Justia U.S. 2nd Circuit Court of Appeals Opinion Summaries

After Congress enacted the Tax Cuts and Jobs Act in 2017, which capped the federal deduction for state and local taxes (SALT) at $10,000, New Jersey, New York, Connecticut, and the Village of Scarsdale created or planned programs allowing residents to make contributions to state-administered charitable funds in exchange for significant state or local tax credits. These programs were designed to help residents recover some of the lost federal tax benefit by allowing them to claim a federal charitable deduction for the full amount contributed, despite receiving a state or local tax credit in return. In response, the Internal Revenue Service (IRS) and Treasury Department issued a regulation (the “Final Rule”) requiring taxpayers to reduce their federal charitable deduction by the amount of any state or local tax credit received for the contribution.The States and Scarsdale sued the IRS and Treasury in the United States District Court for the Southern District of New York, arguing that the Final Rule exceeded the IRS’s statutory authority under 26 U.S.C. § 170 and was arbitrary and capricious under the Administrative Procedure Act. The district court granted summary judgment for the government, finding the IRS’s interpretation reasonable under Chevron deference and holding the rule was not arbitrary or capricious.On appeal, the United States Court of Appeals for the Second Circuit determined that New York and Scarsdale had Article III standing, and that the Anti-Injunction Act did not bar the suit because there was no alternative procedure for the plaintiffs to challenge the rule. Applying the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which overruled Chevron, the Second Circuit independently interpreted § 170 and concluded that the IRS’s rule was consistent with the statute’s quid pro quo principle. The court also found the rule was not arbitrary or capricious. The Second Circuit affirmed the district court’s judgment. View "New Jersey v. Bessent" on Justia Law

Two limited liability companies, majority-owned by California residents, applied for provisional licenses to operate marijuana dispensaries in New York under the state’s Adult Use application program. New York law gives “Extra Priority” to applicants who meet three criteria: (a) membership in a community disproportionately impacted by cannabis prohibition, (b) income below 80% of the county median, and (c) a conviction for a marijuana-related offense under New York law (or a close relative with such a conviction). The plaintiffs met the first two criteria but had marijuana convictions under California, not New York, law, making them ineligible for Extra Priority. They alleged that this licensing scheme discriminates against out-of-state applicants in violation of the dormant Commerce Clause.The U.S. District Court for the Northern District of New York denied the plaintiffs’ request for preliminary relief, holding that the dormant Commerce Clause does not apply to markets that Congress has criminalized, such as marijuana. The plaintiffs appealed, arguing that the state’s prioritization scheme was protectionist and that they had standing to challenge both the December Pool (in which they applied) and the November Pool (which was processed first and favored prior CAURD applicants, mostly New Yorkers).The United States Court of Appeals for the Second Circuit held that the plaintiffs have standing to challenge the December Pool’s Extra Priority regime and the November Pool’s precedence, but not the CAURD program. The court found the dormant Commerce Clause applies to New York’s marijuana licensing, as Congress has not clearly authorized state protectionism in this area. The court held that New York’s prioritization of applicants with New York marijuana convictions is a protectionist measure that violates the dormant Commerce Clause. The district court’s denial of preliminary relief was vacated and the case remanded for further proceedings. View "Variscite NY Four, LLC v. New York State Cannabis Control Board" on Justia Law

In this case, the plaintiff brought a defamation claim against Donald J. Trump, based on statements he made in June 2019 during his first term as President. The suit was initially filed in New York state court. In September 2020, the Department of Justice, acting under the Westfall Act, certified that Trump was acting within the scope of his employment and removed the case to federal court, seeking to substitute the United States as the defendant. The District Court for the Southern District of New York denied substitution, finding Trump was not acting within the scope of his employment. Trump appealed, and the United States Court of Appeals for the Second Circuit reversed in part, vacated in part, and certified a question to the D.C. Court of Appeals regarding the scope of employment under D.C. law. The D.C. Court of Appeals clarified the law but did not resolve whether Trump’s conduct was within the scope of employment. The Second Circuit remanded for the District Court to apply the clarified law.On remand, the Department of Justice declined to certify that Trump was acting within the scope of his employment, and neither Trump nor the government sought substitution before trial. The case proceeded to trial, and a jury found in favor of the plaintiff, awarding substantial damages. Trump appealed. After the appeal was fully briefed, and after Trump began his second term as President, Trump and the government jointly moved in the Second Circuit to substitute the United States as a party under the Westfall Act.The United States Court of Appeals for the Second Circuit denied the motion to substitute. The court held that the motion was statutorily barred by the Westfall Act because it was not made before trial, that both Trump and the government had waived any right to seek substitution by failing to timely petition the District Court, and that equitable considerations also warranted denial of the belated motion. View "Carroll v. Trump" on Justia Law

