Supreme Court Update: Espinoza v. Montana Department of Revenue; U.S. Patent and Trademark Office v. Booking.com; Nestlé USA v. Doe I; Cargill v. Doe I; Department of Justice v. House Committee on the Judiciary
Greetings, Court Fans!
No new decisions today, but there’s still plenty to discuss. This morning, the Court granted certiorari in Federal Republic of Germany v. Philipp (No. 19-351), a petition brought by our own Jonathan Freiman and company, concerning the scope of the Foreign Sovereign Immunities Act. Congrats, Jonathan! That reminded us that it’s been a while since we updated you all on what other cases have been set for argument next term. Read on for a summary of Covid-era cert grants. But first, our summaries of the remaining cases decided this week.
First up, in Espinoza v. Montana Department of Revenue (No. 18-1195), the Court applied the Free Exercise Clause to restore a school-choice program that had been eliminated by the Montana Supreme Court under a provision of the Montana constitution prohibiting government aid to schools “controlled in whole or in part by any church, sect, or denomination.” In an opinion written by Chief Justice Roberts, the Supreme Court held that this no-aid provision, as applied by the Montana Supreme Court, violates the Free Exercise Clause by restricting schools’ access to public benefits based on their religious character.
Montana established a program that grants tax credits to anyone who donates to organizations that award scholarships for private-school tuition. In order to comply with the state constitution’s no-aid provision, the Montana Department of Revenue promulgated “Rule 1,” which prohibited families from using these scholarships at religious schools. Three mothers who were unable to use scholarship funds for tuition at a Christian school sued the Department of Revenue in state court, alleging that Rule 1 discriminated on the basis of religion. The trial court enjoined Rule 1, but the Montana Supreme Court reversed, holding that the entire program violated the state constitution’s no-aid provision. That violation, the Montana court held, required invalidating the entire program.
The U.S. Supreme Court reversed, holding that the application of the state no-aid provision discriminated against religious schools and families wishing to attend them in violation of the Free Exercise Clause of the federal constitution. Writing for a 5-4 majority, the Chief explained this result under the Court’s existing precedents. The basic issue with the Montana no-aid provision was that it required a private school to “divorce itself from any religious control or affiliation” before participating in the school choice program. The Chief Justice analogized this to the exclusion of a church from a playground-resurfacing grant program in Trinity Lutheran Church of Columbia, Inc. v. Comer (2017). In both cases, “otherwise eligible recipients from a public benefit” were denied access “solely because of their religious character.” This sort of exclusion—based on an organization’s religious status—was distinguishable, in the Chief’s view, from funding exclusions on the basis of religious conduct, which have been upheld under the Establishment Clause. In Locke v. Davey (2004), the Court upheld the latter type of restriction: a state higher education scholarship that barred recipients from using funds to pursue a career in ministry. Unlike this limit on pursuing an “essentially religious endeavor,” the Montana no-aid clause barred all aid to a religious school “simply because of what it is.” Moreover, unlike the legitimate establishment concerns limiting public funding for ecclesiastical training in Locke, the Montana no-aid provision emerged from an unsavory history of anti-Catholic discrimination.
Because Montana’s no-aid clause facially discriminated against religious schools, the application of that policy to the school-choice program had to be narrowly tailored to advance “interests of the highest order.” But Montana could not survive such strict scrutiny because the state lacked a compelling interest. The Court had already found its establishment concern historically insubstantial, and its claim that excluding religious schools promoted religious liberty or advanced public education fared no better. The Court therefore reversed the Montana Supreme Court, reinstating the tuition-assistance program for religious and secular private schools.
Although he didn’t expressly say so, it is likely that the Chief’s opinion for the Court spells the end of other state no-aid clauses. The Court did not reach the question whether states can restrict direct funding of religious education (as opposed to reimbursement of tuition costs). But the Chief nevertheless suggested in dicta that those limits, too, might be subject to strict scrutiny. Accordingly, future litigation in the lower courts will likely center on (1) whether the exclusion is triggered by religious status or conduct; (2) if triggered by conduct, how “essentially religious” the forbidden activity is; and (3) if the activity is “essentially religious,” whether the exclusion is rooted in anti-religious prejudice or “historic and substantial” establishment concerns.
