Mr. Suri (00:00):
Mr. Chief Justice and may it please the court. The Court of Appeals has effectively nullified the Tobacco Control Act's restrictions on venue. Under the act an adversely affected person may challenge the denial of an application only in its home circuit or the D.C. Circuit, but under the decision below, an applicant may challenge a denial in any circuit anywhere in the country so long as it can enlist a local retailer willing to join its petition. That decision is wrong in two different ways. First, the only person entitled to challenge the denial of an application is the applicant itself, not the applicant's retailers.
(00:43)
Retailers are bystanders to the application process. They don't submit information to the agency, don't participate in the agency's review process, don't receive the order issued by the agency at the end of that process and don't even get to see the full contents of the application or administrative record. Their interests lie outside the zone that Congress sought to protect. Second, even if the retailers could sue, applicants don't get to ride in on their coattails. Venue must be established separately for each party and an applicant, the manufacturers here, may not leave venue based on the retailer's residence. The judgment of the Fifth Circuit should be reversed.
Justice Thomas (01:30):
So if your argument is that only applicants are covered, what do you do with the language, any person adversely affected?
Mr. Suri (01:42):
The language any person adversely affected requires the Court to infer the class of appropriate plaintiffs from the structure of the statute and the language was used by Congress with respect to two classes of actions, regulations, and denials. With respect to regulations, the class of adversely affected persons won't refer to applicants because there's no application process there. But with respect to denials, the only person properly regarded as adversely affected is the applicant itself and the main reason for that is the structure of the statute. It is implausible that Congress set up a system in which someone, the retailers, would have a right to challenge an agency order but wouldn't have a right to be notified of the order in the first place. It's simply unlikely that Congress would have expected such a person to be able to challenge the order within 30 days after it's issued. They don't even know that it's been issued in the first place.
Justice Kagan (02:38):
But just with-
Chief Justice (02:38):
Well, I think they probably do in terms of what they're following. I think it's a bit much to call them bystanders. I mean their business depends upon this or in other circumstances, whatever the retailers are, and the whole purpose of the proceeding is to either overturn a decision preventing retailers from doing what retailers do with respect to the particular product. I mean if that's the whole point of it from the government's point of view, the regulatory point of view, and what's harmful to the public, it's whether or not these products are going to be sold. I don't know why the retailers aren't the most likely people to bring an action, a challenge to it.
Mr. Suri (03:25):
The most likely people to bring an action are the applicants themselves. We are not aware of a single case where a retailer has brought a freestanding challenge unaccompanied by the applicant. That's because it's simply practically implausible that the retailer would be able to do so. Again, the retailer isn't notified that the order has been issued and doesn't get to see the contents of the application. So as a practical matter what's going on is that the retailer is simply a prop being used by the manufacturer to enable them to get into the circuit they prefer. They're not adding any value to the case itself.
Justice Kagan (03:59):
What you suggested Mr. Suri about the structure of the statute, I mean I would think that this structure says it points in the exact opposite direction from what you said. It says, A is the promulgation of a rule and B is the denial of an application. And as to both of those, any person adversely affected can file a petition and you're essentially reading this so that the any person adversely affected has two different meanings, two different definitions for the A and the B. And I would think that that's a very strange way to think about this section.
Mr. Suri (04:36):
I respectfully disagree with the premise of that question, Justice Kagan. We are reading adversely affected to have the same meaning for A and B, it means the zone of interests test. It means you must infer from the structure of the statute the appropriate class of plaintiffs. It's just that the interests protected by the provisions authorizing regulations are different from the interests protected by the provisions authorizing denials of applications.
Justice Kagan (05:01):
Well, I guess I see the point. If you broaden out the generality, you can say, oh, it's still any person adversely affected, but as to A, it's one group of people. As to B, it's only the applicant and I guess I just wouldn't understand a person writing this provision to have that in mind, to think that it can flip around as between A and B when the same language comes after it.
Mr. Suri (05:31):
On any reading of the statute, Justice Kagan, there are going to be different classes of people adversely affected under A than under B. A refers to regulations establishing and revoking tobacco product standards. So the adversely affected people could potentially include smoking cessation groups that believe that the tobacco manufacturers are being under regulated. B, however refers only to the denial of an application. It doesn't refer to the grant of an application, so it doesn't allow for under-regulation to be challenged-
Justice Kavanaugh (06:03):
Does the retailer have Article III standing?
Mr. Suri (06:06):
Yes, we accept that the retailer has Article III standing.
Justice Kavanaugh (06:09):
Why?
Mr. Suri (06:10):
The retailer is in this case being ultimately prevented by the act from selling the products that the retailer wishes to sell. If the denial were reversed, then there is a chance that that injury would be redressed because-
Justice Kavanaugh (06:28):
That sounds like adversely affected.
Mr. Suri (06:30):
That might sound like adversely affected in the colloquial sense of the term adversely affected. We don't deny that as an ordinary use of the English language you might regard this as an adverse effect, but the whole point of this Court's case is interpreting adversely affected and aggrieved is that those are legal terms of art. They don't refer to the-
Justice Kavanaugh (06:49):
Well how do you deal with a case like Bank of America?
Mr. Suri (06:52):
Bank of America was a Fair Housing Act case where there was a special definition of the term aggrieved person. The court in the 1970s had interpreted to extend all the way to the limits of Article III. While more recent cases of the court have questioned whether it really goes quite that far, it does go beyond the normal meaning of the-
Justice Kavanaugh (07:11):
Well, you do agree, don't you, that adversely affected usually in administrative law includes competitors or includes others in the chain of distribution, the manufacturers, the retailers, the distributors that usually can include all those as a matter of basic add law principles.
Mr. Suri (07:33):
I agree with the first part of that statement. It certainly includes competitors in a wide variety of contexts. Almost all of this Court's APA zone of interests cases have involved competitors or other entities with interests adverse to the directly regulated party. This is a very different circumstance. This is an ally of the directly regulated party whose interests are derivative of that party. The only case I'm aware of that looks like that is Block against Community Nutrition Institute, the case about the milk consumers and milk handlers. In that case, the court said that the milk consumers didn't have the opportunity to sue. One of the reasons given by then Judge Scalia in his opinion in the D.C. Circuit was they're indirectly affected and the directly affected party is the more natural plaintiff. That's exactly the situation here.
Justice Jackson (08:22):
And isn't conceptually, I guess, isn't it the case that the retailer's real interest kicks in when a product is marketed? So when it's on the market then we say, okay, we understand that retailers can invest, they want to put it in their stores, they want to sell it to their customers, but I guess conceptually there might be a distinction between that and the retailer's interest in pre-market development and research. Wouldn't you think they would be agnostic as to products in development from the retail perspective?
Mr. Suri (09:01):
That's absolutely right, Justice Jackson and I think this case suffers from a bit of an optical illusion. The fact that the products are on the market is a result of FDA's deferred enforcement policy. But in trying to figure out what Congress intended in the statute, it's helpful to put FDA's enforcement decisions to the side and look at how Congress anticipated that this scheme would play out.
Justice Jackson (09:26):
And it anticipated that this would be happening. This meaning the approval prior to market that-
Mr. Suri (09:31):
Absolutely.
Justice Jackson (09:32):
… that the denial that is at issue here is happening before this product ever is sold by anyone. And so then the question becomes what is the retailer's interest in that?
Mr. Suri (09:42):
Exactly, and the question the court should ask itself is would Congress have anticipated that you have a scheme where a retailer doesn't know this application process is going on, doesn't know that the agency has issued a denial order, probably doesn't even know that the product exists under the statute's confidentiality provisions. Does this retailer get to swoop in out of nowhere and within 30 days institute a judicial review system?
Chief Justice (10:07):
I think that's a very impractical understanding of the… The reason it's not premature and from one perspective, the reason the manufacturer is doing this stuff is because it wants to make a product that the retailers want to sell and the retailers presumably will identify problems and the manufacturers will know about it and they'll try to undertake research, whatever to fix it.
Mr. Suri (10:28):
I'm sorry, Mr. Chief Justice, it's not realistic to say that the retailers are contributing something valuable to the case. Look at this case for example, the basic claim is that the agency unfairly surprised the applicant by changing the standards under which it evaluated the application. Now the retailer has no idea whether the applicant was surprised or not because-
Chief Justice (10:48):
Why do you say that, you don't think there's conversations or discussions or conferences for all I know between the retailers and the manufacturers of the product they sell?
Mr. Suri (10:59):
There may be, but the statute does not require that the agency even reveal the existence of the application to the retailer or the existence of the order. So the question simply is, does the manufacturer get to talk to the retailer on the side and thereby enlist the retailer to participate? The only reason for the manufacturer to do that is to try to get around the venue restrictions. It's not because the retailer is adding some facts or information or legal analysis to the case that the manufacturer couldn't have otherwise.
Justice Kavanaugh (11:28):
You're analyzing it as if the statute only allows suit by the most adversely affected. I mean the retailer is losing money, substantial money that it would otherwise be able to potentially make and that financial injury certainly sounds like adverse effect under any, as you would say, ordinary understanding of the term but also any administrative law understanding of the term that I'm familiar with.
Mr. Suri (11:58):
No, but you could say similarly about the milk consumers in Block against Community Nutrition Institute that they were adversely affected because they had to pay more for the milk. Yet Judge-
Justice Kavanaugh (12:09):
Consumers are arguably analyzed a little differently than those who are in the upstream or downstream chain of production and distribution and sale.
Mr. Suri (12:22):
I respectfully disagree with that Justice Kavanaugh. The entire point of authorizing these e-cigarettes, if they're ultimately authorized, would be to save the lives of consumers, would be to ensure that they can switch from more dangerous products like cigarettes to less dangerous potentially products like e-cigarettes. So if they're outside the zone of interests, then the retailers whose substantive interest Congress really didn't care about at all are certainly outside.
Justice Kagan (12:50):
Do you think that there's anybody who's adversely affected other than the applicant?
Mr. Suri (12:54):
No.
Justice Kagan (12:55):
So why didn't they just say the applicant?
Mr. Suri (12:57):
Because Congress drafted a provision covering both regulations and denials and the fact that it yoked those two together in a single provision forced it to use a more general term, adversely affected?
Justice Kagan (13:10):
Yeah, I mean you might think that they're yoked together because Congress meant for the same people to be able to sue with respect to both.
Mr. Suri (13:18):
But as I was-
Justice Kagan (13:19):
I mean in the withdrawal section it does use the word applicant.
Mr. Suri (13:23):
But the withdrawal section applies only to withdrawals. It doesn't also refer to regulations and for that reason-
Justice Kagan (13:30):
Right, I was just thinking they knew how to use the word applicant. If they thought that the denials should only be about applicants, then they would've written a provision pretty much like the withdrawal provision that says with respect to a denial an applicant can sue.
Mr. Suri (13:46):
Well, let me try it this way. The fact that Congress used the word adversely affected in one provision and the phrase applicant in the other provision certainly requires an explanation. One explanation is the one that respondents have offered, which is adversely affected covers people beyond applicants, but there's another explanation which is that the provision covers both regulations and denials and Congress was forced to use the broader term. There's also a structural implausibility in the other side's argument, which is that retailers are allowed to challenge denials but are not allowed to challenge withdrawals. Withdrawals affect retailers far more directly than denials. It requires them to take off the shelves products that they have lawfully been selling, and yet in that context, Congress made clear that only the applicant is allowed to sue. Now no one has come up with any reason why a rational Congress would have set up the scheme that way.
Justice Jackson (14:43):
Mr. Suri, can I just ask you, I was a little surprised by your emphatic response to Justice Kagan that no one else fits into the category of adversely affected. What about some… I'm hypothesizing an interest group that really believes that the sale of flavored cigarettes is important for helping people to stop smoking, adults. And they really believe this and in their research this is a net positive despite the effects on children or whatever else. Because they have an interest in this particular product, why wouldn't they be adversely affected for the purpose of this statute?
Mr. Suri (15:29):
As much as I'd like to be able to say that other entities would be included, I don't think we could say that. The reason that they're not adversely affected and they're not entitled to sue is ultimately the same reason the retailers aren't entitled to sue either, which is Congress set up a scheme in which they're not entitled to participate in the administrative process and they don't get notice of the order when it's issued. If you're trying to ask what is the group of people whose interests Congress was trying to protect, a good proxy for that is whom did Congress allow to participate in the administrative process?
Justice Jackson (16:03):
Help me to understand then how you are reconciling the text because I don't quite understand it. We do have text that says any party adversely affected on the one hand with respect to denials and we have text with respect to withdrawals that say the holder of an application. You are interpreting those to be equivalent, but they're different language. So how is it that we arrive there?
Mr. Suri (16:28):
We are not interpreting them to be equivalent.
Justice Jackson (16:30):
Okay.
Mr. Suri (16:30):
One requires the court to apply the zone of interests test and with respect to a subset of the agency actions covered by the provision that refers to adversely affected. With respect to the denials, it turns out that the only people adversely affected are the applicants.
JUSTICE BARRETT (16:46):
Mr. Suri-
Mr. Suri (16:46):
Another way-
JUSTICE BARRETT (16:47):
Sorry. Please finish with Justice Jackson.
Mr. Suri (16:49):
Please go ahead.
JUSTICE BARRETT (16:50):
I just wanted to take you to the venue question. Your venue and joinder argument. I just don't want your time to expire before we talk about that a little bit. Let's assume that I think we have the discretion to reach it. The Fifth Circuit, we don't have a lot on it, right, and there's not a circuit split on it. We have a couple circuit court of appeals opinions. Assume that I think we have the discretion to do it, why should we do it and do we risk… I mean, normally we wait for things to percolate and develop so that we don't inadvertently forge ahead and into areas where we might disrupt things. So why wouldn't that prudential concern apply here?
Mr. Suri (17:24):
You should do it because the degree of forum shopping that has happened under the Fifth Circuit's decision so far has been quite remarkable. In 2024, we counted about 14 petitions for review filed by e-cigarette companies under the act.
JUSTICE BARRETT (17:39):
But wouldn't this have ramifications outside of the TCA? That's a little bit what I'm concerned about here. The government gets sued in a lot of places and this would matter beyond just the TCA, correct?
Mr. Suri (17:50):
It could depending on how you rule, and I could offer the court a way to limit its decision to statutes that are phrased just like this statute. The court could set aside the question of what is the default rule for suits against the government, whether everyone must have venue or only one party must have venue and it could just focus on the language of this statute. It says that an adversely affected person may file a petition for review in the circuit where the person resides or has its principle place of business. And the key verb there is file. I take my friends to be drawing a distinction between…
Justice Sotomayor (18:24):
I didn't hear that. The key…
Mr. Suri (18:26):
The key verb is file.
Justice Sotomayor (18:29):
I just didn't hear. Okay.
Mr. Suri (18:33):
I take my friends to be drawing a distinction between filing a petition and joining a petition, but that argument ultimately doesn't stand up. When four different entities jointly file a petition every single one of them is a filer of the petition. Reynolds is just as much a filer of this petition as the retailers are. And the question is are they filing their petition in a circuit that the statute permits them to and they're not. They're not filing in the circuit where they reside or have their principal place of business and they're not filing in the D.C. Circuit either.
Justice Alito (19:07):
Some of the… I'm sorry, did you finish that sentence?
