Narrowing Federal Jurisdictional Rules in Lightfoot

Last Wednesday, the Court issued an opinion in Lightfoot v. Cendant Mortgage Corp.—a case about federal jurisdiction that serves as a useful illustration of a distinctive way of using and modifying precedent: narrowingLightfoot is also interesting in raising the possibility that narrowing jurisdictional precedents might be a special undertaking that ought to be governed by distinctive principles.

By way of background, the main issue in Lightfoot was how to interpret an earlier case, American National Red Cross v. S. G. At the start of its analysis, Red Cross framed its inquiry in this way:

[W]e have had several occasions to consider whether the “sue and be sued” provision of a particular federal corporate charter conferred original federal jurisdiction over cases to which that corporation was a party, and our readings of those provisions not only represented our best efforts at divining congressional intent retrospectively, but have also placed Congress on prospective notice of the language necessary and sufficient to confer jurisdiction. (italics added).

The key words here are “and sufficient.” The Court appears to be saying that its cases have determined what statutory words suffice to create federal jurisdiction. Indeed, the Court seems proud that its cases have achieved this task so well as to have “placed Congress on prospective notice.”

After its fairly lengthy discussion of the relevant cases, the Court distilled the following “rule”:

These cases support the rule that a congressional charter’s “sue and be sued” provision may be read to confer federal court jurisdiction if, but only if, it specifically mentions the federal courts.

There is some ambiguity here. The Court’s “if, but only if” language makes it sound like the Court is delivering a paradigmatic necessary and sufficient condition. But the “rule” actually says that the condition identified—“specifically mention[ing] the federal courts”—means only that the provision “may be read to confer federal jurisdiction.” Does this use of “may” suggest that, where the “rule” applies, there is only the possibility of jurisdiction? It’s hard to say, particularly because one natural reading of “may”—as conferring case-by-case judicial discretion to find jurisdiction—would be doctrinally anomalous.

So, viewed in isolation, the rule is ambiguous. But when paired with the Court’s opening statement about “necessary and sufficient” conditions, it seems like the Court meant to establish not just a jurisdictional ceiling, but also a floor. A number of lower courts so read the Court’s opinion, effectively relying on what seems like the “best” reading of the Court’s precedent.

Yesterday, however, the Court unanimously arrived at a different conclusion in Lightfoot. There, the Court faced a statutory provision that referenced the federal courts and so triggered the Red Cross “rule.” But the provision at issue also had new language referencing courts “of competent jurisdiction.” Did the new statutory language make a difference?

The Court said yes, largely based on the normal meaning of “of competent jurisdiction.” But, what about the Red Cross “rule”? The Court interpreted Red Cross as identifying only a necessary condition on jurisdiction, without grappling with the “and sufficient” language from Red Cross. Instead, the Court seemed eager to set the old “rule” aside, asserting that “this sue-and-be-sued clause is not ‘in all relevant respects identical’” to the one in Red Cross.

It’s worth noting that some members of the Court might have had deeper reasons for wanting to narrow Red Cross, even apart from their understanding of the phrase “of competent jurisdiction.” In Red Cross itself, Justice Scalia filed a fairly powerful dissent arguing that the Court had adopted a “‘magic words’ approach” that defied both precedent and normal language. Moreover, a broad approach to “sue and be sue” clauses might push against the limits of Article III jurisdiction, implicating debates about “protective jurisdiction” that go back at least to Chief Justice Marshall’s controversial opinion in Osborn v. Bank of United States (1824), which is among the precedents bandied about in both Red Cross and Lightfoot. Justices who were sensitive these concerns might have wanted a way to bring Red Cross closer in line with first principles. And narrowing can do that trick.

I think that the outcome in Lightfoot is entirely defensible. But it would have been better for the Court to be more candid about the interpretive choices it was making when construing its own case law. The many lower courts and litigants hanging on the Court’s every word would appreciate it if there were some guidance as to when the Court will or won’t narrow its jurisprudence.

For example, Lightfoot raises the question of whether there ought to be special principles at play when narrowing jurisdictional precedents. On the one hand, subject matter jurisdiction goes to the judiciary’s power, so perhaps precedents establishing that power should generally be narrowly construed. On the other hand, there are unusually large reliance costs when the Court declines to follow the best reading of its jurisdictional cases, since courts and litigants might rely on the best reading when investing time and resources in litigation. So perhaps the Court should strive to stand by the best readings of any precepts that it self-consciously announces as jurisdictional “rules.”

One last note: the Court blamed the lower courts’ broad reading of the Red Cross rule on the Red Cross dissent, written by Justice Scalia. That argument resembles Judge Friendly’s famous warning about the dangers of following broad readings of precedent advanced in Cassandra-like dissents. But it also calls to mind other important examples of dissents, including by Scalia, putting grand glosses on Supreme Court majorities. More on that in a later post.

First posted on Prawfs.


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Filed under Judicial Rhetoric, Jurisdiction, Supreme Court

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