March 11, 2025 | Volume 32, Issue 7
This Report summarizes opinions issued on February 21 and 25, 2025 (Part I).
Opinions
Lackey v. Stinnie, 23-621.
By a 7-2 vote, the Court held that a plaintiff who is awarded a preliminary injunction but does not receive a favorable final judgment because the claim is rendered moot is not a “prevailing party” for the purposes of 42 U.S.C. §1988(b). Respondents were Virginia drivers whose licenses were suspended under a state statute that directed state courts to suspend the license of any driver who failed to pay court fines or costs. They sued the Commissioner of the Virginia Department of Motor Vehicles, alleging that the statute violated the Due Process and Equal Protection Clauses. The district court granted a preliminary injunction, prohibiting the Commissioner from enforcing the statute against the drivers and future class members. It found that the drivers had made a clear showing that they were likely to succeed on their procedural due process claim. Before the bench trial was set to begin, the Commissioner moved to dismiss the claim as moot or alternatively to stay the case because the Virginia General Assembly had adopted a budget amendment that would eliminate the suspension of drivers’ licenses for failure to pay court fines and costs. The Commissioner further represented that the General Assembly was likely to repeal the law during the next legislative session. The district court granted the stay and the statute was later repealed. The parties then agreed that the action had become moot and stipulated to dismissal, but jointly requested the court retain jurisdiction to resolve respondents’ claim that they were entitled to attorney’s fees under §1988(b). The district court and the initial Fourth Circuit panel declined to award attorney’s fees based on Fourth Circuit precedent that a plaintiff awarded a preliminary injunction is not a “prevailing party.” The Fourth Circuit later reheard the case en banc and overturned its prior decision. The en banc court reasoned that some preliminary injunctions “provide enduring, merits-based relief that satisfies all the requisites of the prevailing party standard.” In an opinion by Chief Justice Roberts, the Court reversed and remanded.
The Court started with the text of §1988(b), recognizing that the phrase “prevailing party” is a legal term of art. The Court then referred to the definition of “prevailing party” at the time §1988(b) was adopted as “the party ‘who successfully prosecutes the action or successfully defends against it.’” And such prevailing party status “does not depend upon the degree of success at different stages of the suit, but whether, at the end of the suit, or other proceeding, the party who as made a claim against the other, has successfully maintained it.” The Court noted that although preliminary injunctions indicate the likelihood of success on the merits, they are not “tantamount to decisions on the underlying merits.” The Court emphasized that because preliminary injunctions do not conclusively resolve the rights of the parties on the merits, they cannot confer prevailing party status. The Court rejected the notion that even a preliminary injunction that has something to do with the merits is sufficient to convey prevailing party status. A “plaintiff must succeed on the merits.”
Turning to its own precedent, the Court agreed that a “plaintiff ‘prevails’ when a court grants judicial relief that constitutes a ‘material alteration of the legal relationship of the parties.’” It interpreted its more recent cases as requiring that the change in the legal relationship be judicially sanctioned and enduring for a plaintiff to be considered a prevailing party. The Court noted that it had previously rejected the “catalyst theory”—that a plaintiff may receive attorney’s fees under §1988(b) when the desired result is brought about by a voluntary change in the defendant’s conduct—because it lacked judicial imprimatur. The Court had also held that a plaintiff is not entitled to attorney’s fees where it won a preliminary injunction but was not awarded a permanent injunction because the change in the legal relationship between the parties was not enduring. The Court held that its decision here “follows naturally from these precedents.” All told, “a plaintiff ‘prevails’ under the statute when a court conclusively resolves a claim by granting enduring judicial relief on the merits that materially alters the legal relationship between the parties.”
The Court declared that this bright-line rule reduces litigation over attorney’s fees, and found that any concerns that government defendants would strategically moot claims to avoid attorney’s fees awards would arise only in a small number of contexts. The Court added that Congress has elsewhere authorized courts to award attorney’s fees in different ways, such as the Freedom of Information Act 5 U.S.C. §552(a)(4)(E), which allows attorney’s fees when a complainant substantially prevails even through voluntary or unilateral change in position by the agency. Responding to the dissent and respondents, the Court distinguished certain cases where attorney’s fees are awarded at different stages of a case, noting that attorney’s fees can be awarded where conclusive, enduring judicial relief is meted out on an incremental basis.
