I learned something this week. By way of background, last September, I opened a Twitter account. As of now, I have 904 tweets. I’m biased, but I think that at least some of these tweets are insightful, at least as far as Twitter goes. Yet my most popular tweet of all time, by a fairly significant margin, contains no analysis at all. Instead, all I did was take screen shots of the opening and closing paragraphs of a recent decision of the Sixth Circuit. So why all the attention? Because the Sixth Circuit opinion, authored by Judge Kethledge, concerned the IRS! Hence, my lesson: perhaps not everyone cares about formal rulemaking, clerkship hiring, or even the future of administrative law, but lots of people care about taxes!
Here is a (very) quick recap of the Sixth Circuit’s decision: Judge Kethledge addressed a petition for mandamus filed by the United States in an effort to avoid turning over “‘Be On the Lookout’ lists of organizations allegedly targeted for unfavorable treatment because of their political beliefs.” The Inspector General of the IRS has concluded that the agency “developed and used inappropriate criteria to identify applications from organizations with ‘Tea Party’ in their names.” Various entities in response have brought suit against the agency. Yet, we are told, “the IRS’s response has been one of continuous resistance,” at least when it comes to discovery. The district court ultimately ordered more information to be produced, which prompted the United States to petition for mandamus. The Sixth Circuit, however, would have none of it.*
At this point, you may be wondering, “What does any of this have to do with the D.C. Circuit?” Fair point. The D.C. Circuit matters because the Sixth Circuit addressed it. Long story short, the key question before the Sixth Circuit concerned the requirement that “return information shall be confidential[.]” But are “names of applicants for tax-exempt status … ‘return information’”? The Sixth Circuit concluded that they are not, and in so doing took a shot at the D.C. Circuit:
We recognize that, in another case, the D.C. Circuit held that the names of applicants for tax-exempt status are “return information.” See Landmark Legal Foundation v. IRS, 267 F.3d 1132, 1135 (D.C. Cir. 2001). But that holding is unpersuasive for a simple reason. The Landmark court stated that the names of applicants for tax-exempt status are “return information” because § 6103(b)(2)(A) “specifically covers ‘a taxpayer’s identity.’” Id. (quoting § 6103(b)(2)(A)) (emphasis in original). But the court never referenced Congress’s express definition of that term in § 6103(b)(6)—the IRS apparently failed to mention it there too—and thus the court seemed unaware throughout that “taxpayer’s identity” includes only names on a return, not on an application.
The mandamus posture of this case presumably makes a cert petition more difficult. But at some point, the Supreme Court may be called to weigh in.
The D.C. Circuit’s cases this week are fairly routine—though agencies had another tough week and Judge Sentelle lamented that “this circuit is drifting toward a jurisprudence in which there is no distinction between reviewing for ‘plain error’ and simply reviewing to determine whether the district court erred.”
In United States v. Head, the Court confronted a sentencing error. It seems that Head was convicted of a drug offense in 1988, for which he was sentenced to prison, followed by 5 years of supervised release. In 2012, Head found himself again in court facing revocation of his supervised release due to a new felony conviction. The trial court revoked supervision and imposed a consecutive sentence, concluding that the Sentencing Guidelines required it. Judge Pillard, joined by Judge Silberman, found plain error. The duo reasoned that it appears that the district court used the 2011 Sentencing Guidelines instead of the 1988 Sentencing Guidelines, which would have given the district court discretion to impose a concurrent sentence. The case was remanded for a clearer statement from the district court. Judge Sentelle dissented because he did not think the plain error standard was met.
Next, in Dover Energy v. NLRB, the Court ruled against the NLRB. In the summer of 2012, a division of Dover Energy called Blackmer started negotiations for a new collective bargaining agreement with the employees union. During negotiations, an employee, who had recently been chosen as a union liaison, requested information from Blackmer unbeknownst to and unauthorized by the union. When Blackmer verified that the request was not sanctioned by the union, the company declined it. When the employee filed a second unsanctioned request, Blackmer issued a warning that he would be disciplined for similar requests in the future. The employee went to the NLRB. At a hearing, “[t]he ALJ concluded that Blackmer had not committed an unfair labor practice in issuing the verbal warning.” However, a 2-to-1 Board majority found that Blackmer’s threat of discipline for information requests was an unfair labor practice. Judge Henderson, joined by Judges Pillard and Wilkins, concluded that the Board’s decision was not supported by substantial evidence. The Court found that the warning clearly “targeted specific, unprotected conduct.”
