NewYorkUniversity
LawReview

Case Comments

2023

August 8, 2023

Verdun v. City of San Diego

Jonah Charles Ullendorff

The Constitutionality of Tire Chalking

Jonah Charles Ullendorff33. * Copyright © 2023 by Jonah Charles Ullendorff. J.D., 2023, New York University School of Law; B.A., 2020, The University of Chicago. Thank you to the Online Department of the New York University Law Review for their amazing work and help on this article. Particularly (in alphabetical order), Colin Heath, Jess Moore, Cleo Nevakivi-Callanan, Maeve O’Brien, and Ryan Shaffer.*

Recent Case: Verdun v. City of San Diego, 51 F.4th 1033 (9th Cir. 2022).

The Ninth Circuit recently held that parking enforcement officers’ use of tire chalk, while possibly a warrantless search, is still constitutional under the special needs doctrine. This ruling explicitly rejected a previous Sixth Circuit decision which said that the practice of tire chalking was a warrantless search not justified under the doctrine. The reasoning behind these cases sheds light on some of the most critical and contentious disputes around Fourth Amendment case law that are happening right now across our federal courts: the original meaning and purpose of the Fourth Amendment, debates over how to understand what constitutes a search, and questions of how far the special needs doctrine really goes. Few things seem more mundane than tire chalking; therefore, if tire chalking is a search, that has important implications for the future of the Fourth Amendment.

Introduction

The Chicago Tribune’s 2015 travel section gushes with praise for the quaint California town of Coronado. The coastal city of only 20,000 people is so idyllic that it needs no law enforcement presence—well, save for one small thing: “[In Coronado t]here is no graffiti, [the] streets are clean, and the only police activity we saw in a week was tire-chalking.”44. William Hageman, Coronado a Laid-Back World Away from San Diego, Chi. Trib. (Apr. 27, 2015, 10:48 AM), https://www.chicagotribune.com/travel/sc-trav-0428-coronado-california-20150422-story.html [https://perma.cc/KC9Y-7R7L].

With cars comes parking, and with parking comes parking enforcement. No matter where one goes in America, someone or something will be there, ensuring that their vehicle does not overstay its welcome. One of the oldest tools of these parking enforcers is tire chalking, a practice employed since at least the 1920s.55. Campbell Robertson, Lose the Chalk, Officer: Court Finds Marking Tires of Parked Cars Unconstitutional, N.Y. Times (Apr. 25, 2019), https://www.nytimes.com/2019/04/25/us/tire-chalk-parking-unconstitutional.html [https://perma.cc/R7CG-3LP5]. Tire chalking involves an officer placing chalk on the tire of a parked car and returning after a set amount of time. If the chalk remains where the officer left it, the car has evidently not moved, and the driver is issued a fine for violating the city’s parking ordinances.66. Id. Tire chalking means many things to many people. It can be seen as trivial, boring, inevitable, or just plain annoying. And, maybe, it is also a long-running and egregious violation of the core constitutional rights that we all hold dear as American citizens.

The Ninth Circuit in October 2022 thought otherwise, holding in Verdun v. City of San Diego that while tire chalking might be a warrantless search under the Fourth Amendment, it nonetheless fell under the special needs doctrine exception and was thus constitutional.77. 51 F.4th 1033, 1037 (9th Cir. 2022) (expressing deep skepticism of “plaintiffs’ effort to have us suddenly declare as violating the United States Constitution a rather innocuous parking management practice” but, nonetheless, putting that “skepticism completely to the side” and assuming that tire chalking would be a search); id. at 1046. In doing so, the Ninth Circuit departed from the Sixth Circuit,88. Taylor v. City of Saginaw, 922 F.3d 328, 336 (6th Cir. 2019) (Taylor I) (holding that chalking is a warrantless search and that the exceptions raised on appeal do not apply); Taylor v. City of Saginaw, 11 F.4th 483, 489 (6th Cir. 2021) (Taylor II) (holding that the administrative need exception does not apply). creating an inter-circuit split ripe for Supreme Court review.99. Note that technically both circuits only formally disagree on the special needs analysis, but the majority opinion in Verdun evinces a clear skepticism that tire chalking is a search under Supreme Court caselaw that the Supreme Court may feel necessary to clear up. See Verdun, 51 F.4th at 1037. In fact, a petition for certiori has been docketed and, after conference, a brief in opposition was submitted. Id. at 1033, appeal docketed, No. 22-943 (Mar. 28, 2023). The outcome of Verdun raises important questions about the Fourth Amendment and the contours of the Supreme Court’s precedent on unconstitutional searches and the special needs doctrine. On a more conceptual level, the case also presents unique insights on how different judges understand the constitutional interpretive method of originalism, as well as the ultimate purpose behind the Fourth Amendment.

The comment will proceed in three main parts before concluding. Part I provides the reader with the necessary background on what constitutes a search or seizure under the Fourth Amendment, as well as the special needs doctrine exception to the default requirements of the Fourth Amendment. Part II then analyzes the majority and dissent in the Verdun decision. Part III further explores the key topics laid bare by the disagreements in Verdun: (1) if tire chalking should be considered a search under current Supreme Court precedent; (2) the breadth of the special needs doctrine; and (3) intra-originalist disagreements on how far an originalist conception of the Fourth Amendment should really go. Finally, the comment concludes and poses a brief question on the Fourth Amendment and innate government skepticism that underlies its text.

I. Warrantless Searches and the Special Needs Doctrine

Under English and early colonial law, warrantless general searches, known as “writs of assistance,” were the norm.1010. See Leonard W. Levy, Origins of the Fourth Amendment, 114 Pol. Sci. Q. 79, 81 (1999) (“English law was honeycombed with parliamentary enactments that relied on warrantless general searches and on general warrants for their enforcement . . . .”). Officers would report that they suspected a crime had occurred—no further specificity was needed—and a magistrate would issue a general warrant that allowed officers to search for and seize whatever they wanted within their discretion.1111. See id. at 82 (discussing these broad general warrants, which “allowed officers to search wherever they wanted and to seize whatever they wanted, with few exceptions”). This was, unsurprisingly, a great point of contention among the colonists,1212. Id. at 79. who reviled at the thought of giving such wide-ranging, despotic power to any enforcing officer who asked for it.1313. See Thomas Y. Davies, Recovering the Original Fourth Amendment, 98 Mich. L. Rev. 547, 578 (1999) (“[D]elegation of discretionary authority to ordinary, ‘petty,’ or ‘subordinate’ officers was anathema to framing-era lawyers.”); id. at 580–82 (attributing this view to the colonists). Upon attending a rousing speech by the patriot James Otis in 1761 denouncing the British general writs of assistance, a young John Adams wrote: “[t]hen and there the child [of] Independence was born.”1414. Riley v. California, 573 U.S. 373, 403 (2014) (quoting 10 Works of John Adams 248 (Charles Francis Adams ed., 1856)).

The intuitive instincts of the Framers against general, suspicionless searches led to the adoption of the Fourth Amendment.1515. See Marshall v. Barlow’s, Inc., 436 U.S. 307, 311–12 (1978) (surveying this history). The key purpose of the Amendment was to take discretion away from the investigating officer(s) and require a warrant issued upon probable cause to “search” or “seize” something from an individual.1616. See Davies, supra note 10, at 724 (noting that the Framers aimed the Fourth Amendment at getting rid of discretionary authority for officers). From this, a general principle arose: warrantless searches and seizures are per se unconstitutional, subject to exceptions.1717. E.g., Coolidge v. New Hampshire, 403 U.S. 443, 454–55 (1971) (citing Katz v. United States, 389 U.S. 347, 357 (1967)). These exceptions have, for many, completely vitiated the rule—like Swiss cheese with so many holes it is more air than actual cheese. See, e.g., Florida v. White, 526 U.S. 559, 569 (1999) (Stevens, J., dissenting) (arguing that the Supreme Court’s doctrine on exceptions to the warrant requirement has “all but swallowed the general rule”). Nonetheless, these exceptions are still formally “exceptions” to the general rule. See id. (“The Court does not expressly disavow the warrant presumption . . . .”). As a result, a key and oft-litigated distinction in Fourth Amendment case law is what is and what is not a search.

A. What Is a Search

The biggest sea change in understanding what a “search” was began with the famous 1967 case Katz v. United States.1818. 389 U.S. 347 (1967). Before Katz, what qualified as a search or seizure under the Fourth Amendment was based in the concept of property rights; a violation of the Amendment was interpreted to require some sort of physical force or trespass.1919. See, e.g., Olmstead v. United States, 277 U.S. 438, 463, 465–66 (1928), overruled by Katz, 389 U.S. 347 and Berger v. New York, 388 U.S. 41 (1967). Take, for instance, the case that Katz overruled: Olmstead v. United States.2020. Olmstead, 277 U.S. 438. In this 1920s, prohibition-era decision, the Supreme Court, in an opinion written by Chief Justice William Howard Taft, canvassed the history of the Fourth Amendment to say that a person’s Fourth Amendment rights have not been violated “unless there has been an official search and seizure of his person . . . papers . . . tangible material effects, or an actual physical invasion of his house or curtilage for the purpose of making a seizure.”2121. Id. at 466 (internal quotation marks omitted). Thus, the wiretapping2222. Id. at 456–57. of Olmstead and his co-conspirators was not a search under the Fourth Amendment.2323. Id. at 466. But in Katz, the Supreme Court embraced a broader view of the Fourth Amendment and extended its privacy protections to an oral recording of statements, even though the collection of such recordings involved no physical force or trespass to obtain.2424. Katz, 389 U.S. at 352–53. While Justice Potter Stewart wrote the majority in Katz, Justice John Marshall Harlan’s concurrence stole the show. Justice Harlan outlined a two-tiered test for what the Fourth Amendment protected, requiring that a person have both a subjective expectation of privacy and for that expectation of privacy to be one which society objectively views as “reasonable.”2525. Id. at 361 (Harlan, J., concurring). Harlan’s concurrence created a radical change in the understanding of modern Fourth Amendment law that accounted for new police technologies that often involved touchless surveillance.2626. See Stephen J. Schulhofer, More Essential Than Ever 119–20 (2012) (noting the Court’s watershed application of the Fourth Amendment “regardless of the place where the surveillance occurs and regardless of the means used”). Naturally, this Harlan test was applied consistently among all federal courts interpreting federal constitutional law—from district courts to the Supreme Court.2727. See, e.g., Kyllo v. United States, 533 U.S. 27, 32–33 (2001); United States v. Ramapuram, 632 F.2d 1149, 1153–54 (4th Cir. 1980); United States v. Nettles, 175 F. Supp. 2d 1089, 1092 (N.D. Ill. 2001).

But then something changed—or never changed, depending on your perspective. In a series of cases led by Justice Antonin Scalia, the old property right conception of the Fourth Amendment reared its head again. In the 2012 case United States v. Jones, the Court was confronted with the warrantless GPS tracking of a car.2828. 565 U.S. 400, 402–03 (2012). The government argued, per the Katz formulation, that no one had a reasonable expectation of privacy to the movement of their car on public roads visible to all.2929. Id. at 406. Justice Scalia’s majority opinion said that the lack of a reasonable expectation of privacy was of no matter because the government, by physically placing a GPS tracker on a car to obtain information, committed common law trespass and, thus, engaged in a search or seizure.3030. Id. at 406–10. Furthermore, Justice Scalia announced that Katz was not a “new” test for the Fourth Amendment; rather, it was just additional protection that supplemented the old property law protections of the Fourth Amendment.3131. Id. at 409. Therefore, after Jones, a search is one that violates a reasonable expectation of privacy or is one that involves the government physically intruding on a constitutionally-protected area to obtain information.3232. See id. at 407–08 (holding that “Katz did not narrow the Fourth Amendment’s scope” based on subsequent precedent preserving the property rights element). Justice Samuel Alito concurred in Jones, but he found the GPS tracking a violation of the Fourth Amendment because it invaded a reasonable expectation of privacy.3333. Id. at 430–31 (Alito, J., concurring). For Justice Alito, Katz did away with the old, archaic, property-based standard.3434. Id. at 422.

Then, a year later, in Florida v. Jardines, Justice Scalia further solidified this disjunctive, either-or test for what constitutes a Fourth Amendment search. In Jardines, the physical trespassing of an officer and their drug-sniffing dog on a homeowner’s property was enough to constitute a search because it involved the government physically invading a protected property interest to gather information.3535. 569 U.S. 1, 5–6 (2013). Justice Alito, again, looked to whether the homeowner had a reasonable expectation of privacy and not the property test. Justice Alito argued that law enforcement has routinely used dogs’ sense of smell for centuries and society has not recognized a reasonable expectation of privacy in odors emanating from a property.3636. Id. at 16–17 (Alito, J., dissenting).

Ultimately, Justice Scalia’s property conception of the Fourth Amendment articulated in Jones and Jardines is critical to our understanding of the constitutionality of tire chalking. Under the Katz test, cars are understood to involve minimal privacy interests.3737. See, e.g., Pennsylvania v. Labron, 518 U.S. 938, 940 (1996) (surveying case law that indicates lesser Fourth Amendment protections for cars due, in part, to reduced expectations of privacy for cars); Cardwell v. Lewis, 417 U.S. 583, 590 (1974) (“One has a lesser expectation of privacy in a motor vehicle because its function is transportation and it seldom serves as one’s residence or as the repository of personal effects.”). Combine this with the minimal intrusion of the process of tire chalking, and it is an uphill battle to convince a court solely under the Katz formulation that tire chalking is a search. But, under Jones, tire chalking is a physical trespass upon one’s property by a government official to obtain information, i.e., a search.

B. Special Needs Doctrine

Even under the Jones and Jardines test, there is a significant hurdle a litigator needs to clear in arguing that the practice of tire chalking is unconstitutional: the special needs doctrine. The first case implicating the special needs doctrine was the relatively recent 1985 case of New Jersey v. T.L.O.3838. 469 U.S. 325 (1985); see Ronald Jay Allen, Joseph L. Hoffmann, Debra A. Livingston, Andrew D. Leipold & Tracey L. Meares, Criminal Procedure: Investigation and Right to Counsel 677 (4th ed. 2020) (noting T.L.O. as the first of a long line of cases under the special needs doctrine). There, the Supreme Court allowed widescale searches of students’ backpacks within a school without probable cause or a warrant.3939. T.L.O., 469 U.S. at 341–43. After several subsequent cases, the special needs doctrine was solidified. It held that if the government engages in systematic search or surveillance not primarily related to law enforcement purposes, they do not need to worry about probable cause or warrants.4040. See Barry Friedman, Lawless Surveillance, 97 N.Y.U. L. Rev. 1143, 1181 (2022) (outlining this framework for the special needs doctrine). Therefore, even though something is a “search” and lacks a valid warrant issued under probable cause, the government can still constitutionally engage in such a search under the special needs doctrine.4141. See, e.g., Ferguson v. City of Charleston, 532 U.S. 67, 74 n.7 (2001) (“[I]n limited circumstances, a search unsupported by either warrant or probable cause can be constitutional when ‘special needs’other than the normal need for law enforcement provide sufficient justification.” (citing O’Connor v. Ortega, 480 U.S. 709, 720 (1987)).

One may be excused for wondering if, through the special needs doctrine, we have gone full circle back to the detested generalized writs of assistance that birthed the American “child of Independence” all those years ago.4242. Cf. supra notes 7–11 and accompanying text. In fact, many have argued as such.4343. See, e.g., Scott E. Sundby, Protecting the Citizen Whilst He Is Quiet: Suspicionless Searches, Special Needs and General Warrants, 74 Miss. L.J. 501, 511 (2004) (arguing that the special needs doctrine has systematically undermined the warrant requirement of the Fourth Amendment); Phyllis T. Bookspan, Reworking the Warrant Requirement: Resuscitating the Fourth Amendment, 44 Vand. L. Rev 473, 509–10 (1991) (noting that in special needs analysis the courts depart from the traditional procedural analysis and reasonableness requirements of the Fourth Amendment). However, a key distinction in special needs cases is that they involve an exercise of government authority that is separate and distinct from mere law enforcement, often justified for reasons like health or efficient bureaucracy.4444. See William E. Ringel, Searches and Seizures, Arrests and Confession 2d § 10:13, Westlaw (database updated Mar. 2023) (examining how courts distinguish health and safety concerns from law enforcement); see, e.g., Bd. of Educ. v. Earls, 536 U.S. 822, 830–31 (2002) (using government interest in health and safety to justify an application of the special needs doctrine); O’Connor v. Ortega, 480 U.S. 709, 720 (1987) (using government interest in “efficient operation of the workplace” to justify an application of the special needs doctrine). This crucial difference can be illuminated in the special needs cases that deal with government roadblocks and checkpoints. In Michigan Department of State Police v. Sitz, the Court applied the special needs doctrine to allow drunk driving checkpoints, reasoning that the public safety interest in preventing drunk driving was high and the interest against being briefly stopped was minimal.4545. 496 U.S. 444, 451–52 (1990). However, ten years later, in City of Indianapolis v. Edmond, the Court held that warrantless and suspicionless checkpoints designed to locate narcotics were indistinguishable from general crime fighting purposes and, therefore, did not qualify for the special needs exception.4646. 531 U.S. 32, 41–42 (2000). However, checkpoints can be implemented, and police can inadvertently stumble upon criminal evidence without a warrant while working them, so long as gathering it is not their “primary” purpose.4747. Illinois v. Lidster, 540 U.S. 419, 423 (2004). Further, along with requiring a primary purpose that does not involve general crime fighting, courts will typically conduct some sort of reasonableness balancing test, which weighs the government’s interest in carrying out the program against the privacy interests intruded upon.4848. See, e.g., id. at 426–27 (stating that you first look to non-criminal purpose per Edmond, 531 U.S. at 41–42, and then engage in a reasonableness test); Lynch v. City of New York, 589 F.3d 94, 100 (2d Cir. 2009) (noting this balancing test). Therefore, the special needs doctrine is arguably not as expansive as the old generalized writs were.

II. The Decision in Verdun

Before engaging with Verdun, it is important to consider the prior Sixth Circuit jurisprudence on the issues resulting from two different decisions in Taylor v. City of Saginaw: Taylor I in 2019 and Taylor II in 2021.4949. Taylor I, 922 F.3d 328 (6th Cir. 2019); Taylor II, 11 F.4th 483 (6th Cir. 2021).

In Taylor I, the Sixth Circuit addressed the question of whether tire chalking was a search under the Fourth Amendment. The court noted that after Jones, there are two ways to see if something is a search: the Katz reasonable expectation of privacy test, or the Jones property-based approach.5050. Taylor I, 922 F.3d at 332. Following Jones, the court noted that using chalk to mark someone’s car was a trespass under the common law.5151. Id. at 332–33. Further, it was a trespass to obtain information on whether the vehicle would later move, satisfying the second part of the Jones test, which requires a government intrusion with the goal of obtaining information.5252. Id. at 333. Taylor I also rejected two exceptions to the warrant requirement that were argued by the city: the automobile exception and the community caretaking exception. For the automobile exception, the court said that the reduced expectation of privacy for cars did not mean zero expectation of privacy. Id. at 334. The court also rejected the community caretaking exception because tire chalking was not being done to mitigate a public hazard but to raise revenue. Id. at 335.

Two years later, in Taylor II, Saginaw was back in front of a different panel of Sixth Circuit judges. This time Saginaw admitted that tire chalking was a search, but one that was justified under the special needs doctrine.5353. Taylor II, 11 F.4th at 486, 488. The city argued that tire chalking was essentially an administrative scheme—like inspecting a home for compliance with a housing code—that allowed warrantless searches under the special needs doctrine.5454. Id. at 488. The panel of three Sixth Circuit judges disagreed and took a narrow view of what counted as an exception to the warrant requirement under the special needs doctrine.5555. Id. at 487–89. For one, tire chalking was not necessary for parking enforcement—there were other ways to do it.5656. See id. at 489 (“[T]ire chalking is not necessary to meet the ordinary needs of law enforcement, let alone the extraordinary.”) (citing City of Indianapolis v. Edmond, 531 U.S. 32, 37 (2000)). Second, the court found unconvincing the city’s arguments that tire chalking was being done for a non-law enforcement purpose like “the public welfare.”5757. Taylor II, 11 F.4th at 488. For the court, this was a general crime control scheme.5858. See infra note 115 and accompanying text.

