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December 19, 2019 Articles

Breaking the Banc: Informal En Banc Review in the Seventh Circuit

A pair of recent dissents from denial of rehearing en banc have raised a debate about the scope and purpose of the Seventh Circuit's unique procedure.

By Michael Stewart

A new case always involves elements outside of an appellate advocate’s control. The record comes as it comes. Certain issues may have been forfeited or waived below. And in the federal courts of appeals, the composition of the panel can completely alter the look and outcome of a case, despite being completely beyond the control of either party. A favorably disposed set of judges, a hot or cold bench at argument, and the inclusion of a judge with particular interest in the subject matter can alter the challenge facing the advocate—and the outcome—in myriad ways.

For the small class of cases receiving en banc consideration in the courts of appeals, however, the uncertainty of court composition is largely removed. Except in the Ninth Circuit, where even en banc rehearing involves only a subset of the active judges on the court, en banc review removes the vicissitudes of the random appellate panel draw. And in all circuits, the broader array of voices and viewpoints that come to bear on a case during en banc consideration should lead to deeper engagement of the issues presented by the case and provide additional stability to the outcome within a given circuit. 

But formal en banc rehearing is not the only way for a panel decision to face review by the circuit’s full active membership. Several courts of appeals have what have been called “informal” or “mini” en banc procedures, whereby panel opinions that might ordinarily be considered for en banc review—because, for example, they overrule circuit precedent based on an intervening Supreme Court decision—are circulated for consideration by all active judges on the court before the panel opinion is published. See Amy E. Sloan, The Dog That Didn’t Bark: Stealth Procedures & the Erosion of Stare Decisis in the Federal Courts of Appeals, 78 Fordham L. Rev. 713, 726–28 (2009).

The Seventh Circuit has taken this practice a step further. There, Circuit Rule 40(e) requires that any proposed panel opinion that would either overrule a prior Seventh Circuit decision or create a new circuit split must be circulated to all active members of the court before the opinion is published, to allow them an opportunity to call for en banc rehearing if they think it is merited. Rule 40(e) also permits, but does not require, circulation of opinions that would establish a new rule or procedure. Opinions circulated under this rule and not set for en banc rehearing are identified by a footnote in the opinion’s text.

While this rule of Seventh Circuit practice has not historically been contentious, a pair of recent dissents from denial of rehearing en banc have raised a debate about Rule 40(e)’s scope and purpose. And while the Rule 40(e) debate is most relevant to the Seventh Circuit, the question raises important considerations for practitioners in all federal courts of appeals.

The En Banc Basics

Whether to grant en banc review is the rare discretionary docketing decision for the courts of appeals, which generally have mandatory jurisdiction over appropriate appeals from district courts and federal agencies.

The Federal Rules of Appellate Procedure lay out grounds for granting en banc review that generally mirror, on the circuit level, the Supreme Court’s rules for granting a writ of certiorari. That is, where the Supreme Court typically grants certiorari on questions that have divided federal circuits or state supreme courts, or present new and important questions of federal law, see Sup. Ct. R. 10, en banc rehearing in the circuit courts ordinarily is granted only in order to maintain uniformity within a circuit’s decisions, unless the case “involves a question of exceptional importance,” Fed. R. App. P. 35(a). While neither the Supreme Court nor the courts of appeals are explicitly limited to granting further review in these circumstances, the relatively low rates of certiorari grants (2.8 percent in 2017) and grants of rehearing en banc (which typically comprise well less than 1 percent of all cases decided by the courts of appeals) suggest that courts police these boundaries strictly.

Unlike when the Supreme Court grants certiorari, however, the court of appeals panel hearing a case does not bow out if en banc rehearing is granted. Indeed, although participation in an en banc vote or in an en banc rehearing is typically limited to active members of the court, statute provides senior judges who participated in the panel decision the right to sit on an en banc panel reviewing the same case. See 28 U.S.C. § 46(c).

The majority of circuits have, a least once, used an informal procedure to circulate panel opinions to the en banc court for consideration before publication. See Alexandra Sadinsky, Note, Redefining En Banc Review in the Federal Courts of Appeals, 82 Fordham L. Rev. 2001, 2025 (2014). A smaller number of circuits, such as the Second Circuit, have used the procedure regularly or as a meaningful part of their standard practice. See Sloan, supra, at 728. However, only two circuits have formalized the practice in some form: the D.C. Circuit in a 1996 policy statement, and the Seventh Circuit in Rule 40(e). See id. at 729.

Shifting Sands in the Seventh Circuit

Though unique, Rule 40(e) has largely been an uncontroversial piece of Seventh Circuit practice. But a rift began to open in June of this year when the court declined rehearing after Rule 40(e) circulation of an opinion holding that a debtor had not suffered an injury in fact sufficient to confer standing in a case under the Fair Debt Collection Practices Act (FDCPA). See Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329 (7th Cir. 2019). The opinion, written by Judge Barrett, created a split with the Sixth Circuit over a debtor’s standing requirements under the FDCPA.

