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Kim Rinehart
Jenny Chou

SUPREME COURT UPDATE: CLAPPER V. AMNESTY INTERNATIONAL USA (11-1025) AND MARX V. GENERAL REVENUE CORP. (11-1175)

3.4.2013

Greetings, Court fans!

We're back to bring you two more decisions from last week, both fairly significant: Clapper v. Amnesty International USA (11-1025), a standing decision making it much less likely that government wiretapping under FISA will face scrutiny in an ordinary civilian, federal court; and Marx v. General Revenue Corp. (11-1175), clarifying when defendants may recover costs as a prevailing party in a Fair Debt Collection Practices Act case.

In Clapper v. Amnesty International USA (11-1025), the Court took up a challenge to § 702 of the Foreign Intelligence Surveillance Act of 1978 (FISA), 50 U.S.C. § 1881a, which Congress enacted in 2008. That provision expanded FISA, allowing the Attorney General and Director of National Intelligence to jointly authorize and seek approval from the Foreign Intelligence Surveillance Court (FISC) for electronic surveillance of individuals who are not "United States persons" (a group including U.S. citizens, permanent resident aliens, and some organizations) if the officials reasonably believe the individuals to be outside the U.S. Unlike traditional FISA surveillance, under § 1881a the government need not demonstrate probable cause that a surveillance target is a foreign power or its agent, nor must it specify the nature or location of places at which the surveillance will occur. The plaintiffs – lawyers, human rights organizations, journalists, and others – challenged the law, asking for a declaration that it was unconstitutional and for an injunction against surveillance under the provision.

The tricky preliminary question – the only one addressed by the Court – was whether the plaintiffs, who feared (but could not prove) that their sensitive international communications with likely targets under the act were being monitored, had articulated sufficient injury, and thus had Article III standing to challenge the law at all. The plaintiffs claimed the law had harmed their ability to locate witnesses, work with sources, gather information, and communicate confidentially with clients. They said that they had "ceased engaging" in some telephone and e-mail communications, that they would be forced to travel abroad to engage in in-person conversations, and that they had already undertaken "costly and burdensome measures" to protect the confidentiality of communications. The Second Circuit took their side, finding that the plaintiffs had shown an "objectively reasonable likelihood" that their communications would be intercepted in the future, and that they were suffering "present injuries in fact" in the form of economic and professional harms as a result of the fear of "future harmful government conduct."

An unsurprising five justice majority was not impressed with the plaintiffs' attempt to demonstrate a "certainly impending" injury, which the majority contended Article III requires. Justice Alito wrote for the group, which included the Chief and Justices Scalia, Kennedy, and Thomas. According to the majority, the Second Circuit's "objectively reasonable likelihood" formulation clashed with what it characterized as a longstanding requirement that a "threatened injury must be certainly impending to constitute injury in fact." Plaintiffs here relied on "a highly attenuated chain of possibilities" – that the government would target the people with whom they communicated, that it would invoke § 1881a, that the FISA court would approve surveillance, that the government would successfully intercept communications, and that the plaintiffs themselves would be parties to intercepted communications – that was too speculative to demonstrate "certainly impending" injury. Because of the secrecy of FISA activities, plaintiffs had no actual knowledge of the government's targeting practices and could "not even allege" that the government had asked the FISC for permission to intercept the communications of their foreign clients and contacts, much less that the government would or could successfully eavesdrop on those communications. Nor was the majority impressed with the plaintiffs' protests about measures undertaken to avoid § 1881a surveillance. In the Court's view, plaintiffs "cannot manufacture standing merely by inflicting harm on themselves based on their fears of hypothetical future harm that is not certainly impending." Any such current, ongoing harm is "the product of [plaintiffs'] fear of surveillance," and simply is not "fairly traceable" to the threat of certainly impending interception under § 1881a itself.

The majority was unconcerned that its decision would make it likely that no plaintiff would ever have sufficient information about secret activities under FISA to establish standing to challenge the law. The Justices were confident that the FISC, which is bound to enforce the Fourth Amendment, would protect against FISA abuses by the government. The dissenters – Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan – were less sanguine, and took serious issue with the majority's injury analysis. In their view, the harm plaintiffs alleged was not speculative, but was "as likely to take place as are most future events that commonsense inference and ordinary knowledge of human nature tell us will happen." The majority required the plaintiffs to demonstrate a "certainly impending" harm, but, to the dissenters, "certainty is not, and never has been, the touchstone of standing." The dissent recounted prior cases in which the term "certainly impending" has been used, and argued that it simply did not require the sort of certainty that the majority demanded, but that the term "certainly" merely "emphasizes, rather than literally defines, the immediately following term ‘impending.'" To the dissenters, "[t]he future is inherently uncertain. Yet federal courts frequently entertain actions for injunctions and for declaratory relief aimed at preventing future activities that are reasonably likely or highly likely, but not absolutely certain, to take place. And that degree of certainty is all that is needed to support standing here."

