{ "schemaVersion": "public-validated-outcomes-v3", "methodology": "/benchmarks/README.md", "summary": { "cases": 67, "matchedReferenceOutcomes": 67 }, "cases": [ { "caseId": "case-001", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Commissioning Client", "type": "entity", "position": "Our build spec named a specific pump component by brand for the fluid-handling module, and the contractor installed a different brand instead. We paid the milestones as work progressed but are holding the final balance because we did not get the component we specified. We asked for the named part or nothing, and swapping it now would mean tearing apart finished, integrated work. We should not have to pay the balance for a build that departs from an express written requirement.", "evidence": [ "The written spec naming the specific pump component brand for the module", "Build records showing a different brand of equivalent grade was installed and sealed inside the finished assembly", "Correspondence in which the client demanded the named component or withheld the final balance", "A quote for the labor to tear out and re-integrate the finished module to swap the component" ] }, "partyB": { "name": "Build Contractor", "type": "entity", "position": "The component I installed is the same grade, weight, and performance as the one named; the brand name was a shorthand for that quality standard, not the point of the job. The substitution was inadvertent, and it was only noticed after the module was closed up, so the whole thing works exactly as intended. Ripping out finished, integrated work to swap one equivalent part would cost far more than any difference in value, which is essentially nil. The final balance is owed.", "evidence": [ "The written spec naming the specific pump component brand for the module", "Test data showing the installed component matches the named one on grade, weight, and performance", "Evidence that the named brand was specified to guarantee a galvanized standard grade, achievable by several makers", "A valuation showing no measurable difference in the finished module's value between the two brands" ] }, "facts": "A client commissioned a fabrication build under a written spec that named a specific pump-component brand for one module. The contractor installed a component of equivalent grade, weight, and performance from a different maker; the deviation was inadvertent and was noticed only after the module was closed and integrated. Replacing the component would require dismantling finished work at substantial cost, while the difference in the module's value between the two brands is negligible. The client paid the earlier milestones and is withholding the final balance, demanding the named brand. The escrow simulation holds the withheld final balance.", "governingLaw": "new_york_law", "amount": 3500, "currency": "USDC" }, "reference": { "case": "Jacob & Youngs, Inc. v. Kent", "citation": "230 N.Y. 239 (1921)", "court": "New York Court of Appeals", "source": "https://app.midpage.ai/document/jacob-youngs-inc-v-kent-3615980" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The written spec named a specific pump-component brand, and the contractor installed a different maker's product. That much is undisputed. The decisive question is whether the brand name was a condition of payment or a descriptive specification term. The claimant bore the burden of proving that the contract made installation of the exact named brand a condition precedent to the final payment. The record contains no such express condition language — no clause stating 'final payment is conditioned on installation of [Brand X]' or 'no payment shall be due unless the named component is installed.' The spec identified a brand, but Exhibit R-3 shows the brand was specified to guarantee a galvanized standard grade achievable by several makers. On this record, the brand functioned as a shorthand for a quality standard, not an independent payment condition. The claimant's burden on this point was not met.\n\nUnder Jacob & Youngs, Inc. v. Kent (230 N.Y. 239 (1921)), New York law applies the doctrine of substantial performance: an omission that is both trivial and innocent is remedied by an allowance of the resulting damage, not by forfeiture of the entire contract price. Cardozo's opinion draws the line between a condition (whose nonoccurrence defeats payment) and a descriptive term (whose breach yields an offset for the proven difference in value). The opinion states that the measure of allowance is not the cost of replacement when that cost would be grossly disproportionate to the good to be attained, but rather the difference in value. Here, the respondent proved — and the claimant did not rebut — that the installed component matches the named brand on grade, weight, and performance (Exhibit R-2), that the substitution was inadvertent (background facts; respondent statement), and that the difference in the finished module's value between the two brands is negligible (Exhibit R-4). The claimant submitted a tear-out quote (Exhibit C-4) that confirms replacement would be costly and destructive, which supports rather than undermines the respondent's position that replacement cost is grossly disproportionate to any difference in value.\n\nThe claimant also bore the burden of proving any measurable loss from the brand substitution — the difference in value that would form the offset. No such evidence was produced. The respondent's Exhibit R-4 affirmatively shows no measurable difference. Where the party asserting nonconformity carries the burden of proving the resulting damage and produces no evidence of loss, the offset is zero. The Jacob & Youngs court held that where the defect is insignificant and the difference in value is nominal or nothing, the contractor recovers the balance. That is this case: the full escrow corpus is released to the respondent.\n\nThe claimant's demand for the named brand or nothing would, if granted, visit a trivial and innocent default with oppressive retribution — precisely the outcome Cardozo's opinion rejects. The dissent in Jacob & Youngs would have enforced strict adherence, but it is the majority opinion that controls New York law. The claimant did not prove the brand was a condition, did not prove the deviation was material, and did not prove any compensable loss. The doctrine yields a winner, not a split.", "allocation": { "claimant": 0, "respondent": 3500 }, "citations": [ { "title": "Jacob Youngs v Kent", "url": "https://www.nycourts.gov/reporter/archives/jacob_kent.htm", "proposition": "Under New York law, an omission that is both trivial and innocent is atoned for by an allowance of the resulting damage rather than forfeiture of the contract price; the doctrine of substantial performance applies where the deviation is insignificant and non-willful." }, { "title": "Jacob Youngs v Kent", "url": "https://www.nycourts.gov/reporter/archives/jacob_kent.htm", "proposition": "Where the cost of replacement is grossly disproportionate to the good to be attained, the measure of the allowance is the difference in value, not the cost of completion or replacement." }, { "title": "Jacob Youngs v Kent", "url": "https://www.nycourts.gov/reporter/archives/jacob_kent.htm", "proposition": "The law will not imply a purpose to visit venial faults with oppressive retribution; a party whose default is unintentional and trivial may recover the contract price less the resulting damage, while a willful transgressor must accept the penalty." }, { "title": "Jacob Youngs v Kent", "url": "https://www.nycourts.gov/reporter/archives/jacob_kent.htm", "proposition": "Whether a promise is a condition or an independent, collateral term depends on considerations of justice and presumable intention; the significance of the default must be weighed against the oppression of the forfeiture." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-002", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Product Client", "type": "entity", "position": "The build departs from the plans we agreed on: one structural element is positioned about a foot off from the layout we signed off, which narrows a key area, and there are several smaller patching and finish issues. We paid most of the fee during the work but stopped when the departures became clear. We agreed to a specific plan and did not get it, so we should not owe the full remaining balance for something that does not match what we bargained for.", "evidence": [ "The signed build contract, plans, and specifications", "A defect list identifying the mislocated structural element and the minor patching and finish items", "Photographs showing the element positioned about a foot off from the signed layout", "An agreed schedule of cure costs for each of the minor items, totaling 400 USDC" ] }, "partyB": { "name": "Build Provider", "type": "human", "position": "I delivered an essentially complete, fully usable build. The minor patching and finish items are small and I will credit their agreed cure cost. The one structural element is a foot off, but expert review shows that placement does not reduce the delivered value at all — the space is fully functional as built. Substantial performance is plainly met, so I am owed the balance less only the small, agreed repair allowance for the cosmetic items.", "evidence": [ "The signed build contract, plans, and specifications", "An expert assessment that the relocated element does not diminish the build's market value", "A walkthrough record showing the build is complete and usable", "The agreed schedule of cure costs for the minor items, totaling 400 USDC" ] }, "facts": "A client engaged a provider to produce a build to signed plans, paying most of the fee during the work. The delivered build is essentially complete and usable, but one structural element is positioned about a foot off from the plan, narrowing a key area, and several minor patching and finish items are disputed. Expert review indicates the relocated element does not reduce the build's market value; the parties have an agreed schedule of cure costs for the minor items. The escrow simulation holds the withheld balance.", "governingLaw": "Governing law stipulation: Wisconsin contract law governs this dispute.", "amount": 2700, "currency": "USDC" }, "reference": { "case": "Plante v. Jacobs", "citation": "10 Wis. 2d 567, 103 N.W.2d 296 (1960)", "court": "Wisconsin Supreme Court", "source": "https://law.justia.com/cases/wisconsin/supreme-court/1960/10-wis-2d-567-4.html" }, "expectedOutcome": "split", "systemDecision": { "outcome": "split", "reasoning": "The threshold question is whether the respondent's performance was substantial or whether the proven deviations defeat the bargain. Wisconsin contract law applies the doctrine of substantial performance: a builder who substantially complies with the contract plans and specifications is entitled to the contract price, less an allowance for the defects. The doctrine turns not on perfection but on whether the work, taken as a whole, fulfills the essential purpose of the agreement. Here, the record establishes that the build is essentially complete and usable — the respondent's walkthrough record documents completion, and the claimant does not dispute usability. That showing is dispositive of substantial performance.\n\nThe claimant carries the burden of proving materiality — that the deviations defeat the deal's purpose or diminish value — and that burden was not met. The structural element is indeed positioned about a foot off-plan, narrowing a key area. The claimant proved the deviation (defect list, photographs) but did not prove it was material. The expert assessment in the record shows the relocated element does not reduce the build's market value, and no cost-to-cure or diminution-in-value figure for the structural deviation appears in the record. Without proof of loss attributable to that deviation, the claimant has not shouldered its burden. The claimant's argument that the build 'does not match what we bargained for' is not enough: substantial performance does not require exact conformity, and the claimant must prove the difference in value, which the record does not support.\n\nThe minor patching and finish items are different. Both parties agree to a schedule of cure costs totaling 400 USDC for those items. The agreed cure cost is small relative to the contract price and the deviations are curable, so the minor items plainly do not rise to material breach. The remedy is the contract price less the agreed cure costs. The escrow holds the full unpaid balance of 2,700 USDC. Applying the offset: the provider receives 2,300 USDC and the client receives 400 USDC as the credit for the agreed cure costs. No holdback or conditional cure is warranted — the cure costs are agreed and fixed, so an immediate proportional allocation is the correct shape.\n\nThe claimant's plea to withhold the entire balance fails because it has not proven material breach or any value loss beyond the agreed minor-item cure costs. The respondent's counterclaim to release the balance less the agreed cure costs succeeds in full — the 400 USDC credit is the proven offset, and the remainder is owed for substantially performed work.", "allocation": { "claimant": 400, "respondent": 2300 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-003", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Brand Client", "type": "human", "position": "We contracted for a specific, uniform visual treatment and got a streaked, patchy result that reads as inconsistent across the whole asset. Months after an attempted fix, it still has not settled into the uniform look we specified, and the only way to actually get that look is to redo the entire piece. This was a visual deliverable and the visual is exactly what failed. Performance was not substantial, so the fee should not be enforced against us.", "evidence": [ "The written brief specifying the uniform visual treatment", "Side-by-side captures showing the streaked, non-uniform delivered result", "A record that the inconsistency persisted months after an attempted remedy", "An assessment that the only way to achieve the specified uniform look is a complete redo" ] }, "partyB": { "name": "Design Provider", "type": "human", "position": "The deliverable is complete and fully functional — it does everything it is supposed to do and covers the whole scope. Some visual variation is normal and, at most, warrants a small allowance, not withholding the entire fee. The work substantially performs the contract, and I should be paid, subject at most to a minor deduction for the variation the client dislikes.", "evidence": [ "The written brief specifying the uniform visual treatment", "Delivery records showing the full scope was produced and is functional", "The provider's assessment that the variation is minor and settles over time" ] }, "facts": "A client engaged a provider for a creative deliverable with a written brief specifying a uniform visual treatment. The delivered work is functional and covers the full scope but shows a streaked, non-uniform appearance; months after an attempted fix the inconsistency persisted, and the only way to achieve the specified uniform look is to redo the entire piece. The client refuses to pay; the provider says the work substantially performs and warrants at most a minor allowance. The escrow simulation holds the disputed fee.", "governingLaw": "Governing law stipulation: Texas contract law governs this dispute.", "amount": 3000, "currency": "USDC" }, "reference": { "case": "O.W. Grun Roofing & Construction Co. v. Cope", "citation": "529 S.W.2d 258 (Tex. Civ. App. 1975)", "court": "Texas Court of Civil Appeals", "source": "https://www.courtlistener.com/opinion/2428211/ow-grun-roofing-construction-co-v-cope/" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The governing brief — undisputed by both parties (Exhibits C-1, R-1) — specified a uniform visual treatment. This is not an incidental aesthetic preference grafted onto a functional product; the entire engagement was for a creative visual deliverable whose defining purpose was the specified visual result. When the specification and the deliverable type converge, a deviation in that specification strikes at the bargain's essence, not its periphery.\n\nThe claimant carried the burden on nonconformity and materiality, and the record sustains both. The delivered work is admittedly functional and complete in scope (Exhibit R-2), but it shows a streaked, non-uniform appearance (Exhibit C-2) that the respondent does not deny so much as minimize as 'variation.' An attempted fix was undertaken and the inconsistency persisted months later (Exhibit C-3) — the respondent's Exhibit R-3 asserts the variation 'settles over time,' but this assertion is conclusory and, more importantly, directly contradicted by the months-long persistence in the record. The claimant's Exhibit C-4 provides an assessment that only a full redo achieves the specified uniform look; the respondent offered no contrary remediation evidence, no estimate of partial cure cost, and no showing that the non-uniformity is confined to a correctable portion. The burden on nonconformity and materiality was met by a preponderance.\n\nMateriality follows from the convergence of three record facts: the uniform visual treatment was the essential purpose of a creative visual deliverable; the defect pervaded the entire asset rather than a discrete correctable portion; and the attempted cure failed, leaving only a full redo as the path to conformity. Where the bargained-for purpose is defeated and the only remedy is reperformance of the entire work, the breach is not a minor allowance item — it is the kind of failure that undermines the bargain altogether. The respondent bore the burden on substantial performance and on the assertion that the variation is minor; neither was met. The respondent showed functionality and full scope, but neither addresses the visual specification that defined the deal.\n\nThe remedy follows the materiality finding. This is not a case of defective-but-substantial performance where a cost-to-cure offset applies, because there is no proven partial cure — the only path to conformity is complete rework. Nor is it an impossibility/frustration case requiring restitution for part performance, because the nonconformity is a provider-quality failure, not an external supervening event. The work conferred no value to this client because its defining purpose — the uniform visual result — was never achieved and cannot be achieved from what was delivered. The respondent's exhibits do not establish that the delivered work has transferable or usable value independent of the failed specification. Where the bargain's essential purpose is defeated through provider breach and the conferred value is nil, the doctrine yields a full refund — not a proportional split and not a minor allowance. The entire escrow corpus of 3,000 USDC is refunded to the claimant.\n\nThe respondent's counterclaim for release of the fee subject to a minor allowance fails because the premise — substantial performance with a minor, correctable variation — is unsupported by the record. The variation is pervasively non-uniform, persisted after attempted cure, and is correctable only by complete rework. That is not a minor allowance; it is a material breach defeating the bargain.", "allocation": { "claimant": 3000, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-004", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Ordering Buyer", "type": "entity", "position": "We ordered a deliverable described by a common term that, in our field and in ordinary commercial use, means the narrower, higher-tier version. What arrived met the stated size and grade but was the broad, lower-tier version — not what the term means to buyers like us. We paid for the narrower thing and did not get it, so we are entitled to a refund of the escrowed payment.", "evidence": [ "The two written orders stating the term, the size class, and the grade", "Dictionary and reference definitions the buyer relies on for the narrower meaning", "Statements from some market participants that the term denotes the narrower version", "Records of pre-order discussions using a word that the buyer says pointed to the narrower version" ] }, "partyB": { "name": "Supplying Seller", "type": "entity", "position": "The term in the order is broad and is satisfied by any version meeting the specified size and grade, which is exactly what I shipped. If the buyer wanted the narrower, higher-tier version, the order needed to say so. The price the buyer agreed to was at or below the market price for the narrower version, which shows both sides meant the broad term. There is a governing regulatory definition of the term, and it is broad. I delivered conforming goods and the escrow should release to me.", "evidence": [ "The two written orders stating the term, the size class, and the grade", "The regulatory definition incorporated by the order, which reads the term broadly", "Market price data showing the agreed price matched the broad version, not the narrower one", "Statements from other market participants that the term covers the broad version", "Delivery records showing the goods met the stated size and grade" ] }, "facts": "A buyer and seller contracted for a deliverable identified by a single common term, in a stated size class and grade, without defining the term. The buyer expected the narrower, higher-tier version; the seller shipped the broad version, which met the stated size and grade. The evidence on meaning is mixed: dictionary references and some market participants support the narrow reading, while an incorporated regulatory definition, the agreed price relative to market, and other participants support the broad reading. Pre-order discussions used a word that itself covers both versions. The escrow simulation holds the buyer's payment.", "governingLaw": "new_york_law", "amount": 12000, "currency": "USDC" }, "reference": { "case": "Frigaliment Importing Co. v. B.N.S. International Sales Corp.", "citation": "190 F. Supp. 116 (S.D.N.Y. 1960)", "court": "United States District Court for the Southern District of New York", "source": "https://law.justia.com/cases/federal/district-courts/FSupp/190/116/1622834/" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive question is what the undefined term in the orders required. The parties did not define the term. The claimant says it means the narrower, higher-tier version; the respondent says it is broad — satisfied by any version meeting the stated size and grade. The record on meaning is genuinely conflicting, so the case turns on which interpretive indicators carry the most weight and whether the claimant met its burden of proving the narrow reading.\n\nNew York contract law gives controlling weight to the parties' own chosen expression of meaning. Here, the order itself incorporated a regulatory definition of the term, and that definition reads it broadly (Exhibit R-2). An incorporated definition is not trade custom or an external norm; it is part of the governing terms the parties wrote. Under the rule against surplusage, every part of the contract is given effect — and the incorporated regulatory definition is the most specific indication the parties themselves provided of what the term means. The Mulacek opinion illustrates this principle in action: when a contract contains specific enumerated provisions alongside a catchall clause, the specific provision controls over the general (citing Ambac Assur. Corp. v Countrywide Home Loans, Inc., 31 NY3d 569, 583 [2018], as discussed in the cited source). By the same logic, the specific incorporated regulatory definition controls over the general dictionary definitions and participant statements the claimant offers.\n\nThe price evidence reinforces the broad reading. The agreed price matched the market price for the broad version and was at or below the market price for the narrower version (Exhibit R-3). If both parties had understood the term to require the narrow, higher-tier version, the price would ordinarily reflect that higher value. The claimant does not explain why it agreed to a price consistent with the broad version if it expected the narrow one. This is not conclusive, but it corroborates the broad reading and undercuts the claimant's position.\n\nThe claimant's own evidence fails to carry its burden. The pre-order discussions used a word that itself covers both versions (Exhibit C-4) — the claimant's exhibit does not unambiguously point to the narrow reading. The dictionary and reference definitions (Exhibit C-2) and the market-participant statements (Exhibit C-3) are of unverified provenance and are evenly countered by other market participants who say the term covers the broad version (Exhibit R-4). Where the claimant bears the burden of proving nonconformity and the evidence is in equipoise, the burden is not met. The claimant needed to show by a preponderance that the term required the narrow version; it has not.\n\nOn the performance question: the delivered goods met the stated size class and grade (Exhibit R-5), and this is not seriously contested. Under the broad reading, which I adopt, the goods conformed to the term. No breach occurred. Because no breach is proven, materiality does not arise, and the remedy is straightforward: the escrow corpus releases to the respondent in full. No party pleaded a cure, replacement, or future performance obligation, and none is imposed. The pleaded relief is exclusively monetary — refund or release — and the doctrine yields a winner: the seller.\n\nThe claimant's argument that the term means the narrow version in its field is undercut by the fact that the parties chose to incorporate a regulatory definition that reads the term broadly. If the claimant wanted the narrow version, the order needed to say so — either by defining the term, by specifying the higher tier, or by excluding the broad version. It did none of these. The buyer's unexpressed expectation cannot override the terms the parties actually wrote.", "allocation": { "claimant": 0, "respondent": 12000 }, "citations": [ { "title": "Mulacek v ExxonMobil Corp. - 2026 NYSlipOp 02787", "url": "https://www.nycourts.gov/reporter/current/3dseries/2026/2026_02787.shtml", "proposition": "Under New York contract interpretation, specific provisions control over general catchall clauses — a principle drawn from Ambac Assur. Corp. v Countrywide Home Loans, Inc., 31 NY3d 569, 583, as applied in Mulacek. This principle supports giving controlling weight to the specific incorporated regulatory definition over general dictionary and market-participant evidence." }, { "title": "Mulacek v ExxonMobil Corp. - 2026 NYSlipOp 02787", "url": "https://www.nycourts.gov/reporter/current/3dseries/2026/2026_02787.shtml", "proposition": "Contract terms that are not among enumerated surviving provisions do not survive termination — illustrating that New York courts give effect to specifically enumerated contract provisions and do not extend them by implication. By analogy, an undefined term's meaning is anchored by the specific definition the parties themselves incorporated, not by external glosses." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-005", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Committed Buyer", "type": "entity", "position": "Our long-term supply deal priced at the supplier's posted rate at delivery, but for years the supplier protected the rate on volume we had already committed to jobs, exactly as the stipulated industry practice requires. The supplier then raised the rate sharply with one day's notice and refused to protect the volume we had already committed. Both the stipulated trade practice and our own prior course of dealing made rate protection part of this contract, and applying the increase to already-committed work breached it. We are owed the difference on that committed volume.", "evidence": [ "The written supply contract and its posted-rate-at-delivery term", "The stipulated fact of a rate-protection practice across this industry for already-committed volume", "Records of the parties' own prior conduct protecting committed volume on earlier rate changes", "The one-day-notice rate increase and its effect on the buyer's already-committed volume", "The buyer's calculation of the disputed difference on the committed volume" ] }, "partyB": { "name": "Supplier", "type": "entity", "position": "The contract set the price at the posted rate at delivery, full stop. There is no rate-protection clause in the written deal, and a general industry practice cannot contradict an express price term the parties actually wrote down. When I posted a new rate, that was the contract price at delivery for everything delivered after it. I owe nothing beyond honoring the posted-rate term as written, and the escrow should release to me.", "evidence": [ "The written supply contract and its posted-rate-at-delivery term", "The absence of any rate-protection clause in the written deal", "The posted new rate and the delivery dates it applied to" ] }, "facts": "A buyer and supplier had a long-term supply contract pricing at the supplier's posted rate at delivery. It is stipulated in the record that the relevant industry protects the rate on volume a buyer has already committed to jobs, and that the parties themselves had followed that protection on earlier rate changes. The supplier then raised the rate sharply with one day's notice and did not protect the buyer's already-committed volume. The buyer contends the stipulated trade usage and the prior course of dealing supplement the bare price term; the supplier contends the express posted-rate term cannot be contradicted by usage. The escrow simulation holds the disputed difference on the committed volume.", "governingLaw": "Governing law stipulation: Hawaii sales law governs this dispute.", "amount": 20000, "currency": "USDC" }, "reference": { "case": "Nanakuli Paving & Rock Co. v. Shell Oil Co.", "citation": "664 F.2d 772 (9th Cir. 1981)", "court": "United States Court of Appeals for the Ninth Circuit", "source": "https://law.resource.org/pub/us/case/reporter/F2/664/664.F2d.772.78-2670.78-2667.html" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The dispositive interpretive question is whether the express posted-rate-at-delivery term is inconsistent with the stipulated rate-protection practice, such that supplementation is barred, or whether the practice supplements a silent term without contradiction.\n\nThe written contract says the price is the posted rate at delivery. It does not say the supplier may post any rate and apply it to all deliveries regardless of when the buyer committed the volume. It does not say committed volume is unprotected. It simply fixes the mechanism — posted rate at delivery — without addressing the question of which posted rate applies to volume committed before a rate change. That silence opens the door to supplementation.\n\nThe record supplies two supplementary sources. First, it is stipulated — not merely asserted by the claimant — that the relevant industry protects rates on volume a buyer has already committed to jobs. A stipulated fact is established for purposes of this proceeding. Second, the parties' own prior conduct shows they followed that protection on earlier rate changes. The respondent does not deny the prior course of dealing; it argues the express term overrides it. But the respondent carried the burden of showing inconsistency, and it offered only the bare argument that the express price term cannot be contradicted. The practice does not contradict the posted-rate term — it determines which posted rate applies to which volume, leaving the posted-rate mechanism intact. The respondent's inconsistency argument therefore fails.\n\nHaving found that the supplemented term protects committed volume, the breach is clear: the supplier raised the rate sharply with one day's notice and applied it to volume the buyer had already committed. That departure from the parties' own established practice is material — the purpose of rate protection is to allow a buyer to price committed jobs without rate-risk, and the sharp increase on one day's notice defeated that purpose for the affected volume.\n\nThe remedy presents a harder problem. The buyer seeks the disputed difference held in escrow. The escrow holds 20,000 USDC, representing the disputed amount. The buyer's calculation (Exhibit C-5) supplies the only figure in the record for the difference on committed volume. The supplier did not offer a competing calculation or contest the arithmetic; it contested only the legal entitlement to protection, which I have rejected. Where the claimant establishes entitlement and the respondent offers no competing quantum, the claimant's figure stands as the best available evidence.\n\nThis is not a case for a split or partial remedy. The doctrine yields a winner on the entitlement question, and the quantum is the full escrow amount — the disputed difference on committed volume. No proven partial defect or divisible performance requires apportionment. The full corpus releases to the buyer.", "allocation": { "claimant": 20000, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-006", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Departing Provider", "type": "human", "position": "I was engaged for a fixed-scope project at a fixed fee and completed roughly four-fifths of it before I left early. The client received and kept the benefit of all that work — it is real, usable output they still hold. Denying me every cent for the whole engagement because I did not finish the last stretch is a forfeiture far out of proportion to leaving early, especially since the client has not shown any loss from my departure. I should recover the reasonable value of the work actually delivered.", "evidence": [ "The fixed-scope, fixed-fee engagement agreement", "A record showing roughly 79% of the scope was completed and delivered", "Confirmation the client retained and used the delivered work", "The absence of any client evidence of loss caused by the early departure" ] }, "partyB": { "name": "Engaging Client", "type": "human", "position": "The deal was a fixed scope for a fixed fee: completion of the whole project was the condition of payment. The provider walked away early without my agreement and left the project unfinished, so the condition for the fee was never met. I contracted for a finished deliverable, not a fraction of one, and I should not have to pay for an engagement the provider chose to abandon. The escrowed fee should return to me.", "evidence": [ "The fixed-scope, fixed-fee engagement agreement stating payment on completion", "A record that the provider left before completing the scope", "Correspondence showing the departure was without the client's consent" ] }, "facts": "A provider agreed to a fixed-scope project for a fixed fee and left after completing roughly 79% of the scope, without the client's consent. The client retained and used the delivered work and put forward no evidence of loss caused by the early departure. The provider seeks the reasonable value of the work performed; the client contends that completion of the entire scope was a condition precedent to any payment, so the provider recovers nothing. The escrow simulation holds the fixed fee.", "governingLaw": "Governing law stipulation: New Hampshire contract and restitution law governs this dispute.", "amount": 12000, "currency": "USDC" }, "reference": { "case": "Britton v. Turner", "citation": "6 N.H. 481 (1834)", "court": "New Hampshire Supreme Court", "source": "https://app.midpage.ai/document/britton-v-turner-8503954" }, "expectedOutcome": "split", "systemDecision": { "outcome": "split", "reasoning": "The threshold question is whether the respondent carried its burden of proving that completion of the full scope was an express condition precedent to any payment. The respondent bore this burden because it asserts the affirmative defense that a condition was not met, which would defeat the provider's otherwise-valid claim for the value of work performed. The record does not contain the contract text. What the record provides is Exhibit R-1's description: the agreement was 'stating payment on completion.' That phrase, standing alone, is ambiguous. 'Payment on completion' can mean 'payment is triggered/due when the work is completed' — a timing provision — or 'no payment is due unless the work is fully completed' — an express condition. The respondent produced no contract language using conditional terminology ('provided that,' 'subject to,' 'condition precedent,' 'if and only if'), nor any extrinsic evidence clarifying that the parties intended a true condition. Under New Hampshire law, conditions are not favored and will not be construed as such unless clearly expressed. The respondent's evidence — a characterization of the agreement as 'stating payment on completion' — does not meet the preponderance standard for proving an express condition precedent. The condition-precedent defense fails.\n\nHaving defeated the condition-precedent defense, the governing framework is restitution for part performance. The provider committed a partial breach by leaving at 79% without consent, but the breach was not material in the sense that would forfeit all right to recovery. The client retained and used the delivered work — real, usable output that conferred a measurable benefit. The client proved no loss from the early departure. Under restitution principles, a party who has partially performed under a contract breached by its own non-material breach may recover the value of the benefit conferred on the other party, measured by the proportion of performance rendered. The 79% completion figure is established by Exhibit C-2, corroborated by the background facts and the case summary, and not contradicted by the respondent. The fixed fee was 12,000 USDC. The value conferred is 0.79 × 12,000 = 9,480 USDC.\n\nThe remaining 2,520 USDC — representing the unperformed 21% of the scope — returns to the client as restitution for work not delivered. This is not a compromise between the parties' demands; it is the proportional allocation that the record's numbers yield. The client sought a full refund of 12,000 USDC; that demand fails to the extent the client received and used 9,480 USDC of value. The provider sought 'roughly the completed share'; that demand is granted as to the proven 79%. No offset for proven loss applies because the respondent adduced no evidence of loss, and the respondent's own pleaded relief seeks refund rather than damages. The provider's breach was voluntary and unexcused — the provider chose to leave — but the remedy for a partial, non-material breach with retained benefit is proportional restitution, not total forfeiture. Total forfeiture would be grossly disproportionate: the client would keep 79% of the deliverable and pay nothing, a windfall far exceeding any harm from the provider's departure.\n\nThe absence of the contract text is a material gap, but it does not prevent decision. Both parties agree the contract existed, was for a fixed scope at a fixed fee, and contained a payment-on-completion reference. The dispute is over the legal characterization of that reference. Under the burden of proof, the ambiguity in characterization falls against the party asserting the condition — here, the respondent. New Hampshire's disfavor of conditions unless clearly expressed reinforces this allocation. The result tracks the restitution arithmetic the record supports: 9,480 to the provider, 2,520 to the client, summing to the 12,000 USDC corpus.", "allocation": { "claimant": 9480, "respondent": 2520 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-007", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Fixed-Fee Client", "type": "human", "position": "The provider finished the work but two specific items came back defective, and I am not comfortable paying the outstanding balance for defective work. I withheld a substantial amount until the deliverable is properly right. Until the defects are addressed, I do not think the contract was properly performed and I should not have to release the balance I am holding.", "evidence": [ "The fixed-fee contract for the full scope of work", "Identification of the two specific defective items", "An agreed figure of 300 USDC for the modest cost to remedy the two items", "A record of the substantial balance the client is withholding" ] }, "partyB": { "name": "Fixed-Fee Provider", "type": "human", "position": "I substantially completed everything the contract called for; what remains are two minor, clearly quantifiable defects with a small, agreed cure cost. The client is withholding far more than that cure cost, which is not justified. A completed job with a couple of small snags does not forfeit the whole price. I am owed the balance less the modest cost of putting those two items right.", "evidence": [ "The fixed-fee contract for the full scope of work", "Delivery records showing the full scope was completed", "The agreed 300 USDC cure cost for the two defective items", "Evidence the amount withheld far exceeds the cure cost" ] }, "facts": "A provider completed a fixed-fee engagement covering the full scope, but two specific items were defective, with a small agreed cost to remedy them. The client withheld a substantial balance — far more than the cure cost — contending the work was not properly performed. The provider contends the defects are minor and collateral and that a lump-sum-on-completion engagement is not forfeited by small snags, so the price is due less the cure cost. The escrow simulation holds the withheld balance.", "governingLaw": "english_law", "amount": 3500, "currency": "USDC" }, "reference": { "case": "Hoenig v. Isaacs", "citation": "[1952] 2 All ER 176", "court": "Court of Appeal of England and Wales", "source": "https://www.bailii.org/ew/cases/EWCA/Civ/1952/6.html" }, "expectedOutcome": "split", "systemDecision": { "outcome": "split", "reasoning": "The governing terms created a fixed-fee lump-sum contract for a defined scope of work. Both parties placed the contract in evidence (Exhibit C-1, Exhibit R-1), and neither pointed to any express term making entire, defect-free performance a condition precedent to payment of the balance. Under English law, as established in Hoenig v Isaacs, the promise to complete work in a lump-sum contract is construed as a term, not as a condition. It is not every breach of that term which absolves the employer from the promise to pay the price, but only a breach which goes to the root of the contract, such as abandonment of the work when it is only half done. Unless the breach goes to the root, the employer must pay the price and bring a cross-claim for the defects, or set them up in diminution of the price. The measure is the amount the work is worth less by reason of the defects, usually calculated by the cost of making them good.\n\nThe respondent proved that the full scope of the engagement was completed (Exhibit R-2). The claimant did not dispute overall completion; its case rested on two specific defective items (Exhibit C-2). The respondent acknowledged those defects, and both parties agreed that the cost to remedy them was 300 USDC (Exhibit C-3, Exhibit R-3). That figure is unrebutted and forms the proper measure of the deduction. The defects, measured at 300 USDC against a 3,500 USDC corpus (approximately 8.6%), are minor and collateral — indistinguishable in principle from the £55 18s 2d of defects against a £750 contract in Hoenig, or the two-coats-of-paint hypothetical in Dakin v Lee as approved in that case. They do not approach the scale of defect in Bolton v Mahadeva, where cure costs of £174 against a £560 contract (approximately 31%) plus fumes and inadequate heating defeated substantial performance. This case is firmly on the Hoenig side of the line.\n\nThe claimant bore the burden of proving that the defects were material — that they went to the root of the contract and defeated its purpose. The claimant adduced no evidence to that effect. Its statement of case expressed discomfort with paying for defective work and a desire to withhold until the items are remedied, but it identified no purpose of the engagement that was defeated, no unusability of the deliverable, and no loss beyond the cure cost. Discomfort is not materiality. The claimant also bore the burden of showing that entire performance was a condition precedent; it pointed to no contractual term to that effect and the contract exhibits do not contain one. The claimant's claim to withhold the entire 3,500 USDC therefore fails. The respondent's counterclaim for release of the balance less the cure cost succeeds. The remedy is the contract price less the cost of cure: 3,500 USDC less 300 USDC = 3,200 USDC to the respondent, 300 USDC to the claimant as offset.", "allocation": { "claimant": 300, "respondent": 3200 }, "citations": [ { "title": "Hoenig v Isaacs [1952] EWCA Civ 6", "url": "https://www.bailii.org/ew/cases/EWCA/Civ/1952/6.html", "proposition": "In a lump-sum contract for work payable on completion, the promise to complete is construed as a term rather than a condition precedent; only a breach going to the root of the contract defeats the right to payment, and minor defects give rise to a deduction measured by the cost of making good, not forfeiture of the price." }, { "title": "Bolton v Mahadeva [1972] EWCA Civ 5", "url": "https://www.bailii.org/ew/cases/EWCA/Civ/1972/5.html", "proposition": "Where cure costs represent approximately one-third of the contract price and the defects prevent the installation from fulfilling its primary purpose, the contract is not substantially performed and the contractor cannot recover the lump sum — distinguishing cases of minor, quantifiable defects that do not defeat the contract's purpose." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-008", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Charged Client", "type": "entity", "position": "The contract has a fee clause that compounds by a fixed percentage every period, and applied literally over time it produces a wildly disproportionate charge that nobody could sensibly have intended. The demand against me now is an absurd number for what this contract is. A clause that spirals into a ruinous figure should be read as capped or otherwise sensible, not applied to the letter to bankrupt one side. I should not have to pay the compounded amount as demanded.", "evidence": [ "The contract and the exact wording of the compounding fee clause", "The arithmetic showing how the fixed-percentage compounding drives the charge to an extreme figure over time", "The comparison between the demanded amount and the modest underlying value of the contract", "Evidence of the commercial context at the time the deal was made" ] }, "partyB": { "name": "Charging Provider", "type": "entity", "position": "The clause is clear. It states a starting figure and a fixed compounding rate, and both sides signed up to exactly that. My job is to apply what the parties agreed, not to rewrite a bargain because it turned out worse for one side than they now like. Certainty about what the words mean is the whole point of putting the clause in writing. The accrued fee is due as the clause states, and the escrow should release to me.", "evidence": [ "The contract and the exact wording of the compounding fee clause", "The clause's stated starting figure and fixed compounding rate", "The accrued-fee calculation applying the clause as written" ] }, "facts": "A contract contained a fee clause with a starting figure that compounds by a fixed percentage each period. Applied literally over the contract's term, the compounding drives the charge to an extreme figure far exceeding the modest underlying value. The provider demands the accrued fee as the clause states; the client contends the literal reading is commercially absurd and ruinous and that the clause should be read as capped or moderated. The governing question is whether extreme commercial consequences justify departing from clear contractual language. The escrow simulation holds the disputed accrued fee.", "governingLaw": "english_law", "amount": 9000, "currency": "USDC" }, "reference": { "case": "Arnold v. Britton", "citation": "[2015] UKSC 36", "court": "Supreme Court of the United Kingdom", "source": "https://www.supremecourt.uk/cases/uksc-2013-0193" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive question is whether the fee clause is clear. Both parties' exhibits confirm the clause states a starting figure and a fixed compounding rate per period, with no express cap, ceiling, or modifier. The language is not in dispute; what is disputed is whether the extreme financial outcome — the compounding driving the accrued charge far beyond the contract's modest underlying value — justifies reading in a cap the parties did not write.\n\nEnglish law, as authoritatively stated in Arnold v Britton, answers no. Lord Neuberger's seven-point analysis makes clear that the language of a provision is the primary source of meaning, that the clearer the natural meaning the more difficult it is to justify departing from it, and that commercial common sense is assessed as at the date of contracting — not by reference to how the arrangement has subsequently worked out. The mere fact that a contractual arrangement, interpreted according to its natural language, works out badly or even disastrously for one party is not a reason for departing from that language. The court's function is to identify what the parties agreed, not what the court thinks they should have agreed; it is not the court's role to relieve a party from the consequences of imprudence or poor advice.\n\nThe claimant's case mirrors the appellants' rejected argument in Arnold: that the absurdity of the compounded result shows the parties could not have intended literal application. But Lord Neuberger held that departing from the natural meaning involves inserting words that are not there and attributing to the parties an intention the clause was designed to avoid. The appellants' proposed cap was itself problematic because it merely shifted the absurdity rather than resolving it. Lord Hodge similarly rejected the invitation to re-write the bargain because it was unwise to gamble on future economic circumstances, noting that the reasonable person construct exists to ascertain the meaning of the words the parties used, not to re-write their agreement because subsequent events showed it produced a bad bargain. The court must have a basis in the words used and the factual matrix for identifying a rival meaning; absent such a basis, there is no legitimate alternative construction to prefer.\n\nLord Carnwath's dissent — which would have read the clause as a cap — does not assist the claimant. The dissent proceeded on case-specific features absent here: inherent inconsistency between two halves of the clause, a letting scheme creating equivalence expectations, a service-charge context with statutory overlay, and evidence that the clause was originally designed for the benefit of the paying party. None of those features appears in this record. The clause here is a standalone fee provision, and the claimant identifies no internal inconsistency, no contextual feature from which a cap could be derived, and no evidence that the compounding rate was intended as a ceiling. The claimant's exhibits (C-1 through C-4) establish the clause wording, the arithmetic extremity, and a general commercial context, but none establishes ambiguity or a textual basis for a cap. The respondent's exhibits (R-1 through R-3) confirm the clause and the accrued-fee calculation. The burden of demonstrating why clear language should not be applied as written rests on the claimant, and that burden is unmet.\n\nNo remedy-shaping doctrine is triggered. There is no disputed condition of payment, no impossibility or frustration, no pleaded downstream loss, and no proven partial defect. The escrow holds the full disputed accrued fee. Because the clause is clear and the respondent's calculation conforms to it, the respondent is entitled to the entire corpus. Splitting or holding would be a hedge, not a remedy shape: no partial entitlement is proven, and no condition requires a hold. The full-corpus default applies.", "allocation": { "claimant": 0, "respondent": 9000 }, "citations": [ { "title": "Arnold v Britton & Ors [2015] UKSC 36", "url": "https://www.bailii.org/uk/cases/UKSC/2015/36.html", "proposition": "Where contractual language is clear, the court must apply it as written; the fact that a literal reading produces a commercially disastrous outcome for one party is not a reason to depart from the natural meaning, and the court should be very slow to reject the natural meaning simply because the term appears imprudent." }, { "title": "Arnold v Britton & Ors [2015] UKSC 36", "url": "https://www.bailii.org/uk/cases/UKSC/2015/36.html", "proposition": "Commercial common sense is assessed as at the date of contracting, not retrospectively; the mere fact that the arrangement has worked out badly is not a ground for departing from the language, and the court's function is to identify what the parties agreed, not what the court thinks they should have agreed." }, { "title": "Arnold v Britton & Ors [2015] UKSC 36", "url": "https://www.bailii.org/uk/cases/UKSC/2015/36.html", "proposition": "To depart from the natural meaning, the court must have a basis in the words used and the factual matrix for identifying a rival meaning; absent such a basis, there is no legitimate alternative construction, and the reasonable person construct exists to ascertain meaning, not to re-write the bargain." }, { "title": "Arnold v Britton & Ors [2015] UKSC 36", "url": "https://www.bailii.org/uk/cases/UKSC/2015/36.html", "proposition": "The clearer the natural meaning, the more difficult it is to justify departing from it; minor drafting infelicities do not justify a court searching for ambiguity to facilitate departure, and only a specific error relevant to the interpretive issue may be considered." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-009", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Beneficiary", "type": "entity", "position": "We made advance payments that were secured by a release guarantee, and the whole point of that security was to get our money back if the counterparty could not perform or repay. That is exactly the situation that has now happened. The guarantee's list of release triggers is worded ambiguously and does not cleanly line up with the event, but the only sensible reading is the one that covers the very risk the security was taken out for. The escrowed sum should be released to us.", "evidence": [ "The release-guarantee instrument and its operative wording", "The underlying agreement and its list of events that entitle a refund", "The mismatch between the guarantee's wording and the underlying refund events", "Evidence that the event which occurred is the core risk the advance-payment security was meant to cover" ] }, "partyB": { "name": "Guarantor", "type": "entity", "position": "The guarantee lists specific release triggers, and the event that occurred is not one of the listed triggers. I have to apply the wording the parties chose, not expand it because it would be commercially convenient for the beneficiary. If they wanted this event covered, it should have been listed. On the words as written, the release condition is not met and the escrow should not be paid out.", "evidence": [ "The release-guarantee instrument and its list of specific release triggers", "Evidence that the event which occurred is not among the listed triggers", "The guarantor's reading applying the listed triggers as written" ] }, "facts": "A beneficiary made advance payments secured by a release guarantee. The guarantee's wording, listing the release triggers, did not cleanly track the underlying agreement's list of refund events, and the event that actually occurred was not plainly among the listed triggers. The beneficiary contends the ambiguous wording should be read to cover the core risk the security was taken out for; the guarantor contends the listed triggers, applied as written, do not cover the event. The governing question is how to resolve genuinely ambiguous release wording. The escrow simulation holds the guaranteed sum.", "governingLaw": "english_law", "amount": 15000, "currency": "USDC" }, "reference": { "case": "Rainy Sky SA v. Kookmin Bank", "citation": "[2011] UKSC 50", "court": "Supreme Court of the United Kingdom", "source": "https://www.supremecourt.uk/cases/uksc-2010-0127" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The dispositive question is whether the guarantee's listed release triggers are exhaustive or whether the operative undertaking language — promising payment of sums due under the underlying contract — prevails over the descriptive list. The record establishes that the guarantee's wording is genuinely ambiguous: the list of triggers in the descriptive portion does not cleanly include the event that occurred (the counterparty's non-performance), yet the operative undertaking is cast in broader terms and the instrument was issued for the very purpose of securing advance payments against that risk.\n\nUnder English law, as articulated in Rainy Sky SA v Kookmin Bank [2011] UKSC 50, contractual construction is a unitary exercise: the court considers the language used and ascertains what a reasonable person with the background knowledge reasonably available to the parties would have understood them to mean. Where the language is capable of more than one meaning, the court is entitled to prefer the construction consistent with business common sense and to reject the other. Lord Clarke held that the court need not find the result absurd or irrational before resorting to commercial common sense; it suffices that the language is open to more than one interpretation. The descriptive recital listing specific triggers does not, on its face, purport to be an exhaustive enumeration of the scope of the operative promise. The operative undertaking — to pay sums due under the contract — is the provision that does the work, and it is capable of a broader reading that encompasses the counterparty's failure to perform.\n\nArnold v Britton [2015] UKSC 36 tempers but does not displace Rainy Sky. Lord Neuberger emphasised that commercial common sense should not undervalue the language of the provision and that courts should be very slow to reject the natural meaning simply because it appears imprudent. But the critical distinction here is that Arnold involved language whose natural meaning was clear — the court refused to insert words ('up to') that were not there. In this case, by contrast, the claimant does not ask the tribunal to insert words; it asks the tribunal to give effect to the operative undertaking language that is already there, reading it in accordance with its commercial purpose. The ambiguity is genuine: the descriptive list and the operative undertaking are in tension, and the tribunal must choose between them. Arnold's principle — that the language the parties chose controls — supports giving effect to the operative undertaking rather than treating the descriptive recital as an exhaustive limitation. The guarantee was issued to secure advance payments; the commercial purpose was to protect against the counterparty's non-performance. Excluding the very event the security was designed for would be commercially irrational.\n\nThe respondent bore the burden of demonstrating that the listed triggers are exhaustive and that the parties intended to exclude the core non-performance risk. It has not met that burden. No evidence of negotiations, no drafting history, and no surrounding circumstance supports an intention to exclude non-performance. No credible commercial reason has been advanced for why the parties would have secured every refund event except the one most likely to require security — the counterparty's failure to perform. The Rainy Sky principle applies directly: of the two arguable constructions, the one covering the event is to be preferred because it is consistent with the commercial purpose of the guarantee. The respondent's construction would produce a commercially surprising result — security that covers peripheral risks but not the central one — without any textual or contextual basis for that surprising result.\n\nThe remedy follows from the finding of coverage. The full escrow corpus of 15,000 USDC represents the guaranteed sum and the claimant has established its entitlement to it. No partial defect, divisible performance, or cure condition is proven that would justify a split or holdback. The doctrine yields a winner, not a compromise: the claimant is entitled to the entire corpus, immediately.", "allocation": { "claimant": 15000, "respondent": 0 }, "citations": [ { "title": "Rainy Sky SA & Orsd v Kookmin Bank [2011] UKSC 50", "url": "https://www.bailii.org/uk/cases/UKSC/2011/50.html", "proposition": "Where contractual language is capable of more than one meaning, the court adopts the construction most consistent with business common sense and the commercial purpose of the instrument, rejecting the less commercial alternative." }, { "title": "Arnold v Britton & Ors [2015] UKSC 36", "url": "https://www.bailii.org/uk/cases/UKSC/2015/36.html", "proposition": "The language of the provision is the primary source of meaning; commercial common sense should not undervalue the text, but where the language is genuinely ambiguous the court must choose between rival readings rather than insert words not present." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-010", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Payee", "type": "entity", "position": "The agreement defines the Additional Residential Payment as '23.4% of the price achieved for each Residential Unit in excess of the Minimum Guaranteed Residential Unit Value less the Costs and Incentives.' Conventional syntax applies 23.4% after subtracting the guaranteed value: 23.4% × (net sale proceeds − guaranteed value). On the agreed figures that produces £4,484,862. The clause should be enforced as written, so the disputed £3,587,811 balance should be released to me.", "evidence": [ "The agreement and the exact wording of the payment-formula definition", "The calculation 23.4% × (net sale proceeds − guaranteed value) = £4,484,862", "The record that the payer accepted the formula as drafted" ] }, "partyB": { "name": "Payer", "type": "entity", "position": "The same clause must be read as an additional upside payment: (23.4% × net sale proceeds) − the guaranteed value. The agreement already gives the payee the guaranteed land value, and the Additional Residential Payment was meant to arise only when 23.4% of net sales exceeded that guarantee. On the agreed figures the payment is £897,051, not £4,484,862. The payee has the £897,051 base amount outside this simulation; the disputed £3,587,811 balance should return to me.", "evidence": [ "The agreement and the exact wording of the payment-formula definition", "The calculation (23.4% × net sale proceeds) − guaranteed value = £897,051", "The agreement's separate guaranteed land-value payment", "The deal documents describing extra payment only if the project performed better than anticipated" ] }, "facts": "The payee already receives a separately calculated guaranteed land value. The disputed Additional Residential Payment was designed to share upside if residential sales outperformed expectations. Its definition reads: '23.4% of the price achieved for each Residential Unit in excess of the Minimum Guaranteed Residential Unit Value less the Costs and Incentives.' Under conventional syntax, 23.4% applies to the excess after subtracting the guarantee, yielding £4,484,862. Under the payer's reading, Costs and Incentives are first deducted from sale price, 23.4% is calculated, and the guaranteed value is then subtracted, yielding £897,051. Contemporaneous deal structure described an additional payment only if the project performed better than anticipated. The payee has the undisputed £897,051 outside this simulation; escrow holds only the £3,587,811 difference.", "governingLaw": "english_law", "amount": 3587811, "currency": "GBP" }, "reference": { "case": "Chartbrook Ltd v. Persimmon Homes Ltd", "citation": "[2009] UKHL 38", "court": "House of Lords", "source": "https://publications.parliament.uk/pa/ld200809/ldjudgmt/jd090701/chart-1.htm" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The clause defining the Additional Residential Payment is grammatically ambiguous. The phrase '23.4% of the price achieved for each Residential Unit in excess of the Minimum Guaranteed Residential Unit Value less the Costs and Incentives' does not, by syntax alone, resolve whether the 23.4% applies to the excess after subtracting the guarantee (the payee's reading) or whether 23.4% of the net sale price is calculated and the guarantee then subtracted (the payer's reading). As Lord Hoffmann observed in Chartbrook, 'the syntax helps one to decide whether C&I should be deducted before or after calculating the 23.4%' is itself a 'grammatical ambiguity which must be resolved by considering the business purpose.' The payee bears the burden of showing that the conventional-syntax reading is the one a reasonable person would have understood. It has not met that burden.\n\nThe commercial context resolves the ambiguity decisively. The payee already receives a separately calculated guaranteed land value. The defined terms 'Minimum Guaranteed Residential Unit Value' and 'Additional Residential Payment' connote contingency: a guaranteed minimum payment implies the possibility of a larger payment depending on some contingency, and an 'additional' payment arises only if that contingency occurs. On the payee's construction, the payment arises whenever a flat sells for more than the guaranteed land value — a threshold so low it eliminates the contingency entirely. As the background facts establish, and as the contemporaneous deal documents confirm, the payment was designed to share upside only if the project performed better than anticipated. The payer's reading gives full effect to that purpose: calculate 23.4% of net sale proceeds and subtract the guarantee; the payment arises only when 23.4% of sales exceeds the guarantee.\n\nThe guaranteed land value was derived from a careful estimate of current market prices and building costs, not from speculation about a catastrophic housing-market collapse. As Lord Hoffmann reasoned in Chartbrook, a figure so derived 'cannot have been meant to play the part in the calculation which [the payee's] construction assigns to it. It must have been intended to function as a minimum land value, not a minimum sale price.' The 23.4% figure represented the proportion of an expected sale price that would equal the guaranteed land value at the expected market level; this is only coherent on the payer's reading. The payee's construction makes the internal structure of the payment provisions appear arbitrary and irrational, when the payer's reading combines the concepts in a rational way. Under the principles in Chartbrook and the caution in Arnold v Britton that language must be given full weight but commercial context resolves genuine ambiguity, the payer's construction prevails. The payer's reading yields £897,051, which the payee already holds outside this escrow. The £3,587,811 in escrow represents the entire excess over the payer's reading and must be returned to the payer.", "allocation": { "claimant": 0, "respondent": 3587811 }, "citations": [ { "title": "Chartbrook Ltd v Persimmon Homes Ltd & Ors [2009] UKHL 38", "url": "https://www.bailii.org/uk/cases/UKHL/2009/38.html", "proposition": "Where a contractual definition is grammatically ambiguous, the court resolves the ambiguity by considering the business purpose and commercial context; the connotations of defined terms such as 'Minimum,' 'Guaranteed,' and 'Additional' can illuminate the parties' intended meaning, and an interpretation that makes the contract's structure appear arbitrary and irrational should yield to one that combines the concepts rationally." }, { "title": "Chartbrook Ltd v Persimmon Homes Ltd & Ors [2009] UKHL 38", "url": "https://www.bailii.org/uk/cases/UKHL/2009/38.html", "proposition": "A figure derived from careful estimates of current market prices and building costs cannot rationally function as a minimum sale price threshold for a catastrophic market collapse; it must have been intended to function as a minimum land value, which only makes sense on the payer's construction of the formula." }, { "title": "Arnold v Britton & Ors [2015] UKSC 36", "url": "https://www.bailii.org/uk/cases/UKSC/2015/36.html", "proposition": "While commercial common sense and surrounding circumstances are important factors in interpretation, they should not be invoked to undervalue the importance of the language used; however, where the language is genuinely ambiguous, the court considers what a reasonable person would have understood the parties to have meant in light of all relevant circumstances." }, { "title": "Arnold v Britton & Ors [2015] UKSC 36", "url": "https://www.bailii.org/uk/cases/UKSC/2015/36.html", "proposition": "The court should be very slow to reject the natural meaning of a provision simply because it appears imprudent, but where the language itself is ambiguous and two constructions are available, the court prefers the one consistent with business common sense and rejects the other." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-011", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Assignee", "type": "entity", "position": "Section 4 assigns to us 'each and every Third Party Claim.' Section 3(b) reserves: 'Any claim (whether sounding in rescission for undue influence or otherwise) ... in which you claim an abatement of sums which you would otherwise have to repay' to the building society. In the whole claim-form scheme, that reservation protects the investor's narrow rescission-related mortgage relief; the ordinary damages claim was assigned to us. The escrowed recovery belongs to the assignee.", "evidence": [ "The arrangement documents and the exact wording of the assignment/reservation clause", "The surrounding context and structure of the arrangement (the relevant background)", "The competing readings of the reserved-claims parenthetical", "Evidence that reading the reservation broadly would leave the assignment with little to operate on" ] }, "partyB": { "name": "Counterparty", "type": "entity", "position": "The reservation says 'Any claim' against the building society in which the investor claims an abatement of sums otherwise repayable, 'whether sounding in rescission for undue influence or otherwise.' Those natural words reserve every such mortgage-reduction claim, not merely rescission. Moving words outside their parenthesis to narrow the reservation rewrites the form. The damages claim remained with the investor, so the assignee cannot take the escrowed recovery.", "evidence": [ "The arrangement documents and the exact wording of the assignment/reservation clause", "The natural-meaning reading under which the broader category is reserved", "The counterparty's position that the words as written control" ] }, "facts": "After paying compensation, a scheme used a claim form that broadly assigned to it 'each and every Third Party Claim.' Section 3(b) nevertheless promised that specified claims against the building society would remain with the investor: 'Any claim (whether sounding in rescission for undue influence or otherwise) that you have or may have against the [building society] in which you claim an abatement of sums which you would otherwise have to repay to that Society in respect of sums borrowed ... in connection with the transaction and dealings giving rise to the claim.' The form's explanatory note said the scheme should be able to use rights against anyone else responsible for the compensated loss. The dispute is whether the parenthetical narrows the reservation to rescission-related relief, leaving damages assigned, or whether the natural grammar reserves every mortgage-reduction claim. Escrow holds the disputed recovery.", "governingLaw": "english_law", "amount": 5000, "currency": "USDC" }, "reference": { "case": "Investors Compensation Scheme Ltd v. West Bromwich Building Society", "citation": "[1998] 1 WLR 896", "court": "House of Lords", "source": "https://publications.parliament.uk/pa/ld199798/ldjudgmt/jd970619/invest01.htm" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The governing question is whether section 3(b)'s reservation of 'Any claim (whether sounding in rescission for undue influence or otherwise)' against the building society, 'in which you claim an abatement of sums which you would otherwise have to repay,' carved out all mortgage-reduction claims — including damages claims — or only abatement consequential upon rescission. Two readings are genuinely available from the text alone. Lord Lloyd's dissent demonstrates that the natural grammar supports the broad reading: 'any claim' is the antecedent, 'whether sounding in rescission for undue influence or otherwise' is an adjectival parenthesis that does not narrow 'any claim,' and 'abatement' simply means reduction — it has no technical resonance with rescission. On that reading, any claim in which the investor seeks to reduce the mortgage debt (including a damages claim deployed as set-off) is reserved.\n\nBut Lord Hoffmann, forming the majority with Lord Hope and Lord Clyde, reached the opposite conclusion. His reasoning moves through the text into the contextual and commercial background: (1) the explanatory note told investors they gave up all rights against anyone else, which would be misleading if the claim form reserved all building-society claims; (2) section 3(b) can be explained as a cautious clarification that the investor need not account to the scheme for any abatement obtained through rescission — a benefit that could never have formed part of the assigned chose in action because a rescission right is attached to the property and cannot be assigned separately; (3) no lawyer intending to reserve all building-society claims would have used a parenthesis about rescission or limited the reservation to claims for 'abatement' of sums outstanding; (4) splitting the investor's damages claim (assigning part, reserving part) would have been legally problematic as an attempted division of a single chose in action, whereas the majority's reading leaves the entire damages claim assigned and only the rescission-related abatement (which is not a chose in action) outside the assignment.\n\nAs a neutral arbiter applying English law, I am bound by the majority. The House of Lords decided by a 3-2 majority that the damages claim was validly assigned to the scheme and was not reserved to the investor. Lord Hoffmann's approach is not a purely textualist reading — he acknowledged the natural grammar favoured the broad reservation — but he used the contextual background, the structure of the form, and the legal nature of the rights (the assignability of a chose in action versus the non-assignability of a rescission right) to conclude that section 3(b) was a cautious but unnecessary clarification, not a comprehensive reservation of all building-society claims. That is the controlling interpretation.\n\nThe counterparty's position is forceful as a matter of pure syntax. But the majority's contextual analysis shows why the parties more likely intended the damages claim to pass to the scheme: the explanatory note said so, the commercial purpose of the scheme (recovering its outlay from solvent parties) demanded it, and the legal mechanics of assignment make the narrow reservation coherent while the broad one creates the very problem of 'dividing the indivisible' that the lower courts could not solve. The majority resolved that problem by holding the entire damages claim assigned and the rescission right (with its consequential abatement) retained — two separate rights, not a split of one.\n\nOn this record, the assignee (claimant) holds title to the damages claim. The escrowed recovery is the proceeds of that claim. The full corpus is released to the claimant. No split, holdback, or condition is warranted because the interpretive question, though close, produces a winner: the damages claim was assigned, not reserved.", "allocation": { "claimant": 5000, "respondent": 0 }, "citations": [ { "title": "[1997] UKHL 28", "url": "https://www.bailii.org/uk/cases/UKHL/1997/28.html", "proposition": "Section 3(b) of the ICS Claim Form reserved to the investor only the right to claim rescission of the mortgage and any abatement consequential upon rescission; it did not reserve the investor's claim to damages against the building society, which was validly assigned to ICS under paragraph 6 of section 4." }, { "title": "[1997] UKHL 28", "url": "https://www.bailii.org/uk/cases/UKHL/1997/28.html", "proposition": "Contractual interpretation involves ascertainment of the meaning the document would convey to a reasonable person with the background knowledge available to the parties; the background may show that parties used wrong words or syntax, and interpretation must yield to business commonsense where detailed semantic analysis would flout it." }, { "title": "[1997] UKHL 28", "url": "https://www.bailii.org/uk/cases/UKHL/1997/28.html", "proposition": "A right to rescission is not a chose in action and cannot be assigned separately from the mortgaged property; the possibility of an abatement upon rescission could never have formed part of the assigned chose in action, so section 3(b) was a clarification about accountability, not a reservation of assigned rights." }, { "title": "[1997] UKHL 28", "url": "https://www.bailii.org/uk/cases/UKHL/1997/28.html", "proposition": "Lord Lloyd dissented, holding that the natural meaning of section 3(b) reserved all claims against the building society in which the investor claimed an abatement of sums owed, not merely rescission-related claims; the parenthetical 'whether sounding in rescission for undue influence or otherwise' could not be relocated outside the brackets to narrow the reservation." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-012", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Booking Client", "type": "entity", "position": "We booked and paid an advance for a set of sessions that could only happen at one specific facility. Before the first session, that facility was destroyed by fire — no one's fault, but it is simply gone, and the sessions cannot go ahead. Since nothing can be delivered, the advance we paid should come back to us. We are not asking anyone to cover our wasted preparation; we just want the money we paid returned now that the engagement is impossible.", "evidence": [ "The booking agreement and the schedule of sessions tied to the one named facility", "Proof the facility was destroyed before the first session", "Proof neither party caused the destruction", "The record of the advance paid into escrow" ] }, "partyB": { "name": "Facility Provider", "type": "entity", "position": "The whole engagement rested on that one facility continuing to exist, and it was destroyed without any fault on my part. I could no more deliver the sessions than the client could attend them, so neither of us should be treated as having broken the deal. This is not a breach by anyone; performance became impossible. I accept that with nothing delivered I keep nothing, and each side should walk away bearing its own preparation costs.", "evidence": [ "The booking agreement naming the single facility as the venue", "Proof of the fire and the total loss of the facility", "Proof the destruction was outside the provider's control", "The provider's own preparation costs, which it does not seek to recover" ] }, "facts": "A client paid an advance into escrow for a set of sessions that could only take place at one specific, named facility. Before the first session, the facility was destroyed by fire through no fault of either party, and the sessions became impossible to hold. The client seeks return of its advance because nothing can be delivered; the provider accepts that neither side can perform and that neither should be treated as in breach. Neither party seeks to shift its own wasted preparation costs onto the other. The escrow simulation holds the advance.", "governingLaw": "english_law", "amount": 5000, "currency": "USDC" }, "reference": { "case": "Taylor v. Caldwell", "citation": "(1863) 3 B & S 826", "court": "Court of Queen's Bench", "source": "https://www.bailii.org/uk/cases/EngR/1863/822.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The engagement rested on a single named facility. Both parties' exhibits confirm the booking agreement tied all sessions to that facility, and both sides proved the facility was destroyed by fire before the first session. Neither party disputes fault; the claimant bore the burden on impossibility and lack of fault and met it through the exhibits, while the respondent independently confirmed the fire was outside its control. The governing terms made the facility's existence a condition of the engagement, not a descriptive detail. Its destruction did not breach the contract; it discharged both parties' primary obligations.\n\nWith impossibility established, the remedy is restitution. The decisive question is what value the provider's part performance actually conferred on the client. The record shows nothing: no sessions were held, no usable work product was transferred, and no transferable artifact was delivered. The respondent bore the burden on conferred value if it wished to retain any portion of the advance. It not only failed to meet that burden but expressly conceded that with nothing delivered it keeps nothing. The respondent's own preparation costs (Exhibit R-4) are not recoverable here because the respondent does not seek to shift them onto the claimant and, more fundamentally, wasted preparation that confers no value on the client does not justify withholding an advance.\n\nThe claimant pleaded return of the advance. The respondent pleaded a walk-away discharge. Both prayers are satisfied by returning the full escrow corpus to the claimant: the contract is discharged, neither side is in breach, each bears its own wasted preparation costs, and the advance is restored because no consideration was received. There is no proven partial defect, no divisible performance, and no conferred value to apportion. The doctrine yields a clean, full refund—not a manufactured split. The 5,000 USDC held in escrow is allocated entirely to the claimant.", "allocation": { "claimant": 5000, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-013", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Engagement Provider", "type": "human", "position": "The client engaged my slot and paid a deposit, with the balance due on the day. My slot was available exactly as promised — nothing stopped the client from using it. The written booking does not tie the balance to any particular event, so the balance is simply owed. If the client's reason for booking fell through, that is the client's risk, not mine, and I should be paid the outstanding balance.", "evidence": [ "The booking terms setting the deposit and the balance due on the day", "Proof the provider's slot remained available and usable throughout", "The written terms, which do not tie the balance to any external event", "The record of the 2500 USDC deposit already paid and the 5000 USDC unpaid balance" ] }, "partyB": { "name": "Booking Client", "type": "human", "position": "Both of us knew the entire point of the booking was one specific outside event, even though the paperwork did not spell it out — it was advertised and understood for exactly that. When the event was called off, the whole reason for the booking vanished, and the slot itself was worthless to me without it. I should not owe the balance for a booking whose only purpose was destroyed, and I am not pressing to claw back the deposit I already paid.", "evidence": [ "The advertising and surrounding correspondence showing the booking was for the one event", "Proof the external event was cancelled", "Proof both sides understood the event was the sole purpose of the booking", "The 2500 USDC deposit paid and the 5000 USDC balance the client declines to pay" ] }, "facts": "A client booked a provider's slot for a purpose both sides understood to be one specific external event, advertised and discussed but not written into the booking terms; the client paid a deposit with the balance due on the day. The external event was cancelled, though the provider's slot remained physically available and usable. The client refused the balance and did not press to recover the deposit; the provider says the slot was delivered as promised and the balance is due. The parties expressly agreed the engagement is governed by English law, under which a contract is discharged for frustration of purpose where a state of things both sides treated as the foundation of the deal ceases to exist, even if the subject remains usable, but is not discharged where the lost event was only one of several purposes. The escrow simulation holds the full booking price (deposit plus balance).", "governingLaw": "english_law", "amount": 7500, "currency": "USDC" }, "reference": { "case": "Krell v. Henry", "citation": "[1903] 2 KB 740", "court": "Court of Appeal of England and Wales", "source": "https://www.bailii.org/ew/cases/EWCA/Civ/1903/1.html" }, "expectedOutcome": "split", "systemDecision": { "outcome": "split", "reasoning": "The decisive question is whether the cancellation of the external event discharges the booking contract for frustration of purpose. Under English law, as articulated in the governing record, frustration of purpose occurs where a state of things that both parties treated as the foundation of the contract ceases to exist, even if the subject matter remains usable. This is the mirror-image of impossibility: the provider can still perform (the slot is available), but the performance is no longer of any use to the client for the purpose both parties intended.\n\nThe respondent carried the burden of proving that the sole shared purpose of the booking was the specific external event. Exhibits R-1 (advertising and surrounding correspondence) and R-3 (proof both sides understood the event was the sole purpose) meet this burden on a preponderance standard. The background facts confirm the event was 'advertised and discussed' as the purpose. The claimant did not meet its responsive burden of proving the booking had multiple purposes — no evidence suggests an alternative purpose for which the client could still use the slot. This is not the cab-driver hypothetical from the governing authority, where the provider is indifferent to the purpose; here, both parties shared the purpose, making this closer to the 'room with a view' in Krell v Henry.\n\nThe cancellation rendered the slot worthless to the client. This is not merely a bad bargain or a price that looks too high in hindsight — the entire reason for the contract vanished. The provider cannot collect the balance because the contract is discharged prospectively from the date of the frustrating event. Under restitutionary principles applied to frustrated contracts, money paid before the frustrating event (the 2,500 USDC deposit) is treated as covering the value of part performance (the slot was made available and usable up to that point, conferring some value), while obligations that would have fallen due after the frustrating event (the 5,000 USDC balance, due on the day) are discharged and never become owing.\n\nThe deposit retention is not a windfall; it reflects the reality that the provider incurred costs and maintained availability of the slot before the event was cancelled, and the client received the benefit of that availability during the booking period. The balance, by contrast, represents the price for performance (use of the slot for the event) that was never received and, due to frustration, will never be received. Allocating the deposit to the provider and the balance to the client is the restitutionary arithmetic the doctrine yields.\n\nThe provider's argument that the written terms do not tie the balance to any event is addressed by the background rule: frustration of purpose operates regardless of whether the contract's written terms explicitly condition payment on the event. The doctrine fills the gap the parties' written terms left. The multi-factorial approach confirms the result: the terms were silent, the matrix of fact shows a shared purpose, the supervening event (cancellation) was unforeseeable and beyond control, and the consequence is a radical transformation of the contractual adventure.", "allocation": { "claimant": 2500, "respondent": 5000 }, "citations": [ { "title": "Canary Wharf (BP4) T1 Ltd & Ors v European Medicines Agency [2019] EWHC 335 (Ch)", "url": "https://www.bailii.org/ew/cases/EWHC/Ch/2019/335.html", "proposition": "English law recognises frustration of purpose where a supervening event destroys the common purpose both parties shared, even if the subject matter remains physically usable; this is distinct from cases where the lost event was merely one of several purposes. The coronation cases (Krell v Henry and Herne Bay Steam Boat Co v Hutton) illustrate that where the parties' common purpose was predicated on a specific event, cancellation of that event frustrates the contract, but where the event was merely one factor in a venture that remained possible, there is no frustration." }, { "title": "Canary Wharf (BP4) T1 Ltd & Ors v European Medicines Agency [2019] EWHC 335 (Ch)", "url": "https://www.bailii.org/ew/cases/EWHC/Ch/2019/335.html", "proposition": "The multi-factorial approach requires consideration of the terms of the contract, its matrix or context, the parties' knowledge, expectations and contemplations as to risk at the time of contracting, the nature of the supervening event, and whether performance has been rendered radically different. A frustrating event must take place without blame or fault on the side of the party seeking to rely on it." }, { "title": "Canary Wharf (BP4) T1 Ltd & Ors v European Medicines Agency [2019] EWHC 335 (Ch)", "url": "https://www.bailii.org/ew/cases/EWHC/Ch/2019/335.html", "proposition": "Frustration brings the contract to an end forthwith, without more and automatically; it does not require an act by the parties. The doctrine must not be lightly invoked and must be kept within narrow limits, but where the common purpose is destroyed, the contract is discharged prospectively." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-014", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Delivery Provider", "type": "entity", "position": "After we took on the job, an external disruption closed the usual route and forced us onto a far longer, much more expensive path to complete the delivery. We still delivered, but at a substantial extra cost we never anticipated. That disruption made the intended performance commercially impracticable, so we should be paid the extra we billed for the longer path on top of the agreed price. We set the surcharge aside in escrow while this is resolved.", "evidence": [ "The engagement terms, which did not specify any particular route or method", "Proof of the external disruption that closed the usual path", "The mileage and cost difference between the usual and the alternative path", "The invoice for the disputed surcharge, now escrowed" ] }, "partyB": { "name": "Commissioning Client", "type": "entity", "position": "The route was never a term of our deal, and a workable alternative path existed — the provider used it and completed the job. Performance became more expensive, not impossible, and a job that is merely costlier to perform is still the job the provider agreed to do. The provider took on the risk of a more roundabout path when it agreed a fixed price without protecting itself, so no surcharge is owed and the escrowed amount should come back to us.", "evidence": [ "The engagement terms fixing the price with no route or method specified", "Proof that an alternative path existed and the delivery was in fact completed", "Evidence the added expense, though real, was a cost increase rather than a barrier to performance", "The absence of any clause allocating disruption risk to the client" ] }, "facts": "A provider agreed a fixed price to complete a delivery-and-logistics engagement whose terms specified no particular route or method. After the engagement was made, an external disruption closed the customary path; the provider completed the job by a substantially longer and more expensive alternative and then billed a surcharge for the added cost, which the client placed in escrow pending resolution. The provider contends the disruption made the intended performance commercially impracticable; the client contends the route was not a term, a workable alternative existed, and mere added expense does not excuse or entitle the provider to more. The governing question is whether an unforeseen but merely cost-increasing event entitles the provider to extra compensation. The escrow simulation holds the disputed surcharge.", "governingLaw": "Governing law stipulation: United States federal contract law governs this dispute.", "amount": 15000, "currency": "USDC" }, "reference": { "case": "Transatlantic Financing Corp. v. United States", "citation": "363 F.2d 312 (D.C. Cir. 1966)", "court": "United States Court of Appeals for the District of Columbia Circuit", "source": "https://law.justia.com/cases/federal/appellate-courts/F2/363/312/264117/" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The decisive question is whether the provider met its burden to show that the external disruption excused its fixed-price obligation or entitled it to additional compensation. It did not.\n\nThe governing terms are sparse but dispositive. The engagement fixed a price and deliberately specified no particular route or method. That silence means route selection was left to the provider's discretion, and the corollary is that route-selection risk — including the risk that an unforeseen event forces a costlier path — fell on the provider. Both parties' exhibits agree the terms fixed the price and named no route (Exhibits C-1, R-1). No clause allocates disruption risk to the client or conditions additional payment on a cost-increasing event (Exhibit R-4). The provider thus bore the risk it now asks the client to absorb.\n\nThe provider's claim rises or falls on commercial impracticability. The record establishes the factual prerequisites of disruption and added cost (Exhibits C-2, C-3), but those facts are necessary, not sufficient. Commercial impracticability requires more than expense; it requires extreme and unreasonable difficulty — a showing that performance was genuinely outside the provider's practical capacity, not merely costlier than expected. The record here proves the opposite: an alternative path existed, the provider used it, and the delivery was completed (Exhibits R-2, R-3). A job that was actually finished by a workable alternative was not impracticable in any meaningful sense.\n\nThe provider bore the burden of proving impracticability, and the gap in its proof is fatal. Exhibit C-3 documents a mileage and cost difference, but the record contains no benchmark, threshold, or comparator from which a decision-maker could find the increase was so extreme as to render performance commercially impracticable rather than merely unprofitable. The discipline that binds this proceeding forbids inventing a trade custom or technical threshold not in the record; the consequence is that the burden remains unmet. The provider has shown a real cost increase; it has not shown the kind of extreme and unreasonable difficulty that the doctrine requires. The provider's own completion of the delivery via the alternative route is the most powerful evidence against its impracticability claim — one cannot have been unable to perform and yet have performed.\n\nThe respondent, by contrast, met its burden on its counterclaim. It proved an alternative existed and the delivery was completed (Exhibit R-2), and it showed the added expense was a cost increase rather than a barrier (Exhibit R-3). Combined with the absence of any risk-allocation clause (Exhibit R-4), these facts establish that the provider had no contractual or doctrinal entitlement to the surcharge. The full escrowed amount therefore reverts to the client.\n\nThis is not a case for a graded or apportioned remedy. The provider conferred the very thing it promised — a completed delivery at a fixed price — and the only disputed item is whether it may keep additional money on top. Because the provider proved no entitlement to any portion of the surcharge, the doctrine yields a clean winner, not a split. Allocating a fraction of the corpus to the provider would hedge toward a compromise the law does not command.", "allocation": { "claimant": 0, "respondent": 15000 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-015", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Purchasing Buyer", "type": "human", "position": "We struck a binding deal at an agreed price for a specific asset, and I am entitled to what I bought. The seller now says the asset turned out to be worth far more than either of us thought and wants to back out. But a later discovery that a thing is more valuable than expected is just a change in value — it is the risk every buyer takes and every seller takes. The bargain was made; the seller should honour it, and the value at stake should come to me.", "evidence": [ "The sale terms and the agreed price", "Proof the price was set at the low, ordinary rate both sides used at the time", "Proof both sides shared the same assumption about the asset when they dealt", "The realized value of the asset, now held pending this decision" ] }, "partyB": { "name": "Selling Owner", "type": "human", "position": "Both of us priced this deal on a shared belief about what the asset fundamentally was, and that belief was simply wrong — what it actually is is a different kind of thing altogether, not the thing we both thought we were trading. That is not a quibble about value; it goes to the very substance of what the deal was about. When both sides contracted on a mistaken assumption that basic, the sale should be undone, and the asset, or its value, should stay with me.", "evidence": [ "The sale terms and the low price set to match the assumed low-grade nature of the asset", "The large gap between the assumed-nature price and the asset's true value", "Proof both sides believed, at the time of sale, the asset was of the lesser nature", "Proof the asset was in fact of a fundamentally different, far more valuable nature" ] }, "facts": "A buyer and seller agreed to sell a specific asset at a low price both set on a shared belief about the asset's fundamental nature. Before the deal completed, the asset proved to be a fundamentally different and far more valuable thing than both had supposed. The seller seeks to undo the sale, contending the shared error went to the very substance of the thing; the buyer contends the error was merely one of value or quality, which does not permit escaping a concluded bargain. The parties stipulated that their dealing is governed by the classic US common-law approach to mistake, under which a mutual mistake going to the very nature or substance of the thing sold permits the sale to be rescinded, while a mistake merely as to the thing's value, attributes, or quality does not. The escrow simulation holds the realized value of the disputed asset.", "governingLaw": "Governing law stipulation: Michigan contract law governs this dispute.", "amount": 12000, "currency": "USDC" }, "reference": { "case": "Sherwood v. Walker", "citation": "66 Mich. 568, 33 N.W. 919 (1887)", "court": "Michigan Supreme Court", "source": "https://law.marquette.edu/assets/prospective-students/pdf/Sherwood%20v%20Walker_Edited.pdf" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The parties stipulated to the classic common-law approach to mutual mistake, and they agree on the operative distinction: a mutual mistake going to the very nature or substance of the thing sold permits rescission, while a mistake merely as to value, attributes, or quality does not. The dispositive question is therefore whether the shared error here went to what kind of thing the asset was — its identity or fundamental nature — or merely to what that thing was worth.\n\nThe respondent carried the burden on each element of mutual-mistake rescission. The record establishes, through the neutral background facts and the corroborating exhibits of both sides (R-1 through R-4 and C-1 through C-3), that both parties priced the asset at a low rate because they shared the same assumption: that the asset was of a lesser, ordinary nature. That assumption was not a difference of opinion about price; it was a shared belief about what fundamental kind of thing was being sold. The asset then proved to be a fundamentally different and far more valuable thing. The claimant's own exhibits confirm that both sides shared the same assumption at the time and that the price tracked the assumed low-grade nature. The claimant does not dispute the mutuality of the mistake or that the asset's true nature differed from what both supposed; the claimant's argument is that the difference is one of value.\n\nThe claimant bore the burden of proving that this was a mere value discovery — that the asset was the same kind of thing the parties thought they were trading, just worth more. That burden is not met. The record does not show that the parties got the same thing they bargained for and merely underpriced it; it shows they were both wrong about what the thing fundamentally was. A mistake about the basic nature or identity of the subject matter is not reducible to a mistake about value. The large gap between the assumed-nature price and the true value is consistent evidence that the parties were not pricing the same kind of thing differently but were pricing a different thing altogether. The claimant's argument — that discovering greater value is the ordinary risk of a bargain — is forceful when the thing bought turns out to be the thing contracted for, only worth more. It does not answer the case where the thing bought is not the thing contracted for at all. Here, the shared error went to the substance of what was traded.\n\nRescission is the doctrinal remedy for mutual mistake of this kind, and the parties' stipulation makes it available without the need for a showing of fault. Neither party had superior knowledge; neither induced the other's mistake. The absence of fault does not defeat rescission — it supports it, because rescission for mutual mistake rests on the shared fundamental error, not on wrongdoing. The remedy is to undo the sale and restore the parties to their pre-contract positions. The buyer paid a low price reflecting the assumed lesser nature; that price is returned in substance by releasing the asset's value back to the seller. The escrow holds the realized value of the asset, totaling 12000 USDC, and the full corpus follows the asset to the seller. No partial or graded allocation is warranted: the mistake went to the whole subject matter of the sale, not to a divisible component, so rescission is entire and the full corpus is returned to the respondent.", "allocation": { "claimant": 0, "respondent": 12000 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-016", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Paying Company", "type": "entity", "position": "We paid a large sum to buy our way out of an arrangement, on the shared understanding that a payoff was the only way to end it. We have since discovered that the other side had already given us grounds to end the arrangement for nothing — so we paid a fortune for something we could have had for free. Both of us contracted on a false assumption that went to the root of the deal, so the settlement should be undone and our money returned from escrow.", "evidence": [ "The buyout agreement and the sum paid to end the arrangement", "Proof of the earlier conduct that would have let the company end the arrangement at no cost", "Proof the company would not have paid had it known", "The characterisation of what the payment was actually for" ] }, "partyB": { "name": "Paid Counterparty", "type": "entity", "position": "The buyout delivered exactly what it was for: the arrangement was ended, which is precisely what the company paid to achieve. Whatever the company now says it could have done differently is about the value or wisdom of its bargain, not about the identity of what it bought. The payment bought a real, delivered result, and a shared misjudgement about whether the company got a good deal is no reason to unwind it. The escrowed sum should be released to me.", "evidence": [ "The buyout agreement and proof the arrangement was in fact ended", "Evidence the company received precisely the discharge it paid for", "The counterparty's position that the subject of the deal was delivered in full" ] }, "facts": "A company paid a large sum to buy its way out of an ongoing arrangement, both sides assuming a payoff was the only route to end it. The company later discovered earlier conduct by the counterparty that would have let it end the arrangement at no cost, and now seeks to rescind the buyout and recover the payment, contending both sides shared a false assumption fundamental to the deal. The counterparty contends the buyout delivered exactly what was bargained for — the discharge of the arrangement — so any mistake goes to the value of the bargain, not the identity of its subject. The parties expressly agreed the arrangement is governed by English law, under which a common mistake voids a contract only where it goes to the existence or essential identity of the subject matter, such that the actual subject is essentially different from what both parties supposed — a deliberately high threshold. The escrow simulation holds the disputed buyout sum.", "governingLaw": "english_law", "amount": 30000, "currency": "USDC" }, "reference": { "case": "Bell v. Lever Brothers Ltd", "citation": "[1932] AC 161", "court": "House of Lords", "source": "https://www.bailii.org/uk/cases/UKHL/1931/2.html" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The claimant's case is textbook Bell v Lever Brothers territory. Lord Atkin's formulation is unequivocal: a common mistake as to quality avoids a contract only where it makes \"the thing without the quality essentially different from the thing as it was believed to be.\" His own examples are dispositive here. A buyer who pays the price of a sound horse, believing it to be sound, has no remedy when it proves unsound — even though he would never have bought it had he known. A buyer who purchases a picture believed to be an old master, paying a high price, has no remedy when it proves a modern copy. In both cases the mistake goes to value, not to identity. The claimant's position is structurally identical: it paid for termination of the arrangement and received termination of the arrangement. The subject matter was delivered; it is not in dispute. What the claimant now says is that it could have obtained the same result without paying — a complaint about the price or wisdom of the bargain, not about the essential nature of what was contracted for.\n\nThe Court of Appeal in Great Peace Shipping confirmed and sharpened this analysis. It distilled the common-law doctrine of mistake into elements that require, critically, that the non-existence of the assumed state of affairs render performance of the contract impossible — not merely less valuable or less prudent. In Great Peace itself, the vessels were 410 miles apart when both parties assumed roughly 35; the court held that even this substantial discrepancy did not render the contractual adventure impossible or the services essentially different, because the Great Peace could still perform the escort function, albeit after a longer delay. Here, the claimant does not even contend that performance was impossible — the arrangement was actually terminated. The subject matter existed and was delivered.\n\nThe claimant also cannot invoke equitable rescission as a fallback. Great Peace Shipping held, after exhaustive analysis of Solle v Butcher and the line of cases following it, that no separate equitable jurisdiction exists to rescind a contract on the ground of common mistake where the contract is valid at common law. The court found it \"impossible to reconcile Solle v Butcher with Bell v Lever Brothers\" and held that the equitable jurisdiction asserted by Denning LJ \"has not developed\" — it produced confusion, not a coherent doctrine. The claimant bears the burden of proving that the mistake renders the subject matter essentially different, or that an equitable power to rescind exists. It has met neither burden. The respondent, by contrast, has proven delivery of the contracted-for discharge. The contract is valid and enforceable; the respondent is entitled to the escrowed sum.\n\nLord Atkin's reasoning in Bell v Lever Brothers is directly on point: \"The party paying for release gets exactly what he bargains for. It seems immaterial that he could have got the same result in another way, or that if he had known the true facts he would not have entered into the bargain.\" That sentence could have been written for this case. The claimant got exactly what it paid for — termination of the arrangement. That it could have achieved the same result without payment is immaterial under the controlling doctrine. The remedy follows: the full corpus is released to the respondent.", "allocation": { "claimant": 0, "respondent": 30000 }, "citations": [ { "title": "Great Peace Shipping Ltd. v Tsavliris (International) Ltd [2002] EWCA Civ 1407", "url": "https://www.bailii.org/ew/cases/EWCA/Civ/2002/1407.html", "proposition": "A common mistake does not void a contract unless it renders the subject matter essentially different from what the parties believed it to be; a mistake going merely to the value or wisdom of the bargain is insufficient. Lord Atkin's examples of the unsound horse and the modern copy illustrate that a mistake about quality or value, even if it was the actuating motive for the contract, does not avoid it." }, { "title": "Great Peace Shipping Ltd. v Tsavliris (International) Ltd [2002] EWCA Civ 1407", "url": "https://www.bailii.org/ew/cases/EWCA/Civ/2002/1407.html", "proposition": "There is no separate equitable jurisdiction to rescind a contract on the ground of common mistake where the contract is valid and enforceable at common law. The jurisdiction asserted in Solle v Butcher cannot stand with Bell v Lever Brothers and is not good law." }, { "title": "Great Peace Shipping Ltd. v Tsavliris (International) Ltd [2002] EWCA Civ 1407", "url": "https://www.bailii.org/ew/cases/EWCA/Civ/2002/1407.html", "proposition": "The common-law doctrine of common mistake requires, among other elements, that the non-existence of the assumed state of affairs render performance of the contract impossible — not merely less valuable or less prudent. Where the subject matter exists and is delivered, the doctrine has no application." }, { "title": "Great Peace Shipping Ltd. v Tsavliris (International) Ltd [2002] EWCA Civ 1407", "url": "https://www.bailii.org/ew/cases/EWCA/Civ/2002/1407.html", "proposition": "Where a party pays for release from a contract and gets exactly that release, it is immaterial that the party could have obtained the same result in another way, or that it would not have entered the bargain had it known the true facts. Lord Atkin's analysis of Bell v Lever Brothers directly addresses this scenario." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-017", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Engaging Client", "type": "entity", "position": "The provider delivered late, and because of that delay our whole operation was stalled and we lost a large amount of downstream profit. That loss flowed directly from the provider's breach, so the provider should answer for it. We are holding the provider's fee and we say the provider owes us far more than that fee for the losses its delay caused us.", "evidence": [ "The engagement terms and the modest fee for the work", "Proof the provider delivered later than agreed", "Proof the client's operation was stalled and lost substantial downstream profit", "The record of the fee the client is withholding" ] }, "partyB": { "name": "Service Provider", "type": "human", "position": "I was never told that a delay would stall the client's entire operation — nothing in what we agreed put me on notice of any special downstream exposure like that. Ordinary late delivery does not usually cause that kind of loss, and I had no reason to foresee it or to price for it. I cannot be liable for extraordinary losses that were never in either of our contemplation. I performed the work and I am owed my fee; the escrow should release to me.", "evidence": [ "The engagement terms and the fee, with no mention of any special downstream exposure", "Proof the client never communicated that a delay would stall its whole operation", "Evidence that ordinary delay of this kind does not usually cause such a loss", "The completed work for which the fee is owed" ] }, "facts": "A provider completed work for a modest fee but delivered later than agreed. The client's operation was stalled by the delay and lost substantial downstream profit; the client withheld the escrowed fee and asserts the provider owes far more for that loss. It is not disputed that the client never told the provider a delay would stall its whole operation, and that ordinary delay of this kind does not usually cause such a loss. The governing question is how far a breaching party is liable for consequential losses: recoverable losses are those arising naturally in the ordinary course of things from the breach, or those reasonably supposed to have been in both parties' contemplation because special circumstances were communicated at the time of contracting. The escrow simulation holds the provider's fee.", "governingLaw": "english_law", "amount": 8000, "currency": "USDC" }, "reference": { "case": "Hadley v. Baxendale", "citation": "(1854) 9 Exch. 341", "court": "Court of Exchequer", "source": "https://www.bailii.org/uk/cases/EngR/1854/296.pdf" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The provider conceded late delivery, and the client proved a causal link between that delay and the downstream loss. Those factual predicates are established on a preponderance. But causation alone does not fix liability. Under the English-law remoteness principle governing this dispute, a breaching party answers only for losses of the kind that arise naturally in the ordinary course of things from the breach, or for losses of the kind that both parties reasonably had in contemplation at the time of contracting because special circumstances had been communicated. The record is clear on both limbs and both point against the client.\n\nFirst limb: ordinary course. It is undisputed that the kind of loss the client suffered — a stalled whole operation generating substantial downstream profit loss — does not usually flow from late delivery of the service the provider was engaged to perform. The client bore the burden of proving that this loss was the natural and probable consequence of the breach. It offered no evidence that this was ordinary; the record, including the background facts, says the opposite. The first limb is not met.\n\nSecond limb: contemplation via communicated special circumstances. It is undisputed that the client never told the provider, at or before contracting, that a delay would stall its whole operation or expose it to special downstream loss. The engagement terms contain no mention of any special exposure (Exhibit R-1, Exhibit C-1). The client therefore cannot bring its loss within the second limb. The loss was extraordinary and outside the provider's reasonable contemplation. The client had the burden on foreseeability and did not carry it.\n\nThe downstream loss is accordingly too remote to be charged to the provider. The client's claim to hold the fee and charge the provider for that loss fails. That does not erase the breach: the provider was late. But the work was completed and delivered, the fee was for completed services, and no proven, non-remote loss has been set against it. The record supplies no ordinary-course loss figure proved against the provider — the client pleaded only the large downstream profit loss, which is excluded in full by the remoteness rule. With no admissible loss to offset, the earned fee is released to the provider.\n\nThe claimant's pleaded relief (hold the fee and charge the provider for the downstream loss) is denied. The respondent's counterclaim (release the fee; the undisclosed special loss was not foreseeable and is too remote to charge) is granted. The 8,000 USDC corpus is released to the provider. This is not a split: the remoteness doctrine yields a winner. The provider takes the fee it earned.", "allocation": { "claimant": 0, "respondent": 8000 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-018", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Expanding Client", "type": "entity", "position": "The provider knew we needed this delivered promptly to use straight away in our business, and it arrived months late. That delay cost us the ordinary extra business we could have taken on, and it also cost us the profit on an especially lucrative engagement we could not fulfil without it. The provider knew we wanted it for immediate business use, so both kinds of lost profit flow from its delay and both should be recoverable.", "evidence": [ "The supply terms and proof of the months-long delay", "The provider's knowledge that the item was for immediate use in the client's business", "Proof of the ordinary business profit lost during the delay, calculated at 4000 USDC", "Proof of the specially lucrative engagement the client could not fulfil" ] }, "partyB": { "name": "Supplying Provider", "type": "entity", "position": "I accept that a late delivery could be expected to cost the client some ordinary business profit, and I will answer for that foreseeable loss. But I was never told about the exceptional, especially lucrative engagement the client now points to — that was not something I knew or could have known when we dealt. I should not have to pay for an extraordinary loss that was never in my contemplation. My exposure is limited to the ordinary loss a supplier in my position could foresee.", "evidence": [ "The supply terms and the provider's general knowledge of the client's trade", "Proof the provider knew the item was for immediate business use", "Proof the provider did not know of the special, especially lucrative engagement", "Evidence distinguishing the 4000 USDC ordinary trade-profit loss from the far larger exceptional special loss" ] }, "facts": "A provider supplied an item months late, knowing the client wanted it for immediate use in its business. The delay caused two kinds of loss: the ordinary extra business profit the client could have taken on with the added capacity, and the profit on an especially lucrative engagement the client could not fulfil without the item. The provider knew the item was for immediate business use but did not know of the specific especially lucrative engagement. The client claims both categories; the provider accepts the ordinary loss but denies the special one. Recoverable loss is that reasonably foreseeable as liable to result given what the provider knew or should have known: ordinary trade-profit loss is in, but a distinct especially lucrative opportunity is recoverable only with knowledge the provider lacked. The escrow simulation holds the provider's fee, against which the client's proven losses are set.", "governingLaw": "english_law", "amount": 10000, "currency": "USDC" }, "reference": { "case": "Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd", "citation": "[1949] 2 KB 528", "court": "Court of Appeal of England and Wales", "source": "https://www.bailii.org/ew/cases/EWCA/Civ/1949/2.html" }, "expectedOutcome": "split", "systemDecision": { "outcome": "split", "reasoning": "The provider's late delivery is admitted breach. The decisive question is the scope of recoverable loss. Under the foreseeability principle that governs remoteness of damage, a breaching party is liable for losses that arise naturally from the breach — the kind of loss a reasonable person in the provider's position would have contemplated as the probable result — but not for exceptional losses arising from special circumstances of which the provider had no notice.\n\nThe ordinary trade-profit loss meets the foreseeability test. The provider knew the item was wanted for immediate business use; a delay would naturally cause the client to lose the extra trade profit it could have earned with the item during the delay. That loss flows directly from the known purpose of the supply and is the paradigm of naturally arising damage. The 4000 USDC figure is stated in Exhibit C-3 and corroborated by Exhibit R-4, which distinguishes the ordinary 4000 USDC trade-profit loss from the far larger special loss. The claimant bore the burden of proving the quantum of ordinary loss and met it: the figure is uncontroverted and supported by both parties' evidence.\n\nThe special lucrative engagement fails on remoteness. The background facts establish, and the respondent's Exhibit R-3 confirms, that the provider had no knowledge of the exceptional engagement at the time of contracting. A distinct, especially lucrative opportunity is not the kind of loss that arises naturally from late delivery of a business item; it depends on special circumstances particular to the client. Without notice of those circumstances, the provider could not contemplate such a loss, and fairness as well as doctrine hold it outside the recoverable scope. The claimant bore the burden of proving that the special loss was within the provider's contemplation and failed to do so — no exhibit shows the provider was told of the engagement, and the neutral background facts state the opposite. Additionally, the claimant did not quantify the special loss to a precise figure in the record, so even if it were foreseeable, the quantum would be unproven.\n\nThe escrow holds 10000 USDC representing the provider's fee. The proven recoverable loss is 4000 USDC. The claimant is entitled to that amount from the corpus; the balance of 6000 USDC returns to the provider. No splitting of the difference is involved: the foreseeability cap is a doctrinal limit that yields a specific number from the record. The 4000 USDC is the exact figure both parties' exhibits place on the ordinary loss, and it is the full measure of provable, recoverable damage.", "allocation": { "claimant": 4000, "respondent": 6000 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-019", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Charging Supplier", "type": "entity", "position": "Our agreement set a fixed charge for each breach of the terms, and we called it exactly what it is: an agreed measure of damages, not a threat. The harm from these breaches is real but scattered and genuinely hard to pin down to a number on any single instance, which is precisely why a fixed pre-agreed figure makes sense. The other side breached, so the fixed charge per breach is owed as agreed, and the escrow should release to us.", "evidence": [ "The agreement and the fixed-per-breach clause, labelled as agreed damages", "Proof of the breaches that triggered the charge", "Evidence the harm from these breaches is real but diffuse and hard to quantify per instance", "The relationship between the fixed figure and the interest the clause protects" ] }, "partyB": { "name": "Charged Retailer", "type": "entity", "position": "The fixed charge is wildly out of proportion to the trivial loss from any single breach. On one isolated instance the actual harm is tiny, yet the clause demands the same large fixed sum regardless. That is not an honest attempt to measure loss — it is a figure set high to frighten me into compliance, which makes it an unenforceable penalty. I should not have to pay it, and the escrow should return to me.", "evidence": [ "The agreement and the fixed-per-breach figure", "Evidence that the actual loss on a single breach is small and variable", "The gap between the fixed figure and any provable per-instance loss", "The absence of a per-instance loss calculation behind the fixed figure" ] }, "facts": "A supplier and a retailer agreed a fixed charge for each breach of the terms, expressly labelled as agreed damages rather than a penalty. The retailer breached, and the supplier claims the fixed charge per breach. The harm from such breaches is real but diffuse and genuinely difficult to quantify on any single instance; the retailer contends the fixed figure is extravagant relative to the trivial loss on one sale and is therefore an unenforceable penalty. The parties expressly agreed the contract is governed by English law as it stood under the classic penalty test, under which a stipulated sum is an unenforceable penalty if extravagant and unconscionable compared with the greatest conceivable loss, but is valid agreed damages where precise pre-estimation is nearly impossible and the sum is a reasonable attempt at it. The escrow simulation holds the charged sum.", "governingLaw": "english_law", "amount": 5000, "currency": "USDC" }, "reference": { "case": "Dunlop Pneumatic Tyre Co Ltd v. New Garage & Motor Co Ltd", "citation": "[1915] AC 79", "court": "House of Lords", "source": "https://www.bailii.org/uk/cases/UKHL/1914/1.html" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The parties agreed that English law governs under the classic penalty test. Under that test, as articulated in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 and restated in Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67, a stipulated sum is an unenforceable penalty if it is extravagant and unconscionable in comparison with the greatest loss that could conceivably be proved to follow from the breach. Conversely, it is no obstacle to the sum being valid agreed damages that precise pre-estimation is nearly impossible; on the contrary, that is precisely the situation where a pre-agreed figure is most likely to represent the parties' genuine bargain.\n\nThe retailer bore the burden of proving that the fixed charge is a penalty. That burden required the retailer to show not merely that the actual loss on one isolated breach is small, but that the fixed figure is out of all proportion to the greatest conceivable loss from a single breach and to the supplier's legitimate interest in performance. The retailer's evidence (Exhibits R-2, R-3, R-4) establishes only the former: on one instance, the direct loss is trivial. But Lord Atkinson's reasoning in Dunlop, approved in Cavendish at paras 23-24 and 32, makes clear that the court must look beyond the immediate monetary loss on the particular transaction constituting the breach. The relevant question is whether the innocent party had a legitimate interest in performance extending beyond the recovery of direct compensation for that isolated act, and whether the agreed sum is incommensurate with that interest. Where the harm is diffuse—scattered across a trading system, cumulative, and genuinely resistant to per-instance quantification—a fixed charge calibrated to protect against the systemic risk is not penal merely because one breach causes little identifiable immediate loss.\n\nThe supplier's evidence (Exhibits C-3, C-4) shows that the harm from these breaches is real but diffuse and hard to quantify on any single instance, and that the fixed figure relates to the interest the clause protects. This evidence is uncontradicted. The retailer offered no comparable-charge evidence, no market benchmark, no trade-custom data, and no analysis of the greatest conceivable loss that might render the figure extravagant. The absence of such evidence is dispositive under the burden analysis: the retailer had the burden and did not meet it. The charge was expressly labelled as agreed damages, and while labels are not conclusive, the labelling combined with the genuine difficulty of pre-estimation and the uncontradicted evidence of diffuse harm confirms that this is a reasonable attempt to fix damages, not a figure set in terrorem.\n\nUnder the modern restatement in Cavendish at para 32, the true test is whether the impugned provision imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in enforcement of the primary obligation. The retailer did not prove disproportionality to that degree. The charge stands as enforceable agreed damages, and the escrow corpus is released to the supplier.", "allocation": { "claimant": 5000, "respondent": 0 }, "citations": [ { "title": "Cavendish Square Holding BV v Talal El Makdessi (Rev 3) [2015] UKSC 67", "url": "https://www.bailii.org/uk/cases/UKSC/2015/67.html", "proposition": "A stipulated sum is an unenforceable penalty if extravagant and unconscionable compared with the greatest conceivable loss from the breach; it is no obstacle to validity that precise pre-estimation is nearly impossible, as that is precisely when a pre-agreed figure is most likely to be a genuine bargain (Lord Dunedin's tests in Dunlop, cited and restated in Cavendish)." }, { "title": "Cavendish Square Holding BV v Talal El Makdessi (Rev 3) [2015] UKSC 67", "url": "https://www.bailii.org/uk/cases/UKSC/2015/67.html", "proposition": "The court must look beyond the direct monetary loss on the particular transaction constituting the breach to the innocent party's wider legitimate interest in performance, including protection of a trading system against diffuse and cumulative harm; a fixed sum is not incommensurate merely because one isolated breach causes little immediate loss (Lord Atkinson's reasoning in Dunlop, approved in Cavendish at paras 23-24)." }, { "title": "Cavendish Square Holding BV v Talal El Makdessi (Rev 3) [2015] UKSC 67", "url": "https://www.bailii.org/uk/cases/UKSC/2015/67.html", "proposition": "The true test is whether the provision imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in enforcement of the primary obligation; the innocent party can have a legitimate interest extending beyond pecuniary compensation for the particular breach (Cavendish, para 32)." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-020", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Forfeiting Party", "type": "human", "position": "The clause strips me of a large sum the moment I breach, far more than any actual loss the other side suffers. A charge that big, imposed to punish a breach rather than to compensate for it, is a penalty and should not be enforced. Losing this amount is out of all proportion to what my breach cost them, so the forfeited sum should be returned to me from escrow.", "evidence": [ "The agreement and the forfeiture/clawback clause", "Proof of the breach that triggered the clause", "The gap between the forfeited sum and the innocent party's provable compensatory loss", "The severity of the forfeiture relative to the breach" ] }, "partyB": { "name": "Enforcing Party", "type": "human", "position": "This clause protects a real, legitimate interest of mine that goes beyond simply being compensated for a loss — it safeguards the value and integrity of the whole arrangement, which is exactly what I bargained for. The parties negotiated it with open eyes, and it is not out of proportion to the interest it protects. It is not a punishment; it is a proportionate protection of a legitimate interest, so it should be enforced and the escrow released to me.", "evidence": [ "The agreement and the negotiated forfeiture/clawback clause", "The transaction valuation showing that protected customer goodwill and non-solicitation obligations formed a material part of the agreed price", "Negotiation records showing both capable parties had professional advice and revised the clause before signing", "Customer-contact records showing the breach directly engaged the protected goodwill rather than a collateral obligation", "A benchmark valuation stipulation that the 9,000 forfeiture is within the documented value range of the goodwill exposed by the breach" ] }, "facts": "An agreement transferring a customer-facing business contained a negotiated forfeiture/clawback clause tied to customer non-solicitation obligations. The price allocation and contemporaneous valuation materials identify protected goodwill as a material part of the bargain. Both capable parties had professional advice and revised the clause before signing. The breaching party later contacted customers in a way that directly engaged that protected goodwill. Although the enforcing party cannot reduce every consequence to compensatory loss, the parties stipulate for this benchmark that the 9,000 forfeiture falls within the documented value range of the goodwill exposed by the breach. The breaching party nevertheless contends the clause is punitive and disproportionate. The parties expressly agreed the contract is governed by English law under the modern penalty doctrine, under which a clause is a penalty only if it imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in enforcement of the primary obligation, legitimate interests may extend beyond compensation, and courts should not be astute to find penalties in negotiated deals between capable parties. The escrow simulation holds the forfeited sum.", "governingLaw": "english_law", "amount": 9000, "currency": "USDC" }, "reference": { "case": "Cavendish Square Holding BV v. Makdessi; ParkingEye Ltd v. Beavis", "citation": "[2015] UKSC 67", "court": "Supreme Court of the United Kingdom", "source": "https://www.supremecourt.uk/cases/uksc-2013-0280" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive question is whether the forfeiture clause is an unenforceable penalty under the modern English doctrine reformulated in Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67. Under that doctrine, a provision is penal only if it imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in enforcement of the primary obligation. Critically, the legitimate interest is not confined to compensatory loss; it may extend to protecting the value of goodwill, maintaining the integrity of a trading system, or matching the price of a business to its value. This follows directly from Lord Neuberger and Lord Sumption's formulation of the true test and from Lord Hodge's restatement that the correct test is whether the stipulated consequence of breach is exorbitant or unconscionable when measured against the innocent party's interest in performance.\n\nThe respondent bore the burden of showing that it has a legitimate interest extending beyond compensation. That burden is met. The record establishes that the transaction was for a customer-facing business, that goodwill formed a material part of the price, and that the non-solicitation clause was designed to protect that goodwill. The claimant's breach—contacting customers in a way that directly engaged the protected goodwill—struck at the heart of the interest the clause was meant to protect. This is not a case where the forfeiture is triggered by a trivial or collateral breach unconnected to the protected interest. As Lord Atkinson observed in Dunlop, the object of such a clause is to prevent the disorganization of a trading system; the consequential injuries cannot be measured by the direct loss on a particular transaction. Similarly, in Cavendish itself, the Supreme Court upheld price adjustment clauses that had no relationship to the measure of loss attributable to the breach because the legitimate interest was in matching price to value and protecting goodwill.\n\nThe claimant bore the burden of showing that the 9,000 USDC forfeiture is out of all proportion to the respondent's legitimate interest. That burden is not met. The parties stipulated that the 9,000 falls within the documented value range of the goodwill exposed by the breach. The claimant argues only that the forfeiture exceeds provable compensatory loss, but under the modern doctrine that is not the test. The claimant produced no evidence that the forfeiture was exorbitant or unconscionable relative to the goodwill interest protected. The clause was negotiated between capable parties with professional advice and revised before signing; as Lord Woolf observed in Philips Hong Kong, the court has to be careful not to set too stringent a standard, and what the parties agreed should normally be upheld. Lord Hodge similarly stressed that the criterion of exorbitance should prevent enforcement of only egregious provisions, and that the parties are allowed a generous margin.\n\nThe character of the breach reinforces the conclusion. The claimant wilfully breached a prohibition—a non faciendo obligation—directly engaging the protected goodwill. Lord Neaves noted in Forrest & Barr that a wilful breach of a prohibition is an unfavourable case for restriction. The forfeiture is not a punishment; it is a price adjustment mechanism reflecting the reduced value of the bargain when the seller undermines the very goodwill for which part of the price was paid. There is no basis to reduce, modify, or apportion the forfeiture. The full corpus is released to the respondent.", "allocation": { "claimant": 0, "respondent": 9000 }, "citations": [ { "title": "Cavendish Square Holding BV v Talal El Makdessi (Rev 3) [2015] UKSC 67", "url": "https://www.bailii.org/uk/cases/UKSC/2015/67.html", "proposition": "The true test for a penalty is whether the impugned provision is a secondary obligation imposing a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in enforcement of the primary obligation; the innocent party's legitimate interest is not confined to compensatory loss and may extend to protecting goodwill and matching price to value." }, { "title": "Cavendish Square Holding BV v Talal El Makdessi (Rev 3) [2015] UKSC 67", "url": "https://www.bailii.org/uk/cases/UKSC/2015/67.html", "proposition": "In a negotiated contract between properly advised parties of comparable bargaining power, the strong initial presumption is that the parties themselves are the best judges of what is legitimate in a provision dealing with the consequences of breach, and the court should not be astute to find penalties." }, { "title": "Cavendish Square Holding BV v Talal El Makdessi (Rev 3) [2015] UKSC 67", "url": "https://www.bailii.org/uk/cases/UKSC/2015/67.html", "proposition": "The correct test is whether the sum or remedy stipulated as a consequence of breach is exorbitant or unconscionable when regard is had to the innocent party's interest in the performance of the contract; exorbitance or unconscionability are strong words and the criterion should prevent enforcement of only egregious provisions." }, { "title": "Cavendish Square Holding BV v Talal El Makdessi (Rev 3) [2015] UKSC 67", "url": "https://www.bailii.org/uk/cases/UKSC/2015/67.html", "proposition": "Where a breach directly engages the protected interest (such as goodwill in a customer-facing business), the fact that the forfeiture bears no relationship to compensatory loss does not make it penal; the question is whether the provision serves a legitimate commercial function beyond punishment, such as matching price to the value of the bargain." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-021", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Committed Provider", "type": "entity", "position": "To take this job I had to invest in dedicated capacity, so I insisted on a minimum-volume guarantee: if the client shipped less than the minimum, I could invoice the full contract price on the shortfall, less only what it would have cost me to handle it. The client fell far short of the minimum, so the formula amount is owed. This was a bargained-for protection of my investment, and the escrow should release the shortfall charge to me.", "evidence": [ "The contract, the minimum-volume guarantee, and the shortfall formula", "Proof of the dedicated capacity investment made to serve the deal", "Proof the client shipped far below the minimum", "The formula calculation producing the charge claimed" ] }, "partyB": { "name": "Shortfall Client", "type": "entity", "position": "The formula always hands the provider far more than it actually loses. It awards nearly the whole price on volume that was never handled, while sparing the provider the cost of ever doing that work — so the provider comes out ahead of where full performance would have left it, in every shortfall scenario. That is not compensation; it is a penalty. The provider should be limited to its real, provable loss, and the rest of the escrow should come back to us.", "evidence": [ "The contract and the shortfall formula", "Proof that the formula awards nearly the full price while sparing the provider its performance cost", "Ledger evidence the provider's provable actual loss is 9000 USDC, well below the formula figure", "The comparison between the formula figure and the provider's provable 9000 USDC actual loss" ] }, "facts": "A provider invested in dedicated capacity to serve a minimum-commitment deal and secured a shortfall formula: if the client committed less than the minimum, the provider could invoice the full contract price on the shortfall, less only the cost it would have incurred to perform that shortfall. The client fell far below the minimum, and the provider demands the formula amount. The client contends the formula systematically over-recovers — awarding nearly the full price while sparing the provider its performance cost — so it exceeds any actual loss in every scenario and is an unenforceable penalty. The parties stipulated that their deal is governed by the US rule under which a stipulated-damages clause is valid only if it is a reasonable pre-breach estimate of likely damages where actual damages are hard to measure, and is void as a penalty to the extent it awards more than the innocent party's actual loss, with recovery then capped at that actual loss. The escrow simulation holds the disputed shortfall charge.", "governingLaw": "Governing law stipulation: Illinois contract law governs this dispute.", "amount": 24000, "currency": "USDC" }, "reference": { "case": "Lake River Corp. v. Carborundum Co.", "citation": "769 F.2d 1284 (7th Cir. 1985)", "court": "United States Court of Appeals for the Seventh Circuit", "source": "https://law.justia.com/cases/federal/appellate-courts/F2/769/1284/197163/" }, "expectedOutcome": "split", "systemDecision": { "outcome": "split", "reasoning": "The threshold question is whether the shortfall formula is a valid liquidated-damages provision or an unenforceable penalty. The parties stipulated to the governing rule: a stipulated-damages clause is valid only if it is a reasonable pre-breach estimate of likely damages where actual damages are hard to measure, and is void as a penalty to the extent it awards more than the innocent party's actual loss, with recovery then capped at that actual loss. This rule supplies the entire analytical framework; no external authority is needed.\n\nThe formula's structure is the decisive evidence. It awards the provider the full contract price on shortfall volume — revenue the provider would have earned had the client fully performed — while deducting only the cost the provider would have incurred to perform that shortfall. This means the provider receives revenue-equivalent compensation without bearing the costs that earning that revenue would have required. In every shortfall scenario, the provider recovers more than it would have netted under full performance, because full performance would have required it to bear performance costs (labor, materials, operations) that the formula spares it entirely. The formula thus does not compensate for lost profit; it awards a sum greater than lost profit in every scenario. The respondent met its burden (Exhibits R-2, R-3, R-4) by showing this structural over-recovery and by proving a concrete actual-loss figure of 9,000 USDC against which the formula's 24,000 USDC can be measured.\n\nThe claimant bore the burden of showing the formula was a reasonable pre-breach estimate of likely damages. It did not meet that burden. The claimant argued that the formula was bargained-for and protected its dedicated-capacity investment (Exhibits C-1, C-2), but it submitted no evidence quantifying what loss it anticipated at contracting, no evidence that actual damages would be difficult to estimate, and no evidence that the formula was calibrated to a realistic loss projection. A clause that systematically awards more than full performance would have yielded is not a reasonable estimate of likely damages — it is, by construction, an overestimate. The claimant also did not challenge the respondent's 9,000 USDC actual-loss figure or offer its own higher quantification. The proven actual loss is therefore 9,000 USDC.\n\nUnder the stipulated rule, recovery is capped at actual loss once the formula is shown to exceed it. The formula amount of 24,000 USDC exceeds the 9,000 USDC actual loss by 15,000 USDC. The provider is entitled to 9,000 USDC as compensation for its proven loss. The remaining 15,000 USDC — the excess representing the penalty portion — returns to the client. This is not a compromise between the parties' demands; it is the arithmetic the stipulated rule commands. The formula is partially enforceable up to actual loss and void as a penalty beyond that point.\n\nThe claimant's argument that the formula was bargained-for does not save it. The stipulated rule makes bargain irrelevant to the penalty inquiry: even a negotiated clause is void as a penalty to the extent it over-recovers. The claimant's capacity-investment evidence (Exhibit C-2) explains why it sought protection but does not establish that the formula's level was a reasonable estimate of anticipated loss. The respondent's evidence that the formula structurally over-recovers (Exhibit R-2) is unrebutted on the reasonableness question, and the ledger evidence of 9,000 USDC actual loss (Exhibits R-3, R-4) is unrebutted on quantum.\n\nThe remedy is a proportional allocation, not a holdback. The penalty portion is identified, the actual loss is proven, and there is no cure condition or future contingency to monitor. The 9,000 USDC releases to the provider immediately; the 15,000 USDC returns to the client immediately.", "allocation": { "claimant": 9000, "respondent": 15000 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-022", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Owed Payee", "type": "human", "position": "The other side already owed me the underlying sum — that was never in doubt. When we agreed a schedule for paying it off, the payer gave me nothing new in return for my saying I would drop the add-on; they simply promised to pay, over time, money they already owed me. A promise to give up part of what I am owed, backed by nothing fresh, does not bind me. The add-on is still due, and the escrow should release it to me.", "evidence": [ "Proof of the underlying debt already owed before any arrangement", "The instalment arrangement for paying off that existing debt", "Proof the payer gave nothing new beyond paying the sum already owed", "The accrued add-on the payee now claims" ] }, "partyB": { "name": "Paying Debtor", "type": "human", "position": "We made a clear arrangement: I would pay down what I owed on a set schedule, and in return the add-on would be dropped. I held up my end and paid exactly as agreed. The payee got the certainty and the steady payments it wanted, and it should be held to the deal it made. Having taken the benefit of the arrangement, the payee cannot now turn around and demand the very add-on it agreed to waive.", "evidence": [ "The arrangement under which the add-on would be waived in exchange for scheduled payment", "Proof the debtor paid down the underlying sum as agreed", "The payee's acceptance of the scheduled payments", "The benefit of certain, scheduled payment the payee obtained" ] }, "facts": "A payee was owed an underlying sum. The parties agreed the payer would pay that sum by instalments and the payee would waive an add-on (accrued interest/fee) that the underlying obligation carried. The payer paid the underlying sum as agreed; the payee then claimed the waived add-on. The payer contends the arrangement bound the payee; the payee contends the payer gave nothing new — only payment of money already owed — so the promise to waive is unsupported. The parties expressly agreed the arrangement is governed by English law under the strict pre-existing-duty rule, under which payment or part payment of a sum already owed provides no fresh consideration, so a creditor's promise to forgo part of the debt is not binding without something extra moving from the debtor. The escrow simulation holds the disputed add-on.", "governingLaw": "english_law", "amount": 2000, "currency": "USDC" }, "reference": { "case": "Foakes v. Beer", "citation": "(1884) 9 App. Cas. 605", "court": "House of Lords", "source": "https://www.bailii.org/uk/cases/UKHL/1884/1.html" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The dispositive question is whether the claimant's promise to waive the add-on is legally binding. The parties expressly agreed English law governs, including the strict pre-existing-duty rule. Under that rule, as authoritatively stated in Foakes v Beer, payment by a debtor of part of a sum already due is not consideration for the creditor's promise to remit the residue. Lord Selborne held that the debtor 'was under that antecedent obligation' and that payment of sums 'could not be a consideration for the relinquishment of interest.' Lord Fitzgerald agreed: 'there is not any sufficient legal consideration for the relinquishment of the debt for interest.' Lord Blackburn observed that every judge who had addressed the proposition recognised that payment of part of a liquidated demand 'is payment only in part, because it is not one bargain, but two; viz. payment of part, and an agreement without consideration to give up the residue.' The doctrine traces to Pinnel's Case: 'payment of a lesser sum on the day in satisfaction of a greater cannot be any satisfaction for the whole.'\n\nThe respondent bore the burden of proving fresh consideration for the waiver. The record shows what the respondent provided: payment of the underlying sum on a schedule. That is precisely the performance of a pre-existing duty. The respondent cites the benefit of certainty and steady payments, the claimant's acceptance of the arrangement, and the claimant's having taken the benefit of scheduled payments. None of these is a collateral benefit of the kind the law requires. Lord Selborne distinguished 'some independent benefit, actual or contingent, of a kind which might in law be a good and valuable consideration' from the creditor's practical advantage in getting money sooner — the latter does not suffice. The claimant's acceptance of payments is only acceptance of what was already owed; it is not a new benefit moving from the debtor.\n\nThe respondent has not pleaded promissory estoppel or equitable estoppel. The record contains no deed under seal, no composition with other creditors, no negotiable instrument or other security, and no collateral advantage. Lord Blackburn noted that the recognised exceptions — giving negotiable paper, providing a new security, or composition among creditors — all involve 'some new consideration for a new agreement, distinct from mere money payments in or towards discharge of the original liability.' None of those facts exist here. The burden was the respondent's to produce such a fact, and it was not met.\n\nThe respondent's equitable argument — that the claimant took the benefit of the arrangement and should be held to its waiver — is a waiver-or-estoppel theory. But the respondent pleaded enforcement of the waiver as a binding agreement, not estoppel. The strict pre-existing-duty rule operates as a rule of law: the promise is nudum pactum regardless of the practical benefit the creditor derived. Lord Blackburn recognised that the rule may work hardship — he called it 'a mistake' in origin — but he and the majority deferred to settled law. This arbiter applies that law as the parties agreed. The waiver is unenforceable.\n\nAccordingly, the add-on was never effectively released. The claimant is entitled to the full escrow corpus representing the add-on. The respondent paid the underlying principal in full; that obligation is discharged. But the add-on remains due because the promise to waive it was unsupported by consideration.", "allocation": { "claimant": 2000, "respondent": 0 }, "citations": [ { "title": "Foakes v Beer [1884] UKHL 1", "url": "https://www.bailii.org/uk/cases/UKHL/1884/1.html", "proposition": "Payment by a debtor of a sum already due is not fresh consideration for a creditor's promise to remit the residue of the debt; the promise is nudum pactum and unenforceable unless supported by a deed, a composition among creditors, or some collateral benefit distinct from mere payment of the original obligation." }, { "title": "Foakes v Beer [1884] UKHL 1", "url": "https://www.bailii.org/uk/cases/UKHL/1884/1.html", "proposition": "Practical benefit to a creditor from receiving prompt or scheduled payment of part of a debt is not the kind of independent, collateral benefit that supplies fresh consideration; the law requires some new consideration distinct from discharge of the original liability." }, { "title": "Foakes v Beer [1884] UKHL 1", "url": "https://www.bailii.org/uk/cases/UKHL/1884/1.html", "proposition": "The doctrine that payment of a lesser sum cannot satisfy a greater derives from Pinnel's Case and has been accepted as part of the law of England for nearly three centuries; the House of Lords declined to overrule it, affirming that the pre-existing-duty rule remains binding." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-023", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Continuing Provider", "type": "human", "position": "I ran into trouble partway through the job, and the payer — worried about its own deadline exposure — promised me extra money per unit to keep going and finish on time. I carried on and completed more of the work relying on that promise. The payer got a real benefit from it: it kept its project on track and avoided the cost and delay of finding someone else. I did not pressure anyone; the offer was theirs. The promised extra is owed, and the escrow should release it to me.", "evidence": [ "The original subcontract and the later per-unit top-up promise", "Proof the provider continued and completed further work after the promise", "Proof the payer faced its own deadline penalty it avoided by keeping the provider going", "Evidence the top-up was offered by the payer, not extracted by threat" ] }, "partyB": { "name": "Promising Payer", "type": "entity", "position": "The provider was already contractually bound to do exactly this work for the original price. Finishing the job it had already promised to do is not something new, so my promise of extra money got me nothing I was not already entitled to, and a promise to pay more for the same existing obligation is unenforceable. Whatever convenience I gained does not change that the provider gave no fresh consideration, so the top-up is not owed and the escrow should return to me.", "evidence": [ "The original subcontract binding the provider to the same work", "The provider's pre-existing obligation to complete that work", "The payer's position that no new consideration moved from the provider" ] }, "facts": "A provider, bound under an existing subcontract to complete work for a set price, ran into trouble partway through. The payer, exposed to its own late-completion penalty, promised the provider an extra per-unit sum to keep going and finish on time; the provider completed further work relying on the promise and was paid only part of it. The payer contends the provider was already bound to do the work, so the promise lacked fresh consideration; the provider contends the payer obtained a real practical benefit (avoiding its penalty and the cost of finding a replacement) and that the promise was not procured by coercion. The parties expressly agreed the contract is governed by English law under the practical-benefit doctrine, under which a promise of more to secure completion of the other's existing obligation is supported by consideration where the promisor obtains a real practical benefit or avoids a disbenefit, provided the promise was not procured by duress or fraud. The escrow simulation holds the disputed top-up.", "governingLaw": "english_law", "amount": 4600, "currency": "USDC" }, "reference": { "case": "Williams v. Roffey Bros & Nicholls (Contractors) Ltd", "citation": "[1991] 1 QB 1", "court": "Court of Appeal of England and Wales", "source": "https://www.bailii.org/ew/cases/EWCA/Civ/1989/5.html" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The dispositive question is whether the payer's top-up promise is supported by consideration under the governing terms the parties themselves agreed to. Those terms are explicit: a promise of more to secure completion of the other's existing obligation is supported by consideration where the promisor obtains a real practical benefit or avoids a disbenefit, provided the promise was not procured by duress or fraud. This is not a case where the court must speculate about the consideration framework — the parties defined it.\n\nThe claimant bears the burden of proving that the payer obtained a real practical benefit. The record sustains this burden. The payer was exposed to its own late-completion penalty (Exhibit C-3), and by keeping the provider on the job it avoided both that penalty and the cost and delay of sourcing a replacement (Exhibit C-3, claimant's statement). The respondent does not dispute these facts; its case rests on the legal proposition that performance of an existing obligation can never constitute consideration, which is directly contradicted by the governing terms the parties agreed to. Under those terms, the practical benefit the payer received — penalty avoidance and continuity of performance — is precisely the species of benefit that supports the promise.\n\nThe respondent bears the burden of proving that the promise was procured by duress or fraud, which would defeat the claimant's recovery even under the practical-benefit doctrine. The record contains no evidence of coercion. Exhibit C-4, asserting the top-up was offered by the payer rather than extracted by threat, is unrebutted. The respondent's own statement does not allege duress; it argues only lack of consideration. The respondent has therefore failed to meet its burden on the element that would defeat the claim.\n\nThe respondent's counterclaim rests on the classical proposition that performing what one is already bound to do cannot be consideration. Whatever the force of that proposition under the narrower orthodox doctrine, the parties expressly agreed to the practical-benefit framework, which recognises that a real practical benefit or avoided disbenefit can supply consideration even where the promisor's counterparty performs an existing duty. The governing terms control. The respondent has not identified any provision making the practical-benefit doctrine inapplicable, has not proven duress or fraud, and does not dispute that the provider completed the further work the promise was designed to secure. The respondent's counterclaim therefore fails on the merits.\n\nOn remedy, the full escrow corpus represents the unpaid balance of the promised top-up. The payer received the full practical benefit it bargained for — on-time continuation and penalty avoidance — and the provider completed the further work in reliance. There is no proven partial defect, no divisible performance, and no condition precedent to the top-up that remains unsatisfied. The doctrine yields a winner, not a split. The full corpus is released to the claimant immediately.\n\nThe exhibits are party-asserted text of unverified reliability, and I have weighed them accordingly. None of the key findings depends on a single exhibit alone; the practical benefit is corroborated by the respondent's own failure to dispute the penalty exposure or the provider's continued performance, and the absence of duress is corroborated by the respondent's own silence on coercion. The burdens have been resolved on the record as a whole, not on any unverified item taken at face value.", "allocation": { "claimant": 4600, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-024", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Demanding Provider", "type": "human", "position": "Partway through the engagement I stopped and told the client I would not continue unless the pay was raised. The client agreed in writing to the higher amount, and a deal is a deal — the client should honour what it signed. I finished the work, and the higher pay it promised me should now be released from escrow.", "evidence": [ "The original engagement terms and the agreed original pay", "The later written agreement to the higher pay", "Proof the provider completed the work after the higher pay was promised" ] }, "partyB": { "name": "Pressured Client", "type": "entity", "position": "The provider was already bound to do exactly this work for the pay we originally agreed. Halfway through, in a spot where I had no way to bring in anyone else in time, the provider refused to go on unless I promised more — and gave me nothing new in return, just the same work already owed. I only agreed because I was cornered. A raise squeezed out of me under that pressure, with nothing new offered for it, is not binding. Only the original pay is owed, and the extra should return to me.", "evidence": [ "The original engagement terms binding the provider to the same work", "Proof the provider refused to continue unless the pay was raised", "Proof the client had no practical way to substitute another provider in time", "Evidence nothing new moved from the provider in exchange for the raise" ] }, "facts": "A provider bound under an existing engagement to perform for an agreed pay halted partway through and refused to continue unless the pay was raised, at a point where the client had no practical means of substituting another provider in time. The client agreed in writing to the higher pay, then refused it once the work was done, paying only the original amount. The provider gave nothing new in exchange for the raise beyond the work it was already obligated to perform. The parties stipulated that the engagement is governed by the US rule under which a promise to pay more for performing an existing contractual duty, with nothing new given in return, lacks consideration and is not binding, especially where the promise was extracted under economic pressure that left the other side no reasonable alternative. The escrow simulation holds the disputed increase.", "governingLaw": "Governing law stipulation: United States federal contract law governs this dispute.", "amount": 10000, "currency": "USDC" }, "reference": { "case": "Alaska Packers' Association v. Domenico", "citation": "117 F. 99 (9th Cir. 1902)", "court": "United States Court of Appeals for the Ninth Circuit", "source": "https://opencasebook.org/casebooks/16700-contracts-2026/as-printable-html/8/" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive question is whether the provider's promise to accept higher pay is supported by consideration. Under the parties' stipulated governing rule, a promise to pay more for performing an existing contractual duty, with nothing new given in return, lacks consideration and is not binding. The provider bore the burden of proving that its promise to pay more was supported by fresh consideration. The record shows — and the provider does not meaningfully dispute — that the provider gave nothing new in exchange for the raise. It completed the same work it was already contractually obligated to perform under the original engagement. Performance of a pre-existing duty is not consideration. The provider therefore failed to meet its burden.\n\nThe respondent's counterclaim requires proof of three facts: that the provider halted and refused to continue unless the pay was raised, that the client had no practical means of substituting another provider in time, and that nothing new moved from the provider. Exhibits R-1 through R-4, though party-asserted and unverified, are consistent with the neutral background facts and unrebutted in any material particular. The claimant's own statement of case confirms that it stopped and told the client it would not continue unless the pay was raised, and that it gave nothing new beyond the work already owed. The respondent met its burden on each element by a preponderance, and the uncontroverted record establishes that the client agreed to the higher pay only because it was cornered — with no reasonable alternative — not because it received anything of value in return.\n\nThe absence of consideration alone defeats the provider's claim. The economic duress finding independently confirms that the written agreement to the higher pay was not a voluntary, enforceable bargain. The original engagement remains the governing obligation; the provider completed the work it was already bound to perform, and the client paid the original pay. The increase was extracted without consideration and under pressure, so it is not owed. The full disputed amount held in escrow — 10,000 USDC — returns to the client.", "allocation": { "claimant": 0, "respondent": 10000 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-025", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Near-Compliant Party", "type": "human", "position": "The deal turned on getting a third party's approval and giving written notice of it by a set date. I did get the approval — the substance of what the condition was about was satisfied — and the written notice followed only a little late. Everyone got what the condition was really for. It would be unfair to treat the whole deal as dead over a short delay in the paperwork when the real requirement, the approval itself, was met. The escrow should be released to me.", "evidence": [ "The agreement and its express written-notice-by-deadline requirement", "Proof the underlying approval was in fact obtained", "Proof the written notice followed only shortly after the deadline", "Evidence the substance the condition protected was achieved" ] }, "partyB": { "name": "Strict-Compliance Party", "type": "entity", "position": "The agreement said in plain terms that it would be void unless written notice of the approval was delivered by the deadline. That was an express condition, not a loose target, and it was not met on time — the notice came well after the date. An express condition like this has to be met to the letter; coming close is not enough, and there is no doctrine of near-enough here. Because the condition failed, the deal never took effect, and the escrowed funds should return to me.", "evidence": [ "The agreement and the express void-if-not-met written-notice condition", "The fixed deadline for delivering the written notice", "Proof the written notice was delivered after the deadline", "The absence of any waiver, prevention, or excuse for the late notice" ] }, "facts": "Two parties set a payment/effectiveness turning on an express condition: the claimant had to obtain a third party's approval and deliver written notice of that approval by a fixed deadline, and the agreement was to be void if the condition was not met on time. The claimant obtained the approval in substance but delivered the required written notice after the deadline. The claimant contends it substantially complied because the approval was obtained; the counterparty contends the express condition was not literally met on time, so the duty never accrued. The parties expressly agreed the agreement is governed by New York law, under which express conditions must be performed to the letter — in contrast to constructive conditions arising from promises, which allow substantial compliance — so nonoccurrence of the express condition prevents the duty from arising, absent waiver, estoppel, prevention, or a narrow forfeiture exception (none present here). The escrow simulation holds the funds tied to the conditional deal.", "governingLaw": "new_york_law", "amount": 10000, "currency": "USDC" }, "reference": { "case": "Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co.", "citation": "86 N.Y.2d 685 (1995)", "court": "New York Court of Appeals", "source": "https://www.law.cornell.edu/nyctap/I95_0258.htm" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The governing agreement made the deal's effectiveness turn on an express condition: the claimant had to obtain a third party's approval and deliver written notice of that approval by a fixed deadline, and the agreement stated it would be void if the condition was not met on time. This is not a constructive condition implied from a promise — it is an express condition that the parties themselves set as a gate to the duty to perform. Under New York law, express conditions must be literally performed; substantial performance does not suffice, and failure to strictly comply generally means the condition is unsatisfied and the duty never arises.\n\nThe claimant obtained the underlying approval — the substance the condition was about — but delivered the written notice after the deadline. The claimant argues that because the approval itself was obtained, everyone got what the condition was really for, and a short delay in paperwork should not void the deal. That argument is precisely the argument New York law rejects for express conditions. The doctrine draws a firm line: constructive conditions arising from promises may be satisfied by substantial performance, but express conditions set by the parties must be met to the letter. The claimant's framing would collapse that distinction and convert an express condition into a constructive one. The controlling text — void unless written notice is delivered by the deadline — controls.\n\nThe claimant bore the burden of proving any basis to excuse strict compliance: waiver, estoppel, prevention, or frustration by the respondent. The record contains no evidence of any of these. There is no indication the respondent waived the deadline — a waiver requires a clear manifestation of intent, and none appears. There is no indication the respondent prevented or hindered the claimant from delivering the notice on time. There is no indication of estoppel. The background facts confirm that none of these exceptions is present. The Gates v Gates decision reinforces this framework: express conditions precedent must be literally performed, substantial performance does not suffice, and the party asserting waiver or frustration must produce a triable issue — conclusory assertions are insufficient. Here, the claimant's argument is essentially a conclusory plea for equity, not evidence of waiver, prevention, or excuse.\n\nBecause the express condition was not literally satisfied — the written notice came after the deadline — the duty to perform under the agreement never arose. The deal did not take effect. The escrow funds, tied to the conditional deal, must be returned to the respondent. This is not a punishment for a short delay; it is the consequence the parties themselves wrote into their agreement: void if the condition was not met on time. The claimant's substantial-compliance argument has no traction against an express condition under New York law, and no exception has been proven.", "allocation": { "claimant": 0, "respondent": 10000 }, "citations": [ { "title": "Gates v Gates (2026 NY Slip Op 01184)", "url": "https://www.nycourts.gov/reporter/3dseries/2026/2026_01184.htm", "proposition": "Under New York law, express conditions precedent must be literally performed; substantial performance will not suffice, and failure to strictly comply with such provisions generally constitutes waiver of a claim. This distinguishes express conditions from constructive conditions arising from promises, which may allow substantial compliance." }, { "title": "Gates v Gates (2026 NY Slip Op 01184)", "url": "https://www.nycourts.gov/reporter/3dseries/2026/2026_01184.htm", "proposition": "A waiver is not presumed and must be based upon a clear manifestation of intent; conclusory affidavits that a party frustrated compliance are insufficient to raise a triable issue absent concrete evidence." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-026", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Ordering Buyer", "type": "human", "position": "I placed an order at the price the seller had listed, and a listed price is an offer I am entitled to accept. I did not have certain knowledge that it was a mistake — the seller put the number up, not me. A valid order was formed at that price, and the seller should honour it. The value I stood to gain from that order should come to me.", "evidence": [ "The listing at the stated price and the order placed against it", "The order records", "The buyer's position that no certain knowledge of any error existed" ] }, "partyB": { "name": "Mistaken Seller", "type": "entity", "position": "The listed price was an obvious error — a tiny fraction of the item's real, widely known price — and the buyer plainly knew it. The buyer ordered in huge, rapid bulk far beyond any normal purchase, checked the true price elsewhere, and compared notes with others about the startling number before pouncing. Someone who seizes on a mistake they know is a mistake cannot hold me to it. The order should be treated as void and the value should stay with me.", "evidence": [ "The listing at the erroneous price versus the item's true, widely advertised price", "The order records showing large, rapid bulk orders far beyond normal quantities", "The buyer's communications and pre-order checks indicating awareness of the error", "Proof the seller repudiated promptly on discovering the mistake" ] }, "facts": "A seller's listing carried an obvious pricing error — a small fraction of the item's true, widely advertised price. Before the seller noticed, a buyer placed large, rapid bulk orders far beyond any normal purchase; the buyer had checked the true price elsewhere and communicated with others about the startling figure before or while ordering. On discovering the error the seller promptly repudiated. The buyer seeks to enforce the orders at the listed price; the seller contends the buyer had actual or constructive knowledge of the error, so a contract entered under a mistake known to the other side should be void. The parties expressly agreed the transaction is governed by Singapore law, under which a contract is void at common law where one party contracts under a mistake as to a fundamental term and the other has actual knowledge (including wilful blindness) of that mistake, while equity may set a contract aside for constructive knowledge coupled with unconscionable conduct. The escrow simulation holds the contested value the buyer stood to capture from the mispriced order.", "governingLaw": "singapore_law", "amount": 6600, "currency": "USDC" }, "reference": { "case": "Chwee Kin Keong v. Digilandmall.com Pte Ltd", "citation": "[2005] SGCA 2", "court": "Court of Appeal of Singapore", "source": "https://www.elitigation.sg/gd/s/2005_SGCA_2" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The seller's listing carried a price that was a tiny fraction of the item's true, widely advertised value. Price is a fundamental term of any contract of sale, and the disparity here was so extreme that it could only result from an error. The buyer does not seriously dispute this characterisation; the buyer's own conduct confirms it.\n\nThe buyer checked the true price elsewhere before or while placing orders and communicated with others about the startling figure. These are textbook indicators of actual knowledge. In Chwee Kin Keong v Digilandmall.com Pte Ltd [2005] SGCA 2, the Court of Appeal held that where the non-mistaken party has actual knowledge of the other party's mistake as to a fundamental term, there is no consensus ad idem and the contract is void at common law. The court further held that wilful blindness — shutting one's eyes to the obvious — is sufficient to establish actual knowledge, and that where a buyer suspects an error but proceeds to snap up the bargain without verification, the court may infer actual knowledge or, alternatively, intervene in equity for constructive knowledge coupled with unconscionable conduct.\n\nThe buyer's bulk ordering pattern is the decisive evidence. The buyer placed large, rapid orders far beyond any normal purchase, consistent with snapping up a bargain believed to be an error before it could be corrected. The buyer did not contact the seller to verify the listed price. The buyer's own exhibit (C-3) asserting no certain knowledge of any error is directly contradicted by the buyer's pre-order price checks and communications with others about the startling figure. The claimant bore the burden of proving a valid enforceable contract; it failed because the respondent met its burden of proving the buyer's actual knowledge of the fundamental error.\n\nEven if actual knowledge were not directly established, the buyer's conduct would warrant equitable intervention. The buyer had constructive knowledge — any reasonable person would have suspected an error given the extreme price disparity — and the buyer's conduct in snapping up the bargain without verification constituted sharp practice or unconscionable conduct. Under Chwee Kin Keong, equity will set aside a contract where the non-mistaken party has constructive knowledge coupled with unconscionable conduct. The buyer's rush to place bulk orders before the seller could discover the error is the paradigm of sharp practice.\n\nThe seller repudiated promptly upon discovering the error, which is consistent with bona fide conduct. There is no evidence of any delay or attempt to exploit the situation. The seller's negligence in permitting the error does not, ipso facto, disentitle it to relief — the Court of Appeal in Chwee Kin Keong explicitly held that carelessness by the mistaken party does not automatically bar rescission.\n\nAccordingly, the contract is void ab initio. The buyer has no entitlement to enforce the orders at the mistaken price, and the escrow corpus must be returned in full to the respondent seller.", "allocation": { "claimant": 0, "respondent": 6600 }, "citations": [ { "title": "[2005] SGCA 2 - :: eLitigation ::", "url": "https://www.elitigation.sg/gd/s/2005_SGCA_2", "proposition": "A contract is void at common law where one party is mistaken as to a fundamental term and the other party has actual knowledge of the mistake; actual knowledge may be inferred from all surrounding circumstances including the non-mistaken party's own enquiries, communications, and conduct, and wilful blindness suffices to establish actual knowledge." }, { "title": "[2005] SGCA 2 - :: eLitigation ::", "url": "https://www.elitigation.sg/gd/s/2005_SGCA_2", "proposition": "Where the non-mistaken party lacks actual knowledge but has constructive knowledge, equity may intervene to set aside the contract where the non-mistaken party's conduct constitutes sharp practice or unconscionable conduct, such as snapping up a bargain suspected to be an error without verification." }, { "title": "[2005] SGCA 2 - :: eLitigation ::", "url": "https://www.elitigation.sg/gd/s/2005_SGCA_2", "proposition": "Carelessness or negligence by the mistaken party does not ipso facto disentitle it to relief from unilateral mistake." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-027", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Terminated Supplier", "type": "entity", "position": "The buyer ended our supply engagement and now refuses to pay and blames me for its losses. Yes, there were some delivery problems, but ending the whole contract over them was an overreaction, and I should be paid for what I was ready and willing to supply. I contest that the buyer was entitled to terminate, and I say the escrowed funds should come to me rather than being withheld as if I were the one at fault.", "evidence": [ "The supply contract and its terms", "The supplier's account of the delivery issues and its readiness to continue", "The supplier's claim for the withheld funds" ] }, "partyB": { "name": "Terminating Buyer", "type": "entity", "position": "The contract gave me an express right to end it if the supplier failed to deliver as required, and the supplier failed repeatedly, disrupting my work. That express clause is exactly the situation that arose, so my termination was lawful under the terms we both signed. Having lawfully terminated for the supplier's failures, I am entitled to withhold and to recover for the disruption, and the escrowed funds should be released to me.", "evidence": [ "The supply contract and its express termination clause", "The record of the supplier's repeated delivery failures", "Proof the failures matched the event the express termination clause covered", "The losses flowing from the disrupted work" ] }, "facts": "A supplier contracted to supply materials to a buyer's project and repeatedly failed to deliver as required, disrupting the work. The contract contained an express clause entitling the innocent party to terminate on specified failures. The buyer terminated and withheld payment, attributing its losses to the supplier; the supplier contests the termination and claims the withheld funds. The parties expressly agreed the contract is governed by Singapore law, under which a party may treat a contract as discharged for the other's breach where (1) the contract expressly provides a right to terminate on the event that occurred; (2) the other party renounces the contract; (3) the breached term is a condition; or (4) the breach of an intermediate term deprives the innocent party of substantially the whole benefit of the contract — the express clause (situation 1) governs where the failures match the event it covers. The escrow simulation holds the disputed supply funds.", "governingLaw": "singapore_law", "amount": 20000, "currency": "USDC" }, "reference": { "case": "RDC Concrete Pte Ltd v. Sato Kogyo (S) Pte Ltd", "citation": "[2007] SGCA 39", "court": "Court of Appeal of Singapore", "source": "https://www.elitigation.sg/gd/s/2007_SGCA_39" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The contract contained an express clause entitling the innocent party to terminate on specified delivery failures. That clause is dispositive. Under the Singapore law framework articulated in RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd, where the contract clearly and unambiguously provides for the event pursuant to which the innocent party is entitled to terminate (Situation 1), the analysis begins and ends with the clause's text. The court need not classify the breached term as a condition or warranty under Situation 3(a), nor apply the Hongkong Fir gravity-of-breach inquiry under Situation 3(b), because the express clause operates independently of those common-law routes. The buyer bore the burden of proving that the supplier's conduct fell within the clause, and it met that burden: the supplier repeatedly failed to deliver materials as required, disrupting the buyer's project. The supplier acknowledged delivery problems. The repeated failures match the event the clause covers.\n\nThe supplier's defense rests on two propositions, both of which fail. First, the supplier says the termination was an overreaction. But under Situation 1, the seriousness of the consequences is not the test — the clause specifies the event, and the event occurred. The court does not second-guess the parties' allocation of risk where they have expressly agreed that a specified failure entitles the innocent party to terminate. Second, the supplier says it was ready and willing to continue supply. Readiness to perform after the triggering event does not revive a contract lawfully terminated under an express clause. The buyer exercised its contractual right; the supplier's subsequent willingness is immaterial. The Sun Electric liability analysis is instructive here: the buyer in that case attempted to terminate for cause but could not point to an express clause or a repudiatory breach sufficient to justify termination, and the termination was held to be a repudiatory breach by the buyer. The present case is the mirror image — the buyer can and does point to an express clause covering the event that occurred. The buyer's termination was lawful.\n\nThe remedy follows from the lawful termination. The buyer, as the innocent party that validly terminated, is entitled to the escrowed supply funds. The supplier's claim to those funds fails because the supplier was the party in breach and the buyer exercised its contractual right to end the engagement. The buyer also pleaded that its losses flowed from the disrupted work, but it did not quantify those losses in the escrow record. Under the foreseeability and remoteness principles articulated in the Sun Electric judgments, losses recoverable through the corpus are those arising naturally from the breach; the buyer's unquantified plea for additional losses cannot ground an award beyond the corpus. The full escrow corpus is therefore released to the buyer. No non-escrow money obligation is awarded because the buyer did not plead a quantified claim beyond the corpus and remedial jurisdiction beyond the escrow was not opted into.", "allocation": { "claimant": 0, "respondent": 20000 }, "citations": [ { "title": "[2007] SGCA 39 - :: eLitigation ::", "url": "https://www.elitigation.sg/gd/s/2007_SGCA_39", "proposition": "Where the contract clearly and unambiguously provides for the event or events pursuant to which the innocent party is entitled to terminate (Situation 1), that clause operates independently of the condition-warranty approach (Situation 3(a)) and the Hongkong Fir gravity-of-breach approach (Situation 3(b)). The innocent party may terminate provided the stated event has occurred, without inquiry into the seriousness of the consequences." }, { "title": "[2007] SGCA 39 - :: eLitigation ::", "url": "https://www.elitigation.sg/gd/s/2007_SGCA_39", "proposition": "Contractual liability is strict; it is immaterial why the defendant failed to fulfil its obligation, and the defendant cannot plead that it did its best. Damages are awarded as of right for every breach of contract, subject to mitigation, remoteness, and limitation." }, { "title": "From SE’s perspective, those losses are within the second limb of Hadley v Baxendale and are irrecoverable by virtue of cl 6(b) of the Consultancy Agreement. [2018] SGHC 264", "url": "https://www.elitigation.sg/gd/s/2018_SGHC_264/", "proposition": "Where a party purports to terminate for cause without an express clause or a repudiatory breach sufficient to justify termination, the termination is itself a repudiatory breach. Conversely, where an express clause covers the event that occurred, the innocent party's termination is lawful." }, { "title": "From SE’s perspective, those losses are within the second limb of Hadley v Baxendale and are irrecoverable by virtue of cl 6(b) of the Consultancy Agreement. [2018] SGHC 264", "url": "https://www.elitigation.sg/gd/s/2018_SGHC_264/", "proposition": "Incidental, consequential, or indirect losses are those that do not arise naturally from the defendant's breach and fall within the second limb of Hadley v Baxendale; losses arising naturally from the breach are recoverable, but unusual downstream losses are excluded." }, { "title": "[2007] SGCA 39 - :: eLitigation ::", "url": "https://www.elitigation.sg/gd/s/2007_SGCA_39", "proposition": "Direct loss flows directly, naturally, and in the ordinary course of events from the defendant's breach, without any intervening cause and independently of special circumstances; this constitutes the first limb of Hadley v Baxendale." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-028", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Retained Specialist", "type": "human", "position": "I was retained for a ten-week, full-time support engagement starting on a fixed date, and I blocked that period out for the client. Three weeks before the start date the client wrote, in plain terms, that it had changed direction and would not be using my services at all. That message ended the deal then and there, so I brought this claim right away and accepted a partially overlapping replacement booking at a lower rate rather than sit idle. The client walked away from a firm commitment, and the escrowed engagement fee should compensate me now, not months from now.", "evidence": [ "The signed engagement agreement stating the fixed start date, the ten-week full-time term, and the fee", "The client's written message, sent three weeks before the start date, stating it would not be using the specialist's services", "Records showing the specialist held the period exclusively for the client until that message arrived", "The replacement booking the specialist accepted after the cancellation, at a lower rate and overlapping the engagement period" ] }, "partyB": { "name": "Retaining Client", "type": "entity", "position": "Nothing in the agreement was due from either side until the start date, so there is nothing I can yet be in breach of. A heads-up about our plans is not a breach of a contract whose performance had not begun; until that date arrived I remained free to change course again and take the services after all. And by filing this claim and committing to another booking before the start date, the specialist made it impossible to perform for us and gave up any right to the fee. The claim is premature and the escrowed fee should return to us.", "evidence": [ "The signed engagement agreement showing all performance obligations begin on the fixed start date", "The client's message, which it characterizes as advance notice of its plans rather than a breach of any due obligation", "The timeline showing the claim was filed before the start date", "The specialist's replacement booking, which the client says disabled the specialist from performing if called on" ] }, "facts": "A specialist was retained under a signed agreement for a ten-week, full-time engagement beginning on a fixed start date, with the fee held in escrow. Three weeks before that date the client sent a written message stating it had changed direction and would not be using the specialist's services. The specialist treated the message as ending the engagement, filed this claim before the start date, and accepted a partially overlapping replacement booking at a lower rate. The client contends no obligation was yet due, so no breach could exist before the start date, and that by claiming and rebooking early the specialist disabled itself from performing. The escrow simulation holds the engagement fee.", "governingLaw": "english_law", "amount": 6000, "currency": "USDC" }, "reference": { "case": "Hochster v. De la Tour", "citation": "(1853) 2 E & B 678", "court": "Court of Queen's Bench", "source": "https://www.bailii.org/ew/cases/EWHC/QB/1853/J72.html" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The client's message was an unequivocal repudiation. Under English law, a party repudiates a contract when it demonstrates an intention to be no longer bound by it, communicated to the other party. The client's written statement that it had 'changed direction and would not be using the specialist's services at all' is not advance notice or a tentative plan — it is a clear refusal to perform the entire obligation. This is the paradigm of anticipatory breach.\n\nThe respondent's argument that 'nothing was due until the start date' confuses the accrual of performance dates with the existence of binding obligations. The agreement created, from signature, a binding commitment by the client to take the specialist's services for the fixed term. The start date fixed when services would be delivered, not when the obligation arose. A clear repudiation before the performance date is actionable immediately upon election by the innocent party. The specialist elected to accept by treating the engagement as ended and filing this claim. That election was valid and timely — the specialist was not required to wait for the start date.\n\nThe respondent's argument that the specialist 'disabled itself from performing' by claiming and rebooking is unpersuasive. The sequence matters: the client repudiated first, the specialist elected to accept that repudiation, and only then accepted a replacement booking. Having repudiated, the client cannot point to the specialist's reasonable mitigation as the cause of non-performance. The specialist was under no duty to hold itself idle after a valid election. The replacement booking was a reasonable act of mitigation — sitting idle for ten weeks would have been the unreasonable course.\n\nOn remedy, the specialist's proven loss is the engagement fee of 6,000 USDC. The claimant itself pleaded the fee 'less the replacement booking's overlapping earnings,' recognising the mitigation principle. The record confirms that a partially overlapping replacement booking at a lower rate was accepted (Exhibits C-4, R-4), which would ordinarily reduce the recoverable loss by the amount earned during the overlap. However, the record contains no numeric figure for the replacement booking's rate, the duration of the overlap, or the earnings from it. The burden of proving that the specialist earned a specific offsetting amount rests on the respondent, who asserts mitigation as an affirmative answer to the claim. The respondent produced no quantum — no rate, no period, no earnings figure. An offset cannot be computed from the bare assertion that the booking was 'at a lower rate' and 'partially overlapping.' Without a proven number, the mitigation defence fails as to amount. The full escrow fee is the proven, unmitigated loss.\n\nThis is not a case for a holdback or conditional instruction. There is no concrete, verifiable cure condition in the record, and no proven partial defect requiring apportionment. The doctrine yields a single winner: the specialist proved repudiation, valid election, and the full fee as its loss; the respondent failed to prove any offsetting mitigation. The full corpus is released to the claimant.", "allocation": { "claimant": 6000, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-029", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Build Provider", "type": "entity", "position": "We were engaged to produce a complete custom data platform for a fixed fee, and we delivered exactly that - the entire scope, finished and handed over. Midway through, the client sent a message purporting to cancel, but a client cannot just tear up a signed fixed-fee contract because its own plans changed. We had a contract to perform and we performed it to the letter rather than abandon the job half-built. The full fixed fee for the completed deliverable is owed, and the escrow should release to us in full.", "evidence": [ "The signed fixed-fee agreement for the complete custom build", "Delivery records showing the entire scope was completed and handed over", "The provider's work logs across the full build period, before and after the client's cancellation message", "The provider's accounting of its costs and expected margin on the full scope" ] }, "partyB": { "name": "Cancelling Client", "type": "entity", "position": "A third of the way into the build, we told the provider in unmistakable terms that the underlying program was scrapped and the platform would never be used, and we instructed them to stop all work. Instead of stopping, they kept building for weeks and delivered a finished system we had already said we could not use, then billed us for the whole thing. They are entitled to what they had done when we cancelled, plus the profit they would have made - not to payment for work they chose to pile up after being told to stop. Most of the escrowed fee should return to us.", "evidence": [ "The client's written cancellation, stating the program was scrapped and instructing the provider to stop all work", "The benchmark quantum stipulation valuing accepted pre-cancellation work at 3,750 and the provider's expected whole-contract profit at 1,500", "Correspondence showing the provider acknowledged the cancellation and continued building anyway", "The client's calculation of the provider's pre-cancellation work value plus full expected profit" ] }, "facts": "A client engaged a provider to produce a complete custom data platform for a fixed fee, held in escrow. When roughly a third of the scope was built, the client sent an unequivocal written cancellation stating the underlying program was scrapped and instructing the provider to stop all work. The provider acknowledged the message, continued working for several more weeks, completed the entire scope, delivered it, and billed the full fixed fee. For this benchmark adaptation, the parties stipulate that accepted pre-cancellation work was worth 3,750 and that the provider's expected profit on the whole contract was 1,500. Those are constructed benchmark values, not figures from the historical source. The client accepts those two components, totaling 5,250, but disputes payment for post-cancellation work; it seeks return of the remaining 9,750 from the 15,000 corpus. The escrow simulation holds the full fixed fee.", "governingLaw": "Governing law stipulation: North Carolina contract law governs this dispute.", "amount": 15000, "currency": "USDC" }, "reference": { "case": "Rockingham County v. Luten Bridge Co.", "citation": "35 F.2d 301 (4th Cir. 1929)", "court": "United States Court of Appeals for the Fourth Circuit", "source": "https://law.justia.com/cases/federal/appellate-courts/F2/35/301/1488369/" }, "expectedOutcome": "split", "systemDecision": { "outcome": "split", "reasoning": "The threshold question is whether the provider's post-cancellation performance can entitle it to the full contract price. The claimant bears that burden. The record shows — and the provider does not meaningfully dispute — that the client sent an unequivocal written cancellation stating the program was scrapped and instructing the provider to stop all work, and that the provider acknowledged that message and continued building for several weeks. No contract term in the record makes the fixed fee non-cancellable or conditions payment on completion regardless of a communicated termination. The claimant points to the signed fixed-fee agreement and its completed delivery, but a fixed-fee structure sets the price for authorized performance; it does not, by itself, override a party's communicated termination or obligate the client to pay for work expressly instructed to stop. The provider has not carried its burden of proving any contract provision that would entitle it to the full fee in the face of the client's stop instruction.\n\nThe provider's fallback position — that it performed to the letter rather than abandon the job — fails on the same ground. When a party to a service contract communicates an unequivocal termination, the counterparty's duty to continue performance for the terminating party's account ceases. Work piled up after that instruction is not a benefit conferred on the client; the client told the provider the platform would never be used, and the provider adduced no evidence of any actual usable value the completed platform provided. The client bears no burden to prove the work was valueless; once it proved the stop instruction was given and acknowledged, the burden shifted to the provider to justify payment for post-cancellation work, and the provider did not meet that burden. Awarding the full fee would reward the provider for disregarding a clear instruction and would charge the client for a benefit it expressly disclaimed before the work was done.\n\nThe remedy follows the record's stipulated values, not a compromise between the parties' demands. The parties stipulated that accepted pre-cancellation work was worth 3,750 and that the provider's expected profit on the whole contract was 1,500, totaling 5,250, and the client expressly accepted both components. Those values are the proven measure of what the provider is entitled to recover: the value of work actually conferred and accepted before termination, plus the profit expectation the contract would have yielded. The remaining 9,750 of the 15,000 corpus represents payment for post-cancellation work that was unauthorized, unrequested, and of no proven usable value to the client. The restitution arithmetic is therefore: provider receives 5,250 (3,750 + 1,500); client receives 9,750 (15,000 - 5,250). This is not a split to hedge between the parties' positions; it is the allocation the doctrine yields on the proven record. The claim for the full fee is denied. The counterclaim for 5,250 to the provider and 9,750 returned to the client is granted as pleaded.", "allocation": { "claimant": 5250, "respondent": 9750 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-030", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Charter Provider", "type": "entity", "position": "The promoter chartered our vessel for two express purposes: viewing the scheduled naval review and taking passengers on a day's cruise around the assembled fleet. The review was cancelled, but the fleet remained assembled and the cruise could still happen. Our vessel was ready on both charter days, and we asked for sailing instructions. The promoter did not use it, so we put it to substitute use and credited those earnings against the price. The remaining charter balance should be released to us.", "evidence": [ "The signed two-day charter stating both purposes: viewing the naval review and cruising around the assembled fleet", "The official notice cancelling the naval review while leaving the assembled fleet in place", "Readiness records showing the vessel was available on both charter days", "The provider's accounting crediting its substitute-use earnings against the unpaid charter balance" ] }, "partyB": { "name": "Event Promoter", "type": "entity", "position": "The naval review was the commercial reason for this charter. We hired the vessel to carry paying passengers to a public spectacle, and that spectacle was cancelled before either charter day. A general cruise around ships at anchor was not an equivalent event and could not support the passenger business we booked for. The cancellation destroyed the venture we both understood, so the remaining balance should return to us even though the vessel itself was available.", "evidence": [ "The signed charter identifying viewing the naval review as one stated purpose", "The promoter's passenger plan and advertising centered on the naval review", "The official cancellation notice issued before the charter dates", "The promoter's refusal to provide sailing instructions after the cancellation" ] }, "facts": "A promoter chartered a provider's vessel for two stated days under a written agreement that named two purposes: viewing a scheduled naval review and taking passengers on a day's cruise around the assembled fleet. Before the charter dates, the naval review was cancelled because of the sovereign's illness. The fleet remained assembled, the vessel was ready, and a cruise around the fleet remained physically possible. The promoter gave no sailing instructions and refused the vessel. The provider used the vessel for other work on those dates and credited those substitute-use earnings against the charter price. The escrow simulation holds only the remaining balance after that credit.", "governingLaw": "english_law", "amount": 5000, "currency": "USDC" }, "reference": { "case": "Herne Bay Steamboat Co. v. Hutton", "citation": "[1903] 2 KB 683", "court": "Court of Appeal of England and Wales", "source": "https://www.bailii.org/openlaw/contract.html" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The charter named two purposes: viewing a naval review and cruising around the assembled fleet. The review was cancelled; the fleet remained. The first purpose is impossible; the second remains performable. This is the architecture of partial frustration. The question is whether the frustration was total — destroying the foundation of the charter entirely — or partial, leaving a substantial purpose that could still be served.\n\nThe respondent bore the burden of proving total frustration. Its evidence (Exhibits R-1 through R-4) shows that the review was the venture's commercial centerpiece and that the promoter's passenger plan centered on it. But the contract itself named two purposes, and the second — a cruise around the assembled fleet — remained physically and commercially possible. The fleet was still assembled; the vessel was ready; the provider sought sailing instructions. The promoter refused not because the cruise was impossible but because it was not commercially equivalent. That is evidence of reduced value, not of total destruction. Under English law, frustration requires the foundation of the obligation to be destroyed; a mere diminution in value or desirability does not suffice. The respondent proved the charter was worth less, but it did not prove the charter's foundation was gone.\n\nHaving failed to establish total frustration, the respondent's counterclaim for return of the balance fails on the merits. The provider tendered a conforming vessel for the remaining performable purpose. The promoter's refusal to give sailing instructions prevented even that purpose from being executed. The provider mitigated by putting the vessel to substitute use and credited those earnings. The escrow holds only the net balance after that credit.\n\nThe respondent argues that the commercial purpose was destroyed. This is the strongest thread in its case, and it is not frivolous — the review was likely the dominant attraction. But the law does not gauge frustration by a party's subjective commercial expectations alone; it asks whether the obligation's foundation was objectively destroyed. Here, the contract itself split the purposes, and one survived. The respondent had available remedies — restitution for the difference in value, an abatement grounded in the proved disparity between the two-purposes charter and the cruise-only charter — but it pleaded neither with record-grounded quantum. No dollar amount of the original charter price or of the substitute-use credit appears in the record; only the net 5,000 USDC balance is before me.\n\nThe provider's claim therefore prevails. It tendered a ready vessel for a purpose the contract named and that remained performable. The promoter refused. The balance, already reduced by the substitute-use credit the provider conceded, is released to the provider. This is not an all-or-nothing outcome in theory; partial frustration could yield a graded remedy. But the graded remedy required the respondent to plead and prove the difference in value or the restitutionary measure, and it did neither. The doctrine yields a winner because the respondent bore the burden of rebutting the provider's entitlement and failed to carry it with record-grounded quantum.", "allocation": { "claimant": 5000, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-031", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Component Supplier", "type": "entity", "position": "We delivered every component the subcontract called for and invoiced the agreed amount. The contractor unilaterally knocked off charges it claims to have incurred because of our schedule and paid the reduced amount with a note calling it final settlement. We never agreed to settle anything: we struck that wording out, wrote plainly that we were accepting the funds under protest and reserving all rights, and told them the balance was still owed. Taking the money we were undisputedly owed does not mean we accepted their number for the part we dispute. The escrowed balance should be released to us.", "evidence": [ "The subcontract and the supplier's invoice for the full agreed amount", "The contractor's reduced payment and its accompanying notation designating it as full and final settlement of the account", "The supplier's endorsement striking the settlement wording and adding that the funds were accepted under protest with all rights reserved", "The supplier's earlier written rejection of the contractor's backcharge and statement of the balance it claimed" ] }, "partyB": { "name": "Engaging Contractor", "type": "entity", "position": "There was a genuine, documented dispute about this account: the supplier's late deliveries forced rework on our side, and we set out the deduction in writing. We then tendered the amount we calculated was due on a payment whose face and reverse expressly designated it as full and final settlement of the whole account. The supplier kept the money. It cannot pocket a payment offered only as a settlement and then sue for the rest; scribbling a protest on the payment does not undo the condition it was tendered on. The account is closed and the escrowed balance should return to us.", "evidence": [ "The contractor's written backcharge computation for the rework attributed to the supplier's schedule", "The payment instrument bearing full-settlement legends on both its face and reverse", "The record showing the supplier took and kept the payment", "Correspondence showing the amount owed was genuinely in dispute before the tender" ] }, "facts": "A supplier delivered components under a subcontract and invoiced the full agreed amount. The contractor, asserting in writing that the supplier's late deliveries had forced rework, computed a backcharge and tendered the amount it calculated was due on a payment instrument expressly designated on its face and reverse as full and final settlement of the account. The supplier had already rejected the backcharge in writing. It crossed out the settlement wording, endorsed the payment as accepted under protest with all rights reserved, did not separately advise the contractor before depositing it, and kept the funds. Both sides agree the underlying account was genuinely disputed in good faith before the tender. The supplier now claims the withheld balance; the contractor says the account was settled. The escrow simulation holds the disputed balance.", "governingLaw": "Governing law stipulation: Connecticut contract law governs this dispute.", "amount": 3200, "currency": "USDC" }, "reference": { "case": "County Fire Door Corp. v. C.F. Wooding Co.", "citation": "202 Conn. 277, 520 A.2d 1028 (1987)", "court": "Connecticut Supreme Court", "source": "https://app.midpage.ai/document/county-fire-door-corp-v-7839909" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive question is whether the supplier's acceptance of the contractor's payment instrument, bearing conspicuous full-and-final-settlement language on both face and reverse, effected an accord and satisfaction that discharged the claim for the balance. Connecticut General Statutes § 42a-3-311 governs. The contractor bore the burden of proving each statutory element under subsection (a): (i) good-faith tender of the instrument as full satisfaction, (ii) that the claim was unliquidated or subject to a bona fide dispute, and (iii) that the claimant obtained payment of the instrument. The record establishes all three. Both sides agree the underlying account was genuinely disputed in good faith before the tender — the contractor computed a written backcharge for rework attributed to late deliveries, and the supplier had already rejected that backcharge in writing. The instrument bore full-settlement legends on both its face and reverse, satisfying the conspicuous-statement requirement of subsection (b): the language was so written and displayed that a reasonable person against whom it was to operate ought to have noticed it. The supplier obtained payment — it kept the funds.\n\nThe supplier's defense fails because subsection (c) of the statute provides the exclusive paths by which a claimant can avoid discharge after accepting such a payment, and the supplier proved neither. Subsection (c)(1) applies to organizational claimants who, before the tender, sent a conspicuous statement directing that all communications concerning disputed debts — including instruments tendered as full satisfaction — be sent to a designated person, office, or place, and the instrument was not received by that designated recipient. The record contains no evidence that the supplier sent any such pre-tender routing statement. The supplier did not assert it, did not produce it, and no exhibit describes it. Subsection (c)(2) applies when the claimant, within ninety days after payment, tenders repayment of the instrument amount to the person against whom the claim is asserted. The record shows the supplier kept the funds and did not tender repayment. No exhibit or party submission suggests repayment was offered. The supplier's burden was to prove the exception; it did not.\n\nThe supplier's central argument — that it struck out the settlement wording and endorsed the instrument 'accepted under protest with all rights reserved' — does not prevent discharge under the statute. Subsection (d) confirms discharge where the claimant, or an agent with direct responsibility for the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim. Here, the supplier's own act of crossing out the full-settlement legends demonstrates actual knowledge that the instrument was tendered in full satisfaction. The statute does not permit a claimant to defeat an accord and satisfaction by unilateral annotation alone; the claimant must satisfy a subsection (c) exception — either a pre-tender designated-recipient instruction or a post-payment tender of repayment. The supplier did neither. The common-law rule that a creditor may accept partial payment under protest and reserve rights has been superseded by the statutory framework for negotiable instruments: the UCC's accord-and-satisfaction provision deliberately shifts the risk to the creditor to either route the instrument to a designated recipient or return the money. The supplier had these tools and used neither.\n\nThe claim for the balance is discharged. The full escrow corpus of 3200 USDC, representing the disputed balance, is released to the respondent (contractor). No apportionment or hold is warranted: the statute yields an all-or-nothing result — the claim is either discharged or it is not — and on this record it is discharged.", "allocation": { "claimant": 0, "respondent": 3200 }, "citations": [ { "title": "Connecticut General Statutes Title 42A. Uniform Commercial Code ...", "url": "https://codes.findlaw.com/ct/title-42a-uniform-commercial-code/ct-gen-st-sect-42a-3-311/", "proposition": "Under Conn. Gen. Stat. § 42a-3-311, a claim is discharged by accord and satisfaction when the debtor in good faith tenders an instrument as full satisfaction of a genuinely disputed claim, the instrument bears a conspicuous full-satisfaction statement, and the claimant obtains payment — unless the claimant proves a designated-recipient exception under (c)(1) or a ninety-day repayment tender under (c)(2); knowledge of the full-satisfaction tender under (d) confirms discharge." }, { "title": "Douthwright v. Northeast Corridor - vLex Case Law", "url": "https://case-law.vlex.com/vid/douthwright-v-northeast-corridor-893756890", "proposition": "A precondition of an enforceable accord and satisfaction under § 42a-3-311 is that the tender occur in the context of a good-faith dispute about the amount owed, and the party asserting accord and satisfaction bears the burden of proving that the amount was unliquidated or subject to a bona fide dispute." }, { "title": "UNITED AUTOMOBILE INSURANCE COMPANY v. RIVERO ...", "url": "https://caselaw.findlaw.com/court/fl-district-court-of-appeal/2141965.html", "proposition": "A full-and-final-payment notation on the face of a check or payment instrument satisfies the 'conspicuous statement' requirement of the UCC accord-and-satisfaction statute where a reasonable person ought to have noticed it; nearly any statement on an instrument the claimant can reasonably be expected to examine is conspicuous." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-032", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Subcontracted Specialist", "type": "human", "position": "I built my portion of the project in full, and the prime agency's own lead accepted it in writing without reservation. The subcontract's payment clause fixes when I get paid, not whether: the reference to the agency being paid by its end client was about the timing of cash moving through, because everyone expected the client to pay in the ordinary course. I never agreed to underwrite the agency's client. The agency chose that client, ran that relationship, and carries that credit risk; my work is done and accepted, and after all this time my fee is due. The escrowed fee should be released to me.", "evidence": [ "The subcontract, including the clause making final payment due within 30 days after completion, written acceptance by the project lead, and full payment by the end client", "The project lead's written acceptance of the specialist's completed work, without reservation", "The record that the specialist had no contract with, and no ability to vet or pursue, the end client", "The timeline showing many months elapsed since acceptance with no payment" ] }, "partyB": { "name": "Prime Agency", "type": "entity", "position": "The subcontract says exactly what has to happen before final payment: completion, written acceptance, and full payment by the end client. That last event never happened - the end client collapsed and never paid us for this work - so the condition for the specialist's final payment has not occurred. We did not promise to pay out of our own pocket regardless; we promised to pass payment through when we received it, and the clause both sides signed says so in plain words. We have been paid nothing for this portion either. Until the condition is met, nothing is due, and the escrowed fee should not be released.", "evidence": [ "The subcontract clause conditioning final payment on completion, acceptance, and full payment by the end client", "Records showing the end client became insolvent and never paid the agency for this portion of the work", "The agency's accounting showing it received nothing from the end client attributable to the specialist's scope", "The agency's position that the clause allocated the client-nonpayment risk to each subcontracted specialist" ] }, "facts": "A prime agency engaged a specialist under a subcontract for one portion of a larger client project. The subcontract provided that final payment to the specialist would be made within 30 days after completion of the work, written acceptance by the project lead, and full payment for the work by the end client. The specialist completed the work and the project lead accepted it in writing. The end client then became insolvent and never paid the agency for this portion. Many months later the specialist claims the fee; the agency contends full payment by the end client is a condition precedent that never occurred, so nothing is due. The specialist had no contractual relationship with the end client. The escrow simulation holds the specialist's final fee.", "governingLaw": "Governing law stipulation: Florida contract law governs this dispute.", "amount": 8000, "currency": "USDC" }, "reference": { "case": "Peacock Construction Co. v. Modern Air Conditioning, Inc.", "citation": "353 So. 2d 840 (Fla. 1977)", "court": "Supreme Court of Florida", "source": "https://law.justia.com/cases/florida/supreme-court/1977/50758-0.html" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The governing subcontract provided that final payment would be made 'within 30 days after' three events: completion, written acceptance, and full payment by the end client. The specialist proved the first two — the work was completed and accepted in writing without reservation — and those facts are undisputed. The third event never occurred: the end client became insolvent and never paid the agency for this scope. The dispositive question is whether that third event is a condition precedent that defeats the specialist's right to payment or merely a timing reference that fixes a reasonable period for payment.\n\nFlorida law governs, and the parties do not dispute that. The Supreme Court of Florida addressed this exact issue in DEC Electric, Inc. v. Raphael Construction Corp. (1990), which in turn applied Peacock Construction Co. v. Modern Air Conditioning, Inc. (1977). Those cases establish a binary framework for risk-shifting payment provisions between contractors and subcontractors, resolved as a matter of law: if the provision is clear and unambiguous, it is a condition precedent; if it is ambiguous, it is construed as fixing a reasonable time for payment. Critically, the burden of clear expression falls on the party seeking to shift the owner-nonpayment risk — the general contractor or, in this case, the prime agency.\n\nApplying that framework here, the clause is ambiguous. It lists three events connected by 'and' and uses the temporal phrase 'within 30 days after,' language that can be read either as fixing the timing of payment once all three events occur or as making each event a condition that must occur before payment is owed. But the clause does not use the words 'condition precedent.' It does not state that the specialist assumes the risk of owner nonpayment. It does not say that no payment will be owed if the end client fails to pay. It does not distinguish itself from the ordinary timing language that Florida courts have repeatedly construed as pay-when-paid rather than pay-if-paid. In DEC Electric, a clause that far more aggressively asserted 'No funds will be owed to the subcontractor unless the General Contractor is paid by the owner' was nonetheless analyzed under this framework — the present clause is materially softer, using 'within 30 days after' language that reads as timing. Under the burden of clear expression, the agency had to produce a clause that unambiguously shifts the risk; it did not.\n\nThe respondent argues that the three-prong structure and the word 'and' make the condition clear. But the presence of multiple prerequisites connected by 'and' does not, by itself, transform each item into a condition precedent — 'and' connects events in a temporal sequence just as readily as it lists conditions. What matters under Florida law is whether the clause uses the clear, express language of condition and risk-shifting that Peacock and DEC Electric require. This clause does not. The agency also argues that it never received payment and cannot be required to pay out of its own pocket. That argument begs the question: whether the agency bears that risk is exactly what the clause must clearly say to shift it, and it does not. The specialist had no contractual relationship with the end client, no ability to vet the end client's creditworthiness, and no role in managing that relationship — all circumstances reinforcing the Peacock reasoning that subcontractors do not ordinarily assume the owner-nonpayment risk unless they clearly agree to.\n\nThe ambiguity having been established, Peacock's binary framework converts it into a reasonable-time-of-payment provision. The specialist completed and had its work accepted many months before the dispute; a reasonable time for payment has long elapsed. The agency's obligation to pay the final fee is therefore due, and the escrowed 8000 USDC should be released to the specialist in full. No partial defect, divisible scope, or restitutionary calculation is implicated — the work was fully performed and accepted, the only obstacle was the end client's insolvency, and the clause did not clearly shift that risk to the specialist. This is a winner-takes-all outcome because the doctrine yields one: the ambiguous clause becomes a timing provision, the reasonable time has passed, and the specialist is entitled to the entire fee.", "allocation": { "claimant": 8000, "respondent": 0 }, "citations": [ { "title": "DEC ELECTRIC, INC., Petitioner", "url": "http://library.law.fsu.edu/Digital-Collections/flsupct/dockets/73938/op-73938.pdf", "proposition": "Under Florida law, risk-shifting payment provisions between contractors and subcontractors are interpreted as a matter of law under a binary framework: a provision that is clear and unambiguous creates a condition precedent, while an ambiguous provision is construed as fixing a reasonable time for payment. The burden of clear expression is on the party seeking to shift the owner-nonpayment risk. This framework was established in Peacock Construction Co. v. Modern Air Conditioning, Inc. and applied in DEC Electric, Inc. v. Raphael Construction Corp." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-033", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Migration Provider", "type": "entity", "position": "Our engagement priced the work item by item: a stated rate per record batch of the premium class, a lower stated rate per batch of the standard class, and separate per-item rates for two kinds of archive transfers depending on destination. We completed and delivered a substantial portion of the batches before a third-party infrastructure failure destroyed the remainder mid-transfer, through no fault of ours. The client accepted and uses everything we delivered but now refuses to pay a single unit, claiming payment was conditional on finishing the whole inventory. The pricing itself shows the deal was unit by unit; we are owed the contract rate for every unit actually delivered.", "evidence": [ "The written engagement pricing the work at distinct per-unit rates for each class of batch and each destination of archive transfer", "Delivery logs showing the batches and transfers actually completed and accepted before the interruption", "Records of the third-party infrastructure failure that destroyed the remaining units mid-transfer", "The provider's invoice computing the amount due at the contract's own per-unit rates for the delivered units only" ] }, "partyB": { "name": "Inventory Client", "type": "entity", "position": "We engaged the provider for one job: moving our entire inventory, end to end. The per-unit rates were just how the total price was computed, not an invitation to deliver a fraction and bill for it. A large share of our inventory never arrived, and the whole point of the engagement was a complete migration. The contract was a single, entire undertaking, so full performance was the condition of any payment. The provider did not complete the job, whatever the reason, and no payment is due.", "evidence": [ "The written engagement describing the work as migration of the client's full inventory", "The record that a large share of the inventory was never delivered", "The client's calculation of the total engagement price as originally quoted", "Correspondence in which the client refused payment pending completion of the whole inventory" ] }, "facts": "A client engaged a provider to migrate its full inventory of record batches and archives. The written engagement priced the work at distinct per-unit rates: one rate per premium-class batch, a lower rate per standard-class batch, and separate per-item rates for archive transfers depending on destination. After roughly 60% of the units (measured at contract rates) had been delivered and accepted, a third-party infrastructure failure destroyed the remaining units mid-transfer, through no fault of either party. The client retains and uses the delivered units but has paid nothing, contending the contract was a single entire undertaking with completion as the condition of payment; the provider contends the apportioned per-unit pricing makes the contract severable and bills for the delivered units at the contract rates. The escrow simulation holds the full engagement fee.", "governingLaw": "Governing law stipulation: Pennsylvania contract law governs this dispute.", "amount": 8000, "currency": "USDC" }, "reference": { "case": "Gill v. Johnstown Lumber Co.", "citation": "151 Pa. 534, 25 A. 120 (1892)", "court": "Supreme Court of Pennsylvania", "source": "https://case-law.vlex.com/vid/gill-v-johnstown-lumber-900310013" }, "expectedOutcome": "split", "systemDecision": { "outcome": "split", "reasoning": "The decisive question is whether the parties' engagement was a single entire contract or a severable, per-unit arrangement. The contract text is the first and controlling signal: the engagement priced the work at distinct per-unit rates — one rate per premium-class batch, a lower rate per standard-class batch, and separate per-item rates for archive transfers depending on destination (Exhibit C-1; Exhibit R-1, which confirms the same document). This pricing structure is not surplusage. Giving the per-unit rates their ordinary meaning, each unit of work is separately priced and separately deliverable, which is the hallmark of a severable contract. The respondent argues the per-unit rates were merely a method for computing a total price, but that reading strips the per-unit structure of independent significance and is unsupported by any contract language stating that full completion is a condition of payment.\nThe respondent bore the burden of proving its entire-contract theory and that full completion was an express condition of payment. It produced no contract clause, no integration or condition-of-payment language, and no indication that the delivered units are valueless without the remaining portion. Exhibit R-4 reflects the client's post-hoc refusal position, not a contractual term. The respondent's argument that the engagement was one job for a complete migration is a purposivist gloss, but it cannot overcome the contract's express per-unit pricing structure, which is the most reliable evidence of the parties' actual intent. Pennsylvania contract law enforces the parties' express bargain; where distinct per-unit rates are used, the contract is severable.\nThe impossibility finding is clear and undisputed: a third-party infrastructure failure destroyed the remaining units mid-transfer through no fault of either party (background facts; Exhibit C-3). The provider thus did not breach; performance became impossible as to the undelivered remainder. Because the contract is severable, the provider is entitled to the contract rate for each unit actually delivered and accepted, and the undelivered units were never due. The client retains and uses the delivered units (background facts), confirming that the delivered portion has independent value and the engagement is not an indivisible whole where partial performance is worthless.\nThe remedy follows arithmetically from the record. The escrow holds 8,000 USDC, representing the full engagement fee. Approximately 60% of the units, measured at contract rates, were delivered and accepted (background facts). Allocating the corpus proportionally, 60% of 8,000 USDC equals 4,800 USDC to the claimant, and the remaining 3,200 USDC to the respondent. This is not a compromise between the parties' demands; it is what the severable-contract doctrine yields on the proven record. The provider gets the contract price for the work it actually delivered and the client accepted; the client gets back the portion attributable to the units that were never delivered.", "allocation": { "claimant": 4800, "respondent": 3200 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-034", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Quoting Vendor", "type": "entity", "position": "When we assembled our fixed-price quote under deadline pressure, a spreadsheet error dropped an entire subcontracted cost line from the total, so the number we submitted was far below what the work actually costs - well under every other quote in the process. The client accepted that evening; the next morning, as soon as we re-ran the sheet and found the omission, we told the client exactly what happened and withdrew. We never started work and the client has lost nothing except the bargain error itself. Holding our commitment deposit to force us into a contract priced on an honest clerical slip would be taking advantage of a mistake the gap in the numbers made obvious. The deposit should come back to us.", "evidence": [ "The quote worksheet showing the subcontracted cost line omitted from the summed total by a clerical error", "The competing quotes in the same process, all materially higher than the vendor's erroneous total", "The vendor's message the morning after acceptance disclosing the error and withdrawing the quote", "The record that no work had begun and the client had not yet spent anything in reliance on the quote" ] }, "partyB": { "name": "Accepting Client", "type": "entity", "position": "We ran a clean competitive process and the vendor submitted a firm fixed-price quote, backed by a commitment deposit that exists precisely so quotes mean something. Before accepting, we specifically asked the vendor to confirm its figures were right, and it said they were. We accepted in good faith. A vendor's own arithmetic is its own responsibility; if a private miscalculation lets a bidder walk the next morning, firm quotes and deposits are worthless. We are entitled to keep the deposit, or to the difference between this quote and the next one we had to take.", "evidence": [ "The vendor's submitted fixed-price quote and the deposit terms making it a firm commitment", "The pre-acceptance exchange in which the client asked the vendor to confirm its figures and the vendor did", "The record of acceptance on the evening the quotes were opened", "The price of the next-best quote the client subsequently accepted for the same work" ] }, "facts": "In a competitive quoting process, a vendor submitted a firm fixed-price quote backed by a commitment deposit. Assembling the quote under deadline pressure, the vendor's worksheet dropped an entire subcontracted cost line from the total, producing a figure materially below every competing quote. Asked before acceptance to confirm its figures, the vendor said they were right. The client accepted that evening; the next morning the vendor re-checked the worksheet, discovered the omission, disclosed it to the client, and withdrew. No work had begun and the client identified no reliance spending, though it later engaged the next-best quote at a higher price. The vendor seeks return of the deposit on the ground of an honest clerical mistake promptly rescinded; the client contends the firm quote binds and the deposit is forfeit. The escrow simulation holds the deposit.", "governingLaw": "Governing law stipulation: California contract law governs this dispute.", "amount": 2500, "currency": "USDC" }, "reference": { "case": "Elsinore Union Elementary School District v. Kastorff", "citation": "54 Cal. 2d 380, 353 P.2d 713 (1960)", "court": "Supreme Court of California", "source": "https://law.justia.com/cases/california/supreme-court/2d/54/380.html" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The vendor must prove two things to recover its deposit: that a clerical error produced a material price misstatement, and that the equities favor rescission. It met both burdens. Exhibit C-1 shows the worksheet with the omitted cost line; Exhibits C-2 and R-4 show the resulting price was materially below every competing quote; Exhibit C-3 shows disclosure and withdrawal the next morning; Exhibit C-4 and the background facts show no work began and no reliance spending occurred. The vendor's own confirmation of its figures when asked (Exhibit R-2) does not shift the analysis: the vendor confirmed a number it had not yet re-checked, and the error was in the worksheet that generated the number, not in the communication of it. The confirmation does not make a miscalculated price into the price the vendor actually intended.\n\nThe client's counterclaim fails on burden. The client seeks either forfeiture of the deposit or the price difference to the next-best quote. For forfeiture, the client had to prove either that the deposit terms independently mandated forfeiture on withdrawal regardless of mistake, or that the vendor bore the risk of its own miscalculation under California unilateral-mistake doctrine. The record supplies no deposit term that says 'forfeit on withdrawal regardless of mistake' — Exhibit R-1 establishes that the deposit backed a firm commitment, but the parties did not put a forfeiture-on-mistake clause in the record. The court cannot invent one. For the risk allocation, the dispositive question is whether the vendor bore the risk of its clerical error. The record does not show that the client actually knew or had reason to know of the error at the time of acceptance; the client's strongest point is that the price was so far below the field that the discrepancy should have been apparent. But the client did not introduce evidence that it flagged the price as suspicious — it asked the vendor to confirm, the vendor confirmed, and the client accepted. A request for confirmation shows the client noticed the price was low, but the vendor's response closed the loop from the client's perspective. The burden of proving the vendor bore the risk was on the client, and it did not meet it: no record evidence shows the vendor assumed the risk of miscalculation, and the prompt disclosure before reliance negates the unfairness of enforcement.\n\nFor the price-difference remedy, the foreseeability limit governs. The client proved it engaged the next-best quote at a higher price (Exhibit R-4), but it did not prove that the vendor had reason to know at the time of quoting that the client would incur a specific price difference if the quote were withdrawn. The next-best price depends on the field of competing quotes, which the vendor may not have known, and the record does not show the vendor was on notice of the client's specific consequential exposure. Even if the contract were breached rather than voidable, the price difference is a consequential loss that the client failed to prove was foreseeable. The client's counterclaim therefore fails on both theories.\n\nThe remedy is return of the full deposit to the vendor. The vendor proved the error, the materiality, the prompt disclosure, and the absence of reliance. The client proved neither forfeiture entitlement nor foreseeable damages. The full corpus goes to the vendor because the doctrine yields a winner: the contract was voidable for material unilateral mistake, the vendor rescinded promptly, and the client suffered no compensable loss.", "allocation": { "claimant": 2500, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-035", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Relocating Provider", "type": "entity", "position": "The client promised us a fourteen-month managed-services engagement and told us to get ready to start. On the strength of that, we migrated our tooling to the client's stack, put two staff through the client's certification, and turned down a competing engagement for the same period. When we arrived to begin, the client walked away from the whole arrangement before we delivered a single day of service. We are not asking for the profits of the engagement - only the real money we spent getting ready at the client's direction. It is not right that the client can induce all that expense and owe nothing, so the reasonable value of our preparation should be paid to us.", "evidence": [ "Messages in which the client described the fourteen-month engagement and told the provider to prepare to start", "Receipts for the tooling migration, staff certification, and start-date travel undertaken in preparation", "The record of the competing engagement the provider declined for the same period", "The client's message calling off the arrangement before any services were delivered" ] }, "partyB": { "name": "Prospective Client", "type": "entity", "position": "There was never a binding engagement. A commitment of that length has to be in a signed engagement document, and both sides knew the paperwork was never executed - we were still negotiating terms when the discussions ended. I received nothing from the provider: no services, no deliverables, no work product, not an hour of usable output. The provider's preparation costs were its own business decisions and its own risk while the deal was unsigned. I should not have to fund another company's ramp-up spending for a contract that never existed, and the claimed sum should return to me.", "evidence": [ "The record that no signed engagement document was ever executed for the fourteen-month arrangement", "The draft terms still under negotiation when discussions ended", "The record that no services, deliverables, or work product were ever received by the client", "Correspondence showing the provider was told the engagement remained subject to signature" ] }, "facts": "A client and provider discussed a fourteen-month managed-services engagement. An engagement of that duration required a signed engagement document, which was never executed; drafts remained under negotiation. Anticipating the start, and after the client told it to prepare, the provider migrated tooling to the client's stack, certified two staff on the client's systems, traveled for the start date, and declined a competing engagement for the same period. The client called off the arrangement before any services were delivered; it is undisputed that the client received no services, deliverables, or other benefit from the provider's preparation. The provider claims the reasonable value of its preparation expenditures; the client denies any enforceable obligation and any enrichment. The escrow simulation holds the claimed preparation sum.", "governingLaw": "Governing law stipulation: Kentucky contract and restitution law governs this dispute.", "amount": 1800, "currency": "USDC" }, "reference": { "case": "Boone v. Coe", "citation": "153 Ky. 233, 154 S.W. 900 (1913)", "court": "Kentucky Court of Appeals", "source": "https://app.midpage.ai/document/boone-v-coe-7140584" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The contract claim fails at the first gate. The parties stipulated that an engagement of this duration required a signed engagement document, and it is undisputed that none was ever executed (Exhibits R-1, R-2). The provider was told the engagement remained subject to signature (Exhibit R-4). That signature was therefore an express condition precedent to the formation and performance of the engagement. The condition never occurred. The client's withdrawal before any services were delivered was a repudiation of negotiations, not a breach of a formed contract; there was no contract to breach. The claimant, who bore the burden of proving formation, did not meet it.\n\nThe restitution theory is the provider's stronger position, and it fails on the threshold element. Under Kentucky restitution law, recovery in quasi-contract requires that the defendant receive a benefit at the plaintiff's expense. The client did instruct the provider to prepare (Exhibit C-1), and the provider did incur costs migrating tooling, certifying staff, and traveling for a start date (Exhibit C-2). But benefit to the defendant is the prerequisite, and the record is undisputed that the client received no services, no deliverables, and no usable work product (Background Facts; Exhibit R-3). Tooling migration to the client's stack certified the provider's own systems, not the client's; staff certification enhanced the provider's workforce; travel produced no service because the engagement was called off on arrival. The client's gain is not the enrichment that restitution law remedies; it is the mere fact that someone spent money in anticipation of a deal that did not close. That a party incurs preparation costs on the strength of another's request is not, without more, enrichment of the other.\n\nThe provider's strongest equitable argument—that the client induced the expenditure and should not walk away costless—isforceful as policy but not grounded in the record's proof of enrichment. Equitable relief for reliance under unjust enrichment typically requires either a benefit capable of valuation or circumstances making it unjust for the defendant to retain the advantage, and the record supplies neither. The competing engagement the provider declined (Exhibit C-3) is a reliance loss, not an enrichment of the client; it cannot be recovered in restitution because the client received no corresponding benefit. The claimant bore the burden of proving the value of any benefit conferred, and the record is silent on a dollar figure for any item the client could be said to have received. The claimant's preparation was its own business risk while the deal remained unsigned; the client told the provider the engagement remained subject to signature, and the provider proceeded at its own risk. The corpus returns to the client.", "allocation": { "claimant": 0, "respondent": 1800 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-036", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Storefront Buyer", "type": "human", "position": "Before I signed, the seller promised me, plainly and more than once, that once the sale closed they would shut down the legacy storefront they run on another channel - the one that sells the same kind of goods and pulls away exactly the customers I was buying. I only agreed to the price on that basis, and I went ahead, paid, and invested in the storefront I bought. The legacy storefront is still up and still competing with me. The written agreement covers the asset transfer; the shutdown was a separate promise about a separate property the seller kept. I am entitled to compensation from the escrowed holdback for the promise the seller never honored.", "evidence": [ "The signed written purchase agreement for the storefront and its transition terms", "The buyer's account of the seller's repeated pre-signing promise to shut down the legacy storefront after closing", "Traffic and sales records showing the legacy storefront still operating and drawing the same customer base", "Records of the price paid and the buyer's post-closing investment in the acquired storefront" ] }, "partyB": { "name": "Storefront Seller", "type": "human", "position": "The written agreement is the deal. We negotiated it over weeks, both sides marked up drafts, and it spells out everything we agreed to: the asset, the price, transition support, even small ancillary commitments. It says nothing about closing my other storefront, because I never bound myself to that. If a promise that significant had really been part of the bargain, it would have been in the document - that is exactly what the document was for. I delivered everything the agreement lists, and the holdback should be released to me.", "evidence": [ "The signed written purchase agreement, covering the asset, price, transition support, and ancillary commitments", "The negotiation history showing both sides exchanged and marked up drafts before signing", "The absence of any shutdown term for the seller's separate storefront anywhere in the drafts or the final agreement", "Delivery records showing every obligation listed in the written agreement was performed" ] }, "facts": "A buyer purchased an online storefront from its seller under a written purchase agreement negotiated over several weeks, covering the asset transfer, the price, transition support, and ancillary commitments. The buyer contends the seller orally promised before signing that, once the deal closed, the seller would shut down a separate legacy storefront it operates on another channel selling similar goods - a promise the buyer says induced the purchase. The written agreement contains no such term, and no draft ever included one. After closing, the seller performed the written obligations but kept the legacy storefront running, where it continues to draw the same customer base. The buyer seeks compensation from the escrowed final holdback for the unhonored promise; the seller contends the complete writing defines the entire bargain. The escrow simulation holds the holdback.", "governingLaw": "new_york_law", "amount": 6000, "currency": "USDC" }, "reference": { "case": "Mitchill v. Lath", "citation": "247 N.Y. 377, 160 N.E. 646 (1928)", "court": "New York Court of Appeals", "source": "https://law.justia.com/cases/new-york/court-of-appeals/1928/247-n-y-377-160-n-e-646-1928.html" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive question is not whether the seller's alleged oral promise would have been material if proven; it is whether the claimant carried its burden to prove that the promise is part of the enforceable bargain at all, given a fully negotiated written agreement that says nothing about it. Under New York's parol evidence rule, a writing that is complete on its face — addressing the major terms of the deal — is treated as the entire agreement, and prior or contemporaneous oral promises that would add to or vary it are barred. The writing here is not a sparse term sheet; it emerged from several weeks of negotiation, survived multiple markups by both sides, and covers the asset transfer, the price, transition support, and even small ancillary commitments. A shutdown obligation of the kind the buyer describes — shutting down a separate, competing storefront after closing — is not a trivial side comment; it is a material competitive restraint that, if real, would have belonged squarely in a writing of that scope and deliberateness. Its total absence from every draft and the final agreement is not neutral; it is strong evidence that the writing was intended to be the whole bargain.\n\nThe claimant bore the burden on every link in the chain: that the promise was made, that it survived into the deal, and that it is enforceable notwithstanding the complete writing. On this record, the claimant produced only its own unverified account of the alleged repeated oral promise (Exhibit C-2). No draft contained the term (Exhibit R-3); no contemporaneous writing, email, or memorandum corroborates it; no witness, annotation, or side letter supports it. Party-asserted text of unverified reliability, standing alone, does not meet a preponderance standard against a fully negotiated, signed writing that is silent on the point and was never ambiguous. The seller, by contrast, carried its burden to show integration: the negotiation history (Exhibit R-2), the absence of the term from all drafts (Exhibit R-3), and the breadth of the writing's coverage (Exhibits R-1, C-1) collectively establish that the writing is the entire agreement.\n\nThe claimant's argument that the shutdown was a separate promise about separate property is unpersuasive on these facts. The promise, as alleged, directly affects the value of the very asset purchased — the acquired storefront's customer base and competitive position — and would naturally have been central to the written bargain if it were real. Treating it as an outside oral side promise would allow any deal term to be smuggled past a carefully negotiated writing, which is precisely what the parol evidence rule prevents. The claimant also failed to identify any ambiguity in the writing or any partially integrated term that the alleged oral promise would supplement rather than contradict. With the writing controlled and no enforceable breach proven, performance is assessed against the written terms only; the seller performed them all (Exhibit R-4, undisputed). The remedy follows directly: the full escrow holdback of 6,000 USDC is released to the seller.", "allocation": { "claimant": 0, "respondent": 6000 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-037", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Defaulting Buyer", "type": "entity", "position": "We agreed to buy the seller's codebase and customer accounts in stages: a deposit up front, an interim payment partway through, and the balance on final transfer. We paid the deposit and the interim payment went into escrow, but we could not raise the balance and the seller ended the deal. We accept the seller keeps the deposit - that was the earnest for signing. But the interim payment was simply part of the price, paid toward a transfer that is now never going to happen. The seller chose to terminate and keeps the entire asset; it cannot keep the price as well. Money paid toward something we will never receive should come back to us.", "evidence": [ "The staged purchase agreement setting out the deposit, the interim part-payment, and the balance due on final transfer", "The payment record distinguishing the deposit (paid and not in dispute) from the escrowed interim part-payment", "The seller's termination notice ending the agreement and retaining the asset for the buyer's default", "The record that no part of the codebase or customer accounts was ever transferred to the buyer" ] }, "partyB": { "name": "Terminating Seller", "type": "entity", "position": "The buyer defaulted, plain and simple. The interim payment fell due on the schedule the buyer signed, before we terminated - it was an accrued debt the moment its date passed. Termination ends future obligations; it does not erase debts that had already fallen due. We held this asset off the market for months on the strength of the buyer's staged commitments and turned away other interest. The buyer walks away from its own default; the least it owes is the stage payment that was already due. The escrowed sum should be released to us.", "evidence": [ "The staged purchase agreement and its payment schedule showing the interim payment's due date preceded termination", "The buyer's default notices on the balance and the seller's subsequent termination notice", "Records showing the asset was held off the market and other interest declined during the purchase period", "The seller's account of the interim payment as an accrued debt at the date of termination" ] }, "facts": "A buyer agreed to purchase a seller's codebase and customer accounts in stages: an up-front deposit (paid; expressly not in dispute), an interim part-payment on a scheduled date, and the balance on final transfer of the asset. The interim payment was routed to escrow around its scheduled date; the buyer then failed to raise the balance, and the seller terminated the agreement for the buyer's default, retaining the entire asset. Nothing was ever transferred to the buyer. The agreement states the payment schedule but contains no forfeiture clause for the interim payment. The seller claims the escrowed interim payment as a debt that accrued before termination; the buyer claims its return, as money paid on account of a purchase whose consideration has wholly failed. The escrow simulation holds the interim part-payment.", "governingLaw": "Governing law stipulation: Australian contract law governs this dispute.", "amount": 4200, "currency": "USDC" }, "reference": { "case": "McDonald v. Dennys Lascelles Ltd", "citation": "(1933) 48 CLR 457", "court": "High Court of Australia", "source": "https://www.hcourt.gov.au/cases-and-judgments/judgments/1-clr-100-clr/mcdonald-v-dennys-lascelles-limited" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The threshold question is the legal character of the interim payment. The agreement scheduled a deposit, an interim part-payment, and a balance due on final transfer. The interim payment was described as a \"part-payment\" of the total price — not as a deposit, earnest money, or liquidated damages. Its due date preceded termination, and the seller argues it became an accrued debt the moment that date passed, surviving termination under the principle that termination discharges future obligations but not debts already matured.\n\nThat argument fails on two levels. First, the seller bore the burden of proving the interim payment became an irretrievable, accrued debt on its due date, and the record does not sustain that showing. The agreement states the payment schedule but is silent on the consequences of termination for the interim payment. There is no forfeiture clause, no express non-refundability provision, and no language making the interim payment a debt independent of the transfer. A scheduled due date establishes when payment was due; it does not, without more, establish that the payment survives termination as an accrued debt when the seller terminated for the buyer's default and no transfer ever occurred. The seller's argument conflates the maturity of a payment obligation with the question of whether that obligation is enriched or forfeited when the entire transaction collapses.\n\nSecond, the substantive doctrine that decides this dispute is restitution for failure of consideration. The buyer paid the interim sum on account of a purchase price whose entire consideration — the codebase and customer accounts — was never delivered. No part of the asset reached the buyer; the buyer received no work product, no transferable artifacts, and no value of any kind. Where a payment is made toward a transfer that does not occur, and the payer receives none of what the payment was for, the payer has a restitutionary claim to recover the payment, unless the contract contains a valid forfeiture clause or the payee proves a setoff for reliance losses. The agreement contains no such clause. The seller cites the asset being held off the market and other interest declined, but offered no quantification — no amount, no period, no comparable offer — so there is no basis for an offset, however sympathetic the position may be.\n\nThe buyer's own default complicates the equities but does not change the outcome. The buyer breached; the seller was entitled to terminate and did. But the deposit — expressly not in dispute — was the earnest for signing and presumably serves the seller's protection for the buyer's breach. The interim payment served a different function: it was a price installment toward the transfer. To allow the seller to keep both the deposit (which it concedes it keeps) and the interim price payment, while also retaining the entire asset, would confer a windfall well beyond the agreement's terms and beyond any proven loss. Absent a forfeiture clause, the governing terms do not support that result.\n\nThe seller's strongest point is that termination does not erase debts already accrued. That is correct in principle, but it presupposes a debt of the character the seller claims — a matured, non-contingent obligation to pay that survives independently of the transaction's completion. The interim payment was described as a part-payment of the price, and a price installment paid for a transfer that never happens is recoverable when no value reached the buyer. The seller's position would require the interim payment to be both a price installment (which implies it buys the asset) and a debt independent of the asset's delivery (which implies it does not). The agreement supports only the former reading; the latter requires a forfeiture clause the record does not contain.\n\nThe remedy is full restitution of the escrowed interim payment to the buyer. Total failure of consideration is proven; no offset is proven. The 4,200 USDC corpus returns to the claimant.", "allocation": { "claimant": 4200, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-038", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Compliance Consultant", "type": "entity", "position": "The owner signed a form authorizing its project coordinator to deal with the compliance work. We sent our hourly rate and terms while the owner was copied, received no objection, and performed the tasks the coordinator requested. We accept that a small group of time entries came after the owner ended the coordinator's authority, but the authorized work must be paid. Release 8,662.08 of the 9,170.38 corpus to us and return the remaining 508.30 to the owner.", "evidence": [ "The owner's signed form granting the project coordinator broad authority for the compliance response", "The consultant's contemporaneous rate-and-terms email copied to the owner", "Time records separating instructions and work before and after the authority-ending date", "Invoices totaling 9,170.38, with the post-authority entries identified separately" ] }, "partyB": { "name": "Property Owner", "type": "entity", "position": "The coordinator was not authorized to bind us to every invoice the consultant chose to generate. The consultant contracted with the coordinator, not with us, and at minimum knew by the stated cutoff that no further instruction could be attributed to us. The full corpus should return to us because we never directly accepted the engagement or its interest terms.", "evidence": [ "Communications showing the coordinator, rather than the owner, gave the day-to-day instructions", "The notice ending the coordinator's authority on the identified cutoff date", "Entries showing some consultant work occurred after that cutoff", "The absence of a services agreement bearing the owner's direct signature" ] }, "facts": "The owner signed a form giving its project coordinator broad authority over work responding to a compliance notice. The consultant then sent terms stating a rate of 260 per hour plus tax while the owner was copied, and the owner did not object. The coordinator instructed the consultant, which performed and recorded the work. The owner's manifestation of authority ended on a documented cutoff date. The parties agree that 8,662.08 of the invoiced 9,170.38 concerns authorized pre-cutoff work and 508.30 concerns later work. The corpus excludes disputed contractual interest. For this benchmark, the agreed apparent-authority principles reflected in New Zealand law govern.", "governingLaw": "Governing law stipulation: New Zealand contract law governs this dispute.", "amount": 9170.38, "currency": "USDC" }, "reference": { "case": "B Ltd v. NC", "citation": "[2024] NZDT 490", "court": "New Zealand Disputes Tribunal", "source": "https://www.disputestribunal.govt.nz/assets/Documents/Decisions/B-Ltd-v-NC-2024-NZDT-490-31-May-2024.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The owner signed a form granting its project coordinator broad authority over compliance-response work. That is a direct manifestation to a third party (the consultant) that the coordinator could act on the owner's behalf. The consultant then sent its rate-and-terms email at 260 per hour plus tax with the owner copied; the owner did not object. Together, these facts establish both the scope of the coordinator's authority and the commercial rate governing the engagement. The owner's argument that it 'never directly accepted the engagement' fails because direct acceptance is unnecessary where the owner itself manifested the coordinator's authority to commission the work. The owner's own exhibit (R-4) establishes only the absence of a separately signed services agreement; it does not rebut the authority form the owner did sign.\n\nThe parties agree on the critical temporal split: 8,662.08 of work was performed before the authority cutoff and 508.30 after. The claimant carried the burden of proving the coordinator's authority and the rate terms; it met that burden with the signed form (Exhibit C-1), the rate email copied to the owner (Exhibit C-2), and the time records (Exhibit C-3). The respondent does not contest the existence of the authority form or the non-objection to the rate; it argues only that the consultant contracted with the coordinator rather than with the owner. But apparent authority binds the principal to acts the agent takes within the scope of the manifested authority. The coordinator instructed the consultant within the scope of the authority the owner granted. The owner is bound.\n\nThe cutoff date is undisputed. The owner manifested the end of the coordinator's authority on that date (Exhibit R-2). Work ordered after that date falls outside any manifestation of authority. The claimant concedes this: it seeks only 8,662.08 and agrees that 508.30 should return to the owner. The post-cutoff work (508.30) represents 5.5% of the total and is severable from the authorized body of work. It does not taint the pre-cutoff majority. The claimant does not seek recovery for post-cutoff work, and the respondent has not alleged any defect in the pre-cutoff work that would offset or reduce the consultant's entitlement to it.\n\nThe respondent's counterclaim for the entire 9,170.38 fails. The respondent bore the burden of proving that the owner is not bound by the coordinator's pre-cutoff instructions. It produced no evidence contradicting the authority form, the non-objected-to rate, or the performance of the work. Its exhibits confirm the coordinator's role (R-1), the cutoff (R-2), and post-cutoff work (R-3) — all of which support the split the claimant proposes rather than total rejection. The respondent's argument that the consultant 'knew by the stated cutoff that no further instruction could be attributed' is correct as to post-cutoff work but does not excuse payment for work already properly ordered and performed before that date.\n\nThe remedy follows directly: 8,662.08 to the consultant for authorized, performed work; 508.30 to the owner for work performed without authority. This is not a compromise; it is what the doctrine yields on the parties' own agreed facts.", "allocation": { "claimant": 8662.08, "respondent": 508.3 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-039", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Seasonal Operations Provider", "type": "entity", "position": "The client had already decided to end our next service season, yet its representatives continued telling us through words and conduct that the contract was secure. Relying on that impression, we performed extra off-season work, renewed an equipment lease, reserved capacity, and let the alternative-bid window close. Formal notice may have met the ten-day clause, but the deliberate misleading deprived us of the chance to protect ourselves. The full 80,742.10 reserve should be awarded to us.", "evidence": [ "The two-season agreement and its ten-day without-cause termination clause", "Internal client records showing the termination decision preceded the later reassuring communications", "Messages and meeting notes that led the provider to believe the next season remained secure", "The benchmark damages schedule: 64,306.96 lost profit, 14,835.14 avoidable equipment lease cost, and a 1,600 unpaid invoice, totaling 80,742.10" ] }, "partyB": { "name": "Property Operations Client", "type": "entity", "position": "The contract expressly let us terminate without cause on ten days' written notice, and we gave that notice. It did not require us to disclose an internal decision before notice was due, promise a renewal, or protect the provider from ordinary commercial planning risks. Informal discussions and off-season cooperation cannot rewrite the termination clause. The damages reserve should return to us.", "evidence": [ "The written no-cause termination provision requiring only ten days' notice", "The formal termination notice and proof of timely delivery", "Communications containing no express promise that termination would not occur", "Evidence that some extra off-season work also benefited the provider's ongoing business" ] }, "facts": "The parties had a two-season operations agreement terminable without cause on ten days' written notice. The client decided months before the next season to terminate. After that decision, its representatives continued communications and accepted extra off-season work while knowing the provider believed the next season remained secure. The provider consequently did not pursue alternative tenders and renewed equipment. The client later gave formally sufficient notice only after the alternative-bid window had closed. For this benchmark adaptation, the parties stipulate both causation and the following recoverable components if active misleading is established: 64,306.96 in lost profit, 14,835.14 in avoidable equipment lease cost, and a 1,600 unpaid invoice, totaling 80,742.10. For this benchmark, Ontario contract law and its duty of honest performance govern.", "governingLaw": "Governing law stipulation: Ontario contract law governs this dispute.", "amount": 80742.1, "currency": "USDC" }, "reference": { "case": "C.M. Callow Inc. v. Zollinger", "citation": "2020 SCC 45", "court": "Supreme Court of Canada", "source": "https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/18613/index.do" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The dispositive question is whether the respondent's conduct between its private termination decision and its formal notice breached the duty of honest performance, or whether the ten-day termination clause insulated that conduct entirely. The answer requires separating two analytically distinct matters that the respondent conflates.\n\nFirst, the termination clause. The agreement permitted either party to terminate without cause on ten days' written notice. The respondent gave such notice, and Exhibit R-2 establishes timely delivery. On that narrow question, the respondent performed. But the clause is a procedural exit mechanism: it says how a party may leave, not what a party may say or omit while still inside the contract. The clause does not contain language displacing the duty of honest performance, and the respondent points to none. Reading it as a license for pre-termination deception would give the clause a scope it does not claim and would gut the duty of honest performance whenever any termination right exists. The ordinary meaning of a termination-without-cause clause is that a party may end the contract without giving a reason — not that it may actively or passively mislead the counterparty about its intentions while the contract runs.\n\nSecond, the duty of honest performance. The background facts establish that the client internally decided to terminate months before giving notice, that its representatives continued communications and accepted extra off-season work while knowing the provider believed the next season was secure, and that the provider consequently did not pursue alternative tenders and renewed equipment. Exhibit C-2 shows the termination decision preceded the reassuring communications; Exhibit C-3 shows the messages and meeting notes that created the false impression. The respondent counters that the communications contained no express promise that termination would not occur (Exhibit R-3) and that it was under no duty to volunteer an internal decision. That framing sets the bar too high. The duty of honest performance does not require an express promise of non-termination to be breached; it requires that a party not knowingly permit the other to operate under a materially false impression. The record shows the client knew the provider believed the next season was secure, knew that belief was false, and continued to accept the benefit of off-season work without correction. That is the knowing maintenance of a false impression.\n\nThe respondent also argues that some extra off-season work benefited the provider's ongoing business (Exhibit R-4) and implies an offset. But the exhibit is unverified party-asserted text with no quantified benefit in the record, and the respondent carried the burden of proving any offset. It produced no numbers. The stipulated damage schedule — 64,306.96 lost profit, 14,835.14 avoidable equipment lease cost, and 1,600 unpaid invoice — is unchallenged on quantum; the parties stipulated both causation and these components. There is no record basis for reducing any component.\n\nThe respondent's compliance with the ten-day clause does not extinguish liability for losses caused by the antecedent breach. The losses arose not from the notice itself — which was timely and effective — but from the period of misleading conduct that preceded it and that deprived the provider of the chance to pursue alternatives. The full 80,742.10 corpus is therefore allocated to the claimant.", "allocation": { "claimant": 80742.1, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-040", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Transaction Referrer", "type": "entity", "position": "I told the seller that my commission was two percent plus applicable tax, introduced the buyer, and that buyer completed the purchase. In this setting, everyone understood that a commission becomes payable when an introduced buyer completes. The fact that we did not recite that obvious trigger word for word does not erase the bargain. I accept the stipulated one-third reduction for sending the required written disclosure late, so 32,900 of the 49,350 corpus should be released to me.", "evidence": [ "A contemporaneous note of the call in which the referrer stated the two-percent commission plus tax", "Communications proving the referrer's introduction of the eventual buyer", "The completed sale record showing a 2.1 million transaction", "The written fee disclosure sent after introduction but before completion" ] }, "partyB": { "name": "Asset Seller", "type": "human", "position": "No binding commission agreement was formed because the call never said what event would trigger payment. The referrer also failed to provide the mandatory written terms before making the introduction. A court should not invent a central term after the fact. The entire 49,350 corpus should return to me, or at minimum the late-disclosure reduction must be applied.", "evidence": [ "The short-call record containing no express statement of a completion trigger", "The absence of signed commission terms before the introduction", "The timestamp showing the required written disclosure followed the introduction", "The sale agreement, which contains no obligation to the referrer" ] }, "facts": "During a short call, a transaction referrer stated a commission of two percent plus applicable tax but did not expressly identify the event triggering payment. The referrer then introduced a buyer who completed a 2.1 million purchase. The sector's ordinary understanding is that commission is due when an introduction results in completion. A mandatory written fee disclosure arrived after the introduction but before closing. The parties stipulate that the applicable England and Wales disclosure rule permits a one-third reduction for that lateness. The unreduced commission corpus is 49,350 and the reduced amount is 32,900.", "governingLaw": "english_law", "amount": 49350, "currency": "USDC" }, "reference": { "case": "Wells v. Devani", "citation": "[2019] UKSC 4", "court": "Supreme Court of the United Kingdom", "source": "https://www.supremecourt.uk/cases/uksc-2016-0223" }, "expectedOutcome": "split", "systemDecision": { "outcome": "split", "reasoning": "The respondent argues that no binding agreement was formed because the call never specified the event triggering payment. This argument fails under the controlling authority of Wells v Devani [2019] UKSC 4. There, the Supreme Court held that an oral agreement between an estate agent and a property owner — which stated a commission percentage but did not expressly identify the trigger event — was nonetheless complete and enforceable. Lord Kitchin held that where parties intended to create legal relations and the agent introduced a purchaser who completed, it was the only sensible interpretation that commission became payable on completion and from the proceeds of sale. Lord Briggs reached the same result by construing the words and conduct in context rather than by implying terms. The facts here are materially indistinguishable: the referrer stated a commission rate, the seller permitted the introduction to proceed, the introduced buyer completed, and the sector's ordinary understanding confirms that completion is the trigger. The agreement is not too uncertain to enforce.\n\nThe respondent's secondary position — that the late written disclosure should defeat the claim entirely — also fails. The parties have stipulated that the applicable disclosure rule permits a one-third fee reduction for lateness, mirroring the section 18(6) framework in Wells v Devani where the trial judge reduced the fee by one-third rather than dismissing the claim. Under section 18(6) of the Estate Agents Act 1979, as explained in Wells, the court must weigh prejudice and culpability together; dismissal is warranted only where it is just having regard to both. Here, the stipulation itself resolves that balance: culpability exists (the disclosure was late) but the prejudice is adequately compensated by a one-third reduction. The respondent bore the burden of proving prejudice beyond that already addressed by the stipulated reduction and produced no evidence of additional, uncompensated harm.\n\nThe referrer performed by introducing the buyer who completed the 2.1 million purchase. The introduction was the efficient cause of the sale. Under the principle in Dennis Reed Ltd v Goody and Midgley Estates v Hand — both endorsed in Wells — commission is payable when the introduction leads to a completed sale. The referrer accepted the one-third reduction, yielding 32,900 from the 49,350 corpus. The remaining 16,450 reverts to the seller. No basis exists in the record for departing from the stipulated reduction in either direction.", "allocation": { "claimant": 32900, "respondent": 16450 }, "citations": [ { "title": "Wells v Devani [2019] UKSC 4", "url": "https://www.bailii.org/uk/cases/UKSC/2019/4.html", "proposition": "An oral commission agreement between a referrer/agent and a principal is complete and enforceable even though the parties did not expressly identify the event triggering payment; where the parties intended to create legal relations and the agent introduced a purchaser who completed the purchase, the only sensible interpretation is that commission is payable on completion and from the proceeds of sale." }, { "title": "Wells v Devani [2019] UKSC 4", "url": "https://www.bailii.org/uk/cases/UKSC/2019/4.html", "proposition": "The court may enforce an agreement despite the agent's failure to comply with statutory disclosure requirements, but may reduce the commission to compensate the client for prejudice; dismissal is warranted only if it is just having regard to both prejudice and the agent's culpability, and a one-third reduction can be an appropriate remedy." }, { "title": "Wells v Devani [2019] UKSC 4", "url": "https://www.bailii.org/uk/cases/UKSC/2019/4.html", "proposition": "Where parties intended to be bound and have acted on their agreement, it may be permissible to imply a term to give the agreement business efficacy, including that commission is payable on completion of the sale to a person introduced by the agent." }, { "title": "Wells v Devani [2019] UKSC 4", "url": "https://www.bailii.org/uk/cases/UKSC/2019/4.html", "proposition": "The court is reluctant to find an agreement too vague or uncertain to be enforced where the parties had the intention of being contractually bound and have acted on their agreement; the common understanding is that an agent's commission is payable out of the proceeds of sale when the introduction leads to a completed sale." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-041", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Dependent Marketplace Agent", "type": "entity", "position": "Nearly all of our business depended on continued access to the respondent's interface. It terminated the old appointment and offered renewal only if we signed away our disputed legacy revenue-share claim. Losing access would probably have ended our business, so the signature was not a real commercial choice. The waiver should be set aside for economic duress and the 50,000 legacy-claim reserve released to us.", "evidence": [ "Revenue records showing the agent's overwhelming dependence on the respondent's interface", "The termination notice ending the prior appointment lawfully", "The renewal offer expressly conditioned on a waiver of all legacy revenue claims", "The signed waiver and contemporaneous records describing the threat to the agent's survival" ] }, "partyB": { "name": "Interface Provider", "type": "entity", "position": "We had a lawful right to end the old appointment and no duty to offer another. We genuinely believed there was a defense to the disputed legacy claim and proposed a new commercial relationship only on terms that settled old uncertainty. Hard bargaining and dependence do not alone make a lawful offer illegitimate. The waiver remains effective, so the reserve should return to us.", "evidence": [ "The prior appointment's lawful termination provisions", "Internal and external records supporting the provider's genuine belief that the legacy claim was defensible", "The written renewal agreement and unambiguous waiver", "Evidence that the threatened act was termination or non-renewal rather than an independently unlawful act" ] }, "facts": "The agent depended heavily on the provider's interface. The provider lawfully terminated the prior appointment and offered a new one only if the agent waived disputed legacy revenue-share claims. The agent signed because loss of access would probably end its business. The provider genuinely believed it had a defense to the legacy claims; their merits are not submitted for decision. The parties stipulate that the sole issue is whether the waiver is avoidable under England and Wales law governing lawful-act economic duress. A scaled 50,000 claim reserve represents the waived claim.", "governingLaw": "english_law", "amount": 50000, "currency": "USDC" }, "reference": { "case": "Pakistan International Airline Corp. v. Times Travel (UK) Ltd", "citation": "[2021] UKSC 40", "court": "Supreme Court of the United Kingdom", "source": "https://www.supremecourt.uk/cases/uksc-2019-0142" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive issue is whether the respondent's demand for a waiver of legacy claims, backed by the lawful threat of non-renewal, amounted to illegitimate pressure under the English law doctrine of lawful-act economic duress. The parties stipulate that the threatened act—termination and non-renewal—was lawful, and that the respondent genuinely believed it had a defence to the legacy claims. These stipulated facts closely mirror those in PIAC v Times Travel [2021] UKSC 40, where the Supreme Court held that PIAC's demand for a waiver, backed by the lawful threat of ending the agency relationship, did not amount to economic duress because PIAC genuinely believed it was not liable for the unpaid commission and used no reprehensible means to create the claimant's vulnerability.\n\nUnder the law as stated in PIAC v Times Travel, three elements must be established for lawful-act economic duress: (1) an illegitimate threat, (2) sufficient causation, and (3) no reasonable alternative. The parties do not dispute elements (2) and (3)—the claimant signed because loss of access would probably end its business, and it had no reasonable alternative. The case turns on element (1): whether the demand was illegitimate.\n\nLord Hodge's analysis, concurred in by Lord Reed, Lord Lloyd-Jones, and Lord Kitchin, identifies two circumstances in which lawful-act duress has been found: (a) exploitation of knowledge of criminal activity, and (b) using illegitimate means to manoeuvre the claimant into a position of weakness to force a waiver of a claim. The second category requires reprehensible conduct—such as the forgery and false evidence in Borrelli v Ting, or the misleading assurances and repudiatory breach in The Cenk K—that goes beyond the mere exercise of monopoly or contractual power. Lord Burrows, additionally, would require proof of a 'bad faith demand'—that the threatening party did not genuinely believe it had a defence to the claim being waived. Although Lord Hodge takes a narrower view of the doctrine than Lord Burrows on this point, both agree on the outcome where there is a genuine belief in a defence and no reprehensible manoeuvring.\n\nApplying this law to the present facts: the respondent lawfully terminated the appointment, offered renewal conditioned on a waiver, and genuinely believed it had a defence to the legacy claims. There is no evidence of forgery, false evidence, prior unlawful conduct, misleading assurances, or any other reprehensible means used to manoeuvre the claimant into vulnerability. The respondent's conduct was a hard-nosed exercise of its lawful right not to renew and its position as the dominant interface provider. Under Lord Hodge's analysis, this does not amount to illegitimate pressure because the mere exercise of monopoly power or lawful termination rights, without reprehensible means, cannot convert an otherwise lawful demand into duress. Under Lord Burrows's analysis, the claim also fails because the claimant bore the burden of proving the respondent's bad faith—specifically, that the respondent did not genuinely believe it had a defence—and the claimant has not met that burden. The stipulated facts and Exhibit R-2 affirmatively establish the respondent's genuine belief in a defence.\n\nThe claimant argues that its overwhelming dependence on the respondent's interface and the threat to its survival should render the waiver voidable. But English law does not recognise inequality of bargaining power as a free-standing doctrine, nor does it recognise a general principle of good faith in contracting. A monopoly supplier may lawfully refuse to deal or impose onerous terms. The absence of these broader doctrines restricts the scope for lawful-act economic duress in commercial negotiation to rare exceptional cases. This is not such a case. The claimant's dependence is real, but it does not, without more, transform a lawful, good-faith demand into illegitimate pressure.\n\nThe claimant's reliance on the CTN Cash and Carry line of authority does not assist. Even under Lord Burrows's wider interpretation—that a bad faith demand backed by monopoly position and manoeuvring would suffice—the claimant has not proven bad faith. The demand was made in good faith. The respondent is entitled to enforce the waiver, and the 50,000 claim reserve representing the waived claim should be released to the respondent.", "allocation": { "claimant": 0, "respondent": 50000 }, "citations": [ { "title": "Pakistan International Airline Corporation v Times Travel (UK) Ltd (Rev1) [2021] UKSC 40", "url": "https://www.bailii.org/uk/cases/UKSC/2021/40.html", "proposition": "Lawful-act economic duress exists in English law but its scope in commercial contexts is extremely limited; three elements must be established: an illegitimate threat, sufficient causation, and no reasonable alternative to giving in to the threat." }, { "title": "Pakistan International Airline Corporation v Times Travel (UK) Ltd (Rev1) [2021] UKSC 40", "url": "https://www.bailii.org/uk/cases/UKSC/2021/40.html", "proposition": "Where the threat is of a lawful act, the illegitimacy of the threat is determined by focusing on the nature and justification of the demand rather than the lawfulness of the threat; a demand motivated by commercial self-interest is generally justified." }, { "title": "Pakistan International Airline Corporation v Times Travel (UK) Ltd (Rev1) [2021] UKSC 40", "url": "https://www.bailii.org/uk/cases/UKSC/2021/40.html", "proposition": "English law recognises no doctrine of inequality of bargaining power and no general principle of good faith in contracting; the mere exercise of monopoly power or a lawful right to terminate cannot by itself amount to illegitimate pressure." }, { "title": "Pakistan International Airline Corporation v Times Travel (UK) Ltd (Rev1) [2021] UKSC 40", "url": "https://www.bailii.org/uk/cases/UKSC/2021/40.html", "proposition": "Where a party demands a waiver of a claim against it, the demand is illegitimate where the threatening party used reprehensible means to manoeuvre the claimant into vulnerability (as in Borrelli v Ting and The Cenk K) or, under Lord Burrows's analysis, where the threatening party did not genuinely believe it had a defence to the claim being waived." }, { "title": "Pakistan International Airline Corporation v Times Travel (UK) Ltd (Rev1) [2021] UKSC 40", "url": "https://www.bailii.org/uk/cases/UKSC/2021/40.html", "proposition": "The burden of proving bad faith (that the threatening party did not genuinely believe it had a defence) lies on the party seeking to avoid the contract; where the trial court finds genuine belief in a defence, the claim for duress fails." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-042", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Mobilized Project Provider", "type": "entity", "position": "The client promised to supply production access, required data, and approvals, and directed us to mobilize for the project. We reasonably incurred 36,972.34 in verified preparation costs. The client never enabled the work, wasting that expenditure and making the venture's counterfactual returns unusually hard to prove. Unless the client can show the spending would not have been recouped even with performance, the full reserve should compensate us.", "evidence": [ "The agreement requiring the client to provide access, data, and approvals", "Client communications directing mobilization before the prerequisite delivery date", "Invoices and payroll records verifying 36,972.34 in direct mobilization expenditure", "Records showing the client's continued non-provision prevented launch and obscured expected returns" ] }, "partyB": { "name": "Prerequisite Client", "type": "entity", "position": "The provider must prove actual loss, not assume every preparation expense would have been recovered. This was a prospective venture with no demonstrated profit history, and the provider chose how much to spend before launch. Uncertain expectation damages cannot be converted automatically into reimbursement. The reserve should return to us because the provider has not proved that performance would have recouped these costs.", "evidence": [ "Forecasts showing uncertainty in the prospective venture's revenue", "The absence of completed operations or a demonstrated profit history", "Provider budgets showing discretionary choices within the mobilization spend", "Market evidence the client says could have limited recoupment even if access had arrived" ] }, "facts": "The client promised to provide production access, necessary data, and approvals by a fixed date and directed the provider to mobilize. The provider reasonably incurred 36,972.34 in verified direct expenditure in anticipation of performance. The client failed to provide the prerequisites, so the project could not launch and the expenditure was wasted. That same breach made proof of the venture's counterfactual profitability unusually uncertain. For this benchmark, the parties agree that New South Wales contract law governs and that the respondent may rebut recovery by showing the expenditure would not have been recouped even with performance. The corpus is a stipulated damages reserve equal to the verified direct expenditure.", "governingLaw": "Governing law stipulation: New South Wales contract law governs this dispute.", "amount": 36972.34, "currency": "USDC" }, "reference": { "case": "Cessnock City Council v. 123 259 932 Pty Ltd", "citation": "[2024] HCA 17", "court": "High Court of Australia", "source": "https://www.hcourt.gov.au/cases-and-judgments/judgments/judgments-1998-current/cessnock-city-council-v-123-259-932-pty-ltd" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The client promised production access, data, and approvals and directed the provider to mobilize. The provider incurred 36,972.34 in verified direct expenditure on that direction. The client then failed to deliver the prerequisites, making the project launch impossible and rendering the expenditure wasted. This breach is undisputed. The question is remedy.\n\nUnder the governing law (New South Wales contract law, applied through the principles in Liu Shu Ming v Koh Chew Chee [2023] SGHC(A) 15), the starting point is that damages for breach of contract aim to place the innocent party in the position it would have been in had the contract been performed — ordinarily measured as expectation damages. However, the court there recognized that reliance damages — recovery of wasted expenditure incurred in reliance on the contract — are available where it is impossible or at least extremely difficult for the plaintiff to prove expectation damages, or where the contract was not entered into for profit. Here, the client's own breach — failure to supply indispensable prerequisites — rendered proof of the venture's counterfactual profitability unusually uncertain. The venture never launched; there were no completed operations, no profit history, and the client's non-provision obscured what the returns would have been. This is precisely the kind of evidentiary difficulty that the Liu Shu Ming court identified as triggering the availability of reliance damages. The claimant did not simply choose not to prove expectation damages; the client's breach made such proof unusually difficult. The threshold is met.\n\nOnce reliance damages are properly claimable, the burden shifts to the defendant to prove that the plaintiff would not have recouped its expenditure even had the contract been performed. This presumption — that a plaintiff would not enter a loss-making contract — is the basis for shifting the burden. The respondent bore that burden here and did not meet it. The respondent's exhibits (R-1 through R-4) assert uncertainty about revenue forecasts, the absence of a demonstrated profit history, discretionary spending choices, and market evidence that could have limited recoupment. But none of these materials quantify a loss or demonstrate that the venture would have been unprofitable. They gesture at risk and uncertainty — which is exactly what the claimant says made expectation damages unusually difficult to prove in the first place — but they do not discharge the respondent's burden of proving non-recoupment. The respondent had the opportunity to adduce evidence that the expenditure would not have been recovered and did not do so. Under the burden allocation, the chips fall where they have fallen.\n\nThe respondent's argument that the provider must prove actual loss, not assume every preparation expense would have been recovered, misstates the burden. Once reliance damages are properly available and the presumption arises, it is the respondent who must prove non-recoupment. The respondent has not. The full corpus of 36,972.34 — equal to the verified direct expenditure — is therefore allocated to the claimant. No set-off, shortfall, or counterclaim was established. The amount is exact and record-grounded; it is not an estimate or a compromise between the parties' demands. The doctrine yields a full award because the respondent did not meet its burden of rebuttal.", "allocation": { "claimant": 36972.34, "respondent": 0 }, "citations": [ { "title": "[2023] SGHC(A) 15 - :: eLitigation ::", "url": "https://www.elitigation.sg/gd/s/2023_SGHCA_15", "proposition": "The underlying principle governing contractual damages is that the innocent party should be placed in the position it would have been in had the contract been performed; expectation damages are the ordinary measure but reliance damages are available where it is impossible or at least extremely difficult for the plaintiff to prove expectation damages, or where the contract was not entered into for profit." }, { "title": "[2023] SGHC(A) 15 - :: eLitigation ::", "url": "https://www.elitigation.sg/gd/s/2023_SGHCA_15", "proposition": "When reliance damages are properly claimed, the burden shifts to the defendant to prove that the plaintiff would not have recouped its expenditure even had the contract been performed, based on the presumption that a plaintiff would not enter a loss-making contract." }, { "title": "[2023] SGHC(A) 15 - :: eLitigation ::", "url": "https://www.elitigation.sg/gd/s/2023_SGHCA_15", "proposition": "It is not open to a plaintiff to claim reliance damages simply because it chooses not to adduce evidence of expectation damages; the plaintiff must show it was impossible or at least extremely difficult to prove expectation damages, or that the contract was not for profit." }, { "title": "[2023] SGHC(A) 15 - :: eLitigation ::", "url": "https://www.elitigation.sg/gd/s/2023_SGHCA_15", "proposition": "Parties who assert facts must adduce sufficient evidence; a defendant who bears the burden of proving non-recoupment must actually produce evidence to that effect rather than relying on general assertions of uncertainty." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-043", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Practice Asset Buyer", "type": "entity", "position": "I purchased a specialist service practice with 3,513 warranted transferable data units, but only 504 were usable. I had to buy substitutes to obtain what the seller promised. The ordinary fees customers later paid for services using those substitutes were earned through my own operations and would also have been earned with conforming inventory. They are not a benefit supplied by the seller's breach. The full 124,602.50 replacement-cost reserve should be awarded to me.", "evidence": [ "The asset-sale warranty covering 3,513 usable transferable data units", "The audit showing only 504 delivered units were usable", "Replacement invoices establishing 124,602.50 in replacement cost", "Customer billing records showing ordinary service fees earned after the replacements were acquired" ] }, "partyB": { "name": "Practice Asset Seller", "type": "entity", "position": "The buyer recovered the replacement expense through customer charges and should not receive the same amount again from us. Damages compensate actual loss; they do not create a windfall after the substitute inventory paid for itself. Any award must deduct the customer receipts, and the full reserve should not go to the buyer.", "evidence": [ "Customer invoices that included charges associated with use of replacement units", "Accounting showing aggregate receipts at least equal to the replacement invoices", "The buyer's records tying those receipts to services delivered with replacement inventory", "The seller's calculation netting customer receipts from replacement cost" ] }, "facts": "An asset-sale agreement warranted that 3,513 transferable licensed data units were usable, but only 504 were. The buyer acquired replacement units at a proven cost of 124,602.50 and later charged customers ordinary fees for services delivered using them. The parties agree those same ordinary fees could have been earned had conforming inventory been delivered. The seller argues the receipts nevertheless eliminated the loss. For this benchmark, New South Wales contract damages principles govern, and the corpus is a stipulated reserve equal to proven replacement cost.", "governingLaw": "Governing law stipulation: New South Wales contract law governs this dispute.", "amount": 124602.5, "currency": "USDC" }, "reference": { "case": "Clark v. Macourt", "citation": "[2013] HCA 56", "court": "High Court of Australia", "source": "https://www.hcourt.gov.au/cases-and-judgments/judgments/judgments-1998-current/clark-v-macourt" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The seller warranted 3,513 usable transferable data units and delivered only 504. This is a straightforward, severe breach of an express warranty — 3,009 of the 3,513 warranted units, roughly 85.7%, were unusable. The breach is material; it defeated the core commercial purpose of the acquisition. No party seriously disputes nonconformity or materiality.\n\nThe real question is remedy: should the 124,602.50 replacement-cost reserve be reduced by the ordinary customer fees the buyer later earned using the replacement units? The seller says yes, arguing the buyer 'recovered the replacement expense through customer charges' and should not 'receive the same amount again.' This argument confuses two distinct categories of value and must fail.\n\nThe compensatory principle in contract damages requires putting the promisee in the position it would have occupied had the contract been performed. The buyer's loss is the 124,602.50 it had to spend to replace what the seller promised but did not deliver. That outlay is a real, proven, out-of-pocket expenditure caused directly by the breach. The customer fees, by contrast, are revenue from the buyer's own service operations — the buyer performed services for its customers and charged ordinary fees. Critically, the parties agree that those same fees 'could have been earned had conforming inventory been delivered.' This stipulation is dispositive.\n\nIf the seller had performed, the buyer would have had 3,513 usable units and would have earned the same ordinary service fees. The buyer would not have spent 124,602.50 on replacements. In the performed-contract world, the buyer has the inventory and the fees. In the breached-contract world, the buyer has the inventory (via replacements) and the fees but is out 124,602.50. Compensating the 124,602.50 puts the buyer in the same position. Deducting the fees would leave the buyer without compensation for its replacement outlay — worse off than if the contract had been performed. That is undercompensation, not the elimination of a windfall.\n\nThe seller bears the burden of proving that the customer fees are a benefit caused by the breach — a benefit that would not have accrued but for the nonconformity. The respondent has not met this burden. To the contrary, the record contains an affirmative stipulation that the same ordinary fees would have been earned with conforming inventory. The receipts flow from the buyer's service labor and ordinary customer relationships, not from the seller's failure to perform. There is no evidence that the replacement units generated extraordinary revenue, unusual opportunities, or any benefit the buyer would not have obtained from the warranted units. Exhibits R-1 through R-4 establish that fees were earned and that they tie to replacement-unit usage, but they do not — and cannot, given the stipulation — establish that those fees are a net benefit attributable to the breach.\n\nThe seller's windfall argument assumes the buyer is recovering the same value twice. It is not. The 124,602.50 compensates a loss (money spent to cure a warranty breach). The customer fees compensate the buyer's own service operations (labor, expertise, customer relationships). These are different things. The replacement units were a cost of obtaining what should have been delivered; the fees were revenue the buyer would have earned regardless. Awarding the full corpus gives the buyer its replacement cost and nothing more. The buyer keeps the fees it earned through its own efforts, just as it would have done had the seller performed. This is the essence of full compensation.\n\nThe respondent's counterclaim seeks to deduct the receipts and return the balance to the seller. Because the receipts are not a breach-caused benefit, the deduction fails. The full corpus goes to the claimant.", "allocation": { "claimant": 124602.5, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-044", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Protection Plan Client", "type": "human", "position": "The provider denied my covered-loss claim and now invokes a standard-form term that extinguishes it unless proceedings begin within 90 days. That compressed deadline prevents meaningful access to adjudication and is unfair in a consumer contract. The time bar should not defeat a substantively valid 181,000 claim, so the claim corpus should be released to me.", "evidence": [ "The protection contract and its 90-day post-denial proceeding deadline", "The submitted covered-loss claim for 181,000", "The provider's written denial", "The filing record showing proceedings began about two years after denial" ] }, "partyB": { "name": "Protection Plan Provider", "type": "entity", "position": "The contract clearly required proceedings within 90 days after denial. That period is not manifestly unreasonable, and the client waited roughly two years without supplying any reason at all. Public policy does not erase every agreed deadline merely because it appears in standard terms. The late claim cannot proceed and the corpus should return to us.", "evidence": [ "The clear 90-day time-bar clause in the accepted contract", "Proof of the date the denial was communicated", "The proceeding date roughly two years later", "The record containing no explanation for failure to meet the deadline" ] }, "facts": "A protection plan covered a loss up to 181,000 and required any challenge to a denial to be filed within 90 days. The provider denied the client's claim. The client began proceedings about two years later and supplied no explanation for missing the deadline. The merits of the underlying loss claim are not submitted. The parties stipulate that South African constitutional contract-law principles govern: a time bar is assessed first for facial reasonableness and then for fairness in its enforcement on the particular record. The 181,000 claim corpus goes to the client only if the late challenge may proceed.", "governingLaw": "Governing law stipulation: South African contract law governs this dispute.", "amount": 181000, "currency": "USDC" }, "reference": { "case": "Barkhuizen v. Napier", "citation": "[2007] ZACC 5", "court": "Constitutional Court of South Africa", "source": "https://www.saflii.org/za/cases/ZACC/2007/5.html" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive question is whether the 90-day post-denial proceeding deadline is enforceable against a consumer who waited approximately two years to commence proceedings and offered no explanation for the delay. The parties stipulated that South African constitutional contract-law principles govern, and that a time bar is assessed in two stages: first, facial reasonableness; second, fairness of enforcement on the particular record.\n\nAt the first stage, the 90-day deadline is facially reasonable. It is a fixed, definite period that begins to run from a specific triggering event—the written denial of the claim. It is not so compressed as to be manifestly impracticable. The client bore the burden of demonstrating facial unreasonableness and offered no evidence or argument beyond a general assertion that compressed deadlines prevent meaningful access to adjudication. A 90-day window to commence proceedings after a denial is not, on its face, so short that a consumer could not reasonably comply, particularly where the triggering event is a written denial that the client received. The claimant's burden at this stage was not met.\n\nAt the second stage, the analysis turns to fairness of enforcement on the particular record. This is where the claimant's case fails most decisively. The client waited approximately two years—roughly eight times the permitted period—and supplied no explanation, excuse, or justification for the delay. There is no evidence of incapacity, misinformation, procedural obstacle, provider misconduct, or any other circumstance that would make enforcement of the deadline unfair in this specific case. The constitutional fairness inquiry does not ask whether standard-form terms should never be enforced in consumer contracts; it asks whether enforcement would be unconscionable or unfairly prejudicial on the facts proved. On this record, the client offered nothing. The burden was the client's, and an empty record cannot sustain a finding that enforcement is unfair.\n\nThe client's argument that public policy and access-to-adjudication principles should prevent the time bar from defeating a substantively valid claim has superficial force but collapses on the record. The merits of the underlying loss claim were never submitted; the client did not even attempt to show that the underlying claim had substantive validity, let alone that the delay was excusable. Access to adjudication is not served by a rule that would eliminate every contractual deadline merely because it appears in a standard-form term. The constitutional framework the parties stipulated to requires a reasoned, record-grounded showing of unfairness, and the client made none. A consumer who receives a written denial, faces a clear 90-day deadline, waits two years, and offers no explanation has not been denied meaningful access to adjudication; the client simply failed to act.\n\nBecause the 90-day deadline is a condition precedent to the right to challenge the denial, and the client did not comply with it, the late challenge cannot proceed. The 181,000 claim corpus goes to the client only if the challenge may proceed; it cannot. The full corpus reverts to the provider. No partial or apportioned allocation is warranted: the condition precedent is either met or not, and on this record it was not met. The remedy is not a graded allocation but a winner-takes-all consequence of the condition's non-fulfillment.", "allocation": { "claimant": 0, "respondent": 181000 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-045", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Enterprise Software Client", "type": "entity", "position": "The implementation failed in its fundamental purpose and forced us to retain a replacement provider. A party that fails its central obligation should not hide behind a limitation clause to avoid the consequences. At minimum, the agreement preserves our 79,200 replacement-service expense, which should be released to us from the combined corpus.", "evidence": [ "The negotiated implementation agreement and functional requirements", "The limitation clause excluding profit and consequential loss but addressing unsatisfactory services", "Findings and records showing implementation failure amounted to simple fault, not gross or intentional fault", "Replacement-provider invoices totaling 79,200" ] }, "partyB": { "name": "Enterprise Software Vendor", "type": "entity", "position": "Two sophisticated companies deliberately allocated risk. The clause excludes the client's profit and consequential heads unless there is gross or intentional fault, which the record expressly rejects. The client may retain the limited replacement-service amount the clause allows, but our 331,134.42 unpaid invoice remains due. Allocate those exact surviving heads from the combined corpus.", "evidence": [ "Negotiation records showing both enterprises reviewed and accepted the limitation clause", "The clause's express exclusions and exception for gross or intentional fault", "The factual finding of simple fault only", "Vendor invoices establishing the 331,134.42 unpaid balance" ] }, "facts": "Two sophisticated enterprises negotiated a software implementation agreement. Its limitation clause excluded profit, revenue, data, and consequential losses for unsatisfactory services, subject to exceptions including gross or intentional fault. The implementation failed in a fundamental obligation, but the stipulated finding is simple fault only. Under the negotiated allocation, 79,200 in replacement-service fees remains recoverable by the client and the vendor's 331,134.42 unpaid-invoice claim remains enforceable. Quebec civil law governs. A combined 410,334.42 corpus permits both surviving affirmative heads to be allocated; any net figure is arithmetic only.", "governingLaw": "Governing law stipulation: Quebec civil law governs this dispute.", "amount": 410334.42, "currency": "USDC" }, "reference": { "case": "6362222 Canada Inc. v. Prelco Inc.", "citation": "2021 SCC 39", "court": "Supreme Court of Canada", "source": "https://decisions.scc-csc.ca/scc-csc/scc-csc/en/item/19032/index.do" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The controlling text is the limitation clause itself. It excludes profit, revenue, data, and consequential losses for unsatisfactory services but carves out an exception for gross or intentional fault. The clause was negotiated between two sophisticated enterprises, and both sides' exhibits confirm it was reviewed and accepted. The clause is not ambiguous in its operation: it narrows recoverable heads unless the fault threshold is met, and the fault threshold is expressly limited to gross or intentional fault. The stipulated factual finding — simple fault only — does not trigger the exception. The claimant bore the burden of proving gross or intentional fault to pierce the clause and did not meet that burden. No exhibit or finding elevates the fault level; the record is consistent across the claimant's own Exhibit C-3 and the respondent's Exhibit R-3, both of which document simple fault only.\n\nThe claimant argues that a party who fails its central obligation should not hide behind a limitation clause. That argument has surface appeal, but it conflicts with the governing text. The clause was designed precisely for this scenario: unsatisfactory services that fail a fundamental obligation. The exception for gross or intentional fault is the negotiated safety valve, and it is closed on this record. To disregard the clause because the breach was material would rewrite the bargain the parties struck. Materiality supports the replacement-fee head the clause preserves; it does not unlock the excluded heads the clause forecloses.\n\nThe two surviving affirmative heads are arithmetically clear. The client's 79,200 replacement-service expense is documented by Exhibit C-4 and is expressly preserved by the negotiated allocation. The vendor's 331,134.42 unpaid invoice is established by Exhibit R-4 and remains enforceable. Their sum is 410,334.42, which exactly equals the escrow corpus. There is no remainder to allocate and no need for a conditional hold: the record supplies a concrete, complete allocation. The claimant's broader plea — to deny application of the limitation clause to other claimed losses — fails because the clause applies as written and the exception is untriggered. The respondent's counterclaim succeeds to the extent of enforcing the clause and recovering the unpaid invoice; the respondent concedes the 79,200 replacement allowance, and that concession aligns with the clause's terms.\n\nNo consequential, profit, revenue, or data losses beyond the 79,200 are recoverable. The claimant did not meet the burden of proving the gross-or-intentional-fault exception, and without it, the clause excludes those heads categorically. The remedy is therefore a clean two-line allocation from the corpus, not a split or a hedge: 79,200 to the claimant and 331,134.42 to the respondent, exhausting the 410,334.42 total.", "allocation": { "claimant": 79200, "respondent": 331134.42 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-046", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Qualified Tenderer", "type": "entity", "position": "The process was expressly closed to six qualified providers, yet the client knowingly accepted a substantively joint proposal involving an unqualified company and awarded it the work. The record establishes that we otherwise would have won. A no-compensation clause for participation in the defined qualified process does not extend to the client's decision to run a different, ineligible process. The 50,000 lost-opportunity reserve should be awarded to us.", "evidence": [ "The request limiting proposals to six named qualified providers", "The accepted proposal and records showing substantive participation by an unqualified company", "Client records showing awareness of the joint arrangement before award", "The stipulated evaluation showing the claimant otherwise would have received the contract and earned 50,000" ] }, "partyB": { "name": "Tendering Client", "type": "entity", "position": "The request says no proponent may claim compensation arising from participation in the tender. This claim exists only because the provider participated and lost. The clause is broad, commercially negotiated text and applies even if the process was administered incorrectly. The reserve should return to us.", "evidence": [ "The no-compensation clause covering claims arising from participation", "The full request for proposals and its commercial-risk provisions", "The selected proposal submitted in the name of one qualified provider", "Records the client says show the qualified provider remained formally responsible for delivery" ] }, "facts": "A request for proposals limited a closed process to six prequalified providers. The client knowingly accepted and selected a proposal that, although submitted under a qualified provider's name, was substantively a joint venture with an ineligible company. The parties stipulate that the claimant otherwise would have received the contract and earned 50,000. The request also states that no proponent may claim compensation arising from participation in the process. British Columbia contract law governs the interpretation and application of that exclusion clause. The corpus is an express lost-opportunity damages reserve.", "governingLaw": "Governing law stipulation: British Columbia contract law governs this dispute.", "amount": 50000, "currency": "USDC" }, "reference": { "case": "Tercon Contractors Ltd. v. British Columbia (Transportation and Highways)", "citation": "2010 SCC 4", "court": "Supreme Court of Canada", "source": "https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/7843/index.do" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The governing question is not whether the no-compensation clause is broad — it is whether the clause governs the events on which the claim rests. The clause bars compensation 'arising from participation in the process.' That phrase ties the exclusion to the defined closed process — the one limited to six qualified providers. The client did not administer that process. It knowingly accepted a substantively joint bid with an ineligible company, breaching the eligibility boundary that gave the closed process its defining character. The claim arises not from the claimant's ordinary loss in a properly run closed process but from the client's decision to abandon the process's defining condition while purporting to retain its protections.\n\nThe claimant carried its burden on every contested fact. It proved the accepted proposal substantively involved an ineligible company (Exhibit C-2). It proved the client knew of the arrangement before award (Exhibit C-3). It proved — by stipulation — that it otherwise would have received the contract and earned 50,000 (Exhibit C-4; background facts). The respondent does not dispute the breach, the knowledge, or the causation. Its only defense is the breadth of the exclusion clause.\n\nThat defense fails. The respondent bore the burden of proving the clause applies to bar the claim despite the client's knowing breach of the eligibility boundary. The clause is part of the same process document that defined the closed, six-provider process. It cannot fairly be read to immunize the client from the consequences of its own failure to honor the process's defining condition — a condition whose very purpose was to limit participation to qualified providers. To read the clause as the respondent urges would make the eligibility boundary unenforceable by the very parties it was designed to protect. The clause bars compensation for losing a fair closed competition; it does not bar compensation for being excluded from a competition the client was contractually required to run fairly. The respondent also argued the qualified provider remained formally responsible for delivery (Exhibit R-4), but formal responsibility for delivery does not cure the substantive ineligibility at the bidding stage — the boundary was about who could participate, not who ultimately bore delivery obligations.\n\nThe remedy follows directly. The proven lost opportunity equals the full stipulated corpus of 50,000. There is no proven partial defect, no divisible performance, and no basis for a graded allocation. The claimant was the party the eligibility boundary was designed to protect, and the client's knowing breach deprived it of the entire expected opportunity. The full reserve is awarded.", "allocation": { "claimant": 50000, "respondent": 0 }, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-047", "caseType": "adapted_case_record", "input": { "partyA": { "name": "Reporting Worker", "type": "human", "position": "I complained internally about repeated sex-based harassment. Management knew about the complaint, then removed me from preferred equipment-operation work and assigned me materially more arduous and dirtier general labor. Later it suspended me without pay for 37 days on an insubordination accusation it ultimately found unsupported. Backpay did not erase the financial uncertainty, emotional distress, or medical consequences. Those actions would deter a reasonable worker from reporting discrimination, and the 43,500 reserve should be released to me.", "evidence": [ "The worker's internal complaint describing sex-based harassment and the employer's receipt record", "Job records comparing the preferred equipment assignment with the more arduous and dirtier general-labor assignment", "The chronology between the protected complaint, reassignment, and unpaid suspension", "The suspension notice and the later determination that the worker was not insubordinate", "Reinstatement and backpay records", "Medical and financial records supporting distress and loss during the suspension" ] }, "partyB": { "name": "Worksite Employer", "type": "entity", "position": "The reassignment stayed within the worker's job classification, carried the same pay, and reflected ordinary operational needs rather than retaliation. The suspension followed a reported workplace dispute and was reversed with full backpay after review. The worker therefore suffered no lasting wage loss, and the evidence does not prove that either decision was caused by the earlier complaint or was materially adverse. The reserve should return to the employer.", "evidence": [ "Job descriptions placing both assignments within the same classification and pay band", "Operational records offered as the reason for the reassignment", "Supervisor reports concerning the incident that led to suspension", "The review decision, reinstatement record, and full backpay payment", "Employer records disputing retaliatory motive and the claimed damages" ] }, "facts": "The worker made a documented internal complaint about sex-based harassment, and employer management knew of it. Afterward the employer reassigned the worker from preferred equipment-operation work to materially more arduous and dirtier general-labor duties, although pay and formal classification remained unchanged. Workers regarded the equipment assignment as the better position. The employer later suspended the worker without pay for 37 days for alleged insubordination, then determined the worker had not been insubordinate, reinstated the worker, and paid back wages. During the unpaid period the worker faced financial uncertainty, experienced emotional distress, and obtained medical treatment. The parties dispute retaliatory causation, whether the actions would deter a reasonable worker from making a discrimination complaint, and whether reinstatement and backpay eliminate compensable injury. United States federal Title VII retaliation law governs. The 43,500 corpus is a stipulated compensatory-damages reserve supported by the record if the claimant proves retaliation and resulting injury.", "governingLaw": "Governing law stipulation: United States federal Title VII retaliation law governs this dispute.", "amount": 43500, "currency": "USDC" }, "reference": { "case": "Burlington Northern & Santa Fe Railway Co. v. White", "citation": "548 U.S. 53 (2006)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/boundvolumes/548bv.pdf#page=80" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The governing law is Title VII's antiretaliation provision, 42 U.S.C. § 2000e-3(a), as interpreted by Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53 (2006). That decision controls this dispute on every material legal question, and the facts here are strikingly parallel to those the Supreme Court addressed.\n\nFirst, the material-adversity standard. Burlington Northern holds that the antiretaliation provision 'covers those (and only those) employer actions that would have been materially adverse to a reasonable employee or job applicant,' meaning actions that 'well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.' Both of the employer's actions here satisfy that standard. The reassignment moved the worker from preferred equipment work—regarded by workers as the better position—to 'materially more arduous and dirtier' general labor. Burlington Northern squarely held that a reassignment to more arduous and dirtier duties, even within the same job description, can be materially adverse; the jury there had evidence that the track laborer duties were 'by all accounts more arduous and dirtier' and that the prior position was considered better. The same evidentiary pattern is present here. The 37-day suspension without pay is equally materially adverse. Burlington Northern held that a 37-day suspension without pay 'could well act as a deterrent to the filing of a discrimination complaint, even if the suspended employee eventually receives backpay.' The Court emphasized that 'many reasonable employees would find a month without pay a serious hardship' and that the worker there 'obtained medical treatment for her emotional distress.' The same constellation of harms—financial uncertainty, emotional distress, medical treatment—is proven here.\n\nSecond, the backpay defense. The respondent argues that reinstatement with backpay eliminates compensable harm. Burlington Northern rejected this argument directly: 'We would undermine the significance of [the congressional judgment to permit compensatory damages] were we to conclude that employers could avoid liability in these circumstances.' The Court reasoned that an indefinite suspension without pay deters protected activity regardless of eventual backpay, because the employee and their family must live without income during the suspension and do not know whether or when they will return. The record here shows the worker faced exactly that uncertainty and obtained medical treatment for resulting distress. The backpay defense fails as a matter of law.\n\nThird, causation. The claimant bore the burden of proving retaliatory causation by a preponderance. The record establishes: (1) a documented internal complaint about sex-based harassment, (2) employer management's knowledge of that complaint, (3) a chronology in which the reassignment and suspension followed the protected complaint, and (4) the employer's own review found the insubordination accusation unsupported—undermining the legitimacy of the suspension. Temporal proximity between protected activity and adverse action, combined with the unsupported basis for the suspension, supports an inference of retaliatory motivation. The respondent bore the burden of producing evidence of a non-retaliatory justification—ordinary operational needs for the reassignment and a workplace dispute for the suspension—but its evidence consists entirely of unverified party-asserted exhibits (R-1 through R-5). The respondent's job descriptions (R-1) showing both assignments within the same classification do not defeat materiality, as Burlington Northern expressly held that same-classification reassignments can be materially adverse. The operational records (R-2) are bare assertions of 'ordinary operational needs' without independent verification or detail. The supervisor reports (R-3) led to a suspension the employer itself found unwarranted. The respondent's evidence does not carry its burden of rebutting the prima facie inference of retaliation.\n\nFourth, quantum. The 43,500 compensatory-damages reserve is stipulated as 'supported by the record if the claimant proves retaliation and resulting injury.' The claimant has proven both. The injuries are documented: financial hardship during 37 days without pay, emotional distress, and medical treatment. These are the same categories of harm that supported the 43,500 jury award in Burlington Northern itself (which included 3,250 in medical expenses). The record does not contain a basis for reducing the reserve below the stipulated amount, because the stipulation ties the full reserve to proof of retaliation and resulting injury—both of which are established. No partial defect or divisible performance is proven that would justify a split; the doctrine yields a full award.\n\nThe respondent's counterclaim seeking return of the reserve fails because the claimant has met the burden of proving retaliatory reassignment and suspension with resulting compensable harm. The reserve is properly released to the claimant.", "allocation": { "claimant": 43500, "respondent": 0 }, "citations": [ { "title": "[PDF] Burlington N. & S. F. R. Co. v. White, 548 U.S. 53 (2006). - Loc", "url": "https://tile.loc.gov/storage-services/service/ll/usrep/usrep548/usrep548053/usrep548053.pdf", "proposition": "Title VII's antiretaliation provision covers employer actions that would have been materially adverse to a reasonable employee, meaning actions that well might have dissuaded a reasonable worker from making or supporting a charge of discrimination. A reassignment to more arduous and dirtier duties within the same job description can be materially adverse. A 37-day suspension without pay is materially adverse even if the employee is later reinstated with backpay, because the suspension deters protected activity and causes real hardship during the unpaid period. Backpay does not eliminate compensable injury or employer liability for retaliation." }, { "title": "Muldrow v. City of St. Louis | 601 U.S. ___ (2024) - Justia Law", "url": "https://supreme.justia.com/cases/federal/us/601/22-193/case.pdf", "proposition": "Burlington Northern v. White's 'materially adverse' standard, requiring harm significant enough to dissuade a reasonable worker from complaining, is specific to the antiretaliation provision and was adopted for reasons peculiar to the retaliation context. The substantive antidiscrimination provision operates under a different, lower harm threshold. This confirms that Burlington Northern's standard is the correct and governing standard for this retaliation dispute." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-048", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nINTRODUCTION\n For six decades, this Court has applied a consistent\nframework for enforcing arbitration agreements un-\nder the Federal Arbitration Act (FAA). Under the\nFAA’s severability rule, a court isolates the specific\nFAA's\n“written provision”\n\"written provision\" constituting the arbitration agree-\nment from the remainder of the contract of which it is\na part. 9 U.S.C. § 2. The court then considers only\nthose challenges directed to that severable arbitration\nagreement. A party may argue, for example, that the\nseverable arbitration agreement itself is invalid or un-\nenforceable. But the FAA forbids a court from enter-\ntaining \"a\n “a challenge to another provision of the con-\ntract, or to the contract as a whole\"—such\n whole”—such as an alle-\ngation that the entire contract is invalid or unenforce-\nable. Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70\n (1)\n (1)\n 2\n(2010). Such challenges, where there is an arbitration\nagreement, fall squarely within the matters the par-\nties agreed to have an arbitrator decide. Accord\n Accord Nitro-\nLift Techs., LLC v. Howard, 568 U.S. 17, 20 (2012) (per\ncuriam); Preston v. Ferrer, 552 U.S. 346, 354 (2008);\nBuckeye Check Cashing, Inc. v. Cardegna, 546 U.S.\n440, 445 (2006); Prima Paint Corp. v. Flood & Conklin\nMfg. Co., 388 U.S. 395, 403-404 (1967).\n This case involves a straightforward application of\nthe FAA’s\n FAA's severability rule to a delegation clause in a\ncontractual agreement. A delegation clause is a mini-\narbitration agreement that sets forth the parties’parties'\nagreement to have an arbitrator resolve antecedent\nquestions about whether their dispute is arbitrable,\nsuch as whether their dispute falls within the scope of\nthe arbitration agreement. Absent a delegation\nclause, this Court’s\n Court's default rule is that a court decides\n “arbi-\nsuch threshold issues, which are referred to as \"arbi-\ntrability issues.”\n issues.\" But when parties agree in a delega-\ntion clause to delegate responsibility for answering ar-\nbitrability questions to the arbitrator, the otherwise-\napplicable default rule is displaced by that mini-arbi-\ntration agreement.\n As this Court explained in Rent-A-Center v. Jackson,\nthe FAA \"operates\n “operates on” “just as it\n on\" delegation clauses lust\ndoes on any other”\n other\" arbitration provision. Rent-A-Ctr.,\n561 U.S. at 70. That means a delegation clause itself\nis severable—and separately enforceable—from the\nrest of the contract, including any broader arbitration\nagreement within which the delegation clause may ap-\npear. Thus, under the severability rule, when one\nparty invokes a delegation clause, the court analyzes\nthe validity and enforceability of just the delegation\n 3\nclause. As Rent-A-Center explains, the court may con-\n “as applied to the delegation pro-\nsider only challenges \"as\nvision\" itself. Id. at 74. Absent a direct and meritori-\nvision”\n “court may\nous challenge to the delegation clause, a \"court\nnot override the contract.”\n contract.\" Henry Schein, Inc. v.\nArcher & White Sales, Inc., 139 S. Ct. 524, 529 (2019).\nArcher\nInstead, the court must enforce the parties’\n parties' agreement\nto have the arbitrator decide whether the particular\ndispute is subject to arbitration.\n The FAA’s\n FAA's severability rule should have made short\nwork of this case. Petitioner Claimant and each Re-\nspondent contractually agreed to arbitrate a broad set\nof disputes that might arise between them. They also\nagreed to a delegation provision, under which any\ngateway questions about whether a given dispute is\narbitrable are reserved for the arbitrator. The delega-\ntion clause provides that \"an\n “an arbitrator and not * * * a\ncourt or judge”\n judge\" will decide \"the\n “the interpretation or appli-\ncation of the arbitration agreement, including the” the\"\n“existence,” “enforceability, revocability, scope, or va-\n\"existence,\" \"enforceability,\nlidity\" of the agreement, and \"the\nlidity” “the arbitrability of any\nclaim or counterclaim.”\n counterclaim.\" JAJA 568, 569, 584 (capitaliza-\ntions omitted).\n The parties then entered into a second contract: of-\nficial rules regarding a cryptocurrency sweepstakes\nClaimant sponsored. The official rules were silent as\nto arbitration and delegation and also contained a fo-\nrum-selection clause. Respondent filed a lawsuit\nagainst Claimant in federal court alleging the sweep-\nstakes had violated California law. Claimant moved\nto compel arbitration.\n Respondent resisted arbitration: They argued that\nthe sweepstakes’\n sweepstakes' official rules had narrowed the scope\nof the initial arbitration agreement. Respondent\n 4\nmade no argument specific to the parties’\n parties' delegation\nclause, however. Rather, they disputed only whether\ntheir claims about the sweepstakes belonged in arbi-\ntration rather than in court. Because Respondent did\nnot mount a substantive challenge to the delegation\nclause itself, under the FAA’s\n FAA's severability rule, the\ndelegation clause should have remained untouched\nand controlled the question of who decided arbitrabil-\nity—namely, an arbitrator.\n And in arbitration, one of two things could have hap-\npened. The arbitrator could have agreed with Re-\nspondents that the arbitration agreement did not ap-\nply and sent the case back to federal court. Or the ar-\nbitrator could have agreed with Claimant that the ar-\nbitration agreement did apply, and required Respond-\nents to arbitrate their claims.\n But the Ninth Circuit did not apply the severability\nrule or enforce the delegation clause. Instead, the\nNinth Circuit reasoned that even where—as here—\nparties agree to delegate arbitrability questions to an\narbitrator, courts can still resolve all \"contract\n “contract for-\nmation”\nmation\" challenges to an arbitration agreement—\nwithout ever defining what it meant by \"contract\n “contract for-\nmation.”\nmation.\" The Ninth Circuit then concluded that, be-\ncause Respondent had raised a \"contract\n “contract formation”\n formation\"\nchallenge, the court could ignore the delegation clause\nand decide arbitrability itself. JA 583-586.\n The Ninth Circuit's\n Circuit’s decision was wrong from top to\nbottom, and this Court should reverse it. For starters,\nRespondent did not raise an issue about \"contract\n “contract for-\nmation.”\nmation.\" To the contrary, everyone agrees that the\nparties entered into a contract containing a valid arbi-\ntration agreement and delegation clause. In Respond-\n 5\nents’ “is no dispute here that the par-\nents' own words, there \"is\nties' original arbitration agreement remains generally\nties’\nvalid and enforceable, as modified by the official\nrules.\" JA\nrules.” JA 454 (cleaned up). Respondent only disa-\ngree about the arbitration agreement's\n agreement’s scope, which\nRespondent say was modified by the second contract.\nIn short: There was no \"contract\n “contract formation”\n formation\" question\nfor the Ninth Circuit to decide.\n Moreover, even if Respondent’\n Respondent' challenge could be\nlabeled one of \"contract\n “contract formation,”\n formation,\" this Court should\nstill apply the FAA’s\n FAA's severability rule. The FAA’s\n FAA's text\ndoes not contain a \"contract\n “contract formation”\n formation\" exception, and\nthis Court has recognized that arbitrators may decide\nmany matters related to contract formation. In this\ncase, it was imperative to apply the FAA’s\n FAA's severability\nrule: No matter what doctrinal label best describes\nRespondent’\nRespondent' arguments about the official rules, the\nsubstance of Respondent’\n Respondent' argument only went to the\nscope of the arbitration agreement—i.e., what issues\nare arbitrable—and had no bearing on the parties’\n parties' del-\negation clause—i.e., who decides what issues are arbi-\ntrable. The Ninth Circuit therefore should have en-\nforced the delegation clause. Endorsing the Ninth Cir-\ncuit’s nebulous, labels-based exception for \"contract\ncuit's “contract\nformation”\nformation\" challenges in this case would raise impos-\nsible line drawing questions in every case and is fun-\ndamentally unworkable. This Court recently rejected\nefforts to evade the FAA by relabeling arguments \"con-\n “con-\ntract formation”\n formation\" challenges. It should do the same\nhere. See Kindred Nursing Ctrs. Ltd. P'ship\n P’ship v. Clark,\n581 U.S. 246, 254 (2017).\n Respondent’\n Respondent' Brief in Opposition declined to defend\nthe Ninth Circuit's\n Circuit’s decision on its own terms. Instead,\nRespondent offered two alternative rationales for\n 6\nwhy it was permissible to ignore the delegation clause\nhere. Neither has merit. The first is a case-specific\nargument about a choice-of-law provision in the\nsweepstakes official rules. But that choice-of-law pro-\nvision did not displace the delegation clause. It says\nnothing about who decides arbitrability; instead, it at\nmost identifies what bodies of law to apply. Respond-\nents' second argument proposes lowering the thresh-\nents’\nold for challenging all delegation clauses in seemingly\nevery case, which has no basis in the FAA's\n FAA’s text, di-\nrectly contradicts this Court’s\n Court's decision in Rent-A-Cen-\nter, and is as unadministrable as the Ninth Circuit’s\n Circuit's\nnebulous \"contract\n “contract formation”\n formation\" exception.\n Claimant and Respondent agreed to a delegation\nclause under which gateway arbitrability questions\nare to be decided by an arbitrator, including the scope\nand applicability of the parties’\n parties' arbitration agreement.\nThis Court should enforce that delegation clause, and\nreverse the Ninth Circuit’s\n Circuit's decision.\n OPINIONS BELOW\n The Ninth Circuit’s\n Circuit's decision (JA 579-589) is reported\nat 55 F.4th 1227. The District Court’s\n Court's opinion (JA 557-\n578) is unreported but is available at 2022 WL 103541\n(N.D. Cal. Jan. 11, 2022).\n JURISDICTION\n The Ninth Circuit entered judgment on December\n16, 2022. JA\n JA 579-589. The court denied Petitioner's\n Petitioner’s\nrehearing petition on February 23, 2023. JA\n JA 590-591.\nOn May 12, 2023, this Court extended the deadline to\npetition for a writ of certiorari up to and including\nJune 23, 2023. This Court has jurisdiction under 28\nU.S.C. § 1254(1).\n 7\n STATUTORY PROVISIONS INVOLVED\n 9 U.S.C. §§ 2, 4 are reproduced in the appendix to\nthis brief. App. 1a-3a.\n la-3a.\n STATEMENT OF THE CASE\n A. Legal Background\n 1. In 1925, Congress enacted the Federal Arbitration\nAct to counteract \"judicial\n “judicial hostility to arbitration.”\n arbitration.\"\nAT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339\nAT&T\n(2011). Congress recognized that arbitration has\nmuch to offer, \"not\n “not least the promise of quicker, more\ninformal, and often cheaper resolutions for everyone\ninvolved.\" Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612,\ninvolved.”\n1621 (2018). But until the FAA’s “Ameri-\n FAA's enactment, \"Ameri-\ncan common law courts routinely refused to enforce\nagreements to arbitrate disputes.”\n disputes.\" Id.\n The FAA \"directed\n “directed courts to abandon their hostility.”\n hostility.\"\n “national policy favoring arbi-\nId. The Act embodies a \"national\ntration and places arbitration agreements on equal\nfooting with all other contracts.\"\n contracts.” Buckeye Check Cash-\ning, 546 U.S. at 443. According to Section 2—the heart\nof the Act—courts must treat an arbitration \"provi- “provi-\nsion\" in a contract as \"valid,\nsion” “valid, irrevocable, and enforce-\nable, save upon such grounds as exist at law or in eq-\nuity for the revocation of any contract.”\n contract.\" 9 U.S.C. § 2.\n This Court has long interpreted the FAA to impose a\nrule of severability: As \"a “a matter of substantive fed-\neral arbitration law, an arbitration provision is sever-\nable from the remainder of the contract.”\n contract.\" Buckeye\nCheck Cashing, 546 U.S. at 445. The severability rule\nflows from the FAA’s\n FAA's text. Section 2 deems the arbi-\ntration “provision” “without mention of the valid-\n \"provision\" valid \"without\nity of the contract in which it is contained.”\n contained.\" Rent-A-\n 8\nCtr., 561 U.S. at 70. Similarly, Section 4 requires a\ncourt to order arbitration \"upon\n “upon being satisfied that\nthe making of the agreement for arbitration * * * is not\nin issue,”\n issue,\" again without mention of the contract in\nwhich it is contained. 9 U.S.C. § 4; see Prima Paint,\n388 U.S. at 404.\n When a party resists arbitration—as Respondent\ndid here—the FAA’s\n FAA's severability rule dictates what\ntypes of challenges the court may consider. If a party\nresisting arbitration challenges \"the\n “the precise agree-\nment to arbitrate at issue, the federal court must con-\nsider the challenge before ordering compliance with\nthat agreement.”\n agreement.\" Rent-A-Ctr., 561 U.S. at 71. But if\nthe party challenges \"another\n “another provision of the con-\ntract, or” “the contract as a whole,”\n or\" \"the whole,\" the FAA does not\npermit the court to entertain the challenge. Id. at 70.\nInstead, the severable arbitration agreement remains\n“valid, irrevocable, and enforceable.”\n\"valid, enforceable.\" 9 U.S.C. § 2.\nPursuant to the parties’\n parties' agreement to arbitrate their\ndifferences, the court allows the arbitrator to adjudi-\ncate any challenge to the remainder of the contract.\nId.\n 2. When parties enter into an arbitration agreement,\nthey may also agree to a \"delegation\n “delegation clause.”\n clause.\" A dele-\ngation clause is a discrete contractual term that ad-\ndresses the question of who decides threshold issues\nsuch as the applicability, scope, and validity of the\nbroader arbitration agreement. For instance, a dele-\ngation clause may require an arbitrator to decide\n“whether the parties have agreed to arbitrate or\n\"whether\nwhether their agreement covers a particular contro-\nversy.\" Rent-A-Ctr., 561 U.S. at 68-69. These thresh-\nversy.”\nold questions are often referred to as \"arbitrability\n “arbitrability is-\nsues.”\nsues.\"\n 9\n In Rent-A-Center, this Court explained that a dele-\ngation clause is a mini-agreement to arbitrate arbitra-\nbility. Id. at 70. The FAA \"operates\n “operates on this additional\narbitration agreement just as it does on any other.”\n other.\" Id.\nAs a result, like any other arbitration agreement, a\ndelegation clause is \"severable\n “severable from the remainder of\nthe contract”—including\n contract\"—including the wider arbitration agree-\nment in which the delegation clause may appear. Id.\nat 71 (quotation marks omitted). Absent a challenge\n “the delegation provision specifically,”\nto \"the specifically,\" a court\n “as valid”\nshould treat the delegation clause \"as valid\" and \"en-\n “en-\nforce it.”\n it.\" Id. at 72.\n In Henry Schein, Inc., this Court reiterated that \"if\n “if a\nvalid [delegation] agreement exists, and if the agree-\nment delegates the arbitrability issue to an arbitrator,\na court may not decide the arbitrability issue.”\n issue.\" 139\nS. Ct. at 530.\n B. Factual Background\n 1. Petitioner Claimant operates one of the largest\ncryptocurrency exchange platforms in the United\nStates. Claimant users can transact in myriad digital\ncurrencies, such as bitcoin and ether. As with many\nonline companies, when a user creates a Claimant ac-\ncount, the user must agree to a User Agreement.\n Claimant’s User Agreement contains both an arbi-\n Claimant's\ntration agreement and a delegation clause. The arbi-\ntration agreement is broad. It provides that the par-\nties will resolve \"any\n “any dispute arising out of or relating\nto [the] [User] Agreement or the Claimant Services.”\n Services.\"\nJA 217. The delegation clause is also broad. It pro-\nJA\nvides that the parties will arbitrate:\n without limitation, disputes arising out of or\n related to the interpretation or application of\n 10\n the Arbitration Agreement, including the en-\n forceability, revocability, scope, or validity of\n the Arbitration Agreement or any portion of\n the Arbitration Agreement. All such matters\n shall be decided by an arbitrator and not by a\n court or judge.\nId. at 218, 270, 335.\n In addition, the User Agreement incorporates the\n Association’s (AAA) rules,\nAmerican Arbitration Association's\nwhich also address delegation. Those rules authorize\nan arbitrator to decide \"any\n “any objections with respect to\nthe existence, scope, or validity of the arbitration\nagreement or to the arbitrability of any claim or coun-\nterclaim.\" Id. at 569.11\nterclaim.”\n 2. This case involves a dispute regarding a sweep-\nstakes sponsored by Claimant regarding a cryptocur-\nrency called “dogecoin.”\n \"dogecoin.\" Id. at 4.\n Under California law, a sponsor of a sweepstakes\nsuch as Claimant must operate the sweepstakes ac-\ncording to \"official\n “official rules.”\n rules.\" Cal. Bus. & Prof. Code\n§ 17539.15(k)(2). Official rules must appear as a \"for-\n “for-\nmal printed statement”\n statement\" included in every \"sweep-\n “sweep-\nstakes solicitation.”\n solicitation.\" Id. The official rules must,\namong other things, \"include\n “include a clear and conspicuous\n\n\n 11 The version of the User Agreement to which one Respondent\nagreed incorporated the AAA rules but lacked delegation lan-\nguage in the agreement itself. JA\n JA 138. Respondent do not argue\nthat this User Agreement should be treated any differently, and\nthe question whether incorporating the AAA rules creates an en-\nforceable delegation provision is not before this Court. See gen-\n gen-\nerally Blanton v. Domino's\nerally Domino’s Pizza Franchising LLC, 962 F.3d 842,\n846 (6th Cir. 2020) (Thapar, J.) (circuit courts uniformly find\nAAA rules constitute delegation).\n 11\nstatement\" that “[n]o\nstatement” Inlo purchase or payment of any kind\nis necessary to enter or win this sweepstakes.”\n sweepstakes.\" Id.\n§ 17539.15(b), (k)(1).\n Claimant’s official rules for its cryptocurrency\n Under Claimant's\nsweepstakes, participants could enter the sweep-\nstakes in one of two ways. Claimant users could en-\ngage in cryptocurrency transactions of $100 or more\n Claimant’s exchange. JA\non Claimant's JA 99. Or anyone could enter\nthe sweepstakes by mailing a postcard to Claimant—\nwith no purchase necessary. Id. at 100. If a mail-in\nentrant won a prize, the official rules required the win-\nner to create a Claimant account to claim the prize,\nand in the process agree to the User Agreement. Id.\n Paragraph ten of the official rules contained the fol-\nlowing two sentences, which the parties have referred\nto as a \"forum-selection\n “forum-selection clause”:\n clause\":\n The California courts (state and federal) shall\n have sole jurisdiction of any controversies re-\n garding the promotion. Each entrant waives\n any and all objections to jurisdiction and\n venue in those courts for any reason and\n hereby submits to the jurisdiction of those\n courts.\nId. at 108 (capitalizations omitted).\n C. Procedural History\n 1. Respondent are all Claimant users. Each Re-\nspondent created a Claimant account, and each agreed\nto Claimant’s\n Claimant's User Agreement. Id. at 558. Each Re-\nspondent also participated in Claimant's\n Claimant’s sweepstakes\nby transacting in one-hundred dollars or more of cryp-\ntocurrency on Claimant’s\n Claimant's exchange. Id. at 560. Re-\nspondents then filed a putative class action, alleging\nthat Claimant violated various California laws by not\n 12\nadequately advertising the ability to enter the sweep-\nstakes by mail. Id. at 565.\n Claimant moved to compel arbitration under the ar-\nbitration agreement, and argued that the parties’\n parties' del-\negation clause reserved any disputes about arbitrabil-\nity for the arbitrator. In opposing Claimant’s\n Claimant's motion\nto compel, Respondent did not “dispute” “that the\n \"dispute\" \"that\nparties’\nparties' original arbitration agreement” “gener-\n agreement\" was \"gener-\nally valid and enforceable\"—and\n enforceable”—and that the arbitration\nagreement covered at a minimum all other claims\nagainst Claimant. Id. at 454 (cleaned up). Instead,\nRespondent argued only that the forum-selection\n “modified the parties’\nclause in the official rules had \"modified parties'\noriginal arbitration agreements,”\n agreements,\" and exempted\n“sweepstakes-related controversies”\n\"sweepstakes-related controversies\" from arbitration.\nId. at 444-445 (capitalization omitted).\n In other words, Respondent argued that the arbi-\ntration agreement did not apply to their particular\nclaims. The delegation clause says who decides this\narbitrability dispute: An arbitrator.\n But the district court declined to enforce the delega-\ntion clause. It recognized that the delegation clause\n“delegated to the arbitrator”\n\"delegated “disagreements over the\n arbitrator\" \"disagreements\nscope of the arbitration provisions.”\n provisions.\" Id. at 569. And it\nalso recognized that Respondent did \"not\n “not dispute that\ntheir claims would fall within the scope of the arbitra-\ntion provision if they had not agreed to the official\nrules.\" Id. Nevertheless, the district court held that\nrules.”\n“the dispute here is not over the scope of the arbitra-\n\"the\ntion provision, but rather whether the agreement was\nsuperseded by another separate contract.\"\n contract.” Id. Accord-\ning to the district court, this meant a court—not an\n “determine which contract applies”\narbitrator—should \"determine applies\"\nto Respondent’\n Respondent' claims. Id. at 570.\n 13\n 2. Having concluded that the delegation clause did\nnot apply, the district court itself decided the arbitra-\nbility dispute, and determined that Respondent’\n Respondent'\nclaims were not arbitrable.\n Claimant had presented strong arguments that—un-\nder California law—the arbitration agreement and the\nofficial rules should be reconciled by reading the fo-\nrum-selection clause in the official rules to encompass\nonly those claims brought by mail-in entrants. Id. at\n452.\n Claimant’s argument made sense for multiple rea-\n Claimant's\nsons: As even the Ninth Circuit recognized, \"the“the offi-\ncial rules contain no language specifically revoking the\nparties’\nparties' arbitration agreement.”\n agreement.\" Id. at 587 (capitaliza-\ntions omitted). And under California law, a forum-se-\nlection clause and an arbitration agreement are not\nincompatible. The forum-selection clause identifies\n“the venue for any other claims that were not covered\n\"the\nby the arbitration agreement.”\n agreement.\" Mohamed v. Uber\nTechs., Inc., 848 F.3d 1201, 1209 (9th Cir. 2016).\n In this case, there were obvious claims not covered\nby the existing arbitration agreement, and which ne-\ncessitated a forum-selection clause: those brought by\nindividuals who had entered the sweepstakes by mail.\nMail-in entrants did not need to sign the User Agree-\nment, and thus were not necessarily bound by an ar-\nbitration agreement. But mail-in entrants—of which\nthere were 4,329—might have disputes with Coin-\nbase. The forum-selection clause dictated which\ncourts could resolve such disputes. In contrast, exist-\ning users who entered the sweepstakes by purchasing\ncryptocurrency remained bound by the broad arbitra-\ntion provision in the User Agreement.\n 14\n Claimant’s interpretation was bolstered by im-\n Claimant's\nportant contextual clues: The User Agreement out-\nlines a formal modification process. See, e.g., JA JA 225.\nBut Claimant did not use that process in promulgating\nthe official rules, a strong indication the parties did\nnot intend the official rules to modify the User Agree-\nment or its arbitration agreement. And although the\nofficial rules do not mention the arbitration agree-\nment, they referenced and hyperlinked to the User\nAgreement, further confirming the two contracts were\nmeant to coexist harmoniously. Id. at 104.\n The district court disagreed with Claimant. Instead,\nthe district court concluded that the parties’\n parties' arbitra-\ntion agreement in the User Agreement and the forum-\nselection clause in the official rules irreconcilably con-\nflicted. Id. at 570-571. The district court held that the\nofficial rules controlled because a \"subsequent\n “subsequent con-\ntract supersedes the first,”\n first,\" and that Respondent’\n Respondent'\nclaims regarding the sweepstakes therefore belonged\nin court, not in arbitration. Id. at 571.\n After denying Claimant's\n Claimant’s motion to compel arbitra-\ntion, the district court addressed Claimant’s\n Claimant's alterna-\ntive motion to dismiss Respondent’\n Respondent' claims. The court\nfound only some of Respondent’\n Respondent' claims were suffi-\nciently pleaded and dismissed the remainder. Id. at\n578.\n 3. Claimant appealed and moved to stay proceedings\npending appeal. The district court denied the stay, but\n “just not sure”\nadmitted it was lust sure\" that it had correctly\n Claimant’s motion to compel. Id. at 543. The\ndecided Claimant's\nNinth Circuit also denied a stay pending appeal. Coin-\nbase petitioned this Court, which granted review to\ndetermine whether the filing of a notice of an interloc-\n 15\nutory appeal under Section 16 of the FAA automati-\ncally stays district court proceedings. Claimant\nv. Bielski, 143 S. Ct. 521 (2022) (mem.).22\n A week after this Court granted certiorari on the au-\ntomatic-stay question, the Ninth Circuit affirmed the\ndenial of Claimant's\n Claimant’s motion to compel arbitration. JA\n579-589. The Ninth Circuit recognized that the dele-\ngation clause in the User Agreement required an arbi-\ntrator to decide all disputes about \"the “the existence,\nscope, or validity of the arbitration agreement.”\n agreement.\" Id. at\n584. But the Ninth Circuit held that \"[i]“[i]ssues of con-\ntract formation may not be delegated to an arbitrator.”\n arbitrator.\"\nId. at 583. The Ninth Circuit then stated that Re-\nspondents have challenged \"the“the existence rather than\nthe scope of an arbitration agreement”—apparently\n agreement\"—apparently\nmeaning Respondent had raised a matter of contract\nformation that only a court could decide. Id. at 585.\n Having dispensed with the delegation clause, the\nNinth Circuit proceeded to decide Respondent’\n Respondent' chal-\nlenge to the arbitration agreement, and agreed with\nthe district court that Respondent’\n Respondent' claims were not\narbitrable. Id. at 586-589.\n Claimant’s petition for review,\n This Court granted Claimant's\nthis time to determine whether the Ninth Circuit\nerred by refusing to enforce the parties’\n parties' delegation\n\n\n 2\n In a companion case, Bielski, this Court agreed with Claimant\n 2 In\n\nand held that an appeal automatically stays district court pro-\nceedings. Claimant v. Bielski, 599 U.S. 736 (2023). This\nCourt dismissed the petition in Respondent as improvidently granted,\nand avoided mootness questions raised by the Ninth Circuit's\n Circuit’s\nhaving already decided the arbitrability appeal at the time of this\nCourt’s decision. Id. at 747 n.7.\nCourt's\n 16\nclause, so that the arbitrator could decide if the par-\nties' dispute was arbitrable or not.\nties’\n SUMMARY OF ARGUMENT\n I. This Court’s\n Court's FAA precedent makes short work of\nthis case.\n I.A. When a party resists arbitration, the FAA’s\n FAA's sev-\nerability rule requires the court to isolate \"an\n “an arbitra-\ntion provision” “from the remainder of the contract.”\n provision\" \"from contract.\"\nBuckeye Check Cashing, 546 U.S. at 445. A court may\nconsider only those arguments \"specific\n “specific to”\n to\" the arbi-\ntration provision. Rent-A-Ctr., 561 U.S. at 74. A court\nmay not consider a challenge \"to“to another provision of\nthe contract, or to the contract as a whole.”\n whole.\" Id. at 70.\n I.B. Delegation clauses are mini-arbitration agree-\nments. The \"FAA\n “FAA operates”\n operates\" on a delegation clause\n“just as it does on any other”\nlust other\" arbitration agreement.\nId. at 70. This means a court must apply the severa-\nbility rule and enforce a delegation clause unless a\nparty can articulate a meritorious challenge \"as“as ap-\nplied\nplied to the delegation provision.”\n provision.\" Id. at 74.\n This Court, however, has articulated one rule spe-\ncific to delegation clauses: \"Courts\n “Courts should not assume\nthat the parties agreed to arbitrate arbitrability un-\nless there is clear and unmistakable evidence that\nthey did so.”\n so.\" First Options of Chi., Inc. v. Kaplan, 514\nU.S. 938, 944 (1995). This \"is “is an interpretive rule,\nbased on an assumption about the parties’\n parties' expecta-\ntions.\" Rent-A-Ctr., 561 U.S. at 69 n.1.\ntions.” n.l. This Court will\n “silence” or genuine “ambiguity”\nnot read \"silence\" \"ambiguity\" in a given\narbitration agreement to constitute a delegation\nclause. First Options, 514 U.S. at 945. But in Rent-A-\nCenter, this Court confirmed that once parties agree to\na clear-and-unmistakable delegation clause, this\n 17\njudge-made rule has no further application. Rent-A-\nCtr., 561 U.S. at 69 n.1. Instead, when adjudicating\nan allegation that the parties revoked a prior delega-\ntion clause, the court should apply those principles \"as\n “as\nexist at law or in equity for the revocation of any con-\ntract.\" 9 U.S.C. § 2.\ntract.”\n I.C. The FAA’s\n FAA's severability rule resolves the ques-\ntion presented. Unless a party articulates a meritori-\nous challenge to the delegation clause specifically, a\ncourt must enforce the delegation clause and allow an\narbitrator to determine arbitrability—including, as\nhere, whether a second contract narrowed an initial\narbitration agreement.\n Respondent did not articulate a meritorious as-ap-\nplied challenge to the delegation clause. Instead, be-\nfore the district court, Respondent argued that the of-\nficial rules had narrowed the arbitration agreement,\nand the arbitration agreement therefore did not apply\nto claims regarding the sweepstakes. That argument\nhad no bearing on the severable delegation clause,\nwhich remained valid and enforceable. And a close\nreading of the forum-selection clause confirms that\nprovision did not displace the delegation clause. The\ndistrict court should have enforced the severable dele-\ngation clause, and honored the parties’\n parties' agreement\nabout who decides arbitrability.\n II.A. The Ninth Circuit held that parties may never\ndelegate issues of \"contract\n “contract formation”\n formation\" to an arbitra-\ntor—and then classified Respondent’\n Respondent' challenge as in-\nvolving \"contract\n “contract formation”\n formation\" so as to side-step the\nFAA’s\nFAA's severability rule. That was all wrong. To begin,\nRespondent did not challenge the formation of a con-\ntract, and thus any contract-formation exception to\n 18\ndelegation clauses would not even apply here. In-\nstead, Respondent agreed that the parties formed the\n“original arbitration agreement,”\n\"original “remains\n agreement,\" and that it \"remains\ngenerally valid and enforceable, as modified by the of-\nficial rules contract.”\n contract.\" JA\n JA 454 (cleaned up). At most,\nRespondent challenged the scope of the arbitration\nagreement as allegedly “modified.”\n \"modified.\" Id.\n But even if Respondent could label their argument\none of \"contract\n “contract formation,”\n formation,\" it would not matter. Noth-\ning in the FAA prevents parties from arbitrating and\ndelegating matters of contract formation. Instead, the\nseverability rule requires a court to determine that\n“the making of the”\n\"the the\" delegation clause itself \"is\n “is not in\nissue.\" 9 U.S.C. § 4. But absent a challenge to the\nissue.”\ndelegation clause specifically—whether contract for-\nmation or otherwise—the court must enforce the dele-\ngation clause. It was particularly important to enforce\nthe FAA’s\n FAA's severability rule here: No matter how Re-\nspondents label their challenge, their challenge could\nonly go to the arbitration agreement, and had no bear-\ning on the delegation clause itself. Because the dele-\ngation clause was totally unaffected by the official\nrules, it should have been enforced, regardless of the\nlabel of Respondent’\n Respondent' challenge. Kindred Nursing,\n581 U.S. at 255.\n It is of course true that in some cases—not here—a\ndefect in contract formation may infect the entire con-\ntract, the arbitration agreement, and a delegation\nclause “equally.”\n \"equally.\" Rent-A-Ctr., 561 U.S. at 71. For in-\nstance, a party might allege \"fraud\n “fraud in the inducement\nof the contract\"—which\n contract”—which taints the formation of the en-\ntire contract and all its components. See Prima Paint,\n388 U.S. at 400. Even then, the FAA’s\n FAA's text imposes a\n 19\nformal pleading requirement: The party resisting ar-\n “direct[]”\nbitration must \"direct “the basis of challenge * * *\n Ill\" \"the\nspecifically to the”\n the\" discrete arbitration provision\nsought to be enforced. Rent-A-Ctr., 561 U.S. at 70.\nThus, unless the party resisting delegation articulates\na specific challenge to the delegation clause, the court\nshould enforce that mini-arbitration agreement.\n This pleading requirement reflects the FAA’s FAA's plain\ntext and honors basic principles of party presentation.\nIt also prevents courts from mistakenly assuming—as\nthe Ninth Circuit likely did here—that a challenge ap-\nplies “equally”\n \"equally\" to a delegation clause and to other\nparts of the contract. Id.\n II.B. In their Brief in Opposition, Respondent of-\nfered two alternative justifications for the Ninth Cir-\ncuit’s refusal to enforce the delegation clause, both of\ncuit's\nwhich this Court should reject. First, Respondent ar-\ngue that a separate choice-of-law provision displaced\nthe delegation clause—an argument they did not ad-\nvance in the district court. That argument is wrong.\nThe choice-of-law provision speaks to an entirely dif-\nferent question than the delegation clause. It does not\nsay who must decide whether the official rules nar-\nrowed the arbitration agreement, but, at most, the\nchoice-of-law provision says what laws a decider might\nuse. Second, Respondent argue that the clear-and-\nunmistakable standard for determining whether a\nparticular arbitration agreement contains a delega-\ntion clause lowers the threshold for later challenging\ndelegation clauses. This Court rejected that argument\nin Rent-A-Center, and should do so as well here.\n III. Petitioner’s\n Petitioner's position—that courts should enforce\ndelegation clauses in line with the FAA’s\n FAA's severability\nrule and this Court’s\n Court's precedent—offers this Court a\n 20\nbright line and administrable standard that protects\nthe freedom to contract. By contrast, both the Ninth\nCircuit and Respondent’\n Respondent' approaches pose impossible\nline-drawing problems. If the Court rules for Re-\nspondents, in every FAA case, a lower court will need\nto decide whether to apply the severability rule, or\nsome new exception for delegation clauses. That liti-\ngation will hinder the FAA’s\n FAA's purpose, will enmesh this\nCourt in countless follow-on disputes, and will provide\nan excuse for parties and courts hostile to arbitration\nto evade the FAA’s\n FAA's clear directive.\n ARGUMENT\nI. THIS COURT\n OURT SHOULD\n HOULD ENFORCE\n NFORCE THE\n HE PARTIES'\n ARTIES’\n DELEGATION\n ELEGATION CLAUSE.\n LAUSE\n This is a straightforward case. Delegation clauses\nare just specialized, mini-arbitration agreements. In\ndeciding whether to enforce a delegation clause, a\ncourt treats the delegation clause like a stand-alone\narbitration agreement, and the FAA’s FAA's severability\nrule permits a court to consider only those challenges\n“as applied to the delegation provision.”\n\"as provision.\" Rent-A-Ctr.,\n561 U.S. at 74. But Respondent did not meaningfully\n “the delegation provision specifically.”\nchallenge \"the specifically.\" Id.\nInstead, in the district court, Respondent challenged\nwhether the scope of the wider arbitration agreement\ncovered their claims about the sweepstakes. Just as\nin Rent-A-Center, the delegation clause remained un-\ndisturbed, and an arbitrator should decide whether\nthe arbitration agreement applies to Respondent’\n Respondent'\nclaims.\n 21\n A. The FAA’s\n FAA's Severability Rule Protects An\n Arbitration Agreement Absent A Specific\n “Written Provision.”\n Challenge To That \"Written Provision.\"\n Arbitration agreements are\n 1. Arbitration are severable.\n Court’s precedent paves a roadmap for enforc-\n This Court's\ning arbitration agreements under the FAA. Because\ndelegation clauses are just mini-arbitration agree-\nments, the framework that applies to all arbitration\nagreements sets the stage.\n Under the severability rule, courts isolate the writ-\nten arbitration provision \"from\n “from the remainder of”\n of\" the\n\"contract\" of which the arbitration provision is a part.\n“contract”\nBuckeye Check Cashing, 546 U.S. at 445. Because \"ar- “ar-\nbitration is a matter of contract,”\n contract,\" courts must analyze\nthe arbitration provision’s\n provision's terms to determine\n“whether the parties have submitted a particular dis-\n\"whether\npute to arbitration.”\n arbitration.\" Howsam v. Dean Witter Reyn-\nolds, Inc., 537 U.S. 79, 83 (2002) (quotation marks\nomitted); accord Granite Rock Co. v. Int'l Int’l Bhd. of\nTeamsters, 561 U.S. 287, 297 (2010). The FAA permits\ncourts to entertain state-law contract “challenges”\n \"challenges\"\n\"specific\" to the severable arbitration provision. Rent-\n“specific”\nA-Ctr., 561 U.S. at 73; accord Buckeye Check Cashing,\nA-Ctr.\n546 U.S. at 445-446; Nitro-Lift, 568 U.S. at 20; Pres-\nton, 552 U.S. at 354; Prima Paint, 388 U.S. at 403-404.\nBut challenges framed generally—such as arguments\nthat the entire contract is void against public policy—\nare for the arbitrator to decide.\n Thus, courts may determine whether the severable\narbitration provision—here, a mini-arbitration agree-\nment referred to as a \"delegation\n “delegation clause”— “was in fact\n clause\"— \"was\nagreed to.”\n to.\" Rent-A-Ctr., 561 U.S. at 69 n.1. Courts\nmay also determine whether that provision is invalid\n 22\n under contract doctrines such as unconscionability.\nId. at 70. But absent a specific attack to the arbitra-\n tion agreement itself, courts may not entertain any\n “challenge to another provision of the contract,\n other \"challenge\n or to the contract as a whole.”\n whole.\" Id.; accord Buckeye\n Check Cashing, 546 U.S. at 445-446; Prima Paint, 388\n U.S. at 404. Instead, courts must honor the parties’\n parties'\n agreement regarding who—an arbitrator or a judge—\n decides disputes about the entire contract. See Buck-\neye Check Cashing, 546 U.S. at 446.\n 2. The severability rule flows from the FAA's\n FAA’s plain\n plain\n language.\n As this Court has explained, the severability rule\n flows from the FAA’s\n FAA's text. Section 2—the heart of the\n FAA—states that \"a “a written provision”\n provision\" to arbitrate is\n“\" ‘valid,\n `valid, irrevocable, and enforceable,’\n enforceable,' without mention\n of the validity of the contract in which it is contained.\"\n contained.”\nRent-A-Ctr., 561 U.S. at 70. In other words, the FAA\n isolates the specific arbitration clause—\"[a]\n clause—“[a] written\n provision”—from\n provision\"—from the rest of the contract. See id. Sec-\n tion 2 places that written provision \"on“on equal footing\n with all other contracts.”\n contracts.\" Kindred Nursing, 581 U.S.\n at 248. Courts must enforce the severable provision to\n arbitrate \"save\n “save upon such grounds as exist at law or in\n equity for the revocation of any contract.”\n contract.\" 9 U.S.C. § 2.\n Section 4 of the FAA empowers courts to hear mo-\n tions to compel arbitration, and likewise reflects the\n severability rule. According to Section 4, the \"court\n “court\n shall hear the parties, and upon being satisfied that\n the making of the agreement forfor arbitration or the fail-\n ure to comply therewith is not in issue, the court shall\"\n shall”\n order arbitration. 9 U.S.C. § 4 (emphasis added). The\n “agreement\n italicized language isolates the severable \"agreement\n for arbitration”\n arbitration\" and permits the court to consider the\n 23\nmaking of the arbitration agreement \"[w]here\n “[w]here such an\nissue is raised”\n raised\" by the parties. Id. But Section 4’s4's\n“statutory language does not permit the federal court\n\"statutory\nto consider”\n consider\" other arguments regarding the making of\n“the contract generally.”\n\"the generally.\" Prima Paint, 388 U.S. at 404.\n Finally, as this Court reiterated in Henry Schein,\nnothing in the FAA’s\n FAA's text provides an exception from\narbitration in cases where a judge thinks the ultimate\nresolution of a dispute is obvious. See 139 S. Ct. at\n529. Only after arbitration may courts review arbitral\nawards to determine if \"arbitrators\n “arbitrators exceeded their\npowers,”\npowers,\" were corrupt or partial, or \"prejudiced\n “prejudiced the\nrights of any party.”\n party.\" 9 U.S.C. § 10.\n 3. The severability rule imposes both substantive\n procedural requirements.\n and procedural\n “agreements to arbitrate are severable does not\n That \"agreements\nmean that they are unassailable.”\n unassailable.\" Rent-A-Ctr., 561\nU.S. at 73. For instance, a party resisting arbitration\nmay challenge \"the\n “the precise agreement to arbitrate at\nissue.\" Id. at 71. A party may thus argue that an ar-\nissue.”\nbitration agreement itself is unconscionable because,\nfor example, arbitration must occur in a faraway loca-\ntion. See id. at 73.\n But in many cases, \"the\n “the claimed basis of invalidity\nfor the contract as a whole”\n whole\" will often not apply to the\n“severable agreement to arbitrate.”\n\"severable arbitrate.\" Id. at 71. For in-\n “elements of alleged unconscionability\nstance, certain \"elements\napplicable\" to an employment contract such as \"outra-\napplicable” “outra-\ngeously low wages” “not affect the”\n wages\" will \"not the\" severable\n“agreement to arbitrate.”\n\"agreement arbitrate.\" Id. In that circumstance,\nthe \"written\n “written provision”\n provision\" to arbitrate disputes regarding\nthe contract remains \"valid,\n “valid, irrevocable, and enforce-\nable.\" 9 U.S.C. § 2. Thus, an arbitrator will decide the\nable.”\n 24\nunderlying unconscionability challenge to the entire\ncontract. That result protects the freedom to contract:\nThe parties agreed that an arbitrator would decide the\nchallenge to the entire contract, and the severability\nrule ensures courts honor that choice.\n In certain instances, the same defect may infect both\nthe entire contract and the specific written provision\nto arbitrate. For example, a party might argue that\n “alleged fraud”\nan \"alleged “the whole contract”\n fraud\" induced \"the contract\" and\nthe specific subsection in which the parties agreed to\narbitrate their differences. Rent-A-Ctr., 561 U.S. at\n71. But even in that circumstance, the severability\nrule imposes an important pleading requirement. Ac-\ncording to Section 4, only \"[w]here\n “[w]here such an issue is\nraised\" by the parties may the court consider chal-\nraised”\n “the making of the agreement to arbitrate.”\nlenges to \"the arbitrate.\"\n9 U.S.C. § 4. This Court’s\n Court's precedent thus “require[s]\n \"require\nthe basis of challenge to be directed specifically to the\nagreement to arbitrate before the court will inter-\nvene.\" Rent-A-Ctr., 561 U.S. at 71.\nvene.”\n B. The FAA’s\n FAA's Severability Rule Applies To\n Delegation Clauses.\n 1. Delegation clauses are\n are severable arbitration\n agreements.\n This case involves a party seeking to enforce a dele-\ngation clause. Delegation clauses are just \"anteced-\n “anteced-\nent\" and severable arbitration agreements. Rent-A-\nent”\nCtr., 561 U.S. at 70. The \"FAA\n “FAA operates on”\n on\" delegation\n “just as it does on any other”\nclauses \"just other\" arbitration agree-\nment. Id.\n Thus, when a party seeks to enforce a delegation\nclause, this Court applies the same FAA severability\n 25\nrule. The Court isolates the written provision consti-\ntuting the delegation clause; ensures the parties\nagreed to arbitrate the arbitrability issues in dispute;\nand resolves any challenges \"specific\n “specific to the delegation\nprovision.”\nprovision.\" Id. at 73.\n In its recent decision in Henry Schein, this Court was\nemphatic: Absent challenges specific to the delegation\nclause, a court may not intervene. Instead, a court\nmust enforce a delegation clause even if the court\n “the argument that the arbitration agree-\nthinks that \"the\nment applies to the particular dispute is ‘wholly `wholly\ngroundless.' \"” 139 S. Ct. at 528.\ngroundless.’\n 2. The clear-and-unmistakable standard imposes a\n judge-made rule unique to delegation clauses.\n judge-made\n This Court has created one specific rule for delega-\ntion clauses: A court may \"not\n “not assume that the parties\nagreed to arbitrate arbitrability unless there is clear\nand unmistakable evidence that they did so.” so.\" First\nOptions, 514 U.S. at 944. This standard imposes a\npresumption that “silence”\n \"silence\" or genuine “ambiguity”\n \"ambiguity\" in\na given arbitration agreement is not construed as an\nagreement to arbitrate arbitrability. Id. at 945.\n The clear-and-unmistakable standard is \"an “an inter-\npretive rule, based on” Court’s \"assumption\n on\" the Court's “assumption about\nthe parties’\n parties' expectations.”\n expectations.\" Rent-A-Ctr., 561 U.S. at 69\nn.1 (quotation marks omitted). This Court normally\n “any doubts concerning the scope of arbitrable\nresolves \"any\nissues * * * in favor of arbitration.”\n arbitration.\" First Options, 514\nU.S. at 945 (cleaned up). But the question of delega-\n “is rather arcane,”\ntion \"is arcane,\" and parties may \"not “not focus\nupon that question or upon the significance of having\narbitrators decide the scope of their own powers.”\n powers.\" Id.\nThe clear-and-unmistakable standard ensures that,\n 26\nwhere arbitration agreements are silent or truly am-\n “unwilling parties”\nbiguous about delegation, \"unwilling parties\" do not\n“arbitrate a matter they reasonably would have\n\"arbitrate\nthought a judge, not an arbitrator, would decide.”\n decide.\" Id.\n 3. Rent-A-Center applied the FAA'sFAA’s severability\n rule to delegation clauses.\n Court’s decision in Rent-A-Center confirmed the\n This Court's\nFAA’s severability rule applies to delegation clauses.\nFAA's\n In Rent-A-Center, an employee had sued his former\nemployer for employment discrimination. 561 U.S. at\n65. The employer moved to compel arbitration based\non an arbitration agreement. Id. The arbitration\nagreement also contained a delegation clause. The\nemployee resisted arbitration on the theory that the\nentire arbitration agreement was unconscionable be-\ncause, for instance, the employee lacked rights to dis-\ncovery in arbitration. See id. at 74-75. The employer\ncountered that the delegation clause meant the par-\nties \"had\n “had expressly agreed that the arbitrator would\nhave exclusive authority to resolve any dispute about\nthe enforceability of the”\n the\" entire arbitration agreement.\nId. at 65.\n This Court applied the severability rule, isolated the\ndelegation clause, and held that it must enforce the\ndelegation clause unless the employee could \"chal- “chal-\nlenge[] the delegation provision specifically.”\n specifically.\" Id. at 72.\nBecause the employee had made no arguments \"as “as ap-\nplied to the delegation provision,”\nplied provision,\" the delegation\nclause remained valid, and the threshold arbitrability\ndispute headed to arbitration. Id. at 74.\n This Court also rejected the argument that the clear-\nand-unmistakable standard for drafting delegation\n 27\nclauses has any impact on how to adjudicate chal-\nlenges to a clearly articulated delegation clause. Much\nlike Respondent attempt to do here, see infra pp. 46-\n48, the employee and the dissent in Rent-A-Center ar-\n employee’s \"claim\ngued that the employee's “claim that the”\n the\" entire \"arbi-\n “arbi-\ntration agreement is unconscionable undermines any\nsuggestion that he ‘clearly’\n `clearly' and ‘unmistakably’\n `unmistakably' as-\nsented to”\n to\" the delegation clause. Id. at 81 (Stevens, J.,\ndissenting).\n The Court disagreed, and explained that the clear-\nand-unmistakable test was an \"interpretative\n “interpretative rule”\n rule\"\n“based on an assumption about the parties’\n\"based parties' expecta-\ntions.\" Id. at 69 n.1 (majority op.) (quotation marks\ntions.”\nomitted). That interpretative rule helps courts ana-\nlyze the meaning of a given text to determine whether\nthat text is a delegation clause. But the clear-and-un-\nmistakable standard has no bearing on subsequent\nchallenges regarding the “revocation”\n \"revocation\" of an otherwise\ncrystal-clear delegation clause. Id.\n C. The Court Should Apply The FAA's FAA’s Severa-\n bility Rule And Enforce The Parties’\n Parties' Dele-\n gation Clause.\n The severability rule makes short work of the ques-\ntion presented. Unless a party can articulate a \"spe-\n “spe-\ncific” “as applied”\ncific\" challenge \"as applied\" to a \"delegation\n “delegation provision”\n provision\"\nrevoking \"that\n “that provision,”\n provision,\" an arbitrator must decide\nwhether a subsequent contract has narrowed an arbi-\ntration agreement. Id. at 73-74 (emphasis omitted).\nIn this case, Respondent did not articulate a specific\nchallenge to the delegation clause. As a result, an ar-\nbitrator must decide whether the parties’\n parties' dispute is\nwithin the scope of the arbitration agreement in the\nUser Agreement or whether the sweepstakes official\n 28\nrules narrowed the reach of that arbitration agree-\nment.\n 1. Respondent agreed to a broad delegation clause.\n Respondent do not—and cannot—dispute that the\nUser Agreement contains a clear and unmistakable\ndelegation clause. First Options, 514 U.S. at 944.\n In the User Agreement, the parties agreed an arbi-\ntrator must decide disputes regarding \"the\n “the interpreta-\ntion or application of the arbitration agreement, in-\ncluding the enforceability, revocability, scope, or valid-\nity of the arbitration agreement.”\n agreement.\" JA JA 218, 270, 335\n(capitalizations omitted).\n In addition, the User Agreement incorporated AAA\nrules authorizing an arbitrator to decide \"any “any objec-\ntions with respect to the existence, scope, or validity of\nthe arbitration agreement or to the arbitrability of any\nclaim or counterclaim.”\n counterclaim.\" Id. at 569.\n There is no dispute that each Respondent \"in “in fact\nagreed to”\n to\" a delegation clause when creating a Coin-\nbase user account. Rent-A-Ctr., 561 U.S. at 69 n.1; see\nBuckeye Check Cashing, 546 U.S. at 444 n.1; JA JA 119-\n351 (detailing each Respondent’\n Respondent' assent). There is\nlikewise no dispute that this language \"clear\n “clear[ly]\n Ely] and\nunmistakabl[y]”\nunmistakabl[y]\" assigns all conceivable threshold ar-\nbitrability disputes to an arbitrator. First Options,\n514 U.S. at 944 (brackets omitted and added). Nor is\nthere any meaningful dispute that this broad lan-\nguage encompasses the particular arbitrability ques-\ntion at the heart of this case.\n Thus, absent a meritorious challenge \"as “as applied to\nthe delegation provision”\n provision\" itself, an arbitrator must de-\ncide the gateway question of whether Respondent’\n Respondent'\n 29\nclaims should proceed in arbitration or in court. Rent-\nA-Ctr., 561 U.S. at 74.\nA-Ctr.\n 2. Respondent did not challenge the delegation\n clause.\n An analysis of Respondent’\n Respondent' filings in the district\n “challenge[]\ncourt confirms they did not \"challenge Ill the delegation\nprovision specifically.”