Supreme Court Hears Deadly Force Arguments

Mr. Zelinsky (00:00):

Mr. Chief Justice, and may it please the court, we are here today because Ashton Barnes was shot and killed on the side of a Texas highway after being pulled over for unpaid tolls. The question before this court is how to determine whether Ashton's Fourth Amendment rights were violated.

(00:18)
The Fourth Amendment prohibits unreasonable seizures. Justice Scalia was no fan of a totality of the circumstances test, but in Scott, Justice Scalia made clear that courts must slosh through the fact-bound morass of reasonableness. In this case, the district court and the Fifth Circuit didn't do that. Instead, they applied the moment of the threat doctrine. According to the Fifth Circuit decision below, "We may only ask whether Officer Felix was in danger at the moment of the threat," and "Any of the officer's actions leading up to the shooting are not relevant." This kind of legal amnesia is incompatible with precedent, conflicts with common law and defies common sense.

(01:06)
Until now, respondents had embraced the moment of the threat doctrine, but before this court, respondents have abruptly shifted position, they now argue that courts should look to what occurs before the moment of the threat and apply the law of self-defense and superseding cause. Absolutely none of this appears in the decision below. All of it confirms why the moment of the threat doctrine is so wrong. Finally, as Judge Higginbotham underscored in his concurrence, the facts show that Officer Felix acted unreasonably.

(01:41)
But this is a court of review not of first view. The court should rule for petitioner on the sole question presented and remand for the lower courts to apply the correct constitutional standard. I welcome this Court's questions.

Justice Thomas (01:53):

Under your approach, what would that correct standard look like? And how would it be applied here?

Mr. Zelinsky (01:58):

Justice Thomas, we think the standard is the totality of the circumstances standard that this court articulated in Graham and Garner, Scott, and Plumhoff. In this particular case, it would require looking at more than just the two seconds in which Officer Felix was on the moving vehicle. It would require asking was there a reason for Officer Felix-

Justice Thomas (02:19):

How much more than the last two seconds?

Mr. Zelinsky (02:22):

Justice Thomas, if you include an extra three seconds then you would look at the seizure in its totality, I think that this court shouldn't be drawing bright line rules on exactly how much of the seizure should or shouldn't come in. That's what Justice Scalia underscored in Scott. There are no rigid rules and courts can apply ordinary principles of relevancy and proximate cause to determine the reasonableness of a seizure.

Justice Kavanaugh (02:51):

Was it reasonable for the officer to jump on the side of the car?

Mr. Zelinsky (02:57):

So, Justice Kavanaugh, we don't think it was in this particular case but that's precisely the issue that the lower courts couldn't evaluate because they applied this legal amnesia and only look at the fact that the officer was on the moving vehicle. Judge Higginbotham in his concurrence looked at the totality of the circumstances and said, "I think it was unreasonable in this case." We want the opportunity for a court to be able to look at that and for us to be able to litigate that core claim.

Justice Kavanaugh (03:25):

What's an officer supposed to do when at a traffic stop and someone pulls away? Just let them go?

Mr. Zelinsky (03:32):

No, Justice Kavanaugh. I think there are a number of other options that available to Officer Felix that day. Let me give you four. First, the highway was a camera-controlled highway so you can monitor all the cars by camera. That's in fact how Ashton Barnes was pulled over in the first place. The cameras automatically identified his car as one with unpaid tolls.

(03:53)
Second, he could have radioed to somebody else on the road to follow Ashton Barnes. Third, he could have gotten back into his squad car and followed him. And fourth, they also had the car's license plate. So, we're not suggesting that somebody should just get away scot-free, but it is unreasonable to use deadly force, because what happened was Officer Felix put himself in a position where he had no alternative but to shoot the driver and that's unreasonable. And you have to look at the whole picture, not just the two seconds in which he's on the car.

Justice Alito (04:25):

Did the officer violate the Fourth Amendment at any point prior to the time when he used deadly force? If he had not used deadly force but he had jumped on the side of the car and done everything else he did prior to that moment, would there be a violation of the Fourth Amendment?

Mr. Zelinsky (04:42):

So, Justice Alito, we had brought a predicate claim below about the drawing of the firearm. My friends on the other side have suggested we should have brought a predicate claim based on the jumping onto the car. But at the end of the day, I don't think that it matters whether there is a predicate claim, because let me give you an analogy. In the search context, you have an obligation to knock before you search. There is no freestanding requirement under the Fourth Amendment if you're an officer standing outside a door to knock. But if you are going to engage in a search, we evaluate the reasonableness of that search by looking a couple seconds before. Did you knock? It's the same thing here.

Justice Alito (05:19):

Well, my question, the reason for the question is to probe whether you are using the term "unreasonable" in a sense that's different from the sense in which the Fourth Amendment prohibits unreasonable searches and seizures. So, "unreasonable" has a particular meaning when the court has to decide whether there was a Fourth Amendment violation. But in lay speech, "unreasonable" could go to whether the action was prudent, whether it was a violation of best police practices or the practices of a particular police department. Those are not necessarily the same thing. In fact, it seems that they're probably different. So, you are eliding these two different meanings of reasonable. Now, maybe that's sound, maybe that's unsound.

Mr. Zelinsky (06:07):

Justice Alito, what we're asking for is the standard that this court has applied in Garner, Graham and Scott, and Plumhoff, which is, you have to look at the balance here. There is on the one side the state interest in seizing someone in a particular manner. On the other side there's the harm to the suspect here, the ultimate harm, the loss of his life. The problem in this case is that the Fifth Circuit couldn't engage in that core balancing because it couldn't ask was there a really pressing reason for an officer to jump onto a car and give himself no other opportunity but to shoot the driver?

Justice Alito (06:40):

Would you be satisfied with a narrow holding that it is wrong for a court to look just at the moment of the threat, that the court has to judge the reasonableness of the alleged unreasonable seizure based on taking into account to whatever extent they are relevant, the events that occurred before that. Would you be satisfied if we just did that?

Mr. Zelinsky (07:08):

I think we would-

Justice Alito (07:09):

Not get into these other more difficult questions.

Mr. Zelinsky (07:12):

… 100%. I think it would be helpful if the court makes clear that that means that you can look at the jump in addition to the shoot. Right? That's the core issue that we want to be able to litigate. But yes, Justice Alito we'd be happy with a very narrow holding.

Justice Sotomayor (07:24):

You don't want to limit it just to that though. I mean, I thought that the totality of the circumstances as we described it has at least three factors: the nature of the crime for which the stop occurred, the circumstances, etc. The three minutes, are you starting that from the moment that the stop occurred-

Mr. Zelinsky (07:45):

So-

Justice Sotomayor (07:46):

… And the reason for it? Or you want to do it just from when he jumped on the car?

Mr. Zelinsky (07:51):

… So, we don't want to look at it just from when he jumps on the car. I do think you have to consider things like what he stopped for. My friends on the other side by the way agree on that because they say all of that comes in because it's part of the-

Justice Sotomayor (08:02):

I know we'll get to that with them-

Mr. Zelinsky (08:04):

… Yeah. So-

Justice Sotomayor (08:04):

… Which is they want to make it a totality of the circumstance case, but that's not what the Fifth Circuit said.

Mr. Zelinsky (08:12):

Totally.

Justice Sotomayor (08:12):

I can ask them that question. Having said that there is a split of eight to four on this question whether the court needs to look at the totality or just a moment of threat. Correct?

Mr. Zelinsky (08:24):

That's correct, Justice Sotomayor.

Justice Sotomayor (08:26):

So, if we do what Justice Alito has defined as a narrow approach that's not really narrow, that's deciding a circuit split. Correct?

Mr. Zelinsky (08:35):

Yes. Can I add a "but" to clarify my answer to Justice Alito? I think you could resolve this case by saying "The moment of the threat to doctrine is wrong. It was too narrow. It didn't apply the totality of the circumstances and we, this court are not going to try and delineate every meet and bound in every case." I think-

Justice Sotomayor (08:54):

You've given up in your reply brief, I understood, that you are not asking us to address the question of what an officer-created danger rule is like.

Mr. Zelinsky (09:04):

We're not asking for an officer-created danger test at all.

Justice Sotomayor (09:07):

And that wasn't even addressed below. Correct?

Mr. Zelinsky (09:10):

That's correct.

Justice Sotomayor (09:11):

Okay. Thank you.

Justice Barrett (09:11):

Mr Z., you're happy with the, you're happy with the narrow, I'm going to call it narrow in the sense that if we said moment of the threat is wrong and we don't articulate a precise standard other than saying our regular totality of the circumstances test applies as Justice Sotomayor said, that's really what you're asking for.

Mr. Zelinsky (09:30):

I think in this case we're trying to be able to litigate the fact that he jumped onto a car and we have sharply different views. My friend on the other side and I have sharply different views about whether it was reasonable to jump onto that car. That's the issue we were not able to litigate. I think this court doesn't need to go and say in every case, "Here are the meets and bounds." I do think Justice Barrett, if you want to put a little bit of flesh on the bones of that test, you could look to your decision in Biegert for the Seventh Circuit where you said an officer might act unreasonably where they're primarily responsible for the danger.

Justice Barrett (10:02):

And you would be happy with that language?

Mr. Zelinsky (10:04):

We would be happy with that language.

Justice Barrett (10:05):

And you don't have a position on whether a prior fourth kind of goes to Justice Alito's point, whether kind of a predicate Fourth Amendment violation that's unrelated to the excessive force necessarily means that if the officer violated constitutional rights, let's imagine it's not a car stop, let's imagine it's a home entry or something like that, that then it's off the table after that, even if things devolve-

Mr. Zelinsky (10:30):

No-

Justice Barrett (10:31):

… The officer put himself in this situation.

Mr. Zelinsky (10:33):

… In fact, well I have two answers to that. The first is in Mendez, this court already held that where the damages are the foreseeable consequences of that predicate violation then they are on the table. I think that goes a long way toward disproving the parade of horribles on the other side because you are in those cases going to look at preceding conduct. But the second answer to your question is that we of course agree things like superseding cause, again, your decision in Biegert for the Seventh Circuit is a great example of that. Superseding cause comes into play. The Fifth Circuit couldn't apply those kinds of tests because all it looks at is the fact that Officer Felix is standing on that vehicle. And that's why it's so concerning. It prevents you from engaging in that core Fourth Amendment balancing. What was the nature of the government interest on the one hand? What was the harm to the individual on the other?

Justice Kavanaugh (11:21):

Do you agree with the language in the Seventh Circuit opinion that said it applies when the officer created a situation where deadly force became essentially inevitable?

Mr. Zelinsky (11:33):

I think that that is our view of this case, Justice Kavanaugh. Once-

Justice Kavanaugh (11:36):

And are you asking then, and I realize you're going to say this is for the Fifth Circuit on revamp, but I'm going to ask it anyway, are officers always prohibited at traffic stops when the car pulls away from jumping on a car?

Mr. Zelinsky (11:48):

Absolutely not.

Justice Kavanaugh (11:49):

Okay. When can they and when can't they?

Mr. Zelinsky (11:51):

Let me give you an example when they can. Let's say they see an abducted child in the back seat and they know if they don't jump onto the car then something terrible might happen to that abducted child. That's a type of totality of the circumstances inquiry that looks at what's the nature of the government interest at play? What's the harm to the individual? In this particular case, we're talking about unpaid tolls. We want to be able to argue down off this circuit-

Justice Kavanaugh (12:17):

True, but obviously traffic stops sometimes identify people who are doing things that are much worse. Oftentimes, major criminals are apprehended for things like that. And I can give you some historical examples that are obvious, but so I don't know that an officer can assume that's the only thing going on and if someone's pulling away, they could be a danger to others on the road. Who knows what's going on? Right?

Mr. Zelinsky (12:47):

So, Justice Kavanaugh, that's precisely, and maybe this was prefaced in your opening colloquy, but that's precisely what the Fifth Circuit couldn't engage in this case. And so, I agree that there may be some sort-

Justice Kavanaugh (12:58):

When an officer jumps on the car, the deadly force can be avoided by the driver too.

Mr. Zelinsky (13:03):

Well, in this particular case, Officer Felix's own expert testifies that Officer Felix shot so quickly, Ashton Barnes didn't have time to stop. And if I could, let me sketch out, Justice Kavanaugh, why it's so dangerous for you to shoot a driver. In fact, there is, I'm not aware of any police department that recommends that it's officers shoot drivers.

(13:25)
The high likelihood in this particular case, Ashton Barnes didn't immediately die. He was able to break the car and put it into park if he had been immediately killed, that car could have careened and crashed into the highway. Officer Felix put other people on that highway in grave, very serious danger that particular day. So, I don't think it's just a, he's jumping on to stop Ashton from getting away. He's also jumping on in a manner that is going to put a lot of other people at risk.

Justice Jackson (13:51):

Mr. Zelinsky, can I take you back to the question presented, which is whether or not it was correct for the Fifth Circuit to apply the moment of threat doctrine? What is your understanding of that doctrine? I guess I was surprised that respondent in this case at this time sort of has created now a conception of it that did not seem to align with what the Fifth Circuit said. So, what is your view of the moment of the threat doctrine?

Mr. Zelinsky (14:17):

So, Justice Jackson, Judge Higginbotham was very clear in his decision below. You cannot look at any of the officer's actions prior to the moment of the threat. He's joined in that decision by Judge Elrod and Judge Smith, respondents themselves agreed below that you can't look at anything prior to the moment.

Justice Jackson (14:35):

Do you perceive them now to be saying that you can look at some things?

Mr. Zelinsky (14:38):

Yes.

Justice Jackson (14:39):

So, that's a different concept

Mr. Zelinsky (14:40):

A 100%. And Justice Jackson, they've gone so far as to say if an officer jumps in front of a moving car and shoots the driver, that's unreasonable. Well, that's our view of this case and part of the problem is we weren't able to have a lower court look at the totality of the circumstances and decide was this like a case in which you jump in front of a car and immediately shoot the driver.

Justice Kavanaugh (15:02):

Do you agree with the language in the Solicitor General's brief that says the circumstances that the moment that forces used will generally have primary significance in the analysis?

Mr. Zelinsky (15:11):

So, I think that there's very little daylight between us and the Solicitor General. I think that language, Justice Kavanaugh, is descriptive. So, it's describing that in the vast majority of these cases-

Justice Kavanaugh (15:21):

Do you agree with it?

Mr. Zelinsky (15:22):

… I do in its descriptive aspect-

Justice Kavanaugh (15:24):

And do you agree with when the Solicitor General says the type of situation that was described in Biegert will be rare?

Mr. Zelinsky (15:30):

… I think that there are a series of reoccurring fact patterns. I think there are two of them. I think that the jumping in front of or onto car does occur with some frequency. So, we cited in our reply brief a study of 400 stops that found that there is a routine problem of officers jumping in front of cars. In the article, it's described in a Hollywood style, and then shooting the driver.

(15:53)
The other reoccurring fact pattern is a pattern where officers fail to identify themselves and the suspect exercising his or her own Second Amendment rights to self-defense pulls out a firearm. The Fifth Circuit alone has two cases in which they apply the moment of the threat doctrine. The cases are Cass and Royal, and they say "We can't look at the fact that the officer failed to identify himself. We can only look at the fact that the officer faced a loaded gun." And that by the way, is just sharply inconsistent with how the common law approached the exact same circumstance. And that's a very strong indication-

Justice Kavanaugh (16:29):

And the jumping in front of the car, I think you said this earlier, but sometimes it'll be reasonable and sometimes not?

Mr. Zelinsky (16:35):

So, yeah, let me give you an example maybe where it might be reasonable just to help flesh it out. Take the tragic terrorist attack in New Orleans. In that particular case, someone used a car as a weapon of terror. If an officer had jumped in front of the car and shot the driver, that officer would be a hero. And it's because the state interest in that case in seizing that terrorist is incredibly high. Again, that's the type of balancing that the Fifth Circuit just couldn't engage in this case.

Justice Alito (17:02):

Well, here the stop is for failure to pay tolls, but we could ratchet up very gradually the severity of the reason for the stop. And at what point would the offense become sufficiently serious? At what point, if any, would the offense become sufficiently serious in your judgment to make it reasonable for the officer to get on the sill of the car?

Mr. Zelinsky (17:31):

So, Justice Alito, it's a very difficult question to answer because as this court has said that it is a fact-specific question, it's going to depend on each given case. And there are no magic rules, there's no on-off switch and that's Justice Scalia and Scott, you can't just start drawing the lines precisely because these cases are so numerous and there are so many different permutations and so I think it would be very dangerous to start drawing those lines.

Chief Justice Roberts (17:57):

Thank you, Counsel. Justice Thomas, anything further?

Justice Sotomayor (18:00):

What do you do with the cases cited by the other side, where the Fifth Circuit does appear not to apply the moment of threat doctrine and does take into account more of the totality of circumstances?

Mr. Zelinsky (18:18):

So, Justice Sotomayor, let me give you three responses. First, there's never a Fifth Circuit case where they actually look at the officer's prior conduct and say "That's part of the calculus and it goes against the officer." So, it's always whenever they might do it's only in the officer's benefit. The second, the best case thing-

Justice Sotomayor (18:36):

Some of my colleagues might agree with that. Why should we not?

Mr. Zelinsky (18:40):

… Because you have to look reasonable. The framers gave us a test of reasonableness and that is, it's a two-way street, not a one-way ratchet. And it requires-

Justice Sotomayor (18:50):

The common law. You gave the crime example. In the common law, which is if a plainclothes officer doesn't denounce he's an officer and pulls out a gun-

Mr. Zelinsky (18:58):

… Yes.

Justice Sotomayor (18:59):

… Under that circumstance, the common law would say someone can defend themselves and pull out a gun.

Mr. Zelinsky (19:06):

Yes.

Justice Sotomayor (19:06):

All right.

Mr. Zelinsky (19:08):

Yes.

Justice Sotomayor (19:09):

So, okay. Go ahead with yours.

Mr. Zelinsky (19:10):

And then, the other response to your question, and I have two more answers. The first is that there's just a wealth of Fifth Circuit cases that come out in the other direction and are just crystal clear. So, I would just direct the court to the Harris V. Surface case and that's quoted by Judge Higginbotham and his decision below. In Harris, the Fifth Circuit goes out of its way to say this court has narrowed that test and that test is referring to the Graham test. They are self-consciously clear that they are narrowing this court's precedent and the court then goes on to say "Any of the officer's actions leading up to the shooting are not relevant for the purposes of an excessive force inquiry in this circuit." So. That's a categorical bar.