A pharmaceutical company challenged the federal government’s implementation of a new program created by the Inflation Reduction Act of 2022, which authorizes the Centers for Medicare and Medicaid Services (CMS) to negotiate prices for certain high-expenditure prescription drugs under Medicare. The company’s drug was selected for the program, and it signed an agreement to participate “under protest” while filing suit. The company alleged that the program violated its constitutional rights under the First, Fifth, and Eighth Amendments, and that CMS failed to follow required notice-and-comment procedures under the Administrative Procedure Act (APA) when issuing the standard agreement for participation.The United States District Court for the District of Connecticut granted summary judgment to the government on all claims. The district court found that participation in the program was voluntary, so there was no unlawful deprivation of rights. It also held that the program did not impose unconstitutional conditions on participation in Medicare and Medicaid, and that the Inflation Reduction Act expressly allowed CMS to implement the program for its first three years without notice-and-comment rulemaking.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court’s judgment. The Second Circuit held that, under its precedent in Garelick v. Sullivan, participation in the Medicare Drug Price Negotiation Program is voluntary, and thus the program does not effect a taking, deprive the company of property without due process, or compel speech in violation of the First Amendment. The court further held that the program does not impose unconstitutional conditions because it is designed to control Medicare spending and does not regulate the company’s private market conduct. Finally, the court concluded that the Inflation Reduction Act expressly exempted CMS from the APA’s notice-and-comment requirement for the program’s initial years. View "Boehringer Ingelheim Pharms., Inc. v. Dep't of Health & Hum. Servs." on Justia Law

A healthcare provider, Neurological Surgery Practice of Long Island, PLLC, provides out-of-network medical services governed by the No Surprises Act. This Act requires out-of-network providers to seek compensation from the patient’s healthcare plan rather than billing patients directly. If a provider and a healthcare plan cannot agree on a compensation amount, an independent dispute resolution (IDR) process is used. Neurological Surgery alleges that a backlog of disputes has resulted in unpaid or delayed reimbursements due to the Departments of Health and Human Services, Treasury, and Labor failing to implement the Act properly, violating the Administrative Procedure Act (APA) and the Due Process Clause of the Fifth Amendment.The United States District Court for the Eastern District of New York dismissed Neurological Surgery’s claims. The court concluded that the claims were moot due to the reopening of the IDR portal, Neurological Surgery lacked standing to compel the Departments to enforce the Act’s deadlines on third parties, and the claims regarding the Departments’ failure to certify a sufficient number of arbitrators and provide guidance on New York’s surprise billing law were foreclosed by the APA.The United States Court of Appeals for the Second Circuit reviewed the case. The court affirmed the district court’s judgment, agreeing that the challenge to the pause of the IDR portal was moot since the portal was operational. The court also held that Neurological Surgery lacked standing to compel the Departments to enforce deadlines on healthcare plans and IDR entities, as the injury was caused by third parties, not the Departments. Additionally, the court found that the challenge to the Departments’ failure to certify a sufficient number of IDR entities was foreclosed by the APA, as the Act did not specify discrete actions required by the Departments. Lastly, the court held that the challenge to the Departments’ failure to issue guidance on New York’s surprise billing law failed to state a claim under the APA. View "Neurological Surgery v. Department of Health & Human Services" on Justia Law

The case involves the National Rifle Association of America (NRA) suing Maria T. Vullo, the former Superintendent of the New York State Department of Financial Services (DFS), alleging that Vullo violated its First Amendment rights. The NRA claimed that Vullo engaged in coercive and retaliatory actions against the NRA by pressuring financial institutions and insurers to sever ties with the NRA, thereby infringing on its free speech and equal protection rights. Vullo argued that she was entitled to qualified immunity.The United States District Court for the Northern District of New York denied Vullo's motion to dismiss the NRA's First Amendment claims, finding that the NRA had sufficiently stated a claim and that Vullo was not entitled to qualified immunity at that stage. Vullo appealed the decision.The United States Court of Appeals for the Second Circuit initially reversed the district court's decision, holding that the NRA failed to state a First Amendment claim and that Vullo was entitled to qualified immunity. The NRA then petitioned the Supreme Court, which granted certiorari to address whether the NRA had stated a plausible First Amendment claim. The Supreme Court concluded that the NRA had plausibly alleged a First Amendment violation and remanded the case to the Second Circuit to reconsider the issue of qualified immunity.Upon reconsideration, the Second Circuit concluded that Vullo was entitled to qualified immunity. The court reasoned that, although the general principle that a government official cannot coerce a private party to suppress disfavored speech was well established, it was not clearly established that Vullo's conduct—regulatory actions directed at the nonexpressive conduct of third parties—constituted coercion or retaliation in violation of the First Amendment. Therefore, the court reversed the district court's denial of qualified immunity and remanded the case for the district court to enter judgment dismissing the remaining claims against Vullo. View "Nat'l Rifle Ass'n of Am. v. Vullo" on Justia Law

