D.C. Circuit Review – Reviewed: “Someone Else’s Money”
Apologies: I’m traveling this week so this post will be quick.
In my mind, I can hear Judge Janice Rogers Brown say “This is stealing.” To be clear, I’ve not spoken with her about Keepseagle v. Perdue, one of the week’s big cases. So I suppose I don’t really know what she said. Even so, I’m pretty sure she said “This is stealing,” and I’m pretty sure I know how she sounded when she said it. How do I know? Because years ago, I clerked for her. After spending many, many hours in her office, I have a good idea of what her reaction must have been.
Let’s back up. As regular readers know, I strongly urge law students to try to clerk. This is especially true for students at schools that do not produce that many law clerks.* (Students at schools that do, well, they don’t need my advice.) There are all sorts of instrumental reasons why clerking is a good idea. But those are not the real reasons why you should clerk. The best reason is this: Because it is an amazing experience.
When you read one of Judge Brown’s opinions, you might think she is a loud person, thunderous even. And it’s true that she writes with force. But she’s not loud at all; she is bookish and even shy. She loves to read. And she remembers what she reads. She has studied Abraham Lincoln, Norse mythology, French philosophy, the Book of Job, and Albert Einstein, among many other topics. She once took the clerks on a field trip to visit an exhibit about Lincoln. The depth of her knowledge was astounding. Truth be told, I can’t count the number of times I heard her say something like “Well, Kipling once said …” and suddenly she would share the perfect quotation to sum up the situation. And then we would never hear the quotation again! She wasn’t showing off; she just loves to read and think.
To this day, I have no idea how Judge Brown picks her clerks. I do know that she tries to find folks she can have conversations with. And she definitely doesn’t want all of her clerks to come from Harvard, Stanford, and Yale. To be sure, she is fine with hiring some of her clerks from those schools–but not all. Nor do her clerks have to agree with her; in fact, she tries to find clerks who do not agree with her. She also thinks about building a team. Beyond that, how she hires is a mystery to me. But though I do not know how she picks her clerks, I do know how fortunate I am to have been one of them.
When you clerk for Judge Brown, you quickly come to know that she has strong opinions. She listens and is willing to discuss. But at the same time, if she thinks something is wrong, she will say so.
And that brings us to Keepseagle. Judge Edwards, joined by Judge Wilkins, wrote the majority opinion. This is how it begins:
In 1999, a class of Native American farmers and ranchers filed suit against the United States Department of Agriculture (“the Department”), contending that the Department discriminated against Native American applicants in their claims under farm credit and benefits programs. After more than a decade of contentious litigation, the District Court approved a Settlement Agreement (“the Agreement”) in 2011 that created a $680 million compensation fund for the benefit of class members who participated in a non-judicial, administrative claims process.
At the conclusion of the claims process, $380 million still remained in the compensation fund. Under the terms of the Agreement, any leftover funds were to be distributed to cy-près beneficiaries – i.e., non-profit organizations that provided services to Native American farmers. Because the parties had not anticipated such a large remainder, they entered into negotiations to modify the Agreement. The parties’ initial attempt at modification was unsuccessful. However, a second effort resulted in an addendum to the Agreement that is the subject of the dispute in this case. Under the terms of the addendum, the cy-près process would be reformed to distribute funds more efficiently and supplemental payments would be awarded to class members who had successfully recovered from the compensation fund.
Is that okay? Yes, says the Court:
We affirm the judgment of the District Court. We reject the claim that the modification clause requires Appellant Mandan’s assent before the Agreement can be amended. We further hold that the District Court did not abuse its discretion in finding that the addendum was fair, reasonable, and adequate. We decline to reach the merits of Appellant Mandan’s legal challenges to the cy-près provision because these claims were explicitly waived before the District Court.
Judge Brown, however, did not agree. Here are some quotes from her very long dissent (many citations omitted):
- “$380,000,000 is, to use the late Senator Dirksen’s wry phrase, ‘real money.’ That is what has been left on the table for private disbursement in this case. Perhaps one day, I will possess my colleagues’ schadenfreude toward the Executive Branch raiding hundreds-of-millions of taxpayer dollars out of the Treasury, putting them into a slush fund disguised as a settlement, and then doling the money out to whatever constituency the Executive wants bankrolled. But that day is not today.”
