cfpb – Prof. Zachary Wolfe, Esq.

First Monday and October 2023 cases

August 13, 2023case suggestions

The new Supreme Court term begins on the “First Monday” in October. This year it has a slower than usual start, with only one case set for argument on four of the first five argument days (and there’s usually six argument days in each month’s two-week block, but the second Monday is a holiday). But it will take up interpretation of the First Step Act, the constitutionality of the CFPB, ADA testers, whistleblower protections, insurance regulation, and — in one of the more high-profile cases — how to distinguish partisan gerrymandering from racial gerrymandering. See the other pages for tips on attending in-person or listening online.

Monday, October 2

Pulsifer v. US is focused on the First Step Act and the meaning of “and.” This was a bipartisan criminal justice reform law enacted in 2018. As relevant here, the Act instructs judges to disregard the mandatory minimum sentence under certain drug laws if the defendant satisfies various criteria. One of those criteria is that “the defendant does not have- (A) more than 4 criminal history points, . . . as determined under the sentencing guidelines; (B) a prior 3-point offense, as determined under the sentencing guidelines; and (C) a prior 2-point violent offense, as determined under the sentencing guidelines.” An offense is assigned “points” based on severity of sentence: 3 points for 13 months or more, 2 points for less than that but more than 60 days, and 1 point for anything else.

The defendant does have both A and B, but argues that “and” means that he is eligible unless he fails on all three criteria. On the other hand, the government argues, and the 8th Circuit held, that “and” should be read severally — “a defendant is eligible for safety-valve relief if he does not have (A), does not have (B), and does not have (C).” That’s from the NAAG‘s useful explainer.

One principle in support of the government’s and 8th Circuit’s reasoning is the “presumption against surplusage,” which cautions that courts should not interpret laws in a way that renders some parts of them meaningless. In this instance, failing both B and C necessarily means failing A, so there would have been no reason to include A in the statute unless the intent was to render a defendant ineligible if they fail to meet any (not all) of the criteria.

But there are other “canons of statutory construction,” including the “presumption of consistent usage” (“and” doesn’t mean “or” elsewhere in this Act) and the “rule of lenity” (ambiguity in criminal laws should be resolved to favor the defendant). Interestingly, the conservative/libertarian Americans for Prosperity has filed an amicus brief in support of the defendant.

This is the only argument scheduled for today.

Tuesday, October 3

Consumer Financial Protection Bureau v. Community Financial Services Association of America is an important case concerning the constitutionality of the funding structure for the CFPB. As Amy Howe explains, CFBP uses a:
unique funding scheme, which operates outside the normal congressional appropriations process. Instead of receiving money allocated to it each year by Congress, the CFPB receives funding directly from the Federal Reserve, which collects fees from member banks. And that scheme, the court of appeals concluded, violates the Constitution’s appropriations clause, which directs that ‘[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.’ The appropriations clause, the court of appeals explained, ‘ensures Congress’s exclusive power over the federal purse,’ which is in turn essential to ensure that other branches of government don’t overstep their authority.

The case has drawn a lot of attention and competing amicus briefs, along the lines you would expect. (The dispute started with payday lenders challenging a rule that barred them from making a third effort to withdraw funds from consumer accounts with insufficient funds, which produces high fees for those consumers.) But for an interesting perspective, see the amicus brief from the Lawyers’ Committee for Civil Rights Under Law, which explains how “lenders colluded with state actors to discriminate against people of color” and argues that “CFPB’s funding structure is consistent with the Appropriations Clause” and “originates from a decision by Congress to continue long-standing funding practices that enabled its predecessor federal agencies to address the safety and fairness of financial products.”

Again, this is the only case set for argument today.

Wednesday, October 4

Acheson Hotels, LLC v. Laufer is about the Americans with Disabilities Act, and specifically whether “testers” have standing. But there is also a layer of intrigue regarding the attorney for Laufer at an earlier stage in the proceeding, whose license to practice law was suspended.