Justice Jackson wrote a dissenting opinion, which Justice Sotomayor joined. The dissent maintained that the Court’s decision is not based on the text of §1988(b) and is inconsistent with the provision’s clear objective. The dissent first argued that nothing in the text of §1988(b) compels a conclusion that a plaintiff who obtains injunctive relief is never eligible for a fee award. It read the majority’s opinion as conflating “when the suit ends” with a requirement that the suit end “by virtue of a ‘conclusive’ judicial ruling on the merits of the plaintiff’s claims.” Instead, the dissent said, a §1988(b) prevailing party is one that accomplishes the lawsuit’s objective, achieving “a material alteration in the legal relationship between the parties.” The dissent argued that securing a preliminary injunction awarding actual relief on the merits of a claim that is never reversed by a final decision equates to successfully maintaining a claim to its end. The dissent noted that here, the plaintiffs accomplished what they had sought to achieve—access to the roads as licensed drivers. The plaintiffs thus prevailed on the merits of their claim “in every meaningful sense.”
The dissent then contrasted §1988(b) with other statutes that explicitly make “prevailing party” status dependent on the entry of a final order or final judgment. The dissent argued that the majority overread the Court’s precedents, insisting that a preliminary injunction that mandates a legal change in the parties’ relationship that is never reversed by a final ruling on the merits is both judicially sanctioned and enduring, and therefore sufficient to satisfy that precedent. On the practical effects, the dissent argued that Congress’s clear intent was to promote access to justice via fee shifting in civil rights cases. Yet, said the dissent, the categorical rule created by the majority will adversely affect civil rights enforcement in the long run and not necessarily encourage judicial efficiency.
Williams v. Reed, 23-191.
By a 5-4 vote, the Court held that where a state court’s application of a state exhaustion requirement effectively immunizes state officials from §1983 claims, state courts may not deny those claims on failure-to-exhaust grounds. Twenty-one claimants from Alabama contend they applied for unemployment benefits with the Alabama Department of Labor, but the department unlawfully delayed processing their claims. The claimants sued the Secretary of Labor in state court invoking 42 U.S.C §1983 and asserting, as relevant here, that the department’s delays in processing their benefits claims violated the Due Process Clause of the Fourteenth Amendment and the Social Security Act of 1935. The secretary moved to dismiss the complaint, arguing that the state trial court lacked jurisdiction because the claimants had not satisfied the administrative-exhaustion requirement in Alabama Code §25-4-95. The court granted the motion and dismissed the complaint. The Alabama Supreme Court affirmed on failure-to-exhaust grounds. In an opinion by Justice Kavanaugh, the Court reversed and remanded.
The Court noted that it has long held that a state law that immunizes government conduct that would otherwise be subject to suit under §1983 is preempted even when the federal civil rights claim is brought in state court. See Haywood v. Drown, 556 U.S. 729 (2009); Felder v. Casey, 487 U.S. 131 (1988). The Court found that Alabama’s exhaustion requirement creates a catch-22: It prevents state courts from reviewing challenges to unlawful delays in the administrative process under §1983 unless and until the claimants first complete the administrative process and receive a final decision. That means a claimant could never challenge through §1983 the delays in their administrative process.
The Court held that placing a jurisdictional label on the exhaustion requirement makes no difference. Its precedent establishes that the jurisdictional label is not dispositive and cannot save “an immunity statute cloaked in jurisdictional garb.” The Court dismissed Alabama’s contention that the availability of mandamus relief allows for judicial relief to cure delays in the state administrative process and thus prevents preemption. The Court held that even if mandamus is available to the claimants, that process suffers from the same infirmity as the exhaustion requirement more generally. “[T]he supposed availability of mandamus is simply another way of saying that the claimant must go through the process provided by the State before suing under §1983 to challenge delays in the state process.” Finally, the Court specifically declined to address the claimants’ broader argument that the Court’s precedent categorically bars state courts from applying state administrative-exhaustion requirements to §1983 claims.
