p. 520, new note 4.a.

4.a. Not-so-concrete guidance about what it means to be “concrete.” In its first significant discussion of constitutional standing since the death of Justice Scalia, the Court reiterated that an injury-in-fact must be both “concrete and particularized,” and, in addition, it shared some thoughts on what it means to be “concrete.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016).

The Fair Credit Reporting Act of 1970 (FCRA) imposes various requirements governing the creation and use of “consumer reports” by “consumer reporting agencies.” It also creates a cause of action enabling an individual to sue “[a]ny person who willfully fails to comply with any requirement [of the FCRA] with respect” to that individual. 15 U.S.C. § 1681(n)(a). Liability can include actual damages, statutory damages, and punitive damages.

Spokeo produced a consumer report about Robins that contained many inaccuracies (e.g., his marital status), and Robins responded by using FCRA’s private cause of action to sue Spokeo. The Ninth Circuit concluded that Robins had suffered an injury-in-fact that was both particularized and concrete given that “Spokeo violated his statutory rights, not just the statutory rights of other people,” and that Robins’ interest at stake was “individualized rather than collective.” 742 F.3d at 413.

Justice Alito, writing for a six-justice majority, held that the Ninth Circuit had not given proper thought to whether Robins’ injury was properly “concrete.” He explained that an injury, to satisfy this requirement, must be “de facto,” it must “exist,” and it must be “real” rather than “abstract.” 136 S. Ct. at 1548. It need not, however, be “tangible.” Determining whether an intangible injury is concrete enough for standing implicates both “history and the judgment of Congress.” Id. at 1549. Regarding history, “it is instructive to consider whether an alleged intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts.” Id. As for Congress, its judgment is “instructive and important” because it “is well positioned to identify intangible harms that meet minimum Article III requirements.” Id. (citing Lujan, 504 U.S. at 578). This congressional power does not extend, however, to authorizing plaintiffs to sue for violation of any statutory right at all—a plaintiff still must suffer “a concrete injury even in the context of a statutory violation.” Id. On a slightly more specific note, Justice Alito used the informational injury suffered in Akins (discussed in note 4, above) as an example of an intangible harm that turned out to be concrete enough for standing.

Justice Alito then observed that it was easy to imagine some violations of FCRA that would not actually cause anyone any real harm—e.g., a consumer report misidentifying someone’s zip code. Id. Robins therefore could not properly claim an injury-in-fact merely by “alleging a bare procedural violation” of the statute’s various reporting and process requirements. Id. The Ninth Circuit had not properly addressed “whether the particular procedural violations alleged in this case entail a degree of risk [of harm to Robins] sufficient to meet the concreteness requirement.” Id. So the Court remanded to the Ninth Circuit to think it over.

Justice Ginsburg, joined by Justice Sotomayor, would have upheld standing for Robins rather than remand to the Ninth Circuit on this issue. In support of this position, she included a big string cite of opinions suggesting that the “concreteness” requirement speaks to whether a litigant has a personal stake in the outcome of a case and whether that case involves genuinely adverse parties:

Illustrative opinions [explaining what it means to be “concrete”] include Akins, 524 U.S. at 20 (“[C]ourts will not pass upon abstract, intellectual problems, but adjudicate concrete, living contests between adversaries.” (internal quotation marks and alterations omitted)); Diamond v. Charles, 476 U.S. 54, 67 (1986) (plaintiff's “abstract concern does not substitute for the concrete injury required by Art [icle] III” (internal quotation marks and ellipsis omitted)); Los Angeles v. Lyons, 461 U.S. 95, 101 (1983) (“Plaintiffs must demonstrate a personal stake in the outcome.... Abstract injury is not enough.” (internal quotation marks omitted)); Babbitt v. Farm Workers, 442 U.S. 289, 297-98 (1979) (“The difference between an abstract question and a ‘case or controversy’ is one of degree, of course, and is not discernable by any precise test. The basic inquiry is whether the conflicting contentions of the parties present a real, substantial controversy between parties having adverse legal interests, a dispute definite and concrete, not hypothetical or abstract.” (citation, some internal quotation marks, and ellipsis omitted)); Simon v. Eastern Ky. Welfare Rights Organization, 426 U.S. 26, 40 (1976) ( “organization's abstract concern ... does not substitute for the concrete injury required by Art. III”); California Bankers Assn. v. Shulz, 416 U.S. 21, 69 (1974) (“There must be ... concrete adverseness”; “[a]bstract injury is not enough.” (internal quotation marks omitted)); Railway Mail Assn. v. Corsi, 326 U.S. 88, 93 (1945); Coleman v. Miller, 307 U.S. 433, 460 (1939) (opinion of Frankfurter, J.) (“[I]t [is] not for courts to pass upon ... abstract, intellectual problems but only ... concrete, living contest[s] between adversaries call[ing] for the arbitrament of law.”).

