Supreme Court Update: Romag Fasteners v. Fossil (No. 18-1233), County of Maui v. Hawaii Wildlife Fund (No. 18-260), Barton v. Barr (No. 18-725)
Greetings, Court Fans!
We’re back with the three lagging decisions from last week. But first, we’ve got three more decisions to pass on, which were handed down today. In New York State Rifle and Pistol Assn. v. City of New York (No. 18-280), the first Second Amendment case to reach the Court in a decade, a per curiam majority concluded that the petitioners’ challenge to a since-repealed New York City rule regarding the transport of firearms is moot, given subsequent legislative changes. Justice Alito penned a lengthy dissent, joined by Justices Gorsuch and (mostly) Thomas. In Maine Community Health Options v. United States (No. 18-1023), the Court held (over another Alito dissent, this time tout seul) that the Government was obligated to pay funds promised to unprofitable insurance companies through Obamacare’s now-expired “Risk Corridor Program,” even though Congress had enacted appropriations riders prohibiting the use of funds for such reimbursements. And in Georgia v. Public.Resource.Org, Inc. (No. 18-1150), the Court held (by an unusual assemblage of Justices) that the annotations to the Official Code of Georgia Annotated cannot be copyrighted. We’ll have more on each of those decisions later in the week.
But now back to last week. Tucked away neatly amidst the week’s thornier decisions was Romag Fasteners v. Fossil (No. 18-1233), a relatively straight-forward 9-0 decision holding that the Lanham Act does not require a plaintiff alleging trademark infringement to show that the defendant willfully infringed the plaintiff’s trademark in order to recover profits. Perhaps this wasn’t headline news last Thursday, but we’re giving it top billing, not least (okay, most) because our appellate colleague Jonathan Freiman was among the appellate counsel who steered Romag, our Connecticut-based client, to victory. Romag makes magnetic snap fasteners for use on leather goods. Fossil designs and distributes a wide range of fashion accessories, including leather handbags. Years ago, the two companies signed an agreement permitting Fossil to use Romag’s fasteners on Fossil’s handbags and other products. However, after a while, Romag discovered that the Chinese factories manufacturing Fossil’s handbags were using counterfeit Romag fasteners, and that Fossil was doing very little to guard against this. Romag sued and requested as part of its damages the profits that Fossil had earned from its trademark violation. The jury agreed that Fossil had acted “in callous disregard” of Romag’s trademark rights. However, the jury rejected Romag’s allegation that Fossil had acted “willfully,” as that term had been defined in the jury instructions. That finding became important, as the District Court concluded (following Second Circuit precedent) that the defendants’ willful infringement is a precondition to a profits award. The Federal Circuit agreed with that interpretation (again following Second Circuit precedent). But the Supreme Court reversed.
Justice Gorsuch made quick work of the statutory question. The relevant provision of the Lanham Act, 15 U.S.C. 1117(a), provides as follows: “When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established . . . , the plaintiff shall be entitled . . . subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages or a willful violation under section 1125(a) of this title, shall have been established.” As Justice Gorsuch observed, “this language spells trouble for Fossil and the circuit precedent on which it relies.” Though the statute does make a showing of willfulness a precondition to a profits award under Section 1125(c), which addresses trademark dilution, Romag had alleged and proved a violation of Section 1125(a), which provides a cause of action for false or misleading use of trademarks. The fact that the statute uses the word “willful” in one section and not the other makes it clear that the requirement was not intended for Section 1125(a).
Justice Gorsuch rejected Fossil’s argument that the willfulness requirement for Section 1125(a) is found in Section 1117(a)’s reference to “the principles of equity.” Fossil had argued that equity courts historically required a showing of willfulness before authorizing a profits remedy in trademark disputes, so willfulness must remain a precondition to a profits award “subject to principles of equity.” But, Gorsuch retorted, Congress would not have intended to incorporate a willfulness requirement obliquely only as to Section 1125(a), when in Section 1125(c) and elsewhere in the Lanham Act, mens rea conditions are spelled out explicitly. Moreover, it’s far from clear that trademark law historically required a showing of willfulness before allowing a profits remedy. Though an element called willfulness was often required, the concept was defined differently in different case, sometimes including recklessness, sometimes not. While Justice Gorsuch recognized the policy argument against permitting plaintiffs to recover profits without a showing of willfulness, and agreed that “a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate,” he insisted that it was not the Court’s place to weight those considerations absent statutory instruction.
Gorsuch’s opinion was essentially for 8. Justices Alito, Breyer, and Kagan concurred with a brief paragraph reiterating that willfulness, though not required as a prerequisite to a profits award under Section 1117(a), “is a highly important consideration.” Justice Sotomayor went even further on that same point. She concurred in the judgment only and wrote separately to stress her view that, while willfulness may not be a categorical requirement for a profits award, profits should not be available in cases of “innocent infringement.” She felt the majority’s opinion was too “agnostic” on that point, and therefore refused to join it.