In May 2019, a month after the Sixth Circuit held suspicionless tire chalking a search,5959. Taylor I, 922 F.3d 328, 332 (6th Cir. 2019). a class action lawsuit was filed against San Diego for their use of tire chalking in parking enforcement.6060. See Ashley Mackin-Solomon, San Diego Police Using New System for Detecting Parking Violations After City Is Sued over Chalking Tires, La Jolla Light (Nov. 20, 2020), https://www.lajollalight.com/news/story/2020-11-20/san-diego-police-using-new-system-for-detecting-parking-violations-after-city-is-sued-over-chalking-tires [https://perma.cc/4UG7-BFSV] (noting the class action lawsuit, which was filed in May 2019). Prior to the lawsuit, San Diego had been doing tire chalking to enforce time limits for their parking code since the 1970s.6161. Verdun v. City of San Diego, 51 F.4th 1033, 1037 (9th Cir. 2022). In the contentious two-to-one Verdun decision, the Ninth Circuit parted ways with the Sixth Circuit and said the practice was constitutional.6262. Id. at 1048. Judge Daniel Bress wrote the majority decision to which Judge Patrick Bumatay dissented.

A. The Majority Opinion

The first thing to note is that for Judge Bress, there is salient skepticism over whether tire chalking is a search. Judge Bress states that before Jones, no one even seriously considered that tire chalking constituted a search.6363. Id. at 1037. Nonetheless, Judge Bress assumed tire chalking is a search for the purposes of his analysis.6464. Id. This initial skepticism by Judge Bress over whether tire chalking is a search is important to consider as it likely influences his understanding, later, of what is a reasonable or unreasonable intrusion in the context of a government scheme under the special needs doctrine.6565. See infra notes 72–73 and accompanying text.

Having assumed a search, Judge Bress moved on to the special needs doctrine, which involves a two-part analysis in the Ninth Circuit drawing on precedent regarding checkpoints.6666. In a nutshell, checkpoints—or roadblocks—involve police setting up a barrier and briefly stopping and inspecting drivers as they come through. See Paul Bergman, When Can Police Set Up Roadblocks, NOLO, https://www.nolo.com/legal-encyclopedia/police-set-up-roadblocks.html [https://perma.cc/4C4Q-F5CH]. Of course, the police lack probable cause to question or briefly hold many of these drivers, but the Supreme Court has held that checkpoints are valid under the Fourth Amendment so long as they conform to certain procedures. Id.; see also Kathryn L. Howard, Stop in the Name of that Checkpoint: Sacrificing Our Fourth Amendment Right in Order to Prevent Criminal Activity, 68 Mo. L. Rev. 485, 491–93 (2003) (providing a brief history of checkpoints under the Fourth Amendment). First, the court must determine if the search is “per se invalid” because its “primary purpose” is “to advance the general interest in crime control.”6767. Verdun, 51 F.4th at 1041 (quoting Demarest v. City of Vallejo, 44 F.4th 1209, 1220 (9th Cir. 2022)). Second, if the search is not per se invalid, the court must conduct a balancing test to determine if the search is reasonable.6868. Id. at 1041–42. The idea behind this second reasonableness test, Judge Bress notes, is that the special needs doctrine merely exempts the “warrant” requirement of the Fourth Amendment, but the “reasonableness” requirement of that Amendment’s textual command stays. See id. at 1040 (“[W]hile administrative searches are an exception to the Fourth Amendment’s warrant requirement, they are not an exception to the Fourth Amendment’s standard of reasonableness.” (quoting United States v. Bulacan, 156 F.3d 963, 967 (9th Cir. 1998)). Note that Judge Bress’s analysis draws on the Ninth Circuit’s precedents for checkpoints, which both makes a somewhat awkward fit and also represents a broader understanding of the special needs doctrine as one that allows for another exception even if there is no specific case law on it.6969. This would contrast with a doctrine such as Bivens, which requires identifying factually similar precedent to justify its application. See Joanna C. Schwartz, Alexander Reinert & James E. Pfander, Going Rogue: The Supreme Courts Newfound Hostility to Policy-Based Bivens Claims, 96 Notre Dame L. Rev. 1835, 1836 (2021) (discussing said Bivens’ “sufficiently similar” framework). This latter point is especially problematic for Judge Bumatay in his dissent.7070. See Verdun, 51 F.4th at 1056 (Bumatay, J., dissenting) (taking a highly limited and narrow view of special needs case law).

Using this test, Judge Bress first notes that the primary purpose of tire chalking is not for general crime control. Instead, its primary purpose is to “assist the City in its overall management of vehicular traffic . . . .”7171. Id. at 1042 (majority opinion). Tire chalking is about freeing up parking spots, which enhances public safety, promotes commerce, and makes room for emergency service vehicles.7272. Id. at 1035–36. Yes, tire chalking can lead to a parking citation, but that is not its primary purpose.7373. Id. at 1042. Next, tire chalking also satisfies the reasonableness prong.7474. Id. at 1043. The “search” itself is small and insignificant7575. Id. at 1044–45. (this understanding surely being informed by Judge Bress’s skepticism of whether it even is a search), especially since cars already have a reduced expectation of privacy.7676. Id. at 1045. Finally, the process in which the city engages in tire chalking is sufficiently tailored to its stated goals and is thus straightforwardly reasonable.7777. Id. at 1044.

Judge Bress then moves on to address his detractors. First, concerning the Sixth Circuit’s opinion, Judge Bress argues that the court erroneously viewed the special needs doctrine too narrowly insofar as they said that tire chalking needed to be necessary to enforce parking. For Judge Bress, something can qualify under the special needs exception even if it is not “necessary.”7878. See id. at 1046 (arguing that it is not relevant for special needs cases to see if another alternative scheme that does not involve Fourth Amendment searches can be viable). Next, Judge Bress criticizes Judge Bumatay’s dissent as being too originalist and ignoring precedent in favor of a historical analysis of the Fourth Amendment.7979. See id. (“Merely citing the general concerns that animated the Fourth Amendment and some basic legal history, as the dissent does, hardly proves the more specific proposition that tire chalking violates the Constitution.”). Judge Bress argues that rather than faithfully applying Supreme Court and Ninth Circuit precedent on the special needs doctrine, Judge Bumatay’s reasoning starts with the foundational principle that the special needs doctrine violates the original meaning of the Fourth Amendment and goes from there.8080. See id. at 1047.

B. The Dissent

To begin, Judge Bumatay lays the groundwork of his dissent as one entirely guided by originalist thought. He starts with a citation to the 2005 Supreme Court case of District of Columbia v. Heller to argue that “[c]onstitutional rights are enshrined with the scope they were understood to have when the people adopted them.”8181. Id. at 1049 (Bumatay, J., dissenting) (quoting District of Columbia v. Heller, 554 U.S. 570, 634–35 (2008)). Judge Bumatay’s dissent is highly influenced by originalism: it surveys the historical meaning of the Fourth Amendment,8282. See id. early state and federal constitutional debates,8383. Id. at 1053, 1053–54. and eighteenth-century congressional practice,8484. Id. at 1054–55. and quotes from Founding Fathers like Patrick Henry.8585. Id. at 1054. Using this historical framework as evidence in tandem with Jones, Judge Bumatay stresses that the Fourth Amendment is directly tied to the common law trespass test.8686. Id. at 1049. In light of Jones, Judge Bumatay would not just assume that tire chalking is a search; he would hold that it is unequivocally.8787. Id. at 1051.

Of course, given that Judge Bress operated under the assumption in his majority that there was a search, the real meat of the dissent comes with Judge Bumatay’s argument against the application of the special needs doctrine as an appropriate exception to the warrant requirement for tire chalking. What is especially interesting about the discussion between Judges Bumatay and Bress on the special needs doctrine is that their ultimate conclusions can be read as a product of their reasoning methods. Judge Bress starts with Supreme Court and circuit precedent as his first principle, which he then supplements with originalism;8888. Judge Bress in Verdun does not explicitly say he is doing this, but it can be inferred by his opinion against a larger context. In the immediate confines of Verdun, Judge Bress engages with originalism, but places less value on it in comparison with Supreme Court precedent. Cf. id. at 1046–47 (majority opinion). This is consistent with the responses he gave on his judicial nominee questionnaire, which showed support for originalist analysis so long as it conforms to Supreme Court precedent. See S. Comm. on the Judiciary, 116th Cong., Nomination of Daniel Bress to the U.S. Court of Appeals for the Ninth Circuit, Questions for the Record (2019) https://www.judiciary.senate.gov/imo/media/doc/Bress%20Responses%20to%20QFRs.pdf [https://perma.cc/66QG-27S5] (“The Supreme Court has considered the original public meaning of constitutional provisions when construing them. . . . But ultimately, lower court judges must follow the precedents of the Supreme Court.”). Judge Bress engages with the originalist arguments of Judge Bumatay but finds it both incomplete and incorrect. Incomplete, because his originalist analysis “merely cit[es] the general concerns that animated the Fourth Amendment and some basic legal history. . . .” Verdun, 51 F.4th at 1046. And, relatedly, incorrect, because the dissent’s contention that tire chalking exhibits the same characteristic as general warrants and writs and fails to appreciate that the general writs involved search and seizure of “whatever and whomever they pleased while investigating crimes or affronts to the Crown.” Id. While clearly accepting the dissent’s originalist style of argumentation as legitimate, Judge Bress takes issue with it because it “does not even purport to work within the Supreme Court’s established doctrinal framework,” id. at 1047, and is, therefore, “not one we are permitted to follow,” id. at 1048. alternatively, Judge Bumatay starts with originalism as his first principle, which he then supplements with Supreme Court and circuit precedent.8989. See Verdun, 51 F.4th at 1049 (Bumatay, J., dissenting) (setting out his originalist framework as the root of his interpretation). Judge Bress’s method leads to an expansive special needs doctrine, and Judge Bumatay’s method leads to a narrow one.

So, Judge Bumatay begins his opinion by framing the original meaning of the Fourth Amendment as being hostile to “suspicionless general warrants.”9090. Id. at 1051; see id. at 1056 (“Because dragnets operate without a warrant or individualized suspicion . . . they have been justified in ‘only limited’ contexts involving extraordinary and immediate governmental interests . . . . [G]iven th[is] historical aversion . . . we must scrupulously guard against the expansion of government concerns that warrant this rare exception.”); see also supra Part I. Therefore, the special needs exceptions set out by the Supreme Court in its precedents are incredibly narrow exceptions that must “involv[e] extraordinary and immediate governmental interests.”9191. Verdun, 51 F.4th at 1056. Interestingly—and this is where Judge Bress explicitly accuses Judge Bumatay of misreading Supreme Court precedent9292. See id. at 1047 (“The dissent not only fails to explain why the original meaning of the Fourth Amendment requires its result, it is essentially in opposition to longstanding Supreme Court precedent . . . .”). —the dissent says this primary-purpose-of-crime-control framework set out in Edmond actually stands for the proposition that general interest in crime control is too minor an interest for the special needs doctrine.9393. See id. at 1057 (Bumatay, J., dissenting) (setting out this interpretation). So, whereas Judge Bress sees this general crime control aspect of Edmond as standing to mean that the special needs doctrine works so long as it is unrelated to criminal evidence-gathering and is reasonable, Judge Bumatay says it stands for the principle that even general crime control is not a high enough interest to satisfy the special needs doctrine. Instead, to satisfy the doctrine, the government needs to propose a purpose that is “grave and urgent,” like preventing a terrorist hijacking.9494. Id. (quoting United States v. Davis, 482 F.2d 893, 910 (9th Cir. 1973)); see also City of Indianapolis v. Edmond, 531 U.S. 32, 44 (2000) (“[T]here are circumstances that may justify a law enforcement checkpoint where the primary purpose would . . . relate to ordinary crime control . . . . [T]he Fourth Amendment would almost certainly permit an appropriately tailored roadblock to thwart an imminent terrorist attack . . . .”). Having laid all this out, Judge Bumatay argues that the city is engaging in warrantless and suspicionless general searches9595. Verdun, 51 F.4th at 1055 (Bumatay, J., dissenting). for something too mundane like traffic control to justify granting the tremendous power of tire chalking.9696. See id. at 1057–58 (drawing a contrast between the concerns motivating chalking and less “routine” challenges such as drunk drivers and hijacking of airplanes). Or, as Judge Bumatay puts it: “[T]he City’s interests in perpetuating its parking enforcement regime don’t chalk up.”9797. Id. at 1058.

III. Implications and Core Disagreements

While ostensibly a case just about tire chalk, Verdun has much broader implications. There are three critical concepts illuminated by the opinion that the reader may want to keep an eye on in the future. First, how Verdun informs our understanding of what qualifies as a search under Fourth Amendment. Second, if courts should view the special needs doctrine—at least functionally—as a flexible grant of power or as a narrow exception to a general rule. Third, the debate over tire chalking lays bare an intra-originalist fight between the Judge Bumatay and Justice Scalia originalists versus the Judge Bress and Justice Alito originalists.

A. Is Tire Chalking a Search?

The formulation in Jones and Jardines vastly expanded the potential areas of privacy protections for searches and seizures. With tire chalking, we are confronted with the question of how far this Jones framework goes. A key concept picked up by Judge Bumatay in his Verdun dissent is the idea that Jones and Jardines merged private and public law.9898. Cf. id. at 1049 (framing intrusions on private property as common law trespass). As Professors William Baude and James Stern note, Katz concerned abstract notions of what our society views as private and not private.9999. See William Baude & James Y. Stern, The Positive Law Model of the Fourth Amendment, 129 Harv. L. Rev. 1821, 1831 (2016) (describing Katz as an “abstract exploration of sensibilities about the privacy of places or information”). What Jones and Jardines have now done, though, is bring us closer to a simplified version of what a search is by examining whether “a government actor [has] done something that would be unlawful for a similarly situated nongovernment actor to do . . . .”100100. Id.; see also Carpenter v. United States, 138 S. Ct. 2206, 2267–68 (2018) (Gorsuch, J., dissenting) (advocating increased focus on a better, more understandable conception of property law for the Fourth Amendment). However, while Justice Scalia’s property conception of the Fourth Amendment brought Fourth Amendment law closer to private law, it is highly doubtful that he closed the gap completely. For instance, a property and privacy conception of Fourth Amendment law completely shuts off the justifications behind the open fields doctrine,101101. See Baude & Stern, supra note 96, at 1886 (“At a minimum, the [Jones and Jardine] model eliminates the modern rationale for the open fields doctrine.”). which has its reasoning rooted in the Katz formulation that one has no reasonable expectation of privacy in the vast fields of property that they own outside their actual house.102102. See Oliver v. United States, 466 U.S. 170, 179 (1984) (“[O]pen fields do not provide the setting for those intimate activities that the [Fourth] Amendment is intended to shelter . . . .”). The open fields doctrine technically should not work under the Jones test. And yet, Justice Scalia in Jardines explicitly voices support for the open fields doctrine, stating that privacy protection for open fields is not “enumerated in the [Fourth] Amendment’s text.”103103. Florida v. Jardines, 569 U.S. 1, 6 (2013).

So, a critical debate relevant to tire chalking is how close Jones brings private and public law together. Judge Bumatay’s dissent considers it more 1:1, arguing that since a private party cannot chalk your tires, neither can a public official without a warrant. For Judge Bumatay, it is an “easy case.”104104. Verdun v. City of San Diego, 51 F.4th 1033, 1051 (9th Cir. 2022) (Bumatay, J., dissenting) (quoting Jardines, 596 U.S. at 11). Judge Bress’s majority opinion is more skeptical of the 1:1 distinction, and while reluctantly considering tire chalking a search, he clearly still has his doubts.105105. Id. at 1037 (majority opinion).

The above is about the reach of Jones, but if one considers Jones narrowly with respect to tire chalking, the connection is too strong, and it makes it hard to argue that tire chalking is not a search under Jones—this is perhaps why Judge Bress did not fight this point and decided the case on the more solid grounds of the special needs doctrine. Jones, again, said a physical common law trespass with the intent to gain information is a search.106106. See supra note 27 and accompanying text. Just like the light touch of a GPS tracker was a search, so too should be tire chalking. The counterargument would be that surely GPS information is different and more expansive, but it is important to remember that Justice Scalia’s opinion in Jones said the question of privacy and the GPS data did not matter; rather, it all came down to the physical touch to gain information.107107. Id. Some have also suggested that tire chalking may not be a search to gain information when it is done because the information is gleaned once the parking enforcer returns.108108. See Orin S. Kerr, Chalking Tires and the Fourth Amendment, Volokh Conspiracy (Apr. 23, 2019), https://reason.com/volokh/2019/04/23/chalking-tires-and-the-fourth-amendment [https://perma.cc/B8KT-CS6J] (“Is it really a search of the car at Time A to see at Time B if the chalk moved between Time A and Time B?”). This is a relatively weak argument, though, insofar as one could say that very same logic applies to the GPS tracker in Jones. The information was not gained at the time of the placement but after.

It is the obvious triviality of tire chalking that makes it so significant. If tire chalking is a search, that could mean that other government behavior involving touch that was previously seen as unobjectionable could be considered a search. Consider previously unchecked police activity that does not require warrants, such as canine drug sniffs.109109. See, e.g., United States v. Place, 462 U.S. 696, 707 (1983) (holding that a canine “sniff” is not a search under the Fourth Amendment). What if the dog’s nose lightly taps the bag it is smelling? Or, what if an officer places his hand on the trunk of a car and gently pushes down to make sure it is locked when he pulls a driver over?110110. Cf. Why Do Policemen Touch Your Tail Light When They Pull You Over?, The Law Dictionary, https://thelawdictionary.org/article/why-do-policemen-touch-a-tail-light-when-they-pull-you-over [https://perma.cc/3FZA-JYKE]. Both of these things, by definition, involve a touch (dog nose on bag and officer’s hand on car) to gain information (drugs in the bag or status of the trunk), which is all that is needed for a search under Jones.111111. See supra note 27 and accompanying text.

B. Special Needs: Narrow Exception or Broad Tool?

In Verdun, we see two approaches to the special needs doctrine and tire chalking. The Judge Bress majority views the application of special needs broadly and looks to see if the programmatic intent is both unrelated to general crime-fighting efforts and is reasonable.112112. See supra notes 64–65 and accompanying text. On the other end of the spectrum, the Judge Bumatay dissent sees the special needs doctrine as incredibly narrow and containing only a few notable exceptions for particularly crucial government purposes.113113. See supra notes 87–90 and accompanying text. For Judge Bress, then, there is a sense that the special needs doctrine can still be used for mundane, necessary purposes, whereas Judge Bumatay suggests mundane purposes can never satisfy.114114. See supra notes 91–94 and accompanying text.

With respect to Judge Bumatay’s dissent, Judge Bress accuses Judge Bumatay of willfully misreading special needs case law.115115. See supra note 89 and accompanying text. And Judge Bress does make a solid argument to that effect in light of Judge Bumatay’s reading of Edmond. Edmond has stood for the proposition in the Ninth Circuit that the special needs doctrine cannot be used for general crime control.116116. See, e.g., Demarest v. City of Vallejo, 44 F.4th 1209, 1218 (9th Cir. 2022) (making this argument). In Edmond, the city tried to justify suspicionless checkpoints to locate narcotics,117117. More specifically, the city set up a number of highway checkpoints on roads within Indianapolis to interdict illegal drugs. City of Indianapolis v. Edmond, 531 U.S. 32, 34–35 (2000). At each checkpoint, an officer would approach the vehicle, tell the person they were being stopped at a drug checkpoint, and ask for licenses and registration all while looking for signs of impairment and looking through the window in an open-view examination. Id. at 35. While this was happening, a “narcotics-detection dog walks around the outside of each stopped vehicle.” Id. but the Supreme Court said that the special needs doctrine did not include general crime fighting purposes.118118. Id. at 41–42. In dicta, however, the Supreme Court left open the possibility that the doctrine may encompass certain terrorism-related purposes.119119. See id. at 44 (“Of course, there are circumstances that may justify a law enforcement checkpoint where the primary purpose would otherwise, but for some emergency, related to ordinary crime control. . . . [T]he Fourth Amendment would almost certainly permit an appropriately tailored roadblock set up to thwart an imminent terrorist attack . . . .”). Judge Bumatay interpreted this passage to mean that special needs is only for the most pressing needs, like fighting terrorism.120120. Verdun v. City of San Diego, 51 F.4th 1033, 1057 (9th Cir. 2022) (Bumatay, J., dissenting). This seems like quite a stretch or, at least, an interpretation outside of the way Edmond is typically interpreted.121121. See, e.g., Illinois v. Lidster, 540 U.S. 419, 426–27 (2004) (framing Edmond as standing for the idea that the special needs doctrine requires a primary purpose outside of crime control before then engaging in a reasonableness balancing test); United States v. Fraire, 575 F.3d 929, 932 (9th Cir. 2009) (“If the checkpoint is not per se invalid as a crime control device, then the court must ‘judge [the checkpoint’s] reasonableness . . . .’” (quoting id. at 426)); United States v. Henson, 351 F. App’x 818, 820 (4th Cir. 2009) (stating that you first look to whether the primary purpose is a valid, non-criminal one per Edmond before then conducting a balancing test); United States v. William, 603 F.3d 66, 68–69 (1st Cir. 2010) (same). Interestingly, Judge Bumatay did not fight Judge Bress on one of the stronger anti-tire chalking points: whether or not the primary purpose of the tire chalking was to issue fines—i.e., general crime control. This was an important finding the Sixth Circuit hung its hat on when invalidating the tire chalking scheme in Saginaw, Michigan.122122. See Taylor II, 11 F.4th 483, 489 (6th Cir. 2021) (“[T]ire chalking is not necessary to meet the ordinary needs of law enforcement, let alone the extraordinary.”) (citing Edmond, 531 U.S. at 37).