Mr. Suri (19:10):
I'm finished.
Justice Alito (19:10):
Some of the amici claim that there are as many as 650 review provisions that are similar to the one here. So how many of those, can you tell us how many of those would be subject to the limitation that you just set out?
Mr. Suri (19:30):
I don't have an exact number, Justice Alito, but the amici are including in their numbers the general venue statute, which refers to suits in District court and Hobbs Act but both of those are worded very differently. They don't talk about where a person may file a petition, they just say where venue is proper and use terms like the petitioner or the plaintiff.
Justice Alito (19:51):
Well, there are a lot of statutes that have specific specified venue provisions, right?
Mr. Suri (19:58):
Yes.
Justice Alito (19:58):
And would this apply to all of… Would our decision here apply to all of those?
Mr. Suri (20:04):
Not necessarily all of those. Some of those are worded like the statute here. I think the only example cited in the parties briefs and the Chamber of Commerce amicus brief are the Investment Advisors Act and the Natural Gas Act. Yes, it's true that other statutes that are worded the same way as this statute would be interpreted the same way as well.
Justice Kagan (20:25):
And what about 1391? Would this be a way essentially to bracket 1391 or would 1391, is it similar enough so that we might be taken to say something about 1391?
Mr. Suri (20:41):
While we would very much like an opinion that addresses in dicta 1391 as well, the court doesn't need to go that far. The court could say we're just focusing on the language of this statute.
Justice Kagan (20:54):
Sure. I'm just saying is your suggestion, which is you don't have to rely on any kind of default rule about the government and instead just focus on the language of the statute. What do you think candidly, honestly, that would suggest or not about 1391?
Mr. Suri (21:13):
What that would take away in the 1391 cases is this argument, which I think is wrong in the first place, that there's some special rule for suits against the government. What would be left in the 1391 cases is simply to analyze the language, history and purpose of that statute, applying the normal rules of statutory interpretation. While we think we have the better of those arguments, those would be the issues that the courts would have to resolve in that context.
Justice Sotomayor (21:40):
Mr. Suri, I thought when I read the venue statute at issue here, not that you were relying on the word file, but that you were relying on the explicit use of something that's not in the other statutes, at least the ones that had been brought to our attention in the briefs. The language here is any person adversely affected may file a petition for review in their residence or the District of Columbia in which such person… It was the word such person, which is missing from all the other statutes.
Mr. Suri (22:20):
It's not missing-
Justice Sotomayor (22:21):
And I may be wrong, but I think it's missing from 1391.
Mr. Suri (22:24):
It is certainly missing from 1391 and the Hobbs Act, it's missing from the most important statutes.
Justice Sotomayor (22:30):
Those were the two I looked at, but so that's why I'm not sure. I know you'd like us to say that the government should not be treated differently, but by suggesting that you're inviting a larger ruling than Justice Barrett suggests, we might want to undertake.
Mr. Suri (22:49):
I'd prefer to win as big as I can get away with, but if the Court is concerned about issuing a broad ruling, it can certainly focus on the words file and such person, which are not unique to this statute, but which do distinguish the statute from the others that the other side is most concerned about?
Justice Sotomayor (23:08):
What do we do with your forfeiture meaning… And Justice Barrett said we might have equity to go by and I do understand the forum shopping concerns that you have, but what do we do about the forfeiture?
Mr. Suri (23:24):
The issue was passed upon below and was-
Justice Sotomayor (23:27):
How if you forfeit? You didn't raise it explicitly in this way.
Mr. Suri (23:31):
It was passed upon the top of page 3A and the bottom of page 5A of the petition appendix where the court of appeals stated that venue is proper because two out of the four parties have their principle places of business within the circuit. We didn't raise it in this case because we were foreclosed from doing so by circuit precedent. They argued that we didn't raise it in a previous case as well, the circuit precedent that foreclosed the issue in this case. But I'd like just to quickly put that in context. There the issue arose initially on a stay motion. We said there's a question asked venue but we can't be sure because the record doesn't show where all the parties reside.
(24:12)
They in their reply brief said it doesn't matter because one party resides in the circuit and then the Fifth Circuit issued a published opinion accepting their theory. We never really had a chance to engage on that issue. The Fifth Circuit issued a published opinion that was binding precedent in this case and we tried to make arguments that weren't foreclosed by that precedent, but the Fifth Circuit rejected that as well. So all of that is properly before this one.
Justice Kagan (24:36):
And then what's your view of what question you brought to us?
Mr. Suri (24:40):
We brought the question whether a manufacturer can sue in the Fifth Circuit if it doesn't reside there or have its principle place of business there. And we gave two different reasons why they're not able to do so. The Court could address either of those arguments in either order and it would be sufficient to reverse if it agreed with us on the second part.
Chief Justice (25:02):
Thank you counsel. Justice Thomas.
Justice Thomas (25:06):
We're definitely not talking about jurisdiction here. We're merely talking about venue and when I think of venue and normally think of convenience to the parties, as a practical matter, why is it inconvenient for the government to litigate in one circuit versus another?
Mr. Suri (25:25):
It's not inconvenient for the government-
Justice Thomas (25:27):
So what's this all about?
Mr. Suri (25:29):
It's about Congress's choice in the statute. Congress could have passed a statute that said you can sue the government anywhere you want. It chose not to do that. It specified particular venues. I think it had good reasons to do that. One is to minimize opportunities for forum shopping, ensuring that cases can percolate among multiple courts before they get to this court. Contrast wages where you had cases from eight different circuits that address the question before it got to this court to what's happening now where almost all the cases are being filed in the Fifth Circuit. Congress had good reason.
Justice Thomas (26:04):
It seems like it's convenient for you then.
Mr. Suri (26:07):
Well, it's the statute Congress enacted and that's what we're asking the court to apply.
Justice Thomas (26:11):
So does it have anything to do with your not winning in the Fifth Circuit?
Mr. Suri (26:19):
We neither like nor dislike the Fifth Circuit, Justice Thomas. What we dislike is for the other side to be able to choose whichever circuit is most convenient out of all 12 in the country.
Chief Justice (26:30):
Justice Alito.
Justice Alito (26:32):
Suppose a retailer continues to sell, views products and is criminally prosecuted, could that retailer assert that the denial was unlawful as a defense in the criminal proceedings?
Mr. Suri (26:47):
There would be no jurisdictional bar to the retailers doing so as there's nothing like the Hobbs Act issue that you'll be hearing about in the second case this morning. We would simply argue that the retailer's defense would fail on the merits. The statute says that the product may not be sold without authorization and regardless of whether the denial was lawful or unlawful, that doesn't result in getting an authorization. That's like a driver driving without a license and saying, "I should have been issued the license, but I wasn't." That usually wouldn't be regarded as a valid defense.
Justice Alito (27:21):
Your friends on the other side say that this dispute is basically irrelevant because petitioners challenging the same agency order in different circuits petitions… I'm sorry, challenging the order in different circuits will eventually be consolidated. What's your response to that?
Mr. Suri (27:37):
The response to that is that the multi-circuit petition process includes a provision that says that a court at the end of that process determines the most convenient forum and can send the cases to that forum. They have circumvented that ability of a court to identify the most convenient forum by allowing them to use the tactic that they've used. They can unilaterally send the cases to whichever court they prefer.
Justice Alito (28:05):
Thank you.
Chief Justice (28:06):
Justice Sotomayor.
Justice Sotomayor (28:07):
Explain that to me. I thought the multi-circuit rules required that the first filing controls correct.
Mr. Suri (28:20):
The first filing controls if there's one filing in the first 10 days and then further filings after the first 10 days. But regardless of whether the first filing controls the court in which the petitions are consolidated can receive a motion to transfer the case to what it regards as the most convenient forum. And we have cited authorities saying that preventing gamesmanship is a valid basis for granting such a motion. So if they tried some tactic to engineer the cases to get to the Fifth Circuit, we would respond potentially by filing that type of motion. They've prevented us from doing that by not invoking the multi-circuit process.
Justice Sotomayor (29:01):
I see. By filing everything in the Fifth Circuit
Mr. Suri (29:04):
Exactly.
Justice Sotomayor (29:04):
And joining everyone there.
Mr. Suri (29:06):
Exactly.
Justice Sotomayor (29:06):
Got it.
Chief Justice (29:08):
Justice Kagan. Justice Gorsuch.
Justice Gorsuch (29:12):
Mr. Suri, on the second question, you say it's not inconvenient to litigate in the Fifth Circuit for the government. I get that, but you say that there's forum shopping concerns by allowing manufacturers to piggyback. Is that right? Those two things, we can hold those two ideas in our head at the same time?
Mr. Suri (29:30):
Yes.
Justice Gorsuch (29:30):
Okay. If we got rid of the manufacturer's piggybacking what would stop manufacturers from simply funding retailer suits and we wind up in exactly the place?
Mr. Suri (29:43):
The first problem with that would be that there is a question about the scope of the relief that would be issued. The statute uses the phrase set aside, and I know there's been some debate about whether that allows for universal relief or party-specific relief.
Justice Gorsuch (29:56):
Putting that aside.
Mr. Suri (29:57):
So it may be that there's relief only for the retailer.
Justice Gorsuch (29:59):
I understand that.
Mr. Suri (30:00):
Putting that aside, there might be additional reasons why a manufacturer is unable to fund the retailer. For example, the contents of the application often include trade secrets that the manufacturer may not be willing to share with the retailer.
Justice Gorsuch (30:14):
But suppose the manufacturer is.
Mr. Suri (30:18):
Well then that's the price that the manufacturer is paying in order to… It may well be-
Justice Gorsuch (30:22):
We could wind up in the same place, is I guess what I'm driving at. Third-party funded litigation is not unknown in this country.
Mr. Suri (30:30):
It is… The ingenious lawyers representing the applicants could come up with some-
Justice Gorsuch (30:36):
You're pretty ingenious too, Mr. Suri, don't sell yourself short.
Mr. Suri (30:40):
-- may come up with some way to circumvent the ruling. I agree. But that is no reason not to enforce the limitations that Congress-
Justice Gorsuch (30:48):
I understand that. And then back on the first QP or how I perceive it, you rely very heavily on Block in your brief. Your friends on the other side say, well, that's a different venue statute
Justice Gorsuch (31:00):
… there. It said, let's see, it may be brought in the district in which such handler, the milk handler, is located, rather than consumers or parties aggrieved or anything like that. So what's your response? I'm sure you've got one.
Mr. Suri (31:17):
I certainly do. The response is that the suit was not brought under that provision. The suit was brought under the APA.
Justice Gorsuch (31:24):
Understood. But the court relied on the overall statutory structure in understanding what the zone of interest in that particular statute was informed in part by that provision as well as the fact that I think the producers of the handlers had to vote on the regulation. And here I don't think the regulated community gets to vote on what you decide.
Mr. Suri (31:49):
The factors, the structural factors that the court in Block consider-
Justice Gorsuch (31:53):
Yeah. Why aren't those distinguishable, I guess is what I'm saying?
Mr. Suri (31:57):
There undoubtedly are some factors that are distinct, but the most important factors the Court relied on also apply here. First, it relied on the fact that the milk consumers played no role in the agency process and that's true of the retailers here. Second, it relied on the fact that the consumers were indirectly affected. That's true here-
Justice Gorsuch (32:15):
I understand that, but I'm not asking you to discuss the points of similarity. I'm asking you to address the points of dissimilarity.
Mr. Suri (32:24):
Yes, I acknowledge that there are points of dissimilarity. We're not saying this case is 100% controlled by that case, but we are saying the most important factors are points of similarity.
Justice Gorsuch (32:34):
Got it. Thank you.
CHIEF JUSTICE (32:36):
Justice Kavanaugh?
Justice Kavanaugh (32:37):
On consumers, that would open it up to basically anyone to sue.
Mr. Suri (32:42):
Potentially.
Justice Kavanaugh (32:43):
Right, and that's potentially a problem, or at least the court might think that that's a strange way to read a statute as distinct from retailers is not going to present that kind of problem.
Mr. Suri (32:57):
But I think that's a problem with respondent's position. The provision directing FDA to evaluate applications explicitly requires it to consider the consumer's interests. It is weighing the risk to their health against the benefits to their health. And if they're not allowed to sue, then I would think that the retailers who aren't even mentioned in the section are even less entitled to sue.
Justice Kavanaugh (33:22):
In response to Justice Thomas, and I might've misheard you, so just correct me if I did, I thought one of your answers about the Fifth Circuit was that prevents multiple circuits from being able to address the issue. Was that one of your answers?
Mr. Suri (33:36):
Yes.
Justice Kavanaugh (33:37):
Well, doesn't the 2112 process yield the same issue? And you say that's perfectly appropriate. Of course, it has to be.
Mr. Suri (33:47):
The 2112 process will result in a single order being challenged in a single circuit. So that's true, but there are multiple applicants with multiple orders all over the country. What's happening now is all of these applicants, whether they're in California or Michigan or Ohio or even China, are going to the Fifth Circuit to sue. What would happen in the world that we think Congress envisioned is the California applicants would go to either D.C. or the Ninth Circuit and Ohio would go to the Sixth Circuit and Florida would go to the Eleventh Circuit and that way similar orders would be addressed in different circuits. That's what's not happening right now under the Fifth Circuit's decision.
Justice Kavanaugh (34:29):
Thank you.
CHIEF JUSTICE (34:29):
Justice Barrett?
JUSTICE BARRETT (34:31):
Mr. Suri, I want to state something about what it means to be adversely affected or aggrieved and then I want you to tell me if we're understanding it the right way. Would you say that it's fair to say that the terms "adversely affected or aggrieved" have gained a particular meaning in the context of the APA when they're used elsewhere? Like in the TCA, they bring that old soil with them so we would understand them to have that capacious APA style meaning unless aspects of the statutory structure in the organic statute overcome that? Do you think that's fair?
Mr. Suri (35:10):
No.
JUSTICE BARRETT (35:10):
Okay.
Mr. Suri (35:10):
The terms "adversely affected and aggrieved" acquired illegal meaning even before the APA in the context of agency-specific statutes and non-APA statutes. And the court has been applying that meaning in the context of non-APA cases even after the 1970s APA cases. So it has acquired a special meaning in the APA context that is more lenient than its meaning in other contexts.
JUSTICE BARRETT (35:38):
So it has kind of a term of art, old soil meaning in this other line of cases?
Mr. Suri (35:44):
Yes.
JUSTICE BARRETT (35:44):
Okay.
CHIEF JUSTICE (35:47):
Justice Jackson, anything further? Thank you counsel. Mr. Watson?
MR. WATSON (35:59):
Mr. Chief Justice, and may it please the Court. This Court lacks jurisdiction to hear this case as we explained in our brief, but if the Court does reach the merits, it should affirm.
(36:08)
The Tobacco Control Act allows any person adversely affected to challenge a marketing denial order and retailers easily qualify. The TCA contains two judicial review provisions that allow for three types of challenges. For withdrawals of marketing authorization, Congress limited review to the applicants. For tobacco product standards and marketing denials, the latter of which is at issue here, Congress permitted review by any person adversely affected.
(36:35)
By allowing any person adversely affected to challenge denials, Congress plainly intended to extend review beyond the applicant and the retailers are the next in line. That plain text point is underscored by this Court's ordinary zone-of-interest test under which an entity harmed by agency action falls within the statutory zone when its interests are arguably protected or regulated by the statute.