Plaintiff Jere Eaton sued the City of Stamford and police officer Steven Estabrook, alleging that Estabrook used excessive force during a protest on August 8, 2020. Eaton claimed that Estabrook lifted her by her bra strap, drove her backward several feet, and dropped her on the ground without warning, violating her Fourteenth Amendment rights and committing assault and battery under Connecticut state law. Estabrook and the City of Stamford moved for summary judgment on the grounds of qualified immunity and state governmental immunity.The United States District Court for the District of Connecticut granted summary judgment in favor of the defendants. The court found that while there were genuine disputes of material fact regarding whether Estabrook used excessive force, Estabrook was entitled to qualified immunity because it was not clearly established at the time that his actions were unconstitutional. The court also granted summary judgment on Eaton’s state law claims, concluding that Estabrook was entitled to state governmental immunity.The United States Court of Appeals for the Second Circuit reviewed the case and agreed with the district court that there were genuine disputes of material fact regarding the use of excessive force. However, the appellate court concluded that Estabrook was not entitled to qualified immunity at this stage because the same factual disputes also affected whether his actions were clearly established as unconstitutional at the time. The court affirmed the district court’s judgment in part, vacated it in part, and remanded the case for further proceedings. The appellate court upheld the district court’s decision regarding state governmental immunity for the state law claims. View "Eaton v. Estabrook" on Justia Law

Plaintiff-Appellant Mollie Marie Flinton applied for Social Security disability insurance and supplemental security income benefits in August 2015, citing mental health disabilities. Her application was initially denied, and she requested an administrative hearing. ALJ Mark Solomon, who was not properly appointed at the time, conducted the hearing and denied her benefits in March 2018. Flinton appealed, and the United States District Court for the Southern District of New York remanded the case for a new hearing in 2020. Despite the remand, Flinton appeared again before ALJ Solomon in August 2021, whose appointment had been ratified by then.The United States District Court for the Southern District of New York, presided over by Magistrate Judge Gary R. Jones, granted a motion for judgment on the pleadings in favor of the Commissioner of Social Security in September 2023. The court found that the ALJ’s decision was supported by substantial evidence and that remanding the case to a new ALJ was unnecessary, despite acknowledging the Appointments Clause challenge.The United States Court of Appeals for the Second Circuit reviewed the case and held that, pursuant to Lucia v. SEC, Flinton was entitled to a new hearing before a different, properly appointed ALJ. The court found that ALJ Solomon’s initial decision was invalid due to his improper appointment and that the subsequent hearing before the same ALJ did not cure the constitutional violation. The court vacated the district court’s decision and remanded the case to the Commissioner for a de novo hearing before a different, validly appointed ALJ. View "Flinton v. Comm'r of Soc. Sec." on Justia Law

Plaintiff-Appellant Mansoor Hamoud Hadwan, a natural-born U.S. citizen, has been stranded in Yemen for twelve years. In 2013, he visited the U.S. Embassy in Sana’a, Yemen, to apply for immigration paperwork for his children. During this visit, embassy staff retained his Consular Report of Birth Abroad (CRBA) and U.S. passport. Nine months later, the U.S. Department of State formally revoked both documents, alleging they were fraudulently obtained. Hadwan was unable to attend his hearing challenging the revocation.The United States District Court for the Southern District of New York upheld the State Department's decision to revoke Hadwan's documents. The court found that Hadwan had waived most of his arguments by not presenting them at the agency hearing, which he was not permitted to attend. The court also found that the State Department's hearing process did not violate due process requirements.The United States Court of Appeals for the Second Circuit reviewed the case and found that the State Department erred in two ways. First, the decision to uphold the revocation was arbitrary and capricious, violating the Administrative Procedure Act, because it failed to consider material, undisputed facts about Hadwan’s English literacy, which raised doubts about the reliability of his alleged confession statement. Second, the State Department violated Hadwan’s constitutional due process rights by revoking his documents without providing him an opportunity to be heard in a meaningful manner. The court reversed the district court's judgment and the State Department's decision, ordering the State Department to return Hadwan’s CRBA and expired passport so he may reapply for a new passport if he chooses. View "Hadwan v. US Dep't of State" on Justia Law

Suqin Xia, a citizen of China, has lived unlawfully in the United States for over thirty years. She applied for adjustment of status to lawful permanent resident under 8 U.S.C. § 1255. The United States Citizenship and Immigration Services (USCIS) denied her application, citing discretionary reasons. Xia then challenged the decision in the United States District Court for the Eastern District of New York under the Mandamus Act and the Administrative Procedure Act.The district court dismissed Xia's complaint for lack of subject matter jurisdiction, referencing 8 U.S.C. § 1252(a)(2)(B)(i), which bars judicial review of any judgment regarding an application made under § 1255. The court concluded that the denial of Xia's application was a "judgment" under this statute, thus precluding judicial review.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that the denial of an application for adjustment of status under § 1255 is a "judgment" for purposes of § 1252(a)(2)(B)(i), regardless of whether it is issued by an immigration court or USCIS. Consequently, the court held that there was no jurisdiction to review Xia's claims, affirming the district court's dismissal of her complaint. View "Xia v. Bondi" on Justia Law