Next up is County of Maui v. Hawaii Wildlife Fund (No. 18-260), a case addressing the scope of the Clean Water Act. The Act forbids the addition of pollution from a “point source” to any “navigable waters” without a proper permit from the EPA. But what if a point source discharges pollutants into the ground, which then flow via groundwater into navigable waters? Must the discharger obtain an EPA permit? Six members of the Court (the Court’s four liberals plus the Chief and Justice Kavanaugh) concluded that they must, so long as the addition of pollutants through groundwater is the “functional equivalent” of a direct discharge.
The County of Maui operates a wastewater reclamation facility on the island. It collects sewage, treats it, and then pumps it through wells hundreds of feet underground. The approximately four million gallons of water discharged every day in this manner then travels through the groundwater into the Pacific Ocean. In 2012, several environmental groups sued the County, arguing that it was discharging pollutants into the ocean—a “navigable water” if there ever was one—without a valid EPA permit. The district court and the Ninth Circuit agreed with the groups, holding essentially that since the eventual flow of pollutants into the ocean was “fairly traceable” to the County’s discharges, it was covered by the Act’s permitting requirements.
The operative provision of the Clean Water Act, Section 301, prohibits the “discharge of any pollutant” without an appropriate permit. The Act’s definitions set the boundaries on this general prohibition: “Discharge of a pollutant” means the “addition of any pollutant to navigable waters fromany point source.” A “point source” is any “discernable, confined and discrete conveyance from which pollutants are or may be discharged” and includes things like pipes, wells, and ditches. Last of all, “pollutant” is broadly defined to include solid waste, residue, heat, discarded equipment, sand, and just about everything else that doesn’t belong. Taking this all together, the basic question was whether the County’s discharge of pollutants into the groundwater, from which they then flow into the Pacific, counts as the discharge of a pollutant into the ocean “from” a point source? Adopting the view of the Ninth Circuit, the environmental groups argued that it did: the permitting requirement should apply whenever the ultimate discharge into a navigable waterway is fairly traceable to a point source, even if the pollutant had to travel through many intermediate sources to get there. Maui, supported by the U.S. as amicus, disagreed, proposing the bright-line rule that pollution is only “from” a point source if the point source is the means of delivering the pollution directly into navigable waters.
Like Goldilocks (or perhaps King Solomon), Justice Breyer, writing for a majority of six, rejected both positions. He began with the Ninth Circuit’s broad “fairly traceable” test. The problem is that all groundwater eventually makes its way to some navigable waterway, and using modern science, it would nearly always be possible to trace any pollution back to some groundwater discharge. That would subject essentially everything to the EPA’s permitting authority, a result at odds with Congress’s stated goal of leaving significant authority for regulating water pollution to the states. Citing sources rarely relied on in recent Supreme Court majority opinions, Justice Breyer also found support in the Clean Water Act’s legislative history for rejecting this broad interpretation of EPA authority.
But the majority then turned to Maui’s and the U.S.’s proposed rule. Reasoning in a Breyer-like, purposive manner—again something rarely seen in recent majority opinions—Justice Breyer concluded that allowing polluters to escape EPA permitting authority simply because there was some amount of groundwater flow between the point source and the ultimate navigable waterway into which the pollution flowed would create a “large and obvious loophole” that Congress could not have intended. On this interpretation, all a polluter must do to evade EPA oversight entirely is move back their pipes a few feet and discharge pollutants into a ditch, from which they immediately flowed into a river, lake, or ocean. That approach would simply make the Act irrelevant.
Instead, Justice Breyer picked a middle course. He concluded that a permit is required not only when there is a direct discharge of pollutants into navigable waters from a point source but also when there is something “functionally equivalent” to such a direct discharge. What, you may ask, does “functionally equivalent” mean? Well, that will depend on the facts, facts such as the time and distance between the point source and its passage into navigable waters, the nature of the materials it travels through on its journey, the extent the pollutant is diluted or chemically changed in transit, and the ultimate amount of pollution entering covered waterways. Because the Ninth Circuit had not applied this newly created test, the Court vacated the lower courts’ decision and remanded for it to do so.
The remaining three dissented. (Justice Kavanaugh briefly concurred to argue that the majority’s rule was consistent with how the Act had been interpreted in prior Supreme Court decisions written by the late Justice Scalia.) Justice Thomas, joined by Justice Gorsuch, relied heavily on the statute’s plain text to reject the majority’s “functionally equivalent” to a direct discharge formulation. In their view, the key word was not “from” but “addition”: A discharge of pollution only occurs if there is an “addition” of a pollutant to navigable waters that comes from the point source. If pollutants are dumped in groundwater from which they then flow into the ocean, one would the point source has added pollutants to the groundwater, but one wouldn’t (they contended) naturally say that the point source was adding pollution to the ocean; only the groundwaters were. Thus they agreed with Maui and the U.S. that only discharges directly into navigable waterways are subject to EPA permits.