- “Here, Congress only appropriated money for the Executive Branch to pay settled claims against the United States via the Judgment Fund Act. Those claims have already been paid—every Native-American farmer who filed a viable claim of discrimination by the United States has been compensated. And yet, more than half of the Judgment Fund appropriation for this case—more than $380,000,000—remains. The Executive Branch and class counsel have devised a cy pres distribution scheme to send these taxpayer dollars to ‘nonprofits’ and ‘charities’ with no claims against the United States.”
- “Unfortunately, no party before the Court really cares what Congress authorized. Cy Pres gives the Executive Branch a win-win: By agreeing to a settlement amount that vastly overstated the claimants’ monetary damages, the Executive can use a large dollar amount to reap the political benefits of photo-op compassion towards a discriminated minority group. At the same time, the Executive’s agreement to an overstated damages sum ensures enough money is left in the fund to pay favored third parties after the claimants are compensated.”
- “Judicial restraint becomes judicial abdication when the parties keep making mistakes and we keep them from being corrected. Cf. 33 G.K. CHESTERTON, The Blunders of Our Parties.”
- “Keepseagle reveals that nothing short of the Constitution’s enumerated limits on power can protect the taxpayer’s money and the judiciary’s integrity. The Executive Branch has an independent obligation to assess the constitutionality of its own conduct. In the first instance, politics should not have been allowed to permit what the Appropriations Clause would prohibit. Similarly, in the first instance, the district court should have never allowed the parties’ consent to override its independent obligation to not approve agreements that transgress Article III’s limits. But the violation to our Constitution’s structure here is not merely ex ante to approving this settlement agreement’s cy pres provisions. This violation is ongoing and is jurisdictional.”
- “More than a century ago, Yale Professor William Graham Sumner famously discussed ‘The Forgotten Man.’ The Forgotten Man is the one left behind in the Government’s rush to ‘right’ every perceived ‘wrong.’ …. Keepseagle is Sumner’s formulation come to life, and our decision today only entrenches the American People’s status as the Forgotten. The Executive Branch saw a wrong to correct—discrimination against Native-American farmers. It talked it over with class counsel, eager to receive a big payday. They then worked together to ensure a vastly-overinflated settlement amount that would leave a huge sum to ‘remedy the evil’ via cy pres. Lost in the midst of their self-congratulation is the plight of … the American People that pay for the Executive Branch’s outsized misadventure and class counsel’s fee feast.”
- “John Adams’s observation, ‘[o]ur Constitution was made only for a moral and religious People’ and is ‘wholly inadequate to the government of any other,’ is often quoted. Few, however, explain what he meant. In the same passage, Adams admonished an America that ‘assume[d] the Language of Justice and moderation while it is practicing Iniquity and Extravagance.’ In such a nation, he warned, ‘Avarice, Ambition [and] Revenge or Galantry, would break the strongest Cords of our Constitution as a Whale goes through a Net.’ … There are, in short, norms upon which self-government depends. The Constitution presumes them, but the character of our people determines whether we keep them. … The conduct of those in this case proves how little the Constitution will matter when good character ceases to be informed by adherence to one’s oath of office, and is primarily defined by how generous you are willing to be with someone else’s money.”
Judge Wilkins concurred to defend the majority:
The dissent spins a tale of corruption and conspiracy, in which the plaintiffs and the Government were complicit in bilking the nation’s taxpayers to pay a political ransom. While this narrative may have been advanced in news accounts and scholarly articles, most of those statements and opinions have not been validated by the solemnity of the oath and “testing in the crucible of cross-examination”; nor are they found in the record, and it is the record upon which our decision must be based.
Of course, some errors cannot be waived – subject matter jurisdiction chief among them. In an attempt to shoehorn this case into that category, the dissent hints that a federal court may be without jurisdiction to approve a settlement agreement that requires the Executive to make an unappropriated expenditure. No authority is cited for that proposition and the legal signposts in this area instead point in the opposite direction.
When properly presented in a case or controversy, courts vindicate the constitutional scheme of separation of powers. Otherwise, allegations of trespass onto Congress’ constitutional curtilage must be addressed by Congress – not the courts – and Congress has ample weaponry with which to defend its turf.
Students, what can I say? You really ought to try to clerk!