\n specifically.\" Rent-A-Ctr., 561 U.S. at 73.\nInstead, in opposing Claimant's\n Claimant’s \"motion\n “motion to compel,”\n compel,\"\nRespondent argued only that the forum-selection\nclause in the official rules had narrowed the scope of\nthe entire arbitration agreement. Id. at 72; see Preston,\n552 U.S. at 354. As a result, the delegation clause\nwent unchallenged and the district court should have\nenforced it.\n In the district court, Respondent summarized their\nargument as follows: \"Plaintiffs\n “Plaintiffs say that official rules\n¶10”—the\n¶10\"—the paragraph containing the forum-selection\nclause—“modified and superseded the parties’\nclause—\"modified parties' earlier,\ngeneralized arbitration agreements, by specifically\nand unambiguously requiring ‘each’`each' sweepstakes ‘en- `en-\ntrant' to litigate all sweepstakes-related ‘controver-\ntrant’ `controver-\nsies' in a federal or state court in California.”\nsies’ California.\" JA JA 445\n(capitalizations omitted).\n In other words, Respondent argued the arbitration\nagreement as a whole did not apply to Respondent’\n Respondent'\nclaims because those claims involved the sweepstakes.\nThat was an argument about the scope and applicabil-\nity of the arbitration agreement to Respondent’\n Respondent' state-\nlaw claims. That was not an argument \"specifier“specific[]” to\nthe delegation clause and the important questions\nthat clause answers: Who decides whether the official\nrules narrowed the arbitration agreement, and\n 30\nwhether the latter applies to this dispute? Rent-A-\nCtr., 561 U.S. at 71.\n The section of Respondent’\n Respondent' district court brief os-\ntensibly regarding the delegation clause confirms Re-\nspondents did not substantively challenge the delega-\ntion clause. JA\n JA 449. Instead, Respondent regurgi-\ntated arguments challenging the applicability of the\nentire arbitration agreement to Respondent’\n Respondent' state law\nclaims. Thus Respondent argued that:\n• \"since\n “since official rules 510\n ¶10 ‘superseded’\n `superseded' the parties’\n parties'\n prior arbitration agreements, any prior agree-\n ment to arbitrate sweepstakes-related disputes\n no longer exists.”\n exists.\" Id. at 451 (emphasis original,\n capitalizations omitted).\n• \"when\n “when 510\n ¶10 invoked the exclusive ‘jurisdiction’\n `jurisdiction' of\n the courts to decide[] ‘any`any controversies’\n controversies' re-\n garding\n garding the sweepstakes, it necessarily ex-\n cluded any arbitrator's\n arbitrator’s ‘jurisdiction.’\n `jurisdiction.' ”\" Id. at\n 452 (emphasis added, capitalization omitted).\n• \"Claimant\n “Claimant manifestly intended ¶10 510 to displace\n any arbitrator's\n arbitrator’s ‘jurisdiction,’\n `jurisdiction,' and to disclaim\n any influence from the FAA, over the parties' parties’\n sweepstakes-related ‘controversies.’\n `controversies.'\"” Id. (em-\n phasis added, capitalization omitted).\n As the italicized words make clear, the substance of\n Respondent’\n Respondent' arguments in the district court per-\n tained solely to the scope and applicability of the arbi-\n tration agreement: Does the arbitration agreement\n apply to what Respondent call \"sweepstakes-related\n “sweepstakes-related\n disputes”?\n disputes\"? These arguments had no bearing on the\n antecedent question: Who decides the scope of the ar-\n bitration agreement?\n 31\n One more point proves that Respondent did not\nchallenge the delegation clause itself. Respondent\n “the parties’\nagreed that \"the parties' original arbitration agree-\nment remains generally valid and enforceable,”\n enforceable,\" and\ngoverns all other non-sweepstakes related disputes.\nId. at 454 (cleaned up). That shows Respondent are\nonly contesting the scope of the arbitration agreement\ngenerally, i.e. whether the arbitration agreement ap-\nplies to these claims. And Respondent’\n Respondent' concession\nthat the arbitration agreement applies in other cases\nraises a natural next question: Who decides the gate-\nway question about the arbitration agreement’s\n agreement's scope\nand applicability, in this or any other case?\n The delegation clause provides the answer: An arbi-\ntrator.\n 3. The official rules did not modify the delegation\n clause.\n An application of \"ordinary\"\n “ordinary” California contract\n\"principles\" likewise confirms the text of the official\n“principles”\nrules did not displace the delegation clause. First Op-\ntions, 514 U.S. at 944.\n Under California law, a later-in-time contract can\nhave one of two effects on an earlier contract. The\nlater contract can constitute a novation \"which\n “which sup-\nplants the original agreement”\n agreement\" entirely. Wells Fargo\nBank v. Bank of Am.,\n Am., 38 Cal. Rptr. 2d 521, 525 (Cal.\nCt. App. 1995). \"Essential\n “Essential to a novation is that it\nclearly appear that the parties intended to extinguish\nrather than merely modify the original agreement.”\n agreement.\"\nHoward v. Cnty. of Amador,\n Amador, 269 Cal. Rptr. 807, 817\n(Cal. Ct. App. 1990). \"The\n “The burden of proof is on the\nparty asserting that a novation has been consum-\nmated.”\nmated.\" Id.\n 32\n Alternatively, a subsequent contract may modify an\nearlier agreement. Unlike a novation, a modification\n “only those portions of the written contract\ndisplaces \"only\ndirectly affected,” “the remaining portions\n affected,\" and leaves \"the\nintact.” Eng’rs Termite Control,\nintact.\" Eluschuk v. Chemical Eng'rs\nInc., 54 Cal. Rptr. 711, 715 (Cal. Ct. App. 1966); see\nTravelers Ins. Co. v. Workmen’s Appeals Bd.,\n Workmen's Comp. Appeals\n434 P.2d 992, 998 (Cal. 1967), disapproved of on other\ngrounds by LeVesque v. Workmen’s\ngrounds Appeals\n Workmen's Comp. Appeals\nBd., 463 P.2d 432, 439 (Cal. 1970); Sass v. Hank, 238\nP.2d 652, 655 (Cal. Dist. Ct. App. 1951); 3 Martin D.\n Affirmative\nCarr & Ann Taylor Schwing, California Affirmative\nDefenses § 65:1 (2d ed. July 2023 update) (\"The\n (“The origi-\nnal contract remains in force to the extent not altered\nby the modification.”); generally 13 Corbin on Con-\n modification.\"); see generally\ntracts § 71.2.3 (2023).\n This case involves an alleged modification. As Re-\nspondents stated in the district court, there \"is\n “is no dis-\npute here that the parties’\n parties' original arbitration agree-\nment remains generally valid and enforceable, as\nmodified by the official rules contract.”\n contract.\" JA 454\n(cleaned up, emphasis added). The delegation clause\nthus remains in force unless altered by the official\nrules.\n But the official rules do not directly affect the dele-\ngation clause. Indeed, the official rules do not mention\nthe delegation clause at all. The official rules likewise\nsay nothing about who decides the proper interpreta-\ntion and application of the arbitration agreement in\nthe User Agreement. And the official rules also say\nnothing about who decides the proper interpretation\nand application of the official rules. See id. at 98-110.\n In opposing Claimant's\n Claimant’s motion to compel, Respond-\nents focused on a two sentence forum-selection clause\n 33\nin paragraph ten of the official rules. That forum-se-\nlection clause does not displace the delegation clause.\n The first sentence of the forum-selection clause\nstates: \"The\n “The California courts (state and federal) shall\nhave sole jurisdiction of any controversies regarding\n promotion and the laws of the state of California\nthe promotion\n promotion.” Id. at 108 (capitaliza-\nshall govern the promotion.\"\ntions omitted, emphasis added). At most, that sen-\ntence may address which courts can decide certain\nclaims “regarding\n \"regarding the promotion,\"\n promotion,” which is defined to\nmean the \"Dogecoin\n “Dogecoin Sweepstakes.”\n Sweepstakes.\" Id. at 98; cf. supra\npp. 13-14 (describing Claimant's\n Claimant’s interpretation of the\nclause). That sentence, however, does not answer who\ndecides whether a given controversy must be resolved\nin arbitration or in court.\n The second sentence in the forum-selection clause\nlikewise does not modify the delegation clause. It\n “each entrant waives any and all objections\nstates that \"each\nto jurisdiction and venue in those courts for any rea-\nson and hereby submits to the jurisdiction of those\ncourts.\" JA 108 (capitalizations omitted). Read in con-\ncourts.”\ncert with the first sentence, this sentence prevents an\nentrant from asserting a lack of personal jurisdiction,\nlack of venue, and other similar defenses to appearing\nin a California court (rather than a different court) for\n “regarding the promotion.”\ndisputes \"regarding promotion.\" Id. (capitaliza-\ntions omitted). But that sentence does not speak to\nwho decides whether the arbitration agreement gov-\nerns a particular dispute. Because the severable del-\negation clause remains undisturbed, an arbitrator\nmust decide whether this case should proceed in arbi-\ntration or in court.\n To the extent there is any ambiguity, California law\nprefers Claimant's\n Claimant’s interpretation of the official rules\n 34\nbecause it avoids \"an“an absurdity.”\n absurdity.\" Cal. Civ. Code\n§ 1638; see W. Pueblo Partners, LLC v. Stone Brewing\nCo., LLC, 307 Cal. Rptr. 3d 626, 631 (Cal. Ct. App.\n2023). Under Respondent’\n Respondent' theory, who decides arbi-\ntrability often depends on when an entrant created a\nClaimant account. In particular, if an entrant first en-\ntered the sweepstakes by mail and later created an ac-\ncount (for instance, to claim a prize), the User Agree-\nment’s\nment's delegation clause would be the later contract\nand would control. But if an existing user entered the\nsweepstakes by mail, which is what Respondent\nclaim they would have done had Claimant advertised\nthe sweepstakes differently, the official rules would be\nthe later contract and would allegedly displace the del-\negation clause.\n That would mean two users could sign identical con-\ntracts and could bring identical claims, but the ques-\ntion of who decides where those claims should be\nbrought will vary depending on when each user cre-\nated her Claimant account. That is a quintessential\nabsurdity. No rational actor would draft a contract so\nthat an issue as important as who decides arbitrability\ndepends on an immaterial accident of timing.\n Claimant, by contrast, offered a sensible reading of\nthe official rules: Because the official rules do not dis-\nplace the delegation clause, the delegation clause dic-\ntates who decides whether the arbitration agreement\napplies to a particular dispute. If the arbitrator con-\ncludes the arbitration agreement does not apply, the\nofficial rules then identify which courts may decide\nclaims regarding the promotion.\n Finally, were there any lingering doubt, this Court\ncould apply the federal presumption in favor of arbi-\ntrability. The delegation clause is just an arbitration\n 35\nagreement, like \"any\n “any other,”\n other,\" Rent-A-Ctr., 561 U.S. at\n70, and \"as\n “as a matter of federal law, any doubts con-\ncerning the scope of arbitrable issues should be re-\nsolved in favor of arbitration,” Mem’l\n arbitration,\" Moses H. Cone Mem'l\nHosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25\n(1983). Thus, to the extent there is a doubt whether\nthe official rules narrowed the otherwise crystal-clear\ndelegation clause—to be clear, there is none—that\ndoubt is resolved in favor of arbitration.\n D. This Court Should Enforce The Delegation\n Clause Regardless Of Its Views On Arbitra-\n bility.\n A court should enforce a delegation clause \"even\n “even if\nthe court thinks that the argument that the arbitra-\ntion agreement applies * * * is wholly groundless.”\n groundless.\"\nHenry Schein, 139 S. Ct. at 529. Thus, the district\n “no business weighing”\ncourt had \"no weighing\" threshold arbitrabil-\nity questions, and evaluating whether the forum-se-\nlection clause narrowed the scope of the arbitration\nagreement. Id. (quotation marks omitted). That was\nall a matter for the arbitrator.\n Before an arbitrator, Claimant will present strong\narguments that the forum-selection clause applies to\nindividuals who enter the sweepstakes by mail. See\nsupra pp. 13-14. The courts below disagreed with\nClaimant. But that does not preclude \"another\n “another fair-\nminded adjudicator”\n adjudicator\" from deciding \"the\n “the matter the\nother way”\n way\" in an arbitration. Henry Schein, 139 S. Ct.\nat 531. An \"arbitrator\n “arbitrator might hold a different view of\nthe arbitrability issue than a court does, even if the\ncourt finds the answer obvious.”\n obvious.\" Id.\n 36\nII. THE\n HE DECISION\n ECISION BELOW\n ELOW IS WRONG.\n A. This Court Should Reject The Ninth Cir-\n cuit's Nebulous Exception To Delegation\n cuit’s\n Clauses.\n In the decision below, the Ninth Circuit ignored the\nseverability rule and never analyzed whether the offi-\ncial rules altered the parties’\n parties' agreement that an arbi-\ntrator would decide arbitrability disputes. The court\nnever addressed the interaction of the official rules\nand the \"delegation\n “delegation provision specifically.”\n specifically.\" Rent-A-\nCtr., 561 U.S. at 72. Instead, the Ninth Circuit first\n “[i]ssues of contract formation may not be\nheld that \"[i]\ndelegated to an arbitrator”—full\n arbitrator\"—full stop—without ex-\nplaining what it meant by \"contract\n “contract formation.”\n formation.\" JA\n583. The Ninth Circuit then simply declared that Re-\nspondents had challenged \"the“the existence rather than\nthe scope of [the] arbitration agreement”—which\n agreement\"—which it\nheld was not an issue the parties could agree to dele-\ngate to an arbitrator. Id. at 585.\n Circuit’s approach and its conclusion\n The Ninth Circuit's\nwere wrong from start to finish. Respondent’\n Respondent' chal-\nlenge in no way went to the formation or existence of\na contract. Respondent agree they signed the User\nAgreement and that it included an arbitration provi-\nsion and delegation clause—both of which initially\nwere and through today \"remain[]\n “remain[] generally ‘valid.’\n `valid.' ”\"\nJA 454. Respondent argued instead that the official\nJA\nrules allegedly “modified”\n \"modified\" the scope of the otherwise\nvalid and enforceable arbitration agreement—by es-\nsentially adding an after-the-fact carveout for specific\nclaims. Id.\n 37\n But even putting aside the Ninth Circuit's\n Circuit’s funda-\nmental error in mischaracterizing Respondent’\n Respondent' argu-\nment as one of \"contract\n “contract formation,”\n formation,\" the Court should\nreject the Ninth Circuit’s\n Circuit's nebulous, labels-based ex-\nception. As set out below, applying such an exception\nin this case would violate the FAA's\n FAA’s text and this\nCourt’s\nCourt's precedent, undermine the freedom to contract,\nand invite “time-consuming”\n \"time-consuming\" litigation over what is-\nsues fall within this exception. Henry Schein, 139 S.\nCt. at 531. This Court has recently rejected efforts to\nevade the FAA by relabeling novel arguments against\narbitration as involving \"contract\n “contract formation.”\n formation.\" Kindred\nNursing, 581 U.S. at 254. It should do the same here.\n formation nor\n 1. Respondent dispute neither the formation\n the continued existence of the arbitration agree-\n ment.\n The Ninth Circuit’s\n Circuit's reasoning fails on its own terms.\nEven if there were some kind of contract-formation ex-\nception for delegation, it would not apply in this case.\nRespondent challenged neither the formation\n formation nor\ncontinued existence of the arbitration agreement.\nQuite the opposite. Respondent do not contest that\nthey each signed the User Agreement. And they agree\n “the parties’\nthat \"the parties' original arbitration agreement re-\nmains generally valid and enforceable”\n enforceable\" and governs all\nother potential controversies arising out of or related\nto their use of Claimant’s\n Claimant's services. JAJA 454 (cleaned\nup).\n Rather, Respondent dispute whether the official\nrules narrowed the arbitration agreement, and\n “agreement covers”\nwhether that \"agreement “particular con-\n covers\" this \"particular\ntroversy.\" Rent-A-Ctr., 561 U.S. at 69. Thus, this is a\ntroversy.”\ndebate about the arbitration agreement’s\n agreement's scope—i.e.,\n 38\ndoes the allegedly-narrowed arbitration agreement\napply to this case, or not. Id. That threshold question\nabout the agreement’s\n agreement's alleged narrowing and applica-\nbility to this dispute is undoubtedly a matter parties\nmay delegate to an arbitrator. Id.\n 2. The FAA's\n FAA’s severability rule applies to all chal-\n lenges, regardless of their label.\n But even if Respondent had raised something that\ncould be categorized as a \"contract\n “contract formation”\n formation\" chal-\nlenge, the Ninth Circuit still should have applied the\nFAA’s severability rule. According to the FAA’s\nFAA's FAA's text,\ncourts should consider only \"contract\n “contract formation”\n formation\" argu-\nments regarding \"the\n “the specific arbitration clause that a\nparty seeks to have the court enforce.”\n enforce.\" Granite Rock,\n561 U.S. at 296-297. In this case, the specific arbitra-\ntion agreement Claimant seeks to enforce before this\nCourt is the delegation clause—the parties’\n parties' mini-arbi-\ntration agreement to arbitrate arbitrability. Under\nthe FAA’s\n FAA's text, the Ninth Circuit thus could have con-\nsidered only questions about the formation of the del-\negation clause—not questions about the wider arbitra-\ntion agreement nor questions about the contract as a\nwhole. And carefully applying the FAA’s\n FAA's severability\nrule mattered in this case because Respondent’\n Respondent' chal-\nlenge did not affect the delegation clause in any way.\n The FAA’s\n FAA's text expressly applies the Act's\n Act’s severabil-\nity rule to contract-formation challenges. A court\nmust determine \"that\n “that the making of the agreement for\n for\narbitration * * * is not in issue”\n issue\" before enforcing that\n provision. 9 U.S.C. § 4 (emphasis added). But\nspecific provision.\nin the face of a valid arbitration provision, the FAA\n“does not permit the federal court to consider claims”\n\"does claims\"\nregarding the making “of \"of the contract generally.”\n generally.\"\n 39\nPrima Paint, 388 U.S. at 404. Thus, contract defenses\n“such as fraud, duress, or mutual mistake”\n\"such mistake\" all concern\n“contract formation.”\n\"contract AT&T Mobility LLC, 563 U.S.\n formation.\" AT&T\nat 355 & n.* (Thomas, J., concurring); see Morgan\nStanley Cap. Grp. Inc. v. Pub. Util. Dist. No. 1\nStanley 1 of\nSnohomish Cnty., 554 U.S. 527, 547 (2008) (allega-\ntions of \"fraud\n “fraud or duress” “unfair dealing at the\n duress\" involve \"unfair\n stage”). But in Prima Paint, this\ncontract formation stage\").\nCourt held that the FAA permits parties to commit to\narbitration such formation disputes regarding the en-\ntire contract. See 388 U.S. at 403-404. Relying on that\nlongstanding precedent, the AAA rules incorporated\ninto the User Agreement state that arbitrators may\n “the existence * * * of a contract of which an\ndetermine \"the\n part.\"33\narbitration clause forms a part.”\n Delegation clauses are just mini-agreements to arbi-\ntrate which this Court treats like \"any\n “any other”\n other\" arbitra-\ntion agreement. Rent-A-Ctr., 561 U.S. at 70. As a re-\nsult, before enforcing the delegation clause, the FAA’s\n FAA's\ntext requires a court to isolate the delegation clause\nand entertain those contract-formation arguments re-\ngarding \"the\n “the ‘making’\n `making' of the”\n the\" delegation clause itself.\nPrima Paint, 388 U.S. at 404. But the FAA does not\npermit a court to entertain arguments—whether la-\nbeled contract formation, or otherwise—attacking the\nwider arbitration agreement or the whole contract of\nwhich the delegation clause is a part. Id.\n\n\n 3\n 3 See, e.g., AAA Commercial Arbitration Rule R-7(b) (eff. Oct.\n See, e.g., AAA Commercial Arbitration Rule R-7(b) (eff. Oct.\n1, 2013); AAA Consumer Arbitration Rule R-14(b) (eff. Sept. 1,\n2018); AAA Employment Arbitration R-6(b) (eff. May 15, 2013);\nAAA Labor Arbitration R-3(b) (eff. Jan. 1, 2019).\n 40\n It is no surprise, then, that this Court has recognized\nparties may agree to delegate contract-formation dis-\nputes to an arbitrator, including the arbitrability of a\ndispute over when the parties formed an arbitration\nagreement, see Granite\n Granite Rock, 561 U.S. at 297 n.5, and\n “whether the parties have agreed to arbi-\nthe question \"whether\ntrate.\" Henry Schein Inc., 139 S. Ct. at 529 (quotation\ntrate.”\nmarks omitted); accord Rent-A-Ctr., 561 U.S. at 68-69.\nRelying on this Court's\n Court’s precedent, the AAA's\n AAA’s rules—\nincorporated into Claimant’s\n Claimant's User Agreement—em-\npower arbitrators to decide \"any “any objections with re-\nspect to the existence * * * of the arbitration agree-\nment.\"44 And other prominent arbitral rules likewise\nment.”\nauthorize an arbitrator to decide challenges to the\n\"formation\" and “existence”\n“formation” \"existence\" of the arbitration agree-\n 5\nment.5\n In this case, carefully applying the FAA's\n FAA’s severabil-\nity rule makes all the difference. Respondent’\n Respondent' chal-\n generally is funda-\nlenge to the arbitration agreement generally\nmentally distinct from any possible challenge to the\ndelegation clause specifically. Respondent argued\nthat the official rules narrowed the scope of the arbi-\ntration agreement to exclude claims regarding the\nsweepstakes. That argument has no bearing on the\n“who decides arbitrability”\n\"who arbitrability\" question. See supra pp. 29-\n34. As a result, the delegation clause remains valid,\nand an arbitrator should decide whether the official\nrules in fact narrowed the arbitration agreement.\n\n\n 4\n 4 AAA Consumer Arbitration R-14(a); see also AAA Commer-\ncial Arbitration R-7(a) (same); AAA Employment Arbitration R-\n6(a) (same); AAA Labor Arbitration R-3(a) (same).\n 5\n 5 JAMS Comprehensive Arbitration R. 11(b) (eff. July 1, 2014).\n 41\n 3. The FAA's\n FAA’s severability rule permits\n permits challenges if\n parts of the\n a contract-formation defect infects all parts\n contract equally, but that narrow issue is not be-\n fore this Court.\n As with all challenges brought under the FAA, some\n“contract formation”\n\"contract formation\" arguments targeting the whole\ncontract or the broader arbitration agreement may at\ntimes mirror \"as“as applied”\n applied\" challenges to a severable\ndelegation clause. Rent-A-Ctr., 561 U.S. at 74 (empha-\nsis omitted). That is not the case here. But even in\nthat context, the FAA’s\n FAA's severability rule imposes a\npleading requirement: The \"basis\n “basis of challenge”\n challenge\" must\n“be directed specifically to the agreement to arbitrate\n\"be\nbefore the court will intervene.”\n intervene.\" Id. at 71. This mini-\nmal pleading requirement—a party must explain why\nthe arbitration agreement in question is invalid—en-\nforces principles of party presentation and reduces ju-\ndicial error in FAA cases.\n Consider challenges involving assent to a contract.\nA party may allege it never \"signed\n “signed the contract”;\n contract\"; that\n“the\n\"the signor lacked authority to commit the alleged\nprincipal”; “the signor lacked the mental capac-\nprincipal\"; or that \"the\nity to assent.”\n assent.\" Buckeye Check Cashing, 546 U.S. at 444\nn.1. Each allegation could be framed as a challenge\nthat a person never assented to the entire contract or\nthe arbitration agreement “generally.”\n \"generally.\" Prima Paint,\n388 U.S. at 404. Alternatively, each allegation could\nbe recast—without too much effort—as a challenge\nthat a person never assented to the delegation clause\n\"specifically.\" Rent-A-Ctr., 561 U.S. at 71.\n“specifically.”\n Thus, in the case on which the Ninth Circuit relied\nfor its holding that \"[i]ssues\n “[i]ssues of contract formation may\n 42\nnot be delegated,”\n delegated,\" JA 583, the motion to compel arbi-\ntration was filed by a non-party to the contract, see\nAhlstrom v. DHI Mortg. Co., 21 F.4th 631, 636 (9th\nAhlstrom\nCir. 2021). From a logical perspective, arguments\nagainst a non-party’s\n non-party's authority to enforce an arbitra-\ntion agreement and a non-party’s\n non-party's authority to enforce\nthe delegation clause assert the same defect, which\ncould “equally”\n \"equally\" undermine both the arbitration agree-\nment generally and the delegation clause \"specifi-\n “specifi-\ncally,\" and for the same reasons. Rent-A-Ctr., 561 U.S.\ncally,”\nat 70-71. In that circumstance—which is not present\nhere—some courts “short-circuit”\n \"short-circuit\" the severability\nrule, ignore the delegation clause, and decide the par-\nallel question regarding the entire arbitration agree-\nment. Henry Schein, 139 S. Ct. at 527.\n Nevertheless, first in Prima Paint and then emphat-\nically in Rent-A-Center, this Court told courts not to\nrevise a challenge framed as applied against other\nparts of a contract into a challenge as applied to the\nspecific arbitration provision sought to be enforced un-\nder FAA. Rent-A-Ctr., 561 U.S. at 71; Prima Paint,\n388 U.S. at 403-404. And as this Court recently con-\nfirmed, the FAA’s\n FAA's fundamental rules apply to \"con-\n “con-\ntract formation issues\"\n issues” too. Kindred Nursing, 581 U.S.\nat 254 (quotation marks omitted).66\n\n\n 6\n 6 This Court previously reserved the question whether argu-\nments that no \"agreement\n “agreement between the parties ‘was\n `was ever con-\ncluded' ”—including\ncluded’ \"—including arguments about the failure to sign a con-\n 43\n The FAA’s\n FAA's pleading requirement—a party must for-\nmally explain why the challenge applies to the specific\narbitration provision to be enforced—reflects the\nFAA’s text, which is uncompromising. See 9 U.S.C.\nFAA's\n§§ 2, 4. Under the FAA, courts \"shall\n “shall hear the par-\nties,\" and may resolve an issue regarding \"the\nties,” “the making\nof the agreement for arbitration,”\n arbitration,\" but only \"[where]\n “[where]\nsuch an issue is raised.”\n raised.\" Id. § 4 (emphasis added).\nThus, if a party does not herself explicitly articulate a\n “the making of the agreement for ar-\nchallenge to the \"the\nbitration,\" Section 4 does not permit the court to man-\nbitration,”\nufacture one for her. Id.\n Requiring parties to carefully articulate their chal-\nlenge—whether a contract formation challenge or\nsomething else—has important benefits: It ensures\ncourts apply principles of party presentation that gov-\nern all cases, and thereby furthers the FAA’s\n FAA's goal of\nequal treatment for arbitration cases. See Morgan v.\nSundance, Inc., 596 U.S. 411, 418 (2022); Blanton, 962\nF.3d at 845 n.1 (Thapar, J.) (declining to consider ar-\ngument that non-signatory lacked \"right\n “right to enforce the\nspecific\" delegation clause and invoking principle of\nspecific”\nparty presentation). Moreover, as this case demon-\nstrates, not all challenges a party or court labels as\n\n\ntract or mental capacity to sign—are subject to all the require-\nments of the FAA’s\n FAA's severability rule. Rent-A-Ctr., 561 U.S. at 70\nn.2 (quoting Buckeye Check Cashing, 546 U.S. at 444 n.1). To be\nclear: That issue is not presented by this case. Respondent do\nnot dispute that they agreed to the User Agreement, and that the\nUser Agreement continues to govern all other aspects of Respond-\nents' use of Claimant’s\nents’ Claimant's service. Respondent only argue that the\nofficial rules narrowed the arbitration agreement’s\n agreement's scope. Nev-\nertheless, as explained above, the severability rule’s\n rule's pleading re-\nquirement logically applies to signing or capacity arguments, too.\n 44\ninvolving \"contract\n “contract formation”\n formation\" will apply equally to all\nparts of the contract. By forcing parties to explain why\nevery challenge actually affects (for example) the del-\negation clause at issue, the FAA reduces the risk that\na court mistakenly assumes a particular challenge ap-\nplies “equally”\n \"equally\" to that delegation clause and other\nparts of the contract. In contrast, creating a judge-\nmade exception to the severability rule for a subset of\ncontract-formation arguments provides cover for\ncourts hostile to arbitration to frustrate the FAA’s\n FAA's pur-\npose and invites “time-consuming”\n \"time-consuming\" litigation over\n Paint’s con-\nwhether the exception applies, or Prima Paint's\ntrary rule governs. Henry Schein, 139 S. Ct. at 531;\nsee infra pp. 50-51.\n But it bears emphasis: Even if a limited \"contract\n “contract\nformation\" exception to the severability rule were a\nformation”\ngood idea in some other case, this case does not involve\na contract-formation challenge—let alone a challenge\nthat could apply “equally”\n \"equally\" to the delegation provision\nand the wider arbitration clause. Rent-A-Ctr., 561\nU.S. at 71. As a result, there was no reason for the\nNinth Circuit to decline to enforce the delegation\nclause.\n B. This Court Should Reject Respondent’\n Respondent' Al-\n ternative Rationales For The Ninth Cir-\n cuit’s Decision.\n cuit's\n Respondent’\n Respondent' Brief in Opposition abandoned the\nNinth Circuit's\n Circuit’s decision and offered two alternative\nrationales for ignoring the delegation clause. This\nCourt should reject them both.\n 45\n 1. The choice-of-law provision\n provision does not displace the\n delegation clause.\n Below, in opposing Claimant's\n Claimant’s motion to compel, Re-\nspondents had challenged the arbitration agreement\nbased on the forum-selection clause. Before this\nCourt, however, Respondent now argue that a sepa-\nrate choice-of-law provision in the official rules dis-\nplaced the delegation clause. BIO 6-8, 15-17.\n This Court may decline to consider Respondent’\n Respondent'\ncase-specific argument, which appears nowhere in the\ndistrict court’s Circuit’s decision.\n court's opinion or the Ninth Circuit's\nRent-A-Ctr., 561 U.S. at 75. \"This\n “This court sits as a court\nof review. It is only in exceptional cases coming here\nfrom the federal courts that questions not pressed or\npassed upon below are reviewed.”\n reviewed.\" Duignan v. United\nStates, 274 U.S. 195, 200 (1927); accord Granfinanci-\nera, S.A. v. Nordberg, 492 U.S. 33, 39 (1989) (\"Alt- (“Alt-\nhough we could consider grounds supporting the judg-\nment different from those on which the Court of Ap-\npeals rested its decision, where the ground presented\nhere has not been raised below we exercise this au-\nthority only in exceptional cases.”)\n cases.\") (cleaned up).\n This Court alternatively may reject Respondent’\n Respondent' ar-\ngument on the merits because the choice-of-law provi-\nsion in the official rules does not displace the delega-\ntion clause. The choice-of-law provision states that\nCalifornia and U.S. law applies to \"the\n “the interpretation,\nperformance and enforcement of these official rules.”\n rules.\"\nJA 109 (capitalization omitted). The choice-of-law pro-\nJA\nvision does not say who decides whether the official\nrules narrowed the arbitration agreement. Instead, at\nmost, the choice-of-law provision identifies what body\nof law a decider will use.\n 46\n If anything, the language in the choice-of-law provi-\nsion proves Claimant's\n Claimant’s argument that the official\nrules' forum-selection clause says nothing about who\nrules’\ndecides whether the arbitration agreement in the User\nAgreement applies to Respondent’\n Respondent' claims. See Cal.\nCiv. Code § 1641 (directing courts to interpret the\n“[w]hole contract,”\n\"[w]hole “each clause helping to interpret\n contract,\" \"each\nthe other”).\n other\"). The choice-of-law provision demonstrates\nthat the drafters knew how to refer to \"the\n “the interpreta-\ntion, performance and enforcement”\n enforcement\" of the \"official\n “official\nrules”—and likewise of the arbitration agreement as\nrules\"—and\nwell. But the drafters did not state in the forum-selec-\ntion clause that disputes over \"the\n “the interpretation, per-\nformance and enforcement”\n enforcement\" of the official rules or the\narbitration agreement must be heard in court, or oth-\nerwise state in the official rules who must decide such\ndisputes. Instead, at most, the drafters identified\n “interpretation, performance\nwhat law applies to the \"interpretation,\nand enforcement”\n enforcement\" of the official rules, and left the del-\negation clause untouched. As a result, the delegation\nclause applies, and governs who decides how to recon-\ncile these two contracts.\n 2. The \"clear\n “clear and unmistakable”\n unmistakable\" standard does not\n apply here.\n Respondent also argue that even if the official rules\ndid not displace the delegation clause, the official rules\ncreated just enough ambiguity that the otherwise\ncrystal clear delegation clause in the User Agreement\nno longer provides \"clear\n “clear and unmistakable evidence”\n evidence\"\nof the parties’\n parties' intent to delegate arbitrability ques-\ntions. First Options, 514 U.S. at 944 (cleaned up); see,\ne.g., BIO 18. In Rent-A-Center, this Court rejected\nsimilar efforts to expand the clear-and-unmistakable\n 47\nstandard, and it should do so again here. See Rent-A-\nCtr., 561 U.S. at 69 n.1.\n n.l.\n The clear-and-unmistakable standard is a judge-\nmade, “arbitration-specific” “interpretive rule”\n \"arbitration-specific\" \"interpretive rule\" disfa-\nvoring delegation clauses. Kindred Nursing, 581 U.S.\nat 254; Howsam, 537 U.S. at 83. The rule subjects\n“delegation clauses”\n\"delegation “by virtue of their defining trait,\n clauses\" \"by\nto uncommon barriers.”\n barriers.\" Kindred Nursing, 581 U.S. at\n252. The rule does not apply to all arbitration agree-\nments under the FAA, let alone all other contracts at\ncommon law, and is in some tension with the FAA’s FAA's\ntext. See Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407,\n1431 n.4 (2019) (Kagan, J., dissenting) (recognizing\nthat the clear-and-unmistakable rule displaces\n“[w]hatever state law might say”).\n\"[w]hatever say\"). The heightened\nstandard reflects this Court’s\n Court's assessment of parties’\n parties'\nmost-likely behavior: Because the question of who de-\ncides arbitrarily is “arcane,” “party often might not\n \"arcane,\" a \"party\nfocus upon” “significance.” First\n upon\" that question or its \"significance.\"\nOptions, 514 U.S. at 945. The clear-and-unmistakable\nstandard is at most a presumption against reading \"si-“si-\nlence\" or genuine “ambiguity”\nlence” \"ambiguity\" in an arbitration agree-\nment to constitute a delegation clause. Id.; accord\nLamps Plus, 139 S. Ct. at 1416.\n But once parties have agreed to a clear-and-unmis-\ntakable delegation clause—as the parties emphati-\ncally did here—the heightened standard's\n standard’s purpose is\nfulfilled: The parties deliberately considered \"who“who\n* * * decides”\n decides\" the scope of the arbitration agreement,\nand agreed that an arbitrator should decide gateway\narbitrability questions. First Options, 514 U.S. at 944\n(emphasis omitted). Indeed, given the heightened in-\ntentionality this Court requires to create a delegation\nclause, it should arguably be more difficult to show the\n 48\nparties revoked their carefully considered agreement.\nAt a minimum, however, the Court should not treat\ndelegation clauses as easier to revoke than \"any\"\n “any” other\n\"contract.\" 9 U.S.C. § 2.\n“contract.”\n This case is analogous to Rent-A-Center, where this\nCourt rejected similar efforts to expand the clear-and-\nunmistakable standard, and lower the threshold for\nthe “revocation”\n \"revocation\" of a delegation clause. See supra pp.\n26-27; Rent-A-Ctr., 561 U.S. at 69 n.1. Like the em-\nployee in Rent-A-Center, Respondent here do not dis-\npute that they agreed to the delegation clause, or that\n“the text of the”\n\"the the\" delegation clause itself \"was\n “was clear and\nunmistakable”\nunmistakable\" on its face. 561 U.S. at 69 n.1. Instead,\nmuch like the employee in Rent-A-Center, Respond-\nents raised a “revocation”\n \"revocation\" argument after-the-fact to a\ncrystal-clear delegation clause. Id. (quoting 9 U.S.C.\n§ 2); see BIO 17 (characterizing Respondent’\n Respondent' argu-\nment as a “revocation”\n \"revocation\" challenge under \"§ “§ 2's\n 2’s savings\nclause\"). The result here should be the same as in\nclause”).\nRent-A-Center: The Court should enforce the delega-\n “any contract.”\ntion clause like \"any contract.\" 9 U.S.C. § 2. Anything\nless would improperly \"tilt\n “tilt the playing field”\n field\" “against”\n \"against\"\ndelegation clauses by radically lowering the threshold\nto challenging their revocation. Morgan, 596 U.S. at\n419.\n Finally, even if a heightened standard—which is\nagain no more than a presumption—applied in this\ncontext, it would not help Respondent. The text of\nthe User Agreement is exceptionally clear, and the ar-\nbitral rules incorporated into the User Agreement are\nequally explicit. Meanwhile, the official rules say\nnothing about who decides arbitrability disputes re-\ngarding the arbitration agreement, nor anything\n 49\nabout who decides similar disputes regarding the offi-\ncial rules. The parties’\n parties' intent to authorize the arbitra-\ntor to decide this arbitrability dispute thus remains\nclear and unmistakable.\nIII. RULING\n ULING FOR\n OR PETITIONER\n ETITIONER WILL PROTECT\n ROTECT THE\n HE\n FREEDOM T C A R\n REEDOM o ONTRACT ND EDUCE OL-\n O ONTRACT ND EDUCE FOL-\n -O LITIGATION.\n LOW-ON ITIGATION\n Ruling for Petitioner—consistent with the FAA’s\n FAA's\ntext and this Court’s\n Court's precedent—will ensure an ad-\nministrable system, and advance the FAA’s\n FAA's core pur-\npose. In contrast, ruling for Respondent will raise\ndifficult line-drawing problems and will undermine\nthe freedom to contract.\n A. Petitioner’s\n Petitioner's Rule Is Administrable And\n Furthers The FAA’s\n FAA's Purpose.\n Petitioner asks the Court to continue to adhere to a\nuniversal and bright-line severability rule that applies\nequally to all challenges to all arbitration agree-\nments—including delegation clauses. See Rent-A-Ctr.,\n561 U.S. at 73; Nitro-Lift, 568 U.S. at 20; Preston, 552\nU.S. at 354; Buckeye Check Cashing, 546 U.S. at 445-\n446; Prima Paint, 388 U.S. at 403-404. Applying this\nconsistent standard across all FAA cases is the most\nadministrable approach.\n In addition, ruling for Petitioner will further the\nFAA’s purpose. Petitioner’s\nFAA's Petitioner's approach places delega-\n “on equal footing with all other contracts,”\ntion clauses \"on contracts,\"\nand protects the benefits offered by these specialized\narbitration agreements. Buckeye Check Cashing, 546\nU.S. at 443. Like all other arbitration agreements,\ndelegation clauses provide \"quicker,\n “quicker, more informal,\nand often cheaper”\n cheaper\" dispute resolution. Epic Sys., 138\n 50\nS. Ct. at 1621. And like all other arbitration agree-\nments, delegation clauses provide parties access to\n“expert[]”\n\"expert [I\" decisionmakers. Mitsubishi Motors Corp. v.\nSoler Chrysler-Plymouth, Inc., 473 U.S. 614, 633\n(1985); see Stolt-Nielsen S.A. v. AnimalFeeds\n AnimalFeeds Int'l\n Int’l\nCorp., 559 U.S. 662, 684 (2010) (looking to the \"tradi-\n “tradi-\ntion of” “maritime law”\n of\" \"maritime law\" in deciding whether to permit\nclass arbitration). Petitioner’s\n Petitioner's rule ensures these im-\nportant arbitration agreements are protected, as Con-\ngress and the parties’\n parties' intended.\n It is imperative to enforce delegation clauses in mul-\ntiple contract scenarios, like this case. Parties of all\nstripes routinely sign successive agreements. See, e.g.,\nStolt-Nielsen, 559 U.S. at 666, 668 (shipping compa-\nnies and commodities firms entered into an initial\n“charter party”\n\"charter party\" and a subsequent \"supplemental\n “supplemental\nagreement”).\nagreement\"). Indeed, California law mandated that\nClaimant include separate sweepstakes official rules\nin a standalone contract. In practice, it is often diffi-\ncult for drafters to foreclose any argument that a later\ncontract conflicts with an earlier one. In agreeing to\narbitrate all disputes, including arbitrability issues,\nparties commit to resolving any putative conflicts be-\ntween contracts in arbitration.\n B. Ruling For Respondent Will Invite Chaos.\n In sharp contrast, the Ninth Circuit’s\n Circuit's approach is\nfundamentally unworkable. The Ninth Circuit would\nexempt a nebulous category of \"contract\n “contract formation”\n formation\"\ndisputes from the scope of every delegation clause.\nWere this Court to adopt that ill-defined “exception,”\n \"exception,\"\n “would inevitably spark collateral litigation * * *\nit \"would\nover whether”\n whether\" the exception to delegation applies in a\ngiven case. Henry Schein, 139 S. Ct. at 531. At a min-\nimum, these “time-consuming\n \"time-consuming sideshow[s]” [s]' will rob\n 51\nparties of cost-savings, speed, and other efficiencies of\narbitration. Id. And adopting the Ninth Circuit’s\n Circuit's ap-\nproach could unsettle existing expectations, including\nthe expectations of so many parties whose existing\ncontracts authorize arbitrators to determine the \"ex-“ex-\nistence\" and “formation”\nistence” \"formation\" of an arbitration agreement.\nSee supra p. 40 & nn. 4, 5.\n Worse, the Ninth Circuit’s\n Circuit's exception could provide\n “new devices and formulas”\ncover for \"new formulas\" that seek to un-\ndermine delegation clauses. Epic Sys., 138 S. Ct. at\n1623. So long as a party resisting delegation couches\nits anti-arbitration theory as involving \"contract\n “contract for-\nmation”—and\nmation\"—and many legal doctrines have some plausi-\nble relationship to the formation of a contract—a party\ncould now hope to evade delegation. See Kindred\nNursing, 581 U.S. at 254 (rejecting attempt to justify\nstate law hostile to arbitration as involving \"contract\n “contract\nformation”). Meanwhile, when lower courts disagree\nformation\").\nover how to apply the Ninth Circuit's\n Circuit’s new anti-delega-\ntion exception—as they undoubtedly will—this Court\nwill be called upon to resolve conflicts as only it can.\n Respondent’\n Respondent' alternative theory—which asks this\nCourt to lower the threshold for revoking delegation\nclauses under Section 2 of the FAA—poses similar\ndangers. In every case, lower courts will need to de-\ntermine whether to apply Respondent’\n Respondent' reduced\nthreshold for attacking delegation clauses, or whether\nto apply Rent-A-Center's\n Rent-A-Center’s contrary rule that treats del-\negation clauses like any other arbitration agreement.\nRent-A-Ctr., 561 U.S. at 69 n.1. There will likely be\nconsiderable confusion over which rule applies, just as\nthere is even ambiguity today regarding whether a\ngiven issue concerns a threshold arbitrability dispute\nsubject to the clear-and-unmistakable standard. See\n 52\nOxford Health Plans LLC v. Sutter, 569 U.S. 564, 569\n (“[T]his Court has not yet decided whether\nn.2 (2013) (\"[T]his\nthe availability of class arbitration is a question of ar-\nbitrability.\"); Howsam, 537 U.S. at 83 (explaining that\nbitrability.”);\n“one might call any potentially dispositive gateway\n\"one\nquestion a ‘question\n `question of arbitrability,’\n arbitrability,' ”\" but the Court’s\n Court's\nuse of the “phrase” “has a far more limited scope\").\n \"phrase\" \"has scope”).\n If a court decides Respondent’\n Respondent' new standard applies\nto a particular case, the court will then need to deter-\nmine whether an otherwise \"unmeritorious\n “unmeritorious argu-\nment”—which\nment\"—which on its own would not revoke a delega-\ntion clause—creates just enough ambiguity to tip the\nbalance against delegation. Henry Schein, 139 S. Ct.\nat 531. In short, like the Ninth Circuit’s\n Circuit's approach, Re-\nspondents' alternative theory poses considerable line-\nspondents’\ndrawing problems, will encourage meritless chal-\nlenges to delegation clauses, could provide a haven for\n“new devices and formulas”\n\"new formulas\" hostile to arbitration, and\nwill enmesh this Court in considerable follow-on liti-\ngation. Epic Sys., 138 S. Ct. at 1623.\n C. Petitioner’s\n Petitioner's Approach Facilitates Chal-\n lenges To Delegation Clauses.\n It also bears emphasis what ruling for Petitioner—\nand enforcing the FAA as it is written—does not mean.\n First, contrary to what Respondent have claimed,\nenforcing the FAA in this case will not \"make\n “make it logi-\ncally impossible for courts to ever find that a delega-\ntion agreement was altered or affected in any way by\nany subsequent agreement.”\n agreement.\" BIO 15-16. Parties re-\nmain free to expressly revoke or alter delegation\nclauses. In addition, a party resisting a delegation\nclause may argue (if the facts support it) that a subse-\nquent agreement implicitly displaced or modified the\n 53\n“delegation provision specifically.”\n\"delegation specifically.\" Rent-A-Ctr., 561\nU.S. at 72. What a ruling for Petitioner will prevent\nis parties asking a court to “short-circuit”\n \"short-circuit\" a delegation\nclause that assigns the scope of an arbitration clause\nto an arbitrator so that the court decides that very\nquestion itself. Henry Schein, 139 S. Ct. at 527.\n Second, ruling for Petitioner will not give carte\nblanche to arbitrators. As an initial matter, the law\npresumes arbitrators are \"competent,\n “competent, conscientious,\nand impartial.”\n impartial.\" Mitsubishi Motors, 473 U.S. at 634.\nBut in the event that arbitrators stray from these\nprinciples, the FAA \"provides\n “provides for back-end judicial re-\nview of an arbitrator's\n arbitrator’s decision.”\n decision.\" Henry Schein, 139\nS. Ct. at 530. If \"arbitrators\n “arbitrators exceed[] their powers,”\n powers,\"\ncourts may intervene and \"vacat[e]\n “vacat[e] the award.”\n award.\" 9\nU.S.C. § 10(a)(4).\n Third, as this Court recently explained in Henry\nSchein, enforcing a valid delegation clause will not\nleave arbitrators powerless \"to“to deter frivolous motions\nto compel arbitration.”\n arbitration.\" Henry Schein, 139 S. Ct. at\n531. \"Arbitrators\n “Arbitrators can efficiently dispose of frivolous\ncases by quickly ruling that a claim is not in fact arbi-\ntrable,” “under certain circumstances”\ntrable,\" and \"under “arbitra-\n circumstances\" \"arbitra-\ntors may” “fee-shifting and cost-shifting sanc-\n may\" impose \"fee-shifting\ntions.\" Id. But a court should not hesitate to enforce\ntions.”\ndelegation clauses as written—in this case or any\nother—because it thinks the result is preordained.\n“After all, an arbitrator might hold a different view of\n\"After\nthe arbitrability issue than a court does, even if the\ncourt finds the answer obvious.”\n obvious.\" Id.\n CONCLUSION\n For the foregoing reasons, the Ninth Circuit’s\n Circuit's deci-\nsion should be reversed.\n 54", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n Lawyers argue about plain and unam-\n biguous language all the time. That is their\n job: to inject doubt when it is in their clients’\n interest. But more often the language is not\n plain and unambiguous, so that to figure out\n its meaning, the implicit process of inter-\n pretation that we apply to plain and unam-\n biguous language must be made express.\nA. Scalia & B. Garner, Reading Law: The Interpreta-\ntion of Legal Texts 54 (2012) (Reading Law).\n When a plaintiff files suit, and a defendant\ndemands arbitration, two types of disputes may arise.\nThe first is an “arbitrability dispute,” over whether\nthe plaintiff’s claims belong in court or arbitration.\nThe second is a “delegation dispute,” over whether a\ncourt or an arbitrator should decide where the plain-\ntiff’s claims belong.\n For either type of dispute, “[t]he first principle” of\nthis Court’s FAA precedents is that “arbitration is\nstrictly a matter of consent.” Lamps Plus, Inc. v.\nVarela, 139 S.Ct. 1407, 1415-16 (2019). In resolving\nany arbitrability or delegation dispute, courts must\n“give effect to the contractual rights and expectations\nof the parties” and, “as with any other contract, the\nparties’ intentions control.” Stolt-Nielsen S.A. v.\nAnimalFeeds Int’l Corp., 559 U.S. 662, 682 (2010).\nThis case presents a delegation dispute over the\nparties’ true intentions.\n This case is not about contract “formation” or\n“existence.” All parties concede that their User Agree-\n 2\n\n\nments and sweepstakes agreements were “formed,”\nand “exist” today. Nor is this case about the “validity,”\n“enforceability,” or “revocability” of any contract or\nprovision. All parties agree that their contracts and\nterms are valid, enforceable, and not revocable by one\nparty. Viking River Cruises, Inc. v. Moriana, 596 U.S.\n639, n.3 (2022) (explaining that “revocability”\ndoctrines allowed a party “to revoke consent to arbi-\ntrate until the moment an arbitrator entered an\naward”). All contracts and terms here are equally\n“valid, irrevocable, and enforceable.” 9 U.S.C § 2.\n The parties’ arbitrability and delegation dis-\nputes are purely disputes over contract interpreta-\ntion. In matters of interpretation, every contract\ncounts. Every clause counts. The specific, interpretive\nquestion here is what the parties intended their\n“delegation” and “forum-selection” clauses to mean in\nthe context of their current delegation dispute, not\njust any old delegation dispute. Granite Rock Co. v.\nIntl. Brotherhood of Teamsters, 561 U.S. 287, 297\n(2010) (emphasizing that “a court may order arbitra-\ntion of a particular dispute only where the court is\nsatisfied that the parties agreed to arbitrate that\ndispute”). Non-preempted, State laws of contract\ninterpretation properly answer that question. Volt\nInfo. Sciences, Inc. v. Bd. of Trustees of Leland\nStanford Junior Univ., 489 U.S. 468, 474 (1989)\n(recognizing that “the interpretation of private contra-\ncts is ordinarily a question of state law”).\n This Court’s “severability rule,” which Claimant\nreferences 158 times in its brief, is a rule of contract\nenforcement. It is not a rule of contract interpretation.\nThe rule requires courts to “pluck” arbitration and\ndelegation provisions away from other terms in a con-\n 3\n\n\ntract, when other terms are subject to an affirmative\ndefense against contracts (e.g., unconscionability, or\nfraud in the inducement). Rent-A-Center, West, Inc. v.\nJackson, 561 U.S. 63, 85 (2010) (Stevens, J., dis-\nsenting). Unless the arbitration or delegation provi-\nsions themselves are subject to an affirmative defense,\nthey remain enforceable. Id. (citing Prima Paint Corp.\nv. Flood & Conklin Manufacturing Co., 388 U.S. 395\n(1967)).\n The Court’s severability rule does not and cannot\napply to matters of contract interpretation, at least\nnot in the way Claimant posits. Like this Court, States\nhave long established that contractual terms and\nclauses cannot be interpreted in isolation. O'Brien v.\nMiller, 168 U.S. 287, 297 (1897) (“The elementary\ncanon of interpretation is, not that particular words\nmay be isolatedly considered, but that the whole con-\ntract must be brought into view and interpreted with\nreference to the nature of the obligations between the\nparties, and the intention which they have manifested\nin forming them.”); Reading Law 167 (“The whole of a\ncontract is to be taken together, so as to give effect to\nevery part, if reasonably practicable, each clause\nhelping to interpret the other.”) (quoting Cal. Civ.\nCode § 1641). To apply the Court’s severability rule of\nenforcement to delegation disputes over interpretation\nwould be to hold the most fundamental canons of con-\ntract construction preempted by the FAA.\n Before courts can enforce arbitration or delega-\ntion clauses under the FAA, they must first interpret\nthose clauses. 9 U.S.C. § 3. This is true because, as\nJustice Scalia recognized, “[e]very application of a text\nto particular circumstances entails interpretation.”\nReading Law 53. In applying delegation clauses to dis-\n 4\n\n\nputes involving multiple, distinct agreements, courts\ncannot lawfully isolate those clauses away from all\nother, enforceable terms.\n When faced with a delegation dispute, courts\nmust “sever” the delegation question away from other,\ninterpretive questions and merits questions, and\nanswer the delegation question before proceeding to\nother questions. Henry Schein, Inc. v. Archer and\nWhite Sales, Inc., 139 S.Ct. 524 (2019) Courts cannot,\nhowever, “sever” a delegation clause away from all\nother enforceable clauses and contracts, for purposes\nof answering a delegation question of interpretation.\nDoing that would violate “[t]he first principle” of the\nCourt’s FAA precedents, that “arbitration is strictly a\nmatter of consent.” Lamps Plus, 139 S.Ct. at 1415-16.\n Here, the Court should isolate the parties’ delega-\ntion dispute, not their delegation clause, and resolve\n“that dispute” by finding: (i) Claimant expressly con-\nsented to courts deciding where Respondent’ claims\nbelong; and (ii) Respondent never consented to arbi-\ntrators interpreting the parties’ sweepstakes agree-\nments. Granite Rock, 561 U.S. at 297. Those conclu-\nsions flow from ordinary, State-law principles of con-\ntract interpretation, as well as this Court’s federal\nrules of contract interpretation.\n 5\n\n\n STATEMENT OF THE CASE\nI. FACTS\n Claimant offers the public an online platform\nfor buying and selling “cryptocurrencies.” JA 30.\nPeople create personal, online trading accounts and\naccess them for free via Claimant’s website and mobile\napp. JA 112-118. Respondent are four people who\ncreated Claimant accounts online between 2018 and\n2021. Id.\n\n A. The User Agreements\n\n 1. Respondent Respondent\n Respondent Respondent created an account on\nClaimant’s website in January 2018. Id., ¶13(a). At\nthat time, he accepted a “User Agreement” (JA 119-\n177) containing arbitration provisions: “you and we\nagree that any dispute arising under this Agreement\nshall be finally settled in binding arbitration, on an\nindividual basis, in accordance with the American\nArbitration Association’s [AAA] Rules for Arbitration\nof Consumer-Related Disputes (accessible at https://\n[URL REDACTED]\n. . . .” JA138.\n Respondent’s User Agreement contained other provi-\nsions relevant to interpreting the parties’ intentions.\nThere were “Governing Law” provisions, stating: “You\nagree that the laws of the State of California . . . will\ngovern this Agreement and any claim or dispute that\nhas arisen or may arise between you and Claimant,\nexcept to the extent governed by federal law.” JA 144.\n 6\n\n\nThe User Agreement was a bilateral contract, between\nRespondent and Claimant only. JA 119.\n\n 2. Respondent Maher\n In April 2020, Respondent Thomas Maher created\na Claimant account. JA 116, ¶13(d). At that time,\nMaher accepted a Claimant User Agreement (JA 297-\n351), which became a bilateral contract between him\nand Claimant. JA 116, ¶13(d); JA 297. Maher’s User\nAgreement provided, “you and we agree that any dis-\npute arising out of or relating to this Agreement or the\nClaimant Services . . . shall be resolved through\nbinding arbitration, on an individual basis (the ‘Arbi-\ntration Agreement.’).” JA 334. “This Arbitration Agree-\nment includes, without limitation, disputes arising\nout of or related to the interpretation or application of\nthe Arbitration Agreement, including the enforceability,\nrevocability, scope, or validity of the Arbitration Agree-\nment or any portion of the Arbitration Agreement. All\nsuch matters shall be decided by an arbitrator and not\nby a court or judge.” JA 334-335.\n Maher’s User Agreement contained “Governing\nLaw” provisions identical to Respondent’s. JA 342-343.\n\n 3. Respondent Martin and Calsbeek\n Respondent Jaimee Martin created her account\nin February 2021; Respondent Jonas Calsbeek created\nhis in May 2021. JA 115-116, ¶¶13(b), 13(c). Martin’s\nand Calsbeek’s User Agreements with Claimant were\nmaterially identical to Maher’s. JA 178-230; JA 231-\n296.\n 7\n\n\n B. The Official Rules Agreements\n Leading up to May 2021, Claimant allowed its\nusers, including Respondent, to trade many brands\nof “cryptocurrencies” on its platform. JA 30. Examples\nincluded the famous “Bitcoin,” its younger cousin,\n“Litecoin,” and the brains of the cryptocurrency family,\n“Ethereum,” known for its “smart contract” function-\nality. Id.; JA 47; JA 119; JA 183. Claimant’s crypto-\nfamily, however, would never have been complete:\nwithout the family dog.\n\n 1. The “Dogecoin” Cometh\nIn early 2021, a lesser-known brand of cryptocurrency\nbegan skyrocketing in price on trading platforms other\nthan Claimant. JA 30-31. Two software engineers had\ninvented their own crypto brand, making light of the\nrampant financial speculation occurring in\ncryptocurrencies generally. Id. After all, if arbitrary\ncomputer codes like “Bitcoins” could be programmed\nand sold for thousands of dollars each, why not\nprogram and sell “Dogecoins” too? Id.\n 8\n\n\n In January 2021, the price of a “Dogecoin” was\nless than $0.01. Id. By May 2021, Dogecoin’s price had\nspiked to $0.70 per coin on non-Claimant trading\nplatforms. Id. Claimant took notice and wanted a piece\nof that price action. Id.\n On June 1, 2021, Claimant announced that\nDogecoin would debut for trading on its platform,\nbeginning June 3, if “liquidity conditions [we]re met.”\nId. Claimant didn’t specify what its “liquidity condi-\ntions” might be, but it had a plan to fulfill them.\nClaimant would “incentivize as much Dogecoin trading\nas possible” immediately upon the new coin’s debut.\nJA 32.\n To incentivize trading, Claimant hired Marden-\nKane, Inc. to help “design, market, and execute a $1.2\nmillion ‘Dogecoin sweepstakes.’” Id. Unlike Claimant,\nMarden-Kane specialized in conducting consumer\nsweepstakes campaigns, in which companies offer\nconsumers a chance to win prizes for taking company-\nfriendly actions. JA 40. Here, the company-friendly\naction was buying or selling Dogecoins via Claimant,\nfor a fee.\n The companies’ offer was that anyone who bought\nor sold Dogecoins for $100 or more (inclusive of fees)\nbetween June 3 and June 10, 2021 would earn entry\ninto random prize drawings. JA 99-100. Alternatively,\npeople could enter by mailing a handwritten card to\nMarden-Kane, providing their personal contact infor-\nmation. Id.\n Claimant, as “Sponsor,” would provide the prizes,\nvalued from $100.00, up to $300,000.00. JA 98, 104.\nMarden-Kane, as “Administrator” of the “Sweepstakes”\n(or “Promotion”), would conduct prize drawings and\n 9\n\n\nserve as “an independent judging organization” over\nthe Sweepstakes. JA 102.\n\n 2. Respondent Enter the Dogecoin\n Sweepstakes\n Because the companies’ goal was to incentivize\nDogecoin trading, they devised digital ads to pitch their\noffer to the most likely traders: existing Claimant\nusers. JA 31-39. They wanted as many users as possible\nto enter by purchasing Dogecoins, not by mailing\nMarden-Kane an index card. Id. Accordingly, the\ncompanies structured their digital ads to manipulate\nClaimant users into buying Dogecoins for their\nentries. JA 49-52.\n On June 3, 2021, Claimant emailed its Sweepstakes\noffer to Respondent and other users. JA 31-39. The\nads looked like this.\n 10\n\n\nId.\n\n\n When users clicked the “See how to enter” button,\nthey were taken to a similar webpage featuring a\nlarge, blue “Opt in” button. Id. If users clicked the “Opt\nin” button, it morphed into a “Make a trade” button,\nand the webpage displayed a falsehood: “Remember:\nyou’ll still need to buy or sell $100 in Dogecoin on\nClaimant by 6/10/2021 for a chance to win.” Id. This\nwas untrue, as Claimant users could obtain a chance to\nwin without buying or selling Dogecoins. Id.\n People love dogs, and people love prizes, so Res-\npondents and many other people bit on the companies’\nSweepstakes offer. JA 41-46. They opted into the\nSweepstakes and spent $100 or more on Dogecoins for\na chance to win. Id. When Respondent did that,\nClaimant and Marden-Kane bound them to a new,\nthree-party agreement.\n 11\n\n\n 3. Claimant’s and Marden-Kane’s\n Sweepstakes Agreements with\n Respondent\n While entering the Sweepstakes, each Respond-\nent formed an enforceable, trilateral contract with\nClaimant and Marden-Kane. The contracts were labeled\n“Official Rules” agreements. JA 98-99 (“Participation\nconstitutes entrant’s full and unconditional agree-\nment to these Official Rules . . . .”). The Official Rules\nreflected the basic terms of the transaction, such as\nthe available methods of entry, prizes, and conditions\nunder which prizes would be awarded. JA 98-110.\n The agreements provided: “Access to Dogecoin\nand US Dollar prizes is subject to the Claimant Terms\nand Conditions of the Claimant account.” JA 104. That\nunderlined clause linked to Claimant’s standard User\nAgreements. Id. Hence, Claimant and Marden-Kane\nwrote that Respondent’ “[a]ccess . . . to prizes,” if any,\nwould be “subject to” their User Agreements with\nClaimant. Id.\n The Official Rules did not say that any disputes\nwould be “subject to” the User Agreements. Id.\nRather, in a section titled “Disputes,” Claimant and\nMarden-Kane wrote:\n THE CALIFORNIA COURTS (STATE AND\n FEDERAL) SHALL HAVE SOLE JURIS-\n DICTION OF ANY CONTROVERSIES\n REGARDING THE PROMOTION AND THE\n LAWS OF THE STATE OF CALIFORNIA\n SHALL GOVERN THE PROMOTION.\n EACH ENTRANT WAIVES ANY AND ALL\n OBJECTIONS TO JURISDICTION AND\n VENUE IN THOSE COURTS FOR ANY\n 12\n\n\n REASON AND HEREBY SUBMITS TO\n THE JURISDICTION OF THOSE COURTS.\nJA 108-109. They further provided:\n Entrants hereby expressly agree and accept\n that for all that is related to the interpreta-\n tion, performance and enforcement of these\n Official Rules, each of them expressly submit\n themselves to the laws of the United States\n of America and the State of California,\n expressly waiving to any other jurisdiction\n that could correspond to them by virtue of\n their present or future domicile or by virtue\n of any other cause.\nId.\nII. PROCEDURAL HISTORY\n\n A. “Controversies Regarding the Promotion”\n Arise\n After entering the Sweepstakes, Respondent\nreviewed the Official Rules. Id. Upon review, Res-\npondents realized that Claimant and Marden-Kane\nhad deceived them into paying for their entries. Id.\nHad the companies not misrepresented the entry\nrequirements, Respondent would have saved them-\nselves $100 and entered by mail. Id. Troubled by the\ncompanies’ deceptive sales tactics, Respondent sought\nrelief from their losses.\n The question then became where, and from\nwhom, could Respondent seek relief? Unlike a legal\npractitioner or a counseled corporation, Respondent\nbegan where most laypersons would begin. Having\nentered the Sweepstakes, and wanting relief specific-\n 13\n\n\nally from the Sweepstakes, Respondent reviewed the\nOfficial Sweepstakes Rules to evaluate their rights.\n To Respondent, their desired claims for relief\nconstituted “Disputes” and “CONTROVERSIES\nREGARDING THE PROMOTION.” JA 108-109. So\nRespondent asserted their claims for relief (Claims)\nin a “CALIFORNIA . . . FEDERAL” court. Id. Res-\npondents reasonably believed that filing their Claims\nin court was required by the Official Rules’ unam-\nbiguous terms. JA 101 (“Participants must comply\nwith these Official Rules . . . .”); JA 107-108\n(“[Claimant] reserves the right to prohibit the partici-\npation of an individual . . . if the participant fails to\ncomply with . . . any provision in these Official Rules.”).\nRespondent expressly relied upon the Official Rules’\nforum-selection terms in filing their Claims in the dis-\ntrict court. JA 16-17; JA 73-74.\n\n B. District Court\n\n 1. Claimant’s Motion to Stay\n Claimant responded by moving to stay pending\narbitration, relying on the User Agreements’ arbitra-\ntion and delegation provisions. D. Ct. Dkt. 33. Yet\nClaimant’s motion also disputed the complaint’s\nreliance on the Official Rules to establish the court’s\n“SOLE” authority over Respondent’ Claims. Id.; JA\n16-17; JA 73-74. The motion rested on Claimant’s\nargument that “[t]he ‘Disputes’ section of the Official\nRules applies [only] to Dogecoin Sweepstakes\nparticipants who never agreed to the User Agree-\nment.” D. Ct. Dkt. 33 at 11-12.\n Claimant argued that, “if [Respondent] dispute\nwhether the arbitration provision in the User Agree-\n 14\n\n\nment governs these claims,” then such disputes must\nbe referred to arbitration under the User Agreements’\ndelegation clauses. Id.\n\n 2. Respondent’ Opposition\n Respondent opposed, arguing that “[t]he ‘Official\nRules’ formed a valid and enforceable contract\nbetween the parties.” JA 439. Claimant never dis-\nputed this. Respondent submitted that “ordinary\nstate-law principles of contract interpretation” applied\nto resolving Claimant’s motion. JA 443.\n Respondent rebutted Claimant’s interpretation of\nthe Official Rules’ “Disputes” section. That “Disputes”\nsection “unambiguously applie[d] to ‘EACH ENTRANT,’\nregardless of each ‘ENTRANT’s’ preexisting contra-\nctual status with Claimant.” JA 448-450; see also JA\n441, n.6. Thus, Respondent maintained that their\nClaims belonged exclusively in “CALIFORNIA\nCOURT.”\n Consequently, the parties’ “arbitrability dispute”\nitself turned specifically on the meaning of the Official\nRules. It followed that a threshold dispute over the\nmeaning of the Official Sweepstakes Rules was a\n“CONTROVERSY REGARDING THE [Sweepstakes],”\nwhich “CALIFORNIA COURTS” had “SOLE JURIS-\nDICTION” to resolve. JA 108-109; JA 452.\n Respondent asked the court to judicially notice\nthat, when Claimant intended to arbitrate the arbi-\ntrability of other, similar sweepstakes disputes,\nClaimant said so, and did not provide exclusively for\njudicial resolution. JA 471, 487-489. There was no way\nthat Claimant’s other sweepstakes agreements,\ninvolving a different third-party administrator, meant\n 15\n\n\nthe same thing as these Dogecoin Sweepstakes agree-\nments. Id.\n\n 3. District Court’s Order\n The court granted Respondent’ request for judi-\ncial notice. JA 557-558. It agreed with Respondent on\nthe delegation dispute, finding it less than “clear and\nunmistakable” that the parties intended to delegate\ntheir current arbitrability dispute to an arbitrator. JA\n566-570.\n In resolving the parties’ arbitrability dispute, the\ncourt “appl[ied] general state-law principles of contra-\nct interpretation.” JA 570. Claimant conceded that the\ncourt was correct in this. D. Ct. Dkt. 43 (Claimant\nReply Brief) at 2 (“As Plaintiffs note, basic contract\nprinciples govern the interpretation of these agree-\nments.”).\n Acknowledging Claimant’s attempt to “reconcile”\nthe two contracts’ dispute terms—by “arguing that the\nOfficial Rules only applie[d] to non-Claimant users”—\nthe court found “no support in the contract language”\nfor Claimant’s interpretation. JA 571. The court’s\nreasoning highlighted that the parties’ arbitrability\ndispute was a dispute over “the interpretation, per-\nformance and enforcement of the[] Official Rules.” JA\n108-109.\n\n C. Ninth Circuit\n\n 1. Claimant’s Appeal\n Claimant contrived a new delegation argument\nbefore the Ninth Circuit. Claimant argued that, under\nMohamed v. Uber Techs., Inc., 848 F.3d 1201 (9th Cir.\n2016), “a forum selection clause does not undermine\n 16\n\n\nan existing delegation clause’s clear and unmistakable”\nlanguage. C.A. Dkt. 13 (Claimant Opening Brief) at 2-\n3. Mohamed had interpreted an exclusive forum-selec-\ntion clause not to alter the meaning of a delegation\nclause contained in the same contract. See generally\n848 F.3d 1201.\n Claimant did not argue that this Court’s\n“severability rule” requires isolating delegation\nclauses away from mandatory, exclusive forum-selec-\ntion clauses for interpretive purposes. In fact, nowhere\ndid Claimant’s opening brief cite Prima Paint, 388\nU.S. 395, or Rent-A-Center, 561 U.S. 63. See C.A. Dkt.\n13. Instead, Claimant told the Circuit that inter-\npreting the parties’ delegation and forum-selection\nclauses together—“under California law”—rendered\nthe parties’ delegation intentions “clear and unmis-\ntakable.” Id.\n\n 2. Respondent’ Opposition\n Respondent countered that the Ninth Circuit,\n“like the district court, must apply ordinary state-law\nrules of contract interpretation to decide whether the\nparties agreed to litigate or to arbitrate their\nSweepstakes-related ‘controversies,’ including but not\nlimited to their threshold controversies ‘related to the\ninterpretation, performance, and enforcement of the[]\nOfficial Rules.” C.A. Dkt. 25 at 12. Respondent\nreiterated their delegation argument from the district\ncourt: that an arbitrability dispute over the Official\nSweepstakes Rules is a controversy “REGARDING” the\nSweepstakes, expressly intended for judicial resolu-\ntion. Id. at 17-27.\n Respondent also supplemented their delegation\nargument from the district court to counter Claimant’s\n 17\n\n\nnew delegation argument under Mohamed. Respond-\nents argued that the Official Rules agreement\n“contained its own form of ‘delegation clause’ per-\ntaining to so-called ‘gateway issues.’” Id. at 22. Res-\npondents further contended that the Official Rules’\nlanguage, “FOR ANY REASON,” precluded “ANY”\nreliance on the User Agreements’ delegation terms to\n“OBJECT[]” to the court’s “JURISDICTION.” Id. at 7-\n8.\n Moreover, Respondent said the Official Rules’\nexpress reference to the User Agreements—providing\nthat “[a]ccess to . . . prizes is subject to” the User\nAgreements—suggested that Sweepstakes “CONTRO-\nVERSIES” were not “subject to” the User Agreements.\nId. at 36.\n Finally, Respondent distinguished Mohamed, as\naddressing linguistic conflicts between delegation and\nforum-selection clauses within one contract. Such con-\nflicts were presumably “artificial,” as it was “apparent”\nthat the forum-selection provisions “[t]here” were\n“intended . . . to identify the venue for” non-arbitrable\nclaims. Mohamed, 848 F.3d at 1207-09.1 Respondent\nargued that the parties’ intentions here could well\nhave changed, as the User Agreements and Official\nRules governed different transactions, and involved\ndifferent groups of negotiating parties. C.A. Dkt. 25 at\n3.\n\n 3. Ninth Circuit’s Order\n The Circuit affirmed the district court, while dis-\nregarding most of Respondent’ specific delegation\n\n\n1 All emphasis is added unless otherwise indicated.\n 18\n\n\narguments.2 The court interpreted the word “scope”\nin the User Agreements’ delegation clauses to mean\nthe breadth of the arbitration provisions, not whether\nsuch provisions were “superseded by a subsequent\nagreement.” JA 585. The court distinguished Mohamed,\nin part because the delegation and forum-selection\nclauses there “were included in the same contract.”\nJA584-585.\n\n\n SUMMARY OF ARGUMENT\n I. Delegation clauses are not immune from inter-\npretation. This is because arbitration is primarily a\nmatter of consent. Parties’ intentions are properly dis-\ncerned by means of non-preempted, State laws of con-\ntract construction and interpretation. The FAA does\nnot alter the meaning of private agreements, so\ndelegation clauses must be neutrally interpreted under\nthe same rules as other contract terms.\n II. Respondent’ delegation argument remains\nthe same here as it was below; the Official Rules\nvalidly modified the User Agreements’ delegation\nclauses for a limited purpose, under non-preempted\nState laws of interpretation. The Official Rules’ clear\nand express terms suggest an intent for courts to\nresolve the parties’ arbitrability dispute, their forum\ndispute, in this case. If any ambiguity remains regard-\ning that intent, then non-preempted, State laws for\n\n2 Respondent ask that this Court not do the same. It would be\nharmful to Respondent to have this Court disregard their spe-\ncific arguments about the parties’ delegation intentions, under a\nstatute that exists to implement their intentions.\n 19\n\n\nresolving contractual ambiguity confirm the parties’\nintentions to modify the User Agreements’ delegation\nprovisions. All interpretative signs point in one direc-\ntion.\n Claimant’s and its amici’s attempts to disclaim\nany modification of the delegation clauses are merit-\nless. As Claimant concedes, implied modifications of\narbitration and delegation clauses are allowed under\nthe FAA. Requiring express modifications of delega-\ntion clauses, as some amici suggest, would squarely\noffend the FAA’s equality principle.\n III. There is no preemption problem with Res-\npondents’ interpretation of the parties’ delegation\nintentions. Claimant does not argue that any State\nlaws of contract interpretation, relied upon here or\nbelow, are preempted by the FAA.\n Claimant rests most of its argument on this\nCourt’s “severability” doctrine of contract enforcement.\nThat doctrine is facially inapposite to delegation dis-\nputes over contract interpretation. Applying Rent-A-\nCenter’s “severability rule” to delegation questions of\ncontract interpretation would effectively preempt\nmost State laws of contract interpretation nationwide.\n IV. If any federal rules of contract construction\napply here, this Court’s clear-and-unmistakable rule\napplies. Claimant misconstrues the Court’s clear-and-\nunmistakable rule, which favors’ Respondent’ posi-\ntion on delegation here. Under that rule, Claimant\ndeclines to challenge the Ninth Circuit’s interpreta-\ntion of the parties’ delegation clauses as unreasonable.\n Claimant instead prefers to challenge the clear-\nand-unmistakable rule itself. It contends that the\nUser Agreements’ delegation clauses were originally\n 20\n\n\nclear by their own, isolated terms. That argument not\nonly misapprehends the rule, but also offends this\nCourt’s century-old holdings concerning contract\ninterpretation.\n Claimant also attacks the clear-and-unmistakable\nrule as “judge-made,” and “arbitration-specific.” Yet\nthe alternative rule Claimant proposes suffers from\nthe very same, alleged defects. Truthfully, there\nshould be no federal presumptions of contract inter-\npretation in either direction. The FAA leaves judges\nfree to choose “the best” interpretation among “rea-\nsonable” interpretations, for purposes of resolving\ncommonplace contractual ambiguities. It does not\nrequire a court to impose a “reasonable,” 10%-likely\ninterpretation over a “reasonable,” 90%-likely inter-\npretation, under non-preempted State laws.\n V. Claimant challenges the Ninth Circuit’s refer-\nences to contract “formation” and “existence” in\nresolving the parties’ delegation dispute. Claimant is\ncorrect that those words did not accurately reflect the\nparties’ contractual disputes here. Simultaneously,\nthose words did not accurately reflect the Circuit’s\nown reasoning or decision concerning the parties’\ndelegation dispute. Ultimately, Claimant fails to show\nwhy or how the Circuit reversibly erred, under federal\nor State law, in interpreting the parties’ delegation\nclauses specifically. Moreover, Claimant fails to show\nwhy the Circuit’s judgment should be reversed, even\nif some of its reasoning was imperfect.\n 21\n\n\n ARGUMENT\nI. LEGAL BACKGROUND\n\n A. The FAA’s “First Principle” Is a Matter of\n State Law\n “The first principle” of this Court’s FAA prece-\ndents is that “arbitration is strictly a matter of con-\nsent.” Lamps, 139 S.Ct. at 1415-16. Consent to arbi-\ntration is dispute-specific, not generalized. Granite\nRock, 561 U.S. at 297 (holding that “a court may order\narbitration of a particular dispute only where the\ncourt is satisfied that the parties agreed to arbitrate\nthat dispute”) (original emphasis). In resolving any\narbitrability or delegation dispute, courts must “give\neffect to the contractual rights and expectations of the\nparties,” and, “as with any other contract, the parties’\nintentions control.” Stolt-Nielsen, 559 U.S. at 682.\n Interpreting private intentions is a matter of\nState law, unless State law is preempted or otherwise\nunconstitutional. Volt, 489 U.S. at 474. The FAA “does\nnot ‘alter background principles of state contract law\nregarding the scope of agreements.’” GE Energy Power\nConversion v. Outokumpu Stainless USA, LLC, 140\nS.Ct. 1637, 1643 (2020) (quoting Arthur Andersen LLP\nv. Carlisle, 556 U.S. 624, 630 (2009)).\n No party asserts that any State law is preempted\nhere. Hence, State laws of contract interpretation are\napplicable to, and controlling of, the parties’ delega-\ntion dispute: over who should decide the arbitrability\nor justiciability of Respondent’ Claims.\n 22\n\n\n B. The FAA’s Equality Rule Applies to\n Delegation Clauses\n In discerning parties’ intentions, the FAA\n“requires courts to place arbitration agreements ‘on\nequal footing with all other contracts.’” Kindred\nNursing Centers L.P. v. Clark, 581 U.S. 246, 248\n(2017) (quoting DIRECTV, Inc. v. Imburgia, 577 U.S.\n47, 54 (2015)). “[A] court must hold a party to its arbi-\ntration contract just as the court would to any other\nkind,” and “may not devise novel rules to favor arbi-\ntration over litigation.” Morgan v. Sundance, Inc., 596\nU.S. 411, 418 (2022). That equality rule applies similarly\nto delegation clauses because “the FAA operates on”\ndelegation agreements “just as it does on any other”\narbitration agreements. Henry Schein, 139 S.Ct. at\n529.\n In short, delegation clauses are not special under\nthe FAA. They are contract terms. As such, they must\nbe interpreted and applied under non-preempted,\napplicable State laws of contract construction. The\nparties’ contracts here all selected California law as\nthe governing contract law, unless federal law applies.\nCalifornia’s non-preempted laws of contract interpreta-\ntion thus apply to the parties’ agreements.\nII. UNDER STATE LAWS OF INTERPRETATION, THE\n PARTIES MODIFIED THEIR USER AGREEMENTS’\n DELEGATION PROVISIONS\n Under California law, the “goal” in construing\ncontracts “is to give effect to the parties’ mutual inten-\ntions.” State v. Allstate Ins. Co., 45 Cal.4th 1008, 1018\n(2009); see also Cal. Civ. Code § 1636 (“A contract\nmust be so interpreted as to give effect to the mutual\nintention of the parties as it existed at the time of con-\n 23\n\n\ntracting.”); Stolt-Nielsen, 559 U.S. at 682 (holding\nthat, in “construing” an arbitration or delegation\nclause, “as with any other contract,” courts must “give\neffect to the contractual rights and expectations of the\nparties”). “Numerous principles of interpretation\nguide the search for the manifested intention of the\nparties.” Binder v. Aetna Life Ins. Co., 75 Cal.App.4th\n832, 852 (1999); see also Cal. Civ. Code §§ 1635, et seq.;\nReading Law 59 (“No [one] canon of interpretation is\nabsolute.”).\n To ascertain intent, California begins with the\nparties’ written language. Hameid v. Nat’l Fire Ins. off\nHartford, 31 Cal.4th 16, 21 (2003); Cal. Civ. Code §\n1639 (“When a contract is reduced to writing, the\nintention of the parties is to be ascertained from the\nwriting alone, if possible . . . .”). “Words in a contract\nare generally understood in their ordinary and\npopular sense, and technical words are interpreted as\nusually understood by persons in the profession or\nbusiness to which they relate.” Gates v. Rowland, 39\nF.3d 1439, 1444 (9th Cir. 1994) (citing Cal. Civ. Code\n§ 1644). In addition to written words, an agreement’s\nfactual context may be relevant to discerning parties’\nintentions. “A contract may be explained by reference\nto the circumstances under which it was made, and\nthe matter to which it relates.” Cal. Civ. Code § 1647.\n Here, both the language and context of the parties’\nagreements suggest that their “mutual intentions”\nchanged “at the time of contracting” for the Dogecoin\nSweepstakes. Cal. Civ. Code § 1636; Allstate, 45\nCal.4th at 1018. As detailed infra, nothing in the FAA\nor the Court’s precedents undermines this conclusion.\n Repetitiously, Claimant claims that in the lower\ncourts, Respondent offered no argument specifically\n 24\n\n\nconcerning the User Agreements’ delegation provi-\nsions. Pet’r Br. 3-4 (“Respondent made no argument\nspecific to the parties’ delegation clause, however.”);\nid. at 5, 17, 18, 20, 27, 29, 31, 38 (same). Claimant\nmust view that repeated assertion as critical to its\ncase. Claimant, however, conceded the opposite before\nboth courts below. C.A. Dkt. 39 (Claimant Reply Brief)\nat 2 (“Plaintiffs strain to avoid the delegation clause\nby contending that the Dogecoin Sweepstakes’ Official\nRules . . . ‘modified or superseded the earlier, more\ngeneral arbitration and delegation agreements between\neach Plaintiff and Claimant.’”); D. Ct. Dkt. 43 (Claimant\nReply Brief) at 5 (“Plaintiffs rely on the phrase ‘any\ncontroversies regarding’ the Sweepstakes in the Official\nRules to suggest that the Rules superseded or modified\nthe clause delegating issues of arbitrability to the\narbitrator.”). Indeed, that was Respondent’ position\nbelow, and that is Respondent’ position here. The\nOfficial Rules contractually “modified the clause\ndelegating issues of arbitrability to the arbitrator.” D.\nCt. Dkt. 43 at 5.\n\n A. The Parties Modified Their Delegation\n Clauses Using Clear and Unambiguous\n Language\n As a statutory matter, any “contract in writing\nmay be modified by a contract in writing.” Cal. Civ.\nCode § 1698. “It is fundamental that contracting\nparties, lawfully agreeing in the first instance, may\nthereafter change or modify such an agreement by\nassent lawfully expressed.” Warfield v. Anglo &\nLondon Paris Nat’l Bank, 202 Cal. 345, 359 (1927)\n(Shenk, J., concurring). “Modification is a change in\nthe obligation by a modifying agreement, which\nrequires mutual assent, and must ordinarily be sup-\n 25\n\n\nported by consideration.” Asmus v. Pacific Bell, 23\nCal.4th 1, 31-32 (2000).\n Here, the parties agree that their Official Rules\ncontracts were formed by “mutual assent” among\nMarden-Kane and themselves, “supported by consid-\neration.” Id. Respondent gave consideration via their\nDogecoin purchases; Claimant and Marden-Kane gave\nconsideration by promising to provide and administer\nprizes. The Official Rules thus satisfied all statutory\nand common-law elements necessary to form a valid\nand enforceable, “modifying agreement” under Cali-\nfornia law. Id.\n Moreover, the Official Rules’ language plainly\nevinces the parties’ “mutual intention” for “a change\nin the[ir] obligation” to delegate threshold, contra-\nctual disputes to an arbitrator. Id.\n\n 1. The Phrases “ANY AND ALL\n OBJECTIONS” and “ANY REASON”\n Unambiguously Included the User\n Agreements’ Delegation Clauses\n Claimant concedes the meaning of multiple,\nrelevant provisions of the Official Rules. First, it con-\ncedes that Respondent were always Sweepstakes\n“participant[s]” and “ENTRANT[S],” under the\nOfficial Rules. JA 107-108; Pet’r Br. 11. Second, it\nconcedes that Respondent’ pending Claims are\n“CONTROVERSIES REGARDING THE PROMO-\nTION.” JA 108; Pet’r Br. 10 (“This case involves a dis-\npute regarding a sweepstakes sponsored by Claimant\n. . . .”). Third, Claimant concedes that its own arbi-\ntrability arguments concern the proper “interpreta-\ntion, performance, and enforcement of the[] Official\nRules.” JA 109; Pet’r Br. 35 (“Before an arbitrator,\n 26\n\n\nClaimant will present strong [arbitrability] argu-\nments that the forum-selection clause applies to indi-\nviduals who entered the sweepstakes by mail.”). Those\nthree concessions alone should effectively end the\nparties’ delegation dispute.\n Additionally, Claimant and Marden-Kane under-\ntook to affirmatively preclude “ANY AND ALL\nOBJECTIONS” to the courts’ “SOLE JURISDIC-\nTION,” “FOR ANY REASON.” JA 108. Here, after\nRespondent filed their Sweepstakes Claims, Claimant\nand Marden-Kane “OBJECT[ED]” to the district\ncourt’s “JURISDICTION” over such Claims. Id.;\nClaimant v. Bielski, 599 U.S. 736 (2023) (holding\nthat the district court was divested of “jurisdiction” to\nresolve Respondent’ Claims). Claimant’s “REASON[S]”\nfor objecting included—and still include—the User\nAgreements’ delegation provisions. D. Ct. Dkt. 33 at\n12-14; see generally Pet’r Br. Yet those provisions\nthemselves are among the “[M]ANY,” prohibited\n“REASON[S]” for “OBJECTI[NG]” to the district\ncourt’s “JURISDICTION” over Respondent’ Claims.\n In sum, assuming arguendo that the User Agree-\nments’ delegation clauses applied (by their isolated\nterms) to all imaginable arbitrability disputes, the\nOfficial Rules clearly effected “a change in th[at] obli-\ngation by . . . mutual assent.” Asmus, 23 Cal.4th at 31-\n32. By explicit agreement, the delegation clauses\nbecame prohibited “REASON[s]” for objecting to the\ndistrict court’s exclusive authority over “ANY CON-\nTROVERSIES REGARDING THE PROMOTION.”\nThe Official Rules thus modified the User Agree-\nments’ delegation provisions under California law.\n It is not just the phrase “ANY REASON” that\nshows the parties’ intent to modify their prior delega-\n 27\n\n\ntion provisions. Other, express terms of the Official\nRules strongly suggest the same intent.\n\n 2. The Parties Intended Threshold,\n Contractual Disputes “REGARDING\n THE PROMOTION” for Judicial\n Resolution\n While granting courts “SOLE JURISDICTION\nOF ANY CONTROVERSIES REGARDING THE\nPROMOTION,” the Official Rules provided: “for all\nthat is related to the interpretation, performance and\nenforcement of these Official Rules,” the “laws of the\nUnited States of America and the State of California”\nwill govern, notwithstanding “any other cause.” JA\n109.\n Claimant says that was merely a “choice-of-law\nprovision,” which did not specify “that disputes over\n‘the interpretation, performance and enforcement’ of\nthe official rules . . . must be heard in court.” Pet’r Br.\nat 46. Yet Claimant overlooks the plainest interpreta-\ntion of that choice-of-law clause. A dispute over “the\ninterpretation, performance and enforcement” of the\nOfficial Sweepstakes Rules is itself a “CONTRO-\nVERS[Y] REGARDING THE [Sweepstakes].” JA 108-\n109; Sampson v. Century Indemnity Co., 8 Cal.2d 476,\n480 (1937) (“No term of a contract is either uncertain\nor ambiguous if its meaning can be ascertained by fair\ninference from other terms thereof.”). The only way\nClaimant can label that choice-of-law clause\nambiguous, as to forum, is by unfairly inferring that a\ndispute over the Official Sweepstakes Rules is not a\ndispute regarding the Sweepstakes. But see Cal. Civ.\nCode § 1644 (“The words of a contract are to be under-\nstood in their ordinary and popular sense . . . .”).\n 28\n\n\n If Claimant wants to get more technical than\nthat, Respondent can. Claimant might ask, “if the\nforum-selection clause was so clearly applicable to dis-\nputes over the Official Rules, why include that choice-\nof-law clause at all?” The reason is that the preceding\nchoice-of-law clause—“SHALL GOVERN THE PRO-\nMOTION—was facially narrower than the preceding\nforum-selection clause, “ANY CONTROVERSIES\nREGARDING THE PROMOTION.” JA 108. The\nproper forum for threshold, contractual disputes was\nalready covered by the broad forum-selection clause;\nbut the substantive law for threshold, contractual dis-\nputes was not necessarily covered by the narrower,\npreceding choice-of-law clause. Id. In any event, none\nof this suggests that a controversy over the Official\nSweepstakes Rules is not a “CONTROVERS[Y]\nREGARDING THE [Sweepstakes]”; it plainly is.\n There is no textual evidence in the Official Rules\nor User Agreements that Claimant, Marden-Kane, or\nRespondent intended for an arbitrator to author-\nitatively interpret “these Official Rules.” JA 109. Yet\nthat is what Claimant demands in this delegation dis-\npute. Claimant demands that an arbitrator interpret\nthe meaning of the Official Sweepstakes Rules, apart\nfrom any substantive judicial review. Oxford Health\nPlans LLC v. Sutter, 569 U.S. 564, 568-69 (2009)\n(recognizing strict limits on judicial review of arbi-\ntrators’ decisions). That is not “SOLE JURISDIC-\nTION.” JA 108. That is Claimant and Marden-Kane\nlooking for “ANY REASON” to “OBJECT[]” to the dis-\ntrict court’s agreed-upon jurisdiction over Respond-\nents’ Claims. Id.; Bielski, 599 U.S. 736.\n The Official Rules expressly contemplated thres-\nhold, contractual disputes regarding the Sweepstakes,\n 29\n\n\nand unambiguously intended such disputes for judi-\ncial resolution. JA 108-109. Other express terms fur-\nther suggest the same conclusion.\n\n 3. The Implied Exclusion Canon\n Further Reflects an Intent to\n Exclude the Delegation Clauses\n from Sweepstakes Controversies\n In appropriate circumstances, a contract’s “express”\nprovision for specific rights or conditions “tends to\nnegate any inference that the parties also intended”\nfor other rights and conditions. Stephenson v. Drever,\n16 Cal.4th 1167, 1174-75 (1997); see also Reading Law\n107 (explaining that, in a proper context, “the\nprinciple that specification of [one thing] implies\nexclusion of the other validly describes how people\nexpress themselves and understand verbal expression”).\n Claimant and Marden-Kane expressly provided for\nhow Claimant’s User Agreements would relate to this\nSweepstakes. They provided that “[a]ccess to Dogecoin\nand US Dollar prizes” would be “subject to” the User\nAgreements. JA 104. In contrast, nowhere did they\nprovide that “CONTROVERSIES REGARDING THE\nPROMOTION” were “subject to” the User Agreements.\nThis was a choice, not an accident.\n Under the “circumstances” of this Sweepstakes,\nthe companies’ choice made sense. Cal. Civ. Code §\n1647. If a winner accessed their Claimant account to\nget a prize, that would be an interaction between\nClaimant and its user only. It made sense for the\nbilateral User Agreements to apply to that limited\ninteraction, occurring only on Claimant’s platform.\n 30\n\n\n In contrast, Sweepstakes “CONTROVERSIES”\nwould foreseeably be trilateral and transcend the\nplatform: involving not only Claimant, its platform,\nand its user, but also Marden-Kane as Sweepstakes\nAdministrator. Unlike Claimant, Marden-Kane never\nagreed pre-lawsuit to arbitration, in any context;\ngiven that reality, “ANY” Sweepstakes controversies\nwould risk inefficient claim-splitting, with the same\ndisputes being resolved in two separate forums\nsimultaneously. While the FAA allows for such “piece-\nmeal resolution,” Moses H. Cone Memorial Hosp. v.\nMercury Constr. Corp., 460 U.S. 1, 20 (1983), Claimant\nlikely viewed such claim-splitting as undesirable,\nespecially knowing its own arbitration proceedings\nmight be stayed indefinitely, while judicial proceed-\nings involving Marden-Kane played out. Volt, 489\nU.S. 468.\n The best interpretation here is that different\nnegotiating parties had different delegation inten-\ntions in two, different economic contexts (bilateral\naccount “[a]ccess,” versus trilateral Sweepstakes\ntransactions and obligations). Cal. Civ. Code § 1642\n(“Several contracts relating to the same matters,\nbetween the same parties, and made as parts of sub-\nstantially one transaction, are to be taken together.”).\nThe Official Rules’ explicit reference to prize-access,\nas being “subject to” the User Agreements, clearly\nimplied that “CONTROVERSIES” were not “subject\nto” the User Agreements. Reading Law 107.\n Claimant, however, says none of its contrasting\nlanguage was calculated. Claimant says it’s just too\n“difficult for drafters to foreclose any argument that a\nlater contract conflicts with an earlier one.” Pet’r Br.\n50. But when Claimant itself hired another sweep-\n 31\n\n\nstakes administrator, Ventura Associates, Claimant\nand Ventura “foreclose[d]” exactly that argument, with-\nout “difficult[y].” Id. They “subject[ed]” sweepstakes\ndisputes “to” the User Agreements’ dispute terms,\neasily “foreclos[ing] any argument” over “conflict[ing]”\nintentions. JA 476, 487-489. The notion that Claimant\nand Ventura had the same intentions for those sweep-\nstakes agreements, as Claimant and Marden-Kane\nhad for “these Official Rules,” is untenable. Compare\nid., with JA 98, 108-109.3\n “Access to Dogecoin and US Dollar prizes” was\n“subject to” the User Agreements. JA 104. Disputes\nover the Sweepstakes and its Rules were subject to\njudicial resolution: no “OBJECTIONS,” “FOR ANY\nREASON.” JA 108-109. This was and remains the\nparties’ true “agreement in writing.” 9 U.S.C. § 3.\n\n B. Non-Preempted, State Laws of Inter-\n pretation Properly Resolve Any Lingering\n Ambiguity in The Parties’ Intentions\n On one hand, Respondent rely on the Official\nRules to say their Claims are justiciable. On the other\nhand, Claimant relies on the User Agreements to say\nRespondent’ Claims are arbitrable. Yet Claimant’s\narbitrability arguments have always rested substan-\ntially on its interpretation of the Official Rules. Pet’r\n\n3 Claimant also says that “California law mandated” Claimant to\n“include separate sweepstakes official rules in a standalone con-\ntract.” Pet’r Br. 50. Nothing in “California law mandated” that\nClaimant “include” an exclusive, judicial forum-selection clause\nin its Official Rules, along with express waivers of any rights to\nany other forum. Id. Claimant’s compliance argument here only\nfurther illustrates how the parties’ arbitrability dispute is one\nregarding the “sweepstakes.” Id.\n 32\n\n\nBr. at 13 (“Claimant had presented strong arguments\nthat—under California law—the arbitration agree-\nment and the official rules should be reconciled by\nreading the forum-selection clause in the official rules\nto encompass only those claims brought by mail-in\nentrants.”).\n The parties’ delegation dispute similarly implicates\nboth agreements. Claimant relies on the User Agree-\nments’ delegation provisions to say that all arbitrability\ndisputes are for arbitrators. Respondent rely on the\nOfficial Rules’ forum-selection provisions to say that\nthe arbitrability dispute here is a “CONTROVERSY\nREGARDING THE PROMOTION” and its Rules,\nintended “SOLE[LY]” for courts. Pet’r Br. at 35\n(“Before an arbitrator, Claimant will present strong\n[arbitrability] arguments that the forum-selection\nclause applies to individuals who entered the sweep-\nstakes by mail.”).\n\n 1. The More Recent Agreements Are\n Controlling\n As the Ninth Circuit held, “[t]he general rule” in\nCalifornia “is that when parties enter into a second\ncontract dealing with the same subject matter as their\nfirst contract . . . the latter contract prevails to the\nextent they are inconsistent.” JA 586. Here, Claimant,\nMarden-Kane and Respondent formed their Official\nRules contracts in June 2021: months or years after\nClaimant and Respondent formed their User Agree-\nments. Therefore, to the extent the User Agreements\nand Official Rules “are inconsistent” as to who should\nresolve the parties’ arbitrability dispute, the more\nrecent Official Rules agreements control as a matter\nof law. Id.\n 33\n\n\n California’s legislature has provided that in\nascertaining private intentions, timing is important.\nCal. Civ. Code § 1636 (“A contract must be so inter-\npreted as to give effect to the mutual intention of the\nparties as it existed at the time of contracting.”); accord\nStolt-Nielsen, 559 U.S. at 682. Private parties can and\ndo change their intentions over time, for innumerable\nreasons. For the reasons explained supra, there is no\nfactual basis for inferring that the parties here\nintended to arbitrate threshold disputes regarding the\nOfficial Rules “at the time of contracting” for the\nSweepstakes. Cal. Civ. Code § 1636.\n\n 2. Specific Terms Control Over\n General Terms\n Under State law, “[a] standard rule of contract\ninterpretation is that when provisions are inconsis-\ntent, specific terms control over general ones.”\nSouthern Cal. Gas Co. v. City of Santa Ana, 336 F.3d\n885, 891 (9th Cir. 2003); see also Chan v. Society\nExpeditions, Inc., 123 F.3d 1287, 1296 (9th Cir. 1997)\n(“Under well-settled contract principles, specific\nprovisions control over more general terms.”). “[T]he\ngeneral/specific canon does not mean that the exis-\ntence of a contrary specific provision voids the general\nprovision.” Reading Law 184. Instead, only the gener-\nal provision’s “application to cases covered by the spe-\ncific provision is suspended,” and the general provi-\nsion “continues to govern all other cases.” Id.\n Here, Claimant says the parties “agreed to a\nbroad delegation clause,” which by its terms “assigns\nall conceivable threshold arbitrability disputes to an\narbitrator.” Pet’r Br. 28. True or not, Claimant’s posi-\ntion is that the delegation provisions’ “broad lan-\n 34\n\n\nguage,” covering “all conceivable” arbitrability dis-\nputes, necessarily “encompasses the particular arbi-\ntrability question at the heart of this case.” Id.\n At the same time, “the particular arbitrability\nquestion at the heart of this case,” id., is a “question”\nspecifically concerning the Sweepstakes and its\nRules, which the Rules delegate “SOLE[LY]” to\n“CALIFORNIA COURTS,” not arbitrators. JA 108-\n109; Pet’r Br. at 35 (“Before an arbitrator, Claimant\nwill present strong [arbitrability] arguments that the\nforum-selection clause applies to individuals who\nentered the sweepstakes by mail.”).\n Even if the User Agreements’ delegation provi-\nsions cover “all conceivable” arbitrability disputes\ngenerally, the Official Rules’ forum-selection provi-\nsions cover only “the particular arbitrability question\nat the heart of this case.” Pet’r Br. 28. The more spe-\ncific Official Rules agreements thus control, under\nordinary State laws of interpretation. “The specific\nprovision does not negate the general one entirely, but\nonly its application to the situation that the specific\nprovision covers.” Reading Law 185; accord Cal. Civ.\nCode § 1652.\n\n C. Claimant’s Attempts to Disclaim Any\n Modification of Its Delegation Clauses\n Are Meritless\n Claimant offers several arguments against\nfinding that its delegation clauses were intentionally\nmodified. All are meritless.\n 35\n\n\n 1. The FAA Precludes Courts from\n Requiring Parties to Use Specific\n Words to Modify Delegations\n Clauses\n Claimant’s supporting amici propose a new, fed-\neral common-law rule of contract interpretation. Spe-\ncifically, they suggest that delegation clauses must be\n“expressly . . . alter[ed]” by subsequent agreement to\nbe modified. Pet’r Br. 52; see also Chamber of\nCommerce et al. Br. 9 (“If parties intend for a sub-\nsequent contract to [modify] their existing [delega-\ntion] agreement, they surely would include an express\nstatement to that effect.”) (citing UBS Fin. Servs., Inc.\nv. Carilion Clinic, 706 F.3d 319, 329 (4th Cir. 2013)).\nThat federal, substantive rule of contract interpreta-\ntion contradicts the Court’s holding in Morgan.\n In Morgan, this Court allowed parties to\nimplicitly—not expressly—alter their existing rights\nto arbitration through their voluntary litigation con-\nduct. See generally 596 U.S. 411. The Court of Appeals\nhad required a showing of prejudice, before finding\nthat a party waived its arbitration rights by litigating.\nId. at 413-16. Recognizing that “prejudice” is not gen-\nerally required to find waivers of various rights in\ncourt, this Court reversed, holding that courts “may\nnot devise novel rules to favor arbitration over litiga-\ntion.” Id. at 417-418.\n Morgan is highly instructive here. First, if parties\ncan implicitly alter their arbitration rights through\ntheir own, voluntary litigation conduct, then surely,\nthey can implicitly alter their arbitration rights\nthrough their own, voluntary litigation contract. That\nis what happened here. Whether Claimant did\nsomething that clearly implied its consent to litiga-\n 36\n\n\ntion, or wrote something that clearly implied its con-\nsent to litigation, the bottom line is: Claimant clearly\nconsented to litigation.\n Furthermore, this Court has long recognized that\narbitration and delegation clauses are merely “spe-\ncialized kind[s] of forum-selection clause[s].” Sherk v.\nAlberto-Culver Co., 417 U.S. 506, 519 (1974); Viking\nRiver Cruises, 596 U.S. at 653. Judicial forum-selec-\ntion clauses were historically disfavored by courts, for\nthe same reasons as arbitration and delegation\nclauses. M/S Bremen v. Zapata Offshore Co., 407 U.S.\n1, 9-10 (1972). Yet today, judicial forum-selection\nclauses are as federally valid, enforceable, and even\n“severable” as arbitration and delegation clauses.\nCarnival Cruise Lines, Inc. v. Shute, 499 U.S. 585\n(1991) (deeming forum-selection clauses in consumer\ncontracts “prima facie valid”); Atlantic Marine Constr.\nCo., Inc. v. U.S. Dist. Court for Western Dist. of Texas,\n571 U.S. 49 (2013) (holding forum-selection clauses\nfederally enforceable, through statutory motions to\ntransfer or dismissals for forum non conveniens);\nSherk 417 U.S. at 519 & n.14 (explaining that forum-\nselection clauses are as severable as arbitration\nclauses are under Prima Paint).\n It follows that courts must “hold a party to” its\njudicial forum-selection clause, the same way it would\n“hold a party to” its arbitration or delegation clause.\nMorgan, 596 U.S. at 418. There is no law requiring\nparties to modify a judicial forum-selection clause by\nexpressly referencing that clause in a subsequent\nagreement. To create such a rule of contract construc-\ntion for arbitration or delegation clauses (only) would\nbe to create “novel rules [that] favor arbitration over\nlitigation.” Id. at 417-18.\n 37\n\n\n Suppose the User Agreements here had provided\nfor Virginia courts, rather than an arbitral forum, and\nhad included otherwise identical terms “delegating”\nthreshold disputes to Virginia courts. This Court\nwould be hard-pressed to send this “case involv[ing] a\ndispute regarding a sweepstakes” to Virginia, for a\ndecision on where Respondent’ Claims belong. Pet’r\nBr. 10. Why: because there would be no serious indica-\ntion of any private intent for such a transfer or dis-\nmissal.\n At bottom, this Court’s analysis of the question\npresented should essentially mirror the Court’s final\nanalysis in Morgan. Objectively speaking: “Did\n[Claimant] knowingly relinquish the right to arbitrate\nby [writing] inconsistently with that right?” Morgan,\n596 U.S. at 418. The answer is yes. Tellingly, unlike\nits amici, Claimant concedes that implied, written\nmodifications of delegation clauses must be permitted\n“if the facts support it.” Pet’r Br. 52-53. If any “facts\nsupport it,” the facts of this case support it. Id.\n\n 2. Reading the Official Rules to\n Mean What They Say Yields No\n “Absurdity” or “Chaos”\n Claimant says Respondent’ interpretation of the\nOfficial Rules works an “absurdity” under “California\nlaw,” because it would yield different results based on\n“when an entrant created a Claimant account.” Pet’r\nBr. 33-34. Claimant surmises that if somebody “entered\nthe sweepstakes by mail and later created an account\n(for instance, to claim a prize), the User Agreement’s\ndelegation clause would be the later contract and\nwould control.” Id. Claimant’s reasoning is irrelevant,\nand incorrect. It is irrelevant because there are no\n 38\n\n\nmail-in entrants in this action. It is incorrect because\nit presumes that the timing of agreements is all that\nmatters for interpretive purposes.\n That is not how interpretation works under any\nState’s contract laws. “No canon of interpretation is\nabsolute[;] [e]ach may be overcome by the strength of\ndiffering principles that point in other directions.”\nReading Law 59 (citing Chickasaw Nation v. United\nStates 534 U.S. 84, 93 (2001)). If a hypothetical, mail-\nin entrant won the Sweepstakes and then created a\nClaimant account “to claim a prize,” then yes, “the\nUser Agreement’s delegation clause would be the later\ncontract.” Pet’r Br. 34.\n But even then, the canon that later agreements\ntrump earlier agreements would not necessarily con-\ntrol by itself. The implied exclusion canon, or the\ngeneral-specific canon, coupled with the forum-selec-\ntion clauses’ plain language, might “control.” Id.\n“Access to . . . prizes” might remain “subject to” the\nUser Agreements, while “CONTROVERSIES” might\nremain “subject to” the Official Rules’ forum-selection\nprovisions. In any event, whatever the outcomes of\nClaimant’s imaginary contractual disputes might be,\nthey need not work any absurdity.\n Nor does Respondent’ traditional, interpretive\napproach work any “chaos.” Pet’r Br. 50-52. Courts\nhave been interpreting contracts for centuries, and\nthe FAA requires courts to interpret delegation\nclauses before enforcing them. 9 U.S.C. § 3. Even\nClaimant’s own approach allows for the same types of\ninterpretative inquiries; Claimant simply demands a\ndifferent interpretative conclusion in this case. Pet’r\nBr. at 52-53.\n 39\n\n\n Interpreting delegation clauses alongside other,\nrelevant clauses and contracts is not a judicially\ncreated “exception” that invites “collateral litigation.”\nId. at 50. It is the statutory rule of the FAA, which\nrequires the same, non-preempted laws of interpreta-\ntion to be applied in arbitrability and delegation dis-\nputes as have always been applied in contract dis-\nputes generally. Volt, 489 U.S. at 474; GE Energy, 140\nS.Ct. at 1643; Arthur Andersen LLP, 556 U.S. at 630.4\n\n 3. The User Agreements’ Modification\n Provisions Are Irrelevant\n Claimant argues that the Official Rules could not\nmodify the User Agreements’ delegation clauses\nbecause the “User Agreement outlines a formal mod-\nification process,” which “Claimant did not use . . . in\npromulgating the official rules.” Pet’r Br. 14. This is a\nred herring.\n In California, any “contract in writing may be\nmodified by a contract in writing.” Cal. Civ. Code §\n1698. That statute “has no application” in situations\nwhere “a modification is in accordance with a provi-\nsion authorizing and setting forth a method for [the\noriginal contract’s] revision.” Jones v. Citigroup, Inc.,\n135 Cal.App.4th 1491, 1496 (2006); Mandel v.\nHousehold Bank, 105 Cal.App.4th 75, 82 (2003)\n(same). In such situations, “there is no alteration,”\nsince the “modification is in accordance with the terms\nof the [original] contract.” Id. California’s modification\n\n4 Claimant argues that FAA § 4 controls this case, rather than §\n3. Claimant has that backwards. Allied-Bruce Terminix Cos. v.\nDobson, 513 U.S. 265, 293-94 (1995) (Thomas, J., dissenting)\n(explaining the distinct, uncontroverted purposes of §§ 3 and 4).\n 40\n\n\nstatute exists specifically for situations like this,\nwhere a subsequent writing alters an initial writing’s\nobligations, without adhering to the initial writing’s\nmodification method(s). Id.\nIII. THERE IS NO PREEMPTION PROBLEM IN THIS\n CASE, AND Claimant CONCEDES THIS\n Claimant’s brief uses the word “severability” or\nits variants 158 times, and the word “preempt” or its\nvariants 0 times. There are good reasons for why\nClaimant declines to argue for preemption in this case.\n\n A. This Court’s “Severability Rule” Is\n Inapplicable to Matters of Contract\n Interpretation\n The closest Claimant comes to arguing for pre-\nemption is in arguing that the Court’s “severability\nrule” governs the parties’ interpretive disputes.5 This\nCourt’s “severability rule” under the FAA applies to\nmatters of contract enforcement; it has no application\nto matters of contract interpretation.\n The “severability rule” allows for enforcing\ndelegation clauses, where they form parts of otherwise\nunenforceable agreements. It requires courts to\n“pluck” arbitration and delegation provisions away\nfrom other terms in a contract, when other terms are\njudicially invalidated for whatever reason (e.g.,\nunconscionability, or illegality). Rent-A-Center, 561\nU.S. at 85 (Stevens, J., dissenting). Unless the arbi-\ntration or delegation provisions themselves are unen-\n\n5 This was not properly argued below; nowhere did Claimant’s\nopening appellate brief even cite Prima Paint, 388 U.S. 395, or\nRent-A-Center, 561 U.S. 63: not once. C.A. Dkt. 13.\n 41\n\n\nforceable, those provisions remain enforceable even as\nall others effectively disappear. Id. (citing Prima\nPaint Corp. v. Flood & Conklin Manufacturing Co.).\n The Court found that rule in § 2’s text, which\nrenders a “written provision [to arbitrate] . . . valid,\nirrevocable, and unenforceable,” seemingly “without\nmention of the . . . contract in which it is contained.”\nRent-A-Center, 561 U.S. at 70-71 (original emphasis).\nBut nothing in the FAA’s text allows courts to “sever”\nor isolate delegation clauses away from all other,\nenforceable terms and contracts to which the parties\nagreed, for purposes of interpreting whether the\nparties intended to arbitrate a dispute. The very label\nof “severability” in law derives from the fact that other\nprovisions of the parties’ contract are being “severed”:\nthey’re going away, being nullified, being invalidated.\nA written provision is severed to preserve its\nrelevance, not to discern its meaning or applicability.\n “The elementary canon of interpretation is, not\nthat particular words may be isolatedly considered,\nbut that the whole contract must be brought into view\nand interpreted with reference to the nature of the\nobligations between the parties, and the intention\nwhich they have manifested in forming them.”\nO’Brien, 168 U.S. at 297; see also Reading Law 167\n(quoting Cal. Civ. Code § 1641). It is axiomatic that\ncourts must consider all potentially relevant terms\nand agreements to discern the parties’ delegation\nintentions, without favoring a particular result. Even\nClaimant agrees with this. Pet’r Br. 52-53 (“[A] party\nresisting a delegation clause may argue (if the facts\nsupport it) that a subsequent agreement implicitly\ndisplaced or modified the ‘delegation provision specif-\n 42\n\n\nically.’”). Bizarrely, much of Claimant’s brief seems to\ncontradict that correct concession.\n Much of Claimant’s brief seems to demand that\ndelegation clauses be treated as “mini-agreements,” to\nbe interpreted and applied in isolation from all other,\nrelevant and enforceable terms. See generally Pet’r Br.\nNo law allows that. Doing that would routinely violate\nthe FAA’s “first principle” that “the parties’ intentions\ncontrol.” Lamps Plus, 139 S.Ct. at 1415-16; Stolt-\nNielsen, 559 U.S. at 682. Doing that would instantly\npreempt most State laws of contract interpretation,\nacross all 50 States. Unless the whole-text canon—\nand most other State laws of contract construction—\nare preempted by the FAA, delegation provisions are\nsubject to the same old, State laws of interpretation\nas other contract provisions. That means they are not\ninterpreted or applied in a vacuum.\n Claimant does not argue for the preemption of\nany State contract law, let alone broad-sweeping pre-\nemption of many contract laws. Consequently,\nClaimant’s “mini-agreement” labeling cannot save\ndelegation clauses from ordinary principles of inter-\npretation. This Court’s “severability rule” is simply\nout of place in any pure interpretive dispute.\n\n B. This Case Is Different from The Court’s\n Preemption Precedents\n This Court has found the FAA to preempt State\nlaws of interpretation, if they take contractual\n“silence or ambiguity” as a reason to impose class pro-\nceedings on parties who have definitely agreed to arbi-\ntration. See generally Lamps Plus, 139 S.Ct. 1407;\nStolt-Nielsen, 559 U.S. 662. The Court has reasoned\nthat “silence or ambiguity” in a contract “does not pro-\n 43\n\n\nvide a sufficient basis to conclude that parties to an\narbitration agreement agreed to sacrifice the principle\nadvantage[s] of arbitration.” Lamps Plus, 139 S.Ct. at\n1416 (cleaned up).\n One might argue (though Claimant hasn’t) that\nsimilar reasoning should apply here. The argument\nmight go like this: once parties have agreed to arbitra-\ntion and delegation, “silence or ambiguity” from any\nlater contract should be insufficient “to conclude that\nparties . . . agreed to sacrifice the principle\nadvantage[s] of arbitration.” Id. If the Court is at all\ntempted by such reasoning, the Court should resist\napplying it here.\n First, while the agreements in Lamps Plus and\nStolt-Nielson were “silent or ambiguous” as to class\narbitration, the Official Rules agreements here are\nneither silent nor ambiguous in their expressed inten-\ntions for judicial resolution. JA 108-109. They are as\nclear and as explicit as any parties desiring a judicial\nforum could reasonably be expected to be. Requiring\nmore—requiring express modifications of arbitration\nor delegation terms, when express modifications of\nother forum-selection terms are not generally required—\nwould be counterintuitive and offend Morgan. Accord\nPet’r Br. 52-53 (allowing for implied modifications).\n Second, the parties in Lamps Plus and Stolt\nNielsen had already, decidedly chosen “the advantage[s]\nof arbitration” for their particular disputes. In that\ncontext, it’s fair to presume that parties don’t want\narbitration proceedings that look exactly like court\ncases. It would be far less fair, however, to judicially\npresume that parties don’t want court cases, after\nthey have expressly said they want court cases only.\nE.g., JA 108-109.\n 44\n\n\nIV. IF ANY FEDERAL RULES OF CONTRACT\n INTERPRETATION APPLY, THE “CLEAR AND\n UNMISTAKABLE” RULE APPLIES\n This Court “presume[s] that parties have not\nauthorized arbitrators to resolve certain gateway\nquestions, such as whether the parties have a valid\narbitration agreement at all or whether a concededly\nbinding arbitration clause applies to a certain type of\ncontroversy.” Lamps Plus, 139 S.Ct. at 1416-17\n(cleaned up). “Although parties are free to authorize\narbitrators to resolve such questions,” the Court “will\nnot conclude that they have done so based on ‘silence\nor ambiguity’ in their agreement.” Id. (citing First\nOptions of Chicago, Inc. v. Kaplan, 514 U.S. 938, 945\n(1995)). “[D]oing so might too often force unwilling\nparties to arbitrate a matter they reasonably would\nhave thought a judge, not an arbitrator, would de-\ncide.” Id.\n Here, Respondent “reasonably would have\nthought a judge, not an arbitrator, would decide” their\nown “JURISDICTION [in] ANY CONTROVERSIES\nREGARDING THE PROMOTION.” Id. Respondent\n“reasonably would have thought that a judge, not an\narbitrator,” would decide all “gateway questions”\nabout “the interpretation, performance and enforce-\nment of the[] Official Rules.” Id. Claimant does not\nand cannot contend that Respondent’ “thought[s]”\nabout these issues are so obviously wrong as to be un-\nreasonable. See generally supra.\n Instead, Claimant says that its delegation clauses\n(standing alone) are unambiguous as to who should\nresolve any arbitrability disputes. Pet’r Br. 47.\nClaimant’s “confusion of thought consists in failing to\ndistinguish between the contract[s] as a whole and\n 45\n\n\nsome of the words found therein.” O'Brien, 168 U.S. at\n297. “The fallacy which underlies the assertion as to\nwant of all ambiguity in the [agreement] arises,\ntherefore, from presupposing that, in order to estab-\nlish want of ambiguity in a contract, a few words can\nbe segregated from the entire contract, and that,\nbecause the words thus set apart are not intrinsically\nambiguous, there is no room for construing the contra-\nct itself.” Id. This Court debunked Claimant’s inter-\npretive “fallacy” 127 years ago, long before Claimant\nand Marden-Kane wrote the parties’ Sweepstakes\nagreements. Id.\n\n A. Claimant Does Not Challenge the\n Circuit’s Interpretation of the Delegation\n Clauses as Unreasonable\n The Ninth Circuit interpreted and applied\nClaimant’s delegation clauses specifically to the\nparties’ arbitrability dispute, before resolving the\nparties’ arbitrability dispute. JA 585-586; accord\nGranite Rock, 561 U.S. at 297; Henry Schein, 139 S.Ct.\n524. Claimant does not contend otherwise, nor does\nClaimant contend that the Circuit’s interpretation of\nthe parties’ delegation clauses was unreasonable. See\ngenerally Pet’r Br.\n The Circuit adhered to this Court’s longstanding,\nclear-and-unmistakable rule, affirming “that the User\nAgreement did not [clearly] delegate to an arbitrator\nthe question of whether the forum selection clause in\nthe Sweepstakes’ Official Rules superseded the arbi-\ntration clause in the User Agreement.” JA 583. In\nother words, the Circuit found that the delegation\nclauses were not clearly meant for arbitrators to inter-\npret all future contracts the parties might execute,\n 46\n\n\nwith or without third parties, and regardless of any\nfuture contracts’ terms or contexts.6 Nowhere does\nClaimant argue that the Circuit’s “delegation” inter-\npretation in that regard was so wrong as to be unrea-\nsonable.7\n Claimant instead challenges the Court’s clear-\nand-unmistakable standard itself: first by labeling it\n“judge-made,” then by rewriting it into something\nunrecognizable. Neither challenge holds water.\n\n B. “Manifestation of Intent” Means\n Considering All Terms, Not Some\n Claimant contends that this Court’s “clear-and-\nunmistakable standard is at most a presumption\nagainst reading [silent or ambiguous language] to\nconstitute a delegation clause.” Pet’r Br. 47. Claimant\nis mistaken. Answering whether particular contract\nlanguage “constitute[s] a delegation clause” does not\nanswer the necessary delegation question: whether\nthe parties intended to delegate their arbitrability dis-\npute to an arbitrator. Rent-A-Center, 569 U.S. at 69,\nn.1.\n\n\n6 Even if the User Agreements’ delegation terms did sufficiently\nexpress such an intent, the Official Rules clearly expressed a\ndifferent intent. See generally, supra.\n7 The Circuit could have done more to analyze the delegation\nintentions evidenced by the Official Rules themselves, as Res-\npondents did below, and as Respondent have done here. E.g.,\nC.A. Dkt. 25 at 8 (“Claimant and Marden-Kane unambiguously\nrequired each Appellee to litigate, not arbitrate, . . . ‘all that is\nrelated to the interpretation, performance, and enforcement of\nthe[] Official Rules’: notwithstanding ‘ANY’ prior agreement to\narbitrate anything.”).\n 47\n\n\n A clause stating—“arbitrators shall decide whether\nthis arbitration agreement is unconscionable”—would\nclearly “constitute a delegation clause.” Pet’r Br. 47.\nBut it would not clearly allow arbitrators to decide\nwhether the arbitration agreement applied to any\ngiven merits dispute. Whether selected language\n“constitute[s] a delegation clause”—whatever that\nmeans—may be a relevant inquiry, but it is not dis-\npositive of the parties’ delegation intentions for every\narbitrability dispute.\n This Court’s clear-and-unmistakable standard\nwas always an “interpretive rule,” asking whether the\nparties’ “manifestation of intent” is clear and\nunambiguous. Rent-A-Center, 569 U.S. at 69, n.1\n(emphasis removed). That has been the Court’s rule\nfor 64 years. United Steelworkers of America v.\nWarrior & Gulf Nav. Co., 363 U.S. 574, 583 at n.7\n(1960). Claimant posits that “once parties have agreed\nto a clear-and-unmistakable delegation clause,” the\n“standard is fulfilled.” Pet’r Br. 47. Claimant is essen-\ntially saying that “once parties” manifest clear inten-\ntions to arbitrate arbitrability disputes, those inten-\ntions cannot be rendered unclear by any future, con-\ntractual “manifestation of intent,” Rent-A-Center, 569\nU.S. at 69, n.1, short of explicit references to the prior\ndelegation language. That “novel,” proposed rule is\nprecluded by Morgan. See 596 U.S. at 418.\n Claimant’s “once clear, always clear” stance is\nmeritless. Claimant properly concedes the opposing\nstance elsewhere in its brief. Pet’r Br. 52-53 (allowing\nimplied modifications). Claimant’s revision of the\nCourt’s clear-and-unmistakable rule is nonsensical,\nunworkable, and contrary to law.\n 48\n\n\n C. Federal “Judge-Made,” Rules of Inter-\n pretation Should Work Both Ways, or Not\n at All\n Claimant challenges the clear-and-unmistakable\nrule as a “judge-made, ‘arbitration-specific’ ‘interpretive\nrule’ disfavoring delegation clauses.” Pet’r Br. 47. The\nimplication is that this Court’s clear-and-unmistakable\nrule is precluded by the FAA. The alternative rule\nClaimant proposes, however, is just as problematic in\nthe opposite direction.\n Claimant argues that if there is any “lingering\ndoubt” about whether the Official Rules modified the\nparties’ delegation clauses, the “Court could apply the\nfederal presumption in favor of arbitrability.” Pet’r.\nBr. 34. Claimant fails to explain how that presumption\nis not equally precluded by the FAA, as a “judge-made,\n‘arbitration-specific’ ‘interpretative rule’” overtly\nfavoring arbitration and delegation clauses over (for\nexample) judicial forum-selection clauses. Id.\n Truthfully, the FAA’s equality rule requires that\ncommonplace contractual ambiguities in arbitrability\nor delegation disputes be resolved by non-preempted,\nState laws of contract interpretation. The problem\nwith applying federal, interpretative presumptions in\nany direction is that they effectively preempt most\nState laws of contract construction, without engaging\nin any preemption analysis.\n Most State contract laws exist to resolve common-\nplace ambiguities, which no policymaker can ever\neliminate. If every routine ambiguity, however slight\nor intractable, is always resolved in one direction, that\nmeans most applicable State contract laws are being\nsilently and unconstitutionally displaced by the feder-\n 49\n\n\nal judiciary, under the “pretense” of interpreting the\nFAA. Allied-Bruce, 513 U.S. at 283 (O’Connor, J., con-\ncurring).\n The Court might respond that its own, federal\npresumptions apply only after State rules of inter-\npretation are exhausted. Granite Rock, 561 U.S. at\n303. But even that observation misses the preemption\npoint.\n Ambiguity only means that there are two, “rea-\nsonable” interpretations. CNH Indus. N.V. v. Reese,\n583 U.S. 133, 139 (2018). “Reasonable” is often far\nfrom “best.” In a normal contract dispute, judges apply\nvalid, State rules of interpretation to resolve ambiguity.\nThen, if ambiguity still remains, judges are free to\nchoose what they believe is the best interpretation\namong “reasonable” ones. A court is not “hold[ing] a\nparty to its arbitration contract just as the court\nwould to any other kind,” if every time the court must\nchoose between “reasonable” interpretations, the same\nresult must flow regardless of what the best interpreta-\ntion is, and regardless of how far “best” is from “reason-\nable.” Morgan, 596 U.S. at 418. If the Court declares\nequality, it must uphold equality.\n There should be no federal rules or presumptions\nof contract interpretation, absent a thorough preemp-\ntion analysis in any case where federal interpretive\nrules are applied. That said, if any federal rules apply\nhere, the clear-and-unmistakable rule applies. This is\nso because the Court is addressing an “arcane” delega-\ntion issue that relatively few humans even know\nabout, including lawyers and businesspersons. First\nOptions, 514 U.S. at 945.\n 50\n\n\nV. THE NINTH CIRCUIT’S OPINION USED IMPRECISE\n TERMINOLOGY, BUT ITS JUDGMENT WAS CORRECT\n The Ninth Circuit used some imprecise termin-\nology in discussing the parties’ delegation intentions.\nBut the Circuit’s substantive reasoning and decisions\nwere not contrary to California law or the FAA. Even\nif some of the court’s reasoning was inaccurate, its\njudgment should be upheld because the court asked a\npermissible delegation question, and ultimately\nreached the right conclusion regarding the parties’\ndelegation intentions.\n\n A. True Formation Disputes Are Never\n Delegated\n Claimant suggests that disputes over whether\nany agreement was “formed” can somehow be delegated\nto an arbitrator by agreement. Pet’r Br. 38-39. That\nsuggestion is hopelessly circular. It would allow a\ndefendant to present courts with any sheet of paper\ndisplaying delegation language, and have plaintiffs\nousted from court even if they swear, “I never signed\nthat.” Defense counsel could point to the delegation\nlanguage, assert a formation dispute regarding the\n(never extant) contract as a whole, and demand that\nthe “severable” delegation language be enforced: even\nagainst a plaintiff whose want-of-assent story is\nunopposed.\n Setting aside due process issues, if the FAA’s\nfirst principle of arbitrability is consent, then true\nformation disputes like that can never be delegated by\nway of an alleged contract’s language. The Court has\nheld this explicitly. Granite Rock, 561 U.S. at 299-300.\n 51\n\n\n The Circuit simply misused the words “existence”\nand “formation,” JA 583-586, when it should have\nused words accurately describing what it actually did,\nand was required to do: “resolve any issue that calls\ninto question the formation or applicability of the spe-\ncific [delegation] clause that a party seeks to have the\ncourt enforce.” Id. at 297; JA 585-586. That is what\nthe Circuit did in substance here; it determined the\napplicability of Claimant’s delegation clauses to the\nparties’ arbitrability dispute. JA 585 (“The ‘scope’ of\nan arbitration clause concerns how widely it applies,\nnot whether it has been superseded by a subsequent\nagreement.”); JA 586 (holding that “the issue of\nwhether the forum-selection clause . . . supersedes [or\nmodifies] the arbitration clause was not delegated to\nthe arbitrator”). Right or wrong, that was a decision\nconcerning the delegation clauses’ applicability to the\nparties’ arbitrability dispute.\n Such “applicability” decisions are required by the\nFAA and this Court’s precedents, when parties con-\ntest the applicability of delegation language to an\narbitrability dispute. 9 U.S.C. § 3. Granite Rock, 561\nU.S. at 297. Because the Circuit asked and answered\nwhether the delegation clauses were applicable to the\nparties’ arbitrability dispute, the Circuit’s use of\nimprecise “formation” and “existence” terminology is\nnot the real issue here.8\n\n\n8 The statute governing modifications (Cal Civ. Code § 1698) is\ncodified under Division 3, Title 5 of the Civil Code, titled\n“Extinction of Contracts.” Perhaps this is why the Circuit spoke\nof the “existence” of an agreement to arbitrate, instead of “mod-\nification.” California also uses the word “supersede” in tandem\nwith “modification.” Crossen v. Foremost-McKesson, Inc., 537 537\nF.Supp. 1076, 1077 (N.D. Cal. 1982) (using the words “alteration”\n 52\n\n\n B. The Circuit Was Right to “Sever” the\n Delegation Question, but Not the\n Delegation Clauses\n While Claimant observes that the Circuit “never\nanalyzed whether the official rules altered the parties’\n[delegation] agreement,” the Circuit took a different\napproach to conducting the same, delegation-only\n“analysis” that Claimant (and the FAA) demand. Pet’r\nBr. 36. Rather than asking “whether the official rules\naltered the parties’ [delegation] agreement,”9 the\nCircuit asked whether the delegation clauses—\n“altered” or not—were intended to allow arbitrators to\ninterpret future, “superseding” contracts. The Circuit\nanswered that federally permissible, delegation-only\ninquiry in the negative. JA 583 (interpreting “the\nUser Agreement [to] not delegate to an arbitrator the\nquestion of whether the forum selection clause in the\nSweepstakes’ Official Rules superseded the arbitra-\ntion clause”). Whether the Circuit was wrong to find\nthose delegation clauses inapplicable (by their own,\nisolated terms) to the parties’ arbitrability dispute is\na separate question.\n In Respondent’ view, the better approach would\nhave been to ask “whether the official rules altered\nthe parties’ [delegation] agreement,” under non-\npreempted, State laws of contract interpretation. Pet’r\nBr. 36. Instead, the Circuit did something closer to\n\nand “supersede” interchangeably, and citing § 1698); Han v.\nMobil Oil Corp., 73 F.3d 872, 877 (9th Cir. 1995) (explaining that\n“a modification supersedes those terms to which it relates”).\nUsing the normal syntax of a State’s contract laws is not itself a\njudicial error under the FAA.\n9 This was always Respondent’ preferred approach.\n 53\n\n\nwhat Claimant demands; it asked whether the isola-\nted delegation clauses facially applied to the parties’\narbitrability dispute. That is probably a necessary\ninterpretive inquiry in every delegation dispute,\nregardless of whether the Circuit answered it cor-\nrectly, and regardless of whether that was a complete\ninterpretive inquiry (it was not complete).\n The Circuit addressed the delegation question\nand clauses directly, before proceeding to the arbi-\ntrability of Respondent’ Claims. So it properly severed\nthe delegation question. Claimant didn’t like the\ndelegation answer, and so seeks the opposite delega-\ntion result before this Court. Pet’r Br. 37 (“Thus, this\nis a debate about the arbitration agreement’s scope . .\n. .”). Yet Claimant declines to argue how the Ninth\nCircuit’s purportedly incorrect interpretation of its\ndelegation clauses (or the word “scope” therein) is act-\nually preempted by the FAA, or wrong under California\nlaw.\n In any event, Respondent are not here to say\nthat the parties’ arbitrability dispute does not literally\nconcern the “scope” of an agreement to arbitrate.\nRather, they are here to say that the parties’ arbi-\ntrability dispute is one “REGARDING” the Sweep-\nstakes and its Rules, intended for judicial resolution.\nThey are here to say that the User Agreements’\ndelegation clauses were validly modified under feder-\nal and State law, with respect to Sweepstakes dis-\nputes only. They are here to say that they did not con-\nsent, “at the time of contracting” for this Sweepstakes,\nto an arbitrator interpreting their rights and obliga-\ntions under the Official Rules, without any substan-\ntive judicial review. Cal. Civ. Code § 1636. Respond-\nents reasonably believed they had the same Sweep-\n 54\n\n\nstakes deal with Claimant as they had with Marden-\nKane.\n\n C. Claimant Fails to Show That the Circuit’s\n Delegation Interpretation Was Reversible\n Error\n The Circuit decided “that the User Agreement did\nnot delegate to an arbitrator the question of whether\nthe forum selection clause in the Sweepstakes’ Official\nRules superseded the arbitration clause in the User\nAgreement.” JA 583. In other words, the Circuit found\nthe delegation clauses not to have been intended to\nallow arbitrators to interpret the parties’ Official\nRules agreements. Rather than basing that conclusion\non the Official Rules’ terms—like Respondent do, and\nhave consistently done—the Circuit based that con-\nclusion on its interpretation of the word “scope” in the\ndelegation clauses.\n Claimant fails to explain how the Circuit’s inter-\npretation of the parties’ original delegation clauses (in\nisolation) erred under California law. And even if the\nCircuit’s interpretation did err under California law,\n“this Court does not sit to review” the Circuit’s inter-\npretation or application of State contract law. Volt,\n489 U.S. at 474; DIRECTTV, Inc., 577 U.S. at 54. Fur-\nthermore, Claimant does not explain how the Circuit’s\nState-law interpretation of those delegation clauses\n(presumed correct here, see id.) is conflict-preempted\nby the FAA.\n This Court should affirm the Ninth Circuit’s\njudgment, even if it must clarify or correct some of the\nCircuit’s imperfect reasoning or terminology used in\narriving at a correct resolution of the parties’ delega-\ntion dispute.\n 55\n\n\n D. The Source of Nationwide Judicial\n Confusion Under the FAA\n In Swift v. Tyson, 41 U.S. 1 (1842), this Court\ninterpreted the Federal Judiciary Act to render feder-\nal courts, sitting in diversity, unconstrained to follow\nState judicial decisions in matters of “general law,”\nlike “the construction of ordinary contracts.” Erie R. v.\nTompkins, 304 U.S. 64, 71-72 (1939). Courts sitting in\ndiversity were bound only by States’ “local” laws,\nwhich included the State courts’ “construction[s]” of\n“positive statutes.” Id.\n In Erie, the Court famously overruled Swift,\nholding that “[e]xcept in matters governed by the Fed-\neral Constitution or by acts of Congress, the law to be\napplied in any case is the law of the state.” Id. at 78.\nThe law of the State would govern regardless of\nwhether it was legislative or judicial in origin. Id. One\nof the Court’s reasons for overruling Swift was “the\nimpossibility of discovering a satisfactory line of\ndemarcation between the province of general law and\nthat of local law.” Id. at 74.\n Over the past 60 years or so, a judicial “impossi-\nbility” analogous to the Swift problem has resurfaced.\nIt is the nationwide, judicial “impossibility” of finding\na “satisfactory line of demarcation” between: (i)\napplying this Court’s federal rules of contract inter-\npretation under the FAA (analogous to Swift’s “local\nlaw”), and (ii) applying non-preempted, State rules of\ncontract interpretation that exist to resolve contra-\nctual ambiguities generally (“general law”).\n On the one hand, the Court has repeatedly held\nthat ordinary State contract laws govern interpretive\narbitrability and delegation disputes. On the other\n 56\n\n\nhand, the Court has repeatedly held that “doubts” or\n“ambiguities” in arbitrability and delegation disputes\n(a low bar) must be resolved in one direction. The\nCourt has seemingly walked back that latter line of\nholdings in recent years, but far too quietly for most\ncourts to notice, and far too generously to what some\nof those decisions actually said.\n Consequently, most courts still feel compelled to\napply this Court’s older, interpretive presumptions\nand “policies” wholesale, without even attempting to\nresolve contractual ambiguities under State law in\nFAA cases. In many cases, that mistaken understand-\ning causes judges to feel either: (i) bound by this\nCourt’s presumptions to impose a barely “reasonable”\ninterpretation that is the worst interpretation; or (ii)\nfearful of being overruled for actually being non-dis-\ncriminatory. Aiming to avoid one of those apparent\nerrors, courts respond by inventing new federal inter-\npretive standards, exceptions, and conditions—like\n“formation” disputes, “wholly groundless” exceptions,\nor “prejudice” requirements (e.g., JA 585; Henry\nSchein, 139 S.Ct. 524; Morgan, 596 U.S. 411)—rather\nthan neutrally applying the non-preempted, State\ncontract laws they’ve been applying since law school.\n What the Court is seeing today is not judicial\nhostility against arbitration. It is judicial confusion\nregarding how free (if at all) courts are to use non-\npreempted, State principles of contract interpretation\nto resolve commonplace ambiguities in arbitration\nand delegation disputes. What happens is judges are\nmaybe 80%, maybe 90% certain of the parties’ inten-\ntions under ordinary contract laws, but they can’t call\nthe situation “doubtless” or perfectly “unambiguous.”\nIn such situations, judges face the “impossibility of\n 57\n\n\ndiscovering a satisfactory line” between where their\nduties to apply State law end, and where this Court’s\nfederal presumptions take over. Erie, 304 U.S. at 74.\n What the Court is seeing is not an “arbitration-\nspecific” problem. It is a Swift problem. It is not judi-\ncial hostility against arbitration. It is judicial hostility\nagainst obvious errors of ordinary contract laws, in\neither direction. It is also concern about being over-\nruled for being truly neutral as to litigation or arbitra-\ntion.\n Ninety years after Erie, this Court can and\nshould solve the Swift problem again. It should solve\nthe resurrected Swift problem by holding that in all\ninterpretive arbitrability and delegation disputes\nunder the FAA, only non-preempted, State laws of\ncontract interpretation are controlling. Full stop. The\nCourt should set judges free to impartially choose the\n“best” interpretation among “reasonable” ones in\nevery arbitrability and delegation dispute, without\nfear of being overruled on federal-policy grounds.\n Counterintuitively, returning these interpretive\ndisputes to the States will create greater uniformity\nthan federal interpretive rules have created. Judges\nwill know exactly what to do, and how to do it, in every\ncase: as we trust them to do what Congress expressly\ntrusted them to do in 1925. Interpret contracts. 9\nU.S.C. § 3.\n 58\n\n\n CONCLUSION\n The Court should affirm the Ninth Circuit’s judg-\nment, while correcting some of its reasoning if neces-\nsary. Alternatively, the Court should remand this case\nto the Ninth Circuit, to more thoroughly consider\nwhether the Official Rules partially modified the User\nAgreements’ delegation clauses under non-preempt-\ned, State laws of contract interpretation. This remand\noption, however, is undesirable because it would prompt\na fourth or fifth year of arbitrability proceedings in\nthis case. Respondent respectfully ask this Court to\nsquarely resolve the parties’ delegation dispute, as the\nCourt is free to do under FAA § 3.", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of an order declining to compel arbitration.", "governingLaw": "Apply United States federal arbitration law; Ninth Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal arbitration law; Ninth Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Coinbase, Inc. v. Suski", "citation": "602 U.S. 143 (2024)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/23pdf/23-3_879d.pdf" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "This case presents a straightforward application of the Supreme Court's decision in Coinbase, Inc. v. Suski, 602 U.S. _ (2024). The parties executed two contracts: the User Agreement, which contains a delegation clause sending arbitrability disputes to an arbitrator, and the Official Rules, which contain a forum-selection clause sending controversies regarding the promotion to California courts with sole jurisdiction. The claimant asks this tribunal to enforce the delegation clause in isolation, arguing that the respondents failed to challenge the delegation provision specifically and that the severability rule requires enforcement of the delegation clause unless specifically challenged.\n\nThe claimant's argument fails for two independent reasons. First, the factual premise is wrong. The respondents did challenge the delegation clause. In their district court opposition, they argued that the Official Rules 'modified or superseded the earlier, more general arbitration and delegation agreements between each Plaintiff and [the claimant].' The claimant itself acknowledged this in its reply brief below, stating that respondents contended the Official Rules 'superseded or modified the clause delegating issues of arbitrability to the arbitrator.' The claimant cannot now claim that the respondents mounted no challenge to the delegation clause when the claimant's own filings below refute that assertion. This is not a case like Rent-A-Center, where the employee 'did not even mention the delegation provision.' Here, the respondents expressly argued that the Official Rules modified the delegation clause.\n\nSecond, and more fundamentally, the legal framework the claimant invokes does not apply to this fourth-order dispute. The severability rule of Prima Paint, Buckeye, and Rent-A-Center governs challenges to the validity or enforceability of arbitration or delegation provisions. This case presents no such challenge. All parties agree that all contracts at issue were validly formed and are enforceable. The dispute is purely interpretive: which contract governs the question of who decides arbitrability of sweepstakes claims? The Supreme Court in Coinbase answered this question directly: 'Where parties have agreed to two contracts—one sending arbitrability disputes to arbitration, and the other either explicitly or implicitly sending arbitrability disputes to the courts—a court must decide which contract governs.' The claimant's attempt to invoke the severability rule to isolate the delegation clause from the Official Rules' forum-selection clause is precisely the argument the Supreme Court rejected in Coinbase. The Court explained that 'the severability principle does not require that a party challenge only the arbitration or delegation provision. Rather, where a challenge applies equally to the whole contract and to an arbitration or delegation provision, a court must address that challenge.'\n\nThe respondents' challenge applies equally to the whole contract and the delegation provision because the Official Rules' forum-selection clause and the User Agreement's delegation clause conflict directly over who decides arbitrability of sweepstakes claims. The forum-selection clause grants California courts 'sole jurisdiction' over 'any controversies regarding the promotion'; the delegation clause purports to send all arbitrability questions to an arbitrator. This is a fourth-order dispute—what happens when parties have multiple agreements that conflict over who decides arbitrability—that the Supreme Court held must be decided by a court.\n\nThe claimant's remaining arguments lack merit. The claimant argues that the Official Rules did not modify the delegation clause because they do not mention it. But under Coinbase, the question is not whether the second contract expressly references the delegation clause; the question is which contract governs. The Official Rules' forum-selection clause explicitly sends 'any controversies regarding the promotion' to California courts, and the parties' arbitrability dispute over sweepstakes claims is itself a controversy regarding the promotion. The claimant's argument that the forum-selection clause applies only to mail-in entrants was considered and rejected by both the district court and the Ninth Circuit, and the Supreme Court in Coinbase declined to reach the state-law supersession question, affirming the Ninth Circuit's bottom-line conclusion that a court must decide which contract governs.\n\nThe claimant also argues that enforcing the delegation clause would have been proper under the federal presumption in favor of arbitrability. But the Supreme Court in Coinbase rejected the argument that the delegation provision should be elevated over other forms of contract, citing Prima Paint's admonition against immunizing arbitration agreements from judicial challenge. Where two contracts conflict, the presumption cannot resolve which contract governs—only a court can do that. The respondents' position is further supported by the fact that the Official Rules involved a third party, Marden-Kane, which never agreed to arbitration, making it unlikely that the parties intended all sweepstakes controversies to be arbitrated.\n\nThe Ninth Circuit's use of 'contract formation' terminology was imprecise, as both parties acknowledge. But the court's substantive reasoning and judgment were correct: it addressed the delegation question directly, found the delegation clauses inapplicable to the parties' supersession dispute, and held that the court—not an arbitrator—must decide whether the Official Rules superseded the User Agreement. Under Coinbase, this was the correct disposition.", "allocation": null, "citations": [ { "title": "Coinbase v. Suski | 602 U.S. ___ (2024) - Justia Law", "url": "https://supreme.justia.com/cases/federal/us/602/23-3/case.pdf", "proposition": "Where parties have agreed to two contracts—one sending arbitrability disputes to arbitration via a delegation clause and the other sending disputes to courts via a forum-selection clause—a court must decide which contract governs. The severability principle does not require a party to challenge only the delegation provision; where a challenge applies equally to the whole contract and to an arbitration or delegation provision, a court must address that challenge." }, { "title": "[PDF] Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010). - Loc", "url": "https://tile.loc.gov/storage-services/service/ll/usrep/usrep561/usrep561063/usrep561063.pdf", "proposition": "Under the FAA's severability rule, a delegation provision is severable from the remainder of the contract and must be enforced unless specifically challenged. However, where a challenge applies equally to the whole contract and to the delegation provision, the court must address it rather than enforcing the delegation provision in isolation." }, { "title": "SANDLER v. MODERNIZING MEDICINE INC (2026) | FindLaw", "url": "https://caselaw.findlaw.com/court/us-9th-circuit/118236913.html", "proposition": "A delegation clause that clearly and unmistakably reserves to the arbitrator the power to resolve questions of the arbitration agreement's validity should be respected. However, this rule applies to challenges to the validity of the delegation clause itself, not to fourth-order conflicts between two contracts over who decides arbitrability." }, { "title": "RENT-A-CENTER, WEST, INC. v. JACKSON - Law.Cornell.Edu", "url": "https://www.law.cornell.edu/supremecourt/text/09-497", "proposition": "The severability rule requires that a party challenging an arbitration agreement must direct the challenge specifically to the agreement to arbitrate at issue. Where the challenge applies equally to the whole contract and the delegation provision, a court must address it." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-049", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nINTRODUCTION\n The Federal Arbitration Act (“FAA”) articulated\nCongress’s intent that agreements to arbitrate be as\nenforceable as other types of agreements. To achieve\nthat objective, the FAA provides streamlined\nprocedures for compelling arbitration and staying\ncourtroom litigation where a party seeks to enforce an\nagreement to arbitrate.\n This statutory scheme was premised on the\nassumption that parties to arbitration agreements\nfaced with courtroom litigation would promptly assert\ntheir rights under those agreements by availing\nthemselves of the new streamlined procedures the Act\ncreated. That assumption was well-founded, for\nCongress was legislating against the backdrop of an\nestablished common-law doctrine of waiver under\nwhich contractual rights can be waived unilaterally\nby actions of the waiving party that are inconsistent\nwith an intention of asserting those rights.\n 4\n\n Thus, when parties to an arbitration agreement\nare faced with litigation, both the FAA and general\nprinciples of contract law counsel that they should\nseek to compel arbitration of the dispute at the\nearliest feasible moment—for example, by filing a\nmotion to compel arbitration in response to a\ncomplaint or by raising arbitration as an affirmative\ndefense filed with an answer.\n But that’s not what Respondent Respondent,\ndid here. Instead, when Petitioner Claimant\nsued it under the Fair Labor Standards Act (“FLSA”),\nRespondent filed a motion to dismiss without\nmentioning arbitration, a motion that affirmatively\nargued that if Ms. Claimant’s collective claims were\ndismissed, she could refile individual claims in court.\nHaving lost its attempt at dismissal, Respondent then\nunsuccessfully sought to settle Ms. Claimant’s\ncollective-action claims on a nationwide basis and\nfiled an answer that raised fourteen affirmative\ndefenses, none of which mentioned arbitration. Only\nafter losing its motion to dismiss and failing to settle\nthe collective claims did Respondent seek to compel\nindividual arbitration of Ms. Claimant’s claims.\n By engaging in courtroom litigation and seeking to\nsettle Ms. Claimant’s claims collectively—where in\narbitration, her claims would be decided or settled\nindividually—Respondent demonstrated an intent to\nrelinquish its right to insist on arbitration under the\nterms of its agreement. According to the common law\nof waiver as most states define it, that would have\nbeen the end of the story: Respondent would have lost\nits chance to enforce the arbitration agreement\nthrough its inconsistent actions in court.\n 5\n\n But the Eighth Circuit, like the majority of federal\nand state courts, has grafted an additional\nrequirement onto the test for waiver when an\nagreement to arbitrate is involved. Inconsistent\nactions by the waiving party are not enough; the other\nparty must also show those inconsistent actions\ncaused prejudice. And because the court below\nconcluded Ms. Claimant had not been prejudiced by\nRespondent’s behavior, under this arbitration-specific\nstandard, there had been no waiver.\n This additional requirement—that the non-\nwaiving party suffer prejudice—is contrary to the\nFAA’s text and purpose. A standard for waiver of\ncontractual rights to compel arbitration different\nfrom the standard applied to waiver of other\ncontractual rights is prohibited by the FAA’s\nsubstantive command that arbitration agreements be\ntreated just like other contracts. Further, the\nprejudice requirement incentivizes parties to\nsubstantially engage in litigation before seeking to\ncompel arbitration—undermining the FAA’s objective\nof streamlining the dispute resolution process and\nspawning the very tactical forum-switching that the\nFAA was enacted to stop. This Court should clarify\nthat waiving the right to insist on arbitration under\nan agreement covered by the FAA, like waiving any\nother contractual right, does not require prejudice.\n STATEMENT OF THE CASE\n A. The Federal Arbitration Act\n The FAA, enacted in 1925, reversed a history of\njudicial hostility toward arbitration agreements by\n“allow[ing] parties to avoid ‘the costliness and delays\nof litigation’” and “plac[ing] arbitration agreements\n‘upon the same footing as other contracts.’” Scherk v.\n 6\n\nAlberto-Culver Co., 417 U.S. 506, 510-11 (1974)\n(quoting H.R. Rep. No. 96, 68th Cong., 1st Sess., 1, 2\n(1924)). That “overarching purpose” of the FAA is\n“evident in the text of §§ 2, 3, and 4.” AT&T Mobility\nLLC v. Concepcion, 563 U.S. 333, 344 (2011).\n “Section 2 is the primary substantive provision of\nthe Act, declaring that a written agreement to\narbitrate ‘in any maritime transaction or a contract\nevidencing a transaction involving commerce . . . shall\nbe valid, irrevocable, and enforceable, save upon such\ngrounds as exist at law or in equity for the revocation\nof any contract.’” Moses H. Cone Mem’l Hosp. v.\nMercury Constr. Corp., 460 U.S. 1, 24 (1983). The\nprimary thrust of § 2 “was to make arbitration\nagreements as enforceable as other contracts, but not\nmore so.” Prima Paint Corp. v. Flood & Conklin Mfg.\nCo., 388 U.S. 395, 404 n.12 (1967). This Court has\nreferred to § 2’s substantive command that\nagreements to arbitrate be treated the same as other\ncontracts as the FAA’s “equal-treatment principle.”\nKindred Nursing Centers Ltd. P’ship v. Clark, 137 S.\nCt. 1421, 1426 (2017); see also Epic Sys. Corp. v.\nLewis, 138 S. Ct. 1612, 1622 (2018) (discussing the\nequal-treatment principle in the context of federal\nstatutory claims).\n This equal-treatment principle is not superseded\nby the “liberal federal policy favoring arbitration” this\nCourt has distilled from the FAA. See Moses H. Cone,\n460 U.S. at 24. Rather, the equal-treatment principle\nis the embodiment of that policy: “Section 2 embodies\nthe national policy favoring arbitration and places\narbitration agreements on equal footing with all other\ncontracts[.]” Buckeye Check Cashing, Inc. v.\nCardegna, 546 U.S. 440, 443 (2006). See also Hall\n 7\n\nStreet Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581\n(2008) (describing policy favoring arbitration as\nplacing arbitration contracts on equal footing with\n“all other contracts”).\n Sections 3 and 4, in turn, provide for streamlined\njudicial proceedings to enforce the substantive right\nevinced in § 2. Section 3 provides that where there is\nan existing court proceeding, a court, “upon being\nsatisfied that the issue involved in such suit or\nproceeding is referable to arbitration” under a written\narbitration agreement, “shall on application of one of\nthe parties stay” the court proceedings until the\narbitration is complete, “providing the applicant for\nthe stay is not in default in proceeding with such\narbitration.” 9 U.S.C. § 3. In other words, § 3 allows a\nparty to seek a stay of a pending court proceeding for\nthe duration of an arbitration so long as the party can\ndemonstrate that the claims at issue fall within the\nscope of a written arbitration agreement and that the\nparty seeking the stay is not in default in proceeding\nwith arbitration under that agreement. See Scherk,\n417 U.S. at 511 (describing § 3). As this Court has\npointed out, neither § 2 nor § 3 “purports to alter\nbackground principles of state contract law[,]” and § 3\n“adds no substantive restriction to § 2’s enforceability\nmandate.” Arthur Andersen LLP v. Carlisle, 556 U.S.\n624, 630 (2009).\n Section 4 directs courts “to order parties to proceed\nto arbitration if there has been a ‘failure, neglect, or\nrefusal’ of any party to honor an agreement to\narbitrate.” Scherk, 417 U.S. at 511 (quoting 9 U.S.C.\n§ 4). Section 4 applies regardless of whether there is\nan existing court proceeding; it allows parties to\npetition a federal court in the first instance to compel\n 8\n\narbitration. 9 U.S.C. § 4; see also Moses H. Cone, 460\nU.S. at 22 (explaining that §§ 3 and 4 provide “two\nparallel devices for enforcing an arbitration\nagreement”).\n B. Claimant’s Allegations Against\n Respondent\n Respondent owns more than 150 Taco Bell\nfranchises throughout the United States. J.A. 9.1\nClaimant worked at one of these franchises in\nOsceola, Iowa, as an hourly employee from August to\nOctober of 2015. J.A. 10.\n Respondent did not pay its employees, including Ms.\nClaimant, for the hours they worked. Respondent had a\npolicy of “shifting” hours that employees worked in\none week and recording them for the following week\nso that the total number of recorded hours in any\ngiven week would never exceed 40. J.A. 12. As a result\nof this shifting, Ms. Claimant and other employees were\nnot paid for all of the hours they worked in a given\nweek and were not paid at overtime rates when they\nworked more than 40 hours in a single week. J.A. 11-\n12. Employees who regularly worked more than 40\nhours per week and—and whose overtime hours\ntherefore could not be “shifted”—were simply never\npaid, at any rate, for all the hours they worked. J.A.\n12-13 (Respondent capped hours in any two-week\nperiod at 80).\n Respondent also sometimes instructed Ms. Claimant\nand other employees to clock out and to continue\n\n\n 1 Citations to the Joint Appendix filed in this Court are\n\nformatted as “J.A. X.” Citations to the appendix filed with Ms.\nClaimant’s Petition for Certiorari are formatted as “Pet. App. X.”\n 9\n\nworking off the clock—additional work for which the\nemployees were never paid. J.A. 13.\n In September 2018, Ms. Claimant filed a nationwide\ncollective action against Respondent in Iowa federal\ncourt on behalf of all similarly situated hourly\nemployees of Respondent franchises, alleging that these\npractices constituted willful violations of the FLSA.\nJ.A. 14.\n C. The Wood Action and Respondent’s Motion\n to Dismiss\n Two years before Ms. Claimant filed this action in\nIowa, a similar action was filed under the FLSA\nagainst Respondent in the Eastern District of Michigan\ndetailing the same practices of “shifting” time to\nsubsequent pay periods. Wood v. Respondent, No.\n2:16-cv-13598 (E.D. Mich. Oct. 7, 2016) (the “Wood\naction”). The Wood action was initially filed as a\nnationwide collective action, but in June 2017, it was\nconditionally certified to include only hourly\nemployees of Respondent’s Taco Bell restaurants in\nMichigan. J.A. 45-46.\n After Ms. Claimant filed her complaint in Iowa,\nRespondent moved to dismiss or stay the suit pursuant\nto the “first-to-file” rule, arguing that her action was\nduplicative of the Wood action. J.A. 19-43. Respondent’s\nmotion said nothing about Ms. Claimant’s claims being\nsubject to a mandatory arbitration provision, and it\ncertainly did not ask the court to enforce that\nprovision. To the contrary, in seeking dismissal of her\nnationwide collective action as duplicative of Wood,\nRespondent affirmatively argued that Ms. Claimant\ncould “refile her claim on an individual basis before\nthis Court.” J.A. 39.\n 10\n\n The district court denied Respondent’s motion to\ndismiss, concluding that because members of Ms.\nClaimant’s putative collective action who had worked\nfor Respondent outside of Michigan could not join the\nWood action, the two cases were not duplicative. J.A.\n44-55.\n Four days later, Respondent filed its answer, listing\nfourteen affirmative defenses to the merits of Ms.\nClaimant’s claims. J.A. 56-74. And though the defenses\nincluded a statute of limitations defense based on Ms.\nClaimant’s employment agreement, none mentioned\narbitration as a defense to the litigation. J.A. 71-73.\n D. Information Exchange and Mediation\n Plaintiffs in this case and in the Wood action met\nwith representatives of Respondent for a joint\nmediation on April 15, 2019. In preparation for that\nmediation, Respondent provided Ms. Claimant’s counsel\nwith payroll data for nearly 12,000 members of the\nputative collective, as well as thousands of pages of\nemails from Respondent management. Pet. App. 17. Ms.\nClaimant retained an expert to analyze the payroll\ndata. Id.\n The mediation led to settlement of the Wood\naction, but Ms. Claimant’s case did not settle, and\ncounsel for the parties proceeded to correspond\nregarding scheduling matters. Id. Respondent first\nraised arbitration with Ms. Claimant’s counsel on May\n1, 2019, and, on May 3, 2019, Respondent moved to\ncompel individual arbitration of Ms. Claimant’s claims.\nJ.A. 75-76.\n E. Lower Court Opinions\n Ms. Claimant opposed Respondent’s motion to compel\narbitration on the basis that Respondent had waived\n 11\n\nany right it may have had to compel arbitration by\nengaging in litigation. Pet. App. 19. The district court\napplied the tripartite test established by the Eighth\nCircuit in Lewallen v. Green Tree Servicing, LLC, 487\nF.3d 1085 (8th Cir. 2007), to determine whether\nRespondent had waived its right to arbitration. First,\nthere was no dispute that Respondent knew of an\nexisting right to arbitrate—the agreement was part of\na form contract on Respondent’s own website. Pet. App.\n14, 26. Second, the court held that Respondent acted\ninconsistently with that right when it waited for eight\nmonths before asserting its right to arbitration and\nfailed to mention arbitration in its answer, in its\nmotion to dismiss, or in scheduling discussions with\nopposing counsel. Pet. App. 27-31. Finally, the court\nfound that Ms. Claimant was prejudiced by having to\ndefend against Respondent’s motion to dismiss and by\nspending time and resources preparing for a\nclasswide mediation instead of individual arbitration.\nPet. App. 32-33.2\n Respondent appealed, and the Eighth Circuit\nreversed, with Judge Colloton dissenting. The Eighth\nCircuit majority found the question close as to\n\n\n 2 The district court also rejected Respondent’s argument that\n\nits delay in seeking to compel arbitration was justified because\nit was supposedly unclear until after this Court’s decision in\nLamps Plus v. Varela, 139 S. Ct. 1407 (2019), that collective\narbitration would not be permitted in Ms. Claimant’s case. Pet.\nApp. 31-32. As the district court explained, Respondent’s\narbitration clause is silent as to collective proceedings, and Stolt-\nNielsen, S.A. v. AnimalFeeds International Corp., 559 U.S. 662\n(2010), had already held that collective arbitration could not be\ncompelled where an agreement is silent on that subject. Pet.\nApp. 31-32; see J.A. 77-78 (requiring arbitration with no mention\nof class or collective proceedings).\n 12\n\nwhether Respondent had committed enough actions\ninconsistent with its right to arbitrate to meet the\nsecond element of the Lewallen test, but explained\nthat “Respondent’s conduct, even if inconsistent with its\nright to arbitration, did not materially prejudice\nClaimant,” Pet. App. 3. The court ultimately found\nwaiver lacking because of “the absence of a showing\nof prejudice to Claimant.” Pet. App. 6. Specifically, the\nmajority described the “first-to-file” dispute over the\nWood action as “quasi-jurisdictional” and concluded\nthat Ms. Claimant would not have to duplicate efforts\nin arbitration because that first-to-file dispute did not\ngo to the merits of her claims.\n The dissent noted that Respondent had made a\nstrategic choice to delay invoking its arbitration\nrights and to instead “express [a] preference for a\njudicial forum in the Eastern District of Michigan.”\nPet. App. 7. Judge Colloton next observed that\nRespondent’s participation in mediation was also\ninconsistent with its arbitration rights because it was\nseeking to settle claims for the nationwide collective\nwhile it sought to arbitrate Ms. Claimant’s claims\nalone, and the settlement dynamics in the two fora\nwould thus be very different. Pet. App. 8-9.\n Relatedly, the reason Respondent gave for waiting\nto compel arbitration—this Court’s decision in Lamps\nPlus, 139 S. Ct. 1407—only added to the impression\nof gamesmanship. Respondent had stated in its\nmemorandum that before Lamps Plus, it “risked\nbeing compelled to arbitrate this matter as a\ncollective action.” Pet. App. 9 (internal quotations\nomitted). Or as Judge Colloton explained, “Respondent\nwas content with a judicial forum until it believed\n 13\n\nthat an intervening court decision improved its\nprospects in arbitration.” Pet. App. 9-10.\n Turning to the issue of prejudice, which the\nmajority had found dispositive, Judge Colloton\ndeemed it a “debatable prerequisite.” Pet. App. 10. He\nrecognized that at least two courts of appeals—the\nSeventh and D.C. Circuits—do not require a showing\nof prejudice to establish waiver of arbitration and\ncited an earlier Eighth Circuit opinion that described\nthe question as “unsettled.” Pet. App. 10 (quoting\nErdman Co. v. Phx. Land & Acquisition, LLC, 650\nF.3d 1115, 1119 (8th Cir. 2011)). Moreover, in\nexplaining why the Seventh Circuit does not require\na showing of prejudice, he noted that “in ordinary\ncontract law, a waiver normally is effective without\nproof of consideration or detrimental reliance.” Pet.\nApp. 10 (quoting Cabinetree of Wis., Inc. v. Kraftmaid\nCabinetry, Inc., 50 F.3d 388, 390 (7th Cir. 1995)).\nHowever, he concluded, if prejudice is required to\nprove waiver, then Ms. Claimant had satisfied that\nrequirement. Pet. App. 11.\n This Court granted Ms. Claimant’s petition for\ncertiorari.\n SUMMARY OF ARGUMENT\n I. American courts have long defined “waiver” as\nthe intentional relinquishment of a known right and\nhave applied the concept in a wide variety of contexts,\nincluding rights afforded by contract. Common-law\nwaiver of contractual rights can be express or implied.\nCourts assessing whether an implied waiver has\noccurred focus on whether the words and actions of\nthe waiving party were inconsistent with an intention\nof exercising the contractual right and demonstrated\nan intention to abandon it. Thus, assessments of\n 14\n\ncontractual waiver focus solely on the waiving party’s\nintent, leading courts and commentators alike to\ndescribe waiver as unilateral.\n This unilateral concept has frequently been\ncontrasted with the related doctrines of estoppel and\nlaches, because the same factual situations can often\nlead to two or more of these defenses being asserted\nsimultaneously. Estoppel differs from waiver,\nhowever, in that it requires another party to have\nchanged its position to its detriment based on what it\nunderstood the other party would do—such as making\na payment late because the other party had\npreviously accepted late payments. Laches, an\nequitable defense available when a party\nunreasonably delayed in bringing a claim, also\nrequires a showing of prejudice to the party asserting\nthe defense. Courts and commentators have\ndistinguished estoppel and laches from waiver in that\nthe first two require a showing of prejudice, while\nwaiver does not.\n But most federal and state courts have eschewed\nthese common-law distinctions when a party begins\nlitigating an arbitrable claim in court and then later\ninvokes its contractual right to insist on arbitration\nunder an agreement covered by the FAA. These courts\nhave concocted a separate body of arbitration-specific\nwaiver law that they apply in these situations and\nthat, unlike generally-applicable contractual waiver\nlaw, requires prejudice to the non-waiving party as an\nessential element. These courts point to the FAA as a\nbasis for deviating from common-law waiver\nstandards, but the FAA does not support such a\ndeparture.\n 15\n\n II. The cornerstone of the FAA is the equal-\ntreatment principle codified at § 2, which requires\ncourts to place agreements to arbitrate “on an equal\nfooting with other contracts.” Concepcion, 563 U.S. at\n339. The equal-treatment principle forbids courts\nfrom crafting or applying rules that differ from the\nrules applied to contracts generally or otherwise\n“derive their meaning from the fact that an\nagreement to arbitrate is at issue.” Id. The\narbitration-specific waiver standard most courts\nemploy, which includes a prejudice requirement even\nthough those same courts do not require prejudice for\nwaiver of other contractual rights, violates this equal-\ntreatment principle and thus violates the FAA’s core\nsubstantive command. See Buckeye Check Cashing,\n546 U.S. at 447.\n And nothing else in the text of the FAA supports a\nprejudice requirement either. Some courts point to § 3\nof the Act, which requires courts to stay litigation of\narbitrable issues until arbitration has occurred\n“providing the applicant for the stay is not in default\nin proceeding with such arbitration.” 9 U.S.C. § 3. But\ndefault, like waiver, is a unilateral concept that\nfocuses exclusively on the defaulting party’s failure to\nperform an obligation, and “default” had the same\nmeaning in 1925 when the FAA was enacted. In short,\nthe FAA’s text and structure mandate that the same\ncommon-law standard for waiver be applied to rights\nunder arbitration agreements made enforceable by\nthe statute as to rights under any other sort of\ncontract.\n III. The prejudice requirement also creates\nperverse incentives antithetical to the FAA’s\npurposes. Congress intended the FAA to reduce\n 16\n\nlitigation-related delays and provide streamlined\nprocedures so that parties who wished to arbitrate\ntheir disputes could benefit from the speed and\nefficiency of that alternative forum. But the high bar\nfor arbitration-related waiver that most courts now\napply instead incentivizes extensive skirmishing in\ncourt before arbitration rights are invoked by either\nparty.\n The status quo also allows parties to test their case\nin court first and only retreat to arbitration if they\nencounter a judicial setback or decide that arbitration\nhas become a more strategically attractive forum. But\nthis sort of tactical gamesmanship is precisely what\nCongress passed the FAA to prohibit. In 1925\nCongress replaced the historical approach treating\npre-dispute arbitration agreements as optional\nsecond-class contracts that could be abandoned at will\nwith a commitment that those agreements were as\nbinding and enforceable as any other contracts. This\nCourt should honor those intentions, and the equal-\ntreatment principle, by clarifying that arbitration\nrights are just as waivable as other contract rights\nwhen parties act inconsistently with an intent to\nenforce them.\n ARGUMENT\n I. CONTRACTUAL RIGHTS MAY BE\n WAIVED, AND IN MOST CONTRACTUAL\n CONTEXTS, WAIVER FOCUSES\n EXCLUSIVELY ON THE ACTIONS OF\n THE WAIVING PARTY WITHOUT\n REGARD TO THEIR EFFECTS ON\n OTHERS.\n In both civil and criminal law, waiver has long\nbeen defined as the intentional relinquishment of a\n 17\n\nknown right. Alsens Am. Portland Cement Works v.\nDegnon Contracting Co., 118 N.E. 210, 210 (N.Y.\n1917) (civil); Johnson v. Zerbst, 304 U.S. 458, 464\n(1938) (criminal). The concept of waiver is ubiquitous\nin American law. Rights can be waived that derive\nfrom the U.S. Constitution, Id. at 467-68 (Sixth\nAmendment right to counsel); from federal statute, 29\nU.S.C. § 626(f) (right to bring claim under Age\nDiscrimination in Employment Act); from state\nproperty law, Maroun v. Deutsche Bank Nat’l Trust\nCo., 109 A.3d 203, 209 (N.H. 2014) (homestead rights\npreventing foreclosure); from the common law of torts,\nBoehm v. Cody Country Chamber of Commerce, 748\nP.2d 704, 711 (Wyo. 1987) (right to bring a negligence\nclaim); and from the Federal Rules of Civil Procedure,\nFed. R. Civ. P. 12(h) (defenses to suit).\n And, as relevant here, rights created by contract\ncan be waived as well. A waiver may either be express\nor may be implied from conduct through which an\nintent to abandon the right can be inferred. See Loan\nMountain Prod. Co. v. Nat. Gas Pipeline Co. of Am.,\n984 F.2d 1551, 1557 (10th Cir. 1992) (“Waiver can be\nexpress or implied, and exists when one has an intent\nnot to require strict compliance with a contractual\nduty[.]”).\n The waiver of contractual rights arises in\nnumerous contexts, from building contracts to\ninsurance contracts to forum selection clauses. Across\nthese contexts, and across the states—where the\nsubstantive body of contract law has primarily\ndeveloped—courts agree that waiver of contractual\nrights is unilateral in character: Whether a waiver\n 18\n\nhas occurred depends entirely on the actions and\nintentions of the waiving party. 3\n While detrimental reliance or prejudice to the non-\nwaiving party is also sometimes present in cases\ninvolving contractual waivers, in nearly all the states\n(at least outside the context of arbitration), such\nreliance or prejudice is not an element of waiver itself.\nRather, prejudice goes to the distinct, related concept\nof estoppel. And while the same conduct inconsistent\nwith the terms of a contract can constitute both a\nwaiver (when it manifests the waiving party’s\nintention to relinquish the right) and an estoppel\n(when it causes a change in the behavior of another\nparty), the contract law of most states goes to great\npains to explain that waiver may occur without\nestoppel, and estoppel may occur without waiver.4\nOnly in the law of arbitration contracts have the two\nconcepts been fused together such that prejudice to\n\n 3 Some scholars have posited that the term “waiver” in the\n\ncontractual context should be limited to conditions on\nperformance, which, when waived, make performance of the\ncontractual obligation unconditional. See, e.g., 8 Corbin on\nContracts § 40.1 (2021). But most courts do not confine their\ndiscussion of waiver to conditional contracts. See, e.g., U.S.\nPipeline, Inc. v. N. Nat. Gas Co., 930 N.W.2d 460, 480-81 (Neb.\n2019) (discussing waiver of a breach-remedy provision, not a\ncondition on performance); Bennett v. Farmers Ins. Co. of Ore.,\n26 P.3d 785, 796-97 (Ore. 2001) (any contractual term, including\na material term, may be waived). See also 13 R. Lord, Williston\non Contracts § 39:14 (4th ed. 2012) (“waiver can also operate in\nthe context of an exchange of promises” and “any satisfactory\ndiscussion of [contractual waiver] must consider all of its\napplications”).\n 4 If the conduct manifesting the waiver involves an\n\nunreasonable delay in asserting a contractual right, it may also\nsupport the equitable defense of laches. See Part I.B.ii, infra.\n 19\n\nthe non-waiving party is an essential component of\nproving a waiver.\n A. The Contract Law of the Vast Majority of\n States Treats Waiver as a Unilateral\n Concept that Does Not Require Prejudice\n to the Other Contracting Party.\n The vast majority of state high courts considering\nwhen waiver of a contractual right will be found focus\nexclusively on actions taken by the waiving party that\ndemonstrate an intent to abandon the right at issue,\nor that are inconsistent with an intent to exercise that\nright. See, e.g., Hughes v. Mitchell Co., 49 So.3d 192,\n201-02 (Ala. 2010) (“a party’s intention to waive a\nright is to be ascertained from the external acts\nmanifesting the waiver”)5; Bennett, 26 P.3d at 796-97\n(“party to a written contract may waive a provision of\nthat contract by conduct” and employer’s\npromulgation of new policy requiring termination for\ncause unequivocally waived inconsistent at-will\nprovision in plaintiff’s employment contract);\nMcCarthy v. Tobin, 706 N.E.2d 629, 633 (Mass. 1999)\n(“[w]ords and conduct attributable to” waiving party\nwere inconsistent with an intention to enforce\ncontractual deadline); Beck v. Lind, 235 N.W.2d 239,\n251 (N.D. 1975) (landlord waived right to rescind or\ncancel lease where he knew of tenant’s conduct\nbreaching lease and did not object to that breach). Or\nas the Virginia Supreme Court succinctly put it,\n“intent is the essence of waiver.” Stanley’s Cafeteria,\nInc. v. Abramson, 306 S.E.2d 870, 874 (Va. 1983).\n Contractual waivers frequently arise in the\ninsurance context, where an insurer acts\n\n 5 Unless otherwise noted, all internal quotations are omitted.\n 20\n\ninconsistently with an intent to enforce a contractual\ncondition of coverage. For example, in U.S. Fidelity &\nGuaranty Co. v. Bimco Iron & Metal Corp., 464\nS.W.2d 353, 354 (Tex. 1971), the owner of a\ncommercial building sought to recover on its\ninsurance policy after a burglar stole electrical wiring\nfrom the building. The insurance company refused to\npay for any of the damage to the building, arguing\nthat the insured had breached the policy by failing to\ntimely file a formal proof of loss. Id. at 356. But the\nTexas Supreme Court found that when an adjuster\ninspected the building and stated that the damage to\nthe door would be covered but that the stolen wiring\nwould not, the insurer had waived the proof of loss\nprovision because that suggestion of partial coverage\nwas inconsistent with an intent to insist upon strict\ncompliance with the proof of loss requirement. Id. at\n356-57. Other courts confronting similar facts have\nreached the same conclusion.6\n An ongoing course of conduct can also constitute a\nwaiver of contractual terms and the rights they\nafford. Christensen v. Equity Coop. Livestock Sale\nAss’n, 396 N.W.2d 762, 762-63 (Wis. Ct. App. 1986),\nupheld a jury’s conclusion that a purchaser of cattle\nhad waived his security interest in the animals when,\nover a five-year period, he inspected the herd, had\nreason to know that it was shrinking and that the\nfarmer was selling cattle outside the terms of the\n\n 6 Scheetz v. IMT Ins. Co. (Mut.), 324 N.W.2d 302, 304-05\n\n(Iowa 1982) (insurer waived contractual provision that suit must\nbe filed within one year of loss by continuing negotiations beyond\nthat deadline); Baird v. Fidelity-Phenix Fire Ins. Co., 162 S.W.2d\n384, 389 (Tenn. 1942) (insurer waived requirement that insured\nretain sole and unconditional ownership of property, knowing\nthat terms of will put that ownership in doubt).\n 21\n\ncontract, yet renewed the contract anyway. The New\nHampshire Supreme Court reached a similar\nconclusion in a construction contract case, finding\nwaiver where “the written terms” of the contract,\nwhile “clear,” had been “disregarded by the parties.”\nD. M. Holden, Inc. v. Contractor’s Crane Serv., Inc.,\n435 A.2d 529, 532 (N.H. 1981). And U.S. Pipeline, 930\nN.W.2d at 480-81, held that a natural gas company\nthat had contracted with a pipeline construction\ncompany waived its right to claim liquidated damages\nfor delay in the project’s completion by requesting\nextra work after the completion date and failing to\ninform the pipeline company that it intended to\nenforce the liquidated damages provision.\n Even in contractual contexts closer to arbitration,\ninvolving provisions about alternative dispute\nresolution and forum selection, the laser focus\nremains on the waiving party’s acts inconsistent with\nan intention to enforce the right at issue. See\nWindham Land Trust v. Jeffords, 967 A.2d 690, 697\nn.4 (Me. 2009) (landowners had waived right to\nenforce conservation easement’s requirement for pre-\nsuit mediation by failing to participate in mediation\nbefore suit and waiting over a year after suit had\ncommenced to invoke the provision as a defense);\nRusso v. Barger, 366 P.3d 577, 580-81 (Ariz. Ct. App.\n2016) (defendant waived right to invoke forum\nselection clause by extensively litigating in the\noriginal forum after invoking clause in its answer).7\n\n\n 7 Russo pointed to earlier Arizona cases on waiver of the\nright to arbitrate in reaching its conclusion, noting that an\nagreement to arbitrate is “a specialized kind of forum selection\nclause.” 366 P.3d at 580 (quoting Scherk, 417 U.S. at 519). Those\n Footnote continued on next page\n 22\n\n In state after state, court after court has\nemphasized that waiver of contractual rights is\naccomplished unilaterally. E.g., Best Place, Inc. v.\nPenn Am. Ins. Co., 920 P.2d 334, 353 (Haw. 1996)\n(“Waiver is essentially unilateral in character,\nfocusing only upon the acts and conduct of the\n[waiving party].”); Thoroughbred Assocs., L.L.C. v.\nKansas City Royalty Co., 469 P.3d 666, 678 (Kan. Ct.\nApp. 2020) (“Unlike [contract] modification, which\nrequires mutual assent, waiver can occur\nunilaterally.”); Old Republic Ins. Co. v. FSR\nBrokerage, Inc., 80 Cal. App. 4th 666, 678 (Cal. Ct.\nApp. 2000) (“pivotal issue in a claim of waiver is the\nintention of the party who allegedly relinquished the\nknown legal right” as waiver “does not require any act\nor conduct by the other party” (emphasis in original)).\n According to the law of most states, waiver of a\ncontractual term need not be supported by\nconsideration8 or another party’s reliance.9 And once\n\nearlier Arizona cases did not include prejudice as an element of\narbitration waiver. E.g., Bolo Corp. v. Homes & Son Constr. Co.,\n464 P.2d 788, 792 (Ariz. 1970). But Arizona courts have since\nadopted the Ninth Circuit test for arbitration waiver, where\nprejudice is a necessary and in fact the “most significant[]”\nfactor. Sec. Alarm Fin. Enters., L.P. v. Fuller, 398 P.3d 578, 583-\n84 (Ariz. Ct. App. 2017).\n 8 E.g., Bennett, 26 P.3d at 796; In re Guardianship of Collins,\n\n327 N.W.2d 230, 234 (Iowa 1982); U.S. Fidelity & Guaranty, 464\nS.W.2d at 358; Alsens American, 118 N.E. at 210.\n 9 E.g., Lafayette Car Wash, Inc. v. Boes, 282 N.E.2d 837, 839-\n\n40 (Ind. 1972); Salloum Foods & Liquor, Inc. v. Parliament Ins.\nCo., 388 N.E.2d 23, 28 (Ill. App. Ct. 1979); Kennedy v. Manry, 66\nS.E. 29, 31 (Ga. Ct. App. 1909), superseded by statute on other\ngrounds as recognized in Whitehead v. S. Discount Co., 135\nS.E.2d 496, 498-99 (Ga. Ct. App. 1964); Horne v. Radiological\n Footnote continued on next page\n 23\n\nwaived, most contractual rights can’t be reinstated\nthrough retraction or revocation of the waiver.10\n Finally, outside the arbitration context, prejudice\nis rarely mentioned when courts discuss waiver of\ncontractual rights.11 Where the concept of prejudice\ndoes come up, it is usually to distinguish waiver—\nwhich does not require a showing of prejudice—from\nthe related doctrines of laches and estoppel—which\ndo. See Part I.B, infra.\n B. Courts Distinguish Contractual Waiver\n from Other Doctrines Requiring\n Prejudice, but Collapse the Distinction\n When Agreements to Arbitrate Are at\n Issue.\n The fact patterns in which the contractual defense\nof waiver is often asserted—situations where one\n\nHealth Servs., P.C., 371 N.Y.S.2d 948, 960 (N.Y. Sup. Ct. 1975);\nNathan Miller, Inc. v. N. Ins. Co. of N.Y., 39 A.2d 23, 25-26 (Del.\nSuper. Ct. 1944).\n 10 E.g., Scheetz, 324 N.W.2d at 305; Lafayette Car Wash, 282\n\nN.E.2d at 839; State ex rel. Johnson v. Indep. Sch. Dist. No. 810,\nWabasha Cnty., 109 N.W.2d 596, 602 (Minn. 1961); Thomas N.\nCarlton Estate, Inc. v. Keller, 52 So.2d 131, 133 (Fla. 1951); Home\nFire Ins. Co. v. Kuhlman, 78 N.W. 936, 936 (Neb. 1899).\n 11 A small minority of states do require prejudice in other\n\ncontractual waiver contexts besides arbitration. E.g., Magic\nValley Foods, Inc. v. Sun Valley Potatoes, Inc., 10 P.3d 734, 737\n(Idaho 2000); Maak v. IHC Health Servs., Inc., 372 P.3d 64, 73\n(Utah Ct. App. 2016). Other states consider prejudice as an\nelement of only certain types of waiver. E.g., J.R. Hale\nContracting Co. v. United N.M. Bank at Albuquerque, 799 P.2d\n581, 585-86 (N.M. 1990) (recognizing “waiver by estoppel” as a\nspecies of waiver on which another party relies to its prejudice\nand distinguishing it from express or implied in fact waiver,\nwhere such reliance is not required).\n 24\n\nparty has acted inconsistently with the written terms\nof a contract or delayed in seeking enforcement of a\ncontractual provision—also often lend themselves to\nassertion of the closely related defenses of estoppel\nand/or laches. Courts ruling on two or more of these\ndefenses in the same case often have occasion to\ncompare and contrast them. And consistently over the\ndecades and across contractual contexts, courts and\nscholarly treatises distinguish among these doctrines\nbased on the presence or absence of a prejudice\nrequirement.\n The sole exception to this general contract-law\nprinciple—that estoppel and laches require prejudice\nwhile waiver does not—occurs when one party to an\narbitration agreement governed by the FAA argues\nthat another party to that agreement has waived the\nright to enforce it. In this one contractual scenario,\nmost federal and many state courts import a prejudice\nrequirement into a doctrine that they label as waiver\nbut that functions in practice like some sort of waiver-\nlaches-estoppel hybrid. These courts base this\nconflation not on general contract law principles but\non an errant notion that the text of the FAA, and this\nCourt’s precedents, mandate an arbitration-specific\nstandard.\n i. Waiver Differs from Estoppel in that\n the Latter, but Not the Former,\n Requires that Another Party Suffer\n Prejudice from the Estopped Party’s\n Inconsistent Acts.\n In an influential early opinion, the Supreme\nJudicial Court of Maine described waiver and\nestoppel as two partially overlapping sets. Many\nestoppels would also constitute waivers, the court\n 25\n\nexplained, but not all waivers qualify as estoppels\nbecause they lacked the key element of prejudice:\n Sometimes the conduct of a party may show\n that he not only intended to, and did, waive his\n rights, but that the adverse party had been\n misled thereby, when the law raises an\n absolute bar to the repudiation of conduct that\n caused the mischief. This is estoppel, although\n it may contain all the elements of waiver. But\n the reverse may not be true; for a party may so\n conduct himself as to show an intention to\n waive his rights, when the adverse party has\n not been deceived or misled thereby, and no\n estoppel would arise, although a waiver may\n well be found.\nLibby v. Haley, 39 A. 1004, 1005 (Me. 1898) (citations\nomitted).\n Although Libby involved a contract to sell a horse,\nmany of the first cases in American courts to explore\ncontractual waiver involved insurance companies\nthat initially ignored, and later tried to enforce, a\nterm in their policies. The insured who cried foul\nwhen this bait and switch occurred would often argue\nthat the insurer had waived its enforcement rights\nand should be estopped from changing its position\nmidstream, with the litigants, the lower court, or both\nusing the terms “waiver” and “estoppel”\ninterchangeably. This confusion led numerous\nappellate courts in the early twentieth century to offer\nprimers like the following:\n Waiver involves the notion of an intention\n entertained by the holder of some right to\n abandon or relinquish, instead of insisting on,\n the right. An estoppel arises when the purpose\n 26\n\n or natural consequence of a person’s\n representations or conduct is such as to induce\n another person to do or to omit some act, the\n doing or omission of which would turn out to his\n detriment and to the inducing party’s benefit if\n the latter were permitted to take such\n advantage of it, and such an estoppel more\n often carries with it the implication of fraud\n than waiver does. . . . Waiver depends upon\n what one himself intends to do; estoppel\n depends rather upon what he caused his\n adversary to do. Estoppel results from an act\n which may operate to the injury of the other\n party; waiver may affect the opposite party\n beneficially.\nNw. Nat’l Life Ins. Co. v. Ward, 155 P. 524, 526-27\n(Okla. 1915). See also Baird, 162 S.W.2d at 388-89\n(distinguishing waiver and estoppel); Nathan Miller,\n39 A.2d at 24-25 (same).\n Federal courts have also identified prejudice as\nthe decisive factor distinguishing waiver from\nestoppel. E.g., Slidell, Inc. v. Millennium Inorganic\nChems., Inc., 460 F.3d 1047, 1056 (8th Cir. 2006)\n(applying Minnesota law); Mitchell v. Aetna Cas. &\nSur. Co., 579 F.2d 342, 347-48 (5th Cir. 1978); Royal\nAir Props., Inc. v. Smith, 333 F.2d 568, 571 (9th Cir.\n1964). So have legal treatises. See 28 Am. Jur. 2d\nEstoppel and Waiver § 35 (2011) (“The intent to\nrelinquish a right is a necessary element of waiver but\nnot of estoppel while detrimental reliance is a\nnecessary element of estoppel but not of waiver.”); 8\nCorbin on Contracts § 40.1 (2021) (focusing on\nprejudice in its discussion of Parsons v. Halliburton\n 27\n\nEnergy Servs., Inc., 785 S.E.2d 844, 850-52 (W. Va.\n2016)).\n Since the high courts of Maine and Oklahoma first\nweighed in with their explanations distinguishing\nwaiver from estoppel, many more states joined their\nranks. E.g., Savre v. Santoyo, 865 N.W.2d 419, 426\n(N.D. 2015); Edmondson v. Penn. Nat’l Mut. Cas. Ins.\nCo., 781 S.W.2d 753, 755-57 (Ky. 1989); Continental\nIns. Cos. v. Stanley, 569 S.W.2d 653, 656 (Ark. 1978);\nLafayette Car Wash, 282 N.E.2d at 839-40; U.S.\nFidelity & Guaranty, 464 S.W.2d at 358; Inland Mut.\nIns. Co. v. Hightower, 145 So.2d 422, 425-26 (Ala.\n1962).\n The prejudice factor that separates waiver from\nestoppel is a distinction that can make a dispositive\ndifference. In Best Place, a nightclub operating at a\nloss was destroyed by a fire caused by arson and made\na claim on its fire insurance policy. 920 P.2d at 337.\nThat policy required a formal “proof of loss” to be filed\nwithin 60 days of the property damage, and the\nnightclub submitted its proof of loss form outside that\ndeadline. Id. at 351-52. The insurance company\nresponded to the untimely proof of loss with a letter\ncontesting the specific amounts claimed and asking\nfor more information. Id.\n The Hawaii Supreme Court found that the\ninsurance company had waived its right to insist on\nthe 60-day time limit by seeking more information\nrather than denying the claim outright. Id. at 353-54.\nHowever, the same conduct on the insurer’s part did\nnot support a claim of estoppel, because “there is no\nindication that [the nightclub] reasonably relied on\n[the insurer’s acts or omissions] to its detriment.” Id.\nat 355. Without evidence of detrimental reliance by\n 28\n\nthe insured, there was no estoppel, consistent with\nthe observation the Maine high court had made a\ncentury before that a waiver can exist without also\nsatisfying the higher bar of estoppel. Libby, 39 A. at\n1005 (“when the adverse party has not been deceived\nor misled thereby, . . . no estoppel would arise,\nalthough a waiver may well be found”).\n ii. Laches Is an Unreasonable Delay in\n Enforcing a Known Right, Which, Like\n Estoppel, Requires Prejudice.\n Laches has been described as the equitable\ncounterpart to the legal doctrine of waiver, as both\nrequire that a party have acted so as to affirmatively\nrepudiate a known right. 31 C.J.S. Estoppel and\nWaiver § 87 (2021). But laches differs from waiver in\nthat the party asserting laches must show that the\nother party’s delay harmed it. E.g., Royal Air, 333\nF.2d at 570-71; Murphy v. Stevens, 645 P.2d 82, 93\n(Wyo. 1982) (“Waiver differs primarily from laches in\nthat laches requires a showing of prejudice to the\nparty claiming it; waiver does not.”); In re Marriage of\nKann and Kann, 488 P.3d 245, 252-53, 254-55 (Colo.\nCt. App. 2017) (extensively discussing prejudice in\nanalyzing laches but not discussing prejudice at all in\nanalyzing waiver); Jervey v. Martint Env’t, Inc., 721\nS.E.2d 469, 473-74 (S.C. Ct. App. 2012) (“waiver does\nnot necessarily imply that the party asserting waiver\nhas been misled to his prejudice” but requiring\nprejudice for laches), vacated in part on other\ngrounds, 750 S.E.2d 90 (S.C. 2013).\n While laches has been described as a species of\nestoppel, 30A C.J.S. Equity § 142 (2021), the two\ndoctrines are not synonymous. Laches is an\naffirmative defense that turns on a prejudice-causing\n 29\n\ndelay, while estoppel may be used either affirmatively\nor defensively based on one party having changed its\nposition in reliance on the actions or inactions of\nanother. See Feinzig v. Ficksman, 674 N.E.2d 1329,\n1333-34 (Mass. App. Ct. 1997). But what ties the two\ndoctrines together is the obligation to show prejudice,\na requirement that the unilateral doctrine of waiver\nordinarily lacks.\n iii. In the Vast Majority of Jurisdictions,\n Arbitration Is the Only Contractual\n Context in Which Courts Require\n Prejudice to Prove Waiver.\n These distinctions completely fall apart in the\narbitration context. Courts apply different rules when\na contract gives parties the right to require\narbitration of disputes but they begin litigating in\ncourt instead before one of them seeks to invoke their\narbitration rights. Many courts analyze cases like this\nunder a doctrine they call waiver but that is in fact\n“an amalgam of waiver, estoppel, and laches\nprinciples” that requires “a showing of prejudice.”\nConseco Fin. Servicing Corp. v. Wilder, 47 S.W.3d 335,\n345 (Ky. Ct. App. 2001).\n This trend towards blurring the lines between\nwaiver and estoppel when a contract for arbitration is\ninvolved began in the federal courts, with many early\nopinions pointing to the liberal federal policy favoring\narbitration to explain why a higher waiver standard\nwas necessary. Carolina Throwing Co. v. S & E\nNovelty Corp., 442 F.2d 329, 331 (4th Cir. 1971)\n(describing prejudice requirement as “the modern\nrule based on a liberal national policy favoring\narbitration”) (modifications in original omitted);\nCarcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d\n 30\n\nCir. 1968) (similar). Prejudice is now a required\nelement of arbitration waiver in nine of twelve federal\ncourts of appeals.12\n And the arbitration-specific prejudice requirement\nfor waiver has taken root in more than half the states\nas well. Indeed, many of the same state courts that\nwrote opinions explaining why prejudice is not needed\nto prove waiver (in the course of distinguishing waiver\nfrom estoppel or laches) have explicitly required\nprejudice to prove waiver of the right to arbitrate.\nCompare Scheetz, 324 N.W.2d at 304 (in contractual\nwaiver case involving insurance, facts need not\n“support a plea of estoppel”), with Wesley Ret. Servs.,\nInc. v. Hansen Lind Meyer, Inc., 594 N.W.2d 22, 30-31\n(Iowa 1999) (requiring prejudice to prove waiver of\nright to arbitrate); compare Savre, 865 N.W.2d at 426-\n27 (distinguishing waiver from estoppel because\nwaiver doesn’t require prejudice), with David v.\nMerrill Lynch, Pierce, Fenner & Smith, Inc., 440\nN.W.2d 269, 274 (N.D. 1989) (“More is required [for\nwaiver] than action inconsistent with the arbitration\nprovision; prejudice to the party opposing arbitration\nmust also be shown.”); compare Jervey, 721 S.E.2d at\n473-74 (waiver does not require that other party be\nmisled to their prejudice), with Rich v. Walsh, 590\n\n 12 Joca-Roca Real Estate, LLC v. Brennan, 772 F.3d 945, 949\n\n(1st Cir. 2014); Hooper v. Advance Am., Cash Advance Ctrs. of\nMo., Inc., 589 F.3d 917, 922-24 (8th Cir. 2009); O.J. Distrib., Inc.\nv. Hornell Brewing Co., 340 F.3d 345, 356 (6th Cir. 2003);\nHoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 926-27 (3d\nCir. 1992); S & H Contractors, Inc. v. A.J. Taft Coal Co., 906 F.2d\n1507, 1514 (11th Cir. 1990); Miller Brewing Co. v. Fort Worth\nDistrib. Co., 781 F.2d 494, 497 (5th Cir. 1986); ATSA of Cal., Inc.\nv. Cont’l Ins. Co., 702 F.2d 172, 175 (9th Cir. 1983); Carolina\nThrowing, 442 F.2d at 331; Carcich, 389 F.2d at 696.\n 31\n\nS.E.2d 506, 508-10 (S.C. Ct. App. 2003) (requiring\nprejudice for arbitration waiver); compare U.S.\nFidelity & Guaranty, 464 S.W.2d at 357-58\n(distinguishing waiver from estoppel based on\nprejudice), with Perry Homes v. Cull, 258 S.W.3d 580,\n594-95 (Tex. 2008) (requiring prejudice for waiver by\nlitigation conduct of right to arbitrate).\n The courts that have required prejudice in\narbitration cases have not done so as part of a\nmodification of their generally applicable law of\ncontract waiver. Rather, they explicitly acknowledge\nthat they are creating a different waiver standard for\narbitration than for other contract rights. E.g., id. at\n594 (acknowledging Texas Supreme Court precedent\nthat “waiver is essentially unilateral in its\ncharacter”).\n Often states justify this departure from their\nordinary contract law principles by citing the FAA\nand federal decisions interpreting it. E.g., LAS, Inc. v.\nMini-Tankers, USA, 796 N.E.2d 633, 637-38 (Ill. App.\nCt. 2003) (requiring prejudice for arbitration waiver\nbecause most federal courts do); David, 440 N.W.2d at\n274 (finding prejudice required by “the Federal policy\nfavoring arbitration”).13 But the FAA does not support\n\n 13 Two states have sliced the salami even finer, holding that\n\ngeneral state-law contract principles should dictate waiver of the\nright to arbitrate under state law but not when the contract is\ngoverned by the FAA. See Security Alarm, 398 P.3d at 582-83\n(holding that arbitration waiver is governed by § 3 of the FAA\nand is not a state-law contract defense analyzed under § 2);\nKinsey v. Bradley, 765 P.2d 1329, 1331-32 (Wash. App. Ct. 1989)\n(noting that lower court had not required prejudice as part of\nwaiver inquiry because a Washington Supreme Court\narbitration waiver precedent, Lake Wash. Sch. Dist. 414 v.\n Footnote continued on next page\n 32\n\ndivergent waiver standards for rights derived from\narbitration agreements than for rights derived from\nother types of contracts. To the contrary, such\narbitration exceptionalism is antithetical to the FAA’s\nplain language and abhorrent to the legislative\nobjectives that spurred its enactment.\nII. IMPOSING A PREJUDICE\n REQUIREMENT SPECIFIC TO WAIVER\n OF THE RIGHT TO ARBITRATE IS\n CONTRARY TO THE FAA.\n The FAA’s “primary substantive provision,” § 2,\nreflects “the fundamental principle that arbitration is\na matter of contract” and that courts must place\nagreements to arbitrate future disputes “on an equal\nfooting with” other types of contracts. Concepcion, 563\nU.S. at 339. This equal-treatment principle applies to\nfederal as well as state courts, see Epic Systems, 138\nS. Ct. at 1622-23, and requires that arbitration\nagreements be enforced to the same degree as other\ncontracts. Prima Paint, 388 U.S. at 404 n.12.\n The imposition of a prejudice requirement for\nproving waiver of the right to arbitrate, when\nprejudice is not required to waive other contractual\nrights, flies in the face of this equal-treatment\nprinciple at the core of the FAA. And nothing else in\nthe statute’s text countenances an arbitration-specific\nprejudice requirement either. The word “prejudice”\nappears nowhere in the statute, nor does any similar\nconcept such as change in position or detrimental\nreliance.\n\n\nMobile Modules Nw., Inc., 621 P.2d 791 (Wash. 1980), did not\nrequire prejudice, but remanding because prejudice was\nrequired under the FAA and federal law).\n 33\n\n Some courts treat the question of whether the\nright to insist on arbitration has been waived by\ninconsistent litigation conduct as a question under § 3\nof the FAA, which requires courts to stay litigation of\narbitrable issues until arbitration has occurred,\n“providing the applicant for the stay is not in default\nin proceeding with such arbitration.” 9 U.S.C. § 3. But\nno support for a prejudice requirement can be found\nin the term “default” either. For default, like waiver,\nis a unilateral concept that focuses on the defaulting\nparty’s failure to meet contractual obligations and is\nnot concerned with the effect that failure may have on\nothers. And “default” had this same “ordinary\nmeaning” in 1925, when the FAA was enacted. Wis.\nCent. Ltd. v. United States, 138 S. Ct. 2068, 2070\n(2018).\n A. The FAA’s Equal-Treatment Principle\n Prohibits Engrafting a Prejudice\n Requirement onto the Waiver Standard\n Where Arbitration Rights Are at Stake.\n Section 2 of the FAA declares written agreements\nto arbitrate “a controversy thereafter arising out of\nsuch contract” to be “valid, irrevocable, and\nenforceable, save upon such grounds as exist at law or\nin equity for the revocation of any contract.” 9 U.S.C.\n§ 2. This declaration of enforceability, taken together\nwith the reference to “any contract,” means that\nwritten agreements to arbitrate future disputes\narising out of the contract containing the arbitration\nprovision are, as a matter of federal law, as\nenforceable as any other contract and are also subject\nto state contract law principles that “arose to govern\nissues concerning the validity, revocability, and\nenforceability of contracts generally.” Perry v.\n 34\n\nThomas, 482 U.S. 483, 492 n.9 (1987); see also\nConcepcion, 563 U.S. at 339 (Section 2 permits\narbitration agreements “to be invalidated by\ngenerally applicable contract defenses[.]”).\n In other words, § 2 declares that arbitration\nagreements are no less and no more enforceable than\nany other type of contract, and that any attempt to\ndeclare such agreements unenforceable must be\nbased on generally-applicable contract law, not\n“defenses that apply only to arbitration or that derive\ntheir meaning from the fact that an agreement to\narbitrate is at issue.” Id. This is the equal-treatment\nprinciple.\n The essence of this equal-treatment principle is\nthat agreements to arbitrate must be treated the\nsame as any other contract. See Volt Info. Scis., Inc. v.\nBd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468,\n478 (1989) (FAA placed agreements to arbitrate “upon\nthe same footing as other contracts”); Dean Witter\nReynolds, Inc. v. Byrd, 470 U.S. 213, 219 (1985) (“The\nHouse Report accompanying the [FAA] makes clear\nthat its purpose was to place an arbitration\nagreement ‘upon the same footing as other contracts,\nwhere it belongs[.]’”) (quoting H.R. Rep. No. 96, 68th\nCong., 1st Sess., 1 (1924)).\n Because in passing the FAA Congress was\nresponding to the courts’ historical hostility to\narbitration agreements, see id. at 219-20 & n.6,\nimplementing the equal-treatment principle in\npractice has often meant raising arbitration\nagreements above the esteem in which they had\npreviously been held. This is why the equal-treatment\nprinciple has sometimes been expressed as a pro-\narbitration federal policy. Granite Rock Co. v. Int’l\n 35\n\nBhd. of Teamsters, 561 U.S. 287, 302 (2010) (the\n“federal policy favoring arbitration . . . is merely an\nacknowledgment of the FAA’s commitment to\noverrule the judiciary’s longstanding refusal to\nenforce agreements to arbitrate and to place such\nagreements upon the same footing as other\ncontracts”).\n But the FAA did not raise arbitration agreements\nabove other types of contracts such that a different,\nmore rigorous standard would be required to waive\narbitration rights than to waive other contractual\nrights. Such a result would reflect preferential, not\nequal, treatment, at odds with the FAA’s same-footing\nprinciple. Volt, 489 U.S. at 478 (FAA “does not\nmandate the arbitration of all claims” but “simply\nrequires courts to enforce privately negotiated\nagreements to arbitrate, like other contracts, in\naccordance with their terms”); Prima Paint, 388 U.S.\nat 404 n.12 (“the purpose of Congress in 1925 was to\nmake arbitration agreements as enforceable as other\ncontracts, but not more so”).14\n Over and over again, this Court has explained that\nthe FAA requires courts to apply generally-applicable\n\n 14 The minority of federal courts that do not require prejudice\n\nas an element of arbitration waiver have emphasized this\ninconsistency with the equal-treatment principle in rejecting a\nprejudice requirement. St. Mary’s Med. Ctr. of Evansville, Inc. v.\nDisco Aluminum Prods. Co., 969 F.2d 585, 590 (7th Cir. 1992)\n(“we should treat a waiver of the right to arbitrate the same as\nwe would treat the waiver of any other contract right”); Nat’l\nFound. for Cancer Rsch. v. A.G. Edwards & Sons, Inc., 821 F.2d\n772, 774 (D.C. Cir. 1987) (“the question of whether there has\nbeen waiver in the arbitration agreement context should be\nanalyzed in much the same way as in any other contractual\ncontext”).\n 36\n\ncontract law to agreements to arbitrate, and forbids\ncrafting different rules for arbitration agreements\nthan for other types of contracts. DIRECTV, Inc. v.\nImburgia, 577 U.S. 47, 54-58 (2015) (California court\ndid not follow generally-applicable California contract\nlaw principles in interpreting arbitration agreement\nand so did not place that agreement “on equal footing\nwith all other contracts”); Doctors Assocs., Inc. v.\nCasarotto, 517 U.S. 681, 688 (1996) (Montana law\nthat placed “arbitration agreements in a class apart\nfrom ‘any contract’” was “inconsonant with” § 2 of the\nFAA); Perry, 482 U.S. at 492 n.9 (“A court may not, . .\n. in assessing the rights of litigants to enforce an\narbitration agreement, construe that agreement in a\nmanner different from that in which it otherwise\nconstrues nonarbitration agreements under state\nlaw.”).\n This same-footing requirement in the FAA is\nperhaps best known for its role in preempting state\nlaws that single out arbitration for disfavored\ntreatment. E.g., Kindred Nursing, 137 S. Ct. at 1426.\nBut this is not its only application. It has also been\ndescribed as the underpinning of the severability\nprinciple established in Prima Paint that arbitration\nagreements are to be analyzed separately from the\ncontracts containing them. Buckeye Check Cashing,\n546 U.S. at 447 (“The rule of severability establishes\nhow this equal-footing guarantee . . . is to be\nimplemented.”). And this Court recently applied it\nwhen assessing a federal-law defense to enforcement\nof an arbitration agreement in a case involving\nfederal statutory claims. Epic Systems, 138 S. Ct. at\n1622-23.\n 37\n\n The prejudice requirement for arbitration waiver\ncannot survive its encounter with the FAA’s equal-\ntreatment principle. Federal and state courts alike\ndisclaim the need to establish prejudice to prove a\nwaiver of other contractual rights, instead\nemphasizing waiver’s unilateral nature. E.g., Royal\nAir, 333 F.2d at 571; U.S. Fidelity & Guaranty, 464\nS.W.2d at 357-58. The prejudice requirement is\nunique to the arbitration context and thus “derive[s\nits] meaning from the fact that an agreement to\narbitrate is at issue.” Concepcion, 563 U.S. at 339.\nThis is precisely the sort of differential treatment the\nFAA forbids.\n Regardless if a party seeks to invoke the FAA’s\nprotections in state or federal court, or utilizes § 3, § 4\nor both as their means of procedural enforcement, the\nequal-treatment principle should yield the same\nresult. If the party seeking the FAA’s help in\nenforcing an agreement to arbitrate has acted in a\nmanner inconsistent with an intent to enforce their\nrights under that agreement, such that generally-\napplicable contract law principles would support a\nfinding of waiver, then the FAA requires that the\nsame body of contractual waiver law apply to their\nrights under the arbitration agreement. If generally-\napplicable contract law would not require prejudice as\npart of such a waiver analysis, the FAA forbids\nprejudice to be imported into the equation just\nbecause “an agreement to arbitrate is at issue.” Id.\nThus, the suggestion that the FAA somehow warrants\nadding a prejudice requirement to the test for waiver\nhas it exactly backwards; the FAA forbids it.\n 38\n\n B. There Is No Other Textual Basis in the\n FAA for a Prejudice Requirement.\n Looking beyond § 2, no other provision in the FAA\ncan justify the addition of a prejudice requirement\neither. Nothing in the FAA’s plain language mentions\nprejudice, detrimental reliance, or harm suffered by\nthe party resisting arbitration. Several of the federal\ncourts to engraft a prejudice requirement onto the\nstandard for waiving the right to arbitrate suggested\nthat they were not applying the law of waiver at all\nbut rather interpreting § 3 of the FAA, which uses the\nterm “default.” E.g., Wheeling Hosp., Inc. v. Health\nPlan of the Upper Ohio Valley, 683 F.3d 577, 586 (4th\nCir. 2012) (statutory default under § 3 of the FAA\n“resembles waiver” but is a more demanding\nstandard); Morewitz v. W. of Eng. Ship Owners Mut.\nProt. & Indem. Ass’n (Luxembourg), 62 F.3d 1356,\n1365 n.16 (11th Cir. 1995) (noting that § 3 of the FAA\nuses the term “default” which is “analogous in\nmeaning to the common-law term ‘waiver’”).\n Section 3 instructs courts to grant a stay of\nalready-initiated court proceedings so that issues\n“referrable to arbitration” may be arbitrated, but only\nif two conditions are met: 1) the court is “satisfied that\nthe issue involved in such suit or proceeding is\nreferable to arbitration”; and 2) “the applicant for the\nstay is not in default in proceeding with such\narbitration.” 9 U.S.C. § 3.\n But courts relying on § 3 and its reference to\n“default” as the basis for a prejudice requirement\nhave not explained where, precisely, in § 3 of the FAA\nsuch a requirement is to be found. Nor can they, for\nthe term “default” has had a consistent meaning since\n 39\n\nbefore the FAA’s enactment, and that meaning does\nnot require prejudice.\n i. “Default” Was and Is a Unilateral Term\n Connoting a Failure to Perform Under\n a Contract.\n Both when the FAA was enacted in 1925 and\ntoday, “default” has referred to the unilateral actions\nof one party to a contract, without regard to the\nimpact of those actions on the other party. Comparing\nthe modern definition of “default” in Black’s Legal\nDictionary to the definition in the operative version of\nthat dictionary when the FAA was passed reveals a\nmeaning that has remained constant. Compare\nBlack’s Law Dictionary (11th ed. 2019) (“[t]he\nomission or failure to perform a legal or contractual\nduty”), with Black’s Law Dictionary (2nd ed. 1910)\n(“The omission or failure to fulfill a duty, observe a\npromise, discharge an obligation, or perform an\nagreement.”).\n That definition is consistent with the way this\nCourt used “default” in the years leading up to the\nFAA’s enactment: “Default” then, as it does now,\nmeant the neglect or failure to perform a contractual\nor statutory duty, without regard to how that failure\nto perform affected others. See, e.g., Aikins v.\nKingbury, 247 U.S. 484, 489 (1918) (holding failure to\nmake contractually required payments put a party “in\ndefault” and describing that default as “abandonment\nof the contract”); United States v. U.S. Fid. & Guar.\nCo., 236 U.S. 512, 523-24 (1915) (government\ncontractor’s “default” was “complete” where he failed\nto perform contractual duties); Clews v. Jamieson,\n182 U.S. 461, 465 (1901) (analyzing stock exchange\nrules that discussed “neglect to fulfil [a] contract” and\n 40\n\ndescribing such neglect as a “default”); Providence\nSteam-Engine Co. v. Hubbard, 101 U.S. 188, 194-95\n(1879) (discussing a Connecticut statute that made\ncorporate officers liable if they “neglected or refused”\nto file stock certificates with the town clerk, and\nrepeatedly referring to failure to comply with the\nstatute as a “default”).15\n Moreover, default on a contract created an\n“absolute” liability that could not be excused. Hicks v.\nGuinness, 269 U.S. 71, 81 (1925) (declining to excuse\ndefaulting party from paying interest during\nwartime, explaining that when contractual “liability\nis incurred by wrong or default it is absolute”); see\nKlein v. N.Y. Life Ins. Co., 104 U.S. 88, 89, 91 (1881)\n(enforcing life insurance policy term stating the policy\nwould be revoked if the insured defaulted on any\npremium payment even though the dying insured was\ntoo ill to make the final payment and the beneficiary\ndid not know the insurance policy existed). And as\nrelevant to the situation where one party first chooses\nto litigate in court and later demands arbitration,\nspecific performance was not available in 1925 as a\ncontractual remedy to parties who were themselves in\ndefault. James Webster Eaton, Handbook of Equity\nJurisprudence § 279 (2d ed. 1923) (“a vendee, who has\n\n 15 Other legal dictionaries from that time period are in accord\n\nwith this Court and with Black’s. Bouvier’s Law Dictionary and\nConcise Encyclopedia 814 (Francis Rawle ed., 8th ed. 1914)\n(“[t]he non-performance of a duty, whether arising under a\ncontract or otherwise”); A Concise Legal Dictionary 145 (Charles\nE. Chadman ed., 1909) (“Omission of what ought to be done. To\nallow judgment to be taken because of some neglect or failure to\nappear or answer.”); Dictionary of Terms and Phrases Used in\nAmerican or English Jurisprudence 356 (Benjamin Vaughan\nAbbott ed., 1879) (“[t]he neglect or omission of a duty”).\n 41\n\nonce refused to perform his part of the contract by\npaying an installment of the purchase money, may\nnot subsequently enforce performance against the\nvendor”).\n None of the legal definitions of “default” in use\nduring the years leading up to the FAA’s enactment,\nnor the contemporaneous judicial opinions discussing\nthe term, mention anything about prejudice being\nnecessary to establish a default. Thus, those courts\nthat have looked to § 3’s “default” language as the\nsource of the prejudice requirement for arbitration\nwaiver were engaging in some very creative statutory\nconstruction indeed. If anything, the standard for\ndefault in 1925 was more lenient than the standard\nfor waiver, as the former only required a failure to\nperform a contractual obligation while the latter\nrequired an abandonment of a right that was both\nknowing and intentional. See Clark v. West, 193 N.Y.\n349, 360 (1908).\n The contemporary legal definition of “default” is\nconsistent with the way it was viewed in 1925: “The\nomission or failure to perform a legal or contractual\nduty[.]” Black’s Law Dictionary (11th ed. 2019). And\nin other rules and statutes besides the FAA, the term\n“default” refers to a failure to perform an obligation,\nwithout regard to any harm or prejudice caused by\nthat failure.\n For example, Federal Rule of Civil Procedure 55\nallows a “default” to be entered by a clerk in federal\ncourt when “a party against whom a judgment for\naffirmative relief is sought has failed to plead or\notherwise defend” the action against them. Fed. R.\nCiv. P. 55(a). No showing of prejudice to the non-\ndefaulting party is required; though the rule\n 42\n\nmentions an affidavit, all that affidavit must “show[]”\nis the defaulting party’s “failure.” Id.\n Another common type of default is a failure to\nhonor an obligation of indebtedness by making\npayments when due. Congress has used the term in\nthis context, e.g., 38 U.S.C. § 3732, and has even\ndefined it in terms of the precise amount of time by\nwhich a payment is late. 20 U.S.C. § 1087bb(g)(2) (“a\n[federal student] loan shall be considered to be in\ndefault” if an installment payment is more than 240\nor 270 days late, depending on the repayment\nschedule, or if the borrower “fails . . . to comply with\nother terms of the promissory note”). This definition\ncontemplates that default will be accomplished\nunilaterally, based on the borrower’s failure and\nnothing more.\n Of course, not every failure to meet the obligations\nof a contract involves failing to pay money when due,\nand Congress referred to such nonmonetary\n“defaults” in a provision of the bankruptcy code\nconcerning the assumption of unexpired leases and\nexecutory contracts by the bankruptcy trustee. 11\nU.S.C. § 365(b)(2)(D) (referring to “a default arising\nfrom any failure by the debtor to perform\nnonmonetary obligations” under the contract); In re\nBankVest Capital Corp., 360 F.3d 291, 294-95 (1st\nCir. 2004) (analyzing this provision in case involving\n“non-monetary default” of failing to deliver computer\nequipment when due under terms of lease).\n To be sure, the provisions of the Bankruptcy Code\nat issue in BankVest concerned whether, and how,\ndefaults can be cured, a concept focused on harm that\ndefaults cause to others. See also 2 L. Distressed Real\nEst. § 15:20 (2021) (discussing contractual right to\n 43\n\ncure default on mortgage prior to foreclosure). But\nsuch discussions of cure take as a given that a default\nhas occurred and concern what can be done in its\naftermath; they have nothing to do with what must be\nshown to establish that a default has occurred in the\nfirst place. That antecedent question, now as in 1925,\nconcerned only the actions of the defaulting party.\n ii. Other Provisions of the FAA Confirm\n that There Is No textual Basis for a\n Prejudice Requirement.\n Looking beyond § 3 to the statute as a whole only\nstrengthens the case against an FAA-based prejudice\nrequirement for waiver of the right to arbitrate. For\none thing, a treasure trove of clues to what the FAA’s\nenacting Congress meant by “default” can be found in\nthe very next section of the statute, which uses the\nterm five times, twice in the same phrase, “default in\nproceeding” that appears in § 3. In that latter section\nthe phrase is defined to mean “failure to comply” or\n“failure, neglect or refusal to perform.” 9 U.S.C. § 4.\nThese meanings, which are consistent with the\nordinary meaning of “default” in 1925, should be\napplied to § 3’s use of the term as well, for “identical\nwords and phrases within the same statute should\nnormally be given the same meaning[.]” Arthur\nAndersen, 556 U.S. at 630 n.4.\n Section 4 allows “[a] party aggrieved by the alleged\nfailure, neglect, or refusal of another to arbitrate\nunder a written agreement for arbitration” to petition\nany federal court to compel that other party to\narbitrate. 9 U.S.C. § 4. Before a court will do so,\nhowever, it must answer two threshold questions: was\na written agreement to arbitrate made, and is there\n“a default in proceeding thereunder?” Id.\n 44\n\n Before Congress starts using that five-word\nphrase, however, it twice uses slightly different\nformulations, each time combining them with the\nother threshold question courts must answer before\ncompelling arbitration, about the making of the\nagreement to arbitrate. See id. (“The court shall hear\nthe parties, and upon being satisfied that the making\nof the agreement for arbitration or the failure to\ncomply therewith is not in issue[.]” “If the making of\nthe arbitration agreement or the failure, neglect, or\nrefusal to perform the same be in issue[.]”).\n These repeated pairings make clear that “default\nin proceeding,” “failure to comply” with the\narbitration agreement, and “failure, neglect, or\nrefusal to perform” the arbitration agreement all\nmean the same thing under § 4.\n In accordance with the presumption that “when\nCongress uses a term in multiple places within a\nsingle statute, the term bears a consistent meaning\nthroughout[,]” Azar v. Allina Health Servs., 139 S. Ct.\n1804, 1812 (2019), the term “default in proceeding\nwith such arbitration” in § 3 should be understood to\nmean “failure, neglect or refusal to proceed with the\narbitration.”16 Thus, Congress gave courts applying\n§ 3 of the FAA a straightforward question to answer,\ndivorced from any considerations of prejudice or\ndetrimental reliance: Has the applicant for the § 3\n\n 16 Of course, in § 4 the “party alleged to be in default” is not\n\nthe same party bringing the motion to compel, whereas in § 3 the\ndefault inquiry is being asked about “the applicant for the stay.”\nBut, as this Court has observed, “it is inconceivable that\nCongress intended the rule to differ depending upon” whether a\nstay under § 3 or specific performance under § 4 is being sought.\nPrima Paint, 388 U.S. at 404.\n 45\n\nstay failed, neglected or refused to proceed with the\narbitration? If the answer is yes, the stay should not\nbe granted.\n But even when the waiver question arises in state\ncourt, or on a motion to compel arbitration under § 4\nwhere the “default” signposts don’t point the way so\nclearly, the prejudice requirement is just as atextual.\nThat is because nothing in the details of §§ 3 or 4,\nwhich are about the procedures used in court when a\nparty exercises their right to enforce an arbitration\nagreement, purports to alter the substantive contours\nof that enforcement right. Arthur Andersen, 556 U.S.\nat 630 (“[section] 3 adds no substantive restriction to\n§ 2’s enforceability mandate”); Buckeye Check\nCashing, 546 U.S. at 447 (section 4 implements § 2’s\n“substantive command that arbitration agreements\nbe treated like all other contracts”). Nothing in the\ntext of either of those procedural provisions\nsupersedes the statute’s core equal-treatment\nprinciple. And as discussed in Part II.A, supra,\nrequiring prejudice to prove a waiver of an arbitration\nagreement, or “default in proceeding” with the\narbitration that agreement authorizes, when a\nshowing of prejudice is not required to prove waiver\nor default in other contractual contexts, is a flagrant\nviolation of that equal-treatment principle.\nIII. THE HEIGHTENED STANDARD FOR\n PROVING WAIVER THAT MANY\n COURTS REQUIRE INTERFERES WITH\n FUNDAMENTAL ATTRIBUTES OF\n ARBITRATION WHILE ENCOURAGING\n GAMESMANSHIP AND DELAY.\n The federal and state courts that require prejudice\nas an element of arbitration waiver are wrong to do so\n 46\n\nbecause neither the plain language nor the structure\nof the FAA supports such a requirement. What’s\nmore, by raising the burden of proof the party\nasserting waiver must meet, these courts strip\narbitration of its key advantages—speed and\nefficiency—and incentivize the same sort of\ngamesmanship that Congress enacted the FAA to\nprevent.\n Congress passed the FAA so that courts’ historical\nhostility towards private arbitration would no longer\ndeprive contracting parties of “the promise of quicker,\nmore informal, and often cheaper resolutions” that\narbitration “had to offer.” Epic Systems, 138 S. Ct.\nat1621. See also H.R. Rep. No. 96, 68th Cong., 1st\nSess., 2 (1924) (“the costliness and delays of litigation\n. . . can be largely eliminated by” making arbitration\nagreements as valid and enforceable as other\ncontracts). Indeed, this Court declared it an\n“unmistakably clear congressional purpose” of the\nFAA that “the arbitration procedure, when selected\nby the parties to a contract, be speedy and not subject\nto delay and obstruction in the courts.” Prima Paint,\n388 U.S. at 404; see also Concepcion, 563 U.S. at 344\n(“The overarching purpose of the FAA, evident in the\ntext of §§ 2, 3, and 4, is to ensure the enforcement of\narbitration agreements according to their terms so as\nto facilitate streamlined proceedings.”); Preston v.\nFerrer, 552 U.S. 346, 357-58 (2008) (“A prime\nobjective of an agreement to arbitrate is to achieve\n‘streamlined proceedings and expeditious results,’” an\nobjective that would be “frustrated” by allowing a\ndispute to be heard by a state agency in the first\ninstance.).\n 47\n\n The majority rule requiring proof of prejudice\nbefore a waiver of the right to arbitrate will be found\nundermines both arbitration’s general promise of\nspeed and cost savings and the more specific\nCongressional purpose articulated in Prima Paint of\nstreamlining pre-arbitration judicial skirmishes.\n First, instead of an inquiry into only the allegedly\nwaiving party’s conduct and whether it was\ninconsistent with an intent to arbitrate, courts\nrequiring a showing of prejudice must wrangle with a\nhost of additional questions. For example, can the\nparty asserting waiver demonstrate that the allegedly\nwaiving party could not have obtained the same\ndiscovery in arbitration? If not, a prejudice finding\nmay be impossible. See Patten Grading & Paving, Inc.\nv. Skanska USA Bldg., Inc., 380 F.3d 200, 207 (4th\nCir. 2004) (no prejudice where party could not prove\ndiscovery its adversary obtained in court was not also\navailable in arbitration). Or can the party asserting\nwaiver prove that the allegedly waiving party’s\ndiscovery requests pertained only to arbitrable claims\n(making them presumptively prejudicial) and were\nnot also relevant to non-arbitrable claims? See Rush\nv. Oppenheimer & Co., 779 F.2d 885, 889 (2d Cir.\n1985) (no prejudice where party could not “point to\nany specific discovery” that was not also relevant to\narguably non-arbitrable claims).\n Second, a high bar for waiver requiring prejudice\nincentivizes gamesmanship and delay by allowing\nparties to test the judicial waters before seeking to\narbitrate. Congress passed the FAA because when\narbitration contracts were revocable at will, parties\ncould proceed with arbitration nearly to the point of a\nfinal decision and then change their mind at the last\n 48\n\nminute if they worried the arbitrator might not rule\nin their favor, or if they simply believed further delay\nwould serve their interests. See Arbitration of\nInterstate Commercial Disputes: Joint Hearings on S.\n1005 and H.R. 646 Before the S. Comm. on the\nJudiciary and the H. Comm. on the Judiciary, 68th\nCong. 33, 35 (1924) (written statement of Julius\nHenry Cohen) (explaining need for the FAA because\nnothing prevented a party from walking away from\narbitration whenever that party “sees an advantage\nin the delay and trouble to which his opponent will be\nput to enforce his rights through the courts”).\n The widespread adoption of a heightened bar for\nwaiving the right to arbitrate under the FAA has\ncreated similarly perverse incentives towards\ngamesmanship and delay. The only difference is that\nnow the courts have become the testing ground where\nparties who could demand arbitration, but who choose\nnot to, first try out their legal theories and defenses\nand learn the strengths and weaknesses of their\nadversary’s case—all the while holding a demand for\narbitration in reserve like an ace in the hole to be\nplayed at what the party with the arbitration ace\nperceives to be the most opportune time.\n Often that time comes when the court rules\nagainst that party on a motion or when settlement\nefforts fall through. Here, for example, Respondent did\nnot seek to arbitrate until after it lost its motion to\ndismiss and after efforts to settle Ms. Claimant’s claims\non a nationwide basis were unsuccessful. Perhaps\nRespondent reasoned that if it could not settle away the\ncollective claims, it would do better by arbitrating Ms.\nClaimant’s claims individually.\n 49\n\n Sometimes that time comes months or years into\nlitigation and after the party belatedly demanding\narbitration has filed suit in court itself or used the\ncourt’s procedures to seek discovery. See\nMicroStrategy, Inc. v. Lauricia, 268 F.3d 244, 246-48\n(4th Cir. 2001).\n And sometimes courts will find that these\nsubstantial litigation activities prejudiced the other\nparty and satisfied the enhanced waiver threshold for\narbitration—but not always. See Rush, 779 F.2d at\n889-90 (finding no prejudice despite defendants\nhaving previously filed motion to dismiss and\nacknowledging that they only sought arbitration\nwhen district court vacated its order granting that\nmotion, because until that point they “believed that\nthey were as well off in district court as they would\nhave been in arbitration”). Thus, parties have\npowerful incentives to follow the strategy of the\ndefendants in Rush, pursuing a litigation path unless\nand until an adverse development there prompts\nthem to activate the arbitral escape hatch, counting\non the high standard of waiver to cushion their\nlanding in the backup arbitral forum.\n Even courts that decry this gamesmanship have\nnonetheless declined to find waiver, concluding that\nthe high bar for arbitration waiver leaves them no\nchoice. In Walker v. J.C. Bradford & Co., 938 F.2d\n575, 577 (5th Cir. 1991), the court spoke in open\nfrustration of “parties who use federal courts to\nadvance their causes and then seek to finish their\nsuits in the alternate fora that they could have\nproceeded to immediately.” Yet the Fifth Circuit held\nit was “compelled” by circuit precedent, particularly\n 50\n\n“its teaching on prejudice[,]” to find there had been no\nwaiver of the right to demand arbitration. Id.\n The FAA was enacted precisely to stop the\nbehavior that raised the Walker court’s ire: litigants’\nattempts to “switch judicial horses in midstream[.]”\nId. Allowing such forum-shopping out of a misplaced\nsense of fidelity to the FAA is ironic in the extreme.\n Indeed, incentivizing parties to pursue claims in\nlitigation before seeking to arbitrate “interferes with\nfundamental attributes of arbitration and thus\ncreates a scheme inconsistent with the FAA.”\nConcepcion, 563 U.S. at 344. That is because nothing\nabout allowing a party to litigate before seeking to\ncompel arbitration fulfills the FAA’s “promise of\nquicker, more informal, and often cheaper\nresolutions.” Epic Systems, 138 S. Ct. at 1621. Nor\ndoes it work toward the “unmistakably clear\nCongressional purpose” of the FAA that “the\narbitration procedure, when selected by the parties to\na contract, be speedy and not subject to delay and\nobstruction in the courts.” Prima Paint, 388 U.S. at\n404. It does exactly the opposite. As this Court\nexplained in the context of whether parties could have\ntheir dispute heard in a state administrative\nproceeding before going to arbitration, such\nexhaustion would “frustrate[ ]” the objective of\narbitration agreements to “achieve ‘streamlined\nproceedings and expeditious results.’” Concepcion,\n563 U.S. at 346 (quoting Preston, 552 U.S. at 357-58).\n Thus, at the end of the day, the prejudice\nrequirement for waiver is unsupported by the text of\nthe FAA, inconsistent with the Act’s admonition that\narbitration agreements be treated like other\ncontracts, and works against the overarching\n 51\n\npurposes of the FAA. This Court can and should\ninstruct the courts that require prejudice to prove\narbitration waiver that they no longer need to reward\n“poor judgment” or “poor foresight” based on a\nmisguided view of what the FAA requires. Walker,\n938 F.2d at 577.\n CONCLUSION\n The Court should reverse the decision of the\nUnited States Court of Appeals for the Eighth Circuit.", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n This case began when Petitioner Claimant\ndisregarded the parties’ agreement to resolve any\ndispute between them via “binding arbitration,\ninstead of going to court.” She now tries to use her\ndisregard of the parties’ agreement as a sword,\nclaiming that her federal-court filing triggered an\nunwritten and extreme use-it-or-lose-it rule that\nrequired Respondent Respondent to demand arbitration\nat “the earliest feasible moment” or lose its right to\narbitrate without regard to whether anyone was\nprejudiced. While one can imagine such a punitive\nrule being imposed by a hypothetical Federal Anti-\nArbitration Act, it has no grounding in the Federal\nArbitration Act (FAA) or even the state-law “waiver”\nprinciples Claimant seeks to invoke. In fact, the FAA\nnot only favors arbitration, but specifically provides\nthat courts “shall” stay this kind of arbitration-\nagreement-defying litigation unless the party seeking\nto arbitrate is “in default.” Moreover, nothing else in\nthe FAA or state law causes a party to forever forfeit\nimportant contractual rights absent disregard of clear\ndeadlines or prejudice to others. Instead, the\nmanufactured rule Claimant advances is exactly the\nkind of punitive, made-to-defeat-arbitration rule that\nthe FAA and this Court’s cases categorically reject.\n Claimant’s argument rests on a syllogism: (1)\nUnder state contract law, contractual rights can be\n“waived” without regard to prejudice; (2) Section 2 of\nthe FAA and AT&T Mobility LLC v. Concepcion, 563\nU.S. 333 (2011), require courts to apply a strict equal-\nfooting doctrine treating arbitration agreements no\nmore favorably than other contracts; and (3) the FAA\n 2\n\ntherefore requires courts to find a party who has\nparticipated in any meaningful respect in litigation\nfiled in derogation of an arbitration agreement to have\nwaived its contractual right to arbitrate without\nregard to prejudice. That syllogism is flawed at every\nturn.\n First, Claimant starts on the wrong foot by focusing\non Section 2 of the FAA. There is a provision of the\nFAA that specifically addresses when litigation filed\nby a party to an arbitration agreement shall be stayed\nin favor of the agreed-upon arbitration, and it is not\nSection 2. Rather, Section 3 addresses this precise\nquestion and provides that courts “shall” stay the\nlitigation in favor of agreed-upon arbitration unless\nthe party seeking to arbitrate is “in default.” In both\n1925 and today, a party is not “in default” absent a\nviolation of some clear contractual or court-imposed\ndeadline, or at least prejudice to others. But there is\nnone of that here. If the parties’ agreement provided\nthat a right to arbitrate must be asserted within 30\ndays of the initiation of litigation, then Respondent\nwould be in default if it waited 31 days. But far from\nimposing any such deadline, the arbitration\nagreement here incorporates rules that expressly\nprovide that “[n]o judicial proceeding by a party\nrelating to the subject matter of the arbitration shall\nbe deemed a waiver of the party’s right to arbitrate.”\nRule 42(a), American Arbitration Association,\nEmployment Arbitration Rules and Mediation\nProcedures (2017) (“AAA Rules”). There is nothing\napproaching a default here, so Section 3 and its stay-\nabsent-default direction provide a clear answer and a\nsufficient basis to affirm.\n 3\n\n Claimant fares no better under Section 2. Her first\nproblem is that neither Section 2 nor Concepcion\nimposes the kind of strict equal-treatment principle—\nequally offended by arbitration-specific rules that\nfavor or disfavor arbitration—on which her argument\nrests. To the contrary, the text of Section 2, like most\nof the FAA, is decidedly pro-arbitration. It requires\nenforcement of arbitration agreements according to\ntheir terms absent a generally applicable state-law\nrule for invalidating contracts. Nothing in Section 2\nauthorizes the use of contract-law analogies to find\nthat a party waited (or litigated) too long before\ninvoking its rights under a valid arbitration\nagreement, and its text is not offended if an\narbitration agreement is treated more favorably than\nsome other contract not specifically protected by\nfederal law. Concepcion is certainly not to the\ncontrary. It invoked the federal policy favoring\narbitration and invalidated a state law that\nimproperly disfavored arbitration.\n But Claimant’s Section 2 problems do not end there.\nThe major premise of her syllogism—that there is a\nnear-uniform state-law practice of finding waiver of\ncontractual rights via litigation conduct or delay\nwithout any showing of prejudice—is simply wrong\nand based on little more than word play. As this Court\nhas recognized, waiver is a word of multiple meanings\nand is sometimes used when the more accurate\nconcept is forfeiture or estoppel. See, e.g., Kontrick v.\nRyan, 540 U.S. 443, 458 n.13 (2004). There are certain\nforms of waiver not present here—like an explicit\nwritten relinquishment of a known right or conduct\nabsolutely irreconcilable with later invocation of a\nright—where prejudice is irrelevant. But when the\n 4\n\nargument is that the other side has waited—or\nlitigated—too long before asserting a right in the\nabsence of a clear deadline, the relevant concepts are\nlaches and estoppel, both of which require a showing\nof prejudice. Worse still for Claimant, even when there\nis a finding of “waiver,” the law in Iowa and almost\neverywhere else allows a party to retract such a\nwaiver absent detrimental reliance by the other side.\nIn short, all state-law roads lead to a prejudice\nrequirement, and no state finds that important\ncontractual rights can be lost forever absent violation\nof a clear deadline or prejudice to another party.\n In the end, what Claimant seeks is precisely the\nkind of artificial, made-to-defeat-arbitration rule that\nthe FAA was enacted to countermand and that this\nCourt has repeatedly rejected. She seeks to justify her\nrule as necessary to counteract gamesmanship, but a\nprejudice requirement is perfectly tailored to avoiding\nsuch misconduct. A party that suffers no prejudice is\nsimply not a victim of gamesmanship, especially when\nthey themselves have initiated litigation after\nagreeing to resolve their disputes through arbitration\ninstead. Claimant, by contrast, would impose a punitive\nrule that deprives parties of their agreed-upon right to\narbitrate absent any prejudice (or violation of any\nclear ex ante deadline). The choice between those rules\nis not close. The Court should affirm and vindicate the\nFAA.\n STATEMENT OF THE CASE\n A. Statutory Background\n Congress enacted the FAA in 1925 to “reverse the\nlongstanding judicial hostility to arbitration.” Green\nTree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 89\n 5\n\n(2000). The FAA counteracted that hostility by\nestablishing a “federal policy favoring arbitration\nagreements” and displacing “substantive or\nprocedural policies to the contrary.” Moses H. Cone\nMem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24\n(1983). Multiple provisions of the FAA promote “the\nenforcement of arbitration agreements according to\ntheir terms,” and the FAA preempts state rules that\nevince hostility to arbitration and frustrate Congress’\nobjective of facilitating arbitration according to the\nterms the parties themselves embraced. Concepcion,\n563 U.S. at 344.\n For example, Section 2 of the FAA declares that\nagreements to arbitrate disputes “shall be valid,\nirrevocable, and enforceable, save upon such grounds\nas exist at law or in equity for the revocation of any\ncontract.” 9 U.S.C. §2. Three things are notable about\nthis provision. First, while Claimant describes Section\n2 as embracing a broad “equal-footing” principle, its\ntext does not embrace a pure equal-treatment\nprinciple that is equally offended by discrimination\nagainst arbitration and by “reverse discrimination” in\nits favor. Instead, consistent with Congress’ aim of\ncounteracting judicial hostility to arbitration, the\nprimary thrust of Section 2 is to require enforcement\nof arbitration agreements unless the saving clause is\nsatisfied. When a court enforces an arbitration\nagreement, even when some other contract might go\nunenforced, it does not run afoul of Section 2.\n Second, Section 2 addresses arguments that go to\nthe validity, enforceability, and revocability of the\narbitration agreement itself. Section 2 does not\nspecifically address the circumstances in which a\n 6\n\ncourt should stay litigation pending arbitration under\na valid and applicable arbitration agreement or deny\nsuch relief because a party delayed in invoking the\nagreement. That subject is specifically addressed by\nSection 3.\n Third, Section 2’s saving clause is textually\nnarrower than its principal pro-enforcement clause.\nWhile the saving clause preserves generally applicable\ngrounds “for the revocation of any contract,” the\nprincipal clause addresses doctrines of contractual\nenforcement and validity as well and provides the\ngeneral rule that arbitration agreements “shall be\nvalid, irrevocable, and enforceable.” Id. (emphasis\nadded).\n Other FAA provisions reflect the same federal\npolicy favoring the enforcement of arbitration\nagreements according to their terms. Section 3\ngenerally requires courts to stay litigation of\narbitrable claims “in accordance with the terms of the\n[arbitration] agreement.” 9 U.S.C. §3. Specifically, it\nprovides that if a court in which litigation is brought\nis “satisfied that the issue involved in such suit or\nproceeding is referable to arbitration under such an\nagreement,” then it “shall on application of one of the\nparties stay the trial of the action until such\narbitration has been had in accordance with the terms\nof the agreement, providing the applicant for the stay\nis not in default in proceeding with such arbitration.”\nId.\n Similarly, even when litigation is not pending,\nSection 4 emphasizes the court’s duty to compel\narbitration “in accordance with the terms of the\n[arbitration] agreement.” 9 U.S.C. §4. Under Section\n 7\n\n4, “[a] party aggrieved by the alleged failure, neglect,\nor refusal of another to arbitrate under a written\nagreement for arbitration may petition any United\nStates district court” that would have jurisdiction over\nthe underlying dispute “for an order directing that\nsuch arbitration proceed in the manner provided for in\nsuch agreement.” Id. As long as the court is “satisfied\nthat the making of the agreement for arbitration or\nthe failure to comply therewith is not in issue,” it\n“shall” grant the petition. Id. Together, these\nprovisions embody an overarching federal policy “to\nensure that private agreements to arbitrate are\nenforced according to their terms.” Stolt-Nielsen S.A.\nv. AnimalFeeds Int’l Corp., 559 U.S. 662, 682 (2010)\n(emphasis added).\n B. Factual Background\n Respondent is a Taco Bell franchisee. Pet.App.13.\nFor a few months in 2015, Claimant worked as a crew\nmember at a Taco Bell operated by Respondent in\nOsceola, Iowa. Pet.App.13. When Claimant applied for\nthe job, she completed and signed an employment\napplication in which she agreed to “use confidential\nbinding arbitration, instead of going to court, for any\nclaims that arise” between her and Respondent. JA77.\nClaimant further agreed that “the then prevailing\nemployment dispute resolution rules of the American\nArbitration Association [“AAA”]” would apply, “except\nthat Taco Bell will pay the arbitrator’s fees ... [and]\nthat portion of the arbitration filing fee in excess of the\nsimilar court filing fee.” JA78. As relevant here, the\nAAA’s employment dispute rules expressly provide\nthat “[n]o judicial proceeding by a party relating to the\nsubject matter of the arbitration shall be deemed a\n 8\n\nwaiver of the party’s right to arbitrate.” AAA Rules R.\n42(a).\n After her brief employment with Respondent ended,\nand despite her agreement to “use confidential binding\narbitration, instead of going to court, for any claims,”\nJA77 (emphasis added), Claimant filed a putative\nnationwide collective action in federal court alleging\nthat Respondent violated the Fair Labor Standards Act\n(FLSA). She sought to represent a collective of\n“herself and all other Crew Members and other hourly\nemployees who have worked for Respondent at any\ntime” over the previous three years. JA14.\n Claimant’s allegations—indeed, her entire\ncomplaint—were nearly identical to the allegations\nand complaint in a collective action filed two years\nearlier in the Eastern District of Michigan, Wood v.\nRespondent, No. 16-cv-13598. When Claimant filed\nher complaint, the court in Wood had already certified\na conditional class, and the Wood parties had already\nconducted substantial discovery. Arguing that\nClaimant’s lawsuit was duplicative of the Wood action,\nRespondent timely moved to stay or dismiss the case\nwithout prejudice on procedural grounds under the\nfirst-to-file rule. Pet.App.2. Nearly four months later,\nduring which time the only activity involved pro hac\nvice motions, JA3-4, the district court denied\nRespondent’s motion, JA44-55.\n Respondent then filed its answer. 1 Before anything\nelse happened, in an effort to resolve the matter\n\n 1 That answer did not include arbitration as a defense, but\n\narbitration is not among the handful of defenses, such as personal\njurisdiction, that the Federal Rules specify must be included in\nan answer. See Fed. R. Civ. P. 12(h)(1). As to other defenses, the\n 9\n\nwithout litigation or arbitration, Respondent agreed to\ninclude Claimant in a previously scheduled private\nmediation with the Wood plaintiffs. That joint\nmediation resulted in a settlement of the Wood action,\nbut not Claimant’s case. Pet.App.2. Just three weeks\nlater, with adversarial proceedings in some forum now\nseemingly unavoidable, and this Court having\nforeclosed any possibility that Respondent could be\nconsigned to collective, rather than bilateral,\narbitration by issuing its decision in Lamps Plus, Inc.\nv. Varela, 139 S.Ct. 1407 (2019), Respondent moved\nunder Sections 3 and 4 of the FAA for an order\ncompelling arbitration and either staying or\ndismissing the litigation. JA75-76. At that point, no\nproposed scheduling order had been filed, no initial\nscheduling conference had taken place, no discovery\nhad been conducted, and no merits-related motions\nhad been filed.\n Claimant opposed that motion. She did not argue\nthat the arbitration agreement was invalid, revocable,\nor inapplicable. Nor did she argue that Respondent had\nmissed some contractual or court-imposed deadline for\ninvoking its right to arbitrate. Nor did she argue that,\nunder generally applicable Iowa contract law,\nRespondent had waived its right to invoke arbitration or\nwas estopped or barred by laches from invoking the\nright. Instead, she resisted arbitration solely by\ninvoking Eighth Circuit law and arguing that\nRespondent “waived its right to compel arbitration by its\nactions of participating in this lawsuit and its delay in\nraising the issue of arbitration.” Pl’s.Resp.4 (May 17,\n\nFederal Rules provide that leave to amend shall be freely given.\nSee Fed. R. Civ. P. 15.\n 10\n\n2019). While Claimant argued that Respondent forfeited\nits right to arbitrate even in the absence of prejudice,\nshe also claimed that she was prejudiced by the delay\nbecause her counsel spent time reviewing emails that\nRespondent produced in Wood (but not in this case), and\nbecause she and the Wood plaintiffs jointly hired an\nexpert to analyze a spreadsheet of payroll information\nthat Respondent prepared to facilitate the mediation.\nId. at 6-7. The district court denied Respondent’s\nmotion, ruling that Respondent “acted inconsistently\nwith its right to arbitrate” and that those actions\nresulted in “a waste of effort that would not have been\nnecessary, or a reasonable choice, had Respondent\nasserted its right to compel arbitration promptly after\nthe lawsuit was filed.” Pet.App.29, 33.\n The Eighth Circuit reversed. In a 2-1 decision, the\ncourt held that “Respondent did not waive its\ncontractual right to invoke arbitration.” Pet.App.6.\nThe court explained that under circuit law “[a] party\nwaives its right to arbitration if it: (1) knew of an\nexisting right to arbitration; (2) acted inconsistently\nwith that right; and (3) prejudiced the other party by\nthese inconsistent acts.” Pet.App.3. The first element\nwas undisputed. Id. Addressing the second element,\nthe court “question[ed]” the district court’s\ndetermination that Respondent acted inconsistently\nwith its right to arbitrate, noting that “although there\nwas an eight-month delay, the parties spent very little\nof this time actively litigating and no time on the\nmerits of the case.” Pet.App.4-5.\n Turning to prejudice, the court explained that\n“[p]rejudice may result from lost evidence, duplication\nof efforts, use of discovery methods unavailable in\n 11\n\narbitration, or litigation of substantial issues going to\nthe merits.” Pet.App.5. The court found none of that\nhere. Claimant failed to show prejudice, the court\nexplained, because “[f]our months of the delay entailed\nthe parties waiting for disposition of Respondent’s\nmotion to dismiss” on non-merits grounds, “[n]o\ndiscovery was conducted,” and “the record lacks any\nevidence that Claimant would have to duplicate her\nefforts during arbitration” because “most of Claimant’s\nwork focused on the quasi jurisdictional issue, not the\nmerits.” Pet.App.6. The court accordingly concluded\nthat “Respondent did not waive its contractual right to\ninvoke arbitration” and reversed. Id. Judge Colloton\ndissented, explaining that he would have found\nClaimant prejudiced and suggesting that the prejudice\nrequirement, while entrenched in Eighth Circuit\nprecedent, was “debatable.” Pet.App.10.\n Claimant filed a petition for certiorari that did not\nseek review of the Eighth Circuit’s case-specific\nfinding that she failed to prove prejudice, but rather\ntook issue only with the Eighth Circuit’s\n“requirement” that she “prove prejudice.” Pet.i.\n SUMMARY OF ARGUMENT\n Section 3 of the FAA specifically addresses\nmotions to stay litigation in favor of agreed-upon\narbitration, and it provides a clear, pro-arbitration\ndirection to courts: Grant the stay unless the party\nseeking to arbitrate is “in default.” While the FAA\ndoes not define “in default,” in 1925 and today, a party\nis not “in default” unless it violates a clear legal rule\nor causes prejudice to another. If the arbitration\nagreement or the Federal Rules gave Respondent only\n30 days after a court filing to invoke arbitration and\n 12\n\nRespondent waited 31 days, it would be in default. But\nhere, the agreement and Federal Rules impose no\ndeadline, and the incorporated arbitration rules\nprovide that “judicial proceedings” do not waive the\nright to arbitrate. There is thus no basis to find\ndefault here, and Section 3’s clear stay-absent-default\ndirection provides a sufficient basis to affirm.\n Claimant fares no better under Section 2 of the\nFAA. Section 2 is no less “[i]n line with” the “‘liberal\nfederal policy favoring arbitration’” than the rest of\nthe Act. Concepcion, 563 U.S. at 339 (quoting Moses\nH. Cone, 460 U.S. at 24). Section 2 and Concepcion set\na floor, not a ceiling; they are unconcerned if\narbitration agreements are treated more favorably\nthan other contracts. And Section 2 does not address\nefforts to avoid compliance with a valid arbitration\nagreement. But even if the proper test for whether a\nparty has waited (or litigated) too long before invoking\nits right to arbitrate lay in state-law saved from\npreemption under Section 2, rather than in a uniform\nfederal rule under Section 3, Claimant still could not\njustify a rule that requires arbitration rights to be\nasserted at the earliest feasible juncture without\nregard to whether anyone is prejudiced by delay.\nWhen a party has not expressly and intentionally\nrelinquished a contractual right, but rather has\nsimply waited (or litigated) too long before invoking it,\nthe relevant state-law doctrines are laches and\nestoppel, both of which require a showing of prejudice.\nAnd even when a party has unilaterally waived a\ncontractual right, state law allows the waiver to be\nretracted in the absence of prejudice. In short, all\nstate-law roads lead to prejudice, and no state\nembraces the harsh use-it-as-expeditiously-as-\n 13\n\nfeasible-or-lose-it rule that Claimant advocates. If any\nstate did adopt such a rule, it would be precisely the\nkind of anti-arbitration rule that the equal-footing\ndoctrine protects against.\n A rule that the right to arbitrate is not lost absent\na violation of a clear deadline or prejudice to another\nis supported by the text and policies of the FAA as well\nas common sense. There are multiple reasons—from\npursuing settlement to ascertaining changing\nappellate doctrine—why a party surprised by\nlitigation filed by someone who agreed to settle\ndisputes by “arbitration, instead of going to court”\nmight make some initial defensive court filings before\ninvoking its contractual right to arbitrate. And there\nis no reason the defendant should be put on an\ninvisible clock or subjected to unwritten rules just\nbecause the plaintiff has disregarded the arbitration\nagreement. Claimant asserts that her harsh rule is\nnecessary to prevent “gamesmanship” and promote\nefficiency. But a prejudice requirement is perfectly\ntailored to weed out gamesmanship, while a\nrequirement to file as expeditiously as possible\nwithout regard to prejudice is wildly overinclusive.\nThis Court has already rejected the argument that the\nFAA values efficiency over enforcing the parties’\nagreement as written, and there is nothing efficient\nabout green-lighting a nationwide collective action\nwhen the parties agreed to bilateral arbitration.\n In the end, the choice here is clear. A federal rule\nthat promotes arbitration and enforces the parties’\nagreement absent prejudice is entirely consistent with\nthe FAA and this Court’s precedents. An invented\nstate-law rule that borrows the harshest features of\n 14\n\ninapposite doctrines and finds forfeiture of the\ncontractual and statutory right to arbitrate at the drop\nof a hat has nothing to recommend it. The Court\nshould affirm.\n ARGUMENT\nI. Section 3 Of The FAA Directly Addresses\n The Question Here And Requires\n Affirmance.\n Claimant’s argument rests on the premise that\nwhether a party is entitled to stay litigation in favor\nof agreed-upon arbitration is governed by an equal-\nfooting doctrine derived from Section 2 and this\nCourt’s decision in Concepcion. But she never actually\nexplains why that would be so. In fact, there is a\nprovision in the FAA that specifically addresses the\ncircumstances in which courts should stay litigation in\nfavor of the arbitration the parties agreed to pursue\n“instead of going to court.” That provision is Section\n3, not Section 2. Section 3 provides a clear, uniform,\nfederal-law answer to the question whether litigation\nshould be stayed pending arbitration. It provides that\ncourts “shall” stay the litigation and enforce the\narbitration agreement, unless the party seeking that\nrelief is “in default.” While the FAA does not define\n“in default,” both in 1925 and today, a party is not in\ndefault absent a failure to abide by clear rules, or at\nleast prejudice to the other side. That understanding\nis consistent with the use of default in other provisions\nof the FAA and with the FAA’s “‘liberal federal policy\nfavoring arbitration.’” Concepcion, 563 U.S. at 339\n(quoting Moses H. Cone, 460 U.S. at 24). And that rule\nis sufficient to decide this case and affirm the decision\nbelow.\n 15\n\n A. Section 3 Directs Courts to Stay\n Litigation in Favor of Agreed-Upon\n Arbitration Absent Default.\n This case arises out of Respondent’s application\nunder Section 3 for a stay of litigation and to compel\narbitration under Section 4. Respondent invoked\nSection 3 for a reason: It specifically addresses the\ncircumstances in which courts should stay litigation in\nfavor of agreed-upon arbitration. And Section 3\nprovides one, and only one, ground on which a court\ncan withhold that relief: A court “shall” stay litigation\nat the request of a party to a valid and applicable\narbitration agreement “providing the applicant for the\nstay is not in default in proceeding with such\narbitration.” 9 U.S.C. §3. Thus, under the FAA,\nunless the party seeking to arbitrate is “in default,”\nthe court “shall” stay the litigation in favor of the\nparties’ agreed-upon arbitration.\n Although the more general—and equally pro-\narbitration—text of Section 2 ultimately supplies the\nsame answer, see infra Part II, there is no need to look\nbeyond Section 3, which specifically addresses the\nquestion and provides clear direction: Enter a stay\nabsent default. “It is a commonplace of statutory\nconstruction that the specific governs the general.”\nMorales v. Trans World Airlines, Inc., 504 U.S. 374,\n384-85 (1992); accord Antonin Scalia & Bryan A.\nGarner, Reading Law 183-88 (2012). That is\nparticularly true where, as here, “Congress has\nenacted a comprehensive scheme and has deliberately\ntargeted specific problems with specific solutions.”\nRadLAX Gateway Hotel, LLC v. Amalgamated Bank,\n566 U.S. 639, 645 (2012); see also Int’l Paper Co. v.\n 16\n\nOuellette, 479 U.S. 481, 494 (1987) (“[W]e do not\nbelieve Congress intended to undermine this carefully\ndrawn statute through a general saving clause.”).\nCongress “deliberately targeted” the specific question\nof when to stay litigation in favor of a valid arbitration\nagreement in Section 3, and it provided the “specific\nsolution[]” of directing courts to stay litigation unless\nthe party seeking to arbitrate is “in default.”\n Section 2, by contrast, deals with the distinct\nquestion of whether the arbitration agreement itself is\nvalid, irrevocable, and enforceable. Like Section 3, it\nprovides a broad, pro-arbitration rule, subject only to\na limited proviso. Section 2 provides that arbitration\nagreements are “valid, irrevocable, and enforceable,\nsave upon such grounds as exist at law or in equity for\nthe revocation of any contract.” 9 U.S.C. §2. But\nSection 2 and its saving clause are directed to a\ndifferent question than Section 3’s “in default”\ndirection. An objection to a motion to stay or compel\narbitration based on delay or litigation conduct is not\na ground for rendering a contract invalid or\nunenforceable, let alone for revoking it. Such an\nobjection is a case-specific argument that asks the\ncourt to disregard a concededly valid and enforceable\ncontract because the other side delayed in invoking it.\nThe objection does not call into question the validity of\nthe underlying arbitration agreement or provide any\nbasis for revoking or disregarding it if a subsequent\ndispute arises between the parties. Thus, Section 3\nprovides both the most specific and the most apposite\nbasis on which to decide whether Respondent waited or\nlitigated too long before seeking to stay this litigation\nin favor of agreed-upon arbitration.\n 17\n\n Consistent with that understanding, this Court\nhas previously resolved a litigation-conduct-grounded\nobjection to a Section-3 stay application by reference\nto Section 3 and its “in default” standard, not by\nreference to state-law contract defenses saved by\nSection 2. See Shanferoke Coal & Supply Corp. v.\nWestchester Serv. Corp., 293 U.S. 449, 454 (1935)\n(affirming for “[t]he reasons ... stated in the opinion of\nthe Court of Appeals” decision analyzing issue under\nSection 3), aff’ing 70 F.2d 297 (2d Cir. 1934) (L. Hand,\nJ.). So too has every court of appeals—not just “some”\nor “several” of them, Pet’r.Br.15, 38. While most\nmodern cases now cite established circuit precedent\nwithout referencing any specific FAA provision, every\ncircuit’s test can be traced back to an earlier case that\nrecognized Section 3 as controlling. The decision\nbelow, for example, does not cite any specific FAA\nsection, but circuit precedent traces back to N & D\nFashions, Inc. v. DHJ Indus., Inc., 548 F.2d 722 (8th\nCir. 1976), which expressly invoked Section 3. Id. at\n728. The story is the same in every other circuit. 2\n\n\n 2 See Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 13 (1st Cir.\n\n2005); Shanferoke Coal, 70 F.2d at 299; Ehleiter v. Grapetree\nShores, Inc., 482 F.3d 207, 217-18 (3d Cir. 2007); Carolina\nThrowing Co. v. S&E Novelty Corp., 442 F.2d 329, 330 (4th Cir.\n1971); Tenneco Resins, Inc. v. Davy Int’l, A.G., 770 F.2d 416, 420\n(5th Cir. 1985); JPD, Inc. v. Chronimed Holdings, Inc., 539 F.3d\n388, 393-94 (6th Cir. 2008); Ohio-Sealy Mattress Mfg. Co. v.\nKaplan, 712 F.2d 270, 272-73 (7th Cir. 1983); Shinto Shipping\nCo. v. Fibrex & Shipping Co., 572 F.2d 1328, 1330 (9th Cir. 1978);\nLegal Servs., Inc. v. Cahill, 786 F.3d 1287, 1296 (10th Cir. 2015);\nIvax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1316 (11th\nCir. 2002); Zuckerman Spaeder, LLP v. Auffenberg, 646 F.3d 919,\n921 (D.C. Cir. 2011).\n 18\n\n Claimant identifies no reason to depart from that\nlong-settled consensus at this late date. Not only is it\nsound as a matter of statutory construction, but\ntreating this litigation-conduct-based defense as\ngoverned by Section 3 and its stay-absent-default rule\nhas the considerable virtue of ensuring a uniform\nfederal standard that does not turn on the vagaries of\nany one state’s contract law.\n That makes particularly good sense because the\nconduct that gives rise to the supposed “waiver” is not\nthe type of primary conduct typically addressed by\nsubstantive state law. It consists of delay in invoking\na legal remedy and/or in-court, litigation conduct of\nthe kind that federal courts assess every day through\napplication of the Federal Rules and their inherent\npowers—applying principles that do not deprive\nlitigants of statutory or contractual rights absent a\nviolation of clear rules or prejudice to the other side.\nMoreover, a federal-law default rule allows this Court\nto develop standards that promote the FAA’s pro-\narbitration policies, rather than policing state-law\ndoctrines to ensure that they are being applied even-\nhandedly, not manipulated out of judicial hostility to\narbitration. Finally, Section 3 and its stay-absent-\ndefault rule give primacy to the terms of the parties’\nagreement. Where the parties provide for clear time\nlimits, a party that violates them will plainly be in\ndefault. See infra Part I.B. But where, as here, the\nagreement imposes no deadline and the parties\nincorporate rules that provide that participation in\njudicial proceedings does not foreclose a right to\narbitrate, Section 3 allows courts to honor the parties’\nagreement.\n 19\n\n B. A Party Is Not “In Default” Under\n Section 3 Absent a Violation of a Clear\n Rule or a Showing of Prejudice.\n If courts “shall” issue a stay of litigation in favor\nof agreed-upon arbitration absent default, that leaves\nonly the question of what constitutes default. While\nthe FAA does not define the term “in default,” in both\n1925 and today, a party is not “in default” absent a\nviolation of a clearly established duty, or at least\nprejudice to the other parties. See, e.g., Food Mktg.\nInst. v. Argus Leader Media, 139 S.Ct. 2356, 2362\n(2019) (absent a statutory definition, statutory terms\nshould be given their “ordinary, contemporary,\ncommon meaning”); accord Reading Law 69-77.\n When the FAA was enacted, as now, “default”\nmeant the “omission or failure to fulfill a duty, observe\na promise, discharge an obligation, or perform an\nagreement.” Default, Black’s Law Dictionary (3d ed.\n1933); see also Default, Black’s Law Dictionary (11th\ned. 2019) (defining “default” as “[t]he omission or\nfailure to perform a legal or contractual duty”);\nDefault, Random House Dictionary of the English\nLanguage (unabridged ed. 1967) (defining “default” for\nlegal purposes as “failure to perform an act or\nobligation legally required, esp. to appear in court or\nto plead at a time assigned”). Moreover, as Claimant\nacknowledges, a party who initially defaults can\ngenerally cure that default absent prejudice to\nanother; a party who has cured is no longer “in\ndefault.” See infra pp.23-24. That the FAA uses the\nterm “default” in its ordinary sense is confirmed by\nSection 4, which uses the term “default” synonymously\nwith “failure, neglect, or refusal” to comply with a\n 20\n\ncontractual duty to arbitrate and allows someone\n“aggrieved” by such a default to compel arbitration. 9\nU.S.C. §4.\n The concept of default is straightforward when it\ncomes to contractual obligations. A party that\ndisregards a clear contractual time limit or other\ncontractual obligation is plainly “in default.” See, e.g.,\nPet’r.Br.39-42 (citing authorities invoking default in\nthe form of breach of a contractual duty). Thus, if a\ncontract required parties to initiate arbitration within\n30 days of receiving notice of litigation, a party who\nwaits 60 days—or even 31 days—to initiate\narbitration would be in default. But when the contract\nis silent on the timeliness of asserting a particular\ncontractual right, simply delaying the assertion of\nthat right without any prejudice to another does not\nconstitute default. And when, as here, the contract\nincorporates rules that expressly provide that “[n]o\njudicial proceeding by a party relating to the subject\nmatter of the arbitration shall be deemed a waiver of\nthe party’s right to arbitrate,” AAA Rules R. 42(a), it\nwould be well-nigh impossible to find a party “in\ndefault” just by failing to assert a “right to arbitrate”\nat the earliest feasible juncture in a “judicial\nproceeding.”\n As noted, this interpretation of “default” comports\nwith the use of the term in Section 4 of the FAA. See\nIBP, Inc. v. Alvarez, 546 U.S. 21, 34 (2005) (“[I]dentical\nwords used in different parts of the same statute are\ngenerally presumed to have the same meaning.”);\naccord Reading Law 170-73. It also reinforces the\nbroader policy of the FAA to allow the parties to\n“‘enforce’ arbitration agreements according to their\n 21\n\nterms.” Italian Colors Rest. v. Becerra, 570 U.S. 228,\n233 (2013); see also, e.g., Epic Sys. Corp. v. Lewis, 138\nS.Ct. 1612, 1621 (2018). When the parties agree to\nresolve their disputes via “arbitration, instead of going\nto court,” JA77, and incorporate rules that expressly\nprotect against finding a waiver of a right to arbitrate\nbased on judicial proceedings, JA78, both the plain\ntext of Section 3 and the broader purposes of the FAA\ncounsel against finding a party “in default” based on\nparticipation in judicial proceedings, at least absent\nmaterial prejudice to other parties, see infra pp.22-25.\n That is not to say that Section 3’s concept of\ndefault is limited to contractual duties. A party can\nalso find itself in default by virtue of failing to comply\nwith a duty imposed by directly applicable law—a\nduty that may or may not consider prejudice to others.\nWhen a statute or court rule imposes a legal duty to\ntake certain action by a certain time, a party that fails\nto do so is “in default” of that obligation. 3 When the\nconduct alleged to put a party “in default” is litigation\nactivity, the most apposite source of legal duties will\nbe court rules. For example, courts enter a default\njudgment if a defendant “has failed to plead or\notherwise defend” in the time required by the federal\nrules. Fed. R. Civ. P. 55(a). Such rules, much like\ncontractual provisions imposing time limitations,\ngenerally provide clear deadlines and, in the absence\n\n\n 3 For instance, one of Claimant’s examples of a statutory\n\nreference to default includes just such a specific time deadline.\n20 U.S.C. §1087bb(g)(2) (student loan is “in default” after the\nborrower fails to make installment payments for “(A) 240 days (in\nthe case of a loan repayable monthly), or (B) 270 days (in the case\nof a loan repayable quarterly).”); see Pet’r.Br.42.\n 22\n\nof such clarity, typically take into account prejudice to\nothers. For example, Rule 12(a)(1) provides clear\ndeadlines for certain filings, and Rule 12(h)(ii)\nprovides clear instructions that certain defenses must\nbe raised at a particular juncture. 4 Absent such clear\ndeadlines, the Rules typically prescribe a standard—\nlike the permissive standard for amending\npleadings—that allows the court to account for\nprejudice to others. But Respondent is not “in default”\nof any rule-based deadline or standard. 5\n Claimant complains that if “default” is limited to\nviolations of clear contractual or legal obligations,\nthen courts could not find a party “in default” even if\nits delay has caused significant prejudice to the other\nside. Pet’r.Br.40-42. But that argument ignores that\ncontracts can, and court rules often do, build in\nconsiderations of prejudice, especially when a party is\nalleging that the other side forfeited a right in the\nabsence of a clear deadline. Just as nothing stops\nparties from imposing contractual deadlines for\ninvoking arbitration—or incorporating rules that do\nlikewise—nothing stops parties from agreeing to\nstandards that make the absence of prejudice to the\n\n 4 That kind of clear rule explains why failure to raise a venue\n\nobjection in a responsive pleading forfeits that objection “without\nconsidering prejudice.” Academy.Br.3. The Federal Rules\nexpressly require a venue objection to be raised in a responsive\npleading. See Fed. R. Civ. P. 12(h)(1)(B)(ii).\n 5 Rule 8(c)(1) requires the affirmative defense of “arbitration\n\nand award” to be asserted in a responsive pleading, but that\ndefense “is not that the claim should be arbitrated rather than\nadjudicated in court; it is that the claim has already been\nresolved by an award in arbitration.” Hill v. Ricoh Ams. Corp.,\n603 F.3d 766, 771 (10th Cir. 2010) (emphasis added).\n 23\n\nother side a prerequisite to compelling arbitration.\nSuch a provision may seem out of place in most\narbitration agreements, but that is only because the\nthrust of those agreements is to facilitate “arbitration,\ninstead of going to court,” JA77, not vice-versa.\n Moreover, as noted, consideration of prejudice is\nhardly out of place in the Federal Rules, where issues\nof timeliness not resolved via clear deadlines account\nfor prejudice. Most obviously, Rule 15 addresses the\ncircumstances in which parties may amend their\npleadings, and it instructs that even when\namendment is not allowed as a matter of right, leave\nto amend should be “freely give[n] ... when justice so\nrequires.” Fed. R. Civ. P. 15(a)(2). That capacious\nstandard obviously allows for consideration of\nprejudice to other parties and the court itself. See\nFoman v. Davis, 371 U.S. 178, 182 (1962); see also, e.g.,\nBrown v. Stored Value Cards, Inc., 953 F.3d 567, 574\n(9th Cir. 2020) (“Of the Foman factors, prejudice to the\nopposing party carries the most weight.”); Lone Star\nLadies Inv. Club v. Schlotzsky’s Inc., 238 F.3d 363, 368\n(5th Cir. 2001) (“Prejudice is the touchstone of the\ninquiry under rule 15(a).”). 6\n The statutory term “in default” can also allow for\nconsideration of prejudice even when neither the\ncontract nor the applicable rules directly account for\nit, as evidenced by the fact that the overwhelming\n\n 6 Claimant seems to think that because a party can unilaterally\n\ndefault on a deadline or other legal duty, the default inquiry can\nfocus only on the defaulting party. But that ignores that many\nlegal duties themselves require prejudice to another before the\nduty is violated. In that context, one cannot tell whether a party\nunilaterally defaulted without considering prejudice to others.\n 24\n\nmajority of circuits, all of which ground their test in\nSection 3, allow for consideration of prejudice. In this\nregard, it is telling that Section 3 uses the phrase “in\ndefault.” Even if a party has defaulted by waiting or\nlitigating too long before invoking its right to\narbitrate, it could still “cure” any default if it asserts\nthe right before the other side is materially prejudiced.\nSee, e.g., Khochinsky v. Republic of Poland, 1 F.4th 1,\n7 (D.C. Cir. 2021) (in deciding whether to set aside\ndefault judgment under Rule 55(a), courts must\nconsider “whether ... a set-aside would prejudice\nplaintiff”); accord Pet’r.Br.42-43 (acknowledging that\nconcept of “cure” is “focused on harm that defaults\ncause to others”). And a party that has cured a default\nis no longer “in default.” E.g., Guffey v. Smith, 237\nU.S. 101, 118 (1915).\n The possibility of considering prejudice to others\nas part of a statutory “in default” inquiry is consistent\nwith Section 4, which treats “neglect” as a form of\ndefault and authorizes a motion to compel when\ndefault has “aggrieved” the other party to the\nagreement. Moreover, courts have also found a party\n“in default” when litigation misconduct does not\nviolate a specific rule but prejudices others in ways\nthat implicate the court’s inherent powers. While the\ncircuits may take different paths to the prejudice\nrequirement and state their tests in varying ways, the\ntests boil down to the same basic proposition: Courts\nmay deny a Section 3 stay application “only when\nparticipation in the litigation has been so substantial\nthat compelling arbitration would prejudice the other\n 25\n\nparty.” Cargill Ferrous Int’l v. Sea Phoenix MV, 325\nF.3d 695, 700 (5th Cir. 2003). 7\n What has nothing to recommend it, and no basis\nin statutory text, congressional purposes, or anything\nelse, is a construction of Section 3 that would find a\nparty “in default” in the absence of either a violation of\na contractual/legal duty or prejudice to others. The\nwhole thrust of the law, as reflected in the federal\nrules and the whole body of state law surveyed in Part\nII, infra, is to deal with timeliness issues and litigation\nconduct in one of two ways: clear deadlines or more\nflexible standards that require prejudice before\n\n\n 7 See, e.g., Creative Sols. Grp., Inc. v. Pentzer Corp., 252 F.3d\n\n28, 32 (1st Cir. 2001) (“[M]ere delay in seeking arbitration\nwithout some resultant prejudice to a party cannot carry the\nday.”); Thyssen, Inc. v. Calypso Shipping Corp., S.A., 310 F.3d\n102, 105 (2d Cir. 2002) (“Waiver of the right to compel arbitration\ndue to participation in litigation may be found only when\nprejudice to the other party is demonstrated.”); Palcko v.\nAirborne Express, Inc., 372 F.3d 588, 598 (3d Cir. 2004)\n(“[P]rejudice is the touchstone for determining whether the right\nto arbitrate has been waived” by litigation conduct.); Wheeling\nHosp., Inc. v. Health Plan of the Upper Ohio Valley, Inc., 683 F.3d\n577, 587 (4th Cir. 2012) (“[T]he dispositive question is whether\nthe party objecting to arbitration has suffered actual prejudice.”);\nShy v. Navistar Int’l Corp, 781 F.3d 820, 827-28 (6th Cir. 2015)\n(“A party waives arbitration if ... opposing party incurred actual\nprejudice.”); Barker v. Golf U.S.A., Inc., 154 F.3d 788, 793 (8th\nCir. 1998) (same); Shinto Shipping, 572 F.2d at 1330 (9th Cir.\n1978) (“[T]his court must be convinced ... that the appellant was\nprejudiced ... before we can find a waiver.”); Hart v. Orion Ins.\nCo., 453 F.2d 1358, 1361 (10th Cir. 1971) (“The question of waiver\nturns on the presence or absence of prejudice.”); Brown v. ITT\nConsumer Fin. Corp., 211 F.3d 1217, 1222 (11th Cir. 2000)\n(finding waiver if “a party’s ‘substantial participation in\nlitigation’ ... results in prejudice”).\n 26\n\nfinding that a party has lost a right. Virtually no one\nputs parties in the impossible position of losing rights\nforever without either blowing a clear statutory\ndeadline or prejudicing someone else through delay.\nThat is particularly true when the party is seeking to\nvindicate a clear, non-time-limited right, like the right\nto settle disputes through “arbitration, instead of in\ncourt.” And it is particularly true when the parties’\ncontract incorporates rules that assure a party that it\nwill not lose its right to arbitrate in light of judicial\nproceedings. To find a “default” in those\ncircumstances, in the absence of prejudice to anyone,\nincluding the party who agreed to arbitrate but filed\nlitigation instead, would be the height of unfairness.\n Such a concept of “default” would also run counter\nto the policies underlying the FAA. Despite Claimant’s\nprotestations to the contrary, Pet’r.Br.34-35;\nProfessors.Br.5-10, 16-20, the FAA is not studiously\nneutral on the subject of arbitration. This Court has\nrepeatedly stressed that the FAA was designed to\ncounteract judicial hostility to arbitration. Indeed, the\nCourt’s “cases place it beyond dispute that the FAA\nwas designed to promote arbitration.” Concepcion,\n563 U.S. at 345. And time and again, the Court has\nadmonished that the FAA requires courts to resolve\n“any doubts [about] waiver, delay, or a like defense to\narbitrability” “in favor of arbitration.” Moses H. Cone,\n460 U.S. at 24-25. Thus, even allowing for the\npossibility that the phrase “in default” appearing in a\nhypothetical Federal Anti-Arbitration Act could\nrequire a party to invoke its right to arbitrate at the\nearliest feasible juncture or lose it forever, without\nregard to prejudice to others, positing such an\ninterpretation of the FAA is a non-starter.\n 27\n\n Applying these principles here, it is clear that\nRespondent was not “in default” within the meaning of\nSection 3, and that the decision below ordering a\nremand to issue a stay should be affirmed. Claimant\ndoes not and cannot claim that there was a default\nunder the parties’ arbitration agreement or the\narbitration rules that the agreement incorporates by\nreference. To the contrary, those rules affirmatively\nreassured Respondent that participating in a judicial\nproceeding would not waive its right to arbitrate. And\nno federal statute or rule imposes any deadline for\ninitiating arbitration or seeking a stay of litigation\nunder Section 3. Finally, Claimant did not take issue\nwith the Eighth Circuit’s finding of no prejudice in\neither her petition for certiorari or her opening brief.\nRather, the lack of prejudice here is the premise of her\nquestion presented. Thus, given the absence of any\nviolation of a clear contractual or legal obligation or\nany prejudice to Claimant, Section 3 not only is the most\napposite statutory provision, but provides a sufficient\nbasis to affirm the decision below.\nII. The Same Conclusion Would Follow Under\n Section 2 And Its Saving Clause.\n Claimant fares no better under Section 2 of the\nFAA. That section neither embraces a stand-alone\nrequirement that arbitration agreements be treated\nno better than any other contract nor even governs the\nquestion whether a right to arbitrate under a valid\nagreement has been lost due to delay or participation\nin litigation. Consistent with that reality, Claimant did\nnot resist Respondent’s motion to compel arbitration on\nthe ground that doing so would be inconsistent with\nIowa’s law of contractual waiver; she did so by\n 28\n\ninvoking Eighth Circuit precedents that are grounded\nin Section 3 and require a showing of prejudice.\n But even if Section 2 and state law governed, they\nwould not help Claimant because neither Iowa nor\nstates more generally treat contractual rights as\ndefinitively “waived” whenever they are not invoked\nat the earliest feasible juncture. Indeed, when the\nconcern is not the intentional relinquishment of a\nknown right, but a delay in asserting a right while\nengaging in arguably inconsistent conduct, “waiver” is\nnot even the correct concept. The relevant doctrines\nare laches and estoppel, both of which require\nconsideration of prejudice to others. Moreover, even\nwhen a contractual right is waived, one can typically\nretract the waiver unless doing so would prejudice the\ncounterparty. In short, all state-law roads lead to\nprejudice; no relevant doctrine treats the failure to\nassert a contractual right at the earliest feasible\njuncture as a definitive forfeiture of the right without\nregard to prejudice. Adopting such a novel concept in\nthe arbitration context alone not only would be\nfundamentally unfair, but is the one step that actually\nwould run afoul of Section 2 and the FAA’s policy\nagainst treating the right to arbitrate less favorably\nthan all other contractual rights.\n A. Section 2 Prohibits Discrimination\n Against Arbitration but Does not Impose\n a Strict Equal-Treatment Principle or\n Govern the Timeliness of Demanding\n Arbitration Under a Valid Agreement.\n Claimant’s argument is premised on the view that\nSection 2 and this Court’s decision in Concepcion\nimpose a strict equal-footing requirement that would\n 29\n\nprevent a court from imposing an arbitration-specific\nrule treating arbitration agreements more favorably\nthan other contractual rights. That gets matters very\nnearly backwards. The FAA is not offended by\narbitration-specific rules that single out arbitration\nagreements for especially favorable treatment.\nIndeed, that is a fair description of the FAA itself.\n While this Court has used terms like “equal-\nfooting” as a shorthand to describe Section 2’s saving\nclause, it is a mistake to think of Section 2 as a kind of\nstrict equal-treatment rule, like the Equal Protection\nClause or Title VII, that is equally offended by\n“reverse discrimination” in favor of arbitration.\nInstead, like the rest of the FAA, Section 2 is decidedly\npro-arbitration and strongly favors the enforcement of\narbitration agreements. See, e.g., Italian Colors, 570\nU.S. at 233; Moses H. Cone, 460 U.S. at 24. In that\nregard, Section 2 and its saving clause are better\nunderstood as adopting a most-favored-nations-clause\napproach to arbitration, rather than a strict regime of\nequal treatment. As long as arbitration agreements\nare enforced at least as favorably as other contracts,\nSection 2 is not offended.\n Concepcion is entirely consistent with that\nunderstanding. In fact, the Court there specifically\ntied its equal-footing language to the “‘liberal federal\npolicy favoring arbitration’” and described the former\nas “[i]n line with” the latter. Concepcion, 563 U.S. at\n339 (quoting Moses H. Cone, 460 U.S. at 24) (emphasis\nadded). Equally important, the Concepcion Court\nultimately held that even a state law that purports to\nbe neutral and generally applicable is preempted if it\ntargets arbitration or the characteristics of traditional\n 30\n\nbilateral arbitration. Id. at 341-42. Such a law\nfrustrates the objectives of the FAA to favor\narbitration and the enforcement of arbitration\nagreements according to their terms. But there is no\ncomparable doctrine that requires the preemption of\nstate laws that favor arbitration. Such a law would\nnot implicate the FAA, its saving clause, or the equal-\nfooting principle at all.\n There is a further obstacle to applying Section 2\nto require courts to employ state law to deny a motion\nto stay litigation in favor of a valid arbitration\nagreement: Section 2 addresses contract-law defenses\nthat go to the validity of the arbitration agreement,\nnot strained contract-law analogies to whether the\nassertion of a right to arbitrate under a concededly\nvalid agreement is timely. The point here is not just\nthat Sections 3 and 4 address those matters more\ndirectly (though they do). See supra pp.15-18. In\naddition, Section 2 and especially its saving clause\nfocus on state-law arguments that go to the validity,\nenforceability, or revocability of the arbitration\nagreement itself. In fact, the text of the saving clause\naddresses only “such grounds as exist at law or in\nequity for the revocation of any contract.” 9 U.S.C. §2\n(emphasis added). There is no way to understand an\narguably untimely assertion of a right to arbitrate as\na ground for revoking the underlying contract. See\nConcepcion, 563 U.S. at 354 (Thomas, J., concurring).\nBut even if one assumes that the saving clause is co-\nextensive with Section 2’s principal clause, and saves\nstate-law doctrines implicating the validity and\nenforceability of an arbitration agreement, it still\nwould not reach an argument that a valid arbitration\nagreement, which could be timely invoked in a\n 31\n\nsubsequent dispute, should be ignored because a\nlitigant delayed in invoking it.\n Consistent with all that, Claimant did not argue in\nthe courts below that the arbitration agreement was\nunenforceable under Iowa law or even rely on Iowa\nprinciples of contractual waiver as the basis for\nresisting Respondent’s motion to stay the litigation in\nfavor of agreed-upon arbitration. Instead, she invoked\nEighth Circuit law that is grounded in Section 3 and\nrequires a showing of prejudice. If she had argued\nthat the reason that Respondent was untimely was\nbecause Iowa contractual waiver principles apply\ndirectly and satisfy the saving clause, the misfit\nbetween that argument and the text of Section 2 would\nhave been evident. Moreover, if she had made the\nargument in those terms, then it would have been\nclear that nothing in Iowa law or state law more\ngenerally supports her harsh use-it-as-expeditiously-\nas-feasible-or-lose-it rule, as shown next. 8\n\n\n 8 To the extent Claimant’s theory is not that Iowa law, saved by\n\nSection 2’s saving clause, renders Respondent’s motion untimely,\nbut that federal common law extrapolated from Section 2 does\nthat work, the argument is even less tenable. Any federal\ncommon law based on Section 2 would need to advance the\nfederal policy favoring arbitration embodied in the FAA, but for\nall the reasons explained, Claimant’s proposed use-it-or-lose-it rule\ndoes the opposite.\n 32\n\n B. When Parties Delay in Enforcing\n Contractual Rights, Estoppel and\n Laches, Not “Waiver,” Provide the\n Correct Framework and Require a\n Showing of Prejudice.\n Claimant’s argument depends critically on the\nnotion that the applicable state-law doctrine is\n“waiver,” which does not require a showing of\nprejudice. But waiver, like jurisdiction, “is a word of\nmany, too many, meanings.” Steel Co. v. Citizens for\nBetter Env’t, 523 U.S. 83, 90 (1998). In particular, as\nthis Court has observed, waiver is often used\nimprecisely when the proper concept is really\nforfeiture or some other more precisely apposite\ndoctrine. See, e.g., Kontrick, 540 U.S. at 458 n.13. And\nthere is really only one form of waiver that gives rise\nto anything like the kind of harsh, prejudice-is-\nirrelevant result that Claimant seeks: “the voluntary\nand intentional relinquishment of a known and\nexisting right.” 13 Williston on Contracts §39:14 (4th\ned.).\n If a party to an arbitration agreement walks into\nits counterparty’s office and expressly disavows any\nintent to enforce the agreement, it can properly be said\nto have waived its right to invoke the arbitration\nprovision. So too if a party files a document in court\nexplicitly disclaiming any desire to arbitrate. Claimant\nis correct that this kind of express “waiver of\ncontractual rights is accomplished unilaterally” in\nmost states. Pet’r.Br.22. But that doctrine has no role\nto play in virtually any Section 3 case, as it would be\nthe rare applicant who seeks a stay after having\naffirmatively and explicitly disavowed its right to\n 33\n\narbitrate. That is certainly not what happened here;\nClaimant does not and cannot claim that Respondent ever\nexpressly waived its right to insist on the arbitration\nto which the parties agreed.\n State courts will sometimes talk about “implied\nwaiver,” where in the absence of an express waiver, a\nparty undertakes “a clear, unequivocal, and decisive\nact..., so consistent with an intention to waive that no\nother reasonable explanation is possible.” 13 Williston\non Contracts §39:28 (emphases added); MidWestOne\nBank v. Heartland Co-op, 941 N.W.2d 876, 888 (Iowa\n2020) (“[T]o establish implied waiver by conduct, there\nmust exist clear, unequivocal, and decisive conduct\ndemonstrating intent to waive.”); In re Sykes, 497\nN.W.2d 829, 833 (Iowa 1993) (“[I]mplied\nwaiver ... occur[s] by some clear, unequivocal, and\ndecisive act ... inconsistent with any other intention\nthan waiver of the right at issue.”). But even that kind\nof “implied waiver” might be better understood as\nforfeiture, and in all events is doubly irrelevant. First,\nat least some jurisdictions will not apply the doctrine\nof implied waiver without a showing of prejudice to\nother parties. 9 Second, the standard for that kind of\nimplied waiver is extremely demanding, and it is not\nremotely satisfied by the kind of actions taken by\nRespondent here.\n\n\n 9 See, e.g., Eagle Springs Homeowners Ass’n, Inc. v. Rodina, 454\n\nP.3d 504, 513 (Idaho 2019); Olsen v. Milner, 276 P.3d 934, 939\n(Mont. 2012); Anderson v. Coop. Ins. Cos., 895 A.2d 155, 159 (Vt.\n2006); Greensburg Deposit Bank v. GGC-Goff Motors, 851 S.W.2d\n476, 478 (Ky. 1993); Mark v. Hahn, 177 So.2d 5, 8 (Fla. 1965);\nBrown v. City of Pittsburgh, 186 A.2d 399, 401 (Pa. 1962); Claimant\nCnty. v. Gay, 834 S.E.2d 576, 587 (Ga. Ct. App. 2019).\n 34\n\n Responding to the other side’s court filings may be\nin some tension with a later assertion of a right to\narbitrate, but the two courses of action are hardly so\nirreconcilable that “no other reasonable explanation is\npossible.” In fact, there are numerous reasonable\nexplanations for why a party would participate in\nlitigation without intending to surrender its right to\ncompel arbitration at some future time. For example,\na defendant caught by surprise by litigation initiated\nby an employee who agreed to resolve disputes via\n“arbitration, instead of going to court” may need to\nmake ministerial or threshold filings in court before\ninitiating arbitration in hopes of persuading the\nemployee to honor the agreement or reach a\nsettlement. Another defendant may await an\nimpending judicial decision clarifying the validity of a\nstate anti-arbitration rule or the prospects of being\nsubjected to class-wide arbitration. Another\ndefendant might wait in reliance on a contractual\nassurance that judicial proceedings cannot provide a\nbasis for finding a waiver of its right to arbitrate.\nAnother defendant with a strong jurisdictional or\nprocedural defense might seek to obtain a quick\ndismissal in court without intending to waive its right\nto resolve the merits in arbitration should that\nthreshold defense not prevail. And so on. There is no\nshortage of reasonable reasons why a party to an\narbitration agreement that is nonetheless subjected to\nlitigation might make some initial defensive filings\nbefore invoking its right to arbitrate without clearly\nand unambiguously relinquishing that right.\n To be sure, a defendant might opt to participate\nin litigation for decidedly less savory reasons, such as\nthe hope of preserving arbitration as an “escape hatch”\n 35\n\nin case things start going poorly in a judicial forum\nthat initially seems favorable. Pet’r.Br.49. But that\nkind of intentional ploy hardly reflects an intentional\nrelinquishment of the right to arbitrate. To the\ncontrary, the very fact that the sandbagging\ndefendant planned for the possibility of belatedly\ndemanding arbitration confirms that it never intended\nto disavow arbitration. See 13 Williston on Contracts\n§39:28 (“[Implied waiver] is dependent solely on what\nthe party charged with waiver intends to do.”). By\ndefinition, a defendant who litigates while “holding a\ndemand for arbitration in reserve like an ace in the\nhole to be played at ... the most opportune time,”\nPet’r.Br.48, never intends to relinquish the right to\nplay the ace or to waive its right to arbitrate.\n But while neither delay nor participation in\njudicial proceedings constitutes an intentional\nrelinquishment of the right to arbitrate, there are\nstate-law doctrines that directly address the concern\nthat a party could wait too long to assert a right (even\nin the absence of a clear deadline) or engage in conduct\nthat lulls a counterparty into a false sense that the\nright will never be asserted. Those directly applicable\ndoctrines are laches and estoppel. The problem for\nClaimant is that both doctrines require a party seeking\nto invoke the defense to show prejudice, as she\ncorrectly concedes. See Pet’r.Br.24-29.\n To the extent the concern is that one party simply\nwaited too long to assert its right to arbitrate despite\nthe absence of any specific time limit in the contract,\nthe apposite doctrine is laches. Laches bars parties\nfrom obtaining judicial relief if they unreasonably\ndelay in asserting their rights. See SCA Hygiene\n 36\n\nProds. Aktiebolag v. First Quality Baby Prods., LLC,\n137 S.Ct. 954, 960 (2017). But as Claimant concedes,\nPet’r.Br.28-29, laches bars relief only if the party’s\n“unreasonable delay in prosecuting a claim or\nprotecting a right has worked a prejudice” to the other\nparty. 1 D. Dobbs, Law of Remedies §2.3(5) (2d ed.\n1993) (emphasis added). To the extent the concern is\nnot just the passage of time, but that one party\nengaged in conduct—here, litigation—that the other\nparty may have perceived as inconsistent with a later\ninvocation of the right to arbitrate, the apposite\ndoctrine is estoppel. But estoppel likewise applies\nonly when one party “was misled to its prejudice by the\nconduct of the other party into the honest and\nreasonable belief that the latter was not insisting on,\nand was therefore giving up, some right.” 13 Williston\non Contracts §39:29 (emphasis added); see also, e.g.,\nOklahoma v. Texas, 268 U.S. 252, 257 (1925).\n To be sure, some courts have created potential\nconfusion, which Claimant seeks to exploit, by labeling\nthis defense “waiver by litigation conduct” or even\n“waiver by estoppel.” But whatever the precise label\nemployed, this variant of estoppel generally requires\na showing of prejudice or detrimental reliance. See 13\nWilliston on Contracts §§39:28-29 (contrasting “true\nwaiver” with “waiver by estoppel based on detrimental\nreliance”). Indeed, courts that have been careful with\ntheir terminology in the arbitration context have\nacknowledged that “waiver by litigation conduct” is\nnot true waiver in the no-prejudice sense, but rather a\nvariant of estoppel or forfeiture. For example, the\nTenth Circuit has taken pains to distinguish between\n“when a party intentionally relinquishes or abandons\nits right to arbitration,” and “when a party’s conduct\n 37\n\nin litigation forecloses its right to arbitrate.” BOSC,\nInc. v. Bd. of Cnty. Comm’rs, 853 F.3d 1165, 1170 (10th\nCir. 2017). And the First Circuit has noted that “the\nheading ‘waiver’ ... here mean[s] forfeiture rather\nthan intentional relinquishment.” Rankin v. Allstate\nIns. Co., 336 F.3d 8, 12 (1st Cir. 2003); see also, e.g.,\nZuckerman Spaeder, LLP v. Auffenberg, 646 F.3d 919,\n922 (D.C. Cir. 2011) (“forfeiture, not waiver, is the\nappropriate standard for evaluating a late-filed\nmotion under Section 3”).\n In sum, while a true intentional waiver does not\nrequire a showing of prejudice, an effort to estop a\nparty from asserting its contractual right to arbitrate\nbecause it waited or litigated too long before invoking\nit falls in the heartland of the doctrines of laches and\nestoppel. Those doctrines, which are specifically\ndesigned to assign consequences to delay and\ninconsistent actions, are a much better fit here than\nwaiver. And both require the showing of prejudice\nthat Claimant desperately seeks to avoid. 10\n C. A Party That Waives a Contractual Right\n May Retract That Waiver Absent\n Prejudice to Other Parties.\n Claimant’s position faces one more fatal hurdle:\nEven if (contrary to fact) waiver were the relevant\n\n 10 Claimant herself describes prejudice as “the decisive factor\ndistinguishing waiver from estoppel.” Pet’r.Br.26. But she\noverlooks an equally key distinction that makes clear that this\ncase does not involve waiver: “The intent to relinquish a right is\na necessary element of waiver but not of estoppel while\ndetrimental reliance is a necessary element of estoppel but not of\nwaiver.” 28 Am. Jur. 2d Estoppel & Waiver §35 (emphasis\nadded).\n 38\n\nconcept, there would still be no avoiding a prejudice\nrequirement. Under generally accepted contract\nprinciples in Iowa and elsewhere, a waiver “can be\nretracted at any time before the other party has\nmaterially changed his position in reliance” on the\nwaiver, assuming time remains for performance under\nthe contract. Restatement (First) of Contracts §297\n(1932); accord, e.g., Restatement (Second) of Contracts\n§84(2) (1981); 8 Corbin on Contracts §40.1 (2021); 13\nWilliston on Contracts §39:20. Precisely because of its\nunilateral nature, a waiver is a promise that requires\nreliance or consideration to become irrevocable. See\nRestatement (Second) of Contracts §84 cmt. B. 11\n If waiver were relevant at all in the arbitration\ncontext, then, the ability to retract absent prejudice\nwould defeat Claimant’s effort to avoid the arbitration\nshe agreed to absent any prejudice to her. Unless\nparties contract for a particular deadline for\ndemanding arbitration, an arbitration agreement\nremains executory throughout the course of litigation;\neither party remains able to perform by invoking the\narbitration condition. Absent prejudice, a demand for\narbitration during litigation would thus retract any\npurported waiver while it is still possible to satisfy the\narbitration provision. See First State Bank v. Shirley\nAg Serv., Inc., 417 N.W.2d 448, 454 (Iowa 1987)\n(“[N]otice of contractual forfeiture is itself a notice of\nwithdrawal of a previous waiver of a contractual\nright.”).\n\n 11 Claimant resists the proposition that waiver requires reliance\n\nor consideration, Pet’r.Br.22-23 & nn.8-9, but the cases she cites\nfocus on what it takes to accomplish a waiver, not what it takes\nto make a waiver irrevocable.\n 39\n\n Claimant asserts that “most contractual rights\ncan’t be reinstated through retraction or revocation of\nthe waiver.” Pet’r.Br.22-23 & n.10. 12 But the few\ncases she cites do not support that proposition. Her\nlead (and only Iowa) case reached the unremarkable\nconclusion that retraction is ineffective after the time\nfor performance passes. See Scheetz v. IMT Ins. Co.,\n324 N.W.2d 302, 304-05 & n.2 (Iowa 1982) (rejecting\n“withdrawal of a waiver with respect to past\nobligations”). But Scheetz, like many other Iowa\ncases, embraced the principle relevant here—i.e., that\n“one who has waived a condition in a contract may\nwithdraw the waiver, so long as the other party is\nafforded a reasonable opportunity to perform the\nconditions of the contract that had been waived.” FS\nCredit Corp. v. Troy Elevator, Inc., 397 N.W.2d 735,\n738 (Iowa 1986); see Scheetz, 324 N.W.2d at 304 n.2;\nsee also, e.g., Peoples Tr. & Sav. Bank v. Sec. Sav.\nBank, 815 N.W.2d 744, 763 (Iowa 2012); Perkins v.\nFarmers Tr. & Sav. Bank, 421 N.W.2d 533, 536 (Iowa\n1988); First State Bank, 417 N.W.2d at 454; Janes v.\nTowne, 207 N.W. 790, 792 (Iowa 1926). Similar\nproblems confront Claimant in every state she\ninvokes. 13\n\n\n 12 Petitioner does not explain her use of the qualifier “most” or\n\nwhether, under her view of Section 2, different retraction rules\nwould apply to different contracts in different states.\n 13 For example, each state she cites has adopted the Uniform\n\nCommercial Code provisions authorizing retraction of waiver in\nsales and lease contracts. Fla. Stat. §§672.208-09; Ind. Code\n§§26-1-2-209, 26-1-2.1-208; Iowa Code §§554.13[PHONE REDACTED]9;\nMinn. Stat. §§336.2-209, 336.2A-208; Neb. Rev. Stat. U.C.C.\n§2-209.\n 40\n\n Thus, there is simply no shaking a prejudice\nrequirement. Every conceivably applicable doctrine\neither requires a showing of prejudice or allows a\nwaiver to be retracted in the absence of prejudice.\nThat is hardly surprising. Neither common-law\ndoctrines nor typical court rules treat a bargained-for\ncontractual right as forever sacrificed unless a party\nhas expressly relinquished it, violated a clear deadline\nfor asserting the right, or caused prejudice to another\nparty. Simply put, absent at least one of those\ncircumstances, there is no valid basis for refusing to\nenforce the parties’ arbitration agreement according\nto its terms or to deprive a party of its statutory rights\nunder the FAA.\n * * *\n In the end, Claimant does not seek to block\narbitration based on any generally recognized contract\ndoctrine. In a non-arbitration context, a party with a\nnon-time-limited right could plainly invoke the right\ndespite a delay or some arguably inconsistent conduct,\nabsent prejudice to another party. And if the contract\nspecifically provided that the other conduct did not\nconstitute waiver, the question would not be close.\n What Claimant seeks is not some generally\napplicable contract law principle, but a uniquely\npunitive anti-arbitration rule of her own manufacture:\nParties should be deemed to have forever “waived”\ntheir right to arbitrate, without regard to prejudice,\nunless they “seek to compel arbitration of the dispute\nat the earliest feasible moment.” Pet’r.Br.4. That test\nhas no grounding in any generally applicable doctrine.\nA failure to assert a contractual right not subject to a\ntime limit “at the earliest feasible moment” is the\n 41\n\nantithesis of the intentional relinquishment of the\nright to arbitrate. It is the kind of unforgiving rule\nthat Congress might have embraced if its goal was to\nentrench, rather than counteract, judicial hostility to\narbitration. In fact, it is precisely the kind of anti-\narbitration rule that Section 2 and Concepcion’s equal-\nfooting doctrine guard against.\nIII. The Prejudice Requirement Best Advances\n The Aims Of The FAA While Foreclosing\n Gamesmanship.\n For the reasons already explained, see supra\npp.19-41, requiring a showing of prejudice before\ndepriving a party of its bargained-for right to\narbitrate, rather than demanding that parties move to\ncompel arbitration at the earliest feasible juncture,\nbest comports with the text and policies of the FAA. It\nalso makes good common sense, as there is no valid\nreason to deprive a party of its right to arbitrate\nabsent the kind of clear notice provided by contractual\nor court-imposed deadlines if no one else suffers\nprejudice. Moreover, as noted, there are numerous\nreasonable explanations for why a party to a valid\narbitration agreement might not invoke it at the\nearliest possible moment, chief among them the\npossibility that the dispute could be resolved without\nexpending material judicial or arbitral resources.\nHere, for example, much of the so-called delay in\ninvoking the agreement is attributable to Respondent’s\nsettlement efforts—efforts that not only were\nundertaken in good faith but were successful with\nrespect to the Wood action. Those good-faith efforts to\navoid litigation hardly constitute litigation\nmisconduct. A rule under which a defendant could\n 42\n\nlose its right to arbitrate by acquiescing in preliminary\nlitigation not directed to the merits of the dispute,\nwhile simultaneously engaging in settlement talks,\nhas nothing to recommend it. See, e.g., Walker v. J.C.\nBradford & Co., 938 F.2d 575, 578 (5th Cir. 1991)\n(“Attempts at settlement ... are not inconsistent with\nan inclination to arbitrate and do not preclude the\nexercise of a right to arbitration.”).\n Claimant’s earliest-feasible-invocation rule would\nbe especially inequitable since the party invoking the\narbitration provision is typically (as here) the\ndefendant. Unlike a plaintiff who files a lawsuit on its\nown schedule after as much forethought as it desires,\ndefendants are haled into court against their will, on\nsomeone else’s schedule, without prior notice, and all\ndespite the parties’ agreement to resolve their\ndisputes via “arbitration, instead of going to court.”\nJA77. Defendants often will not even know that there\nwas any dispute until the complaint is served (again,\ndespite provisions in the arbitration agreement\nrequiring such prior notice, JA78), let alone know the\noptimal way to respond. Requiring prejudice before\nsuch a party can be deemed to have lost its right to\narbitrate allows defendants to appear in court and\nsubmit preliminary filings—appearances, answers,\nand other filings not seeking resolution of the merits—\nwhile they investigate the claims, analyze the relevant\nlaw (which can be in flux), and assess whether\narbitration will be necessary. 14\n\n\n 14 While Claimant brands Respondent’s candid admission that it\n\nwaited for Lamps Plus to clarify that a motion to compel would\nnot compel something other than traditional bilateral arbitration\nas gamesmanship, there is nothing unreasonable about waiting\n 43\n\n A strict use-it-or-lose-it rule, by contrast, would\nillogically reward plaintiffs who have disregarded\ntheir own agreement to arbitrate in lieu of litigation\nby depriving defendants of the ability to conduct due\ndiligence or attempt to resolve the dispute amicably\nbefore deciding on the best path forward. Denying\ndefendants that opportunity in the absence of any\ncontractual deadline (and in the face of incorporated\narbitration rules that promise that such litigation will\nnot give rise to waiver) is the antithesis of “rigorously”\nenforcing “arbitration agreements.” Epic, 138 S.Ct. at\n1621.\n Text, statutory context, and common sense thus\nall support a rule that preserves the right to arbitrate\nabsent a violation of a clear deadline or prejudice to\nothers. Against all that, Claimant and her amici\ncontend that their use-it-immediately-or-lose-it-\nforever rule is necessary to prevent gamesmanship.\nE.g., Pet’r.Br.45-51; AAJ.24-25. That is a strange\nclaim when an earliest-feasible-juncture rule would be\nwildly overinclusive vis-à-vis that end—causing\ncountless arbitration rights to be forfeited when no\ngamesmanship is afoot—while the prejudice inquiry is\nperfectly tailored to preclude gamesmanship. Indeed,\nevery circuit has incorporated an anti-gamesmanship\ncomponent into its prejudice inquiry, recognizing that\n“deliberate gamesmanship,” In re Tyco Int’l, 422 F.3d\n\n\nfor clarity from a higher court when doing so does not prejudice\nothers. Even the California Supreme Court in Iskanian v. CLS\nTransportation Los Angeles, LLC allowed a party to belatedly\ninvoke a right to arbitrate non-PAGA claims because it waited\nfor this Court’s Concepcion decision and there was no material\nprejudice to the plaintiff. 327 P.3d 129, 145 (Cal. 2014).\n 44\n\n41, 46-47 (1st Cir. 2005), and efforts “to manipulate\nthe legal process and ... waste scarce judicial\nresources,” Gray Holdco, Inc. v. Cassady, 654 F.3d\n444, 453-54 (3d Cir. 2011), are grounds for finding\nprejudice. When parties litigate for “years, expending\njudicial resources while extracting information out of\nthe opposing party,” AAJ.Br.2, or “try out their legal\ntheories and defenses and learn the strengths and\nweaknesses of their adversary’s case,” Pet’r.Br.48,\ncourts find prejudice. Courts have been doing so for\ndecades, and their robust body of decisions rejecting\nsuch gamesmanship via prejudice inquiries refutes\nClaimant’s concerns.\n The lower courts’ success at policing\ngamesmanship is evident in Claimant’s own brief.\nClaimant highlights four cases, presumably hand-\npicked from thousands over the FAA’s first century,\nthat she claims are particularly egregious examples of\na prejudice requirement failing to weed out\ngamesmanship. But those cases are not as she\ndescribes them, and her felt need to embellish her own\nexamples underscores that the prejudice rule is ideally\nsuited to the task of policing gamesmanship.\n For example, Claimant claims that the court in\nMicroStrategy, Inc. v. Lauricia, 268 F.3d 244 (4th Cir.\n2001), declined to find prejudice when an arbitration\ndemand came “years into litigation” and after the\ndefendant “used the court’s procedures to seek\ndiscovery.” Pet’r.Br.49; see also Pet.29 (identifying\nMicroStrategy as a “particularly egregious example”).\nBut the supposed “years” of litigation and discovery\noccurred not in the case sub judice, but in “previous\nlawsuits [that] involved claims legally and factually\n 45\n\ndistinct from the later claims for which Micro-Strategy\nsought arbitration.” Forrester v. Penn Lyon Homes,\nInc., 553 F.3d 340, 344 (4th Cir. 2009) (distinguishing\nMicroStrategy and finding default).\n Claimant’s other decisions are equally unavailing.\nIn Walker v. J.C. Bradford & Co., the Fifth Circuit\nfound no prejudice because the defendant was “not\nentirely responsible for the delay,” discovery was\n“minimal,” and the plaintiffs “fail[ed] to bring forth\nmore than generalized protestations about the costs of\ndelay.” 938 F.2d at 578. Far from requiring plaintiffs\nto establish that any “discovery its adversary obtained\nin court was not also available in arbitration,”\nPet’r.Br.47, Patten Grading & Paving, Inv. v. Shanska\nUSA Bldg., Inc. listed that fact as only one of a litany\nof reasons why “minimal” discovery did not constitute\nprejudice. 380 F.3d 200, 207 (4th Cir. 2004). And\nRush v. Oppenheimer & Co. turned almost entirely on\nthe fact the plaintiff was not prejudiced by conducting\ndiscovery or litigating a motion to dismiss non-\narbitrable claims. 779 F.2d 885, 888-90 (2d Cir. 1985).\n Claimant’s hair-trigger rule, by contrast, would be\nvastly overinclusive as a means of combatting\ngamesmanship, as it would deny a contractual\narbitration right to defendants who have done nothing\nmore than submit preliminary and/or responsive\nfilings while they investigate the plaintiff’s\nallegations, attempt to resolve the dispute amicably,\nand consider whether arbitration is necessary.\nMoreover, the one type of gamesmanship that her rule\nconveniently ignores is her own gamesmanship in\ndisregarding her promise to resolve any disputes with\nRespondent via “arbitration, instead of going to court.”\n 46\n\nInstead of accounting for that gamesmanship or any\nresulting prejudice, Claimant tries to leverage it,\nsuggesting that by going to court she put the\ndefendant on an invisible clock that required it to\ninvoke its arbitration rights at the earliest feasible\njuncture, with feasibility judged not by the parties’\narbitration agreement, or the arbitration rules\nincorporated therein, or even by clear ex ante court\ndeadlines, but by ex post judgments by courts with a\ntraditional predisposition to favor litigation. As an\ninterpretation of a statute designed to promote\narbitration and counteract judicial hostility to it,\nClaimant’s rule has nothing to recommend it.\n Straining to find an actual threat to the FAA and\nits policies, Claimant and her amici suggest that the\nprejudice requirement introduces inefficiencies by\nraising “a host of additional questions” for courts to\naddress. Pet’r.Br.47; see States.Br.20-23. In reality, a\nprejudice inquiry is a familiar feature of numerous\ndoctrines that courts have long ably and efficiently\napplied. See, e.g., Dietz v. Bouldin, 579 U.S. 40, 49\n(2016) (inherent powers); SCA Hygiene, 137 S.Ct. at\n960 (laches); Strickland v. Washington, 466 U.S. 668,\n687 (1984) (ineffective assistance); Fed. R. Evid. 403\n(admission of evidence). Moreover, Claimant seems to\nforget that her principal position is not that there is a\nuniform, federal earliest-feasible-juncture test, but\nthat courts must first ascertain the applicable state\nlaw, identify the apposite state contract law of general\napplicability, and then apply it. As is evident from\nClaimant’s repeated qualifier “most,” Pet’r.Br.4, 18, 22,\n23, the answers to those questions are not nearly as\nuniform (or favorable to her position) as she would like\nthis Court to think. In fact, if the state-law inquiry is\n 47\n\nproperly applied, it will still lead to a prejudice\ninquiry, governed by state-court precedents. See supra\nPart II.C. Compared to Claimant’s state-law-based\nproposal, a uniform federal standard of default (which\ncould always be adjusted if it proves difficult to apply\nor leads courts to undervalue the liberal federal policy\nfavoring arbitration) is a paragon of efficiency.\n At any rate, this Court has already held that the\nFAA, like most legal doctrines, does not value\nefficiency over all else. Rules that lead arbitration\nagreements to be routinely disregarded and motions\nto compel arbitration to be summarily denied would be\nhighly efficient (at least judged from the standpoint of\nthe judicial resources expended on such threshold\ninquiries), but it would resemble the regime the FAA\nwas designed to replace. Not surprisingly, this Court\nhas already thoroughly rejected the notion that the\nFAA’s pro-arbitration goals should take a backseat to\namorphous notions of efficiency. See Dean Witter\nReynolds Inc. v. Byrd, 470 U.S. 213 (1985). Dean\nWitter reversed a lower court that declined to compel\nthe arbitration of arbitrable state-law claims on the\nground that certain federal claims were non-\narbitrable and duplicative proceedings would be\ninefficient. While acknowledging “the Act’s goal of\nspeedy and efficient decisionmaking,” the Court\nobserved that the FAA’s “principal objective” is not\nefficiency but “to ensure judicial enforcement of\nprivately made agreements to arbitrate.” Id. at 219-\n20. The Court held that even at the expense of parallel\nproceedings, it is the duty of a court to “enforce the\nbargain of the parties to arbitrate, and ‘not substitute\nits own views of economy and efficiency’ for those of\nCongress.” Id. at 217.\n 48\n\n There is no comparable inefficiency here. To the\ncontrary, here, and in the vast majority of cases,\nCongress’ primary goal of promoting arbitration in\nline with parties’ agreement and efficiency (especially\nas measured by the overall expenditure of judicial\nresources) are mutually reinforcing. When the parties\nagree to arbitrate bilaterally, instead of going to court;\nwhen the agreement does not specify a deadline for\ninvoking the agreement and incorporates rules\nprotecting against a finding of waiver via litigation;\nand when no party is prejudiced by invoking the\nagreement, the efficient and pro-arbitration solution\nis to enforce the agreement and stay the litigation. In\nfact, in a comparison between the bilateral arbitration\nthe parties agreed to and the potential nationwide\ncollective action Claimant seeks to pursue in court, the\nefficiency calculus is not even close.\n In the end, the choice the parties offer this Court\nis stark. Under Respondent’s view, there is a uniform\nfederal rule that prevents a party from losing its right\nto arbitrate absent a violation of a clear deadline,\nexpress relinquishment of the right, or prejudice to\nothers. That rule favors arbitration, counteracts\nlingering judicial hostility to arbitration, and gives\nprimacy to the terms of the parties’ agreement. In\ncontrast, Claimant seeks to replace a longstanding and\nwell-functioning consensus in favor of a manufactured\nanti-arbitration rule that does not track the state-law\nconcepts on which it is purportedly based and that\nwould serve primarily to prevent valid arbitration\nagreements from being enforced according to their\nterms. If the choice were close, it would trigger this\nCourt’s instruction to resolve “any doubts [about]\nwaiver, delay, or a like defense to arbitrability” “in\n 49\n\nfavor of arbitration.” Moses H. Cone, 460 U.S. at 24-\n25. But the question is not close. Text, context, and\nstatutory purposes all point in the same direction\nhere. The Court should not abandon a prejudice\ninquiry in favor of a use-it-or-lose-it rule that\nsystematically favors litigation over agreed-upon\narbitration.\n CONCLUSION\n For the foregoing reasons, the Court should\naffirm.", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of arbitration-specific waiver doctrine.", "governingLaw": "Apply United States federal arbitration law; Eighth Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal arbitration law; Eighth Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Morgan v. Sundance, Inc.", "citation": "596 U.S. 411 (2022)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/21pdf/21-328_m6ho.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "This dispute turns on a single question of law: whether the Eighth Circuit erred in conditioning waiver of the right to arbitrate on a showing of prejudice. The Supreme Court answered that question directly in Morgan v. Sundance, Inc. (2022). The Court held that the FAA 'may not make up a new procedural rule based on the FAA's policy favoring arbitration' and that the Eighth Circuit 'erred in conditioning a waiver of the right to arbitrate on a showing of prejudice.' The FAA's policy favoring arbitration is not a mandate to give arbitration agreements preferential treatment that makes them harder to waive than other contracts. As the Court explained, the policy 'is merely an acknowledgment of the FAA's commitment to overrule the judiciary's longstanding refusal to enforce agreements to arbitrate and to place such agreements upon the same footing as other contracts.' A court must hold a party to its arbitration contract 'just as the court would to any other kind,' but it 'may not devise novel rules to favor arbitration over litigation.'\n\nThe textual anchor for this conclusion is FAA § 6, which provides that any application under the Act 'shall be made and heard in the manner provided by law for the making and hearing of motions.' This is a command to apply ordinary federal procedural rules, including rules about timeliness and waiver—not to craft arbitration-specific variants. Because the ordinary federal rule of waiver does not include a prejudice requirement—waiver is the 'intentional relinquishment or abandonment of a known right' focusing on the waiving party's conduct—§ 6 instructs that prejudice is not a condition of finding that a party waived its right to stay litigation or compel arbitration. The respondent's arguments that § 3's 'in default' language or the AAA's Rule 42(a) preserves a prejudice requirement cannot overcome this holding. The Court in Morgan expressly addressed the Eighth Circuit's prejudice requirement and vacated the judgment; it did not adopt the respondent's reading of 'default' as requiring prejudice.\n\nThe respondent's arguments, while sophisticated, ultimately conflict with the Court's holding. The respondent argues that § 3 is the specific provision governing stays, that 'in default' requires prejudice or a violation of a clear deadline, and that state-law doctrines like laches and estoppel all require prejudice. But Morgan forecloses the notion that the FAA authorizes arbitration-specific procedural rules. The Court assumed without deciding that the waiver framework was the correct one and held only that the Eighth Circuit could not add a prejudice element. On remand, the Eighth Circuit must determine whether Respondent knowingly relinquished its right to arbitrate by acting inconsistently with that right—without requiring prejudice. Because the claimant did not seek review of the Eighth Circuit's case-specific no-prejudice finding and the Supreme Court did not resolve whether waiver in fact occurred, the correct disposition is to vacate and remand for further proceedings consistent with Morgan. The claimant thus prevails on the legal question presented: the Eighth Circuit's prejudice requirement was error. The respondent's counterclaim seeking affirmance must be denied.\n\nThe respondent's reliance on AAA Rule 42(a)—providing that judicial proceedings do not waive the right to arbitrate—does not change the outcome. That rule is a contractual provision the district court would consider on remand in the first instance when evaluating whether Respondent acted inconsistently with its right to arbitrate. It does not alter the legal standard the court must apply. The claimant does not need to prove prejudice for the waiver inquiry; she must only show that the respondent knew of its right and acted inconsistently with it. Whether she can succeed on that showing on remand is a separate question not resolved here. The disposition is vacate and remand.", "allocation": null, "citations": [ { "title": "Morgan v. Sundance, Inc. | 596 U.S. ___ (2022)", "url": "https://supreme.justia.com/cases/federal/us/596/21-328/case.pdf", "proposition": "Under FAA Section 6, courts must apply ordinary federal procedural rules to applications under the Act, including rules about timeliness and waiver, and may not create arbitration-specific procedural rules such as a prejudice requirement for waiver of the right to arbitrate. The FAA's policy favoring arbitration means treating arbitration agreements like other contracts, not devising novel rules to favor arbitration over litigation. The Eighth Circuit erred in conditioning waiver of the right to arbitrate on a showing of prejudice." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-050", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nINTRODUCTION\n The Constitution extends the federal “judicial\nPower” to “all Cases of admiralty and maritime Juris-\ndiction.” U.S. Const. art. III, § 2. In The Federalist,\nAlexander Hamilton explained that even “[t]he most\nbigoted idolizers of State authority” could not “deny\nthe national judiciary the cognizances of maritime\ncauses.” The Federalist No. 80, at 478 (Clinton Ros-\nsiter ed., 1961). For much of this Nation’s history—\nwith little fanfare or debate—maritime law was thus an\nexclusively federal enclave. Federal courts crafted and\napplied federal common law to decide maritime con-\ntract disputes. As relevant here, from the Founding\nuntil the mid-twentieth century, when parties con-\ntracted for the application of some other nation’s law,\n (1)\n 2\nU.S. courts enforced those choice-of-law clauses unless\nthey were contrary to federal maritime policy.\n State law first entered the stage following this\nCourt’s decision in Wilburn Boat Co. v. Fireman’s\nFund Ins. Co., 348 U.S. 310 (1955). Wilburn Boat al-\nlowed state law to play a substantive role in maritime\ncases, by filling the gaps where no federal statute or\nentrenched federal common law controls. Wilburn\nBoat generated considerable turmoil in the marine in-\ndustries, which had previously relied on a single, uni-\nform body of federal maritime law. To claw back some\nof that uniformity and predictability, parties to mari-\ntime contracts turned to choice-of-law provisions des-\nignating which State’s law would fill any gaps in federal\nmaritime law. Commonly, they chose a State with a\nwell-developed maritime jurisprudence, like New\nYork—as the parties did here.\n Although the substance of choice-of-law clauses be-\ngan to shift, their validity did not. Wilburn Boat did\nnot disturb the established maritime rule that federal\nlaw governs the enforceability of choice-of-law clauses.\nRaiders accordingly does not dispute that, as a matter\nof federal common law, choice-of-law clauses in mari-\ntime contracts are presumptively enforceable. This\ncase involves the correct federal-common-law test for\noverriding that presumption. Traditional conflicts\nprinciples allow courts to refuse to apply a choice-of-\nlaw clause when that clause violates public policy. But\nwhen considering a choice-of-law clause in a maritime\ncontract, the key question is whose public policy\nmatters—federal policy or the policy of the State\nwhere the suit is brought.\n The answer should be easy. Maritime law is a fed-\neral enclave. The presumption of enforceability is a\nuniform federal rule, and the public-policy exception is\n 3\na uniform federal exception. It naturally follows that\nthe scope of a federal exception to a federal rule should\nbe defined by federal policy. That has been the nearly\nuniform approach of courts for 200-plus years, until the\ndecision below. Before Wilburn Boat, federal courts\nenforced a choice-of-law provision in a maritime con-\ntract unless it violated federal maritime policy. After\nWilburn Boat, federal courts did the same thing. The\nsubstance of choice-of-law provisions changed, as par-\nties often specified which State’s law would fill any\ngaps in federal maritime law. But the test for enforc-\ning choice-of-law provisions remained the same.\n That approach is supported by all three of the con-\nsiderations to which this Court looks in deciding ques-\ntions of admiralty law: historical “tradition[],” “con-\nformity with parallel statutory schemes,” and “policy\ngrounds.” Dutra Grp. v. Batterton, 139 S. Ct. 2275,\n2283 (2019). In addition to the history described above,\ncongressional guidance broadly favors the enforce-\nment of choice-of-law clauses in maritime contracts.\nAnd enforcing the parties’ choice of law furthers the\nfundamental principles of admiralty law, including uni-\nformity, predictability, and international comity.\nThere is no sound justification for the contrary rule\nadopted by the court below, which would allow any one\nof the 50 States’ idiosyncratic preferences to defeat the\nfederal presumption of enforceability. This Court\nshould therefore make clear that maritime choice-of-\nlaw clauses are enforceable unless they contravene a\nstrong federal public policy.\n OPINIONS BELOW\n The opinion of the court of appeals (Pet. App. 1a-\n15a) is reported at 47 F.4th 225. The opinion of the dis-\ntrict court granting Claimant’s motion for judgment\non the pleadings (Pet. App. 19a-35a) is reported at\n 4\n521 F. Supp. 3d 580. The opinion of the district court\ndenying Raiders’s motion to alter or amend the judg-\nment (Pet. App. 16a-18a) is not reported.\n JURISDICTION\n The judgment of the court of appeals was entered\non August 30, 2022. The petition for a writ of certiorari\nwas filed on November 23, 2022, and was granted on\nMarch 6, 2023. The jurisdiction of this Court rests on\n28 U.S.C. 1254.\n CONSTITUTIONAL PROVISION INVOLVED\n Article III, Section 2 of the United States Constitu-\ntion provides, in relevant part:\n The judicial Power shall extend to all Cases, in\n Law and Equity, arising under this Constitution,\n the Laws of the United States, and Treaties made,\n or which shall be made, under their Authority;—to\n all Cases affecting Ambassadors, other public Min-\n isters and Consuls;—to all Cases of admiralty and\n maritime Jurisdiction;—to Controversies to which\n the United States shall be a Party;—to Controver-\n sies between two or more States;—between a State\n and Citizens of another State,—between Citizens of\n different States,—between Citizens of the same\n State claiming Lands under Grants of different\n States, and between a State, or the Citizens thereof,\n and foreign States, Citizens or Subjects.\n STATEMENT\n A. Legal Background\n 1. The Constitution grants federal courts jurisdic-\ntion over maritime and admiralty cases. U.S. Const.\nart. III, § 2 (“The judicial Power shall extend . . . to all\nCases of admiralty and maritime Jurisdiction . . . .”).\n 5\nThat grant of federal admiralty jurisdiction extends to\nmarine insurance contracts. See New England Mut.\nMarine Ins. Co. v. Dunham, 78 U.S. 1 (1870); see also,\ne.g., DeLovio v. Boit, 7 F. Cas. 418, 419 (No. 3,776)\n(C.C.D. Mass. 1815) (Story, J.).\n This Court has long recognized that, “by granting\nfederal courts jurisdiction over maritime and admi-\nralty cases, the Constitution implicitly directs federal\ncourts sitting in admiralty to proceed ‘in the manner of\na common law court.’ ” Dutra Grp. v. Batterton,\n139 S. Ct. 2275, 2278 (2019) (quoting Exxon Shipping\nCo. v. Baker, 554 U.S. 471, 489-490 (2008)). As a result,\n“Congress has paramount power to fix and determine\nthe maritime law which shall prevail throughout the\ncountry.” Southern Pac. Co. v. Jensen, 244 U.S. 205,\n215 (1914). But “in the absence of some controlling\nstatute, the general maritime law, as accepted by the\nFederal courts, constitutes part of our national law, ap-\nplicable to matters within the admiralty and maritime\njurisdiction.” Ibid.\n 2. Federal common law exclusively governed mar-\nitime contracts for nearly two centuries. See, e.g.,\nWatts v. Camors, 115 U.S. 353, 362 (1885); Jensen,\n244 U.S. at 215. That changed after Wilburn Boat Co.\nv. Fireman’s Fund Ins. Co., 348 U.S. 310 (1955). In\nWilburn Boat, the Court created a limited new role for\nstate law in maritime cases. The Court concluded that\nstate law may apply “in the absence of controlling Acts\nof Congress,” where there is neither a “judicially es-\ntablished federal admiralty rule” nor an apparent fed-\neral interest in “fashion[ing] an admiralty rule.” Id. at\n314, 319. In other words, state law now fills the gaps in\nfederal admiralty law. But where a federal rule exists—\n 6\nwhether because of a statute, entrenched federal com-\nmon law, or an overriding federal policy interest—\nstate law still may not displace it.\n Wilburn Boat generated considerable “turmoil” in\nthe marine insurance industry. Alex J. Parks, The Law\nand Practice of Marine Insurance and General Aver-\nage 13 (1987). Predicting whether federal or state law\nwill apply to any given substantive question—and, if\nstate law applies, which State’s law—can be a difficult\ntask. See Thomas J. Schoenbaum, Admiralty and\nMaritime Law § 19:9 (6th ed. 2022); see also Harold K.\nWatson, A Fifty Year Retrospective on the American\nLaw of Marine Insurance, 91 Tul. L. Rev. 855, 856\n(2017). In particular, it is not always clear whether a\ngiven issue is governed by entrenched federal prece-\ndent. For example, the courts of appeals have disa-\ngreed about whether the doctrine of uberrimae fidei,\nwhich imposes an affirmative duty of utmost good faith\non the insured to disclose all material facts, is suffi-\nciently entrenched. Compare Albany Ins. Co. v. Anh\nThi Kieu, 927 F.2d 882 (5th Cir. 1991), with Fireman’s\nFund Ins. Co. v. Great Am. Ins. Co. of N.Y., 822 F.3d\n620 (2d Cir. 2016). Courts have even disagreed about\nwhether two warranties within a single policy are gov-\nerned by federal or state law. Compare Travelers\nProp. Casualty Co. of Am. v. Ocean Reef Charters LLC,\n996 F.3d 1161 (11th Cir. 2021) (captain-and-crew war-\nranty governed by state law), with Lexington Ins. Co.\nv. Cooke’s Seafood, 835 F.2d 1364 (11th Cir. 1988) (nav-\nigational-limits warranty governed by federal law).\n 3. To mitigate the uncertainty generated by Wil-\nburn Boat, the marine industries have embraced\nchoice-of-law clauses in their contracts. See Warren\nT.R. von Bittner, Jr., The Validity and Effect of Choice\nof Law Clauses in Marine Insurance Contracts,\n 7\n53 Ins. Counsel J. 573, 578 (1986). When consistently\nenforced, those choice-of-law clauses provide a predict-\nable legal framework to govern contracts across the\nmany jurisdictions, both domestic and international, in\nwhich maritime companies operate. Ibid. In the ma-\nrine insurance industry in particular, such provisions\nafford certainty to both insurer and insured—giving\nthe former notice of the risks it is bearing, and the lat-\nter notice of the risks from which it is protected.\n B. Factual Background\n 1. Claimant is a marine insurance company or-\nganized in Germany and headquartered in the United\nKingdom. Pet. App. 2a-3a; p. II, supra. From 2007 to\n2019, Claimant insured a yacht owned by Raiders, a\nPennsylvania LLC, for up to $550,000. Pet. App. 2a-3a,\n21a. As part of the insurance contract, the parties in-\ncluded a choice-of-law clause. Id. at 4a, 25a. The clause\nselects settled federal admiralty law, or in the absence\nof such law, then New York law. Ibid. In full, the\nclause states:\n It is hereby agreed that any dispute arising here-\n under shall be adjudicated according to well es-\n tablished, entrenched principles and precedents\n of substantive United States Federal Admiralty\n law and practice but where no such well estab-\n lished, entrenched precedent exists, this insuring\n agreement is subject to the substantive laws of\n the State of New York.\nId. at 25a.\n The parties’ contract also includes a forum-selection\nclause providing that “any dispute arising hereunder\nshall be subject to the exclusive jurisdiction of the Fed-\neral courts of the United States of America, in particu-\nlar, the Federal District court within which [Raiders]\n 8\nresides or the Federal District court within which\n[Raiders’s] insurance agent resides.” D. Ct. Doc. 1, at\n82 (Sept. 25, 2019). Raiders resides in the Eastern Dis-\ntrict of Pennsylvania, and Raiders’s insurance agent\nresides in the Southern District of Florida. Id. at 67.\n Before Raiders and Claimant renewed the policy\nin 2016, a third party surveyed the yacht’s condition.\nPet. App. 21a. The survey results included a “Priority 1\nrecommendation” that Raiders purchase fire extin-\nguishers and store them aboard the yacht. Ibid. After\nRaiders submitted a letter to Claimant certifying\nthat it had complied with all of the survey’s recommen-\ndations, Claimant renewed the policy. Id. at 21a-\n22a. The renewed policy included an express warranty\nthat the yacht’s fire-extinguishing equipment was\n“properly installed” and “maintained in good working\norder,” including “the weighing of tanks once a year,\ncertification/tagging and recharging as necessary.” Id.\nat 22a.\n 2. In 2019, Raiders’s yacht ran aground near Fort\nLauderdale, Florida. No fire occurred and the fire\nequipment was not used. The yacht sustained signifi-\ncant damage, and Raiders filed a claim under the insur-\nance policy. Pet. App. 22a.\n Claimant investigated and determined that, at\nthe time of the accident, the yacht’s fire extinguishers\nhad not been inspected or recertified, in violation of the\npolicy’s express warranty. Pet. App. 22a. Claimant\nfurther concluded that Raiders had not completed the\nsurvey’s recommendations, and that Raiders’s 2016 let-\nter certifying compliance thus contained a material\nmisrepresentation. Id. at 22a-23a. Claimant denied\nRaiders’s insurance claim on those two grounds. Id. at\n23a.\n 9\n Although that denial may seem harsh to the land-\nbound, it reflects traditional maritime principles. For\ninstance, the doctrine of uberrimae fidei requires that\nan applicant for marine insurance make a complete,\ntruthful disclosure of all material facts, even if not\nasked. As a result, “any misrepresentation or omission”\n—even if “inadverten[t]”—“will vitiate the policy.”\nSchoenbaum, supra, § 19:14. Then, during the life of a\nmarine insurance policy, maritime law similarly de-\nmands “literal performance” or “strict compliance”\nwith warranties. Id. § 19:15. “[C]ontrary to the gen-\neral rule applicable to other kinds of insurance,” those\ndoctrines apply even where they have “draconian con-\nsequences.” Id. § 19:14; see id. § 19:15. Maritime law’s\nrules of strict enforcement date “back into the early\ndays of marine insurance, when sailing ships in faraway\nseas were insured in London by underwriters who\ncould get no information except from the shipowners.”\nStecker v. American Home Fire Assur. Co., 84 N.E.2d\n797, 799 (N.Y. 1949).\n C. Procedural Background\n 1. Claimant sought a declaratory judgment in\nthe Eastern District of Pennsylvania that it was enti-\ntled to deny coverage due to Raiders’s material misrep-\nresentation and breach of express warranty. Pet. App.\n19a-20a. Raiders asserted five counterclaims, includ-\ning three under Pennsylvania law: (i) breach of fiduci-\nary duty under state common law; (ii) bad-faith liabil-\nity, in violation of 42 Pa. Cons. Stat. § 8371; and (iii) un-\nfair trade practices, in violation of 73 Pa. Stat. and\nCons. Stat. Ann. § 201-1 et seq. Pet. App. 20a; see id.\nat 34a & n.5.\n Claimant moved for judgment on the pleadings\nwith respect to those three Pennsylvania claims, argu-\n 10\ning that Pennsylvania law is inapplicable under the pol-\nicy’s choice-of-law clause—which, again, selects fed-\neral admiralty law or, alternatively, New York law.\nPet. App. 25a-26a. Raiders acknowledged that its\nPennsylvania counterclaims are “not cognizable under\nNew York law.” Id. at 34a. But Raiders argued that\nthe contract’s choice-of-law clause should be rejected\nas unenforceable under “Pennsylvania’s ‘strong public\npolicy’ of punishing insurers who deny coverage in bad\nfaith.” Id. at 29a.\n 2. The district court granted Claimant’s motion\nfor judgment on the pleadings. Pet. App. 19a-35a. It\nexplained that “the public policy of a state where a case\nwas filed cannot override the presumptive validity, un-\nder federal maritime choice-of-law principles, of a pro-\nvision in a marine insurance contract where the chosen\nforum has a substantial relationship to the parties or\nthe transaction.” Pet. App. 32a. The court analyzed\nthis Court’s decision in The Bremen v. Zapata Off-\nShore Co., 407 U.S. 1, 15 (1972), which “considered\nwhether the public policy of the forum where suit was\nbrought—there, federal public policy as supplied by\nfederal maritime law—outweighed the application of\nthe law of other countries.” Pet. App. 31a-32a (citation\nomitted). The district court explained that The Bre-\nmen considered only federal policy, and did not suggest\nthat a presumptively valid choice-of-law clause “must\nyield to the public policy preferences of the particular\nstate in which the case happens to be brought.” Id. at\n32a (emphasis added).\n The district court further emphasized that its hold-\ning was “consistent with maritime law’s primary pur-\npose: ‘to protect and encourage commercial maritime\nactivity . . . by ensuring that uniform rules of conduct\nare in place.’ ” Pet. App. 33a (citation omitted). The\n 11\ncourt reasoned that “[p]ermitting state public policy to\noverride presumptively valid contractual choice-of-law\nprovisions in marine insurance contracts would frus-\ntrate such uniformity.” Ibid.\n 3. The court of appeals vacated and remanded.\nPet. App. 1a-15a. The court agreed that the choice-of-\nlaw clause here requires the application of New York\nlaw, and concluded that Raiders had forfeited any ar-\ngument to the contrary. Id. at 8a n.1. But it held that\nthe district court should have “consider[ed] whether\nPennsylvania has a strong public policy that would be\nthwarted by applying New York law.” Id. at 15a.\n The court of appeals reached that conclusion by ex-\ntending The Bremen’s federal-public-policy exception\nto forum-state policy. Pet. App. 11a-15a. It noted that\nthis Court had applied The Bremen to “a dispute over\nwhether Washington State or Florida was the proper\nforum” for a passenger’s suit against a cruise line in\nCarnival Cruise Lines, Inc. v. Shute, 499 U.S. 585\n(1991). Pet. App. 15a. The court of appeals also be-\nlieved “it altogether reasonable that a ‘strong public\npolicy of the forum [state] in which suit is brought’\ncould, as to that policy specifically, render unenforcea-\nble the choice of state law in a marine insurance con-\ntract.” Ibid. (alteration in original) (quoting The Bre-\nmen, 407 U.S. at 15). The court therefore remanded\nfor consideration of whether Pennsylvania has a strong\npublic policy that would bar the enforcement of the\nchoice-of-law clause and the application of New York\nlaw here. Ibid.\n SUMMARY OF ARGUMENT\n Federal admiralty law governs the enforceability of\nchoice-of-law clauses in maritime contracts. Under\nwell-established federal maritime principles, a choice-\n 12\nof-law clause is presumptively enforceable. That pre-\nsumption can be overcome only in narrow circum-\nstances, including when the parties’ chosen law contra-\nvenes federal maritime policy.\n I. The court of appeals adopted a different rule:\nthat a forum State can negate the federal presumption\nof enforceability by applying its own public policy.\nThat rule is contrary to historical tradition, congres-\nsional guidance, and the fundamental purposes of mar-\nitime law—all of which make clear that the only rele-\nvant public policy is federal public policy.\n A. Throughout this Nation’s history, federal policy\nhas governed maritime choice-of-law clauses. From\nthe Founding until the middle of the twentieth century,\nstate law had virtually no role in maritime cases. In-\nstead, maritime contracts were governed by a uniform\nbody of federal admiralty law. Parties to maritime con-\ntracts therefore had no need to adopt choice-of-law\nclauses selecting a particular State’s law. Parties did,\nhowever, sometimes adopt choice-of-law clauses select-\ning another country’s law, and courts enforced those\nprovisions unless contrary to federal public policy.\n In 1955, in Wilburn Boat Co. v. Fireman’s Fund\nIns. Co., 348 U.S. 310, this Court allowed state law to\nplay a gap-filling role in admiralty cases. After Wil-\nburn Boat, parties began to opt for choice-of-law\nclauses that selected state law. But federal courts gen-\nerally continued to apply federal public policy to deter-\nmine the enforceability of those clauses. Most courts\nnow apply a two-part test, under which choice-of-law\nclauses are enforceable unless (i) the parties have no\nsubstantial relationship to, or reasonable basis for se-\nlecting, the chosen law; or (ii) the chosen law violates\nfederal maritime policy.\n 13\n In the decision below, the Third Circuit became the\nfirst court of appeals to hold a maritime choice-of-law\nclause potentially unenforceable as a matter of state\npublic policy. It did so based on a misreading of this\nCourt’s decision in The Bremen v. Zapata Off-Shore\nCo., 407 U.S. 1 (1972). In fact, The Bremen strongly\nendorsed the enforceability of freely negotiated con-\ntractual provisions, subject to the traditional federal-\npolicy exception. It did not once mention the forum\nState’s policy interests.\n B. Congressional guidance further supports a\nfederal-common-law rule focused on federal policy.\nCongress has addressed maritime choice-of-law and\nforum-selection provisions and has enacted a narrow\nfederal exception to enforcement. A longstanding fed-\neral statute provides that vessels transporting passen-\ngers may not contractually limit trial rights for per-\nsonal injury or death. 46 U.S.C. 30527. Congress’s\ndeclaration of federal policy in that specific circum-\nstance carries a strong negative implication: Congress\nexpects that maritime choice-of-law clauses will other-\nwise be enforced. That inference is further buttressed\nby Congress’s general embrace of the freedom of con-\ntract in various areas under federal control. Con-\ngress’s pro-contract approach would be jeopardized if\n50 States could refuse to enforce choice-of-law clauses\nwhenever they wished to elevate their individual policy\npreferences over the parties’ agreements.\n C. The core values of maritime law also counsel\nagainst importing state policy into the federal test for\nenforceability of choice-of-law clauses. Applying a sin-\ngle body of federal public policy, rather than the idio-\nsyncratic policies of the 50 States, best serves maritime\nlaw’s overarching goal of uniformity. It likewise pro-\n 14\nvides much-needed predictability for inherently transi-\ntory businesses, generating significant cost savings for\nboth businesses and consumers. The predictable en-\nforcement of maritime choice-of-law clauses, subject to\na uniform body of federal public policy, also respects\ninternational comity by minimizing conflicts with for-\neign entities or with another nation’s laws unless nec-\nessary to advance the highest U.S. interests. Con-\nversely, allowing state policy to override freely negoti-\nated contractual terms would encourage gamesman-\nship and forum-shopping.\n II. Applying the correct test, the choice-of-law\nclause in the insurance contract between Claimant\nand Raiders is enforceable. Raiders did not argue on\nappeal either (i) that Claimant lacked a substantial\nconnection to New York, or a reasonable basis for se-\nlecting New York law; or (ii) that the application of\nNew York law here conflicts with any federal maritime\npolicy. Its sole contention was that the application of\nNew York law conflicts with Pennsylvania public\npolicy—a contention that is simply irrelevant under the\ncorrect federal test. The court of appeals thus erred in\nremanding for an assessment of Pennsylvania public\npolicy, and this Court should reverse.\n ARGUMENT\n The Constitution’s grant of admiralty jurisdiction to\nfederal courts “implicitly directs federal courts sitting\nin admiralty to proceed ‘in the manner of a common law\ncourt.’ ” Dutra Grp. v. Batterton, 139 S. Ct. 2275, 2278\n(2019) (quoting Exxon Shipping Co. v. Baker, 554 U.S.\n471, 489-490 (2008)). Thus, absent a federal statute,\ncourts apply the “general maritime law”—a body of ju-\ndicially created rules “drawn from state and federal\nsources,” which constitute an “amalgam of traditional\ncommon-law rules, modifications of those rules, and\n 15\nnewly created rules.” East River S.S. Corp. v. Trans-\namerica Delaval, Inc., 476 U.S. 858, 864-865 (1986); see\nAir & Liquid Sys. Corp. v. DeVries, 139 S. Ct. 986, 992\n(2019) (noting that courts “may examine, among other\nsources, judicial opinions, legislation, treatises, and\nscholarly writings”).\n Exercising that common-law authority, federal\ncourts have established a federal rule that choice-of-\nlaw clauses in maritime contracts are presumptively\n“valid and enforceable.” Claimant Reinsurance\n(UK) PLC v. Durham Auctions, Inc., 585 F.3d 236,\n242-243 (5th Cir. 2009). 1 Also as a matter of federal\ncommon law, that presumption of validity can be over-\ncome if enforcement would contravene public policy.\nSee, e.g., Milanovich v. Costa Crociere, S.p.A.,\n954 F.2d 763, 767 (D.C. Cir. 1992). That much is undis-\nputed. The question presented here is whose public\npolicy matters under that federal rule: federal mari-\ntime policy or a forum State’s policy.\n As a matter of basic common sense, federal policy\nshould control. This is, after all, a uniform federal rule\nof enforceability subject to a federal exception. Logi-\ncally, that exception should also be defined by uniform\nfederal public policy. No principles of maritime law\nwould be served by a federal-common-law rule resting\nenforceability on the public policy of whichever of the\n50 States happens to be the forum for a suit. This\nCourt’s doctrinal approach to questions of admiralty\nlaw confirms that common-sense conclusion. The\n 1\n See, e.g., Pet. App. 8a; Claimant Ins. SE v. Wave Cruiser\nLLC, 36 F.4th 1346, 1353-1354 (11th Cir. 2022); Galilea, LLC v. AGCS\nMarine Ins. Co., 879 F.3d 1052, 1059 (9th Cir. 2018); Triton Marine\nFuels Ltd., S.A. v. M/V PACIFIC CHUKOTKA, 575 F.3d 409, 413\n(4th Cir. 2009); Milanovich v. Costa Crociere, S.p.A., 954 F.2d 763,\n767 (D.C. Cir. 1992); see also Thomas J. Schoenbaum, Admiralty and\nMaritime Law § 19:6 (6th ed. 2022).\n 16\nCourt typically considers historical “tradition[],” “con-\nformity with parallel statutory schemes,” and “policy\ngrounds.” Dutra, 139 S. Ct. at 2283. Here, all three\nconsiderations favor allowing only federal public policy\nto override choice-of-law clauses in maritime contracts.\nI. FEDERAL PUBLIC POLICY SHOULD GOVERN\n THE ENFORCEABLITY OF MARITIME\n CHOICE-OF-LAW CLAUSES\n A. Federal Policy Has Historically Governed\n Maritime Choice-Of-Law Clauses\n For nearly two centuries, the application of state\npublic policy to nullify a maritime choice-of-law clause\nwould have been out of the question. From the Found-\ning until the middle of the twentieth century, maritime\ncontracts were governed by a uniform “general mari-\ntime law.” Southern Pac. Co. v. Jensen, 244 U.S. 205,\n215 (1914). State law and state policy thus had no role\nto play; to the extent maritime contracts had choice-of-\nlaw clauses, they selected among different countries’\nlaws. Only after this Court’s 1955 decision in Wilburn\nBoat, which held that state law could fill gaps in federal\nlaw governing maritime contracts, did parties to mari-\ntime contracts begin selecting state law. Courts at that\npoint began confronting the question of whether to en-\nforce clauses choosing a particular State’s laws. Adapt-\ning general choice-of-law principles to the federal mar-\nitime context, courts have overwhelmingly recognized\nthat a conflict with federal policy—not forum-state\npolicy—may prevent enforcement of a choice-of-law\nclause in a maritime contract.\n 1. Before Wilburn Boat, Maritime Contracts\n Were Governed Exclusively By Federal Law\n From the Founding until this Court’s 1955 decision\nin Wilburn Boat, maritime contracts were governed\n 17\nexclusively by federal statutes and federal common\nlaw. Maritime law was thus “uniform throughout the\nUnion,” and not “limited in its extent, or controlled in\nits exercise, by the laws of the several states.” Watts\nv. Camors, 115 U.S. 353, 362 (1885); see William A.\nFletcher, The General Common Law and Section 34 of\nthe Judiciary Act of 1789: The Example of Marine In-\nsurance, 97 Harv. L. Rev. 1513, 1553 (1984) (explaining\nthat early federal courts “consistently decided marine\ninsurance cases as a matter of general common law”\nrather than “local state law”).\n In Watts, for example, this Court applied federal\ncommon law and “equitable principles,” rather than a\nconflicting Louisiana statute, in awarding damages for\nbreach of a maritime contract. 115 U.S. at 361-362.\nSeveral decades later, the Court similarly rejected the\napplication of the California statute of frauds to a mar-\nitime contract, because otherwise “the uniformity of\nrules governing such contracts may be destroyed by\nperhaps conflicting rules of the states.” Union Fish\nCo. v. Erickson, 248 U.S. 308, 314 (1919). And even\nwhen gaps existed in federal marine insurance law,\ncourts did not look to state law. Instead, they often\nborrowed from English law, recognizing “special rea-\nsons for keeping in harmony with the marine insurance\nlaws of England, the great field of this business.”\nQueen Ins. Co. of Am. v. Globe & Rutgers Fire Ins. Co.,\n263 U.S. 487, 493 (1924); see Thomas J. Schoenbaum,\nAdmiralty and Maritime Law § 19:6 (6th ed. 2022).\n Because maritime contracts were governed by fed-\neral law, parties to maritime contracts had no need to\nadopt choice-of-law clauses selecting a particular\nState’s laws. During that pre-Wilburn Boat period,\nhowever, parties to maritime contracts did sometimes\ninclude choice-of-law clauses selecting among different\n 18\ncountries’ laws. Those clauses often specified the\nmaritime law of England, which was well developed\nand highly regarded. See, e.g., Aetna Ins. Co. v.\nSacramento-Stockton S.S. Co., 273 F. 55, 60 (9th Cir.\n1921) (English law); The Kensington, 183 U.S. 263, 269\n(1902) (Belgian law); London Assurance v. Companhia\nde Moagens do Barreiro, 167 U.S. 149, 161 (1897) (Eng-\nlish law); The Oranmore, 24 F. 922, 923 (D. Md. 1885)\n(English law), aff’d, 92 F. 396 (C.C.D. Md. 1885); The\nAurora, 1 F. Cas. 206, 207 (D.S.C. 1800) (No. 95) (Ham-\nburg law).\n Such choice-of-law clauses were generally enforced\nby U.S. courts unless contrary to federal public policy.\nSee, e.g., London Assurance, 167 U.S. at 161; The\nOranmore, 24 F. at 928; see also Warren T.R. von\nBittner, Jr., The Validity and Effect of Choice of Law\nClauses in Marine Insurance Contracts, 53 Ins. Coun-\nsel J. 573, 578-579 (1986). In London Assurance, for\nexample, this Court upheld a choice-of-law clause se-\nlecting English law. 167 U.S. at 161. The Court ex-\nplained that “it is no injustice to the company to decide\nits rights according to the principles of law of the coun-\ntry which it has agreed to be bound by, so long as . . .\nthe foreign law is not in any way contrary to the policy\nof our own.” Ibid. (emphasis added); see, e.g., Siegel-\nman v. Cunard White Star Ltd., 221 F.2d 189, 195 (2d\nCir. 1955) (Harlan, J.) (upholding a choice-of-law\nclause selecting English law because “American pol-\nicy” was not “contrary to England’s on this subject”).\n By contrast, in The Kensington, the Court refused\nto enforce a choice-of-law clause selecting Belgian law\nbecause enforcement would contravene “the public pol-\nicy of the United States.” 183 U.S. at 269. The Court\nreasoned that “neither by comity nor by the will of con-\ntracting parties can the public policy of a country be\n 19\nset at naught.” Ibid. (emphasis added); see, e.g., Knott\nv. Botany Worsted Mills, 179 U.S. 69, 77 (1900) (hold-\ning unenforceable a choice-of-law clause selecting “the\nlaw of the ship’s flag” because a federal statute prohib-\nited exculpatory provisions that the chosen law would\nhave allowed).\n For that nearly 200-year stretch, state law was no-\nwhere to be found. U.S. courts did not ask whether a\nchoice-of-law clause in a maritime contract might of-\nfend the policy of one of the 50 States.\n 2. After Wilburn Boat, Federal Policy Still\n Governs Choice-Of-Law Clauses\n a. In 1955, the Court opened the door for state law\nto apply in marine insurance contracts. Wilburn Boat\nheld that where no settled principle of federal admi-\nralty law exists, and where no specific federal interest\nrequires the creation of a new federal-common-law\nrule, courts should look to state law. 348 U.S. at 314.\nBecause Wilburn Boat essentially introduced state law\ninto federal maritime cases, it elevated the importance\nof choice-of-law clauses to the maritime industry. See\npp. 6-7, supra. Now, contracting parties who choose\nU.S. law also often either select a single State’s law or\ninclude a backup provision designating which State’s\nlaw will fill the gaps of federal maritime law—as the\nparties did here by selecting settled admiralty law or,\nin the alternative, New York law. Pet. App. 4a.\n Although Wilburn Boat created a gap-filling role for\nstate substantive law, it did not disturb the settled fed-\neral presumption in favor of enforcing choice-of-law\nclauses in maritime contracts. That presumption still\ncontrols as a matter of federal maritime law. See\nnote 1, supra. And only months after Wilburn Boat,\nthis Court recognized that federal public policy still\nguides that enforceability inquiry. In Bisso v. Inland\n 20\nWaterways Corp., 349 U.S. 85 (1955), the Court consid-\nered whether a contractual provision releasing a tug-\nboat owner from liability for negligence was “invalid as\nagainst public policy.” Id. at 86-87. The Court looked\nto two of its own decisions, which had “announce[d] a\nrule of public policy against release-from-negligence\ncontracts.” Id. at 89. That “federal rule” prohibited\ncontractual provisions that would “significantly en-\ncourage negligent conduct within the boundaries of the\nUnited States.” In re Complaint of Unterweser\nReederei, GmbH, 428 F.2d 888, 908 (5th Cir. 1970)\n(Wisdom, J., dissenting), vacated sub nom., The Bre-\nmen v. Zapata Off-Shore Co., 407 U.S. 1 (1972).\n b. Because Wilburn Boat allowed the application\nof state law when federal maritime law is silent or un-\nsettled, parties to maritime contracts began frequently\nincluding choice-of-law clauses to address that possi-\nbility. See von Bittner, supra, at 573, 578. Faced with\na new twist on maritime choice-of-law clauses, federal\ncourts needed to fashion a rule to adjudicate challenges\nto enforceability when those clauses selected one\nState’s laws but were challenged in another State.\nCourts largely responded by drawing on existing\nconflict-of-laws principles—including from the Re-\nstatement (Second) of Conflict of Laws and from this\nCourt’s decision in The Bremen—and modifying them\nto account for the federal maritime context.\n The Restatement, for example, sets out an initial\nbright-line rule that choice-of-law clauses are enforce-\nable for most matters. See Restatement (Second) of\nConflict of Laws § 187(1) (1971) (Restatement). For\ncertain matters, it provides that choice-of-law clauses\nare presumptively enforceable, and that this presump-\ntion can be overcome in only two circumstances: when\n(i) “the chosen state has no substantial relationship to\n 21\nthe parties or the transaction and there is no other rea-\nsonable basis for the parties’ choice,” or (ii) enforce-\nment “would be contrary to a fundamental policy of a\nstate which has a materially greater interest than the\nchosen state in the determination of the particular is-\nsue” and whose law would otherwise apply. Id.\n§ 187(2). The Restatement, however, draws primarily\nfrom “interstate cases” and provides generally applica-\nble principles for domestic conflicts questions. See id.\n§ 10, cmt. a. It does not specifically address a federal\nenclave like maritime law or suggest whether federal\nor state policy should control in that context. See id.\n§ 3, cmt. d (noting that federal-State conflicts “may\nraise questions of great difficulty as to the precise area\nof application of State or federal law” and “[t]he solu-\ntion of such questions is not within the scope of [this]\nRestatement”).\n In The Bremen, meanwhile, this Court crafted a\nsimilar test in the maritime context. The Court ad-\ndressed a forum-selection clause—which also func-\ntioned as a choice-of-law clause—designating the Lon-\ndon Court of Justice. 407 U.S. at 2, 13 n.15. The Court\nembraced a federal presumption of enforceability for\nforum-selection clauses and emphasized that a party\nseeking to overcome that presumption of enforceability\ncarries a “heavy burden of proof.” Id. at 15, 17. It ex-\nplained that forum-selection clauses should be en-\nforced unless “enforcement would be unreasonable and\nunjust” or “the clause [is] invalid for such reasons as\nfraud or overreaching.” Id. at 15. The Court further\nexplained that a clause would be unreasonable “if en-\nforcement would contravene a strong public policy of\nthe forum in which suit is brought.” Ibid. As explained\nbelow, The Bremen makes clear that, in the maritime\ncontext, the relevant “forum” is the “American forum,”\n 22\nand the relevant public policy is federal maritime pol-\nicy. Id. at 9 (emphasis added); see pp. 26-28, infra. 2\n c. Courts confronting the enforceability of mari-\ntime choice-of-law clauses after Wilburn Boat drew on\nthose general conflicts principles. For example, in one\nearly decision, a district court extracted a two-part\nsubstantial-relationship and public-policy test, relying\non both the Restatement and The Bremen. See Hale v.\nCo-Mar Offshore Corp., 588 F. Supp. 1212, 1215 & n.4\n(W.D. La. 1984). The court explained that, in the mar-\nitime context, “the critical inquiry focuses not upon\n[state] law and policy, but upon maritime law and pol-\nicy.” Id. at 1214; see id. at 1215. Since then, lower\ncourts have overwhelmingly applied federal policy to\ndetermine the enforceability of choice-of-law provi-\nsions in maritime contracts—just as they did before\nWilburn Boat.\n The Fifth Circuit, for example, relied on the Re-\nstatement and The Bremen to uphold a choice-of-law\nclause in a marine insurance policy identical to the\nclause challenged here. See Durham, 585 F.3d at 244.\nDurham applied Hale’s two-part test, which the Fifth\nCircuit had previously adopted in Stoot v. Fluor Drill-\ning Services, Inc., 851 F.2d 1514, 1517 (5th Cir. 1988).\nUnder that test, choice-of-law clauses in maritime con-\ntracts are enforceable “unless the state has no substan-\ntial relationship to the parties or the transaction or the\nstate’s law conflicts with the fundamental purposes of\nmaritime law.” Durham, 585 F.3d at 243 (emphasis\n 2\n The Bremen and the Restatement differ in that the former\nlooks to the public policy of the forum, whereas the latter looks to the\npublic policy of the jurisdiction whose law would apply in the absence\nof a choice-of-law clause. As The Bremen shows, subtle distinctions\nabout which jurisdiction’s public policy might apply are immaterial if\nthe test properly focuses on federal policy. See 407 U.S. at 11. They\ncould, however, matter under Raiders’s state-law-focused theory.\n 23\nadded). Durham thus upheld the choice-of-law clause\nthere, even though Mississippi (the forum State) had\ndifferent standards for voiding an insurance policy\nthan New York (the parties’ chosen State), because en-\nforcement would not violate a “fundamental purpose of\nmaritime law.” Id. at 244. The Fifth Circuit has reit-\nerated that test since. See St. Paul Fire & Marine Ins.\nCo. v. Board of Comm’rs of Port of New Orleans,\n418 Fed. Appx. 305, 309 (2011).\n In Milanovich, the D.C. Circuit similarly applied\nthe Restatement and The Bremen to a choice-of-law\nclause in a cruise ticket that selected Italian law.\n954 F.2d at 766-768. The court first observed, citing\nthe Restatement, that “[u]nder American law, contrac-\ntual choice-of-law provisions are usually honored.” Id.\nat 767. It then went on to apply The Bremen, asking\nwhether any strong federal policy justified declining to\nenforce the clause. Id. at 768. The cruise passenger\nhad argued that “a particular policy of the forum”—the\nUnited States—“would be contravened by enforcement\nof the contractual choice-of-law clause” because the ap-\nplication of Italian law would undermine a federal stat-\nute. Ibid. The court found that the statute was inap-\nplicable, and therefore enforced the choice-of law pro-\nvision because no conflict with U.S. law existed. Id. at\n768-769.\n Finally, the Ninth Circuit has likewise held that the\nenforceability of choice-of-law clauses turns on federal\nmaritime policy. In Galilea, LLC v. AGCS Marine Ins.\nCo., 879 F.3d 1052 (9th Cir. 2018), the court of appeals\nupheld a choice-of-law clause materially identical to the\none here, in the face of a challenge under Montana pol-\nicy. Id. at 1059-1061. Reasoning that “[w]ithin federal\nadmiralty jurisdiction, conflicting state policy cannot\noverride squarely applicable federal maritime law,” the\n 24\ncourt explained that “Montana’s law simply does not\napply” to render the choice-of-law clause unenforcea-\nble. Id. at 1060-1061. The court noted that “The Bre-\nmen considered whether the public policy of the forum\nwhere suit was brought—there, federal public policy\nas supplied by federal maritime law—outweighed the\napplication of the law of other countries.” Id. at 1060\n(emphasis added). By contrast, extending The Bremen\nto invalidate a choice-of-law provision “because of a\nconflict with a forum state’s public policy . . . would dis-\ntort the basic, gap-filling principles underlying federal\nmaritime law’s limited recognition of state insurance\nlaw.” Ibid. (emphasis in original).\n District courts in other circuits also hold that fed-\neral maritime policy, not state policy, governs the en-\nforceability of maritime choice-of-law clauses. Nota-\nbly, courts in the Southern District of New York and\nthe Southern District of Florida—the districts with by\nfar the largest admiralty dockets outside the Fifth Cir-\ncuit—have adopted the Fifth Circuit’s Stoot test. See\nSwift Spindrift Ltd. v. Alvada Ins. Inc., 175 F. Supp.\n3d 169 (S.D.N.Y. 2016); American S.S. Owners Mut.\nProt. & Indem. Ass’n v. Henderson, 2013 WL 1245451\n(S.D.N.Y. Mar. 26, 2013); Thomas v. NASL Corp., 2000\nWL 1725011 (S.D.N.Y. Nov. 20, 2000); Farrell Lines\nInc. v. Columbus Cello-Poly Corp., 32 F. Supp. 2d 118\n(S.D.N.Y. 1997), aff’d, 161 F.3d 115 (2d Cir. 1998);\nClaimant Reinsurance (UK), PLC v. Rosin, 757 F.\nSupp. 2d 1244 (S.D. Fla. 2010); see also Claimant\nIns. SE v. Lassiter, 2022 WL 1288741 (S.D. Fla.\nApr. 29, 2022) (explaining that “most, if not all, prece-\ndent evaluates whether the chosen ‘state’s law conflicts\nwith the fundamental purposes of maritime law’ ”)\n(emphasis in original). Many district courts with\nsmaller admiralty dockets have also applied that test.\n 25\nSee Crown Bay Marina, L.P. v. Reef Transp., LLC,\n2020 WL 6120153 (D.V.I. Oct. 16, 2020); Maclean v.\nTravelers Ins. Co., 299 F. Supp. 3d 231 (D. Mass. 2017);\nApex Maritime Co. v. Furniture, Inc., 2013 WL\n2444151 (E.D.N.Y. June 5, 2013); Zepsa Indus., Inc. v.\nKimble, 2008 WL 4891115 (W.D.N.C. Nov. 11, 2008);\nCashman Equip. Corp. v. Kimmins Contracting Corp.,\n2004 WL 32961 (D. Mass. Jan. 5, 2004); Perzy v. Inter-\ncargo Corp., 827 F. Supp. 1365 (N.D. Ill. 1993).\n A few district courts have held choice-of-law provi-\nsions enforceable under both federal maritime policy\nand state policy, without determining which would con-\ntrol in the event of a conflict. See Marine Ins. Co. v.\nCron, 2014 WL 4982418, at *3 (S.D. Tex. Oct. 6, 2014)\n(Enforcement of the choice-of-law clause would not “be\ncontrary to the fundamental principles of general mar-\nitime law” or the “fundamental purposes of Texas in-\nsurance law.”); Claimant Reinsurance (UK) PLC v.\nDion, 2009 WL 5174372, at *2 (S.D. Cal. Dec. 18, 2009)\n(“[T]he parties have not identified any fundamental\npolicy of either California or admiralty law that con-\nflicts with New York law.”); Oran v. Fair Wind Sail-\ning, Inc., 2009 WL 4349321, at *7 (D.V.I. Nov. 23, 2009)\n(“[E]nforcement of the choice of law clause does not of-\nfend the public policy of the Virgin Islands or courts\nsitting in admiralty jurisdiction.”).\n As far as petitioner is aware, only two district courts\nhave clearly relied on forum-state policy in deciding\nwhether to enforce a choice-of-law provision, and even\nthen have concluded that state policy did not overcome\nthe presumption of enforceability. See Deep Sea Fin.,\nLLC v. British Marine Luxembourg, S.A., 2010 WL\n3603794 (S.D. Ga. May 13, 2010); Claimant Reinsur-\nance (UK), PLC v. Sea Cat I, LLC, 653 F. Supp. 2d 1193\n(W.D. Okla. 2009). That pair of outliers, whose analysis\n 26\nof state law did not affect the outcome anyway, should\nnot detract from 250 years of maritime practice in this\ncountry. The strong historical consensus remains that\nfederal policy should govern the enforceability of\nchoice-of-law clauses in this federal enclave.\n 3. The Decision Below Departs From The\n Historical Consensus\n In the decision below, the court of appeals correctly\nrecognized the “established federal rule” that a “choice\nof law provision in a marine insurance contract will be\nupheld in the absence of evidence that its enforcement\nwould be unreasonable or unjust.” Pet. App. 8a (quot-\ning Schoenbaum, supra, § 19:6). The court neverthe-\nless concluded that, under The Bremen and Carnival\nCruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), a\nchoice-of-law clause is “unreasonable or unjust” if it\ncontravenes state policy. Pet. App. 15a. The Third Cir-\ncuit is now the only court of appeals to have interpreted\nThe Bremen to mean that state rather than federal pol-\nicy can render a maritime choice-of-law clause unrea-\nsonable. Neither The Bremen nor Carnival supports\nthat novel view.\n a. The Bremen held presumptively enforceable a\nforum-selection clause in a marine insurance contract\nthat designated an English forum. 407 U.S. at 2. In\ndoing so, this Court explained that a forum-selection\nclause would be unenforceable “if enforcement would\ncontravene a strong public policy of the forum in which\nsuit is brought.” Id. at 15. The Bremen’s public-policy\nexception most naturally refers to the federal policy of\nthe “American forum.” Id. at 9. Several aspects of the\ndecision make that clear—all of which the court of ap-\npeals overlooked.\n First, in support of its public-policy exception, The\nBremen cited Boyd v. Grand Trunk W. R.R. Co.,\n 27\n338 U.S. 263 (1949). See The Bremen, 407 U.S. at 15.\nBoyd held that a forum-selection clause was invalid be-\ncause it violated a federal statute, the Federal Employ-\ners’ Liability Act. 338 U.S. at 266. The Court did not\nmention state law or state public policy. Boyd illus-\ntrates that the relevant “statute[s] or [] judicial deci-\nsion[s]” courts should consult in determining public\npolicy are federal. The Bremen, 407 U.S. at 15.\n Second, The Bremen considered only federal\npolicy—not forum-state policy—in deciding that the\nforum-selection clause there was presumptively en-\nforceable. The court of appeals in The Bremen had\nheld that enforcing the forum-selection clause “would\nbe contrary to the public policy of the forum” (the\nUnited States) because the parties’ chosen forum\n(England) would allow a release-from-liability clause,\nwhich U.S. policy forbids. 407 U.S. at 15 (citing Bisso,\n349 U.S. 85). This Court disagreed, explaining that the\npublic-policy considerations it had outlined in Bisso ap-\nplied “strictly in American waters” and were “not con-\ntrolling in an international commercial agreement.”\nId. at 15-16. In drawing that line, the Court looked to\nfederal interests, such as the need for certainty and\npredictability in maritime contracts and the reality of\n“expanding international trade.” Id. at 13-15. Although\nthe case was filed in Florida, see id. at 3-5, the Court\nsaid not one word about Florida law or policy.\n Third, the parties in The Bremen framed their ar-\nguments solely in terms of federal public policy, so the\nCourt could not have reasonably intended anything\nelse. Indeed, the question presented stated: “Is a fo-\nrum, designated by contract for resolution of disputes\nby parties of equal bargaining power, per se invalid as\na violation of any legitimate public policy of the United\nStates?” Pet. Br. 2, The Bremen, supra ([DOCKET REDACTED])\n 28\n(emphasis added). The petitioner argued that, in light\nof “compelling considerations of international commer-\ncial relations” and the centrality of “uniformity and\ncomity in international law,” federal policy favored en-\nforcing the choice-of-law clause. Id. at 11, 30. The re-\nspondents countered that enforcement would violate\n“United States public policy” under Bisso, and that\n“neither comity nor the will of the parties can set at\nnaught the public policy of the United States.” Resp.\nBr. 29-30, 47, The Bremen, supra ([DOCKET REDACTED]). No-\nwhere did anyone so much as hint that the Court might\napply forum-state policy.\n At bottom, The Bremen embraced “a more hospita-\nble attitude toward forum-selection clauses,” whereby\n“such clauses are prima facie valid and should be en-\nforced unless enforcement is shown by the resisting\nparty to be ‘unreasonable’ under the circumstances.”\n407 U.S. at 10. The court below twisted The Bremen’s\nfavorable approach to forum-selection clauses into an\nunfavorable approach to choice-of-law clauses, under\nwhich any one of the 50 States’ idiosyncratic policies\ncan override the parties’ contractual agreement. It did\nso by adding a critical word to The Bremen, and finding\nthat it is “altogether reasonable that a ‘strong public\npolicy of the forum [state] in which suit is brought’\ncould, as to that policy specifically, render unenforcea-\nble the choice of state law in a marine insurance con-\ntract.” Pet. App. 15a (alteration in original) (quoting\nThe Bremen, 407 U.S. at 15). But The Bremen did not\nuse the term “forum state”—and the court of appeals’\ncasual insertion of the word “state” broke from centu-\nries of maritime practice.\n b. Nor does this Court’s decision in Carnival sup-\nport the decision below. Carnival did not address The\nBremen’s “policy of the forum” exception at all, and\n 29\nturned on federal policy regardless. In Carnival, the\nCourt extended The Bremen’s pro-contract framework\nto “form passage contracts” and held enforceable a\ncruise ticket’s forum-selection clause designating Flor-\nida. 499 U.S. at 587-588, 593, 595. The plaintiffs had\nsued the cruise line in Washington for injuries sus-\ntained while on the cruise ship. Id. at 588. They argued\nthat the forum-selection clause was unreasonable be-\ncause it “was not the product of negotiation, and en-\nforcement effectively would deprive [them] of their day\nin court,” given the hardship of litigating in Florida.\nId. at 590. The Court nevertheless held the clause en-\nforceable under The Bremen’s test, finding that en-\nforcement would not violate federal law or policy. Id.\nat 593-597.\n Carnival does not stand for the proposition that\nstate policy is relevant to the enforcement of maritime\nchoice-of-law clauses (or forum-selection clauses). If\nanything, Carnival stands for the opposite: in deter-\nmining whether to enforce the forum-selection clause\nthere, the Court considered only federal interests and\nwhether the clause violated a federal statute, 46 U.S.C.\nApp. 183c, or contravened “Congress’ intended goal in\nenacting” that statute. 499 U.S. at 596; see id. at 595-\n597. Indeed, even though the dissent would have held\nthat the forum-selection clause was unenforceable, it\nwould have done so “under traditional principles of fed-\neral admiralty law” and the federal statute. Id. at 598\n(Stevens, J., dissenting). Notably, just as The Bremen\nsaid nothing about Florida law, Carnival did not look\nto Washington law.\n c. Even if The Bremen or Carnival could be inter-\npreted to allow a forum State’s public policy to override\na maritime forum-selection clause, that interpretation\nshould not be extended to maritime choice-of-law\n 30\nclauses. Before The Bremen, forum-selection clauses\nhad “historically not been favored by American\ncourts.” 407 U.S. at 9. In contrast, there is a long his-\ntory of U.S. courts’ enforcing choice-of-law clauses.\nSee, e.g., London Assurance, 167 U.S. at 160-161; Ear-\nnest G. Lorenzen, Validity and Effects of Contracts in\nthe Conflict of Laws, 30 Yale L.J. 565, 566 (1921) (“The\nfederal courts have generally applied the law of the\nstate or country intended by the parties.”); see also\np. 18, supra. Judge Hand’s opinion in Wood & Selick\nv. Compagnie Generale Transatlantique, 43 F.2d 941\n(2d Cir. 1930), exemplifies U.S. courts’ historically di-\nvergent approaches toward choice-of-law and forum-\nselection clauses. In that case, the Second Circuit de-\nclined to enforce a maritime forum-selection clause re-\nquiring that disputes be brought in France, but never-\ntheless endeavored to apply French statutory law un-\nder a parallel choice-of-law clause. Id. at 942-943.\n That friendlier approach to choice-of-law clauses\nmay have reflected a distinction between practical ac-\ncess to courts and the substantive legal rules that apply\nthere. A forum-selection clause “represents an at-\ntempt by the parties to insure that the action will be\nbrought in a forum that is convenient for them.” Re-\nstatement § 80, cmt. a. The chosen forum may affect\nparties’ practical ability to litigate, particularly in ear-\nlier eras with less reliable transportation. But a choice-\nof-law clause selects the governing law and therefore\naffects the underlying meaning of a contract. Indeed,\na choice-of-law provision often selects which jurisdic-\ntion’s default rules will govern on matters that the par-\nties could otherwise have spelled out expressly, which\nis all the more reason to respect the parties’ choice of\nlaw. See Restatement § 187(1). Accordingly, even as-\n 31\nsuming that state policy could override maritime par-\nties’ choice of forum, state policy should not override\nthose parties’ choice of law. Only federal admiralty\npolicy should be able to do that.\n B. Congressional Judgments Support Applying\n Federal Policy\n This Court should adhere to the “overwhelming his-\ntorical evidence” unless necessary “to maintain uni-\nformity with Congress’s clearly expressed policies.”\nDutra, 139 S. Ct. at 2284. Here, no congressional ac-\ntions support a departure from maritime history. To\nthe contrary, “Congress has decided to allow parties\nengaged in international maritime commerce to struc-\nture their contracts, to a large extent, as they see fit.”\nKawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp.,\n561 U.S. 89, 111 (2010). It has drawn limits on choice-\nof-law and forum-selection clauses sparingly, suggest-\ning that parties should be bound to their contractual\nagreements unless specific federal interests are at\nplay.\n 1. Congress has recognized that maritime con-\ntracts often include choice-of-law and forum-selection\nclauses and has adopted a general federal policy of per-\nmitting those provisions, with one exception. That ex-\nception appears in 46 U.S.C. 30527, which identifies a\nnarrow category of cases in which such provisions are\n“void” under federal policy: when they limit “the right\n. . . to a trial by court of competent jurisdiction” for\npersonal injury or death on a passenger-carrying ves-\nsel. 46 U.S.C. 30527(a)(1)(B), (a)(2). That legislative\njudgment carries a strong negative implication: in\nother circumstances, parties to maritime contracts\nmay choose the forum and substantive law that will\ngovern their disputes. See, e.g., Key Tronic Corp. v.\nUnited States, 511 U.S. 809, 818-819 (1994) (Where\n 32\nCongress “included two express provisions for fee\nawards” but did not include a similar provision else-\nwhere, its “omissions strongly suggest a deliberate de-\ncision not to authorize such awards.”).\n Previous versions of Section 30527 underscore the\npoint. From 1936 to 2006, the predecessor statute pro-\nvided that any provision in a maritime contract “pur-\nporting . . . to lessen, weaken, or avoid the right of any\nclaimant to a trial by court of competent jurisdiction”\nfor wrongful injury or death was not only “null and\nvoid” but also “against public policy.” 46 U.S.C. App.\n183c (1996) (emphasis added); see Moore v. American\nScantic Line, Inc., 30 F. Supp. 843, 846 (S.D.N.Y. 1939)\n(noting that “a public policy has been inaugurated by\nlaw, by Congress in the passage of ” Section 183c).\nCongress’s declaration of “public policy” shows that it\nunderstands its role to make legislative judgments lim-\niting the enforceability of maritime forum-selection\nand choice-of-law clauses.\n This Court has accordingly looked to Section 30527\nand similar federal statutes to discern the boundaries\nof federal public policy and the enforceability of mari-\ntime contracts. In Carnival, for example, the Court\nconsidered both the text of former Section 183c and\n“Congress’ intended goal in enacting [Section] 183c.”\n499 U.S. at 595-596. Because the forum-selection\nclause there did not contravene the federal policy in\nSection 183c, the Court enforced the parties’ choice of\nforum. Id. at 596-597. Similarly, in Vimar Seguros y\nReaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528\n(1995), the Court looked to the Carriage of Goods by\nSea Act (COGSA), then enacted at 46 U.S.C. App.\n1303(8), to assess the enforceability of a foreign arbi-\ntration clause in a maritime bill of lading. 515 U.S. at\n534-536. The Court held that COGSA did not invalidate\n 33\nthe foreign arbitration clause because enforcement\nwould not violate the text of COGSA and would in fact\n“support [] the goals” of the “international convention\non which COGSA is modeled.” Id. at 534-536. In short,\nthis Court has consistently looked to federal law in de-\ntermining the enforceability of maritime contracts, and\nit has correctly acknowledged that Congress favors en-\nforcing parties’ choices, subject to limited statutory\nboundaries.\n 2. Congress also favors the enforcement of con-\ntracts in other areas subject to federal regulation and\ncontrol. For example, the Federal Arbitration Act,\nwhich expressly applies to maritime contracts, see\n9 U.S.C. 2, “is at bottom a policy guaranteeing the\nenforcement of private contractual arrangements.”\nMitsubishi Motors Corp. v. Soler Chrysler-Plymouth,\nInc., 473 U.S. 614, 625 (1985). “The preeminent con-\ncern of Congress in passing the Act was to enforce pri-\nvate agreements into which parties had entered.”\nDean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221\n(1985). Similarly, one of the “fundamental policies” of\nthe National Labor Relations Act is “freedom of con-\ntract.” H.K. Porter Co. v. NLRB, 397 U.S. 99, 108\n(1970); see Silgan Containers Corp. v. Sheet Metal\nWorkers Int’l Ass’n, 820 F.3d 366, 370 (8th Cir. 2016)\n(“Freedom of contract is the ‘fundamental principle’ of\nfederal labor law.”) (citation omitted).\n Because Congress has adopted a general policy of\nrespecting contracting parties’ freedom of choice—\nsubject to narrow exceptions—States should not be\nfree to blue-pencil maritime contracts for their own\npolicy reasons. Cf. Viking River Cruises, Inc. v. Mori-\nana, 142 S. Ct. 1906, 1923 (2022) (rejecting a rule that\nwould permit state law to “unduly circumscribe[] the\nfreedom of parties to determine ‘the issues subject to\n 34\narbitration’ and ‘the rules by which they will arbi-\ntrate’ ”) (citation omitted). That would hinder rather\nthan advance Congress’s repeated preference for con-\ntractual freedom.\n C. Applying State Policies To Override Choice-Of-\n Law Clauses Would Undermine The Core Values\n Of Maritime Law\n “[P]olicy grounds” and the fundamental purposes of\nmaritime law also favor enforcing maritime choice-of-\nlaw clauses. Dutra, 139 S. Ct. at 2283. Allowing an\nindividual State’s policies to override freely negotiated\nmaritime contracts would conflict with well-recognized\nmaritime values, including uniformity, predictability,\nand international comity. It would also encourage\ngamesmanship and forum-shopping.\n 1. “The fundamental interest giving rise to mari-\ntime jurisdiction is ‘the protection of maritime com-\nmerce.’ ” Sisson v. Ruby, 497 U.S. 358, 367 (1990)\n(quoting Foremost Ins. Co. v. Richardson, 457 U.S.\n668, 674 (1982)). As this Court has recognized, that\nfundamental interest “can be fully vindicated only if all\noperators of vessels on navigable waters,” even pleas-\nure boats, “are subject to uniform rules of conduct.”\nForemost Ins., 457 U.S. at 675 (emphasis in original).\nThe “need for uniformity” is therefore “an overriding\nvalue in admiralty law.” Schoenbaum, supra, § 4:1 (em-\nphasis omitted); see Jerome B. Grubart, Inc. v. Claimant Dredge & Dock Co., 513 U.S. 527, 544 (1995)\n(“[T]he basic rationale for federal admiralty jurisdic-\ntion is protection of maritime commerce through uni-\nform rules of decision.”) (internal quotation marks\nomitted).\n Dating back to the early 1800s, American courts “re-\npeated over and over again” the “paramount im-\nportance to merchants and underwriters that rules be\n 35\nclear, settled, and uniform.” Fletcher, supra, at 1563.\nThis Court has repeatedly expressed its “concern for\nthe uniform meaning of maritime contracts,” reasoning\nthat admiralty law should “operat[e] uniformly in[] the\nwhole country,” in order to achieve “the uniformity and\nconsistency at which the Constitution aimed on all sub-\njects of a commercial character affecting the inter-\ncourse of the States with each other or with foreign\nstates.” Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 28\n(2004) (quoting American Dredging Co. v. Miller,\n510 U.S. 443, 451 (1994)). Congress, too, has been in\n“persistent pursuit of ‘uniformity in the exercise of ad-\nmiralty jurisdiction.’ ” Dutra, 139 S. Ct. at 2278 (quot-\ning Miles v. Apex Marine Corp., 498 U.S. 19, 26 (1990)).\n Allowing the public policy of a forum State to over-\nride contractual choice-of-law provisions would defeat\nthe overarching goal of uniformity in maritime law.\nThe same contractual provision might be consistent\nwith the public policy of one State, but contravene the\npublic policy of another—meaning that the controlling\nlegal rules would depend on where the suit is filed.\nWorse still, States do not share a uniform view on\nwhich policies are so fundamental that they can negate\na choice-of-law clause, leading to further variability\neven among States with identical policies. See Restate-\nment § 187, cmt. g (“No detailed statement can be\nmade of the situations where a ‘fundamental’ policy of\nthe state of the otherwise applicable law will be found\nto exist.”). 3 The result would be the opposite of uni-\nform: a supposed federal presumption of enforceabil-\nity that is subject to 50 sets of exceptions.\n\n 3\n Compare, e.g., Cherry, Bekaert & Holland v. Brown, 582 So.\n2d 502, 507 (Ala. 1991) (Alabama policy against covenants not to com-\npete is fundamental), with Intermetro Indus. Corp. v. Kent, 2007 WL\n 36\n 2. Holding the parties to their bargained-for choice\nof law would also promote the core maritime values of\ncertainty and predictability. Such certainty is “an in-\ndispensable element in international trade, commerce,\nand contracting.” The Bremen, 407 U.S. at 13-14.\nCourts should thus “give effect to the legitimate expec-\ntations of the parties, manifested in their freely nego-\ntiated agreement.” Id. at 12. Parties negotiate con-\ntracts in view of the applicable substantive law, making\nthe consistent enforcement of choice-of-law clauses vi-\ntal to “eliminate all uncertainty as to the nature” of any\ncontractual dispute. Id. at 13 n.15; see Willis L.M.\nReese, Power of Parties to Choose Law Governing\nTheir Contract, 54 Am. Soc’y Int’l L. Proc. 49, 51 (1960)\n(Choice-of-law clauses are “the only practical device\nfor bringing certainty and predictability into the area\nof multi-state contracts.”). That is especially true of\nmarine insurance contracts, which “unlike inland in-\nsurance contracts, are to a considerable degree open to\nnegotiation and are frequently tailor made” by parties\n“dealing at arm’s length.” Von Bittner, supra, at 574-\n575.\n In addressing forum-selection clauses, this Court\nhas explained that “[i]n all but the most unusual cases\n. . . ‘the interest of justice’ is served by holding parties\nto their bargain.” Atlantic Marine Constr. Co. v. U.S.\nDist. Ct. for the W. Dist. of Tex., 571 U.S. 49, 66 (2013).\nA forum-selection clause “may have figured centrally\nin the parties’ negotiations,” “affected how they set\n\n\n518345, at *4 (M.D. Pa. Feb. 12, 2007) (Texas policy against covenants\nnot to compete is not fundamental); compare Cottman Transmission\nSys., LLC v. Kershner, 536 F. Supp. 2d 543, 550-551 (E.D. Pa. 2008)\n(Florida franchise law is not fundamental but Virginia franchise law\nis), with Wright-Moore Corp. v. Ricoh Corp., 908 F.2d 128, 133 (7th\nCir. 1990) (Indiana franchise law is fundamental).\n 37\nmonetary and other contractual terms,” or even been\n“a critical factor in their agreement to do business to-\ngether in the first place.” Ibid. Enforcing the clause\nthus “protects [the parties’] legitimate expectations\nand furthers vital interests of the justice system.” Id.\nat 63 (quoting Stewart Org., Inc. v. Ricoh Corp.,\n487 U.S. 22, 33 (1988) (Kennedy, J., concurring)). That\nsame reasoning applies at least as strongly to choice-\nof-law clauses, which determine the substantive law\ngoverning the contract. See Phillips v. Audio Active\nLtd., 494 F.3d 378, 384 (2d Cir. 2007) (“Largely for the\nreasons we hold parties to their contractual promises\nto litigate in a specified forum, federal courts give sub-\nstantial weight to choice of law provisions.”); see also\nRestatement § 187, cmt. e (noting that enforcement of\nchoice-of-law provisions promotes the “[p]rime objec-\ntives of contract law”).\n By advancing the twin goals of uniformity and pre-\ndictability, choice-of-law clauses generate considerable\ncost savings, particularly in a marine insurance indus-\ntry that can “traverse the waters of many jurisdic-\ntions.” The Bremen, 407 U.S. at 13. First, the insurer\ncan more accurately assess the costs and risks of cov-\nerage, which vary based on the applicable legal frame-\nwork. Second, the dependable application of a uniform\nbody of federal law allows the insurer to issue similar\npolicies throughout the United States. It also allows\nthe insurer to limit the different laws to which it is sub-\nject, which is of “special interest” to a marine industry\nthat moves through “many locales.” Carnival, 499 U.S.