Congressional Court Watcher: Recent Appellate Decisions of Interest to Lawmakers (April 29–May 5, 2024)

Legal Sidebari

Congressional Court Watcher: Recent

Appellate Decisions of Interest to Lawmakers

(April 29–May 5, 2024)

May 6, 2024

The federal courts issue hundreds of decisions every week in cases involving diverse legal disputes. This

Sidebar series selects decisions from the past week that may be of particular interest to federal lawmakers,

focusing on orders and decisions of the Supreme Court and precedential decisions of the courts of appeals

for the thirteen federal circuits. Selected cases typically involve the interpretation or validity of federal

statutes and regulations, or constitutional issues relevant to Congress’s lawmaking and oversight

functions.

Some cases identified in this Sidebar, or the legal questions they address, are examined in other CRS

general distribution products. Members of Congress and congressional staff may click here to subscribe to

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attorneys.

Decisions of the Supreme Court

Last week, the Supreme Court granted certiorari in four cases:

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Civil Liability: The Court granted certiorari in a case from the Second Circuit on

whether a trucker who consumed a hemp-derived product marketed as free from

tetrahydrocannabinol (THC), then lost his job following a positive drug test, could sue

the product marketer for damages, including lost wages, under the Racketeer Influenced

and Corrupt Organizations Act (RICO), which creates a civil treble-damages action for

those injured in their “business or property by reason of” certain offenses (Med.

Marijuana, Inc. v. Horn).

Civil Procedure: The Court agreed to hear a case from the Eighth Circuit to consider

whether, following a defendant’s removal of a case from state to federal court, a

plaintiff’s post-removal amendment of the complaint to omit the federal questions

eliminates federal subject-matter jurisdiction under 28 U.S.C. § 1331 and supplemental

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jurisdiction over the plaintiff’s remaining state-law claims under 28 U.S.C. § 1367 (Royal

Canin U.S.A., Inc. v. Wullschleger).

Immigration: The Court agreed to hear a case from the Eleventh Circuit on whether 8

U.S.C. § 1252’s bar on judicial review of certain discretionary immigration decisions

applies to a decision to revoke approval of a visa petition under 8 U.S.C. § 1155 (Bouarfa

v. Mayorkas).

Veterans: The Court granted certiorari in a case from the Federal Circuit on how the U.S.

Court of Appeals for Veterans Claims (CAVC) should review whether the Department of

Veterans Affairs (VA) properly applied the “benefit of the doubt” rule to benefits claims

under 38 U.S.C. § 5107(b). The petitioners argue that 38 U.S.C. § 7261(b), which

requires the CAVC to “take due account” of VA’s application of the rule, requires the

court to employ something other than its ordinary “clear error” standard of review

(Bufkin v. McDonough).

Decisions of the U.S. Courts of Appeals

Topic headings marked with an asterisk (*) indicate cases where the appellate court’s controlling opinion

recognizes a split among the federal appellate courts on a key legal issue resolved in the opinion,

contributing to a non-uniform application of the law among the circuits.

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Bankruptcy: The Seventh Circuit joined the Ninth and Tenth Circuits in holding that a

Chapter 13 trustee must return his or her fee if the debtor’s repayment plan is not

confirmed by the bankruptcy court. Among other things, the panel reasoned that if

Congress intended Chapter 13 trustees to deduct their fee before confirmation, Congress

would have expressly said so, as it had done for trustees under other Bankruptcy Code

chapters (Marshall v. Johnson).

Civil Liability: The Fourth Circuit affirmed a district court’s dismissal of a civil RICO

claim for failure to allege a domestic injury, where Ghanian nationals claimed that their

funds were misappropriated by a Ghanian entity that then transferred those funds to shell

companies in the United States. The panel ruled that the plaintiffs had no expectation that

their money would end up within the United States, and the defendants’ unilateral

decision to transfer funds to American companies did not domesticate the plaintiffs’

injuries (Percival Partners Ltd. v. Nduom).

Criminal Law & Procedure: The Fourth Circuit joined the Ninth Circuit in holding that

a provision of the Speedy Trial Act, 18 U.S.C. § 3161(h)(4), which excludes certain

periods of delay when computing the time in which an information or indictment must be

filed against a criminal defendant, excludes all time during which a defendant is mentally

incompetent, regardless of whether other provisions of the Act might otherwise apply

(United States v. Minton).