Justice Thomas authored a dissent, which Justices Alito, Gorsuch, and Barrett joined as to Part II. In Part I, Justice Thomas reiterated his position that §1983 does not raise preemption issues because it does not require states to provide a forum for a plaintiff’s §1983 claims; rather, §1983 merely establishes who may sue and be sued for violations of federal law. Justice Thomas further noted that Alabama’s exhaustion bar does not implicitly conflict with §1983 because plaintiffs are free to bring claims in federal court.
In Part II, Justice Thomas rejected the Court’s conclusion under existing precedents. He observed that the Court has established two narrow exceptions to the state’s ordinary discretion to decide what cases its courts will hear. First, states cannot refuse to hear a claim solely because it is brought under federal law. Second, “a State may not deprive its courts of jurisdiction over a ‘disfavored’ federal claim, even if it simultaneously denies jurisdiction to an ‘identical state claim,’ where doing so would ‘undermine federal law.’” Justice Thomas found neither exception applicable here. No one asserted that the first exception applies. And Justice Thomas concluded that the second exception does not apply because “Alabama’s exhaustion requirement is a procedural step that ‘promotes judicial efficiency,’ in contrast to the statute in Haywood, which created a de facto ‘immunity’ shielding a class of claims from judicial review[.]” (Citations omitted.) Justice Thomas next rejected the claimants’ broad contention that “Patsy v. Board of Regents of Fla., 457 U.S. 496 (1982), and Felder establish that States are categorically precluded from imposing exhaustion requirements in the §1983 context.” And he rejected the majority’s narrower ruling on the ground that, “[u]nlike the New York statute in Haywood, Alabama’s exhaustion requirement is not ‘an immunity statute cloaked in jurisdictional garb.’” “There is no credible argument,” he maintained, “that Alabama adopted its exhaustion requirement in order to defeat challenges to the exhaustion process itself.” Thus, “[a]t most, this case presents a circumstance in which Alabama’s ‘neutral jurisdictional rule’ has the effect of defeating a federal claim”―which is entirely permissible.
Glossip v. Oklahoma, 22-7466.
By a 5-1-2 vote, the Court reversed an Oklahoma man’s capital murder conviction after holding that the prosecution violated its constitutional obligation to correct false testimony. An Oklahoma jury convicted petitioner Richard Glossip of paying Justin Sneed to murder Barry Van Treese and sentenced him to death. At trial, Sneed admitted to killing Van Treese, but testified that Glossip had paid him to do so. Sneed’s testimony was the only direct evidence that connected Glossip to Van Treese’s murder. Although Glossip confessed to helping Sneed cover up the crime, he denied any involvement in the murder. Following his conviction and its affirmance on appeal, Glossip continued to maintain his innocence. He filed several state and federal habeas corpus petitions, all of which were ultimately unsuccessful. That litigation, however, caused concerns about the integrity of Glossip’s conviction. An independent investigation ordered by the Oklahoma Legislature led to the issuance of a report, which prompted the state to disclose seven boxes of previously withheld documents from Glossip’s trial. Based on the evidence in these boxes and uncovered by the independent investigation, Glossip filed another motion for post-conviction relief with the Oklahoma Court of Criminal Appeals (OCCA). That motion was denied.
Shortly thereafter, the state uncovered an eighth box of documents that had been withheld from the defense at Glossip’s trial. Included in this box were documents that showed that Sneed suffered from bipolar disorder, which combined with known drug use, could have caused impulsive outbursts of violence. The documents also established that a jail psychiatrist prescribed Sneed lithium to treat that condition, and that the state allowed Sneed to falsely testify at trial that he was mis-prescribed lithium and that he had never seen a psychiatrist. Based on the contents of the eighth box, the attorney general retained independent counsel to conduct another review of Glossip’s conviction. As relevant here, the independent counsel concluded that the lead prosecutor’s failure to correct Sneed’s false testimony that he had been given lithium after asking for cold medicine violated Napue v. Illinois, 360 U.S. 264 (1959). Glossip then filed a successive petition for post-conviction relief with the OCCA asserting a Napue claim, among others. The attorney general filed a “Response in Support of Petitioner’s Successive Application for Post-Conviction Relief.” Although the attorney general did not concede that Glossip was actually innocent of the crime, he acknowledged that the prosecution had committed a Napue violation. He also stated that he was “concerned that there were multiple and cumulative errors, such as violation of the rule of sequestration and destruction of evidence, that when taken together with Sneed’s misstatements warrant a new trial.” The OCCA declined the parties’ joint request to grant Glossip a new trial. The court held that the state’s concession was not “based in law or fact” and cannot alone overcome the limitations on successive post-conviction review. It then applied Oklahoma’s Post-Conviction Procedures Act (PCPA) to hold that Glossip’s claims were procedurally barred. The court also concluded that the evidence presented by the parties did not “create a Napue error.” In an opinion by Justice Sotomayor, the Court reversed and remanded for a new trial.
