Publications

Greetings, Court Fans!

Today, on what is likely the penultimate day of the term, the Court issued three decisions, including one of the most watched cases of the term:

• In Students for Fair Admission v. President and Fellows of Harvard College (No. 20-1199), a 6-3 Court declared the admissions programs of Harvard College and the University of North Carolina unconstitutional, concluding that race-conscious admission programs do not survive strict scrutiny;

• In Groff v. DeJoy (No. 22-174), a unanimous Court held that Title VII of the Civil Rights Act of 1964 requires employers to accommodate religious practices unless the employer demonstrates “substantial increased costs” to its business from the accommodation, disapproving of a prior Supreme Court decisions suggestion that any effort or cost that is more than “de minimis” suffices to deny an accommodation;

• And in Abitron Austria GmbH v. Hetronic International Inc. (No. 21-1043), the Court unanimously held that the Lanham Act’s provisions prohibiting trademark infringement do not apply extraterritoriality, with a narrower majority then holding that the Act extends only to cases where the infringing use of a trademark occurs in the United States.

That leaves just two cases before this term comes to a close, which we expect the Court will issue tomorrow: 303 Creative, LLC v. Elenis (No. 21-476), a First Amendment challenge to Colorado’s public-accommodations law; and a pair of cases (likely to be decided together) challenging the Biden Administration’s student-loan forgiveness program.

We’ll be back soon to give you the rundown on those decisions as well as to summarize today’s decisions, but for now we have recaps of three recent decisions:

• Mallory v. Norfolk Southern Railway Co. (No. 21-1168), a groundbreaking personal jurisdiction case upholding a Pennsylvania statute that gives the State’s courts personal jurisdiction over any corporate defendant that registers to do business in the State, regardless of whether the suit has some tie with Pennsylvania;

• Counterman v. Colorado (No. 22-138), where the Court held that in prosecutions for making a “true threat,” the First Amendment requires the Government to show that the defendant has some subjective understanding of the threatening nature of the communications, but that no more than recklessness is required; and

• Coinbase, Inc. v. Bielski (No. 22-105), holding that district courts must stay litigation on the merits when a party appeals a decision finding the case is not subject to arbitration.

We’ll start with Mallory v. Norfolk Southern Railway Co. (No. 21-1168), where an unusual alignment of Justices combined to make it much easier to sue corporate entities in a plaintiff’s chosen forum. Specifically, the Court upheld a provision of Pennsylvania’s long-arm statute, which specifies that by registering to do business in the state (something non-Pennsylvania corporations generally must do to own property or conduct business there), a corporation consents to Pennsylvania courts’ exercise of general personal jurisdiction, that is, jurisdiction in any suit, regardless of whether the suit is connected to Pennsylvania. Depending on how state legislatures respond, Mallory could seriously cabin—or for practical purposes maybe even abrogate—the Court’s recent decisions limiting states’ exercise of general jurisdiction over corporate defendants.

Robert Mallory suffers from cancer, which he alleges was caused by his exposure to asbestos and chemicals during his work for the Norfolk Southern Railway as a freight-car mechanic in Ohio and Virginia. He sued the railroad under a federal scheme permitting railroad employees to recover damages from their employers’ negligence. But he didn’t sue in Virginia, where Mallory resides, Norfolk Southern is incorporated and based, and some of the alleged exposure occurred. Nor did he sue in Ohio, another state where alleged exposure took place. Instead, he sued in Pennsylvania state court, perhaps because that state is perceived to be more friendly to plaintiffs. Norfolk Southern argued that the Pennsylvania courts lacked personal jurisdiction over it in Mallory’s suit, given the lack of any real connection between the state and the case. But Mallory responded by pointing to a Pennsylvania statute providing that by registering to do business in the state—as Norfolk Southern had done—foreign companies consent to Pennsylvania courts exercising personal jurisdiction over them to the same extent as a domestic Pennsylvania corporation. That has the effect of allowing Pennsylvania courts to exercise “general” jurisdiction, that is, jurisdiction in any cause of action, whether connected with Pennsylvania or not. Norfolk Southern argued that this scheme violated its federal constitutional right to due process. The Pennsylvania Supreme Court agreed, unanimously holding its own statute was unconstitutional. Because that holding disagreed with the Georgia Supreme Court’s decision in a case involving a similar Georgia statute, the Court granted certiorari to resolve the split.