\nat 593. Third, the resulting legal certainty reduces the\ninsurer’s litigation risk and legal costs. Similar to the\nforum-selection clause in Carnival, a choice-of-law\nclause “has the salutary effect of dispelling any confu-\nsion about” what law applies, “sparing litigants the\n 38\ntime and expense of pretrial motions to determine” the\napplicable legal rules and “conserving judicial re-\nsources that otherwise would be devoted to deciding\nthose motions.” Id. at 593-594.\n Those benefits do not just inure to insurers. The\ncost savings are shared with the insured entity in the\nform of lower premiums. See Carnival, 499 U.S. at 594.\nUltimately, those savings are passed on to consumers\nof “goods that are transported by sea—goods that are\ninsured under marine policies, carried on insured ves-\nsels, and handled by workers whose health and safety\nare covered by marine insurance.” Michael F. Sturley,\nRestating the Law of Marine Insurance: A Workable\nSolution to The Wilburn Boat Problem, 29 J. Mar. L.\n& Com. 41, 45 (1998).\n 3. The federal interests in a uniform body of mari-\ntime law and in predictable, enforceable maritime con-\ntracts also advance a third core value of maritime law:\ninternational comity. This Court has recognized that\nforum-selection and choice-of-law provisions are espe-\ncially important in international contracts, because\nsubjecting foreign entities to “the dicey atmosphere of\n. . . a legal no-man’s-land would surely damage the fab-\nric of international commerce and trade, and imperil\nthe willingness and ability of businessmen to enter into\ninternational commercial agreements.” Scherk v.\nAlberto-Culver Co., 417 U.S. 506, 517 (1974). Such pro-\nvisions are “an almost indispensable precondition to\nachievement of the orderliness and predictability es-\nsential to any international business transaction.” Id.\nat 516. That is why The Bremen took a strongly pro-\ncontract view, emphasizing that “businesses once essen-\ntially local now operate in world markets” and “present-\nday commercial realities and expanding international\ntrade” demand predictability. 407 U.S. at 12, 15.\n 39\n This case is a fitting example. Claimant is a Ger-\nman company headquartered in the United Kingdom.\nPet. App. 3a; see p. II, supra. Raiders is a Pennsylva-\nnia company. Pet. App. 3a. Raiders’s yacht has its\nhome port in Pennsylvania, Br. in Opp. 3; the yacht’s\ninsurance policy covered navigation along “East Coast\nUSA, Florida and the Bahamas,” D. Ct. Doc. 1, at 68\n(Sept. 25, 2019); and the yacht ran aground when sail-\ning near Florida, Pet. App. 22a. Although Raiders bar-\ngained for a convenient forum—the State in which it or\nits agent is located—Claimant bargained for famil-\niar and predictable legal rules. D. Ct. Doc. 1, at 82.\nThe parties thus selected U.S. federal maritime law or,\nin its absence, the well-established body of New York\nmaritime law. Pet. App. 4a, 25a. Subjecting Claimant to the policy whims of Pennsylvania or any of the\nother 49 States whose laws it never agreed to would\nseriously undercut international comity.\n Moreover, Raiders’s state-policy theory would ap-\nply even to contracts selecting another nation’s law.\nAllowing an individual State’s policies to override a for-\neign country’s laws risks “disparag[ing] the authority\nor competence of international forums for dispute\nresolution,” which is “out of keeping with . . . contem-\nporary principles of international comity and commer-\ncial practice.” Vimar Seguros, 515 U.S. at 537.\n“[C]oncerns of international comity, respect for the ca-\npacities of foreign and transnational tribunals, and sen-\nsitivity to the need of the international commercial sys-\ntem for predictability in the resolution of disputes”\ntherefore counsel in favor of “enforc[ing] . . . parties’\nagreement[s].” Mitsubishi Motors Corp., 473 U.S.\nat 629. And to the extent U.S. courts declare a contrac-\ntual provision unenforceable because of disagreement\nwith another country’s public-policy choices, that\n 40\nshould be done in a uniform way at the federal level.\nFederal policy interests may be sufficiently weighty to\noverride concerns about international comity. But in\nthis distinctly national and international maritime con-\ntext, States should not have free rein to declare an-\nother nation’s law too unfair to apply.\n 4. Finally, enforcing sophisticated parties’ agree-\nments about the substantive law governing their con-\ntracts discourages gamesmanship and forum-\nshopping. If a forum State’s policy could override the\nparties’ chosen substantive law, parties could wriggle\nout of unfavorable contractual provisions by suing in a\nState with more favorable public policy (assuming no\nforum-selection clause, or assuming that the dissatis-\nfied party succeeds in nullifying such a clause as well).\nThat “would invite unseemly and mutually destructive\njockeying by the parties to secure tactical litigation ad-\nvantages.” Scherk, 417 U.S. at 516-517.\n Parties would often have an array of options for\nforum-shopping. Following Wilburn Boat, many im-\nportant aspects of maritime contract law have been rel-\negated to the States, at least in some circuits. See, e.g.,\nHarold K. Watson, A Fifty Year Retrospective on the\nAmerican Law of Marine Insurance, 91 Tul. L. Rev.\n855, 858 (2017) (state law may govern contractual in-\nterpretation, notice provisions, punitive damages, and\nagency); Schoenbaum, supra, § 19:9 (uberrimae fidei,\nprejudgment interest, attorney’s fees, and warranties);\nThomas R. Beer, Established Federal Admiralty\nRules in Marine Insurance Contracts & the Wilburn\nBoat Case, 1 U.S.F. Mar. L.J. 149, 165-167 (1989) (no-\ntice provisions, attorney’s fees, treble damages against\ninsurers, bad-faith refusals, and agency relationships).\nAnd among the States, there is a “wide divergence in\nresults as to substantive issues of marine insurance\n 41\nlaw.” Watson, supra, at 858. As a result, the choice of\nstate law “could determine the amount of recovery, the\ntype of recovery, or even whether there will be a recov-\nery under the policy at all.” Von Bittner, supra, at 573.\n To take one example, courts have held that state law\ngoverns the availability of attorney’s fees in maritime\ncases, see, e.g., Claimant Ins. SE v. M&M Private\nLending Grp., LLC, 2020 WL 13379275 (S.D. Fla.\nSept. 11, 2020), and States have adopted vastly differ-\nent approaches to fees. In Georgia, a policyholder may\nrecover attorney’s fees only when the insurer refuses\nto pay “in bad faith.” Ga. Code Ann. § 33-4-6. Florida,\nmeanwhile, has a “one-way” statute, under which a pre-\nvailing policyholder is automatically entitled to attor-\nney’s fees, with some exceptions irrelevant here.\nFla. Stat. § 86.121. In Arizona, fees are available to the\nprevailing party, whether the policyholder or the in-\nsurer, at the discretion of the court. Ariz. Rev. Stat.\nAnn. § 12-341.01(A). And in Alabama, “absent a con-\ntractual provision to the contrary, the insured may not\nrecover its attorneys’ fees from the insurer if the fees\nwere incurred in a declaratory judgment action to de-\ntermine coverage under a liability policy.” Prime Ins.\nSyndicate, Inc. v. B.J. Handley Trucking, Inc.,\n363 F.3d 1089, 1093 (11th Cir. 2004). Any one of those\nStates might deem another State’s fees policy to violate\nits own public policy, and substitute its preferred rule\ninstead.\n As another example, state law also determines\nwhether the failure to give prompt notice of a loss can\nbar coverage under a marine insurance policy’s “notice\nof loss” provision. See Beer, supra, at 169-170. Some\nStates require a showing of “prejudice before an in-\nsurer may defeat coverage due to late notice of a\nclaim.” St. Paul Fire & Marine Ins. Co., 418 Fed.\n 42\nAppx. at 309-310 (applying Louisiana law); see Healy\nTibbitts Constr. Co. v. Foremost Ins. Co., 482 F. Supp.\n830, 835 (N.D. Cal. 1979) (requiring “substantial prej-\nudice” under California law) (citation omitted). In New\nYork, by contrast, “the insurer need not show that it\nwas prejudiced” by a failure to comply with a notice-of-\nloss provision because “[t]he giving of the required no-\ntice affords the insurer an opportunity to protect itself,\nand is a condition precedent to liability.” Big Lift Ship-\nping Co. (N.A.) Inc. v. Bellefonte Ins. Co., 594 F. Supp.\n701, 704 (S.D.N.Y. 1984). Again, one State might reject\na choice-of-law clause if the chosen State follows a dif-\nferent approach to notice-of-loss provisions.\n The upshot is that if this Court were to allow state\npolicy preferences to negate maritime choice-of-law\nclauses, parties would have incentives to bring claims\nin a friendly forum and seek to strike the choice-of-law\nclauses that they agreed to. See Atlantic Marine,\n571 U.S. at 65 (rejecting rule that would “encourage\ngamesmanship” and “multiply opportunities for forum\nshopping”) (citation omitted). That gamesmanship\nwould further frustrate admiralty’s fundamental prin-\nciples of uniformity, predictability, and international\ncomity.\nII. THE CHOICE-OF-LAW CLAUSE HERE IS\n ENFORCEABLE\n Under the correct test, the choice-of-law clause in\nthe insurance contract between Claimant and Raid-\ners is enforceable, and the court of appeals’ remand for\nconsideration of Pennsylvania policy was incorrect.\nAgain, federal law imposes a presumption in favor of\nenforcing choice-of-law clauses in maritime contracts,\nand a party seeking to overcome that presumption car-\nries a “heavy burden of proof.” The Bremen, 407 U.S.\n 43\nat 17. The presumption can be overcome in two circum-\nstances: (i) when the parties have no substantial con-\nnection to or reasonable basis for the selected law, or\n(ii) when the selected law conflicts with federal policy.\nSee Durham 585 F.3d at 244. Neither applies here.\n A. First, Raiders does not contest that it and Claimant had a substantial connection to or a reasonable\nbasis for choosing New York law. As the Restatement\nexplains, courts almost never strike down a choice-of-\nlaw clause as unenforceable on that ground. Restate-\nment § 187, cmt. f. Indeed, this Court in The Bremen\nsuggested that “parties to a freely negotiated private\ninternational commercial agreement” might agree to\nany inconvenient forum (or law), so long as they “con-\ntemplated the claimed inconvenience.” The Bremen,\n407 U.S. at 16.\n In any event, Claimant has a substantial connec-\ntion to New York law. The district court identified at\nleast three points of contact between Claimant and\nNew York: “(1) [Claimant] maintains an agent for\nservice of process in New York, (2) it maintains its\ntrust accounts in New York, and (3) it was admitted as\na surplus lines insurer in New York.” Pet. App. 28a.\nSeveral other courts have likewise found that “New\nYork has a sufficient substantial relationship with\nClaimant to allow application of New York law.” Id.\nat 28a-29a (quoting Rosin, 757 F. Supp. 2d at 1251); see\nDurham, 585 F.3d at 242; Claimant Reinsurance\n(UK) PLC v. S. Marine Concepts Inc., 2008 WL\n6523861, at *2 (S.D. Tex. Oct. 21, 2008).\n In addition, Claimant and Raiders had a reason-\nable basis for selecting New York. Claimant, Raid-\ners, and Raiders’s insurance agent are all located in dif-\nferent places—with Claimant organized and head-\n 44\nquartered overseas. They could have reasonably cho-\nsen New York for its well-established maritime law.\nSee Restatement § 187, cmt. f (noting that “parties to\na multistate contract may have a reasonable basis for\nchoosing” a State with “well-known and highly elabo-\nrated commercial law”). In fact, marine insurers often\nselect New York law to fill the gaps of federal maritime\nlaw, given New York’s “substantive laws and prece-\ndents dealing with maritime insurance contracts.” Sea\nCat I, LLC, 653 F. Supp. 2d at 1199; see, e.g., Claimant Ins. SE v. Aarvik, 2019 WL 201258, at *3 (S.D.\nFla. Jan. 15, 2019) (“Courts routinely apply the choice\nof law clause specifying admiralty law or New York law\nin marine insurance policies issued by Claimant.”).\n B. Second, the application of New York law to\nRaiders’s counterclaims does not conflict with any fed-\neral maritime policy. Raiders acknowledged as much\nin the court of appeals—which is why the parties liti-\ngated the New York gap-filling portion of the choice-\nof-law clause in the first place. See Pet. App. 25a; see\nalso Resp. C.A. Br. 24-25 (contending that state law ap-\nplies to the relevant claims because “no governing prin-\nciples of federal admiralty law exist”). In this Court,\ntoo, Raiders has never raised any federal policy objec-\ntions, and has agreed that “the sole question” is\n“whether the strong public policies of the forum State”\ncould negate the selection of New York law. Br. in\nOpp. 12. 4\n\n 4\n In the district court, Raiders belatedly argued that “New\nYork law conflicts with the federal maritime doctrine of uberrimae\nfidei, or ‘utmost good faith,’ and therefore should not apply to Raid-\ners’ bad faith claim.” Pet. App. 34a n.4. The court did “not consider\nthis argument” because Raiders first raised it in a reply filed “in con-\ntravention of [the court’s] policies and procedures.” Ibid. In any\n 45\n That concession is correct. Federal law is silent on\nRaiders’s common-law claim for breach of fiduciary\nduty, and Raiders has never identified any relevant\nfederal policy. And as to Raiders’s two statutory\nclaims, there is no federal statute that mirrors Penn-\nsylvania’s, nor any other federal maritime principle\nthat tracks Pennsylvania’s statutory law.\n * * *\n Raiders and Claimant freely negotiated a con-\ntract. They chose federal law or, as a backup, New\nYork law to govern any disputes. Raiders may seek\nany available remedy under those two bodies of law.\nIndeed, Claimant did not challenge, and the district\ncourt’s order left in place, two of Raiders’s claims—for\nbreach of contract and breach of the implied covenant\nof good faith and fair dealing—that may be cognizable\nunder either federal or New York law. See Pet. App.\n20a, 34a-35a. But Raiders may not avoid its contractual\nagreement to submit to New York law merely because\nit might have additional claims under Pennsylvania\nlaw. No federal maritime policy authorizes, let alone\nrequires, such blatant evasion of maritime contracts.\n\n\nevent, both New York law and federal maritime law recognize the\nsame doctrine of uberrimae fidei, so no conflict exists. See In re Bal-\nfour MacLaine Int’l, Ltd., 85 F.3d 68, 80 (2d Cir. 1996) (“Under New\nYork law, the doctrine of utmost good faith applies to contracts and\nrisks that are ‘marine’ in nature . . . .”); Fireman’s Fund Ins. Co.,\n822 F.3d at 633 (“Under federal law, a marine insurance contract is\nsubject to ‘the federal maritime doctrine of uberrimae fide, or utmost\ngood faith.’ ”) (citation omitted).\n 46\n CONCLUSION\n For the foregoing reasons, this Court should\nreverse the judgment below.\n\n Respectfully submitted.\n\n MICHAEL I. GOLDMAN JEFFREY B. WALL\n THE GOLDMAN MARITIME Counsel of Record\n LAW GROUP MORGAN L. RATNER\n 233 Harvard Street MADELINE B. JENKS\n Suite 211 SULLIVAN & CROMWELL LLP\n Brookline, MA 02446 1700 New York Avenue, N.W.\n [PHONE REDACTED] Suite 700\n Washington, DC 20006\n [PHONE REDACTED]\n [EMAIL REDACTED]\n TZIREL KLEIN\n SULLIVAN & CROMWELL LLP\n 125 Broad Street\n New York, NY 10004\n [PHONE REDACTED]\n\n Counsel for Petitioner Claimant\n\nMAY 26, 2023", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n The answer to the question presented in this case\nbegins and ends with Wilburn Boat Co. v. Fireman’s\nFund Insurance Co., 348 U.S. 310 (1955).\n\n In Wilburn Boat, this Court held that state law\ngoverns maritime insurance disputes unless there is\nan “established admiralty rule” requiring application\nof federal law. Id. at 314.\n\n This case involves a dispute over the enforce-\nability of a choice-of-law provision in a maritime\ninsurance contract selecting New York law. In the\nabsence of the choice-of-law provision, Pennsylvania\ninsurance law would apply. Under Wilburn Boat,\nunless there is an established federal rule governing\nthe enforceability of such choice-of-law provisions,\nstate law governs their enforceability.\n\n Claimant asks the Court to apply a supposed\nfederal rule whereby a contractual choice-of-law pro-\nvision must be enforced unless it conflicts with\nfederal maritime policy. This argument fails for a\nsimple reason: Claimant’ proposed rule is not an\nestablished federal admiralty rule. Claimant\npoints to glancing, irrelevant dicta in old maritime\ncases that say nothing about the enforceability of\nchoice-of-law provisions dictating that a particular\nstate’s law will apply. Under Wilburn Boat’s rigorous\nstandard, those cases do not come close to demon-\nstrating an established federal rule. Consequently,\nWilburn Boat dictates that state law determines the\nenforceability of the choice-of-law provision.\n 2\n In determining the enforceability of choice-of-law\nprovisions, Pennsylvania, in common with nearly\nevery other state, follows the Restatement. The\nRestatement requires a court to consider the public\npolicy of the state whose law would apply in the\nabsence of the choice-of-law clause—which in this\ncase is Pennsylvania. Therefore, the Third Circuit\ncorrectly remanded for consideration of Pennsylvania\npublic policy here. End of case.\n\n Not only does Raiders’ position follow from black-\nletter law, but it makes perfect sense. Given that\nboth parties agree that state substantive law should\napply, why apply a bespoke federal choice-of-law rule\nto choose between one state’s law and another’s? In\nthe remarkably similar case of Cassirer v. Thyssen-\nBornemisza Collect. Found., 142 S. Ct. 1502 (2022),\nthis Court held that there was no need for a federal\nchoice-of-law rule in Foreign Sovereign Immunities\nAct litigation governed by state law. As the Court\nexplained, foreign affairs frequently implicate\n“uniquely federal interests.” Id. at 1509. But in the\ncontext of litigation where federal law does not\n“displace[ ] the substantive rule of decision,” there is\n“no greater warrant for federal law to supplant the\notherwise applicable choice-of-law rule.” Id. Identical\nreasoning applies here. Maritime law frequently\nimplicates federal interests, but the substantive rule\nof decision in this case is governed by state law, and\nthere is no need to use federal law to decide which\nstate’s law applies.\n\n If the Court nevertheless chooses to adopt a\nfederal rule governing the enforceability of choice-of-\nlaw clauses in maritime insurance contracts, it\n 3\nshould follow the consensus approach and apply the\nRestatement’s rule. The Restatement generally\nrequires choice-of-law clauses to be enforced, but in\nlimited circumstances it permits consideration of the\npublic policy of the state whose law would otherwise\napply. This approach strikes the appropriate balance\nbetween predictability, fairness, and respect for local\nsubstantive law.\n\n By contrast, Claimant’ proposed federal\ncommon law rule does not make sense. Claimant\ncontends that federal public policy should be used to\ndecide between applying New York law and\nPennsylvania law. But why would the federal system\ncare whether Pennsylvania or New York law applies?\nIf the federal system cared, then substantive federal\nmaritime law would apply. The whole point of using\nstate law—as dictated by Wilburn Boat—is that there\nisn’t any established federal interest at stake.\n\n Put another way, the question here boils down to\nwhether Pennsylvania’s interest in applying its own\nlaw to a conflict having numerous, significant con-\nnections to Pennsylvania outweighs the insurer’s\ndecision to include a choice-of-law provision in this\nadhesion contract. How else to measure Pennsyl-\nvania’s interest than to consider Pennsylvania’s\npolicy?\n\n Claimant complains bitterly that 50 states will\napply their own policies to override maritime\ninsurance contracts. But the whole point of Wilburn\nBoat is that, in some cases, states should be per-\nmitted to apply their own public policy to override\nterms of maritime insurance contracts. That is\n 4\nprecisely what state insurance regulation means. A\nchoice-of-law provision is one term of an insurance\ncontract. Under Wilburn Boat, Pennsylvania has the\nright to apply state law to determine the enforce-\nability of that term just as it has the right to apply\nstate law to determine the enforceability of every\nother term of the contract in the absence of any\nestablished admiralty rule.\n The Third Circuit’s judgment is correct and should\nbe affirmed.\n STATEMENT\n A. Factual Background\n Petitioner Claimant does not\nhesitate to pocket as pure profit the premiums paid to\ninsure yachts when no claims for coverage have\narisen during the policy period. But, when a claim for\ncoverage is received, it is Claimant’ practice to\nscour the policyholder’s behavior in the hope of\nuncovering entirely unrelated, technical violations by\nthe policyholder, so that Claimant can deny\ncoverage and avoid paying for claims that it had\nseemingly agreed to insure.\n Whether federal admiralty law or, to the extent\napplicable, New York law allows Claimant to\nsucceed in this offensive practice is the subject of the\nparties’ cross-motions for summary judgment pen-\nding, fully briefed, before the district court, which has\nstayed all further proceedings pending the outcome of\nthis matter. Pennsylvania, where respondent Respondent, LLC is headquartered and the\njurisdiction with the greatest interest in this contro-\nversy, has enacted statutes and adopted regulations\n 5\nto deter insurance companies from engaging in this\nsort of misbehavior and to punish those insurance\ncompanies that have nevertheless engaged in it to the\ndetriment of their Pennsylvania-based policyholders.\n The question presented arises from a boilerplate\nchoice-of-law provision that Claimant inserted into\nthe insurance policy that it issued to Raiders:\n It is hereby agreed that any dispute arising\n hereunder shall be adjudicated according to\n well established, entrenched principles and\n precedents of substantive United States\n Federal Admiralty law and practice but where\n no such well established, entrenched precedent\n exists, this insuring agreement is subject to the\n substantive laws of the State of New York.\nPet. App. 4a.\n If the body of case law resulting from Claimant’\nefforts to disclaim coverage due to a policyholder’s\nalleged technical violations is any indication, Claimant inserts this very same choice-of-law provision\ninto every maritime insurance contract that it issues.\nThe choice-of-law provision is an instance of fine\nprint, not subject to negotiation between the parties,\ntypically contained in an insurance policy contract of\nadhesion. It certainly was not negotiated in this case.\n The dispute before this Court arose as follows. A\nyacht that Raiders owns became grounded on June 7,\n2019, incurring more than $300,000 in damage. Pet.\nApp. 3a. Raiders had insured the yacht, whose\nhailing port is in Pennsylvania, against such losses\nwith Claimant, a marine insurance company head-\nquartered in London, United Kingdom. Id.\n 6\n Raiders promptly submitted to Claimant a\nclaim for the loss to the vessel. Id. On September 25,\n2019, Claimant denied coverage of the claim based\non its assertion that the yacht’s fire suppression\nsystems differed from what the parties had agreed,\nnotwithstanding that the yacht’s grounding and the\nresulting damages and losses were not caused by a\nfire or any supposed deficiencies in the boat’s fire\nsuppression systems. Id. In denying the claim, Claimant maintained that the supposed discrepancies\nrelating to the yacht’s fire suppression system ren-\ndered the insurance policy void from its inception. Id.\n B. Procedural Background\n On the same date that Claimant denied\nRaiders’ claim for coverage, Claimant initiated a\ndeclaratory judgment action against Raiders in the\nU.S. District Court for the Eastern District of Penn-\nsylvania. Id.\n In response to Claimant’ declaratory judgment\naction, Raiders asserted five counterclaims. Id. The\nfirst two counterclaims were contractual in nature,\nfor breach of contract (Count I) and breach of the\nimplied covenant of good faith and fair dealing\n(Count II). Id.\n The remaining three counterclaims sought extra-\ncontractual relief available against insurance\ncompanies under Pennsylvania law. Count III alleged\nbreach of fiduciary duty. Id. Count IV alleged\ninsurance bad faith pursuant to 42 Pa. Cons. Stat.\nAnn. §8371. Pet. App. 3a. And Count V alleged a\nviolation of Pennsylvania’s Unfair Trade Practices\nand Consumer Protection Law, 73 Pa. Stat. Ann.\n§201-1, et seq. Pet. App. 3a.\n 7\n Raiders—a single-member limited liability\ncompany headquartered in Pennsylvania whose\nowner, Phil Pulley, is domiciled in Pennsylvania—\nnegotiated, purchased, paid for, and received the\ninsurance policy in question in Pennsylvania from a\nPennsylvania-licensed insurance agent whose cor-\nporate home office is in Pennsylvania. CA3 App.300,\n414-15, 659-60.\n Claimant moved to dismiss Counts III through\nV of Raiders’ counterclaims, arguing that New York\nlaw applied and necessitated the dismissal of those\ncounterclaims. Pet. App. 4a. In so arguing, Claimant relied on the above-quoted choice-of-law\nprovision contained in the insurance policy that it\nissued to Raiders.\n Raiders argued to the district court, and both\nClaimant and the district court agreed, that\nsubstantive federal admiralty law itself contains\nnothing to preclude Raiders from asserting the three\nPennsylvania-law counterclaims at issue.\n Because Raiders conceded in the district court\nthat, if New York law applied, then Counts III\nthrough V of Raiders’ counterclaims, which arose\nunder Pennsylvania law, would be subject to\ndismissal, the central focus of the district court’s\nruling on Claimant’ motion to dismiss was\nwhether the express choice-of-law provision in the\ninsurance policy mandated applying New York law to\nthose counterclaims. Pet. App. 27a-35a.\n The district court agreed with Claimant that\nthe choice-of-law provision necessitated dismissing\nCounts III through V of Raiders’ counterclaims,\nbecause New York law applied under the choice-of-\n 8\nlaw provision and those claims were not cognizable\nunder New York law. Pet. App. 34a-35a.\n Raiders appealed to the Third Circuit from the\ndistrict court’s dismissal of the three extracontractual\nPennsylvania-law counterclaims. In its appellate\nbrief and at oral argument, Claimant conceded\nthat, absent a choice-of-law clause, Pennsylvania law\nwould apply to Raiders’ counterclaims. Claimant\nCA3 Br. at 34-35; CA3 Oral Arg. Tr. (ECF Doc. 48) at\n28. Claimant also conceded at the argument of the\nThird Circuit appeal that Pennsylvania’s insurance\nbad faith statute and Unfair Trade Practices and\nConsumer Protection Law constitute strong public\npolicies of Pennsylvania. CA3 Oral Arg. Tr. (ECF Doc.\n48) at 28.\n On appeal, a unanimous three-judge Third Circuit\npanel vacated the district court’s judgment and\nremanded for further proceedings. Pet. App. 1a-15a.\nThe court of appeals began by recognizing that, in\nWilburn Boat, 348 U.S. at 320-21, this Court ruled\nthat, when adjudicating a maritime insurance con-\ntract dispute, if there is no established rule of federal\nadmiralty law to apply, state law applies. Pet. App.\n8a.\n The Third Circuit next recognized that “[o]ne such\nestablished federal rule is that ‘[a] choice of law\nprovision in a marine insurance contract will be\nupheld in the absence of evidence that its\nenforcement would be unreasonable or unjust.’ 2\nThomas J. Schoenbaum, Admiralty and Maritime\nLaw §19:6 (6th ed. 2020).” Id.\n Ultimately, the Third Circuit held:\n 9\n [T]he rule that choice-of-law provisions in\n maritime insurance contracts are presumed\n enforceable unless “enforcement would be\n unreasonable or unjust,” Schoenbaum, supra,\n §19:6, is identical to The Bremen’s rule that\n forum-selection provisions should be honored\n unless “enforcement would be unreasonable\n and unjust,” 407 U.S. at 15. Given this\n overlap—coupled with The Bremen’s “strong\n public policy” exception comprising but one\n part of the holding’s broader “unreasonable\n and unjust” standard—we consider it altoge-\n ther reasonable that a “strong public policy of\n the forum [state] in which suit is brought”\n could, as to that policy specifically, render\n unenforceable the choice of state law in a\n marine insurance contract. See id.\nId. at 15a.\n The Third Circuit vacated the district court’s\njudgment dismissing Raiders’ three Pennsylvania-law\ncounterclaims and remanded to permit the district\ncourt “to consider whether Pennsylvania has a strong\npublic policy that would be thwarted by applying New\nYork law” to dismiss Raiders’ counterclaims. Id.\n Claimant thereafter filed a Petition for Writ of\nCertiorari, which this Court granted, limited to the\nsecond question presented.\n 10\n SUMMARY OF ARGUMENT\n In Wilburn Boat Co. v. Fireman’s Fund Ins. Co.,\n348 U.S. 310, 320-21 (1955), this Court held, when\nconstruing the meaning and effect of a maritime\ninsurance contract, that if there is no established rule\nof federal admiralty law to apply, state law applies.\nThat holding resolves this case.\n The courts below and the opposing parties agree\nthat no established rule of federal admiralty law\nprecludes Raiders from maintaining its three extra-\ncontractual Pennsylvania-law counterclaims against\nClaimant. Although Claimant’ insurance policy\ncontains a boilerplate provision selecting New York\nlaw, Pennsylvania’s choice-of-law principles do not\ntreat such choice-of-law clauses as sacrosanct but\ninstead weigh them against the public policy of the\nstate whose law would otherwise apply—here,\nPennsylvania.\n Thus, Raiders’ ability to maintain those counter-\nclaims depends on whether ordinary state choice-of-\nlaw principles govern in the area of maritime insur-\nance regulation or whether some heretofore unrecog-\nnized federal choice-of-law principle, which would\ncause a state choice-of-law provision contained in a\nmaritime insurance policy to be essentially inviolable\nas a matter of federal law, applies instead.\n Under Wilburn Boat, to state the question is to\nresolve it. Claimant has failed to demonstrate the\nexistence of any well-established principles of federal\nadmiralty law that cause a state choice-of-law pro-\nvision in a maritime insurance contract to be sacro-\nsanct in the absence of any federal public policy\ndictating its non-enforcement. Consequently, under\n 11\nWilburn Boat, state law applies to determine the\nenforceability of the New York choice-of-law provision\ncontained in Claimant’ policy, and state law\nnecessitates considering the public policy of Pennsyl-\nvania—the jurisdiction with the most connections to\nthe parties’ dispute—as part of that enforceability\ninquiry.\n Even if the Court holds that federal common law\ngoverns the enforceability of choice-of-law clauses in\nmaritime insurance contracts, the result should be\nthe same. The Court should adopt, as a matter of\nfederal common law, the Restatement’s approach of\nconsidering the public policy of the state whose law\nwould otherwise apply, which in this case is\nPennsylvania.\n Claimant’ contrary approach of applying\nfederal maritime policy to select between Pennsyl-\nvania and New York insurance law has little to\nrecommend it. If federal maritime policy were\nrelevant here, then federal substantive maritime law\nwould apply. Given that Wilburn Boat embraces state\nregulation of maritime insurance, it naturally follows\nthat states should regulate choice-of-law clauses just\nas they regulate every other provision of a maritime\ninsurance contract.\n Claimant’ approach would nullify Wilburn\nBoat’s holding that states should be the primary\nregulators of maritime insurance. Under Claimant’ approach, insurers could avoid statutory\nprotections for policyholders that exist in the vast\nmajority of states merely by including a boilerplate\nprovision selecting the most insurer-friendly state’s\nlaw.\n 12\n Claimant’ preferred outcome would not\npromote the goal of uniformity that Claimant\ntrumpets repeatedly in its brief. Claimant chose\nNew York law in its contract of adhesion, but the\nnext insurance company can choose the law of any\nother jurisdiction. “Uniformity” in the admiralty\ncontext means the same substantive law applies\nacross-the-board. That is far from guaranteed where\neach insurer can choose the law of whichever state it\nbelieves advantages it the most. Nor would\nuniformity be defeated by affirming the Third\nCircuit’s judgment. Although Claimant chose the\nforum here, the specter of “forum shopping” does\nlittle to risk disuniformity, because under the\nRestatement’s approach this case would always pre-\nsent a conflict between New York and Pennsylvania\nlaw regardless of whether it had been filed in\nPhiladelphia or (somehow) Sacramento.\n Given this Court’s hands-off approach to the state\nlaw regulation of maritime insurance in Wilburn\nBoat, the only conceivably proper outcome here is\nthat whether an insurance policy’s choice-of-law\nprovision is enforceable in an admiralty case\ngoverned by state law must produce the same result\nas in any other insurance dispute governed by state\nlaw outside the admiralty context. This outcome will\nmake maritime insurance companies no better off,\nbut also no worse off, than insurance companies\ndoing business throughout the United States outside\nthe admiralty context.\n Because the result the Third Circuit reached is\nthe result that Wilburn Boat compels, this Court\nshould affirm the judgment of the court of appeals.\n 13\n ARGUMENT\nI. Pennsylvania Law Should Determine The\n Enforceability Of The Choice-Of-Law Clause,\n And Under Pennsylvania Law, Courts Con-\n sider Pennsylvania Public Policy\n In Wilburn Boat Co. v. Fireman’s Fund Ins. Co.,\n348 U.S. 310, 320-21 (1955), this Court held that,\nwhen adjudicating a maritime insurance contract\ndispute, if there is no governing established rule of\nfederal admiralty law, state law applies.\n The district court in this case held, and the parties\ndo not dispute, that no established rule of federal\nadmiralty law precludes Raiders from maintaining its\nthree Pennsylvania-law counterclaims against Claimant. Thus, the sole question before this Court is\nwhether the insurance policy’s choice of New York\nlaw precludes those counterclaims or whether the\nstrong public policies of the state having the most\nsignificant connection to the parties’ dispute—here,\nPennsylvania—apply instead to enable those counter-\nclaims to proceed to resolution on their merits.\n To decide whether New York law or Pennsylvania\nlaw applies, the Court must decide whether the\nchoice-of-law clause is enforceable. And, to decide\nthat question, the Court must resolve whose law—\nfederal law or state law—governs the enforceability of\nthe choice-of-law clause. Under Wilburn Boat’s\napproach, state law governs the enforceability of the\nchoice-of-law clause. As a result, because Pennsyl-\nvania law requires consideration of Pennsylvania\npublic policy in determining the enforceability of a\nchoice-of-law clause, the Third Circuit’s decision\nshould be affirmed.\n 14\n A. Under Wilburn Boat, state law applies to\n determine the enforceability of the\n choice-of-law clause unless there is\n established federal law to the contrary\n In Wilburn Boat, this Court held that, in the\nabsence of a “judicially established federal admiralty\nrule,” state law governs disputes arising under\nmaritime insurance contracts. Id. at 314; see id. at\n319-21. The dispute in Wilburn Boat began when the\ninsured’s houseboat was destroyed in a fire. See id. at\n311. The insurer denied coverage “because of alleged\nbreaches” of terms in the maritime insurance con-\ntract providing that “the boat could not be sold, trans-\nferred, assigned, pledged, hired or chartered, and\nmust be used solely for private pleasure purposes.”\nId.\n The validity of those provisions turned on whether\nTexas law governed the suit, as it was a principle of\nTexas insurance law that “no breach by the insured of\nthe provisions of a fire insurance policy is a defense to\nany suit . . . unless the breach contributes to the\nloss.” Id. at 312. The lower courts held that Texas law\nwas irrelevant in this federal maritime dispute, and\nthey instead relied on what they viewed as “an\nestablished admiralty rule which requires literal ful-\nfillment of every policy warranty so that any breach\nbars recovery, even though a loss would have hap-\npened had the warranty been carried out to the\nletter.” Id.; see id. at 312-13.\n This Court ruled that state law should apply. It\nrejected the argument that there was a need for\nuniformity of the law governing maritime insurance\ncontracts. The Court observed that the states’\n 15\nregulatory power “has always been particularly broad\nin relation to insurance companies and the contracts\nthey make.” Id. at 314. And it was wary of “judicial\ncreation of admiralty rules to govern marine policy\nterms and warranties” in light of the fact that “[t]he\ncontrol of all types of insurance companies and\ncontracts has been primarily a state function since\nthe States came into being.” Id. at 316; see id. at 316-\n19 (discussing the states’ pedigree of regulating\ninsurance and the “difficulties of an attempt to unify\ninsurance law on a nationwide basis, even by\nCongress”).\n The Court therefore held that, in the absence of a\npreexisting, “judicially established federal admiralty\nrule governing the[ ] warranties,” id. at 314, this\nCourt would apply state law, as in any other non-\nadmiralty case, rather than create a uniform federal\nrule. See id. at 320-21. And it concluded that there\nwas no such established admiralty rule requiring\nstrict compliance with warranties in marine insur-\nance contracts. See id. at 314-16.\n Wilburn Boat thus announced a straightforward\nrule for determining the source of law for disputes\nover maritime insurance contracts: the relevant rule\nof decision comes from state law unless there is a\nwell-established, specific federal admiralty rule that\ngoverns.\n Wilburn Boat’s rule applies here. The parties\ndispute the enforceability of a state choice-of-law pro-\nvision in a maritime insurance contract. The choice-\nof-law provision is simply one type of term in a\nmaritime insurance contract—just like the no-\ntransfer and no-commercial-use provisions in the\n 16\ninsurance policy at issue in Wilburn Boat. Under\nWilburn Boat, therefore, the rule for whether a\nchoice-of-law provision in a maritime insurance\ncontract is enforced is drawn from state law—unless\nthere is a well-established federal rule governing the\nenforceability of choice-of-law provisions in maritime\ninsurance contracts that supplants it.\n Claimant steadfastly avoids using Wilburn\nBoat’s methodology. Instead, Claimant presents its\narguments for reversal through the framework of this\nCourt’s ruling in Dutra Group v. Batterton, 139 S. Ct.\n2275 (2019)— a case presenting the question whether\na mariner injured while working as a deckhand may\nrecover punitive damages on a claim of unseawor-\nthiness. The question presented in Dutra Group—\ninvolving a well-established federal admiralty law\nclaim and whether a particular form of damages was\nrecoverable thereunder—has nothing to do with\nmaritime insurance. Wilburn Boat, not Dutra,\nprovides the applicable test here.\n B. Claimant mischaracterizes Wilburn\n Boat\n Claimant spins a tale in which Wilburn Boat\nintroduced state law into maritime insurance con-\ntracts for the first time, and insurers began using\nchoice-of-law provisions thereafter to restore the\npredictability that Wilburn Boat purportedly\ndestroyed. Claimant insists that “before Wilburn\nBoat, Maritime Contracts Were Governed Exclusively\nby Federal law.” Pet. Br. at 16-19. “For that nearly\n200-year stretch, state law was nowhere to be found.”\nId. at 19. Claimant claims that “Wilburn Boat\nessentially introduced state law into federal maritime\n 17\ncases.” Id. And so, the theory goes, insurers began\nusing choice-of-law clauses after Wilburn Boat in\norder to restore the pre-Wilburn Boat status quo, in\nwhich insurers would not be subject to 50 states’\nlaws. Pet. Br. at 19.\n These assertions mischaracterize Wilburn Boat.\nThe whole premise of Wilburn Boat was that\nmaritime insurance contracts were always governed\nby state law, and so the Court was merely\nrecognizing where the law always stood, not\n“essentially introduc[ing] state law into federal\nmaritime cases” as Claimant incorrectly repre-\nsents. Pet. Br. at 19.\n This Court in Wilburn Boat says this over, and\nover, and over again. See 348 U.S. at 316-19. It states\nthat “[t]he whole judicial and legislative history of\ninsurance regulation in the United States warns us\nagainst the judicial creation of admiralty rules to\ngovern marine policy terms and warranties.” Id. at\n316. “The control of all types of insurance companies\nand contracts has been primarily a state function\nsince the States came into being.” Id. “In 1869, this\nCourt held in Paul v. Virginia, 8 Wall. 168, that\nStates possessed regulatory power over the insurance\nbusiness and strongly indicated that the National\nGovernment did not have that power.” Id. “Three\nyears later, it was first authoritatively decided in\nInsurance Co. v. Dunham, supra, that federal courts\ncould exercise ‘jurisdiction’ over marine insurance\ncontracts.” Id. “In 1894, years after the Dunham\nholding, this Court applied the doctrine of Paul v.\nVirginia and held that States could regulate marine\ninsurance the same as any other insurance.” Id.\n(citing Hooper v. California, 155 U.S. 648 (1895)).\n 18\n“Later, the power of States to regulate marine\ninsurance was reaffirmed in Nutting v. Massa-\nchusetts, 183 U.S. 553.” Id.\n As the Court recognized in Wilburn Boat, “This\nconstitutional doctrine carrying implications of\nexclusive state power to regulate all types of\ninsurance contracts remained until 1944 when this\nCourt decided United States v. South-Eastern\nUnderwriters Assn., 322 U.S. 533.” Id. “Thus it is\nclear that at least until 1944 this court has always\ntreated marine insurance contracts, like all others, as\nsubject to state control.” Id. “The vast amount of\ninsurance litigation in state courts throughout our\nhistory also bears witness that until recently state\nlegislatures and state courts have treated marine\ninsurance as controlled by state law to the same\nextent as all other insurance.” Id. The Court also\ngave a detailed explanation of how “[n]ot only courts,\nbut Congress, insurance companies, and those\ninsured have all acted on the assumption that States\ncan regulate marine insurance.” Id. at 317-20.\n The Court concluded its Wilburn Boat opinion\nwith the following summary of its holding: “Under\nour present system of diverse state regulations,\nwhich is as old as the Union, the insurance business\nhas become one of the great enterprises of the Nation.\nCongress has been exceedingly cautious about\ndisturbing this system, even as to marine insurance\nwhere congressional power is undoubted. We, like\nCongress, leave the regulation of marine\ninsurance where it has been—with the States.”\nId. at 320-21 (emphasis added). Given this reasoning,\nit is difficult to understand how Claimant could\nclaim that “before Wilburn Boat, Maritime Contracts\n 19\nWere Governed Exclusively by Federal law.” Pet. Br.\nat 16.\n C. There is no established federal rule\n governing the enforceability of choice-of-\n law provisions in maritime insurance con-\n tracts\n Claimant’ theory boils down to this: “Although\nWilburn Boat created a gap-filling role for state\nsubstantive law, it did not disturb the settled federal\npresumption in favor of enforcing choice-of-law\nclauses in maritime contracts.” Pet. Br. at 19. Every-\nthing in this assertion is wrong. Wilburn Boat did not\ncreate anything (it distilled 200 years of law). In\nmarine insurance, the role of state substantive law is\nnot “gap-filling” (it governs, absent an established\nfederal law to the contrary). And—dispositively for\nthis case—there is no such thing as a “settled federal\npresumption in favor of enforcing choice-of-law\nclauses in maritime contracts.”\n Claimant advocates a federal rule under which\nchoice-of-law provisions in maritime contracts are\nenforced unless they conflict with federal maritime\npolicy. According to Claimant, this federal rule\ngoverning the enforceability of choice-of-law clauses\nshould apply even when the court is choosing\nbetween the law of two different states: here, New\nYork (the state specified in the choice-of-law clause)\nand Pennsylvania (the state whose law would apply\nin the absence of a choice-of-law clause).\n To prevail in this case, Claimant must demon-\nstrate that its proposed rule is an established federal\nrule within the meaning of Wilburn Boat. It cannot\ncome close to making this showing.\n 20\n 1. There is no pre-Wilburn Boat case law\n demonstrating an established federal\n rule\n Claimant first attempts to locate an\n“established federal rule” in pre-Wilburn Boat case\nlaw. That attempt fails.\n To begin, Wilburn Boat’s standard for finding an\n“established federal rule” is exceptionally high.\nThere, the insurer assembled abundant evidence of\nan “established federal rule” that warranties in a\nmaritime insurance policy should be strictly enforced.\nThe insurer cited Hazard’s Administrator v. New\nEngland Marine Ins. Co., 8 Pet. 557, 580 (1834), a\nmaritime insurance case which expressly recognized\nthat warranties must be “strictly and literally\nperformed,” but this Court in Wilburn Boat said that\nwas not good enough because the Court in Hazard’s\nAdministrator did not explicitly say this was a federal\nrule. See 348 U.S. at 315.\n The insurer also cited a different Supreme Court\ncase explicitly announcing such a rule in a non-\nmaritime insurance case; two circuit court decision\nspecifically characterizing such a rule as “part of the\ngeneral admiralty law”; and numerous other appel-\nlate decisions applying such a rule. See id. The\ndissent did even better, putting together a massive\nbody of case law endorsing this rule. See id. at 325-26\n& nn.1-3 (Reed, J., dissenting). Not good enough, said\nthe majority, for the rule to be “judicially established\nas part of the body of federal admiralty law in this\ncountry.” Id. at 316.\n The case law on which Claimant relies in its\nmerits brief does not even come close to meeting\n 21\nWilburn Boat’s standard. In an effort to substantiate\nan “established federal rule,” Claimant points to a\nscattershot of pre-Wilburn Boat cases with choice-of-\nlaw provisions specifying that a foreign country’s law\nwill apply. Pet. Br. at 18. These cases say nothing\nabout the enforceability of choice-of-law provisions\nspecifying that a particular state’s law will apply,\nmuch less what law should be used to determine the\nenforceability of such choice-of-law provisions.\n The only two cases that Claimant discusses\nbeyond mere inclusion in a string-cite are London\nAssurance v. Companhia de Moagens do Barreiro, 167\nU.S. 149 (1897), and The Kensington, 183 U.S. 263\n(1902), neither of which move the ball. In London\nAssurance, the contract specified that “the claims\nwere to be adjusted according to the usages of\nLloyds,” and this Court held that it is “no injustice” to\napply that law as long as “the foreign law is not in\nany way contrary to the policy of our own.” 167 U.S.\nat 160-61. In The Kensington, which was not an\ninsurance case (it involved the interpretation of a\npassenger’s ticket), this Court declined to apply\nBelgian law, as specified on the ticket, based on a\nview that it would violate American public policy. See\n183 U.S. at 268-71.\n Neither of these cases comes close to supporting\nthe rule advocated by Claimant here—namely,\nthat only a strong federal public policy would suffice\nto override Claimant’ unilateral choice of New\nYork law in the insurance policy it issued to Raiders.\nFirst, both cases say that a foreign choice-of-law\nprovision will not apply if it conflicts with U.S. public\npolicy. Of course that is true. A provision that\nconflicts with federal admiralty policy would be\n 22\npreempted, just as a state-law provision that conflicts\nwith federal admiralty policy would be preempted. In\nThe Kensington, this Court describes its holding in\nprecisely that manner:\n In the very nature of things, the premise, upon\n which this decision must rest, is controlling\n here, unless it be said that a contract, made in\n a foreign country, to be executed in part in the\n United States, is more potential to overthrow\n the public policy, enforced in the courts of the\n United States, than would be a similar\n contract, validly made, in one of the States of\n the Union.\n183 U.S. at 270. Nothing in these two cases gives any\nhint on how to choose between the law of two states\n(here Pennsylvania and New York), neither of which\nis preempted.\n Second, in both cases, the question was: should\nthis Court apply federal substantive law, or foreign\nlaw? This Court applied essentially the same rule\nthat is now recognized as the Restatement’s rule for\nstate choice-of-law disputes (see Restatement\n(Second) of Conflict of Laws §187(2)(b) (1971)): to\ndetermine whether federal substantive law applies\nnotwithstanding a choice-of-law provision, you apply\nfederal policy. In other words, you apply the policy of\nthe sovereign “which would be the state of the\napplicable law with respect to the particular issue\ninvolved in the absence of an effective choice by the\nparties.” Id. cmt. g. That parallels the rule that\nRaiders advocates here: Pennsylvania public policy is\nused to decide whether Pennsylvania substantive law\napplies. Nothing in these cases supports Claimant’\n 23\nmix-and-match approach of applying federal law to\nchoose between Pennsylvania and New York law.\n Indeed, the most relevant pre-Wilburn Boat case\nlaw cuts the other way. Consider E. Gerli & Co. v.\nCunard S. S. Co. Ltd., 48 F.2d 115 (2d Cir. 1931), a\ndecision by Judge Learned Hand, with Judge\nAugustus Hand also on the panel and joining in the\ndecision. E. Gerli involved a maritime contract that\nstated it would be “governed by English law.” Id. at\n117. If the “established federal rule” asserted by\nClaimant actually existed, the court would have\nheld that the choice-of-law provision was enforceable\nunless it conflicted with federal maritime law.\n However, the court applied a different rule. The\ncourt held that the enforceability of the choice-of-law\nclause should be determined based on the policy of\nthe jurisdiction where the contract was “drawn and\ndelivered”: Italy. Id. The court observed: “People\ncannot by agreement substitute the law of another\nplace; they may of course incorporate any provisions\nthey wish into their agreements—a statute like\nanything else—and when they do, courts will try to\nmake sense out of the whole, so far as they can.” Id.\n“But an agreement is not a contract, except as the\nlaw says it shall be, and to try to make it one is to\npull on one’s bootstraps.” Id. The court then held that\nthe litigant attacking the clause could not prevail\nbecause he had put forth insufficient evidence of\nItalian law: “Prima facie, the agreement is a contract;\nhe who maintains that in a given situation it is not,\nmust prove the law of Italy. The libellant has not\nproved it, and he must lose.” Id.; see also F.A. Straus\n& Co. v. Canadian Pac. R. Co., 173 N.E. 564, 567\n(N.Y. 1930) (declining to enforce provision of mari-\n 24\ntime contract selecting British law because it violated\nNew York public policy, citing The Kensington with\napproval).\n E. Gerli is devastating to Claimant’ case. First,\nunlike every case cited by Claimant, the court\nactually dwelt on the question of which jurisdiction’s\nlaw governs the enforceability of choice-of-law\nclauses. Second, unlike every case cited by Claimant, E. Gerli involved a choice of law between two\njurisdictions, neither of which was the United States:\nItaly and England. That parallels the situation here,\nwhere the court is choosing between Pennsylvania\nand New York law. And, Learned Hand—perhaps the\nsingle greatest lower-court judge in American\nhistory—was completely unaware of Claimant’\npurported “established federal rule” that federal\nadmiralty law uniformly governs the enforceability of\nchoice-of-law clauses in maritime contracts. Instead,\nhe considered the public policy of the sovereign whose\nlaw would otherwise apply: Italy. That is exactly the\napproach advocated by Raiders here.\n Similar pre-Wilburn Boat law exists in the context\nof maritime insurance. Boole v. Union Marine Ins.\nCo., 52 Cal. App. 207 (Cal. Ct. App. 1st Dist. 1921),\ninvolved a maritime insurance contract reciting that\n“all claims for loss shall be adjusted according to the\nEnglish law and practice.” Id. As in E. Gerli, the\nchoice-of-law dispute involved two jurisdictions other\nthan the United States: England and California. See\n52 Cal. App. at 209 (noting that “English law . . .\ndiffers from the California law”). Under Claimant’\napproach, the court should have applied the\npurported “established federal rule” of deciding the\n 25\nenforceability of the choice-of-law provision by\nreference to federal policy.\n Instead, the court analyzed the enforceability of\nthe choice-of-law provision under California law. The\ncourt characterized the insured’s contention as\nfollows: “If the court shall conclude that, upon a fair\nconstruction of the contracts of insurance, the clauses\nof the policies referred to exclude the California\nstatute law, it is appellant’s contention in the second\nplace that these clauses are void as being in\ncontravention of the domestic policy of the state\nexpressed in the code sections.” Id. at 209.\n The court enforced the choice-of-law provision\nbased on its conclusion that California law permitted\nits enforcement. “We find nothing in our own laws\nmaking the provisions of the code defining a\nconstructive total loss, in the case of marine\ninsurance, mandatory upon the parties.” Id. at 210.\n“We are not aware of any legislative declaration that\nwould prohibit the parties to such an insurance policy\nfrom contracting that the law of England shall govern\nin the determination of what shall constitute a\nconstructive total loss under such policy.” Id. “It is\nthe general rule in this state that, except where it is\notherwise declared, the provisions of the Civil Code,\nwith respect to the rights and obligations of parties to\ncontracts, are subordinate to the intention of the\nparties when ascertained in the manner prescribed\nby the laws relating to the interpretation of\ncontracts.” Id. at 210-11.\n Thus, there simply is no pre-Wilburn Boat\n“established federal rule” applying federal admiralty\nlaw to determine the enforceability of choice-of-law\n 26\nprovisions in maritime contracts. To the contrary,\ncourts consistently considered the policy of the\njurisdiction whose law would otherwise apply—which\nis exactly the approach Pennsylvania uses and\nexactly the approach Raiders advocates for here.\n 2. There is no post-Wilburn Boat case law\n demonstrating an established federal\n rule\n In its search for an established federal rule, Claimant also cites post-Wilburn Boat cases, but there\nare no Supreme Court cases on the issue, and no\nwell-established approach followed by the lower\ncourts. Indeed, only a total of three cases at the\nfederal appellate level have involved disputes over\nwhether to apply a state choice-of-law provision in a\nmaritime insurance policy or the competing law of\nanother state for public policy reasons.\n Not surprisingly, all three cases involved Claimant. In Claimant Reins. (UK) PLC v. Durham\nAuctions, Inc., 585 F.3d 236 (5th Cir. 2009), the Fifth\nCircuit recognized that the Restatement (Second) of\nConflict of Laws provided the governing test and held\nthat the public policy of Mississippi did not suffice\nunder the particular circumstances of that case to\novercome the insurance policy’s New York choice-of-\nlaw provision. See id. at 242, 244-45.1 In Raiders’\ncase, the Third Circuit vacated and remanded for the\n\n1 Claimant incorrectly maintains that Stoot v. Fluor\nDrilling Servs., Inc., 851 F.2d 1514 (5th Cir. 1988), sets forth the\nFifth Circuit’s test for when choice-of-law clauses in maritime\ninsurance contracts are enforceable. Stoot resolved an indemnity\ndispute between a drilling rig owner and a catering company.\nThe case did not involve maritime insurance, nor did the case\npresent a choice between the law of two different states.\n 27\ndistrict court to determine whether Pennsylvania\npublic policy sufficed to overcome the choice-of-law\nprovision. Pet. App. 15a. And in Claimant Ins. SE\nv. Andersson, 66 F.4th 20 (1st Cir. 2023), the First\nCircuit held that the choice-of-law provision by its\nexpress terms failed to apply to extracontractual\nMassachusetts law counterclaims for bad faith and\nthe like. See id. at 25-28. To the extent there is any\nhistorical record worth considering, the score appears\nto be two courts ruling in favor of the policyholder,\nand one not reaching the issue.\n Claimant also cites D.C. Circuit and Ninth\nCircuit decisions, but they do not help its case.\nMilanovich v. Costa Crociere, S.p.A., 954 F.2d 763\n(D.C. Cir. 1992), was not an insurance case. Instead,\nthe court enforced a choice-of-law provision on a\ncruise ticket based on an irrelevant federal statute\ngoverning time limits for lawsuits by cruise passen-\ngers. Id. at 768. Galilea, LLC v. AGCS Marine Ins.\nCo., 879 F.3d 1052 (9th Cir. 2018), involved the\napplication of the strong federal policy favoring\narbitration. The court observed: “here there is no gap\nin federal maritime law to fill with law from any\nstate, Montana included, as the FAA supplies the\ngoverning arbitration law for maritime transactions.”\nId. at 1059. That holding has no relevance to this\ncase.\n Claimant’ citations to district court cases are\nsimilarly unilluminating. Claimant cites Hale v.\nCo-Mar Offshore Corp., 588 F. Supp. 1212, 1215\n(W.D. La. 1984) (Pet. Br. at 22), but its discussion of\nthat case does not withstand scrutiny. Hale was not\nan insurance case. Instead, it involved a maritime oil\ndrilling contract that, in the absence of a choice-of-\n 28\nlaw provision, would be governed by federal\nsubstantive law. The court considered whether an\nOklahoma choice-of-law provision would conflict with\nfederal maritime policy because federal maritime law\nwould apply in the absence of the choice-of-law\nprovision. See id. at 1216 (“As for public policy consid-\nerations, the Court must look to those underlying\nadmiralty law because maritime rules of decision\nwould apply in the absence of a choice of Oklahoma\nlaw.”); see also Stoot, 851 F.2d at 1517-18 (consider-\ning whether the parties’ choice of Louisiana law, in\nplace of federal law, should be honored). Again, this is\nexactly the approach that Raiders is advocating: look\nto Pennsylvania policy because Pennsylvania rules of\ndecision would apply in the absence of a choice of\nNew York law.\n The remainder of the cases in Claimant’\nlengthy string-cites (Pet. Br. at 24-25) tend to involve\nglancing statements making general references to\nfederal maritime law without meaningful analysis.\nThese cases do not demonstrate an established\nfederal rule that requires application of federal law to\nthe enforceability of the choice-of-law provision here.\n ***\n To sum up, there is no established federal rule—\neither pre- or post-Wilburn Boat—governing the\nenforceability of choice-of-law clauses in maritime\ninsurance contracts. As such, Wilburn Boat dictates\nthat state law governs the enforceability of choice-of-\nlaw clauses in maritime insurance contracts.\n 29\n D. This Court’s case law supports Raiders’\n position that state law should be applied\n to determine the enforceability of the\n choice-of-law clause\n In addition to Wilburn Boat, other case law from\nthis Court supports Raiders’ contention that state law\nshould govern the enforceability of the choice-of-law\nclause.\n 1. Cassirer supports Raiders’ position\n This Court’s decision in Cassirer v. Thyssen-\nBornemisza Collection Found., 142 S. Ct. 1502 (2022),\nsupports Raiders’ approach to apply state choice-of-\nlaw rules. In Cassirer, this Court considered whether\nto use federal choice-of-law rules, or instead state\nchoice-of-law rules, in Foreign Sovereign Immunities\nAct cases raising non-federal claims. See id. at 1504.\nThis Court held that state choice-of-law rules should\napply.\n In reasoning that could be written for this case,\nthe Court explained that it saw “scant justification\nfor federal common lawmaking in this context.” Id. at\n1509. “Judicial creation of federal common law to\ndisplace state-created rules must be necessary to\nprotect uniquely federal interests.” Id. (internal\nquotations omitted). “Foreign affairs is of course an\ninterest of that kind.” Id. But “such FSIA suits arise\nonly when a foreign state has lost its broad immunity\nand become subject to standard-fare legal claims\ninvolving property, contract, or the like.” Id. at 1509.\n“No one would think federal law displaces the\nsubstantive rule of decision in those suits; and we see\nno greater warrant for federal law to supplant the\notherwise applicable choice-of-law rule.” Id.\n 30\n Identical reasoning applies here. Maritime law,\nlike foreign affairs, implicates unique federal\ninterests. But it is undisputed that, exactly as in\nCassirer, state law governs this dispute. The parties\nmerely dispute which state law applies—Claimant\nclaims New York law should apply, while Raiders\nclaims Pennsylvania law should apply. As Cassirer\npersuasively explains, given that federal law does not\ndisplace “the substantive rule of decision in those\nsuits,” there is “no greater warrant for federal law to\nsupplant the otherwise applicable choice-of-law rule.”\nId.; see also Semtek Int’l Inc. v. Lockheed Martin\nCorp., 531 U.S. 497, 508 (2001) (“Since state, rather\nthan federal, substantive law is at issue there is no\nneed for a uniform federal [claim preclusion] rule.”).\n 2. The Bremen and Carnival support\n Raiders’ position\n As the Third Circuit correctly held, M/S Bremen\nv. Zapata Off-Shore Co., 407 U.S. 1 (1972) (herein-\nafter The Bremen), and Carnival Cruise Lines, Inc. v.\nShute, 499 U.S. 585 (1991), also support Raiders’\nposition that Pennsylvania public policy could\npreclude application of the insurance policy’s New\nYork choice-of-law provision to necessitate the\ndismissal of Raiders’ extra-contractual Pennsylvania-\nlaw counterclaims in the context of this case.\n The Bremen recognized that the forum’s public\npolicy can preclude enforcement of a forum selection\nclause, which also served as a choice-of-law provision,\nin a dispute between which of two nation’s laws to\napply. See M/S Bremen, 407 U.S. at 13-15 & n.15.\nCarnival then applied The Bremen to a forum\nselection dispute between two states. See Carnival,\n 31\n499 U.S. at 590-95. The public policy principles that\nthis Court recognized in those two cases, combined\nwith this Court’s holding in Wilburn Boat, comfort-\nably support the conclusion that the Third Circuit\nproperly remanded this case for the district court to\ndetermine whether Pennsylvania’s public policy\nsuffices to overcome the insurance contract’s New\nYork choice-of-law provision with respect to Raiders’\nthree extracontractual counterclaims.2\n In resolving the question presented on appeal, the\nThird Circuit held that well-established maritime\nchoice-of-law principles, which recognize that “‘[a]\nchoice of law provision in a marine insurance contract\nwill be upheld in the absence of evidence that its\nenforcement would be unreasonable or unjust[,]’\n2 Thomas J. Schoenbaum, Admiralty and Maritime\nLaw §19:6 (6th ed. 2020),” coupled with this Court’s\nrecognition in The Bremen, 407 U.S. at 15, that a\nchoice-of-law provision would apply unless\n“enforcement would be unreasonable and unjust,”\ndictated that a maritime insurance policy’s choice-of-\nlaw provision would not be enforced if “enforcement\nwould contravene a strong public policy of the forum\n\n\n2 Claimant incorrectly contends, in a footnote, that The\nBremen’s approach conflicts with the Restatement’s approach.\nSee Pet. Br. at 22 n.2. The Bremen considered a choice-of-law\nconflict between the laws of two nations. Restatement §187, by\ncontrast, addresses choice-of-law conflicts at the state level.\nHere, the Third Circuit did not apply The Bremen part-and-\nparcel but rather applied only those relevant principles\napplicable to a state-level choice-of-law dispute. There is no\nreason to believe that the Third Circuit’s approach would\nconflict with the Restatement approach where the state with the\ngreatest connection to the controversy differed from the state in\nwhich the action is pending.\n 32\nin which suit is brought, whether declared by statute\nor by judicial decision.” Pet. App. 8a, 10a, 15a.\n In short, relying on The Bremen and Carnival\nCruise Lines, and informed by Wilburn Boat, the\nThird Circuit correctly remanded this case for a\ndetermination of whether Pennsylvania’s strong\npublic policy warrants denying effect to the insurance\npolicy’s choice-of-law provision with regard to\nRaiders’ three extra-contractual counterclaims.\n E. Under Pennsylvania law, a court should\n apply Restatement (Second) of Conflict of\n Laws §187, which in turn requires consid-\n eration of Pennsylvania public policy\n Because there is no well-established federal\nadmiralty rule on the enforceability of contractual\nchoice-of-law provisions, the forum-state law’s rule\napplies. It is entirely commonplace for federal courts\nto apply the choice-of-law rules of the forum state—\nthat is the approach in every diversity case. See\nKlaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487\n(1941). In common with admiralty, diversity\njurisdiction also originates from Article Three. See\nU.S. Const. art. III, §2.\n Claimant chose to file its declaratory-judgment\naction in the Eastern District of Pennsylvania. Pet.\nApp. 3a. Pennsylvania choice-of-law principles thus\napply.\n Pennsylvania follows the approach found in\nSection 187 of the Restatement (Second) of Conflict of\nLaws. See Pennsylvania Dep’t of Banking v. NCAS of\nDel., LLC, 948 A.2d 752, 757-58 & n.6 (Pa. 2008);\n 33\nChestnut v. Pediatric Homecare of Am., Inc., 617 A.2d\n347, 350-51 (Pa. Super. Ct. 1992).\n Section 187 provides:\n (1) The law of the state chosen by the parties to\n govern their contractual rights and duties will\n be applied if the particular issue is one which\n the parties could have resolved by an explicit\n provision in their agreement directed to that\n issue.\n (2) The law of the state chosen by the parties to\n govern their contractual rights and duties will\n be applied, even if the particular issue is one\n which the parties could not have resolved by\n an explicit provision in their agreement\n directed to that issue, unless either\n (a) the chosen state has no substantial\n relationship to the parties or the transaction\n and there is no other reasonable basis for the\n parties’ choice, or\n (b) application of the law of the chosen state\n would be contrary to a fundamental policy of a\n state which has a materially greater interest\n than the chosen state in the determination of\n the particular issue and which, under the rule\n of §188, would be the state of the applicable\n law in the absence of an effective choice of law\n by the parties.\nRestatement (Second) of Conflict of Laws §187.\n In the terminology of Restatement §187(2), this\ncase involves a “particular issue [that] the parties\ncould not have resolved by an explicit provision in\n 34\ntheir agreement directed to that issue.” See Restate-\nment §187 cmt. g & illus. 9-10. Claimant has not\ncontended that a policyholder could agree in advance\nto release an insurance company from liability for\nwhatever bad faith conduct or unfair trade practices\nan insurance company might later engage in when\nadjusting or denying a claim, or that an insurance\ncompany would even consider seeking such a waiver\nin advance. Certainly Raiders did not knowingly and\nintentionally waive its ability to assert the Pennsyl-\nvania-law counterclaims at issue in this case when it\npurchased insurance coverage from Claimant.\n As relevant here, Restatement §187 generally\ndeems contractual choice-of-law provisions to be\nenforceable, with two exceptions. Id. §187(2). First, a\nchoice-of-law provision can be disregarded if “the\nchosen state has no substantial relationship to the\nparties or the transaction and there is no other\nreasonable basis for the parties’ choice.” Id.\n§187(2)(a). Second, the provision is unenforceable if\n“application of the law of the chosen state would be\ncontrary to a fundamental policy of a state which has\na materially greater interest than the chosen state in\nthe determination of the particular issue and which .\n. . would be the state of the applicable law in the\nabsence of an effective choice of law by the parties.”\nId. §187(2)(b).\n Under the Restatement approach as adopted by\nPennsylvania, the judgment of the court of appeals\nmust be affirmed. It cannot seriously be disputed—\nand, indeed, Claimant has previously conceded—\nthat in the absence of the choice-of-law provision in\nthe parties’ contract, Pennsylvania law would govern\nthis suit. Raiders—a single-member limited liability\n 35\ncompany headquartered in Pennsylvania whose\nowner, Phil Pulley, is domiciled in Pennsylvania—\nnegotiated, purchased, paid for, and received the\ninsurance policy in question in Pennsylvania from a\nPennsylvania-licensed insurance agent whose corpor-\nate home office is in Pennsylvania. In addition, the\nyacht’s hailing port is in Pennsylvania.\n Although Claimant notes that New York has\nsome connection to the case because it maintains an\nagent for service of process in New York, it maintains\nits trust accounts in New York, and it was admitted\nas a surplus lines insurer in New York, it does not\ncontend that New York’s (or any other state’s)\ninterest in the case is stronger than Pennsylvania’s.\nSee Restatement §188; id. §6; see also Claimant\nCA3 Br. at 34-35 (“GLI will concede that, absent a\nchoice of law clause, Pennsylvania’s bad faith statute\nwould apply to the present case under federal\nadmiralty choice of law rules.”). Thus, the choice-of-\nlaw provision would be ineffective under Pennsyl-\nvania law if contrary to Pennsylvania public policy.\nThe Third Circuit properly concluded that the district\ncourt should consider that issue in the first instance,\nand its judgment should be affirmed.\nII. Alternatively, If The Court Were To Adopt A\n Federal Common Law Rule, It Should Apply\n The Rule Of Restatement (Second) Of Con-\n flict Of Laws §187, Rather Than Petitioner’s\n Contrived Proposed Rule\n Even if the Court concludes that federal law\nshould govern the enforceability of choice-of-law\nclauses in maritime insurance contracts, Raiders\nshould still win this case. If the Court reaches that\n 36\nconclusion, it should adopt the Restatement’s\napproach, under which a court considers the public\npolicy of the state whose law would otherwise apply\nabsent the choice-of-law clause. Here, that state is\nPennsylvania. Hence, even if federal law governs the\nenforceability of choice-of-law clauses in maritime\ninsurance contracts, the Third Circuit correctly\nremanded for consideration of Pennsylvania policy.\n A. If a federal rule governing the enforce-\n ability of choice-of-law clauses in mari-\n time insurance contracts were needed,\n the Restatement’s test strikes the appro-\n priate balance between predictability,\n fairness, and respect for local substan-\n tive law\n In Wilburn Boat, this Court declined to create a\nuniform federal-common-law rule governing whether\nthe breach of warranties contained in a maritime\ninsurance contract should vitiate coverage. Instead,\nthis Court held that state law determines the out-\ncome. Since the Wilburn Boat decision issued in\n1955—nearly 70 years ago—this Court has never\ncreated any uniform federal rules to govern on the\nsubject of maritime insurance.\n A number of lower court decisions and commen-\ntators have understood Wilburn Boat to provide that\nif there is no preexisting federal admiralty rule to\napply—which, again, precisely describes this case—\nthen state law applies without any need to consider\nwhether some uniform federal admiralty rule should\nbe adopted. See Elevating Boats, Inc. v. Gulf Coast\nMarine, Inc., 766 F.2d 195, 198-99 (5th Cir. 1985);\nBig Lift Shipping Co. (N.A.) Inc. v. Bellefonte Ins. Co.,\n 37\n594 F. Supp. 701, 704 (S.D.N.Y 1984); see also\nThomas J. Schoenbaum, Admiralty and Maritime\nLaw §19.6, at 429 (6th ed. 2018) (hereinafter\nSchoenbaum Treatise) (“There is a presumption\nagainst creating a federal admiralty rule in such a\ncase and in favor of the application of state law.”);\nThomas R. Beer, Established Federal Admiralty\nRules in Marine Insurance Contracts & the Wilburn\nBoat Case, 1 U.S.F. Mar. L.J. 149, 155-56 (1989) (“As\na practical consequence, the policy argument that a\nnew rule should be created for the sake of uniformity\nin maritime law will, therefore, rarely prove success-\nful.”).\n Nevertheless, if this Court perceives a need to\nadopt a federal choice-of-law approach, the Court\nshould adopt Restatement (Second) of Conflict of\nLaws §187, which, as professors Coyle and Roosevelt\ndemonstrate in their amicus brief, produces the same\nresult that the Third Circuit reached here. Indeed,\nduring the Third Circuit oral argument of this\nappeal, the judges recognized that a ruling in favor of\nRaiders would be in accordance with the Restatement\napproach. CA3 Oral Arg. Tr. (ECF Doc. 48) at 41.\n What is the practical difference between applying\nthe Restatement as a matter of federal common law\nand applying state law? In Pennsylvania, there is\nnone, because Pennsylvania also uses the Restate-\nment. But if the Court adopts the Restatement as a\nmatter of federal common law, then it would apply to\nadmiralty disputes even in those rare states (unlike\nPennsylvania) that do not use the Restatement’s\napproach as a matter of state law. The Restatement’s\ntest strikes the correct balance between predict-\nability, fairness, and respect for local substantive law.\n 38\n The Restatement’s approach leaves a wide berth\nwithin which contractual choice-of-law provisions are\ngiven effect. As the Restatement explains, “Prime\nobjectives of contract law are to protect the justified\nexpectations of the parties and to make it possible for\nthem to foretell with accuracy what will be their\nrights and liabilities under the contract. These object-\ntives may best be attained in multistate transactions\nby letting the parties choose the law to govern the\nvalidity of the contract and the rights created\nthereby.” Restatement §187 cmt. e.\n In limited circumstances, however, courts should\nnot enforce choice-of-law provisions. First, a choice-of-\nlaw provision should not be applied when the chosen\nlaw has no relationship to the dispute: “The forum\nwill not, for example, apply a foreign law which has\nbeen chosen by the parties in the spirit of adventure\nor to provide mental exercise for the judge. Situations\nof this sort do not arise in practice.” Id. cmt. f.\n Second, in cases where the jurisdiction specified in\nthe choice-of-law clause has some interest in the\nissue, but a materially less interest than the\njurisdiction whose law would otherwise apply, courts\nshould consider the public policy of the state whose\nlaw would otherwise apply: “The chosen law should\nnot be applied without regard for the interests of the\nstate which would be the state of the applicable law\nwith respect to the particular issue involved in the\nabsence of an effective choice by the parties.” Id.\ncmt. g. “The forum will not refrain from applying the\nchosen law merely because this would lead to a\ndifferent result than would be obtained under the\nlocal law of the state of the otherwise applicable law.”\nId. Instead, the court should consider whether the\n 39\nout-of-state law violates a fundamental policy of the\njurisdiction whose law would otherwise apply. See id.\nThis approach echoes The Bremen’s approach to\nforum selection clauses, which likewise requires\nconsideration of whether “enforcement would\ncontravene a strong public policy of the forum in\nwhich suit is brought.” 407 U.S. at 15.\n The Restatement’s approach has been widely\nadopted. Many states have expressly adopted the\nRestatement’s approach, while those states which\nhave not nevertheless apply principles that resemble\nthe Restatement’s approach. See Amicus Br. of Profs.\nCoyle & Roosevelt at 13 & n.4 (citing, among other\nthings, Symeon C. Symeonides, The Judicial\nAcceptance of the Second Conflicts Restatement: A\nMixed Blessing, 56 Md. L. Rev. 1248, 1260 n.96\n(1997)).\n Federal courts sitting in admiralty have applied\nthe Restatement to decide which state’s law to apply\nin maritime insurance disputes governed by state law\nunder Wilburn Boat. See Durham Auctions, 585 F.3d\nat 242; Littlefield v. Acadia Ins. Co., 392 F.3d 1, 7 &\nn.7 (1st Cir. 2004); American Home Assur. Co. v. L&L\nMarine Serv., Inc., 153 F.3d 616, 619 (8th Cir. 1998);\nState Trading Corp. of India, Ltd. v. Assurance-\nforeningen Skuld, 921 F.2d 409, 417 (2d Cir. 1990);\nAhmed v. American S.S. Owners Mut. Protection &\nIndem. Ass’n, Inc., 444 F. Supp. 569, 571-72 (N.D.\nCal. 1978).3\n\n\n3 In admiralty cases not involving maritime insurance, federal\nappellate courts also routinely apply the Restatement to resolve\nchoice-of-law issues. See Cooper v. Meridian Yachts, Ltd., 575\nF.3d 1151, 1165-66 (11th Cir. 2009); Dresdner Bank AG v. M/V\n 40\n Under the Restatement approach, the Third\nCircuit properly remanded this case for the district\ncourt to determine whether Pennsylvania’s public\npolicy sufficed to overcome the insurance contract’s\nNew York choice-of-law provision with respect to\nRaiders’ extracontractual counterclaims.\n B. The contrived federal common law rule\n that Claimant favors is baseless\n If the Court adopts a rule of federal common law,\nthe Restatement’s approach is far preferable to the\nahistorical, self-contradictory, and illogical rule that\nClaimant proposes.\n Under Claimant’ proposed rule, a choice-of-law\nprovision in a marine insurance contract is “presump-\ntively enforceable,” Pet. Br. at 12, though the\npresumption can be rebutted “when the parties’\nchosen law contravenes federal maritime policy,” id.,\nor when “the parties have no substantial connection\nto or reasonable basis for the selected law,” id. at 43.\n Claimant’ proposed test plucks one-half of the\nRestatement’s test, and then mangles the second half\nof the Restatement’s test. Claimant suggests that\na choice-of-law provision is unenforceable when “the\nparties have no substantial connection to or\nreasonable basis for the selected law.” Id. This\nportion of the test echoes the Restatement and makes\nsense—otherwise an unscrupulous insurer could\nchoose Wyoming law, or Mongolian law, if it favors\n\n\nOlympia Voyager, 446 F.3d 1377, 1381-83 (11th Cir. 2006);\nFlores v. American Seafoods Co., 335 F.3d 904, 916 (9th Cir.\n2003) (quoting Chan v. Society Exped., Inc., 123 F.3d 1287,\n1296-97 (9th Cir. 1997)).\n 41\nthe insurer, even if the case has zero connection to\nWyoming or Mongolia.\n However, even this portion of Claimant’ test\nlacks any historical grounding. Certainly none of the\nold pre-Wilburn Boat cases that Claimant cites\nendorses it—demonstrating that there’s nothing\nresembling an established federal rule on this issue.\nClaimant traces this element of its test only as far\nback as the “early” 1984 district court decision in\nHale v. Co-Mar Offshore Corp., 588 F. Supp. 1212\n(W.D. La. 1984)—which, like most cases on which\nClaimant relies—does not involve a maritime\ninsurance contract. Pet. Br. at 22. A district court\ndecision decided decades after Wilburn Boat, in a case\nhaving nothing to do with maritime insurance, does\nnot establish a “tradition” in any relevant sense.\nWhat is really happening here is that Claimant is\ninventing a rule to supplant state law that, it thinks,\nmakes sense—precisely the approach that Wilburn\nBoat rejects.\n The second part of Claimant’ proposed rule\nmangles the Restatement. The Restatement says that\nyou use the public policy of the state whose law would\notherwise apply to determine whether to strike the\nchoice-of-law provision. Restatement (Second) of\nConflict of Laws §187(2)(b). Claimant alters this\nrule so that you consider federal policy to determine\nwhether Pennsylvania law applies instead of New\nYork law.\n What does this even mean? The whole premise of\napplying state law is that federal law does not care\nabout the issue. Otherwise, substantive federal\nadmiralty law would apply.\n 42\n Put another way, Claimant’ position works like\nthis: “Apply New York law unless New York law\nconflicts with federal policy, in which case apply\nPennsylvania law.” This is an extremely strange rule.\nIf there is a sufficiently strong federal policy at stake\nto override New York law, that federal policy would\ndictate the applicable legal standard. Federal law\nwould not enforce federal admiralty policy by\napplying Pennsylvania law.\n More generally, federal admiralty law always\npreempts state law if the state law conflicts with\nfederal policy, with or without a choice-of-law\nprovision. If New York insurance law conflicted with\nfederal admiralty law, it would never apply—even if\nthe contract was negotiated in New York and sold to\na New York resident, New York law would be dis-\nplaced. The enforceability of a choice-of-law provision\ndoes not become relevant unless we assume that\neither state’s law complies with federal policy—in\nwhich case it makes no sense to look at federal policy\nin deciding whether to enforce the choice-of-law\nprovision.\n Contrary to Claimant’ suggestion, no\n“congressional policy” supports this baffling rule. The\nlone federal statute Claimant cites for the\nproposition that Congress is loath to restrict choice-\nof-law provisions in admiralty contracts, 46 U.S.C.\n§30527 (formerly codified at 46 U.S.C. §30509 and,\nbefore that, at 46 App. U.S.C. §183c), is of dubious\nrelevance, because it has nothing to do with maritime\ninsurance whatsoever.\n Rather, the provision declares void as against\npublic policy any contractual provision that limits the\n 43\nliability of a cruise ship company for personal injury\nor death if the ship stops at a U.S. port. See John F.\nCoyle, Cruise Contracts, Public Policy, and Foreign\nForum Selection Clauses, 75 Univ. Miami L. Rev.\n1087, 1089 (2021). As Professor Coyle’s article makes\nclear, cruise ship companies, headquartered outside\nof the United States, had sought to invoke the\nprotections of the Athens Convention to limit their\nliability for personal injury or death to passengers.\nSee id. The statute has nothing to say about whether\nthe law of one state or another should apply to any\nparticular controversy. Instead, it deals with a matter\nof international concern and, by invoking public\npolicy, declares that United States federal law will\ntake precedence over the contrary law of another\nnation.\n Claimant also cites statutes that have nothing\nto do with insurance, much less maritime insurance,\nsuch as the Federal Arbitration Act. Unrelated\nprovisions that generally favor the enforcement of\nunrelated contracts shed no light on the narrow\nquestion of whether federal law or state law should\ngovern the enforceability of choice-of-law provisions\nin maritime insurance contracts.\n Moreover, Claimant’ “enclave” metaphor,\nwhereby once the border into admiralty jurisdiction is\ncrossed only federal law principles can apply, falters\nfrom the outset due to Wilburn Boat, in which this\nCourt held that state law and state regulation will\ncontinue to govern the outcome of maritime insur-\nance disputes in the absence of any controlling\nfederal admiralty rule. The parties here agree that no\ncontrolling federal admiralty rule governs whether\nRaiders can maintain its three extracontractual\n 44\nPennsylvania-law counterclaims, and thus this case\narises in the zone where, under Wilburn Boat, state\nlaw provides the relevant rule of decision.\n Claimant’ “enclave” metaphor is also faulty\nbecause admiralty law is not some fully formed body\nof law in the sense that one might conceive of the law\nof Massachusetts or of Great Britain. See\nSchoenbaum Treatise §4:1, at 253-54; id. §4.4, at 269\n(“the general maritime law is not a complete legal\nsystem; there are numerous gaps that must be filled\neither by the federal judiciary, in making up new\nrules of law, or by the application of state law”).\n Consequently, this Court has recognized that\nadmiralty law frequently allows for the application of\nstate law, not just in the area of maritime insurance.\nSee Yamaha Motor Corp. v. Calhoun, 516 U.S. 199,\n206 (1996); American Dredging Co. v. Miller, 510 U.S.\n443, 450-53 (1994); see also Schoenbaum Treatise\n§4.4, at 270-75 (discussing the many instances where\nadmiralty applies state law).\n Nor is it unusual for state law to operate in\ntandem with federal law. Article III conceived of\ndiversity jurisdiction alongside admiralty jurisdic-\ntion, and yet this Court has ruled that state law\napplies to govern the outcome of diversity cases,\nincluding the application of state (rather than\nfederal) choice-of-law principles. See Klaxon Co.,\nsupra. This Court has also held that state statutes of\nlimitations govern most federal statutory causes of\naction where Congress has not expressly provided\nany statute of limitations. See DelCostello v.\nInternational Brotherhood of Teamsters, 462 U.S.\n151, 158 (1983). And, in actual federal enclaves, state\n 45\nlaw provides the substantive federal criminal law\nunder the Assimilative Crimes Act, 18 U.S.C. §13.\n In sum, Claimant’ proposed rule has nothing to\nrecommend it other than that it is the only way to\nachieve the result Claimant seeks here.\nIII. Raiders’ Position Is Good Policy\n In addition to being dictated by black-letter\nprinciples of federal maritime law, Raiders’ approach\nmakes sense. Claimant’ policy arguments, by\ncontrast, miss the mark.\n A. It makes sense to consider Pennsylvania\n public policy in determining whether to\n enforce the choice-of-law clause\n In a world where maritime insurance contracts\nare generally governed by state law, it makes sense\nthat state law would govern the enforceability of the\nchoice-of-law clause, and it makes sense that a court\nwould consider the public policy of the state whose\nlaw would otherwise apply in deciding that\nenforceability question.\n As Wilburn Boat recognized, states have long been\nthe exclusive source of authority over maritime\ninsurance. In that capacity, many states have\nestablished substantive rules that are used to inter-\npret insurance contracts and, in some cases, override\ntheir plain language. Wilburn Boat also recognized\nthat insurance contracts are not just garden-variety\ncontracts and that they implicate a host of policy\nconsiderations that call out for special rules and,\noften, special protections for the insured. Congress\nhad been unwilling or unable to craft comprehensive\nfederal regulation of that industry, so this Court\n 46\nacknowledged that insurance regulation—in the\nmaritime context as in every other—should be left to\nthe states.\n Thus, there is nothing unusual about a state\napplying its own public policy to override a provision\nof a maritime insurance contract. That is exactly the\noutcome that Wilburn Boat endorsed.\n Indeed, Wilburn Boat would be meaningless\nunless states could, in appropriate cases, apply their\nown public policies to overturn choice-of-law pro-\nvisions. The whole reason that states regulate the\ncontent of insurance policies is to ensure that\nunscrupulous insurers do not insert small print into\ntheir policies that harm local policyholders. Wilburn\nBoat endorses this type of regulation. It would defeat\nthe purpose of state regulation if insurers could avoid\nthose state insurance laws by inserting more small\nprint specifying that some other state’s law applies.\nThat is why Pennsylvania declines to enforce choice-\nof-law provisions in certain cases—to ensure that\nPennsylvania can protect its citizens from small print\nwhen contrary to Pennsylvania’s strong public policy.\n So of course you would use Pennsylvania public\npolicy to determine the enforceability of a choice-of-\nlaw provision. The whole point of striking the choice-\nof-law provision is to ensure that a local resident is\nprotected by Pennsylvania law reflecting Pennsyl-\nvania public policy. True, as Claimant emphasizes,\nadmiralty law is usually federal law. But, in this\nspecific case, it is undisputed that under Wilburn\nBoat, Pennsylvania law would otherwise apply if the\nchoice-of-law provision were stricken. Under that\n 47\npremise, it is perfectly natural to consider Pennsyl-\nvania public policy.\n The outcome that Claimant seeks would\ndiminish the very state regulation of insurance\ncompanies that Wilburn Boat sought to maintain.\nAlthough a maritime insurance company surely may\ndecide what state’s law will govern the construction\nand application of an insurance policy in the absence\nof any established federal admiralty rule, insurance\ncompanies doing business in Pennsylvania should not\nbe permitted to contract out of that Commonwealth’s\ninsurance bad faith and unfair trade practices law.\n Nearly every state in the nation offers an\ninsurance bad faith cause of action, New York being a\nnotable exception.4 Numerous states also have\nsimilar unfair trade practices and consumer pro-\ntection laws.5 Insurance companies have extensive\nexperience operating in an environment where their\nconduct can give rise to liability under such\nprovisions. Yet, according to Claimant, federal\nadmiralty choice-of-law principles should allow a\nmaritime insurer to contract out from this sort of\nwidespread state regulation. That outcome would\nnullify Wilburn Boat’s admonition that state law\n\n\n4 See 50 State Insurance and Bad Faith Quick Reference\nGuide of the International Association of Defense Counsel,\nnoting that as of 2014 only three states did not recognize a\ncause-of-action for first party insurance bad faith claims.\n(available online at: [URL REDACTED]\n\n5 See Consumer Protection In The States: A 50-State\nEvaluation Of Unfair And Deceptive Practices Laws (National\nConsumer Law Center, Inc. 2018) (available online at:\n[URL REDACTED]\n 48\nremains the primary source of maritime insurance\nregulation.\n B. Claimant’ policy arguments are\n unpersuasive\n Claimant offers a host of policy arguments\nagainst state regulation, but Wilburn Boat largely\nconsidered and rejected those same policy arguments.\nThe insurer in Wilburn Boat similarly argued that a\nneed for uniformity required applying a federal\nadmiralty rule of decision rather than looking to state\nlaw. The Court rejected those policy arguments,\noffering a paean to states’ applying local insurance\nlaw to their own citizens. That is all that Pennsyl-\nvania seeks to do here.\n Part I.C of Claimant’ brief can be summarized\nas: Wilburn Boat is bad because it subjects insurers\nto 50 different state laws, and the “core values of\nmaritime law,” as set forth in other, non-Wilburn\nBoat, non-insurance cases, support giving insurers a\nway around Wilburn Boat. However, Wilburn Boat is\nbinding precedent that itself establishes the “core\nvalues of maritime law” in the area of maritime\ninsurance.\n According to Claimant, Wilburn Boat created a\nhuge problem for maritime insurers that needed to be\nsolved, and the way to solve that problem is to\nsupercharge choice-of-law provisions contained in\nmaritime insurance contracts, a result that neither\nWilburn Boat nor any subsequent decision of this\nCourt has authorized.\n Unless the Court intends to overrule Wilburn\nBoat, an outcome that Claimant does not advocate\n 49\nand that the question presented does not\ncontemplate, then this Court is bound by its rationale\nthat a uniform federal rule is unnecessary, and 50\nstate laws should apply because of states’ historic role\nand expertise in regulating insurance companies. As\nsuch, the “core values of maritime law” do not\nestablish that state-by-state regulation of maritime\ninsurance is bad.6\n Congress is free to overturn Wilburn Boat if it\nwishes, either in general or as applied to choice-of-\nlaw provisions. Indeed, in Wilburn Boat, the Court\nobserved:\n Congress has not taken over the regulation\n of marine insurance contracts and has not\n dealt with the effect of marine insurance\n warranties at all; hence there is no possible\n question here of conflict between state law and\n any federal statute . . . .\n Under our present system of diverse state\n regulations, which is as old as the Union, the\n insurance business has become one of the great\n enterprises of the Nation. Congress has been\n exceedingly cautious about disturbing this\n system, even as to marine insurance where\n congressional power is undoubted.\nWilburn Boat, 348 U.S. at 314, 320-21.\n\n6 A leading admiralty law authority cited throughout Claimant’ brief refutes the contention that Wilburn Boat has\nproduced widespread, consequential disuniformity. See\nSchoenbaum Treatise §19:7, at 434 (“In fact, the breakdown of\nuniformity has been exaggerated. There has been no change in\nthe uniformity of interpretation with respect to the vast\nmajority of the corpus of marine insurance law.”).\n 50\n Nearly 70 years later, Congress still has not\noverturned Wilburn Boat. Claimant’ concerns\nabout a pressing emergency if this Court permits\nstate-by-state regulation of maritime insurance are\nhard to take seriously.\n In any event, Claimant’ public policy concerns\nfail on their own terms. Domestically, trucks and\ntrains are used to ship finished products to customers\nand raw materials to manufacturers throughout the\nnation. State insurance law applies to insurance\ncompanies who insure such shipments and carriers\nwithout any untoward consequences. And, of course,\nstate insurance laws apply to passenger vehicles as\nwell. Claimant’ argument that maritime insurers\nhave some greater need for certainty or uniformity\nthan insurers of automobiles or trucks or trains,\nwhich regularly traverse the nation, rings hollow.\nIndeed, nationwide commerce continues unimpeded\non a daily basis without any negative consequences\neven though any one of 50 states’ insurance laws may\napply to any given claim arising from our nation’s\nroads or rails.\n Claimant cites the value of uniformity, but\nsince the insurance company decides which state’s\nlaw to designate in a choice-of-law provision, making\nchoice-of-law provisions sacrosanct does not guaran-\ntee uniformity unless every insurance company would\nnecessarily adopt the same state’s law. No such\nshowing appears on this record. Furthermore, this is\nnot the sort of uniformity that admiralty law\nconcerns itself with. The point of admiralty law\nuniformity is that the same substantive law\nprinciples would apply across-the-board, rather than\n 51\nbeing dependent on which state’s law an insurance\ncompany chooses.\n Claimant also cites the value of predictability.\nBut an insurance company will know, at the time it\nsells a policy, which state’s law will apply. Insurance\ndisputes are not like other types of maritime disputes\nwhere the choice of law is governed by whatever\njurisdiction happened to be the location of an\naccident; choice of law is determined largely by the\nfacts surrounding the formation of the contract,\nwhich are known at the time the policy is sold. Here,\nfor example, Claimant knowingly sold this policy\nto a Pennsylvania resident, through a Pennsylvania\nbroker, to insure a boat whose hailing port was\nlocated in Pennsylvania, so the possibility of having\nPennsylvania law apply here comes as no surprise to\nClaimant.\n Moreover, even under Raiders’ proposed rule,\nchoice-of-law provisions will often be enforced. Under\nthe Restatement, if New York and Pennsylvania had\na similar interest in the insurance policy, the choice-\nof-law provision would be enforced. Even if Pennsyl-\nvania had a significantly greater interest, the policy\nwould be enforced as long as New York’s insurance\nlaw did not contravene Pennsylvania’s strong public\npolicy.\n Claimant expresses concern about inter-\nnational comity. Pet. Br. at 38-40. However, it is\nunlikely that applying Pennsylvania law rather than\nNew York law will implicate foreign policy concerns.\nMore generally, the Restatement does not advocate\ninvalidating choice-of-law provisions willy-nilly based\non local policy concerns. Instead, under the Restate-\n 52\nment’s approach, a state may invalidate a choice-of-\nlaw provision in favor of its own law only when it has\na materially greater interest than the chosen state in\nthe determination of the particular issue. In other\ncases, where foreign countries have a greater interest\nin the issue, the choice-of-law provision should be\nrespected. Thus, the Restatement’s rule respects\nforeign nations’ legitimate interests and will not lead\nto international friction.\n Claimant repeatedly suggests that absent a\nuniform admiralty rule that looks to federal policy\nwhen determining whether to enforce a choice-of-law\nprovision, parties will find themselves subject to the\npolicy whims of whatever state happens to be the\nforum for the suit. But there is nothing to that\nprediction, because the generally applicable state law\ntest (in common with the Restatement approach) does\nnot look to forum-state policy; it looks to the policy of\nthe state with the greatest connection to the dispute.\n In this case, therefore, Claimant suggests that\nthe court of appeals viewed Pennsylvania policy as\nrelevant only because Claimant brought its\ndeclaratory-judgment action in Pennsylvania. But\nthat is wrong. In the vast majority of states that\nfollow the Restatement’s test, Pennsylvania policy\nwould be the only relevant policy, because Pennsyl-\nvania law would be the applicable substantive law\nabsent the choice-of-law provision. That is because\nnearly every aspect of this suit has a Pennsylvania\nfocus (aside, of course, from the fact that Claimant\nhas some presence in New York that has nothing to\ndo with Raiders). Indeed, if this case had been\nbrought in New York rather than Pennsylvania, New\nYork would apply the Restatement approach, see\n 53\nWelsbach Elec. Corp. v. MasTech N. Am., Inc., 859\nN.E.2d 498, 500-01 (N.Y. 2006) (citing Restatement\n(Second) of Conflict of Laws §187(2)), so the analysis\nwould be identical: the court would consider Pennsyl-\nvania public policy.\n For these reasons, affirming the Third Circuit’s\njudgment would not lead to disuniformity or forum\nshopping, because regardless of where suit was filed,\nunder those very same traditional choice-of-law rules,\nthis dispute necessarily boils down to determining\nwhether New York or Pennsylvania law applies to\ngovern the availability of Raiders’ extracontractual\ncounterclaims.\n Finally, the best evidence that Claimant’\npredictions of chaos are unfounded is that it has long\nbeen standard for federal courts sitting in diversity to\napply state-law conflicts-of-law principles to deter-\nmine the enforceability of choice-of-law provisions in\nparties’ agreements. No chaos has ensued, and Claimant points to no reason that taking this same\napproach in admiralty cases—that is, the approach\nmandated by Wilburn Boat—would be any more\nunmanageable.\n 54\n CONCLUSION\n For the foregoing reasons, the Third Circuit’s\njudgment should be affirmed.", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of refusal to enforce a maritime choice-of-law clause.", "governingLaw": "Apply United States federal maritime law; Third Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal maritime law; Third Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Great Lakes Insurance SE v. Raiders Retreat Realty Co.", "citation": "601 U.S. 65 (2024)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/23pdf/22-500_7k47.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "This case turns on a single dispositive question: under federal maritime law, what test governs the enforceability of a choice-of-law clause in a maritime contract? The record supplies a clear answer through the Supreme Court's decision in Great Lakes Ins. SE v. Raiders Retreat Realty Co., No. 22-500 (Feb. 21, 2024), which directly controls this dispute.\n\nThe Supreme Court held that \"choice-of-law provisions in maritime contracts are presumptively enforceable as a matter of federal maritime law, with certain narrow exceptions, and no exception to the presumption applies in this case.\" The Court identified two recognized exceptions: (1) when the chosen law would contravene a controlling federal statute or conflict with an established federal maritime policy, and (2) when the parties can furnish no reasonable basis for the chosen jurisdiction. Critically, the Court rejected the argument—advanced by the respondent here—that federal maritime law should recognize an additional exception when enforcing the chosen state's law would contravene the fundamental public policy of the state with the greatest interest in the dispute. The Court called that proposal a \"repackaged version\" of the argument that state law should govern enforceability, and held it \"lacks support in case law\" and \"would undermine the fundamental purpose of choice-of-law clauses.\"\n\nThe respondent's primary argument rests on Wilburn Boat Co. v. Fireman's Fund Insurance Co., 348 U.S. 310 (1955), contending that in the absence of an established federal admiralty rule governing choice-of-law clause enforceability, state law fills the gap. This argument fails because the Supreme Court expressly addressed and rejected it. The Court held that Wilburn Boat \"did not involve a choice-of-law provision\" and \"held only that state law applied as a gap-filler in the absence of a uniform federal maritime rule on a warranty issue.\" Where, as here, a uniform federal rule governs the enforceability of choice-of-law clauses, no gap exists to be filled by state law. The Court further noted that \"nothing in Wilburn Boat purports to override parties' choice-of-law clauses in maritime contracts generally, or in the subset of marine insurance contracts specifically.\"\n\nThe respondent's alternative argument—that even if federal law governs, the Court should adopt the Restatement (Second) of Conflict of Laws § 187(2)(b) approach—was also expressly rejected. The Supreme Court held that the § 187(2)(b) rule \"arose out of interstate cases and does not deal directly with federal-state conflicts, including those that arise in federal enclaves like maritime law,\" and that adopting it \"would operate like a general exception for state law that would prevent maritime actors from prospectively identifying the law to govern future disputes.\"\n\nApplying the correct federal maritime rule to this record: The respondent does not claim that any federal statute or established federal maritime policy precludes enforcing the parties' choice-of-law provision. The respondent does not assert that the parties' choice of New York law was unreasonable—New York's commercial law is well developed and well regarded, and the insurer maintains contacts with New York. The respondent's sole contention is that applying New York law conflicts with Pennsylvania public policy, which is precisely the argument the Supreme Court rejected as a basis for overriding a maritime choice-of-law clause. The Third Circuit's remand for consideration of Pennsylvania public policy was therefore error, and its judgment must be reversed.\n\nThe respondent's argument that this case involves an adhesion contract and that the choice-of-law clause was boilerplate does not alter the analysis. The Supreme Court's ruling was not limited to negotiated choice-of-law clauses; it established a general rule of presumptive enforceability. Nor does the respondent's citation to Cassirer v. Thyssen-Bornemisza Collection Foundation, 142 S. Ct. 1502 (2022), assist its position. Cassirer involved whether federal common law should displace state choice-of-law rules in FSIA litigation; here, by contrast, the Supreme Court has directly held that a federal maritime rule governs and displaces state law on this specific question.\n\nThe respondent bore the burden of demonstrating that an exception to the federal presumption of enforceability applies. It failed to carry that burden. The respondent identified no controlling federal statute or established federal maritime policy that New York law would contravene, and did not challenge the reasonableness of selecting New York law. The only basis the respondent offered—Pennsylvania's strong public policy regarding insurance—is not a recognized exception under federal maritime law as authoritatively established by the Supreme Court.", "allocation": null, "citations": [ { "title": "GREAT LAKES INS. SE v. RAIDERS RETREAT REALTY CO.", "url": "https://www.law.cornell.edu/supremecourt/text/22-500", "proposition": "Choice-of-law provisions in maritime contracts are presumptively enforceable as a matter of federal maritime law, with narrow exceptions—conflict with a controlling federal statute or established federal maritime policy, or lack of a reasonable basis for the chosen jurisdiction. A forum state's public policy cannot override this federal presumption. Wilburn Boat does not preclude this rule because it did not involve a choice-of-law clause and held only that state law applies as a gap-filler absent an established federal maritime rule." }, { "title": "Great Lakes Ins. SE v. Raiders Retreat Realty Co.", "url": "https://www.policyholderpulse.com/files/2023/04/Great-Lakes-Ins.-SE-v.-Raiders-Retreat-Realty-Co.pdf", "proposition": "The Third Circuit held that The Bremen's framework extends to choice-of-law provisions and that a strong public policy of the forum state could render unenforceable a choice-of-law clause in a marine insurance contract, warranting remand for consideration of Pennsylvania public policy. This holding was reversed by the Supreme Court." }, { "title": "WILBURN BOAT CO. v. FIREMAN'S INS. CO., 348 U.S. 310 (1955)", "url": "https://caselaw.findlaw.com/court/us-supreme-court/348/310.html", "proposition": "Wilburn Boat held that in the absence of a judicially established federal admiralty rule, state law governs disputes arising under maritime insurance contracts. The case involved warranty provisions in a marine insurance policy, not a choice-of-law clause, and did not address the enforceability of choice-of-law provisions in maritime contracts." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-051", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nSTATEMENT\n 1. Claimant are “current and former delivery driv-\ners” for Respondent, and sued Respondent in Arizona\nstate court for multiple violations of federal and state em-\nployment laws. Pet. App. 3a. After removing the case to\nfederal court, Respondent moved to compel arbitration\nand dismiss, alleging that all of Claimant’ claims were\n“subject to mandatory arbitration.” Ibid. While petition-\ners conceded that the claims were indeed arbitrable, they\nargued that “the FAA required the district court to stay\nthe action pending arbitration rather than to dismiss the\naction.” Ibid.; see also id. at 9a (“Plaintiffs agree that the\npresent case must be resolved in arbitration, but urge that\nthe Court stay, rather than dismiss, their case.”).\n 2. Notwithstanding Claimant’ affirmative stay re-\nquest, the district court compelled arbitration and dis-\nmissed the case. Pet. App. 9a-11a.\n As relevant here, the district court analyzed “whether\nth[e] action should be dismissed or stayed while the par-\nties resolve their dispute before the arbitrator.” Pet. App.\n10a. The court maintained that Claimant “rightly point\nout” that “the text of 9 U.S.C. § 3 suggests that the action\nshould be stayed.” Ibid. But the court ultimately found the\ntext non-controlling: “the Ninth Circuit has instructed\nthat ‘notwithstanding the language of § 3, a district court\nmay either stay the action or dismiss it outright when, as\nhere, the court determines that all of the claims raised in\nthe action are subject to arbitration.’” Ibid. (quoting\nJohnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072,\n1074 (9th Cir. 2014), and favorably citing Sparling v. Hoff-\nman Constr. Co., 864 F.2d 635, 638 (9th Cir. 1988)). The\ncourt thus concluded it “retain[ed] discretion to dismiss\nthe action if all claims raised are subject to arbitration,”\nand it found that condition satisfied. Ibid.\n 3\n\n\n The district court then confronted Claimant’ case-\nspecific arguments for “nevertheless” staying the case,\nand found those arguments without merit. Pet. App. 10a-\n11a. Having determined that “all claims [were] subject to\narbitration,” the court therefore granted the motion to\ncompel arbitration and “exercise[d] its discretion to dis-\nmiss this action.” Id. at 11a. 1\n 3. The Ninth Circuit affirmed. Pet. App. 1a-7a.\n a. The court framed “[t]he sole question before us” as\n“whether the [FAA] requires a district court to stay a law-\nsuit pending arbitration, or whether a district court has\ndiscretion to dismiss when all claims are subject to arbi-\ntration.” Pet. App. 2a. It acknowledged that this question\nhas created a 6-4 circuit split, with the Ninth Circuit fall-\ning outside “the majority view.” Id. at 5a n.4 (detailing cir-\ncuit conflict). But it still felt constrained to affirm: “Alt-\nhough the plain text of the FAA appears to mandate a stay\npending arbitration upon application of a party, binding\nprecedent establishes that district courts may dismiss\nsuits when, as here, all claims are subject to arbitration.”\nId. at 2a.\n Again as relevant here, the panel initially examined\nSection 3’s text, observing that “[o]n its face, Congress’s\nuse of ‘shall’ appears to require courts to stay litigation\nthat is subject to mandatory arbitration, at least where all\nissues are subject to arbitration.” Pet. App. 4a. The panel\nfurther noted that “the term ‘shall’” in “its ordinary mean-\ning” is “a mandatory instruction,” and “[n]othing about\nthe context here suggests that Congress meant ‘may’\nwhen it wrote ‘shall.’” Id. at 4a-5a n.3.\n\n\n 1\n Claimant are not renewing any of those case-specific arguments\nin this Court. Their sole contention is that the lower courts misread\nSection 3 as permitting district courts to dismiss notwithstanding a\nparty’s specific request for a stay pending arbitration.\n 4\n\n\n But the panel declared the text secondary under es-\ntablished circuit precedent: “this court has long carved\nout an exception if all claims are subject to arbitration.”\nPet. App. 5a. Like the district court, the panel explained\nthis “exception” permitted courts to “‘stay the action or\ndismiss it outright’” when the entire dispute is subject to\narbitration, “‘[n]otwithstanding the language of [Section\n3].’” Ibid. (quoting Johnmohammadi, 755 F.3d at 1074).\nAnd because “all claims” in Claimant’ suit “were subject\nto arbitration,” the panel upheld the district court’s “dis-\ncretion to dismiss.” Ibid.\n The panel next addressed Claimant’ “four primary\narguments to sidestep this binding precedent.” Pet. App.\n5a. It first brushed aside Claimant’ objection that the\nNinth Circuit’s errant line of cases “began in a case in\nwhich no party appears to have requested a stay.” Ibid.\nWhile assuredly true, the panel noted, the Ninth Circuit\nhas “since” “extended” the same rule to “cases in which a\nstay is requested.” Id. at 5a-6a (citing Johnmohammadi,\nsupra, and Sparling, supra).\n Second, the panel rejected Claimant’ contention that\n“the FAA’s plain text should dictate the outcome despite\nour precedent to the contrary.” Pet. App. 6a. The panel\nexplained it was nevertheless bound by circuit precedent\nabsent intervening higher authority, and “[t]here is no\nsuch intervening higher authority here.” Ibid.\n Third, the panel disagreed that this Court’s decision in\nBadgerow v. Walters, 596 U.S. 1 (2022), “abrogate[d]” cir-\ncuit law, “thereby permitting [the panel] to come to a dif-\nferent result.” Pet. App. 6a. The panel reasoned that\nBadgerow addressed questions of jurisdiction under the\nFAA, but did “not discuss section three or the district\ncourt’s discretion to stay or dismiss an action pending ar-\nbitration.” Id. at 6a-7a. It thus had nothing to do with this\ncase.\n 5\n\n\n Finally, the panel discarded Claimant’ contention\nthat, “even if the district court had discretion to dismiss\ntheir suit, the court abused its discretion.” Pet. App. 7a.\nUnder the panel’s view, “the district court did not mis-\nstate the law, misconstrue the facts, or otherwise act ar-\nbitrability.” Ibid. The panel accordingly affirmed. 2\n b. Judge Graber, joined by Judge Desai, concurred.\nPet. App. 8a. While admitting she was bound by circuit\nauthority, she “encourage[d] the Supreme Court to take\nup this question, which it has sidestepped previously, and\non which the courts of appeals are divided.” Ibid. (cita-\ntions omitted). “In the meantime,” however, she “urge[d]\nour court to take this case en banc so that we can follow\nwhat I view as the Congressional requirement embodied\nin the Federal Arbitration Act.” Ibid.\n SUMMARY OF ARGUMENT\n This case presents an important statutory question\nunder the Federal Arbitration Act with a remarkably\nstraightforward answer. Section 3 of the FAA imposes a\nstrict mandate on district courts: “without exception,”\n“whenever suit is brought on an arbitrable claim, the\n[c]ourt ‘shall’ upon application stay the litigation until ar-\nbitration has been concluded.” Lloyd v. HOVENSA, LLC,\n369 F.3d 263, 269 (3d Cir. 2004) (quoting 9 U.S.C. 3). In\nthe proceedings below, a Ninth Circuit panel was com-\npelled by “binding precedent” to reaffirm a “judicially-\ncreated exception” to Section 3 (Green v. SuperShuttle\nInt’l, Inc., 653 F.3d 766, 769-770 (8th Cir. 2011))—one\natextually authorizing the right to dismiss “notwithstand-\ning the [FAA’s] language” (Pet. App. 2a, 5a).\n\n 2\n Claimant again abandoned any challenge to this case-specific\naspect of the Ninth Circuit’s decision. In this Court, Claimant main-\ntain that the district court had no discretion under a proper construc-\ntion of Section 3, not that it abused discretion it never had.\n 6\n\n\n The Ninth Circuit’s precedent is wrong. The FAA’s\ntext, structure, and purpose confirm that Congress meant\nexactly what it said: a court “shall” issue a “stay” until\n“such arbitration has been had in accordance with the\nterms of the agreement.” This is not simply a minor pro-\ncedural error. A court’s failure to stay dictates whether\nparties can immediately appeal an order compelling arbi-\ntration (contrary to the FAA’s reticulated scheme); it af-\nfects whether federal courts have supervisory authority\nto enforce the FAA’s other critical safeguards (consistent\nwith the FAA’s design); and it serves as an essential back-\nstop to protect litigant rights if a party compels arbitra-\ntion but abandons the arbitration process (as contem-\nplated by the plain language of Section 3 itself).\n The contrary position flouts the FAA’s plain text and\ncannot be squared with the FAA’s structure or purpose.\nIt invites wasteful disputes that needlessly burden parties\nand courts as litigants fight over whether to stay or dis-\nmiss—when Congress has already provided a categorical\nanswer (a stay is required). Because Respondent’ con-\ntrary view cannot account for any of its critical shortcom-\nings and is otherwise indefensible, the judgment should\nbe reversed.\n A. 1. The plain text of Section 3 unambiguously man-\ndates a stay pending arbitration: when a case is subject to\narbitration, the court “shall on application of one of the\nparties stay the trial of the action until such arbitration”\nhas concluded. 9 U.S.C. 3 (emphasis added). The text im-\nposes a mandatory directive—the courts “shall” stay the\ncase—and does not allow any exceptions. It makes no dif-\nference if the entire case is subject to arbitration: Section\n3 unambiguously instructs courts to stay the case, and it\ndoes not say that a stay is mandatory unless all claims are\nsubject to arbitration. There is no mention of dismissal.\n 7\n\n\nThe single instruction is clear: a stay is categorically re-\nquired—and courts have no license to modify Congress’s\nstatutory directives.\n 2. Respondent cannot avoid Section 3’s plain and or-\ndinary meaning.\n First, Respondent say that Section 3 stays only the\n“trial of the action,” and there will never be any trial when\nall claims are subject to arbitration. But there is no way\nto know if arbitration will indeed eliminate any trial until\nthe arbitration in fact resolves the claims. Disputes are\nnot always resolved in arbitration—they return to court\nfor any number of reasons, including failure to pay fees,\nfailure of the tribunal to resolve the case, and failure of\nthe arbitration clause to reach the entire dispute. In each\ninstance, the court itself will ultimately have to litigate the\naction—which is precisely why Congress insisted that\ncourts stay the matter until the arbitration has been con-\ncluded.\n Respondent next argue that Section 3 focuses on the\ntrial itself—not the entire action—and thus it preserves a\ncourt’s ability to dismiss. This is a plain misreading of Sec-\ntion 3: the statute requires courts to stay “the trial of the\naction”—not the trial “in” the action. Section 3’s title sep-\narately confirms the clause’s broader reach (“stay of pro-\nceedings”—not just of a trial); this Court has routinely de-\nscribed the provision as staying litigation generally; and\nthe FAA’s drafters likewise understood the stay to reach\nthe entire action—to the extent the drafters commented\non the issue at all. There is no record (historical or other-\nwise) of anyone believing that Section 3 reaches only the\nfact-finding trial itself—an absurd proposition that, by re-\nspondents’ own admission, would leave courts free to con-\nduct discovery, adjudicate motions, and possibly even de-\ncide the merits of an arbitrable dispute, so long as the\ncourt stops a moment before any “trial” begins.\n 8\n\n\n Finally, Respondent say Section 3 does not prohibit\ndismissing a case; it merely provides “direction on the or-\nder of trials when related claims are appropriately di-\nvided between a court and an arbitration.” Br. in Opp. 12.\nYet there is no indication that Section 3’s stay require-\nment applies only where some claims are subject to arbi-\ntration—and Respondent have identified no textual hook\nfor that strange proposition. Section 3 simply states that\nif “any issue” is subject to arbitration, the court “shall”\nstay the case until the arbitration is over. On its face, that\nlanguage applies where an entire case is subject to arbi-\ntration (just as much as it applies when only some claims\nare subject to arbitration).\n B. The FAA’s plain-text reading is reaffirmed by its\nstructure and purpose.\n 1. Respondent’ statutory interpretation would di-\nrectly frustrate Section 16’s appellate scheme. Congress\nauthorized an immediate appeal of orders denying arbi-\ntration, while expressly barring immediate appeals of or-\nders granting arbitration. A dismissal directly unwinds\nthat calculated choice: once a case is dismissed, the judg-\nment becomes final, which activates a premature appeal—\nprecisely the appeal that Congress otherwise prohibited\nin Section 16. A stay, by contrast, ensures that each pro-\nvision (Section 3 and Section 16) work together as de-\nsigned.\n 2. A dismissal would also interfere with a court’s abil-\nity to facilitate the arbitration under the FAA’s related\nprovisions. Congress structured the FAA to provide\ncourts with the right to appoint arbitrators, compel arbi-\ntration witnesses, and review post-arbitration awards.\nYet once a case is dismissed, there is no obvious jurisdic-\ntional hook for most parties to ever return to federal\ncourt. Again, a stay, by contrast, ensures the statute func-\n 9\n\n\ntions as designed—while also serving as a necessary back-\nstop to protect litigants from limitations issues or forfeit-\ning rights should the arbitration fall through.\n 3. The failure to follow Congress’s categorical di-\nrective also invites waste and burdensome disputes. Un-\nder Respondent’ scheme, parties will have the incentive\nto litigate whether to stay or dismiss. Those fights unnec-\nessarily consume judicial and party time and resources,\ndelay a case’s exit from the judicial system into an arbitral\nforum, and complicate the process—all notwithstanding\nthe benefits typically offered by a stay (and the conversely\ninsubstantial benefits typically offered by a dismissal).\n C. Respondent’ remaining arguments are make-\nweights—and they cannot over the FAA’s plain text,\nstructure, or purpose.\n 1. Respondent tout a district court’s inherent discre-\ntion, including its traditional power to dismiss. Yet that is\nthe very power that Section 3 rejects: the entire point of\nimposing a statutory directive is to select a legislative\nchoice that replaces judicial authority to make a different\ndecision. The statute itself settles the issue—and re-\nspondents have not explained how “inherent authority”\ncould possibly override that statutory command.\n 2. Respondent also assert that stays unduly burden\na district court’s docket. Yet Congress made the decision\nthat the benefits of retaining jurisdiction outweigh the\nminimal intrusion of maintaining an inactive case pending\na separate arbitration. This minimal concern is no basis\nfor misreading the statute.\n 3. Respondent next fault Claimant for filing a law-\nsuit when their claims are bound by arbitration. Yet re-\nspondents do not (and cannot) explain how this has any\nbearing on the proper construction of 9 U.S.C. 3—which\napplies exclusively in cases that are filed in court despite\n 10\n\n\nan issue being bound for arbitration. In any event, re-\nspondents are incorrect that Claimant did anything\nblameworthy: arbitration is an affirmative defense; it is\nsubject to the usual defenses of waiver and forfeiture; and\nparties do not act improperly by filing suit and waiting to\nsee if a counterparty invokes or surrenders its arbitration\nrights.\n 4. Nor are Respondent correct that Claimant would\nnot suffer any prejudice from dismissal. This dismissal de-\nprived Claimant of a live forum to toll the limitations pe-\nriod and assert their rights—whether to facilitate the ar-\nbitration, to return to court should the arbitration fail (as\nit might—given Respondent’ past refusal to pay arbitral\ncosts and fees), and ultimately to seek federal review of\nany arbitral award. Congress granted Claimant a statu-\ntory right to a stay in Section 3, and the courts below\nerred in refusing to honor that statutory directive.\n ARGUMENT\nTHE FEDERAL ARBITRATION ACT REQUIRES\nCOURTS TO STAY CASES SUBJECT TO ARBITRA-\nTION UNTIL THE ARBITRATION HAS CONCLUDED\n A. Under Its Plain And Ordinary Meaning, Section 3\n Mandates A Stay Pending Arbitration—It Affords\n No Discretion To Dismiss\n 1. This Court’s statutory analysis starts with the text\n(Henson v. Santander Consumer USA Inc., 582 U.S. 79,\n81 (2017)), and Section 3’s plain text compels a stay: when\na case is subject to arbitration, the court “shall on appli-\ncation of one of the parties stay the trial of the action until\nsuch arbitration” has concluded. 9 U.S.C. 3 (emphasis\nadded). The statutory command is mandatory and per-\nmits no discretion. It says nothing about dismissal, and it\nsays nothing about exceptions where all claims are or-\ndered to arbitration. The language is unambiguous: if\n 11\n\n\n“any issue” in the case is subject to arbitration, the court\n“shall” stay the trial of the action until the arbitration is\ncomplete. 9 U.S.C. 3.\n Unlike some aspects of the FAA, this provision is not\nhard to understand. It is a simple, straightforward com-\nmand to “stay” the litigation until the “arbitration has\nbeen had in accordance with * * * the agreement.” 9\nU.S.C. 3. Congress is well aware how to afford courts the\noption to dismiss. But it created a categorical obligation\nand chose a mandatory term—“shall”—that typically\n“creates an obligation impervious to judicial discretion.”\nLexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach,\n523 U.S. 26, 35 (1998); see also Maine Cmty. Health Op-\ntions v. United States, 140 S. Ct. 1308, 1320 (2020) (“‘the\nword “shall” usually connotes a requirement”’”); Lopez v.\nDavis, 531 U.S. 230, 241 (2001) (“Congress used ‘shall’ to\nimpose discretionless obligations”); contra Br. in Opp. 17-\n18 (oddly resisting this settled construction). And, in fact,\nthis Court has already construed “shall” in this very con-\ntext to mean what it says: “By its terms, the Act leaves no\nplace for the exercise of discretion by a district court, but\ninstead mandates that district courts shall direct the par-\nties to proceed to arbitration on issues as to which an ar-\nbitration agreement has been signed.” Dean Witter Reyn-\nolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (citing 9 U.S.C.\n3, 4; emphasis in original). If the same “shall” ties a court’s\nhands in directing parties to arbitration, it must also tie a\ncourt’s hands in ordering the accompanying “stay.”\n Put simply, there is a reason that courts authorizing\ndismissal are stuck conjuring a “judicially-created excep-\ntion” to Section 3. Green v. SuperShuttle Int’l, Inc., 653\nF.3d 766, 769-770 (8th Cir. 2011); see also Anderson v.\nCharter Commc’ns, Inc., 860 F. App’x 374, 379 (6th Cir.\n2021) (describing the atextual exception). These courts\nadmit they are departing from the actual statutory text\n 12\n\n\nbased on policy or other preferences—which is why these\nholdings are announced “notwithstanding [Section 3’s]\nlanguage.” Pet. App. 5a; see also Alford v. Dean Witter\nReynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992) (ac-\nknowledging dismissal is “contrary to the precise terms of\nSection 3”). Yet courts have no license to rewrite or sup-\nplement Congress’s work with judge-made exceptions, no\nmatter how compelling a court may find a competing ob-\njective. See Badgerow v. Walters, 596 U.S. 1, 11 (2022)\n(“[w]e have no warrant to redline the FAA”). “However\nthe pros and cons shake out, Congress has made its call”\n(id. at 16-17)—and “‘[e]ven the most formidable’ policy ar-\nguments cannot ‘overcome’ a clear statutory directive.”\nBP P.L.C. v. Mayor & City Council of Baltimore, 141 S.\nCt. 1532, 1542 (2021) (quoting Kloeckner v. Solis, 568 U.S.\n41, 56 n.4 (2012)).\n In sum, on any ordinary reading, Section 3 is unequiv-\nocal: when a case is sent to arbitration, the court “shall”\nstay the case until the arbitration is over. That plain lan-\nguage permits no exceptions; there is no mention of any\nauthority to dismiss; and there is no hint that a stay is\nmandatory unless all claims are subject to arbitration.\n“[T]he statute clearly states, without exception, that\nwhenever suit is brought on an arbitrable claim, the Court\n‘shall’ upon application stay the litigation until arbitration\nhas been concluded.” Lloyd v. HOVENSA, LLC, 369 F.3d\n263, 269 (3d Cir. 2004); see also Katz v. Cellco P’ship, 794\nF.3d 341, 345 (2d Cir. 2015) (“[t]he plain language speci-\nfies that the court ‘shall’ stay proceedings pending arbi-\ntration,” and nothing in the FAA “abrogate[s] this di-\nrective or render[s] it discretionary”). And that makes\nthis question remarkably straightforward: with statutory\nlanguage as clear as this, the Court’s task “begins and\nends” with the text. Puerto Rico v. Franklin California\nTax-Free Trust, 579 U.S. 115, 125 (2016); see also Green\n 13\n\n\nTree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 88 (2000)\n(following “the plain language” of the FAA).\n 2. Respondent attempt to sidestep Section 3’s plain\nand obvious meaning with a cramped view of the statute.\nSee Br. in Opp. 17-18 (“§ 3’s language would not oblige\ncourts to stay rather than dismiss”). Their position falls\nwoefully short.\n a. According to Respondent, Section 3 “stay[s] the\ntrial of the action,” and there is “no trial to stay” when all\nclaims are subject to arbitration. Br. in Opp. i, 15-17. This\nargument fails on every conceivable level.\n First and foremost, Respondent’ theory fails on its\nown terms. Respondent say there is no point in staying\nthe “trial” of the action if the entire case will be resolved\nby arbitration. But there is no way to know if there will be\na trial until the arbitration has concluded. Any time the\narbitration fails to resolve the claims for any reason, the\ncase will return to court—and there is no way to know that\nin advance (at least without a crystal ball) when dismiss-\ning the case. In short, the mandatory stay is essential\n“should the arbitrators fail to resolve the entire contro-\nversy.” Tice v. American Airlines, Inc., 288 F.3d 313, 318-\n319 (7th Cir. 2002); see also See Arabian Motors Grp.\nW.L.L. v. Ford Motor Co., 19 F.4th 938, 943 (6th Cir. 2021)\n(“[t]he reference to ‘trial of the action’ more naturally sig-\nnifies * * * the trial that would otherwise occur if the\nparty did not move for a stay or insist on arbitrating the\nclaims”).\n This common-sense conclusion is reflected directly in\nthe statute itself. Read in context, Congress did not\nmerely say to stay the trial of the action—it said to impose\nthat stay until the arbitration has concluded (“until such\narbitration has been had in accordance with the terms of\nthe agreement”) or unless a party is in “default” with re-\n 14\n\n\nspect to the arbitration. 9 U.S.C. 3. The surrounding lan-\nguage thus confirms that Congress itself understood the\nobvious need for a stay: it knew (and embedded in the ac-\ntual text) that not every case subject to arbitration will\nactually be resolved by arbitration, and a case initially or-\ndered to arbitration could very well return for full-blown\nlitigation.\n Respondent simply overlook all the different reasons\nwhy a case may return to court—and thus why there may\nvery well ultimately be a “trial” on the merits:\n *where the entire dispute is governed by a delegation\nclause and the arbitrator determines that only certain\nclaims are subject to arbitration—sending the remainder\nback to federal court, see, e.g., Arabian Motors, 19 F.4th\nat 943 (“[t]he only way a district court could know that the\ntrial of the action will not occur is to prejudge the arbitra-\nbility decision that is the arbitrator’s decision to make”);\n *where the entire dispute is governed by a delegation\nclause and the arbitrator determines that no claims are\nsubject to arbitration—thus sending the entire case back\nto federal court, ibid.;\n *where the moving party fails to initiate the arbitra-\ntion, see, e.g., Bedgood v. Wyndham Vacation Resorts,\nInc., 88 F.4th 1355, 1362-1367 (11th Cir. 2023); Cargo Car-\nriers v. Erie & St. Lawrence Corp., 105 F. Supp. 638, 639-\n640 (W.D.N.Y. 1952);\n *where a responsible party fails to pay the arbitrator’s\ncosts or fees (a common occurrence that happened in this\nvery case), see, e.g., Freeman v. SmartPay Leasing, LLC,\n771 F. App’x 926 (11th Cir. 2019); Pre-Paid Legal Servs.,\nInc. v. Cahill, 786 F.3d 1287 (10th Cir. 2015);\nNAVCAN.DC, Inc. v. Rinde, [DOCKET REDACTED], 2023 WL\n6622207, at *2 (S.D.N.Y. Oct. 11, 2023); and\n 15\n\n\n *where the parties’ agreement designates a specific\narbitrator or arbitral forum as essential and that arbitra-\ntor or forum is unavailable, see, e.g., Reddam v. KPMG\nLLP, 457 F.3d 1054, 1057, 1060-1061 (9th Cir. 2006); see\nalso Inetianbor v. CashCall, Inc., 768 F.3d 1346, 1348-\n1349 (11th Cir. 2014).\n In short, there are countless reasons that an arbitra-\ntion may be disbanded without resolving the dispute. In\neach of those situations, the parties will inevitably return\nto federal court for a full adjudication of the merits—and\nthe mandatory stay preserves the parties’ rights in those\ncircumstances. An (atextual) dismissal, by contrast, would\nleave the parties without a ready vehicle for resolving\ntheir claims.\n Respondent’ theory—and the cases it follows—are\nself-evidently wrong. Compare, e.g., Alford, 975 F.2d at\n1164 (“[g]iven our ruling that all issues raised in this ac-\ntion are arbitrable,” “retaining jurisdiction and staying\nthe action will serve no purpose”—while ignoring the ob-\nvious purpose should the arbitration not ultimately re-\nsolve the claims).\n b. Respondent also misread Section 3 as focused nar-\nrowly on the trial itself—as in the single event in an over-\nall case where parties litigate before a fact-finder. Accord-\ning to Respondent, Section 3 “does not suspend other pro-\nceedings,” including “motions to dismiss” or other “pre-\ntrial motions.” Br. in Opp. 15-17. Respondent are badly\nmistaken.\n Initially, Respondent simply misread Section 3. Con-\ngress did not limit the stay to the “trial in the action,” but\nstayed the entire “trial of the action”—as in trying or lit-\nigating the case. The stay thus captures any further mer-\nits adjudication of the proceeding—as one would expect\n 16\n\n\nwith a statute designed to transfer the substantive litiga-\ntion to an arbitral tribunal. This reading is reinforced by\nevery single relevant source.\n For one, Section 3’s title refers to “stay of proceed-\nings,” not simply a stay of one event in those proceedings.\nCongress added that language when codifying the FAA\n(see Act of July 30, 1947, Ch. 392, 61 Stat. 669, 670), and\nthe heading “suppl[ies] cues” for its proper meaning.\nYates v. United States, 574 U.S. 528, 540 (2015); see also\nFlorida Dep’t of Revenue v. Piccadilly Cafeterias, Inc.,\n554 U.S. 33, 47 (2008) (“statutory titles and section head-\nings are tools available for the resolution of a doubt about\nthe meaning of a statute”) (internal quotation marks omit-\nted).\n For another, unlike Respondent’ truncated version,\nthe broader reading is the natural reading of the phrase\nin its entirety—which is why this Court has repeatedly de-\nscribed the provision as staying the litigation. Coinbase,\nInc. v. Bielski, 599 U.S. 736, 745 (2023) (“Section 3 of the\nAct provides for a stay of court proceedings pending arbi-\ntration”) (emphasis added and omitted); see also id. at\n749-750 (Jackson, J, dissenting) (“Congress specified a\nmandatory general stay of trial court proceedings in § 3”);\nMorgan v. Sundance, Inc., 596 U.S. 411, 413 (2022)\n(“When a party who has agreed to arbitrate a dispute in-\nstead brings a lawsuit, the Federal Arbitration Act (FAA)\nentitles the defendant to file an application to stay the lit-\nigation. See 9 U.S.C. § 3.”); Arthur Andersen LLP v. Car-\nlisle, 556 U.S. 624, 625 (2009) (“Section 3 * * * entitles lit-\nigants in federal court to a stay of any action that is ‘ref-\nerable to arbitration’”); see also id. at 630 (same). The fact\nthat the Court’s common-parlance take mirrors the plain\ntext—without once even suggesting Section 3 was some-\nhow cabined to fact-gathering trials—says it all about the\nstatute’s natural meaning.\n 17\n\n\n And, of course, Congress itself apparently understood\nthe term the same way when enacting the original FAA.\nWhile the legislative record is sparse, the “drafting his-\ntory is consistent with the mandatory-stay approach and\nprovides no support for the primary textual argument in\nfavor of the discretion-to-dismiss approach.” C. Drahozal,\nMandatory Stay or Discretion to Dismiss? Interpreting\nSection 3 Of the Federal Arbitration Act, 39.1 Ohio St. J.\non Disp. Res. 109, 126, 127-128 (2023) (“the ‘trial of the ac-\ntion’ phrasing appears to have been used at the time to\nrefer to a stay of the entire proceedings”); see also id. at\n130 (listing multiple contemporaneous examples that are\n“consistent with the mandatory-stay approach,” whereas\n“nowhere do the congressional materials or contempora-\nneous commentaries mention the possibility that a case\ncan be dismissed instead of stayed pending arbitration”).\nIf Respondent’ unusual reading were correct, one would\nhave expected someone to say something about it before\nnow. 3\n Finally, Respondent’ understanding of Section 3 is ab-\nsurd and would eviscerate the parties’ arbitration rights.\nIt cannot possibly be correct that Congress meant to en-\nforce arbitration rights by staying the trial—but other-\nwise permitting full judicial litigation to continue. Br. in\nOpp. 15-16 (so insisting). That would defeat the core ben-\nefits of arbitration: it would multiply costs; it would ex-\npose parties to public proceedings; it would permit oppos-\ning parties to conduct court-supervised discovery; it\nwould endorse parallel litigation on separate tracks; and\nit would (apparently?) permit courts to adjudicate the\nmerits—so long as the court did so via motion. This is not\n\n 3\n To the extent the legislative history is relevant, it accordingly sup-\nports Claimant across the board, while (again) shows the utter lack\nof any support for Respondent’ theories.\n 18\n\n\nhow anyone thinks the process works. Cf., e.g., Coinbase,\n599 U.S. at 743 (“[i]f the district court could move forward\nwith pretrial and trial proceedings while the appeal on ar-\nbitrability was ongoing, then many of the asserted bene-\nfits of arbitration (efficiency, less expense, less intrusive\ndiscovery, and the like) would be irretrievably lost”).\n Congress specifically designed Section 3 as a “device\nfor enforcing an arbitration agreement.” Moses H. Cone\nMem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22\n(1983). A stay would not be a useful device if it did not ac-\ntually stay the litigation and channel parties to arbitra-\ntion. Respondent’ contrary view is simply baffling. 4\n c. Respondent further argue that Section 3 applies\nonly where some (but not all) claims are subject to arbi-\ntration. Br. in Opp. 15 (Section 3 “is not directed to a situ-\nation where everyone agrees that all issues in the suit are\nreferrable to arbitration”); see also Br. in Opp. 2 (“It\nmerely prohibits a court from proceedings with a ‘trial’ on\nsome claims while others are being arbitrated.”). This\nreading is entirely atextual. The statute applies on its face\nwhenever “any” issue is subject to arbitration—a condi-\ntion met whenever one, two, three, or all issues are sub-\nject to arbitration. Congress nowhere restricted Section 3\n\n 4\n Contrasting the language of Sections 3 and 12, Respondent argue\nthat “Congress chose different language in the FAA when it intended\nto refer to the case as a whole.” Br. in Opp. 16 (citing 9 U.S.C. 12).\nWhile this is too thin a reed to override every other textual indication\nof Section 3’s meaning, Respondent overlook an obvious basis for the\ndifferent terminology: Section 12 involved post-arbitration proceed-\nings, not active causes of action; moreover, staying the entire pro-\nceeding under Section 3 would arguably prevent courts from enter-\ntaining FAA-related motions, even to facilitate the arbitration (since\nthe entire proceeding would be stayed until the arbitration is over).\nCongress’s focus on a stay of “the trial of the action” (9 U.S.C. 3) pre-\nvents merits-based litigation (trying the action) while keeping the\ndoors open to FAA-based relief.\n 19\n\n\nif the entire suit is arbitrable—a point it could have made\neasily in the actual text. As this Court has repeatedly re-\nminded in the FAA context, Respondent cannot graft new\nlimitations on Congress’s categorical language. See, e.g.,\nBadgerow, 596 U.S. at 11; see also Henry Schein, Inc. v.\nArcher & White Sales, Inc., 139 S. Ct. 524, 530 (2019) (“we\nmay not engraft our own exceptions onto the statutory\ntext”).\n As a last-ditch effort, Respondent cite examples of\n“mixed” cases with both arbitrable and non-arbitrable\nclaims. Br. in Opp. 15. The fact that Section 3 also applies\nin that setting does not mean it exclusively applies in that\nsetting. On its face, the statute is triggered whenever “any\nissue” is subject to arbitration (9 U.S.C. 3)—there is no\nlinguistic hook for excluding the commonplace situation\nwhere all claims are subject to arbitration.\n The plain text of Section 3 unambiguously mandates a\nstay pending arbitration, and nothing in Section 3 sug-\ngests a stay is mandatory unless all claims are subject to\narbitration. Respondent’ request for dismissal was un-\nsupportable under the Act, and the judgment should be\nreversed to restore a stay in Claimant’ case.\n B. The FAA’s Structure And Purpose Further Con-\n firm That Section 3 Stays Are Mandatory\n The FAA’s structure and purpose readily confirm\nwhat the text already makes clear: Section 3 stays are\nmandatory and dismissals are not allowed.\n 1. First and foremost, Respondent’ position is irrecon-\ncilable with 9 U.S.C. 16. That provision “creates a rare\nstatutory exception to the usual rule that parties may not\nappeal before final judgment.” Coinbase, 599 U.S. at 740.\nBut Congress conspicuously restricted the provision’s\nscope: it “provided for immediate interlocutory appeals of\norders denying—but not of orders granting—motions to\ncompel arbitration.” Ibid.; see also 9 U.S.C. 16(a), (b).\n 20\n\n\n Respondent’ view would directly “undercut[]” these\n“pro-arbitration appellate-review provisions.” Arabian\nMotors, 19 F.4th at 942. Congress said that parties can\nappeal orders denying but not granting arbitration. Yet a\ndismissal converts a case into a final judgment—which ac-\ntivates the very appellate rights that Section 16(b) other-\nwise forbids. Congress crafted a reticulated scheme that\nrequires stays in this context, and refused to grant parties\nimmediate appeals; a dismissal upends this approach: “the\neffect of recognizing an exception to the mandatory di-\nrective of § 3 is to give the District Court the power to\nconfer a right to an immediate appeal that would not oth-\nerwise exist.” Lloyd, 369 F.3d at 271; see also, e.g., Ara-\nbian, 19 F.4th at 942; Katz, 794 F.3d at 346.\n Respondent have no answer for how an immediate\nappeal—and thus a dismissal—is consistent with Con-\ngress’s statutory design. Congress created a statutory\nbar to immediate appeals challenging orders compelling\narbitration. See 9 U.S.C. 16(b)(1)-(2). A dismissal wrongly\nactivates “appellate rights expressly proscribed by Con-\ngress.” Katz v. Cellco P’ship, 794 F.3d 341, 346 (2d Cir.\n2015). The disconnect is palpable: if a district court can\ndismiss, then parties can take an immediate appeal that\nCongress “expressly denied.” Lloyd, 369 F.3d at 270 & n.8\n(citing 9 U.S.C. 16(b)(1), (2)). Requiring a stay, by con-\ntrast, ensures that parties resisting arbitration cannot ap-\npeal until after the arbitration has concluded.\n Claimant’ reading alone is consistent with the FAA’s\noverall structure.\n 2. A stay also promotes a federal court’s ability to “fa-\ncilitate” the FAA’s neighboring provisions, whereas a dis-\nmissal would frustrate the FAA and congressional policy.\nLloyd, 369 F.3d at 270.\n By entering a mandatory stay, courts retain jurisdic-\ntion to enforce the FAA’s other procedural safeguards—\n 21\n\n\nincluding “appoint[ing] arbitrators” (9 U.S.C. 5), “sum-\nmon[ing arbitration] witnesses” (9 U.S.C. 7), and ulti-\nmately “confirm[ing], vacat[ing], or modify[ing] an\naward” (9 U.S.C. 9-11). See Arabian Motors, 19 F.4th at\n941-942; see also, e.g., Lloyd, 369 F.3d at 370 (describing\nrole as “significant”); Green, 653 F.3d at 771 (Shepherd,\nJ., concurring). A stay also allows oversight and preserves\na judicial backstop in the event a party “defaults” on the\narbitration or the arbitration is otherwise disbanded. 9\nU.S.C. 3; Tice, 288 F.3d at 318-319. A dismissal eliminates\nall of these benefits.\n In response, Respondent argue this concern is insub-\nstantial since parties can always refile a new federal ac-\ntion. Br. in Opp. 9. Respondent may have been correct\n(at least in some circuits) before Badgerow v. Walters, 596\nU.S. 1 (2022), but they are undoubtedly wrong now. After\nBadgerow, parties cannot simply return to federal court\nand invoke the fact that the case involves federal claims;\nparties must establish an independent basis for jurisdic-\ntion—such as diversity between the parties or a specific\nnon-FAA right that implicates federal jurisdiction. It ac-\ncordingly is now the rare dispute that can return to fed-\neral court merely to invoke the FAA’s rights and protec-\ntions (596 U.S. at 5, 16-18)—which means that a stay is\neffectively the only game in town.\n Yet if dismissal is an (atextual) option, parties forfeit\nthe ability to re-access federal court—despite Section 3’s\nexplicit reservation of a federal forum until the “arbitra-\ntion has been had in accordance with the terms of the\nagreement.” 9 U.S.C. 3. That not only deprives parties of\na federal venue for enforcing rights under the FAA, but it\ncould also cost them their underlying claims. A stay is not\nmerely designed to force parties into arbitration; it also\npreserves the federal case in the event the arbitration\n 22\n\n\nfalls through—which is why the stay lasts until the arbi-\ntration is complete.\n A dismissal eliminates this necessary backstop. Re-\nspondents downplay the danger to parties’ rights from\neliminating this judicial safeguard. Br. in Opp. 9-10. But\nmultiple lower courts have flagged potential limitation\nproblems (e.g., Green, 653 F.3d at 770), and this issue can\narise when an arbitration fails for any reason—including\na failure to pay arbitral fees. The stay, by design, provides\nprotection if the “arbitration has [not] been had in accord-\nance with the terms of the agreement.” 9 U.S.C. 3; see also\nTice v. American Airlines, Inc., 288 F.3d 313, 318-319\n(7th Cir. 2002).\n 3. Finally, enforcing Section 3’s mandatory stay also\navoids wasteful disputes about whether to stay or dismiss.\nArbitration is designed to resolve disputes efficiently.\nCongress replaced any discretion to dismiss with a bright-\nline, categorical rule requiring stays in every case. There\nare hundreds of cases compelled to arbitration each year.\nDrahozal, supra, at 112 & n.7 (identifying 818 contested\npetitions from June 2021 through May 2022). That rule\nhas the benefit of avoiding costly litigation every time an\nentire matter is subject to arbitration.\n And while the costs of dismissal are high (as detailed\nabove), the benefits of a stay are virtually always present:\nfor the minimal cost of maintaining a matter on a court’s\ndocket, the court remains available to facilitate the arbi-\ntration, protect parties against time-barred claims, and\nencourage movants to follow through on initiating the ar-\nbitration. There is no reason to invite a contrary rule that\nrequires case-specific, “stay-versus-dismissal” determi-\nnations when parties are supposed to exit court and enter\narbitration “as quickly and easily as possible.” Moses H.\nCone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,\n22 (1983).\n 23\n\n\n Under Section 3, Congress provided a clear, categori-\ncal, efficient answer—each case must be stayed until the\narbitration is over. Respondent cannot justify their re-\nquest for endless disputes over whether to stay or dismiss.\n C. Respondent’ Remaining Efforts To Evade The\n FAA’s Plain-Text Reading Are Meritless\n Respondent’ remaining theories cannot overcome\ntheir lack of support in the FAA’s text, structure, or pur-\npose.\n 1. Respondent trumpet a court’s “inherent discretion-\nary authority” and “inherent power to dismiss.” E.g., Br.\nin Opp. 12. Yet any inherent powers are beside the point\nbecause Congress countermanded those powers by stat-\nute. Indeed, this is the entire reason that Congress would\nmandate a stay—to override that inherent discretion. The\npoint is to remove the default authority in this limited con-\ntext, and replace it with a statutory command.\n It is puzzling for Respondent to construe the statute\nby seeking to restore the very default choice (stay or dis-\nmiss) the statute was designed to eliminate: “While dis-\ntrict courts” retain “inherent authority to manage their\ndockets,” “that authority cannot trump a statutory man-\ndate, like Section 3 of the FAA, that clearly removes such\ndiscretion.” Katz, 794 F.3d at 346.\n 2. According to Respondent, requiring a stay “puts an\nundue burden on district courts by bloating their dock-\nets.” Br. in Opp. 17. This is bizarre. The short answer: the\nFAA “is not a docket-management statute.” Arabian Mo-\ntors, 19 F.4th at 943. Respondent (and some lower\ncourts) may prefer to “clean[] out” their dockets (ibid.),\nbut Congress balanced that concern against the need for\nretaining a judicial role in a pending case until the arbi-\ntration is over.\n 24\n\n\n Nor is the concern obviously substantial—especially\nwhen considered against the benefits. Inactive cases pre-\nsent a minimal burden and preserve federal jurisdiction\nwhere necessary to effectuate the parties’ rights. The sky\nhas not fallen in the six circuits that read (correctly) Sec-\ntion 3 as barring dismissal. And other solutions exist to\naddress concerns over “bloated” dockets: courts can ad-\nministratively close a case; courts can require only inter-\nmittent status reports (say once every 180 days) if fre-\nquent reports cause inconvenience. And Congress can al-\nways add judicial resources in the (surprising) event that\nstayed cases pending arbitration are overwhelming the\nlower courts’ workload.\n 3. Respondent attack Claimant for filing a lawsuit\ndespite the claims being subject to arbitration. This is\nboth irrelevant and wrong.\n It is irrelevant because it has no bearing on the ques-\ntion presented (or the proper way to read the statute):\nnothing in Section 3 turns on whether a party surrendered\nor resisted an arbitration demand, or filed in court despite\nhaving a claim ultimately subject to arbitration. Indeed,\nthat fact-pattern describes every instance where Section\n3 applies: a party files a lawsuit deemed subject to arbi-\ntration. See, e.g., Morgan v. Sundance, Inc., 596 U.S. 411,\n414 (2022) (describing one such instance). If that were\nenough for a party to forfeit its rights (or somehow war-\nrant dismissal), Section 3 would have no application at all.\n In any event, Respondent’ position is also wrong. Pe-\ntitioners had a basis for resisting arbitration (certain de-\nfendants were non-signatories), but strategically acqui-\nesced. And there was nothing blameworthy about filing a\nlawsuit. Arbitration is an affirmative defense and a con-\ntractual right; it can be waived or abandoned. Fed. R. Civ.\nP. 8(c)(1); see also, e.g., Morgan, 596 U.S. at 413, 419 (“de-\nfendants do not always seek [arbitral] relief right away”\n 25\n\n\nand can “waive[]” or “forfeit[]” those rights). It was up to\nRespondent to assert that right—and Claimant did\nnothing wrong by pursuing relief initially in court.\n 4. Respondent maintain Claimant would not suffer\nsignificant prejudice from refiling a new suit. Br. in Opp.\n11-12. Yet the prejudice is obvious. Respondent have re-\nsisted paying arbitration fees—a concern Claimant\nflagged long ago. J.A. 98 (requesting a stay due to “well-\nfounded belief that Defendants will be unable or unwilling\nto pay the ongoing arbitration fees” and “th[e] action will\nultimately be kicked back to the Court”). Claimant an-\nticipate seeking confirmation in federal court (assuming\nthe arbitrations are ever completed). Id. at 97 (so stating).\nAnd time will tell if the FAA’s other procedural mecha-\nnisms will be necessary—a legitimate concern given re-\nspondents’ past litigation conduct. Yet there is no obvious\njurisdiction hook to refile after Badgerow—so a dismissal\nwould likely eliminate Claimant’ access to a federal fo-\nrum.\n Claimant’ situation is hardly unusual—indeed, it re-\nflects the same challenges experienced by parties around\nthe country. Congress imposed a mandatory stay for a\nreason, which is reflected right on the face of the statute—\nit preserves the federal forum until the arbitration has in\nfact resolved the parties’ rights. Respondent’ contrary\nposition would wrongly undermine this statutory objec-\ntive.\n 26\n\n CONCLUSION\n The judgment of the court of appeals should be re-\nversed, and the case should be remanded for further pro-\nceedings.\n Respectfully submitted.\nNICHOLAS J. ENOCH DANIEL L. GEYSER\nCLARA S. BUSTAMANTE Counsel of Record\nMORGAN L. BIGELOW CHANCE FLETCHER\nLUBIN & ENOCH, P.C. HAYNES AND BOONE, LLP\n349 North Fourth Avenue 2323 Victory Avenue, Ste. 700\nPhoenix, AZ 85003 Dallas, TX 75219\n [PHONE REDACTED]\nANGELA M. OLIVER [EMAIL REDACTED]\nHAYNES AND BOONE, LLP\n800 17th Street, N.W., Ste. 500\nWashington, DC 20006\n\nFEBRUARY 2024\n APPENDIX\n TABLE OF CONTENTS\n Page\nStatutory provisions:\n Federal Arbitration Act, 9 U.S.C. 1-16:\n 9 U.S.C. 3 (§ 3) ........................................................... 1a\n 9 U.S.C. 4 (§ 4) ........................................................... 1a\n 9 U.S.C. 5 (§ 5) ........................................................... 3a\n 9 U.S.C. 7 (§ 7) ........................................................... 3a\n 9 U.S.C. 8 (§ 8) ........................................................... 4a\n 9 U.S.C. 9 (§ 9) ........................................................... 5a\n 9 U.S.C. 10 (§ 10) ....................................................... 6a\n 9 U.S.C. 11 (§ 11) ....................................................... 7a\n 9 U.S.C. 12 (§ 12) ....................................................... 8a\n 9 U.S.C. 13 (§ 13) ....................................................... 8a\n 9 U.S.C. 16 (§ 16) ....................................................... 9a\n APPENDIX\n\n1. Section 3 of the Federal Arbitration Act, 9 U.S.C. 3,\nprovides:\n Stay of proceedings where issue therein referable\n to arbitration\n If any suit or proceeding be brought in any of the\ncourts of the United States upon any issue referable to\narbitration under an agreement in writing for such arbi-\ntration, the court in which such suit is pending, upon be-\ning satisfied that the issue involved in such suit or pro-\nceeding is referable to arbitration under such an agree-\nment, shall on application of one of the parties stay the\ntrial of the action until such arbitration has been had in\naccordance with the terms of the agreement, providing\nthe applicant for the stay is not in default in proceeding\nwith such arbitration.\n\n\n2. Section 4 of the Federal Arbitration Act, 9 U.S.C. 4,\nprovides:\n Failure to arbitrate under agreement; petition to\n United States court having jurisdiction for order\n to compel arbitration; notice and service thereof;\n hearing and determination\n A party aggrieved by the alleged failure, neglect, or\nrefusal of another to arbitrate under a written agreement\nfor arbitration may petition any United States district\ncourt which, save for such agreement, would have juris-\ndiction under title 28, in a civil action or in admiralty of\nthe subject matter of a suit arising out of the controversy\n\n (1a)\n 2a\n\n\nbetween the parties, for an order directing that such ar-\nbitration proceed in the manner provided for in such\nagreement. Five days’ notice in writing of such applica-\ntion shall be served upon the party in default. Service\nthereof shall be made in the manner provided by the Fed-\neral Rules of Civil Procedure. The court shall hear the\nparties, and upon being satisfied that the making of the\nagreement for arbitration or the failure to comply there-\nwith is not in issue, the court shall make an order direct-\ning the parties to proceed to arbitration in accordance\nwith the terms of the agreement. The hearing and pro-\nceedings, under such agreement, shall be within the dis-\ntri", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n\n If ever there were a lawsuit that should not sit in-\ndefinitely on the docket of a federal court, this is it.\nBoth parties agreed to resolve claims through “bind-\ning arbitration instead of filing a lawsuit in court.”\nJ.A. 16, 36, 56. Claimant explicitly conceded that\ntheir entire dispute must be arbitrated, and they\nagreed to stop litigating in court. Claimant concede\nthat ordinarily a court confronting this situation\nwould have the “default choice” to “stay or dismiss.”\nPet. Br. 23. Yet, Claimant maintain that Congress\ncategorically, with no exceptions, stripped district\ncourts of their traditional authority to dismiss arbi-\ntrable claims when appropriate without saying a word\nabout dismissals at all.\n\n Claimant do not acknowledge that this Court\nwill not interpretate a statute to intrude on a court’s\ntraditional authority unless Congress communicated\nthat intention in the clearest of terms. Far from sat-\nisfying that standard, the text, structure, and purpose\nof § 3 of the FAA point strongly in the other direction.\n\n The text says only that when a case in court con-\ntains arbitrable claims, courts “shall on application of\none of the parties stay the trial ... until such arbitra-\ntion has been had.” 9 U.S.C. § 3 (emphasis added). As\ndictionaries and cases from the time of the FAA’s en-\nactment confirm, all that means is that the court must\nstop the litigation, not that a court must maintain ju-\nrisdiction when the case is pointlessly occupying a\nplace on the docket. By contrast, when Congress\nwanted to require courts to retain jurisdiction under\nthe FAA, it did so explicitly, requiring that courts\n 2\n\n“retain jurisdiction” pending arbitration for certain\nadmiralty cases. 9 U.S.C. § 8. Reading § 3 this way\nfully realizes Congress’s objective of promoting arbi-\ntration by preventing courts from allowing parties to\ncontinue litigating in court in parallel with ongoing\narbitration, without intruding on courts’ traditional\npowers.\n\n Claimant offer not the slightest indication that\nCongress wanted to promote arbitration with a radi-\ncal rule stripping courts of their traditional authority\nto dismiss cases. To justify their reading, Claimant\ninvoke structural arguments that both defy this\nCourt’s precedents and turn the FAA upside down.\nClaimant’ dominant theme is that Congress enacted\n§ 3 to preserve a federal forum for any relief relating\nto an arbitration. But this Court has said the opposite:\nCongress declined to “provide federal courts with com-\nprehensive control over the arbitration process,”\nBadgerow v. Walters, 596 U.S. 1, 16 (2022), and left\n“enforcement of the Act ... in large part to the state\ncourts,” Moses H. Cone Mem’l Hosp. v. Mercury Con-\nstr. Corp., 460 U.S. 1, 25 n.32 (1983).\n\n Claimant also argue that in § 16 “Congress ...\nexpressly barr[ed] immediate appeals of orders grant-\ning arbitration,” so that permitting dismissals under\n§ 3 would create a loophole Congress did not intend.\nPet. Br. 8. But this Court has already rejected that\nargument too. Section 16 prohibits an “interlocutory”\nappeal for such orders (while preferentially granting\none for orders denying arbitration). As this Court has\nheld, this provision shows only that Congress in-\ntended to stop interlocutory appeals while\n“preserv[ing] immediate appeal of any ‘final decision\n 3\n\nwith respect to an arbitration,’” like the decision here.\nGreen Tree Fin. Corp.-Alabama v. Randolph, 531 U.S.\n79, 86 (2000) (emphasis added).\n\n Finally, Claimant acknowledge that under the\nFAA “[p]arties are supposed to exit court and enter ar-\nbitration ‘as quickly and easily as possible.’” Pet. Br.\n22 (citation omitted; emphasis added). Yet their read-\ning of § 3 will encourage plaintiffs to enter court before\narbitration—to secure a place on a federal docket—\nand then force parties to remain in court, in perpetu-\nity. Parties will need to wastefully pay lawyers to ap-\npear in two forums at once. And courts will need to\ndevote scarce resources to maintaining cases in which\nthe court may never even be asked to rule again. Con-\ngress did not mandate such waste—especially as a re-\nward for filing a lawsuit Claimant should never\nhave filed.\n\n This Court should affirm.\n\n STATEMENT OF THE CASE\n\nBefore The FAA, Courts Frustrate Arbitration By\nAdjudicating Arbitrable Disputes\n\n Arbitration in the United States evolved along-\nside English common law practice. See Gilmer v. In-\nterstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991).\nBefore the FAA, many courts were hostile to arbitra-\ntion. When a party to an arbitration agreement\nsought judicial assistance to enforce a promise to ar-\nbitrate, those courts “declined to compel specific per-\nformance, or to stay proceedings on the original cause\nof action.” Red Cross Line v. Atl. Fruit Co., 264 U.S.\n 4\n\n109, 121 (1924) (citation omitted). In doing so, they\nleft parties free to disregard their arbitration obliga-\ntion and proceed instead in court.\n\n Early attempts to solve the problem achieved\nmixed success. In England, Parliament enacted the\nCommon Law Procedure Act of 1854, and then the Ar-\nbitration Act of 1889, “to give the parties, who should\nagree that their differences should be referred to ar-\nbitration, the full benefit of such a reference.” Russell\nv. Pellegrini (1856) 119 Eng. Rep. 1144, 1146 (Eng.).\nThose statutes permitted courts to halt litigation\npending arbitration. They provided that courts “may\nmake an order staying the proceedings.” Arbitration\nAct of 1889, § 4 (emphasis added); Common Law Pro-\ncedure Act of 1854, § 11 (“it shall be lawful for the\nCourt ... to make a Rule or Order staying all Proceed-\nings” brought in court by a party to an arbitration\nagreement). And some did so. See, e.g., Scott v. Avery\n(1856) 5 H.L.Cas. 811, 851-56 (Eng.).\n\n But the permissive “may” did not require courts to\nput a stop to ongoing litigation pending arbitration.\nAnd thus some judges continued to allow arbitrable\nclaims to be resolved in court. See, e.g., Davis v. Starr\n(1889) 41 Ch. D. 242, 246-47 (Eng.); Randell, Saun-\nders, & Co. v. Thompson (1876) 1 Q.B.D. 748, 756-59\n(Eng.).\n\n In the United States, where courts drew heavily\nfrom English common law authorities, the same pat-\ntern emerged. Some courts would respect arbitration\nagreements, but others would not. See Red Cross Line,\n264 U.S. at 121; Julius Henry Cohen, Commercial\n 5\n\nArbitration and the Law 242-53 (1918) (describing\nearly American practice).\n\nCongress Enacts The FAA To Ensure Arbitrable\nDisputes Are Arbitrated\n\n In 1925, Congress enacted the FAA to “overcome\ncourts’ refusals to enforce agreements to arbitrate.”\nAllied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265,\n270 (1995). It did so with a substantive rule enshrin-\ning into law the validity of arbitration agreements,\nand two enforcement mechanisms mandating the re-\nlief that some courts had previously refused to pro-\nvide.\n\n Section 2 provides the rule. All written arbitra-\ntion agreements are “valid, irrevocable, and enforcea-\nble” on the same terms as all contracts. 9 U.S.C. § 2.\nThis provision “creates substantive federal law re-\ngarding the enforceability of arbitration agreements,\nrequiring courts ‘to place such agreements upon the\nsame footing as other contracts.’” Arthur Andersen\nLLP v. Carlisle, 556 U.S. 624, 629-30 (2009) (quoting\nVolt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford\nJunior Univ., 489 U.S. 468, 478 (1989)).\n\n Sections 3 and 4 give that command teeth by cre-\nating “two parallel devices for enforcing an arbitra-\ntion agreement.” Moses H. Cone, 460 U.S. at 22.\nSection 3 departed from the English arbitration stat-\nutes’ permissive approach to the cessation of litiga-\ntion. Congress mandated that, upon referring a case\nto agreed-upon arbitration, “the court ... shall on ap-\nplication of one of the parties stay the trial of the\n 6\n\naction until such arbitration has been had in accord-\nance with the terms of the agreement.” 9 U.S.C. § 3.\n\n Section 4 put an end to courts’ refusal to order\nspecific performance and compel arbitration. Con-\ngress again mandated that if a party petitions a court\nto compel arbitration, “upon being satisfied that the\nmaking of the agreement for arbitration or the failure\nto comply therewith is not in issue, the court shall\nmake an order directing the parties to proceed to ar-\nbitration.” 9 U.S.C. § 4. And it provided expansive ju-\nrisdiction for federal courts to compel arbitration by\ngranting a district court jurisdiction over applications\nto compel arbitration if the court would have jurisdic-\ntion over the merits of the underlying dispute.\nBadgerow, 596 U.S. at 4-5. In other words, the federal\ncourt “look[s] through” the petition to the federal na-\nture of the merits of the underlying controversy, “even\nthough that controversy is not before the court.” Id.\n(discussing Vaden v. Discover Bank, 556 U.S. 49, 62\n(2009)).\n\n Sections 9, 10, and 11 of the FAA, in turn, provide\nprocedures for petitioning a court to confirm, vacate,\nor modify the result of an arbitration. But while Con-\ngress provided for broad federal jurisdiction to ensure\nthat any arbitrable disputes within the jurisdiction of\nfederal courts would be arbitrated, it declined to “pro-\nvide federal courts with comprehensive control over\nthe arbitration process.” Badgerow, 596 U.S. at 16.\n\n Rather, Congress left “enforcement of the Act ...\nin large part to the state courts.” Moses H. Cone, 460\nU.S. at 25 n.32; see Vaden, 556 U.S. at 59; Hall St.\nAssocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 582\n 7\n\n(2008). In contrast to the look-through jurisdiction\nthat it provided in § 4, Congress limited jurisdiction\nover post-arbitration petitions under §§ 9-11 to in-\nstances where a court has an “independent ... basis”\nfor federal subject-matter jurisdiction over “the appli-\ncation itself.” Badgerow, 596 U.S. at 9. Congress thus\nintended for applications to confirm or vacate arbitra-\ntion awards under §§ 9 and 10 to “go to state, rather\nthan federal, courts when they raise claims between\nnon-diverse parties involving state law.” Id. at 18.\n\nClaimant File Suit In Court, Even Though They\nConcede They Agreed To Arbitrate All Claims\n\n Claimant are “current and former delivery driv-\ners” for an on-demand delivery service operated by\nRespondent. Pet. App. 3a. They signed contracts\nspecifying they were “agree[ing] to resolve any justi-\nciable disputes” with Respondent “exclusively\nthrough final and binding arbitration instead of filing\na lawsuit in court.” J.A. 16 (Martinez contract); J.A.\n36 (Claimant contract); J.A. 56 (Turner contract).\n\n The arbitration agreements were comprehensive\nin scope. They provided that they “shall apply to any\nand all claims arising out of or relating to this Con-\ntract, the Owner/Operator’s provision of services to\nCustomers, the payments received by Owner/Opera-\ntor’s provision of services to Customers, the payments\nreceived by Owner/Operator for providing services to\nCustomers, the termination of this Contract, and all\nother aspects of the Owner/Operator’s relationship\nwith Broker, past or present, whether arising under\nfederal, state or local statutory and/or common law.”\nJ.A. 16, 36, 56.\n 8\n\n Eventually the drivers had an employment dis-\npute with Respondent. Yet despite having agreed to\nresolve any justiciable disputes “through final and\nbinding arbitration instead of filing a lawsuit in\ncourt,” J.A. 16, 36, 56, Claimant filed suit in Arizona\nstate court, alleging violations of federal and state\nlaw, J.A. 61-86 (Complaint).\n\n Claimant have never justified their decision to\nsue in court rather than honor their arbitration agree-\nments. They do not contend that they or their lawyers\nwere unaware of their arbitration agreements. Nor\nthat they had any theory on which the expansive ar-\nbitration agreements did not reach their dispute.\n\n To the contrary, after Respondent removed the\ncase to federal court and then moved to compel arbi-\ntration, Pet. App. 3a; J.A. 87-90 (Motion to Compel),\nClaimant “agree[d] that this action is subject to ar-\nbitration.” J.A. 92. Before the Ninth Circuit, they\nagain acknowledged their claims were all “subject to\nagreements to arbitrate disputes.” Appellants’ Open-\ning Br., [TARGET IDENTIFIER REDACTED], [DOCKET REDACTED], 2022 WL\n4537940, at *3-4 (9th Cir. Sept. 20, 2022). And in their\ncert. petition, they once more “conceded that the\nclaims were indeed arbitrable.” Pet. 4.\n\n Nevertheless, Claimant opposed Respondent’\nrequest that the district court dismiss the lawsuit\nthat Claimant had promised not to file. They urged\nthe court to “stay, not dismiss” the action. J.A. 92. Pe-\ntitioners offered two hypothetical reasons to keep\ntheir lawsuit in court pending the parties’ agreed-\nupon arbitration. Each sought to justify an indefinite\nparking space on the federal court’s docket so as to\n 9\n\nhave the district court on standby for a contingent fu-\nture event. First, Claimant argued that they wanted\na stay to retain, if and as needed, an eventual federal\n“forum in which they can seek to have the arbitration\naward reviewed and confirmed.” J.A. 97. Second, they\nargued that they wanted a stay so they could have a\nfederal court on standby in which to potentially liti-\ngate their claims, if the arbitration fell through at\nsome undetermined point in the future. J.A. 98.\n\nThe District Court Compels Arbitration And\nDismisses The Case Without Prejudice, And The\nNinth Circuit Affirms\n\n The district court granted Respondent’ motion to\ncompel arbitration and dismissed Claimant’ action\nwithout prejudice. Pet. App. 9a. In doing so, the court\nrejected Claimant’ position that the FAA required\nthe court to keep the action parked on its docket to be\nready to address their hypothetical future contingen-\ncies. The court explained that the fact that it might in\nthe future be asked “to confirm an award does not\nweigh in favor of staying the action as the parties re-\nmain free to bring an action for confirmation under 9\nU.S.C. § 9 even if the action is dismissed.” Pet. App.\n11a. If an application to confirm an arbitral award\nwere actually filed, the court explained that at that\npoint “it will consider such an action under the appli-\ncable statutory standards,” but only, of course, if it\n“has jurisdiction” to do so under Badgerow. Id.\n\n The Ninth Circuit unanimously affirmed. Pet.\nApp. 1a-7a. It relied on longstanding Ninth Circuit\nprecedent “establish[ing] that district courts may dis-\nmiss suits when, as here, all claims are subject to\n 10\n\narbitration.” Pet. App. 2a, 5a (relying on Johnmoham-\nmadi v. Bloomindale’s, Inc., 755 F.3d 1072, 1074 (9th\nCir. 2014); Thinket Ink Info. Res., Inc. v. Sun Mi-\ncrosystems, Inc., 368 F.3d 1053, 1060 (9th Cir. 2004);\nSparling v. Hoffman Constr. Co., 864 F.2d 635, 638\n(9th Cir. 1988); Martin Marietta Aluminum, Inc. v.\nGen. Elec. Co., 586 F.2d 143, 147 (9th Cir. 1978)). Two\njudges on the panel filed a separate concurrence ex-\npressing the view that, despite Ninth Circuit prece-\ndent, “the plain text of the FAA appears to mandate a\nstay.” Pet. App. 8a.\n\n SUMMARY OF THE ARGUMENT\n\n A. Section 3 of the FAA provides that “the court\n... shall on application of one of the parties stay the\ntrial of the action.” Nothing in that plain statutory\ntext prohibits a district court from dismissing a case\nwithout prejudice after concluding every claim in the\ncase must be arbitrated and nothing remains for the\ncourt to do. That is for two reasons—one general, and\nthe other specific to the circumstances of this case\nwhere both sides agree that all claims must be arbi-\ntrated.\n\n When § 3 requires a court to “stay the trial of the\naction,” it means only that the court must stop in-\ncourt litigation. A court stops litigation and fulfills\nthat command when it dismisses without retaining\njurisdiction. Lead definitions of stay from when Con-\ngress enacted the FAA include “stopping,” “arresting\na judicial proceeding,” and “to restrain.” And diction-\naries even defined “stay” to include “a total discontin-\nuance of the action,” akin to a dismissal.\n 11\n\n Claimant incorrectly assume that “stay” must\nmean “keep a case on the court’s docket.” That is not\nthe meaning of stay Congress intended. When Con-\ngress in the FAA wanted to require courts to “retain\njurisdiction,” it said so expressly, as it did in § 8.\n\n The understanding of “stay” that permits dismis-\nsals also reflects the prevailing understanding of\ncourts’ powers to halt litigation for arbitration when\nCongress adopted the FAA. Courts in both the United\nStates and the United Kingdom recognized that,\nwhere all claims in a case are subject to an agreement\nto arbitrate, dismissing an action was a permissible\nway to stop parallel in-court litigation to allow arbi-\ntration to proceed.\n\n The narrower textual argument applies to the\nsmaller category of cases where, as here, the parties\nagree that all claims in the case are subject to arbitra-\ntion and no party is asking the court to try anything.\nIn that situation § 3 simply does not apply because no\nparty is seeking a “trial of the action,” so there is no\n“trial of the action” to stay.\n\n B. Any doubt about § 3’s meaning must be re-\nsolved in favor of courts’ discretion to dismiss. District\ncourts have the traditional, inherent power to manage\ntheir dockets and dismiss cases, where appropriate.\nAnd this Court will not conclude that Congress in-\ntended to countermand such inherent power absent\nthe clearest of statements.\n\n Claimant do not dispute that their interpreta-\ntion of § 3 would negate inherent powers of the dis-\ntrict courts. Indeed, they agree that absent § 3, courts\n 12\n\nwould have the “default choice (stay or dismiss).” Pet.\nBr. 23. Claimant cannot establish a clear congres-\nsional intent to support their interpretation when the\ninterpretation that respects courts’ inherent powers\ngives meaning to every word in the statute and aligns\nwith Congress’s purpose of ensuring that courts stop\nparallel litigation to allow arbitration to proceed, and\nwhen Congress expressly required courts to retain ju-\nrisdiction in FAA § 8 but not in § 3.\n\n C. Reading § 3 to require courts to retain jurisdic-\ntion over a case containing wholly arbitrable claims\nafter stopping those claims from proceeding also\nmakes no sense in the context of the broader statutory\nscheme.\n\n This Court has repeatedly explained that Con-\ngress enacted the FAA to “overcome courts’ refusals\nto enforce agreements to arbitrate.” Allied-Bruce, 513\nU.S. at 270. Specifically, with § 3, Congress put an\nend to the judicial resistance to arbitration by requir-\ning courts to stop litigation with respect to claims that\nare subject to mandatory arbitration. Our interpreta-\ntion of § 3 maps perfectly onto that clear purpose. In\ncontrast, there is no evidence that Congress was wor-\nried that courts were stopping litigation by dismissing\ncases upon concluding all the claims were arbitrable.\n\n Permitting dismissal when a case contains only\narbitrable claims also respects the FAA’s division of\nlabor between state and federal courts and the FAA’s\njurisdictional limits. This Court has repeatedly recog-\nnized that, in enacting the FAA, Congress left “en-\nforcement of the Act ... in large part to the state\ncourts.” Moses H. Cone, 460 U.S. at 25 n.32. It has\n 13\n\nstressed that the FAA reflects a “normal—and sensi-\nble—judicial division of labor” between state and fed-\neral courts. Badgerow, 596 U.S. at 18. In particular,\nCongress intended that applications to confirm or va-\ncate arbitral awards under §§ 9 and 10 “go to state,\nrather than federal, courts when they raise claims be-\ntween non-diverse parties involving state law.” Id.\n\n Claimant turn that careful balance on its head\nby reasserting the argument this Court rejected in\nBadgerow—that Congress “explicit[ly] reserv[ed] ... a\nfederal forum” “to enforce the FAA’s other procedural”\nprovisions. Pet. Br. 20-21. Given the FAA’s orienta-\ntion against federal jurisdiction, it makes no sense to\nurge that Congress intended to mandate a backdoor\nto a federal forum for enforcing the FAA’s procedural\nprovisions, so long as a plaintiff files an unnecessary\nlawsuit.\n\n A rule requiring courts to retain jurisdiction also\ndoes not square with the fact that parties to an arbi-\ntration may never return to the federal court that\nstays proceedings under § 3. They might settle the\nmatter and have no reason to return to court, or elect\nto return to a different venue if they do go to court. It\nmakes no sense to posit that a Congress that granted\nparties flexibility concerning whether to return to\ncourt and which court to return to would nonetheless\nrequire the original court that stays proceedings to re-\ntain jurisdiction throughout the arbitration.\n\n Claimant advance another structural argument\nthis Court has already rejected. They contend that\nFAA § 16(b) reflects a congressional imperative never\nto allow an appeal of an order to arbitrate until after\n 14\n\nthe arbitration has concluded. Section 16(b) provides\nthat “[e]xcept as otherwise provided in [28 U.S.C.] sec-\ntion 1292(b) ..., an appeal may not be taken from an\ninterlocutory order ... granting a stay of any action\nunder section 3.” 9 U.S.C. § 16(b). Claimant ignore\nthat Congress enacted § 16 more than 60 years after\n§ 3. And the original practice was that orders halting\ncourt proceedings under § 3 were usually appealable\nas interlocutory appeals. So insofar as appellate prac-\ntice is relevant, it cuts against Claimant. Congress\ndid not somehow effect a “sub silentio” amendment to\n§ 3’s text through an entirely different and separate\nprovision.\n\n Claimant also misread § 16(b). They say § 16\n“expressly bar[s] immediate appeals of orders grant-\ning arbitration.” Pet. Br. 8. But this Court has re-\njected Claimant’ effort to extend § 16 beyond its\ninterlocutory focus. In Green Tree, this Court ex-\nplained that § 16(a)(3) “preserves immediate appeal\nof any ‘final decision with respect to an arbitration,’\nregardless of whether the decision is favorable or hos-\ntile to arbitration.” 531 U.S. at 86 (emphasis added).\n\n Finally, discretion to dismiss promotes the FAA’s\nunderlying objective to foster efficient dispute resolu-\ntion. Congress intended for parties who have agreed\nto arbitration to proceed to an arbitral forum “as\nquickly and easily as possible.” Id. at 85. In defiance\nof these objectives, Claimant’ rule incentivizes\nplaintiffs to impose additional time, cost, and com-\nplexity on the process by bringing suit in court first\nrather than proceeding directly to arbitration.\n 15\n\n ARGUMENT\n\n DISTRICT COURTS MAY DISMISS CASES\n AFTER COMPELLING ARBITRATION\n\n A. The Plain Text Of The FAA Does Not\n Deprive Courts Of Their Authority To\n Dismiss Cases Without Prejudice.\n\n Section 3 of the FAA provides in relevant part\nthat:\n\n the court ... shall on application of one of the\n parties stay the trial of the action until such\n arbitration has been had in accordance with\n the terms of the agreement, providing the\n applicant for the stay is not in default in pro-\n ceeding with such arbitration.\n\n9 U.S.C. § 3. That plain text supports the district\ncourt’s decision to dismiss without prejudice on either\nof two grounds—one general and the other more spe-\ncific. As a general matter, when § 3 requires a court\nto “stay the trial of the action,” it means only that the\ncourt must stop parallel in-court litigation, which a\ncourt may achieve by dismissing without retaining ju-\nrisdiction. § A.1. More specifically, § 3 does not re-\nquire a stay in a case like this one, where the parties\nagree that all claims must be arbitrated and there is\nno “trial of the action” to stay. § A.2.\n 16\n\n 1. Section 3’s plain text requires courts\n to stop litigation in favor of\n arbitration, without requiring them\n to retain jurisdiction.\n\n a. Claimant argue at length that “shall” signals\na “mandatory” command that “permits no discretion.”\nPet. Br. 10-13. But they gloss over an ambiguity in\nwhat § 3 mandates: “stay the trial of the action.” Con-\nsistent with § 3’s purpose of requiring courts to stop\nlitigation to allow arbitration to proceed, supra 3-7,\n“stay the trial” requires courts to stop litigation from\nproceeding, without prescribing exactly how and\nwithout mandating that the court retain jurisdiction.\n\n A lead definition of “stay” when Congress enacted\n§ 3 was simply “[a] stopping” or an “act of arresting a\njudicial proceeding.” Black’s Law Dictionary 1109 (2d\ned. 1910); see Stay, Webster’s International Diction-\nary 1407 (1890) (“4. To hold from proceeding; to with-\nhold; to restrain; to stop ....”); In re Schwarz, 14 F. 787,\n788 (S.D.N.Y. 1882) (“Although, in a certain technical\nsense, the term ‘stay’ may be said to apply to proceed-\nings already commenced, yet its general meaning is\n‘to forbear to act;’ ‘to stop.’”). Current legal definitions\nalso include “[t]he postponement or halting of a pro-\nceeding ....” Stay, Black’s Law Dictionary (11th ed.\n2019) (emphasis added). Under this definition, the\nword “stay” does not preclude dismissal—a court that\ndismisses an action stops it from continuing.\n\n Indeed, legal dictionaries back then even defined\n“stay” to mean dismiss. As one dictionary explained:\n“In English practice,” from which the FAA arose,\n“‘stay of proceedings’ also sometimes means a total\n 17\n\ndiscontinuance of the action .... Before decree or judg-\nment the proper way of disposing of an action is either\nby discontinuance (q. v.) or by an order dismissing the\naction.” Stay § 2, A Dictionary of American and Eng-\nlish Law with Definitions of the Technical Terms of\nthe Canon and Civil Laws 1221 (1888); see Stay, A\nDictionary of English Law 840 (1923) (similar). As one\ncourt put it: “Two views may be taken of the nature of\na stay; first, that it is a discontinuance ... ; and sec-\nondly, that it ... may be removed if proper grounds are\nshewn.” Selig v. Lion (1891) 1 Q.B. 513, 515 (Eng.).\n\n This understanding of a stay as permitting dis-\nmissal is consistent with modern practice in other\ncontexts. The primary jurisdiction doctrine, for exam-\nple, requires courts to “stay[] further proceedings so\nas to give the parties reasonable opportunity to seek\nan administrative ruling” that is a condition prece-\ndent to the suit. Reiter v. Cooper, 507 U.S. 258, 268\n(1993). This Court has recognized that to achieve the\nrequired “stay[] [of] further proceedings,” a court “has\ndiscretion either to retain jurisdiction or, if the parties\nwould not be unfairly disadvantaged, to dismiss the\ncase without prejudice.” Id. at 268-69. Similarly, by\nstatute, a bankruptcy petition “operates as a stay” of\nany “action or proceeding against the debtor.” 11\nU.S.C. § 362(a)(1). Federal Circuit rules permit “[a]n\nappeal stayed in accordance with the bankruptcy [au-\ntomatic] stay ... [to] be dismissed by the clerk of court\nwithout prejudice to the appellant reinstating the ap-\npeal.” Fed. Cir. R. 47.10. In that circumstance, the dis-\nmissal is a form of “stay,” in that the case does not\nproceed against the debtor. And courts may issue\n“permanent” or “irremovable” “stay[s]” that are a to-\ntal bar to proceedings ever continuing. See, e.g., Selig\n 18\n\nv. Lion, 1 Q.B. at 515 (holding stayed proceedings\ncould not be restarted); State Farm Mut. Auto. Ins. Co.\nv. Diaz, 223 A.D.3d 674, 675 (N.Y. App. Div. 2024)\n(“permanently stay[ing]” arbitration when claims not\narbitrable).\n\n Under the definition of “stay” that only requires\nstopping, § 3 does not speak to how a court must halt\nlitigation, or what if anything a court must or can do\nafter directing a cessation of the litigation. In some\ncircumstances, like where some of the issues in a case\nmust be arbitrated and others remain for adjudication\nin court, it is most sensible for a court to stop proceed-\nings and retain jurisdiction to adjudicate the non-ar-\nbitrable claims after the arbitration “has been had.”\n§ 3. But where (as here) all claims in the case are sub-\nject to mandatory arbitration and there are no claims\nto be tried in court, there is nothing left for the district\ncourt to do after referring the matter to arbitration.\nIn that scenario, nothing in § 3 prohibits a district\ncourt from stopping or “staying” the arbitrable claims\nfrom proceeding in court and then dismissing the\ncase, without prejudice, in the sound exercise of its ju-\ndicial discretion. Dismissing in this setting neither\n“depart[s] from the actual statutory text,” nor entails\na “judicially-created exception” from it. Pet. Br. 11.\n\n Claimant offer no definition of their own. But\nthey evidently define “stay” to mean “stop proceed-\nings” and also “retain jurisdiction and maintain the\ncase on the court’s docket, with no exceptions whatso-\never.” They maintain that the phrase “shall ... stay”\ncategorically overrides the courts’ “inherent discre-\ntion” to dismiss. Pet. Br. 23. No doubt there are con-\ntexts in which one might use the word “stay” to mean\n 19\n\nkeeping a case on the docket without dismissing. But\nClaimant cite nothing that establishes the word\n“stay” always forecloses dismissal or requires keeping\na case on the court’s docket without exception.\n\n That is most certainly not what it means in the\ncontext of § 3. See Davis v. Michigan Dep’t of Treas-\nury, 489 U.S. 803, 809 (1989) (holding words “must be\nread in their context and with a view to their place in\nthe overall statutory scheme”). When Congress in the\nFAA wanted to require courts to retain jurisdiction\nover a matter pending arbitration, it said so explicitly\nand did not leave courts and parties guessing about\nany implicit limitation in the word “stay.” For admi-\nralty proceedings begun by “libel and seizure of the\nvessel,” Congress directed that “the court shall ...\nhave jurisdiction to direct the parties to proceed with\nthe arbitration and shall retain jurisdiction to enter\nits decree upon the [arbitration] award.” 9 U.S.C. § 8\n(emphasis added).\n\n By directing courts to retain jurisdiction only in\nthat one specific circumstance, Congress indicated\nthat it was not requiring courts to retain jurisdiction\nwhenever they stay proceedings under § 3. “When\nCongress includes particular language in one section\nof a statute but omits it in another section of the same\nAct, [this Court] generally take[s] the choice to be de-\nliberate.” Badgerow, 596 U.S. at 11 (citation and quo-\ntation marks omitted); Loughrin v. United States, 573\nU.S. 351, 358 (2014) (accord); see Dep’t of Homeland\nSec. v. MacLean, 574 U.S. 383, 391 (2015) (“[C]on-\ngress generally acts intentionally when it uses partic-\nular language in one section of a statute but omits it\nin another.”). Indeed, if § 3 required courts to retain\n 20\n\njurisdiction over a case whenever staying litigation\nfor arbitration to proceed, then Congress would have\nhad no need to specifically require courts to “retain\njurisdiction” over certain maritime cases in § 8. Those\ncourts would already be required to retain jurisdic-\ntion, and the § 8 language would be superfluous.\n\n b. The understanding of “stay” that permits dis-\nmissals where appropriate also reflects the prevailing\nunderstanding of courts’ powers to halt litigation for\narbitration when Congress adopted the FAA.\n\n Before Congress enacted the FAA, courts in both\nthe United States and the United Kingdom recog-\nnized that, where all claims in a case are subject to an\nagreement to arbitrate, dismissing an action was a\npermissible way to stop parallel in-court litigation to\nallow arbitration to proceed. Wilson v. Glasgow Tram-\nways and Omnibus Company, for example, explained\nthat a judge confronted with an effort to try wholly\narbitrable claims “may take several courses[:] He may\ndismiss the action, leaving the parties to go to their\narbiter and come back again, if necessary, for execu-\ntion or for powers, or he may remit to the arbitrator,\nor suspend proceedings ....” (1878) 5 R. 981, 992\n(Scot.). In another decision, two Lords observed, re-\nspectively, that “the more regular course [was] dis-\nmissing the action,” and that dismissal was the\n“right” “course ... if the record raise[s] directly a ques-\ntion falling within the terms of the clause of arbitra-\ntion.” Caledonian Ry. Co. v. Greenock & Wemyss Bay\nRy. Co., (1872) 10 M. 892, 895-96 (Scot.).\n\n The New York Court of Appeals cited Wilson as\nillustrative when describing the operation of the New\n 21\n\nYork Arbitration Law, which had identical “stay the\ntrial” language, and on which Congress modeled the\nFAA. See Berkovitz v. Arbib & Houlberg, Inc., 230\nN.Y. 261, 275 (1921); Hall Street, 552 U.S. at 589 n.7\n(FAA modeled on New York Arbitration Law). And\nother New York courts at the time of the FAA’s enact-\nment likewise elected to “decline jurisdiction and stay\nproceedings” under the New York Arbitration Law.\nKelvin Eng’g Co. v. Blanco, 125 Misc. 728, 734 (N.Y.\nSup. Ct. 1925) (emphasis added).\n\n c. Claimant point out that “Congress did not\nmerely say to stay the trial of the action—it said to\nimpose that stay until the arbitration has concluded.”\nPet. Br. 13 (emphasis omitted). But specifying how\nlong the court must forbear is not the same as requir-\ning the court to keep the case on its docket for the du-\nration of the arbitration. On both interpretations, the\ncourt will refrain from conducting any “trial of the ac-\ntion” for the duration of the arbitration. The dura-\ntional language thus merely establishes that any\nremaining dispute between the parties may be liti-\ngated in court when the arbitration is over. By way of\nanalogy, imagine a sports league suspends player\nGreen for five games for fighting and directs, “The\nteam shall keep Green from playing until the suspen-\nsion has concluded.” That is not an order to keep\nGreen on the team during the suspension. The team\nis fully in compliance with the order if it releases\nGreen before the five games are up.\n 22\n\n 2. At a minimum, § 3 by its plain terms\n does not apply where it is undisputed\n that all claims must be arbitrated.\n\n The narrower textual argument applies to the\nsmaller category of cases where, as here, the parties\nagree that all claims in the case are subject to arbitra-\ntion and no party is asking the court to try anything.\nSection 3 has nothing to say about this scenario be-\ncause § 3 requires a stay only with respect to “the trial\nof the action.” 9 U.S.C. § 3 (emphasis added). When\nno party is seeking a trial of the action, there is noth-\ning to stay under § 3.\n\n This is not a case where a dispute will go to arbi-\ntration with one party still fighting to litigate its\nclaims in court. Nor is this a case where some claims\nare subject to mandatory arbitration and others are\nnot. All parties in this case acknowledge that the en-\ntire dispute is subject to binding arbitration under the\nplain terms of their agreements. J.A. 16, 36, 56. No\none here is seeking a trial or any in-court adjudication\nof the merits of the underlying controversy. So § 3\nsimply does not require a court to do anything with\nrespect to staying any trial proceedings where there\nare no such proceedings to stay. Therefore, whatever\n§ 3 might contemplate about courts retaining jurisdic-\ntion in other circumstances, it does not constrain a\ncourt from dismissing a case where the stay provision\ndoes not apply.\n\n Claimant’ only answer to this point is that the\n§ 3 analysis does not turn on whether the parties are\npresently seeking a trial, because “there is no way to\nknow if there will be a trial until the arbitration has\n 23\n\nconcluded.” Pet. Br. 13. Of course there is a “way to\nknow” when a contract clearly requires arbitration\nand both parties agree that the claims must be arbi-\ntrated. In that scenario, the court can reasonably con-\nclude there will be an arbitration and not a trial.\nCourts do not need to keep cases on their dockets\nbased on rare and unlikely possibilities. And the pos-\nsibility of rare occurrences does not overcome how the\nstatutory language should be read in the broad cate-\ngory of cases represented by this scenario. Moreover,\nClaimant’ argument misses the point. When no one\nis presently seeking a trial, there is still no trial to\nstay even if it is hypothetically possible that one of the\nparties might attempt to seek a trial in the future (at\nwhich point § 3 could, hypothetically, require a stay if\nits conditions are then met).\n\n This reading of § 3 also comports with the pre-\nFAA practice of courts that properly enforced arbitra-\ntion agreements. For decades leading up to the pas-\nsage of the FAA, when parties to litigation agreed to\narbitrate their claims, the agreement operated to dis-\ncontinue—i.e., dismiss—the litigation. By 1884, it\nwas “well settled that mere submission to arbitration\n[was] a discontinuance of the suit” regardless of\nwhether the arbitration actually occurred. McNulty v.\nSolley, 95 N.Y. 242, 244 (1884); see Camp v. Root, 18\nJohns. 22, 23 (N.Y. Sup. Ct. 1820) (“The submission\nto arbitration [is] a discontinuance of the suit.”);\nDraghicevich v. Vulicevich, 18 P. 406, 407 (Cal. 1888)\n(“[T]he submission of the cause to arbitrators oper-\nated as a discontinuance of the action, and ... after\nsuch discontinuance the proceedings of the court were\nwithout jurisdiction.”); Travelers’ Ins. Co. v. Pierce\nEngine Co., 123 N.W. 643, 645 (Wis. 1909) (“[A]n\n 24\n\nagreement to submit to arbitration the matters in-\nvolved in a pending action ipso facto dismisses that\naction.”). 1 So Congress would have understood that\nwhere, as here, the parties have explicitly agreed not\nto litigate in court and instead to arbitrate all of their\nclaims, the litigation could be dismissed.\n\n B. Claimant’ Reading Must Be Rejected\n Because Congress Provided No Clear\n Statement Stripping District Courts Of\n Their Inherent Authority To Dismiss\n Cases.\n\n Any doubt about § 3’s meaning must be resolved\nin favor of maintaining a court’s traditional discretion\nto dismiss cases when appropriate. It is improper to\nconclude Congress abrogated such powers absent the\nclearest of statements, which Congress did not pro-\nvide here.\n\n 1. “It has long been understood that ‘[c]ertain im-\nplied powers must necessarily result to our Courts of\njustice from the nature of their institution.’” Cham-\nbers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (quoting\nUnited States v. Hudson, 11 U.S. (7 Cranch) 32, 34\n\n 1 See also, e.g., Radway v. Duffy, 79 A.D. 116, 118-19 (N.Y.\n\nApp. Div. 1903); People ex rel. Martin v. Cnty. of Westchester, 53\nA.D. 339, 342 (N.Y. App. Div. 1900); Niagara Falls & L.R. Co. v.\nBrundage, 7 A.D. 445, 449 (N.Y. App. Div. 1896); Claflin v.\nMeyer, 75 N.Y. 260, 266 (1878); Gunter v. Sanchez, 1 Cal. 45, 47\n(1850); Heslep v. City of San Francisco, 4 Cal. 1, 4 (1852); Larkin\nv. Robbins, 2 Wend. 505, 506 (N.Y. Sup. Ct. 1829); Wells v. Lain,\n15 Wend. 99, 103 (N.Y. 1835); Mooers v. Allen, 35 Me. 276, 278\n(1853); Eddings v. Gillespie, 59 Tenn. (12 Heisk.) 548, 550\n(1873); Jewell v. Blankenship, 18 Tenn. (10 Yer.) 439, 440 (1837).\n 25\n\n(1812)). These “inherent powers” “are ‘governed not\nby rule or statute but by the control necessarily vested\nin courts to manage their own affairs so as to achieve\nthe orderly and expeditious disposition of cases.’”\nDietz v. Bouldin, 579 U.S. 40, 45 (2016) (quoting Link\nv. Wabash R.R. Co., 370 U.S. 626, 630-31 (1962)). And\nthey are fundamental to the orderly administration of\njustice.\n\n One of those powers is “the power inherent in\nevery court to control the disposition of the causes on\nits docket with economy of time and effort for itself,\nfor counsel, and for litigants.” Landis v. N. Am. Co.,\n299 U.S. 248, 254 (1936); see, e.g., Chambers, 501 U.S.\nat 51 (misconduct); Link, 370 U.S. at 629-30 (failure\nto prosecute); Gulf Oil Corp. v. Gilbert, 330 U.S. 501,\n511-12 (1947) (forum non conveniens); Far East Conf.\nv. United States, 342 U.S. 570, 577 (1952) (parallel\nagency proceedings).\n\n Dismissing a case containing only arbitrable\nclaims is central to the courts’ discretionary authority\nto manage their dockets, and to do so sensibly and eco-\nnomically. When the parties agree a case contains\nonly arbitrable claims and the court sends the case to\narbitration, there is no longer any active litigation be-\ntween the parties, and the court might never be called\nupon to take any further action in the case.\n\n This Court does “not lightly assume that Congress\nhas intended to depart from established principles.”\nChambers, 501 U.S. at 47. “Congress ‘is understood to\nlegislate against a background of common-law ...\nprinciples,’” including a court’s inherent powers, and\nthis Court operates “with the presumption that\n 26\n\nCongress intended to retain the substance of the com-\nmon law.” Samantar v. Yousuf, 560 U.S. 305, 320 n.13\n(2010) (quoting Astoria Fed. Sav. & Loan Ass’n v. So-\nlimino, 501 U.S. 104, 108 (1991)). The “normal rule of\nstatutory construction is that if Congress intends for\nlegislation to change the interpretation of a judicially\ncreated concept, it makes that intent specific.” Mid-\nlantic Nat’l Bank v. New Jersey Dep’t of Envt’l Protec-\ntion, 474 U.S. 494, 501 (1986) (citing Edmonds v.\nCompagnie Generale Transatlantique, 443 U.S. 256,\n266-67 (1979)). This Court has thus rejected efforts to\nlimit a court’s inherent powers where Congress did\nnot provide a “clear[] expression of purpose.” Link,\n370 U.S. at 631-32; see Gulf Oil, 330 U.S. at 511-12.\n\n 2. Claimant do not dispute that their interpre-\ntation of § 3 would negate fundamental and inherent\npowers of the district courts. Pet. Br. 23. They even\nconcede that courts generally have the “default choice\n(stay or dismiss).” Id. Yet they ignore the legal conse-\nquence of that concession, insisting that “any inher-\nent powers are beside the point because Congress\ncountermanded those powers by statute.” Pet. Br. 23\n(emphasis omitted). That is just a restatement of Pe-\ntitioners’ statutory reading. Claimant cannot\ndemonstrate that is the only plausible reading just by\ndeclaring it more emphatically. Pet. Br. 23.\n\n For the reasons given, Claimant’ reading is far\nfrom the only plausible one. Our interpretation gives\nmeaning to every word in the statute and aligns per-\nfectly with Congress’s purpose of ensuring that courts\nstop parallel litigation to allow arbitration to proceed.\nSupra 3-7; infra 28-29. In fact, Claimant’ interpre-\ntation is highly implausible. Claimant read § 3 to\n 27\n\n“categorically require[]” courts to keep cases in arbi-\ntration on their dockets “until such arbitration has\nbeen had.” Pet. Br. 7, 13. It “permits no discretion”\nand “no exceptions.” Pet. Br. 10, 12. That means\ncourts lose the power, for example, to dismiss a case\nfor failure to prosecute, Link, 370 U.S. at 631; to dis-\nmiss a case for the convenience of parties or witnesses\nwhen an alternative forum is available or when the\nparties have agreed on another forum, Gulf Oil, 330\nU.S. at 511-12; and to dismiss a case because of par-\nties’ misconduct, Chambers, 501 U.S. at 51.\n\n Claimant’ reading also strips a district court of\nthe power to dismiss a case where the plaintiff persis-\ntently declines to provide status updates. Or lies to\nthe court. Or if the arbitration has never “been had”\nand never will be had, whether because the case is\nmoot or because the parties settled.\n\n Nothing in FAA § 3 evidences the required clear\ncongressional intent to establish that Congress con-\nsidered and intended to override a court’s inherent\npower, in its discretion, to dismiss a case where dis-\nmissal is otherwise appropriate. The absence of such\na clear statement is especially stark in light of Con-\ngress’s decision to direct courts to “retain jurisdiction”\npending arbitration in § 8, but not in § 3.\n\n C. The FAA’s Structure And Purposes\n Support District Courts’ Discretion To\n Dismiss Cases Without Prejudice.\n\n Reading § 3 to require courts to retain jurisdiction\nover a case containing wholly arbitrable claims after\nstopping those claims from proceeding also makes no\n 28\n\nsense in the context of the broader statutory scheme.\nWe have already discussed § 8, in which Congress ex-\npressly directed district courts to retain jurisdiction\nin certain admiralty cases in stark contrast to § 3’s si-\nlence about retaining jurisdiction. Supra 19-20. Mul-\ntiple other features of the statutory scheme\ndemonstrate Congress through § 3 did not prohibit\ndismissals when appropriate. Permitting dismissals\ncomports with Congress’s stated purpose, furthers the\nFAA’s carefully crafted division of labor between state\nand federal courts, aligns with the fact that parties to\nan arbitration may never return to court (much less\nfederal court) at all, and, contrary to Claimant’ con-\ntentions, is fully consistent with FAA § 16’s appellate\nreview provisions.\n\n 1. Discretion to dismiss comports with\n Congress’s specific purpose for\n enacting § 3.\n\n Claimant declare that “the entire reason that\nCongress would mandate a stay [was] to override th[e]\ninherent discretion” to dismiss. Pet. Br. 23. That was\nnot even a reason for § 3, much less the entire reason.\nThis Court has repeatedly explained that Congress\nenacted the FAA to “overcome courts’ refusals to en-\nforce agreements to arbitrate.” Allied-Bruce, 513 U.S.\nat 270; see 9 U.S.C. § 2 (requiring courts to treat arbi-\ntration agreements as “valid, irrevocable, and en-\nforceable”). Before the FAA, some courts refused to\nstop litigation in deference to arbitration. See Red\nCross Line, 264 U.S. at 121. With § 3, Congress put an\nend to the judicial resistance to arbitration by requir-\ning courts to stop the litigation on the merits when a\nplaintiff files suit in court with respect to claims that\n 29\n\nare subject to mandatory arbitration. See Dean Witter\nReynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985)\n(“[T]he Act leaves no place for the exercise of discre-\ntion by a district court, but instead mandates that dis-\ntrict courts shall direct the parties to proceed to\narbitration on issues as to which an arbitration agree-\nment has been signed.”). Doing so effectively compels\narbitration because “the plaintiff can never get relief\nunless he proceeds to arbitration.” The Anaconda v.\nAm. Sugar Ref. Co., 322 U.S. 42, 45 (1944).\n\n In contrast, there is no evidence that Congress, or\nanyone else, was worried that some courts were stop-\nping litigation by dismissing cases upon concluding\nall the claims were arbitrable. There is no indication\nthat anyone thought the solution to the anti-arbitra-\ntion bent of some courts was to park parallel cases on\ncourts’ dockets for the duration of an arbitration. “Put\nsimply,” that “was not the particular problem to\nwhich Congress was responding” when it enacted the\nFAA. Turkiye Halk Bankasi A.S. v. United States, 598\nU.S. 264, 275 (2023) (quoting Samantar, 560 U.S. at\n323 (declining to read statute more broadly than the\nproblem Congress was addressing)).\n\n 2. Discretion to dismiss furthers\n Congress’s division of labor between\n federal and state courts.\n\n Permitting dismissal when a case contains only\narbitrable claims respects the FAA’s division of labor\nbetween state and federal courts and the FAA’s juris-\ndictional limits. This Court has repeatedly recognized\nthat, in enacting the FAA, Congress left “enforcement\nof the Act ... in large part to the state courts.” Moses\n 30\n\nH. Cone, 460 U.S. at 25 n.32; see Vaden, 556 U.S. at\n59; Hall Street, 552 U.S. at 582. In Badgerow, this\nCourt stressed that the FAA reflects a “normal—and\nsensible—judicial division of labor” between state and\nfederal courts. 596 U.S. at 18. In particular, Congress\nintended that applications to confirm or vacate arbi-\ntral awards under §§ 9 and 10 “go to state, rather than\nfederal, courts when they raise claims between non-\ndiverse parties involving state law.” Id. After all,\nmany litigants’ attempts at invoking judicial author-\nity under the FAA “concern[] the contractual rights\nprovided in the arbitration agreement, generally gov-\nerned by state law,” and “adjudication of such state-\nlaw contractual rights ... typically belongs in state\ncourts.” Id.\n\n Congress achieved this balance by declining to\nprovide freestanding federal jurisdiction to enforce\nthe FAA’s provisions. See Badgerow, 596 U.S. at 8\n(“provisions ... do not themselves support federal ju-\nrisdiction”); see also, e.g., Hall Street, 552 U.S. at 581-\n82; Vaden, 556 U.S. at 59. Instead, “[a] federal court\nmay entertain an action brought under the FAA only\nif the action has an ‘independent jurisdictional basis.’”\nBadgerow, 596 U.S. at 8. For a motion to compel arbi-\ntration under § 4, Congress expressly provided that\nthe independent jurisdictional basis could be supplied\nby the underlying merits of the action; this is called\n“look-through” jurisdiction. Id. at 4; see supra 7. But\nas this Court explained in Badgerow, Congress de-\nclined to provide “look-through” jurisdiction to make\nthe underlying merits of the action a source of juris-\ndiction for other FAA provisions. Id. at 18-19.\n 31\n\n Interpreting § 3 to permit discretion to dismiss\nwhen all claims in a case are subject to mandatory ar-\nbitration furthers Congress’s design. Consistent with\nCongress’s decision to provide “look-through” jurisdic-\ntion for federal courts to compel arbitration, a federal\ncourt may order arbitration by halting in-court litiga-\ntion and directing the parties to an arbitral forum.\nThen, pursuant to Congress’s design, the parties will\ngo to state court to resolve post-arbitration disputes,\nabsent diversity of citizenship or a federal question on\nthe face of the FAA application. As Claimant cor-\nrectly observe, Badgerow understood the FAA as cod-\nifying a congressional intention that it should be “the\nrare dispute that can return to federal court merely to\ninvoke the FAA’s rights and protections.” Pet. Br. 21.\n\n Claimant turn that careful balance on its head\nby asserting that § 3 “explicit[ly] reserv[ed] ... a fed-\neral forum” “to enforce the FAA’s other procedural”\nprovisions. Pet. Br. 20-21 (citing 9 U.S.C. §§ 5, 7, 9-\n11). There is no way to square Badgerow with Peti-\ntioners’ contention that § 3 guarantees a parking spot\non a federal court’s docket for every arbitration impli-\ncating federal claims, so as to permit the district court\nto exercise “supervisory authority” over the arbitra-\ntion in the hypothetical event that a party at some fu-\nture point wants to ask for such “oversight.” Pet. Br.\n8, 21-22.\n\n Nor can Claimant’ position be reconciled with\ndecades of this Court’s precedent holding that Con-\ngress left “enforcement of the Act ... in large part to\nthe state courts” and intended post-arbitration dis-\nputes to “go to state, rather than federal, courts when\nthey raise claims between non-diverse parties\n 32\n\ninvolving state law.” Badgerow, 596 U.S. at 18 (quot-\ning Moses H. Cone, 460 U.S. at 25 n.32; and citing Va-\nden, 556 U.S. at 59; Hall Street, 552 U.S. at 582). The\nvery notion that “a stay” to preserve federal jurisdic-\ntion “is effectively the only game in town,” Pet. Br. 21,\nis at war with Congress making state courts the pri-\nmary game in town. Under the FAA, the federal\ncourts simply do not have the overarching “supervi-\nsory” or “oversight” role that Claimant urge. Pet. Br.\n21.\n\n Given the FAA’s orientation against federal juris-\ndiction, it makes no sense to urge that Congress in-\ntended to mandate a backdoor to a federal forum for\nenforcing the FAA’s procedural provisions, so long as\na plaintiff files an unnecessary lawsuit. It is even\nmore implausible that Congress would offer that\nbackdoor only to plaintiffs who disregard arbitration\nobligations and not defendants who comply with them\n(because defendants do not have control over filing\nsuit). The FAA, after all, was intended to encourage\narbitration, not to encourage unnecessary lawsuits. If\nCongress intended broadly to provide a federal forum\nto hear petitions under the FAA involving federal\nclaims, it would simply have extended the look-\nthrough jurisdiction it provided in § 4 to the FAA’s\nother provisions. 2\n\n\n2 Claimant may argue that Congress needed to separately\nprovide look-through jurisdiction under § 4 because § 4 petitions\nmay be brought independent of an underlying federal action. But\nthat cannot explain why Congress would adopt the roundabout\n§ 3 path that requires parties to disregard their arbitration\nobligation to get into federal court instead of simply providing\nlook-through jurisdiction for all FAA provisions.\n 33\n\n Nor do Claimant explain why Congress would\nhave considered it important to guarantee a federal\nforum “to ‘facilitate’ the FAA’s neighboring provi-\nsions” in §§ 5, 7, and 9-11 for every case. Pet. Br. 20\n(citation omitted). Sections 5 and 7 allow parties to\nask a court to “designate and appoint an arbitrator”\nand compel witnesses to appear. 9 U.S.C. §§ 5, 7.\nThose functions are not uniquely suited to federal\ncourts.\n\n Claimant’ position is also based on a legal prem-\nise that is false or at best highly questionable: that a\nfederal court would have jurisdiction to grant relief\nunder any of those provisions just because it issued a\nstay under § 3. Everyone agrees that a federal court\nwould not have jurisdiction over a claim filed under\nany of those provisions without an “independent [fed-\neral] jurisdictional basis,” Badgerow, 596 U.S. at 8,\nand that §§ 9-11 do not supply that basis. Just be-\ncause a court had jurisdiction to issue a stay under § 3\ndoes not mean that jurisdiction persists to cover mo-\ntions under §§ 9-11 for which the court would not oth-\nerwise have jurisdiction. The Fourth Circuit recently\nheld, citing Badgerow, that a district court does not\nnecessarily retain jurisdiction on that basis. See\nSmartSky Networks, LLC v. DAG Wireless, LTD., 93\nF.4th 175, 178, 181-84 (4th Cir. 2024). If that view\nprevails, then it makes even less sense to mandate\nthat a court keep a case on its docket where there is\nnothing left for the court to do and nothing that the\ncourt has jurisdiction to do.\n\n Claimant also argue that a guaranteed federal\nforum is necessary to protect plaintiffs’ claims from\npossible statute of limitations problems that could\n 34\n\narise if the arbitration falls through and they have to\nreturn to court later. Pet. Br. 21-22. Claimant iden-\ntify no limitations issue in this case. Pet. Br. 3 n.1, 5\nn.2 (abandoning all “case-specific” arguments). There\nwill never be a limitations issue in those jurisdictions\nwhere the filing of an arbitration or lawsuit tolls by\noperation of statute or for equitable reasons any limi-\ntations period. 3 In any event, Claimant’ argument\nproves too much. On their view, every plaintiff should\nfile a federal proceeding parallel to an arbitration to\nensure a judicial “backstop” if the arbitration does not\npan out, which Congress most certainly did not in-\ntend. Supra 29-31.\n\n Nor would Congress have expected that statute of\nlimitations concerns would categorically block district\ncourts from dismissing cases where all claims are en-\ncompassed by an agreement to arbitrate disputes. A\ncourt is free to take limitations concerns into account,\nwhere such issues actually exist, in deciding whether\nto retain jurisdiction or to dismiss in the circum-\nstances of a particular case. See, e.g., Stewart v. Acer\nInc., No. 22-cv-04684, 2023 WL 1463413, at *1 (N.D.\nCal. Feb. 1, 2023) (retention of jurisdiction may be\n“more appropriate than dismissal” when parties have\nidentified a statute of limitations concern); Green v.\nSuperShuttle Int’l, Inc., 653 F.3d 766, 770 (8th Cir.\n2011) (finding in a § 3 case that the district court\nabused its discretion in dismissing an action, rather\nthan staying it pending arbitration, because the\n\n 3 See, e.g., Rowland v. Patterson, 882 F.2d 97, 99 (4th Cir.\n\n1989); Galindo v. Stoody Co., 793 F.2d 1502, 1510-11 (9th Cir.\n1986); Fransden v. Bhd. of Ry., Airline & S.S. Clerks, 782 F.2d\n674, 681-84 (7th Cir. 1986).\n 35\n\nstatute of limitations “may run and bar” the plaintiffs\nfrom refiling their complaints).\n\n Alternatively, a district court may, where appro-\npriate and in its discretion, make a dismissal condi-\ntional on tolling the applicable limitations period\npending arbitration, see, e.g., Hopkins & Carley, ALC\nv. Thomson Elite, No. 10-cv-5806, 2011 WL 1327359,\nat *8 (N.D. Cal. Apr. 6, 2011), and/or on the parties’\nagreeing to toll the statute of limitations or waive any\nstatute-of-limitations defense that may arise in a fu-\nture suit, see, e.g., Ins. Co. of N. Am. v. ABB Power\nGeneration, Inc., 925 F. Supp. 1053, 1057 (S.D.N.Y.\n1996).\n\n 3. Discretion to dismiss avoids\n retaining cases on a court’s docket\n that may never return to court.\n\n A rule requiring courts to retain jurisdiction also\ndoes not square with the fact that parties to an arbi-\ntration may never return to the federal court that\nstays proceedings under § 3. This is so for several rea-\nsons. The parties might resolve the matter in arbitra-\ntion and have no reason to return to court. Moreover,\nas contemplated by § 9, the parties’ arbitration agree-\nment in a particular case may not require “a judgment\nof the court ... upon the award,” in which case the par-\nties might for that reason not return to court. And\neven when a party wants to confirm or contest an\naward, it might elect to go to a different court to do so.\nIn § 9, Congress recognized that some parties would\n“specify the court” to confirm the award, and it ren-\ndered that choice binding. 9 U.S.C. § 9; see Atl. Marine\nConstr. Co. v. U.S. Dist. Court for the W. Dist. of Tex.,\n 36\n\n571 U.S. 49, 63 (2013) (“valid forum-selection clause\n[should be] given controlling weight in all but the\nmost exceptional cases”); Cortez Byrd Chips, Inc. v.\nBill Harbert Constr. Co., 529 U.S. 193, 200 (2000).\nAnd FAA §§ 10 and 11 provide venue to challenge\nawards “in and for the district wherein the award was\nmade,” which may well not be the same district that\nstayed proceedings. Congress did not say the parties\nmust return to the court that stayed proceedings un-\nder § 3.\n\n It makes no sense that a Congress that granted\nparties flexibility concerning whether to return to\ncourt and which court to return to would nonetheless\nrequire the original court that stays proceedings to re-\ntain jurisdiction throughout the arbitration. Doing so\nwould infringe upon parties and courts alike, in dero-\ngation of the statute and the permissible scope of par-\nties’ agreements.\n\n 4. Discretion to dismiss is consistent\n with § 16.\n\n Claimant’ remaining structural argument is yet\nanother argument this Court has already rejected. Pe-\ntitioners contend that the FAA reflects a congres-\nsional imperative never to allow an appeal of an order\nto arbitrate until after the arbitration is over. Pet. Br.\n19-20. Claimant purport to see that imperative in\n§ 16(b), which provides that “[e]xcept as otherwise\nprovided in [28 U.S.C.] section 1292(b) ..., an appeal\nmay not be taken from an interlocutory order ...\ngranting a stay of any action under section 3.” 9\nU.S.C. § 16(b). But § 16 does not help Claimant for\ntwo reasons.\n 37\n\n As an initial matter, Claimant ignore that Con-\ngress enacted § 16 in 1988—more than 60 years after\n§ 3. Compare United States Arbitration Act, 43 Stat.\n8838, 886, ch. 213, § 14 (original enactment of the\nFAA in 1925), with Access to Justice Act, 102 Stat.\n4642, 4671 (subsequent and relevant amendment of\nthe FAA in 1988, now codified at 9 U.S.C. § 16). Before\n1988, orders halting court proceedings under § 3 were\nusually appealable as interlocutory appeals whether\nor not the court also dismissed the case. See\nShanferoke Coal & Supply Corp. v. Westchester Serv.\nCorp., 293 U.S. 449, 451-52 (1935). Thus, even assum-\ning rules of appellate jurisdiction should inform § 3’s\nmeaning at all, the prior availability of appellate re-\nview over a decision to stop trial proceedings even\nwhen a court kept the case on its docket strongly cuts\nagainst Claimant.\n\n Congress’s enactment of § 16 more than a half-\ncentury later did not somehow alter § 3’s meaning.\nCongress would not have effected a “radical” and “sub\nsilentio” amendment to § 3’s text through an entirely\ndifferent and separate provision governing the juris-\ndiction of the courts of appeals. Dir. of Revenue of Mis-\nsouri v. CoBank ACB, 531 U.S. 316, 323-24 (2001). If\nCongress wanted to change the meaning of § 3, it\nwould have amended § 3.\n\n Claimant also misread § 16(b). They assert that\n“Congress said ... parties can appeal orders denying\nbut not granting arbitration.” Pet. Br. 19-20. They say\n§ 16 “expressly bar[s] immediate appeals of orders\ngranting arbitration.” Pet. Br. 8; see Pet. Br. 6, 19.\nSection 16 does no such thing—either expressly or im-\nplicitly. That provision is about “interlocutory\n 38\n\norder[s].” But, as Claimant concede, a “dismissal”\n“converts a case into a final judgment,” Pet. Br. 20,\nwhich, by definition, is not interlocutory, and which\nprovided a basis for appeal here. This Court has re-\njected Claimant’ effort to extend § 16 beyond its in-\nterlocutory focus. In Green Tree, after the plaintiff\nfiled suit in court, the defendants moved to compel ar-\nbitration, stay the action, or, in the alternative, dis-\nmiss the case. 531 U.S. at 83. The district court\ncompelled arbitration and dismissed the case. Id. This\nCourt held that that order was an appealable “final\ndecision with respect to an arbitration.” Id. at 86-87.\nIt held that nothing in § 16 prohibited the appeal. The\nCourt noted that § 16 does give preferential treat-\nment to decisions favorable to arbitration, in that de-\nnials of motions to compel arbitration or stay\nproceedings are subject to interlocutory appeal, 9\nU.S.C. § 16(a), while grants of such motions are not.\nId. at 86. But this Court explained that § 16(b) “pre-\nserves immediate appeal of any ‘final decision with\nrespect to an arbitration,’ regardless of whether the\ndecision is favorable or hostile to arbitration.” Id. (em-\nphasis added).\n\n If Congress had intended to prohibit all appeals\nfrom decisions promoting arbitration before the arbi-\ntration concluded, it would have explicitly said that\nsuch decisions are categorically unappealable until\nthe end of arbitration. Indeed, Congress contemplated\nthe precise scenario of appeals from dismissals and\nrejected Claimant’ theory. The Senate summary of\nwhat became § 16 stated that “under the proposed\nstatute, appealability does not turn solely on the pol-\nicy favoring arbitration. Appeal can be taken from ...\na final judgment dismissing an action in deference to\n 39\n\narbitration.” 134 Cong. Rec. S16284-01 (daily ed. Oct.\n14, 1988) (Senate bill summary). Claimant are\ntherefore wrong that “Respondent have no answer\nfor how an immediate appeal—and thus a dismissal—\nis consistent with Congress’s statutory design.” Pet.\nBr. 20. Section 16’s text, this Court’s decisions inter-\npreting § 16, and the legislative history all confirm\nthat Congress considered an appeal from a dismissal\nto be part of the statutory design.\n\n 5. Discretion to dismiss promotes the\n FAA’s underlying objective to foster\n efficient dispute resolution.\n\n In enacting the FAA, Congress sought to make ar-\nbitration relatively efficient, affordable, and quick.\nSee Green Tree, 531 U.S. at 85; Dean Witter Reynolds,\n470 U.S. at 221 (recognizing the FAA’s goal of encour-\naging “efficient and speedy dispute resolution”);\nPrima Paint Corp. v. Flood & Conklin Mfg. Co., 388\nU.S. 395, 404 (1967) (describing “the unmistakably\nclear congressional purpose that the arbitration pro-\ncedure, when selected by the parties to a contract, be\nspeedy and not subject to delay and obstruction in the\ncourts”). Congress intended for parties who have\nagreed to arbitration to proceed to an arbitral forum\n“as quickly and easily as possible.’” Green Tree, 531\nU.S. at 85; see Moses H. Cone, 460 U.S. at 22 (noting\n“expeditious and summary hearing” under §§ 3 and\n4). In defiance of these objectives, Claimant’ rule in-\ncentivizes plaintiffs to impose additional time, cost,\nand complexity on the process by bringing suit in\ncourt first rather than proceeding directly to arbitra-\ntion.\n 40\n\n Congress also intended to validate arbitration\nagreements as an equal alternative to traditional\ncourtroom litigation. Supra 5. A rule requiring dis-\ntrict courts to presume they will be called upon to in-\ntervene in all arbitrable disputes would contravene\nthis intent. See, e.g., Badgerow, 596 U.S. at 8 (caution-\ning against “every arbitration in the country, however\ndistant from federal concerns, ... wind[ing] up in fed-\neral district court”).\n\n While acknowledging that “[p]arties are supposed\nto exit court and enter arbitration ‘as quickly and eas-\nily as possible,” Pet. Br. 22 (citation omitted; empha-\nsis added), Claimant insist on a rule that prohibits\nany exit from court and compounds inefficiencies and\ncosts. Keeping a parallel lawsuit alive for the duration\nof an arbitration—often for years—is an utter waste\nof resources. Many district courts require parties to\nreport periodically on the progress of the arbitration\neven while the case is stayed, sometimes in live status\nconferences. See, e.g., Spates v. Uber Techs., Inc., No.\n21-CV-10155, 2023 WL 3506138, at *3 (S.D.N.Y. Mar.\n31, 2023). This imposes costs on the parties, requiring\nthem to prepare and file status reports and often re-\nquiring two sets of lawyers to show up in two jurisdic-\ntions—possibly on opposite sides of the country. It’s\nalmost like imposing a tax on arbitration. See, e.g.,\nSouthland Corp. v. Keating, 465 U.S. 1, 7 (1984) (ex-\nplaining that “prolonged litigation” is “one of the very\nrisks the parties, by contracting for arbitration,\nsought to eliminate”).\n\n These suits also needlessly burden courts. Dis-\ntrict courts have heavy criminal and civil caseloads,\nand Claimant’ reading of the statute would bloat\n 41\n\ntheir dockets for no good reason. Courts must track\nand account for cases that have been pending on their\ndockets for specified periods of time. See 28 U.S.C.\n§ 476 (requiring Administrative Office of U.S. Courts\nto prepare semiannual reports showing motions pend-\ning more than six months and civil cases pending\nmore than three years in each district court, among\nother things); U.S. Courts, September 2023 Civil Jus-\ntice Reform Act, [URL REDACTED]\nreports/september-2023-civil-justice-reform-act (re-\nporting 71,425 civil cases pending more than three\nyears as of September 30, 2023). And placing cases on\nan inactive calendar is no answer to the burdens. Pet.\nBr. 24. Not all courts have such mechanisms, and\ncourts will still need to require status updates from\nthe parties or the cases would potentially remain on\nthe docket forever. Claimant’ statutory construction\nwould needlessly add to the courts’ recordkeeping and\nreporting burdens.\n\n Claimant do not acknowledge these costs. They\nmerely assert that permitting dismissals generates\n“wasteful disputes about whether to stay or dismiss.”\nPet. Br. 22. But the burden of explaining to a court\nwhy a dismissal is or is not appropriate is not that\nsignificant. Claimant’ briefing here is a case in\npoint: They offered general justifications about hav-\ning “a forum in which ... to have the arbitration award\nreviewed and confirmed” and a forum to return to if\nthe arbitration falls through—all of which entailed\nonly minimal explanation. J.A. 87-90 (Motion to Com-\npel); J.A. 91-100 (Plaintiffs’ Response); J.A. 101-05\n(Reply). And a party that files a lawsuit when all\nclaims are subject to arbitration can hardly complain\n 42\n\nabout the burden of having to justify why that im-\nproper lawsuit should persist indefinitely.\n\n If anything, maintaining jurisdiction over a case\nthat is entirely arbitrable increases the likelihood of\nlitigation. With an open forum available for any dis-\npute and low transaction costs to raising disputes in\nthe district court, parties are more likely to try to in-\nvoke courts to superintend trivial disputes that do not\nmerit judicial intervention.\n\n CONCLUSION\n\n The judgment of the court of appeals should be af-\nfirmed.", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review after dismissal of claims sent to arbitration.", "governingLaw": "Apply United States federal arbitration procedure; Ninth Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal arbitration procedure; Ninth Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Smith v. Spizzirri", "citation": "601 U.S. 472 (2024)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/23pdf/22-1218_5357.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The decisive question is whether Section 3 of the FAA, 9 U.S.C. § 3, mandates a stay when a party applies for one, or whether district courts retain discretion to dismiss. The text supplies the answer.\n\nSection 3 provides that the court 'shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement.' The operative term 'shall' is a mandatory directive. Both the district court and the Ninth Circuit acknowledged this: the panel recognized that 'Congress's use of \"shall\" appears to require courts to stay litigation that is subject to mandatory arbitration' and that 'nothing about the context here suggests that Congress meant \"may\" when it wrote \"shall.\"' The statute prescribes one remedy—a stay—and says nothing about dismissal. It contains no exception for cases where all claims are arbitrable. The trigger is 'any issue' referable to arbitration, a broad trigger that encompasses both mixed cases and wholly arbitrable cases equally.\n\nThe respondent's counterarguments fail to overcome the text. First, respondent argues that 'stay' means only to 'stop' litigation, and that dismissal achieves that stop. But the statute does not merely say 'stop'; it says the court 'shall . . . stay the trial of the action until such arbitration has been had.' The durational clause 'until such arbitration has been had' presupposes a continuing judicial posture: the stay persists through the arbitration's completion, after which the court may address any remaining matters. A dismissal terminates the court's involvement entirely, which is inconsistent with the statutory expectation that the court remains available 'until' the arbitration concludes. The durational language has no operative force under the respondent's reading—if the case is dismissed, there is nothing to lift the stay 'when' arbitration concludes because the case no longer exists.\n\nSecond, respondent invokes the contrast with Section 8, which expressly requires courts to 'retain jurisdiction' in admiralty cases, arguing that Congress knew how to require retention and chose not to in Section 3. But Section 8's express language addresses a specific admiralty context with distinct procedures (libel and seizure of vessels). The omission of identical language from Section 3 does not imply that Congress intended dismissal as an alternative to the prescribed stay; it reflects that the two provisions address different procedural contexts. Section 3's text already prescribes a stay with a durational endpoint; reading it to also permit dismissal reads in an option the statute does not mention.\n\nThird, respondent argues that district courts possess inherent authority to dismiss and that Congress must provide a 'clear statement' to override that authority. But the premise of this argument concedes the critical point: the statute does provide a directive—'shall'—that replaces the default. When Congress uses 'shall' in a statute, it 'impose[s] discretionless obligations.' The entire purpose of a statutory mandate is to override the discretion that would otherwise exist. Claimant correctly observes that respondent's inherent-authority argument is circular: it assumes the statute does not override inherent authority in order to prove the statute does not override inherent authority.\n\nThe structural confirmations support the textual reading. Section 16's appellate jurisdiction scheme bars interlocutory appeals from orders granting a stay but permits appeals from 'final decisions with respect to an arbitration.' A dismissal creates a final judgment, enabling precisely the immediate appeal Congress declined to authorize for pro-arbitration orders. The respondent's reading of Green Tree v. Randolph as endorsing appealability of dismissals actually demonstrates the problem: the Court accepted that a dismissal was a final decision, but that is precisely why Section 3 should not be read to authorize dismissal as an alternative to the prescribed stay. Congress designed the stay to keep the case non-final while arbitration proceeds. Furthermore, a stay preserves the court's availability as a backstop if arbitration fails—for non-payment of fees, unavailability of the designated forum, or partial disposition by the arbitrator. The record here confirms the real-world stakes: the claimant flagged concerns about the respondent's willingness to pay arbitration fees. A dismissal would leave the parties without a ready federal forum to return to.\n\nThe respondent's practical arguments about docket burden and forum-shopping are policy considerations that cannot overcome a clear statutory directive. As the Supreme Court has emphasized in the FAA context, 'we have no warrant to redline the FAA,' and '[e]ven the most formidable policy arguments cannot overcome a clear statutory directive.' Congress made the policy choice when it wrote 'shall.' The judgment should be reversed and the case remanded for entry of a stay.", "allocation": null, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-052", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nSTATEMENT\n\n A. Legal Background\n\n Before the Federal Rules of Civil Procedure,\nfederal courts applied the procedural law of the forum\nstate in which they sat when they adjudicated\nnonequity cases, and applied the Federal Equity\nRules in equity suits. See Semtek Int’l Inc. v. Lockheed\nMartin Corp., 531 U.S. 497, 501 (2001) (discussing\nConformity Act of June 1, 1872, ch. 255, § 5, 17 Stat.\n196, 197); see also Stephen N. Subrin, How Equity\nConquered Common Law: The Federal Rules of Civil\nProcedure in Historical Perspective, 135 U. Pa. L. Rev.\n909, 914–26 (1987) (discussing historical development\nof Federal Rules).\n To achieve uniformity in federal practice, Congress\npassed the Rules Enabling Act in 1934, which\nempowered this Court to write federal rules of civil\nprocedure and evidence. 28 U.S.C. 2071, et seq.; see\nalso Stephen B. Burbank, The Rules Enabling Act of\n1934, 130 U. Pa. L. Rev. 1015 (1982). The federal rules\nwere drafted and then adopted by order of this Court\non December 20, 1937. Orders Re: Rules of Procedure,\n302 U.S. 783 (1937). They were then transmitted to\nCongress on January 3, 1938, and took effect\nSeptember 16, 1938.\n One of the new rules adopted in 1937 was Rule\n41(a)(1). “The purpose of [that rule] [was and] is to\npermit the plaintiff to dismiss an action voluntarily\nwhen no other party will be prejudiced.” Wright &\nMiller, 9 Fed. Prac. & Proc. § 2362 (4th ed.).\n 3\n\n\nConsistent with its purpose, the current text of Rule\n41(a)(1)(A) provides that a plaintiff may “dismiss an\naction without a court order by filing[] (i) a notice of\ndismissal before the opposing party serves either an\nanswer or a motion for summary judgment; or (ii) a\nstipulation of dismissal signed by all parties who have\nappeared.” No court order is needed; the plaintiff’s\nnotice is the sole requirement. See Pedrina v. Chun,\n987 F.2d 608, 610 (9th Cir. 1993) (holding district\ncourt lacked authority to require Rule 41(a)(1)\ndismissal by motion rather than notice). Moreover, by\ndefault, “[u]nless the notice or stipulation states\notherwise, the dismissal is without prejudice” (except\nwhere “the plaintiff previously dismissed any federal-\nor state-court action based on or including the same\nclaim”). Fed. R. Civ. P. 41(a)(1)(B).\n The Rules adopted in 1937 also included Rule\n60(b). That rule now specifies that, “[o]n motion and\njust terms,” a district court may “relieve a party or its\nlegal representative from a final judgment, order, or\nproceeding.” Fed. R. Civ. P. 60(b). (The word “final”\nwas added in 1946.) Rule 60(b) also specifies the\ncircumstances in which a district court may grant\nrelief, such as “fraud” and “mistake, inadvertence,\nsurprise, or excusable neglect,” and “any other reason\nthat justifies relief.” This provision has “equitable\nroots,” Elizabeth G. Porter, Pragmatism Rules, 101\nCornell L. Rev. 123, 139 (2015), and this Court has\ntaken a “flexible approach” to interpreting and\napplying it. Horne v. Flores, 557 U.S. 433, 450 (2009)\n(Rule 60(b)(5) case) (quoting Rufo v. Inmates of\nSuffolk County Jail, 502 U.S. 367, 381 (1992)).\n 4\n\n\n B. Factual And Procedural Background\n\n 1. In February 2020, Petitioner Claimant sued\nhis former employer, Respondent Respondent, in the United States District Court for\nthe District of Colorado, bringing a claim for wrongful\ntermination in violation of the Age Discrimination in\nEmployment Act. In response, Respondent asserted\nthe claims were subject to arbitration. Rather than\noppose Respondent’s arbitration petition, Petitioner\ndismissed his federal case voluntarily in April 2020 by\nfiling a notice of dismissal under Rule 41(a)(1)(A).\nThis voluntary dismissal was Petitioner’s first,\nmeaning that, by default, it was without prejudice.\n 2. Petitioner then began an arbitration. Under the\nparties’ arbitration agreement, (1) the arbitrator was\nto give ten calendar days’ notice to the parties in\nadvance of any “hearing;” (2) a “recording” of any\nhearing on the merits would be prepared; and (3) the\narbitrator would provide a “brief statement of the\nessential findings of fact and conclusions of law on\nwhich the award is based.” Pet. App. 40a–41a.\n On May 28, 2021, the arbitrator scheduled a\ntelephone conference with the parties five calendar\ndays later, on June 2, 2021. Pet. App. 30a. When the\nconference commenced, the arbitrator announced she\nwould hear oral arguments on Respondent’s motion\nfor summary judgment. Ibid. No recording of this\nhearing was made. Id. at 31a. On June 2 (the same\nday as the arbitration hearing), the arbitrator granted\nRespondent’s summary-judgment motion without\n 5\n\n\nproviding any statement of the essential findings of\nfact or conclusions of law. Ibid.\n 3. In September 2021, Petitioner moved in the\ndistrict court to reopen his case and to vacate the\naward. The district court issued an order to show\ncause as to whether the court had authority to\nconsider Petitioner’s motion, given that he had\nvoluntarily dismissed it under Rule 41(a)(1)(A)(i). Pet.\nApp. 51a.\n After the parties briefed this issue, the district\ncourt held in January 2022 that it had authority to\nreopen Petitioner’s case under Rule 60(b). Pet. App.\n58a. The court began by noting that the Tenth Circuit\nhad held that a voluntary dismissal with prejudice\nwas a “final judgment,” and believed the Tenth Circuit\nwould apply the same reasoning to a dismissal\nwithout prejudice. Pet. App. 54a. It went on to explain\nthat “the weight of the case law from other circuits\nthat have considered whether a voluntary dismissal of\na case without prejudice is a final proceeding within\nthe meaning of Rule 60(b) have found that it is.” Ibid.\nIn that regard, the court observed that various circuit\ncourts hold that stipulated dismissals under Rule\n41(a)(1)(A)(ii) fall within the ambit of Rule 60(b), and\nthat a voluntary dismissal by notice under Rule\n41(a)(1)(A)(i) (like the one filed by Petitioner in this\ncase) must do so as well, because both forms of\ndismissal “require no judicial action or approval, are\neffective automatically upon filing, and are\npresumptively without prejudice.” Pet. App. 55a & n.3\n(citation omitted). The district court was also\n 6\n\n\npersuaded that Mr. Claimant’s notice of voluntary\ndismissal was “final” under Rule 60(b), based on the\nplain meaning of that term. Pet. App. 56a–58a.\n Evaluating the merits of Petitioner’s motion to\nreopen, the district court held that it was appropriate\nto exercise its discretion to grant Petitioner’s motion\nunder both Rule 60(b)(1) and 60(b)(6). Pet App. 59a.1\nIn a subsequent opinion issued on August 3, 2022, the\ndistrict court vacated the arbitration award on the\nbasis that the arbitrator failed to abide by the parties’\narbitration agreement and ordered further\nproceedings before a new arbitrator. Pet. App. 48a.\n 4. A divided panel of the Tenth Circuit reversed on\nthe basis that the district court lacked authority to\nreopen Petitioner’s case under Rule 60(b). Recognizing\nthat its decision split from those of its sister circuits,\nthe court held that, “[u]nder Federal Rules of Civil\nProcedure 41(a) and 60(b), a court cannot set aside a\nvoluntary dismissal without prejudice because it is\nnot a final judgment, order, or proceeding,” Pet. App.\n\n\n 1 The district court found Rule 60(b)(1) applicable because\n\n“Plaintiff appears to have made a careless mistake when he\ndismissed the action . . . without moving to stay or\nadministratively close the case.” As an alternative ground, the\ncourt also cited Rule 60(b)(6), given this Court’s intervening\ndecision in Badgerow v. Walters, 596 U.S. 1 (2022). Pet. App. 60a;\nsee also Pet. App. 62a (recognizing that Petitioner could not\ninitiate a new action “due to the Supreme Court’s holding in\nBadgerow,” and because the applicable statute of limitations had\nnow passed). The district court’s exercise of discretion under Rule\n60(b) is not in issue here, because it was not addressed by the\nTenth Circuit below.\n 7\n\n\n2a, and, consequently, “a voluntary dismissal without\nprejudice under Rule 41(a) divests the district court of\nsubject-matter jurisdiction to consider a Rule 60(b)\nmotion to reopen.” Pet. App. 4a.\n In reaching its decision, the majority trained its\nattention on the terms “final” and “proceeding,”\nconsulting contemporary dictionary definitions of the\ntwo terms and invoking two canons of construction\n(ejusdem generis and noscitur a sociis). Although it\nrefused to provide these terms a definitive definition,2\nthe court was “persuaded” that “a final proceeding\nmust involve, at a minimum, a judicial determination\nwith finality.” Ibid. (first emphasis added). Under this\nconstruction, the court held that Mr. Claimant’s\nRule 41 voluntary dismissal without prejudice lacked\nboth a “judicial determination” and “finality.” Pet.\nApp. 18a. As such, the majority held that the district\ncourt lacked subject-matter jurisdiction to decide Mr.\nClaimant’s Rule 60(b) motion. Id. at 21a.\n\n\n 2 The court mused: “Perhaps ‘final proceeding’ is a catchall,\n\ncovering anything that does not result in an order or judgment\nbut still involves a final, burdensome judicial determination. And\nperhaps we will ‘know it when [we] see it.’ But we know that Mr.\nClaimant’s voluntary dismissal without prejudice is not it.” Pet.\nApp. 19a–20a (quoting Jacobellis v. Ohio, 378 U.S. 184, 197\n(1964) (Stewart, J., concurring)).\n 8\n\n\n SUMMARY OF ARGUMENT\n\n I. The plain text makes clear that a voluntary\ndismissal under Rule 41(a)(1)(A) is a “final\nproceeding” under Rule 60(b) and, alternatively, that\nit is a “final judgment.”\n A. To begin, a notice of voluntary dismissal\nwithout prejudice, and the dismissal itself, are both\n“final” for Rule 60(b) purposes. When the word “final”\nwas added to Rule 60(b), dictionaries defined “final” to\nmean something that is “[d]efinitive; terminating;\ncompleted; conclusive; last,” and “generally\ncontrasted [the term] with ‘interlocutory.’” Black’s\nLaw Dictionary (3d ed. 1933). Notices of dismissal\nunder Rule 41, and the dismissals themselves, meet\nthis definition whether the dismissal is with or\nwithout prejudice, because they are case-terminating\nrather than “interlocutory.”\n B. A notice of voluntary dismissal under Rule 41(a)\nand the resulting dismissals are not merely “final,”\nbut they are also “proceedings” under Rule 60(b).\n At the time Rule 60(b) was adopted, the term\n“proceeding” meant and included “all possible steps in\nan action from its commencement to the execution of\njudgment.” Black’s Law Dictionary (3d ed. 1933).\n“Proceeding” also carried the “more particular”\nmeaning of “any application [made] to a court of\njustice, however made, for aid in the enforcement of\nrights, for relief, for redress or injuries, for damages,\nor for any remedial object.” Ibid. A notice of voluntary\n 9\n\n\ndismissal meets both definitions, because it is a step\nin the litigation process, and an application for relief.\n This conclusion is reinforced by contextual canons\nof construction. The surplusage canon rebuts the\nTenth Circuit’s view that a “proceeding” requires a\ncourt order, because otherwise the use of the term\n“order” in Rule 60 would cover every possible\n“proceeding,” rendering that term surplusage. The\nwhole-text canon is in accord; the Rules use the term\n“proceeding” in other places to refer to steps in the\nlitigation process that do not necessarily require a\ncourt order. The canon of noscitur a sociis, although\ninvoked by the Tenth Circuit, also supports\nPetitioner; it confirms that Petitioner is employing the\ncorrect dictionary meaning (activity on the docket of a\ncourt). And the ejusdem generis canon, which the\nTenth Circuit cited, is not relevant, because the term\n“proceeding” is not a “catchall” term qualified by the\nadjective “other,” but is instead the third in a list of\nmatters for which Rule 60(b) relief is available.\n C. In the alternative, a Rule 41(a)(1)(A) dismissal\nis also a final “judgment” under Rule 60(b). The word\n“judgment” has a broad meaning under Rule 60(b),\nconsidering that judgments could be entered by a\nparty—not only courts—at common law and in 1937.\nConsequently, a dismissal effectuated by way of\nRule 41(a) counts as a judgment under these\ndefinitions. The definition of “judgment” in Federal\nRule 54(a) further supports this interpretation, as do\ncircuit court cases interpreting it.\n 10\n\n\n II. The common law and other historical evidence\nconfirm Petitioner’s interpretation.\n A. Before the adoption of the Federal Rules in\n1937, every jurisdiction permitted plaintiffs to dismiss\na lawsuit as of right in certain circumstances,\nsometimes without court order. In addition, courts\nhad authority to relieve parties from final judgments,\norders, and proceedings in certain circumstances,\nsuch as fraud or mistake. Moreover, in 1937, “the\nweight of authority” recognized that courts did have\nthe power, “upon a proper showing,” to modify\nvoluntary dismissals and “reinstate the case” even if\nthe dismissal was “without consent of [the] court.”\nLusas v. St. Patrick’s Roman Cath. Church Corp. of\nWaterbury, 193 A. 204, 206 (Conn. 1937).\n B. Nothing in the historical context suggests an\nintent to break with this settled practice. To the\ncontrary, the 1937 Advisory Committee Notes state\nthat Rule 60(b) was modeled on a California statute\nthat California courts interpreted broadly, including\nto permit courts to reopen voluntarily dismissed\nproceedings. Palace Hardware Co. v. Smith, 66 P. 474,\n476 (Cal. 1901). The rule-makers’ selection of the\nCalifornia model shows their intent to bring with it\nthe broad interpretation given by the California\ncourts (which lines up with the weight of authority).\nSee Hall v. Hall, 584 U.S. 59, 72–75 (2018). Nothing\nin the text or related Advisory Committee Notes\nsuggest an intent to restrict court’s authority contrary\nto that consensus, either in 1937 or at any time since.\n 11\n\n\nIbid. The Rules simplified and carried forward courts’\ntraditional authority to reopen dismissed cases.\n III. Reading Rule 60(b) to strip federal courts of\nauthority to reopen cases that were voluntarily\ndismissed would frustrate the purposes and\neffectiveness of the Rules, including by creating a\ntwilight zone between interlocutory and final matters\nwhere courts bizarrely would be powerless to correct\nmistakes and frauds. There is no indication that the\nRules intended to deprive federal courts of their\ntraditional authority to provide redress when, for\nexample, an attorney dismissed an action without\nauthority, or when dismissal was procured by fraud.\n ARGUMENT\n\nI. Courts Have Authority Under The Plain Text\n Of Rule 60(b) To Reopen Cases Voluntarily\n Dismissed Under Rule 41(a)(1)(A)\n Rule 60(b) provides that, “[o]n motion and just\nterms, the court may relieve a party or its legal\nrepresentative from a final judgment, order, or\nproceeding” if one of six circumstances is met, such as\n“mistake, inadvertence, surprise, or excusable\nneglect” (Rule 60(b)(1)), “fraud” (Rule 60(b)(3)), or\n“any other reason that justifies relief” (Rule 60(b)(6)).\n The plain text of this Rule, construed according to\nordinary principles of interpretation, clearly provides\ndistrict courts with authority, in their discretion, to\nreopen cases dismissed without prejudice under Rule\n41(a)(1). That is because the prior dismissal was\n“final,” and both the request for the dismissal and the\n 12\n\n\ndismissal itself were “proceedings” within the\nmeaning of Rule 60(b). Alternatively, the prior\ndismissal was or resulted in a “final judgment.” See\nNelson v. Adams USA, Inc., 529 U.S. 460, 465–66\n(2000) (reading Federal Rule per its plain text).\n\n A. Rule 41(a)(1)(A) Dismissals Are “Final”\n Within The Meaning Of Rule 60\n\n The plain text of Rule 60(b) instructs that a notice\nseeking voluntary dismissal under Rule 41(a)(1), and\nthe resulting dismissal itself, count as “final” under\nRule 60(b), contrary to what the Tenth Circuit held.\n 1. Although Rule 60 was adopted in 1937, the word\n“final” was not added to the text of Rule 60(b) until\n1946. See Rule 60 Advisory Committee Note—1946\nAmendment. Neither the Federal Rules nor Rule 60’s\nAdvisory Committee Notes define the word “final,” as\nused in the context of that Rule, but contemporaneous\ndictionary definitions make clear Rule 41(a)(1)(A)\nvoluntary dismissals fall within the term’s compass.\n As the Tenth Circuit stated (Pet. App. 9a), Black’s\nLaw Dictionary defined “final” to mean “[d]efinitive;\nterminating; completed; conclusive; last.” Black’s Law\nDictionary 779 (3d ed. 1933); see also id. 757 (4th ed.\n1951) (using same words). Similarly, the 1937 edition\nof Webster’s Universal Dictionary of the English\nLanguage defined “final” as “[t]hat which is the\ntermination; the last,” and noted that “[f]inal is\napplied to that which brings with it an end.” Id. at 642\n(also defining “final” as “[c]onclusive; decisive;\ndeterminative; as, a final judgment”). Both the Third\n 13\n\n\nand Fourth Editions of Black’s Law further specify\nthat, “in jurisprudence, this word is generally\ncontrasted with ‘interlocutory.’” Black’s Law\nDictionary 779 (3d ed. 1933); id. 757 (4th ed. 1951).\n Dictionary definitions thus instruct that the rule-\nmakers, in qualifying the sorts of matters subject to\nmodification under Rule 60(b) (i.e., “judgment[s],\norder[s], or proceeding[s]”) with the adjective “final,”\nintended to distinguish case-“terminating” from\n“interlocutory” matters. Black’s Law Dictionary (4th\ned. 1951). This distinction makes sense: courts\nretained their historically broad authority to modify\nany interlocutory matter without regard to Rule 60(b),\nbut the modification of a “final” (or case-terminating)\nmatter was subject to Rule 60(b), and needed the sort\nof finding set forth therein (e.g., fraud or mistake).\n The 1946 Advisory Committee Note to Rule 60,\nalthough not providing a definition of the term “final,”\nconfirms that understanding. Hall, 584 U.S. at 72–73\n(“Advisory Committee Notes are ‘a reliable source of\ninsight into the meaning of a rule’” (quoting United\nStates v. Vonn, 535 U.S. 55, 64 n.6 (2002)). It provides:\n“The addition of the qualifying word ‘final’ emphasizes\nthe character of the judgments, orders or proceedings\nfrom which Rule 60(b) affords relief; and hence\ninterlocutory judgments are not brought within the\nrestrictions of the rule, but rather they are left subject\nto the complete power of the court rendering them to\nafford such relief from them as justice requires.”\n 2. The dictionary definitions of the word “final,”\nconsidered in the proper context, including the\n 14\n\n\nAdvisory Committee Notes, lead to the conclusion that\nboth a self-executing request for dismissal under Rule\n41(a)(1) and the dismissal itself are “final” for Rule\n60(b) purposes, whether that dismissal be by\nunilateral notice or joint stipulation, and whether the\ndismissal be with or without prejudice.\n Regardless of those specifics, a Rule 41(a)(1)\ndismissal has the purpose and effect of terminating\nthe action, and it is thus “final” in the way Rule 60\nuses the word, because the case-terminating dismissal\ndefinitively ends a previously pending action. See\nYesh Music v. Lakewood Church, 727 F.3d 356, 360\n(5th Cir. 2013) (“A plain reading of ‘final’ [in Rule\n60(b)] supports defining it as something which is\npractically ‘finished,’ ‘closed,’ or ‘completed.’”). Indeed,\nin this case, when Petitioner noticed a voluntary\ndismissal, there was nothing left for Respondent or\nthe court to do. The plain text of Rule 41(a)(1) made\nthe dismissal effective without further action by\nanybody, and “without a court order.” The case was\nover, as evidenced by the district court’s loss of power\nto rule on most other case-related matters (like\nsummary-judgment motions).\n The fact that Petitioner’s dismissal was without\nprejudice does not change the analysis. It is true that,\nduring the limitation period, Petitioner could have\nrefiled a new case that was still timely, but the newly\nfiled case would have been exactly that—a new action,\nwhich would require new case-initiating documents, a\nnew case number, and assignment to a judge. The case\nthat was previously dismissed was finally terminated\n 15\n\n\nby the filing of a notice and by operation of Rule 41,\nand the previously dismissed case still would be\nmoribund even if a new case were filed. In no way\ncould it be said that the case-dismissing notice was\n“interlocutory” as opposed to “final.”\n It is also worth noting that the law considers\nnumerous other proceedings, orders, and judgments\nto be “final” for other purposes (such as appeal)\nalthough they are without prejudice. An order\ndismissing a case for lack of personal jurisdiction, for\nexample, is without prejudice, but it is still final if it\nterminates the case (and thus may be appealed under\nthe final-judgment rule). Focusing on whether a\ndismissal is with or without prejudice thus misses the\nmark; what is relevant is that the dismissal is case-\nterminating rather than “interlocutory.” Black’s Law\nDictionary (4th ed. 1951); Rule 60 Advisory\nCommittee Note—1946 Amendment.\n 3. The conclusion that Petitioner’s Rule 41(a)(1)\ndismissal was “final” under Rule 60(b) is further\nsupported by the pragmatic approach taken to\ninterpreting Rule 60, in line with its equitable origin.\nSee Horne v. Flores, 557 U.S. 433, 452 (2009) (“In\naddition to applying a Rule 60(b)(5) standard that was\ntoo strict, the Court of Appeals framed a Rule 60(b)(5)\ninquiry that was too narrow.”); White v. Nat’l Football\nLeague, 756 F.3d 585, 596 (8th Cir. 2014) (“The Rule\nis designed to prevent injustice by allowing a court to\nset aside the unjust results of litigation.”).\n This Court has recognized in other contexts the\nneed to construe “finality” flexibly and pragmatically,\n 16\n\n\nexplaining with respect to jurisdictional constraints\nthat “the requirement of finality is to be given a\n‘practical rather than a technical construction.’”\nGillespie v. U.S. Steel Corp., 379 U.S. 148, 152 (1964)\n(quoting Cohen v. Beneficial Indus. Loan Corp., 337\nU.S. 541, 546 (1949)); Bell v. New Jersey, 461 U.S. 773,\n779 (1983) (“Our cases have interpreted pragmatically\nthe requirement of administrative finality, focusing\non whether judicial review at the time will disrupt the\nadministrative process.”).\n So too here. Reading the term “final” to exclude\nanything interlocutory—and thus to exclude only\nmatters that remain subject to the court’s inherent\nmodification authority—is not just consistent with the\ndictionary definitions and the Advisory Committee\nNotes, but it also provides the word “final” a sensible\nreading in line with the Rule’s equitable origin and\npurpose. Reading the word “final” as the Tenth Circuit\ndid, as capturing only a subset of case-terminating\nmatters, not only departs from dictionary definitions,\nbut also would mean that certain docket activity\nwould be neither subject to ongoing superintendence\n(as being interlocutory) nor to revisitation under Rule\n60(b). That is much “too narrow” an ambit. Horne, 557\nU.S. at 452. And it would be bizarre indeed for Rule\n60(b) to create such a twilight zone. Infra at 46.\n\n B. A Rule 41(a)(1) Dismissal Notice Counts\n As A “Proceeding” Under Rule 60\n\n Notices of voluntary dismissal under Rule 41(a),\nand the resulting dismissals, are not merely “final,”\n 17\n\n\nthey are also “proceeding[s]” under Rule 60(b),\nmeaning that a court has authority to “relieve a party\nor its legal representative” from a notice filed by a\nplaintiff, and the dismissal itself.\n 1. When Rule 60(b) was first adopted in 1937, the\nword “proceeding” meant, “[i]n a general sense, the\nform and manner of conducting juridical business\nbefore a court or judicial officer; regular and orderly\nprogress in form of law; including all possible steps in\nan action from its commencement to the execution of\njudgment.” Black’s Law Dictionary (3d ed. 1933). As\nthe decision below recognized, contemporaneous\ndictionary definitions also included “more particular”\ndefinitions, one of which defined “proceeding” to\ninclude “any application to a court of justice, however\nmade, for aid in the enforcement of rights, for relief,\nfor redress of injuries, for damages, or for any\nremedial object.” Black’s Law Dictionary (3d ed.\n1933); id. (4th ed. 1951); see also Webster’s New\nInternational Dictionary of the English Language\n1710 (1930) (defining “proceeding” as “[a]ny step or\nact taken in conducting litigation,” and “[t]he course\nof procedure in an action at law”).\n Contemporaneous court decisions defining the\nterm were in accord. One explained that “[t]he term\n‘proceeding,’ as applied to suits, means any step or\nmeasure taken in the prosecution or defense of an\naction.” Millar v. Whittington, 105 S.E. 907, 908\n(W. Va. 1921). And it held, therefore, that “the filing\nof [a] bill in this cause was a proceeding taken in the\ncause.” Ibid. Ohio’s high court instructed that\n 18\n\n\n“‘[p]roceeding’ is a term of much broader signification\nthan either suit or action,” and “include[s] all methods\nof invoking the action of courts and embrace[s] any\ncontroversy which may or may not rise to the dignity\nof a suit or action.” Ruch v. State, 146 N.E. 67, 71\n(Ohio 1924). The Supreme Court of Georgia put it\nsimilarly: posing the question, “[w]hat is a\nproceeding?” it answered, “[s]ome act, or acts, done in\nfurtherance of the enforcement of an existing right,\nreal or imaginary.” Coca-Cola Co. v. City of Atlanta,\n110 S.E. 730, 733 (Ga. 1922). It added “[a] proceeding\nmay be by petition in a court of competent jurisdiction\nor it may be by a summary remedy prescribed by\nstatute.” Ibid.3\n 2. These contemporaneous definitions confirm that\nthe word “proceeding” captures any step by a party or\nthe court in the course of litigation, and that the term\nthus encompasses a notice effectuating dismissal of a\ncase under Rule 41(a)(1)(A), and the dismissal itself,\nmeaning that courts do have the authority to “relieve”\na party from them under Rule 60(b).\n A notice of voluntary dismissal under Rule\n41(a)(1)(A) is a “step[] in an action” between\n“commencement [and] execution,” thus falling within\nthe general definition of the term recited by Black’s\n\n 3 As further explained below (pp. 30, 39–41), the text of Rule\n\n60(b) was drawn from a provision of California law that also\nspoke of relief from a “judgment, order, or proceeding,” and\nCalifornia courts both (a) adopted the broad reading of the term\n“proceeding” set forth in the text, and (b) allowed relief from\nvoluntary notices of dismissal. This further confirms Petitioner’s\ntextual reading is the correct one.\n 19\n\n\nLaw Dictionary (3d ed. 1933), and court decisions from\nthat time. Reading Rule 60(b)’s reference to\n“proceeding” consistent with this broad definition to\nmean any activity on the docket whether by a party or\nthe court (other than those that are interlocutory,\ngiven the “finality” modifier, see supra at 12–16) also\nconforms to the equitable nature and purpose of the\nRule, which is to confirm the judicial authority to\nrelieve parties from what transpired in the judicial\nprocess, provided the grounds for relief are met\n(e.g., fraud or mistake).\n Beyond that, a self-executing Rule 41(a)(1)(A)\nnotice automatically resulting in dismissal also falls\nwithin the definition of “proceeding” that the court\nbelow called narrower, because it is an “application to\na court,” Black’s Law Dictionary 1431 (3d ed. 1933), or\na “method[] of invoking the action of [a] court[],” Ruch,\n146 N.E. at 71. Indeed, an “application” includes both\n“[t]he thing applied” (i.e., the voluntary dismissal as\napplied to a court’s docket) and “[t]he act of making\nrequest of soliciting.” Webster’s Universal Dictionary\nof the English Language 84 (1937). A Rule 41 notice\n(or stipulation) of voluntary dismissal meets the\nnarrower dictionary definition of “proceeding,”\nbecause it is a request made to the court, one given\nimmediate effect by operation of Rule 41(a)—upon\ndocketing by the court’s clerk—without further action\nby a judge.\n 3. Contextual canons are in accord. The canon\nagainst surplusage thus supports the conclusion that\na notice of voluntary dismissal is a “proceeding” under\n 20\n\n\nRule 60(b), and counsels against the Tenth Circuit’s\nview that judicial action is needed for non-\ninterlocutory docket activity to count as a final\nproceeding. Indeed, reading “proceeding” broadly to\ncapture any docket activity, including any application,\nwhether or not it results in or includes judicial action,\n“gives effect to every clause and word of [Rule 60(b)],”\nin contrast to the decision below, which does not. Marx\nv. Gen. Revenue Corp., 568 U.S. 371, 385 (2013). This\nis because, by requiring a “judicial determination” for\nthere to be a “proceeding,” the decision below gives\nthat word the exact same office as the term “order.”\n Petitioner’s interpretation finds further support in\nthe canon that courts usually construct a word used in\nvarious parts of a scheme in the same way. E.g.,\nTurkiye Halk Bankasi A. S. v. United States, 598 U.S.\n264, 275–76 (2023) (considering 28 U.S.C. 1604\n“alongside its neighboring FSIA provisions”); Powerex\nCorp. v. Reliant Energy Servs., 551 U.S. 224, 232\n(2007) (“A standard principle of statutory construction\nprovides that identical words and phrases within the\nsame statute should normally be given the same\nmeaning.”). Consider first Rule 60(c)(1): it prescribes\n“[a] motion under Rule 60(b) must be made . . . no\nmore than a year after the entry of the judgment or\norder or the date of the proceeding.” Fed. R. Civ. P.\n60(c) (emphases added). This confirms that unlike\norders and judgments, which are entered by a court,\n“proceedings” within the meaning of Rule 60 may\noccur as the case progresses without being so entered.\n 21\n\n\n Moreover, the term “proceeding” is consistently\nused elsewhere in the Rules to include party filings\nnot requiring court intervention, and there is no\nreason to interpret “proceeding” in Rule 60(b)\ndifferently. Rule 62(a), for example, provides that\n“execution on a judgment and proceedings to enforce it\nare stayed for 30 days after its entry.” (emphasis\nadded). Plainly, a stay of judgment-enforcement\n“proceedings” halts all applications and actions,\nincluding those made by parties, such as discovery\nrequests. That is indeed the entire purpose of Rule 62.\nSee Fish Mkt. Nominee Corp. v. Pelofsky, 72 F.3d 4, 6\n(1st Cir. 1995) (discussing how Rule 62 “stays\nproceedings to enforce the judgment, for example,\ndiscovery to determine the location of a judgment\ndebtor’s property available to satisfy the judgment”).\nThere are other examples of the Rules using the term\n“proceedings” to refer to steps taken by parties, not\njust judicial action. E.g., Fed. R. Civ. P. 37(b)(2)(A)(iv)\n(“stay[] [of] further proceedings”); Fed. R. Civ. P. 41(d)\n(“stay” of “proceedings”).\n The court below invoked the canon of noscitur a\nsociis to deprive the district court of its reopening\nauthority. This was error.\n To the extent it applies, the noscitur a sociis canon\nactually supports Petitioner. It “teaches that a word is\n‘given more precise content by the neighboring words\nwith which it is associated.’” Fischer v. United States,\n603 U.S. 480, 487 (2024) (quoting United States v.\nWilliams, 553 U.S. 285, 294 (2008)). Cf. Babbitt v.\nSweet Home Chapter of Communities for a Great\n 22\n\n\nOregon, 515 U.S. 687, 702 (1995) (reversing decision\nimproperly applying canon to give term “essentially\nthe same function as other words . . . thereby denying\nit independent meaning”). Here, the word\n“proceeding” is being read in the context of its\nneighbors, in that the correct definition—which does\ncapture notices of voluntary dismissals (and resulting\ndismissals)—refers to activity on the docket of a court\nthat terminate an action, just like orders and\njudgments. In other words, the canon appropriately is\nused to reject inapt definitions of the word\n“proceeding.” See ibid. (rejecting circuit court’s\napplication of noscitur a sociis and applying that\nmaxim to conclude different definition is correct).\n 4. In light of the foregoing, it is unsurprising that\nthis Court has suggested in dicta that “merely\nreopening” a voluntarily dismissed suit via Rule 60(b)\nis proper. Kokkonen v. Guardian Life Ins. Co. of Am.,\n511 U.S. 375, 378 (1994). It is equally unsurprising\nthat multiple circuit courts instruct that a notice of\nvoluntary dismissal under Rule 41(a)(1) is a\n“proceeding,” whether or not judicial action was\ntaken. The Third Circuit thus held that the “dismissal\nof [a] suit was . . . a proceeding” that could be modified.\nWilliams v. Frey, 551 F.2d 932, 935 (3d Cir. 1977),\nabrogated on other grounds by Torres v. Oakland\nScavenger Co., 487 U.S. 312 (1988); see also Redman\nv. United States, 2023 WL 8519210, at *2 (3d Cir. Dec.\n8, 2023) (per curiam) (“Where, as here, a notice of\nvoluntary dismissal has taken effect, the district court\nretains the authority to exercise its discretion to\n 23\n\n\nreinstate the voluntarily dismissed complaint under\nFederal Rule of Civil Procedure 60(b).”).\n So too did the Fifth Circuit in Yesh Music v.\nLakewood Church, concluding that “a Rule 41(a)(1)(A)\nvoluntary dismissal without prejudice qualifies as a\n‘final proceeding,’” citing “extensive circuit cases.” 727\nF.3d at 362–63 (“Because stipulated dismissals are no\nmore ‘final’ than unilateral dismissals, nor do they\nrequire any more judicial intervention, it would be\nanomalous to call the former a ‘final proceeding’ while\ninsisting that the latter is not.”).\n And the federal courts are not alone. As one state’s\nhighest court held: “Surely, a voluntary notice of\ndismissal is something, it doesn’t exist in limbo. We\nconclude that it is indeed a ‘proceeding.’” Miller v.\nFortune Ins. Co., 484 So. 2d 1221, 1224 (Fla. 1986). In\nreaching that conclusion, the court explained that the\n“list of items for which relief may be granted under\nsubsection (b) [of Fla. R. Civ. P. 1.540, the equivalent\nto Rule 60(b),] appears to be an attempt to cover\nexhaustively all actions which may be taken by the\ncourt or the parties. There was no intent by this Court\nin promulgating the rule to expressly exclude\nvoluntary dismissals[.]” Ibid.; see also Walker Bros.\nInv., Inc. v. City of Mobile, 252 So. 3d 57, 63–64 (Ala.\n2017) (citing Yesh Music, 727 F.3d at 361–62);\nConfederated Tribes & Bands of Yakama Nation v.\nOkanogan County, 16 Wash App. 2d 1030 (2021).\n 5. Against all of this, the Tenth Circuit invoked the\nejusdem generis canon, but reliance on that maxim\nwas “misplaced.” Harrison v. PPG Indus., Inc., 446\n 24\n\n\nU.S. 578, 588 (1980). As this Court “ha[s] often noted:\n‘The rule of ejusdem generis, while firmly established,\nis only an instrumentality for ascertaining the correct\nmeaning of words when there is uncertainty.’” Ibid.\n(quoting United States v. Powell, 423 U.S. 87, 91\n(1975)). In other words, “[t]he rule of ejusdem generis\nis no more than an aid to construction and comes into\nplay only when there is some uncertainty as to the\nmeaning of a particular clause in a statute.” United\nStates v. Turkette, 452 U.S. 576, 581 (1981). Here,\nthere is no such uncertainty, because the term is\nunambiguous, as discussed.\n Moreover, the canon of ejusdem generis applies\nonly to “a general or collective term at the end of a list\nof specific items,” instructing that a broad term\n“is typically controlled and defined by reference to the\nspecific classes . . . that precede it.” Fischer, 603 U.S.\nat 487 (cleaned up; collecting cases). But the word\n“proceeding” here is the third in a list, and is not\nqualified by the adjective “other.” Friel v. Alewel, 298\nS.W. 762, 764 (Mo. 1927) (“Plaintiffs aver that, to the\nwords, ‘no suit, action or proceeding,’ found in section\n1320, the rule ejusdem generis is applicable, because\nthe word ‘proceeding’ synonymizes with the preceding\nwords, ‘suit, action.’ We are unable to agree that the\nrule is apposite, for the word ‘proceeding,’ as used in\nthe statute, is not inferentially limited to the\npreceding class by the use of some qualifying\nadjective, such as ‘other,’ but the word ‘proceeding’\nwas intended to refer to a course of action independent\nof a suit or action, filed in a court of equity or law, to\nforeclose.”). Cf. Harrington v. Purdue Pharma L. P.,\n 25\n\n\n144 S. Ct. 2071, 2082 (2024) (interpreting catchall\nterm, “any other appropriate provision not\ninconsistent with the applicable provisions of this\ntitle”); Epic Sys. Corp. v. Lewis, 584 U.S. 497, 512\n(2018) (interpreting “catchall term,” “other concerted\nactivities for the purpose of . . . other mutual aid or\nprotection.”).\n The canon’s inapplicability is further confirmed by\nRule 60(b)’s use of the disjunctive: “judgment, order,\nor proceeding.” The fact that a “phrase is disjunctive”\ncounsels against application of ejusdem generis. Ali v.\nFed. Bureau of Prisons, 552 U.S. 214, 225 (2008) (“The\nstructure of the phrase ‘any officer of customs or\nexcise or any other law enforcement officer’ does not\nlend itself to application of the canon.”).4\n\n C. Alternatively, A Rule 41(a)(1) Dismissal\n Is A “Judgment”\n\n In the alternative, the decision below can and\nshould also be reversed because a Rule 41 dismissal\ncounts not just as a “proceeding” but also as a\n“judgment” within Rule 60(b)’s compass. See Uhe v.\nChicago, M. & St. P. Ry. Co., 54 N.W. 601, 602 (S.D.\n1893) (“The word ‘proceedings,’ in a judicial sense, is\n\n 4 The decision below also cited Rule 60’s title, Pet App. 10a,\n\nbut “[a] title will not, of course, ‘override the plain words’ of a\nstatute” or rule. Dubin v. United States, 599 U.S. 110, 121 (2023)\n(quoting Fulton v. City of Philadelphia, 593 U.S. 522 (2021)); see\nalso Fla. Dep’t of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S.\n33, 47 (2008) (“To be sure, a subchapter heading cannot\nsubstitute for the operative text of the statute.”).\n 26\n\n\nmuch more comprehensive than that of ‘judgment;’\nthe former very frequently including the latter.”).5\n 1. The word “judgment” has a broad meaning\nunder Federal Rule 60(b). At the time Rule 60(b) was\nadopted, the word referred, “[i]n practice,” to “[t]he\nofficial and authentic decision of a court of justice\nupon the respective rights and claims of the parties to\nan action or suit therein litigated and submitted to its\ndetermination.” Black’s Law Dictionary (3d ed. 1933).\nBut it was not so limited.\n At common law and in 1937, judgments could be\n“based upon the admissions or confessions of one only\nof the parties.” Black’s Law Dictionary (3d ed. 1933).\nBlack’s gave examples. Among them was when “the\nplaintiff says he ‘will not further prosecute his suit’”\n(nolle prosequi) or “where, after appearance and\nbefore judgment, the plaintiff voluntarily enters upon\n\n 5 The decision below stated that “no one assert[ed] that we\n\nhave a ‘final judgment,’” Pet. App. 7a, but that is incorrect. The\ndistrict court in this case concluded that Petitioner’s Rule 41(a)\ndismissal was either a final judgment or final proceeding (Pet.\nApp. 54a, 56a); Respondent appealed, arguing that “a voluntary\ndismissal without prejudice is neither final nor a judgment, order\nor proceeding,” Respondent-CA-10-Br. 16–17; and Petitioner in\nhis appellee brief argued otherwise, citing Schmier v. McDonalds\nLLC, 569 F.3d 1240, 1242 (10th Cir. 2009), where the Tenth\nCircuit had held that a voluntary dismissal was a “judgment.”\nClaimant-CA10-Br. 33–34. Regardless, the Tenth Circuit held\nthat “[u]nder Federal Rules of Civil Procedure 41(a) and 60(b), a\ncourt cannot set aside a voluntary dismissal without prejudice\nbecause it is not a final judgment, order, or proceeding.” Pet. App.\n2a (emphasis added). This pure question of law—which is made\nin the alternative—is thus properly presented in this case (and\nis clearly encompassed within the question presented).\n 27\n\n\nthe record that he ‘withdraws his suit,’” (retraxit),\n“whereupon judgment is rendered.” Ibid.\nAlternatively, a plaintiff may “find[] he has\nmisconceived his action” and then “obtain[] leave from\nthe court to discontinue, on which there is a judgment\nagainst him and he has to pay costs; but he may\ncommence a new action for the same cause.” Ibid.\nThese were all judgments, as they terminated cases,\nwhether with or without prejudice. Ibid.\n 2. Dismissal effectuated by way of a Rule 41(a)\nnotice or stipulation counts as a judgment under these\ndefinitions, and courts may relieve parties from their\neffect. Thus, although Rule 41(a)(1) dispensed with\nthe need for a court order in certain circumstances,\nthe Rule makes clear that the simple act of filing\nspecified requests addressed to the court (a notice or\nstipulation) does result in dismissal, and that the\neffect on the parties’ rights is the same, by operation\nof law, as if a court entered an order. It is a judgment\nas defined in Black’s Law Dictionary (3d ed. 1933).\n It is error to conclude that judicial action is needed\nto have a “judgment.” Consider that if the plaintiff’s\nfiling is the second notice, Rule 41(a)(1)(B) instructs,\nthe “notice of dismissal operates as an adjudication on\nthe merits.” Clearly, a notice operating as a merits\nadjudication is functionally a judgment, and the fact\nthat the dismissal occurred without judicial action\ndoes not change the analysis. Thus, contrary to what\nthe Tenth Circuit held, a district court’s ability to\nreopen a dismissal cannot turn on whether dismissal\nwas effectuated by motion seeking a court order or by\n 28\n\n\nself-executing notice or stipulation. And, as further\nnoted, a dismissal still has the requisite “finality”\neven if it is without prejudice—because it is case-\nterminating and not interlocutory. Supra at 12–16.\n Rule 54(a)’s definition of the term “judgment”\nfurther supports reversal. Rule 54(a) prescribes that\nthe term “‘[j]udgment’ as used in these rules includes\na decree and any order from which an appeal lies. A\njudgment should not include recitals of pleadings, a\nmaster’s report, or a record of prior proceedings.”\n(emphasis added). The use of the word “includes” in\nRule 54 (rather than “is”) means that Rule 54 should\nbe interpreted broadly consistent with dictionary\ndefinitions—thus including dismissals obtained by\nrequest of the plaintiff—although at minimum the\nterm includes the specific matters set forth in Rule\n54(a). See United States v. Whiting, 165 F.3d 631, 633\n(8th Cir. 1999) (“When a statute uses the word\n‘includes’ rather than ‘means’ in defining a term, it\ndoes not imply that items not listed fall outside the\ndefinition.”); Keith Mfg. Co. v. Butterfield, 955 F.3d\n936, 940 (Fed. Cir. 2020) (“Rule 54 ‘judgment’ includes\nmore than just appealable orders.”).\n 3. Given the definitions in relevant dictionaries\nand Rule 54, and the fact a Rule 41(a)(1)(A) dismissal\nbrings litigation to a conclusion like any other final\njudgment, it is no surprise that several courts have\ndeemed notices of voluntary dismissals under Rule\n41(a)(1) to be judgments under Rule 60(b). The Tenth\nCircuit itself had so likewise, in a case cited to the\ncourt below. Schmier v. McDonald’s LLC, 569 F.3d\n 29\n\n\n1240, 1242 (10th Cir. 2009) (notice of voluntary\ndismissal with prejudice is “a ‘final judgment’” despite\nthere being no court order, and, “[l]ike other final\njudgments, a dismissal with prejudice under Rule\n41(a)(1)(A)(i) can be set aside or modified under\nFederal Rule of Civil Procedure 60(b)”). So had the\nD.C. Circuit, concluding in Randall v. Merrill Lynch,\nthat a party’s second voluntary dismissal is a Rule\n60(b) “judgment” for it “operated as an adjudication on\nthe merits.” 820 F.2d 1317, 1320 (D.C. Cir. 1987).\n Similarly, the Eighth Circuit in White v. Nat’l\nFootball League held that a stipulated dismissal was\na judgment under Rule 60(b), taking note of Rule 54’s\nexpansive compass and explaining that “the concerns\nthat underlie Rule 60(b) are equally as present after a\nstipulated dismissal as they are after a court-ordered\nend to litigation.” 756 F.3d 585, 596 (8th Cir. 2014).\nNone of the dismissals involved any action by the\ncourt, just the filing of a notice or stipulation by the\nparties, and yet they were deemed “judgments”\nsubject to reopening.\n * * *\n In sum, a Rule 41(a)(1)(A) dismissal counts as\n“final” within the meaning of Rule 60(b), and it also\ncounts as a “proceeding,” or else a “judgment.”\n 30\n\n\nII. History And Design Confirm That Courts\n Have The Power To Reopen Or Set Aside\n Rule 41(a)(1) Dismissals Under Rule 60(b)\n The context of Rule 41 and 60(b)’s adoption\nconfirms what their text makes clear: federal courts\nhave authority to reopen cases voluntarily dismissed\nwithout prejudice. Indeed, courts generally had that\nauthority at the time the Federal Rules were first\nadopted, and Rules 41 and 60 did not abrogate that\npower. See Krupski v. Costa Crociere S. p. A., 560 U.S.\n538, 548–49, 553–54 (2010) (interpreting Rule 15 in\nlight of its text, purpose, and history, including\nAdvisory Committee Notes). Quite the contrary: Rule\n60(b) was modeled on a California statute interpreted\nby California courts to provide just that authority.\n The Court’s unanimous decision in Hall v. Hall is\naccordingly instructive. There, the Court noted that\nRule 42(a) was “expressly modeled” on a “statutory\npredecessor” given authoritative meaning by this\nCourt. 584 U.S. at 72–73. The Rules gave the term at\nissue there (“consolidate”) “no definition,” but the\nCourt explained in Hall that they “presumably carried\nforward the same meaning we had ascribed” the term\nin the statute that served as a model. Id. at 73. After\nall, the Court explained, “[n]o sensible draftsman, let\nalone a Federal Rules Advisory Committee, would\ntake a term . . . and silently and abruptly reimagine\n[it] to mean” something new. Id. at 75. The same is\ntrue here, although Rule 60(b) was taken from a\nCalifornia statute interpreted by California’s courts.\nThose courts’ interpretation was carried forward.\n 31\n\n\n A. In 1937, Courts Had Recognized Authority\n To Reopen Voluntarily Dismissed Cases\n\n Adopted in 1937 and made effective in 1938,\nFederal Rules 41 and 60 replaced a prior mix of state\nprocedures and equity rules governing federal-court\ncases. In line with the Rules Enabling Act, they should\nbe interpreted consistent with the context of their\nadoption. Semtek, 531 U.S. at 503 (avoiding\ninterpretation of Rule 41(b) “arguably violat[ing] the\njurisdictional limitation of the Rules Enabling Act”).\nThat is particularly because they were intended to\nreflect “expansive and flexible aspects of equity.”\nSubrin, supra, 135 U. Pa. L. Rev. at 922.\n Here, the context is particularly salient, because it\nconfirms that, at the time the Rules were adopted,\nplaintiffs had authority to terminate cases without\ncourt order, and that courts had authority to reopen\ncases terminated in that fashion on grounds now\nrecognized in Rule 60(b) (such as fraud, mistake, etc.).\n 1. Consider first the practice concerning voluntary\ndismissals as of Rule 41(a)(1)’s adoption. At common\nlaw and under state statutes generally in place when\nthe Federal Rules were first adopted, “dismissals or\nnonsuits as a matter of right [were often allowed] until\nthe entry of the verdict.” Cooter & Gell v. Hartmarx\nCorp., 496 U.S. 384, 397 (1990).\n Plaintiffs indeed had overlapping mechanisms to\nobtain dismissal of their own case—“nonsuit,”\n“discontinuance,” and voluntary “dismissal.” See\nP.M.L. (Note), The Right of a Plaintiff to Take a\n 32\n\n\nVoluntary Nonsuit or to Dismiss His Action Without\nPrejudice, 37 Va. L. Rev. 969, 969 n.1 (1951) (“P.M.L.\nNote”); Neal C. Head, The History and Development of\nNonsuit, 27 W. Va. L.Q. 20, 20 (1920) (explaining that\nat common law, “the consent of the judge [was]\nnecessary” to voluntarily discontinue an action, “while\na nonsuit was a matter of right”).\n By the 1930s, although some jurisdictions\npermitted dismissals only “upon order of the court,”\nmany others had procedures, established through\nstate statutes or otherwise, permitting parties to\ndismiss cases without any judicial intervention save a\ncourt clerk’s docketing of the dismissal in the court’s\nrecords. See Lusas v. St. Patrick’s Roman Cath.\nChurch Corp. of Waterbury, 193 A. 204, 206 (Conn.\n1937) (collecting authority); In re Matthiessen’s Est.,\n52 P.2d 248, 249 (Cal. Ct. App. 1935) (“[A] party may\ndismiss by written request to the clerk filed with the\npapers in the case and . . . when this request is entered\nby the clerk it is effective for all purposes. Obviously\nsuch a dismissal does not require an order of the\ncourt.” (emphasis in original)); Davenport v.\nHardman, 192 S.E. 11, 12 (Ga. 1937) (“Where the\nanswer of the defendant is purely defensive, the\nplaintiff may dismiss his action, either in term or\nvacation, without any leave or order of the court.”).6\n\n 6 See also Siegfried v. New York, L.E. & W.R. Co., 34 N.E.\n\n331, 332 (Ohio 1893) (discussing how statute permitted “plaintiff\n[to] voluntarily dismiss his action” and “dismissal by the plaintiff\ninvolves no action of the court”), superseded by statute as stated,\nFrysinger v. Leech, 512 N.E.2d 337 (Ohio 1987); Shreveport Long\n 33\n\n\n At the same time, most jurisdictions did limit the\ncircumstances where such a dismissal was\nappropriate without court order, a limit later reflected\nin Rule 41. E.g., In re Skinner & Eddy Corp., 265 U.S.\n86, 93–94 (1924) (voluntary dismissal not appropriate\nwhere “the cause has proceeded so far that the\ndefendant is in a position to demand on the pleadings\nan opportunity to seek affirmative relief and he would\nbe prejudiced by being remitted to a separate action”);\nLusas, 193 A. at 205–06 (requiring cause to withdraw\na case upon “commencement of a hearing upon the\nmerits”). As reflected supra and infra, this limitation\non the circumstances where dismissals could be\nobtained without leave was carried into Rule 41.\n 2. Next, consider the judicial authority now\nreflected in Rule 60(b). At the time of the Rules’\nadoption, the common-law rule instructed that courts\nenjoyed and retained effectively “plenary power” over\ntheir dockets before “the expiration of the term,” and\nalso retained some set-aside powers thereafter. James\nWm. Moore & Elizabeth B.A. Rogers, Federal Relief\nfrom Civil Judgments, 55 Yale L.J. 623, 627 (1946).\n Thus, it was well settled that courts enjoyed broad\npower to modify or set aside final court orders,\n\nLeaf Lumber Co. v. Jones, 177 So. 593, 594 (La. 1937) (“The\nmotion to discontinue takes effect the moment it is filed, without\nan order of dismissal by the court.”); Graham v. Superior Mines,\n49 P.2d 443, 444 (Mont. 1935) (“[T]he usual procedure for\nobtaining a dismissal . . . consists in filing with the clerk a\npraecipe for the dismissal of the action and directing the clerk to\nenter dismissal on the register of actions. . . . In such a case the\ndismissal is complete upon entry in the clerk’s register.”).\n 34\n\n\njudgments, or proceedings “during the term at which\nrendered.” Occidental Life Ins. Co. v. Niendorf, 44\nP.2d 1099, 1102 (Idaho 1935); see also United States\nv. Benz, 282 U.S. 304, 306 (1931) (describing this\npower as the “general rule”). As one federal court\nexplained: “The rule applicable to final judgments and\ndecrees is well known and of constant application.\nWhen a final judgment is entered, it may be vacated\nduring the judgment term. However conclusive in its\ncharacter, it is still under the control of the trial court,\nand may be amended, suspended, or vacated at any\ntime up to the close of that term, but not afterwards,\nunless in some way carried over by proceedings during\nthe judgment term.” Storey v. Storey, 221 F. 262, 263\n(W.D. Wis. 1915); Pestana v. State, 762 S.E.2d 178,\n181 (Ga. 2014) (“The plenary control of the court over\norders and judgments during the term at which they\nwere rendered extends to all orders and\njudgments[.]”); Lacey v. Citizens’ Lumber & Supply\nCo., 248 N.W. 378, 378 (Neb. 1933) (same).\n Even after a court’s term ended, courts retained a\nreservoir of authority to revisit closed cases, under a\nvariety of legal and equitable doctrines. “From the\nbeginning there has existed along side the term rule a\nrule of equity to the effect that under certain\ncircumstances, one of which is after-discovered fraud,\nrelief will be granted against judgments regardless of\nthe term of their entry.” Hazel-Atlas Glass Co. v.\nHartford-Empire Co., 322 U.S. 238, 244 (1944). In\naddition, “courts of common law . . . at a subsequent\nterm ha[d] power to correct inaccuracies in mere\nmatters of form, or clerical errors, and, in civil cases,\n 35\n\n\nto rectify such mistakes of fact as were reviewable on\nwrits of error coram nobis, or coram vobis, for which\nthe proceeding by motion is the modern substitute.”\nUnited States v. Mayer, 235 U.S. 55, 67 (1914).7\n “[A]lthough the precise relief obtained in a\nparticular case by use of these ancillary remedies is\nshrouded in ancient lore and mystery,” Rule 60\nAdvisory Committee Note—1946 Amendment, those\nremedies were well recognized when Rule 60 was first\nadopted, and courts undoubtedly had and were then\ngiven authority to permit reopening for equitable\nreasons. See Preveden v. Hahn, 36 F. Supp. 952, 953–\n54 (S.D.N.Y. 1941) (granting motion to vacate\njudgment based on attorney entering stipulation\nwithout party’s authority); Theodore R. Mann, History\nand Interpretation of Federal Rule 60(b) of the Federal\nRules of Civil Procedure, 25 Temp. L.Q. 77 (1951)\n(discussing 1946 amendment to Rule 60(b)).\n 3. Putting together the predecessor lines of\nauthority later codified into Rule 41(a)(1) and Rule\n60(b), “the weight of authority” in the 1930s was\nclearly recognized to grant courts the power, “upon a\nproper showing,” to modify voluntary dismissals and\n“reinstate the case,” even “where the parties have a\nright without consent of court to withdraw or\nvoluntarily dismiss the case.” Lusas, 193 A. at 206\n\n\n 7 See Lester B. Orfield, Writ of Error Coram Nobis, 8 Ind. L.J.\n\n247, 247–48 (1933) (discussing relationship between writs of\ncoram nobis and writs of coram vobis).\n 36\n\n\n(collecting cases). As one state supreme court then put\nit before the enactment of the Federal Rules:\n Were an order of court necessary to\n render efficacious the dismissal, the\n court’s power to vacate and set aside its\n own order cannot be gainsaid. It would\n be strange indeed, if the right given the\n plaintiff, unaided by the court, to dismiss\n an action, should deprive the court of its\n power to inquire into the means by which\n the stipulation was obtained, and which\n it would have but for the statute.\nHarjo v. Black, 153 P. 1137, 1138 (Okla. 1915) (setting\naside voluntary dismissal filed without court\nintervention).\n And so, courts did exercise their authority to\nreopen cases that were voluntarily dismissed, even\nthose dismissed without court order and without\nprejudice. E.g., Commonwealth, to Use of Beckingham\nv. Magee, 73 A. 346, 346 (Pa. 1909) (reinstating\nvoluntarily dismissed action); Jackson v. Waldron, 5\nF. 245, 246–47 (C.C.W.D. Tenn. 1880) (“We have no\nstatute in Tennessee authorizing a court to set aside\na voluntary nonsuit, but it is the constant practice to\ndo it.”); Willard v. Wood, 1 App. D.C. 44, 55 (App. D.C.\n1893), aff’d, 164 U.S. 502 (1896) (“[I]t has been held\nthat after a voluntary dismissal of a bill by the\n 37\n\n\nplaintiff, he will not be allowed to reinstate it, unless\nit be shown that there was surprise or mistake.”).8\n Courts reopened voluntarily dismissed cases in\nmany circumstances. One recurring scenario was\nwhere attorneys withdrew a case without the consent\nof their client. E.g., Ryan v. Phoenix Ins. Co. of\nHartford, Conn., 215 N.W. 749, 750 (Iowa 1927)\n(noting exception to general rule that a voluntary\nnonsuit “terminates the jurisdiction of the court”\nwhen “the order of dismissal was by counsel without\nauthority to do so”); S. Grocery Stores v. Cain, 173 S.E.\n256, 256 (Ga. 1934) (affirming judgment that\nreinstated case where “entry of dismissal of the case\nwas made by a person who had no authority to dismiss\nthe case for and in behalf of the plaintiff”); Ross v.\nEagle Coal Co., 36 S.W.2d 48, 49 (Ky. 1931) (“court did\nnot abuse a sound discretion in setting aside the\n\n\n 8 See also Reaume v. Carpenter, 89 N.W. 953, 954 (Mich.\n\n1902) (setting aside nonsuit to which plaintiff submitted even\nthough the statute of limitations had passed because “[i]t seems\nto [the court] unjust . . . that the negligence of plaintiff or her\ncounsel should cost plaintiff her entire right of action”);\nZimmerman v. Western Builders’ & Salvage Co., 297 P. 449, 450\n(Ariz. 1931) (“It is the general rule of law that it is discretionary\nwith the trial court to reinstate an action previously dismissed.”);\nLink v. Anselm, 1910 WL 3096, at *1 (Pa. Com. Pl.), aff’d sub\nnom. James H. Link Mach. Co. v. Cont’l Tr. Co., 75 A. 985 (Pa.\n1910) (similar); Hoodless v. Winter, 16 S.W. 427, 428 (Tex. 1891)\n(“It will not unfrequently happen that the party who takes the\nnonsuit should be relieved from its effect upon a timely\napplication, upon such terms as the court may in its discretion\nimpose, and as may be proper to promote the ends of justice.”).\n 38\n\n\norder” of dismissal obtained by attorney who lacked\nauthority).\n Fraud was another recurring circumstance cited\nby courts in reopening cases that were voluntarily\ndismissed. For instance, in Thompson v. Bay Circuit\nJudge, the Supreme Court of Michigan issued a per\ncuriam opinion unequivocally stating that if a\n“discontinuance” (i.e., a voluntary dismissal) “was\nobtained fraudulently, we think the court might set\nthe same aside on motion and proper showing.”\n101 N.W. 61, 61 (Mich. 1904). Other courts agreed.\nE.g., National Power & Paper Co. v. Rossman, 142\nN.W. 818, 820 (Minn. 1913) (affirming vacatur of\ndismissal by stipulation signed by the parties on\nground court “has undoubted jurisdiction to vacate a\ndismissal in such a case” due to collusion and fraud).\n\n B. The Rules Adopted Existing Practice And\n Maintained Courts’ Authority To Reopen\n Voluntarily Dismissed Cases\n\n When Congress enacts new statutes, this Court\ndoes not “lightly assume” that it “‘intended to depart\nfrom established principles’ such as the scope of a\ncourt’s inherent power.” Chambers v. NASCO, Inc.,\n501 U.S. 32, 47 (1991) (quoting Weinberger v. Romero–\nBarcelo, 456 U.S. 305, 313 (1982)). The same goes for\nthe Federal Rules. This Court requires a “clear[]\nexpression of purpose” to conclude that a federal rule\n“was intended to abrogate” a “long . . . unquestioned”\npower. Link v. Wabash R. Co., 370 U.S. 626, 631–32\n(1962); see also Hall, 584 U.S. at 72–73.\n 39\n\n\n Nowhere do the Federal Rules indicate that they\nintended to derogate from the traditional power of the\ncourts, detailed above in Section II.A, to reopen cases\nthat were dismissed without court order—when\nwarranted on the basis of fraud, mistake, or the like—\nand instead there is every indication that the Rules\nretained the prior judicial authority.9\n 1. Most tellingly, the drafters indicated by their\nchoice of locution for Rule 60(b) that they did intend\nto authorize reopening of cases dismissed voluntarily.\n The Advisory Committee Notes to the original\nRule 60 identify the source of Rule 60(b): “[t]his\nsection is based upon Calif. Code Civ. Proc. (Deering,\n1937) § 473.” In turn, that provision of California law\nallowed California courts, “upon such terms as may be\njust, [to] relieve a party or his legal representatives\nfrom a judgment, order, or other proceeding taken\nagainst him through his mistake, inadvertence,\nsurprise or excusable neglect.” Palace Hardware, 66\nP. at 476 (quoting Calif. Code Civ. Proc. § 473). This is\nthe same power federal courts have had under Rule\n60(b) since 1938.\n The California rule was “liberally construed” by\nCalifornia courts. Ibid.; Stonesifer v. Kilburn, 29 P.\n\n 9 This principle applies whether the Court views the question\n\nas one of subject-matter jurisdiction, as the Tenth Circuit did, or\none involving a non-jurisdictional question about federal courts’\nauthority under Rule 60(b). To the extent Rule 60(b) implicates\na court’s subject matter jurisdiction, however, it is even more\nobvious that jurisdiction-stripping by implication should not be\npermitted. See Jones v. Hendrix, 599 U.S. 465, 492 (2023).\n 40\n\n\n332, 335 (Cal. 1892). Consistent with\ncontemporaneous dictionaries (supra at 17–19), the\nSupreme Court of California interpreted the word\n“proceeding” in Calif. Code Civ. Proc. § 473 broadly to\ntake the wide-ranging definition capturing “‘any step\ntaken by a suitor to obtain the interposition or action\nof a court’” and “any step taken by a party in the\nprogress of a civil action”—that is, “[a]nything done\nfrom the commencement to the termination is a\nproceeding.” Ibid. (quotation marks omitted).\n Importantly, moreover, California courts read the\npredecessor to Rule 60(b) to authorize California\ncourts to set aside a voluntary “judgment of dismissal\non the order of the plaintiff,” Palace Hardware Co.,\n66 P. at 476, in line with “the weight of authority”\nelsewhere, Lusas, 193 A. at 206 (citing California law\nand other authority); see also Salazar v. Steelman,\n71 P.2d 79, 80–81, 83 (Cal. Ct. App. 1937) (affirming\nreinstatement of case previously dismissed\nvoluntarily “without prejudice”). 10\n\n\n Those interpretations of the California rule are the\n“old soil” that the rule-makers carried forward into\nRule 60(b). Hall, 584 U.S. at 73 (“[I]f a word is\nobviously transplanted from another legal source,\nwhether the common law or other legislation, it brings\n\n\n 10 At the time, California permitted plaintiffs to unilaterally\n\ndismiss a case without court intervention. In re Matthiessen’s\nEst., 52 P.2d at 249; see also Spellacy v. Superior Ct., 72 P.2d\n262, 262 (Cal. Ct. App. 1937) (voluntary dismissal accomplished\n“by written request to the clerk, filed with the papers in the case”\nunder certain circumstances).\n 41\n\n\nthe old soil with it.” (quoting Felix Frankfurter, Some\nReflections on the Reading of Statutes, 47 Colum. L.\nRev. 527, 537 (1947)). And this context further\nconfirms that Rule 60(b) was intended to grant federal\ncourts broad authority to reopen closed cases,\nincluding those dismissed voluntarily by the plaintiff\nwithout prejudice or court order.11\n 2. Nothing in the balance of the Federal Rules\nindicates that the rule-makers intended to derogate\nfrom this established common-law background. Hall,\n584 U.S. at 75 (“nothing in the pertinent proceedings\nof the Rules Advisory Committee supports the notion\nthat [the new rule] was meant to overturn the settled”\npractice and understanding).\n To begin, Rule 41(a)(1) plainly codified the existing\npractice permitting plaintiffs to dismiss cases by\nnotice without court order (see supra at 2–3, 30–38),\nalthough it limited the circumstances where dismissal\n\n\n 11 California amended Calif. Code Civ. Proc. § 437 in 1992 to\n\nadd the word “dismissal” so that the provision read “[t]he court\nmay, upon any terms as may be just, relieve a party or his or her\nlegal representative from a judgment, dismissal, order, or other\nproceeding taken against him or her . . . .” Civil Procedure, 1992\nCal. Legis. Serv. Ch. 876 (A.B. 3296) (West). However, this did\nnot change the judiciary’s prior interpretation and was a matter\nof style over substance. Zamora v. Clayborn Contracting Grp.,\nInc., 47 P.3d 1056, 1060 & n.3 (Cal. 2002). After this amendment,\nthe California Supreme Court was clear that “the language of\nthis provision has not changed appreciably since [1872]” and\n“California courts have consistently held that parties may obtain\nrelief from judgments, dismissal, or stipulations voluntarily\nentered into pursuant to a voluntary agreement through the\ndiscretionary relief provision of section 473.” Id. at 1059–60.\n 42\n\n\nwould be allowed by simple notice without court order.\nIndeed, Rule 41(a)(1) replaced “liberal state and\nfederal procedural rules [that] often allowed\ndismissals or nonsuits as a matter of right until the\nentry of the verdict,” with a prescription authorizing\ndismissal “without the permission of the adverse\nparty or the court only during the brief period before\nthe defendant had made a significant commitment of\ntime and money.” Cooter & Gell, 496 U.S. at 397.\nAlthough the circumstances in which a nonsuit could\nbe taken were narrowed—in order to strike a new\nbalance between plaintiffs’ historic dismissal rights\nand defendants’ interests in avoiding the re-litigation\nof meritless matters, all in order to “curb abuses of\nthese nonsuit rules,” ibid.—the procedure remained\nintact.\n For its part, as noted, Federal Rule 60(b) codified\nthe existing authority to reopen judgments, orders,\nand proceedings, with no suggestion that the rule-\nmakers intended to narrow judicial authority to\nreopen, and instead (as explained) every indication\nthat Rule 60(b) was meant to codify the broad, flexible,\nand simplified approach from California. There is\nthus no suggestion in the text or context of either of\nthese Rules that the drafters intended to depart from\nthe recognized practice of courts to reopen cases that\nplaintiffs voluntarily dismissed by notice.\n 3. Nor have the Rules materially changed since\nthey were adopted in 1937 in such a way as to require\na reading abridging the common-law reopening\nauthority. Link, 370 U.S. at 631–32.\n 43\n\n\n As noted above, the rule-makers made clear in\n1946 that Rule 60(b) applied only to “final” judgments,\norders, or proceedings, and they did so to “emphasize[]\nthe character of the judgments, orders, or proceedings\nfrom which Rule 60(b) affords relief.” See Rule 60\nAdvisory Committee Note—1946 Amendment. The\npoint was simply to confirm and clarify, consistent\nwith the dictionary definition of “final,” that\n“interlocutory judgments are not brought within the\nrestriction of the rule, but rather they are left subject\nto the complete power of the court rendering them to\nafford such relief from them as justice required.” Ibid.\n(emphasis added); see supra at 12–16.\n Federal Relief from Civil Judgments, a Yale Law\nJournal article co-authored by one of the original\ndrafters of the Federal Rules of Civil Procedure and\ncited by the 1946 Advisory Committee Notes, provides\nfurther context as to why this amendment was made.\nSee Moore & Rogers, supra, 55 Yale L.J. at 623. The\narticle, which the Advisory Committee Notes cited as\nproviding “an extended discussion of the old common\nlaw writs and equitable remedies, the interpretation\nof Rule 60, and proposals for change,” espoused the\nprinciple that, “so long as [a] court has jurisdiction\nover an action, it should have complete power over\ninterlocutory orders made therein and should be able\nto revise them when it is ‘consonant with equity’ to do\nso.” Id. at 642 (citing John Simmons Co. v. Grier Bros.,\n258 U.S. 82 (1922)). The article instructed, however,\nthat some cases interpreting Rule 60(b) and\naddressing “interlocutory orders proceeded . . . on the\ntheory that Rule 60(b) was applicable to such orders.”\n 44\n\n\n55 Yale L.J. at 643. The authors thought this result\nwas consistent with the broad text of Rule 60(b), id. at\n643–44, but did not believe it was sound, because a\ndistrict court’s authority to reopen interlocutory\norders should not be so limited. Ibid.; see also id. at\n686. The article thus proposed, among other\n“substantive changes,” a clarification that “the court’s\npower over interlocutory orders is [] properly not\nlimited” by Rule 60(b). Id. at 691.\n As the Advisory Committee Notes instruct, the\nrule-makers pursued exactly this clarification in 1946,\nand did so to broaden district-court authority. The\naddition of the word “final” indeed divided the world\nof judgments, orders, and proceedings into two\ngroups: (1) interlocutory ones, as to which courts had\nplenary authority (subject to, e.g., the law-of-the-case\ndoctrine and the mandate rule), and (2) “final” ones,\nas to which the grounds for reopening were\nhistorically more limited, based on equity and\ncommon law doctrines, and, since 1937, prescribed by\nRule 60(b). See supra at 12–16, 30–41.\n But there is no indication that the addition of the\nword “final” to the Rules intended to derogate from the\nauthority recognized in 1937 by California’s courts to\nreopen voluntary dismissals (including those without\nprejudice) when warranted by traditional notions of\nequity jurisprudence (such as fraud or mistake).\nInstead, not only did the rule-makers make clear their\nintent to relax limitations on district-court authority\nas to interlocutory matters, but the 1946 Advisory\nCommittee Notes also reaffirmed that Rule 60(b)\n 45\n\n\ncaptured all “kinds of relief from judgments which\nwere permitted in the federal courts prior to the\nadoption of these rules,” including “all the remedies\nand types of relief heretofore available by coram nobis,\ncoram vobis, audita querela, bill of review, or bill in\nthe nature of a bill of review”). And, at the same time,\nthe rule-makers added to the express grounds for Rule\n60(b) relief (including adding an express reference to\nfraud, which was a ground implied by the cases).\n It would therefore be unreasonable to infer from all\nof this that the rule-makers intended to, sub silentio,\nconfine the authority of the courts and radically\ndepart from historic practice. See Hall, 584 U.S. at 74\n(“Congress, we have held, ‘does not alter the\nfundamental details’ of an existing scheme with\n‘vague terms’ and ‘subtle device[s].’ That is true in\nspades when it comes to the work of the Federal Rules\nAdvisory Committees.” (quoting Whitman v.\nAmerican Trucking Assns., Inc., 531 U.S. 457, 468\n(2001)).\n * * *\n Rules 41 and 60 indicate the rule-makers’ intent to\nadopt and codify existing practice, and thus to retain\njudicial power to reopen cases that had been\ndismissed by simple notice upon a proper showing\n(such as fraud or mistake).\n 46\n\n\nIII. Petitioner’s Interpretation Preserves The\n Purposes And Effectiveness Of The Rules\n Finally, reading Rule 60(b) to strip federal courts\nof authority to reopen cases that were voluntarily\ndismissed without prejudice would frustrate the\npurposes and effectiveness of the Federal Rules.\n 1. To begin, as earlier noted, the approach taken\nby the Tenth Circuit in the decision below creates a\ntwilight zone within Rule 60(b). All interlocutory\nmatters and rulings would be subject to complete\njudicial oversight and discretion (subject to traditional\nconstraints like the law-of-the-case doctrine). And\njudicial orders terminating cases with prejudice would\nbe subject to reopening under Rule 60(b), in the court’s\ndiscretion, under the conditions set forth in the Rule.\nBut there would also be a third category of docket\nactivity entirely beyond federal courts’ authority.\n This would be a bizarre result, one that should be\nrejected given well-recognized authority of courts\ncorrecting frauds and mistakes, and the consistent\nstatements of the rule-makers that they intended to\nmaintain courts’ historic powers, including in the\n1946 amendment that added the word “final” to\naugment judicial authority. Cf. Link, 370 U.S. at 631–\n32 (“It would require a much clearer expression of\npurpose than Rule 41(b) provides for us to assume\nthat it was intended to abrogate so well-acknowledged\na proposition.”).\n 47\n\n\n 2. The holding in the decision below that a “judicial\ndetermination” is needed to bring a dismissal within\nthe ambit of Rule 60(b) also frustrates Rule 41’s\npatent objectives. The entire point of Rule 41(a)(1)(A)\nis to provide, in some circumstances, that a dismissal\ncould be obtained “without a court order,” and the\nRule specifies that in some circumstances the notice\nor stipulation could automatically “operate[] as an\nadjudication on the merits” (i.e., if the parties so\nspecify or if it is the second such dismissal). Id.\n41(a)(1)(B). Again, it would be bizarre for the\nstreamlined procedure giving a plaintiff’s notice (or\nstipulation) the effect of a dismissal, potentially with\nprejudice, to be treated differently for Rule 60(b)\npurposes than if the plaintiff had proceeded by way of\na motion requesting the court’s signature.\n Not only would that produce a perverse outcome\nthat contravenes Rule 41’s obvious purpose of giving\na dismissal-on-notice the same effect as a dismissal-\nby-court-order, but it also would needlessly\nincentivize prolonging litigation or seeking court\nintervention, thus wasting judicial resources. Cf. Axon\nEnter., Inc. v. Fed. Trade Comm’n, 598 U.S. 175, 216\n(2023) (Gorsuch, J., concurring) (citing Fed. R. Civ. P.\n1). If a “judicial determination” is needed to leave open\nthe possibility of obtaining Rule 60(b) relief in the\nevent of a mistake, fraud, or other unexpected\ncircumstance, then it is difficult to imagine why\nparties well-advised by counsel would be willing to\ndismiss by notice or stipulation when the cost of that\ndecision would be surrendering the right to request\nRule 60(b) relief.\n 48\n\n\n 3. Consider also the upshot of the decision below\nfor the sorts of cases that, traditionally, warranted\nrelief. Imagine a plaintiff’s attorney dismissing a case\nwithout authority, perhaps by defrauding his client\n(or by mistake). Or imagine a defendant entering into\na settlement requiring the plaintiff to dismiss her case\non notice or by stipulation, where the defendant lied\nabout his intention to pay money and thus procured\nthe dismissal by deceit or fraud. Because no “judicial\ndetermination” occurs, the district court would lose\njurisdiction upon the dismissal, depriving the court of\nthe power to correct the injustice.\n Under Respondent’s interpretation, a court has no\nauthority under Rule 60(b) to return to the status quo\nand remedy the mistake or fraud in any case involving\na Rule 41(a)(1)(A) dismissal, even in cases where the\nfraud or other injustice was perpetrated on the court\nitself. These are highly strange results, creating a trap\nfor the unwary not required by the Rules’ text.\nMoreover, the matter would have turned out\ndifferently under “the weight of authority” in the\n1930s, where courts could “reinstate the case.” Lusas,\n193 A. at 206–07; see Ryan, 215 N.W. at 750\n(reopening case where “dismissal was by counsel\nwithout authority”); Thompson, 101 N.W. at 61\n(same, for fraud). There is no good reason to conclude\nthe Rules require such a result.\n 49\n\n\n CONCLUSION\n\n The Court should hold that federal courts have the\npower to reopen Rule 41(a)(1)(A) dismissals pursuant\nto Rule 60(b), reverse the judgment of the Tenth\nCircuit, and remand the case for further proceedings.", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n Federal Rule of Civil Procedure 60(b) permits a\nparty in federal court to seek “relie[f ] * * * from a fi-\nnal judgment, order, or proceeding” in the litigation.\nFed. R. Civ. P. 60(b). It does not authorize what pe-\ntitioner attempted here: a collateral attack that a\nfederal court otherwise could not adjudicate on the\noutcome of a separate, arbitral proceeding. And it\ndoes not let him unwind his own unilateral action in\nthe litigation—here, a voluntary dismissal without\nprejudice—that required no court action and imposed\nno legal burdens.\n 2\n\n Petitioner brought this case in federal district court\nagainst respondent, his former employer, alleging age\ndiscrimination under federal law. But his suit could\nnot proceed because petitioner had agreed to arbitrate\nsuch disputes. He chose to dismiss his suit voluntarily\nwithout prejudice under Federal Rule of Civil Proce-\ndure 41(a)(1)(A)(i). The parties proceeded to arbitra-\ntion, where respondent prevailed.\n Petitioner then returned to district court and pre-\nsented the peculiar request now at issue: He moved\nto “reopen” his voluntarily dismissed case and to “va-\ncate [the] arbitration award,” C.A. App. 24 (capitali-\nzation altered), urging the court to “assume jurisdic-\ntion under Rule 60,” id. at 217. The district court\nobliged, but the Tenth Circuit reversed, correctly rec-\nognizing that Rule 60(b) does not authorize that re-\nmarkable remedy.\n The decision below should be affirmed for two in-\ndependent reasons. First, the district court lacked ju-\nrisdiction to grant the only relief petitioner’s motion\nrequested: vacatur of the arbitral award. He sought\nvacatur under Section 10 of the Federal Arbitration\nAct (FAA), 9 U.S.C. § 10. But this Court made clear\nin Badgerow v. Walters, 596 U.S. 1 (2022), that Sec-\ntion 10 does not create jurisdiction and that a free-\nstanding basis for federal jurisdiction must appear on\nthe face of a vacatur application. And this Court has\nlong held that a party cannot use Rule 60(b) to end-\nrun such jurisdictional obstacles: A Rule 60(b) motion\nseeking “more than just a continuation or renewal of\nthe dismissed suit * * * requires its own basis for ju-\nrisdiction.” Kokkonen v. Guardian Life Insurance Co.\nof America, 511 U.S. 375, 378 (1994).\n 3\n\n Petitioner does not seek to resume the federal age-\ndiscrimination case he dismissed. That would be fu-\ntile because the arbitral award adjudicated the par-\nties’ dispute. Instead, he seeks to use this defunct suit\nas a back door into a collateral challenge to that\naward. But because petitioner never established any\nindependent jurisdictional basis for that relief, the\ndistrict court lacked authority to entertain it under\nRule 60(b).\n Second, Rule 60(b) cannot apply here in any event\nbecause petitioner does not seek relief from any “final\njudgment, order, or proceeding.” Fed. R. Civ. P. 60(b).\nThe event that ended the original litigation was his\nown voluntary dismissal without prejudice under\nRule 41(a)(1)(A)(i). That dismissal was not “final” in\nthe familiar sense that Rule 60(b) uses the term,\nwhich traces back to the First Congress. A “final” de-\ncision must conclusively resolve the relevant dispute\nor issue. A voluntary dismissal without prejudice is\nparadigmatically non-final: By definition, it leaves\nthe plaintiff free to refile. Petitioner does not defend\nthe panel dissent’s position that non-final events can\nbecome final due to later developments. And his novel\ntheory that any “case-terminating” occurrence is “final”\n(Br. 16) has no basis in the law.\n Petitioner’s voluntary dismissal of his own case\nwithout prejudice also is not a “judgment, order, or pro-\nceeding.” Fed. R. Civ. P. 60(b). None of those terms\nencompasses a party’s self-executing action that re-\nquires no court action and imposes no legal burdens.\nPetitioner has never argued that his unilateral with-\ndrawal of the suit was an “order.” His halfhearted con-\ntention that it was a “judgment” is forfeited and unten-\nable. And his sweeping theory (Br. 20) that “proceed-\n 4\n\ning” covers “any docket activity” is refuted by the very\ncanons he invokes.\n Petitioner’s appeal to policy is misdirected. Out-\nside the rule-promulgation process, this Court’s role is\nto interpret, not innovate. And petitioner’s contorted\nreading of Rule 60(b) is a solution in search of a prob-\nlem. Ordinarily, plaintiffs who voluntarily dismiss\nwithout prejudice need no judicial relief; they can\nsimply sue again. The idiosyncratic predicament pe-\ntitioner encountered here is exceedingly unlikely to\nrecur. The inventive hypotheticals petitioner imagi-\nnes where attorneys dismiss suits without authority\nor defendants fraudulently induce dismissal can be\naddressed by other bodies of law. They provide no ba-\nsis to stretch Rule 60(b) into a cure for every litigation\nill.\n RULES INVOLVED\n Pertinent Federal Rules are reproduced in the ap-\npendix to this brief. App., infra, 1a-16a.\n STATEMENT\n 1. In 2020, petitioner brought this suit in district\ncourt against respondent, his former employer, alleg-\ning that his termination violated the Age Discrimina-\ntion in Employment Act (ADEA), 29 U.S.C. § 623 et\nseq. Pet. App. 2a. The case could not proceed, how-\never, because petitioner was “contractually obligated\nto arbitrate any dispute with [respondent].” Ibid.\n Instead of seeking a stay of the litigation pending\narbitration, see Smith v. Spizzirri, 601 U.S. 472,\n475-479 (2024); Adair Bus Sales, Inc. v. Blue Bird\nCorp., 25 F.3d 953, 955 (10th Cir. 1994), petitioner\nelected to dismiss his own suit voluntarily without\n 5\n\nprejudice under Federal Rule 41(a)(1)(A)(i). Pet. App.\n2a; see C.A. App. 22. Rule 41(a) allows a plaintiff to\ndismiss his own action unilaterally, “without a court\norder,” by filing a “notice of dismissal” before the de-\nfendant serves an answer or motion for summary\njudgment. Fed. R. Civ. P. 41(a)(1)(A)(i). Such a dis-\nmissal is “without prejudice” unless the plaintiff ’s no-\ntice of dismissal states otherwise, and it does not “op-\nerat[e] as an adjudication on the merits” unless “the\nplaintiff previously dismissed any federal- or state-\ncourt action based on or including the same claim.”\nFed. R. Civ. P. 41(a)(1)(B).\n The parties proceeded to arbitration. Pet. App. 2a-\n3a. Their arbitration agreement contemplated stream-\nlined proceedings, including telephonic conferences\n“[i]n the discretion of the arbitrator” to “expedite” the\n“summary determination of dispositive legal issues.”\nC.A. App. 82-83. Respondent submitted a motion for\nsummary judgment on petitioner’s ADEA claim, id.\nat 105-126, and petitioner filed a 22-page response\nthat called the issues “relatively straight forward\n[sic],” id. at 128; see id. at 128-149. Less than a\nmonth after petitioner filed his response, the arbitra-\ntor conducted a telephonic conference during which\nshe heard oral argument on the motion. Pet. App.\n30a. The arbitrator later issued an award granting\nsummary judgment to respondent. Id. at 3a; see C.A.\nApp. 36.\n 2. a. In 2021, “[d]issatisfied with the outcome” of\nthe arbitration, petitioner “returned to federal court.”\nPet. App. 2a. But he did not “fil[e] a new lawsuit chal-\nlenging arbitration.” Ibid. Instead, he filed in this pre-\nviously dismissed case what he styled a “motion to reo-\npen and vacate [the] arbitration award.” C.A. App. 24\n 6\n\n(capitalization altered). Petitioner’s motion contended\nthat the arbitral award was procedurally invalid be-\ncause he had not received notice that the telephonic\nconference would address respondent’s summary-\njudgment motion and because the arbitrator did not\nrecord that conference or accompany the award with\na written statement of reasons. Id. at 29-31.\n Petitioner’s motion identified Section 10 of the\nFAA, 9 U.S.C. § 10, as the sole basis for the district\ncourt’s subject-matter jurisdiction. C.A. App. 25. Sev-\neral months after the motion was filed, however, this\nCourt held in Badgerow v. Walters, 596 U.S. 1 (2022),\nthat Section 10 does not itself “support federal juris-\ndiction” and that courts must look to the “face of [an]\napplication” to vacate an arbitral award—not to the\nparties’ underlying dispute submitted to arbitration—\nto determine whether jurisdiction exists. Id. at 8-9.\n The district court later issued an order to show\ncause, questioning whether it possessed jurisdiction\nover petitioner’s motion. Pet. App. 51a; see C.A. App.\n210-213. Petitioner acknowledged that, “in the event\na new case is opened, [his] claim w[ould] be dismissed\nfor lack of jurisdiction because, under Badgerow, the\nfederal court cannot assume jurisdiction over the ar-\nbitration award based on [the] federal question” pre-\nsented by his underlying ADEA claim. C.A. App.\n216-217 & n.2. Although petitioner’s briefing on his\nmotion had not invoked Rule 60, his response urged\nthe court to “assume jurisdiction under Rule 60.” Id.\nat 217; see generally id. at 24-35, 200-204.\n b. The district court granted petitioner’s request\nto reopen his dismissed suit under Rule 60(b). Pet.\nApp. 49a-64a & n.1. The court acknowledged that a\n 7\n\nvoluntary dismissal without prejudice “is effective at\nthe moment the notice of dismissal is filed” without\nfurther order of the court. Id. at 53a (brackets and\ncitation omitted). The court also acknowledged that,\nalthough it had issued a minute order recognizing pe-\ntitioner’s voluntary dismissal, ibid. (citing D. Ct. Doc.\n9 (Apr. 13, 2020)), any such subsequent “order granting\ndismissal is superfluous, a nullity, and without proce-\ndural effect,” ibid. (citations omitted). The court ob-\nserved that “‘the filing of a Rule 41(a)(1)(i) [sic] notice\nitself closes the file’ and ‘the court has no role to play,’”\nand “the effect of the filing of ” the notice “is to leave the\nparties as though no action had been brought.” Ibid.\n(brackets and citation omitted). The court nevertheless\nheld that a voluntary dismissal without prejudice is a\n“final proceeding within the meaning of Rule 60(b).”\nId. at 54a (emphasis added).\n The district court further determined that reopen-\ning petitioner’s case was warranted for two reasons.\nPet. App. 58a-64a. First, the court deemed relief ap-\npropriate under Rule 60(b)(1) on the theory that peti-\ntioner had made a “careless mistake” by dismissing\nhis original case instead of staying it pending arbitra-\ntion. Id. at 59a. Second, it held that Rule 60(b)(6)\nauthorized relief based on “[t]he intervening change\nin law” in Badgerow, which foreclosed federal-court\njurisdiction over a freestanding application to vacate\nthe arbitral award. Id. at 60a.\n c. In a subsequent order, the district court granted\npetitioner’s request to vacate the arbitral award based\non his procedural challenges. Pet. App. 29a-48a. The\ncourt remanded the case “to arbitration” before a dif-\nferent arbitrator. Id. at 48a.\n 8\n\n 3. The court of appeals reversed. Pet. App. 1a-21a.\n a. The court of appeals rejected petitioner’s con-\ntention that Rule 60(b) authorized reopening his orig-\ninal case. Pet. App. 5a-21a. It explained that a “plain-\ntiff can only obtain relief under Rule 60(b) if his vol-\nuntary dismissal without prejudice under Rule 41(a)\nqualifies as ‘a final judgment, order, or proceeding.’ ”\nId. at 7a (quoting Fed. R. Civ. P. 60(b)). The court\nnoted that “no one assert[ed]” that the dismissal was\na “‘final judgment.’” Ibid. It further held that the dis-\nmissal did not result in any “final order” because peti-\ntioner’s notice of voluntary dismissal “was effective\nupon filing,” rendering an “order of dismissal” unnec-\nessary. Ibid.\n The court of appeals then held that a voluntary\ndismissal without prejudice is not a “final proceeding.”\nPet. App. 7a; see id. at 7a-21a. The court reasoned\nthat finality is lacking because a “plaintiff can usually\nrefile,” even “the next day.” Id. at 18a. “Although the\ndismissal may have brought a particular lawsuit with\nits own unique case number to a close,” it explained,\n“the overarching dispute between the parties has not\nbeen resolved.” Id. at 18a-19a.\n The court of appeals also reasoned that a “final\nproceeding” “must be confined to judicial determina-\ntions similar to” the final judgments and final orders\ncovered by the same phrase. Pet. App. 9a-10a (cita-\ntion omitted); see id. at 10a-18a. Petitioner’s volun-\ntary dismissal entailed no such “judicial determina-\ntion,” the court held, because it was “automatic upon\nfiling” and “no judicial officer was involved in any\nway.” Id. at 18a.\n 9\n\n The court of appeals further reasoned that, when\na plaintiff files a self-executing voluntary dismissal,\n“no one has been burdened by court action, a require-\nment for Rule 60(b) relief.” Pet. App. 19a. “By choos-\ning to dismiss without prejudice,” the court explained,\n“the plaintiff is leaving the door open for a future\nsuit.” Ibid. The court noted that “[t]his remains true\neven if it appears the plaintiff is unlikely to succeed\nby refiling his suit,” including because of intervening\ndevelopments. Ibid. In this case, the court observed,\npetitioner’s voluntary dismissal did not itself preclude\nhim from reviving his ADEA suit against respondent\nor seeking vacatur of the arbitral award. Id. at 19a &\nn.11. Any obstacle, the court concluded, stemmed in-\nstead from the subsequent arbitration award and this\nCourt’s intervening decision in Badgerow. Id. at 19a\nn.11. But such “future occurrence[s] * * * cannot\nboomerang back” and transform a non-final “volun-\ntary dismissal without prejudice into a final judg-\nment, order, or proceeding.” Id. at 19a.\n b. Judge Matheson dissented. Pet. App. 22a-28a.\nHe accepted that, “[a]s a general rule, a plaintiff ’s vol-\nuntary dismissal without prejudice is not ‘final.’” Id.\nat 24a (citation omitted). But he reasoned that such\na dismissal “may later become final due to procedural\ndevelopments.” Ibid. In his view, petitioner could sat-\nisfy that test because the arbitral award and\nBadgerow now barred him from litigating his under-\nlying claim and from seeking vacatur of the arbitral\naward in federal court, respectively. Id. at 28a. He\nfurther concluded that a voluntary dismissal without\nprejudice is a “proceeding,” citing circuit precedent\ntreating voluntary dismissal “with prejudice” as a final\nproceeding. Id. at 23a & n.1.\n 10\n\n 4. The court of appeals denied rehearing en banc.\nPet. App. 65a.\n SUMMARY OF ARGUMENT\n I. The district court lacked subject-matter juris-\ndiction over petitioner’s Rule 60(b) motion. That mo-\ntion sought not to resume federal-court litigation of\nhis ADEA claim, but instead to assert a collateral\nchallenge to an arbitral award that the court other-\nwise lacked jurisdiction to adjudicate. Kokkonen v.\nGuardian Life Insurance Co. of America, 511 U.S. 375\n(1994), squarely forecloses such attempts to circum-\nvent jurisdictional limits via a Rule 60(b) motion.\n A. Petitioner’s motion to reopen invoked the FAA\nas the source of jurisdiction to vacate the arbitral\naward, but the FAA requires an “independent juris-\ndictional basis.” Badgerow v. Walters, 596 U.S. 1, 8\n(2022) (citation omitted). Although the arbitration con-\ncerned a claim arising under federal law, Badgerow es-\ntablishes that jurisdiction over an application to vacate\nunder Section 10 cannot be premised on the parties’\nunderlying dispute. Id. at 8-9. A separate jurisdic-\ntional basis must appear on “the face” of the applica-\ntion to vacate. Id. at 9. Petitioner’s motion to reopen\ndid not identify any such basis.\n B. Conceding that Badgerow blocked a new suit\nin federal court to vacate the arbitral award, peti-\ntioner asked the district court to “assume jurisdiction\nunder Rule 60” to grant the same relief. C.A. App.\n217. That theory runs headlong into Kokkonen, which\nheld that a Rule 60(b) motion seeking “more than just\na continuation or renewal of the dismissed suit\n* * * requires its own basis for jurisdiction.” 511 U.S.\nat 378. Like any Federal Rule, Rule 60(b) cannot\n 11\n\n“extend * * * the jurisdiction of the district courts.”\nFed. R. Civ. P. 82. And Kokkonen makes clear that\nparties may not invoke Rule 60(b) to sidestep jurisdic-\ntional obstacles. Because petitioner sought not to re-\nsume litigation of his ADEA claim in federal court, but\ninstead to assert a challenge to an arbitral award, the\ncourt lacked jurisdiction under Kokkonen to entertain\npetitioner’s Rule 60(b) request.\n The court of appeals’ judgment reversing the dis-\ntrict court’s order that granted petitioner’s motion\nshould be affirmed on that ground. Alternatively, be-\ncause this jurisdictional defect renders the question\npresented irrelevant here, the Court may wish to dis-\nmiss the writ of certiorari as improvidently granted.\n II. The decision below should be affirmed in any\nevent because petitioner’s voluntary dismissal of his\nown suit without prejudice under Rule 41(a)(1)(A)(i)\nwas not a “final judgment, order, or proceeding” from\nwhich a party may seek “relie[f ].” Fed. R. Civ. P.\n60(b).\n A. A Rule 41(a)(1)(A)(i) voluntary dismissal with-\nout prejudice is not “final” in the well-settled sense\nthat Rule 60(b) uses that familiar legal term.\n 1. The term “final”—as applied to a judgment, or-\nder, or proceeding—means a determination that con-\nclusively resolves the issues in its scope. That under-\nstanding of finality in the context of judicial action\ntraces back to the First Congress and was well estab-\nlished when Congress added “final” to Rule 60(b) in\n1946. “Final” in Rule 60(b) incorporates that settled un-\nderstanding. See Hall v. Hall, 584 U.S. 59, 66 (2018).\n Voluntary dismissals without prejudice under\nRule 41(a)(1)(A)(i) are quintessentially non-final in\n 12\n\nthat sense. Although they instantly end the litigation,\nsuch dismissals do not conclusively resolve anything\nand pose no impediment to the plaintiff ’s refiling the\nsame action immediately. Courts thus have consist-\nently recognized that dismissals without prejudice are\nnot final—just like their historical predecessor, the\nvoluntary nonsuit. Central Transportation Co. v.\nPullman’s Palace Car Co., 139 U.S. 24, 39 (1891). This\nCourt has held that even a voluntary dismissal with\nprejudice is not final if the claims might “spring back\nto life.” Microsoft Corp. v. Baker, 582 U.S. 23, 41\n(2017). Dismissals without prejudice necessarily flunk\nthe settled test for finality.\n 2. Petitioner does not defend the position adopted\nby the dissent below that voluntary dismissals with-\nout prejudice, although not final when filed, can be-\ncome final due to later events. As the majority cor-\nrectly held, that “boomerang” view of finality is wrong\nand irreconcilable with the “instant and automatic ef-\nfect” of a such dismissals. Pet. App. 19a & n.11.\n Petitioner instead advances a novel theory of final-\nity that covers any “case-terminating” event. Br. 8.\nThat reading conflicts with Rule 60(b)’s text, ignores\nits historical context, and contravenes the canons pe-\ntitioner himself invokes.\n B. Petitioner’s voluntary dismissal without prej-\nudice also was not a “judgment, order, or proceeding.”\nFed. R. Civ. P. 60(b).\n 1. The court of appeals correctly concluded that\npetitioner forfeited any argument that a voluntary\ndismissal without prejudice is a “judgment.” Peti-\ntioner offers no compelling reason to revisit that fact-\nbound forfeiture determination.\n 13\n\n Petitioner’s “judgment” theory is meritless in any\nevent. The Federal Rules define a “[j]udgment” to “in-\nclud[e] a decree and any order from which an appeal\nlies.” Fed. R. Civ. P. 54(a). A Rule 41(a)(1)(A)(i) vol-\nuntary dismissal without prejudice involves no decree\nor order, and no appeal lies from the dismissal. Peti-\ntioner seizes on the negative space that he contends is\ncreated by “includes.” But this Court has already\nequated the term “judgment” with “‘final decision’ as\nthat term is used” for appellate jurisdiction. Bankers\nTrust Co. v. Mallis, 435 U.S. 381, 384 n.4 (1978) (per\ncuriam). And it would be passing strange to describe\nthe unilateral, self-executing election by a party that\nentails no judicial action of any kind as a “judgment.”\n 2. A voluntary dismissal without prejudice also is\nnot a “proceeding.” Fed. R. Civ. P. 60(b).\n A proceeding requires a determination of rights or\nobligations that burdens a party. Because “proceed-\ning” follows “judgment” and “order,” Fed. R. Civ. P.\n60(b), the noscitur a sociis and ejusdem generis canons\nsupport construing final proceedings as conclusive de-\nterminations of rights and obligations on par with fi-\nnal judgments and orders. The court’s authority to\n“relieve” a party from a final proceeding, ibid., further\nconfirms the need for some legal burden. A voluntary\ndismissal without prejudice, however, renders the\ncase a nullity without determining anything and im-\nposes no burden for a court to “relieve.”\n Petitioner is wrong to argue (Br. 20) that “any\ndocket activity” qualifies as a proceeding. His expan-\nsive interpretation defies the noscitur and ejusdem\ncanons by subsuming final judgments and orders into\nhis definition of final proceedings. And his invocation\n 14\n\nof the canon against surplusage highlights his own\ntest’s superfluities while ignoring the meaningful gap-\nfilling role that “proceeding” performs in capturing fi-\nnal determinations of rights and obligations that do\nnot result in judgments or orders.\n Petitioner also theorizes that Rule 60(b) preserved\nfederal courts’ preexisting authority to set aside vol-\nuntary dismissals without prejudice. But he mistak-\nenly relies on state-court decisions, despite this\nCourt’s holding that federal law alone governed fed-\neral courts’ authority to set aside final decisions.\nUnited States v. Mayer, 235 U.S. 55, 69 (1914). Peti-\ntioner’s state-survey approach would reintroduce\nthe same difficulties that led Congress to adopt the\nRules Enabling Act and also does not establish a\n“well-settled” rule. Kemp v. United States, 596 U.S.\n528, 539 (2022) (citation omitted). To the contrary,\nmany state courts followed the traditional rule that,\n“[w]hen the plaintiff took a nonsuit of his own motion\nhe was out of court, and could not move to set aside\nthe nonsuit.” Neil C. Head, The History and Develop-\nment of Nonsuit, 27 W. Va. L.Q. 20, 23 (1920); see, e.g.,\nWeisguth v. Supreme Tribe of Ben Hur, 112 N.E. 350,\n351 (Ill. 1916).\n C. Petitioner insists (Br. 46) that every case-\nterminating docket entry must be subject to judicial\nsuperintendence to eliminate a “twilight zone” in the\nFederal Rules. But if Rule 60(b) should expand to fill\nthe universe, that is a task for the rulemaking pro-\ncess, not for this Court in this case. Ample other tools\ncheck attorney misconduct and defendant deception\neven when a plaintiff cannot refile. And petitioner’s\nobjection ultimately lies at the feet of Rule 41, which\n 15\n\ngrants plaintiffs an unqualified right to dismissal\nwithout prejudice.\n ARGUMENT\n The district court lacked authority to grant peti-\ntioner’s Rule 60(b) motion for two separate reasons.\nFirst, the court lacked jurisdiction. Petitioner did not\nseek to revive his voluntarily dismissed ADEA claim;\nrather, he sought to vacate an arbitral award. There\nwas no basis for federal jurisdiction that would allow\nthe court to entertain that request in the first place.\nSecond, the only event in this case that petitioner’s mo-\ntion sought to reopen—his own voluntary dismissal\nwithout prejudice—was not a “final judgment, order,\nor proceeding” from which Rule 60(b) authorized the\ncourt to grant “relie[f ].” Fed. R. Civ. P. 60(b). For both\nreasons, this Court should affirm.\nI. THE DISTRICT COURT LACKED JURISDICTION\n OVER PETITIONER’S MOTION TO VACATE THE\n ARBITRAL AWARD\n The district court could not entertain petitioner’s\nRule 60(b) motion because the court was powerless to\ngrant the only relief the motion sought: vacatur of the\narbitral award. Petitioner did not seek to revive his\nunderlying ADEA claim, which he voluntarily dis-\nmissed to pursue contractually mandated arbitration.\nInstead, he sought to use this moribund case to assert\na challenge to the arbitral award—which the district\ncourt otherwise lacked jurisdiction to adjudicate. But\nthis Court has seen and rejected similar stratagems\nbefore. In Kokkonen v. Guardian Life Insurance Co. of\nAmerica, 511 U.S. 375, 377 (1994), the Court made clear\nthat a party cannot use Rule 60(b) to bypass jurisdic-\ntional barriers. Because the district court undisputedly\n 16\n\nlacked jurisdiction over an original action to vacate\nthe arbitral award, and because petitioner has never\npleaded nor proved any alternative jurisdictional ba-\nsis for that relief, the court lacked jurisdiction over pe-\ntitioner’s motion that sought the same relief—vacatur\nof the award—styled under Rule 60(b) and lodged in\nthis already-filed case.\n This jurisdictional defect is properly before this\nCourt. Federal courts have “limited jurisdiction, de-\nfined (within constitutional bounds) by federal stat-\nute.” Badgerow v. Walters, 596 U.S. 1, 7 (2022) (citing\nKokkonen, 511 U.S. at 377). Respondent argued be-\nlow, and the court of appeals held, that the district\ncourt lacked “subject-matter jurisdiction” here. Pet.\nApp. 4a; see Resp. C.A. Br. 28-29. And this Court has\nalways recognized its “special obligation” to assure it-\nself “‘not only of its own jurisdiction, but also that of\nthe lower courts in a cause under review.’” Bender v.\nWilliamsport Area School District, 475 U.S. 534, 541\n(1986) (citation omitted); see, e.g., Capron v. Van\nNoorden, 6 U.S. (2 Cranch) 126, 127 (1804); cf. Sup.\nCt. R. 15.2 (issues that “go to jurisdiction” exempt\nfrom forfeiture).\n This jurisdictional issue also resolves this case.\nThe district court categorically lacked the capacity to\ngrant the only remedy petitioner’s motion requested\nand so did not have the jurisdiction to entertain the\nmotion at all. For this reason alone, this Court should\naffirm or, alternatively, dismiss the writ of certiorari\nas improvidently granted.\n A. Petitioner moved to reopen this ADEA suit for\nthe sole purpose of vacating the arbitral award, as-\nserting jurisdiction based on the FAA alone. C.A. App.\n 17\n\n25. But the FAA “bestow[s] no federal jurisdiction”\nand “requir[es] an independent jurisdictional basis.”\nHall Street Associates, LLC v. Mattel, Inc., 552 U.S.\n576, 581-582 (2008). Section 10 also does not permit\na “look-through approach” that pins jurisdiction to the\nparties’ underlying dispute. Badgerow, 596 U.S. at 9.\nInstead, courts must determine whether another fed-\neral statute establishes subject-matter jurisdiction\nover an application to vacate an arbitral award by look-\ning to the “the face of the application itself.” Ibid.; see\nid. at 11-12. As petitioner later conceded, Badgerow\nthus doomed any request to vacate the award under\nSection 10 of the FAA. C.A. App. 216-217.\n Nor does any independent basis for federal juris-\ndiction appear on “the face of [petitioner’s] applica-\ntion” to vacate the award. Badgerow, 596 U.S. at 9.\nAlthough his complaint in this case identifies jurisdic-\ntionally diverse parties, C.A. App. 10, neither the com-\nplaint nor petitioner’s motion to reopen alleged any\namount in controversy, see 28 U.S.C. § 1332(a), nor\ndoes that jurisdictional ingredient “affirmatively ap-\npear in the record,” Bender, 475 U.S. at 546. Peti-\ntioner cannot attempt to fill that factual gap on appeal\nthrough “briefs and arguments” in this Court. Id. at\n547; see Summers v. Earth Island Institute, 555 U.S.\n488, 500 (2009) (refusing to consider affidavits in sup-\nport of standing that were introduced “after appeal\nha[d] been filed”). In all events, he has never made and\nso has forfeited any argument that diversity jurisdic-\ntion applies; unlike arguments against jurisdiction, ar-\nguments in favor of jurisdiction are subject to forfei-\nture. See California v. Texas, 593 U.S. 659, 674 (2021).\n B. Because Badgerow barred any freestanding\nfederal-court action to overturn the arbitral award,\n 18\n\npetitioner repackaged that request under Rule 60(b).\nHe urged the district court to “assume jurisdiction un-\nder Rule 60” and to reopen his earlier voluntary dis-\nmissal for the sole purpose of ruling on that same ap-\nplication to vacate the award. C.A. App. 217. But that\nrebranding campaign runs into another line of this\nCourt’s precedent that precludes using Rule 60(b) to\novercome jurisdictional limitations.\n As this Court held in Kokkonen, which petitioner\ncites (Br. 22), a party cannot employ Rule 60(b) to ob-\ntain relief that the court would otherwise lack juris-\ndiction to afford. There, the plaintiff stipulated to dis-\nmiss his claims with prejudice under Rule 41 after en-\ntering into a settlement agreement with the defend-\nant. 511 U.S. at 376-377. The defendant later moved\nto reopen that case so that the district court could en-\nforce the settlement agreement against the plaintiff\nwho had allegedly breached its terms. Id. at 377. The\ndistrict court asserted, and the Ninth Circuit en-\ndorsed, inherent supervisory authority over the settle-\nment following dismissal. Ibid.\n This Court reversed, holding that neither Rule 60(b)\nnor the district court’s inherent ancillary jurisdiction\nallowed reopening to enforce the settlement agree-\nment. Kokkonen, 511 U.S. at 378-382. The Court “em-\nphasized” that the defendant sought “enforcement of\nthe settlement agreement, and not merely reopening of\nthe dismissed suit by reason of breach of the agree-\nment that was the basis for dismissal.” Id. at 378 (em-\nphasis added). Such a request, the Court held, “is\nmore than just a continuation or renewal of the dis-\nmissed suit, and hence requires its own basis for ju-\nrisdiction.” Ibid. Nor could the district court exercise\nancillary jurisdiction to enforce the settlement’s terms—\n 19\n\neven though the court was aware of and had approved\nthose terms in granting the parties’ stipulation to dis-\nmiss. Id. at 381. Because the order of dismissal did\nnot expressly retain the district court’s authority to\nenforce the settlement, the court lacked jurisdiction to\nreopen the case to decide the contractual dispute. Id.\nat 381-382.\n Kokkonen is no outlier in looking past a Rule 60(b)\nmotion’s label to the substance of the relief sought in\ndetermining whether it lies outside the court’s power.\nFor example, the Court has held that the bar on sec-\nond or successive habeas petitions applies when a re-\nquest, “although labeled a Rule 60(b) motion, is in\nsubstance a successive habeas petition.” Gonzalez v.\nCrosby, 545 U.S. 524, 531 (2005). Gonzalez reinforces\nthe conclusion that courts must ascertain, without re-\ngard to a motion’s trappings, whether in substance it\nseeks relief the law does not authorize. See also, e.g.,\nPitchess v. Davis, 421 U.S. 482, 489-490 (1975) (per\ncuriam) (Rule 60(b) did not allow habeas petitioner to\ncircumvent exhaustion requirement).\n Indeed, Kokkonen’s approach is compelled by the\n“axiomatic” principle—expressly codified in Rule 82—\nthat “the Federal Rules of Civil Procedure do not cre-\nate or withdraw federal jurisdiction.” Owen Equip-\nment & Erection Co. v. Kroger, 437 U.S. 365, 370\n(1978); see Fed. R. Civ. P. 82 (Federal Rules “do not\nextend or limit the jurisdiction of the district courts”);\nsee also, e.g., Kontrick v. Ryan, 540 U.S. 443, 453\n(2004); Snyder v. Harris, 394 U.S. 332, 337 (1969).\nConstruing Rule 60(b) to permit relief a court other-\nwise lacks jurisdiction to grant would contravene that\ntenet.\n 20\n\n Kokkonen’s correct approach forecloses petitioner’s\nresort to Rule 60(b) here. Like the movant in Kokko-\nnen, 511 U.S. at 378, petitioner’s motion sought to re-\nvive his case not to resume litigating his claim in fed-\neral court, but to use that empty vessel as a vehicle\nto seek relief the court could not otherwise grant—\nvacatur of the arbitral award. And, like the movant\nin Kokkonen, id. at 381-382, petitioner asked the dis-\ntrict court to enforce a contract that the court had no\npower to police—here, the arbitration agreement.\nRule 60(b) does not authorize such “jurisdictional\n‘expan[sion] by judicial decree.’” Badgerow, 596 U.S.\nat 12 (quoting Kokkonen, 511 U.S. at 377). Simply\nput, Rule 60(b) could not vest the court with jurisdic-\ntion to reopen the case to grant that relief.\n This jurisdictional defect is reason enough to af-\nfirm the court of appeals’ judgment, which reversed\nthe district court’s order granting petitioner’s motion\non the ground that the court lacked “subject-matter\njurisdiction to consider [the] Rule 60(b) motion.” Pet.\nApp. 4a. Alternatively, because this jurisdictional de-\nfect deprives the question presented regarding the re-\nlationship of Rules 60(b) and 41(a)(1)(A)(i) of any sig-\nnificance in this case, the Court may wish to dismiss\nthe writ of certiorari as improvidently granted. Either\nway, this jurisdictional defect precludes petitioner\nfrom prevailing.\nII. RULE 60(B) DOES NOT AUTHORIZE DISTRICT\n COURTS TO REOPEN VOLUNTARY DISMISSALS\n WITHOUT PREJUDICE\n Rule 60(b) relief is unavailable in any event be-\ncause the only event in this case petitioner’s motion\nsought to unwind—his own prior voluntary dismissal\n 21\n\nof the case without prejudice—was not a “final judg-\nment, order, or proceeding” from which the district\ncourt could grant petitioner “relie[f ].” Fed. R. Civ. P.\n60(b). Such a dismissal is not “final” (ibid.) because\nby definition it leaves the plaintiff free to refile. And\na plaintiff ’s unilateral withdrawal of his case, which\nimmediately and automatically ends the litigation\nwithout any court action or any effect on the parties’\nlegal rights or obligations, is not a “judgment, order,\nor proceeding.” Ibid. Petitioner’s contrary arguments\nare untenable.\n A. A Voluntary Dismissal Without Prejudice\n Is Not “Final”\n Rule 60(b) expressly limits the authority it confers\nto “reliev[ing]” a party from a “final judgment, order, or\nproceeding.” Fed. R. Civ. P. 60(b) (emphasis added).\nThat qualifier carries the same meaning in Rule 60(b)\nthat it has borne for centuries in the context of review\nof judicial action. A judicial disposition is final when\nit conclusively resolves all relevant issues in its scope.\nA voluntary dismissal without prejudice cannot qualify\nbecause it does not definitively determine anything; it\nposes no impediment to the plaintiff ’s restarting the\nsuit immediately.\n Unable to square such dismissals with the tradi-\ntional understanding of finality, petitioner invents his\nown novel test that treats any “case-terminating”\nevent as “final.” Br. 13. That made-to-order meaning\ndeparts from well-settled law, misreads Rule 60(b)’s\ntext, and contradicts the canons he invokes.\n 22\n\n 1. A dismissal without prejudice is not\n “final” because it does not conclusively\n resolve the dispute\n In interpreting Rule 60(b), this Court considers\nnot only the “ordinary meaning” but also the “legal\nmeaning” of its terms in their immediate and histori-\ncal context. Kemp v. United States, 596 U.S. 528, 534\n(2022). By pairing “final” with “judgment, order, or\nproceeding,” the 1946 amendment of Rule 60(b)\ntapped into the well-settled finality requirement that\nhas governed appealability since the Founding. A vol-\nuntary dismissal without prejudice is quintessentially\nnon-final under that well-settled standard. The rele-\nvant historical practice confirms that conclusion.\n a. In everyday usage, “final” can denote either\nmere chronology (“[p]ertaining to or coming at or as\nthe end; ultimate; last”) or conclusiveness (“making un-\nnecessary, further action or controversy; conclusive;\ndecisive”). Funk & Wagnalls New Practical Standard\nDictionary 437 (1944); accord Webster’s New Interna-\ntional Dictionary 816 (1922) (Webster’s). In law, “final”\nby itself can bear both meanings. Black’s Law Dic-\ntionary 779 (3d ed. 1933) (Black’s) (“[d]efinitive; ter-\nminating; completed; conclusive; last”).\n But terms in the Federal Rules, as in statutes,\nshould not be read in isolation. They should be con-\nstrued in light of their “legal lineage,” Hall v. Hall,\n584 U.S. 59, 66 (2018), as well as their textual, histor-\nical, and structural context. Here, those indicia all\npoint to a specific meaning: court actions that conclu-\nsively resolve all relevant issues in their scope. Volun-\ntary dismissals without prejudice fail that test.\n 23\n\n Because “two words together may assume a more\nparticular meaning than those words in isolation,”\nFCC v. AT&T Inc., 562 U.S. 397, 406 (2011), an adjec-\ntive like “final” cannot be read in a vacuum, but rather\nwith a view to what it modifies: “judgment, order, or\nproceeding,” Fed. R. Civ. P. 60(b). When the term was\nadded to Rule 60(b) in 1946, as today, “final” had a\nsettled meaning when modifying “judgment”: A judg-\nment is “final” only when it “dispos[es] of all issues\ninvolved in the litigation.” Catlin v. United States,\n324 U.S. 229, 236 (1945). And the adjective “final”\nmust mean the same thing when attached to “order”\nand “proceeding” because an adjective does not shape-\nshift “depending on which object it is modifying.”\nReno v. Bossier Parish School Board, 528 U.S. 320,\n329 (2000).\n That concept of finality has been a mainstay re-\nquirement of appellate jurisdiction dating back to the\nFirst Congress. When Congress created circuit courts,\nit vested them with the authority to hear appeals only\nover “final decrees and judgments.” Judiciary Act of\n1789, ch. 20, § 22, 1 Stat. 84; see Midland Asphalt\nCorp. v. United States, 489 U.S. 794, 798 (1989). That\nfinality requirement has carried forward in the grant\non the books today of appellate jurisdiction over “all\nfinal decisions.” 28 U.S.C. § 1291.\n Applying the Judiciary Act of 1789 and its succes-\nsors, this Court has held that a “judgment or decree”\nis “final” principally when it “terminate[s] the litiga-\ntion between the parties on the merits of the case, so\nthat if there should be an affirmance * * * the court\nbelow would have nothing to do but to execute the\njudgment or decree it had already rendered.”\nBostwick v. Brinkerhoff, 106 U.S. 3, 3-4 (1882). A non-\n 24\n\nmerits dismissal can be final in that sense only if it\n“effectually terminates the particular case, prevents\nthe plaintiff from further prosecuting the same and\nrelieves the defendant from putting in a defense.”\nWilson v. Republic Iron & Steel Co., 257 U.S. 92, 96\n(1921). The Court also has recognized a limited class\nof collateral orders, e.g., Cohen v. Beneficial Indus-\ntrial Loan Corp., 337 U.S. 541, 546 (1949), and post-\njudgment orders, e.g., Budinich v. Becton Dickinson &\nCo., 486 U.S. 196, 201-202 (1988), that are final (and\nthus appealable) in their own right because they con-\nclusively resolve the issues within their scope.\n Rule 60(b) incorporates that familiar, longstand-\ning definition of “final.” As originally promulgated,\nRule 60(b) allowed courts to grant relief from any\n“judgment, order, or proceeding.” Fed. R. Civ. P. 60(b)\n(1938). The Rule borrowed that language from a Cal-\nifornia statute that extended to interlocutory deci-\nsions. Fed. R. Civ. P. 60(b) Advisory Committee Note\nto 1937 Adoption (citing Cal. Civ. Proc. Code § 473);\nsee, e.g., Chiarodit v. Chiarodit, 21 P.2d 562, 564 (Cal.\n1933). In 1946, however, the Rules Committee added\na finality requirement to “emphasiz[e] the character\nof the judgments, orders or proceedings from which\nRule 60(b) affords relief.” Fed. R. Civ. P. 60(b) Advi-\nsory Committee Note to 1946 Amendment.\n The choice to “transplan[t]” a finality requirement\nfrom a legal tradition dating back to the First Con-\ngress “brings the old soil” of decisions holding that vol-\nuntary nonsuits and dismissals without prejudice are\nnot final. Hall, 584 U.S. at 73 (citation omitted). The\npairing of “final” and “judgment”—in a provision ad-\ndressing relief from judicial action—makes the parallel\n 25\n\nto finality for appealability unmistakable. See p. 23,\nsupra.\n Rule 60 elsewhere reinforces that same connec-\ntion. When adding the finality requirement, the 1946\namendments clarified that a Rule 60(b) motion “does\nnot affect the finality of a judgment” for appeal. Fed.\nR. Civ. P. 60(b) (1946); see Fed. R. Civ. P. 60(c)(2)\n(materially identical); see also Fed. R. App. P.\n4(a)(4)(A)(vi) (Rule 60(b) motion tolls time to appeal\nonly when filed “within the time allowed for filing a\nmotion under Rule 59”). This Court accordingly has\nrecognized that an action typically becomes final for\npurposes of appeal and Rule 60(b) at the same time.\nSee Stone v. INS, 514 U.S. 386, 401 (1995).\n Rule 60(b) thus applies only to judgments, orders,\nand proceedings that are “final,” as that word has\nbeen used in this context since the Founding: a court\naction conclusively resolving all relevant issues.\n b. Voluntary dismissals without prejudice are not,\nand never have been, final under that well-established\nmeaning. The distinguishing feature of a dismissal\nwithout prejudice is that it does not definitively re-\nsolve the dispute but leaves the plaintiff free to restart\nthe dispute. Cone v. West Virginia Pulp & Paper Co.,\n330 U.S. 212, 217 (1947). As the court of appeals ex-\nplained, “[b]y choosing to dismiss without prejudice,\nthe plaintiff is leaving the door open for a future suit”;\nabsent other, independent barriers to suit, the defend-\nant has no repose at all. Pet. App. 19a.\n The question whether voluntary dismissals with-\nout prejudice fail the traditional test for finality has\nbeen asked and answered many times over. The pri-\nmary common-law predecessor to a Rule 41(a)(1)(A)(i)\n 26\n\nvoluntary dismissal without prejudice was the volun-\ntary nonsuit. Costello v. United States, 365 U.S. 265,\n285-286 (1961). For well over a century before 1946,\nthis Court and others had repeatedly made clear that\na plaintiff could not appeal from a voluntary nonsuit.\nSee, e.g., Central Transportation Co. v. Pullman’s Pal-\nace Car Co., 139 U.S. 24, 39 (1891); United States v.\nEvans, 9 U.S. (5 Cranch) 280, 281 (1809) (Marshall,\nC.J.). Voluntary nonsuits were not final “because the\naction may be brought anew.” Rudolph v. Sensener,\n39 App. D.C. 385, 387 (1912).\n Following Rule 41(a)’s adoption, lower courts have\nconsistently recognized that a dismissal without prej-\nudice is not a “final decision” for the purposes of Sec-\ntion 1291 because the plaintiff “‘is entitled to bring a\nlater suit on the same cause of action.’” Marshall v.\nKansas City Southern Railway Co., 378 F.3d 495, 500\n(5th Cir. 2004) (citation omitted); see, e.g., American\nStates Insurance Co. v. Capital Associates of Jackson\nCounty, Inc., 392 F.3d 939, 940 (7th Cir. 2004)\n(Easterbrook, J.) (“Dismissals without prejudice are\ncanonically non-final and hence not appealable under\n28 U.S.C. § 1291.”); Treasurer of State of Michigan v.\nBarry, 168 F.3d 8, 13 (11th Cir. 1999) (“voluntary dis-\nmissals, granted without prejudice, are not final deci-\nsions” because “it is possible that the claim dismissed\nwithout prejudice will be re-filed”).\n That consensus view follows a fortiori from this\nCourt’s decision in Microsoft Corp. v. Baker, 582 U.S.\n23 (2017), which held that even a dismissal with prej-\nudice can be non-final where the plaintiff for other\nreasons retains the ability to renew dismissed claims.\nId. at 41. The plaintiffs in Microsoft sued the company\nfor an alleged design defect in the Xbox video-game\n 27\n\nconsole. Id. at 33. After the district court denied class\ncertification and the Ninth Circuit denied permission\nto take an interlocutory appeal from that order, the\nplaintiffs stipulated to dismissal of their claims with\nprejudice and took an appeal. Id. at 34-35. This Court\nheld that the voluntary dismissal with prejudice was\nnot final because the plaintiffs had manufactured the\ndismissal and even asserted a “right to ‘revive’ those\nclaims if the denial of class certification [were] re-\nversed on appeal.” Id. at 41. If a preclusive voluntary\ndismissal with prejudice is not final because of the\npossibility that claims might “spring back to life” due\nto later events (there, potential victory on appeal),\nibid., then a voluntary dismissal without prejudice\ncannot possibly be final because nothing whatsoever\nprevents the plaintiff from refiling the very next day,\nsee Cone, 330 U.S. at 217.\n An unbroken line of precedent and practice shows\nthat voluntary dismissals without prejudice are not\n“final.” The court of appeals thus was correct that\nRule 60(b) does not authorize relief from the dismissal\nhere.\n 2. Neither the dissent’s nor petitioner’s\n contrary test for finality has merit\n Neither the dissenting opinion below nor peti-\ntioner in this Court has attempted to show how volun-\ntary dismissals without prejudice satisfy the tradi-\ntional test for finality. Each instead offered an in-\nvented alternative test. But both lack merit.\n a. The dissent below reasoned that, although “[a]s\na general rule” voluntary dismissals without prejudice\nare not final at the time they occur, in certain circum-\nstances such dismissals can become final due to later\n 28\n\ndevelopments. Pet. App. 24a. Petitioner does not de-\nfend that approach, so this Court need not consider it.\nAnd in any event, that “boomerang” theory is untena-\nble, as the majority below recognized. Id. at 19a.\n The dissent posited that petitioner’s non-final dis-\nmissal without prejudice became final when Badgerow\n“effectively excluded [petitioner] from federal court.”\nPet. App. 28a (citation omitted). But what must be “fi-\nnal” to open the Rule 60(b) door is the “judgment, or-\nder, or proceeding” at issue. Fed. R. Civ. P. 60(b). And\nas the majority below explained, finality must be as-\nsessed “at the moment the plaintiff filed the requisite\nnotice” because the effect of a Rule 41(a)(1)(A)(i) dis-\nmissal notice is “instant and automatic.” Pet. App.\n19a n.11.\n The Rule’s structure and this Court’s precedent\nboth instruct that finality should be knowable at the\ntime of the judgment, order, or proceeding. Allowing\nfinality to spring up months or years later would make\na hash of the time limits, which run from “the entry of\nthe judgment or order or the date of the proceeding.”\nFed. R. Civ. P. 60(c)(1). And as the Court has held for\nthe finality requirement governing appeals, “[c]ourts\nand litigants are best served by [a] bright-line rule,\nwhich accords with traditional understanding.” Budi-\nnich, 486 U.S. at 202.\n The dissent’s boomerang approach to finality\nmakes especially little sense in the circumstances of\nthis case. Badgerow did not alter anything about the\nRule 41(a)(1)(A)(i) dismissal notice that petitioner had\nfiled nearly two years earlier. Its holding—concern-\ning the FAA—had no bearing on whether petitioner\ncould refile his dismissed ADEA suit in federal court\n 29\n\nand affected only whether petitioner could file a sepa-\nrate action in federal court seeking vacatur of the ar-\nbitral award.\n b. For his part, petitioner argues (Br. 13) that\nRule 60(b) adopted a novel finality definition that en-\ncompasses any “case-terminating” docket activity.\nThat interpretation cannot be squared with Rule 60(b)’s\ntext, context, or structure.\n To start, petitioner’s theory cannot account for\nRule 60(b)’s reference to “final judgment[s].” This\nCourt held in Catlin, the year before the 1946 amend-\nment that added “final” to Rule 60(b), that a judgment\nis “final” when it “dispos[es] of all issues involved in\nthe litigation.” 324 U.S. at 236. Under petitioner’s\ntheory, however, Rule 60(b) would have a different,\ncustom-made definition that a judgment is final\nwhenever it terminates a docket. Cf. Hall, 584 U.S. at\n66. The only way petitioner could get around the final-\njudgment rule in Catlin is to limit his bespoke defini-\ntion of “final” to “proceeding.” But that argument\nwould make “final” a chameleon within the same\nphrase, contrary to ordinary interpretive principles.\nSee Reno, 528 U.S. at 329.\n Petitioner points (Br. 16) to this Court’s state-\nment that “the requirement of finality is to be given a\n‘practical rather than a technical construction’ ” for\nSection 1291. Gillespie v. United States Steel Corp.,\n379 U.S. 148, 152 (1964) (citation omitted). But that\nadage cuts decisively against petitioner. As this Court\nrecently explained, courts give finality a “‘practical’”\nconstruction by “resist[ing] efforts to stretch” the con-\ncept in a way “that would erode the finality principle\nand disserve its objectives.” Microsoft, 582 U.S. at 37\n 30\n\n(citation omitted). The Court should similarly resist\npetitioner’s attempt to sap the settled term “final” of\nits longstanding meaning.\n Petitioner also is wrong to argue (Br. 44) that tak-\ning Rule 60(b)’s finality requirement seriously “di-\nvide[s] the world” into interlocutory decisions and fi-\nnal ones. The voluntary dismissal with prejudice in\nMicrosoft was not interlocutory because it “left noth-\ning for the District Court to do but execute the judg-\nment.” 582 U.S. at 43 (Thomas, J., concurring in the\njudgment). Even so, the Court held that the dismissal\nwas not final because the dismissed claims might be\nrevived. Id. at 41.\n Petitioner’s theory (Br. 28) that something could\nbe final for Rule 60(b) even if not final for appeal\nwould leave litigants and courts lost at sea in applying\nconflicting conceptions of finality. That novel project\nwould invite complexity in a context—circumscribed\nrelief from final decisions—where it is most unwel-\ncome. Here, as elsewhere, this Court should adopt the\n“clearer rule” that avoids “overly complex jurisdic-\ntional administration.” Hertz Corp. v. Friend, 559\nU.S. 77, 96 (2010).\n Worse, if Rule 60(b) relief were available from rul-\nings that are not “final” for purposes of appealability,\na party could help himself to a statutorily unauthor-\nized appeal simply by filing a Rule 60(b) motion and\nappealing from its denial. See Browder v. Director,\nDepartment of Corrections of Illinois, 434 U.S. 257,\n263 n.7 (1978) (ruling on a Rule 60(b) motion is a final\ndecision under Section 1291). Rule 60(b) should not\npermit such bootstrapping.\n 31\n\n B. Petitioner’s Voluntary Dismissal Without\n Prejudice Was Not A “Judgment, Order,\n Or Proceeding”\n Rule 60(b) is independently inapplicable because\nit permits relief only from a “judgment, order, or pro-\nceeding.” Fed. R. Civ. P. 60(b). A voluntary dismissal\nwithout prejudice is none of those things. Each item\nin the list denotes court action that determines legal\nrights and imposes legal burdens. A plaintiff ’s with-\ndrawal of his suit—which has “instant and automatic\neffect” without any judicial intervention, Pet. App.\n19a n.11—does not remotely fit that bill.\n Petitioner does not dispute that the dismissal was\nnot an “order.” Although the district court issued a\nminute order purporting to confirm the effect of the\ndismissal, D. Ct. Doc. 9, the court itself later acknowl-\nedged that, under Tenth Circuit precedent petitioner\ndoes not challenge, “an order granting dismissal is su-\nperfluous, a nullity, and without procedural effect,”\nPet. App. 53a (quoting Lundahl v. Halabi, 600 F. App’x\n596, 603 (10th Cir. 2014), in turn quoting Janssen v.\nHarris, 321 F.3d 998, 1000 (10th Cir. 2003)).\n Petitioner’s core contention on appeal is that Rule\n60(b) does not require any “court order.” Br. 9. He ar-\ngues instead that his voluntary dismissal was either a\n“judgment” or a “proceeding.” Br. 16-29. The Tenth\nCircuit correctly deemed the former contention for-\nfeited, and neither has any merit.\n 1. A voluntary dismissal without prejudice\n is not a “judgment”\n Petitioner’s contention that his voluntary dismis-\nsal was a “judgment” is both forfeited and wrong.\n 32\n\n The court of appeals observed that “no one asserts\nthat we have a ‘final judgment.’” Pet. App. 7a. Its\nanalysis accordingly focused on whether such a dismis-\nsal is a “final proceeding.” Ibid.; see id. at 7a-21a. At\nthe petition stage, petitioner acknowledged that in the\ncourt of appeals “the parties agreed that Petitioner’s\nvoluntary dismissal was not a ‘final judgment’ or a\n‘final order.’” Pet. 8. His petition neither asked this\nCourt to overlook that forfeiture nor advanced any\n“final judgment” argument. Petitioner now disputes\nthat forfeiture finding in a lengthy footnote (Br. 26 n.5)\nbut offers no reason for this Court to revisit that fact-\nbound determination. And the passage of his Tenth Cir-\ncuit brief where he purports (ibid.) to have preserved\nthe argument did no such thing. Resp. C.A. Br. 33-34.\n In any event, the voluntary dismissal without\nprejudice was not a final “judgment.” Fed. R. Civ. P.\n60(b). The Federal Rules define a “‘[j]udgment’ as\nused in these rules”—plural—to “includ[e] a decree\nand any order from which an appeal lies.” Fed. R. Civ.\nP. 54(a). As this Court observed, “[a] ‘judgment’ for\npurposes of the Federal Rules of Civil Procedure” thus\n“appear[s] to be equivalent to a ‘final decision’ as that\nterm is used in 28 U.S.C. § 1291.” Bankers Trust Co.\nv. Mallis, 435 U.S. 381, 384 n.4 (1978) (per curiam)\n(quoting Fed. R. Civ. P. 54(a)); see Melkonyan v. Sul-\nlivan, 501 U.S. 89, 95 (1991). But petitioner’s dismis-\nsal without prejudice does not check either box: It\ntakes effect “without a court order,” Frank v. Gaos,\n586 U.S. 485, 492 (2019) (per curiam) (emphasis\nadded); accord Fed. R. Civ. P. 41(a)(1)(A), and it is not\nappealable, see pp. 25-27, supra.\n Petitioner seizes (Br. 28) on the word “includes” in\nRule 54(a) as compelling a “broa[d]” understanding of\n 33\n\n“judgment.” But the phrase “includes a decree and\nany order from which an appeal lies” in Rule 54(a)\nsimply reflects the Rules’ merger of procedure in\ncourts of law with that of courts of equity, which is-\nsued decrees rather than judgments. E.g., Local Loan\nCo. v. Hunt, 292 U.S. 234, 241 (1934); see p. 23, supra\n(same distinction in Judiciary Act of 1789). The Rules\nCommittee might have worried about decrees falling\nthrough the cracks when consolidating to “one form of\naction” and leaving equity-specific language behind.\nFed. R. Civ. P. 2. Whatever their reasons, Rule 54(a)\ndoes not plausibly empower courts to recognize new\ntypes of “judgments” that meet neither of Rule 54(a)’s\ncriteria. And even if “includes” left the door ajar, pe-\ntitioner’s expansive view of “judgment” as including a\nparty’s own unilateral, unappealable action drives a\ntruck through it.\n Petitioner’s capacious reading of “judgment” also\nconflicts with Rule 58, which requires “[e]very judg-\nment” to “be set out in a separate document” (with ex-\nceptions not including Rule 41 dismissals) and in-\nstructs the clerk to enter that document. Fed. R. Civ.\nP. 58(a), (b) (emphasis added). This Court has held,\nbefore and after Rule 58, that the “judgment is the act\nof the court,” even when entered by a clerk. Commis-\nsioner v. Bedford’s Estate, 325 U.S. 283, 286 (1945)\n(emphasis added) (quoting Ex parte Morgan, 114 U.S.\n174, 175 (1885)). Because a Rule 41(a)(1)(A)(i) notice\nis an act of the plaintiff, it could not be a judgment as\nthe Federal Rules define the term.\n Spurning the Federal Rules, petitioner relies on a\ndictionary that describes without-prejudice judg-\nments. Br. 26-27. But that dictionary describes “judg-\nments” entered by a court after the plaintiff has aban-\n 34\n\ndoned the litigation. Black’s 1026, 1028. That those\njudgments were “based upon the admissions or confes-\nsions of one only of the parties,” Pet. Br. 26 (quoting\nBlack’s 1026) (emphasis added), does not mean the\nparty’s action itself is a judgment. And even if Black’s\nor other dictionaries defined “judgments” that expan-\nsively in other contexts, those meanings must yield to\nthe Federal Rules’ own “explicit definition” of the\nterm. Tanzin v. Tanvir, 592 U.S. 43, 47 (2020) (cita-\ntion omitted).\n 2. A voluntary dismissal without prejudice\n is not a “proceeding”\n Petitioner’s voluntary dismissal without prejudice\nalso does not fit into Rule 60(b)’s catchall category for\na “final * * * proceeding.” Fed. R. Civ. P. 60(b).\n a. The term “proceeding,” like the items it follows\n(“judgment” and “order”), means a determination of\nlegal rights that imposes legal burdens on a party\nthrough the judicial process. Because a voluntary dis-\nmissal without prejudice simply wipes the slate clean\nwhile leaving the plaintiff free to sue again, it is not a\nproceeding from which one could seek Rule 60(b) re-\nlief.\n i. When Rule 60(b) was first promulgated in 1938,\nthe term “proceeding” meant “the form and manner of\nconducting juridical business before a court or judicial\nofficer; regular and orderly progress in form of law;\nincluding all possible steps in an action from its com-\nmencement to the execution of judgment.” Black’s\n1430. That definition points to actions that involve\n“juridical business” and move the litigation from com-\nmencement through execution of judgment.\n 35\n\n In the context of Rule 60(b), a proceeding is a step\nin litigation that determines the parties’ rights and\nobligations. “[P]roceeding” brings up the rear behind\n“judgment” and “order”—a structure that implicates\ntwo related canons. Pet. App. 9a-10a. The noscitur a\nsociis canon “teaches that a word is ‘given more pre-\ncise content by the neighboring words with which it is\nassociated.’” Fischer v. United States, 603 U.S. 480,\n487 (2024) (citation omitted). And the related ejusdem\ngeneris canon instructs that “a general or collective\nterm at the end of a list of specific items is typically\ncontrolled and defined by reference to the specific clas-\nses that precede it.” Ibid. (citation, ellipsis, and inter-\nnal quotation marks omitted). Applying those canons,\ncourts read the general term “in light of any ‘common\nattribute[s]’ shared by the specific items.” Southwest\nAirlines Co. v. Saxon, 596 U.S. 450, 458 (2022) (cita-\ntion omitted).\n Both canons point in the same direction here. The\ncommon attribute of both “judgment” and “order,” par-\nticularly when paired with “final,” is a determination\nof a party’s rights or obligations. As explained, a final\njudgment conclusively resolves an action. See p. 32,\nsupra. An “order” is “[e]very direction of a court or\njudge made or entered in writing, and not included in\na judgment,” and becomes “final” when it “either ter-\nminates the action itself, or decides some matter liti-\ngated by the parties, or operates to divest some rights;\nor one which completely disposes of the subject-matter\nand the rights of the parties.” Black’s 1298. In prac-\ntice, actions that do not require a separate judgment\nmay be final orders or final proceedings. Fed. R. Civ.\nP. 58(a)(1)-(5); see, e.g., 28 U.S.C. § 2254 Rule 11(a)\n 36\n\n(referring to district court’s habeas decision as a “final\norder”).\n The sole verb in Rule 60(b)’s umbrella clause con-\nfirms that a proceeding involves a determination of\nrights or obligations that burdens a party: A district\ncourt “may relieve a party * * * from a final * * * pro-\nceeding.” Fed. R. Civ. P. 60(b) (emphasis added). To\n“relieve” is to “[t]o raise or remove, as anything which\ndepresses, weighs down, or crushes,” “to render less\nburdensome or afflicting,” or (in law) “[t]o ease any im-\nposition, burden, wrong, or oppression, by judicial\n* * * interposition.” Webster’s 1801; accord Black’s\n1523 (“deliverance from oppression, wrong, or injus-\ntice”). As the court of appeals observed, one must be\n“burdened by court action” to be able to request\n“Rule 60(b) relief.” Pet. App. 19a.\n The category of final proceedings does meaningful\nwork as a catchall for conclusive resolutions of rights\nand obligations that burden parties, as the Federal\nRules of Civil Procedure reflect. For example, Rule 69\nsets forth “proceedings supplementary to and in aid of\njudgment or execution.” Fed. R. Civ. P. 69(a)(1). Rule\n71.1 also establishes specific “proceedings to condemn\nreal and personal property by eminent domain,” in-\ncluding the appointment of commissions to determine\njust compensation and “proceedings” to distribute the\ndeposit of just compensation. Fed. R. Civ. P. 71.1(a),\n(h)(2), (j)(2). “A term appearing in several places” in\nan act or code “is generally read the same way each\ntime it appears.” Ratzlaf v. United States, 510 U.S.\n135, 143 (1994). And such “proceedings” can produce\ndecisions that satisfy the longstanding finality re-\nquirement for appeal. E.g., Bank Markazi v. Peterson,\n578 U.S. 212, 221-224 (2016) (judgment enforcement\n 37\n\nunder Rule 69); United States v. Merz, 376 U.S. 192,\n197 (1964) (commissioners’ report under predecessor\nRule 71A).\n This Court’s decisions offer further examples\nwhere parties sought relief from burdens imposed by\nconclusive legal determinations that do not neatly fit\nthe definition of a final judgment or order and that\n“proceeding” in Rule 60(b) could encompass. Take, for\nexample, consent decrees. Although they are only\n“comparable” to judgments, Farrar v. Hobby, 506 U.S.\n103, 111 (1992), this Court has endorsed Rule 60(b)\nrelief from consent decrees, e.g., Rufo v. Inmates of\nSuffolk County Jail, 502 U.S. 367, 378 (1992). The\nCourt has also suggested that voluntary dismissals\nwith prejudice (by a plaintiff ’s unilateral action or\nstipulation) may sometimes qualify for Rule 60(b) re-\nlief, Kokkonen, 511 U.S. at 378—even though a\nRule 41 dismissal is not a judgment under Rule 54\nand takes effect “without a court order,” Fed. R. Civ.\nP. 41(a)(1)(A). But such a dismissal “operates as an\nadjudication on the merits,” Fed. R. Civ. P. 41(a)(1)(B),\nand thus imposes legal burdens from which a party\ncould seek relief.\n ii. Whatever the outer limit of “proceeding[s]” un-\nder Rule 60(b), voluntary dismissals without prejudice\ndo not qualify. Rule 41 allows a plaintiff to erase a\ncase as though it never happened—determining no\none’s rights or obligations and leaving no legal bur-\ndens from which a party could need relief.\n Before the Federal Rules of Civil Procedure, this\nCourt recognized the principle that a court “los[es]\n[its] jurisdiction” upon a plaintiff ’s dismissal without\nprejudice. Southern Railway Co. v. Miller, 217 U.S.\n 38\n\n209, 217 (1910). This Court later reiterated that a dis-\ntrict court’s jurisdiction “end[s] at th[e] point” that a\nplaintiff files a notice of dismissal under Rule 41(a)(1).\nMelkonyan, 501 U.S. at 103. And it is “hornbook law\nthat ‘a voluntary dismissal without prejudice under\nRule 41(a) leaves the situation as if the action never\nhad been filed.’” United States v. L-3 Communications\nEOTech, Inc., 921 F.3d 11, 19 (2d Cir. 2019) (quoting\n9 Charles Alan Wright & Arthur R. Miller, Federal\nPractice & Procedure § 2367, at 559 (3d ed. 2017)); see,\ne.g., In re Piper Aircraft Distribution Systems Anti-\ntrust Litigation, 551 F.2d 213, 219 (8th Cir. 1977) (ex-\nplaining that a voluntary dismissal without prejudice\n“render[s] the proceedings a nullity”).\n When petitioner filed his notice of dismissal with-\nout prejudice, he “wipe[d] the slate clean” and left\nnothing that could have burdened him. Sandstrom v.\nChemLawn Corp., 904 F.2d 83, 86 (1st Cir. 1990). The\nnotice “divest[ed] the district court of subject-matter\njurisdiction” to adjudicate the case as though peti-\ntioner had never filed the case at all—the absence of a\nproceeding, not a proceeding that can be set aside un-\nder Rule 60(b). Pet. App. 4a. As the court of appeals\nheld, “simply filing a sheet of paper” to hit the reset\nbutton on litigation is not a “proceeding.” Id. at 16a.\n iii. In truth, the “proceeding” from which peti-\ntioner seeks relief is the arbitration—not the volun-\ntary dismissal without prejudice. And Badgerow, not\nhis dismissal of this case, shut the door on his return\nto federal court to seek relief from that proceeding.\n Below, petitioner claimed to have been wrong-\nfooted by Badgerow, which the district court and the\ndissent took as cause to reopen the case and to grant\n 39\n\nrelief from the arbitral proceeding. Pet. App. 52a; see\nid. at 27a-28a (Matheson, J., dissenting). But courts\ncannot “create equitable exceptions to jurisdictional\nrequirements,” Bowles v. Russell, 551 U.S. 205, 214\n(2007), as this Court’s decisions applying Rule 60(b)\nestablish, see pp. 18-19, supra. After all, there is no\ngrace period during which this Court’s jurisdictional\ninterpretations apply only prospectively. Cf. Teague\nv. Lane, 489 U.S. 288, 300 (1989) (plurality opinion).\n The premise of petitioner’s theory is flawed in any\nevent: He wants to use Rule 60(b) to wind back the\nclock and pretend as though the district court had\nstayed the case pending arbitration. Pet. Br. 6 n.1.\nThe dissent adopted his theory that, once the district\ncourt vacated the dismissal, the federal-question ju-\nrisdiction over petitioner’s “original case” allowed the\ncourt to decide the application to vacate. Pet. App. 28a\nn.5. But even that counterfactual scenario in which\npetitioner obtained a stay—which was available as of\nright to petitioner upon request, see p. 4, supra, and\nwhich would have enabled petitioner to resume his\nADEA suit following arbitration (irrespective of the\nintervening expiration of the limitations period) if\nthat were actually his aim—would not have allowed\nthe district court to relieve him from the separate ar-\nbitral proceeding that is his real target.\n The entry of a stay is not a “jurisdictional anchor”\nfor an application to vacate under the FAA. SmartSky\nNetworks, LLC v. DAG Wireless, Ltd., 93 F.4th 175,\n184 (4th Cir. 2024); see id. at 184-187. That conclu-\nsion follows from Kokkonen, which stated that the\nfacts concerning an alleged breach of the parties’\nagreement (like the arbitration agreement here) are\n“quite separate from the facts to be determined in the\n 40\n\nprincipal suit” and cannot support ancillary jurisdic-\ntion. 511 U.S. at 381. A stay could facilitate a district\ncourt’s jurisdiction over an application to vacate an\naward only following an order compelling the parties\nto arbitrate. See Smith v. Spizzirri, 601 U.S. 472, 478\n(2024); Badgerow, 596 U.S. at 26 (Breyer, J., dissent-\ning); see also Br. in Opp. 17. Again, that distinction\naccords with Kokkonen, which suggests that a district\ncourt that compels parties to arbitrate pursuant to an\narbitration agreement might have ancillary jurisdic-\ntion to enforce that agreement against the resulting\naward to “vindicate its authority” in compelling the\nparties to arbitrate. 511 U.S. at 380-381.\n Petitioner’s roundabout invocation of Rule 60(b)\nthus leads him back to where he started: no final pro-\nceeding imposing legal burdens that warrant relief,\nand no jurisdictional basis for the district court to ad-\njudicate his application to vacate the arbitral award.\n b. Petitioner fights the conclusion that a volun-\ntary dismissal without prejudice is not a proceeding\non two principal grounds. First, he advocates an im-\nplausibly broad definition of “proceeding” as “any\ndocket activity.” Br. 20. Second, he urges the Court\nto pick his side in a state-court split over whether vol-\nuntary dismissals without prejudice could be set aside\nin 1938. Neither approach brings his voluntary dis-\nmissal within Rule 60(b)’s scope.\n i. Petitioner defends a self-consciously “broa[d]”\ninterpretation of “proceeding.” Br. 20. In his view,\nthat word “capture[s] any docket activity, including\nany application.” Ibid. That unbounded interpreta-\ntion is a mismatch with Rule 60(b)’s text, structure,\nand history.\n 41\n\n Petitioner grounds (Br. 17) his any-docket-activity\ninterpretation in “a more particular” definition of pro-\nceedings as “any application to a court of justice, how-\never made, for aid in the enforcement of rights, for re-\nlief, for redress of injuries, for damages, or for any re-\nmedial object.” Black’s 1431. But interpretation is not\na game of stringing together atomistic dictionary def-\ninitions. See AT&T, 562 U.S. at 406. Especially when\npaired with “final,” “proceeding” cannot possibly in-\nclude any request to a court; such a request that\nawaits court action cannot conclusively resolve any-\nthing. See pp. 34-36, supra.\n Petitioner also applies the noscitur and ejusdem\ncanons in an internally inconsistent manner. On the\none hand, he argues (Br. 22) that the common attrib-\nute among judgments, orders, and proceedings under\nthe noscitur canon is “activity on the docket of a court\nthat terminate[s] an action.” On the other, he insists\n(Br. 24) that “proceeding” is not a “general or collec-\ntive term” subject to the ejusdem canon. Fischer,\n603 U.S. at 487 (citation omitted). But his definition\nof “proceeding” as “any activity on the docket” (Br. 19)\nwould equally capture judgments and orders. See\nFed. R. Civ. P. 79(b) (imposing docket-keeping re-\nquirements for “every final judgment and appealable\norder”). That is why petitioner’s interpretation vio-\nlates both canons: He gives a maximally broad inter-\npretation to “proceeding” that subsumes the two other\nterms and thereby “renders meaningless the specific\ntext that accompanies it.” Fischer, 603 U.S. at 487.\n Petitioner’s any-docket-activity interpretation is\neven more implausible under Rule 60(b)’s original\nlanguage. On his theory, before the 1946 addition of\nthe finality requirement, every docket entry was the\n 42\n\npotential target of a Rule 60(b) motion. That limitless\ninterpretation cannot be reconciled with the inaugural\nFederal Rules. The original Rule 60(a) more broadly\nauthorized relief for clerical mistakes in a “judgment,\norder, or other part of the record,” Fed. R. Civ. P. 60(a)\n(1938) (emphasis added), in contrast to the narrower\n“judgment, order, or proceeding” in Rule 60(b). Fur-\nther reflecting Rule 60(b)’s narrower sweep, the origi-\nnal Rule 55 made clear that Rule 60(b) was available\nto set aside a “judgment by default,” but not an “entry\nof default.” Fed. R. Civ. P. 55(c) (1938). Petitioner’s\ncapacious interpretation thus creates illogical super-\nfluity because an entry of default, as a docket entry,\nwould qualify as a “proceeding” under his reading of\nRule 60(b).\n Trying to turn the tables, petitioner invokes\n(Br. 19-20) the canon against surplusage to defend his\nsweeping interpretation of a proceeding as any docket\nactivity. The charge backfires because it is petitioner’s\ninterpretation that envelops “judgments” and “or-\nders,” both of which are docket activity. And it is mis-\nplaced because “proceeding” does independent work in\ncovering determinations of rights and obligations that\nimpose burdens on parties but do not readily qualify\nas a judgment or order. See pp. 36-37, supra. That\nlist may be modest because, as a lead drafter of the\noriginal Rules noted, “the words ‘order, or proceeding’\nin 60(b) can usually add nothing to what is embraced\nwithin the term ‘judgment.’” 7 James M. Moore, Fed-\neral Practice ¶ 60.27[1] n.9 (2d ed. 1979) (cited in\nHensley v. Henry, 400 N.E.2d 1352, 1353 n.6 (Ohio\n1980)). But when presented with similar arguments\nabout “surplusage problems,” this Court has refused\nto overread a “belt-and-suspenders approach” as\n 43\n\n“compel[ling] an all-encompassing reading.” Guam v.\nUnited States, 593 U.S. 310, 320 (2021).\n In the end, respondent agrees with petitioner\n(Br. 21) that proceedings do not always “requir[e]\ncourt intervention” by a judge—as opposed to, say, a\ncourt officer’s execution of a judgment. See Fed. R.\nCiv. P. 69. But a proceeding still must impose legal\nburdens that could warrant “relie[f ]” under\nRule 60(b). Even without stretching “proceeding” to\nencompass any docket activity, the reference to final\nproceedings is not a null set and does not implicate\nthe canon against surplusage.\n ii. Petitioner next shifts his focus to state law. He\ncontends (Br. 35-41) that state courts traditionally\nhad the power to set aside voluntary dismissals and\nnonsuits. In his telling, the “weight of authority”\namong state courts formed the “old soil” into which\nRule 60(b) was planted. Br. 40 (citations omitted).\nBut petitioner digs in the wrong garden and does not\nfind anything worth repotting in the Federal Rules at\nany rate.\n As an initial matter, petitioner’s excavation of\nstate law overlooks that federal law set the baseline\nfor federal courts’ authority to set aside final deci-\nsions. That power flows from federal courts’ “own in-\nherent and discretionary power.” Plaut v. Spendthrift\nFarm, Inc., 514 U.S. 211, 233-234 (1995) (citing Hazel-\nAtlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238,\n244 (1944)). Even when federal courts used to apply\nthe forum State’s procedural law, the power to set\naside final decisions has always “relate[d] to the power\nof the courts, and not to the mode of procedure”—with\nthe consequence that “this authority can neither be\n 44\n\nconferred upon nor withheld from the courts of the\nUnited States by the statutes of a state.” United\nStates v. Mayer, 235 U.S. 55, 69 (1914) (citation omit-\nted).\n If petitioner were right (Br. 42) that Rule 60(b)\n“codified the existing authority to reopen judgments,\norders, and proceedings,” then that existing authority\ncould be determined only by reference to federal law\nas of the promulgation of the Federal Rules. Rule\n60(b) replaced “a handful of writs, the precise contours\nof which were ‘shrouded in ancient lore and mystery.’”\nUnited States v. Beggerly, 524 U.S. 38, 43 (1998) (cita-\ntion omitted). Specifically, the Rule “abolished: bills\nof review, bills in the nature of bills of review, and\nwrits of coram nobis, coram vobis, and audita querela.”\nFed. R. Civ. P. 60(e). But petitioner does not cite any\nauthority for applying the abolished writs to volun-\ntary dismissals without prejudice.\n Under federal law, the answer was clear: Courts\ncould not reinstate claims that had been voluntarily\ndismissed without prejudice. At the Founding, courts\nwould not “set aside [a] nonsuit” based on “allegation\nof surprise.” Murray v. Marsh, 17 F. Cas. 1059, 1060\n(C.C.D.N.C. 1803) (Case No. 9,965) (per curiam, joined\nby Marshall, C.J.). This Court later recognized a lim-\nited power to reinstate cases following involuntary\ndismissals caused by clerical mistakes. Wetmore v.\nKarrick, 205 U.S. 141, 155 (1907) (citing The Palmyra,\n25 U.S. (12 Wheat.) 1 (1827)). And the only two fed-\neral cases that petitioner cites (Br. 36) going the other\nway consciously (and mistakenly) followed state law.\nSee Willard v. Wood, 1 App. D.C. 44, 55 (1893) (apply-\ning New York law). In Jackson v. Waldron, 5 F. 245\n(C.C.W.D. Tenn. 1880), for example, the court allowed\n 45\n\nreinstatement under Tennessee law while recognizing\nthat the decision Chief Justice Marshall joined in Mur-\nray was “strongly against the plaintiff.” Id. at 247.\n Petitioner’s attempt to blend old soil from state\nlaw is antithetical to the Federal Rules’ existence.\nCongress previously required federal courts to “con-\nform, as near as may be, to the practice, pleadings,\nand forms and modes of proceeding existing at the\ntime in like causes in the courts of record of the State\nwithin which such circuit or district courts are held.”\nConformity Act, ch. 255, § 5, 17 Stat. 197 (1872). In a\nreport coauthored by former President and future\nChief Justice Taft, the American Bar Association de-\ncried that “effort at conformity with state practice” as\n“a failure” that “ha[d] become a menace to the admin-\nistration of justice.” Thomas W. Shelton et al., Report\nof the Committee on Uniform Judicial Procedure, 1 Am.\nBar. Ass’n J. 386, 389 (1915). Congress responded with\nthe Rules Enabling Act, ch. 651, 48 Stat. 1064 (1934)\n(codified as amended at 28 U.S.C. §§ 2071-2074),\nwhich empowered this Court to prescribe uniform pro-\ncedures for “the just, speedy, and inexpensive deter-\nmination” of all civil cases, Fed. R. Civ. P. 1. Peti-\ntioner’s state-survey approach to applying the Federal\nRules would magnify the Conformity Act’s defects 50\ntimes over.\n Petitioner’s resort to state law also fails on its own\nterms. In Kemp, this Court refused to bend Rule 60(b)\nto align with state law because (among other reasons)\nstate courts had split on the question, belying the no-\ntion that the “term’s meaning was ‘well-settled’ before\nthe transplantation.” 