Notice & Comment

D.C. Circuit Review – Reviewed: Justice Kavanaugh’s Old Stomping Grounds

Befitting his status as a graduate of the University of Iowa, Adam White has eyes like a hawk. Earlier this week, he noticed something: Justice Kavanaugh cribbed from Judge Kavanaugh.

Here are the two quotes. First, from Justice Kavanaugh’s decision in Thole v. U.S. Bank N.A., decided this week:


And second, Judge Kavanaugh’s dissent in Morgan Drexen, Inc. v. CFPB, decided in 2015:


Yep, Justice Kavanaugh has returned to his old stomping grounds. (He also penned a notably short opinion for the Supreme Court — his decision in Thole is only 8 pages — which also was one of his hallmarks on the D.C. Circuit … unless he was writing a separation-of-powers dissent.)

But is he right to do so? Is standing more complicated than it needs to be? Could it really be simpler? This is an issue that I’ve been thinking about since the first (real) D.C. Circuit Review — Reviewed post. There, Judge Brown (for whom I clerked) also lamented that standing is too complicated:

This prompts a question: Why is standing so complicated? And an answer: Because of “formalistic tests.” But why are there formalistic tests? Because there are lots of cases and courts try to be consistent in drawing lines. That desire for consistency makes it harder to simplify things.

For instance, is Thole actually an easy case? There, the question was whether certain “retired participants in U.S. Bank’s defined-benefit retirement plan, which guarantees them a fixed payment each month regardless of the plan’s value or its fiduciaries’ good or bad investment decisions” could sue over bad investment decisions. The Court held that they lacked standing because “win or lose, they would still receive the exact same monthly benefits they are already entitled to receive.”* That’s pretty straightforward, especially after Spokeo, Inc. v. Robins (2016).

But wait — what if the the plan fiduciary wastes so much money that the plan itself may be underfunded? Here’s Justice Kavanaugh’s (summarized) response: “The plaintiffs’ amici assert that defined-benefit plan participants have standing to sue if the plan’s mismanagement was so egregious that it substantially increased the risk that the plan and the employer would fail and be unable to pay the participants’ future benefits. The plaintiffs do not assert that theory of standing here, nor did their complaint allege that level of mismanagement.” That avoids the issue in Thole, but I see a problem going forward: What does “substantially increased the risk” mean? That may turn out to be a tricky question — perhaps a tricky question that requires a test of some sort. Maybe even a formalistic test. Thus, even leaving aside the dissent’s view in Thole that injury in this context extends beyond one’s wallet — a tricky issue because some but not all injuries are pocket-book injuries — there still will be tricky cases down the road. (As an aside, Justice Thomas, another D.C. Circuit alum, offered a standard which turns on public versus private rights. That test too will produce hard cases, although perhaps fewer; it can be tricky to suss out what is a public or private right.)

To be sure, I don’t fault Justice Kavanaugh for not addressing those future cases. “If it is not necessary to decide more, it is necessary not to decide more.” But where there is a large volume of cases that raise an issue and courts seek consistency, it is hard to avoid formalistic tests.

The D.C. Circuit decided two cases this week.

In Karem v. Trump, Judge Tatel (joined by Chief Judge Srinivasan and Judge Pillard) addressed the constitutional fair notice requirement for suspending a White House press pass. Brian Karem, a “hard pass” holder (meaning he has a “special press credential[] that allow[] on-demand access to the White House complex”), was involved in a heated dispute at a White House summit and his pass was temporarily suspended by the press secretary. The district court granted a preliminary injunction against the suspension on due process grounds.  The D.C. Circuit affirmed in relevant part.

Notably, the Court explained, based on earlier precedent, that journalistic access to a press pass is a “liberty interest,” so due process requires fair notice of the magnitude of a potential sanction. Here, Karem had no notice of the magnitude of the punishment: “a month-long loss of his White House access, an eon in today’s news business.” This paragraph may get some attention (“rogue, mooning journalists” is a phrase I haven’t seen before):

But I think the more important paragraph is this one:

Interesting. A standard has to be “formally articulated or published.” Unless this formal-articulation requirement is limited to “hard passes” for some reason, the fair-notice doctrine has more teeth than perhaps many realized. (For what it is worth, the D.C. Circuit in 1977 held that there is a “liberty interest” in hard passes; I’m not sure today’s Supreme Court — which may be wary of identifying new liberty interests — would agree. But the issue probably won’t end up before the Supreme Court anytime soon.)

Finally, in NASDAQ Stock Market, LLC v. SEC, Judge Wilkins (joined by Judges Millett and Santelle) addressed the SEC’s authority under Section 19(d) of the Exchange Act to review generally-applicable fee rules set by securities exchanges. Two exchanges charged fees for access to their “depth-of-book” data. Industry groups challenged those fees under Section 19(d) and the SEC found the fees unreasonable. The Court, however, held that the SEC has no authority under Section 19(d) — “which allows the Commission to review an exchange’s decision to ‘limit’ a person’s access to its services” — to review challenges to generally applicable fees. The text of Section 19(d) does not mention fees at all, and even if some fees could be challenged, they “must, at a minimum, be targeted at specific individuals or entities.” Note, for those who follow interpretative methods, this opinion employs both canons of construction and structure. It is worth a read.

* I’m quoting from the syllabus, which “constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.” Thank you Reporter of Decisions.

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