The Court reversed in an opinion written by Justice Gorsuch and joined by the Court’s two most conservative Justices (Thomas and Alito) and its two most liberal ones (Justices Sotomayor and Jackson). He focused mostly on a 1917 Supreme Court decision, Fire Insurance. Co. of Philadelphia v. Gold Issue Mining & Milling Co., upholding a Missouri statute a lot like the Pennsylvania one. True, a lot has changed in the law of personal jurisdiction since 1917, the most important of which is International Shoe Co. v. Washington (1945), where the Court abandoned a “territorial” approach to personal jurisdiction, instead asking whether the defendant had sufficient “minimum contacts” with the forum state to make that state’s exercise of personal jurisdiction over the defendant fair. But Gorsuch concluded that International Shoe’s minimum contacts approach merely supplemented, rather than conflicted with, Fire Insurance Co. of Philadelphia’s consent-based one. And Gorsuch then quickly batted aside various arguments that Pennsylvania’s statute did not truly establish a corporation’s consent, observing that no “magic words” are needed so long as the statute can be construed as providing consent to suit from the act of registering to do business.

Much of the rest of Gorsuch’s characteristically breezy opinion brushed aside arguments that post-1917 developments in personal jurisdiction had implicitly overruled Fire Insurance Co. of Philadelphia. While many courts (not least the Pennsylvania Supreme Court) had concluded that they did, Gorsuch countered that if one of the Court’s precedents directly applies to a case, then only the Supreme Court itself (and not a lower court) can overrule that decision. Having read this far, you will not be surprised to learn that the Court then refused to overrule its prior case. Among other things, the majority simply failed to see what was unfair about allowing the Pennsylvania courts to exercise jurisdiction over Norfolk Southern when it had taken great advantage of the benefits of registering to do business in the Pennsylvania, such as by operating thousands of miles of track and maintaining scores of employees in the state.

While Justice Jackson joined Gorsuch’s opinion in full, she also wrote separately to emphasize the consistency of the decision with other precedent holding that personal jurisdiction is an issue personal to the defendant, subject to waiver even if, absent waiver, the Court’s jurisprudence would bar the exercise of jurisdiction. And she emphasized that Norfolk Southern’s “consent” in this case was not coerced: Nothing in Pennsylvania law required it to register to do business simply to (say) run trains through the state. Instead, it registered to do business so that it could maintain much more extensive operations there. In exchange for those benefits, it was perfectly fair for the Pennsylvania courts to exercise jurisdiction over it.

Justice Alito concurred in the Court’s judgment but withheld his vote from some aspects of Gorsuch’s opinion, technically making those passages a plurality, not majority, opinion. Alito agreed with majority’s core holding that it does not violate due process for a state to treat a corporation’s registration as consent to general jurisdiction. But he questioned the extent to which a state like Pennsylvania can, in fact, legislate that bargain. In his view, the dormant Commerce Clause places some limits on states requiring foreign companies to register, and hence to consent to general jurisdiction even for cause of action having nothing to do with that state, as a condition of doing business. But those issues had not been decided below, so he invited Norfolk Southern to take them up on remand in the Pennsylvania Supreme Court. Alito even went so far as to state there was a “good prospect” that Pennsylvania’s jurisdictional statute in fact violated the dormant Commerce Clause.

