U.S. Supreme Court Archives

Trump v. CASA, Inc., No. 24A884 – Decided June 27, 2025

Today, the Supreme Court held 6-3 that district courts were wrong to grant “universal” preliminary injunctions against the government’s enforcement of a presidential executive order, and that any injunctive relief should be limited to the parties in those cases.

“‘[U]niversal injunctions’ . . . likely exceed the equitable authority that Congress has granted to federal courts.”

Justice Barrett, writing for the Court

Background:

On January 20, 2025, President Trump issued an Executive Order titled “Protecting the Meaning and Value of American Citizenship.” The order identifies two groups of persons whom the government should not recognize as United States citizens, even though they were born in the United States. The order directs federal officials not to issue documents recognizing U.S. citizenship for those individuals, to reject documents issued by state or local governments recognizing their citizenship, and to develop and issue public guidance on how to carry out the order within 30 days.

Shortly after the order’s issuance, three federal district courts granted universal preliminary injunctions, which forbade the government from taking steps to carry out the order’s directives against any person, anywhere in the country. The government defendants asked each district court (and later, the First, Fourth, and Ninth Circuits) for a partial stay of the preliminary injunctions. Their requests were denied. The government defendants then asked the Supreme Court for a partial stay. They argued that the Court should narrow the preliminary injunctions’ scope to protect only the individuals and identified members of the organizations who challenged the order, which would allow the order to go into effect against nonparties.

Issue:

May federal courts issue universal preliminary injunctions in favor of nonparties against the government?

Court’s Holding:

No. Universal injunctions likely exceed the equitable authority that Congress granted to federal courts under the Judiciary Act of 1789.

What It Means:

Today’s decision confirms that federal district courts likely do not have the power to grant universal preliminary injunctions, which temporarily forbid the government from enforcing a challenged federal action against anyone affected by the action, anywhere in the United States (even against nonparties to the lawsuit). The Court explained that while Congress endowed federal courts with jurisdiction over “all suits . . . in equity” in the Judiciary Act of 1789, courts’ power to fashion equitable remedies only encompasses those remedies “traditionally accorded by courts of equity” at the nation’s Founding.
The Court noted that it was not deciding whether the Administrative Procedure Act authorizes federal courts to vacate federal agency action under the provision allowing courts to “hold unlawful and set aside agency action.” 5 U.S.C. § 706(2). The Court’s decision therefore does not affect plaintiffs’ ability to ask courts to “set aside” an agency action, even when some affected individuals are not parties to the APA suit.
The Court’s ruling signals to plaintiffs that they must consider alternative avenues to expedite their challenges to executive or legislative actions. These avenues may include Rule 23 class actions, lawsuits under civil rights legislation such as 42 U.S.C. § 1983, and actions to enjoin officials under Ex parte Young.
One consequence of today’s decision may be a reduction in the number of emergency applications to the United States Supreme Court. In recent years, a rise in the number of universal injunctions granted by district courts resulted in a sharp increase in emergency applications to the Supreme Court and a corresponding increase in decisions on the so-called “shadow docket”—the name that critics gave to the Court’s emergency docket. Today’s decision could result in a decrease in these applications going forward.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Administrative Law and Regulatory

Stuart F. Delery
+1 202.955.8515
sdelery@gibsondunn.com

Eugene Scalia
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Assistant Dawn J. Forrester: dforrester@gibsondunn.com

Helgi C. Walker
+1 202.887.3599
hwalker@gibsondunn.com

This alert was prepared by associates Stephen Hammer and Audrey Payne.

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FCC v. Consumers’ Research, Nos. 24-354 and 24-422 – Decided June 27, 2025

Today, the Supreme Court held 6-3 that the statute authorizing the FCC to collect universal service contributions from telecommunications companies does not violate the nondelegation doctrine.

“The question in this case is whether the universal-service scheme . . . violates the Constitution’s nondelegation doctrine, either because Congress has given away its power to the FCC or because the FCC has given away its power to a private company. We hold that no impermissible transfer of authority has occurred.”

Justice Kagan, writing for the Court

Background:

The Telecommunications Act of 1996 directed the FCC to establish a Universal Service Fund to subsidize telecommunications services in rural and low-income areas, schools, and libraries. See 47 U.S.C. § 254. The Act instructs that “universal service” should be available at “just, reasonable, and affordable” rates. Id. § 254(i). Telecommunications carriers must make contributions to the fund that are “sufficient” to “advance universal service.” See id § 254(d)–(e). In defining universal service, the Commission must consider “the extent to which” telecommunications services “are essential to education, public health, or public safety”; are “subscribed to by a substantial majority of residential customers”; and “are consistent with the public interest, convenience, and necessity.” Id. § 254(c)(1). The FCC’s policies to “preserv[e] and advance[]” universal service must be based on six specific principles and any additional principles the FCC determines are “necessary and appropriate for the protection of the public interest, convenience, and necessity and are consistent with this chapter.” Id. § 254(b).

In 1997, the FCC directed a private not-for-profit corporation, the Universal Service Administrative Company (USAC), to help the FCC administer the fund. Among other things, USAC helps the FCC determine the size of carriers’ contributions by providing financial projections to the Commission.

A carrier and others challenged the FCC’s 2022 contribution rate in the U.S. Court of Appeals for the Fifth Circuit. They argued that the Universal Service Fund is unconstitutional because Congress delegated legislative power to the FCC and the Commission then redelegated power to USAC. A Fifth Circuit panel rejected the challenge. Sitting en banc, the full Fifth Circuit held 9-7 that the combination of Congress’s delegation to the FCC and the FCC’s delegation to USAC violates the Constitution’s vesting of legislative power in Congress.

Issues:

Did Congress violate the nondelegation doctrine when it authorized the FCC to determine the amounts that telecommunications carriers must contribute to the Universal Service Fund; did the FCC violate the nondelegation doctrine by using USAC projections to determine contribution rates; or did the combination of these delegations violate the nondelegation doctrine?

Court’s Holding:

Neither Congress nor the FCC violated the nondelegation doctrine. Section 254 provides an intelligible principle to constrain the FCC’s discretion in determining the amount of money to collect to support universal service and in defining universal service. The FCC did not improperly delegate to USAC because the FCC maintained the final say as to contribution rates. Those two lawful delegations do not become unconstitutional when combined.

What It Means:

The Court’s decision upholds the Universal Service Fund’s contribution mechanism, applying the traditional intelligible-principle test. The Court reiterated that exercises of Congress’s tax power are evaluated under “the usual nondelegation standard.” It also refused to draw a distinction for nondelegation purposes between statutes authorizing fees and statutes authorizing taxes.
The Court nonetheless emphasized that the intelligible-principle test is not toothless: Congress must make “clear both the general policy that the agency must pursue and the boundaries of its delegated authority”; those standards must “enable both the courts and the public to ascertain whether the agency has followed the law”; and the acceptable degree of discretion “varies according to the scope of the power congressionally conferred.” That leaves open the possibility that some statutes might still be successfully challenged on nondelegation grounds.
On the private nondelegation question, the Court held that the FCC did not unconstitutionally delegate authority to USAC because the FCC retained ultimate “decision-making power,” even if USAC gave “recommendations.” The Court was not willing to scrutinize whether the FCC was practically functioning merely as a rubber stamp.

The Court rejected the Fifth Circuit’s “combination theory” of unconstitutionality as novel and unsound. Because the public and private nondelegation doctrines “do not operate on the same axis,” measures implicating one do not “compound” measures implicating the other. The Court distinguished Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477 (2010), where both measures at issue “limited the same thing—the President’s power to remove executive officers.”
Justice Gorsuch, joined by Justice Thomas and Justice Alito, dissented. He would have held that the funding mechanism is novel and violates the intelligible-principle test. In the end, however, he expressed “some optimism” because the Court did not address two provisions that allow the FCC to provide more “advanced” and “additional” services for schools, libraries, and healthcare providers—§ 254(c)(3) and (h)(2). Those provisions remain open to challenge.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Administrative Law and Regulatory

Stuart F. Delery
+1 202.955.8515
sdelery@gibsondunn.com

Eugene Scalia
+1 202.955.8673
Assistant Dawn J. Forrester: dforrester@gibsondunn.com

Helgi C. Walker
+1 202.887.3599
hwalker@gibsondunn.com

This alert was prepared by associates Zachary Tyree and Connor P. Mui.

Kennedy v. Braidwood Management, Inc., No. 24-316 – Decided June 27, 2025

Today, the Supreme Court held 6-3 that the members of the U.S. Preventive Task Force are inferior officers whose appointment by the HHS Secretary is consistent with the Appointments Clause.

“Task Force members remain subject to the Secretary of HHS’s supervision and direction, and the Secretary remains subject to the President’s supervision and direction. So under Article II and this Court’s precedents, Task Force members are inferior officers, and Congress may vest the power to appoint them in the Secretary of HHS.’”