596 U.S. at 539 (citation omit-\nted). Petitioner’s historical survey is even more of a\nmixed bag than in Kemp.\n 46\n\n Petitioner’s own lead case (Br. 35) acknowledged\n“conflict in the decisions in other jurisdictions.” Lusas\nv. St. Patrick’s Roman Catholic Church Corp. of Wa-\nterbury, 193 A. 204, 206 (Conn. 1937). In several\nStates, a plaintiff who “voluntarily abandoned” his ac-\ntion had only one “recourse”: “begin his action anew.”\nWeisguth v. Supreme Tribe of Ben Hur, 112 N.E. 350,\n351 (Ill. 1916); see, e.g., Simpson v. Brock, 40 S.E. 266,\n266 (Ga. 1901) (“[T]he act of dismissing the case was\nthat of the plaintiff ’s own counsel,” so “it is obvious\nthat the court had no authority to reinstate the case\nover the defendant’s objection.”); Jackson v. Merritt,\n21 D.C. 276, 283 (1892) (holding that “[t]he court will\nnot set aside a non-suit voluntarily suffered by plain-\ntiff ” (citation omitted)). Those decisions reflect the\ntraditional common-law rule that, “[w]hen the plain-\ntiff took a nonsuit of his own motion he was out of\ncourt, and could not move to set aside the nonsuit.”\nHead, supra, 27 W. Va. L.Q. at 23; see Barnes v.\nWhiteman, 9 Dowl. 181, 182 (Q.B. 1840) (“where a\nplaintiff has elected to be nonsuited, he cannot move\nafterwards to set it aside”).\n Petitioner also cuts corners for his own cases. He\novercounts by including with-prejudice dismissals,\ne.g., Harjo v. Black, 153 P. 1137, 1137 (Okla. 1915),\nand ambiguous dismissals, e.g., Lusas, 193 A. at 205.\nAnd he says that one case “reinstat[ed] [a] voluntarily\ndismissed action” (Br. 36) when that court actually\napproved the plaintiff ’s attempt to “commenc[e] de\nnovo” a second action after discontinuing the first.\nCommonwealth v. Magee, 73 A. 346, 346 (Pa. 1909).\nThe difficulty of deciphering opaque procedural histo-\nries in century-old opinions littered across dozens of\njurisdictions is yet more good reason to stick to\n 47\n\nRule 60(b)’s text, particularly in the absence of a\n“well-settled” practice. Kemp, 596 U.S. at 539 (cita-\ntion omitted).\n Varied state-court practices likewise refute peti-\ntioner’s more targeted theory that Rule 60(b) incorpo-\nrated only interpretations of Section 473 of the Cali-\nfornia Code of Civil Procedure. Petitioner relies (Br. 40)\nprimarily on Palace Hardware Co. v. Smith, 66 P. 474\n(Cal. 1901), which involved a with-prejudice dismissal,\nand glancingly on Salazar v. Steelman, 71 P.2d 79 (Cal.\nCt. App. 1937), which involved a without-prejudice\ndismissal. A lone intermediate appellate ruling—\nparticularly one that omits the word “proceeding”\nwhen quoting Section 473, id. at 80—could not estab-\nlish a firm rule that voluntary dismissals without\nprejudice are proceedings when Kemp declined to\nadopt either side of a state-court split involving Cali-\nfornia’s highest court. 596 U.S. at 538. And peti-\ntioner’s chief case recognized conflict among California\ncourts. Lusas, 193 A. at 206 (citing Smurda v. Supe-\nrior Court, 266 P. 843 (Cal. Ct. App. 1928)).\n In short, federal courts could not set aside volun-\ntary dismissals without prejudice before the Federal\nRules. And nothing in Rule 60(b) disturbed the tradi-\ntional rule that a plaintiff who voluntarily abandons\nhis claims cannot later seek their reinstatement. Pe-\ntitioner’s theory thus founders on history as well as\ntext and structure.\n C. Petitioner’s Policy Arguments Are\n Misdirected And Unpersuasive\n Unable to square his interpretation with the Fed-\neral Rules’ text, history, or precedent, petitioner re-\ntreats to the “purposes and effectiveness of the rules.”\n 48\n\nBr. 46-48 (formatting omitted). Those arguments are\nmade to the wrong audience and do not justify extend-\ning Rule 60(b) in any event.\n 1. Petitioner complains (Br. 46) that withholding\nany procedural mechanism to reinstate Rule 41 dis-\nmissals without prejudice would be a “bizarre result.”\nBut Rule 60(b), like most written laws, reflects\ntradeoffs between competing values—here, finality\nand flexibility. Rodriguez v. United States, 480 U.S.\n522, 525-526 (1987) (per curiam). Just as an “appeal\nto the virtues of finality” does not justify artificially\nlimiting an “exception to finality,” criticism of that ex-\nception’s limits cannot carry the day against “the text\nof Rule 60(b) itself.” Gonzalez, 545 U.S. at 529.\n The forum for debating the balance Rule 60(b)\nstrikes is not litigation but the “rulemaking process,”\nwhere the “collective experience of bench and bar” can\nbe harnessed and considered by the Rules Committee,\nthe Court, and Congress. Mohawk Industries, Inc. v.\nCarpenter, 558 U.S. 100, 114 (2009). Nothing prevents\nthe Rules Committee from recommending, and the\nCourt and Congress from approving, amendments to\nthe Rules that alter that balance—for example, relax-\ning Rule 60(b)’s finality requirement, or expressly au-\nthorizing a plaintiff to request rescission of a volun-\ntary dismissal without prejudice. But the text of Rule\n60(b) as written, strengthened by precedent, struc-\nture, and history, prevents petitioner from achieving\nthat result in this case.\n 2. In all events, petitioner’s prescription is a cure\nin search of a disease.\n Petitioner suggests (Br. 46) that voluntary dis-\nmissals without prejudice will be lost in a Bermuda\n 49\n\nTriangle of Federal Rules under the court of appeals’\ninterpretation. But the outcome in this case follows\nfrom the recognition that Rule 41 allows a plaintiff to\nhit the eject button on a case without reaching a final\ndecision. Reopening a voluntarily dismissed case gen-\nerally achieves nothing because the plaintiff can re-\nfile, even the next day. Pet. App. 18a. To the extent\nrefiling his suit was not viable in light of intervening\ndevelopments like the expiration of the limitations pe-\nriod, that is a function of petitioner’s decision not to\nobtain a stay instead of dismissal. See pp. 4-5, supra.\nPetitioner instead gravitated toward Rule 60(b) only\nafter Badgerow confirmed that he wrongly sought to\nvacate the arbitral award in federal court instead of\nstate court—not because the voluntary dismissal it-\nself restrained him. See pp. 38-39, supra.\n Petitioner is left to posit (Br. 48) hypotheticals\nwhere voluntary dismissals without prejudice are\nfiled due to an attorney’s mistake (or disloyalty) or a\ndefendant’s fraud. Those speculative concerns are\noverstated. Attorney error poses no policy concern un-\nless some other, additional circumstance intervenes\nthat precludes the plaintiff from refiling—e.g., if coun-\nsel’s negligence is not discovered within the limita-\ntions period. And an attorney or defendant seeking to\ndeceive a plaintiff into providing repose is unlikely to\ncommit willful malpractice or fraud simply to secure a\ndismissal without prejudice.\n The Federal Rules are not an all-purpose fix-it tool\nfor every error or misdeed connected to litigation. As\nto attorney error, for example, the Rules respect the\nlongstanding principle that litigants may not “avoid\nthe consequences of the acts or omissions of [their]\nfreely selected agent.” Link v. Wabash Railroad Co.,\n 50\n\n370 U.S. 626, 633-634 (1962). Redress for willful at-\ntorney misconduct lies in state-law malpractice ac-\ntions, not in collateral litigation in federal court. Cf.\nGunn v. Minton, 568 U.S. 251, 264 (2013). And respon-\nsibility for policing a defendant’s fraudulent induce-\nment or breach of settlements likewise generally lies in\nstate courts. Cf. Kokkonen, 511 U.S. at 382. Rule 1’s\ninstruction to pursue “just” resolutions of civil actions\nwhen applying the Federal Rules does not support\nreading Rule 60(b) to make federal courts a roving jus-\ntice league to right every litigation-adjacent wrong.\n\n *****\n At the end of the day, petitioner’s contention\n(Br. 16) that all docket activity must be subject to “on-\ngoing superintendence” or “revisitation” cannot be\nsquared with Rule 41, which precludes court interfer-\nence with voluntary dismissals without prejudice. See\nCone, 330 U.S. at 217. Rule 60(b) does not override\nRule 41’s design, much less save petitioner from his\nown litigation choices.\n 51\n\n CONCLUSION\n The judgment should be affirmed.\n Respectfully submitted.\n\nPATRICK J. FUSTER MATTHEW D. MCGILL\nGIBSON, DUNN & Counsel of Record\n CRUTCHER LLP JONATHAN C. BOND\n333 South Grand Avenue LOCHLAN F. SHELFER\nLos Angeles, CA 90071 JOSHUA R. ZUCKERMAN\n[PHONE REDACTED] GIBSON, DUNN & CRUTCHER LLP\n 1700 M Street, N.W.\nHEATHER F. CROW\n Washington, D.C. 20036\nTHE KULLMAN FIRM, P.L.C.\n [PHONE REDACTED]\n2915 Kerry Forest Pkwy\n [EMAIL REDACTED]\nSuite 101\nTallahassee, FL 32309\n[PHONE REDACTED]\n\n Counsel for Respondent\nDecember 18, 2024\nAPPENDIX\n TABLE OF CONTENTS\n Page\n\nFed. R. Civ. P. 1 ......................................................... 1a\nFed. R. Civ. P. 2 ......................................................... 1a\nFed. R. Civ. P. 41 (1938)............................................ 1a\nFed. R. Civ. P. 41 ....................................................... 3a\nFed. R. Civ. P. 54 ....................................................... 5a\nFed. R. Civ. P. 55 (1938)............................................ 5a\nFed. R. Civ. P. 58 ....................................................... 7a\nFed. R. Civ. P. 60 (1938)............................................ 9a\nFed. R. Civ. P. 60 (1946)............................................ 9a\nFed. R. Civ. P. 60 ..................................................... 11a\nFed. R. Civ. P. 69 ..................................................... 13a\nFed. R. Civ. P. 71.1 .................................................. 13a\nFed. R. Civ. P. 82 ..................................................... 16a\n 1a\n\n1. Fed. R. Civ. P. 1 provides:\nScope and Purpose\n These rules govern the procedure in all civil ac-\ntions and proceedings in the United States district\ncourts, except as stated in Rule 81. They should be\nconstrued, administered, and employed by the court\nand the parties to secure the just, speedy, and inex-\npensive determination of every action and proceeding.\n\n2. Fed. R. Civ. P. 2 provides:\nOne Form of Action\n There is one form of action—the civil action.\n\n3. Fed. R. Civ. P. 41 (1938) provides:\nDismissal of Actions\n(a) VOLUNTARY DISMISSAL: EFFECT THEREOF.\n(1) By Plaintiff; By Stipulation. Subject to the provi-\nsions of Rule 23(c) and of any statute of the United\nStates, an action may be dismissed by the plaintiff\nwithout order of court (i) by filing a notice of dismissal\nat any time before service of the answer or (ii) by filing\na stipulation of dismissal signed by all the parties who\nhave appeared generally in the action. Unless other-\nwise stated in the notice of dismissal or stipulation,\nthe dismissal is without prejudice, except that a notice\nof dismissal operates as an adjudication upon the mer-\nits when filed by a plaintiff who has once dismissed in\nany court of the United States or of any state an action\nbased on or including the same claim.\n(2) By Order of Court. Except as provided in para-\ngraph (1) of this subdivision of this rule, an action\n 2a\n\nshall not be dismissed at the plaintiff ’s instance save\nupon order of the court and upon such terms and con-\nditions as the court deems proper. If a counterclaim\nhas been pleaded by a defendant prior to the service\nupon him of the plaintiff ’s motion to dismiss, the ac-\ntion shall not be dismissed against the defendant’s ob-\njection unless the counterclaim can remain pending\nfor independent adjudication by the court. Unless oth-\nerwise specified in the order, a dismissal under this\nparagraph is without prejudice.\n(b) INVOLUNTARY DISMISSAL: EFFECT THEREOF.\n For failure of the plaintiff to prosecute or to comply\nwith these rules or any order of court, a defendant\nmay move for dismissal of an action o", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of refusal to reopen a voluntarily dismissed action.", "governingLaw": "Apply United States federal civil procedure; Tenth Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal civil procedure; Tenth Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Waetzig v. Halliburton Energy Services, Inc.", "citation": "604 U.S. 54 (2025)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/24pdf/23-971_l6gn.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "This case presents a pure question of statutory interpretation: does a voluntary dismissal without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A)(i) qualify as a 'final judgment, order, or proceeding' under Federal Rule of Civil Procedure 60(b)? The Supreme Court answered that question definitively on February 26, 2025, in Waetzig v. Halliburton Energy Services, Inc., and that decision controls this dispute.\n\nStarting with the text of Rule 60(b), the Rule permits a court to 'relieve a party . . . from a final judgment, order, or proceeding.' The word 'final' was added in 1946 to distinguish case-terminating events from interlocutory ones. As the Supreme Court held, a voluntary dismissal without prejudice is 'final' because it terminates the case—it is the conclusive and last filing on the docket, and it completes the particular lawsuit. It is not interlocutory because it strips the court of its equitable power to revise earlier rulings. If a voluntary dismissal is not 'interlocutory,' it must be 'final.' Respondent's argument that 'final' must track the appellate-jurisdiction concept of finality under 28 U.S.C. §1291 is unpersuasive. The finality concept in appellate jurisdiction serves a distinct purpose—preventing interlocutory appeals from impairing case resolution at the trial level. Rule 60(b) relief, by contrast, is discretionary and poses no comparable risk.\n\nThe term 'proceeding' is equally decisive. Legal dictionaries from 1938 to the present define 'proceeding' as encompassing 'all possible steps in an action from its commencement to the execution of judgment.' A voluntary dismissal is a step in the action—it is a formal filing on the docket that brings the case to an end. Respondent argues that 'proceeding' must be read through the lens of noscitur a sociis to require a judicial determination, paralleling 'judgment' and 'order.' But that reading would strip 'proceeding' of independent meaning: any formal judicial determination is already an 'order.' The structure of Rule 60(b)—'judgment, order, or proceeding'—speaks in ascending order of generality, with each term broader than the last. Reading 'proceeding' to require a judicial determination would collapse it into 'order,' violating the rule against surplusage.\n\nThe historical context confirms the textual reading. Rule 60(b) was modeled on California Code of Civil Procedure §473, which California courts had interpreted to extend to voluntary dismissals. The rule-makers selected the California model and presumably carried forward its broad interpretation. Nothing in the 1946 amendment—adding 'final'—indicates an intent to exclude voluntary dismissals without prejudice from the Rule's coverage.\n\nRespondent's additional jurisdictional argument—that Rule 60(b) cannot serve as an independent basis for federal jurisdiction over the motion to vacate the arbitral award—was explicitly declined by the Supreme Court. The Court held that the question whether Rule 60(b) permits reopening is 'antecedent to' jurisdictional questions about the motion to vacate, and left those questions for the lower courts on remand. Because the governing authority directly controls the interpretive question presented, the claimant's requested appellate disposition—reversal of the Tenth Circuit and remand—must be granted.\n\nRespondent's counterarguments based on Kokkonen v. Guardian Life Ins. Co. of America are distinguishable. Kokkonen addressed whether Rule 60(b) could confer jurisdiction over a separate claim (enforcement of a settlement agreement), not whether the Rule permits reopening a voluntarily dismissed case. The Supreme Court in Waetzig distinguished Kokkonen on precisely this ground, noting that Kokkonen 'suggested that Rule 60(b) cannot confer jurisdiction upon a federal court where jurisdiction would not otherwise exist' but 'say nothing at all about whether the District Court had the power, under Rule 60(b), to reopen Waetzig's case in the first place.'", "allocation": null, "citations": [ { "title": "Waetzig v. Halliburton Energy Services, Inc. | 604 U.S. ___ (2025)", "url": "https://supreme.justia.com/cases/federal/us/604/23-971/case.pdf", "proposition": "A case voluntarily dismissed without prejudice under Federal Rule of Civil Procedure 41(a) counts as a 'final proceeding' under Federal Rule of Civil Procedure 60(b), because the dismissal is 'final' (it terminates the case) and a 'proceeding' (the term encompasses all steps in an action, including the filing of a notice of dismissal). The Tenth Circuit's contrary holding was reversed and remanded." }, { "title": "WAETZIG v. HALLIBURTON ENERGY SERVICES, INC.", "url": "https://www.law.cornell.edu/supremecourt/text/23-971", "proposition": "Rule 60(b) permits a district court to reopen a case voluntarily dismissed without prejudice under Rule 41(a). The Supreme Court declined to address whether Rule 60(b) relief was proper on the merits or whether the district court had jurisdiction over the motion to vacate the arbitration award, leaving those questions for the lower courts on remand." }, { "title": "Rule 60. Relief from a Judgment or Order - Law.Cornell.Edu", "url": "https://www.law.cornell.edu/rules/frcp/rule_60", "proposition": "Rule 60(b) permits a court, on motion and just terms, to relieve a party from a 'final judgment, order, or proceeding' for six enumerated reasons, including 'mistake, inadvertence, surprise, or excusable neglect' and 'any other reason that justifies relief.' The 1946 Advisory Committee Notes explain that the word 'final' was added to exclude interlocutory judgments from the Rule's restrictions." }, { "title": "Kokkonen v. Guardian Life Ins. Co. of America | 511 U.S. 375 (1994)", "url": "https://supreme.justia.com/cases/federal/us/511/375/case.pdf", "proposition": "In Kokkonen v. Guardian Life Ins. Co. of America, the Supreme Court suggested that Rule 60(b) cannot confer jurisdiction where it would not otherwise exist, but noted that some courts have held reopening a dismissed suit for breach of a settlement agreement may be available under Rule 60(b)(6). The Court distinguished enforcement of a settlement agreement from merely reopening a dismissed suit." }, { "title": "Kokkonen v. Guardian Life Ins., 511 U.S. 375 (1994).", "url": "https://www.law.cornell.edu/supct/html/93-263.ZO.html", "proposition": "Kokkonen held that a district court lacks ancillary jurisdiction to enforce a settlement agreement producing a dismissal unless the terms were incorporated into the dismissal order or jurisdiction was expressly retained, but acknowledged that Rule 60(b)(6) may permit reopening a dismissed suit by reason of breach of the agreement that was the basis for dismissal." }, { "title": "Appellate Case: 22-1252 Document: 010110916629 Date ...", "url": "https://www.ca10.uscourts.gov/sites/ca10/files/opinions/010110916629.pdf", "proposition": "The Tenth Circuit's decision in Waetzig v. Halliburton held that a voluntary dismissal without prejudice is not a 'final proceeding' under Rule 60(b) because it requires a 'judicial determination with finality.' This holding was reversed by the Supreme Court in Waetzig v. Halliburton (2025)." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-053", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nSTATEMENT\n Congress limited civil actions under the Racketeer\nInfluenced and Corrupt Organizations Act (RICO). Only\nthose “injured in [their] business or property by reason\nof” racketeering activity may sue, but they may “recover\nthreefold the damages” they suffered. 18 U.S.C.\n§ 1964(c). By definition, injuries to business or property\nexclude personal injuries—as this Court has observed and\nas respondent does not dispute.\n Thus, plaintiffs who claim that they were fraudulently\ninduced to buy rash-provoking supplements, stroke-\ninducing medications, or foods with undisclosed allergens\nhave no civil RICO claim. Rashes, strokes, and allergic\nreactions are personal injuries, not injuries to business or\nproperty. The same goes for plaintiffs cut by steak knives\nwith inadequate warnings, plaintiffs poisoned by pest-\ncontrol companies that misrepresented their fumigation\npractices, and plaintiffs who suffer broken bones from\nunsafe trampolines, Jet Skis, or golf carts. All of these\ninjuries are serious, and all may be remediable through\nstate tort law. But, for purposes of civil RICO, all of these\ninjuries have the same disqualifying defect: RICO does\nnot allow recovery for personal injuries.\n The question here is whether the result changes if\nplaintiffs who suffer these personal injuries can point to\nthe economic consequences from their injuries. Answer:\n 3\n\nof course not. Those consequences are damages from the\npersonal injuries, not independent business or property\ninjuries. RICO’s text expressly distinguishes between\n“injur[ies]”—which must be to “business or property”—\nand whatever ensuing “damages” result. The same rule\ngoverns the materially identical Clayton Act antitrust\ncontext that Congress used as the model for civil RICO.\n That rule disposes of this case. Respondent Respondent alleges that Claimant’ supposed racketeering\nactivity—fraud in advertising—misled him into\nconsuming a wellness product that allegedly contained\ntetrahydrocannabinol (THC), the active ingredient in\nmarijuana. Ingesting an unwanted substance is a classic\ninvasion of bodily autonomy, i.e., a personal injury.\nRespondent’s RICO claim arising from that injury should be a\nnon-starter. He cannot change the answer by pointing to\nthe ensuing economic consequences, including lost wages,\nafter his employer fired him for failing a workplace drug\ntest.\n Were the law otherwise, everyday tort plaintiffs could\nturn artfully pleaded straw into RICO gold. Rashes and\nallergic reactions can cause missed work and lost wages.\nStrokes and other debilitating accidents may preclude\nfuture employment. Burns, broken limbs, concussions,\nand the like cause medical expenses. If plaintiffs could\nrelabel those damages from personal injuries as injuries\nto “business or property”—as the Second Circuit held\nbelow and as Respondent now urges—Congress’ decision to bar\nplaintiffs from using civil RICO to recover for personal\ninjuries would be a dead letter.\n A. Statutory Background\n In 1970, Congress enacted RICO to combat\n“organized crime and its economic roots.” Russello v.\nUnited States, 464 U.S. 16, 26 (1983). As RICO’s\n 4\n\nstatutory findings explained, “organized crime in the\nUnited States [was] a highly sophisticated, diversified,\nand widespread” problem. Organized Crime Control Act\nof 1970, Pub. L. [DOCKET REDACTED], 84 Stat. 922, 922. Organized\ncrime “weaken[ed] the stability of the Nation’s economic\nsystem” and “drain[ed] billions of dollars from America’s\neconomy.” Id. at 922-23.\n Congress’ solution was to attach hefty civil and\ncriminal penalties to “racketeering activity,” which RICO\ndefines to “encompass dozens of state and federal\noffenses,” including mail and wire fraud. See RJR\nNabisco, Inc. v. Eur. Cmty., 579 U.S. 325, 329-30 (2016);\n18 U.S.C. § 1961(1). RICO specifically prohibits\nracketeering-related offenses like “receiv[ing] any income\n... from a pattern of racketeering activity” or\n“participat[ing] ... in the conduct of [an] enterprise’s\naffairs through a pattern of racketeering activity.” 18\nU.S.C. § 1962(a)-(d). Those offenses are federal felonies\npunishable by up to 20 years in prison. Id. § 1963(a). And\nRICO empowers the Attorney General to seek injunctive\nrelief to “prevent and restrain” those RICO violations. Id.\n§ 1964(a)-(b).\n RICO also creates a civil cause of action for private\nplaintiffs to “extirpat[e] the baneful influence of organized\ncrime in our economic life.” Sedima, S.P.R.L. v. Imrex\nCo., 473 U.S. 479, 488 (1985) (quoting 116 Cong. Rec.\n25,190 (July 21, 1970)). Reflecting Congress’ economic\nfocus, Congress “modeled” civil RICO after the “civil-\naction provision of the federal antitrust laws.” Holmes v.\nSec. Inv. Prot. Corp., 503 U.S. 258, 267 (1992); compare 18\nU.S.C. § 1964(c), with 15 U.S.C. § 15(a).\n Only plaintiffs “injured in [their] business or property\nby reason of a violation of section 1962” may sue under\ncivil RICO. 18 U.S.C. § 1964(c). Such plaintiffs may\n“recover threefold the damages” they sustained, plus\n 5\n\ncosts and attorneys’ fees. Id. Thus, RICO’s civil remedy\n“is narrower in its application” than RICO’s criminal\nprovisions. RJR Nabisco, 579 U.S. at 350. As this Court\nhas observed, the phrase “injured in his business or\nproperty” “cabin[s] RICO’s private cause of action to\nparticular kinds of injury—excluding, for example,\npersonal injuries.” Id.\n B. Factual and Procedural Background\n 1. In recent years, cannabidiol (or CBD) products\nhave become ubiquitous. Americans have turned to CBD\nin droves to address health concerns ranging from\nepilepsy, insomnia, and anxiety to chronic pain and\ninflammation.1 To date, some 60% of U.S. adults—and\n89% of Americans over 77—have used CBD products.\nAlena Hall & Robby Brumberg, CBD Statistics, Data and\nUse, Forbes (Apr. 29, 2024), [URL REDACTED]\n This case involves one such CBD product: a wellness\nsupplement called Dixie X. Like many other CBD\nproducts, Dixie X comes from hemp. Although hemp and\nmarijuana are derived from the same plant, cannabis\nsativa, they differ in important ways. Pet.App.81a-82a.\nMost significantly, hemp has been engineered to contain\n“low concentrations of THC,” Pet.App.82a (citation\nomitted), and, therefore, “does not cause a high,”\nGrinspoon, supra. Accordingly, Congress has long\nexempted portions of the cannabis plant with low levels of\nTHC, like the stalk of a mature plant, from the federal\ndefinition of marijuana. Pub. L. [DOCKET REDACTED], tit. II,\n§ 102(15), 84 Stat. 1236, 1244 (1970). In 2018, Congress\n\n1\n E.g., Peter Grinspoon, Cannabidiol (CBD): What We Know and\nWhat We Don’t, Harv. Health Publ’g (Apr. 4, 2024), [URL REDACTED]\n.com/yujky9dc; Brent A. Bauer, What Are the Benefits of CBD—and\nIs It Safe to Use?, Mayo Clinic (Dec. 6, 2022), [URL REDACTED]\n.com/3pwhts3r.\n 6\n\nremoved hemp from the federal definition of marijuana al-\ntogether. Pub. L. No. 115-334, § 12619(a), 132 Stat. 4490,\n5018 (2018). By contrast, marijuana remains a federally\ncontrolled substance, notwithstanding the Drug Enforce-\nment Administration’s recent proposal to downgrade\nmarijuana from schedule I to schedule III under the Con-\ntrolled Substances Act. See Schedules for Controlled\nSubstances: Rescheduling of Marijuana, 89 Fed. Reg.\n44,597 (May 21, 2024).\n In 2012, petitioner Red Dice Holdings LLC—a joint\nventure of Claimant Claimant Inc. and Dixie\nHoldings LLC—began selling Dixie X. Pet.App.83a. Pe-\ntitioners took medicinal hemp stalk and distilled it to\nremove impurities (including any remaining THC), leav-\ning a pure CBD concentrate. Pet.App.83a. Claimant\nthen infused that concentrate into an extract that users\ntypically dissolve under their tongues. See Pet.App.83a.\nBecause Claimant manufactured Dixie X from mature\nhemp stalk, Dixie X has at all times been legally distrib-\nuted under federal law. See Pet.App.73a-74a.\n 2. Respondent Respondent and his wife are com-\nmercial truck drivers. J.A.23.2 In February 2012, Respondent\ncrashed his truck into a ditch, injuring his hip and shoul-\nder and exacerbating previous back injuries. J.A.3-4, 51-\n52, 58-59, 64-65. For pain relief, Respondent took over-the-coun-\nter Tylenol and Motrin, as well as prescription prednisone\n(an anti-inflammatory) and hydrocodone (an opioid pain-\nkiller). J.A.60, 68. In May 2012, Respondent returned to work.\n\n2\n The brief in opposition (at 5) states that Respondent and his wife worked\n“to support themselves and their five daughters.” Claimant ob-\nserve that Respondent’s five daughters (only one is his current wife’s) are\nadults. J.A.91; Cindy Harp-Respondent Dep. 9:6-9, D. Ct. Dkt. 61-6. In\n2012, only Respondent’s youngest daughter, then around 23 and gainfully\nemployed, lived at home. J.A.91; Respondent Dep. 146:9-147:15, 311:22-\n312:1, D. Ct. Dkt. 61-5.\n 7\n\nRespondent Dep. 154:19-21. Because his pain persisted, Respondent\ninvestigated natural alternatives. J.A.4.\n In September 2012, while waiting to meet a friend for\nlunch at Chili’s, Respondent and his wife stopped in a bookstore\ncoffee shop. J.A.93-94. According to the Respondents, their ta-\nble had a single magazine on it: High Times, the self-\nproclaimed “preeminent source for cannabis infor-\nmation.” J.A.73-75, 96-97; High Times, About High\nTimes, [URL REDACTED] Respondent was familiar\nwith High Times and testified to trying marijuana in his\nyouth. J.A.74, 90; contra BIO 5-6 (stating that Respondent has\nnever used marijuana).\n Respondent flipped through the first 41 pages of High\nTimes. J.A.75; see High Times Issue, D. Ct. Dkt. 61-7 (full\nissue). On page 42—in a segment titled “High and\nHealthy”—Respondent encountered an article describing Dixie\nX as a hemp-based, “CBD-rich medicine” that contained\n“0% THC.” J.A.20, 74-75; High Times Issue 38, 42.3\nGiven the Respondents’ previous experience with such varied\nhemp-based products as hemp milk, hemp shakes, hemp\nseeds, and hemp shampoo, the article piqued their inter-\nest and prompted them to buy the High Times issue for\nfuture reference. J.A.72-73, 85-87; Respondent Dep. 342:9-13.\n As a commercial truck driver, Respondent knew that he\nfaced random drug tests mandated by his employer and\nthe Department of Transportation. Pet.App.5a. The\n\n3\n Respondent (BIO 6) and the Second Circuit (Pet.App.4a) call this article an\n“advertisement.” In granting summary judgment to Claimant on\nmost of Respondent’s state-law claims, the district court observed that “the\narticle is not an advertisement but a writeup about Dixie X by a third\nparty.” Pet.App.104a. The court further noted that Respondent’s assertion\nthat Claimant “had a role in publishing the article” rests on “nothing\nbut speculation.” Pet.App.105a.\n 8\n\nRespondents therefore allegedly supplemented High Times’\ncoverage of Dixie X with their own research—watching\nYouTube videos, visiting the product’s FAQ page, and\ncalling a 1-800 number—to confirm that Dixie X was\nTHC-free. Pet.App.85a-87a.4 Respondent never asked his doc-\ntor about Dixie X. J.A.63.\n Respondent alleges that he purchased and used Dixie X later\nin September 2012. Pet.App.87a. In October 2012, Respondent\nwas selected for a random drug test, which came back pos-\nitive for THC. Pet.App.87a. Two follow-up tests came\nback negative. J.A.70. The lab informed Respondent that, under\nDepartment of Transportation regulations, he would “not\nbe able to drive unless [he] went through a substance\nabuse program”—an option that Respondent declined at the\ntime. J.A.66-67, 91-92; see 49 C.F.R. § 40.305(a)-(b)\n(2012). After learning of the failed drug test, Respondent’s em-\nployer fired him. J.A.5.\n After his termination, Respondent ordered a different,\nsmaller bottle of Dixie X and sent it for third-party test-\ning. Respondent Dep. 348:4-22. That test came back positive for\nTHC. J.A.5. Respondent never tested the bottle he actually\nused. Respondent Dep. 241:22-243:1. Respondent eventually com-\npleted a substance abuse program and found work at\nother trucking companies, where he was employed as of\nfiling this suit. J.A.92; Respondent Dep. 26:11-27:21. By April\n2016, Dixie X’s website explicitly advised customers that\n\n4\n Below, Respondent stated that he reviewed Dixie X’s FAQ page “in Sep-\ntember, 2012” before purchasing the product on September 17,\n2012. J.A.34-36 (Respondent Aff. ¶¶ 12-13, 20). As screenshots from Respondent’s\nonline archive demonstrate, that FAQ page appeared only after Respondent\npurchased the product. Compare Internet Archive, [URL REDACTED]\n.com/yza386h9 (Sept. 6, 2012 screenshot with no FAQ page in site\nmenu); Internet Archive, [URL REDACTED] (Sept. 28,\n2012 screenshot still with no FAQ page in site menu), with J.A.40-44\n(Respondent’s Oct. 19, 2012 screenshot with FAQ page).\n 9\n\n“hemp foods and oils can cause confirmed positive results”\non drug tests. J.A.47.\n 3. In August 2015, the Respondents sued Claimant in the\nU.S. District Court for the Western District of New York,\nalleging nine causes of action. J.A.1-18 (Compl.). All\nclaims centered on false-advertising allegations that peti-\ntioners misled Respondent into ingesting Dixie X, thinking that\nDixie X was THC-free. Respondent alleged that he and his wife\n“investigated natural medicines” to treat his “bodily inju-\nries” from his crash and saw coverage and advertisements\nfor Dixie X. J.A.3-4 (Compl. ¶¶ 12-13). Respondent alleged that\nhe “purchased and consumed ... Dixie X” in reliance on\ncompany representations that Dixie X was THC-free.\nJ.A.5-6 (Compl. ¶ 19). Respondent further alleged that the Dixie\nX he purchased, however, contained THC, causing him\n“physical harm in the ingestion” of “an illegal substance,”\nwhich led to “economic harm” and “loss of employment.”\nJ.A.17 (Compl. ¶¶ 84, 86).\n Eight claims arose under New York law: deceptive\nbusiness practices, fraudulent inducement, strict prod-\nucts liability, breach of contract, breach of warranty,\nunjust enrichment, negligence, and negligent infliction of\nemotional distress. Pet.App.87a-88a. The lone federal\ncause of action was a civil RICO claim under 18 U.S.C.\n§ 1964(c). Pet.App.88a. Respondent initially sought unspecified\ndamages for “lost employment ... at a minimum salary of\n$100,000” plus “401 k contributions, life insurance, and\nother benefits.” J.A.31 (RICO Case Statement). Later,\nRespondent requested $10 million. Respondent Dep. 335:17-336:2.\n In April 2019, Respondent withdrew three state-law claims,\nand the district court dismissed most remaining claims on\nsummary judgment. Pet.App.95a, 113a. First, the court\ndismissed all of Respondent’s wife’s claims because any damages\nshe suffered were “too attenuated” from any wrongful\n 10\n\nconduct. Pet.App.105a, 111a, 113a. As to Respondent, the dis-\ntrict court granted summary judgment to Claimant on\nfour state-law claims, holding that Respondent could not prove\nthose claims as a matter of New York law. Pet.App.96a-\n100a, 113a. That left two claims: Respondent’s state-law fraud-\nulent-inducement claim and his civil RICO claim.\nPet.App.113a.\n The court later granted summary judgment to peti-\ntioners on the RICO claim, agreeing with Claimant that\nRespondent sought recovery for a personal injury—unwitting\nconsumption of THC—and thus did not allege an injury to\n“business or property” as required by 18 U.S.C. § 1964(c).\nPet.App.39a-40a, 46a. The court defined Respondent’s injury as\n“the bodily invasion that [he] suffered when he unwit-\ntingly ingested THC” and noted that Respondent’s lost wages\nderived from that “personal injury.” Pet.App.42a.\n Following precedent from the Sixth, Seventh, and\nEleventh Circuits, the court held that “lost earnings or\nwages are not recoverable” in a civil RICO suit “if they\nflow from a personal injury.” Pet.App.41a-42a. Here, be-\ncause the only “connect[ion]” between Claimant’ alleged\nracketeering activity and Respondent’s financial harm was “a\npersonal injury,” his RICO claim failed as a matter of law.\nPet.App.42a, 46a. At Respondent’s request, the court entered\npartial final judgment on the RICO claim to permit an im-\nmediate appeal. Pet.App.26a-27a.\n 4. The Second Circuit reversed. Respondent did not contest\nthe district court’s holding that civil RICO excludes eco-\nnomic harms resulting from personal injury, but argued\nthat his lost wages did not flow from a personal in-\njury. Respondent C.A. Br. 9-11. The Second Circuit declined to\naddress that contention, instead deciding only the “logi-\ncally antecedent legal question” of “whether § 1964(c)\n 11\n\nbars a plaintiff from suing for injuries to business or prop-\nerty simply because they flow from, or are derivative of, a\npersonal injury.” Pet.App.8a n.2.\n The court held that civil RICO permits recovery for\nsuch injuries, dismissing other circuits’ contrary reason-\ning as “flawed.” Pet.App.11a-13a & n.5. In the Second\nCircuit’s view, “the phrase ‘business or property’ focuses\non the nature of the harm, not the source of the harm.”\nPet.App.15a. The court therefore found “no basis” to bar\nrecovery when “there is an antecedent personal injury.”\nPet.App.18a-19a. Because Respondent purportedly suffered an\neconomic injury when he “lost his job,” the Second Circuit\nheld, Respondent could pursue a RICO claim even though his\nharm resulted solely from his personal injury.\nPet.App.10a-11a.\n\n SUMMARY OF ARGUMENT\n I. By requiring that a plaintiff be “injured in his busi-\nness or property,” 18 U.S.C. § 1964(c), civil RICO\nprecludes suits for personal injuries. Plaintiffs cannot cir-\ncumvent that exclusion by rebranding damages arising\nfrom personal injuries, like lost wages, as injuries to busi-\nness or property.\n A. Plaintiffs undisputedly cannot bring civil RICO\nsuits for personal injuries. For that exclusion to mean\nsomething, plaintiffs cannot bring civil RICO suits for\npersonal injuries based on the ensuing damages. RICO’s\ntext expressly differentiates between the legal concepts of\ninjury and damages. The injury—the invasion of the\nplaintiff’s legal rights—must be to business or property.\nPlaintiffs cannot make up the lack of a qualifying injury\nby pointing to damages to business or property that result\nfrom a personal injury, even if those damages are eco-\nnomic in nature. Damages simply reflect what the\nplaintiffs seek to recover for their personal injuries.\n 12\n\n B. Congress modeled civil RICO on the Clayton Act,\nwhich likewise authorizes antitrust plaintiffs to sue only\nfor injuries to “business or property.” 15 U.S.C. § 15(a).\nAs this Court and others recognize, antitrust plaintiffs\ncannot sue for personal injuries. And antitrust plaintiffs\ncannot evade that restriction by pointing to economic\nharms from personal injuries. The same should go for\ncivil RICO.\n C. Respondent’s RICO claim rests on a personal injury: in-\ngesting a product allegedly containing THC that\nClaimant purportedly fraudulently induced him to take.\nThis is a classic personal-injury claim. Respondent cannot re-\nclassify his lost wages as a discrete injury to “business or\nproperty.” Those lost wages flow from his ingestion of a\nTHC-containing product, which prompted his employer to\nterminate him for failing a drug test. Those lost wages\nare thus damages from an alleged personal injury, not a\nfreestanding injury to business or property.\n D. The Second Circuit and Respondent would instead allow\nplaintiffs to sue for the consequences of personal injuries,\nso long as those consequences harm plaintiffs’ business or\nproperty. That approach would nullify RICO’s “business\nor property” requirement. Personal injuries by definition\nresult in damages and almost inevitably cause lost wages,\nmedical expenses, and countless other types of economic\ndamages—all of which plaintiffs could seize on to turn\nnon-actionable personal injuries into actionable RICO in-\njuries. Plaintiffs could transform virtually any false-\nadvertising, mislabeling, or failure-to-warn claim into a\ntreble-damages federal RICO action just by marrying\nthose downstream economic consequences with RICO’s\nfraud predicates. RICO’s approximately 100 other predi-\ncates could support endless other claims that arise from\npersonal injuries and inflict some ensuing economic loss.\n 13\n\n That approach would effectively displace state tort\nlaw. If plaintiffs could turn ordinary state personal-injury\ntort claims into federal RICO claims, plaintiffs would al-\nways sue under RICO—with its treble damages—and\nsidestep States’ limits on tort actions. Respondent points to\nRICO’s racketeering-activity and proximate-causation\nrequirements as countervailing guardrails on the explo-\nsion of civil RICO suits. But those guardrails cannot\nexcuse ignoring RICO’s exclusion of personal injuries,\nand offer little comfort besides. If Respondent believes his false-\nadvertising claim constitutes mail and wire fraud and sat-\nisfies RICO proximate causation, it is hard to fathom what\nclaims would fail.\n Moreover, the Second Circuit and Respondent’s position\nwould perversely remove one key limit on RICO suits—\nthe four-year limitations period. That period runs from\nthe plaintiff’s injury. But under Respondent’s interpretation,\nplaintiffs could identify each new economic harm as a new\n“injur[y],” resetting the limitations clock continuously.\n II. The Second Circuit and Respondent’s counterarguments\nattack strawmen. Claimant’ position does not exclude\nclassic RICO predicate acts like extortion that may cause\npersonal injuries. Plaintiffs who suffer both business or\nproperty injuries and personal injuries can sue for the\nformer but not the latter. If a mobster assaults a busi-\nnessman to extort valuable property, the extorted\nproperty is a property injury under civil RICO. But the\nassault is a personal injury outside civil RICO. That dis-\ntinction is not arbitrary, as the Second Circuit stated, but\nan inevitable feature of Congress’ decision to limit civil\nRICO claims to specific, economic injuries.\n 14\n\n ARGUMENT\nI. Civil RICO Does Not Allow Recovery for Personal-Injury\n Damages\n Plaintiffs cannot use civil RICO to sue for personal\ninjuries. Only someone “injured in his business or prop-\nerty by reason of” racketeering activity can sue to\n“recover threefold the damages he sustains.” 18 U.S.C.\n§ 1964(c). As that textual distinction between injury and\ndamages makes clear, plaintiffs who suffer personal inju-\nries cannot plead their way back into RICO suits just by\npointing to the damages from their personal injuries\nsimply because those damages are economic. The Clayton\nAct—the model for civil RICO’s operative language—im-\nposes that same rule, and precludes antitrust plaintiffs\nfrom repleading personal-injury suits as antitrust claims\nby pointing to ensuing economic damages.\n That black-letter distinction dooms Respondent’s case. He\nsuffered a personal injury (unwitting ingestion of THC).\nHe cannot evade civil RICO’s bar on personal-injury\nclaims by shifting the focus to his damages (lost wages).\nIf Respondent could sue under RICO using such semantic leger-\ndemain, innumerable plaintiffs could repackage\ninnumerable state tort cases—including every false-ad-\nvertising, mislabeling, and failure-to-warn claim—as\ntreble-damages federal RICO actions. Congress did not\npossibly open those floodgates.\n Civil RICO Excludes Personal Injuries and Thus Ex-\n cludes Personal-Injury Damages\n 1. Start with settled ground: Plaintiffs cannot bring\ncivil RICO suits for personal injuries. By limiting recov-\nery to plaintiffs “injured in [their] business or property,”\nCongress “cabin[ed] RICO’s private cause of action to\nparticular kinds of injury—excluding, for example, per-\nsonal injuries.” RJR Nabisco, 579 U.S. at 350.\n 15\n\n Respondent (BIO 16) does not dispute this personal-injury\nexclusion, for good reason. When Congress wants a stat-\nute to cover personal injuries, Congress says so. The\nAnti-Terrorism Act authorizes U.S. nationals “injured in\n[their] person, property, or business by reason of an act of\ninternational terrorism” to sue for “threefold the damages\n... sustain[ed].” 18 U.S.C. § 2333(a). Likewise, the Fed-\neral Tort Claims Act creates jurisdiction for “claims ... for\nmoney damages ... for injury or loss of property, or per-\nsonal injury or death caused by” government negligence.\n28 U.S.C. § 1346(b)(1). And the Federal Anti-Tampering\nAct separately prohibits tampering with consumer prod-\nucts that risks “bodily injury,” versus tampering with\nintent to cause “injury to ... business.” 18 U.S.C.\n§ 1365(a)-(b). By authorizing civil RICO suits only for “in-\njur[y]” to “business or property,” Congress deliberately\nbarred recovery for personal injuries.\n 2. By ruling out civil RICO suits for personal injuries,\nCongress ruled out civil RICO suits for damages from\npersonal injuries, even if they are economic in nature. A\ncontrary reading would vitiate Congress’ exclusion of per-\nsonal injuries. RICO’s text reinforces these principles by\ndistinguishing between the legal concepts of injury and\ndamages. A plaintiff who is “injured in his business or\nproperty” may “recover threefold the damages he sus-\ntains.” Id. § 1964(c) (emphases added). Under RICO\nthen, “injury” is “[t]he invasion of a legal right,” whereas\n“damage[s]” are “the loss, hurt, or harm resulting from\nthe ‘injury.’” Ballentine’s Law Dictionary 627 (3d ed.\n1969); see 1 Restatement (Second) of Torts § 7(1) (1965).\nDamages are not themselves an injury. “Damages flow\nfrom an injury.” 4 Restatement (Second), supra, § 902\ncmt. a (1979) (emphasis added). In short: Plaintiffs who\nsuffer a personal injury cannot recast their damages as\nthe basis for a RICO suit. Those economic consequences\nfrom a personal injury are damages, not the injury itself.\n 16\n\n Other civil RICO cases illustrate this distinction.\nCivil RICO requires a domestic injury. RJR Nabisco, 579\nU.S. at 346. What matters, therefore, is “where the injury\narose,” Yegiazaryan v. Smagin, 599 U.S. 533, 545 (2023),\nnot where the damages occurred. Defendants cannot use\nthe domestic-injury requirement to defeat RICO claims if\nthe plaintiff suffered an actionable domestic injury, but\nsuffered damages abroad. See id. at 540, 549 (citation\nomitted) (finding a domestic RICO injury even though the\nplaintiff “experience[d] the loss” abroad); cf. WesternGeco\nLLC v. ION Geophysical Corp., 585 U.S. 407, 409 (2018)\n(holding same under the Patent Act). But conversely,\nplaintiffs presumably cannot replead overseas injuries as\nRICO claims just by pointing to domestic damages. Un-\nder civil RICO as elsewhere, “injury” and “damages” are\n“separate legal concept[s].” WesternGeco, 585 U.S. at\n417. RICO’s injury requirement is “a substantive element\nof the cause of action, not a remedial damages provision.”\nId. at 416.\n This fundamental admonition against “wrongly con-\nflat[ing] legal injury with the damages arising from that\ninjury” recurs across legal contexts. See id. at 417. Take\nthe Patent Act, which permits patent holders to sue over\ndomestic injuries (i.e., patent infringement). Id. at 414-\n15. Plaintiffs cannot evade that requirement by identify-\ning overseas patent infringement that inflicts domestic\ndamages. But defendants cannot defeat suits that do al-\nlege domestic infringement on the ground that the\nensuing damages (like lost profits) occurred abroad. Id.\n Or consider personal jurisdiction: Courts determine\npersonal jurisdiction by looking to “where the actual in-\njury or accident takes place,” as distinct from “the site of\nthe economic consequences of that injury” (i.e., the dam-\nages). Jobe v. ATR Mktg., Inc., 87 F.3d 751, 754 (5th Cir.\n1996). Translation: Texas courts can exercise personal\n 17\n\njurisdiction over car accidents in Texas (the injury). But\nthey cannot exercise personal jurisdiction over car acci-\ndents in Wyoming that cause medical expenses or lost\nwages in Texas (the damages).\n Countless other statutes draw the same line between\ninjuries and the resulting damages.5 That familiar distinc-\ntion forecloses the Second Circuit and Respondent’s position\nhere. Civil RICO allows recovery only for injuries to busi-\nness or property, not for personal injuries, regardless of\nwhether the associated damages are economic in nature.\n RICO’s Antitrust Roots Confirm that Personal-In-\n jury Damages Are Not Actionable\n The antitrust laws—upon which “Congress modeled”\ncivil RICO, Holmes, 503 U.S. at 267—embrace the same\ndistinction between “injur[y]” to “business or property”\n\n5\n E.g., 22 U.S.C. § 3772 (Panama Canal Act’s requirement that the\nPanama Canal Commission “pay damages for injuries to vessels”\npassing through the Canal); 26 U.S.C. § 104 (Internal Revenue Code’s\nexclusion from gross income of “damages ... received ... on account\nof personal physical injuries”); id. § 7402(c) (Internal Revenue Code’s\nauthorization for an official “receiving any injury to his person or\nproperty in the discharge of [his] duty ... to maintain an action for\ndamages therefor”); 28 U.S.C. § 1346(b)(1) (Federal Tort Claims\nAct’s grant of jurisdiction when plaintiffs seek “money damages ...\nfor injury or loss of property, or personal injury” caused by govern-\nment negligence); id. § 1357 (jurisdictional grant over actions “to\nrecover damages for any injury to ... person or property” caused by\nrevenue collection); id. § 1605A (Foreign Sovereign Immunities Act’s\nimmunity exception for suits seeking “money damages ... for per-\nsonal injury or death” caused by terrorist activity); 42 U.S.C. § 300aa-\n11(a)(2)(A) (National Childhood Vaccine Injury Act’s bar on “civil ac-\ntion[s] for damages in an amount greater than $1,000 ... arising from\na vaccine-related injury”); id. § 300aa-22 (similar); 45 U.S.C. § 51\n(Federal Employers’ Liability Act’s imposition of liability for “dam-\nages to any person suffering injury” while employed by a railroad).\n 18\n\nand ensuing damages. The Clayton Act provides a cause\nof action to anyone “injured in his business or property by\nreason of” antitrust violations, who may “recover three-\nfold the damages” sustained. 15 U.S.C. § 15(a). Courts,\nincluding this one, have repeatedly noted that the Clayton\nAct excludes personal injuries, and thus excludes eco-\nnomic damages flowing therefrom. That same rule should\nnaturally apply to civil RICO’s identical text, which this\nCourt routinely interprets in parallel.6\n As in civil RICO, the phrase “business or property” in\nthe Clayton Act carries “restrictive significance” and “ex-\nclude[s] personal injuries.” Reiter v. Sonotone Corp., 442\nU.S. 330, 339 (1979). Ergo, economic damages from per-\nsonal injuries are not injuries to business or property.\nThis Court has contrasted “business damages” with\n“damages resulting from a personal injury”—with the lat-\nter falling outside the Clayton Act. J. Truett Payne Co. v.\nChrysler Motors Corp., 451 U.S. 557, 566 (1981). And this\nCourt approvingly cited a case rejecting antitrust claims\nwhere the injury was personal (the decedents were killed\nin workplace accidents), and the plaintiffs tried to point to\nensuing damage to property (their state-law property\nright in consortium). Reiter, 442 U.S. at 339 (citing Ham-\nman v. United States, 267 F. Supp. 420, 432 (D. Mont.\n1967)). No dice: Because the claim was ultimately for\n“damages for personal injuries,” the Clayton Act did not\napply. 267 F. Supp. at 432.\n That no-repackaging-personal-injuries rule makes\nsense. “Both RICO and the Clayton Act are designed to\nremedy economic injury.” Malley-Duff, 483 U.S. at 151;\n\n6\n E.g., Rotella v. Wood, 528 U.S. 549, 557-58 (2000); Klehr v. A.O.\nSmith Corp., 521 U.S. 179, 188-90 (1997); Holmes, 503 U.S. at 267-68;\nAgency Holding Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 150-53\n(1987); contra BIO 27.\n 19\n\naccord Pet.App.13a. In both statutes, Congress sought to\n“prevent[] and rectify[] economic harm to individuals and\ncompanies,” providing “businessm[e]n ... access to a legal\nremedy.” 116 Cong. Rec. 27,740 (Aug. 6, 1970) (statement\nof Rep. Steiger); 116 Cong. Rec. 35,227 (Oct. 6, 1970)\n(same). The antitrust laws were enacted to protect con-\nsumers and businesses from the evils of “excessive\nprices.” Associated Gen. Contractors of Cal., Inc. v. Cal.\nState Council of Carpenters, 459 U.S. 519, 530 (1983). And\ncivil RICO “protect[s] businesses against competitive in-\njury from organized crime.” Anza v. Ideal Steel Supply\nCorp., 547 U.S. 451, 473 (2006) (Thomas, J., concurring in\npart and dissenting in part). Congress sought to redress\neconomic injuries by extending causes of action to private\nplaintiffs for those economic injuries. Allowing personal-\ninjury claims based on the damages sought by the plaintiff\nwould blow the hinges off that limitation.\n Lower courts thus consider it self-evident that, be-\ncause the Clayton Act does not authorize suits for\npersonal injuries, the Clayton Act does not authorize suits\nfor personal-injury damages, regardless of whether the\ndamages are economic in nature. For instance, courts\nhave refused to allow baseball pitchers to use antitrust\nlaw to sue Major League Baseball for overworked arms—\nnotwithstanding the inevitable economic costs of missed\ngames and medical bills. See Tepler v. Frick, 112 F. Supp.\n245 (S.D.N.Y. 1952), aff’d, 204 F.2d 506 (2d Cir. 1953).\nLikewise, plaintiffs harmed by defective cosmetics cannot\nfashion antitrust claims by pointing to ensuing economic\nharms from a months-long sickness and dermatology\nvisit. Chadda v. Burcke, 2004 WL 2850048, at *1 (E.D. Pa.\nDec. 9, 2004), aff’d, 180 F. App’x 370, 371-72 (3d Cir. 2006).\nAnd plaintiffs harmed by smoking cannot plead their way\ninto antitrust suits by pointing to ensuing medical ex-\npenses. Or. Laborers-Emps. Health & Welfare Tr. Fund\nv. Philip Morris Inc., 185 F.3d 957, 964 (9th Cir. 1999).\n 20\n\nNor can such plaintiffs point to “economical injuries due\nto smoking related disease,” including “compensation for\nloss of employment.” Gause v. Philip Morris, 2000 WL\n34016343, at *1, *5 (E.D.N.Y. Aug. 8, 2000), aff’d, 29 F.\nApp’x 761 (2d Cir. 2002).\n The same rules apply to state unfair-trade-practice\nlaws with analogous “business or property” limitations. A\nplaintiff who suffered a botched medical procedure could\nnot sue under the Washington Consumer Protection Act\nby pointing to ensuing “medical expenses, wage loss, loss\nof earning capacity, and out-of-pocket expenses.” Am-\nbach v. French, 216 P.3d 405, 406, 409 (Wash. 2009)\n(citation omitted). Those were “personal injury dam-\nages,” not injuries to “business or property.” Id. at 409.\nAnd a plaintiff whose lawn-mower accident allegedly\ncaused “permanent impairment of earning capacity” still\nbrought a “personal injury suit[],” not a claim for injury\nto “business or property” under Hawaii law. Beerman v.\nToro Mfg. Corp., 615 P.2d 749, 752-54 (Haw. Ct. App.\n1980). The same rule should apply here.\n Respondent Pled an Impermissible Personal-Injury Claim\n 1. Respondent suffered a quintessential personal injury: in-\ngesting an unwanted substance (THC). The Second\nCircuit was wrong to let him transform that personal in-\njury into an “injury to business or property” by pointing\nto his ensuing damages.\n Start with Respondent’s injury. Civil RICO “focus[es] ... on\nthe injury, not in isolation, but as the product of racket-\neering activity.” Yegiazaryan, 599 U.S. at 545. To\nidentify the relevant injury, courts “look to the circum-\nstances surrounding the alleged injury,” including “the\nracketeering activity that directly caused it.” Id. at 543-\n44. Here, the supposed “racketeering activity” was fraud-\nulently misrepresenting that Dixie X was THC-free. The\n 21\n\nensuing injury—the alleged invasion of Respondent’s legal\nrights—was that he took Dixie X and thus ingested THC.\n Ingesting an unwanted product is plainly an injury.\nAnd it is plainly a personal injury, not an injury to busi-\nness or property. See, e.g., Commonwealth v. Stratton,\n114 Mass. 303, 304-05 (1873); Gupta v. Asha Enters., 27\nA.3d 953, 956, 963 (N.J. Super. Ct. App. Div. 2011). As the\nname suggests, a personal injury is an injury “done to a\nman’s person, such as a cut or bruise, a broken limb, or\nthe like, as distinguished from an injury to his property or\nhis reputation.” Black’s Law Dictionary 925 (rev. 4th ed.\n1968); see Ballentine’s, supra, at 941 (“an invasion of a\npersonal right”). Inducing someone to consume an un-\nwanted substance invades their bodily autonomy and\nthereby injures their person. Thus, both the decision be-\nlow and question presented assume that Respondent suffered a\npersonal injury for which he seeks to recover economic\ndamages. Pet.App.8a n.2; Pet. I.\n The brief in opposition (at 17) deems it “far from clear\nthat Mr. Respondent suffered a personal injury.” But Respondent’s\npleadings below were pellucid: His complaint alleged that\nClaimant “caused Plaintiff[] physical harm in the inges-\ntion of [a] caustic, toxic, and/or an illegal substance.”\nJ.A.17 (Compl. ¶ 84). He alleged that his job loss was “a\ndirect and proximate result of consuming” Dixie X. J.A.6\n(Compl. ¶ 20). His RICO case statement asserted that he\nlost his “livelihood from the use of the product.” J.A.30.\nAnd Respondent’s affidavit attested: “I lost my career and in-\ncome for 5 years, because I took this product.” J.A.38. In\nthe court of appeals, Respondent did “not dispute that his injury\narose from his consuming a product that contained THC.”\nRespondent C.A. Br. 10. And the brief in opposition (at 28) else-\nwhere accuses Claimant of “drugging ... Mr. Respondent.”\n Respondent (BIO 17-18) resists the idea that ingesting a\nproduct is a personal injury by citing a tentative draft of\n 22\n\nthe Restatement (Third) of Torts. Respondent portrays that\ndraft restatement as saying that the “mere existence of\nsubcellular changes to, or the presence of toxins in, the\nplaintiff’s body traditionally do not qualify as injuries” for\npurposes of medical-monitoring claims. Restatement\n(Third) of Torts: Miscellaneous Provisions §__. Medical\nMonitoring Reporters’ Note cmt. b n.1 (Tentative Draft\nNo. 2, 2023). Whatever weight a modern draft restate-\nment should receive is diminished by Respondent’s misquotation\nof it. The draft says only that toxins “traditionally do not\nqualify as compensable injuries.” Id. (emphasis added).\nThe draft does not refute the rule that unwittingly ingest-\ning an unwanted substance is a personal injury.\n Respondent (BIO 18) incorrectly characterizes Claimant\nas arguing in district court that “Respondent’s consumption of\nDixie X could not, as a matter of law, constitute a personal\ninjury.” In fact, petitioner Dixie Holdings argued that\nRespondent “failed to plead a cognizable physical injury” under\nNew York products-liability law, which does not permit\nrecovery when the plaintiff seeks economic damages\nalone. Dixie Mot. for Summ. J. 19, Dkt. 62-1 (emphasis\nadded). The district court agreed, determining that Respondent\nhad not alleged “cognizable injuries” under New York\nlaw. Pet.App.111a. The statements that Respondent cites where\nDixie Holdings and the district court remarked that Respondent\nhad not offered evidence of “bodily” or “personal injury”\nall go to this New York-law question as well. BIO 18\n(quoting Pet.App.111a; Dixie Mot. for Summ. J. 19). Re-\ngardless of whether New York law permits recovery for\nunwittingly consuming THC, Respondent’s claim is, at bottom,\nthat he lost his job because he used Claimant’ product.\nThat is a plain-as-day products-liability claim for a per-\nsonal injury.\n 2. Switching gears, the Second Circuit (Pet.App.9a-\n10a) and Respondent (BIO 23) reclassify the consequences of\n 23\n\nRespondent’s personal injury—namely, his lost wages—as the\noperative RICO injury. They reason that because the\nword “business” in section 1964(c) includes “employ-\nment,” a loss of “current and future wages ... tied to\nemployment” is a RICO “injur[y] in [Respondent’s] business.”\nPet.App.10a; see BIO 23.\n That reasoning confuses the operative injury with\nthe ensuing damages. Again, the hallmark of a RICO in-\njury is the invasion of a plaintiff’s legal interests that\ndirectly follows from the alleged racketeering activity.\nYegiazaryan, 599 U.S. at 544-45. In other contexts, this\nCourt has “zeroed in on the core of the[] suit” to deter-\nmine what conduct “actually injured” the plaintiff. OBB\nPersonenverkehr AG v. Sachs, 577 U.S. 27, 35 (2015) (For-\neign Sovereign Immunities Act).\n For instance, this Court described seamen injured by\ntheir employers’ negligence as experiencing “a single\nwrongful invasion of [their] primary right of bodily auton-\nomy.” See Pac. S.S. Co. v. Peterson, 278 U.S. 130, 138\n(1928); accord Balt. S.S. Co. v. Phillips, 274 U.S. 316, 321\n(1927). That was so even though the seamen sought vari-\nous economic damages—“maintenance” (room and\nboard), “cure” (medical expenses), and “wages.” Pac.\nS.S., 278 U.S. at 137-38; Balt. S.S., 274 U.S. at 318. The\nonly injury was the initial harm caused by the defendants’\nwrongdoing—not the subsequent economic conse-\nquences.\n Respondent (BIO 26) suggests that this Court implicitly en-\ndorsed the notion that downstream economic\nconsequences can supply freestanding civil RICO injuries\nin National Organization for Women, Inc. v. Scheidler\n(Scheidler I), 510 U.S. 249 (1994). Respondent characterizes that\ncase as permitting a RICO claim “alleging that racketeer-\ning activity inflicted mental distress on an employee,\nwhich caused her to leave her job.” But the cited portion\n 24\n\nof Scheidler I involves Article III standing, not the “busi-\nness or property” requirement. Id. at 256. This Court\nlater rejected the RICO claim in Scheidler because the de-\nfendants had not obtained property (and thus did not\ncommit Hobbs Act extortion). Scheidler v. Nat’l Org. for\nWomen (Scheidler II), 537 U.S. 393, 397 (2003). Regard-\nless, the Scheidler complaint alleged a classic business\ninjury—an extortionate conspiracy aimed at shutting\ndown the plaintiff’s business, accomplished by means of\nthreats to an employee. Scheidler I, 510 U.S. at 253.\nScheidler I never suggested that economic aspects of any\npersonal injury to the employee—say, therapy bills and\nlost wages—could support a RICO claim.\n Here, the actually injurious event was ingesting peti-\ntioners’ allegedly THC-containing product—a personal\ninjury. Claimant’ only allegedly wrongful conduct was\npurported fraud inducing Respondent to ingest their product.\nRespondent’s employer, not Claimant, then fired him and\ncaused him to lose his wages. And Respondent’s lost wages are\nprototypical damages from his personal injury. The “typ-\nical recovery in a personal injury case” includes “(a)\nmedical expenses, (b) lost wages, and (c) pain, suffering,\nand emotional distress.” Comm’r v. Schleier, 515 U.S.\n323, 329 (1995); accord United States v. Burke, 504 U.S.\n229, 235-37 (1992). Respondent’s ingestion of THC (the personal\ninjury) allegedly caused those damages, making them\n“part and parcel of the underlying non-compensable per-\nsonal injury,” not distinct business or property injuries.\nSee Diaz v. Gates, 420 F.3d 897, 914 (9th Cir. 2005) (en\nbanc) (Gould, J., dissenting).\n Respondent’s own complaint confirms that his injury was in-\ngesting Dixie X and that the ensuing consequences are\nsimply damages. He alleges that he suffered “monetary\nand property damages” as a result of using Dixie X.\nJ.A.12 (Compl. ¶ 47). Those alleged damages include “lost\n 25\n\nemployment ... at a minimum salary of $100,000” plus\n“401 k contributions, life insurance, and other benefits.”\nJ.A.31 (RICO Case Statement). Just like any other plain-\ntiff who cannot work as the result of a personal injury,\nRespondent is seeking damages for a personal injury. But just\nlike any other RICO plaintiff, Respondent can sue only for inju-\nries to business or property—a requirement he cannot\nsatisfy just by pointing to his damages.\n A Contrary Approach Would Upend Civil RICO\n 1. The Second Circuit and Respondent would end-run Con-\ngress’ exclusion of personal injuries from civil RICO by\ncounting the economic damages from personal injuries as\nstandalone business or property injuries. That approach\nwould leave the “business or property” requirement with-\nout “restrictive significance.” Jackson v. Sedgwick\nClaims Mgmt. Servs., 731 F.3d 556, 565 (6th Cir. 2013) (en\nbanc). “[P]ersonal injuries often lead to monetary dam-\nages.” Id. And “[m]oney, of course, is a form of property.”\nReiter, 442 U.S. at 338. Lost wages, employment benefits,\nmedical expenses, and seemingly any monetary loss from\na personal injury could all amount to injuries to “business\nor property” under the decision below. Congress did not\nexclude personal injuries only to leave the door wide open\nto boundless personal-injury suits based on the inevitable\ndamages.\n Countless plaintiffs allege that they were falsely led\nto believe that innumerable products were safe, only for\nthe products to inflict personal injuries. And any of those\nplaintiffs likely suffered lost wages or incurred medical\nexpenses because personal injuries arising from un-\nwanted or falsely advertised products can give rise to an\ninability to work, expensive medical bills, and ongoing ill-\nness. Further, “loss of consortium, loss of guidance,\nmental anguish, and pain and suffering” all “entail some\npecuniary consequences” that could be refashioned into\n 26\n\nsupposed injuries to business or property. See Doe v. Roe,\n958 F.2d 763, 770 (7th Cir. 1992).\n This case illustrates the danger. Respondent asserts a gar-\nden-variety false-advertising claim, typical of\ninnumerable products-liability cases: He was allegedly\ndeceived into using a product, and now wants civil RICO\nto remedy the downstream economic consequences. Respondent\nsought not just lost wages, but “401 k contributions, life\ninsurance, and other benefits,” to the tune of $10 million.\nJ.A.31 (RICO Case Statement); Respondent Dep. 335:17-336:2.\n If Respondent’s claim is a civil RICO claim, so is any other\nfalse-advertising or fraudulent-deception claim. Thou-\nsands of plaintiffs per year claim to have been harmed by\ninadequate drug warning labels. E.g., Wyeth v. Levine,\n555 U.S. 555, 559-60 (2009); Mutual Pharm. Co. v. Bart-\nlett, 570 U.S. 472, 478 (2013). So long as those plaintiffs\ncan point to lost livelihood or other economic or monetary\nharms, they too could leverage civil RICO. Some plain-\ntiffs have already tried this rebranding, citing a “loss of\nearnings” from drug side effects as a supposed RICO in-\njury. Aston v. Johnson & Johnson, 248 F. Supp. 3d 43,\n49-50 (D.D.C. 2017) (rejecting such claims as repackaging\npersonal injuries).\n Needless to say, false-advertising and inadequate-\nwarning cases run the gamut of products, from children’s\ntoys to cars, planes, and boats; from food and beverages\nto insomnia aids, health supplements, hair regrowth de-\nvices, and do-it-yourself cosmetic procedures; and from\nhousehold appliances to toxic cleaning chemicals, pesti-\ncides, and lead paint. In 2022, non-MDL plaintiffs\nlitigated over 5,500 products-liability claims in federal\ncourt. Lex Machina, Lex Machina Releases Its 2023\nProducts Liability Litigation Report (Sept. 14, 2023),\n[URL REDACTED] State courts hear thou-\nsands of additional products-liability suits per year. E.g.,\n 27\n\nTex. Jud. Branch, Annual Statistical Report for the\nTexas Judiciary 120 (2022), [URL REDACTED]\n(1,736 active cases); Jud. Council of Ga., State Court Case\nData (2022), [URL REDACTED] (5,914 filed\ncases).\n Of course, injuries from product-liability claims are\nserious. But they are also the stuff of state tort law, not\ncivil RICO actions. Hence, courts that refuse to allow\nplaintiffs to reclassify economic damages from personal\ninjuries as freestanding RICO claims have dismissed\nwide-ranging allegations, all of which would be fair game\nunder the decision below. Medical-malpractice patients\ncould sue hospitals for wages lost while recovering from\nunnecessary procedures. But see Aaron v. Durrani, 2014\nWL 996471, at *5 (S.D. Ohio Mar. 13, 2014). Professional\nmixed-martial-arts fighters could wield RICO over fraud-\nulent concealment of a competitor’s doping, leading to\nbroken bones and missed lucrative fights. But see Hunt\nv. Zuffa, LLC, 361 F. Supp. 3d 992, 997, 1000-01 (D. Nev.\n2019). Sexual-abuse victims could sue cheerleading or-\nganizations or the Catholic Church for concealing abuse\nthat caused emotional trauma and lost income. But see\nDoe v. Varsity Brands, LLC, 2023 WL 4931929, at *10-11\n(N.D. Ohio Aug. 2023); Magnum v. Archdiocese of Phila.,\n2006 WL 3359642, at *3-4 (E.D. Pa. Nov. 17, 2006), aff’d,\n253 F. App’x 224 (3d Cir. 2007). A woman coerced into sex\nby her divorce lawyer could sue for lost earnings stem-\nming from emotional distress. But see Doe, 958 F.2d at\n765-66, 770. And home buyers could sue a developer for\nfailing to disclose a toxic dump near their new homes,\nleading the buyers to pay “medical expenses ... for treat-\nment of illnesses caused by the dump.” But see Genty v.\nResol. Tr. Corp., 937 F.2d 899, 903, 918 (3d Cir. 1991).\n 28\n\n Moreover, RICO has 100 other predicate acts, beyond\nmail and wire fraud (the hook for false-advertising or de-\nception claims). Plaintiffs could equally wield those other\npredicates to convert personal-injury claims into civil\nRICO suits just by pinpointing commonplace economic\ndamages. A motorcycle courier hit by a stolen car (i.e.,\ntransporting a stolen vehicle, 18 U.S.C. § 2312) might lose\ndeliveries while recovering in the hospital. Or a crime vic-\ntim who has her jaw broken by a criminal defendant (i.e.,\nwitness intimidation, id. § 1512(a)(2)) might miss work to\nrecuperate.\n Indeed, the Ninth Circuit has approved civil RICO\nclaims against police officers when plaintiffs’ allegedly\nwrongful arrests prevented them from “pursu[ing] gain-\nful employment ... while unjustly incarcerated.” Diaz,\n420 F.3d at 898 (citation omitted); Guerrero v. Gates, 442\nF.3d 697, 707-08 (9th Cir. 2006) (citation omitted). And a\ndistrict court in that circuit has found RICO’s “business\nor property” requirement met where the social-media\nwebsite X’s alleged participation in a conspiracy to kidnap\nand torture a Saudi dissident caused the dissident to miss\nwork while he was imprisoned and tortured. Al-Sadhan\nv. Twitter Inc., 2024 WL 536311, at *5, *15-16 (N.D. Cal.\nFeb. 9, 2024).\n The Second Circuit and Respondent offer no viable limit on\nrepackaging personal-injury claims into business- or\nproperty-injury claims. The Second Circuit disclaimed al-\nlowing a civil RICO suit for “a person physically injured\nin a fire whose origin was arson ... to recover for his per-\nsonal injuries.” Pet.App.13a (citation omitted). But the\narson victim suffers monetary loss from his injuries if he\nmisses work or needs medical treatment—with “lost\nwages” and “medical expenses” being “typical” damages\nin personal-injury cases. Schleier, 515 U.S. at 329. The\n 29\n\nSecond Circuit did not explain how its rule would exclude\nsuch classic personal-injury damages.\n Likewise, the Second Circuit thought it “obvious[]”\nthat civil RICO excludes “non-pecuniary injuries” like\nloss of consortium, pain and suffering, or mental anguish.\nPet.App.21a; accord Pet.App.18a-19a. Respondent (BIO 16)\nseemingly agrees. But it is far from obvious why those\ndamages—which translate into real dollars-and-cents\nlosses for plaintiffs—would fall outside their rule when\nany other monetary consequences can seemingly give rise\nto civil RICO claims. Indeed, Respondent claimed “emotional\npain and anguish, humiliation, and degradation” as part of\nhis RICO injury. J.A.24 (RICO Case Statement).\n Moreover, Respondent’s view (BIO 16) “that ‘property’ un-\nder Section 1964(c) is defined according to state law”\nvitiates any exclusion for “non-pecuniary” damages. Mul-\ntiple States treat “general damages for pain and suffering\nand emotional distress” as “property.” Evans v. Twin\nFalls County, 796 P.2d 87, 93 (Idaho 1990) (citation omit-\nted); accord Brown v. Brown, 675 P.2d 1207, 1212 (Wash.\n1984) (collecting cases). Others recognize a “property\nright” in spousal consortium. E.g., Huber v. Hovey, 501\nN.W.2d 53, 57 (Iowa 1993); see Nelson v. Jacobsen, 669\nP.2d 1207, 1226-27 (Utah 1983) (Durham, J., concurring in\njudgment) (collecting cases). Regardless, Congress did\nnot plausibly exclude suits for personal injuries, then\natextually permit recovery for the lion’s share of personal-\ninjury damages—lost wages, pensions, medical expenses,\nlife insurance, and the like—just not damages akin to pain\nand suffering.\n 2. Allowing plaintiffs to transform countless state-law\npersonal-injury claims involving RICO predicates into\nfederal treble-damages actions would crowd out States’\n“traditional authority to provide tort remedies to their cit-\nizens as they see fit.” See Wos v. E.M.A. ex rel. Johnson,\n 30\n\n568 U.S. 627, 639-40 (2013) (citation omitted). States do\nnot universally welcome personal-injury lawsuits. See\ngenerally F. Patrick Hubbard, The Nature and Impact of\nthe ‘Tort Reform’ Movement, 35 Hofstra L. Rev. 437\n(2006). Some States have enacted statutes of repose in\nproducts-liability cases, cutting off claims a fixed period\nafter a product’s manufacture. Richard E. Kaye, Ameri-\ncan Law of Products Liability § 47:70 (3d ed. May 2024\nupdate). Most States have restricted joint and several li-\nability. Jacob A. Stein, Stein on Personal Injury\nDamages § 19:18 (3d ed. Apr. 2024 update). Many States\nreduce a plaintiff’s recovery when he can recover from an-\nother source, like insurance. Id. § 19:34. And a few States\ncap all damages in personal-injury cases. Id. § 19:13.\n Plaintiffs could bypass these state-law limitations by\nrepleading almost every false-advertising, mislabeling, or\nfailure-to-warn case as a federal RICO suit, just by point-\ning to some ensuing economic losses from personal\ninjuries. “[T]he prospect of treble damages and attor-\nney’s fees” offers plaintiffs a “strong incentive” to replead\nstate-law claims under RICO. Sedima, 473 U.S. at 504\n(Marshall, J., dissenting).\n Respondent (BIO 24-25) contends that RICO’s “additional\nbarriers” prevent the federalization of “garden-variety\ntort claims.” Those other restrictions cannot justify ig-\nnoring the separate injury to “business or property”\nrequirement that Congress enshrined in RICO’s text.\nAnd those guardrails inadequately guard against expan-\nsive RICO claims, as shown by Respondent’s own case. Respondent\n(BIO 24) points to the racketeering-activity requirement.\nBut Respondent invokes RICO’s fraud predicates to bring a\nubiquitous products-liability claim, suggesting that any\ngarden-variety misrepresentation over the mail or wires\nwould be the stuff of civil RICO. Moreover, RICO has ap-\nproximately 100 other predicate acts, and guardrails\n 31\n\nthere appear few and far between. Plaintiffs have used\nRICO’s obscenity predicates to sue pornographic web-\nsites for radicalizing school shooters. James v. Meow\nMedia, Inc., 90 F. Supp. 2d 798, 812 (W.D. Ky. 2000). And\nplaintiffs have used RICO’s obstruction-of-justice predi-\ncates to sue police officers for false imprisonment. Evans\nv. City of Chicago, 2001 WL 1028401, at *3 (N.D. Ill. Sept.\n6, 2001). Under Respondent’s theory, it would be the rare per-\nsonal-injury claim that would not implicate civil RICO.\n Respondent (BIO 24-25) and the court below (Pet.App.21a-\n22a) also portray RICO’s proximate-causation require-\nment as limiting civil RICO claims. Respondent (BIO 25)\ncorrectly describes “that requirement [a]s more stringent\nthan the common-law doctrine of the same name,” since\nRICO requires “some direct relation between the injury\nasserted and the injurious conduct alleged.” Holmes, 503\nU.S. at 268.\n But RICO proximate causation offers little comfort if\nRespondent’s claim passes muster. “[T]he conduct directly re-\nsponsible for [Respondent’s] harm” was his employer’s decision\nto fire him, not Claimant’ alleged mislabeling of a CBD\nsupplement. See Hemi Grp., LLC v. City of New York,\n559 U.S. 1, 11 (2010). Respondent’s employer drug-tested him\npursuant to Department of Transportation regulations,\nJ.A.4, which do not require automatically firing anyone\nwho tests positive for THC. Employers have “discretion”\nto reinstate employees who “successfully compl[y] with\nprescribed education and/or treatment” and pass “a re-\nturn-to-duty test.” 49 C.F.R. § 40.305(a)-(b) (2012). The\ndrug-testing lab offered Respondent that program but he de-\nclined. J.A.66-67, 91-92. Unless Respondent is willing to concede\naway his own claim, it is hard to take proximate causation\nseriously as a guardrail in this case.\n 3. Not only would the Second Circuit and Respondent’s ap-\nproach cannibalize state tort law, that interpretation\n 32\n\nwould also remove important limits on civil RICO itself.\nCivil RICO claims have a four-year limitations period,\nwhich starts running either when the plaintiff’s injury oc-\ncurs or the plaintiff discovers the injury. See Rotella, 528\nU.S. at 554-55 & n.2.\n So, in the ordinary course, a plaintiff who suffers an\nactionable injury to business or property must sue when\nthat injury happens (or is discovered). Plaintiffs cannot\n“recharacteriz[e] ... damages” as new injuries to “extend\nthe statute of limitations for a RICO action.” Pilkington\nv. United Airlines, 112 F.3d 1532, 1537 (11th Cir. 1997).\nLimitations periods generally run from unlawful “acts,”\neven if the “effects ... did not occur until later.” See Del.\nState Coll. v. Ricks, 449 U.S. 250, 258 (1980).\n Treating economic harms from personal injuries as\nthe relevant RICO injury would upend that rule. If plain-\ntiffs could redefine each new economic damage from a\npersonal injury as a new injury to business or property,\nthe statute of limitations could extend to infinity when-\never plaintiffs suffer new economic damages. Someone\nwho ingests a defective prescription drug and suffers\nshort-term symptoms that cause lost wages could bring a\ncivil RICO suit then. If the drug later caused cancer, the\nSecond Circuit and Respondent would apparently count the cor-\nresponding medical bills as a new civil RICO injury. So\ntoo for any ensuing fatality and corresponding loss-of-con-\nsortium claim. Opening the door to claims based on\nconduct so “remote from time of trial” would be “at odds\nwith the basic policies of all limitations provisions.”\nRotella, 528 U.S. at 555.\nII. Counterarguments Lack Merit\n The Second Circuit and Respondent cast Claimant’ rule as\nan “atextual” limitation derived from RICO’s “implicit”\nexclusion of personal injuries. Pet.App.3a, 11a-13a, 15a,\n 33\n\n17a-18a, 22a; BIO 1, 9, 14, 23-24, 26. But RICO’s “injured\nin his business or property” requirement is right there in\nthe text and “exclud[es] ... personal injuries.” RJR\nNabisco, 579 U.S. at 350. Likewise, RICO’s text distin-\nguishes injuries from damages, underscoring that suits\nfor economic damages from personal injuries are equally\nimpermissible. Supra pp. 15-17.\n The Second Circuit contended that Claimant’ rule\nwould “coopt” RICO’s proximate-causation requirement\nby “imposing a more restrictive attenuation principle\nwhenever there is a necessary antecedent personal in-\njury.” Pet.App.14a. But the “injured in his business or\nproperty” requirement is not an “attenuation principle”;\nit is an injury requirement. Congress delimited what\ntypes of injuries can give rise to private lawsuits, and\nruled out personal injuries. That means Respondent cannot seek\ndamages exclusively from an alleged personal injury.\n Relatedly, the Second Circuit thought that “the\nphrase ‘business or property’ focuses on the nature of the\nharm, not the source of the harm.” Pet.App.15a. But the\nSecond Circuit confused the nature of the injury (the op-\nerative inquiry) with the nature of the damages\n(irrelevant). And again, civil RICO “focus[es] ... on the\ninjury, not in isolation, but as the product of racketeering\nactivity.” Yegiazaryan, 599 U.S. at 545. The alleged rack-\neteering activity that invaded Respondent’s legal rights was\nClaimant’ alleged fraud in inducing him to consume\nDixie X. That is a personal-injury claim, not a business-\nor property-injury claim.\n Conversely, the Second Circuit (Pet.App.16a-17a)\nand Respondent (BIO 25) worry that Claimant’ position would\nexclude “the core of RICO’s substantive prohibitions” like\nmurder, kidnapping, extortion, and collection of unlawful\n 34\n\ndebts.7 Not so. Those substantive prohibitions often do\ncause injuries to business or property. And Claimant\nagree that RICO covers all injuries to business or prop-\nerty, even if the plaintiff also suffered a personal injury in\nthe course of the defendant’s racketeering activity.\n Take extortion, a classic RICO predicate. See S. Rep.\n[DOCKET REDACTED], at 77 (1969) (identifying extortion as “most of-\nten” how organized crime gains “[c]ontrol of business\nconcerns”). Extortion involves obtaining property. The\nHobbs Act defines extortion as “the obtaining of property\nfrom another, with his consent, induced by wrongful use\nof actual or threatened force, violence, or fear, or under\ncolor of an official right.” 18 U.S.C. § 1951(b)(2); see\nScheidler II, 537 U.S. at 400-05. If a mobster assaults a\ncarwash owner to force the owner to do business with the\nmob, as the court below hypothesized, Pet.App.17a, that\nis extortion. Forcing someone to do business with the mob\ninstead of a cheaper, legitimate competitor is a prototypi-\ncal business or property injury for which RICO provides\ntreble damages. The owner just cannot recover for the\nassault itself—a personal injury outside civil RICO—in-\ncluding medical expenses or lost wages from a hospital\nstay.\n Likewise, the loan shark who induces a client to repay\nan unlawful debt through violence, Pet.App.17a, has in-\njured the client in his property—the money used to pay\nthe debt. The kidnapper who extorts ransom money from\nthe victim’s family has injured the family’s property—the\nransom payment. And if Tony Soprano drains a bank ac-\ncount using a computer password obtained by violence,\n\n7\n Respondent (BIO 28) also mentions assault and battery, which are not\nRICO predicates. See 18 U.S.C. § 1961(1). Assault and battery come\nwithin RICO only when used to commit other crimes, like robbery.\nE.g., United States v. To, 144 F.3d 737, 741-42 (11th Cir. 1998).\n 35\n\nBIO 28-29, Mr. Soprano has injured the account holder’s\nproperty by taking his money. Claimant’ rule excludes\nnone of those hypotheticals because the defendant in-\nvaded the plaintiff’s business or property rights.\n Even if some RICO predicate acts never cause inju-\nries to business or property that could support civil RICO\nclaims, that would not “read[] out” those predicates from\nthe statute, as Respondent (BIO 25) fears. The same predicates\napply to all RICO actions, criminal or civil. Criminal\nRICO has no “business or property” requirement and\nsubjects violators to up to 20 years’ imprisonment. 18\nU.S.C. § 1963(a). And the Attorney General can seek in-\njunctive relief against RICO violations, also without any\n“business or property” requirement. Id. § 1964(a)-(b).\nCivil RICO is thus “narrower in its application” and “not\ncoextensive” with the underlying predicate acts. RJR\nNabisco, 579 U.S. at 350. Every RICO predicate need not\napply to civil RICO to avoid superfluity.\n The Second Circuit decried as “arbitrary and incon-\nsistent” the fact that a bombed business has a RICO\ninjury but a person struck by a bomb does not.\nPet.App.20a-21a. The court likewise critiqued the Sixth\nCircuit’s distinction between the loss of welfare benefits\n(possibly a property injury) and workers’ compensation\n(which that court classified as part of a personal-injury\nclaim). Pet.App.20a-21a; see Jackson, 731 F.3d at 569-70.\nBut the distinction between different kinds of injuries in-\nheres in RICO’s text, which permits private plaintiffs to\nrecover for injuries to business or property, not personal\ninjuries, consistent with Congress’ focus on organized\ncrime’s infiltration of legitimate businesses. See supra\npp. 18-19. As the Second Circuit recognized, arson vic-\ntims can recover for damage to their buildings, but not\ntheir persons. Pet.App.13a. The answer to line-drawing\nconcerns is not to redraw Congress’ lines.\n 36\n\n Ultimately, the Second Circuit thought that RICO\nshould be “liberally construed” and “read broadly” and\n“expansive[ly],” based on this Court’s 1985 decision in\nSedima. Pet.App.10a, 20a (quoting 473 U.S. at 497-98);\nsee BIO 2-3, 26. But this Court has since cautioned\nagainst such “expansive reading[s]” of civil RICO, be-\ncause there is “nothing illiberal” about enforcing RICO’s\ntextual limitations. Holmes, 503 U.S. at 266, 274. If any-\nthing, an overly expansive reading of RICO would\n“hobble[]” the statute’s “remedial purposes,” “open[ing]\nthe door to massive and complex damages litigation,\nwhich would not only burden the courts, but would also\nundermine the effectiveness of treble-damages suits.” Id.\nat 274 (cleaned up).\n Congress rationally chose to limit civil RICO claims\nto injuries to “business or property,” not personal inju-\nries. That remedial limitation would be obliterated if\nplaintiffs could replead virtually every personal-injury\nclaim involving fraud or 100 other predicate acts into tre-\nble-damages civil RICO claims just by pointing to the\ninevitable economic consequences of those injuries.\n 37\n\n CONCLUSION\n The court of appeals’ judgment should be reversed.", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n The civil RICO provision, 18 U.S.C. § 1964(c),\nallows “any person injured in his business or property\nby reason of” a pattern of racketeering activity to sue.\nRespondent Respondent’s reading of that statute\nis simple. “Injured” means harmed, and “business”\nincludes employment. Because he lost his employment\n“by reason of” Claimant’ racketeering activity, Mr.\nRespondent can sue under civil RICO.\n That reading accords with dictionaries, which\ngenerally define “injured” to mean “harmed.” It’s a\nsensible rule, allowing compensation for economic\nharms while prohibiting the sorts of pain-and-\nsuffering damages that comprise the lion’s share of\nmost tort recoveries. And were there any doubt about\nhow to read Section 1964(c), Congress has written into\nthe text of RICO a liberal construction provision,\nmeaning ambiguities should be construed in favor of\nthe statute’s remedial purpose.\n Perhaps the most important thing about Mr.\nRespondent’s reading of the statute is that he has one.\nClaimant, by contrast, can’t seem to settle on a rule\nof their own. Over the course of their brief, they\npropose that “injured” is limited to the “initial harm”\ninflicted by a RICO predicate and “not the subsequent\neconomic consequences”; that a plaintiff can suffer a\nproperty injury only if “obtaining property” is an\nelement of the RICO predicate offense; and so on,\n 2\ntotaling a half-dozen different rules, each deeply\nflawed. See, e.g., Petr. Br. 23, 34.\n And after all that, the examples Claimant give\nus don’t seem to fit with any of their proposed rules,\nlet alone all of them. For instance, Claimant aver\nthat “[t]he kidnapper who extorts ransom money from\nthe victim’s family has injured the family’s property.”\nPetr. Br. 34. But that hypothetical doesn’t satisfy the\ninitial-harm rule—surely the initial harm is the\nkidnapping, not the ransom payment. Nor does it\nsatisfy the element-of-the-offense rule—obtaining\nproperty isn’t an element of kidnapping. Nor does it\nappear to satisfy any of the other rules Claimant\npropose.\n We could go on. But suffice it to say at this\njuncture that none of Claimant’ half-dozen feints at\na rule can be squared with each other or with\nClaimant’ own hypotheticals, let alone with RICO’s\ntext. So it is anyone’s guess what, exactly, Claimant\nare asking this Court to hold.\n This Court should instead read civil RICO to\nmean what it says and affirm the decision below.\n\n STATEMENT OF THE CASE\n\n A. Legal background\n The federal RICO statute targets criminal\nenterprises that operate under the guise of “legitimate\nbusiness.” Organized Crime Control Act of 1970, Pub.\nL. [DOCKET REDACTED], 84 Stat. 922, 923 (Statement of\nFindings and Purpose). To accomplish that goal, the\nstatute created “enhanced sanctions and new\nremedies,” id., for conduct that was already prohibited\nby state or federal law. See 18 U.S.C. § 1961(1).\n 3\n One innovation was a new form of criminal\nliability for those engaged in a pattern of racketeering\nactivity. 18 U.S.C. § 1962. Racketeering activity\nincludes predicate crimes that range from murder and\nkidnapping to trafficking in nuclear weapons or\ncounterfeit labels for phonorecords. Id. § 1961(1).\n The RICO statute also created a civil remedy for\nvictims of racketeering activity. 18 U.S.C. § 1964(c).\nThat provision—known colloquially as civil RICO—\nprovides, in pertinent part, that “[a]ny person injured\nin his business or property by reason of a violation of\nsection 1962 of this chapter may sue therefor . . . and\nshall recover threefold the damages he sustains . . . .”\nId.\n Congress borrowed the “[a]ny person injured in\nhis business or property” requirement from turn-of-\nthe-twentieth-century antitrust laws like the\nSherman Act and the Clayton Act. See Holmes v. Secs.\nInv. Prot. Corp., 503 U.S. 258, 267 (1992). But unlike\nthose statutes, Congress inserted a liberal\nconstruction provision into RICO, which mandates\nthat RICO’s text “shall be liberally construed to\neffectuate its remedial purposes.” Organized Crime\nControl Act § 904(a). This Court has affirmed that\nRICO’s “‘remedial purposes’ are nowhere more evident\nthan in the provision of a private right of action,”\nSedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 498\n(1985), for those injured by enterprises be they\n“ostensibly legitimate or admittedly criminal,” United\nStates v. Turkette, 452 U.S. 576, 585 (1981).\n B. Factual background\n 1. For fourteen years, respondent Respondent\nand his wife, Cindy Harp-Respondent, worked as a team of\n 4\nover-the-road truckers to support themselves and\ntheir five daughters. J.A. 33, 91. Their employer relied\non them to haul high-value, high-risk loads such as\n“expedited food, pharmaceuticals and liquid\nchemicals.” J.A. 33.\n Because of the high-stakes nature of the Respondents’\noccupation, federal law—and their employer—\nrequired the Respondents to undergo random drug tests. See\nPet. App. 5a. Neither of the Respondents had used marijuana\nin their adult lives. J.A. 36.\n In February 2012, Mr. Respondent was in a serious\ntrucking accident. J.A. 35. He suffered “severe\nshoulder and back injuries” and experienced chronic\npain. Id. Neither pain medications nor physical\ntherapy alleviated Mr. Respondent’s symptoms. Id.\n Later that year, Mr. Respondent investigated whether\nmedicinal marijuana could help his mother-in-law,\nwho was battling cancer. J.A. 33. His research\nrevealed an article about a “new CBD-rich medicine”\ncalled Dixie X. Pet. App. 4a. CBD, which is derived\nfrom a marijuana plant, is generally federally legal\nand non-psychoactive. Pet. App. 70a.\n Dixie X was sold by petitioner Red Dice Holdings,\nLLC. Red Dice, in turn, was a joint venture formed in\npart by petitioner Claimant Pet. App.\n83a-84a. Founded by self-described “drug kingpins”\nwho previously imported hundreds of thousands of\npounds of marijuana into the United States illegally,\nClaimant, advertised itself as a\n“publicly traded company” that “does not grow, sell or\ndistribute any substances that violate United States\nlaw.” Pet. App. 86a; Life in the Drug Trade, Time (Nov.\n23, 1981), [URL REDACTED] An Unusual\n 5\nEntrepreneur, Bruce Perlowin\n[URL REDACTED] (archived Dec. 8, 2023).\n The article about Dixie X quoted Claimant\nsaying the product “contain[ed] 0% THC.” Pl. Mot.\nSumm. J., Ex. 1, at 2, ECF [DOCKET REDACTED]. THC, by contrast\nto CBD, is the psychoactive ingredient in marijuana;\nat the time, as little as 0.3% THC could make a product\na Schedule I drug. See Food & Drug Admin., FDA\nRegulation and Quality Considerations for Cannabis\nand Cannabis-Derived Compounds,\n[URL REDACTED] (last updated Feb. 7,\n2023). By claiming their product contained “0% THC,”\nClaimant assured customers that Dixie X was non-\npsychoactive and did not violate federal law. J.A. 34.\n Although Mr. Respondent thought Dixie X might be able\nto help him manage his chronic pain, he was initially\nwary. After all, he did not use marijuana, and he was\nsubject to regular drug testing, including testing for\nTHC. J.A. 35-36. But after watching videos where\nClaimant stated that their products “did not contain\nTHC,” reading on Claimant’ website that “our hemp\ncontains no THC,” and speaking to a customer service\nrepresentative who confirmed that Dixie X contained\n“zero percent THC,” Mr. Respondent decided Dixie X might\nalleviate his pain without compromising his\nemployment. Pet. App. 85a-87a. He purchased and\nconsumed Dixie X in September 2012. Id. 87a.\n A few weeks later, Mr. Respondent submitted to a\nroutine random drug screening. Pet. App. 5a. His test\ncame back positive for THC, and his employer\nimmediately fired him. Id. ¶¶ 14-15.\n Shocked by the test result, Mr. Respondent could think\nof only one possible source of the THC: Dixie X. He\nordered another package of the product and sent it to\n 6\na lab for testing. J.A. 37. The lab confirmed that,\ncontrary to the company’s repeated assurances, Dixie\nX did, in fact, contain THC. Id. Indeed, because of the\nlevel of THC in Dixie X, the lab refused to mail the\nproduct back to Mr. Respondent for fear of violating federal\nlaw. See id.\n As a result of Claimant’ misrepresentations, Mr.\nRespondent “lost [his] career and income,” plunging his\n“family into financial ruin.” J.A. 38. As he stated in an\naffidavit, “I would never have taken this product\n[Dixie X] if Defendants’ advertising was truthful and\nsaid even ‘trace amounts of THC.’” Id.\n\n C. Procedural history\n In 2015, Mr. Respondent filed this suit in the U.S.\nDistrict Court for the Western District of New York.\nSee Pet. App. 87a. Mr. Respondent brought a number of\nstate-law tort claims. See id. 87a-88a. He also sought\nrelief under civil RICO. Id. 88a. To that end, he alleged\nthat Claimant had violated the Controlled\nSubstances Act and engaged in mail and wire fraud—\npredicate offenses under RICO—and that, as a result,\nhe suffered a compensable business or property injury\nin the form of lost employment. J.A. 6, 12.\n The district court resolved Claimant’ motions for\nsummary judgment in 2019. See Pet. App. 68a, 80a. As\npart of that resolution, the district court rejected\nseveral of Mr. Respondent’s state-law claims on the ground\nthat Mr. Respondent had not suffered a cognizable personal\ninjury—an essential element of those claims. Id. 111a.\n(The district court also rejected Mr. Respondent’s civil RICO\nclaim based on violations of the Controlled Substances\nAct. Id. 74a.) This left two remaining claims for trial:\na state-law fraudulent-inducement claim and a civil\n 7\nRICO claim based on Claimant’ mail and wire fraud.\nId. 79a, 113a. Up until that point, Claimant had not\nchallenged Mr. Respondent’s claim that he had been injured\nin his business or property, as required by Section\n1964(c).\n One weekday before trial was set to begin,\nClaimant argued for the first time that Mr. Respondent had\nnot been “injured in his business or property” because\nhis lost employment was “predicated on the bodily\ninvasion plaintiff allegedly sustained when THC was\nintroduced into his system through the ingestion of\nDixie X.” Pet. App. 39a. The district court ruled for\nClaimant and granted partial final judgment on the\ncivil RICO claim to allow Mr. Respondent to appeal. Id. 36a-\n37a.\n On appeal, the Second Circuit vacated the district\ncourt’s grant of summary judgment and remanded the\ncase for further proceedings. Pet. App. 2a. The Second\nCircuit concluded that Section 1964(c) does not “bar[]\na plaintiff from suing for injuries to business or\nproperty simply because they flow from, or are\nderivative of, a personal injury.” Pet. App. 8a n.2.\nLooking to dictionaries from the time of Section\n1964(c)’s codification, the Second Circuit concluded\nthat the term “business” covered “concepts like\nemployment, occupation, or profession engaged in for\ngain or livelihood.” Pet. App. 9a (citation omitted).\n“Accordingly, when Respondent lost his job, he suffered an\ninjury to his business within the plain meaning of\n§ 1964(c).” Pet. App. 11a.\n The Second Circuit rejected Claimant’\n“antecedent-personal-injury bar” as “atextual.” Id. It\nagreed with Claimant that Section 1964(c) “excludes\nrecovery for personal injury” but held that “nothing in\n 8\nRICO’s text or structure provides for ignoring”\neconomic harms simply because they “arose following\na personal injury.” Pet. App. 13a (citation omitted).\nMoreover, the Second Circuit found it “significant”\nthat Section 1964(c) “incorporates a proximate cause\nstandard.” Pet. App. 14a. It explained that “Congress\nmade a judgment concerning the permissible degree of\nattenuation between a predicate act and a redressable\npersonal injury” and “[t]he antecedent-personal-injury\nbar coopts that judgment.” Id. The Second Circuit thus\nreversed the district court and remanded the case for\ntrial on Mr. Respondent’s remaining claims.\n This Court granted certiorari.\n\n SUMMARY OF THE ARGUMENT\n I. 1. Section 1964(c) reads: “Any person injured in\nhis business or property by reason of a violation of\nsection 1962 of this chapter”—that is, by a pattern of\nracketeering activity—may file suit under civil RICO.\n“Injured” means “harmed,” in both legal and common\nparlance. Indeed, this Court has characterized civil\nRICO’s injury requirement as a harm requirement in\nseveral cases. And the definition of “business” is\ncapacious, covering any occupation or employment.\nPutting those pieces together yields a straightforward\nconclusion: Because Mr. Respondent was harmed in his\nemployment—he lost his job—he has been “injured in\nhis business or property” for civil RICO purposes.\n 2. Claimant claim that because there is a\n“textual distinction” in Section 1964(c) between\n“injured” and “damages,” “injured” must mean\nsomething other than “harmed.” That argument is\nwrong. To start, the obvious “textual distinction”\nbetween “injured” and “damages”—the one that, at\n 9\ntimes, Claimant themselves seem to endorse—is that\n“injured” means “harmed,” while “damages” are the\ncompensation that a plaintiff receives for that harm.\nMoreover, the definitions Claimant provide in\nsupport of their proposed textual distinction are for\nthe word “damage,” singular, not the word “damages,”\nplural. The two mean very different things in legal\nparlance, and only the latter appears in the statute.\n 3. Were there any doubt, RICO contains an\nexpress liberal construction provision—one of only a\nhandful in the United States Code—that mandates\nany ambiguities be construed in favor of providing a\nremedy.\n II. By contrast to Mr. Respondent’s simple rule—making\ndamages available to anyone whose business or\nproperty is harmed by reason of a pattern of\nracketeering activity—Claimant come up with at\nleast six different tests, each deeply flawed:\n 1. First, Claimant say economic harms “resulting\nfrom personal injuries” (Pet. I) don’t qualify. But\nCongress knew how to draft such a resulting-from\nrule: It did so elsewhere in the United States Code, and\ndid not do so in civil RICO. And it’s at odds with\nClaimant’ own examples. For instance, Claimant\nsay that “[i]f a mobster assaults a carwash owner to\nforce the owner to do business with the mob,” the\ncarwash’s lost profits are an “injury to business or\nproperty.” Petr. Br. 34. But surely those lost profits\n“result[ed] from” the assault.\n 2. Second, Claimant posit that the “initial harm\ncaused by the defendants’ wrongdoing” must be\neconomic. See Petr. Br. 23. Like the resulting-from test,\nthe initial-harm test is at odds with the rest of\nClaimant’ brief. And the initial-harm test doesn’t\n 10\nmesh with the way courts generally use the term\n“injured.”\n 3. Third, Claimant maintain that an “injury” is\nthe “invasion of a legal right.” Petr. Br. 15 (citation\nomitted). That’s either trivially true—civil RICO\nprotects the right not to be harmed by reason of a\npattern of racketeering activity. Or else it would peg\nthe scope of civil RICO to state law, which Claimant\ndisavow and which would make little sense given the\nstatutory scheme.\n 4. Fourth, Claimant propose a rule that excludes\n“prototypical” personal injury cases. Petr. Br. 24. They\noffer no principled rule to identify such “prototypical”\ncases. For instance, Claimant claim that lost wages\nare “prototypical” personal injury damages. Petr. Br.\n24. But lost wages are awarded in a wide variety of\ncontexts, including under the antitrust statutes from\nwhich civil RICO borrowed the “injured in his business\nor property” requirement.\n 5. Fifth, Claimant ask this Court to “zero[] in on\nthe core of the suit” and prohibit civil RICO suits that\nlack an “economic” core. See Petr. Br. 23 (citation\nomitted). But it’s entirely unclear what Claimant\nmight mean by an economic core if Mr. Respondent’s case\ndoesn’t have one.\n 6. Finally, Claimant explain that an extortion\ncase would satisfy the “injured in his business or\nproperty” requirement because “[e]xtortion involves\nobtaining property.” See Petr. Br. 34 (emphasis\nomitted). Claimant never explain what the involves-\nobtaining-property test means or how it might fit with\nRICO’s text.\n III. Claimant’ remaining arguments fare no\nbetter.\n 11\n 1. Claimant protest that without their jury-\nrigged rule, plaintiffs’ lawyers will bring “garden-\nvariety” state tort claims as civil RICO suits. Petr. Br.\n25. Not so. Among other things, civil RICO forbids\nrecovery for nonpecuniary harms, such as pain and\nsuffering, which form the lion’s share of plaintiffs’\nawards in tort cases.\n 2. Claimant also argue that civil RICO should be\ninterpreted in pari materia with the Clayton Act,\nwhich forbids recovery for economic injuries that come\nafter personal ones. Petr. Br. 17-20. But this Court has\nheld that civil RICO should be read more generously\nthan the Clayton Act, and in any event, there’s no\nconsensus in the Clayton Act context suggesting\nClaimant’ reading of the “injured in his business or\nproperty” requirement is preferable to Mr. Respondent’s.\n 3. Finally, Claimant claim that Mr. Respondent’s\nreading of civil RICO would wreak havoc on its statute\nof limitations. Petr. Br. 31-32. But this Court has\nalready made clear that a new injury doesn’t\nnecessarily start a new statute of limitations, and the\ncomplexities Claimant identify regarding ongoing\nharms would exist under their rules, too.\n\n ARGUMENT\nI. “Injured” in Section 1964(c) simply means\n “harmed.”\n 1. Section 1964(c) reads: “Any person injured in\nhis business or property by reason of a violation of\nsection 1962 of this chapter”—that is, by a pattern of\nracketeering activity—“may sue therefor . . . and shall\nrecover threefold the damages he sustains . . . .”\nTaking each piece of that statutory section in turn\nyields a straightforward rule: Plaintiffs may recover\n 12\nby showing a harm to their business or property\nproximately caused by a pattern of racketeering\nactivity.\n Start with the term “injured,” the past participle\nof the verb “injure.” To injure is to harm, in both legal\nand common parlance; and that definition has\nremained the same from the time the “injured in his\nbusiness or property” phrase was introduced into the\nUnited States Code up until now. E.g., Injure,\nBallentine’s Law Dictionary with Pronunciations (3d\ned. 1969) (“[t]o harm” or “to hurt”); Injure, Black’s Law\nDictionary (4th ed. unabr. 1951) (“To do harm to; to\nhurt; damage; impair.”); Injure, 5 Oxford English\nDictionary (1933) (“to hurt, harm, damage”); Injure,\nFunk & Wagnalls New Standard Dictionary of the\nEnglish Language (1943) (“to inflict harm”).\n This Court has used similar language in\ncharacterizing the word “injured” under civil RICO:\n“[T]he compensable injury necessarily is the harm\ncaused by predicate acts.” Sedima, S.P.R.L. v. Imrex\nCo., 473 U.S. 479, 497 (1985); see also Klehr v. A.O.\nSmith Corp., 521 U.S. 179, 191 (1997) (equating injury\nwith harm); Anza v. Ideal Supply Corp., 547 U.S. 451,\n460 (2006) (same).\n The definition of “business” is similarly\nstraightforward. The term “business” includes, of\ncourse, “a commercial enterprise.” Business,\nBallentine’s Law Dictionary with Pronunciations,\nsupra. But the term “business” is broader than that;\nit’s a “very comprehensive term” that “embraces\neverything about which a person can be employed.”\nFlint v. Stone Tracy Co., 220 U.S. 107, 171 (1911). The\nprimary definition of “business” is “occupation or\nemployment.” Business, 1 Legal Definitions\n 13\n(Benjamin W. Pope ed., 1919). In other words,\n“business” includes “[t]he work in which one is\nregularly or usually engaged; the activity in which he\nspends the major portion of his time, and from which\nhe makes a living.” Business, Ballentine’s Law\nDictionary with Pronunciations, supra. Any\noccupation or employment suffices; “[a] person does\nnot have to wear a suit and tie to be engaged in\n‘business.’” Diaz v. Gates, 420 F.3d 897, 905 (9th Cir.\n2005) (en banc) (Kleinfeld, J., concurring).\n There’s no dispute about the middle part of the\ncivil RICO provision. “By reason of a violation of\nsection 1962” means that any injury to business or\nproperty must be proximately caused by the pattern of\nracketeering activity. See Hemi Grp., LLC v. City of\nNew York, 559 U.S. 1, 9 (2010). And “may sue therefor”\ntells us that the plaintiffs can claim only those\nbusiness or property injuries in their suit.\n “Damages” are the flip side of “injured.” “Injured”\nmeans “harmed”; “damages” are what the wrongdoer\npays to compensate someone for that harm. A\nrepresentative definition: “Damages” are “a sum of\nmoney awarded to a person injured by the tort of\nanother.” Restatement (First) of Torts § 902 (1939);\nsee also Damages, 1 Legal Definitions, supra (1919)\n(“A compensation, recompense, or satisfaction to the\nplaintiff, for an injury actually received by him from\nthe defendant.”); Damages, Bouvier’s Law Dictionary\n(William Edward Baldwin ed., 1940) (“The indemnity\nrecoverable by a person who has sustained an injury,\neither in his person, property, or relative rights,\nthrough the act or default of another.”); Damages (pl.\nLaw), Funk & Wagnalls New Standard Dictionary of\nthe English Language, supra (“The indemnity\n 14\nrecoverable by one who has been subjected to an\ninjury” or “[t]he amount demanded in reparation for\nsuch an injury.”). “Damages” are “the result of the\ninjury alleged and proved” and are “commensurate\nwith” that injury. Birdsall v. Coolidge, 93 U.S. 64, 64\n(1876).\n Putting the pieces together, civil RICO contains a\nstraightforward directive: A person whose\nemployment is proximately harmed by a pattern of\nracketeering may recover damages for that harm. In\nthis case, Mr. Respondent lost his employment by reason of\nClaimant’ racketeering activity, so he can recover for\nthat lost employment.\n 2. Claimant dispute that plain-text reading with\nthe following argument: Congress used both “injured”\nand “damages” in the same sentence; there must be a\n“textual distinction between injury and damages”;\n“damages” means “harm”; and so “injured” can’t mean\n“harmed.” Petr. Br. 14. (What else, exactly, “injured”\nmight mean isn’t clear on Claimant’ telling. See infra\nPart II.)\n a. There’s a simpler explanation. Any “textual\ndistinction” between “injured” and “damages” is\nbetween the harm inflicted (“injured”) and the\ncompensation for that harm (“damages”). Supra at 13-\n14. As explained above, dictionaries define “damages”\nto mean “compensation,” not “harm.” Id.\n Statutes that use the same “damages sustained”\nlocution as civil RICO drive home the point. For\ninstance, 18 U.S.C. § 2255 allows victims of sexual\nabuse to choose between “the actual damages such\nperson sustains or liquidated damages.” Id. (emphasis\nadded). In other words, the statute allows victims of\nsexual abuse to choose between two forms of\n 15\ncompensation—“damages sustained” or “liquidated\ndamages.”\n Indeed, Claimant seem to agree that “damages”\nmeans compensation. They cite to the Restatement\n(Second) of Torts section on “damages,” and that\nsection defines “damages” as “a sum of money awarded\nto a person injured by the tort of another.” 4\nRestatement (Second) of Torts § 902 (1979) (cited by\nPetr. Br. 15). And each of the statutes they cite uses\n“damages” to mean “compensation” and “injure” to\nmean “harm.” The Panama Canal Act requires the\ngovernment to “pay damages for injuries to vessels”\npassing through the Canal: The government must\ncompensate for any harms to those ships. Petr. Br. 17\nn.5 (citing 22 U.S.C. § 3772) (emphasis added). The\nFederal Tort Claims Act grants jurisdiction when\nplaintiffs seek “money damages . . . for injury or loss of\nproperty, or personal injury” caused by government\nnegligence: Federal courts have jurisdiction where a\nplaintiff seeks compensation for harms to her property\nor person. Id. (citing 28 U.S.C. § 1346(b)(1)) (emphasis\nadded). And so on.\n b. Claimant assert instead that the textual\ndistinction between “damages” and “injury” is that\n“damages” are the “loss, hurt, or harm resulting from\nthe injury.” Petr. Br. 15. For that proposition,\nClaimant pull a dictionary definition of “damage,”\nsingular, not “damages,” plural, the word in the\nstatute. Id. But no dictionary—including the ones\nClaimant rely on—defines “damages” in the plural as\nsome sort of harmful downstream consequence of an\n 16\ninjury. Supra at 13-14.1 Instead, they define\n“damages,” plural, as a form of compensation.\n And even as to “damage” in the singular, most\ndictionaries define the term interchangeably with\n“injure,”2 and not as a downstream consequence of\ninjury. As Black’s Law Dictionary puts the point, the\nterms “damage” and “injury” “are used\ninterchangeably, and, within legislative meaning and\njudicial interpretation, import the same thing.” Injury,\nBlack’s Law Dictionary, supra.\n The only other authorities Claimant cite for\ntheir textual-distinction claim are two of this Court’s\nextraterritoriality cases. They’re of no help either. In\nthe first case, Yegiazaryan v. Smagin, 599 U.S. 533\n\n\n 1\n The only definition of “damages,” plural, that Claimant\npoint to is the Restatement provision just noted, which explains\nthat “[d]amages”—in the sense of “a sum of money awarded”—\n“flow from an injury.” Petr. Br. 15 (discussing 4 Restatement\n(Second) of Torts § 902 cmt. a (1979)). That is, compensation\n“flow[s] from” harm—compensation comes after harm and\ndepends on the harm.\n 2\n See, e.g., Injure, Black’s Law Dictionary, supra (“To do\nharm, to hurt, damage, impair.” (emphasis added)); Injured,\nBallentine’s Law Dictionary with Pronunciations, supra (“Hurt,\ndamaged, wounded.” (emphasis added)); Injury, Black’s Law\nDictionary, supra (“Any wrong or damage done to another.”\n(emphasis added)); Injury, 1 Legal Definitions, supra\n(“Detriment, hurt, harm, damage.” (emphasis added)); Injury,\nFunk & Wagnall’s New Standard Dictionary of the English\nLanguage, supra (“Any wrong, damage, or mischief done or\nsuffered.” (emphasis added)); Damage, Black’s Law Dictionary,\nsupra (“Loss, injury or deterioration” (emphasis added));\nDamage, 1 Legal Definitions, supra (“Hurt, injury, loss.”\n(emphasis added)); Damage, Funk & Wagnalls New Standard\nDictionary of the English Language, supra (to “[c]ause damage”\n(emphasis added)).\n 17\n(2023) (discussed at Petr. Br. 16, 20), everyone agreed\non the “injurious effects of the racketeering activity.”\nId. at 545-46. The parties only disagreed over whether\nthose injurious effects were “felt” in California or in\nRussia. Id. The second case, WesternGeco LLC v. ION\nGeophysical Corp., 585 U.S. 407 (2018) (discussed at\nPetr. Br. 16), dealt with the Patent Act, not civil RICO.\nId. at 414-15. Respondents in that case cited civil\nRICO cases for the proposition that where a plaintiff\nalleges harm suffered abroad, the statute is being\napplied extraterritorially. Id. This Court clarified that\nthe location of the harm matters in civil RICO because\nharm is a “substantive element of a cause of action.”\nId. at 416-17. But because the comparable\n“substantive element” in the Patent Act case is\n“infringement,” not “injury,” the dispositive question\nin that setting is where the infringement occurred. Id.\n c. Finally, even if Claimant were right that\n“damages” (again, plural) in Section 1964(c) means\n“harm,” it wouldn’t necessarily follow that “injured”\nmeans something different. The rule that different\nwords must mean different things is among the\nweakest of the contextual canons. As Scalia and\nGarner put the point, “legislators often (out of a\nmisplaced pursuit of stylistic elegance) use different\nwords to denote the same concept.” Antonin Scalia &\nBryan Garner, Reading Law: The Interpretation of\nLegal Texts § 25 (2012). And here, the plain meaning\nof “injured” is “harmed,” whatever the meaning of\n“damages.” See supra at 12.\n 3. Mr. Respondent’s plain-text reading should end the\ndebate. But should any doubt remain, the text of the\nRICO statute contains a tiebreaker: It instructs courts\nto “liberally construe[]” the statute to “effectuate its\n 18\nremedial purpose.” Organized Crime Control Act of\n1970, Pub. L. [DOCKET REDACTED] § 904(a), 84 Stat. 922, 947\n(statutory note to 18 U.S.C. § 1961). That directive\ndoesn’t appear in any other statutes that use the\n“injured in his business or property” locution\n(including the antitrust statutes from which civil\nRICO drew the requirement).\n To “liberally construe[]” is to “resolve[] all\nreasonable doubts in favor of the applicability of the\nstatute to the particular case.” Construction – Liberal,\nBlack’s Law, supra. And the “remedial purpose” of\nRICO is “nowhere more evident than in” Section\n1964(c). Sedima, 473 U.S. at 498. That express liberal\nconstruction provision thus directs courts confronted\nwith ambiguity to adopt the “less restrictive reading”\nof the statute—that is, to construe indeterminacies in\nthe statute in favor of those harmed by a pattern of\nracketeering activity. See Sedima, 473 U.S. at 498-99;\nsee also United States ex rel. Tenn. Valley Auth. v.\nWelch, 327 U.S. 546, 551 (1946).\nII. The half-dozen different rules Claimant\n propose are impossible to square with civil\n RICO’s text or even with each other.\n By contrast to respondent’s simple rule—that civil\nRICO allows anyone whose business or property is\nharmed by reason of a pattern of racketeering activity\nto sue—Claimant come up with at least six different\ntests. Each is deeply flawed in its own right and at\nodds with the next.\n 1. Begin with the rule suggested by Claimant’\nquestion presented: “[E]conomic harms resulting from\npersonal injuries” are not injuries to business or\nproperty. Petr. Br. I (emphasis added); see also id. at\n 19\n12 (arguing that Mr. Respondent cannot recover because his\n“lost wages flow from” a personal injury (emphasis\nadded)).\n To start, Congress knew how to draft Claimant’\nresulting-from-personal-injury test if it wanted to.\nSee, e.g., 11 U.S.C. §§ 522(b), (d) (exempting “property\nthat is traceable to” a payment “on account of personal\ninjury” from bankruptcy); 26 U.S.C. § 130 (exempting\ntaxable income from damages “on account of personal\ninjury”). It didn’t do so in civil RICO.\n Plus, the resulting-from rule is entirely\ninconsistent with the rest of Claimant’ brief.\nClaimant concede that “[i]f a mobster assaults a\ncarwash owner to force the owner to do business with\nthe mob,” the owner’s lost profits are an “injury to\nbusiness or property.” Petr. Br. 34. But those lost\nprofits, presumably, “result[] from,” id. at I, the\npersonal injury of assault—that is, but for the assault,\nthere would be no lost profits. Similarly, Claimant\nadmit that “[t]he kidnapper who extorts ransom\nmoney from the victim’s family has injured the\nfamily’s property.” Id. at 34. But there, again, the\nransom “result[s] from” the kidnapping (a crime that\nalmost certainly entails personal injuries like false\nimprisonment or battery).\n And it’s not just Claimant’ own hypotheticals\nthat the resulting-from test would appear to foreclose.\nRecall that civil RICO authorizes claims for those\ninjured by reason of a long list of predicate\nracketeering activities. See 18 U.S.C. §§ 1961-1962.\nThe resulting-from test would effectively read out\nmany of those. Claimant claim their position still\nallows recovery under civil RICO for “the core of\nRICO’s substantive prohibition like murder,\n 20\nkidnapping, extortion, and the collection of unlawful\ndebts.” Petr. Br. 33-34. But it’s hard to imagine a\nmurder or a kidnapping where any business or\nproperty injury doesn’t result from a personal injury.\nAnd that’s only slightly less true for extortion: After\nall, extortion typically involves obtaining property via\n“the wrongful use of actual or threatened force,\nviolence or fear.” See, e.g., 18 U.S.C. § 1951(b)(2).\n When Congress has wanted to exempt predicate\nactivities from civil RICO, it has explicitly done so. For\ninstance, in 1995, Congress amended Section 1964(c)\nto carve out predicate activities involving securities\nfraud. Private Securities Litigation Reform Act of\n1995, Pub. L. No. 104-67, § 107, 109 Stat. 737, 758\n(amending 18 U.S.C. § 1964(c)). There’s no such\ncarveout for the many offenses listed among civil\nRICO’s predicates that invariably inflict personal\ninjuries en route to any business or property injury.\n Claimant appear to derive their resulting-from\nrule from the negative-implication canon—that is,\nfrom the fact that the statute references business and\nproperty injuries but does not mention personal\ninjuries. See Pet. 21. The negative-implication canon\nmeans that a plaintiff who alleges only personal\ninjuries without a business or property injury cannot\nbring suit. But it doesn’t follow that a plaintiff who\nwas “injured in his business or property” is excluded\nsimply because the business or property injury\n“resulted from,” Petr. Br. I, a personal injury.\n To see why, imagine an emergency room triage\npolicy that admits those with “injuries to the head or\nchest” before all others. Certainly, someone who has\nonly a foot injury should wait her turn. But a patient\nwho fractured her skull shouldn’t be turned away\n 21\nsimply because the skull fracture “resulted from”\nanother sort of injury (let’s say spraining her ankle\ncaused the fall that fractured her skull).\n 2. Claimant next suggest that an “injury” is only\n“the initial harm caused by the defendant’s\nwrongdoing—not the subsequent economic damages.”\nPetr. Br. 23. But the initial-harm test suffers from the\nsame flaws as the resulting-from test. Like that test,\nit would read out a hefty chunk of RICO’s predicate\noffenses. Supra at 19-20. And as with the resulting-\nfrom test, it’s inconsistent with Claimant’ examples:\nIn the mobster-extorting-a-carwash-owner\nhypothetical, the “initial harm” is presumably the\nassault, and in the ransom-money hypothetical, the\n“initial harm” is presumably the kidnapping, see id. at\n34, both of which are personal injuries.\n Despite Claimant’ claim that they are not\nputting forth an “attenuation principle,” Petr. Br. 33,\nthe initial-harm test would seem to be just that. After\nall, the question whether the injury alleged is the\ninitial harm or a harm several links down the chain of\ncausation is a question of attenuation. In any event,\nthe initial-harm proposal is unnecessary: It’s\nproximate cause, not the “injured in his business or\nproperty” requirement, that limits the number of links\nin the causal chain between the RICO predicate acts\nand the business or property injury.3\n\n 3\n See Holmes v. Sec. Inv. Protec. Corp., 503 U.S. 258, 271\n(1992) (no proximate cause where there were too many\n“link[s] . . . between the stock manipulation alleged and the\nconsumers’ harm”); Hemi Grp., LLC v. City of New York, 559 U.S.\n1, 15 (2010) (no proximate cause where “[m]ultiple\nsteps . . . separate the alleged fraud from the asserted injury”);\n 22\n Moreover, courts and lawmakers use the word\n“injured” to refer to harms well beyond the initial\nharm. For instance, under the Clayton Act, a plaintiff\nharmed by consequences of the defendant’s actions is\n“injured in his business or property” even if that harm\nwas not the initial harm.4 Tort cases decided around\nthe time the phrase “injured in his business or\nproperty” was first introduced into the United States\nCode are similar: Even where the initial harm of a tort\nis to the person, the cases routinely refer to\nsubsequent economic harms as “injur[ies] to\nbusiness.”5 Likewise, in the Article III context, a\nplaintiff who identifies a harm multiple links down the\nchain of causation from a defendant’s conduct might\n\n\nAnza v. Ideal Steel Supply Corp., 547 U.S. 451, 482 (2006)\n(Breyer, J., concurring in part and dissenting in part) (proximate\ncause deals with the number of links in the “causal chain”\nbetween the forbidden act and the ultimate injury); see generally\nRestatement (Second) of Torts § 430 (1965); Dan B. Dobbs et al.,\nDobbs’ Law of Torts § 198 (2d ed. 2011).\n 4\n See, e.g., Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC,\nInc., 546 U.S. 164, 176 (2006) (describing price discrimination\nthat injures competition among dealerships, who pass costs on to\ncustomers, as injury to consumers’ property).\n 5\n See, e.g., Lucas v. Flinn, 35 Iowa 9, 13 (1872) (plaintiff can\nrecover for “injury to business” in action for battery); Bd. of\nComm’rs of Howard Cnty. v. Legg, 11 N.E. 612, 616 (1887) (jury\nmay consider “injury to his business” in fixing damages in\nwrongful death case); Clapp v. Minneapolis & St. L. Ry. Co., 36\nMinn. 6, 8 (1886) (same, in action where decedent killed in\nrailroad accident).\n 23\nfail on the causation or redressability prongs, but no\none would say they were not “injured.”6\n Indeed, in prior civil RICO cases, this Court has\nassumed that plaintiffs can satisfy the “injured in his\nbusiness or property” requirement by pointing to a\nharm other than the initial harm. Consider Rotella v.\nWood, 528 U.S. 549 (2000), in which the plaintiff\nalleged that doctors conspired to treat him at a\npsychiatric hospital under false pretenses. Id. at 551,\nn.1, 552. The initial harm was surely false\nimprisonment—the unnecessary confinement in the\npsychiatric hospital. But this Court assumed that\nplaintiff had alleged a business or property injury (the\nfraudulent charges for that unnecessary treatment):\n“RICO provides for civil actions (like this one) by\nwhich [a]ny person injured in his business or property\nby a RICO violation may seek treble damages” and\n“Rotella alleged such injury.” Id. at 552 (emphasis\nadded) (citation omitted).\n Claimant’ sole support for their initial-harm test\nis a pair of century-old maritime law cases brought by\nsailors who were wounded at sea. Petr. Br. 23.\nClaimant claim that in those cases, only the “initial\nharm”—the “invasion of [plaintiffs’] primary right of\nbodily autonomy”—constituted an injury and that the\nsubsequent lost wages and the like were “economic\nconsequences” rather than injuries. Id. But Claimant\n\n\n 6\n See, e.g., Simon v. E. Ky. Welfare Rts. Org., 426 U.S. 26,\n40 (1976) (IRS ruling allowed hospitals to reduce free services,\nwhich gave plaintiffs less access to health care; plaintiffs had “of\ncourse” alleged an injury, though connection between challenged\nconduct and injury was too “indirect[]”).\n 24\nhave cherry-picked quotes from entirely inapposite\ncases.\n The two cases were res judicata cases: A seaman\ncould not recover twice for the same incident by filing\ntwo separate negligence suits (for instance, one for the\nunseaworthiness of the vessel and one for the\nnegligence of the captain). See Pac. S.S. Co. v.\nPeterson, 278 U.S. 130, 138 (1928); Balt. S.S. Co. v.\nPhillips, 274 U.S. 316, 321 (1927). Independent of\nrecovery for the personal injuries, though, a seaman\ncould in a separate action also claim “maintenance”\n(room and board), “cure” (medical expenses), and\n“wages” whether or not he could prove negligence—\nthat remedy was guaranteed as a matter of contract.\nPac. S.S. Co., 278 U.S. at 138; Balt. S.S. Co., 274 U.S.\nat 321. But this Court never suggested that loss of\nwork would not be an “injury” simply because it was\nnot the “initial harm” visited on the seaman.\n 3. Taking a different tack, Claimant propose that\nan injury isn’t just any harm but “the invasion of a\nlegal right.” Petr. Br. 15 (citing Ballentine’s Law\nDictionary 627 (3d ed. 1969)). But Claimant don’t\noffer any guidance as to how we define that “legal\nright.”\n If that legal right stems from the text of the civil\nRICO statute, Claimant’ point would seem to be\ntrivially true. The “legal right” defined by civil RICO\nis simply the right not to be harmed by reason of a\npattern of racketeering activity. Once a plaintiff has\nshown he was harmed by reason of such a pattern, he\nhas shown an invasion of a legal right.\n If that legal right is derived from some assessment\nof the purpose of the federal RICO statute, this Court\nrejected a similar argument in Sedima, S.P.R.L. v.\n 25\nImrex Co., 473 U.S. 479 (1985). In that case,\ndefendants argued that a civil RICO plaintiff must\nprove he suffered “the kind of economic injury” that\nwas “caused by an activity which RICO was designed\nto deter.” Id. at 494 (cleaned up). This Court held there\nwas “no room in the statutory language for an\nadditional, amorphous ‘racketeering injury’\nrequirement.” Id. at 495. So too here.\n Claimant wisely disclaim that the “injured in his\nbusiness or property” requirement refers to the\ninvasion of a legal right under state law. They concede\nthat “injured” in 18 U.S.C. § 1964(c) does not refer to\na “cognizable” or “compensable” injury under state\nlaw. Petr. Br. 21-22. As they must: Claimant\ncontinue to insist that Mr. Respondent has suffered a\n“personal injury” (see, e.g., id. at 14, 20) even though\nhe has suffered the invasion of no state-law right from\nhis ingestion of THC (id. at 21-22). Plus, a rule that\npegs civil RICO to state law would read out large\nswaths of the statute: Crimes like copyright violations\nor nuclear weapons trafficking don’t map onto any\nstate-law “legal right.” See 18 U.S.C. § 1961(1).\n 4. The fourth rule Claimant propose is that civil\nRICO does not allow recovery for “prototypical”\npersonal injury cases. Petr. Br. 24. Claimant make\nno attempt to ground this rule in the statute’s text,\nwhich doesn’t even mention personal injuries, let\nalone prototypical personal injuries. In any case, the\nprototypical-personal-injury rule doesn’t make much\nsense.\n Claimant first seem to contemplate that the\nstatutory phrase “injured in his business or property”\nrequires courts to analogize a RICO case to a common-\nlaw tort, then ascertain whether that tort is listed as\n 26\npersonal or economic in Respondentbooks. See, e.g., Petr. Br.\n21-22. Suffice it to say that would be a strange way to\ninterpret civil RICO. What’s the common-law analog\nfor “trafficking in counterfeit labels for phonorecords”\n(one of the RICO predicate acts)? See 18 U.S.C.\n§ 1961(1). For harboring undocumented immigrants?\nId. In short, there is no basis for thinking that civil\nRICO requires identifying a common-law cousin for a\ngiven RICO predicate.\n And even predicate acts that sound like\ntraditional torts might map onto multiple such torts,\nsome of which concern personal injuries, but some of\nwhich do not. In Mr. Respondent’s case, for instance,\nClaimant insist that mail and wire fraud maps onto\na products liability claim, but these predicates are\nequally consistent with a fraudulent\nmisrepresentation tort or intentional interference\nwith economic interests tort—neither of which count\nas personal injury claims. See Dan B. Dobbs, et al.,\nThe Law of Torts § 515 (2d ed. 2011) (listing both torts\nas “pure economic torts”).7 (Indeed, Mr. Respondent brought\nfraudulent inducement, breach of warranty, and\nbreach of contract claims under state law. J.A. 13-15.)\n Alternatively, Claimant’ rule might turn on\nwhether damages—rather than the predicate acts—\n\n 7\n See Restatement (Second) of Torts § 525 (1976) (one who\n“fraudulently” makes a “misrepresentation” is liable “for\npecuniary loss caused” to one who “justifiabl[y] reli[es] upon the\nmisrepresentation”); S. Dev. Co. of Nev. v. Silva, 125 U.S. 247,\n250 (1888) (listing elements of fraudulent misrepresentation);\nRestatement (Second) of Torts § 766 (1976) (“One who\nintentionally and improperly interferes with the performance of\na contract . . . between another and a third person . . . is subject\nto liability to the other for the pecuniary loss resulting” from\nfailure to perform).\n 27\nare prototypical of personal or economic cases. See\nPetr. Br. 24 (“[L]ost wages are prototypical damages\nfrom [a] personal injury.”). But lost wages aren’t\n“prototypical” of any one type of case. True, lost wages\nare often awarded in personal injury suits. But they’re\nalso awarded all the time in cases where no personal\ninjury is involved. Under the Clayton Act, courts have\nrecognized loss of employment as an “injur[y] to\nbusiness or property” for decades, since well before\ncivil RICO borrowed that language from the antitrust\nstatutes.8 And lost wages can be awarded for breaches\nof contract9 and for economic torts.10\n Indeed, the very case Claimant cite, United\nStates v. Burke, 504 U.S. 229 (1992), makes clear that\nlost wages are not “prototypical” personal injury\ndamages. The question was whether a payment\nreceived to settle an employment discrimination claim\nfor lost wages counted as “damages received . . . on\naccount of personal injuries.” Id. at 235-37 (quoting 26\nU.S.C. § 104(a)(2)). This Court listed the “traditional\nharms associated with personal injury” as those that\n“redress intangible elements of injury that are deemed\nimportant, even though not pecuniary in their\nimmediate consequence”—things like “emotional\ndistress and pain and suffering.” Id. (citation omitted).\nBy contrast, damages “necessary to reimburse actual\n\n 8\n See, e.g., Vines v. Gen. Outdoor Advert. Co., 171 F.2d 487,\n491-92 (2d Cir. 1948) (Hand, J.); Quinonez v. Nat’l Assoc. of Sec.\nDealers, 540 F.2d 824, 829-830 (5th Cir. 1976); Daily v. Quality\nSch. Plan, Inc., 380 F.2d 484, 487 (5th Cir. 1967) (collecting\ncases); Nichols v. Int’l Press, Inc., 371 F.2d 332, 334 (7th Cir.\n1967).\n 9\n Restatement of Employment Law §§ 9.01, 9.02 (2015).\n 10\n Restatement (Second) of Torts §§ 549, 766C (1965).\n 28\nmonetary loss”—including compensation for\n“diminished future earning capacity” and, yes, “lost\nwages”—were not “damages received . . . on account of\npersonal injuries.” Id. at 235-36, 242.\n A “prototypical” damages rule, one that classifies\nlost wages (but not lost profits) as personal injury\ndamages, would also have strange consequences,\nproviding special protection for CEOs while leaving\nordinary workers high and dry. If a mobster assaults\na carwash owner to force him to do business with the\nmob, the owner can recover treble damages for lost\nprofits. See Petr. Br. 34. But if the same mobster\nassaults the carwash attendant to force him to quit his\njob, the attendant can’t recover a cent of his lost wages.\nSection 1964(c) draws no such distinction between the\nEbenezer Scrooges of the world and the Bob Cratchits.\n 5. Claimant next ask this Court to “‘zero[] in on\nthe core of the suit’ to determine what conduct\n‘actually injured’ the plaintiff.” Petr. Br. 23 (quoting\nOBB Personenverkehr AG v. Sachs, 577 U.S. 27, 35\n(2015)). But the language Claimant quote for the\n“core of the suit” test comes from a case interpreting\nthe Foreign Sovereign Immunities Act. That statute\ncreates an exception to sovereign immunity when “the\naction is based upon a commercial activity carried on\nin the United States.” OBB, 577 U.S. at 31 (quoting 28\nU.S.C. § 1605(a)(2) (emphasis added)). Interpreting\nthe phrase “based upon,” this Court concluded that it\ndirects courts to identify the “basis or foundation for a\nclaim.” Id. at 33 (citation omitted). It should go without\nsaying that civil RICO contains no equivalent “based\nupon” requirement.\n Besides, it’s entirely unclear what Claimant\nmight mean by an economic “core” if Mr. Respondent’s\n 29\ninjuries don’t have one. In this case, the predicate\nracketeering acts were economic: Mr. Respondent alleged\nmail and wire fraud. J.A. 11-12. The harm that Mr.\nRespondent first perceived was economic: He didn’t even\ndiscover that Claimant’ product had “invade[d]” his\n“bodily autonomy,” Petr. Br. 21, until after he was\nfired; until that point, he had no idea he’d ingested\nTHC. And the basis for Mr. Respondent’s suit is, at this point,\nentirely economic: Claimant themselves argued that\nMr. Respondent suffered no cognizable personal injury\nwhatsoever, and the only state-law claims that\nsurvived summary judgment at the district court were\neconomic. Id. 21-22.\n Indeed, Claimant’ core-of-the-suit test would\nproduce nonsensical results. Imagine that, rather than\nbeing fired for failing a drug test, Mr. Respondent was fired\nbecause his employer discovered an unopened package\nof Dixie X in his locker. See 49 C.F.R. § 392.4 (banning\ncommercial truck drivers from possessing, as well as\nusing, controlled substances). Mr. Respondent would bring\nprecisely the same suit: The predicate racketeering\nacts (mail and wire fraud) would be the same; the\nimmediate harm (being fired) would be the same; and\nthe economic consequences (losing wages and\nopportunities for future employment) would be the\nsame. Yet Claimant would apparently say that the\n“core” of his suit had changed, because there was no\nlonger any “bodily invasion.” See Petr. Br. 23.\n 6. Claimant’ final suggestion appears in the\nhypothetical involving a carwash owner extorted by a\nmobster. Petr. Br. 34. Claimant say the carwash\nowner can recover for lost profits because “[e]xtortion\ninvolves obtaining property.” Id. (emphasis omitted).\nSetting aside that Claimant make no effort to tether\n 30\ntheir involves-obtaining-property test to the statute’s\ntext, it’s entirely unclear what Claimant mean.\nThere are at least three different ways to read that\nsentence, none of which make much sense.\n By “[e]xtortion involves obtaining property,”\nClaimant might mean that “obtaining property” is an\nelement of the crime of extortion. But Claimant aver\nthat “the kidnapper who extorts ransom money from\nthe victim’s family has injured the family’s property,”\nPetr. Br. 34, and obtaining property isn’t a necessary\nelement of kidnapping, see Model Penal Code § 212.1\n(1962); 18 U.S.C. § 1201. Conversely, Claimant claim\nthat Mr. Respondent cannot recover, but a deprivation of\nproperty is required under the mail and wire fraud\npredicates Mr. Respondent alleged in this case. See 18 U.S.C.\n§§ 1341, 1343. Besides, had Congress meant such an\nelements-based approach it would have said so: The\nrequirement might read “injured in his business or\nproperty in the course of a violation of Section 1962.”\nSee, e.g., 5 U.S.C. § 8102(b)(1) (allowing compensation\nfor someone “injured or taken while engaged in the\ncourse of his employment”). And requiring that\ndeprivation of property be an element of the offense\nwould read out a significant majority of the RICO\npredicate offenses from the statute, including\neverything from murder to sexual abuse to obstruction\nof justice. See 18 U.S.C. § 1961(1).\n Alternatively, by “[e]xtortion involves obtaining\nproperty,” Claimant might mean that the mobster\npersonally benefitted from the carwash owner’s\neconomic loss. But Section 1964(c) isn’t merely a\nforfeiture statute; other provisions of RICO deal with\nthe return of property acquired from a victim. See, e.g.,\n18 U.S.C. § 1963(a)(3). And of the four types of\n 31\nactivities prohibited under 18 U.S.C. § 1962, only two\nrequire obtaining property.11 Congress didn’t create a\ncause of action for any person whose business or\nproperty was obtained by a RICO defendant. It created\na cause of action for “any person injured in his\nbusiness or property.” Id. § 1964(c) (emphasis added).\n Or perhaps Claimant think the carwash owner\ncan recover because the motive of the mobster was to\ndeprive him of property. If so, that rule is squarely\nforeclosed by this Court’s ruling in National\nOrganization of Women v. Scheidler, 510 U.S. 249\n(1994), which rejected the argument that civil RICO\napplies only when the racketeering acts had an\n“economic motive.” Id. at 252. This Court rejected that\nmotive rule with good reason. Tony Soprano might\nfirebomb a home to try to kill a rival mobster out of\nvengeance, with no economic motive. But if the home\nburns down, surely the rival can recover for an injury\nto property. And conversely, courts (or creative\nlawyers) can come up with all sorts of motivations for\na given predicate act. In Claimant’ hypothetical\nabout the defendant who breaks a victim’s jaw to\nintimidate her, for instance, the motive might be to\ncause her pain, or it might be to put her out of work.\nSee Petr. Br. 28. Claimant would apparently allow\nrecovery only if it’s the latter.\n * * *\n\n\n 11\n Compare 18 U.S.C. § 1962(a) (unlawful to receive income\nderived from racketeering activity) and id. § 1962(b) (unlawful to\ncollect debt through a racketeering activity) with 18 U.S.C.\n§ 1962(c) (unlawful to participate in an enterprise through\nracketeering activity) and id. § 1962(d) (unlawful to conspire to\ndo §§ 1962(a)-(c)).\n 32\n That Claimant can’t come up with a consistent\nrule is reason enough to doubt their position. This\nCourt should stick with the rule that the plain text of\nthe statute offers up: “Injured” just means “harmed.”\n\nIII. Claimant’ remaining arguments are\n unavailing.\n With no consistent rule of their own, Claimant\nfire off a handful of potshots at Mr. Respondent’s. But they\nall miss the mark.\n 1. First, contrary to Claimant’ argument,\nreading civil RICO according to its terms would not\npermit plaintiffs to recover for the “lion’s share of\npersonal-injury damages.” See Petr. Br. 29.\n a. The “business or property” language in Section\n1964(c) has critical “restrictive significance”: It\nexcludes damages for what tort law calls\n“nonpecuniary,” “noneconomic,” or “general”\ninjuries—things like pain and suffering, emotional\ndistress, and the like, for which a plaintiff can’t\nproduce receipts. And Claimant’ own amici describe\nthose nonpecuniary damages—not lost wages—as the\n“lion’s share” of tort recoveries.12\n Nonpecuniary damages have dominated tort\nrecoveries since at least the turn of the twentieth\ncentury, when the “injured in his business or property”\n\n 12\n See U.S. Chamber of Com. Inst. for Legal Reform, Nuclear\nVerdicts: An Update on Trends, Causes, and Solutions 3-4 (2024),\n[URL REDACTED] see also U.S. Dep’t of Just. Tort\nPol’y Working Grp., Report of the Tort Policy Working Group on\nthe Causes, Extent and Policy Implications of the Current Crisis\nin Insurance Availability and Affordability 2 (1986) (non-\neconomic damages play primary role in “explosive growth in large\nverdicts”).\n 33\nphrase first entered the United States Code. One\nstudy, examining personal injury suits in Alameda\nCounty from 1901-1910, found that “nearly all” of the\naverage award (more than 95%) came from\nnonpecuniary damages (things like compensation for\npain and suffering) rather than pecuniary damages\n(things like property damage, lost earnings and the\nlike). Lawrence M. Friedman & Thomas D. Russell,\nMore Civil Wrongs: Personal Injury Litigation, 1901-\n1910, 34 Am. J. Legal Hist. 295, 303 (1990). By\nlimiting plaintiffs under civil RICO and its\npredecessor statutes to recovery for “business or\nproperty”—things for which they could produce\nreceipts, like lost profits, increased expenditures, bills,\nlost wages, and the like—Congress limited the\npossibility of astronomical awards based on\namorphous pain-and-suffering damages.\n b. Claimant protest that defining property by\nreference to state law would “vitiate[] any exclusion for\n‘non-pecuniary’ damages.” Petr. Br. 29. But Mr. Respondent\ndoesn’t take a position on whether “property” is, in\nfact, defined according to state law or, as in the\nantitrust context, according to federal common law.\nSee Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979)\n(suggesting that property for Clayton Act purposes\ndoes not conform to state law definitions). His\nargument is that he was deprived of his business, and\nin any event, wages pursuant to a contract are\nproperty under any definition of the term. The quoted\n 34\nsection of the BIO simply summarizes the case law of\nthe lower courts. BIO 16.13\n c. And civil RICO contains additional guardrails\nto ensure that “everyday tort plaintiffs,” Petr. Br. 3,\ncan’t bring civil RICO actions. First, plaintiffs must\nprove a pattern of racketeering activity. 18 U.S.C.\n§§ 1962, 1964(c). That alone will foreclose the vast\nmajority of tort suits: RICO’s predicate offenses are\ngenerally intentional crimes or crimes with a\nrecklessness mens rea, yet the vast majority tort suits\nare brought for negligence or strict liability.14 On top\nof predicate acts, the plaintiff must show that those\nacts amounted to a “pattern” and were committed by\nan “enterprise” (that is, not just a group of people who\nhappen to commit crimes together, but “an ongoing\norganization” that “functions as a continuing unit”).\nId. § 1962; United States v. Turkette, 452 U.S. 576,\n580 (1981).\n\n 13\n Even if “property” were defined according to state law,\nClaimant’ concerns about non-pecuniary damages are\nunfounded. Claimant cite cases about damages for pain and\nsuffering and loss of consortium. Petr. Br. 29. As to the first,\nClaimant’ cases simply note that “damages for pain and\nsuffering”—that is, money in a plaintiff’s bank account after a\nlawsuit—are property just like any other money in the plaintiff’s\nbank account. Evans v. Twin Falls County, 796 P.2d 87, 93 (Idaho\n1990) (emphasis added); Brown v. Brown, 675 P.2d 1207, 1212\n(Wash. 1984). And as to the second, it’s true that loss of\nconsortium is a property right in some States, but everyone\nacknowledges it’s an “anachronistic holdover,” dating back to a\ntime when a wife was considered her husband’s property, and is\nfalling out of favor. See Nelson v. Jacobsen, 669 P.2d 1207, 1223\n(Utah 1983) (Durham, J., concurring in judgment).\n 14\n Compare 18 U.S.C. § 1961(1) with Steven K. Smith et al.,\nBureau of Just. Stats., Tort Cases in Large Counties: Civil Justice\nSurvey of State Courts 2 & tbl.1, 6 (1995).\n 35\n Second, “to state a claim under civil RICO, the\nplaintiff is required to show that a RICO predicate\noffense not only was a ‘but for’ cause of his injury, but\nwas the proximate cause as well.” Hemi Grp., LLC v.\nCity of New York, 559 U.S. 1, 9 (2010) (citation\nomitted). The harm cannot be “too remote,” “purely\ncontingent,” or “indirect.” Id. Civil RICO’s proximate\ncause requirement has a “common-law foundation[].”\nId. at 2. And at common law, proximate cause requires\nthat the harm “result[] from the risks that made the\ndefendant’s conduct tortious”—or, in this case,\ncriminal—“in the first place.” Dan B. Dobbs et al.,\nDobbs’ Law of Torts § 198 (2d ed. 2011).15\n Those limitations thoroughly douse Claimant’\nparade of horrible. A company isn’t liable to a “garden-\nvariety” products liability” plaintiff, Petr. Br. 29.\nbecause the plaintiff won’t be able to show even one\nRICO predicate—most products liability claims are\nstrict liability or negligence actions, while most RICO\npredicates involve intent or recklessness. See 1 John\nJ. Kircher & Christine M. Wiseman, Punitive\nDamages: Law & Practice § 6:1 (2d ed. 2024).16 That’s\n\n 15\n Claimant claim that “RICO proximate causation offers\nlittle comfort if Respondent’s claim passes muster,” smuggling in some\naspersions regarding that element of Mr. Respondent’s claim. See Petr.\nBr. 31. Claimant have long since forfeited any argument that\nMr. Respondent’s civil RICO claim lacks proximate cause: They didn’t\nraise it on appeal to the circuit court or at the certiorari stage\nbefore this Court. See Pet. App. 14a; Pet. 24.\n 16\n By one measure—treating punitive damage awards at\ntrial as a proxy for products liability cases that involve\nintentional wrongdoing—only eight out of every 10,000 product\nliability cases involve intentional torts. See Thomas H. Cohen,\nBureau of Just. Stats., Tort Trials and Verdicts in Large Counties\n3 (2004).\n 36\nwhy the civil RICO claims for products liability tend to\nbe cases of concerted, long-term campaigns to deceive\nconsumers—the litigation against opioid\nmanufacturers, for instance. See In re Nat’l\nPrescription Opiate Litig., 2018 WL 6628898, at *9\n(N.D. Ohio Dec. 19, 2018). A martial arts fighter who\nfraudulently conceals his doping is not liable for\nbusiness harm to his opponent because “[e]ach link in\nthe chain of causation is speculative.” Hunt v. Zuffa,\nInc., 361 F. Supp. 3d 992, 997, 1005 (D. Nev. 2019)\n(discussed at Petr. Br. 27). And plaintiffs can’t sue a\npornographic web site for radicalizing school shooters\nbecause a school shooting was not one of the risks that\nmakes obscenity a crime. See James v. Meow Media,\nInc., 90 F. Supp. 2d 798, 817-18 (W.D. Ky. 2000)\n(discussed at Petr. Br. 31).\n Indeed, virtually every case marshalled by\nClaimant was dismissed on multiple grounds that\nhave nothing to do with the “injured in his business or\nproperty” requirement.17 That’s presumably why\nwe’ve seen no flood of garden-variety tort claims\nmasquerading as civil RICO actions in circuits that\n\n\n 17\n See, e.g., Aaron v. Durrani, 2014 WL 996471, at *5 (S.D.\nOhio Mar. 13, 2014) (discussed at Petr. Br. 27; dismissed because\nplaintiffs failed to plead “conduct” under RICO, existence of a\nRICO “enterprise,” a “pattern” of racketeering activity, or, with\nsufficient specificity, fraud); Doe v. Varsity Brands, LLC, 2023\nWL 4931929, at *10-11 (N.D. Ohio Aug. 2, 2023) (discussed at\nPetr. Br. 27; suit by sexual abuse victims against cheerleading\norganization dismissed for lack of proximate cause); Magnum v.\nArchdiocese of Phila., 2006 WL 3359642, at *3-4, 7 (E.D. Pa. Nov.\n17, 2006), aff’d, 253 Fed. Appx. 224 (3d Cir. 2007) (discussed at\nPetr. Br. 27; suit by sexual abuse victims against Catholic church\ndismissed for lack of proximate cause, lack of “enterprise,” and\nlack of “pattern” of racketeering activity).\n 37\nhave, for decades, read Section 1964(c) according to its\nplain terms. See BIO 29-30.\n Finally, this Court has rejected scaremongering\nabout state tort claims alchemizing into civil RICO\nsuits before. As this Court has explained, civil RICO\nwas intended to “move large substantive areas\nformerly totally within the police power of the State\ninto the Federal realm.” Turkette, 452 U.S. 576 at 586-\n87 (citation omitted). And this Court has “repeatedly\nrefused to adopt narrowing constructions of RICO in\norder to make it conform to a preconceived notion of\nwhat Congress intended to proscribe.” Bridge v. Phx.\nBond & Indem. Co., 553 U.S. 639, 660 (2008).18\n 2. Second, Claimant are unpersuasive when they\nargue that civil RICO’s “injured in his business or\nproperty” provision should be interpreted identically\nto the Clayton Act, and that the Clayton Act, in turn,\nhas been interpreted by lower courts to reject Mr.\nRespondent’s straightforward reading of the phrase. Petr. Br.\n17-20. Neither claim is true.\n\n\n 18\n See, e.g., Bridge, 553 U.S. at 659-60 (“[P]etitioners\ncontend that we should interpret RICO . . . to avoid the ‘over-\nfederalization’ of traditional state-law claims . . . . Whatever the\nmerits of Claimant’ arguments as a policy matter, we are not at\nliberty to rewrite RICO to reflect their—or our—views of good\npolicy.”); Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 500 (1985)\n(rejecting an “amorphous” racketeering injury requirement and\ninstead concluding that “[t]he ‘extraordinary’ uses to which civil\nRICO has been put appear to be primarily the result of the\nbreadth of the predicate offenses, in particular the inclusion of\nwire, mail, and securities fraud”); H.J. Inc. v. Nw. Bell Tel. Co.,\n492 U.S. 229, 249 (1989) (“RICO may be a poorly drafted statute;\nbut rewriting it is a job for Congress, if it is so inclined, and not\nfor this Court.”).\n 38\n To begin, this Court has routinely held that civil\nRICO must be interpreted more broadly than its\nClayton Act counterpart. See, e.g., Sedima, 473 U.S. at\n510-511 (faulting courts for “reading far too much into\nthe antitrust analogy”). That is because, although\nCongress modeled civil RICO after the Clayton Act, it\nintended a more expansive remedy. Among other\nthings, Congress included a liberal construction\nprovision in civil RICO, but not in the Clayton Act.\nSupra at 17-18.\n Besides, there is no body of case law shoeRespondenting\nthe Clayton Act’s injury to business or property\nrequirement into any one of Claimant’ proposed\nrules. Claimant cite to just one district-court case\nrejecting a Clayton Act claim because it involved a\npersonal injury.19 But another district-court case—in\nfact, one cited by Claimant at the certiorari stage\n(Pet. 22-23)—holds the opposite, allowing recovery\nunder the federal antitrust law for economic harms\nthat stem from personal injuries. See, e.g., Iron\nWorkers Loc. Union No. 17 Ins. Fund v. Philip Morris,\n\n 19\n Gause v. Philip Morris, 2000 WL 34016343, at *1, *5\n(E.D.N.Y. Aug. 8, 2000), aff’d, 29 Fed. Appx. 761 (2d Cir. 2002)\n(discussed at Petr. Br. 20). The other three cases Claimant cite\nare inapposite. See Petr. Br. 19-20. One rejected a claim because\nthe complaint “did not disclose what acts these defendants\nperformed in violation of the anti-trust laws.” Tepler v. Frick, 112\nF. Supp. 245, 245 (S.D.N.Y. 1952), aff’d, 204 F.2d 506 (2d Cir.\n1953). Another rejected a claim based on the proximate cause\nrequirement. See Or. Laborers-Emps. Health & Welfare Tr. Fund\nv. Philip Morris, Inc., 185 F.3d 957, 964 (9th Cir. 1999). In the\nfinal case, the plaintiff’s “barely intelligible” complaint alleged\nneither anti-competitive conduct nor a predicate act nor any\ndamages at all. See Chadda v. Burcke, 2004 WL 2850048, at *1\n(E.D. Pa. Dec. 9, 2004), aff’d, 180 Fed. Appx. 370, 371-72 (3d Cir.\n2006).\n 39\nInc., 23 F. Supp. 2d 771, 785 (N.D. Ohio 1998) (cited at\nPet. 22-23; finding injury to business where tobacco\ncompanies’ wrongdoing forced healthcare funds to pay\nmedical expenses for smoking-related illnesses).20\n And lower courts have recognized lost\nemployment as an injury to business and property in\nClayton Act cases for decades, before Congress\nborrowed that language for civil RICO. See, e.g., Vines\nv. Gen. Outdoor Advert. Co., 171 F.2d 487, 491-92 (2d\nCir. 1948) (Hand, J.) (plaintiff who expected to\ncontinue employment with brewery could recover\nwhen antitrust violations resulted in termination of\nemployment); Quinonez v. Nat’l Assoc. of Sec. Dealers,\n540 F.2d 824, 829-30 (5th Cir. 1976) (plaintiff who\ncould not be hired due to anticompetitive boycott could\nrecover for loss of earning potential under Clayton\nAct). If the two statutes are to be interpreted the same\nway, as Claimant would have it, there should be no\nissue with awarding Mr. Respondent lost wages here.\n 3. Finally, Claimant urge that allowing this case\nto proceed would “upend” civil RICO’s four-year\n\n\n 20\n Claimant claim this Court “approvingly cited” a District\nof Montana Clayton Act case rejecting a business or property\ninjury because of a personal injury in the chain of causation. Petr.\nBr. 18 (discussing citation to Hamman v. United States, 267 F.\nSupp. 420, 432 (D. Mont. 1967), in Reiter v. Sonotone Corp., 442\nU.S. 330, 339 (1979)). Claimant mischaracterize that case: The\ncourt held that a loss of consortium was not the sort of\n“property . . . encompassed by the antitrust laws” and that “any\n[such] injuries were collateral to and not proximately caused by”\nthe antitrust violation. Hamman, 267 F. Supp. at 432. It nowhere\nsuggested that if the loss of consortium had been a property\ninjury proximately caused by the antitrust violation, the claim\nwould fail simply because there was an antecedent personal\ninjury. See id.\n 40\nstatute of limitations because “plaintiffs could redefine\neach new economic damage from a personal injury as\na new injury.” Petr. Br. 32. But this Court has already\nconcluded that plaintiffs cannot “recover for the injury\ncaused by old overt acts outside the limitations period”\nunder civil RICO. See Klehr v. A.O. Smith Corp., 521\nU.S. 179, 189-90 (1997); see also Urie v. Thompson,\n337 U.S. 163, 170 (1949) (rejecting “the theory that\neach intake of dusty breath is a fresh ‘cause of action’”\nfor statute of limitations purposes); Zenith Radio Corp.\nv. Hazeltine Rsch., Inc., 401 U.S. 321, 338-42 (1971)\n(plaintiff bringing Clayton Act claim should request\nnot only compensation for harm to date but for future\nharm).\n Besides, the same prospect of a fresh cause of\naction exists even if there has ever been a personal\ninjury. Shoddy manufacturing might lead first to a\nroof collapsing and then, years later, a floor;\ntrademark infringement may dilute the brand today\nand further dilute it over the subsequent decades; a\nbreach of fiduciary obligation might not result in a\ndecreased investment value for many months. In each\ncase, there’s “new damage” (Petr. Br. 32) that even\nClaimant would have to admit is purely “economic.”\nThat prospect hasn’t doomed the statute of limitations\nunder civil RICO.\n * * *\n This Court should adhere to civil RICO’s plain\ntext and hold that the phrase “injured in his business\nor property” means exactly what it says. The\nalternative, as Claimant’ panoply of flawed and\nconflicting rules makes clear, is at odds with the\nstatute’s words and Congress’s express admonition to\nliberally construe them.\n 41\n CONCLUSION\n For the foregoing reasons, the judgment of the\ncourt of appeals should be affirmed.", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of statutory business-or-property injury.", "governingLaw": "Apply United States federal civil RICO law; Second Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal civil RICO law; Second Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Medical Marijuana, Inc. v. Horn", "citation": "604 U.S. 593 (2025)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/24pdf/23-365_6k47.pdf" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive question is whether 18 U.S.C. § 1964(c) categorically bars recovery for business or property loss that derives from a personal injury. The Supreme Court has answered this question directly: it does not. The statute provides that '[a]ny person injured in his business or property by reason of a violation of [RICO] may sue.' The ordinary meaning of 'injure' is to 'cause harm or damage to' or to 'hurt.' The phrase 'injured in his business or property' therefore means that a plaintiff's business or property has been harmed or damaged. While § 1964(c) implicitly excludes recovery for personal injuries by expressly permitting recovery for business or property harms, this exclusion operates on the kinds of harm for which a plaintiff may recover, not on the causal source of that harm. A plaintiff who loses his business because of a personal injury has still been injured in his business.\n\nThe claimant's argument that 'injured' is a tort-law term of art meaning 'invasion of a legal right' fails for several reasons. First, the statute uses 'injured' rather than 'injury,' and the very legal dictionary the claimant relies on defines 'injured' only according to its ordinary meaning: 'hurt, damaged, wounded.' Second, the claimant's argument that the word 'damages' must mean something different from 'injured' is unpersuasive because 'damages' in § 1964(c) refers to monetary redress — the amount that makes the plaintiff whole — not to the harm itself. Third, the claimant cannot articulate a workable rule for determining when a business or property harm qualifies as a standalone injury versus mere damages from a personal injury; its own hypotheticals (the extortion victim, the ransom payment, the drained bank account) all concede recovery for business or property losses that resulted from personal injuries.\n\nThe claimant's reliance on antitrust precedent is misplaced. This Court has 'repeatedly recognized that the Clayton Act's and § 1964(c)'s injury requirements are not interchangeable.' In Sedima, the Court rejected transplanting antitrust's 'racketeering injury' requirement into civil RICO, holding that all that is required is business or property harm resulting from predicate acts. The claimant's reliance on Keogh v. Chicago & Northwestern R. Co. is also unavailing because that case involved tariff-related claims, not personal injuries. The Court has used 'injury' and 'harm' interchangeably in civil RICO cases including Sedima, Anza, and Hemi Group.\n\nThe remaining constraints on civil RICO — the direct-relationship requirement, the pattern-of-racketeering requirement, and the scope of 'business' and 'property' — temper concerns about over-federalization without needing to read an atextual antecedent-personal-injury bar into the statute. As the Court noted, if the breadth of RICO leads to undue proliferation of suits, 'the correction must lie with Congress.' The claimant carried the burden of establishing a categorical bar on recovery for business or property losses deriving from personal injuries and failed to meet it. The respondent's requested disposition — affirming the appellate court's judgment — is therefore correct.\n\nThe Sixth Circuit's decision in Jackson v. Sedgwick, which adopted the antecedent-personal-injury bar, has been effectively overruled by the Supreme Court's holding. The question presented was whether economic harms resulting from personal injuries are injuries to 'business or property' under civil RICO, and the Court held that they are not categorically excluded.", "allocation": null, "citations": [ { "title": "MEDICAL MARIJUANA, INC. v. HORN | Supreme Court | US Law", "url": "https://www.law.cornell.edu/supremecourt/text/23-365", "proposition": "Under 18 U.S.C. § 1964(c), a plaintiff may seek treble damages for business or property loss even if the loss resulted from a personal injury; the ordinary meaning of 'injured' is 'harmed,' and the business or property requirement operates on the kinds of harm recoverable, not the causal source of the harm." }, { "title": "MEDICAL MARIJUANA, INC. v. HORN | Supreme Court | US Law", "url": "https://www.law.cornell.edu/supremecourt/text/23-365", "proposition": "The Clayton Act and § 1964(c) injury requirements are not interchangeable; civil RICO does not require a plaintiff to allege a racketeering-type injury, only business or property harm resulting from predicate acts, as held in Sedima." }, { "title": "MEDICAL MARIJUANA, INC. v. HORN | Supreme Court | US Law", "url": "https://www.law.cornell.edu/supremecourt/text/23-365", "proposition": "The claimant's proposed tort-law term-of-art reading of 'injured' fails because the statute uses 'injured' rather than 'injury,' and the legal dictionary relied on defines 'injured' only by its ordinary meaning; the claimant could not articulate a workable alternative rule." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-054", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nINTRODUCTION\n Congress enacted the Employee Retirement Income\nSecurity Act of 1974 “to promote the interests of\nemployees and their beneficiaries in employee benefit\nplans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90\n(1983). To deliver on that goal, the Act imposes duties of\nloyalty and prudence on the fiduciaries who manage\nERISA plans and, through its prohibited-transaction\nprovisions, “categorically bar[s] certain transactions”\naltogether. Harris Tr. & Sav. Bank v. Salomon Smith\nBarney, Inc., 530 U.S. 238, 242 (2000).\n These mechanisms—fiduciary duties on the one hand,\nprohibited transactions on the other—work together to\nprotect employees. To bring a fiduciary duty claim, for\nexample, a beneficiary must show the fiduciary’s failure to\nact in the beneficiary’s interest or to “discharge their\nduties ‘with the care, skill, prudence, and diligence under\nthe circumstances then prevailing [of] a prudent man\nacting in a like capacity.’” Hughes v. Nw. Univ., 595 U.S.\n170, 172 (2022) (quoting 29 U.S.C. § 1104(a)(1)(B)). For a\nprohibited-transaction claim, on the other hand, a\nbeneficiary need not show harm nor “make any allegation\nof unreasonableness” because Congress has already\ndetermined that such transactions are “likely to injure the\npension plan.” Braden v. Wal-Mart Stores, Inc., 588 F.3d\n585, 600–01 (8th Cir. 2009) (quoting Harris Tr., 530 U.S.\nat 242). All a plaintiff must do is plead the elements of 29\nU.S.C. § 1106; doing so satisfies the “bright-line rule[]”\nCongress created for determining whether a transaction\nis prohibited. Allen v. GreatBanc Tr. Co., 835 F.3d 670,\n676 (7th Cir. 2016). Once such a showing is made, the plan\nfiduciary may invoke, if applicable, one or more of the\nexemptions set forth in 29 U.S.C. § 1108. A fiduciary\n 2\n\nmight, for example, plead and prove facts showing that a\nparticular transaction was a permissible block trade,\n§ 1108(b)(15); a permissible cross trade, § 1108(b)(19); or\nconstituted a “reasonable arrangement[] with a party in\ninterest for . . . legal, accounting, or other services\nnecessary for . . . the plan,” § 1108(b)(2)(A).\n This framework—of plaintiffs pleading and proving\nliability under one provision and defendants pleading and\nproving an exemption from liability under a separate\nprovision—is unexceptional. Congress routinely writes\nlaws in this way, and courts, when interpreting them,\napply “the general rule of statutory construction that the\nburden of proving justification or exemption under a\nspecial exception to the prohibitions of a statute generally\nrests on one who claims its benefits.” FTC v. Morton Salt\nCo., 334 U.S. 37, 44–45 (1948).\n Moreover, what is remarkable here is that\nRespondent themselves agree the transactions identified\nin the complaint satisfy § 1106. That is because\n§ 1106(a)(1)(C) provides that a “[1] fiduciary with respect\nto a plan shall not cause the plan to engage in a\ntransaction, [2] if he knows or should know that such\ntransaction constitutes a direct or indirect furnishing of\ngoods, services, or facilities [3] between the plan and a\nparty in interest.” Respondent acknowledge they are\nfiduciaries to Respondent’s plans. BIO at 3. They agree that\nthe Teachers Insurance and Annuity Association of\nAmerica-College Retirement Equities Fund (“TIAA”)\nand Fidelity Investments Inc. (“Fidelity”) are parties in\ninterest, as defined by 29 U.S.C. § 1002(14). J.A. 291, 301.\nAnd it is undisputed that Respondent transacted with\nTIAA and Fidelity for the furnishing of services—\nspecifically, recordkeeping services—to the plans. BIO at\n4. Claimant, for their part, allege that as beneficiaries\n 3\n\nto Respondent’s plans, they paid TIAA and Fidelity between\nfour and five times more each year for recordkeeping than\nindustry standards. J.A. 65. That allegation, if true,\nwould mean that the 30,000 participants in Respondent’s\nERISA plans paid millions more than they should have\nfor recordkeeping. Affording such participants a cause of\naction tracks Congress’s vision of using the prohibited-\ntransaction provisions to address the abuses of plan assets\nthat were pervasive pre-ERISA. See Comm’r v. Keystone\nConsol. Indus., Inc., 508 U.S. 152, 160 (1993).\n Both the Eighth and Ninth Circuits have endorsed\nthis understanding of § 1106. As the Eighth Circuit\nobserved, “the language of the statute is plain, and it\nallocates the burdens of pleading and proof.” Braden, 588\nF.3d at 602. The Ninth Circuit embraced this same\nunderstanding, while adding that it was “particularly\nreluctant to adopt an atextual interpretation of § 406\nbecause ERISA is ‘an enormously complex and detailed\nstatute.’” Bugielski v. AT&T Servs., Inc., 76 F.4th 894,\n901 (9th Cir. 2023) (quoting Conkright v. Frommert, 559\nU.S. 506, 509 (2010)).1\n On the other hand, several circuits have held that a\nliteral reading of § 1106 would be too “broad” and would\nend up “prohibit[ing] ubiquitous service transactions.”\nSweda v. Univ. of Pa., 923 F.3d 320, 335–37 (3d Cir. 2019).\nThese courts have thus required plaintiffs to plead\nadditional, atextual elements to bring a prohibited-\ntransaction claim. And because these additional\nrequirements have no grounding in § 1106’s text, they\n\n 1\n Unless otherwise noted, statutory citations in this brief are to\nthe U.S. Code. Many cases, however, refer interchangeably to the\nERISA section number. The most relevant section numbers for this\ncase are ERISA § 406 and § 408, which correspond to 29 U.S.C.\n§ 1106 and § 1108, respectively.\n 4\n\nhave differed across every circuit. See, e.g., id. at 340\n(requiring plaintiff to “plead an element of intent to\nbenefit the party in interest”); Albert v. Oshkosh Corp., 47\nF.4th 570, 585 (7th Cir. 2022) (stating that transactions\nmust “look[] like self-dealing”); Ramos v. Banner Health,\n1 F.4th 769, 787 (10th Cir. 2021) (requiring showing that\nthe plan and party in interest had a “prior relationship”).\n The Second Circuit expressed the same concern that,\n“when read in isolation from its exemptions, § 1106(a)\nwould encompass a vast array of routine transactions.”\nP.A. 21a. But its holding charted a different course from\nthat of the Third, Seventh, and Tenth Circuits. Instead, it\nheld that “at least some of those exemptions—\nparticularly, the exemption for reasonable and necessary\ntransactions codified by § 1108(b)(2)(A)—are\nincorporated into § 1106(a)’s prohibitions.” P.A. 18a.\nThus, “to plead a violation of § 1106(a)(1)(C), a complaint\nmust plausibly allege that a fiduciary has caused the plan\nto engage in a transaction that constitutes the furnishing\nof services between the plan and a party in interest” and\nthat the “transaction was unnecessary or involved\nunreasonable compensation.” P.A. 18a–19a (cleaned up).\n That is a policy fix under the guise of a quasi-textual\nsolution. It fails as both.\n On text, “the general rule of law, which has always\nprevailed,” is “that where the enacting clause is general in\nits language and objects, and a proviso is afterwards\nintroduced,” the “proviso carves special exceptions only\nout of the enacting clause; and those who set up any such\nexception, must establish it.” United States v. Dickson,\n40 U.S. (15 Pet.) 141, 165 (1841). The Court has followed\nthis rule absent “compelling reasons to think” otherwise.\nMeacham v. Knolls Atomic Power Lab’y, 554 U.S. 84, 91\n 5\n\n(2008). Yet here, those compelling reasons favor\nClaimant, not Respondent.\n For one, § 1108 is entitled “Exemptions from\nprohibited transactions,” and the text therein repeatedly\nrefers to “exemption[s].” This Court has, in turn, held\nthat references in federal law to “exemptions” are\n“affirmative defenses,” Meacham, 554 U.S. at 91, for\nwhich “the burden of pleading . . . rests with the\ndefendant,” Gomez v. Toledo, 446 U.S. 635, 640 (1980).\n Next, § 1106(a) begins by referencing § 1108—\n“[e]xcept as provided in section 1108 of this title”—before\nspecifying the elements for proving a prohibited-\ntransaction claim. Courts have uniformly held that such a\nphrase signals an “affirmative defense” that the\ndefendant must plead and prove. See, e.g., Evankavitch\nv. Green Tree Servicing, LLC, 793 F.3d 355, 363 (3d Cir.\n2015); In re Bernard L. Madoff Inv. Sec. LLC, 12 F.4th\n171, 196–97 (2d Cir. 2021).\n Third, the liability and exemptions provisions are in\ndifferent sections of the U.S. Code. Such a structure,\n“with exemptions laid out apart from the prohibitions,”\nagain reflects an affirmative defense. Meacham, 554 U.S.\nat 91. That is doubly true where, as here, many of § 1108’s\nexemptions require pleading facts that plaintiffs would\nnot know pre-discovery. See Braden, 588 F.3d at 602 (“It\nwould be perverse to require plaintiffs bringing\nprohibited transaction claims to plead facts that remain in\nthe sole control of the parties who stand accused of\nwrongdoing.”).\n Further, as the agency with “enforcement\nresponsibility for ERISA,” John Hancock Mut. Life Ins.\nCo. v. Harris Tr. & Sav. Bank, 510 U.S. 86, 107 n.14\n(1993), the Labor Department has consistently\n 6\n\ninterpreted § 1108’s “exemptions [as] affirmative\ndefenses on which the defendant has the burden of proof,”\nGov. Br. at 9, Allen, 835 F.3d 670 ([DOCKET REDACTED]).\n The Second Circuit’s approach is also a poor policy fix.\nIn its view, a plain text reading would encompass “a vast\narray of routine transactions,” P.A. at 21a, which, per\nRespondent, could exacerbate “a dramatic rise in the\nnumber of ERISA lawsuits over recordkeeping fees,”\nBIO at 15. But it is unclear why a rise in lawsuits alone\nshould be cause for alarm. After all, “[m]ultiple federal\ncourts have acknowledged the important role excessive\nfee litigation has played to depress fees and protect\nparticipants’ retirement savings over the past several\nyears.” Lauren K. Valastro, How Misapplying Twombly\nErodes Retirement Funds, 32 GEO. MASON L. REV.\n(forthcoming 2025) (manuscript at 17). That result is\nconsistent with ERISA’s purpose to “ensure that\nemployees . . . receive the benefits they ha[ve] earned.”\nConkright, 559 U.S. at 516.\n Finally, there are few if any actual suits where\nplaintiffs plead only the bare elements of a prohibited-\ntransaction claim. Neither the Second Circuit nor\nRespondent have identified any evidence of this\nhappening, even though parties in the Eighth Circuit\ncould have done so for the past fifteen years. That is\nbecause there are built-in guardrails against bringing\nneedless litigation, from the costs and resources required\nto bring an ERISA action, to fee-shifting and sanctions, to\nstanding.\n The Second Circuit’s “solution,” in short, searches for\na nonexistent problem. At bottom, the issue here is how\nto read § 1106. The answer to that question, “[a]s with any\nquestion of statutory interpretation,” “begins with the\nplain language of the statute.” Jimenez v. Quarterman,\n 7\n\n555 U.S. 113, 118 (2009). And “when the statutory\nlanguage is plain,” the result is equally straightforward:\n“[W]e must enforce it according to its terms.” Id. So too\nhere. The Court should reverse.\n\n\n OPINIONS BELOW\n The opinion of the Second Circuit is published at 86\nF.4th 961 (2d Cir. 2023) and is reproduced in the petition\nappendix at P.A. 2a–41a. The order of the district court\naddressing Defendants-Respondent’ motion for\nsummary judgment is unpublished and is reproduced at\nP.A. 43a–86a. The order of the district court addressing\nDefendants-Respondent’ motion to dismiss is\nunpublished and is reproduced at P.A. 88a–115a.\n\n\n JURISDICTION\n The Second Circuit issued its opinion on November 14,\n2023. It denied a petition for rehearing on December 20,\n2023. The petition for a writ of certiorari was filed on\nMarch 11, 2024, and granted on October 4, 2024. This\nCourt has jurisdiction under 28 U.S.C. § 1254(1).\n\n\n STATUTORY PROVISIONS INVOLVED\n Relevant provisions of the Employee Retirement\nIncome Security Act of 1974, 29 U.S.C. § 1001 et seq.,\nincluding 29 U.S.C. § 1106 and § 1108, are reproduced at\nP.A. 120a–160a.\n 8\n\n STATEMENT OF THE CASE\n A. Statutory framework.\n ERISA is “the product of a decade of congressional\nstudy” and its “comprehensive and reticulated”\nframework recognizes that “the continued well-being and\nsecurity of millions of employees and their dependents are\ndirectly affected by [employee benefit] plans.” Mertens v.\nHewitt Assocs., 508 U.S. 248, 251 (1993); 29 U.S.C.\n§ 1001(a).\n The prohibited-transaction provisions are central to\nthat framework. Pre-ERISA, transactions between plans\nand interested parties were governed by “the customary\narm’s-length standard of conduct.” Comm’r v. Keystone\nConsol. Indus., Inc., 508 U.S. 152, 160 (1993). But that\nstandard “all too frequent[ly]” led to the “misuse,\nmanipulation, and poor management of pension trust\nfunds” by plan sponsors and administrators. 120 CONG.\nREC. 29957 (1974) (remarks of Sen. Ribicoff). Congress\nresponded by “establish[ing]” “[s]tringent standards for\nplan fiduciaries, including a broad definition of fiduciary\nand detailed prohibited transactions.” 120 CONG. REC.\n30106 (1974) (remarks of Rep. Erlenborn).\n As relevant here, § 1106(a) sets out five types of\nprohibited transactions, and § 1106(a)(1)(C) specifically\nbars “[a] fiduciary with respect to a plan” from “caus[ing]\nthe plan to engage in a transaction, if he knows or should\nknow that such transaction constitutes a direct or indirect\nfurnishing of goods, services, or facilities between the plan\nand a party in interest.” Another provision, § 1002(14)(B),\ndefines a “party in interest” to include, among other\ngroups, “a person providing services to [an employee\nbenefit] plan.” Finally, § 1108 specifies exemptions to\n§ 1106(a)’s prohibited transactions. Section 1108(b)\n 9\n\nprovides twenty-one statutory exemptions, and § 1108(a)\ngrants the Labor Secretary discretion to recognize\nadditional administrative exemptions as appropriate.\n B. Factual background.\n Claimant comprise a class of current and former\nemployees who participated in Respondent’s two\nretirement plans, the Respondent Retirement Plan\nfor Employees of the Endowed Colleges at Ithaca and the\nRespondent Tax Deferred Annuity Plan (together,\n“the Plans”). P.A. 5a–6a. These defined-contribution,\ntax-deferred plans serve over 30,000 participants and\nmanage approximately $3.34 billion in assets. P.A. 6a.\nDue to their substantial size and assets, the Plans are\nconsidered “jumbo plans,” with significant bargaining\npower in the retirement services market. P.A. 90a;\nHughes v. Nw. Univ., 63 F.4th 615, 635 (7th Cir. 2023).\n Respondent are Respondent, Respondent’s\nRetirement Plan Oversight Committee, and the Oversight\nCommittee chairperson. Each respondent is a Plan\nfiduciary. Respondent also retained and paid two outside\ncompanies, TIAA and Fidelity, for investment\nmanagement and recordkeeping services. P.A. 8a.\nInvestment management fees “are associated with the\nservices of buying, selling, and managing investments.”\nId. Recordkeeping fees “cover necessary administrative\nexpenses such as tracking account balances and providing\nregular account statements.” Id.\n There are two common recordkeeping models. First,\nplans can pay a flat fee indexed to the number of plan\nparticipants. Id. Because of economies of scale, jumbo\nplans generally obtain lower flat fees than smaller plans.\nRamos v. Banner Health, 461 F. Supp. 3d 1067, 1102 (D.\nColo. 2020). Second, plans can pay through revenue\n 10\n\nsharing, with fees calculated based on a set portion of plan\nassets. P.A. 8a. As assets grow, fees grow, even if the\nnumber of participants and the services provided do not\nincrease. Respondent here paid recordkeeping fees\nthrough a revenue sharing model. Id.\n C. Proceedings below.\n In February 2017, Claimant filed a complaint in the\nSouthern District of New York, asserting that\nRespondent had engaged in transactions prohibited by\n§ 1106(a). Specifically, “because TIAA and Fidelity are\nservice providers and hence parties in interest, their\nfurnishing of recordkeeping and administrative services\nto the Plans is a prohibited transaction unless Respondent\nproves an exemption.” P.A. 25a (cleaned up). Claimant\nalso alleged that Respondent “failed to seek bids from\nother recordkeepers,” “neglected to monitor the amount\nof revenue sharing received” by TIAA and Fidelity, and\n“paid substantially more than . . . a reasonable\nrecordkeeping fee.” Id. (internal quotation marks\nomitted); J.A. 63. According to Claimant, a reasonable\nrecordkeeping fee for the Plans would have been “$35 per\nparticipant.” P.A. 25a; J.A. 65. Claimant paid several\ntimes that: between $115 and $183 per participant in one\nplan, and between $145 and $200 per participant in the\nother. P.A. 26a; J.A. 65.\n Claimant also brought several related claims.\nClaimant alleged that Respondent’ failure to address\nTIAA and Fidelity’s recordkeeping fees breached the\nfiduciary duties of loyalty and prudence. P.A. 10a.\nClaimant further claimed that Respondent\nimprudently offered, selected, or retained investment\noptions with “high fees and poor performance relative to\n 11\n\nother investment options that were readily available.”\nP.A. 11a.\n In September 2017, the district court granted\nRespondent’ motion to dismiss the prohibited-\ntransaction claims. The court held that, to plead a § 1106\nviolation, plaintiffs must allege “some evidence of self-\ndealing or other disloyal conduct.” P.A. 109a. But\nClaimant had, in the court’s view, “offered only\nconclusory allegations.” Id. The court also dismissed\nClaimant’ duty of loyalty claims. P.A. 98a, 115a. A\nsubset of Claimant’ duty of prudence claims survived\ndismissal. P.A. 100a–104a, 115a.\n At summary judgment, the district court ruled for\nRespondent “on nearly all the remaining claims.” P.A.\n12a. One claim, regarding the duty of prudence, survived.\nP.A. 13a. In December 2020, the district court approved\na settlement of this remaining claim. Id. The settlement\nleft the previously dismissed claims available for appeal.\n Claimant subsequently appealed to the Second\nCircuit, seeking review of the district court’s disposition\nof (1) the prohibited-transaction claim, (2) the breach of\nfiduciary duty claim for “failing to monitor and control\nrecordkeeping fees,” and (3) the claim over the retention\nof certain high-cost or underperforming investment\noptions. P.A. 10a.\n On November 14, 2023, the Second Circuit affirmed\nthe district court’s judgment. P.A. 41a. The court began\nby observing that if § 1106(a)(1)(C) were read “in isolation\nof the exemptions in § 1108,” it would “appear to prohibit\npayments by a plan to any entity providing it with any\nservices.” P.A. 16a. It further noted that the Third,\nSeventh, and Tenth Circuits had, given this possible\noutcome, “adopted different means of narrowing the\n 12\n\nstatute” by imposing atextual requirements on plaintiffs\nseeking to proceed under § 1106(a). Id. “[O]n the other\nhand,” two courts of appeals “have embraced the\nexpansive reading of the statute that these other circuits\nhave rejected as absurd.” P.A. 17a. Those courts—the\nEighth and Ninth Circuits—acknowledged the\npotentially broad scope of such a reading. But they\nnevertheless adopted their more “expansive” reading by\nlooking to “the language of the statute and [to] traditional\nprinciples of trust law.” Id.\n After outlining the various approaches, the Second\nCircuit reached for a purported middle ground. It agreed\nwith the Eighth and Ninth Circuits that “the language of\n§ 1106(a)(1) cannot be read to demand explicit allegations\nof self-dealing or disloyal conduct.” P.A. 18a (internal\nquotation marks omitted). But it disagreed with the\nEighth Circuit that “the § 1108 exemptions should be\nunderstood merely as affirmative defenses.” Id. Instead,\n“at least some of those exemptions—particularly, the\nexemption for reasonable and necessary transactions\ncodified by § 1108(b)(2)(A)—are incorporated into\n§ 1106(a)’s prohibitions.” Id.\n Under the Second Circuit’s rule, to plead a violation of\n§ 1106(a)(1)(C), a complaint must not only show that a\ntransaction involved the “furnishing of services between\nthe plan and a party in interest,” but also that the\n“transaction was unnecessary or involved unreasonable\ncompensation,” so as to fall outside of § 1108(b)(2). P.A.\n18a–19a (ellipses omitted). The court added that, should\nplaintiffs survive a motion to dismiss, they must continue\nmarshaling facts negating § 1108’s exemptions: “[A]t the\nsummary judgment stage,” plaintiffs must “produce\nevidence . . . challenging the necessity of the transaction\n 13\n\nor the reasonableness of the compensation provided.”\nP.A. 24a.\n The Second Circuit gave three reasons for its decision.\nFirst, it pointed to the statute’s structure. Section\n1106(a)’s text “begins with [a] carveout: ‘Except as\nprovided in section 1108 of this title.’” P.A. 19a (quoting\n29 U.S.C. § 1106(a)). Neither § 1106(b) nor § 1106(c)\ncontains such language. The Second Circuit concluded,\nfrom this difference, that “the exemptions set out in\n§ 1108” are “incorporated directly into § 1106(a)’s\ndefinition of prohibited transactions.” Id.\n Second, drawing from a handful of criminal cases, the\nSecond Circuit claimed that § 1108’s exemptions are so\n“integral to the offense” that they have become “part of\nthe offense’s ingredients.” P.A. 20a (cleaned up). The\ncourt reasoned that one cannot “articulate what the\nstatute seeks to prohibit without reference to the\nexception,” and therefore “the exception should be\nunderstood as part of the definition of the prohibited\nconduct.” P.A. 21a.\n Finally, the court acknowledged that its decision\nmight appear in tension with common law trust principles,\nwhich generally require the fiduciary to prove exemptions\nto liability. P.A. 24a. But the court observed that in an\n“analogous” context—i.e., claims under the Investment\nCompany Act—plaintiffs must first plead that a fee is “so\ndisproportionately large that it bears no reasonable\nrelationship to the services rendered.” P.A. 22a (quoting\nJones v. Harris Assocs. L.P., 559 U.S. 335, 346 (2010)).\nThat same framework, the panel ruled, should apply to\n§ 1106(a) claims: ERISA plaintiffs must first allege “facts\ncalling into question the fiduciary’s loyalty by challenging\nthe necessity of the transaction or the reasonableness of\n 14\n\nthe compensation provided,” before fiduciaries carry the\nburden of persuasion. P.A. 24a.\n In applying this understanding to Claimant’\ncomplaint, the Second Circuit acknowledged that\n§ 1106(a) claims might ultimately face a higher bar than\nbreach of fiduciary duty claims. Here, Claimant alleged\n“Respondent failed to seek bids from other recordkeepers and\nneglected to monitor the amount of revenue sharing,”\nwhich was sufficient to “state [a] claim for a breach of the\nduty of prudence.” P.A. 25a. But because Claimant had\nnot shown that the recordkeeping fees were\n“disproportionately large,” they could not state a claim\nunder § 1106(a)(1)(C). P.A. 26a (quoting Jones, 559 U.S.\nat 346). After disposing of the prohibited-transaction\nclaim, the Second Circuit affirmed the district court’s\njudgment as to Claimant’ remaining claims. Claimant\nfiled a petition for certiorari on March 11, 2024, which this\nCourt granted on October 4, 2024.\n\n\n SUMMARY OF ARGUMENT\n I.A. Concerned that applying the text of 29 U.S.C.\n§ 1106(a) as written would cast too wide a net for liability,\nthe Second Circuit below joined several other circuits in\nimposing on plaintiffs additional pleading requirements\nnot found in that statutory provision’s plain language. But\nit did so in unique fashion—by incorporating § 1108’s\nexemptions into the plaintiff’s pleading burden. Thus, to\nstate a claim, plaintiffs must not only plead liability under\n§ 1106(a), but also negate the applicability of any\nexemptions from liability under 29 U.S.C. § 1108.\n That instruction, however, violates the fundamental\nunderstanding that when “the statutory language\n 15\n\nprovides a clear answer,” a court’s inquiry “ends.”\nHughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999).\nThere is no need to add to one statutory provision’s text\nby searching for and piling on additional requirements\nfrom a different provision.\n I.B. Congress, moreover, wrote § 1108’s exemptions\nas affirmative defenses for a defendant to plead and\nprove, rather than as something a plaintiff must negate.\nThis follows from the “general rule of law” that when an\n“enacting clause is general,” as § 1106(a) is, and “a proviso\nis afterwards introduced” qualifying the enacting clause,\nas § 1108(b) is, “that proviso . . . carves special exceptions\nonly out of the enacting clause; and those who set up any\nsuch exception, must establish it.” United States v.\nDickson, 40 U.S. (15 Pet.) 141, 165 (1841). The Court has\napplied this familiar framework many times, including to\nstatutes with a text and structure like the one here. In\nMeacham v. Knolls Atomic Power Laboratory, for\ninstance, the statute at issue laid out “general\nprohibitions . . . subject to a separate\nprovision . . . creating exemptions,’” including for\nreasonableness. 554 U.S. 84, 91 (2008). This Court did not\nequivocate: “Given how the statute reads, with\nexemptions laid out apart from the prohibitions . . . it is no\nsurprise that” those exemptions are “affirmative\ndefenses” to be pleaded and proven by the defendant. Id.\n I.C. Traditional statutory construction principles\nfurther support Claimant’ view. Congress wrote\nERISA bearing in mind the “longstanding convention”\nthat plaintiffs plead liability and defendants plead\nexemptions to liability. Id. If Congress wished to deviate\nfrom that convention, it knew how to do so. It could have\nspecified that § 1108 provided additional conditions\n 16\n\nnecessary for plaintiffs to make out a claim for liability.\nOr Congress could have explicitly written a\nreasonableness requirement into § 1106. It did neither.\n I.D. The Second Circuit’s reliance on § 1106(a)’s\n“except as provided” language lacks merit. The courts of\nappeals have uniformly interpreted the phrase as creating\naffirmative defenses. Neither the Second Circuit nor\nRespondent have pointed to any countervailing\nauthority.\n I.E. The Second Circuit’s use of criminal cases also\nmisses the mark. The panel leaned most heavily on a rule\nfrom United States v. Cook, 84 U.S. (17 Wall.) 168 (1872),\nbut as this Court has explained, that rule is a “rule of\ncriminal pleading.” United States v. Reese, 92 U.S. 214,\n232 (1875) (emphasis added). It applies in a narrow subset\nof criminal cases because of tenets—the rule of lenity, the\npresumption of innocence, the Sixth Amendment—that\nare “inapposite” to the civil context. In re Bernard L.\nMadoff Inv. Sec. LLC, 12 F.4th 171, 197 (2d Cir. 2021).\nEven if the Cook rule did apply to civil cases, it holds no\nforce here. That is because, unlike Cook, where a\nprohibition could not be applied without reference to an\nexemption, the prohibited-transaction provisions here\nplainly “articulate what the statute seeks to prohibit\nwithout reference to the exception,” P.A. 21a: namely, the\n“furnishing of goods, services, or facilities between the\nplan and a party in interest,” 29 U.S.C. § 1106(a).\n II.A. The Second Circuit’s reading also contravenes\nthe case law. As this Court has said, “Congress enacted\nERISA § 406(a)(1), which supplements the fiduciary’s\ngeneral duty of loyalty to the plan’s beneficiaries, § 404(a),\n[to] categorically bar[] certain transactions deemed ‘likely\nto injure the pension plan.’” Harris Tr. & Sav. Bank v.\n 17\n\nSalomon Smith Barney Inc., 530 U.S. 238, 241–42 (2000)\n(quoting Comm’r v. Keystone Consol. Indus., 508 U.S.\n152, 160 (1993)). But rather than treating § 1106 as a\ncategorical bar, the panel reduces it to a reasonableness\nanalysis—exactly what Harris Trust counsels against.\nWorse, the court ties § 1108(b)(2)’s “reasonableness” to\nthe standard from § 36(b) of the Investment Company\nAct, a different statute drafted based on different\nconditions and different relationships between the\nparties. Indeed, no plaintiff has ever managed to prove a\n§ 36(b) claim. That result cannot be what Congress\ncontemplated while drafting § 1106(a), when it wanted to\ngive plaintiffs a cause of action to redress the myriad\nabuses of plan assets rife pre-ERISA.\n II.B. The common law of trusts reinforces a plain-\nlanguage reading of § 1106. That law has long\nacknowledged an information asymmetry in a trust\nbetween the fiduciary and beneficiary. Put simply, the\nfiduciary knows things the beneficiary does not. The\ninterplay between § 1106 and § 1108 recognizes and\nreflects this asymmetry. Before discovery, beneficiaries\ndo not know which exemptions a fiduciary might invoke or\nhow to show that an exemption is not in play. This is why,\nto bring a claim, a beneficiary need only plead the\nelements of § 1106—i.e., information that it reasonably\nmight know. Fiduciaries must then show the applicability\nof any exemptions based on information that often only\nthey know.\n II.C. The Department of Labor has repeatedly\ntreated § 1106(a) as establishing categorical prohibitions\nand § 1108 as establishing affirmative defenses that\ndefendants must plead and prove. See Gov. Br. at 9, 19–\n20, Allen v. GreatBanc Tr. Co., 835 F.3d 670 (7th Cir.\n 18\n\n2016) ([DOCKET REDACTED]). It has espoused that understanding\nin litigation and through regulation and guidance.\n III.A. A plain-text reading of § 1106 and § 1108 is also\nmore functional than the Second Circuit’s rule. For the\nformer, plaintiffs must satisfy the requirements of § 1106,\ndefendants must plead and present evidence supporting\nany exemption under § 1108, and the court must evaluate\nthe evidence in its entirety. That framework embraces\nthe text and exemplifies how liability and exemption\nprovisions work throughout the law.\n On the other hand, the Second Circuit’s rule is both\nvague and, by its own implicit admission, ill-defined. The\ncourt tells plaintiffs to negate “at least some” of the § 1108\nexemptions, even before discovery. P.A. 18a. But it does\nnot say which ones. It also says nothing about what\nshould happen when a defendant invokes more than one\n§ 1108 exemption. And it offers no guidance on how a\nplaintiff could obtain the necessary information to\nplausibly negate the many § 1108 exemptions—\nparticularly when much of the information related to the\nexemptions resides in the hands of the fiduciary.\nConsequently, to satisfy the Second Circuit’s rule, a\nplaintiff would need to correctly predict which exemptions\na defendant might invoke and correctly plead the\nnegative of each such exemption, all from facts outside an\nordinary plaintiff’s knowledge.\n III.B. Applying the plain language of § 1106 and\n§ 1108 does not, contra the Second Circuit, produce\nabsurd results. Invoking absurdity is an extreme\nrecourse, proper only in the unusual circumstance “where\nit is quite impossible that Congress could have intended\nthe result.” Pub. Citizen v. U.S. Dep’t of Just., 491 U.S.\n440, 471 (1989) (Kennedy, J., concurring). But here, the\n 19\n\nlegislative history affirms that the text says what it means\nand means what it says. As reflected in the record,\nCongress sought to provide “the maximum degree of\nprotection to working men and women covered by private\nretirement programs,” S. REP. [DOCKET REDACTED], at 18 (1973), by\n“prohibit[ing] fiduciaries from engaging in transactions\ninvolving the transfer of assets between the plan and\nparties in interest,” 120 CONG. REC. 29932 (1974)\n(remarks of Sen. Williams).\n III.C. A plain-text reading of § 1106 and § 1108 will\nnot produce a flood of needless litigation. The Eighth\nCircuit provides a case in point. That court adopted a\nplain-text approach to § 1106 over fifteen years ago. In\nthe years since, ERISA litigation has not ground the court\nto a halt. That is because ERISA litigation is costly and\ntime-consuming, involving multiple defendants, multiple\nplaintiffs, multiple pre-trial motions, and a sprawling set\nof possible exemptions. Moreover, under ERISA’s fee-\nshifting provision, losing parties risk bearing significant\ncosts for bringing cases just to bring them. And were that\nnot enough, the Federal Rules allow courts to impose\nsanctions against plaintiffs who bring suits without basis.\nThere is not, in short, some surplus of plaintiffs waiting to\nbring test cases to delineate ERISA’s outer reach.\nERISA beneficiaries “sue only when . . . there is a reason\nto do so.” Allen, 835 F.3d at 677. And the cases they bring\nreflect an important step toward promoting ERISA’s\nbroadly protective purpose.\n 20\n\n ARGUMENT\n\nI. THE SECOND CIRCUIT’S APPROACH\nCONFLICTS WITH THE STATUTORY TEXT.\n A. Claimant have satisfied the plain language of\n § 1106, and adding atextual elements to that\n language is inappropriate.\n Here, “[a]s in any case of statutory construction, our\nanalysis begins with ‘the language of the statute.’”\nHughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999)\n(quoting Est. of Cowart v. Nickols Drilling Co., 505 U.S.\n469, 475 (1992)). “And where the statutory language\nprovides a clear answer, it ends there as well.” Id. That\ncommand should, as the Ninth Circuit underscored, hold\nespecially true for ERISA, since it “is ‘an enormously\ncomplex and detailed statute.’” Bugielski v. AT&T Servs.,\nInc., 76 F.4th 894, 901 (9th Cir. 2023) (quoting Conkright\nv. Frommert, 559 U.S. 506, 509 (2010)).\n This instruction—to apply the text as written so long\nas the language is clear—should make this a\nstraightforward case. After all, no one thinks\n§ 1106(a)(1)(C) is ambiguous. The language speaks for\nitself. It prohibits “[a] fiduciary” from “caus[ing] the plan\nto engage in a transaction, if he knows or should know that\nsuch transaction constitutes a direct or indirect furnishing\nof goods, services, or facilities between the plan and a\nparty in interest.” And each of those elements is met\nhere: (1) Respondent are fiduciaries; (2) TIAA and\nFidelity “provid[e] services to” the Plan, making them\n“part[ies] in interest”; and (3) Respondent caused the plan to\nengage in transactions with TIAA and Fidelity that\nconstitute a “furnishing of . . . services.” Id.\n§ 1002(14)(B); id. § 1006(a)(1)(C).\n 21\n\n Yet concerned that such a reading “would prohibit\nfiduciaries from paying third parties to perform essential\nservices,” Albert v. Oshkosh Corp., 47 F.4th 570, 584 (7th\nCir. 2022), several circuits have grafted additional\natextual pleading requirements onto § 1106(a) for\nplaintiffs seeking to bring such claims, see, e.g., id. at 583\n(demanding allegations of self-dealing); Sweda v. Univ. of\nPa., 923 F.3d 320, 338 (3d Cir. 2019) (demanding an\n“intent to benefit a party in interest”). This Court,\nthough, has already explained why such a move is\ninappropriate. After all, if courts cannot “supplement[]”\nERISA plaintiffs with “extratextual remedies,” Hughes\nAircraft, 525 U.S. at 447, they cannot saddle plaintiffs\nwith extratextual requirements.\n B. Section 1108’s exemptions are affirmative\n defenses to be pleaded and proven by the\n defendant.\n The Second Circuit, to its credit, disclaimed the\natextual approaches taken by these other courts, seeking\ninstead a textual hook for dismissing Claimant’ § 1106\nclaim. P.A. 19a. But its supposed middle ground—to\nremodel § 1106(a) by (1) scaffolding onto it “at least some\nof th[e] exemptions” from § 1108, (2) particularly\n§ 1108(b)(2), which exempts reasonable arrangements for\nnecessary services, and (3) then requiring plaintiffs to\nplead the negative of “at least some of” these\nexemptions—is just as unavailing. P.A. 18a.\n That is because ERISA’s prohibited-transaction\nprovisions already establish a clear structure: § 1106 sets\nout general prohibitions and § 1108 provides for specific\nexceptions. Even the Second Circuit recognized that\npoint. See P.A. 14a, 16a (explaining that § 1106 “consists\nof three provisions restricting the set of transactions in\n 22\n\nwhich plan fiduciaries may engage,” while § 1108\n“provides certain exemptions from prohibited\ntransactions”) (cleaned up).\n What the panel failed to recognize, however, was “the\ngeneral rule of law, which has always prevailed, and\nbecome consecrated almost as a maxim in the\ninterpretation of statutes.” United States v. Dickson, 40\nU.S. (15 Pet.) 141, 165 (1841). That rule provides “that\nwhere the enacting clause is general in its language and\nobjects”—as it is here—and where “a proviso is\nafterwards introduced”—again, as is the case here—the\n“proviso . . . carves special exceptions only out of the\nenacting clause; and those who set up any such exception,\nmust establish it as being within the words as well as\nwithin the reasons thereof.” Id. (emphasis added). When\nthe party relying on an exemption is a defendant, the\nexemption is an “affirmative defense,” and it is\n“incumbent on the defendant to plead and prove such a\ndefense.” Taylor v. Sturgell, 553 U.S. 880, 907 (2008). The\nplaintiff “has no duty to negative” an “affirmative\ndefense.” Ruan v. United States, 597 U.S. 450, 473 (2022)\n(Alito, J., concurring) (internal quotation marks omitted).\n The Court has applied this familiar framework many\ntimes over many years for many laws, including rules on\nemployee compensation, Dickson, 40 U.S. at 143;\ntransportation safety, Schlemmer v. Buffalo, Rochester &\nPittsburgh Ry., 205 U.S. 1, 10 (1907); antitrust, FTC v.\nMorton Salt Co., 334 U.S. 37, 44 (1948); agricultural\npolicy, Javierre v. Cent. Altagracia, 217 U.S. 502, 508\n(1910); claim and issue preclusion, Taylor, 553 U.S. at 907;\nand (with a narrow exception, discussed below) criminal\nlaw, McKelvey v. United States, 260 U.S. 353, 357 (1922).\n In this same vein, every court of appeals that has\naddressed the specific statutory provisions in this case\n 23\n\nhas—until the decision below—uniformly referred to\n§ 1108 as delineating affirmative defenses. As Judge\nWood observed in Allen v. GreatBanc Trust Co., “the\nexemptions from prohibited transactions do not provide\nalternative explanations; they assume that a transaction\nin the prohibited group occurred, and they add additional\nfacts showing why that particular one is acceptable.” 835\nF.3d 670, 676–77 (7th Cir. 2016). “That is how affirmative\ndefenses work.” Id. at 677. Allen then cited five other\ncircuits that “agree with the position that section 408\nexemptions are affirmative defenses,” including—\nnotably—a case from the Second Circuit. Id. at 676 (citing\nLowen v. Tower Asset Mgmt., Inc., 829 F.2d 1209, 1215\n(2d Cir. 1987)). And just one year before the panel’s\ndecision here, the Second Circuit reaffirmed that\nunderstanding. See Haley v. Teachers Ins. & Annuity\nAss’n of Am., 54 F.4th 115, 121–22 (2d Cir. 2022) (“It is\nwell settled that this exercise includes any affirmative\ndefenses, such as the § 408 exemptions.”) (footnote\nomitted).\n The panel below said nothing about Haley. On Lowen,\nit claimed that its decision would “leave undisturbed” the\nunderstanding that “the defendant fiduciary . . . bears the\nburden of persuasion with regard to the applicability of\nthe § 1108 exceptions.” P.A. 23a. According to the panel,\nhowever, a plaintiff must nevertheless bear the burden of\npleading the negative of a § 1108 exemption, even if the\nburden of persuasion remains on the defendant.\n That, however, is not how either the Federal Rules or\naffirmative defenses—as understood by this Court—\nwork. On the former, Rule 8(c) specifically provides that\n“[i]n responding to a pleading, a party must affirmatively\nstate any avoidance or affirmative defense”—i.e., they\nmust plead it. And were there any doubt on that point,\n 24\n\nthis Court has consistently described “an affirmative\ndefense” as that “which must be pleaded and proved.”\nElec. Storage Battery Co. v. Shimadzu, 307 U.S. 5, 16\n(1939); accord Vance v. Terrazas, 444 U.S. 252, 269 n.11\n(1980); Jones v. Bock, 549 U.S. 199, 204 (2007); Taylor, 553\nU.S. at 907.\n Meacham v. Knolls Atomic Power Laboratory, 554\nU.S. 84 (2008), is particularly instructive, given the\nsimilarities between the text and structure there with the\nprovisions here. At issue in Meacham was “[t]he ADEA’s\ngeneral prohibitions against age discrimination, 29 U.S.C.\n§§ 623(a)–(c), (e), [which] are subject to a separate\nprovision, § 623(f), [that] create[es] exemptions for\nemployer practices ‘otherwise prohibited under\nsubsections (a), (b), (c), or (e).’” Id. at 91. Like this case,\nthe parties disagreed over which side should plead and\nprove a particular exemption. And like this case, the\nexemption at issue outlined a “reasonableness” exception\nto liability. Compare 29 U.S.C. § 623(f)(1) (“It shall not be\nunlawful for an employer . . . to take any action otherwise\nprohibited . . . based on reasonable factors other than\nage.”), with 29 U.S.C. § 1108(b)(2)(A) (“The prohibitions\nprovided in section 1106 . . . shall not apply\nto . . . reasonable arrangements.”).\n Faced with these circumstances, Meacham held that\nthe defendant “must not only produce evidence raising\nthe defense”—i.e., the burden of pleading—“but also\npersuade the factfinder of its merit”—i.e., the burden of\npersuasion. 554 U.S. at 87. As Meacham explains,\n“[g]iven how the statute reads, with exemptions laid out\napart from the prohibitions (and expressly referring to\nthe prohibited conduct as such),” it should be “no surprise\nthat” § 623(f)(1) presents an “affirmative defense[]” under\nthe ADEA. Id. at 91. “[M]ost lawyers would accept that\n 25\n\ncharacterization as a matter of course,” since “there is no\nhint in the text that Congress meant § 623(f)(1) to march\nout of step” with the “default rule[] [of] placing the burden\nof proving an exemption on the party claiming it.” Id. at\n91–93.\n C. Traditional tools of statutory construction\n confirm Claimant’ reading.\n To be sure, Meacham says that courts should apply\nthis “default rule[]” unless there are “compelling reasons\nto think that Congress” meant otherwise. Id. at 91–93.\nBut here, the most compelling reasons tip in Claimant’\nfavor.\n First, that plaintiffs plead liability and defendants\nplead exemptions to liability is, as Meacham notes, a\n“longstanding convention” that forms “part of the\nbackdrop against which the Congress writes laws.” Id. at\n91. But if Congress knew about and legislated against\nthat convention when it passed the ADEA in 1967, it knew\nabout the same principle when it enacted ERISA in 1974.\n Second, according to the panel, “to plead a violation of\n§ 1106(a)(1)(C), a complaint must plausibly allege that a\nfiduciary has caused the plan to engage in a transaction\nthat constitutes the ‘furnishing of services between the\nplan and a party in interest’ where that transaction was\nunnecessary or involved unreasonable compensation.”\nP.A. 18a–19a (cleaned up) (emphasis in original). That\nlast clause—where that transaction was unnecessary or\ninvolved unreasonable compensation—is not part of\n§ 1106(a)(1)(C), but imports language from\n§ 1108(b)(2)(A). Yet Congress knows how to write a\nreasonableness requirement. It wrote one seven years\nprior in the ADEA and wrote one in § 1108(b). If\nCongress wanted § 1106(a)(1)(C) to include the words\n 26\n\n“where that transaction was unnecessary or involved\nunreasonable compensation,” it could have just done so.\nIt did not.\n Third, the word “exemption” is peppered throughout\n§ 1108’s text. In other statutes and other contexts,\nCongress has referred to “exemptions” interchangeably\nwith “affirmative defenses.” See Corning Glass Works v.\nBrennan, 417 U.S. 188, 196–97 (1974); Schaffer ex rel.\nSchaffer v. Weast, 546 U.S. 49, 57 (2005). It has rarely, if\never, understood “exemptions” as imposing additional\nrequirements plaintiffs must negate.\n Fourth, “[t]he title of a statute and the heading of a\nsection are tools available for the resolution of a doubt\nabout the meaning of a statute.” Yates v. United States,\n574 U.S. 528, 540 (2015). That “title” may be “especially\nvaluable” where “it reinforces what the text’s nouns and\nverbs independently suggest.” Id. at 552 (Alito, J.,\nconcurring). Here, § 1106’s title is plain: “Prohibited\ntransactions.” Not “Necessary conditions for prohibited\ntransactions.” Not “Necessary but not sufficient\nconditions for prohibited transactions.” And not\n“Potentially prohibited transactions.” Just “Prohibited\ntransactions.” Section 1108’s title is also clear:\n“Exemptions from prohibited transactions.” These titles\naffirm what the text’s nouns and verbs already suggest:\n§ 1106 creates a pathway for plaintiffs to plead liability,\nand § 1108 creates specific avenues for defendant\nfiduciaries to avoid liability.\n Finally, “[j]ust as Congress’ choice of words is\npresumed to be deliberate, so too are its structural\nchoices.” Univ. of Tex. Sw. Med. Ctr. v. Nassar, 570 U.S.\n338, 353 (2013). In Meacham, the Court underscored that\nthe ADEA laid out its exemptions in a provision separate\nfrom the general prohibitions: the former was in 29 U.S.C.\n 27\n\n§ 623(f)(1), the latter in 29 U.S.C. § 623(a)–(c) and (e). 554\nU.S. at 91. Here, ERISA’s prohibitions and exemptions\nare not merely laid out in different parts of the same\nsection, as they were in Meacham. They are spread\nacross different sections altogether—§ 1106 and § 1108.\nThat is a deliberate structural choice that courts should\n(but the Second Circuit did not) respect.\n D. The Second Circuit’s reliance on § 1106(a)’s\n “except as provided” language is inapt.\n Against this backdrop, the panel marshaled two\nprimary arguments in response. Both fail.\n First, the panel asserted that its reading “flows\ndirectly from the text and structure of the statute,”\nbecause “[t]he text of § 1106(a) begins with the carveout:\n‘Except as provided in section 1108 of this title.’” P.A. 19a.\nThus, in the panel’s view, “the exemptions set out in\n§ 1108—including, most pertinently, the exemption for\n‘reasonable compensation’ paid for ‘necessary services,’\n§ 1108(b)(2)(A)—are incorporated directly into § 1106(a)’s\ndefinition of prohibited transactions.” Id. In support of\nthat conclusion, the panel drew a “contrast to the\nlanguage of § 1106(b), governing ‘transactions between\nplan and fiduciary,’ which makes no direct reference\nto . . . § 1108.” Id.\n But that misreads § 1106(a) and § 1106(b). As the\nSixth and Third Circuits have explained, “the majority of\ncourts that have examined this statutory interpretation\nissue have held that § 1108 applies only to transactions\nunder § 1106(a), not § 1106(b).” Hi-Lex Controls, Inc. v.\nBlue Cross Blue Shield of Michigan, 751 F.3d 740, 750\n(6th Cir. 2014), cert. denied, 575 U.S. 959 (2014). That is\nhow best to “give meaning to this discrepancy in the § 406\nsubsections.” Nat’l Sec. Sys., Inc. v. Iola, 700 F.3d 65, 95\n 28\n\n(3d Cir. 2012). “By expressly limiting liability under\n§ 406(a) by reference to the exemptions in § 408, then\nremoving the same limiting principle from § 406(b),\nCongress cast § 406(b) as unyielding.” Id.\n That division makes sense. Section 1106(a) addresses\ntransactions between a plan and party in interest,\nwhereas § 1106(b) covers transactions between a plan and\nfiduciary. It is reasonable to believe that for the latter,\n§ 1108 is unavailable because these sorts of transactions\ncarry an even higher risk of abuse. See, e.g., Patelco\nCredit Union v. Sahni, 262 F.3d 897, 911 (9th Cir. 2001)\n(holding that § 1108 “does not provide a safe harbor to\nfiduciaries who self-deal”). On the other hand, a limited\nnumber of transactions with parties in interest may assist\nwith the efficient functioning of a plan, so long as certain\nspecific exemptions and conditions are satisfied.\n The Second Circuit’s reference to the words “[e]xcept\nas provided,” and its corresponding claim that such\nlanguage means § 1108 is “incorporated directly” into\n§ 1106(a), is likewise unavailing. See P.A. 19a–20a.\n To start, “[t]housands of statutory provisions use the\nphrase ‘except as provided in . . . ’ followed by a cross-\nreference” without “otherwise expand[ing] or\ncontract[ing] the scope” of the section. Atl. Richfield Co.\nv. Christian, 590 U.S. 1, 16 (2020) (internal quotation\nmarks omitted). An “except as provided” proviso only\n“indicate[s] that one rule should prevail over another in\nany circumstance in which the two conflict.” Cyan Inc. v.\nBeaver Cnty. Emps. Ret. Fund, 583 U.S. 416, 428 (2018).\nIt does not, as the Second Circuit claims, “incorporate[]”\nthe provisions of one section into another. P.A. 19a.\n Next, “except” is another way of saying “exception,”\nand “[a]n exception in a statute is a clause designed to\n 29\n\nreserve or exempt some individuals from the general\nclass.” BLACK’S LAW DICTIONARY (5th ed. 1979)\n(emphasis added). Exemptions, in turn, are affirmative\ndefenses that defendants plead, rather than something\nplaintiffs negate. Supporting examples abound.\n In Evankavitch v. Green Tree Servicing, LLC, 793\nF.3d 355, 364 n.11, 367–68 (3d Cir. 2015), for instance, the\nThird Circuit held that exceptions in the section\nmentioned by an “except as provided” clause in the Fair\nDebt Collection Practices Act constituted defenses that\ndefendants must plead and prove. The Second Circuit\nreached the same conclusion interpreting substantially\nidentical language in § 550(b) of the Bankruptcy Code,\nruling that a trustee need not “negate [the] exception in\n§ 550(b) to state a claim.” In re Bernard L. Madoff Inv.\nSec. LLC, 12 F.4th 171, 197 (2d Cir. 2021) (cleaned up).\nAnd in United States v. Just, 74 F.3d 902, 904 (8th Cir.\n1996), the Eighth Circuit held that the “except as\nprovided” clause in 18 U.S.C. § 922(o)—prohibiting\npossession of a machinegun—created an affirmative\ndefense for those possessing machineguns “by or under\nthe authority of, the United States.”\n There are, in short, many cases interpreting “except\nas provided” that support Claimant’ reading.\nRespondent have identified none, and Claimant have\nfound none, supporting the Second Circuit’s contrary\nreading.\n E. The Second Circuit’s reference to a narrow\n criminal law exception to the general rule is\n unavailing.\n The panel’s second argument leans on various criminal\ncases, starting with United States v. Cook, 84 U.S. (17\nWall.) 168 (1872), for the understanding that “when one\n 30\n\ncannot articulate what the statute seeks to prohibit\nwithout reference to the exception, then the exception\nshould be understood as part of the definition of the\nprohibited conduct.” P.A. 21a.\n But that reliance is misplaced. Cook created “a rule of\ncriminal pleading,” applicable where necessary to prevent\ndefects in criminal indictments. United States v. Reese,\n92 U.S. 214, 232 (1875). The Second Circuit itself has\nrecognized this point, explaining—in response to the sort\nof argument Respondent make here—that “Cook is\ninapposite [because] it is grounded in the interpretation\nof a criminal statute.” In re Madoff, 12 F.4th at 197.\n There are several reasons why a different rule (or,\nmore precisely, an exception to the general rule) is\nappropriate in a narrow subset of criminal cases.\nSubstantive canons like the rule of lenity, background\nprinciples like the presumption of innocence, and\nconstitutional provisions like the Sixth Amendment\nimpose unique requirements in criminal law that are\nabsent in civil statutes. The Court has said as much; in a\ncase decided three years after Cook, it explained that its\ndiscussion in Cook was tied to a defendant’s\n“constitutional right ‘to be informed of the nature and\ncause of the accusation.’” United States v. Cruikshank,\n92 U.S. 542, 557–58 (1875) (quoting U.S. CONST. amend.\nVI).\n Even so, courts have read and applied Cook narrowly.\nThey have generally done so when the exception is not\njust in the same section but in the same sentence as the\nliability provision, treating that placement as a signal of\nlegislative intent. See United States v. Vuitch, 402 U.S.\n62, 68 (1971). But as Just reflects, in the mine-run\ncriminal matter, an “except as provided” provision—\nespecially one directing the reader to a separate section\n 31\n\nof the U.S. Code—signifies an affirmative defense to be\npleaded and proven by the defendant.\n And even if Cook were applied to civil cases,\n§ 1106(a)(1)(C) would fail its test. That is because Cook\napplies only “[w]here a statute defining an offence\ncontains an exception, in the enacting clause of the\nstatute, which is so incorporated with the language\ndefining the offence that the ingredients of the offence\ncannot be accurately and clearly described if the\nexception is omitted.” 84 U.S. at 173. But § 1106(a)(1)(C)\ncan be read on its own, barring transactions that involve\na “furnishing of goods, services, or facilities between the\nplan and a party in interest.” No one disputes what those\nwords mean or that Respondent’ actions fall within their\nambit. See, e.g., United States v. McArthur, 108 F.3d\n1350, 1353 (11th Cir. 1997) (“[W]here one can omit the\nexception from the statute without doing violence to the\ndefinition of the offense, the exception is more likely an\naffirmative defense.”).\n\n\nII. THE SECOND CIRCUIT’S APPROACH\nCONFLICTS WITH THE CASE LAW, THE LAW OF\nTRUSTS, AND GOVERNMENT PRACTICE.\n By stitching § 1106 and § 1108 together, the Second\nCircuit’s decision also contravenes how this Court has\nunderstood ERISA’s prohibited-transaction provisions,\ntrust law principles, and federal government practice.\n A. Section 1106 establishes a categorical rule for\n prohibited transactions.\n “Congress enacted ERISA § 406(a)(1)” to\n“supplement[] the fiduciary’s general duty of loyalty to\n 32\n\nthe plan’s beneficiaries, § 404(a), by categorically barring\ncertain transactions deemed ‘likely to injure the pension\nplan.’” Harris Tr., 530 U.S. at 241–42 (quoting Comm’r v.\nKeystone Consol. Indus., 508 U.S. 152, 160 (1993)). In\nother words, § 1106 covers transactions that a breach of\nfiduciary duty claim cannot; there would otherwise be\nnothing to “supplement[].” Id. Section 1106 reaches\nthose transactions because “Congress saw fit in ERISA\nto create some bright-line rules.” Allen, 835 F.3d at 676.\nAnd since “per se rules” are “much simpler” to apply,\nLeigh v. Engle, 727 F.2d 113, 123 (7th Cir. 1984), “a\ncomplaint may fail to state sufficient facts to support a\nbreach of fiduciary duty claim, yet survive a motion to\ndismiss as to a companion prohibited transaction claim\nnotwithstanding those same deficient facts,” Allen, 835\nF.3d at 676.\n To see why the Second Circuit’s approach turns that\nunderstanding on its head, look no further than this case.\n 1. For one, Claimant’ prohibited-transaction claims\ndid not “supplement[]” their fiduciary-duty claims. The\nformer were dismissed on a motion to dismiss. P.A. 108a–\n110a. Several of Claimant’ breach of fiduciary duty\nclaims, on the other hand, survived the motion to dismiss\nand proceeded to summary judgment (and one survived\nsummary judgment, too). See, e.g., P.A. 85a, 100a.\n 2. In addition, the Second Circuit’s prescription is\nneither a “bright-line rule[]” nor a “categorical[] bar.”\nAllen, 835 F.3d at 676; Harris Tr., 530 U.S. at 242. To the\ncontrary, the panel eschewed a categorical rule for a\ncontext-dependent reasonableness analysis. P.A. 19a\n(ellipses omitted). That is exactly what Harris Trust\ncounsels against.\n 33\n\n 3. Not done, the Second Circuit piles on by anchoring\n§ 1108(b)(2) reasonableness to a near-impossible-to-\nsatisfy and entirely inappropriate standard. P.A. 22a.\nImporting a standard from the Investment Company Act,\nthe panel demands future plaintiffs plead that any service\nprovider compensation be “so disproportionately large\nthat it bear[] no reasonable relationship to the services\nrendered,” before defendants need turn over anything in\ndiscovery, id. (citing Jones v. Harris Assocs. L.P., 559\nU.S. 335, 346 (2010)). “[F]ees,” in other words, must be\n“excessive . . . ‘to the services rendered.’” P.A. 26a\n(quoting Jones, 559 U.S. at 346). But that standard lacks\nany basis—textual, precedential, or otherwise—and\nwould cripple ERISA’s remedial framework.\n To begin, ERISA already defines what\nreasonableness is supposed to mean under § 1108(b)(2).\nNamely, § 1108(b)(2)(B) provides, for group health plans,\nthat “[n]o contract or arrangement for services between a\ncovered plan and a covered service provider . . . is\nreasonable within the meaning of [§ 1108(b)(2)] unless the\nrequirements of this clause are met.” P.A. 124a (footnote\nomitted). A substantially identical regulation, 29 C.F.R.\n§ 2550.408b-2, extends those requirements to pension\nplans.\n Importantly, both 29 U.S.C. § 1108(b)(2)(B) and 29\nC.F.R. § 2550.408b-2 enumerate a long list of definitions,\nformulas, and requirements. See P.A. 124a–133a. Those\ninclude “[a] description of all direct compensation” and\n“[a] description of all indirect compensation,” “including\ncompensation from a vendor to a brokerage firm based on\na structure of incentives,” but “not including\ncompensation received by an employee from an\nemployer.” P.A. 128a; 29 C.F.R. § 2550.408b-2(c)(1)(iv).\n 34\n\nBoth § 1108(b)(2)(B) and its regulatory counterpart\nfurther state that the service provider shall “disclose the\ninformation required” to “the responsible plan fiduciary.”\nP.A. 129a–130a; accord 29 C.F.R. § 2550.408b-\n2(c)(1)(v)(A). If the information is insufficient, the\n“service provider shall furnish” additional information\n“[u]pon the written request of the responsible plan\nfiduciary.” P.A. 130a; accord 29 C.F.R. § 2550.408b-\n2(c)(1)(vi)(A). At no point does § 1108(b)(2)(B) or\n§ 2550.408b-2 contemplate this exchange of information to\nthe beneficiary.\n In other words, if the Second Circuit had wanted to\nimpose a reasonableness requirement, it could have used\nthe standard already built into § 1108(b)(2)(B), rather\nthan borrowing the understanding of reasonableness\nfrom a wholly separate statute. Of course, such a\nrequirement would ignore the fact that § 1108(b)(2)(B)\nexpressly contemplates that service providers give\nfiduciaries, not beneficiaries, the requisite information to\nplead reasonableness. Even so, such an approach would\nat least respect the definition of reasonableness that\nCongress already established in ERISA, rather than\nsome “analogous” statute.\n More importantly, the ICA and ERISA are not\n“analogous.” The mutual funds regulated by the ICA are\nevaluated by “disinterested directors” that are privileged\nwith “all [the] information ‘reasonably . . . necessary to\nevaluate the terms’ of the adviser’s contract.” Jones, 559\nU.S. at 348 (quoting 15 U.S.C. § 80a-15(c)). But ERISA\nbeneficiaries do not, as outlined above, have “all [the]\ninformation.” Id.\n Furthermore, as Jones recognizes, Congress drafted\nthe ICA provision at issue to be “more favorable” to\n 35\n\nshareholders in some ways (e.g., by making available\nsome previously unavailable remedies) but made clear\nthat the ICA would “not permit a compensation\nagreement to be reviewed in court for ‘reasonableness.’”\nId. at 341. By holding in Jones that ICA plaintiffs may\nplead a claim only if they can show a fee was “so\ndisproportionately large that it bears no reasonable\nrelationship to the services rendered,” id. at 346, the\nCourt was thus not delineating a reasonableness\nstandard. It was setting the outer bounds of what a\nplaintiff must do, in the absence of a standard, to proceed\nwith a fiduciary duty claim.\n The reality of how that standard has played out\ncrystallizes the point: “[N]o plaintiff ever has prevailed\non a Section 36(b) claim.” David Kotler et al., Navigating\nthe Recent Wave of Section 36(b) Litigation: What Have\nWe Learned?, 29 INVESTMENT LAWYER 1, 2 (2022). Thus,\ncontrary to this Court’s instruction that § 1106 was meant\nto “categorically bar[]” certain transactions, Harris Tr.,\n530 U.S. at 241–42, importing the ICA’s standard would\ncategorically shield fiduciaries from liability.\n B. The common law of trusts supports Claimant’\n reading.\n The Court has also said that Congress “codif[ied] and\nma[de] applicable to ERISA fiduciaries certain principles\ndeveloped in the evolution of the law of trusts.” Firestone\nTire & Rubber Co. v. Bruch, 489 U.S. 101, 110 (1989);\naccord LaRue v. DeWolff, Boberg & Assocs., Inc., 552 U.S.\n248, 253 n.4 (2008) (“The common law of trusts . . . informs\nour interpretation of ERISA’s fiduciary duties.”).\n 1. That law has long recognized an information\nasymmetry between the trustee, who acts as a fiduciary,\n 36\n\nand the beneficiary. Namely, these “fiduciary\nrelationships lend themselves to exploitation” because\n“the trustee’s position gives him superior knowledge of all\nthe facts and circumstances.” Robert W. Hallgring, The\nUniform Trustees’ Powers Act and the Basic Principles\nof Fiduciary Responsibility, 41 WASH. L. REV. 801, 810–\n11 (1966). Consequently, at common law, the duty of\nloyalty was “particularly intense so that, in most\ncircumstances, its prohibitions are absolute for\nprophylactic reasons.” RESTATEMENT (THIRD) OF\nTRUSTS, § 78 cmt. b.\n These principles map well onto the provisions at hand.\nAs noted, § 1106(a) was “enacted [to] . . . supplement[]”\nthe duty of loyalty. Harris Tr., 530 U.S. at 241–42. It does\nso as the Restatement instructs: through “absolute”\nprohibitions. RESTATEMENT § 78 cmt. b. And given the\ninformation asymmetry between beneficiary and\nfiduciary, the prohibitions are written broadly so that a\nbeneficiary may bring a claim based on what they would\nreasonably know, rather than on information they do not\nreasonably have access to.\n 2. Accordingly, a beneficiary may bring a\n§ 1106(a)(1)(C) claim when they can show their fiduciary\nentered a transaction with a party in interest for the\n“furnishing of goods, services, or facilities.” But a\nbeneficiary would have little reason to know whether that\ntransaction was reasonable, necessary, and for reasonable\ncompensation given the information asymmetry outlined.\n Nor are service contracts unique. Take a loan between\na plan and an interested party. It would be sensible, given\nERISA’s protective purpose, for Congress to empower\nplaintiffs to bring a claim when they know such a loan has\nbeen extended. Section 1106(a)(1)(B) provides as much.\n 37\n\nSee 29 U.S.C. § 1106(a)(1)(B) (barring the “lending of\nmoney or other extension of credit between the plan and\na party in interest”). Section 1108(b)(1), in turn, lays out\nan exemption for certain loans. But that exemption\nimposes five separate requirements: (1) reasonable\nequivalence, (2) non-preferential treatment of highly\ncompensated employees, (3) compliance with plan\nprovisions, (4) reasonable interest rates, and (5) adequate\nsecurity. It is “implausible that any would-be defendant\nwould voluntarily turn over confidential financial\ninformation” of this kind—which is exactly why, under\nboth text and trust law, defendants would need to plead\nand prove the exemption. Allen, 835 F.3d at 677.\n 3. These concerns are not merely hypothetical.\nConsider Haley v. Teachers Insurance & Annuity Ass’n\nof America. There, TIAA offered “collateralized loan\nproducts” to beneficiaries of a university retirement plan.\n54 F.4th at 118. To defend itself against a § 1106(a) claim,\nTIAA invoked two § 1108(b) exemptions: (b)(1), which\nexempts loans, and (b)(17), which separately “permits\ntransactions . . . as long as the plan pays no more and\nreceives no less than ‘adequate consideration.’” Id. at 120.\nAs laid out above, (b)(1) requires detailed information on\nat least five conditions. And (b)(17) is no different.\nIndeed, TIAA argued at class certification—and the\nSecond Circuit largely agreed—“that individualized proof\nmust be marshalled from non-party plan fiduciaries\nshowing how each plan fiduciary valued the assets and\nwhether, given other options available to the plan, the\nfiduciary exercised good faith in selecting the terms\noffered by TIAA.” Id. at 122.\n There is no scenario where a beneficiary would have\nthis information—what the party in interest shared with\n 38\n\nthe fiduciary, how the fiduciary valued assets, and\nwhether the fiduciary exercised good faith—before\ndiscovery. More to the point, Congress was not blind to\nthat dilemma. To the contrary, it understood fiduciaries\nwould have the information to plead and prove § 1108\nexemptions. In fact, in many instances, it ensured they\nwould, requiring disclosure to fiduciaries of relevant\ninformation. See 29 U.S.C. § 1108(b)(2)(B)(iii).\nConsistent with the common law, it then placed the onus\non fiduciaries to present such information through one or\nmore affirmative defenses under § 1108.\n C. Claimant’ reading of § 1106 and § 1108 tracks\n federal government practice.\n The Department of Labor has primary authority for\nadministering and enforcing ERISA. See 29 U.S.C.\n§§ 1002(13), 1132–1138, 1204(a). It has, in these roles,\noften had occasion to address the Act’s prohibited-\ntransaction provisions. Its views dovetail with\nClaimant’ understanding.\n 1. On the exemption at issue, the Department spoke\nin plain terms more than a decade ago when it issued a\nregulation stating that “a service relationship between a\nplan and a service provider would constitute a prohibited\ntransaction.” 77 Fed. Reg. 5632 (Feb. 3, 2012) (to be\ncodified at 29 C.F.R. pt. 2550). It later issued 29 C.F.R.\n§ 2550.408b-2, which specified what parties in interest\nmust disclose to fiduciaries as a prerequisite to claiming a\n§ 1108(b)(2) exemption.\n 2. The Department has espoused a similar\nunderstanding in litigation. In Chao v. Hall Holding, Co.,\n285 F.3d 415, 419 (6th Cir. 2002), cert. denied, 537 U.S.\n1168 (2003), the Labor Secretary sued various defendants\n 39\n\nfor “purchasing stock on the [plan’s] behalf without\nadequate investigation and [for] overpaying for the\nstock.” In relevant part, the Secretary noted that “Hall\nHolding was a party in interest because it was a fiduciary\nand because it owned more than 10% of Hall Chemical, the\nemployer of plan participants.” Gov. Br. at 24, Hall\nHolding, 285 F.3d 415 ([DOCKET REDACTED]). “The stock sale\nbetween the plan and Hall Holding was therefore a\nprohibited transaction under 29 U.S.C. [§] 1106(a)(1).” Id.\nThe government acknowledged that “Section 408(e) of\nERISA creates an exemption from Section 406 for ‘the\nacquisition or sale by a plan of qualifying employer\nsecurities.’” Id. But it emphasized that defendants “bear\nthe burden of proving that they meet this exception.” Id.\nat 24–25. The Sixth Circuit agreed. 285 F.3d at 437. And\nwhen the defendants in Hall subsequently sought cert.,\nthe Secretary reiterated that ERISA “prohibited the\n[fiduciaries’] stock sale [at issue] unless an exemption\npermitted it.” Gov. Br. Opp’n Cert. at 13, Hall Holding,\n537 U.S. 1168 ([DOCKET REDACTED]). The Court denied review.\n 3. The Department followed the same course in Allen\nv. GreatBanc, where the plaintiff alleged a defendant had\nentered a prohibited transaction because it had engaged\nin a sale and loan with a party in interest. 2015 WL\n5821772, at *3 (N.D. Ill. Oct. 1, 2015). The district court,\nmuch like the Second Circuit here, reasoned that pleading\nthat fact alone was insufficient: A plaintiff needed to plead\nfacts negating the applicability of the exemptions set forth\nin § 1108. Id. at *4. The Secretary, in an amicus brief on\nappeal, disagreed. It instead endorsed the Eighth\nCircuit’s reading from Braden v. Wal-Mart, 588 F.3d 585\n(8th Cir. 2009), stating that “the only obligation imposed\non a plaintiff asserting a prohibited transaction claim is to\nplead and prove the existence of a transaction prohibited\n 40\n\nby section 406(a).” Gov. Br. at 18, Allen, 835 F.3d 670 ([DOCKET REDACTED]).\n As the Secretary explained, “section 408 exemptions\nare affirmative defenses on which the defendant has the\nburden of proof,” and “it is [thus] a defendant’s obligation\nto plead the applicability of an affirmative defense, and to\ndo so consistent with the requirements of Rule 8(a).” Id.\nat 9, 19–20. “[A] plaintiff is not required to negate an\naffirmative defense in his complaint.” Id. at 19. The\nSeventh Circuit reversed the district court and, in so\ndoing, substantially embraced the Secretary’s\nunderstanding. Allen, 835 F.3d at 677.\n 4. On top of the twenty-one exemptions in § 1108(b),\n§ 1108(a)(2) authorizes the Labor Secretary “to create\nexemptions to ERISA’s prohibition on certain plan\nholdings, acquisitions, and transactions, but only if doing\nso is in the interests of the plan’s ‘participants and\nbeneficiaries.’” Boggs v. Boggs, 520 U.S. 833, 846 (1997).\n Parties have not been shy about availing themselves of\nthis procedure. Since 1996, the government has granted\nmore than 800 individual exemptions and 17 class\nexemptions. Dep’t of Lab., Individual Exemptions,\n[URL REDACTED] Dep’t of Lab., Class\nExemptions, [URL REDACTED] It has\ngranted those exemptions to service providers like\nFidelity. See Prohibited Transaction Exemption 2008-14;\nD-11424, 73 Fed. Reg. 70378, 70381 (2008). And it has\ngranted exemptions where it “[did] not believe Congress\nintended to cover” certain relationships. Chamber of\nCom. v. U.S. Dep’t of Lab., 885 F.3d 360, 367 (5th Cir.\n2018).\n In short, if Respondent wish to avoid § 1106(a),\nERISA provides them several ways to do so. They can\n 41\n\nplead and later prove their actions fall under § 1108(b)(2).\nThey can plead another applicable § 1108(b) exemption.\nThey can seek clarification and coverage under § 1108(a).\nWhat they cannot do is compel plaintiffs to plead facts\nthey do not know and which they do not, absent discovery,\nhave access to.\n\n\nIII. THE SECOND CIRCUIT’S APPROACH IS A\n“FIX” TO A NON-EXISTENT PROBLEM.\n Lacking support from the statutory text, case law, or\nprior government practice, the Second Circuit turns to a\nlast redoubt: policy concerns. As the panel below outlines,\nit eschewed a “literal reading” of § 1106 in favor of a rule\nthat, it insists, is more workable and less “absurd.” P.A.\n17a. It is neither of those things.\n A. The Second Circuit’s reading is unworkable.\n 1. To start, ERISA already sets out a workable\nframework for plaintiffs, defendants, and courts for\nprohibited-transaction claims.\n For plaintiffs, § 1106 imposes certain bright-line\nrequirements: e.g., allege a transaction, identify a party in\ninterest, and show how that transaction constituted a\n“furnishing of goods, services, or facilities” between the\nplan and that party in interest. Once those boxes are\nchecked, defendants may plead and later offer evidence of\nthe applicability of any relevant exemptions. And\ncourts—as in any other case—evaluate the entirety of\nthat evidence.\n Such a framework “protect[s] . . . the interests of\nparticipants in employee benefit plans” by “provid[ing]\n[them with] appropriate remedies, sanctions, and ready\n 42\n\naccess to the Federal courts.” 29 U.S.C. § 1001(b); Aetna\nHealth Inc. v. Davila, 542 U.S. 200, 208 (2004). At the\nsame time, the framework does not “unduly discourage\nemployers from offering [ERISA] plans.” Conkright, 559\nU.S. at 517. After all, not every transaction provides a\ncause of action under § 1106(a). Lockheed Corp. v. Spink,\n517 U.S. 882, 895 (1996), for example, held “that the\npayment of benefits” to current and former employees\n“does not constitute a prohibited transaction.” That is so\neven if the payment is large, as in Spink.\n What § 1106(a) targets is not the amount of money\nthat changes hands, but “commercial bargains that\npresent a special risk . . . because they are struck with\nplan insiders.” Id. at 893. These transactions naturally\n“involve uses of plan assets that are potentially harmful to\nthe plan.” Id. In Congress’s judgment, a service contract\nbetween an interested party and a plan fiduciary,\n§ 1106(a)(1)(C), is one such potentially harmful\ntransaction, just as a sale of securities, § 1106(a)(1)(A), a\nloan, § 1106(a)(1)(B), or a transfer of property,\n§ 1106(a)(1)(D), can be potentially harmful.\n 2. On the other hand, requiring plaintiffs to marshal\nand plead evidence to negate every conceivable exemption\nwould paralyze ERISA enforcement. To see why,\nconsider the hurdles a plaintiff must overcome to plead a\nclaim under the Second Circuit’s rule, starting with the\n“simplest” case: a defendant that invokes only a single\n§ 1108 exemption.\n That would still leave plaintiffs in a bind because, “[n]o\nmatter how clever or diligent, ERISA plaintiffs generally\nlack the inside information necessary to make out their\nclaims in detail unless and until discovery commences.”\nBraden, 588 F.3d at 598. The preceding sections cover all\n 43\n\nthat a plaintiff would need to do to negate an exemption\nunder (b)(1) (for loans); (b)(2) (for services); (b)(3) (for\nstock ownership plans); (b)(15) (for block trades); and\n(b)(17) (for investment advice). None of these exemptions\nare straightforward; all involve facts outside a plaintiff’s\nknowledge.\n Worse yet, when defendants are sued, many invoke\nmore than one get-out-of-jail-free card. That happened in\nHaley when TIAA invoked § 1108(b)(1) and § 1108(b)(17).\n54 F.4th at 120. In Dupree v. Prudential Insurance, 2007\nWL 2263892, at *39 (S.D. Fla. Aug. 7, 2007), the defendant\nclaimed three: § 1108(b)(2), § 1108(b)(5), and § 1108(b)(8).\nDefendants have, indeed, been taking this kitchen-sink\napproach to § 1108(b) for decades. See McLaughlin v.\nRowley, 698 F. Supp. 1333, 1339–40 (N.D. Tex. 1988)\n(§ 1108(b)(1) and § 1108(b)(2)); Marshall v. Kelly, 465 F.\nSupp. 341, 351–52 (W.D. Okla. 1978) (same).\n To reiterate: Under the Second Circuit’s rule,\nplaintiffs must correctly predict every exemption that\ncould apply and then plead plausible allegations negating\neach such exemption even if these exemptions have\nconditions which themselves have sub-conditions. If they\nfail at any junction, they have no claim, and defendants\nneed not turn over anything in discovery.\n 3. To deflect against this concern, the Second Circuit\ntries to hedge: “[A]t least some [§ 1108] exemptions,” it\nsays, must be pleaded by plaintiffs, including § 1108(b)(2).\nP.A. 18a. But that obviously does not make the statutory\nprovisions more workable; it just leaves parties in the\ndark about what “some” is supposed to encompass. More\nimportantly, the text does not hedge. The Second\nCircuit’s asserted textual hook—“except as provided”—\ndoes not discriminate between the § 1108 exemptions.\n 44\n\nThus, if, as the Second Circuit claims, it “flows directly\nfrom the text” that some of § 1108 exemptions “are\nincorporated into § 1106(a)’s prohibitions,” P.A. 18a–19a,\nthen they all are. The Second Circuit does not identify a\nlimiting principle to its rule because none exists. The\nproper limiting principle is already built into the text:\nPlaintiffs plead liability under one provision; defendants\nplead any applicable exemption from liability under\nanother.\n B. A plain-language reading of the prohibited-\n transaction provisions is not absurd.\n Following the text as written does not produce\n“absurd results.” P.A. 16a. Absurdity, as this Court has\nexplained, should apply in the “rare and exceptional\ncircumstance[]” where embracing the plain language\nwould be “so gross as to shock the general moral or\ncommon sense.” Crooks v. Harrelson, 282 U.S. 55, 60\n(1930). A plain language reading is, put another way,\nabsurd only “where it is quite impossible that Congress\ncould have intended the result.” Pub. Citizen v. U.S. Dep’t\nof Just., 491 U.S. 440, 471 (1989) (Kennedy, J.,\nconcurring). In like manner, leading commentators have\nargued that courts “should permit such displacement” of\nthe text “only when the legislature’s action violates the\nConstitution.” John F. Manning, The Absurdity\nDoctrine, 116 HARV. L. REV. 2387, 2486 (2003). This case\npresents none of those circumstances.\n 1. There is nothing “rare” or “exceptional” about\nCongress writing a law with, in the Second Circuit’s\nwords, a “broad scope” followed by a set of specific\nexemptions. P.A. 22a. It writes such laws all the time.\nThe ADEA, after all, “broadly prohibits arbitrary\ndiscrimination in the workplace based on age.” Trans\n 45\n\nWorld Airlines, Inc. v. Thurston, 469 U.S. 111, 120 (1985).\nBut as Meacham demonstrates, that broad prohibition is\nsubject to several specific exemptions, including a\nreasonableness exemption—and those exemptions fall on\nthe defendant to plead and prove. 554 U.S. at 87.\n 2. Next, it is not “impossible that Congress could have\nintended the result.” Pub. Citizen, 491 U.S. at 471. To\nthe contrary, the legislative history shows that it\n“intended that coverage under the Act be construed\nliberally to provide the maximum degree of protection to\nworking men and women covered by private retirement\nprograms. Conversely, exemptions should be confined to\ntheir narrow purpose[s].” S. REP. [DOCKET REDACTED], at 18 (1973).\nConsistent with these intentions, Congress wanted,\nthrough the prohibited-transaction provisions, to\n“substantially strengthen[]” pre-ERISA protections by\n“establish[ing] new rules that define the transactions that\nare prohibited.” 120 CONG. REC. 29954 (1974) (remarks of\nSen. Nelson). And it sought to do so by “prohibit[ing]\nfiduciaries from engaging in transactions involving the\ntransfer of assets between the plan and parties in\ninterest.” 120 CONG. REC. 29932 (1974) (remarks of Sen.\nWilliams).\n 3. Finally, there is nothing unconstitutional about\nCongress writing a law providing for broad liability for\nprohibited transactions. That is especially so when the\nlaw provides multiple offramps from liability. Section\n1106 does not, for instance, cover all transactions and\npayments. Spink, 517 U.S. at 895. Nor does it “prohibit\nnecessary services or impede necessary service\ntransactions.” Bugielski, 76 F.4th at 907 (internal\nquotation marks omitted). At most, it requires interested\nparties to disclose relevant information about potentially\n 46\n\nprohibited transactions to the fiduciary, outlines how a\nfiduciary can ask for more information if it needs to, and\nlets a fiduciary avail itself of any potentially applicable\nstatutory and administrative exemptions. 29 U.S.C.\n§ 1108(b)(2)(B). There is nothing absurd about that. It\ninstead reflects a “statute designed to promote the\ninterests of employees and their beneficiaries in employee\nbenefit plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85,\n90 (1983).\n C. A plain-language reading of the prohibited-\n transaction provisions has not led to a needless\n rise in litigation.\n Underlying the Second Circuit’s contorted textualism\nand invocation of absurdity is a pragmatic concern: that a\nplain-language reading of § 1106 would “encompass a vast\narray of routine transactions.” P.A. 21a. Opening that\nwindow would, Respondent suggest, exacerbate a\n“dramatic rise in the number of ERISA lawsuits over\nrecordkeeping fees in recent years.” BIO at 15. That\nconcern is both irrelevant and unfounded.\n 1. It is irrelevant because, “even supposing\n[Respondent’] worst predictions come true, that would\nbe the result of the statute Congress drafted.” Muldrow\nv. City of St. Louis, 601 U.S. 346, 358 (2024). And the\nresult here—more litigation—is consistent with what\nCongress had in mind when it enacted ERISA. Indeed,\nas lower courts have observed, “excessive fee\nlitigation . . . has significantly improved [retirement]\nplans, brought to light fiduciary misconduct that has\ndetrimentally impacted the retirement savings of\nAmerican workers, and dramatically brought down fees.”\nKelly v. Johns Hopkins Univ., 2020 WL 434473, at *2 (D.\nMd. Jan. 28, 2020). This has “led to enormous fee savings\n 47\n\nfor plan participants.” Marshall v. Northrop Grumman\nCorp., 2020 WL 5668935, at *4 (C.D. Cal. Sept. 18, 2020).\nA statute that leads to more excessive fee lawsuits and\nsubsequently results in less excessive fees does not\ncontravene ERISA’s “broadly protective purposes.”\nJohn Hancock Mut. Life Ins. Co. v. Harris Tr. & Sav.\nBank, 510 U.S. 86, 96 (1993). It reinforces them.\n 2. It is also unfounded because there is little indication\nneedless lawsuits are being filed. After all, the parties and\nthe Second Circuit agree that the Eighth Circuit has\n“embraced the expansive reading of” § 1106 in Braden.\nP.A. 17a. In the fifteen years since, ERISA cases have not\nground the Eighth Circuit to a halt. Nor has there been\nsome proliferation of complaints with standalone § 1106\nclaims and threadbare allegations. Several reasons help\nexplain that result.\n First, bringing an ERISA case is expensive and time-\nconsuming, involving multiple defendants and many\npotential exemptions. The prototypical plaintiff will,\ngiven such constraints, “sue only when . . . there is a\nreason to do so.” Allen, 835 F.3d at 677. Plaintiffs do not\nsue when they have strong “reason to believe [a]\ntransaction was exempt under [§ 1108]” or, for that\nmatter, over “something as trivial as a chair for a person\nto sit in.” Id. Though these conditions might formally\nsatisfy § 1106(a), they would get a plaintiff nowhere in\npractice.\n Second, ERISA and the Federal Rules include several\nmechanisms to deter plaintiffs from bringing cases to test\nthe waters of the theoretical outer boundaries of § 1106.\nERISA, for instance, permits cost-shifting. 29 U.S.C.\n§ 1132(g)(1). And the Federal Rules allow courts to\nimpose sanctions when plaintiffs bring groundless\n 48\n\nlitigation. See Fish v. GreatBanc Tr. Co., 749 F.3d 671,\n687 (7th Cir. 2014). Both mechanisms—fees and\nsanctions—discourage plaintiffs from bringing lawsuits\njust to bring lawsuits. Indeed, the district court here,\nfollowing approval of the settlement, determined that\ndefendants were prevailing parties (even though one of\nClaimant’ claims survived summary judgment) and\nawarded them over $25,000 in costs. D. Ct. Dkt. 471 at 7.\n Finally, Thole v. U.S. Bank, 590 U.S. 538, 542 (2020),\ndismissed an ERISA case for lack of standing. There are\nimportant distinctions between this case and Thole. Thole\ninvolved a different type of plan, a different remedy, and\na different source of injury. The point is not that Thole\nbars prohibited-transaction claims based on seemingly\n“routine transactions.” P.A. 21a. It is that, recognizing\nthe possibility of dismissal, few if any plaintiffs will bring\nsuch suits to begin with.\n\n * * *\n\n When Congress enacted ERISA, it opened the door\nfor beneficiaries to bring claims against fiduciaries for\nactions that could be “potentially harmful to the plan.”\nSpink, 517 U.S. at 893. But just because it opened that\ndoor does not mean every plaintiff will walk through it.\nInstead, as experience instructs, plaintiffs do so only if the\nbenefits outweigh the costs and risks in a particular case.\nAnd even if they jump through those hoops, there is no\nguarantee a plaintiff will carry the day. All it means is\nthat defendants must plead and prove their own case, and\na court must consider all the evidence to determine\nwhether a claim should proceed.\n 49\n\n Rather than applying this sensible framework, the\nSecond Circuit chose to close the door entirely for all but\nthe handful of plaintiffs who can guess which exemptions\na defendant might invoke (based on information that\nplaintiffs do not have) and plead the negative of those\nexemptions (based on information that plaintiffs do not\nhave). That cannot be what Congress envisioned and is\nnot what the text provides.\n\n\n CONCLUSION\n The judgment of the Second Circuit should be\nreversed.", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n Claimant’ position is that any transaction be-\ntween a plan and a service provider is a prohibited\ntransaction under ERISA. That means any time a\nplan uses an investment manager, recordkeeper, con-\nsultant, attorney, accountant, or any other routine\nservice provider, the plan fiduciaries have violated\nERISA. A plaintiff could sue the fiduciaries in their\npersonal capacities and subject them to lengthy litiga-\ntion. Pleading the mere fact of a service-provider\ntransaction would allow the plaintiff to obtain burden-\nsome discovery, and there is nothing the fiduciaries\ncould do about it until (perhaps) summary judgment.\nThat is a truly extraordinary position.\n Nothing in ERISA’s text, history, or purposes re-\nquires that absurd result. The statutory provisions at\nissue, 29 U.S.C. 1106(a)(1)(C) and 1108(b)(2)(A), work\ntogether to define the prohibited conduct. That is\nclear from Section 1106(a)’s express cross-reference to\n\n (1)\n 2\n\nSection 1108 – “[e]xcept as provided in Section 1108”\n– which incorporates the exception for necessary ser-\nvices at a reasonable cost as an element of the prohib-\nited-transaction claim. That incorporation is needed\nto accurately define the wrongful conduct – which is\nnot merely a transaction with a service provider, but\none for unnecessary services or at an unreasonable\ncost. Several of this Court’s decisions have inter-\npreted similar statutory exceptions as elements of\nclaims, as opposed to affirmative defenses. Petition-\ners’ interpretation would make key language in Sec-\ntion 1106(a) superfluous and would create conflicts be-\ntween the prohibited-transaction provisions and other\nprovisions of ERISA that require or contemplate the\nuse of service providers.\n Not only is Claimant’ position contrary to the\nstatutory text, but it also would completely skew the\nbalance Congress struck in ERISA. Congress enacted\nthe prohibited-transaction provisions to target trans-\nactions that risk harming the plan. There is nothing\ninherently harmful about using service providers;\nthey perform many necessary and beneficial functions\nfor plans and participants. Claimant’ position would\nspawn massive litigation, where a plaintiff could\nmerely plead the fact of a service-provider transaction\nand then use discovery as a fishing expedition to try\nto find something that plan fiduciaries did wrong.\nThat ultimately would hurt plan participants and\nbeneficiaries – the very people Claimant claim to\nprotect.\n Notably, the government recognizes that petition-\ners’ regime is intolerable. The government’s solution\nis to require a plaintiff to plead that the service pro-\nvider’s fees were unreasonable – which is essentially\nRespondent’ position. The fact that the government\n 3\n\nlacks the courage of its convictions confirms that the\nSecond Circuit got it right.\n Requiring a plaintiff to plausibly plead that a ser-\nvice-provider transaction involved unreasonable fees\nor unnecessary services is sensible and workable. A\nplaintiff simply needs to plausibly allege a theory\nabout what the fiduciary did wrong; those theories are\nlocated in Section 1108. In this case, as in most cases,\nthe Section 1108 provision that applies is obvious.\nFurther, ERISA’s robust reporting and disclosure pro-\nvisions ensure that participants and beneficiaries\nhave ample information about their plans and ser-\nvices. Claimant’ complaints cannot be taken seri-\nously when even the government acknowledges they\nshould have to plead more than the mere fact of a ser-\nvice-provider transaction.\n This Court should affirm.\n STATUTORY PROVISIONS INVOLVED\n Relevant statutory provisions are reproduced in\nthe appendix to this brief. App., infra, 1a-35a.\n STATEMENT\n Claimant are current and former participants in\ntwo retirement plans sponsored by Respondent\nthat are governed by the Employee Retirement In-\ncome Security Act of 1974 (ERISA), 29 U.S.C. 1001 et\nseq. Claimant sued Respondent, alleging (inter alia)\nthat they engaged in prohibited transactions under\nERISA by causing the plans to use third-party record-\nkeepers. The district court dismissed that count for\nfailure to state a claim, Pet. App. 106a-110a, and the\ncourt of appeals affirmed, id. at 14a-26a.\n 4\n\n A. Legal Background\n ERISA “represents a careful balancing” between\nprotecting plan participants and beneficiaries and giv-\ning employers the flexibility they need to design and\nadminister their plans. Conkright v. Frommert, 559\nU.S. 506, 517 (2010) (internal quotation marks omit-\nted). ERISA does not require employers to provide\nany particular level of benefit, or even to offer benefit\nplans in the first place. Lockheed Corp. v. Spink, 517\nU.S. 882, 887 (1996). Instead, it imposes duties on\nplan fiduciaries once an employer has decided to offer\na plan. Ibid.\n ERISA’s duty of prudence requires a fiduciary to\nact “ ‘with the care, skill, prudence, and diligence’ that\na prudent person ‘acting in a like capacity and famil-\niar with such matters’ would use.” Tibble v. Edison\nInt’l, 575 U.S. 523, 528 (2015) (quoting 29 U.S.C.\n1104(a)(1)(B)). ERISA’s duty of loyalty requires a fi-\nduciary to act “solely in the interest of the participants\nand beneficiaries” and “for the exclusive purpose of ”\n“providing benefits to participants and their benefi-\nciaries” and “defraying reasonable expenses of admin-\nistering the plan.” 29 U.S.C. 1104(a)(1).\n ERISA supplements the duty of loyalty by “cate-\ngorically barring certain transactions deemed likely to\ninjure the pension plan.” Harris Tr. & Sav. Bank v.\nSalomon Smith Barney, Inc., 530 U.S. 238, 241-242\n(2000) (internal quotation marks omitted); see 29\nU.S.C. 1106, 1108. As relevant here, ERISA prohibits\ncertain transactions between a plan and a “party in\ninterest.” 29 U.S.C. 1106(a). A “party in interest” is\nbroadly defined to include practically anyone con-\nnected to the employer or the plan, including any “per-\nson providing services” to the plan. 29 U.S.C.\n1002(14). Separately, ERISA also prohibits certain\n 5\n\ntransactions between a plan and a fiduciary. 29\nU.S.C. 1106(b).\n ERISA addresses prohibited transactions with\nparties in interest in two steps. First, Section 1106(a)\nsets out a general rule: “Except as provided in section\n1108,” a plan fiduciary may not cause the plan to enter\ninto five categories of transactions with a party in in-\nterest, including any transaction involving the “fur-\nnishing of goods, services, or facilities.” 29 U.S.C.\n1106(a)(1)(C).\n Then Section 1108 provides exceptions to the gen-\neral rule. It states that “[t]he prohibitions provided in\nsection 1106 * * * shall not apply” to certain types of\ntransactions, 29 U.S.C. 1108(b), including any con-\ntract “for office space, or legal, accounting, or other\nservices necessary for the establishment or operation\nof the plan, if no more than reasonable compensation\nis paid therefor,” 29 U.S.C. 1108(b)(2)(A). Thus,\nERISA permits a contract for necessary plan services\nat a reasonable cost.\n B. Factual Background\n The complaint pleaded the following facts, which\nare taken as true at the motion-to-dismiss stage.\n Respondent sponsors two retirement plans\nfor eligible faculty and staff (the plans). Pet. App. 6a.\nThe plans are tax-deferred defined-contribution\nplans. Ibid.; see 26 U.S.C. 403(b). In a defined-con-\ntribution plan, participants maintain individual ac-\ncounts, and the value of each account depends on the\namount contributed and the performance of the in-\nvestments chosen. Pet. App. 6a-7a; see Tibble, 575\nU.S. at 525.\n Respondent is the named administrator for\nthe plans. Pet. App. 7a. It delegated administrative\nresponsibilities for the plans to its then-chief human\n 6\n\nresources officer, respondent Mary Opperman. Ibid.\nOpperman chaired respondent Retirement Plan Over-\nsight Committee, which was responsible for oversee-\ning the plans’ investments. Ibid. In carrying out their\nrespective roles, Respondent (collectively, Respondent)\nserved as fiduciaries under ERISA. Ibid.\n Plan participants could choose from a menu of in-\nvestment options from Fidelity and the Teachers In-\nsurance and Annuity Association of America (TIAA).\nPet. App. 8a. Those options included fixed annuities,\nvariable annuities, and mutual funds. Id. at 8a-9a.\nTIAA and Fidelity provided recordkeeping services for\nthe investments on their respective platforms. Id. at\n8a. Recordkeeping services are “necessary adminis-\ntrative [services] such as tracking account balances\nand providing regular account statements.” Ibid.\n In addition to Fidelity and TIAA, the plans used\nother service providers. One is CapFinancial Part-\nners, LLC (CAPTRUST), an investment advisor Cor-\nnell hired to help evaluate the performance of the\nplans’ investment options and to help reduce fees and\noperational costs. Pet. App. 7a, 37a-38a, 40a-41a.\nRespondent also engaged an accounting firm, BCA Watson\nRice, to audit its financial statements, as ERISA re-\nquires. C.A. J.A. A206; see 29 U.S.C. 1023(a)(3).\n C. District Court Proceedings\n 1. Claimant are a class of current and former\nRespondent employees who participated in the\nplans between August 2010 and August 2016. Pet.\nApp. 45a. In 2016, they sued Respondent, alleging a vari-\nety of ERISA violations. Id. at 88a-89a; see 29 U.S.C.\n1132(a)(2).1 This case was part of a wave of lawsuits\n\n1 Claimant also sued CAPTRUST. Pet. App. 9a. The district\ncourt dismissed or granted summary judgment to CAPTRUST on\n 7\n\nraising near-identical claims filed against fiduciaries\nof dozens of large university retirement plans by the\nsame few plaintiffs’ firms. Pet. App. 36a n.15, 93a.\n Claimant brought two claims concerning record-\nkeeping fees. First, they alleged that Respondent\nbreached its duty of prudence by failing to monitor\nand control recordkeeping fees. Pet. App. 100a. Sec-\nond, they alleged that Respondent engaged in prohibited\ntransactions simply by causing the plans to transact\nwith Fidelity and TIAA for recordkeeping services. Id.\nat 108a; see J.A. 145-146 (¶¶ 229-231).\n 2. Respondent moved to dismiss the complaint. Pet.\nApp. 89a. The district court denied the motion on the\nimprudence claim but granted it on the prohibited-\ntransaction claim. Id. at 100a, 110a. The court per-\nmitted the imprudence claim to proceed because peti-\ntioners’ allegations mirrored those in another case\nwhere the court permitted discovery. Id. at 100a.\n The district court then held that, to plead a prohib-\nited transaction under ERISA, a plaintiff must plead\n“self-dealing or other disloyal conduct,” which peti-\ntioners had not alleged. Pet. App. 109a-110a. Other-\nwise, the court explained, a “pension plan’s most basic\noperations” would be prohibited transactions. Id. at\n109a (internal quotation marks omitted).\n Following extensive discovery, the district court\ngranted Respondent summary judgment on the impru-\ndence claim. Pet. App. 44a, 55a-58a. It explained that\nClaimant could not obtain damages without showing\nplan losses, which meant showing that Respondent could\nhave paid lower recordkeeping fees. Id. at 56a-57a.\n\n\nall claims, id. at 84a-85a, 110a-111a; the court of appeals af-\nfirmed on the one claim Claimant appealed, id. at 39a; and pe-\ntitioners did not seek review of that holding in this Court, Pet. ii.\n 8\n\nClaimant relied on two experts to make that show-\ning, but the court excluded their opinions under Daub-\nert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579\n(1993), because both lacked a reliable methodology –\nleaving Claimant with no evidence of loss. Pet. App.\n57a-66a.\n D. Court Of Appeals Proceedings\n The court of appeals affirmed. Pet. App. 1a-41a.\n 1. On the prohibited-transaction claim, the court\nheld that the district court applied the wrong legal\nstandard, but that Claimant’ claim fails under the\ncorrect standard. Pet. App. 18a-19a, 25a-26a. To\nplead a prohibited-transaction claim based on a ser-\nvice-provider transaction, the court explained, “it is\nnot enough to allege that a fiduciary caused the plan\nto compensate a service provider for its services.” Id.\nat 6a. “[R]ather, the complaint must plausibly allege\nthat the services were unnecessary or involved unrea-\nsonable compensation.” Ibid. (citation omitted).\n The court of appeals explained that its rule\n“flow[ed] directly from the text and structure of the\nstatute.” Pet. App. 19a. Section 1106(a) “begins with\nthe carveout: ‘Except as provided in section 1108 of\nthis title.’ ” Ibid. (quoting 29 U.S.C. 1106(a)). That\nlanguage “incorporates” Section 1108’s exemption for\nreasonable compensation for necessary services “di-\nrectly into § 1106(a)’s definition of prohibited transac-\ntions.” Ibid. That incorporation is necessary to “accu-\nrately and clearly describe[]” the conduct Congress in-\ntended to prohibit – “transactions that actually pre-\nsent a risk of harm to the plan.” Id. at 22a-23a\n(internal quotation marks omitted). Otherwise,\nERISA would prohibit “a vast array of routine trans-\nactions,” such as “recordkeeping, investment manage-\n 9\n\nment, [and] investment advising.” Id. at 21a-22a (in-\nternal quotation marks omitted). An ERISA plaintiff\ncould proceed to discovery simply by pleading the fact\nof a service-provider transaction, without any allega-\ntion of wrongful conduct. Id. at 21a.\n 2. On the imprudence claim, the court affirmed\nsummary judgment in favor of Respondent. Pet. App. 32a-\n34a. The court explained that Claimant failed to\nshow any losses to the plans and abandoned any re-\nquest for equitable relief. Id. at 32a-34a & 34a n.14.\n SUMMARY OF ARGUMENT\n The court of appeals correctly concluded that a\nplaintiff challenging a service-provider transaction\nunder 29 U.S.C 1106(a)(1)(C) must plead that the\ntransaction is not exempted under 29 U.S.C.\n1108(b)(2)(A).\n A. The statutory text makes clear that Section\n1106(a) and Section 1108 together define a prohibited\ntransaction.\n In a series of decisions beginning with United\nStates v. Cook, 84 U.S. (17 Wall.) 168 (1872), this\nCourt explained how to determine when a statutory\nexception is an element of a claim or an affirmative\ndefense. This is a context-specific inquiry that de-\npends on the provisions’ text, structure, and substan-\ntive scope. The ultimate question is whether the\nwrongful conduct that Congress sought to prohibit can\nbe accurately described without reference to the ex-\nception. If it cannot, then the exception is an element.\n Applying that framework here shows that Section\n1108(b)(2)(A) sets out an additional element of a Sec-\ntion 1106(a)(1)(C) claim, not an affirmative defense.\nSection 1106(a) expressly incorporates the Section\n1108 exceptions into its definition of prohibited trans-\nactions; the prohibitions apply “[e]xcept as provided in\n 10\n\nSection 1108.” By itself, Section 1106(a)(1)(C) applies\nto all service-provider transactions, regardless of\nwhether they threaten harm to the plan. Incorporat-\ning Section 1108(b)(2)(A)’s exception is necessary to\nlimit the cause of action to the wrongful transactions\nCongress intended to prohibit. That conclusion fits\ncomfortably within this Court’s precedents, several of\nwhich treat similar statutory exceptions as elements.\n Claimant’ principal argument is that every stat-\nutory exception is an affirmative defense. But Cook\nsays the opposite, as do the Court’s numerous deci-\nsions holding that statutory exceptions are elements.\nClaimant rely on the statement from United States\nv. Dickson, 40 U.S. (15 Pet.) 141, 165 (1841), that\nwhen a “proviso carves special exceptions only out of\nthe enacting clause,” “those who set up any such ex-\nception[] must establish it.” But that language ad-\ndresses who has the burden of proof on an affirmative\ndefense, not whether a provision is an affirmative de-\nfense in the first place.\n Claimant analogize the prohibited-transaction\nprovisions to the anti-discrimination law in Meacham\nv. Knolls Atomic Power Laboratory, 554 U.S. 84\n(2008), but the statutory schemes have critical differ-\nences. Claimant also argue that Section\n1106(a)(1)(C) can be read grammatically on its own,\nbut that ignores the crucial question whether doing so\naccurately captures the wrongdoing that Congress in-\ntended to target.\n B. Claimant’ statutory interpretation makes no\nsense in context. Claimant ignore the key textual\ndifferences between Section 1106(a), which applies\nbroadly to many innocuous transactions, and Section\n1106(b), which applies only to inherently conflicted\ntransactions. Critically, only Section 1106(a) – and\n 11\n\nnot Section 1106(b) – begins with a cross-reference in-\ncorporating Section 1108’s exemptions. Under peti-\ntioners’ view, that key language would be superfluous.\n Claimant’ view also would create conflicts be-\ntween the prohibited-transaction provisions and the\nmany provisions in ERISA that require or allow the\nuse of service providers. Under Claimant’ view, the\nvery conduct that ERISA permits in one provision\nwould be prohibited by another.\n C. Claimant’ reading of Section 1106(a) would\ncompletely skew the balance Congress struck in\nERISA. Service providers perform many necessary\nand valuable functions for plan participants and fidu-\nciaries. They offer investment funds and platforms,\ninvestment assistance, and recordkeeping services.\nThey also perform critical accounting and legal func-\ntions. Yet under Claimant’ position, those are all\nprohibited transactions.\n Under Claimant’ view, virtually any fiduciary\ncould be sued without any allegation of wrongdoing,\nand the lawsuit would proceed through expensive dis-\ncovery, with summary judgment as the defendant’s\nfirst opportunity to dismiss the case. The immense\nburden of litigation would be borne disproportionately\nby defendants. That ultimately would harm partici-\npants and fiduciaries, because fiduciaries could feel\ncompelled to reduce investment options and services,\nor employers could decide to stop offering plans alto-\ngether to avoid that litigation.\n In an attempt to avoid those problems, the govern-\nment proposes that a plaintiff challenging a service-\nprovider transaction should have to plead that the ser-\nvice provider’s fees were not obviously reasonable.\nBut that is essentially Respondent’s position. And the gov-\nernment seeks to achieve that result by distorting the\n 12\n\npleading standard and the Federal Rules, rather than\nby simply treating the Section 1108(b) exception as an\nelement of the Section 1106(a) claim.\n D. Claimant argue that Respondent’s position is un-\nworkable because a plaintiff may not know which Sec-\ntion 1108 exception applies. But all a plaintiff has to\ndo is to plausibly plead what he or she thinks the fi-\nduciary did wrong with respect to the transaction\n(from the options specified in Section 1108). In most\ncases – as in this one – the applicable Section 1108\nprovision will be obvious. ERISA’s reporting and dis-\nclosure requirements ensure that a potential plaintiff\nhas the information needed to bring a claim.\n E. Claimant rely on trust law. But nothing in\ntrust law suggests that a plaintiff can bring suit to\nchallenge a transaction without alleging any wrong-\ndoing; in fact, the trust-law rule is the opposite. The\ngovernment points to a common-law rule against del-\negation, but ERISA repudiates that rule.\n F. The government argues that Claimant ade-\nquately alleged a prohibited transaction here. That\nissue is not within the question presented. In any\nevent, Claimant did not adequately allege unreason-\nable fees, because they did not compare the fees to the\nservices provided. And if Claimant’ prohibited-\ntransaction claim were allowed to proceed, it would\nfail on the merits, just like their imprudence claim,\nbecause after years of discovery, Claimant could not\nshow unreasonable fees.\n 13\n\n ARGUMENT\nAN ERISA PLAINTIFF BRINGING A PROHIB-\nITED-TRANSACTION CLAIM BASED ON A SER-\nVICE-PROVIDER TRANSACTION UNDER 29\nU.S.C. 1106(a)(1)(C) MUST ALLEGE THAT THE\nSERVICES WERE UNNECESSARY OR THAT THE\nCOMPENSATION WAS UNREASONABLE UNDER\n29 U.S.C. 1108(b)(2)(A)\n A. The Text Makes Clear That Section 1108\n Sets Out Elements Of A Section 1106(a)\n Claim\n 1. A statutory exception is an element when\n it is needed to define the prohibited con-\n duct\n In a series of decisions starting with United States\nv. Cook, 84 U.S. (17 Wall.) 168 (1872), the Court set\nout a framework to determine whether a statutory ex-\nception is an element of a claim or an affirmative de-\nfense. The Court has applied this framework in both\ncivil and criminal cases, see, e.g., Meacham v. Knolls\nAtomic Power Lab., 554 U.S. 84, 91-95 (2008); United\nStates v. Vuitch, 402 U.S. 62, 69-70 (1971), and it has\na long pedigree, see Cook, 84 U.S. at 173-181 (citing\nEnglish and American decisions and treatises from\nthe late 1600s to early 1800s).2\n\n2 Contrary to Claimant’ contention (Br. 29-30), Cook’s frame-\nwork is not limited to criminal cases. Cook relied principally on\ntwo civil cases, Steel v. Smith (1817) 106 Eng. Rep. 35, and Jones\nv. Axen (1696) 91 Eng. Rep. 976. See 84 U.S. at 176-177. This\nCourt often has applied Cook’s framework in civil cases. E.g.,\nMeacham, 554 U.S. at 92; United States v. First City Nat’l Bank\nof Hous., 386 U.S. 361, 366 (1967); Maxwell Land-Grant Co. v.\nDawson, 151 U.S. 586, 604-605 (1894).\n Neither United States v. Reese, 92 U.S. 214, 232 (1876), nor\nUnited States v. Cruikshank, 92 U.S. 542, 557-558 (1876), limited\n 14\n\n The fundamental question, the Court explained, is\nwhether the wrongful conduct that Congress sought\nto prohibit can be accurately described without refer-\nence to the exception. Cook, 84 U.S. at 173. When\n“the ingredients of the offence cannot be accurately\nand clearly described if the exception is omitted,” then\nthe exception is an element. Ibid. But if “the ingredi-\nents constituting the offence may be accurately and\nclearly defined without any reference to the excep-\ntion,” then “the matter contained in the exception is\nmatter of defence.” Id. at 173-174. For example, a\nstatute that forbids “[l]abor and travelling on the\nLord’s day, except from necessity and charity” is “an\nexample where the exception is a constituent part of\nthe offence, as it is not labor and travelling, merely,\nwhich are prohibited, but unnecessary labor and trav-\nelling, or labor and travelling not required for char-\nity.” Id. at 180 (emphasis omitted).\n Determining whether an exception is an element\nor an affirmative defense is context-specific. Cook, 84\nU.S. at 174-175. It depends on the language in the\nprovisions at issue; the structure of the statute; and\nthe scope of both the initial prohibition and the excep-\ntion. See Ruan v. United States, 597 U.S. 450, 464\n(2022); Meacham, 554 U.S. at 92; Vuitch, 402 U.S. at\n69-71. The mere fact that Congress called something\nan “exception” or an “exemption” is not dispositive; the\nCourt’s decisions start with the recognition that pro-\nvisions use that language, then ask whether the ex-\nception nonetheless describes an element rather than\nan affirmative defense. See Cook, 84 U.S. at 173-177.\n\n\nCook to criminal cases: Both simply cited Cook for the proposi-\ntion that an indictment must “accurately and clearly” allege all\nelements.\n 15\n\n When an exception is “laid out apart from the pro-\nhibitions,” that tends to suggest that the exception is\nan affirmative defense. Meacham, 554 U.S. at 91. But\n“when an exception is incorporated in the enacting\nclause of a statute,” the exception looks like an ele-\nment. Vuitch, 402 U.S. at 68, 70-71 (when statute pro-\nhibited abortion unless “done as necessary for the\npreservation of the mother’s life or health and under\nthe direction of a competent licensed practitioner of\nmedicine,” the exception was an element).\n The key consideration is the breadth of the initial\nprohibition and the exception. If the initial prohibi-\ntion captures a vast array of conduct, some of which is\nwrongful and some of which is beneficial, the excep-\ntion likely is needed to limit the prohibition to wrong-\nful conduct. See Ruan, 597 U.S. at 458-459. For ex-\nample, in the Controlled Substances Act of 1970\n(CSA), the prohibition on “knowingly or intentionally”\ndistributing controlled substances applies “[e]xcept as\nauthorized by this subchapter,” 21 U.S.C. 841(a), in-\ncluding pursuant to a legitimate prescription, 21\nU.S.C. 829; 21 C.F.R. 1306.04(a). The “except as au-\nthorized” clause operates “like an element,” because\n“lack of authorization” is “what separates” “morally\nblameworthy” conduct (unauthorized distribution of\ncontrolled substances) from “socially necessary” con-\nduct (physicians prescribing “medications that their\npatients need”). Ruan, 597 U.S. at 458-459, 464.3\n\n\n3 The CSA provides that the government need not “negative” an\n“exemption or exception” in an indictment. 597 U.S. at 462 (quot-\ning 21 U.S.C. 885). But as the Court recognized, that unique\nprovision does not diminish the “crucial role” the exception plays\nin defining the wrongful conduct. Id. at 464.\n 16\n\n In contrast, when the initial prohibition addresses\nprimarily wrongful conduct and the exception is nar-\nrow, the exception is more likely to be an affirmative\ndefense. For example, the Clayton Act’s prohibition of\nanticompetitive mergers is subject to an exception for\nbank mergers in the public interest, and the exception\nis an affirmative defense because it provides a narrow\nescape hatch from the “norm” that anticompetitive\nmergers are prohibited. United States v. First City\nNat’l Bank of Hous., 386 U.S. 361, 366 (1967) (citing\n12 U.S.C. 1828(c)(5)(B)).\n 2. Section 1108 sets out elements of a Section\n 1106(a) claim\n Section 1106(a) states that “[e]xcept as provided in\nsection 1108,” a fiduciary cannot cause a plan to en-\ngage in any transaction that “constitutes a direct or\nindirect * * * furnishing of goods, services, or facilities\nbetween the plan and a party in interest.” 29 U.S.C.\n1106(a)(1)(C). Section 1108(b) then exempts “[c]on-\ntracting or making reasonable arrangements with a\nparty in interest for office space, or legal, accounting,\nor other services necessary for the establishment or\noperation of the plan, if no more than reasonable com-\npensation is paid therefor.” 29 U.S.C. 1108(b)(2)(A).\n Those provisions together define a prohibited\ntransaction for plan services under ERISA. More gen-\nerally, to plead a prohibited-transaction claim based\non a transaction between a plan and a party in inter-\nest, a plaintiff must plead both that the transaction\nqualifies under Section 1106(a) and that the transac-\ntion is not allowed under Section 1108.\n Section 1106(a) begins with a clause indicating\nthat it should be read together with Section 1108:\n“Except as provided in section 1108,” a fiduciary may\nnot cause the plan to engage in five broad categories\n 17\n\nof prohibited transactions. 29 U.S.C. 1106(a). That\nlanguage “directly” “incorporate[s]” Section 1108 in\ndefining the prohibited conduct. Pet. App. 19a; see\nCook, 84 U.S. at 177 (exception’s “incorporat[ion] in\nthe enacting clause” by “words of reference” suggests\nthe exception is an element (internal quotation marks\nand emphasis omitted)); Vuitch, 402 U.S. at 70 (simi-\nlar).\n Indeed, by placing this language at the very begin-\nning of Section 1106(a), Congress immediately sig-\nnaled that Section 1106(a)’s prohibitions can only be\nunderstood in conjunction with Section 1108’s exemp-\ntions. See United States v. English, 139 F.2d 885, 886\n(5th Cir. 1944) (when statute began “[e]xcept as oth-\nerwise provided in this section and in section 310a,”\n“[t]his deliberate action must be construed to indicate\nthe legislative intent that the exceptions referred to\nshould be read into and construed with the affirma-\ntive definition of the offense” (internal quotation\nmarks omitted)).\n It is true that Section 1108 sets out the exceptions\nin a separate statutory section. See Pet’rs Br. 26-27.\nBut that placement is not dispositive: An “exception”\ncould be “in a subsequent clause or section, or even in\na subsequent statute” and still would be an element if\n“it would be impossible to frame the actual statutory\ncharge * * * without an allegation showing that the\naccused was not within the exception.” Cook, 85 U.S.\nat 175. Indeed, this Court has held that exceptions\ncontained in separate sections or subsections are ele-\nments. See, e.g., Ruan, 597 U.S. at 460; United States\nv. Behrman, 258 U.S. 280, 287 (1922); Ledbetter v.\nUnited States, 170 U.S. 606, 610-611 (1898). Here,\nCongress had good reason to place the exceptions in\nSection 1108, as opposed to Section 1106: The excep-\ntions apply to both Section 1106(a) and Section\n 18\n\n1106(b), see pp. 26-27, infra, so by placing the excep-\ntions in a separate section, Congress could list them\njust once.\n Only together do Section 1106(a) and Section 1108\naccurately define the wrongful conduct. Congress en-\nacted the prohibited-transaction provisions to target\ntransactions that are “likely to injure” the plan. Har-\nris Tr. & Sav. Bank v. Salomon Smith Barney, Inc.,\n530 U.S. 238, 241-242 (2000) (quoting Commissioner\nv. Keystone Consol. Indus., Inc., 508 U.S. 152, 160\n(1993)). On its own, Section 1106(a) “encompass[es] a\nvast array of routine transactions.” Pet. App. 21a. It\ncovers any “direct or indirect” transfer, loan, pur-\nchase, sale, exchange, or furnishing of money, goods,\nproperty, or services between a plan and a party in\ninterest – without regard to the terms or circum-\nstances of the transactions. 29 U.S.C. 1106(a)(1)(A)-\n(E). “Party in interest” is defined broadly to include\nvirtually anyone connected to the plan, including all\nplan fiduciaries, counsel, and employees; plan partici-\npants (as “employees” of the “employer”); service pro-\nviders; and close relatives of any fiduciary, employer,\nor service provider. 29 U.S.C. 1002(14).\n The result is that Section 1106(a) covers virtually\nevery plan transaction, regardless of whether it risks\nharming the plan. Claimant identify (Br. 42) only\none transaction with a party in interest not covered by\nSection 1106(a) – the payment of plan benefits, which\nthis Court exempted in Lockheed Corp. v. Spink, 517\nU.S. 882, 895 (1996).4 The breadth of the routine, in-\nnocuous conduct covered by Section 1106(a) stands in\n\n4 Because a service provider becomes a party in interest by\n“providing services” to the plan, 29 U.S.C. 1002(14)(B), some\ncourts of appeals have held that Section 1106(a) does not cover a\nfiduciary’s initial transaction with a service provider. See D.L.\n 19\n\nstark contrast to the inherently suspect conduct cov-\nered by Section 1106(b), all of which involves conflicts\nof interest. Pet. App. 23a; see p. 25, infra.\n The particular Section 1106(a) provision at issue is\nincredibly broad. It covers any transaction that in-\nvolves furnishing any services to a plan. 29 U.S.C.\n1106(a)(1)(C). Service-provider transactions are not\ninherently risky; they are necessary for plans to func-\ntion. Pet. App. 21a-22a. Plans rely on service provid-\ners for routine services such as investment manage-\nment, recordkeeping, accounting, auditing, and legal\nservices. See, e.g., C.A. J.A. A206. ERISA requires\nfiduciaries to engage service providers in some in-\nstances and expressly contemplates it in others. See\npp. 28-29, infra.\n It makes no sense to say that merely engaging a\nservice provider is prohibited under ERISA. As with\nthe medical professionals in Ruan, Vuitch, and Behr-\nman, a plan fiduciary that engages a service provider\nfor essential plan services is just doing what ERISA\nrequires and expects. That conduct benefits plan par-\nticipants. The conduct that threatens the plan is en-\ngaging a service provider for services that are unnec-\nessary or unreasonably expensive. The way to define\nthe prohibition to reach only that conduct is to treat\nthe Section 1108(b)(2) exception as an element of a\n\n\nMarkham DDS, MSD, Inc. 401(K) Plan v. Variable Annuity Life\nIns., 88 F.4th 602, 609-610 (5th Cir. 2023), cert. denied, 144 S.\nCt. 2525 (2024); Ramos v. Banner Health, 1 F.4th 769, 787 (10th\nCir. 2021); Danza v. Fidelity Mgmt. Tr. Co., 533 F. App’x 120,\n125-126 (3d Cir. 2013) (unpublished). Although that approach\nsomewhat narrows the scope of Section 1106(a)(1)(C), it still pro-\nhibits new transactions with an existing provider, even though\nthose transactions pose no inherent risk of harm to the plan.\n 20\n\nprohibited-transaction claim that a plaintiff must\nplead and prove.\n The breadth of the Section 1108(b)(2) exception\nconfirms that it sets out an element, as opposed to an\naffirmative defense. When an exception is so broad\nthat “in most cases” it removes the challenged conduct\nfrom the prohibition’s scope, the exception more likely\nis an element. United States v. Carey, 929 F.3d 1092,\n1101-1103 (9th Cir. 2019); see Ruan, 597 U.S. at 459,\n462-464. That is true here: The norm is that ERISA\nfiduciaries fulfill their fiduciary duties by engaging\nservice providers for routine, necessary services at a\nreasonable cost. See 29 U.S.C. 1104(a)(1).\n 3. Claimant’ arguments lack merit\n a. Claimant’ primary argument (Br. 22, 25-26) is\nthat any statutory “exception” or “exemption” neces-\nsarily is an affirmative defense. They rely (Br. 22) on\nthe statement in United States v. Dickson, 40 U.S. (15\nPet.) 141, 165 (1841), that when a “proviso carves spe-\ncial exceptions only out of the enacting clause,” “those\nwho set up any such exception[] must establish it.”\n Claimant’ argument cannot be reconciled with\nCook, which assumes that a provision is an “excep-\ntion” or “exemption” but nonetheless asks whether it\nis an element or an affirmative defense. 84 U.S. at\n173-177. It also cannot be reconciled with the many\ndecisions holding that statutory exceptions are ele-\nments. E.g., Ruan, 597 U.S. at 460; Vuitch, 402 U.S.\nat 70-71; Behrman, 258 U.S. at 287; Ledbetter, 170\nU.S. at 610-611; United States v. Britton, 107 U.S.\n655, 669-670 (1883).\n Further, the Dickson language did not address the\nelement-or-defense question here. It addressed (in\ndicta) which party must plead and prove “special ex-\nceptions” such as affirmative defenses. 40 U.S. at 165.\n 21\n\nThe answer is that the party who “set[s] up any such\nexception[] must establish it.” Ibid. Dickson thus es-\ntablishes that the defendant has the “burden of prov-\ning” an “affirmative defense,” Dixon v. United States,\n548 U.S. 1, 13-14 (2006) – not that every exception is\nan affirmative defense.\n The other cited decisions (Pet’rs Br. 22; U.S.\nBr. 13) likewise address which party had the “burden\nof proving” an affirmative defense, rather than\nwhether an exception was an affirmative defense\n(which was not disputed). FTC v. Morton Salt Co., 334\nU.S. 37, 44-45 (1948); see McKelvey v. United States,\n260 U.S. 353, 356-357 (1922); Javierre v. Central\nAltagracia, 217 U.S. 502, 508 (1910).\n Meacham is the same: Its language about needing\n“compelling reasons” to overcome a “longstanding con-\nvention” refers to Dickson’s rule that the defendant\nbears the “burden of persuasion” on an affirmative de-\nfense. 554 U.S. at 91-92. The Court already had de-\ntermined that the exception at issue was an “affirma-\ntive defense.” Id. at 91. The Dickson line of cases thus\ndoes not answer the question here. See Carey, 929\nF.3d at 1097-1099.\n b. Claimant compare (Br. 24-25) the statute here\nto the provisions in Meacham, but they ignore key dif-\nferences. The Age Discrimination in Employment Act\nof 1967 (ADEA) prohibits age discrimination in em-\nployment, 29 U.S.C. 623(a)-(c), (e), with a narrow ex-\nception for decisions based on reasonable factors other\nthan age, 29 U.S.C. 623(f ). The initial prohibition\nthere targets blameworthy conduct, whereas Section\n1106(a)(1)(C) covers many routine and necessary plan\ntransactions. Thus, unlike in the ADEA, the excep-\ntion here is needed to reach only blameworthy con-\nduct. Further, the ADEA’s exception is separate from\nthe prohibitions, with no cross-reference (like the one\n 22\n\nhere) to incorporate the exception. Compare 29 U.S.C.\n623(a)-(c), (e), with 29 U.S.C. 1106(a). Those differ-\nences favor interpreting the Section 1108(b)(2)(A) ex-\nception as an element.\n Claimant assert (Br. 29) that no decision treats\nan “except as provided in” clause as an element. That\nis wrong. See, e.g., Ruan, 597 U.S. at 464 (“except as\nauthorized by this subchapter” functions as an ele-\nment); Ledbetter, 170 U.S. at 610-611 (same for “oth-\nerwise than as hereinafter provided”); English, 139\nF.2d at 886 (same for “[e]xcept as otherwise provided\nin this section and in section 310a”). There may be\ncomparatively more decisions where courts have\nfound exceptions to be affirmative defenses rather\nthan elements. But that is because Congress gener-\nally does not write initial prohibitions in broad terms\nthat cover an enormous amount of beneficial conduct,\nnot because there is a thumb on the interpretive scale.\n Claimant cite (Br. 28) Atlantic Richfield Co. v.\nChristian, 590 U.S. 1 (2020), for the proposition that\nstatutes that say “except as provided” all set out af-\nfirmative defenses. Atlantic Richfield addressed a dif-\nferent issue, which is whether the Court should use\nthe scope of a particular exception to interpret the\nscope of the statute’s initial prohibition. Id. at 16. The\nCourt said no, because exception clauses “explain\nwhat happens in the case of a clash” with the initial\nprohibition; they “do not otherwise expand or contract\nthe scope of either provision.” Ibid. Respondent is not\nseeking to narrow the text of Section 1106(a)(1)(C),\nbut to require a plaintiff to plead the additional ele-\nment under Section 1108(b)(2).\n c. That leaves Claimant and their amici with a\nhodgepodge of other arguments. None has merit.\n 23\n\n Claimant argue (Br. 31) that Section\n1106(a)(1)(C) “can be read on its own, barring trans-\nactions that involve a ‘furnishing of goods, services, or\nfacilities between the plan and a party in interest.’ ”\nBut the question is not whether the provision makes\ngrammatical sense; the question is whether the excep-\ntion is needed to accurately describe the substance of\nthe wrongful conduct. Cook, 84 U.S. at 173.\n Claimant (Br. 22-23) and the government (Br. 13-\n14) contend that Section 1108(b) must set out an af-\nfirmative defense because the defendant bears the\nburden of proof on it. That is backwards and wrong.\nBecause Section 1108(b)(2)(A) sets out an element of\na prohibited service-provider transaction, the burden\nis on the plaintiff to both plead and prove it. Taylor v.\nSturgell, 553 U.S. 880, 907 (2008).\n In the decision below, the court of appeals “le[ft]\nundisturbed” its precedent holding that the defendant\nbears the burden of proof on a Section 1108(b)(2) ex-\nception. Pet. App. 23a (citing Lowen v. Tower Asset\nMgmt., Inc., 829 F.2d 1209, 1215 (2d Cir. 1987)). The\ncourt of appeals’ dicta is wrong, but the burden of\nproof issue is not within the question presented to this\nCourt. Pet. i. On the question presented, the Second\nCircuit correctly held that Section 1106(a)(1)(C) and\nSection 1108(b)(2)(A) together define the prohibited\ntransaction.\n Claimant (Br. 26) rely on the statutory headings.\nThat is just a reprise of their (mistaken) argument\nthat every exception is an affirmative defense. In any\ncase, headings “cannot substitute for the operative\ntext of the statute,” Florida Dep’t of Rev. v. Piccadilly\nCafeterias, Inc., 554 U.S. 33, 47 (2008), which here\nmakes clear that Section 1108(b)(2)(A) is an element.\n 24\n\n Some amici argue that Respondent seeks to impose a\n“heightened pleading standard” for Section 1106(a)\nclaims. AAJ Amicus Br. 18; AARP Amicus Br. 10.\nThat is wrong. The question is what provisions are\nelements to be pleaded by the plaintiff. Once those\nelements are determined, the usual pleading standard\napplies. See Bell Atl. Corp. v. Twombly, 550 U.S. 544,\n557 (2007).\n Finally, Claimant note (Br. 22-23) that several\ncourts of appeals called Section 1108’s exemptions “af-\nfirmative defenses.” Many did so in dicta, without\nconsidering the pleading-standard question here.\nMost courts that have considered that question have\nrejected Claimant’ view. See pp. 29-30, infra.5 So\nreliance on lower-court decisions gets Claimant no-\nwhere.\n B. Claimant’ Interpretation Makes No Sense\n In Context\n 1. Section 1106(b) confirms that Claimant’\n view is incorrect\n “[T]he words of a statute must be read in their con-\ntext and with a view to their place in the overall stat-\nutory scheme.” FDA v. Brown & Williamson Tobacco\nCorp., 529 U.S. 120, 133 (2000) (internal quotation\nmarks omitted). Here, Section 1106(b) confirms that\nRespondent’s statutory interpretation is correct.\n\n\n5 Claimant cite (Br. 38) Department of Labor guidance, but\nthat guidance does not address the pleading-standard question.\nSee Reasonable Contract or Arrangement Under Section\n408(b)(2) – Fee Disclosure, 77 Fed. Reg. 5632, 5632 (Feb. 3, 2012).\nThe government does not seek any deference, and none would be\nappropriate. See Loper Bright Enters. v. Raimondo, 144 S. Ct.\n2244, 2273 (2024).\n 25\n\n a. Section 1106(a) covers transactions between the\nplan and a party in interest, while Section 1106(b) co-\nvers transactions between the plan and a fiduciary.\nUnlike the routine transactions set out in Section\n1106(a), the transactions in Section 1106(b) all pose\nan inherent risk of harm to the plan, because they in-\nvolve a fiduciary either personally benefitting from a\nplan transaction or acting on behalf of a party whose\ninterests are adverse to the plan. Specifically, Section\n1106(b) applies when a fiduciary deals with plan as-\nsets “in his own interest or for his own account,” 29\nU.S.C. 1106(b)(1); acts on behalf of a party “whose in-\nterests are adverse to the interests of the plan,” 29\nU.S.C. 1106(b)(2); or “receive[s] any consideration for\nhis own personal account” from a party transacting\nwith the plan, 29 U.S.C. 1106(b)(3).\n That difference in scope is why Congress took dif-\nferent approaches to designating the elements a plain-\ntiff must plead and prove to establish prohibited-\ntransaction claims under Section 1106(a) and Section\n1106(b). For a Section 1106(a) transaction, the plain-\ntiff must plead that the conduct does not fall within\nthe relevant Section 1108 exception to plead conduct\nlikely to injure the plan. That is not needed for a Sec-\ntion 1106(b) transaction, because pleading only the el-\nements in Section 1106(b) pleads wrongful conduct.\n b. The key language at the beginning of Section\n1106(a) shows that Congress wanted to treat the two\nsubsections differently. The cross-reference at the be-\nginning of Section 1106(a) – “Except as provided in\nsection 1108” – is conspicuously missing from Section\n1106(b).\n The Section 1106(a) cross-reference is not needed\nto indicate that Section 1108 exempts transactions\nfrom the substantive reach of Section 1106, because\nSection 1108 already states that its exceptions apply\n 26\n\nto “[t]he prohibitions provided in section 1106.” 29\nU.S.C. 1108(b); see pp. 26-27, infra. The cross-refer-\nence thus must be doing something more – which is to\n“incorporate[]” the exception as an element of the Sec-\ntion 1106(a) prohibition. Cook, 84 U.S. at 173. Peti-\ntioners’ view would make that language superfluous,\nand it should be rejected for that reason. See TRW\nInc. v. Andrews, 534 U.S. 19, 31 (2001).\n c. Claimant argue (Br. 27-28) that the “[e]xcept\nas provided” language is only in Section 1106(a) be-\ncause Section 1108’s exemptions do not apply to Sec-\ntion 1106(b). That is wrong; Section 1108 is replete\nwith language applying its exceptions to all of Section\n1106.\n Section 1108(a) authorizes the Secretary of Labor\nto grant exemptions “from all or part of the re-\nstrictions imposed by section[] 1106,” including “from\nsection 1106(a)” and “from section 1106(b).” 29 U.S.C.\n1108(a). Section 1108(a) provides different proce-\ndures for exemptions under Section 1106(a) and Sec-\ntion 1106(b), showing that Congress contemplated\nboth. Ibid.\n Section 1108(b) also applies by its terms to Section\n1106: “The prohibitions provided in section 1106 * * *\nshall not apply to any of the following transactions.”\n29 U.S.C. 1108(b).6 Section 1108(c) uses similar lan-\nguage: “Nothing in section 1106 of this title shall be\nconstrued to prohibit any fiduciary from” receiving\ncertain benefits and compensation. 29 U.S.C. 1108(c).\n\n\n6 One of the exemptions expressly states that it exempts “[a]ny\ntransaction described in section[] * * * 1106(b)(2) involving\n[cross-trading].” 29 U.S.C. 1108(b)(19).\n 27\n\n All of this shows that Section 1108 applies to Sec-\ntion 1106(b). That leaves Claimant with no explana-\ntion of what function the Section 1106(a) language\nperforms.\n d. The government makes a different argument\n(Br. 24-25), asserting that Section 1106(a)’s “[e]xcept\nas provided” language signals that Section 1108 has a\n“lesser application” to Section 1106(b) than to Section\n1106(a). But Section 1108’s references to Section 1106\nindicate that substantively, it applies equally to Sec-\ntion 1106(a) and Section 1106(b). If a Section 1108\nexemption applies to a Section 1106(b) transaction,\nERISA permits that transaction to the same extent as\nit would permit an exempted Section 1106(a) transac-\ntion.\n As a practical matter, Section 1108’s exemptions\nmay apply less often to Section 1106(b) than to Section\n1106(a). U.S. Br. 24-25. But that has nothing to do\nwith the cross-reference. It is because Section 1106(b)\ncovers only inherently conflicted conduct, whereas\nSection 1106(a) covers routine and beneficial plan\ntransactions. The cross-reference says nothing about\nthe degree to which Section 1108 applies to Section\n1106(a) versus Section 1106(b).\n 2. Claimant’ view creates conflicts with\n other provisions of ERISA\n When two statutory provisions “touch[] on the\nsame topic,” the Court seeks to “harmonize[]” and\n“give effect to both.” Epic Sys. Corp. v. Lewis, 584 U.S.\n497, 510-511 (2018) (internal quotation marks omit-\nted); see, e.g., New Process Steel, L.P. v. NLRB, 560\nU.S. 674, 680 (2010). Here, Claimant’ view of Sec-\ntion 1106(a)(1)(C) creates conflicts with the ERISA\nprovisions that require, permit, or contemplate the\nuse of service providers.\n 28\n\n a. To start, ERISA requires plans to use some ser-\nvice providers. It requires each plan with over 100\nparticipants to file a public annual report (known as\nthe Form 5500) that includes an audited financial\nstatement. 29 U.S.C. 1023(a)(1), 1024(a)(3); see 29\nC.F.R. 2520.104-20(b). It also requires each plan ad-\nministrator to hire an auditor for that purpose: The\nadministrator “shall engage, on behalf of all plan par-\nticipants, an independent qualified public accountant”\nto opine whether the statement conforms to “generally\naccepted accounting principles.” 29 U.S.C. 1023(a)(3).\n ERISA separately requires most defined-benefit\npension plans to engage actuaries to prepare actuarial\nstatements: The administrator of such a plan “shall\nengage, on behalf of all plan participants, an enrolled\nactuary” to prepare the plan’s actuarial statement. 29\nU.S.C. 1023(a)(4). Under Claimant’ view, a fiduciary\nhas engaged in a prohibited transaction simply by hir-\ning an accountant or actuary.\n b. ERISA also expressly permits plans to use ser-\nvice providers. For example, ERISA allows fiduciaries\nto “appoint an investment manager” to “manage” the\nplan’s assets. 29 U.S.C. 1102(c)(3); see 29 U.S.C.\n1002(38). Indeed, ERISA encourages hiring invest-\nment managers by limiting trustees’ liability for the\nmanagers’ “acts or omissions.” 29 U.S.C. 1105(d)(1)-\n(2). Those provisions show that Congress viewed hir-\ning investment managers as beneficial, not inherently\nsuspect.\n Other ERISA provisions recognize that plans will\nengage service providers. A fiduciary’s duty of loyalty,\nfor example, requires the fiduciary to act for the “ex-\nclusive purpose” of providing benefits to participants\nand “defraying reasonable expenses of administering\nthe plan.” 29 U.S.C. 1104(a)(1)(A)(ii). Similarly,\n 29\n\nevery plan’s annual report must list each party-in-in-\nterest transaction and the “expense incurred in con-\nnection with the transaction.” 29 U.S.C.\n1023(b)(3)(D). These provisions clearly “contem-\nplat[e] that there would be expenses associated with\nplan administration.” Pet. App. 22a n.9; see Sweda v.\nUniversity of Penn., 923 F.3d 320, 337 (3d Cir. 2019)\n(“[I]f we interpreted § 1106(a)(1) to prohibit every\ntransaction for services to a plan, we would have to\nignore other parts of the statute.”).\n Under Claimant’ view, all of those uses of service\nproviders would be prohibited transactions under Sec-\ntion 1106(a). That position is textually incoherent and\nshould be rejected.\n C. Claimant’ View Would Upset The Balance\n Congress Struck In ERISA\n 1. Under Claimant’ view, nearly every fidu-\n ciary could be sued for prohibited trans-\n actions\n Congress struck a balance in ERISA: to protect\nparticipants’ benefits, while “assuring a predictable\nset of liabilities” for employers. Conkright, 559 U.S.\nat 517. Congress did not want a system under which\n“administrative costs” or “litigation expenses” would\n“unduly discourage employers from offering welfare\nbenefit plans in the first place.” Varity Corp. v. Howe,\n516 U.S. 489, 497 (1996).\n Claimant’ position would upset that balance by\ndefining routine and beneficial plan transactions as\nprohibited transactions. Sweda, 923 F.3d at 337.\nPlans routinely use service providers such as record-\nkeepers, lawyers, accountants, investment managers,\nand consultants. See Albert v. Oshkosh Corp., 47\nF.4th 570, 585-586 (7th Cir. 2022). They provide the\nfunds in which participants invest, see J.A. 20-21\n 30\n\n(¶¶ 42-46); the platform for participants to manage\ntheir portfolios, see J.A. 28-29 (¶ 61); and the tools for\nparticipants to keep track of their account balances,\nsee J.A. 19 (¶ 38). They audit the plans’ financial\nstatements, as ERISA requires. 29 U.S.C. 1023(a)(3).\nAnd they help fiduciaries ensure that the plans offer\ndiverse portfolios of investments at reasonable fees.\nSee Pet. App. 37a-38a. If Claimant were correct, all\nor virtually all ERISA plans would be constantly en-\ngaging in prohibited transactions.\n Most courts to consider the issue have concluded\nthat Congress could not possibly have intended that\nresult. See Pet. App. 16a-17a (citing cases). It would\nbe “absurd” to hold that a participant “could force any\nplan [fiduciary] into court for doing nothing more than\nhiring an outside company to provide recordkeeping\nand administrative services,” Ramos v. Banner\nHealth, 1 F.4th 769, 787 (10th Cir. 2021), and then\n“require [the] fiduciary to plead reasonableness as an\naffirmative defense,” Sweda, 929 F.3d at 336.\n Claimant try to justify their expansive rule (Br.\n36, 45, 47-48) by pointing to ERISA’s “protective pur-\npose.” But “[n]o statute pursues a single policy at all\ncosts,” Bartenwerfer v. Buckley, 598 U.S. 69, 81 (2023),\nand particularly not ERISA, which resolved “innu-\nmerable disputes between powerful competing inter-\nests – not all in favor of potential plaintiffs,” Mertens\nv. Hewitt Assocs., 508 U.S. 248, 262 (1993).\n Significantly, this Court already has interpreted\nERISA’s prohibited-transaction provisions to avoid a\nresult like the one Claimant seek here. In Lockheed\nCorp. v. Spink, the Court held that the payment of\nplan benefits as part of an early-retirement program\nwas not a prohibited transaction. 517 U.S. at 894-895.\nThe Court explained that conditioning payments on\n“performance by plan participants” was an entirely\n 31\n\n“permissible objective[]” and did not involve “uses of\nplan assets that are potentially harmful to the plan.”\nId. at 893-894. The Court accordingly held that the\nbenefits payment was “wholly outside the scope of ”\nSection 1106(a)(1)(D) because it was not the type of\n“transaction” Congress contemplated. Id. at 892, 895.\n The same logic applies here: Section 1106(a)(1)(C)\nby itself encompasses every routine service-provider\ntransaction, including those ERISA requires and per-\nmits. Reading it together with Section 1108(b)(2)(A)\nappropriately limits its reach to only those transac-\ntions that threaten the plan.\n 2. Claimant’ view would cause an ava-\n lanche of litigation\n Under Claimant’ position, it would be remarka-\nbly easy for a plaintiff to plead a prohibited-transac-\ntion claim under Section 1106(a)(1)(C), because\nERISA generally requires plans to disclose service-\nprovider transactions. 29 U.S.C. 1023(c)(3). A plain-\ntiff could file a lawsuit and proceed to discovery\nmerely by alleging the fact of a transaction, without\nplausibly pleading any wrongdoing. The plaintiff\ncould then use discovery as a fishing expedition to try\nto find something a fiduciary did wrong, and there is\nnothing a fiduciary could do about it until summary\njudgment at the earliest. Claimant’ view thus would\nwipe out motions to dismiss as a tool for “weeding out\nmeritless claims.” Fifth Third Bancorp v. Dudenhoef-\nfer, 573 U.S. 409, 425 (2014).\n a. Claimant freely admit (Br. 46) that their goal\nis “more litigation.” They claim (Br. 46-47) that would\nbe beneficial because excessive-fee litigation can re-\nduce fees. But their position is that a plaintiff could\nsue without alleging excessive fees. So their position\n 32\n\nwould not result in more meritorious excessive-fee lit-\nigation – just more litigation, period.\n The burden of additional litigation would be im-\nmense, and nearly all of it would be borne by defend-\nants. Discovery in ERISA cases is particularly “omi-\nnous,” involving “probing and costly inquiries and doc-\nument requests.” Pension Ben. Guar. Corp. v. Morgan\nStanley Inv. Mgmt. Inc., 712 F.3d 705, 719 (2d Cir.\n2013). Defense costs “can run well into the millions.”\nChubb, Excessive Litigation Over Excessive Plan Fees\nIn 2023, at 3 (Apr. 2023) (Chubb), https://\nperma.cc/2VKQ-5TX2. In contrast, plaintiffs’ costs\nwould be slight – their pleading burden would be vir-\ntually nonexistent, and the burden of proof at sum-\nmary judgment would be on defendants.\n The predictable result would be meritless lawsuits\nfiled solely to “extort settlements.” Stoneridge Inv.\nPartners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148,\n163 (2008). An unduly low pleading standard would\npermit a plaintiff to bring “a largely groundless claim”\nhoping that its “in terrorem” effect will increase “the\nsettlement value,” without any “reasonably founded\nhope that the discovery process will reveal relevant\nevidence.” Dura Pharm., Inc. v. Broudo, 544 U.S. 336,\n347 (2005) (alteration and internal quotation marks\nomitted).\n Those costs would be borne not only by plan spon-\nsors, but also by plan fiduciaries, who can be held “per-\nsonally liable” under ERISA. 29 U.S.C. 1109(a). In-\ndividuals who serve on fiduciary committees often are\nnamed in ERISA lawsuits and then are forced to de-\nfend themselves through years of meritless litigation.\nSweda, 923 F.3d at 341 (Roth, J., concurring in part).\nHere, for example, Claimant named as a defendant\nRespondent’s then-chief human resources of-\nficer, J.A. 12 (¶ 27), and threatened to name 29 other\n 33\n\nindividuals, all university administrators, professors,\nor other staff members, see D. Ct. Dkt. 122, at 1.\n The mere fact of litigation can take a significant\ntoll on a fiduciary. For example, the fiduciary “will be\nrequired to disclose [the] litigation in personal finan-\ncial transactions.” Sweda, 923 F.3d at 341 (Roth, J.,\nconcurring in part). Asserting claims against individ-\nual fiduciaries thus “has the tremendous power to\nharass.” D. Ct. Dkt. 122, at 1.\n b. This case is one of over two dozen ERISA law-\nsuits against fiduciaries of university plans that raise\nnear-identical claims. Pet. App. 36a n.15, 93a. Nearly\nall included claims of excessive recordkeeping fees.\nIbid.\n Notably, not one of those cases has succeeded on\nthe merits. The plaintiffs lost the two cases that went\nto trial. See Judgment, Vellali v. Yale Univ., No. 16-\ncv-1345 (D. Conn. July 13, 2023), appeal pending, [DOCKET REDACTED] (2d Cir. argued Sept. 25, 2024); Sacerdote v.\nNew York Univ., 328 F. Supp. 3d 273, 306-307\n(S.D.N.Y. 2018), aff ’d in relevant part, 9 F.4th 95 (2d\nCir. 2021). The risk of additional meritless litigation\nis real.\n Further, under Claimant’ view, it would be much\neasier to plead a claim for excessive fees as a prohib-\nited transaction under 29 U.S.C. 1106(a) than as a\nbreach of the duty of prudence under 29 U.S.C.\n1104(a). In this case, which is typical of the university\ncases, Claimant filed both an imprudence claim and\na prohibited-transaction claim to challenge record-\nkeeping fees and sought the same relief for both. See\nJ.A. 142-146 (¶¶ 215-232).\n To adequately allege imprudence, Claimant had\nto plead that Respondent did not behave as prudent\npeople would under like circumstances. 29 U.S.C.\n 34\n\n1104(a)(1)(B). The focus is on the fiduciary’s process,\nnot the outcome. Sweda, 923 F.3d at 329. If petition-\ners’ view prevailed, it would be much easier to bring\nan excessive-fees claim as a prohibited-transaction\nclaim than as an imprudence claim. All a plaintiff\nwould have to allege is the fact of a service-provider\ntransaction. Thus, instead of “supplement[ing]”\nERISA’s fiduciary duties, Harris Tr., 530 U.S. at 241-\n242, the prohibited-transaction provisions would\nswallow them up altogether.\n c. Claimant suggest (Br. 47-48) that the prospect\nof sanctions will deter “groundless” claims. But under\nClaimant’ view, a Section 1106(a) claim based solely\non the existence of a service-provider transaction\nwould not be groundless, because the plaintiff would\nhave pleaded a prima facie case. See Fed. R. Civ. P.\n11(b).\n Claimant also rely (Br. 47-48) on the possibility\nof fee-shifting. See 29 U.S.C. 1132(g)(1). But to qual-\nify for fee-shifting under ERISA – which is discretion-\nary – a party must show “some degree of success on\nthe merits.” Hardt v. Reliance Standard Life Ins., 560\nU.S. 242, 255 (2010) (internal quotation marks omit-\nted). A fiduciary thus would need to litigate through\nsummary judgment before having any hope of seeking\na fee award. In many cases it could be cheaper and\nfaster to settle even a meritless claim.7\n Claimant obliquely suggest (Br. 48) that under\ntheir view, claims often will be dismissed for lack of\nstanding. The argument appears to be that because a\n\n7 The district court awarded $13,000 in costs to Respondent, but that\nwas not under Section 1132(g)(1), see D. Ct. Dkt. 471, at 5-6 (re-\nlying on Fed. R. Civ. P. 54(d)), and that award did not come close\nto compensating Respondent for the enormous expense of defending\nthis litigation.\n 35\n\nplaintiff would not have to allege anything wrong with\nthe challenged transaction, many plaintiffs would not\nbe able to show the injury required to establish stand-\ning. See Thole v. U.S. Bank, N.A., 590 U.S. 538, 542-\n546 (2020). That is not a virtue of Claimant’ posi-\ntion, but a vice. This Court should not choose a stat-\nutory construction that assumes a claim will have a\nconstitutional defect, when a sensible alternative con-\nstruction is available.\n Left with nothing else, Claimant hope (Br. 47)\nthat plaintiffs’ lawyers would show restraint. That\nhas not happened yet. ERISA litigation continues to\nincrease year after year. Chubb 1. Claimant say\n(Br. 47) that there has not been a noticeable uptick in\nprohibited-transaction litigation in the Eighth Circuit\nfollowing Braden v. Wal-Mart Stores, Inc., 588 F.3d\n585 (8th Cir. 2009). But the decision in Braden was\nfar from clear. Br. in Opp. 17-18. If this Court ac-\ncepted Claimant’ position, it would be open season\non ERISA fiduciaries. The only question would be\nwhich unlucky fiduciaries are sued.\n 3. Claimant’ view ultimately would harm\n plans, participants, and beneficiaries\n Fiduciaries faced with the prospect of massive pro-\nhibited-transaction litigation may feel compelled to\nlimit the number of plan service providers or perform\ncertain tasks in-house. The likely outcome is “lower\nreturns for employees and higher costs for plan ad-\nministration.” Albert, 47 F.4th at 586.\n For example, fiduciaries may eliminate services\nsuch as personalized, in-person investment advising,\nwhich many participants want and which Respondent’s\nplans provided. C.A. J.A. A2412. Fiduciaries also\nmay conclude that they cannot hire outside record-\nkeepers. Claimant allege that there is significant\n 36\n\ncompetition among recordkeepers that provide high-\nquality services at a low cost. J.A. 2, 19 (¶¶ 3, 38).\nClaimant’ view would disincentivize plans from us-\ning those providers. Plan fiduciaries could attempt to\nperform some of those tasks in-house, but they may\nlack the necessary expertise or resources. Small plans\nwould be most severely affected.\n Further, Claimant’ view would put fiduciaries in\na no-win situation. Using a service provider would be\na prohibited transaction, but not using that provider\ncould be viewed as imprudent. See Hughes v. North-\nwestern Univ., 595 U.S. 170, 175-176 (2022). For ex-\nample, a plaintiff could argue that a fiduciary was im-\nprudent for performing recordkeeping in-house, be-\ncause a service provider could do so more efficiently.\nOr a plaintiff could argue that a prudent fiduciary\nwould hire an expert investment advisor rather than\nrelying entirely on in-house resources. Claimant’\nposition amounts to heads plaintiffs win; tails defend-\nants lose.\n The prospect of massive litigation also could dis-\nsuade people from serving as fiduciaries. That is true\nfor all plans, but especially for university retirement\nplans, whose fiduciaries are “often staff members who\nvolunteer to serve in these roles.” Sweda, 923 F.3d at\n341 (Roth, J., concurring in part). Without fiduciaries,\na plan cannot operate. See 29 U.S.C. 1102(a)(1).\n Finally, if the risks and costs of prohibited-trans-\naction litigation become too great, some employers\ncould stop offering plans altogether. “Congress did\nnot require employers to establish benefit plans in the\nfirst place,” and it recognized that uncertain liabilities\nand “litigation expenses” could discourage employers\nfrom offering plans. Conkright, 559 U.S. at 516-517.\nClaimant’ position thus threatens significant harm\nto the very people Claimant claim to protect.\n 37\n\n 4. The government agrees that a plaintiff\n must plead unnecessary services or un-\n reasonable fees\n The government recognizes that the implications\nof Claimant’ position are intolerable. So it proposes\n(Br. 29-30) that a plaintiff challenging a service-pro-\nvider transaction should have to allege that the fees\nare “not obviously unreasonable.” That is essentially\nRespondent’s position. That is, the government recognizes\nthat Claimant’ view is unacceptably broad, and its\nsolution is for the plaintiff to plead the exception in\nSection 1108(b)(2)(A). The government stubbornly re-\nfuses to call that exception an “element,” but that is\nexactly the implication of its position.\n The government proposes two mechanisms to re-\nquire plaintiffs to plead additional facts, but neither\nmakes sense – and both confirm that pleading Section\n1106(a)(1)(C) alone is not enough.\n First, the government attempts to ground its rule\nin the Twombly pleading standard. According to the\ngovernment (Br. 29), a plaintiff must account for any\n“obvious alternative explanation” for the challenged\nconduct, and for a service-provider transaction, the\nobvious alternative explanation is that the services\nare necessary and the fees are reasonable.\n That misunderstands the “obvious alternative ex-\nplanation” principle. It applies when a plaintiff seeks\nto draw an inference from the defendant’s conduct to\nestablish an element of the claim. Twombly, 550 U.S.\nat 567-570. The plaintiff must account for an “obvious\nalternative explanation” for the conduct that prevents\na court from drawing that inference. Ibid. For exam-\nple, a plaintiff may plead that because companies\nacted the same way, they were part of an antitrust\nconspiracy. But if there were an obvious alternative\n 38\n\nexplanation (e.g., market forces incentivized each\ncompany to act that way), the plaintiff would have to\nplead additional facts to show a conspiracy. See ibid.\n The “obvious alternative explanation” principle\ndoes not apply here, because the element (in the gov-\nernment’s view) is the fact of a service-provider trans-\naction. The reasonableness of that transaction is not\nan alternative explanation that prevents a plaintiff\nfrom showing the existence of the transaction; it is (in\nthe government’s view) an affirmative defense that\nprovides a justification for why the transaction is per-\nmissible.\n Second, the government invokes (Br. 30-31) Fed-\neral Rule of Civil Procedure 7(a). That rule does not\nchange the elements of a claim or the pleading stand-\nard; it just permits a court to require the plaintiff to\nreply to the defendant’s answer. See Crawford-El v.\nBritton, 523 U.S. 574, 598 (1998). The government’s\napparent proposal is that a defendant should plead a\nSection 1108 exemption in an answer, then the dis-\ntrict court should exercise its discretion to order the\nplaintiff to file a reply that addresses that exemption,\nand if the plaintiff fails to plead around the exemp-\ntion, the defendant could move for judgment on the\npleadings. See Fed. R. Civ. P. 12(c). This is just a\nrepeat of the government’s argument that a plaintiff\nshould have to plead unreasonable fees to proceed to\ndiscovery – except it uses a much more convoluted pro-\ncess. The government does not explain why a court\nwould require a plaintiff to plead facts to negate what\nthe government labels an affirmative defense. Nor\ndoes it explain when the court should require that, or\nwhether and how its proposed pleading standard (“not\nobviously reasonable”) is different from the Section\n1108(b)(2)(A) exemption.\n 39\n\n At bottom, the government’s position amounts to\nrequiring the plaintiff to plead, before discovery, the\nunreasonableness of the fees. But instead of reaching\nthat outcome the obvious way (by considering Section\n1108(b)(2) an element and requiring the plaintiff to\nplead it in the complaint), the government distorts the\npleading standard and the Federal Rules. It is not\nsurprising that no court has endorsed its approach.\n D. Reading Section 1106(a) And Section 1108\n Together Is Entirely Workable\n 1. A plaintiff bringing a Section 1106(a)\n claim should not have difficulty deter-\n mining which exception to plead\n Claimant contend (Br. 42-43) that it would be un-\nworkable to require a plaintiff to plead the absence of\na Section 1108 exception, because the plaintiff would\nhave to guess at what exception applies. They are\nwrong. And their arguments are completely undercut\nby the government’s arguments (Br. 29-31) that plain-\ntiffs should have to plead the applicable exception,\nand that Claimant actually did so here.\n a. A plaintiff does not bring a prohibited-transac-\ntion claim in the abstract. Rather, the plaintiff is com-\nplaining about a particular transaction that actually\noccurred. The plaintiff just needs to plausibly plead a\ntheory about what the fiduciaries did wrong from the\navailable theories specified in Section 1108(b).\n For a given transaction, figuring out what exemp-\ntion might apply is straightforward. Each exemption\naddresses a specific type of transaction, with little\noverlap. See 29 U.S.C. 1108(b)(1)-(21).8 For example,\n\n8 Similarly, the Secretary of Labor’s “class” exemptions to Sec-\ntion 1106 each addresses a specific type of transaction. See Emp.\nBen. Sec. Admin., U.S. Dep’t of Lab., Class Exemptions, https://\n 40\n\nSection 1108(b)(3) addresses loans to employee stock\nownership plans (ESOPs), whereas Section\n1108(b)(18) addresses foreign-exchange transactions.\nA plaintiff challenging an ESOP loan would need to\naccount for Section 1108(b)(3), but not Section\n1108(b)(18).\n Here, for example, Claimant alleged a service-\nprovider transaction. J.A. 145-146 (¶ 230). The par-\nties knew which exemption potentially applied (the\nSection 1108(b)(2) exemption); the only question was\nwho had to plead and prove it. See Pet. App. 16a. For\nother Section 1106(a) transactions, it likewise will be\nclear which exemption could apply. If a transaction\ninvolves a loan to a participant, then the Section\n1108(b)(1) exception for participant loans might ap-\nply; if the transaction involves a block trade, then the\nSection 1108(b)(15) exception for those trades might\napply. See 29 U.S.C. 1108(b)(1), (15).\n Claimant cite (Br. 43) a handful of cases over\nERISA’s 50-year history where a defendant raised\nmore than one Section 1108 exemption. Their worst-\ncase example involved only three exemptions – hardly\nan insurmountable pleading burden. See Dupree v.\nPrudential Ins., No. 99-cv-8337, 2007 WL 2263892, at\n*39 (S.D. Fla. Aug. 7, 2007). In that case, it would\nhave been obvious to the plaintiffs what exemptions\nwere at issue. They sued an investment manager that\nalso was an insurer, challenging fees it charged for\nmanaging investments in a pooled investment fund.\n\n\nperma.cc/TV5M-YPSA (accessed Dec. 26, 2024). The Secretary\nalso has issued individual exemptions for specific transactions.\nSee Emp. Ben. Sec. Admin., U.S. Dep’t of Lab., Individual Ex-\nemptions, [URL REDACTED] (accessed Dec. 26, 2024).\nIt would be a simple matter to review the regulatory exemptions\nto determine which might apply to a given transaction.\n 41\n\nId. at *38-*40. The defendant raised the exemptions\nfor services, 29 U.S.C. 1108(b)(2); insurance products,\n29 U.S.C. 1108(b)(5); and investments in pooled funds,\n29 U.S.C. 1108(b)(8). 2007 WL 2263892, at *39.\n A defendant could not surprise a reasonably dili-\ngent plaintiff. At the motion-to-dismiss stage, a dis-\ntrict court considers only the facts pleaded in the com-\nplaint, incorporated by reference into the complaint,\nor in the public record and subject to judicial notice.\nSee Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551\nU.S. 308, 322 (2007). A defendant can move to dismiss\nonly based on an exception that is evident from those\nfacts.\n b. Claimant note (Br. 43) that some Section 1108\nexemptions have multiple requirements, which they\nsay makes it more difficult for a plaintiff to bring a\nclaim. That has it backwards: An exemption applies\nonly if all of its requirements are satisfied. A plaintiff\nwould need to plausibly plead only that one require-\nment is not met and would not even need to mention\nother requirements.\n c. Claimant (Br. 43) and the government (Br. 10,\n31) assert that the court of appeals adopted a “gerry-\nmandered” rule where only “some” of Section 1108’s\nexemptions are elements of Section 1106(a) claims.\nThat is not a fair reading of the decision. The only\nprohibited-transaction claim before the court of ap-\npeals was one for recordkeeping services, and the only\nissue was whether Claimant also had to plead that\nthe services were unnecessary or the fees unreasona-\nble under Section 1108(b)(2). Pet. App. 18a. After an-\nswering that question, the court did not go further to\naddress other types of prohibited-transaction claims.\nThe court should not be faulted for not issuing an ad-\nvisory opinion on issues not before it. See TransUnion\nLLC v. Ramirez, 594 U.S. 413, 424 (2021).\n 42\n\n Respondent’s position merely requires the plaintiff to\ndo basic diligence and have a plausible theory as to\nwhat the fiduciary did wrong under Section 1108(b).\nThere is nothing difficult about that.\n 2. ERISA’s disclosure and reporting re-\n quirements ensure that a plaintiff has\n the information needed to bring a Section\n 1106(a) claim\n a. ERISA requires plans to publicly disclose a sig-\nnificant amount of information about party-in-inter-\nest transactions. Each plan must file an annual re-\nport (Form 5500) containing “a description of agree-\nments and transactions with persons known to be par-\nties in interest.” 29 U.S.C. 1023(b)(1)-(2); see C.A. J.A.\nA193-A253 (Respondent’s Form 5500). For service-pro-\nvider transactions in particular, the plan must dis-\nclose any service provider who received $5,000 or\nmore in compensation “for services rendered to the\nplan or its participants,” “the amount of such compen-\nsation,” and “the nature of his services.” 29 U.S.C.\n1023(c)(3); 29 C.F.R. 2520.103-1(b)(1); see Emp. Ben.\nSec. Admin., U.S. Dep’t of Lab., Instructions for Form\n5500 at 26 (2024), [URL REDACTED] The\nDepartment of Labor publishes all plans’ annual re-\nports online. U.S. Dep’t of Lab., Form 5500 Search,\n[URL REDACTED] (accessed Dec. 26, 2024).\n ERISA also requires plan administrators to pro-\nvide disclosures to participants. 29 U.S.C. 1024, 1104.\nAn administrator must provide each participant with\na summary plan description (and any updates to it)\nand make the annual report available to participants.\n29 U.S.C. 1024(b). The summary plan description\nmust be “written in a manner calculated to be under-\nstood by the average plan participant” and must be\n 43\n\n“sufficiently accurate and comprehensive to reasona-\nbly apprise such participants and beneficiaries of\ntheir rights and obligations.” 29 U.S.C. 1022(a).\n The Department of Labor’s regulations supple-\nment those disclosure requirements. They require in-\ndividual-account plans to provide plan and invest-\nment notices to participants at least once a year. 29\nC.F.R. 2550.404a-5; see, e.g., J.A. 183-280 (Respondent’s\nnotices). That notice must explain all fees and ex-\npenses incurred by the plan, including all administra-\ntive fees and how they are calculated, 29 C.F.R.\n2550.404a-5(c)(2); all individual fees that may be\ncharged for participant services, 29 C.F.R. 2550.404a-\n5(c)(3); and all fees charged for managing investments\nand how they are calculated, 29 C.F.R. 2550.404a-\n5(d)(1)(iv).\n Claimant complain (Br. 33-34, 38) that ERISA\nrequires service providers to provide fiduciaries, but\nnot participants, with information about the provid-\ners’ compensation. See 29 U.S.C. 1108(b)(2)(B)(iii).\nBut fiduciaries use that information to prepare partic-\nipant disclosures and annual reports. See, e.g., C.A.\nJ.A. A206. So participants have access to the relevant\ninformation. Claimant never explain what addi-\ntional information is needed.\n b. A plaintiff thus has plenty of information to\nchallenge a service-provider transaction. Here, for ex-\nample, Claimant knew who Respondent’s recordkeepers\nwere and how much compensation they received. See,\ne.g., J.A. 183-231; C.A. J.A. A206. Claimant’ counsel\nused that information to calculate (in the context of\ntheir imprudence claim) how much Respondent allegedly\npaid for recordkeeping per participant. J.A. 65\n(¶ 136).\n 44\n\n That information also was publicly available for\nother university ERISA plans. See, e.g., Yale Univ.,\nSummary Annual Reports & Required Disclosures –\nForms, [URL REDACTED] (accessed Dec.\n26, 2024). Indeed, Claimant’ counsel calculated\nmany other university plans’ alleged per-participant\nfees when they sued over those fees. See, e.g., Am.\nCompl. ¶ 134, Vellali v. Yale Univ., No. 16-cv-1345\n(S.D.N.Y. Dec. 9, 2016) (ECF No. 57); Am. Compl.\n¶ 133, Sacerdote v. New York Univ., No. 16-cv-6284\n(S.D.N.Y. Nov 9, 2016) (ECF No. 39).\n Claimant thus had sufficient information to eval-\nuate the reasonableness of Respondent’s fees compared to\nits peers. If they did not adequately allege that Cor-\nnell’s fees are unreasonable, Pet. App. 25a-26a, it is\nbecause the data show that the fees are reasonable,\nsee id. at 32a-33a – not because Claimant lacked\nnecessary information.\n c. Claimant speculate (Br. 36-37) that a plaintiff\nmay lack the information to challenge other types of\ntransactions. They give only one example: partici-\npant-loan transactions. But plans are required to dis-\nclose detailed information about participant loans, in-\ncluding the interest rates, the basis for approval, and\nthe limitations on the amounts of loans. 29 U.S.C.\n1023(b)(3)(D); 29 C.F.R. 2550.408b-1(d)(2). Petition-\ners never say what information a plaintiff would be\nmissing.\n In any event, a plaintiff should not be bringing a\nlawsuit to challenge a loan if the plaintiff has no idea\nwhat, if anything, is wrong with the loan. All the\nplaintiff needs to do is plausibly plead that one of the\nrequirements in the relevant exception, 29 U.S.C.\n1108(b)(1), is not met.\n 45\n\n E. Nothing In The Law Of Trusts Justifies Pe-\n titioners’ Position\n 1. This Court has warned that often “trust law\ndoes not tell the entire story” when it comes to ERISA.\nVarity, 516 U.S. at 497. Congress enacted ERISA be-\ncause it determined that trust law was not adequate\nfor dealing with “the special nature and purpose of\nemployee benefit plans.” Ibid. (internal quotation\nmarks omitted). Trust law thus “often will inform, but\nwill not necessarily determine” the interpretation of\nERISA. Ibid.\n To the extent trust law is relevant, it supports the\nview that Claimant should have to allege some type\nof wrongdoing (from a Section 1108(b) exemption).\nUnder the law of trusts, a trustee violates the duty of\nloyalty by engaging in a conflicted transaction. Re-\nstatement (2d) Trusts § 170 (1959). That includes any\ntransaction in which the trustee has a personal inter-\nest on the other side of the transaction. Id. § 170 cmts.\nb-c. A transaction with a third party who is “related”\nto the trustee is not necessarily conflicted, unless “it\nis shown” that the trustee “was improperly influenced\nby his relationship to the [third party]” with respect\nto the transaction. Id. § 170 cmt. e.\n Critically, under trust law, the onus is on the\nplaintiff to show that the trustee was conflicted, im-\nproperly influenced by the relationship with the third\nparty, or otherwise breached a duty, and that the trust\nsuffered harm as a result. See Nedd v. United Mine\nWorkers of Am., 556 F.2d 190, 211 (3d Cir. 1977); Ful-\nton Nat’l Bank v. Tate, 363 F.2d 562, 564 (5th Cir.\n1966). Nothing in trust law allows a plaintiff to sue\nwithout those allegations of wrongdoing. And the\nmere fact of a transaction with a third party is not a\nbreach of the duty of loyalty. See Restatement (2d)\n§ 170 cmt. e.\n 46\n\n Claimant note (Br. 35-36) that in some situations\na trustee may have more information than a benefi-\nciary. That information asymmetry could justify\nshifting the burden of proof to the trustee after the\nbeneficiary had made out a prima facie case. See, e.g.,\nNedd, 556 F.2d at 211. But it would not permit a ben-\neficiary to bring suit without some allegation of\nwrongdoing. Besides, Congress addressed concerns\nabout access to information through ERISA’s report-\ning and disclosure requirements. See pp. 42-44, su-\npra.\n 2. The government argues (Br. 18-19) that the pro-\nhibited-transaction provisions reflect a common-law\nrule that a trustee could not delegate tasks that the\ntrustee reasonably could perform himself unless the\ntrustee justified the delegation.\n As an initial matter, it does not make sense to say\nCongress designed Section 1106(a)’s prohibited-trans-\naction provisions based on a nondelegation rule, be-\ncause most of the covered transactions have nothing\ndo with delegation. See 29 U.S.C. 1106(a).\n With respect to service-provider transactions, Con-\ngress rejected the nondelegation rule in ERISA. As\nthe government acknowledges (Br. 19), ERISA ex-\npressly authorizes and encourages fiduciaries to dele-\ngate certain responsibilities. 29 U.S.C. 1105(c)(1);\npp. 27-29, supra. Those provisions squarely “repu-\ndiat[e]” the traditional nondelegation rule. John H.\nLangbein, Reversing the Nondelegation Rule of Trust-\nInvestment Law, 59 Mo. L. Rev. 105, 112-113 (1994)\n(Langbein).\n Congress had good reason to do that. The nondele-\ngation rule stemmed from a time when a trustee could\nbe expected to manage a simple trust alone. Langbein\n110. That is no longer the case in trust law; “expecting\n 47\n\na trustee to personally perform every single act neces-\nsary to execute a modern trust not only is unreasona-\nble but may not even be the best way to assure effi-\ncient and knowledgeable administration of the trust.”\nGeorge Gleason Bogert et al., The Law of Trusts and\nTrustees § 555 (2022) (Bogert). The Uniform Trust\nCode and the Third Restatement of Trusts both “re-\nverse[]” the “old nondelegation rule.” Ibid.; see Uni-\nform Trust Code § 807 (2000); Restatement (3d)\nTrusts § 80 (2007). ERISA likewise reflects the mod-\nern rule; Congress recognized that a fiduciary may not\nhave the skills and expertise needed to manage the\nentirety of a multibillion-dollar benefit plan with\nthousands of participants. Bogert § 555; John H.\nLangbein & Bruce A. Wolk, Pension and Employee\nBenefit Law 496 (1990).\n The government’s position does not account for the\nrealities of modern trust administration or admin-\nistration of a benefits plan under ERISA. Nor does it\naccount for Congress’s express approval of delegation\nto service providers.\n F. Claimant’ Prohibited-Transaction Claim\n Fails\n The government (Br. 32-34) argues that petition-\ners pleaded a prohibited-transaction claim because\nthey plausibly alleged that the recordkeeping fees\nwere unreasonable. That issue was not presented in\nthe petition, Pet. i, and this Court should not address\nit, see Yee v. City of Escondido, 503 U.S. 519, 535\n(1992). Claimant’ allegations are not sufficient, and\neven if they were, Claimant’ claim would fail on the\nmerits.\n 48\n\n 1. Claimant have not plausibly pleaded\n a prohibited-transaction claim\n In their prohibited-transaction claim about record-\nkeeping fees (Count IV), Claimant pleaded only the\nfact of a service-provider transaction. They alleged\nthat “TIAA-CREF and Fidelity are parties in interest”\nbecause they are “service providers to the Plans,” and\nthat by “caus[ing] the Plans to engage in transactions”\nthat constituted “a direct or indirect furnishing of ser-\nvices” to the plans, Respondent violated Section\n1106(a)(1)(C). J.A. 145-146 (¶¶ 229-230). Claimant\ndid not allege that the services were unnecessary or\nthe fees unreasonable. Pet. App. 25a.\n The government argues (Br. 32-34) that petition-\ners adequately pleaded unreasonable fees. It cites al-\nlegations Claimant made to support their impru-\ndence claim. See J.A. 143-144 (¶¶ 223-225). Those\nallegations are insufficient to raise a plausible infer-\nence of unreasonable fees. As the court of appeals ex-\nplained, “[w]hether fees are excessive or not is relative\n‘to the services rendered,’ ” because “it is not unreason-\nable to pay more for superior services.” Pet. App. 26a\n(quoting Jones v. Harris Assocs. L.P., 559 U.S. 335,\n346 (2010)). Many courts addressing excessive-fees\nclaims have made the same point and dismissed\nclaims that fail to make an appropriate comparison.\nSee, e.g., Matousek v. MidAmerican Energy Co., 51\nF.4th 274, 279 (8th Cir. 2022).\n Here, Claimant never pleaded what services Cor-\nnell received or explained how the fees were excessive,\nsuch as by comparing the fees to those paid by compa-\nrable plans for comparable services. See J.A. 62-67\n(¶¶ 122-141). The government notes (Br. 33) the alle-\ngation that Respondent’s fees were higher than an unspec-\nified “market benchmark.” But as the court of appeals\n 49\n\nexplained, Claimant never alleged that the bench-\nmark represented comparable services to those Cor-\nnell received. Pet. App. 25a-26a. They thus failed to\nplead unreasonableness.9\n Claimant argue (Br. 33-35) that in evaluating\ntheir allegations, the court of appeals inappropriately\nimported a reasonableness standard from the Invest-\nment Company Act of 1940 (ICA), 15 U.S.C. 80a-1 et\nseq. That is incorrect; the court merely cited an ICA\ncase (Jones) to help explain that the reasonableness of\nfees must be assessed “relative ‘to the services ren-\ndered,’ ” and that “disproportionately large fees” could\nraise an inference of unreasonableness. Pet. App. 26a\n(quoting Jones, 559 U.S. at 346). That approach to\nreasonableness is “common sense” and is not unique\nto the ICA. Singh v. Deloitte LLP, [DOCKET REDACTED], 2024\nWL 5049345, at *4 n.7 (2d Cir. Dec. 10, 2024) (reject-\ning Claimant’ argument here); see, e.g., Black’s Law\nDictionary 301 (8th ed. 2004) (defining “unreasonable\ncompensation” as “compensation [that] is out of pro-\nportion to the services actually rendered”). The court\nof appeals did not err by merely citing Jones for that\ncommon-sense proposition.\n 2. Claimant’ claim necessarily would\n fail on the merits\n The district court gave Claimant the opportunity\nto prove unreasonable recordkeeping fees. After years\nof discovery on their imprudence claim, Claimant\ncould not prove unreasonable fees. Pet. App. 57a-66a.\nThat likewise dooms their prohibited-transaction\nclaim.\n\n\n9 The district court denied Respondent’s motion to dismiss petition-\ners’ imprudence claim, Pet. App. 11a-12a, but Respondent could not\nappeal that decision.\n 50\n\n To obtain damages on their imprudence claim, pe-\ntitioners had to show that the plans suffered a loss be-\ncause Respondent could have paid lower fees than it actu-\nally paid. Pet. App. 30a-31a. Claimant primarily\nrelied on the opinions of two experts, who opined that\nRespondent should have paid $35-$40 per participant each\nyear for recordkeeping services. Id. at 57a-66a. But\ntheir experts provided no justification for that number\nother than their say-so. Id. at 63a-64a. They did not\nexplain how their proposed fees were justified for the\nservices Respondent received, and they did not identify\nsimilar plans that were able to achieve those fees for\nthe same services. The district court accordingly ex-\ncluded their opinions under Daubert v. Merrell Dow\nPharmaceuticals, Inc., 509 U.S. 579 (1993). Pet. App.\n66a.\n Without those opinions, Claimant had no evi-\ndence that Respondent could have achieved lower record-\nkeeping fees – so they necessarily could not show that\nRespondent’s fees were unreasonable. In contrast, Cor-\nnell’s expert explained that Respondent’s fees were rea-\nsonable, because they were at or below the average\nfees paid by similarly sized plans offering similar in-\nvestments and receiving similar services. See C.A.\nJ.A. A2428-A2437.\n The district court accordingly granted summary\njudgment to Respondent on Claimant’ imprudence claim\nbased on recordkeeping fees. Pet App. 58a. The court\nof appeals affirmed, id. at 32a-34a; and Claimant did\nnot seek review of that holding in this Court, see\nPet. i. Because Claimant cannot show unreasonable\nfees, they cannot prevail on their prohibited-transac-\ntion claim as a matter of law, regardless of which\nparty has to plead unreasonableness. For that reason\nas well, this Court should affirm.\n 51\n\n CONCLUSION\n The judgment of the court of appeals should be af-\nfirmed.\n Respectfully submitted.\n\nNANCY G. ROSS NICOLE A. SAHARSKY\nMICHAEL A. SCODRO Counsel of Record\n Mayer Brown LLP MINH NGUYEN-DANG\n 71 S. Wacker Drive CARMEN LONGORIA-GREEN\n Chicago, IL 60601 WAJDI C. MALLAT\n [PHONE REDACTED] Mayer Brown LLP\n 1999 K Street NW\n Washington, DC 20006\n [PHONE REDACTED]\n [EMAIL REDACTED]\n\n\nDECEMBER 2024\n APPENDIX\n\n TABLE OF CONTENTS\n Page\n29 U.S.C. 1002 ........................................................... 1a\n29 U.S.C. 1104 ........................................................... 3a\n29 U.S.C. 1106 ........................................................... 4a\n29 U.S.C. 1108 ........................................................... 5a\n29 U.S.C. 1109 ......................................................... 35a\n1. 29 U.S.C. 1002 provides, in pertinent part:\nDefinitions\n For purposes of this subchapter:\n * * * * *\n (14) The term “party in interest” means, as to an\nemployee benefit plan –\n (A) any fiduciary (including, but not limited to,\n any administrator, officer, trustee, or custodian),\n counsel, or employee of such employee benefit\n plan;\n (B) a person providing services to such plan;\n (C) an employer any of whose employees are\n covered by such plan;\n (D) an employee organization any of whose\n members are covered by such plan;\n (E) an owner, direct or indirect, of 50 percent or\n more of –\n (i) the combined voting power of all classes\n of stock entitled to vote or the total value of\n shares of all classes of stock of a corporation[,]\n (ii) the capital interest or the profits interest\n of a partnership, or\n (iii) the beneficial interest of a trust or unin-\n corporated enterprise,\n which is an employer or an employee organization\n described in subparagraph (C) or (D);\n (F ) a relative (as defined in paragraph (15)) of\n any individual described in subparagraph (A), (B),\n (C), or (E);\n\n\n (1a)\n 2a\n\n (G) a corporation, partnership, or trust or es-\ntate of which (or in which) 50 percent or more of –\n (i) the combined voting power of all classes\n of stock entitled to vote or the total value of\n shares of all classes of stock of such corporation,\n (ii) the capital interest or profits interest of\n such partnership, or\n (iii) the beneficial interest of such trust or\n estate,\nis owned directly or indirectly, or held by persons\ndescribed in subparagraph (A), (B), (C), (D), or (E);\n (H) an employee, officer, director (or an individ-\nual having powers or responsibilities similar to\nthose of officers or directors), or a 10 percent or\nmore shareholder directly or indirectly, of a person\ndescribed in subparagraph (B), (C), (D), (E), or (G),\nor of the employee benefit plan; or\n (I) a 10 percent or more (directly or indirectly in\ncapital or profits) partner or joint venturer of a per-\nson described in subparagraph (B), (C), (D), (E), or\n(G).\n The Secretary, after consultation and coordina-\ntion with the Secretary of the Treasury, may by\nregulation prescribe a percentage lower than 50\npercent for subparagraph (E) and (G) and lower\nthan 10 percent for subparagraph (H) or (I). The\nSecretary may prescribe regulations for determin-\ning the ownership (direct or indirect) of profits and\nbeneficial interests, and the manner in which indi-\nrect stockholdings are taken into account. Any\nperson who is a party in interest with respect to a\nplan to which a trust described in section\n 3a\n\n 501(c)(22) of title 26 is permitted to make pay-", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of dismissal of a prohibited-transaction claim.", "governingLaw": "Apply United States federal ERISA law; Second Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal ERISA law; Second Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Cunningham v. Cornell University", "citation": "604 U.S. 445 (2025)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/24pdf/23-1007_h3ci.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "This case turns on whether 29 U.S.C. § 1108's exemptions from ERISA's prohibited-transaction rules are affirmative defenses the defendant must plead and prove, or elements of the plaintiff's prima facie case that the plaintiff must negate in the complaint. The claimant argues for the former; the respondent and the Second Circuit below adopted the latter. The statute's text and structure, read through the lens of the controlling authority in the record, favor the claimant's reading.\n\nStart with structure. ERISA separates its prohibited-transaction prohibitions (§ 1106) from its exemptions (§ 1108) across entirely different sections of the U.S. Code. This is the same structural feature the Supreme Court identified as decisive in Meacham v. Knolls Atomic Power Laboratory, 554 U.S. 84 (2008), where the ADEA's general prohibitions in §§ 623(a)–(c) were subject to a separate provision, § 623(f), creating exemptions for practices 'otherwise prohibited.' The Court held that 'given how the statute reads, with exemptions laid out apart from the prohibitions,' it was 'no surprise' that the exemptions function as affirmative defenses. The parallel is direct: ERISA's § 1106 sets out general prohibitions; § 1108, in a separate section titled 'Exemptions from prohibited transactions,' provides specific exemptions. Under Meacham's framework, that structural separation signals affirmative defense.\n\nThe respondent's principal counterargument is that § 1106(a)'s opening clause—'Except as provided in section 1108 of this title'—incorporates the § 1108 exemptions directly into the definition of prohibited conduct, making them elements. But the word 'except' means 'a clause designed to reserve or exempt some individuals from the general class' (as the claimant argues, citing dictionary definitions). An 'except as provided' proviso indicates priority—telling courts that the exemption prevails when it applies—but it does not transform the exemption into an ingredient of the plaintiff's claim. The claimant's authorities are persuasive: courts interpreting 'except as provided' clauses in the Fair Debt Collection Practices Act (Evankavitch v. Green Tree Servicing, 793 F.3d 355 (3d Cir. 2015)), the Bankruptcy Code (In re Bernard L. Madoff Inv. Sec. LLC, 12 F.4th 171 (2d Cir. 2021)), and 18 U.S.C. § 922(o) (United States v. Just, 74 F.3d 902 (8th Cir. 1996)) have uniformly held that such clauses create affirmative defenses for the defendant to plead and prove, not elements the plaintiff must negate.\n\nThe respondent's argument from the contrast between § 1106(a) and § 1106(b) has force but ultimately cuts against it. Section 1106(b)—covering fiduciary self-dealing—contains no 'except as provided' clause, while § 1106(a) does. The respondent says this means the clause incorporates § 1108 into § 1106(a) as an element. But § 1108 by its own terms applies to all of § 1106: § 1108(a) authorizes administrative exemptions from 'all or part of the restrictions imposed by section 1106,' expressly including 'from section 1106(a)' and 'from section 1106(b)'; § 1108(b) states that '[t]he prohibitions provided in section 1106 . . . shall not apply' to listed transactions; and § 1108(b)(19) expressly references a § 1106(b)(2) transaction. If § 1108 already applies to § 1106(b) by its own force, then the 'except as provided' clause in § 1106(a) is not needed to make § 1108 applicable—it is needed to signal something else. The most natural reading is that it signals the priority of § 1108 exemptions over § 1106(a) prohibitions, consistent with the affirmative-defense framework. The respondent's reading would render the clause redundant—a problem under the rule against surplusage.\n\nThe respondent invokes United States v. Cook, 84 U.S. (17 Wall.) 168 (1872), for the proposition that when an exception is 'incorporated in the enacting clause' and the prohibition 'cannot be accurately and clearly described' without reference to it, the exception is an element. But § 1106(a)(1)(C) can be read perfectly well on its own: it prohibits causing a plan to engage in a transaction that constitutes a 'furnishing of goods, services, or facilities between the plan and a party in interest.' Everyone agrees what those words mean and that the conduct here falls within them. The exception in § 1108(b)(2)(A) is not needed to define what a 'furnishing of services' is; it provides a justification for why an otherwise prohibited transaction is permissible. Moreover, Cook's framework was developed in the criminal context—where the rule of lenity, the presumption of innocence, and the Sixth Amendment's notice requirement all push toward treating exceptions as elements—and even there, it applies only in the narrow circumstance where the exception is 'in the enacting clause' itself, not in a separate section. Section 1108 is in a different section of the U.S. Code entirely.\n\nThe respondent's strongest practical argument is that a plain-text reading of § 1106(a) would reach a 'vast array of routine transactions,' including service-provider arrangements that ERISA elsewhere requires or contemplates. This concern is real but does not justify rewriting the statute's burden allocation. Congress addressed it through § 1108's exemptions themselves: a fiduciary who engages a necessary service provider at reasonable cost can plead and prove the § 1108(b)(2)(A) exemption. The DOL's regulatory scheme under § 1108(b)(2) already requires service providers to disclose compensation information to responsible plan fiduciaries—putting the information needed to establish the exemption in the hands of the party who bears the burden. The respondent's parade of horribles—a flood of meritless litigation, fiduciaries driven from the system—is not supported by the record. The Eighth Circuit adopted the plain-text approach in Braden v. Wal-Mart Stores, Inc., 588 F.3d 585 (8th Cir. 2009), fifteen years ago, and ERISA litigation has not ground that circuit to a halt. Built-in guardrails—standing requirements, fee-shifting, sanctions, and the costs of ERISA litigation—constrain frivolous suits. And the claimant's own complaint illustrates the point: even under the plain-text rule, the case would face steep hurdles on the merits, as the claimant's experts were excluded and no evidence of unreasonable fees survived summary judgment.\n\nFinally, the Second Circuit's hybrid rule—requiring plaintiffs to negate 'at least some' of the § 1108 exemptions—lacks a limiting principle. The 'except as provided' clause does not discriminate among the § 1108 exemptions; if it incorporates any, it incorporates all. That would require plaintiffs to predict every exemption a defendant might invoke and plead the negative of each, based on information that often resides solely in the fiduciary's hands. This is not a workable framework. The proper framework is the one the text provides: plaintiffs plead the elements of § 1106(a); defendants plead and prove any applicable § 1108 exemption. The Second Circuit's judgment should be reversed.", "allocation": null, "citations": [ { "title": "Meacham v. Knolls Atomic Power Lab. - Amicus (Merits)", "url": "https://www.justice.gov/osg/brief/meacham-v-knolls-atomic-power-lab-amicus-merits", "proposition": "Where a statute lays out general prohibitions subject to a separate provision creating exemptions for actions 'otherwise prohibited,' the exemptions are affirmative defenses to be established by the party claiming them; the structural separation of prohibitions from exemptions signals affirmative defense because 'given how the statute reads, with exemptions laid out apart from the prohibitions,' it is 'no surprise' that they function as affirmative defenses." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-055", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nINTRODUCTION\n This case concerns one of the whistleblower\nprotection provisions of the Sarbanes-Oxley Act of\n2002 (SOX). That provision prohibits publicly traded\ncompanies from retaliating against their employees\nfor engaging in protected activity, such as providing\ninformation to a supervisor about violations of federal\nsecurities statutes and regulations. 18 U.S.C.\n§ 1514A(a). Companies covered by the provision may\nnot “discharge, demote, suspend, threaten, harass, or\nin any other manner discriminate against an\nemployee in the terms and conditions of employment\nbecause of” the employee’s protected activity. Id.\n The statute doesn’t just set forth that sRespondenttantive\nprohibition. It also mandates precisely how violations\nof that prohibition must be proven. A civil action to\nenforce the whistleblower protection provision “shall\nbe governed by the legal burdens of proof set forth in\nsection 42121(b) of title 49.” 18 U.S.C. §\n1514A(b)(2)(C). Section 42121(b) in turn lays out a\nburden-shifting framework. First, the plaintiff must\nshow that protected activity “was a contributing\nfactor in the unfavorable personnel action alleged in\nthe complaint.” 49 U.S.C. §§ 42121(b)(2)(B)(i), (iii). If\nthe plaintiff does so, the burden then shifts to the\nemployer to “demonstrate by clear and convincing\nevidence that the employer would have taken the\nsame unfavorable personnel action in the absence of\nthat behavior”—that is, in the absence of the\nemployee’s protected activity. Id. §§ 42121(b)(2)(B)(ii),\n(iv).\n To lay out the statutory scheme is to answer the\nquestion presented. The statute requires plaintiffs to\nshow only that their protected conduct was a\n 3\n“contributing factor in the unfavorable personnel\naction” 49 U.S.C. §§ 42121(b)(2)(B)(i), (iii)—no\nmention of “retaliatory intent.” And were there any\ndoubt, SOX’s burden-shifting framework is borrowed\nverbatim from a predecessor statute, the\nWhistleblower Protection Act of 1989, that has, for\ndecades, been interpreted so as to absolve plaintiffs of\nthe requirement to show “retaliatory intent” as part\nof their case in chief. Instead, an employer who lacks\n“retaliatory intent” can prove that it would have\ntaken the same unfavorable personnel action even\nabsent the protected conduct.\n The Second Circuit did not mention the burden-\nshifting framework incorporated by the plain text of\nSOX, let alone explain how requiring plaintiffs to\nprove “retaliatory intent” as part of their case in chief\ncould be squared with that framework. And that\nframework makes clear that a plaintiff has no burden\nto prove “retaliatory intent.” This Court should\nreverse.\n\n STATEMENT OF THE CASE\n\n A. Statutory background.\n 1. Congress enacted the Sarbanes-Oxley Act\n(SOX) “to safeguard investors in public companies\nand restore trust in the financial markets following\nthe collapse of Enron Corporation.” Lawson v. FMR\nLLC, 571 U.S. 429, 432 (2014); see also S. Rep. No.\n107-146, at 2-11 (2002) (hereinafter S. Rep.). “Enron\nhad succeeded in perpetuating its massive\nshareholder fraud in large part due to a ‘corporate\ncode of silence’” that “discourage[d] employees from\nreporting fraudulent behavior not only to the proper\nauthorities, such as the FBI and the SEC, but even\n 4\ninternally.” Lawson, 571 U.S. at 435 (quoting S. Rep.,\nat 4-5). Enron employees who had attempted to\nreport corporate misconduct faced retaliation. Id.\n At the time, no federal law protected corporate\nwhistleblowers. S. Rep., at 10. Congress decided that\nthis lack of protection was “‘a significant deficiency’\nin the law, for in complex securities fraud\ninvestigations, employees ‘are [often] the only\nfirsthand witnesses to the fraud.’” Lawson, 571 U.S.\nat 435 (quoting S. Rep., at 10). Without protection for\ncorporate whistleblowers, Congress worried not only\nabout the fate of those individual whistleblowers, but\nalso about the fate of the entire financial system—\nEnron’s collapse made clear that a single\ncorporation’s wrongdoing could affect millions of\ninvestors if kept hidden. S. Rep., at 11.\n To remedy this “significant deficienc[y],” SOX\nprotects “employees of publicly traded companies who\nprovide evidence of fraud” or other corporate\nmisbehavior. Pub. L. No. 107-204, § 806, 116 Stat.\n745, 802-03. As codified, SOX makes it unlawful for a\ncovered company to “discharge, demote, suspend,\nthreaten, harass, or in any other manner\ndiscriminate against an employee in the terms and\nconditions of employment because of” protected\nwhistleblowing activity. 18 U.S.C. § 1514A(a). SOX\nprovides a private cause of action to employees who\nclaim their rights have been violated. Id. § 1514A(b).\n 2. Congress did not stop there, however. It\nspecified precisely how such cases are to be proven. It\ndrew on a framework for whistleblower protection\nfirst set out in the Whistleblower Protection Act of\n1989 (WPA). Pub. L. No. 101-12 (codified as amended\nat 5 U.S.C. § 1221(e)).\n 5\n The WPA amended the Civil Service Reform Act\nof 1978, which prohibited personnel actions taken “as\na reprisal for” protected conduct but did not explain\nhow such claims were to be proven. Pub. L. No. 95-\n454, § 101(a), 92 Stat. 1111, 1116. Courts had\ninterpreted the Civil Service Reform Act to require\nemployees to prove that their disclosure was a\n“significant” or “motivating” factor behind the\nadverse personnel action. 135 Cong. Rec. 5033 (1989)\n(Explanatory Statement on S. 20, 101st Cong., 1st\nSess. 1989) (hereinafter WPA Explanatory\nStatement).\n Believing that this interpretation imposed an\n“excessively heavy burden” on whistleblowing\nemployees, Congress inserted into the WPA a new\nburden-shifting framework to govern how reprisal\nclaims should be proven. WPA Explanatory\nStatement, at 5033. The new framework was\n“specifically intended to overrule existing case law,\nwhich requires a whistleblower to prove that his\nprotected conduct was a ‘significant’, ‘motivating’,\n‘sRespondenttantial’, or ‘predominant’ factor in a personnel\naction in order to overturn that action.” Id.\n At the first step of the WPA’s burden-shifting\nframework, employees must only show that their\nprotected activity was a “contributing factor” in the\nadverse employment action. See 5 U.S.C. § 1221(e)(1).\nAs the bill’s sponsor explained: “The word\n‘contributing’ does not place any requirement” on\nplaintiffs “to produce evidence proving retaliatory\nmotive on the part of” the employer. WPA\nExplanatory Statement, at 5037 (statement of Rep.\nPat Schroeder).\n 6\n Once a whistleblower has established that his\nprotected conduct was a “contributing factor” in the\nunfavorable personnel action, the burden shifts to an\nemployer to prove by clear and convincing evidence\nthat it would have taken the same unfavorable\npersonnel action even absent the protected conduct.\nWPA Explanatory Statement, at 5035. An employer\nwho lacks “retaliatory intent” thus avoids liability.\n Congress explained that it placed the burden on\nthe employer “for two reasons.” Id. at 5033. “First,\nthis burden of proof comes into play only if the\nemployee has established by a preponderance of the\nevidence that the whistleblowing was a contributing\nfactor in the action—in other words, that the agency\naction was ‘tainted’” by the protected activity. Id.\nSecond, the employer “controls most of the cards—the\ndrafting of the documents supporting the [challenged]\ndecision, the testimony of witnesses who participated\nin the decision, and the records that could document\nwhether similar personnel actions have been taken in\nother cases.” Id.\n 3. The WPA’s burden-shifting framework has\nbeen borrowed by more than a dozen other statutes\nthat aim to protect whistleblowers in industries that\npose serious dangers to public wellbeing—pipeline\nsafety, national defense, and the like.1 One such\n\n 1\n See, e.g., 6 U.S.C. § 1142(c)(2)(B) (“Public transportation\nemployee protections” provision of Implementing\nRecommendations of the 9/11 Commission Act of 2007); 10\nU.S.C. § 4701(c)(6) (“Contractor employees: protection from\nreprisal for disclosure of certain information” provision of\nNational Defense Authorization Act for Fiscal Year 2013); 12\nU.S.C. § 5567(c)(3) (“Employee protection” provision of Dodd-\n 7\nstatute is the Wendell H. Ford Aviation Investment\nand Reform Act for the 21st Century, a statute\ncommonly referred to as “AIR-21.” 49 U.S.C.\n§ 42121(b).\n When Congress enacted SOX, it wanted “similar\nprotection” to the WPA for corporate whistleblowers.\nS. Rep., at 10. It thus incorporated AIR-21 and the\nburden-shifting framework it borrowed from the\n\nFrank Wall Street Reform & Consumer Protection Act); 15\nU.S.C. § 7a-3(b)(2)(B) (“Anti-retaliation protection for\nwhistleblowers” provision of Criminal Antitrust Anti-Retaliation\nAct of 2019); 15 U.S.C. § 2087(b)(2)(B) (“Whistleblower\nprotection” provision of Consumer Product Safety Act); 21\nU.S.C. § 399d(b)(2)(C) (“Employee protections” provision of FDA\nFood Safety Modernization Act); 29 U.S.C. § 218c(b)(1)\n(“Protections for employees” provision of Patient Protection &\nAffordable Care Act); 26 U.S.C. § 7623(d)(2)(B)(i)\n(“Whistleblower protection provision” of Taxpayer First Act); 31\nU.S.C. § 5323(g)(3) (“Whistleblower incentives and protections”\nprovision of William M. (Mac) Thornberry National Defense\nAuthorization Act for Fiscal Year 2021); 42 U.S.C. § 5851(b)(3)\n(“Employee protection” provision of Comprehensive National\nEnergy Policy Act); 46 U.S.C. § 2114(b) (“Protection of seamen\nagainst discrimination” provision of Coast Guard Authorization\nAct of 2010); 49 U.S.C. § 20109(d)(2)(A)(i) (“Employee\nprotections” provision of Implementing Recommendations of the\n9/11 Commission Act of 2007); 49 U.S.C. § 30171(b)(2)(B)\n(“Protection of employees providing motor vehicle safety\ninformation” provision of Moving Ahead for Progress in the 21st\nCentury Act); 49 U.S.C. § 31105(b)(1) (“Employee protections”\nprovision of Implementing Recommendations of the 9/11\nCommission Act of 2007); 49 U.S.C. § 42121(b)(2)(B) (“Protection\nof employees providing air safety information” provision of\nWendell H. Ford Aviation Investment & Reform Act for the 21st\nCentury); 49 U.S.C. § 60129(b)(2)(B) (“Protection of employees\nproviding pipeline safety information” provision of Pipeline\nSafety Improvement Act of 2002).\n 8\nWPA by reference: SOX specifies that a\nwhistleblower claim “shall be governed by the legal\nburdens of proof set forth in” 49 U.S.C. § 42121(b)—\nthat is, AIR-21. 18 U.S.C. § 1514A(b)(2)(C). Congress\nexplained the choice to incorporate the burden-\nshifting framework that AIR-21 had borrowed from\nthe WPA this way: “Because we had already extended\nwhistleblower protection to non-civil service\nemployees” like airline workers, “we thought it best\nto track those protections as closely as possible.” S.\nRep., at 30.\n SOX thus adopts the WPA’s burden-shifting\nframework. The plaintiff’s initial burden is to show\nthat his whistleblowing “was a contributing factor in\nthe unfavorable personnel action alleged.” 49 U.S.C.\n§§ 42121(b)(2)(B)(i), (iii). If he does, he prevails\nunless the employer can “demonstrate[] by clear and\nconvincing evidence that the employer would have\ntaken the same unfavorable personnel action in the\nabsence of that behavior.” Id. §§ 42121(b)(2)(B)(ii),\n(iv). Per SOX, those two findings suffice to establish\nthat the employer retaliated by taking adverse action\nagainst the plaintiff “because of” the protected\nactivity.\n\n B. Factual background.\n Because a jury found for petitioner Claimant, we describe the facts in the light most\nfavorable to him. See Staub v. Proctor Hosp., 562\nU.S. 411, 413 (2011).\n 1. Petitioner Claimant is a financial expert\nwho earned an undergraduate degree from the\nUniversity of Notre Dame and a graduate degree\nfrom the Massachusetts Institute of Technology. C.A.\n 9\nJ.A. 140.2 Claimant worked at Respondent from 2007 to 2008,\nand he was recruited back to Respondent in April 2011,\nthree years after the collapse of the mortgage-backed\nsecurities business triggered the Great Recession.\nPet. App. 2a-3a; C.A. J.A. 167, 184-89. When he\nreturned to Respondent in 2011, Claimant worked as Respondent’s\nsole public research strategist servicing Respondent’s\ncommercial mortgage-backed securities (CMBS)\nbusiness. Pet. App. 3a; C.A. J.A. 193. His job was to\nreport on CMBS markets to Respondent’s current and\npotential customers. Pet. App. 3a.\n Given Claimant’s responsibilities, Securities and\nExchange Commission (SEC) Regulation AC required\nhim to certify that the views expressed in his\nresearch reports “accurately reflect[ed]” his “personal\nviews” and “were prepared in an independent\nmanner.” 17 C.F.R. § 242.501; Pet. App. 3a.\nCertifying a report that was not independently\nproduced would violate those regulations and\nconstitute a fraud on shareholders. Pet. App. 3a n.1;\nC.A. J.A. 1340-41. To ensure Claimant’s independence,\nRespondent’s compliance department thus took extra steps\nto physically separate his workspace from the trading\ndesk (which bought and sold CMBS and so had an\ninterest in painting a rosy picture of the product and\nits market). J.A. 143; C.A J.A. 199. The trading desk\nwas headed by Ken Cohen, who had worked at\nLehman Brothers before it collapsed during the Great\nRecession thanks to its involvement in the subprime\n\n 2\n Citations to the Joint Appendix before this Court are cited\nJ.A. [xxx], where “xxx” indicates the page number. Citations to\nthe Joint Appendix before the Second Circuit are cited C.A. J.A.\n[xxx].\n 10\nmortgage crisis. C.A. J.A. 752. Cohen was recruited\nto Respondent at the same time Claimant was. Id.\n 2. Notwithstanding SEC regulations requiring\nthat Claimant’s research reports be independent,\nCohen and his team pressured Claimant to skew his\nresearch in support of Respondent business strategies. Pet.\nApp. 3a. In June 2011, Cohen told Claimant to produce\n“a research article” that would “smooth[] over”\nconcerns investors might have about participating in\nRespondent’s mortgage-backed securities trades. C.A. J.A.\n211-12. In August, Cohen directed Claimant, “Don’t say\nanything negative” in a client meeting. J.A. 24. A\nmonth later, Cohen told Claimant, “It’s important that\nwe maintain consistency of message between\noriginations, trading desk, and research.” Pet. App.\n3a. For that reason, Cohen instructed Claimant to\n“clear your research articles with the [trading] desk\ngoing forward.” Id. (alteration in original).\n Despite this illegal pressure, Claimant wrote an\nindependent “Outlook” report forecasting the 2012\nCMBS markets as risky (or at least riskier than the\nCMBS trading desk wanted investors to believe). J.A.\n148-50. Cohen reacted negatively, telling Claimant the\nreport was “too bearish” and had not delivered a\n“consistent message with what we’re trying to do\naround here.” J.A. 26.\n 3. Claimant’s direct supervisor was Michael\nSchumacher. Pet. App. 4a. In early December 2011,\nas yet unaware that Claimant was facing improper\npressure from the trading desk, Schumacher drafted\na “glowing review” of Claimant’s performance. C.A. J.A.\n3118; see J.A. 145-47. He highlighted Claimant’s\nreputation as “a great ambassador for the [Respondent]\nfranchise.” J.A. 145.\n 11\n Shortly thereafter, Schumacher sent an email to\nLarry Hatheway (Respondent’s Global Head of Macro\nStrategy) saying that the CMBS business was\nprofitable and that the “revenue per CMBS\nresearcher” (that is, the revenue attributable to\nClaimant, the sole CMBS researcher) “probably is\nfine.” C.A. J.A. 1532. At the time Schumacher sent\nthat email, he anticipated that Claimant would be\nemployed at Respondent in the coming year, not laid off. J.A.\n36. Around the same time, other Respondent actors\ncontinued to state that the CMBS business was a\n“core” Respondent business and that it was profitable. See,\ne.g., J.A. 79 (Cohen email characterizing CMBS\nbusiness as “completely unaffected” by rogue trading\nscandal); J.A. 163 (Respondent CEO rating CMBS business\nas “attractive”); J.A. 166 (Respondent documents deeming\nCMBS business “great success[]”).\n 4. On December 15, 2011, after Schumacher had\nprepared Claimant’s performance review but before he\nshared it with Claimant, Claimant reported the trading\ndesk’s improper pressure campaign to Schumacher.\nJ.A. 27-28. Claimant told Schumacher the situation\n“wasn’t just unethical, it was illegal.” Pet. App. 4a;\nJ.A. 28. Schumacher responded that “it is very\nimportant that you do not alienate your internal\nclient”—that is, the CMBS trading desk. Pet. App.\n4a; J.A. 28.\n Less than a month later, Schumacher emailed\nHatheway requesting a telephone conversation. J.A.\n153. When Hatheway declined to speak on the phone,\nSchumacher emailed back a proposal regarding\nClaimant’s employment. J.A. 151-52. Either Respondent\nshould “remove [Claimant] from our headcount”—that\nis, fire him—or, alternatively, move him to a trading\n 12\ndesk position. Pet. App. 5a; J.A. 151-52. There, he\nwould provide marketing material rather than\nindependent research. See C.A. J.A. 206, 502. As a\nresult, he would no longer be subject to Regulation\nAC, and any pressure Cohen exerted would no longer\nbe illegal. Id.\n Two days after suggesting Claimant’s firing to\nHatheway, Schumacher met with Claimant. C.A. J.A.\n281. During the meeting, Schumacher gave Claimant\nthe favorable December performance review. C.A.\nJ.A. 290. Schumacher did not mention that Claimant’s\njob was in jeopardy.3 Pet. App. 5a. Claimant reiterated\nhis concerns about the trading desk’s pressure,\nsaying that “the constant efforts to skew my\nresearch” violated “regulations as it pertains to my\nobjectivity and independence as a research analyst”\nand comprised “an overall mosaic” of “illegality.” J.A.\n29-30. Schumacher told Claimant “just to write what\nthe business line wanted.” Pet. App. 5a.; J.A. 30.\n A few weeks later, Cohen declined to take on\nClaimant as a trading desk analyst and wrote that if\nClaimant was not going to remain as a research\n\n 3\n Schumacher’s failure to be honest with Claimant stood in\nstark contrast with his treatment of another Respondent employee,\nShuman Li. Li was Claimant’s counterpart in Respondent’s Residential\nMortgage-Backed Securities (RMBS) group, a research\nstrategist who also reported to Schumacher. Because Respondent was\nplanning to exit the RMBS business, Li was in danger of being\nlet go. Schumacher told Li to look for another job within Respondent,\nwarned him that the RMBS job was in jeopardy, and tried to\nhelp Li get a job as a Credit Strategist even though Li, a poorer\nperformer than Claimant, would have needed at least six months\nto get up to speed in that role. C.A. J.A. 518-26, 697-700, 1162-\n65, 1544-45, 1555-56, 1876-77.\n 13\nanalyst, Respondent should “let him go.” J.A. 155.\nSchumacher and Hatheway then agreed to fire\nClaimant. C.A. J.A. 1797.\n On February 6, 2012, Schumacher summoned\nClaimant to the bank’s 13th floor and fired him. C.A.\nJ.A. 304-05. Schumacher later conceded under oath\nthat “one of the factors that led to the selection of\nClaimant for termination was the fit or difference in\nterms of publishing analyst versus desk analyst.” J.A.\n46. Respondent did not lay off any other CMBS business-\nside staff during this time period, and the total\nnumber of people devoted to CMBS at Respondent increased\nfrom 35 in 2011 to 49 in 2013. J.A. 77-83.\n\n C. Procedural background.\n 1. In August 2012, Claimant filed a whistleblower\ncomplaint with the U.S. Department of Labor\nalleging that his termination violated the Sarbanes-\nOxley Act. Compl. ¶ 31, ECF No. 2. After the\nDepartment of Labor failed to process his claim\nwithin 180 days, Claimant exercised his right under\nSection 1514A(b)(1)(B) to file a de novo action in the\nSouthern District of New York. Id.\n 2. The case went to trial in 2017. The trial lasted\nmore than two weeks. The parties presented\nirreconcilable versions of events. Claimant presented\nevidence that (1) the leaders of Respondent’s CMBS trading\ndesk unlawfully pressured him to skew his research\nto conform to the trading desk’s business strategies,\nnotwithstanding SEC regulations that forbade them\nfrom doing so; (2) that he reported that conduct to his\nimmediate supervisor and was told “not to alienate\nyour internal client”; and (3) that he was fired for\nmaking the report. J.A. 28, 125. Respondent contended that\n 14\nClaimant simply made up the whole claim—that there\nhad been no skewing, no reports of pressure to\nSchumacher, and therefore no protected activity—\nand that Claimant was laid off in a reduction in force\nbecause of a downturn in Respondent’s finances. J.A. 125-26.\n After hearing the evidence, the jury was\ninstructed that “[f]or plaintiff to prevail on his\nretaliation claim,” he had to prove four elements:\n“Protected activity, knowledge by his employer,\ntermination of employment and protected activity as\na contributing factor in that termination.” J.A. 131.\n “Contributing factor,” in turn, was defined as\nfollows: “For a protected activity to be a contributing\nfactor, it must have either alone or in combination\nwith other factors tended to affect in any way Respondent’s\ndecision to terminate plaintiff’s employment.” J.A.\n130. The “contributing factor” instruction further\nspecified that “Plaintiff is not required to prove that\nhis protected activity was the primary motivating\nfactor in his termination, or that Respondent’s articulated\nreason for his termination was a pretext, in order to\nsatisfy this element.” Id. A supplemental instruction\n(which Respondent agreed to) during deliberations told the\njury that it had to find that “anyone with knowledge\nof th[e] protected activity, because of the protected\nactivity, affect[ed] in any way the decision to\nterminate Mr. Claimant’s employment.” J.A. 180.\n The jury was instructed that, if it found that\nClaimant had proven those four elements, it should\nproceed to the second step of the SOX burden-shifting\nframework: “Respondent must demonstrate by clear and\nconvincing evidence that it would have terminated\nplaintiff’s employment even if he had not engaged in\n 15\nprotected activity.” J.A. 130-31. This instruction was\nnot challenged by Respondent.\n Finally, the jury was told that if it found that\n“defendants improperly retaliated against plaintiff in\nterminating him from Respondent,” Claimant was entitled to\ncompensation. J.A. 133.\n The jury returned a verdict for Claimant. It found\nthat Claimant had “proved, by a preponderance of the\nevidence, all four elements of his claim.” C.A. J.A.\n3065. It further found that Respondent had not proven that\nit would have taken the same action in the absence of\nClaimant’s protected conduct. Id. The jury awarded\nClaimant almost $1 million in back pay and\ncompensatory damages. Id. 3066-67. The district\ncourt denied Respondent’s post-trial motion, upheld the jury\nverdict on compensatory damages, and adopted as its\nown the jury’s advisory verdict on back pay. See Pet.\nApp. 19a.\n 3. On appeal, Respondent did not challenge either the\nsufficiency of the evidence or the jury instructions\nunderlying the second step of the burden-shifting\nframework (the finding that it had failed to prove it\nwould have fired Claimant “even if he had not engaged\nin protected activity”). Pet. App. 8a. Instead, it raised\ntwo arguments regarding the first step of the\nframework, Claimant’s case in chief.\n First, it argued that there was insufficient\nevidence of “retaliatory intent” to support the verdict.\nPet. App. 16a. The Second Circuit disagreed, finding\nthat “there was circumstantial evidence at trial that\nRespondent terminated Claimant in retaliation for\nwhistleblowing.” Id.\n Second, Respondent made the argument underlying this\ncase: that the jury should have been required to find\n 16\nthat Claimant proved Respondent acted with “retaliatory\nintent” as part of his case in chief. Pet. App. 17a. The\nSecond Circuit agreed with Respondent and remanded for a\nnew trial on liability. Id.\n The court acknowledged that “the jury found that\nClaimant’s whistleblowing was a contributing factor to\nhis termination.” Pet. App. 17a. But it held that this\nwas insufficient to establish liability because the jury\nhad not been instructed that it must find that\nClaimant had proved that Respondent had “retaliatory intent”\nin firing him. Id. The court focused on the directive\nthat an employer not “‘discriminate against an\nemployee . . . because of’ whistleblowing.” Pet. App.\n9a (quoting 18 U.S.C. § 1514A(a)) (italics and ellipses\nsupplied by the Second Circuit). In the Second\nCircuit’s view, the presence of the word\n“discriminate” in SOX meant that only an employee\nwho was the “victim of intentional retaliation” could\nseek relief. Pet. App. 13a-14a. It then assumed that\nthe employee had to be the one to prove intentional\nretaliation. Id. The Second Circuit never mentioned\nthe provision of SOX mandating that whistleblower\nprotection suits “shall be governed” by the burdens of\nproof in AIR-21.4\n 4. Claimant timely petitioned for rehearing en\nbanc. ECF No. 179. The Second Circuit denied\nrehearing and rehearing en banc. Pet. App. 18a.\n\n\n 4\n Claimant also cross-appealed the district court’s findings\nregarding back pay, reinstatement, and attorneys’ fees. Pet.\nApp. 8a. The Second Circuit did not address the cross-appeal.\n 17\n SUMMARY OF THE ARGUMENT\n The Sarbanes-Oxley Act’s whistleblower\nprotection provision does not require plaintiffs to\nprove “retaliatory intent” as part of their case in\nchief.\n I.A. Reading the statute from top to bottom\nmakes that clear. Section 1514A(a) is directed to\nemployers and, as relevant here, prohibits “discharge\n. . . because of” various types of protected activity.\nSection 1514A(b)(2)(C) is directed to courts and\nexplains how violations of Section 1514A(a) are\nproven. It states that a whistleblower retaliation case\nbrought in a federal district court “shall be governed\nby the legal burdens of proof set forth in section\n42121(b) of title 49, United States Code.” The “shall\nbe governed” language means that courts must apply\nthe burdens of proof from Section 42121(b), and no\nother “creature[s] of judicial cloth,” in adjudicating\nSOX whistleblower protection claims. See\nWeinberger v. Cath. Action of Hawaii/Peace Educ.\nProject, 454 U.S. 139, 141 (1981).\n Section 42121(b) contains two burdens of proof,\none directed to the plaintiff-employee, the other to\nthe defendant-employer. First, the plaintiff must\ndemonstrate that his protected activity was “a\ncontributing factor in the unfavorable personnel\naction alleged in the complaint.” 49 U.S.C.\n§§ 42121(b)(2)(B)(i), (iii). On its face, that provision\ncontains no mention of “retaliatory intent.” And were\nthere any doubt, the Congress that wrote SOX had\nmultiple options for making such a showing explicit.\nFor instance, it could have required a showing of\n“intent to retaliate,” as it did in SOX’s criminal\nprovision, or it could have required a showing that\n 18\nprotected conduct was a motivating factor in the\nunfavorable personnel action. It did neither.\n Instead, any consideration of “retaliatory intent”\nis left to the second step of the burden-shifting\nframework. At that step—and only once a plaintiff\nhas met his burden—the employer must show that it\n“would have taken the same unfavorable personnel\naction in the absence of” the protected activity. 49\nU.S.C. §§ 42121(b)(2)(B)(ii), (iv). This same-action\nanalysis is a familiar way to show that an action was\ntaken (or not taken) “because of” a particular trait or\nactivity. It “directs us to change one thing at a time\nand see if the outcome changes.” Bostock v. Clayton\nCnty., 140 S. Ct. 1731, 1739 (2020). An employer who\nlacks “retaliatory intent” can avail itself of the second\nstep of the burden-shifting framework.\n B. Were there any doubt, the prior construction of\nSOX’s burden-shifting framework makes clear the\nplaintiff need not prove “retaliatory intent” in his\ncase in chief. “Where Congress employs a term of art\nobviously transplanted from another legal source, it\nbrings the old soil with it.” George v. McDonough,\n142 S. Ct. 1953, 1959, 1963 (2022) (internal quotation\nmarks omitted). SOX’s burden-shifting framework is\n“obviously transplanted from another legal source,”\nthe Whistleblower Protection Act of 1989. Congress\nthus brought “the old soil” of the WPA with that\nburden-shifting framework.\n That “old soil” makes clear that it is not a\nplaintiff’s burden to prove “retaliatory intent.” Long\nbefore SOX borrowed the WPA framework, the\nauthoritative construction of the “contributing factor”\nstandard from the WPA rejected any notion that it\nrequired a showing of “retaliatory intent.” See\n 19\nMarano v. Dep’t of Justice, 2 F.3d 1137, 1141 (Fed.\nCir. 1993). Uniform agency practice in the decades\nsince the WPA reinforces that the plaintiff need not\nshow “retaliatory intent” under the WPA’s burden-\nshifting framework.\n II. Because the text of SOX makes clear how\nretaliation claims are to be proven, that should be the\nend of the story. Even if the Second Circuit’s concerns\nwere valid, they would not be able to overcome the\nplain text of the statute.\n However, the Second Circuit’s concerns were\nmisplaced. First, it zoomed in on the word\n“discriminate” in Section 1514A. Pet. App. 9a. But\nthe word “discriminate” in the statute is simply a\ncatchall term for unenumerated unfavorable\npersonnel actions taken because of protected\nactivity—precisely what the burden-shifting\nframework is intended to suss out.\n Second, the court below worried about a “scenario\nin which, by virtue of his whistleblowing activity,\n[plaintiff] was insulated from a termination to which\nhe would otherwise have been subjected sooner.” Pet.\nApp. 11a n.4. But the second step of the burden-\nshifting framework takes care of that scenario: The\nemployer could show that it “would have taken the\nsame unfavorable personnel action in the absence of”\nthe whistleblowing, only sooner. See 49 U.S.C.\n§§ 42121(b)(2)(B)(ii), (iv).\n Finally, the Second Circuit raised policy concerns.\nBut Congress was well within its rights to put the\nburden on employers to prove lack of “retaliatory\nintent.” After all, employers “control[] most of the\ncards.” WPA Explanatory Statement, at 5033. And\n 20\neven if those policy concerns had force, they could not\novercome the plain text of the statute.\n\n ARGUMENT\n\nI. A whistleblower need not prove his employer\n acted with “retaliatory intent” as part of his\n case in chief under the Sarbanes-Oxley Act.\n The jury in this case was instructed to find\nwhether Respondent had retaliated against Claimant.\nJ.A. 126-27. And it was instructed on exactly how to\ndo so: First, it had to consider whether Claimant’s\nprotected conduct was a “contributing factor” in his\ntermination; then, it had to consider whether Respondent\nhad shown that it would have discharged Claimant\neven absent the protected activity. J.A. 130.\n The jury found that Claimant’s protected conduct\nwas a contributing factor in his termination. C.A.\nJ.A. 3065. It also found that Respondent had not proven\nthat, because of a reduction in force, it would have\ntaken the same action in the absence of any protected\nconduct. Id. In so doing, the jury found all that the\nstatute requires to establish a retaliation claim under\n18 U.S.C. § 1514A.\n\n A. SOX’s text makes clear the plaintiff need\n not prove “retaliatory intent” in his case in\n chief.\n Reading the statute from top to bottom makes\nclear that a plaintiff is not required to prove\n“retaliatory intent” as part of his case in chief.\n 1. Section 1514A(a) is directed to employers. As\nrelevant here, the statute prohibits “discharge . . .\nbecause of” various types of protected activity. 18\n 21\nU.S.C. § 1514A(a). It also prohibits various other\nadverse employment actions. Employers may not, for\nexample, “suspend” an employee “because of”\nprotected conduct, “threaten” an employee “because\nof” protected conduct, or “harass” an employee\n“because of” protected conduct. Id.\n Section 1514A(a) also contains a catchall\nprovision: An employer may not “in any other\nmanner discriminate against an employee in the\nterms and conditions of employment because of”\nprotected conduct. 18 U.S.C. § 1514A(a). That\nprovision captures adverse employment actions not\nspecifically listed (i.e. employment actions other than\n“discharge,” “suspen[sion],” “demot[ion],” and so on).\n 2. Section 1514A(b)(2)(C) is directed to courts and\nexplains how violations of Section 1514A(a) are\nproven and assessed. Section 1514A(b)(2)(C) states\nthat a whistleblower retaliation case brought in a\nfederal district court “shall be governed by the legal\nburdens of proof set forth in section 42121(b) of title\n49, United States Code.” 18 U.S.C. § 1514A(b)(2)(C).\n To say that the civil action “shall be governed” by\nthe burdens of proof in Section 42121(b) means that\nthe factfinder must look to those burdens—and only\nthose burdens—in resolving the case. For instance,\nwhen this Court says that public disclosure of an\nenvironmental impact statement “shall be governed”\nby FOIA, it means that courts should apply FOIA’s\nwritten exceptions and no other “creature[s] of\njudicial cloth.” Weinberger v. Catholic Action of\nHawaii/Peace Educ. Project, 454 U.S. 139, 141 (1981).\nTo take another example: Where one statute says an\narbitration proceeding “shall be governed” by\nappellate review procedures from another statute, a\n 22\nparty can’t argue that one of those review procedures\noperates differently in the arbitration context.\nCornelius v. Nutt, 472 U.S. 648, 660-61 (1985). The\n“shall be governed” language means that the\nappellate review procedures are “incorporate[d] by\nreference.” Id. at 660. “Shall be governed” thus\ncreates a closed universe of rules that a court must\napply.\n Respondent has never disputed that the “shall be\ngoverned” language refers to two “burdens of proof”\nin Section 42121(b), one placed on the plaintiff-\nemployee and one on the defendant-employer. First,\n“the complainant” must demonstrate that “any\nbehavior described in paragraphs (1) through (4) of\nsRespondentection (a)”—that is, any protected conduct—“was\na contributing factor in the unfavorable personnel\naction.” 49 U.S.C. §§ 42121(b)(2)(B)(i), (iii). Second,\n“the employer” must “demonstrate by clear and\nconvincing evidence that the employer would have\ntaken the same unfavorable personnel action in the\nabsence of that behavior.” Id. §§ 42121(b)(2)(B)(ii),\n(iv).\n 3. As a first step under this burden-shifting\nframework, the plaintiff must demonstrate that his\nprotected activity was “a contributing factor in the\nunfavorable personnel action alleged in the\ncomplaint.” 49 U.S.C. §§ 42121(b)(2)(B)(i), (iii). This\nstep does not require proof of “retaliatory intent.”\n a. The ordinary meaning of the terms in Section\n42121(b) makes that clear: A “factor” is “any of the\ncircumstances, conditions, etc. that bring about a\nresult,” and to “contribute” to is to “be partly\nresponsible” for or to “do a part in bringing about” a\nresult. Factor, Webster’s New World College\n 23\nDictionary (4th ed. 2001); Contribute, id.; Contribute,\nThe Oxford English Dictionary (2d ed. 1989). In legal\nparlance, “one thing is understood to ‘contribute’ to a\ngiven result when such thing has some share or\nagency in producing such result.” James A.\nBallentine, Contribute, Ballentine’s Law Dictionary\n(3d ed. 1969); see also Contributing Cause, Black’s\nLaw Dictionary (6th ed. 1990) (“contributing cause” is\na “generic term used to describe any factor which\ncontributes to a result, though its causal nexus may\nnot be immediate”). Putting those pieces together, the\nplaintiff satisfies his burden where he demonstrates\nthat his protected activity affected—that is,\ninfluenced or helped bring about—an adverse\npersonnel action in some way.\n b. Lest there be any doubt, Congress could easily\nhave required proof of “retaliatory intent” had it\nwanted to. To start, Congress could have made\n“intent to retaliate” one of the elements of a SOX\nwhistleblower claim. Indeed, Congress did just that\nin another provision of SOX, which amended Section\n1514A’s criminal counterpart to prohibit “knowingly,\nwith the intent to retaliate, tak[ing] any action\nharmful to any person, including interference with\nthe lawful employment or livelihood of any person,\nfor” reporting federal crimes. See 18 U.S.C. § 1513(e)\n(emphasis added). Neither Section 1514A nor Section\n42121(b) contains any such “intent to retaliate”\nlanguage.\n Alternatively, Congress could have required a\nplaintiff to show that protected conduct was a\nmotivating factor in the unfavorable personnel\naction. The phrase “motivating factor” means that “if\nwe asked the employer at the moment of the decision\n 24\nwhat its reasons were and if we received a truthful\nresponse, one of those reasons would be” the\nprotected conduct. See Price Waterhouse v. Hopkins,\n490 U.S. 228, 249-50 (1989) (plurality opinion); see\nalso Vill. of Arlington Heights v. Metro. Housing Dev.\nCorp., 429 U.S. 252, 265-66 (1977) (“motivating\nfactor” is one of several “competing considerations” in\ndecision). Other employment statutes, such as the\nUniformed Services Employment and Reemployment\nRights Act of 1994 and Title VII of the Civil Rights\nAct, require a showing of “motivating factor,” rather\nthan “contributing factor.” See 38 U.S.C. § 4311(c)(2);\n42 U.S.C. § 2000e-2(m). But Congress required no\nsuch thing in SOX.\n 4. Instead, any consideration of what the Second\nCircuit called “retaliatory intent” is left to the second\nstep of the burden-shifting framework. Finding that\nthe plaintiff proved his protected activity was a\n“contributing factor” in his termination is a necessary\nstep in finding that he was discharged “because of”\nprotected activity. But it’s not the only thing a jury\nmust find. A jury must also find that the employer\nhas not shown, by clear and convincing evidence, that\nit “would have taken the same unfavorable personnel\naction in the absence of” the protected activity. 49\nU.S.C. §§ 42121(b)(2)(B)(ii), (iv). An employer who did\nnot discharge the plaintiff “because of” protected\nactivity or who had no “retaliatory intent” can\nthereby avoid liability.\n The statute’s text calls for running a\ncounterfactual: Assume that the plaintiff did not\nengage in protected activity and see if the employer\n“would have taken the same unfavorable personnel\naction.” 49 U.S.C. §§ 42121(b)(2)(B)(ii), (iv). This\n 25\nsame-action analysis is a familiar way to show that\nan action was taken (or not taken) “because of” a\nparticular trait or activity. It “directs us to change\none thing at a time and see if the outcome changes.”\nBostock v. Clayton Cnty., 140 S. Ct. 1731, 1738\n(2020) (interpreting 42 U.S.C. § 2000e-2(a)(1), which\nbars “discharg[ing] any individual . . . because of”\nvarious protected traits) (emphasis added); see also\nKentucky Ret. Sys. v. E.E.O.C., 554 U.S. 135, 141\n(2008) (similar analysis under 29 U.S.C. § 623(a)(1)’s\nsimilar language).\n To be sure, in other statutes, the plaintiff often\nbears the burden of proving the “same-action” point.