June 16, 2014
Today, the Supreme Court granted certiorari in two cases of interest to the business community:
Administrative Procedures Act—Notice-And-Comment Requirements for Revisions to Agency Interpretations of Federal Regulations
Today, the Supreme Court granted certiorari to decide whether an agency is required to follow notice-and-comment rulemaking procedures when revising interpretive regulations that resulted from notice and comment.
Section 553(b) of the Administrative Procedure Act (“APA”) generally requires an agency to employ notice-and-comment rulemaking procedures when issuing any regulations within their authority, unless the regulations consist of “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice.” Under D.C. Circuit precedent, however, even if an agency’s initial rulemaking is exempt from notice-and-comment requirements, if the agency nevertheless employs notice-and-comment rulemaking and issues a “definitive” interpretation, any amendments to that interpretation must follow notice-and-comment procedures.
In this case, the U.S. Department of Labor issued a formal opinion in 2006 that mortgage loan officers were exempt from the overtime wage requirements set forth in the Fair Labor Standards Act (“FLSA”) and its implementing regulations. In 2010, the Department of Labor issued an informal “Administrator’s Interpretation” withdrawing the 2006 opinion letter and concluding that mortgage loan officers were entitled to overtime wages under FLSA regulations.
Reaffirming its precedent, the D.C. Circuit invalidated the Administrator’s Interpretation, because the 2006 opinion had resulted from notice-and-comment proceedings but the 2010 reversal had not. The D.C. Circuit’s approach to the APA has been adopted by the Fifth Circuit, which also requires federal agencies to conduct notice-and-comment proceedings revising “definitive” interpretations of their regulations. However, the rule conflicts—to varying degrees—with decisions of the First, Second, Fourth, Sixth, Seventh, and Ninth Circuits, which do not require notice and comment to amend interpretive rules that were the product of notice-and-comment rulemaking.
Today’s grant in two consolidated cases—Perez v. Mortgage Bankers Association, No. 13-1041, and Nickols v. Mortgage Bankers Association, No. 13-1052—will resolve the division of authority. The Supreme Court’s decision should be of great interest to federally regulated industries because it likely will clarify the extent to which the APA’s notice-and-comment requirements apply to attempts by agencies to revise existing interpretive rules. In addition, the decision could have broader implications for the level of deference that is afforded to such interpretations in court proceedings. And because the Court’s decision could determine the validity of interpretive rulemaking issued by agencies under numerous federal laws and regulations, this case should be of high interest to federally regulated businesses.
Absent extensions, which are likely, amicus briefs in support of the petitioners will be due on August 7, 2014, and amicus briefs in support of the respondent will be due on September 9, 2014. Any questions about the case should be directed to Brian Netter (+1 202 263 3339) in our Washington DC office.
Today and in recent weeks, the Supreme Court has also invited the Solicitor General to file briefs expressing the views of the United States in six cases of interest to the business community:
OBB Personenverkehr AG v. Sachs, No. 13-1067: The questions presented are (1) whether, for purposes of determining when an entity is an “agent” of a “foreign state” under the first clause of the commercial-activity exception of the Foreign Sovereign Immunities Act, 28 U.S.C. § 1605(a)(2), the express definition of “agency” in the FSIA, the factors set forth in First National City Bank v. Banco Para el Comercio Exterior de Cuba, or common law principles of agency, control; and (2) whether, under that same clause, a tort claim for personal injuries suffered in connection with travel outside the United States is “based upon” the allegedly tortious conduct occurring outside the United States or instead on the preceding sale of the ticket in the United States for the travel entirely outside the United States.
Commil USA, LLC v. Cisco Systems, Inc., No. 13-896, and Cisco Systems, Inc. v. Commil USA, LLC, No. 13-1044: The questions presented in No. 13-896 are (1) whether the Federal Circuit erred in holding that a defendant’s belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b); and (2) whether the Federal Circuit erred in holding that Global-Tech Appliances, Inc. v. SEB S.A. required retrial on the issue of intent under that statutory provision where the jury (A) found the defendant had actual knowledge of the patent and (B) was instructed that “[i]nducing third-party infringement cannot occur unintentionally.” The question presented in No. 13-1044 is whether, and in what circumstances, the Seventh Amendment permits a court to order a partial retrial of induced patent infringement without also retrying the related question of patent invalidity.
Kimble v. Marvel Enterprises, Inc., No. 13-720: The question presented is whether the Court should overrule Brulotte v. Thys Co., which held that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se.”
Kellogg Brown & Root Services, Inc. v. Harris, No. 13-817, and KBR, Inc. v. Metzgar, No. 13-1241: Both cases present the questions (1) whether the political-question doctrine bars state-law tort claims against a battlefield-support contractor operating in an active war zone when adjudication of those claims would necessarily require examining sensitive military judgments, and (2) whether the Federal Tort Claims Act’s “combatant-activities exception,” 28 U.S.C. § 2680(j), preempts state-law tort claims against a battlefield-support contractor that arise out of the U.S. military’s combatant activities in a theater of combat. No. 13-1241 presents the additional question (3) whether the doctrine of derivative sovereign immunity bars state-law tort claims against a private contractor performing delegated public functions where the government would be immune from suit if it performed the same functions.
Mayer Brown's Supreme Court & Appellate practice ordinarily distributes a Docket Report when the Supreme Court grants certiorari in a case of interest to the business community and a Docket Report-Decision Alert when the Court decides such a case. We hope that you find the Docket Reports and Decision Alerts useful. We welcome feedback on them, which should be addressed to the general editors, Richard B. Katskee (at email@example.com or +1 202 263 3222) and Brian D. Netter (at firstname.lastname@example.org or +1 202 263 3339).
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