Id. at 1555-56 (Ginsburg, J., dissenting).

Justice Ginsburg then observed that Robins “complains of misinformation about his education, family situation, and economic status, inaccurate representations that could affect his fortune in the job market.” Id. at 1556 (Ginsburg, J., dissenting). Given this much, she saw “no utility in returning this case to the Ninth Circuit to underscore what Robins’ complaint already conveys concretely: Spokeo's misinformation causes actual harm to his employment prospects.” Id. at 1556 (Ginsburg, J., dissenting) (citation, internal quotation marks, and brackets omitted).

p. 576, new note 6.a.

Note 6.a. at 576. More on finality and the second prong of Bennett

“Peat is . . . widely used for soil improvement and . . . can also be used to provide structural support and moisture for smooth stable putting greens that leave golfers with no one to blame but themselves for errant putts.” U.S. Army Corps of Engineers v. Hawkes Co., Inc., 136 S. Ct. 1807, 1812 (2016). In Hawkes, the Supreme Court took up the question of whether respondent peat miners could obtain judicial review under the Administrative Procedure Act (APA), of a “jurisdictional determination” (JD) from the Army Corps of Engineers (the “Corps”). Id.; 5 U.S.C. § 704. The JD indicated that the respondents’ peat mining resulted in the discharge of pollutants into “waters of the United States” in potential violation of the Clean Water Act, 33 U.S.C. §§ 1311(a), 1362(7), (12). The Corps argued that the JD was not judicially reviewable because it was not “final agency action.” Hawkes, 136 S. Ct. at 1813. More specifically, the Corps argued that the JD did not meet the second prong of the test outlined in Bennett v. Spear because no legal consequences flowed directly from the jurisdictional determination. See id. at 1813-14.

The Supreme Court disagreed. In an opinion written by Chief Justice Roberts, it held that the JD did constitute final agency action because it gave rise to “direct and appreciable legal consequences.” Id. at 1814 (citing Bennett, 520 U.S. at 178). The Court relied in part on the fact that the Corps had entered into a memorandum of agreement with the Environmental Protection Agency (EPA), the agency responsible for enforcing the Clean Water Act. The memorandum stated that the Corps’ JD would be “binding on the Government and represent the Government’s position in any subsequent federal action or litigation concerning that final determination.” Id. To the extent that a JD is indeed binding with regard to the Government’s litigation position, it would not be surprising to treat it as final, especially when read in conjunction with the Court’s prior decision in Sackett. See note 6, supra.

The Court’s opinion was made more interesting, however, by what the Chief Justice said next. After applying the legal consequences test from Bennett, he concluded by pointing out that permitting judicial review of the Corps’ JD is consistent with “the ‘pragmatic’ approach we have long taken to finality.” Hawkes, 136 S. Ct. at 1815. He cited Abbott Labs and an earlier case, Frozen Food Express v. United States, 351 U.S. 40, 76 (1956), for the proposition that agency actions can be deemed final, and thus reviewable, when they have sufficient practical effects on a party, including when a party experiences an increased risk of consequences that are not yet mandated by law. Id. This difference may not matter in the majority of cases because agency action will often have both legal and practical consequences. But there is nevertheless a theoretical difference between the legal consequences outlined in Bennett and the practical effects in Abbott Labs and Frozen Food Express that could be worth watching in future cases dealing with finality.