Justice Barrett, joined by Chief Justice Roberts and Justices Kagan and Kavanagh, dissented. She emphasized a settled rule different from the one that Justice Gorsuch focused on—namely that “the Due Process Clause does not allow state courts to assert general jurisdiction over foreign [i.e., out-of-state] defendants merely because they do business in the State.” Barrett saw no way to square that established rule with the artifice of a state requiring consent to general jurisdiction as a condition of conducting business. Barrett also saw little in Pennsylvania’s statutory scheme resembling true consent. And, perhaps most importantly, she rejected Gorsuch’s view that the Court’s 1917 precedent in Fire Insurance Co. v. Philadelphia resolved this case. The facts of that case were, in her view, not nearly as similar as Gorsuch portrayed them. And, more importantly, International Shoe had drastically changed the Court’s entire approach to personal jurisdiction, a change the Court had repeatedly warned made pre-International Shoe decisions of doubtful validity.

So how much of an impact will Mallory have on personal jurisdiction? Well, right away, it is going to make suing foreign corporations—at least those that have registered to do business—a whole lot easier in Pennsylvania and Georgia. And other states may well follow suit, enacting their own statutes specifying that registering to do business in their states amounts to consent to personal jurisdiction. That potentially seismic change in personal jurisdiction would be thwarted, though, if Justice Alito’s dormant Commerce Clause guess proves correct. But on the other hand, the unusual left-right alliance against the narrower approach to personal jurisdiction that has dominated the Court in recent decades could prove to be durable, with Mallory marking just the first step in a fuller rethinking of the law of personal jurisdiction. Only time will tell.

In our second case today, Counterman v. Colorado (No. 22-138), the Court clarified the standard for proving that a defendant has made a “true threat” to cause illegal harm to another, holding that the First Amendment requires the Government to show that the defendant had “some subjective understanding of the threatening nature of his statements,” but that no more than “recklessness” is required.

Wait, some of you may be asking, didn’t the Court already decide this true-threats issue a few years ago in the “Facebook threats” case, Elonis v. United States (2015)?  Well, it was asked to, but in Elonis all the Court decided was that the federal statute that made it a crime to communicate threats in interstate commerce itself required something more than near negligence.

So eight years later the question returned to the Court, in another case involving allegedly threatening Facebook messages. This time the messages came from Colorado resident Billy Counterman, who repeatedly sent discomfiting DMs (using new accounts each time he was blocked) to a local musician identified as “C.W.” Some of these messages at least predicted (if not threatened) harm to C.W. (“Staying in cyber life is going to kill you”; “You’re not being good for human relations. Die.”); all were unwelcome and left C.W. in a state of fear and anxiety. After C.W. reported Counterman, Colorado charged him under a state statute making it unlawful to “[r]epeatedly … make[] any form of communication with another person” in “a manner that would cause a reasonable person to suffer serious emotional distress and does cause that person … to suffer serious emotional distress.” Counterman sought to dismiss the charges, arguing that his messages were not “true threats,” but the Colorado courts held that the state statute required only proof that a reasonable person would have viewed the communications as threatening; it did not require proof of any subjective intent to threaten. After he was convicted (based solely on the content of the messages), Counterman appealed right up to the Supreme Court, which agreed (this time for real) to resolve the division among state and federal courts over (1) whether the First Amendment requires proof a defendant’s subjective mindset in true-threats cases, and (2) if so, what mens rea is sufficient to sustain a conviction.

In a 7-2 decision, the Court held that states “must prove in true-threats cases that the defendant had some understanding his statements’ threatening character” and that “a recklessness standard is enough” to satisfy First Amendment concerns. Writing for the majority, Justice Kagan began by situating “true threats of violence” among the familiar categories of speech (like incitement, defamation, and obscenity) that are “of such slight social value as a step to truth” that they fall outside the First Amendment’s protections. (A reminder to any CNN guests out there: “Hate speech” is not one of these categories; nor is “fire-in-a-theater-shouting.”) But, as Kagan acknowledged, the First Amendment still plays a role in the policing of unprotected categories of speech, precisely because they’re so hard to categorize. Just as the line between risqué art and obscenity may be fuzzy, so too the line between a true threat and a bad joke. To mitigate any “chilling effect” that a prohibition on unprotected speech may have on a speaker’s willingness to engage in protected speech, the First Amendment demands that courts err on the side of protection. And “an important tool” to prevent chilling protected speech is conditioning liability for prohibited speech on proof of a culpable mental state. The “best known and theorized example” of this requirement, Kagan noted, is in the context of defamation. Though false and defamatory statements of fact are categorically unprotected, the First Amendment still demands that a mental state of recklessness (when the statement is made against a public figure) or at least negligence (when the statement is made against a private figure). The “vital element of scienter” is all the more important, of course, when there are criminal consequences to engaging in unprotected speech, as in the case of incitement and obscenity.