There is a long tradition of “testers” in civil rights enforcement. For example, people of varying races might apply for loans from the same bank to document differences in treatment, without any intent by any of them to take out a loan if offered. This case is a bit different from that typical sort of “tester.” According to her affidavit, Laufer has MS, is visually impaired, and uses a wheelchair. After experiencing frustrations in finding accessible hotel rooms, she became involved with lawyers, forwarding them information whenever she found a hotel website that lacked sufficient information and sometimes serving as an “ADA plaintiff.”

The First Circuit’s opinion nicely sums up the issue and their holding:
Certain regulations under the Americans with Disabilities Act (“ADA”) require places of public lodging to make information about the hotel’s accessibility available on any reservation portal to those with disabilities. In the age of websites, that means a disabled person can comb the web looking for non-compliant websites, even if she has no plans whatsoever to actually book a room at the hotel. Thus, the information could be viewed as irrelevant to her — except to whether the website is complying with the law. Has she suffered a concrete and particularized injury in fact to have standing to sue in federal court? Contrary to the district court’s thinking, we think the answer is yes. We further conclude that Laufer has standing to pursue injunctive relief and that the case is not moot.

This furthered a “circuit split.” The 11th Circuit appears to agree with the above, while the 2nd, 5th, and 10th have said there is no standing. The question presented for the Court is:
Whether a self-appointed Americans with Disabilities Act “tester” has Article III standing to challenge a place of public accommodation’s failure to provide disability accessibility information on its website, even if she lacks any intention of visiting that place of public accommodation.

This is the only case set for argument today. The US has asked to participate in arguments (that motion was filed just a few days before this post but will almost certainly be granted), so expect the session to run even longer than usual.

The Court is closed on Monday, October 9 for Columbus/Indigenous Peoples Day.

Tuesday, October 10

The first two-argument day of the term.

First up is Murray v. UBS Securities, LLC, which is about the burden of proof in a whistleblower case brought under the Sarbanes Oxley Act (securities fraud).

Murray was a strategist at UBS. Part of his job included preparing reports that SEC regulations required to be independent and reflective of his own views. He complained to his supervisors repeatedly that he felt pressured to alter his reports, and then was fired. He then filed suit under the Sarbanes Oxley Act’s whistleblower protection provision, which prohibits publicly traded companies from “discriminat[ing] against an employee … because of” any lawful whistleblowing act. 18 U.S.C. § 1514A(a).

Murray prevailed at trial after the jury was instructed that Murray needed to prove 4 things: he engaged in protected activity, the employer knew that, he was fired, and — crucially — “that plaintiff’s protected activity was a contributing factor in the termination of his employment.”

The Second Circuit held that was not enough, and that the jury should also have been instructed that Murray needed to prove that UBS acted with “retaliatory intent—i.e. , an intent to ‘discriminate against an employee … because of’ lawful whistleblowing activity.” This is a split with two other Circuits (5th and 9th), which held that a plaintiff need only prove that the protected activity was a contributing factor in the decision to terminate.

The Court has accepted a “question presented” that puts this more as a matter of civil procedure — who must prove what and when:
Whether, following the burden-shifting framework that governs cases under the Sarbanes-Oxley Act of 2002, a whistleblower must prove his employer acted with a “retaliatory intent” as part of his case in chief, or whether the lack of “retaliatory intent” is part of the affirmative defense on which the employer bears the burden of proof.

Public Citizen has a useful amicus brief that relies heavily on the burden-shifting framework that Congress specified for filling such cases with the Department of Labor. Under 49 U.S.C. § 42121(b)(2)(B), the complaint must show that the protected activity “was a contributing factor in the unfavorable personnel action,” but the investigation can then be stopped if “the employer demonstrates, by clear and convincing evidence, that the employer would have taken the same unfavorable personnel action in the absence of that behavior.”