(19:53)
And then, the third point is that in this case you don't just have Judge Higginbotham who's describing the split or the moment of the threat doctrine. You also have Judge Elrod and Judge Smith who signed onto that panel decision and all of them agree this is how the doctrine operates in the Fifth Circuit.

Justice Sotomayor (20:08):

Thank you.

Chief Justice Roberts (20:14):

[inaudible 00:20:11]. Justice Jackson? Thank you, Counsel. Mr. Covey?

Speaker 2 (20:46):

Mr. Chief Justice, and may it please the court, the Fifth Circuit analyzed this case by examining only the so-called moment of the threat and categorically ignoring all prior events. None of the parties defends that approach. That is because reasonableness is assessed under the totality of the circumstances and pre-force events can be critical to that assessment.

(21:05)
Prior events often show that the force was reasonable. For example, police may have issued warnings or attempted de-escalation, all of which a split-second moment of the threat doctrine misses. Of course, when officers face a moment of danger, that is by far the most important factor under Graham. But in rare cases, a moment of danger doesn't tell the whole story. If the danger was manufactured entirely by police conduct outside the bounds of reasonable behavior and not by the suspects intervening apparent misconduct, it is unreasonable to use force in the moment. The panel's approach fails to provide a constitutional backstop in those cases and it disregards context that may show that force was reasonable in others. I welcome the court's questions.

Justice Thomas (21:44):

Would that also include, those circumstances also include the conduct of the victim that preceded the shooting?

Speaker 2 (21:53):

Absolutely. And as we explained in our brief, the officer's conduct and the suspect's conduct are often intertwined. It's how the suspect reacted to what the officer did and that can be very important in the reasonableness assessment.

Justice Thomas (22:06):

And the other way how the officer reacted to the victims.

Speaker 2 (22:08):

Exactly. It's truly a totality of the circumstances approach and the Fifth Circuit's narrow cramped reasoning didn't allow for any of that to be considered.

Speaker 1 (22:25):

[inaudible 00:22:18], What do you…

Chief Justice Roberts (22:25):

Is there-

Speaker 1 (22:25):

Oh, sorry, Chief.

Chief Justice Roberts (22:25):

I just wondering is there any area where you disagree with the petitioner?

Speaker 2 (22:25):

No, I think that what petitioners just articulated aligns well with our view and I'm glad to hear that he endorses some of the statements in our brief. We agree this court doesn't need to go further than just saying that the Fifth Circuit's approach here was wrong because it focused only on a narrow two-second snippet of the encounter rather than looking at the entirety and the court probably doesn't need to go further and delineate the precise bounds of when force will be sort of reasonable or not.

(22:52)
And so, I think we don't have a lot of daylight to be honest. I don't think we have a lot of daylight between us and respondents either, because respondent also seems to agree now that pre-force circumstances matter and I think respondent also agrees that a moment of danger doesn't tell the whole story because at page 33 and 34 of his brief, he agrees there are circumstances where there can be an imminent danger to the officer and the use of force can still be reasonable.

Justice Kavanaugh (23:14):

What do you tell an officer who pulls someone over for a traffic violation, but as often or not often, but sometimes happens that person has done or is planning to do something more serious and driving away is one potential indicator of that? An officer does not get the time we've spent here today to make the decision. Do I let it go, knowing that this person could do serious harm, or has done and will never catch the person, or do I jump on the car? And they have to make that decision in about… What do you tell them?

Speaker 2 (23:51):

So, Justice Kavanaugh, we completely agree that the Graham inquiry has to be very sensitive and deferential to the officer's need for split-second decision-making. I think the training, the guidance we would have officers be given is one that officers are already trained under as petitioner points out at page 41 of her brief, basically you may use force to respond to a danger to yourself or the public but don't manufacture a situation where the use of force becomes essentially inevitable. And I think that kind of guidance would be helpful to officers when they are in a split-second moment in a traffic stop as you're discussing, it may often be reasonable to use force to stop the vehicle. A vehicle can be a dangerous weapon, as this court has recognized, but that's not true in every single case and the Graham inquiry has to be case-sensitive.

Justice Kavanaugh (24:37):

I think the officers are going to want to know "Do I let them go or do I not let them go," as a general proposition when someone pulls away from a traffic stop or "Do I try to jump on the car, jump in front of the car," and I don't know that you're… And I realize we're not going to flesh all this out in this case, but officers are presumably paying attention to this. And they have to make those decisions all the time. And I'm curious let them go or not.

Speaker 2 (25:01):

Of course. I think it's going to depend on what you've pulled them over for, if you know or suspect them to be armed, how they're behaving in your interaction with them, if you're getting the sense that as they pull away they're going to pose right away a big danger to people on the road. And respondent says that that was the case here and it may well have been, and it may well have been reasonable to use force to stop the officer or to jump on the car to stop Barnes from getting away, but the Fifth Circuit just didn't consider any of that and that's what we think is wrong.

Justice Kagan (25:29):

I assume-

Chief Justice Roberts (25:29):

Is it an objective or subjective inquiry in terms what type of conduct is going to create the danger? I mean, it's like, what about in the equivalent of an eggshell plaintiff? I mean, is the officer subject to varieties in terms of reaction from people that he pulls over?

Speaker 2 (25:49):

Mr. Chief Justice, it's, the Fourth Amendment test is always an objective reasonableness test. We're not looking into the subjective state of mind of the officer to see if he was acting in good faith or being particularly sensitive or something like that. It's whether he acted objectively reasonably. I do want to briefly-

Chief Justice Roberts (26:03):

I think more of the perpetrator in the officer's mind. I mean, maybe somebody is really, really views something as a serious danger and the officer doesn't know that. Is that at all pertinent?

Speaker 2 (26:19):

I think the officer should take into account sort of the imminence of the threat he perceives and he may perceive that the suspect has a bad motivation, is about to do something dangerous and that does matter. But the ultimate inquiry is the reasonableness of the officer's perception that there was an imminent threat and it was reasonable to use force.

(26:37)
I do want to just briefly address on the subject of objective versus subjective standards. I think Texas argues in its amicus brief and we haven't had a chance to respond that we are sort of improperly inserting a subjective element into the qualified immunity inquiry because we say that reasonableness is assessed based on the actual facts that the officer knew.

(26:57)
That's not correct. Our test is an objective reasonableness one, and this court has actually rejected that precise argument that Texas makes in Anderson versus Creighton, which is a case that Texas cites in its brief. If I could quote from page 641 of the U.S. reports there, the court says that the qualified immunity inquiry "Will often require examination of the information possessed by the searching officials, but contrary to the Creighton's assertion, this does not reintroduce into qualified immunity analysis, the inquiry into official subjective intent that Harlow sought to minimize." So, this really is an objective test. Of course, the officer will be making perceptions about whether the subject that he's engaging with is acting in bad faith or about to do something dangerous, but the ultimate inquiry is objective.

Justice Kagan (27:39):

I assume, tell me if I'm wrong, but I assume that you would want us to write an opinion that doesn't say anything about the weight to be given to the officer himself creating the danger. But I'm trying to think of, given the facts of this case, how an opinion that you would want us to write avoids that question entirely.

Speaker 2 (28:03):

I think the narrowest opinion this court could write would just be to say "Prior circumstances matter. They're part of the totality of the circumstances. The Fifth Circuit didn't recognize that." If the court wants to put more meat on the bones, I think it could say, as we've said in our brief, the circumstances at the moment of the threat are going to have prime importance. And it's going to be a rare case in which an officer is experiencing a moment of danger. And it's nevertheless unreasonable to use force. And it's going to be these types of cases where we're talking about and of the sort that Justice Barrett recognized in her Biegert opinion where the officer has done something outside the bounds of reasonable behavior that essentially makes the use of force almost inevitable. There's really no intervening misconduct by the suspect.

Justice Gorsuch (28:44):

Why would we do that? Why would we put a thumb on the scale that way and say that it's almost impossible to make out a Fourth Amendment claim in those circumstances given the varied nature of encounters between police officers and citizens across the country? The standard we've always said, reasonableness is a totality of the circumstances and a common law. These were all questions for the jury and you also have layered on top of the Fourth Amendment qualified immunity to protect the officers in these cases. Why would we start creating a new jurisprudence of exceptional circumstances?

Speaker 2 (29:24):

I don't think it would be a new jurisprudence or a thumb on the scale so much as a reflection that when balancing the Fourth Amendment interest of the individual and the government, the government has a very strong interest when there is an imminent danger to himself or to the public.

(29:38)
But you're right, of course it is a totality of the circumstances inquiry and we wouldn't be asking for a departure of that. I think the reason the court might want to go further and say it's going to be rare when there truly is a moment of danger is because you want to avoid a situation where courts are taking this as license to do some kind of officer-created danger rule where merely getting into a bad circumstance, making a bad stop means that the later use of force is automatically unreasonable. I think that would be what we're trying to guard against Justice Gorsuch.

Justice Sotomayor (30:06):

That's nice. But this is not the issue before this court. Correct?

Speaker 2 (30:10):

Correct. This court does not need to go any further than to say that in this case-

Justice Sotomayor (30:14):

And Justice Scalia was very clear in his Scott writings that we shouldn't be trying to do black line rules here.

Speaker 2 (30:23):

… Certainly, we're not asking for black line rules. I think just if the court wanted to give more color, it could say, as Justice Barrett said, in the Biegert opinion, we think when there's a moment of danger that's very often going to be [inaudible 00:30:36]. But not always-

Justice Sotomayor (30:36):

Well, why don't we just say it's important just as everything is important, but it's important. You're putting a scale on it by the words you used. You're putting a thumb on it.

Speaker 2 (30:48):

This court certainly doesn't need to say anything further than the narrow opinion that Justice Alito sketched out with my friend. But I do think given that the question is the reasonableness of the use of force in the moment, the circumstances in the moment and the presence of a danger in the moment will have to be quite important.

Chief Justice Roberts (31:08):

Thank you, Counsel. Justice Alito?

Justice Alito (31:10):

Well, it's fine to tell someone, a court or anybody else "Take into account the totality of the circumstances." But that's fairly meaningless unless you also tell that person what you are examining the totality of the circumstances to determine. And that's really the difficult question here. Are you examining the totality of the circumstances to determine whether the act that forms the gravamen of the Fourth Amendment claim, let's say it is the allegedly unreasonable use of deadly force is unreasonable? Or are you asking the court or the jury to determine whether the whole course of conduct in which the officer is engaged was unreasonable in part in the sense that it wasn't prudent? It was in violation of perhaps departmental policies or the best practices that have been established for police departments, that some people think should be followed by police departments around the country. That's really the difficult question. And what would you say to that?

Speaker 2 (32:31):

I would say, Justice Alito, the former, the question is was the use of force the seizure reasonable in the moment? That's what we're trying to get at when we look at the totality of circumstances, we're not doing some sort of freewheeling inquiry into whether the officer overall over the course of five minutes acted reasonably. So, that is why we think the circumstances in the moment do have prime importance, but that does not mean that courts have a license to ignore everything before that moment as the Fifth Circuit did here.

Justice Alito (32:55):

Well, would it be, would a court hearing this case be obligated to admit expert testimony by various individuals who have a view about what are good police practices and what are not good police practices? Would that be what the jury's determination would boil down to?

Speaker 2 (33:17):

So, the ultimate determination here about whether the officer acted reasonably is, according to Scott, a pure question of law. The jury's not deciding that. The jury could be making factual determinations about what actually happened, when the officer jumped, and all the rest. As the court is examining whether that initial thing that the officer did here, jumping on the car, was outside the bounds of reasonable behavior, I do think it's appropriate to look at training manuals and the like. That can't resolve the question, but that could provide helpful guidance.

Justice Alito (33:47):

Well, there are some federal law enforcement officers who make vehicle stops. So, what is the teaching? Do you know? What are they taught about placing themselves in front of the car or in

Justice Thomas (34:00):

… in a position where they could be killed or injured if the driver decides to try to drive away.

Speaker 2 (34:06):

I don't know across the board a rule for stepping in front of cars. I know that federal officers are trained to use force to respond to danger, but not to enter into situations where the use of force becomes sort of inevitable. That's the DHS manual that my friend points to at page 41 of her brief. I think, again, we don't really train officers to go right up to the constitutional line.

(34:28)
We often will train officers to not enter in these situations to begin with. Even if they ultimately do so it could end up being not a Fourth Amendment violation. So I suspect we would train officers to frequently avoid using force on roads and whatnot, even if it would be permissible under the circumstances to do so because we just want to train them more cautiously, I suspect.

Justice Thomas (34:50):

Thank you.

Chief Justice John Roberts (34:52):

Justice Sotomayor?

Justice Sotomayor (34:55):

No, thank you.

Chief Justice John Roberts (34:57):

Justice Kagan? Justice Gorsuch? Justice Kavanaugh?

Justice Kavanaugh (35:00):

I just am curious after this case gets resolved on remand, if it goes back on remand what the rule will be for officers and what those training manuals will say. Put aside the abducted child example, someone's pulling away it might be they just don't feel like they want to be hassled for a traffic violation, but they could be about to drive down the street in New Orleans. You don't know.

(35:23)
Or they might be on drugs and about to kill someone else who's on a bike on the side of the road and I don't know what we want officers to do and I don't know how that's going to get fleshed out. Officers, if they're held liable for jumping on cars where anything that happens thereafter are just going to let cars go and maybe that's the rule that the United States thinks is appropriate. I don't know.

Speaker 2 (35:45):

That's not the rule the United States thinks is appropriate. I do think that it is sometimes appropriate to use force to stop a car from pulling away from a stop. I think Brosseau is good guidance on that. But Brosseau also says that the use of force to stop a vehicular flight is necessarily a context-specific thing. I think it says in Brosseau that that is an area that depends very much on the facts of each case. So I recognize that could be unsatisfying in giving guidance to officers. Police departments may well say, "Don't jump on the car no matter what unless you see a weapon." Or something like that, again, they may train them not to go all the way up to the Fourth Amendment line, but we don't think that there's a [inaudible 00:36:24] that I can't-

Justice Kavanaugh (36:24):

An individual officer would be who? Whose risk averse on being held liable for something like this? Just not going to do it. But anyway, I'll stop there. Thank you.

Chief Justice John Roberts (36:37):

Justice Barrett.

Justice Barrett (36:38):

We should go back to this point. There is a split on this. So what about in the circuits that don't take the moment of threat approach, these questions that Justice Kavanaugh is asking about guidance for police officers I'm just wondering what your view is of how courts are handling these kinds of cases in that circuit in ways that might affect police behavior.

Speaker 2 (36:59):

So I do think actually the split is maybe not so much a two-sided split as a three-sided. I do think there have been some courts that veer a little bit towards an officer-created-danger rule where they seem to say that almost suggests that the use of force automatically unreasonable if earlier in the sequence the officer did anything unreasonable. And we don't think that's correct and we do think that would be bad guidance for officers and would lead them to police less aggressively than they need to be able to.

(37:26)
But I think in a court that appropriately takes into account the totality of the circumstances, officers will have good guidance to use force when necessary, when there's a danger and they need to protect themselves or the public. But to avoid situations, as I said, to avoid manufacturing a situation where the use of force effectively becomes inevitable, that's jumping in front of the car, that type of thing. Again, obviously respondent disputes, that's what he's done here. Petitioner thinks it is, that's what they'll sort of hash out below. But I think guidance that says you can use force to respond to danger, don't manufacture a dangerous situation would go a long way.

Justice Barrett (38:03):

So you said it's a three-sided split and you're kind of saying Fifth Circuit on one side and then these officer-fabricated or officer-caused dangers on the other side. What about those circuits in the middle and this concern that Justice Kavanaugh is correctly expressing about what cops do in the moment in those circuits that take the more middle approach? I take it that's what the United States is supporting.

Speaker 2 (38:28):

Correct.

Justice Barrett (38:28):

And this isn't a problem in those circuits or-

Speaker 2 (38:31):

I don't think so. I mean, we have amicus briefs on the other side from, for example, law enforcement officers from Wisconsin, which is in the Seventh Circuit, which does take this kind of more middle-of-the-road approach and I don't see in their brief something saying that they have a uniquely difficult time policing. I think they are of course going to have to make split-second decisions and very often in the cases where a court sort of ultimately decides that the decision they made was on the wrong side of the line, they'll still be protected by qualified immunity. So of course we are definitely very concerned as the United States about officers not being able to engage in aggressive enough policing they need to be able to, but we don't think that a totality of the circumstances approach, which is what Graham cautions, what Scott cautions, what this court has endorsed over and over again would lead down that path.

Justice Barrett (39:16):

And last question, what's the deal in respondent's brief at footnote three? It says, "The United States questions whether Sergeant Felix jumped onto the dorsal shortly before, shortly after, but the parties agree it was after." What's the deal with that factual dispute?

Speaker 2 (39:31):

I think it's a dispute about the way the district court phrased its opinion. It seems to suggest a distinction between the moment that the car started moving forward and a moment of acceleration. So it seems now everyone agrees that the officer stepped on the car after it started moving forward. There is that passage that we quoted from the district court opinion that says it's not clear if it's before or after the acceleration. I think that may be where the confusion comes from. The fact that there is some confusion about this matter of timing which could go to the question whether the decision to jump on the sill was reasonable or not to me seems like further reason to vacate and remand and set it back to the Fifth Circuit.

Chief Justice John Roberts (40:11):

Justice Jackson.

Justice Jackson (40:12):

Just to follow up on Justice Barrett's questions, it's the majority of circuits that use a totality test. Is that correct?

Speaker 2 (40:20):

Yes, I think that's correct.

Justice Jackson (40:22):

And is there any indication in those circuits that there is confusion or concern about the application of that test either on the part of the courts or on the part of the officers who do their jobs in that context?

Speaker 2 (40:43):

Not to my knowledge. I do think that, again, a feature of the sort of totality of the circumstances approach that applies to the Fourth Amendment across the board is that it doesn't always provide perfect guidance to officers, that's why we do have the backstop of the clearly established prong of the qualified immunity analysis to make sure that officers are not held liable for things that they weren't on notice were on the wrong side of the line. But I'm not aware of a problem in the circuits that are correctly applying a totality of the circuit.

Justice Jackson (41:10):

And is it the case that in those circuits that are correctly applying the test officers are regularly found to have engaged in using reasonable force? We're not talking about the application of a test that necessarily results in officer liability, right?

