MURPHY v. SMITH et al.

Certiorari To The United States Court Of Appeals For The Seventh Circuit

No. 16-1067. Argued December 6, 2017—Decided February 21, 2018

Petitioner Charles Murphy was awarded a judgment in his federal civil rights suit against two of his prison guards, including an award of attorney’s fees. Pursuant to 42 U. S. C. 1997e(d)(2), which provides that in such cases “a portion of the [prisoner’s] judgment (not to exceed 25 percent) shall be applied to satisfy the amount of attorney’s fees awarded against the defendant,” the district court ordered Mr. Murphy to pay 10% of his judgment toward the fee award, leaving defendants responsible for the remainder. The Seventh Circuit reversed, holding that 1997e(d)(2) required the district court to exhaust 25% of the prisoner’s judgment before demanding payment from the defendants.

Held: In cases governed by 1997e(d), district courts must apply as much of the judgment as necessary, up to 25%, to satisfy an award of attorney’s fees. The specific statutory language supports the Seventh Circuit’s interpretation. First, the mandatory phrase “shall be applied” suggests that the district court has some nondiscretionary duty to perform. Second, the infinitival phrase “to satisfy the amount of attorney’s fees awarded” specifies the purpose or aim of the preceding verb’s nondiscretionary duty. Third, “to satisfy” an obligation, especially a financial obligation, usually means to discharge the obligation in full. Together, these three clues suggest that a district court (1) must act (2) with the purpose of (3) fully discharging the fee award. And the district court must use as much of the judgment as necessary to satisfy the fee award without exceeding the 25% cap. Contrary to Mr. Murphy’s suggestion, the district court does not have wide discretion to pick any “portion” that does not exceed the 25% cap. The larger statutory scheme supports the Seventh Circuit’s interpretation. The previously governing provision, 42 U. S. C. 1988(b), granted district courts discretion to award fees in unambiguous terms. It is doubtful that Congress, had it wished to confer the same sort of discretion in 1997e(d), would have bothered to write a new law for prisoner civil rights suits alone; omit all of the words that afforded discretion in the old law; and then replace those old discretionary words with new mandatory ones. This conclusion is reinforced by 1997e(d)’s surrounding provisions, which like paragraph (2), also limit the district court’s pre-existing discretion under 1988(b). See, e.g., 1997e(d)(1)(A) and (B)(ii). The discretion urged by Mr. Murphy is exactly the sort of unguided and freewheeling choice that this Court has sought to expunge from practice under 1988. And his suggested cure for rudderless discretion—to have district courts apportion fees in proportion to the defendant’s culpability—has no basis in the statutory text or roots in the law. Pp. 2–9.

844 F. 3d 653, affirmed.

Gorsuch, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Thomas, and Alito, JJ., joined. Sotomayor, J., filed a dissenting opinion, in which Ginsburg, Breyer, and Kagan, JJ., joined.


Certiorari To The United States Court Of Appeals For The Ninth Circuit

No. 16-1276. Argued November 28, 2017—Decided February 21, 2018

Endeavoring to root out corporate fraud, Congress passed the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Both Acts shield whistleblowers from retaliation, but they differ in important respects. Sarbanes-Oxley applies to all “employees” who report misconduct to the Securities and Exchange Commission (SEC or Commission), any other federal agency, Congress, or an internal supervisor. 18 U. S. C. 1514A(a)(1). Dodd-Frank defines a “whistleblower” as “any individual who provides . . . information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.” 15 U. S. C. 78u–6(a)(6). A whistleblower so defined is eligible for an award if original information provided to the SEC leads to a successful enforcement action. 78u–6(b)–(g). And he or she is protected from retaliation in three situations, see 78u–6(h)(1)(A)(i)–(iii), including for “making disclosures that are required or protected under” Sarbanes-Oxley or other specified laws, 78u–6(h)(1)(A)(iii). Sarbanes-Oxley’s anti-retaliation provision contains an administrative-exhaustion requirement and a 180-day administrative complaint-filing deadline, see 18 U. S. C. 1514A(b)(1)(A), (2)(D), whereas Dodd-Frank permits a whistleblower to sue an employer directly in federal district court, with a default six-year limitation period, see 78u–6(h)(1)(B)(i), (iii)(I)(aa).

