D.C. Circuit Review – Reviewed: A Week With Cases Worth Watching
While this is my first post for D.C. Circuit Review – Reviewed, I am happy to return to blogging at Notice & Comment and to be part of the team keeping you up to date when opinions drop — and when they don’t. This week they didn’t. But the D.C. Circuit heard oral argument in cases that we’ll be tracking.
The week’s calendar included cases with classic administrative law issues. Does the Securities Exchange Act of 1934 authorize the SEC to regulate data services companies providing wireless services that can (and in fact do) connect customers to trading venues and market data providers? That’s the question in Intercontinental Exchange, Inc. v. SEC, a case that raises perennial issues about statutory interpretation and the limits of an agency’s delegated authority. (Queue Chevron, about which the parties battled in their briefs.) Did FERC arbitrarily and capriciously approve a new filed rate formula? FERC watchers will recognize that as the question presented by the petitioner in California Public Utilities Co. v. FERC. Did the Federal Labor Relations Authority unlawfully and arbitrarily change its standard for determining an agency’s obligation to bargain over conditions of employment? The petitioners argued just that in American Federation of Gov’t Employees, AFL-CIO v. FLRA.
The issues presented in Intercontinental Exchange are particularly interesting. According to the petitioners, the SEC does not have authority under the Exchange Act to regulate corporate affiliates of exchanges when they provide wireless connectivity services that don’t serve a marketplace function. The SEC’s order under review approved the facility fees proposed by five NYSE exchanges for two types of wireless connections, one that is used to send trading orders and the other to receive proprietary market data. In doing so, the Commission concluded that both types of wireless connections fall within its authority with respect to “exchanges” and their “facilities.” The petitioners argue that this assertion of authority is equivalent to the SEC regulating cafeterias that serve exchanges. Not so, the SEC and their amici retort. As the amicus brief of SIFMA and the FIA PTG put it, in the real world, the New York Stock Exchange looks nothing like it does in the hustle and bustle of a Hollywood film. Rather, it looks like computer servers sitting in Mahwah, New Jersey. The SEC’s not regulating the cafeteria, but rather today’s equivalent of the telephone line that securities firms and traders once used to communicate.
During oral argument in Intercontinental Exchange, the panel of Judge Katsas, Judge Walker, and Judge Ginsburg asked about the right analogy for each type of wireless connection, beginning with Judge Ginsburg’s question to Kelly Dunbar, counsel for the petitioners, about the “status of tickers,” which are included with the Exchange Act’s definition of “facility.” After a follow-up from Judge Katsas, it didn’t take long for discussion to turn to telegraphs and telephones, not to mention the technicalities of blackletter administrative law. As Jeffrey Berger closed his argument for the SEC, Judge Walker’s question suggested that the panel was searching for principles limiting the SEC’s assertion of authority that would leave its order standing.
This week the Court also heard oral argument in De Csepel v. Republic of Hungary, a case concerning the Foreign Sovereign Immunities Act. Part of a “family’s decades-long effort to recover a valuable art collection that the World-War-II-era Hungarian government and its Nazi collaborators seized during their wholesale plunder of Jewish property during the Holocaust,” this litigation has been before the D.C. Circuit twice before. This time, the question is whether the District Court erred in exercising jurisdiction over an asset manager for the Republic of Hungary and allowing the case to go forward without Hungary itself. To resolve that question, the Court will have to navigate a maze set by FSIA, Rule 19, and its precedents, including Kickapoo Tribe of Indians of Kickapoo Reservation in Kansas v. Babbitt, which, according to Hungary, strongly favors dismissal when an absent sovereign is a necessary party but immune from suit. If their questions at oral argument are any guide, the panel of Judge Tatel, Judge Pillard, and Judge Jackson will let litigation continue as Baron Mór Lipot Herzog’s descendants fight for the return of artworks that Nazis and the Hungarian government stole from their family.
In short, this week without opinions was worth watching (and by that, of course, I mean listening to). When is a wireless connectivity service a telegraph? Keep D.C. Circuit Review – Reviewed in your feed to find out.