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February 13, 2024

Appellate Judges Education Institute: Supreme Court Preview

By: Chantel L. Febus

In a captivating glimpse into the legal landscape of the U.S. Supreme Court’s 2023 Term, a distinguished panel of appellate practitioners stole the spotlight at the 2023 Appellate Judges Educational Institute Summit.  The stage was set with Jason Steed, the moderator-maestro from Kilpatrick Townsend & Stockton LLP, orchestrating the discussion that featured legal luminaries Elaine J. Goldberg of Munger, Tolles, & Olson, and John P. Ellwood of Arnold & Porter.

The conversation kicked off with a riveting exploration of emerging themes and trends.  Mr. Steed, in tune with the pulse of the Supreme Court, hinted at a potential appetite among certain justices to up the ante on the number of merits cases per term.  This intriguing tidbit surfaced from a noteworthy remark by Justice Brett Kavanaugh during his keynote address, envisioning the Court comfortably handling around 75 cases per term, a departure from its current average of fewer than 60.

The panelists, legal virtuosos in their own right, delved into the possibility of continued seismic shifts in precedent, fueled by the Court’s current composition and the potential for newer members to sway the legal pendulum.

Ms. Goldberg brought a touch of drama to the stage, emphasizing that several cases before the Court have the power to “rock the foundation” of entrenched realms like administrative law.  The air was thick with anticipation as the panelists cautioned against making assumptions about voting alignments.  The enigmatic jurisprudence of newer members, such as Justices Ketanji Brown Jackson and Amy Coney Barrett, adds an element of unpredictability.  Both justices have shown a propensity to dance to their own legal tune, voting outside conventional alignments.  It’s a legal dynamic that Mr. Elwood likened to “[Justice] Kennedy before Casey,” leaving the legal enthusiasts in the room eagerly awaiting the next act in this judicial drama.

The panel next delved into the riveting First Amendment showdown between the controversial use of public officials’ personal social media accounts to conduct government business and the free speech rights of public officials and constituents who disagree with them.  Two headline-grabbing cases, O’Connor-Ratcliff v. Garnier and Lindke v. Freed, took center stage, raising the crucial question of whether public officials’ actions on social media should be deemed “state action” subject to the First Amendment.

Ms. Goldberg adeptly explained the prohibition against government officials blocking access to public forums based on viewpoints.  Complexity arises, she noted, in the digital age, because social media can blur the lines between personal and official communications, potentially transforming them into “state action.”  The panel dissected the oral arguments of both cases, conducted in a marathon three-hour session, exploring the delicate balance the justices grappled with—should the determination of “state action” focus on the “appearance” or “purpose” of an official’s social media page, as perceived by the public?

Mr. Elwood voiced concerns about a ruling that could overreach, stifling free speech.  Meanwhile, Mr. Steed and Ms. Goldberg pointed out the backdrop of the cases, influenced by former President Trump’s Twitter saga and Representative Alexandria Ocasio-Cortez’s use of social media for official business.  In a moment of levity, Mr. Steed shared his own experience of being blocked from a U.S. Senator’s social media account, highlighting the real-world impact of these legal debates.  Ms. Goldberg foresaw a ruling involving a “fuzzy multifactor test,” offering lower courts flexibility for case-specific determinations.  Consensus emerged among the panelists that the elusive demarcation line may cause officials to maintain distinct personal and official social media accounts, compelled either by the Supreme Court’s decision or as a “best practice.”

The discussion then pivoted to the intriguing intersection of Trademark law and the First Amendment in Vidal v. Elster.  Promising further legal intricacies and intellectual stimulation, Mr. Steed set the stage by explaining two predecessor cases, Matal v. Tam and Iancu v. Brunetti.  In Tam, the Supreme Court addressed the constitutionality of the Lanham Act’s provision prohibiting the registration of trademarks that may “disparage or bring into contempt or disrepute any persons, living or dead.”  Simon Tam, the frontman for the Asian-American rock band “The Slants,” sought to register the band’s name as a trademark.  The U.S. Patent and Trademark Office (USPTO) denied the application, considering the term “slants” offensive.  The Supreme Court disagreed, unanimously holding that the disparagement clause of the Lanham Act violated the Free Speech Clause of the First Amendment.  The Court emphasized the principle that speech may not be banned on the grounds that it expresses ideas that offend.  The decision had broader implications, signaling a shift towards protecting potentially offensive or disparaging trademarks under the umbrella of free speech.