Today’s second case, Great Lakes Insurance SE v. Raiders Retreat Realty Co., is rather esoteric:
Whether, under federal admiralty law, a choice-of-law clause in a maritime contract can be rendered unenforceable if enforcement is contrary to the “strong public policy” of the state whose law is displaced

In contract law in general (not just under admiralty law), the parties’ contractual agreement can be set aside by a court as void as against public policy. In this case, the insurance company brought suit in Pennsylvania (where the policy had been issued), seeking a declaration that it did not have to pay for damages when a yacht ran aground because its fire-extinguishing system had not been properly inspected as the owners had claimed when they took out the policy, rendering the policy void ab initio even though the damages had nothing to do with fire. The owners counter-sued, advancing claims under Pennsylvania consumer protection laws for insurance bad faith. If the contract’s choice-of-law provision is enforceable, New York law applies to the entire dispute so those counter-claims based on Pennsylvania law would have to be dismissed. But if Pennsylvania has a strong public policy interest in seeing its laws against insurance bad faith enforced, does that mean the choice-of-law agreement is unenforceable? So although an admiralty case is not normally one I’d recommend to a casual observer, this could be an interesting argument.

Wednesday, October 11 — Gerrymandering

This is an extraordinarily important case asking whether a gerrymandered election district is based on race or politics. In 2019 in Rucho v. Common Cause, the Supreme Court held that federal courts cannot concern themselves with partisan gerrymandering. Of course, racial gerrymandering remains unlawful under the Voting Rights Act and the 14th and 15th Amendments.

In this case, South Carolina claims that the Republican-controlled legislature re-drew congressional districts to “create a stronger Republican tilt” in a district. The map they drew moved tens of thousands of Black voters out of a district, and a 3-judge panel found that “race was the predominant factor motivating the General Assembly’s adoption of Congressional District No. 1.” Before the Supreme Court, South Carolina argues that the lower court’s decision “rested on nothing but the correlation between race and politics” and cautions that “courts could always purport to infer racial predominance or a racial target from lines that correlate with both race and politics—and thereby insert themselves into political disputes under the guise of enforcing the Constitution’s prohibition on racial gerrymandering.”

The case has received a great deal of attention, so I won’t write more. In addition to the panel’s ruling above, I’ll direct you to an interesting Politico story that includes a piece about Rep. Clyburn’s possible role. And I strongly recommend reviewing the NAACP’s brief before taking in the argument.

February & Early March Cases

February 13, 2020case suggestions

The next block of arguments will occur in the last week of February and first week of March—with a large number of very significant cases. It starts with an important case involving federal lands that has not received much attention, followed by other important cases including a really interesting one in the context of free speech related to illegal immigration and another questioning the whole “expedited removal” process, then the CFPB case, and finally ending on March 4 with one of the more high-profile cases of the term, involving access to abortion.

Monday, February 24

First is a case that has not received much public attention but represents an important contest over whether the Trump Administration can authorize commercial activity on federal land in apparent violation of enacted laws. The Federal Energy Regulatory Commission awarded a right-of-way to Atlantic Coast Pipeline LLC so it could construct a natural gas pipeline across the Appalachian Trail within the George Washington Forest, despite laws that specify that such rights-of-way may be granted on federal lands “except lands in the National Park System.” 30 U.S.C. § 185(b)(1). An environmental organization successfully sued to block this action, with the Fourth Circuit holding that the Appalachian Trail is a “unit” of the National Park System and therefore the Mineral Leasing Act “specifically excludes” the Trail “from the authority . . . to grant pipeline rights of way.” The Administration is arguing, among other things, that the Appalachian Trail is not “land” within the meaning of these laws, which one group of amici seized on: “Petitioners’ first response (USFS Br. 19; ACP Br. 18) to that straightforward reading of the relevant statutory texts is that the AT is not ‘land’ at all but is instead merely ‘a trail’ or ‘a footpath’ that metaphysically crosses land. That argument is too clever by half.” I recommend reviewing that brief from NRDC and other groups, which offers a useful overview of the arguments. [There are two cases, US Forest Service v. Cowpasture River Assn. and Atlantic Coast Pipeline, LLC v. Cowpasture River Assn., but they have been consolidated for a total of 1 hour of argument.]

