Reply Brief — Lisa M. Phoenix, Petitioner v. Regions Bank

No. 19-815

In the Supreme Court of the United States

LISA M. PHOENIX, PETITIONER

v.

REGIONS BANK

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

REPLY BRIEF FOR THE PETITIONER

DANIEL R. ORTIZ

UNIVERSITY OF VIRGINIA

SCHOOL OF LAW SUPREME

COURT LITIGATION CLINIC

580 Massie Road

Charlottesville, VA 22903

MARK T. STANCIL

Counsel of Record

WILLKIE FARR & GALLAGHER

LLP

1875 K Street, NW

Washington, DC 20006

(202) 303-1000

mstancil@willkie.com

MATTHEW M. MADDEN

DONALD BURKE

ROBBINS, RUSSELL, ENGLERT,

ORSECK, UNTEREINER &

SAUBER LLP

2000 K Street, NW, 4th Floor

Washington, DC 20006

(202) 775-4500

TABLE OF CONTENTS

Page

A.

B.

The question presented warrants review ............ 2

This case is a sound vehicle ................................. 5

TABLE OF AUTHORITIES

Cases:

Chevron U.S.A., Inc. v. Natural Resources Def.

Council, Inc., 467 U.S. 837 (1984) ............................. 5

Comerica Bank v. Pars Ice Cream Co., No.

338955, 2018 WL 6625171 (Mich. Ct. App. Dec.

18, 2018), appeal denied, 929 N.W.2d 350

(Mich. 2019) ................................................................ 4

Cutter v. Wilkinson, 544 U.S. 709 (2005) ............... 7, 11

Hawkins v. Community Bank of Raymore, 136 S.

Ct. 1072 (2016) ............................................................ 1

Hawkins v. Community Bank of Raymore, 761

F.3d 937 (8th Cir. 2014), aff’d by an equally

divided Court, 136 S. Ct. 1072 (2016) ........................ 9

Kaminsky v. Equity Bank, No. 17-CV-573-TCKFHM, 2018 WL 6011658 (N.D. Okla. Nov. 16,

2018) ............................................................................ 4

Manuel v. City of Joliet, 137 S. Ct. 911 (2017) ............. 7

Mares v. Outsource Receivables Mgmt., Inc., No.

1:19-cv-0004, 2019 WL 2248106 (D. Utah May

24, 2019) .................................................................. 4, 5

Moran Foods, Inc. v. Mid-Atlantic Mkt. Dev. Co.,

476 F.3d 436 (7th Cir. 2007) ...................................... 3

RL BB Acquisition, LLC v. Bridgemill Commons

Dev. Grp., LLC, 754 F.3d 380 (2014) ..................... 2, 9

Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d

678 (11th Cir. 2014) .................................................... 7

Timbs v. Indiana, 139 S. Ct. 682 (2019) ................. 5, 10

United States v. Stitt, 139 S. Ct. 399 (2018)................. 7

United States v. Williams, 504 U.S. 36 (1992) ............. 8

(I)

II

Case—Continued:

Page

Virginia Bankshares, Inc. v. Sandberg, 501 U.S.

1083 (1991) .................................................................. 8

Statute:

15 U.S.C. § 1961a(b) ...................................................... 3

Miscellaneous:

38A C.J.S. Guaranty (2008) .......................................... 4

Stephen M. Shapiro et al., Supreme Court

Practice (11th ed. 2019) ............................................. 9

In the Supreme Court of the United States

No. 19-815

LISA M. PHOENIX, PETITIONER

v.

REGIONS BANK

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

REPLY BRIEF FOR THE PETITIONER

In the decision below, a divided panel of the court

of appeals invalidated Regulation B’s definition of the

term “applicant,” which has long ensured that the applicants protected from discrimination by the Equal

Credit Opportunity Act (ECOA) include guarantors.

This Court’s intervention is needed, just as it was in

Hawkins v. Community Bank of Raymore, 136 S. Ct.