(36:58)
And here, the retailers' interests are directly related to the statute because the provision under which FDA denied authorization governs what products may be sold, and the denial prohibits retailers from selling the products. Indeed, the harm to the retailers here could not be more plain. Retailer Avail Texas would go out of business if it could not sell Vuse products.
(37:19)
Finally, by failing to raise it below, FDA forfeited its argument that each petitioner must independently establish venue, but FDA is wrong anyway. Congress enacted the TCA against a uniform judicial interpretation holding that in cases challenging federal action, only one challenger need established venue. In any event, ruling for FDA on this issue would change nothing. All four entities here would still end up in a consolidated case in the Fifth Circuit. Therefore, the Court should dismiss the writ or affirm the order below. And I welcome the Court's questions.
JUSTICE THOMAS (37:51):
Why do you think Congress would treat denials and withdrawals differently?
MR. WATSON (37:58):
As your question suggests, Justice Thomas, Congress did distinguish between those two scenarios. The plain text makes that clear and if we think about why that is the case, it's helpful to look at 387j(d), which is the provision that governs withdrawals. The seven out of the eight reasons for issuing a withdrawal are focused on the applicant. For example, untrue statements in an application or misleading labeling of an applicant or not maintaining the facilities properly from the applicant. It's a very applicant-focused decision by the agency. And then if the agency is considering withdrawing authorization, there is a notice and hearing process that is laid out for the applicant to participate before the agency, before the withdrawal is issued. So it's evident throughout the statutory structure and the other provisions that withdrawals are very applicant-focused. By contrast, a marketing denial is much more broadly focused as to whether the products may be sold and in that respect the applicant and the retailers have the same interest which is selling the products.
Justice Sotomayor (39:00):
But what else can you do? Meaning, retailers have no greater rights if the manufacturer fails to do something in the administrative process, you can't make it up. You come in with the exact same rights for approval that the manufacturer has exercised or not exercised.
MR. WATSON (39:27):
The decision that the agency is making under 387j is whether to authorize the marketing, the sale of the products. And in that regard, the applicants and the retailers are similarly situated. They both have an interest in selling these products.
Justice Sotomayor (39:39):
Tell me what you can do that the manufacturer can't do in challenging the order. You're stuck with the record the manufacturer created, correct?
MR. WATSON (39:52):
The administrative record would govern a challenge filed by retailers or by applicants.
Justice Sotomayor (39:55):
So what arguments could you raise that would be different than the manufacturer's?
MR. WATSON (40:03):
I take your question, Justice Sotomayor, to be getting at why would retailers be involved in the litigation process? What do they add to that? What additional argument could there be? And in that regard, I would point the Court to the fact that when a marketing denial order is issued, it's very important to everyone in that distribution chain to seek a judicial stay of that order immediately so that the products may continue to be sold. And we went into court immediately and sought such a stay. When making that argument, the irreparable-
Justice Sotomayor (40:29):
But the manufacturers could have done that if they really thought it was necessary.
MR. WATSON (40:34):
Yeah.
Justice Sotomayor (40:35):
But they can't do it unless there's something inadequate in the record, correct?
MR. WATSON (40:42):
Both the manufacturers and the applicants jointly did that in this case. And my point was that in seeking a stay, irreparable harm has to be established and the fact that for example, Avail Texas, one of the retailers here, will have to go out of business if it cannot sell the Vuse products. It's relevant to that.
Justice Sotomayor (40:57):
I fully understand the harm but it's identical to withdrawal. So you're going to be harmed in any situation whether there's approval not given or it's withdrawn.
MR. WATSON (41:10):
It is true.
Justice Sotomayor (41:10):
I am asking you what rights in the administrative, what arguments, what evidence, what anything can you present that would be different than the manufacturers'?
MR. WATSON (41:24):
The retailers can make the same arguments and it is based on the same administrative record, Justice Sotomayor, but-
Justice Jackson (41:30):
Sorry, go ahead.
MR. WATSON (41:31):
But here Congress has distinguished between the withdrawal scenario which is limited to applicants and-
Justice Jackson (41:35):
Yes, and that distinction is what really bugs me about your position because I think we would all agree that the retailers have a significant interest once the product is on the market, that they have purchased it, they have stocked their shelves, they are ready to go. In fact, they might even have sales numbers where it's been out there and now their skin is really in the game. And yet, in that situation in which they would be clearly harmed if suddenly approval was withdrawn, Congress has made clear that they don't have the ability to sue.
(42:15)
And so it seems just at least peculiar, if not, in my view, sort of undermining your argument that the retailers have an interest in the pre-market scenario, that would entitle them to sue. The fact that Congress has said in the very situation in which we would expect that retailers would be able to come in to protect their own interests, Congress has not allowed them to.
MR. WATSON (42:39):
Justice Jackson, I think I would answer that in two parts. The first is that very strong interest that you identify, we agree and that is implicated here because in this case these products are on the shelves of retailers-
Justice Jackson (42:50):
Can we just pause for… Let's talk about the post because I do want to get back to that, but I agree with you that once the product is marketed and the retailers, I think in some places they actually purchase it to sell to their customers. I mean, they're in this thing.
MR. WATSON (43:05):
That's correct.
Justice Jackson (43:06):
Congress says if the FDA withdraws its approval of products that they have already purchased and stocked their shelves, they can't sue. So that suggests to me that Congress was really not in this statute protecting retailers' interests.
MR. WATSON (43:23):
It is absolutely true that in the withdrawal scenario they cannot sue, but Congress here drafted a separate provision that says any person adversely affected can challenge the marketing denial.
Justice Jackson (43:32):
No, I understand, but what we have to try to figure out what Congress wanted with respect to whether retailers were in the class of people that should be entitled to sue and the clue from the statute here is that Congress was not focused on retailers because if they were, they really would've given retailers the ability to sue where their interests are most seriously affected.
(43:53)
Let me ask you about the pre-market assumption that retailers and manufacturers actually stand in the same shoes. I guess I'm not sure I understand that because it would seem to me that retailers really get their interest from marketed products. Again, once the product is on the market, the retailers come in, they buy it up, they do whatever and they're ready to sell it to customers. I'm not sure that they have the same interest as a manufacturer in pre-market, pre-development, is it going to be approved or not. So can you say more about why you're just assuming that retailers and manufacturers have the same interest in the pre-market scenario?
MR. WATSON (44:37):
Absolutely. It's clear that retailers are the next in line in terms of the harm suffered behind applicants and the reason is that they want to sell these products whether it's on their shelf right now or they just have a desire to do so for their business purposes going forward.
Justice Jackson (44:49):
But why is that a harm? Why is that a harm that Congress would want to protect here? I mean, it seems to me the retailers just want to sell some tobacco product. They see that this product might be developed. Mr. Suri says they don't even see that because this is happening confidentially, but fine, they hear about this kind of product and they're excited. Okay, I understand that, but why are they harmed if that product never gets approved?
MR. WATSON (45:14):
Because section 387j, which is the core section that we're talking about here, governs whether the product may be introduced into interstate commerce and retailers have business interest in selling certain products over other products. They don't just want to sell some product. Here, the retailers want to sell these products and the thing that is stopping them from doing so is the agency action.
Justice Jackson (45:34):
How is their interest different than the customer? So say I'm a customer out there that really is interested in a flavored tobacco product because I think it's going to help me to stop smoking. And so just like the retailer, I hear about it, I really want to buy it, is that person adversely affected for the purpose of this statute?
MR. WATSON (45:56):
The difference is that the statute here prohibits the retailer from selling a product that has been denied and subjects them to severe penalties if they do so, which include imprisonment, civil, monetary penalties, injunction and seizure. None of that applies to a consumer who wants to purchase their product. Thus-
Justice Kagan (46:10):
Can I flip you to your other argument, Mr. Watson? So let's assume that a retailer is adversely affected for purposes of this question. So a person adversely affected may file a petition for review with the D.C. Circuit or the circuit in which such person resides. Such person is the person adversely affected who files a petition for review. How do we read that any other way than that each person petitioning for review do so in either the D.C. Circuit or that person's home district?
MR. WATSON (46:44):
Justice Kagan, the way to read that is in light of the decades-long uniform judicial interpretation of nearly identical venue provisions that govern suits against the federal-
Justice Kagan (46:54):
Okay, I want to let you talk about that, but if that's the first sentence out of your mouth, it's kind of a concession that this language taken on its own is best read against you, is best read for the government.
MR. WATSON (47:06):
We don't concede that, but we do think that our best textual argument is you read that text in light of how it has been interpreted by courts and how we assume that Congress had in mind when it enacts it against that, but we don't concede. Happy to discuss the other reasons.
Justice Kagan (47:20):
Well, okay, give me the other reasons. Just on the text itself. I mean, I want to know how to read that text your way.
MR. WATSON (47:27):
So at best for the FDA, the text is ambiguous because yes, it refers to "such person". It also refers to "their", which is plural. And 1 U.S.C. 1, the Dictionary Act, says that singular can refer to the plural. I would also point out that even if it is singular, it doesn't actually answer the question here. So let's assume it's singular. That just means that at least one person has to satisfy it. It doesn't mean that every person has to satisfy it. And that's essentially the rewriting that FDA's position does is rewrite it to say every person has to satisfy it or all persons have to satisfy it.
Justice Kagan (47:59):
Well, I take the point that it doesn't say, "and we mean," and then answer the question in this case, but usually you look at a statute, it says "such person", we're talking about a person, that's the person who's filed and that person has and is given two choices, D.C. Circuit Or the circuit in which the person resides
MR. WATSON (48:19):
Justice Kagan, the other point that I would make on this is that nothing in the Tobacco Control Act overrides the operation of basic joinder principles. And the four respondents here filed the petition for review invoking Federal Rule of Appellate Procedure 15. 15(a) is what allows joinder where practicable if the parties are challenging the same order and have the same interest as is the case here. So nothing in that provision overrides the background operation of joinder principles, which support our position and our approach here.
Justice Kavanaugh (48:50):
Can you address, going back to the first argument, all your responses to Block?
MR. WATSON (48:57):
Yes, happy to do that. As an initial matter, Block supports our approach for how you look at the statute to construe what the zone of interest is. It looks at all of the relevant provisions in the entire structure of the statute, which is what we are suggesting that this court should do.
(49:13)
The reason that Block is distinguishable is that included a collaborative price-setting process set out in the statute, whereas Justice Gorsuch mentioned, the members of the industry, the handlers and the processors had votes as to the price setting and then there was an administrative review mechanism which was limited to handlers and did not involve consumers. There then was a judicial review provision that was limited to handlers and not to consumers. The consumers tried to go outside of all of that and invoke the APA in their own lawsuit. And the court said, and this really wasn't even a zone of interest case, it was a case about precluding judicial review.
(49:49)
The court said, well, the structure of the statute precludes judicial review there. That would be like if consumers or perhaps even retailers tried to file a district court APA challenge to a withdrawal decision, right? This statute in the Tobacco Control Act has an administrative review process for withdrawals and it's limited to applicants and it has a judicial review provision for withdrawals and it's limited to applicants. If someone other than an applicant ran to district court and filed a challenge to a withdrawal decision, the court might say the statute precludes judicial review of a consumer suit in that context. But that's not what we have here.
(50:24)
Here, the TCA expressly distinguishes between applicants on the one hand and any person adversely affected on the other. So once we decide that someone other than an applicant is included with any person adversely affected, the next question for the court is who's the next in line in terms of being harmed? And here, that is plainly the retailers. The retailers here are subject to a prohibition on selling the products after the denial and are subject to severe penalties if they violate that. And indeed, the FDA press releases that accompanied the marketing and denial orders for the views products expressly threaten enforcement against the retailers if they continue to sell the products. So it's hard to see how retailers in that context would not be adversely affected by a marketing denial. And as I noted in my opening-
Justice Jackson (51:13):
Sorry, go ahead.
JUSTICE BARRETT (51:14):
I was just going to ask you if you could respond to the same question that I asked Mr. Suri about the meanings of the terms "aggrieved and adversely affected". I asked him whether they had a special meaning that they'd acquired in administrative law that we assume presumptively applies elsewhere unless the statutory structure overcomes it. He responded that really they have a longer common soil, longer common law meaning that brings the old soil and that the APA is, as I understood his answer, unique. What's your understanding?
MR. WATSON (51:45):
My understanding is that if we just look at the plain text here, we plainly prevail. But I do acknowledge that the Court has applied a zone-of-interest test in these contexts and that "any person adversely affected" has a meaning under those tests. Where I would disagree with my friend is the notion that the Court's usual lenient zone-of-interest test has not been applied outside of the APA context.
(52:07)
The Bank of America case is an example. That was a Fair Housing Act case, and the Court applied a very lenient version of that test which included the word "arguably." The Thompson case was a Title VII case. That likewise applied the usual lenient version, and it used the word "arguably" again there.
JUSTICE BARRETT (52:22):
But when you say usual and you point to the Bank of America case, I mean really what you're saying then is that the lenient test from the APA generally applies absent, some of it.
MR. WATSON (52:36):
Yes. In fact, this Court in the Bennett decision at page 163 indicated that the usual test applies unless the statute expressly indicates otherwise. In that case, "any person" was the phrase in the Endangered Species Act, and so the Court said, "Well, that indicates otherwise." That's even broader. Here, there's no express overriding of that test and in fact, the language of the judicial review provision at issue here is verbatim the same as the APA judicial review provision.
JUSTICE BARRETT (53:00):
And let me just ask you one question about venue. Your friend on the other side says, "Oh no, no, no, don't worry about it." Mr. Suri said we could have a large win on the venue joinder issue and we would be happy with that, but a small win would be fine too. And if we find the holding just to the TCA, he said that would be, we could assure ourselves that we wouldn't cause damage elsewhere. What risks do you see if you lose on that issue?
MR. WATSON (53:30):
If we lose on that issue, it is hard for me to see how it would be cabined to just the Tobacco Control Act context because the Tobacco Control Act's language is quite similar to the Hobbs Act, and the Hobbs Act is quite similar to the general venue statute, all of which have been construed to allow just one party to establish venue. And that's all against-
Justice Kagan (53:49):
I don't think that's quite right, Mr. Watson. I mean, you do analogize primarily to the Hobbs Act and the Hobbs Act strikes me as very different. The original version of the Hobbs Act allowed for venue where any of the parties filing the petition for review resided. That was the original version and then they maintained that meaning by just defining in their definition of petitioner. So the current version does the exact same thing by reference to a definition, that it makes it clear that you can get venue where any of the persons filing the petition for review resided, which is exactly what this section does not do.
MR. WATSON (54:32):
Respectfully, Justice Kagan, none of the cases we point to under the Hobbs Act rely on the definitional provision and indeed none of them even refer to that. I acknowledge of course that it was amended, but that is not the basis for those decisions-
Justice Kagan (54:45):
Whatever the basis was and whether they were just sort of thinking about the old Hobbs Act so they didn't have to say, "Oh, you know, the new Hobbs Act does the same thing by using a definition." I mean, it does do the same thing by using a definition and what the Hobbs Act does and has always done is to say where any of the parties reside, that's where you can file.