Justice Kavanaugh, writing for the Court

Background:

The U.S. Preventive Services Task Force is a 16-member volunteer body within the Public Health Service of the Department of Health and Human Services (“HHS”). Task Force members are experts in prevention, evidence-based medicine, and primary care who develop recommendations about preventive health services. They serve four-year terms, and there are no statutory restrictions on their removal. The current Task Force members were appointed by the Director of the Agency for Healthcare Research and Quality; their appointments were later ratified by the HHS Secretary in June 2023.

In codifying the Task Force, Congress directed that “[a]ll members of the Task Force . . . and any recommendations made by such members, shall be independent and, to the extent practicable, not subject to political pressure.” 42 U.S.C. § 299b-4(a)(6). Although the Task Force originally made only voluntary recommendations, in the Affordable Care Act of 2010, Congress determined that some of the Task Force’s recommendations would create binding obligations for health-insurance issuers and group health plans to cover certain preventive health services, unless rejected by the HHS Secretary. 42 U.S.C. § 300gg-13(a)-(b).

Several small businesses and individuals objected to the requirement—recommended by the Task Force—that health-insurance issuers and group plans cover certain HIV-prevention medications. Plaintiffs argued that the structure of the Task Force violated the Appointments Clause because Task Force members are “principal officers” and must therefore be nominated by the President and confirmed by the Senate. The HHS Secretary disagreed, arguing that Task Force members are “inferior officers” who may be appointed by the HHS Secretary.

The district court ruled for Plaintiffs, agreeing that the Task Force members’ appointments violated the Constitution because they were principal officers. The Fifth Circuit affirmed on the ground that “the Task Force cannot be ‘independent’ and free from ‘political pressure’ on the one hand, and at the same time be supervised by the HHS Secretary, a political appointee, on the other.”

Issue:

Whether appointment of the U.S. Preventive Services Task Force members by the HHS Secretary is consistent with the Appointments Clause.

Court’s Holding:

Yes. Task Force members are inferior officers: they are removable at will by the HHS Secretary and their recommendations can be rejected by the HHS Secretary before having any legal effect.

What It Means:

Today’s decision reiterates the Court’s commitment to enforcing the Appointments Clause and the chain of political accountability that is central to its design. See, e.g., Edmond v. United States, 520 U.S. 651 (1997); Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477 (2010); Lucia v. SEC, 585 U.S. 237 (2018).
In making the principal versus inferior officer determination, the Court emphasized that at-will removal by a principal officer is strong evidence of inferiority. At-will removal is a “powerful tool for control” and historical practice supports treating officers who can be removed at will by principal officers as inferior.
The Court also emphasized that the default presumption is that all officers are removable at will, and unless Congress clearly and explicitly states otherwise, the Court will not presume or imply restrictions on officers’ removal.
The Court clarified that the inability of a principal officer to compel a subordinate officer’s actions does not mean the subordinate officer is not inferior. The superior officer’s ability to overrule or reject a subordinate’s decision is sufficient supervisory authority.
The Court’s decision provides guidance to the potential avenues available to businesses seeking to challenge actions by federal government actors who may not have been validly appointed. Important considerations include assessing whether the actors’ decision may be overruled or rejected by senior government personnel and whether statutory language about independence is sufficient to overcome the presumption of at-will removal.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Administrative Law and Regulatory

Stuart F. Delery +1 202.955.8515 sdelery@gibsondunn.com	Eugene Scalia +1 202.955.8673 Assistant Dawn J. Forrester: dforrester@gibsondunn.com	Helgi C. Walker +1 202.887.3599 hwalker@gibsondunn.com
Matt Gregory +1 202.887.3635 mgregory@gibsondunn.com

This alert was prepared by associates Salah Hawkins and Aly Cox.

Stanley v. City of Sanford, Fla., No. 23-997 – Decided June 20, 2025

Today, the Supreme Court held 7-2 that the Americans with Disabilities Act does not extend to retired employees.

“[T]o prevail under [Title I of the ADA], a plaintiff must plead and prove that she held or desired a job, and could perform its essential functions with or without reasonable accommodation, at the time of an employer’s alleged act of disability-based discrimination.”

Justice Gorsuch, writing for the Court

Background:

The Sanford Fire Department previously provided health insurance until age 65 for two categories of retirees: (1) those who retired with 25 years of service and (2) those who retired earlier because of a disability. In 2003, Sanford reduced the insurance period for those who retired due to disability to 24 months following retirement.

Karyn Stanley started working as a Sanford firefighter in 1999. She retired due to disability in 2018. Under Sanford’s revised policy, she was only entitled to 24 months of post-retirement health-insurance coverage. In 2020, Stanley sued Sanford, alleging that providing different benefits to those who retired with 25 years of service and those who retired earlier due to disability was impermissible discrimination under Title I of the Americans with Disabilities Act.

The district court dismissed the suit, holding that Stanley was not a “qualified individual” under the ADA because she was retired. She was not able to perform the essential functions of a job she held or desired at the time the City ceased providing her health insurance. The Eleventh Circuit agreed, but acknowledged a split among the circuits as to whether the ADA reached retirees like Stanley.

Issue:

Under the Americans with Disabilities Act, does a former employee—who was qualified to perform her job and who earned post-employment benefits while employed—lose her right to sue over discrimination with respect to those benefits solely because she no longer holds her job?

Court’s Holding:

Yes. Title I’s anti-discrimination provision does not protect individuals who do not hold nor desire a job with the defendant employer at the time of the allegedly discriminatory act.

What It Means:

Today’s decision clarifies that the ADA does not cover retired employees who neither hold nor desire a job at the time of the allegedly discriminatory conduct. But because retired employees might have other avenues by which to challenge changes to retirement-benefit plans, employers should continue to exercise caution in making such changes.
A plurality of the Justices (Gorsuch, joined by Alito, Sotomayor, and Kagan) wrote separately to opine that, unlike retired employees, employees who were both disabled and “qualified” when their employer adopted a discriminatory retirement-benefits policy might be able to state a claim under Title I. Justice Jackson articulated a similar view in her dissent.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Labor and Employment

Jason C. Schwartz
+1 202.955.8242
jschwartz@gibsondunn.com

Katherine V.A. Smith
+1 213.229.7107
ksmith@gibsondunn.com

This alert was prepared by Cate McCaffrey and Elizabeth Strassner.

McLaughlin Chiropractic Associates, Inc. v. McKesson Corporation, No. 23-1226 – Decided June 20, 2025

Today, the Supreme Court held that the Hobbs Act’s exclusive review provision for administrative orders does not prevent district courts from interpreting a statutory provision in civil enforcement proceedings.

“The Hobbs Act does not preclude district courts in enforcement proceedings from independently assessing whether an agency’s interpretation of the relevant statute is correct.”

Justice Kavanaugh, writing for the Court

Background:

The Hobbs Act provides that for certain pre-enforcement challenges to agency orders, “[t]he court of appeals . . . has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of all final orders of the Federal Communications Commission” (FCC) and other agencies. 28 U.S.C. § 2342(1). Circuit courts were divided as to whether this channeled review provision required district courts to defer to the FCC’s interpretation in any subsequent civil enforcement actions after the period for court of appeals review had passed.

The Telephone Consumer Protection Act (TCPA) creates a private right of action against companies that “use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.” 47 U.S.C. § 227(b)(1)(C). McLaughlin Chiropractic Associates brought a class action lawsuit against McKesson Corporation alleging that the company sent unsolicited messages using online fax services to market its medical software products. While the lawsuit was ongoing, the FCC issued an order determining that the TCPA did not apply to an online fax service because it was not a “telephone facsimile machine.” The district court followed the interpretation set forth in the FCC’s order and entered summary judgment for McKesson, reasoning that the Hobbs Act precluded the court from considering whether the FCC’s interpretation of the TCPA was correct. The Ninth Circuit affirmed.

Issue:

Whether the Hobbs Act binds district courts presiding over civil enforcement suits to an agency’s interpretation of a statute.

Court’s Holding:

No. The Hobbs Act channels pre-enforcement challenges of agency orders to the courts of appeals. But the availability of pre-enforcement review does not mean that district courts are bound by the agency’s interpretation in civil enforcement proceedings.