Given all this background, it is no surprise that the majority concluded that the First Amendment demands proof of some subjective intent in true-threats cases. “The speaker’s fear of mistaking whether a statement is a threat; his fear of the legal system getting that judgment wrong; his fear, in any event, of incurring legal costs—all those may lead him to swallow words that are in fact not true threats,” but instead protected speech. To forestall that chilling effect, and nurture the “uninhibited, robust, and wide-open debate that the First Amendment is intended to protect,” a subjective element is required to prove a true threat.

But which one? As Kagan noted, “[t]he law of mens rea offers three basic choices.” The most difficult to prove is purpose, meaning that the defendant “consciously desires” a result (e.g., that his words be received and understood as true threats). A slight step down is knowledge, that is, the awareness that a result is practically certain to result. And “a greater gap separates those two from recklessness,” the “conscious disregard of a substantial and unjustifiable risk that the conduct will cause harm to another.” (Of course, there is also a fourth choice, negligence, but as Kagan noted, that is an objective standard and so not one the First Amendment permits, given its requirement of a subjective element.) “Among these standards,” Kagan concluded, “recklessness offers the right path forward.” To justify this conclusion, Kagan examined the other side of the coin. While there is undoubtedly a strong constitutional interest in free expression, there is also a strong societal interest prosecuting, and therefore discouraging, true threats of violence. Merely requiring a subjective intent will necessarily impede some true-threat prosecutions, and “as we go up the subjective mens rea ladder, that imposition on States’ capacity to counter true threats becomes still greater—and presumably, with diminishing returns for protected expression.” In other words, the First Amendment benefit of requiring more than recklessness does not justify the societal harm that would result if reckless threats were unpoliceable.

In settling on recklessness as the proper mens rea, Justice Kagan analogized true threats to defamation. The Court long ago settled on recklessness as the standard that must be proved (in either the civil or criminal context) to hold a defendant liable for defamatory speech. Kagan could see “no reason to offer greater insulation to threats than to defamation.” True, she acknowledged, the Court has required purpose or knowledge in incitement cases. But “incitement to disorder is commonly a hair’s-breadth away from political ‘advocacy’,” which is at the core of the First Amendment’s protections. Moreover, the Court’s incitement decisions came against a historical backdrop of failing to protect the mere advocacy of force or lawbreaking from prosecution when state and federal governments tried to suppress the labor and communist movements in the early 20^th Century. “A strong intent requirement was, and remains, one way to guarantee history was not repeated.” The “potency of that protection” is not required for true threats, where a recklessness standard “offers just enough breathing space for protected speech without sacrificing too many of the benefits of enforcing laws against true threats.”

What does that mean for Billy Counterman? Since he was convicted based on an objective (negligence) standard, the First Amendment demands vacatur. Whether he can be prosecuted again under a recklessness standard will be up to Colorado.

Though the decision was 7-2, only the Chief, and Justices Alito, Kavanaugh, and Jackson joined Kagan’s decision in full. Justice Sotomayor (joined mostly by Justice Gorsuch) concurred in part, and in the judgment. As she noted, Counterman was specially charged with stalking C.W.. In her view, a recklessness standard was appropriate in cases of stalking, which combines “threatening statements and repeated, unwanted, direct contact.” But she would leave “for another day the question of the specific mens rea required to prosecute true threats generally,” i.e. threatening statements unaccompanied by direct contact. In those cases, she insisted, “the answer is that true threats encompass a narrow band of intentional threats. Especially in a climate of intense polarization,” she warned, “it is dangerous to allow criminal prosecutions for heated words based solely on an amorphous recklessness standard.” (Gorsuch joined only the leave-this-for-another-day part, and not the answer-is-intentional part.)

