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Greetings, Court Fans!

It was a busy day at One First Street yesterday, with five new decisions. In City of Austin v. Reagan National Advertising (No. 20-1029), the Court clarified its test for determining when speech-restrictions are content based and therefore presumptively invalid. In United States v. Vaello Madero (No. 20-303), the Court held that residents of Puerto Rico and other U.S. territories do not have a constitutional right to federal benefits provided to residents of the 50 states. In Boechler v. Commissioner of Internal Revenue (No. 20-1471), the Court held that a particular deadline in the Internal Revenue Code is a non-jurisdictional deadline subject to equitable tolling. In Cassirer v. Thyssen-Bornemisza Collection Foundation (No. 20-1566), the Court held that the same choice-of-law rules apply in cases against foreign states under the Foreign Sovereign Immunities Act as in similar suits against private parties. And in Brown v. Davenport (No. 20-826), the Court erected yet another barrier to federal habeas relief, holding that petitioners must satisfy both the judicially created harmless-error standard of Brecht v. Abrahamson (1993), as well as the statutory requirements of the Antiterrorism and Effective Death Penalty Act (AEDPA) in order to warrant relief.

That’s a lot to get through in one sitting, so we’re going to split it up, with summaries of City of Austin, Vaello Madero, Boechler, and Cassirer today, with Brown to come early next week. Let’s get to it.

First up, in City of Austin v. Reagan National Advertising (No. 20-1029), a 6-3 Court held that municipal regulations treating billboards and other off-premises signs differently from on-premises signs are not content-based restrictions on speech and therefore not subject to strict scrutiny.

Governments at all levels have long distinguished between signs (most notably billboards) that promote products or services found elsewhere and those that promote or identify things found onsite. As part of the Highway Beautification Act of 1965, Congress directed states receiving federal highway funding to regulate outdoor signs in proximity to federal highways by limiting off-premises signs. Most states did that with regulations that drew on-/off-premises distinctions. And at the local level, tens of thousands of municipalities have adopted on-/off-premises distinctions in their sign codes. Austin, for example, permits on-premises signs, but prohibits the construction of new off-premises signs. Existing off-premises signs can remain in place, and the owners can change the messages on them, but they cannot change the method of conveying a messages. That means that, unlike on-premises signs, off-premises signs cannot be converted to a digital format.

Reagan National Advertising is one of the largest outdoor-advertising companies in the country. It sought permits from Austin to digitize some of its signs, but the City refused. Reagan then filed suit in state court, arguing that the sign code’s prohibition against digitizing off-premises signs, but not on-premises signs, violated the Free Speech Clause. After Austin removed the suit to federal court, the district court held a bench trial and entered judgment for the city, finding that the on-/off- premises distinction was content neutral and served a valid purpose. The Fifth Circuit reversed, reasoning that the on/off distinction required a reader to inquire “who is the speaker and what is the speaker saying,” which are hallmarks of a content-based inquiry. Because a regulator would have to read a sign’s message to determine what rules apply to it, the sign code imposed a content-based restriction subject to strict scrutiny. Under that “fatal in fact” standard, the regulations were struck down.

The Supreme Court reversed, in a 6-3 decision authored by Justice Sotomayor and joined by all but Justices Thomas, Gorsuch, and Barrett. As Justice Sotomayor explained, the case called on the Court to revisit its 2015 decision in Reed v. Town of Gilbert, where it invalidated a town’s sign code as a content-based restriction on speech. Reed held that a regulation is content based if it “applies to particular speech because of the topic discussed or the idea or message expressed.” The Fifth Circuit took that to mean that a regulation is automatically content based if a reader must ask who is the speaker and what is the speaker saying in order to apply the regulation. That, according to Sotomayor, “is too extreme an interpretation of this Court’s precedent.” Whereas the sign code in Reed singled out specific subject-matter for differential treatment (“ideological signs” were given more leeway than others), Austin’s code is “agnostic as to content.” The substance of the message on a sign is irrelevant to the application of the regulations; the code requires examination of speech only in service of drawing neutral, location-based lines. Though Reed recognized that content-based restrictions can sometimes be “subtle, defining regulated speech by its function or purpose” rather than its particular subject matter,” Sotomayor rejected Reagan’s argument that this meant every regulation that defines regulated speech based on function or purpose is necessarily content-based. All Reed’s “function or purpose” language means is that “a regulation of speech cannot escape classification as facially content based simply by swapping an obvious subject-matter distinction for a ‘function of purpose’ proxy that achieves the same result.” To read Reed otherwise would contravene numerous precedents upholding restrictions on off-premises signs going back over 100 years.