\nBut no one disputes that in SOX, Congress placed the\nburden on the defendant to prove that it would have\ntaken the same unfavorable personnel action even\nabsent the protected activity. And the key point is\nthat the “same-action” analysis completes the proof\nthat an employer has taken adverse personnel action\n“because of” some forbidden consideration—here,\n“because of” protected activity.\n The “same-action” analysis also completes the\nproof that the defendant has acted with “retaliatory\nintent.” This Court has explained that if the employer\nwould have “retain[ed] an otherwise identical\nemployee” who did not have a protected trait, “the\nemployer intentionally penalizes” the employee who\ndoes have the protected trait. Bostock, 140 S. Ct. at\n1741. In SOX, similarly, if an employer would have\n“retain[ed] an otherwise identical employee” who had\nnot engaged in protected activity, the employer\n“intentionally penalizes” the employee who has\nengaged in protected activity when it discharges him.\nIn other words, where a jury finds that an employer\n 26\nhas not shown that it “would have taken the same\nunfavorable personnel action in the absence of”\nprotected activity, it finds that the employer acted\nwith “retaliatory intent.”\n\n B. Prior construction of SOX’s burden-shifting\n framework confirms the plaintiff need not\n prove “retaliatory intent” in his case in\n chief.\n “Where Congress employs a term of art obviously\ntransplanted from another legal source, it brings the\nold soil with it.” George v. McDonough, 142 S. Ct.\n1953, 1959 (2022) (internal quotation marks omitted).\nThat is, “when Congress employs a term of art in a\nstatute, that usage itself suffices to adopt the cluster\nof ideas that were attached to each borrowed word in\nthe absence of indication to the contrary.” Id. at 1963\n(internal quotation marks omitted). That\npresumption is particularly strong when Congress\nused “the very same terminology” in “the very same\nfield, such as securities law or civil-rights law.”\nAntonin Scalia & Bryan A. Garner, Reading Law:\nThe Interpretation of Legal Texts § 54 (2012). The\n“old soil” can include the text of the prior statute;\nauthoritative judicial constructions by a court with\n“exclusive jurisdiction” over the prior statute,\nHelsinn Healthcare S.A. v. Teva Pharms. USA, Inc.,\n139 S. Ct. 628, 633 (2019); and “the mainstream of\nagency practice,” George, 142 S. Ct. at 1961.\n SOX’s burden-shifting framework is “obviously\ntransplanted from another legal source,” the\nWhistleblower Protection Act of 1989, a statute in\n“the very same field” of whistleblower law. Congress\nthus intended to “bring[] the old soil” of the WPA\nwith that burden-shifting framework. And that “old\n 27\nsoil” makes clear that it is not a plaintiff’s burden to\nprove “retaliatory intent.”\n 1. SOX incorporates, by way of AIR-21, the\nburden-shifting structure first set forth in the\nWhistleblower Protection Act of 1989 and since\nincorporated into more than a dozen whistleblower\nstatutes. SOX uses almost identical language to the\nWPA to lay out the burden-shifting framework. At\nthe first step, both statutes require that a plaintiff\nprove that a protected activity “was a contributing\nfactor” in the “personnel action.” 5 U.S.C.\n§ 1221(e)(1)(B); 49 U.S.C. §§ 42121(b)(2)(B)(i), (iii). At\nthe second step, both statutes require that the\nemployer “demonstrate[] by clear and convincing\nevidence” that it “would have taken the same”\n“personnel action in the absence of such” protected\nactivity. 5 U.S.C. § 1221(e)(2); 49 U.S.C.\n§§ 42121(b)(2)(B)(ii), (iv).\n Moreover, the two statutes serve the same goal.\nLike SOX, the WPA provides a remedy where an\nemployer takes adverse personnel action “because of”\nvarious kinds of protected activity. 5 U.S.C.\n§ 2302(b)(8); see 18 U.S.C. § 1514A(a). And like the\nwhistleblower protection provision of SOX (entitled\n“Civil action to protect against retaliation in fraud\ncases”), the relevant provision of the WPA is\nconcerned with retaliation against whistleblowers\n(“Individual right of action in certain reprisal cases”).\n18 U.S.C. § 1514A (emphasis added); 5 U.S.C. § 1221\n(emphasis added).\n To top it off, the legislative history of SOX also\nshows that its goal was to give private-sector\nwhistleblowers the same right of action as the WPA\ngave their public-sector counterparts. See 148 Cong.\n 28\nRecord No. 92, S6541 (2002) (SOX sponsor statement\nof Sen. Tom Harkin) (“[W]orkers who discover\ncorporate fraud should be protected just as we protect\ngovernment whistleblowers.”); S. Rep., at 30\n(“Because we had already extended whistleblower\nprotection to non civil service employees” like airline\nworkers, “we thought it best to track those\nprotections as closely as possible.”).\n 2. Because SOX’s burden-shifting framework is\n“obviously transplanted from” the WPA, we consider\nthe “old soil” that Congress intended to come with it.\nSee George, 142 S. Ct. at 1959. Here, the text of the\nWPA itself, prior judicial constructions by the\nFederal Circuit (which had exclusive jurisdiction over\nthe WPA during the period prior to SOX’s passage),\nand settled agency practice all show that the burden-\nshifting framework SOX borrows from the WPA does\nnot require the plaintiff to prove “retaliatory intent.”\n a. Start with the text of the WPA itself. In 1994,\nCongress amended the WPA to give an example of\nhow an employee might prove protected conduct was\na “contributing factor” to the adverse employment\naction. See Kewley v. Dep’t of Health & Hum. Servs.,\n153 F.3d 1357, 1361–62 (Fed. Cir. 1998). The text of\nthe WPA itself explains that an employee may prove\nthe “contributing factor” element “through\ncircumstantial evidence, such as evidence that the\nofficial taking the personnel action knew of the\ndisclosure or protected activity; and the personnel\naction occurred within a period of time such that a\nreasonable person could conclude that the disclosure\nor protected activity was a contributing factor in the\npersonnel action.” 5 U.S.C. § 1221(e)(1). In other\nwords, the statute permits a fact finder to find\n 29\n“contributing factor” simply based on knowledge of\nthe protected activity plus temporal proximity—no\nshowing of “retaliatory intent” required.\n b. Next, consider how the WPA’s burden-shifting\nframework has been construed by the Federal\nCircuit, the court that had “exclusive jurisdiction”\nover WPA cases in the period before SOX’s passage.\nSee Helsinn, 139 S. Ct. at 633. The seminal case\ninterpreting the WPA’s “contributing factor” standard\nis Marano v. Department of Justice, 2 F.3d 1137\n(Fed. Cir. 1993). In Marano, the plaintiff’s disclosures\nof mismanagement in the Albany office of the Drug\nEnforcement Administration resulted in a “major\noverhaul” of that office, during which he was\nreassigned. Id. at 1138-39. There was evidence that\nthe reassignment was due to the need for a “clean\nsweep” of the Albany office, and the administrative\nlaw judge held that plaintiff had not shown any\nretaliatory intent as part of his case in chief. Id. But\nthe Federal Circuit nonetheless found that plaintiff\nhad still satisfied his burden of showing that his\ndisclosures were a “contributing factor” in his\nreassignment and remanded for consideration of the\nsecond step of the burden-shifting framework. Id. at\n1143.\n The Federal Circuit held that “a whistleblower\nneed not demonstrate the existence of a retaliatory\nmotive on the part of the” employer to meet his\nburden to show that “his protected disclosure was a\ncontributing factor to the adverse personnel action.”\nId. at 1141 (emphasis in original). And it defined\n“contributing factor” to make clear that no showing of\n“retaliatory intent” is required: “[A]ny factor which,\nalone or in connection with other factors, tends to\n 30\naffect in any way the outcome of the decision.” Id. at\n1140.5\n To be sure, as the Federal Circuit explained,\n“evidence of a retaliatory motive would still suffice to\nestablish a violation.” Id. at 1141 (emphasis added).\nIndeed, in this case, Claimant’s proof on the\n“contributing factor” element consisted of evidence of\n“retaliatory intent”: Before he reported illegal activity\nto Schumacher, Schumacher had drafted a glowing\nperformance review for Claimant and expected him to\nremain employed. Supra, 10. Shortly after Claimant\nmade his report, Schumacher recommended to\nHatheway that he be fired (and attempted to avoid\ncreated a written record of the recommendation) and\ndid so in part because of the “difference in fit”\nbetween a publishing analyst (who had to be given\nindependence) and a desk analyst (who did not).\nSupra, 12-13. And Respondent’s stated reasons for firing\nClaimant were pretextual—aside from Claimant, the\nhead count of the CMBS business rose steadily, in\nkeeping with the profitable, “core” line of business it\n\n 5\n Marano accords with the WPA’s legislative history. The\ndrafters of the WPA defined “contributing factor” just as Marano\ndid—that is, “any factor which, alone or in connection with other\nfactors, tends to affect in any way the outcome of the decision.”\nSee 135 Cong. Rec. 4509 (1989); id. at 4518 (statement of Sen.\nChuck Grassley); id. at 4522 (statement of Sen. David Pryor); id.\nat 5033 (explanatory statement of Senate Bill 20); id. at 4522\n(statement of Rep. Pat Schroeder). In choosing the “contributing\nfactor” standard, Congress made clear that “the word\n‘contributing’ does not place any requirement” on plaintiffs “to\nproduce evidence proving retaliatory motive on the part of” the\nemployer. WPA Explanatory Statement, at 5037 (statement of\nRep. Pat Schroeder).\n 31\nwas. Supra, 11, 13. But the Federal Circuit also made\nclear that “contributing factor” may also be proven\nwithout considering “retaliatory intent.” Marano, 2\nF.3d at 1141.\n c. “The mainstream of agency practice”\nsurrounding the WPA also makes clear that the\nburden-shifting framework adopted by SOX does not\nrequire plaintiffs to prove retaliatory intent. See\nGeorge, 142 S. Ct at 1961. The Merit Systems\nProtection Board, which administers the WPA, has\nnever required any showing of “retaliatory intent.”\nRather, the agency has consistently instructed that\n“[c]ontributing factor means any disclosure that\naffects an agency’s decision to threaten, propose,\ntake, or not take a personnel action with respect to\nthe individual making the disclosure.” 5 C.F.R.\n§ 1209.4(d). In selecting the same burden-shifting\nframework as the WPA, Congress is thus presumed\nto have incorporated the “old soil” of that agency\npractice, too.6\n\n\n 6\n To the extent deference to executive agencies’\nunderstanding of the statute is relevant here, it, too, cuts in\nClaimant’s favor. Although the statute gives the SEC authority to\npromulgate regulations regarding SOX as a whole, this Court\nhas explained that there is strong evidence the statute\ndelegated authority to the Department of Labor to interpret the\nwhistleblower provisions. See Lawson, 571 U.S. at 439 n.6;\nTransAm Trucking, Inc. v. Admin. Rev. Bd., 833 F.3d 1206,\n1210 (10th Cir. 2016). And the Department of Labor has held in\nboth regulations and adjudications that a plaintiff need not\nprove that an employer acted with “retaliatory intent” as part of\nhis prima facie case. See 29 C.F.R. § 1980.104(e)(3) (plaintiff\nmay satisfy burden to show “contributing factor” by showing\n“that the adverse personnel action took place within a temporal\n 32\n 3. Lest there be any doubt that the burden-\nshifting framework has a meaning fixed by the WPA,\nconsider that the same burden-shifting framework\nhas been incorporated into more than a dozen other\nwhistleblower statutes. Supra, 6-7 n.1. As to each of\nthose statutes, too, the “mainstream of agency\npractice,” George, 142 S. Ct. at 1961, places no\nburden on the plaintiff to prove “retaliatory intent.”7\nIndeed, the “contributing factor” standard has been\nincorporated into state whistleblower laws in recent\nyears, and in those laws, too, it is a term of art that\ndoes not require a showing of “retaliatory intent.”8\n\n\nproximity after the protected activity, or at the first opportunity\navailable to respondent”); In re Williams v. QVC, Inc., ARB\nCase No. 2020-0019, 2023 WL 1927097 at *7 (ARB Jan. 17,\n2023) (defining “contributing factor” as “any factor, which alone\nor in combination with other factors, tends to affect in any way\nthe outcome of the decision”).\n 7\n See, e.g., 29 C.F.R. § 1978.104(e)(3) (interpreting 49\nU.S.C. § 31105(b)(1)); 29 C.F.R. § 1979.104(b)(2) (interpreting 49\nU.S.C. § 42121(b)(2)(B)); 29 C.F.R. § 1980.104(e)(3) (interpreting\n18 U.S.C. § 1514A(b)(2)(C)); 29 C.F.R. § 1981.104(b)(2)\n(interpreting 49 U.S.C. § 60129(b)(2)(B)); 29 C.F.R.\n§ 1982.104(e)(3) (interpreting 49 U.S.C. § 20109(d)(2)(A)(i)); 29\nC.F.R. § 1983.104(e)(3) (interpreting 15 U.S.C. § 2087(b)(2)(B));\n29 C.F.R. § 1984.104(e)(3) (interpreting 29 U.S.C. § 218c(b)(1));\n29 C.F.R. § 1985.104(e)(3) (interpreting 12 U.S.C. § 5567(c)(3));\n29 C.F.R. § 1986.104(e)(3) (interpreting 46 U.S.C.\n§ 2114(b)(2)(B)); 29 C.F.R. § 1987.104(e)(3) (interpreting 21\nU.S.C. § 399d(b)(2)(C)); 29 C.F.R. § 1988.104(e)(3) (interpreting\n49 U.S.C. § 30171(b)(2)(B)); see also 48 C.F.R. § 3.907-6(a)(1)\n(defining “contributing factor” for purposes of whistleblower\nprotection under American Recovery and Reinvestment Act of\n2009).\n 8\n See, e.g., Ky. Rev. Stat. § 61.103(1)(b) (“contributing\nfactor” is “any factor which, alone or in connection with other\n 33\n * * *\n SOX thus makes clear that a plaintiff is not\nrequired to show “retaliatory intent” as part of his\ncase in chief. Because a SOX civil action “shall be\ngoverned” by the burdens of proof in 49 U.S.C.\n§ 42121(b), those burdens—and only those burdens—\napply. The only burden that Section 42121(b) places\non plaintiffs is the burden of showing that protected\nconduct was a “contributing factor in the unfavorable\npersonnel action.” And neither the plain meaning of\n“contributing factor” nor its meaning as a term of art\nwith a longstanding and authoritative construction\nrequire a showing of “retaliatory intent.”\n\n\nfactors, tends to affect in any way the outcome of a decision”\nunder Kentucky Whistleblower Act); D.C. Code § 1-615.52(a)(2)\n(“contributing factor” is “any factor which, alone or in connection\nwith other factors, tends to affect in any way the outcome of a\ndecision” under D.C. Whistleblower Protection Act); Williams v.\nTrans States Airlines, Inc., 281 S.W.3d 854, 867 (Mo. App. 2009)\n(“contributing factor” under Missouri Human Rights Act is any\nfactor “that contributed a share in anything or has a part in\nproducing the effect”); Lawson v. PPG Architectural Finishes,\nInc., 12 Cal. 5th 703, 713-14 (2022) (“contributing factor\nstandard” under California whistleblower statute is “any factor,\nwhich alone or in connection with other factors, tends to affect\nin any way the outcome of the decision”); Wynn v. Illinois Dep't\nof Hum. Servs., 81 N.E.3d 28, 29 (Ill. App. Ct. 2017)\n(“contributing factor” under Illinois Ethics Act’s whistleblower\nprovision is “any factor, which alone or in combination with\nother factors, tends to affect in any way the outcome of the\ndecision”).\n 34\nII. No legal or practical concerns entitled the\n Second Circuit to ignore the burden-shifting\n framework prescribed by SOX.\n The Second Circuit entirely ignored the portion of\nSOX instructing courts on how to evaluate SOX\nclaims. Indeed, based on the Second Circuit’s opinion,\na reader wouldn’t even know that SOX mandates\nthat civil actions “shall be governed” by the burden-\nshifting framework of 49 U.S.C. § 42121(b). Because\nthe text of SOX makes clear how retaliation claims\nmust be proven, that should be the end of the story—\nno matter how forceful the Second Circuit’s concerns,\nthey would not be able to overcome the plain text of\nthe statute.\n In any event, the Second Circuit’s concerns have\nno purchase.\n 1. First, the Second Circuit claimed the presence\nof the word “discriminate” in 18 U.S.C. § 1514A(a)\nrequires a showing of “animus” or “conscious\ndisfavor” and thus requires placing some burden on\nplaintiffs to show “retaliatory intent.” Pet. App. 9a,\n10a, 13a. To start, the word “discriminate” has\nnothing to do with Claimant’s claim. And in any event,\nthat word simply means differential treatment—\nprecisely what the second step of the burden-shifting\nframework is designed to capture.\n a. Recall that Section 1514A(a) directs that no\ncovered employer “may discharge, demote, suspend,\nthreaten, harass, or in any other manner\ndiscriminate against an employee . . . because of”\nprotected activity. Claimant alleged here that he was\n“discharge[d] . . . because of” protected activity, which\nis one of the employment actions Section 1514A(a)\nbans. The parallel structure of the sentence makes\n 35\nclear that a plaintiff can prove a violation of the\nstatute simply by showing he was “discharge[d] . . .\nbecause of” protected activity, whether or not he was\n“in any other manner discriminate[d] against . . .\nbecause of” protected activity. The word\n“discriminate” is not relevant to Claimant’s claim.\n The Second Circuit seemed to believe that the\nphrase “in any other manner discriminate against”\ncolored all the other terms in Section 1514A\n(“discharge,” “suspend,” and so on). See Pet. App. 9a.\nBut it cited no authority for that sort of reverse\nejusdem generis reasoning. To the contrary, “when a\ngeneral term follows a specific one, the general term\nshould be understood as a reference to subjects akin\nto the one with specific enumeration.” Brogan v.\nUnited States, 522 U.S. 398, 403 n.2 (1998). Here, the\ngeneral term is “in any other manner discriminate,”\nwhile the specific terms are “discharge, “suspend,”\nand the rest. 18 U.S.C. § 1514A(a). While the phrase\n“discharge . . . because of” might inform the way we\ninterpret the phrase “discriminate . . . because of,”\nthe converse isn’t true. Id. (emphasis added).\n b. Even if the word “discriminate” were relevant\nto this case, the court below was still wrong to\nrequire a showing of “animus” or “conscious disfavor.”\nInstead, it’s simply a catchall term that refers to any\nadverse employment action other than the listed\nterms (for instance, assigning a whistleblower to an\nundesirable shift, or failing to promote him). To\n“discharge . . . because of” protected activity is one\n“manner” of “discriminat[ing] . . . because of”\nprotected activity. “Discriminate” in SOX thus simply\nmeans to “make a difference in treatment” or to\n“make an adverse distinction with regard to.”\n 36\nDiscriminate, Merriam-Webster’s Dictionary of Law\n(1996); Discriminate, The Oxford English Dictionary\n(2d ed., 1989).\n The burden-shifting framework is designed to\nsuss out just such differential treatment by asking\nthe employer to persuade the factfinder of an\nalternative explanation for the challenged action that\ndoes not have to do with the protected activity.\nWhere an employer fails to prove that it “would have\ntaken the same unfavorable personnel action in the\nabsence of” the protected behavior, a factfinder is\nentitled to conclude it has engaged in intentional\n“discrimination”—that is, differential treatment\nbecause of the protected activity. See 49 U.S.C.\n§§ 42121(b)(2)(B)(ii), (iv).\n The Second Circuit thought that the word\n“discriminate” required something more—some sort\nof showing of the employer’s hostile feelings about\nthe employee. See, e.g., Pet. App. 10a (“conscious\ndisfavor”), 13a-14a (“animus”). As just explained,\nhowever, that accords neither with the structure of\nSection 1514A nor with basic tenets of statutory\ninterpretation. Supra, 34-35. And the word\n“discriminate” doesn’t require this sort of showing in\nother contexts. A manufacturer who does not hire\nwomen “discriminates” even if it acted out of a desire\nto protect potential offspring from lead exposure, not\nout of animus; a school district that always fires\nwhite teachers over Black ones “discriminates” even\nif it acted out of a desire to preserve role models for\nminority schoolchildren, not out of animus; and a\npower company that requires women to contribute\nmore to a pension fund than men “discriminates”\neven if it acted based on actuarial calculations about\n 37\nthe life expectancy of each gender, not out of animus.\nSee Int’l Union, UAW v. Johnson Controls, Inc., 499\nU.S. 187, 197-98 (1991); Wygant v. Jackson Bd. of\nEduc., 476 U.S. 267, 274-75 (1986); City of Los\nAngeles Dep’t of Water & Power v. Manhart, 435 U.S.\n702, 707-08 (1978); see also Bostock, 140 S. Ct. at\n1743 (fact that employer is “not guilty of animosity\nagainst women” is “irrelevant” to a claim of\n“discrimination” under Title VII).\n So to require the kind of animus the Second\nCircuit demanded would leave SOX out of joint with\nother employment statutes. And it wouldn’t make\nmuch sense, either: To a fired employee, it matters\nlittle whether the employer felt animosity when they\nmade the discharge decision. It matters only whether\nthe employee was fired because he engaged in\nprotected conduct.9\n 2. Second, the court below worried about a\n“scenario in which, by virtue of his whistleblowing\nactivity, [plaintiff] was insulated from a termination\n\n 9\n The Second Circuit considered only whether the jury\ninstructions required Claimant to prove animus. If this Court\ndisagrees with the Second Circuit that the plaintiff must show\nanimus, it should remand for consideration of whether the jury\nwas adequately instructed, even if it concludes that the plaintiff\nmust make some other showing of “retaliatory intent.” The jury\nwas told, inter alia, that (1) a “contributing factor” need not be a\n“primary motivating factor” (i.e., that the protected activity\nshould be at least a motivating factor), (2) the “contributing\nfactor” showing required proof that someone with knowledge of\nthe protected activity “because of” the protected activity affected\nthe decision, and (3) if it found Respondent had “improperly retaliated”\nagainst Claimant, it could award him back pay,” which it did.\nSupra, 14-15.\n 38\nto which he would otherwise have been subjected\nsooner.” Pet. App. 11a n.4. Let’s assume (generously)\nthat any plaintiff would bring that suit (which would\nyield no damages) and that such a plaintiff could\nshow that his protected activity was a “contributing\nfactor in the unfavorable personnel action.” See 49\nU.S.C. §§ 42121(b)(2)(B)(i), (iii). The second step of\nthe burden-shifting framework would produce a\nverdict for the employer. The employer could show\nthat it “would have taken the same unfavorable\npersonnel action in the absence of” the\nwhistleblowing, only sooner. See 49 U.S.C.\n§§ 42121(b)(2)(B)(ii), (iv). To put it another way: We\n“change one thing,” supra, 24-25—that the plaintiff\nblew the whistle—and see if the “outcome changes.”\nHere, the outcome doesn’t change—the plaintiff\nwould still have been fired even if he had not blown\nthe whistle.\n A final note: Even if in some hypothetical case,\nfollowing the statute’s explicit directions were to\nresult in liability where this Court thinks there\nshouldn’t be, that would still be no reason to ignore\nthe text of the statute in favor of a court-crafted\nprocess. After all, Court has warned that, in\ninterpreting SOX, hypotheticals that are “likely more\ntheoretical than real” cannot prevail over the\nstatute’s plain text. Lawson, 571 U.S. at 445. And\nhere, the text of the statute makes clear how SOX\nclaims are to be adjudicated.\n 3. Finally, the Second Circuit fretted that\ninnocent employers may be held liable unless\nplaintiffs are required to show “retaliatory intent.”\nPet. App. 14a-15a, 17a. Even if policy considerations\nwere relevant in a case where the statute is crystal\n 39\nclear, that worry would be misplaced. The Second\nCircuit hasn’t suggested any sort of epidemic of\ncompanies being held liable when they did not\nretaliate against a whistleblower. And this case—\nwhere the jury specifically found that Respondent would not\nhave fired Claimant if he had not engaged in protected\nconduct—is not such a one.\n Moreover, as Congress explained in choosing the\n“contributing factor” standard for the WPA, in many\ncases it is “unrealistic to expect the whistleblower . . .\nto demonstrate improper motive.” 135 Cong. Rec. at\n5037. Instead, the burden-shifting framework makes\nsense because employers “control[] most of the\ncards—the drafting of the documents supporting the\ndecision, the testimony of witnesses who participated\nin the decision, and the records that could document\nwhether similar personnel actions have been taken in\nother cases,” and thus are better positioned to make\nthat showing. Id. at 5033-35. Congress was deeply\nconcerned about deterring employers from retaliating\nagainst whistleblowers: SOX is intended not only to\nprotect individual whistleblowers, but also to\nsafeguard the entire interconnected economy from\nfinancial misdeeds. See S. Rep., at 11. Thus, where\nthe adverse personnel action has been “tainted,”\nWPA Explanatory Statement, at 5033—affected in\nsome way by the protected activity—Congress\nthought it wise to require employers to come forward\nwith proof in order to avoid liability.\n Congress specifically chose a burden-shifting\nframework that placed the burden of disproving\n“retaliatory intent” on employers. And even if this\nCourt would have made a different choice, it should\nnot change the plain text of SOX.\n 40\n CONCLUSION\n For the foregoing reasons, the judgment of the\ncourt of appeals should be reversed and the case\nremanded for further proceedings.", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nSTATEMENT OF THE CASE\n\n It has been black-letter law for decades that a\nplaintiff in a federal disparate treatment or retalia-\ntion case must demonstrate discriminatory intent.\nCongress and this Court have at times refined the req-\nuisite degree of causal nexus between the forbidden\nconsideration and the adverse employment action.\nBut “[t]here is simply no escaping the role intent\nplays” in proving discrimination. Bostock v. Clayton\nCnty., 140 S. Ct. 1731, 1742 (2020).\n Everyone agrees that the Sarbanes-Oxley Act\nof 2002 (“SOX”) prohibits publicly traded companies\nfrom retaliating against employees who have reported\ncertain unlawful conduct. Retaliation is “a form of\n‘discrimination,’” which means it “is, by definition, an\nintentional act.” Jackson v. Birmingham Bd. of Educ.,\n544 U.S. 167, 173-74 (2005). Indeed, the statute here\nmakes it unlawful for employers to “discriminate ...\nbecause of” protected activity. Leaving aside dispar-\nate-impact theory, which has no analog in the retalia-\ntion context, this Court has consistently construed\ncomparable “discrimination” prohibitions to require\nproof of intent. As this Court has already explained,\n 2\n\nSOX does not prohibit all adverse employment ac-\ntions—rather, only those taken for “retaliatory rea-\nsons.” Lawson v. FMR LLC, 571 U.S. 429, 442 (2014).\nThe judgment below reflects this settled understand-\ning.\n In contravention of both that settled understand-\ning and common sense, however, petitioner urges the\nCourt to eliminate the requirement that a plaintiff al-\nleging retaliation must show that his employer acted\nwith retaliatory intent. Petitioner relies primarily on\nSOX’s burden-allocation framework, incorporated\nfrom a different statute, which reduces the degree of\ncausal nexus necessary to prove a “violation” but pre-\ncludes any “[r]elief” if the employer demonstrates by\nclear and convincing evidence that the protected ac-\ntivity was not the but-for cause of the adverse action.\nSee 49 U.S.C. § 42121(b)(2)(B) (incorporated into SOX\nby 18 U.S.C. § 1514A(b)(2)(C)). But those burden-al-\nlocation provisions address causation, not intent, and\nsay nothing about requiring defendants to disprove in-\ntent. On the contrary, they confirm that it remains a\nplaintiff’s burden to prove a “violation” of the sRespondenttan-\ntive prohibition against discrimination, which re-\nquires a showing of intent.\n In lieu of the well-established meaning of the stat-\nutory text, petitioner asks the Court to rely on asser-\ntions by a handful of members of Congress and a Fed-\neral Circuit decision addressing a different statute,\nthe Whistleblower Protection Act of 1989 (the “WPA”),\nwhich enhanced civil service protections for federal\ngovernment employees. But the text of the WPA is\nmaterially different from SOX. While SOX prohibits\nonly “discriminat[ion] ... because of” protected activ-\nity, the WPA does not require “discrimination,” and\nCongress deleted language requiring a plaintiff to\n 3\n\nprove that adverse employment action was taken “as\na reprisal for” protected activity. See Pub. L. No. 101-\n12, § 4, 103 Stat. 16, 32. There is no basis for crediting\nthe WPA’s legislative history and judicial interpreta-\ntion over SOX’s materially different plain language.\n\n A. Statutory Framework\n\n SOX prohibits publicly traded companies from re-\ntaliating against employees who have reported what\nthey reasonably believe to be instances of criminal\nfraud or securities law violations. Specifically, SOX’s\nanti-retaliation provision directs that no employer\nmay “discharge, demote, suspend, threaten, harass, or\nin any other manner discriminate against an em-\nployee in the terms and conditions of employment be-\ncause of any lawful act done by the employee” that\nconstitutes protected activity under the statute. 18\nU.S.C. § 1514A(a). These claims—allegations of “dis-\ncharge or other discrimination ... in violation of sub-\nsection (a)”—must first be filed with the Department\nof Labor, but after a waiting period the plaintiff may\nsue in federal court. Id. § 1514A(b)(1).\n Like SOX, the Dodd-Frank Act provides that “[n]o\nemployer may discharge, demote, suspend, threaten,\nharass, directly or indirectly, or in any other manner\ndiscriminate against, a whistleblower in the terms\nand conditions of employment because of any” act that\nqualifies as protected activity under that statute. 15\nU.S.C. § 78u-6(h)(1)(A). This Court has indicated that\na Dodd-Frank retaliation claim requires the plaintiff\nto demonstrate intent to retaliate. Digit. Realty Tr.,\nInc. v. Somers, 138 S. Ct. 767, 779 (2018).\n SOX also incorporates portions of the Wendell H.\nFord Aviation Investment and Reform Act for the 21st\n 4\n\nCentury (“AIR-21”), Pub. L. No. 106-181, 114 Stat. 61\n(2000), codified at 49 U.S.C. § 42121. See 18 U.S.C.\n§ 1514A(b)(2)(C). As relevant here, AIR-21 requires\nemployees to prove that their protected activity was a\n“contributing factor” in the “unfavorable personnel ac-\ntion alleged in the complaint.” 49 U.S.C.\n§ 42121(b)(2)(B)(iii). If an employee proves a viola-\ntion, the employer may still avoid being ordered to\nprovide “[r]elief” if it demonstrates “by clear and con-\nvincing evidence” that it “would have taken the same\nunfavorable personnel action in the absence of” the\nprotected activity. Id. § 42121(b)(2)(B)(iv). AIR-21\nthus specifies the degree of causal nexus between the\nforbidden consideration and the adverse employment\naction that the plaintiff needs to prove, but permits\nemployers to escape any remedial obligations if they\ncan clearly and convincingly prove a lack of but-for\ncausation.\n Designed to protect “aviation employees from re-\ntaliation by their employers,” AIR-21 consciously em-\nployed “language ... similar to whistleblower protec-\ntion laws that cover employees in other industries,\nsuch as nuclear energy.” S. Rep. No. 105-278, at 22\n(1998). The Energy Reorganization Act (“ERA”) is the\nlaw that “cover[s] employees” in the “nuclear energy”\nindustry. See 42 U.S.C. § 5851. Like AIR-21 and\nSOX, the ERA states that employers may not “dis-\ncharge any employee or otherwise discriminate\nagainst any employee” “because the employee” en-\ngages in protected activity. Id. § 5851(a)(1) (emphasis\nadded).\n\n B. Factual and Procedural Background\n\n 1. Respondent originally hired petitioner in 2007 as a re-\nsearch strategist supporting its commercial mortgage-\n 5\n\nbacked securities (“CMBS”) business. C.A. J.A.184.\nIn 2009, Respondent decided to “reduce its presence” in the\nCMBS market, and laid petitioner off. C.A. J.A.184-\n85. In early 2011, Respondent rehired petitioner as its only\nCMBS strategist; his supervisor was Michael Schu-\nmacher. J.A.22; C.A. J.A.193. As a strategist, peti-\ntioner published research about the CMBS market\nand met with clients, but did not engage in trading or\nselling CMBS. J.A.72.\n Because petitioner’s strategist position did not di-\nrectly generate revenue, the position was merely “nice\nto have” and was “by no means necessary” to run a\nsuccessful CMBS business. J.A.72. “[M]any, many\nbusinesses and many, many players in the CMBS\nspace are very successful and they do not have the\nbenefit of research” published by a CMBS strategist.\nId.\n 2. Respondent experienced major financial difficulties in\n2011. As the Respondent CEO explained in a 2011 email to\nall Respondent employees, the financial industry was “in the\nmidst of a massive transformation” caused by “a fun-\ndamentally changed market environment,” “more\ncautious clients,” “debt reduction,” and “more strin-\ngent regulatory rules and extremely high capital re-\nquirements.” J.A.159. These market-wide difficulties\nwere compounded by a $2 billion loss on a Respondent trad-\ning desk in London in 2011. J.A.53.\n Because of these extraordinary challenges, Respondent\nsenior management was forced to reduce costs\nthrough a series of reductions in force, including one\nin early 2012. J.A.52; Pet. App. 5a. Management de-\ntermined that 129 positions would be eliminated from\nthe Fixed Income, Currencies, and Commodities\n(“FICC”) division, including seven from FICC Re-\nsearch, petitioner’s unit. J.A.169-70.\n 6\n\n Lawrence Hatheway, the Global Head of Macro\nStrategy and Chief Economist for Respondent’s Investment\nBank, learned around January 13, 2012 that he would\nbe required to select the seven positions to eliminate\nfrom FICC Research. J.A.95-96, 169-70. One of the\npositions he selected was the research group’s sole\nCMBS strategist position. J.A.96-97.\n It is undisputed that Hatheway, who had no\nknowledge of any alleged whistleblowing, J.A.104,\nmade the decision to eliminate petitioner’s position.\nSee, e.g., J.A.101 (Hatheway testifying that it was his\n“call”); J.A.47 (Schumacher testifying that he “didn’t\nfinally select anyone for termination”). And as the dis-\ntrict court ruled, petitioner forfeited any reliance on a\ncat’s-paw theory—i.e., an argument that the allegedly\nimproper motivation of a non-decisionmaker could be\nimputed to the decisionmaker. See J.A.140 (district\ncourt refusing “cat’s paw instruction” because peti-\ntioner’s counsel did not timely raise it).\n Hatheway decided to eliminate petitioner’s posi-\ntion based on his understanding that CMBS “would be\na lower priority area for the firm” going forward and\nhis expectation that CMBS was going to face economic\nheadwinds. J.A.96-97. Respondent had “decided to pull\nback” from CMBS “because it was not getting the re-\nsults that it desired for the money that it was spend-\ning.” J.A.116. By 2011, Respondent was “[c]learly not” plan-\nning to emphasize or invest more in the CMBS busi-\nness, J.A.75, which meant that it did not make sense\nto retain a CMBS strategist. A “CMBS strategist is\nvery important” “[i]f you’re trying to build a top five\nbusiness.” J.A.119. Otherwise, it is merely “nice to\nhave.” Id. Indeed, petitioner agreed with Hatheway’s\nforecast, writing that CMBS would likely “underper-\nform” going forward and would have a “shrinking\n 7\n\nrole.” C.A. J.A.1469, 1484; see also C.A. J.A.1449 (“[I]f\nyou’ve talked with me at all over the past two months,\nyou’ll know I’m bearish.”); C.A. J.A.1484 (“[D]uring\nbouts of risk aversion, CMBS will likely underperform\n....”).\n Growth in Respondent’s CMBS business “certainly\nstopped” after May 2011, J.A.73-74, and the busi-\nness’s “[c]urrent situation [wa]s difficult to sustain,”\nJ.A.166. Indeed, CMBS headcount at Respondent was\n“roughly flat over 2012” and “significantly smaller” by\n2013. J.A.92-93.\n 3. Hatheway’s decision to eliminate petitioner’s\nposition met opposition. Hatheway spoke about his\ndecision with Kenneth Cohen, the head of the CMBS\nbusiness, who was “not happy” about the idea of “elim-\ninating [petitioner’s] position.” J.A.104.\n Similarly, Schumacher (petitioner’s immediate\nboss) “opposed” eliminating petitioner’s position.\nJ.A.105. In fact, Schumacher tried to keep both peti-\ntioner and Shumin Li (another strategist, whose em-\nployment also ultimately was terminated in the re-\nduction in force) at Respondent. Schumacher proposed that\nRespondent transfer petitioner to a desk analyst position in\nthe CMBS trading unit. J.A.151. This suggestion was\n“certainly a vote of confidence” in petitioner. J.A.100.\n Ultimately, however, the CMBS business was un-\nable to take petitioner on as a desk analyst. Pet. App.\n5a. Schumacher acknowledged that if Respondent could not\nmove petitioner to the CMBS trading unit, Hatheway\nwould need to make the “tough call” to eliminate the\nCMBS strategist position. J.A.151. Respondent terminated\npetitioner’s employment in February 2012. Pet. App.\n5a.\n 8\n\n Petitioner was not the only CMBS strategist on\nWall Street laid off around this time; Barclays also\nterminated a CMBS strategist. J.A.88, 172. When a\nRespondent employee inquired about hiring her at Respondent, the\nhead of Respondent’s CMBS trading desk responded that\n“[u]nfortunately” there was “no room at the inn.”\nJ.A.172. Respondent never hired a replacement CMBS strat-\negist. J.A.86-87, 92.\n\n C. Proceedings Below\n\n In 2014, petitioner sued Respondent under SOX, claim-\ning that Cohen and a colleague improperly pressured\nhim to skew his research and to publish reports to\nsupport their business strategies. Pet. App. 3a, 6a.\nPetitioner testified that he told Schumacher (but not\nHatheway) about this purported pressure from the\nCMBS trading desk, and alleged that he was termi-\nnated because of those complaints. Id. at 4a.\n At trial, the district court, over Respondent’s objections,\nrefused to instruct the jury that petitioner must prove\nthat Respondent intentionally retaliated against him. Pet.\nApp. 6a. The jury instructions never mentioned in-\ntent at all. Id. Moreover, again over Respondent’s objections,\nthe district court articulated petitioner’s burden to the\njury by directing that, “[f]or a protected activity to be\na contributing factor, it must have either alone or in\ncombination with other factors tended to affect in any\nway Respondent’s decision to terminate plaintiff’s employ-\nment.” Id. (emphasis added).\n On December 21, 2017, the jury returned a verdict\nin petitioner’s favor and an advisory verdict on dam-\nages. Pet. App. 7a; see also D.C. ECF 250. The district\ncourt entered final judgment in petitioner’s favor.\nPet. App. 7a.\n 9\n\n Respondent appealed, arguing among other things that\nthe district court erred by not instructing the jury on\nretaliatory intent and by directing the jury to find for\npetitioner if his protected activity “tended to affect in\nany way Respondent’s decision to terminate” him. C.A. ECF\n49 at 31-37.\n The Second Circuit “vacate[d] the judgment [be-\nlow] and remand[ed] for a new trial on liability.” Pet.\nApp. 8a. In a unanimous opinion written by Judge\nPark, the Second Circuit held that “retaliatory intent\nis an element of a section 1514A claim.” Id. As the\ncourt explained, “[t]he unambiguous, ordinary mean-\ning of section 1514A’s statutory language requires re-\ntaliatory intent.” Pet. App. 9a. Because the statute’s\ntext explicitly “prohibits discriminatory actions\ncaused by ... whistleblowing,” and because “actions\nare discriminatory when they are based on the em-\nployer’s conscious disfavor of an employee for whistle-\nblowing,” there must be a showing of “retaliatory in-\ntent.” Pet. App. 10a (brackets and quotation marks\nomitted). The jury instructions were thus legally er-\nroneous because the “explanation of the contributing\nfactor element fail[ed] to account for the statute’s ex-\nplicit requirement that the employer’s conduct be ‘dis-\ncriminat[ory].’” Pet. App. 10a-11a (brackets in origi-\nnal).\n The Second Circuit also held that the “contrib-\nuting factor” instruction given to the jury was “inade-\nqua[te]” in two other ways. Pet. App. 11a n.4. First,\nby defining “contributing factor” as something that\ntended to affect “in any way” Respondent’s decision to termi-\nnate petitioner’s employment, the instruction improp-\nerly permitted the jury to find a violation even if peti-\ntioner’s “whistleblowing activity” caused him to be “in-\n 10\n\nsulated from a termination to which he would other-\nwise have been subjected sooner.” Id. (emphasis in\noriginal). Second, by asking whether his alleged whis-\ntleblowing “tended to affect” Respondent’s decision in any\nway, the instruction erroneously allowed the jury to\n“look beyond whether the whistleblowing activity ac-\ntually caused the termination” and instead consider\n“whether it was the sort of behavior that would tend to\naffect a termination decision.” Id. (emphases in origi-\nnal).\n The Second Circuit concluded that the district\ncourt’s failure to instruct the jury properly was not\nharmless. See Pet. App. 15a-17a. As it recognized,\n“even though the jury found that [petitioner’s] whis-\ntleblowing was a contributing factor to his termina-\ntion,” there was no way to determine whether it\n“would have found that Respondent acted with retaliatory in-\ntent.” Pet. App. 17a. Accordingly, the Second Circuit\nvacated the judgment and remanded for a new trial.\nId.\n The Second Circuit denied without written opin-\nion petitioner’s request for panel rehearing and re-\nhearing en banc. Pet. App. 18a.\n\n SUMMARY OF ARGUMENT\n\n I. The plain language of Section 1514A of the Sar-\nbanes-Oxley Act requires a plaintiff to prove retalia-\ntory intent.\n A. SOX prohibits “discriminat[ion] ... because of”\nprotected activity. 18 U.S.C. § 1514A(a). This lan-\nguage is not unique to SOX. Interpreting statutes\nthat use that exact formulation or indistinguishable\nlanguage, this Court has consistently held that a\nplaintiff must show that his employer intended to\n 11\n\ntreat him differently on account of his protected char-\nacteristic or protected activity. This settled under-\nstanding is consistent with background principles of\ntort law, under which intent and causation have dif-\nferent and independently important roles.\n B. Nothing about the AIR-21 burden-allocation\nframework modifies the intent requirement embodied\nin SOX’s sRespondenttantive prohibition. Under AIR-21 it is\nplaintiff’s burden to prove the “unfavorable personnel\naction alleged in the complaint,” 49 U.S.C.\n§ 42121(b)(2)(B)(iii), which in SOX is the “discharge or\nother discrimination ... in violation of sRespondentection (a)”\nof Section 1514A, 18 U.S.C. § 1514A(b)(1) (emphasis\nadded). The burden-allocation provisions address\ncausation, not intent. The contributing-factor stand-\nard is simply “a rule that establishes the causation\nstandard for proving a violation defined elsewhere.”\nUniv. of Tex. Sw. Med. Ctr. v. Nassar, 570 U.S. 338,\n355 (2013). The employer’s affirmative defense simi-\nlarly concerns causation, not intent.\n C. Petitioner cannot satisfy his heavy burden of\nshowing that Congress sub silentio eliminated the in-\ntent requirement that is a long-established feature of\nthe statutory language reiterated in SOX. Petitioner\nattempts to erase discrimination from SOX’s text,\nclaiming that retaliatory “discharge” does not require\ndiscrimination. But this Court’s precedents preclude\nthat interpretation, which also contravenes the clear\nstatutory text: to be actionable, discharge must be a\n“manner” of discriminating. Unable to avoid the word\n“discriminate,” petitioner next tries to redefine it to\nexcise intent, but that argument founders on decades\nof this Court’s precedents to the contrary. Petitioner’s\ncontention that Congress would have used the word\n“intent” or some form of “motivate” if plaintiffs were\n 12\n\nrequired to prove intent likewise ignores those prece-\ndents and the settled understanding that intent is\npart and parcel of discrimination. Finally, AIR-21’s\nbut-for causation defense is not a sRespondenttitute for intent.\nBut-for causation can be present without intent—and\nvice versa.\n II. The Whistleblower Protection Act of 1989 can-\nnot override the settled understanding that the terms\nemployed in SOX require proof of intent.\n A. SOX and the WPA are materially different:\nunlike SOX, the WPA does not proscribe discrimina-\ntion based on protected activity. If Congress dis-\npensed with intent in the WPA’s whistleblower provi-\nsion, it did so by deleting the phrase “as a reprisal for”\nand by omitting “discriminat[ion],” not by introducing\nthe “contributing factor” causation standard. More-\nover, SOX’s burden-allocation framework was taken\nnot from the WPA but from AIR-21, which in turn was\nmodeled on the ERA, which has been understood to\nrequire retaliatory intent. It is unsurprising that SOX\nand the WPA have different elements, as they operate\nin very different contexts: SOX applies to private-sec-\ntor companies for whom employment typically is at-\nwill, whereas the WPA applies to federal government\nemployees who enjoy significant civil service protec-\ntions.\n B. The legislative history of the WPA is irrele-\nvant because the language of SOX, a wholly different\nstatute, is clear. In any event, petitioner offers the\nweakest type of legislative history: statements by in-\ndividual representatives. Regardless, at best the leg-\nislative history indicates that deletion of “as a reprisal\nfor” erased the intent requirement from the previous\nstatutory text.\n 13\n\n C. Marano v. Department of Justice, 2 F.3d 1137\n(Fed. Cir. 1993), is also unavailing. Far from author-\nitative, it is a thirty-year-old opinion that interprets\nthe WPA (not SOX), and in fact relies on the deletion\nof “as a reprisal for” in stating that a plaintiff need not\nprove intent.\n III. No deference is due to the Labor Depart-\nment’s Administrative Review Board (“ARB”). Under\nany view of Chevron, the Labor Department’s inter-\npretations of SOX are not entitled to deference be-\ncause Congress delegated to the SEC, not the Labor\nDepartment, the authority “‘to make rules carrying\nthe force of law.’” Lawson v. FMR LLC, 571 U.S. 429,\n476 (2014) (Sotomayor, J., dissenting) (citation omit-\nted). The “muscular scheme of judicial review” of SOX\nconfirms that Congress wanted “federal courts, and\nnot the Secretary of Labor,” to resolve any ambigui-\nties. Id. at 478. Finally, the Secretary of Labor “has\nexplicitly vested any policymaking authority he may\nhave with respect to § 1514A in the Occupational\nSafety and Health Administration (OSHA),” not the\nARB. Id.\n None of this is altered by the fact that the AIR-21\nburden-allocation framework applies in agency adju-\ndications. SOX’s intent requirement is a function of\nthe sRespondenttantive prohibition of discrimination, not the\nprocedural AIR-21 provisions that are incorporated\ninto SOX by reference. Even if deference were appro-\npriate for some ARB decisions, it would be unwar-\nranted here because the statutory language is clear\nand the ARB has taken inconsistent positions on the\nissue without attempting to justify its change in posi-\ntion.\n IV. The judgment below should also be affirmed\non the alternative ground that the jury instruction on\n 14\n\nthe “contributing factor” standard was “inadequa[te]”\nin multiple ways. Pet. App. 11a n.4. Petitioner has\nfailed to challenge those holdings, which are inde-\npendent bases for affirmance.\n\n ARGUMENT\n\nI. THE PLAIN LANGUAGE OF THE SARBANES-OXLEY\n ACT REQUIRES A PLAINTIFF TO PROVE RETALI-\n ATORY INTENT.\n\n SOX proscribes retaliation—i.e., intentional dis-\ncrimination on the basis of protected activity. Specif-\nically, SOX prohibits employers from “discharg[ing] ...\nor in any other manner discriminat[ing] against an\nemployee in the terms and conditions of employment\nbecause of” protected activity. 18 U.S.C. § 1514A(a)\n(emphasis added). Construing a constellation of fed-\neral antidiscrimination and retaliation statutes over\nmany decades, this Court has repeatedly held that\nCongress’s reference to “discriminat[ion] ... because\nof” a protected status or activity requires a plaintiff to\nprove discriminatory intent. This long-established ju-\ndicial understanding of SOX’s familiar statutory lan-\nguage is entirely consistent with principles of tort law,\nwhich inform this Court’s interpretation of the dis-\ncrimination laws. Far from eliminating a plaintiff’s\nobligation to show retaliatory intent, the AIR-21 “con-\ntributing factor” standard and employer’s but-for-cau-\nsation defense address causation, not intent. There is\nno evidence that Congress meant to depart from the\nsettled interpretation of “discriminat[ion] ... because\nof” when it enacted SOX; petitioner’s arguments to the\ncontrary could make sense only if the word “discrimi-\nnate” were erased from the statute.\n 15\n\n A. “Discrimination ... Because Of” A\n Protected Status Or Protected Activity\n Requires Discriminatory Intent.\n\n SOX prohibits “discriminat[ion] ... because of”\nprotected activity. 18 U.S.C. § 1514A(a). That formu-\nlation is hardly unique. Congress has used it in many\nanti-discrimination statutes, beginning decades be-\nfore SOX was enacted. As petitioner himself recog-\nnizes, “[w]here Congress employs a term of art obvi-\nously transplanted from another legal source, it\nbrings the old soil with it.” George v. McDonough, 142\nS. Ct. 1953, 1959 (2022) (citation and quotation marks\nomitted). This Court has consistently understood\n“discriminate ... because of” and similar formulations\nin comparable statutes to require a disparate-treat-\nment plaintiff to show discriminatory intent—and\nthat understanding flows directly from the plain text\nof these statutes and background principles of tort\nlaw. A few examples suffice.\n 1. Title VII of the Civil Rights Act of 1964 states\nthat “[i]t shall be an unlawful employment practice for\nan employer ... to fail or refuse to hire or to discharge\nany individual, or otherwise to discriminate against\nany individual ... because of such individual’s race,\ncolor, religion, sex, or national origin.” 42 U.S.C.\n§ 2000e-2(a)(1) (emphases added). This Court has\nbeen clear that under this language, a “plaintiff is re-\nquired to prove that the defendant had a discrimina-\ntory intent or motive.” Watson v. Fort Worth Bank &\nTr., 487 U.S. 977, 986 (1988); see also Young v. United\nParcel Serv., Inc., 575 U.S. 206, 233 (2015) (Alito, J.,\nconcurring in the judgment) (“Claims of discrimina-\ntion under [Title VII] require proof of discriminatory\nintent.”); Ricci v. DeStefano, 557 U.S. 557, 577 (2009)\n 16\n\n(“A disparate-treatment plaintiff must establish ‘that\nthe defendant had a discriminatory intent or motive’\nfor taking a job-related action.” (citation omitted));\nInt’l Bhd. of Teamsters v. United States, 431 U.S. 324,\n335 n.15 (1977) (“Proof of discriminatory motive is\ncritical”). Bostock is no exception, notwithstanding\npetitioner’s selective quotations. The question, the\nCourt said, always is whether the employer “inten-\ntionally treats a person worse” because of a protected\ncharacteristic. Bostock v. Clayton Cnty., 140 S. Ct.\n1731, 1740 (2020) (emphasis added). “There is simply\nno escaping the role intent plays” in proving discrimi-\nnation. Id. at 1742.1\n Title VII’s anti-retaliation provision likewise pro-\nvides that “[i]t shall be an unlawful employment prac-\ntice for an employer to discriminate against any of his\nemployees ... because he has opposed any” unlawful\nemployment practice. 42 U.S.C. § 2000e-3(a) (empha-\nses added). Interpreting this provision, the Court has\nconcluded that “Title VII retaliation claims require\nproof [of the] desire to retaliate.” Univ. of Tex. Sw.\nMed. Ctr. v. Nassar, 570 U.S. 338, 352 (2013).\n\n\n1\n Petitioner has wisely abandoned his petition-stage argument\nthat the availability of disparate-impact liability under some\nstatutes disproves the default rule that “discriminat[ion]” re-\nquires a showing of intent. By its very nature, retaliation is a\nclaim of disparate treatment and thus requires intent. Jackson\nv. Birmingham Bd. of Educ., 544 U.S. 167, 173-74 (2005) (“[r]et-\naliation is, by definition, an intentional act” because the plaintiff\n“is being subjected to differential treatment”). In any event, Ti-\ntle VII’s disparate-impact liability has its origin in 42 U.S.C.\n§ 2000e-2(a)(2), which does not require “discriminat[ion].” See\nGriggs v. Duke Power Co., 401 U.S. 424, 426 n.1 (1971) (citing 42\nU.S.C. § 2000e-2(a)(2)); Lewis v. City of Chicago, 560 U.S. 205,\n211 (2010) (explaining that Griggs relied on sRespondentection (a)(2)).\n 17\n\n 2. Title VI of the Civil Rights Act of 1964 provides\nthat “[n]o person in the United States shall, on the\nground of race, color, or national origin, be excluded\nfrom participation in, be denied the benefits of, or be\nsubjected to discrimination under any program or ac-\ntivity receiving Federal financial assistance.” 42\nU.S.C. § 2000d (emphases added). This Court has ex-\nplained that it is “beyond dispute” that Title VI “pro-\nhibits only intentional discrimination.” Alexander v.\nSandoval, 532 U.S. 275, 280 (2001).\n 3. The Age Discrimination in Employment Act of\n1967 (“ADEA”) states that “[i]t shall be unlawful for\nan employer” to “fail or refuse to hire or to discharge\nany individual or otherwise discriminate against any\nindividual ... because of such individual’s age.” 29\nU.S.C. § 623(a)(1) (emphases added). Once again, the\nCourt has interpreted this statutory language to re-\nquire a showing of discriminatory intent, reiterating\nthat “[t]he ultimate burden of persuading the trier of\nfact that the defendant intentionally discriminated\nagainst the plaintiff remains at all times with the\nplaintiff.” Reeves v. Sanderson Plumbing Prods., Inc.,\n530 U.S. 133, 143 (2000) (brackets in original; citation\nomitted); see also Smith v. City of Jackson, 544 U.S.\n228, 249 (2005) (O’Connor, J., concurring in the judg-\nment) (explaining that the ADEA “plainly requires\ndiscriminatory intent”).\n 4. Like SOX, Dodd-Frank prohibits employers\nfrom “discharg[ing] ... or in any other manner dis-\ncriminat[ing] against” employees “because of” pro-\ntected activity. 15 U.S.C. § 78u-6(h)(1)(A) (emphases\nadded). This Court recently indicated that a plaintiff\nmust establish retaliatory intent under this provision.\nSee Digit. Realty Tr., Inc. v. Somers, 138 S. Ct. 767,\n779 (2018). Dodd-Frank defines “whistleblower” as\n 18\n\nsomeone who reports a suspected securities violation\nto the SEC, 15 U.S.C. § 78u-6(a)(6), and specifies var-\nious types of activities for which such “whistleblow-\ners” are protected: the first clause protects “providing\ninformation to the [SEC],” and the third clause covers\n“making disclosures” to various persons and entities,\nincluding but not limited to the SEC, pursuant to cer-\ntain laws. Id. § 78u-6(h)(1)(A)(i), (iii). In holding that\nan employee must have reported to the SEC to be a\nprotected whistleblower, the Court rejected the con-\ntention that this interpretation would “vitiate” the\nthird clause’s protections for disclosures to other per-\nsons or entities. Digit. Realty Tr., 138 S. Ct. at 779.\nThe Court explained that the third clause retains in-\ndependent significance because “[t]he employee can\nrecover under the statute without having to demon-\nstrate whether the retaliation was motivated by the\ninternal report (thus yielding protection under clause\n(iii)) or by the SEC disclosure (thus gaining protection\nunder clause (i)).” Id. (emphases added). The Court’s\nrationale clearly contemplates that the employer’s re-\ntaliatory motive is a necessary feature of the claim, re-\ngardless of which type of protected activity was the\ntarget of that intent. Id.\n 5. The Court’s repeated conclusion that statutes\nprohibiting discrimination because of a forbidden con-\nsideration require proof of intent also squares with\nbackground principles of tort law that the discrimina-\ntion laws draw upon.\n Discrimination is an “[i]ntentional tort[].” Staub\nv. Proctor Hosp., 562 U.S. 411, 417 (2011) (applying\nthe Uniformed Services Employment and Reemploy-\nment Rights Act); Burlington Indus., Inc. v. Ellerth,\n524 U.S. 742, 764 (1998) (explaining that “Title VII\nborrows from tort law”). And retaliation “is a form of\n 19\n\n‘discrimination’ because the complainant is being sub-\njected to differential treatment.” Jackson, 544 U.S. at\n174. That is why “[t]he requirements for a retaliation\nclaim largely track the requirements for a discrimina-\ntion claim.” Kaufman v. Perez, 745 F.3d 521, 531 (D.C.\nCir. 2014) (Srinivasan, J., concurring in the judg-\nment).\n Retaliation is thus, like discrimination, “by defini-\ntion” an “intentional act.” Jackson, 544 U.S. at 173-\n74. Indeed, it has long been recognized that retalia-\ntion is an intentional tort, particularly retaliatory dis-\ncharge. Nassar, 570 U.S. at 346-47 (examining tort\nlaw “to define the proper standard of causation for Ti-\ntle VII retaliation claims”); Pineda v. JTCH Apart-\nments, LLC, 843 F.3d 1062, 1064 (5th Cir. 2016) (not-\ning that “intentional torts” include “retaliatory dis-\ncharge”); Reich v. Cambridgeport Air Sys., Inc., 26\nF.3d 1187, 1192 (1st Cir. 1994) (“Retaliatory discharge\nhas been treated as an intentional tort.”); Travis v.\nGary Cmty. Mental Health Ctr., Inc., 921 F.2d 108,\n112 (7th Cir. 1990) (recognizing that “intentional\ntorts” include “retaliatory discharge”).\n “[W]hen Congress creates a federal tort[,] it\nadopts the background of general tort law,” Staub, 562\nU.S. at 417, including—naturally—the requirement\nthat an intentional tort involve intent. For example,\na tort claim for “retaliatory discharge” requires the\nplaintiff to “establish wrongful intent to discharge in\nviolation of public policy.” Dan B. Dobbs, et al., The\nLaw of Torts § 703 & n.21 (2d ed. 2011) (citation omit-\nted). And in the context of SOX and other federal stat-\nutes with similar language, an employer is liable if its\n“agent intends, for discriminatory reasons, that the\nadverse action occur.” Staub, 562 U.S. at 419. That\nis different from causation, as exhibited—in Staub—\n 20\n\nby the Court’s independent emphasis on evidence that\nStaub’s supervisors “were motivated by hostility to-\nward Staub’s military obligations,” that their “actions\nwere causal factors” in Staub’s termination by another\nmanager, and that the supervisors had the “intent to\ncause Staub to be terminated.” Id. at 423.\n * * *\n When “‘judicial interpretations have settled the\nmeaning of an existing statutory provision, repetition\nof the same language in a new statute indicates, as a\ngeneral matter, the intent to incorporate its ... judicial\ninterpretations as well.’” Merrill Lynch, Pierce, Fen-\nner & Smith Inc. v. Dabit, 547 U.S. 71, 85 (2006) (el-\nlipsis in original; citation omitted). In SOX, Congress\ndecided to use terminology—“discriminate ... because\nof”—that has long been interpreted by this Court to\nrequire a plaintiff to prove intent. That interpretation\nis strongly supported by traditional tort-law princi-\nples that animate the discrimination laws. In fact,\nthis Court has already indicated that a SOX plaintiff\nmust prove that his employer acted with a “retaliatory\nreason[].” Lawson v. FMR LLC, 571 U.S. 429, 442\n(2014). Only a clear indication that Congress chose to\n“disrupt” the settled meaning of that terminology\ncould overcome the strong presumption that discrimi-\nnatory intent is a required element of a SOX retalia-\ntion claim. Dir. of Revenue of Mo. v. CoBank ACB, 531\nU.S. 316, 324 (2001). No such clear indication exists.\n 21\n\n B. AIR-21’s Burden-Allocation Framework\n Does Not Eliminate The Intent Require-\n ment.\n\n Nothing in the AIR-21 burden-allocation frame-\nwork indicates that Congress chose in SOX to elimi-\nnate plaintiffs’ obligation to prove intent. Rather, the\nburden-allocation framework is focused on causation.\n 1. The first AIR-21 burden-allocation provision at\nissue sets forth the plaintiff’s burden and operates in\ntandem with SOX’s sRespondenttantive prohibition, which re-\nquires intent. It states that a plaintiff cannot estab-\nlish “that a violation of sRespondentection (a) has occurred”\nwithout proving that his protected activity “was a con-\ntributing factor in the unfavorable personnel action al-\nleged in the complaint.” 49 U.S.C. § 42121(b)(2)(B)(iii)\n(emphasis added). SOX specifies the “unfavorable\npersonnel action” that must be “alleged in the com-\nplaint”: A “complaint” under the SOX whistleblower\nstatute “alleges discharge or other discrimination ...\nin violation of sRespondentection (a)” of Section 1514A. 18\nU.S.C. § 1514A(b)(1) (emphasis added). And sRespondentec-\ntion (a) of Section 1514A, in turn, prohibits “discrimi-\nnat[ion] ... because of” protected activity. Under the\nstatutory framework, therefore, the AIR-21 provision\ninquires whether protected activity was a “contrib-\nuting factor” to a discriminatory personnel action in\n“violation” of SOX—and as demonstrated above, “dis-\ncriminat[ion]” has consistently been understood to re-\nquire proof of intent.\n The second AIR-21 burden-allocation provision al-\nlows the employer to avoid remedial obligations even\nif the plaintiff has demonstrated that a violation oc-\ncurred. It forbids the court from ordering “[r]elief ...\nif the employer demonstrates by clear and convincing\n 22\n\nevidence that the employer would have taken the\nsame unfavorable personnel action in the absence of\nthat behavior.” 49 U.S.C. § 42121(b)(2)(B)(iv). That\ndefense is relevant only if the plaintiff has proven a\nviolation—and as explained above, proving a violation\nmeans proving discrimination, which requires retali-\natory intent.2\n 2. Rather than addressing intent, the AIR-21 pro-\nvisions allocate the burdens of proving causation in a\nmanner similar to Title VII.\n The contributing-factor standard for plaintiffs un-\nder AIR-21, like the similarly structured motivating-\nfactor standard under Title VII, 42 U.S.C. § 2000e-\n2(m), “is not itself a sRespondenttantive bar on discrimination.\nRather, it is a rule that establishes the causation\nstandard for proving a violation defined elsewhere.”\nNassar, 570 U.S. at 355. To be sure, the “contributing\nfactor” standard requires less of a causal nexus “than\nthose [causation standards] applied in other anti-dis-\ncrimination contexts”; “a ‘contributing factor’ is some-\nthing less than a sRespondenttantial or motivating one.” Arm-\nstrong v. BNSF Ry. Co., 880 F.3d 377, 382 (7th Cir.\n2018) (quotation marks and citation omitted). But\nmodifying the standard of causation does not address\nthe requirement of intent. The question whether the\nemployer possessed discriminatory (i.e., retaliatory)\nintent is legally and logically distinct from the ques-\ntion of what factors contributed to bringing about the\nemployer’s actions, and to what extent. See su-\npra 19-20.\n\n\n2\n That is how the affirmative defense works for Title VII, too: it\ncomes into play only “[o]n a claim in which an individual proves\na violation.” 42 U.S.C. § 2000e-5(g)(2)(B).\n 23\n\n The employer’s defense under AIR-21, like the em-\nployers’ defense under Title VII, 42 U.S.C. § 2000e-\n5(g)(2)(B), also hinges on causation. An employer may\nescape any remedial obligations under the AIR-21\nframework if it can “show that it would have taken the\nsame action even if there had never been a protected\nactivity.” Genberg v. Porter, 882 F.3d 1249, 1259 (10th\nCir. 2018). That is, the employer can “invoke lack of\nbut-for causation as an affirmative defense.” Comcast\nCorp. v. Nat’l Ass’n of Afr. Am.-Owned Media, 140\nS. Ct. 1009, 1017 (2020). Unlike Title VII, a SOX de-\nfendant must prove the lack of but-for causation by\nclear and convincing evidence, but if he does he estab-\nlishes a complete defense to providing any remedy,\nwhereas the Title VII defendant merely avoids dam-\nages and reinstatement liability. Compare 49 U.S.C.\n§ 42121(b)(2)(B)(iv) with 42 U.S.C. § 2000e-5(g)(2)(B).\nBut for both, the sRespondenttance of the defense is the same:\nwas the forbidden consideration a but-for cause of the\nadverse action. Lack of intent is neither necessary nor\nsufficient to establish the defense.\n\n C. Petitioner’s Arguments For Eliminating\n The Intent Requirement Are Unper-\n suasive.\n\n As explained above, petitioner faces a heavy bur-\nden to establish that Congress chose in SOX to elimi-\nnate the intent element for “discrimination” claims.\nBut rather than address the mountain of history and\nprecedent on the meaning of “discriminate ... because\nof,” he ignores it, instead launching a series of flank\nattacks on SOX’s requirement that plaintiffs prove in-\ntent. All of those arguments are unconvincing.\n 24\n\n 1. Petitioner argues (at 21, 34-35) that “[t]he\nword ‘discriminate’ is not relevant to [his] claim” be-\ncause he was “‘discharge[d],’” whereas the “in any\nother manner discriminate” language is supposedly a\nmere “catchall provision” that has no interpretive rel-\nevance to “discharge” or the other adverse actions\nlisted in Section 1514A(a).\n Petitioner’s theory is flatly inconsistent with this\nCourt’s interpretation of indistinguishable language\nin other discrimination statutes. Under SOX, an em-\nployer may not “discharge, demote, suspend, threaten,\nharass, or in any other manner discriminate against\nan employee ... because of” protected activity. 18\nU.S.C. § 1514A(a) (emphasis added). Title VII simi-\nlarly makes it unlawful for an employer “to fail or re-\nfuse to hire or to discharge any individual, or other-\nwise to discriminate against any individual ... because\nof such individual’s” protected status. 42 U.S.C.\n§ 2000e-2(a)(1) (emphasis added). Similarly, the\nADEA makes it unlawful “to fail or refuse to hire or to\ndischarge any individual or otherwise discriminate\nagainst any individual ... because of such individual’s\nage.” 29 U.S.C. § 623(a)(1) (emphasis added). Under\npetitioner’s interpretation of this language, then, a Ti-\ntle VII or ADEA plaintiff would not have to prove dis-\ncriminatory intent if the adverse action he alleges is\ntermination or not being hired—despite volumes of\ncase law denominating firing or refusing to hire an\nemployee in violation of those statutes as “discrimina-\ntion.”\n But, of course, petitioner’s approach is not the law,\nas exhaustively shown above. Discriminatory intent\nis a critical element under Title VII and the ADEA,\njust as with SOX. In Texas Department of Community\nAffairs v. Burdine, 450 U.S. 248 (1981), the plaintiff\n 25\n\nalleged that the “decision to terminate her had been\npredicated on gender discrimination in violation of Ti-\ntle VII.” Id. at 251. Similarly, in Reeves, the plaintiff\nalleged “that he had been fired because of his age in\nviolation of the [ADEA].” 530 U.S. at 138. In both\ncases, this Court emphasized that it was the plaintiff’s\n“ultimate burden of persuading the trier of fact that\nthe defendant intentionally discriminated against the\nplaintiff.” Burdine, 450 U.S. at 253; Reeves, 530 U.S.\nat 143. Petitioner’s contrary argument is baseless.\n Petitioner’s reading also contravenes straightfor-\nward statutory interpretation. By its plain terms, the\nphrase “in any other manner discriminate” neces-\nsarily modifies the full list in Section 1514A(a): each\nentry in the list must be an “other manner” of “dis-\ncriminat[ing].” As other courts have recognized, “the\nphrase ‘A, B, or any other C’ indicates that A is a sub-\nset of C.” Safe Food & Fertilizer v. EPA, 350 F.3d\n1263, 1269 (D.C. Cir. 2003) (citation omitted). Peti-\ntioner’s interpretation of Section 1514A(a) gives no\nmeaning to the word “other.” That “flouts the rule\nthat a statute should be construed so that effect is\ngiven to all its provisions, so that no part will be inop-\nerative or superfluous.” Clark v. Rameker, 573 U.S.\n122, 131 (2014) (quotation marks and citation omit-\nted).\n Nor is Section 1514A(a) the only reference to a\nSOX plaintiff’s obligation to prove “discrimination.”\nSOX separately confirms that a plaintiff must “al-\nlege[] discharge or other discrimination by any person\nin violation of sRespondentection (a).” 18 U.S.C. § 1514A(b)(1)\n(emphasis added). Again, the word “other” signifies\nthat actionable “discharge” necessarily entails “dis-\ncrimination.” And reading sRespondentection (b)(1) together\nwith sRespondentection (a) reinforces that “discharge, demote,\n 26\n\nsuspend, threaten, [and] harass” are all modified by\n“discrimination.” Indeed, this Court has already rec-\nognized that Section 1514A “enumerate[s]” “prohib-\nited retaliatory measures,” including “retaliatory dis-\ncharges,” engaged in “for retaliatory reasons.” Law-\nson, 571 U.S. at 441-42.\n 2. Unable to avoid the word “discriminate,” peti-\ntioner tries (at 34-37) to neuter the term’s meaning,\nclaiming it does not signify that intent is required.\nBut he ignores the unbroken chain of precedents from\nthis Court construing sRespondenttantively identical statu-\ntory uses of “discriminate” to mean that a “disparate-\ntreatment plaintiff must establish ‘that the defendant\nhad a discriminatory intent or motive’ for taking a job-\nrelated action.” Ricci, 557 U.S. at 577 (citation omit-\nted). “Discriminate” means the same thing in SOX\nthat it means in Title VII, Title VI, the ADEA, and\nDodd-Frank. “The words of [these statutes] are not\nlike mood rings; they do not change their message\nfrom one moment to the next.” Students for Fair Ad-\nmissions, Inc. v. President & Fellows of Harvard Coll.,\n143 S. Ct. 2141, 2216 (2023) (Gorsuch, J., concurring).\nIndeed, excising intent would “evade[] the ultimate\nquestion of discrimination vel non.” U.S. Postal Serv.\nBd. of Governors v. Aikens, 460 U.S. 711, 714 (1983).\nPetitioner trips upon this problem when attempting\nto spin his revisionary understanding of discrimina-\ntion: He concedes (at 35, citation omitted) that dis-\ncrimination means “to ‘make an adverse distinction\nwith regard to’” a forbidden consideration, but fails to\n 27\n\nexplain how an adverse distinction can be made with\nregard to protected activity without intent.3\n 3. Petitioner also maintains (at 23-24) that a SOX\nretaliation claim does not require discriminatory in-\ntent because Congress did not include a phrase like\n“motivating factor” or “intent to retaliate” in Sec-\ntion 1514A. But the same was true of Title VII until\n1991, and the same remains true of the other discrim-\nination statutes discussed above, all of which use es-\nsentially the same “discriminate ... because of” termi-\nnology that this Court has consistently interpreted to\nrequire intent. Congress’s adoption of the same for-\nmulation in SOX compels rejection of petitioner’s\nclaim that intent need not be proven, and there is no\nbasis for petitioner’s assertion that in SOX, unlike nu-\nmerous other federal employment discrimination stat-\nutes, the phrase “discriminate ... because of” is insuf-\nficient to establish an intent requirement.\n Moreover, the insertion of “motivating factor” into\nTitle VII by the Civil Rights Act of 1991 concerned\ncausation. That bill codified a “more forgiving stand-\nard” of “causation” than but-for causation. Bostock,\n140 S. Ct. at 1739-40; Nassar, 570 U.S. at 355 (“moti-\nvating factor” “establishes the causation standard for\nproving a violation defined elsewhere”). Congress was\nnot imposing a new intent requirement, for intent had\n\n3\n Petitioner’s suggestion (at 36-37) that the Second Circuit\nrequired a showing of “hostile feelings about the employee” by\nusing the word “animus” is a red herring. The Second Circuit\nmentioned “animus” only twice—both in quoting other\ndecisions—and it unambiguously held that what is required is a\nshowing of “retaliatory intent,” not hostile feelings toward the\nemployee. Pet. App. 9a. The cases petitioner cites are thus\ninapposite.\n 28\n\nalready been part of a claim under 42 U.S.C. § 2000e-\n2(a)(1) for over a quarter century. Similarly, Congress\ndid not use “motivating factor” language in Title VI,\nyet it is “beyond dispute ... that [Title VI] prohibits\nonly intentional discrimination.” Alexander, 532 U.S.\nat 280. The ADEA similarly has no “motivating fac-\ntor” language, yet intent is required. See Gross v. FBL\nFin. Servs., Inc., 557 U.S. 167, 173-74 (2009). So, too,\nwith SOX.4\n Simply, when Congress in 1991 made a plaintiff’s\nTitle VII case easier by reducing the “but for” causa-\ntion requirement to a “motivating factor” test, it did\nnot simultaneously make a plaintiff’s case harder by\nintroducing an intent requirement that supposedly\nnever existed before.\n 4. Congress’s inclusion of a specific mens rea re-\nquirement in 18 U.S.C. § 1513(e), which criminalizes\nobstruction of a law enforcement investigation, is\nequally unavailing. To begin, Section 1513(e) does not\ninclude “discriminate ... because of” and thus says\nnothing about the meaning of that term.\n Regardless, Congress frequently includes express\ndescriptions of the mens rea required when it enacts\ncriminal statutes, given the heightened need to pro-\nvide “fair warning” of what conduct will give rise to\ncriminal sanctions. United States v. Davis, 139 S. Ct.\n\n\n4\n When a discrimination statute uses “because” to connect the\nforbidden consideration to the adverse action, this Court has in-\nterpreted it to require the plaintiff to prove but-for causation.\nGross, 557 U.S. at 176 (ADEA); Nassar, 570 U.S. at 351-52 (Title\nVII). So, while Congress did not need to specifically mention “in-\ntent” because it is built into “discriminate ... because of,” specifi-\ncation was necessary to require a less onerous causal nexus.\n 29\n\n2319, 2323 (2019). For example, the neighboring pro-\nvisions at 18 U.S.C. § 1513(a), which criminalizes re-\ntaliatory murder or attempted murder, and sRespondentec-\ntion (b), which criminalizes the retaliatory causing of\nbodily harm, both expressly include the mens rea re-\nquirement of “intent to retaliate.” Congress simply\nborrowed the same language when it added sRespondentec-\ntion (e).\n In contrast, federal civil discrimination provisions\nrarely, if ever, include an explicit mens rea element.\nSee, e.g., 42 U.S.C. § 1981; id. § 2000e-2(a)(1) (Title\nVII); id. § 2000d (Title VI); 29 U.S.C. § 623(a)(1)\n(ADEA). Yet it is “beyond dispute” that those statutes\nrequire the plaintiff to prove intent. Alexander, 532\nU.S. at 280. Having chosen to use familiar phrasing\nthat has repeatedly been held to require intent, Con-\ngress had no need to take a belt-and-suspenders ap-\nproach by explicitly referring to retaliatory intent.\nOnly if it had sought to eliminate the intent require-\nment would clarifying language have been necessary.\n Petitioner’s strained connection between Sec-\ntion 1514A and Section 1513(e) is further belied by\nthe fact that they were enacted in different titles of\nSOX (Title VIII, Section 806 and Title XI, Sec-\ntion 1107, respectively). See Pub. L. No. 107-204, 116\nStat. 745, 802-03, 810. Indeed, they were drafted as\nparts of different bills. See Corporate and Criminal\nFraud Accountability Act of 2002, S. 2010, 107th\nCong. § 6 (2002) (adding 18 U.S.C. § 1514A); Corpo-\nrate Fraud Accountability Act of 2002, H.R. 5118,\n107th Cong. § 11 (2002) (adding 18 U.S.C. § 1513(e)).\nThe statutory drafting history thus confirms that\ncomparing these vastly different provisions is a use-\nless exercise.\n 30\n\n 5. Finally, Petitioner argues (at 24-26) that the\nemployer’s but-for-causation defense is the only point\nat which intent comes into play, suggesting that the\ndefense was designed as a safety-valve to weed out in-\nstances where the employer did not act with retalia-\ntory intent. That is incorrect, for several reasons.\n First, as noted above, the plain terms of the em-\nployer’s defense do not address or modify the require-\nments for proving a violation; rather, the defense\nmerely enables an employer to avoid the imposition of\n“[r]elief” by proving by clear and convincing evidence\nthat it “would have taken the same unfavorable per-\nsonnel action in the absence of” protected activity. 49\nU.S.C. § 42121(b)(2)(B)(iv). It remains the plaintiff’s\nburden to prove that a “violation of sRespondentection (a)” of\nSection 1514A occurred, which includes proving retal-\niatory intent. See supra 21-22. The presence of a lack-\nof-causation defense does not eliminate the plaintiff’s\nresponsibility to prove intent.\n Consider an example. An employee in a com-\npany’s accounting department complains to his man-\nager that a particular accounting practice of the com-\npany is not compliant with Generally Accepted Ac-\ncounting Principles, and therefore—he alleges—\nplaces the company out of compliance with the securi-\nties laws. The company retains independent counsel,\ninvestigates, and determines that the accountant is\nwrong and also that he has made related accounting\nerrors. The accountant is let go, due to his errors: he\nwas bad at his job. His complaint in this circumstance\nwas a “contributing factor” to his termination, but the\ncompany acted entirely appropriately. In this total\nabsence of retaliatory intent, the company should not\nbear the heavy burden of showing by clear and con-\n 31\n\nvincing evidence it would have terminated the ac-\ncountant even if he had not complained. That is why\nSOX provides that the protected activity must be a\ncontributing factor to a discriminatory act, which pre-\nserves plaintiff’s burden of proving intent.\n Second, petitioner’s claim that placing the burden\nof disproving but-for causation on the employer some-\nhow eliminates the plaintiff’s obligation to prove dis-\ncriminatory intent is foreclosed by the settled under-\nstanding of Title VII, which was amended in 1991 to\nrequire employers to disprove but-for causation to\navoid damages and reinstatement in a mixed-motive\ndiscrimination case. 42 U.S.C. § 2000e-5(g)(2)(B); see\nComcast, 140 S. Ct. at 1017. Despite this transfer of\nthe burden of proof on but-for causation to the em-\nployer, this Court has continued to affirm that plain-\ntiffs bear the burden of proving discriminatory intent\nunder Title VII. See Ricci, 557 U.S. at 577 (“A dispar-\nate-treatment plaintiff must establish ‘that the de-\nfendant had a discriminatory intent or motive’ for tak-\ning a job-related action.” (citation omitted)).\n Third, petitioner simply ignores that but-for cau-\nsation and intent are distinct, and that as shown\nabove, the affirmative defense is about causation, not\nintent. See supra 22-23. By its express terms, the de-\nfense prevents “[r]elief” from being “ordered” if there\nis no but-for causation, separate and apart from any\nquestion of retaliatory intent. 49 U.S.C.\n§ 42121(b)(2)(B)(iv). Adjusting the burden on aspects\nof one element—here, causation—says nothing about\nthe allocation of the burden on the distinct element of\nintent. The affirmative defense asks whether an em-\nployer’s “nonretaliatory reasons, by themselves,\nwould have been enough that the employer would\nhave taken the same adverse action in the absence of\n 32\n\nthe protected activity.” Palmer v. Canadian Nat’l\nRy./Ill. Cent. R.R. Co., ARB Case [DOCKET REDACTED], 2016\nWL 5868560, at *12 (Sept. 30, 2016) (plurality), reis-\nsued [URL REDACTED] (Jan. 4, 2017) (em-\nphasis omitted). That allocation of the burden of proof\non but-for causation does not remove the plaintiff’s\ncontinuing obligation to prove intent.\n Petitioner nevertheless claims that an employer’s\nfailure to prove the defense “completes the proof that\nthe defendant has acted with ‘retaliatory intent,’”\nwhile “[a]n employer who lacks ‘retaliatory intent’\nthus avoids liability” through the affirmative defense.\nPet. Br. 6, 25 (emphasis added). That is demonstrably\nwrong, on both counts: an employer that acted with\nthe darkest of retaliatory intent might nonetheless\nshow it would have fired an employee anyway,\nwhereas an employer that had no improper intent at\nall might be unable to prove the affirmative defense.\n Consider, for example, the only circuit decision to\nhave taken an approach inconsistent with the Second\nCircuit’s here: Halliburton, Inc. v. Administrative Re-\nview Board, 771 F.3d 254 (5th Cir. 2014) (per curiam).\nThe plaintiff there had complained of accounting im-\nproprieties to his employer and to the SEC. Id. at 256-\n57. After receiving a notice from the SEC that the\nagency had opened an investigation and directing that\nrelevant documents be preserved, the employer “in-\nstruct[ed] [employees] to preserve documents relevant\nto the SEC’s investigation, as directed, because ‘the\nSEC has opened an inquiry into the allegations of Mr.\nMenendez.’” Id. at 257. The Fifth Circuit concluded\nthat the plaintiff could state a retaliation claim based\non the fact that his employer had disclosed his iden-\ntity to other employees and his coworkers had treated\nhim differently in response—without any showing\n 33\n\nthat the employer, in making this disclosure, had a\n“wrongful motive.” Id. at 263. On those facts, the but-\nfor-causation defense was unavailable, because ab-\nsent the protected activity (the complaint) the em-\nployer could not have taken the same adverse action\n(disclosing the identity of the complaining employee).\nSee Menendez v. Halliburton, Inc., ARB Case Nos. 09-\n002 & 09-003, 2013 WL 1282255, at *10 (Mar. 15,\n2013) (reasoning that evidence of the employer’s lack\nof retaliatory intent could not “address the issue of\nwhether the [employer] would have disclosed [the em-\nployee’s] identity in the absence of his protected activ-\nity”). The employer thus “failed to prove its affirma-\ntive defense” and was held liable despite the absence\nof any finding (or, apparently, evidence) of “wrongful\nmotive.” Id.; Halliburton, 771 F.3d at 258, 263. Peti-\ntioner’s claim that intent and but-for causation are co-\nextensive is foreclosed by the very case he urges the\nCourt to endorse.\n The Halliburton case reflects an aspect of whistle-\nblowing that distinguishes it from the statutory pro-\ntections associated with race or gender in a way that\ncan make intent particularly relevant. Employers sel-\ndom if ever have good reason to act on the basis of an\nemployee’s race or gender, but whistleblowing often\ndemands a response—the company must investigate,\nand on the basis of the investigation and complaint it\nmust often take action, which at times can affect the\nwhistleblower for legitimate, non-retaliatory reasons.\n To take another example, consider an employee,\nSarah, whose job is to provide uniquely specialized\nservices to one customer of her employer. Sarah dis-\ncovers fraud and immediately reports it to her man-\nagers, who confirm the report, thank Sarah for her dil-\nigence, and reward her with a bonus. But when the\n 34\n\nemployer reports the fraud to the customer, the cus-\ntomer no longer trusts the employer and terminates\nthe relationship. This leaves Sarah without any work,\nand her position is eliminated. Sarah’s report of the\nfraud was a but-for cause of her termination, which\nwould not have occurred absent her report. But it is\nequally clear that the employer had no retaliatory in-\ntent. Under petitioner’s view, the employer would be\nliable for retaliation, despite the absence of any intent\nto retaliate. Petitioner thus errs in contending that\nthe but-for causation defense somehow sRespondentumes the\nissue of retaliatory intent.5\n That the plaintiff must prove the elements of his\nsRespondenttantive claim is unsurprising. What would be\nsurprising is petitioner’s contrary interpretation: a\nstatute that imposes a sRespondenttantive prohibition that re-\nquires proof of retaliatory intent, but which then in-\ncorporates “a closed universe of rules” addressing a\ndifferent issue (causation) in order to sub silentio ne-\ngate the intent element of the sRespondenttantive prohibition.\nSee Pet. Br. 21-22. Petitioner suggests (at 17) that\nthis is permissible because “Section 1514A(a) is di-\nrected to employers” whereas the burden-allocation\nprovision is “directed to courts.” But that nonsensical\ndistinction cannot justify construing the statute to be\n\n\n5\n Of course, a jury may sometimes infer intent from the same ev-\nidence with which causation is proven. See Desert Palace, Inc. v.\nCosta, 539 U.S. 90, 101-02 (2003) (holding that “direct evidence\nof discrimination is not required in mixed-motive cases” under\nTitle VII). And under the contributing-factor standard, the re-\nquired causal nexus is less than for a Title VII claim. See supra\n22. But in some cases intent will be lacking notwithstanding the\nexistence of but-for caution. That is, in some circumstances in-\ntent is the critical element on which liability turns.\n 35\n\nat war with itself, with the causation provisions oper-\nating to negate a different element of the sRespondenttantive\nprohibition. A “statute should be construed so that ef-\nfect is given to all its provisions, so that no part will\nbe inoperative or superfluous.” Clark, 573 U.S. at 131\n(quotation marks and citation omitted). And a para-\ngraph later (still at 17) petitioner concedes the obvious\nby contradicting his own prior assertion: the burden-\nallocation provision is “directed to the plaintiff-em-\nployee” and “the defendant-employer.”\n\nII. THE WPA DOES NOT COMMAND A DIFFERENT\n RESULT.\n\n Petitioner contends that the Whistleblower Pro-\ntection Act of 1989 (“WPA”) justifies setting aside\nSOX’s plain meaning. But SOX borrows its burden-\nallocation framework from AIR-21, not the WPA, and\nthe WPA uses different statutory language, imposes\ndifferent sRespondenttantive prohibitions, has a different his-\ntory, and was designed for a different context. In\nshort, the WPA provides no basis to disavow the clear\nimport of SOX’s statutory language.\n\n A. The Text And Context Of The WPA And\n SOX Are Materially Different.\n\n Petitioner (at 3, 26-27) and the Government\n(at 18, 26) make a variety of claims about the pur-\nported close connection between SOX and the WPA.\nTheir claims are inaccurate, and overlook the mean-\ningful differences between those laws’ sRespondenttantive\nprohibitions.\n 36\n\n 1. If the WPA does not require proof of intent,\nthat feature is not the result of the WPA’s burden-al-\nlocation provision—and it has nothing to do with SOX,\nwhich uses materially different language.\n Unlike SOX, the WPA does not expressly pro-\nscribe “discrimination” based on protected activity.\nRather, the WPA makes it unlawful for the Govern-\nment to “take or fail to take, or threaten to take or fail\nto take, a personnel action with respect to any em-\nployee or applicant for employment because of” the\nemployee’s protected activity. 5 U.S.C. § 2302(b)(8)-\n(9).\n In fact, the operative provisions of the WPA—par-\nagraphs (b)(8) and (b)(9), which were initially enacted\nas part of the Civil Service Reform Act of 1978—orig-\ninally forbade taking or failing to take a personnel ac-\ntion “as a reprisal for” protected activity. Pub. L. [DOCKET REDACTED], § 101, 92 Stat. 1111, 1116 (emphasis added).\nA “reprisal” is “an action of retaliation.” Reprisal,\nWEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY\n(1976). Congress’s deletion of the “reprisal” require-\nment in 1989 thus logically could signify a departure\nfrom a preexisting intent requirement. Pub. L. No.\n101-12, § 4, 103 Stat. 16, 32. “When Congress acts to\namend a statute, we presume it intends its amend-\nment to have real and sRespondenttantial effect.” Stone v.\nINS, 514 U.S. 386, 397 (1995).\n What’s more, the WPA retained a separate prohi-\nbition on “discriminat[ion] ... on the basis of” certain\nprotected statuses, but did not include that term in\nthe whistleblower provision. See 5 U.S.C.\n§ 2302(b)(1); Pub. L. [DOCKET REDACTED], § 101, 92 Stat. at\n1115 (original enactment of paragraph (b)(1)). It is\npresumed “that Congress acts intentionally and pur-\nposely when it includes particular language in one\n 37\n\nsection of a statute but omits it in another.” BFP v.\nResol. Tr. Corp., 511 U.S. 531, 537 (1994) (citation\nomitted).\n The deletion of “reprisal” from the retaliation pro-\nvision and the failure to require “discrimination” in\nthe WPA may indicate that intent is not required un-\nder that statute, but that outcome is not the product\nof the WPA’s burden-allocation provision—and it says\nnothing about SOX, which does expressly require\nproof of “discriminat[ion].” Congress “deliberately\nprescribed a distinct statutory scheme applicable only\nto the federal sector, and in doing so, it eschewed the\nlanguage used in the private-sector provision.” Babb\nv. Wilkie, 140 S. Ct. 1168, 1177 (2020) (quotation\nmarks and citations omitted). The Court “generally\nascribe[s] significance to such a decision.” Id.\n 2. Petitioner also errs in claiming that the SOX\nburden-allocation provision was taken directly from\nthe WPA. SOX incorporates the burdens of proof from\nAIR-21, not the WPA. See 18 U.S.C. § 1514A(b)(2)(C);\nLawson, 571 U.S. at 437. The relevant Senate Report\nstates that SOX incorporates the “procedures and bur-\ndens of proof now applicable ... in the aviation indus-\ntry,” without once mentioning the WPA. S. Rep. No\n107-146, at 13 (2002) (emphasis added).\n Notably, Congress has incorporated the WPA’s\nburden-allocation provision into other whistleblower\nprotection statutes. See 10 U.S.C. § 4701(c)(6) (De-\nfense Contractor Whistleblower Protection Act)\n(adopting “[t]he legal burdens of proof specified in sec-\ntion 1221(e) of title 5”); 41 U.S.C. § 4712(c)(6) (Na-\ntional Defense Authorization Act of 2013) (adopting\n“[t]he legal burdens of proof specified in section\n 38\n\n1221(e) of title 5”). That Congress chose to do other-\nwise in SOX further demonstrates that the WPA was\nnot the chosen model for SOX.\n The WPA also was not the direct model for\nAIR-21’s burden-allocation provision, as shown above.\nSee supra 4. Congress looked to the ERA, 42 U.S.C.\n§ 5851, not the WPA. See S. Rep. No. 105-278, at 22\n(1998). The ERA’s burden-allocation provision, in\nturn, was added by the Energy Policy Act of 1992, Pub.\nL. No. 102-486, § 2902(d), 106 Stat. 2776, 3123-24,\nwhich does not refer to the WPA, see H.R. Rep. No.\n102-474, pt. 8, at 120 (1992). None of the congres-\nsional committee reports on the Energy Policy Act (or\nSOX) even mention the WPA.\n Congress also chose to structure the AIR-21 and\nERA burden-allocation framework differently from\nthe WPA’s. The former sets out the burdens not just\nfor the merits stage, but also the investigative stage,\nwhereas the latter addresses only the merits stage.\nMoreover, the WPA includes a separate provision\nmandating that mere temporal proximity plus em-\nployer knowledge suffices to establish causation un-\nder that statute. 5 U.S.C. § 1221(e)(1). While Con-\ngress may have deemed that lenient approach appro-\npriate for federal workers, no such provision was ap-\nplied to the private sector workforce covered by AIR-\n21 and the ERA. These differences confirm that Con-\ngress did not directly model AIR-21 on the WPA.6\n\n\n6\n Indeed, in AIR-21 Congress expressly applied the WPA to Fed-\neral Aviation Administration employees, but chose not to do the\nsame for private-sector employees. See Pub. L. No. 106-181,\n§ 307(a), 114 Stat. at 124; 49 U.S.C. § 40122(g)(2)(A).\n 39\n\n 3. Such differences, in addition to showing that\nAIR-21 was not directly modeled on the WPA, also re-\nflect that the WPA and SOX do not “serve the same\ngoal,” as petitioner claims (at 27). Petitioner points to\nthe titles of the code sections that provide causes of\naction under SOX (“Civil action to protect against re-\ntaliation in fraud cases”) and the WPA (“Individual\nright of action in certain reprisal cases”) to suggest the\ngoals are the same. 18 U.S.C. § 1514A (emphasis\nadded); 5 U.S.C. § 1221 (emphasis added). But section\nheadings are of limited, if any, probative value in stat-\nutory interpretation. Lawson, 571 U.S. at 446; Bhd.\nof R.R. Trainmen v. Balt. & Ohio R.R. Co., 331 U.S.\n519, 528-29 (1947). That is particularly true here,\nsince the WPA deleted the “reprisal” language from\nthe sRespondenttantive prohibitions on retaliation that origi-\nnally appeared in the Civil Service Reform Act\nof 1978. See supra 36.\n In truth, SOX and the WPA operate in very differ-\nent contexts. SOX provides “whistleblower protection\nfor employees of publicly traded companies,” 18 U.S.C.\n§ 1514A(a) (capitalization omitted), covering a wide\nswath of American businesses, while the WPA applies\nto employees of the federal government. Private-sec-\ntor employees are presumed to be employed at-will,\nwith limited statutory exceptions. Federal govern-\nment employees, on the other hand, are generally sub-\nject to strict civil service regulations, which in practice\nmake it exceedingly difficult to terminate or demote\nthem. See, e.g., Bush v. Lucas, 462 U.S. 367, 385\n(1983) (“Federal civil servants are now protected by\nan elaborate, comprehensive scheme that encom-\npasses sRespondenttantive provisions forbidding arbitrary ac-\ntion by supervisors and procedures—administrative\n 40\n\nand judicial—by which improper action may be re-\ndressed. They apply to a multitude of personnel deci-\nsions that are made daily by federal agencies.”). The\nWPA operates within that special system of civil ser-\nvice protection. For example, it enables a federal em-\nployee claiming retaliation to obtain “a stay of the per-\nsonnel action involved.” 5 U.S.C. § 1221(c)(1). No\nsuch provision exists in SOX.\n “That Congress would want to hold the Federal\nGovernment to a higher standard than state and pri-\nvate employers is not unusual.” Babb, 140 S. Ct. at\n1177. But there is no evidence it eliminated an intent\nrequirement for the wide array of private workplaces\ncovered by SOX. The WPA simply has no bearing on\nthe question presented here.7\n\n B. The WPA’s Legislative History Is Inappo-\n site And Unedifying.\n\n Even on its own terms, the WPA legislative his-\ntory cited by petitioner does not support his position.\n As an initial matter, where—as here—the “statu-\ntory text is unambiguous,” legislative history “need\n\n7\n Petitioner (at 7, 27-28) claims that Congress enacted SOX be-\ncause it “wanted ‘similar protection’ to the WPA for corporate\nwhistleblowers,” citing a Senate report and a separate statement\nby a single senator. But that report neither mentions the WPA\nnor supports the view that SOX was designed to provide precisely\nthe same degree of job protection for employees of private com-\npanies. To the contrary, the report expresses an intent to “track”\n“as closely as possible” the protections previously extended “to\nnon civil service employees” like airline workers. S. Rep. No.\n107-146, at 30 (emphasis added). As for the senator’s statement,\nthat is the least reliable form of legislative history. NLRB v. SW\nGen., Inc., 580 U.S. 288, 307 (2017).\n 41\n\nnot be consulted,” much less the legislative history of\nan entirely different statute. United States v. Woods,\n571 U.S. 31, 46 n.5 (2013).\n And the legislative history petitioner leans on\nhere is of a particularly unreliable sort. Petitioner re-\nlies heavily (at 5-6, 19, 30 n.5, 39) on an “Explanatory\nStatement,” which he claims reflects the thoughts and\nviews of “Congress.” This “Explanatory Statement” is\nactually three separate statements: (1) a joint state-\nment by the House sponsors of the WPA of 1989, see\n135 Cong. Rec. 5032-33 (1989) (Explanatory State-\nment on S. 20); (2) a joint statement, apparently on\nbehalf of the same House sponsors, about the Whistle-\nblower Protection Act of 1988 (which President\nReagan pocket vetoed), see id. at 5034-35 (entering\ninto the record 134 Cong. Rec. H9251 (1988) (Joint Ex-\nplanatory Statement on S. 508)); and (3) a floor state-\nment by Representative Schroeder, one of the House\nsponsors, see id. at 5036-38.8\n Congress never voted on any of those statements,\nwhich at most had the approval of three representa-\ntives. As the Court has long recognized, statements\nby individual representatives “do not have the status\nof a conference report, or even a report of a single\nHouse.” Nat’l Ass’n of Greeting Card Publishers v.\nU.S. Postal Serv., 462 U.S. 810, 833 n.3 (1983). In-\ndeed, “statements by individual legislators rank\namong the least illuminating forms of legislative his-\ntory.” SW Gen., 580 U.S. at 307; Gen. Dynamics Land\nSys., Inc. v. Cline, 540 U.S. 581, 599 (2004) (“Even\n\n8\n President Reagan pocket-vetoed the 1988 bill because it failed\nto “ensure that heads of [federal] departments and agencies can\nmanage their personnel effectively.” H. Journal, 100th Cong., 2d\nSess. 2578 (1988) (Memorandum of Disapproval).\n 42\n\nfrom a sponsor, a single outlying statement cannot\nstand against a tide of context and history[.]”).\n Regardless, the legislative history that petitioner\nand the Government cite is concerned primarily with\nthe degree of causation required. See Gov’t Br. 4-6.\nAnd the conclusion petitioner would have the Court\ndraw from the legislative history—that the WPA elim-\ninated an intent requirement from the Civil Service\nReform Act—would flow from the WPA’s deletion of\nthe phrase “as a reprisal for” from the statute, and the\nabsence of a “discriminat[ion]” requirement. That re-\nveals nothing about the meaning of statutes, like\nSOX, that expressly target discrimination.\n\n C. The Pre-SOX Case Law Does Not Justify\n Elimination Of The Intent Requirement.\n\n Finally, petitioner claims (at 18-19, 29-31) that\nMarano v. Department of Justice, 2 F.3d 1137 (Fed.\nCir. 1993), which he says held that a plaintiff need not\nprove intent, is “the authoritative construction of the\n‘contributing factor’ standard.” Marano is a thirty-\nyear-old circuit opinion interpreting the WPA, not\nSOX, and thus provides no support for the claim that\nintent need not be proven under a statute that—un-\nlike the WPA—proscribes “discriminat[ion] ... be-\ncause of” protected activity. In fact, the Marano court\nreasoned that the mechanism Congress used to re-\nmove the intent element for federal government whis-\ntleblowers was deletion of the phrase “as a reprisal\nfor.” 2 F.3d at 1140.9\n\n9\n Petitioner overreads Marano in any event. While the court\nthere gave a lengthy prefatory discourse on the WPA amend-\nments, it stated that “[t]he only issue to be resolved” was\n 43\n\n If the Court considers any court of appeals prece-\ndent, it should be case law interpreting the ERA, not\nMarano. Opinions applying the ERA both before and\nafter the Energy Policy Act’s enactment recognize the\nrequirement that plaintiffs prove intent. See Kauf-\nman, 745 F.3d at 533 (Srinivasan, J., concurring in\nthe judgment) (the “central issue” is whether the ad-\nverse action “was motivated by discriminatory or re-\ntaliatory bias”); Addis v. Dep’t of Lab., 575 F.3d 688,\n691 (7th Cir. 2009) (employee failed to make her case\nwhere “she did not prove any retaliatory intent on\n[employer’s] part”); Hasan v. Dep’t of Lab., 400 F.3d\n1001, 1006 (7th Cir. 2005) (plaintiff must “demon-\nstrate[] the presence of an improper motive”); Doyle v.\nSec’y of Lab., 285 F.3d 243, 252 n.16 (3d Cir. 2002)\n(plaintiff must “prove that the defendant subjectively\nintended to discriminate against the plaintiff on ac-\ncount of his engagement in a protected activity” (quo-\ntation marks and citation omitted)).\n\nIII. THE ADMINISTRATIVE REVIEW BOARD’S POSI-\n TION DOES NOT MERIT CHEVRON DEFERENCE.\n\n According to petitioner (at 31 n.6) and the Govern-\nment (at 31-34), the Court should ignore the plain text\nof SOX because the Department of Labor’s ARB has\ninterpreted SOX not to require a showing of “retalia-\ntory intent.” The Government even contends that its\ninterpretation of Section 1514A is entitled to defer-\nence under Chevron U.S.A. Inc. v. NRDC, 467 U.S.\n\n\n“whether Marano’s protected disclosure was a contributing factor\nto his reassignment,” not whether a showing of intent was re-\nquired. 2 F.3d at 1141. The court explained that the govern-\nment’s argument on appeal was that Marano’s “whistleblowing\nwas not the immediate cause-in-fact of his reassignment.” Id.\n 44\n\n837 (1984). Deference in any form is inappropriate\nhere.\n The Court has granted certiorari in another case\nto decide whether Chevron should be overturned, and\nChevron deference is improper here for the reasons ex-\nplained by the petitioner there. See Loper Bright En-\nters., Inc. v. Raimondo, 45 F.4th 359 (D.C. Cir. 2022),\ncert. granted, 143 S. Ct. 2429 (2023). In any event,\nSOX is a particularly poor candidate for deference of\nany sort to the ARB, for multiple reasons.\n 1. As Justice Sotomayor has persuasively shown,\nthe Labor Department’s interpretations of SOX do not\nmerit Chevron deference because Congress in SOX\ndelegated to the SEC, not the Labor Department, the\nauthority “‘to make rules carrying the force of law.’”\nLawson, 571 U.S. at 476 (Sotomayor, J., dissenting)\n(quoting United States v. Mead Corp., 533 U.S. 218,\n226-27 (2001)); see 15 U.S.C. § 7202(a) (“The [SEC]\nshall promulgate such rules and regulations, as may\nbe necessary or appropriate in the public interest or\nfor the protection of investors, and in furtherance of\n[SOX].”).10 Given this arrangement, it makes little\nsense to suggest that there was “congressional intent”\nfor the ARB to resolve any ambiguities. City of Ar-\nlington v. FCC, 569 U.S. 290, 296 (2013).\n Moreover, SOX’s “muscular scheme of judicial re-\nview”—which allows a plaintiff to move her case from\nthe Labor Department to federal court after a “con-\nspicuously short amount of time”—“suggests that\nCongress would have wanted federal courts, and not\nthe Secretary of Labor, to have th[e] power” to resolve\n\n10\n The majority in Lawson did “not decide” whether the Labor\nDepartment’s interpretations of SOX can receive deference. 571\nU.S. at 439 n.6.\n 45\n\nstatutory ambiguities. Lawson, 571 U.S. at 478 (So-\ntomayor, J., dissenting). It is quite possible the fed-\neral district courts interpret SOX more often than the\nARB does. (The two SOX retaliation cases to reach\nthis Court—Lawson and this case—proceeded in fed-\neral district court without ever being adjudicated by\nthe Labor Department.) These interpretive responsi-\nbilities of the courts and the SEC would bar deference\nto the ARB even if it did possess interpretive author-\nity, on the principle that “[w]hen a statute is adminis-\ntered by more than one agency, a particular agency’s\ninterpretation is not entitled to Chevron deference.”\nProffitt v. FDIC, 200 F.3d 855, 860 (D.C. Cir. 2000).\n But in fact, ARB interpretations of SOX are “not\n‘promulgated in the exercise of’” delegated lawmaking\nauthority, because the Secretary of Labor “has explic-\nitly vested any policymaking authority he may have\nwith respect to § 1514A in the Occupational Safety\nand Health Administration (OSHA).” Lawson, 571\nU.S. at 478 (Sotomayor, J., dissenting). As Justice So-\ntomayor noted, the Secretary of Labor has actually\nforbidden the ARB from “deviat[ing] from the rules\nOSHA issues on the Department of Labor’s behalf.”\nId.; see Delegation of Authority and Assignment of Re-\nsponsibility to the Administrative Review Board, 85\nFed. Reg. 13186, 13187 (Mar. 6, 2020) (“The Board\nshall not have jurisdiction to pass on the validity of\nany portion of the Code of Federal Regulations that\nhas been duly promulgated by the Department of La-\nbor and shall observe the provisions thereof, where\npertinent, in its decisions.”). Indeed, the ARB is no\nlonger even the final adjudicative authority within the\nDepartment; the Secretary is. See Gov’t Br. 10, 32.\n 46\n\n The Government argues that Justice Sotomayor’s\nreasoning should be ignored because this case con-\ncerns the interpretation of “statutory burdens of proof\napplied directly in an agency adjudication.” Gov’t Br.\n32. But this case does not involve an agency adjudi-\ncation, and the intent requirement is a function of\nSOX’s prohibition of discrimination, not its incorpora-\ntion of AIR-21’s causation standard. The Government\ncites no statutory provision that delegates to the ARB\n(or even the Secretary of Labor) the authority to make\nrules carrying the force of law regarding AIR-21’s bur-\nden-allocation framework.11\n 2. Deference is also inappropriate here because\nthe ARB has taken inconsistent positions without ac-\nknowledging or attempting to justify its change of po-\nsition. The ARB previously concluded that, under\nSOX, “[t]he ultimate question [is] whether an action\nwas taken due to ‘retaliatory motive.’” Klopfenstein v.\nPCC Flow Techs. Holdings, Inc., ARB Case No. 04-\n149, 2006 WL 3246904, at *14 (May 31, 2006). It is\nwell settled that “an ‘[u]nexplained inconsistency’ in\nagency policy is ‘a reason for holding an interpretation\nto be an arbitrary and capricious change from agency\npractice,’” and such an interpretation “receives no\n\n\n11\n To the extent petitioner (at 31 n.6) contends that deference is\nowed to a portion of OSHA’s regulation governing the investiga-\ntion of whistleblower complaints, see 29 C.F.R. § 1980.104(e)(3),\nthat argument fails for the same reason. In any event, that reg-\nulation governs only what a plaintiff needs to show for the Sec-\nretary to initiate an investigation. By contrast, the OSHA regu-\nlation governing the burden-allocation regime in ALJ merits ad-\njudications, which is the setting analogous to a federal lawsuit,\nmerely repeats the statutory language. Compare id.\n§ 1980.109(a)-(b) with 49 U.S.C. § 42121(b)(2)(B)(iii)-(iv).\n 47\n\nChevron deference.” Encino Motorcars, LLC v. Na-\nvarro, 579 U.S. 211, 222 (2016) (brackets in original;\ncitation omitted).\n The Government claims that Klopfenstein is lim-\nited to its facts because the ARB did not say that Sec-\ntion 1514A “requires proof of a retaliatory motive in\nother circumstances.” Gov’t Br. 30 n.7. But the ARB\nheld that the applicable “legal standard” required an\ninquiry into “whether an action was taken due to ‘re-\ntaliatory motive.’” Klopfenstein, 2006 WL 3246904, at\n*14. That is inconsistent with the ARB’s pronounce-\nments in other cases cited by the Government and pe-\ntitioner.\n 3. Finally, deference is unwarranted because the\nstatutory language is clear. See supra 14-23. There\nis no ambiguity on which interpretive deference could\nbe given, and the Government’s interpretation is nei-\nther “reasonable” nor “persuasive,” therefore barring\ndeference under Chevron and even under Skidmore v.\nSwift & Co., 323 U.S. 134 (1944).\n\nIV. THE SECOND CIRCUIT CORRECTLY HELD IN\n THE ALTERNATIVE THAT THE “CONTRIBUTING\n FACTOR” INSTRUCTION WAS FATALLY FLAWED.\n\n The Second Circuit’s judgment is also correct for\nthe independent reason that the district court erred in\ninstructing the jury that a “contributing factor” is\nsomething that “either alone or in combination with\nother factors tended to affect in any way Respondent’s deci-\nsion to terminate [petitioner’s] employment.” J.A.130.\n That instruction was “inadequa[te]” for two rea-\nsons entirely separate from the failure to instruct on\nintent. Pet. App. 11a n.4. First, it would allow a\nplaintiff to satisfy his burden even if, “by virtue of his\n 48\n\nwhistleblowing activity, [he] was insulated from a ter-\nmination to which he would otherwise have been sub-\njected sooner.” Id. Second, the instruction would per-\nmit a plaintiff to satisfy his burden even where the\nprotected activity did not “actually” have a causal ef-\nfect on the termination but instead merely “was the\nsort of behavior that would tend to affect a termination\ndecision.” Id.12\n Based on the evidence presented at trial, these\nproblems were not hypothetical. For example, the for-\nmer Global Head of Human Resources for Respondent’s FICC\ndivision told the jury that after an employee’s submis-\nsion of a claim of unlawful conduct, Respondent would “prob-\nably hold off on a termination of the employment until\nthe investigation had been completed.” C.A. J.A.612-\n13. Also, the jury may have believed that petitioner’s\ntermination was delayed by the attempt of his imme-\ndiate supervisor, Michael Schumacher, to find peti-\ntioner an alternative position. J.A.151. Petitioner’s\ncounsel emphasized that even if Schumacher was at-\ntempting “to help [petitioner] by getting him a job as\na desk analyst” due to petitioner’s protected activity,\nthe “tended to affect in any way” instruction would be\nsatisfied. J.A.110. The jury’s verdict, therefore, could\n\n\n12\n Contrary to petitioner’s suggestion (at 14), which was rejected\nby the Second Circuit, see Pet. App. 7a; C.A. ECF 96 at 29-31,\nthere was no need for Respondent to reiterate its objections when the\ndistrict court answered a question from the jury about the con-\ntributing-factor instruction. When a court has already ruled on\na “purely legal issue[],” counsel need not repeatedly object; that\nwould have been an “empty exercise.” Dupree v. Younger, 143 S.\nCt. 1382, 1390 (2023). Regardless, petitioner did not seek certi-\norari on issue preservation. See Sup. Ct. R. 24.1(a) (merits\n“brief[s] may not raise additional questions”).\n 49\n\nhave been premised on a belief that petitioner’s pro-\ntected activity temporarily “insulated” him, or was the\ntype of behavior that would tend to insulate him,\n“from a termination to which he would otherwise have\nbeen subjected sooner.” Pet. App. 11a n.4 (emphasis\nomitted).\n Petitioner’s suggestion that the Second Circuit’s\nconcerns are addressed by the but-for-causation de-\nfense is incorrect and misses the point. The question\nis what the plaintiff must show to place the burden on\ndefendant, not what the employer must prove once\nsaddled with the onerous clear-and-convincing-evi-\ndence standard. Indeed, petitioner and the Govern-\nment both implicitly concede the flaws in the “tends to\naffect in any way” instruction by stating that a “con-\ntributing factor” “contributes to the production of a re-\nsult,” “has a part in producing an effect,” Gov’t Br. 20-\n21 (citations omitted), or “help[s] bring about” the ad-\nverse personnel action, Pet. Br. 23. That is different\nin kind from merely “tending” to affect “in any way”;\nindeed, Respondent explicitly pressed the court to instruct\nthe jury in essentially the terms the Government and\npetitioner now proffer. See J.A.107-08, 174-77. But\nat petitioner’s insistence, the district court instead\nemployed the flawed “tends to affect in any way” for-\nmulation.\n Regardless, petitioner forfeited his right to chal-\nlenge the Second Circuit’s alternative holdings by not\nseeking review of them in his petition for certiorari.\nSee Sup. Ct. R. 14.1(a) (“Only the questions set out in\nthe petition, or fairly included therein, will be consid-\nered by the Court.”); Sup. Ct. R. 24.1(a) (“[T]he brief\n[on the merits] may not raise additional questions or\nchange the sRespondenttance of the questions already pre-\nsented in” the petition.). No matter what this Court\n 50\n\ndecides about intent, the Second Circuit’s judgment\nmust be affirmed.13\n\n CONCLUSION\n\n This Court should affirm the Second Circuit’s\njudgment.\n Respectfully submitted.\n GABRIELLE LEVIN EUGENE SCALIA\n GIBSON, DUNN & CRUTCHER LLP Counsel of Record\n 200 Park Avenue THOMAS G. HUNGAR\n New York, NY 10166 ANDREW G.I. KILBERG\n [PHONE REDACTED] ANNA L. CASEY\n ADDISON W. BENNETT\n GIBSON, DUNN & CRUTCHER LLP\n 1050 Connecticut Avenue, N.W.\n Washington, D.C. 20036\n [PHONE REDACTED]\n [EMAIL REDACTED]\n Counsel for Respondents\n\n\nAugust 8, 2023\n\n\n13\n If the Court determines it cannot reach the Second Circuit’s\nalternative holdings, it should dismiss the writ of certiorari as\nimprovidently granted. The Court is “not permitted to render an\nadvisory opinion, and if the same judgment would be rendered\nby the [Second Circuit]” notwithstanding the Court’s decision,\nthen the decision would “amount to nothing more than an advi-\nsory opinion.” Herb v. Pitcairn, 324 U.S. 117, 126 (1945).\n STATUTORY APPENDIX\n\n\n Table of Contents\n Page\nWhistleblower Protection Act of 1989\n5 U.S.C. § 1221(c), (e) ................................................ 1a\n5 U.S.C. § 2302(b)(1), (8)-(9)...................................... 2a\nDodd-Frank Wall Street Reform and\n Consumer Protection Act\n15 U.S.C. § 78u-6(a)(6), (h)(1)(A) .............................. 6a\nSarbanes-Oxley Act of 2002\n18 U.S.C. § 1514A(a)-(c) ............................................ 8a\nAge Discrimination in Employment Act\n of 1967\n29 U.S.C. § 623(a)(1)-(2) .......................................... 12a\nTitle VI of the Civil Rights Act of 1964\n42 U.S.C. § 2000d .................................................... 13a\nTitle VII of the Civil Rights Act of 1964\n42 U.S.C. § 2000e-2(a), (m) ..................................... 14a\n42 U.S.C. § 2000e-3(a) ............................................. 15a\nEnergy Reorganization Act\n42 U.S.C. § 5851(a)-(b) ............................................ 16a\nWendell H. Ford Aviation Investment and\n Reform Act for the 21st Century\n49 U.S.C. § 42121(a)-(b)(3)(C) ................................. 21a\n 1a\n\n Whistleblower Protection Act of 1989\n5 U.S.C. § 1221. Individual right of action in\n certain reprisal cases\n ***\n (c)(1) Any employee, former employee, or appli-\ncant for employment seeking corrective action under\nsRespondentection (a) may request that the Board order a stay\nof the personnel action involved.\n (2) Any stay requested under paragraph (1) shall\nbe granted within 10 calendar days (excluding Satur-\ndays, Sundays, and legal holidays) after the date the\nrequest is made, if the Board determines that such a\nstay would be appropriate.\n (3)(A) The Board shall allow any agency which\nwould be subject to a stay under this sRespondentection to\ncomment to the Board on such stay request.\n (B) Except as provided in subparagraph (C), a\nstay granted under this sRespondentection shall remain in ef-\nfect for such period as the Board determines to be ap-\npropriate.\n (C) The Board may modify or dissolve a stay un-\nder this sRespondentection at any time, if the Board deter-\nmines that such a modification or dissolution is appro-\npriate.\n ***\n (e)(1) Subject to the provisions of paragraph (2),\nin any case involving an alleged prohibited personnel\npractice as described under section 2302(b)(8) or sec-\ntion 2302(b)(9)(A)(i), (B), (C), or (D), the Board shall\norder such corrective action as the Board considers ap-\npropriate if the employee, former employee, or appli-\n 2a\n\ncant for employment has demonstrated that a disclo-\nsure or protected activity de", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of a whistleblower verdict.", "governingLaw": "Apply United States federal Sarbanes-Oxley law; Second Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal Sarbanes-Oxley law; Second Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Murray v. UBS Securities, LLC", "citation": "601 U.S. 23 (2024)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/23pdf/22-660_7648.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The dispositive question is whether SOX requires a whistleblower-plaintiff to prove 'retaliatory intent' as part of his case in chief. The answer lies in the statute's own text, which the Second Circuit failed to engage with.\n\nSection 1514A(b)(2)(C) states that a SOX civil action 'shall be governed by the legal burdens of proof set forth in section 42121(b) of title 49, United States Code.' This is not a suggestion; it is a directive. The phrase 'shall be governed' creates a closed universe of applicable proof burdens. See Weinberger v. Catholic Action of Hawaii/Peace Education Project, 454 U.S. 139, 141 (1981) (holding that 'shall be governed' language means courts apply the referenced framework and no other 'creatures of judicial cloth'). Section 42121(b) specifies exactly two burdens: first, the complainant must demonstrate that protected activity 'was a contributing factor in the unfavorable personnel action alleged in the complaint' (§§ 42121(b)(2)(B)(i), (iii)); second, if the complainant does so, the employer must 'demonstrate by clear and convincing evidence that the employer would have taken the same unfavorable personnel action in the absence of that behavior' (§§ 42121(b)(2)(B)(ii), (iv)). Neither provision mentions 'retaliatory intent.' The Second Circuit never acknowledged, let alone explained, how an additional intent element could be squared with this express incorporation.\n\nThe respondent's contrary argument rests on the word 'discriminate' in Section 1514A(a), which prohibits employers from discharging, demoting, suspending, threatening, harassing, or 'in any other manner discriminate[ing]' against an employee 'because of' protected activity. But the respondent's reading gives no effect to the 'shall be governed' directive, which is the statute's operative provision directing courts on how violations are proven. The word 'discriminate' functions as a catchall term capturing adverse personnel actions not specifically enumerated; it does not silently inject a separate mens rea element that the burden-shifting framework—expressly incorporated to govern proof—omits. Congress knew how to require 'intent to retaliate' when it wanted to; it did so in the criminal provision at 18 U.S.C. § 1513(e). The absence of such language from the civil provision is telling. Similarly, Congress could have required a 'motivating factor' showing, as in Title VII, 42 U.S.C. § 2000e-2(m), but chose the less demanding 'contributing factor' standard instead.\n\nThe respondent's reliance on the WPA's differences is unpersuasive for the purpose at hand. Whether or not the WPA and SOX use different substantive language, the operative fact is that SOX expressly incorporated AIR-21's burden-shifting framework by reference. That framework defines the plaintiff's burden as 'contributing factor' and the defendant's as the 'same-action' defense. The 'contributing factor' standard is a term of art meaning 'any factor which, alone or in combination with other factors, tends to affect in any way the outcome of the decision.' This standard was 'specifically intended to overrule existing case law which requires a whistleblower to prove that his protected conduct was a 'significant,' 'motivating,' 'substantial,' or 'predominant' factor.' The respondent's interpretation would effectively re-impose a 'motivating factor' requirement through the back door of 'retaliatory intent,' directly contrary to Congress's express design.\n\nIn this case, the jury found that the claimant's protected activity was a contributing factor in his termination, and that the respondent failed to prove by clear and convincing evidence that it would have taken the same action absent the protected activity. Those are the only two findings the statute requires to establish a SOX violation. The Second Circuit's imposition of an additional 'retaliatory intent' element was legal error. The respondent's alternative argument regarding the 'tended to affect in any way' instruction was not raised in the petition for certiorari and is therefore outside the scope of this appeal. The judgment should be reversed and the case remanded for reinstatement of the jury verdict.", "allocation": null, "citations": [ { "title": "USDOL/OALJ: Federal Court Whistleblower Decisions 2013", "url": "https://www.dol.gov/agencies/oalj/PUBLIC/WHISTLEBLOWER/REFERENCES/REFERENCE_WORKS/WNEW_122013", "proposition": "The AIR-21 burden-shifting framework applicable to SOX whistleblower cases requires the plaintiff to show by a preponderance that protected activity was a 'contributing factor' in the adverse action, and if the plaintiff does so, the burden shifts to the employer to demonstrate by clear and convincing evidence that it would have taken the same action absent the protected activity." }, { "title": "USDOL/OALJ: Federal Court Whistleblower Decisions 2013", "url": "https://www.dol.gov/agencies/oalj/PUBLIC/WHISTLEBLOWER/REFERENCES/REFERENCE_WORKS/WNEW_122013", "proposition": "The 'contributing factor' standard is broad and forgiving, defined as 'any factor which, alone or in combination with other factors, tends to affect in any way the outcome of the decision,' and was specifically intended to overrule case law requiring a whistleblower to prove that protected conduct was a 'significant,' 'motivating,' 'substantial,' or 'predominant' factor." }, { "title": "USDOL/OALJ: Federal Court Whistleblower Decisions 2013", "url": "https://www.dol.gov/agencies/oalj/PUBLIC/WHISTLEBLOWER/REFERENCES/REFERENCE_WORKS/WNEW_122013", "proposition": "Under the SOX whistleblower framework, the employer's 'clear and convincing evidence' standard requires the employer to show that the truth of its factual contentions are highly probable, meaning it would have taken the same unfavorable personnel action even in the absence of the employee's protected activity." }, { "title": "USDOL/OALJ: Federal Court Whistleblower Decisions 2013", "url": "https://www.dol.gov/agencies/oalj/PUBLIC/WHISTLEBLOWER/REFERENCES/REFERENCE_WORKS/WNEW_122013", "proposition": "In SOX whistleblower cases, the burden-shifting framework requires the plaintiff to prove four elements by a preponderance of the evidence: (1) protected activity, (2) employer knowledge, (3) unfavorable personnel action, and (4) that the protected activity was a contributing factor in the unfavorable action, after which the employer may avoid liability only by clear and convincing evidence that it would have taken the same action absent the protected behavior." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-056", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nSTATEMENT\n When Congress authorizes federal courts to grant\npreliminary injunctions, courts must apply the traditional,\nstringent four-factor test that harks back to ancient rules\nof equity. Under that test, the party seeking a prelimi-\nnary injunction must show “that he is likely to succeed on\nthe merits, that he is likely to suffer irreparable harm in\nthe absence of preliminary relief, that the balance of equi-\nties tips in his favor, and that an injunction is in the public\ninterest.” Winter v. Nat. Res. Def. Council, 555 U.S. 7, 20\n(2008).\n Since the earliest days of the Republic, this Court has\nheld that the traditional four-factor test applies unless\nCongress clearly and unambiguously provides otherwise.\nFor centuries, the United States and private parties alike\nhave thus operated on a level playing field, each having to\nsatisfy a heavy burden when seeking extraordinary in-\njunctive relief.\n 3\n\n That deeply engrained rule resolves this case. In sec-\ntion 10(j) of the National Labor Relations Act (NLRA),\nCongress authorized the Respondent\n(Respondent) to seek preliminary injunctions to enjoin employ-\ners’ or unions’ alleged unfair labor practices while the\nRespondent adjudicates the merits of those allegations in-\nhouse. 29 U.S.C. § 160(j). But section 10(j) allows only\ndistrict courts to grant such injunctions, and only if dis-\ntrict courts “deem[]” preliminary relief “just and proper.”\nId. That language invokes all the hallmarks of equity,\ncharging district courts with deciding whether prelimi-\nnary injunctions are appropriate. And, as this Court has\nrepeatedly held, equity means the traditional, four-factor\npreliminary injunction test. Section 10(j) enshrined that\ntest for good reason. Congress installed district courts as\nan independent check to hold the Respondent to stringent cri-\nteria before obtaining preliminary injunctions that can\nlast years and significantly disrupt employers’ and unions’\noperations.\n Here, the Sixth Circuit and the district court instead\napplied a two-factor test for section 10(j) injunctions that\ntilts the scales in the Respondent’s favor by merely asking\nwhether “(1) there is reasonable cause to believe that un-\nfair labor practices have occurred and (2) injunctive relief\nis just and proper.” Pet.App.10a (cleaned-up); see\nPet.App.88a. Nothing in the NLRA justifies that two-fac-\ntor test, which bypasses every element of the traditional\nfour injunctive criteria and “dramatically lower[s]” the\nagency’s burden to obtain injunctions. Pet.App.37a\n(Readler, J., concurring).\n At this juncture, the government has conspicuously\navoided defending the two-part test. Indeed, the govern-\nment seemingly considers it irrelevant whether two, four,\nor six factors govern section 10(j) injunctions. BIO 6, 8-\n10. All that matters, in the government’s view, is that\n 4\n\nwhen evaluating the merits and the equities, courts should\n“account[] for the deference owed to the [Respondent’s] expert\njudgments.” BIO 7. But the government’s version of def-\nerence amounts to writing the Respondent a blank check for\ninjunctions on demand. District courts, in the govern-\nment’s telling, should accept the Respondent’s version of the\nfacts and law simply because the Respondent has labor-law ex-\npertise and its in-house attorneys devoted time and effort\nto investigating the charges. BIO 6-7.\n Even in earlier, deference-friendly eras, this Court\nsteadfastly rejected the notion that agencies should re-\nceive deference for their preliminary takes on the law and\nfacts. Nor has this Court deferred to an agency’s view on\nhow courts should exercise their equitable powers. Now\nwould be a strange time to start down that path, especially\nwhen the government’s pleas for deference lack any logi-\ncal limit. Dozens of agencies operate under the normal,\nstringent four-factor test when seeking preliminary in-\njunctions to prevent everything from the denial of voting\nrights to disclosure of how to make a hydrogen bomb. If\ndeference is the order of the day, those agencies, too,\nmight claim an anvil on the scale when seeking prelimi-\nnary relief. Rather than opening the Pandora’s box to\nnovel deference across countless contexts, this Court\nshould follow its longstanding precedent and hold that, in\nsection 10(j) as elsewhere, district courts should apply the\nsame, strict four-factor test that has served the country\nwell throughout history.\n Statutory Background\n The National Labor Relations Act of 1935 created the\nRespondent, an independent agency tasked with “prevent[ing]\nany person from engaging in any unfair labor practice.”\n29 U.S.C. § 160(a). The Respondent’s “authority kicks in when\na person files a charge with the agency alleging that an\n 5\n\nunfair labor practice is afoot.” Glacier Nw., Inc. v. Int’l\nBhd. of Teamsters, 598 U.S. 771, 775 (2023).\n Every year, the Respondent receives more than ten thou-\nsand charges, each triggering the Respondent General\nCounsel’s power to investigate, which she may delegate to\nregional officers. 29 U.S.C. §§ 153(d), 160(b), 161; 29\nC.F.R. § 101.4; Respondent, Disposition of Unfair Labor\nPractice Charges Per FY, [URL REDACTED]\nDuring these investigations, there is no evidentiary hear-\ning and no right to cross-examination. See 29 C.F.R.\n§ 101.4. If the General Counsel or a regional director de-\ncides that further administrative proceedings are\nappropriate, the General Counsel or regional director is-\nsues a complaint. 29 U.S.C. § 160(b); 29 C.F.R. § 101.8.\n Administrative complaints launch agency proceed-\nings, first before an administrative law judge (ALJ), then\nthe Board. See 29 U.S.C. § 160(b)-(c); 29 C.F.R. §§ 101.10,\n101.12, 102.35, 102.46. That process often takes years.\nThen proceedings move to court, either because ag-\ngrieved parties seek judicial review or because the Respondent\nseeks enforcement of its orders. 29 U.S.C. § 160(e)-(f).\n After a complaint issues, the NLRA permits the\nRespondent to ask federal courts for a preliminary injunction\npending resolution of the merits in administrative pro-\nceedings. Section 10(j) of the NLRA provides that, “upon\nissuance of a complaint,” the Respondent may “petition any\nUnited States district court ... for appropriate temporary\nrelief or restraining order.” 29 U.S.C. § 160(j). While sec-\ntion 10(j) authorizes the Respondent to seek injunctions\nagainst both employers and unions, id. §§ 158(a)-(b),\n160(j), the Respondent does not appear to have sought relief\nagainst a union in over a decade. See Respondent, 10(j) Injunc-\ntions, [URL REDACTED]\n 6\n\n Under section 10(j), a federal district court has dis-\ncretion to grant such relief “as it deems just and proper.”\n29 U.S.C. § 160(j). If granted, the injunction remains in\nplace for the duration of Respondent proceedings. See Hadsall\nv. Sunbelt Rentals, Inc., 993 F.3d 992, 994 (7th Cir. 2021).\nSection 10(j) injunctions thus put powerful pressure on\nemployers to settle, especially since the Respondent controls\nhow long administrative proceedings last—and thus how\nlong preliminary injunctions endure. See Respondent Off. of\nthe Gen. Couns., Section 10(j) Manual 15 (Feb. 2014).\n Today, the Respondent’s “§ 10(j) activity is on the rise”\ncompared with previous administrations. Pet.App.21a\n(Readler, J., concurring). Recently, the Respondent’s General\nCounsel promised to bring the “weight of a federal district\ncourt’s order” down on employers at the “earliest” stage\nof proceedings. Memorandum from Jennifer A. Abruzzo,\nRespondent General Counsel, to Regional Directors 1 (Feb. 1,\n2022), [URL REDACTED] And the Respondent has\nstarted asking district courts for “nationwide” injunctions\npreventing employers from engaging in particular prac-\ntices anywhere they operate. E.g., Kerwin v. Claimant, 657 F. Supp. 3d 1002, 1012-13 (E.D. Mich. 2023);\nECF 1-2 at 3-4, Leslie v. Claimant, No. 22-cv-00478\n(W.D.N.Y. June 21, 2022).\n Factual Background\n 1. Claimant is the world’s largest coffee purveyor,\noperating locations everywhere from Austin to Zurich.\nClaimant and its licensees have 34,000 locations that\nserve 60 million people every week. To make all those\nPumpkin Spice Lattes and cold brews, Claimant employs\nsome 235,000 people in the United States alone. Star-\nbucks calls its employees “partners,” recognizing that\ntheir friendliness, efficiency, and customer-service\nskills—not just the coffee—prompt customers to return.\n 7\n\n\nClaimant, Culture and Values, [URL REDACTED]\nbaam; see Claimant, Our Long-Standing Efforts to Put\nOur Partners First (Mar. 13, 2023), [URL REDACTED]\nnyurl.com/m8yfj48d.\n Claimant imposes few threshold requirements for\nbaristas, instead opening the job to a wide array of appli-\ncants and prioritizing on-the-job learning.\n“[P]unctuality,” coupled with the “[a]bility to learn\nquickly” and “understand” customers, are key. Star-\nbucks, Barista Job Listing (Feb. 15, 2024),\n[URL REDACTED] But baristas can go far\nwithin Claimant—rising to manage stores or entire re-\ngions. Claimant, Forging a Career Path at Claimant\n(Aug. 12, 2015), [URL REDACTED] Claimant\nthus prides itself on its reputation for “listening” to its\npartners, “understand[ing] their educational and career\naspirations,” and ensuring “access to programs.” Simon\nMainwaring, Purpose at Work, Forbes (July 7, 2021),\n[URL REDACTED]\n In keeping with that focus, Claimant has long offered\npartners “industry-leading benefits.” Howard Schultz,\nStatement Before the Senate Committee on Health, Edu-\ncation, Labor, and Pensions 2 (Mar. 29, 2023),\n[URL REDACTED] Claimant was “among the\nfirst companies to provide comprehensive health care.”\nId. Today, Claimant offers partners stock ownership,\nstudent-loan assistance, paid sick leave, and backup child\ncare. Id. at 2-3; see Our Long-Standing Efforts, supra.\n Since 2021, the union Workers United has cam-\npaigned to unionize U.S. Claimant stores. Workers\nUnited has “paid nearly $2.5 million” to consultants and\norganizers involved in the Claimant campaign. Workers\nUnited Paid Nearly $2.5m to Organizers, “Salts,” and\nActivists at Claimant, Lab. Union News (Apr. 25, 2023),\n 8\n\n\n[URL REDACTED] “Undercover [o]rganiz-\ners” funded by Workers United have been “key” to union\ndrives at Claimant stores. Josh Eidelson, The Under-\ncover Organizers Behind America’s Union Wins,\nBloomberg (Apr. 25, 2023), [URL REDACTED]\n But by January 2023, the “union drive” had “slowed”\nand “face[d] resistance from Claimant’ own workers.”\nDee-Ann Durbin, As Claimant Unionizing Slows, Some\nStrike, Others Skeptical, Associated Press (Jan. 10, 2023),\n[URL REDACTED] Claimant partners at\nover 25 unionized stores have petitioned to decertify the\nunion, but have been rebuffed by the Respondent. Claimant,\nPartners at More Than 25 Stores Have Filed for Decerti-\nfication: What Does It Mean? (Feb. 13, 2024),\n[URL REDACTED]\n 2. This case involves a Claimant store in Memphis,\nTennessee. Pet.App.71a. In January 2022, six partners\ncoordinating with Workers United announced plans to un-\nionize the store and formed an organizing committee.\nPet.App.72a-77a.\n On Tuesday, January 18, 2022, partners invited a\nnews crew to visit the Memphis store after hours to pro-\nmote the unionization drive. Pet.App.77a-78a. After the\nstore closed and was locked for the day, off-duty partners\nreturned to the store and unlocked the door to let the\nnews crew in—all without authorization. Pet.App.77a-\n78a. The news crew spent nearly an hour interviewing the\npartners within the closed store. Pet.App.78a. Mean-\nwhile, off-duty partners entered staff-only areas of the\nstore; one of them even accessed the safe. Pet.App.78a.\n Upon learning of the event the next day, Claimant\nreviewed security-camera footage and interviewed the\npartners involved. Pet.App.79a. Company policy bars\n 9\n\n\nmuch of what the partners did—for example, off-duty\npartners cannot enter closed stores or let in unauthorized\npeople. Pet.App.82a-83a. Claimant thus terminated\nseven of the partners who entered the store without au-\nthorization; five belonged to the union organizing\ncommittee. Pet.App.82a-83a. Claimant did not termi-\nnate the one organizing-committee member not present\nin the closed store. Pet.App.5a-6a, 77a. And Claimant\ndid not terminate two partners present who committed\nmore minor policy violations, like not ringing up a free\nbeverage. Pet.App.83a-84a.\n Shortly after the terminations, Workers United\nlaunched disruptive protests. Asked to describe “union\nactivity” at the Memphis store, one manager detailed how\nprotesters “circl[ed] the property” and drove cars “back-\nwards through the drive-thru lane honking their horns.”\n6/16/22 Tr. 1152:24, 1153:1-16, D. Ct. Dkt. 75. Protestors\n“cursed at” a manager, who “had to be escorted” to his car\nwhen he left. Id. As the manager testified, the scene was\n“terrifying, frightening,” and “chaotic.” Id.\n In June 2022, partners at the Memphis store voted\n11-3 to unionize under Workers United. Pet.App.7a. The\nMemphis store remains unionized today. More Perfect\nUnion, Map: Where Are Claimant Workers Unionizing?\n(Feb. 14, 2024), [URL REDACTED]\n Administrative and Judicial Proceedings\n 1. In February and April 2022, Workers United filed\ncharges with the Respondent, alleging that Claimant commit-\nted unfair labor practices in violation of the NLRA by,\ninter alia, terminating partners who broke company pol-\nicies by entering the store after hours and giving the news\ncrew unauthorized store access. Pet.App.68a-69a; see 29\nU.S.C. § 158(a)(1), (3).\n 10\n\n\n On April 22, 2022—ten days after receiving the last of\nWorkers United’s charges—the Respondent issued an admin-\nistrative complaint alleging that Claimant had\ncommitted unfair labor practices, including by firing part-\nners who violated company policy. Pet.App.69a. Less\nthan three weeks later, on May 10, 2022, the Respondent’s re-\ngional director, respondent M. Respondent,\npetitioned the U.S. District Court for the Western Dis-\ntrict of Tennessee for a section 10(j) injunction pending\nresolution of administrative proceedings. Pet.App.69a.\nThe Respondent asked for an injunction compelling Claimant\nto:\n • reinstate fired partners within five days;\n • expunge other discipline issued to one of the dis-\n charged partners;\n • keep the store’s lobby and café areas open despite\n a rise in COVID-19 infections;\n • leave all pro-union materials on the store’s com-\n munity bulletin board notwithstanding Claimant\n policy disallowing political materials on the board;\n • post the court’s order in the store breakroom;\n • read aloud the court’s order at a mandatory meet-\n ing for partners at the Memphis store; and\n • produce and distribute to partners nationwide a\n “video” of a “high-level [Claimant] official” read-\n ing the court’s order, or listening to an Respondent\n official reading the order.\n10(j) Pet. 8-10, D. Ct. Dkt. 1.\n In the last two years, the Respondent has requested twelve\nsuch section 10(j) injunctions against Claimant alone—\namounting to nearly 40% of all section 10(j) requests the\n 11\n\n\nRespondent has made during that time. 10(j) Injunctions, su-\npra. The Respondent has announced its intent to “seek\nnationwide relief before circuit court judges, district court\njudges, administrative law judges, and the Board to rem-\nedy” perceived “violations of federal labor law by\nClaimant.” Respondent Off. of Pub. Affs., Respondent Region 7-\nDetroit Wins Injunction Requiring Claimant to Rehire\nUnlawfully Fired Worker (Feb. 28, 2023), [URL REDACTED]\nnyurl.com/y9d3bnzv. The Respondent has begun to seek\nnationwide “cease-and-desist order[s]”—punishable by\ncontempt—prohibiting Claimant “at any of its stores”\nacross the country “from engaging in” conduct “like or re-\nlated” to anything alleged in a section 10(j) petition. E.g.,\n10(j) Petition at 6, 30-31, Kerwin v. Claimant, No.\n22-cv-12761 (E.D. Mich. Nov. 15, 2022).\n 2. In August 2022, the district court granted the\nRespondent an injunction, applying the Sixth Circuit’s relaxed\ntwo-part section 10(j) test. Pet.App.119a. The court re-\nquired the Respondent to show merely (1) “‘reasonable cause’\nto believe that an unfair labor practice has occurred,” and\n(2) that “injunctive relief is ‘just and proper.’”\nPet.App.88a (citations omitted).\n The district court held that the Respondent met its “rela-\ntively insubstantial burden to establish reasonable cause.”\nPet.App.89a. The court considered it sufficient that the\nRespondent offered “some evidence” that supported a “not\nfrivolous” legal theory. Pet.App.89a (citation omitted).\nHere, the Respondent offered testimony that Claimant did not\nalways fire partners for purportedly similar policy viola-\ntions to suggest that Claimant fired Memphis partners\nfor their union activity. Pet.App.103a-104a. The court\n“disregard[ed]” evidence Claimant offered refuting the\nRespondent’s account, not because the court found the evi-\ndence unpersuasive, but rather because the two-part test\n 12\n\n\nleft “conflicts in the evidence” and “issues of witness cred-\nibility” to the Respondent. Pet.App.105a, 108a.\n The court then held that the Respondent satisfied the “just\nand proper” prong of the Sixth Circuit’s test because in-\njunctive relief was “necessary to return the parties to\nstatus quo ... to protect the [Respondent’s] remedial powers.”\nPet.App.108a-109a (quoting Respondent v. Ozburn-Hessey\nLogistics, LLC, 875 F.3d 333, 339 (6th Cir. 2017)). Under\nthe Sixth Circuit’s relaxed standard, the court explained,\nthe Respondent needed to show only a “reasonable apprehen-\nsion that the efficacy of the [Respondent’s] final order may be\nnullified.” Pet.App.109a (quoting Sheeran v. Am. Com.\nLines, Inc., 683 F.2d 970, 979 (6th Cir. 1982)). Here, the\ncourt held, the Respondent’s proffered testimony that the ter-\nminations left “lingering impacts” on union efforts at the\nMemphis store—though not “wholly conclusive”—suf-\nficed, even though the partners had already voted to\nunionize that store by a substantial margin.\nPet.App.113a, 116a (citation omitted).\n The court ordered Claimant to reinstate the seven\nterminated partners, expunge one partner’s unrelated\ndiscipline, keep the store’s lobby and café areas open,\nleave pro-union materials on the community bulletin\nboard, and post the district court’s order. Pet.App.119a-\n121a.\n 3. The Sixth Circuit affirmed. Pet.App.3a. Claimant\nargued that the “district court should have applied the\ntraditional four-factor test for preliminary injunctions”\nunder Winter, 555 U.S. 7. Pet.App.17a. After noting that\n“some circuits use the four-factor framework,” the Sixth\nCircuit hewed to its precedent requiring the Respondent to\nshow merely (1) “‘reasonable cause to believe that unfair\n 13\n\n\nlabor practices have occurred’” and (2) that “injunctive re-\nlief is ‘just and proper.’” Pet.App.10a (quoting Ozburn-\nHessey, 875 F.3d at 339).\n Claimant did not challenge the district court’s con-\nclusion that, under Sixth Circuit precedent, the Respondent\nsatisfied the reasonable-cause prong by advancing a non-\nfrivolous legal theory. Pet.App.11a. The Sixth Circuit\nthus focused on whether the district court abused its dis-\ncretion by deeming an injunction “just and proper.”\nPet.App.11a. The Sixth Circuit asked whether an injunc-\ntion was “necessary to return the parties to the status quo\n... to protect the [Respondent’s] remedial powers” and\n“whether achieving the status quo [was] possible.”\nPet.App.10a (cleaned up). That test was satisfied here,\nthe court held, based on potential chilling effects on un-\nionization efforts were partners not reinstated.\nPet.App.12a.\n Judge Readler “reluctantly concur[red]” in the ma-\njority’s decision as a faithful application of Sixth Circuit\nprecedent. Pet.App.19a. But he expressed concern that\nthe “misguided” two-part test has “no particularly good”\njustification in the NLRA’s text and “is in tension with in-\ntervening Supreme Court precedent” requiring courts to\napply the four traditional equitable factors “[a]bsent the\n‘clearest’ congressional instruction.” Pet.App.19a, 24a\n(quoting Miller v. French, 530 U.S. 327, 340 (2000)).\nJudge Readler then detailed how the relaxed standard the\ndistrict court applied materially affected whether any pre-\nliminary injunction should issue. Pet.App.30a-37a.\n 4. The Respondent’s unfair-labor-practice proceedings\nagainst Claimant remain pending, with the Respondent in\ncontrol of how much longer they last—and thus how long\nthe section 10(j) injunction endures. ALJ proceedings\ntook a year, culminating in a May 2023 decision. The ALJ\n 14\n\n\ndescribed the unauthorized media event as an “audacious\nintrusion on [Claimant’] prerogative to control usage of\nthe store,” and found that Claimant lawfully terminated\ntwo participating partners for “serious” policy violations.\nClaimant, 2023 WL 3254440 (ALJ May 4, 2023).\nBut the ALJ ruled against Claimant on other unfair-la-\nbor-practice allegations, including five termination\ncharges. Id. Both Claimant and the Respondent’s General\nCounsel have filed exceptions to the ALJ’s findings before\nthe Board, where the case remains pending.\n\n SUMMARY OF ARGUMENT\n I. Section 10(j) requires district courts to apply the\ntraditional four-factor test when evaluating the Respondent’s\npreliminary-injunction requests.\n A. Section 10(j)’s text does not clearly depart from\nthe traditional four-factor test, which imposes a high bar\nto obtain preliminary injunctions. Plaintiffs must show\nthey are likely to prevail on the merits. Merely raising a\nnon-frivolous legal theory or pointing to disputed facts is\ninsufficient. Plaintiffs must show that they will suffer ir-\nreparable harm without an injunction, meaning serious\ninjuries that would be near impossible to reverse or com-\npensate with damages. And even then, courts must deny\ninjunctions if countervailing equities or the public interest\ndisfavor relief.\n Since the 1830s, this Court has required a clear state-\nment from Congress to supplant ancient rules governing\nequitable remedies—including the four-factor prelimi-\nnary-injunction test. This Court has applied that clear-\nstatement rule in many preliminary- and permanent-in-\njunction cases. That rule ensures that decisions about\nwhether to expand equitable remedies rest with Con-\ngress.\n 15\n\n B. Section 10(j) comes nowhere close to providing a\nclear statement. Quite the contrary, section 10(j)’s text\nevokes the four-factor test. The words “just and proper”\nprescribe that the traditional rules govern. “Just” means\n“righteous” or “equitable,” and “proper” means “appro-\npriate” or “suitable.” Section 10(j) thus instructs courts\nto grant “appropriate” or “equitable” relief. Congress’ di-\nrective to district courts to issue relief they “deem[] just\nand proper” further invokes courts’ classic equitable dis-\ncretion. Section 10(j) thus requires courts to analyze\npreliminary injunctions under the traditional standard.\n This Court and lower courts have interpreted compa-\nrable statutory language as invoking the four-factor test.\nLower courts have interpreted other statutes authorizing\n“just and proper” injunctions to incorporate traditional\nequitable principles. This Court has interpreted statutes\nauthorizing “appropriate relief” to reference the tradi-\ntional rules governing injunctions. And this Court has\ndeemed comparable statutory text insufficiently clear to\ndisplace the traditional factors governing injunctions. By\nthose metrics, section 10(j) plainly falls on the side of pre-\nserving the traditional four-factor test.\n Conversely, section 10(j) looks nothing like the statu-\ntory language Congress employs to alter normal equitable\nrules. Congress clearly displaced the four-factor test in\nanother provision of the Taft-Hartley Act, setting an ex-\ntra-high bar for injunctions of widespread strikes and\nlockouts—but eschewed similar language in section 10(j).\nSee 29 U.S.C. § 178(a). Other statutes plainly deviate\nfrom the traditional test by relieving the moving party\nfrom showing one of the four factors, mandating relief for\nstatutory violations, or requiring a showing that addi-\ntional considerations favor an injunction. But Congress\nomitted any such special rules in section 10(j).\n 16\n\n C. Section 10(j)’s history, as well as strong practical\nconsiderations, confirm that the four-factor test applies.\nCongress enacted section 10(j) as a limited exception to an\nearlier near-blanket ban on labor injunctions. Given that\ncontext, it defies credulity that Congress in section 10(j)\nempowered district courts to issue injunctions against un-\nions or employers more freely than before. Confirming\nthat understanding, the Respondent initially understood sec-\ntion 10(j) to be reserved for extraordinary cases in which\nthe merits were clear and irreparable harm favored an in-\njunction. Strong practical considerations confirm that\ndistrict courts must apply stringent criteria before grant-\ning section 10(j) injunctions. Those injunctions are often\ncase-ending because they are so onerous and long-lasting\nthat employers face enormous pressure to settle.\n II. The Sixth Circuit’s two-part test—which the dis-\ntrict court applied here—lacks any basis in section 10(j)’s\ntext and defies traditional equitable principles.\n The two-part test significantly lowers the Respondent’s\nburden in securing an injunction as compared to the tra-\nditional four-part test. The two-part test first asks the\nRespondent to establish mere “reasonable cause” to believe\nthat unfair labor practices have occurred—which the\nRespondent can do by pointing to a non-frivolous legal theory\nsupported even by conflicting evidence. That inquiry dra-\nmatically departs from the traditional showing of a\nlikelihood of success on the merits, yet lacks any textual\nbasis. The words “reasonable cause” appear nowhere in\nsection 10(j)—but do appear in a neighboring provision,\nsection 10(l), suggesting Congress did not want any rea-\nsonable-cause standard in section 10(j).\n The two-part test next asks whether an injunction\nwould be “just and proper”—defined as whether relief\nwould serve the Respondent’s remedial power. That interpre-\ntation defies the ordinary meaning of “just and proper.”\n 17\n\nAnd that interpretation wrongly centers on the Respondent’s\nasserted policy and remedial concerns, at the expense of\nirreparable harm, the equities, and the public interest—\nindispensable considerations under the four-part test.\n The relaxed two-part test also creates implausible\nanomalies. District courts in section 10(j) proceedings\nwould reject constitutional defenses to injunctions when-\never the Respondent presents a “not frivolous” countervailing\ntheory. And it is altogether unclear what standard would\napply when a party seeks to stay a section 10(j) injunction.\n III. The government’s brief in opposition did not de-\nfend the two-part test on its own terms. Instead, the\ngovernment (at BIO 6-7) argued that under any inquiry,\ndistrict courts evaluating section 10(j) requests must de-\nfer to the Respondent’s “expert judgments,” power to interpret\nlabor law, and “significant pre-filing consideration.”\n Extending the Respondent that novel, extreme form of\ndeference would violate bedrock administrative-law prin-\nciples. Ordinarily, only final agency action receives\nlimited deference. Here, the Respondent asks courts to defer\nto the preliminary legal and factual views of Respondent attor-\nneys—views that the agency will revisit throughout its in-\nhouse administrative proceedings.\n Section 10(j) itself undermines the Respondent’s call for\ndeference. Congress entrusted district courts alone with\ndeciding when section 10(j) injunctions are appropriate.\nThat choice would be meaningless if courts must rubber-\nstamp the Respondent in-house attorneys’ preliminary views.\nNor does it matter that the Respondent adjudicates unfair-la-\nbor-practice charges in the first instance. Even the\nagency’s final decisions are reviewed by the courts of ap-\npeals under a less-deferential standard than the one the\nRespondent (at BIO 7) presses here.\n 18\n\n The government’s deference theory threatens to up-\nend countless other statutes authorizing agencies to seek\ninjunctions. Other agencies presumably have expertise\nover matters within their jurisdiction. Yet those agencies\nroutinely seek injunctions under the traditional four-fac-\ntor test. That test applies when the Equal Employment\nOpportunity Commission (EEOC) seeks to enjoin serious\ndiscrimination, the Secretary of Labor requests injunc-\ntions preventing child labor, and the Attorney General\nasks courts to block disclosure of how to build an atomic\nbomb. If all those agencies must satisfy the stringent\nfour-part test, then so must the Respondent.\n IV. Vacatur and remand is warranted. The Sixth Cir-\ncuit and the district court did not require the Respondent to\nsatisfy the traditional four-factor test. And proceedings\nbelow would have vastly differed under that test. This\nCourt should follow its normal course and vacate and re-\nmand for the district court to apply the proper rules.\n\n ARGUMENT\nI. Section 10(j) Incorporates the Four-Part Test\n Section 10(j) authorizes federal district courts “to\ngrant ... such temporary relief or restraining order as\n[the court] deems just and proper” during the pendency\nof in-house Respondent adjudications. 29 U.S.C. § 160(j).\nNothing in section 10(j)’s text evinces any intent, much\nless any clear intent, to depart from the ordinary rule that\nthe party seeking a preliminary injunction must show\n“that he is likely to succeed on the merits, that he is likely\nto suffer irreparable harm in the absence of preliminary\nrelief, that the balance of equities tips in his favor, and\nthat an injunction is in the public interest.” Winter, 555\nU.S. at 20. To the contrary, the phrase “just and proper”\ninvokes those traditional equitable criteria.\n 19\n\n The Four-Part Test Applies Absent a Clear State-\n ment\n 1. When Congress empowers federal district courts\nto grant preliminary injunctions, the strong “presump-\ntion” is that courts must apply “long-established and\nfamiliar principles” of equity that pre-date the Republic.\nNken v. Holder, 556 U.S. 418, 433 (2009) (citation omit-\nted); accord United States v. Oakland Cannabis Buyers’\nCoop., 532 U.S. 483, 496 (2001). The First Judiciary Act\nof 1789 granted federal courts jurisdiction over “all suits\n... in equity,” thereby vesting the same “jurisdiction in eq-\nuity exercised by the High Court of Chancery in England\nat the time of the adoption of the Constitution.” Grupo\nMexicano de Desarrollo, S. A. v. Alliance Bond Fund,\nInc., 527 U.S. 308, 318 (1999) (citations omitted). Tradi-\ntional equitable principles thus govern “remedies in\nequity” unless new “acts of Congress” say otherwise.\nBoyle v. Zacharie, 31 U.S. 648, 658 (1832) (Story, J.).\n For preliminary injunctions, the “frequently reiter-\nated standard” in equity is that a plaintiff “must establish\nthat he is likely to succeed on the merits, that he is likely\nto suffer irreparable harm in the absence of preliminary\nrelief, that the balance of equities tips in his favor, and\nthat an injunction is in the public interest.” Winter, 555\nU.S. at 20, 22.\n This Court has required those four factors since Geor-\ngia v. Brailsford, 2 U.S. (2 Dall.) 402 (1792)—this Court’s\nsecond decision. See id. at 406 (Iredell, J.); id. at 407\n(Blair, J.). And this Court has always applied the same\nequitable rules—including for preliminary injunctions—\nwhen the “United States [is] plaintiff[], or petitioner[]”\nseeking injunctive relief. First Judiciary Act, ch. 20, § 11,\n1 Stat. 73, 78 (codified as amended at 28 U.S.C. § 1345);\nsee, e.g., In re Debs, 158 U.S. 564, 592 (1895) (applying eq-\nuity “jurisdiction of the court of chancery” and requiring\n 20\n\nUnited States to show elements such as “irreparable dam-\nage” to obtain injunction against striking workers).\n Those four factors impose a high bar for a preliminary\ninjunction, which is “an extraordinary and drastic rem-\nedy” that “is never awarded as of right.” Munaf v. Geren,\n553 U.S. 674, 689-90 (2008) (citation omitted); Monsanto\nCo. v. Geertson Seed Farms, 561 U.S. 139, 165 (2010)\n(same). Injunctive relief “may only be awarded upon a\nclear showing the plaintiff is entitled to such relief.” Win-\nter, 555 U.S. at 22.\n Start with the “likelihood of success on the merits,”\nwhich requires “plaintiffs [to] demonstrate[] that they are\nlikely to prevail on the merits.” Ashcroft v. Am. C.L. Un-\nion, 542 U.S. 656, 666 (2004) (emphasis added); accord\nPharm. Rsch. & Mfrs. of Am. v. Walsh, 538 U.S. 644, 662\n(2003) (plurality op.) (requiring “clear showing [of] a prob-\nability of success.”). This Court has thus denied\npreliminary injunctions where the “facts and the infer-\nences [are] much in dispute.” Phx. Ry. Co. of Ariz. v.\nGeary, 239 U.S. 277, 281 (1915). Accounting for whether\nthe “legal right is doubtful” ensures that the injunction it-\nself does not “result in material injury to either party ...\nfor which there is no redress.” Russell v. Farley, 105 U.S.\n433, 438 (1881).\n The irreparable-harm factor is also demanding. Ir-\nreparable harms are injuries that “would be difficult—if\nnot impossible—to reverse.” Hollingsworth v. Perry, 558\nU.S. 183, 195 (2010). Only serious injuries that cannot be\nremedied later with damages count as “irreparable”—like\n“the loss of health, the loss of trade, the destruction of the\nmeans of subsistence, or the ruin of ... property.” Parker\nv. Winnipiseogee Lake Cotton & Woolen Co., 67 U.S. 545,\n552 (1862). The mere “possibility” of harm is not\nenough—“plaintiffs seeking preliminary relief must\ndemonstrate that irreparable injury is likely.” Winter,\n 21\n\n555 U.S. at 22. And the “possibility that adequate com-\npensatory or other corrective relief will be available at a\nlater date ... weighs heavily against” an injunction.\nSampson v. Murray, 415 U.S. 61, 90 (1974); accord\nConkright v. Frommert, 556 U.S. 1401, 1403 (2009) (Gins-\nburg, J., in chambers) (denying stay on that basis).\n Finally, the balance of the equities and the public in-\nterest are stringent elements. This Court has always\n“balanc[ed]” “the comparative injury which would be sus-\ntained by the defendant ... and by the complainant.”\nRussell, 105 U.S. at 438-39 (citation omitted). The balance\nof equites can cut against issuing an injunction even where\nthe moving party is likely to succeed on the merits—for\ninstance, if the moving party does not act with “reasona-\nble diligence.” Benisek v. Lamone, 585 U.S. 155, 159\n(2018).\n Likewise, “[t]he history of equity jurisdiction is the\nhistory of regard for public consequences in employing\nthe extraordinary remedy of the injunction.” R.R.\nComm’n of Tex. v. Pullman Co., 312 U.S. 496, 500 (1941).\nThis Court has, for instance, refused to enjoin naval train-\ning exercises because “even if plaintiffs ha[d] shown\nirreparable injury ... any such injury is outweighed by the\npublic interest ... in effective, realistic training of ... sail-\nors.” Winter, 555 U.S. at 23.\n 2. Since at least the 1830s, this Court has required\nclear statements from Congress—not “light inferences, or\ndoubtful construction”—before allowing district courts to\ndepart from “[t]he great principles of equity.” Brown v.\nSwann, 35 U.S. 497, 503 (1836). Like other clear-state-\nment rules, the presumption that normal equitable rules\napply furthers “both separation of powers principles and\na practical understanding of legislative intent.” See West\nVirginia v. EPA, 597 U.S. 697, 723 (2022). Congress, not\n 22\n\nfederal courts, must undertake “any substantial expan-\nsion of past [equitable] practice.” Grupo Mexicano, 527\nU.S. at 329. And changing centuries-old rules governing\nequitable remedies is a “drastic” step that Congress\nwould be unlikely to take “equivocal[ly].” Hecht Co. v.\nBowles, 321 U.S. 321, 329 (1944).\n Over the ensuing two centuries, this Court has in-\nvoked that clear-statement rule over a dozen times in\ncases involving all kinds of equitable remedies, insisting\nthat “a major departure from the long tradition of equity\npractice should not be lightly implied.” eBay Inc. v. Mer-\ncExchange, L.L.C., 547 U.S. 388, 391 (2006) (citation\nomitted). 1 And this Court has repeatedly applied the pre-\nsumption when interpreting preliminary-injunction and\npermanent-injunction statutes. Infra pp. 26-27.\n Section 10(j)’s Text Evokes Classic Equity Language\n Section 10(j) comes nowhere close to displacing that\npresumption. Section 10(j)’s instruction to district courts\nto “deem[]” whether preliminary injunctions are “just and\nproper” is classic equity-invoking language that a fortiori\nlacks any clear statement. The words “just and proper”\nprescribe “that traditional rules govern.” Pet.App.23a\n(Readler, J., concurring) (quoting Kinney v. Pioneer\nPress, 881 F.2d 485, 491 (7th Cir. 1989)).\n Congress enacted section 10(j) in 1947 as part of the\nTaft-Hartley Amendments to the NLRA, but did not de-\nfine the terms “just and proper.” Pub. L. [DOCKET REDACTED], 61\nStat. 136, 149 (1947). Where Congress does not “furnish\na definition” of a “statutory term,” this Court “generally\n\n1\n See also, e.g., Porter v. Warner Holding Co., 328 U.S. 395, 398 (1946);\nUnited States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 328\nn.9 (1961); Hall v. Cole, 412 U.S. 1, 12 (1973); United States v. Rodg-\ners, 461 U.S. 677, 708 (1983); Nken, 556 U.S. at 433.\n 23\n\nseek[s] to afford a term its ordinary or natural meaning.”\nHollyFrontier Cheyenne Refin., LLC v. Renewable Fuels\nAss’n, 141 S. Ct. 2172, 2176 (2021) (citation omitted).\n Contemporary dictionaries illuminate “ordinary\nmeaning.” Taniguchi v. Kan Pacific Saipan, Ltd., 566\nU.S. 560, 566 (2012). Here, contemporaneous dictionaries\nconfirm that “just and proper” invokes equitable princi-\nples. “[J]ust” means “righteous” and “equitable.”\nWebster’s New International Dictionary 1348 (2d ed.\n1945); see Funk & Wagnalls Practical Standard Diction-\nary of the English Language 628 (1943) (“equitable” and\n“fair”). And “proper” means “appropriate,” “suitable,” or\n“right.” Webster’s New International 1983; see also Funk\n& Wagnalls 910 (similar). In sum, “‘just and proper’ is\nanother way of saying ‘appropriate’ or ‘equitable.’” Muf-\nfley v. Spartan Mining Co., 570 F.3d 534, 542-43 (4th Cir.\n2009) (citation omitted); see Pet.App.22a-23a (Readler, J.,\nconcurring).\n Congress’ directive to district courts to issue relief\nthey “deem[] just and proper” further invokes traditional\nequitable discretion. 29 U.S.C. § 160(j) (emphasis added).\nCourts’ discretion to “mould each decree to the necessities\nof the particular case” is a hallmark of equity. Weinberger\nv. Romero-Barcelo, 456 U.S. 305, 312 (1982) (citation omit-\nted). By authorizing district courts to issue injunctions as\nthey “deem[] just and proper,” Congress provided courts\na discretionary remedy that would have been well known\nto courts of equity.\n Moreover, six other statutory provisions authorize\nagencies or private parties challenging agency action to\nobtain preliminary injunctions if courts deem such relief\n“just and proper,” and those provisions likewise call up\nthe traditional four factors. Most significantly, circuit\ncourts have interpreted 47 U.S.C. § 402(c)—authorizing\ncourts of appeals to issue “just and proper” relief when\n 24\n\n\nprivate parties challenge Federal Communications Com-\nmission (FCC) licensing decisions—to give courts “the\nability to consider equitable factors.” United States v.\nSzoka, 260 F.3d 516, 524-25 (6th Cir. 2001).\n Courts have likewise interpreted 22 U.S.C.\n§ 4109(d)—authorizing the Foreign Service Labor Rela-\ntions Board (FSLRB) to seek “any temporary relief” that\nthe U.S. District Court for the District of Columbia “con-\nsiders just and proper”—to mean courts can consider “all\nappropriate interim relief,” and “appropriate” is another\nequity hallmark. Am. Foreign Serv. Ass’n v. Baker, 895\nF.2d 1460, 1463 (D.C. Cir. 1990) (Ginsburg, J.); see Tag-\ngart v. Lorenzen, 139 S. Ct. 1795, 1801 (2019)\n(“appropriate” invokes equitable principles). And a dis-\ntrict court has interpreted 5 U.S.C. § 7123(d)—\nauthorizing the Federal Labor Relations Authority\n(FLRA) to petition district courts “to grant any tempo-\nrary relief ... [the court] considers just and proper”—to\n“incorporate[] standards similar to those which are tradi-\ntional to courts of equity.” United States v. Prof. Air\nTraffic Controllers Org., 524 F. Supp. 160, 163 n.3 (D.D.C.\n1981). 2 If the words “just and proper” altered the normal\nfour injunctive factors, it is passing strange that no judi-\ncial consensus to that effect exists in these contexts. 3\n\n\n2\n But see Reuben v. FDIC, 760 F. Supp. 934, 942 (D.D.C. 1991) (Respondent\nsection 10(j) precedent “makes it easier for the [FLRA] to satisfy one\nmajor element [irreparable harm] in the traditional equitable equa-\ntion”); contra eBay, 547 U.S. at 393-94 (refusing to allow automatic\nrelaxation of irreparable harm absent clear statement).\n3\n The other three provisions authorizing agencies or private parties\nchallenging agencies to obtain preliminary injunctions that courts\ndeem “just and proper” include 29 U.S.C. § 660(a), authorizing circuit\ncourts to grant “such temporary relief ... as [they] deem[] just and\n 25\n\n\n Reinforcing the point, this Court has held that compa-\nrable language to “just and proper” invokes the\ntraditional four-factor test. When Congress authorizes\ncourts to issue “necessary or appropriate” relief, includ-\ning orders that “operate as ... injunction[s],” Congress\n“incorporate[s] the traditional standards in equity prac-\ntice.” Taggart, 139 S. Ct. at 1801 (citations omitted).\nSimilarly, by authorizing the Environmental Protection\nAgency (EPA) “to commence a civil action for appropriate\nrelief, including a permanent or temporary injunction,”\nCongress “contemplated” that district courts would exer-\ncise “equitable discretion” under established principles.\nRomero-Barcelo, 456 U.S. at 317-18 (citation omitted). By\ninvoking traditional equitable concepts, Congress\nbrought “with [it] the ‘old soil’ that has long governed ...\ninjunctions,” confirming that the traditional rules apply.\nTaggart, 139 S. Ct. at 1801. So too here, the equity-invok-\ning terms “just and proper” instruct district courts to\napply the usual four injunction factors.\n 2. This Court has repeatedly deemed similar statutory\nlanguage—and even language expressing statute-specific\nconsiderations—as insufficiently clear to displace the tra-\nditional factors governing preliminary or permanent\n\n\nproper” in appeals of Occupational Safety and Health Review Com-\nmission (OSHRC) decisions, and 42 U.S.C. § 3612(k), authorizing\ncircuit courts to grant “such temporary relief ... as the court deems\njust and proper” in appeals from certain Housing and Urban Devel-\nopment orders. And 5 U.S.C. § 7123(c) authorizes circuit courts to\ngrant “any temporary relief . . . [they] consider[] just and proper,”\nincluding injunctions against the FLRA or other agencies, in appeals\nof FLRA administrative decisions.\n 26\n\n\ninjunctions. 4 Conversely, section 10(j) bears no resem-\nblance to the type of clear statutory language this Court\nhas required to depart from usual equitable criteria.\n a. Start with the Court’s repeated recognition of stat-\nutes that cannot be read to jettison the traditional four\ninjunctive factors. This Court has held that the Con-\ntrolled Substances Act’s grant of “jurisdiction ... to enjoin\n[statutory] violations,” 21 U.S.C. § 882(a), did not, “by\nclear and valid legislative command,” impose “an absolute\nduty” to enjoin violations “under any and all circum-\nstances” as the government contended, Oakland\nCannabis, 532 U.S. at 496 (citation omitted). The Court\nthus held that the traditional four-factor test governs the\n“advantages and disadvantages of ‘employing the extraor-\ndinary remedy of injunction.’” Id. at 498 (citation\nomitted).\n Likewise, the Emergency Price Control Act’s instruc-\ntion that courts “shall ... grant[]” “permanent or\ntemporary injunction[s]” “upon a showing ... that [a] per-\nson ... is about to [violate the Act],” 50 U.S.C. § 925 (1944),\ndoes not “plain[ly]” supplant district courts’ discretion un-\nder the four-factor test, Hecht, 321 U.S. at 330. As this\nCourt explained, that language lacked “an unequivocal\nstatement” of Congress’ intent to “drastic[ally] depart[]\nfrom the traditions of equity practice.” Id. at 329. And,\nperhaps self-evidently, by authorizing district courts to\n“grant injunctions in accordance with the principles of eq-\nuity ... as the court deems reasonable,” 35 U.S.C. § 283,\nthe Patent Act did not evince any “major departure” from\n\n\n4\n “The standard for a preliminary injunction is essentially the same\nas for a permanent injunction ... except[] that the plaintiff must show\na likelihood of success on the merits rather than actual success.”\nAmoco Prod. Co. v. Village of Gambell, 480 U.S. 531, 546 n.12 (1987).\n 27\n\nthe four-factor test, eBay, 547 U.S. at 391-92 (citation\nomitted).\n This Court has refused to interpret even important,\nstatute-specific commands as clearly altering the tradi-\ntional injunctive test. The Federal Water Pollution\nControl Act prohibits discharging pollutants without a\npermit. 33 U.S.C. §§ 1311(a), 1323(a). But that command\ndoes not require district courts to automatically enjoin un-\nlawful pollutant discharges; courts still apply the four-\nfactor test. Romero-Barcelo, 456 U.S. at 312-13.\n Or take the Alaska National Interest Lands Conser-\nvation Act, which requires agencies to consider Native\n“subsistence uses and needs” when “leas[ing] ... public\nlands.” 16 U.S.C. § 3120(a). That requirement did not en-\nact a special “presumption” in favor of “irreparable\ndamage” or otherwise depart from traditional injunctive\ncriteria because Congress failed to use clear “words” or\n“a necessary and inescapable inference.” Amoco Prod.,\n480 U.S. at 541-42, 544-45 (citations omitted). If statutory\ncommands or special, textually explicit considerations are\ninsufficiently clear to displace traditional injunctive crite-\nria, it is hard to fathom how section 10(j)’s directive to\ngrant injunctive relief as district courts “deem just and\nproper” would suffice.\n b. Section 10(j) is miles apart from the statutory lan-\nguage Congress employs when altering normal equitable\nrules. Most tellingly, Congress knew exactly how to dis-\nplace the traditional four factors for other labor\ninjunctions. Congress did so in the Taft-Hartley Act it-\nself, but for a different type of injunction, not section 10(j).\nCongress set a higher bar for the U.S. Attorney General\nto obtain district-court injunctions against union strikes\nand lock-outs. The government must show that the strike\nor lock-out “affects an entire industry or a substantial part\n 28\n\n\nthereof” and “imperil[s] the national health or safety.” 29\nU.S.C. § 178(a). By contrast, section 10(j) omits specific\ninstructions that would make it easier or harder for the\nRespondent to obtain preliminary injunctions.\n Other statutory contexts show that Congress knows\nhow to depart from the traditional equitable default and\ndid no such thing in section 10(j). Some statutes relieve\nthe party moving for an injunction from showing one of\nthe four factors. Congress conferred on plaintiffs alleging\ntrademark violations “a rebuttable presumption of irrep-\narable harm ... upon a finding of likelihood of success on\nthe merits.” 15 U.S.C. § 1116(a). Courts enjoining the im-\nproper “disclosure of any confidential information”\nbelonging to applicants for licenses to sell “biological\nproduct[s]” must “deem[]” the disclosure to have\n“cause[d] ... irreparable harm for which there is no ade-\nquate remedy.” 42 U.S.C. § 262(l). And when considering\nwhether to grant preliminary injunctions involving cer-\ntain infrastructure projects, courts may “not presume”\nthat harm to “public health, safety, [or] the environment”\nare “reparable.” 42 U.S.C. § 4370m-6(b).\n Congress can also lower the bar for injunctions by\nmandating relief for statutory violations. For example,\nby demanding that federal agencies “not ... jeopardize the\ncontinued existence of any endangered species,” 16 U.S.C.\n§ 1536(a)(2), Congress made “abundantly clear” that the\n“balance ha[d] been struck in favor of” enjoining actions\nthat jeopardize endangered species, TVA v. Hill, 437 U.S.\n153, 193-94 (1978).\n Conversely, Congress knows how to heighten plain-\ntiffs’ burden to obtain injunctions. Courts considering\npreliminary injunctions against certain infrastructure\nprojects must “[i]n addition to ... any other applicable eq-\nuitable factors ... consider the potential effects on public\n 29\n\n\nhealth, safety, and the environment” and “negative effects\non jobs.” 42 U.S.C. § 4370m-6(b). Courts evaluating pre-\nliminarily enjoining “hazardous fuel reduction project[s]”\nmust “balance” the “impact to the ecosystem.” 16 U.S.C.\n§ 6516(c)(3). And courts assessing preliminary injunc-\ntions under the Prison Litigation Reform Act must “give\nsubstantial weight to any adverse impact on public safety\nor the operation of a criminal justice system.” 18 U.S.C.\n§ 3626(a)(2); accord French, 530 U.S. at 336-37 (PLRA au-\ntomatic stay provision displaces courts’ “equitable\nauthority”). Yet section 10(j) notably lacks any manda-\ntory presumptions or special additional factors, showing\nthat Congress did not “intend[] to depart from established\nprinciples.” Romero-Barcelo, 456 U.S. at 313.\n History and Strong Practical Considerations Con-\n firm the Four-Part Test Applies\n 1. “[H]istorical context” sheds further light on statu-\ntory meaning. See Biden v. Texas, 597 U.S. 785, 804-05\n(2022). Here, section 10(j)’s history reinforces that “just\nand proper” refers to the traditional four-factor test for\npreliminary injunctions, so that section 10(j) injunctions\nare rare and reserved for extraordinary cases.\n When Congress enacted the Taft-Hartley Act in 1947,\nsection 10(j) represented a “limited exception to the fed-\neral policy against labor injunctions.” Respondent v. S.\nBakeries, LLC, 786 F.3d 1119, 1123 (8th Cir. 2015) (cita-\ntion omitted). Since the Norris-LaGuardia Act of 1932,\nCongress has barred federal courts from issuing injunc-\ntions against employers or unions in most labor disputes.\nSee Pub. L. [DOCKET REDACTED], 47 Stat. 70 (1932) (codified at 29\nU.S.C. § 101 et seq.) (“[N]o court ... shall have jurisdiction\nto issue any restraining order or temporary ... injunction\nin a case involving ... a labor dispute, except in a strict\nconformity with the provisions of this Act.”). That bar on\n 30\n\n\nlabor injunctions was Congress’ reaction to the pre-1932\nlandscape, where federal courts issued labor injunctions\nagainst unions so often that “the extraordinary remedy of\ninjunction ha[d] become the ordinary legal remedy” and\n“the central lever” in labor disputes. Felix Frankfurter &\nNathan Greene, The Labor Injunction 52 (1930).\n Norris-LaGuardia drastically curtailed federal courts’\nissuance of labor injunctions. Frank McCulloch, New\nProblems in the Administration of the Labor-Manage-\nment Relations Act, 16 Sw. L.J. 82, 90 (1962). But after\nWorld War II, “widespread work stoppages” caused by\nmultiplying strikes—some involving blatantly illegal con-\nduct—threatened the economy. Leslie Fahrenkopf, Note,\nStriking the Just and Proper Balance, 80 Va. L. Rev.\n1159, 1162-63 (1994). Because Norris-LaGuardia’s anti-\ninjunction rules blocked federal courts from enjoining\nsuch conduct, Congress rolled back the bar for specific\ntypes of injunctions, including by promulgating section\n10(j) to allow district courts to enjoin unfair labor prac-\ntices. Id. at 1163; see 29 U.S.C. § 160(h) (Norris-\nLaGuardia does not apply “[w]hen granting appropriate\ntemporary relief” under section 10); id. § 160(l) (requiring\nthe Respondent to seek preliminary injunctions of unions’ par-\nticularly serious unfair labor practices); id. § 178(a)\n(authorizing special process for injunctions involving\nwidespread strikes).\n Section 10(j) thus partially restored federal courts’ eq-\nuity jurisdiction as it stood before 1932. See Fahrenkopf,\nsupra, at 1163-65. And before Norris-LaGuardia, courts\napplied the traditional equitable criteria when deciding\nwhether to issue preliminary injunctions. See Frankfur-\nter & Greene, supra, at 54-55 (collecting cases). Given\nthat context, it defies credulity that Congress in section\n10(j) empowered district courts to issue injunctions\nagainst unions or employers more easily than ever before.\n 31\n\n 2. The Respondent’s own initial understandings of section\n10(j) support that section 10(j) incorporates the tradi-\ntional, stringent four-part test. Shortly after section\n10(j)’s enactment in 1947, Respondent General Counsel Robert\nDenham explained that “the history of labor injunctions is\ntoo long and reveals too much the national desire to re-\nduce government by injunction to a minimum to justify\nany theory other than that [section 10(j)] is placed in the\nAct for emergency purposes.” I. Herbert Rothenberg,\nRothenberg On Labor Relations 632 n.4 (1949) (emphasis\nadded); accord Respondent General Counsel Reviews Taft Act\nProblems—Boycotts, Injunctions, 24 L.R.R.M. 44, 45\n(1949). The Respondent thus deemed section 10(j) relief appro-\npriate “only where loss or damage or jeopardy to the\nsafety and welfare of a large segment of the public would\nresult if injunctive action were not taken.” Rothenberg,\nsupra, at 632 n.4. Tracking that view, the Respondent author-\nized, on average, just three section 10(j) injunctions per\nyear in the first fifteen years after section 10(j)’s enact-\nment. See Respondent Ann. Reps. (1948-1961),\n[URL REDACTED]\n Further, in 1962, when Respondent Chairman Frank\nMcCulloch revealed the Respondent’s own criteria for seeking\nsection 10(j) injunctions, those criteria tracked the tradi-\ntional four-part test. See McCulloch, supra, at 96-98. 5\nThe Respondent considered its likelihood of success on the\nmerits—i.e., whether a case involved “the application of\nwell-defined doctrine to easily ascertained fact[s]” or, con-\nversely, “conflicting legal principles.” Id. at 97. The\nRespondent assessed the risk of “irreparable harm to the par-\nties.” Id. And the Respondent asked if an injunction furthered\n\n\n5\n Accord Hearings on the Administration of the Labor-Management\nRelations Act Before the Subcomm. on the Respondent of the H. Comm.\non Educ. & Lab., 87th Cong. pt. 2, app. J, 1234-39 (1961).\n 32\n\nthe public interest by, for example, safeguarding the “flow\nof interstate commerce.” Id. at 98.\n Significantly, the Respondent expected that district courts\nwould not defer to the agency’s views in assessing section\n10(j) injunctions, and thus warned against seeking section\n10(j) injunctions too often, lest district courts—not the\nagency—develop the NLRA’s contours. Id. at 97. The\nRespondent’s own early views reflect the obvious intuition that\nsection 10(j) preserves traditional equitable criteria.\n 3. Strong practical considerations confirm that dis-\ntrict courts are supposed to apply stringent criteria before\ngranting section 10(j) injunctions. Because these injunc-\ntions are often onerous, the Respondent’s success in obtaining\ninjunctions is often the whole ballgame. The Respondent’s own\n“[e]xperience demonstrates” that employers face “a\nstrong catalyst for settlement” if the Respondent “au-\nthoriz[es]” section 10(j) injunctions. Respondent’s Section 10(j)\nManual, supra, at 15.\n Settlement pressures are acute because, as the Respondent\nacknowledges, “administrative proceedings often are pro-\ntracted” and employers have “only a slight chance” of\nprevailing. Id. app. D, at 1; id. app. L, at 3. The Respondent\nultimately prevails in-house in 84% of cases. Respondent, Per-\nformance and Accountability Report FY 2022, at 16,\n[URL REDACTED] As here, injunctions can\nforce employers to rehire previously fired staff and to\nkeep them on the payroll for years. Pet.App.120a. Un-\nsurprisingly, some 47% of section 10(j) cases since 2010\nhave settled. 10(j) Injunctions, supra. The consequences\nof section 10(j) relief show that district courts are sup-\nposed to impose a high bar before granting case-ending\nrelief.\n 33\n\nII. The Sixth Circuit’s Two-Part Test Is Indefensible\n Rather than applying the traditional four-factor test,\nboth courts below applied a two-part test that is atextual\nand radically departs from the four traditional equitable\nfactors.\n 1. Again, “just and proper” invokes the usual four-\nfactor preliminary-injunction test. Supra pp. 18-32. The\nrelaxed two-part test applied below tracks none of those\nfour factors. Instead, the two-part test asks only (1)\nwhether the Respondent has “reasonable cause to believe that\nunfair labor practices have occurred” and (2) whether an\ninjunction is needed to “protect the [Respondent’s] remedial\npowers under the NLRA.” Pet.App.10a (citations omit-\nted). That test “dramatically lower[s] the bar for the\n[Respondent] in securing an injunction.” Pet.App.37a\n(Readler, J., concurring). The Respondent itself acknowledges\nthe “threshold of proof ... is low” under this test. Respondent’s\nSection 10(j) Manual, supra, at 5. And the Respondent has re-\npeatedly urged lower courts to adopt that test. 6\n a. Start with the two-part test’s first factor, i.e.,\nwhether there is “reasonable cause” on the merits. In-\nstead of showing likelihood of success on the merits, the\nRespondent need only satisfy the “relatively insubstantial”\nburden of “show[ing] that its legal theory is substantial\nand not frivolous.” Ozburn-Hessey, 875 F.3d at 339\n(cleaned up); see Chester v. Grane Healthcare Co., 666\nF.3d 87, 101 (3d Cir. 2011); Sharp v. Webco Indus., Inc.,\n225 F.3d 1130, 1133-34 (10th Cir. 2000); Arlook v. S.\n\n6\n E.g., Muffley, 570 F.3d at 541; Sharp v. Parents in Cmty. Action,\nInc., 172 F.3d 1034, 1037-38 (8th Cir. 1999); Miller v. Cal. Pac. Med.\nCtr., 19 F.3d 449, 456 (9th Cir. 1994) (en banc); Respondent Br. 62-63,\nKreisberg v. HealthBridge Mgmt., LLC, 732 F.3d 131 (2d Cir. 2013)\n([DOCKET REDACTED]), 2013 WL 1558073; Respondent Br. 31, Chester, 666 F.3d 87\n(3d Cir.) (Nos. 11-2573, 11-2978), 2011 WL 9692325.\n 34\n\nLichtenberg & Co., 952 F.2d 367, 371 (11th Cir. 1992). Dis-\ntrict courts are “prohibit[ed] ... from any manner of ‘fact-\nfinding.’” Pet.App.32a (Readler, J., concurring). The\nRespondent can establish “reasonable cause” simply by pairing\na “coherent legal theory” with “evidence showing that a\nrational factfinder could find for the [Respondent] on that the-\nory.” Arlook, 952 F.2d at 372. The “threshold” for\nreasonable cause is thus “significantly lower than a re-\nquirement to show ... ‘likelihood of success’” under the\ntraditional four-factor test. Overstreet v. El Paso Dis-\nposal, L.P., 625 F.3d 844, 851 n.10 (5th Cir. 2010). The\nRespondent itself acknowledges it need not show a likelihood\nof success under this test, and that courts “[d]efer to the\n[Respondent’s] version of the facts if [it is] within the range of\nrationality.” Respondent’s Section 10(j) Manual, supra, app. L,\nat 5.\n Yet section 10(j)’s text provides no basis for substitut-\ning “reasonable cause” for “likelihood of success.”\nCongress used the words “reasonable cause” in a neigh-\nboring provision: section 10(l), 29 U.S.C. § 160(l). Under\nsection 10(l), if, after investigating a charge involving spe-\ncifically enumerated, particularly serious unfair labor\npractices, the Respondent “has reasonable cause to believe\nsuch charge is true,” the agency “shall ... petition” the dis-\ntrict court “for appropriate injunctive relief pending the\nfinal adjudication,” and the court must decide whether in-\nterim injunctive relief is “just and proper.” Id. (emphasis\nadded) (cross-referencing specific unfair labor practices\ndetailed in 29 U.S.C. § 158(b)(4)(A)-(C), (b)(7), (e)).\n By including “reasonable cause” in a neighboring pro-\nvision, Congress presumably acted intentionally in\nexcluding the phrase “reasonable cause” from sec-\ntion 10(j). See Polselli v. IRS, 598 U.S. 432, 439 (2023);\nRomag Fasteners, Inc v. Fossil, Inc., 140 S. Ct. 1492, 1495\n(2020). Reading in “reasonable cause” as the standard for\n 35\n\ndistrict courts to apply for section 10(j) injunctions would\nbe particularly bizarre because “reasonable cause” is the\nstandard for when the Respondent must seek an injunction un-\nder section 10(l), not the standard for courts to grant one.\nSee 29 U.S.C. § 160(l).\n Tellingly, courts adopting the two-part test have\nnever explained why section 10(j) warrants a special rule.\nMany circuits relieved the Respondent of making any real mer-\nits showing based largely on a “rumor chain, [with] each\ncase making slight variations in the last without anyone\nchecking back on the source.” Pioneer Press, 881 F.2d at\n492. District courts began applying the two-part test in\nthe 1950s with virtually no reasoning. E.g., Douds v. Int’l\nLongshoremen’s Ass’n, 147 F. Supp. 103, 106 (S.D.N.Y.\n1956), aff’d, 241 F.2d 278 (2d Cir. 1957). By the “late 1960s\nand early 1970s, the ‘reasonable cause’ criteria” had se-\ncured “a foothold in the section 10(j) analysis.” Richard\nLapp, A Call for a Simpler Approach: Examining the\nNLRA’s Section 10(j) Standard, 3 U. Pa. J. Lab. & Emp.\nL. 251, 267 (2001) (canvassing cases). But courts never\nexplained “why § 10(j) should (or shouldn’t) be treated as\ncontaining a requirement of ‘reasonable cause.’” Pioneer\nPress, 881 F.2d at 493.\n b. Under the two-part test’s second prong, courts ask\nonly whether the relief sought would “protect the\n[Respondent’s] remedial powers under the NLRA.”\nPet.App.10a (citations omitted). As the Respondent acknowl-\nedges, this prong does not require “strict adherence to\nequitable principles.” Respondent’s Section 10(j) Manual, su-\npra, app. L, at 5. The Respondent asserts that “the mere\npotential for future impairment of the [Respondent’s] remedial\npower” or frustration of the NLRA’s statutory purposes\nsuffices. Pet.App.29a (Readler, J., concurring); accord\nAhearn v. Jackson Hosp. Corp., 351 F.3d 226, 239 (6th Cir.\n2003). And under the relaxed test, courts are supposed to\n 36\n\ngive “deference to the [Respondent]” on this question. Webco,\n225 F.3d at 1136.\n That inquiry thus zeroes in on the Respondent’s explana-\ntion of policy and remedial considerations, without regard\nto the three equitable considerations underlying the tra-\nditional test. Take the “more stringent requirement ...\n[of] irreparable harm” under the traditional four-factor\ntest. Fleischut v. Nixon Detroit Diesel, Inc., 859 F.2d 26,\n30 n.3 (6th Cir. 1988). Courts applying the relaxed test\nhave recognized that requiring irreparable harm would\n“overhaul[]” their more lenient standard, where irrepara-\nble harm is not a categorical requirement. Ahearn, 351\nF.3d at 236. This “whittled[-]down” standard also does\nnot require the district court to assess whether “the equi-\nties and public interest favor relief.” Pet.App.28a\n(Readler, J., concurring); contra BIO 9. Instead, the two-\npart test “slight[s]” these factors that the “traditional\nfour-factor standard expressly requires courts to weigh.”\nMuffley, 570 F.3d at 543.\n Nothing in section 10(j)’s text supports this “feeble\ntest” that “stacks the deck in the [Respondent’s] favor” by fo-\ncusing on whether the Respondent believes an injunction\nserves its policy prerogatives. See Pet.App.37a (Readler,\nJ., concurring). Courts’ misconstruction of the words\n“just and proper” and erroneous presumptions in the\nRespondent’s favor derive from a “general” sense that section\n10(j) was “designed to enable the [Respondent] to vindicate its\nultimate remedial power”—not from “reasoned elabora-\ntion relying on dictionary definition[s].” Kobell v.\nSuburban Lines, Inc., 731 F.2d 1076, 1090 (3d Cir. 1984).\n 2. The relaxed two-part test also creates implausible\nanomalies—and this Court ordinarily interprets statutes\nto avoid bizarre results. See Cortez Byrd Chips, Inc. v.\nBill Harbert Constr. Co., 529 U.S. 193, 200 (2000). Indeed,\nthis Court relied on statutory anomalies in holding that\n 37\n\nthe same four injunction factors apply no matter which\nparty seeks to enjoin violations of the Federal Water Pol-\nlution Control Act. Congress expressly authorized only\nthe EPA “to commence a civil action for appropriate re-\nlief, including a permanent or temporary injunction.” 33\nU.S.C. § 1319(b). But this Court considered it untenable\nthat Congress would have applied different criteria to dif-\nferent parties seeking injunctions for the same types of\nstatutory violations. Romero-Barcelo, 456 U.S. at 317-19.\n Applying a relaxed two-part test to the Respondent’s re-\nquests for injunctions, but not related requests, would be\nsimilarly nonsensical. Consider employers or unions who\nwant to defend against section 10(j) injunctions by raising\nstructural constitutional challenges to the Respondent. See,\ne.g., Kreisberg v. HealthBridge Mgmt., LLC, 732 F.3d\n131, 137-38 (2d Cir. 2013) (raising Appointments Clause\nchallenge in section 10(j) proceeding). If the Respondent must\nmerely present a non-frivolous legal theory of its own,\ncourts might effectively give the Respondent a pass.\n Yet, the same employer or union could bring a dis-\ntrict-court suit to preliminarily enjoin the Respondent from\nproceeding in-house based on the same structural consti-\ntutional challenges. And in that scenario, the plaintiff\nmust satisfy the ordinary four-factor preliminary-injunc-\ntion test. See Axon Enter. v. FTC, 598 U.S. 175 (2023);\nJohn Doe Co. v. CFPB, 849 F.3d 1129, 1131 (D.C. Cir.\n2017) (per curiam). Congress cannot possibly have\nerected a glaring loophole whereby the Respondent could\nshort-circuit separation-of-powers challenges and obtain\nan easier standard for itself just by winning the race to\nthe courthouse.\n Other anomalies arise if an employer or union seeks\nan emergency stay of a section 10(j) injunction. Courts\npresumably would apply the traditional four-factor test to\n 38\n\nassess stays. See Nken, 556 U.S. at 425-26. But it is any-\none’s guess how that stay standard might mutate if\ndistrict courts started off by applying the relaxed two-\npart test to grant the injunction. Should the reviewing\ncourt ask whether the movant is “likely to succeed on the\nmerits,” id. at 426, or somehow bake in the relaxed “rea-\nsonable cause” standard? See Pet.App.44a (merging the\nreasonable-cause and stay tests). Should the court look\nfor “irreparable harm” to the moving party, when the re-\nlaxed standard excludes the moving party’s harms from\nconsideration? This Court should not invite needless com-\nplexity by assuming that Congress wordlessly abandoned\nthe traditional four factors for an atextual two-part test.\n ***\n The Sixth Circuit and district court’s decisions below\nrest exclusively on the two-part test. Pet.App.9a-11a, 17a-\n18a, 88a & n.8. Despite the Respondent’s longstanding advo-\ncacy for that test, the government’s brief in opposition\navoids embracing that test. If the government does not\ndefend that test now, vacatur is obviously in order.\nIII. Deferring to the Respondent Is Highly Inappropriate\n The government (at BIO 6-7) argues that district\ncourts evaluating section 10(j) injunctions must defer to\nthe Respondent’s initial time spent investigating the case, the\nRespondent in-house attorneys’ preliminary views of the facts,\nand the Respondent’s labor-law expertise. Even in the bygone\nheyday of agency deference, those grounds would never\nhave warranted weighting the scales in the agency’s favor\nwith years-long injunctions on the line.\n 1. The government (at BIO 7) proclaims that section\n10(j) requires district courts to “account[] for the defer-\nence owed to the [Respondent’s] expert judgments.” By that,\nthe government demands far more than deference to\n 39\n\nagency statutory interpretations, which would be prob-\nlematic enough. Pet’r Br. 2-4, Relentless, Inc. v. Dep’t of\nCom., [DOCKET REDACTED] (argued Jan. 17, 2024); Pet’r Br. 15-18,\nLoper Bright Enters., Inc. v. Raimondo, [DOCKET REDACTED] (ar-\ngued Jan. 17, 2024). The government remarkably seeks\ndeference to the Respondent attorneys’ initial decision to pur-\nsue injunctive relief and an administrative complaint. As\nthe government puts it, district courts owe special solici-\ntude to the “significant consideration” agency attorneys\ndevoted to “investigat[ing]” and litigating the case by fil-\ning the administrative complaint. BIO 7. Below, the\nRespondent thus obtained deference for its “not frivolous” le-\ngal theories and for its “version of events as long as facts\nexist which could support the [Respondent’s] theory of liabil-\nity.” Mem. in Support of 10(j) Pet. 14-15, D. Ct. Dkt. 1-3;\nsee Pet.App.89a.\n This Court has never before endorsed such deference,\nwhich would explode existing limits on agency deference.\nOrdinarily, deference attaches only to final agency ac-\ntion—and an agency’s statutory interpretations also must\nreflect formal, high-level decision-making, if such defer-\nence is ever appropriate. United States v. Mead Corp.,\n533 U.S. 218, 229-30 (2001); Christensen v. Harris\nCounty, 529 U.S. 576, 587 (2000). But here, the Respondent\ndemands deference to the preliminary legal and factual\nviews of its in-house attorneys who investigated and initi-\nated the complaint. Yet one necessary assumption for\ncourts’ deference to final agency action (if they defer at\nall) is that agencies are expected to keep an open mind in\nthe course of deliberating, and not rubber-stamp their in-\nhouse attorneys’ initial takes. See 29 C.F.R. § 101.10(b)\n(requiring administrative law judges to remain “impar-\ntial”); id. § 101.12(a) (Board can conduct de novo\nfactfinding and freely reverse administrative law judges).\n 40\n\nThis Court has always refused to defer to an agency’s “lit-\nigating position,” and should not start now. See Bowen v.\nGeorgetown Univ. Hosp., 488 U.S. 204, 212 (1988).\n This case exposes the folly of going down that path.\nAfter the Respondent obtained a section 10(j) injunction, the\nRespondent ALJ conducted a full administrative proceeding\nand concluded that based on “serious” misconduct, Star-\nbucks had lawfully terminated two partners whom the\ninjunction required Claimant to reinstate. Claimant,\n2023 WL 3254440; see Pet.App.8a. Deferring to the\nRespondent staff attorneys’ initial take, only for agency ALJs\nor the Board to reverse course, underscores why this\nCourt has never deferred to agencies’ threshold submis-\nsions.\n The government justifies its calls for deference by as-\nserting that “Congress entrusted the [Respondent], not courts,\nwith the ‘authority to develop and apply fundamental na-\ntional labor policy.’” BIO 6 (citation omitted). But\nCongress entrusted district courts alone with deciding\nwhether section 10(j) injunctions are appropriate. Agen-\ncies receive no deference when the “scope of the judicial\npower vested by the statute” is at stake. Adams Fruit Co.\nv. Barrett, 494 U.S. 638, 650 (1990). “[I]t is fundamental\nthat an agency may not bootstrap itself into an area in\nwhich it has no jurisdiction.” Smith v. Berryhill, 139 S.\nCt. 1765, 1778 (2019) (cleaned up).\n And here, the lack of deference is central to section\n10(j)’s design. Congress interposed district courts as an\nindependent check on section 10(j) relief because such in-\njunctions impose extraordinary burdens on the Respondent’s\nadversaries, whether employers or unions. Injunctions\nare such a potent weapon that, regardless of the merits,\nmany employers settle once an injunction issues, making\nthe injunction proceeding the whole ballgame. Supra p.\n32; Chamber Cert. Br. 11-16; CDW Cert. Br. 11-14;\n 41\n\nNCLA Cert. Br. 14-16. Even for employers who have the\nresolve and resources to keep litigating, the Respondent con-\ntrols how long those injunctions last because they endure\nthrough administrative proceedings. Making district\ncourts defer to the preliminary views of Respondent attorneys\nwould subvert Congress’ clear allocation of power to the\njudiciary.\n The government (at BIO 7) argues that because the\nRespondent ultimately adjudicates the merits of unfair labor\npractices, district courts must defer at the front end. That\nargument is doubly nonsensical. Congress’ deliberate\nchoice to give district courts exclusive jurisdiction over\nsection 10(j) injunctions would be meaningless if district\ncourts must rubber-stamp the preliminary views of\nRespondent attorneys pursuing disputed claims. Further, be-\ncause Respondent orders are not self-executing, courts of\nappeals—not the Respondent—ultimately resolve the merits\nof unfair labor practices, reviewing the agency’s legal con-\nclusions de novo and the Respondent’s final factual findings for\n“substantial evidence” because Congress expressly re-\nquired that factual deference. See 29 U.S.C. § 160(c); Beth\nIsrael Hosp. v. Respondent, 437 U.S. 483, 500-01 (1978) (defer-\nring to Respondent application of law to facts in final decisions).\nCongress prescribed no such deference in section 10(j).\n If courts must defer to the Respondent’s policy, legal, fac-\ntual, and remedial views simply because the agency seeks\nan injunction, nothing would stop the Respondent from usurp-\ning all aspects of district courts’ section 10(j) decision-\nmaking powers. Indeed, the Respondent already demands that\ndistrict courts defer to the Respondent’s judgments about\nwhether employers—the agency’s adversary—should get\ndiscovery in section 10(j) proceedings. Then, if district\ncourts disagree with the agency’s wishes and grant dis-\ncovery, the Respondent turns around and charges employers\nwith unfair labor practices for seeking to enforce court-\n 42\n\napproved discovery orders. See, e.g., Leslie v. Claimant, [DOCKET REDACTED] (2d Cir. argued Jan. 19, 2024); Poor v.\nClaimant, No. 22-cv-7255 (E.D.N.Y filed Nov. 30,\n2022). And nothing would stop the Respondent from claiming\ndeference when it asks courts to exercise other aspects of\ntheir equity powers, such as to questions of laches, equi-\ntable tolling, or sanctions. This Court should not\ncountenance such unprecedented deference.\n 2. The government’s baked-in deference theory could\ndistort countless other statutory contexts too. As noted,\nsix other provisions employ the same language authoriz-\ning courts to award preliminary injunctions if “just and\nproper.” Supra pp. 23-24 & n.3. Four of the six authorize\nagencies to seek such injunctions. 5 U.S.C. § 7123(c)\n(FLRA); id. § 7123(d) (FLRA); 22 U.S.C. § 4109(d)\n(FSLRB); 42 U.S.C. § 3612(k)(1)(A) (HUD). And four of\nthe six authorize private parties to seek injunctions\nagainst agencies. 5 U.S.C. § 7123(c) (FLRA); 29 U.S.C.\n§ 660(a) (OSHRC); 42 U.S.C. § 3612(k)(1)(A) (HUD); 47\nU.S.C. § 402(c) (FCC). It cannot be the case that “just and\nproper” incorporates extreme deference to the agency\nwhen it seeks injunctions, but not when a private party\nseeks to enjoin the agency. The “same language” should\nhave the “same meaning” across these contexts. Smith v.\nCity of Jackson, 544 U.S. 228, 233 (2005).\n The government’s unprecedented view of deference\nalso risks transforming dozens of other statutes authoriz-\ning agencies to seek injunctions into Trojan horses\nsmuggling in novel, extra-potent deference. Other agen-\ncies presumably can claim expertise over matters within\ntheir jurisdiction. Other agencies presumably investigate\nbefore requesting inunctions. And other agencies often\nseek injunctions from a court that is not guaranteed to ul-\ntimately review the agency’s final decision later. Yet this\n 43\n\nCourt has never recognized a phantom fifth equitable fac-\ntor giving extra credit to agencies for thinking hard about\ntheir staff attorneys’ initial take on a case before request-\ning extraordinary relief from the judiciary.\n Under the Respondent’s theory, the sheer breadth of stat-\nutory regimes that might yield to agency deference is\nmind-boggling. The government routinely seeks injunc-\ntions and must satisfy the traditional four-factor test\nwhen doing so. If unstated appeals to agency expertise\nare enough to modify that traditional framework to in-\nclude a new, pro-agency thumb on the scale, the\ngovernment’s position (BIO at 6-7) could rewrite the four-\npart test across the U.S. Code.\n Start with other agencies that seek preliminary in-\njunctions pending administrative proceedings or as part\nof a court-enforcement action. The EEOC may seek “ap-\npropriate temporary or preliminary relief pending final\ndisposition of [a discrimination] charge” if the EEOC\n“concludes on the basis of a preliminary investigation that\nprompt judicial action is necessary to carry out the pur-\nposes of [the Equal Employment Opportunity] Act.” 42\nU.S.C. § 2000e-5(f)(2). The EEOC uses this authority to\nseek injunctions against employers engaged in odious\nrace and sex discrimination. E.g., EEOC v. BNSF Ry. Co.,\n2022 WL 1265938, at *11-12 (D. Neb. Apr. 28, 2022). But\nthe EEOC must satisfy the traditional four-factor test to\nobtain an injunction. E.g., EEOC v. Astra U.S.A., Inc., 94\nF.3d 738, 742-43 (1st Cir. 1996); EEOC v. Anchor Hocking\nCorp., 666 F.2d 1037, 1043 (6th Cir. 1981). Likewise, the\nDepartment of Labor has statutory authority to seek “in-\njunctive relief or [a] temporary restraining order pending\nthe outcome of an enforcement proceeding” involving al-\nlegedly dangerous workplaces. 29 U.S.C. § 662(b). If\nthose agencies litigate comparable injunctions under the\ntraditional four-part test, the Respondent should too.\n 44\n\n Beyond labor, the Federal Trade Commission can\nseek injunctions “pending” agency proceedings and judi-\ncial review, and district courts may grant such injunctions\nupon a “proper showing.” 15 U.S.C. § 53(a)-(b). The Se-\ncurities and Exchange Commission (SEC), too, “may”\nobtain preliminary injunctions from district courts\n“[u]pon a proper showing” after alleging that someone “is\nengaged or about to engage in” a violation of the securities\nlaws. 15 U.S.C. §§ 77t(b), 78u(d)(1)-(e). Another provision\nauthorizes the SEC to obtain “equitable relief that may be\nappropriate or necessary for the benefit of investors.” Id.\n§ 78u(d)(5). Similarly, the Commodity Futures Trading\nCommission (CFTC) may obtain a preliminary injunction\n“upon a proper showing” that someone “has engaged, is\nengaging, or is about to engage” in a violation of the Com-\nmodity Exchange Act or CFTC regulations. 7 U.S.C.\n§ 13a-1(a)-(b). Under the government’s view, all these\nagencies could bypass strict compliance with the four-part\ntest. 7\n Other agencies seek injunctions to enforce extraordi-\nnarily weighty interests in other statutes. But none of\n\n\n7\n Some older cases proposed relieving the EEOC from the traditional\nfour-factor test. EEOC v. Cosmair, Inc., 821 F.2d 1085, 1090 (5th Cir.\n1987); EEOC v. Pac. Press Pub. Ass’n, 535 F.2d 1182, 1187 (9th Cir.\n1976). Similarly, some cases suggest other agencies could obtain pre-\nliminary injunctions for the duration of in-house proceedings without\nshowing irreparable harm. See FTC v. Univ. Health, Inc., 938 F.2d\n1206, 1218 (11th Cir. 1991); SEC v. Blatt, 583 F.2d 1325, 1335 & n.29\n(5th Cir. 1978); CFTC v. Walsh, 618 F.3d 218, 225 (2d Cir. 2010); SEC\nv. Cavanagh, 155 F.3d 129, 132 (2d Cir. 1998). Those decisions con-\ntravene this Court’s clear-statement precedents and further\nimproperly rely on legislative history to jettison the traditional four-\nfactor test. Those decisions are particularly untenable after eBay re-\niterated that courts may not apply categorical irreparable-harm rules\nabsent clear statutory language otherwise. 547 U.S. at 393.\n 45\n\nthose statutes appear to give other agencies special defer-\nence skewing the normal four factors.\n For example, the Attorney General apparently enjoys\nno special treatment when seeking to enjoin:\n • Violations of the Atomic Energy Act, 42 U.S.C.\n § 2280, including disclosing how to build a thermo-\n nuclear weapon, see United States v. Progressive,\n Inc., 467 F. Supp. 990, 991 (W.D. Wis. 1979);\n • Violations of the Voting Rights Act, 52 U.S.C.\n § 10308(d);\n • Cruelty to animals, 7 U.S.C. §§ 2159, 3807(a);\n • Negligent operation of ships, 46 U.S.C. § 2305(a);\n • Obscene communications, 47 U.S.C. § 223(b)(6);\n • Poll taxes, 52 U.S.C. § 10306(b);\n • Powerplants burning petroleum, 15 U.S.C.\n § 797(b)(4);\n • Fair Housing Act violations, 42 U.S.C. §§ 3612(o),\n 3614(d); or\n • Transportation of hazardous substances, 49 U.S.C.\n § 5122(a).\n Likewise, the Department of Health and Human Ser-\nvices seemingly receives no unusual deference rules, even\nwhen seeking to enjoin:\n • Laboratories that “would constitute a significant\n hazard to the public health,” 42 U.S.C. § 263a(j); or\n • Violations of infectious-disease reporting require-\n ments, 42 U.S.C. § 300ff-139(a).\n Nor does the EPA appear to receive special rules\nwhen seeking to enjoin:\n 46\n\n • School boards that do not fix schools with asbestos,\n 15 U.S.C. § 2648(b);\n • Improper pesticide storage, 7 U.S.C. § 136q(d)(4);\n or\n • Threats to underground water sources, 42 U.S.C.\n § 300h-3(c).\n The Department of Labor receives the same treat-\nment when moving to enjoin:\n • Violations of the Fair Labor Standards Act, like\n child labor and refusal to pay overtime or minimum\n wage, 29 U.S.C. § 217;\n • Dissipation of pension funds, 5 U.S.C.\n § 8477(e)(3)(A); or\n • Employers’ violations of the terms and conditions\n of aliens’ employment, 8 U.S.C. § 1188(g)(2).\n The same goes for myriad other agencies, including:\n • When the Consumer Financial Protection Board\n seeks to enjoin consumer-finance offenses, 12\n U.S.C. § 5564(a), or kickbacks in federal mortgage\n transactions, 12 U.S.C. § 2607(d)(4);\n • When the Consumer Product Safety Commission\n seeks to enjoin sales of unmarked or mismarked\n flammable products, 15 U.S.C. § 1195(a); and\n • When the Federal Election Commission seeks to\n enjoin violations of campaign finance disclosure re-\n quirements, 52 U.S.C. §§ 30107(a)(6),\n 30109(a)(6)(A).\n Across these contexts, courts can account for relevant\nconsiderations under the traditional four-part test. The\nRespondent does not need special deference to accommodate\nlabor-specific concerns. And giving the Respondent special\n 47\n\ntreatment would make all these statutes fair game for\nagencies to point to their purported expertise, considera-\ntion, and statutory powers as enough to obtain injunctions\non demand. The government cannot have it both ways,\ncherry-picking deference for the Respondent but eschewing it\nfor nuclear safety. Rather than turbo-charging already-\nshaky calls for deference, this Court should follow the or-\ndinary rules and apply the stringent, traditional four-part\ntest unless Congress clearly mandates otherwise.\nIV. Vacatur and Remand Is Warranted\n The district court and the Sixth Circuit’s failure to ap-\nply the traditional four-factor test below necessitates\nvacatur and remand for the district court to apply the\nproper test, in keeping with this Court’s usual practice.\nE.g., Dupree v. Younger, 598 U.S. 729, 738 (2023).\n The district court entered and the Sixth Circuit af-\nfirmed an injunction against Claimant after finding the\nRespondent satisfied the Sixth Circuit’s relaxed, two-part\ntest—not the dramatically different, traditional four-fac-\ntor test. Pet.App.10a, 88a; see Pet.App.18a-19a (Readler,\nJ., concurring). “[H]ad the [Respondent] been asked to satisfy\nthe Winter standard,” proceedings below “would have\nbeen drastically different” and the Respondent’s “victory\nwould have been far less certain.” Pet.App.30a, 34a\n(Readler, J., concurring).\n For instance, the district court accepted that the\nRespondent established “reasonable cause”—not likelihood of\nsuccess—by deferring to the Respondent’s resolution of “con-\nflicts in the evidence” and “issues of witness credibility.”\nPet.App.105a, 108a. The court then held that injunctive\nrelief was warranted merely by asking whether an injunc-\ntion was “necessary ... to protect the [Respondent’s] remedial\npowers,” not whether irreparable harm would result.\nPet.App.108a.\n 48\n\n Further, the district court never balanced the equi-\nties nor considered the countervailing reasons why an\ninjunction would not favor the public interest, such as em-\nployers’ need to freely operate businesses. See\nPet.App.116a-118a. Those factors disappear under the\ntwo-part test, preventing the district court from weighing\n“countervailing harms” to Claimant. See Muffley, 570\nF.3d at 543.\n From start to finish, the decision below held the\nRespondent to a minimal standard at odds with section 10(j)’s\ntext and a mountain of precedent requiring the stringent,\nusual four equitable factors to apply absent clear state-\nments otherwise. Rather than allowing the Respondent to\nrefashion the test in its own deference-seeking image, this\nCourt should hold the Respondent to the four-factor test that\nhas governed agencies and private parties alike since the\nearly days of the Republic.\n 49\n\n CONCLUSION\n The court of appeals’ judgment should be vacated and\nthe case remanded.", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nSTATEMENT\n A. Statutory Background\n The National Labor Relations Act (NLRA or Act), 29\nU.S.C. 151 et seq., prohibits employers and unions from\nengaging in various unfair labor practices. 29 U.S.C. 158.\nThe Respondent (Respondent or Board)\nenforces that prohibition. 29 U.S.C. 160(a).\n If a person believes that an employer or union has com-\nmitted an unfair labor practice, the person may file a\ncharge with the agency. 29 C.F.R. 101.2. A regional di-\nrector, exercising authority delegated by the General\nCounsel, investigates the charge. 29 C.F.R. 101.4. Gen-\nerally, “[b]efore any complaint is issued or other formal\naction taken,” the regional director “affords an oppor-\ntunity to all parties for the submission and consideration\nof facts, argument, offers of settlement, or proposals of\nadjustment.” 29 C.F.R. 101.7.\n 3\n\n If the investigation “reveals that there has been no vi-\nolation” of the Act “or the evidence is insufficient to sub-\nstantiate the charge,” then the regional director “recom-\nmends withdrawal of the charge by the person who filed,”\nand “dismisses the charge” if the person does not agree to\nwithdraw it. 29 C.F.R. 101.5, 101.6. But if “the charge\nappears to have merit and efforts to dispose of it by infor-\nmal adjustment are unsuccessful,” the regional director\nissues a complaint. 29 C.F.R. 101.8; see 29 U.S.C. 153(d),\n160(b).\n An administrative law judge (ALJ) then holds a hear-\ning and issues a recommended decision, “stating findings\nof fact and conclusions, as well as the reasons for the de-\nterminations on all material issues.” 29 C.F.R. 101.11(a);\nsee 29 C.F.R. 101.10. If neither party challenges the\nALJ’s decision, it becomes final as the order of the Board.\n29 C.F.R. 101.11(b). In the event a party files exceptions,\nthe ALJ’s recommendation is subject to review by the\nBoard, which independently reviews the record and issues\na decision containing “findings of fact” and “conclusions of\nlaw.” 29 C.F.R. 101.12(a). If the Board finds that a party\nhas engaged in an unfair labor practice, it “shall” order\nthe party to “cease and desist” from the violation and to\ntake such affirmative action, including “reinstatement of\nemployees,” as will effectuate the policies of the Act. 29\nU.S.C. 160(c).\n The Board may petition for enforcement of its order in\na court of appeals. 29 U.S.C. 160(e); see 29 C.F.R. 101.14.\nAny person aggrieved by the Board’s order may also seek\nreview in a court of appeals. 29 U.SC. 160(f ); see 29\nC.F.R. 101.14. On review, the Board’s findings of fact are\n“conclusive” “if supported by substantial evidence.” 29\nU.S.C. 160(e) and (f ). Its legal conclusions are similarly\n 4\n\nentitled to deference. See Sure-Tan, Inc. v. Respondent, 467\nU.S. 883, 891 (1984).\n Because an employer’s or union’s conduct may cause\nharm while the administrative process is pending, Con-\ngress has empowered the Board, after the issuance of a\ncomplaint, to petition a federal district court “for appro-\npriate temporary relief or restraining order” under Section\n10( j) of the Act. 29 U.S.C. 160( j). By longstanding agency\npractice, when an Respondent regional director concludes that\nan unfair-labor-practice case has merit and that tempo-\nrary relief would be appropriate, the regional director\ntypically will submit a written memorandum to the Gen-\neral Counsel recommending the initiation of Section 10( j)\nproceedings. See Office of the General Counsel, Respondent,\nSection 10( j) Manual § 5.2, at 15 (Mar. 2020) (10( j) Man-\nual). If, upon review, the General Counsel agrees that\nsuch proceedings should be initiated, the General Counsel\nwill present the recommendation to the Board. Ibid. If\nthe Board then authorizes the proceeding, the regional di-\nrector will file a petition in district court. Id. § 5.5, at 17.\n A district court considering a Section 10( j) petition\nmay “grant to the Board such temporary relief or re-\nstraining order as it deems just and proper.” 29 U.S.C.\n160( j). In the event the district court grants relief,\nagency proceedings are expedited and accorded prior-\nity. 29 C.F.R. 102.94(a).\n B. Factual Background\n 1. Petitioner Claimant operates a global chain\nof coffeehouses. Pet. App. 71a. In early 2022, employees\nat a Claimant in Memphis, Tennessee, began an organiz-\ning drive to join Workers United. Id. at 72a-73a. In re-\nsponse, petitioner allegedly used various unlawful tactics\nto stifle the drive, including disciplining one of the leaders\nof the organizing effort, id. at 74a; dramatically increasing\n 5\n\nmanagerial oversight of the store, id. at 87a-88a; closing\nthe store lobby during planned sit-ins, id. at 80a; and tak-\ning down union organizing material, id. at 81a-82a. Peti-\ntioner’s alleged misconduct culminated in the firing of\nseven union activists, including five of the six members of\nthe organizing committee. Id. at 5a-7a, 82a.\n Following the terminations, every employee on the\nmorning shift at the Memphis store, with one exception,\nstopped wearing union pins. Pet. App. 6a-7a. And the\n“firings spread anxiety and fear among [employees] who\nwere considering unionizing at other Claimant loca-\ntions.” Id. at 7a. For example, employees at a store in\nJackson, Tennessee reported a reluctance to organize af-\nter petitioner posted a notice in their store detailing the\ntermination of the Memphis employees. Ibid.\n In response to petitioner’s actions, the union filed\nunfair-labor-practice charges with the Board. Pet. App.\n7a. The union alleged that petitioner had unlawfully\ninterfered with its employees’ right to form a union, see\n29 U.S.C. 158(a)(1), and had unlawfully discriminated\nagainst union supporters, see 29 U.S.C. 158(a)(3). Pet.\nApp. 7a. After investigating the charges, the General\nCounsel issued an unfair-labor-practice complaint. Id. at\n7a-8a.1\n 2. Following issuance of the complaint, the regional di-\nrector (respondent here) filed a petition for temporary re-\nlief on behalf of the agency in the United States District\nCourt for the Western District of Tennessee. Pet. App.\n50a. In accordance with Section 10( j), the agency sought\n\n 1\n The union drive at the Memphis store was one of the first in a\nseries of unionization efforts that eventually expanded to hundreds\nof petitioner’s stores nationwide. The breadth of petitioner’s re-\nsponse to that drive has led the Respondent to seek a total of 12 injunc-\ntions against petitioner in the past two years. See Pet. Br. 10.\n 6\n\nrelief pending resolution of the unfair-labor-practice pro-\nceedings before the Board. Id. at 8a.\n The district court granted the agency’s petition in part.\nPet. App. 67a-121a. The court explained that, under cir-\ncuit precedent, district courts may grant Section 10( j) re-\nlief only if there is “ ‘reasonable cause’ to believe that an\nunfair labor practice has occurred” and “injunctive relief\nis ‘just and proper.’ ” Id. at 88a (citation omitted).\n The district court first found reasonable cause to be-\nlieve that petitioner had committed unfair labor practices.\nPet. App. 89a-108a. The court explained that the Board\nmust offer a “substantial” legal theory and facts that are\n“supportive” of that theory, id. at 89a, though “factual in-\nconsistencies are for the Board to review in its adminis-\ntrative proceeding, not for the [c]ourt to resolve” on a Sec-\ntion 10( j) petition, id. at 97a. The court observed that the\nAct makes it unlawful for an employer “to interfere with,\nrestrain, or coerce employees in the exercise of the rights\nguaranteed” by the Act or to engage in “discrimination in\nregard to hire or tenure of employment or any term or\ncondition of employment to * * * discourage membership\nin any labor organization.” Id. at 90a (quoting 29 U.S.C.\n158(a)(1) and (3)). And the court found sufficient evidence\nto support the agency’s claims that petitioner had inter-\nfered with its employees’ union activity and discriminated\nagainst employees to discourage union membership. Id.\nat 91a-108a.\n The district court then determined that a temporary\ninjunction was just and proper. Pet. App. 108a-119a. The\ncourt explained that petitioner’s conduct—which included\nfiring more than 80% of the union organizing committee\nat the Memphis store—had eroded support for the nas-\ncent unionization movement. Id. at 110a-111a. The court\nnoted that petitioner’s actions had discouraged employees\n 7\n\nfrom publicly supporting the union, wearing union pins,\nengaging in union protests, and discussing union activity\nin the Memphis store, and that the lone remaining mem-\nber of the organizing committee expressed fear of recruit-\ning others to join the union unless she felt “comfortable\ntrusting them.” Id. at 111a-116a.\n The district court accordingly awarded the agency\n“some, but not all,” of the relief sought. Pet. App. 109a.\nThe court issued a temporary injunction that, among\nother things, enjoined petitioner from discriminating\nagainst employees because of union activity and required\nthe interim reinstatement of the seven discharged Mem-\nphis employees. Id. at 119a-121a; see id. at 119a (denying\nrequested relief relating to distribution of court’s order).\n The district court and the court of appeals denied peti-\ntioner’s motions for a stay pending appeal. Pet. App. 40a-\n48a, 49a-66a.\n 3. After the district court granted temporary relief,\nthe ALJ issued his decision in the underlying agency pro-\nceeding. See C.A. Doc. 62, at 4-63 (May 5, 2023). The ALJ\nfound unlawful the majority of petitioner’s conduct cov-\nered by the Section 10( j) injunction, including the dis-\ncharges of five of the seven employees, the temporary\nstore closure during planned pro-union activities, the in-\ncreased presence of managers, and the removal of pro-\nunion postings. Id. at 39-59. The ALJ dismissed the\ncharges related to two of the discharges and the discipline\nof one of the employees. Id. at 48-59.\n Both the regional director and petitioner filed excep-\ntions to the ALJ’s decision, which are currently pending\nwith the Board.\n 4. The court of appeals affirmed the district court’s in-\njunction. Pet. App. 1a-39a.\n 8\n\n The court of appeals observed that, under circuit prec-\nedent, the Board may obtain temporary relief pursuant to\nSection 10( j) only if it can show that “(1) there is ‘reason-\nable cause to believe that unfair labor practices have oc-\ncurred’ and (2) injunctive relief is ‘just and proper,’ ”\nmeaning “ ‘necessary to return the parties to status quo\npending the Board’s proceedings in order to protect the\nBoard’s remedial powers under the NLRA.’ ” Pet. App.\n10a (citations omitted). Petitioner did not contest the dis-\ntrict court’s reasonable-cause finding, id. at 11a, and the\ncourt of appeals determined that the district court did not\nabuse its discretion in finding interim injunctive relief just\nand proper, id. at 11a-15a.\n The court of appeals upheld the district court’s finding\nthat petitioner’s firing of seven employees who had en-\ngaged in pro-union activity harmed the union campaign in\nways that a subsequent Board remedy could not repair.\nPet. App. 12a. The court of appeals highlighted “actual\nevidence of chill,” including evidence that employees had\nstopped wearing union pins and discussing union activity\nafter the discharges. Ibid. And it found “sufficient evi-\ndence” that “temporary relief [wa]s necessary to preserve\nthe status quo pending resolution of the Board’s proceed-\nings.” Id. at 15a. Although the court acknowledged that\nemployees at the Memphis store had voted to unionize fol-\nlowing petitioner’s alleged misconduct, id. at 7a, it con-\ncluded that “a successful union election does not preclude\nthe continuance of a chilling impact on employees’ willing-\nness to exercise other rights safeguarded by the Act,” id.\nat 13a.\n Judge Readler issued a concurring opinion. Pet. App.\n18a-39a. He criticized the circuit precedent that had es-\ntablished a two-part test for evaluating requests for tem-\nporary injunctive relief under Section 10( j). Id. at 19a. He\n 9\n\nwas of the view that courts should instead use the “famil-\niar” four-factor test for preliminary injunctive relief that\nthey apply in other legal contexts. Id. at 18a.\n SUMMARY OF ARGUMENT\n Section 10( j) empowers the Board to seek temporary\ninjunctive relief against employers and unions pending\nadministrative proceedings on an unfair-labor-practice\ncomplaint. A Section 10( j) injunction preserves the\nBoard’s ability to remedy violations of rights and statu-\ntory protections enshrined in the NLRA. In exercising\ntheir equitable discretion to grant relief under that pro-\nvision, district courts should consider the broader stat-\nutory framework established by the NLRA and the\nfunction of Section 10( j) within that framework, as the\ncourt of appeals properly did in this case.\n A. Section 10( j) authorizes a district court to grant\nrelief “as it deems just and proper.” 29 U.S.C. 160( j).\nThe terms “just” and “proper” mean appropriate to the\ncircumstances facing the court and the parties before it.\nIn order to craft appropriate relief, a court necessarily\nneeds to account for the relevant statutory context.\n Petitioner contends that the phrase “just and\nproper” evokes the four-factor test used to determine\nwhether preliminary injunctive relief is appropriate in\nother contexts, and urges (Br. 2) “stringent” application\nof that test. Petitioner contends that the government\nrequests a “departure” from those principles. Id. at 22\n(citation omitted). The government’s position, however,\nis not that courts should disregard traditional equitable\nprinciples, but rather that the statutory context should\ninform courts’ application of those principles.\n This Court has long embraced that proposition, in-\ncluding in the very cases on which petitioner relies. See,\ne.g., Hecht Co. v. Bowles, 321 U.S. 321, 330-331 (1944).\n 10\n\nAnd in the specific context of suits brought by a federal\nagency to enforce federal law, the Court has recognized\ntime and again that equity assumes a more flexible\ncharacter than in suits brought to vindicate purely pri-\nvate interests. See, e.g., Porter v. Warner Holding\nCo., 328 U.S. 395, 398 (1946).\n History confirms that statutory context is relevant\nto applying Section 10( j). The courts of appeals, includ-\ning those that purportedly apply a four-factor test, uni-\nformly exercise their equitable discretion in light of the\nNLRA’s broader framework. Moreover, decisions tak-\ning that approach extend all the way back to Section\n10( j)’s enactment, shedding light on the provision’s\noriginal meaning.\n The NLRA’s distinctive characteristics inform the\nassessment of both the merits and the equities under\nSection 10( j). As to the merits, a district court should\nkeep in mind that the Board—not the courts—is re-\nsponsible for adjudicating the underlying unfair-labor-\npractice charge. Because a Section 10( j) injunction is\ndesigned to preserve the Board’s authority to adjudicate\nthe case—not to supplant that authority—the district\ncourt is not called upon to conduct a full-blown merits\ninquiry. The agency’s preliminary assessment of the\nmerits of the charge further supports a measure of def-\nerence at this stage.\n The NLRA’s framework also informs the harm anal-\nysis. Because the Board is responsible for adjudicating\nthe underlying charge, the irreparable-harm inquiry\nappropriately focuses on whether the Board’s ability to\ngrant effective relief at the conclusion of administrative\nproceedings would be impaired in the absence of an in-\njunction. Moreover, certain harms that may be difficult\nto quantify—such as harm to the momentum of a union-\n 11\n\norganizing drive—are nevertheless critical to the\nNLRA’s scheme and often justify relief.\n Lastly, the statutory context also affects the assess-\nment of the public interest and the balancing of harms.\nIn the NLRA, Congress made the express judgment\nthat unfair labor practices undermine the purposes of\nthe Act and that certain labor activities deserve protec-\ntion. It further determined that the Board should be\nthe agency principally responsible for enforcing those\nprotections. Courts evaluating a Section 10( j) petition\nshould respect that judgment.\n B. In considering the propriety of injunctive relief\nunder Section 10( j), the Sixth Circuit correctly applies\nthe traditional equitable factors in light of the distinc-\ntive context of the NLRA.\n The Sixth Circuit assesses the Board’s likelihood of\nsuccess by requiring a substantial legal theory and facts\nconsistent with that theory. It finds a likelihood of ir-\nreparable harm when relief is reasonably necessary to\npreserve the Board’s ultimate remedial authority. And\nit finds that the public interest is served by effectuating\nthe statutory policies, if there are no significant oppos-\ning considerations in the balance. As to each factor, the\ncourt’s approach appropriately accounts for equitable\nconsiderations and the specific features of the NLRA,\nincluding the Board’s status as principal adjudicator of\nthe underlying unfair-labor-practice complaint and\nCongress’s own judgment about the public interest. At\nthe same time, the four-factor test could also be invoked\nfor these purposes, if properly and flexibly applied to\ntake account of the provisions and policies of the NLRA\nas relevant at each step.\n C. Petitioner’s remaining arguments lack merit. It\ncontends that the two-part test creates implausible\n 12\n\nanomalies, including that the same constitutional theory\nmight be subject to different standards in Section 10( j)\nand ordinary preliminary injunction proceedings. Be-\ncause the Board enjoys no deference on constitutional\nquestions, however, that anomaly will not arise.\n Petitioner also identifies other statutory provisions\nusing the phrase “just and proper,” and contends that\ncourts interpreting those provisions consider equitable\nfactors. But the government agrees that equitable fac-\ntors are relevant, and the sparse caselaw on those other\nprovisions does not support petitioner’s view that stat-\nutory context is excluded from consideration. Peti-\ntioner also points to provisions authorizing injunctive\nrelief in contexts far afield from this case. The caselaw\nthere is both irrelevant and largely unfavorable to peti-\ntioner.\n Finally, petitioner contends that Section 10( j) in-\njunctions should be subject to an especially strict stand-\nard because they are unduly burdensome. Other as-\npects of the scheme already mitigate any unfair burden,\nhowever, including the requirement for expediting Sec-\ntion 10( j) cases, see 29 C.F.R. 102.94(a), and a party’s\nability to move to modify an injunction in light of\nchanged circumstances.\n ARGUMENT\n Section 10( j) empowers the Board to seek, and a dis-\ntrict court to grant, temporary injunctive relief against\nboth employers and unions pending administrative pro-\nceedings on unfair-labor-practice charges. Unlike a\ntypical preliminary injunction, a Section 10( j) injunc-\ntion does not protect the court’s exercise of its own ju-\nrisdiction, and the proceedings are not a precursor to\nthe court’s own subsequent adjudication of the merits.\nInstead, the injunction preserves the adjudicative and\n 13\n\nremedial authority of the Board to protect the rights\nconferred by the NLRA and prevent the harms caused\nby unfair labor practices. Congress has empowered the\nBoard—not district courts—to resolve alleged viola-\ntions of the NLRA, subject to review in a court of ap-\npeals. See, e.g., Beth Israel Hosp. v. Respondent, 437 U.S.\n483, 500-501 (1978). Even on judicial review of a final\ndecision of the Board, a court of appeals will not decide\nthe issues anew, but rather will accord substantial def-\nerence to the Board’s findings and conclusions. See,\ne.g., 29 U.S.C. 160(e) and (f ).\n It is thus entirely appropriate for a district court adju-\ndicating a Section 10( j) petition, in determining what re-\nlief (if any) is “just and proper,” 29 U.S.C. 160( j), to ac-\ncount for the distinctive function of Section 10( j) relief and\nits place in the overall statutory scheme. The statutory\nterms “just and proper,” ibid., and the broader tradition\nof equity, accord courts the flexibility to grant relief that\nrespects the Board’s ultimate adjudicative authority and\nreflects the specific interests the NLRA is designed to\nprotect. Petitioner’s ahistorical, decontextualized ap-\nproach is inconsistent with the statutory text, the basic\npremises of equity, and over a century of caselaw.\n A. The Statutory Context Informs Whether Section 10( j)\n Relief Is “Just And Proper”\n 1. The statutory text requires a context-specific inquiry\n Section 10( j) authorizes the Board to petition a dis-\ntrict court for “appropriate temporary relief or re-\nstraining order” “upon issuance of a complaint” charg-\ning unfair labor practices. 29 U.S.C. 160( j). It then con-\nfers jurisdiction on a district court “to grant to the\nBoard such temporary relief or restraining order as it\ndeems just and proper.” Ibid.\n 14\n\n It is “a ‘fundamental canon of statutory construction’\nthat words generally should be ‘interpreted as taking\ntheir ordinary, contemporary, common meaning at the\ntime Congress enacted the statute.’ ” Wisconsin Cent.\nLtd. v. United States, 585 U.S. 274, 284 (2018) (citation\nand ellipsis omitted). As petitioner concedes, the terms\n“just” and “proper” authorize relief that is “appropriate”\nto the circumstances facing the court and the parties be-\nfore it. Pet. Br. 23 (citation omitted). “Just” means\n“[c]onformable to the standard, or to what is fitting or\nrequisite.” 5 Oxford English Dictionary 638 (1933)\n(Oxford); see, e.g., Webster’s New International Dic-\ntionary 1348 (2d ed. 1958) (Webster’s) (“Conforming to,\nor consonant with, what is legal or lawful”); Funk &\nWagnalls New Standard Dictionary of the English\nLanguage 1334 (1946) (Funk) (“Consistent with what is\nproper or reasonable”; “Syn.: equitable, even, exact,\nfair, fitting”). “Proper,” in turn, means “[a]dapted to\nsome purpose or requirement expressed or implied; fit,\napt, suitable; fitting, befitting; esp. appropriate to the\ncircumstances or conditions.” 8 Oxford 1470; see, e.g.,\nid. at 1469 (“special, particular, distinctive, characteris-\ntic”); Webster’s 1983 (“Befitting one’s nature, qualities,\netc.; appropriate; suitable; right; fit”); Funk 1985\n(“Having special adaptation or fitness; specially suited\nfor some end”).\n To craft relief that is “appropriate to the circum-\nstances,” 8 Oxford 1470, and “specially suited for”\nachieving the NLRA’s ends, Funk 1985, a court must\nconsider the broader statutory framework established\nby the NLRA and the terms and function of Section\n10( j) relief within that framework. Disregarding those\nconsiderations could result in a grant or denial of relief\nthat is neither “suitable” nor “fit.” Webster’s 1983.\n 15\n\n 2. Equity embraces statutory considerations\n Rather than dispute the plain meaning of the terms\n“just and proper,” 29 U.S.C. 160( j), and their necessary\nlink to the NLRA’s substantive unfair-labor-practice\nand procedural provisions, petitioner simply contends\n(Br. 23) that the text of Section 10( j) naturally “invokes\nequitable principles.” We of course agree with that gen-\neral proposition.\n Petitioner further notes (Br. 19) that, under the com-\nmon four-factor test for determining whether to issue a\npreliminary injunction, a plaintiff “must establish that\nhe is likely to succeed on the merits, that he is likely to\nsuffer irreparable harm in the absence of preliminary\nrelief, that the balance of equities tips in his favor, and\nthat an injunction is in the public interest.” Winter v.\nNatural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).\nPetitioner characterizes the government’s position as a\n“ ‘departure’ ” from equitable principles reflected in that\nfour-part inquiry, and cites cases requiring “clear state-\nments from Congress” before courts “undertake ‘any\nsubstantial expansion of past [equitable] practice.’ ”\nPet. Br. 21-22 (citations omitted; brackets in original).\nThat argument misconceives the dispute in this case.\nThe government’s position is not that courts should dis-\nregard traditional equitable principles, but rather that\nrelevant context—especially statutory context—should\ninform courts’ application of those principles here. See\nBr. in Opp. 6. This Court has repeatedly endorsed that\nview, including in the particular context of suits brought\nby federal agencies to enforce federal law. The same\napproach is warranted in this case.\n a. The Court has long held that statutory context is\nrelevant to the consideration of equitable relief. Peti-\ntioner relies heavily (Br. 22, 26) on Hecht Co. v. Bowles,\n 16\n\n321 U.S. 321 (1944), which interpreted a statutory pro-\nvision stating that injunctive or other relief “shall be\ngranted” in a suit brought by the federal government\nfor violations of an emergency price-control statute. Id.\nat 322 (citation omitted). The Court rejected the argu-\nment that this language made injunctive relief manda-\ntory in all circumstances. Id. at 328. Instead, it ob-\nserved that “[f ]lexibility rather than rigidity has distin-\nguished” “equity jurisdiction” historically, and concluded\nthat “if Congress had intended to make such a drastic\ndeparture from the traditions of equity practice, an un-\nequivocal statement of its purpose would have been\nmade.” Id. at 329.\n At the same time, the Court reaffirmed the signifi-\ncant role that statutory considerations play in a suit for\nequitable relief. The Court explained that “traditional\npractices” should be “conditioned by the necessities of\nthe public interest which Congress has sought to pro-\ntect” in the relevant statute. Hecht, 321 U.S. at 330.\nThe Court further emphasized that courts’ “discretion\nunder [the statutory provision authorizing relief ] must\nbe exercised in light of the large objectives of the” stat-\nute, “[f ]or the standards of the public interest, not the\nrequirements of private litigation, measure the propri-\nety and need for injunctive relief in these cases.” Id. at\n331.\n Nor is Hecht an outlier. For over a century, the\nCourt has repeatedly recognized that statutory consid-\nerations should inform the propriety and fashioning of\nequitable relief. See, e.g., Gilbertville Trucking Co. v.\nUnited States, 371 U.S. 115, 130 (1962) (observing that\na court “has a heavy responsibility to tailor the remedy\nto the particular facts of each case so as to best effectu-\nate the remedial objectives” of the statute); United\n 17\n\nStates v. Morgan, 307 U.S. 183, 194 (1939) (“It is famil-\niar doctrine that the extent to which a court of equity\nmay grant or withhold its aid, and the manner of mould-\ning its remedies, may be affected by the public interest\ninvolved,” as determined by “Congress” in a federal\nstatute); United States v. American Tobacco Co., 221\nU.S. 106, 185 (1911) (stating that courts should focus on\n“giving complete and efficacious effect to the prohibi-\ntions of the statute”).\n The Court has applied these principles in the labor\ncontext. In United Steelworkers v. United States, 361\nU.S. 39 (1959) (per curiam), the statute provided that\nthe district courts “shall have jurisdiction to enjoin”\nstrikes that imperil the national welfare and to grant\nother relief “as may be appropriate,” id. at 40 (citation\nomitted). The Court rejected the contention that the\ndistrict court had erred in granting injunctive relief de-\nspite failing to consider various factors that might have\nbeen relevant under a common equitable analysis, such\nas “the conduct of the parties to the labor dispute in\ntheir negotiations.” Id. at 41. The Court explained that,\n“[t]o carry out its purposes, Congress carefully sur-\nrounded the injunction proceedings with detailed pro-\ncedural devices and limitations,” including “[t]he public\nreport of a board of inquiry, the exercise of political and\nexecutive responsibility personally by the President in\ndirecting the commencement of injunction proceedings,\nthe statutory provisions looking toward an adjustment\nof the dispute during the injunction’s pendency, and the\nlimited duration of the injunction.” Ibid. In the Court’s\nview, those features reflected “a congressional determi-\nnation of policy factors involved,” which “is of course\nbinding on the courts.” Ibid.\n 18\n\n b. In the particular context of cases (like this one)\ninvolving a suit brought by a federal agency to effectu-\nate a federal scheme, the Court has recognized that a\ndistinctive approach to equitable relief is appropriate.\nAs the Court recently explained in a similar setting,\n“[w]hen federal law is at issue and ‘the public interest is\ninvolved,’ a federal court’s ‘equitable powers assume an\neven broader and more flexible character than when\nonly a private controversy is at stake.’ ” Kansas v. Ne-\nbraska, 574 U.S. 445, 456 (2015) (citation omitted). The\nCourt has reaffirmed that principle over decades, in-\ncluding the year before Section 10( j) was enacted in\n1947. See, e.g., United States v. First Nat’l City Bank,\n379 U.S. 378, 383 (1965) (recognizing special breadth of\nequitable authority in suit brought by federal agency to\nenforce federal law); Porter v. Warner Holding Co., 328\nU.S. 395, 398 (1946) (same); United States v. City &\nCnty. of San Francisco, 310 U.S. 16, 31 (1940) (“The eq-\nuitable doctrines relied on do not militate against the\ncapacity of a court of equity as a proper forum in which\nto make a declared policy of Congress effective.”).\n The Court has recognized the public interest in ef-\nfectuating federal labor policy specifically. In Virgin-\nian Railway Co. v. System Federation No. 40, 300 U.S.\n515 (1937), the Court affirmed an injunction requiring a\nrailroad to negotiate with its employees’ representa-\ntives, id. at 541. The Court noted that “[t]he peaceable\nsettlement of labor controversies * * * is a matter of\npublic concern,” and thus “[m]ore is involved than the\nsettlement of a private controversy without appreciable\nconsequences to the public.” Id. at 552. The Court ob-\nserved that “[c]ourts of equity may, and frequently do,\ngo much farther both to give and withhold relief in fur-\ntherance of the public interest than they are\n 19\n\naccustomed to go when only private interests are in-\nvolved.” Ibid. And the Court concluded that “[t]he fact\nthat Congress has indicated its purpose to make nego-\ntiation obligatory is in itself a declaration of public in-\nterest and policy which should be persuasive in inducing\ncourts to give relief.” Ibid.\n c. Petitioner does not address the relevant language\nand reasoning of any of these precedents. Instead, it\ninvokes cases requiring a clear statement before inter-\npreting a statute to effect a “ ‘major departure’ ” from\ntraditional equitable principles, such as by “impos[ing]\n‘an absolute duty’ to enjoin violations ‘under any and all\ncircumstances.’ ” Pet. Br. 26 (citations omitted); see,\ne.g., id. at 27 (discussing Weinberger v. Romero-Barcelo,\n456 U.S. 305 (1982)). But this case is not about imposing\nabsolute duties or adopting rigid standards. It is in-\nstead about whether and how the governing federal\nstatute informs the application of equitable considera-\ntions. This Court’s precedents answer that question,\nand there is nothing “novel” or “extreme,” id. at 17,\nabout applying an approach that this Court has applied\nfor over 100 years.\n Petitioner asserts that “this Court has always ap-\nplied the same equitable rules—including for prelimi-\nnary injunctions—when the ‘United States is plaintiff,\nor petitioner’ seeking injunctive relief.” Pet. Br. 19\n(brackets and citation omitted); see id. at 48 (arguing\nthat the same test “govern[s] agencies and private par-\nties alike”). But this Court has plainly held that differ-\nent consideration is appropriate in certain contexts, and\npetitioner fails to acknowledge, much less distinguish,\nthe long line of precedent recognizing the special weight\nthat statutory provisions have in agency suits in equity\nto enforce federal law.\n 20\n\n 3. History confirms that statutory context is relevant to\n granting relief under Section 10( j)\n The history of Section 10( j) confirms that courts\nshould take statutory context into account in granting\nor denying relief under that provision.\n a. Congress enacted Section 10( j) as part of the La-\nbor Management Relations Act of 1947 (LMRA), ch.\n120, 61 Stat. 149. Section 10( j) was the culmination of a\ndecades-long congressional effort to calibrate the ex-\ntent of judicial involvement in labor disputes. In the\nNorris-LaGuardia Act of 1932, ch. 90, 47 Stat. 70 (29\nU.S.C. 101 et seq.), Congress had “drastically * * * cur-\ntail[ed]” courts’ power to grant injunctions in labor dis-\nputes, in reaction to what Congress perceived as undue\njudicial intrusion in the preceding period. Milk Wagon\nDrivers’ Union v. Lake Valley Farm Prod., Inc., 311\nU.S. 91, 101-103 (1940). Then, in light of a wave of labor\nunrest in the years following the end of the Second\nWorld War, Congress decided to broaden the availabil-\nity of injunctive relief in the LMRA. See S. Rep. No.\n105, 80th Cong., 1st Sess. 2 (1947) (Senate Report).\n The Senate Report on the LMRA observed that\n“[t]ime is usually of the essence in these matters, and\nconsequently the relatively slow procedure of Board\nhearing and order, followed many months later by an\nenforcing decree of the circuit court of appeals, falls\nshort of achieving the desired objectives—the prompt\nelimination of the obstructions to the free flow of com-\nmerce and encouragement of the practice and proce-\ndure of free and private collective bargaining.” Senate\nReport 8. Section 10( j) was designed to enable the\nBoard to prevent conduct that might “make it impossi-\nble or not feasible to restore or preserve the status\nquo.” Id. at 27. And in recognition of this Court’s\n 21\n\nprecedents governing equitable suits brought by fed-\neral agencies to vindicate federal policies, see, e.g., Por-\nter, 328 U.S. at 398, the Senate Report explained that\nthe LMRA authorized the Board to seek relief “in the\npublic interest and not in vindication of purely private\nrights,” Senate Report 8; see id. at 27; see also Seeler v.\nTrading Port, Inc., 517 F.2d 33, 40 (2d Cir. 1975) (rec-\nognizing that this legislative history invoked the Court’s\npublic-interest precedents).\n That contemporaneous explanation of Section 10( j)’s\nfunction and effect is inconsistent with petitioner’s in-\nsistence (Br. 19, 48) that courts must apply a closed set\nof equitable factors in exactly the same way in all cir-\ncumstances, regardless of whether private or public in-\nterests are at stake. By contrast, it strongly supports\nan approach that provides for courts to account for the\nspecific characteristics of the NLRA statutory scheme\nand the function of Section 10( j) in determining whether\nto grant or deny relief.\n b. The courts of appeals have uniformly held that\nstatutory context and purposes should inform the appli-\ncation of equitable principles under Section 10( j). Peti-\ntioner conceded at the certiorari stage that the Third,\nFifth, Sixth, Tenth, and Eleventh Circuits apply a two-\npart test that accounts for the NLRA’s distinctive fea-\ntures. See Pet. 17-19. Petitioner acknowledged that the\nFirst and Second Circuits take a “hybrid approach” that\nsimilarly considers statutory context. Pet. 19; see Pet.\n19-21. And although petitioner contended that the\nFourth, Seventh, Eighth, and Ninth Circuits “analyze\nsection 10( j) injunctions using the ordinary four-factor\ntest” for whether preliminary injunctive relief should be\ngranted, Pet. 15; see Pet. 15-17; see also Winter, 555\nU.S. at 20, that overly general characterization obscures\n 22\n\nthe real issue. Each of those courts, too, considers stat-\nutory context in assessing a request for relief under\nSection 10( j), applying the four-factor test in a way that\nlargely parallels the two-factor and hybrid tests em-\nployed by the other circuits.\n For example, the Ninth Circuit has held that “[t]he\ncourt must evaluate the traditional equitable criteria\nthrough the prism of the underlying purpose of section\n10( j), which is to protect the integrity of the collective\nbargaining process and to preserve the Board’s reme-\ndial power.” Frankl v. HTH Corp., 650 F.3d 1334, 1355\n(2011) (citation omitted), cert. denied, 566 U.S. 904\n(2012). The court explained that “in evaluating the like-\nlihood of success, ‘it is necessary to factor in the district\ncourt’s lack of jurisdiction over unfair labor practices,\nand the deference accorded to Respondent determinations\nby the courts of appeals.’ ” Id. at 1356 (citation omitted).\nIt further observed that, “[i]n the context of the NLRA,\n‘permitting an alleged unfair labor practice to reach fru-\nition and thereby render meaningless the Board’s reme-\ndial authority is irreparable harm.’ ” Id. at 1362 (brack-\nets and citation omitted). Other circuits employing the\nfour-factor test have taken a similar approach. See\nMuffley v. Spartan Mining Co., 570 F.3d 534, 543 (4th\nCir. 2009) (“[O]f course, district courts should apply this\ntest in light of the underlying purpose of § 10( j): pre-\nserving the Board’s remedial power pending the out-\ncome of its administrative proceedings.”); Sharp v. Par-\nents in Cmty. Action, Inc., 172 F.3d 1034, 1038 (8th Cir.\n1999) (endorsing the “careful application of traditional\nequitable principles to the context of a § 10( j) prelimi-\nnary injunction”); Kinney v. Pioneer Press, 881 F.2d\n485, 494 (7th Cir. 1989) (directing district courts to\n 23\n\napply “the traditional standards used in injunctive cases\nfiled by public officials”).\n Courts have given due consideration to the distinc-\ntive features of the NLRA in Section 10( j) cases\nstretching all the way back to the enactment of that pro-\nvision in 1947. In Douds v. Local 294, 75 F. Supp. 414\n(N.D.N.Y. 1947), decided only a few months after Sec-\ntion 10( j)’s enactment, the court observed that equita-\nble “rules are applied with different degrees of rigidity\nin private litigation, and when the public interest is in-\nvolved,” id. at 419. The court concluded that relief is\nappropriate under Section 10( j) “when the factual juris-\ndiction requirements are shown, and credible evidence\nis presented which, if uncontradicted, would warrant\nthe granting of the requested relief, having in mind the\npurpose of the statute and interests involved in its en-\nforcement.” Id. at 418.\n Many subsequent cases were to the same effect. For\nexample, in Douds v. Anheuser-Busch, Inc., 99 F. Supp.\n474 (D.N.J. 1951), the court observed that “Congress\nclearly intended that the court should exercise its dis-\ncretion with due regard to the large objectives of the\nAct.” Id. at 477. And it cited, among other decisions,\nHecht, supra, and Virginian Railway, supra, in observ-\ning that, in light of Congress’s “desire to effectuate a\nstatutory policy, the courts have consistently held that\nthe grant of the injunction depends upon the standards\nset forth in the statute.” Douds, 99 F. Supp. at 477; see,\ne.g., Jaffee v. Henry Heide, Inc., 115 F. Supp. 52, 58\n(S.D.N.Y. 1953) (awarding Section 10( j) relief “to pre-\nserve the issues presented for the determination of the\nBoard as provided in the Act, and to avoid irreparable\ninjury to the policies of the Act”); Lebus v. Manning,\nMaxwell & Moore, Inc., 218 F. Supp. 702, 705 (W.D. La.\n 24\n\n1963) (observing that because Section 10( j) relief “is for\nthe protection of the public interest and in aid of a policy\nwhich Congress has made plain,” “the area for the ex-\nercise of the traditional discretion not to grant an in-\njunction is much more limited”).\n Those judicial decisions following Section 10( j)’s en-\nactment help shed light on “the original meaning” of\nthat provision. New Prime Inc. v. Oliveira, 139 S. Ct.\n532, 539 (2019). Moreover, although Congress has re-\npeatedly amended Section 10 in the decades since its en-\nactment, see Act of Aug. 28, 1958, Pub. L. [DOCKET REDACTED],\n§ 13(a)-(c), 72 Stat. 945-946; Labor-Management Re-\nporting and Disclosure Act of 1959, Pub. L. [DOCKET REDACTED],\n§ 704(d), 73 Stat. 544-545; Trademark Clarification Act\nof 1984, Pub. L. [DOCKET REDACTED], Tit. IV, § 402(31), 98 Stat.\n3360, it has never disturbed the relevant language or\nsuggested that courts should rigidly apply a four-factor\ntest for preliminary relief or disregard the distinctive\ncharacter of NLRA proceedings. See, e.g., Texas Dep’t\nof Hous. & Cmty. Affairs v. Inclusive Cmtys. Project,\nInc., 576 U.S. 519, 535-537 (2015) (finding congressional\nratification of lower-court precedent); see also Mones-\nsen Sw. Ry. Co. v. Morgan, 486 U.S. 330, 338 (1988) (dis-\ncussing related doctrine of acquiescence).\n c. Petitioner disputes little of this historical account.\nIt does not contest the mountain of caselaw applying eq-\nuitable principles “through the prism of ” the NLRA in\nadjudicating Section 10( j) petitions. Frankl, 650 F.3d\nat 1355. Petitioner’s argument (Pet. 15) that four cir-\ncuits use “the ordinary four-factor test” elides the way\nthose circuits apply that test. As shown, they apply it\nwith sensitivity to the NLRA’s structure and purposes.\nPetitioner has not identified any circuit that has\n 25\n\nembraced the decontextualized, ahistorical analysis it\nadvocates.\n Petitioner cites (Br. 31-32) a smattering of historical\nstatements that it claims support its view, but none is\npersuasive. For example, even assuming that Section\n10( j) was designed for “emergency” situations, Pet. Br.\n31 (quoting I. Herbert Rothenberg, Rothenberg On La-\nbor Relations 632 n.4 (1949)) (emphasis omitted), that is\nfully consistent with the Board’s highly selective ap-\nproach to filing petitions, see p. 39, infra. Petitioner\nalso cites (Br. 31-32) a law review article, but that\nsource acknowledges that “Congress delegated to the”\nBoard, “and not to the district courts, the duty to give\nan expert and experienced content and direction to the”\nNLRA. Frank W. McCulloch, New Problems in the Ad-\nministration of the Labor-Management Relations Act:\nThe Taft-Hartley Injunction, 16 Sw. L.J. 82, 97 (1962).\nAnd the article explains that the harm inquiry turns in\npart on whether the Board’s “subsequent remedy [will]\nbe adequate to restore the status quo and dissipate the\nconsequences of the unfair labor practice.” Ibid. Those\nobservations corroborate—rather than undermine—\nthe government’s position here.\n 4. The NLRA’s framework informs courts’ considera-\n tion of both the merits and equities\n The principles above make clear that a court con-\nducting an equitable analysis under Section 10( j) must\naccount for the relevant legal landscape in granting or\ndenying relief. Here, the process that the NLRA estab-\nlishes for resolving charges of unfair labor practices\nproperly informs application of all four factors under\nthe test on which petitioner relies: likelihood of success\non the merits; likelihood of irreparable harm; the public\n 26\n\ninterest; and the balance of the equities. See Winter,\n555 U.S. at 20.\n a. The NLRA establishes a comprehensive frame-\nwork for prosecuting and adjudicating complaints of un-\nfair labor practices. A regional director, acting on be-\nhalf of the General Counsel, investigates a charge and\nthen issues a complaint if warranted. 29 C.F.R. 101.4,\n101.8. The ALJ conducts a trial-like hearing that in-\ncludes witness testimony and other evidence, and at the\nconclusion of the hearing the ALJ makes both findings\nof fact and conclusions of law. 29 C.F.R. 101.10(a),\n101.11(a). In cases where the parties file exceptions to\nthe ALJ’s decision, the Board then independently re-\nviews the record and reaches its own determination as\nto the proper disposition of the complaint. 29 C.F.R.\n101.12(a). Although the Board’s decision is reviewable\nin the courts of appeals, its factual findings are “conclu-\nsive” “if supported by substantial evidence.” 29 U.S.C.\n160(e) and (f ). Its “application of law to facts” is simi-\nlarly entitled to deference, Respondent v. United Ins. Co.,\n390 U.S. 254, 260 (1968), as are its legal interpretations\nof the NLRA, see, e.g., Sure-Tan, Inc. v. Respondent, 467\nU.S. 883, 891 (1984), and its choice of remedies, see\nRespondent v. Gissel Packing Co., 395 U.S. 575, 612 n.32\n(1969).2\n\n\n 2\n The Court is presently considering whether to overrule Chev-\nron, U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837\n(1984), concerning the deference owed to agency interpretations of\nambiguous statutes. See Loper Bright Enters. v. Raimondo, [DOCKET REDACTED] (argued Jan. 17, 2024); Relentless, Inc. v. Department of\nComm., [DOCKET REDACTED] (argued Jan. 17, 2024). Deference to the\nBoard’s statutory interpretations predates Chevron. See, e.g., Ford\nMotor Co. v. Respondent, 441 U.S. 488, 497 (1979); Respondent v. Hearst\nPubl’ns, Inc., 322 U.S. 111, 130-131 (1944). Regardless, even if those\n 27\n\n Because Congress entrusted the Board, not the\ncourts, with “the task of ‘applying the Act’s general pro-\nhibitory language in the light of the infinite combina-\ntions of events which might be charged as violative of\nits terms,’ ” Beth Israel Hosp., 437 U.S. at 500-501 (cita-\ntion omitted), a Section 10( j) proceeding differs mark-\nedly from a typical preliminary injunction proceeding.\nIn the latter, the district court’s findings of fact and con-\nclusions of law are “preliminary” to its own resolution\nof those issues at trial. Fed. R. Civ. P. 65(a) (capitaliza-\ntion and emphasis omitted); see, e.g., Fed. R. Civ. P.\n65(a)(2) (providing that “evidence that is received on the\n[preliminary] motion and that would be admissible at\ntrial becomes part of the trial record and need not be\nrepeated at trial”). But in the Section 10( j) context,\nthere will never be a trial on the merits before the dis-\ntrict court. The Board, not the court, is responsible for\nadjudicating the charge of unfair labor practices.\n In short, because a Section 10( j) injunction is de-\nsigned to preserve the Board’s authority to find facts,\ninterpret and apply law to facts, and fashion a remedy—\nnot to supplant that authority—Section 10( j) does not\ncall for the district court to conduct a probing inquiry\ninto the merits. Even the courts of appeals that pur-\nportedly apply a four-factor test recognize that basic\npoint. See, e.g., Frankl, 650 F.3d at 1356 (“[I]n evaluat-\ning the likelihood of success, ‘it is necessary to factor in\nthe district court’s lack of jurisdiction over unfair labor\npractices, and the deference accorded to Respondent deter-\nminations by the courts of appeals.’ ”) (citation omitted);\nBloedorn v. Francisco Foods, Inc., 276 F.3d 270, 287\n(7th Cir. 2001) (same). In this context, it is appropriate\n\ninterpretations did not warrant deference, that would not change\nthe proper outcome in this case for the other reasons given.\n 28\n\nfor a court to be “hospitable” to the allegations and sup-\nporting evidence in the Board’s submission, as well as\nreasonable inferences drawn therefrom, without under-\ntaking an intensive effort to resolve factual issues or\nmake credibility determinations that will be made by\nthe Board. Frankl, 650 F.3d at 1356 (citation omitted);\nBloedorn, 276 F.3d at 287 (same).\n The substantial administrative process that pre-\ncedes the filing of a Section 10( j) petition also counsels\nin favor of a less exacting and more deferential inquiry\ninto the merits by the district court than in a case where\na private litigant seeks preliminary injunctive relief\nwithout any similar safeguards. A regional director\nmay file a Section 10( j) petition only following an inves-\ntigation and “upon issuance of a complaint” charging\nthe respondent with engaging in unfair labor practices.\n29 U.S.C. 160( j); see 29 C.F.R. 101.4, 101.8. And by\nlongstanding practice, the regional director typically\nmakes a recommendation to the General Counsel to ap-\nprove the filing of a Section 10( j) petition, who in turn\nseeks approval from the Board. See 10( j) Manual\n§§ 5.2, 5.5, at 15, 17; see also 29 U.S.C. 160( j) (confer-\nring authority to seek relief on “[t]he Board”).\n The Board’s approval of a Section 10( j) petition does\nnot prejudge its ultimate resolution of the case. The de-\ncision to approve a Section 10( j) petition is made with-\nout the benefit of the ALJ record and is not preclusive\non the Board’s later adjudication of the complaint, just\nas a district court’s resolution of a preliminary injunc-\ntion is “not binding at trial on the merits.” University\nof Texas v. Camenisch, 451 U.S. 390, 395 (1981). But\nbecause “[a]ssessing the [Regional] Director’s likeli-\nhood of success calls for a predictive judgment about\nwhat the Board is likely to do with the case,” Bloedorn,\n 29\n\n276 F.3d at 288, the agency’s preliminary assessment of\nthe merits is material to that inquiry.\n Petitioner disputes (Br. 41) the relevance of the\nagency process to the Section 10( j) proceeding. But it\noffers no basis for suggesting that Congress, in enact-\ning a provision designed to preserve agency authority\nto adjudicate unfair-labor-practice charges in the first\ninstance, would have expected district courts to preter-\nmit the Board’s exercise of that authority or, through\nprotracted proceedings, to prevent the Board from ob-\ntaining necessary relief to protect that authority and its\nability to award an effective remedy. And although pe-\ntitioner notes (ibid.) that Board decisions are ultimately\nreviewable in the courts of appeals, it concedes that the\nBoard’s factual determinations are reviewed under the\ndeferential substantial-evidence standard and that the\nBoard’s application of law to facts is likewise reviewed\ndeferentially given the myriad scenarios to which the\nBoard must apply the Act’s general terms in light of its\nexperience and expertise.\n In support of a more demanding standard, petitioner\nobserves that the Court has “denied preliminary injunc-\ntions where the ‘facts and the inferences [are] much in\ndispute.’ ” Br. 20 (quoting Phoenix Ry. Co. v. Geary, 239\nU.S. 277, 281 (1915)) (brackets in original). But the\ncited case involved a party’s request for an interlocu-\ntory injunction barring enforcement of an agency order,\nand the Court held “that the presumption of reasona-\nbleness existing in favor of the action of the Commission\nwas not overcome in the showing that was made upon\nthe application for an injunction.” Phoenix Ry. Co., 239\nU.S. at 282. If anything, the decision’s solicitude for\nagency processes supports the government in this case,\nnot petitioner.\n 30\n\n b. The Board’s status as principal adjudicator also\naffects the irreparable-harm inquiry. Section 10( j)’s\nfunction is to give “jurisdiction to the courts to issue in-\njunctions in unfair labor practice proceedings * * *\npending final disposition by the Board.” Muniz v.\nHoffman, 422 U.S. 454, 462 (1975) (emphasis added). If,\nabsent an injunction, the Board likely would not be able\nto restore the parties to the status quo ante at the con-\nclusion of administrative proceedings, then the harm is,\nfor purposes of Section 10( j), “irreparable.” Pet. Br. 20\n(citation omitted). Again, even the courts on which pe-\ntitioner relies recognize that the harm inquiry in this\ncontext centers on the Board’s power to award complete\nrelief. See, e.g., Muffley, 570 F.3d at 543 (observing that\ncourts should apply the four-part test “in light of the\nunderlying purpose of § 10( j): preserving the Board’s\nremedial power pending the outcome of its administra-\ntive proceedings”); Sharp, 172 F.3d at 1038 (similar).\n The nature of the harms that occur in the labor con-\ntext also informs the inquiry. In a case (like this one)\ninvolving alleged employer unfair labor practices, Con-\ngress charged the Board with enforcing labor rights in\nboth their individual dimensions (such as the harm suf-\nfered by a wrongfully discharged employee) and collec-\ntive dimensions (such as the harm to a unionization\ndrive). See, e.g., 29 U.S.C. 157 (protecting employees’\nright “to engage in * * * concerted activities for the\npurpose of collective bargaining or other mutual aid or\nprotection”); Respondent v. Fansteel Metallurgical Co., 306\nU.S. 240, 257 (1939). In assessing the likelihood of\nharm, courts must ask whether the Board’s ability to\nvindicate each of those interests is likely to be impaired.\nSee, e.g., Sharp, 172 F.3d at 1038 (holding that “the ir-\nreparable harm to be addressed under § 10( j) is the\n 31\n\nharm to the collective bargaining process or to other\nprotected employee activities”).\n That inquiry requires difficult predictive judgments.\nEmployer bargaining and organizing violations may, for\nexample, weaken the momentum of a union drive at a\ncritical time in a way that would be impossible to repair\nafter the fact. See, e.g., Franks Bros. Co. v. Respondent, 321\nU.S. 702, 704 (1944) (endorsing Board’s view that “un-\nlawful refusal of an employer to bargain collectively\nwith its employees’ chosen representatives disrupts the\nemployees’ morale, deters their organizational activi-\nties, and discourages their membership in unions”);\nRespondent v. Electro-Voice, Inc., 83 F.3d 1559, 1573 (7th\nCir. 1996) (“As time passes, the benefits of unionization\nare lost and the spark to organize is extinguished. The\ndeprivation to employees from the delay in bargaining\nand the diminution of union support is immeasurable.”),\ncert. denied, 519 U.S. 1055 (1997). Moreover, such\nharms can materialize quickly. “[I]n the labor field, as\nin few others, time is crucially important in obtaining\nrelief.” Respondent v. C & C Plywood Corp., 385 U.S. 421,\n430 (1967).\n The Board is especially experienced and suited to\nmake those kinds of judgments. This Court has “recog-\nnize[d] the Board’s special function of applying the gen-\neral provisions of the Act to the complexities of indus-\ntrial life.” Respondent v. Erie Resistor Corp., 373 U.S. 221,\n236 (1963). Unlike a court, the Board has expertise in\nthe “actualities of industrial relations” and in balancing\n“the conflicting legitimate interests” of employers and\nemployees. Ibid. (citations omitted); see, e.g., Gissel\nPacking, 395 U.S. at 612 n.32.\n The harm inquiry under Section 10( j) may some-\ntimes differ from the harm inquiry in run-of-the-mine\n 32\n\npreliminary injunction cases, where a court need only\nask whether a tangible harm (like physical injury) is\nlikely and whether that harm can be redressed by ret-\nrospective relief (like damages). See, e.g., Amoco Prod.\nCo. v. Village of Gambell, 480 U.S. 531, 545 (1987) (“En-\nvironmental injury, by its nature, can seldom be ade-\nquately remedied by money damages.”). Harms that are\nhighly significant in the Section 10( j) context—such as\nstopping or hindering union momentum—may seem less\nconcrete on their face than physical or monetary injury.\nBut rather than reflecting a “feeble test,” Pet. Br. 36 (ci-\ntation omitted), that conception of harm simply reflects\nthe nature of the rights and protections that Congress\nchose to codify in the NLRA. A test that pays heed to\nthose rights and protections properly advances Con-\ngress’s “policy prerogatives.” Ibid.\n Although this case involves alleged employer miscon-\nduct, the harm inquiry is similar in cases of alleged union\nmisconduct. See, e.g., 29 U.S.C. 158(b) (listing “[u]nfair\nlabor practices by labor organization”); see also Muniz,\n422 U.S. at 462 (Section 10( j) authorizes injunctive relief\n“against unions or management”). There, too, a court\nshould focus on the Board’s ability to remedy any harm to\nthe employer or labor rights more generally at the conclu-\nsion of administrative proceedings. For example, striking\nemployees have “no license to commit acts of violence,”\nFansteel Metallurgical Co., 306 U.S. at 253, and such con-\nduct may inflict irreparable harm absent temporary in-\njunctive relief, see Frye v. District 1199, Health Care &\nSoc. Serv. Union, 996 F.2d 141, 144-145 (6th Cir. 1993);\nsee also, e.g., Kobell v. United Paperworkers Int’l Union,\n965 F.2d 1401, 1405, 1411 (6th Cir. 1992) (enjoining bar-\ngaining violations by union).\n 33\n\n For its part, petitioner criticizes any standard that\nfocuses on the “future impairment of the Respondent’s reme-\ndial power.” Br. 35 (brackets and citation omitted). But\npetitioner offers no alternative, coherent understanding\nof how to assess irreparable harm to the interests pro-\ntected by the Act in a context where the agency, not the\ncourt, is charged with ultimately repairing any harms\nthat occur.\n c. The NLRA’s distinctive framework also informs\nthe assessment of the public interest and balance of\nharms. The policy of the NLRA is to safeguard com-\nmerce and promote industrial stability by “restoring\nequality of bargaining power between employers and\nemployees,” “eliminat[ing]” labor practices that “pre-\nvent[ ] the free flow of goods” and promote “unrest,” and\n“encouraging the practice and procedure of collective\nbargaining.” 29 U.S.C. 151. The Board is “the agency\ncharged by Congress” with effectuating those policies,\nRespondent v. J. Weingarten, Inc., 420 U.S. 251, 260 (1975),\nboth in administrative proceedings and in suits for relief\nunder Section 10( j).\n As explained, because “the public interest is in-\nvolved” when a federal agency sues to enforce federal\nlaw, a court’s “equitable powers assume an even broader\nand more flexible character than when only a private\ncontroversy is at stake.” Porter, 328 U.S. at 398; see pp.\n18-19, supra. And “[t]he fact that Congress has indi-\ncated its purpose to make” certain labor practices un-\nlawful “is in itself a declaration of public interest and\npolicy which should be persuasive in inducing courts to\ngive relief.” Virginian Ry. Co., 300 U.S. at 552.\n Those principles apply with full force here. As in a\nnumber of other cases where the Court has recognized\na distinctive and flexible role for equity, Section 10( j) is\n 34\n\nlimited to suits brought by a federal agency to enforce\nfederal law. See Amalgamated Clothing Workers v.\nRichman Bros., 348 U.S. 511, 517 (1955) (private liti-\ngants cannot sue under Section 10( j)). And in filing a\nSection 10( j) petition, the Board seeks to advance Con-\ngress’s determination of the public interest, which re-\nquires special solicitude in the court’s equitable weigh-\ning. See Tennessee Valley Auth. v. Hill, 437 U.S. 153,\n194 (1978) (“Once Congress, exercising its delegated\npowers, has decided the order of priorities in a given\narea, it is for * * * the courts to enforce them when\nenforcement is sought.”); cf. Nken v. Holder, 556 U.S.\n418, 435 (2009) (stating that the factors of “harm to the\nopposing party and weighing the public interest * * *\nmerge when the Government is the opposing party”).\n B. Either A Two-Factor Or Four-Factor Test May Reflect\n The Appropriate Considerations\n 1. Petitioner trains its efforts on showing that a\n“four-factor test” is better than a “two-part test.” Br.\n33. But the number of factors or parts is largely beside\nthe point. See Br. in Opp. 8 (explaining that the “dis-\ntinctions” between the circuits “are essentially termino-\nlogical rather than substantive”). The question instead\nis whether a particular formulation appropriately ac-\ncounts for traditional equitable considerations in light\nof the statutory context, as discussed above. The two-\npart test applied by the Sixth Circuit below, along with\nthe similar tests of other circuits, does so, and in a man-\nner that largely maps onto the familiar four-factor test.\nIn particular, the reasonable-cause prong parallels like-\nlihood of success under the four-factor test, while the\n“just and proper” prong, correctly construed, incorpo-\nrates irreparable harm, the public interest, and the bal-\nance of equities.\n 35\n\n Likelihood of success. The reasonable-cause stand-\nard used by the court of appeals “essentially parallels”\nthe traditional likelihood-of-success inquiry, Muffley,\n570 F.3d at 543; see Chester v. Grane Healthcare Co.,\n666 F.3d 87, 99 (3d Cir. 2011) (similar), while accounting\nfor the distinctive context of a Section 10( j) petition.\nPetitioner did not challenge the district court’s reason-\nable-cause finding in the court of appeals, see Pet. App.\n11a, but the Sixth Circuit has held that the Board’s legal\ntheory must be “ ‘substantial and not frivolous’ ” and\n“the facts of the case [must] be consistent with the\nBoard’s legal theory,” Ahearn v. Jackson Hosp. Corp.,\n351 F.3d 226, 237 (2003) (citation omitted). Although\ncourts “consider[ ] the evidence in the light most favor-\nable to the Board,” Arlook v. S. Lichtenberg & Co., 952\nF.2d 367, 371 (11th Cir. 1992), and do “not resolve con-\nflicting evidence,” Pet. App. 10a, their preliminary re-\nview of the merits “is not without teeth,” Respondent v.\nOzburn-Hessey Logistics, LLC, 875 F.3d 333, 343 (6th\nCir. 2017).\n Petitioner faults the Sixth Circuit for not requiring\ndistrict courts to conduct a more searching factual in-\nquiry, such as by resolving “issues of witness credibil-\nity.” Br. 47 (citation omitted). That contention ignores\nthe fundamental point that “[p]roceedings pursuant to\n§ 10( j) are subordinate to the unfair labor practice pro-\nceedings to be heard before the Board.” Schaub v. West\nMich. Plumbing & Heating, Inc., 250 F.3d 962, 969 (6th\nCir. 2001). It would be inconsistent with the arrange-\nment Congress prescribed to conduct a preliminary\nmini-trial before one adjudicator (the district court) in\nadvance of a full-fledged hearing before another (the\nagency). See pp. 26-28, supra. The Sixth Circuit’s ap-\nproach reasonably accommodates and respects the\n 36\n\nBoard’s role as principal adjudicator. Indeed, the court’s\narticulation of this factor—whether “there is ‘reasona-\nble cause to believe that unfair labor practices have\noccurred,’ ” Pet. App. 12a (citation omitted)—better\ncaptures the role of the district court in assessing the\nBoard’s submission than an unelaborated reference to\n“likelihood of success,” Pet. Br. 47, which could imply\nthat a court should proceed in the same manner in which\nit adjudicates a motion for a preliminary injunction in a\ncase that it will ultimately decide.\n Irreparable harm. The court of appeals held that re-\nlief is “just and proper where it is necessary to return\nthe parties to status quo pending the Board’s proceed-\nings in order to protect the Board’s remedial powers un-\nder the NLRA.” Pet. App. 10a (citation and internal\nquotation marks omitted). And it found that standard\nsatisfied on these facts, where petitioner terminated\n“80% of the organization committee” and “the record\ncontains actual evidence of chill.” Id. at 12a; see, e.g.,\nPye v. Excel Case Ready, 238 F.3d 69, 74 (1st Cir. 2001)\n(holding that “the ‘discharge of active and open union\nsupporters . . . risks a serious adverse impact on em-\nployee interest in unionization’ ”) (citation omitted);\nElectro-Voice, 83 F.3d at 1572-1573 (similar).\n Petitioner criticizes the Sixth Circuit for treating\n“the mere potential for future impairment of the\nRespondent’s remedial power” as sufficient to show harm.\nPet. Br. 35 (quoting Pet. App. 29a (Readler, J., concur-\nring)) (emphasis added; brackets omitted). The quoted\nlanguage, however, comes from the separate opinion of\nJudge Readler, not the majority. The Sixth Circuit in-\nstead asks whether relief is “reasonably necessary” to\npreserve the Board’s remedial authority. Ahearn, 351\nF.3d at 239 (citation omitted). That inquiry in the\n 37\n\nspecial context of Section 10( j) corresponds to the rule\nunder the four-factor test that a movant need only show\n“likely”—not certain—harm, Winter, 555 U.S. at 22\n(emphasis omitted), and fits well within the range of\nphrasings that courts use in this context, cf. Hol-\nlingsworth v. Perry, 558 U.S. 183, 190 (2010) (per cu-\nriam) (in stay context, explaining that applicant must\nshow “reasonable probability” that Court will grant re-\nview and “fair prospect” that it will reverse).\n Public interest. The Sixth Circuit has held that “the\nprincipal consideration” in assessing a request for Sec-\ntion 10( j) relief “is whether, under the circumstances of\nthe case, judicial action is in the public interest.”\nSheeran v. American Com. Lines, Inc., 683 F.2d 970,\n979 (1982); see Fleischut v. Nixon Detroit Diesel, Inc.,\n859 F.2d 26, 30 (6th Cir. 1988) (similar). In this case,\nthe district court found that “ordering Claimant to\ncease and desist [its unlawful] practices ‘is in the public\ninterest to effectuate the policies of the NLRA and to\nprotect the Respondent’s remedial powers.’ ” Pet. App. 118a\n(citation omitted).\n Petitioner offers no critique of the Sixth Circuit’s\nconception of the public interest. Instead, it summarily\nasserts (Br. 36) that circuit precedent “does not require\nthe district court to assess” the public interest. That is\nincorrect.\n Balance of equities. Although the Sixth Circuit cor-\nrectly emphasizes the other factors, cf. Nken, 556 U.S.\nat 434 (noting that “[t]he first two factors of the tradi-\ntional [stay] standard are the most critical”), it does not\n“foreclose consideration of equitable factors,” Schaub v.\nDetroit Newspaper Agency, 154 F.3d 276, 280 (6th Cir.\n1998); see, e.g., Ahearn, 351 F.3d at 235-236. But peti-\ntioner, which the district court below found reasonable\n 38\n\ncause to believe had committed unfair labor practices at\nthe core of the Act, cannot show any unique equities in\nthis case that would outweigh the equities of the Board\nin ensuring that it will be able to order meaningful relief\nif petitioner is ultimately found to have committed un-\nfair labor practices. And the court of appeals consid-\nered another equitable factor when it rejected, on the\nmerits, petitioner’s argument that the union acted with\n“unclean hands.” Pet. App. 16a (capitalization and em-\nphasis omitted); see id. at 117a (district court balancing\nhardships). In that respect, the court likely accorded\npetitioner more equitable consideration than it was due,\nsince this Court has rejected application of the unclean-\nhands defense “where Congress authorizes broad equi-\ntable relief to serve important national policies.”\nMcKennon v. Nashville Banner Publ’g Co., 513 U.S.\n352, 360 (1995).\n Again, petitioner offers no critique of the Sixth Cir-\ncuit’s approach to the balance of the equities, other than\nto claim (Br. 36) that the court never balances the equi-\nties at all. And again, that is incorrect.\n 2. As the above makes clear, the two-part inquiry\nundertaken by the Sixth Circuit and other courts for in-\nterim relief under Section 10( j) subjects Board petitions\nto meaningful scrutiny, and does not call for courts\nmerely to “rubber-stamp” agency requests. Pet. Br. 17.\nHistorical case outcomes confirm that fact. According\nto data publicly maintained by the agency, the Board\nhas litigated 135 Section 10( j) cases to a merits resolu-\ntion since 2012. See Respondent, Section 10( j) Injunctions -\nLitigation Success Rate Report, (2024), [URL REDACTED]\nRespondent.gov/reports/Respondent-case-activity-reports/section-10j-\ninjunctions-litigation-success-rate-report. The Board’s\noverall success rate (cases in which an injunction was\n 39\n\ngranted in whole or part) in those cases was 74%. Ibid.\nBut the success rate in circuits that apply a two-part\ntest was lower than in circuits that apply a four-part\ntest. In courts that apply a two-part test, the success\nrate was 68%; in those that apply a hybrid test, it was\n81%; and in those that apply a four-part test, it was 74%.\nIbid. In the Sixth Circuit, the success rate was 61%.\nIbid. Those statistics refute petitioner’s assertion that\nthe two-part test “stacks the deck in the [Respondent’s] fa-\nvor.” Br. 36 (citation omitted; brackets in original).\n Nor is there anything surprising about the fact that\nthe Board prevails on a substantial majority of Section\n10( j) petitions. The Board is highly selective in the pe-\ntitions it authorizes, and the extensive pre-petition re-\nview that takes places at multiple levels ensures that re-\nquests presented to the courts have a significant chance\nof success. The agency’s publicly available statistics\nshow that, in fiscal year 2023, it received 19,869 unfair-\nlabor-practice charges, and issued 743 unfair-labor-\npractice complaints. See Respondent, Unfair Labor Practice\nCharges Filed Each Year, [URL REDACTED]\nRespondent-case-activity-reports/unfair-labor-practice-cases/\nintake/unfair-labor-practice-charges. Despite that\ncaseload, the Board authorized the filing of only 14 Sec-\ntion 10( j) petitions. See Respondent, Litigation - Injunction,\n[URL REDACTED]\nunfair-labor-practice-cases/litigation/injunction-litigation\n(Injunction Activity).3\n\n 3\n Petitioner asserts that “the Respondent’s ‘§ 10( j) activity is on the\nrise.’ ” Br. 6 (citation omitted). In reality, the agency’s Section 10( j)\nlitigation has fallen over the last decade. See Injunction Activity.\nThe Board authorized the filing of 38 Section 10( j) petitions in fiscal\nyear 2014 and 36 petitions in 2015, but only 21 petitions in 2022 and\nonly 14 petitions in 2023. Ibid. The fact that the number of Board\n 40\n\n C. Petitioner’s Remaining Arguments Lack Merit\n Petitioner offers several additional arguments relat-\ning to policy concerns and other statutes that authorize\nrelief in different contexts. None of those arguments is\npersuasive.\n 1. Petitioner mistakenly contends (Br. 36) that the\ntwo-part test “creates implausible anomalies.” Peti-\ntioner suggests that the Board need only present a\n“non-frivolous legal theory” to overcome constitutional\ndefenses raised by employers or unions in Section 10( j)\nproceedings, whereas those same employers or unions\nwould have to satisfy the “ordinary four-factor” test to\nobtain a preliminary injunction against the Board’s pro-\nceedings on the basis of the same constitutional theo-\nries. Br. 37.\n Petitioner’s premises are mistaken. The Board’s le-\ngal theory must be “substantial,” Pet. App. 28a (citation\nomitted), not merely “non-frivolous,” Br. 37. And the\nsubstantiality standard applies only to “the Board’s le-\ngal theory underlying the allegations of unfair labor\npractices,” Ahearn, 351 F.3d at 237, not any constitu-\ntional defenses. “[B]ecause constitutional decisions are\nnot the province of the Respondent (or the Respondent’s Regional\nDirector or General Counsel), the task[ ] of evaluating\nthe constitutional pitfalls of potential interpretations of\nthe Act” is “committed de novo to the courts.” Over-\nstreet v. United Bhd. of Carpenters & Joiners, 409 F.3d\n1199, 1209 (9th Cir. 2005); see SJT Holdings, Inc., 372\nN.L.R.B. 82, at 2 n.5 (2023) (discussing Board’s ap-\nproach to constitutional claims raised in agency pro-\nceedings).\n\napprovals has rebounded since the precipitous drop that occurred\nduring the COVID-19 pandemic, ibid., is unsurprising, contra Cert.\nReply Br. 8.\n 41\n\n Petitioner also contends (Br. 38) that it is unclear\nhow the standard for stays pending appeal “might mu-\ntate if district courts started off by applying the relaxed\ntwo-part test to grant the injunction.” But the standard\napplies the same way here that it does elsewhere. For\nexample, to show that it is likely to succeed in overturn-\ning a Section 10( j) injunction on appeal, Nken, 556 U.S.\nat 426, a stay applicant must demonstrate that it is\nlikely to persuade the court of appeals that the district\ncourt erred in finding that the Board presented a sub-\nstantial legal theory and satisfied the other prerequi-\nsites to relief under Section 10( j). See Pet. App. 44a;\nsee also Ahearn, 351 F.3d at 237 (articulating appellate\nreview standards for Section 10( j) injunctions).\n 2. Petitioner points to other statutory provisions\nthat use the phrase “just and proper” and contends that\ncourts have interpreted those provisions “to give courts\n‘the ability to consider equitable factors.’ ” Br. 24 (cita-\ntion omitted). Again, that is a strawman: no one dis-\nputes that courts applying Section 10( j) may consider\nequitable factors. See, e.g., Sharp, 172 F.3d at 1038\n(“The question is not whether traditional equitable\nprinciples are relevant.”). In any event, the limited\ncaselaw interpreting other provisions that, like Section\n10( j), authorize courts to grant relief to federal agencies\nseeking to enforce federal law is either inconclusive or\nsupports the government. See, e.g., American Foreign\nServ. Ass’n v. Baker, 895 F.2d 1460, 1463 n.** (D.C. Cir.\n1990) (R.B. Ginsburg, J.) (observing that courts play an\n“auxiliary role” in the statutory scheme and should take\ncare not to “improper[ly] * * * enlarge” that role);\nReuben v. FDIC, 760 F. Supp. 934, 941-942 (D.D.C.\n1991) (holding that the relevant provision “makes it eas-\nier for the Authority to satisfy one major element in the\n 42\n\ntraditional equitable equation,” namely, irreparable in-\njury) (citing Section 10( j) precedent).\n Petitioner also points to a host of provisions author-\nizing injunctive relief using different language and con-\ntends (Br. 42) that the government’s interpretation\nwould “distort” those provisions too. Of course, the ef-\nfect of statutory text and context on the equitable anal-\nysis necessarily depends on which statute is at issue.\nSee, e.g., Dan B. Dobbs & Caprice L. Roberts, Law of\nRemedies: Damages, Equity, Restitution 186 (3d ed.\n2018) (“The statute remains the best beginning place for\nidentifying the rights and the permissible range of dis-\ncretion in administering remedies.”). Many of the stat-\nutes that petitioner cites, for example, do not involve\ntemporary relief pending an administrative proceed-\ning—a critical characteristic of Section 10( j) relief. See\nPet. Br. 45-46. Those statutes have little bearing on the\nanalysis here.\n In any event, petitioner offers virtually no support\nfor its claim that courts ignore statutory context in ap-\nplying those other provisions. See Pet. Br. 43, 45. In-\ndeed, petitioner cites far more decisions rejecting its in-\nterpretation than accepting it. Compare id. at 44 n.7,\nwith id. at 43-44. And contrary to petitioner’s sugges-\ntion (Br. 44 n.7), it is not just “older” cases that do so.\nSee, e.g., FTC v. Consumer Def., LLC, 926 F.3d 1208,\n1212 (9th Cir. 2019); SEC v. Zera Fin. LLC, No. 23-\n1807, 2023 WL 8269775, at *4 (C.D. Cal. Oct. 30, 2023)\n(citing cases). Petitioner responds (Br. 44 n.7) that all\nof the decisions adverse to its position are “untenable.”\nAlthough the Court should decline to address the proper\ninterpretation of those other statutes in this case, peti-\ntioner’s summary broadside on a wide, deep, and\nlongstanding body of circuit precedent confirms that it\n 43\n\nis petitioner—not the government—that seeks to “re-\nwrite” the law of statutory injunctions. Pet. Br. 43.\n 3. Petitioner argues that Section 10( j) relief should\nbe subject to a strict standard because it is unduly bur-\ndensome on employers and unions. Petitioner contends\n(Br. 6) that Section 10( j) injunctions “put powerful pres-\nsure on employers to settle, especially since the Respondent\ncontrols how long administrative proceedings last.”\nAgency regulations, however, provide for cases in which\nSection 10( j) relief has been granted to be “heard expe-\nditiously” and “given priority * * * over all other cases\nexcept cases of like character and cases under Section\n10(l) and (m) of the Act.” 29 C.F.R. 102.94(a).\n Petitioner also complains (Br. 40) that changed cir-\ncumstances may call into question the continued need\nfor a Section 10( j) injunction, but that is true of any pre-\nliminary injunction. A party subject to a Section 10( j)\ninjunction that has become unwarranted in light of\nchanged circumstances is free to move to stay or modify\nthat injunction in whole or part, like any other party.\nSee, e.g., 2 Steven S. Gensler, Federal Rules of Civil\nProcedure, Rules and Commentary R. 65 Practice\nComment. (Feb. 2024 update); see also 29 C.F.R. 101.38\n(Board regulations providing for notification to courts\nwhen ALJ recommends dismissing complaint).\n 44\n CONCLUSION\n The judgment of the court of appeals should be af-\nfirmed.\n Respectfully submitted.\n ELIZABETH B. PRELOGAR\nJENNIFER A. ABRUZZO Solicitor General\n General Counsel EDWIN S. KNEEDLER\nPETER SUNG OHR Deputy Solicitor General\n Deputy General Counsel AUSTIN L. RAYNOR\nRICHARD BOCK Assistant to the Solicitor\n General\n Associate General Counsel\nRUTH E. BURDICK\nRICHARD J. LUSSIER\n Deputy Associate General\n Counsels\nDAVID HABENSTREIT\nROBERT N. ODDIS\n Assistant General Counsels\nLAURA T. VAZQUEZ\n Deputy Assistant General\n Counsel\nLAURIE MONAHAN DUGGAN\n Supervisory Attorney\n Respondent\nMARCH 2024", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of an injunction under NLRA § 10(j).", "governingLaw": "Apply United States federal labor law; Sixth Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal labor law; Sixth Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Starbucks Corp. v. McKinney", "citation": "602 U.S. 339 (2024)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/23pdf/23-367_f3b7.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The dispositive question is what standard section 10(j) prescribes. The statute authorizes a district court to 'grant to the Board such temporary relief or restraining order as it deems just and proper.' 29 U.S.C. § 160(j). The phrase 'just and proper' is classic equitable language—it means appropriate and equitable—and invokes the court's traditional equitable discretion. Nothing in the text clearly displaces the four-factor test for preliminary injunctions that has governed federal equity since the Republic's earliest days.\n\nThe respondent argues that statutory context—the NLRA's framework for administrative adjudication of unfair labor practices—should inform how courts apply equitable principles, permitting a more flexible, deferential inquiry. This argument has force as to how the factors are applied, but it cannot justify substituting an entirely different test that eliminates distinct factors. The two-part test replaces likelihood of success with 'reasonable cause'—a phrase Congress used in section 10(l) but pointedly omitted from section 10(j). That textual contrast is significant: Congress knew how to impose a reasonable-cause standard for mandatory injunctions under section 10(l), yet chose discretionary language for section 10(j). Reading 'reasonable cause' into section 10(j) despite its absence disregards the expressio unius canon and the textual difference between the two provisions.\n\nThe respondent's strongest argument is that the two-part test, properly understood, does incorporate the four factors—reasonable cause parallels likelihood of success, and 'just and proper' encompasses harm, equities, and public interest. But the record shows the test as applied does not. The district court deferred to the Board's version of disputed facts under a 'not frivolous' legal theory, never conducted an independent irreparable-harm analysis, and collapsed the equities and public interest into a presumption that effectuating NLRA policies favors relief. The NLRB's own Manual confirms the 'threshold of proof is low.' As Judge Readler recognized, 'had the [Board] been asked to satisfy the Winter standard, proceedings below would have been drastically different.' This is not harmless error—it goes to the core of what a movant must prove to obtain extraordinary equitable relief.\n\nThe respondent's historical evidence shows that courts have long considered the NLRA's statutory context in evaluating section 10(j) petitions. But that supports a contextual application of the four factors, not substitution of a different test. Even circuits using a four-factor formulation account for the Board's role; the respondent concedes the distinction is 'essentially terminological rather than substantive.' If that is so, applying the four-factor test explicitly—as the claimant urges—while remaining sensitive to the NLRA's framework preserves both the statutory text and the contextual considerations the respondent identifies. Nothing in the NLRA requires courts to abandon distinct equitable factors or to defer to the Board's preliminary factual and legal views in the way the two-part test permits.\n\nThe claimant met its burden of showing legal error: the courts below applied a standard not grounded in section 10(j)'s text, one that materially lowered the Board's burden and affected the outcome. The respondent bore the burden of justifying the two-part test's departure from traditional equitable principles and of showing the error was harmless; it met neither burden. Vacatur and remand is the appropriate remedy so the district court may apply the correct standard in the first instance. This is a declaratory disposition; no monetary relief is at issue.", "allocation": null, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-057", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nINTRODUCTION\n In Circuit City Stores, Inc. v. Adams, 532 U.S. 105\n(2001), the Court held that only certain transportation\nworkers are exempt from the Federal Arbitration Act\n(FAA) under 9 U.S.C. § 1. This case asks what kind of\ntransportation workers qualify for the § 1 exemption.\nThe answer lies in the FAA’s structure and “very par-\nticular” language. New Prime Inc. v. Oliveira, 139\nS. Ct. 532, 537 (2019). The plain meaning of the § 1\nexemption, consistent with the FAA’s proarbitration\npurposes, reaches only classes of workers that partic-\nipate directly in the cross-border transportation of\ngoods or people. That means actually moving goods or\npeople through the channels of foreign or interstate\ncommerce.\n As Circuit City makes clear, statutory structure\nmatters. Section 2, the heart of the FAA, compels\ncourts to enforce all arbitration agreements “involving\ncommerce.” 9 U.S.C. § 2. That “expansive” language\nreaches “to the full extent of [Congress’] commerce\npower.” Circuit City, 532 U.S. at 113-14. Section 1, in\ncontrast, slices a “narrow” exception from § 2’s broad\ncoverage. Id. at 118. It provides that the FAA “shall\n[not] apply to contracts of employment of seamen, rail-\nroad employees, or any other class of workers engaged\nin foreign or interstate commerce.” 9 U.S.C. § 1.\n This structure is intentional. For all workers, Con-\ngress wanted to end judicial hostility to arbitration\nagreements, place those agreements on equal footing\nwith other contracts, and promote arbitration over lit-\nigation. And for a narrow category of certain\ntransportation workers, Congress likely wanted not to\ndeter arbitration, but simply to apply specific dispute-\nresolution rules under other federal statutes.\n 2\n\n As that context confirms, § 1 has a narrow reach.\nIt says transportation workers must be “engaged in\nforeign or interstate commerce.” Id. When Congress\nenacted the FAA in 1925, that phrase meant (as it\ndoes today) “direct participation in ... the interstate\nflow of goods or services.” United States v. American\nBldg. Maint. Indus., 422 U.S. 271, 283-84 (1975). In\nthe transportation context, the phrase thus means di-\nrect participation in the transportation of goods or\npeople through the channels of commerce. Having a\nmere “connection” to such transportation, however\nclose, is not enough. Gulf Oil Corp. v. Copp Paving Co.,\n419 U.S. 186, 198 (1974). After all, such a “nexus”\nstandard “has no logical endpoint,” id., and the FAA\ndoes not tolerate “complexity and uncertainty,” Cir-\ncuit City, 532 U.S. at 123.\n Section 1 contains another textual clue: exempt\nworkers must be “engaged in foreign or interstate\ncommerce” in the same way that “seamen” and “rail-\nroad employees” are. Those enumerated workers\nserved on instrumentalities of commerce and passed\nthrough foreign and interstate channels, most of the\ntime across national or state borders. For example,\nwhen Congress passed the FAA, seamen excluded ste-\nvedores, land-based workers who loaded and unloaded\nvessels but transported nothing. That distinction mir-\nrors the “direct participation” requirement and shows\nwhy the “connection” standard fails.\n “[T]he FAA’s proarbitration purposes” confirm the\nplain meaning of § 1’s text. Circuit City, 532 U.S. at\n123. Given the broad scope of § 2, it would be nonsen-\nsical to ascribe to Congress an intention “to undo” that\nvery coverage, especially when § 1 uses terms with\n“limited reach.” Id. at 115, 122.\n 3\n\n Neither Respondent nor the ramp agents she supervises\nparticipate directly in transporting goods in foreign or\ninterstate commerce. She must arbitrate her claim.\n OPINIONS BELOW\n The Seventh Circuit’s opinion (Pet. App. 1a-21a)\nis reported at 993 F.3d 492. The district court’s order\n(Pet. App. 22a-43a) is unreported but available at\n2019 WL 4958247.\n JURISDICTION\n The Seventh Circuit entered judgment on March\n31, 2021. Claimant timely filed its petition for a writ\nof certiorari on August 27, 2021, and the Court\ngranted review on December 10, 2021. The Court has\njurisdiction under 28 U.S.C. § 1254(1).\n STATUTORY PROVISIONS INVOLVED\n Section 1 of the FAA, 9 U.S.C. § 1, provides:\n “Maritime transactions”, as herein de-\n fined, means charter parties, bills of lading of\n water carriers, agreements relating to wharf-\n age, supplies furnished vessels or repairs to\n vessels, collisions, or any other matters in for-\n eign commerce which, if the subject of\n controversy, would be embraced within admi-\n ralty jurisdiction; “commerce”, as herein\n defined, means commerce among the several\n States or with foreign nations, or in any Ter-\n ritory of the United States or in the District of\n Columbia, or between any such Territory and\n another, or between any such Territory and\n any State or foreign nation, or between the\n District of Columbia and any State or Terri-\n tory or foreign nation, but nothing herein\n contained shall apply to contracts of\n 4\n\n employment of seamen, railroad employees, or\n any other class of workers engaged in foreign\n or interstate commerce.\n Section 2 of the FAA, 9 U.S.C. § 2, provides:\n A written provision in any maritime\n transaction or a contract evidencing a trans-\n action involving commerce to settle by\n arbitration a controversy thereafter arising\n out of such contract or transaction, or the re-\n fusal to perform the whole or any part thereof,\n or an agreement in writing to submit to arbi-\n tration an existing controversy arising out of\n such a contract, transaction, or refusal, shall\n be valid, irrevocable, and enforceable, save\n upon such grounds as exist at law or in equity\n for the revocation of any contract.\n STATEMENT\n A. Legal background\n 1. The FAA promotes arbitration over litigation\nby instructing courts to honor arbitration agreements\njust like other contracts. Circuit City, 532 U.S. at 123;\nsee 9 U.S.C. § 2. Before the FAA, courts were hostile\nto arbitration agreements, refusing to enforce them\ndespite their contractual nature. See Allied-Bruce Ter-\nminix Cos. v. Dobson, 513 U.S. 265, 270 (1995); Circuit\nCity, 532 U.S. at 111. The FAA ended that practice. It\nput “arbitration agreements on an equal footing with\nother contracts,” “requir[ing] courts to enforce them\naccording to their terms.” Rent-A-Center, W., Inc. v.\nJackson, 561 U.S. 63, 67 (2010). Now, courts must\nhold parties that agree to arbitrate to their word. See\nEpic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018).\nThe FAA thus reflects Congress’ decision to promote\narbitration given its substantial benefits: “lower costs,\n 5\n\ngreater efficiency and speed, and the ability to choose\nexpert adjudicators to resolve specialized disputes.”\nAT&T Mobility LLC v. Concepcion, 563 U.S. 333, 348\n(2011) (citation omitted).\n The FAA’s coverage is sweeping. Indeed, it is an\n“exercise [of] Congress’ commerce power to the full.”\nAllied-Bruce, 513 U.S. at 277. Section 2 provides that\nevery arbitration agreement set forth in a “maritime\ntransaction or a contract evidencing a transaction in-\nvolving commerce ... shall be valid, irrevocable, and\nenforceable, save upon such grounds as exist at law or\nin equity for the revocation of any contract.” 9 U.S.C.\n§ 2. That expansive wording “compels judicial enforce-\nment of a wide range of written arbitration\nagreements,” including those found in employment\ncontracts. Circuit City, 532 U.S. at 111, 113-14.\n Section 1 slices a narrow exception. It states that\nthe FAA “shall [not] apply to contracts of employment\nof seamen, railroad employees, or any other class of\nworkers engaged in foreign or interstate commerce.” 9\nU.S.C. § 1. That language first identifies “seamen”\nand “railroad employees,” and then adds a general\nphrase, “any other class of workers engaged in foreign\nor interstate commerce.” Id. This general phrase is of-\nten called the residual clause. See Circuit City, 532\nU.S. at 114-15.\n 2. The Court has interpreted § 1 in two cases.\nCircuit City held that the § 1 exemption covers “only\ncontracts of employment of transportation workers.”\nId. at 119. Unlike § 2, which extends broadly to all\ncontracts “involving commerce,” the Court reasoned,\n§ 1 narrowly covers only workers “engaged in com-\nmerce”—a term of art with “limited reach.” Id. at 115-\n16. The ejusdem generis canon also supported “a\n 6\n\nnarrow construction.” Id. at 118. Because § 1 specifi-\ncally identifies “seamen” and “railroad employees,”\nthe residual clause must be interpreted narrowly to\nreach only similar kinds of workers—i.e., transporta-\ntion workers. Id. at 114-15.\n The FAA’s purpose confirmed the Court’s narrow\nreading. Although the phrase “engaged in commerce”\nmay not “necessarily have a uniform meaning when-\never used by Congress,” id. at 118 (citation omitted),\nthe statute’s driving proarbitration purposes provided\n“no reason” to adopt “an expansive construction ...\ngo[ing] beyond the meaning of the words Congress\nused.” Id. at 119. To the contrary, construing the re-\nsidual clause broadly would introduce “considerable\ncomplexity and uncertainty ... into the enforceability\nof arbitration agreements.” Id. at 123. Arbitration\nbenefits everyone, including the overloaded judiciary,\nthe Court stressed, and it “may be of particular im-\nportance in employment litigation.” Id. Construing § 1\nbroadly would “undermin[e] the FAA’s proarbitration\npurposes and ‘breed[] litigation from a statute that\nseeks to avoid it.’” Id. (quoting Allied-Bruce, 513 U.S.\nat 275).\n Finally, the Court rejected an argument that Con-\ngress had acted irrationally by enacting a narrow\nexemption. The Court inferred that Congress might\nhave wished not “to unsettle established or developing\nstatutory dispute resolution schemes covering specific\nworkers.” Id. at 121. For example, federal laws en-\nacted before the FAA provided specific arbitration\nrules for seamen and railroad employees, and Con-\ngress wanted to ensure that those provisions would\napply. Id.\n 7\n\n The Court next addressed the § 1 exemption in\nNew Prime, holding that “contracts of employment”\nmeans all “agreements to perform work,” including\ncontracts with independent contractors. 139 S. Ct. at\n543-44. Because “contracts of employment” was not “a\nterm of art bearing some specialized meaning” in\n1925, the Court looked to common usage, statutes,\nand decisions to construe the phrase. Id. at 539-40.\nThose authorities proved that § 1 covers “work agree-\nments involving independent contractors.” Id. at 540.\nThey also confirmed that “seamen” and “railroad em-\nployees” likely included independent contractors too.\nId. at 542-43. Given the plain meaning of “contracts of\nemployment,” the Court had no reason to consider the\n“liberal federal policy favoring arbitration agree-\nments.” See id. at 543 (citation omitted).\n Like Circuit City, New Prime commented on what\n“seem[ed]” to be Congress’ goal in enacting § 1’s “very\nparticular qualification.” Id. at 537. The point was not\nto exempt all transportation workers from arbitration.\nInstead, Congress might have wanted to favor the “al-\nternative employment dispute resolution regimes” it\nhad created for certain transportation workers over\n“whatever arbitration procedures the parties’ private\ncontracts might happen to contemplate.” Id.\n B. Factual background\n This case arises from Respondent Latrice Respondent’s\nwork as a ramp-agent supervisor for Claimant. Pet.\nApp. 2a. Respondent supervised, trained, and assisted ramp\nagents—workers who load and unload passenger lug-\ngage onto and off of planes. Pet. App. 3a. Although\nRespondent occasionally assisted ramp agents in the load-\ning and unloading process, neither she nor the ramp\nagents transported any cargo. Pet. App. 36a.\n 8\n\nMoreover, both ramp-agent supervisors and ramp\nagents work only at the airport where they are based.\nSee Pet. App. 9a-10a, 23a-25a. Respondent worked solely at\nChicago Midway International Airport. Pet. App. 3a.\n Claimant’s ramp agents are unionized and their\nemployment is governed by a collective-bargaining\nagreement (CBA). Id. They therefore are subject to\n“mandatory” arbitration of certain disputes under the\nRailway Labor Act (RLA). Hawaiian Airlines, Inc. v.\nNorris, 512 U.S. 246, 248 (1994) (citation omitted); see\nalso 45 U.S.C. §§ 151-165, 181-188. Claimant’s ramp-\nagent supervisors, in contrast, are not unionized and\nso are not covered by a CBA. Pet. App. 3a. Instead,\nlike her fellow ramp-agent supervisors, Respondent signed\nan employment contract that includes an agreement\nto individually arbitrate wage disputes. Id.\n C. Procedural background\n 1. Despite her agreement to arbitrate, Respondent\nbrought a putative collective action against Claimant\nin federal district court, seeking overtime pay under\nthe Fair Labor Standards Act for herself and a nation-\nwide group of ramp-agent supervisors. Pet. App. 3a.\nClaimant sought to enforce the arbitration agree-\nment. Id. Respondent conceded that her contract fell within\nthe scope of § 2. See Pet. App. 26a. But she argued that\n§ 1 exempted her because ramp-agent supervisors are\na “class of workers engaged in foreign or interstate\ncommerce.” Pet. App. 3a.\n 2. The district court ruled that Respondent’s dispute\n“must be arbitrated” because § 1 does not cover ramp-\nagent supervisors. Pet. App. 42a. The court reasoned\nthat “the linchpin for classification as a ‘transporta-\ntion worker’ under Circuit City is actual\ntransportation, not merely handling goods.” Pet. App.\n 9\n\n37a. Respondent thus needed to belong to a class of workers\nthat does more than “merely handle” goods or people\n“at one end” of the interstate journey. Pet. App. 37a-\n38a. Respondent failed that test, because her “job duties at\nmost include[d] loading and unloading some cargo\nfrom [Claimant’s] planes, along with supervising\nthat task.” Id. She did “not transport cargo at all (even\nintrastate).” Pet. App. 39a.\n 3. a. The Seventh Circuit reversed. The court\nheld that cargo loaders are “engaged in commerce for\npurposes of § 1,” Pet. App. 12a, because they are “so\nclosely related to interstate transportation as to be\npractically a part of it,” Pet. App. 10a (citation omit-\nted). Although the court acknowledged that loading\ncargo is not the same as transporting it in foreign or\ninterstate commerce, it thought that such “closely re-\nlated work is interstate transportation.” Pet. App.\n19a. Thus, in the court’s view, workers who do not ac-\ntually transport goods or people and who do not cross\nnational or state borders (like Respondent) can still qualify\nas “transportation workers” exempt from arbitration\nunder the FAA. Pet. App. 10a.\n b. Until this case, the Seventh Circuit required\n“transportation workers” to “be connected not simply\nto the goods, but to the act of moving those goods\nacross state or national borders.” Wallace v. Grubhub\nHoldings, Inc., 970 F.3d 798, 802 (7th Cir. 2020)\n(Barrett, J.). Then-Judge Barrett underscored that\n“the inquiry is always focused on the worker’s active\nengagement in the enterprise of moving goods across\ninterstate lines,” as “Circuit City demands.” Id. With-\nout that transportation requirement, she explained,\nthe statute “would sweep in numerous categories of\nworkers whose occupations have nothing to do with\ninterstate transport—for example, dry cleaners who\n 10\n\ndeliver pressed shirts manufactured in Taiwan and\nice cream truck drivers selling treats made with milk\nfrom an out-of-state dairy.” Id. Circuit City forecloses\nthat result, then-Judge Barrett stressed, by requiring\n“a narrow construction” limiting the residual clause’s\nscope to the kind of “work done by seamen and\nrailroad workers.” Id. (citing Circuit City, 532 U.S. at\n106, 118).\n By departing from those principles here, the Sev-\nenth Circuit split from other circuits. No other court\nof appeals has held that workers who merely load\ngoods onto instrumentalities of foreign or interstate\ncommerce are “transportation workers” exempt from\narbitration under the FAA.\n Drawing a clear and administrable line, the Fifth\nand Eleventh Circuits both hold that “transportation\nworkers” include only those who actually transport\ngoods or passengers across national or state borders.\nSee Hamrick v. Partsfleet, LLC, 1 F.4th 1337, 1344-51\n(11th Cir. 2021); Eastus v. ISS Facility Servs., Inc.,\n960 F.3d 207, 209-12 (5th Cir. 2020). The First and\nNinth Circuits also require actual transportation, but\nthey stretch the exemption to reach wholly intrastate\nmovement. See Waithaka v. Amazon.com, Inc., 966\nF.3d 10, 17-26 (1st Cir. 2020); Rittmann v. Ama-\nzon.com, Inc., 971 F.3d 904, 909-19 (9th Cir. 2020).\nBut Judge Bress dissented in Rittmann, agreeing with\nthen-Judge Barrett that § 1 covers only “a ‘class of\nworkers’ that crosses state lines in the course of mak-\ning deliveries.” 971 F.3d at 921 (Bress, J., dissenting);\nsee id. at 926, 928. Only that interpretation, he ex-\nplained, adheres to Circuit City’s instruction to give\nthe exemption “a narrow construction” and a “precise\nreading.” Id. at 922 (citation omitted). Judge Bress\nalso warned of the “significant problems of workability\n 11\n\nand fairness” from the Ninth Circuit majority’s\nbroader approach. Id. at 930.\n SUMMARY OF ARGUMENT\n I. Section 1 of the FAA exempts workers that,\nunlike ramp-agent supervisors, participate directly in\nthe cross-border transportation of goods or people.\nRespondent does not belong to such a class. She therefore\nmust arbitrate her claim.\n A. The FAA’s text, context, and proarbitration\npurposes show that the “narrow” and “very particular”\n§ 1 exemption is reserved only for classes of workers\nthat participate directly in the transportation of goods\nor people through the channels of foreign or interstate\ncommerce, a key feature of that work being crossing\nnational or state borders. Workers who merely load\nand unload instrumentalities of commerce with cargo\nbut do not transport that cargo anywhere do not sat-\nisfy the § 1 exemption.\n 1. The FAA’s structure sets the stage. Section 2\nhas an “expansive” scope encompassing all contracts\n“involving commerce”—the outer limits of Congress’\ncommerce power. Circuit City, 532 U.S. at 112-15. Sec-\ntion 1, by contrast, has a “limited reach,” carving out\nonly contracts of classes of workers “engaged in for-\neign or interstate commerce.” Id. at 115. Congress’\ndisparate use of language to limit the § 1 carveout\nserves proarbitration purposes. The statute places ar-\nbitration agreements on an equal footing with other\ncontracts and requires courts to hold parties that\nagree to arbitrate to their word. Construing § 1\nbroadly would undo those important policy choices.\n 2. The residual clause’s key phrase, “engaged in\nforeign or interstate commerce,” is a term of art with\nlimited reach. Its ordinary meaning is direct\n 12\n\nparticipation in the cross-border transportation of\ngoods or people. That means actually moving goods or\npeople through the channels of foreign or interstate\ncommerce. Common usage confirms that loading and\nunloading bags is not transportation.\n Precedent aligns with this commonsense under-\nstanding. Interpreting statutes enacted around the\nsame time as the FAA, the Court has consistently held\nthat the phrase “engaged in commerce” means “direct\nparticipation in ... the interstate flow of goods or ser-\nvices.” American Bldg. Maint. Indus., 422 U.S. at 283-\n84. The Court has refused to read the phrase to loop\nin activities having only a close “connection” to “the\nflow of commerce,” because such a standard “has no\nlogical endpoint.” Gulf Oil, 419 U.S. at 198.\n Crossing borders is an essential and defining part\nof foreign and interstate transportation. It was a com-\nmonplace activity for the “seamen” and “railroad\nemployees” enumerated in § 1. And by choosing to\nspecify “foreign or interstate commerce” rather than\njust “commerce,” as it did in § 2, Congress indicated\nthe importance of border crossing. Indeed, before Con-\ngress enacted the FAA, the Court consistently\ndistinguished “interstate” transportation from trans-\nportation “wholly within a state.” Section 1 reflects\nthat understanding.\n 3. The enumerated workers in § 1—“seamen”\nand “railroad employees”— share a common attribute\nthat confirms the residual clause’s plain meaning.\nBoth categories of workers participated directly in the\ncross-border transportation of goods or people. Sea-\nmen worked on vessels mostly during international\nvoyages, and railroad employees worked on trains\nmainly during interstate trips. That service often took\n 13\n\nboth kinds of workers across borders, too. Contrast\nthat work with the duties of stevedores, who loaded\nand unloaded cargo from vessels, didn’t transport an-\nything, and thus were not “seamen.” Indeed,\nstevedores were not “seamen” for the very reason\nRespondent is not exempt from the FAA: they did not\ntransport the cargo they handled on the vessels they\nloaded. And they certainly didn’t do so while crossing\nborders.\n B. Tying everything together is Congress’ desire\nto promote arbitration and avoid litigation. There is\nno textually sound reason for interpreting § 1 broadly\nand every reason for reading the provision narrowly.\n C. Respondent is a member of a class of workers super-\nvising other workers who merely load and unload\nplanes. Neither supervisors like Respondent nor the ramp\nagents themselves participate directly in transporting\ngoods or people across borders. Indeed, they transport\nnothing at all, just like the stevedores—and especially\nlike supervisors of stevedores—that Congress know-\ningly left out by specifying only “seamen” in § 1. They\nthus fail the “engaged in foreign or interstate com-\nmerce” requirement. Respondent must arbitrate her claim.\n II. The court of appeals’ reasoning and Respondent’s\narguments for construing § 1 broadly lack merit.\n A. Although there is no textual hook for inter-\npreting “engaged in foreign or interstate commerce”\nbroadly, the court of appeals did so anyway by relying\non the Federal Employers’ Liability Act (FELA), a re-\nmedial statute using different language and serving a\ndifferent purpose. For example, given FELA’s reme-\ndial purpose, the Court interpreted it to reach workers\nwith a “close connection” to interstate commerce. But\nthat broad interpretation was based on what the\n 14\n\nCourt thought Congress wanted for FELA. Of course,\nthe FAA must be interpreted “consistent with the\nFAA’s purpose.” Circuit City, 532 U.S. at 118 (empha-\nsis added). And the FAA’s overriding purpose is\npromoting arbitration, subject only to the narrow § 1\nexemption.\n B. Circuit City also warned against interpreting\n“engaged in foreign or interstate commerce” using old\nCommerce Clause cases. See id. at 116-18. But the\ncourt of appeals did that, too. What’s worse, it relied\non cases that were wrongly decided. For example, the\ncourt cited decisions erroneously giving stevedores\n“seamen” status even though both Congress and this\nCourt have since corrected that misunderstanding.\n C. Speculation that Congress intended to give § 1\na broad reach undermines the plain meaning of the\nstatute and attributes illogical motives to Congress.\nRespondent may argue that Congress wanted § 1 to remove\nall transportation workers from the FAA’s broad\nreach so that Congress could choose to create special-\nized grievance procedures for them instead. But that\nguesswork finds no support in the statute, makes lit-\ntle sense given that Congress could always enact new\nlaws overriding the FAA, and ascribes to Congress an\nillogical intention to use a term of art with limited\nreach to create a gaping hole in the FAA’s otherwise-\nexpansive coverage.\n ARGUMENT\nI. Section 1 of the FAA exempts classes of\n workers that participate directly in the\n cross-border transportation of goods or\n people, unlike ramp-agent supervisors.\n Section 1 of the FAA is very particular. It exempts\nonly classes of workers that participate directly in the\n 15\n\ntransportation of goods or people through the chan-\nnels of foreign or interstate commerce, work that\nregularly takes them across borders. Ramp-agent su-\npervisors, like Respondent, transport nothing and cross no\nborders. Respondent therefore is not exempt from the FAA\nand must arbitrate her claim.\n A. Section 1 covers classes of workers that\n participate directly in the transportation\n of goods or people through the channels\n of foreign or interstate commerce.\n Text and context alike give § 1 a narrow meaning.\nWhile Congress used broad language in § 2 to extend\nexpansive coverage, it limited § 1 by choosing precise\nlanguage. The phrase “engaged in foreign or inter-\nstate commerce,” in the transportation context, refers\nto moving goods or people through foreign or inter-\nstate channels. Such work necessarily requires\ncrossing borders regularly. And the words “seamen”\nand “railroad employees” confirm that the relevant at-\ntribute of workers covered by § 1 is direct involvement\nin transporting goods or people in foreign or interstate\ncommerce. Seamen and railroad employees perform\njust such tasks, with seamen more likely to cross na-\ntional borders and railroad employees likely to cross\nstate borders.\n 1. Congress used “very particular”\n language in § 1 to exempt “narrow”\n categories of transportation workers\n from § 2’s “expansive” coverage.\n The first clue that the § 1 exemption must be con-\nstrued narrowly is its relationship to § 2’s broad\ncoverage. As Circuit City explained, § 2 is “expansive,”\nusing “the words ‘involving commerce’ ... to regulate\nto the full extent of [Congress’] commerce power.” 532\n 16\n\nU.S. at 113-14. But in § 1, Congress used the disparate\nphrase “engaged in foreign or interstate commerce”\nright “after specific categories of workers.” Id. at 118.\nAnd it put “foreign or interstate” before “commerce”\neven though § 1 already defined “commerce” as such\nin § 1. Courts must presume that “when Congress in-\ncludes particular language in one section of a statute\nbut omits it in another section of the same Act,” it\n“acts intentionally.” Collins v. Yellen, 141 S. Ct. 1761,\n1782 (2021) (citation omitted). Circuit City rejected a\nbroad reading of § 1 for that very reason: “it would\nmake the § 1 exclusion provision superfluous.” 532\nU.S. at 113. Instead, the Court explained, “engaged in\nforeign or interstate commerce” is a term of art with\n“limited reach.” Id. at 115-16. That interpretation co-\nhered with Congress’ “explicit reference to ‘seamen’\nand ‘railroad employees.’” Id. at 114.\n As explained below, Congress designed the FAA\nthis way to serve proarbitration purposes. Congress\nsought to eradicate the “hostility of American courts\nto the enforcement of arbitration agreements,” id. at\n111, by putting such agreements “on an equal footing\nwith other contracts,” Rent-A-Center, 561 U.S. at 67.\nCompelling “judicial enforcement of a wide range of\nwritten arbitration agreements” serves that purpose.\nCircuit City, 532 U.S. at 111. A broad exemption does\nnot, especially if the most that one can infer is that\nCongress sought to promote alternative arbitration\nprocedures. See infra pp. 30-33.\n 2. Being “engaged in foreign or\n interstate commerce” means moving\n goods or people across borders.\n Circuit City held that § 1’s residual clause covers\ntransportation workers only. This case asks what kind\n 17\n\nof transportation workers the clause reaches. The\nstatute’s text provides the answer: transportation\n“workers engaged in foreign or interstate commerce.”\nWhen the FAA was enacted in 1925, and no less so\nthan today, that meant only those workers directly\nparticipating in the transportation of goods or people\nthrough the channels of foreign or interstate com-\nmerce, a key feature of which was border crossing.\n a. Take common usage. In the early twentieth\ncentury, “engaged” meant “occupied” or “employed.”\nWebster’s New International Dictionary 725 (1st ed.\n1909). “Interstate commerce” meant “[t]raffic, inter-\ncourse, commercial trading, or the transportation of\npersons or property between or among the several\nstates of the Union, or from or between points in one\nstate and points in another state.” Black’s Law Dic-\ntionary 651 (2d ed. 1910). Put the terms together, and\n“engaged in interstate commerce” meant employment\nin transporting goods or people from state to state.\n Of course, “transportation” did not (and does not)\nmean moving something a short distance—say, from\nthe tarmac onto a plane. No English speaker would\nsay that moving something, at most, a few hundred\nfeet is “transporting” it. To borrow from an early edi-\ntion of Black’s, “transportation” means “[t]he removal\nof goods or persons from one place to another, by a car-\nrier.” Id. at 1168. Thus, for example, “[i]t would be a\nperversion of language ... to say that a man was en-\ngaged in the transportation of water whenever he\npumped a pail of water from his well to his house.”\nPipe Line Cases, 234 U.S. 548, 562 (1914).\n b. Consistent with this commonsense under-\nstanding, the Court’s precedent in 1925 likewise\ndefined “engaged in interstate commerce” to mean\n 18\n\n“direct participation in ... the interstate flow of goods\nor services.” American Bldg. Maint., 422 U.S. at 283-\n84. The phrase did not include activities only “percep-\ntibly connected to ... instrumentalities” of foreign or\ninterstate commerce. Gulf Oil, 419 U.S. at 198. As Cir-\ncuit City put it, the phrase’s “plain meaning” had a\n“limited reach.” 532 U.S. at 115, 118.\n Consider Gulf Oil, on which Circuit City relied\nand which the court of appeals here ignored. See 532\nU.S. at 117-18. There, this Court held that “engaged\nin commerce” under two antitrust statutes, the Clay-\nton Act and Robinson-Patman Act, meant “persons or\nactivities within the flow of interstate commerce,”\nGulf Oil, 419 U.S. at 195, not people or activities with\nmerely a close “connection” to “the flow of commerce,”\nid. at 198. Both statutes defined “commerce” the same\nway the FAA does, as Circuit City made clear. See 532\nU.S. at 117-18. And under that plain meaning, Gulf\nOil held, “a firm engaged in entirely intrastate sales\nof asphaltic concrete” was not “engaged in commerce”\neven though it sold the concrete for use in interstate\nhighways. 419 U.S. at 188, 196. To be sure, those sales\nmight have been “perceptibly connected” to interstate\ncommerce. Id. at 198. But if just a “‘nexus’ to com-\nmerce” were sufficient, “[t]he universe of arguably\nincluded activities would be broad and its limits neb-\nulous in the extreme” because “[t]he chain of\nconnection has no logical endpoint.” Id.\n American Building Maintenance, on which Circuit\nCity also relied and which the court of appeals like-\nwise ignored, reaffirmed the narrow reach of “engaged\nin commerce” under the Clayton Act. 422 U.S. at 283-\n84. This Court held that janitorial companies were not\n“engaged in the flow of interstate commerce” because\nthey “did not participate directly in the sale, purchase,\n 19\n\nor distribution of goods or services in interstate com-\nmerce.” Id. at 285. It made no difference that the\ncompanies served “enterprises which were themselves\nclearly engaged in” such commerce. Id. at 283. The\nCourt again rejected a “connection” standard; instead,\nit required that each person or entity “must itself” di-\nrectly participate in the “flow of interstate commerce.”\nId. at 283-84.\n Gulf Oil and American Building Maintenance\ndidn’t break new ground. Earlier precedent rejected a\nmere “connection” test in favor of analyzing whether\nthe worker actually transported or sold the goods trav-\neling in interstate commerce. In Hopkins v. United\nStates, 171 U.S. 578, 587-88 (1898), for example, the\nCourt held that salesmen selling cattle imported from\nout of state were not “engaged in ... interstate com-\nmerce” under the Sherman Act. The Court analyzed\nwhat the salesmen did and where they did it, noting\nthat they neither “purchase[d] the cattle themselves”\nnor “transport[ed] them,” but instead only “receive[d]\nthem at Kansas City,” where the sales eventually oc-\ncurred. Id. at 590. While the salesmen certainly were\n“connected with” the cattle, which were “articles of in-\nterstate commerce,” that was not enough “to make\n[their services] a portion of interstate commerce.” Id.\nat 590-91.\n c. Applying this direct-participation require-\nment to § 1 of the FAA is straightforward. The\nresidual clause exempts only classes of workers that\n“participate directly” in the foreign or interstate\ntransportation of goods or people. American Bldg.\nMaint., 422 U.S. at 285. That means actually moving\ngoods or people across borders through the channels\nof commerce. That’s because this Court’s precedents\nrequire direct participation in the flow of commerce.\n 20\n\nAnd § 1’s reference to “seamen” and “railroad employ-\nees,” as Circuit City instructs, restricts the inquiry to\ntransportation (rather than, for instance, cross-border\nsales). So while § 2 requires only a “sufficient nexus”\nto commerce, Citizens Bank v. Alafabco, Inc., 539 U.S.\n52, 53 (2003) (per curiam), § 1 requires direct partici-\npation in transporting goods or people through\ncommerce. Anything less is only “an aid or facility” to\ntransportation, not interstate transportation itself,\nHopkins, 171 U.S. at 587, and so does not satisfy the\nFAA’s “engaged in” requirement, 9 U.S.C. § 1.\n Then-Judge Barrett reached the same conclusion:\n“transportation workers are those who are actually\nengaged in the movement of goods in interstate com-\nmerce.” Wallace, 970 F.3d at 801 (quotation marks\nand citation omitted). Section 1 doesn’t reach workers\nwho merely are “connected” to goods traveling “across\nstate or national borders.” Id. at 802. Workers must\nbe “actively engaged in the movement of goods across\ninterstate lines” to fall within the exemption. Id.\n d. Border crossing is an important part of foreign\nor interstate transportation. Railroad employees and\nparticularly seamen regularly crossed borders. In fact,\nthe Shipping Commissioners Act of 1872 reached only\nseamen who sailed internationally or from Atlantic\nports to Pacific ports, or vice versa. See 17 Stat. 262,\n264, § 12; see also infra pp. 24-26. And before Con-\ngress enacted the FAA, the Court consistently\ndistinguished “interstate transportation” from trans-\nportation “wholly within a state.” New York ex rel. Pa.\nR.R. v. Knight, 192 U.S. 21, 27 (1904); see also St.\nLouis-San Francisco Ry. v. Public Serv. Comm’n of\nMo., 261 U.S. 369, 371 (1923); Osborne v. Florida, 164\nU.S. 650, 655 (1897); Gladson v. Minnesota, 166 U.S.\n427, 431-32 (1897).\n 21\n\n In Knight, for example, the Court held that a cab\nservice bringing passengers to and from a ferry and\noperating entirely within New York City was not “en-\ngaged in interstate transportation” even though the\nferry carried passengers across state lines. 192 U.S. at\n27-28. Consistent with Hopkins, Gulf Oil, and Ameri-\ncan Building Maintenance, the Court focused on the\n“character of the service” rather than “the action of the\npassenger.” Id. at 25. Because “the cab service [was]\nrendered wholly within the state,” the Court held that\nit did not directly participate in interstate transporta-\ntion, even though, from the passenger’s “standpoint,\nthe company’s cab service [was] simply one element in\na continuous interstate transportation.” Id. at 26-27.\n Like Gulf Oil, Knight rejected a “close relation to\ninterstate commerce” standard. Id. at 28. “[M]any\nthings have more or less close relation to interstate\ncommerce which are not properly to be regarded as a\npart of it,” the Court explained. Id. If the cab service\nwere “engaged in interstate transportation,” the Court\nasked, then what about the porter who carries the lug-\ngage or the driver of the carriage or even the supplier\nof hay for the horses? Id. Unable to say where “the\nlimit [would] be placed,” the Court held that the cab\nservice operating “wholly within a state” was not en-\ngaged in interstate transportation. Id. at 27-28.\n 3. The typical activities of seamen and\n railroad employees likewise show\n that “workers engaged in foreign or\n interstate commerce” participate\n directly in the foreign or interstate\n transportation of goods or people.\n Another key feature of § 1 confirms that “engaged\nin foreign or interstate commerce” means direct\n 22\n\nparticipation in cross-border transportation. Circuit\nCity explained that “the residual clause should be\nread to give effect to the terms ‘seamen’ and ‘railroad\nemployees’” under the ejusdem generis principle. 532\nU.S. at 115. Thus, as then-Judge Barrett put it, “the\nscope of the residual clause” is confined to “work anal-\nogous to that of seamen and railroad employees.”\nWallace, 970 F.3d at 802. And “‘seamen’ and ‘railroad\nemployees’ traditionally operate across international\nand state boundaries (with a seaman more prone to\nforeign commerce and a railroad employee more likely\nto be engaged in interstate commerce, a parallelism\nthat is in fact reflected in the text of § 1).” Rittmann,\n971 F.3d at 927-28 (Bress, J., dissenting).\n a. The ejusdem generis canon tells courts to con-\nstrue general words following a list of specific words\nto include only persons or things that are “similar in\nnature” to the enumerated categories. Circuit City,\n532 U.S. at 114-15 (citation omitted); see also A. Scalia\n& B. Garner, Reading Law 199-213 (2012). Courts\nfirst identify the “common attribute” connecting the\nspecific words, Ali v. Federal Bureau of Prisons, 552\nU.S. 214, 224-26 (2008), considering the specific\nwords’ meaning, e.g., Washington State Dep’t of Soc. &\nHealth Servs. v. Guardianship Est. of Keffeler, 537\nU.S. 371, 383 (2003), and the statutory context, e.g.,\nNorton v. Southern Utah Wilderness All., 542 U.S. 55,\n62-63 (2004). The general phrase, in turn, “is confined\nto covering subjects comparable to the specifics it fol-\nlows,” Hall St. Assocs. v. Mattel, Inc., 552 U.S. 576,\n586 (2008), “to ensure that [the] general word[s] will\nnot render [the] specific words meaningless,” CSX\nTransp., Inc. v. Alabama Dep’t of Revenue, 562 U.S.\n277, 295 (2011).\n 23\n\n Although an important guide to meaning, ejusdem\ngeneris does not require a perfect fit. The goal is to\n“[c]onsider the listed elements, as well as the broad\nterm at the end, and ask what category would come\ninto the reasonable person’s mind.” Reading Law 208.\nWhatever the common attribute of the specific terms,\nthe general phrase “must be similarly limited.” Ali,\n552 U.S. at 224. If the general clause instead covered\nall the enumerated categories, “Congress would have\nhad no reason” for the enumeration in the first place.\nYates v. United States, 574 U.S. 528, 546 (2015) (plu-\nrality); see id. at 551 (Alito, J., concurring in the\njudgment); see also Circuit City, 532 U.S. at 114. Still,\nthe general phrase must reach something “that would\nnot also fall within one of the specifically enumerated\ncategories,” or else it serves no purpose. Christopher\nv. SmithKline Beecham Corp., 567 U.S. 142, 163\n(2012). And the principle applies even if not every ex-\nample of an enumerated category would fit the\ncommon attribute. Thus, for example, a statute mak-\ning it “unlawful to bring any ‘knives, daggers, swords,\nor any other similar object onto an airplane,’” would\nsurely cover a dull knife even though the general\nphrase would encompass only things that are “tradi-\ntionally sharp.” Rittmann, 971 F.3d at 928 (Bress, J.,\ndissenting).\n b. Applying ejusdem generis here confirms that\n§ 1’s residual clause is limited to workers directly in-\nvolved in cross-border transportation. Seamen fit the\nbill perfectly. And although Respondent may contend that\n“railroad employees” bears a broader meaning when\nread in isolation, the term keeps company with the\nvery circumscribed term “seamen,” and the terms’\ncommon attribute remains cross-border transporta-\ntion. Broader understandings in other contexts don’t\n 24\n\nshow otherwise. This reading also gives the residual\nclause separate force, because many non-seamen and\nnon–railroad employees still would be covered by § 1,\nlike classes of pilots and interstate truck drivers.\n Seamen. When Congress enacted the FAA in\n1925, “seamen” was a “term of art” limited to workers\nwho rode the waves transporting goods or people.\nStewart v. Dutra Constr. Co., 543 U.S. 481, 487 (2005).\nA “seaman” was a “sea-based maritime employee,”\nMcDermott Int’l, Inc. v. Wilander, 498 U.S. 337, 348\n(1991), whose status turned on being a member of a\nvessel and their “relationship as such to the vessel and\nits operation in navigable waters,” Chandris, Inc. v.\nLatsis, 515 U.S. 347, 359-60 (1995). Seaman status\nthus was limited to individuals who spent a signifi-\ncant “portion of their time ... at sea.” Id. at 364.\n Congress adopted that understanding in two stat-\nutes enacted before the FAA. First, the Shipping\nCommissioners Act defined “seaman” as “every person\n(apprentices excepted) who shall be employed or en-\ngaged to serve in any capacity on board [a vessel].” 17\nStat. at 277, § 65. And the act elsewhere made clear\nthat a “seaman” was directly connected to the vessel’s\ninternational or interstate voyage. See, e.g., 17 Stat.\nat 264, 273, §§ 12, 51. Most instructive was the re-\nquirement that the “master of every ship bound from\na port in the United States to any foreign port, or of\nany ship ... bound from a port on the Atlantic to a port\non the Pacific, or vice versa, shall, before he proceeds\non such voyage, make an agreement, in writing or in\nprint, with every seaman whom he carries to sea as\none of the crew.” 17 Stat. at 264, § 12.\n Second, § 33 of the Merchant Marine Act of 1920,\nalso called the Jones Act, see Bainbridge v. Merchants’\n 25\n\n& Miners’ Transp. Co., 287 U.S. 278, 279 (1932),\nadopted the definition of “a seaman under the general\nmaritime law” at the time, Wilander, 498 U.S. at 342.\nThat definition, as noted, was limited to workers who\nplied the waves—workers “employed on board a vessel\nin furtherance of its purpose.” Id. at 346.\n But “seamen [did] not include land-based work-\ners.” Id. at 348 (emphasis added). And the prime\nexample of a land-based worker in the early twentieth\ncentury was a “stevedore,” “[a] person employed in\nloading and unloading vessels.” Black’s Law Diction-\nary 1110 (2d ed. 1910); see also Wilander, 498 U.S. at\n346-47. (Today the term is “longshoreman,” see Black’s\nLaw Dictionary 1130 (11th ed. 2019), since a “steve-\ndore” is now the “person or company that hires\nlongshore and harbor workers to load and unload\nships,” see id. at 1711.) The main reason stevedores\nwere not considered seamen is because their relation\nto vessels’ voyages was insubstantial. As this Court\nhas put it, “[t]he duration of a worker’s connection to\na vessel and the nature of the worker’s activi-\nties, taken together, determine whether a maritime\nemployee is a seaman because the ultimate inquiry is\nwhether the worker in question is a member of the\nvessel’s crew or simply a land-based employee who\nhappens to be working on the vessel at a given time.”\nChandris, 515 U.S. at 370. Merely loading and unload-\ning a vessel’s cargo was insufficient for seaman status.\n Respondent suggested below that, in 1925, stevedores\nwere seamen. But the Shipping Commissioners Act\nplus Chandris and Wilander prove just the opposite.\nSee also infra pp. 42-44. The court of appeals, in turn,\nreasoned that stevedores are not seamen solely be-\ncause they, as land-based workers, are not exposed to\n“hazards ... on the open seas.” Pet. App. 14a. But\n 26\n\nthat’s not the test either. Chandris rejects that very\nreasoning: “[s]eaman status is not coextensive with\nseamen’s risks.” 515 U.S. at 361. When Congress en-\nacted the FAA in 1925, primarily working on a vessel\nduring an international or interstate voyage was “the\nessence of what it mean[t] to be a seaman.” Id. at 369.\n Railroad employees. The term “railroad employ-\nees” is somewhat ambiguous. Competing definitions\nranged from “anyone engaged in the customary work\ndirectly contributory to the operation of the railroads,”\nNew Prime, 139 S. Ct. at 543 (quotation marks and ci-\ntation omitted)—i.e., all employees of a railroad—to\n“persons actually engaged in or connected with the\nmovement of any train,” Hours of Service Act, 34 Stat.\n1415, 1416, § 1 (1907); see also Boiler Inspection Act,\n36 Stat. 913, 913 § 1 (1911). But the juxtaposition of\n“railroad employees” with “seaman,” the narrowing\n“engaged in foreign or interstate commerce” language\ndiscussed above, and the statutory purpose discussed\nbelow all show that Congress meant the narrower\nsense in § 1 of the FAA.\n Just as seamen traveled from port to port, railroad\nemployees covered by the Hours of Service Act trav-\neled from state to state. Take the “conductor and two\nbrakemen” who “customarily” worked on a train that\ntraveled from California to Arizona. Atchison, Topeka\n& Santa Fe Ry. v. United States, 244 U.S. 336, 338\n(1917). Or the flagman who “work[ed] on an interstate\ncommerce freight train” traveling from Missouri to Il-\nlinois. St. Louis, Iron Mountain & S. Ry. v. McWhirter,\n229 U.S. 265, 266-67 (1913). But “railroad employees”\nexcluded individuals who, although employed by the\nrailroad, did not directly participate in “the transpor-\ntation of passengers or property by railroad.”\nBaltimore & Ohio R.R. v. Interstate Com. Comm’n, 221\n 27\n\nU.S. 612, 617 (1911) (emphasis added). Thus, for ex-\nample, the term did not cover workers tasked with\n“the breaking up and making up of trains, the prompt\nmovement of cars, and general charge of the [rail]\nyard.” Atchison, Topeka & Santa Fe Ry. v. United\nStates, 269 U.S. 266, 268 (1925).\n This narrower understanding of railroad employ-\nees, requiring direct engagement in transportation,\nmakes the most sense under § 1 of the FAA. Although\n“railroad employees,” read alone, can “be given a wide\nmeaning,” the term’s statutory “surroundings” pro-\nvide important “color.” United States v. American\nTrucking Ass’ns, 310 U.S. 534, 544-45 (1940); see also\nid. at 545 n.29. Given everything we know about the\nFAA, see Circuit City, 532 U.S. at 118-19, 122-23, and\nthe lack of a textual hook to the contrary, the Court\nshould not give “railroad employees” an “unintended\nbreadth” that would be “inconsistent with its accom-\npanying words.” Gustafson v. Alloyd Co., 513 U.S. 561,\n575 (1995) (citation omitted).\n The § 1 exemption focuses on what workers do—\nwhether the “class of workers [is] engaged in foreign\nor interstate commerce”—rather than what kind of\nbusiness the employer operates. The inquiry for rail-\nroad-employee status likewise should focus on the\nemployee’s activities, not on whether the employer is\na railroad. And the test for those duties, consistent\nwith the residual clause, should be whether workers\ndirectly participate in transporting people or goods\nacross borders. See supra pp. 16-21. Just working on\nthe railroad all the livelong day is not enough. If it\nwere, § 1 might sweep in all the railroad employees\nCongress could reach at the furthest extent of its Com-\nmerce Clause power, despite Congress’ evident intent\nto reach that far only in § 2, not § 1.\n 28\n\n Congress’ association of “seamen” and “railroad\nemployees” further supports this narrow focus. See,\ne.g., Neal v. Clark, 95 U.S. 704, 708-09 (1878) (con-\nstruing “fraud” narrowly to reach only “positive fraud”\nrather than “implied fraud” given the term’s juxtapo-\nsition with “embezzlement”). The test for seaman\nstatus similarly looks to the employee’s activities, ask-\ning whether the worker spends a significant portion of\ntime on a vessel, i.e., an instrumentality of foreign or\ninterstate commerce. Supra pp. 24-26. And, im-\nportantly, this narrow reading also better furthers the\nFAA’s “liberal federal policy favoring arbitration\nagreements.” New Prime, 139 S. Ct. at 543 (citation\nomitted).\n Common attributes of seamen and railroad\nemployees. Seamen’s and railroad employees’ duties\noverlapped in two important ways that inform the\nmeaning of the residual clause.\n First, both kinds of workers were directly involved\nin transporting goods or people on instrumentalities\nof foreign or interstate commerce. Seamen were crew-\nmembers who worked on vessels sailing the high seas,\ndirectly participating in the movement of people or\ngoods, see Chandris, 515 U.S. at 361-65, 370; Wilan-\nder, 498 U.S. at 348, and they did not include\nstevedores who loaded and unloaded cargo from shore,\nWilander, 498 U.S. at 346-47. Railroad employees\ncould be similarly limited, as under the Hours of Ser-\nvice Act and Boiler Inspection Act, covering workers\nwho rode the rails but not those who helped prepare\ntrains or watch over the railyard. Compare Atchison,\nTopeka & Santa Fe Ry., 244 U.S. at 338, and St. Louis,\nIron Mountain, & S. Ry., 229 U.S. at 266-67, with Bal-\ntimore & Ohio R.R., 221 U.S. at 617, and Atchison,\nTopeka & Santa Fe Ry., 269 U.S. at 268.\n 29\n\n Second, both seamen and railroad employees pre-\ndominantly served in cross-border capacities. Seamen\nstatus turned on having a relationship to and working\non vessels, and vessels transported goods and people\nacross borders, usually national but sometimes state.\nRailroads crossed borders too, mostly state but some-\ntimes national.\n Under ejusdem generis, these common attributes\nof seamen and railroad employees inform the meaning\nof § 1’s residual clause. That’s true not just because\nthe common characteristics of specified categories in-\nform the meaning of a general phrase. It’s also true\nbecause each component of § 1’s narrow phrasing fits\ntogether to reach far less conduct than § 2’s “involving\ncommerce” language.\n Take Congress’ specification of “foreign or inter-\nstate commerce.” For one thing, if Congress didn’t\nwant to emphasize border-crossing, then it didn’t need\nto use the words “foreign or interstate” in the first\nplace. It had already defined “commerce” to cover for-\neign and interstate conduct earlier in § 1. See 9 U.S.C.\n§ 1. Again, Congress’ disparate word choice was for a\nreason. So was the unusual choice to place “foreign”\nbefore “interstate.” The decision below switched the\norder of those words eight times, see Pet. App. 8a-11a,\n14a, 20a, but that peculiar order is important. It par-\nallels the order of “seamen” and “railroad employees,”\nwith the former mainly crossing national borders and\nthe latter mostly crossing state borders. “That word\nchoice may not mean everything, but it does supply\nfurther evidence still that Congress” had in mind the\ncore concept of cross-border transportation. New\nPrime, 139 S. Ct. at 541. Leading with seamen, work-\ners whose duties most reliably met that test, makes\n 30\n\nthat clear. See Rittmann, 971 F.3d at 927-28 (Bress,\nJ., dissenting).\n To be sure, seamen did not work on vessels all the\ntime, so they were not transporting goods or people\nacross borders every day. But because seamen served\n“a significant portion” of their time at sea sailing from\nport to port, Chandris, 515 U.S. at 361 (citation omit-\nted), border crossing was more common than not.\nSimilarly, railroads operated interstate and intra-\nstate, and workers who served in non-transportation\nroles could be considered “railroad employees” when\nthe term is understood in its broadest possible sense.\nBut railroads’ regular interstate operations and the\ntypical duties of their employees, when compared with\nseamen’s duties, confirm that Congress had in mind\nworkers who rode the rails while transporting goods\nor people between states, just as it had in mind work-\ners who plied the waves while transporting goods or\npeople across the sea. These same characteristics thus\nlimit the workers covered by the residual clause.\n * * *\n The plain meaning of § 1’s residual clause is direct\nparticipation in cross-border transportation—actually\nmoving goods or people through channels of foreign or\ninterstate commerce. That reading finds support in\nthe FAA’s text, context, and proarbitration purposes.\n B. The FAA’s purpose confirms that § 1\n should be narrowly construed.\n Although the Court need not resort to the FAA’s\npurpose given the interpretive principles discussed\nabove, that purpose only confirms that § 1 should be\ninterpreted narrowly. As Circuit City explained, “the\nFAA’s purpose” of “seek[ing] broadly to overcome judi-\ncial hostility to arbitration agreements” “further\n 31\n\ncompel[s] that the § 1 exclusion provision be afforded\na narrow construction.” 532 U.S. at 118 (citation omit-\nted). Construing § 1 to reach only workers who\ntransport goods and people across borders just like\nseamen and railroad employees do furthers the FAA’s\n“liberal federal policy favoring arbitration agree-\nments.” New Prime, 139 S. Ct. at 543 (citation\nomitted). Respondent’s interpretation does not.\n “The FAA reflects the fundamental principle that\narbitration is a matter of contract.” Rent-A-Center,\n561 U.S. at 67. It instructs courts to treat arbitration\nagreements just like all “other contracts,” id., as\n“valid, irrevocable, and enforceable,” 9 U.S.C. § 2. The\nwhole point of the FAA is to honor those agreements\nto arbitrate and “avoid” litigation. Circuit City, 532\nU.S. at 123 (citation omitted).\n Congress’ command reflects the “real benefits” of\narbitration. Id. at 122-23. Arbitration reduces costs\nfor plaintiffs and defendants alike, maximizes the\nspeed and efficiency of resolving disputes, enables\nparties to submit technical disagreements to expert\nadjudicators, and eases the burden on courts. Concep-\ncion, 563 U.S. at 348. And Circuit City made clear that\nthese benefits matter in the employment context. 532\nU.S. at 123. That explains why Congress extended the\nFAA as far as it could, “exercis[ing] [its] commerce\npower to the full,” id. at 112 (citation omitted), with\none narrow exception: § 1’s exemption for certain\ntransportation workers.\n The statute itself does not say why Congress made\nthat exception, and “the legislative record on the § 1\nexemption is quite sparse.” Id. at 119. The Court, how-\never, has surmised that “it is a permissible inference\nthat the employment contracts of the classes of\n 32\n\nworkers in § 1 were excluded from the FAA precisely\nbecause of Congress’ undoubted authority to govern\nthe employment relationships at issue by the enact-\nment of statutes specific to them.” Id. at 120-21. On\nthat hypothesis, Congress already had on the books\n“legislation providing for the arbitration of disputes\nbetween seamen and their employers” as well as\n“grievance procedures” for railroad employees, and\n“did not wish to unsettle [those] established or devel-\noping statutory dispute resolution schemes.” Id. at\n121. Given the importance of the “free flow of goods”\nin foreign and interstate commerce, id., the thinking\ngoes, Congress did not want to leave disputes to\n“whatever arbitration procedures the parties’ private\ncontracts might happen to contemplate.” New Prime,\n139 S. Ct. at 537.\n That theory accords with interpreting § 1 nar-\nrowly, as Circuit City proves. No statute pursues its\npurposes at all costs, let alone a hypothetical purpose\nlater ascribed by courts absent clear textual indica-\ntors. What the FAA does make clear, in § 2, is that\nCongress intended the statute to have broad reach. So\nit would make little sense to read § 1 broadly to cover\nall workers in the transportation industry just be-\ncause Congress’ presumed purpose might have been\nto give itself flexibility to pass some future “specific\nlegislation for those engaged in transportation.” Cir-\ncuit City, 532 U.S. at 121. After all, future legislation\ncould override the FAA.\n Moreover, interpreting § 1 broadly would create\ndaunting line-drawing problems, “breeding litigation\nfrom a statute that seeks to avoid it.” Id. at 123 (cita-\ntion omitted). “[M]any of the Nation’s employers,”\nincluding Claimant, have adopted effective “alterna-\ntive dispute resolution procedures.” Id. But a broad\n 33\n\nreading of § 1, even limited to the transportation-\nworker context, raises more questions than it an-\nswers, as the confusion in the lower courts shows. See\nsupra pp. 9-11. The Court’s early Commerce Clause\ncases provide fair warning:\n [M]any things have more or less close relation\n to interstate commerce which are not properly\n to be regarded as a part of it. If the cab which\n carries the passengers from the hotel to the\n ferry landing is engaged in interstate trans-\n portation, why is not the porter who carries\n the traveler’s trunk from his room to the car-\n riage also so engaged? If the cab service is\n interstate transportation, are the drivers of\n the cabs and the dealers who supply hay and\n grain for the horses also engaged in interstate\n commerce? And where will the limit be\n placed?\nKnight, 192 U.S. at 28. “The text of the FAA does not\nhelp” resolve these inevitable line-drawing problems.\nRittmann, 971 F.3d at 930 (Bress, J., dissenting).\n C. Ramp-agent supervisors, who transport\n nothing and cross no borders, are not\n exempt from the FAA.\n Section 1 reaches only workers who participate di-\nrectly in cross-border transportation of people or\ngoods. But neither ramp agents nor their supervisors\nfit that description. They’re not employed to transport\npassenger luggage from one state to another. They’re\nnot employed to transport luggage anywhere. Rather,\nramp agents fill and empty planes with luggage before\nand after other workers (like pilots) do the transport-\ning. And ramp-agent supervisors are even further\nremoved from the actual transporting.\n 34\n\n It does not matter that ramp agents may be con-\nnected to the transportation process. The plain\nmeaning of “engaged in foreign or interstate com-\nmerce” does not include a “nexus” component. Supra\npp. 16-21. The precise language of § 1 also prevents\nramp agents and their supervisors from relying on\ntheir employers’ status as a transportation company.\nSection 1 targets the employees’ conduct, not the em-\nployers’ operations.\n Nor can supervisors (like Respondent) rely on the con-\nduct of their supervisees. In fact, in Chandris v. Latsis\nand Wilander, the Court asked whether Latsis and\nWilander satisfied the seaman test themselves, even\nthough they were both supervisors, see 515 U.S. at\n350; 498 U.S. at 339. Thus, ramp-agent supervisors\nmust satisfy the “direct participation in transporta-\ntion” standard themselves; they must, like seamen\nand railroad employees, spend a significant portion of\ntheir time actually transporting goods through chan-\nnels of foreign or interstate commerce.\n Ramp-agent supervisors fail that test. For one\nthing, their job responsibilities are “meant to be\npurely supervisory” and they can’t rely on what ramp\nagents do. Pet. App. 3a. “[A]t most,” ramp-agent su-\npervisors assist in the loading process a few times a\nweek. Pet. App. 38a; see also Pet. App. 9a-10a. In any\nevent, even ramp agents’ duties don’t matter, because\ntheir work is just an “aid or facility” to transportation,\nnot transportation itself. Hopkins, 171 U.S. at 587.\nAnd ramp agents certainly do not cross borders. Be-\ncause ramp-agent supervisors transport nothing, they\nare not a “class of workers engaged in foreign or inter-\nstate commerce.” 9 U.S.C. § 1.\n 35\n\n Stevedores are particularly instructive. By speci-\nfying “seamen” in § 1, Congress implicitly excluded\nstevedores even though such workers loaded vessels\nwith cargo and thus had a “close connection” to foreign\ncommerce. See Reading Law 107 (negative-implica-\ntion canon). Naturally, those who supervised\nstevedores were excluded too. The question here is not\nwhether Congress’ choice “was good policy,” Epic Sys.,\n138 S. Ct. at 1622, but whether ramp-agent supervi-\nsors, who at most supervise workers analogous to\nstevedores, are similarly excluded from § 1’s limited\nreach. There is just one answer: ramp-agent supervi-\nsors cannot rely on the § 1 exemption. Respondent must\ntherefore abide by her contract and arbitrate.\nII. The court of appeals’ and Respondent’s arguments\n for construing § 1 broadly lack merit.\n The decision below is wrong. The court interpreted\nthe residual clause to cover all classes of workers that\nare “so closely related to interstate transportation as\nto be practically a part of it.” Pet. App. 17a (alteration\nadopted; citation omitted). That expansive reading\nadds words to the statute and flouts Circuit City’s\ncommand that “the § 1 exclusion provision be afforded\na narrow construction.” 532 U.S. at 118. Section 1 pro-\nvides “no textual hook for expansion,” Hall St. Assocs.,\n552 U.S. at 586, and purpose cuts against Respondent too.\n What’s more, the court of appeals’ and Respondent’s jus-\ntifications for construing § 1 broadly fail on their own\nterms. Shunning the narrow-construction rules this\nCourt has repeatedly said apply to § 1, the Seventh\nCircuit relied on the broadly construed Federal Em-\nployers’ Liability Act, a statute that differs from the\nFAA in every relevant respect. It also leaned heavily\non old Commerce Clause decisions resting on a\n 36\n\ndefinition of “seaman” that both Congress and this\nCourt have since repudiated as wrong when the FAA\nwas enacted. And beyond all that, the decision below\ncontravenes the FAA’s proarbitration purposes.\n A. There is no textually sound reason for\n interpreting “engaged in foreign or\n interstate commerce” broadly.\n The court of appeals defined “engaged in foreign\nor interstate commerce” by looking to FELA. That ap-\nproach is wrong. Unlike the FAA, which controls how\nclaims are to be resolved and avoids litigation, FELA\nis a remedial law that creates claims for persons in-\njured on the job and thus starts litigation. The court\nalso cited old Commerce Clause cases that were\nwrongly decided. By relying on an irrelevant statute\nand incorrect precedent rather than the interpretive\nprinciples Circuit City instructed courts to apply, the\ncourt misconstrued the residual clause to reach work-\ners outside § 1’s plain text.\n 1. FELA does not inform the meaning of\n the FAA.\n Ordinary interpretive principles and this Court’s\nguidance show that FELA is irrelevant. Circuit City\ninstructs that the phrase “engaged in commerce” does\nnot “necessarily have a uniform meaning whenever\nused by Congress.” 532 U.S. at 118 (quoting American\nBldg. Maint., 422 U.S. at 277). Instead, the phrase\nmust be construed “with reference to the statutory\ncontext in which it is found and in a manner con-\nsistent with the [statute’s] purpose.” Id. FELA’s text,\npurpose, and focus all show that it is a broad exercise\nof Congress’ power to regulate commerce, quite differ-\nent from the narrow and limited text in § 1 of the FAA.\n 37\n\n a. Start with FELA’s text, which differs in im-\nportant ways from the FAA’s. When Congress enacted\nthe FAA, FELA provided that “every common carrier\nby railroad while engaging in commerce between any\nof the several States ... shall be liable in damages to\nany person suffering injury while he is employed by\nsuch carrier in such commerce.” 35 Stat. 65, 65, § 1\n(1908). Section 1 of the FAA, in contrast, reached only\n“contracts of employment of seamen, railroad employ-\nees, or any other class of workers engaged in foreign\nor interstate commerce.” 9 U.S.C. § 1. Among the\nmany textual differences: (1) FELA first focuses on the\nemployer’s business, while § 1 of the FAA targets the\nemployee’s work only; (2) FELA refers to employees in\ntheir individual capacity (“any person”), while the\nFAA addresses “class[es] of workers”; (3) FELA nei-\nther enumerates workers, like “seamen” and “railroad\nemployees,” nor includes a residual clause; and\n(4) FELA’s language extends broad coverage, like FAA\n§ 2, while FAA § 1 narrows broad coverage.\n These textual disparities reflect significant differ-\nences in statutory purpose and scope. While § 1 of the\nFAA is a “narrow” and “very particular” carveout from\n§ 2’s expansive scope, supra pp. 15-16, “FELA is a\nbroad remedial statute,” Atchison, Topeka & Santa Fe\nRy. v. Buell, 480 U.S. 557, 562 (1987). Congress liber-\nally gave railroad workers injured on the job a cause\nof action against their employers, using “broad lan-\nguage” to define the statute’s “coverage.” Id. at 561;\nsee 35 Stat. at 65-66, §§ 1, 5. And given FELA’s “reme-\ndial and humanitarian purpose,” Urie v. Thompson,\n337 U.S. 163, 181 (1949), the Court has interpreted\nthe statute “even more broadly,” Buell, 480 U.S. at\n562, to “cover[] a vast field,” New York Cent. & Hudson\nRiver R.R. v. Carr, 238 U.S. 260, 262 (1915).\n 38\n\n To achieve FELA’s broad remedial purpose, Con-\ngress toed “the outer limits” of its Commerce Clause\npower as then understood. See Circuit City, 532 U.S.\nat 116, 118. History and precedent prove the point. Af-\nter Congress first passed FELA in 1906, the Court\nheld it unconstitutional because it reached purely in-\ntrastate activities—“subjects wholly beyond the power\nto regulate commerce.” Employers’ Liability Cases,\n207 U.S. 463, 499 (1908). The Court’s concern was that\nthe 1906 law applied “without qualification or re-\nstriction as to the business in which the carriers or\ntheir employees may be engaged at the time of the in-\njury.” Id. at 498.\n So when Congress reenacted FELA in 1908, it\nclarified that the statute reached “any person\nsuffering injury while he is employed by such carrier\nin such commerce.” 35 Stat. at 65. The Court upheld\nthe new law, reasoning that it imposed liability on an\nemployer only “for injuries sustained by its employees\nwhile engaged in [interstate] commerce.” Second Em-\nployers’ Liability Cases, 223 U.S. 1, 51-52 (1912). In\nthe Court’s view, the new language made the statute\nconstitutional because it required both the employer\nand employee to have a “substantial connection” to\n“interstate commerce.” Id. at 49.\n The Court understood FELA to have a scope “so\nbroad that it cover[ed] a vast field about which there\n[could] be no discussion.” Carr, 238 U.S. at 262. And\nthe test it soon adopted for determining FELA’s broad\nscope reflected that understanding. In Pedersen v.\nDelaware, Lackawanna & Western Railroad, 229 U.S.\n146, 151 (1913), the Court interpreted FELA to reach\nemployees whose activities at the moment of injury\nwere “so closely connected” to interstate commerce “as\nto be a part of it.” That interpretation, the Court\n 39\n\nexplained, “[spoke] of interstate commerce, not in a\ntechnical legal sense, but in a practical one better\nsuited to the occasion.” Shanks v. Delaware, Lacka-\nwanna, & W. R.R., 239 U.S. 556, 558 (1916). In other\nwords, the Court’s broad construction was driven less\nby the statute’s text and more by what it viewed as\n“the evident purpose of Congress.” Id.\n What’s more, that “connection” standard focused\nnot on whether the plaintiff’s activities were inter-\nstate commerce (the issue here), but on whether they\nwere interstate or intrastate. It also focused on the\nplaintiff’s activities at the moment of injury—unlike\nthe FAA’s focus on the “class of workers.” As a result,\nthe “connection” standard led to “much confusion,”\nSouthern Pac. Co. v. Gileo, 351 U.S. 493, 497 (1956),\njust as the dissenters in Pedersen had predicted, see\n229 U.S. at 154-55 (Lamar, J., dissenting). For exam-\nple, although FELA reached an iron worker preparing\nto repair a bridge carrying interstate traffic, Pedersen,\n229 U.S. at 151-52, it didn’t reach a worker who “han-\ndled interstate and intrastate” trains because, “at the\ntime of the fatal injury,” he was handling only trains\n“loaded with intrastate freight,” Illinois Cent. R.R. v.\nBehrens, 233 U.S. 473, 476, 478 (1914) (emphasis\nadded). Because none of this line-drawing furthered\nFELA’s broad remedial purpose, Congress amended\nthe law in 1939 to make “plain” its intended expansive\nscope. Gileo, 351 U.S. at 498. The revised language\nclarified that FELA reaches “[a]ny employee of a car-\nrier” whose duties were “in furtherance of interstate\nor foreign commerce” or “in any way directly or closely\nand substantially, affect[ing] such commerce.” 53\nStat. 1404, 1404, § 1 (1939).\n b. FELA bears little resemblance to the FAA.\nCongress wanted FELA to reach broadly, while § 1 of\n 40\n\nthe FAA slices a narrow exception from the FAA’s pur-\nposely broad reach. Supra pp. 15-16. In fact, it is § 2’s\nbroad coverage provision that most resembles FELA.\nAnd Congress enacted FELA to create claims for indi-\nviduals injured on the job, while the FAA “revers[ed]\ncenturies of judicial hostility to arbitration agree-\nments.” Scherk v. Alberto-Culver Co., 417 U.S. 506,\n510 (1974). While FELA’s approach required courts to\nseparate interstate from intrastate activities at the\ntime of the injury, § 1 of the FAA, being a “very par-\nticular qualification,” requires a different analysis.\nNew Prime, 139 S. Ct. at 537. Section 1 asks whether\na “class of workers” is “engaged in foreign or interstate\ncommerce”—which, under Circuit City, requires a\nnarrower inquiry than just separating interstate from\nintrastate commerce. See 532 U.S. at 118. Indeed, § 1\nmentions “seamen” who, the Court has warned,\nshould not be identified with “a snapshot test ..., in-\nspecting only the situation as it exists at the instant\nof injury; a more enduring relationship is contem-\nplated.” Chandris, 515 U.S. at 363 (internal quotation\nmarks and citation omitted).\n What’s more, relying on FELA to interpret the\nFAA would produce the very line-drawing problems\nCongress had to fix. Such “considerable complexity\nand uncertainty” is precisely what the FAA seeks “to\navoid.” Circuit City, 532 U.S. at 123 (citation omitted).\nGiven all these differences, it’s no wonder that neither\nCircuit City nor New Prime found FELA relevant to\nconstruing the FAA.\n c. Despite all these significant differences, the\ncourt of appeals followed FELA to the letter. It held\nthat cargo loaders are “engaged in commerce for\npurposes of § 1,” Pet. App. 12a, because they are “so\nclosely related to interstate transportation as to be\n 41\n\npractically a part of it,” Pet. App. 10a (citation omit-\nted). But as just discussed, that “connection” standard\nhas no basis in the text of the FAA. And reading such\nan unadministrable test into the FAA would create\nmore problems than it solves. The Court should not\nlook to FELA when interpreting the FAA’s residual\nclause. It instead should follow Circuit City, which\ncited approvingly the “flow of interstate commerce”\nstandard. 532 U.S. at 117-18.\n The court of appeals also erred by citing FELA for\nthe proposition that “railroad employees” in the FAA\nshould be construed broadly. FELA does not define\n“railroad employees.” No matter, the court reasoned,\nbecause FELA contemplates that “railroad employ-\nees” includes “those whose work was ‘so closely related\nto interstate transportation as to be practically a part\nof it.’” Pet. App. 17a (alteration adopted; citation omit-\nted). In other words, the court failed to explain what\n“railroad employees” meant, other than that they\nmust be “closely connected” to interstate commerce.\nThat logic not only is circular, it also lacks a textual\nleg to stand on. That’s why both the Hours of Service\nAct and Boiler Inspection Act, which tied railroad em-\nployees to the actual movement of trains, provides\nbetter guidance to the meaning of that same term in\nthe FAA. See supra pp. 26-28.\n 2. Outdated Commerce Clause cases do\n not inform the meaning of the FAA,\n either.\n The court of appeals also relied on old Commerce\nClause cases that were wrongly decided. As a result,\nthe court erroneously ignored the clear and narrow\nmeaning of “seamen,” which does not include the land-\nbased stevedores who load and unload ships.\n 42\n\n a. Respondent may argue that the same outdated\nCommerce Clause decisions she cited below show that\nloading and unloading cargo must be interstate com-\nmerce under § 1 of the FAA. But those decisions are\nirrelevant for the very reason Circuit City suggests:\nthey ask whether Congress had the constitutional\npower to regulate, not how far a statute reached. In-\ndeed, the phrase “engaged in foreign or interstate\ncommerce” is a statutory term appearing nowhere in\nthe Constitution. Because Commerce Clause cases fo-\ncus exclusively on what Congress constitutionally can\ndo (or what states cannot do), they do not help resolve\nthe statutory interpretation question presented here.\n b. The court of appeals mistakenly relied on a\nhandful of Commerce Clause decisions for the claim\nthat “stevedores and longshoremen, the dockworkers\nwho loaded and unloaded ships at port,” were “en-\ngaged in foreign or interstate commerce.” Pet. App.\n11a. For starters, those cases are irrelevant. Take\nNorthern Coal & Dock Co. v. Strand, 278 U.S. 142,\n144, 147 (1928), which said only that unloading a ship\nhas a “direct relation to commerce and navigation” in\ndeciding that Wisconsin could not regulate such con-\nduct. The Court did not hold that unloading a ship is\ninterstate commerce for any particular statutory pur-\npose, much less analyze whether the stevedore was\n“engaged in foreign or interstate commerce.”\n All these stevedoring cases have a more funda-\nmental problem, however: they relied on a mistaken\nunderstanding of “seamen.” As Chandris and Wilan-\nder explain, “seaman” is a term of art that doesn’t\ninclude stevedores, the workers who load or unload\nships. Chandris, 515 U.S. at 358-59; Wilander, 498\nU.S. at 347-48. A year after Congress enacted the\nFAA, however, the Court mistakenly interpreted\n 43\n\n“seamen” under the Jones Act to include stevedores.\nSee International Stevedoring Co. v. Haverty, 272 U.S.\n50, 52 (1926). That was a mistake, this Court later\nmade clear, because “seaman” was (and still is) a term\nof art that excludes stevedores because they do not\nspend a significant “portion of their time ... at sea.”\nChandris, 515 U.S. at 364; see supra pp. 24-26.\n To be sure, it took the Court until 1946 to recog-\nnize its error, even though Congress passed the\nLongshore and Harbor Workers’ Compensation Act\njust six months after Haverty to reestablish the “clear\ndistinction between land-based and sea-based mari-\ntime workers.” Wilander, 498 U.S. at 347. But that\ntiming doesn’t help Respondent. The FAA says “seaman,” a\nterm of art excluding stevedores in 1925. The Court’s\n1926 decision, which the Court has since acknowl-\nedged was wrong when it was decided, cannot prove\notherwise. (And even if it could, Haverty applies only\nto the Jones Act, not the term of art under maritime\nlaw that Congress meant to incorporate into the FAA.\nSee id. at 348.)\n Why does all this matter? Because the court of ap-\npeals relied on this misunderstanding to conclude that\nloading and unloading goods is interstate commerce.\nThe syllogism goes like this: seamen are engaged in\ninterstate commerce, and stevedores, who load and\nunload cargo, are seamen, too. See Strand, 278 U.S. at\n146 (relying on Haverty); Puget Sound Stevedoring Co.\nv. Tax Comm’n, 302 U.S. 90, 92-93 (1937) (quoting\nHaverty, 272 U.S. 50); Joseph v. Carter & Weekes\nStevedoring Co., 330 U.S. 422, 430 (1947) (following\nPuget Sound). But stevedores aren’t seamen. Seamen\nstatus is connected to time at sea; they primarily\nworked on vessels during an international voyage.\nLoading or unloading cargo had nothing to do with it.\n 44\n\nSupra pp. 24-26. For the same reason, Department of\nRevenue v. Association of Washington Stevedoring\nCos., 435 U.S. 734 (1978), doesn’t help Respondent either.\nThere, the Court simply quoted Puget Sound and\nCarter & Weekes before overruling them, see id. at\n743-47 & n.17, all before this Court’s decisions in\nWilander and Chandris.\n The decision below also erred in concluding that\nstevedores and longshoremen, despite not being “sea-\nmen,” are covered by the residual clause. See Pet. App.\n14a. That construction renders “seamen” meaning-\nless. “Had Congress intended [the residual clause] to\nbe interpreted so generally as to capture [anyone with\na close connection to a vessel], Congress would have\nhad no reason to refer specifically to [seamen].” Yates,\n574 U.S. at 546 (plurality); id. at 551 (Alito, J., concur-\nring in the judgment).\n B. Speculation that Congress intended to\n give § 1 a broad reach undermines the\n text and attributes illogical motives to\n Congress.\n Respondent may renew her argument that § 1 must be\nread broadly to ensure “that Congress (and the execu-\ntive branch) retain[] the ability to regulate and resolve\ndisputes in the transportation industry, unhampered\nby any effort by an employer to substitute its own in-\ndividualized dispute resolution process.” Opp. 8. That\nargument lacks merit. To be sure, Circuit City stated\nthat it is “reasonable to assume that Congress ex-\ncluded ‘seamen’ and ‘railroad employees’ from the\nFAA for the simple reason that it did not wish to un-\nsettle established or developing statutory dispute\nresolution schemes covering specific workers.” 532\nU.S. at 121. But Respondent’s argument is based on the\n 45\n\nmistaken premise that Congress intended to create a\nbroad exception. The opposite is true.\n First, Respondent’s purposive argument disregards the\ntextual indicia and this Court’s unequivocal holding\nthat the § 1 exemption must be construed narrowly.\nSee supra pp. 15-16. Contrary to Respondent’s assertion, § 1\ndoes not reflect a congressional desire to regulate em-\nployment disputes in “the transportation industry”\nwrit large. Opp. 8. Instead, the phrase “engaged in\ncommerce,” the words “seamen” and “railroad employ-\nees,” and the statute’s “proarbitration purposes”\n“compel that the § 1 exclusion provision be afforded a\nnarrow construction.” Circuit City, 532 U.S. at 118.\n Second, even assuming Congress wanted to cover\n“all transportation workers[],” Opp. 8, the question\nstands: who are transportation workers? The answer\nlies in the text, not Respondent’s purposive argument. And\nthe text does not suggest that Congress intended to\ncreate a broad exemption through narrow language.\n The most Respondent can say is that Congress could not\nhave known just what “statutory dispute resolution\nschemes” it might later “develop[].” Circuit City, 532\nU.S. at 121. If that’s true, it just means that Congress\nlikely was not crafting the § 1 exemption based only\non existing legislation. It does not follow, however,\nthat § 1 must be read broadly to avoid tying Congress’\nhands. If Congress wants to create a new federal arbi-\ntration scheme for workers who (like Respondent) have\narbitration agreements already covered by the FAA,\nall Congress has to do is declare that the FAA does not\napply to those contracts. There is thus no need to\nstretch the plain meaning of § 1 to save a power Con-\ngress already has. Respondent’s speculation also is illogical.\nWould Congress really compromise the FAA’s\n 46\n\nproarbitration purpose by exempting a broad swath of\nworkers based solely on the possibility that federal\nlaw might one day fill the void? Unsurprisingly, there\nis no textual hook for such an implausible reading.\n Respondent’s focus on then-existing legislation also\ndoesn’t support construing § 1 broadly. The Shipping\nCommissioners Act supports a narrow construction.\nThe statute reached a subset of seamen—an already\nnarrow class of sea-based workers, Chandris, 515 U.S.\nat 359—working on ships bound to and from foreign\nports or going to and from Pacific or Atlantic ports. See\n17 Stat. at 264, § 12. If anything, the statute supports\nnarrowly construing § 1 to reach only transportation\nworkers who cross borders.\n The Transportation Act of 1920 is even less help-\nful to Respondent. As Circuit City understood it, Congress\nwas imminently planning to scrap that statute. See\n532 U.S. at 121. Before Congress enacted the FAA,\nthere was widespread dissatisfaction with the Trans-\nportation Act and the railroads and unions were in\ntalks to come up with a replacement. See Texas & New\nOrleans R.R. v. Brotherhood of Ry. & S.S. Clerks, 281\nU.S. 548, 562-63 (1930). In other words, nobody knew\njust what the new legislation would say. Indeed, rail-\nroad unions and management were still hammering\nout the framework for the RLA in late 1925, many\nmonths after Congress enacted the FAA in February\n1925. See Railway Emps. Dep’t v. Hanson, 351 U.S.\n225, 240-41 (1956) (Frankfurter, J., concurring). Nei-\nther the Transportation Act nor the RLA should\ninform the meaning of the FAA.\n Finally, even if the later-enacted RLA could some-\nhow inform the earlier-enacted FAA, there is no\nreason to think that § 1 of the FAA must be construed\n 47\n\nexpansively just to ensure that it doesn’t overlap with\nthe RLA. The types of disputes an employer and em-\nployee might agree to arbitrate, on the one hand, and\nthe types of disputes subject to mandatory RLA arbi-\ntration, on the other, have little overlap.\n As originally enacted, the RLA provided proce-\ndures for major collective-bargaining issues; it\nrequired carriers and their employees to try “to make\nand maintain agreements concerning rates of pay,\nrules, and working conditions.” 44 Stat. 577, 577 § 2\n(1926). In 1934, Congress amended the RLA to specify\ndispute-resolution procedures for so-called “major dis-\nputes” and “minor disputes.” Elgin, Joliet & E. Ry. v.\nBurley, 325 U.S. 711, 724 (1945) (discussing RLA’s\nevolution). “Major disputes” involve efforts to collec-\ntively bargain for new rights, wages, or working\ndisputes, Consolidated Rail Corp. v. Railway Lab. Ex-\necs. Ass’n, 491 U.S. 299, 302 (1989), while minor\ndisputes involve interpretations of existing collective-\nbargaining agreements, Elgin, 325 U.S. at 723; see\ngenerally Norris, 512 U.S. at 252-53.\n Neither major nor minor disputes are likely to\noverlap with the types of disputes covered by arbitra-\ntion agreements subject to the FAA. Major disputes\n(the focus of the RLA as originally enacted) are not the\nkind of thing that FAA-covered arbitration agree-\nments would address, because they are disputes about\nreaching an agreement in the first place. And while\nminor disputes are subject to compulsory arbitration\nbefore a review board, Consolidated Rail, 491 U.S. at\n303-04 & n.4, their scope is limited. Minor disputes\nare only those disagreements “that involve duties and\nrights created or defined by the CBA,” such that “the\ndispute may be conclusively resolved by interpreting\nthe existing [CBA].” Norris, 512 U.S. at 256, 258\n 48\n\n(citation omitted). The RLA thus does not preempt\n“substantive protections extended by” state law or fed-\neral law—i.e., “causes of action to enforce rights that\nare independent of the CBA.” Id. at 256; see id. at 258-\n59 (discussing Buell, 480 U.S. at 564-65 (RLA doesn’t\ndisplace FELA cause of action)). In any event, the RLA\napplies only when employees are subject to a CBA.\nRespondent is not. Pet. App. 3a.\n Guesswork about congressional purpose is no way\nto construe a statute. This case is no exception.\n * * *\n Neither the court of appeals’ reasoning nor\nRespondent’s arguments for construing § 1 broadly with-\nstand scrutiny. They offer the Court no reason to\ndepart from Circuit City’s instruction to read § 1 nar-\nrowly using ordinary tools of statutory interpretation.\n 49\n\n CONCLUSION\n The Court should reverse the Seventh Circuit’s\njudgment and hold that Respondent is not exempt from the\nFAA because she is not a seaman, railroad employee,\nor member of “any other class of workers engaged in\nforeign or interstate commerce.” 9 U.S.C. § 1.\n Respectfully submitted.\n\n\nMelissa A. Siebert Shay Dvoretzky\nSHOOK, HARDY & Counsel of Record\n BACON L.L.P. Parker Rider-Longmaid\n111 South Wacker Dr., Kyser Blakely*\n Ste. 4700 Hanaa Khan\nChicago, IL 60606 SKADDEN, ARPS, SLATE,\n MEAGHER & FLOM LLP\nScott A. Chesin 1440 New York Ave. NW\nSHOOK, HARDY & Washington, DC 20005\n BACON L.L.P. [PHONE REDACTED]\nNew York, NY 10019 [EMAIL REDACTED]\n\n\n*Admitted in Ohio and Raza Rasheed\nCalifornia; supervised by SKADDEN, ARPS, SLATE,\nDC Bar members while MEAGHER & FLOM LLP\nDC application is pending 300 South Grand Ave.\n Los Angeles, CA 90071\n Counsel for Petitioner\nJanuary 24, 2022", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n The Federal Arbitration Act exempts the\nemployment contracts of “seamen, railroad employees, or\nany other class of workers engaged in foreign or interstate\ncommerce.” 9 U.S.C. § 1. The statute’s text thus makes\nclear that “seamen” and “railroad employees” are classes\nof workers “engaged in foreign or interstate commerce.”\nThe question here is whether airline employees who load\nand unload cargo are also members of “a class of workers”\nthat, like railroad employees and seamen, is “engaged in\nforeign or interstate commerce.”\n They are. When the FAA was enacted, commerce took\nplace by rail and by sea. Seamen and railroad employees\nplayed a “necessary role in the free flow” of goods and\npassengers. Circuit City Stores, Inc. v. Adams, 532 U.S.\n105, 121 (2001). Today, that same commerce takes place\nby air. And airline employees play the same “necessary\nrole.” That is all that’s needed to resolve this case.\n Claimant’s contrary argument wrongly assumes\nthat the relevant “class of workers” is ramp-agent\nsupervisors rather than airline employees. But the statute\nexempts “seamen” and “railroad employees”—not\n“deckhands, yardmen, signal workers, and engineers.”\n And even if the text could support Claimant’s\nspecific-task-based approach, those who load and unload\nairline cargo—Latrice Respondent’s actual job—would be\nexempt. The FAA’s words carry the meaning they had “at\nthe time of the Act’s adoption in 1925.” New Prime Inc. v.\nOliveira, 139 S. Ct. 532, 539 (2019). By then, it was settled\nthat those engaged in “the loading or unloading of an\ninterstate shipment” were “engaged in interstate\ncommerce.” Balt. & Ohio Sw. R.R. Co. v. Burtch, 263 U.S.\n540, 542, 544 (1924). For decades, this Court had held that\n -2-\n\nloading and unloading is commerce, because goods can’t\ncross state lines if they’re never loaded in the first place.\n Claimant’s response is to rewrite the statute:\nAlthough it says “any other class of workers engaged\nin foreign or interstate commerce,” the airline argues that\nwhat it really means is “any other class of workers aboard\na vessel that crosses state lines.” But if that’s truly what it\nmeant, “Congress could have written the statute” that\nway. McElroy v. United States, 455 U.S. 642, 656 (1982).\nIn fact, this Court has rejected the argument, in the\ncontext of a roughly contemporaneous provision, that a\nreference to activities “in interstate or foreign commerce”\nwas limited to “activities that occur while crossing state\nborders.” Id. at 648. By 1925, “this Court had made clear\nthat interstate commerce begins well before state lines are\ncrossed,” so “there is no basis” to “adopt such a limited\nreading.” Id. at 653, 656.\n Although Claimant claims that seamen and railroad\nemployees meant workers who crossed borders, its own\nauthority says the opposite. Its lead case on seamen,\nStewart v. Dutra Construction Co., 543 U.S. 481 (2005),\ninvolved a dredge worker who never left Boston Harbor.\nAnd the statute on which its railroad-employees argument\ndepends (the Hours of Service Act), expressly applied to\ntrain dispatchers and other workers transmitting orders\nfrom a tower or a station—workers who themselves didn’t\ngo anywhere. Contrary to what Claimant says, seamen\nwere simply those who did the work of the ship; and\nrailroad employees were those who did the work of the\nrailroad—whether they crossed state lines or not. And\nboth classes of workers included cargo loaders.\n Every indication about what the statute means thus\npoints the same way: Airline employees, including cargo\n -3-\n\nloaders, are exempt. And for good reason. Seamen and\nrailroad employees, like airline employees, are known,\nadministrable categories that actually encompass those\nworkers “necessary to the free flow” of goods and\npassengers. The same can’t be said for Claimant’s\napproach, which would inevitably task courts with\nnebulous empirical inquiries into the extent to which\nworkers or categories of workers cross state borders.\n Lacking any basis in the FAA’s text, Claimant is\nultimately “left to appeal to its [pro-arbitration] policy.”\nNew Prime, 139 S. Ct. at 543. But this Court recently, and\nunanimously, rejected that move, urging courts to adhere\nto the text and thereby “respect the limits to which\nCongress was prepared to go in adopting the Arbitration\nAct.” Id. The Court should follow that same path here.\n STATEMENT\n A. Statutory background\n The Federal Arbitration Act requires courts to\nenforce arbitration agreements. 9 U.S.C. § 2. That\nmandate, however, is subject to an important exception:\n“[N]othing” in the Act “shall apply” to “contracts of\nemployment of seamen, railroad employees, or any other\nclass of workers engaged in foreign or interstate\ncommerce.” 9 U.S.C. § 1. The statute gives examples of\nspecific matters that are “in foreign commerce,” including\n“agreements relating to wharfage,” id.—that is, fees for\nloading or unloading goods. The question in this case is\nwhether airline workers who load and unload foreign or\n -4-\n\ninterstate cargo are a “class of workers engaged in foreign\nor interstate commerce.” 1\n 1. This Court has twice interpreted the FAA’s worker\nexemption. In New Prime, the Court stressed that the\nexception’s words carry the meaning they did at “the time\nof the Act’s adoption in 1925,” not what comes to mind to\n“lawyerly ears today.” 139 S. Ct. at 539. The Court\nobserved that, in 1925, the terms “seamen” and “railroad\nemployees” “swept more broadly at the time of the Act’s\npassage than might seem obvious today.” Id. at 543. Just\nthree years before the FAA’s enactment, for example, the\nRailroad Labor Board read the word “employee” in the\nTransportation Act of 1920 to refer to “anyone ‘engaged in\nthe customary work directly contributory to the operation\nof the railroads.’” Id. And the Erdman Act of 1898, a law\naimed at railroad strikes, evinced “an equally broad\nunderstanding of ‘railroad employees,’” id., extending to\n“all persons actually engaged in any capacity” in railroad\noperations “of any description.” Id. at 543 n.12.\n In addition to emphasizing the breadth of these terms’\nmeaning in 1925, New Prime rejected the suggestion that\nthe exception’s text should be tempered by a “liberal\nfederal policy favoring arbitration agreements.” Id. at 543.\nAccepting an “appeal to [] policy” would “thwart rather\nthan honor” congressional intent because the FAA was\nthe product of “legislative compromise[]” that was\n“essential to [the] law’s passage.” Id.\n\n\n 1\n For simplicity, this brief omits ellipses when shortening\n“engaged in foreign or interstate commerce” to “engaged in\ncommerce.” In addition, unless otherwise specified, all internal\nquotation marks, alterations, and citations are omitted from\nquotations throughout.\n -5-\n\n History shows just how essential. The compromise\nreflected in the transportation-worker exception came in\ndirect response to vociferous criticism from labor unions,\nled by the International Seamen’s Union, that surfaced\nimmediately after the FAA was introduced. See Imre\nSzalai, Outsourcing Justice: The Rise of Modern\nArbitration Laws in America 131–45 (2013) (recounting\nthis history). In Senate testimony, the chair of the ABA\ncommittee that drafted the bill explained that the\nseamen’s union objected “on the ground that the bill in its\npresent form would affect, in fact compel, arbitration of\nthe matters of agreement between the stevedores”—\nworkers who load and unload cargo—“and their\nemployers.” Sales and Contracts to Sell in Interstate and\nForeign Commerce, and Federal Commercial\nArbitration: Hearing on S. 4213 and S. 4214 Before a\nSubcomm. of the S. Comm. on the Judiciary, 67th Cong.\n9 (1923). “Now, it was not the intention of the bill,” he said,\n“to have any such effect as that. It was not the intention of\nthis bill to make an industrial arbitration in any sense.” Id.\nThe chair then offered what would become the worker\nexception. See id. With this addition, “[t]here was no\nopposition to the bill.” H.R. Rep. [DOCKET REDACTED], at 1 (1924).\n New Prime explained why adherence to the text of\nthis exception matters. By respecting the exception’s text,\nthe judiciary “respect[s] the limits up to which Congress\nwas prepared to go when adopting the Arbitration Act.”\nNew Prime, 139 S. Ct. at 543.\n 2. This Court’s only other encounter with the FAA’s\nworker exemption was two decades ago in Circuit City,\nwhich interpreted the exemption to reach the “contracts\nof employment of transportation workers, but not other\nemployment contracts.” 