Greetings Court fans!
Three decisions today. Well, really, two decisions and one “resolution”: the Court issued decisions in United States v. Bean and Howsam v. Dean Witter Reynolds, Inc., and “digged” (dismissed as improvidently granted) Abdur’Rahman v. Bell. With these decisions, the Court has only four decisions left from its October sitting.
In Howsam (01-800), Justice Breyer, writing for all but Thomas and O’Connor, held that an arbitrator — as opposed to a court — must decide whether a claim is time-barred under the National Association of Securities Dealers (NASD) Code of Arbitration. (Thomas wrote a separate concurrence, and O’Connor did not participate in this case for some reason.) Howsam was displeased with investment advice provided by Dean Witter, and so invoked the arbitration clause in their agreement, choosing to arbitrate before the NASD. The NASD arbitration code contains a provision stating that no dispute “shall be eligible for submission . . . where six (6) years have elapsed from the occurrence or event giving rise to the dispute.” For some reason, Dean Witter didn’t want to arbitrate, so it filed suit seeking a declaration that the dispute was ineligible for arbitration based on the NASD time limitation rule. The district court held that this question was for the arbitrator, but the 10th Circuit reversed. Amazingly enough, there was a circuit split on this precise question: whether a court or arbitrator should interpret and apply the NASD time limit rule.
The Court began by noting the general rule: The question whether the parties have submitted a particular dispute to arbitration (i.e., the question of arbitrability) is to be resolved by a court, unless the parties provide otherwise. Thus the question in this case was whether the time limit rule was a “question of arbitrability.” Although all “gateway” questions (Breyer’s word–and one he uses 8 times in a 4-page stretch) might fall into the category of “questions of arbitrability” because they determine whether the dispute will proceed to arbitration on the merits, Breyer noted that the Court had not interpreted “questions of arbitrability” that broadly. Only when the question is one that the parties would have expected a court to decide does the question fall into the question-of-arbitrability category and thus require judicial resolution. When the question is something that the parties would likely have expected an arbitrator to decide, it is not a question of arbitrability and thus can be decided by an arbitrator. Perhaps out of sympathy for those of us who find this categorization unenlightening, the Court provided some examples: “Questions of arbitrability” include questions on whether parties are bound by a given arbitration clause and whether an arbitration clause applies to a particular controversy. By contrast, “procedural” questions that grow out of the dispute (conditions precedent to arbitration, waiver, delay, notice, etc.), are not “questions of arbitrability” and are presumptively for the arbitrator. The Court also quoted the Revised Uniform Arbitration Act, which describes the divide as one between issues of substantive and procedural arbitrability. According to the RUAA, questions of substantive arbitrability are for the court while questions of procedural arbitrability are for the arbitrator. Under this standard, the NASD’s time limit rule is not a question of arbitrability and thus is presumptively for the arbitrator. The Court concluded its analysis by noting that NASD arbitrators are likely to be experts on their own rule, and thus it is reasonable to assume that the parties would have expected the decisionmaker with comparative expertise to resolve the dispute.
Finally, the Court rejected Dean Witter’s argument that the time limit rule’s use of the word “eligible” — language that was effectively incorporated into the parties’ agreement — reflected an intent to have a court decide the applicability of that rule. According to the Court, any inference from use of the word “eligible” was offset by a different NASD rule (also incorporated into the agreement) that states that arbitrators are empowered to interpret and apply all provisions under the NASD rules.
Thomas concurred in the judgment. He would have resolved the case by noting (1) that the parties had agreed to apply New York law to any disputes and (2) that New York law requires arbitrators to apply the NASD time limit rule. Simple enough.
Next, in Bean (01-704) the Court (Thomas for all 9) held that 18 USC 925(c) does not allow for judicial review of an ATF decision declining to review a felon’s petition to lift restrictions on the felon’s ability to possess firearms. Before you stop reading, consider reading the case for a lesson in citation economy. The Court disposed of the question before it solely on the basis of the statutory language; it did not cite a single case (outside of the description of the procedural history), even for classic standby propositions like “we begin our analysis with the plain language of the statute…”. (The opinion doesn’t even include any of those classic statutory interpretation propositions, so while it provides an example of statutory interpretation, it won’t provide juicy cites for a brief.)