MR. WATSON (55:07):
What the courts in the Hobbs Act cases were largely doing is looking to the context in the previous interpretations of the general venue statute and how that had been construed. So the Railway Labor Executives case from the Ninth Circuit is an example of construing the Hobbs Act in light of the federal general venue statute. And as this Court has seen, the courts of appeals have uniformly held that the general venue statute allows only one petitioner to establish venue, and that's because Congress, when it enacted that statute, was expressly trying to open up and broaden the venues that are available when entities are challenging governmental action. The Sidney Coal case from the Sixth Circuit is a good example of a case that discusses those policies [inaudible 00:55:49]-
Justice Jackson (55:48):
But isn't that a different purpose than is at issue here? I mean, I think what's a little concerning is that if you're right that only one party needs venue here, it seems to directly undermine Congress's intent to channel these kinds of actions in a particular way. It seems like the statute gives those who are adversely affected by the denial two choices in terms of venue. They can file in the D.C. Circuit, or they can file in the circuit in which they reside. If you're right, neither of those become limitations on people who want to sue. And so I guess I don't understand how your only-one-person rule works consistently with what Congress is trying to do here.
MR. WATSON (56:38):
Respectfully, Justice Jackson, our position does not nullify the venue provisions as my friend suggests, and there are a few examples I can give to demonstrate that. One is that not all products are sold nationwide. Many e-cigarette products are sold by mom-and-pop vapor shops on the street corner and those mom-and-pop vapor shops have to seek authorization for each of their own e-liquids in the products. If they do so and they receive a marketing denial order and wish to challenge it in court, they are not going to be able to sue all over the country, they're only going to be able to sue in the relevant locality where they sell those products. But even if we address the context of a product that is sold nationwide and thus is on retail shops-
Justice Jackson (57:18):
Are you saying that Congress was not aware that some products are sold nationwide? I mean, the venue provision has no carve out for national products versus local products. It seems pretty clear that you have a choice. If you don't want to sue where you reside, you can bring your suit in the D.C. Circuit.
MR. WATSON (57:34):
I'm simply suggesting that the nullification argument by my friend is not well put because there are scenarios where venue even under our view will impose an obstacle to the lawsuit being filed.
Justice Jackson (57:47):
But that's not the question I'm asking. I'm not saying do you always get away with it? I'm saying why would Congress have set up a statute or scenario where in the vast majority of cases you can just do an easy end run around these limitations?
MR. WATSON (58:01):
Because as discussed in many of the cases that interpret the general venue statute, Congress has expressly intended that when entities are challenging governmental action, they should have many venue options available to them and they should not have to go just to D.C. That's the effect of what the government's argument is here that we can only file in D.C. together, but that is not consistent with Congress's intent. Normally, venue is a protection for defendants in the ordinary run of cases, but that policy reason is flipped in the-
Justice Jackson (58:31):
Are you saying that Congress couldn't craft a statute in which it was trying to channel the venue in this way, in a way that was not a protection for defendants? Congress was trying to ensure that these kinds of cases go in certain forms or that they're being litigated all over the country and not just in one place chosen by the defendants.
MR. WATSON (58:54):
Congress certainly could craft a statute that makes venue very limited or makes there be very many options. My point here is that the statutes that we're looking at read in the context of other statutes that authorize suits against the federal-
Justice Jackson (59:05):
Why do we have to read it in the context of other statutes? Why can't we look at what Congress was doing in this statute?
MR. WATSON (59:11):
We read it in the context of the other statutes under this Court's decision in Bragdon, in the Texas Department of Housing case. When there is a uniform interpretation by the lower courts, we assume that Congress intended the words that it was enacting to have the same meaning that those uniform courts have held. And here, that supports our position. But, as I was also discussing earlier, even setting that argument to the side, basic joinder principles here support the fact that the four respondents can and did jointly file a petition for review under Federal Rule of Appellate Procedure 15 in the Fifth Circuit, and there's nothing in the Tobacco Control Act that overrides the ability of the petitioners to do so.
(59:51)
I would also note that if we prevail on the first question and retailers are indeed allowed to sue, the second question really is not one that the Court needs to reach both because of the forfeiture argument that we made in the briefs but also because 28 U.S.C. 2112(a) is going to result in all four of the respondents being in the Fifth Circuit in a consolidated case challenging this marketing denial order. So it's not going to make a difference in this case.
Justice Gorsuch (01:00:16):
Can you explain that further why that's the case?
MR. WATSON (01:00:19):
Yes, because, in this instance, the four respondents jointly filed their petition within the first 10 days after the marketing denial order. The government raised a venue objection very quickly. And so within the 30-day timeliness window but outside of the first 10 days, we went to the D.C. Circuit and jointly filed what's referred to as a protective petition there. And that's just been pursuant to the agreement of the parties. And the court held in abeyance in case we don't prevail on the venue issue in the Fifth Circuit. If we have the scenario that I was just discussing, the retailers will be able to still stay in the Fifth Circuit, but Reynolds, the applicant, will be transferred to the D.C. Circuit.
Justice Gorsuch (01:00:57):
I would like you just to finish that answer, please.
MR. WATSON (01:00:59):
The protective petition will come alive at that point, and pursuant to 28 U.S.C. 2112(a), the petition will be transferred to the only court in which there was a first 10-day petition.
Justice Gorsuch (01:01:10):
Got it.
MR. WATSON (01:01:11):
It's here, the Fifth Circuit, and then they will be consolidated. That's all mandatory under the statute.
Justice Gorsuch (01:01:15):
I got it. One other question on the forfeiture.
MR. WATSON (01:01:17):
Yes.
Justice Gorsuch (01:01:19):
I'm struggling a little bit with that argument because if the Circuit found venue and so it didn't necessarily pass upon the question even if it didn't discuss it.
MR. WATSON (01:01:33):
So it's conceded that it wasn't pressed below, and I don't think that the opinion below is fairly read as passing upon this either. The government was seeking relief below that is inconsistent with its theory now. It was asking that the case be transferred to the Fourth Circuit or the D.C. Circuit, which their theory now is we couldn't ever be in the Fourth Circuit. I think that demonstrates the court wasn't considering the issue that we're discussing now. Yes, they did comment in the opinion that in addition to establishing
MR. WATSON (01:02:00):
… understanding, two of the petitioners were located in the Circuit, but that's the extent of it. And these issues that we're discussing now, were not put before the court and I don't think fairly are red as having been answered by the court. But in any event, the other reasons why the second question doesn't matter are what we discussed before and the fact that the retailers and the applicants are seeking the same relief, namely to set aside the order.
Justice Sotomayor (01:02:22):
Counsel given 2112, there still exists an equitable decision by it about whether it should transfer to the DC Circuit, meaning the manufacturer filed there outside the 10 day period, but it filed there, it has all of the materials. It was the party responsible for the application. Many parts of it are under seal and shouldn't it be the DC Circuit who decides how much of that the retailer should see? There may be some things, Justice Gorsuch assume the manufacturer might let the retailer look at everything. I'm not so sure, but that could be litigated by the court. So it's not an irrelevant decision by us to say where each party has to file.
MR. WATSON (01:03:21):
It is in the sense that the operation of the statute will result in mandatory consolidation-
Justice Sotomayor (01:03:26):
No. What the government is saying, it could make an application and the court still has equitable powers under 2012 to decide differently.
MR. WATSON (01:03:35):
Correct. What I understand the government to be saying is that yes, the process that I just described will play out, but after it does and everyone is back in the Fifth Circuit, they reserve the right to file a motion to transfer based on convenience at that point. And I do agree that the statute allows such as-
Justice Sotomayor (01:03:50):
That was my only point.
MR. WATSON (01:03:51):
But my friend conceded that it's not inconvenient to the government to be in the Fifth Circuit, which entails just sending the Department of Justice lawyer to the Fifth Circuit for arguments.
Justice Sotomayor (01:03:59):
But it could argue gamesmanship. Having said that, on the zone of interest test, I agree with the government in part and with you in part. There is a common law zone of interest that is different from the APA and we haven't routinely applied the APA test. We look at the language of the statute and its structure and that's the only point they're making, which is there isn't a routine application. In Bank of America, for example, the case you rely on, we chose the APA formulation and even made it broader because we said the language was broader. We've done that a couple of times, and so I don't think, and the government hasn't pointed me to a statute where we narrowed it necessarily, or maybe I'm wrong about that, I don't remember. But the point still remains that I don't think we can do this as a common meaning understanding of what a grieve means.
MR. WATSON (01:05:08):
I'll take that in two parts, Justice Sotomayor. The Bank of America case was applying the ordinary zone of interest test. And yes, there was previous case law under the Fair Housing Act that had said, "Well, we think a grieved person extends to the full parameters of Article III." And that was actually disputed whether that precedent was still good law in that case. And the court said, "We don't need to resolve that. We're just going to apply the ordinary test. And that's why we think it supports our position here." But even setting that aside and just looking at the text in the structure of the statute, we think that it's quite clear that retailers are within the zone of interest because the text distinguishes between applicants on the one hand and any person adversely affected on the other.
Justice Sotomayor (01:05:46):
I know the arguments. Thank you.
Justice Kavanaugh (01:05:49):
Is it your position that adversely affected as a general proposition usually when there's a of a manufacturer adversely affects a retailer and vice versa?
MR. WATSON (01:06:03):
I think that often will be the case, but to answer that we have to look at the organic statute at issue in context. And here it's quite clear that it would, and in many contexts it will. In the ordinary course, it's possible that there would be a statute that makes clear that retailers are outside the zone. For example, a retailer trying to challenge a withdrawal here would be outside the zone because the text and structure of the statute are so clear to that effect.
Justice Kavanaugh (01:06:25):
Well and the economics of the situation, isn't that the key that normally it's going to impose costs on retailers if there's increased regulation of manufacturers as well as distributors and similarly throughout the upstream and downstream chain?
MR. WATSON (01:06:42):
Absolutely. I agree. And the Fleming decision from this court is an example of a case where the court looked to various entities in the distribution chain and how that they were all within the zone of interest.
Justice Kavanaugh (01:06:51):
So too when there's under-regulation of someone, a competitor usually is disadvantaged?
MR. WATSON (01:06:57):
Correct.
Speaker 1 (01:06:59):
Thank you, Counsel, Justice Thomas, Justice Sotomayor. Justice Kavanaugh, anything further?
Justice Kavanaugh (01:07:10):
No.
Speaker 1 (01:07:11):
Justice Barrett, Justice Jackson-
Justice Jackson (01:07:13):
Can I just ask a quick question about enforcement? If the retailer continued selling the bubblegum-flavored e-cigarettes after withdrawal, could the FDA initiate an enforcement action against it?
MR. WATSON (01:07:28):
Yes. Now to be clear, bubblegum products are not at issue here. These are menthol products.
Justice Jackson (01:07:32):
I apologize. Yes. If there was withdrawal of a product, could an enforcement action be brought against the retailer?
MR. WATSON (01:07:40):
Yes, because the retailer would be selling the product-
Justice Jackson (01:07:42):
Would be in violation. And yet still Congress did not you concede allow for retailers to challenge withdrawals?
MR. WATSON (01:07:53):
Perhaps they could make a challenge as applied as a defense in that enforcement action, but I do concede that as a facial matter, challenging a marketing denial order, which is what we're dealing with here.
Justice Jackson (01:08:02):
But you still say that the enforcement possibility would yield the result that retailers should be allowed to challenge the denial on the front end because of enforcement? I was just questioning how far your enforcement goes.
MR. WATSON (01:08:20):
Correct. Here, the retailers are subject to the prohibition and the penalties and FDA has expressly threatened enforcement. So this is an easy case to identify that retailers here in this context certainly are within the zone of interests.
Justice Jackson (01:08:32):
Thank you.
Speaker 1 (01:08:33):
Thank you, Counsel. Rebuttal. Mr. Surrey.
Mr. Suri (01:08:37):
Justice Barrett, you asked why it's important to resolve this case, why the court should exercise its discretion to do so? The practical reason is that a lot of these cases have been piling up in a single Circuit. In 2024, by our count, if you omit protective petitions, about 75% of e-cigarette cases were filed all in the Fifth Circuit. All of them by out-of-circuit applicants trying to use the tactic that was approved in the decision below. If the court doesn't resolve this issue now, then petitions will continue to pile up in that Circuit. Potentially you'd have to reverse those venue decisions years down the line and all of those cases would have to be distributed again all over the country to be done from scratch. It's more efficient for the court to resolve the issue now.
(01:09:23)
Justice Sotomayor, you asked about if there's ever been a case in which the court has narrowed the zone of interests test rather than broadened it. The best case we have for that is Lexmark, where the court interpreted the Lanham Act's unfair competition provision to protect the interests of competitors but not the interests of consumers. Justice Kagan, if I could address your question to Mr. Watson about what textual argument they have based on the language of the statute. And I think respectfully, they didn't have a textual argument about how such person could possibly be interpreted to allow a manufacturer to sue based on a retailer's residence. They went instead to the Hobbs Act and the general Venue Statute.
(01:10:09)
But as you rightly pointed out, the Hobbs Act includes a different definitional provision and different history. The General Venue Statute includes different language was passed with a different purpose. So the narrower way to resolve this case is just to look at the language of this statute and to say, "This statute says where someone can file a petition." Reynolds is filing a petition jointly to be sure, but it is still filing a petition in a place that the statute does not contemplate.
(01:10:38)
Now, I take Justice Alito's concern about how there are 600 statutes pointed to in one of the amicus briefs. I went back and looked at that brief, at 600 statutes that use the term adversely affected or aggrieved. Not 600 statutes that use similar language to this statute with respect to Venue. So a decision about Venue while it could affect other statutes, is not going to be nearly as far reaching as my opponents have suggested or their amici have suggested. It's going to be limited to statutes that are worded like the statute at issue here. Now, it's true Justice Gorsuch to address your question about how they might come up with ways to circumvent whatever it is that we come up with in this case and we will have responses to that, and that may eventually come back to this court in a future case.
(01:11:26)
But the only issue that the court needs to address now is whether multiple parties can sue in a place where only one of them resides. The language of this statute makes it clear that they can't do so. I'd like to end just by noting that we have to be right either on the first issue or the second issue because if we're wrong on both issues, then this venue provision for all practical purposes becomes meaningless. Congress specified two particular places where someone can sue, the Home Circuit and the DC Circuit, but the practical consequence of the decision below is that a person can sue anywhere in any Circuit and that can't possibly be right. We ask the judgment be reversed.
Speaker 1 (01:12:06):
Thank you, Counsel. Case is submitted. We'll hear argument next in case 23-1226, McLaughlin Chiropractic Associates against McKesson Corporation. Mr. Wessler.
Counsel Wessler (01:13:27):
Thank you, Mr. Chief Justice, and may it please the court. Five years ago in PDR Network, four justices recognize that properly construed the Hobbes Act does not require district courts to treat agency orders that interpret federal statutes as binding precedent. Instead, it operates just like other preen enforcement channeling statutes by providing for direct review of agency orders in the courts of appeals. McKesson and the government reject this view together. They urge an interpretation that would bind courts including this one to agency interpretations of federal statutes no matter how wrong. And that would be true even for interpretive rules that by definition do not carry the force of law, transforming even the most informal agency interpretations into permanently binding ones. But none of the relevant markers, text context, structure and history support such a misguided and possibly unconstitutional reading of the Hobbs Act. The key phrase determine the validity of authorizes courts of appeals to determine whether an order is legally in effect.