What It Means:

Today’s decision continues a trend of the Court limiting the deference federal courts must give to an agency’s legal interpretations, following on Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), and other cases. The decision strengthens parties’ ability to request that a court issue a decision contrary to an agency’s interpretation, including in litigation between private parties.
The Court emphasized that Congress can restrict judicial review in an enforcement proceeding, provided Congress does so clearly. Absent such a clear statement by Congress, courts presume judicial review is permitted and may independently assess the meaning of a statute in the context of an enforcement proceeding. Because the Hobbs Act is silent as to whether a party may contest the agency’s legal interpretation in subsequent enforcement proceedings, it does not preclude judicial review or bind district courts to the agency’s interpretation.
The Court’s decision suggests that potential defendants might not be able to rely solely on agency determinations to provide a safe harbor, since a court may not be bound by the agency’s interpretation. However, defendants may still argue that the safe harbor correctly interprets the statute and is entitled to weight under Skidmore. They may also raise other arguments, including that principles of fair notice preclude liability or that other elements of the applicable statute are not satisfied.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Administrative Law and Regulatory

Stuart F. Delery +1 202.955.8515 sdelery@gibsondunn.com	Eugene Scalia +1 202.955.8673 Assistant Dawn J. Forrester: dforrester@gibsondunn.com	Helgi C. Walker +1 202.887.3599 hwalker@gibsondunn.com
Akiva Shapiro +1 212.351.3830 ashapiro@gibsondunn.com	Russell Balikian +1 202.955.8535 rbalikian@gibsondunn.com

This alert was prepared by associate Salah Hawkins.

FDA v. R.J. Reynolds Vapor Co., No. 23-1187 – Decided June 20, 2025

Today, the Supreme Court held 7-2 that tobacco product retailers may sue the FDA for blocking the marketing of new tobacco products, allowing challenges by more than just the product manufacturer.

“If the FDA denies an application, the retailers, like the manufacturer, lose the opportunity to profit from the sale of the new tobacco product—or, if they sell the product anyway, risk imprisonment and other sanctions. . . . Accordingly, the retailers are ‘adversely affected’ by a denial order and are therefore proper petitioners.”

Justice Barrett, writing for the Court

Background:

The Family Smoking Prevention and Tobacco Control Act (“TCA”) requires tobacco product manufacturers to apply to the Food and Drug Administration (“FDA”) for authorization to market “new” tobacco products. If the FDA denies an application, the Act’s judicial-review provision permits “any person adversely affected by” the denial to petition for review in the D.C. Circuit or “the circuit in which such person resides or has their principal place of business.” 21 U.S.C. § 387l(a)(1).

R.J. Reynolds Vapor Co. (“RJR Vapor”), a leading e-cigarette manufacturer, is incorporated and has its principal place of business in North Carolina. When the FDA denied its applications to market four e-cigarette products, it jointly petitioned for review of each denial along with two retailers that sell those kinds of e-cigarettes. The companies filed the joint petition in the Fifth Circuit, where the retailers were formed and have their principal places of business. The FDA moved to dismiss or to transfer the action to the D.C. Circuit or the Fourth Circuit, based on RJR Vapor’s residence. The Fifth Circuit denied the motion, holding that each entity was a person adversely affected by the denial and that the petition could be filed in the Fifth Circuit because the retailers have their principal places of business there.

Issue:

May tobacco product retailers challenge FDA marketing denials, such that a petition for review can be filed in a circuit where a retailer resides or has its principal place of business?

Court’s Holding:

Yes. A retailer who would sell a new tobacco product counts as “any person adversely affected” by an FDA order that bars marketing of that product under the TCA. The retailer can therefore file a petition for review in any circuit in which it resides or has its principal place of business.

What It Means:

Today’s decision confirms that a tobacco product retailer is a “person adversely affected” under the TCA if it would have sold the new product for which the FDA issues a marketing denial. Noting that the phrase “adversely affected” is a term of art, the Court relied on cases interpreting the Administrative Procedure Act and other statutory causes of action to conclude that the TCA review provision “extends to any petitioner ‘with an interest arguably sought to be protected by the statute.’” The Court distinguished the statutory language here—“any person adversely affected”—from language in other statutes, which might limit judicial review to “the applicant” or a “party.” See NRC v. Texas, 605 U.S. __ (2025) (slip op., at 9).
Applying that rule here, the Court held that if the FDA denies a marketing application, retailers, “like the manufacturer, lose the opportunity to profit from the sale of the new tobacco product—or, if they sell the product anyway, risk imprisonment and other sanctions.” Therefore, retailers’ interests are not “so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.”
By creating more opportunities to challenge FDA orders, the Court’s decision could mean that manufacturers and retailers are able to combat more effectively the FDA’s efforts to thwart marketing approval of new tobacco products.
The Court also held that the Fifth Circuit correctly concluded that at least one proper petitioner had venue in that court because a retailer and trade association in this case have their principal places of business in the Fifth Circuit and could therefore file petitions for review in that circuit.
The Court did not decide the separate question—with more far-reaching consequences—whether each petitioner in a joint petition must independently satisfy the TCA’s venue provisions. The Court noted that “[n]o court, including the Fifth Circuit in this case, has analyzed” that question and that its resolution “would inevitably inform debates about similar [venue] statutes,” including “the general venue statute for lawsuits against the Government.” The Fifth Circuit may consider that question on remand.
In dissent, Justice Jackson (joined by Justice Sotomayor)—who would have held that only manufacturers can challenge a marketing denial—suggested that the TCA‘s venue provision limits the ability of manufacturers to sue outside the circuits in which they reside or have their principal places of business, “including through proxy suits that third parties file in other places on their behalf.” Companies should continue to think carefully about how to avail themselves of the best venue for challenging administrative action.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Administrative Law and Regulatory

Stuart F. Delery
+1 202.955.8515
sdelery@gibsondunn.com

Eugene Scalia
+1 202.955.8673
Assistant Dawn J. Forrester: dforrester@gibsondunn.com

Helgi C. Walker
+1 202.887.3599
hwalker@gibsondunn.com

This alert was prepared by associates Zachary Tyree and Audrey Payne.

EPA v. Calumet Shreveport Refining, LLC, No. 23-1229 – Decided June 18, 2025

Today, the Supreme Court held 7-2 that, if EPA denies a Clean Air Act exemption as part of an “en masse” decision—applying one reasoning to multiple petitions—venue lies exclusively in the D.C. Circuit, even though the individual decisions are only locally or regionally applicable.

“[A]n action is ‘based on a determination of nationwide scope or effect’ . . . if such a determination supplies a core justification for EPA’s action . . . .”

Justice Thomas, writing for the Court

Background:

The Clean Air Act requires oil refiners to blend certain amounts of renewable fuel into transportation fuel sold within the United States. The Environmental Protection Agency (EPA) implements this requirement through the Renewable Fuel Standard program. The law permits small refineries to petition EPA for an exemption. Denial of a petition, like all EPA actions under the Clean Air Act, is reviewable in a federal court of appeals. 42 U.S.C. § 7607(b)(1). If EPA’s decision is “locally or regionally applicable,” venue lies in the refinery’s regional court of appeals; if it’s “nationally applicable” or “based on a determination of nationwide scope or effect,” venue is in the D.C. Circuit. Id.

In April and June 2022, EPA denied the exemption petitions of 105 small refineries in two omnibus notices that (1) described these en masse denials as a “new approach” to renewable-fuel exemptions and (2) stated that the denials were reviewable only in the D.C. Circuit.

The refineries nevertheless sought review in their regional court—the Fifth Circuit. EPA moved to transfer to the D.C. Circuit on the ground that they were made en masse with respect to 105 refineries nationwide as part of a broader policy change so the denials qualified as “nationally applicable” or “based on a determination of nationwide scope and effect” under Section 7607(b)(1).

A divided panel of the Fifth Circuit held that it had venue over Plaintiffs’ claims. The Fifth Circuit held that EPA’s exemption decisions were “locally or regionally applicable” because their “legal effect” was limited to the petitioning refineries and did not bind EPA in any future adjudication. On the merits, the Fifth Circuit held the challenged exemption decisions were unlawful. EPA sought certiorari, asserting that the Fifth Circuit’s decision was inconsistent with the Eleventh Circuit’s decision in a different case challenging the same en masse denial, as well as the decisions of several other circuits in similar circumstances.

Issue:

Under what circumstances is a decision by EPA “nationally applicable” or “based on a determination of nationwide scope or effect,” such that it may only be reviewed by the U.S. Courts of Appeals for the D.C. Circuit?

Court’s Holding:

An EPA “action” (defined by the Court to include only the enumerated acts Congress authorized EPA to take) is “nationally applicable” when “[o]n its face” it applies throughout the entire country. An EPA “determination” (defined by the Court to include any justification EPA gives for taking an action) is “of nationwide scope” if it applies throughout the country as a matter of law. An EPA “determination” is “of nationwide . . . effect” if it applies throughout the country as a matter of fact.

In this case, the Court concluded that each denial of a single refinery’s petition was a separate “action,” but that the decisions were of nationwide scope or effect because EPA made each decision on the same legal basis. Venue accordingly lay in the D.C. Circuit.

