Congressional Court Watcher: Recent Appellate Decisions of Interest to Lawmakers (Sept. 12–Sept. 18, 2022)
Legal Sidebari
Congressional Court Watcher: Recent
Appellate Decisions of Interest to Lawmakers
(Sept. 12–Sept. 18, 2022)
September 19, 2022
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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Decisions of the Supreme Court
Last week, the Supreme Court took action in response to an emergency application:
Education: In an unsigned order over the dissent of four Justices, the Supreme Court
denied an application to stay a state trial court order requiring Yeshiva University, a
private Jewish educational institution, to recognize a group for gay, lesbian, bisexual, and
transgender students. The state court ruled that the University’s refusal to recognize the
student group violated a New York City ordinance forbidding discrimination on the basis
of sexual orientation or gender identity. The University argued that its refusal was
grounded in its religious beliefs and is protected by the First Amendment’s Religion
Clauses. The Supreme Court denied the application for a stay of the state court order
pending appeal because the University appeared to have avenues for expedited or interim
relief from the state courts. The Court stated that if the University did not obtain such
relief, it could seek Supreme Court review (Yeshiva Univ. v. YU Pride All.).
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Decisions of the U.S. Courts of Appeals
Topic headings marked with an asterisk (*) indicate cases in which 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.
*Banking: The Second Circuit held that a New York law requiring mortgage lenders to
pay a 2% minimum interest rate on mortgage escrow, as applied to federally chartered
banks, was preempted by the National Bank Act of 1864 (NBA). The court held that the
state law impermissibly interfered with the powers conferred on federally chartered banks
by the NBA, and that changes made by the Dodd-Frank Wall Street Reform and
Consumer Protection Act did not alter the NBA’s preemptive effect. The court disagreed
with the Ninth Circuit, which came to the opposite conclusion about a similar California
state requirement (Cantero v. Bank of America, N.A.).
*Criminal Law & Procedure: In affirming a defendant’s sentencing enhancement under
the Armed Career Criminal Act (ACCA) for committing three or more violent felonies,
the Third Circuit added to a circuit split regarding when, during collateral review of a
defendant’s sentence, a reviewing court may consider offenses committed by the
defendant besides those the government originally identified during sentencing. Here, the
defendant alleged that his plea agreement included an offense that was not a violent
felony under the ACCA, but on collateral review the government argued that a separate
offense listed in the presentence report (PSR) adopted by the sentencing court could also
be treated as a predicate violent felony under the ACCA for sentencing purposes,
rendering any error harmless. Unlike the approaches taken by the Fourth Circuit, which
has held that only ACCA crimes specifically designated by the government during
sentencing may be considered, and the Eleventh Circuit, which more freely allows the
government to substitute new predicates during collateral review, the Third Circuit joined
the Seventh Circuit in taking a more fact-specific approach. The Third Circuit held that a
prior conviction must have been on the menu of options as an ACCA predicate during the
original criminal case, including where the conviction was specifically mentioned as an
ACCA predicate in a charging document, a plea memorandum, a pretrial notice,
sentencing filings, or (as was the case here) the PSR (United States v. Bentley).
*Criminal Law & Procedure: The Ninth Circuit joined a growing circuit split, now
involving seven courts of appeals, over whether non-retroactive changes to sentencing
laws made by the First Step Act can be considered by a district court when it considers a
prisoner’s motion for compassionate release under 18 U.S.C. § 3582(c)(1)(A). Joining
three other circuits, the Ninth Circuit held that the district court may consider non-
retroactive changes the First Step Act made to the law under which the prisoner was
sentenced, in combination with other factors particular to that individual, to determine
whether “extraordinary and compelling reasons” warrant a sentence reduction (United
States v. Chen).
Foster Care: The Sixth Circuit affirmed a district court’s holding that a plaintiff group of
caregivers were not eligible for foster care maintenance payments (FCMPs) from a
Kentucky state agency under Title IV-E of the Social Security Act. Title IV-E provides
federal reimbursement for foster care maintenance to state agencies with foster care plans
if certain criteria are met. These criteria include an approved state plan making FCMPs
“on behalf of each child who has been removed from the home . . . into foster care if . . .
the child’s placement and care are the responsibility of . . . the State agency administering
the State plan.” The majority construed this requirement to mean that the agency needs to
have both placement responsibility and care responsibility over the child for Title IV-E to
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apply. Because the majority concluded the agency did not have placement responsibility,
it decided that plaintiffs were ineligible for FCMPs (J.B-K, by E.B. v. Sec’y of Kentucky
Cabinet for Health and Fam. Servs.).
Food & Drug: The Ninth Circuit held that a pharmaceutical company’s state suit against
the defendant company for selling compound drugs not approved by the Food and Drug
Administration (FDA) was impliedly preempted by the Federal Food, Drug and Cosmetic
Act (FDCA). The plaintiff’s claims were premised on the sale of the compound drugs in
violation of 21 U.S.C. § 353b, which bars third parties from bypassing FDA approval for
compounded drugs that are “essentially a copy” of an already-approved drug. The Act
confers on FDA the exclusive authority to enforce its provisions, including for
determining whether a drug is “essentially a copy” under § 353b. The Ninth Circuit held
that plaintiff could not circumvent this framework by alleging violation of the FDCA
under state law (Nexus Pharmaceuticals, Inc. v. Central Admixture Pharmacy, Inc.).