Speaker 2 (41:26):

Absolutely. Obviously the United States would not endorse such a test. Of course.

Justice Jackson (41:31):

And can I just clarify that the United States is not taking a position on the facts of this case and whether or not Officer Felix used reasonable force, and in fact you would be satisfied with just a clarification that moment of the threat doctrine is not what court should be using and then sending it back to the Fifth Circuit for the Fourth Amendment analysis in this situation?

Speaker 2 (41:54):

That's absolutely correct. Our interest in this dispute is a narrow one. We're really just interested in correcting the Fifth Circuit's legal error and we have no position on the facts of this case. Thank you.

Chief Justice John Roberts (42:03):

Thank you, counsel. Mr. McCloud.

Mr. McCloud (42:15):

Thank you Mr. Chief Justice and may I please the court When an officer doing his duty confronts a threat to his safety or the safety of others, it is reasonable for that officer to use force to end that threat. That's the conclusion this court has consistently reached and that's what the Fifth Circuit correctly held below. At the moment Sergeant Felix used force he was clinging to the side of a fleeing suspect's car and Felix reasonably believed that his life was in imminent danger. That conclusion should end this case.

(42:45)
Petitioner's contrary argument attacked straw man. Let me be very clear. We are defending the decision below and the moment of threat doctrine as it actually exists. The core premise of that doctrine is that an officer doesn't lose his right to defend himself just because he made a mistake at an earlier point in time, but applying that rule does not require courts to ignore everything that occurred prior to the use of force.

(43:09)
Like other circuits, the Fifth Circuit has repeatedly held that proceeding. Events are relevant to the extent they inform the officer's perception of the danger that he faced. The panel decision below repeatedly cited to and quoted from those very precedents. The panel did not and could not overrule them sub silentio. Petitioner asked the court to create a new breed of constitutional tort under which an officer facing the barrel of a gun loses his right to defend himself if he previously used bad tactics or poor planning. That's contrary to precedent and common sense.

(43:44)
Graham asks only whether an officer's use of force was reasonable in the particular circumstances he faced. It requires courts to put themselves in the shoes of the officer who used force not to second guess every decision the officer made in some of the most stressful circumstances imaginable. And Plumhoff and Mendez rejected similar officer created danger theories as illogical, unwarranted and inconsistent with precedent. The court should reject the theory again in this case and affirm the judgment of the Court of Appeals. I welcome the court's questions.

Justice Thomas (44:16):

How would you assess the difference between the Fifth Circuit's approach as you see it and the totality of the circumstances approach as we heard it this morning?

Mr. McCloud (44:33):

So I don't think that there is any difference between what the Fifth Circuit does and what Graham directs. Both-

Justice Thomas (44:38):

No, I mean as what the solicitor general and petitioners as they see the totality of the circumstances not so much Graham.

Mr. McCloud (44:47):

So the difference I think between our position and somewhat the government's position is they want to include within the totality of the circumstances arguments that the officer escalated the danger or created the danger and we think that that is now an irrelevant consideration under Graham and under the Fourth Amendment. In those cases, the question is was there a legitimate threat to the officers responding?

Justice Thomas (45:08):

Were they arguing that this morning?

Mr. McCloud (45:10):

That was exactly their argument that I heard this morning. Mr. Zelensky said that Sergeant Felix created a dangerous situation by jumping onto the car.

Justice Thomas (45:19):

But I thought he said he wants to argue that later when it goes back.

Mr. McCloud (45:23):

Well that was the argument that they tried to advance in the Fifth Circuit and this is I think the one thing I agree with in Judge Higginbotham's solo concurrence at 15 A of the Petition Appendix, he says that argument is foreclosed under Fifth Circuit law and that is the actual issue that divides the circuits. There is no split on the question of whether you can consider proceeding events. Every court in the country considers proceeding events. The question is, whether you can use those proceeding events as a basis for making an argument that the officer made a mistake or use poor planning.

Justice Jackson (45:54):

But Mr. McCloud, that's not what you argued before, and I'm very, very confused now. I mean, it seems as though the moment of the threat doctrine exists and as everybody has understood it, is about evidence essentially. It's what can you look at to prove the alleged Fourth Amendment excessive force claim? Can you look at anything that occurred outside of the moment of the threat, anything that occurred previously? You seem to be now suggesting that it is about liability. You said that they are creating a new breed of constitutional tort and this is about whether or not the police officer can be held liable for his own negligence in the time proceeding. I haven't seen that concept anywhere.

Mr. McCloud (46:43):

That was the argument that was made below. Issue number one in petitioner's Fifth Circuit brief was that Sergeant Felix escalated the danger and was negligent in jumping onto the car. And that is the issue that actually divides the circuits. The Fifth Circuit has never adopted a rule that you can't ever look to anything that happened prior to the use of the force. And the best example I can give-

Justice Jackson (47:02):

Isn't it true that in your bio you stated the Fifth Circuit's approach involves reviewing only the events immediately prior to the use of deadly force as opposed to other prior conduct?

Mr. McCloud (47:15):

The other prior conduct that was being referred to, there is conduct that is alleged to have created the-

Justice Jackson (47:20):

That might be what you're saying is referred to now. The sentence suggests that the dividing line is between looking only at the events immediately prior to the use of deadly force as opposed to other prior conduct.

Mr. McCloud (47:33):

No, Your Honor and on page 33 of the bio we said there was no circuit split on the issue. We said that every court considers prior events. So-

Justice Kagan (47:40):

Whatever you said or you didn't say Mr. McCloud. I think it's pretty clear that if you look at the court below, the court below said we're only looking at the prior two seconds and we're not going to look at anything before that. And so again, even if there's some kind of intra-circuit confusion going on in the Fifth Circuit, there might be, it wouldn't be surprising if on an issue like this there were some, but we have two opinions below actually both the circuit court and the district court who expressed a desire to look beyond two seconds, but said, "We can only look at the prior two seconds."

(48:19)
And you see him to be saying, "Well that is wrong. You can look back beyond the prior two seconds." That suggests to me that there's an easy way of just vacating and remanding and giving it back to the courts below to address okay, once we look beyond the two seconds and we have a fuller scope of evidence, then we'll make our reasonableness inquiry hopefully without our putting a thumb on the scales either way.

Mr. McCloud (48:51):

So I have a couple of responses on that first. I don't think that that's the best reading of the panel decision. I understand that that's what Judge Higginbotham asserted in his solo concurrence, but that is not the law and he doesn't get to make the law for the Fifth Circuit by just asserting things [inaudible 00:49:05].

Justice Thomas (49:04):

Fair enough. I understand you read the opinion differently than Justice Kagan does or maybe Judge Higginbotham did, but what's wrong with proceeding on that understanding?

Mr. McCloud (49:15):

Well, I think there are a number of things wrong. The first thing I would say is to the extent you are concerned about the breadth of the statements in the panel decision, I think the better course of action is to affirm the judgment which purely correct.

Justice Thomas (49:27):

If the only thing we're concerned with is this two-second rule, whether it's there or not, Mr. McCloud, and we just clarified that is not the law, send it back. Any objections to that?

Mr. McCloud (49:39):

Yes because then you would be sending it back for a remand that is going to be pointless. As I said before, the argument that petitioner wants to make on-

Justice Thomas (49:46):

Mr. McCloud the number of remands from this court that lawyers tell us are pointless could fill volumes.

Mr. McCloud (49:54):

Well, in this case it's not-

Justice Thomas (49:56):

Any other objection, besides your view, that it would be pointless?

Mr. McCloud (49:58):

Yes. My other objection is it would be creating I think a dangerous precedent because it could be seen as endorsing the officer created a danger argument that petitioner wants to make and as Justice Barrett alluded to in some of her questioning earlier-

Justice Thomas (50:12):

Fine.

Mr. McCloud (50:12):

There's a-

Justice Thomas (50:13):

Mr. McCloud that's a fair concern, but we've also talked about putting that aside and bracketing that and making clear as we did in men Mendez I think.

Mr. McCloud (50:22):

Mendez.

Justice Thomas (50:23):

Mendez. That footnote in Mendez reserved the question we'd reserve it again possibly, possibly. If we do that, any other objections?

Mr. McCloud (50:32):

So if you do that to do one additional thing which is to make clear that the standard would have to be high and mere negligence alone would not be enough to satisfy this officer created [inaudible 00:50:44].

Justice Thomas (50:44):

Negligence involves mens rea, and that's subjective, and we've said in the Fourth Amendment it's an objective test. Up until then you had me, but now I'm afraid I'm getting off the train.

Mr. McCloud (50:57):

Well I think the problem is I completely agree that negligence is not a relevant consideration and that's why we object to that test.

Justice Thomas (51:03):

All right, thank you.

Mr. McCloud (51:04):

But that is the test that courts of appeals are applying in the country right now. I don't think there's any question-

Justice Thomas (51:09):

Do you want a negligence test or do you not want a negligence test?

Mr. McCloud (51:12):

I do not want a negligence test.

Justice Thomas (51:13):

Okay. All right.

Mr. McCloud (51:14):

I want a test that says you only look at conduct that actually-

Justice Thomas (51:17):

You look at the-

Mr. McCloud (51:18):

… regulated by the Fourth Amendment that's searches in seizures. And so-

Justice Thomas (51:26):

And it's an objective inquiry looking at the totality of the circumstances, right?

Mr. McCloud (51:27):

It is an objective inquiry that looks at the totality of circumstances to determine whether the officer genuinely believed there was a threat. You do not look at the totality to determine well did the officer make a mistake and should have gotten himself-

Justice Thomas (51:38):

No, [Inaudible 00:51:39] or whether there was an excessive use of force? I thought the latter was the question.

Mr. McCloud (51:42):

And this court has consistently said that when an officer confronts a genuine threat it is not excessive to use force, and I would be very concerned about it.

Justice Thomas (51:50):

And that's an objective inquiry though, isn't it?

Mr. McCloud (51:51):

That is an objective inquiry. Yes, Your Honor.

Justice Thomas (51:53):

Okay. Right. Thank you.

Chief Justice John Roberts (51:54):

How broad is the totality of circumstances under your view? Do you get to put in this is the training record of the officer and look, you got D minuses in all the excessive force parts of it? Is that part of the totality as you view it?

Mr. McCloud (52:10):

No, Your Honor, we don't view that as relevant. I think Wren says that very clearly. Those sorts of policies and procedures do not inform the reasonableness question that is being asked by the Fourth Amendment. And Justice Alito's questioning alluded to this before, the Fourth Amendment is not a regulation on the reasonableness in a general sense of everything that officers do, it's a regulation of very specific conduct, searches and seizures.

(52:33)
And this court has established clear guidelines for determining when searches and seizures are reasonable. The problem with the other side's position is they want to take literally anything that an officer does and say if a jury through the lens of hindsight could say, "That was a bad call." Or if an expert could come in and say, "I wouldn't have done that if I were in the officer's shoes," that could be the basis for a Fourth Amendment claim.

Justice Sotomayor (52:56):

So it could be that when this goes down below the Fifth Circuit will actually address that question, but it didn't. It repeatedly said we can't look at any event ever. You can read in your own brief that there could be situations in which an officer is the aggressor. Page 34 I think is the page of your brief. You admit that an officer could be an aggressor and act unlawfully in doing so, correct?

Mr. McCloud (53:25):

Yes. If an officer comes out to mug someone.

Justice Sotomayor (53:27):

Which your articulation of this rule is just trying to get us to draw lines that haven't even been addressed by the court below.

Mr. McCloud (53:35):

I think they have been, Your Honor, respectfully. If you look at the cases-

Justice Sotomayor (53:38):

No, respectfully Mr. McCloud, the court repeatedly said we can only look at the actions in the two minutes before the moment of threat. If your answer had been, if he had walked up in an unmarked car in plain clothes with a gun drawn and he walked up to the car and this person took off, and/or accelerated slightly and he jumped on and shot blindly, do you think that's reasonable?

Mr. McCloud (54:11):

I think that would not be reasonable for a number of reasons.

Justice Sotomayor (54:13):

All right. So you've given the game away because at that point you have to look at what the officer did.

Mr. McCloud (54:19):

And Your Honor we agree that you can look at what the officer did and the Fifth Circuit does look at what the officer did. The best [inaudible 00:54:25] I can give you-

Justice Sotomayor (54:25):

It didn't in this case.

Mr. McCloud (54:26):

In this case that's because the only argument the petitioner made below, the only action she said you should look at was an action based on officer may differ.

Justice Sotomayor (54:34):

And we have three judges who said we shouldn't be limited in this way in the mind run of cases. And so we're stuck with this. We think the judgment is right, but it wasn't addressed at all. Officer-created danger wasn't addressed and the other side says clearly it's not raising it here.

Mr. McCloud (54:56):

It is going to raise it on remand. And I think it was addressed.

Justice Sotomayor (55:01):

And you want and you want an anticipatory ruling from us.

Mr. McCloud (55:05):

No, Your Honor. I think it was addressed and the best evidence I can give you of that are the cases that the Fifth Circuit itself cited for the proposition that we don't look at the action of the officer. All of those are cases in which the argument that was being made was the argument that they made below that the officer created a dangerous situation and that was the basis for liability. So that is the argument the Fifth Circuit said it's not considering. And that's what Judge Higginbotham said he wanted to consider. He said-

Justice Jackson (55:30):

Mr. McCloud, did the plaintiff argue that the court should be looking at the totality of the circumstances?

Mr. McCloud (55:36):

Yes.

Justice Jackson (55:37):

And did you object to that as being the test that the court should apply when it decided what it was going to look at to make this determination?

Mr. McCloud (55:45):

No, our objection was that you should not be adopting this officer-created danger theory and considering whether Sergeant Felix escalated the situation.

Justice Jackson (55:53):

So you did not say the moment of the threat doctrine is the test in the Fifth Circuit, and that's only what you should be looking at. You should not be looking at circumstances and facts and things that happened before the moment of the threat. If I look at the record I'll find that you're arguing that below.

Mr. McCloud (56:09):

So in the Fifth Circuit briefing I don't believe we did because the labeled moment of the threat doctrine didn't come up until Judge Higginbotham's opinion in this case. That was not a label that had been recognized prior to that. If you look in Westlaw for a moment of the threat doctrine, I think there are four hits for that and this is the one that really originated that term. So that was not our argument below. Our argument below was whether Sergeant Felix escalated the danger was irrelevant, and that's consistent with Fifth Circuit precedent. That's what Judge Higginbotham objected.

Justice Jackson (56:40):

All right. But do you concede that that's not what the Fifth Circuit held in this case, that it was irrelevant whether or not he accelerated the danger or he contributed to it? That's not their holding in this case, is it?

Mr. McCloud (56:52):

I believe that is their holding. And that is what Judge Higginbotham objected to. So if you look at page 15 A of the petition appendix, Judge Higginbotham says, " I would come out differently because I believe we should consider the fact that Sergeant Felix escalated the danger of this situation." That was the argument that they made that he wanted them to consider. And that is the whole basis for the disagreement between us and the court of Appeals and the disagreement that actually divides the circuit courts on this question.

Justice Sotomayor (57:19):

Counsel, can I read you three sentences from this opinion?

Mr. McCloud (57:23):

Certainly.

Justice Sotomayor (57:25):

This is the majority, "We may only ask whether Officer Felix was in danger at the moment of the threat that caused him to use deadly force against Barnes." It said its inquiry was quote, "confined to whether the officers or other persons were in danger at the moment of the threat resulted in the officer's use of deadly force." And it stated, "Any of the officer's actions leading up to the shootings are not relevant for the purposes of an excessive force inquiry in this circuit." So Higginbotham did not make up the moment of the threat doctrine. It's been used, it's been cited repeatedly by other circuits. It's well known by that name. This is not a made-up theory.

Mr. McCloud (58:13):

Well, Your Honor-

Justice Sotomayor (58:13):

No, let me finish. If you can see in page 34 that if the officer was the aggressor then there are circumstances, you don't think this is one of them, but there are circumstances in which the officer's actions are relevant, correct?

Mr. McCloud (58:35):

We agree that the officer's actions are relevant and the Fifth Circuit considers officer actions. Cole versus Carson is an [inaudible 00:58:41] on-line decision.

Justice Sotomayor (58:41):

It just said the officer's actions leading up to the shootings are not relevant. I don't see how I can read that any other way.

Mr. McCloud (58:51):

So Your Honor, I think you have to read the-

Justice Sotomayor (58:53):

Again, they didn't say they're not relevant in this case. They said they're never relevant.

Mr. McCloud (58:58):

And Your Honor, I think you have to read the opinion that's being cited there, that's Harris versus Serpas and that is a case that says we apply totality of the circumstances, and then when it makes the statement that we don't consider the officer's actions. It's referring to-

Justice Sotomayor (59:10):

Totality of the circumstances were not used by this court, correct? In this opinion.

Mr. McCloud (59:14):

It was. They considered the totality of the circumstances, what they did not consider was petitioner's argument that Sergeant Felix created-

Justice Sotomayor (59:22):

Then point me to a place in the opinion where it used the words "totality of the circumstances."

Mr. McCloud (59:26):

I cannot but that was the argument that was made below.

Justice Jackson (59:29):

Can you explain Judge Higginbotham's concurrent sentence I write separately to express my concern with this circuit's moment of the threat doctrine as it counters the Supreme Court's instruction to look to the totality of the circumstances when assessing the reasonableness of an officer's use of deadly force?

Mr. McCloud (59:49):

Yes, he is wrong about that. And the best evidence I can give you of that Cole versus Carson.

Justice Jackson (59:53):

I'm asking did he believe that there was such a thing as the moment of threat doctrine and that it was in opposition to the totality of the circumstances test, which is what he was hoping that the court would be able to apply.

Mr. McCloud (01:00:05):

I don't know how he could reasonably believe that given that he wrote Cole versus Carson, which is an banc decision of the Fifth Circuit that is all about pre-shooting facts in that case.

Justice Kagan (01:00:14):

But I mean he did believe it and that belief produced the decision below.

Mr. McCloud (01:00:19):

Well, I don't think that you should attribute his statements in a solo concurrence that others didn't join to the other members of the panel. I think you should read the cases that they [inaudible 01:00:28].