1072 (2016), where the Court granted certiorari to resolve the same question that is presented here before

ultimately dividing 4-4. Indeed, the question presented is so manifestly worthy of this Court’s review

that respondent hardly contends otherwise. Respondents instead devotes the bulk of its brief in opposition

to arguing that this case is not a suitable vehicle for

resolving the question presented. See Br. in Opp. 718. But the court of appeals’ judgment rests exclusively on the panel majority’s conclusion that “a guarantor is not an ‘applicant’ for credit within the meaning of ” ECOA. Pet. App. 7a; see also id. at 30a.

Although respondent now contends (Br. in Opp. 8)

(1)

2

that the majority “recognized” a potential alternative

ground for the district court’s decision, that contention

rests on a selective quotation of the majority’s opinion,

and respondent does not even urge that the court of

appeals’ judgment rests on any alternative ground of

the sort that could impede review by this Court.

The validity of Regulation B’s definition of “applicant” is squarely presented in this case. This Court

should grant review to resolve that important question.

A. The Question Presented Warrants Review

The court of appeals’ decision invalidating Regulation B’s definition of “applicant” warrants review by

this Court because it deepens a circuit conflict, is incorrect, and presents an important and recurring issue of federal law. Pet. 8-22. Respondent’s contrary arguments lack merit.

1. Respondent acknowledges (Br. in Opp. 18) that

the decision below conflicts with the Sixth Circuit’s

decision in RL BB Acquisition, LLC v. Bridgemill

Commons Development Group, LLC, 754 F.3d 380

(2014). Respondent nevertheless contends that review

is unwarranted because the circuit conflict is “shallow.” Br. in Opp. 18. But the same could have been

said, with added force, when this Court granted certiorari in Hawkins. See Pet. 8-9 (describing 1-1 circuit

split, between the Sixth and Eighth Circuits, when

this Court granted review in Hawkins). Respondent

does not even attempt to explain how, if this Court’s

review was warranted then, it would not be even more

necessary now that the circuit conflict has deepened.

Respondent errs in contending (Br. in Opp. 19)

that the circuit conflict is too “lopsided” to warrant review. Respondent reaches that conclusion by counting

the Seventh Circuit among those courts of appeals

3

that have refused to defer to Regulation B’s definition

of “applicant.” Id. at 15, 18 (citing Moran Foods, Inc.

v. Mid-Atlantic Mkt. Dev. Co., 476 F.3d 436, 441 (7th

Cir. 2007)). But respondent fails to address, let alone

rebut, our explanation that the Seventh Circuit’s comments in Moran regarding Regulation B’s definition

were dicta. See Pet. 9 n.5. In any event, respondent

does not offer any basis to conclude that a 3-1 circuit

conflict would not warrant this Court’s review.

Nor is there any basis for respondent’s suggestion

(Br. in Opp. 18) that the Sixth Circuit might someday

reconsider its position on the question presented to

align it with other circuits. The possibility of en banc

review is always highly speculative, and respondent

provides no reason to believe that the Sixth Circuit is

likely to revisit the issue en banc. To the contrary, this

Court’s equally divided decision in Hawkins suggests

that, if anything, this issue is a particularly unlikely

candidate for en banc review, given that the merits of

the Sixth Circuit’s position were strong enough to attract the votes of four Justices of this Court.

2. Respondent briefly defends (Br. in Opp. 19-22)

the panel majority’s holding that ECOA’s definition of

“applicant” unambiguously excludes guarantors. But

respondent’s preview of its merits-stage arguments offers no basis to deny plenary review, especially in light

of this Court’s equally divided decision in Hawkins.

That finely poised disposition confirms that the question presented here poses a substantial issue on the

merits that should be resolved by this Court.

Respondent’s merits arguments are also unpersuasive. ECOA defines an “applicant” as a person who

“applies” for credit, 15 U.S.C. § 1961a(b), and to “apply” for something ordinarily means to make a request

4

for it, see Pet. 11-12. Like the panel majority, respondent errs in asserting (Br. in Opp. 20) that a guarantor

does not request credit. As the petition explains (Pet.

12), it has long been understood that a guarantor impliedly requests the extension of credit to the primary

borrower. See, e.g., 38A C.J.S. Guaranty § 26 (2008).

