As Judge Griffith noted last week on this blog, everyone being discussed in the news as a possible replacement for Justice Breyer has some connection to the D.C. Circuit, and no one more so than Judge Ketanji Brown Jackson. So the big news this week was her first opinion for the D.C. Circuit, issued on Tuesday. Her second, issued on Friday, garnered less media attention, but is equally interesting for those who follow the Foreign Sovereign Immunities Act. Add in a 2-1 decision about when the Department of Interior must take land into trust under a statute settling certain Indian land claims, and it was a fascinating week. Here goes:
In the case you’ve probably already read about, Am. Federation of Government Employees v. Federal Labor Relations Auth., No. 20-1396 (D.C. Cir. Feb. 1, 2022), the D.C. Circuit considered the scope of the federal government’s duty to bargain regarding a management-initiated change to the “conditions of employment affecting” federal employees who are union members. 5 U.S.C. § 7103(a)(12). From the mid-1980s until the challenged policy statement, the FLRA took the view that management must bargain over any change with more than a de minimis effect. See Dep’t of Health & Human Servs. Soc. Sec. Admin., 24 F.L.R.A. 403, 407 (1986). In September 2020, the FLRA issued a policy statement specifying that “an agency will not be required to bargain over a change to a condition of employment unless the change is determined to have a substantial impact on a condition of employment.” U.S. Dep’t of Educ., 71 F.L.R.A. 968, 971 (2020). The D.C. Circuit, in an opinion by Judge Jackson, held that the policy change in the bargaining threshold—from more-than-de-minimis to substantial-impact—was an insufficiently explained departure from prior policy and therefore arbitrary and capricious. Although news coverage has tended to view the decision through the lens of union rights, the opinion is focused on fundamental principles of the arbitrary and capricious standard. Specifically, the D.C. Circuit held that the FLRA’s explanation of the problems purportedly created by the more-than-de-minimis standard was internally inconsistent, insufficiently supported, and failed to reasonably grapple with prior administrative and court decisions upholding that standard. Further, the Court held, the FLRA failed to sufficiently explain why it prefers the new substantial-impact standard. This latter part of the opinion held the agency to a fairly high bar for explaining policy changes, and it is worth a read for that reason alone. Because the Court vacated the substantial-impact policy on arbitrary-and-capricious grounds, it did not reach the union’s argument that the policy was inconsistent with the statute.
Judge Jackson wrote a second opinion this week, in Wye Oak Technology, Inc. v. Republic of Iraq, Nos. 19-7162, 19-7169 (D.C. Cir. Feb. 4, 2022). The case presents a fascinating law-of-the-case conundrum wrapped in questions about the commercial activities exception to the Foreign Sovereign Immunities Act. The facts are fairly simple: a bench trial found that the Republic of Iraq failed to pay the invoices of a U.S. defense contractor (Wye Oak) for salvage and refurbishment services. The procedural path to get there took more than a decade (so far). Wye Oak first filed suit in the Eastern District of Virginia. That court held that Iraq was not immune from suit because the commercial activities exception applied, but transferred the case to D.D.C. due to improper venue. The commercial activities exception permits a U.S. court to exercise jurisdiction over a sovereign nation when (1) the foreign state carries on a commercial activity in the United States; (2) an act is performed in the United States in connection with the foreign state’s outside-U.S. commercial activity; or (3) an outside-U.S. act connected with the foreign state’s outside-U.S. commercial activity causes a direct effect in the United States. 28 U.S.C. § 1605(a)(2). Iraq appealed the denial of immunity, and the Fourth Circuit affirmed on the second of those grounds (act within the U.S.). A dissent—which turned out to be prophetic—urged the Court not to decide the question because it could “create a circuit split in the same case.” Which is just what happened. A bench trial proceeded in D.D.C. and Iraq was found liable. On final judgment appeal, the D.C. Circuit first held that Iraq’s participation in the trial did not implicitly waive its immunity, because Iraq had vigorously defended its immunity before then. The Court then turned to the commercial activities exception and held (in conflict with the Fourth Circuit) that the act-within-the-U.S. exception applies only when the foreign state acts within the United States and in this case, all of the acts within the U.S. were Wye Oak’s. The law of the case doctrine did not bar the Court from reaching this question principally because, the Court held, it was not the “same issue.” The Fourth Circuit had decided whether Wye Oak’s pleadings were sufficient, and the question before the D.C. Circuit was based on the facts proven at trial. Although rejecting the act-within-the-U.S. exception to sovereign immunity, the D.C. Circuit did not finally decide the immunity question. Instead, it remanded for consideration of whether D.D.C. could exercise jurisdiction under the ‘direct effect’ clause of the commercial activities exception.
The last D.C. Circuit opinion of the week is Sault St. Marie Tribe of Chippewa Indians v. Haaland, No. 20-5123 (D.C. Cir. Feb. 4, 2022). In brief and generalized terms, the form of the question presented was: if a statute permits a tribe to use funds for certain purposes, and requires the Department of Interior to take land into trust when the land is purchased with those funds, can Interior decline to take the land into trust on the ground that the purchase was not one of the permitted uses of the funds? The D.C. Circuit, in an opinion by Judge Rao, held that the answer was yes: Interior can decline to take the land into trust based on its own assessment of whether the purchase was a qualifying use of funds under the statute at issue. The Court further held that Interior correctly declined to take the land into trust on the particular facts presented. Judge Henderson dissented, reasoning that the statute unambiguously required Interior to take land into trust so long as the land was purchased with qualifying funds, without permitting Interior to re-examine whether the purchase complied with the funds’ permitted uses. Moreover, even if the statute were ambiguous, Judge Henderson would have adopted the Tribe’s interpretation under the Indian canons of construction. The dissent hints at some tension, at least, between the majority’s opinion and a Tenth Circuit decision under a similar type of statute, so time will tell if this issue requires Supreme Court resolution.