What It Means:

The opinion distinguishes between “actions,” “determinations of national scope,” and “determinations of national effect,” establishing three different paths for EPA to lay exclusive venue in the D.C. Circuit.
Courts analyzing venue in actions against EPA will need to walk through the two-step, tripartite system laid out in this opinion. First, a court will need to assess whether EPA’s statutorily authorized “action” applies nationwide on its face. If it does, venue will lie exclusively in the D.C. Circuit. Even if it does not, however, a court will still need to determine whether EPA’s reasoning for that act applies nationwide—“as a legal matter (de jure)” or “as a practical one (de facto).”
This ruling reaffirms the special role of the D.C. Circuit, as distinct from the other Courts of Appeals, in reviewing certain agency actions.
Litigants seeking to challenge EPA determinations may be more likely to find themselves limited to the D.C. Circuit—rather than potentially preferable courts in their own localities—when denials are made in en masse bundles supported by broad-reaching determinations.
In a companion case also decided today, Oklahoma v. EPA, No. 23-1067, the Court applied the Calumet rule to hold that EPA’s disapproval of state implementation plans could be challenged in regional circuit courts. There, states and industry groups challenged EPA’s disapproval of state implementation plans for Oklahoma and Utah in the Tenth Circuit, which held that the challenges should have been brought in the D.C. Circuit. The Supreme Court reversed. Under the first step of Calumet’s two-step inquiry, the Court determined the relevant “action” is EPA’s disapproval of the state implementation plans, which is a prototypical locally or regionally applicable action. Under the second step of Calumet, the Court concluded that the disapprovals “were not based on any determination of nationwide scope or effect” because, unlike in Calumet, the disapprovals were based on a “fact-intensive, state-specific analysis.”
The Court’s decision in Oklahoma v. EPA provides practical guidance on the Calumet framework and resolves uncertainty over the venue rules governing challenges to disapprovals of state implementation plans. Challenges to disapprovals of state implementation based on state-specific analysis may be filed in regional circuit courts.

The Court’s opinions are available here (Calumet) and here (Oklahoma).

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Environmental Litigation and Mass Tort

Stacie B. Fletcher
+1 202.887.3627
sfletcher@gibsondunn.com

Daniel W. Nelson
+1 202.887.3687
dnelson@gibsondunn.com

Related Practice: Administrative Law and Regulatory

Stuart F. Delery
+1 202.955.8515
sdelery@gibsondunn.com

Eugene Scalia
+1 202.955.8673
Assistant Dawn J. Forrester: dforrester@gibsondunn.com

Helgi C. Walker
+1 202.887.3599
hwalker@gibsondunn.com

This alert was prepared by Grace Hart, Cate McCaffrey, Elizabeth Strassner, and Tom Donovan.

Commissioner of Internal Revenue v. Zuch, No. 24-416 – Decided June 12, 2025

Today, the Supreme Court held 8-1 that the Tax Court loses jurisdiction in a proceeding under 26 U.S.C. § 6330 when the IRS ceases to pursue a levy.

“Because there was no longer a proposed levy, the Tax Court properly concluded that it lacked jurisdiction to resolve questions about Zuch’s disputed tax liability.”

Justice Barrett, writing for the Court

Background:

In order to collect previously assessed tax liabilities, the IRS may seek to levy—i.e., to seize and sell—a taxpayer’s assets. In such cases, the taxpayer may request an administrative pre-levy hearing with the IRS’s Independent Office of Appeals. An adverse “determination” in that proceeding may then be petitioned to the United States Tax Court under 26 U.S.C. § 6330.

In 2013, the IRS sent Jennifer Zuch a notice of intent to levy her property to collect unpaid taxes from 2010. Zuch requested a pre-levy hearing, claiming that a payment from her former husband should have been applied to offset her tax liabilities for the year at issue. The IRS’s Office of Appeals sustained the proposed levy, and Zuch petitioned the U.S. Tax Court. The U.S. Tax Court remanded for clarification, and, in 2017, the IRS’s Office of Appeals once again sustained the proposed levy.

Meanwhile, Zuch overpaid her annual taxes in certain years. Instead of issuing Zuch a refund in each of those years, the IRS applied the overpayments against her 2010 outstanding tax liability. By April 2019, the entire amount of Zuch’s alleged federal tax liability subject to the levy action had been paid.

The IRS then moved to dismiss the levy case as moot, and the Tax Court granted that motion. The Third Circuit reversed, holding that the Tax Court still had jurisdiction to determine Zuch’s underlying tax liability under 26 U.S.C. § 6330 and Zuch did not need to file a separate refund suit in district court.

Issue:

Does a proceeding under 26 U.S.C. § 6330 become moot when the IRS no longer seeks the proposed levy that gave rise to the proceeding?

Court’s Holding:

Yes. The IRS’s decision to stop seeking to levy a taxpayer’s property deprives the Tax Court of jurisdiction in a proceeding under 26 U.S.C. § 6330.

What It Means:

Today’s decision ties a taxpayer’s ability to pursue a pre-levy challenge to the IRS’s decision to continue seeking to levy the taxpayer’s property. If the IRS ceases to pursue a levy and the taxpayer believes they overpaid, the taxpayer must file a new administrative action before the IRS claiming a refund (the precursor to a refund suit in the U.S. District Court of the U.S. Court of Federal Claims).
An administrative action before the IRS seeking a refund must be filed within two years of any potential overpayment. For this reason, a taxpayer who has potentially satisfied an outstanding liability during the pendency of a proceeding under 26 U.S.C. § 6330 should file a protective administrative action promptly, even if the IRS has not yet formally abandoned its request for a levy.
Justice Gorsuch speculated in dissent that today’s decision may incentivize the IRS to stop pursuing levies in 26 U.S.C. § 6330 proceedings if it anticipates unfavorable rulings from the Tax Court, and to instead pursue other mechanisms of collection, like keeping future overpayments.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Tax

Sandy Bhogal
+44 20 7071 4266
sbhogal@gibsondunn.com

Pamela Lawrence Endreny
+1 212.351.2474
pendreny@gibsondunn.com)

Eric B. Sloan
+1 212.351.5220
esloan@gibsondunn.com

Related Practice: Tax Controversy and Litigation

Sanford W. Stark
+1 202.887.3650
sstark@gibsondunn.com

Saul Mezei
+1 202.955.8693
smezei@gibsondunn.com

C. Terrell Ussing
+1 202.887.3612
tussing@gibsondunn.com

This alert was prepared by Samuel Eckman and Brian Sanders.

CC/Devas (Mauritius) Limited v. Antrix Corp. Ltd., Nos. 23-1201, 24-17 – Decided June 5, 2025

Today, a unanimous Supreme Court held that personal jurisdiction exists under the FSIA whenever an exception to immunity applies and service of process has been accomplished, without regard to whether a foreign state has minimum contacts with the United States.

“Personal jurisdiction exists under § 1330(b) of the FSIA when an immunity exception applies and service is proper.”

Justice Alito, writing for the Court

Background:

The Foreign Sovereign Immunities Act of 1976 provides that foreign states are generally immune from suit in United States courts, subject to several exceptions. 28 U.S.C. §§ 1330, 1602 et seq. For example, the FSIA waives immunity for certain suits to confirm arbitration awards. Id. § 1605(a)(6). When an exception applies, the FSIA vests federal courts with “original jurisdiction” over the claims, id. § 1330(a), and provides that “[p]ersonal jurisdiction over a foreign state shall exist” where the district court possesses subject-matter jurisdiction and “where service has been made under section 1608 of this title,” id. § 1330(b).

In 2005, Antrix Corporation Ltd.—the commercial arm of India’s national space agency—entered into a satellite-leasing agreement with Devas Multimedia Private Ltd.—a privately owned Indian company. Several years later, Antrix invoked the agreement’s force-majeure clause to terminate the agreement with Devas, arguing that India’s new satellite-allocation policy prevented it from performing under the contract. Devas initiated arbitration before the International Chamber of Commerce, which awarded Devas damages for Antrix’s breach of contract.

Devas sought to confirm the award in the United States, invoking the FSIA’s arbitration exception as the basis for federal jurisdiction. On appeal of the confirmed award, the Ninth Circuit held that the court lacked personal jurisdiction over Antrix. Although it did not question that the arbitration exception applied, the court of appeals imposed an additional requirement that a foreign state have sufficient “minimum contacts” with the United States. The Supreme Court granted certiorari to decide whether the FSIA requires proof of minimum contacts before a United States court can exercise personal jurisdiction over a foreign state.

Issue:

Whether plaintiffs must prove minimum contacts before federal courts may assert personal jurisdiction over foreign states sued under the FSIA.

Court’s Holding:

The FSIA does not require proof of minimum contacts before a court can exercise personal jurisdiction over a foreign state.

What It Means:

The Court interpreted 28 U.S.C. § 1330(b) to provide for personal jurisdiction whenever an FSIA exception to immunity applies and a party properly served the foreign state under 28 U.S.C. § 1608. In doing so, the Court admonished the Ninth Circuit for its “strange” statutory interpretation that failed to “enforc[e] these provisions as written.” Op. 10–11.
Although this case arose under the arbitration exception to immunity, the Court’s analysis of 28 U.S.C. § 1330(b) applies to any suit implicating one of the several exceptions in 28 U.S.C. §§ 1605–1607.
In reaching its decision that the statutory text of the FSIA does not impose a minimum contacts requirement, the Court left open for consideration on remand the question whether the Due Process Clause of the Fifth Amendment “itself requires a showing of minimum contacts.” Op. 12–13. Thus, it is possible future courts may hold jurisdiction lacking as a constitutional matter, regardless of the text of the FSIA.