The Court's last decision, in Marx v. General Revenue Corp. (11-1175), will be of interest to our readers who happen to teach statutory interpretation, as it walks through a trio of interpretation canons, disregarding each of them! Olivea Marx defaulted on her student loan and General Revenue Corp. ("GRC") was hired to collect the debt. Marx later brought suit against GRC under the Fair Debt Collection Practices Act ("FDCPA"), claiming that GRC subjected her to harassing phone calls, made false threats and sent inappropriate faxes to her workplace. After a brief trial, the district court found that GRC did not violate the FDCPA. GRC requested its costs pursuant to Federal Rule of Civil Procedure 54(d)(1), which provides that "[u]nless a federal statute, these rules, or a court order provides otherwise, costs – other than attorney's fees – should be allowed to the prevailing party." (GRC also sought costs under Rule 68(d), but that issue is not relevant to the Court's decision, so we won't address it further.) Marx objected, arguing that the FDCPA does not permit an award of costs against a plaintiff unless the plaintiff acted in bad faith and for purposes of harassment. The district court awarded costs to GRC, and the Tenth Circuit affirmed, concluding that the FDCPA's standard was not intended to supplant the trial court's authority to award costs under Rule 54(d)(1).

Splitting 7-2, the Court affirmed, in an opinion by Justice Thomas. Under Rule 54(d)(1), the district court had discretion to award fees to GRC unless the FDCPA "provides otherwise." Rule 54(d)(1) codifies a "venerable presumption" that prevailing parties are entitled to costs. For its part, the FDCPA states that "on a finding . . . that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs." The question with which the Court had to grapple was whether the provision permitting a court to award both attorney's fees and costs in an FDCPA action brought in bad faith displaced the trial court's authority under Rule 54(d)(1) to award a prevailing defendant costs even where the plaintiff did not bring the case in bad faith. The Court found that it did not. The Court first explained that a statute only "provides otherwise" for purposes of Rule 54(d)(1) if it is "contrary to" that Rule. Since Rule 54(d)(1) makes an award of costs discretionary, a statute would be contrary to that rule only if it limited the court's discretion. Here, the FDCPA simply addresses one situation – where the plaintiff brings a case in bad faith – and permits an award of fees and costs in that situation. "[I]t is silent where bad faith and purpose of harassment are absent, and silence does not displace the background rule that a court has discretion to award costs."

The Court then proceeded to reject a string of statutory interpretation arguments advanced by Marx and the United States. First up was the canon of "expression unius, exclusion alterius," which instructs that when Congress addresses one possibility it excludes another by implication. That is, because Congress specifically permitted an award of costs where an FDCPA plaintiff brought an action in bad faith, it implicitly excluded the award of costs where there was no bad faith. The majority easily cast this canon aside, concluding that it was only relevant where it was reasonable to assume that Congress thought about and rejected the other possibility. Here, there was no such evidence. In general, the American rule on attorney's fees is that each party bears its own attorney's fees, but courts have discretion to award fees where an action is undertaken in bad faith. Thus, in specifying that a district court could award attorney's fees to a defendant in a circumstance of bad faith, the FDCPA was simply codifying existing common law. If Congress had not included "costs" in the sentence, it is likely that plaintiffs would have argued that even though fees were recoverable in these circumstances, costs were not. So, it was natural for Congress to include costs to address this potential argument. But the inclusion of costs in situations where there is bad faith does not suggest that Congress considered and rejected the background presumption that a prevailing party is ordinarily entitled to costs, which is codified in Rule 54(d)(1). Moreover, Congress has explicitly limited the authority to award costs in other statutes – demonstrating that it knows how to do so when it wishes to. The Court next turned to the "canon against surplusage." Marx and the United States argued that allowing costs to be recovered under Rule 54(d)(1) would render the "costs" provision in the FDCPA meaningless since a court could already award costs in its discretion even where there was no bad faith or harassing purpose. The Court made short work of this canon. Here, there was no dispute that the provision allowing attorney's fees upon a showing of bad faith was already surplusage since the common law gave courts the discretion to make such awards already. Moreover, redundancy is typical in statutes addressing costs. Finally, the canon is strongest when one interpretation would give meaning to all sections of a single statute and another would render part of the same statutory scheme meaningless. Here, however, the FDCPA cost provision is not part of Rule 54(d)(1). The Court finished up with one last canon – the specific trumps the general. Because the Court found that Congress was only considering the situation of bad faith, it found that Rule 54(d)(1) and the FDCPA cost provision were not directed to the same subjects and therefore, that the canon was not applicable. (So much for those venerable canons of statutory construction.)

Justice Sotomayor dissented, joined by Justice Kagan. In their view, the default rule set forth in Rule 54(d)(1) is displaced by any statute with an express cost provision. Where Congress enacts an express cost provision, there is no longer a need for the default rule. By requiring the cost provision to be "contrary" to the discretionary standard in Rule 54(d)(1), the majority invoked too high a standard. The right inquiry is simply whether the FDCPA imposes a "different" standard than Rule 54(d)(1). Clearly, it does, permitting an award of costs upon a showing of bad faith and harassing purpose. The negative implication from this standard is that Congress did not intend to permit an award of costs where no bad faith was shown. The majority's interpretation also renders the FDCPA cost provision completely irrelevant. Finally, the majority cites no legislative history to support its conclusion that Congress intended merely to codify the common law rules on costs and attorney's fees. While some in the majority have criticized consideration of legislative history, claiming it is like "‘entering a crowded cocktail party and looking . . . for one's friends,'" the majority here simply "speculat[es] whole cloth about congressional intent." Thus, "[t]he majority is saved the trouble of having to look for its friends at the party, it simply invites them."

The Court has been issuing a steady diet of decisions, so we invite you to stay tuned. We'll be back soon with the latest.

Kim, Jenny & Julie

From the Appellate and Complex Legal Issues Practice Group at Wiggin and Dana. For more information, contact Kim Rinehart or any other member of the Practice Group at 203-498-4400

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