The majority opinion was joined in full by Justices Thomas, Alito, Gorsuch and Kavanaugh, but nevertheless garnered three separate concurrences. Justice Thomas, joined by Justice Gorsuch, reiterated his view that the Establishment Clause bars only the “coercion of religious orthodoxy and of financial support by force of law and threat of penalty.” On Thomas’s account, the Establishment Clause leaves states free to favor religion in non-coercive ways. Necessarily then, states lack any “antiestablishment interests” that would justify limits on individual free-exercise rights. Justice Alito penned a separate concurrence emphasizing the anti-Catholic origins of Montana’s no-aid clause and other similar “mini Blaine Amendments” that were adopted after Congress (barely) failed to adopt an amendment to the Constitution prohibiting state aid to “sectarian” schools. Finally, Justice Gorsuch challenged the distinction between status-based and conduct-based discrimination. In his view, the Free Exercise Clause “protects not just the right to be a religious person, holding beliefs inwardly and secretly; it also protects the right to act on those beliefs outwardly and publicly.” Therefore, regardless of whether an exclusion discriminates based on religious identity or religious conduct, Gorsuch would conclude that it violates the Free Exercise Clause.
The dissenters also had a lot to say, in three separate opinions. Justice Ginsburg, joined by Justice Kagan, found no free exercise violation in the Montana Supreme Court’s invalidation of the tuition assistance program. As the program no longer existed, it provided subsidies to neither secular nor religious schools. Thus, the state was not treating religious schools any differently than secular private schools. Without disparate treatment or any substantial burden on religion, the free exercise claim was a non-starter.
Justice Breyer, also joined by Justice Kagan, was unpersuaded that this was a “status” case about religious identity (i.e., being a parochial school) rather than a “conduct” case about religious activity (i.e., religious instruction). In his view, providing religious education was no less an “essentially religious” an endeavor than the ecclesiastical training that had been at issue in Locke. Indeed, the historical record offered robust support for Montana’s establishment concerns with funding religious schools. Thus, he argued the outcome here should follow Locke, not Trinity Lutheran. In a portion of his dissent that Justice Kagan did not join, Justice Breyer went on to criticize the Court’s “doctrinal innovations,” including replacing a “flexible, context-specific approach” with across-the-board strict scrutiny and employing such heightened scrutiny “whenever a government benefit is at issue.”
Justice Sotomayor dissented on the broadest grounds. Like Justice Ginsburg, she noted that the tax benefits at issue “no longer exist for anyone in the State,” since the Montana Supreme Court ended the school choice program on state-law grounds. Thus, Article III precluded “resolving” the facial validity of the no-aid clause, “a constitutional question not presented.” But she also objected substantively to compelling inclusion for religious schools in public benefits programs. In her view, this was a departure from precedent and history that ultimately “weakens this country’s longstanding commitment to a separation of church and state beneficial to both.”
Our second decision of the day is U.S. Patent and Trademark Office v. Booking.com (No. 19-46). At issue in the case was whether Booking.com’s name (i.e., “Booking.com”) could be protected by a federally registered trademark. The U.S. Patent and Trademark Office—the federal agency responsible for registering trademarks—concluded that it could not, reasoning that combining a generic term like “booking” with a domain name like “.com” remained simply a generic term, one ineligible for trademark protection. But eight members of the Court disagreed with the PTO’s nearly per se rule, holding instead that Booking.com could merit trademark protection if Booking.com showed that its combined name was had earned a significance in the mind of consumers beyond the sum of its parts.
We’ll begin with some background on trademark law. One of the (many) things the federal Lanham Act does is create a system for federal trademark registration, overseen by the PTO. While trademarks may merit protection even if not registered, owners of registered trademarks enjoy special benefits, such as the presumption that the mark is valid. But to obtain registration, a mark must meet certain requirements including “distinctiveness.” While some types of marks are deemed “inherently” distinctive, so-called descriptive marks (to draw an example from a famous case, the name ”Park ‘n Fly” for an airport parking lot) can only receive trademark protection if, in the minds of the public, the mark has come to identify the applicant’s goods or services, something referred to as “secondary meaning.” Another category of marks, “generic” marks, are simply the generic name for a good or service (“Wine,” to take an example also with some pedigree in the caselaw). Generic marks are not entitled to trademark protection at all and cannot be federally registered.