Gibson Dunn represented Devas’s owners as Petitioners.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com
Jacob T. Spencer 202.887.3792 jspencer@gibsondunn.com	David W. Casazza +1 202.887.3724 dcasazza@gibsondunn.com

Related Practice: Judgment and Arbitral Award Enforcement

Matthew D. McGill
+1 202.887.3680
mmcgill@gibsondunn.com

This alert was prepared by associates Elizabeth A. Kiernan and Rebecca Roman.

Ames v. Ohio Department of Youth Services, No. 23-1039 – Decided June 5, 2025

Today, the Supreme Court unanimously held that Title VII of the Civil Rights Act of 1964 does not impose an additional requirement on majority-group plaintiffs to show “background circumstances” suggesting that their employer discriminates against the majority group.

“We hold that this additional ‘background circumstances’ requirement is not consistent with Title VII’s text or our case law construing the statute.”

Justice Jackson, writing for the Court

Background:

Title VII makes it unlawful for any “employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual . . . , because of such individual’s race, color, religion, sex, or national origin.” 42 U.S.C. § 2000e-2(a)(1). Those protections cover adverse employment actions based on sexual orientation. Bostock v. Clayton County, 590 U.S. 644, 649-52 (2020).

Marlean Ames, a straight woman, sued her employer under Title VII, claiming she was denied a promotion and later demoted based on her sexual orientation. In support, she pointed out that her employer hired a gay woman for the position to which she had applied and a gay man to fill her previous position after the demotion. The district court granted summary judgment for her employer, and the Sixth Circuit affirmed. Applying circuit precedent, the court of appeals held that Ames had failed to show “background circumstances to support the suspicion that the defendant is th[e] unusual employer who discriminates against the majority.” The Supreme Court granted review to decide whether Title VII imposes that background-circumstances requirement.

Issue:

Whether a plaintiff who belongs to a majority group must show “background circumstances” suggesting the defendant is the “unusual employer who discriminates against the majority” to establish a prima facie case of discrimination under Title VII of the Civil Rights Act of 1964.

Court’s Holding:

No: Title VII imposes the same evidentiary requirements on majority-as on minority-group plaintiffs.

What It Means:

Today’s decision confirms that courts assessing Title VII claims need not divide plaintiffs into majority and minority groups. The burdens of proof are identical for all Title VII plaintiffs, regardless of whether the plaintiffs are in the majority or minority with respect to their protected characteristics.
The Court’s opinion lowers the barrier for majority-group plaintiffs to bring (and increases the burden on employers to defend against) so-called reverse-discrimination claims, particularly in the Sixth, Seventh, Eighth, Tenth, and D.C. Circuits, all of which had adopted the background-circumstances requirement.
The Court’s opinion emphasizes that Title VII prohibits covered discrimination of any kind, not merely discrimination against a limited set of historically disadvantaged groups, which comports with the Court’s modern approach to most anti-discrimination statutes.
Given the narrowness of the question presented, the opinion leaves a number of related Title VII issues unaddressed. For example, the Court assumed without deciding that McDonnell Douglas—the traditional framework for evaluating Title VII claims based on circumstantial evidence—applies in the summary-judgment context. The Court also declined to address whether McDonnell Douglas requires specific evidence of pretext or only a showing that discrimination was a motivating factor in the employer’s decision. And Justices Thomas and Gorsuch, in a separate concurrence, questioned whether McDonnell Douglas “is a workable and useful evidentiary tool” at all.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Labor and Employment

Jason C. Schwartz +1 202.955.8242 jschwartz@gibsondunn.com	Katherine V.A. Smith +1 213.229.7107 ksmith@gibsondunn.com	Zakiyyah T. Salim-Williams +1 202.955.8503 zswilliams@gibsondunn.com
Danielle J. Moss +1 212.351.6338 dmoss@gibsondunn.com	Harris M. Mufson +1 212.351.3805 hmufson@gibsondunn.com	Cynthia Chen McTernan +1 213.229.7633 cmcternan@gibsondunn.com

This alert was prepared by associates Matt Aidan Getz and Bryston C. Gallegos.

Seven County Infrastructure Coalition v. Eagle County, Colorado, No. 23-975 – Decided May 29, 2025

Today, the Supreme Court held that agencies have broad discretion under NEPA in determining the scope and contents of an Environmental Impact Statement, and that agencies need not consider the indirect environmental effects of a project or factors outside the agency’s regulatory jurisdiction.

“The EIS need not address the effects of separate projects. In conducting [their] review, courts should afford substantial deference to the agency as to the scope and contents of the EIS.”

Justice Kavanaugh, writing for the Court

Background:

The National Environmental Policy Act (NEPA) requires federal agencies to consider the “reasonably foreseeable” environmental effects of permits and regulations that they issue. 42 U.S.C. § 4332(2)(C). Although NEPA does not impose substantive limits on what an agency may approve, it requires the agency to publish its analysis in an Environmental Impact Statement (EIS) that is then incorporated into the agency’s order and subject to judicial review under the Administrative Procedure Act.

The Seven County Infrastructure Coalition sought approval from the Surface Transportation Board (STB) to build a rail line in a remote part of Utah that would be used primarily to transport locally produced oil to the national rail network. After completing a 3,600-page EIS, the STB approved an 88-mile rail line. Environmental groups and Eagle County, Colorado challenged the STB’s approval, arguing that the STB made unreasonable analytical mistakes by failing to properly consider the project’s indirect environmental effects such as the effect on national rail-network traffic, the development of new oil wells in Utah, and the overall volume of oil processing on the Gulf Coast that could lead to more pollution and greenhouse gas emissions.

The STB defended its environmental analysis on the merits, and the Coalition intervened to argue that any analytical shortcomings were not actionable under NEPA because any indirect effects were not “reasonably foreseeable” insofar as they were neither proximate to the project nor within the STB’s regulatory authority. The D.C. Circuit ruled for the challengers, vacated the STB’s approval, and remanded for further environmental review. The Coalition appealed.

Issue:

Whether NEPA requires an agency to study environmental impacts beyond the proximate effects of the action over which the agency has regulatory authority.

Court’s Holding:

No. NEPA does not require an agency to study environmental impacts beyond either the proximate effects of the action or the scope of the agency’s regulatory authority.

What It Means:

Today’s decision will streamline federal permitting by limiting what agencies must consider in an EIS and limiting the ability of opponents to delay or defeat development projects through judicial challenges. The Court specifically noted that “NEPA has transformed from a modest procedural requirement into a blunt and haphazard tool employed by project opponents (who may not always be entirely motivated by concern for the environment) to try to stop or at least slow down new infrastructure and construction projects,” and expressed its goal of reversing this trend.
As the Court explained, “NEPA is a procedural cross-check, not a substantive roadblock.” NEPA helps agencies be informed about the significant environmental effects of their actions by requiring the agencies to prepare a report identifying and discussing those effects. An EIS must evaluate the significant environmental effects of the project at hand that are within the agency’s regulatory jurisdiction, but the inclusion of other issues will generally be in the agency’s discretion.
The Court emphasized that courts should afford “substantial deference to the agency” in reviewing the scope and contents of an EIS. The Court also noted that even a defective EIS does not require a court to vacate an approval of a project absent a reason to believe the mistake would lead the agency to disapprove the project.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Environmental Litigation and Mass Tort

Stacie B. Fletcher
+1 202.887.3627
sfletcher@gibsondunn.com

Daniel W. Nelson
+1 202.887.3687
dnelson@gibsondunn.com

Related Practice: Land Use and Development

Mary G. Murphy
+1 415.393.8257
mgmurphy@gibsondunn.com

Benjamin Saltsman
+1 213.229.7480
bsaltsman@gibsondunn.com

This alert was prepared by partner Samuel Eckman and associate Aaron Gyde.

Cunningham v. Cornell University, No. 23-1007 – Decided April 17, 2025

Today, the Supreme Court unanimously held that plaintiffs bringing a prohibited-transaction claim under ERISA Section 406(a)(1)(C) need only allege, in their complaints, the elements set forth in that provision—they need not negate the affirmative defenses set forth in ERISA Section 408. The Court also emphasized that district courts have a variety of other means to screen out insubstantial claims at the pleading stage.

“[P]laintiffs seeking to state a [Section 406(a)(1)(C)] claim must plausibly allege that a plan fiduciary engaged in a transaction proscribed therein, no more, no less. … To the extent future plaintiffs do bring barebones [Section 406] suits, district courts can use existing tools at their disposal to screen out meritless claims before discovery.”