The SEC’s regulations implementing the Dodd-Frank provision contain two discrete whistleblower definitions. For purposes of the award program, Rule 21F–2 requires a whistleblower to “provide the Commission with information” relating to possible securities-law violations. 17 CFR 240.21F–2(a)(1). For purposes of the anti-retaliation protections, however, the Rule does not require SEC reporting. See 240.21F–2(b)(1)(i)–(ii).

Respondent Paul Somers alleges that petitioner Digital Realty Trust, Inc. (Digital Realty) terminated his employment shortly after he reported to senior management suspected securities-law violations by the company. Somers filed suit, alleging, inter alia, a claim of whistleblower retaliation under Dodd-Frank. Digital Realty moved to dismiss that claim on the ground that Somers was not a whistleblower under 78u–6(h) because he did not alert the SEC prior to his termination. The District Court denied the motion, and the Ninth Circuit affirmed. The Court of Appeals concluded that 78u–6(h) does not necessitate recourse to the SEC prior to gaining “whistleblower” status, and it accorded deference to the SEC’s regulation under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837.

Held: Dodd-Frank’s anti-retaliation provision does not extend to an individual, like Somers, who has not reported a violation of the securities laws to the SEC. Pp. 9–19.

(a) A statute’s explicit definition must be followed, even if it varies from a term’s ordinary meaning. Burgess v. United States, 553 U. S. 124. Section 78u–6(a) instructs that the statute’s definition of “whistleblower” “shall apply” “[i]n this section,” that is, throughout 78u–6. The Court must therefore interpret the term “whistleblower” in 78u–6(h), the anti-retaliation provision, in accordance with that definition.

The whistleblower definition operates in conjunction with the three clauses of 78u–6(h)(1)(A) to spell out the provision’s scope. The definition first describes who is eligible for protection—namely, a “whistleblower” who provides pertinent information “to the Commission.” 78u–6(a)(6). The three clauses then describe what conduct, when engaged in by a “whistleblower,” is shielded from employment discrimination. An individual who meets both measures may invoke Dodd-Frank’s protections. But an individual who falls outside the protected category of “whistleblowers” is ineligible to seek redress under the statute, regardless of the conduct in which that individual engages. This reading is reinforced by another whistleblower-protection provision in Dodd-Frank, see 12 U. S. C. 5567(b), which imposes no requirement that information be conveyed to a government agency. Pp. 9–11.

(b) The Court’s understanding is corroborated by Dodd-Frank’s purpose and design. The core objective of Dodd-Frank’s whistleblower program is to aid the Commission’s enforcement efforts by “motivat[ing] people who know of securities law violations to tell the SEC.” S. Rep. No. 111–176, p. 38 (emphasis added). To that end, Congress provided monetary awards to whistleblowers who furnish actionable information to the Commission. Congress also complemented the financial incentives for SEC reporting by heightening protection against retaliation. Pp. 11–12.

(c) Somers and the Solicitor General contend that Dodd-Frank’s “whistleblower” definition applies only to the statute’s award program and not, as the definition plainly states, to its anti-retaliation provision. Their concerns do not support a departure from the statutory text. Pp. 12–18.

(1) They claim that the Court’s reading would vitiate the protections of clause (iii) for whistleblowers who make disclosures to persons and entities other than the SEC. See 78u–6(h)(1)(A)(iii). But the plain-text reading of the statute leaves the third clause with substantial meaning by protecting a whistleblower who reports misconduct both to the SEC and to another entity, but suffers retaliation because of the latter, non-SEC, disclosure. Pp. 13–15.

(2) Nor would the Court’s reading jettison protections for auditors, attorneys, and other employees who are required to report information within the company before making external disclosures. Such employees would be shielded as soon as they also provide relevant information to the Commission. And Congress may well have considered adequate the safeguards already afforded to such employees by Sarbanes-Oxley. Pp. 15–16.

