Saturday, July 1, 2017

On Conflicts, Certiorari and Marinello (7/1/17)

I posted a blog entry Tuesday on the Supreme Court’s grant of the petition for writ of certiorari in  United States v. Marinello, 839 F.3d 209, 218 (2d Cir. 2016).  See Supreme Court Grants Certiorari in Marinello Involving Whether § 7212(a)'s Omnibus Clause Requires Knowledge of Pending Investigation (6/27/17), here.

I thought some readers might want some more discussion of intercircuit conflicts as a basis for certiorari.  From my personal observation standpoint (originally with DOJ Tax Appellate Section and then in the Trial Section and thereafter in private practice and as an academic on tax crimes keenly interested in Supreme Court practice), an intercircuit conflict is, as noted in the article below, the "best predictor of Supreme Court review."  The immediate context is, of course, the conflict between the Second Circuit in Marinello and the Sixth Circuit in  United States v. Kassouf, 144 F.3d 952 (1998).  The other Circuits deciding the issue have sided with the reasoning of the Second Circuit in Marinello and rejected the reasoning in Kassouf.  Kassouf is a lone-wolf holding. Since Kassouf was decided in 1998, the Sixth Circuit has narrowed its apparent scope but has not reversed it or cast serious doubt other than what might be inferred from its narrowing of Kassouf, to join with the other Circuits deciding the issue.  So, at this time, on this issue, the law in the Sixth Circuit is different than in the other Circuits that have addressed the issue.

Often, when the consensus of other Circuits moves against a holding in one Circuit, the outlier Circuit will reverse course, thereby assuring uniformity among the Circuits and avoiding the need for the Supreme Court to resolve the conflict.  The process of allowing other Circuits to speak to the issue (referred to in the excerpts below as “percolating”) allows the issue to be fully vetted by the time the Supreme Court does have to resolve by certiorari if the conflict persists.  But the Sixth Circuit has had several opportunities to reverse course or at least indicate disapproval or concern with the Kassouf holding and, while narrowing the potential scope of Kassouf, has declined to reverse course.

Here is what the Government said on that issue in opposing certiorari by holding out the possibility that the Sixth Circuit itself will fix the problem:
The court of appeals’ decision is consistent with the interpretation of Section 7212(a) adopted by most other courts of appeals and does not conflict with any decision of this Court. Although the Sixth Circuit reached a different conclusion in United States v. Kassouf, 144 F.3d 952 (1998), that court has vacillated in its approach to Section 7212(a) over the years and has not yet had an appropriate opportunity to reconsider Kassouf ’s holding in an en banc proceeding. This  Court has repeatedly denied other petitions raising the same issue. Nothing supports a different result in this case. 
Well, nothing except the persistence of the Sixth Circuit decision as an outlier so that the law is different in the Sixth Circuit than in the other Circuits.  (And perhaps a side note, the Government could have forced the issue by bringing an indictment on the same basis it indicts in other Circuits, which the district court would dismiss on the authority of Kassouf, the Government could appeal, the panel on appeal would affirm dismissal on the authority of Kassouf, and the Government could then ask for en banc review, whereupon the Sixth Circuit could resolve the conflict by overturning Kassouf or, if the Sixth Circuit persisted by denying en banc review or, on en banc review, affirming its holding in Kassouf, asking the Supreme Court to resolve the then clearly persistent conflict; there might be some prudential reasons to avoid bringing a single count indictment like that, so perhaps it a really bad-actor case could be chosen with several counts, which would slow down the issue getting to the Sixth Circuit.)

I thought readers who are interested might benefit from this recent scholarly article analyzing a significant original dataset of Circuit Court conflicts and the issue of whether and when Supreme Court review to resolve the conflicts is appropriate.