Concluding that Austin’s premises distinction is facially content-neutral, the Court remanded the case for consideration of whether it may in fact have been motivated by content-based purposes (in which case strict scrutiny would still apply) and, if not, whether the ordinance can survive intermediate scrutiny.

Justice Breyer filed a concurring opinion. In his view, Reed dictated the outcome here, but the Court’s reasoning in Reed was wrong. Ever the pragmatist, Breyer argued that the First Amendment’s purposes “are better served when judge-made categories (like ‘content discrimination’) are treated, not as bright-line rules, but instead as rules of thumb.” Rather than apply bright lines when determining whether a particular speech restriction violates the First Amendment, he would look to “whether the regulation at issue works harm to First Amendment interests that is disproportionate in light of the relevant regulatory objectives.” He would leave it to the lower courts to make this determination, though he telegraphed his view that the City’s legitimate interests in traffic safety and preserving an esthetically pleasing environment justified the “limited, niche-like” harm to Reagan’s First Amendment interests—i.e., its inability to digitize its signs.

Justice Alito filed an opinion concurring in the judgment in part and dissenting in part. He agreed that the Fifth Circuit’s decision should be vacated, but for different reasons. In Alito’s view, the lower court had failed to apply the proper tests for determining whether a speech restriction is facially unconstitutional. To be facially invalid a speech restriction must be unconstitutional in most of its applications. But Austin’s off-premises sign restrictions would most often be applied to advertisements, and regulations of commercial speech are not subject to strict scrutiny. He would vacate the Fifth Circuit’s judgment on that basis, instead of concluding that Austin’s sign code provisions are not content based. (On that question, Alito believed that the provisions “clearly discriminate” on the basis of the message expressed in a sign and should therefore be subject to strict scrutiny in certain situations, not involving commercial speech.)

Justice Thomas authored the principal dissent, joined by Justices Gorsuch and Barrett. In his view, Reed established a “clear rule for content-based restrictions” and Austin’s off-premises restriction plainly violated that rule, because it “discriminates against certain signs based on the message they convey—e.g., whether they promote an on- or off-site event, activity, or service.” The majority, Thomas argued, had replaced Reed’s clear rule “with an incoherent and malleable standard” reminiscent of the Court’s erroneous (in Thomas’s view) decision in Hill v. Colorado (2000), which upheld a law prohibiting “counseling” near abortion clinics because it discriminated against “an extremely broad category of communications,” supposedly without regard to subject matter. Thomas and the other dissenters would insist on a more formalistic test for determining whether restrictions are content-based to avoid the mischief of Hill.

Our next case for today is United States v. Vaello Madero (No. 20-303), where the Court considered whether the equal-protection component of the Fifth Amendment’s Due Process Clause requires Congress to make Supplemental Security Income (SSI) benefits available to residents of Puerto Rico to the same extent that Congress makes those benefits available to residents of the States. In an 8-1 decision authored by Justice Kavanaugh, the Court held that the Constitution does not require Congress to extend SSI to residents of Puerto Rico. Instead, precedent and historical practice support Congress treating U.S. Territories differently from the States when it comes to tax and benefits programs such as SSI, so long as Congress has a rational basis for doing so.

The Territory Clause of the Constitution states that Congress may “make all needful Rules and Regulations respecting the Territory . . . belonging to the United States.” Five such territories exist today: American Samoa, Guam, the Northern Mariana Islands, the U. S. Virgin Islands, and Puerto Rico. Exercising the broad authority the Territory Clause grants it, Congress sometimes legislates differently with respect to the Territories than it does with respect to the States. Thus, residents of Puerto Rico have long been exempt from most federal income, gift, estate, and excise taxes, while still paying Social Security, Medicare, and unemployment taxes. On the benefits side, residents of Puerto Rico are eligible for Social Security and Medicare and eligible for federal unemployment benefits, but not other benefits, like SSI.