(3) Applying the “whistleblower” definition as written, Somers and the Solicitor General further protest, will allow “identical misconduct” to “go punished or not based on the happenstance of a separate report” to the SEC. Brief for Respondent 37–38. But it is understandable that the statute’s retaliation protections, like its financial rewards, would be reserved for employees who have done what Dodd-Frank seeks to achieve by reporting information about unlawful activity to the SEC. P. 16.

(4) The Solicitor General observes that the statute contains no apparent requirement of a “temporal or topical connection between the violation reported to the Commission and the internal disclosure for which the employee suffers retaliation.” Brief for United States as Amicus Curiae 25. The Court need not dwell on related hypotheticals, which veer far from the case at hand. Pp. 16–18.

(5) Finally, the interpretation adopted here would not undermine clause (ii) of 78u–6(h)(1)(A), which prohibits retaliation against a whistleblower for “initiating, testifying in, or assisting in any investigation or . . . action of the Commission based upon” information conveyed to the SEC by a whistleblower in accordance with the statute. The statute delegates authority to the Commission to establish the “manner” in which a whistleblower may provide information to the SEC. 78u–6(a)(6). Nothing prevents the Commission from enumerating additional means of SEC reporting, including through testimony protected by clause (ii). P. 18.

(d) Because “Congress has directly spoken to the precise question at issue,” Chevron, 467 U. S., at 842, deference is not accorded to the contrary view advanced by the SEC in Rule 21F–2. Pp. 18–19.

850 F. 3d 1045, reversed and remanded.

Ginsburg, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Breyer, Sotomayor, and Kagan, JJ., joined. Sotomayor, J., filed a concurring opinion, in which Breyer, J., joined. Thomas, J., filed an opinion concurring in part and concurring in the judgment, in which Alito and Gorsuch, JJ., joined.


Certiorari To The United States Court Of Appeals For The District Of Columbia Circuit

No. 16-424. Argued October 4, 2017—Decided February 21, 2018

A federal grand jury indicted petitioner, Rodney Class, for possessing firearms in his locked jeep, which was parked on the grounds of the United States Capitol in Washington, D. C. See 40 U. S. C. 5104(e)(1) (“An individual . . . may not carry . . . on the Grounds or in any of the Capitol Buildings a firearm”). Appearing pro se, Class asked the District Court to dismiss the indictment. He alleged that the statute, 5104(e), violates the Second Amendment and the Due Process Clause. After the District Court dismissed both claims, Class pleaded guilty to “Possession of a Firearm on U. S. Capitol Grounds, in violation of 40 U. S. C. 5104(e).” App. 30. A written plea agreement set forth the terms of Class’ guilty plea, including several categories of rights that he agreed to waive. The agreement said nothing about the right to challenge on direct appeal the constitutionality of the statute of conviction. After conducting a hearing pursuant to Rule 11(b) of the Federal Rules of Criminal Procedure, the District Court accepted Class’ guilty plea and sentenced him. Soon thereafter, Class sought to raise his constitutional claims on direct appeal. The Court of Appeals held that Class could not do so because, by pleading guilty, he had waived his constitutional claims.

Held: A guilty plea, by itself, does not bar a federal criminal defendant from challenging the constitutionality of his statute of conviction on direct appeal. Pp. 3–11.

(a) This holding flows directly from this Court’s prior decisions. Fifty years ago, in Haynes v. United States, the Court addressed a similar claim challenging the constitutionality of a criminal statute. Justice Harlan’s opinion for the Court stated that the defendant’s “plea of guilty did not, of course, waive his previous [constitutional] claim.” 390 U. S. 85, n. 2. That clear statement reflects an understanding of the nature of guilty pleas that stretches, in broad outline, nearly 150 years. Subsequent decisions have elaborated upon it. In Blackledge v. Perry, 417 U. S. 21, the Court recognized that a guilty plea bars some “ ‘antecedent constitutional violations,’ ” related to events (such as grand jury proceedings) that “ ‘occu[r] prior to the entry of the guilty plea.’ ” Id., at 30 (quoting Tollett v. Henderson, 411 U. S. 258–267). However, where the claim implicates “the very power of the State” to prosecute the defendant, a guilty plea cannot by itself bar it. 417 U. S., at 30. Likewise, in Menna v. New York, 423 U. S. 61, the Court held that because the defendant’s claim was that “the State may not convict [him] no matter how validly his factual guilt is established,” his “guilty plea, therefore, [did] not bar the claim.” Id., at 63, n. 2. In more recent years, the Court has reaffirmed the Menna-Blackledge doctrine’s basic teaching that “ ‘a plea of guilty to a charge does not waive a claim that—judged on its face—the charge is one which the State may not constitutionally prosecute.’ ” United States v. Broce, 488 U. S. 563 (quoting Menna, supra, at 63, n. 2). Pp. 3–7.