The Court first held that it had jurisdiction to review the OCCA’s judgment. Amicus defending the OCCA judgment argued that the “Court lacks jurisdiction because the OCCA held that Glossip’s claims were barred under the PCPA, and the PCPA is ‘a paradigmatic independent and adequate state-law ground.’ That argument fails,” held the Court, “because it overlooks an antecedent holding that turned on federal law.” Specifically, the Court concluded that the OCCA applied the PCPA only after rejecting the attorney general’s confession of error as having no basis in law or fact. That rejection depended on the OCCA’s analysis of a federal constitutional question―whether a Napue violation had occurred. Thus, the Court concluded that the OCCA’s application of the procedural bar was intertwined with its determination of whether federal constitutional error had been committed. And to the extent the intertwinement of the state-law resolution with the federal issue was unclear from the OCCA’s opinion, the Court presumed reliance on federal law under Michigan v. Long, 463 U.S. 1032 (1983).
Turning to the case’s merits, the Court found that the record supported the attorney general’s confession of a Napue error. To establish a Napue violation, “a defendant must show that the prosecution knowingly solicited false testimony or knowingly allowed it ‘to go uncorrected when it appeared.’” If that showing is made, the defendant is entitled to a new trial “so long as the false testimony ‘may have had an effect on the outcome of the trial.’” Pointing to record evidence, the Court concluded that the first prong of the Napue test was satisfied. Specifically, it noted that Sneed’s medical records from jail and an affidavit from Dr. Trombka, the only psychiatrist who worked at the jail in the relevant time, contradicted Sneed’s trial testimony that he had been given lithium after asking for Sudafed and that he had never seen a psychiatrist. The Court pointed out that the prosecution almost certainly had access to Sneed’s medical files. And even if those medical files were not sufficient to tip the prosecution off to the falsity of Sneed’s statements, the Court resolved any doubt of the prosecution’s awareness as to their falsity by citing the lead prosecutor’s notes. In these notes, she documented her pretrial conversations with Sneed during which he mentioned “lithium” and “Dr. Trumpet.” The Court found that the straightforward inference from these notes is that Sneed had told her that Dr. Trombka had prescribed him lithium.
The Court then satisfied itself that Napue’s second prong―the materiality standard―was met. The Court observed that Sneed’s testimony was the only direct evidence of Glossip’s guilt of capital murder. Thus, the jury’s assessment of Sneed’s credibility was necessarily determinative. The Court concluded that Sneed’s credibility would have clearly suffered if the prosecution had corrected him on the stand. The correction would not only have revealed that Sneed was untrustworthy but also that he was willing to perjure himself on the stand. Sneed’s false testimony additionally bore on Glossip’s guilt in a more direct way. As Dr. Trombka told Glossip’s counsel, bipolar disorder symptoms can be exacerbated by illicit drug use, such as methamphetamine, to cause an individual to be more paranoid or violent. Sneed’s admission at trial that he regularly used methamphetamine, when combined with his bipolar disorder diagnosis, therefore would have undermined the prosecution’s theory at trial that Sneed was harmless on his own. And, found the Court, that theory was an important part of the prosecution’s case. Although the Court concluded that “the prosecution’s failure to correct Sneed’s false testimony at trial was a material Napue violation on its own,” it went on to cite to additional conduct that undermined the confidence in the jury verdict and noted that the cumulative evaluation of all the evidence reinforced its conclusion that the Napue error prejudiced the defense. The Court therefore held that the prosecution’s failure to correct Sneed’s trial testimony violated the Due Process Clause and ruled that Glossip was entitled to a new trial.