Another key question and tension brought to the surface in this case law is the idea behind special needs and programmatic intent surrounding why a city is doing tire chalking. In decisions surrounding the Fourth Amendment, the Supreme Court has been clear that the Fourth Amendment is concerned with objective standards and not with why an officer is doing something.123123. See, e.g., Horton v. California, 496 U.S. 128, 138 (1990) (“[E]venhanded law enforcement is best achieved by the application of objective standards of conduct, rather than standards that depend upon the subjective state of mind of the officer.”); Brigham City v. Stuart, 547 U.S. 398, 404 (2006) (“The Utah Supreme Court also considered the officers’ subjective motivations relevant. . . . Our cases have repeatedly rejected this approach.”). In Whren v. United States, a unanimous Supreme Court said that “the Fourth Amendment’s concern with ‘reasonableness’ allows certain actions to be taken in certain circumstances, whatever the subjective intent.”124124. 517 U.S. 806, 814 (1996). The Court further added that the protections of the Fourth Amendment cannot “be made to turn upon such trivialities” like the subjective intent of the action.125125. Id. at 815. And yet, when it comes to the programmatic intent of a government action like tire chalking, which is arguably a lot harder and more complicated to discern than an individual officer’s intent, the constitutionality of the practice may live or die based on the subjective reasoning of why it is being done. This is not even to mention the genuine possibility that some cities’ primary purposes for tire chalking will be issuing citations and others will be for traffic control.

The issue of tire chalking has implications for the future of the special needs doctrine. It can narrow the doctrine to what is only necessary or extreme (Judge Bumatay dissent); alternatively, it can leave room for its expansion (Judge Bress majority). First step is tire chalking; next step is car GPS trackers for everyone.126126. This, of course, would be unlawful per United States v. Jones, 565 U.S. 400 (2012), so we know that—at least now—the line is at least somewhere before GPS trackers. Or maybe not. It depends on where and if you draw the line somewhere.

C. Originalism and Its Limits—or Lack Thereof

Jones, Jardines, and Verdun are also interesting for the originalist infighting they create: the perhaps softer originalists, Judge Bress and Justice Alito, against the more hardcore originalists, Judge Bumatay and Justice Scalia. In Jones and Jardines, Justice Scalia’s property conception of the Fourth Amendment is stiff and binary.127127. Cf. Florida v. Jardines, 569 U.S. 1, 11 (2013) (“One virtue of the Fourth Amendment’s property-rights baseline is that it keeps easy cases easy.”). For Justice Scalia, the Fourth Amendment was fastened firmly to property protections in its original conception.128128. See United States v. Jones, 565 U.S. 400, 405 (2012) (“The text of the Fourth Amendment reflects its close connection to property . . . .”); see also Jardines, 569 U.S. at 5 (describing baseline protections for physical intrusions). Justice Alito disagrees, viewing the Fourth Amendment as being about broader privacy protections that encompass new technology.129129. See Jones, 565 U.S. at 421–22 (Alito, J., concurring) (framing Katz as doing away with the old property-rights baseline and onto a broader, more modern conception of privacy); see also Jardines, 569 U.S. at 17 (Alito, J., dissenting) (framing his argument about reasonable expectation of privacy). For Justice Alito, it is not correct to simply have the property conception coexist with the Katz conception because, under the Fourth Amendment, a technical trespass is neither necessary nor sufficient.130130. See Jones, 565 U.S. at 423 (Alito, J., concurring). What is interesting about this is that both Justices are self-professed originalists131131. See generally Antonin Scalia, Originalism: The Lesser Evil, 57 U. Cin. L. Rev. 849 (1989) (Justice Scalia defending his viewpoint on originalism); Neil S. Siegel, The Distinctive Role of Justice Samuel Alito: From a Politics of Restoration to a Politics of Dissent, 126 Yale L.J.F. 164, 166 (2016) (noting that Justice Alito is a self-described originalist). yet come out with very different views on this question.

Arguably, one could square the distinction between an originalism which takes past principles and adopts them to the present (Justice Alito) and an originalism which takes past principles and actively resists adopting them to the present (Justice Scalia). Justice Alito’s framework may initially appear to come close to the ostensible counter to originalism: living constitutionalism.132132. See generally Lawrence B. Solum, Originalism Versus Living Constitutionalism: The Conceptual Structure of the Great Debate, 113 Nw. U. L. Rev. 1243, 1244 (2019) (“Originalists argue that the meaning of the constitutional text is fixed and that it should bind constitutional actors. Living constitutionalists contend that constitutional law can and should evolve in response to changing circumstances.”). Solum goes on to define several different and competing versions of living constitutionalism in the same piece. See id. at 1271–76. An attempt to square Justice Alito’s vision of originalism as being separate from living constitutionalism, of course, would require several pages of analysis, but, arguably, it can be squared. Take someone closer to the ideology of living constitutionalism like Justice John Paul Stevens,133133. See, e.g., McDonald v. City of Chicago, 561 U.S. 742, 877 (2010) (Stevens, J., dissenting) (“The judge who would outsource the interpretation of ‘liberty’ to historical sentiment has turned his back on a task the Constitution assigned to him and drained the document of its intended vitality.”); see also id. at 803 (Alito, J., concurring) (“Justice Stevens’ response to this concurrence makes the usual rejoinder of ‘living Constitution’ advocates . . . .”). who sees constitutional interpretation as being based on the premise that the definition of certain concrete terms can be defined by future generations.134134. See John Paul Stevens, The Third Branch of Liberty, 41 U. Mia. L. Rev. 277, 291 (1986) (“The task of giving concrete meaning to the term ‘liberty’ . . . was [a part] of the work assigned to future generations of judges.”) (emphasis added). Justice Alito, meanwhile, holds the definition of liberty at the Founding stagnant, but is more willing to separate it purely from its physical context.135135. Compare Jones, 565 U.S. at 420 (Alito, J., concurring) (“The Court argues—and I agree—that ‘we must “assur[e] preservation of that degree of privacy against government that existed when the Fourth Amendment was adopted . . . .”’ But it is almost impossible to think of late-18th-century situations that are analogous to which took place in this case.” (internal citation omitted)), with id. at 406 n.3 (majority opinion) (arguing by analogy that tracking of car movements was originally considered by the Founders because “it posits a situation that is not far afield—a constable’s concealing himself in the target’s coach in order to track its movements”). The back and forth of the “small constable” between the two Justices shows Justice Scalia straining to preserve the Amendment historically and Justice Alito willing to bend when the historical analogizing becomes too ridiculous. See id. at 420 n.3 (Alito, J., concurring) (“The Court suggests that something like this might have occurred in 1791, but this would have required either a gigantic coach, a very tiny constable, or both—not to mention a constable with incredible fortitude and patience.”). As a rough metaphor, one could think of constitutional meaning as a historical rock: Justice Stevens says the rock can be replaced by future generations, Justice Alito says the original rock is to be smoothed by future generations, and Justice Scalia says the rock is to be preserved by future generations. Of course, Justice Alito’s view is much more similar to Justice Stevens’s view than Justice Scalia’s is. Thus, it is no surprise that Justice Alito was able to get Justices Ruth Bader Ginsburg, Steven Breyer, and Elena Kagan—but not Sonia Sotomayor—to sign onto his opinion in Jones.136136. Id. at 418.

A similar split is happening between Judges Bumatay and Bress in Verdun. Judge Bress has a clear skepticism of Justice Scalia’s understanding in Jones. This is made apparent in Judge Bress’s inadvertent—or intentional—tipping of his hand, where he describes Jones as a “reorientation” of the Fourth Amendment.137137. Verdun v. City of San Diego, 51 F.4th 1033, 1036–37 (9th Cir. 2022). Of course, true believers like Judge Bumatay or Justice Scalia would not describe Jones as a “reorientation” of the Fourth Amendment since the whole premise of Jones is that the property conception of the Fourth Amendment was present since the beginning.138138. See Jones, 565 U.S. at 407–08 (arguing that Katz had never repudiated the old property rights baseline of the Fourth Amendment). Judge Bress posits that surely not every touch to gain information is a search.139139. See Verdun, 51 F.4th at 1037. Judge Bumatay, however, adopts a much stricter approach and stresses the rigid property conception of what constitutes a search laid out by Justice Scalia in Jones.140140. See id. at 1049–50 (Bumatay, J., dissenting). As originalism becomes more popular and cements itself as the default framework of constitutional analysis for some judges, tire chalking and Jones present a potential intra-originalist fight.

Conclusion

The October 2022 Verdun decision was about much more than tire chalking. In parting ways with the Sixth Circuit’s decision in Taylor, the Ninth Circuit created a problem ripe for Supreme Court review that carries with it incredibly far-reaching consequences. Is the Jones conception of what constitutes a search unlimited, or is there a line? How potent is the special needs doctrine and does it reach tire chalking? Is the primary purpose of tire chalking for general criminal investigative purposes, and should we even be considering subjective intent in handling Fourth Amendment questions? How should an originalist approach the question of tire chalking and the special needs doctrine?

There is something quintessentially American about a constitutional standoff concerning the use of tire chalk by parking enforcers. Throughout our history, American society has developed a natural distrust of government.141141. See Michael Price, Remember Why We Have the Fourth Amendment, Brennan Ctr. (Nov. 25, 2015), https://www.brennancenter.org/our-work/analysis-opinion/remember-why-we-have-fourth-amendment [https://perma.cc/J3N8-4U53] (“[A]s Americans, we are . . . committed to a few basic values that we do not fail to mention time-and-again from atop our shining city on a hill—liberty being chief among them.”). When the British gave general writs of assistance to revenue collectors, it was this instinctive distrust that enraged James Otis. “[These writs are] the worst instrument of arbitrary power . . . that was ever found in an English law book,” he said, because “the liberty of every man [is] in the hands of every petty officer.”142142. Boyd v. United States, 116 U.S. 616, 625 (1886). Otis is inextricably linked with the Fourth Amendment; his 1761 words are cited again and again by the Supreme Court.143143. See, e.g., Stanford v. Texas, 379 U.S. 476, 481 (1965); Terry v. Ohio, 392 U.S. 1, 37 (1968) (Douglas, J., dissenting); Payton v. New York, 445 U.S. 573, 583 n.21 (1980); Carpenter v. United States, 138 S. Ct. 2206, 2213 (2018). What the Supreme Court leaves out, though, is that Otis was also famously prone to “fits of insanity” and suffered from an unstable psyche.144144. See James Otis: American Politician, Encyc. Britannica, https://www.britannica.com/biography/James-Otis [https://perma.cc/T2PG-3MNN] (describing Otis as “prone to fits of insanity”); James R. Ferguson, Reason in Madness: The Political Thought of James Otis, 36 Wm. & Mary Q. 194, 194–95 (1979) (“As early as 1765 [James Otis’] mental instability was clearly evident in his confused and erratic behavior . . . .”); Erick Trickey, Why the Colonies Most Galvanizing Patriot Never Became a Founding Father, Smithsonian Mag. (May 5, 2017), https://www.smithsonianmag.com/history/transformative-patriot-who-didnt-become-founding-father-180963166 [https://perma.cc/N7TT-ZSQ7] (discussing Otis’s fragile psyche, which was further exasperated after he was wounded in a fight). In 1770, John Adams wrote about Otis again, this time noting that Otis had been described by a colleague that afternoon as “raving Mad—raving vs. Father, Wife, Brother, Sister, Friend &c. [sic]”145145. John Adams, Diary Entry of Feb. 26, 1770, in Diary and Autobiography of John Adams, Volume I, Diary, 1755-1770, 349–50 (L.H. Butterfield ed., 1961). This added context may put Otis’s words in perspective and perhaps be used to frame his complaints as somewhat hyperbolic. On the other hand, it is worth considering how useful a natural skepticism of government power is in protecting the promises that underly the Fourth Amendment. In that way, maybe the duality of Otis is what makes him the perfect representative for that Amendment. What would he think of tire chalking?

April 23, 2023

Confederación Hípica v. Confederación de Jinetes Puertorriqueños

Jack Samuel

The First Circuit Clarifies That the Statutory Labor-Dispute Exemption From Antitrust Scrutiny Applies to Any Worker Involved in a Dispute Over Wages.

Jack Samuel

Recent Case: Confederación Hípica v. Confederación de Jinetes Puertorriqueños (Jinetes), 30 F.4th 306, 311 (1st Cir. 2022), cert. denied, 143 S. Ct. 631 (2023).

The First Circuit Court of Appeals recently held that the statutory labor-dispute exemption—which immunizes collective action by workers against antitrust scrutiny—applies to any worker involved in a dispute over wages, regardless of the worker’s independent contractor status under labor law. The Supreme Court has long held that the exemption does not apply to independent contractors involved in genuinely entrepreneurial dealings, while leaving open the question of its applicability to workers who sell only their labor outside of the legal employment relation. In holding that this exemption does apply to independent contractors so long as the concerted activity arises in the context of a genuine labor dispute, the First Circuit nevertheless declined to set out a test to establish when a labor dispute qualifies as a dispute over wages.

INTRODUCTION

Workers classified as independent contractors do not enjoy the legal benefits of the employment relationship, including the protection of wage and hour laws, an entitlement to workers’ compensation or unemployment benefits, or access to the National Labor Relations Act’s (“NLRA”) framework for collective bargaining.33. The NLRA explicitly excludes “independent contractors,” 29 U.S.C. § 152(3), while federal wage-and-hour protections under the Fair Labor Standards Act (FLSA) are limited to “employees.” See 29 U.S.C. § 206(a) (setting a federal minimum wage for employees); id. § 207(a) (setting maximum hours for employees). Unemployment and workers’ compensation benefits are typically administered through state law, and while states vary in their approach to classifying workers, they all limit benefits to workers classified as employees. See Independent Contractor Classification, Practical Law Practice Note 4-503-3970, State and Local Tests; see also generally Brishen Rogers, Employment Rights in the Platform Economy: Getting Back to Basics, 10 Harv. L. & Pol’y Rev. 479, 484–96 (2016) (discussing the employee-independent contractor distinction’s ramifications for Uber and Lyft drivers); Catherine L. Fisk, Sustainable Alt-Labor, 95 Chi.-Kent L. Rev. 7, 15–16 (2020) (noting how misclassification of workers as independent contractors through the courts has resulted in a loss of substantial employee benefits for those workers). Another possible consequence of independent contractor status is antitrust liability: While employees may engage in otherwise-illegal concerted action as part of a labor dispute, according to one theory of the “labor-dispute exemption,” independent contractors can be sued, enjoined, and forced to pay treble damages to the companies they work for if they organize to demand higher wages and strike.44. See Brief for the United States and the Federal Trade Commission as Amici Curiae at 8, Chamber of Com. v. City of Seattle, 890 F.3d 769 (9th Cir. 2018) (No. 17-36540) (“Independent contractors, as horizontal competitors, may not collude to set the price for their services.”); 15 U.S. Code § 15(a) (authorizing treble damages in private suits); infra Part I. Platform workers in the ride-hailing industry are currently considered independent contractors under federal labor law, and thus if they go on strike or exert collective pressure on platform companies, they may face liability under the antitrust laws.55. NLRB Advice Memorandum, Uber Technologies, Inc. Cases 13-CA-163062, 14-CA-158833, and 29-CA-177483 (Apr. 16, 2019) (uber drivers are classified as independent contractors under the prevailing standard based on Supershuttle DFW, Inc., 367 NLRB No. 75 (Jan. 25, 2019)); but see Order Granting Review and Notice and Invitation to File Briefs, The Atlanta Opera, Inc., Case 10-RC-276292 (Dec. 27, 2021) (inviting parties and amici to submit briefs addressing whether the Board should reconsider the Supershuttle standard).

In 2016, a group of Puerto Rican jockeys formed a labor organization to protest the terms under which they were hired by the horse owners and the owner-operator of a racetrack.66. Confederación Hípica v. Confederación de Jinetes Puertorriqueños (Jinetes), 30 F.4th 306, 311 (1st Cir. 2022), cert. denied, 143 S. Ct. 631 (2023). The jockeys organized a strike, and the horse and racetrack owners sued. The District Court found that the jockeys had violated antitrust law by acting in concert to restrain trade and could not benefit from the labor-dispute exemption because of their independent contractor status.77. Id. at 312. In April 2022, the First Circuit reversed, extending the statutory labor-dispute exemption beyond the legal employment relationship for the first time.88. Id. at 314. Strictly speaking, what was new in this case was extending the exemption to alleged independent contractors without finding any employee-employer relationship indirectly at issue; courts have included independent contractors in the exemption in some limited circumstances involving industries in which independent contractors compete with legal employees. See infra note 22 and accompanying text. The First Circuit also did not take a position on the jockeys’ status, rejecting a doctrinal framework that would require a finding of employee status before applying the exemption. See infra Part II.

The rule the court articulated—that any dispute over wages is a labor dispute, regardless of whether or not it is between employees and employers—opens the door to labor organizing in the gig economy, an important opportunity for workers in a growing sector.99. See Lawrence F. Katz & Alan B. Krueger, The Rise and Nature of Alternative Work Arrangements in the United States, 19952015, 72 ILR Rev. 382, 383 (2019) (“[T]he percentage of workers engaged in alternative work arrangements—defined as temporary help agency workers, on-call workers, contract company workers, and independent contractors or freelancers—rose from 10.7% in February 2005 to somewhere in the 12.6 to 15.8% range in late 2015.”); Monica Anderson, Colleen McClain, Michelle Faverio & Risa Gelles-Watnick, Pew Rsch. Ctr., The State of Gig Work in 2021, at 11 (2021), https://www.pewresearch.org/internet/2021/12/08/americans-experiences-earning-money-through-online-gig-platforms [https://perma.cc/LYM9-YNUJ] (“About one-in-ten adults (9%) have earned money doing gig platform work in the past 12 months.”).But it’s unclear just how far it opened the door: Replacing a categorical test based on employee classification with the hazy distinction between wages and prices allows courts to construe the exemption as broadly or as narrowly as they like.

I. The Statutory Labor-Dispute Exemption Before Jinetes

Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade.”1010. 15 U.S.C. § 1. The Act was originally passed to fight rising corporate monopolies,1111. See Apex Hosiery Co. v. Leader, 310 U.S. 469, 492–93 (1940) (“[The Sherman Act] was enacted in the era of ‘trusts’ and of ‘combinations’ of businesses and of capital organized and directed to control of the market by suppression of competition in the marketing of goods and services, the monopolistic tendency of which had become a matter of public concern.”); Standard Oil Co. v. United States, 221 U.S. 1, 50 (1911) (“[T]he main cause which led to the legislation was the thought that it was required by the economic condition of the times; that is, the vast accumulation of wealth in the hands of corporations and individuals.”). but courtseager to suppress the nascent labor movementrelied on the vague language of the Sherman Act to issue injunctions against strikers, picketers, and any form of labor action involving violence, social pressure, or even “moral intimidation.”1212. Vegelahn v. Guntner, 44 N.E. 1077, 1077 (1896); see Loewe v. Lawlor (Danbury Hatters), 208 U.S. 274, 276 (1908) (holding unions subject to injunctions under the Sherman Act).

In 1914, Congress attempted to oust federal courts from antitrust scrutiny of labor disputes through the passage of the Clayton Act. Section 6 of the Clayton Act declares that, for the purposes of antitrust law, “[t]he labor of a human being is not a commodity,” and that “[n]othing contained in the antitrust laws shall be construed to forbid the existence and operation of labor . . . organizations . . . ; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws.”1313. 15 U.S.C. § 17. Yet, the federal courts were not deterred. In Duplex Printing, the Supreme Court construed Section 20 of the Clayton Act as merely codifying the case law that had grown around the labor injunction, importing the federal common-law prohibitions on labor boycotts enforced in cases like Danbury Hatters.1414. Duplex Printing Press Co. v. Deering, 254 U.S. 443, 470 (1921) (“The first paragraph [of Clayton Act § 20] merely puts into statutory form familiar restrictions upon the granting of injunctions already established and of general application in the equity practice of the courts of the United States.”).

