MAYER, BROWN & PLATT
SUPREME COURT DOCKET REPORT
1999 Term, Number 15 / May 30,
Today the Supreme Court
granted certiorari in three cases, all of which are of potential interest to the
business community. Amicus briefs in support of the petitioner are due on
Friday, July 14, 2000, and amicus briefs in support of the respondents are due
on Monday, August 14, 2000. The Court also invited the Solicitor General to
express the views of the United States in a fourth case. Any questions about
these cases should be directed to Donald Falk (202-263-3245) or Eileen Penner
(202-263-3242) in our Washington office.
1. Administrative Law — Deference to Agency
Determinations — Customs Service Tariff Classification Rulings. The Supreme
Court granted certiorari in United States v. Mead Corp., No. 99-1434, to
decide two questions: (1) whether courts reviewing the tariff classification of
particular imported goods must defer to ordinary classification rulings of the
United States Customs Service, and (2) whether the Customs Service correctly
classified spiral-bound and ring-bound day planners as "diaries, notebooks, and
address books, bound" under Subheading 4820.10.20 of the Harmonized Tariff
Schedules of the United States ("HTSUS"), 19 U.S.C. § 1202.
Mead Corporation imports
several models of day planners. Under Subheading 4820.10.20, "diaries,
notebooks, and address books, bound; memorandum pads, letter pads and similar
articles" are subject to a tariff, while items classified as "other" under HTSUS
Subheading 4820.10.40 are tariff-free. The Customs Service classified five Mead
day planners as bound diaries (and thus subject to tariff) under Subheading
Mead sought review in the
Court of International Trade. Mead argued that the day planners were neither
"diaries" nor "bound" for the purpose of HTSUS Subheading 4820.10.20, but the
court granted summary judgment to the United States. 17 F. Supp. 2d 1004
The Federal Circuit reversed.
185 F.3d 1304 (1999). The court of appeals held that ordinary classification
rulings did not warrant the Chevron deference owed to Customs regulations
that "fill a gap or define a term" of an ambiguous HTSUS provision.
Id. at 1306 (quoting United States v. Haggar Apparel Co.,
526 U.S. 380, 391 (1999)). In contrast to the formal regulations at issue in
Haggar, "ordinary" classification rulings do not have the force of law
(though they bind the parties) and are issued without procedural safeguards such
as public notice and comment. Id. at 1307. Such rulings also need not be
published, and may issue from any Customs Service port office (not only Customs
headquarters). Id. at 1308. Applying its own interpretation to Subheading
4820.10.20 without any deference to the agency, id. at 1307, the court of
appeals held that the Mead daily planners were "neither ‘diaries’ nor ‘bound.’"
Id. at 1311.
In seeking certiorari, the
United States has asserted that the decision of the Federal Circuit departs from
Haggar and other decisions that afford "some deference" to informal
statutory interpretations by administrative agencies. Christensen v.
Harris County, 120 S. Ct. 1655, 1662 (2000) (quoting Reno v.
Koray, 515 U.S. 50, 61 (1995)). But see id. at 1663 (only
"persuasive" interpretations are "entitled to respect"). The Federal Circuit,
however, found a closer analogy between ordinary classification rulings and IRS
Revenue Rulings, which in many courts receive no deference. See 185 F.3d at 1308
(citing Commissioner v. Schleier, 515 U.S. 323, 326 n.8 (1995)
(distinguishing revenue rulings from regulations)).