(b) In this case, Class neither expressly nor implicitly waived his constitutional claims by pleading guilty. As this Court understands them, the claims at issue here do not contradict the terms of the indictment or the written plea agreement and they can be resolved “on the basis of the existing record.” Broce, supra, at 575. Class challenges the Government’s power to criminalize his (admitted) conduct and thereby calls into question the Government’s power to “ ‘constitutionally prosecute’ ” him. Ibid. (quoting Menna, supra, at 61–62, n. 2). A guilty plea does not bar a direct appeal in these circumstances. Pp. 7–8.

(c) Federal Rule of Criminal Procedure 11(a)(2), which governs “conditional” guilty pleas, cannot resolve this case. By its own terms, the Rule does not say whether it sets forth the exclusive procedure for a defendant to preserve a constitutional claim following a guilty plea. And the Rule’s drafters acknowledged that the “Supreme Court has held that certain kinds of constitutional objections may be raised after a plea of guilty” and specifically stated that Rule 11(a)(2) “has no application” to the “kinds of constitutional objections” that may be raised under the “Menna-Blackledge doctrine.” Advisory Committee’s Notes on 1983 Amendments to Fed. Rule Crim. Proc. 11, 18 U. S. C. App., p. 912. Because the applicability of the Menna-Blackledge doctrine is at issue here, Rule 11(a)(2) cannot resolve this case. Pp. 8–10.

Reversed and remanded.

Breyer, J., delivered the opinion of the Court, in which Roberts, C. J., and Ginsburg, Sotomayor, Kagan, and Gorsuch, JJ., joined. Alito, J., filed a dissenting opinion, in which Kennedy and Thomas, JJ., joined.


Certiorari To The United States Court Of Appeals For The Seventh Circuit

No. 16-534. Argued December 4, 2017—Decided February 21, 2018

The Foreign Sovereign Immunities Act of 1976 (FSIA) grants foreign states and their agencies and instrumentalities immunity from suit in the United States and grants their property immunity from attachment and execution in satisfaction of judgments against them, see 28 U. S. C. 1604, 1609, but with some exceptions. Petitioners hold a judgment against respondent Islamic Republic of Iran pursuant to an exception that applies to foreign states designated as state sponsors of terrorism with respect to claims arising out of acts of terrorism. See 1605A. To enforce that judgment, petitioners filed an action in the District Court to attach and execute against certain Iranian assets—a collection of ancient clay tablets and fragments housed at respondent University of Chicago. The District Court concluded that 1610(g)—which provides that certain property will be “subject to attachment in aid of execution, and execution, upon [a 1605A] judgment as provided in this section”—does not deprive the collection of the immunity typically afforded the property of a foreign sovereign. The Seventh Circuit affirmed.

Held: Section 1610(g) does not provide a freestanding basis for parties holding a judgment under 1605A to attach and execute against the property of a foreign state; rather, for 1610(g) to apply, the immunity of the property at issue must be rescinded under a separate provision within 1610. Pp. 4–15.

