Notice & Comment

D. C. Circuit Review: Reviewed — “In other news . . .”

While all eyes and ears were on the oral arguments before the Supreme Court in Trump v. United States, No. 23-939,  the D. C. Circuit’s landmark decision regarding presidential immunity, the court went about its normal business, issuing three opinions on matters less grand but important nonetheless.

The Federal Service Labor-Management Relations Statute authorizes aggrieved persons to seek judicial review of most orders by the Federal Labor Relations Authority (“FLRA”) directly in the courts of appeals.  5 U.S.C. § 7123(a).  However, the statute creates an exception to this jurisdictional grant for any FLRA order issued under 5 U.S.C. § 7122 involving an arbitration award.  5 U.S.C. § 7123(a)(1).  In American Federation of Government Employees v. FLRA, No. 22-5308, a dispute over twenty years in the running, a labor union sought to challenge such an FLRA order in the district court.  This summary fails to do justice to the complexity of the arguments involved in the case. The opinion, authored by Senior Judge Randolph and joined by Judge Walker, and the concurrence, authored by Judge Wilkins, are remarkably clear explanations of a near-hopelessly intricate interplay of statutory text and case law precedent. The court held that the district court lacked jurisdiction over the lawsuit.  A long line of D. C. Circuit precedent had interpreted Section 7123(a) as generally precluding district-court review.

The court then rejected the union’s argument that the district court may nevertheless have authority to review certain plainly unlawful acts by the FLRA under the Supreme Court’s decision in Leedom v. Kyne, 358 U.S. 184 (1958).  Leedom had created an exception to the National Labor Relations Act’s bar on judicial review of certain decisions by the National Labor Relations Board in cases when the Board violated a “definite statutory prohibition.”  The D.C. Circuit explained Leedom’s deviation from the text of the National Labor Relations Act as a byproduct of a long-since-abandoned method of statutory interpretation that did not directly control this case.  Although several prior D.C. Circuit precedents had applied Leedom’s reasoning, the court distinguished those precedents or held that they could not be followed in light of contrary Supreme Court precedent.  In any event, the court concluded that the FLRA had not committed the type of plainly unlawful act that had been at issue in Leedom.  Judge Wilkins concurred in the result, arguing that the majority’s extended discussion of Leedom was unnecessary inasmuch as the union failed to meet its burden to show that the Leedom exception applied on these facts.

In John Does 1-7 v. Taliban, No. 22-7314, several terror-attack victims who had previously obtained multi-million dollar default judgments against the Taliban, Al-Qaeda, and the Haqqani Network sought to  satisfy those judgments by executing on assets from the International Monetary Fund (“the Fund”) and the International Bank for Reconstruction and Development (“the World Bank”).  John Does contended that when the Taliban took control of Afghanistan in 2021, it became the de facto Afghan government. Because the Fund and the World Bank allegedly hold assets of the Afghan government, John Does argued those assets are now subject to execution.  At issue before the D.C. Circuit was whether the Fund and the World Bank were immune from suit under the Foreign Sovereign Immunities Act (“FSIA”).  The International Organizations Immunity Act extends FSIA immunities to presidentially designated organizations, like the Fund and the World Bank.  In an opinion authored by Judge Millett and joined by Chief Judge Srinivasan and Judge Pan, the court held that they were.

The FSIA provides two kinds of immunity: immunity from suit (jurisdictional immunity) and immunity from having one’s property attached (execution immunity).  John Does did not argue that any of the FSIA’s exceptions to jurisdictional immunity (such as for state sponsors of terror) applied in this case.  They relied instead exclusively on the Terrorism Risk Insurance Act (“TRIA”), which states that “[n]otwithstanding any other provision of law, … in every case in which a person has obtained a judgment against a terrorist party on a claim based upon an act of terrorism, or for which a terrorist party is not immune under [the FSIA’s exception for state sponsors of terrorism], … the blocked assets of that terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party) shall be subject to execution or attachment in aid of execution in order to satisfy such judgment ….”  28 U.S.C. § 1610 note.  However, the D.C. Circuit held that the TRIA only creates an exception for execution immunity, not jurisdictional immunity.  There must also be an exception to or abrogation of jurisdictional immunity in order to maintain this collection action, which John Does failed to establish.

Lamprecht v. IRS, No. 22-1308 is an appeal from the United States Tax Court. Johannes and Linda Lamprecht are Swiss citizens who lived in the United States in 2006 and 2007. In each year they underreported their taxable income by telling the IRS that they had no foreign bank accounts when in fact they had millions in UBS, a Swiss bank. In 2008, the U.S. served a summons on UBS requesting information about a class of unknown taxpayers who might have failed to report the existence of taxable income. The U.S. obtained the information through out-of-court agreements and withdrew the summons in November 2010. The Lamprechts then amended their tax returns and paid the approximately $2.5 million in back taxes that were due. But in 2015, the IRS assessed about $500,000 in penalties against the Lamprechts, which penalties the tax court upheld.

In an opinion authored by Judge Walker and joined by Senior Judge Randolph and Judge Wilkins, the D.C. Circuit affirmed the judgment of the tax court and rejected the Lamprechts’ three arguments. First, the court held that the IRS showed that a supervisor preapproved the Lamprechts’ penalties in writing as required by statute. Second, the Lamprechts’ corrected returns did not protect them from penalties because they were filed after the summons was served on the UBS. Finally, the court concluded that the six-year statute of limitations did not bar the penalty assessments because the limitations period was suspended until the summons was withdrawn in 2010.

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