Labor & Employment: The Third Circuit broadly construed the meaning of a Fair Labor
Standards Act (FLSA) provision, 29 U.S.C. § 215(a)(3), which forbids an employer from
discriminating against an employee for engaging in protected activity, including being
“about to testify” in an FLSA-related proceeding. The court reasoned that retaliation
against an employee who intends to soon file to join a pending collective action has the
same chilling effect as § 215(a)(3)’s “about to testify” language, and thus allowed the
claim to proceed under § 215(a)(3). The court rejected a narrower construction of
§ 215(a)(3) that would require an employee’s testimony to have already been scheduled
or subpoenaed for protection to attach (Uronis v. Cabot Oil & Gas Corp.).
*Speech: The Fifth Circuit allowed a Texas law (H.B. 20) restricting some social media
platforms’ ability to moderate user content to go into effect, vacating a district court’s
preliminary injunction blocking its enforcement. (The Supreme Court vacated an earlier
stay of the injunction by the Fifth Circuit pending Texas’s appeal, allowing it to remain in
effect pending the circuit court’s ruling on the merits.) The district court had enjoined
enforcement of H.B. 20 after deciding that the platforms were likely to succeed on their
claim that the law violated their free speech rights under the First Amendment. The
circuit court reversed, concluding that plaintiffs were not entitled to pre-enforcement
facial relief, and that any First Amendment claims against H.B. 20 were more
appropriately raised in as-applied challenges in future enforcement actions. On Section 7
of H.B. 20, which generally bars covered platforms from “censor[ing]” users or content
based on viewpoint or the users’ geographic location in the state, the majority concluded,
among other things, that (1) Section 7 did not regulate the platforms’ speech, but their
conduct; (2) the section did not chill speech, but protected users from restrictions placed
on their speech by platforms; (3) the platforms appropriately could be treated as
“common carriers” and be restricted from discriminating in the services provided to
Texas users; and (4) even if Section 7 regulated speech, it would withstand constitutional
scrutiny. The court also did not believe Section 2 of H.B. 20—which sets forth disclosure
requirements relating to the platforms’ content and data management and business
practices, as well as process requirements for content removal—was susceptible to pre-
enforcement challenge. The majority held that on its face, Section 2 was consistent with
Supreme Court case law recognizing that a state may require commercial enterprises to
disclose purely factual and uncontroversial information, served a legitimate state interest,
and was not unduly burdensome. The court acknowledged its conclusions differed in
some respects from the Eleventh Circuit, which upheld a preliminary injunction blocking
enforcement of a Florida social media law (NetChoice, L.L.C. v Paxton).
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Tax: The Eleventh Circuit held that an Internal Revenue Service (IRS) employee making
a penalty assessment can communicate with a taxpayer about Internal Revenue Code
penalties before an immediate supervisor approves the “initial determination of such
assessment” required under 26 U.S.C. § 6751(b). While the Tax Court sided with the
taxpayer’s position that § 6751(b) requires supervisory approval of the assessment prior
to communicating about penalties, the Eleventh Circuit reversed and found in favor of the
IRS (Kroner v. Commissioner of Internal Revenue).
Transportation: The Fifth Circuit upheld the assessment of port fees upon plaintiff
energy companies to help finance improvements to the Sabine-Neches Waterway, after
concluding that the waterway navigation district acted consistently with the Water
Resources Development Act. The court held that following an initial down payment that
enabled a portion of the project to be completed, the district could impose port fees as a
means to finance their overall contribution to the improvement project, reading the plain
text of the Act to permit fee collection after a “usable increment of the project” had been
completed. The court also rejected plaintiffs’ argument that the Act limited the district’s
ability to assess fees totaling more than their minimum required funding for 25% of the
project costs; the Act gives non-federal interests discretion to pledge more than 25%, and
enabled the district to levy fees necessary to meet its commitment (BG Gulf Coast LNG,
LLC v. Sabine-Neches Navigation Dist. of Jefferson County).
Travel: The Fifth Circuit upheld a district court’s dismissal of the petitioner’s challenge
to serious tax penalties he was assessed and related revocation of his passport under the
Fixing America’s Surface Transportation (FAST) Act when he failed to pay those
penalties. Among other things, the Fifth Circuit rejected plaintiff’s constitutional
challenge to the FAST Act’s passport revocation provisions, which plaintiff alleged to
violate the constitutional right to international travel. The court differentiated between the
right to domestic versus international travel, holding that government restrictions on
international travel were not subject to strict scrutiny and concluding that the FAST Act’s
passport revocation scheme passed constitutional muster when reviewed under either a
rational basis standard or an intermediate standard between rational basis and strict
scrutiny (Franklin v. United States).
Author Information
Michael John Garcia
Kristen Hite
Deputy Assistant Director/ALD
Legislative Attorney
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