The second case is a terrorism case that also has not received much attention, likely because it involves fairly technical issues of interpretation of the Foreign Sovereign Immunities Act. The suit is against Sudan and alleges that it sponsored Al-Qaeda and bears liability for deaths and injuries of US government employees and contractors in the 1998 embassy bombings in Kenya and Tanzania. Congress amended the FSIA in 2008 to allow for punitive damages in cases of state-sponsored terrorism; the question for the Court today is whether that amendment applies retroactively. Opati v. Republic of Sudan.

Tuesday, February 25

Today is an important First Amendment case in the context of illegal immigration. Federal law provides for imprisonment of anyone who “encourages or induces an alien to come to, enter, or reside in the United States, knowing or in reckless disregard of the fact that such coming to, entry, or residence is or will be in violation of law.” 18 U.S.C. § 1324(a)(1)(A)(iv). Based on those words alone, the statute might be read to criminalize a wide range of political advocacy that would be Constitutionally protected, such as editorials describing immigration law as immoral and illegitimate bars on entry by people fleeing oppression. Although incitement and solicitation of illegal activity may be criminalized under longstanding First Amendment doctrines, “abstract advocacy” of illegal activity is free speech. The line is often difficult to describe and cases typically address the issue in theoretical terms. That’s the case in today’s US v. Sineneng-Smith. Evelyn Sineneng-Smith continued to file green card applications (and charge her clients) under a specific program even though that program had ended. She was convicted of both mail fraud (which is no longer being contested) and under this “encourage or induce” provision. Speech that is part of a criminal scheme is not protected, but in First Amendment cases, we often look to the language of the statute and courts will strike down the law if it is “overbroad” even if the specific defendant before them did something that the Constitution would allow the government to criminalize under a more carefully drafted statute. Prof. Eugene Volokh’s amicus brief offers a compelling examination of the importance of the questions in this case. There’s also an interesting NYT article about the case.

Wednesday, February 26

The only case today is a technical issue under the Prison Litigation Reform Act, involving how to count the number of “strikes” against a prisoner who has had prior lawsuits dismissed. It’s not one I would recommend to the casual observer. Lomax v. Ortiz-Marquez

Monday, March 2

Two important immigration cases today, both involving different aspects of the power of the courts over the immigration process. The first, Nasrallah v. Barr, involves a member of the Druze religion who had been granted asylum in 2006 on the basis of an incident in which Hezbollah fired weapons at him and forced him to jump off a cliff to escape. But in 2013 he was convicted of receiving stolen property, which triggered a removal process. An immigration judge deferred removal, finding that he likely would face persecution if returned to Lebanon, but the Board of Immigration Appeals found that he was not in fact in danger because the guns weren’t aimed at him and he “voluntarily jumped.” The 11th Circuit refused to examine that finding, holding that it lacked power to review factual findings by the BIA. The Supreme Court has granted cert. on “whether the courts of appeals possess jurisdiction to review factual findings underlying denials of withholding (and deferral) of removal relief.” See this interesting amicus brief from a group thirty-three former immigration judges and members of the BIA, which argues that “[i]n light of the immense resource constraints of immigration courts, which amici experienced firsthand, it is crucial to have Article III court review of the underlying basis for a grant or denial of a [Convention Against Torture] claim.”

The second case, DHS v. Thuraissigiam, reviews a 9th Circuit decision that called into question the entire “expedited removal” process, finding that it lacked the “meager procedural protections” that the Supreme Court had required even for enemy combatants in Guantanamo — and therefore the statute denying courts authority to hear habeas petitions was invalid under the Constitution’s “suspension clause.” The Circuit decision itself offers a useful overview of the law and the circumstances this immigrant faced; also see this ABA Journal article and the organization’s amicus brief.