The company Booking.com provides online hotel reservations and similar services through its website. (Guess what it is.) It filed an application with the PTO to register various trademarks, each of which combined visual features with the term “Booking.com.” But it faced a problem: “booking” is indisputably a generic mark for the services Booking.com offered. And “.com” is simply the domain name for a commercial website. The PTO thus rejected Booking.com’s trademark application, reasoning that simply adding a commercial domain name to a generic mark didn’t transform it into anything more than a generic mark. Booking.com challenged the rejection of its application in federal court, where it presented evidence that in the minds of consumers “Booking.com” was descriptive, rather than generic, and further that the term had acquired secondary meaning. The district court thus concluded that its mark met the distinctiveness requirement for registration. The PTO appealed, but the Fourth Circuit affirmed. The Court granted certiorari.
Justice Ginsburg, writing for a majority of eight, affirmed (perhaps unsurprisingly, as she is generally seen as the foremost supporter of broad IP rights among the current members of the Court). She began with some relevant principles for distinctiveness on which all parties agreed. Most important: When considering a compound term, the distinctiveness inquiry turns on the term as a whole rather than its parts. And the relevant meaning of the term is the meaning it has to consumers. This led straight to trouble for the PTO. After all, the district court had already found that in the mind of consumers, Booking.com was descriptive, rather than generic, and that it had acquired secondary meaning. How could the PTO overcome these factual findings on appeal?
By arguing they don’t matter. The PTO urged the “nearly per se rule” that the combination of a generic term with a generic top-level domain was necessarily generic, regardless of how consumers perceived it. While the PTO claimed this rule was supported by precedent, the majority thought this precedent only stood for the rule that whether a term is generic depends on its meaning to consumers, and in the cases cited by the PTO, the courts were simply holding that the combination of generic terms had not in fact produced a name with greater distinctiveness. The PTO also argued for this rule based on policy, contending that allowing companies to trademark “generic.com” would exclude or inhibit competitors. But the Court quickly brushed that aside too, reasoning that other principles of trademark law, like the likelihood of confusion test (which generally affords less protection to less distinctive names), would protect against these risks.
Justice Breyer, writing only for himself, dissented (again perhaps not surprisingly, as he is perhaps the most skeptical member of the current Court toward broad assertions of IP rights). In his view, the PTO’s reading of both precedent and policy had merit. Starting with precedent, common-law decisions, including decisions from the Supreme Court, had frequently held that adding a designation such as “Company” or “Inc.” to a generic term (e.g., “Wine Inc.”) could not transform the previously generic term into a name potential protected by trademark law. And what was a corporate-level domain name like “.com” if not the internet-era equivalent of a corporate designation? Justice Breyer also criticized the sort of cherry-picked evidence Booking.com had provided, such as consumer surveys, to establish that its name had acquired secondary meaning: Relying on such evidence effectively allows big companies to use well-funded advertising campaigns to “claim” generic terms, terms that trademark law is supposed to keep free for all to use to describe their goods and services. (Justice Sotomayor separately concurred to agree with some of these observations, while noting that they did not matter in this case given the PTO’s specific arguments on appeal.) Justice Breyer would thus endorse the PTO’s argument that absent special circumstances, the combination of a generic term with a domain name would not be eligible for federal trademark protection, regardless of what the evidence showed about its meaning to consumers.
That brings us up to speed on the Court’s decisions (with at least seven more decisions to come next week). Now let’s get up to speed on cert grants for next term.
As mentioned at the outset, the Court this morning granted certiorari in Federal Republic of Germany v. Philipp (No. 19-351), a case in which Wiggin and Dana represents Germany and one of its leading museums, to consider (1) whether the “expropriation exception” of the Foreign Sovereign Immunities Act, which abrogates foreign sovereign immunity when “rights in property taken in violation of international law are in issue,” provides jurisdiction over a claim that Germany violated international human-rights law by allegedly taking property from Jewish citizens within its own borders; and (2) whether the doctrine of international comity is available in cases of considerable historical and political significance to Germany, which already has in place a domestic framework for addressing such claims.
The Court also granted cert in a somewhat similar case, Republic of Hungary v. Simon(No. 18-1447), where it will decide whether a district court properly abstained from exercising jurisdiction under the Foreign Sovereign Immunities Act for reasons of international comity when former Jewish citizens sued Hungary to recover the value of property lost in Hungary during World War II without first exhausting Hungary’s domestic framework for addressing such claims.
Keeping with the international-law theme, in the companion cases Nestlé USA v. Doe I (No. 19-416) and Cargill v. Doe I (No. 19-453), the Court will decide whether the presumption against extraterritorial application of the Alien Tort Statute is displaced by allegations that a U.S. company’s foreign operations aided and abetted child slavery and torture leading to plaintiffs’ injuries; and whether a domestic corporation is subject to liability in a private action under the Alien Tort Statute.