There is no requirement that, to qualify as an “applicant,” one must not only request credit but must also

request credit for oneself. Contra Br. in Opp. 20. That

erroneous understanding rests on a single dictionary’s

idiosyncratic definition of “apply,” see Pet. 14-15, and

thus violates respondent’s own admonition that a statutory term ordinarily should not be given an “unusual

meaning,” Br. in Opp. 21 (quoting Pet. App. 18a).

3. This Court’s grant of review in Hawkins also refutes respondent’s suggestion (Br. in Opp. 19) that the

question presented lacks sufficient practical importance to warrant review. As the petition explains,

moreover, the question presented arises frequently,

and the court of appeals’ invalidation of an important

federal regulation independently warrants review.

See Pet. 21-22 & n.10.*

Contrary to respondent’s contention (Br. in Opp. 19 n.6), the

examples collected in the petition (Pet. 21-22 n.10) show that

courts have repeatedly confronted the question presented here in

the few years since Hawkins. In Kaminsky v. Equity Bank, No.

17-CV-573-TCK-FHM, 2018 WL 6011658 (N.D. Okla. Nov. 16,

2018), the court’s disposition of the motion to transfer venue

turned on its conclusion that the transferee district court had deferred to Regulation B’s definition of “applicant.” See id. at *3

n.1. The court in Comerica Bank v. Pars Ice Cream Co., No.

338955, 2018 WL 6625171 (Mich. Ct. App. Dec. 18, 2018), appeal

denied, 929 N.W.2d 350 (Mich. 2019), expressly “follow[ed] the

Sixth Circuit’s” decision deferring to Regulation B’s definition of

“applicant,” albeit before rejecting the plaintiff’s claim on evidentiary grounds. Id. at *9 n.9. And in Mares v. Outsource Receivables Management, Inc., No. 1:19-cv-0004, 2019 WL 2248106 (D.

*

5

4. Contrary to respondent’s contention (Br. in Opp.

22-23), certiorari is warranted regardless of any

doubts that may exist about the continuing viability

of this Court’s decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984). As respondent acknowledges, the question

whether Chevron should be reconsidered “was not

raised, briefed, or decided below.” Br. in Opp. 22. This

case therefore does not present any occasion to address that question. See Timbs v. Indiana, 139 S. Ct.

682, 690 (2019) (declining to address an argument

that was “neither pressed nor passed upon below”).

And respondent’s implicit speculation that Chevron

may one day be reconsidered in some other case does

not counsel against a grant of certiorari to correct the

court of appeals’ misapplication of Chevron deference

in this one.

B. This Case Is A Sound Vehicle

1. This case provides a sound vehicle for resolving

the question presented. See Pet. 22. In the decision

below, the panel majority held “that the district court

correctly granted summary judgment against [petitioner’s] counterclaims because a guarantor is not an

‘applicant’ for credit under” ECOA. Pet. App. 30a. The

majority did not advance any other ground for its decision. Because the court of appeals’ judgment rests

exclusively on the majority’s conclusion that a guarantor cannot qualify as an “applicant” protected by

ECOA, the validity of Regulation B’s definition is

squarely presented for this Court’s review.

Utah May 24, 2019), the court carefully parsed whether the

plaintiff qualified as a guarantor, id. at *3, an inquiry that would

have been irrelevant if, as respondent contends, a guarantor cannot pursue a claim under ECOA.

6

2. Respondent presses a series of vehicle arguments, but none establishes any impediment to this

Court’s review.

a. Respondent first contends (Br. in Opp. 7-9) that

resolution of the question presented would not affect

the outcome of this case because, in respondent’s view,

petitioner failed to challenge an alternative basis for

the district court’s decision in her briefing before the

court of appeals. That argument is premised on the

district court’s statement that petitioner’s ECOA

claim failed “because, aside from the lack of any evidence to establish any alleged discrimination on the

basis of marital status, she was not an ‘applicant’ for

the Periwinkle loan, she was a guarantor.” Pet. App.

85a. According to respondent, the district court’s comment about the evidentiary record—in a single, prefatory clause to its ruling on the validity of Regulation

B’s definition—offers an alternative ground for that

court’s judgment.