Justice Kagan (01:00:27):

Well, he wrote both and he was telling you exactly why he wrote the majority opinion the way he did because he felt constrained to. And I understand that you think he was not so constrained, but we're supposed to be reviewing this decision and he was telling us, "I the majority opinion writer felt that I was constrained to do nothing more than look at the prior two seconds." And you don't say that that's the right rule so it seems as though we should kick it back and let you guys fight it out as to the relevance of anything that happened beyond the prior two seconds.

Mr. McCloud (01:01:05):

So I guess I would encourage the court if it does end up remaining to say a little more than simply do it again Fifth Circuit. I think it is important to say something about this issue of officer-created danger because it has divided the circuits for a number of years and the court has gotten a number of cases that present that issue. Mendez is one, the Bond v. City of Tahlequah case from a few terms ago that was summarily reversed was another.

(01:01:28)
And so it is lurking in the background of many of these excessive force cases and it is doing real harm in the circuits that apply that, the ninth Circuit, the 10th Circuit, that is the reason we have Amici from California that say, "This standard makes it impossible for us to train officers and give them clear guidance." And so I think it's incumbent on the court to offer a little more clarity on that in an opinion even if it does remand.

Justice Barrett (01:01:55):

Just make sure I have it, what clarity would you want us to give?

Mr. McCloud (01:01:59):

So if the court is going to offer or accept some version of officer-created danger perhaps along the lines that Your Honor's Begert opinion suggested, I think you would want to make clear that something like negligence alone is not going to be enough. It's going to be an extraordinary case in which an officer's creation of the danger is the basis for a Fourth Amendment claim.

Chief Justice John Roberts (01:02:23):

Thank you, Counsel. And Justice Thomas.

Justice Thomas (01:02:27):

As I understand you you're saying that it isn't so much that the difference between whether to use the totality of circumstances, but rather what evidence would be available or it could be used in that analysis and here you say the officer-created danger should that the Fifth Circuit said it not, it would not permit that assessment-

Mr. McCloud (01:02:58):

That's correct.

Justice Thomas (01:02:59):

… within the context of totality of circumstances.

Mr. McCloud (01:03:02):

Exactly.

Justice Thomas (01:03:02):

So it's a subcategory of the totality of circumstances. I hear you.

Mr. McCloud (01:03:07):

It is a particular argument that is off limits in the Fifth Circuit and in the majority of the circuits when you're considering the totality of the circumstances. So you can still look to things that the officer did prior to using force, but you cannot blame the officer for creating a bad situation and second-guess all of the decisions he made.

Justice Thomas (01:03:25):

Thank you.

Chief Justice John Roberts (01:03:25):

Justice Lee. Justice Sotomayor.

Justice Sotomayor (01:03:30):

I go back. You do believe there are situations you admitted it to me earlier where an officer's actions can be considered to have created a danger unreasonably.

Mr. McCloud (01:03:41):

I don't agree with that framing. I agree that you can consider an officer's actions and I agree that an officer's actions can make the use of force less reasonable. Again, the Cole versus Carson example is one that's instructive on that. That is a case where the majority of the Fifth Circuit en banc said things that the officers did prior to using force made it unreasonable for them to use force at a later point, but what they did not do is say, well did they violate policies or could I have made a better decision? And that is the fundamental difference between my approach and petitioner's approach.

Chief Justice John Roberts (01:04:15):

Justice Kagan.

Justice Kagan (01:04:15):

So the question presented that we took certiorari on is whether courts should apply the moment of the threat doctrine when evaluating an excessive force claim. So to me what that means is moment of the threat doctrine do you just look at the second or two before or do you widen your scope to look at other things beyond that? What we did not take Serdon is the question that you are raising a very important question, probably one on which there is some confusion wouldn't be a surprise to me, but definitely not the question in this case. The question of what weight to give the fact that or the possibility that the officer created the danger in the reasonableness inquiry. That's a completely different question which we didn't take cert on, which it does not seem to me we are well positioned in this case to discuss.

Mr. McCloud (01:05:09):

So if I can just respectfully push back on that. I think in order to answer the question presented as petitioner framed it, you have to understand what the moment of threat doctrine is. And for all of the reasons we explain in our brief, it is absolutely not a doctrine that says prior events are off limits. There is no court in the country that is applying that version of the standard.

(01:05:28)
The dispute between the courts and what divides us in this case is whether when looking at those prior events you can identify something the officers did that was unreasonable in a general cosmic sense and say that contributed to the danger. And even though that is not itself a violation of the Fourth Amendment, it is the basis for your Fourth Amendment excessive force claim. That's the nub of the issue. Thank you.

Chief Justice John Roberts (01:05:53):

Justice Scorsese. Justice Kavanaugh. Justice [inaudible 01:05:57]. Justice Jackson. Thank you, Counsel.

Mr. McCloud (01:06:14):

Thank you.

Chief Justice John Roberts (01:06:14):

Ms. Pettit.

Ms. Pettit (01:06:15):

Thank you Mr. Chief Justice, may it please the court. In the last 15 years, this court has rejected at least three times that an officer's otherwise liable conduct violates the Fourth Amendment because an earlier split-second decision made a confrontation more likely. Properly understood what Judge Higginbotham dubbed the moment of threat doctrine merely applies that rule. As this court recognized in cases like Mendez and Sheehan, it is necessary because the Fourth Amendment must be applied by thousands of real cops in the real world without in the words of Kentucky against King, an unacceptable degree of unpredictability.

(01:06:53)
The moment the officer created risk theory, which petitioners have continuously pressed at least until the reply brief in this court is antithetical to that proposition because it invites an open-ended subjective inquiry into the officer's intent that cannot be conducted without the benefit of hindsight. It also, as Mendez recognized, involves tricky questions and fuzzy standards of causation that cannot be easily applied because the Fifth Circuit has properly rejected that proposition. Its judgment should be affirmed and I welcome the court's questions.

Justice Thomas (01:07:27):

Would you articulate for us what you think the District court and the Court of Appeals held?

Ms. Pettit (01:07:35):

I think that the district court held, and I would point, Your Honor, at page 17 A and 24 A, footnote two under the Fifth Circuit precedent that prior actions that created a risk were not relevant under the Fifth Circuit's test because that is the argument that petitioner was pursuing at that time. And to Justice Sotomayor's questions earlier, the statements that she's referring to have to be read in light of those

Ms. Pettit (01:08:00):

Arguments because that is what the Fifth Circuit was rejecting when it said the prior actions were irrelevant.

Justice Jackson (01:08:05):

I'm sorry. You're saying the statements that the Fifth Circuit made in its opinion regarding what it's holding was have to be read in light of the arguments that were before it?

Ms. Pettit (01:08:18):

I believe that's what they were referring to when they say these actions that you're talking to are irrelevant.

Justice Jackson (01:08:23):

What is Judge Higginbotham saying when he says in his concurrence, "I write separately to express my concern with the Circuit's moment of the threat doctrine," and then he doesn't define it in the way that you have? He says, "This doctrine counters the Supreme Court's instructions to look at the totality of the circumstances."

Ms. Pettit (01:08:42):

Your Honor, I would point you to page 15A of his opinion where he also says that, "In our reasonableness analysis, references to our supposed obligation to consider the totality of circumstances are merely performative." So the dispute here appears to be not the formulation of the rule as I articulated it, but its application.

Justice Jackson (01:09:01):

No, he says it's performative. You didn't read the first part of the sentence, "If the moment of the threat is the sole determinative factor in our reasonableness analysis." So he says we have a moment of the threat doctrine that tells us we only look at this moment. And what that does is it makes any references to totality merely performative because we're not looking at the totality, we're just looking at the moment of the threat. So do you dispute that at least he conceptualized the doctrine in the way that I'm describing and the way that petitioners have put it forward?

Ms. Pettit (01:09:35):

There are certainly statements to that effect. He has however created a very similar concurrence in a case called Mason against Lafayette City from 2000.

Justice Jackson (01:09:42):

No, I'm talking about this case. So let me tell you what I think is happening and I just want to get your reaction and then I'll be done. It seems as though the question presented here is asking us to decide which test the courts should apply, and it sees the moment of the threat doctrine as different, distinct from the totality of the circumstances. Which test? Fifth Circuit applied moment of the threat, is that right or wrong? It seems now that you are arguing which circumstances. Assuming totality, is it okay to include or consider the circumstance of the officer's own conduct? If courts are doing that, is that a problem? That is a separate question. That is not, I think, properly within the scope of the question presented, which just asks us which test. So can you help me to understand why we would get into whether or not the particular circumstance you've identified is one that court should be looking at or not?

Ms. Pettit (01:10:44):

Because I agree with my colleague that it is difficult to answer the question presented without getting into that and I would point this court to pages 15, 23, 28, 32 and 41 to 42 of the petitioner's opening brief in which they're discussing precisely this type of question. So while they claim to disclaim it, they actually are talking about creation of the risk. In fact, in responding to questions from Justice Alito and Justice Thomas to articulate their test, I heard them say at least twice that they're asking why was he jumping up on the car? I also heard from the United States multiple times manufacturing the risk. That is conflating the two questions because they are quite related. In fact, that is the source of the dispute amongst the circuit courts. The Ninth and the Tenth Circuits say, "Intentional and deliberate conduct creating the risk can obviate the officer's ability to defend himself."

(01:11:41)
The Fifth Circuit says, "That's not the rule." That's the nature of the dispute. And so trying to take it out of that context and say just, "Are you considering two seconds or are you considering 30?" gets into the point where there's not a circuit split as my colleague mentioned. The Fifth Circuit is looking at those issues.

(01:11:58)
In fact, I would point this court to Singleton against Casanova in which Judge Higginbotham joined an opinion six months after this one in which, like Colby Carson, which he wrote three years earlier, the Fifth Circuit was describing all pre-force conduct. So the Fifth Circuit is not applying the moment of the threat doctrine notwithstanding some of the comments in Judge Higginbotham's opinion. And this court ultimately reviews judgments, not statements and opinions.

Speaker 3 (01:12:24):

Counsel, I appreciate that what happened below may be different than what's happening here, at least that's your view. But we did take a question presented about the moment of threat doctrine. I understand you think it's not a thing, but what's wrong with resolving just the question presented and putting aside your record-based concerns? It is a question. We've granted cert on it. I think everybody agrees it's wrong. What's the harm of saying that?

Ms. Pettit (01:13:00):

As long as Your Honor is very clear that you are not endorsing the creation of the risk theory adopted by the Ninth and Tenth Circuit, then I don't think there's anything necessarily wrong. I agree with my colleague that it is unnecessary, and the reason I say that is I point the court to page 5A of the pet app, which the Fifth Circuit quoted at length, the district court opinion that looked at those earlier circumstances. So I don't think it's necessary, but as long as the court is clear that we are not adopting the creation of the risk theory, we have no quarrel with such an action.

Speaker 3 (01:13:30):

Thank you.

Ms. Pettit (01:13:32):

Going to the nature of the questions here for just a minute, I would point out that the inquiry here, as I've heard a lot of concerns about line drawing and I find that interesting because the petitioner's argument here was that they just wanted to consider the jump as well as the shoot. That itself is a line drawing question and it's very deliberate because they have actually litigated whether everything up until the jump was reasonable and the district court concluded that it was because again, courts below are not considering just the two seconds. Instead, they're considering the totality of the circumstances. And to the question from the United States about the subjective nature of the test, this goes again to the arguments that have been raised up until the reply brief, which was after our argument or our brief in which the petitioner was endorsing the view of the Ninth and Tenth Circuit, which this court in Mendes expressly acknowledged was subjective and therefore inconsistent with the Fourth Amendment.

(01:14:34)
Which again is why we think this court, if it is going to remand, which again is unnecessary, makes it very clear that it is not adopting that view because it would be a fundamental shift in the Fourth Amendment. And it also is a shift that going to Justice Kavanaugh's questions earlier would create an impossibility for law enforcement agencies to train their officers for the reasons described in the California Sheriff's Association's brief. There are no further questions. I request that you affirm.

Speaker 3 (01:15:01):

Thank you counsel. Justice Thomas. Justice Sotomayor, Kagan, Justice Gorsuch, Justice Kavanaugh. Justice Bear. Justice Jackson. Thank you Counsel. Rebuttal, Mr. Zielinski.

Mr. Zelinsky (01:15:18):

I have five very brief points. First, Justice Jackson, you asked my friend on the other side when they argued for the test that was applied below, listen to minutes 28 and 29 of oral argument then you'll hear that there. Justice Sotomayor, you noted that my friends on the other side agree in many cases that the jump in front of the car case, you need to look at the whole picture of what the officer did, the jump and the shoot. There is no rule that… They can't distinguish that case from this case. Third, Justice Kavanaugh, you had some practical questions about how this is going to impact effective policing. Officers receive qualified immunity. As the Cato brief discusses 99 plus percent of the time they're also indemnified by the municipality. You have a brief of 22 former high ranking police chiefs who are in front of you saying that you should rule for petitioner and it will not hamper but promote good policing.

(01:16:07)
And then third, the DHS rule is a great example of why this is not going to harm effective policing. Fourth, Justice Alito, I want to be very clear. We are not saying that every single mistake is going to result in liability, but we are saying is you have to look at the whole picture and here that's more than just two seconds. Finally, Justice Gorsuch, we agree wholeheartedly, this rule is inconsistent with the common law. If you rule and adopt the moment of the threat doctrine, you'll essentially enact a hereto unprecedented rule permitting the killing of fleeing misdemeanants. You should not do that. You should vacate and remand. Thank you.

Speaker 3 (01:16:43):

Thank you counsel. The case is submitted. We will hear argument next in case 23-1007 Cunningham versus Cornell University. Mr. Wang.

Speaker 4 (01:18:13):

Mr. Chief Justice and may it please the court. When Congress enacted ERISA, it identified a number of prohibited transactions and codified that understanding in 29 USC, section 1106. In Congress's view, these transactions pose a special risk of being potentially harmful to the plan generally because they involved a party in interest which includes a fiduciary's relative or an officer or an owner of the plan or a person providing services to the plan. Petitioners here have identified a transaction that falls within the text of section 1106 and the Second Circuit's decision to dismiss that claim prior to discovery was incorrect for three reasons. First, text and structure. Congress frequently writes laws where it puts liability in one part of the statute and exceptions to liability in another. And when it does so, this court has time and again held that plaintiffs plead and prove liability and defendants plead and prove exceptions to liability.

(01:19:14)
Second, precedent. In Keystone Consolidated and Harris Trust, this court made clear that the prohibited transaction provisions provide for categorical rules. But what the Second Circuit's approach does is it converts those categorical rules into qualified ones. And that brings me to the final reason for reversal, which is that they're not just qualified prohibitions, but they're qualified based on exemptions that involve information that plaintiffs cannot know and do not know prior to discovery. Information like who the counterparties are in a cross trade or how large a block trade is or what asset classes are in a block trade, which is exactly why when Congress wrote these provisions, it intended for petitioners to plead and prove under section 1106 and for defendants to plead and prove under section 1108. For these reasons, Your Honor, we asked this court to reverse the judgment of the Second Circuit. I welcome the Court's questions.

Speaker 3 (01:20:15):

If we were to read your complaint as it is, what exactly is the injury?

Speaker 4 (01:20:20):

The injury is that with regard to the prohibited transaction provisions, Your Honor, the injury is that the plans here engaged Fidelity and TIAA who are parties in interest and that violates section 1106 A1C.

Speaker 3 (01:20:36):

So how did that harm the plan?

Speaker 4 (01:20:38):

It harmed the plan because Fidelity and TIAA didn't simply just provide record-keeping services to the plan. They bundled them with investment products and those investment products in turn had operating expenses and those operating expenses were then shared via revenue sharing to the plan to pay for record-keeping. Now that bundling resulted in Fidelity and TIAA pushing, this is on page 22 of the joint appendix, pushing its own products, its own actively managed products leading to higher expense ratios and therefore greater record-keeping fees in the result.

Justice Kavanaugh (01:21:17):

Your theory means, I think, or at least the other side says that it's a prohibited transaction just to have record-keeping services.

Speaker 4 (01:21:28):

Correct, Justice Kavanaugh, I think our theory-

Justice Kavanaugh (01:21:30):

And that seems nuts, right? That's what they say and it does to me seem nuts too. So what do we do with that?

Speaker 4 (01:21:37):

Well, justice Kavanaugh, let me try to unpack that. I think the starting point would be to look at the text of the statute and I think for outside service providers that would fall under 1106 A1C, something that the fiduciary shall not do. Now that doesn't provide a per se bar and we don't think it provides a per se bar. Instead, it says, look, that gives plaintiffs an opening to open the door to plead a claim. That doesn't mean that they'll succeed on liability 1108, that's the purpose of 1108.

Justice Kavanaugh (01:22:06):

Of course. But just to state what's obvious from the amicus briefs, and we've heard before in other contexts, they're worried about the expense of litigating this past the motion dismissed. So it's not enough, they say, at the motion dismissed to say, "You're not alleging to Justice Thomas's question. You're not alleging excessive or unreasonable amounts paid for these record-keeping services. You're just alleging that we had them." Well of course we have them, right? Everyone has them. You have to have them. So it's an automatic ticket. Pass go. Go immediately to discovery, summary judgment, huge expense. These universities, other defendants are saying that's just completely absurd and ridiculous, which is the starting point of Judge Livingston's analysis was looking at trying to make sense of all this in context, I think. Now maybe there's a good answer to that, but is it an automatic ticket when you assert that a plan is record-keeping services to get past the motion to dismiss?

Speaker 4 (01:23:10):

Well, Your Honor, maybe I can back up on that, Justice Kavanaugh, and answer it in two ways. The first way is to say that I think as we recognize on page 19 of the joint appendix, record-keeping is a necessary service. And then there may be certain moments where you want to outsource that to an outside service provider. You don't have to, but you might want to. But if you do that, if the fiduciary does that, then it's not a blank check. What 1106 and 1108 say is it's not a blank check. And if that transaction is subject to challenge, then 1108 provides the necessary exemption for you to marshal. Now I think the-

Justice Kavanaugh (01:23:48):

You can't just say, sorry to interrupt and I want you to continue, but just to get this point, you can't just say, and you're not alleging that the fees were excessive at this point on this claim. That's not going to be enough for you to get it dismissed. Correct?

Speaker 4 (01:24:03):

Well, I think that as we note in our-

Justice Kavanaugh (01:24:07):

And you've really suffered no harm, to Justice Thomas's point, either.