These distinctions had a harsh effect on respondent Jose Luis Vaello Madero. A long-time resident of Puerto Rico, he moved to New York in 2013. While living there, he qualified for SSI benefits. Unaware that SSI benefits are not provided to residents of Puerto Rico, he moved back to Puerto Rico a few years later. The government, unaware of his move, continued to pay him benefits. When it eventually learned of his change of residence, it cancelled his SSI benefits. Worse, it sued him to recover more than $28,000 in benefits that had been paid to him while he resided in Puerto Rico. He sought to defend the suit by arguing that Congress’s exclusion of Puerto Rican residents from the SSI program violated the equal-protection component of the Fifth Amendment’s Due Process Clause. And he prevailed on that defense in both the district court and the First Circuit, which held this distinction unconstitutional, because it lacked a rational basis.

Writing for all but Justice Sotomayor, Justice Kavanaugh quickly reversed. Two prior cases dictated the result. First, in Califano v. Torres (1978), the Court held that Congress’s decision not to extend SSI benefits to residents of Puerto Rico did not violate the constitutional right to interstate travel. And then in Harris v. Rosario (1980), the Court upheld a similar differential treatment of Puerto Rico when it comes to public-assistance benefits under the equal-protection component of the Fifth Amendment’s Due Process Clause. Finding no basis to distinguish or overrule these decisions, the Court reversed, finding that Congress’s exclusion of Puerto Rico from SSI may not be fair, but it has a rational basis given other differential treatment of Puerto Ricans (like their exemption from certain federal taxes). 

While the Court’s majority decision is neither groundbreaking nor surprising, there’s more to be said about the concurrences and dissents. First, Justice Thomas and Justice Gorsuch each wrote separately to tell us that while they agree the Court’s precedent dictated the result, some of that precedent (or related precedent) might be worth overruling.

We’ll start with Justice Thomas. As you may have noticed, our summary above keeps talking about the “equal-protection component of the Fifth Amendment’s Due Process Clause.” What’s that about? Well, unlike the Fourteenth Amendment, which has both a due process clause and an equal protection clause that binds the States, the Fifth Amendment (which applies to the federal government) only has the former. But the Court long-ago “reverse incorporated” the Fourteenth Amendment’s equal-protection rule into the Fifth Amendment, meaning that the federal government too is required to apply the laws equally. Justice Thomas expressed doubt about the long-standing premise “that the Due Process Clause of the Fifth Amendment contains an equal protection component whose substance is ‘precisely the same’ as the Equal Protection Clause of the Fourteenth Amendment.” Instead, he suggested that equal-protection-type rights against action by the federal government should be based on the Fourteenth Amendment’s Citizenship Clause. But this alternative approach was “tentative” and merited further discussion in future cases. And that approach might give the equal-protection rights against the federal government a different scope than the rights the Fourteenth Amendment’s Equal Protection Clause grants against the states.

Meanwhile, Justice Gorsuch used his concurrence to call for the overruling of a group of cases not directly relevant to the Court’s resolution of this case, the so-called Insular Cases of the early 20^th Century. Briefly summarized, those cases mean that only “fundamental” constitutional rights apply in U.S. Territories, like Puerto Rico. That issue was not directly implicated here, because both the government and Vaello Madero assumed that the equal-protection component of the Fifth Amendment’s Due Process Clause was “fundamental” (and so applicable to Puerto Rican residents). But Justice Gorsuch called on the Court to overrule these cases, when presented with the opportunity to do so, because they were based on false racial stereotypes and bigotry toward the residents of U.S. Territories.

