Notice & Comment

D.C. Circuit Review – Reviewed: One of These Things [Cases] Is Not Like the Others

The D.C. Circuit issued four opinions this week. Three were in its wheelhouse of agency or public law litigation. One was atypical: a purely commercial dispute. Just for the novelty of it, let’s start with the outlier.

Reinsurance disputes are not the standard fare of the D.C. Circuit, and the Court had to wrestle with an especially complicated matter in Vantage Commodities Financial Services v. Assured Risk Transfer PCC. Judge Tatel, joined by Judge Henderson and Senior Judge Ginsburg, affirmed a district court’s conclusion that Vantage could not recover a $22 million claim from ten reinsurers and insurance brokers. Creditor Vantage created a special purpose insurance entity to insure against default. That entity failed to cover a $22 million default and lacked funds to pay Vantage the arbitral award that followed. The district court rejected Vantage’s contractual claims against the reinsurers because Vantage lacked evidentiary support and dismissed Vantage’s negligence claims against its broker because a D.C. law barred such claims for purely economic losses.

Although reinsurance cases are unusual for the D.C. Circuit, NLRB cases are not. In Fast Food Workers Committee v. NLRB, the D.C. Circuit affirmed the NLRB’s approval of settlements between the General Counsel and McDonalds and its franchisees. In 2014, the union had alleged that the franchisees violated labor laws “by threatening employees, promising benefits to them, interrogating them, and surveilling their protected activity” and argued that McDonalds was jointly and severally liable for their conduct. In December 2019, the NLRB approved a settlement between the General Counsel and the McDonalds and its franchisees. The union challenged the settlement arguing that it failed to provide meaningful relief and left unclear McDonalds’ obligations by avoiding the question whether McDonalds is a joint employer with its franchisees. The union also argued that a Board member had a conflict of interest and should have recused himself. In an opinion by Senior Judge Silberman joined by Judges Rogers and Rao, the panel held that the Board’s determination that resolving the “joint employer” issue was unnecessary to the settlement was within its broad discretion. The panel’s conclusion that the recusal claim was not properly presented drew a dissent from Judge Rogers.

In Murray Braun v. United States, Judges Henderson, Tatel, and Millett considered a case that traces its roots to the killing of a three-month-old girl, Chaya Zissel, by a Hamas terrorist. The Foreign Sovereign Immunities Act authorizes courts to order foreign state sponsors of terrorism to pay damages to their victims. But because such states are unlikely to pay, Congress passed the Justice for United States Victims of State Sponsored Terrorism Act (the “Act”), which established a fund to compensate terrorism victims. The Act draws on two sources of funding: (1) an initial appropriate of $1.025 billion, and (2) proceeds from penalties paid by companies and individuals that violate sanctions on state sponsors of terrorism. The Act sets forth rules for the fund’s administration. Notably, payments from the Terrorism Act fund are to be made annually, and because eligible claims exceed the fund’s balance, claimants receive a pro rata amount each year until their total claims are paid or the fund’s end date in 2039. Murray Braun, Zissel’s grandfather, was awarded $2.5 million. He received almost $105,000 from the second-round distribution in January 2019, and in August 2020, was notified that he would receive $146,000 from the third-round distribution. It appears he had not applied in time to receive a distribution under the first round. The fund then announced that there would be no fourth-round distribution in 2021 because insufficient funds were available. Braun filed suit against the fund’s administrators arguing that the fund was not being administered in accordance with the Act. In an opinion written by Judge Tatel, the Court rejected Braun’s arguments as either moot, forfeited, or inconsistent with the text of the Act, and affirmed the district court’s order dismissing Braun’s claims.

Finally, in Campaign Legal Center v. FEC, the Court, in an opinion written by Senior Judge Edwards and joined by Judges Rogers and Walker, reversed the district court’s ruling that it did not have standing to consider Campaign Legal Center’s case. Campaign Legal Center and Catherine Hinckley Kelley filed an administrative complaint with the Commission. They alleged that two political organizations, Correct the Record and Hillary for America, violated the Federal Election Campaign Act by failing to disclose in-kind donations that Correct the Record made to Hillary for America by coordinating with Hillary for America to create internet communications. The Commission dismissed the complaint, determining that the payments were exempt under an exception for unpaid internet communications. Campaign Legal Center and Kelley then filed this case in the district court challenging the Commission’s ruling. The FEC, because it was short two presidentially-appointed Commissioners, was unable to garner enough votes to defend itself in court, and did not enter an appearance. The district court allowed Correct the Record and Hillary for America to intervene as defendants and dismissed the case for lack of informational standing. The panel reversed the district court. The Federal Election Campaign Act grants a statutory right to information about the amounts, dates, recipients, and purposes of any coordinated expenditures from a political committee to a campaign. 52 U.S.C. §§ 30104(b), 30116(a)(7). When Correct the Record publicly disclosed its financial records, it had not disaggregated the information about its in-kind expenditures on coordinated communications with Hillary for America from its regular operating expenses. The panel ruled that, if Campaign Legal Center and Kelley won on the merits, Correct the Record would have to disaggregate the information it had reported to provide additional details about which expenses were in-kind coordinated expenses, as required under the Act. That disaggregation, the Court held, amounted to “new” information.

Print Friendly, PDF & Email