Speaker 4 (01:24:11):

Well, Justice Kavanaugh, and I think this is consistent with Justice Thomas's point as well, that there are other guardrails that we point to, things like fee shifting and standing and the enormous expense of even bringing a case that would deter this. And I think the best practical proof of this is that the Eighth Circuit has embraced this rule for 15 years and we don't see any evidence of it happening. The response and their-

Justice Kavanaugh (01:24:35):

And the amicus briefs, maybe the amicus briefs might engage in puffery, understandably, I mean I understand that. I'm not saying understandably, but they're painting a pretty bleak picture. The American Benefits Council, the universities who are saying this is a huge problem for the universities, this expanded litigation threat would be near limitless because every college and university relies on third-party service providers. And because the contract's mere existence, mere existence, would be enough to force these defendants to proceed through expensive discovery and risk opening the floodgates to burdensome. And then they say, rightly, the burden of these suits takes away money from its tuition, its faculty, et cetera. The money comes from somewhere. So that's just in one context, it's other context according to benefits counsel. Maybe they're all wrong, but I take it seriously. I listen to what they say and want to at least get your response.

Speaker 4 (01:25:38):

Certainly, Justice Kavanaugh. And two responses to that. The first is I think the court has in fact dealt with a similar issue in Harris Trust. In Harris Trust, that was a case about whether for a prohibited transaction claim one could hold not simply just the fiduciary liable, but also the party in interest. And many amicus briefs were filed in that case and the respondents themselves made the point that, look, if you can hold us liable, hold the parties in interest liable, then that's going to create these devastating policy consequences. And the court rejected that. The court said on page 254 that Solomon, the defendant, submits that the policy consequences could be devastating. Faced with the prospect of liability for dealing with a plan, parties in interest could refuse altogether to transact with plans. But we know that that hasn't happened. Since 2000 when Harris Trust was decided we've seen respondents themselves agree on this point that there are in fact more risks of plans being offered. There are more risks-

Speaker 6 (01:26:33):

Mr. Wang-

Justice Alito (01:26:33):

You have a formal argument, all right? And maybe you're going to win on your formal argument. These are exceptions and exceptions are usually affirmative defenses. And we could write an opinion that says that, end of case. It could be a nice short opinion. But it really does seem to close its eyes to the reality of what's going on. And that's what I'd really like you to address. I don't know why this would be confined to universities, but all sorts of employers with defined contribution plans offer the employees a menu of funds in which they can invest. And so every employer who does… And there are always going to be record keeping expenses relating to these funds. And I don't know whether it would be possible, realistic, reasonable for Cornell or any other employer to do the record keeping for Fidelity and for TIAA. These are their funds. They're going to do the record keeping for it. So all you need to do in your submission is plead something that is perfectly innocuous in and of itself. Now maybe the fees are too high, maybe they're not, that's a different question. But all you need to do is plead something that seems to be on the surface, completely innocuous. That's enough to get you beyond the motion to dismiss. And then how many lawsuits just like this one did the Schlichter Bogard Law Firm in St. Louis file against universities?

Speaker 4 (01:28:24):

Well, Justice Alito, let me try to unpack that.

Justice Alito (01:28:26):

Answer the second question first.

Speaker 4 (01:28:28):

As to how many lawsuits were filed?

Justice Alito (01:28:28):

Yeah, how many lawsuits just like this, did that law firm file against different universities?

Speaker 4 (01:28:35):

I think it's filed a significant number. I don't have the specific number off the top of my head, but I would say that 12, excuse me. But I would say in the complaint itself-

Justice Alito (01:28:46):

I thought it was 20, but it doesn't matter. So you know what, you file all these lawsuits and maybe the universities are going to say, "Look, it's going to cost us a lot of money to go through the discovery. We're just going to settle." And so there's a payday for the law firm. Now maybe this is not something that we should worry about, but.

Speaker 4 (01:29:05):

Certainly, Justice Alito. Well I think first of all, in the amended complaint, we point out that not every university is subject to suit. There are a examples such as Leo and Marymount, California Institute of Technology, Purdue, that have in fact, I think consolidated to a single record keeper or had the record keeping fees below or at the industry benchmark. That's not the case.

Justice Jackson (01:29:26):

Mr. Wang-

Speaker 3 (01:29:27):

Let me ask you this, counsel. So you have a complaint, you got to file it. And my colleagues make a very good point about how it can be easy to overcome a motion to dismiss. But if you're referencing a contract in a complaint, there's a lot of case law there that allows district courts to review the contract and perhaps with the full contract before it could as a matter of law, find that the affirmative defenses apply. Would you agree with that?

Speaker 4 (01:30:01):

I think so, Your Honor, and I think is-

Speaker 3 (01:30:03):

And then there's also a lot of case law that says that a district court can convert a 12B6 into a summary judgment when defendants request it at the outside of a case and appropriate circumstances. Would you agree that that would be appropriate in some cases too?

Speaker 4 (01:30:20):

I think that would be appropriate. That's within a district court's discretion.

Speaker 3 (01:30:23):

Thank you.

Justice Jackson (01:30:25):

I'm sorry. Oh, I just wanted to ask you, so obviously there's some concern about why on Earth Congress would've structured it that way. Do you want to address that?

Speaker 4 (01:30:34):

Yes, certainly, Justice Barrett. I think it was because pre-ARISA as Keystone Consolidated points out, pre-ARISA, the standard was the arm's-length standard of conduct. But that proved difficult to police. It led to a rife of abuses. Abuses were pervasive. And so I think Congress wanted to prescribe these simple and categorical and straightforward rules and prohibitions that provide plaintiffs a cause of action and recognize the information asymmetry between the fiduciary and the beneficiary. And I think this is a-

Justice Jackson (01:31:06):

Sorry, keep going.

Speaker 4 (01:31:07):

Sorry. I think this is just one example of that. As we point out, even with respect to the specific exemption at issue here, 1108 B2. B2 includes another provision, B2B, which specifically says and contemplates that information regarding compensation, regarding a necessary arrangement goes from the party in interest to the fiduciary. It never goes to the beneficiary.

Justice Jackson (01:31:29):

Mr. Wang, following up on Justice Gorsuch's point, is there anything in this statute or in the rules that would prevent a defendant in one of these cases from seeking an expedited summary judgment ruling from the court?

Speaker 4 (01:31:45):

No, there would not be.

Justice Jackson (01:31:47):

So the university or whoever could simply respond, "No, we really do have reasonable fees," attach some documents and that could be the end of the case. We're not necessarily talking about the kind of case that would go on and on and be a big expense.

Speaker 4 (01:32:00):

Certainly, certainly. That's correct, Justice Jackson. I think district courts have the discretion to have limited discovery to order an expedited motion for summary judgment.

Justice Kavanaugh (01:32:08):

They do that with no discovery?

Speaker 4 (01:32:11):

Pardon me? Can you-

Justice Kavanaugh (01:32:11):

They do that with no discovery?

Speaker 4 (01:32:13):

I think that would be a harder call.

Justice Jackson (01:32:15):

But they could do limited discovery that's just targeted to that issue, and the defendant can start the ball rolling by moving for summary judgment to include documents that would prove that it's reasonable and necessary, correct?

Speaker 4 (01:32:28):

Entirely correct. And Justice Kavanaugh, if I can just respond to your question about why doing it with no discovery may not be appropriate in this particular case. Because in this particular case, what the Second Circuit faulted petitioners for being unable to do was to show how services rendered corresponded with fees and how you could benchmark one with the other. And I think that it's reasonable to say, "Well, if you're going to ask that question, at least give us the contract. Give us the contract so we can understand what fees and what services were available." And that's not turned over prior to discovery, that's something the defendants routinely do not turn over.

Justice Kavanaugh (01:33:01):

Following up… Go ahead.

Justice Jackson (01:33:02):

Sorry. No, I was just going to ask about the information asymmetry and those concerns and also the bigger structural concern. We are focusing here on one type of transaction and one exemption, but as I look at this statute, there are 21 separate exemptions in 1108 B. And I guess I'm trying to figure out if there's any principled basis for saying the burdens are different here in this kind of service provider contract, but then they would be in with respect to other exemptions. Do you understand what I'm saying?

Speaker 4 (01:33:36):

Yes. Yes, Justice.

Justice Jackson (01:33:38):

Wouldn't we have to have a consistent rule about whether the plaintiffs bear the burden or the defendants bear the burden of proving exemptions?

Speaker 4 (01:33:46):

Entirely so, Justice Jackson, I entirely agree. And I think that this statute provides the reason why, which is to say, "Look, there is an information asymmetry." The information asymmetry might be lessened as to some exemptions, maybe B2, maybe B1, but it does exist. And given the text and structure-

Justice Jackson (01:34:03):

And some of the exemptions, I mean it would be really, really hard for us to determine that the plaintiff has to plead them because they don't have the information.

Speaker 4 (01:34:11):

Correct. Correct. Exactly so. Correct.

Justice Kavanaugh (01:34:15):

What do you think of the government's point about, and this is following up on Justice Gorsuch's suggestions, the government's point about rule 7A7 and that use? The chamber's amicus brief says even the most ardent scholar of civil procedures likely never heard of that, but it is cited in the government's brief as a tool to mitigate the problems that have been identified. What do you think?

Speaker 4 (01:34:43):

Certainly Justice Kavanaugh. I think this goes to Justice Gorsuch's understanding that the district courts can have a wide variety of tools at their disposal. And I think Justice Jackson as well said perhaps it's limited discovery, perhaps it's an expedited motion for summary judgment. Perhaps it is this, according to the chamber, arcane rule of civil procedure or perhaps it is an additional pleading. But I think that these are all sorts of tools that are within a district court's discretion given the complaint and the specific pleadings at issue and the circumstances between the parties.

Speaker 3 (01:35:16):

Thank you Counsel. Justice Thomas.

Speaker 5 (01:35:20):

Before Varity, were there any suits like this?

Speaker 4 (01:35:25):

I am not aware of any suits like this.

Chief Justice Roberts (01:35:30):

How did the factors the court emphasized in cases like Twombly and Iqbal come into play here? We were interested and did seriously tighten up the pleading standards there and I wonder if that's something we should take into account in deciding how to allocate the burden of going forward here.

Speaker 4 (01:35:52):

Certainly, Chief Justice Roberts. I think that the way that we would see it, if you will, is to imagine if you have sort of three boxes of types of complaints. Box one is the bare bones complaint that says, "I'm going to sue you because you did record keeping." And box two is I think something more like what we see here is to say, "Look, I'm going to bring a suit because I see that record keeping is tied to revenue sharing. And revenue sharing is itself tied to the investment management products that you offer and you happen to offer products that promote your own services." That's box two. And then box three is everything in box two plus give us allegations as to the services and the fees and benchmark them based on information you don't know. I think what we would say, and I think this comes through in the government's brief, is that we would say that we don't see any in box one.

(01:36:40)
We don't see any cases in the Eighth and Ninth Circuit, and that is because of the guardrails that we talk about. But if we were to start seeing them, I think within the many tools in a district court's discretion, whether it's limited discovery, Pickball and Twombly, rule seven, there's a number of ways to manage that litigation to make sure that box one does not get out of hand. And if I could briefly respond to one point that you made in your question, Justice Thomas, I would say that before Verity, I think Congress was nonetheless concerned with these types of transactions and not simply necessarily just a service provider transaction, but I think more broadly as to regarding the parties and interests, which is a fiduciary's relative, a officer and owner. And it combined this corpus and said, look, these are prohibited. And I think those types of lawsuits, I don't have a specific number off my top of my head, but could have happened pre and post Verity,

Speaker 3 (01:37:37):

Justice Alito, anything further?

Justice Alito (01:37:39):

Yeah. What are the guardrails that you think are in play here?

Speaker 4 (01:37:45):

Certainly. As we point out, I think there are a few. One is simply the expense of litigating one of these and bringing one of these cases. Some more formal guardrails include fee shifting, standing, sanctions. So those that we outline in our briefing all provide, I believe, various deterrent mechanisms to the bare bones allegation that I think the court has expressed some concerns about.

Justice Alito (01:38:15):

So rule 11 is one, standing is another one. What do you think you have to plead to establish standing? Do you have to plead anything more than that I am being charged for recordkeeping services? Do you think you have to prove that the charge is excessive in order to have standing at the pleading stage?

Speaker 4 (01:38:40):

Well, justice Alito, I think that that's a little bit of an open question after this court's decision in Thole. Certainly I think with Thole, perhaps one takeaway is that yes, you would have to show because simply alleging recordkeeping would be pleading an injury at law and rather than injury at fact. So I think that that is a possibility. I'm not-

Justice Alito (01:39:02):

All you have to plead, you have to plead, "I was charged too much," and that's enough established standing.

Speaker 4 (01:39:11):

I think in the appropriate case, yes. However, I think that, again, this goes back to the other guardrails that might be there, which are fee shifting and questions about the expense of even bringing one of these cases. So I think these all work together to explain why in the Eighth Circuit and the Ninth Circuit, we don't see cases that have these bare bones threshold complaints.

Justice Alito (01:39:41):

And what do you think about the procedure that the Solicitor General recommended involving civil procedure seven?

Speaker 4 (01:39:50):

I think-

Justice Alito (01:39:51):

Do you think that is something we should say is a good practice?

Speaker 4 (01:40:00):

I think that that is one of several options that would be available to a district court to address perhaps these concerns over a bare bones complaint. But it is

Speaker 3 (01:40:09):

A district court could do that. A district court could say, "After the answer is filed, I want to reply," and then rule on whether it can be determined based on the pleadings, if the defendant is entitled to judgment on the pleadings.

Speaker 4 (01:40:25):

Certainly, Your Honor, I think that's how we would see it. Of course, the district court could have other options available to it, such as limited discovery or an expedited summary judgment motion as well.

Justice Alito (01:40:35):

And do you think that that should be mandatory for the district court to go through that? Well, I'll ask the Solicitor General that. I have no more questions. Thank you.

Speaker 3 (01:40:44):

Justice [inaudible 01:40:46].

Justice Sotomayor (01:40:46):

I do this. This isn't that easy a case in my mind. You're right about the general rules we've set, but the statute is slightly different because many of the cases that we've seen before, the prohibitions were on one page and the exemptions were in a different section, but the prohibition didn't reference the exceptions the way the statute does. It says, "Except for the exemptions in 1108, you can't do the following." On the other hand, there's 21 exemptions within 1108, but I also understand there's dozens if not a hundred more, that have been passed by the Department of Labor. And if we accept the other side's position that you have to prove the case and say there's no exemption, I don't know how you know that. You're right. How will you know which exemptions are pertinent or not, correct?

Speaker 4 (01:41:53):

Correct. Correct.

Justice Sotomayor (01:41:54):

And so that's really the problem in this case, which is either whatever we decide

Justice Sotomayor (01:42:00):

Someone's going to be potentially unfairly treated because no plaintiff has a way of knowing what all the exemptions are and what potential exemptions the other side could pick.

Speaker 4 (01:42:15):

Certainly, Justice Sotomayor. And I think that we…

Justice Sotomayor (01:42:18):

Let me go on, okay? Yeah.

Speaker 4 (01:42:20):

Apologies.

Justice Sotomayor (01:42:20):

Okay. That's a given. But here it's pretty clear that you alleged and you thought you had some sort of burden because I read your very extensive complaint and you basically point to a lot of other industry fees and that the fees were unreasonable. You alleged it's unreasonable. You show a lot of other fees. I'm not quite sure still, and I will ask the government this. Under normal pleading standards, I would've thought this was enough. I think that the Second Circuit was thinking that it has to be pled with Twombly and Iqbal as a fraud and that you needed more particularized information relating to the nature of the services in total, some information that you say you couldn't have known. You just knew how much was being paid and you compared it to what other people were paying.

Speaker 4 (01:43:24):

Comparable plans. Yes.

Justice Sotomayor (01:43:25):

Exactly. So if I have a problem with that part of it, that the Second Circuit may have asked for more than you needed to plead, what do I do?

Speaker 4 (01:43:35):

Well, I think…

Justice Sotomayor (01:43:36):

Even if I accepted their proposition that you need to allege, for whatever reason, a pleading standard, injury standard, that you have to allege something more than that they have a transaction. Do I get to address that or I don't, or what am I doing here?

Speaker 4 (01:43:59):

Certainly, Justice Sotomayor. I think that what you're doing here is, first I think you would reverse. We would ask this court to reverse the judgment of the Second Circuit. And it'd reverse by saying, look, if these are enough under Iqbal and twombly and it involves unreasonableness, then whatever rule you apply, we would still say that there was a legal error here. But if I could get back to, I think, maybe the first part of your question, which is perhaps the relative weakness of our decision, except as otherwise provided language at the top. Well, first of all, I think that precedent answers this point, and precedent answers this point in a couple of different ways. One is respondents have provided no cases that that actually changes the calculus. It turns the words accept as otherwise provided magically turns the exemptions into elements. There's no case on that point. In fact, the cases like Atlantic Richfield and Schlemmer make fairly clear that all that's doing is saying what happens when things clash. It doesn't expand or contract the liability provisions at all.

(01:45:01)
And I think sort of maybe as a concluding point on this point, that is reinforced by the structure and the complexity and the nuance that's provided in 1108 that involves an information asymmetry that again cannot be addressed prior to discovery.

Justice Sotomayor (01:45:17):

I'm going to ask the other two about the Second Circuit's factual ruling, which was that with respect to this provision, you have the burden of showing unreasonableness, but it reserved consideration of whether there were other exemptions that you didn't bear the burden about proving. I don't know how it got there at all, and I'll ask the government and your adversary how we do that. But Cook did say that establish a narrow ruling for criminal pleadings. I don't think there's any case that ever has applied it to civil exemptions, correct?

Speaker 4 (01:45:57):

Correct.

Justice Sotomayor (01:45:58):

So it's hard to rely on Cook, but the essence of its thinking was, if a prohibition looks like you can't really tell it's illegal or not because the exemption here says you can have these relationships, you can just have them with reasonable fees, then you need for the government to prove they were unreasonable. Why wouldn't that apply here? That concept.

Speaker 4 (01:46:30):

Why wouldn't Cook's apply here?

Justice Sotomayor (01:46:33):

Observation.

Speaker 4 (01:46:34):

Yeah, I think it wouldn't apply, not simply just because of the criminal civil distinction that we talk about, but also for the information asymmetries that you mentioned. Really, I think the response or asking this court to carve out the statute in a few different ways, to try to gerrymander it by saying, look, we'll put the B-II exemption, we'll treat that as an element and we'll try to carve out service providers and then we'll stitch together 1106 and 1108, but that's not how the statute is written. And certainly that might lead to some results. We don't see that happening in the eighth or ninth Circuits, but if it does, I think that's in Congress's province to address.