Justice Alito, writing only for himself, provided a different argument. In his view, “from” must mean either that the pollution could be traced back (through an unlimited number of intermediate stages) to some ultimate source or it must mean “directly from”; there was no possible middle ground. As to the first interpretation, he agreed that Congress did not intend that, since it would subject all groundwater discharges to EPA regulation. So only the second could be right. But Justice Alito differed from the other dissenters in what this “direct discharge” standard means. Responding to the majority’s worry that polluters would just move their pipes back ten feet from the ocean and discharge pollutants to a ditch (from which they immediately flowed into the ocean), Justice Alito pointed out that the ditch too was a point source. Thus if pollution was directly discharged from a point source to another point source, and then was directly discharged from that point source into navigable waters (perhaps with additional direct discharges in between), it would fall within the definitional chain of the statute. While this would largely (or entirely) exempt groundwater pollution from EPA authority, it would close the loophole on which the majority relied.
And finally, in Barton v. Barr (No. 18-725), a 5-4 conservative majority affirmed the deportation of green card holder and longtime U.S. resident Andre Barton based on his criminal record, rejecting Barton’s interpretation of the immigration statutes. The Court held that a record of conviction for certain offenses can bar a noncitizen’s application for “cancellation of removal” even if the offense was not among the grounds originally rendering the noncitizen “removable,” i.e., subject to deportation.
In 2016, the government initiated proceedings to remove Barton from the country because of his state convictions for firearms and drug offenses. Though Barton conceded that those offenses made him “removable,” Barton asked the immigration judge to “cancel” removal in light of his longtime lawful residency in the United States. Under 8 U.S.C. § 1229b(d)(1)(B), however, cancellation of removal is not available to someone who committed “an offense referred to in [8 U.S.C. § 1182(a)(2)] that renders the alien inadmissible to the United States under [8 U.S.C. § 1182(a)(2)] or removable from the United States under [8 U.S.C. § 1227(a)(2) or § 1227(a)(4)].” The immigration judge concluded that Barton’s 1996 conviction for aggravated assault—not the firearms or drug offenses that rendered him removable—made him ineligible for cancellation of removal. The Board of Immigration Appeals and the Eleventh Circuit both upheld the ruling. Barton sought review in the Supreme Court on the theory that his aggravated assault conviction could not render him ineligible for cancellation of removal, because that conviction was not the basis for his being removable in the first place—a statutory interpretation that the Ninth Circuit endorsed in 2018, splitting from the Second, Third, Fifth, and Eleventh Circuits.
The Supreme Court affirmed. Writing for the conservative majority, Justice Kavanaugh analogized § 1229b(d)(1)(B) to a recidivist sentencing statute that makes the sentence for a criminal offense dependent on the defendant’s record of past offenses: “It is entirely ordinary to look beyond the offense of conviction at criminal sentencing, and it is likewise entirely ordinary to look beyond the offense of removal at the cancellation-of-removal stage in immigration cases.” A contrary reading, Justice Kavanaugh explained, would not fit the wording of the statute. If § 1229b(d)(1)(B) were referring only to offenses of removal, you would expect it to refer to “an offense referred to in 8 U.S.C. § 1182(a)(2) or § 1227(a)(2),” since § 1227(a)(2) is ordinarily the basis for removal of lawful permanent residents. But instead it refers only to § 1182(a)(2). The majority also rejected Barton’s argument that the words “renders the alien inadmissible” requires a noncitizen to be adjudicated inadmissible on the basis of a § 1182(a)(2) offense, or at least be subject to such an adjudication. The Court instead interpreted “inadmissibility” as a status that can apply even to someone who, like Barton, has already been lawfully admitted and thus is not currently seeking admission. Finally, Justice Kavanaugh dismissed the concern that the Court’s interpretation made the words “or removable from the United States under [8 U.S.C. § 1227(a)(2)]” redundant (as any offense referred to in § 1182(a)(2) that would render you removable would also, by definition, render you inadmissible): “Sometimes the better overall reading of the statute contains some redundancy.”
Justice Sotomayor led the dissenters. She criticized the majority for ignoring the crucial distinction between inadmissibility and removability that pervades the immigration statutes. For a noncitizen like Barton who is already lawfully admitted to the country, she explained, the operative language in § 1182(a)(2) is the portion dealing with removability. In the dissenters’ view, a lawful resident is ineligible for cancellation of removal under § 1182(a)(2) if the government shows that during their first seven years of residency the resident committed an offense that would render them removable, not merely inadmissible. And since the government conceded that Barton’s 1996 aggravated assault offense would not make him removable, the dissenters would have deemed him eligible for cancellation of removal. The result of the majority’s interpretation, wrote Justice Sotomayor, is that “an immigration judge may not even consider whether Barton is entitled to cancellation of removal—because of an offense that Congress deemed too trivial to allow for Barton’s removal in the first instance.”