D.C. Circuit Review – Reviewed: “Whole of New Deal Program in Confusion”

by Aaron Nielson — Friday, May 25, 2018@Aaron_L_Nielson

Reading How Appealing, I stumbled across this provocative headline: “Did the Supreme Court Just Gut the New Deal?” I later found a similar headline: “Neil Gorsuch Just Demolished Labor Rights in a Frontal Attack on the New Deal.” The subject of these headlines, of course, is the Supreme Court’s opinion in Epic Systems v. Lewis, issued a few days ago. Others can (and surely will) discuss the merits of that opinion.* Here, however, I flag these headlines because they remind of yet another headline, this one from almost 83 years ago:

Black Monday Headline

Yes, we are coming upon the anniversary of “Black Monday.” I have discussed Black Monday before:

“Black Monday” was May 27, 1935. On that day, the U.S. Supreme Court—unanimously—issued three momentous decisions. In A.L.A. Schechter Poultry Corp. v. United States, the Court struck down the National Industrial Recovery Act on nondelegation grounds. In Louisville Joint Stock Land Bank v. Radford, the Court invalidated the Frazier-Lemke Act’s mortgage moratorium on Takings Clause grounds. And in Humphrey’s Executor v. United States, the Court rejected President Roosevelt’s removal of a Federal Trade Commissioner. The message was clear: the Court would not “‘let this government centralize everything.’”

As Gillian Metzger explains in her Harvard Law Review Foreword, there may be echoes of the 1930s New Deal cases in some of today’s Supreme Court decisions. To be sure, I’ve pushed back against those comparisons, at least if they are taken too far. Much has changed in administrative law — and society generally — since the 1930s, and observers from many ideological perspectives have recognized that not everything about the 1930s is a good fit for today, and was not even a very good fit then. And as Cary Coglianese has observed, folks have been using strong language about these issues for a long time:

Symposium: Rhetoric and Reality

Even so, it is interesting to see courts — including the D.C. Circuit — address variations on the same categories of questions that the Supreme Court addressed on Black Monday. For instance, although the holding from Humphrey’s Executor is not at issue (lower courts, after all, are bound by precedent), earlier this year the en banc D.C. Circuit addressed how far that holding goes, and the question may eventually end up before the Supreme Court. And the related question of how to apply Appointments Clause precedent to administrative law judges is already at the Supreme Court. Likewise, the Supreme Court next term is slated to address how far Schechter Poultry goes; the D.C. Circuit confronted this issue too, although without deciding the nondelegation issue. And although Louisville Joint Stock Land Bank does not receive the same attention as the other two unanimous Black Monday opinions, the Supreme Court in recent years has addressed how the Takings Clause prevents some types of regulation. Administrative law, in other words, is still very much a work in progress, especially “when [courts are] confronted with new problems — or the emergence of more virulent strains of old problems.”

This week, the D.C. Circuit tried to strike that balance in a case that surely will get some attention.

In United States v. Winstead, Judge Silberman (joined by Chief Judge Garland and Judge Tatel) opened his opinion this way:

United States v. Winstead

What is so “unusual” about this case? The Court pointedly did not defer to Commentary to the Sentencing Guidelines Manual, which, in the Court’s words, “adds a crime, ‘attempted distribution,’ that is not included in the guideline.” Courts generally afford Seminole Rock deference to the Commentary. But here, the D.C. Circuit did not:

US v. Winstead II

Indeed:
US v. Winstead III

(Note, I deleted a stray word beginning a new sentence.)

Interesting — I suspect there is a case comment to be written about this one.

Judge Tatel also authored a couple of interesting opinions this week. Here is how he began Friedman v. FAA (joined by Judges Henderson and Williams):

Friedman v. FAA

Also interesting — though, of late, I’ve been thinking about what this sort of decision does to incentives to bring challenges in the first place. More on that later!

Judge Tatel also authored United Parcel Service, Inc. v. PRC, this time joined by Judges Srinivasan and Pillard. Warning: There is no easy way to explain this case. If you are interested in the nitty-gritty of rate regulation, give it a read. Judge Tatel, for his part, helpfully includes two charts:

UPS v. PRC

And this one:

UPS v. PRC II

Long story short, the Court disagreed with petitioner that “the cost attribution methodology the Commission embraced is both inconsistent with the statute that gives the Commission its regulatory authority and arbitrary and capricious.” Because life is short, I’ll leave it at that.

Finally, in Mellow Partners v. Commission of IRS, Judge Edwards (joined by Judges Wilkins and Silberman) affirmed the Tax Court. Mellow, it seems, was formed as a two-member partnership, with each partner being an LLC and each LLC only having a single member. For complicated tax reasons, the IRS did not buy this as a strategy, and the Court affirmed — “we defer to IRS’s reasonable interpretation of its own regulation that a partnership with pass-thru partners is ineligible for the small partnership exception and that single-member LLCs constitute pass-thru partners.” (The Court also denied Mellow’s challenge to penalties as unpreserved.)

I’ll leave the tax discussion to the experts. But a couple of paragraphs stood out to me (I altered one to remove a page break):

Mellon v. IRS I

Mellon v. IRS II

This is also interesting. Now go forth and enjoy your Black Monday weekend.

 

* In the interest of full disclosure, Kirkland & Ellis represented a party to that case.

 

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About Aaron Nielson

Professor Nielson is an associate professor at Brigham Young University Law School. 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. All views expressed are the author's alone. Follow him on Twitter @Aaron_L_Nielson.

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