D.C. Circuit Review – Reviewed: A Collegial-ish Court

by Aaron Nielson — Friday, Apr. 28, 2017@Aaron_L_Nielson

Last September I suggested that those trying to predict the Clean Power Plan outcome by looking at the judges and “counting ‘R’s and ‘D’s” may be in for a surprise. The D.C. Circuit, after all, is serious about its craft and the idea that cases can be predicted this way is — in the words of Judge Harry Edwards — “truly offensive to everything that our judicial system stands for.” Today the Court took a major step in the Clean Power Plan litigation. And its decision was unanimous. In particular, the Court:

ORDERED that the motion to hold the cases in abeyance be granted to the extent that these consolidated cases be held in abeyance for 60 days from the date of this order. EPA is directed to file status reports at 30-day intervals beginning 30 days from the date of this order. It is

FURTHER ORDERED that the parties file supplemental briefs addressing whether these consolidated cases should be remanded to the agency rather than held in abeyance. The supplemental briefs are due at 4:00 p.m. on May 15, 2017, and may not exceed 3,900 words if produced using a computer or 15 pages if typewritten or handwritten. To the extent possible, the parties are to file jointly. The court looks with extreme disfavor upon duplicative submissions.

Obviously, this is just a preliminary order — the Court has not made a final decision. And who knows? When it does make a final decision, perhaps the Court will splinter. Sometimes disagreements are inevitable; agreement is good but not at the expense of independent judgment. Even so, this order illustrates an important point: “The D.C. Circuit is a ‘collegial’ court, and those who follow it should remember that fact.”

Well, perhaps I should modify that statement: The D.C. Circuit is a collegial court — most of the time! This week, a few of the cases revealed some tension.

The most interesting case,* for instance, is United States v. Anthem, Inc. This is a huge case that may very well end up at the Supreme Court. Judge Rogers, joined by Judge Millett, affirmed the district court’s decision permanently enjoining a merger between Anthem, Inc. and Cigna Corp, two of the nation’s largest health insurance providers. The analysis is complicated, and this quick summary does not do it justice. But one key question is how to analyze asserted efficiencies in evaluating a potential merger. The majority was hesitant to give them much weight — “it is not at all clear that they offer a viable legal defense.” Judge Kavanaugh dissented. Each judge wrote an opinion — and each has very strong views.

From Judge Rogers’s majority opinion:

  • “Put differently, our dissenting colleague applies the law as he wishes it were, not as it currently is.”
    • “The savings projected by McKinsey & Co. and Dr. Israel — uncritically relied on by the dissent — were without a doubt enormous. The problem is, those projections fall to pieces in a stiff breeze. If merging companies could defeat a Clayton Act challenge merely by offering expert testimony of fantastical cost savings, Section 7 would be dead letter.”
      • “The dissent’s critique of the court’s opinion is not well founded. Its fundamental flaw is the failure to engage with the facts shown in the record as they pertain to merger-specificity and verifiability. Repeated references to unspecified evidence, on which the dissent bases sweeping conclusions, speak volumes. Rather than engage with the record, much less adhere to our standard for reviewing findings of fact by the district court, the dissent offers a series of bald conclusions and mischaracterizes the court’s opinion.”
      •  

        From Judge Millett’s concurrence:

        • “I write separately only to underscore the foundational problems that pervade Anthem’s and the dissenting opinion’s insistence that any reduction in provider rates, standing alone, excuses an anticompetitive merger.”
          • “What the dissenting opinion labels as an ‘undeniable’ predicate assumption — that any cost savings will necessarily be passed through to customers — not only is very much denied, but actually flies in the face of the factual record.”
            • “In addition, the dissenting opinion’s rosy forecast that Anthem’s employer-customers would then automatically use those (unproven) savings to raise their employees’ pay is cut out of whole cloth. Not even Anthem offered up that Panglossian prediction.”
            •  

              And from Judge Kavanaugh’s dissent:

              • “The majority opinion portrays this as an easy case for blocking the merger. If the law and the facts were as described by the majority opinion, I would agree with it. But in my view, the law and the facts are not as described by the majority opinion. Indeed, the majority opinion outflanks even the Government’s position on the law and the facts.”
                • “The Government accepts as a given that a defendant in a Section 7 case may rely on a merger’s efficiencies to show that a merger would not be anti-competitive despite the increased market concentration and market shares that would result from the merger. But the majority opinion – echoing the District Court – does not accept that legal principle as a given. On the contrary, the majority opinion casts doubt on this Court’s opinions … and on whether Section 7 analysis allows a court to take account of a merger’s efficiencies as a defense in a merger case. The majority opinion says that the Supreme Court’s 1967 decision in FTC v. Procter & Gamble Co., 386 U.S. 568 (1967), is the essential precedent on this question. For the majority opinion, we are apparently stuck in 1967.”
                  • “Fortunately, the majority opinion in the end does not actually hold that there is no efficiencies defense available in Section 7 cases. The majority opinion merely suggests as much in dicta – perhaps portending a return to 1960s antitrust law in some future merger case. For purposes of this case, however, the majority opinion simply says that even assuming such a defense exists under the law, the defense would not be satisfied here. The majority opinion’s lack of a square holding on the role of efficiencies in merger cases is some measure of good news because it means that future district courts and future panels of this Court still must follow General Dynamics, Baker Hughes, and Heinz, not the ahistorical drive-by dicta in today’s majority opinion.”
                  •  

                    There is a lot going on in this case, but these quotes should give you a pretty good taste of the disagreement. (For what it is worth, strong opinions do not equal lack of respect. The majority disagrees with the dissent, and vice versa, but sometimes that cannot be avoided in hard cases. And the D.C. Circuit has very hard cases.)

                    Next consider National Railroad Passenger Corp. v. Fraternal Order of Police, which has a dissent of its own. Judge Randolph — joined by Judge Kavanaugh — held that the investigatory methods of the Amtrak Office of Inspector General cannot be limited by a collective bargaining agreement. The bargaining agreement contains a provision called “Police Officers Bill of Rights” that provides, among other things, that an “investigator must inform the employee of his right to delay questioning in order to have a union representative present.” Here, “the fired employee, Sarah Bryant, was an officer in the Canine Unit of the Amtrak Police Department. In 2011, Amtrak’s Office of Inspector General received an anonymous tip that Officer Bryant jointly owned a home in Maryland with her supervisor, Inspector William Parker, and that Parker had been giving Bryant a disproportionate number of assignments commanding a higher rate of pay.” The Office of Inspector General investigated but did not “inform Bryant of her right to have a union representative present.” Is that okay? Yes: “'[P]ublic sector unions and agencies can neither add to nor subtract from the OIG’s investigatory authority through collective bargaining.’”

                    Judge Pillard dissented by stressing the narrowness of the standard of review, especially because this case arises in the context of arbitration. The majority was not persuaded, explaining in part: “Even if the dissent’s argument were valid, which is doubtful, it does not matter in this case, which may explain the FOP’s failure to mention it.”

                    Or consider SoundExchange, Inc. v. Muzak LLC. This is how Judge Silberman (joined by Judge Griffith) explained the case:

                    This case pits SoundExchange, a nonprofit entity, charged with the responsibility of collecting royalties for performing artists and copyright owners of music, against Muzak, a company that supplies digital music channels to satellite television networks who, in turn, sell to subscribers. SoundExchange sued Muzak under the Copyright Act in district court, claiming that Muzak underpaid royalties owed. The district court dismissed SoundExchange’s complaint. (From the point of view of classic administrative law, the Register of Copyrights, to which we normally are obliged to defer, plays a rather unusual role.) Although the case is close – the controlling statute is dreadfully ambiguous – we conclude that SoundExchange has the better position, and therefore reverse the district court.

                    Judge Rogers concurred. The point of disagreement — mild disagreement, to be sure — was the role of legislative history. Judge Silberman considered it and found it unhelpful: “Our concurring colleague would make more use of the legislative history when resolving this case. But for each point in the conference report supporting SoundExchange, there can be found a countervailing one in support of Muzak. And many of the report’s observations are susceptible of multiple interpretations — as evidenced by the pages the parties (and the concurrence) devote to disputing the significance of individual phrases in that report.” And here is her response: “Today the court is quick to dismiss that history as ‘no more pellucid’ than the statutory text … But this ignores clear evidence of congressional intent.”