Criminal Law & Procedure: The Seventh Circuit affirmed a criminal defendant’s

conviction and sentence under the Anti-Riot Act, which establishes criminal penalties for

a person who travels in or uses any facility of interstate or foreign commerce to incite,

organize, promote, encourage, or participate in a riot. The panel applied circuit precedent

to hold that the statute was not impermissibly overbroad under the First Amendment. The

panel also held that the defendant’s conviction was covered by the Mandatory Victims

Restitution Act, under which a defendant may be made to pay restitution to his or her

victims for specified offenses, including an “offense against property” (United States v.

Betts).

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Criminal Law & Procedure: Sitting en banc, the Ninth Circuit joined other circuits in

holding that facts underlying factors considered in the sentencing of a criminal defendant

must be supported by a preponderance of the evidence. The court overruled prior circuit

precedent that required the use of the more stringent clear and convincing evidence

standard when the factor would have “an extremely disproportionate effect on the

sentence relative to the offense of conviction” (United States v. Lucas).

Criminal Law & Procedure: Sitting en banc, the Eleventh Circuit held that when a

criminal defendant does not timely object to a sentencing court’s failure to explain its

reason for choosing a particular sentence under 18 U.S.C. § 3553(c), a challenge to that

omission raised on appeal is reviewed for plain error. Under this standard, the appellate

court looks to whether the error was obvious and affected substantial rights of the

defendant to undermine the fairness of the proceeding. The court held that, to the extent

earlier circuit caselaw held that a district court’s failure to explain its sentence mandated

automatic reversal, that precedent was overruled (United States v. Steiger).

Employee Benefits: A divided Second Circuit held that an arbitration agreement

provision that limited the remedies a retirement plan participant could seek under the

Employee Retirement Income Security Act (ERISA) following an alleged breach of

fiduciary duty was not enforceable under the Federal Arbitration Act (FAA). Relying on

Supreme Court and other appeals court precedent, the panel majority explained that the

FAA does not reach agreements that prevent parties from vindicating their statutory

rights. The majority held that the arbitration provision at issue prevented an employee

benefit plan beneficiary from exercising his full statutory rights under ERISA. The

majority held that Sections 409(a) and 502(a)(2) of ERISA permit a participant to seek

plan-wide remedies for certain breaches of fiduciary duties, and that the arbitration

agreement impermissibly allowed the plaintiff only to seek remedies for losses to his

individual retirement account (Cedeno v. Sasson).

Environmental Law: The Third Circuit denied a petition for review of an Environmental

Protection Agency (EPA) plan under the Clean Air Act (CAA) to implement national

ambient air quality standards for Pennsylvania. The EPA had promulgated an

implementation plan after the Third Circuit vacated EPA’s approval of an earlier SIP and

directed EPA to either approve a new state implementation plan (SIP) or formulate its

own plan. The circuit panel held that the EPA did not exceed its authority under the CAA

in promulgating its own plan rather than considering Pennsylvania’s proposed revisions

to the SIP, and that the agency did not violate Administrative Procedure Act requirements

when formulating its plan (Keystone-Conemaugh Projects LLC v. EPA).

*Environmental Law: The Fifth Circuit upheld Louisiana’s decision to issue a preconstruction permit for a liquid natural gas export facility, rejecting the petitioner’s

arguments that the decision was arbitrary and capricious because the facility’s emissions

would exceed national ambient air quality standards and the permit did not require the

facility to use best available control technologies to limit emissions. In so doing, the

panel widened a circuit split on the appropriate standard of review that federal courts

should employ when reviewing state agency action. The panel joined the Third Circuit in

holding that the state agency should be afforded the same deference they would receive

under state law, expressing disagreement with the Fourth Circuit’s application of the

Administrative Procedure Act’s arbitrary and capricious standard to state agency action

(Sierra Club v. La. Dep’t of Env’tl Quality).