Building on the precedent set by Tam, the Supreme Court in Brunetti tackled the issue of the Lanham Act’s ban on registering trademarks that consist of “immoral” or “scandalous” matter. Erik Brunetti, a streetwear clothing designer, sought to register the trademark “FUCT” for his brand.  The USPTO refused registration, deeming the mark immoral or scandalous.  In a decisive 6-3 ruling, the Supreme Court sided with Brunetti, holding that the prohibition on immoral or scandalous trademarks was an unconstitutional restriction on free speech.  The majority opinion echoed the reasoning from Tam, stating that the government’s refusal to register such trademarks amounted to viewpoint discrimination.

Together, the Tam and Brunetti decisions established a strong constitutional protection for trademarks considered offensive, disparaging, immoral, or scandalous.  The Supreme Court’s recognition of First Amendment rights in the realm of trademark registration has opened up avenues for more diverse and controversial expressions in the marketplace, challenging traditional notions of what is acceptable for trademark protection.

In comes Vidal v. Elster.  As Mr. Steed explained, Mr. Elster, spurred by a remark made by Senator Marco Rubio during a 2016 presidential primary debate, sought to register the phrase “TRUMP TOO SMALL” to sell T-shirts.  But the USPTO rejected the registration, citing potential confusion with the former president’s identity.  The pivotal question raised is whether this denial infringed Mr. Elster’s right to free speech, particularly when criticizing a public figure.

During the discussion, panelists pondered the impact of the decision on speech, emphasizing that Mr. Elster can still sell shirts with the controversial phrase, and therefore the denial of trademark registration restricts exclusivity, not his ability to engage in the commercial activity of selling t-shirts emblazoned with the phrase.  As Mr. Steed noted, a ruling that sweeps too broadly could have the perverse effect of restricting speech, as granting a trademark to Mr. Elster would prevent anyone else from using the phrase.  The panelists’ debate delved into the broader implications of allowing such phrases to be trademarked, potentially limiting the use of language critical of public figures.  The panelist also remarked that during the oral argument, which took place the day before the panel, the justices’ focus on the “public figure” factor added another layer of complexity to the case, prompting speculation about its broader implications.

Led by Mr. Elwood, the panel then shifted gears to discuss what may be two of the seminal cases of the 2023 Term, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, which navigate the choppy waters of Chevron deference.  On the surface the cases may seem mundane: they involve an agency rule that obligates fishing vessel owners to cover the costs of government-mandated observers aboard their vessels.  The fishing companies challenged the rule, arguing that it overstepped the bounds of the Magnuson-Stevens Act, which does not itself impose a duty on fishing companies to pay for government-mandated observers.  The Chevron doctrine, which grants agencies interpretive authority and requires courts to defer to reasonable agency interpretations of ambiguous statutory provisions, played a key role in the lower courts’ decisions.  The question posed to the Supreme Court challenges the continued application of Chevron deference or, at the least, seeks clarification of when it should apply when a statute is silent on the issue.  

As panelists, including Mr. Elwood noted, Chevron is a 40-plus year-old precedent and the “third most cited case in history.”  Because agency rules and regulations govern virtually every aspect of personal and commercial life, the panelists’ emphatic concerns about the status of Chevron were not hyperbolic.  They noted the 70 or so amicus briefs filed in the case, and the likelihood that the Court granted certiorari in Relentless, which presents the identical issue based on substantially similar facts, because Justice Jackson is recused from Loper (decided when she was on the D.C. Circuit), and the weight of its potential ruling warrants participation by all nine members of the Court.  The real issue then, according to the panelists, is whether Chevron’s demise will be death by a thousand cuts or sharp push off a high cliff.