This case is of obvious
importance to businesses that import goods that may be subject to tariffs. A
decision to accord deference to classification rulings might readily be extended
to other Customs Service actions, such as rulings on valuation, origin, or
markings. The case has broader importance to all businesses that may seek
judicial review of agency statutory interpretations made without
notice-and-comment procedures, especially IRS Revenue Rulings and similar
determinations. In this case, the Court at last may squarely decide the degree
of deference due to agency interpretive rules and similar expressions of
Administrative Law — Clean Air Act — Cost-Benefit Analysis. Section 109 of the Clean Air Act, 42 U.S.C. § 7409,
authorizes the Environmental Protection Agency (EPA) to set primary National
Ambient Air Quality Standards (NAAQS) at a concentration level "requisite to
protect the public health" with "an adequate margin of safety," 42 U.S.C. §
7409(b). As we reported in the May 22 Docket Report, the Supreme Court granted
certiorari in Browner v. American Trucking Associations, No.
99-1257, to decide several constitutional and statutory questions arising from
the EPA’s promulgation of revised NAAQS for ozone and particulate matter — most
notably, whether the Clean Air Act, as the EPA interprets it, violates the
nondelegation doctrine. Today, the Court granted a cross-petition for certiorari
seeking review of the same decision, American Trucking Associations v.
Browner, No. 99-1426, to decide whether Section 109 precludes the EPA
from considering other factors such as cost and technological feasibility when
setting NAAQS, even if consideration of those factors would allow the agency
(and the courts) to avoid constitutional nondelegation issues.
On petitions for review, a
divided panel of the D.C. Circuit rejected EPA’s revised NAAQS for ozone and
particulate matter. 175 F.3d 1027, modified on rehearing, 195 F.3d 4 (1999). The
court of appeals held that the EPA’s interpretation of Section 109 was so
open-ended that it violated the constitutional nondelegation doctrine, and
remanded the case to the agency to formulate a statutory interpretation that
contained an intelligible limiting principle. See 175 F.3d at 1034, 1038-40. The
court acknowledged that circuit precedent (e.g., Lead Industries
Association v. EPA, 647 F.2d 1130, 1148 (D.C. Cir. 1980)) made the
EPA’s task more difficult by precluding the agency from setting NAAQS with
reference to "any factor other than health effects relating to pollutants in the
air." 175 F.3d at 1038 (internal quotation marks omitted). Thus, it
observed, "[c]ost-benefit analysis * * * is not available." Ibid. Indeed,
in rejecting a challenge to the NAAQS based on the EPA’s failure to take costs
into account, the D.C. Circuit stated flatly that the EPA is "not permitted to
consider the cost of implementing" the standards. Id. at 1040.
This case will be argued in
tandem with the previously granted case presenting nondelegation and statutory
issues arising from the same rulemaking. The additional issue is of obvious
interest to all businesses that may face significant expense in complying with
the Clean Air Act. Additionally, in deciding whether the EPA may weigh the costs
of regulation against health benefits when setting air quality standards, the
Court may determine more generally whether regulatory agencies may engage in
cost-benefit analysis when a statute identifies other factors in authorizing
regulatory standard-setting. Mayer, Brown & Platt represents one of the
petitioners in this case.
Maritime Law — Limitation of Liability Act — Dissolution of Injunction Against
Parallel Action. The Limitation of Liability Act, 46 U.S.C. app. §§ 181-196,
permits a ship owner to consolidate all actions arising from a single maritime
loss in a single federal district court and, if the loss occurred without the
owner’s "privity or knowledge," to limit its liability to the value of the
vessel and its freight. Once the ship owner deposits security for that value
(known as the "limitation fund"), a district court hearing an action under the
Limitation Act must enjoin any other pending actions arising from the same
incident. Id. § 185. The Supreme Court granted certiorari today in
Lewis v. Lewis & Clark Marine, Inc., No. 99-1331, to determine
when a district court may — or must — dissolve a Limitation Act injunction
against state-court proceedings.
Federal district courts have
exclusive admiralty jurisdiction over Limitation Act suits. See 28 U.S.C.
§ 1333. Nonetheless, the Act "sav[es] to suitors in all cases all other remedies
to which they are entitled." Id. § 1333(1)(a).