President Hoover signed the Norris-LaGuardia Act in 1932.1515. 29 U.S.C. § 101. That Act barred federal courts from issuing injunctions “in a[ny] case involving or growing out of a labor dispute.”1616. Id. A decade later, and after the additional passage of the NLRA, the Court construed the ouster broadly, restoring the original purpose of the Clayton Act as a bar on any antitrust scrutiny of labor organizing.1717. See United States v. Hutcheson, 312 U.S. 219, 231 (1941) (“[W]hether trade union conduct constitutes a violation of the Sherman Law is to be determined only by reading the Sherman Law and § 20 of the Clayton Act and the Norris-LaGuardia Act as a harmonizing text . . . .”).

The next year, the Supreme Court issued the first in a series of decisions that narrowed the applicability of the labor-dispute exemption. In Columbia River Packers, the Supreme Court declined to apply the exemption to a dispute between a fishermen’s union and the owner of a cannery.1818. Columbia River Packers Ass’n v. Hinton, 315 U.S. 143, 145 (1942). The union represented fishermen who owned or leased fishing vessels and, in some cases, employed their own crew.1919. Id. at 147. The Court found that they were independent businesspeople, and their dispute with the cannery was over “the terms of a contract for the sale” of fish, rather than, as the Norris-LaGuardia Act required, “the terms or conditions of employment.”2020. Id. at 145. The Court reasoned that because in passing the Norris-LaGuardia Act “the attention of Congress was focussed upon disputes affecting the employer-employee relationship, . . . the Act was not intended to have application to disputes over the sale of commodities.”2121. Id. While acknowledging that the Norris-LaGuardia Act expressly allowed for parties to a labor dispute that did not stand in “the proximate relation of employer and employee,” the Court insisted that it did not apply to “controversies upon which the employer-employee relationship has no bearing.”2222. Id. at 147.

Though nothing in either the Clayton or Norris-LaGuardia Act conditions the immunity on the labor group consisting of common-law employees (as opposed to independent contractors), the Court has, in a handful of cases, declined to apply the immunity to independent contractors that were selling (or re-selling) goods, or whom the Court found were otherwise in business for themselves, and not merely workers selling their labor.2323. See, e.g., United States v. Women’s Sportswear Mfr. Ass’n, 336 U.S. 460, 463–64 (1949) (denying the exemption to a stitching contractor who sold labor but also had “rentals, capital costs, overhead and profits,” and thus was “an entrepreneur, not a laborer”); Los Angeles Meat & Provision Drivers Union v. United States, 371 U.S. 94, 96–97 (1962) (denying the exemption to “grease peddlers,” whom the Court found were “independent entrepreneurs whose earnings as middlemen consisted of the difference between the price at which they bought . . . restaurant grease . . . and the price at which they sold it to the processors,” and who had significant capital investment in the form of “operating and maintaining their trucks”); see also FTC v. Superior Ct. Trial Laws. Ass’n, 493 U.S. 411, 436 (1990) (upholding FTC order against boycott by private attorneys who worked as court-appointed counsel). The exemption was not raised on appeal. See Superior Ct. Trial Laws. Ass’n v. FTC, 856 F.2d 226, 230 n.6 (D.C. Cir. 1988) (“Petitioners routinely used the word ‘strike’ to describe their concerted refusal to accept new cases. Petitioners have not suggested, however, that they are ‘employees’ within the meaning of § 20 of the Clayton Act . . . or that SCTLA is a ‘labor organization’ within the meaning of § 6 of the same Act . . .”). In other cases, workers classified as independent contractors, doing the same work as employees but under different contractual conditions, have enjoyed antitrust immunity for labor union activity.2424. See, e.g., Am. Fed’n of Musicians v. Carroll, 391 U.S. 99, 106 (1968) (treating independent contractor band leaders as a “labor group” involved in a “labor dispute” due to the presence of “job or wage competition or some other economic inter-relationship affecting legitimate union interests between the union members and the independent contractors”); H.A. Artists & Assocs., Inc. v. Actors’ Equity Ass’n, 451 U.S. 704, 721–22 (1981) (“In a case . . . where there is no direct wage or job competition between the union and the group it regulates [viz. agents], the Carroll formulation to determine the presence of a nonlabor group . . . necessarily resolves this issue.”). While some lower courts have inferred a categorical exclusion,2525. See, e.g., Taylor v. No. 7, Int’l Union of Journeymen Horseshoers, 353 F.2d 593, 606 (4th Cir. 1965) (finding that a boycott by the farriers’ union was not entitled to the exemption because the farriers “do not stand in the proximate relation of employees and employers” with horse owners and trainers and “[t]here is no evidence in the record that the boycotting and price-fixing activities of the defendant unions were undertaken in aid of or in connection with the wages, hours, working conditions or any other interest of horseshoers”); Julien v. Soc’y of Stage Dirs. & Choreographers, Inc., No. 68 CIV 5120, 1975 WL 957, at *1 (S.D.N.Y. Oct. 7, 1975) (finding that members of defendant organization “are employees of producers and not independent contractors [and] therefore come[] within the labor exemption”); Int’l Ass’n of Heat & Frost Insulators & Asbestos Workers, etc. v. United Contractors Ass’n, 483 F.2d 384, 390–91 (3d Cir. 1973) (“[C]ourts have sought to fashion the labor exemption . . . according to the . . . analyses of the function of the work in its relevant economic relationships.”); Spence v. Se. Alaska Pilots’ Ass’n, 789 F. Supp. 1007, 1012 (D. Alaska 1990) (“A party seeking refuge in the statutory exemption must be a bona fide labor organization and not independent contractors.” (citing H.A. Artists & Assocs., Inc. v. Actors’ Equity Ass’n, 451 U.S. 704, 717 n.20 (1981))); Ring v. Spina, 148 F.2d 647, 652 (2d Cir. 1945) (“[T]he controversy cannot concern itself with conditions of employment, since none of the parties affected are in any true sense employees. . . . We think the exception therefore inapplicable.”). the Supreme Court’s cases on the issue are few, and offer ambiguous guidance.2626. See Henry H. Perritt, Jr., Dont Burn the LoomsRegulation of Uber and Other Gig Labor Markets, 22 SMU Sci. & Tech. L. Rev. 51, 143–44 (2019) (“Most labor lawyers assume that independent contractors are outside the scope of the labor exemption, on the strength of Allen Bradley, Columbia River Packers, and a number of lower court opinions. However, the case law supporting that proposition is not as strong as one might assume.”); Michael C. Duff, Labor Viscerality? Work Stoppages in the “New Work” Non-Union Economy, 65 St. Louis U. L.J. 115, 148–49 (2020) (noting “the paucity of authority since Columbia River Packers touching on the question of application of the [Norris-LaGuardia Act] to non-employee workers,” and that “it is difficult to locate any narrowing authority” to support lower court inferences to a categorical rule); Samuel Estreicher & Jack Samuel, Independent-Contractor Unionism and the Antitrust Laws 49–56 (Apr. 4, 2023) (unpublished manuscript) (on file with author) (arguing that the Supreme Court’s precedents do not incorporate the common-law agency tests but rather distinguish workers, including independent contractors who sell only their labor, from independent entrepreneurs). Some labor and antitrust experts side with the lower courts in adopting a categorical approach, while others argue that—as far as the Supreme Court cases go—there remains a grey area in which independent contractors who are not in business for themselves fall within the scope of the exemption.2727. Compare Brief for the United States and the Federal Trade Commission as Amici Curiae at 8, Chamber of Com. v. City of Seattle, 890 F.3d 769 (9th Cir. 2018) (No. 17-36540) (“Independent contractors, as horizontal competitors, may not collude to set the price for their services.”), and Heather M. Whitney, Rethinking the Ban on Employer-Labor Organization Cooperation, 37 Cardozo L. Rev. 1455, 1482 n.143 (2016) (summarizing the current doctrine as categorically excluding independent contractors), with Brief for Professor Samuel Estreicher as Amicus Curiae at 5, Chamber of Com. v. City of Seattle, 890 F.3d 769 (9th Cir. 2018) (No. 17-36540) (“There is nothing in the Clayton Act or Supreme Court decisions on labor’s statutory antitrust exemption that hinges the applicability of the exemption on ‘employee’ status under federal labor relations law.”).

II. The First Circuit’s Decision

Puerto Rico is home to only one racetrack: Hipódromo Camarero in the town of Canóvanas.2828. Jinetes, 30 F.4th 306, 311 (1st Cir. 2022), cert. denied, 143 S. Ct. 631 (2023). The Camarero jockeys are hired by horse owners and paid a twenty-dollar “mount fee” per race—a rate about one-fifth of that paid to their counterparts in the rest of the United States, and which has not changed since 1989—plus prize money for the top five finishers.2929. Id. The jockeys have been unhappy with this arrangement for years; they have also criticized pre-race weigh-in procedures and the conduct of racing officials.3030. Id. On June 10, 2016, several aggrieved jockeys refused to race.3131. Id. Race officials fined them; in response, thirty-seven jockeys refused to race for three days.3232. Id. The horse and racetrack owners sued the jockeys, along with their spouses and two different associations that had been involved in the dispute.3333. Id. The district court enjoined the work stoppage and awarded summary judgment to the owners, trebling their claimed losses and ordering the jockeys to pay $1,190,685.3434. Id. at 312.

On appeal, the jockeys argued that the labor-dispute exemption should apply. The First Circuit rejected the district court’s categorical exclusion of the jockeys from the protection of the labor-dispute exemption based on their “alleged independent-contractor status.”3535. Id. at 314. It noted that “any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating . . . terms or conditions of employment,”3636. Id. at 313 (quoting 29 U.S.C. § 113(c)). was by statute an exempted labor dispute.

The court interpreted Columbia River Packers as standing not for a categorical exclusion of independent contractor labor organizations but for a distinction between “disputes about wages for labor” and “those over prices for goods.”3737. Id. at 315. The court distinguished Taylor v. Loc. No. 7, Intl Union of Journeymen Horseshoers, 353 F.2d 593 (4th Cir. 1965) (en banc), along the same lines: The independent contractors in that case did not only sell their labor but sold horseshoes as well, so the dispute was at least partly over prices for goods. Id. at 315 n.3. The First Circuit did not address Womens Sportswear or Los Angeles Meat and discussed Superior Court Trial Lawyers Association only by way of noting that the labor exemption was not argued. See id. at 316 n.4. Unlike other independent contractor cases, the First Circuit held that, as a “labor only case,” Jinetes did not involve any dispute over prices. “The key question,” according to the First Circuit, “is not whether the jockeys are independent contractors or laborers but whether what is at issue is compensation for their labor.”3838. Id. at 314.

Having established the irrelevance of the jockeys’ employment status as a threshold question determining the exemption’s applicability, the First Circuit applied the four-part test usually reserved for disputes involving employees. The exemption “applies to conduct arising (1) out of the actions of a labor organization and undertaken (2) during a labor dispute, (3) unilaterally, and (4) out of the self-interest of the labor organization.”3939. Id. at 313. The defendant association in Jinetes “advocates for the jockeys’ terms of employment”4040. Id. at 314. and thus is “a ‘bona fide’ group representing laborers,”4141. Id. at 313 (quoting H.A. Artists & Assocs., Inc. v. Actors’ Equity Ass’n, 451 U.S. 704, 717 (1981)). regardless of whether it is “formally recognized as a union.”4242. Id. (citing NLRB v. Wash. Aluminum Co., 370 U.S. 9, 14–15 (1962)). Because defendants struck for “higher wages and safer working conditions,” theirs was “a core labor dispute.”4343. Id. at 314. “The district court erred,” the First Circuit held, “when it concluded that the jockeys’ alleged independent-contractor status categorically meant they were ineligible for the exemption” because “by the express text of the Norris-LaGuardia Act, a labor dispute may exist ‘regardless of whether or not the disputants stand in the proximate relation of employer and employee.’”4444. Id. (quoting 29 U.S.C. § 113(c)).

The third and fourth requirements were not in dispute.4545. Id. (“The plaintiffs make no assertion that the defendants coordinated with any nonlabor group. And the defendants acted to serve their own economic interests.”). The First Circuit found that the test was satisfied by the facts of the case, and thus that the labor-dispute exemption applied.4646. Id. at 316.

III. The Future of Independent Contractor Organizing?

The Jinetes decision offers hope to workers organizing in the platform economy. Citing Jinetes, the Federal Trade Commission (FTC) has recently indicated an intention “not [to] focus [enforcement] on organizing efforts undertaken by gig workers.”4747. Fed. Trade Comm’n, Policy Statement on Enforcement Related to Gig Work 14 n.68 (2022), https://www.ftc.gov/system/files/ftc_gov/pdf/Matter%20No.%20P227600%20Gig%20Policy%20Statement.pdf [https://perma.cc/7KLY-TVT2]. As an increasing share of the workforce falls outside the protection of the NLRA due to workplace fissuring and the growth of “gig economy” firms,4848. See generally David Weil, The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It (2014) at 10 (“Employers have incentives to [fissure] for obvious reasons: shifting employment to other parties allows an employer to avoid mandatory social payments (such as unemployment and workers’ compensation insurance or payroll taxes) or to shed liability for workplace injuries by deliberately misclassifying workers as independent contractors.”). and as unionization efforts at workplaces across the country like Amazon and Starbucks continue to gather steam,4949. See, e.g., Sharon Block & Benjamin Sachs, Mapping Union Activity at Amazon, OnLabor (Apr. 1, 2022), https://onlabor.org/mapping-union-activity-at-amazon-update-april-1-2022 [https://perma.cc/Y2EJ-RYKC] (“[E]specially when paired with the recent wave of successful Starbucks organizing sweeping the nation, [the union victory in Amazon’s Staten Island facility] could precipitate a surge of union organizing in pivotal economic sectors, such as the service sector, in which unions have traditionally struggled to gain a meaningful foothold.”). replacing the categorical rule with a potentially more flexible standard would be a timely expansion of the right to strike. Exactly how sweeping a change the decision signals will depend on how the wages/prices distinction is applied. Yet the First Circuit said little to indicate how future courts should apply it.5050. Some remarks in footnote 3 of Jinetes distinguish Taylor and suggest the surprising conclusion that the distinction mirrors that between selling services and selling goods. Jinetes, 30 F.4th 306, 315 n.3 (1st Cir. 2002), cert. denied, 143 S. Ct. 631 (2023). In Taylor, the workers “provided not just labor but also a product [namely horseshoes] . . . to their customers,” unlike Jinetes, which is a “labor-only” case. Id. This could be interpreted to imply that so long as putative laborers are not selling any goods they are entitled to the labor exemption, which would place plumbers and dentists into the same category as steelworkers, longshoremen, and mail carriers. Whatever the merits of allowing plumbers or dentists to collectively set prices, such a rule would be unlikely to survive further judicial review. It is well-settled law that attempts by dentists’ organizations to set rates constitute illegal cartels. See FTC v. Ind. Fed’n of Dentists, 476 U.S. 447 (1986); see also Marina Lao, Workers in the Gig Economy: The Case for Extending the Antitrust Labor Exemption, 51 U.C. Davis L. Rev. 1543, 1563–64 n.88 (2018) (collecting cases). In addition to being overinclusive of professional services providers, such a rule could be underinclusive of workers involved in the production or distribution of goods, so long as their contracts can be structured to construe their pay as a price per unit, though in most cases this would require novel forms of fissuring, as wages cannot be reasonably construed as prices for goods if the workers never own the goods in the first place.

The First Circuit held that Columbia River Packers stands not for the categorical rule based on classification, but for the wages/prices distinction, effectively rejecting the Supreme Court’s claims about the importance of the employer-employee relationship as dicta.5151. See Jinetes, 30 F.4th at 314–15. If the wages/prices distinction operated independently of employee classification, how was the distinction applied there? In Columbia River Packers, the decision rested partly on the Court’s finding that the fishermen operated with significant independence and had invested capital in their individual fishing operations.5252. Columbia River Packers Ass’n v. Hinton, 315 U.S. 143, 147 (1942) (“[The fishermen] desire[d] . . . to continue to operate as independent businessmen, free from such controls as an employer might exercise.”). Capital investment and independence are among the central criteria in distinguishing independent contractors from employees under the common law “control” test,5353. See Restatement (Second) of Agency § 220 (Am. L. Inst. 1958). which determines employee status under the NLRA.5454. See NLRB v. United Ins. Co. of Am., 390 U.S. 254, 256 (1968) (holding that the Taft-Harley amendment of the NLRA’s definition of “employee” to exclude “independent contractors” was intended to incorporate the common-law control test); see also Supershuttle DFW, Inc., 367 NLRB No. 75 at *2 (Jan. 25, 2019) (summarizing NLRB’s interpretation of the common-law control test factors specified in United Insurance). But these factors need not be understood to have legal significance only in the context of employee classification tests. One possible interpretation of Jinetes is that the categorical approach relies on the right factors but is viewed through the wrong doctrinal lens, and thus that capital investment and independence go to distinguishing prices from wages not because prices are by definition paid to contractors and wages to employees—but because employment classification and the wages/prices distinction both reflect the substance of the underlying economic relationships. Rejecting the categorical approach amounts to holding that courts should look directly at the substance of the relationship, in all of its factual richness, without employee classification tests as a mediating analytic step.5555. Cf. New Prime Inc. v. Oliveira, 139 S. Ct. 532, 542 (2019) (“[A]s dominantly understood in 1925, a contract of employment did not necessarily imply the existence of an employer-employee or master-servant relationship.”) (emphasis omitted); Chamber of Com. v. City of Seattle, 426 F. Supp. 3d 786, 788 n.3 (W.D. Wash. 2019) (“Plaintiffs argue that the labor exemption applies only in the context of an employer-employee relationship. . . . [A] recent Supreme Court decision makes clear that, at the time the Clayton Act was written, even the narrower term ‘employment’ encompassed both master-servant relationships and independent contractors.” (citing New Prime, 139 S. Ct. at 542–44)).

Inviting courts faced with putative labor disputes to look at the economic relations between workers and management with fresh eyes would be a welcome development for otherwise-misclassified workers. There is a risk, however, of resuscitating a de facto, antitrust-specific classification test if courts parse the same set of factors in a similar way, and it would be unwise to bet on federal courts dramatically revising their general understanding of employment status.

So how should courts understand the wages/prices distinction, if not as common-law employee classification in a different guise? While it offered virtually no detail concerning the nature of a wage dispute, the First Circuit emphasized the Norris-LaGuardia Act was intended to navigate the “inherent tension between national antitrust policy, which seeks to maximize competition, and national labor policy, which encourages cooperation among workers to improve the conditions of employment.”5656. Jinetes, 30 F.4th 306, 312 (1st Cir. 2002), cert. denied, 143 S. Ct. 631 (2023) (quoting H.A. Artists & Assocs., Inc. v. Actors’ Equity Ass’n, 451 U.S. 704, 713 (1981)). It does so by acknowledging that while “antitrust law [generally] forbids would-be competitors from colluding to increase prices . . . [w]hen the price is a laborer’s wage . . . a different set of rules apply. That must be so, lest antitrust law waylay ordinary collective bargaining.”5757. Id. at 312. New Deal labor policy, in other words, was intended to carve out a space for workers to organize, and the scope of its coverage should reflect that purpose.

Eighty years ago, the Supreme Court faced a similar question: Were newsboys entitled to organize under the National Labor Relations Act, or, as the appeals court below had found, did the NLRA exclude common-law independent contractors? In NLRB v. Hearst Publications, the Court rejected the idea that the control test was appropriate for distinguishing a labor organization from an illegal cartel.5858. NLRB v. Hearst Publ’ns, 322 U.S. 111, 120–121 (1944). According to the Court, in enacting the NLRA, “Congress had in mind a wider field than the narrow technical legal relation of ‘master and servant,’ as the common law had worked this out in all its variations, and at the same time a narrower one than the entire area of rendering service to others.”5959. Id. at 124. Interpreting the category of covered employees in light of the purposes of the NLRA, the Hearst Court found that, because some workers classified as independent contractors under agency law face the same “[i]nequality of bargaining power in controversies over wages, hours and working conditions” as those classified as employees, and “when acting alone, may be as helpless in dealing with an employer, as dependent on his daily wage and as unable to leave the employ and to resist arbitrary and unfair treatment,”6060. Id. at 127 (internal quotations omitted). the Board’s determination that they were covered employees was due judicial deference.