This has been a busy week in the D.C. Circuit. Earlier this week I wrote about some of Tuesday’s cases. There were more on Friday.
Here we go:
- Taylor v. Michael Huerta: This short opinion — authored by Judge Kavanaugh and joined by Judges Wilkins and Edwards — is worth reading. It’s about toy drones. Federal law provides that the FAA “may not promulgate any rule or regulation regarding a model aircraft.” The FAA, however, “issued a final rule requiring owners of all small unmanned aircraft, including model aircraft, to register with the FAA.” That is not okay: “In short, the 2012 FAA Modernization and Reform Act provides that the FAA ‘may not promulgate any rule or regulation regarding a model aircraft,’ yet the FAA’s 2015 Registration Rule is a ‘rule or regulation regarding a model aircraft.’ Statutory interpretation does not get much simpler. The Registration Rule is unlawful as applied to model aircraft.”
- Limnia, Inc. v. DOE: This opinion — also authored by Judge Kavanaugh and this time joined by Chief Judge Garland and Judge Griffith — is interesting too. It’s about voluntary remands: “Limnia alleged that the Department’s rejection of Limnia’s applications was unlawful under the Administrative Procedure Act. Before the District Court could decide Limnia’s case on the merits, however, the Department asked for the case to be remanded back to the agency. The District Court granted the Department’s voluntary remand request, returning Limnia’s case to the agency and closing Limnia’s judicial action. We must determine whether it was proper for the District Court to do so. Limnia argues that the District Court was wrong to grant the Department’s voluntary remand request. That is so, according to Limnia, because the Department did not intend to revisit the challenged agency decisions on review. Rather, the Department sought the remand on the basis that Limnia could submit brand new applications for agency review. … We agree with Limnia. A district court has broad discretion to decide whether and when to grant an agency’s request for a voluntary remand. But a voluntary remand is typically appropriate only when the agency intends to revisit the challenged agency decision on review. That prerequisite was not met in this case.”
- Wilkes-Barre Hospital Co. v. NLRB: This one is really complicated. Judge Sentelle, joined by Judges Pilllard and Edwards, addressed whether the hospital violated the law “by unilaterally ceasing the payment of longevity-based wage increases to its nurses after the expiration of the parties’ collective bargaining agreement.” The Court sided with the Board for reasons that I will let you read for yourself. I appreciate this, however: “In general, ‘[r]atification occurs when a principal sanctions the prior actions of its purported agent.’ Doolin Sec. Sav. Bank, F.S.B. v. Office of Thrift Supervision, 139 F.3d 203, 212 (D.C. Cir. 1998), superseded by statute on other grounds, Federal Vacancies Reform Act of 1998, Pub. L. No. 105-277, 122 Stat. 2681 (1998), as recognized in SW Gen., Inc. v. NLRB, 796 F.3d 67, 70–71 (D.C. Cir. 2015), aff’d 137 S. Ct. 929 (2017).” That is a citation only a lawyer could love.
- TNA Merchant Projects, Inc. v. FERC: Here Judge Edwards — joined by Judges Pillard and Sentelle — opened his opinion this way: “In 2008 the Federal Energy Regulatory Commission (‘FERC’ or ‘Commission’) invoked Section 205 of the Federal Power Act (the ‘Act’ or ‘FPA’) to order Chehalis Power Generating, L.P., (‘Chehalis’) to refund a portion of the rates it had charged a customer because they were not just and reasonable. Several years later, FERC had second thoughts. It determined that Chehalis should not, after all, have been required to pay these funds and held that Chehalis ought to recover funds with interest. But Bonneville Power Administration (‘Intervenor’), the customer to whom Chehalis had paid the refund, had no interest in voluntarily returning the money. Chehalis sought relief from FERC by filing a Motion for an Order Requiring Recoupment of Payments. FERC, however, in a perplexing decision, held that it could not order recoupment because the Commission’s refund authority does not extend to exempt public utilities such as the Intervenor Bonneville. We hold that FERC erred when it held that it lacked the authority to grant the Order Requiring Recoupment.”
I wish I had more time this week — TNA Merchant Projects is a fascinating case. In fact, they all are. Unfortunately, I have to run. Alas.
* I chair my law school’s clerkship committee. One of my favorite parts of a professor’s life is when a student accepts a clerkship.
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