Justice Sotomayor (01:47:12):

Thank you. Justice Kagan.

Justice Gorsuch (01:47:13):

Justice Gorsuch, anything there?

Justice Kavanaugh (01:47:17):

Just in terms of the litigation in the second Circuit in the district court, there were other counts, right? So the complaint, and correct me if I'm wrong, I might be mistaken on this, there are other counts about unreasonable or excessive fees, but this count, count four, was just prohibited transactions, and that's the only issue we are addressing here, correct?

Speaker 4 (01:47:40):

Correct, Justice Kavanaugh.

Justice Kavanaugh (01:47:41):

Okay, thanks. Justice Jackson.

Justice Jackson (01:47:47):

You've been asked a few questions that indicate concerns about the expanded litigation threat in this circumstance. And I guess I'm wondering whether those concerns are really consistent with what Congress itself was thinking in the context of this ERISA statute. Congress set up fiduciary duties.,It created a series of remedies for planned participants to enforce those obligations, and at the beginning of the statute it says that it was, "Providing for appropriate remedies, sanctions, and ready access to the federal courts." So it appears that Congress did not really share the concern about the litigation in this area that the amici, in this case, have raised.

Speaker 4 (01:48:44):

That's right, Justice Jackson. I think that with respect to Congress and this court's understanding of Congress's intent in ERISA, it's to provide a broadly protective and remedial statute and provide an avenue for plaintiffs to enforce ERISA's terms and conditions. And I think it's telling that simply that respondents and their amici, especially their amici, have in fact advocated for changes to 1106 several times in the halls of Congress. Congress has declined to do that. It's kept the scheme as it is and I think applying the text as written is appropriate in this instance.

Justice Jackson (01:49:21):

Thank you.

Justice Gorsuch (01:49:22):

Thank you, counsel. Ms. Deuben.

Ms. Deuben (01:49:38):

Mr. Chief Justice, and may it please the court. The text and structure of this statute demonstrate that the 21 exemptions in 1108 B are the fiduciary's responsibility to plead improve. But as already discussed this morning, that straightforward reading raises a practical concern for the subset of claims that are at issue here, that plaintiffs could obtain discovery simply by alleging a routine service provider transaction. Importantly, that theoretical concern has not materialized in the real world, likely because courts have the necessary tools to weed out and deter bare bones complaints. And in all events, we don't think that concern justifies adopting respondent strained reading. Critically, service providers are just one of the nine categories of parties in interest, the rest are plan insiders with whom transactions carry obvious risks of favoritism and abuse. All the usual interpretive rules indicate that Congress intended the fiduciary to justify such transactions. Respondent's elements-based approach would thus undermine prohibited transaction provisions as a whole based on pragmatic concerns about one sliver of party interest transactions. That approach is fundamentally unsound. I welcome the court's questions.

Speaker 7 (01:50:48):

Why would Congress say it's unlawful for existing service providers to be employed in this way?

Ms. Deuben (01:50:59):

Sure. I don't think Congress is saying it's unlawful for service providers to be employed in this way. What Congress set up is a scheme and this court has recognized that several times, including in your decision in Harris Trust, that these types of transactions have a potential of injuring the plan. It's very easy to see that with respect to insiders, as I just mentioned, but it's also true with respect to service providers. You can pay service providers excessive fees with people's retirement money. So the scheme Congress set up set out specific transactions that are prohibited and then exemptions from those transactions that you can show that a particular transaction was reasonable and necessary. And in that context, it makes perfect sense to put the burden on the fiduciary to show that the transaction was justified and reasonable. The fiduciary is the one who enters into the transaction, the fiduciary is the one who has the information about the transaction, and the fiduciary is the one who's charged under trust law with ensuring that these transactions are an appropriate use of people's retirement money.

Justice Kagan (01:51:50):

So do you think this is just a mistake on Congress's part? In other words, you're saying the scheme makes perfect sense with respect to insiders, but when you apply it with respect to these third-party providers, service providers, all of a sudden you are potentially making libel a really big category of innocuous conduct? Is this something congress just didn't understand it was doing or do you have a theory for why Congress wanted to go that far?

Ms. Deuben (01:52:21):

We don't think it was a mistake. We think it was entirely deliberate. And that's because at trust law, the fiduciary had the burden to justify delegations to third party. The fiduciary was hired for his skill and for his ability to manage resources appropriately. He is allowed to delegate, that's consistent with the restatement second of trust, but when he does so, he's the one who has the burden to justify it, and that's all 1106 and 1108 do, which is you can engage in this transaction, but it's the fiduciary who carries the burden to justify it. So I don't think it's a mistake at all that these service providers were included among the other parties and interests who are all obvious insiders to the plan.

Justice Jackson (01:52:55):

Your broader argument or the sort of remarks that you made initially seem to suggest or assume that there has to be consistency in the rules about burdens across the different kinds of parties in interest and across the different exemptions. Can you say more about why you think that's the case?

Ms. Deuben (01:53:17):

Absolutely. I don't see any textual basis here to slice and dice the way the second circuit suggested where it just focused on this one particular sliver of transactions. The textual hook that they're using, except as provided in 1108, equally applies to all the exemptions, so I don't see how you would single out one exemption. That said, we are very concerned with the effect on the other types of parties in interests, and we do think that's a useful tool for interpreting all of the exemptions as a whole. So the bottom line on that is I don't see a basis for why the second circuit did what it did, but it is really important that if the court is inclined to do something more similar to the second Circuit, even though I can't see exactly the doctrinal basis, it wouldn't let that expand to other parties in interest.

Justice Sotomayor (01:53:56):

So how do we write this opinion? Let's assume we start with, as you want us to, it is the fiduciary's responsibility to prove the reasonableness of their fee. That's their burden, okay? But what do we say about the plaintiff's pleading, and how do we say it? Meaning, is it enough just to say it violated 1106, you seem to suggest not, and then how do I explain why not?

Ms. Deuben (01:54:31):

Sure. Absolutely.

Justice Sotomayor (01:54:32):

And then my last question, and you heard it before, was this pleading enough?

Ms. Deuben (01:54:37):

Sure, absolutely. Let me address both pieces, and if I don't get to the second piece, just let me know. We think that this is a straightforward opinion to write along the line. Justice Alito was suggesting this is a straightforward prohibition and exemption structure and these are affirmative defenses. We think that district courts already have the tools to deal with bare bones allegations in category one that we were talking before that just suggest a routine service provider transaction. They already have the tools and if the court wanted, it could just leave them to continue doing and applying the plausibility framework that they're already applying. But if the court did want to say something about it…

Justice Sotomayor (01:55:11):

I would say the following, they may get it, but I also know plaintiffs counsel often will come in with the minimum, and if the minimum is just they have this prohibition, how do we avoid that?

Ms. Deuben (01:55:25):

Sure. If the court wants to…

Justice Sotomayor (01:55:27):

What do we have to say to avoid that?

Ms. Deuben (01:55:30):

Yeah, if the court wants to say something about it to address, that's nuts, example from Justice Kavanaugh. I think the way to address it would be to explain that the plausibility framework precludes such complaints. And I think that's because that complaint on its face obviously implicates an affirmative defense, and the plaintiffs haven't said anything to suggest why the underlying conduct will ultimately be found unlawful. This isn't treading or breaking new ground, this is already done in various cases and various statutory schemes involving affirmative defense where a petitioner or a plaintiff fails to give any explanation of what's going on.

Justice Sotomayor (01:56:00):

Give me some examples.

Ms. Deuben (01:56:02):

Sure. So I think Nayab versus Capital One, which I'll give you the site, is 942 F third 480 is a great example. It's dealing with an analogous structure in the Fair Credit Reporting Act where the exemptions are affirmative defenses, but a plaintiff still has the burden to say something about their theory of why it doesn't apply. I think another helpful context is that in the sanctions context, courts are ready, many, many circuits look to whether a plaintiff failed to investigate an obvious alternative explanation including an affirmative defense.

Justice Sotomayor (01:56:28):

Well, to the extent that you're saying that the plaintiff is going to need to present an affirmative defense and say something about why it doesn't apply, it seems to me that you're three-quarters of the way to Ms. Saharsky's position. So I guess I don't see that as a typical Iqbal maneuver.

Ms. Deuben (01:56:45):

So this is absolutely critical. Our position is not three-quarters of the way, to my friend on the other side's position, and there are two big reasons why. The first big reason is that my friend's position makes these exemptions into elements. That turns them into the plaintiff's burden to plead and prove all the way through, and they forthrightly admit that. That would be a sea change in the way that these provisions are applied. No court of appeals, including the second Circuit below, has adopted that approach and we think it would strongly undermine these provisions. But even as to the pleading standard, even as to these service provider transactions, our approaches are meaningfully different. And I think here it's very helpful to think about the complaint at issue in this case, which, as we were talking about earlier, does allege excessive fees that were far above the industry benchmark and gives reasons to think that those fees were excessive, including that that the defendants used multiple service providers when they could have used one.

(01:57:32)
We think that's sufficient to say that this explanation is not obvious. However, what respondents think and what the second Circuit's held below is that this complaint failed because they didn't go on to explain why that excessive fees charged weren't justified by the quality of the services provided. And the theory is something like, if the record-keeper is providing the Cadillac of services, maybe these excessive fees are justified. We don't think that plaintiffs carry that burden. We don't think they carry the burden to negate the exemption in that fulsome way.

Justice Kavanaugh (01:58:00):

Please go ahead.

Justice Alito (01:58:02):

I'm a little puzzled by what I've understood you to say, but maybe I don't understand it. Why should the plaintiff have to do anything more than plead the elements of 1106? So in a case like this, the plaintiff simply has to plead that the fiduciary, with respect to the plan, shall not cause the plan to engage in a transaction if the fiduciary knows or should know that such transaction constitutes a direct or indirect furnishing of goods, services or facilities between the plan and the party in interest. So all they have to plead is that the fiduciary here caused the plan to engage in the furnishing of goods, services or facilities by TIAA and Fidelity, end of the elements. That's all you have to plead. Why would anything more be required?

Ms. Deuben (01:59:03):

Sure. It's because I don't think that complaint plausibly alleges entitlement to relief. I think the problem with that complaint is that you're alleging a routine transaction with a service provider for services that they provide on the market.

Justice Gorsuch (01:59:14):

See, that's the problem I have too, which is in trickball, there was an obvious explanation that would negate the existence of a clause of action with… Forget about affirmative defenses. You didn't even get out of the gate. There was a contract combination conspiracy under the Sherman Act, or was it unilateral action in parallel? Okay. That's one thing. Here you're asking for somebody to plead essentially away what you're calling an affirmative defense, not its elements, and I think that's what Justice Alito and Justice Kagan are at. And I'm unaware of this court having endorsed that move before, and it seems to me doing so would have ripple effects we cannot presently anticipate transubstantively across the law with respect to affirmative defenses. Thoughts.

Ms. Deuben (02:00:08):

Sure. I appreciate the Court's concerns and of course we're cautious about spillover consequences in other areas. Again, I think this is already what district courts are doing on the ground when they encounter a complaint that is just bare bones.

Justice Gorsuch (02:00:20):

That's one thing. Leading it alone is one thing, saying something about it is another.

Ms. Deuben (02:00:25):

I completely agree. It's different when things are happening sub rosa rather than announced by this court.

Justice Gorsuch (02:00:29):

Not sub rosa. No. In the normal course, lower courts developing the law and when splits arise or occasion arises, we address it, but we don't first view, review. Come on, right?

Ms. Deuben (02:00:44):

Let me just try to situate this entire line of questioning within our case, which is we are not urging the court to say anything about this. We don't think the court needs to. We think the statutory answer is clear, and for the reasons petitioners already given, these are affirmative defenses, these exemptions. We are for justices who are concerned with this and do think it's appropriate to say something. We do think this is the right answer that's happening on the ground, but I absolutely appreciate the concerns you're articulating.

Justice Gorsuch (02:01:08):

Thank you.

Justice Kavanaugh (02:01:09):

Thank you, counsel. Well, which is it? I mean earlier you kept to say enough to make it plausible and that suggests to me that the court has to… If we say that's the standard, the court has to look at it and determine whether it's plausible. I mean, is that your answer or is it we don't have to say anything?

Ms. Deuben (02:01:32):

I was differentiating between what this court says and an opinion resolving this case and what district courts do on the ground. I agree as to the first response that I gave, which is that district courts on the ground should be evaluating plausibility, and I do think if you failed at all to respond to an obvious explanation for the conduct that would render unlawful, that is a problem for a plaintiff, and I think that's perfectly within the judicial role to recognize that, and I think district courts and lower courts on the ground are doing this already. As to what this court says in an opinion, I think it depends on how the court is weighing the various spillover consequences at issue here. But this is all after you've gotten to the point, I think, where you've already rejected respondents approach, which I think simply doesn't work as a matter of the statutory scheme and has its own pragmatic consequences. This is simply whether you want to address the this would produce nuts results for these bare bones complaints, and I think this is the right answer.

Speaker 7 (02:02:17):

Justice Thomas.

Justice Alito (02:02:19):

Well, I'm still puzzled by your argument because a lot of your answer is, "Well, look at what the district courts are doing on the ground." But is what the district courts are doing on the ground correct? That's what I'm interested in. And I understand the argument that all that's necessary to be pled are the elements of the provision that creates liability, and those are the ones that I set out, and they say nothing about the reasonableness of the fees. I don't know how the reasonableness of the fees gets into the pleading requirement if that's the way we go about it.

Ms. Deuben (02:03:03):

Sure. So I think looking at this court's decision in Iqbal, the language used there as a claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. I think that's the standard the lower courts are looking to.

Justice Alito (02:03:17):

It's reasonable liability as to the elements, not reasonable liability as to affirmative defenses that may or may not exist and may or may not be asserted. Anyway, I'll leave that there. There's been talk about the fact that there are ways… I mean maybe those who have concerns about the practical implications of deciding the case, of reversing the second Circuit's rule, those concerns are unfounded. Maybe they are. Okay, let's assuming that they are, there's some basis to it, and what you propose with rule seven does suggest that the government thinks there's a basis to it. So if all you have to do is plead what I've just outlined, what are the things that district courts can permissibly do that would alleviate these concerns?

Ms. Deuben (02:04:11):

So in addition to applying what we think is the rule of Iqbal and Twombly in this context, I would say that they could also obviously engage in fee-shifting, they can sanction attorneys who bring meritless lawsuits. I think both of those are very much deterrents to these types of bare-bones suits being brought on the ground. I think it's very…

Justice Alito (02:04:27):

You think rule 11 sanctions, that's going to do the job here?

Ms. Deuben (02:04:32):

I do if plaintiffs begin to bring bare-bones complaints. I'll point you to the Tenth Circuit which said part of a reasonable attorney's pre-filing investigation must include determining whether any obvious affirmative defense bars the case. The seventh Circuit, the fifth Circuit, and the sixth Circuit have all said the same. I do think a failure to investigate an obvious alleged affirmative defense is a problem for a plaintiff's case. And I think, going back to what you were asking me, I do think it's relevant that Twombly and Iqbal were about the elements, that was what was going on in those cases, but the thing that was motivating the court, the thing the court was concerned about was that you're coming in to complain without a plausible case against someone, that you have no theory of wrongfulness, and I think these bare-bones complaints share the same problem.

Justice Gorsuch (02:05:12):

Justice Sotomayor?

Justice Sotomayor (02:05:17):

Petitioner's counsel said that maybe the unreasonableness of the fee has to be pledged because you have to plead an injury in fact. Do you accept that?

Ms. Deuben (02:05:29):

I think there's a fairly, this goes also to Justice Thomas's question earlier, I think there's a pretty obvious injury in fact from claims like this, which is if you're charging excessive record keeping, that's coming from the plan assets, it's coming from retired…

Justice Sotomayor (02:05:39):

No, no, no. You misunderstand. You'd say to us that the only pleading standard is the 1106 violation. The 1106 violation does not talk about the reasonableness or excessiveness of the fees. So the elements will not address that. So if that's all you plead, that's a bare bone complaint, which I think meets the eighth circuit standard, correct?

Ms. Deuben (02:06:02):

Yes.

Justice Sotomayor (02:06:03):

All right. If we are concerned about the consequences of that, that we're going to have an explosion of bare bone complaints, do we say something like what your colleague is saying, that that's not enough because you also have to plead injury in fact, and that obviously will take you to the unreasonableness or excessiveness of the fees?

Ms. Deuben (02:06:28):

I think that is one option available to the court here.

Justice Sotomayor (02:06:31):

And what would be the collateral consequences of that option?

Ms. Deuben (02:06:35):

So I think some of these claims… These claims are about excessive fees coming from the plan, and I think that obviously applies in this sort of defined contribution plan. You look at a defined benefit plan like what was going on in Seoul, you could still have someone engaging in excessive record keeping fees and the fiduciary is not being careful with plan assets, and that might mean the fiduciary is the wrong person to be in charge of this plan, that they're not being careful with plan assets. And one of the equitable remedies is replacing the fiduciary. I think that's a harder case for how you think about the injury in fact construct playing out there.

Justice Gorsuch (02:07:04):

Justice Kagan.

Justice Kagan (02:07:06):

And when you say these bare bones complaints, are you talking about the same complaints that Mr. Wang said was in box one? And what are those complaints exactly, and what takes you out of that category?

Ms. Deuben (02:07:19):

Sure, and let me be very clear about this. I think box one is a complaint that just alleges a service provider transaction for routine services. That's box one. Box two is a complaint that includes allegations like the ones we see here, that the fees are excessive four to five times the industry benchmark, that there's a reason to think the plan is paying excessive fees, that they're using multiple record keepers when they could have used one, that he didn't engage in a competitive process for these record keeping services. Box three…

Justice Kagan (02:07:44):

To me, that doesn't sound like a bare bones complaint. Are you suggesting otherwise?

Ms. Deuben (02:07:49):

No, that's exactly our position here, which is that box two is where the complaint should be, and in fact, that is where the complaints that we're seeing on the ground are, that suits being brought under this ledge, that there are excessive fees and that there are reasons to think the fees are excessive. That's actually what the practice is playing out on the ground and I think the practice is playing out on the ground that way because of the constraints we've been talking about today.

