Opinion analysis: CA9 loses again â€“ agency brief interpreting regulations is entitled to deference
on Jan 27, 2011 at 11:34 am
Mondayâ€™s decision in Chase Bank USA v. McCoy (No. 09-329) provided one more in an increasingly long string of rebukes of the Ninth Circuit.Â The Justices (per Sotomayor, J.) unanimously reversed a Ninth Circuit decision holding that a now-superseded Federal Reserve regulation required a credit card issuer to provide advance notice before raising the interest rate on a credit card account in response to a cardholderâ€™s default on an obligation to a third party.
This is a case that looked like it was taken for the purpose of error correction: the regulation in question was superseded first by the Federal Reserve itself, and then by Congress (in the 2009 CARDS Act), based on the widespread view that notice should be explicitly required before the interest rate jumps on a credit card.Â But some combination of a dissent from Judge Cudahy (visiting from the Seventh Circuit), a circuit conflict with the First Circuit (which called for the views of the Federal Reserve and then deferred to them when it received them), and a sense of flagrant unwillingness to defer to the agency motivated the Court to call for the views of the Solicitor General.Â When the Solicitor General advised the Court that the Federal Reserve adhered to the advice it had given to the First Circuit â€“ rejecting the decision of the Ninth Circuit â€“ the only question was whether the Court would summarily reverse or set the case for argument.
So it comes as no surprise that the decision reversed the Ninth Circuit.Â The surprise, however, is that the decision was unanimous.Â At oral argument, the Justices had a protracted debate about whether deference to the Federal Reserveâ€™s views was compelled by Auer v. Robbins (1997), in which the Court deferred to an agencyâ€™s interpretation of its own regulation, or was prohibited by the intervening decision in United States v Mead Corporation (2001).Â The problem for the Court was the statement in Mead (over a typically vigorous dissent by Justice Scalia), that deference was due to an agency only when it acted â€œin the exercise of . . . authorityâ€ â€œto make rules carrying the force of law.â€Â Because the drafting of an amicus brief is clearly not the same thing as â€œadjudication or notice-and-comment rulemaking,â€ Mead strongly suggested that deference was inappropriate.Â Â Because even the Government admitted that the regulation was ambiguous, the question of deference was squarely presented.Â Justice Scalia seemed gleeful at oral argument at the difficulties the other Justices seemed to have in reconciling their instinctive desire to defer to the Federal Reserve with the reasoning of Mead.
It is an impressive accomplishment, then, that Justice Sotomayor managed to craft an opinion for a unanimous Court without so much as a word of separate concurrence by Justice Scalia.Â She took the interesting tack of not mentioning Mead a single time â€“ presumably any mention at all would lead to a Scalia concurrence disavowing its value as a preference.Â The closest she comes to discussing it is a passage in which she distinguishes Christensen v. Harris County, a predecessor of Mead in which the Court declined to apply Auer deference and pointed out that the informal interpretation in question was not entitled to Chevron deference.Â The Courtâ€™s discussion of Christensen here was almost identical to Justice Scaliaâ€™s contention in his Mead dissent that Christensen should be understood as resting not on the informality of the agencyâ€™s position, but on the inconsistency of the agencyâ€™s interpretation with an unambiguous statute.Â Â Compare Chase (slip op. at 15) w/ Mead, 533 U.S. at 254-56 (Scalia, J., dissenting).
Mead, of course, has been the subject of a plethora of academic commentary and the focus of attention at the courts of appeals.Â Whether this decision reflects a substantial retrenchment is quite difficult to say.Â About the most that can be said is that only four of the eight Justices from the Mead majority remain on the Court (Kennedy, Thomas, Ginsburg, Breyer), so there is considerable room for an explicit narrowing of it in the immediate future.