(01:14:27)
And a court does this by issuing a declaratory judgment that the order is valid or invalid. Context cinches this, the phrase is immediately surrounded by terms which all denote specific forms of equitable relief directed against the order itself. The phrase determined the validity of should therefore be read the same way. The Act's broader structure reinforces this understanding. From beginning to end, it establishes procedures designed to govern direct review proceedings, and elsewhere uses the phrase determine the validity to mean a declaratory judgment. And finally, there's history. The act was never intended to implicate actions between private parties. Instead, it was patterned on similar statutes established for the review of orders from other agencies that have never been thought to bind district courts. Consistent with the long-standing recognition that interpreting statutes is a job for the judiciary, this court should construe the Hobbs Act for what it is, a commonplace jurisdictional provision that allows parties to obtain equitable relief directly against agency orders in the courts of appeals. I welcome the court's questions.
Justice Kavanaugh (01:15:34):
What would you do with the Port of Boston case?
Counsel Wessler (01:15:36):
I think Port of Boston case is different for a couple of reasons, Justice Thomas, but most importantly, in that case, both parties that were involved in the district court were also involved in the regulatory proceeding seeking a petition for review. And I think in that scenario where you've got two parties that are specifically bound by an agency action. You've got normal estoppel principles issue preclusion principles that would apply, but we're not really talking about a situation-
Justice Sotomayor (01:16:06):
That's not what the court there said. The court could have easily said that race collateral estoppel principles apply, but it didn't. The court said that the act is explicit. That the district court was without authority to review the merits of the commission's decision. So you have a problem that the analysis that the court used was directly contrary to your-
Counsel Wessler (01:16:27):
But the difference, your Honor, in that case compared with what we have here, is you've got a situation where the parties at our fighting about the meaning of the agency interpretation, were also parties in the agency proceeding itself. Here, you don't have a situation where the plaintiffs in this case had any role to play, or had any involved at all-
Justice Sotomayor (01:16:47):
But they could have. You haven't denied they had an opportunity.
Counsel Wessler (01:16:51):
Well, we don't deny that in theory they had an opportunity.
Justice Sotomayor (01:16:54):
No, not in theory. This is an unusual case where the proceeding was actually in effect during the litigation. In my experience, and I think we've said this, if there is something like that happening, the court below should stay letting that decision become final.
Counsel Wessler (01:17:15):
I think, your Honor, that illustrates what empty promise, my friends on the other side's interpretation would have for the Hobbs Act because you are right. What happened here was the litigation was proceeding for six years and the agency then issued this AmeriFactors order, if in fact what was supposed to happen at that point was the parties in the underlying litigation were required to go and seek some relief in front of either the agency or a petition for review. We are six years on from that point in time happening and the agency hasn't actually resolved what one party had actually done in that case, which was to file for a reconsideration. So I think as the concurrences in PDR Network pointed out, that circuitous route to judicial review doesn't really make very much sense. Either if you look at the terms of the Hobbs Act text itself or in practical sense, if in fact it's the case that a party could seek judicial review in some way, why not allow district courts to provide that review in a case in which arises organically from just a claim that the statute is violated?
Justice Sotomayor (01:18:25):
Thanks, Counsel. What do I do with the dictionary definition of validity? Valid means things like lawful, meritorious, or correct. No dictionary suggests that you only need a declaratory judgment for that. We have Heck versus Humphrey where the court said that you cannot bring a wrongful conviction claim under 1983 because doing so would amount to a collateral challenge to the convictions validity. 1983 only requires money damages, and yet we use validity in a very different sense because nothing in the 1983 was going to vacate the conviction. So there are multiple ways to challenge validity without a declaration.
Counsel Wessler (01:19:13):
Well, I agree with that Justice Sotomayor, but I think that the phrase determine the validity helps provide I think clarity for what that term means in the context of 2342. It isn't just that a court is opining on the validity in a colloquial sense of the legitimacy or reasoning of the order, it's that it's finally resolving whether that order is valid or invalid.
Justice Sotomayor (01:19:37):
It was the same language in Yakus and yet determined the validity. And in Yakus we said it was exclusive. I know you rely on the Second Circuit, but if you look at the analysis, it barely mentions the Second Circuit of the second sentence. Boy, my tongue got tied. What it did was focus in on that language, determine the validity.
Counsel Wessler (01:20:04):
Well, I respectfully disagree with how much it relied on the first sentence or the second sentence. I think it said those two sentences together lead to the conclusion that we reach in that case and the key language there as-
Justice Sotomayor (01:20:18):
But we made that finding and Congress a few years later uses exactly the same language, determined the validity in this statute, the Hobbs Act.
Counsel Wessler (01:20:29):
It does, but it doesn't use what I think is in fact the key language of the second sentence, which is not determine the validity but consider the validity. And I think there's also another distinction, at least as a textual matter between the language of Emergency Price Control Act that was at issue in Yakus in here, which is if you look at where that language determined the validity is in the Emergency Price Control Act, it's not included in a series of other terms that denote specific forms of equitable relief. So yes, the phrase determined the validity of is the same between the two statutes. But the context-
Justice Sotomayor (01:21:07):
I don't understand. When you have a sentence, it doesn't say and, it says or. The equitable relief is set forth at first, it says, "Has exclusive jurisdiction to enjoin, that's equitable, set aside, equitable suspend and hold in part." And it doesn't use the word and, or, and determine the validity of. It says or to determine the validity of, that's broader, that's intended to be broader.
Counsel Wessler (01:21:35):
Well, I respectfully would disagree with that. I think it's different and distinct but not necessarily broader. What I think is notable about the way that that sentence is structured is you have the first three terms enjoin set aside and suspend all referring to some form of injunctive or coercive relief. The next phrase determine the validity of refers to something entirely different, albeit a form of equitable relief but a declaratory judgment.
Justice Sotomayor (01:22:03):
Well, as I mentioned or determine the validity of can be done in a variety of different ways. It doesn't require just the declaratory judgment.
Counsel Wessler (01:22:12):
I think in the abstract, validity might lead a reader to think that that could be true. But I think read in context what's going on in this provision both with respect to the use of the term determined, but also that it's appearing in a list of other forms of equitable relief. That what the statute is trying to do is it's trying to provide something of an instruction manual for parties who are planning to seek direct review of an agency action. And it's saying for that kind of petition or proceeding where you actually want the agency order to be enjoined in some way or declared invalid, you can do that by filing your petition within 60 days in a court of appeals. But what it is not trying to do is forever bind courts in any garden variety run-of-the-mill-
Justice Sotomayor (01:23:00):
Does seem to me that the word exclusive has a lot of power otherwise.
Justice Jackson (01:23:04):
Why do you say that it's forever binds? I guess if we have this mechanism in the Hobbs Act for people to challenge the agency order, I don't understand why you're saying the agency's order forever binds.
Counsel Wessler (01:23:22):
Well, I mean you can take this case, the minute the agency issued this AmeriFactors order, the district court in this case said, " I have no license to review whether the agency's interpretation of the TCPA is correct or not."
Justice Jackson (01:23:36):
Until the court of appeals hears that question per the statute.
Counsel Wessler (01:23:41):
Well, of course, in this case it may never hear.
Justice Jackson (01:23:44):
It may not. But there is a mechanism for it to be corrected. I mean, the suggestion that the agency issues an order and the courts are suddenly divested of any opportunity to address its validity, I think is inconsistent with the very provision we're talking about here, which allows for the courts of appeals to assess the validity. At a minimum, you agree that the courts of appeals can do that?
Counsel Wessler (01:24:10):
Yes. With a maybe friendly amendment, which is not assess the validity, but to determine the validity once and for all. And I do think that there's an important distinction-
Justice Jackson (01:24:17):
No, I understand how your argument plays out. I guess what I'm just saying is it seems to me that we're just talking about a period of time in which the district court is hearing an enforcement action or whatnot, and the agency issues an order. And given the Hobbs Act until the court of appeals determines the validity, the district court has to assume for the purpose of any litigation that it's before it, that it is a valid order.
Counsel Wessler (01:24:48):
I think we are using the terms, determine the validity in different ways. I think what the Hobbs Act says and what it requires is that, if you are seeking a petition for review to enjoin or actually declare invalid once and for all this agency action, then yes, you must bring that petition within 60 days in a court of appeals. But if what you want is just a district court to-
Justice Jackson (01:25:15):
Not apply this order in the context of the litigation that's before it?
Counsel Wessler (01:25:19):
Correct.
Justice Jackson (01:25:20):
I appreciate that distinction. I understand it. What I'm suggesting is just the ultimate conclusion on your part that, or at least you said it at the beginning, that this somehow means that the courts never have a chance to get out from under the agency order. That the agency order will bind the courts forever, perhaps permanently, you say, and I guess I just don't understand that.
Counsel Wessler (01:25:46):
Well, I think it comes up in a number of different contexts, but you could take for instance, a set of consumers who would have no reason to ever think that an agency interpretation of the TCPA would matter to them. So the FCC could issue this a matter of factor.
Justice Jackson (01:26:00):
Why wouldn't they? If we say that when an agency issues an order unless and until the court of Appeals determines its validity, all litigation that is ongoing related to that order is going to treat it as valid.
Counsel Wessler (01:26:17):
Correct. Maybe I was unclear. My hypothetical was just imagine there is no case, the AmeriFactors order is issued. A party only has 60 days to file a petition for review under the Hobbs Act. So in three years down the road, if some consumers believe that a company has violated the TCPA, they are not capable or permitted to bring a petition for review under the-
Justice Jackson (01:26:40):
There's no equitable?
Counsel Wessler (01:26:41):
No. This is a bar. And in that scenario, your Honor, a district court under my friend's interpretation of this provision would have no choice but to enforce the agency's interpretation of the TCPA.
Justice Kagan (01:26:55):
Can I take you back, Mr. Wessler, to Justice Thomas's initial question about the Port case and about Venner, and ask you to tell me what your reply brief means with respect to those cases? Because what you say in your reply brief is that those cases stand for a anti-circumvention principle that we're not going to allow people to evade the Hobbs Act. And you say what those cases do is they shut down collateral challenges that could have been brought under the Hobbs Act. So what do you mean by that? What do you take the scope of those cases to be or said otherwise? What do you take the set of collateral challenges to be that those cases preclude?
Counsel Wessler (01:27:43):
Sure. I think there are maybe two categories, the way to think about it. The first would be in a case in which the actual parties who are in the civil proceeding were also parties to an agency action. And I think in that scenario-
Justice Kagan (01:27:59):
That's not Port of Boston?
Counsel Wessler (01:28:01):
Well, that is Port of Boston. In Port of Boston, both parties, the subject of the district court proceeding were also parties in the agency action that was taking place simultaneously. So in that scenario, I think it is fair to say, well, an order from the district court would effectively enjoin the agency action in a way that would suspend the functioning of the order and would be subject to the Hobbs Act. But I don't think in any of those old cases, Venner, Port of Boston-
Justice Kagan (01:28:35):
You said that there were two things you said-
Counsel Wessler (01:28:37):
Sorry. I think the other category would be a case in which you might have one party who is specifically given a waiver by an agency. And I think in a scenario like that, if it later got sued, and the only agency action related to that specific party, the effect of a later suit might be to suspend the agency order in a way that would look like the kinds of equitable relief that the Hobbs Act covers. But once you're out of those two pretty narrow categories, and certainly that isn't the case we've got here or what we had in PDR Network, it cannot be the case, I think or would submit to the court that the Hobbs Act covers any proceeding that arises in the normal course of a district court's jurisdiction in which the district court is being asked to evaluate or interpret the meaning of a statute and compare the agency's reason.
Justice Kagan (01:29:32):
I understand that position, but I guess I'm wondering why you've argued this case quite so broadly. I mean, it seems to me that you win this case so long as you say, there's at least a requirement that the parties bringing the suit are legally bound and that's not met here. So we win on that ground. Why go further than that?
Counsel Wessler (01:29:56):
Well, I will take a reversal win in whatever way the court thinks is best, but I do think that there is something quite odd about an interpretation that the other side has offered for 2342 that would extend to cover a district court's ability to interpret the statute. And I think that really is what we're talking about in this case. I think it's even more extreme when you look at the nature of the AmeriFactor's order here, which all parties argued and agreed below was an interpretive order, one that-
Justice Kagan (01:30:30):
Right. I guess that's exactly what I'm suggesting. I think that in our initial opinion, and remind me of the name.
Counsel Wessler (01:30:38):
PDR Network.
Justice Kagan (01:30:39):
PDR, that the majority opinion basically says, I think it's important to us, the majority opinion says whether this is an interpretive rule. And here it seems to me you can just come up and say, this is an interpretive rule, the majority in PDR got it that that was an important question. And if it's an interpretive rule, it falls outside the Hobbs Act. End of case.
Counsel Wessler (01:31:07):
Correct. And we would accept a decision going no further than that. I do think that it is hard to square the McKesson and the government's interpretation of 2342 as expansively as they have argued it, to mean anytime a district court is asked to assess the meaning of a statute, if the agency has taken a position on that already, it is barred from doing that. And I don't think that the language of 2342 or the structure of the Hobbs Act could be read to sustain that kind of understanding of what Congress is doing.
Justice Jackson (01:31:45):
What about its purposes? How do you square your point with its purposes?
Counsel Wessler (01:31:49):
Sure. I mean, I don't think there's any indication if you look back in the transformation from the Urgent Deficiencies Act to the Hobbs Act, what Congress was trying to do to suggest that the design and goal of this statute was to do that complete removal of the ability of courts to to assess [inaudible 01:32:11].
Justice Jackson (01:32:12):
Wasn't it trying to establish finality, predictability, uniformity? When the Court of Appeals rules on the validity or does the statutory interpretation you're talking about, we then have a definitive interpretation that applies at least to a particular region. It seems to me that to say that the court or that the Congress was still trying to preserve the district court's ability to make essentially ad hoc determinations within the context of each of its cases, flies in the face of the idea that they were channeling exclusive jurisdiction to determine the validity of the agency's interpretation in the Court of Appeals.
Counsel Wessler (01:32:53):
Yes. But we may just disagree on what determined the validity in this context means because I agree with everything
Counsel Wessler (01:33:00):
… anything you just said, but I think it is tailored to a specific kind of remedy for parties who are adversely affected by-
Speaker 4 (01:33:10):
But why does the remedy matter? If you agree with my premise that what Congress was trying to do was get a rule out there that is being consistently applied, then it really doesn't relate to the remedy, it relates to the merits of the party's claim that this is a valid or invalid interpretation and it wanted the Court of Appeals to make that decision.
Counsel Wessler (01:33:32):
I disagree with that. I think what Congress wanted to do was to create a streamlined process for obtaining quick review of agency actions that would either uphold them throughout or strike them down and invalidate them. But what it was not trying to do, and we know this I think for a couple of reasons, was to extend the Hobbs Act's coverage further to foreclose district courts in the mine-run case from even evaluating whether the agency's interpretation of a statute is correct and we know that, I think, for… There are a couple of, I think, indicia. One, Congress, as we discussed earlier, it had Yakus and the Emergency Price Control Act out there when it was enacting the Hobbs Act and it did not integrate into the Hobbs Act the key second sentence of that statute which had been interpreted along with the first sentence to have this result.