The panel discussed another case likely to rattle the administrative state, Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited.  This case involves the funding mechanism for consumer watch dog agency the Consumer Financial Protection Bureau (CFPB).  In June 2020, the CFPB issued a new Payday Lending Rule after the Supreme Court decided Seila Law LLC v. CFPB.  This new rule stirred the waters by rescinding the original rule’s underwriting provisions while keeping its payment provisions intact.  Two associations representing companies subject to the regulation responded by challenging the law on several grounds, including that the CFPB’s funding mechanism infringes the Appropriations Clause and the separation of powers.  The crux of their argument is that the CFPB, in its insulated state, operates without sufficient congressional supervision.  

As Ms. Goldberg explained, the rationale for the new rule is arguably rooted in the Appropriations Clause argument that funds cannot be disbursed from the Treasury without explicit congressional approval, and as long as a statute caps the funds an agency can receive, there is no violation of the Appropriations Clause.  She also noted the mixed-bag created by the circuit court’s ruling upholding the Payday Lending Rule’s payment provisions as within the CFPB’s statutory authority, while also siding with the associations view that the Bureau’s funding mechanism, as outlined in 12 U.S.C. 5497, violates the Appropriations Clause and the principles of separation of powers because a mere funding source and spending authority do not suffice; an explicit appropriation is imperative.  As the panelists explained, echoing questions posed by the justices during oral argument in October, the pivotal question that looms over this legal battle is whether the Supreme Court will determine that the statute providing funding to the CFBP violates the Appropriations Clause, setting the stage for a legal showdown, with profound implications for the regulatory landscape and the powers vested in financial oversight agencies.

The panel next turned the spotlight to SEC v. Jarkesy, a case that may determine the SEC’s regulatory authority and ability to enforce penalties through administrative actions.  Mr. Elwood walked the audience through this legal saga in which Mr. Jarkesy, accused of securities law violations, found himself in the crosshairs of the SEC.  The allegations ranged from misrepresentation to inflating fund values, ultimately leading to a legal battle challenging the SEC’s administrative proceedings on constitutional grounds.  The plot thickened with Mr. Jarkesy’s hedge funds amassing a hefty $24 million in assets.  The SEC claimed securities law violations, including false claims about audit firms and prime brokers.  Despite challenges, the SEC pressed on with administrative proceedings.  As Ms. Elwood noted, the drama took a turn after the Supreme Court’s Lucia v. SEC decision, highlighting issues with the appointment of Administrative Law Judges (ALJs).

The panelist previewed the burning questions before the Court: Does the SEC’s power to impose civil penalties infringe on the Seventh Amendment right to a trial by jury?  Has Congress overstepped by giving the SEC too much discretion in choosing between administrative and judicial enforcement?  And does the protection of for-cause removal of ALJs violate Article II?  As Mr. Elwood noted, the Supreme Court has not used the nondelegation doctrine to invalidate a statute since 1935.  With at least four members of the Court inclined to revisit the doctrine, he said the time may be now. 

Moving on from the administrative state, the panel turned to Murray v. UBS Sec., LLC, a tale of corporate intrigue.  Mr. Murray, a former research strategist in UBS’s commercial mortgage-backed securities business, faced termination after reporting misconduct to his supervisor alleging that he was pressured to manipulate research to address potential investor concerns.  Mr. Murray alleged that his termination followed this report, leading him to file a whistleblower complaint with the U.S. Department of Labor (DOL), citing a violation of the Sarbanes-Oxley Act (SOX).  When the DOL failed to process his claim within the stipulated 180 days, he filed a de novo action in district court.  Despite a favorable verdict from the jury, the court’s omission to instruct on the necessity for proving retaliatory intent became a focal point.  The Second Circuit intervened, deeming it an error and reversed the decision.