In USPS v. PRC—the Netflix case—the United States Postal Service filed a petition for review because the Postal Regulatory Commission denied its request to reclassify “round-trip mailers” as a “competitive rather than market-dominant” product. “The round-trip mailer is a product used by intervenors Netflix and GameFly whereby customers receive a DVD disc by mail that they can return with an enclosed envelope.” It turns out that the “Postal Service’s products are divided into ‘competitive’ products, which are subject to a statutory price floor, and ‘market-dominant’ products, which are subject to a statutory price ceiling.” So which category captures DVDs by mail? Although “Netflix customers are, in huge numbers, leaving the DVD by-mail service,” the Commission nonetheless “defined the relevant market as the physical delivery of DVDs by mail, and ruled that the Postal Service, as the only entity producing the round-trip mailer, exercised sufficient power within that market to justify a market-dominant classification.” The Postal Service argued that movie streaming is a substitute for DVD-by-mail so the market should have been defined more broadly. Judge Silberman, joined by Judges Pillard and Sentelle, denied USPS’s petition for review because they found the Commission’s conclusion “rather compelling.” (This is a fun case for antitrust lawyers.)
In Maher Terminals v. Federal Maritime Commission, the Court addressed maritime leases. As I understand it, the Port Authority of New York and New Jersey negotiated both with Maher Terminals, which “has no affiliated carrier fleet,” and with APM-Maersk, which “is affiliated with the largest ocean carrier-fleet in the United States.” Because of APM-Maersk’s bargaining advantage, “Maher was forced to pay substantially more than APM-Maersk” and filed a complaint that the port authority granted APM-Maersk an “unreasonable preference.” The ALJ concluded that the preference was reasonable and the Commission affirmed because “APM-Maersk had threatened credibly to abandon the port,” APM-Maersk “was able to make a port guarantee,” and “Maher’s terminal was of a higher quality.” Yet port authorities are only allowed to differentiate between lessees based on “transportation factors.” Judge Silberman, joined by Judges Garland and Tatel, remanded because the agency failed to adequately explain how APM-Maersk’s relative bargaining advantage qualified as a transportation factor. The Court concluded, “It is obvious the underlying problem is competition between ports for a larger share of carrier traffic. We wonder if there is not a regulatory solution to the problem.”
In Lauterbach v. Huerta, the Court confronted an aircraft mechanic who “fraudulently sold helicopter rotor blades” under altered maintenance records. Federal law requires the FAA to revoke airman certificates of anyone criminally convicted of “airplane-parts fraud” and also requires permanent revocation for anyone administratively determined to have committed such actions. The FAA also has a “more general authority to amend, modify, suspend, or revoke” a certificate under a different section of the statute. In 2006, the FAA issued an order permanently revoking Lauterbach’s pilot’s and mechanic’s certificates. While the order was awaiting appeal, the FAA settled the case by temporarily revoking his mechanic’s certificate and allowing him to keep his pilot’s certificate under its more general authority. Afterwards, Lauterbach was prosecuted and convicted by a jury of criminal fraud, and the FAA permanently revoked both certificates in 2013. An ALJ granted Lauterbach summary judgment, but “[o]n appeal to the full board, the NTSB reversed the ALJ’s decision and reinstated the 2013 order.” Lauterbach argued “that the FAA’s earlier administrative action bars the FAA’s permanent revocation order by operation of various preclusion doctrines, double jeopardy, and due process.” Judge Pillard, joined by Judges Brown and Wilkins, denied his petition because Congress had not precluded the FAA from independently applying multiple provisions of the statute. The panel also found that the double jeopardy and due process claims were without merit because revoking the certificate wasn’t a criminal sanction.
Finally, in B.D. v. D.C., the court addressed a disabled child’s rights to a “free appropriate public education” through the D.C. Public Schools. The facts of this case are complicated. Ultimately, Judge Tatel, joined by Judges Edwards and Millett, remanded for an award of additional compensatory education. The court also found that the parents failed to state a claim for reimbursement and that they forfeited various other arguments. Finally, the panel concluded that an injunction was moot. Judge Millett joined the opinion in full and filed a concurring opinion only to note that according to the Department of Education, another way to enforce a hearing officer’s decision is to bring a due process complaint.
These are all interesting opinions … yet somehow I suspect that none of them will attract the same attention as the Sixth Circuit’s take on the IRS’s discovery practices.
* President Obama’s remarks condemning this conduct are some of his best: “Americans are right to be angry about it, and I am angry about it. … And we’re going to have to make sure that the laws are clear so that we can have confidence that they are enforced in a fair and impartial way, and that there’s not too much ambiguity surrounding these laws.” Am I wrong, or is that an allusion to Chevron?
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