Hearst was overturned by the Taft-Hartley Act.6161. Labor Management Relations (Taft-Hartley) Act, 29 U.S.C. § 151; see also NLRB v. United Ins. Co., 390 U.S. 254, 256 (1968) (holding the use of “independent contractor” in the Taft-Hartley Act as intended “to have the Board and the courts apply general agency principles in distinguishing between employees and independent contractors under the Act”). While Taft-Hartley was specifically targeted at amending the NLRA to weaken unions, it did not touch the Norris-LaGuardia antitrust exemption, which draws its purpose from the same policy framework: The New Deal scheme of labor regulation was intended to remedy inequalities of bargaining power and to protect collective self-help by workers.6262. 75 Cong. Rec. 5461, 5487 (1932) (statement of Rep. Charles Sparks); cf. Hiba Hafiz, Labor Antitrusts Paradox, 86 U. Chi. L. Rev. 381, 386–87 (2019) (“The NLRA justified worker combinations as a countervailing power that, in the words of its sponsor, Senator Robert Wagner, ‘match[ed] the huge aggregates of modern capital.’”) (citing Senator Robert Wagner, The New Responsibilities of Organized Labor, Address to the New York State Federation of Labor Convention ¶ 5 (1928), reprinted in 70 Cong. Rec. 225, 227). Interpreting the labor-dispute exemption in light of labor policy, rather than the common law of agency, requires looking at the substance of the economic relation, including the extent to which it reflects inequality of bargaining power between workers and dominant firms. The Hearst Court drew on the preamble to the NLRA to interpret that statute’s purpose, but the Norris-LaGuardia Act’s stated policy aims were essentially the same: to ensure that independent contractors were “free from the interference, restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”6363. 29 U.S.C. § 102.

Courts could, and perhaps should, adjudicate labor-dispute exemption cases by looking directly to the substance of the economic relation at issue, considering the purposes of New Deal labor law, rather than the common law of agency. And if the key to the labor-dispute exemption is the wages/prices distinction, antitrust doctrine may need to account for the economic context in which the economic relation is formed, including the market power on the other side.6464. See generally Brian Callaci & Sandeep Vaheesan, Antitrust Remedies for Fissured Work, 108 Cornell L. Rev. Online 27 (2023) (arguing that antitrust law should prevent corporations from controlling the business decisions of distributors and suppliers); Sanjukta Paul, Antitrust as Allocator of Coordination Rights, 67 UCLA L. Rev. 378 (2020) (exploring antitrust law’s preference for coordination via vertical contracting, as opposed to horizontal, interfirm coordination). In Jinetes, the owners of the horses and the track enjoyed a monopoly over Puerto Rican horse racing and thus a monopsony over the relevant labor market,6565. Jinetes, 30 F.4th 306, 311 (1st Cir. 2022), cert. denied, 143 S. Ct. 631 (2023). but the First Circuit did not address the relevance, if any, of the monopsony power of the plaintiffs. An analysis of unequal bargaining power could help make clear why the jockeys, who have no meaningful ability to bargain over their pay, should be considered as earning a wage rather than being paid a price: What makes a wage a wage, rather than a price for independently provided services, may not only be the capital investment or independence of the recipient, but also the market power of the payor.6666. Analysis of market power already has a role in antitrust doctrine, albeit a limited one in recent decades. Courts consider the market power of defendants in a rule of reason analysis. See, e.g., Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 27–29 (1984) (finding a “tying” practice permissible in part due to the defendant’s lack of market power). Whether future courts will interpret the wages/prices distinction in light of an analysis of market power remains to be seen.

CONCLUSION

The racetrack and horse owners filed a petition for certiorari on October 4th, 2022, identifying the question presented as “Whether the statutory labor exemption from the operation of the antitrust laws, which exempts ‘labor dispute[s]’ that ‘concern[] terms or conditions of employment,’ encompasses concerted action by independent contractors that do not relate to an employer-employee relationship.”6767. Petition for Writ of Certiorari at i, Jinetes, 30 F.4th 306 (No. 22-327).

The jockeys’ opposition brief emphasized, among other things, the public meaning of “employment” when the Clayton and Norris-LaGuardia Acts were passed, no doubt with an eye on the Court’s embrace of textualism and in hopes of convincing at least one more of the Court’s six conservative justices to follow Justice Gorsuch’s lead in New Prime.6868. See Respondents’ Brief in Opposition at 18–20, Jinetes, 30 F.4th 306 (No. 22-327). While the jockeys construed the First Circuit’s decision as consistent with prior Supreme Court and federal appeals courts decisions6969. See id. at 9–15. (as had the First Circuit), the owners portrayed the categorical exclusion of workers classified as independent contractors, where no “employer-employee relationship [i]s the matrix of the controversy,”7070. Columbia River Packers Ass’n v. Hinton, 315 U.S. 143, 147 (1942). as clearly established by prior case law.7171. Reply Brief for Petitioners at 1–7, Jinetes, 30 F.4th 306 (No. 22-327).

If the Supreme Court agreed with the owners’ understanding of its prior decisions, it chose not to say so: on January 9th, 2023, the Court denied the petition for certiorari without explanation or noted dissent.7272. See Confederación Hípica v. Confederación de Jinetes Puertorriqueños, 143 S. Ct. 631 (2023). At least within the First Circuit, workers classified as independent contractors now have the right to strike over wages and other terms and conditions of employment.

February 10, 2023

Olean Wholesale Grocery Cooperative, Inc. V. Bumble Bee Foods LLC

Jonathan L. Goldberg

Ninth Circuit Offers Guidance to Trial Courts in Evaluating Ancillary Predominance Issues for Purposes of Rule 23(b)(3)

Jonathan L. Goldberg

Recent Case: Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods LLC, 31 F.4th 651 (9th Cir. 2022) (en banc)

The Ninth Circuit Court of Appeals recently held in an en banc ruling that district courts wield significant discretion when deciding whether to certify a class action containing potentially uninjured class members. The opinion rejected a “de minimis” rule, which, according to Defendants, other circuits adopted. The court properly focused on Rule 23’s broad text and the class mechanism’s core efficiency goals. However, the Ninth Circuit prematurely addressed the de minimis issue because its opinion reaffirmed the district court’s finding that each plaintiff was similarly situated. Still, in concluding Defendants failed to demonstrate a fatal dissimilarity within the class, the en banc panel effectively reasoned that opposition to predominance at class certification must attack evidence’s relevancy as to each class member rather than its sufficiency in proving the class claims.

INTRODUCTION

The Supreme Court recently confirmed that uninjured plaintiffs may not recover damages from class action judgments but left open questions of how that rule might affect a trial court’s class certification decision.22. See TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2208, 2208 n.4 (2021) (holding Article III requires class members to have standing to recover damages but declining to answer the “distinct question whether every class member must demonstrate standing before a court certifies a class”). In Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC,33. 31 F.4th 651 (9th Cir. 2022) (en banc). the Ninth Circuit provided crucial guidance to trial courts struggling to apply TransUnion’s holding.

Class action lawsuits depart from the usual rule that only named parties conduct litigation.44. Califano v. Yamasaki, 442 U.S. 682, 700–01 (1979). Federal Rule of Civil Procedure 23 outlines the strict conditions a class must meet to ensure aggregate litigation proceeds fairly, both for absent class members and defendants, and advances judicial economy.55. See Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds, 568 U.S. 455, 470 (2013) (citing Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 107 (2009)) (confirming predominance tests whether a court can resolve dissimilarities among class members in a manner that is not “inefficient or unfair”). To recover damages for themselves and the absent class members they represent, putative class representatives usually certify their class under Rule 23(b)(3).66. See Richard A. Nagareda, Robert G. Bone, Elizabeth Chamblee Burch & Patrick Wooley, The Law of Class Actions and Other Aggregate Litigation 274–75 (3d ed. 2020) (suggesting that plaintiffs are extremely unlikely to recover monetary damages through a (b)(2) class after Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011)). Rule 23(b)(3) demands that class litigation be superior to other adjudicatory methods and that common questions of law or fact predominate over individual questions.77. Fed. R. Civ. P. 23(b)(3). Parties frequently target the predominance requirement to challenge motions for class certification.88. See, e.g., Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (class settlement); Halliburton Co. v. Erica P. John Fund, Inc. (Halliburton II), 573 U.S. 258 (2014) (securities fraud); Amgen, 568 U.S. at 466 (securities fraud); Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 454 (2016) (Fair Labor Standards Act). In short, predominance asks whether common questions of law or fact are both central to the litigation and more prevalent or important than individual ones.99. Tyson Foods, 577 U.S. at 453–54 (2016) (“The predominance inquiry ‘asks whether the common, aggregation-enabling, issues in the case are more prevalent or important than the non-common, aggregation-defeating, individual issues’ [and whether] ‘one or more of the central issues in the action are common to the class and can be said to predominate . . . .’” (first quoting 2 W. Rubenstein, Newberg on Class Actions § 4:50 (5th ed. 2012); then quoting 7AA Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1778 (3d ed. 2005))).

The Olean defendants contended that the plaintiff class included more than a de minimis number of uninjured members, prompting many individual questions, preventing common issues from predominating, and automatically precluding certification.1010. A question is common because its answer resolves a central issue in each class member’s claim. Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 663 (9th Cir. 2022) (en banc) (quoting Wal-Mart, 564 U.S. at 350). By contrast, an individual question requires different evidence to prove each class member’s claim. Id. (citing Tyson Foods, 577 U.S. at 453). Uninjured plaintiffs within a class may raise individual questions because a court must determine “which ones” are injured and “which ones” are not. See Tyson Foods, 577 U.S. at 464–66 (Roberts, C.J., concurring) (finding decertification appropriate where a district court cannot identify the uninjured plaintiffs within the class); cf. Olean, 31 F.4th at 681–82 & n.31 (discussing mini-trials to identify each plaintiff’s damages award). Defendants also argued the D.C.1111. In re Rail Freight Fuel Surcharge Antitrust Litig. (Rail Freight II), 934 F.3d 619, 624–25 (D.C. Cir. 2019) (discussing a “six-percent upper limit” on the number of uninjured class members in a certified class). and First1212. See In re Asacol Antitrust Litig., 907 F.3d 42, 47, 51–58 (1st Cir. 2018) (intimating that 10% exceeds the de minimis boundary). Circuits already adopted a “de minimis” rule and urged the Ninth Circuit to hold similarly.1313. Defendants-Appellants’ Supplemental En Banc Brief at 19, 31 F.4th 651 (9th Cir. 2022) (No. 3:15-MD-026770-JLS-MDD), 2021 WL 4126353, at *19. Cf. Olean, 31 F.4th at 666 n.9 (9th Cir. 2022) (discussing the argument but not directly attributing it to defendants); id. at 692 (Lee, J., dissenting) (same). In rejecting a per se de minimis standard, the en banc court held that a district court is in the best position to determine whether individual questions, including those regarding class members’ injury, will overwhelm common ones.1414. Olean, 31 F.4th at 669. In other words, the district court’s decision to certify the class fell within the broad range of permissible conclusions that a class certification appeal’s abuse of discretion standard affords.1515. Id. (quoting Hung Lam v. City of San Jose, 869 F.3d 1077, 1084 (9th Cir. 2017) (quoting Kode v. Carlson, 596 F.3d 608, 612 (9th Cir. 2010))).

The court properly resolved an issue percolating in class action jurisprudence through careful attention to Rule 23’s text and the class mechanism’s core efficiency goals. Furthermore, the decision follows a broad trend—developing as judicial experience with class actions grows—of increasing deference towards trial courts at the class certification stage. Nevertheless, the en banc panel should never have reached the issue. The opinion’s logic renders the holding advisory by concluding each plaintiff could rely upon their expert’s report to prove class-wide antitrust impact—i.e., that defendants injured each and every class member by causing them to pay for tuna at supra-competitive prices. Still, the appellate tribunal faithfully applied Supreme Court precedent on a frequently confusing aspect of the predominance inquiry, carefully distinguishing between evidentiary issues of relevancy (whether there is a “fatal dissimilarity”) and sufficiency or persuasiveness (whether there is a “fatal similarity”).1616. See Nagareda, supra note 4, at 131 (arguing courts should address fatal dissimilarities between class members at certification and address fatal similarities, such as a failure of proof, at summary judgment).

I. BACKGROUND

A. The District Court’s Class Certification Order

Following a 2015 Department of Justice antitrust investigation, various plaintiffs (collectively “Tuna Purchasers”) filed suit against Bumble Bee, StarKist, Chicken of the Sea (“COSI”), and their parent corporations (collectively “Tuna Suppliers”), alleging the corporations conspired to fix tuna prices in violation of federal and state antitrust laws.1717. The Tuna Purchasers allege the Tuna Suppliers engaged in a price-fixing conspiracy from November 2010 to at least December 31, 2016 and further claim the conspiracy forced them to pay supra-competitive prices for the Tuna Suppliers’ products. Olean, 31 F.4th at 661–62. Soon thereafter, the Department of Justice (“DOJ”) entered notice of a pending investigation into the packaged tuna industry for similar violations of the antitrust laws.1818. Id. at 661; see In re Packaged Seafood Prods. Antitrust Litig., 332 F.R.D. 308, 317 (S.D. Cal. 2019) (“Shortly after the commencement of this action, the U.S. Department of Justice (‘DOJ’) noticed the Court of pending investigations of the Defendants. Since that time, Defendants and individual employees have pled guilty and the DOJ has entered multiple indictments.”), vacated and remanded sub nom. Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 993 F.3d 774 (9th Cir. 2021), on rehg en banc, 31 F.4th 651 (9th Cir. 2022), and affd sub nom. Olean, 31 F.4th at 661. During the ongoing civil litigation, the DOJ filed multiple indictments alleging a criminal price-fixing conspiracy in the industry from around November 2011 to December 2013.1919. Olean, 31 F.4th at 661–62; see also In re Packaged Seafood Prod. Antitrust Litig., 332 F.R.D. at 317. Bumble Bee, StarKist, and three industry executives ultimately pled guilty to the conspiracy; a jury convicted Bumble Bee’s former CEO, and COSI cooperated with the DOJ, admitting to price fixing in exchange for leniency.2020. Olean, 31 F.4th at 662. By the end of 2015, the Judicial Panel on Multidistrict Litigation consolidated the civil complaints in the Southern District of California.2121. In re Packaged Seafood Prods. Antitrust Litig., 332 F.R.D. at 316. Judge Janis Lynn Sammartino divided the Tuna Purchasers into four tracks: (1) plaintiffs who filed suit individually against the Tuna Suppliers (“DAPs”); (2) direct purchasers, such as nationwide retailors or regional grocery stores (“DPPs”); (3) indirect purchasers who bought bulk-sized products for prepared food or resale (“CFPs”); and (4) individual end purchasers (“EPPs”).2222. Id. at 316–17. The DPPs and EPPs include plaintiffs who purchased packaged tuna between June 1, 2011 and July 1, 2015, but the CFPs include plaintiffs who purchased tuna products from June 2011 through December 2016. Olean, 31 F.4th at 662.

The latter three groups moved for class certification in 2018 under Rule 23(b)(3). The Tuna Suppliers opposed the motion, arguing individual questions predominated over common ones because the DPPs’ expert, Dr. Russell Mangum, could not demonstrate a common class-wide antitrust impact.2323. Olean, 31 F.4th at 673. Each of the three plaintiff subclasses employed their own expert to establish antitrust impact through qualitative and quantitative analyses. Id. at 662. However, this Case Comment will focus on the DPPs’ class certification, the center of each opinion. Dr. Mangum constructed a multiple regression model to assess whether the price-fixing conspiracy subjected each DPP to an overcharge.2424. Id. at 671. To do so, Dr. Mangum pooled the Tuna Suppliers’ actual sales transaction data during benchmark periods before and after the conspiracy, identified a number of variables that could affect the price of tuna—like product characteristics, input costs, consumer type, consumer preferences and demand, etc.—and recorded the model’s results.2525. Id. The model showed “the DPPs paid 10.28 percent more for tuna during the conspiracy period than they did during the benchmark periods.”2626. Id. To further support this finding, Dr. Mangum conducted four robustness checks,2727. Dr. Mangum (1) evaluated the overcharge to each defendant, (2) changed the model to assess the overcharge for different products with different characteristics, (3) altered the model to evaluate overcharge by customer types, and (4) used the output of the pooled regression model to predict the but-for prices paid by the DPP class. Id. at 672. According to Dr. Mangum, each robustness check confirmed the conspiracy generated higher prices for all or nearly all DPPs. Id. and the final one indicated that 94.5 percent of the DPPs purchased at least one product at a supra-competitive rate.2828. Id. To be clear, despite the regression’s result, Dr. Mangum concluded the Tuna Suppliers injured each DPP: The robustness check was one basis for a conclusion that rested on additional “correlation tests, the record evidence and the guilty pleas and admissions entered in [the] case.” See id. at 676.

The Tuna Suppliers’ rebuttal expert to the DPPs, Dr. John Johnson, advanced two areas of critique: (1) Dr. Mangum inappropriately pooled direct purchaser data for his model, papering over differences among class members, such as disparities in bargaining power or negotiating tactics;2929. Dr. Johnson pointed to several empirics to support this argument. A Chow test, a commonly employed statistical tool to assess whether data can be pooled, counseled against data pooling. See id. at 673. Further, Dr. Mangum’s model could not find statistically significant results for twenty-eight percent of the direct purchaser class, so Dr. Johnson argued the plaintiffs could not rely on the model to demonstrate class-wide impact. Id. and (2) Dr. Mangum’s model contained various errors that undermined its validity, including the use of an improper cost index.3030. First, Dr. Mangum’s model outputted false positives, including those who purchased tuna products from non-defendants (non-conspiring tuna producers). See id. at 674. Second, Dr. Mangum’s model did not match the time periods listed in the plaintiff’s complaint. Id. Third, Dr. Mangum used a cost index rather than the Tuna Suppliers’ actual accounting cost. Id. Further, the Tuna Suppliers argued Dr. Johnson’s superior report indicated around twenty-eight percent of the class was uninjured.3131. Id. at 680.

The district court certified the class after carefully evaluating Dr. Johnson’s critiques and Dr. Mangum’s rebuttal.3232. Id. at 662, 675–76. First, the district court found Dr. Mangum’s pooled model to be acceptable. Dr. Mangum’s model included statistically insignificant results as to some direct purchasers because those class members completed too few transactions to provide significant results, but this data issue had no bearing on a direct purchaser’s ability to rely on the model as evidence of impact. Id. at 675. For instance, general evidence that the Tuna Suppliers inflated prices through their conspiracy supported the inference that all direct purchasers were similarly situated. See id. at 674. Second, while the court acknowledged the Chow Test should be taken seriously, its opinion reiterated Dr. Mangum’s assertions that Dr. Johnson designed the Chow Tests to fail by including too many coefficients and observations and concluded that Dr. Mangum’s testimony gave “persuasive reasons, grounded in economic theory, for why a pooled model [was] appropriate” despite the concerning Chow Test results. In re Packaged Seafood, 332 F.R.D. 308, 225 (S.D. Cal. 2019); see also id. at 325 n.9 (offering examples of “multiple courts [that] have addressed instances where a pooled regression model failed a Chow Test, yet still accepted those models”). The trial judge first found each plaintiff was similarly situated and, therefore, able to rely upon Dr. Mangum’s report as well as other evidence—i.e., guilty pleas, market characteristics, and record evidence—to prove a common antitrust impact.3333. In re Packaged Seafood, 332 F.R.D. at 324. The court concluded that the Tuna Suppliers’ remaining criticisms were “serious and could be persuasive to a finder of fact” but ultimately “beyond the scope of” the certification motion because they merely attacked Dr. Mangum’s persuasiveness rather than his capability of establishing impact for each class member.3434. Id. at 328. The district court still rejected Dr. Johnson’s additional critiques. First, Dr. Mangum included purchases from non-defendant tuna suppliers because the conspiracy had an “umbrella effect” that raised non-colluding tuna suppliers’ prices. Olean, 31 F.4th at 676. Second, Dr. Mangum’s choice to narrow the time frame added to the report’s credibility by improving its accuracy. Id. Third, the court accepted Dr. Mangum’s arguments that cost indexes were preferable for determining competitive market prices as well as his conclusion that defendant-specific costs confirmed the pooled model’s results in any event. Id. at 675–76.

B. The Ninth Circuit’s Three-Judge Panel

The Tuna Suppliers appealed, and the Ninth Circuit’s three-judge panel vacated and remanded. The circuit panel concluded each class member could rely upon Dr. Mangum’s model to establish antitrust impact.3535. See Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 993 F.3d 774, 790 (9th Cir. 2021), rehg en banc granted, 5 F.4th 950 (9th Cir. 2021), and on rehg en banc, 31 F.4th 651 (9th Cir. 2022). However, the court found the trial judge abused its discretion in certifying the class without resolving the experts’ competing conclusions on the number of uninjured plaintiffs within the class.3636. Id. at 793. Even though the issue of the experts’ persuasiveness overlaps with the merits of plaintiffs’ claims, the court held that more than a de minimis number of uninjured class members would raise too many individual questions and defeat predominance.3737. Id. at 794. The court precedent analysis “suggest[s] that 5% to 6% constitutes the outer limits of a de minimis number.” Id. at 792 (quoting Rail Freight II, 934 F.3d 619, 624–25 (D.C. Cir. 2019). However, the panel insisted it did “not adopt a numerical or bright-line rule” but only held “that 28% would be out-of-bounds.” Id. at 793. As a result, the district court should have weighed the persuasiveness of each expert report, entered findings on the number of uninjured class members,3838. See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350–51 (2011) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982)) (holding that Rule 23 requires a party seeking class certification to affirmatively demonstrate compliance with the Rule, a standard that will frequently require courts to engage in a “rigorous analysis” at certification that overlaps with the merits of the moving party’s claims). and only have certified the class if it contained fewer than a de minimis number of uninjured plaintiffs. Judge Andrew D. Hurwitz broke from the panel. He concurred the trial court should have resolved the factual dispute relating to uninjured class members before certification but dissented from the panel’s decision to adopt a de minimis standard.3939. Olean, 993 F.3d at 794 (Hurwitz, J., concurring in part and dissenting in part). According to Judge Hurwitz, predominance asks not about the number of uninjured class members but whether a district court may “economically” separate uninjured plaintiffs from the class, a determination best left to the trial court’s discretion.4040. Id. at 794–95. After all, “Rule 23 certification is at bottom a trial management decision.”4141. Id. at 796.