Justice Barrett wrote a separate opinion concurring in part and dissenting in part. Although she agreed with the Court’s exercise of jurisdiction and with its conclusion that the OCCA misapplied Napue, Justice Barrett parted ways with the majority in its decision to set aside Glossip’s conviction. She believed that the Court exceeded its appellate role by finding facts necessary to the determination that a Napue violation occurred. In Justice Barrett’s view, the record evidence was conflicting and open to multiple, plausible interpretations. She stated that, in these circumstances, the Court should have corrected the OCCA’s misstatements of federal law and vacated the judgment, leaving the next steps―including whether to hold an evidentiary hearing―to the OCCA.
Justice Thomas wrote a dissenting opinion, which Justice Alito joined in full and Justice Barrett joined in part. In Justice Thomas’s view, the Court lacked jurisdiction to review the case because the OCCA’s decision rested on an independent and adequate state-law ground. He explained that the OCCA held that the PCPA barred Glossip’s subsequent post-conviction application because he failed to meet the PCPA’s two threshold requirements of showing diligence and actual innocence. And, he maintained, the OCCA’s analysis of whether these requirements were met was divorced from any consideration of a federal constitutional issue. Under his interpretation of the OCCA’s decision, in writing that the state’s concession was “not based in law or fact” the OCCA was not referring to the state’s acknowledgement that a Napue violation occurred. Rather, that phrase referred to the state’s concession that the circumstances warranted post-conviction relief. When read in this way, said Justice Thomas, the OCCA’s statement that the concession was “not based in law or fact” was grounded in the state’s overlooking that Glossip failed to comply with the PCPA’s threshold requirements of showing diligence and actual innocence, not an independent determination of a federal constitutional issue.
Even assuming jurisdiction, Justice Thomas still would not have granted Glossip relief because he believed that Glossip failed to show he was entitled to a hearing on the merits of his Napue claim. Justice Thomas agreed with the OCCA that “Sneed’s allegedly false statements―that he had ‘never seen’ a psychiatrist and did not ‘know why’ he was given lithium―were not material because the defense already had reason to know about Sneed’s condition but made a strategic decision to not make an issue of it.” In coming to this conclusion, Justice Thomas centered the materiality analysis on the false testimony itself rather than on the prosecution’s failure to correct it. Justice Thomas concluded that it likely would not have changed the jury’s verdict because the testimony was not relevant to a contested issue. He further insisted that Glossip failed the materiality requirement for several reasons: the prosecution’s correction of testimony would not have led the jury to infer that Sneed consciously committed perjury, it would not have been noteworthy considering that the testimony itself held no significance for any contested issue, and it would not have caused the jury to believe that Sneed’s mental condition led him to attack Van Treese on his own initiative. Justice Thomas also took issue with the majority’s application of the cumulative-error doctrine, stating that the other claimed violations are meritless or beyond the Court’s jurisdiction and so should not have been considered.
Justice Thomas concluded by asserting that even if the majority were correct that it had jurisdiction and that the OCCA misapplied Napue, the appropriate course would have been to remand for further proceedings. In his view, the Court lacked the authority to order a new trial because there are at least three state-law questions that must necessarily be resolved to determine whether a new trial is the proper remedy here. And the Court does not have the authority to resolve these state-law questions or to prevent the state court from resolving the case on other state-law grounds. Justice Thomas went on to explain that even if the stated procedural issues were not apparent, Glossip would only, at most, be entitled to an evidentiary hearing on his Napue claim. According to Justice Thomas, there are multiple genuine issues of fact as to whether a Napue claim has been established, and an evidentiary hearing is necessary to further develop the record.
Wisconsin Bell, Inc. v. United States, ex. rel. Heath, 23-1127.
The Court unanimously held that E-Rate (short for Education Rate) reimbursement requests qualified as claims under the False Claims Act (FCA). The E-Rate program, established by the Federal Communications Commission (FCC) pursuant to the Telecommunications Act of 1996, subsidizes internet and other telecommunication services for schools and libraries across the United States. It does so by disbursing funds, collected from telecommunication carriers and managed by a private corporation, the Universal Service Administrative Company (Administrative Company), to schools and libraries to cover a substantial portion of their internet costs. The program protects the value of the subsidy by preventing a carrier from inflating its non-discounted prices. Once an appropriate charge is set, the school can obtain the subsidy by paying the carrier only the discounted price, thus requiring the carrier to seek the remainder of its fee from the E-Rate fund. Alternatively, the school can pay the carrier in full and seek reimbursement from the fund itself.
