High Court Report Card: How the Third Circuit Fared in 2016-17
ALM Media
Updated
Upon Further Review
The U.S. Supreme Court's recently concluded 2016-2017 term will most likely be remembered as the term in which the court largely avoided the limelight as it awaited the arrival of a ninth justice, who joined the court only in time for its final two-week oral argument session. Although the court did decide some high-profile cases, there were far fewer than in recent terms. That could be about to change, however, now that the court has returned to full strength.
The 70 opinions that the court issued this past term marks the fewest in quite some time. Notwithstanding the court's reduced output, our nation's highest court last term managed to decide nine cases involving conflicts that implicated our own Philadelphia-based U.S. Court of Appeals for the Third Circuit.
Two of the cases that the Supreme Court decided this past term arose directly from the Third Circuit. In both cases, the Supreme Court reversed. In an additional seven cases, the Supreme Court expressly noted that it was resolving conflicts that involved the Third Circuit. In four of those seven cases, the Supreme Court agreed with the Third Circuit's approach, while in the remaining three cases the Supreme Court disagreed with the Third Circuit's approach. Thus, the Third Circuit's overall approval rate in the Supreme Court this past term was 44 percent, a vast improvement over last term's 25 percent approval rate.
Starting first with the cases that reached the Supreme Court directly from the Third Circuit, in Advocate Health Care Network v. Stapleton, 137 S. Ct. 1652 (2017), the court considered whether a church must have originally established an employee benefits plan in order for it to qualify as a "church plan" exempt from regulation under the Employee Retirement Income Security Act (ERISA). The Third Circuit was one of three federal appellate courts that had ruled that, to be exempt from ERISA, the plan had to have been originally established by a church.
In a unanimous opinion, the U.S. Supreme Court disagreed with all three federal appellate courts, including the Third Circuit. Justice Elena Kagan wrote the opinion of the court. The decision perhaps demonstrates the difficulties inherent in properly performing a plain language analysis of complicated statutory language, as both the Third Circuit and the Supreme Court relied directly on the statute's actual text in reaching exactly the opposite result. Judge Thomas L. Ambro wrote the Third Circuit's opinion in the case, Kaplan v. St. Peter's Healthcare Systems, 810 F.3d 175 (3d Cir. 2015), in which then-Chief Judge Theodore A. McKee and Judge Thomas M. Hardiman joined.
Because one of the cases to reach the Supreme Court directly from the Third Circuit involved ERISA, it perhaps was inevitable that the other would involve bankruptcy. In Czyzewski v. Jevic Holding, 137 S. Ct. 973 (2017), the Supreme Court (per Justice Stephen G. Breyer) ruled that a bankruptcy court cannot approve the structured dismissal of a Chapter 11 reorganization case pursuant to a settlement under which lower-priority unsecured creditors recovered on their claims even though higher-priority creditors receive nothing. The Third Circuit had approved of that result because the overall outcome would have made more creditors better off. The loophole affording an exception to Chapter 11's strict priority rules that the Third Circuit recognized, although limited, proved controversial, and the Supreme Court's ruling slammed the door shut, eliminating the loophole altogether. Hardiman wrote the Third Circuit's opinion in the case, in which Senior Judge Maryanne Trump Barry joined. Senior Judge Anthony J. Scirica concurred in part and dissented in part, advocating an approach that was somewhat closer (but far from identical) to the one the Supreme Court ultimately adopted.
The remaining seven cases discussed below reached the U.S. Supreme Court from other courts, but in each of these seven cases the Supreme Court expressly noted that it was resolving conflicts that involved the Third Circuit. As always, I will begin with the cases in which the Supreme Court sided with the Third Circuit's approach (four of the seven cases) and then I will review the remaining cases in which the Supreme Court disagreed with the Third Circuit's approach.
None of the four cases in which the Supreme Court sided with the Third Circuit's approach is likely to be viewed as particularly memorable in the years ahead, but a win is a win as they say. In Manuel v. Joliet, Illinois, 137 S. Ct. 911 (2017), the Supreme Court held that a plaintiff's claim of unlawful pretrial physical detention arises under the Fourth Amendment even after the start of legal proceedings against the detainee. Kagan wrote the majority opinion, in which the court cited the Third Circuit's ruling in McKenna v. Philadelphia, 582 F.3d 447 (3d Cir. 2009), as one of the federal appellate court decisions that had reached the correct result on this issue. Senior Circuit Judge Morton I. Greenberg wrote that Third Circuit opinion, in which McKee and Hardiman joined.