(01:34:23)
But I think just as significantly, we know, and the concurrences in PDR Network pointed this out, we know that Congress knows how to accomplish, I think, what Your Honor is suggesting, which is to eliminate the ability of district court, so to provide any judicial review in an enforcement proceeding over an agency interpretation of a statute. We see that in the environmental statutes. There are three or four of them and that language, which I think is quite clear, it provides a kind of negative prescription that district courts do not have the authority to provide any sort of judicial review and enforcement proceeding, just as absent from the Hobbs Act here. And I think that's a quite significant distinction and one, I think that we have to, again, as we know from PDR Network, recognize that the silence that the Hobbs Act has when it comes to that kind of question, I think, ought to be significant and the way we understand the background rule that's operating here, which is for claims that don't fall within one of these channeling statutes.
(01:35:31)
A district court is always free in that context to assess the reasoning of an agency's interpretation and interpret the statute itself. And I think the Hobbs Act because it didn't foreclose that kind of judicial review that we see from other statutes means that district courts must remain free to be able to do that in a case like this one or in what we had in PDR Network.
Justice Gorsuch (01:35:51):
Mr. Wessler, I'm struggling a little bit with the off-ramp you were discussing with Justice Kagan. And as I understand it, the idea goes that the Hobbs Act doesn't even apply at all because the AmeriFactors order wasn't really an order, it was an interpretive rule, but it was an adjudication and there was a final order issued in that administrative adjudication that would seem to be to me every day of the week and twice on Sundays an order and therefore, implicate the Hobbs Act and raise unavoidably the larger question in this case. What am I missing?
Counsel Wessler (01:36:32):
Yeah, I don't think we disagree with any of that and I don't think our view is that this isn't an order. The other side has said, "Well, it's an adjudication and so somehow that doesn't implicate whether there's an interpretive or legislative rule."
Justice Gorsuch (01:36:47):
I know what an interpretive rule looks like and it doesn't look like an administrative agency order to parties in an adjudication.
Counsel Wessler (01:36:54):
Right.
Justice Gorsuch (01:36:54):
At least that's what I had always understood, but maybe I'm missing something.
Counsel Wessler (01:36:57):
Right. Although what we have in this order… It is an adjudicatory order, but we have in this order as an agency simply advising the public of its view of the meaning of a specific phrase in the TCPA. So I do think that-
Justice Sotomayor (01:37:11):
And you don't understand that is binding on you, correct?
Counsel Wessler (01:37:13):
Correct.
Justice Gorsuch (01:37:14):
Oh, it's not binding on you, but it's binding, isn't it?
Counsel Wessler (01:37:17):
Well, we wouldn't say it's binding.
Justice Gorsuch (01:37:19):
It's just a piece of paper in the world?
Counsel Wessler (01:37:21):
Yes. It would be like an informal guidance offering a view of a statute. We don't think that it actually carries any binding significance. You're asking about an off-ramp. I do think that in that way what a district court in a garden variety civil case could do is it could simply ignore the order.
Justice Gorsuch (01:37:42):
That's not how the Court of Appeals understood it.
Counsel Wessler (01:37:44):
Certainly not, certainly not. But we think that if in fact the court wanted to, I think, move in this direction, it wouldn't be determining the validity of anything because the order is non-binding by nature because it's interpretive. Now the 9th Circuit is the only circuit that we're aware of that has adopted an understanding of the Hobbs Act that renders the classification between interpretive and legislative rules irrelevant. In the 9th Circuit, it does not matter. Any order that is subject to the Hobbs Act immediately withdraws jurisdiction from the district court to do anything. I think I would submit to the court that just cannot be right because it does mean that even non-binding informal guidance is capable of binding district courts.
Justice Sotomayor (01:38:32):
Counsel, the problem I'm having with your interpretation is I don't even know why they gave jurisdiction to the agency at all to do anything. Justice Kavanaugh expressed a concern that if a defendant could not challenge an agency's order in an enforcement proceeding, that might be unfair or even raise process concerns. But your interpretation means that if a regulated party seeks an agency order to determine whether its conduct is permissible, it asks the agency for that. It relies on that order to send the e-faxes and it's still liable for triple damages to any plaintiff who wants to come in and say, "Even though I had an opportunity to challenge this interpretation before the agency, I didn't have to bother. I could just wait and sue anyone who followed the agency's order." Correct?
Counsel Wessler (01:39:37):
Well, a couple of-
Justice Sotomayor (01:39:38):
That's the downside.
Counsel Wessler (01:39:39):
A couple of responses to that. I mean, first, I do not think that a defendant would necessarily be on the hook in that scenario for treble damages because the treble damages provision of the TCPA requires… There is a built-in, a reasonable-
Justice Sotomayor (01:39:55):
But it still would be liable?
Counsel Wessler (01:39:56):
But I do think you're not wrong to suggest that there might be some reliance interests at stake here. I do not think those can overcome what the text of this statute means. I also think that-
Justice Sotomayor (01:40:06):
Unless we believe that the act, by giving an out to people who didn't have an adequate opportunity for review, that's the out-
Counsel Wessler (01:40:21):
Well, I don't think-
Justice Sotomayor (01:40:22):
It was lived that it intended to make these orders final unless overturned by the Court of Appeals.
Counsel Wessler (01:40:30):
May I answer?
Justice Sotomayor (01:40:31):
Yeah, certainly.
Counsel Wessler (01:40:32):
With respect, I do not think adequacy is a sufficient safety valve and I think that's true for at least two reasons. The first, Your Honor, is that this court has never taken a position on what adequacy in the APA means. I do not think that the point of a jurisdictional statute would be to invest district courts in all of these cases from assessing the specific circumstances of when individual parties in their case may or may not have known about a particular order that would've given rise to a Hobbs Act claim. And I also think it begs a question, "Exclusive jurisdiction to do what?" Which in this case we would submit the Hobbs Act only requires for petitions that are directly challenging agency actions.
Speaker 2 (01:41:17):
Thank you, Counsel. Justice Thomas, Justice Alito, anything further? Justice Kavanaugh?
Justice Gorsuch (01:41:26):
No.
Speaker 2 (01:41:28):
Justice Jackson? Okay. Thank you, counsel.
Speaker 3 (01:41:30):
Thank you.
Speaker 2 (01:41:37):
Mr. Palmore?
Speaker 3 (01:41:39):
Thank you, Mr. Chief Justice. And may it please the court, the Hobbs Act's text, history, precedent, and purpose all support the conclusion that a lower courts here could not impose liability on McKesson for engaging in conduct that the FCC said did not violate the TCPA, where plaintiff concedes it had adequate opportunity for judicial review under the Hobbs Act. The statutory text and structure show that a Hobbs Act court's exclusive jurisdiction to determine the validity of an order means it alone can evaluate whether the order is correct. If Congress had wanted to limit this exclusivity to declaratory judgments, it would have done so expressly. Instead sections 2349 and 2342 together show that the Hobbs Act court has exclusive jurisdiction, not just over remedies against the order, but also over evaluation of its merits. And that is exactly how this court interpreted predecessor statutes whose terms and precedent Congress incorporated into the Hobbs Act.
(01:42:39)
Under both the Urgent Deficiencies Act and the Emergency Price Control Act, this court construed those statutes to bar collateral review in enforcement and private party disputes even when no declaratory judgment or other relief was sought against the order. And consistent with that precedent, Justice Thomas, the court in Port of Boston interpreted the Hobbs Act's exclusive jurisdiction to mean "review the merits." And on that understanding, it barred redetermination of the same issue decided by an agency in a private payment dispute, again where no declaratory judgment or relief against the order was sought and whether or not the party participated before the agency. Finally, the Hobbs Act's purpose of establishing finality, certainty, and reliance would be undermined by petitioner's position that an FCC order, even if affirmed under Hobbs Act review, could forever be subject to second-guessing in state and federal courts all across the country. I welcome the court's questions.
Justice Thomas (01:43:43):
So as I understand you, if this case were to come before a district judge, an order before a district judge and the district judge says, "This is the most ridiculous opinion I have ever seen in my many years on the bench. However, I have no authority to review it," that you don't see a problem with that?
Speaker 3 (01:44:07):
Justice Thomas, this is not an issue of agency versus court. This is an issue of which court and when and I think it's important to emphasize how-
Justice Thomas (01:44:17):
You have a collateral attack, you have a disagreement between two parties. They're in court and the district judge says, "Under the Hobbs Act, I have no authority even though I can see this order is ridiculous."
Speaker 3 (01:44:33):
That's because the Hobbs Act court has that authority. And if the order is ridiculous, the Hobbs Act court will reverse. And I think it's important to emphasize page four of the cert reply says, "Petitioners ask this court to decide the question presented on the assumption that they had a prior and adequate opportunity for judicial review under the Hobbs Act." So the issue about delay and long ago orders that were presented in PDR is not presented here.
Justice Jackson (01:45:02):
Do you concede that if they didn't have an adequate opportunity that we would have the problem that petitioner raises here?
Speaker 3 (01:45:10):
Well, we think adequacy is an important safety valve. And Justice Kavanaugh in his concurrence in PDR Network canvassed a number of concerns with an overly strict reading of exclusivity in this scheme and we understand-
Justice Jackson (01:45:23):
What about the timing? I had a little colloquy with petitioner and he says that some of these customers, people affected, would've had no reason to bring this up with the Court of Appeals within 60 days of the original order.
Speaker 3 (01:45:44):
So two responses, Justice Jackson. One is that concern is not presented here, but given the concession that they did have a prior and adequate opportunity and they just chose not to exercise it. So in their view, Hobbs Act exclusivity is optional. They can go either way. Two, in a hypothetical case where that issue was presented, we view that as an adequacy problem. We think Congress addressed potential unfairness, potential due process concerns that Justice Kavanaugh canvassed in his PDR Network concurrence not through limiting the exclusive jurisdiction of the Hobbs Act court, but by creating an adequacy safety valve. And we think that's where the consideration of timing, interests, standing, that's where that would go.
Justice Alito (01:46:31):
Suppose I'm a district judge in New Jersey and someone shows me a 9th Circuit opinion on a question of law that I'm considering. And if I conclude that… And there's no 3rd Circuit precedent on point and no Supreme Court precedent on point. If I disagree with the 9th Circuit's interpretation, am I invalidating the 9th Circuit decision?
Speaker 3 (01:47:00):
No, Justice Alito, but that's not the statutory language here. It's not invalidating, it's determining the validity, which is a capacious term. And it wasn't one that was new to this statute. It had just been construed by this court in Yakus and it's comfortably understood to mean evaluate the soundness. This court said in Port of Boston it meant review the merits or collaterally re-determine the same issue. And if I could just make one quick point on Port of Boston, Mr. Wessler says, "Well, that party participated." There were alternative holdings in Port of Boston. The first holding was, "We think you participated through an agent," but the court was crystal clear. It went on and said, "Even if not, your interests were implicated. You could have participated and you chose not to. Having made that choice, you can't now get a collateral re-determination of that same issue in the private payment dispute."
(01:47:55)
And that was a dispute over the meaning of Section XV of the Shipping Act. It was a statutory construction question. And Justice Kagan, this kind of idea of, "Is this a non-coercive order of the AmeriFactors issue?" Came up in Port of Boston also because the party there who was objecting to that order and seeking to get collateral review of it said, "This order has no coercive effect. This is just the agency kind of opining on the meaning of the Shipping Act." And what this court said was, "That's still reviewable under the Hobbs Act because it's a finality consideration." Does it determine rights or obligations and do legal consequences flow from it? And the court said, "Yes, they do." When an agency with statutory authority construes a statute within its jurisdiction, that means something.
(01:48:43)
And it cited this court's decision in the Frozen Foods Express case, which was construing the APA declaratory order provision, which is now codified in 54E, which says, "Agencies have authority to terminate controversy or remove uncertainty." And that's what this order did. It was an adjudication, as Justice Gorsuch pointed out, with real legal effect and they've conceded again that they could have sought Hobbs Act review. They asked the court to decide the question on that understanding but simply opted not to.
Justice Kavanaugh (01:49:15):
You mentioned Yakus in response to Justice Alito. Of course the other side points out that Yakus had the two sentences, determine the validity and consider the validity. Can you just address that?
Speaker 3 (01:49:25):
Sure, Justice Kavanaugh. What Congress did in the Hobbs Act was combine the two sentences. So the first sentence in Yakus said, "The emergency Court of Appeals has exclusive jurisdiction to determine the validity." And then the second sentence said, "And no other court can consider the validity, enjoin, or set aside." What Congress did in the Hobbs Act was meld the two sentences into one and it drew both from that Emergency Price Control Act and also from the Urgent Deficiencies Act. So it takes "determine the validity" and "enjoin" from the first and second sentence of Yakus. It takes "set aside" from the second sentence of Yakus, also from the Urgent Deficiencies Act. It takes "suspend" only from the Urgent Deficiencies Act. So it's drawing on both these sources, both of which had been interpreted to bar collateral redetermination of the same issue and it combined them into one.
(01:50:21)
To the extent that my friend is saying that the second sentence is necessary, Congress can provide exclusive jurisdiction to a court without stating the necessary implication. It can of course choose to do that if it wants to. That exclusive jurisdiction over A means other courts can't exercise jurisdiction over A, but there's no rule I'm aware of that they have to proceed that way. And I think given the old soil principle, the way that language was construed in Port of Boston that "determined the validity" has the meaning that we and the government are suggesting
Justice Alito (01:50:58):
Yakus was a very harsh decision rendered in a wartime atmosphere based on particular facts and a particular statute. And you want us to read an awful lot into it. Why should we do that?
Speaker 3 (01:51:12):
Justice Alito, you are of course correct that the Yakus was a World War II statute, but I think it's important to emphasize that the discussion of the wartime exigencies was only in the due process part of the decision. It was not in the statutory construction part of the decision, which is what we're relying on here. And that makes sense. The meaning of statutes don't change depending on whether the country is at war or enjoying peace. The due process holding in Yakus, Congress responded to that by amending the Emergency Price Control Act, not to change the "determine the validity" language or the exclusivity, but to reopen a window for criminal defendants, civil defendants to seek review through that exclusive path in the event they were prosecuted or sued. And here, of course, what you describe as the harsh result in Yakus is avoided, we believe, by Section 703. 703 was not on the books at the time of Yakus. It was enacted two years later and before the Hobbs Act. And so Congress adopts the Hobbs Act knowing that 703 is there and we believe it provides a very important safety valve.
Justice Gorsuch (01:52:23):
I'd like to ask you a question about 703, your view of 703. Of course it's not in the Hobbs Act, but you're interpreting the Hobbs Act in light of it. I understand that. It seems to me we have two choices basically, one, recognizing that there's an order here as indeed there is. You can say, "Well, on the one hand, the Hobbs Act doesn't preclude the district court from saying, 'This is the craziest decision I ever saw,' because it's not undermining that order in any way. It's just adjudicating the rights of the parties presently before the court." That's one option. Second option is to say, "Ah, yeah, it's still sort of affecting that order in some way, but no worries if you didn't have an adequate opportunity to challenge it." And that's what you're asking us to do.