Justice SOTOMAYOR, writing for the Court

Background:

Health and retirement plans governed by the Employee Retirement Income Security Act (ERISA) commonly transact with third-party entities for various services that benefit plan participants, such as recordkeeping and investment advising. But Section 406(a)(1)(C) of ERISA prohibits a plan fiduciary from “caus[ing] the plan to engage in a transaction” that the fiduciary “knows or should know … constitutes a direct or indirect … furnishing of goods, services, or facilities between the plan and” a service provider for the plan, 29 U.S.C. § 1106(a)(1)(C); see id. § 1002(a)(14)(B), subject to exemptions listed in Section 408 (29 U.S.C. § 1108). Among other things, Section 408 exempts “reasonable arrangements with” a plan service provider “for office space, or legal, accounting, or other services necessary for the establishment or operation of the plan, if no more than reasonable compensation is paid therefor.” Id. § 1108(b)(2)(A).

The Eighth and Ninth Circuits held that merely alleging the elements set forth in Section 406(a)(1)(C)—that a plan fiduciary caused a plan to enter into a service transaction with a third-party service provider—is sufficient to plead a prohibited-transaction claim and proceed to discovery. But the Second Circuit held that a plaintiff also must plausibly allege that the Section 408(b)(2)(A) exemption does not apply—i.e., that the services were unnecessary or the compensation was unreasonable. The Supreme Court granted review to resolve the conflict.

Issue:

Whether a plaintiff can state a prohibited-transaction claim under Section 406(a)(1)(C) of ERISA solely by alleging that a plan fiduciary engaged in a service transaction with a plan service provider.

Court’s Holding:

Yes. The only elements of a prohibited-transaction claim under Section 406(a)(1)(C) are the elements set forth in that provision. To state a claim, the plaintiff need not allege facts negating Section 408’s exemptions, such as the exemption for necessary service transactions that are compensated reasonably. But district courts have several other tools at their disposal to weed out unmeritorious claims at the pleading stage.

What It Means:

The Court’s decision clarifies that, under ERISA’s text and structure, Section 408’s exemptions are affirmative defenses that defendants must plead—not elements of a prohibited-transaction claim under Section 406. So ERISA plaintiffs need not allege, in their complaints, facts that negate the necessity or reasonableness of a service transaction with a plan service provider.
The Court acknowledged, however, that this scheme raises “serious concerns” for ERISA plans and fiduciaries given the ubiquity of service transactions in the plan-administration context. The Court thus highlighted several tools that district courts can deploy to prevent meritless prohibited-transaction claims from reaching full-blown discovery. For example, the Court suggested that, once a defendant pleads a Section 408 exemption as an affirmative defense in its answer, the district court could order the plaintiff to file a reply setting forth “specific, nonconclusory factual allegations” showing that the exemption does not apply. The plaintiff’s inability to do so could result in dismissal.
The Court also highlighted four other mechanisms of protecting ERISA plans and fiduciaries from onerous and costly discovery: (1) Article III standing principles require dismissal of suits that fail to allege a concrete injury; (2) district courts retain discretion to expedite or limit discovery; (3) district courts can impose Rule 11 sanctions if a Section 408 exemption “obviously applies,” and “a plaintiff and his counsel lack a good-faith basis to believe otherwise”; and (4) ERISA authorizes district courts to shift attorneys’ fees and costs to plaintiffs.
In a concurring opinion, Justice Alito, joined by Justices Thomas and Kavanaugh, likewise acknowledged that the Court’s decision could cause “untoward practical results.” They urged district courts to “strongly consider” using the various mechanisms outlined by the majority opinion—especially the option of requiring plaintiffs to file post-answer replies—to ensure “the prompt disposition of insubstantial claims.”

The Court’s opinion is available HERE.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com
Ashley E. Johnson +1 214.698.3111 ajohnson@gibsondunn.com

Related Practice: Insurance and Reinsurance

Geoffrey M. Sigler
+1 202.887.3752
gsigler@gibsondunn.com

Heather L. Richardson
+1 213.229.7409
hrichardson@gibsondunn.com

Related Practice: Labor and Employment

Jason C. Schwartz
+1 202.955.8242
jschwartz@gibsondunn.com

Katherine V.A. Smith
+1 213.229.7107
ksmith@gibsondunn.com

This alert was prepared by associates Robert Batista and Maya Jeyendran.

FDA v. Wages & White Lions Investments, LLC, No. 23-1038 – Decided April 2, 2025

Today, the Supreme Court held unanimously that the Food and Drug Administration did not unlawfully change position in denying marketing authorization for flavored e-cigarettes.

“[A] belief about how an agency is likely to exercise its enforcement discretion is not a ‘serious reliance interest.’”

Justice Alito, writing for the Court

Background:

The Family Smoking Prevention and Tobacco Control Act of 2009 (“TCA”) requires the makers of tobacco products to apply for and obtain premarketing authorization before introducing any “new tobacco product” to the market. 21 U.S.C. § 387j(a). In 2016, the FDA issued a rule that deemed e-cigarettes tobacco products subject to the TCA. However, the FDA delayed enforcement for existing e-cigarette products and set a September 2020 deadline for manufacturers to file applications for premarketing authorization. Before that deadline, the FDA issued a proposed rule concerning premarket tobacco product applications, and guidance concerning the types of scientific evidence that would be required for approval and manufacturers’ marketing plans.

Two companies submitted applications seeking approval to market and sell flavored e-liquids for use in e-cigarettes, but the FDA denied the applications because they had not provided sufficient evidence from scientific studies. The FDA did not consider the marketing plans submitted by the companies with their applications.

After the manufacturers sought judicial review, the en banc Fifth Circuit set aside and remanded the FDA’s denial orders. The court held that the FDA’s denial of the companies’ applications under standards different from those articulated in its pre-decisional guidance was arbitrary and capricious, and that the FDA’s failure to consider the companies’ marketing plans was unlawful and prejudicial (not harmless) error.

Issue:

Did the court of appeals err in setting aside and remanding the FDA’s denial orders as arbitrary and capricious?

Court’s Holding:

The FDA’s denial orders were not arbitrary and capricious and did not constitute an unlawful change in position from the FDA’s pre-decisional guidance. Further, the Fifth Circuit applied an incorrect harmless-error standard to the agency’s failure to consider the marketing plans.

What It Means:

The Court largely deferred to the FDA’s decision to deny manufacturer applications for approval to market and sell flavored e-liquids for e-cigarettes. The decision is an example of the Court giving broad latitude to agency action under the arbitrary and capricious standard of review.
The Court clarified the “change-in-position doctrine,” which applies when an agency changes course on a question of law or policy. The Court explained that an agency does not unlawfully change positions where its previous positions were “largely noncommittal” and the agency gives specific reasons for its actions, or where its previous statements do not directly contradict its later actions. Op. 29, 33, 38. The Court further reasoned that a regulated party’s mere “belief about how an agency is likely to exercise its enforcement discretion is not a ‘serious reliance interest.’” Op. 39–40.
The Court also clarified the “tension” between the harmless-error doctrine, under which courts can excuse agency errors that are not prejudicial, and the Chenery doctrine, under which courts may not uphold agency action with alternative reasoning not considered by the agency. Op. 41–46. The Court explained that courts may uphold agency action—and need not remand to the agency—where it is clear that the agency’s error had no bearing on the procedure used or the substance of the decision reached. The Court remanded to the Fifth Circuit to apply that standard in deciding whether the FDA’s failure to consider marketing plans was a harmless error.
The Court declined to address statutory and constitutional challenges to the FDA’s denial orders that were raised for the first time after certiorari was granted. Parties challenging agency action thus should be mindful of the need to preserve statutory and constitutional challenges at all stages of the litigation.

The Court’s opinion is available HERE.

Appellate and Constitutional Law Practice

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: FDA and Health Care

Jonathan M. Phillips
+1 202.887.3546
jphillips@gibsondunn.com

Gustav W. Eyler
+1 202.955.8610
geyler@gibsondunn.com

John D.W. Partridge
+1 303.298.5931
jpartridge@gibsondunn.com

Related Practice: Administrative Law and Regulatory

Eugene Scalia +1 202.955.8210 escalia@gibsondunn.com	Helgi C. Walker +1 202.887.3599 hwalker@gibsondunn.com	Stuart F. Delery +1 202.955.8515 sdelery@gibsondunn.com
Matt Gregory +1 202.887.3635 mgregory@gibsondunn.com

This alert was prepared by partner Grace Hart and associate Aly Cox.

Medical Marijuana, Inc. v. Horn, No. 23-365 – Decided April 2, 2025

Today, in a 5-4 decision, the Supreme Court held that damages can be available under civil RICO for harm to business or property by reason of a racketeering activity, even when such harm stems from a personal injury.

“[A] plaintiff can seek damages for business or property loss regardless of whether the loss resulted from a personal injury.”