Justices Thomas and Barrett dissented. In her principal dissent, joined by Thomas, Barrett argued that, because true threats enjoy no First Amendment protection, there is no need for a heightened mens rea standard. Nearly every other category of unprotected speech can be restricted under an objective standard, she reasoned, and there is no reason to “grant[] true threats preferential treatment.” In particular, Barrett noted, the majority opinion glided past one of the most apt analogies to true threats, “fighting words.” In the Court’s First Amendment jurisprudence fighting words are unprotected because they are “inherently likely to provoke violent reaction.” In a similar way, true threats by definition must express “an intent to commit an act of unlawful violence” and must be deemed threatening by a reasonable listener who is familiar with the entire factual context in which the statement occurs.” In this way, inherent in the definition of a true threat are features that “guard against the risk of silencing protected speech.” There is no need to give threats elevated status in order to avoid a chilling effect on protected speech. (Barrett acknowledged that one category of unprotected speech, incitement, does require an elevated mens rea, but essentially agreed with Kagan that the fine line between incitement and political advocacy justifies that exception to the general rule.) To Barrett, the majority’s overprotection of true threats “seems driven in no small part by the heavy hammer of criminal punishment.” But that’s a different question, which could be addressed through statutory interpretation (as in Elonis). Here, the issue is about the scope of the First Amendment, not the interpretation of a criminal statute. And “the Court’s holding affects the civil consequences for true threats”—the ability of victims of domestic violence to obtain restraining orders, for example, or of schools to discipline students who threaten violence—“just as much as it restricts criminal liability.” The Court’s conflation of due-process concerns with First Amendment concerns thus “sweeps much further than it lets on.”

In a separate dissent, Justice Thomas took aim at “the majority’s surprising and misplaced reliance on New York Times v. Sullivan (1964),” one of his favorite bogeymen. In Thomas’s view, “[t]he constitutional libel rules adopted by this Court in New York Times and its progeny broke sharply from the common law of libel.” While he would prefer to reconsider this area of law entirely, the Court instead relied upon it to justify its holding here. Noting that he is not the only Justice to have criticized this line of authority, he wrote that it “is thus unfortunate that the majority chooses not only to prominently and uncritically invoke New York Times, but also to extend its flawed, policy-driven First Amendment analysis to true threats, a separate area of this Court’s jurisprudence.”

In our last case of the day, Coinbase, Inc. v. Bielski (No. 22-105), a 5-4 Court held that pre-trial and trial proceedings must be stayed during an interlocutory appeal of the denial of a motion to compel arbitration under the Federal Arbitration Act. The decision is likely to have significant ramifications, especially in class actions, as district courts will no longer have discretion to determine whether certain types of discovery and other proceedings should continue during an arbitrability appeal.

In this case, Bielski filed a putative class action against Coinbase, an online cryptocurrency platform that was accused of failing to replace funds that were fraudulently removed from users’ accounts. The District Court denied Coinbase’s motion to compel arbitration, and Coinbase filed an interlocutory appeal of that order to the Ninth Circuit, as permitted by Section 16(a) of the FAA. Coinbase also moved to stay any further district court proceedings while its appeal was pending, but both the District Court and the Ninth Circuit denied a stay. The Supreme Court granted cert to resolve a split among the circuits on whether a stay is required in this situation (six circuits holding that a stay is required and three circuits holding that it isn’t).