Respondent Todd Heath is an auditor of telecommunication bills who believed that petitioner Wisconsin Bell had defrauded the E-Rate program out of millions of dollars. Heath sued Wisconsin Bell under the FCA, which allows private parties to bring civil actions on the government’s behalf and share in any monetary recovery. Under the Act, a defendant is liable if it “knowingly presents, or causes to be presented, a false or fraudulent claim for payment.” 31 U.S.C. §3729(a)(1)(A). According to Heath, Wisconsin Bell presented a false or fraudulent claim for payment by either on its own submitting, or causing a school to submit, reimbursement requests for amounts higher than the E-Rate program should have had to pay. Wisconsin Bell moved to dismiss Heath’s suit, arguing that an E-Rate reimbursement request can never qualify as an FCA “claim.” To so qualify, the requested money must be “spent or used on the government’s behalf or to advance a government program or interest” and the government must “provide[] or ha[ve] provided any portion of the money” requested. 31 U.S.C. §3729(b)(2)(A)(ii). Wisconsin Bell alleged that an E-Rate reimbursement request did not meet the second requirement of that definition. After the district court denied Wisconsin Bell’s motion, the Seventh Circuit affirmed. The court held that the E-Rate reimbursement requests fit within the FCA’s definition of “claim” under two alternative theories. First, the court held that the government “provided” all the money in the E-Rate program because it regulated the collection and distribution of contributions by, most notably, initially requiring carriers to pay into the fund. Second, the court held more narrowly that the government provided a “portion” of the E-Rate funding by depositing into the fund, in the relevant years, “more than $100 million directly from the U.S. Treasury.” In an opinion by Justice Kagan, the Court affirmed on this narrower ground.
The Court identified the pertinent issue as whether the government provided―i.e., supplied, furnished or made available―any portion of the money here sought. The Court pointed out that to make such a showing Heath needed only to establish that the government provided some of the E-Rate moneys in the fund. And the Court determined that the government did so here. Specifically, the U.S. Treasury put substantial money―more than $100 million―into the fund to finance E-Rate subsidies in the relevant years. That money came from two sources: delinquent contributions the FCC and Treasury Department collected from carriers after the Administrative Company was unable to do so and civil settlements or restitution payments that the Justice Department procured in connection with criminal prosecutions or civil enforcement actions against malefactors misusing the E-Rate program. The Court found that, by depositing money obtained from these sources into the fund, the government quite literally supplied, furnished, and made available funds used to reimburse E-Rate program participants.
The Court rejected Wisconsin Bell’s argument that the $100 million the U.S. Treasury deposited into the fund was provided by private carriers rather than the government. According to Wisconsin Bell, the government, by holding private carriers’ required payments in the U.S. Treasury, acted merely as an intermediary between the private carrier and the Administrative Company. And, in Wisconsin Bell’s view, holding the funds in a Treasury account does not qualify as “providing” for purposes of the FCA. In rejecting that argument, the Court reiterated that the government itself generated the moneys it deposited into the fund by extracting moneys from carriers that were delinquent in their contributions and by prosecuting wrongdoing in the E-Rate program. But even assuming the government was merely an intermediary, the Court recognized that, by acting in such a role, the government could still “provide” the $100 million to the fund for purposes of the FCA. It could do so by collecting the moneys and routing it through Treasury accounts. Ultimately, the Court held that the reimbursement requests at issue qualified as “claims” under the FCA because in the years they were made the government deposited money into the fund to pay for E-Rate subsidies. And all the statute requires is that those deposits cover some portion of the money requested. The Court left open the question whether “the amount of money the Government deposited should limit the damages Heath can recover.”