Justice Barrett, writing for the Court

Background:

More than five decades ago, Congress passed the Racketeer Influenced and Corrupt Organizations Act (“RICO”) to bolster efforts to fight organized crime. In addition to imposing criminal penalties for violating RICO, Congress also authorized “any person injured in his business or property by a violation of” RICO to bring a civil suit and recover triple damages. 18 U.S.C. § 1964(c).

Douglas Horn bought Medical Marijuana, Inc.’s hemp-based product after reading that it contained CBD but not THC, the active chemical compound in marijuana. After Horn failed a THC blood test, he was fired from his job as a commercial truck driver. Horn sued under RICO, alleging that the makers of the product had engaged in mail and wire fraud that caused him to suffer injury to his business or property. The district court granted summary judgment to the company, concluding that Horn sought recovery for a personal injury—unwitting consumption of THC—and so did not allege an injury to “business or property.” The Second Circuit reversed, holding that Horn could recover under RICO because his lost employment is an injury to business even if it flowed from a personal injury.

Issue:

Whether RICO’s civil-action provision permits recovery for injuries to “business or property” resulting from personal injuries.

Court’s Holding:

Yes. Injuries to business or property resulting from personal injuries can be recovered under RICO’s civil-action provision.

What It Means:

The Court interpreted the phrase “injured in his business or property” in RICO’s civil-action provision as “not preclud[ing] recovery for all economic harms that result from personal injuries.” Op. 19. Thus, injuries to business or property flowing from a personal injury may be recoverable under 18 U.S.C. § 1964(c).
The Court took pains to emphasize the narrowness of its decision: “The only question we address is the one squarely before us: whether civil RICO bars recovery for all business or property harms that derive from a personal injury.” Op. 5. The Court expressed no views on whether respondent suffered an antecedent personal injury at all, whether the term “business” includes “employment,” or whether an injury to “property” includes “all pecuniary loss.” Op. 4–5. The Court left these issues for another day.
In response to the dissent’s concern that today’s decision would “eviscerate RICO’s ‘business or property’ limitation,” the Court highlighted several guardrails that constrain civil RICO claims: (1) the requirement that there be “some direct relation between the injury asserted and the injurious conduct,” (2) the requirement that civil RICO plaintiffs establish a pattern of racketeering activity, and (3) the possibility that “business” does not “encompass every aspect of employment” or that “property” does not include “every penny in the plaintiff’s pocketbook.” Op. 17–18.

The Court’s opinion is available HERE.

Appellate and Constitutional Law Practice

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Litigation

Reed Brodsky +1 212.351.5334 rbrodsky@gibsondunn.com	Trey Cox +1 214.698.3256 tcox@gibsondunn.com	Theane Evangelis +1 213.229.7726 tevangelis@gibsondunn.com
Helgi C. Walker +1 202.887.3599 hwalker@gibsondunn.com

This alert was prepared by associates Elizabeth A. Kiernan and Bryston Gallegos.

Dewberry Group, Inc. v. Dewberry Engineers, Inc., No. 23-900 – Decided February 26, 2025

Today, the Supreme Court unanimously held that a court awarding disgorgement of the “defendant’s profits” under the Lanham Act cannot include the profits of the defendant’s non‑party corporate affiliates.

“[The Lanham Act] cannot justify ignoring the distinction between a corporate defendant (i.e., Dewberry Group) and its separately incorporated affiliates. By treating those entities as one and the same, the courts below approved an award including non-defendants’ profits—and thus went further than the Lanham Act permits.”

Justice Kagan, Writing for the Court

Background:

The Lanham Act authorizes a prevailing trademark plaintiff to recover, “subject to the principles of equity,” the “defendant’s profits,” as well as any damages the owner sustained and costs of the suit. 15 U.S.C. § 1117(a). If the court finds that “the amount of the recovery based on profits is either inadequate or excessive,” it “may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case.” Id.

Dewberry Engineers sued the similarly named Dewberry Group for infringing on its registered “Dewberry” trademark. After the district court held Dewberry Group liable, it ordered Dewberry Group to disgorge nearly $43 million in profits earned by its affiliate companies, which are separate corporations and not parties to the suit. The Fourth Circuit affirmed in a divided decision, holding that, even though Dewberry Engineers did not try to pierce the corporate veil separating Dewberry Group from its legally distinct affiliates, the district court correctly treated Dewberry Group and the affiliates as a single corporate entity when calculating the profits from infringement.

Issue:

Can an award of “defendant’s profits” under the Lanham Act include profits earned by the defendant’s separate non-party corporate affiliates?

Court’s Holding:

Under the Lanham Act, a court may not overlook corporate separateness and treat the defendant and its affiliates as a single corporate entity when calculating the “defendant’s profits” from trademark infringement, absent a showing that veil-piercing is appropriate.

What It Means:

The opinion underscores that corporate separateness is foundational and that Congress must speak clearly if it wishes to displace that rule. Because nothing in the text of the Lanham Act overcomes that principle, courts may not disregard corporate separateness when calculating a defendant’s profits, unless a traditional rationale for piercing the corporate veil applies.
The Court also rejected the argument that the provision of the Lanham Act authorizing the court to “enter judgment for such sum as the court shall find to be just” if the amount of recovery based on profits is “inadequate or excessive” permits courts to reach “non‑defendants’ profits.”
Although the opinion emphasizes the importance of corporate separateness, it left a number of questions to be resolved in future cases. It did not address, for instance, whether courts “can look behind a defendant’s tax or accounting records to consider ‘the economic realities of a transaction’ and identify the defendant’s ‘true financial gain.’”

Gibson Dunn represented winning party Dewberry Group

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Jonathan C. Bond +1 202.887.3704 jbond@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Thomas G. Hungar +1 202.887.3784 thungar@gibsondunn.com
Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com	Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Helgi C. Walker +1 202.887.3599 hwalker@gibsondunn.com

Related Practice: Intellectual Property

Kate Dominguez
+1 212.351.2338
kdominguez@gibsondunn.com

Josh Krevitt
+1 212.351.4000
jkrevitt@gibsondunn.com

Jane M. Love, Ph.D.
+1 212.351.3922
jlove@gibsondunn.com

Howard S. Hogan
+1 202.887.3640
hhogan@gibsondunn.com

Ilissa Samplin
+1 213.229.7354
isamplin@gibsondunn.com

This alert was prepared by associates Patrick J. Fuster, Matt Aidan Getz, and Connor P. Mui.

Gibson Dunn’s U.S. Supreme Court Round-Up provides summaries of cases decided during the October 2024 Term and highlights other key developments on the Court’s docket. During the October 2023 Term, the Court heard 61 oral arguments and released 59 opinions. For the October 2024 Term, the Court has granted 71 petitions for a total of 62 arguments. To date, it has heard 34 arguments in 36 cases and disposed of seven cases, releasing four opinions in five cases and dismissing two cases as improvidently granted.

Spearheaded by Miguel Estrada, the U.S. Supreme Court Round-Up keeps clients apprised of the Court’s most recent actions. The Round-Up previews cases scheduled for argument, tracks the actions of the Office of the Solicitor General, and recaps recent opinions. The Round-Up provides a concise, substantive analysis of the Court’s actions. Its easy-to-use format allows the reader to identify what is on the Court’s docket at any given time, and to see what issues the Court will be taking up next. The Round-Up is the ideal resource for busy practitioners seeking an in-depth, timely, and objective report on the Court’s actions.

View the Round-Up Here

Gibson Dunn has a longstanding, high-profile presence before the Supreme Court of the United States, appearing numerous times in the past decade in a variety of cases. Twelve current Gibson Dunn lawyers have argued before the Supreme Court, and during the Court’s ten most recent Terms, the firm has argued a total of 27 cases, including closely watched cases with far-reaching significance in the areas of intellectual property, securities, separation of powers, and federalism. Moreover, although the grant rate for petitions for certiorari is below 1%, Gibson Dunn’s petitions have captured the Court’s attention: Gibson Dunn has persuaded the Court to grant over 40 petitions for certiorari since 2006.

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Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the U.S. Supreme Court. Please feel free to contact the following attorneys in the firm’s Washington, D.C. office, or any member of the Appellate and Constitutional Law Practice Group.

Miguel A. Estrada (+1 202.955.8257, mestrada@gibsondunn.com)

Jessica L. Wagner (+1 202.955.8652, jwagner@gibsondunn.com)

Lavi Ben Dor (+1 202.777.9331, lbendor@gibsondunn.com)

Christian Talley (+1 202.777.9537, ctalley@gibsondunn.com)

E.M.D. Sales, Inc. v. Carrera, No. 23-217 – Decided January 15, 2025

Today, the Supreme Court unanimously held that the preponderance-of-the-evidence standard, rather than the more demanding clear-and-convincing-evidence standard, governs Fair Labor Standards Act exemptions.

“[T]he public interest in Fair Labor Standards Act cases does not fall entirely on the side of employees. Most legislation reflects a balance of competing interests. So it is here. Rather than choose sides in a policy debate, this Court must apply the statute as written and as informed by the longstanding default rule regarding the standard of proof.”