In McLane v. Equal Employment Opportunity Commission, 137 S. Ct. 1159 (2017), Justice Sonia Sotomayor issued the opinion for a nearly unanimous court holding that when a federal district court decides whether to enforce an investigative subpoena of a federal administrative agency (here, the EEOC), the federal district court's decision should be reviewed on appeal for abuse of discretion. Sotomayor's opinion generously linked to both newer and older Third Circuit precedents reaching the same result. Judge Michael A. Chagares wrote the newer Third Circuit decision, Equal Employment Opportunity Commission v. Kronos, 620 F.3d 287 (3d Cir. 2010), in which Senior Judge Walter K. Stapleton and a judge sitting by designation from another federal appellate court joined. And Judge Austin Leander Staley wrote the older precedent, National Labor Relations Board v. Friedman, 352 F.2d 545 (3d Cir. 1965), in which Judge Abraham Lincoln Freedman (yes, that's his actual name) joined. The other judge on the panel dissented on other grounds.
In Lightfoot v. Cendant Mortgage, 137 S. Ct. 553 (2017), the Supreme Court (per Sotomayor) held that Fannie Mae's sue-and-be-sued clause does not grant federal courts jurisdiction over all cases involving Fannie Mae. In so ruling, the court agreed with the Third Circuit's ruling in Lindy v. Lynn, 501 F.2d 1367 (3d Cir. 1974). Senior Judge Albert Branson Maris wrote the opinion in Lindy, in which Judges James Hunter III and Leonard I. Garth joined.
And lastly among the Supreme Court's decisions that approved of Third Circuit rulings, in Microsoft v. Baker, 137 S. Ct. 1702 (2017), Justice Ruth Bader Ginsburg issued an opinion for a unanimous court holding that where the named plaintiffs in a putative class action have voluntarily dismissed their own claims with prejudice, a federal appellate court lacks jurisdiction to review a federal district court's earlier order refusing to certify the case as a class action. In so ruling, the court agreed with the Third Circuit's decision in Camesi v. University of Pittsburgh Medical Center, 729 F.3d 239 (3d Cir. 2013). Judge Marjorie O. Rendell wrote the Third Circuit's ruling in that case, in which Ambro and Judge Thomas I. Vanaskie joined.
Turning now to the bad news, in Beckles v. United States, 137 S. Ct. 886 (2017), the Supreme Court held (per Justice Clarence Thomas) that the federal sentencing guidelines are not subject to challenge as void for vagueness. In so ruling, the court disagreed with the Third Circuit's unreported decision in United States v. Townsend, 638 F. App. 172 (3d Cir. 2015). Judge D. Michael Fisher wrote the opinion in Townsend, in which Hardiman and Senior Judge Jane R. Roth joined.
In Honeycutt v. United States, 137 S. Ct. 1626 (2017), the Supreme Court (per Sotomayor) refused to allow the imposition of joint-and-several liability on co-conspirators to forfeit money or property that the co-conspirator did not himself acquire in a federal drug offense. In so ruling, the court disagreed with the Third Circuit's decision in United States v. Pitt, 193 F.3d 751 (3d Cir. 1999). A senior U.S. district judge sitting by designation from outside of the Third Circuit wrote that opinion, in which Greenberg and then-Judge Samuel A. Alito Jr. joined.
And finally, in Henson v. Santander Consumer USA, 137 S. Ct. 1718 (2017), the Supreme Court unanimously held (per Justice Neil M. Gorsuch) that a company that purchased a debt originated by another lender and then seeks to collect on the debt for itself does not qualify as a "debt collector" subject to the Fair Debt Collection Practices Act. In so ruling, the Supreme Court disagreed with the Third Circuit's ruling in FTC v. Check Investors, 502 F.3d 159 (3d Cir. 2007). McKee wrote that opinion, in which Ambro and Senior Judge Richard L. Nygaard joined.
Although it seems fair to say that an overall approval rating of above 50 percent would be needed to qualify as a good year at the Supreme Court, the Third Circuit's 44 percent approval rating in the just-concluded term is far better than the 25 percent approval rating for the preceding term. If the Third Circuit can continue on its current path, next term seems likely to qualify as a good year before the court.