C. The Ninth Circuit’s En Banc Resolution

The Ninth Circuit then vacated the panel’s decision4242. Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 5 F.4th 950, 952 (9th Cir. 2021). and reheard the case en banc.4343. Olean, 31 F.4th at 662. Writing for a 9-2 majority, Judge Sandra Segal Ikuta rejected the “argument that Rule 23 does not permit the certification of a class that potentially includes more than a de minimis number of uninjured class members.”4444. Id. at 669. The panel conceded that “[w]hen individualized questions relate to the injury status of class members, Rule 23(b)(3) requires that the court determine whether individualized inquiries about such matters would predominate over common questions.”4545. Id. at 668. But any numerical rule would go too far. First, the court analogized classes with uninjured plaintiffs to class actions that require individual proof of damages.4646. Id. at 668–69. Both the Ninth Circuit4747. See, e.g., Vaquero v. Ashley Furniture Indus., Inc., 824 F.3d 1150, 1155 (9th Cir. 2016) (“Our precedent is well settled on this point. . . . [T]he need for individualized findings as to the amount of damages does not defeat class certification.”); Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975) (“The amount of damages is invariably an individual question and does not defeat class action treatment.”). and Supreme Court4848. Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 453–54 (2016) (citing Wright & Miller, supra note 8, § 1778) (noting that individual questions like damages and affirmative defenses do not defeat predomination). permit district courts to certify classes despite the need for individualized damages assessments at trial, “a conclusion implicitly based on the determination that such individualized issues do not predominate over common ones.”4949. Olean, 31 F.4th at 669. Second, the majority determined a de minimis rule to be inconsistent with Rule 23’s text, “which requires only that the district court determine after rigorous analysis whether the common question predominates over any individual questions, including individualized questions about injury or entitlement to damages.”5050. Id. (citing Fed. R. Civ. P. 23(b)(3)). Rule 23(b)(3)’s general language points towards decisionmaking on a “case-by-case basis, rather than . . . a per se rule.”5151. Id. at 669 n.13. The court also rejected the dissent’s policy arguments as atextual. “[W]e are bound to apply Rule 23(b)(3) as written, regardless of policy preferences.” Id. Finally, the panel asserted that a district court “is in the best position to determine whether individualized questions” predominate over common ones.5252. Id. at 669. The opinion abandoned the previous panel’s strong justifications for this position, stating only that the abuse of discretion standard permits district courts to rule within a “wide range of permissible outcomes.”5353. Id. (quoting Hung Lam v. City of San Jose, 869 F.3d 1077, 1084 (9th Cir. 2017) (quoting Kode v. Carlson, 596 F.3d 608, 612 (9th Cir. 2010))). However, the en banc panel also noted the presence of uninjured class members may indicate the class is fatally overbroad, an issue a district court may resolve sua sponte with its inherent authority to manage the class action.5454. See id. at 669 n.14 (“[A] court must consider whether the possible presence of uninjured class members means that the class definition is fatally overbroad.”); see also id. at 666 (“In such a case, the court may redefine the overbroad class to include only those members who can rely on the same body of common evidence to establish the common issue.”); Tobias Barrington Wolff, Discretion in Class Certification, 162 U. Pa. L. Rev. 1897, 1925 (2014) (“[T]he discretionary power that federal courts possess to reshape the boundaries and composition of the class is continuous with their power to decide whether to certify at all.”).

The court then addressed the “central questions on appeal[:] . . . whether the expert evidence presented by the DPPs is capable of resolving this issue ‘in one stroke;’ and whether this common question predominates over any individualized inquiry.”5555. Olean, 31 F.4th at 670 (citation omitted). It found the district court did not abuse its discretion in concluding so.5656. Id. at 670. The majority rigorously analyzed both Dr. Mangum’s and Dr. Johnson’s reports and the district court’s handling of the expert’s disagreements.5757. Id. at 670–77. The en banc panel held that the district court appropriately addressed Dr. Johnson’s arguments and considered unrebutted record evidence, such as prior guilty pleas.5858. Id. at 676. For more detail on the arguments made by both experts, see supra notes 26–33 and accompanying text. The trial court’s recognition that Dr. Johnson’s arguments may prove persuasive at trial did not detract from its ultimate conclusion that “Dr. Mangum’s evidence was capable of showing class-wide impact.”5959. Id. at 676. At bottom, “‘each class member could have relied on [the plaintiffs’ evidence] to establish liability if he or she had brought an individual action,’ and the evidence ‘could have sustained a reasonable jury finding’ on the merits of a common question.’”6060. Id. at 667 (quoting Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 455 (2016)) (alterations in original).

The court then rejected the Tuna Suppliers’ primary arguments. Their main argument was that the regression model used averaging assumptions to “paper over” or mask the individual differences in class members’ bargaining power and negotiation tactics.6161. Id. at 677. The court affirmed that regressions models using averaging assumptions are not inherently suspect but rather a commonly used econometric tool.6262. Id. Then, the majority rejected the Tuna Suppliers’ attempt to establish a fatal dissimilarity between Plaintiffs. Even if some DPPs negotiated their tuna prices with greater bargaining power than that of their peers, a conspiracy would logically and plausibly impact all purchasers by inflating the baseline for price negotiations.6363. Id. at 677–78 (quoting In re Urethane Antitrust Litig., 768 F.3d 1245, 1254–55 (10th Cir. 2014)). The court noted Dr. Mangum concluded the largest retailers—those that should have the most bargaining power, such as Wal-Mart—still paid supracompetitive prices.6464. Id. at 678. At most, the Tuna Suppliers’ argument suggested DPPs have different damages. But, “[w]hile individualized differences among the overcharges imposed on each purchaser may require a court to determine damages on an individualized basis, . . . such a task would not undermine the regression model’s ability to provide evidence of common impact.”6565. Id. at 679. The majority reiterated that individualized damages do not threaten predominance. Id. With respect to impact, all DPPs were similarly situated.

Finally, the court dismissed the Tuna Suppliers’ complaint that the district court refused to resolve the parties’ dispute on the number of uninjured class members. The majority first clarified the Tuna Suppliers’ argument was premised on a misreading of Dr. Johnson’s report.6666. Id. at 680. The Tuna Suppliers read Dr. Johnson’s report to suggest twenty-eight percent of the DPP class was uninjured. Id. However, Dr. Johnson’s test was only an attempt to undermine the confidence in Dr. Mangum’s model because it did not produce statistically significant results. Id. The court held the statistic did not support the Tuna Suppliers’ underlying claim. Id. The district court resolved this dispute as well. Id. at 681 (“[T]he district court determined that Dr. Mangum’s pooled regression model was capable of showing that the DPP class members suffered antitrust impact on a class-wide basis, notwithstanding Dr. Johnson’s critique.”). Then, the opinion confirmed neither expert’s report raised individual inquiries into the class members’ injuries. The trial court already concluded each DPP’s bargaining power was immaterial to a finding of common price impact, and the Tuna Suppliers provided no other factual or legal grounds to distinguish between individual class members.6767. Id. at 681 (“The district court fulfilled its obligation to resolve the disputes raised by the parties in order to satisfy itself that the evidence proves the prerequisites for Rule 23(b)(3), which is that the evidence was capable of showing that the DPPs suffered antitrust impact on a class-wide basis.”); see also Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 622–23 (1997) (“The predominance requirement . . . trains on the legal or factual questions that qualify each class member’s case as a genuine controversy . . . .”). Thus, each class member was similarly situated. In other words, evidence relevant to one class member would be relevant to them all. The Tuna Suppliers’ remaining arguments simply attacked the expert report’s persuasiveness, a determination for the jury at trial.6868. Olean, 31 F.4th at 681.

If the jury found that Dr. Mangum’s model was reliable, then the DPPs would have succeeded in showing antitrust impact on a class-wide basis, an element of their antitrust claim. On the other hand, if the jury were persuaded by Dr. Johnson’s critique, the jury could conclude that the DPPs had failed to prove antitrust impact on a class-wide basis.6969. Id.

Judge Kenneth K. Lee dissented.7070. The majority’s opinion briefly addressed the CFP and EPP classes in its conclusion. The en banc panel held the district court did not abuse its discretion in certifying both classes. Id. He first stressed the importance of a rigorous analysis at class certification to prevent in terrorem settlements.7171. Id. at 691 (Lee, J., dissenting) (“‘[W]hen damages allegedly owed to tens of thousands of potential claimants are aggregated and decided at once, the risk of an error will often become unacceptable. Faced with even a small chance of devastating loss, defendants will be pressured into settling questionable claims.’” (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 350 (2011))). Next, he argued the district court did not resolve the dueling experts’ opinions on the presence of uninjured class member, asserting class certification demands the moving party prove Rule 23’s prerequisites by a preponderance of the evidence after a rigorous analysis.7272. Id. at 687–88. The dissent took issue with the majority’s attempt to “wave[] away” the differences in DPPs’ “negotiating power,” which would have permitted certain retailers to extract rebates or promotional concessions and thereby push tuna prices below competitive levels.7373. Id. at 690. At the very least, according to the dissent, the “only way” to “find out if Wal-Mart and other major retailers suffered any injury” would be to conduct a “highly individualized analys[is]” that defeats predominance.7474. Id. Finally, the dissent stressed that the court’s rejection of a de minimis rule would generate a circuit split.7575. Id. at 691. However, the majority denies the creation of a circuit split. Id. at 669 n.13 (arguing neither case adopted a per se rule but held that based on the particular facts in those disputes, the “need to identify uninjured class members” would “render an adjudication unmanageable” (quoting In re Asacol Antitrust Litig., 907 F.3d 42, 53–54 (1st Cir. 2018))).

According to the dissent, both the D.C. and First Circuits settled on a de minimis rule. The D.C. Circuit stated “5% to 6% constitutes the outer limits of a de minimis number” of uninjured class members,7676. Id. at 692 (quoting In re Rail Freight Fuel Surcharge Antitrust Litig. (Rail Freight II), 934 F.3d 619, 625 (D.C. Cir. 2019)). and the “First Circuit suggested that ‘around 10%’ of uninjured class members marks the de minimis border.”7777. Id. (quoting Asacol, 907 F.3d at 47). But, the Ninth Circuit majority properly denied the creation of a circuit split.7878. Id. at 699 n.13. Both sister circuits defined de minimis “in functional terms”7979. Asacol, 907 F.3d at 54 (quoting In re Nexium Antitrust Litig., 777 F.3d 9, 30 (1st Cir. 2015)). and concluded that the need to identify uninjured class members precluded predominance based on the “nuanced”8080. Rail Freight II, 934 F.3d at 625. and “particular facts of the cases before them.”8181. Olean, 31 F.4th at 699 n.13. While the D.C. and First Circuits contemplated per se boundaries, their opinions ultimately hinged on whether the trial court could employ a “mechanism that can manageably remove uninjured persons from the class in a manner that protects the parties’ rights.”8282. Asacol, 907 F.3d at 54; see Rail Freight II, 934 F.3d at 625 (holding the district court did not abuse its discretion in denying class certification where the plaintiffs “proposed no ‘further way’—short of full-blown, individual trials—‘to reduce this number and segregate the uninjured from the truly injured’” (citation omitted)); see also Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 462 (2016) (Roberts, C.J., concurring) (suggesting the class jury verdict should not stand if the district court cannot “fashion a method for awarding damages only to those class members who suffered an actual injury”). Thus, the en banc panel’s focus on discretion largely accorded with their sister circuits’ case law.

III. IMPLICATIONS OF THE RULING

A. Predominance as Efficient Aggregation

In rejecting the de minimis standard, the Ninth Circuit adhered to Rule 23’s broad textual commands to advance the class mechanism’s driving goal of judicial economy.8383. See Samuel Issacharoff, Rule 23 and the Triumph of Experience, 84 Duke L.J. 161, 168 (2021) (arguing a “simple ‘light touch’ textual reading shows that the words [of Rule 23] point to concerns about the overall administration of justice, measured in terms of the substantive results of aggregate litigation rather than the nature of the rights-holder”). Rule 23(b)(3) asks whether common questions predominate over individual ones, making no statement on specific characteristics8484. Compare Fed. R. Civ. P. 23(b)(3) (defining predominance generally), with id. 23(b)(3)(A)–(D) (detailing the four factors courts must consult to conclude a class action is superior to other adjudicatory methods). that influence such an analysis.8585. Standard canons of statutory construction counsel against limiting general language. See Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 101 (2012) (“Without some indication to the contrary, general words . . . are to be accorded their full and fair scope. They are not to be arbitrarily limited.”). Without specific guidance, the Supreme Court has been hesitant to adopt hard rules based on general language.8686. See, e.g., Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997) (noting that while the Advisory Committee for Rule 23’s 1966 revision cautioned mass accidents are “ordinarily not appropriate” for class litigation, “the text of the Rule does not categorically exclude mass tort cases from class certification, and District Courts, since the late 1970’s, have been certifying such cases in increasing number”); Goldman Sachs Grp., Inc. v. Ark. Tchr. Ret. Sys., 141 S. Ct. 1951, 1960 (2021) (addressing “whether the generic nature of a misrepresentation is relevant to price impact” findings at class certification and concluding “courts ‘should be open to all probative evidence on that question—qualitative as well as quantitative—aided by a good dose of common sense’” (citation omitted)). For instance, in Tyson Foods v. Bouaphakeo, the Supreme Court rejected a “broad” and “categorical” rule forbidding plaintiffs from using representative evidence to establish predominance, holding such a rule would make “little sense” because evidence’s permissibility turns on a specific case’s cause of action.8787. Tyson Foods, 577 U.S. at 454–55. Rule 23’s purposefully general language8888. See Samuel Issacharoff & Peter Zimroth, An Oral History of Rule 23: An Interview with Professor Arthur Miller, 74 N.Y.U. Ann. Surv. Am. L. 105, 117 (2018) (quoting Professor Miller, noting predominance and superiority were meant to ensure (b)(3) classes were a “true efficiency economy win,” but also confirming those “[w]ords . . . were like silly putty that could be molded in any way by a judge in a particular context”). affords trial courts ample latitude to certify, or decline to certify, class proposals based on whether aggregation may materially advance the litigation before them in a fair and efficient manner.8989. See Amchem, 521 U.S. at 615 (stating that predominance and superiority were added for efficiency and fairness, among other considerations); Fed. R. Civ. P. 23 advisory committee’s note to 1966 amendment (“It is only where this predominance exists that economies can be achieved by means of the class-action device.”); see also Am. L. Inst., Principles of the Law of Aggregate Litigation § 2.02(a)(1) (2010) (authorizing aggregate treatment where such adjudication would “materially advance” litigation “in a manner . . . so as to generate significant judicial efficiencies”). Though the dissent attempted to interpret a de minimis rule as enforcing that policy, the dissenting judges provided no assurance such a rule best economizes judicial procedure.9090. Olean, 31 F.4th at 692 (Lee, J., dissenting) (claiming that “allowing more than a de minimis number of uninjured class members tilts the playing field in favor of plaintiffs”). Instead, the dissent erred on the side of preventing “oversized classes,”9191. Id. but the Rules Committee added (b)(3) certification in the 1966 revision precisely to help vindicate the rights of people “who individually would be without effective strength to bring their opponents into court at all.”9292. Amchem, 521 U.S. at 617 (quoting Benjamin Kaplan, A Prefatory Note, 10 B.C. Ind. & Com. L. Rev. 497, 497 (1969)) (discussing how class actions can be a tool for those with smaller damages claims to still obtain relief). The majority’s critical move is to train the predominance inquiry on how a judge will resolve the issue of uninjured class members at trial. After all, “Rule 23 certification is at bottom a trial management decision; it simply allows the class litigation to continue under the district court’s ongoing supervision.”9393. Olean Wholesale Grocery Coop. v. Bumble Bee Foods LLC, 993 F.3d 774, 796 (9th Cir. 2021) (Hurwitz, J., concurring in part and dissenting in part), aff’d on rehg en banc, 31 F.4th 651 (9th Cir. 2022). So long as a district court can fairly and efficiently “winnow out” a “non-injured subset of class members,”9494. Olean, 31 F.4th at 669. common questions should predominate, even if the number of uninjured plaintiffs or percentage of the class appears to be more than de minimis.9595. The Supreme Court recently concluded that 6,332 class members, in a class of 8,185 plaintiffs, did not suffer an injury in fact. TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2214 (2021). The Court remanded on the issue of typicality but made no mention of predominance. Id. Even though the Court concluded most of the class was uninjured, neither the Supreme Court nor the district court had a difficult time separating class members based on the injury-defining characteristic of whether TransUnion provided their tainted credit reports to third parties.

B. Discretion and Judicial Experience

Additionally, Olean solidifies the dominance of discretion at class certification, resulting from an accumulation of judicial experience with complex multi-district and class adjudications. As Professors Samuel Issacharoff and Arthur R. Miller explain, the past decade has seen judges certify classes that “would have given the Rules adopters grave pause.”9696. See Issacharoff, supra note 82, at 163 (citing Issacharoff & Zimroth, supra note 87, at 125) (recounting his interview with Professor Arthur R. Miller and discussing how judicial experience influenced the settlement class’s development, culminating with In re National Football League Players Concussion Injury Litigation, 821 F.3d 410 (3d Cir. 2016)). Circuit courts, and even specific judges, that once viewed novel class proposals with skepticism abandoned their previous positions to embrace efficient aggregation. The rise of Rule 23(c)(4) issue classes provides an apt example. In the 1990s, a series of decisions erected barriers to certifying issue classes. Judge Richard Posner, writing for a Seventh Circuit panel in In re RhonePoulenc Rorer Inc.,9797. 51 F.3d 1293 (7th Cir. 1995). rejected an attempt to certify a class only on a negligence element because the “desire to experiment with an innovative procedure” would possibly infringe upon the defendants’ Seventh Amendment rights to avoid re-examination of a jury’s decision.9898. Id. at 1297, 1303. Similarly, the Fifth Circuit held a district court may not certify an issue class unless the “cause of action, as a whole, . . . satisf[ies] the predominance requirement.”9999. Castano v. Am. Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir. 1996). But these barriers did not last long. Seven years after RhonePoulenc, Judge Posner upheld an issue class, stating issue class treatment “is appropriate and is permitted by Rule 23 when the judicial economy from consolidation of separate claims outweighs any concern with possible inaccuracies from their being lumped together in a single proceeding.”100100. Mejdrech v. Met-Coil Sys. Corp., 319 F.3d 910, 911 (7th Cir. 2003). Posner made no mention of the Seventh Amendment but focused entirely on efficiency and accuracy. The Fifth Circuit also moved past the narrow view of issue class certification.101101. See Steering Comm. v. Exxon Mobil Corp., 461 F.3d 598, 603 (5th Cir. 2006) (noting trial bifurcation might eliminate “the obstacles preventing a finding of predominance”). The majority of circuit courts now take the broad view102102. Russell v. Educ. Comm’n for Foreign Med. Graduates, 15 F.4th 259, 273–74, 273 n.6 (3d Cir. 2021) (writing that “the Second, Fourth, Sixth, Seventh, and Ninth Circuits” have adopted this view and that “[u]nder the broad view, courts apply the Rule 23(b)(3) predominance and superiority prongs after common issues have been identified for class treatment”), cert. denied, 142 S. Ct. 2706 (2022). and have eliminated the strict barriers that once completely precluded issue certification, reducing them into pieces of a multi-factor test that outline a district court’s wide discretion.103103. Id. at 268 (listing nine factors that indicate when issue certification may be appropriate, including whether bifurcated proceedings risk re-examining a jury’s initial findings) cf. Issacharoff, supra note 82, at 176 (arguing the Third Circuit’s prior experience with class settlements allowed them to “give independent weight to the need for closure” in future cases). But, unlike the issue class’s story, the Ninth Circuit correctly resolved the dilemma of uninjured class members upon first impression. Rather than calcify class adjudication through a strict reading of Rule 23, the en banc panel left the decision to the district court’s sound discretion, acknowledging that the trial judge is in the best position to expend judicial resources efficiently and fairly.104104. Olean Wholesale Grocery Coop. v. Bumble Bee Foods LLC, 31 F.4th 651, 669 (9th Cir. 2022) (en banc).