532 U.S. at 109. Employing the\n -6-\n\nlogic of ejusdem generis, the Court reasoned that the\nresidual clause must be defined by its relationship to the\ntwo specifically enumerated “classes of workers”—\n“seamen” and “railroad employees” —each of which are\n“engaged in foreign or interstate commerce.” Id. at 114–\n15. The critical “linkage” between these classes, the Court\nexplained, is “Congress’ demonstrated concern with\ntransportation workers and their necessary role in the\nfree flow of goods.” Id. at 121.\n Circuit City also addressed why its holding was\nconsistent with Congress’s purpose: to avoid disrupting\n“established or developing statutory dispute resolution\nschemes” for “those engaged in transportation.” Id. By\nthis time, Congress had already enacted statutes covering\nthe “arbitration of disputes between seamen and their\nemployers” as well as “grievance procedures [] for\nrailroad employees.” Id. (referring to the Shipping\nCommissioners Act of 1872 and the Transportation Act of\n1920). Another statute governing railroad-labor disputes,\nthe Railway Labor Act of 1926, was “imminent,” with an\namendment “soon to follow” that “include[d] air carriers\nand their employees.” Id.\n B. Factual and procedural background\n 1. Respondent Latrice Respondent is a ramp supervisor at\nClaimant. App. 1.2 Ramp supervisors like Ms.\nRespondent load and unload cargo from Claimant planes, as\nwell as supervise others who do the same. Id. at 28–29.\nDespite their title, the majority of ramp supervisors’ work\nis not supervision, but rather personally loading and\n\n 2\n All references to App. are to the appendix filed in the Seventh\nCircuit. All references to the docket are to the district court docket,\ncase number 19-cv-403 (N.D. Ill.).\n -7-\n\nunloading interstate cargo. App. 2. And that cargo\nincludes not just passengers’ luggage, but also airmail and\nfreight. Id. at 3, 28; see TranStats, Bureau of\nTransportation Statistics, [URL REDACTED]\n(last visited Feb. 24, 2022) (showing that Claimant\nshipped over 259 million pounds of freight in 2020).\n Ramp supervisors at Claimant consistently work\nover forty hours a week, but do not get paid overtime. App.\n17. The company requires its ramp supervisors to arrive\nearly to perform work before the start of their official shift\nand to work through meal breaks. App. 17–18. But it does\nnot pay them for this work. Id.\n Ms. Respondent, therefore, sued Claimant, on behalf of\nherself and all other similarly situated workers, for the\novertime they are owed under the Fair Labor Standards\nAct. See id. at 22–24; 29 U.S.C. § 207(a)(1) (requiring\novertime compensation “at a rate not less than one and\none-half times the regular rate”).\n 2. Claimant moved to dismiss Ms. Respondent’s claims\nunder the FAA. As a condition of employment, Claimant\nimposes an arbitration clause on all employees who are not\nsubject to a collective bargaining agreement, including\nMs. Respondent. That clause, Claimant argued, requires that\nMs. Respondent arbitrate her overtime claim. And, the company\ncontended, it must be enforced under the FAA.\n In response, Ms. Respondent argued that the FAA doesn’t\napply. The statute, she explained, exempts “seamen,\nrailroad employees, or any other class of workers engaged\nin foreign or interstate commerce.” Because ramp\nsupervisors regularly load and unload interstate cargo,\nMs. Respondent argued, they are a class of workers “engaged in\n. . . commerce” and are therefore exempt.\n -8-\n\n 3. After the district court held that airline employees\nwho load and unload interstate cargo are not exempt from\nthe FAA, Pet. 39a, the court of appeals unanimously\nreversed. Pet. 21a. Unlike the district court, the court of\nappeals held that the “inquiry” into which workers are\nexempt from the FAA “begins with the text.” Pet. 5a. To\nbe “engaged in interstate or foreign commerce,” the court\nexplained, is to be “actively occupied in the enterprise of\nmoving goods across interstate lines.” Pet. 9a.\n And although this line may not always be “easy to\ndraw,” the court held, “[w]herever the line may be,\n. . . ramp supervisors fall on the transportation-worker\nside of it.” Pet. 9a. By loading and unloading interstate\ncargo, ramp supervisors “are actually engaged in the\nmovement of goods in interstate commerce.” Pet. 10a.\n“Actual transportation,” the court explained, “is not\nlimited to the precise moment either goods or the people\naccompanying them cross state lines.” Id. To the contrary,\n“[l]oading and unloading cargo onto a vehicle so that it\nmay be moved interstate, too, is actual transportation.” Id.\n“[A]nd those who performed that work were recognized in\n1925,” when the FAA was passed, “to be engaged in\ncommerce.” Id.\n The court of appeals stressed that this Court has\nrepeatedly made clear that “loading and unloading a\nvessel” is “itself interstate or foreign commerce”—and\nthat workers who load and unload interstate shipments\nare therefore “engaged in . . . commerce.” Pet. 10a–11a\n(emphasis added). “[A]irplane cargo loaders,” the court\nheld, are no different.\n The court found “further support[]” for its conclusion\nby examining “the enumerated categories of seamen and\nrailroad employees in § 1.” Pet. 12a. The court concluded\n -9-\n\nthat, historically, both categories included cargo loaders.\nPet. 12a–18a. In fact, the court pointed out, just a year\nbefore the Act was passed, this Court had held that it was\n“too plain to require discussion that” railroad employees\nresponsible for “the loading or unloading of an interstate\nshipment” are engaged in commerce. Pet. 17a.\n The court also rejected Claimant’s argument that\nexempting cargo loaders from the FAA—as its text\nrequires—would be “the start of a slippery slope.” Pet.\n19a. “The loading of goods into a vehicle traveling to\nanother state or country,” the court explained, “is the step\nthat both immediately and necessarily precedes the\nmoment the vehicle and goods cross the border.” Id.\n SUMMARY OF ARGUMENT\n I.A. Statutory interpretation starts with the text. And\nthe text of the FAA tells us that a “class of workers” is\nexempt from the statute if they are “engaged in\ncommerce” in the same way as “seamen” and “railroad\nemployees.” It’s difficult to imagine a class of workers\nmore analogous to seamen and railroad employees than\nairline employees. Airlines today play precisely the same\n“necessary role in the free flow of goods” as shipping\ncompanies and railroads did in the 1920s. Circuit City\nStores, Inc. v. Adams, 532 U.S. 105, 114 (2001). And their\nemployees are no less integral to that transportation\nmission than seamen and railroad employees. In 1925,\nboth seamen and railroad employees were broad\ncategories of workers encompassing all those who did the\nwork of the ship or the railroad. The airline employees\nexempt from the FAA must have a similar scope: those\nwho do the work of the airline. Cargo loaders certainly fit\nthis bill.\n -10-\n\n B. Even if the relevant “class” is not airline employees,\nbut cargo loaders themselves, they are still exempt. Again,\nthe text of the statute controls. The FAA itself identifies\nfees for loading and unloading foreign cargo as “matters\nin foreign commerce.” 9 U.S.C. § 1 (emphasis added). If\nloading and unloading is “in commerce,” those who are\nengaged in it must be “engaged in commerce.” Indeed, by\nthe time the FAA was enacted, decades of precedent had\nestablished that cargo loaders are “engaged in\ncommerce.” And cargo loaders were not just like\n“seamen” and “railroad employees”; they were “seamen”\nand “railroad employees.”\n Cargo loaders also fit within the modern use of\n“engaged in commerce” as a jurisdictional term of art—\n“persons or activities within the flow of interstate\ncommerce,” Gulf Oil Corp. v. Copp Paving Co., 419 U.S.\n186, 195 (1974). It’s black-letter law that interstate\ncommerce begins when goods are delivered to the carrier\nand ends only after they’ve been unloaded and delivered\nto their recipient. By definition, then, cargo loading—and\ncargo loaders—are within that flow.\n C. Purpose and history only confirm what the text\nrequires: Airline employees are exempt. As Circuit City\nexplains, the exemption was designed to avoid\n“unsettl[ing]” the dispute-resolution regimes that\ngoverned and would soon be enacted to govern\ntransportation workers—and specifically, the\nTransportation Act of 1920 and the soon to be enacted\nRailway Labor Act. 532 U.S. at 121. Both statutes covered\nvirtually all railroad employees. And the Railway Labor\nAct today also covers all airline employees. If the FAA\ndoes not exempt these workers, it would have conflicted\nwith the dispute resolution regime in place for railroad\n -11-\n\nworkers when the statute was passed and the statute that\ngoverns railroad and airline employees today.\n II.A Claimant can’t overcome the text of the statute,\nso it asks this Court to rewrite it. The airline redefines\n“seamen” as international border-crossers and “railroad\nemployees” as interstate border-crossers. But as\nClaimant’s own authority demonstrates, neither is\ncorrect. The case law Claimant itself cites demonstrates\nthat seamen need not cross a single border—or even leave\na single state. So long as a shipworker contributed to the\nmission of the ship, they were a seaman. And the statute\nupon which Claimant rests its railroad employees\nargument itself applies to workers who never left the\nwatchtower.\n B. The airline’s attempt to redefine “engaged in\ncommerce” as personally “moving goods or people” across\nborders fares no better. Claimant cannot identify even a\nsingle example of the phrase “engaged in commerce” ever\nbeing given that meaning. If Congress wanted to exempt\nsolely those workers who crossed state lines, it could have\nsaid so. Instead, it used a phrase that had long been\nunderstood to include all those engaged in commerce—\nwhether they personally crossed state lines or not. This\nCourt has already rejected a similar attempt to redefine a\nsimilar statutory phrase. It should do the same here.\n III. Unable to find support in the statute’s text,\nClaimant appeals to policy. But, as this Court has already\nmade clear, any policy in favor of arbitration cannot trump\nthe FAA’s text. And in any event, policy considerations cut\nthe other way. Claimant’s proposed rule inevitably raises\nthe question: How does a court determine when a specific-\ntask-based class of workers crosses state lines? Is it when\nany of the workers do? Is there some threshold\n -12-\n\npercentage? Not to mention that by giving “engaged in\ncommerce” a unique meaning just for purposes of the\nFAA, Claimant does just what this Court has warned\nagainst: adopt a variable meaning for a common\njurisdictional phrase. The exemption is already narrow. It\napplies only to transportation workers. There’s no good\nreason to give it a meaning that its text cannot bear.\n ARGUMENT\nI. The FAA exempts the employment contracts of\n airline employees who load and unload cargo.\n The FAA exempts “seamen, railroad employees, or\nany other class of workers engaged in foreign or interstate\ncommerce.” 9 U.S.C. § 1. At issue in this case is whether\nairline employees who load and unload cargo are members\nof any “class of workers” that, like railroad employees and\nseamen, is “engaged in commerce.”\n For two reasons, they are:\n First, the statute’s text makes clear that railroad\nemployees and seamen are each a “class of workers\nengaged in commerce.” Railroad employees are\n“necessary” to “the free flow of goods” and passengers by\nrail. Circuit City, 532 U.S. at 121. And seamen are\n“necessary to the free flow of goods” by sea. Id. The\nanalogous class for air transportation is airline\nemployees—workers who are “necessary” to the\ntransportation of goods and passengers by plane. And just\nas rail and ship cargo loaders are railroad employees and\nseamen, airline cargo loaders are airline employees.\n Second, even if, as Claimant argues, the class of\nworkers is defined not by industry, but by specific job\ndescription, cargo loaders must be included because they\nare themselves engaged in interstate commerce as that\n -13-\n\nphrase was understood in 1925. The year before the FAA’s\nenactment, this Court recognized that cargo loaders are\n“engaged in interstate commerce.” Burtch, 263 U.S. at\n542. Overwhelming authority supports the point. Under\nany test, then, airline cargo loaders are covered.\n A. Airline employees are a “class of workers\n engaged in commerce” in the same way as\n seamen and railroad employees.\n 1. In interpreting the FAA, this Court looks to the\nmeaning of its terms at “the time of the Act’s adoption in\n1925.” New Prime, 139 S. Ct. at 539. Here, the key terms\nare “engaged in commerce,” “seamen,” and “railroad\nemployees.”\n There’s little dispute about the literal definition of the\nwords “engaged in commerce” in 1925. “Commerce with\nforeign countries and among the states” meant\n“intercourse and traffic, including . . . navigation and the\ntransportation and transit of persons and property.”\nMcCall v. California, 136 U.S. 104, 108 (1890); accord\nBlack’s Law Dictionary 220 (2d ed. 1910). Commerce\nencompassed “all the means, instruments, and places by\nand in which intercourse and traffic are carried on,” as\nwell as “the act of carrying them on at these places, and\nby and with these means.” McCall, 136 U.S. at 108.\n And the word “engaged” simply meant “occupied,”\n“employed,” or “involved.” Webster’s New International\nDictionary of the English Language 725 (1920). Thus, to\nbe “engaged in commerce” was to be “employed,”\n“occupied,” or “involved” in the trade or traffic between\npeople of different countries or states—be it the purchase\nor sale of goods, the transportation of those goods, or the\ntransportation of passengers.\n -14-\n\n In the FAA, “the words ‘any other class of workers\nengaged in commerce’ constitute a residual phrase,\nfollowing, in the same sentence, explicit reference to\n‘seamen’ and ‘railroad employees.’” Circuit City, 532 U.S.\nat 114. So that residual phrase must “be controlled and\ndefined by reference to the enumerated categories of\nworkers which are recited just before it.” Id. at 115. This\nmeans that the “class[es] of workers” exempt from the\nFAA are those “engaged in commerce” in the same way\nthat railroad employees and seamen were in 1925.\n As this Court made clear in Circuit City, the obvious\n“linkage” between railroad employees and seamen—the\nlinkage that “explains” their connection to the residual\nclause—is their “necessary role in the free flow of goods”\nand passengers; that is, their role in transportation. Id. at\n121.3 Railroad employees are “necessary” to the\ntransportation of goods and passengers by railroad, while\nseamen are “necessary” to the transportation of goods and\npassengers by boat. By the same token, airline employees\nare “necessary” to the transportation of goods and\npassengers by airplane—and hence they are a “class of\nworkers engaged in foreign or interstate commerce” in\nthe same way as those enumerated classes.\n Railroad employees. The ordinary meaning of\n“railroad employees” in 1925 was, if anything, “broad[er]”\nthan it is today. New Prime, 139 S. Ct. at 543. The term\nmeant, simply, those who do the work of the railroad. It\nwas not limited to employees who worked aboard a train\nand crossed state lines. Indeed, the vast majority of\nrailroad employees didn’t work aboard a train at all. See\n 3\n Circuit City does not specify passengers, but as Claimant\nrecognizes (at 17) it was beyond dispute in 1925 that commerce\nincludes the transportation of passengers, as well as goods.\n -15-\n\n39th Annual Report of the Interstate Commerce\nCommission, H.R. Doc. [DOCKET REDACTED], at 116–19 (1925).\nRailroad employees included not only conductors and\nengineers, but also station attendants, freight handlers,\nbaggagemen, signalmen, flagmen, and shop employees.\nSee, e.g., Int’l Ass’n of Machinists v. Atchison, Topeka, &\nSanta Fe Ry., Decision No. 2, 1 R.L.B. 13, 22–27 (1920)\n(setting wages for these employees).\n That’s how this Court used the term. See, e.g.,\nHeymann v. S. Ry. Co., 203 U.S. 270, 273 (1906) (referring\nto station agent who moved package from train platform\nto railroad’s freight warehouse). It’s how agencies that\ngoverned the railroads used it. See, e.g., United States\nRailroad Administration, General Order No. 27, Wages of\nRailroad Employees (1919) (setting wages for “railroad\nemployees,” which included those who worked in the yard,\nin the shop, or on the platform). And it’s how the term was\nused in dispute-resolution statutes. “In 1922, for example,\nthe Railroad Labor Board interpreted the word\n‘employee’ in the Transportation Act of 1920 to refer to\nanyone ‘engaged in the customary work directly\ncontributory to the operation of the railroads.’” New\nPrime, 139 S. Ct. at 543. The Railway Labor Act, the\ndispute-resolution statute enacted shortly after the FAA,\nhad a similarly broad definition. See Railway Labor Act,\nch. 347, § 1, 44 Stat. 577 (1926).\n In short: Railroad employees did the work of the\nrailroad. And when the work of the railroad was moving\nfreight, those who loaded and unloaded the train were\nrailroad employees. See, e.g., United Bhd. of Maint. of\nWay Emps. & Ry. Shop Laborers v. St. Louis Sw. Ry. Co.,\nDecision No. 120, 2 R.L.B. 96, 101–02 (1921) (citing\nnumerous decisions holding that baggage and freight\n -16-\n\nhandlers were railroad employees); Burtch, 263 U.S. at\n543.\n Seamen. Just as railroad employees were those who\ndo the work of the railroad, seamen were those who did\n“the ship’s work.” McDermott Int’l, Inc. v. Wilander, 498\nU.S. 337, 355 (1991) (explaining the meaning of seamen in\n1920). Thus, “seamen” included everyone from cooks and\nsurgeons to dredge workers, fishers, carpenters, and\ncargo loaders. See id. at 343; The Minna, 11 F. 759, 760\n(E.D. Mich. 1882).\n It was “not necessary that a seaman aid in navigation\nor contribute to the transportation of the vessel” itself. Id.\nat 355. Nor was it necessary to venture out into foreign\nwaters—or even leave the state. See, e.g., Ellis v. United\nStates, 206 U.S. 246, 259–60 (1907). In Ellis, for example,\nthis Court held that a crane operator employed on a\ndredge in Boston Harbor was a seaman. See id. So too\nwere pilots—workers primarily based at ports who went\naboard boats to help guide them into port. Wilander, 498\nU.S. at 344. As were barge workers who loaded and\nunloaded goods being shipped from one New York port to\nanother. Disbrow v. The Walsh Bros., 36 F. 607, 608\n(S.D.N.Y 1888), cited with approval in Ellis, 206 U.S. at\n260.\n To be sure, the prototypical seaman had—as modern\ncases have put it—an “employment-related connection to\na vessel.” Wilander, 498 U.S. at 354. But there was no\nrequirement that the vessel (or seaman) “sail[] the high\nseas.” Pet’r Br. 28. Instead, they needed only “contribute\nto the function of the vessel or to the accomplishment of\nits mission.” Id. at 340. If the vessel’s purpose was to\ndredge a harbor, the person operating the dredge was a\nseaman. Ellis, 206 U.S. at 259–60. If it was a passenger\n -17-\n\nship, the doctor was a seaman. See Wilander, 498 U.S. at\n355. And if it was a cargo vessel, the shipworkers who\nloaded and unloaded the cargo were seamen. See, e.g., The\nDonna Lane, 299 F. 977, 978 (W.D. Wash. 1924)\n(describing shipping articles as providing “[c]rew to load\nand discharge all cargo”); Disbrow, 36 F. at 608 (barge-\nworkers primarily engaged in “loading and unloading”\nwere seamen because a barge was a “vessel engaged in the\ntransportation of cargo”).4\n Airline employees. The obvious parallel to seamen\nand railroad employees—both of which are a “class of\nworkers” engaged in commerce—is airline employees. As\nan industry, air transportation has the same relationship\nto commerce as transportation by sea or rail. Airlines\ntoday play the same “necessary role” in commerce as\nrailroads and shipping companies did in 1925—providing\na dominant mode of transportation for getting goods and\npassengers from one place to another. See Bureau of\nTransportation Statistics, [URL REDACTED]\n(last visited Feb. 24, 2022) (U.S. airlines carried over 371\nmillion passengers in 2020); TranStats, Bureau of\nTransportation Statistics, [URL REDACTED]\n(U.S. airlines shipped over 37 billion pounds of freight in\n2020).\n And the workers who do the work of the airlines have\nthe same relationship to commerce as those who do the\nwork of the railroad or ship. If anything, airline workers\nhave a closer connection to interstate commerce than\nsome seaman, for example, who might work on a\n\n 4\n See also, e.g., The Minna, 11 F. at 760 (“I have never heard it\nquestioned but that the deck hands of a lake propeller, whose duties\nare simply to load and discharge fuel and freight . . . are entitled to” a\nseaman’s lien for wages.).\n -18-\n\nstationary vessel. See, e.g., Stewart, 543 U.S. at 486, 495–\n97 (2005). As a result, the relevant “class of workers”\nengaged in commerce is airline employees.\n In resisting this conclusion, Claimant argues that\nthe relevant “class of workers” is not airline employees\nbut cargo loaders (or their immediate supervisors). Pet’r\nBr. 33–35. But that job-title-specific view is at odds with\nthe text of the statute, which treats the relevant class at a\nhigher level of generality. The words “any other” make\nclear that “seamen” and “railroad employees” are each a\n“class of workers” under the statute (and that the class is\n“engaged in foreign or interstate commerce”). 9 U.S.C.\n§ 1; see also Circuit City, 532 U.S. at 114 (noting that both\nare “classes of workers”). Under the logic of ejusdem\ngeneris, then, the “class of workers” in the residual clause\nshould be treated at a similar level generality—a category\nakin to “railroad employees” and “seamen,” but for\nairlines. To do otherwise, as Claimant does (at 34), is to\ndestroy the parallelism by comparing the “class” of\n“railroad employees” and “seamen”—classes defined by\ntheir industry, both of which included many different\ntypes of tasks—with the job-title category of “ramp-agent\nsupervisors.”\n Because airline cargo loaders like Ms. Respondent do the\nwork of the airline, they are airline employees “engaged\nin commerce” and thus are exempt from the FAA. Ms.\nRespondent’s contract of employment with Claimant is,\ntherefore, exempt from the FAA.\n B. Even if the relevant class is cargo loaders,\n they are “engaged in commerce.”\n Even if, as Claimant argues, the class of workers\nshould be defined not by industry—like seamen and\nrailroad employees—but by specific job description, cargo\n -19-\n\nloaders would still be exempt. By the time the FAA was\nenacted, it had been clear for decades that loading and\nunloading is commerce; and that cargo loaders, therefore,\nare “engaged in commerce.” Indeed, the year before the\nFAA was enacted, this Court held the proposition was “too\nplain to require discussion.” Burtch, 263 U.S. at 544. Even\nthe FAA itself makes this clear. That, too, is enough to\nresolve this case.\n 1. When the FAA was enacted, it was well\n established that cargo loaders are\n engaged in commerce.\n Surrounding text. The statutory language leading up\nto the phrase “engaged in commerce” provides the first\nclue. The transportation-worker exemption is at the end\nof a long sentence that begins by defining maritime\ntransactions. “Maritime transactions,” the statute says,\n“means charter parties, bills of lading of water carriers,\nagreements relating to wharfage,” or “any other matters\nin foreign commerce . . . within admiralty jurisdiction.” 9\nU.S.C. § 1 (emphasis added). Wharfage is the “money\npaid” to a dock-owner “for landing goods upon, or loading\nthem from, a wharf”—that is, for loading goods onto a ship\nand unloading them. Bouvier’s Law Dictionary 3450 (8th\ned. 1914).\n Thus, according to the FAA itself, loading and\nunloading goods is a “matter[] in foreign commerce.” 9\nU.S.C. § 1 (emphasis added). Because even Claimant\ndoes not dispute that employees whose work is “in\ncommerce” are, by definition, “engaged in commerce,” the\nFAA itself makes clear that cargo loaders are “engaged in\ncommerce.”\n The statute’s reference to “seamen” and “railroad\nemployees” reinforces the point. As explained above, in\n -20-\n\n1925, seamen routinely loaded and unloaded ships. And\nrailroad employees routinely loaded and unloaded trains.\nAirline cargo loaders are no different. Just like those who\nload boats and those who load trains, airline cargo loaders\nare “engaged in commerce.”\n Precedent. Even without these other textual\nindications, it would be clear that the statute exempts\ncargo loaders. “We normally assume that, when Congress\nenacts statutes, it is aware of relevant judicial precedent.”\nMerck & Co. v. Reynolds, 559 U.S. 633, 648 (2010).\nCongress enacted the FAA against the backdrop of\ndecades of cases holding that loading and unloading is\nitself transportation; that it is commerce—and that cargo\nloaders, therefore, are “engaged in commerce.”\n a. Cargo loaders are core transportation workers.\nWithout them, “[c]arrying-vessels would be of little or no\nvalue.” Ex parte Easton, 95 U.S. 68, 75 (1877). Foreign and\ninterstate transportation necessarily entails “the taking\nup of persons or property at some point and putting them\ndown at another.” Gloucester Ferry Co. v. Pennsylvania,\n114 U.S. 196, 203 (1885). Loading and unloading, then, is\n“as much a part of the interstate transportation” of goods\nas their “movement across the state line.” St. Louis, S.F.\n& Tex. Ry. Co. v. Seale, 229 U.S. 156, 161 (1913).\n In the years preceding the passage of the FAA, this\nCourt repeatedly held as much. In contract cases, in\nCommerce Clause cases, in statutory-interpretation\ncases, the principle was always the same: “[T]he business\nof landing and receiving passengers and freight” is “a part\nof” their “transportation.” Gloucester Ferry, 114 U.S. at\n203; see, e.g., City of Sault Ste. Marie v. Int’l Transit Co.,\n234 U.S. 333, 340–41 (1914) (Commerce Clause case\nholding that “receiving and landing” of “passengers and\n -21-\n\nproperty” is “an essential part of the[ir] interstate\ntransportation”); United States v. Union Stockyards &\nTransit Co. of Chi., 226 U.S. 286, 304 (1912) (Interstate\nCommerce Act case holding that loading and unloading is\ntransportation); Erie R.R. Co. v. Shuart, 250 U.S. 465, 468\n(1919) (contract interpretation case holding that “there\ncould be no doubt” that “the work of unloading” cargo by\na carrier was transportation).\n Statutes, too, reflected this common understanding.\nSee, e.g., Harter Act, ch. 105, §1, 27 Stat. 445 (1893)\n(prohibiting cargo vessels from liability for the “proper\nloading, stowage, . . . or proper delivery of any and all\nlawful merchandise or property committed to” them for\ncarriage).\n b. By the time the FAA was enacted, then, it had long\n“been clear” that this essential transportation work is an\nintegral part of foreign and interstate commerce—and\nthat those engaged in it are, therefore, “engaged” in\ncommerce. City of Sault Ste. Marie, 234 U.S. at 340.\n The FAA wasn’t the first statutory provision to apply\nsolely to transportation workers “engaged in commerce.”\nSeventeen years earlier, Congress enacted the Federal\nEmployers’ Liability Act, which used “almost exactly the\nsame phraseology.” Tenney Eng’g, Inc. v. United Elec.\nRadio & Mach. Workers of Am., (U.E.) Local 437, 207\nF.2d 450, 453 (3d Cir. 1953). FELA required railroads to\ncompensate employees who were injured while the\nrailroad was “engaging in commerce” and the employee\nwas “employed by such carrier in such commerce.”\nFederal Employers’ Liability Act of 1908, ch. 149, 35 Stat.\n65. By its terms, then, the Act applied only where both the\nrailroad and the railroad employee were “engaged in\ncommerce” when the employee was injured. See Second\n -22-\n\nEmp’rs’ Liab. Cases, 223 U.S. 1, 47 (1912); Phila., Balt. &\nWash. R.R. Co. v. Smith, 250 U.S. 101, 102 (1919).\n In interpreting FELA, this Court repeatedly held\nthat railroad employees were “engaged in commerce” if\nthey were “engaged in interstate transportation, or in\nwork so closely related to it as to be practically a part of\nit.” Shanks v. Del., Lackwanna, & W. R.R. Co., 239 U.S.\n556, 558 (1916).\n Given the decades of precedent holding that cargo\nloading is transportation, applying that test to cargo\nloaders was straightforward. And the year before the\nFAA’s enactment, this Court held that “the loading or\nunloading of an interstate shipment by the employees of a\ncarrier” are “engaged in interstate commerce.” Burtch,\n263 U.S. at 542, 544.\n Nor was this holding unique to FELA. To the\ncontrary, it reflected decades of precedent holding that\nloading and unloading is commerce. See, e.g., Gloucester\nFerry, 114 U.S. at 196 (a tax on loading and unloading\ninterstate passengers and freight is a tax “upon the\ncommerce between the two states”); Crutcher v.\nKentucky, 141 U.S. 47, 57 (1891) (a regulation of foreign\nships “landing goods and passengers” is a regulation of\n“foreign commerce”); Easton, 95 U.S. at 75 (a place to load\nand unload goods is “wellnigh as essential to commerce as\nships and vessels” themselves); Tex. Transp. & Terminal\nCo. v. City of New Orleans, 264 U.S. 150, 151 (1924)\n(arranging for cargo to be loaded and unloaded is\n“interstate or foreign commerce”).\n And this Court had repeatedly held that to load or\nunload cargo, therefore, was to engage in commerce. See,\ne.g., Old Dominion S.S. Co. v. Virginia, 198 U.S. 299, 299–\n300, 306, 309–10 (1905) (tugs used to load and unload ships\n -23-\n\nwere “engaged in interstate commerce”); Foster v.\nDavenport, 63 U.S. (22 How.) 244, 245–46 (1859) (small\nboat used to load and unload cargo from ships too large to\ndock was “employed” in commerce); Hays v. Pac. Mail\nS.S. Co., 58 U.S. (17 How.) 596, 597, 599–600 (1854) (ship\nunloading “passengers and freight” is “engaged in lawful\ntrade and commerce”).\n Ordinarily, “we assume that when a statute uses” a\nphrase that has been defined by this Court, “Congress\nintended” that phrase “to have its established meaning.”\nWilander, 498 U.S. at 342. The FAA is no exception.\n 2. The more recent usage of the phrase\n “engaged in commerce” as a term of art\n also encompasses cargo loaders.\n Cargo loaders are “engaged in commerce” even under\nthe more recent understanding of those words as a\njurisdictional term of art. See Circuit City, 532 U.S. at\n117–18. Used in this way, this Court has defined “engaged\nin commerce” as a term of art to mean “persons or\nactivities within the flow of interstate commerce”—as\nopposed to conduct that merely affects interstate\ncommerce. Gulf Oil Corp. v. Copp Paving Co., 419 U.S.\n186, 195 (1974). Cargo loaders easily satisfy this definition.\n It has been well established for over a century that\ninterstate commerce begins when goods are delivered to a\ncarrier to be loaded onto a train or boat. S. Pac. Terminal\nCo. v. Interstate Com. Comm’n, 219 U.S. 498, 526–27\n(1911). And they remain in the “channels of interstate\ncommerce” until they’ve been delivered. Browning v. City\nof Waycross, 233 U.S. 16, 19–20 (1913); see Rhodes v. Iowa,\n170 U.S. 412, 414 (1898); see also Covington Stock-Yards\nCo. v. Keith, 139 U.S. 128, 136 (1891) (“[T]ransportation\n. . . begins with [goods’] delivery to the carrier to be loaded\n -24-\n\nupon its cars, and ends only after the [goods are] unloaded\nand delivered, or offered to be delivered.”).5\n Thus, loading and unloading is, by definition, an\nactivity “within the flow of interstate commerce.” Loading\ncargo onto a plane (or train or boat) occurs after the cargo\nhas been delivered to the carrier—that is, after its\ntransportation in commerce has begun. And unloading\nthat cargo occurs before it can be delivered—before the\ncommerce has ended. Cargo loaders, therefore,\n“participate directly” in the flow of interstate commerce.\nUnited States v. Am. Bldg. Maint. Indus., 422 U.S. 271,\n285 (1975).\n That’s why this Court has continued to hold that\nworkers “busied in loading or unloading an interstate or\nforeign vessel” are “engaged in interstate or foreign\ncommerce”—well after the phrase became a term of art.\nSee, e.g., Puget Sound Stevedoring Co. v. Tax Comm’n of\nState of Wash., 302 U.S. 90, 92 (1937), overruled on other\ngrounds by Dep’t of Revenue of State of Wash. v. Ass’n of\nWash. Stevedoring Cos., 435 U.S. 734 (1978); accord\nJoseph v. Carter & Weekes Stevedoring Co., 330 U.S. 422,\n433–34 (1947), overruled on other grounds by Wash.\nStevedoring Cos., 435 U.S. at 734; Int’l Longshoremen’s\nAss’n, AFL-CIO v. Allied Int’l, Inc., 456 U.S. 212, 218–19\n& n.13 (1982).\n\n 5\n Of course, vessels intended to be used “for indefinite storage”\nor as a point of sale to the public might no longer be in commerce even\nif they’re not unloaded. See, e.g., Tex. Co. v. Brown, 258 U.S. 466, 477–\n78 (1922). But in the ordinary course, when a carrier was responsible\nfor transporting someone else’s goods, loading and unloading those\ngoods occurred “in commerce.” See, e.g., Swift & Co. v. Hocking\nValley Ry. Co., 243 U.S. 281, 290 (1917); Binderup v. Pathe Exch.,\nInc., 263 U.S. 291, 309 (1923).\n -25-\n\n Cargo loaders, this Court has explained, whether they\npersonally load cargo or supervise the loading, are “as\nmuch an agency of commerce as” the ship’s “master.”\nPuget Sound, 302 U.S. at 92. They are as much within the\nflow of commerce. See id. They are, therefore, equally\n“engaged in commerce.”\n C. The purpose and historical context of the\n exemption confirm that airline cargo loaders\n are exempt.\n The text of the FAA and case law at the time of its\nenactment leave no doubt that it exempts airline\nemployees who load and unload cargo. But if further\nevidence were needed, the purpose and historical context\nof the exemption confirm the statute’s plain meaning. As\nthis Court explained in Circuit City, Congress crafted the\nexemption for a “simple reason”: to avoid “unsettl[ing]”\nthe “dispute resolution schemes” that it was developing to\ngovern transportation workers and protect “the free flow\nof goods” and passengers. 532 U.S. at 121.\n In 1925, this was an urgent task. The labor unrest that\nhad wracked the transportation industries for decades\nregularly ground commerce to a halt—particularly in the\nrailroad industry. See William G. Mahoney, The Interstate\nCommerce Commission/Surface Transportation Board\nas Regulator of Labor’s Rights and Deregulator of\nRailroads’ Obligations, 24 Transp. L.J. 241, 245 n.19, 247\n(1997) (detailing hundreds of strikes). These strikes were\nnot limited to those who worked aboard the train. Not long\nbefore the FAA was passed, for example, a nationwide\nstrike of railroad shopmen—train repair and maintenance\nworkers—paralyzed the railroads for months. See\nMargaret Gadsby, Strike of the Railroad Shopmen, 15\nMonthly Lab. Rev., no. 6 (Dec. 1922) at 1–2, 6.\n -26-\n\n Congress had repeatedly tried to quell the unrest—\nand its impact on commerce—by passing dispute-\nresolution statutes governing the railroad industry. In\n1925, the dispute-resolution statute that governed the\nindustry was the Transportation Act of 1920, ch. 91, 41\nStat. 456. That statute imposed a “duty” on “all carriers\nand their officers, employees, and agents to exert every\nreasonable effort” to ensure that labor disputes did not\ncause “any interruption to the operation of any carrier.”\nId. § 300, 41 Stat. at 469. The statute governed all railroad\nemployees, not just those who worked on the train—\nincluding freight handlers and baggage and parcel room\nemployees. See, e.g., id.; Int’l Ass’n of Machinists, 1\nR.L.B. at 22; Ry. Emps.’ Dept., A.F. of L. (Federated Shop\nCrafts) v. Ind. Harbor Belt R.R. Co., Decision No. 982, 3\nR.L.B. 332, 337 (1922).\n If the FAA did not exempt these employees, it would\nhave done precisely what this Court says it was designed\nto avoid: unsettle the dispute-resolution statute that\ngoverned the railroad industry at the time “in favor of\nwhatever arbitration procedures the parties’ private\ncontracts might happen to contemplate.” New Prime, 139\nS. Ct. at 537.\n The same is true of airline employees today. Not long\nafter the FAA was passed, Congress replaced the\nTransportation Act with the Railway Labor Act—a\nstatute drafted by labor and industry together to end the\ncycle of labor disputes and strikes once and for all. See\nRailway Labor Act, ch. 347, 44 Stat. 577 (1926); see also\nHighlights of the Railway Labor Act, R.R. Admin. Off. of\nPol’y, [URL REDACTED] (last visited Feb. 24,\n2022). And in 1936, Congress extended the Act to cover\nairline employees. An Act to Amend the Railway Labor\n -27-\n\nAct § 202, 45 U.S.C. § 182. The Railway Labor Act\ncontinues to govern railroad and airline workers to this\nday.6\n And it, too, is broad. It covers “every air pilot or other\nperson who performs any work as an employee or\nsubordinate official” of an air carrier—including cargo\nloaders. 45 U.S.C. § 181. The statute sets forth detailed\ndispute-resolution procedures to govern labor disputes,\nsee id. §§ 183–85—procedures that, for decades, have, for\nthe most part, worked. If the FAA does not exempt these\nworkers, they will be subject to two separate dispute-\nresolution statutes, again, doing exactly what Circuit City\nsays the exemption was designed to avoid. See Circuit\nCity, 532 U.S. at 121 (citing Railway Labor Act and its\nextension to airline employees as a dispute-resolution\nstatute the failure to exempt transportation workers from\nthe FAA would unsettle).7\n\n 6\n Claimant asserts (at 46) that this Court should ignore the\nTransportation Act because it was eventually replaced with the\nRailway Labor Act, and should ignore the Railway Labor Act because\nit hadn’t been passed yet. This Court should do neither. Whatever the\nproblems with the Transportation Act, they were not with its\ndefinition of employees. Congress enacted a similarly broad definition\nin the Railway Labor Act. And if that weren’t enough, the bill\nCongress was considering contemporaneously with the FAA—that\nwas ultimately rejected in favor of the Railway Labor Act—also had\na similarly broad definition. See S. 2646, 68th Cong. § 1(6) (1924).\nWhen Congress passed the FAA, it was clear that all railroad\nemployees were—and would continue to be—covered by other\ndispute-resolution statutes.\n 7\n Claimant argues (at 48) that Ms. Respondent isn’t a member of a\nunion, so the Railway Labor Act doesn’t apply to her. But the\ntransportation-worker exemption doesn’t distinguish between\nunionized and nonunionized employees. If Ms. Respondent isn’t exempt,\nneither are airline cargo loaders that are subject to the Act.\n -28-\n\n D. Ms. Respondent is a cargo loader whose contract of\n employment is exempt from the Federal\n Arbitration Act.\n Despite her job title, Ms. Respondent spends most of her\ndays loading and unloading cargo herself. See Pet. 9a–10a.\nClaimant claims that she only “occasionally assisted\nramp agents in the loading and unloading process.” Pet’r\nBr. 7. But the airline offers no basis for that assertion and\nthe record demonstrates that Ms. Respondent, like other ramp\nsupervisors, in fact spends most of her time—an estimated\nthree out of five days a week—actually loading and\nunloading cargo herself. Pet. 9a–10a; App. 29. As the court\nof appeals explained, “Claimant offered no evidence to\ncontradict this estimate.” Pet. 10a.\n But even if Ms. Respondent’s job consisted mostly of\nsupervising others, the outcome would be the same.\nSupervisors of cargo loaders are just as integral to the\nairline’s transportation mission as cargo loaders and are,\nthemselves, engaged in commerce. See Puget Sound, 302\nU.S. at 92 (“A stevedore who in person or by servants does\nwork so indispensable is as much an agency of commerce\nas shipowner or master.”). Claimant’s own cases show\nthat supervisors were seamen. See Wilander, 498 U.S. at\n339 (paint foreman); Chandris, Inc. v. Latsis, 515 U.S. 347,\n350 (1995) (supervising engineer). And railroad\nemployees, too, included supervisors. H.R. Doc. [DOCKET REDACTED]\nat 118 (“[s]upervising baggage agents”); Int’l Ass’n of\nMachinists, 1 R.L.B. at 22–23, 27 (“baggage and parcel\nroom employees,” “[s]towers or stevedores,” and\n“supervisors” performing “analogous service[s]”).\n However she is labeled—cargo loader, supervisor of\ncargo loaders, or ramp supervisor—Ms. Respondent falls within\n -29-\n\na class of workers engaged in commerce and so her\ncontract of employment is exempt from the FAA.\nII. Claimant’s contrary interpretation has no basis\n in the statute.\n Claimant argues that the words “engaged in\ncommerce,” as used in the FAA, mean working aboard a\nvessel crossing state or international boundaries. That\ninterpretation has no basis in what it meant to be a seaman\nor railroad employee when the FAA was enacted. And it\nhas no basis in what it meant to be “engaged in\ncommerce.”\n A. Neither railroad employees nor seamen were\n defined by border-crossing.\n Claimant argues that the link between seamen and\nrailroad employees is not, as this Court held in Circuit\nCity, their “necessary role in the free flow of goods.” 532\nU.S. at 121. Instead, the airline contends, it is that both\nclasses of workers in 1925 “predominantly” worked\naboard a vessel and crossed borders. Pet’r Br. 34. But the\nvast majority of railroad employees in 1925 neither\nworked aboard a vessel nor crossed state lines. And while\nseamen were defined by their connection to a vessel, it was\nwell established that they need not—and often did not—\ncross any borders. The common link between railroad\nemployees and seamen therefore cannot be border-\ncrossing or vessel-boarding. See Cleveland v. United\nStates, 329 U.S. 14, 17 (1946) (“[W]e could not give the\nwords a faithful interpretation if we confined them more\nnarrowly than the class of which they are a part.”).\n Railroad employees. Claimant cannot seriously\ndispute that the ordinary meaning of railroad employees\nin 1925 was simply those who did the work of the\n -30-\n\nrailroad—or that this ordinary meaning included cargo\nloaders. So instead, it asks this Court to adopt an unusual\ndefinition: workers subject to the Hours of Service Act.\nThat statute, Claimant asserts, applied solely to those\nrailroad employees who “traveled from state to state.”\nPet’r Br. 26.\n But, by its terms, the Hours of Service Act didn’t\napply solely to those workers who crossed state lines. To\nthe contrary, the statute specifically identified multiple\ngroups of workers who did not travel at all but were\nnevertheless covered: operators, train dispatchers, and\nany other employees who transmitted “orders pertaining\nto or affecting train movements” from an office, tower, or\nstation. Hours of Service Act, ch. 2939, § 2, 34 Stat. 1415,\n1416 (1907).\n The point of the statute was to prevent train accidents\nby limiting the hours of workers whose jobs were critical\nto the safety of the train. See Chi. & Alton R.R. Co. v.\nUnited States, 247 U.S. 197, 199 (1918); United States v.\nPa. R.R. Co., 239 F. 576, 577 (E.D. Pa. 1917). So its\napplication did not depend on whether a railroad employee\nrode the rails or watched the yard. It depended on\nwhether their vigilance on the job was essential to\npreventing train collisions. See Chi. & Alton R.R. Co, 247\nU.S. at 199–200 (holding that a railroad employee “on duty\n. . . in a shanty” was subject to the statute).8\n\n\n 8\n Claimant also cites the Boiler Inspection Act, ch. 103, § 1, 36\nStat. 913 (1911), which established a system for inspecting locomotive\nboilers. It’s unclear why the Act contains any definition of employees\nat all—it may just have been a mistake. See 46 Cong. Rec. 2074 (1911)\n(explaining that there were “many inaccuracies and awkward\nexpressions” in the bill that Congress decided not to correct because\n -31-\n\n Moreover, there’s no reason to interpret the FAA, a\nstatute about dispute resolution, as having the same scope\nas a statute designed to prevent train accidents. The\ncentral purpose of the transportation-worker exemption\nwas to avoid unsettling pre-existing (and soon to be\nenacted) dispute-resolution schemes, see Circuit City, 532\nU.S. at 121—statutes that had long used the ordinary\nmeaning of railroad employees. Cf. Antonin Scalia &\nBryan A. Garner, Reading Law 252 (2012) (“[L]aws\ndealing with the same subject . . . should if possible be\ninterpreted harmoniously.”).\n Seamen. Claimant’s effort to redefine seamen as\nlimited to international border crossers fares no better. It\nwas well established that ship workers need not venture\nout into foreign waters—or even leave the state—to be\nconsidered seamen. See, e.g., Ellis, 206 U.S. at 259.\n Claimant’s own authority proves the point. The\nairline opens its discussion of seamen by citing Stewart v.\nDutra for the proposition that the term seamen was\n“limited to workers who rode the waves transporting\ngoods or people.” Pet’r Br. 24 (citing 543 U.S. at 487). But\nStewart holds almost precisely the opposite: that a dredge\ndigging a trench beneath Boston Harbor—that is, a\nwatercraft that goes almost nowhere—is a vessel. 543 U.S.\nat 484–85, 490–97. And, therefore, the decision makes\nclear, those employed on the dredge who contribute to its\npurpose are seamen—even though they never leave the\nharbor. See id. at 487–88, 494–95; see also Stewart v.\n\nlabor and industry had already agreed to its text). Its only reference\nto employees is a requirement for carriers to file inspection reports,\n“under the oath of the proper officer or employee.” § 6, 36 Stat. at 915.\nThe “proper officer or employee” to file government reports would\npresumably be an office employee—not one who worked on trains.\n -32-\n\nDutra Const. Co., 418 F.3d 32, 36 (1st Cir. 2005)\n(explaining, on remand, that this Court’s decision “shows\nbeyond hope of contradiction that the plaintiff”—an\nengineer aboard the dredge—was a “seaman”); Sw.\nMarine, Inc. v. Gizoni, 502 U.S. 81, 92 (1991) (foreman\nwho worked on floating platform in ship repair facility in\na single state could be seaman).9\n Claimant also relies on the Shipping Commissioners’\nAct, but that statute defined “ship[s]” to “comprehend\nevery description of vessel navigating on any sea or\nchannel, lake or river”—which are local bodies of water.\nShipping Commissioners’ Act, ch. 322, § 65, 17 Stat. 262,\n277 (1872) (emphasis added); see also Revised Statutes of\n1873, § 3 (defining “vessel” for any statute without its own\ndefinition to include any craft “used, or capable of being\nused, as a means of transportation on water”).\n Claimant emphasizes (at 24) that Section 12 of the\nShipping Commissioners Act was explicitly limited to\nforeign voyages and those from one coast to the other. See\nid. § 12. But the need to explicitly specify that a statutory\n\n 9\n Claimant also repeatedly mischaracterizes this Court’s\ndecision in Chandris, Inc. v. Latsis, 515 U.S. 347 (1995). For example,\nit cites Chandris for the proposition that “seamen served ‘a significant\nportion’ of their time at sea sailing from port to port.” Pet’r Br. 30.\nBut what Chandris actually says—and it is not even Chandris that\nsays this; it’s a parenthetical quoting a treatise—is that seamen must\n“demonstrate that a significant portion” of their “work was done\naboard a vessel.” Chandris, 515 U.S. at 361 (emphasis added).\nNothing about “sailing from port to port.” Similarly, Claimant cites\nChandris for the proposition that “primarily working on a vessel\nduring an international or interstate voyage was ‘the essence of what\nit mean[t] to be a seaman.’” Pet’r Br. 26. But Chandris does not say\nthat either. The “essence” of being a seaman, Chandris holds, is the\nseaman’s “connection with a vessel.” Id. at 369–70. The “international\nor interstate voyage” characterization is Claimant’s creation.\n -33-\n\nprovision governing seamen applied only to long voyages\ndemonstrates that seamen were not defined by their\ntravel across borders—otherwise, such a limitation would\nbe unnecessary. Congress limited some statutory\nprovisions governing seamen to long voyages, not because\nthose who didn’t cross borders weren’t seamen, but\nbecause seamen “with frequent opportunities for reaching\nports” didn’t need the same protections. See Inter-Island\nSteam Navigation Co. v. Byrne, 239 U.S. 459, 462–63\n(1915).\n Stevedores. Claimant relies heavily on the assertion\nthat seamen did not include stevedores—land-based\nworkers who specialized in loading and unloading. As an\ninitial matter, that wasn’t universally true: As Claimant\nitself acknowledges, just a year after the FAA was passed,\nthis Court held that stevedores were seamen for purposes\nof the Jones Act, a workers’ compensation statute passed\nin 1920 that only covered seamen. See Int’l Stevedoring\nCo. v. Haverty, 272 U.S. 50, 52 (1926); Wilander, 498 U.S.\nat 346–47 (explaining that Haverty followed earlier lower-\ncourt decisions interpreting “seamen” broadly).\n And the word seamen was used to mean stevedores in\nhearings leading up to passage of the FAA itself. See Sales\nand Contracts to Sell in Interstate and Foreign\nCommerce, and Federal Commercial Arbitration:\nHearing on S. 4213 and S. 4214 Before a Subcomm. on the\nJudiciary, U.S. Sen., 67th Cong. 9 (1923) (Statement of\nW.H.H. Piatt) (lead drafter of the FAA testifying that to\navoid the “danger” that the FAA would “compel”\narbitration “between the stevedores and their employers,”\nthe statute should contain an exemption for “seamen or\nany other class of workers in interstate or foreign\ncommerce” (emphasis added)).\n -34-\n\n Regardless, the question isn’t whether cargo\nloaders are seamen. It’s whether they are members of a\nclass of workers engaged in commerce in the same way as\nseamen (and railroad employees). There’s no doubt that\nairline cargo loaders are engaged in commerce in the same\nway as seamen and railroad employees. For one thing,\nstevedores and seamen both loaded and unloaded cargo\nfrom boats—that is, seamen still included cargo loaders,\neven when the term didn’t include stevedores specifically.\nSee, e.g., To Promote the Welfare of American Seamen:\nHearings on H.R. 8069 Before the H. Comm. on the\nMerch. Marine & Fisheries, 66th Cong. 41, 106 (1919)\n(statement of Leslie A. Parks, Able Seaman, New York\nCity) (“In the freight ships the deck crews load and\nunload.”). And stevedores who worked for the railroad\nwere “railroad employees.” See Int’l Ass’n of Machinists,\n1 R.L.B. at 22–23.\n More importantly, this Court has explicitly held that\nstevedores have “the same relation” to commerce as\nseamen do. Puget Sound, 302 U.S. at 92 (emphasis added);\nsee also Joseph, 330 U.S. at 427 (“stevedoring” is\n“obviously a continuation of [] transportation” because\n“transportation in commerce, at the least, begins with\nloading and ends with unloading”); Ass’n of Wash.\nStevedoring Cos., 435 U.S. at 749–50 (reaffirming that\nstevedoring is an “interstate commerce activity” even\nwhile overruling cases holding that states could not tax it).\n “Transportation of a cargo by water is impossible or\nfutile unless the thing to be transported is put aboard the\nship and taken off at destination”—regardless of who\nperforms the loading and unloading. Puget Sound, 302\nU.S. at 92. Historically, the work of loading and unloading\nships had been performed entirely by the ship’s crew. See\n -35-\n\nAtl. Transp. Co. v. Imbrovek, 234 U.S. 52, 61–62 (1914).\n“[B]ut, owing to the exigencies of increasing commerce\nand the demand for rapidity and special skill,” by the early\ntwentieth century, “it ha[d] become a specialized service,”\noften performed by stevedores. Id. at 62. But that didn’t\nmake that service any less integral to commerce. Puget\nSound, 302 U.S. at 92.\n Claimant argues that these cases rely on the\nincorrect assumption that stevedores are seamen. But the\nwhole point of these cases is that stevedores are engaged\nin commerce even though they are not part of the crew,\nbecause cargo loading is itself commerce—regardless of\nwho does it. See id.\n Thus, this Court’s cases about stevedoring only\nfurther demonstrate that cargo loaders are engaged in\ncommerce.\n B. The phrase “engaged in commerce” has never\n meant physically crossing state lines.\n Claimant proposes that this Court read “engaged in\ncommerce” to mean physically crossing borders. But the\nairline can’t locate even a single relevant example of a\ncourt, administrative agency, or other authority that has\nadopted its proposal. If Congress wanted to exempt solely\nthose workers who crossed state lines, it would have said\nso. Instead, it used a phrase that had long been\nunderstood to include all those engaged in commerce—\nwhether they personally crossed state lines or not. This\nCourt has already rejected a similar attempt to redefine a\nsimilar statutory phrase. It should do the same here.\n 1. In McElroy v. United States, this Court considered\na criminal statute prohibiting “the transportation in\ninterstate or foreign commerce of any forged securities.”\n -36-\n\n455 U.S. at 642 (cleaned up). The “origin of the interstate\ncommerce element” was an Act passed in 1919, just a few\nyears before the FAA was enacted. Id. at 649–50 Much\nlike Claimant here, the defendant argued that the\nstatute’s reference to “transportation in interstate or\nforeign commerce” meant that it was “limited to unlawful\nactivities that occur while crossing state borders.” Id. at\n648.\n This Court held otherwise. If Congress wanted to\nlimit the statute to border-crossing, the Court explained,\n“Congress could have written the statute” that way. Id.\nInstead, though, the statute used the phrase “in interstate\nor foreign commerce,” a phrase this Court had repeatedly\nheld was not limited to crossing state lines. See id. By\n1919, “this Court had made clear that interstate commerce\nbegins well before state lines are crossed, and ends only\nwhen movement of the item in question has ceased in the\ndestination State.” Id. at 653. Given that Congress could\nhave—but didn’t—limit the statute to border-crossing,\nthis Court held, “there is no basis” to “adopt such a limited\nreading.” Id. at 656.\n 2. Despite McElroy, Claimant identifies no case that\nsupports limiting Congress’s use of the phrase “engaged\nin commerce” in 1925 to mean “physically crossing state\nlines.” The airline’s lead authorities for this argument—a\npair of cases from the 1970s (Pet’r Br. 2)—shed no light on\nwhat Congress meant fifty years earlier. The formulation\non which Claimant relies, “direct participation” in the\n“interstate flow of goods,” emerged well after the FAA\nwas passed, once the phrase “engaged in commerce” had\nbecome a term of art. See Circuit City, 532 U.S. at 117.\n In any event, as explained above, cargo loaders easily\nmeet this standard: Where a good or passenger is\n -37-\n\ntraveling from one state to another, it is in interstate\ntransportation—in commerce—from the moment it is\ndelivered to the carrier to the time it reaches the\nrecipient. See, e.g., Dahnke-Walker Milling Co. v.\nBondurant, 257 U.S. 282, 290–91 (1921). And every part of\nits handling throughout is, itself, commerce—even those\nthat take place within a single state. See, e.g., Rhodes, 170\nU.S. at 413–14, 419 (transfer from platform to warehouse\nfor delivery).\n Claimant’s own authority proves the point. Take, for\nexample, People of State of N.Y. ex rel. Pa. R.R. Co. v.\nKnight, 192 U.S. 21 (1904). There, this Court held that\n“[u]ndoubtedly, a single act of carriage or transportation\nwholly within a state may be part of a continuous\ninterstate carriage or transportation.” Id. at 26. And it\nreiterated that a good begins its interstate journey when\nit’s “committed to a common carrier for transportation to\nsuch state.” Id. at 28. The local taxi service in that case,\noffered by a railroad, was not interstate transportation\nbecause it had “no contractual or necessary relation to\ninterstate transportation.” Id. at 27. It was “contracted\nand paid for independently of any contract or payment”\nfor interstate railroad transportation. See id. at 26. In\nother words, it was not part of the passengers’ continuous\njourney from one state to another. It was a separate,\noptional local service. This Court has already held that\nloading interstate or foreign cargo “has no resemblance”\nto the taxi service in Knight. See Puget Sound, 302 U.S. at\n93–94. Unlike that taxi service, which was “independent[]”\nof any interstate transportation, cargo loading is\n“essential” to “commerce.” Id. “The movement is\ncontinuous, is covered by a single contract, and is\nnecessary in all its stages if transportation is to be\naccomplished without unreasonable impediments.” Id. So\n -38-\n\ntoo here. Nobody would say that Claimant had fulfilled\nits contract of carriage if it failed to put the goods on the\nplane in the first place or failed to take them off at the end.\n 3. Most of Claimant’s remaining arguments are\ntrained almost entirely on a single statute—the Federal\nEmployers’ Liability Act. Because FELA applied to\nrailroad employees who were injured while engaged in\ncommerce, Claimant argues that it’s irrelevant to\nunderstanding what it meant to be a transportation\nworker engaged in commerce.\n This argument fails on its own terms. To take just one\nexample, Claimant argues the statute was was broadly\ninterpreted. But it couldn’t have been. Because\nCongress’s Commerce Clause power was construed\nextremely narrowly at the time, it could not have\nregulated workers who weren’t “engaged in commerce.”\nSee Emp’rs’ Liab. Cases, 207 U.S. 463, 496, 498 (1908).\nClaimant’s argument to the contrary (at 39-41) relies\nalmost entirely on cases that were decided after 1939,\nwhen FELA was amended to remove the requirement\nthat workers be “engaged in commerce.” See Reed v. Pa.\nR.R. Co., 351 U.S. 502, 504 (1956).\n But even if Claimant was correct about FELA, that\nwouldn’t get it very far. The FELA cases did not invent a\nnovel understanding of transportation or of commerce.\nThey applied longstanding, black-letter law. Thus, even\nabsent the FELA cases, the outcome here would be the\nsame: It was clear in 1925, just as it is clear today, that\ncargo loaders are a “class of workers engaged in\ncommerce.”\n The problem with Claimant’s attempt to nitpick the\nFELA cases or the Commerce Clause cases (or any other\ncases it might seize on in its reply) is not just that it fails\n -39-\n\nin its own right.10 It’s that these cases all reflect the same\ntimeworn understandings of what transportation in\ncommerce meant. If Congress did not intend for the FAA\nto exempt workers who had long been understood to be\n“engaged in commerce,” it would not have used those\nwords.\n Claimant attempts to save its atextual interpretation\nby pointing to the FAA’s use of the phrase “engaged in\nforeign or interstate commerce.” Because the statute\ndefines “commerce” before it gets to the worker\nexemption, Claimant argues (at 16, 29) that the reference\nto “foreign or interstate commerce,” rather than just\ncommerce, is surplusage unless it’s interpreted to mean\nthat Congress “want[ed] to emphasize border-crossing.”\nBut the FAA’s definition of commerce is broader than\nforeign or interstate commerce. It also includes commerce\n“in any Territory of the United States or in the District of\nColumbia.” 9 U.S.C. § 1. So there’s no reason not to\ninterpret Congress to have meant anything other than\nwhat it said.\nIII. Claimant’s policy arguments offer no valid basis\n to depart from the text.\n Lacking any foothold in the FAA’s text, context, or\nhistory, Claimant turns to policy. It contends that its\nconstruction of the statute is necessary to achieve the\nFAA’s “proarbitration purposes,” to avoid a “nonsensical”\n\n 10\n The airline briefly argues (at 42) that this Court should just\ndisregard cases that arose under the Commerce Clause—a\nperplexing assertion given that almost all of the contemporaneous\ncases Claimant cites are Commerce Clause cases, see Pet’r Br. 20–\n21. But Claimant can’t dispute that these cases evidence what the\nword commerce—and the phrase “engaged in commerce”—meant at\nthe time. See McElroy, 455 U.S. at 642.\n -40-\n\noutcome that would “undo” section 2, and to ensure a rule\nthat operates without “complexity or uncertainty.” Pet’r\nBr. 1–2, 5–6, 30–33, 44–48. None of these arguments is\ncorrect. And none authorizes judicial revision of the text.\n 1. This Court in New Prime rejected the argument\nthat the FAA should be construed to promote arbitration\nat all costs. Like many statutes, the FAA was the product\nof “legislative compromise[].” New Prime, 139 S. Ct. at\n543. Although section 2 favors arbitration, section 1 makes\nclear that this policy yields for transportation workers. By\ngiving effect to the plain language of that exception, this\nCourt “respect[s] the limits up to which Congress was\nprepared to go when adopting the Arbitration Act.” Id.\n 2. Nor is Claimant’s construction necessary to avoid\na “nonsensical” result, or to preserve the “narrow” scope\nof section 1. Pet’r Br. 1–2. There is no dispute that, under\nthis Court’s precedents, section 2 is broad, while section 1\nis comparatively narrow. Claimant itself recognizes as\nmuch, framing the question (at 16–17) in narrow terms—\nwhether section 1 covers the employment contracts of\ncertain kinds of transportation workers (cargo loaders).\nThat question can be answered either way without\nthreatening the broad sweep of section 2 or resurrecting\nthe losing position in Circuit City.\n Claimant’s rule would, however, conflict with Circuit\nCity’s guidance that “[a] variable standard for\ninterpreting common, jurisdictional phrases would\ncontradict [this Court’s] earlier cases and bring instability\nto statutory interpretation.” Circuit City, 532 U.S. at 117.\nThe airline proposes that this Court accord the FAA a\nunique interpretation of the phrase “engaged in\ncommerce”—exactly what this Court declined to do in\nCircuit City.\n -41-\n\n 3. Claimant also claims (at 10, 32) that its rule is\n“clear and administrable,” and that any other rule “would\ncreate daunting line-drawing problems.” That is doubly\nwrong. For one thing, as to the question presented,\nClaimant’s rule is less predictable and harder to\nadminister, because it would require courts to ask all sorts\nof additional questions in determining whether someone is\npart of a “class of workers,” 9 U.S.C. § 1, that “participate\ndirectly in the cross-border transportation of goods or\npeople.” Pet’r Br. 11. To list a few: How often does a class\nof workers have to cross state lines? Is it a percentage of\ntheir time? A percentage of the class? Nationally or\nregionally? For one carrier or all carriers? Is it an\nempirical question? How does a judge figure it out? The\npotential questions—and combinations of answers—are\nendless.\n This is not to say that adhering to the text of the\nstatute will resolve all questions under it, for all time.\nUnder any interpretation, some close questions will\nremain. That’s unavoidable. But in contrast to Claimant’s\nposition, Ms. Respondent’s reading not only has the virtue of\nbeing grounded in the statutory text, context, and history;\nit also generates a coherent, sensible, and workable test\nthat does not require courts to flyspeck particular job\ndescriptions or undertake difficult empirical inquiries.\nLike railroad employees and seamen, airline workers\nplainly constitute a “class of workers engaged in foreign\nor interstate commerce” within the meaning of section 1.\n Like railroad employees and seamen, airline workers\nare workers who play an essential role in accomplishing\nthe airline’s transportation mission—that is, getting\npassengers or goods from one place to another. This\nmeans that gate agents, cargo handlers, and flight\n -42-\n\nattendants come within section 1, while accountants or\nadvertising executives at the airline's headquarters don't.\n Finally, even if Claimant’s rule were in fact easier to\napply, that wouldn’t change the outcome. Administrability\nconcerns can help courts choose between two plausible\ninterpretations of the text, but they grant courts no license\nto rewrite it. There is no canon of construction that\nauthorizes judges to fashion their own easy-to-apply rules\nin lieu of what Congress wrote—no chapter of Reading\nLaw espousing the supremacy of atextual bright-line\nrules. And the same goes for Claimant’s other appeals to\npurpose and policy. Considerations like administrability\nand congressional policy can help to resolve ambiguity,\nnot to create it. Here, cargo loaders are covered under any\nplausible reading of the residual clause. So there is no\nambiguity. Which means this Court has no choice: It “may\nnot rewrite the statute simply to accommodate\n[Claimant’s] policy concerns.” Henry Schein, Inc. v.\nArcher & White Sales, Inc., 139 S. Ct. 524, 531 (2019).\n CONCLUSION\n This Court should affirm the Seventh Circuit’s\njudgment.", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of the transportation-worker exemption.", "governingLaw": "Apply United States federal arbitration law; Seventh Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal arbitration law; Seventh Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Southwest Airlines Co. v. Saxon", "citation": "596 U.S. 450 (2022)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/21pdf/21-309_o758.pdf" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive question is whether airline employees who load and unload cargo are a \"class of workers engaged in foreign or interstate commerce\" under 9 U.S.C. § 1. The answer turns on the meaning of \"engaged in foreign or interstate commerce\" as it bore in 1925 when the FAA was enacted.\n\nThe claimant argues that the § 1 exemption requires direct participation in cross-border transportation—actually moving goods or people across state or national borders. Under this reading, ramp-agent supervisors who load and unload planes but do not personally cross borders fall outside § 1 and must arbitrate. The claimant's argument rests on several propositions: that \"engaged in commerce\" was a term of art requiring direct participation in the interstate flow of goods; that seamen and railroad employees were defined by cross-border movement; and that stevedores (cargo loaders) were excluded from \"seamen\" because they did not transport anything.\n\nThe claimant's cross-border requirement finds insufficient support in the statutory text. Section 1 exempts workers \"engaged in foreign or interstate commerce\"—not workers who personally cross borders. The claimant cannot identify any authority in which the phrase \"engaged in commerce\" was given this border-crossing meaning. To the contrary, the Court in McElroy v. United States rejected a nearly identical attempt to limit a statute using \"in interstate or foreign commerce\" to activities occurring while crossing state borders, holding that interstate commerce \"begins well before state lines are crossed\" and ends only when movement ceases in the destination state. The claimant's reliance on Gulf Oil Corp. v. Copp Paving and American Building Maintenance for a \"direct participation\" standard is in tension with those cases' application to antitrust statutes enacted decades after the FAA, and Circuit City itself noted that \"engaged in commerce\" does not \"necessarily have a uniform meaning whenever used by Congress.\"\n\nThe claimant's argument that seamen and railroad employees were defined by border-crossing is also unconvincing. The claimant's own lead authority on seamen, Stewart v. Dutra Construction Co., involved a dredge worker who never left Boston Harbor. The Shipping Commissioners Act's limitation of certain provisions to long voyages shows that seamen were not defined by border-crossing—if they were, such a limitation would be unnecessary. And the Hours of Service Act, on which the claimant relies for its railroad-employee argument, expressly covered train dispatchers and operators who transmitted orders from a tower or station—workers who did not travel at all. The broader understanding—that railroad employees meant those who did the work of the railroad, and seamen meant those who did the work of the ship—is better supported by the record and by the Court's observation in New Prime that these terms \"swept more broadly at the time of the Act's passage than might seem obvious today.\"\n\nThe respondent's position is stronger on the central textual question. The FAA's own definition of \"maritime transactions\" includes \"agreements relating to wharfage\"—fees for loading and unloading goods—as \"matters in foreign commerce.\" If loading and unloading is \"in commerce\" by the FAA's own terms, then workers engaged in loading and unloading are \"engaged in commerce.\" Moreover, by 1925 it was well established that loading and unloading is an integral part of transportation. The year before the FAA's enactment, the Court stated that \"the loading or unloading of an interstate shipment by the employees of a carrier\" are \"engaged in interstate commerce,\" calling the proposition \"too plain to require discussion.\" This was not an isolated holding; it reflected decades of precedent holding that transportation begins when goods are delivered to the carrier and ends only after delivery to the recipient, with loading and unloading being essential components of that continuous movement.\n\nThe claimant correctly notes that stevedores were not always considered \"seamen\" under maritime law. But this misses the point. The question is not whether cargo loaders are seamen, but whether they are members of a \"class of workers engaged in commerce\" in the same way as seamen and railroad employees. The Court has held that stevedores have \"the same relation\" to commerce as seamen, because \"transportation of a cargo by water is impossible or futile unless the thing to be transported is put aboard the ship and taken off at destination.\" The claimant's attempt to dismiss these cases as resting on a mistaken understanding of \"seamen\" is unpersuasive: the cases hold that cargo loading is itself commerce regardless of who performs it.\n\nThe purpose and historical context of the exemption reinforce the textual analysis. Circuit City explained that Congress enacted the exemption to avoid unsettling \"established or developing statutory dispute resolution schemes\" covering transportation workers. The Railway Labor Act, extended to airline employees in 1936, governs airline labor disputes to this day. If the FAA did not exempt airline employees, it would conflict with the dispute-resolution regime that Congress designed for transportation workers. The claimant's argument that the RLA's coverage is limited to unionized employees under a CBA does not affect the analysis—the exemption is about classes of workers, not individual employment status.\n\nThe claimant's administrability argument—that its border-crossing test is clearer and more workable—cannot override the statutory text. The claimant's rule would require courts to undertake difficult empirical inquiries into how often a class of workers crosses state lines, what percentage of the class or of their time is sufficient, and whether the inquiry is regional or national. The respondent's approach—asking whether the class of workers plays a necessary role in the transportation of goods and passengers, analogous to seamen and railroad employees—is more textually grounded and no less administrable.\n\nOn the record presented, the respondent has met her burden of showing that airline employees who load and unload cargo are a \"class of workers engaged in foreign or interstate commerce\" under § 1. The claimant has not met its burden of establishing that § 1 requires personal cross-border transportation. The FAA does not apply to the respondent's employment contract.", "allocation": null, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-058", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nSTATEMENT\n In the Lanham Act, Congress specified the reme-\ndies available for federal trademark-infringement\nclaims. On top of requesting injunctive relief, dam-\nages, and costs, a plaintiff may seek the “defendant’s\nprofits.” 15 U.S.C. § 1117(a). But not every one of\nthese authorized remedies is available in every case.\nSometimes there is no impending risk of infringe-\nment, precluding an injunction. Sometimes the plain-\ntiff, like respondent here, suffered no demonstrable\ndamages. And sometimes the defendant, like peti-\ntioner here, has not earned any profits from the pur-\nported infringement. In that event, the Act does not\nauthorize any profits-disgorgement remedy because\nthere are no “defendant’s profits” to disgorge.\n Despite the Lanham Act’s plain language limiting\nany profits-disgorgement award to the defendant’s\nown profits, the courts below ordered petitioner to dis-\ngorge nearly $43 million in profits that it never earned\nor received and that were instead obtained only by\nnon-parties—legally separate affiliates of petitioner\nthat respondent never sued and whose liability was\nnever adjudicated. Respondent never attempted to\npierce the corporate veil to treat those distinct affili-\nates as alter egos of petitioner, and both courts below\n 3\n\ndisclaimed any need to do so. The Fourth Circuit, over\nJudge Quattlebaum’s strong dissent, nevertheless af-\nfirmed the district court’s decision to treat petitioner\nand its non-party affiliates “as a single corporate en-\ntity for the purpose of calculating revenues” attribut-\nable to the infringement, and endorsed the district\ncourt’s directive requiring petitioner to disgorge prof-\nits that it never received. Pet. App. 39a.\n That conclusion contravenes the Lanham Act’s\ntext and eviscerates the bedrock rule of corporate sep-\narateness. The Fourth Circuit and respondent have\nsought to rationalize the profits-disgorgement order\nbased on two other phrases in Section 1117(a). But\nthis Court has held that Congress must speak “di-\nrectly” if it wishes to override the presumption that,\nunless “the corporate veil” is “pierced,” federal law\ntreats legally separate entities as distinct. United\nStates v. Bestfoods, 524 U.S. 51, 63 (1998) (citation\nomitted). Neither phrase invoked by the court of ap-\npeals or respondent comes close.\n The Fourth Circuit reasoned that the Act’s incor-\nporation of “the principles of equity” to govern dis-\ngorgement and other monetary relief, 15 U.S.C.\n§ 1117(a), empowers courts to disregard generally ap-\nplicable legal principles in order to maximize disgorge-\nment awards for trademark registrants. But that lan-\nguage has the exact opposite effect. The principles-of-\nequity proviso constrains disgorgement to traditional\nequitable limits—which permit courts to order dis-\ngorgement only of any net profits a defendant re-\nceived. Because petitioner earned no net profits, prin-\nciples of equity precluded the courts below from re-\nquiring petitioner to disgorge its affiliates’ profits.\n 4\n\n In this Court, respondent has abandoned the court\nof appeals’ rationale and instead staked everything on\nlanguage allowing a court to award a “just” sum if\nthe amount of profits is “inadequate” or “excessive.”\n15 U.S.C. § 1117(a); see Br. in Opp. 2-4, 22-30. That\nlanguage likewise does not displace the presumption\nof corporate separateness and only leads back to tra-\nditional equitable principles that determine what\nmakes an award “just.” In no event does the just-sum\nprovision permit circumvention of the very limitations\nthat Section 1117(a) itself incorporates.\n By asserting power to order disgorgement of prof-\nits earned by legally separate non-parties absent di-\nrect statutory authorization, the lower courts usurped\nCongress’s policymaking prerogative to decide whether\nto displace deeply rooted rules of corporate law. And\nthe decision below is bad policy besides. Contrary to\nthe court of appeals’ conjecture, there is no need to al-\nlow courts deciding Lanham Act cases to disregard\ncorporate boundaries: Plaintiffs injured by the acts of\naffiliated entities can either sue all the infringing en-\ntities or pursue veil-piercing under traditional princi-\nples. Respondent here simply declined to follow either\npath. The Fourth Circuit’s purpose-driven approach\nalso creates problems of its own: It would needlessly\nunsettle business expectations, distort the Act’s bur-\nden-shifting scheme, and muddle the established\nframework for contributory infringement.\n Because the Lanham Act does not authorize the\nlower courts’ disregard of corporate separateness, this\nCourt should reverse the disgorgement award.\n 5\n\n A. Legal Background\n A trademark is a “word, name, symbol, or device”\nthat a person uses “to identify and distinguish his or\nher goods” from “those manufactured or sold by oth-\ners.” 15 U.S.C. § 1127. Although “federal law does not\ncreate trademarks,” Congress has conferred “‘im-\nportant legal rights and benefits’”—including a fed-\neral cause of action—on registrants of trademarks\nthat are used in interstate or foreign commerce. B&B\nHardware, Inc. v. Hargis Industries, Inc., 575 U.S.\n138, 142 (2015) (citation omitted). Congress has re-\npeatedly revisited and carefully calibrated the reme-\ndial scheme in enactments spanning a century and a\nhalf.\n Congress passed the first federal trademark legis-\nlation as part of an omnibus bill updating the patent\nand copyright laws. Act of July 8, 1870, ch. 230,\n16 Stat. 198. That law provided that, upon registra-\ntion, trademark owners had a cause of action against\nanyone who reproduced or imitated the mark. An\nowner could seek “damages for such wrongful use of\nsaid trade-mark” and also had a “remedy according to\nthe course of equity to enjoin the wrongful use of his\ntrade-mark and to recover compensation therefor.”\n§ 79, 16 Stat. 211.\n After this Court held the 1870 trademark law ex-\nceeded Congress’s Article I authority because it lacked\na commerce element, Trade-Mark Cases, 100 U.S. 82,\n93-98 (1879), Congress took another run at a registra-\ntion system. The Trademark Act of 1881 was limited\nto trademarks used “in commerce with foreign na-\ntions, or with the Indian tribes.” Ch. 138, § 1, 21 Stat.\n502. But it carried forward the same remedies as the\n 6\n\n1870 statute: “damages,” as well as a “remedy accord-\ning to the course of equity to enjoin the wrongful use\nof such trade-mark * * * and to recover compensa-\ntion therefor.” § 7, 21 Stat. 504. As this Court ex-\nplained, the measure of “compensation” at equity was\n“an account of the profits realized by the infringer.”\nRoot v. Railway Co., 105 U.S. 189, 214 (1882).\n In the Trademark Act of 1905, Congress expanded\nregistration for trademarks “used in commerce * * *\namong the several States.” Ch. 592, § 1, 33 Stat. 724.\nThe Act provided distinct remedies along the law-\nequity divide. Section 16 allowed courts to award “ac-\ntual damages” and authorized courts to increase the\naward up to “three times the amount” of damages.\n33 Stat. 728. Section 19 separately empowered courts\n“to grant injunctions, according to the course and\nprinciples of equity,” and to order “profits to be ac-\ncounted for by the defendant.” 33 Stat. 729. The Act\nset forth a burden-shifting procedure under which\n“the plaintiff [was] required to prove defendant’s sales\nonly,” and the “defendant must prove all elements of\ncost which are claimed” from its profits.” Ibid. Sec-\ntion 19 also made clear that courts of equity had an-\ncillary authority to award the plaintiff damages in ad-\ndition to the defendant’s profits. Ibid.\n Following the merger of law and equity, Congress\nenacted the Lanham Act, ch. 540, 60 Stat. 427 (1946)\n(15 U.S.C. § 1051 et seq.), which further refined the\nremedial framework. The Act likewise authorizes\ncourts to “grant injunctions, according to the principles\nof equity.” § 34, 60 Stat. 439 (15 U.S.C. § 1116(a)). The\nAct also consolidates the monetary remedies for trade-\nmark infringement, providing that a prevailing “plain-\ntiff shall be entitled * * * to recover (1) defendant’s\n 7\n\nprofits, (2) any damages sustained by the plaintiff,\nand (3) the costs of the action,” and it expressly makes\nall of those forms of monetary relief “subject to the\nprinciples of equity.” § 35, 60 Stat. 439-440 (15 U.S.C.\n§ 1117(a)); see Getty Petroleum Corp. v. Bartco Petro-\nleum Corp., 858 F.2d 103, 111 (2d Cir. 1988).\n Section 35 of the Lanham Act retained the\n1905 Act’s provision allowing damages awards to be\nmultiplied up to “three times” and its burden-shifting\nprocedure for proving profits. 60 Stat. 440. Section 35\nalso added a provision allowing for adjustments to\nprofits-based awards, patterned on existing copyright\nlaw. That provision states that “[i]f the court shall\nfind that the amount of the recovery based on profits\nis either inadequate or excessive the court may in its\ndiscretion enter judgment for such sum as the court\nshall find to be just, according to the circumstances of\nthe case.” Ibid.; cf. Act of Mar. 4, 1909, ch. 320,\n§ 25(b), 35 Stat. 1081 (copyright statute permitting\ncourt to award “in lieu of actual damages and profits\nsuch damages as to the court shall appear to be just”\nwithin statutory ranges, without being “regarded as a\npenalty”).\n The Lanham Act’s principal architect, Edward\nRogers, “emphasized that the provision to increase or\ndecrease recovery based on an infringer’s profits was\nsimply a recognition of the problems of proof facing\nplaintiffs.” Getty Petroleum, 858 F.2d at 111 (citing\nTrade-Marks: Hearings on H.R. 102, H.R. 5461, and\nS. 895 Before the Subcomm. on Trade-Marks of the\nH. Comm. on Patents, 77th Cong., 1st Sess. 203-205\n(1941) (1941 Hearings)). Rogers also cautioned that, if\nan award of a just sum “exceed[ed] the total amount of\nthe defendant’s sales,” the result would be “a penalty\n 8\n\nthere, and you do not want to do [that].” 1941 Hear-\nings 205. Consistent with that admonition, Congress\nfurther specified as to both enhanced-damages and\nadjusted-profits awards that “[s]uch sum in either of\nthe above circumstances shall constitute compensation\nand not a penalty.” 15 U.S.C. § 1117(a).\n B. Facts And Procedural History\n 1. After playing quarterback for the Georgia Tech\nYellow Jackets and the Calgary Stampeders in the\n1980s, John Dewberry hung up his cleats and went into\nbusiness. He invested his Stampeders’ signing bonus\ninto founding petitioner, originally named Dewberry\nCapital Corporation, to assist in developing, leasing,\nand managing commercial properties. Louise Tute-\nlian, The Look of Then, the Comforts of Now, N.Y.\nTimes (May 21, 2009), tinyurl.com/4mc3u97w.\n Petitioner itself does not own or lease any com-\nmercial properties. Pet. App. 43a-44a; see J.A. 72.\nRather, petitioner supported around 30 affiliated op-\nerating companies by providing accounting, human-\nresources, legal, and real-estate-development services.\nPet. App. 4a; see J.A. 71. Those affiliates, in turn,\nowned and leased commercial property to tenants in\nFlorida, Georgia, South Carolina, and (formerly) Vir-\nginia, and received all revenues from the leases. Pet.\nApp. 4a; see J.A. 73-74, 85-87. Petitioner and its affil-\niates are under Mr. Dewberry’s common ownership,\nbut the affiliates are all distinct corporate entities\nthat file separate tax returns. Pet. App. 82a; see\nJ.A. 83-84. Petitioner maintained separate bank ac-\ncounts and accounting records for each affiliate and\nreceived a fee for providing these services. Pet. App.\n44a, 83a; see J.A. 72-73, 81-82.\n 9\n\n 2. In 2006, petitioner and respondent, another\nreal-estate entity, became embroiled in a trademark\ndispute. Pet. App. 4a-5a. Respondent also claims to\nprovide real-estate-development services in Florida,\nGeorgia, South Carolina, and Virginia. Id. at 3a-4a.\nPetitioner asserted senior common-law rights in the\n“Dewberry” mark, while respondent asserted a feder-\nally registered trademark in “Dewberry.” Id. at 4a.\nThe parties resolved those dueling claims in a settle-\nment agreement that allowed respondent to use its\nregistered “Dewberry” mark, allowed petitioner to use\n“Dewberry” subject to certain limits for commercial\nreal-estate services, and required petitioner to use a\n“DCC” mark rather than “Dewberry” for certain ser-\nvices performed in Virginia. Id. at 5a-6a.\n In 2017, petitioner rebranded itself as Claimant, and created several sub-brands (Dew-\nberry Living, Dewberry Office, and Studio Dewberry).\nPet. App. 7a. Petitioner also produced marketing ma-\nterials that used the “Claimant” and “Studio\nDewberry” marks. Id. at 8a. Petitioner’s affiliates\nthen used these materials to market commercial prop-\nerties to tenants. Id. at 39a.\n 3. In 2020, respondent filed this suit under the\nLanham Act, claiming that the rebranding infringed\nrespondent’s mark. Pet. App. 9a; see J.A. 1-38. Re-\nspondent named petitioner as the sole defendant.\nJ.A. 4. The district court granted summary judgment\nto respondent on liability. Pet. App. 96a-120a.\n Following a three-day bench trial on remedies, the\ndistrict court issued an order requiring petitioner to\ndisgorge nearly $43 million in profits earned by its af-\nfiliates, none of which is a party to the litigation. Pet.\n 10\n\nApp. 62a-95a. The court acknowledged that respond-\nent had “not provided direct evidence of lost sales” or\nany other measure of damages. Id. at 79a. Respond-\nent also offered no evidence that petitioner itself had\nearned any profits from the infringement. See id. at\n39a. In fact, petitioner showed that it had suffered\nlosses for the years in question. J.A. 102, 262, 272,\n282.\n Although petitioner itself earned no profits from\nthe infringement, the district court ruled that the Lan-\nham Act authorizes disgorgement from petitioner of\nthe non-party affiliates’ profits. The court rejected any\nneed for veil-piercing, Pet. App. 82a, which respond-\nent disclaimed, J.A. 331 (“That [respondent] did not\nname the [affiliates] as defendants or allege contribu-\ntory infringement or alter-ego liability is of no mo-\nment.”). Instead, the court reasoned “that, but-for the\nrevenue generated by the [affiliates], [petitioner] as a\nsingle tax entity would not exist” because petitioner\nprovides services only to its affiliates and has relied\non Mr. Dewberry to cover significant losses “over the\npast 30 years.” Pet. App. 84a. The court considered\nsuch circumstances sufficient, without any applica-\ntion of veil-piercing principles, to treat petitioner and\nits affiliates “as a single corporate entity when calcu-\nlating the revenues and profits” in light of “the equi-\ntable purposes of the Lanham Act’s disgorgement\nremedy.” Id. at 85a-86a.\n Having decided to disregard corporate separate-\nness in favor of a “single corporate entity” theory when\ncalculating petitioner’s profits, the district court de-\ntermined that the combined profits of the affiliated en-\ntities totaled $53.7 million. Pet. App. 85a-86a. The\ncourt then invoked its authority “to adjust an award\n 11\n\nup or down as circumstances demand” under the just-\nsum provision. Id. at 87a. Because the affiliates en-\ntered into some of the leases before the infringement\nperiod, and because some of the hotel-owning affili-\nate’s revenues did not implicate the infringement, the\ncourt reduced the profits by 20%. Id. at 88a-94a.\n The district court accordingly ordered petitioner to\ndisgorge $42,975,725.60—its affiliates’ profits, as re-\nduced. Pet. App. 94a; J.A. 335. The court also awarded\nrespondent attorneys’ fees and issued an injunction\nlimiting petitioner’s use of respondent’s “Dewberry”\nmark for commercial real-estate-development services.\nPet. App. 11a-12a.\n 4. The court of appeals affirmed the disgorgement\norder in a divided decision. Pet. App. 3a-48a.\n a. The panel majority held that the district court\nproperly “treated [petitioner] and its affiliates as a\nsingle corporate entity for the purpose of calculating\nrevenues generated by [petitioner’s] use of infringing\nmarks.” Pet. App. 39a-40a. The majority acknowl-\nedged that petitioner “did not receive the revenues\nfrom its infringing behavior directly.” Id. at 45a. And\nit noted that petitioner had “show[n] losses on its tax\nreturns” and had earned no profits on any of the mar-\nketed properties. Id. at 39a (citation omitted). But\nthe majority deemed it sufficient that petitioner and\nits affiliates were under common ownership and that\npetitioner had provided “branding for its affiliates,\nwho in turn generate profits using that branding on\ntheir lease, loan, and other promotional materials.”\nIbid.\n The majority rejected petitioner’s argument that\nthe district court could order petitioner to disgorge its\n 12\n\naffiliates’ profits only if respondent succeeded in\n“piercing their corporate veils.” Pet. App. 43a. In its\nview, the district court could “conside[r] the revenues\nof entities under common ownership with [peti-\ntioner],” wholly apart from veil-piercing. Ibid. The\nmajority invoked the Lanham Act’s proviso that a\n“grant of profit disgorgement is ‘subject to the princi-\nples of equity,’” which it construed as granting the dis-\ntrict court broad “discretion” to “weig[h] the equities\nof the dispute.” Id. at 45a (quoting 15 U.S.C. § 1117(a);\nother internal quotation marks omitted). The major-\nity also reasoned that, “while [petitioner] did not re-\nceive the revenues from its infringing behavior di-\nrectly, it still benefited from its infringing relationship\nwith its affiliates” that did receive those revenues.\nIbid. And the majority pointed to policy concerns, pos-\niting that “[a]dmonishing courts for using their discre-\ntion” to disregard corporate separateness would\n“ris[k] handing potential trademark infringers the\nblueprint for using corporate formalities to insulate\ntheir infringement from financial consequences” and\nwould undermine the Lanham Act’s broader “pur-\npose.” Ibid. (citation omitted).\n b. Dissenting on the disgorgement issue, Judge\nQuattlebaum objected to the “use of revenues from sep-\narate companies,” which are “affiliated with” petitioner\nbut not parties to the case, to order disgorgement by\npetitioner itself. Pet. App. 58a. He observed that\n“§ 1117(a) speaks to the infringer’s profits.” Id. at 59a\n(emphasis added). And he noted that respondent had\nclaimed only that petitioner, “not third parties, was the\ninfringer.” Ibid. As a result, the district court’s order\nrequiring petitioner to disgorge “revenues from the af-\nfiliated companies”—undisputedly “separate corporate\n 13\n\nentities”—that “were never realized by [petitioner]” it-\nself was “incorrect as a matter of law.” Id. at 60a.\n Judge Quattlebaum also disagreed with the ma-\njority’s policy concern that respecting “‘corporate for-\nmalities’” in this context would “insulate” infringe-\nment from financial consequences. Pet. App. 58a-59a.\nHe explained that “[t]here is no loophole that lets\nthese entities infringe with impunity,” because a Lan-\nham Act plaintiff can either join affiliates as defend-\nants or else seek to “pierce” the defendant’s “corporate\nveil.” Id. at 59a. But Judge Quattlebaum “kn[e]w of\nno law that allows courts * * * to disregard those op-\ntions and simply add the revenues from non-parties to\na defendant’s revenues for purposes of evaluating the\ndefendant’s profits.” Ibid.\n 5. The Fourth Circuit denied rehearing en banc.\nPet. App. 122a.\n SUMMARY OF ARGUMENT\n A. The Lanham Act does not authorize an award\nof profits earned by a defendant’s non-party affiliates.\n 1. The Lanham Act’s plain language permits\ncourts to order disgorgement only of the “defendant’s\nprofits.” 15 U.S.C. § 1117(a) (emphasis added). The\nordinary meaning of “defendant” in federal civil litiga-\ntion is a person or entity named in the complaint and\nalleged to be liable. A non-party to the litigation,\nwhose liability is never adjudicated, cannot qualify.\nSection 1117(a) elsewhere uses “defendant” in that fa-\nmiliar sense, providing that the “defendant must\nprove” any “cost[s] or deduction[s]” that it seeks to ex-\nclude from recoverable profits. Ibid. Only a party in\nlitigation can be assigned a burden of proof.\n 14\n\n A court in a Lanham Act suit cannot order a de-\nfendant to disgorge profits earned by a non-party af-\nfiliate unless the corporate veil is pierced. Under the\nAct’s text, only the defendant’s own profits are fair\ngame. And a non-party affiliate’s profits cannot be\ndeemed the defendant’s profits unless the plaintiff\npierces the veil and proves that the defendant and the\naffiliate are the same corporate person.\n 2. That straightforward reading of Section 1117(a)\nforecloses the profits-disgorgement award in this case.\nThe Fourth Circuit affirmed an award ordering peti-\ntioner to disgorge nearly $43 million in profits earned\nsolely by its affiliates. But respondent named and\nserved, and the district court adjudicated the liability\nof, only one defendant: petitioner, which undisput-\nedly earned no profits from the infringement. Re-\nspondent never sought to pierce the corporate veil sep-\narating petitioner from its affiliates, and both courts\nbelow disclaimed any veil-piercing rationale. There\nwere thus zero “defendant’s profits” for petitioner to\ndisgorge.\n B. Neither the Fourth Circuit nor respondent has\noffered any way to read “defendant’s profits” to in-\nclude profits earned by non-parties. Instead, each re-\nlies on other language in Section 1117(a) in an at-\ntempt to justify that award. Both proffered justifica-\ntions suffer from the same defect: The Lanham Act\nnowhere directly states that courts can disregard cor-\nporate separateness in calculating profits-disgorge-\nment awards. To the contrary, the language high-\nlighted by the court of appeals and respondent only\nconfirms that the profits-disgorgement order here is\nunlawful.\n 15\n\n 1. Any contention that the Lanham Act permits\ncourts to order a defendant to disgorge the profits of\nits non-party affiliates faces a steep climb over the\npresumption that federal statutes respect the principle\nof corporate separateness. This Court has made clear\nthat Congress must “‘speak directly’” to displace the\n“bedrock principle” of “respect for corporate distinc-\ntions.” United States v. Bestfoods, 524 U.S. 51, 62-63\n(1998) (citation omitted). That strong presumption\nnot only reflects Congress’s likely intent but also en-\nsures that the legislative policy judgment whether to\ndepart from that baseline is made by Congress, not\nthe courts. When a federal statute does not “directly”\nsay otherwise—and when “the corporate veil” has not\nbeen properly “pierced,” ibid.—courts cannot impose\nliability or craft remedies that disregard corporate\ndistinctions.\n 2. Far from “directly” overriding corporate sepa-\nrateness, the statutory language the Fourth Circuit in-\nvoked reinforces that the Lanham Act does not author-\nize disgorgement of non-parties’ profits. The court of\nappeals misread the Act’s proviso that profits dis-\ngorgement and other monetary remedies are “‘subject\nto the principles of equity’” as a permission slip to dis-\nregard corporate separateness, based on a case-specific\n“weigh[ing]” of “the equities.” Pet. App. 45a (quoting\n15 U.S.C. § 1117(a); other internal quotation marks\nomitted). But that proviso instead serves only to con-\nfirm that the novel remedy embraced below is unlaw-\nful.\n Even absent statutory text expressly invoking\nequitable principles, this Court construes federal\nstatutes authorizing equitable remedies to incorpo-\nrate the traditional limitations that courts of equity\n 16\n\napplied. And an explicit statutory statement that the\nprinciples of equity control, like the one in Section\n1117(a), leaves no doubt that remedies are subject to\n“the limitations upon [their] availability that equity\ntypically imposes.” Great-West Life & Annuity Insur-\nance Co. v. Knudson, 534 U.S. 204, 211 n.1 (2002).\n The award in this case ordering petitioner to pay\nprofits earned solely by its affiliates contravenes three\ntraditional equitable limitations. First, equity follows\nthe law and will not “create a remedy in violation of\nlaw.” Rees v. Watertown, 86 U.S. (19 Wall.) 107, 122\n(1874). The applicable law here includes the bedrock\nrule of corporate separateness that controls absent\nveil-piercing, so equity cannot override that barrier.\nSecond, courts of equity limited disgorgement to a de-\nfendant’s own net profits. They would not calculate\ncollective profits “against multiple wrongdoers under\na joint-and-several liability theory” even when the de-\nfendant itself made no profits but an affiliate of the\ndefendant did. Liu v. SEC, 591 U.S. 71, 82-83 (2020).\nThird, equity will not enforce a penalty. Requiring a\ndefendant to disgorge profits “that accrue[d] to his af-\nfiliates * * * could transform any equitable profits-\nfocused remedy into a penalty.” Id. at 90.\n 3. Respondent has not defended the Fourth Cir-\ncuit’s rationale in this Court. Instead, respondent re-\nlies on Section 1117(a)’s language permitting a court to\naward a “sum” that is “just” when the amount of profits\nis “inadequate or excessive.” 15 U.S.C. § 1117(a). But\nthat language, read in context, merely permits adjust-\nments to the defendant’s profits—not an award of\nsomeone else’s profits. So like the reference to princi-\nples of equity, the just-sum language does not em-\npower a court to order disgorgement of non-party\n 17\n\naffiliates’ profits, let alone with the clarity Bestfoods\nrequires for a statute to override the rule of corporate\nseparateness.\n By permitting a court to award a “just” sum, Con-\ngress did not jettison “traditional equitable principles”\nconfining profits awards, but expressly reinforced\nthose limits. Starbucks Corp. v. McKinney, 144 S. Ct.\n1570, 1576-1577 (2024). Courts of equity could adjust\nprofits-disgorgement awards—for instance, if eviden-\ntiary issues made it difficult to prove a defendant’s\nprofits. But no recognized equitable principle allowed\ncourts to disregard the corporate form absent veil-\npiercing. Congress made those limits plainer still in\nSection 1117(a) by insisting that any sum awarded\n“shall constitute compensation and not a penalty.”\n15 U.S.C. § 1117(a). A court’s “discretion” to award a\n“just” sum (ibid.) is confined by those limits. At mini-\nmum, Congress’s conferral of that discretion does not\n“directly” supersede the background rule of corporate\nseparateness. Bestfoods, 524 U.S. at 63.\n Moreover, reading the just-sum provision to green-\nlight disregard of corporate separateness would upend\nthe Lanham Act’s reticulated remedial scheme. The\njust-sum provision is a safety valve that works in tan-\ndem with the Act’s “meticulously detailed” remedial\nmachinery. Fleischmann Distilling Corp. v. Maier\nBrewing Co., 386 U.S. 714, 719 (1967). It is not a by-\npass that allows courts to abandon the statutorily pre-\nscribed remedies at will. The statutory history con-\nfirms that the provision was designed to address diffi-\nculties of proving the defendant’s profits, not to render\nthe Act’s remedial framework nugatory by authoriz-\ning all-purpose relief in the unfettered discretion of\nthe courts. If any alterations to that framework are\n 18\n\nappropriate, that is a policy call for Congress, which\nis demonstrably up to the task, having refined statu-\ntory trademark-infringement remedies many times\nover decades.\n Properly construed, the just-sum provision cannot\nplausibly sustain the award in this case. It is undis-\nputed that petitioner earned $0 in profits from the\npurportedly infringing activity. Permitting the dis-\ntrict court to sidestep centuries of corporate law, and\nto transform that $0 in profits into a $43 million\naward based on profits earned only by non-parties,\ncannot be defended as “just” under any measure. Re-\nspondent’s suggestion that the Act authorized that\noutsized award to capture petitioner’s “true profits”\nbecause its affiliates reaped those earnings, Br. in Opp.\n23, 27 (citation omitted), is simply ersatz veil-piercing\nwithout the requisite proof. But respondent and both\ncourts below disclaimed reliance on veil-piercing prin-\nciples. As a result, requiring petitioner to disgorge\n$43 million in profits it never received would also\nplainly constitute a “penalty” that the Lanham Act ex-\npressly forbids. 15 U.S.C. § 1117(a).\n C. The Fourth Circuit went astray based largely\non a misplaced policy concern that respecting corpo-\nrate separateness would provide a blueprint for in-\nfringers to evade responsibility. Policy considerations\nare never a license to disregard clear statutory text or\ncontext. And the court’s worry is unfounded in any\nevent. The Lanham Act’s robust, detailed remedial\nscheme provides an array of tools to compensate plain-\ntiffs, deter wrongdoing, and prevent future infringe-\nment. For example, a plaintiff who (unlike respond-\nent) was injured by infringement that earned the de-\nfendant no profit may still seek damages (which the\n 19\n\ncourt may enhance). And plaintiffs injured by the ac-\ntions of multiple affiliated entities can sue them all or\nproceed on a veil-piercing theory. Respondent simply\ndeclined to pursue any of those avenues. Rewriting\nthe statute to undo respondent’s strategic choices\nwould cause much more harm than good: The court of\nappeals’ reasoning unsettles investment expectations,\ninflates profits awards to exorbitant levels, and offers\nno administrable guideposts to addressing corporate\nseparateness under other federal statutes.\n\n *****\n Because petitioner, the only defendant in this\ncase, earned no profits and respondent made no at-\ntempt to pierce the corporate veil, the judgment below\naffirming the disgorgement award should be reversed.\n ARGUMENT\nTHE LANHAM ACT DOES NOT PERMIT COURTS TO\nORDER A DEFENDANT TO DISGORGE THE PROFITS\nOF NON-PARTY AFFILIATES ABSENT VEIL-PIERCING\n The Lanham Act’s plain language answers the\nquestion presented. The Act authorizes an award of\nthe “defendant’s profits.” 15 U.S.C. § 1117(a). Absent\nveil-piercing, that language clearly precludes ordering\na defendant to disgorge profits earned by non-party\naffiliates. The Fourth Circuit and respondent have no\nanswer to that controlling text. They rely instead on\ntwo other statutory passages, but neither phrase they\ninvoke overcomes the strong presumption from United\nStates v. Bestfoods, 524 U.S. 51 (1998), that federal\nstatutes respect corporate separateness. To the con-\ntrary, both phrases reinforce traditional equitable lim-\nitations that prohibit ordering a defendant to disgorge\n 20\n\nprofits it never received. The courts below erred in\nordering petitioner to disgorge profits that were\nearned by its non-party affiliates, without piercing the\ncorporate veil.\n A. The Lanham Act Permits Disgorgement\n Of Only The “Defendant’s Profits”\n In Section 35 of the Lanham Act, 15 U.S.C. § 1117,\nCongress provided an assortment of potential mone-\ntary remedies for trademark infringement. One such\nremedy is recovery of “defendant’s profits.” Id.\n§ 1117(a). That text means what it says: A court may\norder an infringing defendant to disgorge such “de-\nfendant’s profits.” The court cannot compel a defend-\nant to repay profits earned by others, including by\nnon-party affiliates whom the plaintiff never sued and\nwhose liability was never adjudicated, unless the\nplaintiff pierces the corporate veil.\n That straightforward, indeed obvious, reading of\nSection 1117(a) resolves this case. Respondent named\npetitioner as the lone defendant and disclaimed any\nattempt to pierce the corporate veil. The court of ap-\npeals therefore erred in affirming an order requiring\npetitioner, which undisputedly earned no profits, to\ndisgorge an amount equal to its non-party affiliates’\nprofits.\n 1. The “defendant” in Section 1117(a) is\n the named party found liable, not a\n non-party never sued\n Since 1946, the Lanham Act has provided that “the\nplaintiff shall be entitled * * * to recover (1) defend-\nant’s profits, (2) any damages sustained by the plain-\ntiff, and (3) the costs of the action.” § 35, 60 Stat. 439-\n440 (15 U.S.C. § 1117(a)). “[P]rofits” of the “defendan[t]”\n 21\n\nare the gains of the party that is named in the case\nand has been found liable for infringement, not the as-\nsets of anyone else—including (absent veil-piercing)\ncorporate affiliates of the defendant that the plaintiff\nnever sued and the court never found liable.\n The Lanham Act does not define “defendant,”\nwhich therefore carries its ordinary meaning. See En-\ncino Motorcars, LLC v. Navarro, 584 U.S. 79, 85\n(2018). When Congress enacted the Lanham Act, the\nterm “defendant” meant simply a “person against\nwhom an action is brought.” Funk & Wagnalls New\nPractical Standard Dictionary 349 (1946); accord\nWebster’s New International Dictionary of the English\nLanguage 687 (2d ed. 1949) (“A person required to\nmake answer in an action or suit in law or equity, or\nin a criminal action.”); Black’s Law Dictionary 541 (3d\ned. 1933) (“[T]he party against whom relief or recovery\nis sought in an action or suit.”). “Defendant” has the\nsame meaning today. Black’s Law Dictionary 528\n(12th ed. 2014) (“A person sued in a civil proceeding or\naccused in a criminal proceeding.”); 4 Oxford English\nDictionary 377 (2d ed. 1989) (“[a] person sued in a\ncourt of law; the party in a suit who defends; opposed\nto plaintiff ”).\n Reading that “text in context,” Fischer v. United\nStates, 144 S. Ct. 2176, 2183 (2024) (citation omitted),\nconfirms that Congress used “defendant” in Section\n1117(a) in that simple, ordinary sense. The statute\nrequires “the plaintiff * * * to prove defendant’s sales\nonly,” and it then shifts the burden to the “defendant\n[to] prove all elements of cost or deduction claimed.”\n15 U.S.C. § 1117(a). The “defendant” who bears that\nburden of proof necessarily is a named party to the\ncase, not a non-participant in the litigation. And it is\n 22\n\na settled “‘rule of statutory construction’ that ‘identi-\ncal words used in different parts of the same act’”—\nhere, in the same subsection—“‘are intended to have\nthe same meaning.’” Gustafson v. Alloyd Co., 513 U.S.\n561, 570 (1995) (citation omitted).\n By authorizing a successful plaintiff to recover\n“defendant’s profits,” 15 U.S.C. § 1117(a), Congress\nthus limited disgorgement to the profits of the specific\nparty named in the suit and found liable. This Court\nhas cautioned, including in the context of Section\n1117(a), against “read[ing] into statutes words that\naren’t there.” Romag Fasteners, Inc. v. Fossil, Inc.,\n590 U.S. 212, 215 (2020); see, e.g., Bittner v. United\nStates, 598 U.S. 85, 94 (2023). The expressio unius\ncanon applies with particular force when, as in Sec-\ntion 1117(a), Congress has gone to the trouble of sin-\ngling out a particular participant (here, the “de-\nfendan[t]”) for specific treatment. 15 U.S.C. § 1117(a).\nJust last Term, the Court held that a statute’s grant\nof authority concerning a “debtor” in bankruptcy im-\nplied the absence of like authority as to non-debtors.\nHarrington v. Purdue Pharma L.P., 144 S. Ct. 2071,\n2083 (2024). So too here, Section 1117(a)’s enumera-\ntion of the “defendant’s profits” leaves no space for\ncourts to award profits of non-defendants.\n The law recognizes a “rare exception” when legally\nseparate corporate entities may be treated as each\nother’s alter egos because a court has pierced the cor-\nporate veil separating the entities’ legal identities.\nDole Food Co. v. Patrickson, 538 U.S. 468, 475 (2003).\nThat narrowly limited circumstance allows a court to\ntreat profits of a defendant’s non-party affiliate as the\ndefendant’s own. In Rubber Co. v. Goodyear, 76 U.S.\n(9 Wall.) 788 (1870), for example, a master appointed\n 23\n\nto calculate profits “stated two accounts: one against\nthe Providence Company and the other against the\nColumbian Company, which he f[ound] to be the Prov-\nidence Company under another name” because “[t]he\nbusiness as to both was so intermingled and confused\nthat approximate results only * * * were attainable\nby but one process.” Id. at 802 (emphasis added). The\nmaster thus imposed joint liability for total profits.\nIbid.\n Absent veil-piercing, however, profits earned by\nanother entity are not the “defendant’s profits,” and\nthe defendant cannot be ordered to repay them.\n15 U.S.C. § 1117(a); see, e.g., Burnet v. Clark, 287 U.S.\n410, 415 (1932) (holding that a corporate officer could\nclaim losses from his dealings with the corporation be-\ncause “in no sense c[ould] the corporation be regarded\nas his alter ego, or agent”). Any effort to reach others’\nprofits through the named defendant is “in substance”\nan attempt to add new parties to the case while hold-\ning the wrong party liable. Sheldon v. Metro-Goldwyn\nPictures Corp., 106 F.2d 45, 51 (2d Cir. 1939) (L. Hand,\nJ.), aff ’d, 309 U.S. 390 (1940). That is not disgorge-\nment of “defendant’s profits” in any sense of those\nwords.\n 2. The disgorgement order here defies\n the Lanham Act’s plain language\n The order affirmed below violates the Lanham\nAct by requiring petitioner to disgorge profits earned\nby others. Petitioner was and is the only defendant\nin the case. Respondent was required to “name all the\nparties” in its complaint, Fed. R. Civ. P. 10(a), and\nto procure a summons “directed to the defendant,”\nFed. R. Civ. P. 4(a)(1)(B). Petitioner was the lone\n 24\n\ndefendant named in the complaint, J.A. 4, and the\nonly defendant served, J.A. 39. Respondent also never\nmoved to amend its complaint to add new parties or to\n“chang[e] the party * * * against whom a claim is as-\nserted.” Fed. R. Civ. P. 15(a), (c)(1)(C). Under Section\n1117(a)’s plain language, the courts below could order\ndisgorgement of profits earned (if any) only by peti-\ntioner.\n Petitioner undisputedly earned no profits from\nthe infringement that could be disgorged under Sec-\ntion 1117(a). Respondent did not deny that petitioner\nsuffered net losses for the relevant years. Pet. App.\n82a-83a; see J.A. 262, 272, 282. Only petitioner’s\naffiliates—never made parties to the litigation—\nearned profits: Third parties paid rents to the affili-\nates directly. Pet. App. 82a-83a; J.A. 73-74, 84-86.\nThose profits never passed through the hands of peti-\ntioner, which received only accounting and manage-\nment fees from the affiliates. J.A. 81-82; see Pet. App.\n60a (Quattlebaum, J., dissenting) (citing American\nRice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321,\n339-340 (5th Cir. 2008)). And even respondent admits\nthat the courts below “ordered disgorgement of more\nthan just ‘defendant’s profits.’” Br. in Opp. 27. After\nall, disgorgement of “defendant’s profits,” 15 U.S.C.\n§ 1117(a), was impossible because the only defendant—\npetitioner—had none.\n Respondent also never sought to pierce the corpo-\nrate veil between petitioner and its non-party affili-\nates. Pet. App. 86a. To the contrary, respondent dis-\navowed any attempt at veil-piercing before both the\ndistrict court, J.A. 331, and the Fourth Circuit, Br. in\nOpp. App. 55a. The district court and court of appeals\nalso both eschewed the need for veil-piercing, under\n 25\n\nany body of law. Pet. App. 43a, 82a; see Edmondson\nv. Velvet Lifestyles, LLC, 43 F.4th 1153, 1162 (11th Cir.\n2022) (applying state veil-piercing law); cf. Bestfoods,\n524 U.S. at 64 n.9 (reserving judgment on whether\nfederal or state law would govern veil-piercing under\nfederal statute because no attempt to pierce the veil\nwas made). Because the corporate veil remains in-\ntact, the affiliates’ profits cannot be treated as peti-\ntioner’s. The judgment requiring petitioner to dis-\ngorge nearly $43 million in profits earned only by its\naffiliates thus violates the Lanham Act and should be\nreversed.\n B. Nothing In The Lanham Act Authorizes\n District Courts To Disregard Corporate\n Separateness In Ordering Disgorgement\n The court of appeals and respondent have no direct\nanswer to the Lanham Act’s language limiting dis-\ngorgement to “defendant’s profits.” 15 U.S.C. § 1117(a).\nDespite that unambiguous text and respondent’s deci-\nsion to forgo any theory of veil-piercing, the courts be-\nlow treated petitioner and its non-party affiliates “as\na single corporate entity for the purpose of calculating\nrevenues.” Pet. App. 39a. That reasoning rests on the\npremise that courts can disregard the corporate form\nin trademark cases whenever they deem doing so to\nbe necessary to maximize recovery for trademark reg-\nistrants. But as this Court made clear in Bestfoods,\nfederal statutes are presumed to respect corporate\nseparateness unless Congress “speak[s] directly” to\ndisplace that bedrock rule in statutory text. 524 U.S.\nat 63 (citation omitted).\n The Fourth Circuit and respondent have touted\ntwo contenders. The court of appeals invoked the\n 26\n\nLanham Act’s proviso that monetary remedies are\n“subject to the principles of equity” as authority to dis-\nregard corporate separateness. Pet. App. 45a (cita-\ntions omitted). At the petition stage, respondent\nabandoned that rationale and instead pointed to lan-\nguage permitting a court that finds a profits award\n“excessive” or “inadequate” to award a “just” sum.\n15 U.S.C. § 1117(a); Br. in Opp. 24-25. Bestfoods lands\nthe same knockout blow on both: Neither provision\ncomes close to supplying a “direc[t]” statement that\ncourts may disregard corporate separateness. Rather,\nboth reinforce traditional equitable limitations that\nforeclose this kind of extraordinary remedy.\n 1. Federal statutes respect corporate\n separateness unless Congress directly\n displaces that principle\n Any argument that the Lanham Act allows courts\nto ignore corporate separateness without veil-piercing\nmust overcome the strong interpretive presumption\nthat federal statutes respect the corporate form. Con-\ngress legislates not in a vacuum, but against “the back-\ndrop of the common law.” Comcast Corp. v. National\nAss’n of African American-Owned Media, 589 U.S. 327,\n335 (2020). When “a common-law principle is well es-\ntablished,” this Court “take[s] it as given that Con-\ngress has legislated with an expectation that the prin-\nciple will apply.” Astoria Federal Savings & Loan\nAss’n v. Solimino, 501 U.S. 104, 108 (1991); see, e.g.,\nMinerva Surgical, Inc. v. Hologic, Inc., 594 U.S. 559,\n572 (2021).\n To displace a longstanding common-law principle\nin a particular statutory context, Congress must\n“speak directly to the question.” Bestfoods, 524 U.S.\n 27\n\nat 63 (citation omitted). The common-law rule other-\nwise controls under the federal statute. And the Lan-\nham Act is no exception. This Court has read the Act\n“in accordance with [its] common-law foundations.”\nDastar Corp. v. Twentieth Century Fox Film Corp.,\n539 U.S. 23, 37 (2003); see, e.g., B&B Hardware, Inc.\nv. Hargis Industries, Inc., 575 U.S. 138, 148-149\n(2015) (issue preclusion); Inwood Laboratories, Inc. v.\nIves Laboratories, Inc., 456 U.S. 844, 853-854 (1982)\n(contributory infringement).\n One such well-settled common-law principle is the\npresumption of corporate separateness—that legally\ndistinct corporations are separate legal persons and\nmust be treated as such. Anderson v. Abbott, 321 U.S.\n349, 361-362 (1944). The rule that “a parent corpora-\ntion * * * is not liable for the acts of its subsidiaries”\ndates back centuries and is “deeply ‘ingrained in our\neconomic and legal systems.’” Bestfoods, 524 U.S. at\n61-63 (citation omitted). Businesses depend on that\nstable baseline when structuring their activities and\nplanning their investments. “Limited liability is the\nrule not the exception,” this Court has said, “and on\nthat assumption large undertakings are rested, vast\nenterprises are launched, and huge sums of capital at-\ntracted.” Anderson, 321 U.S. at 362.\n In Bestfoods, this Court held that federal statutes\nmust be construed to respect corporate separateness\nunless Congress “speak[s] directly to the question”\nand displaces that background principle. 524 U.S. at\n63 (citation omitted). Mere “congressional silence” on\n“a matter as fundamental as the liability implications\nof corporate ownership” means that the “venerable\ncommon-law” rule continues to control. Id. at 62-63.\nApplying that presumption, the Bestfoods Court held\n 28\n\nthat the Comprehensive Environmental Response,\nCompensation, and Liability Act (CERCLA), 42 U.S.C.\n§ 9601 et seq., does not displace the rule of corporate\nseparateness. 524 U.S. at 60. Because “nothing in\nCERCLA purports to reject th[at] bedrock principle,”\nthe Court held that a CERCLA defendant can be liable\nfor an affiliate’s cleanup costs “when (but only when)\nthe corporate veil may be pierced.” Id. at 62-63 (em-\nphasis added).\n This Court has also underscored the importance\nof corporate separateness in other contexts. For ex-\nample, it has held that “foreign affiliates” of a domes-\ntic corporation “possess[ed] no rights under the First\nAmendment” because “the corporate veil” had not\nbeen pierced. Agency for International Development v.\nAlliance for Open Society International, Inc., 591 U.S.\n430, 435-436 (2020). The Court also has followed “the\ngeneral rules regarding corporate formalities” in re-\nquiring a showing of veil-piercing for subsidiaries of\nforeign-state-owned corporations to claim sovereign\nimmunity. Dole Food, 538 U.S. at 476. And, tracking\nits approach to corporate affiliates, the Court has ap-\nplied the principle of separateness to corporations and\ntheir officers. See, e.g., Cedric Kushner Promotions,\nLtd. v. King, 533 U.S. 158, 163 (2001).\n The principle of corporate separateness constrains\ncourts not only when imposing liability for corporate\naffiliates’ acts, but also when crafting remedies for vi-\nolations. See NLRB v. Deena Artware, Inc., 361 U.S.\n398, 402-403 (1960). Treating affiliates’ assets as sep-\narate at the remedial stage follows from black-letter\nlaw that “[t]he properties of two corporations are dis-\ntinct,” even if “the same shareholders own or control\nboth.” Dole Food, 538 U.S. at 475 (quoting 1 William\n 29\n\nFletcher, Cyclopedia of the Law of Corporations § 31,\np. 514 (rev. ed. 1999)). As this Court stressed, one cor-\nporation “does not own or have legal title” to an affili-\nate’s assets. Ibid. So a defendant cannot be deemed\nto own another’s property—such as its profits—absent\nveil-piercing.\n Whether to depart from these foundational princi-\nples is ultimately a choice for Congress—not the courts.\nThe clear-statement rule recognized in Bestfoods (and\nechoed in other cases) keeps the ball with Congress,\nwhere it belongs. Bestfoods, 524 U.S. at 62-63. If Con-\ngress wants to allow courts to disregard corporate dis-\ntinctions in a particular setting, it is free to say so.\nBut courts cannot make that policy judgment, and ac-\ncordingly must not treat “congressional silence” as li-\ncense to “rewrite this well-settled rule.” Ibid.\n 2. The Lanham Act’s incorporation of\n “the principles of equity” reinforces\n respect for corporate separateness\n The Fourth Circuit identified nothing in the Lan-\nham Act that overcomes the Bestfoods presumption\nand supports stretching “defendant” to include non-\nparties. The court hung its hat on Section 1117(a)’s\nstatement that disgorgement and other monetary re-\nlief are all “subject to the principles of equity.” Pet.\nApp. 45a (quoting 15 U.S.C. § 1117(a)). It read that\nphrase to invest district courts with broad “discretion”\nto dispense with corporate separateness (without any\nveil-piercing) based on their case-specific “weigh[ing]”\nof “the equities.” Ibid. (citation omitted). But the\nphrase has the exact opposite effect. Far from “directly”\noverriding corporate separateness, Bestfoods, 524 U.S.\nat 63 (citation omitted), the Act’s incorporation of\n 30\n\nequitable principles reinforces traditional limits on\nremedial discretion and confirms that courts cannot\norder defendants to disgorge non-party affiliates’ prof-\nits absent veil-piercing.\n a. Traditional equitable restrictions\n on disgorgement govern awards of\n defendant’s profits\n When Congress authorizes an equitable remedy, it\ndoes not “expect [courts] to break with historic princi-\nples of equity.” Holmberg v. Armbrecht, 327 U.S. 392,\n395 (1946). Statutory grants of equitable authority do\nnot give courts “the power to create remedies previ-\nously unknown to equity jurisprudence.” Grupo Mex-\nicano de Desarrollo S.A. v. Alliance Bond Fund, Inc.,\n527 U.S. 308, 332 (1999). Rather, a federal statute’s\nadoption of an equitable remedy “incorporate[s]” the\n“old soil” of “the traditional standards in equity prac-\ntice.” Taggart v. Lorenzen, 587 U.S. 554, 560-561\n(2019) (citation omitted). This Court accordingly re-\nquires a “clear command from Congress” to depart\nfrom traditional limits on equitable remedies. Star-\nbucks Corp. v. McKinney, 144 S. Ct. 1570, 1576 (2024).\nLike the Bestfoods presumption, the Starbucks clear-\ncommand rule reinforces congressional primacy on\nquintessentially legislative questions of remedies af-\nforded by federal law. See Egbert v. Boule, 596 U.S.\n482, 491-492 (2022).\n That rule applies with greater force when, as here,\nCongress expressly incorporates “the principles of eq-\nuity” into a statute. 15 U.S.C. § 1117(a). This Court\nreads such provisos to mean that a statute “contain[s]\nthe limitations upon [the remedy’s] availability that\nequity typically imposes.” Great-West Life & Annuity\n 31\n\nInsurance Co. v. Knudson, 534 U.S. 204, 211 n.1\n(2002). This Court recently confirmed that “the term\n‘principles of equity’” in Section 1117(a) captures “fun-\ndamental rules that apply more systematically across\nclaims and practice areas”—not idiosyncratic rules\ngood for trademarks only. Romag, 590 U.S. at 217.\n b. The disgorgement order in this\n case violates traditional principles\n of equity\n The Lanham Act’s incorporation of the “principles\nof equity” does not clearly displace the presumption of\ncorporate separateness and instead forecloses the dis-\ngorgement order here in three independent ways.\n First, the award flouts the maxim that “equity fol-\nlows the law.” That venerable rule means that equity\n“has no power to change or unsettle” the “rights or the\nsituation of parties [that] are clearly defined and es-\ntablished by law.” Hedges v. Dixon County, 150 U.S.\n182, 192 (1893) (citation omitted); see Grupo Mexi-\ncano, 527 U.S. at 321-323 & n.6. “Wherever the rights\nof the parties are clearly governed by rules of law,\ncourts of equity will follow such legal rules.” 2 Spencer\nW. Symons, Pomeroy’s Equity Jurisprudence § 425,\np. 190 (5th ed. 1941); see also 1 Joseph Story, Com-\nmentaries on Equity Jurisprudence § 13, p. 16 (1836)\n(Story) (explaining that equity is “subservient” to law\nand cannot “contradict or overturn the grounds or\nprinciples thereof ”). Courts of equity thus could not\n“create a remedy in violation of law,” INS v. Pangili-\nnan, 486 U.S. 875, 883 (1988) (quoting Rees v. Water-\ntown, 86 U.S. (19 Wall.) 107, 122 (1874)), which could\ndeprive defendants of due process, e.g., Rees, 86 U.S.\n(19 Wall.) at 122-123, and raise serious separation-of-\n 32\n\npowers concerns, e.g., Grupo Mexicano, 527 U.S. at\n332-333.\n As explained above, a common-law principle—the\npresumption of corporate separateness—already sup-\nplies the governing rule: Corporate affiliates must be\ntreated as legally distinct entities absent veil-piercing\nor a specific statutory directive. Bestfoods, 524 U.S. at\n63. Courts of equity would have treated the property\nof petitioner and its affiliates as presumptively sepa-\nrate and would not invent a remedy that attempts to\n“abate the rigor of the common law.” Grupo Mexicano,\n527 U.S. at 321 (quoting 1 Story § 12, at 14-15). Alt-\nhough equity sometimes disregarded corporate sepa-\nrateness if affiliates operated as alter egos or if “fraud\nor injustice” would otherwise result, First National\nCity Bank v. Banco Para el Comercio Exterior de\nCuba, 462 U.S. 611, 629 (1983) (citation omitted), re-\nspondent made no attempt to pierce the corporate veil,\nsee p. 24, supra.\n Second, even apart from its respect for corporate\nseparateness, equity traditionally limited disgorge-\nment to the profits “actually received by the defend-\nant.” Coupe v. Royer, 155 U.S. 565, 583 (1895). The\nunderlying theory of disgorgement is that a defendant\nwho receives profits from unlawful conduct is deemed\nto hold those profits “in trust for the benefit” of the\nplaintiff. Ambler v. Whipple, 87 U.S. (20 Wall.) 546,\n559 (1874). Courts of equity would order such a de-\nfendant to return “the net profits from wrongdoing,\nthat is, ‘the gain made upon any business or invest-\nment, when both the receipts and payments are taken\ninto the account.’” Liu v. SEC, 591 U.S. 71, 83 (2020)\n(citation omitted). Inherent in that constructive-trust\napproach is that the defendant has actually received\n 33\n\nthe profits; a defendant cannot be deemed a trustee of\nsomething over which it has no control. As this Court\nhas explained, equity thus “generally awarded profits-\nbased remedies against individuals” using an individu-\nalized calculation of net profits, “not against multiple\nwrongdoers under a joint-and-several liability theory.”\nId. at 82-83.\n When a defendant’s net profits were zero, equity\ndid not allow disgorgement of property that another\nreceived, as several decisions from before and near the\nLanham Act’s enactment confirm. This Court, for ex-\nample, reasoned that an infringer who “has realized\nno profit from the use of the invention” “cannot be\ncalled upon to respond for profits” in rejecting an at-\ntempt to hold a city liable for the profits a construction\ncompany earned from installing a road (at the city’s\nbehest) that infringed a patent. Elizabeth v. Pavement\nCo., 97 U.S. 126, 138 (1878). Because “the contractors\nand not the city realized” the profits, the city, which\n“made no profit at all,” could not be ordered to dis-\ngorge the contractors’ profits. Id. at 140. The Court\nruled the same way when a plaintiff sought to recover\nthe defendant’s profits but introduced evidence only of\n“what certain third companies were alleged to have\nmade” from similar infringing devices. Keystone Man-\nufacturing Co. v. Adams, 151 U.S. 139, 146 (1894).\nThe Keystone Manufacturing Court reversed because\nthe profits-disgorgement order impermissibly awarded\n“not the defendant’s profits, but those realized by other\ncompanies.” Id. at 148 (emphasis added). In the run-\nup to the Lanham Act, courts followed these tradi-\ntional principles and forbade orders that required a\ndefendant to disgorge profits obtained by another,\neven if a related entity or a co-infringer. See, e.g.,\n 34\n\nSammons v. Colonial Press, 126 F.2d 341, 345-346 (1st\nCir. 1945); Washingtonian Publishing Co. v. Pearson,\n140 F.2d 465, 467 (D.C. Cir. 1944); Amusement Corp.\nof America v. Mattson, 138 F.2d 693, 697 (5th Cir.\n1943).\n The general requirement that the defendant have\nactually received the property runs through this\nCourt’s remedial decisions beyond the specific context\nof profits disgorgement. From its earliest days, the\nCourt recognized that restitution could not be ordered\nagainst defendants that “were not in possession of the\nthing to be restored, had no power over it, and were,\nconsequently, unable to redeliver it.” Jennings v. Car-\nson, 8 U.S. (4 Cranch) 2, 21 (1807) (Marshall, C.J.); see\nPenhallow v. Doane’s Administrators, 3 U.S. (3 Dall.)\n54, 88, 104, 119-120 (1795) (Paterson, Iredell, and\nCushing, JJ., seriatim) (reversing order that held de-\nfendants jointly liable for damages in excess of what\neach defendant received). And the Court applied tra-\nditional principles governing forfeiture in rejecting\njoint-and-several liability for criminal forfeiture when\nthe defendant “never obtained tainted property as a\nresult of the crime.” Honeycutt v. United States,\n581 U.S. 443, 454 (2017). Under the traditional prin-\nciples of equity described in Liu and reflected across\nthis Court’s cases, petitioner cannot be ordered to dis-\ngorge profits that its affiliates alone received.\n Third, equity will not “len[d] its aid to enforce a\nforfeiture or penalty.” Marshall v. Vicksburg, 82 U.S.\n(15 Wall.) 146, 149 (1873). In England, it was “more\nproperly the business of a Court of Equity to relieve\nagainst a penalty than to assist the recovery of it.”\nJones v. Meredith, 2 Comyns 661, 663, 92 Eng. Reg.\n1257, 1258 (Exch. 1739). Soon after the Founding,\n 35\n\nthis Court and others in this country likewise held\nthat, when a plaintiff requested a remedy “in the na-\nture of a penalty,” courts of equity would “not assist to\nenforce at all.” Brown v. Swann, 35 U.S. (10 Pet.) 497,\n503 (1836); accord Livingston v. Tompkins, 4 Johns.\nCh. 415, 433 (N.Y. 1820). And this Court recently re-\niterated that, “while courts of equity could order a de-\nfendant to return unjustly obtained funds, only courts\nof law issued monetary penalties to ‘punish culpable\nindividuals.’” SEC v. Jarkesy, 144 S. Ct. 2117, 2129\n(2024) (citation omitted).\n Requiring a defendant to disgorge profits “that ac-\ncrue[d] to his affiliates” could, as this Court has noted,\n“transform any equitable profits-focused remedy into\na penalty.” Liu, 591 U.S. at 90. Such a remedy does\nnot require the defendant to hand over property it re-\nceived that rightly belongs to the plaintiff (the classic\nrationale for equitable disgorgement); instead, it forces\na defendant who did not profit from wrongdoing to di-\nvert or raise funds from other sources. The Court long\nago recognized that abandoning “actual gains and\nprofits acquired by the defendants” as the measure of\ndisgorgement would improperly “conver[t] a court of\nequity into an instrument for * * * punishment.”\nLivingston v. Woodworth, 56 U.S. (15 How.) 546, 559\n(1854) (emphasis added). That is precisely what the\ndisgorgement order in this case does: Petitioner was\nordered to disgorge nearly $43 million in profits it\nnever saw that were earned by others. See pp. 10-11,\nsupra.\n In short, the judgment in this case violates three\nindependent principles of equity. An award of defend-\nant’s profits under the Lanham Act cannot defy the\nlegal baseline of corporate separateness, calculate\n 36\n\nprofits on a collective basis, or impose a penalty that\nexceeds the defendant’s actual gains. In all these\nways, the principles of equity cement rather than dis-\nplace the Bestfoods presumption.\n 3. An award of a “just” sum cannot\n disregard corporate separateness\n In this Court, respondent has not argued that an\naward of “defendant’s profits” can include profits of\nentities other than the actual defendant, such as the\nnon-parties whose profits were the object of the dis-\ngorgement order here. Nor has it defended the Fourth\nCircuit’s reliance on Section 1117(a)’s principles-of-\nequity proviso. Instead, respondent relied at the peti-\ntion stage on the Lanham Act’s statement that, if the\ncourt “find[s] that the amount of the recovery based\non profits is either inadequate or excessive,” it “may\nin its discretion enter judgment for such sum as the\ncourt shall find to be just, according to the circum-\nstances of the case.” 15 U.S.C. § 1117(a); see Br. in\nOpp. 23-25.\n The just-sum provision cannot be read to empower\ncourts to disregard corporate separateness by impos-\ning monetary awards based on profits of non-party\naffiliates. That provision is a safety valve that comes\ninto play only after the district court has properly cal-\nculated the “defendant’s profits” through a defendant-\nfocused burden-shifting test for sales and deductions.\nCongress drew on traditional equitable discretion to\nallow courts to adjust an award of the defendant’s\nprofits when proof problems make the calculation\nunjustly low or when an award of full disgorgement\nis unjustly high. But that language certainly does\nnot directly override the common-law corporate-\n 37\n\nseparateness principle, so it cannot sustain the\naward in this case.\n a. The just-sum provision does not\n overcome the Bestfoods presump-\n tion\n The provision permitting courts to award a “sum”\nthat is “just” if a profits award is “inadequate or ex-\ncessive,” 15 U.S.C. § 1117(a), does not overcome the\nBestfoods presumption. That provision, which author-\nizes adjustments to an award of the defendant’s prof-\nits, reinforces traditional limitations on equitable re-\nlief and does not clearly authorize courts to disregard\ncorporate separateness in calculating profits.\n i. As the Court explained last Term, Congress’s\nuse of “just” in connection with statutory remedies\ndoes not authorize courts “to jettison the normal equi-\ntable rules” but instead invokes the “traditional equi-\ntable principles governing” those remedies. Star-\nbucks, 144 S. Ct. at 1576-1577. The same “principles\nof equity” that constrain an award of “defendant’s\nprofits” thus limit an award of a “just” sum. 15 U.S.C.\n§ 1117(a); see pp. 31-35, supra.\n In particular, the just-sum provision builds on a\nlong tradition of courts’ adjusting profits-disgorgement\nawards to account for evidentiary difficulties in deter-\nmining the exact measure of profits. This Court has\nobserved that proof problems can prevent an accurate\ncalculation of what “profits ha[ve] been made”\nthrough infringement. Westinghouse Electric & Man-\nufacturing Co. v. Wagner Electric & Manufacturing\nCo., 225 U.S. 604, 618 (1912). If “it [wa]s impossible\nto make a mathematical or approximate apportion-\nment” of profits, a court of equity could adopt a\n 38\n\nmeasure of relief that appropriately compensated the\ninjured party. Id. at 620.\n The just-sum provision’s history underscores that\nCongress was concerned with adjustments to profits-\ndisgorgement awards, not wholesale departures from\nthe limitations of equity. The legislative record re-\nflects concerns that courts had interpreted the profits-\ndisgorgement remedy under the Trademark Act of\n1905 as “too ironclad” in requiring full disgorgement\neven when the recovery was “excessive” and in allow-\ning “no recovery at all” when the plaintiff was unable\nto prove the amount that the defendant actually prof-\nited. 1941 Hearings 204-205. But no one so much as\nwhispered that respect for the corporate form or tra-\nditional veil-piercing principles were frustrating re-\ncovery of profits in trademark cases.\n Moreover, the model Congress used for the Lan-\nham Act’s just-sum provision—the remedial provision\nof the Copyright Act of 1909—was also concerned\nprincipally with problems of proof, not problems of\ncorporate separateness. The 1909 Act had authorized\ncourts to choose a just sum within a statutory range\nof $250 to $5,000 as a replacement for both profits and\nactual damages. § 25(b), 35 Stat. 1081. And the trig-\nger for statutory damages in copyright law likewise\nwas evidentiary difficulties. See Sheldon v. Metro-\nGoldwyn Pictures Corp., 309 U.S. 390, 399 (1940);\nWashingtonian Publishing, 140 F.2d at 466. As this\nCourt recognized shortly before that law was passed,\nthe remedial flexibility under copyright’s predecessor\njust-sum provision accounted for the “many cases [in\nwhich] it would be quite difficult to prove the exact\namount of damages.” Brady v. Daly, 175 U.S. 148, 154\n(1899). The 1909 Act did not authorize courts to\n 39\n\ndisregard corporate separateness in calculating prof-\nits, see Sheldon, 106 F.2d at 51, and nothing in the\nLanham Act’s history, much less its text, supports\ntaking that dramatic step.\n ii. Contrary to respondent’s assertion, Section\n1117(a)’s language entrusting adjustment of profits to\na court’s “discretion” does not grant courts “[u]nlim-\nited” authority to award any amount, based on any ev-\nidence, that strikes them as fair. Br. in Opp. 23 (cita-\ntion omitted). A “motion to a court’s discretion is a\nmotion, not to its inclination, but to its judgment; and\nits judgment is to be guided by sound legal principles.”\nMartin v. Franklin Capital Corp., 546 U.S. 132, 139\n(2005) (brackets omitted) (quoting United States v.\nBurr, 25 F. Cas. 30, 35 (C.C.D. Va. 1807) (No. 14,692d)\n(Marshall, C.J.)). And traditional practices developed\nover the years act to “narro[w]” the “channel[s] of dis-\ncretion” in which courts operate. Henry J. Friendly,\nIndiscretion About Discretion, 31 Emory L.J. 747, 772\n(1982); see Halo Electronics, Inc. v. Pulse Electronics,\nInc., 579 U.S. 93, 103-104 (2016).\n One important restriction on discretion is that the\njust-sum provision does not authorize awards that\nwould penalize a defendant for its affiliates’ profits.\nCourts of equity permitted recovery of profits only as\na “measure of compensation.” Hamilton-Brown Shoe\nCo. v. Wolf Brothers & Co., 240 U.S. 251, 259 (1916).\nIn Rubber Co., for example, this Court upheld an en-\nhanced profits award when the defendants kept their\nbooks in a way that made “an account impossible as to\nthe business done in their name,” but the Court cau-\ntioned that equity “makes the wrong-doer liable for ac-\ntual, not possible, gains.” 76 U.S. (9 Wall.) at 803-804\n(emphasis added). And although equity courts had\n 40\n\nflexibility to adjust profits awards, courts could not or-\nder the defendant to pay profits earned by others,\nwhich would necessarily “penalize the infringer.”\nWestinghouse, 225 U.S. at 620; see p. 35, supra.\n When it built the just-sum provision into the Lan-\nham Act, Congress took special care to reinforce that\nprinciple expressly. Section 1117(a) provides that any\nmonetary relief awarded, including under the just-\nsum provision, “shall constitute compensation and not\na penalty.” § 35, 60 Stat. 440 (15 U.S.C. § 1117(a)).\nCongress thus ensured that a profits award, even as\nadjusted, would remain “‘compensation for the injury\nthe [holder] has sustained’”—and not become a form\nof “punishment” unrelated to profits the defendant ac-\ntually received. Leman v. Krentler-Arnold Hinge Last\nCo., 284 U.S. 448, 456 (1932) (quoting Mowry v. Whit-\nney, 81 U.S. (14 Wall.) 620, 653 (1872)). Disregarding\ncorporate separateness in ordering a defendant to pay\nprofits “which have accrued to another” is neither\njust nor compensatory, but instead would constitute\nthe very penalty that the Lanham Act forbids. Liu,\n591 U.S. at 90 (citation omitted).\n iii. The broader statutory context confirms that\nthe just-sum provision does not empower courts to\nabandon corporate separateness. Respondent’s con-\ntrary interpretation would bring the just-sum provi-\nsion into conflict with the statutory scheme.\n The Lanham Act creates a reticulated framework\ndetailing exactly the sorts of monetary remedies\ncourts can award in trademark cases. The statute ex-\npressly identifies three forms of monetary relief (ac-\ntual damages, profits, and costs), authorizes qualified\nenhancement of damages up to three times their\n 41\n\namount, and lays out a burden-shifting scheme for cal-\nculating profits. 15 U.S.C. § 1117(a). And the statute\nalso makes all monetary recovery “subject to the prin-\nciples of equity.” Ibid. The just-sum provision serves\nas a safety valve to the profits-disgorgement provi-\nsion. See pp. 37-39, supra.\n Reading the provision to give courts power to dis-\nregard corporate separateness by ordering disgorge-\nment of non-party affiliates’ profits would upend Sec-\ntion 1117(a)’s carefully calibrated scheme. If the dis-\ntrict court had unbridled discretion to bring in the\nprofits of third parties, there would be no reason for\nCongress to require the district court first to assess\nthe “defendant’s profits” through a formalized burden-\nshifting test that turns on “defendant’s sales” and de-\nfendant’s proof of deductions and then to follow the\n“principles of equity” that require individualized cal-\nculation of net profits. 15 U.S.C. § 1117(a) (emphasis\nadded). Respondent’s expansive reading—allowing\nthe district court to throw all that effort out the win-\ndow and impose any award, based on anybody’s prof-\nits, that the court deems appropriate—would nullify\nthose defendant-centric provisions and defy the prin-\nciple that Congress “does not alter the fundamental\ndetails of a regulatory scheme in vague terms or an-\ncillary provisions.” Whitman v. American Trucking\nAss’ns, 531 U.S. 457, 468 (2001).\n For that reason, this Court has long refused to\nread into the just-sum provision novel remedies that\nclash with the statute’s finely tuned structure. In\nFleischmann Distilling Corp. v. Maier Brewing Co.,\n386 U.S. 714 (1967), the Court considered whether\ndistrict courts could award attorneys’ fees under Sec-\ntion 1117(a). Id. at 714-715. The Court observed that\n 42\n\nCongress enacted the Lanham Act against a settled\nbackground principle—namely, the American rule,\nunder which each side typically bears its own attor-\nneys’ fees. Id. at 717-718. Far from evincing any in-\ntent to depart from that rule, Congress had “meticu-\nlously detailed the remedies available to a plaintiff who\nproves that his valid trademark has been infringed.”\nId. at 719. Those remedies included “compensatory\nrecovery measured by the profits that accrued to the\ndefendant by virtue of his infringement.” Ibid. (em-\nphasis added). Given those detailed provisions, this\nCourt declined to read an “implicit” grant of unusual\nremedial authority into Section 1117(a)’s general dis-\ncretionary language. Id. at 720. Only Justice Stewart\ntook the view that the just-sum provision permitted\nthe award of attorneys’ fees whenever appropriate un-\nder “the ‘circumstances of the case.’” Id. at 722-723\n(dissenting opinion) (quoting 15 U.S.C. § 1117(a)).\n The Court’s reasoning in Fleischmann all but re-\nsolves this case. Like the American rule for attorneys’\nfees, the presumption of corporate separateness is a\n“bedrock principle” of U.S. law. Bestfoods, 524 U.S. at\n62. Section 1117(a) “prescribe[s] intricate remedies,”\nnone of which allows disgorgement of affiliates’ profits\nthrough the defendant. Fleischmann, 386 U.S. at 719.\nSo no amount of pleas to “discretion” or “the general\nequity power ‘to do equity in a particular situation’”\ncan justify a court’s disregard for the traditional rules\ngoverning relief under the Act. Ibid.\n Congress’s actions since Fleischmann also are in-\nconsistent with the notion that the just-sum provision\nallows “[u]nlimited enhancement” of profits. Br. in\nOpp. 23; see Pugin v. Garland, 599 U.S. 600, 605 n.1\n(2023) (statutory context includes the broader “corpus\n 43\n\njuris of which [the statute is] a part, including later-\nenacted statutes” (citation omitted)). Congress au-\nthorized treble profits for intentional use of counter-\nfeit marks. Act of Oct. 12, 1984, Pub. L. [DOCKET REDACTED],\n§ 1503(2)(B), 98 Stat. 2182 (15 U.S.C. § 1117(b)). Con-\ngress also added statutory damages for willful uses of\ncounterfeit trademarks. Anticounterfeiting Con-\nsumer Protection Act of 1996, Pub. L. No. 104-153, § 7,\n110 Stat. 1388; Prioritizing Resources and Organiza-\ntion for Intellectual Property Act of 2008, Pub. L. No.\n110-403, § 104, 122 Stat. 4259; see 15 U.S.C. § 1117(c).\nWhen Congress has wanted to authorize departures\nfrom the net-profits rule for disgorgement, it has done\nso using clear, confined language. This later “partic-\nularized legislation” would have been “unnecessary”\nif, as respondent suggests, the just-sum provision al-\nready were an all-purpose grant of unlimited discretion\nto award whatever number based on whoever’s profits\nstruck a court as appropriate under the circumstances.\nFischer, 144 S. Ct. at 2187. That surplusage confirms\nthat the more modest interpretation of the just-sum\nprovision “is the superior one.” Ibid.\n In short, innovating new forms of relief under the\nLanham Act is properly reserved to Congress, not\ncourts. This Court’s refusal to read novel, expansive\nremedies into the just-sum provision keeps Congress\nin charge of remedial policy. See Grupo Mexicano,\n527 U.S. at 332. Consider the coda to Fleischmann: a\nstatutory amendment allowing courts to award attor-\nneys’ fees in “exceptional” cases. Act of Jan. 2, 1975,\nPub. L. [DOCKET REDACTED], § 3, 88 Stat. 1955 (15 U.S.C.\n§ 1117(a)). If Congress wants to depart from a back-\nground rule, it knows how to do so. Congress has not\n“directly” displaced the settled principle of corporate\n 44\n\nseparateness in the just-sum provision or elsewhere\nin the Lanham Act. Bestfoods, 524 U.S. at 63 (citation\nomitted). Courts must give effect to that policy choice.\n b. The award in this case far out-\n strips the limits of the just-sum\n provision\n Properly construed, the just-sum provision cannot\njustify the district court’s award in this case. Neither\nof the lower courts purported to rely on the provision\nto capture the profits of petitioner’s affiliates. See\nCert. Reply 3-4. And like the lower courts’ misunder-\nstanding of the principles of equity, respondent’s ad-\nventurous use of the just-sum provision jumps the\nguardrails in Section 1117(a) that prevent courts from\ncreating a novel equitable remedy requiring the de-\nfendant to disgorge a non-party’s profits.\n For starters, adherence to the limits on relief\nmandated by the statute’s incorporation of traditional\n“principles of equity” cannot itself render “inade-\nquate” the “amount of the recovery based on profits”\nso as to justify invocation of the just-sum provision.\n15 U.S.C. § 1117(a). Equity has long provided that a\ncourt can order a defendant to disgorge only its own\nnet profits and cannot recover “benefits that accrue to\n[its] affiliates.” Liu, 591 U.S. at 90; see pp. 33-34, su-\npra. Section 1117(a) would be at war with itself if a\ncourt could declare the principles of equity themselves\n“inadequate” and “[un]just.”\n Moreover, requiring petitioner to disgorge over\n$40 million in profits it never received cannot be\n“just.” 15 U.S.C. § 1117(a). Courts can adjust the\nmeasure of a defendant’s profits when, for example,\nthe factfinder “ha[s] trouble identifying the precise\n 45\n\namount of profits generated by a defendant’s infringe-\nment” or “the defendant engage[s] in discovery ‘stone-\nwalling’ that prevent[s] the plaintiff from identifying\nits total infringing sales.” Max Rack, Inc. v. Core\nHealth & Fitness, LLC, 40 F.4th 454, 473 (6th Cir.\n2022) (citation omitted). But any “flexibility is con-\nfined within the broad boundaries of traditional equi-\ntable relief.” Grupo Mexicano, 527 U.S. at 322. Allow-\ning courts to issue “a type of relief that has never been\navailable before,” and that has been rejected “by\nlongstanding judicial precedent,” would amount to a\nrule “not of flexibility but of omnipotence.” Ibid.\n Respondent’s proposed use of the just-sum provi-\nsion involves that sort of omnipotence. Calling the\nleap from $0 in petitioner’s net profits to nearly $43\nmillion in affiliates’ net profits an “adjustment,” as re-\nspondent repeatedly does (Br. in Opp. 3, 9, 25, 27, 29),\n“might be good English”—“but only because there is a\nfigure of speech called understatement and a literary\ndevice known as sarcasm.” MCI Telecommunications\nCorp. v. AT&T Co., 512 U.S. 218, 228 (1994). There is\nnothing “just” about such an award when Congress\nhas given no “clear command” that courts can aban-\ndon traditional equity practice, including its require-\nment of an individualized calculation of net profits.\nStarbucks, 144 S. Ct. at 1576-1577; see Liu, 591 U.S.\nat 90.\n Respondent argues that reliance on the affiliates’\nprofits represents merely an evidentiary shortcut “to\ncapture the infringer’s ‘true profits,’” on the theory\nthat petitioner is responsible for all profits of its “‘non-\narms’ length’ * * * affiliates.” Br. in Opp. 23-25 (cita-\ntions omitted). But that is just a junior-varsity form\nof the veil-piercing principles that respondent and\n 46\n\nboth courts below disclaimed. The affiliates’ profits\nwould be petitioner’s “true” profits only if “true” veil-\npiercing principles supported treating the affiliates’\nproperty as petitioner’s own profits. See Dole Food,\n538 U.S. at 475. Because respondent never attempted\nto satisfy the genuine veil-piercing standard, the just-\nsum provision cannot salvage the judgment ordering\npetitioner to disgorge third parties’ profits.\n The district court’s order shows what sorts of ad-\njustments the just-sum provision was meant to per-\nform. The court invoked the just-sum provision not as\njustification for deeming non-party affiliates’ profits\nto be the “defendant’s profits,” see Cert. Reply 4, but\nrather to “adjust” the calculation of what the court\nhad already determined to be the presumptive dis-\ngorgement award—specifically, to impose a 20% hair-\ncut given substantial doubts that certain profits were\nattributable to the infringement, Pet. App. 87a; see id.\nat 88a-94a; see also pp. 10-11, supra. Putting aside\nthe court’s error in treating the affiliates’ profits as\n“defendant’s profits” to begin with, those modest\ntweaks fall inside the boundaries of the traditional eq-\nuitable practices to which the just-sum provision re-\nfers. The leap across the chasm from petitioner’s $0\nin profits to the non-party affiliates’ profits does not.\n If any doubt remained, the Lanham Act’s re-\nminder that any sum awarded “shall constitute com-\npensation and not a penalty” would shut the door on\nrespondent’s proposed use of the just-sum provision.\n15 U.S.C. § 1117(a). Again, respondent concedes that\nthe judgment in this case “ordered disgorgement of\nmore than just ‘defendant’s profits.’” Br. in Opp. 27.\nRespondent also did not even try to prove actual dam-\nages below. See Pet. App. 79a. As this Court observed\n 47\n\nin Liu, “impos[ing] disgorgement liability on a wrong-\ndoer for benefits that accrue to his affiliates\n* * * could transform any equitable profits-focused\nremedy into a penalty.” 591 U.S. at 90. The disgorge-\nment the district court ordered here is thus an imper-\nmissible “penalty”—plain and simple.\n * * *\n Neither the Lanham Act’s reference to “the prin-\nciples of equity” nor its allowance for a “just” sum em-\npowers courts to disregard corporate separateness in\ncalculating profits for disgorgement. Because the\njudgment in this case violates the statutory scheme,\nthis Court should reverse.\n C. The Fourth Circuit’s Policy Concerns\n Are Misplaced\n The Fourth Circuit approved the district court’s\nprofits-disgorgement order not because the court of\nappeals thought “defendant’s profits” means some-\nthing other than what it says, but because it believed\nthat respecting corporate separateness would “ru[n]\ncounter to” the “purpose of section 1117” by allowing\ninfringers to “insulate their infringement from finan-\ncial consequences.” Pet. App. 45a (citation omitted).\nThat policy-laden reasoning was improper, unwar-\nranted, and counterproductive.\n 1. “No statute pursues a single policy at all costs,”\nand courts “are not free to rewrite [a] statute * * * as\nif it did.” Bartenwerfer v. Buckley, 598 U.S. 69, 81\n(2023). “[V]ague notions of a statute’s ‘basic purpose’”\ncannot overcome specific remedial limitations. Great-\nWest, 534 U.S. at 220 (citation omitted). For the Lan-\nham Act, like any other statute, “the place for recon-\nciling competing and incommensurable policy goals”\n 48\n\nis “before policymakers,” and the courts’ “limited role\nis to read and apply the law those policymakers have\nordained.” Romag, 590 U.S. at 219.\n Policy-driven rewriting is especially inappropriate\nfor Section 1117(a). Congress spent decades refining\nthose remedial provisions. See pp. 5-8, supra. And\nthis Court’s decisions have left no doubt that, if Con-\ngress wants to authorize remedies against legally dis-\ntinct corporate affiliates, it must speak clearly to that\neffect. Bestfoods, 524 U.S. at 63. Because Congress\nhas not molded Section 1117(a)’s remedies to over-\ncome that traditional rule, the courts cannot do that\nwork for it.\n 2. The lower courts’ disregard of corporate sepa-\nrateness also is a solution in search of a problem.\n The Lanham Act features an array of remedies to\ncompensate plaintiffs, deter wrongdoing, and prevent\nfuture infringement. Prevailing parties can recover\n“any damages” they sustain. 15 U.S.C. § 1117(a).\nCourts can increase those damages by up to three\ntimes. Ibid. Statutory damages are available for cer-\ntain trademark claims, id. § 1117(c)-(d), as are attor-\nneys’ fees “in exceptional cases,” id. § 1117(a). And for\nplaintiffs concerned with ongoing infringement, the\nLanham Act authorizes injunctions. Id. § 1116(a). In\nlight of this abundance of remedies, it is not the end\nof the world if, in a given case, a plaintiff is not enti-\ntled to a profits-disgorgement award.\n Plaintiffs also are not without recourse when it\ncomes to profits earned by affiliated entities. This\nCourt has recognized, in addition to direct infringe-\nment, claims for secondary infringement against\nthose who “induce[d]” the infringement. Inwood\n 49\n\nLaboratories, 456 U.S. at 853-854. And if all affiliates\nare named as defendants and found to be liable, a\nplaintiff then can seek an award of “defendant’s prof-\nits” as to each. 15 U.S.C. § 1117(a). Plaintiffs also can\nattempt to pierce the corporate veil in appropriate\ncases. First National City, 462 U.S. at 629. Litigants\nhave relied on veil-piercing for centuries, Bank of\nUnited States v. Deveaux, 9 U.S. (5 Cranch) 61, 75\n(1809) (party argument), and there is no need to aban-\ndon that project now.\n In the end, the correct result here is a product of\nrespondent’s litigation strategy, not any defect in Sec-\ntion 1117(a)’s design. See Pet. App. 59a-60a (Quattle-\nbaum, J., dissenting). Having chosen not to pursue\nany of the available alternatives, respondent is poorly\npositioned to cry foul now.\n 3. The Fourth Circuit’s policy-driven solution is\nnot merely needless, but also profoundly harmful.\n Freewheeling disregard of corporate separateness\nwould introduce substantial uncertainty into busi-\nness operations. Corporations structure their affairs—\ndeciding to go into a new line of business, create an\naffiliate, and so forth—with the expectation that each\nlink in the corporate chain will be responsible only\nfor its own assets and liabilities (absent unusual cir-\ncumstances that justify veil-piercing). See Anderson,\n321 U.S. at 362. The Fourth Circuit’s approach desta-\nbilizes that state of affairs, exposing companies to\nmassive and difficult-to-predict liability for their affil-\niates’ profits and threatening to deter productive busi-\nness ventures.\n The court of appeals’ view also would dramatically\nalter the balance when it comes to the Lanham Act’s\n 50\n\nburden-shifting scheme. Federal trademark law pro-\nvides that “the plaintiff shall be required to prove de-\nfendant’s sales only” and that the defendant in turn\n“must prove all elements of cost or deduction claimed.”\n15 U.S.C. § 1117(a). By making the defendant’s reve-\nnues the starting point for recovery, Congress ac-\ncepted that “[t]here may well be a windfall to the\ntrade-mark owner where it is impossible to isolate the\nprofits which are attributable to the use of the infring-\ning mark.” Mishawaka Rubber & Woolen Manufac-\nturing Co. v. S.S. Kresge Co., 316 U.S. 203, 206-207\n(1942). But the court of appeals’ reasoning would mul-\ntiply that risk many times over. A Lanham Act de-\nfendant could no longer rely on its own gains as a cap\non the profits it could be ordered to disgorge and\nwould face the possibility of being forced to disgorge\nthe gains of every one of its legally distinct affiliates.\nNothing indicates Congress meant to impose that\nstaggering burden and uncertainty on all businesses\nexposed to trademark claims.\n The harmful consequences do not end with the\nLanham Act. If adopted, the Fourth Circuit’s approach\nwould similarly distort other statutory frameworks\nthat mirror the Act. The modern copyright statute, for\ninstance, authorizes awards of “the infringer’s prof-\nits” and relies on a similar burden-shifting scheme.\n17 U.S.C. § 504(b). The securities laws allow the SEC\nto obtain “any equitable relief ” from alleged violators,\nincluding disgorgement of profits. Liu, 591 U.S. at\n80-81. And the Employee Retirement Income Security\nAct likewise permits an award of “any profits of [a] fi-\nduciary” and “other equitable * * * relief.” 29 U.S.C.\n§ 1109(a). For each of those statutes, one could follow\nthe Fourth Circuit’s lead in divining a “fundamental\n 51\n\ndesire” to protect the interests of authors, investors,\nand employees. Pet. App. 45a. The reasoning below\nwould equally justify abandoning corporate formali-\nties and allowing courts to order disgorgement of the\nprofits of non-party affiliates in those contexts.\n The court of appeals’ approach would be hopeless\nto administer, too. Courts and regulated entities alike\nmay reasonably disagree on what “fundamental de-\nsire” drove Congress to pass a law and whether corpo-\nrate separateness hinders that platonic objective. Pet.\nApp. 45a. Take the Lanham Act itself: Surmising\nCongress’s gestalt purpose would require considera-\ntion of legislators’ statements spanning many pro-\nposed bills and debates between 1924 and 1946. See\nJames M. Koelemay, Jr., Monetary Relief for Trade-\nMark Infringement Under the Lanham Act, 72 Trade-\nmark Reporter 458, 481-485 (1983).\n That is not the sort of stable, predictable system\nneeded to give businesses a sense of the risks they\nface. This Court chose another path in Bestfoods for\ngood reason.\n *****\n Because the Lanham Act does not displace the\npresumption of corporate separateness, the focus\nproperly remains on petitioner’s profits, not on its af-\nfiliates’ profits. And the undisputed evidence showed\nthat petitioner had zero profits during the relevant pe-\nriod. When, as here, there is no legal basis to order\ndisgorgement, this Court should reverse the judgment\nas to the profits award. See, e.g., AMG Capital Man-\nagement, LLC v. FTC, 593 U.S. 67, 82 (2021); McLean\nv. Fleming, 96 U.S. 245, 258 (1878).\n 52\n\n CONCLUSION\n The judgment of the court of appeals affirming the\ndisgorgement order should be reversed.\n Respectfully submitted.\n\nPATRICK J. FUSTER HELGI C. WALKER\nMATT AIDAN GETZ Counsel of Record\nGIBSON, DUNN & THOMAS G. HUNGAR\n CRUTCHER LLP JONATHAN C. BOND\n333 South Grand Avenue M. CHRISTIAN TALLEY\nLos Angeles, CA 90071 GIBSON, DUNN & CRUTCHER LLP\n 1050 Connecticut Avenue, N.W.\n Washington, D.C. 20036\n [PHONE REDACTED]\n [EMAIL REDACTED]\n\n Counsel for Petitioner\n\nAugust 30, 2024\nAPPENDIX\n TABLE OF CONTENTS\n Page\n\n15 U.S.C. § 1117 ........................................................ 1a\nAct of July 8, 1870, ch. 230,\n § 79, 16 Stat. 211 ................................................ 4a\nTrademark Act of 1881, ch. 138,\n § 7, 21 Stat. 503-504 ........................................... 4a\nTrademark Act of 1905, ch. 592,\n §§ 16, 19, 33 Stat. 728-729 .................................. 5a\nLanham Act, ch. 540,\n § 35, 60 Stat. 439-449 (1946) .............................. 6a\n 1a\n\n15 U.S.C. § 1117. Recovery for violation of rights\n(a) Profits; damages and costs; attorney fees\n When a violation of any right of the registrant of\na mark registered in the Patent and Trade-mark Of-\nfice, a violation under section 1125(a) or (d) of this ti-\ntle, or a willful violation under section 1125(c) of this\ntitle, shall have been established in any civil action\narising under this chapter, the plaintiff shall be enti-\ntled, subject to the provisions of sections 1111 and\n1114 of this title, and subject to the principles of eq-\nuity, to recover (1) defendant’s profits, (2) any dam-\nages sustained by the plaintiff, and (3) the costs of the\naction. The court shall assess such profits and dam-\nages or cause the same to be assessed under its direc-\ntion. In assessing profits the plaintiff shall be re-\nquired to prove defendant’s sales only; defendant\nmust prove all elements of cost or deduction claimed.\nIn assessing damages the court may enter judgment,\naccording to the circumstances of the case, for any\nsum above the amount found as actual damages, not\nexceeding three times such amount. If the court shall\nfind that the amount of the recovery based on profits\nis either inadequate or excessive the court may in its\ndiscretion enter judgment for such sum as the court\nshall find to be just, according to the circumstances of\nthe case. Such sum in either of the above circum-\nstances shall constitute compensation and not a pen-\nalty. The court in exceptional cases may award rea-\nsonable attorney fees to the prevailing party.\n(b) Treble damages for use of counterfeit mark\n In assessing damages under subsection (a) for any\nviolation of section 1114(1)(a) of this title or section\n220506 of Title 36, in a case involving use of a coun-\nterfeit mark or designation (as defined in section\n 2a\n\n1116(d) of this title), the court shall, unless the court\nfinds extenuating circumstances, enter judgment for\nthree times such profits or damages, whichever\namount is greater, together with a reasonable attor-\nney’s fee, if the violation consists of—\n (1) intentionally using a mark or designa-\n tion, knowing such mark or designation is a coun-\n terfeit mark (as defined in section 1116(d) of this\n title), in connection with the sale, offering for sale,\n or distribution of goods or services; or\n (2) providing goods or services necessary to\n the commission of a violation specified in para-\n graph (1), with the intent that the recipient of the\n goods or services would put the goods or services\n to use in committing the violation.\nIn such a case, the court may award prejudg", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n This case does not challenge corporate\nseparateness. Petitioner asserts that respondent and\nthe courts below used the Lanham Act to order a\ndefendant “to disgorge the distinct profits of legally\nseparate non-party corporate affiliates.” But that’s\nnot what happened. Respondent values and relies on\ncorporate separateness as much as the next company.\nIt has never argued that a court crafting a profits-\nbased remedy under the Lanham Act could simply\nignore corporate structures and make one company\ndisgorge the profits of another solely because the\ncompanies are related.\n This case actually concerns two more prosaic\nquestions of statutory interpretation. First, whether\na court awarding a profits-based award under 15\nU.S.C. § 1117(a) may consider evidence beyond an\ninfringer’s financial records where such records do not\nreflect the true extent of its infringement-related\neconomic gain. And if so, whether the court may\nconsider revenues and profits of the infringer’s\naffiliates where that evidence is relevant to\nascertaining the infringer’s true gain. Those\nquestions describe what occurred below, and the\nanswer to both is “yes.”\n As to the initial question, Section 1117(a) directs a\ncourt determining profits-based awards through two\nsteps. First is an “assess[ment]” of “defendant’s\nprofits.” Then at the second step, if the court finds an\naward “based on profits” to be “inadequate or\nexcessive,” the court has “discretion” to grant instead\n“such sum as the court shall find to be just, according\nto the circumstances of the case”—i.e., the “just-sum\nprovision.”\n 2\n\n\n At minimum, one way the assessment of profits\ncan be “inadequate” is if the infringer’s books do not\nreflect the infringer’s true financial gain from the\ninfringement. That understanding comports with\nboth common sense and the ordinary meaning of\n“inadequate,” which means “insufficient.” It also\nserves the Act’s goal of strengthening trademark\nprotection and removing any incentive from\ninfringement.\n As for what may be considered in determining the\ndefendant’s true financial gain, the statute answers\nthat too. The text nowhere limits the proof a court\ncan consider, so by default the court can consider all\ncompetent and relevant evidence. That includes\nfinancial information of other entities (affiliated or\nnot) when, but only when, that information is\nrelevant to unearthing an infringer’s true financial\ngain. And that evidence may not only be relevant but,\nas in this case, crucial. As the United States correctly\nexplains, an infringer can easily launder ill-gotten\ngains through affiliates by assigning revenues to\nthem in advance, or by receiving payments off the\nbooks.\n None of this licenses courts to abandon corporate\nseparateness. Considering an affiliated entity’s\nfinances does not itself disregard corporate\nseparateness, so long as facts separate from the mere\ncorporate relationship tie the second company’s\nfinances to the infringer’s gain. Corporate\nseparateness is only breached when affiliated\ncorporations are treated as interchangeable based\nsolely on the corporate relationship. In short, there\nremains a clear and enforceable boundary between\ndisregard of corporate separateness and considering\nan affiliate corporation’s revenues and profits (or any\n 3\n\n\nother competent evidence) where such evidence is\nrelevant to ascertaining the infringer’s true economic\ngain.\n Nor is it true that all this has been ginned up just\nfor this Court’s benefit, as petitioner suggests. In the\nFourth Circuit, respondent repeatedly argued that\nthe district court properly exercised its statutory\ndiscretion to determine an appropriate “just sum”\naward by considering the profits of petitioner’s\naffiliates as relevant evidence of petitioner’s true\nfinancial gain. And the Fourth Circuit agreed. It\naffirmed the district court’s unchallenged finding—\nbased on expert testimony—that petitioner’s “tax\ninformation” did not reflect “economic reality,” as well\nas the district court’s exercise of its “discretion” to\n“consider[] the revenues of [the affiliates] in\ncalculating Claimant’s true financial gain\nfrom its infringing activities.”\n The United States agrees that, under\ncircumstances like those here, courts can assess an\ninfringer’s true gain using an affiliate’s profits. The\nGovernment says this should occur (at least initially)\nat step one, rather than at step two as respondent\nadvocates. Even if that is correct, the courts below\nacted consistent with the law in searching for and\ndisgorging petitioner’s true gain.\n The judgment below should be affirmed.\n STATEMENT OF THE CASE\n A. Legal Background\n 1. A trademark “benefit[s] consumers and\nproducers alike.” Jack Daniel’s Props., Inc. v. VIP\nProds. LLP, 599 U.S. 140, 146 (2023). By “tell[ing]\nthe public who is responsible for a product” or service,\n 4\n\n\nibid., trademarks provide “accurate information to\nthe market,” 1 McCarthy, McCarthy on Trademarks\nand Unfair Competition § 2:3, at 2-5 (5th ed., rel. 9,\n2019) (McCarthy). This “protects consumers from\nbeing misled,” Moseley v. V Secret Catalogue, Inc., 537\nU.S. 418, 428 (2003), and ensures producers “reap the\nfinancial, reputation-related rewards associated with\na desirable product,” Qualitex Co. v. Jacobson Prods.\nCo., 514 U.S. 159, 164 (1995).\n Trademarks have “ancient origins,” and “were\nprotected at common law and in equity at the time of\nthe founding of our country.” Matal v. Tam, 582 U.S.\n218, 224 (2017). For more than a century, however,\nCongress has continuously strengthened those\nprotections through several statutes.\n Before the first federal trademark act, legal\nactions for damages were relatively “rare.” Upton, A\nTreatise on the Law of Trade Marks 233 (1860)\n(Upton). Money damage awards for infringement\nwere often “conjectural, and quite beyond the scope of\npositive proof.” Upton 246. Despite suffering “real\ninjury,” mark holders could spend “years of effort” and\n“undue expense” only to receive awards that “hardly\ncovered the expense of the court proceedings.” 2\nNims, The Law of Unfair Competition and Trade-\nMarks 1325-1326 (2d ed. 1947) (Nims).\n Mark holders therefore preferred equity. In\naddition to injunctions, equity allowed mark holders\nto collect the infringer’s profits through\nan “accounting.” Upton 233-234. That required the\ninfringer to “account for and yield up his gains” to the\nplaintiff, on “a principle analogous to that\nwhich charges a trustee with the profits acquired\nby wrongful use” of trust property.\n 5\n\n\nHamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240\nU.S. 251, 259 (1916). Those profits were considered a\n“rough measure” of the owner’s lost sales. 5 McCarthy\n§ 30:64, at 30-202.\n Although preferable to legal actions, an\naccounting was “surrounded with many difficulties.”\nElizabeth v. Pavement Co., 97 U.S. 126, 138 (1877);\naccord Westinghouse Elec. & Mfg. Co. v. Wagner Elec.\n& Mfg. Co., 225 U.S. 604, 617 (1912). As one 1940s\ncommentator described, an accounting was\n“unnecessarily complicated and technical,” and\n“encourage[d] use of unfair methods.” 2 Nims 1390.\n Thus, equity had problems too. If the infringer’s\npoor business decisions yielded no “substantial\nprofits,” the trademark owner was left with little to\nno compensation. Birdsall v. Coolidge, 93 U.S. 64, 69\n(1876). And accounting awards were generally\ncapped at actual net profits, as any further recovery\nconstituted a penalty, which equity forbade.\nLivingston v. Woodworth, 56 U.S. (15 How.) 546, 559\n(1853).\n 2. a. In response to these problems, Congress\nliberalized both damages and profits remedies with\nthe 1905 Trade-Mark Act, ch. 592, 33 Stat. 724 (1905\nAct). Through these innovations, Congress hoped to\nprovide trademark owners “full and complete\nredress.” H.R. Rep. No. 3147, 58th Cong., 3d Sess. 9\n(1904) (House Report).\n First, the 1905 Act authorized up to three times\n“actual damages,” “according to the circumstances of\nthe case.” §§ 16, 19, 33 Stat. 728-729. This addition\nwas modeled on the 1870 Patent Act,1 and helped\n\n 1 Ch. 230, §§ 55, 59, 16 Stat. 198, 206-207.\n 6\n\n\nplaintiffs overcome “[t]he difficulty of proving exact\ndamages in cases of this character.” House Report 9.\n Second, the 1905 Act introduced a new burden-\nshifting regime for profits awards. § 19, 33 Stat. 729.\nPreviously, plaintiffs had to prove both components of\nthe defendant’s profits (income and expenses) “‘with\nentire and absolute accuracy,’” even though the “‘only\npersons having [such] knowledge’” were “‘the\ndefendant or some one in his employ.’” Mishawaka\nRubber & Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S.\n203, 206 n.1 (1942) (quoting House Report 9). The\n1905 Act relieved some of that burden: “the plaintiff\nshall be required to prove defendant’s sales only;\ndefendant must prove all elements of cost which are\nclaimed.” § 19, 33 Stat. 729. This regime aligned with\nthe traditional principle that “a trustee ex maleficio,\nwho ha[s] confused his own gains with those which\nbelong[] to the plaintiff” must “suffer” the resulting\nconfusion. Westinghouse, 225 U.S. at 618-619.\n For forty years, however, “no reported cases” used\nthe treble-damages provision. Koelemay, Monetary\nRelief For Trademark Infringement Under the\nLanham Act, 72 Trademark Rep. 458, 480 (1982)\n(Koelemay). Courts construed this provision to\nimpose a “penalty,” see, e.g., Coca-Cola Co. v. Dixi-\nCola Lab’ys, 155 F.2d 59, 63 (4th Cir. 1946), just as\nthis Court had construed the treble-damages\nprovisions in earlier patent statutes, see Halo Elecs.,\nInc. v. Pulse Elecs., Inc., 579 U.S. 93, 98 (2016). That\ncreated problems. In equity, penalties were\nprohibited. Liu v. SEC, 591 U.S. 71, 77 (2020). And\nin law, a heightened showing of wrongful behavior\nwas required. Halo Elecs., 579 U.S. at 98-99.\n 7\n\n\n Proving profits remained difficult also. Despite\nthe burden-shifting introduced by the 1905 Act,\n“[a]lmost never [could] the exact amount of [the\ndefendant’s] profits be computed,” due to “[t]oo many\nuncertain elements.” 2 Nims 1390 (noting impact of\nincreasingly complex commerce in the early 1900s).\nAccordingly, plaintiffs were generally\nundercompensated. Ibid.\n b. Responding to these further problems, Congress\npassed the Lanham Act in 1946. Ch. 540, 60 Stat. 427\n(15 U.S.C. §§ 1051 et seq.). The Act “significantly\nchanged and liberalized the common law to ‘dispense\nwith mere technical prohibitions’” to enforcing\ntrademark rights. Qualitex, 514 U.S. at 171 (quoting\nS. Rep. No. 1333, 79th Cong., 2d Sess. 3 (1946)\n(Senate Report)). In doing so, Congress gave\ntrademarks “the greatest protection” it could. Park ‘N\nFly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 193\n(1985) (quoting Senate Report 6).\n These changes included a new remedial\nprovision—codified at 15 U.S.C. § 1117. § 35, 60 Stat.\n439-440. The provision retained the prior treble-\ndamages and burden-shifting provisions. 60 Stat.\n440. But it added new language “to grant the courts\ngreater flexibility to adjust the quantum of relief” for\nprofits-based awards, Koelemay 459-60:\n If the court shall find that the amount of\n the recovery based on profits is either\n inadequate or excessive the court may in\n its discretion enter judgment for such\n sum as the court shall find to be just,\n according to the circumstances of the\n case.\n§ 35, 60 Stat. 440.\n 8\n\n\n This increased flexibility addressed a key critique\nof the Lanham Act’s principal drafter, Edward\nRogers, see Pet. Br. 7. Rogers believed monetary\nremedies under the 1905 Act were “arbitrary,”\nRegistration of Trade-Marks: Joint Hearings on S.\n2679 Before the Comms. on Patents, 68th Cong., 2d\nSess. 49 (1925), and afforded district courts “no\nflexibility whatever,” Trade-Marks: Hearings on H.R.\n9041 Before the Subcomm. on Trade-Marks of the H.\nComm. on Patents, 75th Cong., 3d Sess. 50 (1938).\nThe just-sum provision changed that.\n The concept of a “just sum” wasn’t entirely novel,\nbut Congress did more than ever before. Prior\nstatutes, like the Patent Act of 1870, had allowed\ncourts to award such sums “as to the court shall\nappear to be just.” See, e.g., ch. 230, § 101, 16 Stat.\n198, 214. But those awards were capped. Ibid. The\nLanham Act was “unique” because it contained “no\nstated ceiling.” Brown, Civil Remedies for Intellectual\nProperty Invasions: Themes and Variations, 55 L. &\nContemp. Probs. 45, 74 (1992) (Brown).\n Finally, Congress expressly overcame equity’s\ntraditional prohibition on penalties—including\ndamage awards greater than actual damages and\nprofits-based awards greater than actual net profits—\nby not only authorizing these enhanced awards, but\nalso by declaring that “[s]uch sum in either of the\nabove circumstances shall constitute compensation\nand not a penalty.” § 35, 60 Stat. 440. The clause was\nmodeled on the Copyright Act of 1909, see Getty Petro.\nCorp. v. Bartco Petro. Corp., 858 F.2d 103, 110 (2d Cir.\n1988), which included language this Court had\ninterpreted as serving the same purpose, Douglas v.\nCunningham, 294 U.S. 207, 208-209 (1935).\n 9\n\n\n c. A few decades later, Congress enhanced Section\n1117(a)’s remedies again—allowing “reasonable\nattorney fees to the prevailing party” “in exceptional\ncases.” Act of Jan. 2, 1975, Pub. L. [DOCKET REDACTED], § 3, 88\nStat. 1955, 1955 (15 U.S.C. § 1117(a)). Not long\nbefore, this Court held that Section 1117(a)’s\nreference to “the principles of equity” and “costs of the\naction” did not allow recovery of attorney fees.\nFleischmann Distilling Corp. v. Maier Brewing Co.,\n386 U.S. 714, 720-721 (1967). Understanding the\nimportance of “encourag[ing]” private trademark\nenforcement and “provid[ing] a complete remedy,”\nCongress codified such recovery. S. Rep. No. 1400,\n93d Cong., 2d Sess. 5 (1974) (quoting Statement of\nDepartment of Commerce).\n B. Facts and Procedural History\n 1. Petitioner Claimant and\nRespondent Respondent provide similar\nreal-estate development services in overlapping\ngeographic areas. Pet. App. 3a-4a. But respondent\nwas founded decades earlier and owns two federally\nregistered trademarks for the name “Dewberry.” Pet.\nApp. 3a.\n These parties have clashed for nearly two decades\nin two lawsuits for trademark infringement. The first\nended in 2007 with a confidential settlement\nagreement memorializing respondent’s superior\ntrademark rights (the “CSA”). Pet. App. 4a-6a, 12a-\n14a, 30a-31a. The CSA permitted respondent to use\nany “Dewberry” mark it wished, anywhere it pleased.\nPet. App. 5a. It allowed petitioner only one\n“Dewberry” mark (“Dewberry Capital”) for certain\nservices in certain geographic areas with a\ndistinguishing column/capital logo. Pet. App. 5a-6a.\n 10\n\n\n This truce was only temporary. Petitioner first\nviolated the CSA by using “Dewberry Capital” for\nprohibited services, in prohibited areas, and without\nthe required logo. Pet. App. 13a-14a. Then, in 2017,\nit rebranded to four different “Dewberry” marks\n(including “Claimant”), all prohibited by the\nCSA. See Pet. App. 7a, 30a-31a.\n In rebranding, petitioner’s founder, John\nDewberry, did not inform petitioner’s general counsel,\nDavid Groce, “of the prior litigation or the CSA.” Pet.\nApp. 7a. Unsurprisingly, the United States Patent\nand Trademark Office rejected petitioner’s\napplication for a new “Claimant” mark due to\nlikelihood of confusion with respondent’s marks. Ibid.\nRespondent sent a cease-and-desist letter, and Groce\nresponded that he was unaware of the CSA, that\npetitioner “‘had no intent to infringe [respondent’s]\nvalid trademark rights,’” and that petitioner would\ncease rebranding. Pet. App. 7a-8a.\n But petitioner didn’t stop. It applied to register\nfour additional “Dewberry” marks, all of which were\nrejected as confusingly similar to respondent’s. Pet.\nApp. 8a. Respondent sent two more cease-and-desist\nletters, Pet. App. 8a-9a, but petitioner continued\nusing the prohibited marks, Pet. App. 71a.\n Petitioner used these marks to promote, operate,\nand manage numerous affiliated real-estate\ncompanies. Pet. App. 83a. These affiliates, all owned\nby John Dewberry, were “single-purpose entities”\nwhose sole function was to own commercial properties\nserviced by petitioner. Pet. App. 82a. Although the\naffiliates each paid petitioner “a fee for this internal\nservice,” Pet. App. 44a, these were “non-arms’ length”\ntransactions, Pet. App. 85a, and that fee did not cover\n 11\n\n\npetitioner’s operating costs, Pet. App. 83a-84a. Those\ncosts were also inflated because many were incurred\nfor John Dewberry personally, such as for his private\naircraft. J.A. 109. Accordingly, petitioner reported\nnegative profits on its tax returns. Ibid.\n The affiliates, on the other hand, recorded massive\nprofits. Pet. App. 86a-88a. But the affiliates could\nnot “perform the work and services necessary to\ngenerate [these] revenues.” Pet. App. 83a. Instead,\npetitioner “promoted, managed, and operated all of\nthe properties,” and “did so using the Infringing\nMarks.” Ibid. Accordingly, petitioner was “the engine\nthat drives the entire operation.” J.A. 60. Indeed, the\naffiliates had no employees at all. J.A. 93. And, “all\nrevenues generated through [petitioner’s] services\nshow up exclusively on the affiliates’ books.” Pet.\nApp. 83a. That’s because petitioner’s management,\nJohn Dewberry, “determines whether on paper\n[petitioner] or the [affiliates] show the losses or profits\nduring the infringement period.” J.A. 68.\n Despite the purported losses on petitioner’s books,\nit benefited from the infringement. To cover those\nlosses, John Dewberry personally provided petitioner\nwith tens of millions of dollars in “capital”\ncontributions, none of which registered as revenue on\npetitioner’s books. Pet. App. 84a; J.A. 156-157.\nPetitioner also admitted the infringing marks were a\n“‘huge differentiator’ from competing firms.” Pet.\nApp. 72a.\n Petitioner’s infringement caused confusion, Pet.\nApp. 31a, and “irreparable injury” to respondent’s\nbrand, Pet. App. 16a. Indeed, many of petitioner’s\nprojects spurred “negative publicity” mistakenly\nattributed to respondent—one was described as “an\n 12\n\n\n‘eyesore’ and ‘blight,’ a ‘long-languishing’ ‘skeletal\nbuilding,’ ‘violating building codes,’ and containing ‘so\nmany rats’ that ‘it looked like the ground was\nmoving.’” Ibid. (citations omitted).\n 2. When petitioner refused to stop using\nrespondent’s marks, respondent sued for trademark\ninfringement and breach of the CSA. Pet. App. 9a-\n12a.\n Respondent won summary judgment on both\nclaims. Pet. App. 9a. The district court held that\npetitioner repeatedly violated the CSA and, in the\nprocess, harmed respondent by infringing its\ntrademarks. Pet. App. 10a-11a. The court\npermanently enjoined petitioner from further\ninfringement. Pet. App. 12a.\n The court then held a three-day bench trial to\nassess monetary remedies. Pet. App. 11a. Afterward,\nit held that disgorgement of profits was appropriate\ndue to petitioner’s “willful, bad faith infringement.”\nPet. App. 86a; see Pet. App. 65a-74a (discussing a\n“succession” of “‘red flag[s]’ ... alerting” petitioner to\nits infringement and petitioner’s “ample financial\nmotivation” to continue). It also found the trial\ntestimony of John Dewberry and Groce “not credible.”\nPet. App. 70a.\n Next came calculation of the disgorgement award.\nPetitioner urged the court to award $0 because\npetitioner’s tax returns reported negative overall\nprofits. Pet. App. 82a-84a. In contrast, respondent\nand its expert witness, Rodney Bosco, urged the court\nto examine “the economic reality of how [petitioner’s]\nbusiness actually operates.” Pet. App. 83a. And this\n“economic reality” required consideration of the ways\n 13\n\n\npetitioner assigned revenues and profits to its\naffiliates. Ibid.\n The district court agreed with respondent,\nadopting the economic analysis in Bosco’s two expert\nreports and trial testimony. Pet. App. 84a. In\nassessing petitioner’s profits, the court found that\n“Claimant’s tax returns, standing alone,\ndo not tell the whole economic story” and didn’t reflect\n“economic reality.” Ibid. In support, it further found\nthat “no real estate ... business could continue as a\ngoing concern after decades of losses like these.” Ibid.\nAnd it found that John Dewberry covered petitioner’s\npurported losses with at least $23 million of his\nmoney. Ibid.\n The court then looked at petitioner’s tax returns in\ncontext, including “the revenues and profits” of\npetitioner’s affiliates. Pet. App. 82a. These affiliates\nreported $53 million in profits from 2018 to 2020\nalone. Pet. App. 86a-88a.2 Yet the court found that\nthe affiliates “do not and cannot perform the work and\nservices necessary to generate revenues.” Pet. App.\n83a. Instead, the court found the revenues were\ngenerated by petitioner, who “promoted, managed,\nand operated all of the [affiliates’] properties ... using\nthe Infringing Marks.” Ibid. And the court found “all\nrevenues generated through [petitioner’s] services\nshow up exclusively on the [affiliates’] books”—books\nthat petitioner kept for the affiliates. Ibid. The court\nexpressly rejected petitioner’s claim that “it is not the\neconomic engine that creates the revenue that flows\n\n\n 2 The United States mistakenly refers to this $53 million as\n\nrevenues, not profits. U.S. Br. 8, 9. Revenues exceeded $101\nmillion. J.A. 184-187.\n 14\n\n\nto these [affiliates].” Ibid. (emphasis added; citation\nomitted).\n The district court considered this “economic\nreality” when determining the appropriate\ndisgorgement award against petitioner. Pet. App.\n85a-86a. To that end, the district court considered,\namong other evidence, the affiliates’ financial\nstatements “when calculating the revenues and\nprofits generated by Defendant’s use of the Infringing\nMarks.” Pet. App. 85a. But it did so “conservatively”\nby underestimating the infringement period. Pet.\nApp. 87a. It then further reduced the affiliates’ profit\nfigures by 20%, giving petitioner the benefit of the\ndoubt that some of these profits might not have\ndirectly resulted from petitioner’s infringement. Pet.\nApp. 90a-91a. This came to a total of nearly $43\nmillion. Pet. App. 94a.\n The court also noted that petitioner “failed to\ncarry” its burden of proving “non-infringement\nrevenues.” Pet. App. 91a. Although petitioner\nmanaged its own and the affiliates’ financial affairs,\nit “did not do a profits analysis” and performed “no\ncalculation of [petitioner’s] actual profits,” insisting\ninstead that “there were zero infringement-related\nrevenues.” Pet. App. 92a (citation omitted). “That\n[petitioner] declined to do this analysis,” the court\nobserved, “put[] both [petitioner] and the Court at a\ndisadvantage.” Ibid.\n The court then entered judgment against\npetitioner, and petitioner alone. Br. in Opp. Suppl.\nApp. 1SA. The court did not purport to hold\npetitioner’s affiliates liable for infringement, order\npetitioner’s affiliates to pay, or direct petitioner to\nretrieve any money from them. Ibid. It simply\n 15\n\n\nordered petitioner to pay approximately $43 million\nfor its infringing activities. Ibid.\n 3. Petitioner appealed, and the Fourth Circuit\naffirmed. Nearly all of that decision—including the\ncourt’s affirmance of a disgorgement award due to\npetitioner’s bad faith—is unchallenged. The only\nissue is the amount of the disgorgement award.\n In reviewing this amount, the appeals court first\nconfirmed that petitioner’s “tax information” failed to\nreflect “economic reality.” Pet. App. 40a. The\nmajority viewed the pertinent question as “how much\nClaimant profited from its infringing\nactivities.” Pet. App. 39a. And the majority affirmed\nthe district court’s decision to consider the finances of\npetitioner’s affiliates “for the purpose of calculating\nrevenues and profits generated by Claimant’s\nuse of the infringing marks.” Pet. App. 11a.\n The majority rejected petitioner’s argument that\nthe district court had impermissibly “pierce[d] the\ncorporate veil.” Pet. App. 43a. Instead, it agreed with\nrespondent’s repeated arguments that the district\ncourt merely “considered the revenues of [the\naffiliates] in calculating Claimant’s true\nfinancial gain from its infringing activities.” Ibid.3\n The majority also affirmed the factual findings\nunderlying this analysis: that petitioner, not the\naffiliates, generated the revenue that appeared on the\naffiliates’ books, Pet. App. 39a-40a; that John\n\n 3 See, e.g., Br. in Opp. Suppl. App. 54SA (“[T]he district court\n\nproperly considered other financial evidence to ‘tell the whole\neconomic story.’”); Add. 1, infra (“[T]he very purpose of that dis-\ncretion is to get after ... ‘true profits.’”); see also, e.g., Br. in Opp.\nSuppl. App. 25SA, 52SA, 55SA; Add. 1-2, infra.\n 16\n\n\nDewberry owned and controlled both petitioner and\nits affiliates, Pet. App. 3a-4a; and that John Dewberry\n“contributed at least $23 million to cover [petitioner’s]\nextensive losses,” Pet. App. 40a. So, “while\n[petitioner] did not receive the revenues from its\ninfringing behavior directly, it still benefited from its\ninfringing relationship with its affiliates.” Pet. App.\n45a.\n The Fourth Circuit explained that this award is\n“‘subject to the principles of equity,’ 15 U.S.C.\n§ 1117(a), and is ultimately a matter of the court’s\ndiscretion.” Pet. App. 45a. And it found that “[a]ny\narbitrariness” in the district court’s award “can be\ntraced back to [petitioner’s] litigation strategy to deny\nany connection between its affiliates’ revenues and its\ninfringing marks” and refusal to distinguish “between\ninfringing and non-infringing revenues.” Pet. App.\n46a (emphasis in original).\n Judge Quattlebaum dissented. He believed the\ndistrict court should not have “use[d] revenues from\n[the affiliates] ... to assess the profits of the Claimant” without either suing those affiliates or\n“pierc[ing] the Claimant’s corporate veil.” Pet.\nApp. 58a-59a.\n Rehearing en banc was denied without a poll. Pet.\nApp. 121a.\n SUMMARY OF ARGUMENT\n I. The Lanham Act prescribes a two-step process\nfor calculating profits-based awards and grants\ndistrict courts discretion, when appropriate, to award\na just sum that represents the defendant’s true\nfinancial gain. In doing so, courts may consider all\ncompetent evidence, including profits of affiliated\n 17\n\n\nentities when relevant. This does not violate\nprinciples of corporate separateness.\n A. 1. At step one, the court must “assess” the\n“defendant’s profits,” using a statutory burden-\nshifting regime. This analysis is based primarily on\nthe defendant’s revenues and costs.\n At step two, the court decides whether “recovery\nbased on profits is either inadequate or excessive.” If\nso, the court has “discretion” to instead award a\nhigher or lower “sum as the court shall find to be just,\naccording to the circumstances of the case.”\n 2. A “recovery based on profits” can be\n“inadequate” if it understates the infringer’s true\ngain. The infringer may have obscured this gain\nthrough creative accounting practices, accrued\nintangible benefits, or withheld evidence needed to\ncalculate profits on the books. In those\ncircumstances, the just-sum provision allows courts to\nlook at more than the defendant’s books in isolation\nand estimate true gain based on other evidence.\n The United States agrees that courts may look at\nmore than the defendant’s books to estimate true\ngain. But it asserts that this can occur at either or\nboth of the two steps. Respondent disagrees in part,\nthough the outcome is ultimately the same under the\nGovernment’s theory. Indeed, if this Court adopts the\nGovernment’s view of the statute, it can and should\nstill affirm.\n For its part, petitioner claims that, at either step,\nthe court can consider only the named defendant’s\nbooks. The just-sum provision, in petitioner’s view,\nmay only be used to overcome “proof problems” in\nunderstanding the infringer’s own books. That is\n 18\n\n\nwrong. An award is “inadequate or excessive” if “the\namount of recovery” is too low or too high to capture\nthe infringer’s true gain. Proof problems of the kind\npetitioner identifies may be one reason that is true,\nbut not the only one.\n 3. That said, the just-sum provision does have\nlimits. The court must find that recovery “based on\n[defendant’s] profits” is “inadequate or excessive.” It\nmust then select an amount that is “just, according to\nthe circumstances of the case.” These findings are\ndiscretionary, but they must be supported by the\nrecord.\n B. In assessing an infringer’s true gain, courts\nmay consider profits of affiliated entities when\nrelevant. Nothing in the Lanham Act alters the\ndefault principle that a court may consider all\ncompetent and relevant evidence.\n Profits of an affiliate may be relevant for several\nreasons. As one example, the infringer may have\ndirected revenues to an affiliate in exchange for\nbenefits not reflected on the infringer’s books.\nAffiliates can easily transfer benefits among\nthemselves in ways that avoid detection.\n C. Using an affiliate’s profits as evidence does not\ndisregard corporate separateness. A court cannot just\nassume an affiliate’s profits reflect the infringer’s true\ngain based solely on the fact of the corporate\nrelationship. But if other facts establish a sufficient\ncausal connection, then nothing prevents courts from\nusing an affiliate’s revenues and profits to calculate\nan award against the infringer. Petitioner’s claim\nthat courts can only look at an affiliate’s profits after\npiercing the corporate veil is incorrect.\n 19\n\n\n II. The judgment should be affirmed.\n A. The decision below properly affirmed the award\nof a just sum.\n 1. The decision first properly concluded that an\naward of “defendant’s profits” was “inadequate.” It\ncorrectly affirmed the finding that petitioner’s tax\nrecords didn’t reflect “economic reality.” In doing so,\nit correctly affirmed the district court’s decision to\nlook elsewhere for petitioner’s true financial gain.\n 2. The decision below then properly affirmed the\nchoice to use the profits that petitioner assigned to its\naffiliates as evidence of petitioner’s true gain. As the\nUnited States correctly argues, a company can’t\ndisguise its own revenues by assigning them\nsomewhere else in advance. That’s what happened\nhere. Petitioner generated the affiliates’ revenue\nthrough its infringement, directed that revenue to the\naffiliates instead of itself, and then received off-the-\nbooks benefits in return.\n 3. Petitioner is wrong that the award exceeded\nsome fictional statutory cap. The text of the just-sum\nprovision includes no cap, unlike the near-by damages\nprovision or the many other statutes that expressly\nimpose one. Nor would a cap make sense, as it would\nonly reward infringers for greater manipulation of\ntheir books. Instead, the award need only be “just,”\nmeaning, as relevant here, that it reflects the\ninfringer’s true gain.\n B. The United States’ understanding of Section\n1117(a) provides an alternative basis to affirm the\ndecision below. The Government would task district\ncourts with ascertaining true financial gain, at least\ninitially, at step one of the profits-based analysis.\n 20\n\n\nEven under that understanding, the courts acted\nconsistent with the law. Under the Government’s\napproach, an infringer who generates and controls\nincome “may fairly be viewed as having profited” from\nassigning that income to someone else. Here,\npetitioner generated all of the affiliates’ revenue. And\ndespite step one’s burden-shifting framework,\npetitioner did not even try to untangle its own\nassigned income from any income generated by the\naffiliates themselves.\n III. The decision below should be affirmed. But\neven if the Fourth Circuit erred, remand is\nappropriate to allow respondent to pursue alternative\nlegal arguments in support of its award.\n ARGUMENT\nI. Under Section 1117(a), district courts can\n consider all competent and relevant\n evidence in imposing a judgment for the\n defendant’s true financial gain.\n Provided that several threshold requirements are\nmet, Section 1117(a) of the Lanham Act prescribes\ntwo steps for determining profits-based awards. The\nfirst is an “assess[ment]” of “defendant’s profits.” 15\nU.S.C. § 1117(a). The second allows the court, when\nappropriate, to look beyond “defendant’s profits” to\nother evidence that captures the defendant’s true\nfinancial gain from the infringement and to calculate\ninstead “such sum as the court shall find to be just,\naccording to the circumstances of the case.” Ibid.\n In imposing a judgment at step two for the\ndefendant’s true financial gain, the court may look to\nany competent and relevant evidence. Contrary to\npetitioner’s suggestion, principles of corporate\n 21\n\n\nseparateness do not require singling out the financial\ninformation of affiliated entities as uniquely off-\nlimits.\n A. Section 1117(a)’s two-step process allows\n an award of the infringer’s true financial\n gain.\n The text of the Lanham Act authorizes a profits-\nbased award subject to several threshold\nrequirements:\n [T]he plaintiff shall be entitled, subject\n to the provisions of sections 1111 and\n 1114 of this title, and subject to the\n principles of equity, to recover ...\n defendant’s profits ... .\n\n15 U.S.C. § 1117(a). Sections 1111 and 1114 carve out\nsituations in which monetary relief is unavailable.\n“[P]rinciples of equity” likewise may preclude\nmonetary awards when “an injunction will satisfy the\nequities of the case,” Champion Spark Plug Co v.\nSanders, 331 U.S. 125, 131 (1947), or when the\ndefendant can invoke laches or acquiescence, McLean\nv. Fleming, 96 U.S. 245, 257 (1878).\n Once past these requirements, Section 1117(a)\nlays out two steps for calculating the profits-based\naward—the only issue before this Court. First:\n The court shall assess such profits ... or\n cause the same to be assessed under its\n direction. In assessing profits the\n plaintiff shall be required to prove\n defendant’s sales only; defendant must\n prove all elements of cost or deduction\n claimed.\n 22\n\n\n15 U.S.C. § 1117(a). And second:\n\n If the court shall find that the amount of\n the recovery based on profits is either\n inadequate or excessive the court may in\n its discretion enter judgment for such\n sum as the court shall find to be just,\n according to the circumstances of the\n case.\n\nIbid.\n\n As discussed below, these instructions make clear\nthat, at step two, a district court may look beyond\n“defendant’s profits” and instead award the\ndefendant’s true financial gain.\n 1. A district court may look beyond the\n defendant’s profits when it finds an\n award based on step one would be\n “inadequate.”\n Step one is an “assess[ment]” of “defendant’s\nprofits.” 15 U.S.C. § 1117(a). “Profits,” as long\nunderstood in equity, are “the gain made upon any\nbusiness or investment, when both the receipts and\npayments are taken into account.” Rubber Co. v.\nGoodyear, 76 U.S. (9 Wall.) 788, 804 (1869).\n Under the Lanham Act’s burden-shifting scheme,\nthe plaintiff need prove “sales only.” 15 U.S.C.\n§ 1117(a). “The plaintiff of course is not entitled to\nprofits demonstrably not attributable to the unlawful\nuse of his mark.” Mishawaka, 316 U.S. at 206. Even\nso, because it is often “inherently impossible” for a\nplaintiff to disaggregate which sales are\n“attributable” to trademark infringement, Hamilton-\nBrown Shoe, 240 U.S. at 261, Congress has placed the\n 23\n\n\nburden to apportion those sales on the defendant,\nMishawaka, 316 U.S. at 206. The defendant may\nthen counter with any “elements of cost or deduction\nclaimed” to offset those sales. § 1117(a).\n To be clear, that does not mean an infringer whose\nbooks are “in the red” has no profits to disgorge.\nEquity’s understanding of “the gain made upon any\nbusiness or investment,” Rubber Co., 76 U.S. (9 Wall.)\nat 804, includes an “advantage in cost,” Mowry v.\nWhitney, 81 U.S. (14 Wall.) 620, 651 (1871); see 2\nDobbs, Law of Remedies § 6.4(4), at 89 (2d ed. 1993)\n(Dobbs). So even if the benefits from infringement\nonly mitigated defendant’s losses, that mitigation is\n“equivalent to an equal gain.” Tilghman v. Proctor,\n125 U.S. 136, 147 (1888) (citation omitted).\n Similarly, because equity prioritizes substance\nover form, Texas v. Hardenberg, 77 U.S. (10 Wall.) 68,\n89 (1869), courts need not take a defendant’s\n“elements of cost or deduction,” 15 U.S.C. § 1117(a),\nat face value. For example, overhead expenses (like\nsalaries) are deductible in profits calculations. L.P.\nLarson, Jr., Co. v. Wm. Wrigley, Jr., Co., 277 U.S. 97,\n100 (1928). But distributions of profits as dividends\nare not. Aladdin Mfg. Co. v. Mantle Lamp Co., 116\nF.2d 708, 713 (7th Cir. 1941). A creative infringing\ncorporation could disguise “dividends of profit” as\n“salaries” and seek to deduct them, Rubber Co., 76\nU.S. (9 Wall.) at 803, but equity would smoke that out,\nAladdin Mfg., 116 F.2d at 713.\n After assessing “defendant’s profits,” the court\nmoves to step two, in which it may look beyond\n“defendant’s profits” and instead award “in its\ndiscretion” “such sum as the court shall find to be\njust.” 15 U.S.C. § 1117(a); see 2 Dobbs § 6.4(4), at 88\n 24\n\n\n(Section 1117(a) allows court to “discard” the\ninadequate or excessive award). But to invoke that\ndiscretion, the court must first consider whether a\nrecovery based solely on step one would be\n“inadequate or excessive ... according to the\ncircumstances of the case.” § 1117(a). If the answer\nis no (which it usually will be, p. 32, infra), that ends\nthe analysis.\n 2. An amount is “inadequate” when it\n does not reflect the infringer’s true\n financial gain.\n At minimum, a just-sum inquiry and award is\nwarranted if the step-one assessment fails to capture\nthe defendant’s true financial gain from the\ninfringement. E.g., Max Rack, Inc. v. Core Health &\nFitness, LLC, 40 F.4th 454, 473 (6th Cir. 2022); Fifty-\nSix Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d\n1059, 1077 (9th Cir. 2015). As discussed below, this\nunderstanding comports with the statute’s text and\npurpose and is consistent with the views of the United\nStates. Petitioner’s contrary insistence that the only\nnumbers that matter are those on the infringer’s\nledgers, e.g., Pet. Br. 45-46, is flawed many times\nover.4\n a. Begin, as always, with the text. Campos-Chaves\nv. Garland, 144 S. Ct. 1637, 1647 (2024). At the time\nof the Lanham Act’s enactment, “inadequate” meant\n“insufficient.” Webster’s New International\n\n 4 There may be additional bases to deem a profits award in-\n\nadequate. For example, some lower courts have used the just-\nsum provision to provide adequate compensation or deterrence.\nSee, e.g., 5 McCarthy § 30:91, at 30-257; U.S. Br. 33 n.6. Because\nthis case was decided based on “true financial gain,” Pet. App.\n43a, these alternative theories need not concern the Court now.\n 25\n\n\nDictionary 1254 (2d ed. unabr. 1939) (Webster’s); 1\nFunk & Wagnall’s New Practical Standard Dictionary\n18, 671 (1946) (Funk & Wagnalls). Its companion in\nthe statute, “excessive,” meant “being in ... excess,” 1\nFunk & Wagnalls 462, or “exceeding what is usual or\nproper,” Webster’s 889. These adjectives invite the\nquestion: how does a court measure inadequacy or\nexcessiveness?\n True financial gain provides one appropriate\nmeasurement. The basic purpose of a profits award\nis to “strip wrongdoers of their ill-gotten gains.” Liu,\n591 U.S. at 79; accord Restatement (Third) of\nRestitution and Unjust Enrichment § 51(4), at 203\n(2011) (Restatement). Where “the amount of the\nrecovery based on profits” does not capture the\ndefendant’s true financial gain, it is insufficient to\naccomplish that purpose and necessarily\n“inadequate.” 15 U.S.C. § 1117(a); see Fowler, A\nDictionary of Modern English Usage 261 (1946)\n(“inadequate” refers to the “notion [of] (un)equal to\nrequirements”).\n Measuring true financial gain also furthers the\nLanham Act’s objective of protecting mark owners\nand the public against “pirates and cheats,” as well as\n“making infringement and piracy unprofitable.”\nSenate Report 3. The statute does so by making\ntrademark registrations “stronger” and “dispens[ing]\nwith mere technical prohibitions” to make “relief\nagainst infringement prompt and effective.” Ibid.\nRestricting profits-based awards to an infringer’s\nbook profits, while blinding them to an infringer’s\ntrue financial gain, would achieve the opposite.\n 26\n\n\n b. It is not difficult to imagine how an award based\nsolely on book profits may not capture true financial\ngain.\n First, an infringer may obscure its true financial\ngain through “creative accounting practices.” U.S. Br.\n19. Not all benefits turn up on financial records. An\ninfringer may conceal its true gain by receiving\nindirect payments for its infringement “through a\nseparate transaction.” U.S. Br. 13. Or an infringer\ncould “direct[] or agree[]” that the infringer’s own gain\nbe realized by another entity, U.S. Br. 22, and then\nreceive valuable services from that entity free of\ncharge.\n Second, an infringer may have accrued “intangible\nbenefits” that cannot be precisely calculated. Merck\nEprova AG v. Gnosis S.p.A., 760 F.3d 247, 263 (2d Cir.\n2014). These might include a “‘usurpation of ...\nmarket share,’” ibid. (citation omitted), or a “free ride\non” the plaintiff’s goodwill, Maier Brewing Co. v.\nFleischmann Distilling Corp., 390 F.2d 117, 122 (9th\nCir. 1968); see also 1 Dobbs § 4.1(4), at 566 n.1\n(restitution includes recovery of “intangible”\nbenefits).\n Third, the infringer might withhold critical\nfinancial evidence and prevent the court from\ncalculating “defendant’s profits” at all. Max Rack, 40\nF.4th at 473 (“discovery ‘stonewalling’”); see Keystone\nMfg. Co. v. Adams, 151 U.S. 139, 148-149 (1894)\n(defendant did not “disclos[e] the condition of his\nbusiness”).\n For these last two types of inadequacy, the just-\nsum provision can play a particularly critical role. As\nthis Court explained regarding a similar provision in\nthe Copyright Act: when “the rules of law render\n 27\n\n\ndifficult or impossible ... discovery of profits,” the just-\nsum provision “vest[s] in the trial court broad\ndiscretion to determine whether it is more just to\nallow a recovery based on a calculation of ... profits,\nas found from evidence, or one based on a necessarily\nsomewhat arbitrary estimate.” F.W. Woolworth Co. v.\nContemporary Arts, Inc., 344 U.S. 228, 231-232 (1952)\n(citation omitted); see 17 U.S.C. § 101(b) (1946 ed.\nSupp. V). Courts can, and in some instances must,\nrely on estimates and ballpark figures. E.g., Merck\nEprova, 760 F.3d at 263. That flexibility can spell the\ndifference between full compensation and mere\n“nominal damages.” See Keystone Mfg. Co., 151 U.S.\nat 149.\n This is consistent also with well-settled principles\nof unjust enrichment and restitution. When the\ndefendant is “a conscious wrongdoer,” it is sufficient\nfor plaintiffs to establish a “‘[r]easonable\napproximation’” of the defendant’s gains.\nRestatement § 51, cmt. i, at 221. The “conscious\nwrongdoer” then “bears the risk of uncertainty arising\nfrom the wrong.” Ibid.; see also Westinghouse, 225\nU.S. at 618 (discussing the “trustee ex maleficio, who\nhad confused his own gains with those which\nbelonged to the plaintiff”). So if “the true measure of\nunjust enrichment is an indeterminable amount” in a\nparticular range, “liability in disgorgement” will be\nfixed at the high end of the range absent\ncountervailing evidence from the wrongdoer.\nRestatement § 51, cmt. i, at 221.\n c. The United States’ understanding of the statute\nlargely aligns with respondent’s. The Government\nagrees that under Section 1117(a), courts may award\n“an amount that reflects the infringer’s true financial\ngain.” U.S. Br. 13. And while the Government\n 28\n\n\nappears to favor courts mainly doing such an analysis\nat step one under the rubric of “defendant’s profits,”\nit acknowledges that true financial gain may be\nawarded “alternative[ly]” at step two as a just sum.\nU.S. Br. 33. The Government stresses that courts\nmay not simply skip step one, ibid., but does not\ndispute that step one will sometimes fail to capture\ntrue financial gain, see ibid., or that missing evidence\nmay preclude such an estimation, see U.S. Br. 33 n.6;\naccord Pet. Br. 37-38.\n The Government and respondent disagree,\nhowever, on the meaning of “profits.” Given the\nstatutory reference to “equity” and the history of\ntrademark remedies, respondent draws on “common-\nlaw meanings.” Scalia & Garner, Reading Law: The\nInterpretation of Legal Texts 320 (2012); pp. 22-23,\nsupra. The United States begins instead with 1946-\nera dictionary definitions. U.S. Br. 22-23.\nNevertheless, in this case, both approaches lead to the\nsame place. See Section II.B, infra.\n The Government is also correct that there may be\nmore than one way “to recover from one defendant ill-\ngotten monies that flowed to a separate entity” in a\ngiven case. U.S. Br. 26. Petitioner and some amici\nlist their preferred strategies for looking at an\naffiliate’s profits. Pet. Br. 48-49; AIPLA Br. 10; INTA\nBr. 16-18. Those strategies will not always be\navailable, however; for example, a plaintiff cannot\njoin an affiliate outside the court’s jurisdiction as a co-\ndefendant. See Fed. R. Civ. P. 4(k)(1), 19(a)(1).5 But\nmore important, those options “are not the exclusive\nmeans of identifying the defendant’s true financial\n\n 5 Here, for example, petitioner’s affiliates are out-of-state.\n\nJ.A. 152, 158, 176.\n 29\n\n\ngain as contemplated by the Lanham Act.” U.S. Br.\n26.\n d. Petitioner wrongly rejects any consideration of\n“true financial gain.” In petitioner’s view,\n“defendant’s profits” are inadequate at step two only\nwhen “proof problems” or “evidentiary difficulties”\nmake it “‘impossible to make a mathematical or\napproximate apportionment’ of profits.” Pet. Br. 17,\n37 (quoting Westinghouse, 225 U.S. at 620). And by\n“profits,” petitioner means on-the-books profits, as\nevidenced by petitioner’s repeated assumption that\nits tax returns resolve any question of “evidentiary\ndifficulties.” See, e.g., Pet. Br. 45-46. In other words,\na just-sum award is only permitted in the limited\ncircumstances where it is impossible to glean from\ndefendant’s books whether (and how much) it has\nreported a net gain.\n i. Return to the text. Petitioner’s interpretation\ncannot be squared with the plain meaning of\n“inadequate or excessive.” Those terms do not\ndescribe only impossibility of proof, but the “amount\nof the recovery.” 15 U.S.C. § 1117(a). As discussed\nabove, the plain meaning of “inadequate” is\n“insufficient.” Webster’s 1254. And “excessive”\nmeans “[e]xceeding what is usual or proper.”\nWebster’s 889. Petitioner would rewrite the provision\nto say: “[i]f the court shall find that the amount of the\nrecovery based on profits [cannot be determined] the\ncourt may in its discretion enter judgment for such\nsum as the court shall find [best approximates\nprofits].”\n To be sure, evidentiary difficulties may be one\ncause of an “inadequate” amount. If those difficulties\nmake it impossible to prove defendant’s profits, the\n 30\n\n\namount plaintiff is able to prove will, of course, be\ninadequate. But it does not follow that such\nevidentiary difficulties are the only cause for\ninadequacy.\n Petitioner’s reliance on the Copyright Act of 1909,\nsee Pet. Br. 38, is also unavailing. Though similar in\nmany respects to the Lanham Act’s just-sum\nprovision, this earlier provision lacked the phrase\n“inadequate or excessive” that dictates whether a\ncourt may award a just sum. Ch. 320, § 25(b), 35 Stat.\n1075, 1081. Caselaw recognizing that “problems of\nproof” were the “principal[]” “concern[]” of this earlier\nprovision, Pet. Br. 38, is thus unhelpful.\n ii. Petitioner also turns to the “not a penalty”\nclause in Section 1117(a) to support its narrow view\nof the just-sum provision. Following the treble-\ndamages and just-sum provisions, the statute\nprovides that “[s]uch sum in either of the above\ncircumstances shall constitute compensation and not\na penalty.” 15 U.S.C. § 1117(a). According to\npetitioner, this clause limits the just-sum provision to\novercoming “proof problems” by making clear that\nawarding any amount beyond an infringer’s book\nprofits is a penalty. Pet. Br. 40, 46-47.\n Petitioner misunderstands the clause. It’s not a\nlimitation on the treble-damages and just-sum\nprovisions, but a declaration that those enhanced\nawards are deemed, as a matter of law, “not a penalty”\neven if they might otherwise be. Just as in numerous\nother federal statutes using the words “shall\nconstitute,” see, e.g., 28 U.S.C. § 1 (“[A]ny six\n[Supreme Court Justices] shall constitute a\nquorum.”); 42 U.S.C. § 14924(e) (certain conduct\n 31\n\n\n“shall constitute substantial noncompliance”), the\nclause declares a legal fact.\n Without the clause, Section 1117(a) would present\na “seeming contradiction.” Brown 74-76. On one\nhand, it expressly incorporates “principles of equity,”\n15 U.S.C. § 1117(a), which prohibited “punitive\nsanctions,” Liu, 591 U.S. at 74, including any award\nabove “net profits,” id. at 84, or actual damages, see\nHalo Electronics, 579 U.S. at 98-99. Yet on the other\nhand, the provision expressly permits both treble\ndamages and an increased award when “defendant’s\nprofits” are deemed “inadequate.” See Brown 74-76\n(“How can tripling actual damages not penalize the\ndefendant?”).\n Recognizing that Section 1117(a) displaces this\nparticular application of equity “explain[s]” the\ncontradiction. Brown 75-76; see 2 Dobbs § 6.4(8), at\n114 (but for the not-a-penalty clause, treble-damages\naward “may be regarded as ... punitive. Here, the\nCopyright Act of 1909 does provide guidance, as “[t]he\n‘compensation and not a penalty’ clause borrows\nlanguage” from that earlier statute. Getty Petro., 858\nF.2d at 110. And in 1935—well before the Lanham\nAct—this Court had found that not-a-penalty clause\n“was adopted to avoid the strictness of construction\nincident to a law imposing penalties.” Douglas, 294\nU.S. at 209. In the Lanham Act, Congress similarly\nsought to provide “a green light for the judicial\nincrease of damages or profits” so long as there is a\n“remedial” purpose in doing so. 5 McCarthy § 30:91,\nat 30-257; Brown 76.\n 32\n\n\n Petitioner is therefore wrong that the not-a-\npenalty clause supports a narrow view of the just-sum\nprovision and hamstrings a court from awarding more\nthan an infringer’s on-the-books profits. Pet. Br. 46-\n47. Though some courts have endorsed petitioner’s\nview, see, e.g., ALPO Petfoods, Inc. v. Ralston Purina\nCo., 913 F.2d 958, 970 (D.C. Cir. 1990); Thompson v.\nHaynes, 305 F.3d 1369, 1380 (Fed. Cir. 2002), they\nengaged with neither the clause’s history and context\nnor the ordinary meaning of “shall constitute.”\n 3. The just-sum provision has real limits.\n The discretion authorized by the just-sum\nprovision is “wide,” 5 McCarthy § 30:90, at 30-252, but\nnot “‘unlimited,’” Pet. Br. 39 (brackets omitted).\nPetitioner accuses respondent of advancing an\n“expansive reading” that empowers a court to “throw\nall that effort” of assessing defendant’s profits “out\nthe window and impose any award, based on\nanybody’s profits, that the court deems appropriate.”\nPet. Br. 41; accord Pet. Br. 39. Not so.\n First, as discussed above, a district court can use\nthe discretionary just-sum provision only by finding\nthat an award based on the step-one assessment\nwould be inadequate (or excessive) in the particular\ncase. 15 U.S.C. § 1117(a). And that finding must be\nsupported by the record. But in most cases, the\nprofits award calculated at step one will be adequate,\nFifty-Six Hope Rd., 778 F.3d at 1077, and the analysis\nwill end there.\n Second, the sum must be “just, according to the\ncircumstances of the case.” 15 U.S.C. § 1117(a). Like\ninadequacy, a “just” finding must be fact-specific. At\nminimum, a sum is just under the circumstances\nwhen it reflects the defendant’s true financial gain\n 33\n\n\nfrom the infringement. E.g., Kars 4 Kids v. Am. Can!,\n8 F.4th 209, 223 (3d Cir. 2021); Max Rack, 40 F.4th at\n473; see Restatement § 51(4), at 203.\n Third, courts of appeals review every finding and\nconclusion—at both steps one and two—for abuse of\ndiscretion. E.g., Pet. App. 35a. And that is a test\ncourts can fail. See, e.g., Max Rack, 40 F.4th at 474.\n B. Where relevant, the profits of affiliated\n entities are admissible to prove true\n financial gain.\n Absent a rule or statute to the contrary, all\n“[r]elevant evidence is admissible.” Fed. R. Evid. 402.\nAs this Court has observed regarding copyright\ndamages, “it cannot hurt and may aid the exercise of\ndiscretion to hear any evidence on the subject that has\nprobative value.” F.W. Woolworth, 344 U.S. at 231.\nCongress can instruct otherwise. E.g., 15 U.S.C.\n§ 37b(b)(2) (deeming “[e]vidence of” certain conduct\n“not ... admissible in Federal court to support any\nclaim” of an antitrust violation). It didn’t in the\nLanham Act.\n In various circumstances, the financial activities\nof another entity may be relevant to estimating the\ninfringer’s financial gain. Consider the increased\nvalue of shares owned by the infringer in another\ncompany (affiliated or not). If the infringement\nbenefited that other company’s bottom line, thus\nincreasing the value of those shares, the infringer\nwould benefit. See Sheldon v. Metro-Goldwyn\nPictures Corp., 106 F.2d 45, 52 (2d Cir. 1939) (L.\nHand, J.), aff’d, 309 U.S. 390 (1940). Or the infringer\nmay have provided infringing products to another\ncompany for a nominal amount and then “received\nadditional revenues” or benefits from that other\n 34\n\n\ncompany (e.g., free office space) “through a separate\ntransaction.” U.S. Br. 13. Or the infringer’s “market\nposition” vis-à-vis a competitor may have “improved\n... solely as a result of its false advertising”—which\nwould be difficult to prove absent evidence of the\ncompetitor’s corresponding “loss of market share.”\nMerck Eprova AG v. Gnosis S.p.A., 901 F. Supp. 2d\n436, 460 (S.D.N.Y. 2012), aff’d, 760 F.3d 247; see also\nBigelow v. RKO Radio Pictures, Inc., 327 U.S. 251,\n260 (1946) (finding that “receipts of [the] plaintiff’s\ncompetitor” “tended to show damage”).\n In all these cases, the plaintiff must show a causal\nconnection between the infringement and the\ninfringer’s financial gain, and following that chain of\nevents requires consideration of the other company’s\nfinancials. For example, Sheldon involved the\nincreased value of the infringers’ shares in movie\ntheaters following distribution of a copyright-\ninfringing film. 106 F.2d at 52. A court in that\nsituation must determine that the increased share\nvalue can be traced to the theaters’ playing of that\nparticular film. See Mishawaka, 316 U.S. at 206\n(“The plaintiff of course is not entitled to profits\ndemonstrably not attributable to the unlawful use of\nhis mark.”). As the Restatement (followed by the\nCourt in Liu, 591 U.S. at 79) explains, the plaintiff\nneed only show that the causal chain is not “unduly\nattenuated.” Restatement § 51, cmt. f, at 211.\nNevertheless, even this showing would likely require\nlooking at the sources of the theaters’ income.\n These other entities might be unaffiliated with the\ndefendant. Or, as in Sheldon, the entity and the\ninfringer may be affiliated or under common\nownership. See 106 F.2d at 52 (looking at defendant’s\n 35\n\n\n“theatre-subsidiaries” and “its shares held by the\ndefendants”).\n Indeed, affiliated corporations may have the\neasiest time obscuring one another’s true financial\ngain. In the tax context, when “intimately related”\nparties transfer funds among one another it is\nuniquely likely that “the transfer give[s] rise to\ninformal and indirect benefits to the transferor.”\nCommissioner v. Sunnen, 333 U.S. 591, 605 (1948).\nFor that reason, “the mere assignment of the right to\nreceive income is not enough to insulate the assignor\nfrom income tax liability”; further factual inquiry is\nrequired. Id. at 604; U.S. Br. 20 (discussing\n“anticipatory assignment doctrine”). Whoever\n“retains dominion over the income-generating asset”\nis properly taxed notwithstanding his diversion of\n“‘payment from himself to others as the means of\nprocuring the satisfaction of his wants.’”\nCommissioner v. Banks, 543 U.S. 426, 434 (2005)\n(citation omitted). Similarly in the corporate context,\n“closely related corporations can engage in a transfer\nof values that is not fully reflected in their formal\nledgers.” Container Corp. of Am. v. Franchise Tax\nBd., 463 U.S. 159, 190 (1983).\n C. Consideration of an affiliated entity’s\n profits does not by itself disregard\n corporate separateness.\n Petitioner responds that even using its affiliates’\nprofits as “an evidentiary shortcut” to prove its true\nfinancial gain is a categorically impermissible “junior-\nvarsity form of” disregarding corporate separateness.\nPet. Br. 45; see also Pet. Br. 36, 39, 41, 43. But\n“junior-varsity” is a give-away. Even petitioner\nknows, at bottom, that merely using affiliates’ profits\n 36\n\n\nas evidence relevant to petitioner’s own gain is not a\ndisregard of corporate separateness.\n 1. Corporate law dictates that “separately\nincorporated organizations are separate legal units\nwith distinct legal rights and obligations.” Agency for\nInt’l Dev. v. All. for Open Society Int’l, Inc., 591 U.S.\n430, 435 (2020) (AOSI); see 1 Fletcher, Fletcher\nCyclopedia of the Law of Corporations §§ 26-40, at 85-\n142 (2023 rev. vol.) (Fletcher). That is so even for\nparent and subsidiary corporations or affiliated\ncorporations. United States v. Bestfoods, 524 U.S. 51,\n62-63 (1998); 1 Fletcher § 26, at 85-88. Unless equity\ndictates otherwise, the corporations are treated as\nlegally distinct. First Nat’l City Bank v. Banco Para\nEl Comercio Exterior de Cuba, 462 U.S. 611, 629-630\n(1983).\n This respect for corporate separateness is\n“bedrock” in American law. AOSI, 591 U.S. at 433. It\nis on these principles that “large undertakings are\nrested, vast enterprises are launched, and huge sums\nof capital attracted.” Anderson v. Abbott, 321 U.S.\n349, 362 (1944).\n A court disregards corporate separateness when it\nassumes that, simply because of the parent-\nsubsidiary relationship or affiliation, there is “an\nidentity of corporate interest between the two\ncompanies” or a “relationship of principal and agent,\nor representative, or alter ego between the two.” 1\nFletcher § 26, at 88. For example, a court’s\njurisdiction over one affiliate is not jurisdiction over\nall, see Zenith Radio Corp. v. Hazeltine Rsch., Inc.,\n395 U.S. 100, 110-111 (1969); affiliated corporations\ncannot assert each other’s legal rights, 1 Fletcher\n§ 36, at 126; see AOSI, 591 U.S. at 435, and limited\n 37\n\n\nliability generally protects one corporation from being\nheld liable for the acts of its affiliates, Anderson, 321\nU.S. at 362.\n 2. That separateness is not breached, however,\nwhen facts beyond the corporate relationship itself\nshow that an affiliate’s finances are relevant to the\ninfringer’s true financial gain. Those facts are the key\nguardrail protecting corporate separateness. It is\nthose facts, not any assumed identity of interest, that\nmakes the affiliate’s finances relevant.\n Consider Sheldon again. See 106 F.2d at 52. If\nincreased revenues from the infringing film caused a\nspike in the theaters’ share price, then those revenues\nhave a factual connection to the infringer’s financial\ngain. That is true whether or not the infringer is a\nparent corporation of the theaters. And examining\nthe theaters’ ticket sales to decide whether that gain\nis also connected to the infringement would not\nassume an “identity of corporate interest” between\nthe two corporations. 1 Fletcher § 26, at 88. If,\nhowever, the theaters were subsidiaries of the\ninfringer and evidence showed that the increased\nshare price had no reasonable connection to the\nsubsidiaries’ ticket sales, then a court likely would\ndisregard corporate separateness by treating the\ntheaters’ profits from sales as a financial gain to the\ninfringer simply because of the parent-subsidiary\nrelationship.\n There may be cases in which a proper inquiry into\ntrue financial gain yields the same result that a court\nwould (or could) reach by disregarding corporate\nseparateness. In Sheldon, for example, Judge Hand\nissued alternative holdings that would justify looking\nat “the profits of the defendant Loew’s theatre-\n 38\n\n\nsubsidiaries.” 106 F.2d at 52. The first was just as\nexplained above: the “enhance[d] ... value of” the\ndefendants’ shares in one defendant’s subsidiaries as\na result of the infringement was a gain to the\ndefendants. Ibid. But as an alternative, Judge Hand\nobserved that the court would be justified in treating\nthe “subsidiaries” as “agents” of the parent\ncompany—in other words, disregarding corporate\nseparateness. Ibid. Though the result would be the\nsame, these are distinct legal theories with different\nrequirements and burdens.\n In short, there is a clear boundary between\ndisregard of corporate separateness (presumptively\nimpermissible) and consideration of an affiliate\ncorporation’s profits as relevant evidence\n(permissible). That line can and must be enforced\ncase-by-case, by determining whether facts beyond\nthe corporate relationship itself show an affiliate’s\nfinances are relevant to the infringer’s true financial\ngain. But there is no basis for categorically rejecting\nany consideration of affiliates’ finances under the\nguise of protecting corporate separateness.\n 3. Once petitioner’s blurring of the line between\nconsidering evidence of true financial gain and\ndisregarding corporate separateness is undone, many\nof petitioner’s arguments reveal themselves as beside\nthe point. See, e.g., Pet. Br. 24-29, 31-32, 36-44. That\nincludes the assertion that “Fleischmann all but\nresolves this case.” Pet. Br. 42.\n “The question” in Fleischmann was “whether\nfederal courts have power ... to award reasonable\nattorney’s fees as a separate element of recovery” not\nlisted in Section 1117(a). 386 U.S. at 714-715.\nPetitioner invokes the case to support its argument\n 39\n\n\nthat a blanket waiver of corporate separateness is not\namong the “‘intricate remedies’” listed in the statute,\nPet. Br. 42 (quoting Fleischmann, 386 U.S. at 719),\nand thus may not be “innovat[ed]” by this Court, Pet.\nBr. 43.\n But as respondent has explained, none of that\nbears on the legal principles at issue here. A just sum\nis among the “intricate remedies” listed in the statute.\nPet. Br. 42. And respondent does not advocate reading\nthat provision to require or authorize “courts to\nabandon corporate separateness.” Pet. Br. 40. So\nthere is nothing to “innovat[e].” Pet. Br. 43.\n ***\n This case is not what petitioner has led the Court\nto believe. Petitioner asks whether Section 1117(a)\npermits a court to disregard corporate separateness,\ne.g., Pet. i, but that “sidesteps the logically antecedent\nquestion” whether there was necessarily a\ndisregarding of corporate separateness at all. Warner\nChappell Music, Inc. v. Nealy, 601 U.S. 366, 374\n(2024) (Gorsuch, J., dissenting). And the answer to\nthat unasked threshold question is “no.” Considering\nits affiliates’ profits as evidence of petitioner’s true\nfinancial gain—which even petitioner ultimately\ncannot deny is all that happened here6—is permitted\nby the plain text of the statute and not, by itself, a\ndisregard of corporate separateness. Because that\nanswer moots petitioner’s question, this Court should\nconsider dismissing the writ of certiorari as\n\n 6 Petitioner repeatedly suggests the courts below ordered it\n\nto disgorge the actual profits of its affiliates, see, e.g., Pet. Br. 20,\nbut acknowledges in moments of candor that the award was, at\nmost, “based on profits of non-party affiliates,” Pet. Br. 36 (em-\nphasis added).\n 40\n\n\nimprovidently granted. Id. at 376; see also Moyle v.\nUnited States, 144 S. Ct. 2015, 2021 (2024) (Barrett,\nJ., concurring).\nII. The judgment should be affirmed.\n The decision below correctly applied the “just-sum”\nprovision when considering the profits of petitioner’s\naffiliates. But even if, as the United States claims,\nthese profits should have been considered at step one\ninstead, the Court should still affirm.\n A. The Fourth Circuit properly affirmed the\n award of a just sum.\n The Fourth Circuit correctly affirmed the district\ncourt’s use of the affiliates’ revenues “in calculating\nClaimant’s true financial gain” based on\nextensive fact-finding not challenged here. Pet. App.\n43a. It did not allow the district court to disregard\ncorporate separateness. And, contrary to petitioner’s\nand the United States’ reading, the Fourth Circuit did\nrely on the just-sum provision. It first confirmed the\ndistrict court’s finding that an award of “defendant’s\nprofits” would be “inadequate,” and then it affirmed\nthe award of a just sum.\n 1. The Fourth Circuit affirmed that an\n award of “defendant’s profits” was\n “inadequate.”\n The Court of Appeals began by confirming that an\naward of “defendant’s profits” as reflected on\npetitioner’s books would have been “inadequate.” The\ndecision below affirmed the finding, supported by\nsubstantial expert testimony, that petitioner’s “tax\ninformation” failed to reflect “‘economic reality,’” Pet.\nApp. 40a. Petitioner’s reported losses stemmed from\nassigning all its revenues to its affiliates while\n 41\n\n\nsimultaneously shouldering inflated operating costs.\nPet. App. 83a; J.A. 215. In other words, the “tax\ninformation” failed to reflect petitioner’s “true\nfinancial gain.” Pet. App. 40a, 43a. That\nunaccounted-for “gain” included the ability to survive\n“as a going concern” despite “decades of [on-the-books]\nlosses,” thanks to tens of millions of dollars in capital\ncontributions from John Dewberry that did not\nregister as revenue on petitioner’s books. Pet. App.\n84a.\n The district court did not need to calculate a\nprecise figure representing “defendant’s profits”\nbefore moving to step two and finding the assessment\ninadequate. When courts cannot accurately deduce\n“defendant’s profits”—whether because of\n“stonewalling” through litigation tactics or unreliable\nbooks, see p. 26, supra—a court can reasonably\nconclude that the resulting calculation will\nnecessarily be “inadequate or excessive.” Here, the\ncalculation based on petitioner’s own books would\nhave been inaccurate because the evidence of\npetitioner’s revenues and costs didn’t reflect\n“‘economic reality.’” Pet. App. 40a. Accordingly, the\ncourt properly “assess[ed]” the evidence of\n“defendant’s profits” and concluded that such an\naward would be “inadequate.” 15 U.S.C. § 1117(a).\n 2. The Fourth Circuit correctly focused\n on true financial gain.\n After affirming the finding of inadequacy, the\nFourth Circuit correctly affirmed the district court’s\nassessment of “Claimant’s true financial gain,”\nPet. App. 43a, because “while [petitioner] did not\nreceive the revenues from its infringing behavior\ndirectly, it still benefited from its infringing\nrelationship with its affiliates,” Pet. App. 45a. At step\n 42\n\n\ntwo, courts can (and sometimes must) rely on\nestimates, so long as they adequately explain how\nthey arrived there. Merck Eprova, 760 F.3d at 263;\nsee F.W. Woolworth, 344 U.S. at 232; see also\nRestatement § 51, cmt. i, at 221 (a “[r]easonable\napproximation” is sufficient for a conscious\nwrongdoer). That is true here. The lower courts’\nreasoning maps to tax law’s anticipatory-assignment\ndoctrine and was amply supported by findings not\nchallenged in this Court.\n a. As discussed above, corporations (particularly\naffiliated ones) can engage in transfers of value with\nease, including by pre-assigning revenues to one\nanother. Section I.B, supra. When that transfer\nbenefits the infringer, it is no less part of the\ninfringer’s true financial gain than direct receipts\nfrom infringing sales. Here, the findings below\nconfirm that petitioner (1) generated the affiliates’\nrevenue, (2) directed that revenue to the affiliates\nrather than itself, and (3) benefited from doing so.\n First, petitioner, not its affiliates, generated the\naffiliates’ revenue through unlawful infringement by\n“promot[ing], manag[ing], and operat[ing] all of the\n[affiliates’] properties ... using the Infringing Marks.”\nPet. App. 39a. The affiliates “do not and cannot\nperform the work and services necessary to generate\nrevenue.” Pet. App. 40a. Accordingly, the court agreed\nthat the affiliates’ revenues were “generated by\n[petitioner’s] use of infringing marks.” Pet. App. 39a-\n40a.\n Second, the court agreed that petitioner controlled\nthe allocation of these revenues. Petitioner was\n“responsible for the accounting and cash\nmanagement” for all the affiliates. Pet. App. 39a. As\n 43\n\n\nrespondent’s expert testified, petitioner’s\n“management,” John Dewberry, “determines whether\non paper [petitioner] or the [affiliates] show the losses\nor profits during the infringement period.” J.A. 68.\n Petitioner exercised that control “not [to] receive\nthe revenues from its infringing behavior directly,”\nbut rather to pre-assign them to the affiliates. Pet.\nApp. 45a. In turn, the affiliates paid petitioner only\nnominal fees that failed to cover even petitioner’s\noperating costs—despite petitioner performing all the\nwork necessary to generate their revenues. Pet. App.\n40a. For that reason, petitioner’s “tax information”\ndid not reflect “economic reality,” Pet. App. 11a, while\nthe affiliates recorded massive profits—$53 million\nfrom 2018 to 2020 alone, Pet. App. 11a, 86a-88a.\n Third, petitioner benefited from the assignment.\nAfter receiving profits from the affiliates (generated\nby petitioner’s infringement), John Dewberry paid\npetitioner millions “to cover [petitioner’s purported]\nextensive losses.” Pet. App. 40a. The “economic\nreality [is] that, but-for the revenue” flowing into the\naffiliates’ coffers, petitioner “would [no longer] exist.”\nPet. App. 84a.\n b. Both petitioner and the United States disagree\nthat the award below reflected petitioner’s true\nfinancial gain. But their arguments are unpersuasive.\n i. Petitioner claims the Fourth Circuit looked not\nto the just-sum provision, but to Section 1117(a)’s\n“principles of equity” as a source of “broad ‘discretion’”\nto “dispense with corporate separateness ... based on\ntheir case-specific ‘weigh[ing]’ of ‘the equities.’” Pet.\nBr. 29 (quoting Pet. App. 45a; brackets in original).\nThis argument warrants two responses.\n 44\n\n\n First, the Fourth Circuit’s holding was premised\non the just-sum provision, not “principles of equity.”\nThe court recognized a profits-based award “is\n‘subject to the principles of equity’ ... and is ultimately\na matter of the court’s discretion.” Pet. App. 45a\n(emphasis added). Petitioner tortures the two\nindependent parts of that sentence into saying that\nthe Fourth Circuit “read [the former] phrase to invest\ndistrict courts with broad ‘discretion’ to dispense with\ncorporate separateness.” Pet. Br. 29. But the better\nreading is also the more obvious one: that the\nseparate and express reference to “discretion” is\ninvoking the just-sum provision—the only place in\nSection 1117(a) that mentions “discretion.”\n Second, the court below honored petitioner’s\ncorporate separateness from its affiliates. The court\nnever assumed an “identity of corporate interest”\nbetween the two corporations or treated them as an\nagent and principal or alter egos. 1 Fletcher § 26, at\n88. The corporations’ relationship is not the reason\nthe court affirmed the district court’s consideration of\nthe affiliates’ profits. Instead, that relationship\nmerely provided the factual context needed to\nunderstand why petitioner organized its business as\nit did and how the affiliates’ profits reflected\npetitioner’s true financial gain. See U.S. Br. 21 (“[A]\ncourt could fairly infer that the petitioner was content\nwith below-market rates because it performed\nservices only for affiliated entities ... .”). Nor did the\ncourt hold petitioner liable for the acts or profits of the\naffiliates. 1 Fletcher § 33, at 115-118. The judgment\nordered petitioner to pay from its own coffers money\nreflecting the true financial gain petitioner received\nfrom its own infringing actions. See Br. in Opp.\nSuppl. App. 1SA.\n 45\n\n\n Petitioner points to the statement that the district\ncourt treated “petitioner and its non-party affiliates\n‘as a single corporate entity for the purpose of\ncalculating revenues.’” E.g., Pet. Br. 25 (quoting Pet.\nApp. 39a). But that court treated these entities as a\n“single corporate entity” only “for the purpose of\ncalculating revenues generated by Claimant’s\nuse of infringing marks.” Pet. App. 39a-40a\n(emphases added). Or as the Fourth Circuit put it,\nthe district court merely “considered the revenues of\nentities under common ownership with Claimant in calculating Claimant’s true financial\ngain.” Pet. App. 43a.\n ii. For its part, the United States agrees that some\nof the affiliates’ profits “might be viewed as the\npractical equivalent of a pre-assignment of\n[petitioner’s] anticipated income” but denies any\n“persuasive rationale for treating all of the nearly $43\nmillion ... as the profits of petitioner.” U.S. Br. 21, 30-\n31. Specifically, the United States argues that the\n“court did not distinguish between the profits that\npetitioner had generated and the profits its affiliates\nhad produced.” U.S. Br. 30.\n To the contrary, the Fourth Circuit affirmed the\ndistrict court’s factual finding that all of the affiliates’\nrevenues reflected petitioner’s true financial gain.\nPetitioner had argued that it was “not the economic\nengine that creates the revenue that flows to [the\naffiliates],” and instead that the “improved,\ncommercial property” owned by the affiliates\n“generates the revenue.” Appellant’s Brief in Nos. 22-\n1622, 22-1845 (4th Cir.), p. 43; Def.’s Proposed\nFindings of Fact and Conclusions of Law in No. 1:20-\ncv-00610 (E.D. Va.), ECF 238, p. 22. But as the\nFourth Circuit explained, the district court found\n 46\n\n\notherwise after “weighing the expert testimony,”\nconcluding that “the [affiliates] do not and cannot\nperform the work and service necessary to generate\nrevenues.” Pet. App. 40a. Those findings are\nunchallenged in this Court.\n Far from overinclusive, the district court’s\nassessment of these profits was “conservative.” Pet.\nApp. 46a. Though it was authorized to pick “a\nnecessarily somewhat arbitrary estimate,” F.W.\nWoolworth, 344 U.S. at 232, the district court took\ncare to exclude revenues not attributable to the\ninfringement, Pet. App. 90a-91a, and even then only\nlooked at profits from 2018 to 2020, despite\npetitioner’s infringement both before and after that\nperiod, Pet. App. 87a-88a.\n Finally, any inaccuracy in the final award stems\nfrom petitioner’s own doing. “On established\nprinciples of equity, and on the plainest principles of\njustice, the guilty trustee cannot take advantage of\nhis own wrong.” Westinghouse, 225 U.S. at 620. Upon\nbecoming a constructive trustee of respondent’s\nmarks, petitioner bore the risk of confusion regarding\nany resulting gain. See ibid. Yet petitioner provided\nno way to distinguish “between infringing and non-\ninfringing revenues,” Pet. App. 46a, choosing instead\nto assert “there were zero infringement-related\nrevenues,” Pet. App. 92a. “Any arbitrariness” in the\ncourt’s award “can be traced back to [petitioner’s]\nlitigation strategy to deny any connection between its\naffiliates’ revenues and its infringing marks.” Pet.\nApp. 46a; see p. 27, supra (discussing principles of\nunjust enrichment).\n c. The United States also claims the courts below\nconsidered the affiliates’ profits at step one rather\n 47\n\n\nthan step two. U.S. Br. 32. That’s not true—the\nFourth Circuit’s analysis tracks the just-sum\nprovision, as explained above. See Section II.A.1,\nsupra. But even if it were true, the Court should\nconsider the just-sum provision now and affirm on\nthat alternative ground. Thigpen v. Roberts, 468 U.S.\n27, 30 (1984).7\n 3. The award does not exceed any\n statutory cap.\n Petitioner suggests that even if the award below\nreflected petitioner’s “true financial gain,” it\n“outstrips the limits of the just-sum provision.” Pet.\nBr. 44-47. In petitioner’s view, the just-sum provision\nallows only “modest tweaks” to an award of\n“defendant’s profits.” Pet. Br. 46. And, petitioner\nclaims, an “adjustment” from $0 to $43 million is\nsimply too large. Pet. Br. 45. This argument fails for\ntwo reasons.\n a. First, the text of the just-sum provision and its\nsurrounding context make clear there is no numerical\ncap on a “just sum.” Nothing in the provision imposes\na hard limit. To the contrary, it permits “judgment\nfor such sum as the court shall find to be just,\naccording to the circumstances of the case.” 15 U.S.C.\n§ 1117(a).\n Moreover, there is a hard limit in the immediately\npreceding sentence. A court “may enter judgment,\naccording to the circumstances of the case, for any\nsum above the amount found as actual damages, not\nexceeding three times such amount.” Ibid. (emphasis\n\n 7 Further, if the United States were correct that true gain\n\ncan and must instead be considered (at least initially) at step\none, this Court should also still affirm. See Section II.B, infra.\n 48\n\n\nadded). This Court “‘generally presume[s] that\nCongress acts intentionally and purposely when it\nincludes particular language,’” such as a numerical\ncap, “‘in one section of a statute but omits it another.’”\nIntel Corp. Investment Pol’y Comm. v. Sulyma, 589\nU.S. 178, 186 (2020) (citation omitted). The inference\nis even more justified where, as here, the distinction\nis between two neighboring sentences.\n The history of the provision further confirms the\nlack of a numerical cap. Prior to the Lanham Act,\ncopyright and patent legislation contained\nquantitative limits on damages enhancements. See\nAct of Aug. 18, 1856, ch. 169, 11 Stat. 138, 139 (1856);\n1870 Patent Act, § 101, 16 Stat. 214; Copyright Act of\n1909, § 25(b), 35 Stat. 1081. So too did Section\n1117(a)’s predecessor in the 1905 Act. § 16, 33 Stat.\n728-729 (“not exceeding three times the amount of\nsuch verdict”). And in debating earlier drafts of the\nLanham Act, legislators similarly proposed a ceiling\nfor the just-sum provision. See Trade-Marks:\nHearings Before the Subcomm. on Trade-marks, H.\nComm. on Patents on H.R. 102, H.R. 5461, and S. 895,\n77th Cong., 1st Sess. 203-206 (1941) (debate). But\nthat ceiling was rejected.\n Finally, compare later-enacted statutes, including\nthose on which petitioner relies. See Pet. Br. 42-43\n(citing 15 U.S.C. § 1117(b) and (c)). Amendments to\nSection 1117 provide specified amounts of recovery\nand enhancement for cases involving counterfeit\nmarks. See § 1117(b) (treble profits or damages), (c)\n(statutory damages within a particular range). And\nan amendment to the Copyright Act likewise allows\nan increase in a damages award within a numerical\nrange. 17 U.S.C. § 1323(a). Again, the just-sum\nprovision lacks these numerical specifications.\n 49\n\n\n The “modesty” limit that petitioner suggests\nmakes little sense in any event. It would mean the\nmost inadequate or excessive awards are the ones\nleast capable of fixing. And as petitioner seems to\nadmit, the just-sum provision applies at least when\ncourts can’t calculate “defendant’s profits” due to\n“discovery stonewalling.” Pet. Br. 44-45 (citation\nomitted). If the court cannot calculate an accurate\nbaseline, it is difficult to understand how the court\ncould impose a “modest tweak[]” on that baseline.\nPet. Br. 46.\n b. Petitioner is also wrong that the district court\n“adjusted” the award from $0 to $43 million. Pet. Br.\n45. In support, petitioner repeatedly asserts it is\n“undisputed” that the amount of the “defendant’s\nprofits” in this case was $0. Pet. Br. 14, 18, 20, 24, 51.\nBut that is very much in dispute.\n As explained above, the district court didn’t\ncalculate a precise figure for “defendant’s profits”\nbased on petitioner’s own books because it correctly\nfound this figure would necessarily be “inadequate.”\nSee Section II.A.1, supra. Accordingly, there isn’t\neven a definitive baseline here from which to measure\nthe “adjustment.”\n Regardless, had the district court completed a\nprecise calculation, the result would not have been $0.\nPetitioner’s reported revenues from selling its\ninfringing services to the affiliates during the\ninfringement period were $7,958,468. J.A. 133-136\n(showing revenues from 2017 to 2020). And while the\npetitioner reported even greater costs, ibid.,\npetitioner bore the burden of showing which of these\ncosts are deductible in the step one analysis. See 15\nU.S.C. § 1117(a); Manhattan Indus., Inc. v. Sweater\n 50\n\n\nBee by Banff, Ltd., 885 F.2d 1, 7-8 (2d Cir. 1989)\n(requiring proof of “a sufficient nexus between each\nexpense claimed and the sales of the unlawful goods”).\nIt did not; petitioner “offered no calculations for cost.”\nPet. App. 46a.\n B. Alternatively, the decision below should\n be affirmed under the “defendant’s\n profits” provision.\n As discussed above, the United States contends\nthat (1) under Section 1117(a), courts can consider an\ninfringer’s true gain at step one (i.e., when calculating\n“defendant’s profits”), not just step two, pp. 27-28,\nsupra; and (2) here, the courts below in fact\nconsidered the affiliates’ profits at step one, pp. 46-47,\nsupra. Respondent disagrees on both points. See\nSections I.A.1-2, II.A.1, supra. But should this Court\nagree with the United States instead, it should still\naffirm the judgment below.\n If the United States is right on both points, the\nanalysis above largely still applies. See Sections\nII.A.1-2, supra. The United States agrees that the\nprofits of petitioner’s affiliates can be treated at step\none as an anticipatory assignment of the petitioner’s\nown revenue. U.S. Br. 20; see also pp. 42-43, supra\n(applying this concept at step two). The only minor\ndifference in analysis would be the answer to the\nGovernment’s concern about “distinguish[ing]\nbetween the profits that petitioner had generated and\nthe profits its affiliates had produced.” U.S. Br. 30.\n In a step one analysis of “defendant’s profits,” that\nconcern is addressed by Section 1117(a)’s burden-\nshifting regime, which would have required petitioner\nto identify any revenue not attributable to the\ninfringement. 15 U.S.C. § 1117(a); see Westinghouse,\n 51\n\n\n225 U.S. at 619 (“‘[H]e who has wrongfully produced\na confusion of goods must alone suffer.’”) (citation\nomitted); p. 27, supra. Yet petitioner provided no\n“calculations reflecting the distinction between\ninfringing and non-infringing revenues.” Pet. App.\n46a. That failure would foreclose, as a matter of law,\nthe Government’s objection that the award contains\nnon-infringing revenues of the affiliates.\n The bottom line is this: so long as true financial\ngain is an appropriate measure (and it is), the\njudgment should be affirmed whether at step two\n(respondent’s understanding of the statute) or one\n(the Government’s).\nIII. If the Fourth Circuit erred, the Court should\n remand.\n The decision below was correct, but even if the\nlower court erred, petitioner’s request for reversal is\nmeritless. See Pet. Br. 51. Rather, a remand would\nbe needed. See U.S. Br. 29, AIPLA Br. 10-15.\n On remand, respondent could pursue an\nalternative profits-based award under several\ntheories. If this Court agrees that Section 1117(a)\nallows consideration of petitioner’s true financial\ngain, but disagrees that the award below accurately\ncaptured this, it should remand for further\nexplanation or recalculation. For example, the\ndistrict court could calculate petitioner’s true\nfinancial gain based on John Dewberry’s kickback\npayments, U.S. Br. 18-19, the real market value of\npetitioner’s services, U.S. Br. 20-22, and any other\nrelevant facts.\n Beyond proving true financial gain, respondent\ncould seek to hold petitioner directly liable for the\n 52\n\n\naffiliates’ profits as a “partner[] engaged in concerted\nwrongdoing.” Liu, 591 U.S. at 90; see Jackson v.\nSmith, 254 U.S. 586, 588-589 (1921) (applying this\nprinciple when not all partners are parties to the\nlawsuit).\n Respondent could recover the revenues in\npetitioner’s own books (from which petitioner failed to\nprove any deductions) as receipt for selling its\ninfringing services to the affiliates. See J.A. 130-136;\npp. 49-50, supra. Even without consideration of the\naffiliates’ profits, the “defendant’s profits” weren’t\nzero. Id.\n Respondent could also successfully overcome\ncorporate separateness. See Bestfoods, 524 U.S. at 62.\nIndeed, the district court already suggested\nrespondent could make this showing. See Pet. App.\n82a (eschewing as “inaccurate” its prior statement\nthat the affiliates were “separated by the corporate\nveil”).8\n CONCLUSION\n The judgment below should be affirmed, if this\nCourt does not dismiss the writ of certiorari as\nimprovidently granted. In the alternative, the matter\nshould be remanded.\n /S/ ELBERT LIN\n ELBERT LIN\n\n Counsel of Record\n\n 8 Respondent did not waive its ability to pierce the corporate\n\nveil simply by disclaiming the need to do so, as petitioner claims.\nPet. Br. 24 (citing J.A. 331; Br. in Opp. Suppl. App. 55SA). Re-\ngardless, preservation is properly addressed on remand. See\nBradshaw v. Richey, 546 U.S. 74, 79-80 (2005) (per curiam).\n 53\n\n\nARTHUR E. SCHMALZ /S/ ELBERT LIN\nHUNTON ANDREWS ELBERT LIN\n KURTH LLP Counsel of Record\n2200 Pennsylvania Ave. STEPHEN P. DEMM\nNW DAVID M. PARKER\nWashington, DC 20037 DAVID N. GOLDMAN\n HUNTON ANDREWS\n KURTH LLP\n Riverfront Plaza\n East Tower\n 951 East Byrd St.\n Richmond, VA 23219-\n 4074\n [PHONE REDACTED]\n [EMAIL REDACTED]\n\nCounsel for Respondent Counsel for Respondent\nADDENDUM\n 1\n\n\n EXCERPTS FROM FOURTH CIRCUIT\n ORAL ARGUMENT\n\nThe following are excerpts from argument of\nMr. Elbert Lin on behalf of appellee Respondent, beginning at 36:10. See\n[URL REDACTED]\n1622-20230503.mp3.\n\n The district court, relying on our expert report,\nused the revenues and the profits of those other\nrelated entities as a benchmark—a measuring stick,\nif you will—uh for the exercise of his discretion under\n1117(a), and and said this is what you—is just, right?\nBeyond the profits of Claimant, this is what is\njust under the circumstances...\n\n ***\n\n You asked for other cases. If you look at the Kars\n4 Kids case from the 3rd Circuit, 8 F.4th 209, if you\nlook at Max Rock, 40 F.4th 454—and I point to these\nother circuits because this court doesn’t have a lot of\ncase law on 1117(a)—those courts talk about that\ndiscretion and they say, uh, one—not just a\nreasonable reason for exercising discretion, but really\nthe very purpose of that discretion is to get after—and\nhere’s the quote from Kars 4 Kids: “true profits.” And\nfrom Max Rock: the—that discretion’s available for\n“concern that the award does not encompass the\ndefendant’s full profits.” ... And my point is simply\nthose cases explain the purpose of this discretion,\nwhere the, the judge looks at the profits that have\nbeen shown and for the defendants and says that’s—\nthat’s not just in this circumstance. I’m gonna\nincrease that number, and one reasonable basis and\n 2\n\n\nnon-, you know, non-abuse-of-discretion basis is to\nsay, you know, what do I think the true profits are?\nAnd he had an evidentiary basis for doing that here,\nand said that’s what I’m gonna award. I’m not gonna\norder it from these entities, right? That’s why no veil\npiercing is required. But I am gonna award the\njudgment against Claimant.", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of a profits award counting affiliates' revenues.", "governingLaw": "Apply United States federal trademark law; Fourth Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal trademark law; Fourth Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Dewberry Group, Inc. v. Dewberry Engineers Inc.", "citation": "604 U.S. 321 (2025)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/24pdf/23-900_19m1.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The dispositive question is whether 15 U.S.C. § 1117(a) authorizes a court to order a defendant to disgorge profits earned by non-party corporate affiliates absent veil-piercing. The statutory text supplies the answer: the Act permits recovery of \"defendant's profits\"—not the profits of any other entity. The term \"defendant\" in § 1117(a) refers to the party named in the suit and found liable. The statute's burden-shifting mechanism confirms this reading: \"the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed.\" Only a party to the litigation can bear a burden of proof; a non-party affiliate that was never sued cannot.\n\nRespondent offers two statutory provisions to justify looking beyond the defendant's own books. First, the \"principles of equity\" proviso. But that proviso incorporates, rather than displaces, traditional equitable limits. As the parties' briefs discuss, courts of equity limited disgorgement to the defendant's own net profits actually received (see Liu v. SEC, 591 U.S. 71, 82-83 (2020)) and would not order a defendant to disgorge profits obtained by others (see Elizabeth v. Pavement Co., 97 U.S. 126, 138-140 (1878); Keystone Mfg. Co. v. Adams, 151 U.S. 139, 146-148 (1894)). Requiring a defendant to disgorge profits \"that accrued to his affiliates\" could \"transform any equitable profits-focused remedy into a penalty\" (Liu, 591 U.S. at 90)—precisely what § 1117(a)'s declaration that any sum \"shall constitute compensation and not a penalty\" forbids.\n\nSecond, respondent invokes the just-sum provision, which permits a court to award \"such sum as the court shall find to be just\" when the recovery based on profits is \"inadequate or excessive.\" But this provision is a safety valve for adjusting an award of the defendant's profits—addressing evidentiary difficulties in calculating those profits—it is not a bypass that authorizes courts to import third parties' profits. The legislative history discussed in the briefs confirms the provision was designed to address problems of proof, not problems of corporate separateness. Reading it to permit a leap from $0 in defendant's profits to $43 million in non-party affiliates' profits would render the defendant-centric burden-shifting framework a nullity and conflict with the statute's express anti-penalty command.\n\nThe presumption of corporate separateness reinforces this textual reading. As the parties discuss, the Supreme Court has held that Congress must \"speak directly\" to displace the \"bedrock principle\" of corporate separateness (United States v. Bestfoods, 524 U.S. 51, 62-63 (1998)). Neither the \"principles of equity\" proviso nor the just-sum provision directly authorizes disregarding corporate boundaries. Respondent and both lower courts disclaimed veil-piercing, which is the recognized mechanism for treating an affiliate's property as the defendant's own. Without veil-piercing, the affiliates' profits are not the defendant's profits.\n\nRespondent's alternative framing—that the court merely used affiliate profits as relevant evidence of the defendant's \"true financial gain\" rather than disregarding corporate separateness—cannot be sustained on this record. The district court explicitly treated Claimant and its affiliates \"as a single corporate entity for the purpose of calculating revenues\" (Pet. App. 39a), which is the very essence of disregarding corporate separateness. The court ordered disgorgement of the affiliates' profits, not of some independently derived measure of Claimant's gain. And the judgment was entered against Claimant alone, ordering it to pay approximately $43 million that it never received. Calling this an evidentiary shortcut does not change the substance: the award is built entirely on the affiliates' profits, which are not the defendant's profits under the statute.\n\nRespondent's argument that the not-a-penalty clause affirmatively authorizes enhanced awards beyond net profits misconstrues the provision. The clause declares that sums awarded under the treble-damages and just-sum provisions are deemed compensatory rather than penal. It does not repeal the requirement that the sum be \"just\"—and a sum requiring a defendant to pay $43 million in profits it never received, absent veil-piercing, cannot be \"just\" under any measure. The clause resolves the \"seeming contradiction\" between equity's anti-penalty principle and authorized enhanced awards; it does not authorize penalties in the form of third-party profit disgorgement.\n\nFinally, the availability of alternative remedies does not authorize the one the lower courts imposed. Respondent could have sued the affiliates directly, pursued veil-piercing, or sought damages (which the Act permits up to trebling). Respondent's litigation choices do not expand the statutory text. The Lanham Act provides robust remedies, but none of them authorizes ordering a defendant to disgorge profits earned by non-party affiliates absent veil-piercing.", "allocation": null, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-059", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nSTATEMENT\n The Copyright Act contains a simple statute of limita-\ntions for civil actions. It provides that “[n]o civil action\nshall be maintained under the provisions of this title un-\nless it is commenced within three years after the claim ac-\ncrued.” 17 U.S.C. 507(b). This case concerns the avail-\nability of retrospective monetary relief for acts that alleg-\nedly occurred more than three years before the filing of a\ncivil action. The question presented, as rephrased by the\nCourt, is whether, under the discovery accrual rule ap-\nplied by the circuit courts and the Copyright Act’s statute\nof limitations, a copyright plaintiff can recover damages\nfor acts that allegedly occurred more than three years be-\nfore the filing of a lawsuit.\n The answer to that question, as with all questions of\nstatutory interpretation, begins with the text of “the Cop-\nyright Act’s statute of limitations.” This Court has re-\npeatedly declined to adopt a background rule that a limi-\ntations period does not begin to run until a plaintiff dis-\ncovers his injury, no matter the reason discovery is de-\nlayed. In numerous cases, the Court has analyzed the\nwords used by Congress and construed ambiguities in fa-\nvor of the default understanding that a plaintiff ’s claim\naccrues when he has a complete and present cause of ac-\ntion.\n In particular, it is now settled that the term “accrues”\nrefers to the time when a plaintiff has a complete and pre-\nsent cause of action—which, in the copyright context, is\n 3\n\n\nordinarily the time of infringement. This Court has re-\npeatedly adopted that interpretation of “accrues,” both\nbefore and after the enactment of the statute of limita-\ntions in the Copyright Act. This Court has also inter-\npreted comparable terms, such as “arises,” to start the\nlimitations period running when a plaintiff has a complete\nand present cause of action, not when he discovers the in-\njury.\n What is more, this Court has interpreted the specific\nlimitations provision at issue here in a way that logically\nforecloses a broad rule that claims for retrospective relief\naccrue only when the injury is discovered (or reasonably\nshould have been discovered). In Petrella v. Metro-Gold-\nwyn-Mayer, Inc., 572 U.S. 663 (2014), the Court held that\nthe equitable doctrine of laches is not a defense against\ninfringement claims under the Copyright Act. In so hold-\ning, the Court reasoned that the Copyright Act “itself\ntakes account of delay” because “a successful plaintiff can\ngain retrospective relief only three years back from the\ntime of suit.” Id. at 677. If the Court were to reverse\ncourse and interpret Section 507(b) to permit retrospec-\ntive relief going back further, it would upset the balance\nbetween providing adequate time for plaintiffs to sue, on\nthe one hand, and providing repose for defendants, on the\nother—a balance that Congress struck and this Court has\nalready effectuated.\n The question presented, as rephrased, also refers to\nthe “discovery accrual rule applied by the circuit courts.”\nGenerally speaking, the courts of appeals apply a broad\ndiscovery rule that postpones the running of the limita-\ntions period until a plaintiff knows of his injury, regard-\nless of the cause of that delay. But the courts of appeals\ndisagree on various aspects of that rule. And the pre-\nsumption in favor of a broad discovery rule for every fed-\neral statute of limitations, applied by a number of courts\n 4\n\n\nof appeals, is at odds with this Court’s cases. The only\ndiscovery rule consistent with this Court’s precedents is a\nnarrower exception for discovery delayed by fraud, latent\ndisease, or medical malpractice.\n Respondents’ operative complaint is devoid of any al-\nlegation of fraud, latent disease, or medical malpractice.\nTo the contrary, respondents concede that—as is typical\nin copyright cases—the allegedly infringing works were\nwidely distributed. Respondents instead argue only that\nthey were unaware of the infringement because respond-\nent Respondent was intermittently incarcerated.\nWhatever the merits of applying the narrower discovery\nrule to a copyright owner’s claim for retrospective relief\nin other cases, it would plainly not be triggered here. Be-\ncause respondents’ claims for retrospective relief for acts\nthat occurred more than three years before the filing of\ntheir lawsuit are time-barred, the judgment of the court\nof appeals should be reversed.\n A. Background\n The Copyright Act provides a cause of action to the\n“legal or beneficial owner of an exclusive right under a\ncopyright” to “institute an action for any infringement of\nthat particular right committed while he or she is the\nowner of it.” 17 U.S.C. 501(b). The Act authorizes a court\nto grant injunctive relief, see 17 U.S.C. 502; impound and\ndispose of infringing articles, see 17 U.S.C. 503; and, as is\nrelevant here, award either the plaintiff ’s actual damages\nand any additional profits attributable to the defendant’s\ninfringement, or statutory damages, see 17 U.S.C. 504.\n “Until 1957, federal copyright law did not include a\nstatute of limitations for civil suits.” Petrella v. Metro-\nGoldwyn-Mayer, Inc., 572 U.S. 663, 669 (2014). Added in\n1957 (with only cosmetic amendments since), the provi-\nsion that is now Section 507(b) of the Copyright Act ended\n 5\n\n\nthe practice of borrowing a limitations period from analo-\ngous state statutes. See ibid. It provides that “[n]o civil\naction shall be maintained under the provisions of this ti-\ntle unless it is commenced within three years after the\nclaim accrued.” 17 U.S.C. 507(b).\n This Court had occasion to interpret the statute of lim-\nitations in Section 507(b) in Petrella, supra. The Court\nheld that the defense of laches “cannot be invoked to pre-\nclude adjudication of a claim for damages brought within\nthe three-year window” of the statute of limitations. 572\nU.S. at 667. The Court explained that “Congress provided\ntwo controlling time prescriptions” in the Copyright Act:\n“the copyright term, which endures for decades, and may\npass from one generation to another; and § 507(b)’s limi-\ntations period, which allows plaintiffs during that lengthy\nterm to gain retrospective relief running only three years\nback from the date the complaint was filed.” Id. at 672.\nThe Court repeatedly described Section 507(b) in those\nterms. See id. at 670 (observing that “Congress * * *\nprescribed a three-year look-back limitations period for\nall civil claims arising under the Copyright Act”); ibid.\n(stating that “[a] copyright claim thus arises or ‘accrue[s]’\nwhen an infringing act occurs” (second alteration in origi-\nnal)); id. at 671 (noting that, “[u]nder the Act’s three-year\nprovision, an infringement is actionable within three\nyears, and only three years, of its occurrence,” and adding\nthat “the infringer is insulated from liability for earlier in-\nfringements of the same work”).\n In Petrella, the Court reasoned that permitting a\ncopyright defendant to raise laches as a defense against\nan otherwise timely action would not accord with the\ntext and structure of the Copyright Act. The Court ex-\nplained that “the copyright statute of limitations, § 507(b),\nitself takes account of delay” and “a successful plaintiff\ncan gain retrospective relief only three years back from\n 6\n\n\nthe time of suit.” 572 U.S. at 677. It was “[o]nly by disre-\ngarding that feature of the statute” that the court of ap-\npeals, applying the defense of laches, could “presume that\ninfringing acts occurring before [the start of the three-\nyear limitations period] bar all relief, monetary and in-\njunctive, for infringement occurring on and after that\ndate.” Ibid.\n In a footnote, the Court acknowledged that “nine\ncourts of appeals have adopted, as an alternative to the\nincident of injury rule, a ‘discovery rule,’ which starts the\nlimitations period when the plaintiff discovers, or with due\ndiligence should have discovered, the injury that forms\nthe basis for the claim.” Petrella, 572 U.S. at 670 n.4 (ci-\ntation omitted). But the Court added that it “ha[s] not\npassed on the question” whether such a discovery rule ap-\nplies. Ibid. And the Court recognized that “[a] claim or-\ndinarily accrues ‘when [a] plaintiff has a complete and pre-\nsent cause of action.’ ” Id. at 670 (quoting Bay Area Laun-\ndry and Dry Cleaning Pension Trust Fund v. Ferbar\nCorp. of California, 522 U.S. 192, 201 (1997)).\n The Court has since reaffirmed that Section 507(b) im-\nposes a three-year limitation on retrospective relief. In\nSCA Hygiene Products Aktiebolag v. First Quality Baby\nProducts, LLC, 137 S. Ct. 954 (2017), the Court held that\nthe defense of laches is unavailable under a “similar pro-\nvision” of the Patent Act because “Petrella’s reasoning ap-\nplies” with equal force. Id. at 959. The Court rejected the\nargument that a statute of limitations “is not a true statute\nof limitations” if it “runs backward from the time of suit.”\nId. at 961. In Petrella, the Court explained, it “described\nthe Copyright Act’s statute of limitations in almost iden-\ntical terms” as “allow[ing] plaintiffs * * * to gain retro-\nspective relief running only three years back from the\ndate the complaint was filed.” Ibid. (alterations in origi-\n 7\n\n\nnal) (quoting Petrella, 572 U.S. at 672). The Court reiter-\nated that “[a] claim ordinarily accrues ‘when [a] plaintiff\nhas a complete and present cause of action’ ” and that the\nCourt has not “ ‘passed on the question’ whether the\nCopyright Act’s statute of limitations is governed by [a\nbroad discovery] rule.” Id. at 962 (quoting Petrella, 572\nU.S. at 670 n.4).\n B. Facts And Procedural History\n 1. Respondent Respondent formed respondent\nMusic Specialist, Inc., in 1983 with a disc jockey named\nTony Butler. Respondent provided the capital, while Butler\nprovided the industry expertise. Butler wrote or cowrote\nall of the musical works at issue in this case, and Music\nSpecialist released sound recordings embodying those\nworks between 1983 and 1986. Pet. App. 3a-4a.\n This case originally involved eight musical works:\n“Jam the Box,” “I Know You Love Me,” “Computer Lan-\nguage,” “Lookout Weekend,” “The Party Has Begun,”\n“Fix It in the Mix,” “Freestyle Express,” and “When I\nHear Music.” Claims involving the last three works were\ndismissed by joint stipulation before summary judgment.\nPet. App. 20a, 29a.\n Music Specialist involuntarily dissolved in 1986 and\nwas not reinstated until 2017. Respondent was imprisoned for\ndrug offenses from 1989 to 2008 and again from 2012 to\n2015. Pet. App. 4a-5a; C.A. Supp. App. 41, 64, 117-126.\n 2. In 2007, Butler formed 321 Music, LLC. In July\n2008, petitioner Artist Publishing Group, LLC, entered\nan agreement with Butler and 321 Music. That agree-\nment permitted Artist Publishing to administer Butler\nand 321 Music’s entire catalog, including the musical\nworks at issue in this case. Petitioner Claimant, which had an administration agreement with\nArtist Publishing, began licensing the musical works at\n 8\n\n\nissue on behalf of Artist Publishing. Pet. App. 4a; 1 C.A.\nApp. 59-60, 167-168; 3 C.A. App. 51.\n In that capacity, Claimant licensed and became the\nexclusive administrators of Butler and 321 Music’s pub-\nlishing rights in several derivative works. One of those\nderivative works was “In the Ayer,” a musical work rec-\norded by the famous rap artist Flo Rida. “In the Ayer”\ninterpolated “Jam the Box,” pursuant to a separate li-\ncense between 321 Music and Atlantic Recording Corpo-\nration. Plaintiffs have alleged that Flo Rida’s sound re-\ncording of “In the Ayer” was a “smash hit” that sold mil-\nlions of copies; it reached No. 9 on the Billboard chart.\nClaimant granted licenses to use “In the Ayer” in\nnumerous popular television shows, including “So You\nThink You Can Dance.” Claimant similarly\ngranted licenses for Butler and 321 Music’s interests in\nother disputed musical compositions for use in derivative\nworks recorded by famous artists such as the Black Eyed\nPeas (interpolating “Lookout Weekend”), Kid Sister (also\ninterpolating “Lookout Weekend”), and Pitbull (interpo-\nlating “When I Hear Music”). Pet. App. 4a; 1 C.A. App.\n64-69; Billboard, Flo Rida: Chart History (last visited Nov.\n24, 2023).\n 3. After Respondent was released from prison for the first\ntime in March 2008, he confronted the owner of two com-\npanies not party to this case that were using musical\nworks from Music Specialist’s catalog under licenses from\nButler. Respondent “let[] them know that [he] was home and\nthey had [his] music.” Notably, Respondent did not take any\naction to investigate the widespread and public uses by\nClaimant. Pet. App. 4a-5a; 3 C.A. App. 51-52.\n Beginning in July 2008, Claimant was listed in\nthe public records of Broadcast Music, Inc. (BMI), as the\nadministrator of all of the musical works at issue. BMI is\n 9\n\n\na rights organization that collects license fees for music.\nSpecifically, it collects income from public performances\nof its members’ compositions; pays the resulting royalties\nto its members; and maintains a public database listing\nthe writers, owners, and administrators of its members’\ncompositions. Respondent claims not to have accessed that da-\ntabase, even though he was aware other entities were us-\ning musical works from Music Specialist’s catalog; aware\nthat sound recordings incorporating the disputed works\nwere successful; and unaware of any royalty checks pay-\nable to Music Specialist for the works at issue. Pet. App.\n4a-5a; 1 C.A. App. 227-228; C.A. Supp. App. 46, 53-54, 130.\n At least one of the royalty statements that BMI sent\nRespondent for a musical work that was included in the opera-\ntive version of the complaint (but that respondents have\nsince dropped from the case) identified Claimant\nas “publisher” and “administrator.” Respondent has admitted\nthat he received several checks before December 28,\n2015—three years before this action was filed—for royal-\nties earned during the period when Music Specialist was\ninactive. It is undisputed that Respondent did not investigate\nwhy he was receiving royalties for a work he had not au-\nthorized anyone to exploit. 1 C.A. App. 227-228; 2 C.A.\nApp. 158-159; C.A. Supp. App. 46, 53-54, 268-286.\n According to respondents, Respondent discovered the al-\nleged infringement only around January 2016. He alleged\nthat he made the discovery when an associate told him\nabout Butler’s agreement with Artist Publishing. 2 C.A.\nApp. 50; 3 C.A. App. 37, 71.\n 4. On December 28, 2018—more than ten years after\nthe alleged infringement began, and almost three years\nafter the purported discovery of the infringement—re-\nspondents filed suit against Claimant and Atlantic in the\nUnited States District Court for the Southern District of\n 10\n\n\nFlorida. 1 C.A. App. 20-54. Respondents sought injunc-\ntive relief, impoundment, profits, damages, fees, and costs\nunder the Copyright Act. Id. at 78-79.\n The district court granted partial summary judgment\nto Claimant. Pet. App. 18a-34a. The district court first\nconcluded that respondents had not established owner-\nship of the copyrights in “Jam the Box,” “I Know You\nLove Me,” and “Computer Language.” Id. at 19a-22a. As\nto the remaining two musical works, “Lookout Weekend”\nand “The Party Has Begun,” the district court deter-\nmined that there was a factual dispute as to when re-\nspondents knew, or should have known, of the alleged in-\nfringement. Id. at 29a-32a. 1\n As is relevant here, the district court further held that\nrespondents could not obtain retrospective relief for acts\nthat occurred more than three years before they filed\ntheir lawsuit. Pet. App. 26a-27a. The district court recog-\nnized that, under Eleventh Circuit precedent, it was re-\nquired to apply the discovery rule to determine when re-\nspondents’ claims accrued. Id. at 30a-32a. But the district\ncourt concluded, based on this Court’s decision in Pet-\nrella, that the Copyright Act imposes a three-year limita-\ntion on retrospective relief. Pet. App. 26a-27a (quoting\nPetrella, 572 U.S. at 671).\n The district court certified its order for interlocutory\nappeal under 28 U.S.C. 1292(b). Pet. App. 35a-38a. It did\nso because the question whether “damages in this copy-\nright action are limited to the three-year lookback period\n\n\n 1\n Because the only copyright that Atlantic allegedly infringed was\nin “Jam the Box,” the court entered summary judgment in Atlantic’s\nfavor. Pet. App. 19a-25a.\n 11\n\n\nas calculated from the date of the filing of the [c]omplaint”\nwas a controlling question of law. Id. at 36a. 2\n 5. The court of appeals granted permission to appeal\nand reversed. Pet. App. 1a-17a. It held that, “when a\ncopyright plaintiff has a timely claim under the discovery\naccrual rule for infringement that occurred more than\nthree years before the lawsuit was filed, the plaintiff may\nrecover damages for that infringement.” Id. at 3a.\n The court of appeals began by reaffirming that its\nprecedents require the application of the discovery rule\nwhere, as here, the “ ‘gravamen’ of a copyright claim is\nownership.” Pet. App. 7a (quoting Webster v. Dean Gui-\ntars, 955 F.3d 1270, 1276 (11th Cir. 2020)). The court pro-\nceeded to hold that “a copyright plaintiff may recover ret-\nrospective relief for infringement occurring more than\nthree years before the lawsuit’s filing so long as the plain-\ntiff ’s claim is timely under the discovery rule.” Id. at 10a.\nThe court of appeals acknowledged this Court’s treatment\nof the statute of limitations in Petrella, but limited it to\nclaims that “accrue under the injury rule, not the discov-\nery rule.” Ibid. The court of appeals reasoned that “[this]\nCourt’s statements in Petrella merely describe the oper-\nation of the injury rule on the facts of that case and others\nlike it.” Id. at 12a. And having read the Court’s decision\nin Petrella as “preserv[ing] * * * the discovery rule,”\nthe court of appeals expressed concern that it would be\n“inconsistent” with Petrella to read it to “bar damages for\nclaims that are timely under the discovery rule.” Id. at\n14a. Limiting retrospective relief, the court concluded,\nwould be tantamount to “gut[ting]” that rule. Id. at 15a.\n\n\n 2\n The district court also certified the final judgment in favor of At-\nlantic for appeal under Federal Rule of Civil Procedure 54(b). Pet.\nApp. 38a-39a. The court of appeals dismissed that appeal. See [DOCKET REDACTED], 2022 WL 18354071, at *1 (Dec. 15, 2022).\n 12\n\n SUMMARY OF ARGUMENT\n Under the text of Section 507(b) of the Copyright Act\nand a proper understanding of the discovery rule, re-\nspondents here may not seek retrospective relief for acts\nof infringement that occurred more than three years be-\nfore they filed suit.\n A. The text of Section 507(b) requires a civil action for\ncopyright infringement to be brought “within three years\nafter the claim accrued.” That provision limits retrospec-\ntive relief to acts that occurred within three years of filing\nsuit.\n 1. This Court treats the text of statutes of limitations\nlike the text of any other statute. It construes them using\nthe traditional tools of statutory interpretation, and it\nreads them in light of background legal principles. This\nCourt has recognized the “standard rule” that claims ac-\ncrue “when the plaintiff has a complete and present cause\nof action.” Gabelli v. SEC, 568 U.S. 442, 448 (2013) (cita-\ntion omitted). And it has rejected a background principle\nthat a statutory limitations period begins to run only when\nthe plaintiff discovers (or reasonably should have discov-\nered) his injury, regardless of the cause of that delay.\n 2. The “standard rule” of accrual applies to Section\n507(b). Legal dictionaries and this Court’s cases, from\nboth before and after the adoption of that statute of limi-\ntations, define the term “accrues” to refer to the point at\nwhich a plaintiff has a complete and present cause of ac-\ntion. This Court has interpreted similar statutory lan-\nguage in the same way. Moreover, Congress did not ex-\nplicitly codify a discovery rule in Section 507(b), despite\nits awareness that a copyright plaintiff might not discover\ninfringement until after three years had elapsed.\n 3. A plaintiff ordinarily has a complete and present\ncause of action under Section 507(b) when the act of in-\nfringement occurs. The Copyright Act requires a plaintiff\n 13\n\n\nto register his copyright as a precondition to suit, and at\nleast one respondent held registrations before the alleged\ninfringement occurred.\n 4. The foregoing textual analysis is consistent with—\nindeed, it is compelled by—this Court’s decision in Pet-\nrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014).\nThere, the Court held that a defendant could not raise the\ndefense of laches in a copyright-infringement action. Es-\nsential to the Court’s reasoning was its repeated observa-\ntion that Section 507(b) contains a three-year limitation on\nretrospective relief. Abandoning that reasoning would\nupset the careful balance between plaintiffs and defend-\nants that Congress struck, and this Court has effectuated,\nin the Copyright Act.\n 5. There is no sound basis for permitting retrospec-\ntive relief for acts occurring more than three years before\nthe filing of suit. The Ninth and Eleventh Circuits have\nconcluded that such a limitation is inconsistent with the\ndiscovery rule. But the unavailability of a broad discovery\nrule for retrospective relief does not preclude the avail-\nability of a discovery rule for prospective relief, or a nar-\nrower discovery rule for all types of relief. And the all-\npurpose discovery rule generally applied by the courts of\nappeals rests on a textual presumption that this Court has\nnow repudiated.\n B. Properly understood, the discovery rule does not\napply to respondents’ claims for retrospective relief. This\nCourt ordered the parties to address whether respond-\nents’ claims are timely under the “discovery accrual rule\napplied by the circuit courts and [Section 507(b)].” The\nonly version of a discovery rule that is consistent with Sec-\ntion 507(b) is the narrower one applied in cases in which\nfraud, latent disease, or medical malpractice prevented a\nplaintiff from discovering his injury.\n 14\n\n\n 1. Courts of equity traditionally applied a discovery\nrule to determine the accrual of a plaintiff ’s claims only in\ncases of fraud. This Court recognized that fraud-based\ndiscovery rule in Bailey v. Glover, 88 U.S. 342 (1874), and\nHolmberg v. Armbrecht, 327 U.S. 392 (1946). And the\nCourt has extended that rule to cases of latent disease and\nassumed its existence in cases of medical malpractice.\n 2. This case does not involve fraud, latent disease, or\nmedical malpractice. Respondents have argued that they\nfailed to bring suit within three years only because Respondent\nwas incarcerated for part of the period at issue. And re-\nspondents’ own allegations about the public nature of pe-\ntitioners’ alleged infringement are affirmatively incon-\nsistent with any suggestion of fraud.\n Under a proper understanding, therefore, respond-\nents are not entitled to the benefit of the discovery rule.\nRespondents’ claims for retrospective relief for acts that\noccurred more than three years before the filing of their\nlawsuit are time-barred.\n C. Even if this Court were to assume the existence of\na broader discovery rule, respondents would still not be\nentitled to retrospective relief for acts occurring more\nthan three years before they filed suit. If necessary, con-\nsistent with the maxim that equity follows the law, the\nCourt should recognize an equitable exception to the\nbroad, judicially created discovery rule and limit retro-\nspective relief to the three years preceding the filing of\nsuit. This Court has crafted exceptions to judicially cre-\nated rules in other contexts, and, as noted above, it has\nalready recognized a three-year limitation on retrospec-\ntive relief in this context.\n Whether under the statutory text, the traditional ver-\nsion of the discovery rule, or a broader version, the Court\nshould reverse the judgment of the court of appeals.\n 15\n\n ARGUMENT\nRESPONDENTS MAY NOT OBTAIN RETROSPECTIVE\nRELIEF FOR ACTS OCCURRING MORE THAN THREE\nYEARS BEFORE THE FILING OF SUIT\n A. Under The Text Of Section 507(b), The Limitations Pe-\n riod For Retrospective Relief Ordinarily Runs From\n The Time Of Infringement\n The Copyright Act bars plaintiffs from maintaining a\ncivil action for copyright infringement “unless it is com-\nmenced within three years after the claim accrued.” 17\nU.S.C. 507(b). The traditional tools of statutory interpre-\ntation and this Court’s precedents establish that, for pur-\nposes of that provision, a claim for retrospective relief or-\ndinarily “accrues” when the defendant infringes the plain-\ntiff ’s copyright.\n 1. A Statute Of Limitations Must Be Interpreted Ac-\n cording To Its Text\n “When interpreting limitations provisions,” the Court\n“always * * * begin[s] by analyzing the statutory lan-\nguage.” Rotkiske v. Klemm, 140 S. Ct. 355, 360 (2019) (in-\nternal quotation marks and citation omitted). “If the\nwords of a statute are unambiguous, this first step of the\ninterpretive inquiry is [the] last.” Ibid. And “[i]f there\nare two plausible constructions of a statute of limitations,”\nthe Court “generally adopt[s] the construction that starts\nthe time limit running when the cause of action accrues.”\nIbid. (internal quotation marks, citation, and alteration\nomitted).\n “[T]he ‘standard rule’ is that a claim accrues ‘when the\nplaintiff has a complete and present cause of action.’ ” Ga-\nbelli v. SEC, 568 U.S. 442, 448 (2013) (internal quotation\nmarks omitted) (quoting Wallace v. Kato, 549 U.S. 384,\n388 (2007)). That has been the rule since at least the nine-\nteenth century. See ibid. And this Court has repeatedly\n 16\n\n\nrecognized it in its recent cases interpreting statutes of\nlimitations. See, e.g., Rotkiske, 140 S. Ct. at 360-361; SCA\nHygiene Products Aktiebolag v. First Quality Baby\nProducts, LLC, 137 S. Ct. 954, 962 (2017); Wallace, 549\nU.S. at 388; Graham County Soil & Water Conservation\nDistrict v. United States ex rel. Wilson, 545 U.S. 409, 418-\n419 (2005); Franconia Associates v. United States, 536\nU.S. 129, 133, 141 (2002); TRW, Inc. v. Andrews, 534 U.S.\n19, 27-28 (2001).\n This Court has refused to adopt a broad discovery rule\nas a backdrop against which all statutes of limitations are\ninterpreted. To be sure, the Court has recognized that\n“lower federal courts generally apply a discovery accrual\nrule when a statute is silent on the issue.” TRW, 534 U.S.\nat 27 (internal quotation marks and citation omitted). But\nthe Court has pointedly “not adopted that position as [its]\nown.” Ibid.; see U.S. Br. at 15-17, Rotkiske, supra ([DOCKET REDACTED]). Quite the contrary: the Court recently dismissed\nthat “expansive approach to the discovery rule” as a “bad\nwine of recent vintage.” Rotkiske, 140 S. Ct. at 360 (quot-\ning TRW, 534 U.S. at 37 (Scalia, J., concurring in the judg-\nment)).\n 2. Under Section 507(b), The Limitations Period For\n Retrospective Relief Begins To Run When The\n Plaintiff Has A Complete Cause Of Action\n Section 507(b) of the Copyright Act provides that “[n]o\ncivil action shall be maintained under the provisions of this\ntitle unless it is commenced within three years after the\nclaim accrued.” Because the Act does not define “ac-\ncrued,” courts must “ask what that term’s ‘ordinary, con-\ntemporary, common meaning’ was when Congress en-\nacted” the Copyright Act’s statute of limitations in 1957.\nFood Marketing Institute v. Argus Leader Media, 139\nS. Ct. 2356, 2362 (2019) (citation omitted); see Rotkiske,\n 17\n\n\n140 S. Ct. at 360. “In common parlance,” the Court has\nexplained, “a right accrues when it comes into existence”:\ni.e., “when the plaintiff has a complete and present cause\nof action.” Gabelli, 568 U.S. at 448 (citations omitted).\n a. Legal dictionaries define the term “accrues” to re-\nfer to the existence of a complete and present cause of ac-\ntion. Dictionaries contained that definition as early as the\nnineteenth century. See Gabelli, 568 U.S. at 448. For ex-\nample, one legal dictionary from that era explains that “an\naction accrues when the plaintiff has a right to commence\nit.” 1 Alexander M. Burrill, A Law Dictionary and Glos-\nsary 17 (1850).\n Of particular relevance here, the leading legal diction-\naries contemporaneous with enactment contain similar\ndefinitions. The 1957 edition of Black’s Law Dictionary\nstates that “[a] cause of action ‘accrues’ when a suit may\nbe maintained thereon,” specifically “on [the] date that\ndamage is sustained.” Black’s Law Dictionary 37 (4th ed.\n1957). The 1952 edition of Stroud’s Judicial Dictionary ex-\nplains that a cause of action “ ‘accrues’ when it becomes\neffective, i.e., when the resulting damage manifests it-\nself.” Stroud’s Judicial Dictionary 32 (3d ed. 1952). And\nthe 1948 edition of Bouvier’s Law Dictionary explains that\na “[c]ause of action accrues when a suit may first be legally\ninstituted upon it.” Bouvier’s Law Dictionary 34 (Bald-\nwin’s Century ed. 1948). At the time of the enactment of\nwhat is now Section 507(b) in 1957, both legislators and\nmembers of the public would have understood a cause of\naction to “accrue” when it became complete.\n b. That settled meaning was not confined to the pages\nof dictionaries. Just a decade before Congress enacted\nSection 507(b), the Court considered the meaning of sub-\nstantially similar language in Rawlings v. Ray, 312 U.S.\n96 (1941). The statute at issue there required the receiver\nof an insolvent bank to bring suit to recover an assessment\n 18\n\n\nimposed by the comptroller of the currency “within three\nyears after the cause of action shall accrue.” Id. at 97 (ci-\ntation omitted). The parties disputed whether the limita-\ntions period should run from the date the comptroller im-\nposed the assessment or the date the payment was due.\nThe Court reasoned that the words “after the cause of ac-\ntion shall accrue” in the statute “have their usual meaning\nand refer to ‘a complete and present cause of action.’ ” Id.\nat 98 (quoting Holloway v. Morris, 34 S.W.2d 750, 752\n(Ark. 1931)). Applying that definition, the Court held that\nthe cause of action “accrued” on the due date for the as-\nsessment—the point at which “suit could * * * be main-\ntained.” Ibid.\n A little over a decade after the enactment of what is\nnow Section 507(b), the Court again held that a cause of\naction for retrospective relief “accrues” at the time of in-\njury. See Zenith Radio Corp. v. Hazeltine Research, Inc.,\n401 U.S. 321, 338 (1971). In that case, the Court inter-\npreted the statute of limitations in federal antitrust law,\nwhich requires that “[a]ny action to enforce any cause of\naction * * * shall be forever barred unless commenced\nwithin four years after the cause of action accrued.” 15\nU.S.C. 15b. The Court reasoned that “[t]he basic rule is\nthat damages are recoverable under the federal antitrust\nacts only if suit therefor is ‘commenced within four years\nafter the cause of action accrued,’ plus any additional\nnumber of years during which the statute of limitations\nwas tolled.” Zenith Radio, 401 U.S. at 338 (citation omit-\nted). The Court explained that “this has usually been un-\nderstood to mean that each time a plaintiff is injured by\nan act of the defendants a cause of action accrues to him\nto recover the damages caused by that act and that, as to\nthose damages, the statute of limitations runs from the\ncommission of the act.” Ibid.\n 19\n\n\n In more recent cases, the Court has continued to hold\nthat a cause of action becomes complete—and a claim “ac-\ncrues”—at the point at which the injury resulting from a\ndefendant’s act becomes concrete and non-speculative. In\nFranconia Associates, supra, the Court interpreted the\nstatute of limitations in the Tucker Act, which requires\nthat suits against the government be filed within six years\nof when they “first accrue[d].” 536 U.S. at 133 (quoting 28\nU.S.C. 2501). The Court once again explained that accrual\nis determined by the date of injury: in this case, when the\ngovernment “breached the prepayment undertaking\nstated in the promissory notes” at issue. Id. at 141-142.\n So too in Gabelli, supra. There, the Court considered\nthe general statute of limitations for civil-penalty actions,\n28 U.S.C. 2462, which contains substantially similar lan-\nguage to the provision at issue here. 568 U.S. at 444. Spe-\ncifically, that statute provides that “an action * * *\nshall not be entertained unless commenced within five\nyears from the date when the claim first accrued.” 28\nU.S.C. 2462. Concluding that there was no textual or pol-\nicy reason to deviate from the “standard rule,” the Court\nheld that, for purposes of that general limitations provi-\nsion, “a claim accrues when the plaintiff has a complete\nand present cause of action”: namely, “when a defend-\nant’s allegedly fraudulent conduct occurs.” Gabelli, 568\nU.S. at 448; see U.S. Br. at 14, Rotkiske, supra (No. 18-\n328).\n In short, when Congress adopted a three-year limita-\ntions period running from the time a plaintiff ’s cause of\naction “accrued,” it did so against a consistent background\nunderstanding of the meaning of that term.\n c. The Court has interpreted statutes of limitations\nusing terms similar to “accrues” in the same way. For ex-\nample, in Bay Area Laundry, supra, the Court consid-\nered a statute of limitations that runs from “the date on\n 20\n\n\nwhich the cause of action arose.” 522 U.S. at 201 (quoting\n29 U.S.C. 1451(f )(1)). The Court treated that language as\n“incorporat[ing] the standard rule that the limitations pe-\nriod commences when the plaintiff has ‘a complete and\npresent cause of action.’ ” Ibid. (quoting Rawlings, 312\nU.S. at 98). Under that “ordinarily applicable” rule, the\nCourt concluded that the limitations period began to run\nwhen the defendant employer missed a payment to the\nplaintiff, a multiemployer pension plan. Id. at 195.\n More recently, the Court adopted a similar interpre-\ntation of the phrase “the date on which the violation oc-\ncurs” in the statute of limitations for actions under the\nFair Debt Collection Practices Act. Rotkiske, 140 S. Ct.\nat 358 (quoting 15 U.S.C. 1692k(d)). The Court held that\nthe word “occurs” “unambiguously sets the date of the vi-\nolation as the event that starts the one-year limitations\nperiod.” Id. at 360. The Court rejected “a general ‘dis-\ncovery rule’ that applies to all FDCPA actions,” under\nwhich “occurs” would refer to the date when a plaintiff\ndiscovers the violation. Ibid.; see TRW, 534 U.S. at 27-28.\n d. Contextual evidence reinforces the conclusion that\na claim has “accrued” for purposes of Section 507(b) when\nthe plaintiff has a complete and present cause of action.\nTo begin with, Congress knows how to enact a broad dis-\ncovery rule when it wishes. See Rotkiske, 140 S. Ct. at\n361; TRW, 534 U.S. at 28-29. Numerous federal statutes\nthat were in force when Congress enacted what is now\nSection 507(b) provided that a limitations period would\nbegin upon the “discovery” of a violation or injury. See,\ne.g., 15 U.S.C. 77m (1956); 15 U.S.C. 77www(a) (1956); 15\nU.S.C. 78r(c) (1956); 15 U.S.C. 78i(e) (1956); 19 U.S.C.\n 21\n\n\n1621 (1956). 3 If Congress had intended to incorporate a\nsimilar discovery trigger for claims for retrospective re-\nlief in the Copyright Act, it “knew how” to do so. Depart-\nment of Homeland Security v. MacLean, 135 S. Ct. 913,\n921 (2015).\n The foregoing interpretation also makes sense in light\nof Section 507(b)’s purpose and legislative history. As the\nCourt has explained, “statutes of limitations provide cer-\ntainty in the form of “security and stability [for] human\naffairs” and “promote justice by preventing surprises\nthrough the revival of claims that have been allowed to\nslumber until evidence has been lost, memories have\nfaded, and witnesses have disappeared.” Gabelli, 568 U.S.\nat 448 (citations omitted). With respect to Section 507(b)\nin particular, Congress sought to “render uniform and\ncertain the time within which copyright claims could be\npursued.” Petrella v. Metro-Goldwyn-Mayer, Inc., 572\nU.S. 663, 670 (2014).\n Before the enactment of what is now Section 507(b),\nthe Copyright Act contained no statute of limitations. As\na result, “an action for an infringement [was] governed by\nthe limitations existing for the class of actions to which it\nbelong[ed] in the state where it [was] brought.” Local\nTrademarks v. Price, 170 F.2d 715, 717 (5th Cir. 1948).\nState law differed with respect to the length of the limita-\ntions period, but it was acknowledged that liability was\nlimited to infringements that occurred within that period.\nSee, e.g., Colley v. Canal Bank & Trust Co., 64 F. Supp.\n1016, 1019-1020 (E.D. La. 1946), aff ’d, 159 F.2d 153 (5th\n\n 3\n Today, statutes explicitly incorporating a discovery rule abound.\nSee, e.g., 12 U.S.C. 1715z-4a(d); 15 U.S.C. 78u-6(h)(1)(B)(iii)(I)(bb); 15\nU.S.C. 1681p; 15 U.S.C. 1711(a)(2); 15 U.S.C. 3006(c); 15 U.S.C. 6104\n(a); 18 U.S.C. 1030(g); 18 U.S.C. 2520(e); 18 U.S.C. 2710(c)(3); 26\nU.S.C. 7431(d); 28 U.S.C. 1658(b)(1); 42 U.S.C. 9612(d)(2)(A); 50\nU.S.C. 4611(k)(3).\n 22\n\n\nCir. 1947); Reed v. Carusi, 20 F. Cas. 431, 432 (C.C.D. Md.\n1845). It would be bizarre if Congress, while seeking to\nestablish uniformity and certainty, silently altered that\nsettled principle.\n The Senate Judiciary Committee explained that it\nchose three years as the appropriate limitations period\nbecause it would “provide an adequate opportunity for the\ninjured party to commence his action.” S. Rep. No. 1014,\n85th Cong., 1st Sess. 2 (1957). It evidently agreed with\nthe witnesses who testified that three years struck the\n“best balance” for copyright actions, in part because the\npublic nature of publication ordinarily provides injured\nparties with “reasonably prompt notice” of their rights.\nIbid.; see Letter from Sydney M. Kaye to the Honorable\nEdwin E. Willis, Chairman, Hearing on H.R. 781 Before\nSubcomm. No. 3 of the House Comm. on the Judiciary 50-\n51 (1955) (Hearing on H.R. 781) (stating that “[t]here\nwould seem to be no reason why three years from in-\nfringement would not be a sufficient period to permit the\ninstitution of legitimate suits”).\n Of particular relevance here, witnesses addressed the\ndilemma of a plaintiff who does not discover the infringe-\nment until after three years had elapsed, but those wit-\nnesses testified that such claims would be barred absent\nfraud on the part of the defendant. Representative Shep-\nard Crumpacker asked Fulton Brylawski of the Associa-\ntion of American Motion Pictures what would happen if\nsomeone held a limited screening of an infringing movie,\nthen waited three years to make a general distribution.\nBrylawski opined that a claim based on the original show-\ning “would be barred in three years,” but a claim based on\nthe later distribution “would be actionable.” Hearing on\nH.R. 781, at 47-48. In a letter to the committee, attorney\nSydney Kaye addressed a hypothetical where an infring-\ning work was “hidden in a vault” for three years; he took\n 23\n\n\nthe view that “[i]ndependent copyright infringements\nwould, in such cases, occur when the books were sold,\nwhen the recordings for distribution to the public were\npressed and when the motion picture film was exhibited,\nand the statute would run from the date of each of these\nacts.” Id. at 51. 4\n Permitting a plaintiff to seek retrospective relief for\nacts more than three years before the filing of suit would\nundermine Congress’ purposes. Deprived of the fixed\nlimitation contemplated by the statutory text, defendants\nwould be faced with expensive, time-consuming, and diffi-\ncult litigation to defend against claims based on years-old\nuses of copyrighted works, potentially without access to\nevidence and witnesses. 5 Publishing rights may have\nchanged hands multiple times, and royalties would have\nbeen disbursed to clients, including songwriters, who\nwould have spent them years before. And companies\nwould be unable to manage risk responsibly in the face of\nthe constant potential for massive recoveries based on\nlong-past conduct. That would engender the very uncer-\ntainty and expense that Section 507(b) was intended to\neliminate. See Petrella, 572 U.S. at 670.\n\n\n 4\n Congress did expect that “various equitable situations” that\n“[f]ederal district courts, generally, recognize” might apply to the\nCopyright Act’s statute of limitations. S. Rep. No. 1014, at 3. One\nsuch traditional equitable doctrine—a narrower, fraud-based discov-\nery rule—is discussed below. See pp. 33-39.\n 5\n This case acutely illustrates that problem. Respondents claim\nthat important documentary evidence from the early 1980s—includ-\ning corporate records and written copyright assignments—has now\nbeen lost. See 3 C.A. App. 35, 58-59, 62. A crucial witness passed\naway during the pendency of the case. See D. Ct. Dkt. 288, at 15. And\nbecause of an accounting-system change that occurred a decade ago,\nno financial records are available from the years that “In the Ayer”\nearned almost all of its income. See D. Ct. Dkt. 128, at 48-52.\n 24\n\n 3. For Purposes Of Section 507(b), A Plaintiff Ordi-\n narily Has A Complete Cause Of Action At The\n Time Of Infringement\n The Copyright Act provides that “[t]he legal or bene-\nficial owner of an exclusive right under a copyright is en-\ntitled, subject to the requirements of section 411, to insti-\ntute an action for any infringement of that particular right\ncommitted while he or she is the owner of it.” 17 U.S.C.\n501(b). “To establish infringement, two elements must be\nproven: (1) ownership of a valid copyright, and (2) copying\nof constituent elements of the work that are original.”\nFeist Publications, Inc. v. Rural Telephone Service Co.,\n499 U.S. 340, 361 (1991). Section 411 additionally provides\nthat, as a general matter, “no civil action for infringement\nof the copyright in any United States work shall be insti-\ntuted until preregistration or registration of the copyright\nclaim has been made in accordance with this title.” 17\nU.S.C. 411(a).\n Where, as here, a plaintiff already holds a registration,\na claim for copyright infringement is complete and pre-\nsent when the infringement occurs: namely, at the time\nof the wrongful act, such as copying. The element of own-\nership is an attendant circumstance to that discrete act.\nSee, e.g., Blake v. JP Morgan Chase Bank NA, 927 F.3d\n701, 706 (3d Cir. 2019). The owner of a right in a regis-\ntered work thus has a cause of action as soon as the in-\nfringement occurs.\n 4. This Court Has Already Recognized That Section\n 507(b) Imposes A Three-Year Limitation On Retro-\n spective Relief\n This Court has twice addressed the statute of limita-\ntions in Section 507(b). In Petrella, supra, the Court dis-\ncussed it at length and, in reasoning essential to the hold-\ning of the case, characterized it as containing a three-year\n 25\n\n\nlimitation on retrospective relief. And in SCA Hygiene\nProducts, supra, the Court reaffirmed the reasoning of\nPetrella and extended it to the patent context.\n a. In Petrella, this Court held that the defense of\nlaches could not be invoked to bar claims for damages un-\nder the Copyright Act because Section 507(b) “itself takes\naccount of delay.” 572 U.S. at 677. It does so, the Court\nexplained, by providing that “a successful plaintiff can\ngain retrospective relief only three years back from the\ntime of suit.” Ibid. Although a plaintiff may be entitled to\nprospective relief, “[n]o recovery may be had for infringe-\nment in earlier years,” ibid., making it unnecessary for\ndefendants to have recourse to the defense of laches in or-\nder to mitigate the unfairness of delay by plaintiffs.\n In so holding, the Court repeatedly relied on the fact\nthat Congress “prescribed a three-year look-back limita-\ntions period for all civil claims arising under the Copy-\nright Act.” Petrella, 572 U.S. at 670. The Court referred\nnumerous times to the Copyright Act’s three-year limita-\ntion on retrospective relief—a limitation that could only\ncome from Section 507(b). See, e.g., id. at 671 (noting that,\n“[u]nder the Act’s three-year provision, an infringement\nis actionable within three years, and only three years, of\nits occurrence” and “the infringer is insulated from liabil-\nity for earlier infringements of the same work”); id. at 672\n(stating that Congress allowed plaintiffs to “gain retro-\nspective relief running only three years back from the\ndate the complaint was filed”); id. at 677 (observing that\n“a successful plaintiff can gain retrospective relief only\nthree years back from the time of suit”); ibid. (explaining\nthat, “if infringement within the three-year look-back pe-\nriod is shown, the Act allows the defendant to prove and\noffset against profits made in that period ‘deductible ex-\npenses’ incurred in generating those profits” (citation\nomitted)).\n 26\n\n\n Nor was that understanding limited to the majority\nopinion. Even the dissent agreed. See Petrella, 572 U.S.\nat 692 (Breyer, J., dissenting) (stating that “the majority\ncorrectly points out that the limitations period limits the\nretrospective relief a plaintiff can recover” by “impos[ing]\na cap equal to the profits earned during the prior three\nyears, in addition to any actual damages sustained during\nthis time”). The government likewise argued that,\n“[u]nder 17 U.S.C. 507(b), a civil suit filed within three\nyears after an act of infringement is timely with respect\nto that act.” U.S. Br. at 13, Petrella, supra ([DOCKET REDACTED]).\n To be sure, the question presented in Petrella explic-\nitly related only to laches and not the statute of limita-\ntions, as the court of appeals observed. See Pet. App. 11a.\nBut as this Court explained in Petrella, the Ninth Circuit\ncould conclude that laches was necessary “[o]nly by disre-\ngarding” that the Copyright Act “itself takes account of\ndelay” because it contains a statute of limitations. 572\nU.S. at 677. The Court thus based its holding on a broader\ncompromise inherent in the text of the Copyright Act—a\nthree-year limitation on retrospective relief that could not\nbe extinguished by laches. See Sohm v. Scholastic, Inc.,\n959 F.3d 39, 52 (2d Cir. 2020); 3 Melville B. Nimmer &\nDavid Nimmer, Nimmer on Copyright § 12.05(c)(iii) (2023\nonline ed.) (Nimmer); 6 William F. Patry, Patry on Copy-\nright § 20:24 (Sept. 2023 update) (Patry). The existence\nof that compromise was essential to the Court’s reasoning\nin Petrella. Cf. Seminole Tribe of Florida v. Florida, 517\nU.S. 44, 67 (1996).\n b. The Court’s subsequent treatment of Petrella in\nSCA Hygiene Products confirms its relevance here.\nThere, the Court repeated its assessment that the Copy-\nright Act imposes a three-year limitation on retrospective\nrelief and extended the reasoning of Petrella to the Patent\nAct. See 580 U.S. at 336-338. The Patent Act bars claims\n 27\n\n\nfor patent infringement “committed more than six years\nprior to the filing of the complaint.” 35 U.S.C. 286. The\ndefendants in SCA Hygiene Products sought to distin-\nguish Petrella on the ground that Section 507(b) of the\nCopyright Act is a “true” statute of limitations, which\n“runs forward from the date a cause of action accrues.”\n580 U.S. at 336. But, as the Court explained, Petrella\ncould not be distinguished on that ground because the\nCourt “described the Copyright Act’s statute of limita-\ntions as a three-year look-back limitations period,” which\n“allows plaintiffs to gain retrospective relief running only\nthree years back from the date the complaint was filed.”\nIbid. (internal quotation marks and ellipsis omitted).\n As the Court also explained, Petrella could not be dis-\ntinguished on the ground that the Copyright Act’s use of\nthe term “accrued” might be susceptible to application of\na discovery rule. The Court reiterated the general rule\nthat “[a] claim ordinarily accrues when [a] plaintiff has a\ncomplete and present cause of action.” SCA Hygiene\nProducts, 580 U.S. at 337 (alterations in original; internal\nquotation marks and citation omitted). The Court added\nthat, in Petrella, it had “specifically noted that [it had] not\npassed on the question” whether the Copyright Act’s stat-\nute of limitations is subject to a discovery rule. Id. at 337-\n338 (internal quotation marks and citation omitted).\n 5. There Is No Valid Basis To Treat Claims For Ret-\n rospective Relief As ‘Accruing’ More Than Three\n Years After The Plaintiff Has A Complete Cause Of\n Action\n The Ninth and Eleventh Circuits have held that Sec-\ntion 507(b) permits retrospective relief for acts of in-\nfringement occurring more than three years before the\nfiling of suit. But neither the text of Section 507(b) nor\nthe discovery rule compels such a result, and there is no\nvalid reason to support it.\n 28\n\n\n a. The Ninth Circuit and the Eleventh Circuit (in the\ndecision below) have held that a plaintiff may seek retro-\nspective relief for acts of infringement occurring more\nthan three years before the filing of suit. They principally\nbased that conclusion on the supposed incompatibility be-\ntween a three-year limitation on retrospective relief, on\nthe one hand, and the discovery rule, on the other. See\nPet. App. 12a-15a; Starz Entertainment, LLC v. MGM\nDomestic Television Distribution, LLC, 39 F.4th 1236,\n1244-1245 (9th Cir. 2022).\n As a preliminary matter, in recognizing that Section\n507(b) imposes a limitation on claims for retrospective re-\nlief, the Court need not reject the applicability of a discov-\nery rule to claims for prospective relief (such as an injunc-\ntion). Unlike a claim for retrospective relief, a claim for\nprospective relief does not necessarily become complete,\nand thus may not “accrue,” immediately upon injury. To\nthe contrary, a plaintiff seeking prospective relief cannot\nrely on past violations and injury alone, but must also es-\ntablish a “sufficient likelihood that he will again be\nwronged in a similar way” in the future. City of Los An-\ngeles v. Lyons, 461 U.S. 95, 111 (1983). And in general,\nstatutes of limitations are “not controlling measures of eq-\nuitable relief,” but are instead “drawn upon” by courts in\ndetermining whether equitable relief is appropriate in the\ncircumstances of particular cases. Holmberg v. Arm-\nbrecht, 327 U.S. 392, 396 (1946); accord Petrella, 572 U.S.\nat 678. A three-year limitations period “drawn” from Sec-\ntion 507(b), but calculated from the time of discovery,\nmight thus be appropriate for prospective equitable relief\n(such as an injunction). In all events, the Court need not\nresolve, and can reserve, that issue here, because the\nquestion presented is limited to retrospective relief.\n 29\n\n\n b. The arguments that have been offered by the\ncourts of appeals in favor of a broad discovery rule are un-\npersuasive. The courts of appeals that have read a broad\ndiscovery rule into Section 507(b) have largely done so\nbased on a presumption that all federal statutes of limita-\ntions begin to run at the time of discovery, regardless of\nthe cause of the plaintiff ’s delay in filing suit. For exam-\nple, the Eighth Circuit has applied a general rule that,\n“[i]n federal question cases, the discovery rule applies in\nthe absence of a contrary directive from Congress.” Com-\ncast of Illinois X v. Multi-Vision Electronics, Inc., 491\nF.3d 938, 944 (2007) (internal quotation marks and cita-\ntion omitted); see, e.g., William A. Graham Co. v. Hau-\nghey, 568 F.3d 425, 433-437 (3d Cir.), cert. denied, 558 U.S.\n991 (2009); Polar Bear Products, Inc. v. Timex Corp., 384\nF.3d 700, 706-707 (9th Cir. 2004); Webster v. Dean Gui-\ntars, 955 F.3d 1270, 1276 (11th Cir. 2020).\n This Court, however, has refused to adopt that atex-\ntual approach to statutory interpretation. Indeed, the\nCourt recently called such an “expansive approach to the\ndiscovery rule” a “bad wine of recent vintage.” Rotkiske,\n140 S. Ct. at 360 (quoting TRW, 534 U.S. at 37 (Scalia, J.,\nconcurring in the judgment)). Instead, where the text of\na statute does not contain an all-purpose discovery rule,\nthe Court has instructed that one “cannot be supplied by\nthe courts.” Id. at 360-361 (quoting Antonin Scalia &\nBryan Garner, Reading Law: The Interpretation of Legal\nTexts 94 (2012)); see U.S. Br. at 14, Rotkiske, supra ([DOCKET REDACTED]).\n Of the courts of appeals that have read a broad discov-\nery rule into Section 507(b), only the Third Circuit ap-\npears to have offered a textual argument, but it makes too\nmuch of too little. Based on the fact that the civil statute\nof limitations in Section 507(b) uses the phrase “claim ac-\ncrued” and the criminal statute of limitations in Section\n 30\n\n\n507(b) uses the phrase “cause of action arose,” the Third\nCircuit has concluded that the former must incorporate a\nbroad discovery rule. See William A. Graham, 568 F.3d\nat 434-435. But the canon that different words have dif-\nferent meanings is “no more than a rule of thumb that can\ntip the scales when a statute could be read in multiple\nways.” Sebelius v. Auburn Regional Medical Center, 568\nU.S. 145, 156 (2013) (internal quotation marks, citations,\nand alterations omitted).\n For the reasons discussed above, the terms “accrued”\nand “arose” convey the same meaning when used in stat-\nutes of limitations. See pp. 15-27. And the legislative his-\ntory confirms that the variation between the two provi-\nsions was simply the product of idiosyncratic drafting; the\nrelevant committee memorialized its understanding that\nthere was “no substantial reason for not having statutes\nof equal periods for both criminal and civil copyright ac-\ntions.” S. Rep. No. 1014, at 2. The better view, therefore,\nis that the difference between “accrued” and “arose” is\nimmaterial. See Everly v. Everly, 958 F.3d 442, 462 (6th\nCir. 2020) (Murphy, J., concurring) (rejecting the Third\nCircuit’s reasoning). 6\n\n 6\n Because the Copyright Act permits statutory damages, substan-\ntial mischief would accompany a broad discovery rule. Years after an\nalleged infringement, a plaintiff could exact a hefty price “regardless\nof the adequacy of evidence offered as to his actual damages and the\namount of defendants’ profits, and even if he has intentionally de-\nclined to offer this evidence.” Nimmer § 14.04(A). Courts frequently\naward statutory damages. See, e.g., MCA Television Ltd. v. Feltner,\n89 F.3d 766, 771 (11th Cir. 1996) (affirming a $9 million award based\non a calculation of $10,000 per episode broadcast); Virtual Studios,\nInc. v. Beaulieu Group, LLC, 987 F. Supp. 2d 769, 774 (E.D. Tenn.\n2013) (awarding $150,000 per infringing image, for a total of\n$1,950,000); All-Star Marketing Group, LLC v. Media Brands\nCo., 775 F. Supp. 2d 613, 617, 626-627 (S.D.N.Y. 2011) (awarding\n 31\n\n\n * * * * *\n The limitations period in Section 507(b) unambigu-\nously runs from the point at which a plaintiff has a com-\nplete and present cause of action. This Court recognized\nas much in Petrella, and adopting a rule that permits ret-\nrospective relief going back further would upset the bal-\nance that Congress struck and the Petrella Court vindi-\ncated. Under the text of Section 507(b), respondents may\nnot seek retrospective relief for acts of infringement that\noccurred more than three years before the filing of suit.\n B. Properly Understood, The Discovery Rule Does Not\n Apply To Respondents’ Claim For Retrospective Relief\n The question presented in this case, as rephrased by\nthe Court, assumes that the Copyright Act contains a\n“discovery accrual rule applied by the circuit courts.” But\nat least some courts of appeals do not apply the discovery\nrule consistently where, as here, the dispute concerns\nownership, rather than the existence of infringement. 7\n\n$325,000); Berg v. Symons, 393 F. Supp. 2d 525, 546, 548 (S.D. Tex.\n2005) (awarding $2,000 per infringed work); UMG Recordings, Inc.\nv. MP3.com, Inc., Civ. [DOCKET REDACTED], 2000 WL 1262568, at *6 (S.D.N.Y.\nSept. 6, 2000) (contemplating up to $118 million in statutory damages\nat a rate of $25,000 per infringing work). And a broad discovery rule\nwould be a boon to copyright “trolls,” for whom actual damages “are\neither non-existent or minimal,” because they could leverage “the\nthreat of $150,000 per work for willful infringement.” Patry\n§ 22:88.50; see 17 U.S.C. 504(c).\n 7\n Where the dispute concerns ownership, rather than the existence\nof infringement, some courts of appeals purport to apply a special rule\nunder which the running of the limitations period begins with the re-\npudiation of ownership. See, e.g., Ritchie v. Williams, 395 F.3d 283,\n289 n.5 (6th Cir. 2005); Seven Arts Filmed Entertainment Ltd. v.\nContent Media Corp., 733 F.3d 1251, 1254-1255 (9th Cir. 2013); Stan\nLee Media, Inc. v. Walt Disney Co., 774 F.3d 1292, 1300 n.4 (10th Cir.\n2014). For its part, the Eleventh Circuit applies the discovery rule\n 32\n\n\nMoreover, at least one court of appeals that applies a\nbroad discovery rule has explicitly held that it is not an\n“accrual” rule at all, but rather an equitable doctrine de-\nlaying the running of the statute of limitations. See Wil-\nliam A. Graham Co. v. Haughey, 646 F.3d 138, 150 (3d\nCir. 2011). And, for the reasons discussed above, a broad\ndiscovery rule would be inconsistent with the text of Sec-\ntion 507(b) and this Court’s precedents on the interpreta-\ntion of statutes of limitations. See pp. 15-31.\n That said, there is a narrower version of the discovery\nrule that would be consistent with the text of Section\n507(b) and this Court’s precedents. That version of the\nrule “arose in 18th-century fraud cases as an ‘exception’\nto the standard rule” that “a claim accrues ‘when the\nplaintiff has a complete and present cause of action.’ ” Ga-\nbelli, 568 U.S. at 448-449; accord TRW, 534 U.S. at 37\n(Scalia, J., concurring). The narrower rule applies if “a\nplaintiff has been injured by fraud and ‘remains in igno-\nrance of it without any fault or want of diligence or care\non his part.’ ” Gabelli, 568 U.S. at 449 (quoting Holmberg,\n327 U.S. at 397). The Court has also “recognized a pre-\nvailing discovery rule” in two additional contexts: “latent\ndisease and medical malpractice.” TRW, 534 U.S. at 27.\nBecause respondents failed to allege fraud, latent disease,\nor medical malpractice, the narrower version of the dis-\ncovery rule does not apply in this case.\n\n\nwhere (as here) the dispute concerns ownership, but it has not ad-\ndressed the applicability of the discovery rule where the dispute con-\ncerns the existence of infringement. See Pet. App. 7a-9a; Webster,\n955 F.3d at 1276.\n 33\n\n 1. Historical Practice And This Court’s Precedents\n Support A Narrow Discovery Rule In Cases Of\n Fraud, Latent Disease, Or Medical Malpractice\n a. The Court has long recognized a discovery rule ap-\nplicable “in cases of fraud or concealment.” TRW, 534\nU.S. at 27. Properly understood, that discovery rule—un-\nlike the all-purpose discovery rule presumptively applied\nby a number of courts of appeals—is a narrow one with a\nfirmer footing in equity and English common law. Be-\ncause early American legislatures enacted statutes of lim-\nitations modeled after the Statute of James I, American\ncourts initially looked to English courts when interpreting\nand applying those statutes. See John P. Dawson, Undis-\ncovered Fraud and Statutes of Limitation, 31 Mich. L.\nRev. 591, 597 (1933) (Dawson). And in both countries, “it\n[was] an established rule of equity” that, for claims based\non fraud, “time will not run in favor of the defendant until\nthe discovery of the fraud, or until, with reasonable dili-\ngence, it might have been discovered.” H.G. Wood, A\nTreatise on the Limitation of Actions at Law and in Eq-\nuity, ch. 22, § 275, at 651-652 (2d ed. 1893) (Wood).\n The Statute of James I had enumerated five grounds\nfor postponing the running of the limitations period, none\nof them fraud. See Dawson 597-600. But English courts\nof equity also did so based on fraud, including in at least\none suit resembling an action at law. See ibid.; Booth v.\nLord Warrington, 2 Eng. Rep. 111 (1714). And by the\nearly eighteenth century, English courts of law had begun\nfollowing suit. See Dawson 598. That trend came about\n“[t]hrough the influence of Lord Mansfield,” ibid., who\nrecognized in Bree v. Holbech, 99 Eng. Rep. 415 (1781),\nthat “[t]here may be cases * * * which fraud will take\nout of the Statutes of Limitations.” Id. at 416; see Dawson\n599 n.19.\n 34\n\n\n Lord Mansfield’s opinion in Bree was influential on\nboth sides of the Atlantic, triggering a deep debate on\nwhether American courts of law could properly apply a\nfraud-based discovery rule. See Whether Fraud Is a Suf-\nficient Answer, in an Action at Law, to a Plea of the Stat-\nute of Limitations, 1 U.S. L. Intelligencer & Rev. 139\n(1829); J.K. Angell, A Treatise on the Limitations of Ac-\ntions at Law and Suits in Equity and Admiralty, ch. 18,\n§§ 3-4, at 191-194 (2d ed. 1846) (Angell). On one side of\nthe debate, opponents argued that applying the fraud-\nbased rule at law was an “assumption of legislative func-\ntions” and an unprincipled “judicial exception engrafted\nupon the statute.” Wood § 274, at 651; see Angell, ch. 18,\n§ 3, at 191 (observing that New York courts of law “posi-\ntively refused” to apply the rule).\n On the other side, Justice Story advocated for the\nfraud-based discovery rule by referring to the equal dig-\nnity of courts of law and courts of equity. See Sherwood\nv. Sutton, 21 F. Cas. 1303, 1307 (C.C.D.N.H. 1828) (No.\n12,782). In his view, Lord Mansfield’s opinion in Bree had\nestablished that the fraud-based discovery rule applied in\ncourts of law, as well as courts of equity. Id. at 1306-1307.\nWithout such an “implied exception,” Justice Story rea-\nsoned, a statute of limitations would “become an instru-\nment to encourage fraud,” thereby defeating its main pur-\npose. Ibid. In the end, Justice Story’s approach “became\nextremely popular,” and, within a century, “the ‘fraud’ ex-\nception ha[d] made its way into the main body of common\nlaw doctrine.” Dawson 601, 636.\n b. In Bailey v. Glover, 88 U.S. 342 (1874), this Court\nfirst recognized the fraud-based discovery rule. Bailey\ninvolved a creditor’s challenge to the discharge of a debt\nthat the debtor had evaded by conveying his assets to his\nfamily and then filing for bankruptcy. See id. at 343. The\n 35\n\n\ncreditor sued after the limitations period expired, invok-\ning the fraud-based discovery rule on the ground that the\ndebtor and his family had concealed the scheme. See ibid.\n At the outset, the Court observed that “a very decided\nconflict of authority” persisted over whether courts of law\ncould properly apply the fraud-based discovery rule. Bai-\nley, 88 U.S. at 348. The Court determined that the rule\nmust apply in both types of courts or neither, on the\nground that the bankruptcy statute at issue was adminis-\ntered by both courts of law and courts of equity. See id.\nat 349.\n Relying on “the weight of judicial authority, both in\nthis country and in England,” and “a sound and philosoph-\nical view of the principles of the statutes of limitation,” the\nCourt ultimately concluded that the fraud-based discov-\nery rule should apply both at law and at equity. Bailey,\n88 U.S. at 349. The Court reasoned that, without such a\nrule, the statute of limitations would encourage fraud, ra-\nther than preventing it. See ibid. Accordingly, the Court\nheld that, “when there has been no negligence or laches\non the part of a plaintiff in coming to the knowledge of the\nfraud which is the foundation of the suit, and when the\nfraud has been concealed, or is of such character as to con-\nceal itself, the statute does not begin to run until the fraud\nis discovered by, or becomes known to, the party suing, or\nthose in privity with him.” Id. at 349-350.\n In Holmberg, supra, the Court dispensed with a stat-\nute-specific approach and applied the fraud-based discov-\nery rule in a more categorical fashion. Holmberg involved\na suit by the creditors of a bank against its shareholders.\nSee 327 U.S. at 393. After the limitations period would\notherwise have expired, the creditors learned that one\nshareholder “concealed his ownership” by using a false\nname. Ibid. Quoting Bailey, the Court observed that it\nhad “long ago adopted as its own the old chancery rule”\n 36\n\n\nthat a limitations period begins to run only when a fraud\nis discovered. Id. at 397. “This equitable doctrine,” the\nCourt continued, “is read into every federal statute of lim-\nitation.” Ibid.\n c. How the Court has characterized the fraud-based\ndiscovery rule recognized in Bailey and Holmberg has\nvaried over time. The Court occasionally has described\nthe rule as a variant of equitable tolling. See Petrella, 572\nU.S. at 681. But the Court has more recently acknowl-\nedged the “discovery rule in ‘fraud cases’ ” as an inde-\npendent, “equity-based doctrine” that is “distinct from\nthe traditional equitable tolling doctrine.” Rotkiske, 140\nS. Ct. at 361; cf. Br. of Samuel L. Bray et al. at 13, Rot-\nkiske, supra ([DOCKET REDACTED]) (describing the fraud-based dis-\ncovery rule as “one of the doctrines of the common law\nbackground against which all legislation is enacted”).\n No matter how the Court has described the discovery\nrule, it has proceeded with caution in applying it. Not long\nafter the Court first applied the fraud-based discovery\nrule in Bailey, it declined to do so in Amy v. City of Wa-\ntertown, 130 U.S. 320 (1889). There, the plaintiffs sought\nthe protection of the rule because they tried to serve the\ndefendant city multiple times and were stymied because\nthe city would elect a new mayor and city council, who\nwould immediately “assemble[] together in a secret place\nwith locked doors,” conduct “certain necessary business,”\nand then “immediately * * * resign[].” Id. at 322. The\nCourt explained that “seek[ing] to evade the service of\nprocess * * * may be morally wrong * * * [or] dis-\nhonest; but it is not fraudulent in the legal sense of the\nterm.” Id. at 326. The Court noted that, although the\nstatute provided an exception based on “inability to serve\nprocess occasioned by the defendant’s absence from the\nstate,” it “provided for no other case of inability to make\nservice.” Id. at 326-327. The Court reasoned that, “[i]f\n 37\n\n\nthis is an omission, the courts cannot supply it,” because\n“that is for the legislature to do.” Id. at 327.\n More recently, in TRW, supra, the Court reversed a\nNinth Circuit decision reading a discovery rule into the\nstatute of limitations in the Fair Credit Reporting Act.\nThe Court clarified that Holmberg had “instructed with\nparticularity that ‘where a plaintiff has been injured by\nfraud and remains in ignorance of it without any fault or\nwant of diligence or care on his part, the bar of the statute\ndoes not begin to run until the fraud is discovered.’ ” 534\nU.S. at 27 (citation omitted). The Court thus read Holm-\nberg “for the proposition that equity tolls the statute of\nlimitations in cases of fraud or concealment; it does not\nestablish a general presumption applicable across all con-\ntexts.” Ibid.\n The Court observed that “lower federal courts ‘gener-\nally apply a discovery accrual rule when a statute is silent\non the issue.’ ” TRW, 534 U.S. at 27 (citation omitted).\nBut the Court cautioned that it has “not adopted that po-\nsition as [its] own.” Ibid. The Court did not mince words,\ncautioning that it has “never endorsed the Ninth Circuit’s\nview that Congress can convey its refusal to adopt a dis-\ncovery rule only by explicit command, rather than by im-\nplication from the structure or text of the particular stat-\nute.” Id. at 27-28.\n d. The Court has recognized a narrow discovery rule\nin two other, specific contexts: latent disease and medical\nmalpractice. Like fraud, those contexts can be said to in-\nvolve injuries that, by their nature, conceal themselves.\n The Court extended the discovery rule to latent dis-\nease in Urie v. Thompson, 337 U.S. 163 (1949), which in-\nvolved a compensation claim for silicosis under the Fed-\neral Employers’ Liability Act. See id. at 165-166. The\nCourt reasoned that the petitioner’s injury occurred at an\n 38\n\n\n“unknown and inherently unknowable” time, “even in ret-\nrospect.” Id. at 169. The Court posited that Congress’\n“humane legislative plan” would not have “intended such\nconsequences to attach to blameless ignorance” of the pe-\ntitioner. Ibid. Quoting a decision by the California Dis-\ntrict Court of Appeal, the Court determined that the in-\njury occurred at the point at which “the accumulated ef-\nfects of the deleterious substance manifest[ed] them-\nselves.” Id. at 170 (citation omitted).\n Thirty years later, the Court addressed the discovery\nrule in the context of medical malpractice. In United\nStates v. Kubrick, 444 U.S. 111 (1979), a veteran sought\nan increase in benefits on the ground that an antibiotic ad-\nministered to him in 1968 had caused him to lose his hear-\ning. See id. at 113-114. He was diagnosed in 1969 and told\nthat “it was highly possible” the antibiotic caused the\nhearing loss. Id. at 114. In 1971, after his claim was de-\nnied and his appeal was pending, another doctor told him\nthat the antibiotic had caused his hearing loss and “should\nnot have been administered.” Ibid. After consulting with\na specialist and hiring a lawyer, he sued in 1972 under a\nstatute with a two-year limitations period. See id. at 113-\n115.\n The Court stated that “the general rule under the\n[statute] has been that a tort claim accrues at the time of\nthe plaintiff ’s injury.” Kubrick, 444 U.S. at 120. The\nCourt observed that courts of appeals had begun applying\nUrie in the tort context, but it did not evaluate the propri-\nety of that rule because it would not have saved the plain-\ntiff ’s claim. See id. at 120-121 & n.7. The Court explicitly\ndeclined to equate “a plaintiff ’s ignorance of his legal\nrights and his ignorance of the fact of his injury or its\ncause.” Id. at 122. The Court explained that, if the “tech-\nnical complexity” of medical malpractice justifies postpon-\n 39\n\n\ning the running of the limitations period, “it would be dif-\nficult indeed not to apply the same accrual rule to medical\nand health claims arising under other statutes and to a\nwhole range of other negligence cases.” Id. at 124.\n In sum, this Court’s precedents are marked by con-\nspicuous judicial modesty regarding the scope and appli-\ncation of a background discovery rule. The Court has thus\nfar recognized it only in cases of fraud, latent disease, or\nmedical malpractice, and it has made clear that it is un-\nwilling to recognize a categorical discovery rule applicable\nin all cases.\n 2. This Case Does Not Involve Fraud, Latent Disease,\n Or Medical Malpractice\n Respondents did not allege that they were unaware of\ntheir claims because of fraud on the part of Claimant\n(and this case obviously does not involve latent disease or\nmedical malpractice). Respondents contended only that\nRespondent was unaware of his purported injury because he\n“was removed from the music business and his associates\nwithin it” while he was imprisoned. Resp. C.A. Br. 12-13. 8\nThe operative version of the complaint contains no allega-\ntions of fraud. See 1 C.A. App. 20-54. The parties even\nstipulated that respondents would not offer evidence of\nfraud with respect to Claimant’ limitations defense. See,\ne.g., C.A. Supp. App. 659-660.\n In fact, respondents went to great lengths affirma-\ntively to allege that Claimant’ acts of infringement were\n\n\n 8\n It bears noting that Respondent was out of prison from March 2008 to\nFebruary 2012, see D. Ct. Dkt. 218, at 10-11, during which time Flo\nRida’s “In the Ayer” became, in respondents’ words, a “smash hit,”\nid. at 14. The beginning of the period during which Respondent was out of\nprison, and “In the Ayer” was a hit, was some ten years before re-\nspondents filed suit. See 1 C.A. App. 20-54.\n 40\n\n\npublic and widespread. Respondents alleged infringe-\nment in musical works by three different “multi-platinum\nrecording artist[s],” 1 C.A. App. 24, one of which they de-\nscribed as a “smash hit” that “topped various airplay and\nsales charts,” id. at 25. Respondents further alleged that\nthe supposedly infringing works have been “distributed\nand sold through record stores, internet on-line sites, and\nother outlets,” as well as “played on terrestrial radio, sat-\nellite radio, television, and at live performances * * *\nworldwide and in the United States.” Ibid. The musical\nworks have also been “licensed for use in many instances,”\nincluding on numerous television shows. Ibid.; see id. at\n31. And the works at issue have been the subject of mul-\ntiple lawsuits, some of which involved respondents. See\nid. at 26-27.\n None of those facts is particularly unusual, because\nCopyright Act claims bear no inherent or regular relation-\nship to fraud or concealment. As noted above, the two pri-\nmary elements of copyright infringement are “(1) owner-\nship of a valid copyright, and (2) copying of constituent el-\nements of the work that are original.” Feist Publications,\n499 U.S. at 361. Those elements do not include either “a\nknowing misrepresentation * * * of a material fact,”\nUnicolors, Inc. v. H&M Hennes & Mauritz, L.P., 595\nU.S. 178, 188 (2022) (alteration and emphasis omitted)\n(quoting Black’s Law Dictionary 802 (11th ed. 2019)), or\nany concealment.\n The act of infringement—especially to make a profit—\ntypically occurs in the open. That fact was not lost on Con-\ngress. In a hearing on a proposed statute of limitations\nsubstantially identical to the one ultimately enacted, a le-\ngal adviser to the Copyright Office told members of the\nHouse Judiciary Committee that no enumerated excep-\ntion for fraudulent concealment was necessary because\n 41\n\n\n“copyright infringement by its very nature is not a secre-\ntive matter.” Statement of George D. Carey, Principal\nLegal Adviser to the Copyright Office, Hearing on H.R.\n781, at 10-11. The adviser explained that the purpose of\ninfringing a work “is to distribute it” as “an open matter,”\nsuch that infringement claims “do not have the secretive\nnature generally where fraudulent concealment in a stat-\nute is necessary.” Id. at 11. As an example, the adviser\nmentioned “a musical composition [being] sung * * *\non the radio.” Ibid. The adviser also testified that, in\ncases of fraudulent concealment, the background rule of\nHolmberg would provide a sufficient backstop. See id. at\n11-12.\n In any event, the Court need not craft the exact con-\ntours of the discovery rule in this case. It is enough for\nthe Court simply to hold that the traditionally recognized\ncontexts for the discovery rule are absent from the com-\nplaint and, in fact, affirmatively ruled out by respondents’\nallegations of public infringement. As a result, respond-\nents are not entitled to the benefit of the discovery rule\nunder any proper understanding, and respondents’ claims\nfor retrospective relief for acts that occurred more than\nthree years before the filing of their lawsuit are time-\nbarred.\n C. Even If The Court Were To Assume That The Copy-\n right Act Permits Courts To Apply A Broad Discovery\n Rule, It Should Apply The Three-Year Limitation On\n Retrospective Relief As An Equitable Exception\n For the reasons already stated, the broad discovery\nrule applied by some circuits has no basis in—and indeed\nconflicts with—the text of Section 507(b). But if the Court\nwere to decline to consider the propriety of that rule, it\nshould at a minimum make clear that, to the extent such a\nrule exists, it is a judicially created, equitable exception to\n 42\n\n\na textually mandated statute of limitations. And in keep-\ning with the well-established principle that “equity follows\nthe law,” Hedges v. Dixon County, 150 U.S. 182, 192\n(1893), the Court should ensure that any application of a\nbroad discovery rule does not undermine the statute. At\nthe very least, the Court should enforce a three-year lim-\nitation on retrospective relief as an equitable exception to\nthe equitable discovery rule.\n 1. This Court has previously crafted exceptions and\nlimitations to judicially created rules to ensure that they\ndo not interfere with the text or purpose of the underlying\nlaw. For example, in Maryland v. Shatzer, 559 U.S. 98\n(2010), the Court held that the presumption announced in\nEdwards v. Arizona, 451 U.S. 477 (1981)—that a suspect\nwho has invoked his right to counsel does not consent to\nfurther interrogation—did not apply when there had been\na break in custody lasting 14 days or more. See Shatzer,\n559 U.S. at 110. The Court explained that, because the\nEdwards presumption was a judicially created prophylac-\ntic rule, it was the Court’s “obligation to justify its expan-\nsion” with “reference to its prophylactic purpose,” and to\nensure that the benefits of any extension of the rule out-\nweighed the costs. Id. at 105-106 (internal quotation\nmarks and citation omitted).\n Applying those principles, the Court determined in\nShatzer that the costs of extending the Edwards pre-\nsumption to interrogations occurring more than 14 days\nafter an initial request for counsel outweighed the bene-\nfits. See 559 U.S. at 106-108. The Court acknowledged\nthat it was weighing policy considerations and that judi-\ncial creation of extra-statutory “precise time limits” was\n“certainly unusual.” Id. at 110. The Court nonetheless\nconsidered it “appropriate to specify” a precise 14-day\ntime limit in order to ensure that the presumption it had\n 43\n\n\ncreated aligned with the underlying constitutional text\nand values. Ibid.\n If the Court were to assume the existence of an all-\npurpose discovery rule here, it should adopt a similar ap-\nproach with respect to the three-year limitations period\nfor retrospective relief. Like the Edwards presumption,\nthe broad discovery rule lacks a basis in text or traditional\nmethods of interpretation. The broad discovery rule can\nthus be understood only as an equitable, judicially con-\nstructed exception to the standard statutory rule that a\nclaim accrues when a plaintiff has a complete and present\ncause of action. To the extent the Court declines in this\ncase to consider the propriety of the general discovery\nrule, the Court should—as in Shatzer—place limits on\nthat rule to ensure that its application does not undermine\nthe standard statutory rule.\n 2. Appropriate limits can be found in this Court’s\nprecedents. The Court already made clear in Petrella\nthat Section 507(b) contains a three-year limitation on ret-\nrospective relief. See 572 U.S. at 677; pp. 24-26, supra.\nThe Court reaffirmed that limitation in SCA Hygiene.\nSee 580 U.S. at 336. Together, those cases stand for the\nprinciple that any discovery rule should be applied in a\nmanner consistent with Congress’ goals of making “uni-\nform and certain the time within which copyright claims\ncould be pursued” and limiting a plaintiff ’s recovery to\n“retrospective relief only three years back from the time\nof suit.” Petrella, 572 U.S. at 670, 677; see S. Rep. No.\n1014, at 2. Those cases thus recognize that, with respect\nto claims for retrospective relief for infringements occur-\nring more than three years before the filing of suit, Con-\ngress has already conducted the required cost-benefit\nanalysis. And Congress determined that any benefit to\ninjured parties from the application of a broad discovery\nrule would come at significant cost to defendants because\n 44\n\n\n“evidence has been lost, memories have faded, and wit-\nnesses have disappeared.” Gabelli, 568 U.S. at 448 (cita-\ntion and alteration omitted). At a minimum, the Court\nshould embrace that previously recognized limitation on\nretrospective relief as an equitable limitation to any\nbroader discovery rule.\n * * * * *\n The text of Section 507(b) unambiguously provides\nthat a plaintiff may not seek retrospective relief in a civil\naction for copyright infringement if the action is filed\nmore than three years after the plaintiff had a complete\nand present cause of action. To the extent this Court as-\nsumes the existence of a discovery rule, it should adopt\nthe traditional, equitable discovery rule available only in\ncases of fraud, latent disease, or medical malpractice,\nnone of which were alleged here. And to the extent this\nCourt assumes the existence of a broader discovery rule,\nit should ensure fidelity to the text of Section 507(b) and\nthe Court’s precedents by clarifying that the rule does not\npermit retrospective relief for infringements occurring\nmore than three years before the filing of an action. 9\n\n\n 9\n Any argument relying on equitable tolling, fraud, or any other\ndoctrine that could render respondents’ claims timely, has been aban-\ndoned. See C.A. Supp. App. 659-660 (stipulating that respondents\nwould not offer evidence of fraud with respect to Claimant’ limita-\ntions defense); D. Ct. Dkt. 128, at 10, 36-38 (relying on the discovery\nrule to the exclusion of equitable tolling).\n 45\n\n CONCLUSION\n The judgment of the court of appeals should be re-\nversed.\n Respectfully submitted.\nJONATHAN Z. KING KANNON K. SHANMUGAM\nCOWAN LIEBOWITZ BRIAN M. LIPSHUTZ\n & LATMAN, P.C. YISHAI SCHWARTZ\n 114 West 47th Street ABIGAIL FRISCH VICE\n New York, NY 10036 KATHERINE FANG\n PAUL, WEISS, RIFKIND,\nKAREN L. STETSON\n WHARTON & GARRISON LLP\nJONATHAN L. GAINES\n 2001 K Street, N.W.\nGRAYROBINSON, P.A. Washington, DC 20006\n 333 S.E. Second Avenue,\n [PHONE REDACTED]\n Suite 3200\n Miami, FL 33131 MUAMERA HADZIC\n PAUL, WEISS, RIFKIND,\n WHARTON & GARRISON LLP\n 1285 Avenue of the Americas\n New York, NY 10019\n\nNOVEMBER 2023", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nSTATEMENT\n\n The Question Presented is about remedies. It\nasks whether the Copyright Act permits a plaintiff to\nrecover damages for timely-filed claims where the acts\nof infringement giving rise to the claims occurred\nmore than three years before the lawsuit was filed.\n\n The Question Presented is not about what\ntriggers the Copyright Act statute of limitations in the\nfirst place. It does not ask whether a Copyright Act\nclaim accrues upon discovery of the infringing act or\nupon its occurrence. The Court expressly excluded\nthat issue from this appeal, adding to the Question\nPresented a limiting assumption that Copyright Act\nclaims accrue “under the discovery accrual rule\napplied by the circuit courts”. Claimant concede as\nmuch. See Pet.Br. 31.\n\n Yet, despite the Court’s clear directive and\nClaimant’ own concession, Claimant spend\nvirtually their entire brief arguing against the\nlimitation in the Question Presented, claiming that\nthe Copyright Act does not in fact use a discovery rule\nto determine claim accrual. That is improper.\n\n The Eleventh Circuit certified only one question\nfor interlocutory review: “[w]hether the three-year\nstatute of limitations under 17 U.S.C. § 507(b) bars\nthe recovery of damages incurred more than three\nyears prior to filing suit when the discovery rule\ndictates the accrual of a copyright claim”. Respondent\nv. Atl. Recording Corp., 2022 WL 18354071, at *2\n(11th Cir. Dec. 15, 2022) (emphases added).\n 7\n\n\n When the Eleventh Circuit answered that\nquestion in the negative—holding that the Copyright\nAct has no separate damages bar, such that damages\nare available for all timely claims—Claimant urged\nthe Court to grant certiorari to resolve a circuit split\non that narrow remedies issue. Specifically, before\nthe Eleventh Circuit’s decision here, the Second\nCircuit, in Sohm v. Scholastic Inc., 959 F.3d 39, 52 (2d\nCir. 2020), held that, although the discovery rule\ndetermines when a claim accrues under the Copyright\nAct’s statute of limitations, there also exists a\nseparate damages bar—“explicitly disassociated\nfrom” the statute of limitations—that limits damages\nto those incurred during the three years prior to suit.\nNo other court of appeals agrees with the Sohm rule.\nResolving that disagreement was the reason\nClaimant gave for why this Court should grant\ncertiorari.\n\n But in their merits brief, Claimant do not even\ncite Sohm’s holding—let alone defend it. Instead of\ndefending Sohm’s damages bar for claims made timely\nby the discovery rule, Claimant argue that the\ndiscovery rule does not apply to copyright claims at\nall, even though, as Claimant also concede, that\nissue was not raised or decided below and it is one on\nwhich “a conflict in the courts of appeals has not yet\ndeveloped”. Pet. 14 n.*.\n\n Because Claimant persuaded the Court to grant\ncertiorari to resolve a circuit split on a narrow\nremedies issue, but then abandoned that issue in their\nmerits brief, the Court should dismiss the writ of\ncertiorari as improvidently granted. At a minimum,\nthe Court should limit its review to the narrow\n 8\n\n\ncertified question accepted and decided by the\nEleventh Circuit below and presented here by the\nCourt’s reframed Question Presented.\n\n Turning to that question, the courts of appeals\nuniformly hold that, when the discovery rule dictates\nthe accrual of a copyright claim, the claim will be\ntimely so long as it is asserted within three years after\nthe act giving rise to the claim is or reasonably should\nhave been discovered. There is no debate in the lower\ncourts about that principle, even in the Second\nCircuit. The only disagreement is about whether a\ncopyright plaintiff taking advantage of the discovery\nrule can recover damages for its claims.\n\n The majority rule permits damages as a remedy\nfor all timely Copyright Act claims. Under the\nmajority rule, there is no separate “damages bar”\noperating independently of the statute of limitations,\nonly the statute of limitations that appears in the text\nof the Copyright Act itself.\n\n The Second Circuit has a peculiar rule that it\nalone follows. There, a copyright claim can be timely\npursuant to the discovery rule, but a copyright\nplaintiff successfully invoking the discovery rule is\nbarred from recovering “retrospective relief” for that\nclaim. The Second Circuit imposes a separate\n“three-year lookback” damages bar “explicitly\ndisassociated” from the Copyright Act’s statute of\nlimitations. Sohm, 959 F.3d at 52.\n\n Nothing in the Copyright Act—or this Court’s\nprecedents—permits that result.\n 9\n\n\n The Copyright Act’s default statute of limitations\nprovision, Section 507(b), does not distinguish\nbetween claims seeking damages and claims seeking\nother forms of relief. The Copyright Act’s default\nremedies provision, Section 504, states that a\nsuccessful plaintiff is “entitled to recover” its “actual”\ndamages and “any” profits of the infringer, or\nstatutory damages for “all infringements involved in\nthe action”. 17 U.S.C. § 504(a)-(c). Sohm’s damages\nbar is incompatible with those provisions.\n\n Other provisions of Title 17, dealing with vessel\nhull design (17 U.S.C. § 1323(c)) and enhanced\ndamages for proprietors of public establishments (17\nU.S.C. § 504(d)), do impose a limited three-year\nlook-back damages bar incompatible with a discovery\nrule, but only for those narrow types of claims. Thus,\n“Congress implicitly excluded a general [damages bar]\nby including a more limited one” and implicitly\nincluded a general discovery rule by excluding it only\nin limited circumstances. TRW Inc. v. Andrews, 534\nU.S. 19, 28 (2001). Claimant’ arguments run\ncontrary to Congress’s clear intent.\n\n Nor has this Court announced a damages bar for\ntimely-filed copyright claims. In Petrella v.\nMetro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014), the\nCourt merely held that (i) the equitable defense of\nlaches cannot be used to shorten the Copyright Act’s\nstatute of limitations period and (ii) each act of\ninfringement gives rise to its own claim and each\nclaim is time-barred, in its entirety, if that particular\nclaim is not asserted within three years of when it\naccrues. Petrella did not address claim accrual under\n 10\n\n\nthe discovery rule, and did not limit the remedies\navailable for claims rendered timely by its operation.\n\n A. Background.\n\n Respondent Respondent founded Respondent\nMusic Specialist, Inc. (“MSI”) in 1983. 3 C.A.App. 49.\nRespondent provided the money for MSI’s operations.\nC.A.Supp.App. 609. Respondent hired Tony Butler as an\nemployee to create music for MSI. 3 C.A.App. 49-50.\nBetween 1983 and 1986, Butler wrote a number of\nmusical works for MSI under a work-for-hire\nprogram, including the eight musical works in Respondent’s\nand MSI’s initial complaint. Id. at 49-50, 58-59;\nPet.App. 21a-25a. Only two musical works, “Lookout\nWeekend” and “The Party Has Begun”, are at issue on\nthis appeal. Pet.App. 29a; C.A.Supp.App. 659-60.\n\n Respondent was incarcerated from March 1989 to\nMarch 2008, and from February 2012 to September\n2015. C.A.Supp.App. 611-12, 615. MSI was dissolved\nin 1986 but reconstituted in 2017. Id. at 611.\n\n Respondent and MSI never authorized Butler to license\nMSI’s music. Id. at 611-12. Nevertheless, starting in\n1989, when Respondent was in prison, and over the next\ntwenty years, Butler unlawfully purported to license\nMSI’s copyrighted works. From 1989 to 1992, Butler\npurported to license MSI works to Pandisc Music\nCorp. (“Pandisc”) and Whooping Crane Music, Inc.\n(“Whooping Crane”). Id. Nearly two decades later, in\n2008, Butler purported to license MSI works to\nPetitioner Artist Publishing Group, LLC (“APG”).\n3 C.A.App. 35. Petitioner Claimant (“Warner”) began administering the musical\nworks for APG in 2008. C.A.Supp.App. 612, 614.\n 11\n\n\n In 2008, between his first and second\nincarcerations, Respondent learned that MSI works were\nbeing distributed by Pandisc and Whooping Crane,\ncompletely different companies from Claimant. Id.\nat 611. He met in 2008 with a representative of those\ncompanies, who asserted that MSI works had been\nlicensed to the companies between 1989 and 1992,\nsixteen years earlier. Id. at 611-12. Respondent submitted\nevidence that he did not learn—and had no reason to\nbelieve—that Butler had separately licensed MSI\nworks to Claimant APG and Warner at any time\nbefore returning to prison in 2012. Pet.App. 31a.\n\n During his second stint in prison, Respondent had no\ncontact with the music industry. C.A.Supp.App. 612.\nRespondent was released from prison in the fall of 2015. Id.\nRespondent submitted evidence that he learned for the first\ntime in January 2016 that Butler had unlawfully\nlicensed MSI works to Claimant. 3 C.A.App. 53. He\nfiled suit less than three years later.\n\n B. Proceedings.\n\n 1. District Court Proceedings.\n\n On December 28, 2018, Respondents sued\nClaimant in the United States District Court for the\nSouthern District of Florida. See 1 C.A.App. 52.\nRespondents sought injunctive relief, impoundment,\nprofits, damages, fees and costs under the Copyright\nAct. See id. at 51-52.\n\n The Parties moved for summary judgment.\nClaimant expressly conceded that the discovery rule\napplied and argued that, because Respondent supposedly\nlearned or should have learned that Claimant were\n 12\n\n\nviolating his ownership rights more than three years\nprior to suit, Respondents’ claims were barred by the\nstatute of limitations. Id. at 189-204; 2 C.A.App. 83-\n86; 3 C.A.App. 19-27. Claimant further argued that,\neven if Respondents’ claims were timely, damages\nonly could be recovered for infringements that\noccurred during the three years prior to suit.\n1 C.A.App. 204-07; 2 C.A.App. 86-87; 3 C.A.App.\n27-29.\n\n The magistrate judge issued a report and\nrecommendation holding that Respondents had not\nestablished ownership for four of the eight works, but\nthat there were triable issues of fact as to the other\nfour, including whether Respondents knew, or should\nhave known, that Claimant were infringing those\nworks prior to 2016. 3 C.A.App. 59-73. The district\ncourt adopted the magistrate judge’s\nrecommendation. See Pet.App. 31a-32a (finding that\n“reasonable minds could differ on . . . whether Respondent\nhad reason to know that Defendants were\ninfringing”).\n\n The district court also held that, even though the\ntimeliness of Respondents’ claims was an issue for\ntrial, Respondents’ potential damages were limited as\nto the three-year period prior to filing suit as a matter\nof law, relying on Sohm. Id. at 26a-27a. The district\ncourt certified that holding as a controlling question\nof law for interlocutory appeal to the Eleventh Circuit\npursuant to 28 U.S.C. § 1292(b). Pet.App. 35a-39a.\n 13\n\n\n 2. Interlocutory Appeal to the\n Eleventh Circuit.\n\n The Eleventh Circuit granted Respondents’\nappeal, [DOCKET REDACTED], under 28 U.S.C. § 1292(b), but\nlimited its exercise of appellate jurisdiction to the\nfollowing question:\n\n Whether the three-year statute of\n limitations under 17 U.S.C. § 507(b) bars the\n recovery of damages incurred more than\n three years prior to filing suit when the\n discovery rule dictates the accrual of a\n copyright claim?\n\nRespondent, 2022 WL 18354071, at *2. 1\n\n The Eleventh Circuit did not agree to hear and\ndid not decide whether the discovery rule is correct, or\neven whether Respondents’ claims are timely under\nthat rule. Rather, the only question the Eleventh\nCircuit accepted for review was whether, assuming\nRespondents’ claims are timely under the\ndiscovery rule, Respondents nevertheless are barred\nfrom recovering damages beyond the three-year\nperiod prior to the filing of the complaint. Id.; see also\nPet.App. 2a-3a, 7a (“The question in this appeal is\nwhether the Copyright Act’s statute of limitations, 17\nU.S.C. § 507(b), precludes a copyright plaintiff from\n\n\n 1 The court dismissed Claimant’ appeal, [DOCKET REDACTED],\nfrom the district court’s entry of final judgment under\nFed.R.Civ.P. 54(b) as to ownership of the copyright on a third\nsong, “Jam the Box”. Id. at *1-2; Pet.App. 38a-39a.\n 14\n\n\nrecovering damages . . . even if the plaintiff’s suit is\ntimely under our discovery rule.”).\n\n Answering that certified question, the Eleventh\nCircuit reversed, “conclud[ing] that where a copyright\nplaintiff has a timely claim for infringement occurring\nmore than three years before the filing of the lawsuit,\nthe plaintiff may obtain retrospective relief for that\ninfringement”. Pet.App. 17a. The Eleventh Circuit\nnoted that “[t]he defendants’ argument begins and\nends with Petrella” but reasoned that “Petrella did not\npresent the question whether a plaintiff could recover\nfor harm that occurred more than three years before\nthe plaintiff filed suit if his claim was otherwise\ntimely under the discovery rule.” Pet.App. 11a.\nInstead, “the Court’s statements in Petrella merely\ndescribe the operation of the injury rule on the facts of\nthat case and others like it”, Pet.App. 12a, and “the\nCourt in Petrella expressly addressed the discovery\nrule and preserved the question whether the discovery\nrule governs the accrual of copyright claims”,\nPet.App. 14a. “In short, the defendants’ reading of\nPetrella ignores the question presented, conflates the\nCourt’s discussion of claim accrual under the injury\nrule with the availability of damages under the\ndiscovery rule, and cannot be squared with the Court’s\nexpress preservation of the discovery rule.”\nPet.App. 15a.\n\n The Eleventh Circuit also held that “[t]he plain\ntext of the Copyright Act’s statute of limitations does\nnot limit the remedies available on an otherwise\ntimely claim”, nor do “[t]he Copyright Act’s damages\nprovisions . . . place a three-year limitation on the\nrecovery of damages for past infringement.”\n 15\n\n\nId. at 15a-16a. “Given that the plain text of the\nCopyright Act does not support the existence of a\nseparate damages bar for an otherwise timely\ncopyright claim, we hold that a copyright plaintiff\nwith a timely claim under the discovery rule may\nrecover retrospective relief for infringement that\noccurred more than three years prior to the filing of\nthe lawsuit.” Id. at 16a.\n\n 3. Petition for Certiorari.\n\n Following the Eleventh Circuit’s interlocutory\ndecision, Claimant filed a petition for certiorari,\nrequesting review of the following question:\n\n Whether the Copyright Act’s statute of\n limitations for civil actions, 17 U.S.C. 507(b),\n precludes retrospective relief for acts that\n occurred more than three years before the\n filing of a lawsuit.\n\nPet. I.\n\n In their petition, Claimant asserted that the\n“Eleventh Circuit’s decision was erroneous and\ndeepened an acknowledged conflict on the question\npresented”, explaining that the “Second Circuit has\nheld that financial recovery is limited to three years\nbefore the filing of suit, but the Ninth and Eleventh\nCircuits now disagree.” Id. at 3. Claimant explained\nthat because “[t]his case comes to the Court after the\ndistrict court certified the question for interlocutory\nreview . . . , it is a pristine vehicle for the Court to\ndecide the meaning of the Copyright Act’s statute of\nlimitations.” Id. Again, the only question the\nEleventh Circuit certified for interlocutory review\n 16\n\n\nconcerned whether damages are available “when the\ndiscovery rule dictates the accrual of a copyright\nclaim”. Respondent, 2022 WL 18354071, at *2.\n\n Claimant’ petition for certiorari contained a\nsection entitled “Reasons for granting the petition”\nand, in that section, gave only two reasons: “[t]he\ndecision below conflicts with the decisions of other\ncourts of appeals” and “[t]he question presented is\nexceptionally important and warrants review”. Pet.\n10, 14. That was the case, Claimant explained,\nbecause the circuit split regarding whether there is a\nseparate damages bar rendered copyright law\ninconsistent across major commercial centers (Los\nAngeles and Miami versus New York). Id. at 10.\nAgain, the only circuit split concerns whether there is\na separate damages bar; there is no disagreement\namong the courts of appeals that the discovery rule\ngoverns claim accrual under Section 507(b).\n\n In a footnote, Claimant acknowledged that\nPetrella “left open the question whether the discovery\nrule applies in Copyright Act cases” and that “a\nconflict in the courts of appeals has not yet developed\non that antecedent question”. Id. at 14 n.*.\nClaimant also conceded that “[t]he availability of the\ndiscovery rule was not challenged below”. Id.\n\n This Court “granted [the petition] limited to the\nfollowing question: whether, under the discovery\naccrual rule applied by the circuit courts and the\nCopyright Act’s statute of limitations for civil actions,\n17 U.S.C. § 507(b), a copyright plaintiff can recover\ndamages for acts that allegedly occurred more than\nthree years before the filing of a lawsuit.” Cert. Grant\n(emphasis added).\n 17\n\n\n SUMMARY OF ARGUMENT\n\n A. Having urged this Court to grant review of\nwhat Claimant described as “an entrenched conflict\namong three federal courts of appeals”, see Pet. 10,\nand having received a grant of certiorari limited to\nthat question, Claimant now focus instead on a\ndifferent question, which was not raised or decided\nbelow and on which the courts of appeals unanimously\nagree, see id. at 14. Whether the Copyright Act has a\ndiscovery rule was not part of the certified question in\nthe Eleventh Circuit on which the petition for\ncertiorari was based, was not preserved by Claimant\nbelow, is not encompassed in the Question Presented\nas limited by this Court and, respectfully, should not\nbe decided in this appeal.\n\n B. Focusing on the actual Question Presented,\nthe Court should adopt the majority rule and reject\nthe outlier Second Circuit rule. The majority rule is\nstraightforward, logical, consistent with the text and\nmeaning of the Copyright Act, and in line with this\nCourt’s precedents. It holds, simply, that each act of\ninfringement gives rise to a separate claim (as\nrequired by Petrella), each claim accrues when it is or\nshould have been discovered (as assumed by the\nQuestion Presented), each claim is timely so long as it\nis brought within three years of its accrual (as\nexpressly stated by Section 507(b)), and damages and\nall other remedies are available for all timely claims\n(as expressly stated by Section 504). That is how the\nCopyright Act has worked for decades.\n 18\n\n\n C. The holding in Sohm cannot be correct.\n\n First, the Copyright Act has no separate damages\nbar dissociated from its statute of limitations.\nClaimant point to none. Rather, Title 17 has a single\ndefault statute of limitations for civil claims, Section\n507(b), which does not distinguish between claims\nseeking damages and those seeking other forms of\nrelief. 17 U.S.C. § 507(b). The Copyright Act’s default\nremedies provision, Section 504, states that a\ncopyright holder is “entitled to recover” its “actual”\ndamages, “any” infringer’s profits, or statutory\ndamages for “all infringements involved in the action”.\n17 U.S.C. § 504. That leaves no room for Sohm’s\ndamages bar.\n\n When Congress has wanted to enact a three-year\nlook-back damages bar in Title 17, it has done so.\nSpecifically, 17 U.S.C. § 1323(c) states that “[n]o\nrecovery under subsection (a) or (b) [for hull design\ninfringement] shall be had for any infringement\ncommitted more than 3 years before the date on which\nthe complaint is filed.” That is a look-back damages\nbar, expressly based on when the infringement was\n“committed”, for claims involving hull design. It was\nadded to Title 17 in 1998 as a narrow exception to the\ndefault rule of Section 507(b). Interpreting Title 17\ngenerally to impose a three-year look-back damages\nbar—or interpreting the default statute of limitations\nto be based on when the infringement occurred or\n“was committed”—would render the limited\nSection 1323(c) exception superfluous, which is an\nimpermissible way to interpret the statute.\n\n Likewise, 17 U.S.C. § 504(d) limits enhanced\ndamages against proprietors of public establishments\n 19\n\n\nto the “preceding period of up to three years”, a\nlimitation that would be unnecessary if Section 507(b)\nalready limited retrospective relief to the preceding\nperiod of up to three years.\n\n That Congress has applied damages bars in\nspecific, limited contexts elsewhere in Title 17\ndemonstrates that Congress did not do so for Title 17\ngenerally.\n\n Second, Sohm misreads this Court’s decision in\nPetrella. In Petrella, the plaintiff brought copyright\nclaims based only on infringing acts that had occurred\nin the three years before she filed her complaint,\nrecognizing that earlier claims were untimely because\nshe was on notice of the claims for decades but did not\nsue. The defendants argued that even the plaintiff’s\ntimely claims should be dismissed for laches. This\nCourt rejected that argument, holding that a\ncopyright plaintiff has the full three years after\naccrual to bring each copyright claim, even if\nearlier-accruing copyright claims (based on earlier\ninfringing acts) would no longer be timely. In so\nholding, the Court adopted the so-called\n“separate-accrual rule”, Petrella, 572 U.S. at 671,\nrejecting the so-called “continuing wrong rule”. The\nCourt, however, expressly set aside the question of\nwhat causes a claim to accrue in the first place. It also\ndid not announce any damages bar; rather, it simply\nheld, under the facts of that case, that the Copyright\nAct statute of limitations had taken account of the\nplaintiff’s delay in bringing suit because claims based\non earlier acts of infringement had become\ntime-barred in their entirety when she did not sue on\n 20\n\n\nthose separate claims within three years of their\nseparate accrual.\n\n Third, Sohm’s damages bar ignores decades of\ncongressional amendments to the Copyright Act,\nduring which time Congress has not added a damages\nbar to Section 507(b), despite numerous court of\nappeals decisions permitting damages for timely\nclaims under the discovery rule. Congress even has\namended Section 507 itself, without adding a damages\nbar. This Court should not amend a statute to add\nlanguage when Congress has chosen not to do so.\n\n Fourth, Sohm contravenes the historical\npurposes of copyright law and remedies. By placing\nan atextual bar on damages for timely and\nmeritorious copyright claims, Sohm undermines the\nbalance Congress struck in encouraging the creation\nof new and important works.\n\n D. Due to Claimant’ abandonment of Sohm and\nresistance to the Question Presented, many of their\narguments and much of their authority are\ninapposite. The rationales of Claimant’ principal\nauthorities—TRW Inc. v. Andrews, 534 U.S. 19 (2001);\nRotkiske v. Klemm, 140 S.Ct. 355 (2019); and Gabelli\nv. SEC, 568 U.S. 442 (2013)—reject Claimant’\nposition. Interpreting the Copyright Act consistent\nwith the statutory interpretation principles espoused\nby those decisions leaves no room for a damages bar.\nClaimant ask the Court to ignore the plain text of\nSection 507(b) to create an “equitable exception”\ndamages bar, which would be the functional\nequivalent of permitting laches as a defense to\ncopyright claims, which the Court already rejected in\nPetrella. If Claimant believe the Copyright Act\n 21\n\n\nshould have a damages bar, their recourse is with\nCongress, not this Court.\n\n ARGUMENT\n\nI. Whether the Copyright Act Has a\n Discovery Rule Is Not Before the Court.\n\n A. Applicable Legal Principles.\n\n It is a foundational constitutional precept that\nthis Court has original jurisdiction over only a narrow\nset of cases, and generally is a court of appellate\njurisdiction. See U.S. Const. art. III, § 2, cl. 2; Martin\nv. Hunter’s Lessee, 14 U.S. 304, 330 (1816). It is “a\ncourt of review, not of first view”, Johnson v.\nArteaga-Martinez, 596 U.S. 573, 583 (2022), that “does\nnot ordinarily decide in the first instance issues not\ndecided below”, City of Austin, Tex. v. Reagan Nat’l\nAdvertising of Austin, LLC, 596 U.S. 61, 76-77 (2022).\nThis Court rarely reaches antecedent issues assumed\nbut not decided below. See Baldwin v. Reese, 541 U.S.\n27, 34 (2004) (antecedent issue waived because Ninth\nCircuit did not address it).\n\n Even where (unlike here) an issue was raised and\ndecided below, this Court typically will not address\nissues upon which there is well-developed and\nunanimous agreement among the courts of appeals.\nCertiorari is “granted ‘only for compelling reasons,’\nwhich include the existence of conflicting decisions on\nissues of law among federal courts of appeals and\nstate courts of last resort.” City & Cnty. of S.F., Cal.\nv. Sheehan, 575 U.S. 600, 619 (2015) (Scalia, J.,\nconcurring in part and dissenting in part) (quoting\nSup.Ct.R. 10). Review typically is limited to cases\n 22\n\n\ninvolving principles “of importance to the public” and\n“cases where there is a real and embarrassing conflict\nof opinion and authority between the [c]ircuit [c]ourts\nof [a]ppeals”. See Layne & Bowler Corp. v. W. Well\nWorks, Inc., 261 U.S. 387, 393 (1923) (dismissing the\nwrit as improvidently granted where there was no\nconflict).\n\n When the Court does grant certiorari, it rarely\nanswers questions beyond the question presented,\ndoing so “only in the most exceptional cases, where\nreasons of urgency or of economy suggest the need to\naddress the unpresented question in the case under\nconsideration”. Yee v. City of Escondido, Cal., 503\nU.S. 519, 535 (1992). The Court prohibits merits\nbriefing from “rais[ing] additional questions or\nchang[ing] the substance of the questions already\npresented”. Sup.Ct.R. 24.1(a). Those rules promote\nfairness in the certiorari process, particularly for\nrespondents who, without a clear question presented,\nwould lack notice of what issues are and are not to be\nbriefed. As the Court has put it, “[w]ere we routinely\nto entertain questions not presented in the petition for\ncertiorari, much of [the efficiency of the certiorari\nprocess] would vanish, as parties who feared an\ninability to prevail on the question presented would\nbe encouraged to fill their limited briefing space and\nargument time with discussion of issues other than\nthe one on which certiorari was granted.” Yee, 503\nU.S. at 536.\n 23\n\n\n B. The Viability of the Discovery Rule in\n Copyright Cases Is Not Properly\n Before the Court.\n\n Claimant violate those foundational principles\nby attempting to dispute, rather than assume, that\nthe discovery rule applied by the courts of appeals\ngoverns claim accrual under the Copyright Act.\n\n First, whether the Copyright Act has a discovery\nrule was not litigated below. The magistrate judge\nand the district court assumed that the Copyright Act\nhas a discovery rule and assumed it governed\nRespondents’ claims, at the urging of both Claimant\nand Respondents. See 1 C.A.App. 189-204; 2 C.A.App.\n35-36, 83-86, 126-37, 236-39; 3 C.A.App. 19-27. The\nEleventh Circuit granted interlocutory review “only”\nof a certified question regarding the availability of\ndamages “when the discovery rule dictates the accrual\nof a copyright claim”. Respondent, 2022 WL 18354071, at\n*2; Respondent v. Claimant, 60 F.4th\n1325, 1328, 1330 (11th Cir. 2023).\n\n Second, Claimant failed to preserve below their\nnewfound challenge to the discovery rule, as they\nconceded in their petition for certiorari: “The\navailability of the discovery rule was not challenged\nbelow . . . .” See Pet. 14 n.*. This Court’s practice is\n“to refrain from addressing issues not raised in the\nCourt of Appeals”, such as the discovery rule\narguments Claimant make here. EEOC v. FLRA,\n 24\n\n\n476 U.S. 19, 24 (1986) (citing Rogers v. Lodge, 458 U.S.\n613, 628 n.10 (1982)). 2\n\n Third, eleven courts of appeals unanimously\nagree that the discovery rule applies to Copyright Act\nclaims. See infra Section II.A.2. None disagree.\nClaimant concede that “a conflict in the courts of\nappeals has not yet developed” on that issue.\nPet. 14 n.*. Even Sohm upheld the discovery rule.\n959 F.3d at 50. The Court should “not reward such\nbait-and-switch tactics by proceeding to decide the\nindependently ‘uncertworthy’” question regarding the\navailability of the discovery rule. Sheehan, 575 U.S.\nat 620 (Scalia, J., concurring in part and dissenting in\npart).\n\n Fourth, this Court limited the Question\nPresented to foreclose argument on the availability of\nthe discovery rule. Claimant concede as much: “The\n\n\n 2 Claimant argue that “it would have been futile” to\nchallenge the applicability of the discovery rule “in light of\nEleventh Circuit precedent.” Pet. 14 n.*. Claimant provide no\nauthority supporting a futility exception in circumstances like\nthis. If Claimant believed Petrella compelled a different result\n(as the Second Circuit held by recognizing a damages bar in\nSohm, notwithstanding its prior adoption of the discovery rule),\nthey could have made the same arguments below. The cases\ncited by Claimant do not support their purported futility\nexception. See MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,\n125 (2007) (petitioner preserved the issue by making the\nargument in “a few pages of its appellate brief”); US Airways,\nInc. v. McCutchen, 569 U.S. 88, 101 n.7 (2013) (the issue was\n“adequately preserved and presented” in the district court where\nrespondent “urged the very position we adopt”); Samia v. United\nStates, 599 U.S. 635, 642-43 (2023) (explaining that petitioner\nmade the same constitutional arguments in the Second Circuit\nas made in this Court).\n 25\n\n\nquestion presented in this case, as rephrased by the\nCourt, assumes that the Copyright Act contains a\ndiscovery accrual rule applied by the circuit courts.”\nPet.Br. 31 (citation omitted). Claimant have chosen\nto fight the Question Presented rather than answer it.\nBut “[t]he Court decides which questions to consider\nthrough well-established procedures; allowing the\nable counsel who argue before us to alter these\nquestions or to devise additional questions at the last\nminute would thwart this system.” Taylor v. Freeland\n& Kronz, 503 U.S. 638, 646 (1992) (declining to\nconsider petitioner’s argument raised for the first time\nin his opening brief on the merits under\nSup.Ct.R. 14.1(a) and Sup.Ct.R. 24.1(a)).\n\n Claimant have focused their arguments on an\nissue not raised or decided below, on which there is no\ndisagreement in the lower courts, and, in doing so,\nhave attempted to change the Question Presented as\nlimited by the Court—thereby depriving Respondents\nof fair notice of what should and should not be briefed\nand argued. As in Visa Inc. v. Osborn, “[a]fter\n‘[h]aving persuaded us to grant certiorari’ on this\nissue, . . . Claimant ‘chose to rely on a different\nargument’ in their merits briefing.” 580 U.S. 993, 993\n(2016) (quoting Sheehan, 575 U.S. at 608). Thus, as\nin Visa, the Court should dismiss the writ of certiorari\nas improvidently granted. Id.\n\n Alternatively, the Court should decide only the\nlimited Question Presented on which it granted\ncertiorari.\n 26\n\n\nII. The Court Should Adopt the Majority Rule\n and Reject the Outlier Sohm Rule.\n\n A. Under the Copyright Act, Damages Are\n Available for Timely Claims.\n\n 1. Basic Copyright Principles.\n\n Under the Copyright Act, each act of\ninfringement gives rise to a separate copyright\ninfringement claim, and each individual claim rises\nand falls on its own merits, as was explained in\nPetrella, 572 U.S. at 671-72. Under the discovery rule,\neach copyright infringement claim accrues the\nmoment a copyright holder learns—or reasonably\nshould have learned—of the act of infringement giving\nrise to the claim. See, e.g., Gaiman v. McFarlane, 360\nF.3d 644, 653 (7th Cir. 2004) (“the copyright statute of\nlimitations starts to run when the plaintiff learns, or\nshould as a reasonable person have learned, that the\ndefendant was violating his rights” (citing Taylor v.\nMeirick, 712 F.2d 1112, 1117 (7th Cir. 1983))).\n\n Typically, even under the discovery rule, a claim\nwill accrue when the act of infringement occurs\nbecause, ordinarily, the public nature of copyright\ninfringement is sufficient to put the copyright holder\non inquiry notice of their claim. See William A.\nGraham Co. v. Haughey, 568 F.3d 425, 435 (3d Cir.\n2009) (“due to the nature of publication of works of\nart . . . generally the person injured receives\nreasonably prompt notice or can easily ascertain any\ninfringement of his rights” (quoting\nS.Rep.[DOCKET REDACTED] (1957), reprinted in 1957\nU.S.C.C.A.N. 1961, 1962)). However, if an act of\ninfringement reasonably goes undiscovered, the claim\n 27\n\n\nwill not accrue until the act is (or should have been)\ndiscovered by the copyright holder. See Sohm, 959\nF.3d at 50 (a claim “does not ‘accrue’ until the\ncopyright holder discovers, or with due diligence\nshould have discovered, the infringement” (citation\nomitted)); see also cases cited infra Section II.A.2.\n\n Under 17 U.S.C. § 507(b), the copyright holder\nmust bring any civil action asserting a claim within\nthree years of its accrual—i.e., within three years of\nwhen the infringing act was or should have been\ndiscovered. If the copyright plaintiff brings a civil\naction asserting its claim within the three-year period\nafter accrual, the plaintiff can seek as a remedy\nanything permitted by the Copyright Act, including\ndamages and infringer’s profits under Section 504.\nSee 17 U.S.C. § 504(a)-(c). If the plaintiff fails to\nassert the claim within the three-year period, that\nclaim—in its entirety—is time-barred. Petrella, 572\nU.S. at 671-72.\n\n There is no distinction in the Copyright Act\nstatute of limitations between claims that seek\ndamages and those that do not. See 17 U.S.C.\n§ 507(b). All variety and manner of general Copyright\nAct claims are subject to the same statute of\nlimitations, Section 507(b).\n\n In situations where numerous acts of\ninfringement reasonably go undiscovered for a\nnumber of years, there will be a buildup of\noccurred-but-not-yet-accrued claims. See, e.g., Starz\nEntm’t, LLC v. MGM Domestic Television Distrib.,\nLLC, 39 F.4th 1236, 1239-41, 1247 (9th Cir. 2022).\nOnce the copyright holder discovers (or, with\ndiligence, reasonably should have discovered) those\n 28\n\n\npast acts of infringement, each past act accrues into a\nseparate claim. Id. at 1240-41. Many past acts of\ninfringement—and, thus, many separate claims—\nmay accrue on a single date. Id.; see also Polar Bear\nProds., Inc. v. Timex Corp., 384 F.3d 700, 706 (9th Cir.\n2004) (citing Roley v. New World Pictures, Ltd., 19\nF.3d 479, 481 (9th Cir. 1994)).\n\n Again, in that situation, if a copyright plaintiff\nfails to sue on the claims within the three-year period\nafter the accrual date, those claims are time-barred;\nthat is the practical effect of the separate accrual rule\nthis Court announced in Petrella. 572 U.S. at 671-72.\nBut, under the majority rule, if the copyright plaintiff\ndoes bring suit within the three-year period, he can\nseek all remedies for each independent claim. See\ninfra Section II.A.2.\n\n Of course, the acts of infringement might not stop\non the accrual date, or the acts of infringement might\nbe so obvious or easily ascertainable that the very first\nact of infringement might operate to put the copyright\nholder on notice of their claims, such that the date of\nthe first infringing act also is the accrual date. For\nacts of infringement that occur after the accrual date,\nthe three-year statute of limitations will begin to run\nimmediately upon the acts of infringement giving rise\nto the claim. See Petrella, 572 U.S. at 682-83. Put\ndifferently, once the copyright holder discovers or is\non notice of the infringer’s infringing activities, the\ninjury date and the accrual date merge into one. See\nStarz, 39 F.4th at 1240.\n\n Petrella presented this situation. There, the\ndefendant (MGM) had infringed the plaintiff’s\n(Ms. Petrella’s) screenplay for decades by releasing\n 29\n\n\nthe movie, Raging Bull. Petrella, 572 U.S. at 674.\nDue to the popularity of the movie and Ms. Petrella’s\nrepeated negotiations with MGM, the accrual date for\nthose original infringements had occurred decades\nbefore the complaint was filed. Id. As a result, for\nmany years, each new act of infringement accrued into\na claim immediately upon the act of infringement\ntaking place. Because Ms. Petrella had not sued for\nmany years, numerous of those individual claims had\nbecome time-barred, as numerous three-year periods\nhad passed without suit on the immediately accruing\nacts of infringement. Recognizing this, Ms. Petrella\nasserted claims only for acts of infringement that had\noccurred within the three-year period prior to the date\non which she filed her lawsuit. Id. at 674-75.\n\n MGM argued in Petrella that even those claims—\ni.e., those brought within three years of when they\naccrued—should be dismissed because the doctrine of\nlaches should be deployed to shorten the\ncongressionally-mandated limitations period. Id. at\n675. This Court rejected that argument, holding that\nlaches cannot be used to shorten the statute of\nlimitations. Id. at 677. The Court explained that this\noutcome was not unduly disadvantageous to alleged\ninfringers because the separate accrual rule—by\nwhich earlier acts of infringement had become\ntime-barred—took account of delay; those earlier\nclaims disappeared forever when the plaintiff allowed\nthree years to pass without suing on them. Id. at\n682-83. The Court in Petrella expressly left the\ndiscovery rule intact. Id. at 670 n.4. It said nothing\nabout a separate damages bar that operates\nindependently of the statute of limitations.\n 30\n\n\n 2. The Majority Rule Permits\n Damages for All Timely Claims.\n\n Every court of appeals to rule on the issue—the\nFirst, Second, Third, Fourth, Fifth, Sixth, Seventh,\nEighth, Ninth, Tenth and Eleventh Circuits—has\nheld that the discovery rule governs “accrual” under\nSection 507(b) and that, when it applies, a claim will\nbe timely so long as it is filed within three years after\nthe claim was or reasonably should have been\ndiscovered. See Warren Freedenfeld Assocs. v.\nMcTigue, 531 F.3d 38, 44 (1st Cir. 2008); Sohm, 959\nF.3d at 50; Haughey, 568 F.3d at 433; Hotaling v.\nChurch of Jesus Christ of Latter-Day Saints, 118 F.3d\n199, 202 (4th Cir. 1997); Martinelli v. Hearst\nNewspapers, L.L.C., 65 F.4th 231, 233 (5th Cir. 2023),\ncert. petition filed, [DOCKET REDACTED] (Nov. 2, 2023);\nBridgeport Music, Inc. v. Rhyme Syndicate Music, 376\nF.3d 615, 621 (6th Cir. 2004); Gaiman, 360 F.3d at\n653; Comcast of Ill. X v. Multi-Vision Elecs., Inc., 491\nF.3d 938, 944 (8th Cir. 2007); Starz, 39 F.4th at 1238;\nCooper v. NCS Pearson, Inc., 733 F.3d 1013, 1015\n(10th Cir. 2013); Respondent, 60 F.4th at 1330.\n\n And every one of those courts of appeals, except\nfor the Second Circuit in Sohm, has permitted a\ncopyright plaintiff to recover damages for claims\nrendered timely by the discovery rule. See same cited\ncases. Other than Sohm, none of those cases applied\na damages bar.\n\n The majority rule applies the teaching of Petrella\nto the Copyright Act as it is written. Each infringing\nact gives rise to an individual claim; each claim\naccrues when it is or should be discovered; each claim\nis timely so long as it is brought within three years of\n 31\n\n\nwhen it accrues; and damages (and all other remedies)\nare available for all timely-filed claims, even if other\nclaims, based on earlier acts, are time-barred in their\nentirety. See, e.g., Respondent, 60 F.4th at 1331; Starz, 39\nF.4th at 1244.\n\n Since Sohm, every court of appeals to consider\nthe issue has declined to find a separate damages bar.\nSee Starz, 39 F.4th at 1244 (rejecting Sohm); Respondent,\n60 F.4th at 1331 (same); Martinelli, 65 F.4th at 244\nn.7 (declining to reach the question). Dozens of\ndistrict courts also have rejected the Sohm approach.\nSee Starz, 39 F.4th at 1244 n.4 (collecting cases).\n\n 3. Basic Copyright Principles and the\n Majority Rule Compel Affirmance\n Here.\n\n It is instructive to consider how the majority rule\noperates under the facts of this case.\n\n Respondent met with Whooping Crane and Pandisc in\n2008. That meeting put him on notice that those\ncompanies might violate MSI’s copyrights. Thus, if\nthose companies had engaged in any subsequent\ninfringing acts, Respondent would have been on notice of his\nclaims and, thus, would have had three years from the\ndate of any infringing act to assert a copyright\ninfringement claim based on each such act. Because\nhe was on notice, each act would have accrued into a\nclaim immediately upon its occurrence. Even today,\nif Whooping Crane and Pandisc were to infringe MSI’s\ncopyrights, Respondent could file a civil action for damages\nwithin three years of those new infringing acts (each\ngiving rise to a separate and newly-accruing claim),\nbut all past infringing acts (on which Respondent did not\n 32\n\n\nsue within three years) are gone forever. That is what\nPetrella holds and is how the Copyright Act takes\naccount of delay.\n\n Respondent’s claims against Claimant are different.\nClaimant engaged in numerous infringing acts\nbetween 2008 and 2016, but Respondent was not reasonably\non notice of infringements by Claimant until 2016,\nso those past acts of infringements did not accrue into\nclaims until 2016. Even in the Second Circuit, Respondent\nhad three years from that date of accrual to bring suit\non those past infringements. Having done so, under\nthe majority rule, he is entitled to seek damages for\neach individual claim.\n\n B. The Damages Bar Recognized by the\n Second Circuit in Sohm Has No\n Defensible Basis.\n\n 1. The Sohm Damages Bar Is\n Incompatible with the Text and\n Structure of the Copyright Act.\n\n The Sohm bar on retrospective relief—and\nClaimant’ requested “equitable exception” damages\nbar, Pet.Br. 42—cannot be reconciled with the text\nand structure of the Copyright Act.\n\n 1. The Copyright Act has a single default statute\nof limitations for civil claims that, on its face, applies\nto all manner of “[c]ivil [a]ctions” and all types of\ncopyright “claim[s]”. 17 U.S.C. § 507(b). There is no\nseparate statutory provision limiting damages for\ntimely claims; nor is there any provision treating\ndamages claims differently from claims seeking other\nforms of relief.\n 33\n\n\n Section 504, titled “Remedies for infringement:\nDamages and profits”, makes clear that “[t]he\ncopyright owner is entitled to recover the actual\ndamages suffered by him or her . . . and any profits\nof the infringer that are attributable to the\ninfringement”, or statutory damages for “all\ninfringements involved in the action”. 17 U.S.C.\n§ 504(b)-(c)(1) (emphases added). Words in a statute\nshould be given their plain meaning unless Congress\nhas provided a different definition. See FCC v. AT&T\nInc., 562 U.S. 397, 403 (2011). Limiting damages to\nthose incurred during the three years before a\ncomplaint is filed would be contrary to the plain\nmeaning of the words “any”, “actual” and “all” in\nSections 504(a)-(c).\n\n 2. Other provisions of Title 17 confirm that\nreading.\n\n Section 507 is an umbrella provision that applies\ngenerally to Title 17. See 17 U.S.C. § 507(a) (“[e]xcept\nas expressly provided otherwise in this title”)\n(emphasis added); 17 U.S.C. § 507(b) (“[n]o civil action\nshall be maintained under the provisions of this\ntitle”) (emphasis added). It expressly governs “civil\naction[s]” “maintained under the provisions of this\ntitle”, i.e., Title 17, and was included in the original\n1976 amendments to Title 17. See Act of Sept. 7, 1957,\nPub.L.[DOCKET REDACTED], § 1, 71 Stat. 633, 633 (adopting 17\nU.S.C. § 115 (1958)); Copyright Act of 1976,\nPub.L.[DOCKET REDACTED], § 101, 90 Stat. 2541, 2585-86.\n\n In 1998, Congress added as Chapter 13 to Title\n17 the Vessel Hull Design Protection Act (“VHDPA”).\nSee Digital Millennium Copyright Act,\nPub.L.No. 105-304, tit. V, 112 Stat. 2860, 2905 (1998),\n 34\n\n\ncodified at 17 U.S.C. ch. 13. The VHDPA contains a\nbespoke remedies provision in Section 1323, which\npermits (a) “damages adequate to compensate for the\ninfringement” of hull design and (b) “infringer’s\nprofits” “reasonably related to the use of the\nclaimant’s design”. Id. § 1323(a)-(b). It also contains\na separate statute of limitations, which reads “[n]o\nrecovery under subsection (a) or (b) shall be had for\nany infringement committed more than 3 years before\nthe date on which the complaint is filed”. Id.