For those of you still reading: Bean is a felon, and that means he cannot possess, distribute or receive firearms. 18 USC 922(g)(1). Under 18 USC 925(c), the ATF (as delegate of the Secretary of the Treasury) can grant relief from these “firearms disabilities” if certain conditions are met. If the ATF denies the application for relief, the disappointed felon can seek judicial review in federal district court. So far so good, but since 1992, Congress has expressly barred the ATF from using any funds to rule on 925(c) petitions. Thus, when Bean petitioned ATF to lift his firearms disabilities, ATF returned the application explaining that it could not review it. Bean filed suit in federal district court, claiming that the ATF’s decision amounted to a denial of relief, and asking the court to make its own determination on his fitness to possess firearms. The district court obliged, ruling that Bean was relieved from his firearms disabilities, and the Fifth Circuit affirmed.
The Court disagreed. Inaction by the ATF does not amount to “denial” of the application. The statute’s text, and the procedure it lays out, make clear that the only decisions subject to judicial review are those by the ATF actually ruling on the substantive merits of an application. First, on the text: Section 925(c) permits review of applications “denied by the Secretary” but this language refers to the ATF’s decision on whether the applicant meets the conditions for relief. A decision on whether the applicant meets the conditions for relief cannot be construed as anything other than a decision denying the application. Moreover, the procedure outlined in 925(c), which gives broad discretion to ATF to grant or deny relief even when the statutory prerequisites are satisfied, demonstrates that judicial review is inappropriate without a dispositive decision by the agency. First, any review would be under the Administrative Procedure Act, which limits review to determining whether agency decisions are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” This test contemplates the review of some action by another entity, not a decision by the court in the first instance. Second, the standards for granting relief under 925(c) — whether the applicant is likely to be dangerous to public safety and whether relief is in the public interest — are standards best applied by the Executive branch. Finally, while the statute provides for the admission of some evidence in a court review proceeding, it also makes clear that the admission of new evidence is only to be done in exceptional circumstances, thus confirming that the ATF was to be the primary decisionmaker. In sum, in the absence of an “actual denial” of a 925(c) application by the ATF, 925(c) does not allow for judicial review.
In the final “resolution” today, the Court dismissed one case as “improvidently granted,” apparently finding jurisdictional problems that prevented its resolution of the questions presented. Abdur’Rahman (01-9094). (Indeed, two weeks before argument, the Court ordered the parties to brief 2 jurisdictional questions.) This is the second time this Term that the Court has “digged” a case. Not a good record for last year’s clerks. In this case, however, Stevens registered his disagreement with the Court’s resolution, penning an 11-page dissent. Here are the highlights: Federal law places severe restrictions on the filing of “second or successive” habeas petitions by state prisoners. In this case, after the denial of petitioner’s first habeas petition, he filed a Rule 60(b) motion, asking the court to set aside its denial on the basis of intervening law which demonstrated (in Stevens’ words) that the ruling “erroneous.” The lower courts effectively denied relief on this motion. This is where the jurisdictional questions arise. Trust me on this: the resolution of the questions in the Supreme Court turns on whether Petitioner’s motion was a Rule 60(b) motion or was actually an application to file a second habeas petition. Stevens would conclude that the motion was a 60(b) motion because petitioner was contesting the integrity of the earlier habeas proceeding, not challenging the constitutionality of his state conviction. Therefore, Stevens would remand the case and direct the district court to rule on the merits of the 60(b) motion.
That’s all for tonight. Thanks for reading.
Sandy
From the Appellate Practice Group at Wiggin & Dana.
For more information, contact Mark Kravitz or Sandy Glover
at 203-498-4400, or visit our website at www.wiggin.com.