(a) Congress enacted the FSIA in an effort to codify the careful balance between respecting the immunity historically afforded to foreign sovereigns and holding them accountable, in certain circumstances, for their actions. As a default, foreign states have immunity “from the jurisdiction of the courts of the United States and of the States,” 1604, but there are express exceptions, including the one at issue here, for state sponsors of terrorism, see 1605A(a). The FSIA similarly provides as a default that “the property in the United States of a foreign state shall be immune from attachment arrest and execution.” 1609. But 1610 outlines certain exceptions to this immunity. For example, 1610(a)(7) provides that property in the United States of a foreign state that is used for a commercial activity in the United States shall not be immune from attachment and execution where the plaintiff holds a 1605A judgment against the foreign state. Before 2008, the FSIA did not expressly address under which circumstances a foreign state’s agencies or instrumentalities could be held liable for judgments against the state. The Court had addressed that question in First Nat. City Bank v. Banco Para el Comercio Exterior de Cuba, 462 U. S. 611 (Bancec), and held that, as a default, agencies and instrumentalities of a foreign state are separate legal entities that cannot be held liable. It recognized the availability of exceptions, however, and left the lower courts to determine whether an exception applied on a case-by-case basis. The lower courts coalesced around five relevant factors (the Bancec factors) to assist in those determinations. In 2008, Congress amended the FSIA, adding 1610(g). Subparagraphs (A) through (E) incorporate almost verbatim the Bancec factors, leaving no dispute that, at a minimum, 1610(g) serves to abrogate Bancec where a 1605A judgment holder seeks to satisfy a judgment held against the foreign state. The question here is whether, in addition to abrogating Bancec, it provides a freestanding exception to property immunity in the context of a 1605A judgment. Pp. 4–8.

(b) The most natural reading of 1610(g)(1)’s phrase “as provided in this section” is that it refers to 1610 as a whole, so that 1610(g)(1) will apply to property that is exempted from the grant of immunity as provided elsewhere in 1610. Those 1610 provisions that do unambiguously revoke the immunity of a foreign state’s property employ phrases such as “shall not be immune,” see 1610(a)(7), and “[n]otwithstanding any other provision of law,” see 1610(f)(1)(A). Such textual markers are conspicuously absent from 1610(g). Thus, its phrase “as provided in this section” is best read to signal only that a judgment holder seeking to take advantage of 1610(g)(1) must identify a basis under one of 1610’s express immunity-abrogating provisions to attach and execute against a relevant property. This reading provides relief to judgment holders who previously would not have been able to attach and execute against property of an agency or instrumentality of a foreign state in light of Bancec. It is also consistent with the basic interpretive canon to construe a statute so as to give effect to all of its provisions, see Corley v. United States, 556 U. S. 303, and with the historical practice of rescinding attachment and execution immunity primarily in the context of a foreign state’s commercial acts, see Verlinden B. V. v. Central Bank of Nigeria, 461 U. S. 480–488. Pp. 8–11.

(c) Petitioners’ counterarguments are unpersuasive. They assert that the phrase “as provided in this section” might refer to the procedures in 1610(f)(1), which permits 1605A judgment holders to attach and execute against property associated with certain prohibited financial transactions, but which was waived by the President before it could take effect. However, it is not logical to read the phrase as indicating a congressional intent to create 1610(g) as an alternative to 1610(f)(1), particularly since Congress knows how to make clear when it is rescinding immunity. Nor could Congress have intended “as provided in this section” to refer only to 1610(f)(2)’s instruction that the Federal Government assist in identifying assets, since that provision does not provide for attachment or execution at all. Finally, there is no basis to conclude that “this section” in 1610(g) reflects a mere drafting error.

The words “property of a foreign state,” which appear in the first substantive clause of 1610(g), are not rendered superfluous under the Court’s reading. Section 1610(g) serves to identify in one place all the categories of property that will be available to 1605A judgment holders for attachment and execution, and commands that the availability of such property will not be limited by the Bancec factors. Also, without the opening clause, 1610(g) would abrogate the Bancec presumption of separateness in all cases, not just those involving terrorism judgments under 1605A. Although petitioners contend that any uncertainty in 1610(g) should be resolved by giving full effect to the legislative purpose behind its enactment—removing obstacles to enforcing terrorism judgments—they offer no real support for their position that 1610(g) was intended to divest all property of a foreign state or its agencies or instrumentalities of immunity. Bank Markazi v. Peterson, 578 U. S. ___, ___, n. 2, distinguished. Pp. 12–15.

830 F. 3d 470, affirmed.

Sotomayor, J., delivered the opinion of the Court, in which all other Members joined, except Kagan, J., who took no part in the consideration or decision of the case.