C. Predominance as Relevance

1. The Ninth Circuit’s Unnecessary Holding

Nevertheless, the Ninth Circuit should never have addressed this legal issue because the court’s conclusions were “clearly unnecessary to its resolution of the case, d[id] not affect its outcome in any manner, and constitute[d] an advisory opinion.”105105. Spears v. Stewart, 283 F.3d 992, 998–99 (9th Cir. 2002) (Reinhardt, J., dissenting from denial of rehearing en banc) The Court has shared similar concerns. See Loc. 144 Nursing Home Pension Fund v. Demisay, 508 U.S. 581, 592 n.5 (1993) (describing dicta as language “uninvited, unargued, and unnecessary to the Court’s holdings”). Simply put, if a district court understood each class member to be similarly situated, it would not need to confront questions of how to handle a class containing both injured and uninjured class members.106106. See Olean, 31 F.4th at 681 (noting that a jury’s findings as to the persuasiveness of Dr. Mangum’s report would not give rise to any individual issues regarding a class member’s injury status). Even here, the district court considered whether a de minimis standard would impact the case but did not develop the issue because it concluded Dr. Mangum’s report could establish class-wide impact.107107. See In re Packaged Seafood Prods. Antitrust Litig., 332 F.R.D. 308, 323–24, 329 (S.D. Cal. 2019), vacated and remanded sub nom. Olean Wholesale Grocery Coop. v. Bumble Bee Foods LLC, 993 F.3d 774 (9th Cir. 2021), aff’d on rehg en banc, 31 F.4th 651 (9th Cir. 2022). The en banc panel unequivocally affirmed that conclusion.108108. Olean, 31 F.4th at 685. And, the Ninth Circuit’s refusal to resolve the related issue of whether each class member must prove Article III standing at certification renders the decision to address the de minimis question paradoxical.109109. See id. at 682 (“We need not consider the Tuna Suppliers’ argument that the possible presence of a large number of uninjured class members raises an Article III issue, because . . . the district court concluded that the DPPs’ evidence was capable of establishing antitrust impact on a class-wide basis.”). It ultimately appears the court “reached out to address a novel, complex, and important issue in an advisory opinion.”110110. Spears, 283 F.3d at 1004.

2. Distinguishing Between Evidence’s Relevance and Sufficiency to Satisfy Predominance

Still, in addressing the predominance issues related to the parties’ experts, the Ninth Circuit navigated a confusing inquiry: whether the plaintiff must preliminarily prove antitrust impact or simply demonstrate that antitrust impact is capable of class-wide proof.111111. See Nagareda et al., supra note 5, at 334 (discussing the thin line between the two different conceptions of the moving party’s burden at class certification). The Supreme Court in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds clearly takes the latter side: Moving parties need not establish that they “will win the fray” but only that the class is cohesive enough to prompt predominating common questions of law or fact.112112. 568 U.S. 455, 460 (2013). Merits questions may overlap with the inquiry into whether the class is cohesive. In that situation, courts must engage in the trickier determination of which ancillary issues—for instance, factual questions about the nature of a product market113113. See, e.g., In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 316, 325 (3d Cir. 2008) (remanding and requiring the district court to resolve experts’ disputes as to hydrogen peroxide’s fungibility in the relevant market before certifying that plaintiffs can prove antitrust impact through common evidence). or a defendant’s particular business practices114114. See, e.g., Ellis v. Costco Wholesale Corp., 657 F.3d 970, 983–84 (9th Cir. 2011) (mandating the district court resolve factual disputes regarding whether local or upper management promoted individuals because plaintiffs would be unlikely to establish discrimination with common evidence if local managers promoted employees).—bear on the predominance inquiry.115115. Courts routinely engage in similar determinations when they address preliminary evidentiary questions of conditional relevance. See Fed. R. Evid. 104(a)–(b) (directing the court to “decide any preliminary question about whether . . . evidence is admissible”). Courts must first decide if the proffered evidence’s relevance “depends on whether a fact exists” and, if so, preliminarily rule on the existence of that fact. Id. 104(b). Similarly at certification, a trial court must determine if the putative class’s cohesion depends on whether a fact exists and, if so, resolve the factual question by a preponderance of the evidence. See Olean Wholesale Grocery Coop. v. Bumble Bee Foods LLC, 31 F.4th 651, 665 (9th Cir. 2022) (en banc) (holding “plaintiffs must prove the facts necessary” to satisfy Rule 23’s prerequisites “by a preponderance of the evidence”); Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351–52 (2011) (directing lower courts to “resolve preliminary matters” at class certification); see also Jonah B. Gelbach, The Triangle of Law and the Role of Evidence in Class Action Litigation, 165 U. Pa. L. Rev. 1807, 1820 & n.62 (2017) (arguing courts at class certification should resolve disputes over “auxiliary assumption[s] necessary for counterfactual evidence to be probative” for each class member through Rule 104’s framework).

Olean presents such a case. To the dissent, every attack on Dr. Mangum’s report required the court’s attention because a jury might have believed Dr. Johnson’s argument that twenty-eight percent of the class was uninjured. But, the Ninth Circuit effectively distinguished between the Tuna Suppliers’ arguments that raised “fatal dissimilarit[ies]” and those that illustrated “fatal similarit[ies].”116116. Amgen, 568 U.S. at 470 (citing Nagareda, supra note 4, at 107). Fatal dissimilarities are those differences between the class members that “make use of the class-action device inefficient or unfair” because each class member may require individualized proof:117117. Id. Evidence would not be relevant to each class member.118118. Compare Wal-Mart, 564 U.S. at 356–57 (decertifying a class action because 1.5 million plaintiffs across thousands of stores managed by tens of thousands of managers were not similar enough for statistical regressions or sampling evidence to prove Wal-Mart discriminated against each plaintiff), with Amgen, 568 U.S. at 467 (holding proof of materiality is not needed at the certification stage because it is objective and applies to each member of the class), and Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 459 (2016) (holding each plaintiff could rely upon a single study to recover under the Fair Labor Standards Act because “each employee worked in the same facility, did similar work, and was paid under the same policy”). The Tuna Suppliers only argued some plaintiffs were uninjured, and therefore dissimilar, because of their stronger bargaining power, but Dr. Mangum, the district court, and the Ninth Circuit adequately addressed and resolved the dispute on that ancillary issue.119119. See supra notes 60–64 and accompanying text (explaining how the Ninth Circuit concluded each plaintiff could establish antitrust injury with Dr. Mangum’s evidence). In contrast, the district court refused to enter any findings on many of Dr. Johnson’s general critiques—e.g., Dr. Mangum used inferior cost data—because those addressed a similarity: Evidence would not be sufficient for every class member.120120. See In re Asacol Antitrust Litig., 907 F.3d 42, 54 (1st Cir. 2018) (“[P]laintiffs point to no such substantive law that would make an opinion that ninety percent of class members were injured both admissible and sufficient to prove that any given individual class member was injured.”). As the en banc aptly held, such a debate is best reserved for summary judgment and, ultimately, a jury.121121. Olean, 31 F.4th at 681.

CONCLUSION

The Ninth Circuit’s decision to reject a de minimis standard for uninjured class members is another step in acknowledging Rule 23’s core purpose of and the trial court’s superior position in efficiently managing complex cases and controversies. The de minimis standard is a proxy for Rule 23’s textual commands at best and a hindrance to district courts saddled with overwhelming dockets and weary plaintiffs at worst. Though the en banc panel should not have reached the de minimis question, its opinion still provided important guidance for district courts struggling to evaluate ancillary predominance issues. By properly distinguishing between disputes over dissimilarities—relevancy issues a court must address at certification—and similarities—sufficiency debates best reserved for summary judgment or a jury—the court ensured Rule 23 continues to serve as an important tool to redress democratic theft and preserve increasingly strained judicial resources.

2022

November 10, 2022

In re Grand Jury

In re Grand Jury

Ninth Circuit Offers Guidance on Privilege Test for Dual-Purpose Communications

Recent Case: In re Grand Jury, 23 F.4th 1088 (9th Cir. 2021)

The Ninth Circuit Court of Appeals recently held that dual-purpose communications, or communications made with more than one purpose, must satisfy the “primary purpose” test in order for privilege properly to attach. Yet in 2014, the D.C. Circuit adopted a different test for dual purpose communications, asking whether “a”—not “the”—primary purpose of the communication is to give or receive legal advice. The Ninth Circuit did not explicitly reject the logic of the D.C. Circuit, and instead declined the opportunity to draw the precise contours of the privilege standard as applied to dual purpose communications. Looking forward, it is likely that other circuits may grapple with the proper inquiry for privilege and the logic of the D.C. Circuit’s standard.

INTRODUCTION

To what degree should attorney-client privilege protect dual-purpose communications? As businesses grow in size and complexity, their attorneys often serve as both lawyers and businesspersons. This phenomenon has given rise to dual-purpose communications, or communications with “more than one purpose.”33. In re Grand Jury, 23 F.4th 1088, 1091 (9th Cir. 2021) (referring to dual-purpose tax documents in United States v. Sanmina Corp., 968 F.3d 1107, 1118 (9th Cir. 2020)). These dual-purpose communications have proved slippery for courts to fit into existing privilege jurisprudence.44. See, e.g., Geoffrey C. Hazard, Jr., W. William Hodes & Peter R. Jarvis, Law of Lawyering 2022 Supplement § 10.07.8 (Wolters Kluwer 4th ed. 2021–22) (“One common problem that arises, most often when privilege claims are made by in-house counsel, is whether particular communications were made in connection with business rather than legal advice.”). The Ninth Circuit recently confronted an intra-circuit split on the proper standard for assessing privilege claims for dual-purpose communications. The court squarely rejected a broad test in favor of a narrower inquiry.55. See In re Grand Jury, 23 F.4th at 1094 (“[W]e reject Appellants’ invitation to extend the ‘because of’ test to the attorney-client privilege context, and hold that the ‘primary purpose’ test applies to dual-purpose communications.”). Some district courts hewed to the more focused “primary purpose” test, which looked to the primary reason of a communication.66. See id. at 1091 (“Under the ‘primary purpose’ test, courts look at whether the primary purpose of the document is to give or receive legal advice, as opposed to business or tax advice.”) (citing In re County of Erie, 473 F.3d 413, 420 (2d Cir. 2007)). Other district courts assessed claims of privilege under the broader “because of” standard, which inquired into the causal connection animating the creation of a document.77. Id. at 1092. The “because of” test, which applies to the work product doctrine, “‘does not consider whether litigation was a primary or secondary motive behind the creation of a document.’ It instead ‘considers the totality of the circumstances and affords protection when it can fairly be said that the document was created because of anticipated litigation.’”88. Id. (citation omitted). Thus, the “because of” inquiry is much broader than the primary purpose test.99. Id.

The Ninth Circuit determined that the “primary purpose” test governs, underscoring the distinction between work product and attorney-client privilege.1010. Id. at 1092 (“We hold that the primary purpose test applies to attorney-client privilege claims for dual-purpose communications.”). In arriving at its conclusion, the court distinguished work product and attorney-client privilege in part by exploring the goals for which each privilege is tailored. It noted that “the work-product doctrine upholds the fairness of the adversarial process by allowing litigators to creatively develop legal theories and strategies—without their adversaries invoking the discovery process to pry into the litigators’ minds and free-ride off them.” Id. at 1093 (citing Allen v. Chi. Transit Auth., 198 F.R.D. 495, 500 (N.D. Ill. 2001)). On the other hand, attorney-client privilege is not meant to address the adversarial process but rather “encourages ‘full and frank communication between attorneys and their clients.’” Id. at 1093 (citing Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)). However, although the court rejected the “because of” test for attorney-client privilege, it punted on the precise standard1111. The court declined the opportunity to adopt the “a primary standard” test for attorney-client privilege with respect to dual-purpose communications. As the court explained by reference to In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014), the “a primary purpose” test asks whether “obtaining or providing legal advice [was] a primary purpose of the communication, meaning one of the significant purposes of the communication?” Id. at 1094. The court therefore left “[o]pen [w]hether the ‘[a] [p]rimary [p]urpose [t]est [s]hould [a]pply.” Id. On the other hand, “the primary purpose” inquiry asks the court to identify the “‘predominant’ purpose” of the communication. Id. to assess dual-purpose communications—leaving businesses in the dark as to which documents may properly be withheld under a privilege assertion.

I. BACKGROUND

Attorney-client privilege protects certain communications between a client and her lawyer—specifically, communications in which the client seeks legal advice—from compelled disclosure in the course of litigation.1212. See, e.g., United States v. Samnina Corp., 968 F.3d 1107, 1116 (9th Cir. 2020) (“The attorney-client privilege protects confidential communications between attorneys and clients, which are made for the purpose of giving legal advice.”) (citing Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)); Hazard, Hodes, & Jarvis, supra note 2, § 10.07.8 (“In order for attorney-client privilege to apply, the communication between attorney and client (or their respective representatives), must be in aid of the attorney’s provision of legal advice to the client—it must be about a legal matter, in other words.”). In federal courts, Rule 501 of the Federal Rules of Evidence1313. Rule 501 requires that common law determines assertions of privilege unless the U.S. Constitution, a federal statute, or rules promulgated by the Supreme Court dictate otherwise. See Fed. R. Evid. 501. However, “in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” Id. cognizes the privilege that was developed under federal common law.1414. Ellen S. Pogdor & Jerold H. Israel, White Collar Crime in a Nutshell 387 (4th ed. 2009). In the Ninth Circuit, the attorney-client privilege is articulated by a functionally equivalent “eight-part test: (1) Where legal advice . . . is sought (2) from a professional legal advisor . . . , (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are . . . protected (7) from disclosure . . . , (8) unless the protection be waived.” Sanmina Corp., 968 F.3d at 1116 (citing United States v. Graf, 610 F.3d 1148, 1156 (9th Cir. 2010)). In order to invoke the privilege successfully and shield a communication from disclosure, one generally must demonstrate: “(1) a communication, (2) that was made by the client to a lawyer, (3) that was made in confidence, and (4) that was made for the purpose of obtaining professional legal advice (or services relating thereto).”1515. Pogdor & Israel, supra note 12, at 389. Generally, those communications that satisfy all four elements may be withheld from compelled disclosure on the ground that the privilege cloaks the communications in protection.1616. See id. at 389–90 (noting that the privilege “block[s] the disclosure of the protected communications . . .”).

On the other hand, work product privilege protects disclosure of documents prepared by an attorney in “anticipation of litigation.”1717. See id. at 426. Originally articulated in the seminal Supreme Court case Hickman v. Taylor,1818. 329 U.S. 495 (1947). work product privilege trains attorneys’ and the court’s perspective on the attorney’s actions in the face of litigation (or the threat of litigation).1919. See Pogdor & Israel, supra note 12, at 427–29 (establishing Hickman standards and describing Federal Rule 26(b)(3) as having “substantially incorporated” these standards). Today, Rule 26(b)(3) of the Federal Rules of Civil Procedure also sets the standard for work product privilege.2020. See id. at 430 (describing how Rule 26(b)(3) incorporates Hickman and “sets forth a standard as to the showing needed to overcome work product protection”). See also Fed. R. Civ. Proc. 26(b)(3)(A) (“Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative . . . .”).

Attorney-client and work product privilege are distinct privileges justified on distinct grounds and focused on distinct inquiries.2121. See supra note 8 (noting distinct goals toward which attorney-client and work product privilege are respectively tailored). In most instances, these doctrines are straightforward to apply. However, a communication created by an attorney with more than one purpose in mind—a so-called dual-purpose communication—implicates thorny issues. These dual-purpose communications are often made by an attorney “wear[ing] dual hats, serving as both lawyer and a trusted business advisor.”2222. In re Grand Jury, 23 F.4th 1088, 1090 (9th Cir. 2021). Consequently, dual-purpose communications have grown more relevant over the years, in light of the “increasingly complex regulatory landscape”2323. Id. implicating the services of attorneys who may offer both legal and business advice.

The tax context, for instance, is rife with opportunities for privilege issues relating to dual-purpose communications.2424. “[S]ome communications might have more than one purpose, especially ‘in the tax law context, where an attorney’s advice may integrally involve both legal and non-legal analyses.’” Id. at 1091 (citing Sanmina Corp., 968 F.3d 1107, 1118 (9th Cir. 2020)). These issues in the tax context emerge because corporations may consult attorneys for myriad advice, and although there is an attorney-client privilege, there is no “accountant-client” privilege.2525. In contrast, “normal tax return preparation assistance—even coming from lawyers—is generally not privileged, and courts should be careful to not accidentially create an accountant’s privilege where none is supposed to exist.” Id. at 1095 n.5. Thus, courts must ensure that documents withheld from disclosure on ground of privilege meet the requirements for attorney-client privilege. As the In re Grand Jury court noted, “attorney-client privilege might apply to legal advice about what to claim on a tax return, even if it does not apply to the numbers themselves.”2626. Id. at 1092 n.2. However, privilege protects only certain communications; it will not apply to run-of-the-mill tax information relayed from client to attorney or memorialized by the attorney as part of standard tax practice.2727. Id. at 1091 (“Generally, communications related to an attorney’s preparation of tax returns are not covered by attorney-client privilege. So, for example, ‘a client may communicate the figures from his W-2 form to an attorney while litigation is in progress, but this information certainly is not privileged.’” (quoting United States v. Abrahams, 905 F.2d 1276, 1283–84 (9th Cir. 1990), rev’d on other grounds by United States v. Jose, 131 F.3d 1325 (9th Cir. 1997)) (citing Olender v. United States, 210 F.2d 795, 806 (9th Cir. 1954)). In the context of standard tax information, there would be no valid claim of privilege as justification for withholding the communications.2828. Id. Courts have not articulated a standard for assessing privilege claims of dual-purpose communications.2929. See id. at 1090 (“Our court, however, has yet to articulate a consistent standard for determining when the attorney-client privilege applies to dual-purpose communications that implicate both legal and business concerns.”).

Facts Underlying the Recent Ninth Circuit Decision

In In re Grand Jury, a California federal grand jury sought information relating to the owner of a company, who was the target of a criminal investigation.3030. See id. at 1090–91 (describing background facts giving rise to privilege assertion). Seeking specific communications, the grand jury issued subpoenas to the appellants: the individual’s company and law firm. The appellants complied with some of the requests but refused to produce certain requested tax-related documents citing work product and attorney-client privilege.3131. See id. When the district court granted in part the government’s motion to compel production,3232. In granting the government’s motion to compel production, “the district court explained that these documents were either not protected by any privilege or were discoverable under the crime-fraud exception.” Id. at 1090. Discussion of the crime-fraud exception and its bearing on the issues in In re Grand Jury is beyond the scope of this piece. The Ninth Circuit disposed of the assertion of the crime-fraud exception “in a concurrently filed, sealed memorandum disposition.” Id. at 1090 n.1. the appellants continued to assert both privileges and refused to produce the withheld documents. The refusal ultimately landed the appellants in contempt, prompting the appeal to decide the appropriate standard for assessing attorney-client privilege with respect to dual-purpose communications.3333. See id. at 1091 (noting findings of contempt and appellants’ appeal). The court focused on the standard for attorney-client privilege for dual-purpose documents. Work product asks whether the document was created in anticipation of litigation and often relies on the “because of” test explored infra note 41, and it does not protect documents where there has been a showing of “substantial need” by the adversary. Thus, because work product privilege applies to documents created in the face of litigation, work product privilege for dual-purpose communications is uninteresting. Fed. R. Civ. Proc. 26(b)(3). The Ninth Circuit granted the motion.3434. See id. (granting appeal under 28 U.S.C. § 1291).

A year earlier, the Ninth Circuit declined an opportunity to decide this question. In United States v. Sanmina Corp. & Subsidiaries,3535. 968 F.3d 1107 (9th Cir. 2020). the court heard a dispute concerning privilege claims with respect to dual-purpose tax communications.3636. See id. at 1118–19, 1118 n.5 (describing the communications as “dual purpose” and weighing possible proper standards). The Sanmina court chronicled the intra-circuit split on the question of the proper test to apply,3737. See id. at 1118 n.5 (illustrating the Ninth Circuit intra-circuit split by pointing to four district courts which applied the “primary purpose” test and two other courts which applied the “because of” test in an attorney-client privilege claim). but it ultimately declined to resolve the split given that the facts of the case did not demand a clear standard.3838. See id. at 1118–19 (“Notwithstanding this intra-circuit split, however, we need not decide the issue on the facts of this case.”). However, the open question once again materialized before the court on appeal in In re Grand Jury.