(01:53:06)
Are we going to then have a jurisprudence of adequacy? And if so, what does that look like for parties who weren't alive at the time of the administrative proceeding or parties who wished to present different arguments than was considered by the agency at the time, for parties with different factual circumstances than those that the agency may have had in mind at the time it adjudicated the case before it? Thoughts?
Speaker 3 (01:53:36):
Sure, Justice Gorsuch, I'll give you some thoughts. I mean, I would emphasize at the outset that that issue is not presented here because adequacy is conceded.
Justice Gorsuch (01:53:44):
I understand that, but you're asking us to open a new door and create a jurisprudence of adequacy. And I just want to understand what it would look like because I think those are our two choices in this case, that I outlined at the very beginning of my question?
Speaker 3 (01:53:58):
Well, right. You can enforce what we believe to be the proper reading of the Hobbs Act, bracketing that adequacy exists for hard cases-
Justice Gorsuch (01:54:06):
Or simply say-
Speaker 3 (01:54:07):
Or we could lose on the Hobbs Act-
Justice Gorsuch (01:54:08):
Right. Those are the two choices. But if we buy yours, what does this jurisprudence of adequacy look like?
Speaker 3 (01:54:14):
Well, I think that there are a couple of data points already in the court's cases. So PDR Network, admittedly not a definitive holding, but it remanded for consideration of adequacy and we understand that to be a response to the defendant's argument there. They would've had no interest in participating at the FCC or seeking Hobbs Act review at the time that that order issued and the court viewed that party-specific argument as a possible adequacy issue. We think Port of Boston, although it's not citing 703, is consistent with that because it looked at the specifics of that party and it said, "You had every interest in participating and you didn't."
Justice Gorsuch (01:54:54):
So what I think it'll wind up doing is saying for the people who are really closely tied at the moment, who could have been there or were there, and kind of collateral estoppel sort of idea. But I don't know what it means much beyond that. Five years out, 10 years out, different people, different arguments, different facts, we're just going to wind up in the same place.
Speaker 3 (01:55:18):
Well, Justice Gorsuch, we think Congress was balancing two competing interests here. It was balancing finality, reliance, what this court called in corner post the kind of finality-focused orientation of the Hobbs Act with, we think, fairness and due process concerns. And so Congress is, of course, not required to pursue all its objectives to the ends of the Earth. It can balance them. And we think that that's what it did here. But I think what I'd emphasize is even if there was some work to do in future cases, that would all be work to do about the meaning of adequacy because-
Justice Gorsuch (01:55:52):
I understand that. But if finality is so important, and it turns out that your interpretation doesn't do much to advance finality beyond a few parties presently, what do we hear about?
Speaker 3 (01:56:04):
Well, I think it would. Justice Gorsuch, of course, here, again, adequacy is conceded. So the court doesn't really have to get into that. But you alluded to this yourself. I mean the FCC operates in a highly… This is a highly regulated industry. You have an amicus brief from some of the major trade associations who are repeat players. They have armies of people who follow what goes on at the FCC. They engage in litigation. Those folks are unlikely to be able to make any kind of adequacy argument. And they're the ones who are often engaged in this litigation. But we think Congress allowed a safety valve-
Justice Gorsuch (01:56:39):
But then we're going to have the corner posts of the world who are going to come in and say, "I wasn't alive. I wasn't there. I wasn't in business." And we said the statute of limitations allows them to file their claims. That's got to mean something, right?
Speaker 3 (01:56:50):
Well, perhaps so, Your Honor. So I guess in our conception… And the government has a different view on adequacy, which is probably a less capacious view-
Justice Gorsuch (01:57:00):
Substantially, I suspect.
Speaker 3 (01:57:01):
Substantially, right. We have more of a… We believe it can be more party specific, but I think it's important to emphasize the implications of petitioner's view, is that a party could go to the agency, say, "I want to send faxes to online fax services," get a declaratory order, which is like a declaratory judgment. Someone wants guidance, they want a ruling before they act at their own peril. The agency could say, "That's right, that's not covered." That could be affirmed by a Court of Appeals under the Hobbs Act. Then years later, they could be exposed to liability in a federal court, in a state court for having relied on and sent the faxes that the FCC in a Hobbs act affirmed order said was permissible. We think that-
Justice Jackson (01:57:46):
Sorry, Mr. Palmore, can you speak to petitioner's argument about interpretive rule? Do you agree that this is an interpretive rule?
Speaker 3 (01:57:54):
Absolutely not, Justice Jackson. This is an adjudication. It's not a rule of any kind. It's an adjudication. And in USC 554E Congress gave agencies authority to issue declaratory orders with light effect as to other orders to terminate a controversy or remove uncertainty. And that's what it did here. The FCC, like many other agencies based on this court's decision in Chenery II in the NLRB versus Bell Aerospace, often announces kind of broad things that look like rules through declaratory orders. It did it here with notice and comment rulemaking.
Justice Jackson (01:58:33):
And you consider this to be binding then?
Speaker 3 (01:58:36):
Yes. Yes, it's binding because the FCC was not just deciding a dispute between two particular parties, it was applying the statute to a particular technology, which was these online-
Justice Kagan (01:58:51):
So I mean, suppose that I think that you have some good arguments about why it's not just suits asking for declaratory judgments that fall within the Hobbs Act, but that you at least have to have a suit that's challenging an agency decision with the force of law, that that's a necessity to fall within the Hobbs Act, you think that if that's the rule, you are covered?
Speaker 3 (01:59:14):
Absolutely. And I think Port of Boston stands for that proposition. Port of Boston, again, if you look at the relevant part-
Justice Kagan (01:59:20):
So do you think that that should be the rule? Yeah, you don't have to have a declaratory judgment, but the only thing that the Hobbs Act is talking about is challenging challenges to agency rulings with the force of law? The Hobbs Act just excludes anything that doesn't have the force of law.
Speaker 3 (01:59:37):
I think that's right. So the SG cites in their brief a 7th Circuit decision called the American Trucking case, which was ICC report where the ICC was just kind of opining on some things. And what the 7th Circuit said was, "That's not a Hobbs Act reviewable order because it has no legal consequences. It doesn't determine rights or obligations. So it's not a Hobbs Act order." So then there would be no preclusion.
Justice Kagan (02:00:01):
But then I take it that you're actually agreeing with Mr. Wessler more than I maybe thought you were, but disagreeing just as to what this ruling does and what it is. In other words, you are saying, "Yeah, we too agree that if you're talking in the land of interpretations, you're outside the Hobbs Act," but you think that if we limit the Hobbs Act coverage to rulings with the force of law, you think you're in, Mr. Wessler thinks you're out.
Speaker 3 (02:00:31):
I want to be careful in how I answer this. So interpretation is being used in multiple different ways here. Of course, agencies always are interpreting statutes, including when they issue legislative rules. They're creatures of statute-
Justice Kagan (02:00:43):
But we know what binding decisions are and what they're not. And I take Wessler to be essentially saying, "The decision that you are challenging, it's not binding on you," and that's at least one reason why you don't have a good argument under the Hobbs Act.
Speaker 3 (02:01:04):
So a couple points, Justice Kagan. We think an order is either in under the Hobbs Act or it's out. It's either reviewable under the Hobbs Act or it's not reviewable. And then this exclusivity discussion we are having is inapplicable. They've conceded in footnote two of their reply brief that this is a final order reviewable under the Hobbs Act. So our point is there may be some things agencies do that have absolutely no legal consequences that are not reviewable under the Hobbs Act at all, and then we wouldn't be having this discussion. There's no middle category though, and this is the point I want to emphasize, of orders that are somehow reviewable under the Hobbs Act. They're final and legally consequential enough to be reviewable under the Hobbs Act, but don't trigger this kind of exclusivity.
Speaker 2 (02:01:51):
Thank you, counsel. Justice Thomas?
Justice Thomas (02:01:54):
I'm going to try one more time. You mentioned Yakus. Yakus was a criminal trial. They were indicted for violating one of the stabilization laws and the district court refused to admit evidence, their arguments… To allow their arguments that the ruling of the board or commission was improper. What if the district judge said that, "It's ridiculous. It's the worst thing I've ever seen?" You find nothing wrong with that, even in the criminal context?
Speaker 3 (02:02:36):
Well, I don't think… Of course, this is not a criminal case-
Justice Thomas (02:02:39):
No, but you're relying on Yakus.
Speaker 3 (02:02:41):
Well, there's a due process holding in Yakus that is, as you describe. We don't need to rely on the full extent of that Yakus due process holding. We are the defendant. We are the ones wielding an agency order that says that what we did did not violate the statute and the other side is trying to impose liability on us. So the situation is flipped. The due process concerns, and I completely understand them, and Justice Rutledge wrote about them at length, although he tethered his discussion to the criminal context. None of those issues is applicable here.
Speaker 2 (02:03:15):
Justice Alito?
Justice Alito (02:03:19):
The problem with the other side's argument is that unlike corner posts where the new entity went and as it has a right to do to challenge the order completely by… They could do a petition for reconsideration, correct, before the commission?
Speaker 5 (02:03:38):
Yes, your Honor.
Justice Alito (02:03:39):
They can file a petition for a declaratory judgment in a circuit court. Correct?
Speaker 5 (02:03:45):
A declaratory ruling at the agency and that they could get Hobbs Act review back.
Justice Alito (02:03:48):
Exactly.
Speaker 5 (02:03:49):
Yes.
Justice Alito (02:03:49):
So now if we don't do something like this, people can just ignore agency final orders
Justice Kagan (02:04:00):
… because they can't be… If they think they got a good argument, they might as well just go ahead and do it, and because the agency ruling will have no effect on them.
Speaker 3 (02:04:12):
I think that's right. And then the Hobbs Act is somewhat unique as this court and corner post described it. It's unique in having this marrying of exclusive and determined the validity, and Congress really wanted finality in this situation. And again, in a case like this one where the party has conceded that it could have sought judicial review and it said that was a reason why this was a good cert vehicle, their position would basically turn Hobbs Act exclusive review into an option. A party could decide to do it or they could decide to hang back and wait and see if it mattered to them down the road.
Justice Kagan (02:04:46):
Until somebody sued them. The government or-
Speaker 3 (02:04:47):
Correct.
Justice Roberts (02:04:50):
Justice Kagan? Justice Gorsuch?
Justice Kavanaugh (02:04:52):
Just one question In response to Justice Kagan, force of law, do you think that, or what do you think that means?
Speaker 3 (02:05:01):
The best I can do, Justice Kavanaugh is to use this court's words. Does it determine legal consequences or… I'm sorry, determine rights or obligations, or do legal consequences flow from it? So that's what this court in Port of Boston said when the same kind of argument was made, "Well this isn't a coercive order." And of course that became the the formulation in Bennett versus Spear-
Justice Kavanaugh (02:05:25):
It's a lot of debate-
Speaker 3 (02:05:25):
… down the road.
Justice Kavanaugh (02:05:26):
A lot of debate in application about particular things, whether they have the force law, isn't there?
Speaker 3 (02:05:31):
Well perhaps, but I think the FCC declaratory orders are quite common. They're done through notice and comment rulemaking. They have for decades resulted in Hobbs Act review, this court's decision. City of Arlington was a declaratory ruling.
Justice Kavanaugh (02:05:48):
That's right.
Speaker 3 (02:05:48):
So the agencies can and do broadly applicable things through this font of their authority.
Justice Kavanaugh (02:05:55):
Thank you.
Justice Roberts (02:05:57):
Justice Jackson?
Justice Jackson (02:05:58):
Was the character of this order as interpretive or otherwise addressed by the lower court?
Speaker 3 (02:06:06):
Yes, this issue was joined and the Ninth Circuit held it was an adjudication. It did not hold that it was an interpretive rule. It said, "This is an adjudication." And that was actually critical-
Justice Jackson (02:06:15):
Well I thought legislative versus interpretive was the fault line.
Speaker 3 (02:06:20):
So there's legislative and interpretive is over here and then there's adjudication over here, and what the Ninth Circuit said was, "This is an adjudication." And that was critical to one of its holdings, which was then it applied retroactively, because that's what adjudications do. And so that was the holding below, that this was an adjudication, not that it was an interpretive rule. And the petitioners never explained in the [inaudible 02:06:44] petition or anywhere else why the Ninth Circuit was wrong in what it said, other than to say, "Well this was an adjudicatory order interpreting the statute." But that's a different use of the word interpretive because agencies always interpret statutes.
Justice Jackson (02:06:57):
Thank you.
Justice Roberts (02:06:58):
Thank you, Counsel. Mr. Garnieri?
Mr. Garnieri (02:07:12):
Mr. Chief Justice, and may it please the court, the Hobbs Act precludes collateral attacks on covered agency actions in district court even in suits between private parties. The act does so by conferring exclusive jurisdiction on the courts of appeals to determine the validity of covered agency actions. Now Petitioner contends, as you've heard this morning, that determining the validity of an order refers only to entering a declaratory judgment, finding that the order is valid or invalid. That reading of the act is inconsistent with its plain language purpose and history and with this court's precedent, particularly the Port of Boston case, which we refer to as Transatlantic, which I still don't think Petitioner has provided an adequate explanation for.
(02:07:53)
If you accept Petitioner's view, that would mean that a regulated party could obtain a final order from the FCC determining that some particular course of conduct does not violate the TCPA. That order could be upheld on direct review by the court of appeals under the Hobbs Act procedures and a private plaintiff could nonetheless go into district court, sue the regulated party and ask the district court to disregard the agency's order and impose liability. That is not how the Hobbs Act has ever been understood to work and we ask this court to reject that interpretation. I welcome the court's questions.
Justice Alito (02:08:27):
Does that take you as far as the court Yakus?
Mr. Garnieri (02:08:32):
I think at least with respect to the statutory interpretation piece of this, yes and that's no accident. Congress was clearly drawing on the language that this court interpreted in Yakus. The Emergency Price Control Act conferred on a special emergency court, exclusive jurisdiction to determine the validity of price control regulations, and Congress took that language, which was I think unique at the time in the Emergency Control Act. Congress took it and brought it into the Hobbs Act in order to accomplish the same purpose that this court construed the Emergency Price Control Act to have in the Yakus decision.
Justice Gorsuch (02:09:07):
If you take the Hobbs Act to go as far as Yakus, and that's an extraordinary thing. Yakus is not a case People usually want to rely on outside the wartime context, but if that's as far as the Hobbs Act goes, if it goes that far, aren't we going to have real due process questions? Justice Rutledge raised them. Justice Powell raised them years later in-
Speaker 6 (02:09:32):
[inaudible 02:09:35].
Justice Gorsuch (02:09:35):
What was that?
Speaker 6 (02:09:35):
[inaudible 02:09:37].
Justice Gorsuch (02:09:36):
In one of them. Yeah, you know which one I'm talking about.
Mr. Garnieri (02:09:39):
I do, Your Honor.
Justice Gorsuch (02:09:40):
Let's see. I can even find it for you.
Mr. Garnieri (02:09:41):
It's the [inaudible 02:09:43].
Justice Gorsuch (02:09:43):
Adamo or whatever. However you pronounce it. Adamo. Yeah. You really want us to start a 14th Amendment jurisprudence about this?