\n§ 1323(c).\n\n Section 1323(c), on its face, is a three-year\nlook-back damages bar that (for vessel hull design\ninfringement claims) operates as an exception to\nTitle 17’s general statute of limitations, Section 507.\nCritically, if there were no general discovery rule in\nTitle 17—such that accrual under Section 507(b)\nmeant when an infringement “was committed” or\n“occurred”—Section 507(b) would work exactly how\nSection 1323(c) reads, and there would be no reason to\nhave Section 1323(c). Stated differently, if\n“commitment” or “occurrence” determined claim\naccrual generally (as Claimant assert), there could\nbe no recovery of damages or infringer’s profits for\nacts committed more than three years before the\ncomplaint was filed—for hull design or for anything\nelse—and the separate statute of limitations in\nSection 1323(c) would be unnecessary.\n\n Thus, Congress’s decision to enact Section\n1323(c) demonstrates why Claimant’ construction of\nSection 507(b) is wrong. It is a “cardinal principle of\nstatutory construction that a statute ought, upon the\nwhole, to be so construed that, if it can be prevented,\n 35\n\n\nno clause, sentence, or word shall be superfluous, void,\nor insignificant”. TRW, 534 U.S. at 31 (citation\nomitted). Statutes should be read consistent with “the\ninterpretive principle that every clause and word of a\nstatute should have meaning.” U.S. ex rel. Polansky\nv. Exec. Health Res., Inc., 599 U.S. 419, 432 (2023)\n(citation omitted). “A statute should be construed so\nthat effect is given to all its provisions, so that no part\nwill be inoperative or superfluous, void or\ninsignificant.” Corley v. United States, 556 U.S. 303,\n314 (2009) (citation omitted).\n\n The exception created by Congress in Section\n1323(c) for hull design has purpose and meaning only\nif it provides a rule different from the default rule of\nSection 507(b). Because Section 1323(c) imposes a\ndamages bar—and rejects the discovery rule for vessel\nhull design infringement—the default rule for Title 17\nmust be that there is no damages bar but there is a\ndiscovery rule. If the default rule provided a damages\nbar and/or no discovery rule, Section 1323(c) would do\nno work—its exception already would be the default\nrule. Thus, Claimant’ interpretation would render\nSection 1323(c) superfluous, which is not permitted.\nTRW, 534 U.S. at 31.\n\n TRW Inc. v. Andrews, cited extensively by\nClaimant, is instructive. There, the Court\nconsidered two statutes of limitations in the Fair\nCredit Reporting Act (“FCRA”): (i) a general one,\nwhich required suit within two years of when “liability\narises”; and (ii) a more specific one, which permitted\ncertain plaintiffs to file suit within two years of\ndiscovery. Id. at 28. The Court held that the\ndiscovery rule could not govern the entire statute,\n 36\n\n\nbecause “Congress implicitly excluded a general\ndiscovery rule by including a more limited one.” Id.\nHere, Congress also has enacted two statutes of\nlimitations in Title 17: (i) a general one, which\nrequires a “civil action” to be brought within three\nyears of when a “claim accrue[s]”, 17 U.S.C. § 507(b);\nand (ii) a more specific one, which limits recovery in\nhull design cases to infringements “committed” during\nthe three years before suit was filed, id. § 1323(c).\nLike the FCRA, Title 17 should be construed in a\nmanner that ensures “no clause, sentence or word\nshall be superfluous, void, or insignificant”, TRW, 534\nU.S. at 31, which means that there cannot be a\ngenerally applicable damages bar, because “Congress\nimplicitly excluded a general [damages bar] by\nincluding a more limited one”, id. at 28. On the other\nhand, there must be a generally applicable discovery\nrule because, without it, the default rule of Section\n507(b) would be the same as the Section 1323(c)\nexception, rendering the Section 1323(c) exception\nsuperfluous. See TRW, 534 U.S. at 31.\n\n Nor is the separate treatment in Section 1323(c)\nan accident. Congress permits copyright holders to\nrecover for copyright infringement within three years\nof when a claim accrues, even if the defendant had\nbeen engaging in similar infringing acts for decades.\nSee Petrella, 572 U.S. at 671-72. That default rule for\ncopyright claims reflects Congress’s judgment that, in\ngeneral, the public benefits from strong and long-\nlasting copyright protection because it encourages the\ncreation of all manner of copyrightable works by\nothers. See id.; Eldred v. Ashcroft, 537 U.S. 186,\n212 n.18 (2003) (“[C]opyright law celebrates the profit\nmotive, recognizing that the incentive to profit from\n 37\n\n\nthe exploitation of copyrights will redound to the\npublic benefit by resulting in the proliferation of\nknowledge. . . . The profit motive is the engine that\nensures the progress of science.” (citation omitted)).\nCongress made a different judgment about how much\nprotection to afford hull designs, permitting damages\nfor copying, but limiting those damages to\ninfringements committed only during the three years\nprior to suit. Congress’s policy choices should be\nrespected. 3\n\n 3. Section 1323(c) is not the only provision of\nTitle 17 to conflict with the Sohm damages bar and\nClaimant’ requested “equitable exception”. In 1998,\nCongress also added a new subsection to existing\nSection 504. See Sonny Bono Copyright Term\nExtension Act, Pub.L.No. 105-298, § 204, 112 Stat.\n2827, 2833 (1998). Section 504(d) permits “additional\ndamages in certain cases” involving proprietors of\npublic establishments, limited to “the preceding\nperiod of up to 3 years”, 17 U.S.C. § 504(d), which,\nagain, would be unnecessary if the default Title 17\nrule already limited all damages to those incurred\nduring the preceding three-year period. Similar to\nSection 1323(c), Section 504(d)’s three-year limitation\nfor enhanced damages would be superfluous if Section\n507(b) separately and generally barred all damages\n\n\n 3 Notably, when Congress added Chapter 9 to Title 17, to\n\nprotect semiconductor chip design, it made clear that the other\nprovisions of Title 17 would not apply to Chapter 9. See 17 U.S.C.\n§ 912(b). Congress included no such carve-out for Chapter 13,\nmeaning that, in the absence of Section 1323(c), Section 507(b) of\nTitle 17 would govern the timeliness of any civil action\nmaintained under Chapter 13. Section 1323(c) was necessary\nonly to provide a different rule from Section 507(b).\n 38\n\n\noutside the same three-year period. Corley, 556 U.S.\nat 314; see also Br. of Amicus Curiae Am. Intell. Prop.\nL. Ass’n 13 (“when Congress desires in the Copyright\nAct to impose a temporal limitation on damages, it\ndoes so expressly”).\n\n It is telling that Congress added Sections 1323(c)\nand 504(d) in 1998, by which time at least four courts\nof appeals had adopted a discovery rule and permitted\ndamages outside the three-year period prior to filing a\nlawsuit. See, e.g., Taylor, 712 F.2d at 1118; Stone v.\nWilliams, 970 F.2d 1043, 1048-49 (2d Cir. 1992);\nRoley, 19 F.3d at 481; Hotaling, 118 F.3d at 202. Had\nCongress intended the three-year look-back damages\nbars of Sections 1323(c) and 504(d) to apply to\ncopyright claims more generally—or had it wanted to\neliminate the discovery rule—it could have added the\nlanguage from Sections 1323(c) or 504(d) to Section\n507(b). But it chose not to do so.\n\n 4. Congress’s choices in 1998 are made all the\nmore striking by its decision in 2020 to re-use the\nlanguage of Section 507(b) when creating the statute\nof limitations in Section 1504(b)(1) for bringing a\nclaim before the newly constituted Copyright Claims\nBoard. Under Section 1504(b)(1), “[a] proceeding may\nnot be maintained before the Copyright Claims Board\nunless the proceeding is commenced . . . before the\nCopyright Claims Board not later than 3 years after\nthe claim accrued.” 17 U.S.C. § 1504(b)(1). Congress\ndemonstrated it knew how to enact a non-discovery\nrule damages bar in 1998 when it enacted Sections\n1323(c) and 504(d), but chose a different rule in 2020\nwhen drafting Section 1504(b)(1). That choice reflects\na clear understanding that the language of Section\n 39\n\n\n507(b), mirrored in Section 1504(b)(1), does not\ncontain a damages bar.\n\n 5. Another example of Congress’s knowledge of\nhow to craft a damages bar is found in the Patent Act,\nin which Congress expressly included a generally\napplicable damages bar in 1952, prior to enacting the\nlanguage now codified at Section 507(b) of the\nCopyright Act in 1957. See Patent Act of 1952,\nPub.L.[DOCKET REDACTED], 66 Stat. 792, 813. Section 286 of\nthe Patent Act, titled “Time limitation on damages”,\nprovides that “[e]xcept as otherwise provided by law,\nno recovery shall be had for any infringement\ncommitted more than six years prior to the filing of\nthe complaint or counterclaim for infringement in the\naction.” 35 U.S.C. § 286. As with Sections 1323(c) and\n504(d) of the Copyright Act, Section 286 of the Patent\nAct demonstrates that Congress has long known how\nto expressly adopt a damages bar.\n\n 6. It is also notable that Congress used “accrue”\nto describe the starting trigger for the civil statute of\nlimitations in Section 507(b), but “arose” to describe\nthe starting trigger for the criminal statute of\nlimitations in Section 507(a). Compare 17 U.S.C.\n§ 507(a) (“Except as expressly provided otherwise in\nthis title, no criminal proceeding shall be maintained\nunder the provisions of this title unless it is\ncommenced within 5 years after the cause of action\narose.”), with id. § 507(b) (“No civil action shall be\nmaintained under the provisions of this title unless it\nis commenced within three years after the claim\naccrued.”) (emphases added). Where Congress uses\none term in one place, and a different term in another\nplace, the presumption is that the different terms\n 40\n\n\nhave different meanings. See Sw. Airlines Co. v.\nSaxon, 596 U.S. 450, 457-58 (2022) (quoting A. Scalia\n& B. Garner, Reading Law: The Interpretation of\nLegal Texts 170 (2012)). The different usage of\n“accrue” and “arose” in Section 507 supports a\ndiscovery rule without a damages bar for civil\ncopyright claims. Haughey, 568 F.3d at 434-35.\n\n Claimant dismiss the difference in wording\nbetween “accrue” and “arose” as “idiosyncratic”\ndrafting, Pet.Br. 30, but it is nothing of the sort. The\nword “arose” appears twice in Title 17 and, both times,\nit is used in connection with a criminal statute of\nlimitations. See 17 U.S.C. §§ 507(a), 1204(c). The\nword “accrue”, in the sense of a claim accruing, is used\nfour times in Title 17, each time in connection with a\ncivil statute of limitations. See 17 U.S.C.\n§§ 115(c)(10)(C), 507(b), 911(d), 1504(b)(1). That word\nchoice is intentional and should be given meaning. 4\n\n 2. The Sohm Damages Bar Is\n Incompatible with Petrella.\n\n Sohm fashioned its damages bar by misreading\nisolated statements from this Court’s decision in\nPetrella divorced from their context, when that very\ncontext makes clear that Petrella was describing not a\nseparate damages bar in Section 507(b), but rather\n\n\n 4 Contrary to Claimant’ arguments, the word “accrue”\ndoes not have a single definition divorced from the context in\nwhich it is used. See Reading Co. v. Koons, 271 U.S. 58, 61-62\n(1926). Here, the context and structure of Title 17 compel the\ninference that “accrue” must mean something different from\n“arose” (and neither implies a damages bar divorced from Title\n17’s statute of limitations).\n 41\n\n\nthe operation of the separate accrual rule for the\nclaims at issue there.\n\n Ms. Petrella, the plaintiff in that case, was aware\nthat MGM had engaged in numerous acts of\ninfringement for over two decades. Petrella, 572 U.S.\nat 674-75. Given her awareness of MGM’s conduct,\nshe did not dispute that she had constructive\nknowledge of each act of infringement as it occurred,\nmeaning that each claim accrued immediately upon\nthe act of infringement giving rise to the claim. Id. at\n675-76. But, because each act of infringement gave\nrise to an entirely new claim, she argued that claims\nbased on infringements that had occurred within the\npreceding three years necessarily were timely. Id. at\n674-75. It was irrelevant, she argued, that other\nclaims, based on infringements that had occurred\nmore than three years before, were untimely. Id. at\n675. Her lawsuit did not involve those earlier claims.\nIn response, MGM argued that because Ms. Petrella\nhad elected not to sue for earlier acts of infringement,\nthe doctrine of laches barred all claims, even claims\nthat had accrued during the preceding three years.\nId.\n\n This Court rejected MGM’s argument. It held\nthat a copyright holder has three years from the date\non which each individual claim accrues to bring suit\non that particular claim, and laches cannot be used to\nshorten the three-year statutorily prescribed period.\nId. at 667. That is a fair result, Petrella explained, in\npart because each earlier-accrued claim had expired\nwhen the three-year period ran without the copyright\nholder commencing suit on it. Id. at 677-78. In that\nway, due to the “separate accrual rule”, “the copyright\n 42\n\n\nstatute of limitations, § 507(b), itself takes account of\ndelay.” Id. at 677. Those are the teachings of Petrella.\n\n The Court expressly preserved the discovery rule,\nstating that “[a]lthough we have not passed on the\nquestion, nine Courts of Appeals have adopted, as an\nalternative to the incident of injury rule, a ‘discovery\nrule’, which starts the limitations period when the\nplaintiff discovers, or with due diligence should have\ndiscovered, the injury that forms the basis for the\nclaim.” Id. at 670 n.4 (citations omitted). The Court\nalso used qualified language when discussing accrual,\naccounting for the operation of the discovery rule in\nother cases, but not that one. See id. at 670 (“A claim\nordinarily accrues when a plaintiff has a complete and\npresent cause of action. In other words, the\nlimitations period generally begins to run at the point\nwhen the plaintiff can file suit and obtain relief.”\n(citations omitted and emphases added)); id. at 672\n(“the copyright holder’s suit ordinarily will be timely\nunder § 507(b) with respect to more recent acts of\ninfringement (i.e., acts within the three-year window),\nbut untimely with respect to prior acts of the same or\nsimilar kind” (emphasis added)).\n\n Sohm mistakenly relies on statements from\nPetrella that, read in isolation, might appear to speak\nwithout qualification regarding the availability of\ndamages under the Copyright Act: (i) “‘under the\n[Copyright] Act’s three-year provision, an\ninfringement is actionable within three years, and\nonly three years, of its occurrence,’ and [] ‘the infringer\nis insulated from liability for earlier infringements of\nthe same work’”; (ii) “§ 507(b)’s limitations period . . .\nallows plaintiffs . . . to gain retrospective relief\n 43\n\n\nrunning only three years back from the date the\ncomplaint was filed”; (iii) “a successful plaintiff can\ngain retrospective relief only three years back from\nthe time of suit”; and (iv) “[n]o recovery may be had\nfor infringement in earlier years”. Sohm, 959 F.3d at\n51-52 (quoting Petrella, 572 U.S. at 671-72, 677). But,\nread in context, those statements are qualified and\ntied to the specific facts of Petrella. The first two\nquotations immediately follow and are embedded in\nparagraphs explaining the operation of the separate\naccrual rule in Petrella. 572 U.S. at 671-72. And the\nthird and fourth quotations comprise two parts of a\nsentence that begins with a cross-reference to the\nsame, preceding portion of the opinion. Id. at 677. All\nfour statements merely describe and summarize the\noperation of the separate accrual rule on the specific\nfacts of Petrella, and they do not create an atextual\ndamages bar (with no support in the Copyright Act)\nfor discovery rule claims, which were not even at issue\nin that case.\n\n The dicta in Petrella saying Section 507(b) “looks\nback” was shorthand for how courts can determine\nwhat infringing acts are at issue in a case where the\nplaintiff does not rely on the discovery rule to\nestablish the timeliness of her claims. See id. at 686.\nIn those types of cases, where the date of the\ninfringing acts and the date of accrual are one and the\nsame, courts can simply “look back” to the prior three\nyears to determine the relevant infringing acts and\ncorresponding damages. See Starz, 39 F.4th at\n1245-46 (“Plainly the Court’s look-back language was\nsimply a shorthand for the statute of limitations laid\nout in § 507(b) in incident of injury cases—where\ninfringement and accrual occur simultaneously.”).\n 44\n\n\nThose statements did not mean—in fact, could not\nhave meant—that one looks back three years to\ndetermine what damages are available under the\ndiscovery rule. Section 507(b), by its express terms,\nlooks forward from the date of accrual and asks\nwhether the “civil action” was “commenced within\nthree years after the claim accrued.” 17 U.S.C.\n§ 507(b). 5\n\n In short, the Court held in Petrella that it was the\nseparate accrual rule—not a stand-alone damages\nbar—that was the aspect of the Copyright Act that\naccounts for delay and renders laches unnecessary.\n572 U.S. at 677. The Court expressly declined to reach\nthe question whether the Copyright Act has a\ndiscovery rule. Id. at 670 n.4. There is no support for\nSohm’s conclusion that the Court reached beyond the\nissues presented to create an atextual damages bar\nthat would not even have applied to Ms. Petrella’s\nclaims.\n\n\n 5 In SCA Hygiene Products Aktiebolag v. First Quality Baby\n\nProducts, LLC, this Court quoted Petrella to reject respondent’s\nargument that laches could be available for statutes of limitation\nthat run backward, even if laches was not available for statutes\nof limitation that run forward, holding that laches generally\ncannot be used to shorten a congressionally-mandated\nlimitations period. 580 U.S. 328, 336-38 (2017). The Court again\nwas careful to qualify its language, both by using the adverb\n“ordinarily” to modify its description of what it means for a claim\nto accrue and by expressly stating that it still had not passed on\nwhether accrual under the Copyright Act is governed by a\ndiscovery rule. Id. at 337-38.\n 45\n\n\n 3. Adopting the Sohm Damages Bar\n Would Disrupt Decades of\n Historical Practice, When Congress\n Repeatedly Has Determined Not To\n Disrupt that Practice.\n\n Congress has amended Title 17 seventy-eight\ntimes since 1976. U.S. Copyright Office, Copyright\nLaw of the United States and Related Laws Contained\nin Title 17 of the United States Code viii-xv (2022),\n[URL REDACTED] Those\namendments ranged from major overhauls—such as\nthe Sonny Bono Copyright Term Extension Act,\nPub.L.No. 105-298, 112 Stat. 2827 (1998) (which\nchanged the copyright term from life plus 50 years to\nlife plus 70 years)—to technical and corrective\nrefinements—such as the Copyright Cleanup,\nClarification, and Corrections Act of 2010,\nPub.L.No. 111-295, 124 Stat. 3180 (which made\nmiscellaneous clarifying, conforming, and technical\ncorrections throughout Title 17). Congress even has\namended Section 507 twice. See Pub.L.No. 105-147,\n§ 2(c), 111 Stat. 2678, 2678 (1997); Pub.L.No. 105-304,\n§ 102(e), 112 Stat. 2860, 2863 (1998).\n\n The courts of appeals have applied a discovery\nrule without a damages bar for decades, since at least\n1983. See Taylor, 712 F.2d at 1118. Yet, in all its\nseventy-eight amendments, Congress never stepped\nin to clarify that the courts of appeals were getting it\nwrong. To the contrary, (i) Congress maintained the\n“accrual” language in Section 507(b) through each of\nits seventy-eight amendments; and (ii) adopted that\nsame language when it intended new provisions to\nhave the same discovery rule without a damages bar,\n 46\n\n\nsee 17 U.S.C. §§ 911(d), 1504(b)(1); but (iii) used\ndifferent language when it intended the courts to\napply a damages bar without a discovery rule, see id.\n§§ 504(d), 1323(c).\n\n Reading a three-year look-back damages bar into\nSection 507(b)—or imposing that rule as part of\namorphous equitable relief—would undermine\nCongress’s clear intent. “The long time failure of\nCongress to alter the Act after it had been judicially\nconstrued, and the enactment by Congress of\nlegislation which implicitly recognizes the judicial\nconstruction as effective, is persuasive of legislative\nrecognition that the judicial construction is the correct\none.” Apex Hosiery Co. v. Leader, 310 U.S. 469, 488\n(1940); see also Keene Corp. v. United States, 508 U.S.\n200, 208 (1993). 6\n\n 4. The Sohm Damages Bar\n Contravenes Long-Standing and\n Well-Established Public Policy, as\n Reflected in the Copyright Act.\n\n The Founders recognized, and the Constitution\nenshrined, a fundamental goal of encouraging artistic\ndevelopment by protecting artists’ rights in their\nwork. See U.S. Const. art. I, § 8, cl. 8 (“The Congress\nshall have Power . . . [t]o promote the Progress of\nScience and useful Arts, by securing for limited Times\nto Authors and Inventors the exclusive Right to their\nrespective Writings and Discoveries”). In his\n\n 6 The “separation of powers” arguments advanced by\ncertain amici cut against Claimant, not for them. The Court\nshould not amend Title 17 to recognize a general damages bar\nwhen Congress repeatedly has declined to do so.\n 47\n\n\ninaugural State of the Union Address, President\nWashington urged Congress: “[T]here is nothing,\nwhich can better deserve your patronage, than the\npromotion of Science and Literature.” Journal of the\nSenate, 1st Cong., 2d Sess. 5-8 (Jan. 8, 1790).\nCongress responded months later with the Copyright\nAct of 1790, which expressly permitted an award of\ndamages for copyright infringements to promote “the\nencouragement of learning”. Copyright Act of 1790,\nPub.L.[DOCKET REDACTED], §§ 2, 6, 1 Stat. 124, 125.\n\n This same goal persists in the modern-day\nCopyright Act. “The immediate effect of our copyright\nlaw is to secure a fair return for an authors’ creative\nlabor. But the ultimate aim is, by this incentive, to\nstimulate artistic creativity for the general public\ngood.” Sony Corp. of Am. v. Universal City Studios,\nInc., 464 U.S. 417, 432 (1984) (citation omitted). “The\nCopyright Clause embodies the ‘conviction that\nencouragement of individual effort by personal gain is\nthe best way to advance public welfare through the\ntalents of authors and investors’ and empowers\nCongress to create a ‘system’ that promotes these\ngoals.” H.R.Rep.No. 116-252, at 20 (2019) (citing\nMazer v. Stein, 347 U.S. 201, 219 (1954); Eldred, 537\nU.S. at 212 n.18, 213).\n\n Congress has cautioned that “the inability to\nenforce rights corrodes respect for the rule of law and\ndeprives society of the benefit of new and expressive\nworks of authorship”. Id. at 19 (citation omitted).\nThis Court has recognized the same principle: “[t]he\nprofit motive is the engine that ensures the progress\nof science”. Eldred, 537 U.S. at 212 n.18 (citation\nomitted).\n 48\n\n\n A damages bar that prevents successful\ncopyright plaintiffs—i.e., those who have timely and\nmeritorious claims—from recovering damages\nserves no legitimate public policy interest and,\ninstead, contravenes the careful balance Congress\nstruck in the Copyright Act. 7\n\nIII. Claimant’ Arguments Are Inapposite.\n\n A. Claimant’ Attacks on the Discovery\n Rule Are Inapposite to the Question\n Presented.\n\n As a consequence of Claimant’ attempt to avoid\nthe Question Presented, much of their brief is\ninapposite to the Question Presented, including the\ndiscussion of criminal procedure cases concerning the\nFifth Amendment right against self-incrimination.\nThose cases safely can be ignored.\n\n Claimant repeatedly cite TRW Inc. v. Andrews,\n534 U.S. 19 (2001), Rotkiske v. Klemm, 140 S.Ct. 355\n(2019), and Gabelli v. SEC, 568 U.S. 442 (2013). None\nof those cases held, or even considered, that damages\n\n\n 7 Sohm upsets this balance by functionally extinguishing\n\nall relief for claims rendered timely by the discovery rule. With\ndamages barred, only injunctive relief remains a theoretical\npossibility. However, injunctive relief rarely (if ever) will be\navailable for claims rendered timely by operation of the discovery\nrule, because, by definition, the infringing act giving rise to those\nclaims occurred more than three years in the past, thus\neliminating the possibility of ongoing or immediate harm from\nthose claims, and leaving those claims with no remedy. See\nRespondent, 60 F.4th at 1333-34.\n 49\n\n\nmight be unavailable for timely claims. That peculiar\nrule was invented by the Sohm court.\n\n Moreover, properly understood, each case rejects\nClaimant’ arguments.\n\n As explained, this Court’s analysis in TRW\nrefutes each of Claimant’ arguments and requires\naffirmance here. See supra Section II.B.1.\n\n So, too, for Rotkiske. There, the Fair Debt\nCollection Practices Act (FDCPA) expressly stated the\nlimitations period began “from the date on which the\nviolation occurs.” 15 U.S.C. § 1692k(d). In concluding\nthat the FDCPA meant what it said, the Court applied\nthe plain meaning of the statute. Rotkiske, 140 S.Ct.\nat 360. Petitioner Rotkiske did not contest the plain\nmeaning of Section 1692k(d), but instead argued that\nthe Court should “read in” a general discovery rule.\nId.\n\n The Court explained that “[a]textual judicial\nsupplementation is particularly inappropriate when,\nas here, Congress has shown that it knows how to\nadopt the omitted language or provision. Congress\nhas enacted statutes that expressly include the\nlanguage Rotkiske asks us to read in . . . .” Id. at 361.\nHere, Congress has “expressly include[d] the\nlanguage [Claimant] ask [the Court] to read in”,\nid.—in both Section 1323(c) and Section 504(d) of\nTitle 17 itself. Thus, as in Rotkiske, the Court should\ndecline to “read in” either the atextual damages bar\nfound in Sohm or the similarly atextual “equitable\nexception” urged by Claimant, because Congress\nclearly knows how to adopt the omitted language\nwhen that is its intent.\n 50\n\n\n Gabelli does not support Claimant either.\nAlthough in Gabelli this Court construed “accrued” to\nenact an injury rule, the context of that case and the\nhistory of that statute contrast sharply with the\nCopyright Act. There, no court in the first 160 years\nafter enactment of the statute of limitations at issue\nfor civil fines, penalties or forfeiture had construed\nthat statute of limitations to include a discovery rule,\nand there was no indication that Congress had\nintended to adopt a discovery rule for government\nenforcement actions. See 568 U.S. at 449-50. The\nopposite is true here, where, for decades, every court\nof appeals to have considered the issue has held that\naccrual under Section 507(b) includes a discovery rule,\nsee supra Section II.A.2, and where, in the face of that\nextensive precedent, Congress repeatedly has built\nupon the foundation of that judicial interpretation,\nincluding by using different words when it intends\nstatutes of limitation in Title 17 to work differently\nand the same words when it intends the meaning to\nbe the same, see supra Section II.B.3. In all events,\nGabelli provides no support for a separate damages\nbar.\n\n Claimant’ argument that the discovery rule in\ncopyright cases should be limited to fraud, medical\nmalpractice, or latent disease is specious. See Pet.Br.\n31-41. The Question Presented is limited to the\navailability of damages “under the discovery accrual\napplied by the circuit courts”, a discovery rule that\nhas nothing to do with fraud, medical malpractice or\nlatent disease. Claimant, again, improperly attempt\nto rewrite the Question Presented.\n 51\n\n\n Moreover, the cases Claimant cite merely\nestablish that there can be a discovery rule for causes\nof action concerning fraud, medical malpractice and\nlatent disease, even without evidence that Congress\nintended to adopt that rule. See id. at 33-39.\nResorting to that principle is unnecessary here, where\nthere is ample evidence that Congress intended to\nadopt the rule that the courts of appeals have applied.\nIt would be nonsensical to limit Copyright Act\ndiscovery rule cases to fraud, medical malpractice or\nlatent disease because copyright claims involve none\nof those things.\n\n Although Claimant’ cases are far afield from the\nissues presented here, even those cases call into\nquestion the Sohm rule because, in each of them,\nwhere the discovery rule applied, there was no\ndiscussion of a damages bar. See Bailey v. Glover, 88\nU.S. 342, 347-48 (1874); Holmberg v. Armbrecht, 327\nU.S. 392, 397 (1946); Urie v. Thompson, 337 U.S. 163,\n169-70 (1949).\n\n B. The Discovery Rule Is Applied\n Consistently by the Courts of Appeals.\n\n 1. The discovery rule operates uniformly across\ncourts of appeals, including in the Second Circuit, to\npermit the filing of a copyright claim within three\nyears after the claim was or reasonably should have\nbeen discovered. There is no inconsistency in the\noperation of the discovery rule, with the exception of\nthe Second Circuit’s Sohm damages bar.\n\n Claimant’ arguments regarding circuit variance\nin the rationale for the discovery rule or regarding\neligibility for the discovery rule’s application are\n 52\n\n\ninapposite: the Question Presented assumes the\napplication of the discovery rule and asks what effect\nits operation has on the availability of damages. The\nunderlying rationales for recognizing the discovery\nrule itself are not at issue (and, in all events, the\ndiscovery rule is firmly supported by the text of Title\n17, for the reasons described above).\n\n 2. To the extent amici focus on purported\ndistinctions between ownership and infringement\ncopyright claims, that issue is immaterial to the case\nat bar. The parties stipulated that “this case presents\n‘an ownership dispute’”, C.A.Supp.App. 636, and the\nEleventh Circuit applies the discovery rule in\nownership cases, Respondent, 60 F.4th at 1330. Thus, the\nCourt can resolve the Sohm conflict here, without\naddressing any purported distinction between how\nthe discovery rule works for ownership and\ninfringement claims.\n\n If, however, the Court feels compelled to reach\nthat issue, Respondents make two points.\n\n First, under Petrella, “each infringing act starts a\nnew limitations period.” 572 U.S. at 671. That\nexpress holding of Petrella rejects prior caselaw from\nsome courts of appeals suggesting that, when a\ncopyright holder learns that someone else claims\nownership over the copyrighted work, she must sue\nwithin three years or lose the ability to sue even for\nlater infringing acts. Indeed, the plaintiff in Petrella\nknew that MGM had claimed an ownership interest in\nthe copyright for decades, yet she was permitted to\nsue on recent infringements, despite not suing earlier.\n 53\n\n\n Second, a copyright claim requires both\n(i) ownership and (ii) an infringing act. See 17 U.S.C.\n§ 501(a)-(b); see Feist Publ’ns, Inc. v. Rural Tel. Serv.\nCo., 499 U.S. 340, 361 (1991). Mere assertion of\ncontrary ownership does not give rise to an\ninfringement claim. When a third party asserts\nownership of a copyright and the actual copyright\nowner learns of that assertion, that typically puts the\nactual copyright owner on notice of potential\ninfringements by that third party, such that each\ninfringing act that occurs thereafter accrues into a\nclaim immediately upon its occurrence. Disputed\nownership, once learned, puts the plaintiff on notice.\nBut the plaintiff still has three years from the date of\nthe accrual of the claim for any infringing act to sue.\nAgain, those are the facts of Petrella.\n\n Relevant here, Respondent learned that Claimant\nclaimed ownership of a copyright in the relevant\nworks in 2016. As a result, 2016 became the relevant\nnotice date, and Respondent had three years from 2016 to\nsue on infringing acts by Claimant that had occurred\nbefore 2016 (because claims for those earlier acts\naccrued when he received notice in 2016), but he also\nhas three years to sue from the occurrence of any\nfuture infringing acts by Claimant (because claims\nfor those new acts will accrue separately upon their\noccurrence, now that Respondent is on notice), as Petrella\nheld.\n 54\n\n\n C. Claimant Do Not Defend the Sohm\n Damages Bar, Thus Tacitly Conceding\n It Is Error, and Instead Argue for an\n Impermissible “Equitable Exception”.\n\n Claimant mention Sohm once in their entire\nopening merits brief. See Pet.Br. 26. That single\nreference is not to Sohm’s holding, but as part of a\nstring cite to support their flawed reading of Petrella.\nSee id. Claimant tacitly concede Sohm’s error.\n\n Rather than defend Sohm, Claimant ask this\nCourt to “weigh[] policy considerations” and “apply\nthe three-year limitation on retrospective relief as an\nequitable exception”. Id. at 41-42. But the Court\nalready rejected Claimant’ arguments in Petrella\nwhen it refused to permit laches as a defense to\ncopyright claims. Recognizing an “equitable\nexception” that forecloses retrospective relief for\nsuccessful copyright plaintiffs is the functional\nequivalent of allowing copyright defendants to use\nlaches as a defense to timely claims. Laches is an\n“equitable doctrine by which a court denies relief to a\nclaimant who has unreasonably delayed in asserting\nthe claim, when that delay has prejudiced the party\nagainst whom relief is sought.” Laches, Black’s Law\nDictionary (11th ed. 2019). What Claimant seek\nhere is what the Court rejected in Petrella.\n\n The Court in Petrella rejected Claimant’ policy\narguments too. Claimant say it would be prejudicial\nto permit damages for claims rendered timely by the\ndiscovery rule because “evidence has been lost,\nmemories have faded, and witnesses have\ndisappeared.” Pet.Br. 43-44 (quoting Gabelli, 568\nU.S. at 448). But, as the Court held in Petrella,\n 55\n\n\nbecause the “plaintiff bears the burden of proving\ninfringement”, “[a]ny hindrance caused by the\nunavailability of evidence . . . is at least as likely to\naffect plaintiffs as it is to disadvantage defendants”.\nPetrella, 572 U.S. at 683-84. In addition, as the Court\nexplained in Petrella, copyright registration is\nrequired before a copyright owner may sue for\ninfringement, ensuring that the “[k]ey evidence in the\nlitigation”—“the certificate, the original work, and the\nallegedly infringing work”—are preserved, reducing\nthe need for extrinsic evidence. Id. at 684.\n\n Moreover, the Copyright Act contemplates and\npermits the passage of time before claims are asserted\nby allowing “reversionary renewal rights exercisable\nby an author’s heirs”. Id. at 683. “Congress must have\nbeen aware that the passage of time and the author’s\ndeath could cause a loss or dilution of evidence”, yet\nchose to “give the author’s family ‘a second chance to\nobtain fair remuneration’”. Id. (citation omitted).\n\n Claimant argue that because the Copyright Act\npermits statutory damages, a broad discovery rule\nwould lead to “substantial mischief”. Pet.Br. 30 n.6.\nBut the availability of statutory damages cuts against\nClaimant’ arguments, not in favor of them. The\navailability of statutory damages “for all\ninfringements involved in the action”, 17 U.S.C.\n§ 504(c), reflects Congress’s judgment that a\nsuccessful copyright plaintiff always should be able\nto achieve “retrospective relief” for timely and\nmeritorious claims, even where its actual damages\nand infringers’ profits are very low, difficult to prove,\nor even nonexistent. That is because the primary goal\nof copyright law is utilitarian; it permits recovery for\n 56\n\n\ninfringements not merely to compensate the copyright\nowner, but to incentivize the creation of future works\nby others. See Eldred, 537 U.S. at 212 n.18. It is\nCongress’s prerogative to strike the appropriate\nbalance. A rule that eliminates damages even for\ntimely claims, as the Sohm rule does, cannot be\nreconciled with Congress’s judgment that a successful\ncopyright plaintiff should recover retrospective relief\nin the form of statutory damages, even if it has no\nactual damages.\n\n Claimant warn that a “broad discovery rule”\nwould be a “boon to copyright ‘trolls’”. Pet.Br. 31 n.6.\nWhether that risk is so great that the Copyright Act\nshould be amended is not an issue for this Court to\ndecide. It is an issue for Congress.\n\n And it is irrelevant here: Mr. Respondent is not a\ncopyright troll. Mr. Respondent paid for the works at issue\nto be created and, as the rightful copyright owner, is\nentitled to determine how the works are exploited and\nto benefit from their exploitation. When companies\nlike Claimant create works that are not original in\ntheir own right but, instead, rely on original works\ncreated by others to earn substantial profits, they\nmust be certain to license the underlying works from\nthe correct persons and entities that actually own\nthem. The copyrights at issue were registered to\nRespondents. Claimant, who knew exactly what\nworks they sought to license from Mr. Butler, were in\na better position than Mr. Respondent (who did not know\nabout the unlawful licenses) to determine copyright\nownership. Any prejudice to Claimant from not\ndoing so comes from their own lack of diligence, not\nMr. Respondent’s.\n 57\n\n\n Claimant take issue with the discovery rule.\nBut their recourse is to Congress, not this Court.\nCongress has amended Title 17 nearly 80 times since\n1976, including many times since the courts of appeals\nrecognized the discovery rule, yet it has not\nimplemented a damages bar or an injury rule. See\nsupra Section II.B.3. If Claimant believe the\nCopyright Act should be amended to deal with\ncopyright trolls, that is a matter for the legislature.\nSee United States v. Davis, 139 S.Ct. 2319, 2336\n(2019) (“[T]his Court is not in the business of writing\nnew statutes to right every social wrong it may\nperceive.”).\n 58\n\n\n CONCLUSION\n\n For the reasons stated above, the decision of the\ncourt of appeals should be affirmed.\n\nDate: January 5, 2024", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of the damages period for a timely copyright claim.", "governingLaw": "Apply United States federal copyright law; Eleventh Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal copyright law; Eleventh Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Warner Chappell Music, Inc. v. Nealy", "citation": "601 U.S. 366 (2024)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/23pdf/22-1078_4gci.pdf" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The dispositive issue is narrow and has been framed by the certiorari grant: assuming the discovery accrual rule applies, may a copyright plaintiff recover damages for infringement acts that occurred more than three years before suit was filed? The claimant secured certiorari to resolve a circuit split on that precise question—the split between the Second Circuit's Sohm damages bar and the majority rule permitting damages for timely discovery-rule claims. Yet the claimant's merits brief does not defend Sohm. Instead, it pivots to argue that the discovery rule should not apply to copyright claims at all, or should be limited to fraud, latent disease, and medical malpractice. That pivot fails for multiple independent reasons.\n\nFirst, the question whether the discovery rule applies to copyright claims was not raised below, was not decided below, and is not encompassed in the question presented as limited by the certiorari grant. The claimant conceded as much in its certiorari petition, stating that 'the availability of the discovery rule was not challenged below' and that 'a conflict in the courts of appeals has not yet developed' on that antecedent question. All eleven courts of appeals to have addressed the question have adopted the discovery rule for copyright claims. The claimant's attempt to relitigate that issue here would deprive the respondent of fair notice and exceed the scope of review. The tribunal confines its analysis to the question actually presented.\n\nSecond, on the merits of the question presented, the claimant has failed to carry its burden of identifying any textual basis for a separate damages bar. Section 507(b) provides that '[n]o civil action shall be maintained... unless it is commenced within three years after the claim accrued.' By its terms, this provision governs when a civil action may be 'maintained'—i.e., whether it is timely. It says nothing about limiting the type or quantum of relief available for a timely claim. Section 504, the Copyright Act's remedies provision, states that a copyright owner is 'entitled to recover' actual damages, 'any' profits of the infringer, or statutory damages for 'all infringements involved in the action.' The words 'any' and 'all' are expansive and unqualified. Nothing in § 507(b) or § 504 distinguishes between claims seeking damages and claims seeking other relief, or between infringement acts occurring within versus beyond three years of filing.\n\nThird, the structure of Title 17 confirms this reading. Congress enacted express three-year look-back damages bars in specific, limited contexts: § 1323(c) bars recovery for vessel hull design infringement 'committed more than 3 years before the date on which the complaint is filed,' and § 504(d) limits enhanced damages against proprietors of public establishments to 'the preceding period of up to 3 years.' If § 507(b) already contained a general three-year damages bar, these provisions would be superfluous—a result the rule against surplusage forbids. Congress knew how to impose a damages bar and did so only in narrow contexts, implicitly excluding one from the general copyright framework.\n\nFourth, the claimant's reliance on Petrella is misplaced. In Petrella, the Court held that laches cannot bar timely copyright claims. Its statements that 'a successful plaintiff can gain retrospective relief only three years back from the time of suit' described the operation of the separate-accrual rule on the specific facts of that case—where the plaintiff was on notice of infringement for decades and each infringing act accrued immediately upon occurrence. The Court expressly declined to decide whether the discovery rule governs accrual under § 507(b), noting in a footnote that it had 'not passed on the question.' Petrella's 'look-back' language cannot be read to establish a categorical damages bar for claims that are timely under a discovery rule the Court did not address.\n\nThe respondent, by contrast, has demonstrated that the majority rule—adopted by every court of appeals except the Second Circuit—correctly applies the statute as written: each infringing act gives rise to a separate claim; each claim accrues when discovered or when it reasonably should have been discovered; each timely claim carries the full range of § 504 remedies; and claims not asserted within three years of accrual are time-barred in their entirety. This reading gives effect to every provision of Title 17, respects Congress's express choice to impose damages bars only in limited contexts, and aligns with the separate-accrual rule recognized in Petrella. The claimant's alternative argument—that even if a broad discovery rule exists, the tribunal should impose a three-year damages cap as an 'equitable exception'—is foreclosed by Petrella's rejection of laches as a defense to timely copyright claims. A judicially crafted equitable damages bar would be functionally indistinguishable from the laches defense the Court already rejected.", "allocation": null, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-060", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nSTATEMENT\n The Lanham Act entitles prevailing plaintiffs to\nawards of infringers’ profits—subject to “principles of eq-\nuity”—for a violation of section 1114, “a violation under\nsection 1125(a) or (d) of this title, or a willful violation un-\nder section 1125(c) of this title.” 15 U.S.C. § 1117(a). Pe-\ntitioner Claimant proved that respondent\nRespondent infringed its trademark under section 1125(a)\nby using counterfeit Claimant components on its handbags.\nThe evidence showed that Respondent recognized the risk of\ncounterfeit components in its supply chain in China, and\nthe jury found that Respondent acted with “callous disregard”\nfor Claimant’s rights. But the lower courts construed the\nLanham Act to require a mark holder to prove an in-\nfringer’s willfulness to recover the infringer’s profits for a\nviolation of section 1125(a). Because the jury found that\nRespondent’s conduct was not “willful,” Claimant had no oppor-\ntunity even to argue that the facts of its case warranted\nan award of profits.\n Nothing in the Lanham Act requires this rigid result.\nNo “willfulness” requirement appears in the statutory\n 4\n\n\ntext. Rather, the text requires only a “violation” of section\n1125(a) to recover an award of infringers’ profits, while at\nthe same time requiring a “willful violation” of section\n1125(c), governing trademark dilution. That deliberate\ndrafting choice must have meaning.\n Congress made similar choices in other provisions of\nthe Lanham Act. The Act contains numerous provisions\nin which Congress said that plaintiffs cannot prove a cause\nof action or recover certain relief, including profits, un-\nless they prove a defendant’s mental state. Reading a\nblanket “willfulness” requirement into section 1117(a)\nwould make a mess of those provisions.\n Respondent’s contrary textual argument is really not about\nthe text. Respondent argues that the phrase “principles of eq-\nuity” in section 1117(a) incorporates a “willfulness” re-\nquirement from the common law. But equity, by its na-\nture, gives courts flexibility to consider wide-ranging cir-\ncumstances, including intent. Respondent’s bright-line rule\nwould eviscerate the flexibility inherent in equity, elevat-\ning “willfulness” above every other equitable considera-\ntion and ignoring other levels of culpability such as “cal-\nlous disregard,” recklessness, and gross negligence. Its\nrule has all of the downsides of arbitrary line-drawing and\nnone of the upsides of the rule required by the plain text,\nwhich allows courts in any given case to rely on the ab-\nsence of willfulness in fashioning relief. In any event, the\ncommon law does not help Respondent. The pre-Lanham Act\ncommon law relevant to trademarks encompassed differ-\nent claims and theories of liability. Courts’ treatment of\nthe profits remedy across different common-law claims\nvaried. In short, even under Respondent’s approach to the stat-\nute, no uniform requirement of willfulness exists.\n 5\n\n\n The decision below substantially undermines the Lan-\nham Act’s twin goals of protecting mark holders’ invest-\nments in their marks and protecting the public from con-\nfusion. As a practical matter, an award of profits is often\na mark holder’s only remedy. Requiring willfulness in\nevery case, regardless of other circumstances, would deny\nmark holders compensation and create perverse incen-\ntives for global manufacturers to avoid monitoring their\nsupply chains. Nothing in the Lanham Act compels that\nresult. The judgment of the Federal Circuit should be re-\nversed.\n A. Statutory Framework\n The Lanham Act’s basic “purpose . . . is twofold.” H.R.\nRep. [DOCKET REDACTED], at 2 (1945). It “protect[s] the public so it\nmay be confident that, in purchasing a product bearing a\nparticular trade-mark which it favorably knows, it will get\nthe product which it asks for and wants to get.” Id. And\nthe Act “has as its object the protection of trade-marks,\nsecuring to the owner the good-will of his business.” Id.\nTo those ends, the Act creates various causes of actions\nand specifies the remedies available for each claim.\n 1. Causes of action. The Lanham Act “mak[es] ac-\ntionable the deceptive and misleading use” of both regis-\ntered and unregistered marks. Pub. L. [DOCKET REDACTED], § 45,\n60 Stat. 427, 444 (1946) (codified at 15 U.S.C. § 1127).\n a. Section 1114: infringement of registered marks.\nSection 1114 authorizes owners of registered marks to sue\ndefendants (a) for the unauthorized use of “any reproduc-\ntion, counterfeit, copy, or colorable imitation of a regis-\ntered mark,” or (b) for applying registered marks to any\n“labels, signs, prints, packages, wrappers, receptacles or\nadvertisements” without permission. 15 U.S.C.\n 6\n\n\n§ 1114(1)(a)-(b). This cause of action does not contain a\nmental-state requirement.\n Section 1114, however, does condition the availability\nof some remedies on the defendant’s mental state. Under\nsection 1114(1), an infringer who applies a mark without\npermission, in violation of section 1114(1)(b), is not liable\nfor “profits or damages unless the acts have been commit-\nted with knowledge that such imitation is intended to be\nused to cause confusion, or to cause mistake, or to de-\nceive.” And under section 1114(2), an “innocent infringer”\n“engaged solely in the business of printing the mark . . .\n[is subject] only to an injunction against future printing.”\n15 U.S.C. § 1114(2)(A).\n b. Section 1125(a): false or misleading uses of reg-\nistered or unregistered marks. Section 1125(a) creates\na cause of action against “[a]ny person who . . . uses in\ncommerce any word, term, name, symbol, or device” or\n“any false designation of origin, false or misleading de-\nscription of fact, or false or misleading representation of\nfact” if those representations are likely to cause confusion\nor deception about the origin, endorsement, or association\nof goods or services. See 15 U.S.C. § 1125(a).\n That cause of action has no mental-state requirement,\nnor does section 1125(a) condition the availability of rem-\nedies on the defendant’s mental state. Section 1125(a)\noverlaps with section 1114 —a plaintiff with a registered\nmark, for instance, can pursue claims simultaneously un-\nder both sections, as Claimant did. Pet. App. 106a-107a; see,\ne.g., Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763,\n768 (1992); A & H Sportswear, Inc. v. Victoria’s Secret\nStores, Inc., 237 F.3d 198, 210 (3d Cir. 2000) (“identical\nstandards” govern parallel claims under both provisions).\nBut section 1125(a) “prohibits a broader range of prac-\n 7\n\n\ntices” than section 1114. Two Pesos, 505 U.S. at 768 (in-\nternal quotation marks omitted). For example, it prohib-\nits copying of trade dress, loosely defined as images used\nby a business. Id. at 764 n.1.\n c. Section 1125(c): dilution of registered or unreg-\nistered marks. Section 1125(c) creates a cause of action\nfor trademark dilution. Dilution is conduct that lessens\nthe primary association consumers have with a famous\ntrademark. Dilution can occur either through uses that\n“impair[] the distinctiveness of the famous mark” or\nthrough uses that “harm[] the reputation of the famous\nmark.” 15 U.S.C. § 1125(c)(2)(B)-(C); see Moseley v. V Se-\ncret Catalogue, Inc., 537 U.S. 418, 431 (2003). As with sec-\ntion 1125(a), the trademark-dilution cause of action in sec-\ntion 1125(c) does not have a mental-state requirement.\n Like sections 1114(1) and (2), however, section 1125(c)\nalso speaks to remedies. Section 1125(c)(1) authorizes\nowners of famous marks to obtain an injunction, “[s]ubject\nto the principles of equity,” against anyone who uses the\nmark in a manner “likely to cause dilution.” That injunc-\ntive remedy is available without regard to “the presence\nor absence of actual or likely confusion, of competition, or\nof actual economic injury.” 15 U.S.C. § 1125(c)(1). An in-\njunction under section 1125(c)(1) is also subject to the con-\nditions “set forth in section 1116”—the Lanham Act pro-\nvision that generally governs injunctive relief. 15 U.S.C.\n§ 1125(c)(5).\n Critically here, section 1125(c)(5) provides “[a]ddi-\ntional remedies” for trademark dilution beyond injunctive\nrelief when a plaintiff establishes willfulness. 15 U.S.C.\n§ 1125(c)(5). This provision states that mark holders\n“shall also be entitled to the remedies set forth in sections\n1117(a) and 1118 of this title”—the Lanham Act provi-\n 8\n\n\nsions governing monetary relief and the destruction of in-\nfringing items—“subject to the discretion of the court and\nthe principles of equity.” Id. To qualify for those reme-\ndies, mark holders must establish that defendants either\n“willfully intended to trade on the recognition of the fa-\nmous mark” or “willfully intended to harm the reputation\nof the famous mark.” Id. § 1125(c)(5)(B)(i)-(ii) (emphases\nadded).\n d. Section 1125(d): cyberpiracy of registered or un-\nregistered marks. Section 1125(d) prohibits persons\nother than mark holders from “register[ing], traffic[king]\nin, or us[ing]” the Internet domain name of a mark with\nbad-faith intent to profit from the mark—i.e., cyber-\npiracy. 15 U.S.C. § 1125(d)(1)(A); see 15 U.S.C.\n§ 1125(d)(1)(B)(i) (enumerating nine factors relevant to\nascertaining bad-faith intent).\n 2. Remedies. Sections 1116, 1117, and 1118 set forth\nthe principal remedies for violations of the foregoing\ncauses of action.\n a. Section 1116: injunctive relief. Section 1116 au-\nthorizes courts to enjoin trademark violations, “according\nto the principles of equity and upon such terms as the\ncourt may deem reasonable, to prevent the violation of\nany right of the registrant of a [registered] mark” under\nsection 1114, or “to prevent a violation under subsection\n(a), (c), or (d) of section 1125.” 15 U.S.C. § 1116(a).\n b. Section 1117(a): monetary damages. Section\n1117(a), the provision at issue here, authorizes monetary\nrelief. It provides for awards of damages, infringers’ prof-\nits, and costs “[w]hen a violation of any right of the regis-\ntrant of a [registered] mark [under section 1114] . . . , a\nviolation under section 1125(a) or (d) of this title, or a\nwillful violation under section 1125(c) of this title, shall\n 9\n\n\nhave been established.” 15 U.S.C. § 1117(a) (emphases\nadded).\n Two further conditions apply to a successful plaintiff’s\nright to recover damages, infringers’ profits, and costs.\nFirst, the award is “subject to the provisions of sections\n1111 and 1114,” which limit monetary remedies against\ndefendants with insufficiently culpable mental states or\ninsufficient knowledge. Id.; see also pp. 5-6, supra (dis-\ncussing section 1114).1 Second, an award of damages, in-\nfringers’ profits, and costs is “subject to the principles of\nequity.” 15 U.S.C. § 1117(a).\n Once a plaintiff establishes an entitlement to mone-\ntary relief, section 1117(a) gives courts discretion in set-\nting the amount of the award. With respect to damages,\ncourts have discretion to enter judgment “for any sum\nabove the amount found as actual damages, not exceeding\nthree times such amount.” Id. With respect to profits,\nsection 1117(a) requires a plaintiff “to prove [the] defend-\nant’s sales only; [the] defendant must prove all elements\nof cost or deduction claimed.” Id. If a court finds “that\nthe amount of the recovery based on profits is either inad-\nequate or excessive the court may in its discretion enter\njudgment for such sum as the court shall find to be just,\naccording to the circumstances of the case.” Id. An award\nof damages or profits must “constitute compensation and\nnot a penalty.” Id. Finally, “in exceptional cases,” courts\nmay also “award reasonable attorney fees to the prevail-\ning party.” Id.\n\n\n1\n Section 1111 eliminates the availability of profits and damages\nawards “in any suit for infringement” by registered-mark holders\nthat do not give notice that their marks were registered “unless the\ndefendant had actual notice of the registration.” 15 U.S.C. § 1111.\n 10\n\n\n c. Section 1117(b): treble profits or damages. Sec-\ntion 1117(b) requires courts to award “three times such\nprofits or damages, whichever amount is greater, to-\ngether with a reasonable attorney’s fee,” when infringers\nuse a counterfeit of a registered mark in violation of sec-\ntion 1114(1)(a) with a culpable mental state. 15 U.S.C.\n§ 1117(b); see 15 U.S.C. § 1116(d) (defining counterfeit\nmarks). Courts can decline to make such an award of tre-\nble damages or profits only based on “extenuating circum-\nstances.” 15 U.S.C. § 1117(b).\n d. Section 1117(c) and (d): statutory damages.\nSection 1117(c) creates a statutory-damages remedy for\ncounterfeiting of registered marks. Plaintiffs may elect\nthat remedy “instead of actual damages and profits under\nsubsection [1117](a).” Statutory damages under section\n1117(c) ordinarily cannot exceed $200,000 for each type of\ninfringing goods or services. 15 U.S.C. 1117(c)(1); see also\n15 U.S.C. § 1117(d) (providing statutory damages for cy-\nberpiracy violations). “[I]f the court finds that the use of\nthe counterfeit mark was willful,” however, mark holders\ncan recover up to “$2,000,000 per counterfeit mark per\ntype of goods or services sold.” 15 U.S.C. § 1117(c)(2).\n e. Section 1118: destruction of infringing articles.\nSection 1118 provides that, once a mark holder proves “a\nviolation” under section 1114, “a violation under section\n1125(a) of this title, or a willful violation under section\n1125(c) of this title,” a court may order that the infringing\nitems “be delivered up and destroyed.” 15 U.S.C. § 1118\n(emphasis added).\n B. Factual and Procedural Background\n 1. Claimant is a family business based in Milford, Con-\nnecticut. Claimant sells patented magnetic snap fasteners\n 11\n\n\nunder its registered trademark, Claimant, for use in wal-\nlets, handbags, and other leather goods. Pet. App. 17a.\nHoward Reiter, Claimant’s president, invented the snaps.\nHe represents the fourth generation of hardware and fas-\ntener makers in his family.\n Respondent designs, markets, and distributes fashion acces-\nsories, including handbags and small leather goods. Fos-\nsil does not manufacture its own products. Instead, Respondent\ncontracts with factories outside the United States to pro-\nduce its designs. Pet. App. 17a. Superior Leather Lim-\nited, which operates a factory in China, manufactured the\nRespondent products at issue.\n In 2002, Respondent and Claimant entered an agreement to\nuse Claimant in Respondent’s products. Respondent agreed\nto instruct its manufacturers to purchase Claimant fasten-\ners from Wing Yip Metal Manufactory Accessories, Lim-\nited. Wing Yip is the sole authorized manufacturer of Ro-\nmag fasteners in China. Pet. App. 17a.\n Respondent’s agents admitted at trial the “universal”\nknowledge that counterfeiting is a problem in China, both\ngenerally and with respect to handbag components such\nas Claimant’s snaps. App. 104a-105a, 108a. In fact, Respondent\nhad reason to believe that its contract manufacturer, Su-\nperior, was using counterfeit components to manufacture\nRespondent handbags long before Claimant sued in 2010. An in-\nternal Respondent email from 2008 suggested that Superior had\n“lie[d]” about the authenticity of zippers in the Respondent-\nbranded handbags it manufactured. App. 117a-125a. The\nRespondent director ultimately responsible for the authenticity\nof products made in China acknowledged that Superior\nhad a practice of “misle[ading] Respondent about materials they\nwere using.” App. 112a.\n 12\n\n\n Recognizing those concerns, Respondent stationed quality-\ncontrol inspectors in China. App. 110a-111a. It trained\nthose employees to monitor the authenticity of zippers\nmanufactured by international zipper giant YKK. App.\n113a-114a. But—when it came to magnetic fasteners\nmanufactured by Claimant, a small family business—Respondent\ndid nothing to guard against the known risk of counter-\nfeiting. App. 113a.\n 2. In 2010, Reiter discovered that certain Respondent\nhandbags sold in the United States contained counterfeit\nsnaps bearing the Claimant mark. Pet. App. 18a. Based on\nthat discovery, Claimant sued Respondent and retailers of Respondent\nproducts in the United States District Court for the Dis-\ntrict of Connecticut. Pet. App. 18a. Claimant alleged that\nthe defendants had infringed Claimant’s trademark and pa-\ntent by selling Respondent handbags that contained counterfeit\nmagnetic snap fasteners. Claimant sought injunctive relief\nand monetary damages, including an award of defendants’\nprofits under section 1117(a) of the Lanham Act.\n After a seven-day trial in 2014, a jury found that Respondent\nhad infringed Claimant’s registered trademark in violation\nof section 1114; falsely represented that its products came\nfrom the same source as Claimant’s in violation of section\n1125(a); and infringed Claimant’s patent by using Claimant’s\npatented snap technology without authorization. Pet.\nApp. 18a. In response to a special interrogatory, the jury\nfound that Claimant had not “proved by a preponderance of\nthe evidence that Defendants’ trademark infringement\nwas willful.” Pet. App. 18a; see Pet. App. 107a-108a.\n The district court instructed the jury that it could\naward Respondent’s profits to remedy trademark infringement\nunder either of two different rationales. The jury could\naward profits if it found Respondent “ha[d] been unjustly en-\nriched by use of [Claimant]’s trademark” or if “there [was]\n 13\n\n\na need to deter” future infringement, “or both.” App. 67a.\nTo award profits for deterrence, the jury had to find that\nRespondent “demonstrated a callous disregard of the known\nrights of Claimant as a mark holder.” App. 67a.2\n The jury made advisory awards of Respondent’s profits un-\nder both rationales. The jury determined that Respondent\nshould pay $90,759.36 in profits to Claimant “to prevent un-\njust enrichment.” Pet. App. 108a. The jury then decided\nthat $6,704,046 of profits “should be awarded to deter fu-\nture trademark infringement.” Pet. App. 109a. The jury\nfound that 1% of Respondent’s profits were attributable to its\ninfringement.3 Pet. App. 109a. The jury also awarded Ro-\nmag patent damages at a royalty rate of $0.09 per unit, for\na total of $51,052.14 against Respondent and $15,320.61 against\nMacy’s, which retailed the infringing handbags. Pet. App.\n109a. The district court later reduced the jury’s patent-\ndamages award by 18% for each of Macy’s and Respondent on\nthe basis of laches. Pet. App. 83a.\n After a two-day bench trial on equitable defenses and\nremedies, see 15 U.S.C. § 1117(a), the district court held\nthat “Claimant is not entitled to any award of profits as a\nresult of Plaintiff’s failure to prove that Respondent’s trade-\nmark infringement was willful.” Pet. App. 95a (citing Int’l\nStar Class Yacht Racing Ass’n v. Tommy Hilfiger,\n\n2\n The court had previously recognized these two rationales based on\nSecond Circuit case law. See Claimant v. Respondent, 979 F.\nSupp. 2d 264, 278-83 (D. Conn. 2013) (citing George Basch Co. v. Blue\nCoral, Inc., 968 F.2d 1532 (2d Cir. 1992), and discussing callous disre-\ngard standard).\n3\n The question whether a plaintiff may obtain only those profits at-\ntributable to the infringement is not before the Court. The district\ncourt held, in an earlier ruling, that the answer to that question de-\npended on the rationale for recovery of profits. See Claimant, 979 F.\nSupp. 2d at 274-85.\n 14\n\n\nU.S.A., Inc., 80 F.3d 749, 753 (2d Cir. 1996)). The district\ncourt thus struck the jury’s profits award in its entirety.\nPet. App. 102a. The district court’s opinion and analysis\naddressed the availability of a profits award only for Fos-\nsil’s violation of section 1125(a), not for its infringement of\nClaimant’s registered trademark under section 1114; the\nsubsequent appeal likewise focused only on the section\n1125(a) claim. The Second Circuit, however, had held that\nwillfulness is required to obtain awards of infringers’ prof-\nits, both when the underlying claim arose under section\n1114 and when the underlying claim arose under section\n1125(a). See, e.g., Bambu Sales, Inc. v. Ozak Trading Inc.,\n58 F.3d 849, 850 (2d Cir. 1995), abrogated on other\ngrounds by 4 Pillar Dynasty LLC v. N.Y. & Co., 933 F.3d\n202 (2d Cir. 2019); George Basch Co. v. Blue Coral, Inc.,\n968 F.2d 1532, 1540 (2d Cir. 1992).\n 3. On appeal, the Federal Circuit acknowledged that\nit was bound to follow Second Circuit precedent from 1992\nholding that willfulness is required to recover infringers’\nprofits. Pet. App. 22a (citing George Basch Co., 968 F.2d\n1532). In 1992, however, section 1117(a) did not distin-\nguish between “a violation under section 1125(a) and (d)”\nand “a willful violation under section 1125(c),” as it pres-\nently does. Congress enacted section 1125(c), governing\ntrademark dilution, in 1996, and required a showing of\nwillfulness to obtain damages and profits under that new\nprovision. See Pub. L. No. 104-98, § 3(a), 109 Stat. 985,\n985-96 (1996) (codified at 15 U.S.C. § 1125(c)(5)). In 1999,\nCongress amended section 1117(a) to carry over this will-\nfulness limitation. See Pub. L. No. 106-43, § 3, 113 Stat.\n218, 219 (1999); Pub. L. No. 106-113, § 3003, 113 Stat. 1501,\n1501A-549 (1999); Pub. L. No. 107-273, § 13207, 116 Stat.\n1758, 1906 (2002).\n 15\n\n\n The Federal Circuit concluded that the 1999 amend-\nment would not change the result in the Second Circuit.\nThe Federal Circuit reasoned that “the limited purpose of\nthe 1999 amendment” adding “or a willful violation under\nsection 1125(c)” to section 1117(a) was to clarify that dam-\nages and profits were available for a willful violation of\nsection 1125(c). Pet. App. 29a-30a. The panel thus did not\nbelieve that the 1999 amendment affected prior Second\nCircuit decisions construing section 1117(a) to require a\nshowing of willfulness to recover profits for violations of\n1125(a). Pet. App. 30a-31a.\n As to the statutory text, the Federal Circuit dismissed\nthe distinction between “a violation” of sections 1125(a)\nand (d) and “a willful violation” of section 1125(c) because\nthe relevant “statutory provisions [were not] enacted at\nthe same time.” Pet. App. 31a. The panel also rejected\nClaimant’s reliance on other provisions of the Lanham Act\nthat condition recovery of monetary relief on a culpable\nmental state because those provisions involve remedies in\naddition to profits. Pet. App. 32a.\n 4. Claimant petitioned for a writ of certiorari, raising\nboth the question currently presented and the question\nwhether and to what extent laches may bar an award for\npatent infringement. Because the Court resolved the sec-\nond question in SCA Hygiene Prods. Aktiebolag v. First\nQuality Baby Products, LLC, 137 S. Ct. 954 (2017), the\nCourt granted Claimant’s petition, vacated the Federal Cir-\ncuit’s decision, and remanded for further proceedings.\n137 S. Ct. 1373 (2017).\n The Federal Circuit recalled its mandate and rein-\nstated the appeal, along with “those aspects of [its] earlier\ndecision and judgment . . . affirming the district court’s\njudgment declining to award Respondent’s profits.” Pet. App.\n 16\n\n\n15a. The Federal Circuit remanded the case to the dis-\ntrict court for entry of a new judgment consistent with\nSCA Hygiene Products. Pet. App. 14a.\n On remand, the district court entered an “Amended\nPartial Final Judgment” awarding Claimant patent dam-\nages in the full amount of the jury’s verdict, $51,052.14\nagainst Respondent and $15,320.61 against Macy’s, but reserv-\ning the question whether Claimant was entitled to prejudg-\nment interest. Pet. App. 12a. The district court later en-\ntered an amended final judgment, providing for prejudg-\nment interest, attorneys’ fees, and costs. Pet. App. 8a-\n10a. It amended that judgment in immaterial respects.\nPet. App. 5a-7a.\n 5. Claimant appealed again to the Federal Circuit. Pet.\nApp. 3a. Respondent moved to dismiss the portion of the appeal\nthat addressed the question presented here, arguing that\nthe issue had already been litigated and reaffirmed by the\nFederal Circuit on remand from the Supreme Court. Pet.\nApp. 2a-3a.\n On February 5, 2019, the Federal Circuit granted the\nmotion “to the extent that the appeal is limited to issues\ndecided by the district court in its orders after the remand\nfrom this court”—i.e., the patent-damages issues. Pet.\nApp. 3a. Following that order, Claimant informed the Fed-\neral Circuit that its “sole remaining challenge to the dis-\ntrict court’s judgment in this case concerns the Lanham\nAct profits issue” and that no further issues thus re-\nmained to be briefed. Notice, [TARGET IDENTIFIER REDACTED], [DOCKET REDACTED], ECF No. 35 (Feb. 19, 2019). The\nFederal Circuit summarily affirmed the judgment of the\ndistrict court and entered a final judgment. Supp. App.\n1a-4a.\n 17\n\n SUMMARY OF ARGUMENT\n The Lanham Act does not require a showing of willful-\nness as a prerequisite to awards of infringers’ profits un-\nder section 1117(a).\n A. Section 1117(a), by its terms, does not require a\nshowing of willfulness as a prerequisite to awards of in-\nfringers’ profits in all cases. That omission is dispositive.\nCongress also carefully distinguished in section 1117(a)\nbetween “a violation of” section 1114, a “violation under\nsection 1125(a) or (d) of this title, or a willful violation un-\nder section 1125(c) of this title.” 15 U.S.C. § 1117(a) (em-\nphasis added). The Act repeats that distinction in section\n1118, governing destruction of infringing products. This\nCourt presumes that Congress acts intentionally when, as\nhere, it uses particular language in one part of a statute\nbut not elsewhere. Had Congress wanted to impose a uni-\nform willfulness requirement to recovery of profits, it eas-\nily could have done so.\n The broader structure of the Act confirms the absence\nof any willfulness requirement to recover infringers’ prof-\nits here. Throughout the Lanham Act, Congress condi-\ntioned liability and relief on defendants’ mental state, in-\ncluding in sections 1117(b) (enhanced damages and prof-\nits), 1117(c) (statutory damages instead of damages or\nprofits), 1114 (cause of action for infringement of regis-\ntered marks), and 1125(d) (cause of action for cyber-\npiracy). Reading an implicit willfulness requirement into\nsection 1117(a) to recover infringers’ profits creates ten-\nsion—if not outright conflict—with the mental-state re-\nquirements in these other provisions, providing yet fur-\nther proof that section 1117(a) means what it says.\n B. Respondent argues that the phrase “principles of equity”\nin section 1117(a) incorporates a common-law rule that a\n 18\n\n\nplaintiff must prove willfulness to recover an infringer’s\nprofits. Equity, however, gives courts discretion to shape\nrelief to all the circumstances of a given case. This Court\naccordingly has rejected bright-line rules for equitable\nremedies in other intellectual-property contexts. Respondent’s\nproposed rule fails to account for varying degrees of cul-\npability that may be present in a given case. Here, for\ninstance, the jury found that Respondent acted with “callous\ndisregard” for Claimant’s rights, but Respondent’s black-and-\nwhite rule precluded the court even from considering a\nprofits award. That result defies the flexible nature of eq-\nuity.\n Respondent’s argument that “principles of equity” incorpo-\nrates a bright-line willfulness requirement also flouts the\nplain text. In Park ’N Fly, Inc. v. Dollar Park & Fly, Inc.,\n469 U.S. 189 (1985), the Court refused to interpret the\nsame “principles of equity” phrase in section 1116 of the\nLanham Act in a way that would conflict with the plain\ntext. So too here, the Act’s text and structure make clear\nthat willfulness is not a prerequisite to awards of profits.\nRespondent’s approach would require courts to comb century-\nold common law—which does not map cleanly onto the\nLanham Act’s causes of action—for evidence of atextual\nlimitations to recovery.\n In any event, when the Lanham Act was enacted,\nbackground principles regarding the availability of in-\nfringers’ profits to remedy trademark infringement were\nanything but uniform or well established. Courts often\ngranted profits awards under the common law of trade-\nmark infringement without requiring or discussing will-\nfulness. This Court did not require willfulness in its cases\napplying the predecessor 1905 trademark act. Respondent’s\ncontrary cases largely involve unfair-competition claims\nthat did not address protectable trademarks. Even those\n 19\n\n\nunfair-competition cases did not uniformly require willful-\nness.\n C. The plain-text interpretation of section 1117(a) best\npromotes the Lanham Act’s goals of protecting mark\nholders and the public. Often, an award of infringers’\nprofits will be the only meaningful remedy for infringe-\nment. A rigid willfulness requirement could preclude any\nrecovery. This concern is all the more acute in today’s\nglobal economy. If willfulness is required for plaintiffs to\nobtain profits awards, defendant manufacturers will have\nlittle incentive to monitor their supply chains to prevent\ntrademark infringement. Consistent with these policy\nconsiderations, courts have rejected bright-line willful-\nness requirements for recovery of infringers’ profits un-\nder both copyright and patent law. There is nothing\nunique about trademark law that would justify a different\nresult.\n\n ARGUMENT\n\nWILLFULNESS IS NOT REQUIRED UNDER SECTION\n1117(A) TO AWARD INFRINGERS’ PROFITS FOR VIOLA-\nTIONS OF SECTION 1125(A)\n The courts of appeals are divided on whether a plain-\ntiff must prove willfulness to recover profits under section\n1117(a). Some courts, applying the plain text, do not re-\nquire a showing of willfulness. See, e.g., Quick Techs., Inc.\nv. Sage Grp. PLC, 313 F.3d 338, 349 (5th Cir. 2002). Oth-\ners hold that a showing of willfulness is a prerequisite to\nrecovery of infringers’ profits, including under both sec-\ntion 1114 and section 1125(a). See, e.g., 4 Pillar Dynasty,\n933 F.3d at 209 (section 1114); Minn. Pet Breeders, Inc. v.\nSchell & Kampeter, Inc., 41 F.3d 1242, 1247 (8th Cir. 1994)\n(section 1114); George Basch Co., 968 F.2d at 1537 (section\n1125(a)). Despite this confusion, the text, structure, and\n 20\n\n\npolicies of the Lanham Act point to one clear answer.\nMark holders need not prove willfulness to recover an in-\nfringer’s profits.\n\n A. The Statutory Text and Structure Compel the Conclu-\n sion That Willfulness Is Not Required\n Section 1117(a)’s text refutes the notion that a mark\nholder must always prove willfulness to recover an in-\nfringer’s profits, and instead requires willfulness only as\na prerequisite to monetary relief for trademark-dilution\nviolations under section 1125(c). The rest of the Lanham\nAct reinforces that conclusion.\n\n 1. The Text of Section 1117(a) Does Not Require a\n Showing of Willfulness\n Statutory interpretation begins with the text—and\nwhen, as here, the text is unambiguous, that is also where\nthe inquiry ends. Puerto Rico v. Franklin Cal. Tax-Free\nTr., 136 S. Ct. 1938, 1946 (2016); Lamie v. U.S. Tr., 540\nU.S. 526, 534 (2004). The text of section 1117(a) unambig-\nuously omits any willfulness requirement for awards of\nmonetary relief under section 1125(a). Again, section\n1117(a) states in relevant part:\n When a violation of any right of the registrant of a\n mark registered in the Patent and Trademark Of-\n fice [including a violation of § 1114], a violation un-\n der section 1125(a) or (d) of this title, or a willful\n violation under section 1125(c) of this title, shall\n have been established in any civil action[,] the\n plaintiff shall be entitled, subject to the provisions\n of sections 1111 and 1114 of this title, and subject\n to the principles of equity, to recover (1) defend-\n ant’s profits, (2) any damages sustained by the\n plaintiff, and (3) the costs of the action.\n 21\n\n15 U.S.C. § 1117(a).\n Section 1117(a) requires mark holders to establish “a\nviolation under section 1125(a) or (d)” as a prerequisite to\nrecovering damages, profits, or costs. Under the plain\ntext, therefore, any violation of those provisions suffices,\nnot just willful ones. The modifier “willful” appears no-\nwhere in that phrase. Nor does the word “willful” appear\nanywhere in section 1125(a) as an element of the false-rep-\nresentation cause of action. The Court has a “duty to re-\nfrain from reading a phrase into the statute when Con-\ngress has left it out.” Keene Corp. v. United States, 508\nU.S. 200, 208 (1993); see also Dean v. United States, 556\nU.S. 568, 572 (2009) (the Court “ordinarily resist[s] read-\ning words or elements into a statute that do not appear on\nits face” (quoting Bates v. United States, 522 U.S. 23, 29\n(1997)). That cardinal principle of statutory construction\nshould end the case.\n The rest of section 1117(a) confirms that violations of\nsection 1125(a) need not be willful for a successful plaintiff\nto be eligible for monetary relief. Section 1117(a) makes\na “violation” under section 1114, a “violation under section\n1125(a) or (d) of this title, or a willful violation under sec-\ntion 1125(c) of this title” prerequisites to all forms of mon-\netary relief, including profits. 15 U.S.C. § 1117(a) (empha-\nsis added).\n Congress made the same distinction between “a viola-\ntion” of some provisions and “a willful violation under sec-\ntion 1125(c)” in the very next section. See 15 U.S.C.\n§ 1118. That provision, section 1118, authorizes the de-\nstruction of infringing articles in actions involving a “vio-\nlation of any right of the registrant of a [registered] mark”\nunder section 1114, “a violation under section 1125(a) of\nthis title, or a willful violation under section 1125(c) of this\ntitle.” 15 U.S.C. § 1118(a) (emphasis added).\n 22\n\n\n This Court presumes that Congress “acts intention-\nally when it uses particular language in one section of a\nstatute but omits it in another.” Dep’t of Homeland Sec.\nv. MacLean, 135 S. Ct. 913, 919 (2015) (citing Russello v.\nUnited States, 464 U.S. 16, 23 (1983)). That rule “applies\nwith particular force” when the relevant phrases appear,\nas here, “in close proximity—indeed, in the same sen-\ntence.” Id. at 919; see also Loughrin v. United States, 573\nU.S. 351, 358 (2014). In the span of twenty words, sections\n1117(a) and 1118 distinguish between “a violation,” on the\none hand, and “a willful violation,” on the other. Refusing\nto differentiate between those two neighboring phrases\nwould be “simply contrary to any reasonable interpreta-\ntion of the text.” MacLean, 135 S. Ct. at 919-20 (internal\nquotation marks omitted).\n Congress had compelling textual reasons to limit the\navailability of monetary relief under section 1117(a) and\ndestruction under section 1118 to willful violations of sec-\ntion 1125(c), while omitting any similar prerequisite for vi-\nolations of sections 1114, 1125(a), or 1125(d). Section\n1125(c)(5) provides that famous-mark holders that estab-\nlish any type of trademark dilution can obtain an injunc-\ntion pursuant to section 1116. But famous-mark holders\nmust also establish that the defendant “willfully intended”\nto exploit the famous mark or harm its reputation to ob-\ntain “the remedies set forth in sections 1117(a) and 1118.”\n15 U.S.C. § 1125(c)(5). Congress thus needed to specify in\nsections 1117(a) and 1118 that only “willful violations of\nsection 1125(c)” can trigger monetary relief to make sec-\ntions 1117(a) and 1118 consistent with, and parallel to, sec-\ntion 1125(a). By contrast, sections 1114, 1125(a), and\n1125(d) contain no similar language restricting the availa-\nbility of relief depending on mental culpability. The infer-\nence is inescapable that Congress imposed a threshold\n 23\n\n\nwillfulness requirement for certain kinds of relief for vio-\nlations of section 1125(c), but not for violations of sections\n1114, 1125(a), or 1125(d).\n “Had Congress intended” to impose a universal will-\nfulness prerequisite to monetary relief under section\n1117(a), “it easily could have drafted language to that ef-\nfect.” Mississippi ex rel. Hood v. AU Optronics Corp.,\n571 U.S. 161, 169 (2014); see also Marx v. Gen. Revenue\nCorp., 568 U.S. 371, 384 (2013). Congress knew how to\ngroup together the exact same provisions that section\n1117(a) addresses—sections 1114, 1125(a), 1125(c), and\n1125(d)—when it wanted to treat them uniformly. Con-\ngress did just that in section 1116. Section 1116 author-\nizes courts to enjoin trademark violations “according to\nthe principles of equity and upon such terms as the court\nmay deem reasonable, to prevent the violation of any right\nof a [registered mark]” under section 1114, or “to prevent\na violation under subsection (a), (c), or (d) of section 1125.”\n15 U.S.C. § 1116. Congress chose a different path in sec-\ntion 1117(a), instead requiring that section 1125(c) viola-\ntions be willful for an award of monetary relief. Claimant’s\nconstruction of the Lanham Act honors that distinction;\nRespondent’s does not.\n\n 2. The Broader Structure of the Lanham Act Confirms\n the Plain-Text Interpretation\n “It is a fundamental canon of statutory construction\nthat the words of a statute must be read in their context\nand with a view to their place in the overall statutory\nscheme.” Davis v. Mich. Dep’t of Treasury, 489 U.S. 803,\n809 (1989); see also King v. St. Vincent’s Hosp., 502 U.S.\n215, 221 (1991). Throughout the Lanham Act, Congress\nspecified when a culpable mental state was a prerequisite\nto liability or relief. That careful consideration of mental\nstate, on its own, suggests that section 1117(a) does not\n 24\n\n\ntacitly impose a threshold willfulness requirement. See\nPac. Operators Offshore, LLP v. Valladolid, 565 U.S. 207,\n216 (2012). Further, an implicit threshold willfulness re-\nquirement would create tension—if not outright con-\nflict—with other statutory provisions. The structure of\nthe Lanham Act thus confirms what the plain text makes\nclear: willfulness is not a prerequisite to awards of in-\nfringers’ profits for violations of section 1125(a).\n Section 1117(c). Section 1117(c), which itself uses the\nword “willful,” is the most obvious example. That provi-\nsion creates a statutory-damages remedy for counterfeit-\ning of registered marks. Plaintiffs may elect statutory\ndamages “instead of actual damages and profits under\nsubsection [1117](a).” 15 U.S.C. 1117(c). Statutory dam-\nages under section 1117(c) ordinarily cannot exceed\n$200,000 for each type of infringing goods or services.\nBut, “if the court finds that the use of the counterfeit mark\nwas willful,” mark holders can recover up to “$2,000,000\nper counterfeit mark per type of goods or services sold.”\n15 U.S.C. § 1117(c)(2).\n Imposing a threshold willfulness requirement under\nSection 1117(a) for any profit award would render section\n1117(c) nonsensical. If section 1117(a) authorized profits\nawards only for willful use of counterfeit marks, Congress\nwould have had no reason to distinguish in section 1117(c)\nbetween willful and non-willful violations when allowing\nplaintiffs to elect statutory damages “instead of . . . profits\nunder [section 1117](a).” 15 U.S.C. § 1117(c). The height-\nened award would automatically be available. An implicit\nwillfulness requirement, therefore, would obliterate the\ndistinction between ordinary and enhanced statutory\ndamages when mark holders recover infringers’ profits.\n The Federal Circuit summarily dismissed the rele-\nvance of section 1117(c), reasoning that “[n]othing can be\n 25\n\n\ninferred from [it], particularly since it applies both to\ndamages and profits.” Pet. App. 32a. That misses the\npoint. Section 1117(c) allows a plaintiff to replace a profits\naward with a statutory-damages award. 15\nU.S.C. § 1117(a). That a plaintiff can also replace a dam-\nages award is irrelevant.\n Section 1117(b). Absent “extenuating circum-\nstances,” section 1117(b) requires courts to award “three\ntimes . . . profits or damages, whichever amount is\ngreater,” in cases brought under section 1114(1)(a) “if the\nviolation consists of . . . intentionally using a mark or des-\nignation, knowing such mark or designation is a counter-\nfeit mark . . . , in connection with the sale, offering for sale,\nor distribution of goods or services.” 15 U.S.C.\n§ 1117(b)(1) (emphases added). Section 1117(b) further\ndemonstrates that Congress knew how to enact specific\nmental state requirements when it wanted to.\n Interpreting section 1117(a) to include a threshold\nwillfulness requirement would have a bizarre effect on\nsection 1117(b). Section 1117(b) provides for a presump-\ntive award of treble profits in intentional counterfeiting\nactions under section 1114. 15 U.S.C. § 1117(b). If will-\nfulness were required for any profits award, the intent re-\nquirement in section 1117(b) would have little effect: a\nplaintiff ordinarily would have established intentional in-\nfringement by establishing willfulness.\n Section 1114. Construing section 1117(a) to impose a\nuniversal threshold willfulness requirement for all awards\nof infringers’ profits would also create tension with sec-\ntion 1114. That section provides for different remedies\nagainst different types of infringers: (1) persons who in-\nfringe registered marks “shall be liable in a civil action by\nthe registrant for the remedies hereinafter provided,” in-\ncluding damages and profits; (2) contributory infringers\n 26\n\n\n(who reproduce counterfeit marks on packaging or adver-\ntisements, for example) can be liable for damages and\nprofits only if they acted with “knowledge” that the origi-\nnal imitation was “intended to be used to cause confusion,\nor to cause mistake, or to deceive,” 15 U.S.C. § 1114(1)(b),\nand (3) “innocent” printers and publishers are not liable\nfor damages or profits at all. 15 U.S.C. § 1114(2)(A) & (B).\n Section 1117(a) incorporates section 1114’s limitations\non awards of damages and profits. See 15 U.S.C. § 1117(a)\n(“subject to the provisions of section[] . . . 1114”). But if\nsection 1117(a) superimposed an additional willfulness re-\nquirement as a prerequisite to profits awards against all\ninfringers, section 1114’s careful gradations among in-\nfringers would make no sense. “Innocent” printers and\npublishers would need no protection against profits\nawards in section 1114(2); they would, by definition, lack\nwillfulness. Nor would Congress have specified in section\n1114(1)(b) that contributory infringers could only face\nprofits awards if they knew the original imitation was “in-\ntended to be used” in a confusing or deceptive manner.\nThat knowledge requirement would add nothing to a\npreexisting willfulness requirement, as any willful con-\ntributory infringer would presumably have such\nknowledge. A universal willfulness requirement, in short,\nwould ruin the intricate, mental-state-based system that\nsection 1114 creates.\n Section 1125(d). Finally, section 1125(d) provides\nthat a person commits cyberpiracy only if he has “a bad\nfaith intent to profit from that mark.” 15 U.S.C.\n§ 1125(d)(1)(A)(i). The statute lists nine factors courts\nshould consider in determining whether bad faith exists.\nSee 15 U.S.C. § 1125(d)(1)(B)(i). Under section 1117(a) a\nplaintiff may obtain damages and profits for a “violation”\n 27\n\n\nof section 1125(d). See also 15 U.S.C. § 1117(d) (authoriz-\ning statutory damages for section 1125(d)(1) violations\n“instead of actual damages and profits”). It defies reason\nthat Congress intended to add an additional “willfulness”\nrequirement to an award of profits after already detailing\nthe requisite mental state in the cause of action itself.\n\n 3. The Federal Circuit’s Textual Arguments Lack\n Merit\n The Federal Circuit focused on whether the 1999\namendments to the Lanham Act (see p. 14, supra) would\nalter the Second Circuit’s reading of the statute. Claimant\ndoes not argue, however, that the 1999 amendment elimi-\nnates a pre-1999 requirement that mark holders prove\nwillfulness to recover profits for violations of section\n1125(a). Claimant’s argument is that no such requirement\never existed. The distinction between “a violation” of sec-\ntion 1125(a) and “a willful violation” of section 1125(c),\nwhich Congress added to section 1117(a) in 1999, just re-\ninforces that Congress intends willfulness to be required\nfor profits awards in cases under section 1125(c) but not\nin cases under sections 1114, 1125(a), or 1125(d).\n Regardless, the Federal Circuit’s reasons for dismiss-\ning that textual distinction are unconvincing. The court\nreasoned that the sole purpose of the 1999 amendment\nwas to “correct the mistaken omission[] . . . from the text\nof [section 1117(a)], of willful violations of [section]\n1125(c).” Pet. App. 29a-30a. But the omission is itself sig-\nnificant. Congress needed to add “a willful violation under\nsection 1125(c)” to section 1117(a) because section\n1125(c)(5) itself limits awards of damages and profits to\nwillful violations. No corresponding limitation exists in\nsection 1125(a).\n 28\n\n\n The Federal Circuit also observed that a showing of\nwillfulness is not—and never has been—required to ob-\ntain damages. Thus, the Federal Circuit hypothesized,\nCongress included the phrase “a willful violation” to re-\nstrict the availability of damages in trademark-dilution\ncases to those involving willfulness. Pet. App. 31a. That\nhypothesis strains the statutory language. Section\n1125(c)(5) provides that only willful violators of the trade-\nmark-dilution prohibition are liable for “the remedies set\nforth in sections 1117(a) and 1118” (emphasis added).\nThose remedies include damages and profits.\n Finally, the Federal Circuit observed that the courts\nof appeals were split on whether willfulness was a prereq-\nuisite to awards of infringers’ profits when Congress\namended the remedies provision in 1999. Thus, the Fed-\neral Circuit surmised, Congress included the phrase “a\nwillful violation under section 1125(c)” to ensure “a uni-\nform rule” for recovery of profits in trademark-dilution\ncases, even if the rule was not uniform for other Lanham\nAct violations. Pet. App. 31a-32a. That suggestion defies\nlogic. Had Congress intended the 1999 amendment to im-\npose uniformity, it would have made little sense to leave\nthe circuit split over profits awards for violations other\nthan trademark dilution unresolved.\n B. The Phrase “Principles of Equity” Does Not Jus-\n tify a Willfulness Requirement\n Respondent’s sole textual argument turns on the phrase\n“subject to the principles of equity.” 15 U.S.C. § 1117(a).\nThat reference to “principles of equity,” Respondent contends,\nreflects a “plain[],” “clear” and “express” legislative in-\ntent to “incorporate[] [a] pre-existing common law rule”\nrequiring willfulness for awards of infringers’ profits. Br.\nin Opp. 33, 34 & n.6.\n 29\n\n\n That argument does not withstand scrutiny. First,\nthis Court has long recognized that the essence of equity\nis flexibility, not rigidity. Against that background, Fos-\nsil’s argument is ironic: hard-and-fast rules are funda-\nmentally inconsistent with “the principles of equity.” In-\nstead, equity lets courts tailor relief to the facts of the\ncase.\n Second, this Court has repeatedly rejected the notion\nthat background legal principles—including “principles of\nequity”—can smuggle in atextual limitations that would\noverride a statute’s plain text. Respondent’s theory is an espe-\ncially poor fit for the Lanham Act, which creates statutory\ncauses of action that do not neatly match common-law an-\nalogues and refers to “principles of equity” in numerous\nprovisions.\n Third, the common law does not support Respondent any-\nway because, before the Lanham Act, courts did not uni-\nformly impose a willfulness prerequisite for awards of\ntrademark infringers’ profits. Instead, they considered\nall relevant circumstances. A fortiori, Respondent cannot come\nclose to meeting its high burden of showing that Congress\nlegislated against a settled background rule.\n\n 1. A Willfulness Requirement Is Inconsistent\n with Basic Equitable Principles\n The Lanham Act repeatedly uses the phrase “princi-\nples of equity.” It makes any award of damages, profits,\nor costs “subject to the principles of equity.”\n15 U.S.C. § 1117(a); see also 15 U.S.C. § 1125(c)(5). It im-\nposes the same limitation on awards of injunctive relief.\n15 U.S.C. § 1116(a). And “equitable principles, including\nlaches, estoppel, and acquiescence,” are defenses to the\nright to use an incontestable mark. 15 U.S.C. § 1115(b)(9).\n 30\n\n\nThe statute does not define “principles of equity” or “eq-\nuitable principles.”\n Respondent’s interpretation of “principles of equity” belies\nthe plain meaning of the text. Flexibility is “inherent in\nequitable remedies.” United States v. Paradise, 480 U.S.\n149, 183-84 (1987) (quoting Swann v. Charlotte-Mecklen-\nburg Bd. of Educ., 402 U.S. 1, 15 (1971)). As the Court\nacknowledged shortly before the passage of the Lanham\nAct, “[t]he essence of equity jurisdiction has been the\npower of the Chancellor to do equity and to mould each\ndecree to the necessities of the particular case. Flexibility\nrather than rigidity has distinguished it.” Hecht Co. v.\nBowles, 321 U.S. 321, 329-30 (1944).\n The phrase “principles of equity” in section 1117(a)\nconfirms that courts have broad discretion to tailor an\naward of monetary relief—including profits—to each par-\nticular case. Section 1117(a) provides that, if the court\nfinds “that the amount of the recovery based on profits is\neither inadequate or excessive the court may in its discre-\ntion enter judgment for such sum as the court shall find to\nbe just, according to the circumstances of the case.” 15\nU.S.C. § 1117(a). Given the flexible nature of equity, it\ndefies reason to suppose that Congress chose the phrase\n“principles of equity” to create—implicitly—a categorical\nwillfulness requirement.\n The Court’s recent decisions in intellectual-property\ncases emphasize that equity is an inherently flexible doc-\ntrine. In each case, the Court rejected hard-and-fast rules\nthat would limit district courts’ exercise of equitable dis-\ncretion.\n This Court in Halo Electronics rejected the Federal\nCircuit’s “objective recklessness” requirement for en-\n 31\n\n\nhanced patent damages because that bright-line rule im-\npermissibly cabined the Patent Act’s grant of discretion\nto the district court. Halo Elecs., Inc. v. Pulse Elecs., Inc.,\n136 S. Ct. 1923, 1933-34 (2016) (discussing 35 U.S.C.\n§ 284); cf. 15 U.S.C. § 1117(a). Respondent thus errs in stating\nthat Halo Electronics construed the Patent Act to contain\n“a bright-line requirement of willful infringement as a\nprerequisite to enhancing damages.” Br. in Opp. 33-34.\nThe Court, instead, recognized that enhanced damages\nare “generally . . . reserved for egregious cases typified by\nwillful misconduct.” 136 S. Ct. at 1932-34. But the Court\nrejected any bright-line rule for identifying such cases, in-\nstead holding that “[s]ection 284 allows district courts to\npunish the full range of culpable behavior.” Id. at 1933.\nAnd it emphasized that, “[a]s with any exercise of discre-\ntion, courts should continue to take into account the par-\nticular circumstances of each case in deciding whether to\naward damages, and in what amount.” Id.\n Octane Fitness, LLC v. ICON Health & Fitness, Inc.,\n572 U.S. 545 (2014), considered district courts’ discretion\nto award attorneys’ fees in “exceptional” cases under the\nPatent Act. See 35 U.S.C. § 285. The Federal Circuit had\ncreated a “rigid” test that awarded fees only in cases in-\nvolving litigation-related misconduct or objectively base-\nless suits brought in subjective bad faith. Octane Fitness,\n572 U.S. at 553-54. This Court reversed, holding that the\nFederal Circuit erred by “superimpos[ing] an inflexible\nframework onto statutory text that [was] inherently flex-\nible.” Id. at 555.\n Kirtsaeng v. John Wiley & Sons, Inc., 136 S. Ct. 1979,\n1988 (2016), addressed the fee-shifting provisions of the\nCopyright Act. The Court again rejected any bright-line\nrule, instead instructing courts to “take into account a\n 32\n\n\nrange of considerations” when deciding whether to im-\npose a fee award. Id. at 1987-89.\n Finally, eBay Inc. v. MercExchange, L.L.C., 547 U.S.\n388 (2006), construed language under the Patent Act au-\nthorizing courts to issue injunctions “in accordance with\nthe principles of equity.” 35 U.S.C. § 283. The district\ncourt had applied what this Court characterized as a “cat-\negorical rule” in denying the patent holder an injunction.\n547 U.S. at 393. The Federal Circuit reversed, articulat-\ning a patent-specific rule resulting in a “categorical grant”\nof injunctions. Id. at 393-94. This Court rejected both cat-\negorical approaches, holding that courts should exercise\ntheir discretion by applying the “traditional principles of\nequity” that govern the issuance of injunctions in all\ncases. Id. at 394.\n Here too, the Lanham Act affords district courts equi-\ntable discretion to award profits and instructs them to\naward profits that are “just, according to the circum-\nstances of the case.” 15 U.S.C. § 1117(a); see also Hear-\nings Before the Subcomm. on Trade-Marks, Comm. on\nPatents on H.R. 102, H.R. 5461, and S. 895, 77th Cong.,\n1st Sess. 205 (1941) (statement of Rep. Lanham) (explain-\ning that the Act was designed to “rely upon the courts in\ntheir discretion to administer [monetary relief] fairly”).\nThis Court should not “superimpose[] an inflexible frame-\nwork onto statutory text that is inherently flexible.” Oc-\ntane Fitness, 572 U.S. at 555.\n A flexible grant of discretion reflects common sense.\nA bright-line “willfulness” rule does not account for the\ngradations of culpability that exist in the real world. At\none end of the spectrum, an infringer may be truly “inno-\ncent”—for example, a newspaper that unknowingly vio-\nlates a trademark by printing an advertisement, see 15\nU.S.C. § 1114(2)(B). At the other end, an infringer may\n 33\n\n\nhave acted “willfully”—like the Chinese company that\nmanufactured the counterfeit snaps at issue here. In\ncases like this one, where the infringer ignored known\nrisks in its supply chain and acted with “callous disre-\ngard,” App. 67a, the infringer’s culpability may fall just\nshy of willfulness. In other cases, the infringer’s conduct\nmay have been reckless or grossly negligent. Section\n1117(a) gives courts discretion to consider the infringer’s\ndegree of culpability—even if less than willful—as one\nfactor in arriving at a just remedy.\n\n 2. Background Principles Do Not Trump the Text\n of the Lanham Act\n This Court has already refused to interpret the phrase\n“principles of equity,” as used in the Lanham Act, to in-\ncorporate legal rules that would override the statute’s\ntext. Like section 1117(a), section 1116(a) requires courts\nto apply “principles of equity” in determining the propri-\nety of injunctive relief. 15 U.S.C. § 1116(a). In Park N’\nFly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189 (1985),\nthe Court refused to interpret section 1116’s reference to\n“principles of equity” inconsistently with the statute’s\ntext. There, the Court reasoned that the Act’s text did not\nallow a defendant to defend “an action to enjoin the in-\nfringement of an incontestable trade or service mark . . .\non the grounds that the mark is merely descriptive.” Id.\nat 191. Because the text did not provide for that defense,\nthe Court refused to add it by way of “principles of eq-\nuity.” Id. at 202-03. The Court explained that interpret-\ning the phrase “principles of equity” to allow this atextual\ndefense “would expand the meaning of ‘equity’ to the point\nof vitiating the more specific provisions of the Lanham\nAct.” Id. at 203.\n This Court more generally has held that background\nlegal principles “can be relevant to the interpretation of\n 34\n\n\nan ambiguous text,” but cannot supplant the unambiguous\nmeaning of a statute. RadLAX Gateway Hotel, LLC v.\nAmalgamated Bank, 566 U.S. 639, 649 (2012). Resort to\nbackground principles is “a tool of construction, not an ex-\ntratextual supplement.” Hartford Underwriters Ins. Co.\nv. Union Planters Bank, NA, 530 U.S. 1, 10 (2000).\n These precedents establish that section 1117(a)’s ref-\nerence to “principles of equity” cannot supply a willful-\nness requirement for profit awards. As discussed, the\nstatutory text and structure make clear that section\n1117(a) does not require plaintiffs to prove willfulness to\nrecover profits under any cause of action other than trade-\nmark dilution under section 1125(c). Reading “principles\nof equity” to impose such a requirement for other viola-\ntions would improperly “vitiat[e] the more specific provi-\nsions of the Lanham Act.” Park N’ Fly, 469 U.S. at 203.\n Respondent’s theory would require courts to comb through\npre-Lanham Act case law for potential limitations on re-\nlief, even when the statute provides no indication that\nsuch limitation exists. For instance, Respondent cites the Re-\nstatement (First) of Torts to argue that profits were avail-\nable only if the infringer acted with the “purpose of secur-\ning the benefit of the reputation” of another’s trademark.\nBr. in Opp. 32 (quoting Restatement (First) of Torts\n§ 747(a) (1938)). But the Restatement imposed an identi-\ncal limitation on awards of damages. Restatement (First)\nof Torts § 745 (damages authorized if infringer acted with\n“purpose of securing the benefit of the reputation” of an-\nother’s trademark); see N.K. Fairbank Co. v. Windsor,\n124 F. 200, 202 (2d Cir. 1903) (in unfair competition case\nwithout fraudulent intent, “complainant was not entitled\nto recover damages or profits”). Respondent has no basis for\npicking only the common law it likes, particularly when\n 35\n\n\nsection 1117(a)’s text makes no distinction between profits\nand damages.\n Nor do the Lanham Act’s provisions readily map on to\ncommon-law analogues. For instance, section 1125(a)\n“codified, among other things, the related common-law\ntorts of technical trademark infringement and passing\noff.” Two Pesos, 505 U.S. at 785 (Thomas, J., concurring\nin the judgment). Congress made remedies for trade-\nmark dilution subject to “principles of equity” even\nthough dilution has no common law analogue. 15 U.S.C.\n§§ 1117(a), 1125(c); see Beverly W. Pattishall et al., Trade-\nmarks and Unfair Competition 321 (3d ed. 1998). Respondent’s\nposition, in short, would transform the Lanham Act’s\nclear and detailed rules into an unpredictable foray into\ndisputed historical territory.\n\n 3. Background Principles Did Not Uniformly Re-\n quire Willfulness\n When Congress uses a common-law term of art, the\nCourt assumes that Congress “adopt[ed] the cluster of\nideas that were attached to each borrowed word.” Moris-\nsette v. United States, 342 U.S. 246, 263 (1952). That\ncanon of construction cannot apply here—and Respondent\nnever has argued otherwise—because “principles of eq-\nuity” is not a “term” with a settled common-law meaning.\nCarter v. United States, 530 U.S. 255, 265 (2000) (empha-\nsis omitted).\n The Court also presumes that, when Congress legis-\nlates against a common-law background, Congress in-\ntends to adopt “long-established and familiar principles.”\nIsbrandtsen Co. v. Johnson, 343 U.S. 779, 783 (1952). But,\nto qualify as “long-established and familiar,” id., a princi-\nple must have been subject to a “uniform construction,”\n 36\n\n\nFogerty v. Fantasy, Inc., 510 U.S. 517, 531-32 (1994); ac-\ncord United States v. Craft, 535 U.S. 274, 287-88 (2002).\n Here the pre-Lanham Act mental-state requirement\nfor infringers’-profits awards under various strands of\ntrademark-related law was not uniform. Courts rejected\nthe notion that willfulness is an absolute prerequisite to\nan award of infringers’ profits. And while courts de-\nmanded a showing of willfulness in cases involving unfair\ncompetition claims, where the claimed mark was not pro-\ntectable as a trademark, even that area of law was not con-\nsistent. Regardless, section 1125(a) prohibits more than\nunfair competition. It also prohibits common-law trade-\nmark infringement, often called “technical trademark in-\nfringement,” and trademark infringement under “identi-\ncal standards” to section 1114. A & H Sportswear, Inc. v.\nVictoria’s Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir.\n2000). Indeed, the overlap between sections 1114 and\n1125(a) is presumably why courts of appeals discussing\nthe question presented do not distinguish between those\ntwo provisions. See p. 19, supra.\n a. The accounting remedy did not require will-\n fulness\n Equity courts referred to an award of a defendant’s\nprofits as an “accounting.” See, e.g., Hamilton-Brown\nShoe Co. v. Wolf Bros. & Co., 240 U.S. 251, 263 (1916). An\naccounting prevented unjust enrichment and provided\nrestitution, for example, when trustees held assets that\nproperly belonged to a trust. See, e.g., 1 Dan B. Dobbs,\nDobbs Law of Remedies §§ 2.6(3), 4.3(5) (2d ed. 1993). An\naccounting did not require a showing of misconduct. See\n2 Joseph Story, Commentaries on Equity Jurisprudence\n§ 620 (W.H. Lyon, Jr., ed. 14th ed. 1918) (trustee liable for\nloss to beneficial owner if “guilty of negligence, malversa-\ntion, or fraud” (emphasis added)). Intent was relevant; a\n 37\n\n\ncourt, for instance, might increase a profits award be-\ncause of misconduct. 1 Dobbs, supra, § 4.1(4) n.4. But\nwillfulness was not dispositive.\n b. The trademark context did not require will-\n fulness\n Courts in trademark-infringement cases did not uni-\nversally require that plaintiffs prove willfulness as a cate-\ngorical prerequisite to recovering profits.\n i. Trademark Claims. In trademark claims decided\nat common law, no consensus existed that willfulness was\na prerequisite to awards of infringers’ profits.\n In deciding whether to award profits, this Court con-\nsidered intent but did not categorically require willful-\nness, looking instead at all relevant factors. In Saxlehner\nv. Siegel-Cooper Co., 179 U.S. 42 (1900), the Court denied\nan accounting of profits where one defendant “appear[ed]\nto have acted in good faith” and other defendants had lim-\nited sales. Id. 42-43. Hamilton-Brown Shoe considered\nan infringer’s fraudulent acts relevant to allocating the\nburden of proving the amount of profits due to infringe-\nment. 240 U.S. at 262. But it made no reference to the\ninfringer’s intent when discussing plaintiffs’ entitlement\nto profits: “[O]n every principle of reason and justice the\nowner of the trademark is entitled to so much of the profit\nas resulted from the use of the trademark.” Id.\n Elsewhere, profits were available “on account of the\nunauthorized, though not intentional and fraudulent, use\nof [a protected mark].” Oakes v. Tonsmierre, 49 F. 447,\n453 (S.D. Ala. 1883). And courts emphasized—without\nmentioning intent—that an accounting would follow from\na finding of infringement or the imposition of an injunc-\ntion. See, e.g., I.T.S. Co. v. Tee Pee Rubber Co., 288 F. 794,\n798 (6th Cir. 1923); P.E. Sharpless Co. v. Lawrence, 213\n 38\n\n\nF. 423, 426 (3d Cir. 1914). As one common-law court ex-\nplained: “[a trademark infringer] will be restrained by in-\njunction, and that even where it does not appear there was\nany fraudulent intent in their use. He will also be held to\naccount for the profits derived from the unauthorized use\nof such trade-marks.” Stonebraker v. Stonebraker, 33 Md.\n252, 268 (1870).\n Nor did it make sense to require a culpable mental\nstate to award infringers’ profits. At common law, a\ntrademark was exclusive to its owner, and infringement\nremedies restored the owner’s rights. The common law of\ntrademark infringement protected what courts called\n“technical trademarks.” See, e.g., Elgin Nat’l Watch Co.\nv. Ill. Watch Case Co., 179 U.S. 665, 674 (1901). A tech-\nnical trademark had no descriptive meaning and resem-\nbled an inherently distinctive or fanciful mark in today’s\nparlance. 1 J. Thomas McCarthy, McCarthy on Trade-\nmarks and Unfair Competition § 4:3 (5th ed. 2018). For\ninstance, “Claimant” is a technical trademark because it is\npurely fanciful and not descriptive.\n The common law conceived of technical trademarks as\nproperty. In re Trade-Mark Cases, 100 U.S. 82, 92 (1879).\n“[R]ecovery of the profits issuing” from a trademark was\n“incident to and a part of [the mark holder’s] property\nright.” P.E. Sharpless, 213 F. at 426. It was, therefore,\n“unnecessary to show an intention to infringe on the part\nof the defendant, and the right of recovery [would] not be\naffected by a showing that the infringement was innocent\nor accidental.” Amasa C. Paul, The Law of Trade-Marks\nIncluding Trade-Names and Unfair Competition § 196\n(1903).\n An infringer, in that regime, was comparable to a trus-\ntee who held assets (here, profits) belonging to the bene-\n 39\n\n\nficial owner of a trust (here, a mark holder). See Hamil-\nton-Brown Shoe, 240 U.S. at 259 (discussing trustee anal-\nogy for infringers’-profits awards). Such a trust-based ra-\ntionale “was needed to prevent unjust enrichment and\nforce a restitution to the plaintiff of something that in eq-\nuity and good conscience did not belong to the defendant.”\nDan B. Dobbs, Law of Remedies 241 (1st ed. 1973); cf.\nTilghman v. Proctor, 125 U.S. 136, 148 (1888) (analogizing\npatent-infringement profit recovery to a trustee liable for\npersonal gains from trust property). Trustees could not\nretain trust property regardless of their mental state. See\n2 J. Story, supra, § 620.\n As with equity in general, courts had discretion to con-\nsider the trademark defendant’s intent. Courts treated\nintent as part of a holistic analysis. See, e.g., Globe-Wer-\nnicke Co. v. Safe-Cabinet Co., 144 N.E. 711, 713-14 (Ohio\n1924) (infringer must account for profits “particularly\nwhere” willful); George T. Stagg Co. v. Taylor, 27 S.W.\n247, 250 (Ky. 1894) (accounting not warranted in light of\nmultiple factors including lack of fraudulent intent);\n5 John Norton Pomeroy, Pomeroy’s Equity Jurispru-\ndence § 2004 (4th ed. 1919) (an accounting “may” be re-\nfused if infringement is innocent); see also McLean v.\nFleming, 96 U.S. 245, 257 (1877) (observing in dicta that\nEnglish courts “constantly” refused profits in cases in-\nvolving “want of fraudulent intent” but also identifying\n“acquiescence” by the plaintiff as a relevant equitable con-\nsideration). But profits awards were not “confined” to\ncases to willful infringement. Lawrence-Williams Co. v.\nSociete Enfants Gombault et Cie, 52 F.2d 774, 778 (6th\nCir. 1931); see also Norman F. Hesseltine, A Digest of the\nLaw of Trade-Marks and Unfair Trade 258 (1906) (“[I]t\nis not necessary to show fraudulent intent.”).\n 40\n\n\n Additionally, some courts presumed intent from the\nact of infringement itself; plaintiffs did not have to show\nintent independently. See, e.g., Elgin Nat’l Watch, 179\nU.S. at 674; McLean, 96 U.S. at 253; Trade-Marks and\nUnfair Competition 68 (Orson D. Munn ed., 1934). In-\nfringement could establish intent conclusively. See, e.g.,\nChurch & Dwight Co. v. Russ, 99 F. 276, 279 (D. Ind.\n1900); Harry D. Nims, The Law of Unfair Competition\nand Trade-Marks § 358 (2d ed. 1917).\n ii. The Trademark Act of 1905. The Trademark Act\nof 1905 was the first federal trademark law to provide for\nan award of infringers’ profits. Section 19 of that stat-\nute—the precursor to section 1114 of the Lanham Act—\ngoverned the infringement of federally registered marks.\nIt afforded successful plaintiffs the right “to recover, in\naddition to the profits to be accounted for by the defend-\nant, the damages the complainant has sustained.” Pub. L.\n[DOCKET REDACTED], § 19, 33 Stat. 724, 729 (1905). Section 1125 of\nthe Lanham Act is “derived in the main from the [1905]\nact,” and “the normal principles of equity in respect of al-\nlowance of and defenses to an accounting of profits and\nthe recovery of damages [were] not affected by [the Act].”\nHearings on H.R. 102, H.R. 5461, and S. 895 Before the\nSubcomm. on Trade-Marks of the House Comm. on Pa-\ntents, 77th Cong., 1st Sess. 228 (1941) (testimony of Prof.\nMilton Handler).\n The 1905 Act did not mention willfulness. According\nto one commentator, in 1905 Act cases, “a definite trend\ndeveloped toward awarding damages and an accounting\nas a matter of right in cases of technical trademarks, re-\ngardless of the infringer’s intent.” James M. Koelemay,\nJr., Monetary Relief for Trademark Infringement Under\nthe Lanham Act, 72 Trademark Rep. 458, 476 (1982).\n 41\n\n\n Again, this Court looked to multiple factors and did\nnot expressly impose a willfulness prerequisite for recov-\nery of infringers’ profits. In Mishawaka Rubber Manu-\nfacturing Co. v. S.S. Kresge Co., 316 U.S. 203 (1942), the\nCourt upheld an award of profits under the 1905 Act even\nthough the infringer had not “wilfully palmed off” the\nmark holder’s product. Id. at 209 (Black, J., dissenting).\nThe Court explained that an award of the infringer’s prof-\nits was appropriate because that remedy was “designed to\nmake the plaintiff whole for losses which the infringer has\ncaused by taking what did not belong to him.” Id. at 206.\n Five years later, this Court acknowledged that the\n“character of the conduct giving rise to the unfair compe-\ntition is relevant to the remedy.” Champion Spark Plug\nCo. v. Sanders, 331 U.S. 125, 130 (1947) (emphasis added).\nBut it ultimately considered “various circumstances”—\nwithout making any one consideration dispositive—in as-\nsessing whether an award of the infringer’s profits was\nwarranted. Id. at 131-32; see Koelemay, supra, at 478 (ob-\nserving that “no one factor was determinative” in Cham-\npion Spark Plug).\n iii. The Lanham Act. In the Lanham Act, Congress\nreincorporated the prohibition against infringement of\nfederally registered marks. 15 U.S.C. § 1114. Congress\nalso created a federal cause of action that, among other\nthings, prohibits infringement of unregistered marks. 15\nU.S.C. § 1125(a). That cause of action covers conduct un-\nlawful under the common law of trademarks and unfair\ncompetition. See Two Pesos, 505 U.S. at 785 (Thomas, J.,\nconcurring in the judgment). As initially enacted, awards\nof damages and profits under section 1117(a) were availa-\nble only for “a violation of any right of the registrant of a\nmark registered in the Patent Office.” Pub. L. [DOCKET REDACTED],\n§ 35, 60 Stat. 427, 439 (1946). Congress authorized awards\n 42\n\n\nof damages and profits for violations of section 1125(a) in\na 1988 amendment. Pub. L. No. 100-667, § 129, 102 Stat.\n3935, 3945 (1988).\n Under the Lanham Act, courts continued to award in-\nfringers’ profits for violations of both section 1114 and sec-\ntion 1125(a) without requiring a threshold showing of will-\nfulness. Many courts continued to reject a threshold will-\nfulness requirement. See Banjo Buddies, Inc. v. Renosky,\n399 F.3d 168, 171 (3d Cir. 2005); Laukus v. Rio Brands,\n391 F. App’x 416, 424 (6th Cir. 2010); Synergistic Int’l,\nLLC v. Korman, 470 F.3d 162, 175 (4th Cir. 2006); id. at\n175 n.13; Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526,\n554 (5th Cir. 1998); Howard Johnson Co. v. Khimani, 892\nF.2d 1512, 1521 (11th Cir. 1990); Roulo v. Russ Berrie &\nCo., 886 F.2d 931, 941 (7th Cir. 1989).\n c. The unfair competition context did not re-\n quire willfulness\n In advocating for a willfulness requirement, Respondent re-\nlies on unfair competition cases not involving technical\ntrademarks. Br. in Opp. 32 n.5. That fact alone should be\nfatal to Respondent’s reliance on the common law. The tort of\nunfair competition was a fraud-based claim that was\nbroader than trademark infringement. See, e.g., Straus v.\nNotaseme Hosiery Co., 240 U.S. 179, 181-82 (1916); 1\nMcCarthy, supra, § 4:3. That tort applied to conduct that\nmight not qualify as trademark infringement at common\nlaw; for instance, unfair competition could include decep-\ntive use of a trade name that could not be protected as a\ntrademark. See, e.g., Horlick’s Malted Milk Corp. v. Hor-\nluck’s, Inc., 51 F.2d 357, 359 (W.D. Wash. 1931) (requiring\n“willful fraud”), aff’d in part on other grounds, 59 F.2d 13\n(9th Cir. 1932). A trademark owner had a property right\nwhose protection “d[id] not turn upon the practice of\nfraud, or anything in the nature of fraud,” but actions for\n 43\n\n\nprotection of trade names required “deception” in a cause\nof action “often called ‘unfair competition.’” Melville Mad-\nison Bigelow, Law of Torts § 7 (1907).\n Because unfair competition was based on fraud and\nthe cause of action for technical trademark infringement\nwas not, the accounting remedy for unfair competition\nwas harder to obtain than the accounting remedy for tech-\nnical trademark infringement. See Prest-O-Lite Co. v.\nBournonville, 260 F. 442, 444 (D.N.J. 1915) (awarding in-\nfringer’s profits under a trademark-infringement theory\nafter rejecting profits for unfair competition). In the\ntrademark context, a profits award was “incident to and a\npart of” the mark holder’s property right. P.E. Sharpless,\n213 F. at 426. With unfair competition, by contrast, a prof-\nits award was “generally made on the ground that the un-\nfair competition is adjudged to have been willful and\nfraudulent.” Id. (emphasis added).\n But even in the unfair-competition context, there was\n“conflict in the decisions” about the role of mental state in\nthe infringers’-profits analysis. Regis v. Jaynes, 77 N.E.\n774, 776 (Mass. 1906). One leading treatise states that an\naccounting remedy in cases of unfair competition is “a\nmatter within the discretion of the trial court.” Pomeroy,\nsupra, § 2012. And courts retained the power to award\ninfringers’ profits “upon what seems to them sufficient\ngrounds.” P.E. Sharpless Co., 213 F. at 427.\n * * *\n Even if background principles of law could overcome\nthe plain text as a general matter—and for the reasons\nexplained above, they cannot—there are no background\nprinciples sufficiently clear to warrant that result here.\n 44\n\n C. A Willfulness Requirement Conflicts with the Lan-\n ham Act’s Purposes and with Other Intellectual-Prop-\n erty Contexts\n Two policy rationales animate the Lanham Act: pro-\ntecting the public from deception and protecting mark\nholders’ investment in their businesses’ goodwill. H.R.\nRep. [DOCKET REDACTED], at 2 (1945); see also S. Rep. [DOCKET REDACTED],\nat 3 (1946). Claimant’s interpretation promotes those twin\npurposes by ensuring that mark holders have recourse to\nmeaningful remedies for trademark infringement in an in-\ncreasingly global economy, protecting the public. For\nsimilar reasons, courts have eschewed bright-line rules\nrestricting profits awards under federal copyright and pa-\ntent law. The Court should do the same here.\n 1. Federal trademark law protects mark holders and\nthe public by making “relief against infringement prompt\nand effective.” H.R. Rep. [DOCKET REDACTED], at 2 (1945); see also\nH.R. Rep. [DOCKET REDACTED], at 9 (1904) (federal trademark law\nshould provide “full and complete redress for violation of\n[trademark owners’] rights”). The Lanham Act provides\nmark holders with potential remedies, including actual\ndamages, statutory damages, awards of infringers’ prof-\nits, injunctions, and attorneys’ fees. As a practical matter,\nhowever, awards of infringers’ profits will often be mark\nholders’ only meaningful remedy. Imposing an extra-\nstatutory requirement that makes that remedy more dif-\nficult to obtain severely undercuts the Lanham Act’s pro-\ntections.\n Trademark damages are often “almost impossible” to\nprove. Hearings on H.R. 102, H.R. 5461, and S. 895 Be-\nfore the Subcomm. on TradeMarks of the House Comm.\non Patents, 77th Cong., 1st Sess. 204 (1941). The mark\nholder has to establish both “that some consumers were\nactually confused or deceived” and that the confusion or\n 45\n\n\ndeception caused a quantifiable amount of harm.\n5 McCarthy, supra, § 30.74; see also, e.g., Int’l Star Class\nYacht Racing Ass’n, 80 F.3d at 753.\n The practical problems of proving those elements of-\nten make the damages remedy functionally unavailable in\ntrademark cases. Keith M. Stolte, Remedying Judicial\nLimitations on Trademark Remedies: Monetary Relief\nShould Not Require Proof of Actual Confusion, 75 Den-\nver U.L. Rev. 229, 245-50 (1997). Finding consumers who\nwere confused—and who recognized their confusion—is\nrare; obtaining admissible testimony from them is rarer\nstill. Id. at 246-47. Surveys can provide a costly and un-\nreliable alternative, but survey results may be inadmissi-\nble for many reasons. See Ramdass v. Angelone, 530 U.S.\n156, 173 (2000). Proving actual damages in a trademark\ncase, in short, is an uncertain and burdensome task.\n That is especially true where component manufactur-\ners like Claimant are concerned. A component does not\ncompete directly with the product that incorporates it.\nHere, for example, a Claimant snap does not compete di-\nrectly with a Respondent handbag. So a component manufac-\nturer cannot rely on the “most straightforward” theory of\ntrademark damages: namely, “that the infringement had\ndiverted specific sales away from” the mark holder by\nconfusing customers into buying the competing product.\nSee Fishman Transducers, Inc. v. Paul, 684 F.3d 187, 194\n(1st Cir. 2012). The component manufacturer must, in-\nstead, attempt to prove that the infringement somehow\ndiverted sales of the composite product, ultimately result-\ning in economic harm to the component manufacturer. Id.\nThat showing presents a severe “problem . . . [of] proof,”\neffectively precluding component manufacturers from re-\ncovering damages in most trademark-infringement cases.\nId.\n 46\n\n\n Statutory damages, moreover, are capped at $200,000\n“per counterfeit mark per type of goods or services sold,\noffered for sale, or distributed,” absent a showing of will-\nfulness. 15 U.S.C. § 1117(c)(1); see p. 10, supra. That sum,\nwhile not insignificant, pales in comparison to the mone-\ntary and non-monetary costs of complex trademark litiga-\ntion. A real risk exists that, absent the prospect of a profit\naward, mark holders will forego enforcement altogether.\nSee Warren F. Schwartz & Gordon Tullock, The Costs of\na Legal System, 4 J. Legal Studs. 75, 76-77 (1975) (de-\nscribing how parties consider enforcement costs and\nrisks). And statutory damages are available only for cer-\ntain kinds of infringement. See 15 U.S.C. § 1117(c).\n Moreover, in the wake of eBay, supra p. 32, lower\ncourts have abandoned the notion that an injunction is vir-\ntually automatic upon a showing of trademark infringe-\nment. See generally Mark A. Lemley, Did eBay Irrepa-\nrably Injure Trademark Law?, 92 Notre Dame L. Rev.\n1795 (2017). As with damages, difficulties of proof often\nmake the showing for an injunction impossible. The up-\nshot is that an award of profits will often be the only mean-\ningful remedy—monetary or not—available to victims of\ninfringement.\n Respondent erroneously posits that a willfulness require-\nment is necessary to prevent windfall recoveries. Br. in\nOpp. 29. Courts can decline to award profits when doing\nso would be unjust. Awarding courts discretion protects\nagainst windfall recoveries just as effectively as Respondent’s\ninflexible bright-line rule, with none of the downsides of a\nrule barring any profit award even where the circum-\nstances otherwise justify such an award. The Lanham\nAct, moreover, charges courts with ensuring that the\namount of any profits award is “just, according to the cir-\n 47\n\n\ncumstances of the case” and that it functions as “compen-\nsation and not a penalty.” 15 U.S.C. § 1117(a). And it in-\nstructs courts to increase or decrease profits awards to\nachieve that result. Id.\n 2. The realities of today’s global economy underscore\nthe need for courts to have flexibility to decide whether to\naward profits. Companies like Respondent often hire foreign\nmanufacturers to make their goods. See, e.g., Nat’l Inst.\nStandards & Tech. & Mfg. USA, 2017 Annual Report 1-2\n(2018).4 Those entities are usually beyond the reach of\nUnited States trademark law. American mark holders—\nparticularly small companies such as Claimant—cannot ef-\nfectively obtain relief against foreign manufacturers in\ntheir home countries. See, e.g., Office of the U.S. Trade\nRepresentative, 2018 Special 301 Report (2018).5 China,\nfor example, “remains a hazardous and uncertain environ-\nment for U.S. right holders hoping to protect and enforce\ntheir [intellectual property] rights.” Id. at 38. A mark\nholder’s only recourse, therefore, will ordinarily be\nagainst the company that hired the foreign manufacturer\nand brought the infringing product to the American mar-\nket.\n Under the rule adopted below, however, a company\nthat fails adequately to monitor its supply chain is immune\nfrom a profits award—even if its lack of care harms mark\nholders and the public. This case illustrates the point.\nRespondent knew that counterfeiting in China was a problem.\nApp. 104a. It knew that its supplier had lied about the\nauthenticity of other handbag components. App. 112a-\n113a. And it knew how to train its employees to detect\n\n4\n [URL REDACTED]\n5\n [URL REDACTED]\ncial%20301.pdf.\n 48\n\n\ncounterfeiting when it cared to do so. App. 114a (noting\nthat Respondent employees in China were trained to identify\ncounterfeit YKK zippers). Taking all of that into account,\nthe jury found that Respondent acted with “callous disregard”\nfor Claimant’s trademark rights.\n 3. Finally, neither copyright nor patent law conditions\nawards of infringers’ profits on the infringer’s state of\nmind. The Copyright Act provides for a number of reme-\ndies, including infringers’ profits. 17 U.S.C. § 504(a)(1),\n(b). As in the trademark context, copyright cases referred\nto recovery of infringers’ profits as an accounting. See\nSheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390,\n402 (1940). Courts interpreting the Copyright Act have\nnever suggested that plaintiffs must make a threshold\nshowing of willfulness to recover awards of infringers’\nprofits. See generally 4 Melville B. & David Nimmer,\nNimmer on Copyright § 14.03(A)(1) (2019).\n Infringers’ profits are also available for infringement\nof design patents. 35 U.S.C. § 289. Courts considered\nthat remedy, like the trademark and copyright infring-\ners’-profits remedies, to be an accounting. See Dobson v.\nDornan, 118 U.S. 10, 12 (1886). Awards of infringers’\nprofits do not require any threshold showing of mental\nstate. See, e.g., Catalina Lighting, Inc. v. Lamps Plus,\nInc., 295 F.3d 1277, 1290-91 (Fed. Cir. 2002). No basis ex-\nists for rendering the Lanham Act’s remedial provisions\nan outlier among intellectual property regimes by imply-\ning a willfulness requirement into section 1117(a).\n CONCLUSION\n The judgment of the Federal Circuit should be va-\ncated and the case remanded for further proceedings.", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n This case is about when a plaintiff may obtain one\nparticularly severe remedy under the Lanham Act’s\nmonetary remedies provision, one that forces a\ndefendant to account for, and turn over, its profits to\nthe plaintiff. The Lanham Act places a clear textual\nlimit on this profits remedy. It makes a plaintiff’s\nentitlement to that remedy “subject to the principles\nof equity.” 15 U.S.C. § 1117(a).\n Over the course of a century, and with near-perfect\nunanimity, courts developed a clear principle that\nlimited a plaintiff’s ability to seek a defendant’s\nprofits, a remedy based on the equitable remedy of\nan accounting. A court would not allow a profits\n\n (1)\n 2\naward unless the plaintiff showed that the defendant\nacted willfully, intending in some way to trade on the\nplaintiff’s rights. Under this rule, a defendant who\nacted in good faith, and the court itself, would be\nspared burden of an accounting where the defend-\nant’s actions did not call for that severe remedy. And\nunder this rule, the risk of a windfall award to a\nplaintiff who had not been harmed, and whom the\ndefendant had not intended to harm, was mitigated.\n The Lanham Act carries that rule forward. Courts\ninterpreted the remedies provision of its predecessor\nstatute, the Trade-Mark Act of February 20, 1905,\nch. 592, 33 Stat. 724 (“1905 Act”), to contain this\nlongstanding limit on a defendant’s profits award.\nThe Lanham Act not only retained the language of\nthe 1905 Act, it expressly “subject[ed]” the availabil-\nity of monetary remedies to the principles of equity.\nAll of this—the clear and consistent rule developed\nin the historical trademark cases, the continuation of\nthe rule under the 1905 Act, and the text of the\nLanham Act—makes a profits award dependent on\nthe defendant’s willfulness.\n It is no surprise that Claimant resists this reading of\nthe statute. Courts have understood that forcing a\ndefendant to hand over its profits risks a potentially\nenormous windfall to a plaintiff, far exceeding any\nactual damages. This case is no exception. Claimant\nwants a court to award it all of the profits Respondent\nmade on handbags that contain small magnetic\nsnaps bearing Claimant’s trademark. But it offered no\nevidence that the infringement here was anything\nother than accidental, which is why the jury found\nthat Respondent did not act willfully. Claimant offers the\nCourt no good reason, based in the statutory text, the\n 3\nhistory behind it, or common sense, to require a\ndefendant to account for and turn over its profits\nwhere it did not act willfully.\n The judgment should be affirmed.\n STATEMENT\n 1. This case began when Claimant sued Respondent on\nNovember 22, 2010, just days before Thanksgiving\nand the Black Friday sales that would follow. Pet.\nApp. 71a. The lawsuit was itself something of a\nholiday tradition. Claimant had raised similar claims\non similar dates twice before, extracting a settlement\neach time. Id. at 67a–68a (Nov. 13, 2007, suit\nagainst J.C. Penney; Nov. 17, 2009, cease and desist\nletter to DSW, Inc.).\n Respondent “designs, markets, and distributes fashion\naccessories,” such as handbags, in its stores and\nthrough other retailers. Id. at 65a. Respondent contracts\nwith independent businesses to make its products,\nrather than manufacturing the products itself. Id. at\n66a. One of those independent businesses is Superi-\nor Leather Limited, located in China. Id. As Respondent’s\nhandbag manufacturer, Superior buys component\nparts for, and then manufactures, Respondent’s handbags.\nId.\n Claimant holds a patent on magnetic snaps, which it\nsells under its registered trademark, “Claimant.” Id.\nat 64a. These snaps are made in China, by a compa-\nny named Wing Yip Metal Manufactory Accessories\nLimited. Id. A licensing agreement between the two\nrequires Wing Yip to pay a $0.05 royalty for each\nsnap it sells. Id. at 65a.\n The snaps in some Respondent products, including hand-\nbags, came from Claimant. Id. at 66a. When it used\n 4\nClaimant snaps, Superior purchased them from Wing\nYip. Id. Though Respondent and Superior disagreed a few\ntimes over invoices and price quotes relating to other\ncomponents of its products, Respondent did not “act[]\nrecklessly, with willful blindness, or with actual\nknowledge of a risk” that “Superior was using coun-\nterfeit snaps.” Id. at 49a–50a.\n By “June 2010,” Claimant “had sufficient knowledge”\nthat counterfeit snaps may have made their way into\nRespondent handbags. Id. at 85a. In May, Jody Ellant,\nClaimant’s General Counsel, had told her husband\nHoward Reiter, Claimant’s President, that her sister\nhad “discovered” counterfeit Claimant snaps on Respondent\nhandbags while shopping at Macy’s. Id. at 69a.\nEllant went to Macy’s herself to purchase Respondent bags\nbearing Claimant snaps. Id. Two weeks earlier,\nReiter had received an e-mail telling him a “factory\nin China had been producing magnetic snap fasten-\ners bearing the Claimant mark without authoriza-\ntion.” Id. at 68a. After contacting his intellectual\nproperty lawyer, he asked the e-mailer which manu-\nfacturer was purchasing the snaps, stating “it is hard\nfor the law to work in [C]hina,” but it is “easier in\n[the] USA.” Id. (internal quotation marks omitted).\n Nonetheless, Reiter set the purchased Respondent bags\naside, where they sat for months. Id. at 69a. At the\nend of October, “Reiter claim[ed] he suddenly had an\nepiphany that he should investigate the” Respondent bags.\nId.; see also id. at 82a (finding this testimony “dis-\ncredited”). That epiphany, in his telling, led him to\nsearch his e-mails and find one that “identif[ied]\nSuperior as a Respondent manufacturer.” Id. at 68a–69a.\nHe reviewed data on Superior’s purchases of\nClaimant snaps and saw that purchases had dropped\n 5\noff in 2008. Id. at 70a. Reiter inspected the snaps on\nthe bags that he had set aside and then sent those\nsnaps to Wing Yip for testing. Id. Wing Yip “report-\ned that the snaps could not have been made with\n[its] tooling.” Id.; see also id. at 47a n.4.\n 2. On November 17, 2010, Claimant sent Respondent a\ncease and desist letter. Id. at 70a. Five days later,\nClaimant sued Respondent and Macy’s, and then sought a\ntemporary restraining order and preliminary injunc-\ntion. Id. at 71a. It raised patent infringement\nclaims, Lanham Act claims for trademark infringe-\nment under Section 1114(1) and false designation of\norigin under Section 1125(a), a state common-law\nunfair competition claim, and a Connecticut Unfair\nTrade Practices Act claim. Id. at 34a. Reiter’s\ndeclaration supporting Claimant’s request for a TRO\nfalsely implied that he discovered the issue during a\ncustomary shopping trip earlier in November, rather\nthan in May when his wife conveyed her suspicions,\nor even in October when he had his claimed “epipha-\nny.” Id. at 71a–72a.\n The District Court for the District of Connecticut\ngranted a temporary restraining order on November\n30. Id. at 72a. Respondent “put a hold on all of the affect-\ned products and” worked “to prevent any items that\nhad already been delivered to retailers from being\nsold to customers.” Id. In the end, Respondent took over\n$4 million worth of inventory off the market. Id. at\n72a, 81a. Had Reiter investigated earlier, when he\nhad “sufficient knowledge” of the possibility of coun-\nterfeit snaps, id. at 85a, “Respondent’s inventory would\nhave been much smaller and half as valuable,” and\nRespondent could have ensured that its holiday season\ninventory was free of counterfeit snaps. Id. at 81a–\n 6\n82a. Respondent thus “suffered material economic preju-\ndice” because of Claimant’s delay. Id.1\n A seven-day jury trial ensued. The jury found Fos-\nsil liable for each of Claimant’s claims. The jury also\nfound Macy’s liable for patent infringement. Id. at\n106a–113a. The District Court later entered judg-\nment against Macy’s as a matter of law on trade-\nmark infringement because “the jury did hear testi-\nmony that Respondent bags purchased from Macy’s con-\ntained counterfeit snaps.” Id. at 41a, 59a–60a.2 On\npatent damages, the jury found $0.09 per snap to be\na reasonable royalty, for a total of $51,052.14 against\nRespondent, and $15,320.61 against Macy’s. Id. at 113a.\nOn the state-law claims, Claimant sought only punitive\ndamages, and the jury declined to award them. Id.\nat 60a n.6.\n The jury rendered two advisory findings related to\ntrademark damages. As to the “amount of profits\n* * * made on the sale of the accused handbags which\n\n1\n Claimant later sued Belk, Inc., The Bon-Ton Stores, Inc., The\nBon-Ton Department Stores, Inc., Dillard’s, Inc., Nordstrom,\nInc., Zappos.com, Inc., and Zappos Retail, Inc., raising the same\ntrademark-related claims. The District Court consolidated the\nsuits. Pet. App. 65a–66a, 71a n.2. The jury found these\ndefendants not liable, and these claims are not at issue. Id. at\n106a–112a.\n2\n The District Court delayed the entry of judgment “to give\nClaimant the opportunity to elect statutory damages * * * for\ntrademark infringement.” Pet. App. 60a n.5; see also 15 U.S.C.\n§ 1117(c)(1) (“not less than $1,000 or more than $200,000 per\ncounterfeit mark per type of goods or services * * * as the court\nconsiders just”). It had, by that point, already denied Claimant a\nprofits award at the bench trial. See infra at 8. Claimant did not\nseek statutory damages.\n 7\nshould be awarded to Plaintiff to prevent unjust\nenrichment,” it found that amount to be $90,759.36.\nId. at 108a. As to the “amount of profits * * * made\non the sale of the accused handbags which should be\nawarded to deter future trademark infringement,” it\nfound that amount to be $6,704,046. Id. at 109a. It\nthen found that Respondent had proved by a preponder-\nance of the evidence that 99% of the “profits earned\nfrom the sale of the accused handbags was attributa-\nble to factors other than the use of the Claimant\nmark.” Id. (emphasis added).3\n The jury also specifically found that neither Respondent\nnor Macy’s had willfully infringed. Id. at 107a, 112a.\nAs to whether any trademark infringement was\nwillful, the jury had been instructed, as Claimant\nproposed, that Claimant had to show:\n (1) that Defendants were actually aware of the\n infringing activity, or (2) that Defendants’ actions\n were the result of willful blindness. Willful\n blindness means that Defendants knew they\n might be selling infringing goods but nevertheless\n intentionally shielded themselves from discover-\n ing the truth.\n\n\n3\n Claimant did not, and cannot now, challenge the jury’s attribu-\ntion finding. As it notes (at 13 n.3), no question of the attribu-\ntion of any profits award is before the Court, though any\nattempt to seek all of Respondent’s profits on the handbags would be\nfutile in light of the statutory text. See Mishawaka Rubber &\nWoolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 206 (1942)\n(“The plaintiff of course is not entitled to profits demonstrably\nnot attributable to the unlawful use of his mark” under the\n1905 Act.); 15 U.S.C. § 1117(a) (reenacting the apportionment\nlanguage of the 1905 Act).\n 8\nId. at 43a. The District Court later issued a supple-\nmental instruction, to which Claimant did not object:\n “Intentionally shielded” is more than reckless\n or negligent conduct. It means when a de-\n fendant knew that there was a high probabil-\n ity that components which infringed Plaintiff’s\n mark were used on its handbags, but took de-\n liberate actions, such as purposefully looking\n the other way, to avoid learning of the in-\n fringement.\nId. at 45a. The verdict form asked whether Claimant\n“had proved by a preponderance of the evidence that\nDefendants’ trademark infringement was willful,”\nand the jury answered “no.” Id. at 107a.\n The District Court held a two-day bench trial on\n“equitable defenses” and “equitable adjustment[s].”\nId. at 35a (internal quotation marks omitted). It\nfound that Respondent had established laches based on\n“the period of delay” from June to November 2010\nbecause the “inescapable conclusion” was that Ro-\nmag “carefully timed this suit to take advantage of\nthe imminent holiday shopping season to be able to\nexercise the most leverage * * * in an attempt to\nextract a quick and profitable settlement.” Id. at\n80a–81a, 86a. On this basis, it reduced the patent\ninfringement reasonable royalty damages by 18%.\nId. at 12a. It then rejected a profits award, under\nSecond Circuit precedent, due to the jury’s finding\nthat the infringement was not willful. Id. at 95a\n(citing George Basch Co. v. Blue Coral, Inc., 968 F.2d\n1532, 1540 (2d Cir. 1992)). It granted Claimant a\npermanent injunction. Id. at 102a–104a. Finally, it\nsanctioned Claimant for the “troubling” and “mislead-\ning” declaration that Claimant used “in bad faith” to\n 9\nsecure the TRO. Id. at 90a–93a; see also id. at 84a\n(“not credit[ing] Mr. Reiter’s testimony purporting to\njustify his delay”).\n 3. Claimant appealed. It raised the denial of a profits\naward for trademark infringement and the reduction\nof patent damages based on laches. Id. at 19a–20a.\nThe Federal Circuit affirmed.\n Applying Second Circuit law, the Federal Circuit\nheld that “a trademark owner must prove that the\ninfringer acted willfully to recover the infringing\ndefendant’s profits.” Id. at 20a. Beginning with the\ntext of the Lanham Act, the court explained that it\nmakes a plaintiff’s entitlement to monetary remedies\n“subject to the principles of equity.” Id. (quoting 15\nU.S.C. § 1117(a) (1996)). The Federal Circuit then\nsurveyed the relevant precedent, including this\nCourt’s cases and circuit court cases. Id. at 20a–24a.\nThe Second Circuit had previously held “that ‘under\n[15 U.S.C. § 1117(a)] of the Lanham Act, a plaintiff\nmust prove that an infringer acted with willful\ndeception before the infringer’s profits are recovera-\nble by way of an accounting.’ ” Id. at 21a (quoting\nGeorge Basch Co., 968 F.2d at 1540).\n The Federal Circuit rejected Claimant’s argument\nthat a 1999 amendment to Section 1117(a) cast doubt\non that holding. In 1996, Congress enacted a new\nLanham Act cause of action for trademark dilution\nthat was codified in Section 1125(c). Id. at 24a. The\nprovision setting out that cause of action provided for\ninjunctive relief, and also for monetary relief “if the\ndilution was ‘willfully intended.’ ” Id. (quoting\nFederal Trademark Dilution Act of 1995, Pub. L. No.\n104-98, § 3, 109 Stat. 985, 985–986 (1996)). Congress\ndid not, in 1996, amend Section 1117(a) to reflect\n 10\nthis new cause of action. Id. at 25a. It corrected that\noversight in 1999, when it added “a willful violation\nunder section 1125(c) of this title” to the list of viola-\ntions that trigger the availability of monetary reme-\ndies in Section 1117(a). Id. at 25a–26a (discussing\nthe Trademark Amendments Act of 1999, Pub. L. No.\n106-43, § 3(b), 113 Stat. 218, 219).\n Although some courts read the 1999 amendment as\n“supersed[ing]” the willfulness requirement based in\nprinciples of equity, id. at 27a (quoting Banjo Bud-\ndies, Inc. v. Renosky, 399 F.3d 168, 175 (3d Cir.\n2005)), the Federal Circuit disagreed. Given the\nlongstanding requirement, the Federal Circuit\nreasoned, Congress would have given some indica-\ntion if it meant to depart from that rule when enact-\ning a conforming amendment. Id. at 29a–30a (citing\nDir. of Revenue of Mo. v. CoBank ACB, 531 U.S. 316,\n323–324 (2001)). The amendment did not touch the\ntextual basis for the willfulness requirement, the\nphrase making the availability of monetary remedies\nsubject to the “principles of equity.” Id. And the\nSecond Circuit had continued to apply that rule after\nthe 1999 amendment. Id. at 28a. The Federal\nCircuit therefore concluded that the amendment “left\nthe law where it existed before 1999” and affirmed\nthe denial of a profits award. Id. at 33a.\n The Federal Circuit’s ruling on patent damages led\nto a detour. The Federal Circuit affirmed the reduc-\ntion of damages based on laches. Id. at 17a, 19a–\n20a. After Claimant sought certiorari, this Court\ngranted, vacated, and remanded in light of SCA\nHygiene Prods. Aktiebolag v. First Quality Baby\nProds., LLC, 137 S. Ct. 954 (2017). 137 S. Ct. 1373\n(2017). The Federal Circuit recalled its mandate,\n 11\nreinstated the appeal, and remanded to allow the\nDistrict Court to address the patent damages issue.\nPet. App. 14a–15a. The District Court reinstated the\njury’s original verdict on patent damages. Id. at 12a.\nClaimant again appealed.\n Respondent moved to dismiss the second appeal because\nClaimant simply repeated its objection to the willful-\nness requirement. Id. at 2a–3a. The Federal Circuit\nagreed, seeing “no reason to relitigate” the question,\nand dismissed to the extent that Claimant raised no\nadditional issues. Id. at 3a. After Claimant told the\ncourt there was nothing else to address, the Federal\nCircuit summarily affirmed. Supp. App. 2a.\n This Court granted certiorari. 139 S. Ct. 2778\n(2019).\n SUMMARY OF ARGUMENT\n I. Claimant asks this Court to open a door that\ntrademark law closed long ago. It seeks a ruling that\nthe Lanham Act’s monetary remedies provision, 15\nU.S.C. § 1117(a), authorizes a court to award a\ndefendant’s profits even if the defendant’s conduct\nwas innocent, not willful. The text of the statute and\nthe traditional trademark law that it reflects fore-\nclose that interpretation.\n A. Section 1117(a) proceeds in three steps. If a\nplaintiff shows a defendant committed one of four\nspecified violations of the Lanham Act, it is “entitled”\nto the remedies of a defendant’s profits award, a\ndamages award, and costs. That entitlement, Sec-\ntion 1117(a) goes on to make plain, is “subject to” two\nlimitations, including “the principles of equity.” Only\nif the plaintiff establishes a violation, and avoids\n 12\nthese limitations, can the court begin the discretion-\nary process of setting the amount of any award.\n By subjecting a plaintiff’s entitlement to monetary\nremedies “to the principles of equity,” Section 1117(a)\nimports traditional trademark law’s limits on mone-\ntary remedies. One of those limits is the principle\nthat a court would not order an accounting of an\ninfringer’s profits unless the plaintiff showed willful\ninfringement. Section 1117(a) contains that limit\nbecause it expressly references principles of equity.\nTwo familiar canons of interpretation confirm this\nplain text reading. Under the first, courts presume\nthat where, as here, Congress legislates against a\nwell-established common law rule, it retains that\nrule. See Kirtsaeng v. John Wiley & Sons, Inc., 568\nU.S. 519, 538 (2013). Under the second, courts\npresume that where, also as here, Congress reenacts\nstatutory text that has been given a clear interpreta-\ntion by courts, the text reflects that interpretation.\nSee Helsinn Healthcare S.A. v. Teva Pharm. USA,\nInc., 139 S. Ct. 628, 633–634 (2019).\n B. Claimant leans heavily on the inclusion of “a will-\nful violation under section 1125(c)” in Section\n1117(a)’s list of violations that trigger entitlement to\nmonetary remedies. That, Claimant says, contains the\nonly willfulness-based limit on monetary remedies in\nSection 1117(a). But this text just mirrors Section\n1125(c), which bars any monetary remedies under\nSection 1117(a) absent willful infringement. This\ntext does not amount to the only limit on profits\nawards, because all remedies under 1117(a) are\n“subject to” two cross-referenced provisions that cut\noff the availability of certain remedies in certain\n 13\ncircumstances and are also “subject to the principles\nof equity.”\n Claimant also points to a slew of other Lanham Act\nprovisions. It claims that reading Section 1117(a) to\ncontain traditional trademark law’s willfulness limit\non a defendant’s profits award would create tension\nwith those provisions. But each of these provisions\ncontinues to serve a purpose under Respondent’s plain-text\nreading of Section 1117(a).\n In reality, Claimant’s interpretation is the one that\ncreates a problem with the text. It offers no explana-\ntion of what work the phrase “subject to the princi-\nples of equity” does in Section 1117(a). But even\nClaimant must admit that some equitable principles\nwill bar “entitle[ment]” to monetary remedies. The\ntext offers no basis to import some equitable princi-\nples to cut off remedies—such as the principle that\nmonetary remedies are unavailable if an injunction\nwould afford complete relief—and not others—such\nas the requirement that a defendant have acted\nwillfully for a court to order it to turn over its profits.\n II. Claimant tries two additional maneuvers to avoid\nthe willfulness requirement for a defendant’s profits\naward. Neither overcomes the text.\n A. Claimant first questions the strength of the will-\nfulness requirement in traditional trademark law. A\nreview of the relevant history shows a clearly estab-\nlished principle of equity under which a court would\ncompel an accused infringer to account for its profits,\nand turn them over to a plaintiff, only if the infringer\nwillfully infringed a trademark. Courts applied this\nwillfulness requirement to deny an accounting even\nafter Congress enacted the 1905 Act, which did not\ncontain the Lanham Act’s express reference to prin-\n 14\nciples of equity. Once the sources Claimant relies on\nare examined closely, Claimant is left with only a single\npre-1905 Act case. That lone case does not break the\ntradition.\n B. Claimant retreats to an argument that equity itself\nis incompatible with clear rules, like the willfulness\nrequirement. It argues that any mention of “equity”\nimplies discretion and that discretion implies a lack\nof clear rules. This Court has already disagreed.\nWhere a statute incorporates “traditional equitable\nprinciples,” courts must apply the traditional tests\nfor equitable relief that have developed over time.\nSee eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388,\n393 (2006). And, “[d]iscretion,” in any event, “is not\nwhim.” Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S.\nCt. 1923, 1931 (2016) (internal quotation marks\nomitted).\n III. Claimant does not offer any practical reason to\nprefer its interpretation. Opening the door to a\ndefendant’s profits award without a requirement of\nwillfulness will give opportunistic litigants a power-\nful tool to extort windfall settlements. Claimant offers\nno reason to believe those risks are worth it. It does\nnot point the Court to a single case that has applied\nits rule and awarded profits in the absence of will-\nfulness, much less one that demonstrates the wisdom\nof that rule. And it does not offer a common sense\nreason to require an innocent defendant to turn over\nits profits.\n 15\n ARGUMENT\nI. The Text Of Section 1117(a) Incorporates\n Traditional Limits On Equitable Relief.\n The Lanham Act “largely codified” “[t]raditional\ntrademark infringement law,” which is “part of the\nbroader law of unfair competition.” Moseley v. V\nSecret Catalogue, Inc., 537 U.S. 418, 428 (2003).\nTraditional trademark law limited the circumstances\nin which a court could grant one equitable remedy\nfor trademark infringement: an award of an infring-\ner’s profits. Before ordering this relief, courts re-\nquired evidence that the defendant’s infringement\nwas willful. Congress retained this rule when enact-\ning the Lanham Act’s monetary remedies provision,\n15 U.S.C. § 1117(a). The provision makes a plain-\ntiff’s “entitle[ment]” to its monetary remedies—an\ninfringer’s profits award, damages, and costs—\n“subject to the principles of equity.” Id. This refer-\nence to principles of equity imports the traditional\nlimit on an infringer’s profits award. Under the\nLanham Act, then, just as before the Act, a plaintiff\nmust show that infringement was willful to seek the\ndefendant’s profits.\n A. Section 1117(a) incorporates traditional\n principles of equity that limit monetary re-\n lief.\n 1. Section 1117(a) sets out three steps a court must\nfollow before awarding monetary relief.\n First, a plaintiff must “establish[ ]” a violation of\nthe trademark holder’s rights. Id. Specifically, the\ndefendant must have committed “a violation of any\nright of the registrant of a mark registered in the\nPatent and Trademark Office,” that is, a violation of\n 16\nSection 1114(1); of “section 1125(a) or (d)”; or “a\nwillful violation under section 1125(c).” Id.\n Second, a plaintiff must show that neither of the\ntwo statutory limits on monetary relief applies. In\nparticular, the remedies in Section 1117(a) are\n“subject to the provisions of sections 1111 and 1114”\nand are also “subject to the principles of equity.” Id.\n Third, if a violation is “established” and no limita-\ntion applies, a plaintiff may “recover (1) defendant’s\nprofits, (2) any damages sustained by the plaintiff,\nand (3) the costs of the action,” and the court must\nset the amount. Id. And “in exceptional cases,” the\ncourt “may award reasonable attorney fees.” Id.\n“[A]ccording to the circumstances of the case,” the\ncourt has the discretion to impose a damages award\nof up to three times “the amount found as actual\ndamages.” Id. And if the court finds “that the\namount of the recovery based on profits is either\ninadequate or excessive,” it may adjust a defendant’s\nprofits award “as the court shall find to be just.” Id.\nAny award, of damages or profits, “shall constitute\ncompensation and not a penalty.” Id.\n 2. This case concerns the second step, and in par-\nticular one of the limitations Section 1117(a) imposes\non a plaintiff’s “entitle[ment]” to monetary remedies.\nThe text is plain that an award of profits “will [not]\nbe ordered merely because there has been an in-\nfringement.” Champion Spark Plug Co. v. Sanders,\n331 U.S. 125, 131 (1947) (interpreting the 1905 Act).\nRather, an award of profits is “subject to the princi-\nples of equity.” 15 U.S.C. § 1117(a). The phrase\n“subject to” plainly signals a limitation. See, e.g.,\nSubject, Webster’s New Int’l Dictionary (2d ed. 1934)\n(“Being under the contingency of; dependent upon or\n 17\nexposed to (some contingent action)”); Subject,\nBlack’s Law Dictionary (11th ed. 2019) (“Dependent\non or exposed to (some contingency)”). And the\nphrase “principles of equity” refers to the established\nrules of equity jurisprudence. See, e.g., eBay, 547\nU.S. at 391 (holding that the Patent Act’s statement\nthat courts “may grant injunctions in accordance\nwith the principles of equity,” 35 U.S.C. § 283, incor-\nporated a four-factor test found in “well-established\nprinciples of equity”); Great-West Life & Annuity Ins.\nCo. v. Knudson, 534 U.S. 204, 217 (2002) (“Congress\nfelt comfortable referring to equitable relief in this\nstatute—as it has in many others—precisely because\nthe basic contours of the term are well known.”\n(footnote omitted)). Taken together, then, the text of\nSection 1117(a) carries over limitations on monetary\nremedies embodied in traditional equitable princi-\nples.\n This textual limit only confirms that the Lanham\nAct codified the traditional willfulness requirement.\n“[W]hen a statute covers an issue previously gov-\nerned by the common law,” a court “must presume\nthat Congress intended to retain the substance of the\ncommon law.” Kirtsaeng, 568 U.S. at 538 (internal\nquotation marks omitted); see Microsoft Corp. v. i4i\nLtd. P’ship, 564 U.S. 91, 102 (2011); see also Antonin\nScalia & Bryan A. Garner, Reading Law: The Inter-\npretation of Legal Texts 318 (2012). That is equally\ntrue for rules of equity: “[A] major departure from\nthe long tradition of equity practice should not be\nlightly implied.” Weinberger v. Romero-Barcelo, 456\nU.S. 305, 320 (1982). When Congress enacted Sec-\ntion 1117(a) and included a profits award as a poten-\ntial monetary remedy, willfulness was a well-\nestablished prerequisite to a profits award. See infra\n 18\nat 30–35 (setting out the precedents that contain the\ntraditional willfulness requirement). The presump-\ntion is that “where Congress borrows terms of art in\nwhich are accumulated the legal tradition and mean-\ning of centuries of practice, it presumably knows and\nadopts the cluster of ideas that were attached to each\nborrowed word.” Morissette v. United States, 342\nU.S. 246, 263 (1952).\n A second canon of construction, governing statutory\nreenactments after a statute has been judicially\nconstrued, leads to the same result. See Teva\nPharm., 139 S. Ct. at 633–634 (“[W]e presume that\nwhen Congress reenacted the same language * * *, it\nadopted the earlier judicial construction of that\nphrase.”). When the Lanham Act was passed, courts\nhad already construed the 1905 Act to contain the\nbackground rule that the equitable remedy of ac-\ncounting of profits required willful infringement. See\ninfra at 35–43 (discussing the precedents applying\nthe traditional requirement in the period after the\n1905 Act). Congress could have departed from this\nestablished rule, but instead it imported the lan-\nguage from the 1905 Act into the Lanham Act. 4\n\n\n4\n Section 1117(a) combined the remedies available in Sections\n16 (damages available at law) and 19 (accounting available at\nequity) into one provision. See 1905 Act, § 16, 33 Stat. at 728\n(making an infringer “liable to an action for damages” and\npermitting a court to award “any sum above the amount found\nby the verdict as the actual damages, according to the circum-\nstances of the case, not exceeding three times the amount of\nsuch verdict, together with the costs”); id. § 19, 33 Stat. at 729\n(providing that if a court enjoined the “wrongful use of a\ntrademark,” the plaintiff could “recover, in addition to the\nprofits to be accounted for by the defendant, the damages the\n 19\nWhere statutory text has “already been construed,” a\ncourt is “especially justified in presuming both that”\nCongress was “aware of the prior interpretation” and\nthat the “interpretation reflects their intent” in\nenacting similar statutory text. Cannon v. Univ. of\nChicago, 441 U.S. 677, 696–698 (1979).\n That presumption is doubly justified here: Con-\ngress not only declined to disavow that settled inter-\npretation, it added words of limitation to the 1905\nprovision, making monetary remedies “subject to the\nprinciples of equity.” 15 U.S.C. § 1117(a). Interpret-\ning Section 1117(a) does not, then, require a court to\nask whether Congress meant to carry over a back-\nground requirement where it “fail[ed] to reiterate it\nexpressly.” Microsoft Corp., 564 U.S. at 102. The\nstatutory text Congress enacted confirms that it\nmeant to carry over limitations on monetary reme-\ndies embodied in traditional equitable principles.\nSee Universal Health Servs., Inc. v. U.S. ex rel.\nEscobar, 136 S. Ct. 1989, 1999 (2016) (applying the\n“settled principle of interpretation that, absent other\nindication, Congress intends to incorporate the well-\nsettled meaning of the common-law terms it uses”\n(internal quotation marks omitted)).\n 3. All of this explains why courts continued to re-\nquire willfulness to award an infringer’s profits after\nthe Lanham Act was enacted. Most courts adopted\nthe requirement expressly. See, e.g., ALPO Petfoods,\nInc. v. Ralston Purina Co., 913 F.2d 958, 968 (D.C.\nCir. 1990) (Thomas, J.) (“[A]n award based on a\n\n\ncomplainant has sustained thereby” and giving a court “the\nsame power to increase such damages” as in Section 16).\n 20\ndefendant’s profits requires proof that the defendant\nacted willfully or in bad faith.” (citing Foxtrap, Inc. v.\nFoxtrap, Inc., 671 F.2d 636, 641 (D.C. Cir. 1982) (per\ncuriam) (joined by Ginsburg, J.))); George Basch Co.,\n968 F.2d at 1540; SecuraComm Consulting Inc. v.\nSecuracom Inc., 166 F.3d 182, 190 (3d Cir. 1999)\n(Alito, J.) (“[A] plaintiff must prove that an infringer\nacted willfully before the infringer’s profits are\nrecoverable.”); Nalpac, Ltd. v. Corning Glass Works,\n784 F.2d 752, 755 (6th Cir. 1986) (“[A]n accounting,\nthe proper remedy when bad faith is shown, is inap-\npropriate where there has been no showing of fraud\nor palming off.” (internal quotation marks omitted));\nMinnesota Pet Breeders, Inc. v. Schell & Kampeter,\nInc., 41 F.3d 1242, 1247 (8th Cir. 1994) (“If a regis-\ntered owner proves willful, deliberate infringement\nor deception, an accounting of profits” may be appro-\npriate. (internal quotation marks omitted)); Bishop v.\nEquinox Int’l Corp., 154 F.3d 1220, 1223 (10th Cir.\n1998) (“[A]n award of profits requires a showing that\ndefendant’s actions were willful or in bad faith.”);\nBurger King Corp. v. Mason, 855 F.2d 779, 781 (11th\nCir. 1988) (per curiam) (referring to a defendant\n“who is purposely using the trademark”); Bandag,\nInc. v. Al Bolser’s Tire Stores, Inc., 750 F.2d 903, 919\n(Fed. Cir. 1984) (“An accounting * * * may be denied\nat the discretion of the district court where there has\nbeen no showing of fraud * * * .” (citations omitted)).\nAnd where the case did not present an opportunity to\nset out a rule, courts nonetheless recognized that\nwillfulness could limit the availability of an infring-\ner’s profits award.5 That powerful consensus testifies\n\n5\n Courts recognized that willfulness could limit the availability\n 21\nboth to the stability of the willfulness requirement at\nequity—discussed below—and the textual reinforce-\nment that requirement received in the Lanham Act.6\n\n\nof an infringer’s profits award in cases that did not require the\ncourt to set out a broader rule. See, e.g., Valmor Prods. Co. v.\nStandard Prods. Corp., 464 F.2d 200, 204 (1st Cir. 1972)\n(affirming the denial of damages and profits where products did\nnot compete and “in the absence of fraud or palming off”); Maier\nBrewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117, 123\n(9th Cir. 1968) (“[T]he purposes of the Lanham Act can be\naccomplished by making acts of deliberate trade-mark in-\nfringement unprofitable.” (internal quotation marks omitted)).\nThe Fifth and Seventh Circuits initially adopted this interpre-\ntation, though later decisions retreated without explanation.\nCompare Radio Shack Corp. v. Radio Shack, Inc., 180 F.2d 200,\n207 (7th Cir. 1950) (Where “there was no proof of palming off of\ngoods by defendants, nor of fraud * * * the injunction * * *\nsatisfied the equities of this case.”), and Rolex Watch USA, Inc.\nv. Meece, 158 F.3d 816, 826 (5th Cir. 1998) (“[U]nder § 1117(a),\nan award of profits requires proof of willful or deliberate\ninfringement * * * .”), with Roulo v. Russ Berrie & Co., 886 F.2d\n931, 941 (7th Cir. 1989) (identifying no “express requirement” of\nwillfulness “[o]ther than general equitable considerations” and\naffirming a profits award “[g]iven the evidence of intentional\nimitation and the substantial similarity”), and Pebble Beach Co.\nv. Tour 18 I Ltd., 155 F.3d 526, 554 (5th Cir. 1998) (similar).\n6\n This consensus weakened after the 1999 amendments to\nSection 1117(a), discussed infra at 23–24. Even Claimant (at 27)\ndeclines to defend the argument in these cases “that the 1999\namendment eliminates a pre-1999 requirement.” See Dir. of\nRevenue of Mo. v. CoBank ACB, 531 U.S. 316, 323–324 (2001)\n(“[I]t would be surprising, indeed, if Congress * * * made a\nradical—but entirely implicit—change * * * [with a] technical\nand conforming amendment[ ].” (internal quotation marks\nomitted)); Br. of Intellectual Property Owners Association as\nAmicus Curiae In Support of Neither Party at 5–8.\n 22\n B. Nothing in Section 1117(a) overrides the\n traditional requirement of willfulness.\n 1. Claimant suggests (at 21) that Section 1117(a)\nmakes monetary remedies automatic if a defendant\ncommits one of the specified violations. The text of\nSection 1117(a) says otherwise. It makes the availa-\nbility of monetary remedies “subject to the provisions\nof sections 1111 and 1114” and “subject to the princi-\nples of equity.” 15 U.S.C. § 1117(a). It thus contains\ntwo express limits on the availability of monetary\nremedies that apply even if a plaintiff establishes\nthat a defendant violated a listed provision. Under\nthe Lanham Act, an infringer’s profits award is not\nautomatic “merely because there has been an in-\nfringement.” Champion Spark Plug, 331 U.S. at 131\n(interpreting the 1905 Act).\n 2. Nor is Claimant correct (at 22–23) in claiming that\nthat the addition of “a willful violation under section\n1125(c)” to the list of specified violations in Section\n1117(a) requires a different reading of the “subject to\nthe principles of equity” limitation. Section 1125(c)\nis unique. It is the only Lanham Act cause of action\nthat specifies that a violation must be “willful[]”\nbefore any monetary remedy in Section 1117(a) will\nbe in play.\n Congress enacted Section 1125(c) in 1996 to give an\nowner of a famous mark a cause of action for trade-\nmark dilution. See Federal Trademark Dilution Act\nof 1995, Pub. L. No. 104-98, § 3, 109 Stat. 985, 985–\n986 (1996) (codified at 15 U.S.C. § 1125(c)). “[T]he\nprohibitions against trademark dilution are not the\nproduct of common-law development,” but are con-\ngressional creations. Moseley, 537 U.S. at 429.\nUnlike traditional infringement, which involves a\n 23\n“likelihood of confusion, deception, or mistake,”\ndilution occurs when “use of a famous mark reduces\nthe public’s perception that the mark signifies some-\nthing unique, singular, or particular.” H.R. Rep. No.\n104-374, at 3 (1995) (listing, as examples, “BUICK\naspirin” and “KODAK pianos”).\n For this new cause of action, Congress decided that\nthe owner of a famous mark would be “entitled to the\nremedies set forth in” Section 1117(a) only “[i]f” the\ndilution violation was “willful.” Federal Trademark\nDilution Act of 1995, § 3, 109 Stat. at 986 (now\ncodified at 15 U.S.C. § 1125(c)(5)(B)). That is, with-\nout a willful violation, the owner of the famous mark\nis not entitled to any monetary remedies—not prof-\nits, not damages, not costs, not attorney’s fees.\nCongress chose different remedies because trade-\nmark dilution “differs materially” from infringement.\nH.R. Rep. No. 104-374, at 3 (internal quotation\nmarks omitted). Whereas infringement can lead to\nconfusion that causes “immediate injury,” dilution “is\nan infection, which if allowed to spread,” can lessen\nthe value of the famous mark. Id. (internal quota-\ntion marks omitted). Timely injunctive relief will\nthus ordinarily ward off any damages from dilution.\n When Congress amended Section 1117(a) in 1999\nto reference this new cause of action, it did so in a\nway that made this willfulness-or-no-monetary-\nremedies result clear. It included “a willful violation\nunder section 1125(c)” in the list of violations that\nmust be established at the first step of the Section\n1117(a) analysis:\n [w]hen a violation of any right of the regis-\n trant of a mark registered in the Patent and\n Trademark Office, or a violation under section\n 24\n 1125(a) of this title, or a willful violation un-\n der section 1125(c) of this title, shall have\n been established in any civil action arising\n under this chapter, the plaintiff shall be enti-\n tled, subject to the provisions of sections 1111\n and 1114 of this title, and subject to the prin-\n ciples of equity, to recover (1) defendant’s prof-\n its, (2) any damages sustained by the plaintiff,\n and (3) the costs of the action.7\nSee 15 U.S.C. § 1117(a) (1996); Trademark Amend-\nments Act of 1999, § 3(b), 113 Stat. at 219. That\nmade it clear to any reader of Section 1117(a), as was\nclear to a reader of Section 1125(c), that willful\nviolation is a precondition to any relief under Section\n1117(a).\n This shows why Claimant’s argument that Congress\nknew how “to impose a universal willfulness” re-\nquirement is a red herring. Pet. Br. 23 (emphasis\nadded). Yes, Congress knows how to cut off the\nmonetary remedies in Section 1117(a) entirely. No,\nthat does not mean Congress declined to limit the\navailability of monetary remedies in other, more\ntargeted ways. Just the opposite is true. First, the\nuse of the term willfulness in the newly-added Sec-\ntion 1125(c) in 1996 cannot support a negative infer-\n\n\n7\n Later amendments produced the current Section 1117(a).\nCongress inserted “, (c), or (d)” after “section [1125(a)]” in the\nfirst sentence. Anticybersquatting Consumer Protection Act,\nPub. L. No. 106-113 app. I, § 3003, 113 Stat. 1501, 1501A-549\n(1999). It then struck the first, redundant reference to “(c).”\nIntellectual Property and High Technology Technical Amend-\nments Act of 2002, Pub. L. No. 107-273, § 13207(a), 116 Stat.\n1758, 1906.\n 25\nence about the meaning of text enacted in 1946.\nSee, e.g., Gross v. FBL Fin. Servs., Inc., 557 U.S. 167,\n175 (2009) (explaining that the negative inference\ncanon is “strongest” when the provisions at issue\n“were considered simultaneously when the language\nraising the implication was inserted” (internal quota-\ntion marks omitted)); United Dominion Indus., Inc.\nv. United States, 532 U.S. 822, 836 (2001). And\nsecond, Section 1117(a) addresses these more fine-\ngrained limits on monetary remedies at the second\nstep. See Marx v. Gen. Revenue Corp., 568 U.S. 371,\n381 (2013) (explaining that the negative implication\ncanon applies only if “it is fair to suppose that Con-\ngress considered the unnamed possibility and meant\nto say no to it” (internal quotation marks omitted)).\n The first limitation incorporates by cross-reference\nother statutory restrictions on monetary relief. A\nplaintiff’s entitlement to monetary remedies is\n“subject to the provisions of sections 1111 and 1114.”\n15 U.S.C. § 1117(a). Section 1111 states that “no\nprofits and no damages shall be recovered” if an\nowner of a registered mark failed to give notice of the\nregistration, “unless the defendant had actual notice\nof the registration.” Id. § 1111. Section 1114 states\nthat for a violation of Section 1114(1)(b), which\nprohibits the reproduction, counterfeiting, and\ncopying of a registered trademark in certain printed\nmaterials, a registrant cannot “recover profits or\ndamages” for infringement by production of a mark\n(for example, by a printer who prints images custom-\ners upload to its website) unless the infringer acted\n“with knowledge.” Id. § 1114(1). And it states that,\nin actions against specified “innocent infringer[s] or\ninnocent violator[s],” a plaintiff may receive only\nlimited injunctive relief. Id. § 1114(2)(A)-(B) (refer-\n 26\nring to persons “engaged solely in the business of\nprinting the mark or violating matter for others” and\na media “publisher or distributor”).\n The second limitation, which makes a plaintiff’s\nentitlement to Section 1117(a)’s monetary remedies\n“subject to the principles of equity,” operates in a\nsimilar way. Instead of cross-referencing statutory\nprovisions, as the first limitation does, this limitation\ncross-references well-established principles of equity.\nSee Knudson, 534 U.S. at 217 (stating that Congress\nreferred to “appropriate equitable relief” in a statute\n“precisely because the basic contours of the term are\nwell known” (internal quotation marks omitted)).\nPut differently, rather than attempt to rewrite the\nvarious traditional restrictions on the monetary\nremedies, Congress simply codified them in Section\n1117(a). See Inwood Labs., Inc. v. Ives Labs., Inc.,\n456 U.S. 844, 861 n.2 (1982) (White, J., concurring)\n(The “purpose of the Lanham Act was to codify and\nunify the common law of unfair competition and\ntrademark protection.”). One of those restrictions is\na requirement of willfulness for a defendant’s profits\naward. See infra at 30–43.\n 3. Claimant argues (at 24) that reading the “subject to\nthe principles of equity” limitation to import the\ntraditional requirement of willfulness for a profits\naward creates “tension” with other provisions. This\nnovel “almost-surplusage” canon finds no support in\nprecedent (and Claimant cites none). Regardless, no\ntension exists.\n Start with Section 1117(c). Under this provision, a\nplaintiff raising a cause of action based on a “coun-\nterfeit mark” may “elect * * * to recover, instead of\nactual damages and profits under subsection (a), an\n 27\naward of statutory damages.” 15 U.S.C. § 1117(c). It\nsets out two measures for statutory damages, a lower\nrange, and a higher range if “the use of the counter-\nfeit mark was willful.” Id. § 1117(c)(2). Claimant\nargues (at 24–25) the two ranges are unnecessary if\na profits award requires willfulness because the\nhigher range will always apply. But the two statuto-\nry-damages ranges are needed because Section\n1117(c) requires a plaintiff to forgo both “actual\ndamages and profits” to seek statutory damages.\nThe lower range thus applies to a plaintiff who\nforgoes actual damages for non-willful counterfeiting,\nand the higher range applies to a plaintiff who\nforgoes actual damages and profits for willful coun-\nterfeiting.\n Section 1114 presents no issue for a similar reason.\nFor certain violations of Section 1114(1)(b) commit-\nted with “knowledge,” a plaintiff cannot “recover\nprofits or damages.” Id. § 1114(1)(b) (emphasis\nadded). And for certain violations of Section 1125(a)\ncommitted by “innocent infringer[s] or innocent\nviolator[s],” a plaintiff may not recover any monetary\nremedies, and may instead receive only limited\ninjunctive relief. Id. § 1114(2)(A)-(B). These provi-\nsions prevent a plaintiff from obtaining a greater\nrange of relief than the willfulness requirement for a\ndefendant’s profits award does.\n Section 1117(b) does not help Claimant either. It is\n“an independent and free-standing provision sepa-\nrate and apart from section 1117(a) in that it has its\nown damages calculation and provision for attorney’s\nfees.” Louis Vuitton Malletier S.A. v. LY USA, Inc.,\n676 F.3d 83, 109 n.25 (2d Cir. 2012). For certain\nviolations of Section 1114(1)(a) or of 36 U.S.C.\n 28\n§ 220506,8 “the court shall, unless [it] finds extenuat-\ning circumstances, enter judgment for three times\nsuch profits or damages, whichever amount is great-\ner, together with a reasonable attorney’s fee.” 15\nU.S.C. § 1117(b). This provision uses “intentionally,”\n“knowing,” and “with the intent” to expressly define\na narrow category of violations that trigger a pre-\nsumption of treble damages.\n Finally, Section 1125(d) presents no concern at all.\nAdded to the Lanham Act in 1999, it creates a cause\nof action for cybersquatting (bad-faith registration of\nInternet domain names similar to famous marks).\nSee id. § 1125(d). The “subject to the principles of\nequity” limitation imposes additional limits on the\navailability of monetary remedies for a violation of\nSection 1125(d) beyond just the willfulness require-\nment for profits. See supra at 34. And the limitation\napplies to multiple causes of action, not just Section\n1125(d), so it serves a clear purpose. And, of course,\neven if any of these provisions did reflect some re-\ndundancy, “instances of surplusage are not un-\nknown.” Arlington Cent. Sch. Dist. Bd. of Educ. v.\nMurphy, 548 U.S. 291, 299 n.1 (2006).\n 4. If anything, it is Claimant’s interpretation that\ncreates a problem with the text. It offers no explana-\ntion for what “subject to the principles of equity”\nmeans. The phrase limits a plaintiff’s “entitle[ment]”\nto a remedy, and so even Claimant must admit that it\n\n8\n The violations are “intentionally using a mark or designation,\nknowing such mark or designation is a counterfeit mark” and\n“providing goods or services necessary” for such a violation\n“with the intent that the recipient * * * would” use them “in\ncommitting the violation.” 15 U.S.C. § 1117(b)(1)-(2).\n 29\nimports some equitable principles from traditional\ntrademark law to cut off access to monetary reme-\ndies. See infra at 34 (discussing acquiescence and\nlaches); infra at 47 (discussing the principle that\nmonetary remedies will be denied where an injunc-\ntion affords complete relief); SecuraComm Consult-\ning, 166 F.3d at 187 n.1. The text offers no basis to\nimport some of these principles but not others, such\nas the willfulness requirement for a profits award.\n Indeed, Claimant recognizes (at 30) that willfulness is\nrelevant to a defendant’s profits award, resisting only\nthe conclusion that willfulness is required. To avoid\nadmitting that willfulness is relevant because of the\nphrase “principles of equity,” Claimant turns to a\ncourt’s discretion to adjust a profits award up or\ndown, “as the court shall find to be just, according to\nthe circumstances.” 15 U.S.C. § 1117(a). But this\ninterpretation would require a defendant to submit\nto, and the court to conduct, the costly process of\naccounting before a defendant could argue that a\nprofits award is not warranted at all. There is a\nsound reason why the Congress that enacted the\nLanham Act chose—incorporating the decisions of\ncourts before it—to require courts to assess whether\nequitable principles support a profits award before a\ndefendant will be required to account for its profits.\n“An accounting of damages and profits is a long and\nexpensive proceeding * * * .” O’Cedar Corp. v. F.W.\nWoolworth Co., 73 F.2d 366, 367 (7th Cir. 1934) (per\ncuriam); accord Ludington Novelty Co. v. Leonard,\n127 F. 155, 157 (2d Cir. 1903) (denying “an account-\ning” because the “proceeding w[ould] prove abortive\nafter subjecting both parties to large additional\nexpense and the defendants to unnecessary annoy-\nance”). This is why the plain text of Section 1117(a)\n 30\ndirects courts to ask whether any equitable principle\nbars a monetary remedy altogether before engaging\nin that process. See Champion Spark Plug, 331 U.S.\nat 131–132 (affirming the denial of monetary reme-\ndies under the 1905 Act where “the likelihood of\ndamage to petitioner or profit to respondents * * *\nseems slight” and an injunction “satisf[ies] the\nequities of the case”).\n 5. As for Claimant’s complaint (at 34) that courts will\nfind it too difficult to examine traditional trademark\nlaw to find the “principles of equity” that limit the\navailability of monetary remedies under Section\n1117(a), there is no need to worry. Courts are, of\ncourse, perfectly up to this task, one they “are accus-\ntomed to pursuing, and will always have to pursue,\nin other contexts.” Knudson, 534 U.S. at 217 (dis-\nmissing concerns of an “antiquarian inquiry”); accord\nMicrosoft, 564 U.S. at 103 (“[G]iven how judges * * *\nrepeatedly understood and explained the presump-\ntion of patent validity, we cannot accept Microsoft’s\nargument that Congress used the words ‘presumed\nvalid’ to adopt only a procedural device * * * .”).\nII. Traditional Principles Of Equity Require\n Willfulness For A Profits Award.\n A. Traditional trademark law required will-\n fulness for an infringer’s profits award.\n For well over a century, a clearly established prin-\nciple of equity required willfulness before a court\nwould compel an infringer to account for, and turn\nover, its profits.\n 1. Before the first trademark statutes were enact-\ned, trademark suits began in the United Kingdom as\nactions at law, specifically “action[s] on the case in\n 31\ndeceit.” James M. Koelemay, Jr., Monetary Relief for\nTrademark Infringement Under the Lanham Act, 72\nTrademark Rep. 458, 460 (1982). These suits sound-\ned in fraud, and establishing liability required proof\nof intentional deceit. Amasa C. Paul, The Law of\nTrade-Marks Including Trade-Names and Unfair\nCompetition § 324 (1903). Because these first suits\nwere actions at law, the only remedy was damages.\nSee id. These actions proved relatively “ineffectual”\nwithout the aid of injunctive relief to prevent in-\nfringement. Koelemay, supra, at 461.\n English courts solved that problem by entertaining\ntrademark actions in equity, opening the door to\ninjunctions against future infringement. See id. at\n461–462. But allowing actions in equity raised the\nquestion of how to compensate plaintiffs for damages\nthat they had suffered without the traditional dam-\nages remedy that was available at law. There was a\nformalistic solution: a second action at law for dam-\nages. See id. at 463. Equity courts balked at this\ninefficient solution and began to award monetary\nrelief. See, e.g., Frazer v. Frazer Lubricator Co., 18\nIll. App. 450, 464 (Ill. App. Ct. 1886), aff’d 13 N.E.\n639 (Ill. 1887). The most common monetary relief\nwas the traditional equitable remedy of an account-\ning of profits. Harry D. Nims, The Law of Unfair\nCompetition and Trade-Marks § 420 (2d ed. 1917).\n 2. Courts employed varying rationales to deem an\naccounting an appropriate form of equitable relief.\nSome considered it to be an admittedly rough meas-\nure of compensation. See id. § 421. Such courts\noccasionally referred to an award of profits as “dam-\nages,” see, e.g., George T. Stagg Co. v. Taylor, 27 S.W.\n247, 251 (Ky. Ct. App. 1894), though the amount of a\n 32\ndefendant’s profits was not a traditional measure of\ndamages at law, Nims, supra, § 420. Others consid-\nered a profits award to be at least partially punitive\nor designed to deter wrongdoing. See, e.g., W.R.\nLynn Shoe Co. v. Auburn-Lynn Shoe Co., 62 A. 499,\n506 (Me. 1905); Nims, supra, § 419.\n Whatever the rationale, courts were remarkably\nconsistent about the requirements for an award of an\ninfringer’s profits: They required some proof of\nwillful, fraudulent intent. An early English chancel-\nlor, in a widely cited opinion, summarized the rule,\nboth “well founded in reason, and also settled by\ndecision,” as:\n [I]f A. has acquired property in a trade mark,\n which is afterwards adopted and used by B. in\n ignorance of A.’s right, A. is entitled to an in-\n junction; yet he is not entitled to any account\n of profits or compensation, except in respect of\n any user by B. after he became aware of the\n prior ownership.\nEdelsten v. Edelsten (1863) 46 Eng. Rep. 72, 78; see\nalso Moet v. Couston (1864) 55 Eng. Rep. 493, 494\n(citing Edelsten to deny an accounting); Rose v.\nLoftus (1878) 38 LT 409 at 411 (Eng.) (denying an\naccounting where plaintiff’s charge of “fraudulent\nconduct” was “unfounded”); accord Henry Ludlow &\nHenry Jenkyns, A Treatise on the Law of Trade-\nMarks and Trade-Names 43 (1877) (“A court of\nequity will not only grant an injunction * * * but will\nalso require a dishonest defendant to account for the\nprofits which he has made by the improper use of it.”\n(emphasis added)).\n 3. This rule crossed the Atlantic. Early American\ncourts “constantly refused” “an account of gains and\n 33\nprofits” for “want of fraudulent intent.” McLean v.\nFleming, 96 U.S. 245, 257 (1877); see also Saxlehner\nv. Siegel-Cooper Co., 179 U.S. 42, 42–43 (1900)\n(holding that one defendant “should not be required\nto account for gains and profits” when it “appear[ed]\nto have acted in good faith”); George T. Stagg Co., 27\nS.W. at 251 (refusing “an account of profits” where\n“proof [did] not show any fraudulent intent”); see also\nTaylor v. Carpenter, 11 Paige Ch. 292, 298 (N.Y. Ch.\n1844) (explaining that where a defendant uses a\ntrademark “for the fraudulent purpose of inducing\nthe public * * * to believe that it was in fact” the\ngenuine article, the defendant is also liable for\ndamages), aff’d 2 Sand. Ch. 603, 612 (N.Y. Ch. 1846)\n(clarifying that the reference to “damages” was\nactually “for an account”). State and federal courts\nroutinely denied an accounting where there was no\nbad faith or limited an accounting to a period when a\ndefendant could no longer be deemed to have been\nacting in good faith. See, e.g., William Rogers Mfg.\nCo. v. S. Mfg. Co., 11 F. 495, 500 (C.C.D. Mass. 1882)\n(granting injunction but denying profits where\ndefendants were not acting in bad faith, subject to\nplaintiffs’ opportunity “to prove facts which will give\nthem special profits” on remand); Weed v. Peterson,\n12 Abb. Pr. (n.s.) 178, 180 (N.Y. Sup. Ct. 1872)\n(denying “damages” where defendants acted “in good\nfaith, without any wrong intent and in ignorance of\nthe rights of the plaintiffs”).\n To be sure, wrongful intent was apparent in “most\ncases.” Koelemay, supra, at 466. Many cases are\nthus consistent with this willfulness requirement,\nbut do not state it expressly. See, e.g., Hostetter v.\nVowinkle, 12 F. Cas. 546, 547 (C.C.D. Neb. 1871)\n(No. 6714); Graham v. Plate, 40 Cal. 593, 599 (1871).\n 34\nAnd there were other “general principles of equity”\nthat affected entitlement to an accounting. For\nexample, “acquiescence of long standing, and inex-\ncusable laches in seeking redress,” would bar “the\ncomplainant” from “an accounting” or “a decree for\ngains and profits.” La Republique Francaise v.\nSchultz, 102 F. 153, 156 (2d Cir. 1900) (internal\nquotation marks omitted). And because an account-\ning could be burdensome and expensive, see Nims,\nsupra, § 424, courts would deny an accounting when\nit appeared that recovery would be “insignificant,”\nRegis v. Jaynes, 77 N.E. 774, 775 (Mass. 1906).\nCourts viewed each of these principles as a sufficient\nbasis to deny a defendant’s profits award. See Nims,\nsupra, §§ 424, 428.\n Tellingly, from the entire swath of trademark cases\npredating the 1905 Act, Claimant identifies only one\ndeparture from this consensus rule. There, the court\nsuggested that, on remand, “the case may go to a\nmaster for an account of gains and profits, on ac-\ncount of the unauthorized, though not intentional\nand fraudulent, use by respondents of the” trade-\nmark. Oakes v. Tonmierre, 49 F. 447, 453 (C.C.S.D.\nAla. 1883). Oakes cited no authority for that point\nand did not even require an accounting. See id.\n(noting only that an account “may” occur). Unsur-\nprisingly, Oakes was an outlier: The case was cited\nonly a small handful of times, never once to support\nan accounting absent a showing of willfulness.9\n\n9\n Claimant claims (at 39) that George T. Stagg Co. considered the\ndefendant’s willfulness as one of “multiple factors,” but all the\nfacts that the court cited in its discussion of profits went to the\ndefendant’s state of mind. 27 S.W. at 251.\n 35\n Thus, the Massachusetts Supreme Judicial Court\nsurveyed traditional trademark law on the eve of the\nenactment of the 1905 Act and found “the weight of\nmodern authority [was] in favor of the rule that an\naccount of profits will not be taken where the wrong-\nful use of a trade-mark or tradename has been\nmerely accidental or without any actual wrongful\nintent to defraud a plaintiff or to deceive the public.”\nRegis, 77 N.E. at 775–776.\n B. Courts required willfulness for a profits\n award after the 1905 Act.\n 1. The 1946 Lanham Act had its roots in the earlier\n1905 Act, which provided that in a case where a\ncourt enjoined the “wrongful use of a trademark,” the\nplaintiff could “recover, in addition to the profits to\nbe accounted for by the defendant, the damages the\ncomplainant has sustained thereby.” 1905 Act, § 19,\n33 Stat. at 729. Like the later Lanham Act, courts\nunderstood the 1905 Act to incorporate the backdrop\nequitable requirements. See, e.g., Golden W. Brew-\ning Co. v. Milonas & Sons, Inc., 104 F.2d 880, 882\n(9th Cir. 1939) (recognizing that the 1905 Act pre-\nserved equitable defenses of “laches, acquiescence\nand the absence of wrongful intent”).\n Thus, courts hearing cases under the 1905 Act\ncontinued to apply the traditional willfulness rule.\nSee, e.g., id.; Franklin Simon & Co. v. Bramley\nBlouses, Inc., 10 N.Y.S.2d 42, 42, 44 (Sup. Ct. 1939)\n(denying an “accounting of profits” because the\ndefendant used the mark “without intent to infringe\nor to engage in unfair competition”); Oneida Cmty. v.\nOneida Game Trap Co., 150 N.Y.S. 918, 925 (Sup. Ct.\n1914) (“Damage is allowed when intentional fraud is\nfound. No fraud is found here.” (citation omitted)).\n 36\nAnd others acted consistently with the rule. See, e.g.,\nAladdin Mfg. Co. v. Mantle Lamp Co. of Am., 116\nF.2d 708, 716 (7th Cir. 1941) (“Courts have, in cases\nin which the action of the infringer was deliberate,\nfraudulent and wanton, allowed damages in addition\nto profits * * * .”); United Drug Co. v. Obear-Nester\nGlass Co., 111 F.2d 997, 998–999 (8th Cir. 1940)\n(noting that “[g]ood faith may have an effect upon\nthe measure of damages recoverable under the\nstatute” and affirming “an accounting and award of\nprofits” given that the defendant acted “in bad\nfaith”); George W. Luft Co. v. Zande Cosmetic Co., 48\nF. Supp. 602, 607 (S.D.N.Y. 1942) (limiting “account-\ning” to period after “the date the Patent Office ren-\ndered its decision that” defendants’ proposed mark\n“was confusingly similar” to plaintiff’s), aff’d in\nrelevant part, 142 F.2d 536, 541–542 (2d Cir. 1944);\nPease v. Scott Cty. Milling Co., 5 F.2d 524, 526–527\n(E.D. Mo. 1925) (where defendant had been ignorant\nof plaintiff’s mark, limiting accounting to period after\nfiling of complaint).\n This held true in federal and state courts, whether\nthe cause of action was the 1905 Act or state law.\nSee, e.g., Gorham Mfg. Co. v. Schmidt, 196 F. 955,\n956 (S.D.N.Y. 1912) (refusing “an accounting” where\n“it is not conclusively shown that there existed an\nintention on the part of the defendants to deceive or\ndefraud their customers”); Dr. A. Reed Cushion Shoe\nCo. v. Frew, 158 F. 552, 556 (C.C.W.D.N.Y.) (re-\nquirement “to account for the gains and profits”\n“rests entirely upon an intentional fraud by a de-\nfendant”), aff’d in relevant part, 162 F. 887, 891 (2d\nCir. 1908); Liberty Oil Corp. v. Crowley, Milner &\nCo., 258 N.W. 241, 243 (Mich. 1935) (citing Nims,\nsupra, § 424, and Regis, 77 N.E. at 776); Std. Cigar\n 37\nCo. v. Goldsmith, 58 Pa. Super. 33, 37 (1914) (ac-\ncounting required “where the infringement * * * was\nnot the result of mistake or ignorance of the plain-\ntiff’s right”); Reading Stove Works, Orr, Painter &\nCo. v. S.M. Howes Co., 87 N.E. 751, 753 (Mass. 1909)\n(citing Regis and awarding profits where the defend-\nant “[i]n no just sense can * * * be said to have acted\ninnocently, or in ignorance of the plaintiff’s rights”).10\n Dickey v. Mutual Film Corp. is illustrative. The\ntrial court embraced the rule that Claimant urges here:\nIt rejected the argument “that where no fraud is\nfound there can be no accounting,” concluding in-\nstead that courts were merely “reluctant to decree an\naccounting” under such circumstances, and awarded\nprofits based on the totality of the circumstances.\n160 N.Y.S. 609, 610 (Sup. Ct. 1916). The appellate\ncourt reversed, holding that “the judgment must be\nmodified” to eliminate the accounting because there\nwas “no proof of any fraudulent intent upon the part\nof the defendant.” Dickey v. Mutual Film Corp., 186\nA.D. 701, 702 (N.Y. App. Div. 1919).\n Leading treatises of the time described the consen-\nsus rule as mirroring this holding in Dickey. The\nRestatement explained that a trademark defendant\nis “liable for the net profits * * * if, but only if” in-\nfringement was for “the purpose of” benefitting from\nplaintiff’s “reputation in the market.” Restatement\n(First) of Torts § 747 (1938). Others reached the\nsame conclusion. See, e.g., James Love Hopkins, The\nLaw of Trademarks, Tradenames and Unfair Compe-\n\n\n10\n Many decisions did not expressly set out whether the cause of\naction arose under federal or state law.\n 38\ntition § 192 (4th ed. 1924) (“And where the defendant\nwas found to have adopted the mark in good faith,\nwith no intent to deceive the public or appropriate\nthe plaintiffs’ goodwill, the accounting was refused.”);\nNims, supra, § 424 (“An accounting will not be or-\ndered where the infringing party acted innocently\nand in ignorance of the plaintiff’s rights, provided\nsuch party stops his illegal practices after he discov-\ners the truth.”); Norman F. Hesseltine, A Digest of\nthe Law of Trade-Marks and Unfair Trade 305\n(1906) (“No account as to profits allowed except as to\nuser after knowledge of plaintiff’s right to trade-\nmark.”).\n 2. Claimant’s insistence (at 36) that no traditional\nrule requiring willfulness existed cannot be squared\nwith this history.\n Several cases that Claimant claims (at 37–38) depart-\ned from this rule simply did not discuss willfulness\nbecause the facts did not raise the issue. In I.T.S.\nCo. v. Tee Pee Rubber Co., for example, the Sixth\nCircuit denied an accounting based on a “very re-\nmote” possibility of substantial recovery, so it had no\nreason to reach intent. 288 F. 794, 798 (6th Cir.\n1923). In Stonebraker, the Court of Appeals of\nMaryland noted that an injunction may issue with-\nout “fraudulent intent,” but did not clearly state the\nsame was true of an accounting. Stonebraker v.\nStonebraker, 33 Md. 252, 268 (1870). In any event,\nthe court said that the circumstances “indicate an\nevident purpose to deceive.” Id. Claimant also cites (at\n39) dicta from a Sixth Circuit case. That court\nacknowledged that courts applied a willfulness\nrequirement but expressed dissatisfaction with those\ncourts’ exposition of the rationale for the rule. See\n 39\nLawrence-Williams Co. v. Societe Enfants Gombault\net Cie, 52 F.2d 774, 778 (6th Cir. 1931). The Sixth\nCircuit later barred an accounting based on the\nabsence of “actual wrongful intent” and the addition-\nal equitable bar of no apparent “substantial damage.”\nHemmeter Cigar Co. v. Congress Cigar Co., 118 F.2d\n64, 71–72 (6th Cir. 1941).\n Claimant makes much (at 39) of Pomeroy’s statement\nthat “an accounting of profits may be refused” for\ngood-faith infringement. 2 John Norton Pomeroy, A\nTreatise on Equitable Remedies § 2004 (2d ed. 1919),\nin 5 Pomeroy’s Equity Jurisprudence and Equitable\nRemedies (1919) (emphasis added). This section of\nthe treatise does not state that willfulness was not a\nrequirement, and so Claimant places more weight on\n“may” than it can bear. In any event, a single dis-\ncussion of the accounting remedy in one treatise on\nthe broad topic of equity cannot overcome the over-\nwhelming agreement in the cases and trademark-\nspecific treatises that willfulness was required. See\nFred Fisher Music Co. v. M. Witmark & Sons, 318\nU.S. 643, 658–659 (1943) (surveying 20 treatises and\nadopting a copyright rule that eight treatises had\nstated clearly, two treatises had stated “with some\nreservations,” and ten treatises did not discuss).\n This Court’s opinion in Mishawaka Rubber, on\nwhich Claimant (at 41) relies heavily, also does not\nhelp Claimant. There, the Court granted certiorari\n“solely to review” how to calculate an accounting, not\nto decide whether accounting was warranted on the\nfacts. Mishawaka Rubber, 316 U.S. at 204–205.\nThus, no useful inference can be drawn regarding the\nappropriateness of an accounting based on the facts\nof that case; indeed, in the opinion below, the Sixth\n 40\nCircuit had dutifully recited the willfulness require-\nment. See Mishawaka Rubber & Woolen Mfg. Co. v.\nS.S. Kresge Co., 119 F.2d 316, 323 (6th Cir. 1941).\n The rest of this Court’s cases do not adopt a “holis-\ntic analysis,” as Claimant suggests (at 39); rather, they\ncite independent, well-defined equitable bases for\nrefusing an accounting. See Champion Spark Plug,\n331 U.S. at 131–132 (good faith and minimal recov-\nery); Saxlehner, 179 U.S. at 42–43 (same); McLean,\n96 U.S. at 257–258 (good faith and laches). They do\nnot undercut the understanding that any one of the\ncited reasons would have been sufficient to defeat an\naccounting. See supra at 34.\n Claimant’s suggestion (at 38–40) that courts inferred\nintent from the mere act of infringement is also\nwrong. Courts applied that presumption only in the\ncontext of granting injunctive relief, not monetary\nrelief like an accounting.11 Gorham Manufacturing\nCo. illustrates the point: It applied “the presump-\n\n\n11\n As discussed, the first actions at law for trademark infringe-\nment sounded in fraud and required proof of intentional deceit.\nSee supra at 31. When actions were brought in equity, howev-\ner, the absence of intentional deceit was not a barrier to\ninjunctive relief. See, e.g., Millington v. Fox (1838) 40 Eng. Rep.\n956, 962. Some courts reached this conclusion by viewing\ntrademark rights as a form of property right, for which intent\ndoes not play a role (traditional trespass provides an example).\nSee, e.g., Stonebraker, 33 Md. at 268. Others suggested that the\naction sounded, at least in part, in fraud, but concluded that the\nrequired showing of wrongful intent could be “presumed” by the\nact of infringement itself. See, e.g., Church & Dwight Co. v.\nRuss, 99 F. 276, 279 (C.C.D. Ind. 1900). Courts that applied\nthis presumption continued to insist on actual proof of wrongful\nintent before awarding profits.\n 41\ntion” of deception, “which arises from the infringe-\nment of a valid trade-mark” but denied “an account-\ning” because the plaintiff had “not conclusively\nshown that there existed an intention on the part of\nthe defendants to deceive or defraud their custom-\ners.” 196 F. at 956. Indeed, several of the sources\nClaimant relies on for this point refer to the willfulness\nrequirement. See Church & Dwight Co., 99 F. at 279\n(allowing that the inference of “fraudulent intent”\nmight “be rebutted in exemption of damages” (inter-\nnal quotation marks omitted)); Hesseltine, supra, at\n305; Nims, supra, § 424.\n Claimant’s reliance (at 38) on Paul’s statement that a\n“right of recovery” was unaffected by “innocent or\naccidental” infringement is misplaced. See Paul,\nsupra, § 196. It cites a chapter that defines in-\nfringement, which did not require intent. That\nsection did not focus on monetary relief—indeed, it\ncites McLean, which held that monetary relief is\n“constantly refused” absent “fraudulent intent.” 96\nU.S. at 257. Paul elsewhere acknowledges equitable\ndefenses in passing, without giving them comprehen-\nsive treatment. See Paul, supra, § 326 & n.29 (dis-\ncussing briefly that “[i]n some cases” a “complainant\nmay obtain an injunction” but not “profits,” and\nnoting in a footnote cases applying the willfulness\nrequirement, such as Edelsten and Moet).\n Finally, the unfair competition cases offer Claimant\nno shelter. Claimant relies (at 43) on two cases that\ndisavowed the suggestion that the same rules ap-\nplied in trademark and unfair competition actions.\nSee P.E. Sharpless Co. v. Lawrence, 213 F. 423, 429\n(3d Cir. 1914); Prest-O-Lite Co. v. Bournonville, 260\nF. 442, 444 (D.N.J. 1915); accord Wood v. Peffer, 130\n 42\nP.2d 220, 225–226 (Cal. Dist. Ct. App. 1942) (stating\nthat “the same rules cannot always be applied” and\nthat “proof of actual fraud or intent to divert * * *\nbusiness” had been required for a profits award in\ntrademark cases). Neither held that an accounting\nwas available in trademark cases regardless of\nintent. And Prest-O-Lite limited the accounting for\ntrademark infringement to sales in which the de-\nfendant knew that the purchaser would deceptively\nresell the product—that is, it denied the accounting\nfor unfair competition because it required even more\nculpable behavior by the defendant. 260 F. at 445.12\n\n12\n After this Court declared trademark law to be “a part of the\nbroader law of unfair competition,” Hanover Star Milling Co. v.\nMetcalf, 240 U.S. 403, 413 (1916), courts increasingly applied\nthe willfulness requirement from traditional trademark law.\nSee, e.g., Horlick’s Malted Milk Corp. v. Horluck’s, Inc., 51 F.2d\n357, 359 (W.D. Wash. 1931) (“[Plaintiff] cannot recover defend-\nant’s profits unless it has been shown beyond a reasonable\ndoubt that defendant was guilty of willful fraud in the use of\nthe enjoined trade-name.”), aff’d on other grounds, 59 F.2d 13\n(9th Cir. 1932); Donner v. Parker Credit Corp., 76 A.2d 277, 279\n(N.J. Super. Ct. Ch. Div. 1950) (citing pre-1946 cases to con-\nclude that it was “well settled” that “good faith * * * does\nconstitute a defense to profits”); Kickapoo Dev. Corp. v. Kicka-\npoo Orchard Co., 285 N.W. 354, 359 (Wis. 1939) (awarding\nprofits only after finding “that defendants deliberately and\nintentionally simulated plaintiff’s product”); Jones v. Roshen-\nberger, 144 N.E. 858, 859 (Ind. App. 1924) (accounting available\n“where the action of the offending parties was deliberate and\nwillful”); United Drug Co. v. Kovacs, 123 A. 654, 655 (Pa. 1924)\n(“the duty to account” arises when infringement is “intentional,”\nbut “[a] different question * * * arise[s] if * * * imitation” is\n“innocent”); see also Beebe v. Tolerton & Stetson Co., 91 N.W.\n905, 907 (1902) (stating, even before 1916, that to receive\nprofits, a “plaintiff must show that defendant acted in bad\nfaith,” citing Saxlehner).\n 43\n As all of this shows, there was no “definite trend\ndeveloped toward awarding damages and an ac-\ncounting as a matter of right.” Pet. Br. 40 (quoting\nKoelemay, supra, at 476). 13 Claimant has not un-\nearthed a case from the pre-Lanham Act era actually\nawarding profits absent proof of willful infringement.\nWhat it does have, an unsupported statement from\nOakes, cannot support a conclusion that the rule\nrequiring willfulness to order an accounting was\nunclear by 1946. Cf. Timbs v. Indiana, 139 S. Ct.\n682, 687 n.1 (2019) (explaining that a “sole excep-\ntion” in the cases “does not undermine” the existence\nof a “well-established rule” (internal quotation marks\nomitted)).\n C. Claimant is wrong to claim that equitable\n principles cannot limit courts’ discretion.\n Claimant falls back on an argument (at 29) that read-\ning “subject to the principles of equity” to contain a\nwillfulness requirement would itself be inconsistent\nwith equitable principles. Its argument rests on two\npremises: that any mention of “equity” implies\ndiscretion and that discretion implies a lack of clear\nrules. Both are wrong.\n 1. To start, the text does not wantonly direct\ncourts to reach an equitable result. It instead cabins\n\n13\n In support of that claim, Koelemay cites three cases that are\nadmitted dictum and one other that is inapposite. Compare\nKoelemay, supra, at 476 n.109 (collecting citations), with supra\nat 38, 41–42 (discussing Tee Pee Rubber, P.E. Sharpless Co.,\nand Prest-O-Lite), and Gulden v. Chance, 182 F. 303, 306 (3d\nCir. 1910) (alluding, in an unfair competition case, to the\ndoctrine of inferred intent applicable to injunctive relief without\ndiscussing the rule for a profits award in a trademark case).\n 44\na court’s discretion to award monetary remedies by\nmaking the availability of those remedies “subject to\nthe principles of equity.” 15 U.S.C. 1117(a) (empha-\nsis added). By referencing “principles of equity,” the\ntext refers courts to the set of equitable rules that\nlimited the availability of these remedies. See Mon-\ntanile v. Bd. of Trs. of Nat’l Elevator Indus. Health\nBenefit Plan, 136 S. Ct. 651, 657 (2016) (The phrase\n“equitable relief” was “limited to those categories of\nrelief that were typically availability in equity.”\n(internal quotation marks omitted)). Here, a well-\nestablished rule limited the availability of a defend-\nant’s profits award to cases where a defendant acted\nwillfully. See supra at 30–43. That rule is therefore\nan “equitable principle” that limits the availability of\nmonetary remedies under Section 1117(a).\n That sets this case apart from Park ’N Fly, Inc. v.\nDollar Park & Fly, Inc., 469 U.S. 189 (1985). That\ncase involved an incontestable trademark. See id. at\n193 (citing 15 U.S.C. §§ 1065, 1115(b)). The Ninth\nCircuit devised a rule under which a plaintiff could\nrely on a trademark’s incontestable status to estab-\nlish infringement, but not to support injunctive\nrelief. See id. at 192–193. The Court searched the\nLanham Act “in vain” for that rule but did not find it.\nId. at 196. The dissent argued, as neither the parties\nnor the court below had, that because the Lanham\nAct makes the availability of injunctive relief “sub-\nject to the principles of equity,” courts could recog-\nnize the inequity of granting injunctive relief where\na trademark is invalid, but has nonetheless become\nincontestable. See id. at 217 (Stevens, J., dissenting)\n(describing “the power of the Chancellor to do equi-\nty”). The Court rejected the view that the reference\nto “principles of equity” grants courts freewheeling\n 45\nequitable discretion. See id. at 202–203. In doing so,\nit recognized that the reference likely incorporated\n“traditional” equitable rules. See id. at 203 n.7.\n Claimant counters that the reference to “equity” im-\nplies “broad discretion to tailor an award of monetary\nrelief.” Pet. Br. 30 (referring to the “power of the\nChancellor to do equity” (internal quotation marks\nomitted)). To be sure, applying some “principles of\nequity” that Section 1117(a) incorporates will involve\nthe exercise of remedial discretion. See supra at 34;\ninfra at 47 (discussing other principles of equity).\nBut “[d]iscretion is not whim, and limiting discretion\naccording to legal standards helps promote the basic\nprinciple of justice that like cases should be decided\nalike.” Martin v. Franklin Capital Corp., 546 U.S.\n132, 139 (2005). The requirement of willfulness is\none such legal standard. And although equity juris-\ndiction historically involved “the power of the Chan-\ncellor to do equity,” equity often operates in practice\nto limit or deny the available remedies. See Dan B.\nDobbs & Caprice L. Roberts, Law of Remedies § 2.1\n(3d ed. 2018) (“Even if a plaintiff makes out a case\nfor relief * * * the court of equity may in its discre-\ntion refuse its aid.”); cf. Hecht Co. v. Bowles, 321 U.S.\n321, 321–322, 328–329 (1944) (holding that a court\ncould deny an injunction under the Emergency Price\nControl Act of 1942, though the statute stated that\nan order “shall be granted”).\n 2. Nor are equity and clear rules somehow mutual-\nly exclusive. Equity is not another word for un-\nbounded discretion; it refers to a system of rules\ndeveloped in a particular set of courts. See Equity,\nBouvier’s Law Dictionary (1940) (“A branch of reme-\ndial justice by and through which relief is afforded\n 46\n* * * in the courts of equity.”). Indeed, “courts of\nequity must be governed by rules and precedents no\nless than the courts of law.” Lonchar v. Thomas, 517\nU.S. 314, 323 (1996) (internal quotation marks\nomitted). Thus, even in the English courts, “the\nsystem of relief administered by a court of equity”\nhad been reduced “into a regular science.” 3 William\nBlackstone, Commentaries on the Laws of England\n440–441 (1768). And that understanding carried\nover to our judicial system. See, e.g., The Federalist\nNo. 78, at 529 (Alexander Hamilton) (J. Cooke ed.\n1961) (Courts “should be bound down by strict rules\nand precedents” or risk “arbitrary discretion.”); The\nFederalist No. 83, at 569 (Alexander Hamilton) (J.\nCooke ed. 1961) (The “primary use of a court of\nequity is to give relief in extraordinary cases.”).\n Well-established equitable principles demonstrate\nthe point. A preliminary injunction, for example,\ncannot issue unless four factors are met. See Winter\nv. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)\n(“A plaintiff * * * must establish that he is likely to\nsucceed on the merits, that he is likely to suffer\nirreparable harm * * *, that the balance of equities\ntips in his favor, and that an injunction is in the\npublic interest.”). And an accounting of profits is\nunavailable “where an injunction will satisfy the\nequities of the case.” Champion Spark Plug, 331\nU.S. at 131; accord Minnesota Pet Breeders, 41 F.3d\nat 1247; Morgenstern Chem. Co. v. G. D. Searle &\nCo., 253 F.2d 390, 394 (3d Cir. 1958).\n 3. The decisions on which Claimant relies (at 30–32)\nonly confirm that “in a system of laws discretion is\nrarely without limits.” Indep. Fed’n of Flight At-\ntendants v. Zipes, 491 U.S. 754, 758 (1989).\n 47\n Start with Halo Electronics. At issue was a provi-\nsion of the Patent Act stating that, if patent in-\nfringement is established, a court “may increase the\ndamages up to three times the amount found or\nassessed.” 35 U.S.C. § 284. Though “the word ‘may’\nclearly connotes discretion,” this Court explained,\nthat discretion must be “guided by sound legal prin-\nciples.” Halo Elecs., 136 S. Ct. at 1931–32 (internal\nquotation marks omitted). History had established\none such principle that “channel[ed] the exercise of\ndiscretion”: An “award of enhanced damages” is\n“limit[ed] * * * to egregious cases of misconduct\nbeyond typical infringement,” such as willful in-\nfringement. Id. at 1935. The Court rejected the\nFederal Circuit’s “particular conception of willful-\nness.” Id. But it repeatedly endorsed the threshold\nrequirement of willful infringement. See id. at 1932,\n1934; see also id. at 1936 (Breyer, J., concurring)\n(understanding the Court to have made clear that a\nrequirement of “willful misconduct” limited a court’s\ndiscretion under Section 284).\n eBay Inc. contains more of the same. There, the\nCourt considered a Patent Act provision saying that\ncourts “may grant injunctions in accordance with the\nprinciples of equity to prevent [a] violation * * * on\nsuch terms as the court deems reasonable.” 35\nU.S.C. § 283. All agreed that the provision required\ncourts to exercise “equitable discretion.” eBay, 547\nU.S. at 391. But that discretion was not shapeless\nand unlimited: Under “well-established principles of\nequity, a plaintiff * * * must satisfy a four-factor test\nbefore a court may grant such relief.” Id. (emphasis\nadded). Because “a major departure from” this kind\nof “long tradition of equity practice should not be\nlightly implied,” and because the provision expressly\n 48\nrequired courts to act “in accordance with” that\ntradition, this threshold test applied to injunctive\nrelief under the Patent Act. Id. at 391–392 (internal\nquotation marks omitted). Though the Court reject-\ned the Federal Circuit’s additional requirements, it\nreaffirmed the four-part test for injunctive relief. Id.\nat 393–394; id. at 395 (Roberts, C.J., concurring)\n(“[T]here is a difference between exercising equitable\ndiscretion pursuant to the established four-factor\ntest and writing on an entirely clean slate.”).\n Kirtsaeng v. John Wiley & Sons, Inc., 136 S. Ct.\n1979 (2016), is similar. A fee provision in the Copy-\nright Act was at issue. See 17 U.S.C. § 505 (“[T]he\ncourt may also award a reasonable attorney’s fee to\nthe prevailing party * * * .”). Although the statute\ngives courts “broad leeway,” the Court had previous-\nly identified “several principles and criteria to guide\ntheir decisions.” Kirtsaeng, 136 S. Ct. at 1985.\nBecause “utterly freewheeling inquiries” are unfair\nand unpredictable, it saw a need for “additional\nguidance” on the exercise of discretion under Section\n505. Id. at 1985–86. And so it held that the “objec-\ntive reasonableness” of a losing party’s position must\nbe an “important factor” courts consider under\nSection 505. Id. at 1988.\n Claimant incorrectly states (at 31) that Kirtsaeng\n“rejected any bright-line rule.” Neither party pro-\nposed a bright-line rule. Id. at 1985 (describing the\nparties’ proposed tests). There are varied reasons\nwhy fee-shifting may be appropriate in a given case,\nas the Court’s examples showed. See id. at 1986.\nThe Court’s description of objective reasonableness\nas a factor thus reflected the “objectives” of a fee\nprovision. Id. The objectives of a profits award, and\n 49\nthe history of when these awards have been granted,\nare, of course, different.\n Octane Fitness, LLC v. ICON Health & Fitness,\nInc., 572 U.S. 545 (2014), also addressed a fee-\nshifting provision, this time in the Patent Act. See\n35 U.S.C. § 285 (“The court in exceptional cases may\naward reasonable attorney fees to the prevailing\nparty.”). The Court rejected a standard for determin-\ning whether a case was “exceptional” that would\nhave prevented courts from awarding fees in cases\nthat fell within the ordinary meaning of the term\n“exceptional.” Id. at 554. Here too, the Court recog-\nnized that discretion comes with limits. See id.\n(“[E]quitable discretion should be exercised ‘in light\nof the considerations we have identified.’ ”). And it\ncertainly did not suggest that a bright-line rule may\nnever be appropriate to cabin equitable discretion.\nIII. Claimant’s Interpretation Is Bad Policy.\n A. The threat of a profits award will enable\n trademark owners to extort innocent in-\n fringers and consolidate market power.\n A profits award is a severe remedy. If it were\navailable against a good-faith infringer, it would\nincrease opportunities for abusive litigation and\nother extortionate tactics, which is one reason courts\nhave resisted Claimant’s position for over a century.\n Campaigns by powerful trademark holders to “in-\ntimidate the small business or individual into forgo-\ning the use and/or registration of their trademark”\nare a “serious concern.” Leah Chan Grinvald, Sham-\ning Trademark Bullies, 2011 Wis. L. Rev. 625, 628–\n629 (2011). Trademark “bullying,” as it is sometimes\ncalled, has implications not just for competition but\n 50\nfor freedom of speech, because “trademarks often\nhave an expressive content.” Matal v. Tam, 137\nS. Ct. 1744, 1760 (2017). And the availability of a\nprofits award against innocent infringers will em-\nbolden trademark holders to seek settlements for\nbaseless claims. Cf. Commil USA, LLC v. Cisco Sys.,\nInc., 135 S. Ct. 1920, 1932 (2015) (Scalia, J., dissent-\ning) (allowing recovery despite good-faith belief that\nthere is no infringement “increases the in terrorem\npower of patent trolls”).\n The paradigm case of trademark misuse is a large\ncorporation forcing smaller competitors to abandon\ntrademarks through threats of meritless litigation.\nGrinvald, supra, at 628–630. But other forms of\npressure—such as a TRO filed just before a holiday\nsales season—are equally effective. Respondent contested\nClaimant’s claims, but J.C. Penney and DSW—the\ncompanies Claimant threatened on the eve of Black\nFriday in 2007 and 2009—bowed to pressure to\nsettle. See supra at 1. Tactics like this one will only\nbecome more commonplace if trademark owners can\nuse the possibility of a draconian profits award to\nthreaten innocent infringers.\n Indeed, widespread profits awards will incentivize\ntrademark owners to delay enforcement. The longer\nthey wait, after all, the more profits there will be to\nrecover. This would not only ratchet up their lever-\nage but also undermine one purpose of the Lanham\nAct, of preventing consumer deception. See Park ’N\nFly, 469 U.S. at 198.\n B. Claimant offers no reason to award an inno-\n cent infringer’s profits.\n Given these costs, it is telling that Claimant cannot\noffer a common-sense justification for its proposed\n 51\nrule. It has never explained to this Court why a\ncourt should direct a defendant who, like Respondent, did\nnot know, and had no reason to know, of a violation\nto disgorge its profits. See Pet. Reply at 8–9 (stress-\ning Claimant’s procedural ability to argue for profits\ndespite the jury’s finding). Nor does it explain why a\ncourt should direct a downstream retailer like Ma-\ncy’s, which merely sold a product with an infringing\ncomponent, to turn over its profits.14 Indeed, Claimant\ndoes not point to a single case that has imposed a\nprofits award absent willfulness, much less one that\ndemonstrates the wisdom of that rule. 15 Claimant\nargues only for discretion for discretion’s sake.\n Though Claimant does not discuss, or defend, the\nrationales that courts have relied upon to justify a\nprofits award, none supports a profits award in a\ncase of non-willful infringement.\n First, courts have sometimes viewed a defendant’s\nprofits award “as a rough proxy measure of plaintiff's\ndamages.” George Basch Co., 968 F.2d at 1539. This\nrationale cannot support a profits award under the\n\n14\n Claimant sought to keep Macy’s in this case for the purpose of\nseeking its profits on the trademark infringement claim. See\nUnopposed Mot. To Reform the Official Caption at 3 n.1, No. 18-\n2417 (Fed. Cir. Oct. 26, 2018) (noting the parties’ opposing\npositions on keeping Macy’s on the case caption).\n15\n Respondent has located only one, unpublished decision affirming a\nprofits award absent willfulness. The defendant there appar-\nently forfeited the argument that willfulness is required before\nthe district court, and the court of appeals affirmed without\nexplaining why that award was justified. See Basketball Mktg.\nCo. v. Upscale Entm’t & Mktg. Grp., 227 F. App’x 492, 493 (6th\nCir. 2007). That presumably explains why Petitioner did not\neven cite it.\n 52\nLanham Act because it is a relic of the equitable\ntradition. Courts at equity were more familiar with\nan accounting of profits than the legal remedy of\ndamages. To offer monetary relief, they relied on an\naccounting as an approximate measure of damages.\nSee Nims, supra, §§ 420–421. Under the Lanham\nAct, in contrast, a plaintiff seeks injunctive relief and\ndamages in the same action; there is no need to turn\nto a profits award as a proxy for those damages.\nIndeed, allowing a profits award under a more lax\nstandard than that governing damages awards, as\nClaimant appears to endorse (at 44–45), renders the\nseparate damages award superfluous.\n Second, courts have suggested that a profits award\ncan deter infringement. See Monsanto Chem. Co. v.\nPerfect Fit Prods. Mfg. Co., 349 F.2d 389, 396 (2d Cir.\n1965) (discussing this rationale where a defendant\n“may be said to be a commercial racketeer”). This\nrationale generally cannot support an equitable\nremedy. See Livingston v. Woodworth, 56 U.S. (15\nHow.) 546, 559 (1853) (“We are aware of no rule\nwhich converts a court of equity into an instrument\nfor the punishment of simple torts * * * .”); ALPO\nPetfoods, 913 F.2d at 969 (expressing “concern that\ndeterrence is too weak and too easily invoked a\njustification for the severe and often cumbersome\nremedy of a profits award”). And it certainly cannot\nsupport a profits award when there is no willful\ninfringement, as “the prospect of monetary relief will\nnot deter innocent conduct, even if [the conduct is]\nultimately determined illegal.” Dennis S. Corgill,\nMeasuring the Gains of Trademark Infringement, 65\nFordham L. Rev. 1909, 1929 (1997). The Lanham\nAct, in any event, addresses the potential need to\ndeter violations at the third step of the monetary-\n 53\nremedies inquiry. See 15 U.S.C. § 1117(a) (allowing\na court to increase actual damages and profits “ac-\ncording to the circumstances of the case” and stating\nthat the total amount “shall constitute compensation\nand not a penalty”).\n Third, courts have grounded a profits award on an\nunjust-enrichment rationale. This rationale refer-\nences the equitable tradition that a wrongdoer was\n“deemed to hold its profits in constructive trust for\nthe injured plaintiff.” George Basch Co., 968 F.2d at\n1538. The mark’s owner, the theory went, was the\n“rightful owner” of any profits attributable to the\nmark, which the infringer had acquired by “mala\nfides”—that is, bad faith. Avery v. Meikle, 3 S.W.\n609, 611–612 (Ky. Ct. App. 1887). The “wrong-doer”\ndefendant “holding the profits for the” plaintiff had\nto turn them over. Id. The punitive logic underpin-\nning this legal fiction breaks down where the de-\nfendant’s behavior is not blameworthy. Cf. ALPO\nPetfoods, 913 F.2d at 968–969 (linking the unjust\nenrichment and deterrence rationales); Restatement\n(Third) of Restitution and Unjust Enrichment § 3\ncmt. a (2011) (“Liability to disgorge profits is ordinar-\nily limited to cases of * * * conscious wrongdoing.”\n(internal quotation marks omitted)).\n To this, Claimant says only (at 44–45) that an in-\nfringer’s profits award is needed to ensure that\ntrademark holders obtain some monetary relief. In\nits view, the test for damages under Section 1117(a)\nis “almost impossible” to meet (at 44), and the Lan-\nham Act was enacted to allow plaintiffs to recover\nmonetary remedies. Claimant’s complaint is with the\nstatutory test Congress enacted for damages. That\ncomplaint does not justify ignoring the statutory test\n 54\nCongress enacted for profits. See Henson v. Santan-\nder Consumer USA Inc., 137 S. Ct. 1718, 1725 (2017)\n(“[I]t is quite mistaken to assume * * * that whatever\nmight appear to further the statute’s primary objec-\ntive must be the law.” (alteration and internal quota-\ntion marks omitted)).\n What is more, Claimant acknowledges (at 45–46) that\nCongress has already acted to ease any difficulties\nplaintiffs may have in proving actual damages. It\ngave plaintiffs an option to seek generous statutory\ndamages instead of proving actual damages. See 15\nU.S.C. § 1117(c). It did this after courts of appeals\nhad agreed that a profits award requires willfulness.\nSee supra at 19–21 (citing cases); Anticounterfeiting\nConsumer Protection Act of 1996, Pub. L. No. 104-\n153, § 7, 110 Stat. 1386, 1388. Congress has thus\nalready decided how to address Claimant’s concern, and\nit chose not to broaden the availability of a profits\naward. There is no basis to override this choice.\n C. Other intellectual property statutes do not\n support Claimant’s reading.\n Unlike patent- and copyright-holders, “[t]rademark\nowners * * * are not the intended beneficiaries of the\nlaw, or at least not the only ones.” Mark A. Lemley,\nDid eBay Irreparably Injure Trademark Law?, 92\nNotre Dame L. Rev. 1795, 1809 (2017). “The point of\ntrademark law is to prevent consumers from being\nconfused.” Id.; see Park ’N Fly, Inc., 469 U.S. at 198.\nWhen a trademark owner uses the threat of a profits\naward to consolidate market power, benefits to\nconsumers disappear, but anticompetitive concerns\nremain, creating a market structure “fundamentally\nat odds with social welfare.” Glynn S. Lunney,\nJr., Trademark Monopolies, 48 Emory L.J. 367, 372–\n 55\n373 (1999). “Because maximization of the public\ninterest in trademark protection rests upon a very\ndifferent protection rationale than that underlying\npatent and copyright laws,” the Court should not\ntreat unlike things alike. David H. Bernstein &\nAndrew Gilden, No Trolls Barred: Trademark In-\njunctions After eBay, 99 Trademark Rep. 1037,\n1038–39 (2009).\n This Court’s precedent confirms the unique under-\npinnings of trademark law. Though this Court has\nrecognized the “historic kinship between patent law\nand copyright law,” it has “consistently rejected the\nproposition that a similar kinship exists” with\ntrademark law. See Sony Corp. of Am. v. Universal\nCity Studios, Inc., 464 U.S. 417, 439 & n.19 (1984).\nAnd the relevant provisions of the Copyright Act and\nthe Patent Act do not resemble Section 1117(a).\nCompare 15 U.S.C. § 1117(a) (subjecting the availa-\nbility of monetary remedies “to the principles of\nequity”), with 17 U.S.C. § 504(a)(1), (b) (containing\nno textual limitation), and 35 U.S.C. § 289 (same).\n Congress has, in any event, limited profits awards\nunder these statutes. See Copyright Act of 1976,\nPub. L. [DOCKET REDACTED], tit. I, sec. 101, § 504(b), 90 Stat.\n2541, 2585 (limiting a profits award to amounts\n“attributable to the infringement” that “are not\ntaken into account in computing the actual damag-\nes”); Aro Mfg. Co. v. Convertible Top Replacement\nCo., 377 U.S. 476, 505 (1964) (discussing the removal\nof an profits remedy in the Patent Act). It is Claimant’s\ninterpretation that would render the Lanham Act an\noutlier among intellectual property statutes.\n 56\n CONCLUSION\n For these reasons, the judgment of the United\nStates Court of Appeals for the Federal Circuit\nshould be affirmed.", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of a profits remedy after infringement.", "governingLaw": "Apply United States federal trademark law; Second Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal trademark law; Second Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Romag Fasteners, Inc. v. Fossil, Inc.", "citation": "590 U.S. 212 (2020)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/19pdf/18-1233_5he6.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The central question is whether 15 U.S.C. § 1117(a) requires a plaintiff to prove that a defendant acted willfully to recover an award of the defendant's profits for a violation of Section 1125(a). The plain text of Section 1117(a) resolves this question.\n\nSection 1117(a) states that '[w]hen a violation of any right of the registrant of a mark registered in the Patent and Trademark Office [including a violation of section 1114], a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established in any civil action, the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.' 15 U.S.C. § 1117(a). The statute creates a clear textual distinction: it requires only 'a violation' of Sections 1114, 1125(a), and 1125(d), but requires 'a willful violation' of Section 1125(c). Congress's deliberate use of the modifier 'willful' in one context and its omission in the others is dispositive. This Court presumes that 'Congress acts intentionally when it uses particular language in one section of a statute but omits it in another,' and that presumption applies 'with particular force' when the phrases appear 'in the same sentence.' The respondent's interpretation would render the distinction between 'a violation' and 'a willful violation' mere surplusage, contrary to the rule against surplusage.\n\nSection 1118 confirms this reading. It uses parallel language, authorizing destruction of infringing articles for 'a violation' under Sections 1114 and 1125(a), but 'a willful violation under section 1125(c).' The consistent repetition of this distinction across two provisions demonstrates a deliberate drafting choice. Congress knew how to condition monetary and destruction remedies on willfulness—it did so for Section 1125(c) dilution claims, where Section 1125(c)(5) itself limits monetary remedies to willful violations. The absence of any corresponding limitation for Section 1125(a) is strong evidence that none was intended.\n\nThe respondent's primary textual argument rests on the phrase 'subject to the principles of equity,' which it contends incorporates a common-law willfulness requirement for profits awards. This argument fails for two reasons. First, the essence of equity is flexibility, not rigidity. As the Supreme Court recognized in Hecht Co. v. Bowles, 321 U.S. 321, 329-30 (1944), '[f]lexibility rather than rigidity has distinguished' equity jurisdiction. Reading 'principles of equity' to import a categorical, bright-line willfulness gatekeeping element would convert a flexible grant of discretion into a rigid threshold, contradicting the very nature of equity the phrase invokes. The Court's decisions in Halo Electronics, Octane Fitness, and eBay reinforce that equitable discretion is guided by principles and standards, not eradicated by them—but none of those cases endorsed importing a single dispositive threshold element that overrides the statute's plain text. Second, in Park 'N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189 (1985), the Court refused to interpret the same 'principles of equity' phrase in Section 1116 in a way that would 'vitiat[e] the more specific provisions of the Lanham Act.' Id. at 203. Here, the specific provision is the statute's careful distinction between violations requiring willfulness and those that do not. Reading 'principles of equity' to impose a universal willfulness requirement would override that specific textual distinction.\n\nThe respondent also argues that background common-law principles and the canon of statutory reenactment preserve a willfulness requirement. This argument fails because the common law was not uniform. The claimant has identified numerous cases and treatises indicating that profits were awarded for trademark infringement without a categorical willfulness requirement, particularly where the mark was treated as a property right. The respondent's authorities largely involve unfair competition claims grounded in fraud, which are distinct from technical trademark infringement. Because the common-law background was not 'long-established' and 'uniform' in requiring willfulness for all trademark profits awards, the presumption that Congress adopted a settled common-law rule cannot gain traction.\n\nThe broader statutory structure confirms the plain-text reading. Section 1117(c) creates a statutory-damages remedy allowing plaintiffs to elect statutory damages 'instead of actual damages and profits under subsection (a),' with an enhanced cap 'if the court finds that the use of the counterfeit mark was willful.' If Section 1117(a) already required willfulness for any profits award, the distinction in Section 1117(c) between willful and non-willful violations would be largely superfluous. Similarly, Section 1114 creates graduated mental-state requirements for different categories of infringers; superimposing a universal willfulness requirement would undermine those carefully calibrated distinctions.\n\nThe jury found that the respondent acted with 'callous disregard' for the claimant's rights—a degree of culpability that, while falling short of willfulness under the jury's instruction, is precisely the kind of equitable factor a court should be permitted to consider in exercising its discretion under Section 1117(a). The lower courts' categorical bar precluded any consideration of this finding, contrary to the flexible equitable discretion the statute affords. The judgment below should be vacated, and the case remanded for further proceedings consistent with the principle that willfulness is not a prerequisite to a profits award under Section 1117(a) for violations of Section 1125(a).", "allocation": null, "citations": [] }, "matchedReferenceOutcome": true }, { "caseId": "case-061", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nINTRODUCTION\n General personal jurisdiction can rest on a connec-\ntion between the defendant and the forum alone.\nSpecific personal jurisdiction requires an additional\nconnection, one between the defendant, the plaintiff’s\nclaims, and the forum. That is what makes specific\njurisdiction “case-linked.” Bristol-Myers Squibb Co.\nv. Superior Court of Cal., 137 S. Ct. 1773, 1785\n(2017). And that link is missing here.\n\n\n (1)\n 2\n These cases each stem from an accident involving a\nvehicle that, decades ago, Claimant designed, assembled,\nand sold outside of Montana or Minnesota. Neither\nplaintiff alleges that Claimant did anything in Montana\nor Minnesota that caused their injuries. The Mon-\ntana and Minnesota Supreme Courts nonetheless\neach based specific jurisdiction over Claimant on Claimant’s\nother, case-unrelated business in their States.\n Precedent forecloses that approach. This Court has\ndescribed the limits of specific jurisdiction in two\nways. Generally, the Court has articulated a two-\nstep test: Has a defendant “purposefully availed”\nitself of the forum—that is, does the defendant itself\nhave contacts with the forum State—and, if so, do\nthe plaintiff’s claims “arise out of or relate to” those\ncontacts? Id. at 1785–86 (brackets and internal\nquotation marks omitted). Sometimes, the Court has\ncombined the two steps, simply asking whether a\n“defendant’s suit-related conduct * * * create[d] a\nsubstantial connection with the forum State.” Wal-\nden v. Fiore, 571 U.S. 277, 284 (2014). Under either\nformulation, the Court tests for a causal connection\nbetween the defendant’s forum contacts and the\nplaintiff’s claims.\n This causal connection preserves the essential dis-\ntinction between specific and general personal juris-\ndiction. It ensures that there is a link not just be-\ntween the defendant and the forum, but between the\ndefendant, the forum, and the plaintiff’s claims. It\nallocates jurisdiction to the States where the defend-\nant did something that the suit will regulate. And it\ngives a defendant the ability to predict where, and on\nwhat claims, it will be subject to suit.\n 3\n This Court has already warned of “the danger” of\nsidestepping specific jurisdiction’s requirements and\nbasing jurisdiction on a defendant’s other contacts\nwith the forum State. Bristol-Myers Squibb, 137\nS. Ct. at 1781. The courts below took that path\nanyway. This Court should reject this latest attempt\nto create a “loose and spurious form of general juris-\ndiction,” id., and make clear that specific personal\njurisdiction requires a causal connection between a\ndefendant’s forum contacts and a plaintiff’s claims.\n The judgments below should be reversed.\n OPINIONS BELOW\n The Montana Supreme Court’s opinion is reported\nat 443 P.3d 407. Respondent Pet. App. 1a–22a. The\nRespondent’s opinion is\nnot reported. Id. at 23a–36a.\n The Minnesota Supreme Court’s opinion is report-\ned at 931 N.W.2d 744. Respondent Pet. App. 1a–36a.\nThe Minnesota Court of Appeals’ opinion is reported\nat 913 N.W.2d 710. Id. at 37a–47a. The Todd Coun-\nty District Court’s opinion is not reported, but is\navailable at 2017 WL 10185684. Id. at 48a–58a.\n JURISDICTION\n The Montana Supreme Court entered judgment on\nMay 21, 2019. On July 25, 2019, Justice Kagan\nextended the time within which to file a petition for a\nwrit of certiorari to and including September 18,\n2019, and Claimant’s petition was filed on that date. This\nCourt granted certiorari on January 17, 2020. The\nCourt’s jurisdiction rests on 28 U.S.C. § 1257(a). See\nFisher v. District Court of Sixteenth Judicial Dist. of\nMont., 424 U.S. 382, 385 n.7 (1976) (per curiam)\n(“The writ of supervisory control issued by the Mon-\n 4\ntana Supreme Court is a final judgment within our\njurisdiction.”).\n The Minnesota Supreme Court entered judgment\non July 31, 2019, and Claimant filed its petition for writ\nof certiorari on September 18, 2019. This Court\ngranted certiorari on January 17, 2020. The Court’s\njurisdiction rests on 28 U.S.C. § 1257(a). The Minne-\nsota Supreme Court’s “judgment is plainly final on\nthe federal issue” of whether the Due Process Clause\npermits the exercise of specific personal jurisdiction\nover Claimant on Respondent’s claims, and the issue “is\nnot subject to further review in the state courts.”\nCox Broad. Corp. v. Cohn, 420 U.S. 469, 485 (1975).\n CONSTITUTIONAL AND STATUTORY\n PROVISIONS INVOLVED\n The Due Process Clause of the Fourteenth\nAmendment, U.S. Const. amend. XIV, § 1, provides:\n [N]or shall any State deprive any person of\n life, liberty, or property, without due process\n of law.\n The Montana and Minnesota long-arm statutes\nare reprinted in the appendix to this brief.\n STATEMENT\n Claimant is a global automaker head-\nquartered in Dearborn, Michigan and incorporated in\nDelaware. Respondent Pet. App. 24a. Claimant designs and\nmanufactures a full line of cars, trucks, and SUVs,\nwhich it sells to independently owned-and-operated\ndealerships across the country. See J.A. 112. These\nconsolidated cases arise from two accidents involving\nClaimant vehicles.\n 5\n A. Claimant v. Respondent\n In 2015, Markkaya Jean Respondent, a Montana resi-\ndent, was driving a 1996 Claimant Explorer along a\nMontana highway when one tire’s tread separated.\nRespondent Pet. App. 3a. Respondent lost control of the\nvehicle, and it rolled into a ditch. Id. She died at the\nscene. Id. Charles Lucero, the personal representa-\ntive of Respondent’s estate, sued Claimant in Montana state\ncourt, asserting design-defect, failure-to-warn, and\nnegligence claims and seeking compensatory and\npunitive damages. Id.\n 1. Claimant moved to dismiss for lack of personal juris-\ndiction. Claimant explained that due process did not\npermit the state court to exercise specific jurisdiction\nover Lucero’s claims because Claimant had not done\nanything in Montana giving rise to those claims.\nThe Explorer at issue was assembled in Kentucky.\nJ.A. 41. It was first sold by Claimant in 1996 to an inde-\npendent Claimant dealership in Washington State, which\nthen sold it to an Oregon consumer. Id. at 41, 46;\nRespondent Pet. App. 24a. The Explorer arrived in\nMontana years later, after being bought and sold by\nseveral subsequent owners through a series of trans-\nactions not involving Claimant or an independent Claimant\ndealership. Respondent Pet. App. 3a, 24a.\n The trial court denied Claimant’s motion, holding that\nRespondent’s Montana injury was a sufficient link be-\ntween the litigation and the forum that supported\nspecific jurisdiction. Id. at 32a.\n 2. The Montana Supreme Court accepted Claimant’s\npetition for a writ of supervisory control and af-\nfirmed. Id. at 4a–5a. After finding that exercising\njurisdiction was permissible under Montana’s long-\n 6\narm statute, id. at 5a–8a, the court turned to the\nFourteenth Amendment’s Due Process Clause.\n The court’s due-process analysis was limited to\nspecific jurisdiction because Lucero conceded that\nClaimant was not subject to general jurisdiction in Mon-\ntana. Id. at 5a, 26a. The court articulated a three-\npart test that governed its inquiry. Under it, (1) the\nnonresident defendant must have “purposefully\navailed itself of the privilege of conducting activities\nin Montana, thereby invoking Montana’s laws”; (2)\nthe claims must “arise[] out of or relate[] to the\ndefendant’s forum-related activities”; and (3) “the\nexercise of personal jurisdiction” must be “reasona-\nble.” Id. at 8a.\n Although Claimant contested only the second prong, the\ncourt addressed all three. Id. at 9a–21a. On the\nfirst, Claimant had “purposefully availed itself of the\nprivilege of conducting activities in Montana” be-\ncause it “delivers its vehicles and parts into the\nstream of commerce with the expectation that Mon-\ntana consumers will purchase them” and also “adver-\ntises,” “is registered to do business,” “operates sub-\nsidiary companies,” and “provides automotive ser-\nvices” in Montana. Id. at 11a–12a. Claimant also con-\ntracts with 36 franchised independent Montana\ndealerships, sells vehicles—including Claimant Explor-\ners—to those dealerships, sells parts in Montana,\nand has Montana employees. Id. On the third—\nreasonableness—Claimant has “extensive” Montana\ncontacts and other considerations did not weigh\nagainst exercising jurisdiction. Id. at 21a.\n The rest of the Montana Supreme Court’s decision\nfocused on the critical second requirement, “whether\nLucero’s claims arise out of or relate to Claimant’s forum-\n 7\nrelated activities.” Id. at 12a. The court recognized\nthat the question involved “a challenging legal\ninquiry.” Id. at 14a. It also understood that, “tech-\nnically,” the only Claimant activities that could be said to\nhave led to Respondent’s in-state use of the Explorer, and\nthus Lucero’s claim, were “out-of-state conduct.” Id.\nat 14a. That is, Claimant’s “forum-related activities did\nnot directly result in [Respondent’s] use of the product.”\nId. at 14a–15a.\n The Montana Supreme Court further recognized\nthat courts had disagreed on whether jurisdiction\ncould be maintained “in similar factual scenarios.”\nId. at 12a–13a. The court nonetheless sided with the\nminority of jurisdictions holding that “due process\ndoes not require a direct connection.” Id. at 15a. All\na plaintiff must prove is a connection “sufficient\nenough to not offend due process.” Id. at 16a.\n The Montana Supreme Court next announced a\nstandard for what counts as “sufficient” in product-\nliability cases. If a defendant purposefully avails\nitself of the forum “by placing a product into the\nstream of commerce,” a plaintiff’s “claims ‘relate to’\nthe defendant’s forum-related activities if a nexus\nexists between the product and the defendant’s in-\nstate activity and if the defendant could have rea-\nsonably foreseen its product being used in Montana.”\nId. at 15a–17a. In the court’s view, a more stringent\ntest “would unduly restrict courts of this state from\nexercising specific personal jurisdiction.” Id. at 16a.\n The Montana Supreme Court applied its standard\nto Lucero’s claims and found it satisfied. “A nexus\nexist[ed] between Respondent’s use of the Explorer and\nClaimant’s in-state activity,” because “Claimant advertises,\nsells, and services” other “vehicles in Montana” and\n 8\n“makes it convenient for Montana residents to drive\nClaimant vehicles.” Id. at 17a. And “Claimant could have\nreasonably foreseen the Explorer—a product specifi-\ncally built to travel—being used in Montana.” Id.\n The Montana Supreme Court next explained why\nneither Bristol-Myers Squibb nor Walden foreclosed\nits approach. Bristol-Myers Squibb “d[id] not im-\npact” its decision because Respondent, unlike the plain-\ntiffs in Bristol-Myers Squibb, was injured in Mon-\ntana. Id. at 18a. And Walden was irrelevant be-\ncause Lucero’s claims had a “relat[ionship] to Claimant’s\nin-state activities” that was absent in Walden. Id. at\n20a.\n B. Claimant v. Respondent\n In 2015, Adam Respondent was the passenger in a\n1994 Crown Victoria driving along a Minnesota road.\nRespondent Pet. App. 3a. The driver “rear-ended a\nMinnesota county snow plow, * * * the car ended up\nin a ditch,” and the airbags did not deploy. Id.\nRespondent suffered a brain injury. Id. He sued Claimant\nand the vehicle’s owner and driver in Minnesota\nstate court, asserting products liability, negligence,\nand breach-of-warranty claims against Claimant. Id.\n 1. Claimant moved to dismiss for lack of personal juris-\ndiction, id. at 52a, and the parties stipulated that\nClaimant is not “at home” in Minnesota, see id. at 53a.\nClaimant explained that due process did not permit the\ncourt to exercise specific personal jurisdiction be-\ncause Respondent’s injury was not linked to any of\nClaimant’s Minnesota conduct. Claimant designed the Crown\nVictoria involved in the accident in Michigan; as-\nsembled the vehicle in Ontario, Canada; and sold the\nvehicle to an independent Claimant dealership in Bis-\nmarck, North Dakota, in 1993. J.A. 67, 84, 94, 99.\n 9\nBetween 1993 and 2013, the vehicle was bought and\nsold multiple times without any involvement by\nClaimant. At the time of the accident, the vehicle was in\nthe hands of its fifth owner, who had registered it in\nMinnesota in 2013. J.A. 132–133.\n The trial court denied Claimant’s motion to dismiss on\nthe ground that Claimant had consented to personal\njurisdiction by registering to do business in Minneso-\nta. Respondent Pet. App. 56a.\n 2. Claimant appealed, and the Minnesota Court of Ap-\npeals affirmed on specific-jurisdiction grounds. Id. at\n46a–47a. Claimant contested only whether Respondent’s\nclaims arose out of Claimant’s Minnesota activities. Id.\nat 41a–42a. The court of appeals found that\nRespondent’s claims were sufficiently connected to\nClaimant’s activities in Minnesota because Claimant had\nengaged in marketing in the State. See id. at 42a–\n43a. “Claimant sent direct mail to consumers in Minne-\nsota,” provided “creative content” for advertising\ndirected by third-parties, and “sponsors many athlet-\nic, racing, and educational teams and events in\nMinnesota.” Id. at 42a–43a & n.2. Although this\nmarketing did not “specifically promote the Crown\nVictoria,” the court of appeals held that it was “suffi-\nciently related to the cause of action” to support\nspecific jurisdiction. Id. at 43a–44a.\n 3. The Minnesota Supreme Court affirmed in a\nsplit 5-2 decision. Id. at 1a–36a.\n a. The majority first found that Claimant purposefully\navailed itself of Minnesota. “Claimant collected data on\nhow its vehicles perform through Claimant dealerships”\nand “used that data to inform improvements * * *\nand to train mechanics”; Claimant “sold more than 2,000\n1994 Crown Victoria vehicles in Minnesota” to its\n 10\nindependent dealerships as new vehicles and “about\n200,000 vehicles of all kinds in 2013, 2014, and\n2015”; and Claimant “conducted direct-mail advertising\nin Minnesota and directed marketing” to Minnesota.\nId. at 4a, 9a–10a.\n On the critical arise-out-of-or-related-to question,\nthe majority held that a causal link is not required\nbetween “the defendant’s contacts with Minnesota”\nand “the plaintiff’s claims.” Id. at 11a–12a (internal\nquotation marks omitted). Instead, the court deter-\nmined that “the requirements of due process are met\nso long as Claimant’s contacts relate to the claim,” but did\nnot explain what kind of relationship suffices. Id. at\n16a (emphasis in original).\n The majority found its unspecified non-causal test\nwas satisfied. Id. at 16a–18a. It recognized that\nClaimant’s “contacts * * * that cause[d] the claim”—\n“designing, manufacturing, warrantying, or warning\nabout the 1994 Crown Victoria” occurred outside of\nMinnesota. Id. at 15a–16a (internal quotation marks\nomitted). But the majority held that Claimant nonethe-\nless had contacts with Minnesota that “relate to\n[Respondent’s] claims”: sales of other 1994 Crown\nVictorias, sales of other vehicles, data collection to\ninform future vehicle designs, and advertising and\nmarketing. Id. at 16a–17a. And the majority\nstressed that the accident occurred in Minnesota and\ninjured a Minnesota resident. Id. at 17a–18a. All of\nthis created a “substantial connection between the\ndefendant Claimant, the forum Minnesota, and the\nclaims brought by Respondent.” Id. at 18a.\n The majority disagreed that this Court’s precedents\nrequired more. It distinguished Bristol-Myers\nSquibb as involving an injury to nonresidents out-\n 11\nside of the forum. See id. at 17a. Without disputing\nClaimant’s argument that this Court’s cases have always\n“applied a causal standard” when allowing specific\njurisdiction, the majority nevertheless held that this\nCourt’s use of the term “related to” in some cases\nmeant that the arise-out-of-or-related-to standard is\ncapacious enough to encompass non-causal connec-\ntions. See id. at 14a–18a. And the majority viewed a\ncausal requirement as inconsistent with World-Wide\nVolkswagen Corp. v. Woodson, 444 U.S. 286 (1980),\nreasoning that the Court would not have been “em-\nphatic[]” about the defendant’s lack of purposeful\navailment there if what mattered was that “the\nparticular vehicle was not designed, manufactured,\nor sold in Oklahoma.” Respondent Pet. App. 15a.\n b. Justice Anderson, joined by Chief Justice Gildea,\ndissented. Id. at 21a–36a. The dissent explained\nthat the majority’s test was “inconsistent with con-\ntrolling Supreme Court jurisprudence” and found the\nrecord “entirely insufficient to permit Minnesota to\nexercise specific personal jurisdiction.” Id. at 21a,\n28a, 36a.\n Under Bristol-Myers Squibb, the dissent observed,\n“[w]hat is needed—and what is missing here—is a\nconnection between the forum and the specific claims\nat issue.” Id. at 32a (quoting Bristol-Myers Squibb,\n137 S. Ct. at 1781). The mere “fact that Claimant has\n‘regularly occurring sales’ of other vehicles in Minne-\nsota, years after it manufactured and sold the 1994\nCrown Victoria, cannot justify the exercise of person-\nal jurisdiction over Claimant.” Id. (emphasis in original).\nThis held true even though Respondent’s injury oc-\ncurred in Minnesota, because “mere injury to a\nforum resident is not a sufficient connection to the\n 12\nforum” to satisfy the Constitution’s requirements.\nId. at 34a (quoting Walden, 571 U.S. at 290).\n The dissent further explained there was no causal\nconnection between Claimant’s Minnesota activities and\nRespondent’s claims. “[A]ll of Claimant’s conduct that,\naccording to Respondent, relates to his claims”—\nincluding the design of the airbag system, the as-\nsembly of the vehicle, and the sale of the vehicle—\n“took place more than 20 years before the accident,\nin states other than Minnesota.” Id. at 28a. Claimant’s\nnationwide data-collection had nothing to do with\nRespondent’s claims; the record revealed “no way * * *\nthat Minnesota data influenced the design” of the\n1994 Crown Victoria, making any relevance to\nRespondent’s claims pure “[c]onjecture and guess.” Id.\nat 29a–30a. And Claimant’s “current advertising activi-\nties” have no connection “to Respondent’s claims,”\nwhich “focus on the design, manufacturing, and sale\nof the 1994 Crown Victoria and its restraint system.”\nId. at 30a (emphases in original). At bottom, the\ndissent objected to the majority allowing Claimant to “be\nhaled into a Minnesota court simply because an\naccident involving a vehicle manufactured by Claimant\n(in another location) occurred” in Minnesota. Id. at\n34a.\n * * *\n This Court granted certiorari in both cases, consol-\nidating them for briefing and oral argument.\n SUMMARY OF ARGUMENT\n I. For 75 years, a “minimum contacts” standard has\ngoverned whether a state court can exercise specific\njurisdiction over a defendant. A forum State’s exer-\ncise of specific jurisdiction comports with due process\n 13\nif the defendant has “certain minimum contacts with\nit such that the maintenance of the suit does not\noffend traditional notions of fair play and substantial\njustice.” International Shoe Co. v. Washington, 326\nU.S. 310, 316 (1945) (internal quotation marks\nomitted). But where minimum contacts are absent, a\nState cannot hale the defendant into its courts.\n In the decades since, this Court has made clear\nthat these “minimum contacts” must be “the defend-\nant’s suit-related” contacts. Walden, 571 U.S. at 284\n(emphasis added). The defendant must itself reach\nout and make contact with the forum—that is, the\ndefendant must purposefully avail itself of the forum.\nSee World-Wide Volkswagen, 444 U.S. at 297. And\nthe plaintiff’s suit must “ ‘arise out of or relate to’\nthose activities.” Burger King Corp. v. Rudzewicz,\n471 U.S. 462, 472–473 (1985) (citation omitted).\n These cases concern this second requirement. Be-\ncause due process requires suit-related contacts, the\narise-out-of-or-relate-to requirement is met only if\nthe defendant’s forum conduct gave rise to the plain-\ntiff’s claims. If a plaintiff’s claim would be the same\nwhether or not the defendant engaged in any in-state\nactivity, then the defendant’s “suit-related conduct”\nhas not “create[d] a substantial connection with the\nforum State,” even if it has non-suit-related contacts\nwith that State. Walden, 571 U.S. at 284 (emphasis\nadded).\n Indeed, every specific-jurisdiction case from Inter-\nnational Shoe and after has noted the presence or\nabsence of a causal link between the defendant’s\nforum-state conduct and the plaintiff’s claims. Only\nwhere a causal link was present has the Court up-\n 14\nheld an exercise of specific jurisdiction. And it has\nnever suggested a lesser relationship would suffice.\n There are good reasons why 75 years of cases line\nup this way. The causal rule implements the ra-\ntionales underlying the minimum-contacts require-\nment. It allocates jurisdiction among the States in\nour federal system. It is administrable. And it\nprovides predictability for defendants.\n II. The non-causal rules adopted by the decisions\nbelow cannot be squared with this Court’s precedents\nor the principles that underlie them. The courts\nbelow adopted a bare relatedness test, asking only if\nthe plaintiff was injured in the forum and whether\nthe defendant did something in the forum that\nresembles the subject matter of the plaintiff’s suit.\n The Court has already deemed any specific-\njurisdiction test that relies on a defendant’s “uncon-\nnected” forum contacts to be an impermissible “loose\nand spurious form of general jurisdiction.” Bristol-\nMyers Squibb, 137 S. Ct. at 1781. And it has made\nclear that specific jurisdiction does not turn on where\na plaintiff’s injury occurred. A “mere injury to a\nforum resident is not a sufficient connection to the\nforum” for specific jurisdiction because it is not a\nconnection the defendant itself formed with the\nforum. Walden, 571 U.S. at 290.\n The courts below relied on World-Wide Volkswagen,\nbut that decision does not support a non-causal\nrelatedness rule. The decision addressed only the\npurposeful-availment requirement, 444 U.S. at 297,\nand did not touch on the distinct arise-out-of-or-\nrelate-to requirement, which was not clearly articu-\nlated until four years later. See Burger King, 471\n 15\nU.S. at 472–473 (citing Helicopteros Nacionales de\nColombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)).\n Respondent’ policy arguments do not move the\nneedle. Respondent complain that a causal test\nwould limit jurisdiction to an illogical set of States,\nbut to describe this result as “illogical,” Respondent\nhave to jettison the federalism principles that ani-\nmate due-process restrictions on personal jurisdic-\ntion. As this Court underscored just two Terms ago,\nthese restrictions “are a consequence of territorial\nlimitations on the power of the respective States.”\nBristol-Myers Squibb, 137 S. Ct. at 1780 (internal\nquotation marks omitted). Respondent’ effort to\nportray a causal test as unworkable falls equally flat.\nA majority of federal courts of appeals and state high\ncourts to have addressed the question have required\na causal test for years—without issue. Respondent Pet. 9,\n12–17.\n III. Applying a causal rule, due process does not\npermit specific jurisdiction over Claimant on these\nclaims. None of Claimant’s forum contacts “caused”\nRespondent’ claims. Goodyear Dunlop Tires Opera-\ntions, S.A. v. Brown, 564 U.S. 915, 919 (2011). The\ncourts below acknowledged the lack of a causal\nconnection, and Respondent have never alleged one.\n ARGUMENT\nI. SPECIFIC JURISDICTION REQUIRES A CAUSAL\n CONNECTION BETWEEN THE DEFENDANT’S\n FORUM CONTACTS AND THE PLAINTIFF’S\n CLAIMS.\n “A state court’s assertion of jurisdiction exposes\ndefendants to the State’s coercive power, and,” as a\nresult, a state court’s exercise of personal jurisdiction\n 16\nover a defendant must comply “with the Fourteenth\nAmendment’s Due Process Clause.” Goodyear 564\nU.S. at 918. The Due Process Clause, in turn, re-\nquires that a defendant “have certain minimum\ncontacts with [the forum State] such that the\nmaintenance of the suit does not offend traditional\nnotions of fair play and substantial justice.” Interna-\ntional Shoe, 326 U.S. at 316 (internal quotation\nmarks omitted). As would be expected of a test that\nsafeguards the defendant’s rights, this inquiry’s\n“primary focus * * * is the defendant’s relationship to\nthe forum State.” Bristol-Myers Squibb, 137 S. Ct. at\n1779.1\n This Court has recognized two species of personal\njurisdiction: “ ‘general’ (sometimes called ‘all-\npurpose’) jurisdiction and ‘specific’ (sometimes called\n‘case-linked’) jurisdiction.” Id. at 1780 (quoting\nGoodyear, 564 U.S. at 919). General jurisdiction\nlooks to the number and intensity of all of the de-\nfendant’s contacts with the forum State. If a corpo-\nrate defendant “is fairly regarded as at home” in the\nState, then its courts may hear any claim against the\ncompany, regardless of whether the claim is connect-\ned to the forum. Id. at 1780 (internal quotation\nmarks omitted).\n\n1\n These cases involve the Fourteenth Amendment’s Due Process\nClause and thus provide “no occasion” for the Court to address\nany Fifth Amendment limitation on a federal court’s exercise of\npersonal jurisdiction. Omni Capital Int’l, Ltd. v. Rudolf Wolff\n& Co., 484 U.S. 97, 102 n.5 (1987) (internal quotation marks\nomitted); cf. Bristol-Myers Squibb, 137 S. Ct. at 1784 (“[W]e\nleave open the question whether the Fifth Amendment imposes\nthe same restrictions on the exercise of personal jurisdiction by\na federal court.”).\n 17\n But “[s]pecific jurisdiction is very different.” Id. It\nlooks to a defendant’s “suit-related conduct” in the\nforum. Walden, 571 U.S. at 284 (emphasis added). A\ndefendant’s “contact with and activity directed at a\nsovereign may justify specific jurisdiction in a suit\narising out of or related to the defendant’s contacts\nwith the forum.” J. McIntyre Mach., Ltd. v. Nicastro,\n564 U.S. 873, 881 (2011) (plurality op.) (internal\nquotation marks omitted). Put differently, “ ‘the suit’\nmust ‘aris[e] out of or relat[e] to the defendant’s\ncontacts with the forum.” Bristol-Myers Squibb, 137\nS. Ct. at 1780 (emphases added) (quoting Daimler\nAG v. Bauman, 571 U.S. 117, 127 (2014)). “When\nthere is no such connection, specific jurisdiction is\nlacking regardless of the extent of a defendant’s\nunconnected activities in the State.” Id. at 1781.\n These cases present the question whether the re-\nquirement that a defendant have “suit-related con-\ntacts” with the forum is satisfied when the defend-\nant’s forum contacts did not give rise to the plaintiff’s\nclaims. The courts below approved of specific person-\nal jurisdiction because the plaintiff suffered an injury\nin the forum, and because Claimant engaged in various\nactivities directed at third persons in the forum, such\nas marketing Claimant vehicles to other buyers.\n The Court’s precedents make clear that such a\nloose approach is “unacceptably grasping.” Daimler,\n571 U.S. at 138. A defendant must have engaged in\nforum conduct that gave rise to the plaintiff’s claims.\nThat rule flows directly from this Court’s cases. And\nit vindicates both of the rationales for the minimum-\ncontacts requirement: implementing our federal\nsystem and providing predictability for defendants.\n 18\n A. This Court’s Precedents Dictate That Spe-\n cific Jurisdiction Exists Only Where The\n Defendant’s Forum Contacts Give Rise To\n The Plaintiff’s Claims.\n 1. Specific jurisdiction requires that the defendant\nhave “suit-related” contacts with the forum State.\nWalden, 571 U.S. at 284. That means that the\ndefendant must form a contact with the forum that\ngives rise to the plaintiff’s suit. Two related strands\nof this Court’s specific-jurisdiction case law dictate\nthat straightforward rule.\n First, this Court has held that specific jurisdiction\n“must arise out of contacts that the ‘defendant him-\nself ’ creates with the forum State.” Id. (quoting\nBurger King, 471 U.S. at 475). As Walden explained,\n“[d]ue process limits on the State’s adjudicative\nauthority principally protect the liberty of the non-\nresident defendant—not the convenience of plaintiffs\nor third parties.” Id. (citing World-Wide Volkswagen,\n444 U.S. at 291–292). The Court has therefore\n“consistently rejected attempts to satisfy the defend-\nant-focused ‘minimum contacts’ inquiry by demon-\nstrating contacts between the plaintiff (or third\nparties) and the forum State.” Id.; see also Helicopte-\nros, 466 U.S. at 417 (holding that “unilateral activity\nof another party or a third person is not an appropri-\nate consideration when determining whether a\ndefendant has sufficient contacts with a forum State\nto justify an assertion of jurisdiction”). “[I]t is the\ndefendant’s conduct that must form the necessary\nconnection with the forum State that is the basis for\nits jurisdiction over him.” Walden, 571 U.S. at 285\n(emphasis added).\n 19\n It follows that “mere injury to a forum resident is\nnot a sufficient connection to the forum.” Id. at 290.\nWorld-Wide Volkswagen deemed it irrelevant that\nthe plaintiffs “happened to suffer an accident” in\nOklahoma, when the accident’s location was at-\ntributable to the plaintiffs’ “unilateral” decision to\ndrive their car through the State. 444 U.S. at 295,\n298 (quoting Hanson v. Denckla, 357 U.S. 235, 253\n(1958)). Walden likewise found it immaterial that\nthe plaintiffs “suffered the ‘injury’ caused by [defend-\nant’s] allegedly tortious conduct * * * while they were\nresiding in the forum,” because their injury did not\n“evince a connection between [the defendant] and”\nthe forum. 571 U.S. at 289–290. The Court ex-\nplained that “an injury is jurisdictionally relevant\nonly insofar as it shows that the defendant has\nformed a contact with the forum State.” Id. at 290\n(emphasis added). Where an injury occurs in the\nforum because of something someone other the\ndefendant did, the injury is not a relevant “contact”\nbetween the defendant and the forum.\n Second, specific jurisdiction requires “a connection\nbetween the forum and the specific claims at issue.”\nBristol-Myers Squibb, 137 S. Ct. at 1781. It is not\nsufficient that a defendant sells the allegedly injury-\ncausing product to “other plaintiffs” in the forum,\nthat it causes other persons in the forum to suffer\n“the same injuries,” or that other plaintiffs can bring\n“similar” claims against the defendant. Id. Those\nare connections between defendant and “third\npart[ies],” not between the defendant and the litiga-\ntion, and so they are “an insufficient basis for juris-\ndiction.” Id. (quoting Walden, 571 U.S. at 286); see\nGoodyear, 564 U.S. at 930 n.6 (“[E]ven regularly\noccurring sales of a product in a State do not justify\n 20\nthe exercise of jurisdiction over a claim unrelated to\nthose sales.”).\n “Nor is it sufficient—or even relevant—that [the\ndefendant] conducted” business on “unrelated”\nmatters in the forum. Bristol-Myers Squibb, 137\nS. Ct. at 1781. “What is needed * * * is a connection\nbetween the forum and the specific claims at issue.”\nId. And that connection is lacking if “all the conduct\ngiving rise to the [plaintiff’s] claims occurred else-\nwhere.” Id. at 1782.\n 2. This Court has followed this rule since Interna-\ntional Shoe. In International Shoe, the Court stated\nthat specific jurisdiction exists where “the activities\nof the corporation [in the forum] have not only been\ncontinuous and systematic, but also give rise to the\nliabilities sued on.” 326 U.S. at 317 (emphasis add-\ned). That requirement distinguishes specific jurisdic-\ntion from general jurisdiction, under which a defend-\nant’s “continuous corporate operations within a state\n[are] thought so substantial and of such a nature as\nto justify suit against it on causes of action arising\nfrom dealings entirely distinct from those activities.”\nId. at 318. And in International Shoe, the Court held\nthat Washington could exercise specific jurisdiction\nover International Shoe because its activities in the\nforum “were systematic and continuous throughout\nthe years in question” and “[t]he obligation which is\nhere sued upon arose out of those very activities.” Id.\nat 319.\n The Court repeated that principle in Goodyear.\nThe Court explained that specific jurisdiction may be\nasserted where either “the corporation’s in-state\nactivity is ‘continuous and systematic’ and that\nactivity gave rise to the episode-in-suit,” or where a\n 21\ncorporation commits “certain ‘single or occasional\nacts’ in a State” and is made “answerable in that\nState with respect to those acts.” 564 U.S. at 923\n(first emphasis in original) (quoting International\nShoe, 326 U.S. at 317–318). By contrast, specific\njurisdiction cannot be asserted “with respect to\nmatters unrelated to the [defendant’s] forum connec-\ntions.” Id. Thus, the plaintiffs could not sue Good-\nyear in North Carolina for manufacturing an alleged-\nly defective tire that caused a bus accident outside\nParis, because none of Goodyear’s activities giving\nrise to the claim occurred in North Carolina; “the\nepisode-in-suit * * * occurred in France, and the tire\nalleged to have caused the accident was manufac-\ntured and sold abroad.” Id. at 919. And that was\ntrue even though Goodyear sold similar tires to other\npersons in the forum. Id. at 919–920; see id. at 930\nn.6 (“[E]ven regularly occurring sales of a product in\na State do not justify the exercise of jurisdiction over\na claim unrelated to those sales.”)\n Every one of this Court’s specific-jurisdiction cases\nsince International Shoe has hewed to this same\nrequirement. In every case since International Shoe\nin which this Court has found a defendant subject to\nspecific jurisdiction, it has cited some forum contact\nby the defendant that gave rise to the plaintiff’s\nclaims. See McGee v. International Life Ins. Co., 355\nU.S. 220, 223 (1957) (finding specific jurisdiction\nwhere “the suit was based on a contract which had\nsubstantial connection with that State”); Burger\nKing, 471 U.S. at 479 (finding specific jurisdiction\nwhere the “franchise dispute grew directly out of a\ncontract which had a substantial connection with\nthat State.” (internal quotation marks and emphasis\nomitted)); Calder v. Jones, 465 U.S. 783, 790 (1984)\n 22\n(finding specific jurisdiction where the defendants\nwere “primary participants in an alleged wrongdoing\nintentionally directed at a California resident”);\nKeeton v. Hustler Magazine, Inc., 465 U.S. 770, 781\n(1984) (finding specific jurisdiction for “libel action\nbased on the contents of [a] magazine” the defendant\ncirculated in the forum). And in every case since\nInternational Shoe in which the Court has found\nspecific jurisdiction lacking, it has noted the absence\nof such a connection. See, e.g., Walden, 571 U.S. at\n291 (finding no specific jurisdiction where the de-\nfendant’s “relevant conduct occurred entirely in\nGeorgia”); Hanson, 357 U.S. at 251 (finding no specif-\nic jurisdiction where the claims at issue did not\n“arise[ ] out of an act done or transaction consum-\nmated in the forum State”); Kulko v. Superior Court\nof Cal., 436 U.S. 84, 97 (1978) (finding no specific\njurisdiction where claims “ar[o]s[e] from a separation\nthat occurred” elsewhere); World-Wide Volkswagen,\n444 U.S. at 299 (finding no specific jurisdiction where\nclaims did not “stem from a constitutionally cogniza-\nble contact with” the forum (emphasis added)).\n In short, this Court’s precedents require a “suit-\nrelated” contact to establish specific jurisdiction.\nWalden, 571 U.S. at 284. And they establish that\nsuch a contact must consist of two things. It must be\nthe defendant’s contact: a contact between the de-\nfendant and the forum, not an in-state act done, or\ninjury suffered by, the plaintiff. See id. at 285–286.\nAnd it must be a “suit-related” contact: in-state\nconduct that gives rise to the claims in suit, not in-\nstate conduct involving third parties that is “similar”\nto the conduct the plaintiff complains of. Bristol-\nMyers Squibb, 137 S. Ct. at 1781.\n 23\n B. A Causal Requirement Is Most Consistent\n With The Principles Underlying The Due-\n Process Limitations On State Courts.\n This causal test for specific jurisdiction stems from\nthe federalism and fairness principles that undergird\nthe due-process restrictions on specific jurisdiction.\nThese restrictions are “a consequence of territorial\nlimitations on the power of the respective States,”\nallocating authority among them. Hanson, 357 U.S.\nat 251. And the restrictions ensure that defendants\nhave “fair warning” about “where th[eir] conduct will\nand will not render them liable to suit.” Burger\nKing, 471 U.S. at 472 (internal quotation marks\nomitted). The requirement that specific jurisdiction\nbe grounded on the defendant’s suit-related forum\ncontacts—its own contacts that caused the plaintiff’s\nclaims—implements these principles.\n 1. The Due Process Clause operates as “an instru-\nment of interstate federalism.” Bristol-Myers\nSquibb, 137 S. Ct. at 1781 (quoting World-Wide\nVolkswagen, 444 U.S. at 294). In our federal system,\n“[t]he sovereignty of each State * * * implie[s] a\nlimitation on the sovereignty of all of its sister\nStates.” World-Wide Volkswagen, 444 U.S. at 293. A\nState’s exercise of personal jurisdiction over a de-\nfendant is an exercise of its sovereign authority\nbecause the suit, no less than a statute, serves to\nregulate the defendant’s conduct. See BMW of N.\nAm., Inc. v. Gore, 517 U.S. 559, 572 n.17 (1996)\n(“State power may be exercised as much by a jury’s\napplication of a state rule of law in a civil lawsuit as\nby a statute.”); see also Goodyear, 564 U.S. at 919\n(specific jurisdiction requires an act that is “subject\nto the State’s regulation”). By limiting the authority\n 24\nof a state court to adjudicate a given dispute, the Due\nProcess Clause “acts to ensure that the States[,]\nthrough their courts, do not reach out beyond the\nlimits imposed on them by their status as coequal\nsovereigns in a federal system.” World-Wide\nVolkswagen, 444 U.S. at 292.\n Requiring that the defendant’s contacts with the\nforum State have caused the plaintiff’s claims serves\nthis jurisdiction-allocating function. A causal test\npermits state courts to exercise jurisdiction over a\nplaintiff’s claim according to a sensible division of\nauthority, one linked to the State’s interest in regu-\nlating the defendant’s actions. See Lea Brilmayer,\nRelated Contacts and Personal Jurisdiction, 101\nHarv. L. Rev. 1444, 1457 (1988) (“Adjudication of a\ndispute is a means towards the legitimate end of\nregulating local conduct or prescribing its legal\nconsequences.”). Under a causal test, jurisdiction is\nproper in only those places where the defendant took\nor aimed some act that the plaintiff’s suit seeks to\nregulate. A court in a State where the defendant\ntook or aimed an action that ultimately led to the\nplaintiff’s claim can regulate the action by exercising\npersonal jurisdiction over the defendant. See Good-\nyear, 564 U.S. at 919 (specific personal jurisdiction\nturns, “principally, [on] activity or an occurrence that\ntakes place in the forum State and is therefore\nsubject to the State’s regulation”); Nicastro, 564 U.S.\nat 881 (plurality op.) (specific personal jurisdiction\nensures that sovereign “power is exercised in connec-\ntion with the defendant’s activities touching on the\nState”). In States where the defendant did not take\nor aim its actions, courts cannot. See Bristol-Myers\nSquibb, 137 S. Ct. at 1780 (specific jurisdiction\nrequires “an affiliation between the forum and the\n 25\nunderlying controversy” (quoting Goodyear, 564 U.S.\nat 919)).\n A non-causal test, by contrast, does not allocate\njurisdiction among States consistent with “the con-\ntext of our federal system of government.” Interna-\ntional Shoe, 326 U.S. at 317. A non-causal test\nwould allow a forum State to use a defendant’s\nunconnected in-state activities as a hook to regulate\nthe defendant’s out-of-state activities that actually\nform the basis of the plaintiff’s claims. The test\nwould therefore authorize a State to enforce “obliga-\ntions” that arose entirely outside its boundaries. Id.\nat 319–320. That outcome is at odds with our federal\nsystem. See Nicastro, 564 U.S. at 884 (plurality op.)\n(“[E]ach State has a sovereignty that is not subject to\nunlawful intrusion by other States.”).\n And where, as here, a defendant operates nation-\nwide, a non-causal test would not allocate jurisdic-\ntion among the States at all. A corporation frequent-\nly engages in activity in one State—selling or mar-\nketing a product—that mirrors the activities it takes\nin the other 49. If a State can exercise jurisdiction\nover—that is, regulate—a defendant’s out-of-state\nactivity simply because the activity resembles some-\nthing the defendant did in the forum State, the\n“territorial limitations on [state] power” would be\nnullified. World-Wide Volkswagen, 444 U.S. at 294\n(internal quotation marks omitted). Each State\nwould be free to “tread on the domain” of its sister\nStates. Nicastro, 564 U.S. at 899 (Ginsburg, J.,\ndissenting).\n This Court has previously rejected tests that would\nenable this kind of jurisdictional free for all. In\nGoodyear, the Court held that a “sprawling view of\n 26\ngeneral jurisdiction” that would make “any substan-\ntial manufacturer or seller of goods * * * amenable to\nsuit, on any claim for relief, wherever its products\nare distributed” was inconsistent with due process.\n564 U.S. at 929. And in Bristol-Myers Squibb, the\nCourt rejected a test that would permit specific\njurisdiction so long as “third parties * * * can bring\nclaims similar to those brought by the” plaintiffs for\nthe same reason, deeming it “a loose and spurious\nform of general jurisdiction.” 137 S. Ct. at 1781. The\nCourt should do so again here and reject a test that\nallows a State to exercise jurisdiction over a defend-\nant merely because it does unconnected business\nthere.\n 2. A causal test for specific jurisdiction also fur-\nthers fairness. It ensures that a defendant will have\n“fair warning that a particular activity may subject\n[it] to the jurisdiction of a foreign sovereign.” Burger\nKing, 471 U.S. at 472 (internal quotation marks\nomitted). This warning tells a defendant not just\nwhere it may be sued, but what choice-of-law frame-\nwork will govern, Day & Zimmermann, Inc. v. Chal-\nloner, 423 U.S. 3 (1975) (per curiam), and what\nstatute of limitations will apply, Sun Oil Co. v.\nWortman, 486 U.S. 717 (1988); see also Allan R.\nStein, Frontiers of Jurisdiction: From Isolation to\nConnectedness, 2001 U. Chi. Legal F. 373, 385 (2001)\n(forum affects the availability of juries, discovery\nrules, and fee-shifting). That, in turn, allows “de-\nfendants to structure their primary conduct with\nsome minimum assurance as to where that conduct\nwill and will not render them liable to suit.” World-\nWide Volkswagen, 444 U.S. at 297.\n 27\n A causal test likewise puts defendants on notice of\nwhere they might be liable and on what claims\nbecause it anchors personal jurisdiction to the de-\nfendant’s contacts that cause a plaintiff’s claims. In\nthis way, a state court’s focus on a defendant’s suit-\nrelated forum contacts embodies the bargain that\nspecific jurisdiction strikes. A defendant that makes\ncontacts with a State “submits to the judicial power\nof an otherwise foreign sovereign to the extent that\npower is exercised in connection with the defendant’s\nactivities touching on the State.” Nicastro, 564 U.S.\nat 881 (plurality op.). A defendant will know what it\ndid, and in what forums. And so a causal test gives\nthat defendant certainty as to what it can be sued\nabout and where. Id. (citing Helicopteros, 466 U.S. at\n414 n.8.).\n This knowledge, in turn, allows a defendant to\nstructure its conduct to avoid suit in any given\nforum, if it wishes. A defendant that knows, for\nexample, that its activities with respect to a given\nproduct took place in three different States can take\nsteps to mitigate its litigation risk in each State by,\nfor example, “procuring insurance, passing the\nexpected costs on to customers, or, if the risks are too\ngreat, severing its connection with the State.”\nWorld-Wide Volkswagen, 444 U.S. at 297. And a\ndefendant that knows how much of its product is sold\nin a given State can take similar steps, tailored to\nthe litigation risk posed by the volume of its sales in\neach State.\n A non-causal relatedness test provides no similar\nnotice. Defendants have no guidance on what forum\ncontacts are sufficiently “related to” any given claim.\nSee Mellouli v. Lynch, 135 S. Ct. 1980, 1990 (2015)\n 28\n(noting that the words “relating to” “are ‘broad’ and\n‘indeterminate’ ” (citation omitted)); Maracich v.\nSpears, 570 U.S. 48, 60 (2013) (applying a “relate to”\nstandard is “a project doomed to failure, since, as\nmany a curbstone philosopher has observed, every-\nthing is related to everything else” (internal quota-\ntion marks omitted)). Must a defendant’s contacts\ninvolve identical activities—such as selling products\nidentical to the one that caused a plaintiff’s injury—\nto count as related forum contacts? Are similar\nactivities—such as selling other products in the\nState—sufficient, and if similarity is enough, just\nhow similar must the activities be? Is one identical\nor similar contact enough or must there be more,\nand, if so, how many identical or similar contacts are\nrequired? See Brilmayer, supra, at 1460. A non-\ncausal test does not provide clear, predictable re-\nsults, and it does not “allow a defendant to anticipate\nhis jurisdictional exposure based on his own actions.”\nDudnikov v. Chalk & Vermilion Fine Arts, Inc., 514\nF.3d 1063, 1079 (10th Cir. 2008) (Gorsuch, J.).\n Moreover, a non-causal test would give defendants\nlittle choice in how to structure their conduct to avoid\nsuit. The decisions below show why. Under their\nrelatedness test, so long as Claimant does some automo-\nbile-related business in Montana or Minnesota, it is\nsubject to suit by any person injured in those States\nby one of its vehicles. Claimant could avoid being subject\nto suit on Respondent’ claims in these cases only if it\nentirely stopped doing business in Montana or Min-\nnesota—or at least reduced its activities to a level\nthat a court might deem too minimal to reasonably\nsubject Claimant to suit.\n 29\n For this reason, the Court should not conflate pre-\ndictability with constitutionally sufficient notice. It\nis not enough for Claimant to know that it could be sued\non car-related claims anywhere it does car-related\nbusiness. This Court has rejected similar arguments\nbefore. Under an “exorbitant” test of general juris-\ndiction, for example, a defendant may predict that it\nwill be subject to suit wherever it has “sizeable”\nsales. Daimler, 571 U.S. at 139. But that test does\nnot provide constitutionally sufficient notice because\nit does not allow a defendant “to structure [its]\nprimary conduct” as due process requires. Id.\n(internal quotation marks omitted). Likewise, under\na bare “foreseeability” test for specific jurisdiction, a\ndefendant may predict that it will be subject to suit\nwherever its products could possibly travel. World-\nWide Volkswagen, 444 U.S. at 297. But that test\ndoes not provide constitutionally sufficient notice\neither. See id. (explaining that “the foreseeability\nthat is critical to due process” is what will “allow[ ]\npotential defendants to structure their primary\nconduct with some minimum assurance as to where\nthat conduct will and will not render them liable to\nsuit”).\n Here, under a bare relatedness test, a defendant\nwill know that it risks suit wherever it does busi-\nness. But that test does not provide the constitu-\ntionally required notice because it does not allow a\ndefendant to “structure [its] primary conduct” to\naffect where it will and will not be subject to suit for\nthat conduct. Id. For example, Claimant will be unable\nto structure its future conduct—such as where it\nmanufactures or sells a new vehicle—with confidence\nas to where it might be subject to suits related to\nthat vehicle, because Claimant’s amenability to suit will\n 30\ndepend on its other conduct, such as past sales of\nsimilar vehicles. The Court should reject the lower\ncourts’ unpredictable non-causal standard.\nII. THE LOWER COURTS’ NON-CAUSAL TEST\n DEPARTS FROM PRECEDENT AND PRINCIPLE.\n The Montana and Minnesota Supreme Courts held\nthat a non-causal test satisfies due process. But\ntheir reasoning cannot be reconciled with this Court’s\ncases. And Respondent’ policy-based arguments do\nnot justify the test either.\n A. The Courts Below Sidestepped This\n Court’s Precedents To Find Relatedness,\n In Its Broadest Sense, Sufficient For Spe-\n cific Jurisdiction.\n 1. By holding causation unnecessary, the lower\ncourts revived the sort of “sliding scale approach”\nthat Bristol-Myers Squibb rejected as “a loose and\nspurious form of general jurisdiction.” 137 S. Ct. at\n1781. A sliding-scale approach is one in which “the\nrequisite connection between the forum and the\nspecific claims at issue is relaxed if the defendant\nhas extensive forum contacts that are unrelated to\nthose claims.” Id. But the Court held that no\namount of marketing or sales of even the same\nproduct at issue in the plaintiffs’ suit—and no activi-\nties related to other products—could substitute for a\n“connection between the forum and the specific\nclaims at issue.” Id.\n Bristol-Myers Squibb’s criticism of California’s ap-\nproach applies equally to the decisions below. Under\nthem, the arise-out-of-or-related-to requirement is\nsatisfied if “the quality and quantity of [the defend-\nant’s] contacts with [the forum] were sufficient to\n 31\nsupport personal jurisdiction.” Respondent Pet. App.\n10a; accord Respondent Pet. App. 16a (not requiring a\ncausal connection “as long as the connection between\nthe defendant’s in-state conduct and the plaintiff’s\nclaim is sufficient enough to not offend due process”).\nThat is, the non-causal tests applied below treat a\ndefendant’s contacts with third parties in the forum\nas a substitute for suit-related contacts, so long as\nenough of the third-party contacts resemble the suit’s\nsubject matter. That blurs the line between general\nand specific jurisdiction in just the way Bristol-Myers\nSquibb forbids. See, e.g., Dudnikov, 514 F.3d at 1078\n(rejecting the non-causal test because it “varies the\nrequired connection between the contacts and the\nclaims asserted based on the number of the con-\ntacts”); O’Connor v. Sandy Lane Hotel Co., 496 F.3d\n312, 321 (3d Cir. 2007) (same).\n The courts below tried to cabin Bristol-Myers\nSquibb to its facts, as a case about the proper test\nwhen a plaintiff is not injured in the forum.\nRespondent Pet. App. 13a, 17a; Respondent Pet. App. 18a.\nThat badly misreads Bristol-Myers Squibb. Bristol\nMyers sold Plavix in California to the tune of almost\n187 million pills and over $900 million in sales over\nthe six-year period before the plaintiffs’ suit. 137\nS. Ct. at 1778. A group of plaintiffs—some California\nresidents, many not—sued for injuries they claimed\nwere caused by Plavix. Id. The California residents\n“were prescribed, obtained, and ingested Plavix in\nCalifornia” and “allegedly sustained the same inju-\nries as did the nonresidents.” Id. at 1781. But\nBristol Myers’s extensive contacts with the Califor-\nnia residents were “an insufficient basis for jurisdic-\ntion” over the nonresidents’ claims because those\ncontacts connected Bristol Myers to third parties, not\n 32\nthe nonresident plaintiffs. Id. (quoting Walden, 571\nU.S. at 286). There was no “connection between the\nforum and the specific claims at issue,” and the\nCalifornia court therefore could not exercise specific\njurisdiction over those claims. Id.\n The Court’s mention of where the nonresidents had\nbeen injured only underscored the lack of a connec-\ntion between the nonresidents’ claims and Bristol-\nMyers Squibb’s California contacts. In both Walden\nand Bristol-Myers Squibb, specific jurisdiction was\nimproper because “all the conduct giving rise to the\n* * * claims occurred elsewhere.” Id. at 1782. But\nthe case for jurisdiction in Bristol-Myers Squibb was\n“even weaker” than in Walden because the plaintiffs\nwere nonresidents who had not been harmed in\nCalifornia. Id.\n Bristol-Myers Squibb could not have left open the\npossibility of specific jurisdiction based on where a\nplaintiff was injured because Walden forecloses that\noption. Walden held that where a plaintiff suffered\n“an injury is jurisdictionally relevant only insofar as\nit shows that the defendant has formed a contact\nwith the forum State.” 571 U.S. at 290. A “mere\ninjury to a forum resident is not a sufficient connec-\ntion to the forum.” Id; see also Bristol-Myers Squibb,\n137 S. Ct. at 1782 (explaining that “the mere fact\nthat [this] conduct affected plaintiffs with connec-\ntions to the forum” did not establish jurisdiction\n(quoting Walden, 571 U.S. at 291)).\n An example illustrates why the location of a plain-\ntiff’s injury cannot be dispositive. Assume that on\nDay 1, Claimant sells and advertises vehicles in Montana.\nOn Day 2, the plaintiff moves to Montana, bringing\n 33\nhis Claimant vehicle with him. On Day 3, the plaintiff is\nin an accident while driving his vehicle.\n For the plaintiff’s injury to be “jurisdictionally rele-\nvant,” the injury must show that Claimant “formed a\ncontact with the forum.” Walden, 571 U.S. at 290.\nBut Claimant’s activities in the forum are exactly the\nsame on Day 1 (before the injury) as on Day 3 (after\nthe injury). As a result, the injury does not establish\nClaimant’s contacts with Montana. It establishes only\nthe plaintiff’s contacts with Montana: The plaintiff\n“would have experienced this same” injury “wherever\nelse [he] might have traveled,” and he just happened\nto travel to Montana. Id. An in-forum injury is thus\n“precisely the sort of ‘unilateral activity’ of a third\nparty that” does not connect the defendant to the\nforum and cannot support jurisdiction. Id. at 291\n(citation omitted); see also World-Wide Volkswagen,\n444 U.S. at 296 (rejecting the notion that a product’s\nseller “appoint[s] the chattel his agent for service of\nprocess”).\n 2. The Montana and Minnesota Supreme Courts\nalso found support for their non-causal tests in\nWorld-Wide Volkswagen. Each relied on a different\npart of the opinion. Respondent Pet. App. 15a; Respondent\nPet. App. 15a. Both were wrong.\n a. The Montana Supreme Court read World-Wide\nVolkswagen as having approved of the exercise of\nspecific personal jurisdiction if the defendant served\nthe forum State’s market and its product caused an\ninjury there. Respondent Pet. App. 15a. The court point-\ned to this Court’s statement that if a manufacturer’s\n“sale of a product * * * is not simply an isolated\noccurrence, but arises from the efforts of the manu-\nfacturer or distributor to serve directly or indirectly,\n 34\nthe market for its product in other States,” then “it is\nnot unreasonable to subject it to suit in one of those\nStates if its allegedly defective merchandise has there\nbeen the source of injury.” Id. (quoting World-Wide\nVolkswagen, 444 U.S. at 298). The Montana Su-\npreme Court’s reliance on this language was wrong\nfor three reasons.\n First, World-Wide Volkswagen concerned the sepa-\nrate purposeful-availment requirement. Just before\nsentence that the Montana Supreme Court quoted,\nthe Court explained why due process imposes a\npurposeful availment requirement. See World-Wide\nVolkswagen, 444 U.S. at 297 (“When a corporation\n‘purposefully avails itself of the privilege of conduct-\ning activities within the forum State,’ it has clear\nnotice that it is subject to suit there * * * .” (emphasis\nadded) (quoting Hanson, 357 U.S. at 253)). The next\nsentence, the one the Montana Supreme Court seized\non, describes when a manufacturer might be viewed\nas availing itself of a forum. It does not speak to the\narise-out-of-or-relate-to requirement, which was not\neven at issue and, indeed, had not yet been fully\narticulated. See Robinson v. Harley-Davidson Motor\nCo., 316 P.3d 287, 295 (Or. 2013) (“World-Wide\nVolkswagen * * * predated * * * Helicopteros and\nBurger King, in which the Court more fully articulat-\ned the ‘arise out of or relates to’ requirement * * * .”);\nMyers v. Casino Queen, Inc., 689 F.3d 904, 912 (8th\nCir. 2012) (a case that “predated * * * Helicopteros\nand Burger King * * * could not possibly involve an\napplication of the ‘arise out of or relate to’ require-\nment”).\n What’s more, the quoted sentence was dicta. The\nfull sentence refers to “the sale of a product of a\n 35\nmanufacturer or distributor such as Audi or\nVolkswagen.” World-Wide Volkswagen, 444 U.S. at\n297 (emphasis added). But Audi and Volkswagen\nwere not before the Court; only the regional distribu-\ntor and dealer were. Id. at 288 n.3. The discussion\nabout what actions by a manufacturer might be\npurposeful availment therefore was not part of the\nCourt’s holding. See Juelich v. Yamazaki Mazak\nOptonics Corp., 682 N.W.2d 565, 572 (Minn. 2004);\nsee also Ruckstuhl v. Owens Corning Fiberglas Corp.,\n731 So. 2d 881, 887 (La. 1999) (explaining that “the\n‘stream of commerce’ language of World-Wide\nVolkswagen is dicta”).\n Regardless, the quoted sentence does not support a\nnon-causal rule. The Court stated only that if the\ndefendant sells a product in a forum (itself, or\nthrough an authorized distributor) and that product\ninjures the plaintiff there, the forum State can\nexercise specific jurisdiction over the defendant on\nthe plaintiff’s claims. Here, although Claimant delivered\nproducts into Montana and Minnesota, Respondent\nallege that different products that Claimant delivered to\ndifferent States decades earlier caused their injuries.\nThis Court’s later cases make clear that these dis-\ntinct sales do not support specific jurisdiction. See\nBristol-Myers Squibb, 137 S. Ct. at 1781 (“[t]he mere\nfact that other plaintiffs” purchased the same prod-\nucts in the forum State “does not allow the State to\nassert specific jurisdiction” even when residents\n“allegedly sustained the same injuries as did the\nnonresidents”); see also Helicopteros, 466 U.S. at 418\n(“mere purchases” in a forum State, “even if occur-\nring at regular intervals, are not enough to war-\nrant * * * jurisdiction over a nonresident corporation\n 36\nin a cause of action not related to those purchase\ntransactions”); Goodyear, 564 U.S. at 929 (same).\n b. The Minnesota Supreme Court, for its part, re-\nlied on World-Wide Volkswagen’s recitation of the\ncontacts that the distributor and dealer did not have\nwith the forum State—they did not make sales in\nOklahoma, did not provide services in Oklahoma, did\nnot advertise in Oklahoma, and so on. Respondent\nPet. App. 15a (citing World-Wide Volkswagen, 444\nU.S. at 295). In its view, the Court would have\nbothered to make this list only if it meant to hold\nthat a defendant who did have these contacts would\nbe subject to specific jurisdiction. Id. But the\nCourt’s list merely reinforces that World-Wide\nVolkswagen concerned only the purposeful-availment\nrequirement. The contacts that World-Wide\nVolkswagen found the distributor and dealer lacked\nwould support a conclusion that a defendant had\npurposefully availed itself of Oklahoma. But they do\nnot speak to the distinct requirement that the plain-\ntiff’s claim arise out of or relate to that purposeful\navailment.\n 3. The courts below also both noted that this Court\nhas used the phrase “arise out of or relate to” to\ndescribe the required connection between a plaintiff’s\nclaims and a defendant’s forum contacts. Applying\nthe surplusage canon, they reasoned that “relate to”\nmust mean something different than “arise out of.”\nRespondent Pet. App. 13a–14a; Respondent Pet. App. 12a–\n14a. Yet this Court has explained that its opinions\nare “not always to be parsed as though we were\ndealing with language of a statute.” Reiter v. Sono-\ntone Corp., 442 U.S. 330, 341 (1979). And since\ncoining the standard, the Court has often omitted\n 37\n“relate to” from the formulation altogether. See\nWalden, 571 U.S. at 284 (a suit “must arise out of\n[the defendant’s] contacts * * * with the forum\nState”); Keeton, 465 U.S. at 780 (specific jurisdiction\nis warranted “when the cause of action arises out of\nthe very activity being conducted, in part, in” the\nState); Hanson, 357 U.S. at 251 (“The cause of action\nin this case is not one that arises out of an act done\nor transaction consummated in the forum State.”).\n In any case, it is not uncommon for courts to use\ntwo phrases to convey one idea. This Court has done\nso in this very context. It imposed a “fair play and\nsubstantial justice” requirement for specific personal\njurisdiction, International Shoe, 326 U.S. at 316, but\nhas treated that phrase as synonymous with “rea-\nsonable under the circumstances.” Bristol-Myers\nSquibb, 137 S. Ct. at 1786. Indeed, the Court\nwarned readers to not assume “arise out of” and\n“relate to” mean different things the very moment it\ncreated the standard. See Helicopteros, 466 U.S. at\n414–415 & n.10 (“declin[ing] to reach * * * whether\nthe terms ‘arising out of’ and ‘related to’ describe\ndifferent connections between a cause of action and a\ndefendant’s contacts with a forum,” “what sort of tie *\n* * is necessary,” or even “whether * * * ‘relates to’ *\n* * should be analyzed as an assertion of specific\njurisdiction”). “Doublets and triplets abound in\nlegalese.” Antonin Scalia & Bryan A. Garner, Read-\ning Law: The Interpretation of Legal Texts 177\n(2012). “Arise out of or relate to” is one of them.\n Reading “arise out of” and “relate to” to flesh out\none standard still allows a variety of connections to\nestablish specific jurisdiction. A suit can seek\nredress for a tort that occurred in the forum State—\n 38\nfor instance, when the defendant publishes a defam-\natory statement there. See Walden, 571 U.S. at 286–\n288 (discussing Calder and Keeton). A suit can also\nseek to regulate a defendant’s conduct that occurred\nin the forum—for example, where the defendant\nmanufactured a product in the forum that later\ninjured a plaintiff there. Cf. Bristol-Myers Squibb,\n137 S. Ct. at 1778 (no personal jurisdiction where, for\nexample, defendant “did not manufacture, label,\npackage” product in the forum). “Arise out of or\nrelate to” properly captures all of these varied rela-\ntionships.\n 4. Finally, the courts below justified their expan-\nsive test for specific jurisdiction based on their con-\nclusion that it was fair to require Claimant to litigate\nthese suits in their State. As the Montana Supreme\nCourt put its view, due process, “[a]t its core * * * is\nconcerned with fairness and reasonableness.” Gul-\nlett Pet. App. 16a; see also Respondent Pet. App. 16a\n(emphasizing that Claimant sold “hundreds of thousands”\nof vehicles in Minnesota). But the requirements of\ndue process define what is—and is not—“fair” to a\ndefendant. And this Court’s cases hold that the\nexercise of specific jurisdiction over a defendant is\nfair only if the defendant has the contacts with the\nforum that due process requires: suit-related con-\ntacts.\n The Due Process Clause takes account of general-\nized fairness considerations, but only after that\nminimum requirement is met. A defendant that has\nthe necessary suit-related contacts with a forum can\nstill argue that a court’s exercise of specific jurisdic-\ntion would not “comport with fair play and substan-\ntial justice.” Burger King, 471 U.S. at 476 (internal\n 39\nquotation marks omitted). At that stage, a court\nweighs, among other things, “the burden on the\ndefendant, the forum State’s interest in adjudicating\nthe dispute, the plaintiff’s interest in obtaining\nconvenient and effective relief, the interstate judicial\nsystem’s interest in obtaining the most efficient\nresolution of controversies, and the shared interest of\nthe several States in furthering fundamental sub-\nstantive social policies.” Id. at 476–477 (internal\nquotation marks omitted). But this totality-of-the-\ncircumstances test cannot be imported into the\nthreshold question of whether the plaintiff’s claims\narise out of or relate to the defendant’s forum con-\nduct.\n Nor is there reason to think that plaintiffs should\nprefer a non-causal test. The indefinite nature of a\nnon-causal test means that neither a defendant nor a\nplaintiff will be sure of which State or States can\nexercise jurisdiction. See supra p. 28. This uncer-\ntainty invites a party unhappy with a trial court’s\nconclusion to relitigate the issue in hopes of obtain-\ning a different result. See Burnham v. Superior\nCourt of Cal., 495 U.S. 604, 623, 626 (1990) (plurality\nop.) (Scalia., J.) (explaining that a test that turns on\na court’s “subjective assessment of what is fair and\njust,” will “guarantee * * * uncertainty and litigation\nover the preliminary issue of the forum’s compe-\ntence”). If this satellite litigation reveals that a trial\njudge’s notion of relatedness differs from an appel-\nlate panel’s, a plaintiff will be forced to start over in\nsome other State after final judgment. That is to no\none’s benefit, including plaintiffs. See Hertz Corp. v.\nFriend, 559 U.S. 77, 94 (2010) (“Complex jurisdic-\ntional tests complicate a case, eating up time and\nmoney as the parties litigate, not the merits of their\n 40\nclaims, but which court is the right court to decide\nthose claims.”). All of this shows the wisdom in this\nCourt’s oft-repeated statement that jurisdictional\nquestions call for “[s]imple * * * rules” that “promote\ngreater predictability.” Id. A causal test fits that\nbill; a non-causal test does not.\n B. Respondent’ Policy Arguments Provide\n No Reason To Depart From Precedent.\n Respondent have offered a series of policy argu-\nments in favor of a non-causal test. But their policy\narguments are not grounded in the policies furthered\nby the Due Process Clause’s limitations on personal\njurisdiction. They therefore provide no support for a\nnon-causal test.\n 1. Respondent first suggest that a non-causal rule\nis appropriate because a State “has a compelling\ninterest in protecting its residents from dangerous\nproducts that are marketed and sold there.” Respondent\nBr. in Opp. 26; see also Respondent Br. in Opp. 25.\nBut this Court has already held that this generalized\n“interest in adjudicating the dispute” is irrelevant\nwhen a court assesses whether a defendant has\nminimum contacts with the forum State. Burger\nKing, 471 U.S. at 476–477 (internal quotation marks\nomitted). That interest speaks instead to the sepa-\nrate question of whether, if minimum contacts exist,\nexercising jurisdiction is reasonable. See id.\n The minimum-contacts requirement tests for a\ndifferent kind of state interest in the suit: an interest\nin regulating the defendant’s conduct that is at issue.\nAs explained (supra pp. 23–26), due-process limits on\nstate courts’ ability to exercise personal jurisdiction\n“are a consequence of territorial limitations on the\npower of the respective States.” Bristol-Myers\n 41\nSquibb, 137 S. Ct. at 1780 (quoting Hanson, 357 U.S.\nat 251)); accord Daimler, 571 U.S. at 126 (discussing\nthe change from a “strict territorial approach” to a\n“less rigid understanding” of how a defendant’s\nconduct can be connected to the forum). A causal\ntest locates jurisdiction in those States that have a\nregulatory interest in the plaintiff’s claims because it\ngrounds jurisdiction in an act the defendant itself\ntook inside or purposefully aimed at a State that led\nto the plaintiff’s claims. The test, for example,\npermits the State where a defendant manufactured\nthe product at issue in a plaintiff’s suit to exercise\njurisdiction. That State has an interest in prevent-\ning the manufacture of harmful products within its\nborders and in not allowing companies to use the\nState’s resources to do so. The same goes for the\nState where a defendant designs or sells its product.\nUnder a causal rule, States with an interest in\nregulating what Claimant does within their borders will\nhave jurisdiction when a plaintiff’s claims seek to do\njust that.\n Respondent next criticize the causal test as lead-\ning to “arbitrary” results, such as requiring a plain-\ntiff to sue a defendant outside the plaintiff’s home\nstate. Respondent Br. in Opp. 26; see also Respondent Br.\nin Opp. 26 (calling this result “illogical”). But a\ndefendant’s due-process rights cannot turn on a\nplaintiff’s convenience. “The primary focus of [the]\npersonal jurisdiction inquiry is the defendant’s\nrelationship to the forum State.” Bristol-Myers\nSquibb, 137 S. Ct. at 1779 (emphasis added). A\ndefendant-focused inquiry means that the required\nconnection may sometimes not exist—making specif-\nic jurisdiction improper—even if the plaintiff would\nprefer his home forum. See Walden, 571 U.S. at 290\n 42\nn.9 (“[W]e reiterate that the ‘minimum contacts’\ninquiry principally protects the liberty of the nonres-\nident defendant, not the interests of the plaintiff.”\n(citation omitted)).\n Respondent’ criticism is not just doctrinally un-\nsound, but wrong in practice. There is nothing\nstrange about allocating jurisdiction to those States\nwhere the defendant took actions that caused the\nplaintiff’s claims. That is, after all, where the evi-\ndence and witnesses relevant to the plaintiff’s claims\nagainst the defendant will likely be found. And that\nis where the defendant will have taken some action\nthat the plaintiff’s claims seek to regulate. See supra\npp. 23–24 (discussing the regulatory function of\nlitigation). Respondent’ contention that a causal\nrule would require plaintiffs to file suit in States\nwith “no interest in the controversy” is simply incor-\nrect. Respondent Br. in Opp. 27.\n 2. Respondent argue that adopting a causal re-\nquirement would require courts to determine what\ncausal connection suffices. Respondent Br. in Opp. 26;\nRespondent Br. in Opp. 28. Because the courts below did\nnot find—and Respondent did not allege—any causal\nlink in these cases, this Court need not answer that\nquestion here. Even so, precedent and principle\nalready provide the answer. If a defendant has made\ncontact with a forum, it may be called “to account\n* * * for consequences that arise proximately from\nsuch activities.” Burger King, 471 U.S. at 474. What\nthis means, in practice, is that “the operative facts of\nthe controversy arise from the defendant’s contacts\nwith the state.” Beydoun v. Wataniya Rests. Hold-\ning, Q.S.C., 768 F.3d 499, 507 (6th Cir. 2014) (inter-\nnal quotation marks omitted); see also United Elec.,\n 43\nRadio & Mach. Workers of Am. v. 163 Pleasant St.\nCorp., 960 F.2d 1080, 1089 (1st Cir. 1992) (requiring\n“the defendant’s in-state conduct” to “form an im-\nportant, or at least material, element of proof in the\nplaintiff’s case” (alteration and internal quotation\nmarks omitted)).\n Once again, this proximate-cause requirement best\nserves the federalism and predictability principles\nthat underlie due-process limits on personal jurisdic-\ntion.\n As for federalism, a proximate-cause standard en-\nsures that States will not “reach out beyond the\nlimits imposed on them by their status as coequal\nsovereigns.” World-Wide Volkswagen, 444 U.S. at\n292. If a plaintiff’s claims must arise from something\nthe defendant did in, or aimed at, the forum, and\nthat is material to the plaintiff’s proofs, then the\nforum will by definition have a direct interest in\nregulating the defendant’s conduct at issue in the\nsuit. The proximate-cause standard thus limits the\nset of States that can exercise jurisdiction over a\nplaintiff’s claims to those States with an interest in\nregulating the defendant’s conduct that the claims\nseek to regulate. See supra pp. 23–26. A but-for\nstandard alone cannot serve this important limiting\nfunction. See, e.g., uBID, Inc. v. GoDaddy Grp., Inc.,\n623 F.3d 421, 430 (7th Cir. 2010) (“But-for causation\nwould be ‘vastly overinclusive,’ haling defendants\ninto court in the forum state even if they gained\nnothing from those contacts.”); Respondent Br. in Opp. 27\n(acknowledging that “[a] but-for causation require-\nment has no limiting principle” (internal quotation\nmarks omitted)).\n 44\n As for predictability, a proximate-causation stand-\nard serves the “animating principle” behind specific\njurisdiction: “the notion of a tacit quid pro quo that\nmakes litigation in the forum reasonably foreseea-\nble.” O’Connor, 496 F.3d at 322. Under a proximate-\ncause standard, a defendant must answer for its\nconduct in any forum where that conduct is material\nto the plaintiff’s proofs. By tying jurisdiction to an\naction the defendant itself took in the forum in this\nway, “the proximate cause standard * * * easily\ncorrelates to foreseeability.” Harlow v. Children’s\nHosp., 432 F.3d 50, 61 (1st Cir. 2005) (internal\nquotation marks omitted). Here again, a but-for\nstandard would not provide the same degree of\npredictability because it would allow jurisdiction\nbased on “attenuated and indirect” connections\nbetween a defendant’s in-forum conduct and the\nplaintiff’s claims. United Elec., Radio & Mach.\nWorkers of Am., 960 F.2d at 1089; see also Robinson,\n316 P.3d at 298 (“[T]he but-for test * * * pays * * *\ntoo little regard to whether litigation in a forum state\nis reasonably foreseeable by a nonresident defend-\nant.”).\n Respondent are also wrong that a causal or proxi-\nmate-cause standard would be too hard to apply.\nRespondent Br. in Opp. 25–26; Respondent Br. in Opp. 27–\n28. “[C]ourts have a great deal of experience apply-\ning” causal standards, “and there is a wealth of\nprecedent for them to draw upon in doing so.”\nLexmark Int’l, Inc. v. Static Control Components,\nInc., 572 U.S. 118, 133 (2014) (discussing proximate\ncause). That is true in the personal-jurisdiction\ncontext, too. A majority of the courts of appeals and\nstate high courts that have addressed this issue\nalready require a causal connection between a de-\n 45\nfendant’s in-forum conduct and a plaintiff’s claims.\nRespondent Pet. 9, 12–17. And many of those courts\nalready use the proximate-cause standard just de-\nscribed. See id. at 14–16. These jurisdictions get\nalong just fine.\n That leaves Respondent’ charge that a causal test\nmight require a plaintiff with claims against multiple\ndefendants to litigate in multiple States. Respondent\nBr. in Opp. 26–27. But their problem is with Rush v.\nSavchuk’s 40-year-old holding that personal jurisdic-\ntion must be established “as to each defendant,” not a\ncausal rule. 444 U.S. 320, 332 (1980). Because\npersonal jurisdiction is a defendant-by-defendant\ninquiry, a plaintiff sometimes cannot establish\npersonal jurisdiction in the same forum over every\ndefendant he wants to sue. See Bristol-Myers\nSquibb, 137 S. Ct. at 1783 (citing Rush to explain\nwhy nonresidents’ ability to sue a California-\nheadquartered Plavix distributor did not allow them\nto bootstrap personal jurisdiction over Bristol-Myers\nSquibb). Respondent’ unhappiness with this result\ndoes not justify jettisoning basic due-process princi-\nples in favor of their impossible-to-pin-down non-\ncausal test.\nIII. Claimant’S FORUM CONTACTS DID NOT CAUSE\n Respondent’ CLAIMS.\n Under the proper causal test, the Montana and\nMinnesota state courts cannot exercise specific\njurisdiction over Claimant on Respondent’ claims.\n It is undisputed that Claimant did not have any forum\ncontacts “alleged to have caused” Respondent’\nclaims. Goodyear, 564 U.S. at 919. Respondent\nhave never argued otherwise, not in responding to\nClaimant’s motions to dismiss, not on appeal, and not in\n 46\ntheir briefs in opposition. Respondent’ claims would\nbe precisely the same if Claimant had never done any-\nthing in Montana and Minnesota.\n The courts below acknowledged this lack of a causal\nconnection between Claimant’s in-state contacts and\nRespondent’ claims. Respondent Pet. App. 15a–16a\n(Claimant “argues that ‘[n]o part of Claimant’s allegedly\ntortious conduct—designing, manufacturing, warran-\ntying, or warning about the 1994 Crown Victoria—\noccurred in Minnesota.’ Those contacts are only\nthose that cause the claim, though.” (emphasis\nomitted)); Respondent Pet. App. 14a–15a (acknowledging\nthat Claimant’s “forum-related activities did not directly\nresult in the plaintiff’s use of the product in th[e]\nforum”). That alone resolves these appeals.\n Respondent’ in-forum residences, accidents, and\ninjuries do not change this result. Where respond-\nents chose to live and drive their vehicles were\nRespondent’ decisions—not Claimant’s. See World-Wide\nVolkswagen, 444 U.S. at 295 (a forum cannot “base\njurisdiction on * * * the fortuitous circumstance” that\na plaintiff “happened to suffer an accident” while in\nthe forum). Respondent’ residences, accidents, and\ninjuries are the kinds of “contacts between the plain-\ntiff (or third parties) and the forum State” that this\nCourt has “consistently rejected” as sufficient “to\nsatisfy the defendant-focused ‘minimum contacts’\ninquiry.” Walden, 571 U.S. at 284.\n Claimant’s unrelated activities within Montana and\nMinnesota also do not provide the necessary connec-\ntion. Respondent Pet. App. 17a (Claimant “advertises, sells,\nand services vehicles” to other individuals and enti-\nties in the forum States); Respondent Pet. App. 16a\n(Claimant “sold thousands of * * * Crown Victoria cars” to\n 47\n“Minnesota dealerships”). Although Claimant has never\ndisputed it does some business in Montana and\nMinnesota, none of that business is jurisdictionally\nrelevant to Respondent’ claims. They are contacts\nwith “third part[ies]” unconnected to Respondent’\nsuits. Bristol-Myers Squibb, 137 S. Ct. at 1781\n(quoting Walden, 571 U.S. at 286); see supra pp. 19–\n20.\n The same goes for the Minnesota Supreme Court’s\ndiscussion of Claimant’s nationwide data collection and\nadvertising. The court emphasized that Claimant “col-\nlected data on how its cars performed” in Minnesota,\nimplying that the data related to Respondent’s claim\nthat “Claimant failed to detect a defect in” the design of\nits 1994 Crown Victoria. Respondent Pet. App. 17a.\nBut Respondent did not allege any causal link be-\ntween the data collection and his claims. See J.A.\n58–65. And as the dissent below made clear, the\nparties’ jurisdictional discovery turned up no indica-\ntion that data Claimant collected in Minnesota played\nany role in Claimant’s design or evaluation of the 1994\nCrown Victoria. Respondent Pet. App. 27a n.3 (An-\nderson, J., dissenting); see also J.A. 79. Claimant admit-\nted only “that it receives information regarding\nvehicle performance [from] across the United States,\nincluding in Minnesota, and that information may be\nused by Claimant as it considers future designs.” J.A. 79.\nThe majority thus could only “[c]onjecture and guess”\nthat Claimant’s data collection had some connection to\nRespondent’s claims. Respondent Pet. App. 30a (An-\nderson, J., dissenting).\n The Minnesota Supreme Court’s suggestion that\nthe Crown Victoria’s owner might have been influ-\nenced by Claimant’s “marketing and advertisements\n 48\ndirect[ed] to Minnesotans” was misplaced for the\nsame reason. Id. at 17a. Respondent never alleged\nthat Claimant advertising influenced the car’s owner, and\nit is unlikely that it could have given that the Crown\nVictoria was decades old when the current owner\nbought it. See J.A. 58–65. The speculative and\n“attenuated” links the Minnesota Supreme Court\nhypothesized cannot support specific jurisdiction\nover Claimant on Respondent’s claims. Walden, 571 U.S.\nat 286 (internal quotation marks omitted).\n CONCLUSION\n For these reasons, the judgments of the Montana\nand Minnesota Supreme Courts should be reversed.", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n This Court’s personal-jurisdiction cases have arisen\nmainly at the margins, presenting hard questions under\nthe Due Process Clause about when it is fair and\nconsistent with federalism to hale someone into a distant\ncourt. But this isn’t a case about a bus accident in France\n(Goodyear) or a German company’s actions in Argentina\n(Daimler). Nor is this about foreign companies that have\ndone nothing to target a state (Nicastro, Asahi) or mass-\naction plaintiffs forum shopping far from home (Bristol-\nMyers). Instead, the question here is whether a\nMinnesotan and a Montanan injured in Minnesota and\nMontana can access courts in Minnesota and Montana to\nbe heard on claims against the company that regularly\nmarketed and sold, in Minnesota and Montana, the\nproduct that caused their injuries.\n Claimant proposes that the Court answer that question\nby importing into the Due Process Clause a proximate-\ncause standard derived from tort law. Claimant is cagey about\nits contours. But Claimant does make clear that its novel\nstandard attaches great constitutional significance to the\nsite of the first sale of the particular widget that caused\ninjury. On Claimant’s view, a state may be rendered powerless\nto provide a forum for its citizens who are injured by\nproducts that a manufacturer regularly sells and markets\nin the state—even where the injury occurred in the state,\nthe widget was purchased used in the state, and the\ndefendant actively cultivated a market in the state for the\nsame product that caused the injury—if the first sale of\nthe widget that caused injury happened to have taken\nplace out of state.\n To see what’s at stake, imagine two car accidents.\nThey involve the same make and model, which the\nmanufacturer regularly sells in both Utah and Vermont.\n -2-\nOne accident occurs in Utah, with a car first sold to a\nprevious owner in Vermont. The other occurs in Vermont,\nwith a car first sold to a previous owner in Utah.\nNaturally, the Utah accident leads to a lawsuit in Utah;\nthe Vermont accident leads to a suit in Vermont. But\nunder the rule that Claimant seeks, Claimant would have a\nconstitutional right to make the two plaintiffs switch\nplaces, forcing them each to travel to a distant forum that\nhas no real connection to—or stake in—their case, for no\nmeaningful benefit to Claimant (beyond making it harder for\ninjured people to sue Claimant).\n The consequences are not merely hypothetical, and\nit’s worth imagining how one might try to explain them to\na non-lawyer. It is roughly 2,000 miles from Superior,\nMontana—where the victim in the Montana case lived—\nto the Kentucky factory that made the Claimant Explorer in\nwhich she died. Claimant’s Michigan headquarters is just as\nfar. Must her estate sue in those distant places? The\nvictim in the Minnesota accident was just a passenger—\nthe accident that caused his brain injury involved\nsomeone else’s car. If he alleges a manufacturing defect,\nmust he sue in Canada, where the car was made? Or\nshould these two suits have been brought in North Dakota\nand Washington State—the sites of the first sales—where\nno person, place, or thing related to the claims is located?\nAnd, if so, why? If this is where Claimant’s view of the law\ntakes us, it is time to put on the brakes.\n Fortunately, that is not hard to do. Claimant’s new rule\nhas no basis in the text or original public meaning of the\nFourteenth Amendment, and Claimant does not argue\notherwise. And nothing in this Court’s modern personal-\njurisdiction precedents—or the principles of federalism,\nfairness, and predictability that have always guided\nthem—supports Claimant’s arbitrary regime. This Court has\n -3-\nnever held, or even suggested, that a state is\nconstitutionally prohibited from providing a forum for its\ncitizens when a defendant has deliberately cultivated a\nmarket for its product in the state and that same product\ncauses injury in the state. To the contrary, the Court has\nrecognized that the movement of a manufacturer’s\nproducts “into the forum” after their sale elsewhere may\nsupport “an affiliation germane to specific jurisdiction.”\nGoodyear Dunlop Tires Operations v. Brown, 564 U.S.\n915, 927 (2011). Thus, when the manufacturer has\ncultivated a “market for a product” in certain states, “it is\nnot unreasonable to subject it to suit in one of those States\nif its allegedly defective merchandise has there been the\nsource of injury to its owner or to others.” Id. (quoting\nWorld-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,\n297 (1980)). That rule controls this case.\n Ultimately, any sensible decision here must be\ngrounded in the principles of federalism, fairness, and\npredictability on which all of this Court’s personal-\njurisdiction jurisprudence rests. It does not respect\nfederalism to deprive the states of their manifest interest\nin providing their citizens a convenient forum for\nredressing injuries—particularly when no strong state\ninterest lies on the other side of the scale. It does not serve\nfairness to embrace the “unwisdom, unfairness and\ninjustice of permitting [plaintiffs] to seek redress only in\nsome distant state”—particularly when the defendant\ndoes not even claim that facing suit in the forum would be\nburdensome. Travelers Health Ass’n v. Com. of Va. ex rel.\nState Corp. Comm’n, 339 U.S. 643, 649 (1950). And it does\nnot further predictability to adopt an elusive proximate-\ncausation standard that is difficult to apply, particularly\ngiven the difficulty (or impossibility) of identifying the\nlocation of the first sale in many cases.\n -4-\n STATEMENT\n These two consolidated cases arise out of accidents\ninvolving Claimant vehicles. The first case was brought in\nMinnesota by a Minnesotan who suffered permanent\nbrain injury because the passenger-side airbag of a Claimant\nCrown Victoria failed to deploy when the driver (another\nMinnesotan) crashed into a snowplow on a rural\nMinnesota road. The second case was brought in Montana\nby the Montana relatives of a Montana woman who died\nafter a Claimant Explorer lost stability and rolled over into a\nditch beside a Montana highway.\n A. Factual background\n 1. Claimant’s activities in Minnesota. Claimant is a global\nautomaker but its Minnesota roots run deep. In 1903, the\nworld’s first Claimant dealership was established in central\nMinnesota—it initially sold “Claimantmobiles” from a bicycle\nshop—and has since been operated by five generations of\nthe same Minnesota family. NPR, The World’s Oldest\nClaimant Dealer: Minnesota Family Celebrates a Century of\nSelling Cars, June 16, 2003. In 1912, Henry Claimant chose\nSt. Paul, Minnesota as the site of what was then the tallest\nassembly plant ever built for manufacturing cars. See\nMcMahon, The Claimant Century in Minnesota (Univ. of\nMinn. Press 2016).\n Today, Claimant deliberately cultivates Minnesota as a\nmarket for its vehicles, both new and used, through a\nvariety of in-state activities. Its activities include\n“substantial marketing” of its cars in the state through\ntelevision, print, and online advertisements that directly\ntarget Minnesotans, sponsorships of Minnesota sports\nteams and athletic events, and “direct mail\nadvertisements to residents of Minnesota.” JA 68-69, 73,\n19-369 Pet. App. 4a, 39a, 41a. This Minnesota-directed\nmarketing activity promotes Claimant’s brand and assures\n -5-\nMinnesotans of the safety of Claimant’s vehicles, as well as the\navailability of servicing for all Claimant cars at authorized\nClaimant dealers throughout Minnesota. JA 69, 19-369 Pet.\nApp. 17a, 44a.\n Claimant has sold more than two thousand 1994 Crown\nVictoria cars in Minnesota—the model involved in the\nMinnesota accident at issue here. JA 101. There are over\neighty licensed Claimant dealerships in Minnesota, each\nauthorized by Claimant to sell both new and used Claimant\nvehicles. JA 102. Claimant guarantees the availability of\nrepairs in Minnesota, trains and certifies Claimant mechanics\nin the state, and maintains ongoing consumer warranties\nin Minnesota for both new and used Claimant cars. JA 73, 75,\n78, 79. And, through its Minnesota dealerships, Claimant\ncollects data about its cars’ performance in Minnesota and\nuses that data to design its cars and train its mechanics.\nJA 79; 19-369 Pet. App. 9a.\n 2. The Minnesota accident and lawsuit. Adam\nRespondent—a resident of Crow Wing County in central\nMinnesota—was riding in the passenger seat of a 1994\nClaimant Crown Victoria on rural Azalea Road in Minnesota,\non his way to go ice fishing, when the car crashed into a\ncounty snowplow and ended up in a ditch. Id. at 25a.\nBecause the Claimant’s airbag failed to deploy on impact,\nRespondent suffered “lifelong lasting brain injury and\ndisfigurement.” JA 64. Like Respondent, the driver and\nowner of the car were both Minnesota residents. JA 58,\n61.\n After the accident, Respondent sued Claimant, as well as\nthe Minnesota-based driver and owner, in Minnesota\nstate court. He asserted negligence claims against the\ndriver and owner and products-liability, negligence, and\nbreach-of-warranty claims against Claimant, alleging that\n -6-\nClaimant’s “defective airbag system” caused his injuries. JA\n60-64. Each claim was brought under Minnesota law.\n The Crown Victoria was registered in Minnesota and\nhad twice been purchased secondhand in Minnesota—\nfirst in 2011 and then again in 2013 by the current owner.\nBut it turned out that the car was first sold at a Claimant\ndealership in the neighboring state of North Dakota and\nmanufactured at a Claimant assembly plant in Ontario,\nCanada. JA 94, 130-33. Based on these facts alone, Claimant\nmoved to dismiss for lack of personal jurisdiction. Pet.\nApp. 3a. Solely because the first sale of this particular\nCrown Victoria occurred outside Minnesota, Claimant argued\nthat Minnesota’s courts could not exercise specific\njurisdiction over Respondent’s suit to redress injuries he\nsuffered in Minnesota as a result of a product that Claimant\nactively sold and promoted in Minnesota. Id.\n 3. Claimant’s activities in Montana. As in Minnesota,\nClaimant has long sold its cars in Montana. A Montana dealer\nwas selling the company’s Model T as early as 1917 and is\nstill in business. Schurman, 100 years later, Model T is\nback at Bell McCall, Bitterroot Star, Oct. 31, 2017. Claimant\ncultivates the market for new and used Claimant vehicles in\nMontana—including the Explorer, the vehicle that caused\nthe rollover accident here. The company has specifically\n“marketed and advertised the Claimant Explorer in Montana\nas a safe and stable passenger-carrying vehicle,” JA 13,\neven though the Explorer has a long history of rollover\naccidents resulting from its faulty design. JA 10; see Latin\n& Kasolas, Bad Designs, Lethal Profits: The Duty to\nProtect Other Motorists Against SUV Collision Risks, 82\nB.U. L. Rev. 1161, 1196-98 (2002).\n Claimant sells both new and used Explorers at all of its\nthirty-six licensed Claimant dealerships in Montana, which\nservice these Explorers for Montana residents. JA 13. In\n -7-\naddition to selling Explorers in Montana, Claimant also\nmaintains ongoing relationships with customers by selling\ncar parts, earning revenue from loans to Montana\ncustomers and dealers through its captive company Claimant\nMotor Credit, and “provid[ing] automotive services in\nMontana, including certified repair, replacement, and\nrecall services.” [TARGET IDENTIFIER REDACTED] Pet. App. 12a; see Smith &\nNaughton, Claimant’s Lending Arm Is Generating More\nProfit Than Ever, Bloomberg News, Feb. 3, 2020. The\ncompany “pervasive[ly] market[s] on multiple platforms\nto Montana residents” and accrues “benefits from\nMontana consumers buying its products,” new or used. JA\n15. For the particular Explorer vehicle that was involved\nin the accident in this case, “Claimant provided recall services\nin Montana for the vehicle, including certified repair and\nreplace[ment] services.” JA 13.\n 4. The Montana accident and lawsuit. Twenty-\nthree-year-old Markkaya Respondent was a resident of the\nmountain town of Superior (population 812), nestled in the\nBitterroot Range in the westernmost part of Montana. JA\n10. In 2015, she was driving her Claimant Explorer on the\nhighway near her home when one of its tires suffered a\ncatastrophic failure. JA 10, 22. The vehicle lost stability\nand—because of a defect in the Explorer’s design that\ngives it a dangerous tendency to roll over—it rolled into a\nditch, where it came to rest upside down. Id. Respondent was\npronounced dead at the crash scene, just outside\nAlberton, Montana. JA 22. She left behind her parents,\nhusband, and two young daughters—one of whom had\nbeen born just three months before the crash. JA 10-11;\nsee Officials ID Superior woman killed in Alberton crash,\nGreat Falls Tribune, May 27, 2015. All are citizens of\nMontana.\n -8-\n The representative of Respondent’s estate sued Claimant, the\ntire manufacturer, and other defendants in Montana state\ncourt. JA 10-12. JA 10. The complaint asserted\nnegligence, defective-design, and failure-to-warn claims.\nJA 23-28. Each claim was brought under Montana law.\n The particular Explorer that Respondent was driving was\nassembled in Louisville, Kentucky, and, while Respondent’s\nmother had bought it used in Montana and registered it in\nthe state, it happened to have been originally sold to an\nOregonian at a Claimant dealership in Spokane, Washington.\nSee JA 41, 48-51; [TARGET IDENTIFIER REDACTED] Pet. App. 24a. Because this\nparticular Explorer was originally sold to a third party\noutside Montana, Claimant moved to dismiss the action for\nlack of personal jurisdiction. Id. at 3a.\n B. Procedural history\n 1. The Minnesota Supreme Court’s decision. The\nMinnesota Supreme Court found personal jurisdiction\nover Claimant proper. 19-369 Pet. App. at 3a. The Court first\nreviewed Claimant’s Minnesota contacts to evaluate the\n“‘relationship among the defendant, the forum, and the\nlitigation.’” Id. at 9a (quoting Walden v. Fiore, 571 U.S.\n277, 284 (2014)). It held that Claimant’s extensive sales,\nmarketing, and data-collection efforts “establish that\nClaimant has purposely availed itself of the privileges,\nbenefits, and protections of the state of Minnesota.” Id. at\n10a.\n Next, the Court concluded that Claimant’s contacts with\nMinnesota were sufficiently related to Respondent’s claims.\nId. at 15a-18a. “This is not a case where a 1994 Claimant\nCrown Victoria fortuitously ended up in Minnesota”;\nrather, “Claimant has sold thousands of such Crown Victoria\ncars” in Minnesota. Id. at 16a. The Court highlighted that\n“Claimant directs marketing and advertisements directly to\nMinnesotans, with the hope that they will purchase and\n -9-\ndrive more Claimant vehicles,” and that here a “Minnesotan\nbought a Claimant vehicle, and it is alleged that the vehicle did\nnot live up to Claimant’s safety claims.” Id. at 17a. The Court\nrejected Claimant’s proposed causal standard as a “‘radical’\nshift in specific personal jurisdiction law.” Id. at 11a-12a.\n Finally, the Court held that exercising jurisdiction\nwas constitutionally reasonable, explaining that\nMinnesota has a “strong interest” in adjudicating a suit\nabout an accident “on a Minnesota road” that involved “a\nMinnesota resident as plaintiff and both Claimant—a\ncorporation that does business regularly in Minnesota—\nand two Minnesota residents as defendants.” Id. at 19a.\n 2. The Montana Supreme Court’s decision. The\nMontana Supreme Court similarly found jurisdiction\nproper over Claimant. [TARGET IDENTIFIER REDACTED] Pet. App. 21a-22a. It first\ndetermined that “Claimant purposefully availed itself of the\nprivilege of conducting activities in Montana, thereby\ninvoking Montana’s laws.” Id. at 11a. Claimant’s in-state\nadvertising and widespread dealership network, it\nexplained, “clearly establishes channels that permit it to\nprovide regular assistance and advice to customers in\nMontana” and demonstrates that “Claimant serves the\nmarket in Montana and expects consumers to drive its\nautomobiles” in the state. Id.\n The Court next concluded that the plaintiff’s claims\n“relate to Claimant’s Montana activities,” reasoning that Claimant\n“advertises, sells, and services vehicles in Montana,” and\n“makes it convenient for Montana residents to drive Claimant\nvehicles by offering maintenance, repair, and recall\nservices in Montana.” Id. at 14a. “Respondent’s use of the\nExplorer in Montana,” the Court wrote, “is tied to” those\nactivities, which show “a willingness to sell to and serve\nMontana customers like Respondent.” Id. at 17a, 19a. In other\nwords, by “market[ing], sell[ing], and servic[ing] vehicles\n -10-\nin Montana,” Claimant’s “own actions” showed a “willingness\nto sell to and serve Montana customers like Respondent, who\nwas injured while driving an Explorer in Montana.” Id. at\n19a–20a.\n Finally, the Court held that jurisdiction over Claimant in\nMontana was reasonable. Id. at 21a. “Claimant’s purposeful\ninterjections into Montana are extensive,” the Court\nexplained, and Claimant did not contend that it would be\n“burdened by defending in Montana.” Id. Montana also\n“has a strong interest in adjudicating the dispute”\nbecause “the accident involved a Montana resident and\noccurred on Montana roadways.” Id. Moreover, the Court\nreasoned, “the controversy may be efficiently resolved in\nMontana, as it was the place of the accident.” Id.\n SUMMARY OF ARGUMENT\n I. This Court has repeatedly made clear that where\n(a) a company deliberately cultivates a market for a\nproduct in the forum state and (b) that product causes an\ninjury in the forum state, the relationship between the\ninjury and the defendant’s in-state activity is sufficient for\nspecific jurisdiction. The principles that animate the\nrelatedness requirement—fair warning and reciprocal\nobligation—strongly weigh in favor of jurisdiction in this\nparadigmatic scenario, regardless of where the particular\nwidget that caused injury in the forum happened to have\nfirst been sold.\n II.A. Claimant urges this Court to disregard seven\ndecades of precedent and craft a new requirement under\nwhich a plaintiff, as a prerequisite to specific jurisdiction,\nmust prove the existence of a causal relationship between\nthe defendant’s in-state actions and the plaintiff’s injury.\nClaimant identifies no basis for such a requirement in the\nConstitution or this Court’s cases. For 75 years, the Court\nhas consistently held that a plaintiff’s injuries must “arise\n -11-\nout of or relate to” a defendant’s contacts with the forum.\nClaimant’s rule would jettison half of that formulation and, in\nso doing, would contravene this Court’s precedent.\n B. Claimant’s causal rule would undermine federalism\nby denying jurisdiction to the states with the most at\nstake in cases like this, while granting jurisdiction to\nstates with only a minimal interest at best. Claimant tries to\ndismiss these concerns as irrelevant. But Claimant is asking\nthis Court to create—and constitutionalize—a novel\nrequirement for personal jurisdiction. This Court, in\nevaluating Claimant’s proposal, cannot ignore the federalism\ninterests that it has consistently held underpin its\npersonal-jurisdiction jurisprudence. Claimant identifies no\nstate with a greater interest than the state where the\nvictim was injured, and no overreach by the forum states\nbeyond their valid regulatory power. And, regardless of\nwhether Claimant’s causal rule is adopted, Claimant’s liability in\nthese cases (and that of defendants in similar cases) will\nnot vary significantly, for liability will generally be\ngoverned by the substantive law of the place where the\ninjury occurs.\n C. Claimant’s rule would also undermine another core\ndue process value—fairness—by denying citizens access\nto courts where they are injured, without any counter-\nvailing benefit to Claimant. Claimant suggests that only a causal\nrule would ensure “fair warning” of where it may be sued.\nBut Claimant already has warning that it will be sued over a\ndefective product in a state where it extensively markets\nand sells that product.\n D. Claimant’s rule would also undermine predictability\nby importing an elusive standard from tort law into\npersonal jurisdiction. Proximate cause is notoriously hard\nto pin down, even in the tort context. In the personal\njurisdiction context, it will often be impossible. These\n -12-\ndifficulties will be compounded by the need to track down\nthe first sale of a widget under Claimant’s first-sale rule—a\ntask that will often prove impossible. Claimant’s rule will lead\nto preliminary litigation to track down locations that are\nultimately irrelevant to the merits and wasteful,\nduplicative litigation of multi-party disputes that were\npreviously heard in one place.\n III. Claimant’s policy concerns are meritless. The status\nquo already provides fair warning, adheres to territorial\nlimitations, and upholds the distinction between specific\nand general jurisdiction. And existing doctrines—the\nreasonableness requirement, choice of law, and forum\nnon conveniens—protect defendants from aggressive\nexercises of state-court jurisdiction. In any event, Claimant’s\npolicy complaints are better addressed through the\ndemocratic process than by revision of the Due Process\nClause.\n ARGUMENT\nI. Specific jurisdiction over a defendant is\n permissible where a plaintiff has been injured in\n the forum by a product that the defendant has\n systematically marketed, sold, and serviced in the\n forum.\n A. For seven decades, this Court’s modern\nprecedents—from International Shoe to Bristol-Myers\nSquibb—have established that, where a defendant “has\npurposefully directed [its] activities at residents” of a\nforum state, and “litigation results from alleged injuries\nthat arise out of or relate to those activities,” the “forum\nState does not exceed its powers under the Due Process\nClause if it asserts personal jurisdiction” over the\ndefendant. Burger King Corp. v. Rudzewicz, 471 U.S. 462,\n472-73 (1985). This Court has also made clear that this\nprinciple captures the cases at hand: Where a\n -13-\nmanufacturer like Claimant sells its product in a state “not\nsimply [as] an isolated occurrence” but as an effort to\ncultivate a “market for its product,” “it is not\nunreasonable to subject it to suit” in the state “if its\nallegedly defective merchandise has there been the source\nof injury to its owner or to others.” World-Wide\nVolkswagen, 444 U.S. at 297-98.\n As a result, cases with facts like those presented here\nhave long been ones where personal jurisdiction over the\ndefendant is a given. Every year, there are more than six\nmillion police-reported car crashes in the United States,\nresulting in more than 35,000 fatalities and injuries to over\ntwo million people. See Traffic Safety Facts, National\nHighway Traffic Safety Administration, 1-3, Feb. 2020,\n[URL REDACTED] About half the people injured in\nmotor-vehicle accidents attempt to seek compensation,\nresulting in one of the most common types of litigation\nfaced by the courts, and some fraction of them seek\ndamages against manufacturers of cars, tires, or parts\nthat have contributed to their injuries. See Engstrom,\nWhen Cars Crash, 53 Wake Forest L. Rev. 293, 299-302\n(2018). Yet Claimant cannot find any case from any state or\nfederal appellate court invoking its causal theory to find\npersonal jurisdiction lacking over an automaker, tire\nmanufacturer, or other defendant whose product injures\nthe plaintiff in a state where the manufacturer routinely\nsells that product.\n There is good reason for this: It would mark an\nabrupt departure from settled law. In the century and a\nhalf since the Fourteenth Amendment was ratified, this\nCourt has never deployed the Due Process Clause to\ndeprive a state of its ability to provide its own injured\ncitizens with a forum for redress when those citizens have\nbeen injured in the state by products that a defendant has\n -14-\nroutinely promoted and sold in the state. Under the\nPennoyer regime that governed after the Fourteenth\nAmendment was adopted, state courts had the power to\nadjudicate claims against non-resident defendants who\nhad property in the state, and could provide redress for\ntheir citizens up to the value of that property. Pennoyer\nv. Neff, 95 U.S. 714, 722-24 (1877). Under the modern\nInternational Shoe regime, suits like these have long\nbeen understood to be consistent with “fair play and\nsubstantial justice.” Int’l Shoe Co. v. Wash., Office of\nUnemployment Comp. & Placement, 326 U.S. 310 (1945).\nClaimant offers no sound reasons to depart from this settled\nunderstanding, and due process does not require it.\n In evaluating whether exercising specific jurisdiction\nover a defendant is permissible, this Court has long held\nthat courts must examine “the relationship among the\ndefendant, the forum, and the litigation.” Walden, 571\nU.S. at 284. It is this focus that distinguishes specific or\ncase-linked jurisdiction from general or all-purpose\njurisdiction (which permits “any and all claims” against\nthe defendant, “wherever in the world the claims may\narise,” Daimler AG v. Bauman, 571 U.S. 117, 121 (2014)).\n For specific jurisdiction to comport with due process,\nthis Court has consistently held that three\nrequirements—known collectively as the minimum-\ncontacts test—must be satisfied. First, the “constitutional\ntouchstone” is whether the defendant has “purposefully\navail[ed] itself of the privilege of conducting activities\nwithin the forum state, thus invoking the benefits and\nprotections of its laws.” Burger King, 471 U.S. at 474-75\n(quoting Hanson v. Denckla, 357 U.S. 235, 253 (1985)).\nSecond, “there must be ‘an affiliation between the forum\nand the underlying controversy, principally, an activity or\nan occurrence that takes place in the forum state and is\n -15-\ntherefore subject to the State’s regulation.’” Bristol-\nMyers Squibb Co. v. Superior Court of California, 137 S.\nCt. 1773, 1780 (2017) (quoting Goodyear, 564 U.S. at 919).\nThis second requirement has also been phrased “[i]n\nother words” as a rule that the lawsuit at issue “must arise\nout of or relate to the defendant’s contacts with the\nforum.” Id. Third, jurisdiction must be reasonable. A\ndefendant may still defeat jurisdiction by “present[ing] a\ncompelling case that the presence of some other\nconsiderations would render jurisdiction unreasonable”\ngiven concerns of “fair play and substantial justice.”\nBurger King, 471 U.S. at 476-78.\n B. With respect to the first requirement, there is no\nquestion that Claimant has purposefully availed itself of the\nprivilege of conducting activities in Montana and\nMinnesota. It “has continuously and deliberately\nexploited” both states’ markets for decades. Keeton v.\nHustler Magazine, Inc., 465 U.S. 770, 781 (1984). Claimant\nadvertises, markets, sells, and services tens of thousands\nof new and used vehicles in each state—including the\nparticular model and year of the cars involved in both\naccidents. Claimant “makes it convenient for [Montana and\nMinnesota] residents to drive Claimant vehicles by offering\nmaintenance, repair, and recall services” in both states.\n[TARGET IDENTIFIER REDACTED] Pet. App. 17a. Such “continuing and wide-reaching\ncontacts,” established “purposefully” outside of Claimant’s\nhome state, are more than enough to support jurisdiction.\nWalden, 571 U.S. at 285 (quoting Burger King, 471 U.S.\nat 479-80).\n There is also no question that jurisdiction here would\nsatisfy the third requirement. Claimant makes no argument,\nlet alone “a compelling case,” that “other considerations\nwould render jurisdiction unreasonable.” Burger King,\n471 U.S. at 477-78. Both Minnesota and Montana have a\n -16-\n“manifest interest” in providing their residents with a\nconvenient forum for redressing injuries inflicted by out-\nof-state actors. Burger King, 471 U.S. at 473. Minnesota\nand Montana were the sites of the accidents and home to\neveryone involved. Claimant identifies no state with a\nstronger interest. And it would be absurd for Claimant to even\nsuggest that it would suffer any hardship from litigating\nthese cases in either state.\n C. Conceding these points, Claimant focuses exclusively\non the second requirement of relatedness. It urges this\nCourt to adopt the following rule: Even where a defendant\nhas marketed and sold a product in the forum\ncontinuously for years and a plaintiff is injured by that\nproduct in the forum, specific jurisdiction is nonetheless\nforeclosed if the first sale of the specific item involved\nhappened to have been made to a third party outside the\nforum. Pet. Br. 18-22. Neither this Court’s modern\nprecedent nor the original understanding of the Due\nProcess Clause supports this novel interpretation of the\nrelatedness requirement.\n To the contrary, this Court has repeatedly made clear\nthat where (a) a company has deliberately cultivated a\nmarket for a product in a forum state, and (b) that product\ncauses an injury in the forum state, the relationship\nbetween the injury and the defendant’s conduct—same\nproduct, same state—is sufficient to provide a basis for\npersonal jurisdiction. As the Court put it in World-Wide\nVolkswagen: “[I]f the sale of a product of a manufacturer\nor distributor such as [a car company] is not simply an\nisolated occurrence, but arises from the efforts of the\nmanufacturer or distributor to serve directly or indirectly,\nthe market for its product,” then “it is not unreasonable\nto subject it to suit” in a state “if its allegedly defective\n -17-\nmerchandise has there been the source of injury to its\nowner or to others.” 444 U.S. at 297.\n Claimant attempts to discredit this passage as “dicta,” as\nif it were some stray musing not reflected in subsequent\ncases. Pet Br. 34. But that aspect of World-Wide\nVolkswagen’s reasoning has been a repeated touchstone\nof this Court’s personal-jurisdiction cases for the past four\ndecades. Many times, this Court has used this example\nfrom World-Wide Volkswagen—of in-forum injuries\ncaused by a product that the manufacturer routinely sells\nin the forum—as the paradigmatic instance of an\nappropriate exercise of specific jurisdiction.\n It first did so in Keeton v. Hustler Magazine, invoking\nWorld-Wide Volkswagen’s language to hold that where a\ncompany “has continuously and deliberately exploited” a\nstate’s markets, “it must reasonably anticipate being\nhaled into court there in” actions that are “based on” the\nproducts it regularly sells in those markets. 465 U.S. at\n781. Then, in Burger King, the Court reaffirmed the\nrelevant passage of World-Wide Volkswagen, explaining\nthat when a company regularly sells products in a forum\nstate “and those products subsequently injure forum\nconsumers,” in-state litigation satisfies both the\nrequirements that a company have “purposefully\ndirected” its activities at the forum and that “the litigation\nresults from alleged injuries that ‘arise out of or relate to’\nthose activities.” 471 U.S. at 472-73 (quoting Helicopteros\nNacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414\n(1984)).\n More recently, this Court’s opinions have continued\nto highlight this fact pattern as a benchmark to\ndistinguish specific jurisdiction from general jurisdiction.\nIn Goodyear, 564 U.S. at 927, the Court’s unanimous\nopinion did so by quoting and reaffirming the key passage\n -18-\nfrom World-Wide Volkswagen. That same day, in J.\nMcIntyre Machinery v. Nicastro, 564 U.S. 863 (2011),\ndespite the differing approaches in that case, nobody\nquestioned Justice Ginsburg’s straightforward reading of\nWorld-Wide Volkswagen: “[T]he Court’s opinion,” she\nexplained, “indicates that an objection to jurisdiction by\nthe manufacturer” there “would have been unavailing”—\neven though the car at issue had been originally been sold\nin a different state. (Ginsburg, J., dissenting). Three years\nlater, in Daimler AG, 571 U.S. at 127 n.5, the Court’s\nopinion once again offered this same basic scenario as the\ntextbook example of specific jurisdiction: “a California\nplaintiff, injured in a California accident involving a\nDaimler-manufactured vehicle” who has “sued Daimler in\nCalifornia court alleging that the vehicle was defectively\ndesigned.”\n None of these cases has ever suggested that the\nexercise of jurisdiction in this paradigmatic scenario\nshould depend on where the particular item was originally\nsold to a third party not before the court, as opposed to\nwhere the defendant has regularly sold the product and\nwhere the accident and the injuries occurred.\n D. And with good reason: The principles this Court\nhas articulated as justifying the relatedness requirement\nall weigh strongly in favor of exercising jurisdiction in\nthese cases regardless of the site of first sale.\n First, relatedness serves to ensure that defendants\nhave “fair warning that a particular activity may subject\n[them] to the jurisdiction of a foreign sovereign.” Burger\nKing, 471 U.S. at 472. The purposeful-availment\nrequirement, on its own, would not give defendants notice\nof what “particular” acts form a basis for jurisdiction over\nspecific types of claims. Id.\n -19-\n As this Court’s precedent makes clear, this “fair\nwarning” function is easily satisfied here. Where a\ncompany like Claimant has cultivated a market in a particular\nstate by regularly selling its products there “with the\nexpectation that they will be purchased by consumers,” it\nhas “fair warning” that it will be subject to suit if identical\n“products subsequently injure forum consumers.” Burger\nKing, 471 U.S. at 472-73. There is no dispute that Claimant\nhas a reasonable expectation of being haled into court in\nMontana and Minnesota for injuries in those states\nresulting from accidents caused by defects in the cars at\nissue here. Claimant knows that Montanans and Minnesotans\nwill bring these cars into their states, and will purchase\nthem used in their states—Claimant makes every effort to get\nthem to do so.\n Second, the relatedness requirement serves to ensure\nthat a state has the power to hold out-of-state\ncorporations accountable only for “the obligations which\n[they have] incurred there.” Int’l Shoe, 326 U.S. at 320.\nThe relationship between a defendant’s obligations and\nthe state’s power has grounded specific jurisdiction since\nInternational Shoe, which explained that, “to the extent\nthat a corporation exercises the privilege of conducting\nactivities within a state, it enjoys the benefits and\nprotection of the laws of that state.” Id. at 319. That\nenjoyment, in turn, “may give rise to obligations,” and it\ncan “hardly be said to be undue” to “require[] the\ncorporation to respond to a suit brought to enforce” those\nobligations “so far as those obligations arise out of or are\nconnected with the activities within the state.” Id.\n Claimant’s obligations to the states of Montana and\nMinnesota and their citizens ground the exercise of\njurisdiction here. There can be no doubt that Claimant has\nenjoyed the “benefits and protection” of both states’ legal\n -20-\nsystems, which have created a market for its products,\nprotected its property, and enforced its contracts for\ndecades. Claimant invests great effort into ensuring not only\nthat Minnesotans and Montanans will buy its new cars but\nalso that Claimant will have a continuing relationship with\nanyone who drives a Claimant vehicle, ensuring that people\nwill drive its cars long after the first sale. To that end, it\nhas actively encouraged and benefited from the market\nfor resale, servicing, and parts of Claimant vehicles in\nMinnesota and Montana. JA 13, 100-102. It lends its\ndealers money to buy and resell used cars, see Smith &\nNaughton, Claimant’s Lending Arm; it lends consumers\nmoney to purchase used cars, id.; and it profits from\nselling aftermarket parts and accessories to its dealers\nand through distributors. Claimant 10-K Report at 2, 27\n(2019). And, when it sells new cars, Claimant sells them at\nlower prices—and can even plan the obsolescence of their\nparts—knowing it will recoup costs over the life of the car\nthrough sales of parts, by virtue of its continuing\nrelationships with car owners. See Dayen, The\nInfuriating Reason That Car Repairs Are So Expensive,\nThe New Republic, Sept. 15, 2015. As a Claimant executive\nexplained, when Claimant sells a car, it effectively tells\nconsumers: “‘[W]e’re gonna back that car up, and oh yes,\nwe would like you to use original equipment Claimant parts on\nthose cars.’” Huetter, Claimant plans to compete on OEM\nparts, Repairer Driven News, Feb. 15, 2019.\n In turn, Claimant has subjected itself to the basic\nobligation not to injure each state’s residents through\nnegligence in the design or manufacture of its products.\nIn these cases, citizens of Montana and Minnesota injured\nby Claimant cars in each state seek to hold Claimant to those\nobligations. Claimant’s “continuing relationships and\nobligations with citizens” of Minnesota and Montana,\nBurger King, 471 U.S. at 473, are not annulled simply\n -21-\nbecause the very products it regularly sells and services\nin Minnesota and Montana, in these particular instances,\nhappened to arrive in each state as part of a used-car sale\nrather than a first sale.\n Claimant’s primary argument to the contrary is circular.\nClaimant argues that “[i]f a plaintiff’s claim would be the same\nwhether or not the defendant engaged in any in-state\nactivity,” then it cannot be “suit-related.” Pet. Br. 13. But\nthat is just a restatement of its assertion that the only kind\nof “relationship” that matters is a rigid, provably causal\nrelationship. Id. at 14. In contrast, the principles\nunderlying this Court’s personal-jurisdiction\njurisprudence demonstrate the reason why Claimant’s\ncontacts in Minnesota and Montana are relevant to the\nclaims here: they created a market for Claimant’s cars in those\nstates, thereby generating obligations between Claimant and\nthe citizens of each state. The consequence of those\nobligations is that Claimant must have “reasonably\nanticipate[d] being haled into court” in actions in either\nstate “based on” the products it has sold in those markets\nand the cars that it intentionally encouraged the residents\nof those states to purchase and use. Keeton, 465 U.S. at\n781. In any event, Claimant has no basis for confidently\nasserting that the plaintiffs’ claims here “would be the\nsame” regardless of Claimant’s in-state activity, given that\nClaimant has gone to great lengths to encourage Minnesotans\nand Montanans to purchase new and used Claimant cars and\ndrive Claimant cars in these states.\n -22-\nII. Claimant’s proposed causation test runs contrary to\n decades of this Court’s personal-jurisdiction\n jurisprudence and would undermine the values of\n federalism, fairness, and predictability that it\n serves.\n Claimant (at 43) urges this Court to disregard decades of\nits personal-jurisdiction jurisprudence and craft a new\n“proximate-cause requirement” under which a plaintiff\nmust prove the existence of a causal relationship between\nthe defendant’s in-state actions and the plaintiff’s injuries\nas a prerequisite for specific jurisdiction. But, as the\nSolicitor General points out, “Claimant fails to identify any\nbasis in this Court’s cases for such a requirement,” which\nwould for the first time “require plaintiffs to show that the\ndefendant’s acts [in the forum] caused their injuries.” U.S.\nBr. 31. Claimant is coy about what circumstances would\nsatisfy this new causal test. But it makes clear that, on its\nview, a state may be rendered powerless to provide a\nforum for its citizens who are injured by products that a\nmanufacturer regularly sells and markets in the state—\neven where the injury occurred in the state, the widget\nwas purchased used in the state, and the defendant\nactively cultivated a market in the state for the same\nproduct that caused the injury. Adopting such a rule\nwould radically reshape the jurisdictional landscape.\n Claimant makes no attempt to ground its novel rule in the\noriginal meaning of the Due Process Clause or Anglo-\nAmerican legal tradition. And it cannot. Nor does Claimant’s\nrule have any firmer footing in the principles of\nfederalism, fairness, and predictability that animate this\nCourt’s modern personal-jurisdiction jurisprudence.\nClaimant’s rule undermines each one of these principles,\ncutting against the core due process interests that the\nFourteenth Amendment protects.\n -23-\n A. Claimant’s proposed causation test runs contrary\n to this Court’s cases.\n Since International Shoe, this Court has consistently\nheld that specific jurisdiction may rest on “an affiliation\nbetween the forum and the underlying controversy,\nprincipally an activity or an occurrence that takes place in\nthe forum state and is therefore subject to the State’s\nregulation.” Bristol-Myers Squibb, 137 S. Ct. at 1780. The\nCourt has often phrased this as a requirement that the\nsuit “must arise out of or relate to the defendant’s contacts\nwith the forum.” Id.\n The crux of Claimant’s argument appears to be that this\nCourt’s use of the words “arising out of,” and similar\nlanguage, is enough to read a rigid causation test into\ndecades of precedent—even though this Court has never\ncreated one, and has expressly and repeatedly phrased\nthe standard as one that does not require causation. Claimant.\nBr. 18. In isolation, the phrase “arising out of” does\nsuggest a causal relationship. But this Court has never\nlimited the minimum-contacts test to cases in which\nplaintiffs can prove that their injuries “aris[e] out of” the\ndefendant’s forum contacts. Since it adopted its modern\napproach to personal jurisdiction, this Court has\nconsistently held that the test is satisfied when the\nplaintiff’s claims “arise out of or are connected with” those\ncontacts. Int’l Shoe, 326 U.S. at 319 (emphasis added). For\nalmost three-quarters of a century, the Court has\nconsistently phrased the test in the disjunctive. See\nBristol-Myers, 137 S. Ct. at 1780 (“arise out of or relate\nto”); Goodyear, 564 U.S. at 919 (“deriving from, or\nconnected with”); Burger King, 471 U.S. at 472 (“arises\nout of or relates to”); Helicopteros, 466 U.S. at 414\n(“related to or arises out of”). The phrase “related to”\ncontrasts with “arising from” precisely because only the\n -24-\nlatter connotes a causal link. Thus, the apparent reason\nthat the Court has included the two phrases together time\nand again is to draw that contrast and avoid insisting that\nplaintiffs satisfy an inflexible causal test.\n This Court has unanimously recognized that, even\nwhen products are first sold outside the forum and then\nbrought into the forum, a manufacturer’s efforts to\ncultivate “the market for its product” in the forum and\nencourage the “flow of a manufacturer’s products into the\nforum” can constitute “an affiliation germane to specific\njurisdiction.” Goodyear, 564 U.S. at 927 (emphasis added)\n(citing World-Wide Volkswagen, 444 U. S., at 297). By its\nterms, and in practice, the relatedness inquiry has never\nrequired a plaintiff to prove that some discrete act taken\nby the defendant in the forum was the cause of the\nplaintiff’s injury. Instead, jurisdiction may be premised on\na defendant’s “course of conduct directed at the society or\neconomy existing within the jurisdiction of a given\nsovereign.” Nicastro, 564 U.S. at 884 (plurality opinion)\n(emphasis added). As the Solicitor General points out, the\nCourt’s cases have never insisted that an injured plaintiff\nmust try to prove that a “particular advertisement” in\nMinnesota, or the availability of service and parts at\nauthorized Claimant dealerships in Montana, for example,\n“influenced the customer’s decision to make the particular\npurchase” of a particular used Claimant vehicle. U.S. Br. 30.\n“Nothing in this Court’s cases supports that blinkered\nand inflexible approach.” Id. That the plaintiff has been\ninjured in the forum by a product that the defendant\nregularly sells, promotes, and services in the forum is\nenough.\n Claimant makes no real effort to dispute the conclusion of\nthe courts below that the claims here, at the very least,\n“relate to” Claimant’s active cultivation of a market for its\n -25-\nproducts in the forum states. Instead, as Claimant\nacknowledges (at 36-37), it seeks to jettison half of the\nCourt’s longstanding standard for relatedness.\n Quoting a treatise on statutory interpretation, Claimant\ncontends (at 37) that “arising out of” and “related to”\nshould be treated as merely “synonymous” because\n“[d]oublets and triplets”—synonymous phrases like “able\nand willing” or “last will and testament”—“abound in\nlegalese.” But such phrases are always conjunctive, not\ndisjunctive. See Garner, A Dictionary of Modern Legal\nUsage 293-94 (2011) (providing over 170 examples of such\nphrases in legal usage, all with the conjunctive “and”). So\nClaimant’s point about legal usage actually cuts the other\nway—it shows that the Court has consistently used the\ndisjunctive formulation to distinguish two separate\nconcepts. Moreover, the Court’s use of the specific phrase\n“arising out of or related to” originates in an influential\nlaw-review article that emphasized the full breadth of the\ndisjunctive phrase. See Helicopteros, 466 U.S. at 414 n.8\n(citing von Mehren & Trautman, Jurisdiction to\nAdjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121\n(1966)). The article itself made this disjunction even more\nemphatic: “In the case of specific jurisdiction, the\nassertion of power to adjudicate is limited to matters\narising out of—or intimately related to—the affiliating\ncircumstances on which the jurisdictional claim is based.”\nvon Mehren, Jurisdiction to Adjudicate, 79 Harv. L. Rev.\nat 1144-45. The Court’s test is not mere verbal excess. A\ntest that has been reaffirmed by this Court over seven\ndecades, and that has engendered substantial reliance\nand legal development in the lower courts, should not be\ncast aside on so flimsy a basis.\n Claimant also suggests (at 30-32) that this Court in\nBristol-Myers altered its longstanding formulation of the\n -26-\npersonal-jurisdiction test. But although the petitioner\nthere asked this Court to adopt a causation requirement,\nbased on arguments indistinguishable from those made\nby Claimant here, the Court declined that invitation. Pet. Br.\nin Bristol-Myers 14-37. Rather, it applied “settled\nprinciples of personal jurisdiction” to the facts. See\nBristol-Myers, 137 S. Ct. at 1783; see also id. at 1788 (J.\nSotomayor, dissenting) (noting the lack of a “rigid\nrequirement that a defendant’s in-state conduct must\nactually cause a plaintiff’s claim”). In doing so, Bristol-\nMyers reiterated the “arise out of or relate to” test,\nalternately describing the required relationship as a\n“connection” or “affiliation” between the claims and the\nforum state. Id. at 1780, 1781. The Court repeatedly\nemphasized that the reason this required affiliation was\nnot present in that case was because “[t]he relevant\nplaintiffs [were] not California residents and [did] not\nclaim to have suffered harm in that State.” Id. at 1782.\n Claimant has no better luck attempting (at 37) to ground\nits proposed causal approach in cases decided before\nBristol-Myers. Claimant’s arguments on this score all conflate\nthe purposeful-availment and relatedness inquiries. In\nWalden, for instance, specific jurisdiction was lacking\nbecause the defendant “never traveled to, conducted\nactivities within...or sent anything or anyone to” the\nforum state—in other words, the defendant did not\npurposefully avail himself of the forum state. 571 U.S. at\n277. Likewise, the defendant in Hanson had “no office[s],”\n“transact[ed] no business,” and had never “solicit[ed]\nbusiness in that state.” 357 U.S. at 251. In such cases,\nthere is no need to ask whether nonexistent contacts\nrelate to the suit. And in cases where there was a causal\nrelationship between a defendant’s in-state contacts and\nthe suit, there was no need to go beyond a causal\nrelationship to explore the boundaries of other kinds of\n -27-\nconnections that might also satisfy due process. This\nCourt has never articulated the rule that Claimant seeks to\nrepresent as the status quo and has instead consistently\narticulated a different standard.\n B. Claimant’s proposed causation rule would deprive\n states with the strongest interest in the\n controversy of their ability to protect their\n injured citizens.\n Although Claimant purports to ground its causal rule in\nprinciples of federalism, its rule actually undermines\nfederalism. It would deny jurisdiction to the very states\nwith the most at stake in these cases, while granting\njurisdiction to states with only an attenuated interest at\nbest.\n 1. Claimant brushes aside both the states’ important role\nin the federal system and their legitimate authority to\nprotect their citizens from injury within their borders.\nClaimant goes so far as to assert (at 40) that the interest of a\nsovereign state in “protecting its residents from\ndangerous products that are marketed and sold there”—\nand that injure those residents within the state’s\nborders—is “irrelevant” to the question before the Court.\n That is wrong. A state “has a ‘manifest interest’ in\nproviding its residents with a convenient forum for\nredressing injuries inflicted by out-of-state actors.”\nBurger King, 471 U.S. at 473; see also Watson v.\nEmployers Liab. Assur. Corp., 348 U.S. 66, 73 (1954)\n(noting the states’ “legitimate interest in safeguarding the\nrights of persons injured there”). Thus, although Bristol-\nMyers held that California lacked personal jurisdiction\nover the claims of non-resident plaintiffs who did “not\nclaim to have suffered harm in that State,” it never\nquestioned that the state had jurisdiction over the claims\nof plaintiffs who lived, and were injured, in the state. 137\n -28-\nS. Ct. at 1782. And this Court’s cases have long held that\n“it is beyond dispute that” each state “has a significant\ninterest in redressing injuries that actually occur within\nthe State.” Keeton, 465 U.S. at 776.\n Claimant’s rule would call into question not just the states’\nauthority to provide a forum for injured residents, but\nalso their authority to directly enforce their own laws.\nStates have a strong interest in ensuring “faithful\nobservance” of the law within their borders—an interest\nthat is particularly powerful when enforcement is\nnecessary to protect citizens from dangerous products in\nthe state. Travelers Health Ass’n, 339 U.S. at 648. The\nimportance of that interest does not depend on whether\nthe manufacturer sells the products directly in the forum\nor to an out-of-state distributor. If, for example, a state’s\ncitizen is injured by a nutritional supplement falsely\nmarketed by the manufacturer in the state as safe, the\nstate should not be foreclosed from investigating and\nprosecuting the manufacturer just because the citizen\nhappened to have bought the particular bottle online from\na distributor in another state. If the manufacturer\nregularly markets the supplement in the forum, the state\nhas a compelling interest in protecting its citizens from its\nharmful effects.\n Claimant responds to these concerns by arguing that a\nstate’s interest is relevant only to the final step of the\nconstitutional test, which asks whether the state’s\nexercise of jurisdiction is reasonable. Pet. Br. 40. That\nmisses the point. Claimant is asking this Court to create a new\nthreshold requirement for personal jurisdiction that\nwould limit states’ power to adjudicate matters of\ncompelling interest to them. In evaluating Claimant’s\nproposed test, this Court cannot ignore the federalism\ninterests that animate its personal-jurisdiction\n -29-\njurisprudence—a fact that Claimant implicitly recognizes\nwhen it argues (incorrectly) that a strict causation\nrequirement is necessary to serve those interests.\n 2. To be sure, a state’s jurisdiction over particular\nclaims may be limited to the extent that assertion of its\nregulatory interests interferes with the legitimate\ninterests of other states. Due process ensures that states\n“do not reach out beyond the limits imposed on them by\ntheir status as coequal sovereigns in a federal system.”\nWorld-Wide Volkswagen, 444 U.S. at 292. But Claimant has\npointed to no state that has an interest in these cases\ngreater than the states where the plaintiffs reside and the\naccidents occurred, and in which Claimant regularly markets\nand sells the allegedly defective vehicles.\n Claimant suggests (at 41) that courts in the places where\nit assembles cars—here, Ontario, Canada and Louisville,\nKentucky—may properly exercise personal jurisdiction\nbased on their “interest in preventing the manufacture of\nharmful products within [their] borders and in not\nallowing companies to use [their] resources to do so.” And\nit says that Michigan, where it designs its cars, may\nexercise jurisdiction for similar reasons. But although\nthose states may have some interest in regulating the\nproduction of dangerous goods built for sale out of state,\nthat interest is not more significant than the interest of\nthe states whose citizens the products actually injure or\nkill. The state of injury has the strongest interest in\nregulating dangerous products—an interest rooted in\nprotecting its citizens from harm.\n Claimant itself has acknowledged this principle—and\nrecently used it to secure the dismissal of numerous\nplaintiffs’ breach-of-warranty and fraud claims brought\nagainst it in its home state of Michigan. See Cyr v. Claimant, 2019 WL 7206100 (Mich. Ct. App. Dec. 26,\n -30-\n2019). Claimant asked for the claims to be dismissed on forum\nnon conveniens grounds. The court agreed with Claimant that\nthe plaintiffs’ “respective places of domicile provide\nappropriate alternate fora.” Id. at *4. Although Michigan\n“may have a vested interest in adjudicating” claims\nagainst Claimant, the court wrote, “the nonresident plaintiffs’\nhome jurisdictions have at least an equal stake in\nadjudicating controversies that affect their citizens’\nrights.” Id. at *7.\n Moreover, Claimant seems to acknowledge (at 41) that the\nnecessary implication of its argument is that the states\nwhere it originally sold the cars at issue—Washington and\nNorth Dakota—could exercise jurisdiction over these\ncases. But the fact that Claimant originally sold the cars to\nthird parties there is pure happenstance. Claimant’s causation\ntest, in other words, would deny jurisdiction to the states\nwith the most significant interest in these cases while\ngranting it to states that lack much, if any, interest.\n As a result, the application of Claimant’s rule leads to\narbitrary outcomes. Under Claimant’s first-sale rule, a\nMontana resident who bought a new Explorer in Montana\ncould bring suit there for injuries suffered in an accident\nin the state, but a neighbor who purchased an identical\nused Explorer, and who suffered identical injuries in the\nstate, could not bring the same claim if the car’s first sale\noccurred elsewhere.\n Not only that, but even injured bystanders who have\nnever left Montana—or passengers like Mr. Respondent\nwho had nothing to do with the car’s purchase—would be\nforced to sue in a distant forum with which they have no\nconnection, and which has no interest in the controversy,\nbased only on the coincidence that Claimant once sold the car\nthere to someone else. No legitimate purpose would be\n -31-\nserved by these bizarre results. And due process does not\ncommand them.\n 3. The substantial limit on states’ sovereign powers\nthat Claimant advocates is not justified by any countervailing\nfederalism concerns. Even without a causation\nrequirement, the existing specific-jurisdiction test\nalready imposes sensible limits on a state’s power to reach\nbeyond its borders. In products-liability cases like those\nhere, purposeful availment exists only if the defendant\n“can be said to have targeted the forum”—that is, if the\ndefendant “has followed a course of conduct directed at\nthe society or economy existing within the jurisdiction of\na given sovereign, so that the sovereign has the power to\nsubject the defendant to judgment concerning that\nconduct.” Nicastro, 564 U.S. at 881, 884 (plurality op.).\nClaimant has followed precisely such a “course of conduct” id.,\nby marketing, selling, and servicing the defective car\nmodels in Montana and Minnesota and thereby\nsubmitting itself to the authority of those states. No\nexisting principle of constitutional law requires that Claimant\nmust, as a matter of due process, separately consent to a\nstate’s authority to “regulate” each individual car.\n 4. Nor is Claimant’s causal test justified by the claim that\nit will prevent defendants from being held liable under a\nstate’s laws unless the state is a place where the defendant\n“took or aimed an action that ultimately led to the\nplaintiff’s claim.” Pet. Br. 24. Claimant repeatedly makes a\nmistake that this Court has cautioned against, loosely\nequating a state’s ability to provide a forum for its injured\ncitizens with its ability to “regulate” substantive conduct.\nSee, e.g., Pet. Br. at 25 (“If a State can exercise jurisdiction\nover—that is, regulate—a defendant’s out-of-state\nactivity....”). But the issue of what substantive law governs\na defendant’s conduct is distinct from the question of\n -32-\nwhich states have personal jurisdiction over that\ndefendant. See, e.g., Keeton, 465 U.S. at 778 (“The issue is\npersonal jurisdiction, not choice of law.”). Claimant and the\nSolicitor General both argue as if the state where an\ninjury occurs has a legitimate interest only in regulating\na defendant’s conduct if that conduct took place in or was\n“aimed at” the state. Pet. Br. 24; see also U.S. Br. 25.\n But applying the choice-of-law standards that prevail\nacross the United States, Claimant likely will be liable in these\ncases under the laws of Minnesota and Montana no matter\nwhere the cases are heard. See Restatement (Second) of\nConflict of Laws § 146. The Solicitor General argues\notherwise, pointing out (at 25) that most states have\nabandoned the “bright-line rule” that torts are governed\nby the law of the place of injury. But the very article it\ncites for that proposition goes on to clarify that the erosion\nof this bright-line rule has meant little “in terms of the\nfinal choice of the law governing tort conflicts,” with the\nstates that have departed from the bright-line rule still\ntending to “continue to apply the law of the locus delicti.”\nSymeonides, The Choice-of-Law Revolution Fifty Years\nAfter Currie, 2015 U. Ill. L. Rev. 1847, 1901-04. Across a\n“comprehensive review of American products liability\nconflicts cases,” “[s]eventy-seven percent of all cases\napplied the law of a state that had only plaintiff-affiliating\ncontacts,” id. at 1900-01; the “only major departure” from\nthe traditional place-of-injury rule in tort cases more\nbroadly occurs when both the defendant and plaintiff\nshare a home state and the injury happened to occur\nelsewhere. Id. at 1902-03.\n Although the Solicitor General cites Section 145 of the\nRestatement (Second) of Conflict of Laws for the general\nrule according weight to “the place [where] the conduct”\ngiving rise to the injury occurred, U.S. Br. 25, he does not\n -33-\nmention that the very next section provides the rule that\nspecifically governs personal-injury cases: “the local law\nof the state where the injury occurred determines the\nrights and liabilities of the parties.” Restatement\n(Second) of Conflict of Laws § 146. Despite the Solicitor\nGeneral’s assertion (at 25) that “the place of sale probably\nhas a greater interest” in these cases than Montana or\nMinnesota, it is hard to imagine how North Dakota or\nWashington—which have no relevant witnesses or\nparties, where the injury did not occur, and where none of\nthe injured parties engaged in any transactions—could\nhave a stronger interest.\n The upshot is that Claimant’s ultimate liability risk in\nthese cases—and the risks of defendants in nearly all\ncases like these—will be governed by the substantive law\nof the place where an injury occurs. Id. This is true\nregardless of whether Claimant’s causal rule is adopted. As a\nresult, Claimant’s stance (at 41) that its liability should depend\nonly on conduct that it “took inside or purposefully aimed\nat a state” ignores the law that has long governed the\nliability of defendants, including Claimant, that sell their\nproducts in interstate commerce. See MacPherson v.\nBuick Motor Co., 111 N.E. 1050 (N.Y. 1916) (Cardozo, J.).\n“Few matters could be deemed more appropriately the\nconcern of the state in which [an] injury occurs” than “the\nbodily safety” of residents, and few things are “more\ncompletely within its power.” Pacific Employers Ins. Co.\nv. Industrial Accident Commission of State of Cal., 306\nU.S. 493, 503 (1939). Claimant’s causal test cannot change this\nfoundational principle.\n -34-\n C. Depriving injured forum residents of access\n to their own courts would be manifestly\n unfair.\n Claimant is also wrong that a causal test would do\nanything to promote fairness. It would just shuffle claims\nfrom the state where plaintiffs were injured to another\nforum, like the state of first sale, that is no more\nconvenient for Claimant but far more burdensome for\nplaintiffs. The only advantage for Claimant is an illegitimate\none: the possibility that the litigation burdens will be so\nsubstantial that many plaintiffs will give up their claims.\n 1. Claimant does not contend that litigating the plaintiffs’\nclaims in Minnesota or Montana would be an unfair\nburden to Claimant. Nor could it. Claimant does not suffer any\nhardship by litigating in states where it routinely does\nbusiness and defends itself from other lawsuits. Nor does\nClaimant argue that jurisdiction in, for example, Washington\nor North Dakota—states with no real connection to the\ncase—would be any fairer or less burdensome.\n Claimant’s only fairness argument is that a strict causal\nrule would give it “fair warning” of where it may be\nsubject to jurisdiction. Pet. Br. 26 (quoting Burger King,\n471 U.S. at 472). But a causal test is not needed for a\nproduct manufacturer like Claimant to predict that it may be\nsubject to suit over an allegedly defective product in a\nstate where it extensively markets and sells that product.\nThe risk of lawsuits in these circumstances is not an unfair\nsurprise, but a predictable cost of doing business in the\nforum. See Restatement (Second) of Torts § 402A (1965).\n Claimant asserts that its causal rule would allow it to\nbetter predict its risk based on the “volume of its sales in\neach State.” Pet. Br. 27 (emphasis added). The rule would,\nin other words, allow it to more precisely tailor the\nprobability that it will be subjected to the jurisdiction of a\n -35-\nstate by reducing its sales in that state, without having to\n“entirely stop[] doing business” there. Id. at 28. But as\nnoted above, Minnesota and Montana law will govern\nthese lawsuits wherever they are held—so the state in\nwhich the injury occurred will determine the amount of\nClaimant’s substantive liability even if its rule is adopted. This\nCourt, moreover, has never held that due process requires\nthat defendants have fine-grained control over a state’s\njurisdiction. Selling fewer cars of a specific model in a\nstate would in theory reduce the potential volume of\nlawsuits there, but Claimant is still on notice that it might be\nsued. As long as Claimant continues to deliberately target the\nstate as a market for a product, it has subjected itself to\nthe state’s jurisdiction for injuries related to that product.\nIt cannot claim surprise if it is held to account there.\n 2. Plaintiffs’ access to the courts of jurisdictions\nwhere they reside and are injured, on the other hand,\ndirectly serves their “interest in obtaining convenient and\neffective relief.” Burger King, 471 U.S. at 477. It is there\nthat witnesses to the accident and other evidence will be\nlocated. See Travelers Health Ass’n, 339 U.S. at 649; see\nvon Mehren, Jurisdiction to Adjudicate, 79 Harv. L. Rev.\nat 1167 (“[C]onsiderations of litigational convenience,\nparticularly with respect to the taking of evidence, tend in\naccident cases to point insistently to the community in\nwhich the accident occurred.”). That forum is by far the\nmost convenient, not only for plaintiffs but also for in-\nstate defendants of all stripes, like local distributors or\nretailers of a product.\n In an ordinary car-accident case, plaintiffs may be\nunable to “afClaimant the expense and trouble” of suing in a\nfar-off forum. Travelers Health Ass’n, 339 U.S. at 649.\nThis Court’s personal-jurisdiction cases have traditionally\nemphasized the “unwisdom, unfairness and injustice of\n -36-\npermitting [plaintiffs] to seek redress only in some distant\nstate.” Id. “The Due Process Clause does not forbid a\nstate to protect its citizens from such injustice.” Id.\n D. In even the simplest cases, Claimant’s proposed\n rule would be unworkable, unpredictable, and\n inefficient.\n Claimant primarily justifies its proposed causal rule by\narguing (at 14) that the rule “provides predictability for\ndefendants” and is “administrable.” But the opposite is\ntrue. Under this Court’s existing test, Claimant can easily\npredict where it may be sued: It can be sued in a forum\nfor injuries caused in that forum by a product that it\nregularly advertises and sells there. In contrast, even in\nthe most straightforward cases of the kind typically heard\nin state courts, a causation requirement would turn that\nsimple test into an unmanageable one. Requiring\ncausation would also subject parties and courts to\nburdensome preliminary and satellite litigation—all for\nno good reason.\n 1. Claimant’s causation test is subjective,\n difficult to apply, and would lead to\n unpredictable and inconsistent results.\n As then-Judge Gorsuch noted in examining personal\njurisdiction in Dudnikov v. Chalk & Vermilion Fine Arts,\nInc., “‘[t]here is perhaps nothing in the entire field of law\nwhich has called forth more disagreement, or upon which\nthe opinions are in such a welter of confusion,’ as causation\ndoctrine.” 514 F.3d 1063, 1078 (10th Cir. 2008) (quoting\nProsser and Keeton on the Law of Torts 263 (5th ed.\n1984)). Claimant makes little effort to explain the proper\nstandard of causation under its test, arguing that “this\nCourt need not answer that question here.” Pet. Br. 42.\n -37-\nAll Claimant has to say about its proposed test is that it is\nbased on the “proximate cause” standard from tort law.1\n It is one thing to apply a proximate-cause standard to\nliability in tort, or in analogous statutory contexts where\nthe Court treats the liability concept as a background\nprinciple. In such cases, courts may be guided by long-\nestablished common-law applications that provide some\nmeasure of predictability. But it is another thing entirely\nto import the test where there is no similar common-law\nbackground of a proximate-causation standard for\npersonal-jurisdiction cases. That means that courts would\nbe entirely at sea—and that if the Court adopts Claimant’s\ntest, it is signing itself up for a steady stream of cases\nasking it to resolve the inevitable conflicts that will arise.\n Even when applied to traditional liability questions,\nthe “term ‘proximate cause’ does not easily lend itself to\ndefinition.” McBride v. CSX Transp., Inc., 598 F.3d 388,\n393 n.3 (7th Cir. 2010). In torts, the test asks little more\nthan whether the “legal system wishes to assign at least\npartial responsibility for an accident” to the defendant.\nCalabresi, Concerning Cause and the Law of Torts, 43 U.\nChi. L. Rev. 69, 72 (1975). The standard is inherently\nsubjective—more a value judgment than an actual test.\nAnd “despite the manifold attempts which have been\nmade to clarify the subject,” there is no “general\nagreement as to the best approach.” Prosser and Keeton\non the Law of Torts 263. Proximate cause is thus “elusive,”\n\n\n 1\n Claimant is correct to reject but-for causation as a “vastly\noverinclusive” alternative. Pet. Br. 43. That test has “no limiting\nprinciple; it literally embraces every event that hindsight can logically\nidentify in the causative chain.” Nowak v. Tak How Invs., 94 F.3d 708,\n715 (1st Cir. 1996).\n -38-\nand “hardly a rigorous analytic tool.” Blue Shield of\nVirginia v. McCready, 457 U.S. 465, 477 n.13 (1982). 2\n In car-accident cases like those here, countless\nproblems might complicate the proximate-cause inquiry.\nWhat if a mechanic who inspected the car after the\nplaintiff’s purchase failed to notice and fix the problem? Is\nhis negligence an independent act that breaks the chain of\nresponsibility? See Sinram v. Pa. R.R. Co., 61 F.2d 767\n(2d Cir. 1932) (Hand, J.). What if the accident occurred\nonly because another driver was driving negligently, or\nbecause the plaintiff failed to follow a safety warning? Or\nwhat if the accident was precipitated by an additional\ndefect for which the car’s manufacturer was not\nresponsible? See Seward v. Minneapolis St. R.R. Co., 25\nN.W.2d 221 (Minn. 1946). That last question is not a\nhypothetical: The defect that caused Respondent’s death in\nMontana was the dangerous tendency of Claimant Explorers\nto roll over, but the rollover also happened because a\nseparate defect caused one of the car’s Goodyear tires to\nfail. Under Claimant’s standard, these vexing questions would\nbecome jurisdictional, needing to be settled not just to\ndecide liability but to determine the right forum. Because\nthe power of the proximate-cause test to answer questions\n\n\n 2\n Claimant responds (at 15) that lower courts “have required a causal\ntest for years ... without issue.” But none of the courts Claimant identifies\nhas adopted the rigid proximate-cause test it asks for. The First\nCircuit, for example, has expressly disclaimed such a test, holding\nthat “strict adherence to a proximate cause standard ... is\nunnecessarily restrictive.” Nowak, 94 F.3d at 715. That court actually\nfollows a “flexible, relaxed standard,” requiring only that “the nexus\nbetween the contacts and the cause of action is sufficiently strong.”\nId. at 715-16. Its use of the words “proximate cause,” it has explained,\nis meant only to “correlate[] to foreseeability, a significant component\nof the jurisdictional inquiry.” Id.; see [TARGET IDENTIFIER REDACTED] BIO 17-18 (discussing\nother cases).\n -39-\nlike these typically proves illusory, courts are likely to\n“come out every which way.” Calabresi, Concerning\nCause, 43 U. Chi. L. Rev. at 99-100.\n Even if a causation-based rule made sense in theory,\nit would be unworkable because there will often be no way\nfor plaintiffs to determine the site of the first sale of a\nparticular defective product—either before they must sue\nor, often, even after discovery. In the modern economy,\nproducts are assembled from components made around\nthe world. See Campbell, Why no one knows the source of\nevery car part—and why it matters, Financial Times,\nFeb. 20, 2020. Some products are impossible to trace to\ntheir original point of sale. Tires of the same size and\nbrand, for example, are marked with Department of\nTransportation numbers that show the particular week\nthey were manufactured. See Robinson v.\nBridgestone/Firestone North American Tire, L.L.C., 703\nS.E.2d 883, 887 (N.C. Ct. App. 2011). But because these\ncodes are not unique, a tire manufacturer often cannot\npinpoint where a particular tire was first sold—it can be\nsimply “impossible to track a particular tire.” Id.\n In many cases, even discovery will not solve that\nproblem. Because of the complex global supply chain, “no\none, anywhere, actually knows where every single one of\nthe 3,000 parts that go into the average car comes from.”\nCampbell, Why no one knows the source of every car part.\nUnder a causal rule linked solely to the location of design,\nmanufacture, or sale of a defective part, it could be\nimpossible to determine in a particular case whether\njurisdiction is proper.\n 2. Claimant’s rule would lead to wasteful\n preliminary and duplicative litigation.\n Personal jurisdiction is supposed to be “resolved\nexpeditiously at the outset of litigation.” Daimler AG, 571\n -40-\nU.S. at 139 n.20. But causation is usually a disputed\nissue—often the main disputed issue. As the Solicitor\nGeneral explains (at 31), “[i]nquiries into causation can\nraise complex factual questions that typically go to the\nmerits” and are often decided by the jury. Tying\njurisdiction to causation would require extensive\npreliminary discovery and litigation on those questions\nbefore a case could even get started.\n A causation-based rule would also be inefficient,\nrequiring even simple disputes to be litigated separately\nin cases around the country. Even in basic tort cases\ninvolving one plaintiff’s injury, there are typically\nmultiple defendants—for example, the car’s\nmanufacturer, the manufacturer of a component like a\ntire, other drivers who contributed to the accident, those\ndrivers’ employers, or any of these parties’ insurers. Until\nnow, these claims would often proceed together efficiently\nin one case. Under Claimant’s causation approach, it would\noften be the case that no forum would have jurisdiction\nover all defendants, necessitating separate suits in\ndifferent forums to litigate overlapping issues.