Justice Kagan (02:08:09):

So those are not ones that in any circumstance would raise the necessity of talking about affirmative defenses.

Ms. Deuben (02:08:16):

That is our view. Obviously the second circuit disagreed with us…

Justice Kagan (02:08:19):

Yes, yes, yes. Right.

Ms. Deuben (02:08:22):

Yes, that's exactly our view.

Justice Kagan (02:08:23):

Okay. You were going to go on and tell me about box three. Maybe not.

Ms. Deuben (02:08:28):

I'm happy to. Box three relates to the quality of the services. That's what the second circuit held. The second circuit held that it doesn't matter all this information that you've included about how excessive these fees are, this might be the Cadillac of record-keeping plans. And if it's the Cadillac of record-keeping plans, then those fees were justified, and the problem is that petitioners have no way of knowing if it's the Cadillac of record-keeping plans.

Justice Kagan (02:08:47):

But I take it that as you survey the litigation here, you're saying that most of these complaints or all of these complaints are box two complaints, not the kind of bare-bones complaints that would suggest some special need to do Iqbal maneuvers.

Ms. Deuben (02:09:03):

That's right. Those are the ones we're seeing. And we haven't seen respondents identify any bare-bones complaints, including in the eighth Circuit, which has been applying this rule that petitioners are advocating for 15 years, and we think that's because of the constraints that are already operating.

Justice Kagan (02:09:16):

Thank you.

Justice Gorsuch (02:09:16):

Justice Gorsuch.

Justice Gorsuch (02:09:19):

Ms. Deuben, very briefly. We got cut off because of the red light, but I didn't want to rain on your Iqbal parade too much. It does seem to me the seven A arguments not completely out of left field here. They're generally disfavored, as I remember, from practice. But one of the exceptions is when you have an affirmative defense that's pled in the answer, sometimes the district judge will say, "I want to see the reply," And it happens a lot in qualified immunity, I believe, in particular. And then once you have a pled affirmative defense, a particular one, not just a laundry list, as Justice Alito said, then you might be able to trickball, it seems to me. What do you think of that?

Ms. Deuben (02:10:03):

I agree with you and I think you're right to recognize that this is not some arcane rule of procedure. It does come up.

Justice Gorsuch (02:10:08):

It's pretty arcane, but it's not wholly unknown in civil practice when there's an affirmative defense. I had to do it. I remember it. And you got to plead facts and then you have something to assess, a real trickball question to answer, I think.

Ms. Deuben (02:10:25):

Yes, absolutely. I don't want to rain on the parade we're having here, but I will say that the one thing I do want to make clear is at that point you still don't have the burden to do what the second Circuit held the plaintiffs to here, which is, because they treated the defense as an element of the plaintiff's case.

Justice Gorsuch (02:10:42):

Sure. But you could say as a matter of law, based on the facts pled, no reasonable juror could doubt that this affirmative defense applied.

Ms. Deuben (02:10:55):

That's right.

Justice Gorsuch (02:10:55):

Okay.

Justice Kavanaugh (02:10:58):

A couple questions on a bare-bones complaint category one, the pure prohibited transaction. I think you don't have standing.

Ms. Deuben (02:11:10):

I think that's the problem with that complaint as we've been talking about, as I was just talking about with Justice Sotomayor. But I think before getting to sort of the standing concerns and how it would play out in various contexts, I really just think the most obvious answer is plausibility. But yes.

Justice Kavanaugh (02:11:22):

Okay. And then I think most of the cases in response to your discussion with Justice Kagan are going to involve a claim like that, which is count four here, and other claims that are excessive fees claims, different counts, right? But we still have to analyze the other counts may not go forward, the prohibited transaction count. In other words, I don't know that it's enough to take care of the prohibited transaction count that you're alleging excessive fees in the other counts or is it enough? Do you understand the question?

Ms. Deuben (02:11:57):

Let me try, and if I haven't correctly understood you, please correct me. If you're asking if the complaint here was done entirely properly, I don't think it was. The allegations I'm talking about really weren't in the right place, in my view.

Justice Kavanaugh (02:12:07):

They weren't related to count four, correct?

Ms. Deuben (02:12:08):

To the prohibited transactions claims. However, the Second Circuit did consider them in its analysis because it didn't apply that sort of level of formalism and still found that they were not enough, and I think that's a critical piece where we diverged from the Second Circuit. We absolutely do think it was enough here.

Justice Kavanaugh (02:12:22):

Let me make sure I have that. That sounded important. You think what was enough?

Ms. Deuben (02:12:27):

The second Circuit said even if you consider all of the allegations of the complaint here…

Justice Kavanaugh (02:12:30):

Yes. At the end of the analysis of count four, it had a little tack on, right?

Ms. Deuben (02:12:34):

Yes. Even if you consider all of the allegations plaintiffs made here about the fees being far above the benchmark, about the fact that the plan didn't engage in a competitive bid process and about the fact that they used two record keepers when they could have used more, that would not be enough because the petitioners haven't shown that those excessive fees weren't justified by the quality of the services provided, and that part of the analysis, we strongly disagree.

Justice Kavanaugh (02:12:54):

To get past a motion dismissed.

Ms. Deuben (02:12:56):

Exactly.

Justice Kavanaugh (02:12:56):

Right. So the point, and this is where, to justice Kagan's point earlier about three-quarters of the way, at least on the pleading standard, I think you're 99% of the way, but respondent will obviously address that, which is you have to allege something suggesting unreasonableness of the fees, somehow get that in, at least if, as Justice Gorsuch says, it's been put into play at the motion, at the pleading stage, correct?

Ms. Deuben (02:13:19):

Another way of looking at this is sort of on the face of the complaint, have you pled yourself out of court? That's another way of thinking about it, and I think if you just aren't doing anything to show that these fees are not obviously reasonable, you may be in that category of claims.

Justice Gorsuch (02:13:31):

Good. Thank you.

Justice Gorsuch (02:13:34):

Justice Jackson.

Justice Jackson (02:13:34):

I guess I'm wondering, is this case really about what needs to be pled and do we need to say that? I thought the government's basic position, or at least petitioners, was that the problem with the second Circuit's view was that it didn't recognize that the exemptions are in fact affirmative defenses and instead treated them as elements, and that it would be enough, and maybe I'm wrong about this now given all the conversation that we've had, but that it would be enough for the court to say these are affirmative defenses, they are not elements, therefore the burden is on the defendant to establish them. I didn't know that this was an Iqbal Twombly case where the court was being called upon to determine what the plaintiff had to do as opposed to determining that defendant bore the burden of establishing these exemptions.

Ms. Deuben (02:14:35):

I entirely understand where you're coming from. I think to resolve the elements question, all you would need to hold is that these exemptions are in fact affirmative defenses and not elements of the prohibitions for all the reason you heard already this morning. However, I do think a real practical concern has been raised by the bench. It hasn't materialized yet, we haven't seen it in the eighth circuit, and I think that the government has offered an option for thinking about how district courts will be dealing with complaints that raise those concerns if they were to materialize in the future. Whether the court decides to write that in an opinion and offer that guidance to the lower courts, obviously I leave to the court, but it is an option available to ensure against this concern that respondents have raised. But even if you disagree with the government on that, even if you don't think that that's an appropriate use of Iqbal and Twombly, it still wouldn't counsel in favor of adopting respondents approach, which is a misreading of the statutory text.

(02:15:22)
It doesn't account for the other party and interest transactions, it doesn't account for the other exemptions, and it raises its own pragmatic concerns.

Justice Jackson (02:15:29):

And we wouldn't have to say those other things to resolve the exemptions question that was presented in this case.

Ms. Deuben (02:15:37):

Yes. The other things that you referred to are really only in response to respondents pragmatic concerns. Respondents are saying, don't do what you just said, don't resolve the case along the straightforward [inaudible 02:15:47], ADA, Corning Glass. Don't resolve this case along those lines because of these pragmatic concerns. And to the extent the court shares those concerns, we have offered that framework as a helpful tool.

Justice Jackson (02:15:57):

Thank you.

Justice Gorsuch (02:15:58):

Thank you, counsel.

Speaker 8 (02:16:08):

Ms. [inaudible 02:16:08]?

Speaker 9 (02:16:08):

Mr. Chief Justice, and may it please the court, petitioners view is that pleading the mere fact of a service provider transaction defeats a motion to dismiss and a case could go forward. That can't possibly be right. If we look at this statute, it is unique, Section 1106(a), because it covers an incredibly broad array of innocent beneficial conduct. In fact, ERISA separately requires and encourages hiring service providers. Section 1106(a) thus has to be read together with Section 1108 to limit this cause of action to culpable conduct. And we know that in part because Section 1106(a) has this cross-reference to Section 1108, which says "except as provided in Section 1108."

(02:16:51)
You know, tellingly, there are two different parts of 1106 here. There's a, which includes all of this innocent conduct and b, which includes only self-dealing conduct, and that cross-reference isn't in Section 1106(b). It has to be doing some work textually and it doesn't under petitioner's provision. If you look at all of this together, it shows that Congress's intent was to define the cause of action as not just a service provider transaction, but one where there's some wrongful conduct where the services are unnecessary or the fees are unreasonable. And under petitioner's view, all the plaintiff has to do is plead the mere fact of a transaction, no allegation of wrongful conduct. It automatically opens the door to expensive discovery. The cost is disproportionately borne by defendants. It would force settlements of meritless litigation. It has in some of these university cases.

(02:17:41)
The ultimate result would be to hurt plan participants and beneficiaries. The government recognizes that that is an intolerable result and I'm happy to discuss why its proposed solutions don't make sense. But the bottom line is the Second Circuit got it right and this court should affirm. I welcome the court's questions.

Speaker 10 (02:18:01):

What should be planned?

Speaker 9 (02:18:01):

So here, it's that the fiduciary caused the plan to enter into a transaction with a party and interest, which a service provider is, and either that the services were unnecessary or that the fees are unreasonable. I mean there was never any question in this case about what exemption might apply. This idea that petitioners say oh, we don't know what exemption might apply. I think everyone thought that was obvious and the government seems to agree because they say that they have to plead unreasonable fees too.

(02:18:26)
So it's just a question of can they just come to court and say service provider transaction with nothing wrong with it? As opposed to service provider transaction with some kind of wrongdoing that's in Section 1108. And we think these court's decisions in Iqbal and Twombly make clear if you come to court, you've got to have done some investigation and have some plausible allegation of wrongdoing. And it just doesn't make any sense to read this statute as allowing a cause of action to go forward with no allegation of wrongdoing.

Justice Jackson (02:18:57):

What is your position on who bears the burden of proving the unnecessary and unreasonable fees?

Speaker 9 (02:19:03):

The plaintiffs, because it's an element and so they would bear the burden-

Justice Jackson (02:19:06):

So you disagree that it's an affirmative defense. That the exemptions in 1108 are affirmative defenses.

Speaker 9 (02:19:15):

For Section 1106 claims, they are elements of the claim. They're not affirmative defenses. The burden is on the plaintiff to plead them and that's the question of the Second-

Justice Jackson (02:19:24):

What do we do about the structural clues in the statute that the other side explains that this is a pretty common way in which statutes are set up? That you have prohibitions and then you have exemptions and that we ordinarily say the burdens apply in the way that they are articulating. And you don't normally see elements in this way. What's your response to that?

Speaker 9 (02:19:51):

That's right, but this court has many cases where it said that there are exceptions that are elements. And the question and ask is do you need the exception to define the wrongful conduct? And Cook was a case like that, but there's a series of a whole bunch of other cases-

Justice Jackson (02:20:01):

Are all 21 exemptions elements in your view? And then what do we do about the information asymmetry? The fact that plaintiff could not possibly know many of them?

Speaker 9 (02:20:11):

Well, the plaintiff only has to plead the one that's relevant on the facts of the case. And I think it helps to think that a case comes to a court to challenge, a plaintiff is challenging a particular transaction. Either it's a service provider contract or it's a certain type of buying of employer stock or something else. And the different exemptions apply to different factual circumstances and as I think was discussed-

Justice Jackson (02:20:32):

Right. But do they have to be consistent with respect to the burden that you say falls on the plaintiff? Are they all elements, all 21 exceptions?

Speaker 9 (02:20:40):

With respect to 1106(a) claims, which include the exemption and otherwise would be only innocuous conduct, then yes, the relevant exception in Section 1108 would be an affirmative defense, but not all of them would be relevant in every case on the facts. And I think you can think about this in terms of what a plaintiff has to plead to go forward with a complaint.

Justice Jackson (02:21:00):

I'm sorry. You said some of them are affirmative defenses?

Speaker 9 (02:21:04):

I said that a plaintiff would have to plead facts regarding the transaction, the type of transaction that's applicable in their case. So for example, there are some that involve block trades or cross-trades or buying employer stock, and no one was doing any of those things here. So there's no requirement to plead those kind of facts. The plaintiff's burden is not to plead legal conclusions but to plead facts that show an entitlement to relief.

Justice Jackson (02:21:28):

No, I understand the plaintiff's burden generally. I'm just trying to understand your theory about whether all of the 1108 exemptions, all of them become elements in the 1106 context.

Speaker 9 (02:21:45):

In 1106(a), which is the first part of the statute, that is incredibly broad. It includes every kind of transaction you could imagine with a plan. The only thing that the petitioners say is exempted is the thing that this court exempted in the Lockheed versus Spink decision, which is paying benefits to a beneficiary. But it covers pretty much everything else in the world. The definition of party and interest is literally an everyone and their mother provision. And so this broad range of transactions has to be understood with respect to the exemptions in Section 1108. And yes, they would be elements as apply based on the facts of the case. But you just plead the facts that are relevant to the transaction at issue.

(02:22:23)
And so for this transaction, there was never any question that what was at issue was a service provider transaction. The exception that was relevant was the one for reasonable fees, necessary fees, et cetera. And if for some reason there was a case in which a plaintiff pleaded and did not include a relevant exemption, well, of course-

Justice Jackson (02:22:42):

Can I ask you about potential problems for other statutes that are created in this same way? I mean, do we have to worry that if we are suddenly saying that the exemptions in this structure are elements that we're going to implicate things like the Federal Arbitration Act, which has a similar dynamic?

Speaker 9 (02:23:02):

I don't think it's a problem because this court considers each case and each statute as it comes. That's what it has been doing since the decision in Cook where it said, look, if we look at something and it's called an exemption and it's in a separate provision, we probably would think it's an affirmative defense. But there's some circumstances in which we don't, say if there's a cross-reference to the provision or there's some other way that it's directly incorporated. Or for example, if the conduct that is in the initial prohibition covers so much beneficial innocuous conduct that you think we can't define the wrongful thing that Congress was trying to get at without using the exemption. And that's the inquiry that this court has done and that's the-

Justice Kagan (02:23:40):

Do you think this is a class of one? That this is the only statute we're going to find where it's going to satisfy your requirements? As I understood it, you said you need the cross-reference and you need the fact. And it's a fair point that the 1106 covers a vast amount of conduct and a significant amount of beneficial conduct. Is this a category of one, are you basically saying that we should create?

Speaker 9 (02:24:07):

Well, I think the court has already found circumstances like this. Not a lot. Not a lot, but in the history of the court's opinion, there have been other times the court has found exemptions to the elements. The [inaudible 02:24:18] case, Berman, Ruin, Ledbetter, Britton, a number of cases. The Second Circuit also relied on a Fair Debt Collections Practices Act case, Roth.

Justice Kagan (02:24:26):

See, I think I might find it sort of a happier rule if you had just said it's a category of one.

Speaker 9 (02:24:35):

Right, but what I'm saying-

Justice Kagan (02:24:35):

Because what you are saying is… I mean the cross-reference, there are cross-references like this all the time, which you wouldn't think how much legitimate conduct a particular provision incorporates. That seems like a very loosey-goosey inquiry to me. How much do you need? At what point do you get over the line? It seems as though you're asking us to distinguish among statutes in ways we shouldn't be doing.

Speaker 9 (02:25:05):

Well, what I was suggesting and hoping to give you comfort, Justice Kagan, was that this court already has this method of statutory interpretation where it looks at these factors and comes to the right answer. And there have not been a lot of cases where there are exemptions that have been found to be elements. And so I thought that it might give the court comfort to know that this is something that the court has been doing for decades and decades and centuries and it hasn't been a problem. It's just in this particular context, the statute really can't be understood without reference to the exemptions.

Justice Kavanaugh (02:25:35):

Good word, context. So you're saying a statute like this, structured like this can sometimes be read to mean elements. More often be read to be affirmative defenses, and how do we tell? And the context would seem to be key on that. And some of the concerns that we've been discussing or I've been raising, the amicus briefs raised, others have raised, would suggest that the context here suggests it doesn't make much sense to read 1106(a) that way.

Speaker 9 (02:26:10):

Right. So I'd point the court to four factors. One, the incredible breadth of Section 1106(a), which reaches so much innocent conduct. Not limited to wrongful conduct by itself. Then you have the cross-reference which says, okay, we don't have to read it by itself. We're being told that we should read it with Section 1108, which is what limits it to the wrongful conduct. And then you don't see that cross-reference in Section 1106(b), which is the one that defines only wrongful conduct, only transactions that involve self-interested conduct. So you think I got to give some meaning to that language that's in 1106(a), the cross-reference, but not in 1106(b).

(02:26:47)
Petitioner's view does not give any meaning in that language. It is superfluous. And then the fourth thing I think about is that there are other parts of ERISA where Congress either encouraged or expressly required the use of service providers. And I think to myself, well, Congress said that plans have to do this and every plan does it. So it would make no sense at all to say that Congress just defined the cause of action as using a service provider. If I put that all together, I'd have to come out that this would be part of the-

Justice Kavanaugh (02:27:11):

So on the context you're pulling in the other statutory provisions too. I think that the fourth point's pretty important. And then another point, I just want to be crystal clear on this because the other side says, well, what about the insider transactions? And those are 1106(b), correct?

Speaker 9 (02:27:28):

So 1106(b) are when the fiduciary has conflicts of interest, self-dealing. Those are all on their face bad transactions. I understand the argument that the other side of the government is to be making is, well, maybe 1106(a) is also like that because parties and interest include insiders. But they include a lot of people who aren't involved in conflicted transactions. They include service providers. I mean, the immense breadth of the party and interest definition is hard to describe, but I think the point of that is that you need a way to limit the 1106(a) provision and the cross-reference tells you to do it using the exemptions. Another thing that I just might-

Justice Kagan (02:28:08):

I'm sorry. Just to answer Justice Kavanaugh's question more directly.