Justice Sotomayor, the only Justice who was a former resident of a U.S. Territory, dissented. She saw “no rational basis for Congress to treat needy citizens living anywhere in the United States so differently from others.” And she distinguished Califano and Harris, noting that they relied on slightly different constitutional claims than were at issue here. Specifically, Califano involved a claim under the right to travel, while Harris decided a challenge to the unequal distribution of block grants to the States and Puerto Rico under a separate benefits program. Those cases did not, in her view, preclude an equal protection challenge to a “uniform, federalized, direct-to-individual poverty reduction program like SSI.” Because it was “antithetical to the entire premise” of a poverty-reduction program like SSI to preclude residents of Puerto Rico from receiving benefits based on other differences between the states and Puerto Rico (like Puerto Ricans’ non-payment of federal income taxes), Congress had no rational basis for drawing this distinction. She would have affirmed.

Next up, in a decision that came down the same week many of us were cursing the IRS, the Court handed the Bureau a 9-0 defeat, holding in Boechler v. Commissioner of Internal Revenue (No. 20-1471) that a particular tax deadline is subject to equitable tolling. Disagreeing with the lower courts, a unanimous Court held that the 30-day deadline was not jurisdictional and that it could be equitably tolled in appropriate circumstances.

This case began with a situation no taxpayer wants to find themselves in: fighting to prevent the IRS from seizing his or her property. The IRS can seize taxpayer property to collect tax debts, but it typically must provide taxpayers with administrative review in the form of a “collection due process” hearing. Boechler, P.C., a North Dakotan law firm, found itself on the losing end of such a hearing after it challenged a proposed levy on its property stemming from an alleged tax-filing discrepancy. After the IRS’s Independent Office of Appeals sustained the proposed levy, Boechler had 30 days to appeal under 26 U.S.C. § 6330(d)(1). It missed the deadline by one day, petitioning the Tax Court 31 days after the “collection due process” determination. The Tax Court and Eighth Circuit thought the 30-day deadline was jurisdictional and therefore could not be equitably tolled.

Writing for a unanimous Court, Justice Barrett disagreed. The Court’s analysis focused on the parenthetical at the end of Section 6330(d)(1), which provides that a taxpayer “may, within 30 days of a determination under this section, petition the Tax Court for review of [a ‘collection due process’] determination (and the Tax Court shall have jurisdiction with respect to such matter).” Under well-established law, the Court treats a procedural requirement as jurisdictional only if Congress “clearly states” that it is. Thus, the question was whether Section 6330(d)(1)’s parenthetical limited the Tax Court’s jurisdiction to petitions filed within the 30-day timeframe. Boechler argued that the term “such matter” referred only to the phrase a “petition [to] the Tax Court for review of such determination,” rendering the filing deadline independent of the jurisdictional grant. The IRS contended the opposite, asserting that “such matter” encompassed the first clause of the sentence, tying the Tax Court’s jurisdiction to the filing deadline.

Employing a number of interpretative tools and techniques, the Court found that “such matter” lacked the clarity required to ascribe jurisdictional weight to the filing deadline. First, “such matter” lacked a clear antecedent. Second, Boechler’s and the IRS’s readings of “such matter” were not the only possible interpretations of those terms—it could refer to “such determination,” or possibly the “[m]atters” listed in Section 6330(c). And third, nothing in Section 6330(d)(1)’s text or structure, nor in the broader statutory context, advanced the case for jurisdictional clarity. The Court methodically rejected each of the IRS’s counterarguments—though, notably, it did not rebuff the IRS’s interpretation of “such matter.” In fact, it recognized that the IRS’s interpretation was plausible and that some may even think it better than Boechler’s. But, as was the mantra of the Court throughout its opinion, “in this context, better is not enough.” Because the jurisdictional condition was not clear, the conversation was over.

Ambiguity alone did not save Boechler completely, though. A question still remained as to whether Section 6330(d)(1)’s filing deadline could be equitably tolled. The Court held that it could be, finding unpersuasive the IRS’s attempts to rebut the default presumption that nonjurisdictional limitations periods are subject to equitable tolling. The Court ended its opinion noting that Boechler’s entitlement to equitable tolling on the facts of the case would be addressed by the lower courts on remand, leaving Boechler’s fate uncertain.