Justice Kavanaugh, writing for the Court

Background:

The Fair Labor Standards Act (FLSA) generally requires employers to pay employees a minimum hourly rate, 29 U.S.C. § 206(a), and overtime to employees who work over 40 hours per week, id. § 207(a). But the Act exempts many classes of workers from these requirements. Id. § 213.

Sales representatives for E.M.D. Sales Inc., a food-distribution company that delivers to grocery stores, sued E.M.D. under the FLSA, claiming that they were entitled to overtime pay. In response, E.M.D. argued that the plaintiffs were exempt from the FLSA because they were “employed . . . in the capacity of outside salesm[e]n.” 29 U.S.C. § 213(a)(1). The district court, applying Fourth Circuit precedent, ruled that E.M.D. had not shown by clear and convincing evidence that the plaintiffs were outside salesmen. After the Fourth Circuit affirmed, E.M.D. successfully petitioned for a writ of certiorari, explaining that the Fourth Circuit’s approach conflicted with decisions from the Fifth, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits.

Issue:

Does the FLSA require employers to prove by clear and convincing evidence, or merely by a preponderance of the evidence, that employees are exempt from the Act’s minimum-wage or overtime-pay requirements?

Court’s Holding:

Employers invoking a FLSA exemption need satisfy only the ordinary preponderance-of-the-evidence standard, not the more demanding clear-and-convincing-evidence standard.

What It Means:

The Court’s holding brings the Fourth Circuit, which had been alone in requiring proof by clear and convincing evidence, in line with other circuits, and will make it far easier for employers to prove that employees are exempt from the FLSA’s overtime-pay or minimum-wage requirements.
By correcting course, the Court’s opinion not only changes the likely outcome of FLSA cases turning on whether their employees are exempt, but also relieves employers of the chill of costly litigation and encourages productive use of exempt employees.
The Court rejected the policy arguments in favor of a more demanding standard of proof. As the Court explained, the FLSA is no more significant, in terms of public policy, than any number of other important statutes under which the preponderance standard applies.
More broadly, the Court emphasized that the preponderance-of-the-evidence standard is the presumptive standard of proof for all civil statutes. A more demanding standard applies only where (1) Congress speaks clearly to displace that presumption, (2) the Constitution requires it, or (3) the government seeks to take unusual coercive action against an individual.

The Court’s opinion is available here.

Appellate and Constitutional Law Practice

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Labor and Employment

Jason C. Schwartz
+1 202.955.8242
jschwartz@gibsondunn.com

Katherine V.A. Smith
+1 213.229.7107
ksmith@gibsondunn.com

This alert was prepared by associates Matt Aidan Getz and Catherine Frappier.

Gibson Dunn’s U.S. Supreme Court Round-Up provides a preview of cases set to be argued in the October 2024 Term and highlights other key developments on the Court’s docket. During the October 2023 Term, the Court heard 61 oral arguments and released 59 opinions. The Court has granted 39 petitions thus far for the October 2024 Term.

View the Round-Up Here

Gibson Dunn has a longstanding, high-profile presence before the Supreme Court of the United States, appearing numerous times in the past decade in a variety of cases. Fifteen current Gibson Dunn lawyers have argued before the Supreme Court, and during the Court’s nine most recent Terms, the firm has argued a total of 21 cases, including closely watched cases with far-reaching significance in the areas of intellectual property, securities, separation of powers, and federalism. Moreover, although the grant rate for petitions for certiorari is below 1%, Gibson Dunn’s petitions have captured the Court’s attention; Gibson Dunn has persuaded the Court to grant 40 petitions for certiorari since 2006.

* * * *

Miguel A. Estrada (+1 202.955.8257, mestrada@gibsondunn.com)
Jessica L. Wagner (+1 202.955.8652, jwagner@gibsondunn.com)
Reed Sawyers (+1 202.777.9412, rsawyers@gibsondunn.com)

Gibson Dunn’s U.S. Supreme Court Round-Up provides summaries of cases decided during the October 2023 Term, a preview of cases set to be argued next Term, and highlights other key developments on the Court’s docket. During the October 2023 Term, the Court heard 61 oral arguments and released 59 opinions. The Court has granted 28 petitions thus far for the October 2024 Term.

View the Round-Up Here

Gibson Dunn has a longstanding, high-profile presence before the Supreme Court of the United States, appearing numerous times in the past decade in a variety of cases. Fifteen current Gibson Dunn lawyers have argued before the Supreme Court, and during the Court’s eight most recent Terms, the firm has argued a total of 21 cases, including closely watched cases with far-reaching significance in the areas of intellectual property, securities, separation of powers, and federalism. Moreover, although the grant rate for petitions for certiorari is below 1%, Gibson Dunn’s petitions have captured the Court’s attention: Gibson Dunn has persuaded the Court to grant 39 petitions for certiorari since 2006.

* * * *

Miguel A. Estrada (+1 202.955.8257, mestrada@gibsondunn.com)
Katherine Moran Meeks (+1 202.955.8258, kmeeks@gibsondunn.com)
Jessica L. Wagner (+1 202.955.8652, jwagner@gibsondunn.com)
Reed Sawyers (+1 202.777.9412, rsawyers@gibsondunn.com)

Corner Post v. Board of Governors, Federal Reserve System, No. 22-1008 – Decided July 1, 2024

Today, the Supreme Court held 6–3 that the six-year clock to bring a claim under the Administrative Procedure Act starts when an agency rule injures the plaintiff, not when the agency issues the rule.

“An APA plaintiff does not have a complete and present cause of action until she suffers an injury from final agency action, so the statute of limitations does not begin to run until she is injured.”

JUSTICE BARRETT, writing for the Court

Background:

In 2011, the Federal Reserve Board promulgated Regulation II, which caps interchange fees payment networks can charge merchants on debit-card transactions. The D.C. Circuit rejected a challenge under the Administrative Procedure Act (“APA”) to Regulation II in 2014, holding that the rule “generally rest[s] on reasonable constructions of the statute.” NACS v. Board of Governors of FRS, 746 F.3d 474, 477 (D.C. Cir. 2014). In 2018, a convenience store called Corner Post opened its doors and first paid fees under Regulation II. Three years later, Corner Post filed an APA claim challenging Regulation II.

The Eighth Circuit held that Corner Post’s suit was untimely. The APA allows suit by any person who has suffered a “legal wrong” or been “adversely affected” by an agency rule. 5 U.S.C. § 702. An APA challenge to an agency rule must be “filed within six years after the right of action first accrues.” 28 U.S.C. § 2401(a). Aligning itself with eight other circuits, the Eighth Circuit ruled that APA claims must be brought within six years of the rule’s promulgation, even if the plaintiff could not have filed its own claim within that initial six-year period. That decision split with the Sixth Circuit, which had held that an APA claim accrues (and the six-year limitations period thus starts) only once the agency rule injures the particular plaintiff. The Supreme Court granted review to resolve the conflict.

Issue:

Whether a plaintiff’s APA claim first accrues when an agency issues a rule—regardless of whether that rule injures the plaintiff on that date—or when the rule first adversely affects the plaintiff.

Court’s Holding:

An APA claim accrues, and the six-year statute of limitations begins to run, only when an agency rule injures the plaintiff.

What It Means:

Today’s decision means that the timeliness of an APA claim does not turn on when the agency rule was promulgated or when someone else could have challenged it. Instead, it turns on when the particular plaintiff challenging the agency rule was first injured by the rule. The Court relied on the APA’s “basic presumption” of judicial review and the “deep-rooted historic tradition that everyone should have his own day in court.” Op. 21–22. As a result, an APA claim challenging an agency rule is timely when the plaintiff was first injured by the rule within six years of filing suit—even if the rule was promulgated more than six years ago.
The Court’s decision also amplifies the impact of its decision in Loper Bright to overrule Chevron v. NRDC. As the Court explained, the D.C. Circuit relied on Chevron in its 2014 decision rejecting an APA challenge to Regulation II, holding that the regulation “rest[ed] on reasonable constructions of the statute.” Op. 2. On remand, the district court and Eighth Circuit will address Regulation II’s validity without deferring to the Federal Reserve Board’s interpretation of the relevant federal statutes.
In dissent, Justice Jackson predicted that the Court’s adoption of a plaintiff-specific accrual rule for APA claims could clear the way to new challenges to decades-old regulations.

The Court’s opinion is available here.

Appellate and Constitutional Law

Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com	Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com	Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com	Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com	Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com

Related Practice: Administrative Law and Regulatory Practice

Eugene Scalia
+1 202.955.8210
escalia@gibsondunn.com

Helgi C. Walker
+1 202.887.3599
hwalker@gibsondunn.com

Stuart F. Delery
+1 202.955.8515
sdelery@gibsondunn.com

This alert was prepared by associates Grace Hart and Patrick Fuster.