Supreme Court Update: Lightfoot v. Cendant Mortgage Corp. (14-1055)

January 19, 2017 Supreme Court Update

Greetings, Court Fans!

For those of you who spent the last six months (since cert was granted in Lightfoot v. Cendant Mortgage Corp. (No. 14-1055)) just dying to know whether the sue-and-be-sued clause in Fannie Mae's charter grants federal courts jurisdiction over all suits involving the mortgage giant, have we got a treat for you: No. That's the answer the Court provided in its lone decision yesterday, a unanimous opinion by Justice Sotomayor. Read on for a quick summary, as well as a catalogue of the sixteen—yes, sixteen—new cert grants from Friday afternoon.

Lightfoot involved a recurring question concerning federal jurisdiction over federally chartered corporations. Fannie Mae's charter contains a clause authorizing it "to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal." The question in Lightfoot was whether that clause not only permits Fannie Mae to file and defend lawsuits, but also grants federal courts jurisdiction over all suits involving Fannie Mae, no matter how small. The Court has considered a similar question with respect to five other federal charters containing sue-and-be-sued clauses, dating back to 1809. In three of those cases, it has found that the charter granted federal jurisdiction, while in two others it held that no federal jurisdiction was conferred.

From those five cases, a rule of thumb emerged that "a congressional charter's ‘sue and be sued' provision may be read to confer federal court jurisdiction if, but only if, it specifically mentions the federal courts." Here, however, that rule didn't resolve the issue because while Fannie Mae's charter does mention federal courts, it contains additional language, distinguishing it from the three earlier charters found to confer federal jurisdiction. While those other charters referred to federal courts "without qualification," Fannie Mae's sue-and-be-sued clause refers to "any court of competent jurisdiction, State or Federal." Looking at the plain meaning of the text, the Court concluded that a court of competent jurisdiction is one "with an existing source of subject-matter jurisdiction." Fannie Mae's charter, therefore, only permits suit in any state or federal court already endowed with subject-matter jurisdiction over the suit.

While Justice Sotomayor's reading of the charter seems sound, it also has the benefit of sparing the federal courts from an onslaught of perhaps 60,000 cases in a new Fannie Mae docket. But the Court's own docket grew by leaps and bounds on Friday, when it accepted sixteen new cases for argument this Term:

Sandoz Inc. v. Amgen Inc. (15-1039) and Amgen Inc. v. Sandoz (15-1195) concern the licensing of "biosimilars," biological products that may be approved by the FDA based on their close similarity to an already approved biological product. The Biologics Price Competition and Innovation Act (BPCIA) created an abbreviated licensure "pathway" for biosimilars, but requires notice to be given to the owner of the already-approved biological product (the "sponsor") before the biosimilar can be marketed. In these consolidated cases, the first to construe the BPCIA, the Court will determine when that notice must be given and what are the proper remedies for sponsors who are not given proper notice.

Ernst & Young v. Morris (16-300), NLRB v. Murphy Oil USA (16-307), and Epic Systems v. Lewis (16-285) are consolidated employment cases asking whether the National Labor Relations Act prohibits employers from enforcing under the Federal Arbitration Act employment agreements that require employees to arbitrate claims against the employer on an individual, rather than collective, basis.

National Association of Manufacturers v. Department of Defense (16-299) touches upon the definition of the term "the waters of the United States" and therefore the scope of the Clean Water Act (CWA), but immediately concerns the CWA's judicial-review provision, and whether challenges to the Department of Defense's definition of "waters of the United States" should be first filed in federal district courts or in federal courts of appeals.

California Public Employees Retirement System v. ANZ Securities (16-373) asks whether the filing of a putative class action satisfies the three-year time limitation in Section 13 of the Securities Act with respect to the claims of putative class members.

Henson v. Santander Consumer USA (16-349) asks whether a company that regularly attempts to collect debts it purchased after the debts had fallen into default is a "debt collector" subject to the Fair Debt Collection Practices Act.

BNSF Railway Co. v. Tyrrell (16-405) asks whether a state court may decline to follow the Supreme Court's decision in Daimler AGA v. Bauman, which held that the Due Process Clause forbids a state court from exercising general personal jurisdiction over a defendant that is not at home in the forum state, in a suit against an American defendant under the Federal Employers' Liability Act.

Perry v. Merit Systems Protection Board (16-399) asks whether a decision of the Merit Systems Protection Board disposing of a "mixed" case on jurisdictional grounds is subject to judicial review in the district court or in the U.S. Court of Appeals for the Federal Circuit.

Town of Chester v. Laroe Estates (16-605) asks whether intervenors participating in a lawsuit as of right under FRCP 24(a) must themselves have Article III standing, or whether Article III is satisfied so long as there is a valid case or controversy between the named parties.

Kokesh v. SEC (16-529) asks whether the five-year statute of limitations in the provision of the Securities Act governing penalties and forfeitures also applies to claims by the SEC seeking disgorgement of illegally obtained profits.

Weaver v. Massachusetts (16-240) is an ineffective-assistance-of-counsel case with potentially significant consequences. It asks whether a defendant who alleges ineffective assistance that results in structural error must show prejudice, or whether prejudice is presumed in such cases.

Maslenjak v. United States (16-309) asks whether a naturalized U.S. citizen can be stripped of her citizenship in a criminal proceeding based on an immaterial false statement.

McWilliams v. Dunn (16-5294) asks whether the Court's 1986 ruling in Ake v. Oklahoma that an indigent criminal defendant is entitled to meaningful expert assistance for the "evaluation, preparation, and presentation of the defense" clearly established that such an expert must be independent of the prosecution.

Davila v. Davis (16-6219) asks (1) whether the ineffectiveness of state habeas counsel can overcome the procedural default of a substantial ineffective assistance of appellate counsel claim, and (2) whether Texas's "second punishment special issues," which are necessary findings for a sentence of death, must be decided by the jury beyond a reasonable doubt.

That should just about complete the docket for OT16, with 78 cases (including those already decided). We look forward to discussing each of them with you as the Term continues!