It’s been awhile since my last Fifth Circuit Review–Reviewed, and there’s a lot of adlaw news from Fifth Circuit to cover. Among other things, this post discusses
- the Court’s divided opinion in Texas v. United States;
- the post-Kisor viability of deference to the commentary to the Sentencing Guidelines; and
- the Fifth Circuit’s decision to grant Chevron deference for the first time in nearly a year.
Before we get to all that, though, we need to discuss an important case that has flown (you’ll get that pun later) almost completely under the radar: General Land Office of the State of Texas v. U.S. Department of the Interior, No. 19-50178 (King, Jones, Dennis).
The case is ostensibly about whether the Golden-Cheeked Warbler (pictured below) should remain listed as an endangered species under the Endangered Species Act.
The Court held that United States Fish and Wildlife Service didn’t apply the correct standard when reviewing a delisting petition it received from The General Land Office of the State of Texas. What really grabbed my attention, though, was this one-sentence description of the Warbler itself:
Those of you not fortunate enough to have spent considerable time in the Lone Star “State” might be surprised to learn that Texas is a country. I was born in Texas and have lived here most of my life, so I was well aware. Still, I was surprised to see Texas getting its due in a published opinion of a federal appellate court. Then I checked out the Federal Register cite that Judge King offered in support of Texas’s country-status. I was shocked to discover that it goes even further and recognizes every Texas county as its own country. Don’t believe me? I tracked down images of the original pages of the Federal Register and have them posted on my blog, so you can see for yourself here.
I know a lot of Texans with a lot of Texas pride. Many of them would be downright eager to explain—over a couple of Lone Stars or Shiner Bocks, of course—why Texas ought to be recognized as its own country. I’ve never met anybody, though, who made a similar argument for every Texas county. Naturally, I’m having the Federal Register page and the portion of Judge King’s opinion referencing it framed for my office.
A Divided Panel Holds The ACA’s Individual Mandate Unconstitutional
Next up, we have Texas v. United States, No. 19-10011 (5th Cir. Jan. 9, 2020) (Elrod, Engelhardt, King). There’s a lot of commentary out there about this case, and I’ve already analyzed it into, the, ground on my blog, so I’ll keep this brief. The question was whether the ACA’s individual mandate (26 U.S.C. § 5000A(a)) remained constitutional in the wake of the Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97, § 11081, 131 Stat. 2054, 2092. Judge Elrod’s majority opinion (Judge King dissented) summarizes the decision:
As already mentioned, I’ve discussed the decision at length on my own blog here, here, and here. My first post gives my general take on the case: I’m skeptical of the majority’s standing analysis; I don’t think NFIB v. Sebelius dictates the outcome on the merits; I think there are some arguments regarding the TCJA’s constitutionality that haven’t been considered sufficiently yet; and regarding severability, I explain why I’m not nearly as worked up as some other commentators about the panel’s decision to remand the issue for the district court to apply the correct standard in the first instance. My second and third posts explain why I disagree with Professor Nicholas Bagley’s view of the case.
The Supreme Court has rejected requests to fast track the parties’ petitions for certiorari, so you have plenty of time to read my posts and let me know what you think.
Is Deference to the Commentary to the Sentencing Guidelines Defensible Post-Kisor?
In United States v. Vivar-Lopez, No. 19-40351 (5th Cir. Dec. 20, 2019) (per curiam), the Fifth Circuit held that the district court didn’t commit clear or obvious error by granting Auer deference to one of the Sentencing Commission’s “Application Notes” when calculating Vivar-Lopez’s sentence under the Guidelines:
Deferring To Interior Before Declaring Its Payment Orders Ultra Vires
In W&T Offshore Inc. v. Bernhardt, No. 18-30876 (5th Cir. Dec. 23, 2019) (Clement, Elrod, Duncan), the Court had to decide whether the Department of the Interior could change its settled approach to collecting royalty payments from operators of oil and gas leases under OCSLA without notice and comment and then enforce its newly announced policy retroactively. The Fifth Circuit held that it may not. Along the way, the Court granted Chevron deference (sort of) for the first time since February 2019 only to declare Interior’s payment orders invalid because they were substantive rules issued without notice and comment. I had a lot to say about this case, so I wrote a tight 3,300 word post about it, which you can read here if you dare.
Fifth Circuit Addresses A Matter Of First Impression Under The LHWCA
International-Matex Tank Terminals v. DOWCP, No. 18-60662 (5th Cir. 2019) (King, Higginson, Duncan) involved a matter of first impression for the Fifth Circuit under the Longshore Harbor Workers Compensation Act: the meaning of the word “terminal” in the Act’s situs requirement? See 33 U.S.C. § 903(a). The panel explained that the Act doesn’t define the term but because “terminal” in the LHWCA is a maritime term of art, courts construe it to have its established meaning in the maritime industry.
The ALJ who initially addressed the issue relied on an OSHA regulation, a dictionary, and a definition that the Supreme Court had referred to as “useful” more than four decades. Ne. Marine Terminal Co. v. Caputo, 432 U.S. 249, 268 n.30 (1977) (citing NY Unconsol. Laws § 9806). Applying these definitions, the ALJ concluded that the facility where the employee was injured was a “terminal” under the Act. The Department of Labor’s Benefits Review Board affirmed, and the Fifth Circuit denied the employer’s petition for review, explaining that “the definitions of ‘marine terminal’ on which the ALJ relied are pertinent” to the term’s “established” meaning in the industry.