Health: In consolidated cases, a divided en banc Fourth Circuit held that North

Carolina’s state employee health care plan and West Virginia’s Medicaid program

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violated the Equal Protection Clause by excluding coverage for some health care services

to treat gender dysphoria while covering those services in other contexts. The states

argued that the policies were facially neutral toward transgender persons because, while

they excluded certain treatments for gender dysphoria, they provided transgender and

nontransgender persons the same medical coverage. The en banc majority rejected this

argument, holding that gender dysphoria served as a proxy for transgender status and that

the coverage restrictions turned on sex-based classifications. The majority therefore

subjected the policies to intermediate scrutiny under the Equal Protection Clause and held

that the states failed to provide an adequate justification for the restrictions to withstand

such scrutiny. The majority also held that the West Virginia policy violated the Affordable

Care Act’s prohibition on sex-based discrimination in health programs receiving federal

assistance, as well as federal Medicaid regulations’ prohibition on the arbitrary denial of

medically necessary treatment by state Medicaid programs and the prohibition on

denying Medicaid benefits to some groups that are available to others with the same

needs (Kadel v. Folwell; Anderson v. Crouch).

Health: A Ninth Circuit panel withdrew an opinion that upheld a district court’s

preliminary injunction blocking enforcement of an Idaho law related to transgender

athletes and said that an amended opinion is forthcoming. (The earlier opinion is

discussed in a prior Congressional Court Watcher edition.) The panel’s brief order stated

that the withdrawal was made in light of the Supreme Court’s recent order in Labrador v.

Poe, which narrowed the scope of a preliminary injunction in a case challenging the

constitutionality of an Idaho law barring health care professionals from providing certain

medical treatments to transgender minors. In that case, the Supreme Court limited the

injunction only to the plaintiffs in the case (Hecox v. Little).

International Law: The Eleventh Circuit upheld the denial of a parent’s petition

pursuant to the Hague Convention on Civil Aspects of International Child Abduction and

its implementing statute, the International Child Abduction Remedies Act, on the ground

that the lower court properly applied one of the “narrow exceptions” to the requirement

that children who were wrongfully removed from their home country be “promptly

returned.” Where an abandoned parent files a petition more than one year after the child’s

wrongful removal, the court generally must order the return of the child unless it finds

that the child “is now settled in its new environment.” Observing that the question of

whether this exception applies requires a fact-intensive factor-based analysis, the circuit

court held that, although a child’s lack of permanent legal status is one relevant factor in

deciding whether a child is “now settled” in the United States, it is not necessarily

dispositive. The circuit panel ruled that the lower court did not abuse its discretion in

deciding that other factors supported a finding that the child was settled and that the

exception applied notwithstanding the child’s lack of lawful permanent resident status

(Cuenca v. Rojas).

Labor & Employment: A divided Tenth Circuit held that the lower court did not err in

denying plaintiffs’ motion to preliminarily enjoin enforcement of a Department of Labor

(DOL) rule, which imposes a $15 minimum hourly wage requirement on most federal

contractors, as applied to recreational services outfitters that provide guided tours to

visitors on federal lands. The DOL rule was promulgated pursuant to Executive Order

14026, which was issued by President Biden under the Federal Property and

Administrative Services Act (FPASA). That statute enables the President to prescribe

policies deemed necessary to carry out the FPASA, including to “provide the Federal

Government with an economical and efficient system for . . . [p]rocuring and supplying

property and nonpersonal services.” The majority understood this authority to cover the

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federal government’s provision of nonpersonal services both to itself and to the public.

The majority also decided that the plaintiffs were unlikely to succeed in their argument

that the minimum-wage requirement was arbitrary and capricious in light of the FPASA’s

purpose of providing an “economical and efficient system” for covered services, as the

agency had determined that the wage increase would improve morale and productivity

(Bradford v. U.S. Dep't of Labor).

Securities: The Sixth Circuit affirmed the district court’s dismissal of a suit alleging

fraudulent activity and false or misleading statements under federal securities law. In so

doing, the panel joined other circuits in holding that the Private Securities Litigation

Reform Act’s safe-harbor provision for certain forward-looking statements was not

intended to supplant the Bespeaks Caution doctrine. The judicially created doctrine

generally shields entities from securities fraud claims for forward-looking statements

accompanied by meaningfully cautionary language that renders immaterial any alleged

omission or misstatement (Kolominsky v. Root, Inc.).

Tax: Reversing the Tax Court, the D.C. Circuit held that Section 6038 of the Internal

Revenue Code authorized the Internal Revenue Service (IRS) to assess and

administratively collect penalties owed by a U.S. person who failed to report his control

of a foreign business. The court rejected arguments that the IRS must bring suit in federal

court to collect the sums owed for the reporting violation (Farhy v. Comm’r of Internal

Revenue).

Author Information

Michael John Garcia

Deputy Assistant Director/ALD

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