Speaker 9 (02:28:13):

Sure.

Justice Kagan (02:28:15):

1106(b) does not prohibit a plan from leasing or from accepting services from an insider. That's only prohibited by a.

Speaker 9 (02:28:36):

Correct. I'm sorry.

Justice Kagan (02:28:38):

That's what Justice Kavanaugh was asking.

Justice Kavanaugh (02:28:43):

Yeah, no. 1106(a) covers insiders.

Speaker 9 (02:28:44):

And outsiders.

Justice Kavanaugh (02:28:45):

Right. And 1106(b) covers… Can you repeat that?

Speaker 9 (02:28:51):

Sure.

Justice Kavanaugh (02:28:51):

[inaudible 02:28:52].

Speaker 9 (02:28:52):

So 1106(a)-

Justice Kavanaugh (02:28:53):

Yeah, you're clarifying it.

Justice Kagan (02:28:54):

I think 1106(a) does… Let's do it in the negative. 1106(b) does not include an insider doing services at a reasonable price.

Speaker 9 (02:29:12):

1106(b) does not directly address service provider or transactions. And so if I might just back up.

Justice Kagan (02:29:19):

So it doesn't include. You are only covered if an insider service provider by 1106(a).

Speaker 9 (02:29:26):

Well, it could. It's just that b is written in broader terms. Just if I could back up. A involves a transaction between the fiduciary or the plan and a party in interest. B involves the fiduciary himself or herself doing something with respect to a plan. And so b is focused on the fiduciary's conduct and it could involve dealing with the assets of a plan for his own benefit in his own account. It could be being on both sides of a transaction or on the side of a transaction that's opposite to the plan, or it could involve receiving a kickback.

(02:29:59)
So those things could happen in the context of a service provider transaction. It's just that service provider transactions aren't specifically addressed in Section b. They are addressed in Section a, but they're not just service provider transactions with insiders. They're transactions with any service provider. Any service provider is defined as a party-

Justice Jackson (02:30:21):

So what is your cross-reference argument? I mean, why isn't the conclusion that the cross-reference in a is just saying that the exemptions can apply in this world of service providers and it can't when a fiduciary is dealing, self-dealing. This is a more significant thing and we're not going to allow it.

Speaker 9 (02:30:41):

Because Section 1108 already says that its exemptions apply to all of 1106. It says that in four or five or six different places that are cited in the brief. So 1108 by itself says that its exemptions apply to all of 1106. And so you have this extra language in 1106( a)-

Justice Jackson (02:31:01):

Yeah, but we don't know which language is extra. We don't know whether it was just a sort of a drafting mistake on Congress's part with respect to 1108 to say that all of it applies. When they really were not applying it to 1106(b). I mean, I just don't know that we can draw the conclusion that something work with the cross-reference that leads to the conclusion that you want us to draw.

Speaker 9 (02:31:26):

Well, it's not just the cross-reference. It's the structure of the statute and the rest of ERISA and the other factors that I was discussing with Justice Kavanaugh. But I do think that it's telling that the cross-reference is in 1106(a). It is not in 1106(b). The court, of course, looks at the text very carefully and tries to give meaning to the text, and the only party here that's giving meaning to that text in 1106(a) is us. If you want to disregard that text, we wouldn't advise that particularly because there are other parts of ERISA like the parts that require the use of service providers that make-

Justice Jackson (02:31:57):

What do you say about the principle that the Solicitor General put forward? That the fiduciary generally carries the burden to plead and prove the reasonableness of their actions and that that's really what is underlying the structure of this?

Speaker 9 (02:32:12):

I don't think that that's true. I don't think that the Law of Trust said that, and I don't think that that's something that ERISA says, particularly in the context of service provider transactions. Now this case is not about the burden of proof. This complaint got dismissed at the pleading stage. So the question that the Second Circuit had to decide was who has the burden and what is it? At the pleading stage, what does a plaintiff have to plead to go forward past a motion to dismiss and into discovery to allow a case to go forward?

Justice Alito (02:32:41):

It's been suggested that the concerns that seem to have animated the Second Circuit were unfounded or at least overblown for, I count, six reasons and it would be helpful if you could explain why you think they are insufficient. So one is Rule 7 of the Rules of Civil Procedure. The other which I really don't exactly understand is the idea that box b complaints are required but would be sufficient. Another one is standing expedited discovery coupled with a motion for summary judgment fee-shifting sanctions. Why are they not sufficient?

Speaker 9 (02:33:19):

Right. Because the rule is that a plaintiff has to come to court and plead the elements and doesn't have to plead affirmative defenses. And that's how Iqbal and Twombly are understood, that's what it means to bring a claim to court and plead facts to show an entitlement to relief. It's entitlement to relief on the elements.

Justice Alito (02:33:37):

Okay, so what about the Rule 7 workaround?

Speaker 9 (02:33:40):

So we think that that is kind of convoluted and discretionary, and that's the problem with it. First of all, that there would not be an opportunity to evaluate or dismiss the case on motion to dismiss because Rule 7 just applies to an answer. So the court has discretion about whether it can ask for reply brief or not.

(02:34:01)
So I guess what the government is thinking is the plaintiff pleads the mere fact of a service provider transaction. The defendant says no, it is for reasonable fees and necessary services. And then at that point, the court should exercise its discretion to require the plaintiff to plead additional facts to show that the fees are unreasonable or the services unnecessary.

(02:34:22)
The problem with that is that it's discretionary. A plaintiff could go to a district court that's favorable, the district court would say, I don't want to do that. And then it's off to discovery and off to summary judgment. If this court-

Justice Alito (02:34:33):

Well, could we say that in the particular circumstances here it would be an abuse of discretion for the district court not to follow that procedure?

Speaker 9 (02:34:42):

The court absolutely could say that. I guess my suggestion would be is that the court should be very clear if that's what the court wants because that's not the way that things happen now with respect to Rule 7. And so the court would hopefully say that in those circumstances, in the case of a service provider transaction, that if the defendant alleges that the fees were reasonable, the services were necessary, something in Section 1108, that then the district court absolutely should require the plaintiff to respond and plead facts to plausibly show that the fees were unreasonable.

(02:35:15)
I mean, our bottom line, which I understand to be the same as the government's bottom line, although I'm not entirely sure, is that the plaintiff should not be able to just come to court and say there was a service provider transaction, that's bad. We're off to the races with a lawsuit. They should have to say-

Justice Alito (02:35:27):

What about standing and expedited discovery coupled with a summary judgment motion?

Speaker 9 (02:35:32):

So I will address each of those, but let me just say, none of these supposed solutions or guardrails are working now in the district courts. And that would be before the court announced a rule that you could perhaps just go in with a service provider transaction. And just one point on that, there have been two dozen lawsuits that have been filed against university plans. In none of them has a court found that the plaintiff succeeded on the merits. This has been like millions of dollars at these universities have spent on discovery and individuals who've been named personally and had to live under a cloud for years and years. So this idea that there are these great guardrails that are going to solve that problem, that's not happening now and that's before petitioner's position gets accepted.

(02:36:09)
But to specifically answer your question, I don't know that standing is a solution because establishing an injury for standing is different from establishing an entitlement to relief under a cause of action. I don't know what injury a plaintiff might claim. I mean, I think petitioner's theory is that the mere fact of paying money to a service provider is an injury because Congress decided that that was bad or at least presumptively bad.

(02:36:34)
So now there's been a suggestion that the injury would be unreasonable fees, but that, to me, gets us back to well, aren't the reasonable fees part of the elements of the cause of action? So there's also the possibility of jurisdictional discovery in standing which makes it seem to me like not a very great solution.

(02:36:50)
And I guess the last thing I would say on that is if there is a standing problem or some other constitutional problem with the statutory interpretation that petitioners are suggesting, that would be a good reason not to do that thing and to take the other reading of the statute, which is much more reasonable. I mean, nearly every court that's looked at this and apparently, the Solicitor General say petitioner's position just can't be right. That just cannot be right and there has to be a way to make sure that the plaintiffs have some burden to plead something more. And there's a really obvious way to do that, which is to say, well, in this circumstance we understand that Section 1108 helps to define the cause of action to say that this is actually something that the plaintiffs have to plead.

(02:37:30)
And just to get back to a point Justice Kagan made, I don't think it would be a big deal or weird to do that because this court takes each case as it comes to it. It's not like it has had a lot of interpretive questions about Section 1106(a). But the last time it did, in Lockheed versus Spink, was another plaintiff that came in and was suggesting a reading of Section 1106(a) that seemed kind of facially just crazy. You can't do this. You can't say 1106(a) prohibits a plan from paying benefits to beneficiaries. But the language of Section 1106(a) was so broad that it seemed like it could cover it. And the court said, we're not going to do that. We're going to read the particular provision at issue in 1106(a) to not allow that result.

(02:38:13)
And that's exactly what we're asking here. And just in terms of the experience in terms of the lower courts, these prohibited transaction cases do not come up very often now. There's maybe a handful of factual circumstances that have been litigated in the courts of appeals that involve fees for services, participant loans. Some cases with buying employer stock or property like employee stock ownership cases, things like that. There's kind of a handful of these. I don't think any of them have led to circuit splits. I don't think that there should be much concern about the court adopting a rule that's going to have spillover effects for any of those.

(02:38:51)
And so I guess what we would say is that the court should decide this case just as it decides all of the cases that come to it, which is on the language of this particular provision. And we appreciate that the government is trying to help find these solutions to the problems with petitioner's position. But I think at the end of the day, they're not happening. They're not working now. I think they're discretionary. The suggestion about well, maybe there could be expedited discovery or not much discovery because you could just look at the face of the service provider, the contract and see if it's good or not good. Well, that hasn't been happening in these cases. I mean, there have been experts on both sides to discuss whether the fees are reasonable or not. Discovery has gone on for years and years. These university cases started in 2016 and they're still going on now. So I just would caution the court before thinking that any of those suggested solutions would be real solutions.

Justice Kagan (02:39:46):

Could you just go back to the suggested solution of the government? I think you said to Justice Alito, "It just doesn't make any sense." But I wasn't quite sure I understood why you thought that.

Speaker 9 (02:39:58):

Sure. So if the solution is that a plaintiff has to plead on reasonable fees or unnecessary services, then that is a great result. But we just want that to be clear that that is the obligation that the district courts would enforce. So there are two ways that the government suggests getting there, and they both seem kind of convoluted to us and also had this discretionary aspect that we're concerned about.

(02:40:20)
The first way that the government suggests is on motion to dismiss. The idea would be that in response to a motion to dismiss, that a plaintiff would have to plead additional facts to show that the fees were unreasonable or the services unnecessary. But why would the plaintiff have to plead that because it's not an element? The government says it's an obvious alternative explanation. But what we think that that misunderstands for the reasons Justice Gorsuch gave, what the obvious alternative explanation doctrine is, it's like a reason that the element isn't met. Like in an antitrust complaint, the allegation could be well, a whole bunch of companies did the same thing. But an obvious alternative explanation is well, they all did the same thing because of market forces. So it wasn't that they did the bad thing, which was a conspiracy.

(02:41:07)
Here, what petitioners define as the bad thing is just the service provider transaction and the fees being reasonable isn't an alternative explanation for whether there was a service provider transaction or not. It's like an extra fact. Now, if the court wanted to revisit Iqbal and Twombly and say that it also imposes a burden on plaintiffs to negate affirmative defenses, that would be terrific. But it would be, I think, a seat change in the law that would have effects well past this case. So that's their option one. And then I think we've discussed a little bit more their option two, which was Rule 7. So the option one was for the motion to dismiss [inaudible 02:41:46].

Justice Kagan (02:41:46):

Right. I was asking about option one. If you feel like you have more to say on Rule 7, go ahead. But that was what I wanted to know about.

Speaker 9 (02:41:55):

I just think if the court wanted to pursue a Rule 7 solution, it should please make clear that that is something that district courts have to do because it is discretionary and there's not judicial review of it. And these cases could go on and on and on.

(02:42:09)
I would like to say one other thing though about Rule 7 in this particular case, which is assuming that the plaintiffs do have some burden to plead unreasonable fees, we think the Second Circuit correctly found that they didn't plead it here and that this court ordinarily doesn't review that kind of holding like the application of a legal principle to particular facts. But if it did, it would be clear here that there's no reason for a remand.

(02:42:34)
So just to explain what the Second Circuit did, pleading that fees are unreasonable, of course, is just a legal conclusion. So you need some plausible facts to show why they're unreasonable. Here, there was an allegation that the fees were too high, but there wasn't any allegation of what the services were for or that there were other university plans that had comparable services that had much lower fees. And that's all the Second Circuit was saying. It didn't say anything about Cadillac plans. It just said we don't know if something is too high unless we know what it's for. We need to know what services it's for. Is it more services? Is it fewer services? Is it better services?

(02:43:09)
And that's not a weird rule in the Second Circuit. That's actually the same thing that the Sixth, Seventh, Eighth, Tenth Circuits have said in these unreasonable fee cases, which is you can't just plead high fees in the abstract and say they're too high. You have to give us some plausible facts as to why they're too high, which are compare them to something else that's like your plan where they didn't pay those kinds of fees. And so we think the Second Circuit was exactly right to say that.

(02:43:34)
The only other thing I'll say just because the government put this in issue is that there's no point in a remand in this case because the plaintiffs actually had the opportunity to try to adduce evidence through years and years of discovery to try to show that the fees were unreasonable. That was, I think as Justice Kavanaugh was suggesting, not on their prohibited transaction claim, but on their claim for breach of the duty of prudence. And so they went through all this discovery and they were supposed to put forward their best evidence of the fees being unreasonable and they couldn't do it. They had two experts, but those experts didn't actually compare the fees to the services or to any other plans.

(02:44:11)
And so the district court and then the Second Circuit said, well, you've got no evidence of this. So I mean, it's not only that we don't think that they properly pleaded it. It's that they've already lost on the merits, and so even if the court decides to do something different from the Second Circuit, we think the rules should be that they have to plead the unreasonable fees. And here, they just didn't. The Second Circuit found they didn't, and it's just not going to matter at the end of the day.

(02:44:38)
So the bottom line is petitioner's position's intolerable, nearly everyone recognizes that. The Second Circuit gave you a sensible solution that's very careful reading of the statutory text and doesn't create superfluous language, accounts for all the other provisions of ERISA. And we think that you should adopt that approach and we think you should affirm.

Speaker 8 (02:44:58):

Thank you, counsel. Justice Thomas? [inaudible 02:45:01].

Speaker 11 (02:45:02):

Last point you raised previously, the trial. Did you have experts who said why your fees were reasonable?

Speaker 9 (02:45:12):

Yes. So it was summary judgment. We had an expert. They had two experts. Both of their experts were found to be unreliable under Daubert. And then we also had our own expert that explained that Cornell's fees were entirely in line with the other fees charged by other universities.

Speaker 11 (02:45:29):

So you may be right on that bottom line. So even if we vacated and remanded and encouraged a Rule 7 or whatever, you would still win downstairs.

Speaker 9 (02:45:42):

Correct. But we're suggesting that you shouldn't vacate and-

Speaker 11 (02:45:45):

No, I know what you want. I'm just saying.

Speaker 9 (02:45:47):

Well, I mean yes, as a practical matter, this case has been going on since 2016, just like these other university cases. And it's time for it to end.

Speaker 8 (02:45:57):

Justice Kagan? Justice Gorsuch? [inaudible 02:46:02]. Justice Jackson? Thank you, counsel.

Speaker 9 (02:46:05):

Thank you.

Speaker 8 (02:46:07):

Rebuttal, Mr. [inaudible 02:46:09]?

Speaker 4 (02:46:16):

I just have two brief points. The first point was in response to some questions to my friend on the other side about the super fluidity of 1106. I apologize. About 1106(a) and 1106(b). Why does it have one and not the other? And I think this court's opinion in Barton versus Barr is quite instructive on that. It says at page 239, "Redundancies are common in statutory drafting, sometimes in a congressional effort to be doubly sure."

(02:46:45)
And why would Congress want to be doubly sure here? Because in fact, respondent's brief concedes this point. On page 27 of their brief they say, "As a practical matter, Section 1108's exemptions may apply less often to Section 1106(b) than to Section 1106(a)".

(02:47:01)
And I think in response to Justice Kagan, some of your questions about is this a class of one or not? I think it's pretty clear it's not a class of one. And maybe one analogy can help crystallize this point. Imagine you're going to the airport and you see a sign that says, "Except as otherwise provided, no liquids, gels or aerosols". And then you see another sign that says, "No firearms on the plane". And then the third sign says, "Here are the exceptions". I think the except as otherwise provided is just telling the common traveler, well, certainly we don't want most liquids, gels or aerosols in, but if you have a medical reason, a dietary reason to bring them in, go ahead, make sure you take a look at those exceptions. But there are far fewer exceptions for firearms. And if they do exist, take a look at that, but we don't want to direct you to that list of exemptions.

(02:47:48)
And I think that's just one common instance of the fact that it's not a class of one. I think this leads me to the second and to a final point I'd like to make, which is Justice Gorsuch asked quite a bit about ripple effects. And what are the ripple effects of ruling in our favor versus ruling in respondent's favor? And I think that crystallizes the daylight between our positions.

(02:48:08)
Our position is to ask this court to read the statutory text as written and to apply the text as written using common tools that it sees in terms of the structure of the text, the information and symmetries, common law trust rules. Respondent's position is not simply to sidestep the text, but to contort it and to distort it in two different ways. The first is to try to stitch together 1106(a) and 1108. Some of 1108's exceptions actually become elements, and then you have to plead and prove beyond that.

(02:48:37)
And the second and equally important way that respondents ask you to distort the text is to say, look, we know Congress defined parties and interests. It has all these categories, and we want a little bit of a special carve out for outside service providers. Persons providing services to the plan, but the text doesn't countenance that. And as a practical matter, the Eighth Circuit, the Ninth Circuit, these other courts that have adopted the standard that we advocate, we don't see cases on the ground that suggest that any such solution is needed.

(02:49:11)
So for those reasons, your Honor, we ask this court to apply the text as written and to reverse the judgment of the Second Circuit.

Speaker 8 (02:49:18):

Thank you, counsel. The case is submitted.

Speaker 12 (02:49:22):

The Honorable Court is now adjourned until Friday, the 21st of February at 10:00 o'clock.