While I have no reason to question the Court’s ultimate conclusion, I wish the panel would have explained why the definitions the ALJ relied on were sufficient (or even relevant) to determining the term’s established meaning in the maritime industry. I vent my frustrations at some length in a post on my own blog titled “International-Matex Tank Terminals v. DOWCP Or Why My Therapist Knows So Much About Statutory Interpretation,” if you’re interested.
Auer After Auer
Next, we have Escribano v. Travis County, No. 19-50236 (5th Cir. Jan. 10, 2020) (Davis, Smith, Costa). Six Travis County, Texas Sheriff’s Office detectives sued the County alleging they were entitled to overtime pay under the Fair Labor Standards Act. The case turned on whether the FLSA’s exemptions for executive and highly compensated employees applied to the detectives. 29 C.F.R. §§ 541.100(a), 541.601(c).
The detectives convinced a jury they weren’t paid on a salaried basis, which foreclosed the County’s attempts to show that the FLSA exemptions applied. The district court agreed with the County, however, that no reasonable jury could have reached that conclusion and, on that basis, granted the County’s motion for judgment as a matter of law. The Fifth Circuit affirmed.
Most of the opinion deals with jurisdictional and procedural issues. If you read far enough, however, the Court eventually addresses the district court’s ruling that the detectives were, as a matter of law, paid on a salary basis. The parties agreed that this issue turned on a single requirement of the applicable regulation: whether the detectives’ pay was “subject to reduction because of variations in the quality or quantity of the work performed.” See 29 C.F.R. § 541.602(a).
You may recognize that question. It arose in a 1997 Supreme Court case Auer v. Robbins, 519 U.S. 452, 459-61 (1997). As everyone reading this likely knows, in Auer, the Supreme Court deferred to the Secretary of Labor’s view that an employee’s pay is subject to reduction if the employer had “an actual practice of making … deductions or an employment policy that creates a ‘significant likelihood’ of … deductions.” Id. at 461. That, in turn, depended on whether a “clear and particularized policy . . . ‘effectively communicates’ that deductions will be made in specified circumstances.” Id.
The detectives and the County assumed that Auer’s “practice or policy” standard applied, so that was the standard the district court used in ruling on the County’s Rule 50(b) motion. But in a post-Auer regulation, the Department of Labor announced that there must be a practice of making deductions, with the existence of a policy only being evidence of that practice. 29 C.F.R. § 541.603(a)8; 69 Fed. Reg. at 22,180. As a result, the Fifth Circuit explained, the ultimate inquiry is now just “practice.” Even under that standard, though, the Fifth Circuit agreed with the district court that the detectives were compensated on a salary basis and, for that reason, affirmed.
A Cautionary Tale
Palm Valley Healthcare, Inc. v. Azar, No. 18-41067 (5th Cir. Jan. 15, 2020) (Owen, Haynes, Costa), involves a Medicare provider’s challenge to HHS’s demand that it repay several claims the agency determined didn’t satisfy Medicare coverage requirements. The Fifth Circuit’s opinion affirming the agency’s decision is a cautionary tale about the importance of raising your best arguments properly at the administrative level. I have more on the case here.
But Wait, There’s More
These are just some of the adlaw cases the Fifth Circuit has decided since my last Fifth Circuit Review—Reviewed. In addition to several important immigration cases, which I cover on my blog here, the Court also decided:
- Expeditors & Production Service Co., Inc. v. Director, Office of Workers’ Compensation Programs, No. 18-60895 (5th Cir. 2019) (Stewart, Clement, Ho) (per curiam) (employee was entitled to compensation under the LHWCA, and ALJ and Benefits Review Board correctly concluded that mobile-home trailer at work facility where employee was injured qualified as maritime situs under the Act);
- Hobbs v. Petroplex Pipe and Construction, Inc., No. 19-50350 (5th Cir. Jan. 10, 2020) (Jolly, Smith, Costa) (affirming district court decision holding Petroplex liable to employees under the FLSA and agreeing with district court that employees were not independent contractors under the Act);
- Excel Modular Scaffold & Leasing Co. v. OSHRC, No. 19-60067 (Wiener, Higginson, Ho) (upholding citations charging Excel with safety violations, including a “serious” violation of 29 C.F.R. § 1926.106(d), a regulation which required Excel to ensure the presence of a “lifesaving skiff” at all jobsites where employees were required to work over water);
- The Inclusive Communities Project v. Department of Treasury, No. 19-10377 (5th Cir. Dec. 30, 2019) (Jolly, Smith, Costa) (ICP lacked standing to sue the Department of Treasury and the Office of the Comptroller of the Currency for allegedly violating section 3608 of the Fair Housing Act and the Fifth Amendment by failing to regulate the Federal Low-Income Tax Credit program in a manner that promoted fair housing);
- Johnnetta Punch v. Bridenstine, No. 18-40580 (5th Cir. Dec. 17, 2019) (Jones, Ho, Oldham) (plaintiff alleging that NASA discriminated against her had pled her way out of federal court by pursuing her claims in several mutually exclusive forums simultaneously);
- Baker Hughes, Inc. v. United States, No. 18-20585 (5th Cir. Nov. 21, 2019) (Southwick, Willett, Oldham) ($52 million payment from Baker Hughes’s predecessor in interest to one of the predecessor in interest’s subsidiaries was not a “bad debt” under 26 U.S.C. § 166 or an “ordinary and necessary business expense” under 26 U.S.C. § 162, and as a result, IRS correctly concluded that the payment didn’t qualify for an income tax deduction).
If you’d like to know more these cases, I cover them in a bit more depth here.