Deborah Beim and Kelly Rader, Evolution of Conflict in the Federal Circuit Courts (Yale University 3/19/15), here.  Here are some excerpts (footnotes omitted):
Conflicts between the Courts of Appeals are of central importance to the American judiciary. When circuits split, federal law is applied differently in different parts of the country. It has long been known that the existence of a circuit split is the best predictor of Supreme Court review, but data availability has constrained understanding of circuit splits to this fact. In this paper, we explore the “life cycle” of an intercircuit split. We analyze an original dataset that comprises a sample of conflicts between Courts of Appeals that existed between 2005 and 2013, including both conflicts the Supreme Court resolved and conflicts it has not yet resolved. We show how long a conflict exists before it is resolved and how many go unresolved altogether, which conflicts are resolved soonest, and how a conflict grows across circuits.
End of Abstract 
Conflict between Courts of Appeals is of central importance to the federal judiciary. When circuits split, federal law is applied differently in different parts of the country. As an empirical matter, the existence of a circuit split is one of the best predictors of Supreme Court review. However, despite its importance, scant empirical evidence exists outside of this fact. How many circuit splits go unresolved altogether? Of those that are resolved, for how long do they persist before they are resolved? 
* * * * 
Uniformity in the application of federal law by federal courts is a value as old as Federalist 80. In addition to harming this principle, circuit splits have other potentially undesirable consequences: they make it difficult for lawyers to advise their clients, invite additional litigation, circumscribe potentially legal conduct, and possibly cast doubt on the legitimacy of the legal system itself (e.g., Hellman 1985, Tiberi 1993). 
* * * * 
Unless a circuit repudiates its past decision to come in line with other circuits, only the  Supreme Court can bring uniformity to a body of law when circuits split. In the Supreme Court’s Rule 10, the presence of a circuit split is one of the only factors explicitly mentioned as a consideration in granting writs of certiorari. 
We can see the heavy consideration to which the Supreme Court accords intercircuit conflict in the cases it does decide to hear. Consistent with Rule 10, the Supreme Court is far more likely to review cases that implicate a conflict in the lower courts than those that do not (Tanenhaus et al. 1963, Ulmer 1984, Caldeira and Wright 1988, Caldeira, Wright and Zorn 1999, Perry 1991). In a review of Burger Court cases, Hellman (1985) found that intercircuit conflict was the modal reason for granting cert and that, in some areas of statutory law, resolving conflict was nearly the only reason the Court heard a case. 
The presence of an intercircuit conflict does not guarantee that the Supreme Court will grant review, however. Some conflicts implicate more important areas of the law, potentially affect more litigants, are more likely to persist, involve more contemporaneous disagreement (are more “live”), or involve cases that are harder to distinguish (are more “square”) than others. That is, “there are conflicts, and there are conflicts” (Perry 1991, p. 249). Because it is so widely know that the Court is more likely to grant review to cases that implicate conflicts—and Gressman et al. (2007, p. 242) advise petitioners of this reality—allegation of conflict is common. Much of a clerk’s task is distinguishing genuine from alleged conflict (Estreicher and Sexton 1984). 
Empirical investigations into the Court’s cert decisions show that the Court is far more likely to review cases of true conflict (Estreicher and Sexton 1984) or “strong” or deep conflicts as opposed to shallow ones (Black and Owens 2009). Of course, what constitutes a conflict worthy of review is subject to interpretation. Even the justices themselves disagree over which conflicts, if any, are tolerable (Perry 1991). Occasionally the notion that the Supreme Court either lacks the capacity to resolve important conflicts or is abrogating its duty to do so has given rise to Congressional inquiries. At the behest of the 1990 Federal Courts Study Committee, Hellman (1995) investigated the number, “tolerability,” and “persistence” of intercircuit conflicts implicated by cases in which litigants petitioned for cert but that the Supreme Court nonetheless declined to hear. In the 1989 term, Hellman estimated that the Supreme Court denied cert to petitions implicating between 168 and 274 different intercircuit conflicts. Among those petitions, about one-third involved conflicts that had the potential to cause harm to multicircuit actors, either through the existence of inconsistent obligations or by necessitating compliance with the most restrictive rule. Between one-quarter and one-third involved disagreement over rules that were clear cut enough that the choice of rule would most certainly change the outcome of the case, and an additional thirty to fifty percent involved differences over rules that would favor one side or the other in a class of disputes. That is, a large majority of cert petitions alleging conflict that were denied review involved conflicts that were serious enough to alter the behavior of relevant actors and/or lead to different case outcomes across similar cases. In a similar set of denied petitions from the 1984 and 1985 terms, Hellman found that only about one-third were resolved by the Supreme Court by the 1992 term, though an additional 25 percent were mooted in other ways. 
Beyond workload considerations or potential shirking, one reason the Supreme Court may allow a live conflict to persist is so that the question at issue may percolate. That is, the justices may learn something by allowing multiple circuits to weigh in before they grant cert to resolve a conflict. Clark and Kastellec (2013) develop a theoretical model of  a court that faces a tradeoff between promoting uniformity in the law and learning about legal issues from percolation in the lower courts. The court grants cert to resolve an issue when the costs to allowing the conflict to percolate outweigh the benefits of learning from additional lower courts weighing-in. Using data on conflicts resolved between 1985 and 1996, they test and show support for one prediction from this model—that the Supreme Court is more likely to grant certiorari when a conflict arises late in the percolation process than when a conflict arises early in the percolation process. To the extent that the Court does seek to balance learning and uniformity, there is little evidence that “percolated” decisions are more well-received than non-percolated ones.
I hope that whets readers' appetites to read the whole report.  I think the point, of course, is that, despite the SG's opposition to certiorari, this particular conflict has percolated long enough since there is no real indication that the Sixth Circuit is going to reverse course and the Government apparently has not pressed the issue in the Sixth Circuit as hard as it might have.

One small anecdote about intercircuit conflicts from my tenure with DOJ Tax Appellate Section.  To paraphrase the common expression, I won some cases and I lost some.  On the cases I won where the taxpayer petitioned for certiorari, I routinely wrote the initial draft of the Brief in Opp.  None of the cases I won were accepted for certiorari.  And, among the cases I lost, I had to write a memorandum recommending to the Solicitor General whether or not the Government should petition for certiorari.  I lost a mitigation case.  The mitigation provisions are in Sections 1311-1314.  Many tax practitioners know about those provisions but have not taken a deep dive into them.  I had not until I had the case and came to love the beauty of the mitigation provision.  The opinion holding against the Government created a conflict, at least as I read the cases.  And, although some mitigation cases are messy in the facts and law, I thought my case was about as simple as a mitigation case could be.  So, with the conflict, I recommended to SG that the Government petition for a writ of certiorari.  The SG -- Erwin Griswold, former Dean of the Harvard Law School and outstanding tax scholar -- rejected the recommendation, with the only comment along the lines of  "We cannot take a mitigation case to the Supreme Court; they will never understand it."  So, there are factors other than conflicts that mitigate against seeking certiorari. (Of course, to extend that notion, from my vantage point, it is not certain that the Supreme Court understands some of the more complex tax issues it chooses to dabble in, with the poster child being Frank Lyon for which Dean Griswold wrote the petition and briefs and argued the case after he left the Government, with the result that that area of the law was open to abuse and exploitation by aggressive tax practitioners for years.  Frank Lyon, however, is another story from my days at DOJ Tax that I won't get into now.

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