Chief Judge Wood, joined by Judges Rovner and Hamilton, dissented from the denial of rehearing en banc. In addition to questioning the correctness of the opinion, Chief Judge Wood, who was not on the panel, wrote that the lack of standing in the case was “not so self-evident that we should resolve it using the truncated Rule 40(e) process.” Id. at 340. Rather, neither the case nor the Seventh Circuit’s statutory standing decisions more generally were so clear, the chief judge wrote, suggesting that the court “should instead have a full adversarial presentation before the en banc court.” Id. (Wood, C.J., dissenting from the denial of rehearing en banc).

Joined again by Judges Rovner and Hamilton in Federal Trade Commission v. Credit Bureau Center, LLC, Chief Judge Wood returned more forcefully to the theme that Rule 40(e) should not be a substitute for formal en banc review in cases with substantial merits questions. — F.3d —, 2019 WL 3940917 (Aug. 21, 2019). Making Rule 40(e) circulation the extent of the full court’s consideration of substantial questions, the chief judge wrote in a dissent from denial of rehearing en banc, undermines the benefits of oral argument and the adversarial process.

Written by Judge Sykes, Credit Bureau Center overruled 30-year-old circuit precedent when it held that section 13(b) of the Federal Trade Commission Act, 15 U.S.C. § 53(b), does not authorize the FTC to seek restitution from individuals who violate laws enforced by the FTC. In doing so, the opinion also converted what had been the unanimous alignment of nine circuits allowing the FTC to seek restitution awards into an 8-1 circuit split—almost surely putting the question back on the docket in other circuits and possibly paving a path to the Supreme Court.

Because Credit Bureau Center both created a circuit split and overruled circuit precedent, the panel was required to circulate its opinion to all active members of the court under Rule 40(e). It failed to secure the votes for en banc consideration. The panel argued that the case’s outcome was compelled by intervening Supreme Court guidance that “displace[d] the rationale” of the earlier Seventh Circuit decision on point. See Credit Bureau Center, 2019 WL 3940917, at *9.

Chief Judge Wood’s dissent from denial of rehearing en banc focused first and foremost on the use of Rule 40(e) rather than full en banc rehearing, even before turning to the merits of the decision. Rule 40(e), the chief judge wrote, was meant to “highlight” new circuit splits and to “clean up earlier decisions whose soundness has been undermined” by new legislation, a Supreme Court decision, or further percolation in other circuits. Id. at *18 (Wood, C.J., dissenting). Overuse, however, could “defeat[] our profound commitment to oral argument—a commitment that sets us apart from most of the other circuits, and one that consistently improves the quality of our decisionmaking.” Id.

It would be easy to see the divide over Rule 40(e) as a symptom of a changing court. All four of the Seventh Circuit judges appointed since 2016 voted against en banc reconsideration, signaling that they may view the utility of Rule 40(e) differently than longer-tenured members of the court. But only half of the judges of longer standing voted for rehearing en banc in Casillas and Credit Bureau Center, with Judges Easterbrook, Flaum, and Sykes all voting against—suggesting that the divide over Rule 40(e), and support for expanded use of Rule 40(e) in place of plenary en banc review, may run deeper than a simple analysis of a judge’s tenure might suggest. And while ideology also may provide a partial answer, given that a judge who agrees with a panel’s decision may see less utility in calling for formal en banc review, the procedural and adversarial values highlighted in Chief Judge Wood’s opinions are ostensibly ideologically neutral. Whether Rule 40(e) continues to be used in circumstances that allow for substantial disagreements on the merits will be worth tracking.

Informal En Banc Practice

One of the most striking features of informal en banc procedures like Rule 40(e) is that they cut the advocate out of the en banc petition process. While a petition for en banc rehearing is not foreclosed by Rule 40(e) circulation, the signal to counsel that it likely will not succeed is clear. There is surely some irony that cases like Casillas and Credit Bureau Center, based on their relative importance and the circuit splits they create, would typically have better (albeit still slim) chances of en banc rehearing than the average case. But unlike other cases, the decision is made before counsel have the opportunity to file a petition that clearly frames the request.

Counsel should therefore be aware of these en banc–related issues at the panel briefing stage, when their case presents the potential for informal en banc treatment in the circuits that apply it—whether because the case could create a circuit split or calls on the court to overrule prior precedent. Advocates in cases that could deepen circuit splits or present new and noteworthy issues of first impression should also key into this possibility—and bear in mind that the audience for their briefing may extend beyond the panel. As recent Seventh Circuit experience shows, there may not be another chance to present the issue to the circuit court, so effective presentation of potential en banc issues at the panel stage may take on greater importance than ever before.

Michael Stewart is lead counsel, regulatory at Facebook in Washington, D.C.

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