Our final case for today’s Update is another one for the law nerds: Cassirer v. Thyssen-Bornemisza Collection Foundation (No. 20-1566). There, the Court was asked to decide what choice-of-law rules apply to suits against foreign states raising non-federal claims. A unanimous Court concluded that those suits should be governed by the same choice-of-law rules that would apply in an identical suit against any other defendant, rejecting a Spanish museum’s (and the Ninth Circuit’s) argument that the federal interest in suits against foreign states mandated a federal common-law choice-of-law test.

While the legal issues in Cassirer are a bit dry, the background is not. The case concerns the ownership of Camile Pissarro’s Rue Saint-Honoré in the Afternoon, Effect of Rain. In 1939, the painting belonged to Lilly Cassirer, a German Jew. In order to get an exit visa to escape Nazi Germany, she surrendered the painting to Nazi officials for a token sum. After the war, the work ended up in the hands of a private collector in the United States, who sold it in 1976 to a German baron. A few decades later, the baron sold most of his art collection to a foundation created and controlled by the Spanish government. Ever since, it’s been on display on a public museum in Madrid. In the late 1990s, Lilly’s descendants recognized the painting and began efforts to recover it. Eventually, they sued the foundation in federal court in California (where the descendants lived), alleging that they were the painting’s rightful owners.

Because the foundation is an instrumentality of the Spanish government, the Foreign Sovereign Immunities Act (FSIA) makes it immune from suit unless a statutory exception to immunity applies. During an earlier stage of the case, the district court and the Ninth Circuit concluded that the case fell within the FSIA’s expropriation exception. So the foundation was not immune, and the suit could proceed. But what jurisdiction’s property law determined who the painting’s rightful owner was today: Spain’s or California’s? Before the district court could get to that, it had to decide which choice-of-law rule to use to decide what substantive law applied. The Cassirers argued it should be California’s choice-of-law rules, because in an ordinary diversity suit in federal district court, the court would apply the choice-of-law rules of the forum state (California). But the foundation argued that because the defendant was a foreign sovereign, federal interests were implicated, so a federal common-law choice-of-law standard should instead apply. Relying on Ninth Circuit precedent, the district court agreed with the foundation. Applying the federal choice-of-law test, it applied Spanish property law to the parties’ disputes. And under Spanish adverse-possession rules, the foundation was the painting’s rightful owner. The Ninth Circuit affirmed. But the Supreme Court granted certiorari to decide whether the lower courts correctly used a federal common-law choice-of-law test to select Spanish law instead of California’s choice-of-law principles.

Writing for a unanimous Court, Justice Kagan vacated the Ninth Circuit’s judgment. She began (and largely ended) with one particular provision of the FSIA. Section 1606 states that when a foreign state is not immune from suit, it “shall be liable in the same manner and to the same extent as a private individual under like circumstances” (except for some exceptions not relevant here). In an identical suit against a private museum in California district court, long-established precedent would require the court to apply California’s choice-of-law rules to select the substantive law. If, as the Ninth Circuit did, the court were to apply a different choice-of-law rule (say, a federal one) then it wouldn’t be treating the foreign-state defendant just like a private individual: The different choice-of-law rules might result in the private museum being held liable while the public one was not. Section 1606 forbids this mismatch in liability, so the district court was required to apply the same state-law choice-of-law test it would apply in any other diversity suit, regardless of the identity of the defendant.

In a brief paragraph at the end, Justice Kagan concluded the same result should hold even if Section 1606 weren’t quite so clear. After all, federal common law is a rare thing; it exists only when necessary to protect a uniquely federal interest. Relations with foreign states (which can be affected by suits against them in U.S. court) are of course such an interest. But the foreign-relations interest of those suits is protected primarily by the FSIA’s grant of immunity in all but certain narrow categories of cases. There is no unique federal-law interest in the choice-of-law test used in the rare cases where a foreign state is not immune from suit. For these reasons, the Court vacated the lower court’s judgment so it could consider what jurisdiction’s substantive law should apply under California’s choice-of-law rules.    

That’s all for today. We’ll be back soon to talk about habeas, as well as anything else that takes place in the meantime.

Dave and Tadhg