Last, but certainly not least for today, the Court granted cert in Department of Justice v. House Committee on the Judiciary (No. 19-1328), where it will decide whether the impeachment trial back in January constitutes a “judicial proceeding” under the Federal Rules of Criminal Procedure, such that a court can authorize disclosure of grand-jury materials—in particular, unredacted versions of the Mueller Report and its underlying grand-jury transcripts and other materials.
But as we mentioned, the grants today prompted us to recognize that we’ve been a bit behind on updating you on the cert grants within the past few months, all of which are due to be argued next term. Working in reverse chronological order, the Court will be hearing the following cases when it convenes for OT2020:
In Niz-Chavez v. Barr (No. 19-863), the Court will decide whether, to serve notice in accordance with 8 U.S.C. § 1229(a) and trigger the stop-time rule ending an alien’s continuous physical presence in the United States, the government must serve a specific document that includes all the information identified in Section 1229(a), or whether the government can serve that information serially through a notice to appear followed by a notice of hearing.
Henry Schein Inc. v. Archer and White Sales Inc. (No. 19-963) asks whether a provision in an arbitration agreement that exempts certain claims from arbitration negates an otherwise clear and unmistakable delegation of questions of arbitrability to an arbitrator.
Albence v. Chavez (No. 19-897) presents the question whether the detention of an alien who is subject to a reinstated removal order and who is pursuing withholding or deferral of removal is governed by 8 U.S.C. § 1231, which authorizes detention "pending a decision on whether the alien is to be removed," or instead by 8 U.S.C. § 1226, which makes that detention mandatory during a 90-day "removal period."
Edwards v. Vannoy (No. 19-5807) asks theCourt to spell out the implications of its recent decision in Ramos v. Louisiana (2020) by determining whether the jury unanimity requirement applies retroactively to cases on federal collateral review.
CIC Services, LLC v. Internal Revenue Service (No. 19-930) asks whether the Anti-Injunction Act’s bar on lawsuits to restrain tax collection precludes challenges to a regulatory mandate issued by the IRS which penalizes the failure to report a class of financial transactions.
In Van Buren v. United States (No. 19-783), the Court will consider whether a person who is authorized to access information on a computer for certain purposes but instead accesses that information for an improper purpose violates Section 1030(a)(2) of the Computer Fraud and Abuse Act, which forbids accessing information which one is “not entitled so to obtain.”
California v. Texas (No. 19-840) and Texas v. California (No. 19-1019) mark the return of Obamacare to the Court. These two companion cases ask whether the individual and state plaintiffs challenging the Affordable Care Act’s minimum coverage provision have established standing; whether Congress’s zeroing out the penalty for noncoverage t eliminated the ACA’s tax status and thus rendered it unconstitutional; and whether (if the answers to the first two questions are yes) the minimum-coverage provision is severable from the rest of the ACA.
Borden v. U.S. (No. 19-5410) which asks whether the “use of force” clause in the Armed Career Criminal Act encompasses reckless aggravated assault, a crime with a mens rea requirement of recklessness rather than purposeful intent.
U.S. Fish and Wildlife Service v. Sierra Club (No. 19-547) addresses the scope of the deliberative process privilege, as incorporated into the Freedom of Information Act, in protecting a federal agency against compelled disclosure of deliberative documents related to a proposed agency action that was later modified as part of a formal interagency consultation process.
Jones v. Mississippi (No. 18-1259) asks whether the Eighth Amendment requires finding that a juvenile is permanently incorrigible before imposing a sentence of life without parole.
Brownback v. King (No. 19-546) will address whether a court’s dismissal of a Federal Tort Claims Act suit against the United States for lack of subject matter jurisdiction—because no liability would arise under state tort law—bars a subsequent Bivens claim against federal officers arising from the same nucleus of events.
And last but not least, Ford Motor Company v. Montana Eighth Judicial District Court (No. 19-368) and Ford Motor Company v. Bandemer (No. 19-369) are twoclosely watched consolidated cases that ask whether the “arise out of or relate to” requirements for specific personal jurisdiction and due process are met when a car accident occurs in a state where the defendant manufacturer is a nonresident with in-state advertising and business contacts but the vehicle was designed, manufactured, and first sold out-of-state.
Now you can consider yourselves fully up to speed. Have a great Fourth of July Weekend! We’ll be back next week to bring summarize the climactic end of this remarkable term.