Mr. Garnieri (02:09:52):
Well, I don't think that there are going to be cognizable due process claims in the mind run of applications of the Hobbs Act. The due process clause of the 14th Amendment does not create any kind of freestanding entitlement to get judicial review of agency action in any court at any time that the plaintiff pleases. Congress-
Justice Gorsuch (02:10:09):
I think it does generally say when Congress chooses to invest courts with jurisdiction, as a rule, judges interpret the law and they have a duty to do so independently and not to automatically and reflexively have to adopt interpretations that the executive branch chooses and prescribes for them, right?
Mr. Garnieri (02:10:33):
I think, Justice Gorsuch, that might be a little bit different than the due process concern that my friend has articulated. That's more in the nature of an Article III-
Justice Gorsuch (02:10:38):
It's one I have. So why don't you address it?
Mr. Garnieri (02:10:40):
Sure. So I think if you are thinking about the way the Hobbs act generally, the way Congress envisioned this would work, you would get judicial review in the Court of Appeals under the Hobbs Act and it would be that application of Article III authority that would then be binding as that district court-
Justice Gorsuch (02:10:54):
I understand that. But the fact that one person gets judicial review under the Hobbs Act and makes whatever arguments in our adversarial system that they choose, and then another party years later potentially with very different arguments and different facts, it wasn't around, and you're telling me due process has nothing to say about whether that individual gets to have a judge decide his case?
Mr. Garnieri (02:11:18):
Well again, I think Congress was talking here about which court gets to do that. It's the Hobbs Act Court that gets to exercise Article III authority to determine the validity of the agency's covered action.
Justice Gorsuch (02:11:29):
I understand that and I'm asking you on the due process question. You don't think that raises any due process questions?
Mr. Garnieri (02:11:36):
No, I don't think that you would have a viable due process argument if your contention is that you are not entitled to challenge the validity of the agency's order in an enforcement action. I think you can also get there… Section 703 I think confirms that. Section 703 of the APA is the provision that recognizes that Congress can provide for an exclusive review scheme and there are circumstances in which when Congress does that, parties are not entitled to judicial review of the agency's action in the enforcement proceedings.
Justice Gorsuch (02:12:04):
So Justice Rutledge was wrong and Justice Powell were wrong to be worried about those concerns?
Mr. Garnieri (02:12:09):
No, of course not, but I think they were focused on aspects of the Emergency Price Control Act that aren't necessarily replicated in the Hobbs Act. The other thing that I would point out for the… It is the plaintiff here, the plaintiff in the private TCPA action who is seeking to avoid the application of an FCC order, or an order by a component bureau of the FCC. And I think the due process concerns are particularly weak in that context. [inaudible 02:12:37] in the Yakus-
Justice Gorsuch (02:12:36):
Yes, but you're asking us to draw a much broader rule based on Yakus, and so we have to consider where that leads. And anyway, I've taken up enough of your time.
Justice Kagan (02:12:44):
Mr. Garnieri, in your brief you say the term validity refers in this context to having legal strength, force or authority, that's one, or to be grounded in sound principles. So suppose I agree with the first half of that, that validity does refer in this context to having legal force, but that I don't agree with the second half, that it just refers to, is the ruling grounded in sound principles? That what we're talking about here under the Hobbs Act is a challenge to the legal effect of an agency order, not the hazy challenge to, "Did the agency have sound principles?" So what would it mean if I took your definition and chopped it in half and said I only agree with the first part, that the Hobbs Act covers that?
Mr. Garnieri (02:13:39):
Sure. Justice Kagan, if I'm understanding your question, I think this goes back to some of the issues you may have been discussing with my friends earlier about what do we do with this declaratory order and what do you do if you think some particular agency action is not meant to have legal force or effect at all? I agree with the way that Mr. Palmeri put it. The Hobbs Act in Section 2342 both specifies the things that are reviewable under the Hobbs Act and provides that that jurisdiction is exclusive and no district court here may determine the validity of the covered agency actions. Now if you do that analysis and you determine that some particular agency action actually has no legal force or effect and is not the kind of thing specified in the Hobbs Act as an agency action for which you could get direct review in the Court of Appeals, then you're just out. The exclusivity provision does not come into play because that agency action-
Justice Kagan (02:14:30):
So what do you think is just out? What category of rulings is just out?
Mr. Garnieri (02:14:34):
I think there are some things that agencies do that would constitute interpretive rules in the technical meaning of that sense under the APA that have no legal force or effect. We cite a case involving a report issued by the ICC. The FCC commonly issues reports both to the public and to Congress. Those things don't have legal force or effect. They wouldn't satisfy the test for finality.
Justice Kagan (02:14:54):
So what I understand Mr. Wessler to be saying, and he'll correct me if I'm wrong, is in this case notwithstanding that there is an adjudication, it was not an adjudication binding on the parties here?
Mr. Garnieri (02:15:05):
I'm not actually sure what Mr. Wessler would say about that. I think he has tried to characterize this as an interpretive rule, which is simply incorrect. The FCC understands declaratory orders to have… They are legally binding orders issued by the agency after adjudication. Here the agency put this out for public, it gave notice, it solicited public comment on this. Declaratory orders under the APA under 5 USC 554E have like effect as other agency orders. These are not the same thing as an informal guidance document that the agency might issue to advise the public of its understanding of some pre-existing statutory obligation. This is a real agency order.
Justice Jackson (02:15:48):
Can I understand a little bit more though? You said if the agency act has no legal force or effect, then you're just outside the Hobbs Act. So that, in your view, would allow the district court to consider it in the context of an enforcement action. Is that right?
Mr. Garnieri (02:16:08):
Yes, Justice Jackson.
Justice Jackson (02:16:10):
But doesn't that seem odd when the language in the exclusive jurisdiction provision says that the Court of Appeals determines the validity? It seems counterintuitive that you would have the District court determining whether or not this has a legal force and effect and therefore the Hobbs Act applies at all, when that goes to validity, even your brief suggested it, and yet we have the language of the statute that says the validity is supposed to be determined by the Court of Appeals.
Mr. Garnieri (02:16:41):
Well Justice Jackson, the statute says that the Court of Appeals shall have exclusive jurisdiction to determine the validity of, and it's followed by an enumerated list. And the enumerated list specifies various statutory authorities exercised by agencies like the FCC. And I don't think it would violate the exclusivity provision for a district court to determine that something the FCC has done in a particular case is not, for example, a final order made reviewable under Section 402 of the Communications Act. If the district court decides that, then the district court has effectively decided that this is not the kind of thing the Hobbs Act covers at all. The other point that I would make on this, if I may, is simply that it is open to regulated parties to argue that the FCC has done something by declaratory order that it could only have permissibly done by noticing comment rulemaking. But that is the kind of challenge that must be brought within the Hobbs Act framework itself. You could present that argument to the Court of Appeals, and we've seen cases like that.
Justice Roberts (02:17:39):
Thank you, Counsel. Justice Thomas? Justice Alito?
Justice Alito (02:17:43):
Let me just ask you another question about Port of Boston. Why can't Port of Boston be read to mean that when a litigant is an actual party to an adjudicatory proceeding and that proceeding produces an order regarding the rights of that specific party, the party must seek review through the Hobbs Act and not by waiting for an enforcement action. Why can't Port of Boston be interpreted that way?
Mr. Garnieri (02:18:11):
That is not the rationale that this court gave for its decision in Port of Boston. The court squarely rested on the exclusivity language in the Hobbs Act. There was a factual dispute there about whether the shipper Transatlantic had been represented in the agency proceedings through its agent, which the agent was a member of the shipping association, which was a party to the agency proceeding. This court said even if you were not a formal party to the proceeding, your interests were at stake and you had an opportunity to participate and you did not. So I don't think the reasoning of the decision can be squared with my friend's suggestion that you could write that off as a case about an instance in which a party is actually bound by the agency adjudication in the sense of preclusion principles.
Justice Alito (02:18:56):
Did the court in Port of Boston grapple with all the considerations that were laid out in Justice Kavanaugh's concurring opinion in PDR?
Mr. Garnieri (02:19:09):
No, Justice Alito, I will grant you that the analysis in Transatlantic or Port of Boston doesn't seem as troubled by some of the analysis set forth in Justice Kavanaugh's concurring opinion in PDR Network. But the issue was squarely presented there and the court had no difficulty determining that the suit at issue in that case was in effect an effort to get a collateral re-determination of something that had already been settled by the Federal Maritime Commission and for which review under the Hobbs Act was the exclusive mechanism for determining the validity of that agency action.
(02:19:44)
I think Port of Boston is a strong card for us, but I don't think you have to rest exclusively on that decision either. This goes back to cases like Venner and Lambert Run Coal Company. There are numerous decisions of this court decided under the predecessor scheme, the Urgent Deficiencies Act, but likewise rejected efforts to get a collateral attack on the agency's order, and it suits in which no party was requesting declaratory relief against that order. So in addition to Transatlantic, there are other pre-Hobbs Act precedents that just can't be squared with my friend's understanding of how the statute works.
Justice Alito (02:20:22):
Well let me ask one final question about Yakus. Now I don't know how big the defendants in Yakus were, but let's suppose this was some mom and pop operation that was subject to the price controls that were in effect during World War II, and it was really quite unlikely that an entity in that position was going to be following all the details of what was being done in wartime regulation. So they just were unaware what was happening and then they find themselves in court being criminally prosecuted for violating the price controls. Would you say there's not a due process concern there?
Mr. Garnieri (02:21:08):
I think the holding of Yakus is that there was no due process violation in that application of the statute, even in the context of a criminal prosecution. Obviously we are one step removed from that here. This is a civil enforcement action, not a criminal prosecution. Now I will say the respondent in this case has suggested that today if a similar issue arose, you have Section 703 as a safety valve. Now in PDR Network we took the position that in Section 703 when the statute refers to an adequate prior opportunity for review under one of these exclusive schemes. Adequacy was supposed to be judged at a level of generality.
(02:21:44)
The question is whether the statutory scheme provided an adequate opportunity to the regulated community in general, not the specific party in that case. We haven't had occasion to revisit that position here because Petitioner has asked the court to decide this case on the premise that Petitioner already had a prior and adequate opportunity to seek review under the Hobbs Act. But what I want to stress is if you disagree with us about how to read the adequacy language in Section 703, that could be something the court could address in an appropriate future case. It is not a reason to adopt Petitioner's understanding of the Hobbs Act.
Justice Alito (02:22:18):
All right, thank you.
Justice Roberts (02:22:21):
Justice Sotomayor? Justice Kagan? Justice Gorsuch?
Justice Gorsuch (02:22:24):
Just one quick question about Port of Boston. You emphasized that the Transatlantic there wasn't a party to the administrative proceedings, right?
Mr. Garnieri (02:22:34):
Yes, although I think there was a factual dispute in that case about the extent to which it should be-
Justice Gorsuch (02:22:38):
Right. Didn't the court expressly rely on the fact that Transatlantic had been represented before the commission?
Mr. Garnieri (02:22:45):
No, Your Honor, I think if you look at the final paragraph-
Justice Gorsuch (02:22:48):
It was in fact represented before the commission and has previously made numerous claims to party status. In the petition for reconsideration filed with the commission, it asserted that it had been represented in the administrative evidentiary proceeding through its agent.
Mr. Garnieri (02:23:02):
Yes, justice Gorsuch, but I think-
Justice Gorsuch (02:23:03):
That's part of the holding the court, right?
Mr. Garnieri (02:23:06):
I entirely agree, the court was engaging in two alternative analyses, alternative holdings, I think I heard Mr. Palmeri use that phrase earlier. I entirely agree with you that the court was saying that Transatlantic was trying to have it both ways. They had claimed party status before, now they're disclaiming it. If you look at the next paragraph of the court's opinion-
Justice Gorsuch (02:23:24):
I'm looking at it.
Mr. Garnieri (02:23:24):
There is a clause that says, "Even if Transatlantic was not a formal party-
Justice Gorsuch (02:23:28):
It does say that-
Mr. Garnieri (02:23:29):
… the exclusivity analysis applies the same way."
Justice Gorsuch (02:23:32):
It says that because it had every opportunity to participate before the commission and not in the abstract, in the sense that it did. Just discussed in the prior paragraph. It's not that somebody could have come in, it's that these people did come in. That was bound up in the court's analysis, wasn't it?
Mr. Garnieri (02:23:49):
Yeah, I think we would say the same thing about a party in McLaughlin's shoes. McLaughlin had every opportunity to participate in the agency proceedings and chose not to, and I think the analysis would look the same way.
Justice Roberts (02:24:01):
Mr. Kavanaugh? Justice Barrett? Justice Jackson? No? Thank you, Counsel. Rebuttal, Mr. Wessler.
Counsel Wessler (02:24:14):
Thank you. Just a few brief points in rebuttal. The Hobbs Act's grant of exclusive jurisdiction simply means that the district court may not entertain a petition for review of an agency action subject to the act. Nobody questions that the Hobbs Act's grant of that kind of jurisdiction is designed to create a streamlined process for funneling pre-enforcement facial challenges to agency actions into the courts of appeals. And of course, no matter how the court resolves this case, those challenges will continue. But I think what's at issue here is really whether the Hobbs act, the text of that statute, this court ought to read it in a way that expands and extends the sweep of the Hobbs Act to cover any opportunity a district court might have in a garden variety civil litigation case to even consider or evaluate the reasoning of an agency interpretation. I think that can't be right, as we've explained based on both text, structure, and history of the statute.
(02:25:10)
I think to your point, Justice Alito, yes, Port of Boston, I think distinctly different from what we've got going on here because it involved parties who, Justice Gorsuch, as you noted, were themselves directly involved in the agency proceeding. That isn't the kind of proceeding that we have here in which the FCC has issued a declaratory order that only one party sought. So in this case, you have AmeriFactors, a company seeking a declaratory order. There are no other parties nor could there be for purposes of this agency action. And I think that's significant because the only opportunity that a party in the plaintiff's shoes in this case would have had they wanted to try to challenge that interpretation would be to do what another party did, which is to file a petition for reconsideration in front of the agency. That is an empty promise of judicial review, as Justice Kavanaugh, you pointed out in your concurrence in PDR Network, because that petition for reconsideration of the FCC's AmeriFactors order has been pending for more than five years.
(02:26:12)
I think what you heard from my friends on the other side was perhaps a backing away of a view that the Hobbs Act covers interpretive orders along with legislative orders. If that's correct, I would require reversal here because the Ninth Circuit's rule from which we have taken an appeal is that the Hobbs Act covers both interpretive and legislative orders. I note that the government on page 31 of its brief defends that proposition. Despite what you heard today, it has taken the position that there is no exception under the Hobbs Act for interpretive rules. It covers both kinds of rules. And adjudication can still be an interpretive rule as courts have routinely held.
(02:26:51)
Adjudications are simply an alternative path to a regulation or a rulemaking that an agency can take, but it does not affect a distinction between agency action that carries the force of law versus agency action that does not, and I will just point out that in PDR Network there, the FCC issued a rule through notice and comment, but on remand the Fourth Circuit held that it was interpretive and therefore not subject to the FCC. This court should make clear once and for all that the Hobbs Act does not require district court to follow an agency's interpretation of a statute no matter how wrong. Thank you.
Justice Roberts (02:27:27):
Thank you, Counsel. The case is submitted.
Justice Jackson (02:27:31):
The Honorable Court is now adjourned until tomorrow at 10 o'clock.