                    The other cases this week are rhetorically tamer. In Minteq International, Inc. v. NLRB, Judge Sentelle (joined by Chief Judge Garland and Judge Griffith) upheld the Board’s determination that “Minteq violated section 8(a)(1) and (5) of the Fair Labor Standards Act by failing to afford the employees’ union notice or an opportunity to bargain over Minteq’s unilateral implementation of the requirement that employees sign the [confidentially and non-compete] agreement.” In Portland General Electric Comp v. FERC, Judge Tatel (joined by Judges Srinivasan and Silberman) resolved “a dispute between a small Oregon wind farm and the utility serving Portland over how much of the former’s power the latter must purchase.” The answer? All of it, but not “by utilizing a technology known as dynamic scheduling.” (Tatel does have a few sharp words for FERC, however: “we are mystified by FERC’s continued use of mandatory language to resolve PURPA disputes in orders that it later insists are purely hortatory. … FERC could avoid a great deal of confusion and waste of judicial resources by not using words like ‘shall’ and ‘must,’ and by making clear in its orders — as opposed to later in this court — that its discussions of PURPA-related issues are advisory only.”) And in Kincaid v. District of Columbia, Judge Kavanaugh (joined by Judges Sentelle and Randolph) upheld D.C.’s “post-and-forfeit statute” which allows “certain individuals arrested for misdemeanor crimes receive an opportunity to resolve their criminal charges immediately by paying a relatively small sum of money, typically $25 to $50.” “If there is police abuse of this process, there are other, more targeted tools — including the ability of an arrestee to file a lawsuit claiming wrongful arrest — to deter, detect, and punish such police misconduct.”

                    In Bellagio, LLC v. NLRB, Judge Edwards (joined by Judges Brown and Sentelle) ruled against the NLRB:

                    Bellagio contends that the Board’s determinations should be vacated because they are inconsistent with established precedent and not supported by substantial evidence. It also asserts that the Board violated the Company’s due process rights in finding that a Company supervisor engaged in coercive conduct to compel Garner not to speak with coworkers about his discipline because this was not among the charges in the complaint that had been issued against Bellagio. We find that Bellagio’s contentions are meritorious. We therefore grant in full the petition for review and deny the Board’s cross-application for enforcement

                    And finally, we have United States v. Philip Morris USA Inc. This case has been kicking around for a very long time; the district court found liability in 2006. “As a remedy, the court ordered Appellants to disseminate ‘corrective statements’ relating to the health effects of smoking in newspapers, on television, on cigarette packages, and on websites. For more than a decade since, the parties have battled over the precise language of these statements.” Judge Sentelle (joined by Judges Brown and Randolph) largely upheld the latest order — but rejected requiring the companies to say “Here is the truth” in the preamble.

                    And that’s the week.

                    * At least for me. But remember at heart I am an antitrust lawyer!

                     

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About Aaron Nielson

Professor Nielson is an associate professor at Brigham Young University Law School, where he teaches and writes in the areas of administrative law, civil procedure, federal courts, and antitrust. He currently serves as a public member of the Administrative Conference of the United States, a federal agency that studies the administrative process and makes recommendations on ways to improve it. He also co-chairs the Rulemaking Committee of the American Bar Association’s Section of Administrative Law & Regulatory Practice. Previously he chaired the Section's Antitrust & Trade Regulation Committee. Before joining the academy, Professor Nielson was a partner in the Washington, D.C. office of Kirkland & Ellis LLP (where he remains of counsel). He also has served as a law clerk to Justice Samuel A. Alito, Jr. of the U.S. Supreme Court, Judge Janice Rogers Brown of the U.S. Court of Appeals for the D.C. Circuit, and Judge Jerry E. Smith of the U.S. Court of Appeals for the Fifth Circuit. Follow him on Twitter @Aaron_L_Nielson.

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