Lewis, a crew member on a tug
boat owned by Lewis & Clark Marine, Inc., alleged that he was injured on the
boat’s deck in March 1998. Asserting coverage under the Limitation Act, Lewis
& Clark filed an action for exoneration or limitation of liability in the
Eastern District of Missouri. Lewis then filed an action in Illinois state court
and waived his right to a jury trial. After Lewis & Clark filed a surety
bond for the amount of the limitation fund, the district court enjoined the
state court proceeding. Lewis moved to dissolve the injunction under the "saving
to suitors clause" of the Limitation of Liability Act, stipulating that his
claim was less than the limitation fund and asserting that he was the only
claimant seeking damages from the March 1998 incident. The district court
dissolved the injunction and stayed the federal proceedings, finding that the
stipulation removed the federal interest in limiting liability. 31 F. Supp. 2d
The Eighth Circuit reversed.
196 F.3d 900 (1999). The court of appeals held that the Limitation Act gave the
ship owner a right to a federal determination of exoneration of liability as
well as of limitation, a right that could not be mooted by a stipulation that
damages did not exceed the amount of the limitation fund. See id. at
907-908. The dissolution of the restraining order deprived Lewis & Clark of
its right to a federal-court determination of the exoneration claim. The court
interpreted the "saving to suitors" clause as establishing a "presumption in
favor of jury trials and other common law remedies," id. at 905, but held
that the clause "grant[s] claimants a choice of remedies, not a choice of fora."
Id. at 909. Acknowledging that the Supreme Court had held that the clause
applied to "remedies in equity," ibid. (quoting Red Cross Line v.
Atlantic Fruit Co., 264 U.S. 109, 124 (1924)), the Eighth Circuit held
that non-jury in personam judgments were not among those saved.
Id. at 910.
The petition contended that
Supreme Court precedent requires dissolution of a Limitation Act injunction if
there is only a single claimant (see Langnes v. Green, 282 U.S.
531 (1930)) or if all claims asserted against the ship owner do not exceed the
amount of the limitation fund (see Lake Tankers v. Henn, 354 U.S.
147 (1957). The petition also asserted conflicts with Red Cross Line and
with decisions of other circuits finding that remedies to be awarded in non-jury
trials came with the "saving to suitors" clause. See Kreta Shipping S.A.
v. Preussag International Steel Corp., 192 F.3d 41 (2d Cir. 1999);
Linton v. Great Lakes Dredge & Dock Co., 964 F.2d 1480 (5th Cir.
1992). This case is of obvious
importance to ship owners who prefer to have as many maritime disputes as
possible resolved by federal admiralty courts rather than by state-court
* * * * *
The Supreme Court also
invited the Solicitor General to express the views of the United States in
Cement Masons Health & Welfare Trust Fund v. Stone, No.
99-1403. That case presents several questions regarding the ability of a
fiduciary for a welfare benefit plan covered by the Employee Retirement Income
Security Act (ERISA) to sue under that Act for reimbursement of medical expenses
paid by the plan but later recovered by the beneficiary in a settlement with a
third party. Opinion below: 197 F.3d 1003 (9th Cir. 1999).
Finally, on May 22, 2000,
Mayer, Brown & Platt prevailed by a unanimous vote of the Supreme Court in a
pro bono criminal case, Jones v. United States, No. 99-5739.
Mindful of the limits of congressional power under the Commerce Clause, the
Court held that the federal arson act, which makes a federal crime of any arson
of property that is "used in any activity affecting interstate * * * commerce,"
18 U.S.C. § 844(i), does not apply to the arson of a private residence that is
not actively employed for a commercial purpose. Donald Falk, a partner in our
Washington office, argued the case, and was assisted on the briefs by Sharon
This Mayer, Brown, Rowe & Maw Supreme Court Docket Report provides information and
comments on legal issues and developments of interest to our clients and
friends. The foregoing is not a comprehensive treatment of the subject matter
covered and is not intended to provide legal advice. Readers should seek
specific legal advice before taking any action with respect to the matters