Notably, however, respondent does not contend

that the court of appeals rested its judgment on a conclusion that petitioner had not presented sufficient evidence of discrimination. Respondent had advanced

that argument as an alternative ground for affirmance, see Resp. C.A. Br. 35-39, but the panel majority did not reach it because the majority concluded

that, as a guarantor, petitioner could not pursue a

claim under ECOA, see Pet. App. 7a, 30a. To state the

obvious, this Court routinely grants review of cases in

which the court of appeals has not reached one or

more alternative arguments pressed by the respondent below. The Court’s usual procedure in such cases

is to resolve the question presented and, if the petitioner prevails, to remand for the court of appeals to

7

address any alternative arguments in the first instance. See Cutter v. Wilkinson, 544 U.S. 709, 718 n.7

(2005) (“[W]e are a court of review, not of first view.”);

see also, e.g., United States v. Stitt, 139 S. Ct. 399,

407-408 (2018); Manuel v. City of Joliet, 137 S. Ct.

911, 922 (2017). No different approach is warranted

here.

In an effort to establish that the outcome of this

case is a foregone conclusion regardless of this Court’s

resolution of the question presented, respondent suggests that the panel majority “recognized” the district

court’s comment about the evidentiary record as a

“‘sufficient alternative basis for the summary judgment.’” Br. in Opp. 8 (quoting Pet. App. 25a). But the

very next clause of the majority’s opinion—which respondent conspicuously fails to quote—observed that

“the district court did not clearly designate it as such.”

Pet. App. 25a. And elsewhere in its opinion, the majority explained that, if petitioner had prevailed on

her argument that a guarantor qualifies as an applicant under ECOA, she “would have convinced us that

the primary and arguably the only ‘stated ground for

the judgment * * * is incorrect’” as to counterclaim 11,

which alleged that respondent violated ECOA by requiring petitioner’s husband and his business to guarantee a loan to petitioner’s business. Id. at 26a (emphasis added) (quoting Sapuppo v. Allstate Floridian

Ins. Co., 739 F.3d 678, 680 (11th Cir. 2014)). In other

words, although the majority adverted to the possibility that there could be an alternative ground for the

district court’s decision, the majority’s opinion suggests considerable skepticism on that point. In all

events, the majority did not endorse any conclusion

that petitioner had not presented sufficient evidence

of discrimination. Respondent’s confidence (Br. in

8

Opp. 7) that “review of the question presented will not

affect the outcome of this case” is therefore misplaced.

b. There is no merit to respondent’s suggestion (Br.

in Opp. 9-14) that certiorari should be denied because

of a supposed lack of clarity in the decision below or in

petitioner’s briefing before the court of appeals. Respondent asserts that it is “unclear” whether the

panel majority addressed petitioner’s counterclaim 11, which underlies the petition for certiorari in

this case. Id. at 12. But in fact the majority’s opinion

is crystal clear. It held that petitioner “did not abandon her argument about counterclaims 11 and 12.”

Pet. App. 28a (emphasis added).

At bottom, respondent quarrels with the panel majority’s decision to reach the question presented. Invoking Judge Rosenbaum’s dissent, respondent contends that petitioner did not properly preserve a

challenge to the district court’s ruling that guarantors

cannot qualify as applicants within the meaning of

ECOA. Br. in Opp. 11, 13. But the panel majority carefully considered—and rejected—the dissent’s suggestion that petitioner had forfeited the issue. See Pet.

App. 24a-30a. And, in all events, that intramural debate between the panel majority and the dissent has

no bearing on the scope of the issues that are properly

presented for this Court’s review, which extends to all

issues that were “pressed or passed upon below.”