Tuesday, March 3

The legitimacy of the Consumer Finance Protection Bureau is being challenged on the basis of separation-of-powers concerns in Seila Law v. CFPB. The Constitution vests the President with the authority and duty to “take care that the laws be faithfully executed,” and this has traditionally meant broad authority to remove the heads of administrative agencies. But Congress on occasion creates “independent agencies” (with varying levels of actual independence) that it wants insulated from the political process. That’s been challenged on occasion as inconsistent with the constitutional scheme, but the Court has upheld various restrictions Congress has put on Presidential power over those agencies. CFPB is at the end of the continuum, though: it is funded independently through the Federal Reserve system and has only one director who serves a 5-year term and cannot be removed except for “inefficiency, neglect of duty, or malfeasance in office.” The case raises the question of whether Congress may so restrict the President’s authority to remove an administrative officer, but the Court may not reach that issue. It could instead read the “for cause” clause so broadly as to negate any separation-of-powers concerns, or it could hold that the petitioner lacks standing to raise the issue (it’s a law firm that refused to comply with a subpoena when the CFBP was investigating its telemarketing practices for consumer debt-relief services, which is a bit removed from the Constitutional issues). Scotusblog offers a useful overview and a symposium with a range of views.
There’s a lot of politics surrounding this case. Elizabeth Warren had a very significant role in the creation of the CFPB. Trump’s Solicitor General has declined to defend the constitutionality of the CFPB, so the Court asked Paul Clement (the Solicitor General under George W. Bush) to step in (he’s defended the structure but urged the Court not to reach that issue). And Justice Kavanaugh dissented when the issue was raised in a similar case when he was still on the DC Circuit (PHH Corp. v CFPB was decided 7-3 in favor of CFPB by the full DC Circuit in 2018).

The second case is an important but fairly procedural securities law issue. “Disgorgement” is essentially an order to surrender the ill-gotten gains. A 2017 Supreme Court case (Kokesh v. SEC) held that disgorgement is a form of “penalty” that is subject to a statute of limitations, but it left open the question of whether disgorgement was available as an “equitable remedy” (the ancient common law power of courts to craft appropriate responses to findings of guilt) in SEC enforcement actions when the statute of limitation is not a bar. Liu v. SEC asks that question directly. There’s an interesting NYT article that provides and overview and some details of the enforcement action, and this amicus brief by securities law scholars should really help you to follow the arguments.

Wednesday, March 4

Abortion cases are some of the most contentious and heavily watched argument days, and that was before the most recent batch of state laws following the presidential election. The June Medical Services cases (one with Russo as the petitioner and the other with him as the respondent; earlier cases will list Gee, the prior Secretary of the Louisiana Department of Health) involve a Louisiana law that requires doctors who perform abortions to have admitting privileges in a hospital with 30 miles. If that sounds familiar, it’s because the Court struck down a very similar Texas law in 2016 in Whole Women’s Health v. Hellerstedt. There, the Court found an “undue burden” after looking at the obstacles the law created as balanced against the benefits of the law. It noted that the benefits were minimal: complications are very rare and most occur in the days following the procedure, after the woman had gone home. As to burden, in the Texas case the record showed that about half the state clinics had been forced to close. Louisiana is focused on the “burden” half of the equation, arguing that it won’t be as serious there because the state only has 3 clinics and 4 abortion doctors total, and one already has admitting privileges and the others should be able to satisfy the new requirement. Again Scotusblog offers a symposium collecting a range of views.
This case will draw a huge crowd. Lines to get into the courtroom will form the day before (with some probably arriving days before), but one former student got in (barely!) for the LGBT/Title VII case in January by joining the line in the early afternoon the day before. So obviously no guarantee, but I’d say that if you’re willing to spend 24 hours in line, you’ve got a chance. If you’re not, then it can be a great experience to go to take in the demonstrations outside the Court. Protests will start during commuter hours the morning of the arguments and continue until the arguing counsel leave the court and give interviews and speeches out front. During and immediately after arguments are typically when the crowds outside are biggest and most active. The two cases are consolidated for one hour of argument, but they are the only arguments scheduled for today so I would expect them to run a little long. With bar admissions and decision announcements starting at 10:00, I would expect arguing counsel to be leaving the Courthouse around 11:30.