Justice Kavanagh wrote for the majority, joined by Justices Roberts, Alito, Gorsuch, and Barrett. He acknowledged that the FAA doesn’t answer the question. Section 16(a) provides for an interlocutory appeal of an order denying arbitration, but it does not address whether district court proceedings must be stayed. The majority therefore based its decision instead on what it called the “clear background principle”—articulated in Griggs v. Provident Consumer Discount Co., 459 U.S. 56 (1982)—that an appeal divests the district court over any aspects of the case that are involved in the appeal. According to Kavanagh, “[t]he Griggs principle resolves this case.” Since the interlocutory appeal here involves whether the case should be in court in the first place, “the entire case is essentially ‘involved in the appeal’” and all proceedings below must be stayed.

According to Kavanaugh, the Griggs principle also explains why Congress did not provide for a mandatory stay of district court proceedings in Section 16(a). Congress didn’t need to say anything in Section 16(a) about a stay because the “background Griggs principle already requires an automatic stay” of any proceedings that relate to any aspect of the case that is on appeal, and that requires a stay of the entire case. By contrast, when Congress authorizes an interlocutory appeal and doesn’t want an automatic stay of district court proceedings, it typically says so directly in the statute.

Bielski (and the dissenting opinion) countered that Congress explicitly required an automatic stay of all proceedings when a district court orders a case to be arbitrated under Section 3 of the FAA. That suggests that if Congress intended for district court proceedings to be stayed pending appeal of an order denying arbitration, it would have said so in Section 16(a). But the majority rejected that argument, relying again on Griggs to conclude that a stay provision was needed for orders compelling arbitration under Section 3 because, in that situation, two courts are not considering arbitrability at the same time and therefore there is no Griggs background principle requiring an automatic stay. In contrast, Section 16(a) didn’t need to provide for an automatic stay because Griggs requires one.

Finally, Kavanaugh offered several policy arguments in support of automatic stays. Without a stay of district court proceedings, judicial resources would be wasted and many of the benefits of arbitration, including efficiency and limited discovery, would be “irretrievably lost” if the appellate court concluded that the case had to be arbitrated. A discretionary stay cannot adequately address those concerns, because courts generally find that discovery and other burdens of litigation don’t constitute irreparable harm, one of the factors required to be considered in deciding whether to issue a stay. The majority also rejected the argument that a mandatory stay would encourage defendants to take frivolous interlocutory appeals of orders denying arbitration in order to avoid or defer any discovery, finding no evidence such frivolous appeals are common. And in any event, courts have other tools to address frivolous appeals.

In a dissent joined by Justice Thomas, Sotomayor, and Kagan, Justice Jackson argued that the majority’s “mandatory-general-stay rule for interlocutory arbitrability appeals comes out of nowhere.” As she noted, Congress specifically mandated a stay in FAA Section 3 when a district court determines arbitration is warranted and did not mandate a stay under Section 16(a) when a district court determines arbitration is unwarranted. And, she noted, the same 1988 statute that added Section 16(a) to the FAA also added 28 U.S.C. § 1292(d)(4) which authorized certain interlocutory appeals and expressly provided an automatic stay pending appeal. So, when Congress “intended to mandate interlocutory stays, it said so expressly.”

The dissenters also criticized the majority’s heavy reliance on Griggs. The basic principle is that, absent a statutory directive to the contrary, lower courts have discretion to determine whether and to what extent to stay proceedings during an interlocutory appeal. Against this background, it makes little sense to conclude that Congress required an automatic stay for Section 16(a) appeals without saying so. And rather than reading Griggs broadly, as the majority did, she read it as limited to the narrower proposition that two courts can’t exercise jurisdiction over the same order or judgment at the same time. Applying that principle here, Coinbase’s interlocutory appeal only divested the District Court of authority to modify the order denying arbitration and leaves to the District Court’s discretion whether to stay any other proceedings. Finally, Jackson criticized the majority’s policy-based reasons for its rule, noting that if these concerns are really valid, then district courts can grant discretionary stays based on them in appropriate cases. Ultimately, it is up to Congress to provide for mandatory stays pending appeal, and it simply never did that in this context.