United States v. Williams, 504 U.S. 36, 41 (1992) (emphasis added). Indeed, the panel majority’s conclusion

that guarantors cannot qualify as applicants under

ECOA would be squarely presented for this Court’s review even if, contrary to fact, the majority had raised

the issue entirely sua sponte. See Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1099 n.8

9

(1991); Stephen M. Shapiro et al., Supreme Court

Practice § 6.26(b), at 6-104 (11th ed. 2019).

c. Respondent urges (Br. in Opp. 14) that review is

unwarranted because this case involves a supposedly

“uncharacteristic” fact pattern, in the sense that petitioner suffered harm because respondent, in violation

of ECOA, required that her husband and his business

serve as co-guarantors of a loan to petitioner’s business, rather than because of the requirement that petitioner herself guarantee the loan. Respondent is correct that, in the other court of appeals decisions that

have considered whether a guarantor can qualify as

an applicant under ECOA, the plaintiffs’ claims were

premised on the defendant creditor’s insistence that

the plaintiff serve as a guarantor. See Hawkins v.

Community Bank of Raymore, 761 F.3d 937, 939 (8th

Cir. 2014), aff’d by an equally divided Court, 136 S. Ct.

1072 (2016); RL BB Acquisition, 754 F.3d at 381-382.

But respondent does not explain how that factual distinction could have any bearing on the proper resolution of the question presented. Nor could it, given that

the question presented is a pure issue of statutory interpretation.

Respondent is also wrong to suggest (Br. in Opp.

17) that this case poses a distinct “threshold issue” as

to whether, apart from her status as a guarantor, petitioner “is the proper party to bring” a challenge under ECOA. As an initial matter, respondent did not

even raise that argument below. In the court of appeals, respondent argued that petitioner’s ECOA

claim was barred because of her status as a guarantor,

but it never contended that petitioner’s claim was

barred because it was premised on respondent’s insistence that petitioner’s husband and his business

10

serve as co-guarantors. See Resp. C.A. Br. 39-42. Likewise, the panel majority rejected petitioner’s ECOA

claim on the categorical ground that a guarantor is not

an applicant under ECOA. Pet. App. 7a. It did not rest

its decision on any other aspect of petitioner’s claim.

Respondent’s belated speculation about another

“threshold issue” therefore cannot insulate the decision below from review. See Timbs, 139 S. Ct. at 690.

Respondent’s speculation is meritless in any event.

When respondent required petitioner’s husband and

his business to serve as co-guarantors of the loan to

petitioner’s business, that violation of ECOA harmed

petitioner. Respondent appears to recognize that requiring the additional, interlocking guarantees

harmed petitioner by increasing the risk of a cross-default that would trigger petitioner’s obligations under

her own guarantee. See Br. in Opp. 17. Indeed, that is

precisely what came to pass when her husband’s business failed to make a required payment under a separate loan with respondent, and respondent then declared the loan to petitioner’s business to be in default.

See Pet. 5; Pet. App. 3a-4a. Moreover, respondent’s

ECOA violation denied petitioner the opportunity to

obtain credit for her business on non-discriminatory

terms, and it led to precisely the sort of entanglement

of spouses’ credit histories that ECOA was enacted to

prevent. See Pet. 18-19. Petitioner is therefore a

proper party to pursue a claim under ECOA.

Finally, even assuming that respondent’s additional argument was preserved and had some potential merit, this Court would not need to address it in

the first instance to correct the court of appeals’ error

in invalidating Regulation B’s definition of “applicant.” Consistent with its ordinary practice, the Court

could resolve the question presented and then remand

11

for consideration of any other issues as necessary. See

Cutter, 544 U.S. at 718 n.7; see also pp. 6-7, supra.

*****

For the foregoing reasons, and those stated in the

petition for a writ of certiorari, the petition should be

granted.

Respectfully submitted.

DANIEL R. ORTIZ

UNIVERSITY OF VIRGINIA

SCHOOL OF LAW SUPREME

COURT LITIGATION CLINIC

580 Massie Road

Charlottesville, VA 22903

MARK T. STANCIL

Counsel of Record

WILLKIE FARR & GALLAGHER

LLP

1875 K Street, NW

Washington, DC 20006

(202) 303-1000

mstancil@willkie.com

MATTHEW M. MADDEN

DONALD BURKE

ROBBINS, RUSSELL, ENGLERT,

ORSECK, UNTEREINER &

SAUBER LLP

2000 K Street, NW, 4th Floor

Washington, DC 20006

(202) 775-4500

APRIL 2020