Justice Thomas, joined by Justice Kavanaugh in full and by Justice Alito as to Part I, wrote a concurring opinion. In Part I, the concurring Justices explained that they joined the Court’s decision in full but only because it understood the Court to base its decision on the fact that the government generated the moneys it “provided.” In the concurring Justices’ view, the Court’s decision did not conclusively address whether the government would have “provided” money, for purposes of the FCA, if it had acted as a mere “facilitator.” The remaining parts of the concurring opinion were devoted to consideration of issues the Court did not reach: “whether the government ‘provides’ the money that it requires private carriers to contribute to the E-Rate program,” and “whether the E-Rate program’s administrator is an agent of the United States.” With respect to the first question, Justice Thomas questioned whether the government puts its own funds into jeopardy by requiring private parties to fund the E-Rate program. With respect to the second question, Justice Thomas stated that if the government’s position, that the Administrative Company is an “agent of the United States,” is accepted the E-Rate program would appear to conflict with the Government Corporation Control Act (GCCA).
Justice Kavanaugh wrote a separate concurring opinion, which Justice Thomas joined. He asserted that, although not before the Court in this case, the FCA’s qui tam provisions raise substantial constitutional questions under Article II and urged the Court to consider the Article II issue in an appropriate case.
Republic of Hungary v. Simon, 23-867.
The Court unanimously held that alleging funds received from the sale of expropriated property have been commingled in an account that contains funds from other sources and that funds from that account were subsequently used in the United States, without more, cannot satisfy the commercial nexus requirement of the expropriation exception to the general immunity provided to foreign sovereigns under the Foreign Sovereign Immunities Act of 1976 (FSIA).
Jewish survivors of the Hungarian Holocaust and their heirs (respondents) filed suit in federal district court against Hungary and one of its agencies for the alleged expropriation of their property during World War II. Respondents sued under FSIA, which provides an avenue for plaintiffs to sue foreign sovereigns who expropriate their property under certain conditions. One of those conditions is when the property or any property “exchanged for” for the expropriated property has a commercial nexus to the United States. 28 U.S.C. §1605(a)(3). Respondents contended that this condition was met here, based on the following allegations: “that Hungary, after seizing their property, liquidated it and deposited the proceeds in the Hungarian treasury. There the funds became commingled with other Hungarian Government funds, money Hungary has since used for a wide variety of governmental and commercial operations. . . . In the 2000s, Hungary allegedly used funds from its treasury to issue bonds in the United States and to purchase military equipment here.” (Respondents made similar allegations with respect to Hungary’s national railroad.) The district court and the D.C. Circuit held that this commingling theory satisfied the commercial nexus requirement. In an opinion by Justice Sotomayor, the Court vacated the D.C. Circuit’s judgment and remanded.
The Court stated that it has historically rejected the notion that the expropriation exception was intended to be a radical departure from the general presumption that foreign states are immune from suits in the United States. The Court concluded that respondents’ theory would constitute such a radical departure. The Court explained that merely establishing that funds were commingled does not give rise to the plausible inference that the specific funds are present in the United States because they do not provide for a plausible tracing of those funds. The Court noted that such a theory would require accepting an “attenuated fiction” that the commingling of funds means that those funds deriving from the sale of the expropriated property might remain in the commingled account decades after the commingling. The Court further reasoned that this fiction becomes even more tenuous when the sovereign uses the commingled funds for both commercial and governmental operations. The Court stated that it would be no more likely that the funds related to the expropriated property ended up in the United States than anywhere else. Although the Court acknowledged that the fungible nature of money makes it difficult to trace after it was commingled, the “present in the United States” requirement of §1605(a)(3) was imposed for “any” property. And the Court added that Congress was well aware that the location of money can become indeterminant but made no exception in the text of §1605(a)(3).
The Court also noted that its interpretation is consistent with the structure of §1605(a)(3), its history, and its purpose. It observed that the expropriation exception was drafted to permit the adjudication of claims raised by Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964), where the proceeds in controversy could be traced to an account that contained segregated funds attributable only to the sale of expropriated property. Lastly, the Court found that to read §1605(a)(3) as broadly as respondents request would implicate the United States’ interests, particularly in protecting its own sovereign immunity in foreign courts. The Court’s reading of §1605(a)(3) avoids friction in the country&
NAAG Center for Supreme Court Advocacy Staff
- Dan Schweitzer, Director and Chief Counsel
- Sianha Gualano, Supreme Court Fellow
- Nicole Nixon, Supreme Court Fellow
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