As Ms. Goldberg noted, it is difficult to understand the importance of this case without an understanding of the Enron scandal, collusion between the famed Houston-based energy-trading and utility company and its accounting firm, that gave rise to SOX.  It is against that backdrop that the Supreme Court now grapples with the burden-shifting framework in SOX cases, questioning whether a whistleblower must bear the burden of proving retaliatory intent in his initial case or if it is the employer’s responsibility to establish the absence of such intent as part of its defense.  Remarking on the justices’ skepticism of the government’s position during oral argument, Ms. Goldberg noted that this decision could transform the standard for whistleblower claims, potentially reshaping the landscape of whistleblower protection and the burden of proof in similar cases across federal whistleblower laws in various sectors, including transportation, consumer protection, and healthcare.  She also noted that the government asked for Chevron deference—we’ll see how that lands.

Finally, the panel concluded with a discussion of United States v. Rahimi, taking us into the difficult terrain of gun rights and domestic violence restraining orders.  The Supreme Court now finds itself at the epicenter of a high-stakes clash over the right to bear arms and the government’s authority to restrict gun ownership by domestic violence abusers: whether a federal statute prohibiting individuals under such orders from possessing firearms infringes on their Second Amendment rights. 

The case casts a spotlight on Mr. Rahimi, a figure whose turbulent history is now under the legal microscope.  Having previously assaulted his then-girlfriend and engaged in gunfire during a heated altercation, he found himself at the receiving end of a civil protective order.  The order, which prohibited him from approaching or threatening his ex-girlfriend, revoked his handgun license, and banned him from possessing firearms, failed to deter his alarming actions.  Over the next year and a half, he not only defied the protective order by attempting to approach his ex-girlfriend multiple times but also left a trail of chaos in five separate shootings, including firing a gun in a neighborhood with children present and unleashing a barrage of shots in a fast-food restaurant after a credit card dispute.

Law enforcement, armed with a search warrant, eventually found and seized two firearms from Mr. Rahimi’s residence.  A federal grand jury indicted him for violating 18 U.S.C. § 922(g)(8), a statute that bars individuals under domestic violence protective orders from possessing firearms.  He moved to dismiss the indictment on Second Amendment grounds, which the district court denied.  The legal saga took an unexpected turn when the Fifth Circuit initially upheld that decision but later reversed after the Supreme Court’s landmark 2022 Bruen decision, which struck a New York concealed-carry law and established a history-and-tradition analysis for determining whether gun regulations violate the Second Amendment.  Mr. Steed noted that lower courts have since struggled to apply Bruen’s methodology.

The panelists agreed that Mr. Rahimi’s challenge to the constitutionality of the statute under the Second Amendment has sparked a legal showdown that could reshape the landscape of gun rights in an era of unprecedented U.S. gun violence. 

As the panelists wrapped up their engaging and intellectually stimulating discussion of what could be considered the most crucial and high-profile cases of the term, the room filled with a rapturous round of well-deserved applause.  The collective insight shared during this discourse left us with a heightened awareness of the importance surrounding these significant legal matters, reminding us of the profound impact they will have on our collective future.  In the closing moments of this thought-provoking exchange, one couldn’t help but reflect on the depth of understanding gained and anticipate the unfolding implications that these cases will have on the legal landscape for years to come.

Chantel L. Febus

Dykema Gossett PLLC

Chantel L. Febus serves as Dykema Gossett PLLC’s Head of East Coast Appeals.  As a Member of the Appellate and Critical Motions, Business Litigation, and Government Investigations and Corporate Compliance practices, Chantel partners with clients to navigate novel legal issues and emergent legal challenges.  In addition to 15 years of law firm practice in Washington, D.C., and New York, and service as a federal prosecutor with the United States Department of Justice, Criminal Division, Chantel clerked for The Honorable Clarence Thomas, Associate Justice, United States Supreme Court, The Honorable Edith H. Jones, United States Court of Appeals for the Fifth Circuit, and The Honorable Royce C. Lamberth, United States District Court, District of Columbia.

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