Justices Kagan and Ginsburg reflected this distinction in their respective concurrences in Hawkes. Justice Kagan seemed to favor the legal consequences language from Bennett, explaining that the “memorandum of agreement between the Army Corps of Engineers and the Environmental Protection Agency,” which she read as legally binding the EPA to the conclusions reached in the Corps’ JD, “is central to the disposition of this case.” Id. at 1817. By contrast, Justice Ginsburg rejected the relevance of the memorandum and thought it enough for finality purposes that the JD “has ‘an immediate and practical impact’” on the respondents. Id. at 1817-18 (citing Frozen Food Express). It is unclear whether the distinction between legal consequences and practical impacts will turn out to be critical for the finality doctrine, but the various opinions in Hawkes at least leave the issue open for future treatment by the Court.

p. 681, new note 8.a.

Note 8.a. at 681. Arbitrariness as a threshold question

      If step two of Chevron is the same as arbitrariness review under the APA, as Justice Kagan stated in Judulang, (see note 8, supra) then what is one to do when an agency applies its own statute in a way the Court deems arbitrary and capricious? (Recall that in Judulang the agency action at issue was not a matter of statutory interpretation, so the above question was not answered directly.) That task fell to the Court this past term in Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (2016).

Encino involved a dispute over whether people employed as “service advisors” at car dealerships are entitled to overtime pay under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. The particular facts are complicated, but the key for our purposes is that the Department of Labor (DOL), the agency tasked with administering the FLSA, had its own long and winding history of interpreting the statutory overtime exemption for service advisors. Initially, the agency interpreted the statute such that service advisors were eligible for overtime. Several years after that, the agency issued an opinion letter interpreting a statutory amendment to deny them overtime. The agency held to that position for thirty years. Then in 2011 the agency changed its position again, issuing a final rule requiring overtime pay for auto dealer service advisors.

When the Encino car dealership refused to pay overtime to its service advisors, the advisors sued to enforce the overtime requirements of the new rule. Although the service advisors lost in the district court, the Ninth Circuit reversed, applying Chevron and deferring to the DOL’s 2011 rule as a reasonable interpretation of the FLSA overtime provision. 780 F.3d 1267 (9th Cir. 2015). 

The Supreme Court reversed in language that has caused considerable confusion about the relationship between arbitrary and capricious review and Chevron deference. As a matter of substance, the Court held that the 2011 regulation was arbitrary and capricious under the APA because the agency had not explained why it adopted the new position after many years of having taken the opposite view. This is a longstanding principle, particularly reflected in FCC v. Fox Television Stations (the details of which we discuss supra at note 7 on page 636). Had the Court stopped there, the result would have been fairly simple. It would essentially have confirmed the proposition that Chevron Step 2 is the same as arbitrary and capricious review. The agency had simply failed the test of FCC v. Fox, so it also failed under Step 2 of Chevron. In other words, an agency decision subject to Chevron Step 2 is not “reasonable” if it cannot survive arbitrary and capricious review.

But the Court complicated things by saying that

But where a proper challenge is raised to the agency procedures, and those procedures are defective, a court should not accord Chevron deference to the agency interpretation.

Encino, 136 S. Ct. at 2125. The Court concluded its discussion of the requirements of arbitrary and capricious review by saying

It follows that an “[u]nexplained inconsistency” in agency policy is “a reason for holding an interpretation to be an arbitrary and capricious change from agency practice.”  An arbitrary and capricious regulation of this sort is itself unlawful and receives no Chevron deference.

Id. at 2126 (citations omitted).

These references suggest that the courts must somehow resolve whether an agency’s decision is arbitrary and capricious before determining whether Chevron deference can be considered. It is difficult to see how that determination can be separated from the Step 2 analysis itself. Indeed, Justice Ginsburg, concurring in Encino, considered that case to be a relatively typical instance of arbitrary and capricious review. Id. at 2128 (Ginsburg, J., concurring) (“I write separately to stress that nothing in today’s opinion disturbs well-established law.”). Encino’s ultimate impact will depend on which approach courts take going forward, although it is fair to say that where challengers to agency action bring both arbitrary and capricious and statutory interpretation challenges, questions about the relationship between the two may well be largely academic.