On appeal in In re Grand Jury, the government argued in favor of the “primary purpose” test to narrow the privilege rule, which would promote greater opportunities for compelled disclosure. As the Ninth Circuit explained: “Under the ‘primary purpose’ test, courts look at whether the primary purpose of the communication is to give or receive legal advice, as opposed to business or tax advice. . . . The natural implication of this inquiry is that a dual-purpose communication can only have a single ‘primary’ purpose.”3939. In re Grand Jury, 23 F.4th 1088, 1091 (9th Cir. 2021). In fact, the government sought to narrow substantially the protection offered by decrees of privilege, “suggest[ing] that dual-purpose communications in the tax advice context can never be privileged.”4040. Id. at 1092 n.2 (emphasis added). However, the court disposed of this contention in a footnote as inapposite with Ninth Circuit case law, citing to a case in which the Ninth Circuit neither resoundingly accepted the privilege claim of a dual-purpose tax advice communication nor rejected the possibility outright that privilege may apply under certain circumstances.4141. See id. (determining that relevant case law does not support the government’s contention that dual-purpose tax-related documents are never privileged) (citing United States v. Abrahams, 905 F.2d 1276, 1284 (9th Cir. 1990), rev’d on other grounds by United States v. Jose, 131 F.3d 1325 (9th Cir. 1997)). But while the court rejected the government’s argument that tax-related dual-purpose communications can never be privileged, the court endorsed the government’s “primary purpose” argument, holding that the primary purpose test governs. 4242. See id. at 1092.

On the other hand, the appellants sought adoption of the broadest possible privilege standard—the “because of” test traditionally applied to work product privilege.4343. See id. at 1093 (setting forth appellants’ argument). The “because of” test proposed by appellants:

does not consider whether litigation was a primary or secondary motive behind the creation of a document. It instead considers the totality of the circumstances and affords protection when it can fairly be said that the document was created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of that litigation.4444. Id. at 1091–92 (emphasis added) (internal quotation marks omitted).

However, the Ninth Circuit declined to adopt the “because of” test, finding unpersuasive appellants’ arguments to use the work product “because of” test for whether attorney-client privilege applies for dual-purpose communications.4545. See id. at 1093 (“Appellants assert . . . that we should . . . borrow the test from the work-product doctrine when a communication has a dual purpose . . . . But . . . [a]ppellants offer no persuasive reason to abandon the common-law rule [with respect to privilege claims for dual-purpose communications.]”). Specifically, the court proceeded in three steps. First, the court concluded that the dispute was governed by the applicable attorney-client privilege standard for dual-purpose communications—not work product.4646. Id. at 1091 (finding that the attorney-client privilege is the only privilege applicable in this case). Second, the court rejected the “because of” test for attorney-client privilege and held that the primary purpose standard is the proper test.4747. See id. at 1094. Third, the court explored the D.C. Circuit’s Kellogg test but ultimately declined the opportunity to endorse that standard.4848. See id. For a discussion of the D.C. Circuit’s Kellog test, see infra Section I.C. Thus, in rejecting the “because of” test and affirming the lower court’s finding of contempt, the court explained that attorney-client privilege focused on “the purpose of the communication, not its relation to anticipated litigation,”4949. Id. at 1093. thereby underscoring the distinction between work product and attorney-client privilege.

Rationale of the Ninth Circuit’s Decision

The Ninth Circuit correctly homes in on the distinction between attorney-client and work product privilege. The two privileges, although complementary, serve distinct purposes and trace distinct historical developments along separate threads of the common law. The court explains the goal of work product privilege as preservation of “a zone of privacy in which a lawyer can prepare and develop legal theories and strategy with an eye toward litigation, free from unnecessary intrusion by his adversaries.”5050. Id. (citing United States v. Adlman, 134 F.3d 1194, 1196 (2d. Cir. 1998)). On the other hand, the sanctity of the relationship between a client and her attorney animates the attorney-client privilege.5151. Id. (stating that the attorney-client privilege is concerned with “providing a sanctuary for candid communication about any legal matter, not just impending litigation.”). In fact, “the attorney-client privilege encourages ‘full and frank communication between attorneys and their clients and thereby promote[s] broader public interests in the observance of law and administration of justice.’”5252. Id. (citing Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)).

The Ninth Circuit, however, did not tether its rationale only to the importance of maintaining a clear demarcation between two privileges imported and developed from common law. It also considered the practical realities. In explaining its holding that the work product “because of” standard does not govern attorney-client privilege disputes, the Ninth Circuit considered the incentive structure for attorneys and firms that would inevitably develop in reaction to adoption of a “because of” standard governing attorney-client privilege assertions involving dual-purpose communications. The court explained that the “because of” test, if applied to attorney-client privilege, “would create perverse incentives for companies to add layers of lawyers to every business decision in hopes of insulating themselves from scrutiny in any future litigation,”5353. Id. Privilege standards powerfully influence the manner in which organizations choose to conduct business, and organizations react to incentive structures. For instance, in March 2022, the Department of Justice moved to compel Google, LLC, to disclose certain documents alleged to have been improperly cloaked in attorney-client privilege through the inclusion of attorneys on run-of-the-mill business matters. See generally Plaintiffs’ Motion to Sanction Google and Compel Disclosure of Documents Unjustifiably Claimed by Google as Attorney-Client Privileged, United States v. Google, LLC, No. 1:20-cv-03010 (filed Mar. 21, 2022), https://www.abajournal.com/files/US_v._Google_3_.21.22_sanctions_motion_.pdf [https://perma.cc/47GU-ZPCJ]. and it expressed concern that applying the test in the attorney-client privilege context “might harm our adversarial system if parties try to withhold key documents as privileged by claiming that they were created ‘because of’ litigation concerns.”5454. In re Grand Jury, 23 F.4th at 1093.

Finally, the panel considered the governing standard in other circuits for assertions of attorney-client privilege of dual-purpose communications. Of those which have confronted the issue, sister circuits generally have declined to import the “because of” standard into attorney-client privilege inquiries for dual-purpose communications.5555. See id. at 1094 (“[M]ost, if not all, of our sister circuits that have addressed this issue have opted for some version of the ‘primary purpose’ test instead of the ‘because of’ test.”). However, while the Ninth Circuit merely rejected the “because of” standard and left open the exact contours of the primary purpose test, the D.C. Circuit has provided more granular guidance.5656. See generally In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014).

The D.C. Circuit’s Kellogg Test

Nearly a decade ago, the D.C. Circuit set forth its “a primary purpose” standard.5757. See id. at 759–60 (describing “a primary purpose test” and its justification). Confronted with a privilege dispute centered on whether certain documents produced by attorneys in the course of an internal investigation for a defense contractor constituted “legal advice”5858. Id. at 756. or “unprivileged business records,”5959. Id. the district court reviewed the disputed documents in camera6060. In camera review refers to nonpublic “examination of materials.” See, e.g., In Camera Definition, Law Insider, https://www.lawinsider.com/dictionary/in-camera-review [https://perma.cc/TF4N-G3G6] (last accessed June 13, 2022). and “determined that the attorney-client privilege protection did not apply because . . . [the defendant] had not shown that ‘the communication would not have been made ‘but for’ the fact that legal advice was sought.’”6161. Kellogg, 756 F.3d at 756. The defendant maintained its privilege claim over the dual-purpose communications and sought mandamus relief at the D.C. Circuit.6262. The D.C. Circuit court heard this mandamus petition—an interlocutory order—because “the District Court’s privilege ruling constituted legal error” and also was an “error of the kind that justifies mandamus” under 28 U.S.C. § 1651. Id. at 756–57. As the court explained, “[m]andamus is a ‘drastic and extraordinary’ remedy ‘reserved for really extraordinary causes.’” Id. at 760 (quoting Cheney v. U.S. Dist. Ct. for the Dist. of Columbia, 542 U.S. 367, 380 (2004)).

In an opinion penned by then-Judge Kavanaugh, the Kellogg court found that the district court had applied an incorrect standard—the “but for” test—in its determination that the defendant may not withhold the documents under a claim of attorney-client privilege.6363. See id. at 759 (noting the District Court correctly set forth the “primary purpose” test, but “then said that the primary purpose of a communication is to obtain or provide legal advice only if the communication would not have been made ‘but for’ the fact that legal advice was sought”). The district court correctly cited the primary purpose test but erroneously described the test as a “but-for” inquiry.6464. See id. (noting that the lower court started its privilege inquiry “by reciting the ‘primary purpose’ test [for dual-purpose communications] . . . . [T]he District Court then said that the primary purpose of a communication is to obtain or provide legal advice only if the communication would not have been made ‘but for’ the fact that legal advice was sought”). The Circuit Court rejected the District Court’s application of the primary purpose test6565. See id. (noting the lower court’s error in asking the “but-for” inquiry to apply the primary purpose test). and took the opportunity to clarify precisely the proper standard:

[T]rying to find the one primary purpose for a communication motivated by two sometimes overlapping purposes (one legal and one business, for example) can be an inherently impossible task. It is often not useful or even feasible to try to determine whether the purpose was A or B when the purpose was A and B. It is thus not correct for a court to presume that a communication can have only one primary purpose. It is likewise not correct for a court to try to find the one primary purpose in cases where a given communication plainly has multiple purposes.6666. Id. at 759–60 (second emphasis added).

Thus, the Kellogg court soundly rejected “the primary purpose” standard as the appropriate test in questions of attorney-client privilege claims for dual-purpose communications. Instead, the D.C. Circuit explained that the following inquiry governs: “Was obtaining or providing legal advice a primary purpose of the communication, meaning one of the significant purposes of the communication?”6767. Id. at 760.

Despite careful treatment of the issue and a seemingly unambiguous standard offered by the Kellogg court, commentators remain skeptical of Kellogg’s legacy: “[W]hether Kellogg represents a broad and significant development in attorney-client privilege remains to be seen.”6868. Hazard, Hodes, & Jarvis, supra note 2, § 10–07.08. Although the D.C. Circuit decided Kellogg eight years ago, no other circuit has yet adopted the “a primary purpose” standard. Id. Circuits may continue to narrow Kellogg to its facts, as the Ninth Circuit did by distinguishing tax-related dual-purpose communications from those communications created as part of an internal investigation. In re Grand Jury, 23 F.4th 1088, 1094–95 (9th Cir. 2021) On the other hand, the Kellogg “a primary purpose test” standard has gained traction in a handful of district courts.6969. See, e.g., In re Grand Jury, 23 F.4th at 1095 n.4 (listing cases, e.g., in the Southern District of New York, the District of Maryland, and the Eastern District of Michigan, as instances in which the Kellogg test was adopted). And the D.C. Circuit continues to apply this standard in its assessment of attorney-client privilege for dual-purpose communications.7070. See, e.g., FTC v. Boehringer Ingelheim Pharms., Inc., 892 F.3d 1264, 1267–68 (D.C. Cir. 2018) (applying the Kellogg test to a dual-purpose communication, asking “whether obtaining or providing legal advice was one of the significant purposes of the communications at issue,” and, upon an affirmative finding, holding that the documents were protected by attorney-client privilege).

The Ninth Circuit declined the opportunity to adopt the Kellogg test—despite appellants’ arguments in In re Grand Jury: Appellants argued in the alternative that, should the court decline to adopt the “because of” test, the Kellogg “a primary purpose” test should govern.”7171. See In re Grand Jury, 23 F.4th, at 1094. The Ninth Circuit side-stepped the issue.7272. The court in a section header noted, “We Leave Open Whether the ‘A Primary Purpose Test’ Should Apply.” See id. Later decisions have endorsed the idea that the In re Grand Jury court avoided the issue. See, e.g., Meta Platforms v. Brandtotal Ltd., No. 20-cv-07182, 2022, U.S. Dist. LEXIS 4820, at *4–5 (N.D. Cal. Jan. 10, 2022) (noting that for dual-purpose communications, “the Ninth Circuit has declined to resolve whether legal advice must be ‘the primary purpose’ or merely ‘a primary purpose’”).  See also supra notes 60–65 and accompanying text. Although the court recognized the “merits of the reasoning in Kellogg” and indicated that it may be inclined to adopt the Kellogg test in a future dispute, it declined “to adopt or apply the Kellogg formulation of the primary-purpose test here.”7373. In re Grand Jury, 23 F.4th at 1094–95. Implying that the context in which dual-purpose communications are created is a dimension of the court’s focus, the Ninth Circuit distinguished Kellogg on the ground that it was formulated in light of corporate internal investigations, not tax-related documents as in In re Grand Jury.7474. See id. (“We also recognize that Kellogg dealt with the very specific context of corporate internal investigations, and its reasoning does not apply with equal force in the tax context.”). The Ninth Circuit may have sought to find a way to confine Kellogg to its facts in order to avoid the more corporate-friendly “a primary purpose” test for attorney-client privilege for dual-purpose communications. On the other hand, internal investigations are often an element of a corporate compliance program, and perhaps both the In re Grand Jury and the Kellogg court sought not to undermine future compliance efforts, and therefore treat differently on the margins dual-purpose communications generated in a corporate compliance-centered context.

II. IMPLICATIONS OF THE RULING

Where does this holding leave law firms and business organizations? Although the In re Grand Jury court did not endorse the more corporate-friendly “a primary purpose” standard, those firms and organizations subject to the Ninth Circuit’s jurisdiction will benefit from the clear rejection of the “because of” test in the context of attorney-client privilege for dual-purpose communications.

In any event, both in-house and outside counsel should consider taking steps to designate the purpose for which documents meant to protect attorney-client privilege are created to inoculate against potential future document requests. As some commentators have suggested:

Regardless of how the purpose line is drawn by a court in any particular case, . . . attorneys and their clients may be able to influence—although perhaps not wholly control—the availability of the privilege by creating a record indicating why communications are occurring, or by segregating communications in aid of legal advice from those involving non-legal advice.7575. Hazard, Hodes, & Jarvis, supra note 2.

Thus, critical examination by attorneys of existing processes may be warranted to protect client interests.

In re Grand Jury has implications beyond the tax-law context. District courts in the Ninth Circuit already have relied on In re Grand Jury in order to determine the validity of assertions of privilege in other contexts. In an employment discrimination dispute, a magistrate judge for the District of Oregon conducted an in camera review of two email documents withheld by defendants on grounds of attorney-client privilege.7676. See Walker v. Shangri-La Corp., No. 6:20-cv-01577, 2022 U.S. Dist. LEXIS 16293, at *4 (D. Or. Jan. 28, 2022). Applying the “primary purpose test” as set forth in In re Grand Jury,7777. See id. at *3–4 (applying the In re Grand Jury formulation of the “primary purpose” standard). the magistrate determined that “the primary purpose of the communication was to receive legal advice from an attorney employed with reference to that attorney’s knowledge and discretion in the law”7878. Id. at *4. and concluded the documents were properly withheld on ground of attorney-client privilege.7979. See id. (finding upon application of the primary purpose test that “any discoverable content in the two e-mail documents is protected from disclosure under the attorney-client privilege”).

Interestingly, and perhaps hinting at the degree to which the recent decision clarified the proper standard for assessment of privilege claims, at least one district court in the Ninth Circuit cited to In re Grand Jury for its explication of the “because of” standard in the work product context.8080. Discovery Land Co. LLC v. Berkley Ins. Co., No. CV-20-01541-PHX, 2022 U.S. Dist. LEXIS 11604 (D. Ariz. Jan. 21, 2022). It is possible that the Arizona District Court misconstrued In re Grand Jury, given that it did not cite to the “primary purpose” standard as set forth in In re Grand Jury in its treatment of attorney-client privilege in the same decision. There, and unlike the In re Grand Jury court, the Arizona District Court faced a straightforward, single-purpose communication allegedly protected by work product privilege. The Arizona District Court framed the “because of” standard as an emanation of the In re Grand Jury decision, and the court applied this test to the communication in question to find that contested documents were protected by work product privilege.8181. See id. at *15–16 (“To determine whether a document qualifies for protection under the work-product protection, the Ninth Circuit has adopted a broad ‘because of’ test.” (citing In re Grand Jury, 23 F.4th 1095 (9th Cir. 2021))).

It remains possible that the Ninth Circuit will adopt the Kellogg test in a future dispute for which the difference between “a primary purpose” and “the primary purpose” carries weight. But the In re Grand Jury court explained that it was not obligated to consider the Kellogg test fully “[b]ecause the district court did not clearly err in finding that the predominate purpose of the disputed communications was not to obtain legal advice, [and therefore] they do not fall within the narrow universe where the Kellogg test would change the outcome of the privilege analysis.”8282. In re Grand Jury, 23 F.4th 1088, 1095 (9th Cir. 2021). In other words, the Ninth Circuit was not “persuaded that the facts here require us to reach the Kellogg question.”8383. Id. at 1094. In fact, the court signaled its openness to adopting the Kellogg test—at least under circumstances closely mirroring those present in Kellogg, and for litigants for whom the difference in privilege application between “a primary purpose” and “the primary purpose” is meaningful.8484. Id. at 1094–95 (noting that the Kellogg test “would save courts the trouble of having to identify a predominate purpose among two (or more) potentially equal purposes,” and explaining that “the universe of documents in which the Kellogg test would make a difference is limited”). Compounding the potential for a future dispute to force the Ninth Circuit to rule decisively on the issue, district courts in the circuit continue to acknowledge that the precise standard remains an open question.8585. See, e.g., Meta Platforms v. Brandtotal Ltd., No. 20-cv-07182, 2022 U.S. Dist. LEXIS 4820, at *4–5 (N.D. Cal. Jan. 10, 2022) (“If a communication serves more than one purpose, the Ninth Circuit has declined to resolve whether legal advice must be ‘the primary purpose’ or merely ‘a primary purpose.’”); Walker v. Shangri-La Corp., No. 6:20-cv-01577, 2022 U.S. Dist. LEXIS 16293, at *3 (noting that the In re Grand Jury court “declined to resolve whether its primary purpose test requires legal advice to ‘be the primary purpose or merely a primary purpose’”).

However, although a dispute in which a party argues in favor of the Kellogg standard likely will emerge in the Ninth Circuit, whether the Ninth Circuit will adopt the test remains murky. The Kellogg “a primary purpose” test has failed to gain traction since its 2014 promulgation, suggesting that sister circuits may be reluctant to embrace the broader Kellogg standard for attorney-client privilege for dual-purpose communications.8686. See, e.g., In re Grand Jury, 23 F.4th at 1094 n.3 (citing Alomari v. Ohio Dep’t of Pub. Safety, 626 F. App’x 558, 572–73 (6th Cir. 2015)) (applying the primary purpose test and not mentioning Kellogg). Moreover, many state courts have expressly endorsed “the primary purpose” standard.8787. See, e.g., In re Polaris, Inc, 967 N.W.2d 397, 408 n.1 (Minn. 2021) (citing cases from other state courts in support) (“Because we apply the attorney-client privilege narrowly, we agree with the overwhelming majority of state courts that have adopted the predominant purpose test and conclude that legal advice must be the primary purpose of the communication.”). And the Ninth Circuit’s incremental rulings in the space of dual-purpose communications hint at a reluctance to embrace fully the Kellogg test.8888. See, e.g., United States v. Sanmina Corp., 968 F.3d 1107, 1118–19 (9th Cir. 2020) (declining to decide the issue of proper standard in dual-purpose communications context); In re Grand Jury, 23 F.4th at 1094 (declining at this time to decide whether to embrace the Kellogg test). Thus, given general reluctance by courts to adopt the “a primary purpose” standard, Kellogg remains an outlier. Courts may be motivated to retain the primary purpose standard in order to avoid a corporate-friendly approach to attorney-client privilege. Moreover, as noted, the role of a compliance program may have cut in favor of the business organization in Kellogg in a way that does not easily extend to other contexts.

CONCLUSION

The Ninth Circuit’s In re Grand Jury holding clarified the intra-circuit split left open by the court a year prior in its Sanmina opinion. The In re Grand Jury court expressly rejected importing the “because of” standard from the work product context into the assessment of claims of attorney-client privilege for dual-purpose communications. Instead, the Ninth Circuit asserted that the “primary purpose” test governs. But questions still linger as to the precise test that may be applied in future disputes. In the case of a dual-purpose document formed with two equal purposes, what standard will apply? Will the Ninth Circuit ultimately join the D.C. Circuit in adopting the Kellogg “a primary purpose” framework? Or instead, will the court reject Kellogg explicitly, or implicitly by choosing to characterize one of the purposes as “the primary purpose”? The court’s signaling in In re Grand Jury—and the lower courts’ amplification—of the existing open issue of adoption of the Kellogg test could not be clearer. The Ninth Circuit will likely confront this issue once again and have another opportunity to clarify its stance on the Kellogg test.