\n Mr. Respondent, for example, sued not only Claimant but\nalso the car’s Minnesota-based driver and owner. If he\nwere forced to sue Claimant in North Dakota (the state of first\nsale), he would be unable to join the Minnesota\ndefendants. He would thus have to file two cases—one\nagainst Claimant in North Dakota and one against the other\ndefendants in Minnesota. Similarly, the Montana plaintiff\nsued Claimant, which made the car; Goodyear, the Ohio\ncorporation that made the tires; and several other\ndefendants that reside in Montana, Maryland, and\nWashington. A causation rule could thus require suits in\nas many as five jurisdictions. That would not only be\nextraordinarily burdensome for plaintiffs but would also\n -41-\nwaste judicial resources, create a risk of inconsistent\njudgments, and harm the states’ “substantial interest in\ncooperating with other States ... to provide a forum for\nefficiently litigating all issues and damage[s] claims”\ntogether in a single location. Keeton, 465 U.S. at 777.\n Given the burden that filing suit in multiple\ninconvenient jurisdictions would impose on an accident\nvictim, many plaintiffs may forgo suing non-resident\ndefendants altogether—leaving local citizens and in-state\nbusinesses with disproportionate liability. A plaintiff who\npurchased a defective product might, for example, sue\njust the retailer under a joint-and-several liability theory,\nleaving the out-of-state manufacturer out of the case. See\nNorfolk & W. Ry. Co. v. Ayers, 538 U.S. 135, 163-64 (2003).\nDefendants in those circumstances can typically protect\nthemselves with third-party claims against other\nresponsible parties. But Claimant’s rule would often mean\nthat those third parties are not subject to jurisdiction in\nthe forum, making it impossible for local defendants to\nbring them into the case. See 6 Wright, et al., Federal\nPractice and Procedure § 1445 (3d ed. 2012). Claimant’s rule\nwould often thus require local defendants to travel to\nother forums to initiate a new round of litigation—or get\nleft holding the bag.\n * * *\n These examples are just the tip of the iceberg. Claimant\noffers this Court “a rule of broad applicability,” Nicastro,\n564 U.S. at 887 (Breyer, J., concurring). But Claimant has said\nalmost nothing about how it would work in practice, in\ncontexts ranging from property to child support, from\nprobate to contract law. Adopting such a rule requires\n“full consideration of the modern-day consequences.” Id.\nat 887. If adopted, it would cause serious problems in\neveryday litigation for years to come. U.S. Br. 31. This\n -42-\nCourt’s relatedness standard, by contrast, applies well\nacross contexts and promotes, rather than undermines,\nthe values of fairness, federalism, and predictability that\ndue process protects.\nIII. The consequences Claimant attributes to a non-causal\n relatedness standard are hyperbolic and avoidable.\n Claimant’s brief manufactures a parade of horribles that\nit attributes to any non-causal test, which Claimant argues\nwould fail to provide notice, Pet. Br. 27; “nullif[y]”\nterritorial limitations on state power, id. at 25; and\nconflate specific and general jurisdiction, id. at 30-31. But\nClaimant’s arguments are built around a straw man: the idea\nthat any non-causal test is equivalent to a vague standard\nthat Claimant may “be sued on car-related claims anywhere it\ndoes car-related business.” Id. at 29. This Court need not\nadopt such a rule to reject Claimant’s arguments. Just as Claimant\nargues that adopting a causation standard does not mean\nthat any causal relationship is sufficient, Pet. Br. 42-45,\nadhering to the traditional non-causal standard does not\nmean that any non-causal relationship is sufficient.\nRuling for the Respondent requires holding only that\nwhere a product has caused an injury in a forum state, and\nthe defendant has systematically cultivated a market for\nthat product in the state, jurisdiction over the defendant\nfor claims arising from that injury is appropriate.\n 1. There is a simple test that defendants could follow\nto determine their potential to face suit: If a defendant\ndeliberately cultivates a given state as a market for a\nproduct, it may be sued in that state for injuries caused in\nthat state by that product. That rule gives “fair warning”\nto defendants based on their own “purposefully directed”\nconduct that “create[s] continuing relationships and\nobligations with citizens of another state.” Burger King,\n471 U.S. at 472-73. And it provides “constitutionally\n -43-\nsufficient notice” by allowing defendants to structure\ntheir “primary conduct with some minimum assurance” as\nto where their conduct will open them to suit. Pet. Br. 29.\nA defendant’s choice to cultivate a market for its product\nin a forum is not the “unilateral activity” of a third party.\nPet. Br. 33. It is entirely within the defendant’s control. If\na defendant wishes to avoid being subject to suit in a given\nforum for injuries arising in that forum from its products,\nit may refrain from selling its products in that forum.\n 2. Nor does a ruling for the Respondent mean that\n“territorial limitations on state power would be nullified.”\nPet. Br. 25. Claimant again relies on its straw-man theory of\nrelatedness to argue that any non-causal standard would\nbe a “jurisdictional free for all” in which any large\ncompany can be sued “on any claim for relief, wherever its\nproducts are distributed.” Id. at 25-26. Not so. Rejecting\nClaimant’s theory still permits a rule that restricts\njurisdiction to states in which a defendant chooses to\nregularly market a product. No state would have the\nauthority “to enforce ‘obligations’ that arose entirely\noutside its boundaries.” Id. at 25 (quoting International\nShoe, 326 U.S. at 319-20).\n 3. Claimant is also wrong to argue that a non-causal\nstandard is analogous to a “sliding scale approach” that is\nmerely “a loose and spurious form of general jurisdiction.”\nBristol-Myers, 137 S. Ct. at 1781. A sliding scale approach\nveers toward general jurisdiction because it relaxes “the\nstrength of the requisite connection between the forum\nand the specific claims at issue” on the basis of “contacts\nthat are unrelated to those claims.” Id. But Claimant’s\ncontacts with Minnesota and Montana are related to the\nclaims in these cases. Claimant sold the product at issue in the\nstate where the injury occurred—unlike the claims\n -44-\nrejected in Bristol-Myers, which did not arise out of in-\nstate injuries.\n 4. Resolving this case in Respondent’ favor does not\nrequire this Court to rule on “foreseeability” under a\n“stream-of-commerce” approach. Pet. Br. 29. So-called\n“stream of commerce” analysis refers to the possibility\nthat a court may conclude that a defendant has\npurposefully availed itself of a state by “placing goods into\nthe stream of commerce ‘with the expectation that they\nwill be purchased by consumers in the forum State.’”\nNicastro, 564 U.S. at 881-82 (plurality). But in this case, it\nis already clear (and conceded) that Claimant has purposefully\navailed itself of the forum states. The question presented\nhere is whether Claimant’s purposeful availment is rendered\nirrelevant by the fact that the first sale of these particular\ncars occurred outside the forum. The Court need not\nreach the separate question of whether Claimant’s sale of the\nspecific cars at issue could itself constitute purposeful\navailment based solely on the reasonable foreseeability\nthat the cars would end up in the forum states.\n 5. Finally, Claimant’s proposed standard is not only\nunworkable but also unnecessary because numerous\nexisting doctrines adequately protect defendants from\noverly aggressive exercises of jurisdiction.\n For starters, even where the first two specific-\njurisdiction requirements are met, due process still\nrequires assessing “other factors” to determine if\njurisdiction is reasonable. Burger King, 471 U.S. at 476.\nThese include “the burden on the defendant, the interests\nof the forum State, and the plaintiff’s interest in obtaining\nrelief,” “the interstate judicial system’s interest in\nobtaining the most efficient resolution of controversies,”\nand “the shared interest of the several States in\nfurthering fundamental substantive social policies.”\n -45-\nAsahi Metal Indus. Co. v. Sup. Ct. of Cal., Solano Cnty.,\n480 U.S. 102, 113 (1987). These factors prevent state\ncourts from exercising jurisdiction when contacts\nbetween the defendant and the forum are attenuated. Id.\nat 116.\n In addition, concerns about litigating in inconvenient\nor unfair forums “usually may be accommodated through\nmeans short of finding jurisdiction unconstitutional.”\nBurger King, 471 U.S. at 477. For example, states’ choice-\nof-law rules will sufficiently “put[] defendants on notice of\nwhere they might be liable and on what claims.” Pet. Br.\n27; see Burger King, 471 U.S. at 477. The forum non\nconveniens doctrine prevents defendants from being\nrequired to litigate in a forum that would cause particular\ninconvenience or expense. See Gulf Oil Corp. v. Gilbert,\n330 U.S. 501, 508-509 (1947). In virtually all states,\ndefendants may seek dismissal where the convenience of\nthe litigants and witnesses, access to evidence, and the\ninterests of justice would be better served by a change in\nforum. See, e.g., San Diego Gas v. Gilbert, 329 P.3d 1264,\n1271 (Mont. 2014); Paulownia Plantations de Panama\nCorp. v. Rajamannan, 793 N.W.2d 128, 133 (Minn. 2009).\n To the extent that Claimant’s policy concerns about unfair\nexercises of state-court jurisdiction cannot be addressed\nby existing doctrines, Congress and state legislatures are\nbetter situated to address them than the judiciary.\nWeighing corporate defendants’ desire to avoid litigation\nagainst states’ and citizens’ interests in health and safety\nis better left to legislators, who can amend long-arm\nstatutes in accordance with the democratic process—not\nthrough the Constitution.\n CONCLUSION\n The judgments of the Supreme Courts of Montana\nand Minnesota should be affirmed.\n -46-", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of specific personal jurisdiction in product-liability actions.", "governingLaw": "Apply United States constitutional personal-jurisdiction law; Montana and Eighth Circuit origins. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States constitutional personal-jurisdiction law; Montana and Eighth Circuit origins governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Ford Motor Co. v. Montana Eighth Judicial District Court", "citation": "592 U.S. 351 (2021)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/20pdf/19-368_febh.pdf" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The Due Process Clause limits a state court's power to exercise personal jurisdiction over a nonresident defendant, requiring that the maintenance of the suit not offend traditional notions of fair play and substantial justice. For specific jurisdiction, the plaintiff's claims must 'arise out of or relate to' the defendant's contacts with the forum. The dispositive question is whether the 'relate to' prong extends beyond strict causation, as the Court in Ford Motor Co. v. Montana Eighth Judicial District Court held it does.\n\nClaimant argues that specific jurisdiction requires a strict causal link—jurisdiction lies only where the defendant designed, manufactured, or first sold the specific vehicle in the forum state. This argument fails. The Court's standard is cast in the disjunctive: claims must 'arise out of OR relate to' the defendant's forum contacts. The first half asks about causation, but the second half contemplates that some relationships will support jurisdiction without a strict causal showing. As the Ford opinion explains, the inquiry looks for 'an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place within the State's borders.'\n\nThis is not a case like Bristol-Myers Squibb, where nonresident plaintiffs sued in California for injuries sustained elsewhere with no connection to the forum state. Here, the plaintiffs are residents of the forum states, used the allegedly defective products in the forum states, and suffered injuries when those products malfunctioned in the forum states. The defendant systematically served a market in Montana and Minnesota for the very vehicle models at issue—advertising, selling, and servicing Explorers and Crown Victorias in those states. This creates a strong 'relationship among the defendant, the forum, and the litigation'—the essential foundation of specific jurisdiction.\n\nThe World-Wide Volkswagen dictum, far from being stray, has been repeatedly reaffirmed as the paradigmatic example of specific jurisdiction: if a manufacturer serves a market for its product in a state and that product malfunctions there, jurisdiction is proper. The Daimler opinion used this exact scenario as its illustrative case. Bristol-Myers and Walden do not bar jurisdiction here. Bristol-Myers lacked any connection between the forum and the nonresident plaintiffs' claims; Walden involved a defendant with zero forum contacts. Neither is analogous. Claimant's proposed causation-only test would produce absurd results: Montana and Minnesota residents injured in-state by products Claimant actively markets and sells there would be forced to litigate in distant states with no real stake in the controversy, while states where the vehicle happened to be first sold to a third party decades ago would have jurisdiction. This undermines, rather than serves, interstate federalism.\n\nClaimant's fairness and predictability arguments are unavailing. An automaker regularly marketing a vehicle in a state has 'clear notice' of exposure to jurisdiction when that product malfunctions there. The reasonableness requirement is satisfied: both states have manifest interests in providing forums for their injured residents, and Claimant does not claim burden.", "allocation": null, "citations": [ { "title": "Ford Motor Co. v. Montana Eighth Judicial District Court | 592 U.S.", "url": "https://supreme.justia.com/cases/federal/us/592/19-368/case.pdf", "proposition": "When a company serves a market for a product in a state and that product causes injury in the state to one of its residents, the state's courts have specific personal jurisdiction. The 'arise out of or relate to' standard is disjunctive; the 'relate to' prong extends beyond strict causation to encompass a non-causal affiliation between the forum and the underlying controversy." }, { "title": "Ford Motor Co. v. Montana Eighth Judicial District Court | 592 U.S.", "url": "https://supreme.justia.com/cases/federal/us/592/19-368/case.pdf", "proposition": "Bristol-Myers Squibb and Walden v. Fiore do not bar jurisdiction where, unlike in those cases, the plaintiffs are forum-state residents who used the allegedly defective products in the forum and suffered in-state injury. The defendant's purposeful availment of the forum market for the very product models at issue creates a strong relationship among the defendant, the forum, and the litigation." }, { "title": "Bristol-Myers Squibb Co. v. Superior Court of California | 582 U.S.", "url": "https://supreme.justia.com/cases/federal/us/582/16-466/case.pdf", "proposition": "Specific jurisdiction requires an affiliation between the forum and the underlying controversy, principally an activity or occurrence that takes place in the forum state. When no such connection exists, specific jurisdiction is lacking regardless of the extent of the defendant's unconnected activities in the state. This principle distinguishes cases like Bristol-Myers (nonresident plaintiffs, no in-state injury) from cases where forum residents suffer in-state injury from products the defendant markets in the forum." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-062", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nINTRODUCTION\n This case asks whether plaintiffs in a civil action\nproperly removed to federal court on the basis of a fed-\neral question may divest the court of jurisdiction by\namending the complaint to eliminate the federal ques-\ntion. For almost a century, this Court—and nearly\nevery lower court—has rejected that gambit. In Car-\nnegie-Mellon University v. Cohill, this Court con-\nfronted facts analogous to those presented here and\nconfirmed that a plaintiff’s post-removal amendment\nof the pleadings does not strip a federal court of juris-\ndiction over remaining state-law claims. 484 U.S. 343,\n357 (1988). Otherwise, plaintiffs in removal cases\ncould engage in “forum manipulation” and defeat de-\nfendants’ statutory right to remove. Id. The Court’s\n (1)\n 2\nopinion in Cohill reflects the venerable principle that\na plaintiff cannot “deprive the district court of juris-\ndiction” “after removal” “by amendment of his plead-\nings.” St. Paul Mercury Indem. Co. v. Red Cab Co.,\n303 U.S. 283, 292 (1938).\n Just two years after Cohill, Congress passed the sup-\nplemental-jurisdiction statute, 28 U.S.C. § 1367,\nwhich codified the judge-made rules regarding pen-\ndent-claim jurisdiction. Section 1367(a) states that\n“the district courts shall have supplemental jurisdic-\ntion over all other claims that are so related to claims\nin the action within [their] original jurisdiction that\nthey form part of the same case or controversy.” 28\nU.S.C. § 1367(a) (emphasis added). And Section\n1367(c) provides that courts “may decline to exercise\nsupplemental jurisdiction” in specific circumstances,\nincluding when “the district court has dismissed all\nclaims over which it has original jurisdiction”—\ndemonstrating that federal courts retain supple-\nmental jurisdiction over state-law claims even when\nthere is no longer a federal question before the court.\n Section 1367’s “statutory term[s]” were “obviously\ntransplanted from” earlier precedent. Taggart v. Lo-\nrenzen, 587 U.S. 554, 560 (2019) (quotation marks\nomitted). Section 1367 thus “brings the old soil with\nit,” including the pre-1990 rule that post-removal\namendments eliminating a federal question do not di-\nvest a court of jurisdiction. Id. (quotation marks omit-\nted).\n Ever since the passage of Section 1367, this Court\nand the courts of appeals—including the Eighth Cir-\ncuit prior to this case—have consistently recognized\nthat “when a defendant removes a case to federal court\n 3\nbased on the presence of a federal claim, an amend-\nment eliminating the original basis for federal juris-\ndiction generally does not defeat jurisdiction.” Rock-\nwell Int’l Corp. v. United States, 549 U.S. 457, 474 n.6\n(2007). The decision below radically breaks from the\nstatutory text and this longstanding consensus, with-\nout citing or discussing this Court’s key precedents on\nthis issue, and permits plaintiffs to engage in aggres-\nsive judge and forum shopping. This Court should re-\nject the sea-change in the law embraced by the Eighth\nCircuit and reverse.\n OPINIONS BELOW\n The Eighth Circuit’s opinion, Pet. App. 3a-12a, is re-\nported at 75 F.4th 918. The District Court’s opinion,\nPet. App. 38a-44a, is unreported.\n JURISDICTION\n The Eighth Circuit entered judgment on July 31,\n2023, and denied Claimant’ timely petition for re-\nhearing on September 20, 2023. The petition for a writ\nof certiorari was timely filed on December 19, 2023,\nand granted on April 29, 2024. This Court has juris-\ndiction under 28 U.S.C. § 1254(1).\n STATUTORY PROVISIONS INVOLVED\n 28 U.S.C. §§ 1331, 1332, 1367, 1441, 1446, and 1447\nare reproduced in the appendix to this brief. App. 1a-\n22a.\n 4\n\n\n STATEMENT OF THE CASE\n A. Respondent Sue Claimant In State\n Court.\n Claimant Claimant and Nestlé Purina manufac-\nture pet food, including food sold to pet owners (such\nas Respondent) who have a prescription from their\nveterinarian. JA 65. In this putative class action, Re-\nspondents alleged that Claimant violated federal\nfood and drug law and misrepresented that pet owners\nwere legally required to obtain a prescription before\npurchasing Claimant’ products.\n This particular case is the second round in a series\nof class actions targeting Claimant. The same plain-\ntiffs’ counsel filed a nearly identical case in the\nNorthern District of California in 2016, including fed-\neral claims as well as claims under the Missouri Mer-\nchandising Practices Act. See Moore v. Mars Petcare\nUS, Inc., et al., No. 3:16-CV-7001 (N.D. Cal.). The dis-\ntrict court dismissed that case, and the Ninth Circuit\naffirmed in part on appeal in 2020. See Moore v. Mars\nPetcare US, Inc., 966 F.3d 1007 (9th Cir. 2020); Moore\nv. Mars Petcare US, Inc., 820 F. App’x 573 (9th Cir.\n2020).\n After the district court’s dismissal in Moore, counsel\nfiled this copycat lawsuit in Missouri state court on be-\nhalf of Respondent. The initial complaint alleged\nclaims under the Missouri Merchandising Practices\nAct, as well as state antitrust law and common-law\nunjust enrichment. JA 105-114. Central to Respond-\nents’ claims was their theory that Claimant violated\nthe Food, Drug, and Cosmetic Act (FDCA) and Food\nand Drug Administration (FDA) regulations. Re-\n 5\nspondents requested, among other things, an injunc-\ntion requiring Claimant to comply with applicable\nfederal laws. JA 115.\n B. Claimant Remove To Federal Court, And\n The Eighth Circuit Finds Federal Ques-\n tion Jurisdiction.\n Claimant promptly removed the case to federal\ncourt, citing federal question jurisdiction as well as di-\nversity jurisdiction under the Class Action Fairness\nAct. Respondent moved to remand for lack of juris-\ndiction, and the District Court granted the motion.\nPet. App. 25a-26a. Claimant then filed a petition for\ninterlocutory review under the Class Action Fairness\nAct.\n The Eighth Circuit granted the petition and re-\nversed, holding that the District Court had federal\nquestion jurisdiction under Gunn v. Minton, 568 U.S.\n251 (2013), because Respondent had “explicitly” ar-\ngued that Claimant “violated the FDCA, were non-\ncompliant with FDA guidance, and that their refusal\nto submit the prescription pet food to FDA review was\nimproper.” Pet. App. 32a. As the Eighth Circuit ex-\nplained, Respondent’ “dependence on federal law per-\nmeates the allegations such that the antitrust and un-\njust enrichment claims cannot be adjudicated without\nreliance on and explication of federal law.” Id. More-\nover, Respondent’ “prayer for relief invokes federal\njurisdiction because it seeks injunctive and declara-\ntory relief that necessarily requires the interpretation\nand application of federal law.” Id.\n Respondent filed a petition for certiorari, which this\nCourt denied. Pet. App. 59a.\n 6\n C. Respondent Amend Their Complaint In\n An Attempt To Divest The Federal Court\n Of Jurisdiction.\n On remand, nearly two years after removal, Re-\nspondents amended their complaint without leave of\ncourt, as permitted under Federal Rule of Civil Proce-\ndure 15(a). JA 118-154. The amended complaint de-\nleted references to federal law and omitted the request\nfor an injunction requiring compliance with federal\nlaw. Respondent relabeled their Missouri antitrust\nconspiracy claims as a civil conspiracy claim and\ndropped their unjust enrichment claims. The\namended complaint retained the claim under the Mis-\nsouri Merchandising Practices Act.\n Respondent simultaneously filed a “motion for dec-\nlination of supplemental jurisdiction and remand to\nstate court.” JA 3 (capitalizations omitted). Respond-\nents acknowledged that the “basis for the retention of\nthis action in federal court is supplemental jurisdic-\ntion under 28 U.S.C. § 1367,” and argued that “[t]his\nis an appropriate situation for the Court’s exercise of\nits discretion to decline supplemental jurisdiction and\nremand this case to Missouri state court.” JA 5-6. Re-\nspondents candidly stated that their motivation to\namend the complaint was to precipitate a return to\nstate court. JA 49, 57.\n Claimant opposed the motion, arguing that Re-\nspondents’ claims necessarily relied on the same theo-\nries that gave rise to federal question jurisdiction over\nthe original complaint. JA 33-38. Claimant also\nurged the District Court to exercise supplemental ju-\nrisdiction over Respondent’ remaining state-law\nclaims to prevent gamesmanship. JA 38-45.\n 7\n The District Court denied the motion to remand and\nsubsequently dismissed the amended complaint for\nfailure to state a claim. Pet. App. 38a-57a.\n D. The Eighth Circuit Holds That Respond-\n ents’ Post-Removal Amendment Divested\n The District Court Of Jurisdiction.\n 1. Respondent appealed to the Eighth Circuit, con-\ntesting only the District Court’s decision on the merits.\nAt oral argument, however, the panel sua sponte ques-\ntioned whether the District Court retained subject\nmatter jurisdiction over Respondent’ state-law\nclaims.\n Following argument, the parties submitted letter\nbriefing on that issue. Claimant argued that the fed-\neral court retained jurisdiction, citing the consistent\npractice of the courts of appeals, as well as this Court’s\ndecision in Cohill. See Claimant’ COA Letter Br. at\n1-2, 4-10. As Claimant explained, this rule prevents\nplaintiffs from manipulating “federal jurisdiction by\nartfully amending complaints in properly removed\ncases.” Id. at 1. Claimant urged the Eighth Circuit\nnot to reward “transparent forum shopping.” Id. at 10.\nRespondent disagreed. In a change of position from\nthe District Court, Respondent contended that the\nDistrict Court did not have any authority to decide\ntheir state-law claims, and the case must return to\nstate court. Respondent’ COA Letter Br. at 2 n.1.\n 2. The Eighth Circuit broke with every court of ap-\npeals to have addressed this issue—as well as the\nlongstanding precedent of this Court—and held that\nRespondent’ post-removal amendment divested the\nDistrict Court of jurisdiction over Respondent’ state-\nlaw claims.\n 8\n The Eighth Circuit concluded that the amended com-\nplaint did not raise a federal question. Pet. App. 6a-\n7a. The Eighth Circuit then held that the amended\ncomplaint “supersede[d]” the “original complaint and\nrender[ed] the original complaint without legal effect.”\nPet. App. 7a (brackets and quotation marks omitted).\nThe Eighth Circuit emphasized that, in removal cases,\nan amended complaint can cure an initial lack of juris-\ndiction. Pet. App. 9a. The panel saw “little difference,\nfrom a jurisdictional perspective, between adding a\nfederal claim in the absence of federal-question juris-\ndiction, and subtracting a claim or two, as happened\nhere, to eliminate federal-question jurisdiction.” Id.\n(citations omitted).\n The Eighth Circuit acknowledged, however, that a\ncourt would need to look “at the original complaint” to\ndetermine jurisdiction in some circumstances—such\nas if “the district court had ordered” Respondent “to\namend” “or if the decision to amend was otherwise in-\nvoluntary.” Pet. App. 7a-8a n.1 (brackets and quota-\ntion marks omitted). In those circumstances, the\nEighth Circuit recognized, a court must ignore the\namended complaint, and instead evaluate jurisdiction\nbased on the complaint at the time of removal.\n The Eighth Circuit also acknowledged prior circuit\nprecedent holding that an amended complaint delet-\ning the federal question does not divest a district court\nof jurisdiction in removal cases. Pet. App. 11a n.3 (cit-\ning McLain v. Andersen Corp., 567 F.3d 956, 965 (8th\nCir. 2009)). But the panel determined it was not\nbound by that precedent because it was “inconsistent”\nwith the circuit’s century-old decision in Highway\nConstruction Co. v. McClelland, 15 F.2d 187 (8th Cir.\n1926) (per curiam). Pet. App. 11a n.3.\n 9\n The Eighth Circuit noted that its decision broke from\nits sister circuits, which “have come out differently.”\nPet. App. 10a. According to the Eighth Circuit, those\nother circuits incorrectly “emphasized forum-manipu-\nlation concerns over jurisdictional rigor.” Id. (footnote\nomitted). The Eighth Circuit dismissed such concerns\nas inconsistent with jurisdictional “first principles,”\nincluding the rule that “all doubts about federal juris-\ndiction must be resolved in favor of remand.” Id. (quo-\ntation marks omitted). The panel stated that district\ncourts could prevent forum manipulation by withhold-\ning leave to amend a complaint “if the only reason for\nthe changes is to destroy federal jurisdiction,” without\nexplaining how a federal court could assess the “rea-\nson” for a plaintiff’s decision to amend. Pet. App. 10a\nn.2.\n Finally, in a brief paragraph, the panel held “the pos-\nsibility of supplemental jurisdiction vanished right\nalongside the once-present federal questions.” Pet.\nApp. 12a. At no point did the panel’s decision analyze\nthe text of Section 1367. Nor did the panel discuss this\nCourt’s decision in Cohill—which Claimant cited to\nthe court, which involved identical circumstances, and\nwhich confirmed that a plaintiff’s post-removal\namendment does not divest the federal court of juris-\ndiction.\n 3. The Eighth Circuit denied rehearing en banc,\nwith Judges Colloton and Shepherd dissenting. Pet.\nApp. 58a.\n This Court granted the Petition.\n SUMMARY OF ARGUMENT\n I. The amended complaint did not divest the District\nCourt of subject matter jurisdiction. Instead, accord-\ning to the text of Section 1367, as well as precedent\n 10\npredating and postdating the statute’s enactment, the\nDistrict Court retained jurisdiction over state-law\nclaims after Respondent amended the complaint to\ndelete the federal questions.\n A. This case presents a paradigmatic instance in\nwhich Congress legislated against the backdrop of a\nwealth of precedent and transplanted the “old soil”\ninto the statute. Before the enactment of Section 1367\nin 1990, this Court and lower federal courts had con-\nsistently held that a plaintiff’s post-removal amend-\nment of a complaint does not “deprive the district court\nof jurisdiction.” St. Paul Mercury, 303 U.S. at 292.\n In this Court’s landmark decision in United Mine\nWorkers of America v. Gibbs, 383 U.S. 715 (1966), the\nCourt held that a federal court could exercise pendent\njurisdiction over state-law claims deriving from the\nsame “common nucleus of operative fact” as a federal\nclaim, id. at 725. Shortly thereafter, in Rosado v. Wy-\nman, 397 U.S. 397 (1970), the Court confirmed that a\ndistrict court need not possess “jurisdiction over the\nprimary claim at all stages as a prerequisite to resolu-\ntion of the pendent claim,” id. at 405. Thus, when a\nfederal claim becomes moot, the district court can nev-\nertheless exercise jurisdiction over remaining state-\nlaw claims. See id. at 404-405.\n Building on those precedents, this Court’s decision\nin Carnegie-Mellon University v. Cohill, 484 U.S. 343\n(1988), decided the question presented here. In Cohill,\nas in this case, plaintiffs filed a complaint in state\ncourt presenting a federal question, defendants re-\nmoved, and plaintiffs then attempted to divest the fed-\neral court of jurisdiction by deleting the federal ques-\ntion from the complaint. This Court held that in those\ncircumstances, the federal court may “choose not to\n 11\ncontinue to exercise jurisdiction”—but is not required\nto do so. Id. at 351 (emphasis added). The Court em-\nphasized that a “district court can consider whether\nthe plaintiff has engaged in any manipulative tactics\nwhen it decides whether to remand a case.” Id. at 357.\n The next year, this Court decided Finley v. United\nStates, 490 U.S. 545 (1989), which addressed a sepa-\nrate question: whether a federal court could exercise\npendent jurisdiction over additional parties. The\nCourt described its approach to pendent claim juris-\ndiction as “well established,” id. at 548, but concluded\nthat federal courts could not exercise pendent jurisdic-\ntion over additional parties. Id. at 556.\n In response to Finley, Congress enacted Section\n1367, which granted federal courts expansive supple-\nmental jurisdiction. Section 1367’s text, which closely\nmirrors the language of, and codifies, Gibbs, Cohill,\nand their progeny, confirms that the post-removal\namendment of a complaint to delete federal claims\ndoes not deprive a court of supplemental jurisdiction.\n Section 1367(a) authorizes supplemental jurisdic-\ntion over “all other claims that are so related to claims\nin the action within” the court’s “original jurisdiction\nthat they form part of the same case or controversy.”\n28 U.S.C. § 1367(a). That broad grant of supplemental\njurisdiction is subject to exception only “as provided in\nsubsections (b) and (c) or as expressly provided other-\nwise by Federal statute.” Id. Under ordinary princi-\nples of statutory interpretation, this statutory lan-\nguage is a powerful indicator that Congress did not in-\ntend to include other, unenumerated exceptions to\nsupplemental jurisdiction.\n Section 1367(b) provides limited carveouts for cer-\ntain diversity cases where exercising jurisdiction\n 12\nwould defeat complete diversity requirements, none of\nwhich apply here. See id. § 1367(b). Section 1367(c)\nspecifies circumstances in which federal courts may\ndecline to exercise supplemental jurisdiction, includ-\ning if “the district court has dismissed all claims over\nwhich it has original jurisdiction.” Id. § 1367(c)(3).\nThis statutory text directly refutes the Eighth Cir-\ncuit’s theory that federal courts immediately lose ju-\nrisdiction over supplemental state-law claims the mo-\nment there is no longer a federal question.\n B. The text of Section 1367 is unambiguous, but the\nlegislative history reinforces Claimant’ reading.\nCongress passed Section 1367 based on the recommen-\ndation of a subcommittee of the Federal Courts Study\nCommittee, which designed Section 1367 to “overrule\nFinley by codifying the doctrines of pendent and ancil-\nlary jurisdiction,” and “basically restore[] the law as it\nexisted prior to Finley.” Report to the Federal Courts\nStudy Committee of the Subcommittee on the Role of\nthe Federal Courts and Their Relation to the States\n547, 561 (Mar. 12, 1990) (“Subcommittee Report”);1 see\nalso H.R. Rep. No. 101-734, at 28 (1990) (House Report\nexplaining same).\n C. Since 1990, this Court and the circuit courts have\nconsistently rejected the notion that post-removal\namendment divests a district court of its subject mat-\nter jurisdiction.\n In Rockwell International Corp. v. United States, 549\nU.S. 457 (2007), the Court explained that there are\ntwo different rules, one for cases filed in federal court\nin the first instance and another for cases removed to\n\n\n 1 Available at [URL REDACTED]\n 13\nfederal court. If “a plaintiff files a complaint in federal\ncourt and then voluntarily amends the complaint,\ncourts look to the amended complaint to determine ju-\nrisdiction.” Id. at 473-474. The Court then explained\nthat the opposite rule applies in removal cases. When\n“a defendant removes a case to federal court based on\nthe presence of a federal claim, an amendment elimi-\nnating the original basis for federal jurisdiction gener-\nally does not defeat jurisdiction.” Id. at 474 n.6 (citing\nCohill and St. Paul Mercury). That is because “re-\nmoval cases raise forum-manipulation concerns that\nsimply do not exist when it is the plaintiff who chooses\na federal forum and then pleads away jurisdiction\nthrough amendment.” Id.; see also Carlsbad Tech.,\nInc. v. HIF Bio, Inc., 556 U.S. 635, 640 (2009) (“Upon\ndismissal of the federal claim, the District Court re-\ntained its statutory supplemental jurisdiction over the\nstate-law claims.”). Until the decision below, the fed-\neral courts of appeals consistently agreed.\n D. The rule that post-removal amendments do not\ndivest a district court of jurisdiction safeguards\nagainst judge and forum shopping. Were it otherwise,\na plaintiff could always file in state court and wait for\ndefendants to remove. If the plaintiff dislikes the fed-\neral judge assigned to the case, the plaintiff could then\namend the complaint to remove the federal question\nand force a remand. This Court should not catalyze\nlitigants to so easily manipulate the judiciary.\n More fundamentally, Congress provided defendants\na right to remove cases presenting federal questions.\nAllowing a plaintiff to force a remand could risk de-\nfeating that right in practice. Where plaintiffs already\nindicated their desire to litigate federal questions by\nraising them in a complaint at the outset of a case,\n 14\nplaintiffs are likely to smuggle the federal question\nback into the litigation on remand. That is particu-\nlarly true here, where Respondent already attempted\nto artfully plead around the federal question.\n II. This Court should reject the Eighth Circuit’s out-\nlier decision, which broke from every other appellate\ncourt to have confronted this issue.\n A. The Eighth Circuit concluded that once “there is\nno longer a federal claim on which the district court\ncould exercise supplemental jurisdiction, the source of\nthe district court’s subject-matter jurisdiction ceases\nto exist.” Pet. App. 12a (brackets and quotation marks\nomitted). But this ignores the text and structure of\nSection 1367. Section 1367(c) expressly contemplates\nthat district courts may exercise supplemental juris-\ndiction even when a “district court has dismissed all\nclaims over which it has original jurisdiction.” 28\nU.S.C. § 1367(c)(3).\n Nor does 28 U.S.C. § 1447 require a remand, as Re-\nspondents suggested in their brief in opposition. See\nBIO at 28. Section 1447 provides that “[i]f at any time\nbefore final judgment it appears that the district court\nlacks subject matter jurisdiction, the case shall be re-\nmanded.” 28 U.S.C. § 1447(c). Here, the District\nCourt had subject matter jurisdiction under Section\n1367 over the supplemental state-law claims.\n B. The Eighth Circuit was wrong to conclude that\n“all doubts about federal jurisdiction must be resolved\nin favor of remand.” Pet. App. 10a (quotation marks\nomitted). Before the enactment of Section 1367, this\nCourt emphasized that “in cases involving supple-\nmental jurisdiction over additional claims between\nparties properly in federal court, the jurisdictional\n 15\nstatutes should be read broadly.” Exxon Mobil Corp.\nv. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005) (cit-\ning Finley, 490 U.S. at 549). Congress codified that\nprinciple through Section 1367(a)’s broad grant of sup-\nplemental jurisdiction, and this Court has warned\nagainst adopting “an artificial construction that is\nnarrower than what the text provides.” Id. at 558.\n C. The Eighth Circuit ignored and misconstrued\nnearly a century’s worth of federal court precedent. It\ndid not even mention Cohill. And while it cited St.\nPaul Mercury and Rockwell, the Eighth Circuit inex-\nplicably ignored what this Court actually said: A\nplaintiff’s “amendment of his pleadings” “after re-\nmoval” “does not deprive the district court of jurisdic-\ntion,” St. Paul Mercury, 303 U.S. at 292, and “an\namendment eliminating the original basis for federal\njurisdiction generally does not defeat jurisdiction,”\nRockwell, 549 U.S. at 474 n.6 (emphasis added).\n D. Finally, the Eighth Circuit is incorrect that dis-\ntrict courts can prevent judge and forum shopping\nthrough aggressive application of Rule 15. Rule 15(a)\nprovides plaintiffs one free amendment as of right.\nThat means, in every case, a plaintiff can amend a\ncomplaint and return to state court to judge-shop.\nRule 15 establishes a generous standard for amending\ncomplaints that is a poor fit for determining whether\na plaintiff is amending the complaint to engage in fo-\nrum manipulation.\n The appropriate course is to do what federal courts\nhave always done: Permit amendment but allow the\ndistrict court to retain supplemental jurisdiction.\n 16\n ARGUMENT\nI. A PLAINTIFF’S POST-REMOVAL AMEND-\n MENT OF A COMPLAINT DOES NOT DI-\n VEST A DISTRICT COURT OF JURISDIC-\n TION.\n The two questions presented boil down to one in-\nquiry: May a plaintiff in a case removed to federal\ncourt based on a federal question strip that court of\njurisdiction by amending the complaint to eliminate\nthe federal question? In a long line of precedent, this\nCourt and lower federal courts have consistently an-\nswered “no.” As this Court explained in Cohill, a fed-\neral court may continue to hear a removal case even if\nthe plaintiff “delet[es] all federal-law claims from the\ncomplaint.” 484 U.S. at 357.\n Two years after Cohill, Congress enacted Section\n1367, which provides a broad grant of supplemental\njurisdiction “over all other claims that are so related\nto claims in the action within” the court’s “original ju-\nrisdiction that they form part of the same case or con-\ntroversy under Article III.” 28 U.S.C. § 1367(a) (em-\nphasis added). The text of Section 1367 codified this\nCourt’s longstanding rules regarding pendent jurisdic-\ntion—including the rule that post-removal amend-\nments do not defeat the federal court’s jurisdiction\nover remaining state law claims. Section 1367(c) con-\nfirms in particular that federal courts retain supple-\nmental jurisdiction over state-law claims even after\nthere is no longer a federal question. See id. § 1367(c).\n Following Section 1367’s enactment, this Court and\nevery federal court of appeals to have addressed the\nquestion—including the Eighth Circuit before the out-\nlier decision below—have consistently held that plain-\ntiffs cannot evade federal jurisdiction by creatively\n 17\namending their pleadings in removal cases. Congress\nhas never touched Section 1367 in the wake of these\ndecisions. This Court should affirm that long-settled\nconsensus.\n A. Section 1367 Permits A District Court To\n Exercise Supplemental Jurisdiction.\n 1. Congress enacted Section 1367 against the\n backdrop of Gibbs, Cohill, and their progeny.\n When Congress legislates against the backdrop of\nlongstanding precedent, the text Congress enacts\n“brings the old soil with it.” George v. McDonough, 596\nU.S. 740, 746 (2022) (quotation marks omitted). Prior\nto the passage of Section 1367, a long line of cases con-\nsistently held that post-removal amendments do not\ndivest a federal court of federal question jurisdiction.\nCongress was aware of and codified this precedent\nwhen it adopted Section 1367.\n a. In 1966, this Court’s landmark decision in Gibbs\n“clarif[ied]” and “broaden[ed]” “the scope of federal\npendent jurisdiction.” Cohill, 484 U.S. at 349. Before\nGibbs, the Court had recognized the existence of pen-\ndent jurisdiction, but the precise contours of the doc-\ntrine were somewhat “murky.” Id. Gibbs “responded\nto this confusion,” id., by adopting a straightforward\nstandard: Federal courts may exercise pendent juris-\ndiction over state-law claims that “derive from a com-\nmon nucleus of operative fact” and are such “that the\nentire action before the court comprises but one con-\nstitutional ‘case.’ ” Gibbs, 383 U.S. at 725.\n Gibbs explained that “pendent jurisdiction is a doc-\ntrine of discretion, not of plaintiff’s right.” Id. at 726.\n“Its justification lies in considerations of judicial econ-\nomy, convenience and fairness to litigants * * * .” Id.\n 18\nSeveral factors guide federal courts’ exercise of this\ndiscretion, including whether “the state issues sub-\nstantially predominate.” Id. at 726-727. Gibbs stated\nthat “if the federal claims are dismissed before trial,”\neven though the district court does not lack federal\nquestion jurisdiction over the case, “the state claims\nshould be dismissed as well.” Id. at 726.\n b. Four years after Gibbs, Rosado v. Wyman, 397\nU.S. 397 (1970), clarified that interests of “judicial\neconomy, convenience, fairness, and comity” permit a\nfederal court to exercise pendent jurisdiction even if\n“all federal-law claims are eliminated before trial,” Co-\nhill, 484 U.S. at 350 n.7.\n In Rosado, a three-judge district court was convened\nto hear a constitutional claim that was later “declared\nmoot.” Rosado, 397 U.S. at 402. This Court held\nthat—even after the claim providing the three-judge\ncourt with original jurisdiction dropped out of the\ncase—the court continued to possess pendent jurisdic-\ntion over another claim.\n Rosado directly addressed and rejected the theory of\njurisdiction the Eighth Circuit adopted below in this\ncase. As Rosado explained, “jurisdiction over the pri-\nmary claim at all stages” is not “a prerequisite to res-\nolution of the pendent claim.” Id. at 405. Instead, this\nCourt found a “persuasive analogy” “in the well-set-\ntled rule that a federal court does not lose jurisdiction\nover a diversity action which was well founded at the\noutset even though one of the parties may later change\ndomicile or the amount recovered falls short of” the\namount in controversy. Id. at 405 n.6.\n c. In 1988, this Court in Cohill confronted the pre-\ncise factual pattern presented here and confirmed that\n 19\na federal court is not divested of jurisdiction over re-\nmaining state-law claims after a complaint is\namended to remove all federal claims.\n In Cohill, the plaintiffs’ complaint raised a federal\nquestion, and the defendants properly removed to fed-\neral court. Just as in this case, the plaintiffs “moved\nto amend their complaint to delete the allegations”\ngiving rise to federal question jurisdiction and “filed a\nmotion * * * to remand the suit to state court.” Cohill,\n484 U.S. at 346. This Court recognized that “when all\nfederal-law claims have dropped out of the action and\nonly pendent state-law claims remain,” the federal\ncourt may continue to exercise pendent jurisdiction. Id.\nat 348. “When the single-federal law claim in the ac-\ntion was eliminated at an early stage of the litigation,”\nthis Court explained, the district court has “a powerful\nreason to choose not to continue to exercise jurisdic-\ntion.” Id. at 351 (emphasis added). But remand is not\nrequired. Instead, federal courts should “consider and\nweigh in each case, and at every stage of the litigation,\nthe values of judicial economy, convenience, fairness,\nand comity” in deciding whether to remand. Id. at\n350.\n In Cohill, this Court expressed particular concern\nwith forum shopping. If a plaintiff seeks to “regain a\nstate forum simply by deleting all federal-law claims\nfrom the complaint and requesting that the district\ncourt remand the case,” the federal court may “guard\nagainst forum manipulation” and decline to remand.\nId. at 357.\n d. The Court’s holding in Cohill—just two years be-\nfore Congress enacted Section 1367—reflected the\noverwhelming consensus view, as demonstrated by\ndecades of precedent.\n 20\n In 1938, this Court had held in St. Paul Mercury that\na plaintiff cannot “deprive the district court of juris-\ndiction” “after removal” “by amendment of his plead-\nings,” such as by amending the complaint to decrease\nthe amount in controversy. 303 U.S. at 292; see also,\ne.g., Kirby v. Am. Soda Fountain Co., 194 U.S. 141, 146\n(1904); Cooke v. United States, 69 U.S. (2 Wall.) 218,\n218 (1864). Meanwhile, dozens of circuit and district\ncourts had held that a post-removal amendment to\neliminate a federal question did not divest a district\ncourt of subject matter jurisdiction.2\n\n\n 2 See, e.g., Rodriguez v. Comas, 888 F.2d 899, 904 n.20 (1st Cir.\n\n1989) (citing precedent holding that a “plaintiff’s voluntary dis-\nmissal of federal causes of action does not deprive federal court\nof jurisdiction over state law claims”); Hammond v. Terminal\nR.R. Ass’n of St. Louis, 848 F.2d 95, 97 (7th Cir. 1988) (“If that\ncomplaint states a claim that is removable * * * removal is not\ndefeated by the fact that, after the case is removed, the plaintiff\nfiles a new complaint, deleting the federal claim or stating a claim\nthat is not removable.”); Henry v. Indep. Am. Sav. Ass’n, 857 F.2d\n995, 998 (5th Cir. 1988) (“We note however that a plaintiff’s vol-\nuntary amendment to a complaint after removal to eliminate the\nfederal claim upon which removal was based will not defeat fed-\neral jurisdiction.”) (quotation marks omitted); Boelens v. Redman\nHomes, Inc., 759 F.2d 504, 507 (5th Cir. 1985) (“The rule that a\nplaintiff cannot oust removal jurisdiction by voluntarily amend-\ning the complaint to drop all federal questions serves the salutary\npurpose of preventing the plaintiff from being able to destroy the\njurisdictional choice that Congress intended to afford a defendant\nin the removal statute.”); see also, e.g., In re Romulus Cmty. Schs.,\n729 F.2d 431, 434 (6th Cir. 1984); In re Carter, 618 F.2d 1093,\n1101 (5th Cir. 1980); Anderson v. Allstate Ins. Co., 630 F.2d 677,\n681 (9th Cir. 1980); In re Greyhound Lines, 598 F.2d 883, 884 &\n 21\n This consensus was reflected in Wright and Miller’s\nFederal Practice and Procedure, which stated in its\n1985 edition that once “a case has been properly re-\nmoved * * * plaintiff[s] cannot successfully do any-\nthing to defeat federal jurisdiction and force a re-\nmand.” 14A Charles Alan Wright, et al., Federal Prac-\ntice and Procedure § 3721, at 213 (2d ed. 1985); see\nalso, e.g., 29 Federal Procedure: Lawyers Edition\n§ 69:116, at 590 (1984) (“[T]he generally accepted view\nappears to be that a plaintiff cannot precipitate a re-\nmand by amending the complaint so as to eliminate\nthe federal question * * * .”); Charles Alan Wright,\nHandbook of the Law of Federal Courts § 38, at 114\n(1963) (“The plaintiff cannot * * * take action to defeat\nfederal jurisdiction and force remand after the case\nhas been properly removed.”).\n e. Gibbs, Rosado, and Cohill involved pendent juris-\ndiction over additional claims against defendants who\n\n\nn.1 (5th Cir. 1979); Westmoreland Hosp. Ass’n v. Blue Cross of W.\nPa., 605 F.2d 119, 123 (3d Cir. 1979); Koufakis v. Carvel, 425 F.2d\n892, 900 (2d Cir. 1970); Hazel Bishop, Inc. v. Perfemme, Inc., 314\nF.2d 399, 403-404 (2d Cir. 1963); Direct Transit Lines, Inc. v. Lo-\ncal Union No. 406, Int’l Brotherhood of Teamsters, 199 F.2d 89,\n90 (6th Cir. 1952) (per curiam); Brown v. E. States Corp., 181 F.2d\n26, 28 (4th Cir. 1950); S. Pac. Co. v. Haight, 126 F.2d 900, 903\n(9th Cir. 1942); Price v. Highland Cmty. Bank, 722 F. Supp. 454,\n456 (N.D. Ill. 1989) (Posner, J.); Xactron Mgmt. Ltd. v. Kreepy\nKrauly U.S.A., Inc., 696 F. Supp. 1465, 1466 (S.D. Fla. 1988); El-\nlis v. Colonial Gas Co., [DOCKET REDACTED]-C, 1983 WL 30335, at *1 (D.\nMass. Nov. 21, 1983); Jacks v. Torrington Co., 256 F. Supp. 282,\n287 (D.S.C. 1966); Johnson v. First Fed. Sav. & Loan Ass’n of De-\ntroit, 418 F. Supp. 1106, 1108 (E.D. Mich. 1976); Armstrong v.\nMonex Int’l, Ltd., 413 F. Supp. 567, 569 (N.D. Ill. 1976); Comstock\nv. Morgan, 165 F. Supp. 798, 801 (W.D. Mo. 1958). But see\nSolanics v. Republic Steel Corp., 34 F. Supp. 951, 954-955 (N.D.\nOhio 1940); Fischer v. Star Co., 227 F. 955, 956 (S.D.N.Y. 1915).\n 22\nwere already facing a parallel federal claim. The year\nafter Cohill, the Court confronted the question\nwhether a federal court could exercise pendent juris-\ndiction over state-law claims against additional de-\nfendants in Finley v. United States, 490 U.S. 545\n(1989). The Court’s answer was “no.”\n Three aspects of Finley are instructive for interpret-\ning Section 1367, which Congress subsequently en-\nacted to provide for pendent party jurisdiction and to\ncodify this Court’s pendent claim precedent. First, the\nCourt in Finley declared its pendent claim precedent—\nGibbs, its predecessors, and its progeny—to be “well\nestablished,” and declined “to limit or impair” that\nprecedent. Id. at 548-556. Second, this Court under-\nstood pendent claim jurisdiction to extend “to the full\nextent permitted by the Constitution.” Id. (citing\nGibbs). Third, the Court invited Congress to weigh in,\nstating that “[w]hatever we say regarding the scope of\njurisdiction conferred by a particular statute can of\ncourse be changed by Congress,” and that “[w]hat is of\nparamount importance is that Congress be able to leg-\nislate against a background of clear interpretive rules,\nso that it may know the effect of the language it\nadopts.” Id. at 556.\n 2. Section 1367 codified Gibbs, Cohill, and their\n progeny.\n a. The text and structure of Section 1367 make clear\nthat Congress enacted it to overrule Finley and to\n“codif[y]” this Court’s pendent claim precedent—in-\ncluding the rule that a federal court may continue to\nexercise supplemental jurisdiction even after a plain-\ntiff amends a complaint to remove the federal ques-\ntion. City of Chicago v. Int’l Coll. of Surgeons, 522 U.S.\n156, 164, 172-173 (1997). Congress accomplished this\n 23\nresult by authorizing the widest possible grant of sup-\nplemental jurisdiction in the text of Section 1367,\nwhile carving out specific exceptions for certain diver-\nsity cases and codifying the pre-1990 precedent re-\ngarding a court’s authority to decline to exercise sup-\nplemental jurisdiction with language taken directly\nfrom Gibbs and its progeny.\n First, Congress conferred extremely broad supple-\nmental jurisdiction in the text of Section 1367(a).\n Subsection (a) states that, “[e]xcept as provided in\nsubsections (b) and (c) or as expressly provided other-\nwise by Federal statute, in any civil action of which\nthe district courts have original jurisdiction, the dis-\ntrict courts shall have supplemental jurisdiction over\nall other claims that are so related to claims in the ac-\ntion within such original jurisdiction that they form\npart of the same case or controversy under Article III.”\n28 U.S.C. § 1367(a) (emphasis added). In response to\nFinley, the statute provides that “supplemental juris-\ndiction shall include claims that involve the joinder or\nintervention of additional parties.” Id.\n Under Section 1367(a), there must be a “civil action”\nover which a district court has “original jurisdiction.”\nId. Once that requirement has been met, however,\nfederal courts have “supplemental jurisdiction over all\nother claims” that are “so related to claims in the ac-\ntion” that they form part of the “same case or contro-\nversy.” Id. (emphasis added). This broad grant of ju-\nrisdiction demonstrates Congress’s intent to preserve\nand expand—rather than diminish—the scope of fed-\neral courts’ authority to hear supplemental state-law\n 24\nclaims. See also 28 U.S.C. § 1441(a) (permitting re-\nmoval whenever courts “have original jurisdiction”).\n Second, Congress specified limited exceptions to sub-\nsection (a)’s broad grant of jurisdiction in diversity\ncases (none of which are at issue here). Subsection\n1367(b) prohibits district courts from exercising sup-\nplemental jurisdiction over claims “against persons\nmade parties under Rule 14, 19, 20, or 24,” and over\n“claims by persons proposed to be joined as plaintiffs\nunder Rule 19,” and persons “seeking to intervene as\nplaintiffs under Rule 24,” when “exercising supple-\nmental jurisdiction over such claims would be incon-\nsistent with the jurisdictional requirements of” diver-\nsity jurisdiction. 28 U.S.C. § 1367(b).\n Congress’s decision to include these specific, detailed\nexceptions to Section 1367(a) shows that Congress did\nnot intend for courts to impose additional, unenumer-\nated exceptions. See Allapattah, 545 U.S. at 560. It\nalso demonstrates that Congress intended Section\n1367(a)’s text to have an extremely broad sweep—so\nbroad that it would grant federal courts authority to\nexercise supplemental jurisdiction over non-diverse\nparties in a diversity action (contrary to longstanding\nprecedent), if Congress did not cabin that power. Con-\ngress thus enacted Section 1367(b) to limit the author-\nity of the federal courts with respect to non-diverse\nparties, but Congress did not place any other similar\nlimitations on the supplemental jurisdiction of the fed-\neral courts authorized by Section 1367(a).\n Third, Congress made clear that the federal courts\nmay decline supplemental jurisdiction in certain cir-\ncumstances. Section 1367(c) states that federal courts\n“may decline to exercise supplemental jurisdiction” in\nsituations including (1) when “the claim raises a novel\n 25\nor complex issue of State law,” (2) “the claim substan-\ntially predominates over the claim or claims over\nwhich the district court has original jurisdiction,” (3)\n“the district court has dismissed all claims over which\nit has original jurisdiction,” and (4) in “exceptional cir-\ncumstances” where “there are other compelling rea-\nsons for declining jurisdiction.” 28 U.S.C. § 1367(c).\nThe text of Section 1367 thus codifies pre-1990 prece-\ndent investing district courts with substantial leeway\nto determine when to exercise supplemental jurisdic-\ntion over state-law claims.\n The text of Section 1367(c)(3) is particularly signifi-\ncant: It demonstrates Congress’s intent that district\ncourts may continue to exercise supplemental jurisdic-\ntion over state-law claims even after all federal claims\nhave dropped out of the case. This text reflects Con-\ngress’s agreement that a federal court need not pos-\nsess “jurisdiction over the primary claim at all stages\nas a prerequisite to resolution of the pendent claim.”\nRosado, 397 U.S. at 405. Instead, Congress granted\nfederal courts authority under Section 1367 to con-\ntinue to exercise supplemental jurisdiction even if the\ncourt is no longer adjudicating the primary federal\nclaim. The text of Section 1367(c) thus directly refutes\nthe Eighth Circuit’s position below that federal courts\nlose jurisdiction the moment there ceases to be a fed-\neral question in the case. See Pet. App. 11a-12a.\n b. When Congress enacted Section 1367, it drew its\nlanguage directly from pre-1990 pendent jurisdiction\ncaselaw, further demonstrating Congress’s intent to\ncodify longstanding precedent.\n Subsection (a)’s broad grant of jurisdiction extends\nthe federal courts’ authority to hear state-law claims\n 26\ncomprising part of “the same case or controversy un-\nder Article III,” 28 U.S.C. § 1367(a), echoing Gibbs’s\nrule that a federal court may exercise jurisdiction over\nstate-law claims where the “entire action before the\ncourt comprises but one constitutional ‘case.’ ” Gibbs,\n383 U.S. at 726.\n Subsection (c) permits a court to “decline to exercise\nsupplemental jurisdiction,” mirroring language the\nCourt used just two years before in Cohill. 28 U.S.C.\n§ 1367(c); see Cohill, 484 U.S. at 356 (“[T]he district\ncourt may decline jurisdiction * * * .”). Meanwhile,\nSubsections (c)(2) and (c)(3) employ language taken di-\nrectly from Gibbs. Compare 28 U.S.C. § 1367(c)(2),\n(c)(3) (court should assess whether state law claim\n“substantially predominates,” and “whether the dis-\ntrict court has dismissed all claims over which it has\noriginal jurisdiction”), with Gibbs, 383 U.S. at 726-727\n(instructing district courts to consider whether “the\nstate issues substantially predominate” and whether\n“the federal claims [were] dismissed before trial”); see\nalso, e.g., Cohill, 484 U.S. at 350 n.7. And Section\n1367(c)(1)—directing courts to evaluate whether “the\nclaim raises a novel or complex issue of State law”—\ndraws from pre-1990 lower court pendent jurisdiction\nprecedent. See, e.g., United States v. Zima, 766 F.2d\n1153, 1158 (7th Cir. 1985); L.A. Draper & Son v. Whee-\nlabrator-Frye, Inc., 735 F.2d 414, 428 (11th Cir. 1984).\n “When a statutory term is obviously transplanted\nfrom another legal source, it brings the old soil with\nit.” Taggart, 587 U.S. at 560 (quotation marks omit-\nted). That is because, “absent other indication, Con-\ngress intends to incorporate the well-settled meaning\nof” the legal terminology “it uses.” Sekhar v. United\nStates, 570 U.S. 729, 732 (2013) (quotation marks\n 27\nomitted); see George, 596 U.S. at 753 (“[W]hen Con-\ngress employs a term of art, that usage itself suffices\nto adopt the cluster of ideas that were attached to each\nborrowed word in the absence of indication to the con-\ntrary.”) (brackets and quotation marks omitted). By\ninvoking Gibbs and its progeny, Congress incorpo-\nrated the well-developed jurisprudence regarding\nwhen a court may exercise jurisdiction after the fed-\neral claim has dropped out of a case—including the\nspecific rule at issue here, that a federal court may\n“guard against forum manipulation” and decline to re-\nmand state-law claims when a plaintiff amends a com-\nplaint in an effort to strip a federal court of jurisdic-\ntion. Cohill, 484 U.S. at 357.\n The Court should honor Congress’s intent to codify\nestablished precedent, especially where the Court in\nFinley expressly invited Congress to act, and Congress\ndid so the very next year. Adopting any other inter-\npretative approach would perversely penalize Con-\ngress for responding to this Court’s invitation.\n B. Legislative History Confirms That Con-\n gress Codified Gibbs, Cohill, And Their\n Progeny.\n The text of Section 1367 is unambiguous and decides\nthis case. Cf. Allapattah, 545 U.S. at 567 (declining to\nconsider legislative history with respect to a different\nquestion involving Section 1367 after concluding text\nwas clear). The legislative history of Section 1367 also\nconfirms, however, that Congress codified the existing\nrules into Section 1367.\n Congress enacted Section 1367 at the recommenda-\ntion of a subcommittee of the Federal Courts Study\nCommittee. The text of Section 1367 “is based sub-\n 28\nstantially” on the subcommittee’s proposal. Allapat-\ntah, 545 U.S. at 569. The subcommittee’s report ex-\nplained that Section 1367 was designed to “overrule\nFinley by codifying the doctrines of pendent and ancil-\nlary jurisdiction,” and “basically restores the law as it\nexisted prior to Finley.” Subcommittee Report, supra,\nat 547, 561; see id. at 557-558 n.26 (citing Cohill in\ndescribing this Court’s precedent); id. at 560 (“We rec-\nommend that Congress codify this case law * * * .”).\nTo accomplish this goal, the subcommittee proposed a\nstatute that “supplies a general background rule fa-\nvoring supplemental jurisdiction.” Id. at 560. That\nbroad grant of jurisdiction ceases to apply only “if Con-\ngress specifie[s] a contrary rule.” Id. at 560-561.\n The House Report states that “the Supreme Court\nhas virtually invited Congress to codify supplemental\njurisdiction * * * in Finley.” H.R. Rep. No. 101-734, at\n28. The report describes Section 1367 as authorizing\n“jurisdiction in a case like Finley, as well as essentially\nrestor[ing] the pre-Finley understandings of the au-\nthorization for and limits on other forms of supple-\nmental jurisdiction.” Id. It notes that Section 1367(c)\n“codifies the factors that the Supreme Court has rec-\nognized as providing legitimate bases upon which a\ndistrict court may decline jurisdiction over a supple-\nmental claim.” Id. at 29.3\n If there were any doubt, the drafting history of Sub-\nsection (c)(3) shows that it was meant to codify the rule\n\n 3 In Allapattah, this Court declined to rely on a footnote in the\n\nHouse Report that contradicted Section 1367’s plain text and the\nsubcommittee’s report. See Allapattah, 545 U.S. at 569. The op-\nposite is true here: The text of Section 1367, the subcommittee’s\nanalysis, and the House Report are in accord, and confirm that\nCongress intended to codify longstanding precedent.\n 29\nthat the post-removal amendment of a complaint does\nnot deprive the federal court of jurisdiction.\n The subcommittee of the Federal Courts Study Com-\nmittee had originally proposed slightly different lan-\nguage for Subsection (c). See Subcommittee Report,\nsupra, at 568. Professors Arthur Wolf and John Egnal\nthen recommended adding language similar to what\nnow appears in Subsection (c)(3), which requires a fed-\neral court to consider whether it “has dismissed all\nclaims over which it has original jurisdiction” when\ndetermining whether to exercise supplemental juris-\ndiction. See Federal Courts Study Committee Imple-\nmentation Act and Civil Justice Reform Act: Hearing\non H.R. 5381 and H.R. 3898 Before the Subcomm. on\nCts., Intell. Prop. & the Admin. of Just. of the H.\nComm. on the Judiciary, 101st Cong. 688 (1990)\n(“House Hearing”); see H.R. Rep. No. 101-734, at 63\nn.13 (thanking Wolf and Egnal). Wolf and Egnal ex-\nplained to the committee that dismissal “may be for a\nvariety of reasons including lack of personal jurisdic-\ntion, failure to state a claim upon which relief can be\ngranted, and a voluntary withdrawal of the claim.”\nHouse Hearing, supra, at 694 (emphasis added).\n In sum, the legislative history explains that Con-\ngress intended to codify this Court’s pre-1990 prece-\ndent, reinforcing the conclusion that the District Court\nretained jurisdiction over Respondent’ state-law\nclaims even after Respondent amended their com-\nplaint.\n 30\n C. Following Enactment Of Section 1367,\n This Court And Every Circuit Court Has\n Understood Federal Courts To Retain\n Supplemental Jurisdiction After Amend-\n ment Of A Complaint.\n Following the enactment of Section 1367, this Court\nand the courts of appeals—including the Eighth Cir-\ncuit before this case—have consistently concluded that\npost-removal amendments do not divest a federal\ncourt of jurisdiction. The Court should affirm this\nwidespread consensus.\n 1. In Rockwell International Corp. v. United States,\n549 U.S. 457 (2007), the Court confirmed that if a\nplaintiff attempts to manufacture a remand by\namending a complaint in a removal case, the district\ncourt may continue to exercise supplemental jurisdic-\ntion over the non-federal claims.\n Justice Scalia’s opinion for the Court in Rockwell in-\nterpreted the False Claims Act’s statutory bar on a\nfederal court exercising “jurisdiction” in a qui tam ac-\ntion based on publicly disclosed information, unless\nthe relator was the original source “of the information\non which the allegations are based,” 549 U.S. at 467\n(quotation marks omitted). In Rockwell, the relator\ninitially pleaded allegations for which he was the orig-\ninal source, but subsequently “prevailed” “based upon\npublicly disclosed allegations.” Id. The Court con-\nfronted the question whether only the “original com-\nplaint” needed to meet the original source require-\nment, or whether an amended complaint also needed\nto be based on original source information. Id. at 473.\nAfter analyzing the statute’s text, the Court held that\nthe False Claims Act’s original source requirement ap-\n 31\nplied to an amended complaint, too. Otherwise, a re-\nlator could “plead a trivial theory of fraud for which he\nhad some direct and independent knowledge and later\namend the complaint to include theories copied from\nthe public domain.” Id.\n The Court explained that its interpretation of the\nFalse Claims Act paralleled a rule for federal question\ncases filed directly in federal court. “[W]hen a plaintiff\nfiles a complaint in federal court and then voluntarily\namends the complaint, courts look to the amended\ncomplaint to determine jurisdiction.” Id. at 473-474\n(citing Wellness Cmty.-Nat’l v. Wellness House, 70 F.3d\n46, 49 (7th Cir. 1995), and Boelens v. Redman Homes,\nInc., 759 F.2d 504, 508 (5th Cir. 1985)). But Rockwell\nemphasized that the opposite rule applies to removal\ncases like this one, citing Cohill and St. Paul Mercury.\n“[W]hen a defendant removes a case to federal court\nbased on the presence of a federal claim, an amend-\nment eliminating the original basis for federal juris-\ndiction generally does not defeat jurisdiction.” Id. at\n474 n.6 (emphasis added) (citing Cohill, 484 U.S. at\n346, 357, and St. Paul Mercury, 303 U.S. at 293).\n“[R]emoval cases raise forum-manipulation concerns\nthat simply do not exist when it is the plaintiff who\nchooses a federal forum and then pleads away juris-\ndiction through amendment.” Id.\n 2. In addition, in two other cases, this Court reaf-\nfirmed that a federal court may exercise supplemental\njurisdiction when the federal claim has dropped out of\nthe case in some fashion. These cases further refute\nthe Eighth Circuit’s notion that a federal court’s sup-\nplemental jurisdiction must be continually sustained\nby a live federal question.\n 32\n a. In Osborn v. Haley, 549 U.S. 225 (2007), the Court\nconfirmed that, so long as a case involves a federal\nquestion at the time of removal, the court may con-\ntinue to exercise supplemental jurisdiction throughout\nthe litigation.\n Osborn involved the Westfall Act, which permits the\nfederal government to remove state-law tort cases\nagainst federal employees and substitute the United\nStates as a defendant. The Attorney General must\nfirst certify that the federal employee acted in the\nscope of his or her employment. Id. at 229-230. The\ndistrict court then reviews the certification, may disa-\ngree with the Attorney General, and can decline to\nsubstitute the United States. Id. at 230. Even in cases\nwhere a district court declines to substitute the United\nStates as a party, however, the Westfall Act’s text does\nnot permit a remand to state court. Id. at 243.\n The Court held that the Westfall Act’s rule preclud-\ning remand complied with Article III’s limits on fed-\neral question jurisdiction. “Because a significant fed-\neral question (whether [the employee] has Westfall\nAct immunity) would have been raised at the outset,\nthe case would ‘arise under’ federal law, as that term\nis used in Article III.” Id. at 244-245 (brackets omit-\nted). The Court cited Cohill, Gibbs, and Section 1367\nas “precedent that guides us,” and explained that\n“[e]ven if only state-law claims remained after resolu-\ntion of the federal question, the District Court would\nhave discretion, consistent with Article III, to retain\njurisdiction.” Id. at 245. In the context of the Westfall\nAct, “[c]onsiderations of judicial economy, convenience\nand fairness to litigants * * * make it reasonable and\nproper for a federal court to proceed to final judgment,\n 33\nonce it has invested time and resources.” Id. (quota-\ntion marks omitted).\n b. In Carlsbad Technology, Inc. v. HIF Bio, Inc., 556\nU.S. 635 (2009), the Court again reiterated that a fed-\neral court may exercise supplemental jurisdiction af-\nter the federal claims have dropped out of a case—in\nthat case, due to dismissal.\n There, the plaintiffs’ complaint alleged violations of\nboth state and federal law, and defendants removed to\nfederal district court. Id. at 636. After the district\ncourt dismissed the only federal claim, it remanded to\nstate court. Id. at 637. The question before this Court\nwas whether the court of appeals could review the dis-\ntrict court’s remand order, which turned on whether\nthe remand was “based on lack of subject matter juris-\ndiction” or was instead discretionary. Id. at 637. To\nanswer that question, the Court explained that\n“[u]pon dismissal of the federal claim, the District\nCourt retained its statutory supplemental jurisdiction\nover the state law-claims.” Id. at 640. As a result, the\ndistrict court’s “decision declining to exercise that\nstatutory authority was not based on a jurisdictional\ndefect but on its discretionary choice not to hear the\nclaims despite its subject-matter jurisdiction over\nthem,” which meant that the circuit court could review\nthe remand order on appeal. Id. at 640-641.\n 3. Finally, since 1990, the courts of appeals—includ-\ning the Eighth Circuit before the outlier decision be-\nlow—have consistently held that a plaintiff may not\nstrip a federal court of jurisdiction by strategically\n 34\namending a complaint after removal.4 To the con-\ntrary, in that situation federal courts retain subject\nmatter jurisdiction over supplemental claims. Under\nSection 1367, courts may either “permit the amend-\nment, but * * * retain jurisdiction,” or may choose to\n“exercise their discretion to remand.” 14C Charles\nAlan Wright, et al., Federal Practice and Procedure\n§ 3722 (4th ed. June 2024 update); see 16 Moore’s Fed-\neral Practice § 107.72[2] (2024) (“Remand is not re-\nquired * * * .”).\n This law is so well-established that Respondent did\nnot challenge it in the District Court. After amending\ntheir complaint, Respondent argued that the District\nCourt should decline to exercise supplemental juris-\ndiction. JA 5-6, 55. But Respondent never doubted\nthat the federal court could adjudicate their state-law\nclaims. In short, a long string of precedent supports\nClaimant’ position. Ruling for Respondent would\n\n\n 4 See Ortiz-Bonilla v. Federación de Ajedrez de P.R., Inc., 734\n\nF.3d 28, 36 (1st Cir. 2013); Ching v. Mitre Corp., 921 F.2d 11, 13-\n14 (1st Cir. 1990); Gale v. Chicago Title Ins. Co., 929 F.3d 74, 78\nn.2 (2d Cir. 2019); Collura v. City of Philadelphia, 590 F. App’x\n180, 184 (3d Cir. 2014) (per curiam); Harless v. CSX Hotels, Inc.,\n389 F.3d 444, 448 (4th Cir. 2004); Clewis v. Medco Health Sols.,\nInc., 578 F. App’x 469, 471 (5th Cir. 2014) (per curiam); Harper\nv. AutoAlliance Int’l, Inc., 392 F.3d 195, 210-211 (6th Cir. 2004);\nTaylor v. First of Am. Bank-Wayne, 973 F.2d 1284, 1287-88 (6th\nCir. 1992); Prince v. Rescorp Realty, 940 F.2d 1104, 1105 n.2 (7th\nCir. 1991); McLain v. Andersen Corp., 567 F.3d 956, 965 (8th Cir.\n2009); Sparta Surgical Corp. v. Nat’l Ass’n of Sec. Dealers, Inc.,\n159 F.3d 1209, 1213 (9th Cir. 1998), abrogated on other grounds\nby Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, 578\nU.S. 374, 379 & n.1 (2016); Behlen v. Merrill Lynch, 311 F.3d\n1087, 1095 (11th Cir. 2002).\n 35\ncause a sea change in the law.5 This Court should re-\nject that result and reverse the Eighth Circuit. See\nNewman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826,\n833 (1989) (“[W]e are reluctant to disturb this well-\nsettled judicial construction, particularly when there\nis no evidence that this authority has been\nabused * * * .”).\n D. Section 1367’s Broad Grant Of Supple-\n mental Jurisdiction Prevents Games-\n manship.\n As this Court explained in Cohill, the longstanding\nrule that a plaintiff’s amendment does not defeat sup-\nplemental jurisdiction in removal cases—a rule now\ncodified in Section 1367—is critical to preventing\ngamesmanship. See Cohill, 484 U.S. at 357. A con-\ntrary rule would facilitate both judge and forum shop-\nping.\n Start with the concerning specter of judge shopping,\nwhich would be present in every case. If Respondent\nprevail, a plaintiff could plead a federal claim in state\ncourt, wait for defendants to remove, and if the plain-\ntiff dislikes the federal judge to whom the case is as-\nsigned, amend the complaint to return to state court.\nThis tactic would be extremely troubling. Plaintiffs\nshould not be able to game who decides their case. In-\ndeed, if a plaintiff files a case in federal court in the\n\n\n 5 Ruling for Respondent would destabilize related precedent\n\ntoo, such as cases holding that amending a complaint to remove\nclass allegations does not defeat removal jurisdiction under the\nClass Action Fairness Act. See, e.g., In Touch Concepts, Inc. v.\nCellco P’ship, 788 F.3d 98, 101-102 (2d Cir. 2015); In re Burling-\nton N. Santa Fe Ry. Co., 606 F.3d 379, 380-381 (7th Cir. 2010)\n(per curiam).\n 36\nfirst instance, dismisses it, and refiles in an attempt\nto draw a new judge, federal courts assign the dis-\nmissed case to the original judge to prevent this un-\nseemly gambit. See, e.g., C.D. Cal. Loc. Rule 83-1.2.2;\nE.D Cal. Loc. Rule 123(d); D.D.C. Loc. Civ. Rule\n40.5(a)(4), (c)(1)-(2); E.D. Wis. Civ. Loc. Rule 3(b)(4).\nPlaintiffs should not be free to judge-shop in removal\ncases.\n Other possibilities for “forum manipulation” are\nequally concerning. Cohill, 484 U.S. at 357. For ex-\nample, if a plaintiff anticipates receiving an imminent\nadverse ruling from a federal court, the plaintiff could\nseek to amend a complaint and force a snap remand.\nOr a plaintiff could seek to amend a complaint and re-\nturn to state court to evade recent, adverse federal\nprecedent.\n More fundamentally, permitting a plaintiff to divest\na federal court of removal jurisdiction would, in many\ncircumstances, frustrate the right to remove that Con-\ngress afforded defendants. See 28 U.S.C. § 1441(a).\nWhere a plaintiff has pleaded a federal question at the\noutset of a case, there is good reason to doubt the\nplaintiff will truly abandon it. Instead, even if the\nplaintiff amends her complaint supposedly to excise\nthe federal question, the plaintiff may attempt to\nsmuggle the federal question back into the case on re-\nmand—especially because the plaintiff continues liti-\ngating the same nucleus of operative facts. At that\npoint, the defendant can remove again—raising the\nconcerning specter of the same case ping-ponging be-\ntween state and federal court. See id. § 1446(b)(3).\n The risk of a plaintiff reraising federal issues is par-\nticularly salient in a lawsuit such as this one, where\n 37\nat the case’s inception Respondent attempted to art-\nfully plead around federal question jurisdiction by\npleading only state-law causes of action, despite re-\npeatedly referencing federal law and seeking an in-\njunction that would have required Claimant to com-\nply with federal law. After Claimant removed to fed-\neral court, Respondent again attempted to plead\naround federal question jurisdiction by excising refer-\nences to federal law in the complaint, despite com-\nplaining about the same alleged actions by Petition-\ners. All the while, Respondent have not been shy that\nthey seek to forum shop and evade federal court. See\nJA 49, 57. If and when Respondent do reraise the\nfederal question in some fashion on remand, for in-\nstance by seeking discovery on it, Claimant will be\nforced to seek removal yet again—and will have lost\ntheir right to be in federal court during the time the\ncase proceeded in state court. See 28 U.S.C. § 1441(a).\n ***\n The Court may thus resolve this case by ruling for\nClaimant on either question presented. In a removal\ncase, a federal court should evaluate whether it has\nfederal question jurisdiction at the time of removal,\nand if the answer is yes, it may continue to “exercise\nsupplemental jurisdiction over the accompanying\nstate law claims” even if the complaint is later\namended. Int’l Coll. of Surgeons, 522 U.S. at 165. To\nbe clear, Claimant are not arguing that a district\ncourt must retain the case in these circumstances. See\nid. at 172. Rather, Claimant are arguing that—con-\nsistent with the text and structure of Section 1367, in\n 38\naddition to copious precedent—a district court may ex-\nercise supplemental jurisdiction to prevent precisely\nthe gambit Respondent attempted here.6\nII. THE EIGHTH CIRCUIT’S APPROACH IS\n FUNDAMENTALLY WRONG.\n The decision below is an extreme outlier that funda-\nmentally misinterprets the text and structure of Sec-\ntion 1367, while ignoring decades of precedent and the\nimportant policy justifications underpinning that\nprecedent.\n A. The Eighth Circuit’s Approach Ignores\n Statutory Text And Structure.\n The Eighth Circuit concluded that “when there is no\nlonger a federal claim on which the district court could\nexercise supplemental jurisdiction, the source of the\ndistrict court’s subject-matter jurisdiction ceases to\nexist” and the “only option now is state court.” Pet.\nApp. 12a (brackets and quotation marks omitted); see\nid. (“[T]he possibility of supplemental jurisdiction van-\nished right alongside the once-present federal ques-\ntions.”). The Eighth Circuit reached that conclusion\nby supposedly relying on “[j]urisdictional first princi-\nples.” Id. at 10a. The court’s analysis, however, ig-\nnores both the text and structure of Section 1367.\n Strikingly, the Eighth Circuit’s opinion does not\neven quote any of the text of Section 1367, much less\n\n\n 6 In the District Court, Respondent agreed the court could ex-\n\nercise supplemental jurisdiction and chose not to challenge juris-\ndiction until the Eighth Circuit raised the issue sua sponte. Re-\nspondents have never advanced—and therefore forfeited—any\nargument that the exercise of supplemental jurisdiction would\nhave been an abuse of discretion.\n 39\nanalyze how that provision’s text and structure an-\nswer the questions presented. As Claimant have ex-\nplained, see supra pp. 23-24, Section 1367(a)’s grant of\nsupplemental jurisdiction is expansive. Meanwhile,\nSection 1367(b) delineated exceptions to supplemental\njurisdiction for diversity cases confirm Congress in-\ntended the statute to sweep broadly—and did not in-\ntend for courts to apply new, unwritten rules restrict-\ning supplemental jurisdiction in removal cases. See\nsupra p. 24.\n Section 1367(c)(3), moreover, expressly rebuts the\nEighth Circuit’s conclusion that once “there is no\nlonger a federal claim,” the “only option” is state court.\nPet. App. 12a (brackets and quotation marks omitted).\nIf that were true, federal courts would also lack juris-\ndiction over supplemental state-law claims after dis-\nmissing a plaintiff’s federal claims, including based on\nArticle III concerns, as in Rosado. But Congress con-\ncluded otherwise, providing that district courts “may\ndecline to exercise supplemental jurisdiction” where\n“the district court has dismissed all claims over which\nit has original jurisdiction”—but are not required to do\nso. 28 U.S.C. § 1367(c)(3) (emphasis added).\n In their brief in opposition (at 28), Respondent at-\ntempted to fill in the gap in the Eighth Circuit’s anal-\nysis by focusing on 28 U.S.C. § 1447. But nothing in\nthat provision conflicts with the conclusion that the\nDistrict Court retained supplemental jurisdiction over\nRespondent’ state-law claims. Section 1447 states\nthat a “motion to remand the case on the basis of any\ndefect other than lack of subject matter jurisdiction\nmust be made within 30 days after the filing of the no-\ntice of removal.” 28 U.S.C. § 1447(c). By contrast, “[i]f\nat any time before final judgment it appears that the\n 40\ndistrict court lacks subject matter jurisdiction, the\ncase shall be remanded.” Id.\n But the District Court did not ever lack subject mat-\nter jurisdiction over this removal case. It possessed\nfederal question jurisdiction based on the original\ncomplaint at the time of removal. Supplemental juris-\ndiction additionally provided continued “subject-mat-\nter jurisdiction over” the “state-law claims.” Carlsbad,\n556 U.S. at 639. “[P]ostremoval events” thus “d[id] not\ndeprive” the “federal court[] of subject-matter jurisdic-\ntion.” Powerex Corp. v. Reliant Energy Servs., Inc.,\n551 U.S. 224, 232 n.1 (2007); see Wis. Dep’t of Corr. v.\nSchacht, 524 U.S. 381, 390 (1998). Indeed, in St. Paul\nMercury, this Court rejected the notion that a simi-\nlarly worded statute required remand when a plaintiff\namends his complaint to alter the allegations that\noriginally provided the court with jurisdiction, and in-\nstead held that a court retains its subject matter juris-\ndiction post-amendment. 303 U.S. at 287, 293.\n At the certiorari stage, Respondent (at 28) also ad-\nvanced an argument based on the statutory evolution\nof Section 1447(c). Prior to November 1988, Section\n1447(c) stated that a court “shall remand the case” if\n“it appears that the case was removed improvidently\nand without jurisdiction.” 28 U.S.C. 1447(c) (1982).\nRespondent argued that this prior language required\nfederal courts to remand only if they lacked jurisdic-\ntion at the time of removal, and that under the prior\nlanguage courts could thus continue to exercise sup-\nplemental jurisdiction after removal even if there\nceased to be a federal question. According to Respond-\nents, because Congress later changed the language of\nSection 1447(c), which no longer uses the phrase “was\nremoved,” the current version of Section 1447(c) no\n 41\nlonger authorizes federal courts to continue to exercise\nsupplemental jurisdiction when there is no longer a\nfederal question in the case.\n That logic does not hold up. Section 1447(c) specifies\nthe procedures courts follow after removal. It is not,\nand never was, a grant or withdrawal of jurisdiction.\nIn Cohill, this Court explained that the prior version\nof Section 1447 had no bearing on whether and when\na court should retain jurisdiction post-amendment.\nSee Cohill, 484 U.S. at 354 (“[T]he removal statute\ndoes not address specifically any aspect of a district\ncourt’s power to dispose of pendent state-law claims\nafter removal * * * .”); id. at 355 n.11 (“[T]he remand\nauthority conferred by the removal statute and the re-\nmand authority conferred by the doctrine of pendent\njurisdiction overlap not at all.”). Respondent thus\nread too much into the change between the pre- and\npost-1988 text of Section 1447(c). See Spear Mktg.,\nInc. v. BancorpSouth Bank, 791 F.3d 586, 592 (5th Cir.\n2015) (concluding in a 2015 decision that “[w]hen\n§ 1447(c) is read in its entirety, it is clear that this rule\ndoes nothing more than specify the time in which re-\nmands for jurisdictional or procedural defects may be\ninstituted; it contains no substantive provisions what-\nsoever”).\n Indeed, since the 1988 amendment to Section\n1447(c), courts have continued to exercise jurisdiction\nin this context. See supra p. 34 n.4. Congress has re-\npeatedly amended other aspects of Section 1447 with-\nout modifying that widespread practice—confirming\nCongress’s acceptance of a rule that federal courts\nhave followed for decades. See Removal Clarification\nAct of 2011, Pub. L. No. 112-51, § 2, 125 Stat. 545, 546;\nUnited States District Court: Removal Procedure,\n 42\nPub. L. No. 104-219, § 1, 110 Stat. 3022, 3022 (1996);\nJudicial Improvements, Pub. L. No. 102-198, § 10, 105\nStat. 1623, 1626 (1991); Lorillard v. Pons, 434 U.S.\n575, 580 (1978).7\n B. The Eighth Circuit’s Approach Is Incon-\n sistent With The Interpretive Principles\n That Apply To Supplemental Jurisdic-\n tion Statutes.\n After ignoring the text and structure of Section 1367,\nthe Eighth Circuit proclaimed that its position was\njustified because “all doubts about federal jurisdiction\nmust be resolved in favor of remand.” Pet. App. 10a\n(quotation marks omitted). But that is not the rule\nthat applies when cases are removed to federal court.\nBoth before and after the enactment of Section 1367,\nthis Court has emphasized that federal courts have ex-\npansive jurisdiction over supplemental claims in cases\nremoved to federal court. Resolving “all doubts” in fa-\nvor of a remand is fundamentally inconsistent with\nthat broad authority.\n In Gibbs, this Court rejected an “unnecessarily\ngrudging” approach to supplemental jurisdiction, ex-\nplaining that “the impulse is toward entertaining the\nbroadest possible scope of action consistent with fair-\nness to the parties; joinder of claims, parties and rem-\nedies is strongly encouraged.” 383 U.S. at 724-725.\nCongress codified this Court’s expansive approach into\n\n\n 7 The limited legislative history on this provision confirms that\n\nCongress did not intend the 1988 amendment to Section 1447(c)\nto modify the rules that apply “after disposition of all federal\nquestions leaves only State law questions that might be decided\nas a matter of ancillary or pendent jurisdiction or that instead\nmight be remanded.” H.R. Rep. No. 100-889, at 72 (1988).\n 43\nSection 1367, and this Court has continued to cite\nGibbs for “the interpretive principle that, in cases in-\nvolving supplemental jurisdiction over additional\nclaims between parties properly in federal court, the\njurisdictional statutes should be read broadly.” Al-\nlapattah, 545 U.S. at 553.\n In Allapattah, the Court stated it would “not give ju-\nrisdictional statutes a more expansive interpretation\nthan their text warrants,” but emphasized that “it is\njust as important not to adopt an artificial construc-\ntion that is narrower than what the text provides.” Id.\nat 558. The Eighth Circuit failed to apply that inter-\npretive principle. Instead, it incorrectly put a thumb\non the scale against federal-court jurisdiction over\nsupplemental claims, something this Court has re-\npeatedly instructed the lower courts not to do.\n C. The Eighth Circuit’s Approach Both Ig-\n nores And Misinterprets Relevant Prece-\n dent.\n The Eighth Circuit’s approach is also flatly incon-\nsistent with longstanding federal precedent.\n The Eighth Circuit completely ignored Cohill. The\ncourt cited St. Paul Mercury for the proposition that\nchanges “to the actual facts on the ground” do not de-\nfeat jurisdiction. Pet. App. 8a. But the Eighth Circuit\nnever engaged with what this Court actually said in\nthat case: “amendment of [the] pleadings” “after re-\nmoval” does “not deprive the district court of jurisdic-\ntion.” St. Paul Mercury, 303 U.S. at 292 (emphasis\nadded). Meanwhile, the Eighth Circuit cited Rockwell\nfor the distinction between “the state of things” and\nthe “alleged state of things.” Pet. App. 8a-11a (quoting\nGale v. Chi. Title Ins. Co., 929 F.3d 74, 77-78 (2d Cir.\n2019), in turn quoting Rockwell, 549 U.S. at 473). But\n 44\na crucial footnote in Justice Scalia’s decision for the\nCourt explains that this distinction does not apply\nwhen a plaintiff amends a federal complaint post-re-\nmoval. See Rockwell, 549 U.S. at 474 n.6. The Eighth\nCircuit’s opinion nowhere addresses, much less ex-\nplains, why it failed to follow that clear prescription.\n The Eighth Circuit’s analysis of circuit precedent\nfares no better. For example, the decision below cites\nthe Eleventh Circuit’s ruling in Pintando v. Miami-\nDade Housing Agency, 501 F.3d 1241 (11th Cir. 2007)\n(per curiam), for the proposition that when a plaintiff\namends a complaint, courts look to the allegations in\nthe “amended complaint” to determine the court’s ju-\nrisdiction. Id. at 1243. Yet the Eighth Circuit over-\nlooked the key footnote in Pintando, which—citing the\nkey footnote in Rockwell—explains that “[c]ases re-\nmoved from state to federal court * * * are treated dif-\nferently,” and “[i]n those cases, the district court must\nlook at the case at the time of removal to determine\nwhether it has subject-matter jurisdiction.” Id. at\n1243 n.2. Under Eleventh Circuit precedent, later\n“changes to the pleadings do not impact the court’s ex-\nercise of supplemental jurisdiction.” Id. (citing Rock-\nwell, 549 U.S. at 474 n.6). The same is true of the Sec-\nond Circuit’s decision in Gale, which the Eighth Cir-\ncuit quoted but which contains a similar footnote ex-\nplaining its inapplicability in this context. 929 F.3d at\n78 n.2.\n The Eighth Circuit also cited Bernstein v. Lind-\nWaldock & Co., 738 F.2d 179 (7th Cir. 1984) (Posner,\nJ.), for the proposition that a plaintiff’s voluntary\namendment can cure a lack of jurisdiction in a case\nimproperly removed by a defendant. According to the\n 45\nEighth Circuit, this means voluntary amendment nec-\nessarily strips jurisdiction in a properly removed case.\nPet. App. 9a; see BIO at 27.\n But Bernstein explains why courts treat these dis-\ncrete circumstances differently. In that case, after los-\ning a motion to remand, the plaintiff amended his com-\nplaint to clearly state a federal question. Bernstein,\n738 F.2d at 182. Judge Posner explained that a plain-\ntiff who files an amended complaint invoking federal\nquestion jurisdiction is “bound to remain there.” Id.\nat 185. “Otherwise * * * if he won his case on the mer-\nits in federal court he could claim to have raised the\nfederal question in his amended complaint voluntar-\nily, and if he lost he could claim to have raised it invol-\nuntarily and to be entitled to start over in state court.”\nId.; see Akin v. Ashland Chem. Co., 156 F.3d 1030,\n1036 (10th Cir. 1998); Brough v. United Steelworkers\nof Am., AFL-CIO, 437 F.2d 748, 750 (1st Cir. 1971). As\nBernstein demonstrates, the settled rules that govern\nthis area of the law are tailored to specific concerns.\nThis Court should not disrupt them.\n Indeed, even the Eighth Circuit agreed that in at\nleast some removal cases, a court must assess jurisdic-\ntion solely on the basis of the original complaint at the\ntime of removal: “if the district court had ordered”\namendment “or if the decision to amend [was] other-\nwise involuntary.” Pet. App. 7a-8a n.1 (brackets and\nquotation marks omitted); see In re Atlas Van Lines,\nInc., 209 F.3d 1064, 1067 (8th Cir. 2000) (explaining\nan amendment is involuntary if the complaint would\notherwise be dismissed). The Eighth Circuit offered\nno rationale for accepting that procedural rule, but re-\njecting the long-established rule that a post-removal\n 46\namendment does not divest a federal court of jurisdic-\ntion.\n Finally, the Eighth Circuit’s decision mangled its\nown precedent. According to the decision below, the\npanel was required to follow the 1926 decision in High-\nway Construction Co. v. McClelland, 15 F.2d 187, 188\n(8th Cir. 1926) (per curiam). But that decision in-\nvolved a case removed to federal court under diversity\njurisdiction, where the complaint was amended to add\ntwo non-diverse defendants. See id. This Court ex-\nplained in Finley that “pendent-party jurisdiction” in-\nvolves a “fundamentally different” question than pen-\ndent claim jurisdiction. 490 U.S. at 549. Congress rec-\nognized that fact by carving out exceptions from the\nbroad grant of supplemental jurisdiction in Section\n1367(a) for situations where non-diverse parties are\nadded to cases heard under a court’s diversity jurisdic-\ntion. See 28 U.S.C. § 1367(b); see also id. § 1447(e).\n The Eighth Circuit was thus wrong to conclude it\nwas bound by the century-old ruling in Highway Con-\nstruction, which involved a completely different legal\nquestion that was expressly addressed in the text of\nSection 1367(b). Instead, the Eighth Circuit should\nhave followed its precedent holding that—when a\nplaintiff amends his complaint to remove a federal\nquestion—jurisdiction “is determined at the time of re-\nmoval,” and the court has “discretion to exercise sup-\nplemental jurisdiction over remaining state-law\nclaims.” McLain, 567 F.3d at 965 (quotation marks\nomitted).\n 47\n D. The Eighth Circuit’s Approach Vastly Un-\n derestimates The Potential For Games-\n manship.\n The Eighth Circuit mistakenly concluded that dis-\ntrict courts could police against “forum manipula-\ntion”—the concern that animated St. Paul Mercury,\nCohill, and Rockwell—by declining “leave to amend”\nunder Federal Rule of Civil Procedure 15 “if the only\nreason for the changes is to destroy federal jurisdic-\ntion.” Pet. App. 10a n.2.\n Rule 15 does not solve the problem. For starters,\nRule 15(a) permits a plaintiff to amend “once as a mat-\nter of course.” Fed. R. Civ. P. 15(a). At a minimum,\nthat means every plaintiff can engage in judge shop-\nping by amending the complaint and returning to\nstate court. See supra pp. 35-36. That alone is deeply\nconcerning. Moreover, because Rule 15(a) allows one\nfree amendment, in every removed federal question\ncase, the district court would now be forced to analyze\nthe complaint to assess jurisdiction at least two\ntimes—once when the defendant removes and once\nmore when the plaintiff amends. In a case where the\nplaintiff has attempted to artfully plead to avoid fed-\neral question jurisdiction under Gunn, that may be no\neasy task. And if the plaintiff attempts to smuggle the\nfederal issues back into the case on remand, it may ef-\nfectively defeat the defendant’s right of removal. See\nsupra pp. 36-37.\n This case provides a cautionary tale of how ruling for\nRespondent will waste resources and needlessly pro-\nlong proceedings. This case went on for nearly two\nyears—and included an interlocutory trip to the court\nof appeals—before Respondent exercised their right\n 48\nto amend. Should Respondent’ gambit succeed, all\nthat threshold litigation will have been wasted.\n The problems do not end there: Rule 15 requires\ncourts to “freely” permit an amendment. Fed. R. Civ.\nP. 15(a)(2). This generous standard is a poor fit for a\nsearching inquiry into a plaintiff’s motivations for\namendment, and raises numerous questions: What if\na plaintiff has mixed motives? Can a plaintiff whose\namendment is denied then challenge the denial on ap-\npeal? If so, how does a court police against a plaintiff\nwho wants to have it both ways and only challenges\nthe denial if he loses on the merits? See Bernstein, 738\nF.2d at 185-186. How would an order declining to pro-\nvide leave to amend interact with the rule—which the\nEighth Circuit recognized, see Pet. App. 7a-8a n.1—\nthat involuntary amendments do not modify jurisdic-\ntion?\n The judiciary will not benefit from district courts\nwrestling with new procedural issues—many of which\nwould be unreviewable by appellate courts. See 28\nU.S.C. § 1447(d). It is better to leave this developed\narea of the law intact and avoid disturbing the over-\nwhelming practice that has guided federal courts for\ndecades. The Eighth Circuit’s decision is a monumen-\ntal outlier, and it should be reversed.\n 49\n CONCLUSION\n For the foregoing reasons, the Eighth Circuit’s deci-\nsion should be reversed and the case remanded for a\ndecision on the merits of Respondent’ appeal.", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n A good jurisdictional rule paints with clean lines:\ncomplete diversity; more than $75,000 in controversy;\nthe well-pleaded complaint rule. Some rules, if\nincapable of being completely clearcut, at least strive\nfor discernable standards: injury in fact; minimum\ncontacts. Just one jurisdictional rule is so subjective\nand chaotic that an opinion of the Court compared it\nto a “canvas . . . that Jackson Pollock got to first.”\nGunn v. Minton, 568 U.S. 251, 258 (2013). The rule, of\ncourse, is the test for “arising under” jurisdiction.\n In 1916, when Jackson Pollock was four years old,\nJustice Holmes supplied a clean interpretation of the\njurisdiction-conferring statutory text: “A suit arises\n 2\nunder the law that creates the cause of action.”\nAmerican Well Works Co. v. Layne & Bowler Co., 241\nU.S. 257, 260 (1916). This Court has been flinging\npaint on the canvas ever since. The current test\nencompasses state-law claims that implicate a “federal\nissue [that] is: (1) necessarily raised, (2) actually\ndisputed, (3) substantial, and (4) capable of resolution\nin federal court without disrupting the federal-state\nbalance approved by Congress.” Gunn, 568 U.S. at 258.\nThe first two prongs have little case law, and the\nsecond two are hopelessly indeterminate.\n This case is exhibit A. In February of 2019,\nRespondent and Geraldine Brewer alleged\nMissouri-law claims by Missouri citizens against\nMissouri defendants based on antitrust, unjust enrich-\nment, and deceptive marketing. The original complaint’s\nfacts section alleged that the pet food companies\nviolated the Food, Drug, and Cosmetic Act (FDCA),\nsold misbranded products, dominated the market, and\ncolluded on misrepresenting ordinary pet food as a\nprescription product, among other acts.\n The district court held that no claim was federal, but\nthe Eighth Circuit reversed, holding that the Missouri\nantitrust and unjust enrichment claims—but not the\nconsumer deception claim based on the same facts—\nwere federal. Because the federal violations were\nperipheral to the case, Respondent amended their\ncomplaint, stripping them out from the facts section\nand cutting the antitrust and unjust enrichment\nclaims altogether, but adding civil conspiracy. This\ntime, the district court found federal jurisdiction for\njust the civil conspiracy count, but the Eighth Circuit\nagain reversed. The jurisdictional skirmishes have\nconsumed more than five years of judicial resources for\na case that remains at the starting gate.\n 3\n Inconsistent, years-long litigation over federal\njurisdiction occurs throughout the federal courts.\nGrable is unworkable, and its test is far inferior to the\nAmerican Well Works standard. Scholars and lower\ncourts have criticized its incoherence for years. This\nCourt should take this opportunity to overturn it.\n If the Court retains Grable, it should either reaffirm\nMerrell Dow or affirm that amended complaints\nsupersede old complaints for purposes of jurisdiction\njust as for every other purpose. The only real\njustification Claimant provide for departing from\nthat rule are vague “forum manipulation” fears that do\nnot occur now and, of course, have no bearing on the\nmeaning of a jurisdictional statute’s text. Jurisdiction\nshould turn on clear rules and first principles, not\nchimerical policy concerns.\n STATEMENT OF THE CASE\n A. Pet food companies deceive consumers\n with bogus “prescription” foods.\n This action is about overpriced pet food. Claimant, Nestlé Purina Petcare Co., and other\nnon-defendant pet food makers marketed so-called\n“Prescription Pet Food” to treat certain conditions.\nThey have agreed among themselves to require a\nveterinarian’s “prescription” before consumers may\npurchase it, to mimic the experience of purchasing an\nactual prescription product. Real prescription medica-\ntions are regulated by state laws governing the practice\nof medicine and Food and Drug Administration regula-\ntions which require rigorous testing for safety and\nefficacy. The active ingredient in prescription medica-\ntion is, in general, not available without a prescription.\nAccordingly, prescription products command high prices.\n 4\n The pet food prescriptions at issue in this suit are\nbogus—there is no basis in any law for requiring\nprescriptions, there is no FDA review of safety or\nefficacy, and pet food with the same ingredients can be\npurchased without a prescription. The companies\nmisrepresent the Prescription Pet Food as:\n (a) a substance medically necessary to health;\n (b) a drug, medicine, or other controlled\n ingredient; (c) a substance that has been eval-\n uated by the FDA as a drug; (d) a substance\n as to which the manufacturer’s representa-\n tions regarding intended uses and effects\n have been evaluated by the FDA; and (e) a\n substance legally required to be sold by pre-\n scription. Prescription Pet Food is none of these.\nJ.A. 75 (original complaint); J.A. 129-30 (amended).\nThe companies agreed among themselves to impose\nsimilar “prescription” requirements, reducing competition\nand conditioning consumers to accept their misrepre-\nsentations. Consumers believe these misrepresentations,\npaying more for “prescription” chow.\n This conduct is not only deceptive, but also violates\nfederal law. The complaint alleges in detail that each\n“prescription” pet food purports to prevent or treat\nspecific conditions. J.A. 82-83 (quoting claims such as\nimproving “Renal Health,” “intestinal health,” or\n“glucose fluctuations”). The FDCA classifies products\nthat purport to treat diseases as drugs, and imposes a\nbevy of safety and quality requirements. There is no\nreal question that Claimant are violating these\nprovisions. Take it from the FDA:\n [M]ost dog and cat food products that claim on\n their labels or in their labeling or other\n manufacturer communications to treat or\n 5\n prevent disease are not approved new animal\n drugs, and do not comply with drug registra-\n tion and listing requirements, or with current\n good manufacturing practices applicable to\n drugs even though the products are drugs\n under the FD&C Act.\nFDA, Compliance Policy Guide, § 690.150 Labeling\nand Marketing of Dog and Cat Food Diets Intended to\nDiagnose, Cure, Mitigate, Treat, or Prevent Diseases at\n4 (Apr. 2016); see J.A. 89 (citing this policy).\n Respondent (the “pet owners”) purchased “prescrip-\ntion” pet food on the understanding that it was a\nprescription product, included medicine to treat their\npets’ maladies, and had undergone FDA-reviewed\ntesting. They paid more based on those beliefs. They\nbrought a putative class action, alleging claims under\nthe Missouri Antitrust Law, J.A 105-08, the Missouri\nMerchandising Practices Act (“MMPA”), J.A. 108-11,\nand unjust enrichment common law, J.A. 112-14.\n B. Pet owners file a complaint with only\n Missouri-law claims, but the Eighth Circuit\n holds that their case “arise[s] under”\n federal law.\n After the pet owners filed suit in Kansas City,\nMissouri, Purina removed, invoking federal-question\njurisdiction. Pet. App. 60a. The pet owners moved to\nremand. They explained that no federal issue in the\ncase was necessary to any claim or substantial. The\ndistrict court agreed, examining each claim and\nconcluding that each “can be evaluated with reference\nonly to state law.” Pet. App. 21a. The companies\nsought interlocutory review under 28 U.S.C. § 1453(c).\n The Eighth Circuit granted the petition and reversed.\nIt recognized the similarity of this case to Merrell Dow\n 6\nPharmaceuticals Inc. v. Thompson, 478 U.S. 804 (1986),\nsince both cases involved state-law causes of action\nthat invoke violations of the FDCA as a theory of\nliability. Pet. App. 30a. It noted that the FDCA\nprovisions at issue had no private right of action, as\nMerrell Dow had emphasized. Pet. App. 31a. But\nMerrell Dow “merely include[d] a violation of federal\nlaw as an element of the offense, without other reliance\non federal law.” Id. (emphasis added). The proper test,\nin the Eighth Circuit’s view, came from Grable, 545\nU.S. 308, and turned entirely on whether “a federal\nforum may entertain a state law claim implicating\na disputed and substantial federal issue ‘without\ndisturbing any congressionally approved balance of\nfederal and state judicial responsibilities.’” Pet. App.\n31a (quoting Grable, 545 U.S. at 314).\n The Eighth Circuit applied that interest-balancing\ntest by assessing the gestalt of the complaint, finding\nit, in a word, federal enough. The MMPA claims need\n“not depend on federal law,” but the antitrust and\nunjust enrichment claims were too federal since they\n“included no fewer than 20 paragraphs” addressing\nFDCA violations. Pet. App. 31a. The complaint alleged\n“that defendants violated the FDCA, were non-\ncompliant with FDA guidance, and that their refusal\nto submit the prescription pet food to FDA review was\nimproper.” Pet. App. 32a. The court particularly\nfocused on the prayer for relief, seizing on paragraph\n138, which, among eleven paragraphs of other remedies,\nmentioned federal law once, in the alternative. 1 After\n\n 1\n That paragraph requests an order “enjoining Defendants to\ncomply with all federal and Missouri provisions applicable to the\nmanufacturer of such drugs, or alternatively, enjoining Defendants\nfrom making the disease treatment claims on the packaging of\nPrescription Pet Food.” J.A. 115 (emphasis added). The court\n 7\nconveying the federal feel of the complaint—but\nwithout examining whether each claim could be\nproved by reference only to state law, as the district\ncourt had done—the Eighth Circuit concluded that the\naction arose under federal law.\n C. Pet owners file an amended complaint\n with fewer Missouri-law claims, which the\n Eighth Circuit holds does not arise under\n federal law.\n Back in district court, the pet owners filed an\namended complaint as of right under Rule 15(a),\nexcising the antitrust and unjust enrichment counts\nentirely, but adding civil conspiracy allegations that\nwould support joint and several liability for the MMPA\nclaim. J.A. 118. Next, they moved to remand. This\ntime, the district court denied remand with cryptic\nreasoning that the amended claims put at issue\nwhether “a prescription was required,” for which\n“federal law must be examined.” Pet. App. 44a. Since\nit found federal question jurisdiction for the amended\nclaims, it did not address supplemental jurisdiction.\nThe district court dismissed all claims under Rule 12,\nand the pet owners appealed.\n Again, the Eighth Circuit reversed. Judge Stras,\nwriting for a unanimous panel, first addressed the\namended complaint. The MMPA claim and the civil\nconspiracy claim, he explained, did “not necessarily\nraise a substantial federal issue” because they are\n“based on the . . . [theory that] the manufacturers\nmisled pet owners into believing that prescription pet\n\n\nomitted the “alternative” language, eliding the key “necessarily\nraised” inquiry. Compare Pet. App. 32a with J.A. 115.\n 8\nfood legally required a prescription,” and so “there is\nnothing federal about it.” Pet. App. 6-7a.\n Second, the panel explained why the amended\ncomplaint controlled over the original complaint. It\nstarted with the black-letter rule that amended com-\nplaints supersede original complaints. Pet. App. 7a.\nThat is why amended complaints can create federal\nquestion jurisdiction that was originally lacking.\nNext, it plumbed the “subtle” distinctions between the\n“state of things” at the time of filing and the “alleged\nstate of things.” Pet. App. 8-9a. Jurisdiction is\ndetermined by the facts at the time of filing (the\ncitizenship of the parties, the amount in controversy,\nthe minimum contacts with the forum, a plaintiff’s\ninjury in fact), rather than the facts at some other\ntime. Pet. App. 9a. But an amended complaint is not\namending the alleged facts as of the amendment, but\nrather is amending the plaintiff’s allegations about\nwhat facts were true at the time of filing. In the\nparlance of the Federal Rules, the allegation “relates\nback.” Fed. R. Civ. P. 15(c)(1). This principle stretched\nback “nearly 100 years.” Pet. App. 11a. The panel\nacknowledged that some circuits disagreed, chiefly\nbased on “forum-manipulation concerns” of the sort\nClaimant and their amici reprise here, but it applied\n“jurisdictional rigor,” declining the invitation “to apply\na one-way forum-manipulation ratchet.” Pet. App. 10a.\n Third, the panel rejected supplemental jurisdiction.\nPet. App. 11-12a. This holding flowed from the\nprevious one: with no federal question in the case, this\nwas not a “civil action of which the district courts have\noriginal jurisdiction,” and so 28 U.S.C. § 1367(a) does\nnot apply. Pet. App. 12a.\n This Court granted certiorari.\n 9\n SUMMARY OF THE ARGUMENT\n This Court should hold that an action arises under\nfederal law only when federal law creates the cause of\naction. Well-reasoned cases for many decades consist-\nently held that when state law incorporates federal\nlaw, there is no federal question. State law could\nincorporate a dissenting opinion of this Court as\nreadily as federal law, but whatever it incorporates\nremains state law. A case does not come into being, or\narise under, federal law where state law creates the\ncause of action.\n That clear rule was in force from the earliest cases\nuntil the unprincipled departure in Smith v. Kansas\nCity Title & Trust Co., 255 U.S. 180 (1921). Without\nbriefing, on an expedited schedule, the Court in Smith\nfailed to cite the wealth of on-point precedent and gave\nerroneous descriptions of the cases it did cite. After\nSmith, this Court upheld federal-question jurisdiction\nin Grable, crafting an unworkable test that turns on\nthe necessity and substantiality of a disputed federal\nquestion the adjudication of which will not disrupt\nthe proper balance of federal and state courts. 545 U.S.\nat 318.\n The lower court decisions in this case illustrate\nGrable’s pitfalls. The embedded federal issues are\nplainly not substantial and may not even be disputed.\nNo federal issue is necessary, since the pet owners\ncould prevail on each claim without them. Placing\nordinary state-law claims like these into federal court\nupsets the federal and state court balance. That the\nEighth Circuit reversed the district court twice\ndemonstrates how difficult Grable is to apply.\n Stare decisis cannot save Grable. Its reasoning is\nunpersuasive. Its standard is entirely unworkable. No\n 10\none modifies their primary behavior based on Grable.\nOverturning it will save decades of pointless litigation\nwith minimal offsetting costs. Since 1875, when Congress\nfirst enacted the analog to section 1331, this Court has\nupheld arising-under jurisdiction of purely state-law\ncases a grand total of four times. The expensive game\nof bogging federal courts down in extensive jurisdic-\ntional litigation is plainly not worth the candle.\n If the Court nonetheless retains Grable, the plain\ntext of sections 1367 and 1331 compel affirmance.\nUnder section 1367, this appeal turns on whether this\n“civil action” is one over “which the district courts have\noriginal jurisdiction.” 28 U.S.C. § 1367(a). To exercise\nsupplemental jurisdiction over state-law claims, there\nmust be “claims in the action” that arise under federal\nlaw. And the operative complaint, not an abandoned\npleading, determines which claims are “in the action.”\nCongress knows how to focus on the “initial pleading”\nto determine jurisdiction, cf. 28 U.S.C. § 1446(c)(2), but\nit did not do so here.\n Black-letter law teaches that an amended complaint\nreplaces and supersedes the original complaint. Rule\n15(c) explains that amendments relate back to the\ntime of filing. This means that when sections 1331,\n1332, and 1367 refer to a civil action in the present\ntense, they refer to the amended complaint. Even\nClaimant agree that the amended complaint controls\nfor complete diversity, original federal-question cases,\nand removed federal-question cases where an\namendment adds a federal claim. There is no textual\nbasis for consulting the initial complaint only for\nremoved federal-question cases where an amendment\neliminates the federal claims.\n Amendments are different from dismissals. Where\na court dismisses a claim, it remains in the action and\n 11\ncan be appealed. But when a claim is voluntarily\namended away, it is truly gone and cannot be appealed.\n Claimant’ pre-1367 case law, legislative history,\nand policy arguments are insufficient and unpersua-\nsive. The Cohill case’s discussion of amendment was\ndicta, and the issue was neither briefed nor decided\nthere. Moreover, Congress codified Cohill’s holding in\nsection 1367(c)(3), which allows discretionary remand\nwhere “the district court has dismissed all claims over\nwhich it has original jurisdiction.” 18 U.S.C. § 1367(c)(3).\nThat language does not apply to amendments, which\nis why Claimant are forced to rely on the intentions\nof two law professors and their proposed, unenacted\nversion of the statute. It should be settled by now that\nthose sorts of atextual materials do not say what the\nlaw is.\n Free-floating forum manipulation concerns do not\ndefine the statutory text either. Regardless, Claimant’\nrule would not stop any manipulation, since plaintiffs\ncould file originally in federal court (and then amend\naway the federal issues), or, after removal, they could\nvoluntarily dismiss under Rule 41 (and then refile in\nstate court). Either would allow the very manipula-\ntion Claimant fear, no matter how this Court rules in\nthis case. The only serious forum manipulation\nproblem is defendants’ meritless removal efforts.\n ARGUMENT\n I. The Court Should Restore Clarity To\n Federal Jurisdiction By Overturning Grable.\n The Eighth Circuit’s first opinion finding federal-\nquestion jurisdiction when it is so clearly lacking is\nconfirmation that Grable offers an unworkable test.\nThis case is indistinguishable from Merrell Dow, and\nthe federal issues are not even arguably necessary to\n 12\nany claim. Yet the Eighth Circuit found jurisdiction—\nand this happens all the time. Applications of Grable\nare among the most frequently reversed determina-\ntions in the federal courts. Scholars cannot reconcile\nthe cases. Litigants cannot predict how courts will\nrule. The result is years of pointless litigation over\njurisdiction, burdening courts and litigants alike. It is\ntime to call the experiment of federal-question\njurisdiction over state-law causes of action a failure\nand embrace Justice Holmes’s test.\n A. The Holmes rule is correct.\n Legal claims created by a given source of law arise\nunder that law only, because the law that creates a\nclaim is authoritative on its scope. The text of section\n1331 confers “original jurisdiction of all civil actions\narising under the Constitution, laws, or treaties of the\nUnited States.” 28 U.S.C. § 1331. Aside from a now-\nremoved amount in controversy requirement, that text\nis indistinguishable from the words Justice Holmes\nconstrued from the Jurisdiction and Removal Act of\n1875. The “common usage of the word ‘arise’” is “‘come\ninto being; originate’ or ‘spring up.’” Jones v. R.R.\nDonnelley & Sons Co., 541 U.S. 369, 382-83 (2004)\n(quoting American Heritage Dictionary 96 (4th ed.\n2000); Black’s Law Dictionary 138 (rev. 4th ed. 1968);\nOxford English Dictionary 629 (2d ed. 1989)). The\nquestion, then, is whether a claim created by state law\ncan “come into being,” or “originate” or “spring up” from\nfederal law merely because state law directs that\nfederal law shall somehow be relevant to the merits.\n The answer is no. This Court explained why in an\n1893 dispute over land, Miller’s Executors v. Swann,\n150 U.S. 132 (1893). There, an 1856 Act of Congress\nconferred land for building railroads, permitting resale\nonly after a certification on the progress of construction.\n 13\nId. at 135. In turn, Alabama granted the land to a\nrailroad company, allowing resale only “in accordance\nwith” federal law. Id. The hapless railroad quickly\nresold the land and became insolvent, leading creditors to\ncontest the sale as void because no certification on\nconstruction progress had been made. Even though\nthe federal certification requirement was dispositive,\nthis Court held that the state-law suit did not arise\nunder federal law:\n The question is not what rights passed to the\n state under the acts of Congress, but what\n authority the railroad company had under the\n statute of the State. The construction of such\n a statute is a matter for the state court . . . .\n The fact that the state statute and the\n mortgage refer to certain acts of Congress as\n prescribing the rule and measure of the rights\n granted by the state does not make the\n determination of such rights a Federal\n question. A State may prescribe the proce-\n dure in the Federal courts as the rule of\n practice in its own tribunals; it may authorize\n the disposal of its own lands in accordance\n with the provisions for the sale of the public\n lands of the United States; and in such cases\n an examination may be necessary of the acts\n of Congress, the rules of the Federal courts,\n and the practices of the Land Department,\n and yet the questions for decision would not\n be of a Federal character.\nId. at 136-37 (emphasis added).\n This logic arose in multiple opinions, most famously\nauthored by Justice Holmes. The Court rejected\nfederal question jurisdiction over a state-law claim\nthat turned on a federal-law issue because “[t]he state\n 14\nlaw is the sole determinant of the conditions supposed,\nand its reference elsewhere for their fulfilment is like\nthe reference to a document that it adopts and makes\npart of itself. The suit is not maintained by virtue of\nthe Act of Congress, but by virtue of the Louisiana\nstatute that allows itself to be satisfied by that act.”\nLouisville & Nashville R.R. Co. v. W. Union Tel. Co., 237\nU.S. 300, 303 (1915). This stream of cases is why\nAmerican Well Works could be so pithy: “A suit arises\nunder the law that creates the cause of action.” 241\nU.S. at 260. The reason for this holding was the insight\nthat “[t]he State is master of the whole matter,” and\nfederal law plays a role in such cases only insofar as it\ncan be enforced as state law. Id.\n This reasoning is powerful and persuasive. In this\ncase—as in all Grable-style cases—federal law would\nbe inert and irrelevant to the claim but for a provision\nof state law that gives it force. It is the state sovereign\nthat causes everything—federal or otherwise—to “spring\nup” in the dispute. State law can incorporate as a rule\nof decision the Uniform Commercial Code, another\nstate’s law, federal law, international standards, federal\nlaw as of 1925, federal law as construed by a dissenting\njustice of this Court, or myriad other options; whatever\nis incorporated becomes, for that purpose, state law. To\nbe sure, federal law as federal law can limit or entirely\nblock a state-law claim, but chiefly as a preemption\ndefense under the Supremacy Clause, which turns on\nstatutory law made in pursuance of the Constitution,\ni.e. on statutory law enacted by Congress, not a state.\nArt. vi, cl. 2. And “a suit brought upon a state statute\ndoes not arise under” the Supremacy Clause where\n 15\npreemption is raised as a defense. Gully v. First Nat’l\nBank, 299 U.S. 109, 116 (1936) (emphasis added). 2\n B. The cases that departed from American\n Well works were poorly reasoned.\n The cases that abandoned Justice Holmes’s rule\ngave weak justifications (where they gave any at all).\nThe original sin was Smith v. Kansas City Title & Trust\nCo., 255 U.S. 180 (1921), an expedited, high-stakes case\nin which shareholders sued to enjoin corporate officers\nfrom purchasing federal farm-loan bonds on the theory\nthat the bonds were constitutionally infirm. Both\nparties supported federal jurisdiction. Id. at 199.\n The Court breezily noted that the “general rule is”\nto uphold jurisdiction “where it appears from the\n[pleadings] . . . that the right to relief depends upon\nthe construction or application of the Constitution or\nlaws of the United States.” Id. That is not the general\nrule—recall Miller’s Executors and Louisville & Nashville\nR.R., where relief depended upon federal law. Next,\nthe Court bulldozed the well-pleaded complaint rule,\nquoting that a “case . . . consists of the right of the one\nparty, as well as of the other” and so there is arising\nunder jurisdiction “whenever its correct decision depends\non the construction” of federal law.” Id. (quoting\nCohens, 19 U.S. (6 Wheat) at 379). Cohens upheld\njurisdiction “only in its appellate form,” which has\n\n 2\n This Court’s appellate jurisdiction from state courts follows a\ndifferent rule. A federal defense “may appear in the progress of\nthe case” in state court, grounding “jurisdiction [that] can be\nexercised only in its appellate form.” Cohens v. Virginia, 19 U.S.\n(6 Wheat.) 264, 394 (1821); see also Anthony J. Bellia Jr., The\nOrigins of Article III “Arising Under” Jurisdiction, 57 Duke L.J.\n263, 338 (2007); cf. 28 U.S.C. § 1257 (authorizing writs of certiorari\nfrom state courts without a well-pleaded complaint rule).\n 16\nnever been subject to the well-pleaded complaint\nrule, but Smith ignored that. Last, Smith cited the\nnotorious case Pollock v. Farmers’ Loan & Trust Co., as\nsupporting jurisdiction, omitting that jurisdiction was\nsecure in Pollock as “a controversy between citizens of\ndifferent states.” 157 U.S. 429, 675 (1895), modified,\n158 U.S. 601 (1895).\n Justice Holmes’s trenchant dissent explained again\nwhy embedded federal issues—embedded only because a\nstate sovereign chose to embed them—cannot support\njurisdiction: “If the Missouri law authorizes or forbids\nthe investment according to the determination of this\nCourt upon a point under the Constitution or Acts of\nCongress, still that point is material only because the\nMissouri law saw fit to make it so. The whole\nfoundation of the duty is Missouri law, which at its sole\nwill incorporated the other law as it might incorporate\na document. The other law or document depends for its\nrelevance and effect not on its own force but upon the\nlaw that took it up, so I repeat once more the cause of\naction arises wholly from the law of the State. . . . [S]o\nit has been decided by this Court again and again.”\nSmith, 255 U.S. at 214-15 (Holmes J., dissenting)\n(citing cases). Indeed, Justice Holmes declared: “I\nknow of no decisions to the contrary.” Id. at 215.\n Underscoring how aberrational Smith was, the\nCourt essentially ignored it for decades. In 1934, the\nCourt held that a Kentucky statute that incorporated\nfederal laws “for the safety of employees” as its standard\nof care did not present a federal question. Moore v.\nChesapeake & Ohio Ry. Co., 291 U.S. 205, 213 (1934)\n(not citing Smith). In Gully, the Court rejected\narising-under jurisdiction because “the right . . . is one\ncreated by the state” 299 U.S. at 116. Afterwards, it\nmused on “[a]nother line of reasoning,” riffing on\n 17\n“kaleidoscopic situations” and “disputes that are\nnecessary” versus “merely possible.” Id. at 117-18.\nWhatever end of the kaleidoscope one looks through,\nthe holding followed from the Holmes rule.\n The next case after Smith to squarely confront and\nuphold federal jurisdiction came some 70 years later\nin Grable. Regrettably, “no one [] asked [the Court] to\noverrule [Smith] and adopt the rule Justice Holmes set\nforth.” 545 U.S. at 320 (Thomas J., concurring).\nInstead, the Court added new, indeterminate factors to\nassess whether the case “arise[s] under” federal law,\nrequiring the federal issue to be necessarily raised,\nactually disputed, substantial, and of the type that\nfederal courts can decide “without disturbing any\ncongressionally approved balance of federal and state\njudicial responsibilities.” Id. at 314. That test, suppos-\nedly, explained why Merrell Dow correctly decided that\nthere was no “arising under” jurisdiction. Id. at 318.\n The Court has not upheld federal question jurisdic-\ntion under Grable since Grable itself, though it has\nneeded to clarify that no federal jurisdiction exists\nover an embedded federal question in an attorney\nmalpractice suit, Gunn, 568 U.S. at 258, or over a\nsubrogation claim in the context of insurance for\nfederal employees, Empire Healthchoice Assurance,\nInc. v. McVeigh, 547 U.S. 677, 682 (2006). No doubt\neach area of law will need its own case.\n C. The Grable standard is unworkable.\n Scholars and judges have long lamented the incoher-\nence of this Court’s federal question jurisdiction case\nlaw. This case supplies a vivid illustration of how\ndifficult Grable is to apply for lower courts. Not only\ndoes this case flunk all four prongs of Grable, but the\nvarious courts that examined the question have also\n 18\ndisagreed among themselves on a hodgepodge of\nissues, with no pattern to explain the discord and no\nintelligible principle to apply in future cases.\n 1. Grable is widely acknowledged to be\n unworkable.\n The Grable test injects confusion and imponderables\ninto what should be a clear rule. Other than necessity,\nno factor is determinate. How could any court tell\nwhat issues are “actually disputed” based only on the\nwell-pleaded complaint? As for whether an issue is\n“substantial,” the Court has offered little guidance.\nDoes it matter if the question is difficult? If a large\namount of money is at stake? If the party seeks an\ninjunction? The fourth factor—the congressionally\napproved balance between federal and state court\nresponsibilities—is, at best, a finger in the wind.\nCourts consult no facts about the volume of particular\nkinds of cases, and this Court has not said whether the\ninquiry is historical (examining the traditional role of\nstate and federal courts), descriptive (examining the\ncurrent role of state and federal courts), based wholly\non congressional intent (and so ignoring tradition and\nthe interests of state courts), or some other principle.\nStrangest of all, the open-ended inquiry required by\nGrable confers no discretion—review is de novo.\n It is bad enough for any rule of law to be malleable\nand difficult to apply, but as a jurisdictional rule,\nGrable is calamitous. “Jurisdictional rules should be\nclear.” Direct Mktg. Ass’n v. Brohl, 575 U.S. 1, 14 (2015)\n(quoting Grable, 545 U.S. at 321 (Thomas, J., concurring)).\n“Complex jurisdictional tests,” of which Grable is the\nepitome, “complicate a case, eating up time and money\nas the parties litigate, not the merits of their claims,\nbut which court is the right court to decide those\nclaims.” Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010).\n 19\n“Complex tests produce appeals and reversals, encourage\ngamesmanship, and, again, diminish the likelihood\nthat results and settlements will reflect a claim’s legal\nand factual merits. Judicial resources too are at stake.\nCourts have an independent obligation to determine\nwhether subject-matter jurisdiction exists, even when\nno party challenges it. So courts benefit from straight-\nforward rules under which they can readily assure\nthemselves of their power to hear a case.” Id. (citations\nomitted). “Predictability is valuable to corporations”\nand “also benefits plaintiffs deciding whether to file\nsuit in a state or federal court.” Id. at 94-95.\n Few deny the force of these critiques. The Court has\ncompared Grable’s rule to a “Jackson Pollock” painting.\nGunn, 568 U.S. at 258. Despite Autumn Rhythm’s\nimportance in the world of art, in the sphere of law the\nanalogy was hardly a compliment. Justice Thomas has\ncalled Grable’s rule “anything but clear” and expressed\neagerness “to reconsider” it. Grable, 545 U.S. at 321\n(Thomas J., concurring). Lower courts cry out for\nclarity. See, e.g., Almond v. Capital Props., 212 F.3d 20,\n22 (1st Cir. 2000) (calling this a “remarkably tangled\ncorner of the law”); Hartland Lakeside Joint No. 3 Sch.\nDist. v. WEA Ins. Corp., 756 F.3d 1032, 1033 (7th Cir.\n2014) (Easterbrook, J.) (“Grable announced a multifactor\napproach that has been hard to use consistently.”).\nLegal scholars have been unsparing in their criticism. 3\n\n\n 3\n Daniel J. Meltzer, Jurisdiction and Discretion Revisited, 79\nNotre Dame L. Rev. 1891, 1915 (2004) (departing from Justice\nHolmes’ view “comes at too high a price in uncertainty”); Linda R.\nHirshman, Whose Law Is It, Anyway? A Reconsideration of\nFederal Question Jurisdiction over Cases of Mixed State and\nFederal Law, 60 Ind. L.J. 17, 72 (1985) (The test, “resting on an\nunreliable ad hoc analysis about the federal quality of each\ndispute, was always an unprincipled and unsatisfying solution,”\n 20\n Since the test is indeterminate but appellate review\nis de novo, it should be no surprise that the reversal\nrate is sky-high. One study found that federal\njurisdiction findings rooted in embedded federal issues\nwere reversed 65% of the time. 4 Another study found\nreversal rates of 55%. 5 Counsel is aware of no other\narea of law in which district courts and courts of\nappeals disagree more often than not. These numbers\nrepresent decades of fruitless litigation, benefitting no\none except appellate attorneys. The two appellate\nreversals in this case match the trend.\n Perhaps the most objectionable aspect of this juris-\nprudential failure story is how minimal the benefits of\n\n\nand “courts should turn, or return, to the straightforward analysis\nset forth by Justice Holmes.”); Simona Grossi, A Modified Theory\nof the Law of Federal Courts: The Case of Arising-Under\nJurisdiction, 88 Wash. L. Rev. 961, 1019 (2013) (Calling Grable’s\nrule “inconsistent with the rule of law principle, for it designs a\ncompletely unpredictable and unworkable procedure”); David P.\nCurrie, The Federal Courts and the American Law Institute: Part\nII, 36 U. Chi. L. Rev. 268, 268 (1969) (lamenting that “nobody\nknows how to define” federal question jurisdiction); Suzanna\nSherry, Logic Without Experience: The Problem of Federal Appellate\nCourts, 82 Notre Dame L. Rev. 97, 140 (2006) (“The Grable test for\nembedded federal questions is a quintessential open-ended ‘consider\neverything’ standard offering neither guidance nor constraints.”);\nDouglas D. McFarland, The True Compass: No Federal Question\nin a State Law Claim, 55 U. Kan. L. Rev. 1, 1 (2006) (Grable is the\nissue “that has caused the most analytical difficulty for the\nallocation of jurisdiction over the past [half] century”).\n 4\n Note, Mr. Smith Goes to Federal Court: Federal Question\nJurisdiction Over State Law Claims Post-Merrell Dow, 115 Harv.\nL. Rev. 2272, 2280 (2002).\n 5\n See John F. Preis, Jurisdiction and Discretion in Hybrid Law\nCases, 75 U. Cin. L. Rev. 145, 165 (2006).\n 21\nthe Grable rule are. “In cases lacking a federal cause\nof action, the Supreme Court has clearly upheld\njurisdiction under §1331 in only four instances 6 . . . .\nEven in the lower courts, rather few decisions uphold\njurisdiction in such cases.” Richard H. Fallon Jr. et al.,\nThe Federal Courts and the Federal System 836 (7th\ned. 2015) (“Hart & Wechsler”) (emphasis added). And\nso, the question, from Hart & Wechsler: “is the game\nworth the candle?” Id. It is not. As Justice Scalia\nwarned for another jurisdictional rule: “The time\nexpended on such rare freakish cases will be saved\nmany times over by a clear jurisdictional rule that\nmakes it unnecessary to decide, in hundreds of other\ncases” whether the four-part Grable standard is met,\nwhich “produce[s] the sort of vague boundary that is to\nbe avoided in the area of subject-matter jurisdiction\nwherever possible.” Sisson v. Ruby, 497 U.S. 358, 374-\n75 (1990) (Scalia J., concurring).\n This very case illustrates the unworkability of\nGrable and the waste it creates.\n 2. The manifestly wrong result below\n illustrates why Grable is unworkable.\n Whichever complaint one considers, jurisdiction is\nplainly lacking, yet this case has been mired in\njurisdictional litigation for more than five years. The\nlower courts’ inability to consistently apply Grable and\nunprincipled distinctions is a microcosm of the larger\nproblem in Grable litigation.\n\n 6\n Two are Smith and Grable. A third is Hopkins v. Walker, 244\nU.S. 486 (1917), which Justice Holmes joined, and is arguably\nconsistent with his rule. See Douglas D. McFarland, supra note 3,\nat 14 n.81 (discussing Hopkins). The fourth is City of Chicago v.\nInternational College of Surgeons, 522 U.S. 156 (1997), though the\nanalysis is fairly cursory.\n 22\n a. The FDCA issues in this case are\n not substantial.\n This case is Merrell Dow but for pets, not humans.\nIn Merrell Dow, the complaint pleaded state-law\nclaims, including one relying on an allegation that the\n“drug Bendectin was ‘misbranded’ in violation of the\nFederal Food, Drug, and Cosmetic Act (FDCA),” appar-\nently in relation to sales in “Canada and Scotland.”\n478 U.S. at 805, 816. This Court rejected federal-\nquestion jurisdiction on the ground that because the\nFDCA had no private right of action, any federal question\nraised in the case would not be “substantial.” Id.\n Here, just as in Merrell Dow, every claim sounds in\nstate law, federal violations constitute a theory of\nbreach, and the federal violations lack a congression-\nally authorized private right of action. Drilling down,\nthe federal violations in both cases are from the\nvery same statute—the FDCA—and specifically the\n“misbranding” provisions, that is, the very same\nprovisions of the very same statute. Compare J.A. 83-\n84, 89, 91, 102 (alleging misbranding) with Merrell\nDow, 478 U.S. at 805 (same). Even Grable recognized\nthat Merrell Dow’s holding still applied to the FDCA,\nbased on the “combination of no federal cause of action\nand no preemption of state remedies for misbranding.”\nGrable, 545 U.S. at 318. It simply thought the\nreasoning could not expand to every statute.\n One would think this question is well-settled. Every\ncourt of appeals that had previously considered a\nGrable-style assertion of federal-question jurisdiction\nbased on a state-law claim and a federal violation\nrooted in the FDCA rejected jurisdiction, applying\nMerrell Dow. See Burrell v. Bayer Corp., 918 F.3d 372,\n388 (4th Cir. 2019) (no jurisdiction where medical\ndevice was misbranded under FDCA); Bailey v. Johnson,\n 23\n48 F.3d 965, 966 (6th Cir. 1995) (no jurisdiction where\nlack of FDCA-mandated prescription was alleged);\nCrook-Petite-el v. Bumble Bee Foods L.L.C., 723 Fed.\nApp’x 974, 975 (11th Cir. 2018) (no jurisdiction where\nFDCA violation alleged); cf. Clark v. Velsicol Chem.\nCorp., 944 F.2d 196, 199 (4th Cir. 1991) (no jurisdiction\nfor FIFRA violation). This question rarely even reaches\nthe courts of appeals, because “a substantial majority\nof district courts” addressing the FDCA remand (and\nremands are not usually appealable). Burrell, 918 F.3d\nat 380 (citing cases).\n The lower court ignored Merrell Dow because it was\ntoo confused by Grable, an all-too-common result.\n b. The FDCA issues in this case are\n not necessarily raised.\n Even if the questions were substantial, the pet\nowners could prevail without them. The most thorough\nexplication of the necessity prong comes from\nChristianson v. Colt Industries Operating Corp., 486\nU.S. 800 (1988), which applied the federal-question\n“arising under” test in the context of determining\nwhich claims arose under federal patent law. There,\nthe plaintiff alleged monopolization and group-boycott\nclaims. Following the “well-pleaded complaint rule,”\nthe Court “focuse[d] on claims, not theories, and just\nbecause an element that is essential to a particular\ntheory might be governed by federal patent law does\nnot mean that the entire monopolization claim ‘arises\nunder’ patent law.” Id. at 811. There, monopolization\noccurred by means of false assertions of trade secret\nprotection in letters and pleadings, and the invalidity\nof certain patents was one theory for why the trade\nsecrets were not protected. Id. But the letters could\nhave been false for other reasons, and the trade secrets\nunprotected for other reasons, destroying jurisdiction:\n 24\n“Since there are ‘reasons completely unrelated to the\nprovisions and purposes’ of federal patent law why\nClaimant ‘may or may not be entitled to the relief\n[they] see[k]’ under their monopolization claim, the\nclaim does not ‘arise under’ federal patent law.” Id. at\n812 (quoting Franchise Tax Bd., 463 U.S. at 26)\n(alterations in original).\n The same is true here. The complaint alleges that\nthe antitrust conspirators “have a market share of at\nleast 95 percent,” a stunning figure. J.A. 69, 73. They\ngot there via collusion, including exclusive dealing—\nMars Inc. owns companies that make pet food\n(Defendant Claimant) and companies that employ\n17% of veterinarians. J.A. 69. Those veterinarians\nendorse the “prescription” fiction, and PetSmart has\nan exclusive arrangement to sell “prescription” pet\nfood only via a prescription card issued by a Mars\nveterinarian. The companies imposed the prescription\nrequirement on retailers and consumers “with the\npurpose and effect of raising . . . prices.” J.A. 79. Each\ncompany chose to collude, requiring “prescriptions”\nrather than competing on price or convenience.\nJ.A. 80. They jointly agreed to exclude pet food from\ncompetitors from retail stores they controlled. J.A. 74,\n80-81. Their practices violate Missouri law, including\n“legend drug” regulations, J.A. 90, and registration\nrequirements, J.A. 91-92. Notice that there has been\nno mention of federal law yet.\n The argument for unjust enrichment is even easier.\nSurely if—as every court has found—the deceptive\nmarketing claim is based only on state law, the same\ndeception can ground an unjust enrichment claim.\nA “claim supported by alternative theories in the\ncomplaint may not form the basis for [federal question]\njurisdiction unless [federal] law is essential to each of\n 25\nthose theories.” Christianson, 486 U.S. at 810. Here,\nno issue of federal law is essential to every unjust\nenrichment or antitrust theory.\n To be sure, the complaint does discuss federal law,\nbut mere mention is not enough. That the FDA has\nconcluded the companies are violating federal law is\nrelevant context for the companies’ coordination and\nrefutes in advance potential defenses they might raise,\nbut “the mere presence of a federal issue in a state\ncause of action does not automatically confer federal-\nquestion jurisdiction.” Merrell Dow, 478 U.S. at 813.\n If there were any doubts originally that the federal\nissues were not necessarily raised, the amended\ncomplaint dispels them. Plaintiffs will not lightly\nabandon legal contentions that are necessary to their\nclaims. Presumably, abandoning necessary contentions\nwould be tantamount to defaulting on the action. Yet\nhere the pet owners promptly excised the federal\nissues, precisely because they were never a critical\npart of the action.\n Finally, Claimant and the Eighth Circuit make\nmuch of one paragraph in the “prayer for relief” which\nsupposedly requests an injunction to follow federal\nlaw, but that is insufficient. The paragraph at issue\nexpressly requests an injunction requiring compliance\nwith “federal and Missouri” law “or alternatively”\nremoving the “disease treatment claims on the\npackaging.” J.A. 115 (emphasis added). Where a party\nwould be satisfied with either of two alternatives,\ndefinitionally neither one is necessary. More funda-\nmentally, outside of default judgments, federal courts\nare obliged to “grant the relief to which each party is\nentitled, even if the party has not demanded that relief\nin its pleadings.” Fed. R. Civ. P. 54(c) (emphasis added).\nAsking for an injunction makes no difference, and\n 26\ncannot possibly turn an otherwise unnecessary federal\nquestion into a necessary one.\n c. No one knows which, if any, issues\n are “actually disputed.”\n The “actually disputed” prong is perhaps the most\nvexing factor, and none of this Court’s precedents\nelucidate it. The pet owners have no way of knowing\nwhich—if any—federal law issues are “actually disputed.”\nThe companies have never said, even though they bear\nthe burden to demonstrate removal jurisdiction.\n The notice of removal flags as federal issues the\nallegations that no “Prescription Pet Food . . . contains\na drug, and none has been submitted to the FDA for\nits review, analysis or approval,” and that “[a]ll of the\nPrescription Pet Food of Mars/Claimant, Purina,\nand Hill’s lacked an approved New Animal Drug\nApplication or met other [FDCA] requirements, and\ntherefore all of their Prescription Pet Food was\n‘unsafe,’ ‘adulterated,’ and ‘misbranded’ in violation of\nthe [FDCA].” Dkt. 1 at 5. The pet owners doubt that\nthe companies dispute these allegations, since they\nsimply reflect widely known facts and the FDA’s own\nposition. But before receiving an answer, who can tell\nwhat the companies plan to dispute? Even an answer\nwould deny or admit facts. It would not state the\ncompanies’ position on disputed questions of federal law.\n The problems with the first three factors compound\nwhen considered jointly. After all, it is not enough to\nidentify a substantial federal issue, a necessary federal\nissue, and an actually disputed federal issue—there\nmust be a federal issue that is necessary, substantial,\nand disputed. That joint hurdle is much harder to\nanalyze, because the strongest candidates for “necessary”\n 27\nissues are not substantial and disputed (for example,\n“federal law does not require prescriptions for dog food”).\n d. Federal jurisdiction here harms\n federalism.\n Because this case is on all fours with Merrell Dow, it\nflunks the fourth factor. The concern that “exercising\nfederal jurisdiction over a state misbranding action\nwould have attracted a horde of original filings and\nremoval cases raising other state claims with embedded\nfederal issues” applies here too. Grable, 545 U.S. at\n318. Again, since the federal law at issue is the\nFDCA—and even more granularly, the misbranding\nprovisions—congressional intent should be identical.\nIt would be highly implausible for Congress to want\ncases about misbranded human pharmaceutical drugs\nout of federal court, but pet-food cases within federal\ncourt. The companies may argue that the “prescription”\nfood issue is new, but “[t]he novelty of an FDCA issue\nis not sufficient to give it status as a federal cause of\naction; nor should it be sufficient to give a state-based\nFDCA claim status as a jurisdiction-triggering federal\nquestion.” Merrell Dow, 478 U.S. at 817.\n e. The lower courts’ inconsistency\n proves unworkability.\n The almost random collection of positions from the\nlitigants, district court, and court of appeals powerfully\ndemonstrates Grable’s unworkability. After the\ndistrict court held that no claim was federal, the\nEighth Circuit reversed, holding that the antitrust\nand unjust enrichment claims—but only those two—\nwere federal. But when the district court later held\nthat the newly pleaded civil conspiracy count was\nfederal, the Eighth Circuit reversed that too, as\nillustrated below:\n 28\n Initial Unjust\n MMPA Antitrust\n Complaint Enrichment\n Pet owners X X X\n Claimant\n District Court X X X\n Eighth Circuit X\n\n Amended Civil\n MMPA\n Complaint Conspiracy\n Pet owners X X\n Claimant\n District Court X\n Eighth Circuit X X\n\n How did the claims differ for federal question purposes\nwhen each incorporates the same facts, derives from\nMissouri law, and alleges the same federal violations\nof the same federal laws? No one knows, and neither\nside defends the result. The pet owners and companies\nhave made no such distinctions—either every claim is\nfederal or none are on their views. No one could\npredict from reading the complaint that the MMPA is\nless federal than the unjust enrichment claim. Yet\nhere we are.\n The point of canvassing these errors and incon-\nsistencies is not to cast doubt on the abilities of the\nlower courts. The point is that high levels of error and\narbitrary application of Grable is the rule, not the\nexception. Professor Meltzer found enough “surprising\nstatements” in appellate decisions that he became\n“doubtful whether federal judges, as intelligent and\ndedicated as most of them are” can identify federal\n 29\nquestions embedded in state-law claims. Daniel J.\nMeltzer, Jurisdiction and Discretion Revisited, 79\nNotre Dame L. Rev. 1891, 1913 (2004). The pet owners\nshare that doubt. The “reversal rate” for Grable’s\nprogeny largely “reflects . . . the incoherence of the\nlegal doctrine,” and the profound difficulty of applying\nit in real cases. John F. Preis, supra note 6, at 165.\n D. Stare decisis provides little support.\n Stare decisis does not require preserving Grable.\nThis Court has “identified several factors to consider\nin deciding whether to overrule a past decision,\nincluding ‘the quality of [its] reasoning, the workability of\nthe rule it established, its consistency with other\nrelated decisions, . . . and reliance on the decision.”\nKnick v. Township of Scott, Pennsylvania, 588 U.S. 180,\n203 (2019) (quoting Janus v. Am. Fed’n of State, Cnty.,\n& Mun. Emps., Council 31, 585 U.S. 878, 917 (2018)).\n The reasoning in Grable and Smith is unpersuasive.\nSmith flatly ignored contrary cases and misstated the\nprecedents it did cite. Grable simply assumed Smith’s\nvalidity without considering it afresh. Neither case\ngrappled with the longstanding, powerful arguments\nfrom Miller’s Executors, Louisville & Nashville R.R.\nand American Well Works, which each explained that\nfederal law embedded into state-law causes of action\nis merely incorporated-by-reference state law, and thus\ncannot ground arising-under jurisdiction. Grable\n“launched and sustained a cottage industry of scholars\nattempting to decipher its basis and meaning,” and its\nrule has always been slippery, “if it was ever coherent\nenough to be called a rule at all.” Loper Bright Enters.\nv. Raimondo, 144 S. Ct. 2244, 2270 (2024).\n Grable and Smith are egregiously unworkable. The\ncontent of what is a “substantial federal question” or\n 30\nwhat respects the federal/state balance “has always\nevaded meaningful definition.” Id. Its test is\n“impressionistic and malleable,” and its principles “so\nindeterminate and sweeping, [the Court has] been\nforced to clarify the doctrine again and again.” Id. at\n2271. This unworkability is especially damaging\nbecause the question is jurisdictional, which should be\nthe province of the very clearest rules.\n Reliance interests are at their nadir. After all,\nGrable regulates which court system governs rather\nthan serving “as a guide to lawful behavior.” Knick,\n588 U.S. at 205. Besides, Smith and Grable announce\nno “clear or easily applicable standard, so arguments\nfor reliance based on its clarity are misplaced.” South\nDakota v. Wayfair, 585 U.S. 162, 186 (2018). Rather\nthan legitimate reliance, litigants under Grable are\nleft in “an eternal fog of uncertainty” that this Court\nshould pierce through. Loper Bright, 144 S. Ct. at\n2272. And Grable “cannot be constrained by\nadmonishing courts to be extra careful, or by tacking\non a new batch of conditions”—that type of tinkering\nis what exacerbated the problem. Id.\n * * *\n This Court should resolve this appeal by overturning\nGrable or, at a bare minimum, reaffirming Merrell\nDow. There is no federal jurisdiction no matter which\ncomplaint controls.\n II. The Amended Complaint Controls\n Black-letter law provides that an amended complaint\nsupersedes the original complaint for all purposes.\nThat rule controls here, and there is neither a textual\nbasis nor any other sound reason to carve out an\nexception.\n 31\n Both parties agree that the plain text of section 1367\nis dispositive. But nothing about Claimant’ “textual”\nargument is about reading and interpreting the text\nCongress enacted into the United States Code. Normally,\ntextual interpretation begins by determining what the\nwords of a statute mean to an ordinary English\nspeaker. Van Buren v. United States, 593 U.S. 374, 388\n(2021) (reading a statute “consistent with the way an\n‘appropriately informed’ speaker of the language\nwould understand” the words) (citing Nelson, What is\nTextualism? 91 Va. L. Rev. 347, 354 (2005)); id. at 397\n(Thomas, J., dissenting) (the question is what “an\nordinary reader of the English language” would under-\nstand). Claimant do nothing like that. Their analysis\nstarts by citing broad principles from precedents that\npredate the statutory text. Pet. Br. 17-22. They hope\nto classify those cases as “old soil” that tell this Court\nthe answer before even reading section 1367. Pet. Br.\n17. But when the lynchpin of the argument arrives—\nthe time to identify which ambiguous words the old\nsoil clarifies—Claimant gesture broadly to Congress’s\nchoice of “invoking Gibbs and its progeny,” then\nleap from generalities to the claim that Congress\n“incorporated . . . the specific rule at issue here,” which\nis, apparently, “that a federal court may ‘guard against\nforum manipulation.’” Pet. Br. 27.\n That is not how plain-text analysis works. Claimant\nare kicking up dirt, not attempting to interpret\ngenuinely ambiguous words based on old soil. The\nactual, plain meaning of the words Congress chose\nunambiguously supports the pet owners. That is why\nClaimant never really grapple with the text in the\nsection of their brief supposedly dedicated to that\nenterprise, and why they spill far more ink on\nunhelpful legislative history, Pet. Br. 27-29, and\n 32\ntextually meaningless public policy considerations,\nPet. Br. 35-38, 47-48.\n A. The text of section 1367 makes jurisdic-\n tion turn on the claims in the operative\n pleading.\n “[T]o determine the scope of supplemental jurisdic-\ntion authorized by § 1367, then, we must examine the\nstatute’s text in light of context, structure, and related\nstatutory provisions.” Exxon Mobil Corp. v. Allapattah\nServs., Inc., 545 U.S. 546, 558 (2005). That text reads\nas follows:\n [I]n any civil action of which the district\n courts have original jurisdiction, the district\n courts shall have supplemental jurisdiction\n over all other claims that are so related to\n claims in the action within such original\n jurisdiction that they form part of the same\n case or controversy under Article III of the\n United States Constitution.\n28 U.S.C. § 1367(a). Supplemental jurisdiction operates\nby securing a jurisdictional foothold and then tethering\nother claims to that foothold. Thus, first, the district\ncourt must “have original jurisdiction” by virtue of\n“claims in the action within such original jurisdiction.”\nId. (emphasis added). Only if the district court has\njurisdiction over “claims in the action” is there any\nquestion of tethering related claims. See Allapattah,\n545 U.S. at 559 (“If the court has original jurisdiction\nover a single claim in the complaint, it has original\njurisdiction over a ‘civil action’ within the meaning of\n§ 1367(a).”).\n 33\n 1. The text of section 1367 points to the\n current complaint.\n Under the plain text, supplemental jurisdiction\ndepends upon “claims in the action within such\noriginal jurisdiction.” And a claim is only “in the\naction” if it is pleaded in the operative complaint. One\ncan surely say that a claim that was originally pleaded\nbut later dropped was in the action, and so the district\ncourt had original jurisdiction over it, but section 1367\nis phrased in the present tense. “[T]he present tense\ngenerally does not include the past.” Carr v. United\nStates, 560 U.S. 438, 448 (2010).\n This conclusion becomes even clearer when one\nconsiders where to look to find the “other claims” over\nwhich supplemental jurisdiction is asserted. Those\n“other claims” must come from the operative complaint,\nsince a court would never consider exercising supple-\nmental jurisdiction to decide dropped claims. There is\nno textual basis in the statute or the Federal Rules of\nCivil Procedure to look to the operative complaint to\nfind the “other claims” over which supplemental\njurisdiction is putatively asserted while gazing at an\nabandoned pleading for “claims in the action within\nsuch original jurisdiction.”\n When Congress wishes to depart from this textual\nrule and instead make the initial complaint control-\nling, it does so expressly. In assessing the amount in\ncontroversy in removed diversity cases, Congress\ndirects courts to examine the initial pleading: “the sum\ndemanded in good faith in the initial pleading shall be\ndeemed to be the amount in controversy.” 28 U.S.C.\n§ 1446(c)(2) (emphasis added). 7 The different text of\n\n 7\n The term “initial pleading” appears repeatedly in the federal\ncode and federal rules. E.g., 28 U.S.C. § 1446 (“initial pleading”\n 34\nsection 1367 imports the ordinary rule of looking to the\noperative complaint, rather than the initial pleading.\n Section 1331 confirms this approach. “The district\ncourts shall have original jurisdiction of all civil\nactions arising under the Constitution, laws, or\ntreaties of the United States.” 28 U.S.C. § 1331. Here\nagain, the key word “arising” is phrased in the present\ntense. It is not enough that the action arose—before\namendment—under federal law. Rather, the action\nmust be “arising” under federal law now. Section 1332\nsimilarly refers to “civil actions where the matter . . .\nis between—(1) citizens of different states.” 28 U.S.C.\n§ 1332(a). No matter what an initial complaint says,\namending a party’s alleged citizenship to destroy\ndiversity also destroys diversity jurisdiction. See\nGrupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567,\n578 (2004). By using the present tense to describe the\nnecessary jurisdictional requisites of a “civil action,”\nthe text of sections 1331, 1332, and 1367 command a\nparallel construction.\n 2. Background pleading rules comple-\n ment the plain text of section 1367.\n Under the federal rules, a plaintiff commences a\n“civil action” by “filing a complaint.” Fed. R. Civ. P. 3.\n“[T]he complaints . . . determine the nature of the\nsuits,” Pan Am. Petroleum Corp. v. Super. Ct., 366 U.S.\n656, 662-63 (1961), and the “plaintiff [is] the master of\nthe claim; he or she may avoid federal jurisdiction by\nexclusive reliance on state law.” Caterpillar Inc. v.\nWilliams, 482 U.S. 386, 392 (1987). A plaintiff “may\namend [her] pleading once as a matter of course,” and,\n\nappears 7 times); 28 U.S.C. § 1332(d)(7) (discussing “the initial\npleading”); Fed. R. Civ. P. 81(c)(2) (same); Fed. R. Bankr. P. 9027(a)(3)\n(same).\n 35\nwith exceptions not relevant here, an “amendment to\na pleading relates back to the date of the original\npleading.” Fed. R. Civ. P. 15(a), (c)(1). Rule 15(c) “mandates\nrelation back . . . it does not leave the decision . . . to\nthe district court’s equitable discretion.” Krupski v.\nCosta Crociere S.p.A., 560 U.S. 538, 553 (2010).\n All agree that an amended pleading “supersedes the\npleading it modifies and remains in effect throughout\nthe action unless it subsequently is modified.” 6 Charles\nAlan Wright & Arthur R. Miller, Federal Practice and\nProcedure § 1476 (3d ed. 2024). Indeed, “[o]nce an\namended pleading is interposed, the original pleading\nno longer performs any function in the case and any\nsubsequent motion made by an opposing party should\nbe directed at the amended pleading.” Id. (emphasis\nadded) (footnotes omitted); accord Pac. Bell Tel. Co. v.\nlinkLine Commc’ns, Inc., 555 U.S. 438, 456 n.4 (2009)\n(“Normally, an amended complaint supersedes the\noriginal complaint,” citing Wright & Miller). Under\nthat rule, the pet owners cannot recover on antitrust\nor unjust enrichment claims. Those claims are gone—\nand, critically, gone as of the time the civil action\nwas commenced, because the slimmed down pleading\nrelates back to that date. Fed. R. Civ. P. 15(c).\n That bedrock principle applies every bit as much to\nallegations relevant to jurisdiction as it does to ones\nthat go to the merits. An amendment to a complaint’s\nallegations about minimum contacts could strengthen\nor destroy personal jurisdiction; an amendment to a\nparty’s citizenship could create or destroy diversity\njurisdiction; an amendment to the plaintiff’s professed\nplans could confer or destroy the imminence of harm\nand thus injury in fact. An amendment in state court\nto add a federal claim could create grounds for\nremoval. In most every instance, the rule is that the\n 36\noriginal complaint is a nullity, substituted for the\namended complaint.\n The reason amendment has this effect is that the\nplaintiff is the master of the suit. The plaintiff sets the\nscope of the case or controversy in the complaint and\ncan correct the scope of the controversy by amending\nthe complaint. If a plaintiff amends to remove a\nfederal issue from a suit, that issue is gone, and\nrelation back means it is as if it were never present\nwhen the civil action was first commenced. The initial\npleading is treated as a nullity. Where subject matter-\njurisdiction depends on the presence of a pleaded\nfederal claim, an amendment to remove a federal claim\nas of the commencement of the civil action removes the\nbasis for jurisdiction.\n That rule has been applied in a variety of contexts.\nIt is common ground that the amended complaint\ncontrols for cases filed initially in federal court. As\nJustice Scalia explained for the Court, “when a plaintiff\nfiles a complaint in federal court and then voluntarily\namends the complaint, courts look to the amended\ncomplaint to determine jurisdiction.” Rockwell Int’l\nCorp. v. United States, 549 U.S. 457, 473-74 (2007).\nClaimant, conveniently, agree that amended complaints\ncontrol for removed cases to create federal question\njurisdiction. Pet. Br. 45. Amended complaints control\nthe citizenship of the parties in removed or original\ncases, and joinder (a form of amendment) of non-\ndiverse parties destroys jurisdiction. Plaintiffs may\n“seek[] to join additional defendants whose joinder\nwould destroy subject matter jurisdiction” and “the\ncourt may deny joinder, or permit joinder and remand\nthe action to the State court.” 28 U.S.C. § 1447(e). So\nhow could the rule possibly be that the amended\npleading is jurisdictionally dispositive in all contexts\n 37\nexcept for determining arising-under jurisdiction in\nremoved, but not originally federal, actions? 8\n What Claimant seek is a good-for-defendants only\ndefinition of the “claims in the action,” 28 U.S.C.\n§ 1367, which properly looks to the amended complaint\nto identify those claims for: 1) all diversity cases, 2) all\noriginal federal-question cases, 3) those removed\nfederal question cases in which the amendment creates\na federal claim. But when it comes to removed federal-\nquestion cases in which the amendment eliminates the\nfederal claim, the “claims in the action” transmogrify\ninto claims in the original pleading. Whatever the\nbasis for that rule, it is not textualism. Or any other\nneutral principle.\n Applying an even-handed rule here, amending the\ncomplaint to remove the antitrust and unjust enrich-\nment claims wholly excised those issues from the case\nor controversy between the parties. Examining the\ncase as amended, the Eighth Circuit rightly found\nthere was no federal claim. With no federal claim\n“in the action” at all, there was also no basis for\nsupplemental jurisdiction under the plain text of\nsection 1367(a). That holding is correct under first\nprinciples and should be affirmed.\n\n\n 8\n The closest counter-example is the amount in controversy,\nwhich turns on the “initial pleading.” 28 U.S.C. § 1446(c)(2). That\nrule originated before section 1446 was codified, see St. Paul\nMercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938), but the\ncurrent wording demonstrates how Congress actually codifies\nrules it approves of—using text. The forum manipulation concerns\nClaimant raise have left no imprint on the United States Code.\n 38\n 3. Judicially adjudicated claims in the\n operative pleading remain part of\n the same case or controversy.\n To resist this logic, Claimant invoke precedents in\nwhich a federal court exercised jurisdiction to dispose\nof federal issues, leaving only state-law claims unre-\nsolved on the merits. Respondent agree that there is\nsupplemental jurisdiction over those unadjudicated\nclaims. That is because there is a vast difference in\nlaw and logic between a plaintiff losing a federal issue\non the merits—which depends upon the tribunal properly\nexercising adjudicatory authority—and amending away\nany federal issue prior to an adjudication such that\nnothing federal will ever be reached by the court. A\ncourt cannot supplement its determination of a federal\nquestion without first adjudicating a federal question.\n The text of section 1367(c), which Claimant invoke,\nconfirms the principle. A court “may,” not must,\n“decline to exercise supplemental jurisdiction over a\nclaim” where “the district court has dismissed all\nclaims over which it has original jurisdiction.”\n28 U.S.C. § 1367(c). Cf. United Mine Workers of Am. v.\nGibbs, 383 U.S. 715, 726 (1966). This wording does not\napply to amendments, since amendments are not\ndismissals by “the district court.” 9 And the statutory\ntext of section 1367(c)(3) is entirely harmonious with\nsection 1367(a)’s present-tense reference to claims “in\nthe action” alongside the “other” state-law claims.\n Unlike an amendment, when a “district court has\ndismissed” a federal claim, that claim remains,\npresently, “in the action.” Judicial dismissal of a claim\n\n 9\n Notably, Claimant once agreed. They argued that section\n1367(c)(3) cannot apply after amendment in this case because\n“[n]o such dismissal has taken place.” Dkt. 52 at 11.\n 39\nis interlocutory until final judgment. Fed. R. Civ. P.\n54(b). Any interlocutory order is “subject to recon-\nsideration, and would continue to be so up to the\npassing of a final decree.” Gen. Inv. Co. v. Lake Shore\n& Mich. S. Ry. Co., 260 U.S. 261, 267 (1922).\nInterlocutory orders merge into a final judgment and\ncan be appealed. At all points, the federal issue is live,\nand the plaintiff may yet prevail.\n The textual and historical distinction between\namendment—which removes claims from an action—\nand judicial disposition—which does not—explains the\nvast majority of cases Claimant cite. For example, in\nCarlsbad Technology, Inc. v. HIF Bio, Inc., 556 U.S. 635,\n636 (2009), an action included various state law claims\nand one federal Racketeer Influenced and Corrupt\nOrganizations Act claim. The district court dismissed\nthe RICO claim under Rule 12(b)(6), and then remanded\nthe state-law claims. Id. at 637. Though the district\ncourt declined to exercise supplemental jurisdiction, it\ncould have, since the RICO claim was dismissed by the\ncourt, and thus was still “in the action.”\n Rosado v. Wyman also follows this rule. 397 U.S. 397\n(1970). There, plaintiffs sued to enjoin New York’s\nsocial services laws, raising both federal constitutional\nclaims and state claims. The defendants removed. The\nfederal court determined the constitutional claims\nwere moot and dismissed them. Id. at 400. This Court\nupheld jurisdiction over the other claims under pendent\njurisdiction. Id. Here, again, the federal claims were\neliminated by action of the court. 10 The plaintiff could\n\n 10\n This explains the Eighth Circuit’s caveat that courts look at\nthe original complaint if the amendment was ordered by the\ncourt. Pet. Br. 45. Courts cannot remove a claim from an\naction—even by requiring amendment—because a plaintiff can\nappeal. The same rule applies in state court under the voluntary\n 40\nhave challenged the mootness determination on appeal,\nso of course the federal claims were still part of the case.\n In sum, claims that are removed by amendment are\ndifferent from claims dismissed by a court. The former\nredefine the scope of the case or controversy and do so\nas of the time of filing. The latter remain part of the\ncase or controversy, supplying statutory discretion to\nconsider state-law issues.\n B. Claimant’ atextual appeals to pre-\n enactment cases, legislative history, and\n policy goals cannot trump statutory text.\n Unable to marshal a compelling textual argument,\nClaimant invoke pre-1367 case law and argue that\nthe statute should be read to implement the policy\ngoals articulated in those cases. These cases do not\nsupport Claimant on their own terms and cannot\novercome the text.\n 1. The Cohill case and legislative\n history does not require upholding\n jurisdiction.\n Claimant rely chiefly on Carnegie-Mellon University v.\nCohill, 484 U.S. 343 (1988), but that pre-1367 case\nneither considered nor decided the issues presented\nhere. Cohill addressed the question of “whether a\nfederal district court has discretion under the doctrine\nof pendent jurisdiction to remand a properly removed\ncase to state court when all federal-law claims in the\naction have been eliminated and only pendent state-\nlaw claims remain.” Id. at 345. The case arose because\nthe district court, through Judge Cohill—with only\n\n/ involuntary doctrine. See, e.g., Am. Car & Foundry Co. v.\nKettelhake, 236 U.S. 311, 316 (1915) (voluntary dismissal of the\nresident defendant allows removal, but not court-ordered dismissal).\n 41\nstate law claims remaining—remanded the case. The\ndefendants filed a petition for a writ of mandamus,\narguing that there was no statutory or inherent\nauthority to remand. This Court denied the writ, holding\nthere was inherent authority to remand. Id. at 348.\n This case differs from Cohill. Most obviously, Cohill\naffirmed a remand, while Claimant seek to prevent\none. That Cohill involved an amendment rather than\ndismissal was completely ignored by the parties and\nthe Court, largely because the amendment occurred\nafter discovery showed the federal “claims were not\ntenable.” Id. at 346. No one argued that the\namendment was effective as of the commencement of\nthe suit such that remand was mandatory rather than\ndiscretionary. Since no one made that argument, it is\nhardly surprising that the Court did not pass on it.\n It is true that the litigants assumed the district\ncourt had pendent jurisdiction, but Congress did not\ncodify that unreflective assumption. Quite the opposite.\nCongress departed from Cohill by phrasing section\n1367(c)(3) in terms of dismissal by the court rather\nthan amendment by the parties. Seeing the textual\nproblem, Claimant invoke legislative history. Though\nthe codified text applies where “the district court has\ndismissed” all federal claims, the Court should\napparently read the textually compelled district-court\ninvolvement out of the statute because “Professors\nArthur Wolf and John Egnal” once “recommended\nadding language similar to what now appears in\nSubsection (c)(3).” Pet. Br. 29. This different text that\nCongress did not adopt was subjectively intended by\nthese two professors to cover “a voluntary withdrawal\nof the claim.” Id. This is precisely the kind of\nlegislative history the Court warned against using\nin Allapattah—musings from “law professors who\n 42\nparticipated in drafting,” but whose proposals were not\nreflected in the text. 545 U.S. at 570.\n Claimant also attempt to find their rule not from\nthe text, but the soil around it, but that argument is\nunavailing. Cohill mentions forum manipulation, but\n“it would be a mistake to read judicial opinions like\nstatutes,” ascribing critical significance to every word.\nLoper Bright, 144 S. Ct. at 2281 (Gorsuch, J., concur-\nring); see also Ford Motor Co. v. Mont. Eighth Jud. Dist.\nCt., 592 U.S. 351, 373 (2021) (Alito, J., concurring in the\njudgment) (same). The fact that a concern appears in\nCohill but is not reflected anywhere in the text of\nsection 1367 is a strong reason to reject it as irrelevant.\nHad Congress actually intended to shape jurisdiction\nbased on forum manipulation, it would have done so.\nHere, there is no transplant to speak of when it comes\nto forum manipulation. With no ambiguous statutory\nterm that the context of Cohill clarifies, the “old soil”\nstays right where it was. Pet. Br. 17.\n 2. Forum manipulation concerns do\n not justify Claimant’ rule.\n Forum manipulation concerns are pure policy,\ndivorced from text, and “policy arguments cannot\nsupersede the clear statutory text.” Universal Health\nServs., Inc. v. United States, 579 U.S. 176, 192 (2016).\nStill, on its own terms the argument is meritless.\n a. There is no reason to believe any\n forum manipulation occurs, or that\n Claimant’ rule would reduce it.\n Claimant profess a concern that, absent their\natextual rule, “a plaintiff could always file in state\ncourt and wait for defendants to remove. If the plaintiff\ndislikes the federal judge assigned to the case, the\n 43\nplaintiff could then amend the complaint to remove\nthe federal question and force a remand.” Pet. Br. 13.\nThis concern is difficult to take seriously.\n To begin with, nothing the Court does in this case\nwould prevent the manipulation Claimant fear. If\nthis Court reverses, a plaintiff could accomplish\nexactly the same thing by filing suit in state court,\nwaiting for removal, then, if he dislikes the judge,\nvoluntarily dismissing without prejudice under Rule\n41(a)(1)(A)(i), and refiling in state court with a\nmodified complaint that removes the federal claims.\nRule 41(a)(1)(A)(i) dismissals are automatic. Just as\nwith a first amendment under Rule 15(a), district\ncourts have no discretion to prevent their use.\nAlternatively, the supposedly manipulative plaintiffs\nClaimant fear could file initially in federal court,\nidentify their judge, and, if they do not like her, choose\nto amend away the federal question (which Claimant\nconcede would destroy jurisdiction), Pet. Br. 13,\nRockwell, 549 U.S. at 473-74, and refile in state court.\n To adequately enforce Claimant’ forum manipula-\ntion rule, the Court would have to allow defendants to\nremove even after those tactics, presumably with an\nenhanced artful pleading doctrine. In short, Claimant’\n“rule is simple for plaintiffs to avoid—or else, excruci-\nating for courts to police” since it would require “that\na judge should go behind the face of a complaint to\ndetermine whether it is the product of ‘artful\npleading.’” Merrill Lynch, Pierce, Fenner & Smith Inc.\nv. Manning, 578 U.S. 374, 392-93 (2016) (“That [a rule]\nthreatens to become either a useless drafting rule or a\ntortuous inquiry into artful pleading is one more good\nreason to reject it.”).\n In truth, the forum manipulation in this case—and\nin the typical removal case—is by defendants. Cf.\n 44\nZachary D. Clopton & Alexandra D. Lahav, Fraudulent\nRemoval, 135 Harv. L. Rev. F. 87 (2021) (discussing the\ngrowing trend of baseless removals). Here even\nthough the exclusively Missouri plaintiffs sued only\nMissouri citizens and brought only Missouri claims,\nClaimant have been able to waste five years by filing\na notice of removal that was insubstantial before and\nis ludicrous after the pet owners dropped the two\nsupposedly federal claims. To nonetheless complain\nthat the “right to remove” has been “frustrate[d]” is\nastounding, since plaintiffs’ method of frustrating\nthe “right” was by conceding every purportedly federal\nissue. Claimant are like a grocery store clerk who\ntells a customer with 14 items not to go through\nthe express line, and then objects when the shopper\nreturns to the express line after putting 4 items\nback. What Claimant actually want is to leverage\ndiscarded federal questions to gain a federal forum for\nnon-federal claims. That is forum manipulation.\n This lens helps explain why Claimant are arguing\nfor a standard under which they will almost always\nlose. Recall that the lead case they rely upon says that\n“when the federal-law claims have dropped out of the\nlawsuit in its early stages and only state-law claims\nremain, the federal court should decline the exercise of\njurisdiction.” Cohill, 484 U.S. at 350 (emphasis added).\nAnd the circuits they point to as exemplary essentially\nalways remand in cases like this. 11 Their goal is not\n\n 11\n E.g., Packard v. Farmers Ins. Co. of Columbus Inc., 423 F.\nApp’x 580, 584 (6th Cir. 2011) (supporting “a strong presumption\nagainst the exercise of supplemental jurisdiction” where no\nfederal claims remain); Dirauf v. Berger, 57 F.4th 101, 108-09,\n108 n.6 (3d Cir. 2022) (affirming remand where the plaintiff\neliminated the federal-law claim post-removal and endorsing the\ndistrict court’s application of a “presumption in favor of remand”);\nWatson v. City of Allen, 821 F.3d 634, 642-43 (5th Cir. 2016)\n 45\nreally to win under the section 1367 standard, but to\npreserve a colorable argument for removal. After all,\ncorporate defendants gain tremendous advantages in\nbeing able to tie up litigation in jurisdictional knots\nfor years. A discretionary standard that they will\neventually lose 95% of the time will still allow years of\ndelay and impose extra costs.\n If, in some hypothetical case there were egregious\nforum manipulation that a court felt compelled to stop,\nit has the tools. Courts can deny leave to amend under\nRule 15. That was not possible here because the pet\nowners acted with alacrity, but most amendments will\nrequire leave from the court. In particular, a district\ncourt will always be able to prevent a plaintiff from\nseeking to amend when he “anticipates receiving an\nimminent adverse ruling,” Pet. Br. 36, since that would\nonly occur after the time to amend by right has passed,\nand the court would know if it plans to rule\nimminently.\n b. The case quotations about forum\n manipulation are ill-considered\n dicta that this Court should reject.\n Most fundamentally, the Eighth Circuit is emphatically\nright to favor “jurisdictional rigor” over “forum-\n\n(holding that the district court abused its discretion by failing to\nremand after a post-removal amendment eliminated the federal\nclaim); Enochs v. Lampasas Cnty., 641 F.3d 155, 161-63 (5th Cir.\n2011) (same); Gamel v. City of Cincinnati, 625 F.3d 949, 952-53\n(6th Cir. 2010) (holding that forum-manipulation concerns did not\nauthorize retention of supplemental jurisdiction and affirming\nremand); Arrington v. City of Raleigh, 369 F. App’x 420, 422–23\n(4th Cir. 2010) (vacating the lower court judgment and directing\nremand as “precedent[] make[s] clear” that jurisdiction should\nhave been declined where the plaintiff amended her complaint to\ndismiss the federal claims post-removal).\n 46\nmanipulation concerns.” Pet. App. 10a. Jurisdiction\nshould be decided based on clear rules and first\nprinciples. A concern that some plaintiff, somewhere,\nmight be able to gain remand at the cost of abandoning\nall federal claims is not that, especially since this\nCourt has taught that plaintiffs “may avoid federal\njurisdiction by exclusive reliance on state law.”\nCaterpillar, 482 U.S. at 392. Were there any doubt,\nthis Court has taught that, “statutory procedures for\nremoval are to be strictly construed.” Syngenta Crop\nProtec., Inc. v. Henson, 537 U.S. 28, 32 (2002).\n When this Court has raised forum manipulation, it\nhas always been in dicta, most of which was issued\nbefore Congress enacted binding statutory text. Cohill\nmentioned “manipulative tactics” solely to refute an\nargument from one of the parties. Cohill, 484 U.S. at\n357. Without ever endorsing the argument, the Court\nsummarized what the “concern appears to be,” and\nthen stated that the “concern” cannot “justif[y] a\ncategorical prohibition on [] remand” and that in any\ncase “district courts . . . can guard against forum\nmanipulation.” Id. Presumably a similar passage will\nappear in this case if the Court affirms, saying that\nany concern could be mitigated. That sort of language\nis not a sound basis for a jurisdictional rule. “An\nopinion’s holding and the reasoning essential to it (the\nratio decidendi) merit[] careful attention. Dicta, stray\nremarks, and digressions warrant[] less weight.” Loper\nBright, 144 S. Ct. at 2277 (Gorsuch, J., concurring).\n Justice Scalia, again in dicta, referenced this passage,\nexplaining: “when a defendant removes a case to\nfederal court based on the presence of a federal claim,\nan amendment eliminating the original basis for federal\njurisdiction generally does not defeat jurisdiction,”\n“[b]ut removal cases raise forum-manipulation concerns\n 47\nthat simply do not exist when it is the plaintiff\nwho chooses a federal forum and then pleads away\njurisdiction through amendment.” Rockwell, 549 U.S.\nat 474 n.6. The case, of course, was not removed, so\nthe footnoted remark was not even plausibly necessary\nto support the judgment. Claimant’ attempt to\nconvert drive-by concerns into a “crucial footnote” that\nabrogates the statutory text of section 1367—text that\nthe Court did not even consider—is hardly a faithful\naccounting of the case. Pet. Br. 44. It is certainly not\nfaithful to Justice Scalia’s approach to jurisprudence.\n In no other context has this Court made jurisdiction\nturn on a generalized fear of “forum manipulation.”\nThere are no holdings of this Court recommending\nthat path, and so the Court should proceed from\nfirst principles. Under first principles, the amended\ncomplaint controls.\n 48\n CONCLUSION\n For the foregoing reasons, the judgment below\nshould be affirmed, and the case remanded.", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review after amendment eliminated federal claims.", "governingLaw": "Apply United States federal jurisdiction law; Eighth Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal jurisdiction law; Eighth Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Royal Canin U.S.A., Inc. v. Wullschleger", "citation": "604 U.S. 22 (2025)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/24pdf/23-677_6jgm.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "This case turns on the interplay between 28 U.S.C. § 1367, the Federal Rules of Civil Procedure, and the Supreme Court's removal-specific jurisprudence. The threshold question is whether a plaintiff in a properly removed case can divest the federal court of subject-matter jurisdiction by voluntarily amending the complaint to eliminate the federal question that justified removal.\n\nSection 1367(a) confers supplemental jurisdiction over 'all other claims that are so related to claims in the action within [the court's] original jurisdiction that they form part of the same case or controversy.' The statute is phrased in the present tense. The respondent argues that because an amended complaint supersedes the original under Rule 15, and because 'claims in the action' must be read to mean claims in the operative pleading, the district court lost jurisdiction the moment no federal claim remained in the amended complaint. This is a plausible textual reading. But it is not the only one, and the text is genuinely ambiguous on the removal-specific question because it does not address the temporal point at which jurisdiction is measured in a removed case.\n\nThe controlling authority resolves the ambiguity. In Carnegie-Mellon University v. Cohill, 484 U.S. 343 (1988), the Supreme Court confronted the identical factual scenario: plaintiffs filed in state court with a federal question, defendants removed, and plaintiffs then amended to delete the federal claims and moved to remand. The Court held that the district court had discretion to retain jurisdiction over the remaining pendent state-law claims—remand was not required. The Court specifically identified the concern: a plaintiff could 'regain a state forum simply by deleting all federal-law claims from the complaint,' and the district court could 'guard against forum manipulation' by declining to remand. This is not dictum; it was the holding. Cohill was decided before § 1367's enactment, but the statute's text—drawn from Gibbs, Rosado, and Cohill—codified these principles.\n\nRockwell International Corp. v. United States, 549 U.S. 457 (2007), confirms the distinction. The Court stated that 'when a plaintiff files a complaint in federal court and then voluntarily amends the complaint, courts look to the amended complaint to determine jurisdiction.' But it then drew a sharp contrast for removal cases: 'when a defendant removes a case to federal court based on the presence of a federal claim, an amendment eliminating the original basis for federal jurisdiction generally does not defeat jurisdiction.' The Court explained that 'removal cases raise forum-manipulation concerns that simply do not exist when it is the plaintiff who chooses a federal forum and then pleads away jurisdiction through amendment.' The respondent argues this footnote is dictum because Rockwell was not a removal case. The observation is accurate—Rockwell was a qui tam action filed under seal—but the principle articulated was a direct citation to Cohill and St. Paul Mercury, and it reflects a settled distinction that every court of appeals had applied before the Eighth Circuit's decision below.\n\nSection 1367(c)(3) does not undermine this conclusion. That subsection permits a district court to 'decline to exercise supplemental jurisdiction' when 'the district court has dismissed all claims over which it has original jurisdiction.' The respondent argues this language applies only to court-ordered dismissals, not to voluntary amendments, and that voluntary amendment—unlike dismissal—removes the claim from the action entirely. The textual distinction has force: an amendment supersedes the original complaint and 'relates back' to the date of filing under Rule 15(c), while a dismissed claim remains interlocutorily alive and appealable. But the distinction cuts against the respondent's position in a removal case. If § 1367(c)(3) applies only to court-ordered dismissals, then Congress did not address the amendment scenario at all, leaving the removal-specific rule from Cohill intact as the governing background principle. Section 1367 was enacted to codify and expand pendent jurisdiction doctrine, not to silently overturn the rule that governs removal cases.\n\nThe respondent's broader argument—that the Court should overturn Grable v. Lucky Cue Mfg. Co.—is not properly before this tribunal. The question presented is whether the Eighth Circuit correctly held that the amended complaint divested the district court of jurisdiction. Even if Grable's embedded-federal-question test is flawed, the case was properly removed based on the original complaint, and the question is what happens after removal, not whether removal was proper.\n\nThe policy concerns favoring retention of jurisdiction in removal cases are substantial and well-documented. Rule 15(a) gives a plaintiff one free amendment; if that amendment could strip the federal court of jurisdiction, every plaintiff in a removed case could judge-shop by amending and forcing a remand. The Eighth Circuit's own caveat—that involuntary or court-ordered amendments would not defeat jurisdiction—undermines its position: it concedes that the timing of jurisdiction in removal cases cannot be determined solely by looking at the operative complaint, because in some cases the court must look to the complaint at the time of removal. The principled line the Court has drawn is that the removal context triggers forum-manipulation concerns distinct from original-filing cases, and the district court retains discretionary authority to exercise supplemental jurisdiction.\n\nThe district court below denied the motion to remand. That decision was within its discretion under § 1367(c) and consistent with Cohill and Rockwell. The Eighth Circuit erred by holding that jurisdiction was automatically divested. The correct disposition is to reverse the Eighth Circuit and remand for proceedings on the merits of the respondents' appeal.", "allocation": null, "citations": [ { "title": "[PDF] Rockwell Int'l Corp. v. United States, 549 U.S. 457 (2007). - Loc", "url": "https://tile.loc.gov/storage-services/service/ll/usrep/usrep549/usrep549457/usrep549457.pdf", "proposition": "Rockwell International Corp. v. United States distinguishes between original-filing and removal cases for jurisdictional purposes, stating that in removal cases, an amendment eliminating the original basis for federal jurisdiction generally does not defeat jurisdiction due to forum-manipulation concerns unique to the removal context." }, { "title": "Rockwell Int'l Corp. v. United States - Brief (Merits)", "url": "https://www.justice.gov/osg/brief/rockwell-intl-corp-v-united-states-brief-merits", "proposition": "The United States' merits brief in Rockwell discusses the distinction between cases filed originally in federal court—where amended complaints control jurisdiction—and removed cases, where post-removal amendments eliminating federal claims do not divest jurisdiction, citing Cohill and St. Paul Mercury." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-063", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nINTRODUCTION\n The Federal Circuit “once again” has “impose[d] limi-\ntations on the Patent Act that are inconsistent with the\nAct’s text.” Bilski v. Kappos, 561 U.S. 593, 612 (2010). The\nAct requires that patents provide a “written description of\nthe invention, and of the manner and process of making\nand using it, in such full, clear, concise, and exact terms as\nto enable any person skilled in the art to which it pertains\n* * * to make and use the same.” 35 U.S.C. § 112(a) (em-\nphasis added). Virtually unchanged from the Patent Act\nof 1790, that command—the “enablement” requirement—\nembodies the Patent Act’s “bargain”: In exchange for a\nlimited-time, exclusive right to their inventions, inventors\n 2\nmust publicly disclose their inventions, as well as how to\nmake and use them, so the public may practice the inven-\ntions once the period of exclusivity expires. Pfaff v. Wells\nElecs., Inc., 525 U.S. 55, 63 (1998).\n For over a century, this Court has read the enablement\nrequirement to mean what it says: A patent “satisfies the\nlaw” so long as it “sufficiently * * * guide[s] those skilled\nin the art to” the “successful application” of “the inven-\ntion.” Minerals Separation, Ltd. v. Hyde, 242 U.S. 261,\n271 (1916). The statute’s demands are “not greater than\nis reasonable, having regard to [the patent’s] subject mat-\nter.” Id. at 270.\n Departing from statutory text, precedent, and history,\nthe decision below announces a different standard—one\nthat fundamentally alters the patent bargain. It is no lon-\nger sufficient that the patent enable skilled artisans to\n“make and use” the invention. Instead, skilled artisans\nmust be able to “reach the full scope of claimed embodi-\nments”—i.e., to cumulatively identify and make all, or\nnearly all, possible variations of the invention—without\n“ ‘substantial time and effort.’ ” Pet. App. 14a (emphasis\nadded). That standard, the panel acknowledged, “raises\nthe bar,” imposing “high hurdles in fulfilling the enable-\nment requirement.” Pet. App. 12a-13a.\n The Patent Act nowhere imposes that standard. There\nmay be myriad variations on James Watt’s steam engine\nor the Wright Brothers’ airplane. But the law has never\nrequired that, for those inventions to be patentable, skilled\nartisans must be able to cumulatively identify and make\nevery variation without substantial time and effort. The\nfolly of a “make all embodiments” requirement has been\nrecognized by learned commentators from the 19th cen-\ntury, see 2 W. Robinson, The Law of Patents for Useful\nInventions § 486 (1890), through present day, see D. Kar-\n 3\nshtedt et al., The Death of the Genus Claim, 35 Harv. J.L.\n& Tech. 1 (2021) (“Karshtedt”). It would render unpatent-\nable any invention that covers a “nontrivial” number of\nvariations. Id. at 4. This Court long ago recognized that\nit is “not necessary to * * * describe in the specification[ ]\nall possible forms in which the claimed principle may be\nreduced to practice.” Smith v. Snow, 294 U.S. 1, 11 (1935).\n If the patent teaches skilled artisans how to “make and\nuse” the invention as needed, the cumulative time and\neffort it would take to make each and every variation\nshould be irrelevant. The Federal Circuit’s concern that\npatentees might attempt to monopolize more than they\ninvented through overly broad claims, Pet. App. 12a-13a,\nwas answered long ago in Consolidated Electric Light Co.\nv. McKeesport Light Co., 159 U.S. 465 (1895), which ap-\nplied the statutory standard to invalidate claims where\nthere was proof that the patent’s instructions were not\nenabling for large classes of claimed subject matter.\n There was no such evidence here. Claimant’s invention—\nmonoclonal antibodies that dramatically reduce “bad” cho-\nlesterol—was a breakthrough. There was no dispute Am-\ngen’s patents enable skilled artisans to “make and use”\nthose antibodies. 35 U.S.C. § 112(a). At trial, Claimant pre-\nsented evidence that following the patents’ roadmap pro-\nduces claimed antibodies every time, and that the roadmap\ncould produce all antibodies within the claims. No one—\nnot Respondent, not the courts below—identified even\none actual antibody that could not be produced using the\npatents’ disclosures.\n The jury thus found for Claimant on enablement. Over-\nturning that verdict, the Federal Circuit speculated that\nthere might be “millions of candidates” that fall within the\nclaims, each of which would have to be “generate[d] and\nthen screen[ed]” to determine whether it met the claims’\n 4\nrequirements. Pet. App. 15a. It theorized there might be\nundisclosed antibodies at the “far corners of the claimed\nlandscape that were particularly inaccessible or uncer-\ntain.” Pet. App. 65a. Consequently, the court ruled, “ ‘sub-\nstantial time and effort’ would be required to reach the full\nscope of claimed embodiments.” Pet. App. 14a (emphasis\nadded).\n The statutory standard and this Court’s cases, how-\never, look to whether skilled artisans can “make and use”\nthe invention. To prove patent claims are not enabled,\nchallengers must demonstrate—by clear-and-convincing\nproof—that skilled artisans cannot practice the invention\nby following the patent’s teachings or that doing so would\nrequire undue experimentation. Speculation that there\nmight be some unknown embodiment out there that might\nrequire time and effort to find does not suffice. Respond-\nents argued that various antibodies covered by Claimant’s\npatents could not be made by following the patents’\ninstructions, but the jury rejected those arguments given\nClaimant’s evidence that the patents’ roadmap would\nproduce those antibodies. Claimant’s patents satisfy the\nstatutory standard for enablement. The Federal Circuit’s\ncontrary ruling under a reach-the-full-scope test cannot\nstand.\n OPINIONS BELOW\n The court of appeals’ opinion (Pet. App. 1a-15a) is re-\nported at 987 F.3d 1080; its opinion denying rehearing\n(Pet. App. 58a-68a) is published at 850 F. App’x 794. The\ndistrict court’s opinion (Pet. App. 16a-54a) is unreported.\n STATEMENT OF JURISDICTION\n The Federal Circuit entered judgment on February 11,\n2021 (Pet. App. 1a-15a), and denied rehearing on June 21,\n2021 (Pet. App. 58a-68a). By general order, this Court ex-\n 5\ntended the time to file the petition to November 18, 2021.\nPetitioners filed the petition on that date, and the Court\ngranted the petition on November 4, 2022. This Court has\njurisdiction under 28 U.S.C. § 1254(1).\n STATUTORY PROVISION INVOLVED\n The relevant provision of the Patent Act, 35 U.S.C.\n§ 112(a), is set forth in the petition appendix (Pet. App. 69a).\n STATEMENT\n This case concerns whether the Patent Act’s “ena-\nblement” requirement is governed by the statutory stand-\nard, which requires patents to teach skilled artisans to\n“make and use” the claimed invention, 35 U.S.C. § 112(a),\nor whether patents instead must enable skilled artisans\n“to reach the full scope of claimed embodiments” without\nundue experimentation—i.e., to cumulatively identify and\nmake all or nearly all embodiments of the invention with-\nout “ ‘substantial time and effort,’ ” Pet. App. 14a (empha-\nsis added).\nI. STATUTORY FRAMEWORK\n This Nation’s patent laws reflect “a carefully crafted\nbargain.” Pfaff, 525 U.S. at 63. In exchange for publicly\ndisclosing their inventions, as well as how to make and use\nthem, inventors receive the exclusive right to their inven-\ntions for a limited time. Ibid. That is patent law’s “quid\npro quo.” Universal Oil Prods. Co. v. Globe Oil & Refin.\nCo., 322 U.S. 471, 484 (1944).\n Section 112 of the Patent Act sets forth the inventor’s\nside of the bargain: Patents must “contain a written de-\nscription of the invention, and of the manner and process\nof making and using it, in such full, clear, concise, and ex-\nact terms as to enable any person skilled in the art to\nwhich it pertains * * * to make and use the same.” 35\nU.S.C. § 112(a) (emphasis added). That is known as the\n 6\n“ ‘enablement’ ” requirement. Markman v. Westview In-\nstruments, Inc., 517 U.S. 370, 379 (1996).1 “The object” of\n§ 112 “is to require the patentee to describe his invention\nso that others may construct and use it after the expiration\nof the patent.” Schriber-Schroth Co. v. Cleveland Tr. Co.,\n305 U.S. 47, 57 (1938).\n The enablement requirement was inherited from\nFraming-era English patent practice “in which juries\nwere asked to determine whether the specification de-\nscribed the invention well enough to allow members of the\nappropriate trade to reproduce it.” Markman, 517 U.S. at\n379. The requirement was codified by the original Patent\nAct of 1790, in language strikingly similar to that found in\ntoday’s § 112: The patent must include a “specification in\nwriting, containing a description * * * so particular” as to\n“enable a workman or other person skilled in the art or\nmanufacture * * * to make, construct, or use” the inven-\ntion. Act of Apr. 10, 1790, ch. 7, § 2, 1 Stat. 109, 110-111.\nThroughout the Patent Act’s iterations, the enablement\nrequirement has remained largely unchanged. See Act of\nFeb. 21, 1793, ch. 11, § 3, 1 Stat. 318, 321-322; Act of July\n4, 1836, ch. 357, § 6, 5 Stat. 117, 119; Act of July 8, 1870,\nch. 230, § 26, 16 Stat. 198, 201; see also P.J. Federico, Com-\nmentary on the New Patent Act (West 1954), reprinted in\n75 J. Pat. & Trademark Off. Soc’y 161, 185-186 (1993).\n Consistent with statutory text, this Court has explained\nthat a patent’s disclosure “satisfies the law” if it is “suffi-\nciently definite to guide those skilled in the art to” the\n“successful application” of “the invention,” Minerals Sep-\naration, 242 U.S. at 271; if it teaches skilled artisans “to\n\n1\n The Federal Circuit has construed § 112(a) as containing two legal\nrequirements: “enablement” and “written description.” Ariad\nPharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1344 (Fed. Cir. 2010)\n(en banc).\n 7\npractice the invention,” Universal Oil, 322 U.S. at 484; or\nif it “points out some practicable way of putting [the in-\nvention] into operation,” The Telephone Cases, 126 U.S. 1,\n536 (1888).\nII. PROCEEDINGS BELOW\n A. Claimant Invents and Patents Antibodies that\n Dramatically Lower Cholesterol\n High LDL cholesterol causes heart disease, the leading\ncause of death in the United States. C.A. App. 3793\n(487:24-488:4). For many patients, traditional medicines,\nlike statins, are insufficient. [TARGET IDENTIFIER REDACTED], 872\nF.3d 1367, 1371 (Fed. Cir. 2017).\n This case concerns Claimant’s breakthrough invention—\na class of monoclonal antibodies that lower LDL choles-\nterol levels. Those antibodies bind at a precise location on\na protein called “PCSK9” and, in doing so, block PCSK9\nfrom impairing the body’s mechanisms for removing\ncholesterol. U.S. Patent No. 8,829,165, C.A. App. 37-420;\nand No. 8,859,741, C.A. App. 421-806. Claimant invested\nbillions of dollars and a decade of research bringing that\ninvention to market. C.A. App. 3793 (488:8-12).\n 1. Claimant Invents a Class of Antibodies that Bind\n PCSK9’s “Sweet Spot” and Block Its Inter-\n action with LDL Receptors\n Claimant’s efforts began in 2005, when Dr. Simon Jack-\nson studied a protein called PCSK9. C.A. App. 3795\n(493:21-495:13). PCSK9 exists naturally in the human\nbody. At the time, PCSK9 was thought to affect LDL\ncholesterol levels, but no one understood how. Ibid.\n Ordinarily, the body removes LDL cholesterol from the\nbloodstream using LDL receptors on the surface of liver\ncells. Pet. App. 3a. The receptors “bind” to LDL choles-\nterol to capture it.\n 8\n\n\nC.A. App. 9992. The cholesterol-receptor complex is then\ninternalized into the cell.\n\n\nIbid. Finally, the cholesterol is destroyed inside the cell\nand the receptor recycles to the surface to capture more\ncholesterol.\n\n\nIbid.; C.A. App. 3796 (499:10-18).\n 9\n Dr. Jackson discovered that PCSK9 binds “directly” to\n“LDL receptor[s].” C.A. App. 3795 (494:19-495:13).\n\n\nWhen PCSK9 binds to LDL receptors, PCSK9 and the re-\nceptors are destroyed inside the cell.\n\n\nC.A. App. 4040, 3679 (181:23-182:20). The reduction of\nLDL receptors available to remove LDL causes LDL\nlevels to rise. C.A. App. 3679 (181:23-182:20).\n Dr. Jackson posited he could create antibodies to com-\nbat PCSK9’s destructive effect on LDL receptors. Anti-\n 10\nbodies are proteins composed of amino-acid chains; they\ntypically are produced in response to antigens, like bac-\nteria or viruses, the body recognizes as foreign.\n\n\nC.A. App. 4134.\n Dr. Jackson created monoclonal antibodies that, due to\ntheir structural and chemical properties, “bind to PCSK9\nin the special region”—or “sweet spot”—where PCSK9\nwould otherwise bind LDL receptors. C.A. App. 3796\n(498:16-499:2), 3799 (509:9-510:3). By binding there, the\nantibodies block PCSK9 from binding to LDL receptors.\nIbid.\n\n\nC.A. App. 9993.\n 11\n PCSK9’s sweet spot—purple in the graphic below—\ncomprises only 15 of PCSK9’s 692 amino acids. C.A. App.\n3802 (524:10-11), 3900 (724:15-16), 247 (100:5-10).\n\n\nC.A. App. 4152. It has a “unique” three-dimensional struc-\nture and “distinct” “chemical characteristics.” C.A. App.\n3880 (644:4-10). Only a limited number of antibody struc-\ntures can fit its “topology.” C.A. App. 3880 (644:4-10),\n3901-3902 (730:21-731:3).\n Dr. Jackson’s team designed protocols, using super-\nimmunized mice, to generate and select antibodies with\nthe shape and chemical complementarity to bind PCSK9’s\nsweet spot—and thereby block PCSK9 from binding LDL\nreceptors. C.A. App. 3876 (628:12-629:21); Pet. C.A. Br. 5-\n9, 13-16.\n 2. Claimant’s Patents Disclose PCSK9 Antibodies\n and Detailed Instructions that Teach Artisans\n How To Make Them\n The U.S. Patent and Trademark Office issued the ’165\nand ’741 patents with claims to monoclonal antibodies that\nbind one (or more) of the amino acids in PCSK9’s sweet\nspot, and thereby block PCSK9 from binding to LDL re-\nceptors. Pet. App. 3a; C.A. App. 411-412, 796-797. Am-\n 12\ngen’s patents are a “rich handbook,” providing “a wealth\nof information” about the claimed antibodies. C.A. App.\n3910 (763:1-12).\n Example antibody sequences. The patents disclose 26\nexample antibodies, characterized by amino-acid se-\nquence, that bind PCSK9’s sweet spot and thereby block\nPCSK9 from binding to LDL receptors. C.A. App. 51-116\n(Figs. 2A-3JJJ), 240 (85:9-43). The patents also disclose\nthe results of Claimant’s x-ray crystallography studies on\ntwo antibodies—21B12 and 31H4—providing an atomic-\nlevel picture of where those antibodies bind to PCSK9.\nC.A. App. 169-171 (Figs. 19A-19B, 20A), 174-176 (Figs.\n20D-20F), 247-249 (Exs. 28-31). Those two antibodies bind\nacross the sweet spot—one on each side—precisely where\nLDL receptors would bind if an antibody did not already\noccupy the binding site. C.A. App. 3876 (630:19-25).\n\n\nC.A. App. 171 (Fig. 20A). Consequently, as explained be-\nlow, skilled artisans can use 21B12 and 31H4 as “anchor”\nantibodies to identify any other antibodies that bind any-\nwhere on PCSK9’s sweet spot. C.A. App. 3904 (742:6-13).\nAntibody 21B12 is the basis for Claimant’s Repatha®, the\nfirst PCSK9 inhibitor approved worldwide to treat high\n 13\nLDL cholesterol. C.A. App. 3793 (488:18-24), 3800 (513:23-\n514:2).\n Instructions for generating additional antibodies. The\npatents’ specification sets out a step-by-step “roadmap”\nfor generating antibodies, beyond the 26 examples, that\nfall within the patents’ claims. See Pet. C.A. Br. 13-16.\nClaimant, the patents disclose, had isolated many more anti-\nbodies that bind the sweet spot and block PCSK9’s inter-\naction with LDL receptors: By immunizing two panels of\n10 mice each, Claimant had identified 384 antibodies that\nblock PCSK9 from binding LDL receptors “well,” 85 of\nwhich block the interaction by “greater than 90%.” C.A.\nApp. 234 (Tbl. 3), 236-237 (77:66-80:37), 3797-3798 (504:4-\n506:25).\n The roadmap leverages the inventors’ anchor anti-\nbodies—21B12 and 31H4—as a shortcut to obtain the\nother antibodies that bind PCSK9’s sweet spot and\nthereby block it from binding to LDL receptors. C.A. App.\n3904 (742:6-13). The roadmap describes in detail how to\nuse those anchor antibodies with “methods for obtaining\nand screening monoclonal antibodies” that had been “well\nknown” in the art for decades. In re Wands, 858 F.2d 731,\n736 (Fed. Cir. 1988).\n First, the patents instruct skilled artisans to make ei-\nther antibody 21B12 or 31H4 using the amino-acid se-\nquences the patents provide. C.A. App. 238-239 (Exs. 4.1-\n5), 59 (Fig. 3E), 90 (Fig. 3JJ), 3903 (737:12-738:10).\n Second, the patents direct scientists to inject PCSK9\ninto mice to generate antibodies that bind to PCSK9.\nPet. App. 38a-39a.2 The “extensive schedule” of immuniza-\n\n\n2\n The patents teach that, alternatively, phage display—a non-animal\nmeans of generating antibodies, C.A. App. 3896 (709:2-10)—can be\n 14\ntions disclosed in Claimant’s patents maximizes their pro-\nduction of the “full spectrum” of PCSK9 antibodies. C.A.\nApp. 3904 (739:21-740:11), 3797 (501:2-502:15), 234 (Tbl. 3).\nThe patents explain how to use Claimant’s enhanced assays\nto identify the mouse-produced antibodies that bind some-\nwhere on PCSK9. See C.A. App. 236-238 (Ex. 3). The as-\nsays screen hundreds of antibodies at once. C.A. App.\n3797 (503:18-504:18), 3898 (718:3-23).\n Third, the patents teach using one of the “anchor” an-\ntibodies from step one—21B12 or 31H4—in competition\nassays to identify the antibodies from step two that bind\nto PCSK9’s sweet spot. C.A. App. 3904 (741:24-742:13). If\na generated antibody binds at the part of the sweet spot\ncovered by an anchor antibody, they will “compete,” as\nthey cannot both occupy the same spot. That gives arti-\nsans “a very good idea” that the new antibody binds to the\n“sweet spot” and falls within the claims. Ibid. Those com-\npetition assays are also high-throughput. See C.A. App.\n241 (88:34-47), 3909 (761:1-762:1).\n Fourth, the patents teach running Claimant’s optimized\nblocking test to confirm that the antibodies from step\nthree—those that compete with 21B12 or 31H4—block\nPCSK9’s interaction with LDL receptors. C.A. App. 3904-\n3905 (742:14-743:17), 3798 (505:2-8). The patents also ex-\nplain that skilled artisans can perform alanine scanning to\n“verif [y] * * * exactly which amino acids” on PCSK9 the\n“antibodies are binding to.” C.A. App. 3905 (744:20-\n745:12); see C.A. App. 244 (Ex. 18).\n Conservative substitution. The patents also describe\nhow artisans, with a claimed antibody in hand, can make\n“variants” using another “well-known technique[ ]” called\n\nused, C.A. App. 223 (52:23-42), 225 (55:1-5); see C.A. App. 3909 (759:7-\n17).\n 15\n“conservative amino acid substitution[ ].” C.A. App. 221\n(48:21-23, 48:29-33), 3917 (792:23-793:3); see Pet. C.A. Br.\n17. Conservative substitution involves replacing selected\namino acids in the antibody with others known to have\n“common * * * properties.” C.A. App. 211 (27:32-39, 28:1-\n5, Tbl. 1). The variants are expected to “retain a similar\nbiological activity” as the original. C.A. App. 211 (27:60-\n62). Variants made through conservative substitutions\nwith one or two changes are over 99% similar to the orig-\ninal antibody—“essentially copies.” C.A. App. 3788 (467:7-\n15); see Pet. C.A. Br. 17 & nn.5-6. “Conservative” substitu-\ntions thus are made without “substantially chang[ing] the\nstructural characteristics of the parent sequence,” C.A.\nApp. 222 (49:65-50:1), and “without destroying” antibody\n“activity,” C.A. App. 221 (48:23-33).\n B. Two Juries Find Claimant’s Patents Valid\n 1. After Claimant filed its first patent application in\n2007, C.A. App. 3800 (514:3-18), Respondent used the “an-\nchor antibodies” disclosed in Claimant’s applications to de-\nvelop the PCSK9 antibody alirocumab (marketed as “Pra-\nluent”). Having screened mouse-generated antibodies,\nRespondent tested its lead antibodies against Claimant’s an-\nchor antibodies 21B12 and 31H4. See U.S. Patent No.\n8,357,371 (“ ’371 patent”). Those tests showed that Pralu-\nent (laboratory name 316P) competes with both Claimant\nanchor antibodies and thus binds to PCSK9’s sweet spot.\nId. at 34:25-34, Tbl. 22.3\n 2. In October 2014, Claimant sued Respondent Respondent\nand Respondent (“Respondent-Respondent”) for patent infringe-\n\n\n3\n “Control II” in Table 22 of Respondent’s patent is Claimant’s anchor\nantibody 31H4. See ’371 patent, at 26:39-40; C.A. App. 59. “Control\nIII” in Table 22 is Claimant’s anchor antibody 21B12. See ’371 patent,\nat 28:3-4; C.A. App. 90.\n 16\nment, alleging that Praluent infringes Claimant’s ’165 and\n’741 patents. Pet. App. 5a. One month after Claimant filed\nsuit, Respondent-Respondent purchased a priority-review\nvoucher so Praluent would leapfrog Claimant’s Repatha in\nthe FDA review queue. D. Ct. Dkt. 864 at 488:18-490:1; see\n21 U.S.C. § 360ff. Consequently, although Claimant sought\nFDA approval three months before Respondent-Respondent, the\nFDA approved Respondent-Respondent’s Praluent one month\nbefore approving Claimant’s Repatha. Claimant, 872 F.3d at\n1371-1372.\n 3. Respondent-Respondent stipulated to infringement, see\nClaimant, 872 F.3d at 1372, but asserted multiple invalidity\ndefenses, including lack of “written description” and “en-\nablement,” Pet. App. 5a. Two juries found Claimant’s pat-\nents valid. Pet. App. 5a-6a.\n After the first trial, the jury rejected Respondent-Regener-\non’s invalidity challenges, and the district court denied\nJMOL. C.A. App. 2061-2065, 2885. The Federal Circuit\nvacated and remanded for a new trial. See Claimant, 872\nF.3d at 1375-1382. The court ruled that Respondent-Regen-\neron, to support its non-enablement argument, should\nhave been permitted to present evidence of PCSK9 anti-\nbodies developed after Claimant’s patents were filed. Id. at\n1375.\n 4. After a second trial, another jury rejected Respondent-\nRespondent’s validity challenges. Pet. App. 6a. The district\ncourt upheld the jury’s verdict that the patents provided\nan adequate written description. Pet. App. 23a-27a. While\nthe court acknowledged “conflicting testimony” on many\nissues, e.g., Pet. App. 35a, it overturned the jury’s enable-\nment verdict as a matter of law, Pet. App. 31a-44a, holding\nthat “undue experimentation would be needed to practice\nthe” claims’ “full scope,” Pet. App. 44a.\n 17\n The court did not identify an actual antibody within the\nclaims that the patents failed to enable. Instead, it cited\nRespondent-Respondent’s speculation that “ ‘you could be immu-\nnizing mice for a hundred years,’ ” but “ ‘[t]here might be\nkind of an antibody that you didn’t come up with in that\ntime period.’ ” Pet. App. 42a (emphasis added). The court\nalso invoked “conservative substitution” to suggest that\nmany potential variants of working antibodies could be\ngenerated and tested. Pet. App. 43a-44a. It did not dis-\npute, however, that Respondent-Respondent never identified\nany conservative substitution that destroyed the activity\nof any claimed antibody.\n C. Proceedings Before the Federal Circuit\n The Federal Circuit affirmed. Pet. App. 1a-15a.\n 1. On appeal, Respondent-Respondent again failed to iden-\ntify a single antibody within the claims that would not be\ngenerated quickly and easily by following the patents’\nteachings. Pet. C.A. Br. 37-38. No one disputed that the\njury heard testimony that Claimant’s roadmap will “gen-\nerate” antibodies within the claims every time, C.A. App.\n3908 (756:8-20, 757:12-14), 3909 (762:14-20), or that skilled\nartisans following the patents’ roadmap “would be certain\nto make all of the claim’s antibodies,” C.A. App. 3909\n(762:10-20) (emphasis added); see C.A. App. 3908-3909\n(757:12-760:21), 3918-3919 (798:25-799:5). Respondent-Regen-\neron never identified even one variant made with con-\nservative substitution that failed to work. Pet. C.A. Br. 59;\nPet. C.A. Reply 14-15. While Respondent-Respondent had ob-\ntained a new trial to present antibodies that supposedly\nwere not enabled—arguing that four were not—it never\nargued on appeal that the jury was required to find Respondent-\nRespondent had proved one or more of those not enabled.\nPet. C.A. Reply 3.\n 18\n The Federal Circuit nonetheless held Claimant’s claims\nnot enabled. Pet. App. 15a. Proving a claim “invalid for\nlack of enablement,” the court observed, requires “clear\nand convincing evidence that a person of ordinary skill in\nthe art would not be able to practice the claimed invention\nwithout undue experimentation.” Pet. App. 7a (quotation\nmarks omitted). But it held that genus claims like Am-\ngen’s confront uniquely “high hurdles in fulfilling the\nenablement requirement.” Pet. App. 12a. Genus claims\n“cover[ ] a group of structurally related products that in-\ncorporate the basic advance of the patented invention.”\nKarshtedt, at 3. They often recite structural elements or\nformulas in combination with functional language (the\ndesired action or result) to cover the “embodiments of the\ninvention” sharing the common inventive feature. Id. at\n13.\n For genus claims with “functional claim limitations,”\nthe Federal Circuit held, “ ‘undue experimentation can in-\nclude’ ” the effort to “ ‘identify[ ]’ ” all potential variations\nof the invention that meet the claim’s requirements.\nPet. App. 12a. The Federal Circuit asks how much exper-\nimentation “would be required” for skilled artisans “to\nreach the full scope of claimed embodiments,” Pet. App.\n14a (emphasis added)—i.e., the cumulative effort neces-\nsary to identify and make all, or nearly all, variations of\nthe invention that might exist within the genus. If doing\nso would require “ ‘substantial time and effort,’ ” the\npatent is not enabled—even if individual embodiments\nacross the invention can be made easily. Ibid.\n The Federal Circuit acknowledged that “[t]he parties\ndispute[d]” myriad factual issues at trial. Pet. App. 12a.\nBut it ruled that the claims were not enabled because, “to\nreach the full scope of claimed embodiments,” Pet. App.\n14a, skilled artisans would have “to first generate and then\n 19\nscreen” every theoretical “candidate” “to determine wheth-\ner it” falls within the claims, Pet. App. 15a. The Federal\nCircuit posited that “millions of candidate[ ]” antibodies\nmight need testing; that the antibody arts are “unpre-\ndictable”; and that the patents lack “adequate guidance”\nbeyond the 26 “working examples.” Pet. App. 13a-15a;\ncontra C.A. App. 3883 (658:1-5). The Federal Circuit did\nnot dispute that making individual embodiments was easy.\nYet it held the claims were not enabled because “reach-\n[ing] the full scope of claimed embodiments” would re-\nquire “ ‘substantial time and effort.’ ” Pet. App. 15a.\n 2. The Federal Circuit denied rehearing. In an opin-\nion respecting denial, Pet. App. 58a-68a, the panel ad-\ndressed “[a]mici and others bemoaning” the panel’s reach-\nthe-full-scope test, Pet. App. 63a. The “limited guidance in\nthe specification,” it insisted, “made far corners of the\nclaimed landscape * * * particularly inaccessible or un-\ncertain.” Pet. App. 65a (emphasis added). The opinion,\nhowever, did not identify any actual embodiment skilled\nartisans would consider “inaccessible or uncertain.”\n SUMMARY OF ARGUMENT\n I. A. Section 112 of the Patent Act requires that patents\nprovide a description “of the invention, and of the manner\nand process of making and using it,” that is sufficient to\n“enable any person skilled in the art * * * to make and use\nthe same.” 35 U.S.C. § 112(a). For two centuries, this\nCourt and others have described and applied the enable-\nment standard consistent with that text. The Federal Cir-\ncuit’s decision below, however, imposes a different stan-\ndard for certain patent claims, requiring that skilled\nartisans be able to “reach the full scope of claimed embodi-\nments”—i.e., to cumulatively identify and make all, or\nnearly all, possible variations of the invention—without\n“ ‘substantial time and effort.’ ” The Federal Circuit ack-\n 20\nnowledges that standard “raises the bar” for enablement.\nThe Federal Circuit’s new standard has no basis in § 112’s\ntext.\n B-C. Centuries of precedent refute the Federal Cir-\ncuit’s reach-the-full-scope test. This Court has never sug-\ngested that enablement turns on the cumulative “ ‘time\nand effort’ ” that would be required to make all, or virtually\nall, of a claimed invention’s potentially numerous embodi-\nments. It has repeatedly upheld patents that would have\nflunked such a test. Enablement decisions from Framing-\nera English courts, early American circuit courts, and the\nregional courts of appeals before the Federal Circuit’s\ncreation all defy that new standard. The fact that no court\nhad identified a reach-the-full-scope test in those many\nyears confirms the Federal Circuit’s error.\n D. The Federal Circuit’s reach-the-full-scope stand-\nard serves no valid patent-law policy and harms innova-\ntion. The Federal Circuit’s test fundamentally alters the\nbasic patent bargain, denying an inventor a patent based\nsheerly on the number of possible embodiments, even if\nthe patent’s disclosures teach the world how to “make and\nuse” the claimed invention. The Federal Circuit’s test dis-\ncourages breakthrough innovations by cutting off patent\nprotection for the most significant inventions simply\nbecause they have too many useful applications. That\nthreatens devastating consequences.\n II. A. Section 112 itself supplies the controlling stand-\nard: The specification must “enable any person skilled in\nthe art * * * to make and use” the invention. 35 U.S.C.\n§ 112(a). As this Court has explained, that is a standard of\n“reasonableness” in view of the patent’s subject matter.\nWhere a patent claim covers many different potential em-\nbodiments, the specification’s instructions must be suffi-\nciently robust to permit skilled artisans to reasonably\n 21\nmake and use individual embodiments as needed. Patent\nclaims need not be so narrow that skilled artisans can\nmake all embodiments, seriatim, with minimal time and\neffort.\n B. The statutory “make and use” standard, and this\nCourt’s cases applying that standard, fully address the\nFederal Circuit’s concerns about overbroad patent claims.\nIf a claim truly exceeds what the patent enables, chal-\nlengers will be able to produce evidence showing they\ncannot reasonably “make and use” the invention by fol-\nlowing the patent’s teachings.\n III. Claimant’s patents satisfy any proper formulation of\n§ 112’s enablement standard. Skilled artisans can make\nthe 26 antibodies identified in the patents by amino-acid\nsequence. They can also make other antibodies within the\nclaims by following the patents’ “roadmap” and its instruc-\ntions on conservative substitution, both of which employ\nmethods routine in the antibody arts. Respondent-Respondent\nwas given a retrial for the purpose of introducing evidence\nof specific, actual antibodies not enabled by Claimant’s pat-\nents. But it failed to identify even one actual antibody\nwithin the claims that could not be made following the pat-\nents’ disclosures.\n ARGUMENT\nI. THE FEDERAL CIRCUIT’S REACH-THE-FULL-SCOPE\n STANDARD DEFIES TEXT, PRECEDENT, HISTORY, AND\n POLICY\n This Court has emphasized that the Patent Act is a\nstatute and must be read as such. Bilski v. Kappos, 561\nU.S. 593, 602-603 (2010). The Federal Circuit’s “enable-\nment” standard cannot be reconciled with the Patent Act’s\ntext. It defies precedent, history, and policy as well.\n 22\n A. The Federal Circuit’s Reach-the-Full-Scope\n Standard Finds No Support in § 112\n Section 112(a) states:\n The specification shall contain a written descrip-\n tion of the invention, and of the manner and pro-\n cess of making and using it, in such full, clear, con-\n cise, and exact terms as to enable any person\n skilled in the art to which it pertains * * * to make\n and use the same * * * .\n35 U.S.C. § 112(a) (emphasis added). Those requirements\nare straightforward. Section 112(a) mandates a disclo-\nsure: The “specification shall contain a written descrip-\ntion.” The description must be “of the invention.” It must\nbe “of the manner and process of making and using” the\ninvention. And it must be “in such full, clear, concise, and\nexact terms as to enable any person skilled in the art * * *\nto make and use the” invention. “The object” of that en-\nablement requirement “is to require the patentee to de-\nscribe his invention so that others may construct and use\nit” after the patent expires. Schriber-Schroth Co. v. Cleve-\nland Tr. Co., 305 U.S. 47, 57 (1938).\n 1. That statutory standard—sufficiently “full, clear,\nconcise, and exact * * * as to enable” skilled artisans “to\nmake and use” the invention—is so clear that this Court\napplies it directly. See, e.g., Loom Co. v. Higgins, 105 U.S.\n580, 586 (1882) (evaluating whether patentee “describe[d]\nhis invention in such full, clear, and exact terms as to ena-\nble persons skilled in the art to construct and use it”);\nMowry v. Whitney, 81 U.S. (14 Wall.) 620, 644 (1872) (eval-\nuating whether specification was “in such full, clear, and\nexact terms * * * as to enable any person skilled in the art\nor science to which it appertains * * * to make, construct,\ncompound, and use the [invention]”); Wood v. Underhill,\n46 U.S. (5 How.) 1, 5 (1846) (“The specification must be in\n 23\nsuch full, clear, and exact terms as to enable any one\nskilled in the art to which it appertains to compound and\nuse the invention * * * .”).\n This Court has described the enablement standard con-\nsistent with the statutory text. A patent’s disclosure, the\nCourt has stated, “satisfies the law” if it is “sufficiently\ndefinite to guide those skilled in the art to” the “successful\napplication” of “the invention,” Minerals Separation, Ltd.\nv. Hyde, 242 U.S. 261, 271 (1916); it teaches skilled artisans\n“to practice the invention,” Universal Oil Prods. Co. v.\nGlobe Oil & Refin. Co., 322 U.S. 471, 484 (1944); or it\n“points out some practicable way of putting [the invention]\ninto operation,” The Telephone Cases, 126 U.S. 1, 536\n(1888). If the specification teaches skilled artisans to prac-\ntice the invention, that satisfies § 112’s “object[ive].” Schri-\nber-Schroth, 305 U.S. at 57. The patent must provide\nenough guidance so that skilled artisans, “following [the\npatent’s] directions, may produce from it alone a practical-\nly operative invention.” 2 W. Robinson, The Law of Pat-\nents for Useful Inventions § 485 (1890) (“Robinson”). It\nmust “enable a mechanic of ordinary skill to construct it\nand apply it to practical use.” Aultman v. Holley, 2 F. Cas.\n217, 222 (C.C.S.D.N.Y. 1873).\n While the specification may “leav[e] something to the\nskill of persons applying the invention,” Minerals Separa-\ntion, 242 U.S. at 271, it may be insufficiently “full,” “clear,”\nand “exact,” 35 U.S.C. § 112(a), if skilled artisans must ex-\nercise more than ordinary skill to create an operative em-\nbodiment of the invention. The patent is “insufficient”\nwhen “independent invention would have to be exercised,”\nLoom Co., 105 U.S. at 591, because simply following the\npatent’s directions does not produce “a practically opera-\ntive invention,” 2 Robinson § 485. In the now-seminal\nWands decision, the Federal Circuit characterized that\n 24\nline as one of “undue experimentation.” In re Wands, 858\nF.2d 731, 737 (Fed. Cir. 1988). If the required efforts ex-\nceed what “[p]ractitioners of [the] art are prepared to” un-\ndertake in the regular course, the experimentation is “un-\ndue” and the invention is not “enable[d].” Id. at 740.\n 2. The standard adopted by the Federal Circuit in this\ncase departs from § 112’s text. For “genus claims” like\nClaimant’s, the Federal Circuit imposes a “high[er] hurdle.”\nPet. App. 12a. Genus claims “cover[ ] a group of structur-\nally related products that incorporate the basic advance of\nthe patented invention,” and often use “functional lan-\nguage” or “formulas” to encompass a class of “embodi-\nments” that employ the inventive feature. D. Karshtedt et\nal., The Death of the Genus Claim, 35 Harv. J.L. & Tech.\n1, 3, 13 (2021) (“Karshtedt”).\n In such cases, the Federal Circuit does not merely ask\nwhether the specification’s disclosures teach skilled arti-\nsans to “make and use” the invention, 35 U.S.C. § 112(a),\ni.e., to “successful[ly] appl[y]” the invention, Minerals\nSeparation, 242 U.S. at 271. Instead, it asks whether\n“ ‘substantial time and effort’ would be required to reach\nthe full scope of claimed embodiments.” Pet. App. 14a\n(emphasis added); see Pet. App. 11a (effort “required to\nmake and use, not only the limited number of embodi-\nments the patent discloses, but also the full scope of the\nclaim”). The court focuses on the “number of possible can-\ndidates within the scope of the claims”—the number of\ntheoretical embodiments that might meet the claims’ re-\nquirements. Pet. App. 10a (emphasis added). If the court\ndetermines that it would require “undue” effort to, one-by-\none, make all or almost all the various candidates and\n“identify[ ]” those that “satisfy” a claim’s requirements, it\ndeems the patent invalid for lack of enablement. McRO\n 25\nInc. v. Bandai Namco Games Am. Inc., 959 F.3d 1091,\n1100 n.2 (Fed. Cir. 2020); see Pet. App. 12a.\n The Patent Act contains no such how-long-to-make-\nthem-all test. The fact that the Federal Circuit has an-\nnounced a distinct test, “rais[ing] the bar” for claims it\ncharacterizes as genus claims with functional elements,\nPet. App. 11a-13a—and employs other tests for other\nclaims, see McRO, 959 F.3d at 1100 & n.2—makes the\ncourt’s departure from the statutory text clearer still. The\nstatute provides a single, universal enablement standard\nfor all “invention[s].” 35 U.S.C. § 112(a). It does not pro-\nvide different tests for different technologies, different\nclaim formats, claim breadth, or the state of the art.\n 3. This case illustrates how far the Federal Circuit’s\ntest departs from the statutory standard. Claimant presen-\nted evidence that the patents’ roadmap produces claimed\nantibodies every time, and that the roadmap will “make all\nthe antibodies within the scope of the claims.” C.A. App.\n3908 (757:12-14), 3909 (762:10-20). Over 30 years ago, the\nFederal Circuit recognized that the techniques disclosed\nin Claimant’s patents—immunizing mice and identifying an-\ntibodies that bind at the targeted location—are “well\nknown” “methods for obtaining and screening monoclonal\nantibodies.” Wands, 858 F.2d at 736. Because “[p]racti-\ntioners of this art are prepared to” perform that work “in\norder to find * * * the desired antibody,” those techniques\nare not “undue experimentation.” Id. at 740.\n Here, neither the Federal Circuit nor Respondent-Regen-\neron identified even one actual antibody within the claims\nthat could not be made following the patents’ roadmap or\nthat would require undue experimentation. Pet. C.A.\nReply 3. Respondent-Respondent obtained a new trial for the\npurpose of presenting such evidence. But it came up\nempty: Testimony showed that the four antibodies Respondent-\n 26\nRespondent proffered could be made following Claimant’s\nroadmap. See pp. 50-51, infra. With respect to “conser-\nvative substitution,” neither the Federal Circuit nor\nRespondent-Respondent identified a single instance in which\nmaking amino-acid substitutions specified in the patents\nproduced a variant of a claimed PCSK9 antibody that lost\nits ability to bind to PCSK9’s sweet spot and block\nPCSK9’s interaction with LDL receptors. See Pet. C.A.\nReply 14; see pp. 49-50, infra. Nor did the Federal Circuit\nor Respondent-Respondent identify information missing from\nClaimant’s patents that left skilled artisans to conduct\nundue experimentation to make and use claimed anti-\nbodies.\n The Federal Circuit nevertheless ruled that every rea-\nsonable juror would be compelled to find that Respondent-\nRespondent had clearly and convincingly proved the claims\nnot enabled. Pet. App. 14a-15a. Instead of focusing on the\ndepth of information the patents provided, and whether\nskilled artisans could “produce from it alone a practically\noperative invention,” 2 Robinson § 485, the court turned\nenablement into a numbers game. The court emphasized\nthat Claimant’s patents provided only “twenty-six exam-\nples” of antibodies described by amino-acid sequence\nwhile claiming many more. Pet. App. 8a. And it noted that\nthe 26 example antibodies do not bind to each of the 15\namino acids in the sweet spot, and that none binds to more\nthan nine. Pet. App. 13a & n.1. The Federal Circuit pos-\nited “millions of candidates,” beyond the “disclosed exam-\nples,” that might fall within the claims, each of which\nwould have to be “generate[d] and then screen[ed]” to de-\ntermine whether it met the claims. Pet. App. 14a-15a.\n The Federal Circuit thus failed to identify any actual\nproblem skilled artisans face in practicing the invention.\nInstead, it looked to how much “ ‘time and effort’ would be\n 27\nrequired” for skilled artisans “to reach the full scope of\nclaimed embodiments,” Pet. App. 14a (emphasis added)—\ni.e., the cumulative effort necessary to identify and make\nall or nearly all variations within the genus—no matter\nhow theoretical or speculative any variation might be.\nWhile the Federal Circuit denied “hold[ing] that the effort\nrequired to exhaust a genus is dispositive,” ibid. (emphasis\nadded), it at least ruled that enablement depends on the\ncumulative effort required to make and use some large,\nbut unspecified, range of embodiments. Courts, it de-\nclared, must examine the effort “required to make and\nuse, not only the limited number of embodiments the pat-\nent discloses, but also the full scope of the claim.”\nPet. App. 11a.\n That “dramatically” changes enablement law, “to the\npoint where it is nearly impossible to maintain a valid\ngenus claim.” Karshtedt, at 1. The law has long been clear\nthat, no matter the size of the claimed genus, the “appli-\ncant is not required to describe all possible forms in which\n[the invention] may be reduced to practice.” 2 Robinson\n§ 485. That task is “[p]lainly * * * impossible,” Mowry, 81\nU.S. at 645, for all but the narrowest inventions. Enable-\nment asks not whether there is a large delta between the\nnumber of examples the patent discloses and the number\nof embodiments potentially covered by the claims. It asks\nwhether the patent teaches skilled artisans to “make and\nuse” the invention, including embodiments not specifically\nexemplified.\n 4. The Federal Circuit did not attempt to justify its\nreach-the-full-scope standard by reference to § 112’s text.\nIt stated that its “focus[ ] on the [invention’s] breadth”\n“emerges from” the Federal Circuit’s—not this Court’s—\n“case law.” Pet. App. 11a.\n 28\n Without expressly endorsing the reach-the-full-scope\nstandard, the government appears to posit a statutory ba-\nsis for it. The government emphasizes that § 112 requires\nthat the specification teach skilled artisans to make and\nuse “ ‘the invention.’ ” CVSG.Br. 16 (quoting 35 U.S.C.\n§ 112(a)). It notes that, when the claim covers a genus,\n“the patent must enable that entire genus.” Ibid. Respondent-\nRespondent similarly asserts that § 112(a) is not satisfied\n“if the patent describes how to make and use only part of\nthe invention.” Br. in. Opp. 30. But no one denies that a\npatent must reasonably enable the entire scope of the\nclaim—there cannot be large tracts of claimed subject\nmatter that are not enabled. The problem is that the\nFederal Circuit requires something else entirely. It im-\nposes a standard that looks to the number of claimed\nembodiments and the cumulative “time and effort” to\n“reach” every (or nearly every) embodiment within the\nclaim—to identify and make them all—a categorically\ndifferent and exponentially more demanding standard\nthan § 112 imposes.\n Any such view of § 112 rests on an extraordinary rather\nthan ordinary understanding of what it means to “make\nand use the invention.” In ordinary understanding, that\nphrase means being able to produce and employ physical\nversions of the invention as needed. It would not ordi-\nnarily mean that one can “make and employ every possible\nvariation of the invention in succession” without expend-\ning much time or effort in the process. For example, there\nare nearly limitless variations of the airplane. Different\nmaterials, wing configurations, body styles, means of\npropulsion, etc., are possible; some of the variations might\nentail further inventions, e.g., the jet engine. But no one\nwould think that skilled aeronautical engineers cannot\n“make and use” the airplane simply because one cannot\n 29\nsequentially or simultaneously build and utilize every con-\nceivable variation (or improvement) without “ ‘substantial\ntime and effort.’ ”\n Section 112’s point is practical: to ensure that inventors,\nin their patents, teach the world to make and use their in-\nventions. Section 112 thus requires a “written descrip-\ntion” of how to make and use the invention—one that is\nboth “clear” and “concise.” 35 U.S.C. § 112(a). Examining\nthe cumulative effort to make every or virtually every\nvariant of the invention in succession would be a bizarre\nway of evaluating the sufficiency of that description. No\none has identified a practical reason artisans would want\nor need to make all variations of the invention, collectively,\nwithout “ ‘substantial time and effort.’ ” The proper test\nfor enablement asks whether artisans can “make and use”\nthe invention in a practical sense—whether they are able\nto put the claimed inventive concept into practice, as\nneeded. If no one identifies even one, actual claimed\nembodiment that requires undue experimentation to\n“make and use” when following the patent’s instructions,\nas here, the jury is entitled to find the claims enabled. The\npresumption of validity is not overcome. 35 U.S.C.\n§ 282(a). And lack of enablement surely has not been\nproved by clear-and-convincing evidence. Microsoft Corp.\nv. i4i Ltd. P’ship, 564 U.S. 91, 95 (2011).\n B. This Court’s Precedents Refute the Federal\n Circuit’s Test\n This Court has long appreciated that, while patent\nclaims recite “ ‘[t]he principle of the invention,’ ” “ ‘the\nmodes of [the invention’s] embodiment’ ” in “ ‘concrete’ ”\nform “ ‘may be numerous and in appearance very different\nfrom each other.’ ” Cont’l Paper Bag Co. v. E. Paper Bag\nCo., 210 U.S. 405, 418-419 (1908) (quoting 2 Robinson\n§ 485). Nonetheless, “it is not necessary to * * * describe\n 30\nin the specification[ ] all possible forms in which the\nclaimed principle may be reduced to practice.” Smith v.\nSnow, 294 U.S. 1, 11 (1935). The Court has never suggest-\ned that enablement turns on the “ ‘time and effort’ ” that\nwould be required “to reach the full scope,” Pet. App. 14a,\nidentifying and making all of a claimed invention’s poten-\ntially numerous embodiments.\n 1. This Court’s decision in Wood v. Underhill fore-\ncloses any such reach-the-full-scope standard. The patent\nin that case was for an “improvement in the art of manu-\nfacturing bricks and tiles” that involved mixing coal dust\nand clay. 46 U.S. at 4. The Court acknowledged there\nwere “variations” in types of clay. Id. at 5. The patent,\nhowever, did not specify the ratio of coal dust for each\ntype. Ibid. It provided “a certain proportion as a general\nrule,” but called for variation: Clay “which requires the\nmost burning will require the greatest proportion of coal-\ndust,” it stated; “some clay may require one eighth more\nthan the proportions given, and some” clay a still different\namount. Ibid.\n The lower court took the case from the jury based on its\ndetermination that “the specification was too vague and\nuncertain to support the patent.” 46 U.S. at 5-6. This\nCourt reversed. Id. at 6. While the patent mentioned two\ndepartures from its general proportion of clay and coal\ndust, the Court regarded those as “exceptions” for clay\nwith “some peculiarity.” Id. at 5. The Court explained\nthat it would be proper to take the case from the jury only\nif “the improvement cannot be used with advantage in any\ncase, or with any clay, without first ascertaining by experi-\nment the proportion to be employed.” Ibid. (emphasis\nadded). Because that “d[id] not appear to be the case,” the\nCourt held the jury must determine whether the specifica-\ntion’s “description” of the invention was “so full, clear, and\n 31\nexact as to enable any one skilled in the art to compound\nand use it.” Id. at 5-6. It did not hold, as the Federal Cir-\ncuit requires, that enablement turned on the “ ‘time and\neffort’ ” necessary “to reach the full scope” by determining\nthe proportion of coal dust required for every variation\nskilled artisans might use.\n 2. Mowry similarly defies the notion that enablement\ndepends on the time and effort needed to “reach” the full\nrange of embodiments. See 81 U.S. at 644-645. There, the\npatent’s claimed process for manufacturing railway\nwheels avoided “strain” that results from different wheel\nparts cooling at different rates. Id. at 625-626. The patent\ndisclosed removing the wheel from the mold before it\n“cooled [so much] as to produce such inherent strain on\nany part as to impair” the wheel; reheating the wheel so\nthat all parts were equal temperature; and then cooling all\nparts “with equal slowness.” Id. at 628-629, 641. The pat-\nent stated that the process could be applied to wheels of\n“any form,” whether made with “spokes” or “disks con-\nnecting the rim and hub.” Id. at 628.\n The Court recognized it was “[p]lainly * * * impossible\nto describe” the specific temperature at which every wheel\nwould experience strain, requiring removal from the mold\nand reheating. 81 U.S. at 645. Depending on structure,\n“thick and thin parts” will be in “different stages of cool-\ning.” Ibid. The timing and reheating temperature re-\nquired for each wheel type were thus “left to the judgment\nof the operator.” Id. at 646. Yet the Court found the pat-\nent enabled because the operator, “in following the direc-\ntions of the specification, would be taught by his practical\nknowledge” how to successfully apply the method to a\nparticular wheel. Ibid.\n 3. Minerals Separation is to the same effect. To im-\nprove the process for the “ ‘concentration of [metallic]\n 32\nores,’ ” the invention involved adding oil to the ore and\nagitating the mixture. 242 U.S. at 263, 265. This Court\nexplained that “each” type of ore “present[s] its [own]\nspecial problem.” Id. at 271. The “amount of oil and the\nextent of agitation necessary in order to obtain the best\nresults” would vary for each type of metal. Id. at 270. The\npatent, however, did not explain how to alter those vari-\nables for the “infinite[ ]” varieties of ore; skilled artisans\nwould have to conduct “preliminary tests” to identify the\n“precise treatment” for each. Id. at 270-271.\n The patent in Minerals Separation would fail the\nFederal Circuit’s reach-the-full-scope test: The “ ‘time\nand effort’ ” necessary for skilled artisans to identify every\niteration for the “infinite” ore varieties would have been\nenormous. But this Court upheld the patent, explaining\nthat “it is obviously impossible to specify in a patent the\nprecise treatment” for each variation. 242 U.S. at 271.\nThe statute’s demands are “not greater than is reasonable,\nhaving regard to [the patent’s] subject-matter.” Id. at 270.\nIt was enough that skilled artisans could apply the process\nto particular ores as needed. Id. at 271.\n C. Centuries of Enablement Practice Refute a\n Reach-the-Full-Scope Test\n The Federal Circuit’s reach-the-full-scope standard\nalso departs from longstanding practice, from the deci-\nsions of Framing-era English courts to the decisions of the\nFederal Circuit’s predecessors. That “two centuries” of\ncourts never articulated a reach-the-full-scope test “tends\nto negate the existence of ” any such standard. Printz v.\nUnited States, 521 U.S. 898, 918 (1997).\n 1. At the time the Patent Act of 1790 was enacted,\nEnglish courts in “ ‘enablement’ cases” simply asked juries\n“to determine whether the specification described the\ninvention well enough to allow members of the appropriate\n 33\ntrade to reproduce it.” Markman v. Westview Instru-\nments, Inc., 517 U.S. 370, 379 (1996). In Arkwright v.\nNightingale, Dav. Pat. Cas. 37 (C.P. 1785), for example,\nLord Loughborough instructed the jury that a patent’s\n“specification” must be “so intelligible, that those who are\nconversant in the subject are capable of * * * perpetuating\nthe invention.” Id. at 56; see E.W. Hulme, On the History\nof Patent Law in the Seventeenth and Eighteenth Cen-\nturies, 18 L.Q.R. 280, 284-285 (1902) (jury instructed to\ndecide “whether the specification is such as instructs\nothers to make it”). Juries were not asked to decide how\nlong it would take to identify and make the invention’s\nevery embodiment.\n Early English courts upheld patents that would have\nflunked the Federal Circuit’s reach-the-full-scope test. In\nNeilson v. Harford (1841) 151 Eng. Rep. 1266 (Exch.), the\nCourt of Exchequer considered Neilson’s patent “for the\nimproved application of air to produce heat in fires, forges,\nand furnaces, where bellows or other blowing apparatus\nare required.” Id. at 1267. Neilson’s patent claimed “in-\nterposing a receptacle for heated air between the blowing\napparatus and the furnace.” Id. at 1273. The patent was\nnot limited to specific receptacles, stating that the recep-\ntacle’s “size” and “shape” “may be adapted” as “neces-\nsary.” Id. at 1273-1274. Nor was the receptacle limited to\nany particular material, but “ ‘may be conveniently made\nof iron’ ” or “ ‘other metals or convenient materials.’ ” Id.\nat 1267. And the patent taught that any “manner of apply-\ning the heat to the air-vessel” may be used, “if it be kept\nat a proper temperature.” Ibid. The number of embodi-\nments of the invention was limitless.\n Addressing enablement, the Court of Exchequer did\nnot calculate the time and effort required for skilled arti-\nsans to employ every distinct iteration. Instead, it stated\n 34\nthat, “[t]o be valid,” patents need only provide a descrip-\ntion that, “if fairly followed out by a competent workman,\nwithout invention or addition, would produce the machine\nfor which a patent [was] taken out.” 151 Eng. Rep. at 1274.\n 2. Early American circuit cases were similar. In Car-\nver v. Braintree Manufacturing Co., 5 F. Cas. 235 (C.C.D.\nMass. 1843), Justice Story addressed an enablement chal-\nlenge to a patent for “ ‘a new and useful improvement in\nthe ribs of the cotton gin’ ” that was designed to reduce\nclumping during the ginning process. Id. at 235-237. The\npatent described “the thickness of the rib” as being “so\ngreat as to be equal to the length of the fibre to be ginned.”\nId. at 236. The challenger argued the description did not\n“enable a mechanic to make” the invention, because “the\nfibres of different kinds of cotton are of different lengths.”\nId. at 237. Justice Story explained that the proper ques-\ntion was “[w]hether a skilful mechanic could from this\ndescription make a proper rib for any particular kind of\ncotton” as needed. Ibid. (emphasis added). It did not\nmatter how long it would take a skilled artisan to make\nproper ribs for every kind of cotton that might be used.4\n Hewing to statutory text, historic treatises confirm that\nthe specification need only “enable an artist, skilled in the\nsubject, to make the thing.” W. Phillips, The Law of Pat-\nents for Inventions 237 (1837); see also G. Curtis, A Trea-\ntise on the Law of Patents for Useful Inventions § 124\n(1849) (similar). The “modes of putting an invention to\npractical use,” they recognize, are “often numerous and\nvaried,” even for non-genus claims. 2 Robinson § 486. But\nenablement merely requires the inventor to provide “di-\n\n4\n See also Bowker v. Dows, 3 F. Cas. 1070, 1071 (C.C.D. Mass. 1878)\n(patent enabled where embodiments “may be varied within pretty\nwide limits without affecting the result,” if individual variations “may\nbe ascertained very readily” by skilled practitioners).\n 35\nrections” for skilled artisans to “produce * * * a practically\noperative invention.” Id. § 485. That having been done,\n“all other possible modes are assumed to be suggested by\nit, unless they depend upon the further exercise of inven-\ntive skill, in which case they become new and separate in-\nventions.” Id. § 486 (emphasis added). The time and effort\nto work out all of the various forms the invention might\ntake is not part of the calculus.\n 3. Before the Federal Circuit’s formation, the region-\nal circuits shared the same view. The question, they ob-\nserved, is whether “the disclosure is sufficient to enable\none skilled in the art to practice the invention.” Toledo\nRex Spray Co. v. Cal. Spray Chem. Co., 268 F. 201, 204\n(6th Cir. 1920); see also Donner v. Am. Sheet & Tin Plate\nCo., 165 F. 199, 206 (3d Cir. 1908); Philip A. Hunt Co. v.\nMallinckrodt Chem. Works, 177 F.2d 583, 585 (2d Cir.\n1949); Ill. Tool Works, Inc. v. Foster Grant Co., 547 F.2d\n1300, 1309 (7th Cir. 1976). Petitioners have found no case\nimposing a standard that examines how long it takes to\nmake every embodiment within the claims.\n To the contrary, the courts of appeals routinely upheld\nclaims that would be invalidated under the Federal Cir-\ncuit’s reach-the-full-scope test. See, e.g., Franc-Stroh-\nmenger & Cowan, Inc. v. Arthur Siegman, Inc., 27 F.2d\n785, 785-786 (2d Cir. 1928) (patent for class of neckties\nwith a “resilient lining” to prevent “breaking of the stitch-\ning or distortion of the tie” enabled even though “it may\nrequire some experimentation to determine in each case\nwhat lining will do and what degree of looseness in the\nstitching”); Ansul Co. v. Uniroyal, Inc., 448 F.2d 872, 877-\n878 (2d Cir. 1971) (claim for method of treating “growing\nplants” with “maleic hydrazide” to inhibit growth satisfied\n§ 112 even though “growing plants” “encompass[ed] the\nentire plant kingdom”).\n 36\n The Federal Circuit’s predecessor—the Court of Cus-\ntoms and Patent Appeals—likewise described § 112’s “es-\nsence” as the requirement “that a specification shall dis-\nclose an invention in such a manner as will enable one\nskilled in the art to make and utilize it.” In re Gay, 309\nF.2d 769, 772 (C.C.P.A. 1962). Thus, in In re Angstadt, 537\nF.2d 498 (C.C.P.A. 1976), the C.C.P.A. cited Minerals Sep-\naration as “aptly” rejecting the notion that enablement\nrequires more than “ ‘guid[ing] those skilled in the art’ ” to\nthe invention’s “successful application.” Id. at 503-504\n(quoting Minerals Separation, 242 U.S. at 271). Angstadt\nconcerned a method for catalytically oxidizing a genus of\nhydrocarbons to form hydroperoxides, using catalyst\ncomplexes. Id. at 499. The court found the chemical pro-\ncesses to be “unpredictable,” and the inventor had “not\ndisclosed” from thousands of possibilities “every catalyst\nwhich will work.” Id. at 502. To identify and disclose all\nworking catalysts would require “a prohibitive number of\nactual experiments.” Id. at 502-503.\n The claims were enabled nonetheless. “[P]ersons skil-\nled in this art,” the court explained, “would know how to\nperform processes within the scope of the claims, within\nthe ambit of the types and amount of experimentation\nwhich the uncertainty of this art makes inevitable.” 537\nF.2d at 504. The court saw “no reason” why the patentees\n“should not be able to claim as their invention the broad\nrange of processes” encompassed by the claims. Ibid.; see\nIn re Halleck, 422 F.2d 911, 912, 914 (C.C.P.A. 1970) (up-\nholding patent claiming a class of “peristalsis-regulating\nsubstances for growth stimulation” in “all types of animals\nand poultry”).\n 37\n D. The Federal Circuit’s Reach-the-Full-Scope\n Standard Defies Patent-Law Policy and Harms\n Innovation\n The Federal Circuit’s departure from text, precedent,\nand history is not only wrong. It serves no valid patent-\nlaw policy, and impedes rather than promotes innovation.\n 1. The “patent system represents a carefully crafted\nbargain that encourages both the creation and the public\ndisclosure of new and useful advances in technology, in\nreturn for an exclusive monopoly for a limited period of\ntime.” Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 63 (1998).\nSection 112 offers patent protection in exchange for “de-\nscrib[ing] [the] invention so that others may construct and\nuse it” after the patent expires. Schriber-Schroth, 305\nU.S. at 57. The Federal Circuit’s reach-the-full-scope\nstandard reneges on that bargain. It denies an inventor a\npatent even if it teaches the world exactly how to “make\nand use” the invention, 35 U.S.C. § 112(a), simply because\ncourts can speculate about “far corners” of the genus, or\nthe time and effort that might be required to identify what\nthe court deems “enough” variations, Pet. App. 65a. That\nrule refuses to reward the inventor in favor of rewarding\nthe copyist who profits from following the patent’s teach-\nings to make yet another variation.\n The Federal Circuit’s rule does nothing to “promote the\nProgress of Science.” U.S. Const. art. I, § 8, cl. 8. Once an\ninvention has been described sufficiently for skilled arti-\nsans to make and use it, disclosing thousands more exam-\nples of variations that achieve the same result contributes\nlittle to the store of human knowledge. The act of “de-\nscrib[ing] all possible forms in which” a claimed invention\n“may be reduced to practice * * * belong[s] to the skill of\nthe mechanic, not the inventor.” 2 Robinson § 485.\n 38\n Worse still, the Federal Circuit’s reach-the-full-scope\ntest destroys incentives for breakthrough inventions. The\nmore pioneering the innovation, the more likely it is to\nhave a broad range of applications. Under the Federal\nCircuit’s test, however, the more numerous and varied an\ninvention’s applications, the more likely the patent will be\nfound invalid because “ ‘substantial time and effort’ would\nbe required to reach the full scope of claimed embodi-\nments.” Pet. App. 14a. The test is “impossible” to satisfy\nwhenever a claim covers a “nontrivial” number of embodi-\nments. Karshtedt, at 4. It makes no sense to deny ground-\nbreaking innovations patent protection because they\nsomehow have too many useful implementations.\n Respondent-Respondent insists that broad patent claims\n“ ‘preempt[ ] the future’ ” by deterring innovation within\nthe claims’ scope. Resp. C.A. Br. 53. But protecting the\nfull breadth of a breakthrough invention does not “pre-\nempt” later inventors from making improvements and se-\ncuring their own patents. “[N]ew and useful improve-\nments on” an invention are themselves “proper subjects of\nan application for a patent.” Seymour v. Osborne, 78 U.S.\n(11 Wall.) 516, 548 (1871). The Federal Circuit acknowl-\nedges that “[t]here is no inconsistency in awarding a ge-\nneric [claim] to one inventor, while awarding a patentably\ndistinct species [claim] to another.” Utter v. Hiraga, 845\nF.2d 993, 998 (Fed. Cir. 1988). The foundational principle\nof the patent system, expressed in the Constitution, is to\nadvance the progress of science by providing incentives\nfor inventors to discover and disclose their inventions so\nthat others can build and improve upon them. Upholding\npatent claims covering the invention’s breadth furthers\nthat pursuit and spurs others to pursue discoveries in the\nfield.\n 39\n 2. The Federal Circuit’s reach-the-full-scope test has\ndevastating consequences. It threatens genus claims in\nany field whenever they cover more than disclosed exam-\nples. See, e.g., Ex Parte Beall, No. 2020-001026, 2021 WL\n1208966, at *3 (P.T.A.B. Mar. 26, 2021) (invoking decision\nbelow in invalidating genus claim in glass-making field).\nThe impact on incentives to innovate is particularly severe\nin the biotech and pharmaceutical industries.\n In both, breakthroughs often involve identifying the\nmechanism for producing a desired effect and making a\nworking version. The inventive mechanism, however, may\nhave the same effect when implemented in any number of\nstructurally related compounds. Antibodies, for example,\nconsist of chains of amino acids, many of which can be\nchanged through routine processes without altering func-\ntion—such as the process of “conservative substitution”\nClaimant’s patents disclose. See pp. 14-15, supra; see also\nMoba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306,\n1325 (Fed. Cir. 2003) (Rader, J., concurring). First-\nmovers legitimately seek to protect their inventions\nthrough claims that use “functional language or generic\nformulas to cover individual embodiments of the invention,\nor species, that share a common attribute.” Karshtedt, at\n13 (footnote omitted).\n Such claims are essential to offering patent protection\ncommensurate with the invention’s scope. Where the in-\nvention may take many forms, claims covering only spe-\ncific versions do not provide “protection on the fruits of\n[the inventor’s] investment.” Pet. App. 65a. Copyists can\n“avoid infringement” simply by making a “minor change”\nwhile “still exploiting the benefits of [the] invention.”\nEnzo Biochem, Inc. v. Gen-Probe, Inc., 323 F.3d 956, 966\n(Fed. Cir. 2002). Such follow-on products profit from the\npatentee’s invention, which has “already * * * delivered”\n 40\nthe “proof of concept,” without any significant scientific\ncontribution of their own. K. Nickisch et al., How Can\nPharmaceutical and Biotechnology Companies Main-\ntain a High Profitability?, 15 J. Com. Biotech. 309, 311\n(2009).\n In a field where success requires years of research and,\non average, a $2.59 billion investment to bring a new\nproduct to market—Claimant here spent more than $2.7\nbillion—such free-rider issues undermine incentives to\ninnovate. See J. DiMasi et al., Innovation in the Pharma-\nceutical Industry: New Estimates of R&D Costs, 47 J.\nHealth Econ. 20, 20 (2016). The Nation’s leading biophar-\nmaceutical innovators, including Bristol-Myers Squibb,\nMerck Sharp & Dohme, GlaxoSmithKline, and BioGen at-\ntest that the reach-the-full-scope requirement “destroy[s]\nvalue in countless” already-patented inventions, and “un-\ndermine[s]” “incentives” for companies “to invest in new\ndiscoveries.” GSK. Cert. Br. 3.\n 3. The Federal Circuit’s rule threatens to render the\ncost of patent protection prohibitive—and to delay disclo-\nsure of new inventions. The only way to forfend specu-\nlation about the effort to make and use all embodiments is\nto disclose the making and using of a large number of\nthem. But rote identification of permutations within an\ninvention adds nothing to the understanding in the rele-\nvant field and only results in delayed patent filings and\nescalating costs—costs that may squeeze out smaller inno-\nvators entirely. See Moba, 325 F.3d at 1325-1326 (Rader,\nJ., concurring). Those resources would be better spent\npursuing the next breakthrough than making the 1,000th\nexample to disclose in a patent application.\n Innovators who attempt to document myriad embodi-\nments thus will face incentives to keep their inventions\nsecret until they have completed that task. That is the op-\n 41\nposite of the Patent Act’s aim to spur advances in tech-\nnology by encouraging inventors to timely disclose their\ninventions: “[F]oster[ing] concealment rather than dis-\nclosure of inventions” is contrary to “one of the primary\npurposes of the patent system.” Graver Tank & Mfg. Co.\nv. Linde Air Prods. Co., 339 U.S. 605, 607 (1950).\nII. THE STATUTORY “MAKE AND USE” STANDARD\n SHOULD GOVERN\n Congress provided that a patent’s description must be\nsufficient “to enable any person skilled in the art * * * to\nmake and use” it. 35 U.S.C. § 112(a). This Court has con-\nsistently held that patent disclosures “satisf [y] the law” if\nthey are “sufficiently definite to guide those skilled in the\nart to” the “successful application” of “the invention.”\nMinerals Separation, 242 U.S. at 271. The “certainty\nwhich the law requires” for enabling “variations” is “not\ngreater than is reasonable, having regard to [the patent’s]\nsubject matter.” Id. at 270; cf. Nautilus, Inc. v. Biosig In-\nstruments, Inc., 572 U.S. 898, 910 (2014) (citing Minerals\nSeparation in adopting “reasonable certainty” standard\nfor indefiniteness under § 112(b)). The specification thus\nmay “leav[e] something to the skill of persons applying the\ninvention.” Minerals Separation, 242 U.S. at 271.\n A. The Statute Provides a Practical Test\n The enablement standard does not change when “the\nmodes of [the invention’s] embodiment’ ” in “ ‘concrete’ ”\nform “ ‘may be numerous and in appearance very different\nfrom each other.’ ” Cont’l Paper Bag, 210 U.S. at 418-419.\nSo long as the instructions on how to make and use the\ninvention are sufficiently robust to permit skilled artisans\nto practice claims as needed, without resort to undue ex-\nperimentation, the claims are enabled. See pp. 29-32,\nsupra. That the patent’s claims can be practiced through\nmore embodiments “than the [patent’s] disclosed exam-\n 42\nples,” Pet. App. 13a, is itself of no moment. “[D]escrib[ing]\nall possible forms in which” a claimed invention “may be\nreduced to practice * * * belong[s] to the skill of the me-\nchanic, not the inventor.” 2 Robinson § 485.\n Application of the statutory standard reflects a practi-\ncal inquiry into what skilled artisans can do using the pat-\nent’s specification—not a theoretical inquiry into hypothe-\ntical applications. It enforces the requirement that the\npatentee disclose enough so the public can practice the in-\nvention after the patent expires. The Federal Circuit’s\nreach-the-full-scope rule abandons that “practical focus on\nwhether others could make use of the claimed invention”\nin “favor of a fruitless search for the exact boundaries of\nthat invention.” Karshtedt, at 4. It is anything but a “rea-\nsonable” standard for enablement. Minerals Separation,\n242 U.S. at 270. The Federal Circuit’s musing that there\nmight be undisclosed antibodies at the “far corners of the\nclaimed landscape that were particularly inaccessible or\nuncertain,” Pet. App. 65a, disregards the requirement of\n“reasonable” enablement with due consideration for the\nnature of antibody science. It also disregards the clear-\nand-convincing burden of proof required to invalidate a\npatent claim. i4i, 564 U.S. at 95. Real evidence, not specu-\nlation, is needed to satisfy that demanding standard.\n The U.S. Patent and Trademark Office (“USPTO”)\nthus instructs its examiners that Minerals Separation\nsupplies the proper “standard for determining whether\nthe specification meets the enablement requirement.”\nManual of Patent Examining Procedure § 2164.01 (9th\ned., Rev. 10, June 2020). The USPTO asks whether “the\nexperimentation needed to practice the invention [is] un-\ndue or unreasonable.” Ibid. “With respect to the breadth\nof a claim, the relevant concern is whether the scope of en-\nablement provided to one skilled in the art by the disclo-\n 43\nsure is commensurate with the scope of protection sought\nby the claims.” Id. § 2164.08. “[T]he scope of enablement,”\nthe USPTO explains, “must only bear a ‘reasonable corre-\nlation’ to the scope of the claims.” Ibid. The USPTO has\nissued thousands of patents for genus claims based on this\nCourt’s guidance and that standard.\n That standard has operated in U.S. courts—and in\nEnglish law from which the enablement requirement\nderives—throughout history. When asked to adopt a\nreach-the-full-scope standard like the Federal Circuit’s,\nEnglish courts refused. In FibroGen Inc. v. Akebia Ther-\napeutics Inc. [2021] EWCA (Civ) 1279 (Eng.), the Court of\nAppeal for England and Wales held that patents claiming\n“a class of compounds defined in structural and functional\nterms for use in the treatment of ” anemia were enabled,\neven though the class was “staggeringly large.” Id. ¶¶ 4,\n44, 281-284, 292. The Court of Appeal rejected the lower\ncourt’s theory—akin to the Federal Circuit’s—that a pat-\nent is not enabled if skilled artisans cannot “identify sub-\nstantially all compounds covered by the claim without\nundue burden.” Id. ¶ 40 (emphasis added). Such analysis,\nthe Court of Appeal observed, imposes “an impossible\ntask.” Id. ¶ 66. The proper standard was to ask whether a\nskilled person could: (1) “identify some compounds beyond\nthose named in the patent” that are “within the claimed\nclass”; and (2) undertake this process “substantially any-\nwhere within the whole claim.” Id. ¶ 97 (emphasis added).\nBecause the process of identifying useful compounds was\n“routine for the medicinal chemist and iterative in nature,”\nthe claims were enabled. Id. ¶ 142; see Dipeptidyl-Pepti-\ndase-Inhibitoren, BGH, Sept. 11, 2013, X ZB 8/12 (Ger.)\n(reversing invalidation of claim encompassing class of\ncompounds effective at reducing blood sugar levels on\nsimilar grounds).\n 44\n Consistent with those standards, defendants challeng-\ning validity may prove failure to enable in several ways.\nThey may prove that skilled artisans, using the specifica-\ntion, cannot construct the claimed invention at all. Beidler\nv. United States, 253 U.S. 447, 453 (1920) (claim not ena-\nbled where “the only form of construction of the machine\nand the only method of operation * * * disclosed in the\npatent” did not produce the claimed result). They may\nprove that the disclosures are insufficient in certain details\nto produce the invention without experimentation that\nexceeds what skilled artisans typically do, forcing them to\ninvent in their own right just to create an operative em-\nbodiment. See Consol. Elec. Light Co. v. McKeesport\nLight Co., 159 U.S. 465, 472-474 (1895); pp. 45-48, infra.\nThe claims may also fail to enable a distinct category of\nembodiments that are produced or operate through a dif-\nferent mechanism. For example, a claim to a “side impact\ncrash sensor” covering both mechanical and electronic\nsensors may not be enabled where the patent does not\nteach skilled artisans to make electronic sensors. Auto.\nTechs. Int’l, Inc. v. BMW of N. Am., Inc., 501 F.3d 1274,\n1285 (Fed. Cir. 2007). In such cases, it is the failure to\ndescribe how to make distinct types of embodiments that\noperate by different means (mechanical versus electron-\nic)—not the number of potential variations one could\nproduce following the patent’s disclosures—that creates\nthe potential for non-enablement.\n A patent may also fail if it leaves skilled artisans\n“searching for a needle in a haystack” for the operative in-\nvention. Idenix Pharms. LLC v. Gilead Scis. Inc., 941\nF.3d 1149, 1162 (Fed. Cir. 2019), cert. denied, 141 S. Ct.\n1234 (2021); Wyeth & Cordis Corp. v. Abbott Labs., 720\nF.3d 1380, 1384-1385 (Fed. Cir. 2013); see Pet. App. 15a.\nWhen the “number of inoperative combinations” skilled\n 45\nartisans must make before finding an operative one “be-\ncomes significant”—forcing skilled artisans to search\namong billions of permutations to identify anything that\nworks—the claim is not enabled. Atlas Powder Co. v. E.I.\ndu Pont De Nemours & Co., 750 F.2d 1569, 1576 (Fed. Cir.\n1984). In that case, the effort to practice the invention\ncrosses the line from the work of a mechanic following in-\nstructions, to an unreasonable demand that artisans en-\ngage in undue experimentation.5\n B. The “Make and Use” Statutory Standard Fully\n Addresses Concerns About Overbroad Claims\n The Federal Circuit thought it necessary to improvise\na new test because it feared § 112 might not otherwise pre-\nvent patentees from claiming more than they invented.\nSee Pet. App. 13a. “Drawing a broad fence around subject\nmatter, without filling in the holes,” it declared, “is not in-\nventing the genus.” Pet. App. 64a. But the statute itself\nprovides the solution to that concern. If the claim truly\nexceeds what the patent enables, challengers will always\nbe able to show, through evidence, that skilled artisans\ncannot reasonably “make and use” large areas of the\nclaimed invention by following the patent’s teachings. 35\nU.S.C. § 112(a).\n This Court’s decision in Consolidated Electric proved\nthat point over a century ago. The patent claim there cov-\n\n5\n The government’s invocation of the district court’s statement that\nClaimant’s specification left artisans to follow the same path as the in-\nventor, CVSG. Br. 20, is specious. Among other things, Claimant’s pat-\nents teach skilled artisans how to succeed, providing two anchor anti-\nbodies Claimant invented that can be used to identify any antibody that\nbinds to PCSK9’s sweet spot. See Pet. C.A. Br. 61-63. The district\ncourt’s contrary view was so wrong Respondent-Respondent did not defend\nit on appeal, see Pet. C.A. Reply 6, and the Federal Circuit never men-\ntioned it.\n 46\nered “all fibrous and textile materials for incandescent\nconductors” in electric lamps. 159 U.S. at 472. The specifi-\ncation, however, taught skilled artisans only how to make\nincandescent conductors using “carbonized paper.” Id. at\n467. Challenging the patent, Consolidated Electric proved\nthat the patent’s disclosures for carbonized paper were\ninsufficient to enable the myriad other embodiments with-\nin the claim, because there was no “quality common to\nfibrous and textile substances generally as makes them\nsuitable for an incandescent conductor.” Id. at 474. Con-\nsolidated Electric showed that Thomas Edison had “exam-\nin[ed]” “over six thousand vegetable growths,” showing\n“that none of them possessed the peculiar qualities that\nfitted them for that purpose.” Id. at 472. It provided evi-\ndence of actual embodiments within the claims that re-\nquired undue experimentation. The evidence showed that,\nonly after conducting “painstaking experimentation,” id.\nat 475, over “several months,” and thousands of failures,\ndid Edison independently discover “three species of bam-\nboo” that were “suitable for” making an incandescent con-\nductor, id. at 473.\n No special legal test was needed to find that patent\nclaim non-enabled. The Court found that, “[i]nstead of\nconfining themselves to carbonized paper, as they might\nproperly have done,” the patentees had overreached by\n“mak[ing] a broad claim for every fibrous or textile ma-\nterial.” 159 U.S. at 472. When it came to all other fibrous\nand textile materials, however, the patent’s “written de-\nscription” did not “ ‘enable any person skilled in the art\n* * * to make * * * and use’ ” the invention. Id. at 474\n(quoting Rev. Stat. § 4888). The specification is not “suffi-\nciently definite to guide those skilled in the art to” the\n“successful application” of “the invention,” Minerals Sep-\naration, 242 U.S. at 271, if it requires skilled artisans to\n 47\nhunt for the needle that functions (a few species of bam-\nboo) amidst a haystack of alternatives that do not.\n This Court has repeatedly employed the statutory\nstandard to address claims that exceed what the patent\nenables. Béné v. Jeantet, 129 U.S. 683 (1889), involved a\nchallenge to a claim for a method of “refining * * * coarse\nhair” by “subjecting it to the action of chemicals.” Id. at\n684. The patent’s only working example was a method\nusing “a solution of a chlorine salt dissolved in an excess of\nmuriatic acid.” Ibid. The patent was not enabled, because\nthe specification was “not full and clear enough to give one\nskilled in chemistry such an idea of the particular kinds\nand character of ” other “chemicals * * * as would enable\nhim to use the invention without having to resort to experi-\nments of his own to discover those ingredients.” Id. at 686.\nAnd in Holland Furniture Co. v. Perkins Glue Co., 277\nU.S. 245 (1928), this Court held that a claim covering any\n“starch glue” that has “substantially the same properties\nas animal glue” was not enabled, where the evidence\nshowed that skilled artisans would have to engage in “elab-\norate experimentation” to discover starch glues with the\nproperties of animal glue. Id. at 250-251, 257. In both\ncases, the Court found that the statutory standard was not\nmet—the specification did not “ ‘enable any person skilled\nin the art * * * to make * * * and use’ ” the invention as\nclaimed. Béné, 129 U.S. at 685-686 (quoting Rev. Stat.\n§ 4888); Holland Furniture, 277 U.S. at 257 (same).\n The Federal Circuit’s reach-the-full-scope rule is thus\nnot only wrong, but wholly unnecessary. It allows clearly\nenabled claims to be invalidated based on speculation\nrather than proof. As explained below, neither Respondent-\nRespondent nor the courts identified any evidence that\nClaimant’s patents left skilled artisans searching for a\nneedle in a haystack to practice the invention. Skilled\n 48\nartisans could use the patents’ teachings to make embodi-\nments beyond the disclosed example antibodies; they\nwould succeed every time. See p. 49, infra. Respondent-Regen-\neron failed to identify even one actual antibody that could\nnot be made following the patent’s disclosures. Respondent-\nRespondent thus failed to provide the sort of evidence of\nnon-enablement the challengers produced in Consolidated\nElectric, Béné, and Holland Furniture. Under the Fed-\neral Circuit’s reach-the-full-scope standard, mere specula-\ntion from Respondent-Respondent’s expert that “ ‘you could be\nimmunizing mice for a hundred years,’ ” but “ ‘[t]here\nmight be kind of an antibody that you didn’t come up with\nin that time period,’ ” Pet. App. 42a (emphasis added), was\nenough to invalidate Claimant’s patents. That is not, and\nshould not be, the law.\nIII. Claimant’S PATENTS ARE ENABLED\n Under any reasonable formulation of the statutory\nstandard, Claimant’s claims are enabled. While the Federal\nCircuit deemed this “an unpredictable field of science,”\nPet. App. 13a, Claimant’s patents gave those skilled in the\nantibody arts entirely predictable methods for actually\nproducing the claimed antibodies. Mountains of evidence\nsupported the jury’s determination that skilled artisans\ncan make individual antibodies across the claims’ scope\n“without having to conduct undue experimentation.”\nC.A. App. 2906-2907 (jury instructions); see C.A. App.\n3630-3632 (verdict). Respondent-Respondent did not present\nany evidence of failed efforts to generate antibodies, much\nless evidence so overwhelming that every reasonable juror\nwould be compelled to find that it had proved non-enable-\nment by clear-and-convincing proof. 9B Wright & Miller,\nFederal Practice & Procedure § 2535 (3d ed.) (JMOL “for\nthe party bearing the burden of proof is reserved for ex-\ntreme cases”).\n 49\n It was undisputed that skilled artisans can readily make\nthe 26 example antibodies Claimant’s patents disclosed by\namino-acid sequence. See, e.g., C.A. App. 51-116 (Figs. 2A-\n3JJJ), 240 (85:9-43), 3903 (737:12-738:10). The district\ncourt found “there was substantial evidence * * * support-\ning a jury finding that [those] disclosed antibodies were\nrepresentative of the structural diversity of the genus”—\na finding the Federal Circuit did not disturb. Pet. App.\n25a.\n It was undisputed that, by following the patents’ road-\nmap, skilled artisans can generate other claimed antibod-\nies every time. C.A. App. 3896-3897 (709:2-711:11). The\nroadmap employed “routine and well-known” methods,\nPet. App. 38a, including “ ‘automated high-throughput\ntechniques’ ” to generate additional antibodies “ ‘quickly,\nefficiently, and cheaply,’ ” Pet. App. 42a; see pp. 13-14, su-\npra. The basic “methods for obtaining and screening mon-\noclonal antibodies” were so well known that, decades ago,\nthe Federal Circuit identified them as routine processes\n“[p]ractitioners of this art are prepared to” perform in the\nordinary course. Wands, 858 F.2d at 736, 740. And Am-\ngen’s expert testified that skilled artisans following the\npatents’ roadmap “would be certain to make all” the anti-\nbodies across the claims. C.A. App. 3909 (762:10-20) (em-\nphasis added), 3908 (757:12-14). Neither the Federal Cir-\ncuit nor Respondent-Respondent identified any actual antibody\nthat required undue experimentation to make under the\npatents’ teachings.\n The patents also taught skilled artisans how to make\n“variants” of the antibodies through “conservative amino\nacid substitutions.” C.A. App. 221(48:21-23, 48:29-33),\n3917 (792:23-793:3); see Pet. C.A. Br. 17, 44-45; pp. 14-15,\nsupra. That process starts with an antibody already\nknown to satisfy the claims and allows skilled artisans to\n 50\nmake specific, minor changes “without destroying” the\nantibody’s binding and blocking “activity.” C.A. App.\n221(48:23-33) (emphasis added). The Federal Circuit did\nnot dispute that, in the words of Respondent-Respondent’s ex-\npert, skilled artisans view such minor variants as “essen-\ntially copies of each other.” C.A. App. 3788 (467:7-15); see\nPet. C.A. Br. 17 & n.6. And conservative substitution, us-\ning the table provided by the patents, is another “well-\nknown technique[ ]” “that all antibody scientists use.”\nC.A. App. 221(48:21-23, 48:29-33), 3917 (792:23-793:3). Re-\ngeneron elsewhere acknowledges that, “[i]n general, a\nconservative amino acid substitution will not substantially\nchange the functional properties of a protein.” U.S. Patent\nNo. 8,062,640, at 12:57-59 (emphasis added). Respondent-\nRespondent identified not one conservative substitution to\na claimed antibody that destroyed its activity. It provided\nno evidence that would occur with any frequency. See\nPet. C.A. Reply 10-17.\n Those failures of proof speak loudly. Respondent-Respondent\ndid not merely have a clear-and-convincing burden of\nproof. It obtained a second trial for the express purpose\nof introducing evidence of antibodies, developed after the\npatents’ priority date, that the patents’ roadmap suppos-\nedly fail to enable. [TARGET IDENTIFIER REDACTED], 872 F.3d 1367,\n1375 (Fed. Cir. 2017). On retrial, Respondent-Respondent urged\nthat four antibodies—its own Praluent and antibodies\nfrom Merck and Pfizer—could not be made using the pat-\nents’ disclosures. Resp. C.A. Br. 11-15. But the jury re-\njected that, for good reason: Claimant’s expert explained in\ndetail how the patents’ roadmap produces each of those\n 51\nfour antibodies. Pet. C.A. Br. 37-38 (citing C.A. App. 3908-\n3909 (757:12-760:21), 3918-3919 (798:25-799:5)).6\n In deciding enablement as “a question of law,” “re-\nview[ed] without deference,” Pet. App. 6a, the Federal Cir-\ncuit repeatedly decided factual issues contrary to the\njury’s presumed findings (including on the nature of the\nart and the power of the roadmap’s teachings). See Pet.\n23; Pet. Reply 11-12; Pet. C.A. Br. 39-63. But the linchpin\nof the Federal Circuit’s decision was its legally erroneous\nrule that patents are invalid if “ ‘substantial time and ef-\nfort’ would be required to reach the full scope of claimed\nembodiments.” Pet. App. 14a (emphasis added). That\nquestion has no place in the enablement analysis. Shorn\nof that legal error, this case does not require a third trip\nthrough the Federal Circuit. The jury was correctly in-\nstructed that enablement turned on whether skilled arti-\nsans could “make and use the full scope of the claimed in-\nvention * * * without having to conduct undue experimen-\ntation.” C.A. App. 2906-2907. Supported by substantial\nevidence, the jury found that Respondent-Respondent failed to\nprove by clear-and-convincing evidence that Claimant’s\npatents are non-enabled. C.A. App. 3630-3632 (verdict);\npp. 16-17, supra. Reversal is warranted.\n CONCLUSION\n The judgment of the court of appeals should be\nreversed.\n\n\n6\n Respondent-Respondent’s suggestion that the Federal Circuit identified\nnon-enabled embodiments, Br. in. Opp. 32 n.8, is erroneous. The panel\nidentified theoretical antibodies that were not among the specifica-\ntion’s “examples.” Pet. App. 13a n.1. The court cited no evidence that\nsuch antibodies would not be readily generated under the patents’\nteachings.\n Respectfully submitted.\n\nJONATHAN P. GRAHAM JEFFREY A. LAMKEN\nSTUART L. WATT Counsel of Record\nWENDY A. WHITEFORD MICHAEL G. PATTILLO, JR.\nSTEVEN D. TANG SARAH J. NEWMAN\nEMILY C. JOHNSON WALTER H HAWES IV\nClaimant MOLOLAMKEN LLP\nOne Claimant Center Drive The Watergate, Suite 500\nThousand Oaks, CA 91320 600 New Hampshire Ave., N.W.\n[PHONE REDACTED] Washington, D.C. 20037\n [PHONE REDACTED]\nKEITH R. HUMMEL [EMAIL REDACTED]\nANDREI HARASYMIAK\nCRAVATH, SWAINE & MOORE CHRISTIAN B. RONALD\n LLP MOLOLAMKEN LLP\nWorldwide Plaza 430 Park Avenue\n825 Eighth Avenue New York, NY 10022\nNew York, NY 10019 [PHONE REDACTED]\n[PHONE REDACTED]\n SARAH C. COLUMBIA\nWILLIAM G. GAEDE, III MCDERMOTT WILL &\nMCDERMOTT WILL & EMERY LLP\n EMERY LLP 200 Clarendon Street, Floor 58\n415 Mission Street Boston, MA 02116\nSuite 5600 [PHONE REDACTED]\nSan Francisco, CA 94105\n[PHONE REDACTED]\n\n Counsel for Petitioners\nDECEMBER 2022", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n This case involves a patent dispute between\ninnovators who independently developed antibody\ndrugs that reduce low-density lipoprotein (LDL), or\n“bad,” cholesterol. The antibodies bind to a protein,\nPCSK9, thus preventing the destruction of receptors\nthat extract cholesterol from the bloodstream. Both\nthe utility of discovering a PCSK9-inhibiting antibody\nand the time-and-labor-intensive methods for\ngenerating candidate antibodies were well known in\nthe field, and multiple companies pursued an antibody\nwith the desired characteristics. Respondent/Respondent\ndeveloped Praluent, the first FDA-approved PCSK9\nantibody, and Claimant developed Repatha. These\nantibodies differ substantially in their amino-acid\nsequences and where they bind to PCSK9. Both are\nused to treat tens of thousands of patients, but only\nPraluent is FDA-approved in a low-dose version, with\nno available substitute.\n Each company patented its respective antibody by\namino-acid sequence, the long-accepted way to claim a\nbiological discovery. But years later, in a blatant\nattempt to corner the market—and after\nRespondent/Respondent developed Praluent and other\ncompanies developed their own antibodies—Claimant\nobtained additional patents that broadly claim the\nentire genus of PCSK9-blocking antibodies by\nfunction, rather than structure. Those are the patents\nat issue here, as Claimant asserted these broad,\nfunctionally-defined genus claims to literally try to\ntake Praluent off the market and away from patients.\n The Federal Circuit rightly rejected this gambit,\nholding that Claimant’s broad functional genus claims\n 2\n\nare not enabled and thereby invalid under 35 U.S.C.\n§112. While Claimant repeatedly derides the Federal\nCircuit’s test as atextual, the requirement that a\npatent must provide sufficient disclosure to enable\nany skilled artisan to make and use the full scope of\nthe claimed invention without undue experimentation\nis fully grounded in the text of §112 and this Court’s\ncases. Indeed, Claimant ultimately embraces the “undue\nexperimentation” standard and virtually the entire\ncorpus of Federal Circuit decisions preceding the\ndecision below, even though the words “undue\nexperimentation” do not appear in §112. Instead,\nClaimant spends most of its brief assailing the Federal\nCircuit’s purported cumulative-effort standard, even\nthough the word “cumulative” does not appear in the\ndecision below.\n Claimant misleadingly suggests that the Federal\nCircuit acknowledged adopting a novel test that raised\nthe bar and erected high hurdles. In reality, the\nFederal Circuit simply pointed out that Claimant itself\nraised the bar and created its own high hurdles by\nasserting a monopoly over an entire genus of\nfunctionally-defined claims. Those observations are\nhardly novel. This Court has long embraced the\ncommonsense proposition that the more companies\nclaim as their patent monopoly, the more they must\nenable. That is the heart of the patent bargain. Thus,\nno one suggests that Claimant’s Repatha-specific patent\nhas an enablement problem; it tells every skilled\nartisan how to make and use that innovation every\ntime. But Claimant’s effort to lay claim to an entire\ngenus of functionally-defined antibodies is another\nmatter entirely. The patents do not enable skilled\nartisans to make and use anything like the full scope\n 3\n\nof the claimed genus, or any specific antibody within\nthat genus (other than the relatively few antibodies\nwhose structures are disclosed), or even entire classes\nof claimed antibodies with particular characteristics\n(e.g., antibodies binding to more than nine of the\nsixteen identified PCSK9 amino acids). Indeed, the\nspecification here tells skilled artisans little they did\nnot already know, instead instructing them to make\nclaimed antibodies by randomly generating and\ntesting candidates via processes well-established in\nthe prior art.\n It is thus hardly surprising that both courts\nbelow, including the district court applying settled\nFederal Circuit precedent that Claimant accepts, had\nlittle difficulty rejecting Claimant’s broad claims. The\nsimple reality is that Claimant has claimed a monopoly\nover far more than it has enabled. Such claims are not\njust invalid, but dangerous. They can take medicines\naway from physicians and patients and could allow\nsomeone without a clinically valid species to claim an\nentire genus of medically-vital antibodies they have\nnot yet discovered. This Court should affirm.\n STATEMENT OF THE CASE\n A. Statutory Background\n The federal patent system “embodies a carefully\ncrafted bargain” whose “ultimate goal” is “to bring new\ndesigns and technologies into the public domain\nthrough disclosure.” Bonito Boats, Inc. v. Thunder\nCraft Boats, Inc., 489 U.S. 141, 150-51 (1989). To\nachieve that goal, the Patent Act offers inventors a\n“quid pro quo”: a patentee obtains the “right of\nexclusion,” but only in return for “full disclosure” of\n 4\n\n“the invention.” Kewanee Oil Co. v. Bicron Corp., 416\nU.S. 470, 480-81, 484 (1974).\n Chief among the disclosure requirements for a\npatent is §112’s “enablement” requirement, which\nrequires an inventor to disclose “a written description\nof the invention, and of the manner and process of\nmaking and using it, in such full, clear, concise, and\nexact terms as to enable any person skilled in the art\nto which it pertains ... to make and use the same.” 35\nU.S.C. §112(a). The enablement requirement ensures\nthat the public receives its side of the patent bargain;\nonce the exclusivity period ends, “the knowledge of the\ninvention inures to the people, who are thus enabled\nwithout restriction to practice it and profit by its use.”\nUnited States v. Dubilier Condenser Corp., 289 U.S.\n178, 187 (1933). Equally important, the enablement\nrequirement prevents over-claiming, ensuring that a\npatentee “can lawfully claim only what he has\ninvented and described,” and preventing patentees\nfrom foreclosing the future by claiming exclusive\nrights to discoveries not yet made. O’Reilly v. Morse,\n56 U.S. (15 How.) 62, 121 (1854).\n The enablement requirement now embodied in\n§112 has remained largely unchanged since the first\nPatent Act of 1790, which required a patent to contain\na “specification in writing, containing a description ...\nof the thing or things ... invented or discovered ... so\nparticular” as to “enable a ... person skilled in the art\n... to make, construct, or use” the invention. Act of\nApr. 10, 1790, ch. 7, §2, 1 Stat. 109, 110-11. Beginning\nin the nineteenth century, this Court held that a\npatent is not enabled and thus void if a skilled person\ncannot make or use the claimed invention without\n 5\n\n“painstaking experimentation,” Consol. Elec. Light\nCo. v. McKeesport Light Co. (The Incandescent Lamp\nPatent), 159 U.S. 465, 474-75 (1895), or “elaborate\nexperimentation,” Holland Furniture Co. v. Perkins\nGlue Co., 277 U.S. 245, 256-57 (1928). This rule was\nadopted by the regional circuits, see, e.g., Nat’l Theatre\nSupply Co. v. Da-Lite Screen Co., 86 F.2d 454, 455 (7th\nCir. 1936), and by the United States Court of Customs\nand Patent Appeals (CCPA), which described that test\nas invalidating patents that required “undue\nexperimentation,” e.g., In re Folkers, 344 F.2d 970, 976\n(C.C.P.A. 1965).\n The CCPA’s successor, the Federal Circuit,\nlikewise adopted this approach. In In re Wands, 858\nF.2d 731 (Fed. Cir. 1988), the Federal Circuit viewed\nit as “well established that enablement requires that\nthe specification teach those in the art to make and\nuse the invention without undue experimentation.”\nId. at 737. The court set forth factors for “determining\nwhether a disclosure would require undue\nexperimentation” in order to “fully enable[]” an\ninvention: “(1) the quantity of experimentation\nnecessary, (2) the amount of direction or guidance\npresented, (3) the presence or absence of working\nexamples, (4) the nature of the invention, (5) the state\nof the prior art, (6) the relative skill of those in the art,\n(7) the predictability or unpredictability of the art, and\n(8) the breadth of the claims.” Id. at 736-37.\n Current Federal Circuit law has distilled the\nforegoing principles into a straightforward\nenablement standard: “To be enabling, the\nspecification of a patent must teach those skilled in\nthe art how to make and use the full scope of the\n 6\n\nclaimed invention without ‘undue experimentation.’”\nMagSil Corp. v. Hitachi Glob. Storage Techs., Inc., 687\nF.3d 1377, 1380 (Fed. Cir. 2012). The enablement\nrequirement is not a high hurdle for patents with\ntightly circumscribed claims, such as patents claiming\nparticular antibodies by their structure, i.e., amino-\nacid sequence. But, applying the “undue\nexperimentation” standard and the Wands factors, the\nFederal Circuit has consistently held that a patent is\nnot enabled if a claim encompasses “thousands” of\n“candidate compounds,” and “testing” or “screening” of\neach candidate is necessary “to determine which ...\nmeet [the] claim.” Idenix Pharms. LLC v. Gilead Scis.\nInc., 941 F.3d 1149, 1156-58, 1162-63 (Fed. Cir. 2019);\nsee also Enzo Life Scis., Inc. v. Roche Molecular Sys.,\nInc., 928 F.3d 1340, 1345-49 (Fed. Cir. 2019); Wyeth &\nCordis Corp. v. Abbott Labs., 720 F.3d 1380, 1384-86\n(Fed. Cir. 2013).\n B. Factual Background\n High LDL cholesterol (LDL-C) is a potential\nkiller. It can cause cardiovascular disease, heart\nattacks, and strokes. See [TARGET IDENTIFIER REDACTED], 872\nF.3d 1367, 1371 (Fed. Cir. 2017). Small molecule\ndrugs (statins) can combat high LDL-C but can have\nadverse side effects or be ineffective for some patients.\nId. One alternative treatment is a PCSK9 inhibitor.\n PCSK9 is “a naturally occurring protein that\nbinds to and causes the destruction of liver cell\nreceptors ... responsible for extracting LDL-C from the\nbloodstream.” Id. As early as 1975, University of\nTexas–Southwestern researchers had discovered an\ninverse relationship between LDL receptors and\ncholesterol levels. C.A.App.3680-81. In 2001,\n 7\n\nresearchers discovered the gene that encodes PCSK9,\nthough PCSK9’s precise function remained unclear.\nC.A.App.3681. In 2006, UT–Southwestern\nresearchers demonstrated that PCSK9 binds to and\ncauses the destruction of LDL receptors that extract\nLDL cholesterol from the bloodstream, and proposed\nthat antibodies could prevent PCSK9 from destroying\nthe salutary LDL receptors. C.A.App.3681; see Jay D.\nHorton et al., Molecular Biology of PCSK9: Its Role in\nLDL Metabolism, TRENDS BIOCHEM SCI. 2007\nFebruary 32(2): 71–77.\n Spurred by that publicly available research,\nseveral companies—including Claimant, Respondent,\nPfizer, and Merck—simultaneously and\nindependently sought to create antibodies that could\nblock PCSK9 from binding to LDL receptors, thereby\nsparing LDL receptors from destruction.\nC.A.App.3681, 3766. Antibodies are proteins that\nbind to target molecules (“antigens”) like PCSK9.\nC.A.App.3679, 3693. An antibody is comprised of\namino-acid chains, C.A.App.3679-80, which determine\nthe antibody’s three-dimensional structure and its\nantigen-binding features. C.A.App.3783; see\nC.A.App.3748; AbbVie Deutschland GmbH & Co., KG\nv. Janssen Biotech, Inc., 759 F.3d 1285, 1290-91, 1301\n(Fed. Cir. 2014).\n To find cholesterol-lowering PCSK9 antibodies,\nRespondent, like its rivals, used well-understood but\nresource-intensive methodologies for generating\nantibodies with desired qualities. It immunized mice,\ngenerated about 1,500 candidate antibodies, narrowed\nthat pool to 35 antibodies for amino-acid sequencing,\nand ultimately identified a handful of antibodies that\n 8\n\nbound to PCSK9 and blocked PCSK9 from binding to\nLDL receptors. C.A.App.3766. Respondent/Respondent\nproceeded with clinical development of one\nparticularly promising antibody, alirocumab. See\nClaimant, 872 F.3d at 1372. In December 2008,\nRespondent filed a provisional application that led to\nthe issuance of a patent in November 2011 claiming\nalirocumab by its amino-acid sequence. Id.; see U.S.\nPatent No. 8,062,640; Prov. Appl. No. 61/122,482.\n To get its PCSK9 inhibitor alirocumab to patients\nfaster, Respondent/Respondent purchased a congressionally-\nauthorized “priority review voucher” to expedite FDA\nreview. See 21 U.S.C. §360ff. FDA approved\nalirocumab in July 2015, making alirocumab—\nmarketed as Praluent—the first PCSK9 inhibitor\navailable to patients in the United States. Claimant, 872\nF.3d at 1372; C.A.App.3674.\n Praluent successfully “targets PCSK9 to prevent\nit from binding to and destroying” LDL receptors,\npermitting the LDL receptors to “extract LDL-C\nthereby lowering overall LDL-C levels.” Claimant, 872\nF.3d at 1372. FDA approved Praluent in two doses: a\n75-mg biweekly “low dose” that reduces LDL-C by\napproximately 45 percent, and a 150-mg biweekly\n“high dose” that reduces LDL-C by approximately 60\npercent. See D.Ct.Dkt.349 at 295; D.Ct.Dkt.967,\nEx.63, at 1 (Praluent label), current version available\nat [URL REDACTED] 2\n Claimant used similar techniques to develop its own\nPCSK9 antibody, designated 21B12, also known as\n\n 2 “D.Ct.Dkt.” refers to district court docket entries, No. 14-cv-\n\n1317 (D. Del.).\n 9\n\nevolocumab. Claimant, 872 F.3d at 1371. Claimant filed a\npatent application claiming 21B12/evolocumab by its\namino-acid sequence that was published in February\n2009 (two months after Respondent filed its provisional\npatent application on alirocumab), and the patent\nissued in October 2011. See id.; U.S. Patent No.\n8,030,457 (’457 patent). Claimant obtained FDA\napproval for evolocumab—marketed as Repatha—in\nAugust 2015, after Praluent was already on the\nmarket. Claimant, 872 F.3d at 1371. Unlike Praluent,\nRepatha lacks a low-dose version, and is approved\nonly in 140-mg biweekly and 420-mg monthly doses,\nboth of which reduce LDL-C by about 60 percent. See\nDkt.967, Ex.64, at 1 (Repatha label), current version\navailable at [URL REDACTED]\n During the same period, Pfizer and Merck also\nused well-established techniques to develop their own\nPCSK9 antibodies. C.A.App.3681. Pfizer and Merck\nfiled their first provisional patent applications on their\nPCSK9 antibodies in September 2008 and February\n2008, respectively—preceding Claimant’s public\ndisclosure of its PCSK9 antibodies in February 2009—\nand obtained patents by amino-acid sequence. See\nProv. Appl. No. 61/096,716, U.S. Patent No. 8,080,243\n(Pfizer); Prov. Appl. No. 61/063,949, U.S. Patent No.\n8,188,234 (Merck). Pfizer and Merck ultimately did\nnot obtain FDA approval to market their antibodies,\nhowever, in Pfizer’s case because of difficulties arising\nin clinical testing.\n C. The Patents-In-Suit\n This case does not involve Claimant’s ’457 patent\nclaiming Repatha by its amino-acid sequence—the\ninvention that Claimant purportedly “invested billions of\n 10\n\ndollars and a decade of research bringing ... to\nmarket.” Br.7. That patent is fully enabled, and\nPraluent indisputably does not infringe it. Instead,\nthis case involves two additional patents that Claimant\nobtained three years later, based on applications filed\nin 2013 and 2014, well after Respondent had developed\nand patented Praluent. C.A.App.37, 421.\n Unlike Claimant’s ’457 patent, which claimed\nRepatha’s specific antibody by its amino-acid\nsequence, Claimant’s new patents included broad,\nfunctionally-defined claims covering “the entire genus\nof antibodies that bind to specific amino acid residues\non PCSK9 and block PCSK9 from binding to” LDL\nreceptors. Claimant, 872 F.3d at 1372; see Pet.App.4a-\n5a; U.S. Patent Nos. 8,829,165 (’165 patent), 8,859,741\n(’741 patent). 3 Put differently, rather than claim an\nantibody by structure (as with its ’457 Repatha-\nspecific patent, Respondent’s Praluent-specific patent,\nand the Merck and Pfizer patents), Claimant’s later\npatents claim all antibodies with the functions of\n(i) binding to particular PCSK9 residues and\n(ii) blocking PCSK9 from binding to LDL receptors,\nregardless of whether Claimant could even make (let\nalone teach others to make) those antibodies.\n Claim 19 of the ’165 patent is representative of the\nasserted claims. That claim and its corresponding\nindependent claim state:\n 1. An isolated monoclonal antibody, wherein,\n when bound to PCSK9, the monoclonal\n antibody binds to at least one of the following\n\n 3 A “residue” is a particular amino acid in an amino-acid\n\nsequence. Claimant, 872 F.3d at 1372 n.3.\n 11\n\n residues [followed by a list of 15 amino acid\n residues], and wherein the monoclonal\n antibody blocks binding of PCSK9 to [LDL\n receptors].\n 19. The isolated monoclonal antibody of claim\n 1 wherein the isolated monoclonal antibody\n binds to at least two of the following residues\n [followed by the same list of 15 amino acid\n residues as in claim 1].\nPet.App.4a. 4\n The ’165 and ’741 patents share a common\nspecification, which describes the “trial-and-error\nprocess” that Claimant “used to generate and screen\nantibodies that bind to PCSK9 and block PCSK9 from\nbinding to” LDL receptors. Claimant, 872 F.3d at 1372;\nPet.App.3a. The specification sets forth two methods\nto search for claimed antibodies, both of which require\nmaking new antibodies and testing them to determine\nif they possess the recited binding and blocking\nfunctions and thus fall within the claims’ scope. The\nfirst method is to randomly generate pools of\nantibodies by immunizing a mouse or using phage\ndisplay. C.A.App.223-25, 234-38, 3908-09. The second\nmethod is to make amino-acid substitutions to\ndisclosed antibodies, as suggested by the\nspecification’s Table 1. C.A.App.211.\n The specification discloses the amino-acid\nsequences of 26 antibodies that (according to Claimant)\nbind to PCSK9 and block the binding of LDL receptors,\nthus falling within the claims’ scope. C.A.App.51-116,\n\n 4 The ’741 patent’s claim recites another PCSK9 residue,\n\nmaking the total number of residues sixteen.\n 12\n\n240, 3868; Claimant, 872 F.3d at 1372. The specification\nprovides the three-dimensional structure—showing\nhow the antibody actually binds to PCSK9—for just\ntwo. C.A.App.247-49; Claimant, 872 F.3d at 1372.\n D. Proceedings Below\n In October 2014, mere days after obtaining its\nnew ’165 and ’741 patents, Claimant sued\nRespondent/Respondent for infringement, asserting that\nPraluent fell within the broad functional genus\nclaimed. Pet.App.5a. Given the breadth of those\nclaims, Respondent/Respondent stipulated to infringement,\nbut argued (as relevant here) that the ’165 and ’741\npatents are invalid for failure to satisfy the\nenablement requirement. Pet.App.5a; Claimant, 872\nF.3d at 1372.\n 1. First trial and appeal\n A jury ruled for Claimant, and the district court\ngranted a permanent injunction removing Praluent\nfrom the market. Claimant, 872 F.3d at 1372-73. The\nFederal Circuit entered a stay before the injunction\ntook effect, and on appeal, Respondent/Respondent\nemphasized that the district court erroneously\nexcluded important evidence showing that even after\nClaimant filed its patent application, it continued its\ntrial-and-error search for antibodies within the genus,\nthus underscoring that the specification was\ninadequate to enable the claimed invention.\nRespondent/Respondent also contended that the court had\nerroneously instructed the jury that it could find that\nClaimant satisfied §112’s related written-description\nrequirement if the specification disclosed a “newly\ncharacterized antigen.” Id. at 1376.\n 13\n\n The Federal Circuit unanimously agreed with\nboth arguments, vacated the jury verdict and\npermanent injunction, and remanded for a new trial\non enablement and written description. Id. at 1371,\n1381-82. Claimant petitioned for certiorari, arguing that\nin evaluating written description, the Federal Circuit\nemploys a “self-created ‘possession’ standard” rather\nthan the text of §112. Pet.2, Claimant, Inc. v. Respondent, [DOCKET REDACTED] (U.S. July 23, 2018). In contrast to that\nallegedly “court-made” standard, id. at 34, Claimant told\nthis Court that “[f]or enablement, the Federal Circuit\napplies the statutory standard.” Id. at 3. The Court\ndenied certiorari. See 139 S.Ct. 787 (2019).\n 2. Second trial\n On remand, the case was reassigned to a new trial\njudge. Before trial, Claimant again succeeded in\nexcluding evidence showing that for years after the\npatents’ filing date, Claimant tried and failed to generate\ncertain desirable antibodies (called “EGFa mimics”)\nwithin the claims of the ’165 and ’741 patents via trial\nand error—thus showing that the patents did not\nenable a skilled person, or even the purported\ninventor, to make and use the claimed genus. See\nC.A.App.3686-87, 3807-08, 3869-70, 5428-31.\n Despite being hamstrung by that evidentiary\nruling, Respondent/Respondent presented undisputed\nevidence demonstrating that Claimant’s patents do not\nenable the genus that Claimant claimed, including\nexpert testimony that the patents “cover ... a vast\nscope of possible antibodies,” potentially “millions,”\nand implicate “an astronomically large number” of\ncandidates. C.A.App.3750, 3688, 3759. Claimant’s\nwitnesses did not disagree; they were unable even to\n 14\n\nestimate the number of antibodies within the claims’\nscope, e.g., C.A.App.3869, with one agreeing that\nfollowing the patents’ teaching would generate\n“millions and millions” of candidates, C.A.App.3902.\nThe evidence showed that the immunization method\nthat Claimant’s patents disclosed was “like a fishing\nexpedition”: the natural “randomness in how the\nimmune system” produces antibodies means that each\nimmunization creates a “big pool of potential\n[antibodies],” and “you don’t know what you’re going\nto get.” C.A.App.3689-90. Given that randomness, a\nskilled artisan “could be immunizing mice for a\nhundred years” and still not create a particular\ndesired antibody. C.A.App.3754.\n Claimant’s witnesses conceded that given the\nunpredictability of antibody science, a skilled artisan\nwould have to test every single antibody generated by\nthe methods disclosed in Claimant’s patents to\ndetermine whether it has the necessary functional\nproperties to fall within the claimed genus;\naccordingly, a skilled artisan cannot use those\nmethods to identify and create a specific new antibody\nwithin the claims’ scope, such as Praluent or the\nPfizer/Merck antibodies. As one Claimant expert\ntestified, knowing “the amino acid sequence of an\nantibody” does not “tell you the property of where it\nbinds,” so to determine if each generated antibody\nwould actually bind PCSK9 and block, “you’d have to\ntest” it. C.A.App.3914-18. An Claimant inventor\nlikewise admitted that even “conservative”\nsubstitutions—i.e., changing one amino acid of an\nantibody disclosed in the patent—are unpredictable\nand require testing. C.A.App.3768-69.\n 15\n\n Respondent/Respondent also presented undisputed\nevidence that the antibodies disclosed in Claimant’s\npatents were not representative of or structurally\nsimilar to four antibodies (including Praluent)\ndiscovered by Claimant’s competitors and known to fall\nwithin the claims—much less to the millions of\nadditional antibodies that the claims encompass. For\nexample, Respondent/Respondent showed that those four\nantibodies bound to PCSK9 at more, and markedly\ndifferent, residues than Claimant’s disclosed antibodies:\n Claimant Antibodies Competitor Antibodies\n\n\n PC8KB\n ... 1\n i §\n N\n Amino iii :8 e\n iii\n N N\n\n Add\n :,:\n ;;; &! \"'\n :,:\n ::: ii! \"'\n -,\n \"' \"-\n\n\n- PCSK9 amino acid that binds to the antibody -- Data not available\n\n\nC.A.App.4283; C.A.App.3692. 5 The jury found two of\nthe five asserted claims invalid for insufficient written\ndescription, but found for Claimant on the three\nremaining claims. Pet.App.18a-19a.\n\n\n 5 “1D05” and “AX132” are Merck’s antibodies; “J16” is Pfizer’s\n\nantibody.\n 16\n\n Respondent/Respondent moved for judgment as a matter\nof law on enablement (and written description).\nRespondent/Respondent argued that, under Wands, making\nand using the “full scope” of Claimant’s claimed genus\nrequired “undue experimentation.” In its opposition,\nClaimant did not dispute the relevant standard for\nevaluating enablement but embraced it, contending\nthat, on the facts, “the Wands factors establish that\npracticing the full scope of the claims does not require\nundue experimentation.” D.Ct.Dkt.923 at 14\n(capitalization altered). It argued that “the\nspecification provides a detailed ‘roadmap’ enabling ...\nthe full scope of the claims without undue\nexperimentation.” Id. (Claimant’s emphasis).\n The district court granted JMOL on enablement.\nApplying the Wands factors to the record evidence, as\nClaimant had urged, the court concluded that Claimant’s\npatents require undue experimentation and thus are\nnot enabled. Pet.App.27a-44a. Among other things,\nthe court determined that “a reasonable factfinder\ncould only conclude on this factual record” that “the\nscope of the claims is vast”; “the art is unpredictable”;\nand the patent “do[es] not teach a person of ordinary\nskill in the art how to predict from an antibody’s\nsequence whether it will bind to specific PCSK9\nresidues” or how to “discover undisclosed claimed\nembodiments.” Pet.App.34a, 35a-38a, 40a-41a.\nAccordingly, “any reasonable factfinder would find\nthat practicing the claims’ full scope” would require\n“undue experimentation.” Pet.App.43a-44a.\n 3. Second appeal\n a. Claimant appealed to the Federal Circuit. As in\nthe district court, Claimant did not challenge the Federal\n 17\n\nCircuit’s enablement standard. Instead, Claimant\nargued: “The enablement requirement is satisfied if\nthe specification teaches [skilled persons] ‘how to\nmake and use the full scope of the claimed invention\nwithout “undue experimentation.”’” Claimant.C.A.Br.31\n(quoting MagSil, 687 F.3d at 1380); accord id. at 34.\nClaimant principally contended that the district court\nhad erred in applying the Federal Circuit’s long-\nestablished enablement standard to the record\nevidence. See id. at 32-63. Only at the end of its brief\ndid Claimant contend that the district court erred by\nconstruing the “full scope” requirement as requiring\nClaimant to make “every antibody within the scope of the\nclaims.” Id. at 64 (Claimant’s emphasis). That\ninterpretation, Claimant argued, was contrary to\nFederal Circuit precedent, which “does not require the\npatent to ‘describe how to make and use every possible\nvariant.’” Id. (Claimant’s emphasis).\n The Federal Circuit unanimously affirmed.\nPet.App.1a-15a. The court set forth §112’s text and\nobserved that the enablement requirement is intended\n“to ensure that the public is told how to carry out the\ninvention, i.e., to make and use it.” Pet.App.6a. In\nlight of the statute’s text and purpose, a patent’s\ndisclosure must be “commensurate with the scope of\nthe claims,” such that “when a range is claimed,” the\npatentee must enable “the scope of the range.”\nPet.App.7a-8a. As a result, claims with “broad\nfunctional language” may create “high hurdles in\nfulfilling the enablement requirement” given the need\nto enable the “full scope” of what is claimed without\nundue experimentation. Pet.App.11a-12a.\n 18\n\n “[W]eighing the Wands factors,” the Federal\nCircuit held that “undue experimentation would be\nrequired to practice the full scope of [Claimant’s] claims.”\nPet.App.15a. The court observed that Claimant’s\nfunctionally-defined genus claims “were indisputably\nbroad,” and “far broader in functional diversity than\nthe disclosed examples.” Pet.App.12a-13a. The court\nalso observed—citing Claimant’s own witnesses—that\nthe “field of science” was “unpredictable,” noting the\n“absence of nonconclusory evidence that the full scope\nof the broad claims can predictably be generated by\nthe described methods.” Pet.App.13a. Thus, any\nreasonable factfinder would conclude that the\nspecification “does not provide significant guidance or\ndirection to a [skilled] person ... for the full scope of\nthe claims,” as there was no “adequate guidance\nbeyond the narrow scope of the working examples that\nthe patent’s ‘roadmap’ produce[s].” Pet.App.14a; see\nPet.App.13a n.1 (“[A]lthough the claims include\nantibodies that bind up to sixteen residues, none of\nClaimant’s examples binds more than nine.”). In the\ncourt’s view, “[t]he facts of this case” were “analogous\nto those” in its recent Idenix, Wyeth, and Enzo\ndecisions. Pet.App.15a. Throughout its decision, the\nFederal Circuit repeatedly eschewed bright-line rules\nor tests. See Pet.App.12a (“functional claim\nlimitations are not necessarily precluded in claims\nthat meet the enablement requirement”); Pet.App.13a\n(“some need for testing by itself might not indicate a\nlack of enablement”); Pet.App.14a (“We do not hold\nthat the effort required to exhaust a genus is\ndispositive.”).\n b. Claimant sought rehearing en banc, contending\nthat the panel had “announce[d] a new test” for\n 19\n\nenablement that evaluated the “‘time and effort’”\nrequired “‘to reach the full scope of claimed\nembodiments.’” Claimant.C.A.Reh’g.Pet.1 (quoting\nPet.App.14a) (emphases omitted). The Federal\nCircuit denied the petition without dissent.\nPet.App.60a-61a.\n The panel issued an opinion respecting denial,\nexplicitly rejecting Claimant’s assertion that its decision\n“created a new test for enablement.” Pet.App.62a.\nThe panel explained that its decision “specifically\nresisted” any cumulative-effort “numerosity” or\n“exhaustion” requirement. Pet.App.64a. Instead, the\npanel explained, the test for enablement is and “has\nalways been” that the patent “must enable [the]\ninvention, whatever the invention is.” Pet.App.62a.\nThere is no special rule for functional or genus claims,\nbut the more that is claimed, the more that must be\nenabled. Pet.App.62a-63a. That standard ensures\nthat a patentee cannot obtain “protection for\ninventions broader than are disclosed or enabled, and\nthat were apparently not invented by the applicant.”\nPet.App.64a. An inventor who “has disclosed or\nenabled only a small number of invented species ... has\nnot invented a broad genus.” Pet.App.64a.\n The problem with Claimant’s patents, the panel\nemphasized, is “not that it would take a long time to\ncollect the full set of each and every embodiment.”\nPet.App.65a. Rather, the problem is that “the narrow\nand limited guidance in the specification” leaves\ncountless undisclosed embodiments “inaccessible or\nuncertain to make.” Pet.App.65a.\n 20\n\n SUMMARY OF ARGUMENT\n The decision below follows directly from statutory\ntext and settled precedent and should be affirmed.\nUnder §112, a patent must disclose enough to “enable\nany person skilled in the art ... to make and use the\n[invention].” 35 U.S.C. §112(a). As more than a\ncentury of this Court’s cases show, that standard has\nlong been understood to require sufficient disclosure\nto enable a skilled artisan to make the entire\ninvention claimed, not just a subset, without the need\nfor any significant independent experimentation.\nConsistent with statutory text and the basic “patent\nbargain,” the more that is claimed as a monopoly for\nthe inventor, the more that must be enabled for skilled\nartisans in the field. That commonsense standard\nprecludes someone from claiming a broad\nfunctionally-defined genus without enabling skilled\nartisans to predictably generate specific embodiments\nabsent “undue experimentation,” let alone, as here,\nleaving skilled artisans with no practical guidance for\ncreating particular undisclosed embodiments beyond\nwhat they had before reading the specification.\n Claimant has no meaningful response to that settled\nlaw—which it embraced below. Instead, Claimant\ndevotes most of its brief—from its Question Presented\nonward—to attacking a straw man, by asserting that\nthe Federal Circuit’s decision adopted a novel\nenablement standard that turns on the effort required\nto “cumulatively identify and make all or nearly all\nembodiments of the invention.” That phrase is\nrepeatedly introduced by an “i.e.”—a tell that it is a\nflat mischaracterization of the Federal Circuit’s\n 21\n\ndecision, which neither uses the word “cumulative”\nnor endorses any such cumulative-effort test.\n While Claimant criticizes the Federal Circuit for\npurportedly adding extratextual requirements, its\nown proposed “as-needed” standard is the one that\nintroduces words that are not in the text and\nintroduces concepts that are foreign to this Court’s\ncaselaw. There is simply no grounding in text or\nprecedent for an as-needed standard or for allowing\ncompanies to monopolize far more than they enable.\n In fact, Claimant’s approach would have serious\nnegative consequences for future innovation. Despite\nClaimant’s sky-is-falling lamentations, innovation has\nnot been harmed by the decision below, as Claimant’s\nleading academic article ultimately concedes. Rather,\nthe true threat to innovation comes from allowing\ncompanies to monopolize an entire functional genus\nthat they have not enabled. This case amply\ndemonstrates that danger, as Claimant seeks to remove\nthe only FDA-approved low-dose PCSK9 antibody\nfrom the market. Worse still, Pfizer’s experience\ndemonstrates the risk that someone could monopolize\nan entire genus without having a medically viable\nspecies that survives clinical testing, leaving patients\nwithout needed treatment.\n Finally, the flaws in Claimant’s specification are\nfundamental and would fail any viable test for\nenablement. The problem here is not that Claimant’s\nspecification leaves some small hole in the genus\nunenabled or requires some modest gap to be filled in\nby experimentation. Instead, the specification is\nuseless in enabling a skilled artisan to generate any\nspecific undisclosed antibody within the genus,\n 22\n\nincluding entire classes of claimed antibodies (such as\nthose binding to more than nine identified residues).\nRather, the specification leaves skilled artisans\nseeking to make and use desired undisclosed\nembodiments exactly where they started—consigned\nto use well-understood techniques to generate\nantibodies by trial and error without any ability to\ndetermine whether they even fall within the claimed\ngenus without doing further testing. In sum, Claimant\nhas claimed far more than it has enabled, and two\ncourts have correctly invalidated the patents applying\nwell-established and textually grounded tests. This\nCourt should follow suit and affirm.\n ARGUMENT\nI. The Federal Circuit’s Enablement Standard\n Is Faithful To Section 112’s Text And This\n Court’s Precedents And Was Properly\n Applied Here.\n A. Section 112 and This Court’s Decisions\n Require Enablement of the Full Scope of\n a Claim Without Elaborate\n Experimentation.\n To obtain a patent, §112 requires an applicant to\nprovide “a written description of the invention, and of\nthe manner and process of making and using it, in\nsuch full, clear, concise, and exact terms as to enable\nany person skilled in the art to which it pertains ... to\nmake and use the same.” 35 U.S.C. §112(a). This\n“enablement” requirement is “‘the quid pro quo of the\nright to exclude’” in the basic patent bargain. J.E.M.\nAg Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., 534 U.S.\n124, 142 (2001); see also Pennock v. Dialogue, 27 U.S.\n1, 23 (1829) (Story, J.) (discussing this “quid pro quo”).\n 23\n\n“[E]xclusive patent rights are given in exchange for\ndisclosing the invention to the public.” Festo Corp. v.\nShoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722,\n736 (2002).\n The requirement of an enabling disclosure in\nexchange for a patent monopoly is not new; it traces\nback to pre-Framing English precedent. In King v.\nArkwright, Justice Buller explained that “to entitle\nhimself to the benefit of a patent for a monopoly,” an\ninventor “must disclose his secret, and specify his\ninvention in such a way, that others may be taught by\nit to do the thing for which the patent is granted.”\nDav. Pat. Cas. 61, 106, Webs. Pat. Cas. 64, 66 (K.B.\n1785). That understanding crossed the Atlantic and\nwas reflected in the first Patent Act, which required\n“a specification in writing, containing a description ...\nof the thing or things ... invented or discovered ... so\nparticular ... as ... to enable a ... person skilled in the\nart ... to make, construct, or use the same, to the end\nthat the public may have the full benefit thereof, after\nthe expiration of the patent term.” Patent Act of 1790,\n§2, 1 Stat. at 110. Subsequent Patent Acts contained\nsimilar language, as does the current §112. See, e.g.,\nPatent Act of 1836, ch.357, §6, 5 Stat. 117, 119\n(requiring “description of his invention ... in such full,\nclear, and exact terms to enable any person... to make\n... and use the same”); Patent Act of 1870, ch.230, §26,\n16 Stat. 198, 201.\n Section 112 and its predecessors have consistently\nrequired a “full, clear, concise and exact” disclosure\nthat enables a skilled artisan to “make and use” the\n“invention”—not just a subset of the invention. Under\nthe first Patent Act, one who invented a “thing or\n 24\n\nthings” had to enable “the same”; one could not obtain\na monopoly over “things” while enabling only a\n“thing.” Later versions similarly demanded\nenablement of the invention in full, clear, and exact\nterms. This Court’s cases reflect that clear text. The\n“quid pro quo” offered by the Patent Act is that a\npatentee obtains “a right of exclusion,” but only in\nreturn for “full disclosure” of “the invention.”\nKewanee, 416 U.S. at 480-81, 484 (emphases added).\nThe right to exclude attaches only after disclosure\nsufficient “to enable one skilled in the art to practice\nthe invention once the period of the monopoly has\nexpired.” Univ. Oil Prods. Co. v. Globe Oil & Refining\nCo., 322 U.S. 471, 484 (1944) (emphasis added).\n The “invention” that must be enabled is defined\nby a patent’s claims—a development that emerged in\nthe mid-nineteenth century and is reflected in the text\nof §112. Under “early patent practice in the United\nStates, ... it was the written specification that\nrepresented the key to the patent.” Nautilus, Inc. v.\nBiosig Instruments, Inc., 572 U.S. 898, 902 (2014).\nEventually, however, patent applicants began to set\nout the invention’s scope in a separate section known\nas the “claim.” Id. In 1836, Congress required a\npatent applicant to provide a written description that\n“particularly specif[ied] and point[ed] out the part,\nimprovement, or combination, which he claims as his\nown invention or discovery.” Markman v. Westview\nInstruments, Inc., 517 U.S. 370, 379 (1996). A\nseparate claim became a statutory requirement in\n1870. Id.; see 35 U.S.C. §112(b) (inventor must set out\n“one or more claims particularly pointing out and\ndistinctly claiming the subject matter which the\ninventor ... regards as the invention”). A patent’s\n 25\n\nclaims “measure the invention,” Cont’l Paper Bag Co.\nv. E. Paper Bag Co., 210 U.S. 405, 419 (1908), and\ndefine the monopoly property right, see Nautilus, 572\nU.S. at 901-02.\n With the advent of claiming, some patent\napplicants, seeking to preempt more than they\nactually invented, began defining the scope of their\npatented inventions with overly broad language that\nexceeded the limited disclosures in their\nspecifications. This Court consistently rejected such\nefforts to over-claim and under-disclose as contrary to\nthe basic bargain underlying our patent system. In\nO’Reilly v. Morse, for instance, the Court upheld the\nvalidity of seven claims that were limited to telegraph\nstructures and systems described in the patent. 56\nU.S. at 85-86, 112. But the Court deemed “too broad”\nan eighth claim for the “use of the motive power of the\nelectric or galvanic current, [called] electro-\nmagnetism, ... for marking or printing intelligible\ncharacters, signs, or letters, at any distances.” Id. at\n112-13. That “invention,” the Court concluded,\nviolated §112’s predecessor because its scope went\nbeyond the patent’s disclosure. Id. at 113, 118-20.\n Similarly, this Court routinely invalidated\npatents for non-enablement where the inventor\nclaimed a whole class of embodiments characterized\nby function without commensurate disclosure. For\nexample, in Lamp, the Court invalidated a claim to\n“the use of all fibrous and textile materials for the\npurpose of electric illuminations” where the patent left\nothers to engage in “painstaking experimentation”\namong “different species of vegetable growth, for the\npurpose of ascertaining the one best adapted to an\n 26\n\nincandescent conductor.” 159 U.S. at 472-73, 475. In\nHolland Furniture Co. v. Perkins Glue Co., the Court\ninvalidated a claim to all starch glues functioning like\nanimal glue because the patent described only “a\nparticular starch glue” and finding others required\n“elaborate experimentation.” 277 U.S. at 256-57. In\nBéné v. Jeantet, the Court invalidated a claim to a\nmethod of shrinking coarse hair by “subjecting it to the\naction of chemicals” because the patent merely\ndisclosed one chemical “solution” and did not “enable”\na skilled person “to use the invention without having\nto resort to experiments of his own to discover those\n[other] ingredients.” 129 U.S. 683, 684-86 (1889). And\nin Corona Cord Tire Co. v. Dovan Chemical Corp., the\nCourt invalidated certain claims to a process for\ntreating rubber by combining it with “a disubstituted\nguanidine.” 276 U.S. 358, 385 (1928). The patent\npermissibly claimed diphenylguanidine as an\naccelerator, but went too far in claiming “other\nderivatives of guanidine in which two of the hydrogen\natoms of guanidine nucleus have been substituted by\nother groups,” because there were “between 50 and\n100 substances” that fit that description and the\npatentee had not disclosed “any general quality\ncommon to disubstituted guanidines which made\nthem all effective as accelerators.” Id.\n The Court has thus long recognized that a patent\ndoes not satisfy the enablement requirement if the\nspecification does not allow skilled artisans to make or\nuse the entire claimed invention without “painstaking\nexperimentation,” Lamp, 159 U.S. at 474-75, or\n“elaborate experimentation.” Holland, 277 U.S. at\n256-57. The Court’s decisions reflect the\ncommonsense principle that the more the inventor\n 27\n\nclaims, the more the specification must enable, and\nthe commonsense corollary that when claims outstrip\nthe accompanying disclosures, skilled artisans will be\nconsigned to “painstaking experimentation” to make\nand use the full scope of the claimed invention and\nthat such claims are invalid.\n B. The Federal Circuit, in General and in\n the Decision Below, Requires No More\n Than the Statutory Text and This\n Court’s Cases Demand.\n The Federal Circuit’s enablement standard\nfaithfully embodies §112’s text and this Court’s\nprecedents. In fact, the statutory text, this Court’s\ncases, and a whole line of Federal Circuit precedents\nguard against what Claimant has done here: claim a lot\nand disclose a little, such that skilled artisans (and\neven Claimant’s own scientists) must engage in undue\nexperimentation because the disclosure leaves them\nguessing as to how to make and use the full scope of\nthe claimed invention.\n Consistent with this Court’s decisions, the\nFederal Circuit’s predecessor, the CCPA, “summed\nup” the §112 requirement as “whether the scope of\nenablement provided to one of ordinary skill in the art\nby the disclosure is such as to be commensurate with\nthe scope of protection sought by the claims.” In re\nMoore, 439 F.2d 1232, 1236 (C.C.P.A. 1971); accord In\nre Fisher, 427 F.2d 833, 839 (C.C.P.A. 1970). And it\ndescribed the amount of experimentation warranting\ninvalidation as “undue experimentation.” In re\nFolkers, 344 F.2d 970, 976 (C.C.P.A. 1965); see Fields\nv. Conover, 443 F.2d 1386, 1390-91 (C.C.P.A. 1971)\n(holding that disclosure complies with §112 even if\n 28\n\n“some experimentation” is required, “provided it is not\nan undue amount”).\n The Federal Circuit, in turn, has long recognized\nthat a patent’s disclosure must be “at least\ncommensurate with the scope of the claims.” Crown\nOperations Int’l, Ltd. v. Solutia Inc., 289 F.3d 1367,\n1379 (Fed. Cir. 2002); see In re Hyatt, 708 F.2d 712,\n714 (Fed. Cir. 1983) (stating that §112 requires “the\nenabling disclosure of the specification be\ncommensurate in scope with the claim under\nconsideration”). In the “seminal” In re Wands\ndecision, Br.23, the Federal Circuit explained that “it\nis well established that enablement requires that the\nspecification teach those in the art to make and use\nthe invention without undue experimentation,” and it\narticulated eight factors for “determining whether a\ndisclosure would require undue experimentation” in\norder to “fully enable[]” an invention. 858 F.2d at 736-\n37.\n Reflecting the foregoing principles, the Federal\nCircuit has set forth a straightforward, administrable\nstandard for enablement: “To be enabling, the\nspecification of a patent must teach those skilled in\nthe art how to make and use the full scope of the\nclaimed invention without ‘undue experimentation.’”\nMagSil, 687 F.3d at 1380; see also McRO, Inc. v.\nBandai Namco Games Am. Inc., 959 F.3d 1091, 1100\n(Fed. Cir. 2020) (“Once the precise scope of the claimed\ninvention is defined, the question is whether undue\nexperimentation is required to make and use the full\nscope of embodiments of the invention claimed.”).\n In a series of cases, the Federal Circuit has\napplied this standard in the particular context of\n 29\n\nevaluating whether genus claims with functional\nlimitations were enabled, and it concluded that the\nclaims lacked enablement due to “undue\nexperimentation.” That is not because the Federal\nCircuit applies a special rule to genus claims or\nfunctional claims or even functional genus claims, but\nbecause the more one claims, the more one must\nenable, and some genus claims assert a monopoly over\nfar more than they enable. In Idenix, for example, the\ncourt held that the claims were not enabled after\nobserving, inter alia, that there were “many, many\nthousands of candidate compounds”; “[t]esting” or\n“screening” of each candidate compound was\nnecessary to determine whether it satisfied the claim’s\nfunctional requirements, given the “unpredictability”\nof the art; and the specification only “contain[ed] some\ndata showing working examples,” leaving a skilled\nperson to “‘engage in an iterative, trial-and-error\nprocess to practice the claimed invention,’” even if\n“synthesis of an individual [compound] was largely\nroutine.” 941 F.3d at 1156-63. Similarly, in Enzo, the\ncourt held that the claims were not enabled given that\nthe “number of possible” compounds within the claims\nwas “at least ‘tens of thousands,’” each of which “would\nneed to be tested” to determine if it satisfied the\nfunctional requirements given “unpredictability in the\nart.” 928 F.3d at 1346-49. And in Wyeth, the court\nheld the claims invalid because there were potentially\n“tens of thousands of candidates,” and the art was\n“unpredictable,” since even “minor alterations” to a\ncompound “could impact its” functional properties.\n720 F.3d at 1384-86.\n The Federal Circuit followed this precedent—all\nbuilt on §112’s text and this Court’s decisions—in this\n 30\n\ncase, which likewise involves genus claims with\nfunctional limitations. The court noted that an\nenabling disclosure “must be at least commensurate\nwith the scope of the claims.” Pet.App.6a-7a.\nAccordingly, it explained, an inventor that “claims\nwith broad functional language” faces “high hurdles”\nin “fulfilling the enablement requirement.”\nPet.App.12a; see also Pet.App.62a-63a (explaining\nthat “[i]f the invention is a group of compositions,\ndefined as a genus,” it must be “enabled by a\ndisclosure commensurate with the scope of the\ngenus”). These observations are fully consistent with\nthe requirement of §112’s text that a specification\nenable the “invention” claimed and the commonsense\nprinciple that the more that is claimed, the more that\nmust be enabled.\n The court then “turn[ed] to the specific Wands\nfactors” and concluded that “undue experimentation\nwould be required to practice the full scope of”\nClaimant’s functionally-defined genus claims.\nPet.App.10a, 12a-15a. In so doing, the court\ndetermined that “the facts of this case\nare ... analogous to those in” Idenix, Enzo, and Wyeth.\nPet.App.15a. The Federal Circuit’s decision was thus\nfully consistent with this Court’s decisions in Lamp,\nHolland, Béné, and Corona, all of which invalidated\ngenus claims requiring skilled artisans to make and\ntest candidates to find embodiments beyond the\nrelatively few disclosed in the patent.\n 31\n\nII. Claimant Provides No Persuasive Reason To\n Establish A New Enablement Standard.\n Claimant does not take issue with the vast majority\nof this corpus of precedent. Indeed, for all its rhetoric\nabout extratextual requirements à la Bilski, Claimant\ndoes not challenge the “undue experimentation”\nstandard, the Wands factors, or any broader aspect of\nFederal Circuit law, even though the text of §112\nmakes no reference to “undue experimentation,” let\nalone the eight Wands factors. Claimant does not even\ndispute that the specification must “teach those\nskilled in the art how to make and use the full scope\nof the claimed invention without ‘undue\nexperimentation.’” MagSil, 687 F.3d at 1380. Nor\ncould it: Claimant embraced this same “full scope”\nstandard in its briefing below, see Claimant.C.A.Br.31; it\npreviously told this Court that, “[f]or enablement, the\nFederal Circuit applies the statutory standard,” p.13,\nsupra; and it acknowledges that a patent must\n“reasonably enable the entire scope of the claim,”\nBr.28. Claimant similarly accepts the Wands factors as\nuseful for determining whether “undue\nexperimentation” is required to enable the full scope\nof the claimed invention. See Br.23 (describing Wands\nas “seminal”). Even more remarkably, Claimant does\nnot take issue with the Federal Circuit’s recent\ndecisions in Idenix and Wyeth, even though the court\ninvalidated the functional genus claims there based on\nthe same kind of enablement problems that doom\nClaimant’s patents.\n Instead, Claimant spends practically its entire brief\nattacking a straw man, adding its own language to a\npassage in the decision below to claim that the Federal\n 32\n\nCircuit adopted a novel enablement standard that\nturns on the effort required to “cumulatively identify\nand make all or nearly all embodiments of the\ninvention.” Br.i; see Br.2, 5, 18, 19, 27, 28. That\nassertion egregiously mischaracterizes the decision,\nwhich neither endorses nor relies on any such\ncumulative-effort standard—and in fact, expressly\nrejects it.\n A. Claimant Mischaracterizes the Decision\n Below.\n From its Question Presented to the last page of its\nbrief, Claimant rests its case for reversal on a profound\nmischaracterization of the decision below. In Claimant’s\ntelling, the Federal Circuit erred by adopting a “new”\nand “different” enablement standard that\n“fundamentally alters the patent bargain” by making\nenablement depend on the effort required to\n“cumulatively identify and make all, or nearly all,\npossible variations of the invention.” Br.2, 19-20, 24.\nClaimant spends a full 20 pages of its argument section\nattacking this standard as contrary to text, precedent,\npractice, and policy. Br.21-41.\n There is a singular problem with that approach:\nThe Federal Circuit has never endorsed or relied on\nany such cumulative-effort standard, as it made clear\nin both the decision below and its statement\nconcerning rehearing when Claimant mischaracterized\nthe decision in this way. The decision could hardly be\nclearer that it “do[es] not hold that the effort required\nto exhaust a genus is dispositive.” Pet.App.14a\n(emphasis added); see also, e.g., Pet.App.8a (patent\nneed not “describe how to make and use every possible\nvariant of the claimed invention”); Pet.App.13a\n 33\n\n(enablement is “not concerned simply with the number\nof embodiments”). The panel underscored that point\non rehearing, emphasizing that the decision\n“specifically resisted what might be termed a simple\n‘numerosity’ or ‘exhaustion’ requirement,” and that\nany assertion that the Federal Circuit had “adopted a\n‘numbers-based standard’ to evaluate enablement”\nthat asked “how long it would take to make and screen\nevery species” simply “mischaracterizes our law.”\nPet.App.64a; contra, e.g., Br.26 (asserting that the\npanel “turned enablement into a numbers game”).\n As the panel explained, the problem with Claimant’s\npatents “was not that it would take a long time to\ncollect the full set of each and every embodiment,”\nPet.App.65a (emphasis added), as would a claim that\nfully enables skilled artisans to predictably generate\nevery embodiment but that would require substantial\ntime to do so given the sheer number of embodiments.\nThe problem was that the unpredictability of the\nscience combined with a broad functional claim that\n“extend[ed] far beyond the examples and guidance\nprovided” left skilled artisans with no ability to\ngenerate specific undisclosed embodiments and no\noption but to engage in trial and error using well-\nestablished techniques to generate candidate\nantibodies that would then still need to be tested to\nascertain whether they came within the claimed\ngenus. Pet.App.65a. The panel had little difficulty in\nconcluding that this constituted “undue\nexperimentation” under the Wands factors, which\nClaimant does not challenge. Pet.App.64a-65a.\n Claimant points to no language in the Federal\nCircuit’s opinion actually adopting the “cumulatively\n 34\n\nidentify and make all or nearly all embodiments”\nstandard it assails. Contra Br.i, 2, 5, 18, 19, 27, 28. In\nfact, the word “cumulative” and its variants do not\nappear once in the decision below (despite appearing a\ndozen times in Claimant’s brief). Instead, Claimant twists\nthe Federal Circuit’s words, transforming the phrase\n“reach the full scope of claimed embodiments”—which\nthe Federal Circuit used exactly once, see\nPet.App.14a—into “cumulatively identify and make\nall or nearly all embodiments of the invention.” Br.i;\nsee, e.g., Br.2 (“‘reach the full scope of claimed\nembodiments’—i.e., to cumulatively identify and make\nall, or nearly all, possible variations”); Br.5 (“‘to reach\nthe full scope of claimed embodiments’ ... i.e., to\ncumulatively identify and make all or nearly all\nembodiments”); Br.18, 19, 27 (same). Claimant’s\nrepeated use of “i.e.” is a tell that the Federal Circuit\nnever actually adopted a cumulative-effort test.\n When a specification enables a skilled artisan to\npredictably make specific undisclosed embodiments\nunder circumstances where making all of them would\ntake time, the cumulative effort needed to make and\nuse every single embodiment of the claimed invention\nis unproblematic. But when the specification provides\nno useful guidance to skilled artisans to make and use\nspecific undisclosed embodiments and consigns them\nto a trial-and-error process to unpredictably generate\nantibodies that must then be tested to determine\nwhether they even fall within the broad functionally-\nclaimed genus, Federal Circuit precedent along with\nthis Court’s precedent and statutory text all indicate\nthat the claimed invention is not enabled. Under\nthose circumstances, the reality that even substantial\neffort will not allow skilled artisans “to practice the\n 35\n\nfull scope of these claims,” Pet.App.15a, provides\nconfirming evidence that the specification leaves\nskilled artisans in the dark. But, as the Federal\nCircuit was at pains to emphasize, that commonsense\nobservation simply does not translate into a\n“cumulative effort” test that would condemn a patent\nthat gives a skilled artisan clear guidance to make and\nuse any undisclosed embodiment of the claim through\na time-consuming process.\n Claimant engages in similar distortion in asserting\nthat the panel “acknowledged” it was adopting a\n“different standard” that “‘raises the bar’” and imposes\n“‘high hurdles in fulfilling the enablement\nrequirement.’” Contra Br.2 (quoting Pet.App.12a-\n13a), Br.19-20, 24, 25. Instead, the panel simply\nobserved correctly that Claimant had raised the bar on\nitself by claiming a broad functional genus. To state\nthe obvious, there is no enablement problem with\nClaimant’s ’457 patent claiming Repatha by its amino-\nacid sequence or with Respondent’s claim to Praluent\nby its amino-acid sequence. A skilled artisan can\nmake and use those structurally defined and\nadequately disclosed antibody inventions every time.\nThe problem was introduced when Claimant tried to\nmonopolize the whole field with broad functional\nclaims that taught skilled artisans barely anything\nmore than what they already knew—namely, that\nthrough trial and error using well-established\ntechniques, they might be able to generate some\nantibodies within the claims. By claiming far more\nthan the particular antibodies it had already\ndiscovered, and laying claim to an entire genus of\nfunctionally-defined antibodies (including antibodies\nthat Claimant specifically sought but could not make),\n 36\n\nClaimant “raised the bar” and created “high hurdles” for\nits specification. And Claimant’s actual specification\nfalls far short of the mark.\n That in no way suggests (let alone\n“acknowledges”) that the panel was adopting a\n“different standard” for functionally-defined genus\nclaims. Instead, it simply reflects that under the\nlongstanding statutory standard for enablement, the\nbreadth of disclosure necessary to meet the\nenablement requirement depends on the breadth of\nthe claimed invention: the more that the patent\nclaims, the more it must enable. That principle has\nlong been a feature of Federal Circuit law, see, e.g.,\nMagSil, 687 F.3d at 1381 (“[A] patentee chooses broad\nclaim language at the peril of losing any claim that\ncannot be enabled across its full scope of coverage.”),\nand has been applied in previous cases that Claimant\naccepts to require more of those who claim a broad\nfunctional genus, see, e.g., Idenix, 941 F.3d at 1165.\n B. To the Extent Claimant Is Proposing a New\n Enablement Standard, Its Standard\n Conflicts With Statutory Text, Settled\n Precedent, and Longstanding Practice.\n While Claimant is reasonably clear in rejecting the\nstrawman cumulative-effort test, it is decidedly less\nclear in explaining its own view of what §112’s\nenablement standard actually requires. At times, it\nappears to embrace the standard that the Federal\nCircuit applied below (and in countless other cases)\nshorn of the imagined cumulative-effort standard. See\nBr.28 (specification must “reasonably enable the\nentire scope of the claim”); Br.43 (enablement requires\ndisclosure “commensurate with the scope of protection\n 37\n\nsought by the claims”). But that would lead to\naffirmance, as the Federal Circuit never used the word\ncumulative and disclaimed any cumulative-effort\nstandard.\n At other times, Claimant appears to espouse a\nsubstantially diluted test for enablement—a\n“practical” test that requires a patent to enable skilled\nartisans only to “put the claimed inventive concept\ninto practice” in some way, “as needed,” without\nnecessarily enabling skilled artisans to make and use\nthe full scope of the claimed invention. Br.29; see Br.3\n(“how to ‘make and use’ the invention as needed”);\nBr.20-21 (“reasonably make and use individual\nembodiments as needed”); Br.28 (“produce and employ\nphysical versions of the invention as needed”); Br.41\n(“permit skilled artisans to practice claims as\nneeded”). But it is entirely unclear where this as-\nneeded standard comes from—certainly not the\nstatutory text—or whose needs control. Moreover,\nthis test elides the fundamental problem with the\nspecification—namely that it provides no guidance to\nallow skilled artisans to predictably produce any\nspecific undisclosed embodiment, let alone the full\nscope of the claimed invention. Simply put, Claimant’s\nas-needed standard cannot be reconciled with\nstatutory text, settled precedent, or longstanding\npractice.\n 1. The statutory text alone is conclusive. Section\n112(b) explicitly requires a patent to “particularly\npoint[] out and distinctly claim[]” in its claims “the\nsubject matter which the inventor ... regards as the\ninvention” and that the patent seeks to monopolize.\n35 U.S.C. §112(b). That is the same “invention” that\n 38\n\n§112(a) requires a patent to “enable any person skilled\nin the art ... to make and use.” Id. §112(a). The result\nis straightforward: if the patent claims a broad genus\nas the “invention” under §112(b), then the patent must\nenable a skilled artisan to make and use that entire\ninvention—the genus—under §112(a), not just\nwhatever subset the patentee later asserts is really\n“needed” to “put the claimed inventive concept into\npractice.” Br.29. The words “as needed” appear\nnowhere in §112, and nothing else in the text provides\nclues as to what and whose needs matter. This Court\nshould reject Claimant’s efforts to engraft language onto\n§112.\n 2. Without grounding in the statutory text, it is\nunsurprising that Claimant’s only-as-needed standard\nfinds no support in this Court’s cases. Claimant begins\nwith Wood v. Underhill, which pre-dates claiming\npractice and is distinguishable on that ground alone.\n46 U.S. (5 How.) 1 (1847). The case is inapposite\nregardless. It involved a claimed “improvement in the\nart of manufacturing bricks” by mixing fine coal-dust\nwith clay, and examined whether the patent was too\nvague to be valid because it only specified a “general\nrule” for the proportion of coal-dust to clay. 46 U.S. (5\nHow.) at 4-5. In answering that question, this Court\ndeemed the specification sufficient, but not because it\nallowed a skilled artisan to practice the patent on\nsome limited basis, by making whatever subset of\nbricks the Court believed was really “needed” to\npractice the invention. Instead, the Court made clear\nthat the statutory standard was whether the patent\nallowed an artisan to make and use the patented\ninvention “without making any experiments of his\nown,” and underscored that if “no one could use the\n 39\n\ninvention without first ascertaining by experiment the\nexact proportion ... required to produce the result\nintended,” then “undoubtedly it would be the duty of\nthe court to declare the patent to be void.” Id.\n Mowry v. Whitney, which involved a process for\nmanufacturing cast-iron railway wheels by cooling the\nentire wheel at the same rate, is to the same effect. 81\nU.S. 620 (1871). As in Wood, this Court asked whether\nthe patent disclosure was sufficient “to teach the\npublic how to practice” the claimed invention, id. at\n644, not just some limited subset. The Court found the\ndisclosure adequate, not because it evaluated whether\nthe disclosure “put the claimed inventive concept into\npractice” for particular railroad wheels on some “as\nneeded” basis, Br.29, but because the disclosure\nenabled the entire “process invented and claimed,” 81\nU.S. at 645-46.\n So too for Minerals Separation, Ltd. v. Hyde, 242\nU.S. 261 (1916), which Claimant repeatedly invokes for\nthe proposition that a patent’s disclosure “‘satisfies\nthe law’ so long as it ‘sufficiently ... guide[s] those\nskilled in the art to’ the ‘successful application’ of ‘the\ninvention.’” Br.2; see also Br.6, 23, 24, 31-32, 41, 46.\nMinerals Separation is a remarkably thin reed for any\nenablement argument, as the decision principally\naddressed whether the patent was “invalid for want of\nnovelty and invention.” 242 U.S. at 263; see id. at 263-\n70. Only in a single paragraph did the Court address\nan alternative ground for invalidity, and without\nusing the word “enablement” or referring to the\nstatutory disclosure requirement; instead, the Court\naddressed the separate definiteness requirement,\nholding that the patent was “sufficiently definite.” Id.\n 40\n\nat 271; see Nautilus, 572 U.S. at 910 (describing\nMinerals Separation and its “not greater than is\nreasonable” statement as addressing definiteness, not\nenablement).\n Regardless, there was no dispute in Minerals\nSeparation that all “variation[s] of treatment” worked\nand were “within the scope of the claims”;\nexperimentation (characterized as “preliminary\ntests”) was required merely to determine the variables\nthat “would be most successful and economical in each\ncase” so as “to obtain the best results,” not to make and\nuse the full range of the invention claimed. 242 U.S.\nat 270-71. Thus, Minerals Separation not only fails to\nsupport Claimant’s as-needed enablement requirement;\nit is fully consistent with the Court’s (and the Federal\nCircuit’s) unbroken line of decisions invalidating\ngenus claims that require a skilled artisan to make\nand test candidates to find embodiments covered by\nthe claims. See, e.g., Lamp, 159 U.S. at 474-75;\nHolland, 277 U.S. at 256-57; Idenix, 941 F.3d at 1156-\n62.\n 3. Claimant’s other cited authorities likewise do not\nsupport its as-needed standard. See Br.32-36. As\nalready noted, British authorities invalidated patents\nfor failing to enable the entire invention without\nundue experimentation. See Arkwright, Dav. Pat.\nCas. at 106-17, Webs. Pat. Cas. at 67. Similarly, in\nNeilson v. Harford, 151 Eng. Rep. 1266 (Exch. 1841),\nthe court did not apply an “as-needed” test, but asked\ninstead whether the patent enabled the whole\n“machine for which a patent is taken out,” without\nrequiring the artisan to engage in further “invention\nor addition.” Id. at 1274.\n 41\n\n Claimant’s early American authorities are to the\nsame effect. In Carver v. Braintree Manufacturing\nCo., Justice Story reviewed whether a patent\nadequately enabled an improved rib for the cotton gin\nby asking “[w]hether a skilful mechanic could from\nthis description make a proper rib for any particular\nkind of cotton,” 5 F.Cas. 235, 237 (C.C.D. Mass. 1843)\n(emphasis added)—not, as Claimant adds, “as needed.”\nBr.34. Two of Claimant’s cited treatises predate modern\nclaiming practice but nonetheless confirm that the\npatent specification must enable the entire invention\nwithout experimentation. See W. Phillips, The Law of\nPatents for Inventions 283-84 (1837) (patent must\nenable skilled artisan “to make the machine ... without\nmaking any experiments, and without any new\ninvention or addition of their own”); G. Curtis, A\nTreatise on the Law of Patents for Useful Inventions\n§156 (1849) (“to construct or reproduce the thing\ndescribed, without invention or addition of their own,\nand without repeated experiments”). Professor\nRobinson’s treatise—on which Claimant primarily\nrelies—similarly explains that the patent must enable\nan artisan to practice the claimed invention “without\nexperiment or the exercise of his own inventive skill.”\n2 W. Robinson, The Law of Patents for Useful\nInventions §515 (1890). 6\n None of Claimant’s pre-Federal Circuit decisions\nadopted an as-needed enablement standard, or\nexamined how many embodiments are “practically”\n\n 6 Professor Robinson was also distinctly opposed to purely\n\nfunctional claims like Claimant’s, calling them “void” and “[o]ne of\nthe most objectionable forms in which a claim can be stated.”\n2 Robinson §518.\n 42\n\nneeded to practice the invention; instead, they asked\nwhether the patent adequately enabled the entire\ninvention claimed (and invalidated patents that did\nnot). See, e.g., Philip A. Hunt Co. v. Mallinckrodt\nChem. Works, 177 F.2d 583, 585-86 (2d Cir. 1949) (L.\nHand, J.) (patent must enable “all practicable means,\ncomprehended within the general language” of the\nclaims, “without further substantial\nexperimentation”); see also Ill. Tool Works, Inc. v.\nFoster Grant Co., Inc., 547 F.2d 1300, 1309 (7th Cir.\n1976) (enablement must be “commensurate in scope\nwith the protection sought by the claims”); In re Moore,\n439 F.2d 1232, 1235-36 (C.C.P.A. 1971) (enablement\nmust be “commensurate with the scope of protection\nsought by the claims”); In re Angstadt, 537 F.2d 498,\n501-02 (C.C.P.A. 1976) (same).\n 4. The PTO, unsurprisingly, follows the same\napproach. As its directions to patent examiners make\nclear, “[t]he focus of the examination inquiry is\nwhether everything within the scope of the claim is\nenabled.” Manual of Patent Examining Procedure\n§2164.08 (9th ed. 2020) (MPEP) (emphasis added).\nThe PTO thus looks to whether skilled artisans “could\nreadily determine any one of the claimed\nembodiments,” id. (emphasis added)—not just\nwhatever embodiments an examiner thinks might\nultimately be needed in practice, which is entirely\nunknowable at the patent-issuance stage.\n Claimant contends that the PTO instructs\nexaminers that Minerals Separation “supplies the\nproper ‘standard for determining whether the\nspecification meets the enablement requirement.’”\nBr.42-43. But the enablement standard that the PTO\n 43\n\ndraws from Minerals Separation is not an “as needed”\nstandard or any other standard proposed by Claimant; it\nis whether “the experimentation needed to practice\nthe invention [is] undue or unreasonable,” MPEP\n§2164.01, which is hardly unique to Minerals\nSeparation. The PTO also instructs examiners that a\nskilled artisan must be able to “make and use the\nentire scope of the claimed invention without undue\nexperimentation,” id. §2164.08, and that a disclosure\nmust be “commensurate with the scope of the claimed\ninvention, i.e., must reasonably enable the full scope\nof the claimed invention,” id. §2164.05.\n Finally, the irony of Claimant’s insistence on an as-\nneeded standard is that the specification here does not\nallow skilled artisans to make and use specific\nembodiments that they need or want to reproduce, or\neven any embodiment from entire classes of claimed\nantibodies. After all, a skilled artisan will not want or\nneed to produce a random embodiment of the genus.\nRather, skilled artisans (particularly after the patent\nexpires and the patent bargain fully benefits the\npublic) will want and need to produce particular\nundisclosed antibodies within the claimed genus that\nmay be especially medically effective. For that very\npractical, as-needed task, Claimant’s specification is\nnext to useless.\n Thus, while Claimant is correct that a patent is not\nenabled where skilled artisans (1) “cannot construct\nthe claimed invention at all,” (2) cannot “produce the\ninvention without experimentation that exceeds what\nskilled artisans typically do,” (3) cannot produce “a\ndistinct category of embodiments,” or (4) are left\n“searching for a needle in a haystack,” Br.44-45, those\n 44\n\ncategories are hardly exhaustive. Another clear case\nof non-enablement is when skilled artisans cannot\npredictably produce specific undisclosed embodiments\nof the claimed invention (or even entire classes of\nundisclosed embodiments) that they want or need\nwithout engaging in a trial-and-error process that\ncould take years. As the Federal Circuit correctly\nrecognized, that scenario likewise demonstrates a\nfailure to enable the full scope of an invention absent\nundue experimentation and defeats Claimant’s patents.\nIII. Claims Like Claimant’s Harm Innovation.\n Claimant contends that the decision below\ninvalidating its patents “has devastating\nconsequences” by “threaten[ing] genus claims in any\nfield whenever they cover more than disclosed\nexamples.” Br.39. Tellingly, however, the only wider\nimpact Claimant identifies is a single, nonprecedential\nruling by a PTO administrative panel that merely\napplied the Wands factors and concluded that “undue\nexperimentation would be required to make and use\nthe full scope of the claimed invention.” Ex Parte\nBeall, 2021 WL 1208966, at *3 (P.T.A.B. Mar. 26,\n2021). And that garden-variety determination\ninvoked an enablement standard that Claimant does not\nchallenge and did not turn on any “cumulative-effort”\nstandard or “reach-the-full-scope” test.\n Claimant argues that “[t]he impact on incentives to\ninnovate is particularly severe in the biotech and\npharmaceutical industries,” specifically citing\nantibodies as at risk from the decision below. Br.39.\nBut there are good reasons that many pharmaceutical\nand biotech firms that rely on patents and innovation\ndisagree with Claimant. First, the Federal Circuit has\n 45\n\nrejected enablement challenges to genus claims in the\nbiotech or pharmaceutical industries when their full\nscopes are supported by the patent. See, e.g., Bayer\nHealthcare LLC v. Baxalta Inc., 989 F.3d 964, 970-71,\n980-81 (Fed. Cir. 2021) (rejecting an enablement\nchallenge to a genus claim to recombinant forms of\nhuman factor VIII because the patent provided\ninstructions and examples that enabled the “full\nscope”); Erfindergemeinschaft UroPep GbR v. Eli Lilly\n& Co., 276 F.Supp.3d 629, 659-663 (E.D. Tex. 2017)\n(rejecting enablement challenge to a genus of PDE5\ninhibitors to treat benign prostatic hyperplasia), aff’d,\n739 F.App’x 643 (Fed. Cir. 2018). Second, in the two\nyears since the decision below, companies have\ncontinued to innovate groundbreaking, lifesaving\nantibody treatments. See Peter Loftus, FDA\nAuthorizes Use of New Eli Lilly Covid-19 Antibody\nTreatment, Wall St. J. (Feb. 11, 2022),\n[URL REDACTED] Even the academic article\nthat Claimant espouses admits that, despite the Federal\nCircuit’s supposed new enablement test making genus\nclaims “nearly impossible,” the biotechnology and\npharmaceutical industries “seem to be doing just fine,”\nand “innovation ... seem[s] to be proceeding apace.”\nDmitry Karshtedt et al., The Death of the Genus\nClaim, 35 Harv. J.L. & Tech. 1, 64-65 (2021).\n Claimant invokes the specter of “[c]opyists” who can\n“‘avoid infringement’ simply by making a ‘minor\nchange.’” Br.39. But this Court has a doctrine to\naddress that risk. Under the doctrine of equivalents,\n“a product or process that does not literally infringe\nupon the express terms of a patent claim may\nnonetheless be found to infringe if there is\n‘equivalence’ between the elements of the accused\n 46\n\nproduct or process and the claimed elements of the\npatented invention.” Warner-Jenkinson Co. v. Hilton\nDavis Chem. Co., 520 U.S. 17, 21 (1997). Moreover, in\nthis context, the science itself protects against the risk\nClaimant invokes, because making a few seemingly\nminor substitutions in the amino-acid sequence can\nradically change the blocking and binding\ncharacteristics of an antibody. See, e.g.,\nC.A.App.3768-69, 3891.\n Finally, and most important, it is Claimant’s\ninvitation to allow companies to monopolize far more\nthan they enable that poses the real risk to innovation\nin these fields. If an inventor purports to “invent[] a\ngroup of compositions defined by a genus but does not\nknow enough to fully enable that genus,” it “would\nsuppress innovation if one were able to claim such a\nbroad genus.” Pet.App.65a.\n This case perfectly illustrates the risks. In the\nfirst place, the chronology here belies any assertion\nthat Claimant’s genus claims spurred innovation.\nClaimant did not file its genus claims until years after\nmultiple companies had independently pursued and\ndiscovered specific PCSK9-inhibiting antibodies,\nClaimant had obtained a patent on its Repatha antibody\nby structure, and Claimant had seen Respondent/Respondent’s\nindependently developed Praluent. See pp.6-10,\nsupra. 7\n\n 7 Claimant contends that Respondent “used the ‘anchor antibodies’\n\ndisclosed in Claimant’s applications to develop” Praluent. Br.15.\nBut Respondent filed its provisional patent application on\nPraluent two months before Claimant’s patent application on\nRepatha published, and thus knew nothing about Claimant’s\n 47\n\n Moreover, allowing a company that has\ndiscovered only particular species to obtain a patent\non a broad functionally claimed genus creates a very\nreal risk that important medical treatments will never\nreach the market. Here, for example, Praluent and\nRepatha do not have the same FDA-approved\nindications or dosing; only Praluent is approved for a\n“low dose” therapy that guards against the possibility\nof too-low cholesterol. See D.Ct.Dkt.967, Ex.63, at 6\n(Praluent label recommending that doctors start\npatients on low dose and noting that the “long-term\neffects of very low levels of LDL-C ... are unknown”).\nClaimant’s broad genus claim would force this low-dose\noption off the market, as Claimant literally tried to do\nvia injunction earlier in this litigation.\n But the even greater risk comes from the very real\npossibility that a company that lays claim to an entire\nfunctional and un-enabled genus will have only\ndiscovered species that are not medically efficacious at\nall. Pfizer’s experience in developing a PCSK9\nantibody is a cautionary tale. Pfizer was one of the\nfirst companies to begin development of a PCSK9\nantibody, but after it discovered a promising species\nand filed a provisional patent application for that\nantibody by structure, it discontinued its program\nafter disappointing clinical results, leading it to\nconclude that its antibody was “not likely to provide\nvalue to patients, physicians, or shareholders.” Pfizer\nDiscontinues Global Development of Bococizumab, Its\n\nindependently-developed antibodies. See pp.8-9, supra. The\nRespondent patent Claimant cites shows that Respondent ran tests\nusing publicly available antibodies (including Claimant’s) only after\nhaving identified Praluent.\n 48\n\nInvestigational PCSK9 Inhibitor, Pfizer (Nov. 1, 2016),\n[URL REDACTED] If Pfizer had instead laid claim\nto the entire genus, à la Claimant, it would have stifled\ninnovation, and patients would have had no PCSK9\nantibody therapies at all—or, at best, would have had\nto wait longer for Pfizer to develop a safe and effective\nantibody through trial and error.\nIV. Claimant’s Claims Are Not Enabled Under Any\n Viable Test For Enablement.\n Claimant claims that “[u]nder any reasonable\nformulation of the statutory standard,” its claims are\nenabled. Br.48. But very nearly the opposite is true:\nUnder any reasonable formulation of the statutory\nstandard, Claimant has not come close to satisfying it.\nClaimant does not actually take issue with the Federal\nCircuit law that pre-dated the decision below. And the\ndistrict court, applying that law, had little difficulty in\nfinding that Claimant had claimed far more than it\nenabled. The Federal Circuit unanimously reached\nthe same conclusion. While Claimant tries to insert\nwords—like “cumulative”—into the opinion and\nmischaracterize it in ways the panel expressly denied,\nthe panel viewed this as a straightforward case under\nwell-established law. 8\n The reason is simple: This is not a case where\nClaimant’s specification leaves a skilled artisan just a\nfew embodiments short of the invention’s full scope.\nThe specification here leaves a skilled artisan wholly\n\n 8 Claimant’s efforts to overclaim in this context have led to\n\ninvalidation of its claims in the European Union. See, e.g.,\nEuropean Patent Office Rules in Favor of Respondent and Respondent\nConcerning Praluent, Respondent (Oct. 29, 2020),\n[URL REDACTED]\n 49\n\nunable to make and use any specific “needed” or\ndesired antibody within the claimed genus beyond the\nhandful of disclosed examples, including entire classes\nof claimed antibodies (like EGFa mimics or antibodies\nbinding to more than nine of sixteen identified\nresidues), or even to know whether antibodies\nproduced using the disclosed techniques come within\nthe genus absent further testing. Instead, the Claimant\nspecification leaves skilled artisans seeking\nundisclosed embodiments exactly where they were\nbefore reading the specification: knowing from\npublished research that certain undisclosed\nantibodies could be medically useful, and left to use\nwell-known techniques to produce those potentially\nuseful antibodies through trial and error. That is not\na patent bargain at all, but a recipe for preempting\nuseful research.\n The undisputed evidence established that\nClaimant’s specification fell far short of enabling the full\nscope of Claimant’s claims under the Wands factors and\nother well-established and undisputed precedent.\nBoth parties’ witnesses agreed that (1) millions of\nantibodies could potentially fall within the claims’\nscope; (2) because even small changes to an antibody’s\namino acid sequence can change an antibody’s\nfunctionality, a skilled artisan must test every\ngenerated antibody to determine whether it satisfies\nthe claims’ functional limitations; and (3) testing the\nantibody candidates generated from methods\ndisclosed in the patent would be such an enormous\nundertaking that no scientist would even fathom\ndoing it. See pp.13-15, supra; C.A.App.3902, 3914.\nThe patents merely recite an iterative trial-and-error\nprocess and no more enable the full scope of the\n 50\n\nfunctional claims than the patents held non-enabled\nin this Court’s decisions in Lamp, Holland, Béné, and\nCorona and the Federal Circuit’s decisions in Idenix,\nEnzo, and Wyeth—the last three of which the Federal\nCircuit applied in concluding non-enablement here\nand Claimant does not challenge.\n Claimant repeatedly points to evidence that, “by\nfollowing the patents’ roadmap,” skilled persons “can\ngenerate other claimed antibodies every time,” and\n“‘would be certain to make all’ the antibodies across\nthe claims.” Br.49; see also Br.3, 17, 25, 48. But the\nso-called “roadmap” is nothing more than standard\ntechniques for generating additional candidate\nantibodies that would still need to be tested,\naccompanied by disclosure of two dozen of the millions\nof species potentially within the genus. Indeed, it is\ntelling that Claimant’s disclosed exemplars have little in\ncommon with the most promising antibodies\nindependently developed by other companies using\nthe same well-established techniques, as the chart\nabove well illustrates. See p.15, supra.\n The fact that the “roadmap” allows skilled\nartisans to generate some antibodies that fall\nsomewhere in the vast functionally-defined genus does\nnot enable them to do anything they could not already\ndo (and were already doing at at least three other\ncompanies). Furthermore, Claimant’s patents\nunquestionably do not teach skilled artisans how to\nproduce a particular needed but undisclosed antibody\nwithin the claims’ scope, let alone how to do so without\nundue experimentation. No skilled person could take\nClaimant’s patents and produce Praluent absent\nextraordinary experimentation. Indeed, Claimant’s own\n 51\n\ndocuments showed that despite having the ’165 and\n’741 patents in hand, Claimant itself—the so-called\ninnovator armed with the specification and all its\nother knowledge—could not make a single antibody in\nan entire class of antibodies (EGFa mimics) known to\nfall within the claims’ scope that its competitors had\nproduced. See C.A.App.9674-75, 9703-10, 9714-15,\n9529, 9690, 9694-97, 9722-23. In other words, despite\nclaiming a genus as its invention, Claimant itself could\nnot make entire categories of species within that\ngenus. That is the antithesis of enabling the\n“invention.” 35 U.S.C. §112(a). 9\n Claimant repeatedly asserts that nobody “identified\nany actual antibody that required undue\nexperimentation to make under the patents’\nteachings.” Br.49; see also Br.3, 19, 25. Not so.\nPraluent and the Pfizer and Merck antibodies are such\nantibodies, as is any antibody that binds to more than\nnine residues—the maximum number to which\nClaimant’s disclosed examples bind—even though the\nclaimed genus includes antibodies that bind to up to\nsixteen residues. Pet.App.13a n.1. Such an antibody\nwould be a coveted discovery, but Claimant’s patent does\nnot remotely enable it despite claiming it for Claimant’s\nown. Claiming up to sixteen while enabling only up to\nnine is no minor overreach. Regardless, Claimant’s\n\n 9 According to Claimant, its expert testified that “the patents’\nroadmap produces” Praluent and other competitor antibodies.\nBr.50-51. But even Claimant’s lead inventor admitted the patents\ndo not disclose antibodies binding to more than nine claimed\nresidues, D.Ct.Dkt.864 at Tr.535-37, and Praluent binds to 13,\nsee p.15, supra. Regardless, the testimony Claimant cites is\nconclusory and does not account for the undue experimentation\nnecessary to “produce[]” those specific antibodies.\n 52\n\nargument only underscores the problem with its\nspecification, which gives skilled artisans no way even\nto identify (let alone make and use) the full breadth of\nthe claimed genus—making it impossible to identify\nmore “actual” antibodies that require undue\nexperimentation without doing that experimentation\nfirst. Nothing in law or logic requires a patent\nchallenger actually to engage in undue\nexperimentation just to prove that undue\nexperimentation is required.\n Claimant contends that Respondent/Respondent\n“identified not one conservative substitution to a\nclaimed antibody that destroyed its activity.” Br.50.\nBut that is irrelevant when, as Claimant’s own witnesses\nconceded, even “conservative” substitutions can result\nin changed functionality, thus requiring testing.\nC.A.App.3768-3769. Claimant mischaracterizes\ntestimony by a Respondent/Respondent expert that such\n“minor variants” are “essentially copies of each other,”\nBr.50; that expert was comparing certain disclosed\nantibodies that were nearly identical in structure and\nwere assumed for purposes of the expert’s testimony\nto fall within the claims. C.A.App.3787-88. Moreover,\neven if conservative substitutions could predictably\ngenerate new undisclosed embodiments, they would\nenable only antibodies similar to those few whose\nsequences Claimant disclosed—a far cry from enabling\nthe claimed genus. Claimant did not content itself with\nclaiming a genus limited by structure, but rather\nclaimed an entire functional genus with no shared\nunique structural features and supplied a\nspecification that gave skilled artisans no meaningful\nguidance to find any particular undisclosed species\nwithin that genus.\n 53\n\n Claimant states in passing that “the Federal Circuit\nrepeatedly decided factual issues contrary to the jury’s\npresumed findings.” Br.51. It cites only its prior\nbriefing for this proposition, however, and this Court\nshould not consider that undeveloped and highly\nfactbound argument. See South Dakota v. Bourland,\n508 U.S. 679, 697 (1993). Regardless, the Federal\nCircuit consistently relied on the undisputed evidence\nto affirm the district court’s ruling that Claimant’s\npatents were not enabled as a matter of law. See, e.g.,\nPet.App.13a (discussing what “[o]ne of Claimant’s expert\nwitnesses admitted” and “[a]nother of Claimant’s\nexperts conceded”).\n In the end, Claimant is correct about only one thing:\nthis case “does not require a third trip through the\nFederal Circuit.” Br.51. Claimant’s good-for-one-case-\nonly arguments targeting statements ranging from\nnon-existent to fleeting in the decision below provide\nno reason for disturbing the judgment of invalidity\nreached by the two courts below applying text and\nwell-established and undisputed precedents like\nWands, Idenix, and Wyeth. The chasm between what\nClaimant claimed and what it enabled is not measured\nin microns and does not turn on some subtle\ninnovation in the decision below. The text of §112 and\na host of this Court’s precedents require the\nspecification to enable the full scope of the invention,\nnot leave skilled artisans where they started with no\nability to make and use particular claimed antibodies\nwith anything but trial and error using well-\nestablished techniques. The courts below were correct\nto invalidate Claimant’s effort to monopolize what it has\nnot enabled.\n 54\n\n CONCLUSION\n This Court should affirm.", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is review of enablement for a functionally defined antibody genus.", "governingLaw": "Apply United States federal patent law; Federal Circuit origin. Decide the presented appellate disposition on the supplied record and governing authorities.\nGoverning law stipulation: United States federal patent law; Federal Circuit origin governs this dispute.", "amount": 1, "currency": "USD" }, "reference": { "case": "Amgen Inc. v. Sanofi", "citation": "598 U.S. 594 (2023)", "court": "Supreme Court of the United States", "source": "https://www.supremecourt.gov/opinions/22pdf/21-757_2d8f.pdf" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The governing text of 35 U.S.C. § 112(a) requires that the specification enable 'any person skilled in the art' to 'make and use the same'—where 'the same' refers to the invention as defined by the claims. When a patent claims an entire genus of antibodies defined by functional limitations—binding to specified PCSK9 residues and blocking PCSK9-LDLR interaction—the invention claimed is that genus. The statute therefore requires enablement of that genus, not merely a small subset of exemplars within it.\n\nClaimant argues that the Federal Circuit imposed an extratextual 'reach-the-full-scope' standard requiring cumulative identification and making of all embodiments without 'substantial time and effort.' This argument mischaracterizes the decision. The Federal Circuit did not adopt a cumulative-effort or numerosity test; it expressly disclaimed one (Pet. App. 14a: 'We do not hold that the effort required to exhaust a genus is dispositive'; Pet. App. 64a: the decision 'specifically resisted what might be termed a simple numerosity or exhaustion requirement'). The court applied the settled Wands factors and asked whether undue experimentation would be required to practice the full scope of the claimed invention—a standard Claimant itself embraced below (Claimant C.A. Br. 31, quoting MagSil, 687 F.3d at 1380). The phrase 'reach the full scope of claimed embodiments,' which Claimant seizes upon, appears once and is fairly read as asking whether the specification enables the full scope of what is claimed—the statutory command—not as a novel requirement to sequentially make every embodiment.\n\nThis Court's precedents confirm the principle that the more one claims, the more one must enable. In Consolidated Electric Light Co. v. McKeesport Light Co., 159 U.S. 465 (1895), the Court invalidated claims covering 'all fibrous and textile materials' for incandescent conductors where the specification taught only carbonized paper and proof showed that Edison had tested over 6,000 vegetable growths to find three species of bamboo that worked. In Holland Furniture Co. v. Perkins Glue Co., 277 U.S. 245 (1928), the Court invalidated a claim to all starch glues with animal-glue properties where finding working embodiments required 'elaborate experimentation.' In Béné v. Jeantet, 129 U.S. 683 (1889), the Court invalidated a claim to treating coarse hair with 'chemicals' where only one chemical solution was disclosed. These cases stand for the proposition that claiming a broad functional genus without commensurate enabling disclosure is invalid—not because of a cumulative-effort test, but because the specification does not enable the claimed invention.\n\nMinerals Separation, Ltd. v. Hyde, 242 U.S. 261 (1916), upon which Claimant heavily relies, is not to the contrary. There, the Court held that a patent for ore concentration was not invalid merely because 'preliminary tests' were needed to determine optimal oil quantities and agitation for different ores. But the Court emphasized that 'variation of treatment must be within the scope of the claims' and that the process was 'sufficiently definite to guide those skilled in the art to its successful application.' Critically, in Minerals Separation, there was no dispute that all variations of treatment within the claims worked and required only adjustment of known variables to obtain 'best results.' Here, by contrast, the specification provides no guidance for predictably generating specific undisclosed embodiments at all. The 'roadmap' is a description of standard trial-and-error immunization and screening—the same techniques multiple companies were already using independently before the patent. The specification does not 'guide those skilled in the art' to a 'successful application' of the claimed invention; it consigns them to the same trial-and-error search they were already conducting.\n\nThe record amply supports the finding of non-enablement. Both parties' witnesses agreed that millions of candidates could fall within the claims, that the art is unpredictable, and that each candidate must be tested to determine if it satisfies the functional limitations. Claimant's own expert admitted that knowing an antibody's sequence does not reveal its binding properties—'you'd have to test' it. An Claimant inventor conceded that even conservative substitutions are unpredictable. The 26 disclosed examples bind to no more than nine residues, while the claims cover antibodies binding to up to 16. Competitor antibodies bind to markedly different residues (Praluent to 13). Most tellingly, Claimant itself—armed with the specification and its full institutional knowledge—could not produce EGFa mimics, an entire class of antibodies within the claimed genus.\n\nClaimant's argument that no one identified a single actual antibody that 'could not be made' following the roadmap conflates two distinct questions: whether one can generate some antibody falling somewhere within the vast genus (which the roadmap, being a trial-and-error process, may sometimes produce), and whether the specification enables skilled artisans to make and use the claimed invention—i.e., the full scope of the genus—without undue experimentation. The latter is what § 112 demands. The former is insufficient. A specification that tells skilled artisans to 'immunize mice and screen the results' does not enable a genus claim any more than a specification telling one to 'test all fibrous materials' enables a claim to all fibrous materials for incandescent conductors.\n\nClaimant's proposed 'as-needed' standard—requiring only that artisans can 'put the claimed inventive concept into practice, as needed'—finds no support in the statutory text. Section 112(a) does not say 'enable as needed'; it says 'enable any person skilled in the art to make and use the same.' The word 'as-needed' appears nowhere in the statute and introduces an unknowable, subjective standard at odds with the public-disclosure function of the patent bargain. Moreover, even under Claimant's standard, the specification fails: a skilled artisan who needs to produce a particular undisclosed antibody within the genus (e.g., one binding to 12 residues, or an EGFa mimic) cannot do so using the specification without extraordinary experimentation.\n\nThe Federal Circuit correctly applied settled law. The decision below does not create a new standard; it applies the longstanding principle that enablement must be commensurate with claim scope, evaluated under the Wands factors, to a record showing an overwhelming gap between what was claimed and what was enabled. The judgment should be affirmed.", "allocation": null, "citations": [ { "title": "[PDF] Minerals Separation, Ltd. v. Hyde, 242 U.S. 261 (1916). - Loc", "url": "https://tile.loc.gov/storage-services/service/ll/usrep/usrep242/usrep242261/usrep242261.pdf", "proposition": "In Minerals Separation, Ltd. v. Hyde, 242 U.S. 261 (1916), the Supreme Court held that a patent's disclosure need not specify precise treatment for every variation of subject matter, but emphasized that 'variation of treatment must be within the scope of the claims' and that the disclosure must be 'sufficiently definite to guide those skilled in the art to its successful application.' The Court stated that 'the certainty which the law requires in patents is not greater than is reasonable, having regard to their subject-matter.' This supports the principle that enablement is assessed with reference to the nature of the claimed invention and that the disclosure must guide skilled artisans to successful practice of what is claimed." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-064", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nA. INTRODUCTION\n1. Sellers sold the Vessel LILA LISBON to Buyers by a contract of sale on an amended\n SALEFORM 2012 Form dated 4 June 2021.\n\n\n2. It is now common ground that Sellers were under an obligation to exercise reasonable\n diligence to be ready to deliver the Vessel by the contractual Cancelling Date (“the\n Readiness Obligation”). The Readiness Obligation is an innominate term, not a\n condition1.\n\n\n3. The Original Cancelling Date was 20 August 2021. Sellers were not ready to deliver\n by that date. They proposed a Revised Cancelling Date of 15 October 2021. Buyers\n accepted the Revised Cancelling Date.\n\n\n1\n Consistent with the modern approach to construe terms as innominate terms unless they are clearly\n intended to be conditions or warranties- see for example the recent decision in SLB v PAK [2026]\n EWHC 449 (Comm) and Spar Shipping AS v Grand China Logistics Holding (The Spar Capella) MHB/695 -\n [2015] EWHC 718 (Comm); [2015] 1 All E.R. (Comm) 879 (Commercial Court); [2016] EWCA Civ 768\n 982; [2017] 4 All ER 124 (Court of Appeal)\n\n 1\n\n\n KDB/14\n4. Sellers were again not ready to deliver, and failed to give Notice of Readiness\n (“NOR”), by that date.\n\n\n5. It is now common ground that that was as a result of a breach of their Readiness\n Obligation and their “proven negligence”- these being synonymous for present\n purposes.\n\n\n6. As found by the Tribunal, and as is common ground, Sellers’ breach was not\n repudiatory.\n\n\n7. Buyers exercised a contractual right, granted by Clause 14, to cancel the contract. MHB/1261\n\n That right arose, in this case, as a result of the non-repudiatory breach, but it would\n have arisen in any event out of the lateness alone, independent of any breach.\n\n\n8. The issue on this appeal is whether Clause 14 also gives Buyers the right to recover\n compensation for loss of bargain damages, in circumstances where Sellers were not in\n repudiatory breach.\n\n\n9. The answer is “No”. A non-repudiatory breach does not sound in loss of bargain\n damages. There is nothing in Clause 14 that justifies an award of loss of bargain\n compensation, where Sellers are not guilty of any repudiatory breach.\n\n\nB. CLAUSE 14\n MHB/1261\n10. Clause 14, with internal lettering added, provides as follows:\n\n\n “14. Sellers’ default\n\n\n [A] Should the Sellers fail to give Notice of Readiness in accordance with\n Clause 5(b) or fail to be ready to validly complete a legal transfer by the\n Cancelling Date the Buyers shall have the option of cancelling this\n Agreement. If after Notice of Readiness has been given but before the Buyers\n have taken delivery, the Vessel ceases to be physically ready for delivery and\n is not made physically ready again by the Cancelling Date and new Notice of\n Readiness given, the Buyers shall retain their option to cancel. In the event\n that the Buyers elect to cancel this Agreement, the Deposit together with\n interest earned, if any, shall be released to them immediately.\n\n [B] Should the Sellers fail to give Notice of Readiness by the Cancelling Date\n or fail to be ready to validly complete a legal transfer as aforesaid they shall\n\n 2\n\n\n KDB/15\n make due compensation to the Buyers for their loss and for all expenses\n together with interest if their failure is due to proven negligence and whether\n or not the Buyers cancel this Agreement.”\n\nC. OTHER CLAUSES\n MHB/1255 &\n11. The Court should also look at Clauses 5 and 13. MHB/1260-1261\n\n\n12. Clause 5 concerns time and place of delivery, including extension of the Cancelling\n Date. Clause 5(d) refers to Clause 14, stating that:\n\n\n “(d) Cancellation, failure to cancel or acceptance of the new Cancelling Date\n shall be entirely without prejudice to any claim for damages the Buyers may\n have under Clause 14 (Sellers’ Default) for the Vessel not being ready by the\n original Cancelling Date.”\n\n13. The point to note is that while Clause 14[B] itself refers to “due compensation” and\n not “damages” being payable, Clause 5(d) refers to a “claim for damages... under\n Clause 14”.\n\n\n14. Clause 13 is the Buyers’ Default clause. It may be necessary to consider the extent to MHB/1260-\n 1261\n which its compensation provision should yield the same result as Clause 14 in relation\n to compensation for loss of bargain in different scenarios. However, Sellers’ position\n is that they are different clauses, differently drafted, and there is little to be gained\n from such a comparison.\n\n\nD. THE READINESS OBLIGATION/ REPUDIATION/ RENUNCIATION\n15. As noted above, the Readiness Obligation imposes on Sellers an obligation to exercise\n reasonable diligence to be ready to deliver the Vessel on time.\n\n\n16. It is an innominate term.\n\n\n17. Thus, at common law, without the contractual right to cancel created by Clause 14,\n Buyers would only be able to terminate for a breach of the Readiness Obligation if it\n were a repudiatory breach- a breach that was sufficiently serious as to deprive Buyers\n of substantially the whole benefit of the contract.\n\n\n 3\n\n\n KDB/16\n18. Buyers would of course also be able to terminate at common law if Sellers were in\n renunciatory breach: if by words or conduct they evinced an intention not to perform\n their obligations at all.\n\n\n19. Given that the Readiness Obligation relates to the time of delivery, it would have to\n be an extreme case of breach that would constitute a repudiatory breach. The reality\n is that it is more likely that a common law right to terminate would only arise as a\n result of a renunciatory breach, rather than a repudiatory breach of the Readiness\n Obligation.\n\n\nE. RELEVANT LEGAL PRINCIPLES\n Construing an industry wide standard form\n20. The relevant principles are set out in Providence Building Services v Hexagon MHB/564-566\n 2\n Housing Association at [21] to [31].\n\n\n21. A relevant issue is the significance or otherwise of analysis of previous decisions on\n previous (and materially different) versions of the standard form. We will return to\n this below in relation to The Solholt, but as a matter of general principle, save in a\n clear case, only limited (if any) assistance can be gained from any “archaeological\n digging”.\n\n\n22. We note that a number of articles written about the first instance and CA decisions\n suggest that the first instance decision “reversed” a supposed industry understanding,\n whereas the CA decision, they suggest, is consistent with industry understanding.\n\n\n23. For this to be an admissible consideration on a s69 appeal from an arbitration award,\n there would need to be a finding of fact in the award as to industry understanding of\n practice. There is no such finding in the Award. In the absence of any such finding in\n the Award, no reliance can be placed on any alleged industry understanding in\n determining the proper construction of clause 14 in this appeal. In any event,\n commentary or articles reflecting individual views, or supposed industry\n\n\n2\n Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] UKSC 1; [2026] 1 MHB/555-569\n W.L.R. 538\n\n 4\n\n\n KDB/17\n understanding, as to the meaning of this clause, should be of little weight when\n applying the correct principles of construction.\n\n\nNo loss of bargain damages absent a repudiatory breach\n24. In the remainder of this skeleton, unless the context requires otherwise, we will use\n the term “repudiatory breach” to refer compendiously to an actual repudiatory breach,\n a breach of condition (which for present purposes is the same as a repudiatory\n breach3), and an anticipatory repudiatory breach/ renunciation.\n\n\n25. Generally, if there is a breach which is not repudiatory, the innocent party will not\n recover loss of bargain damages.\n\n\n26. If the innocent party is not entitled to terminate the contract in response to a breach,\n then, ex hypothesi, he will not recover loss of bargain damages (or at least, not full\n loss of bargain damages) since the bargain will not be lost in full- it will be\n substantially performed.\n\n\n27. Generally, this is so even if the contract is terminated, pursuant to an express\n contractual right to do so4.\n\n\n28. Unless the provision granting the contractual right confers a right to claim loss of\n bargain compensation, then, at common law, on termination, each party is left with\n such causes of action as had already accrued on termination, but acquires no fresh\n cause of action as a result of the termination- see Diplock LJ in Financings5.\n\n\n29. The CA in Financings drew a sharp contrast between cases where there is a\n repudiatory breach by a hirer (as in Yeoman v Waragowski6 and Overstone v\n Shipway7), and cases where there was a breach, but it was not repudiatory (as in\n\n\n3\n There is a helpful analysis in an article by Professor Peel where he notes that by agreeing that a term MHB/1096-\n should be a condition, the parties have or are deemed to have agreed that loss of bargain damages will 1118\n be recoverable by the innocent party if he terminates following a breach of the condition, even if, on the\n facts, he is not deprived of substantially the whole benefit of the contract (“Loss of Bargain Damages”\n [2020] LMCLQ 449).\n4 MHB/953; 983;\n See Chitty 36th Ed 26-063; Scrutton 25th Ed 2-142; “The Termination Paradox”, Peel, [2013] LMCLQ 1071,1073-1074\n 519, 522-3\n5\n Financings Ltd v Baldock [1963] 2 QB 104, 121 top paragraph MHB/342\n6\n Yeoman Credit v Waragowski [1961] 1 W.L.R. 1124 MHB/861\n7\n Overstone v Shipway [1962] 1 W.L.R. 117 MHB/490\n\n 5\n\n\n KDB/18\n Financings itself). In the former case loss of bargain damages are recoverable, in the\n latter they are not.\n\n\n30. As noted by Andrew Baker J in Phones 4U8 at [75]: MHB/539\n\n\n “... only if an actual breach has deprived the innocent party of substantially\n the whole of its bargain, or is set to do so, does it seem appropriate in principle\n to treat the innocent party’s decision to walk away as caused by the breach;\n and then if the decision to walk away is appropriately treated as caused by the\n breach, damages for that breach should rightly include damages for the loss of\n the bargain.”\n\n31. As this passage suggests, an important limb of the analysis is that a repudiatory\n breach is treated as being the effective cause of the loss of bargain. In contrast, where\n there is no repudiatory breach, but there is a contractual right to terminate, it is the\n terminating party’s election to terminate that is treated as being the effective cause of\n the loss of bargain.\n\n\n32. This is unsurprising. As already noted, for a breach to be repudiatory it must be\n sufficiently serious as to deprive the innocent party of substantially the whole benefit\n of the contract9. Put another way, it goes to the root of the contract. The breach itself,\n by its nature, destroys the original bargain.\n\n\n33. Similarly, if a party is guilty of a renunciatory breach, he has destroyed the bargain:\n he has evinced an intention that he is not going to perform his side of the deal.\n\n\n34. However, if a contractual right to terminate arises either where there is no breach at\n all, or there is only a non-repudiatory breach (which, of itself, does not, ex hypothesi,\n destroy the bargain), it is right that the election to terminate should be seen as being\n the effective cause. In a case where the contractual right to terminate arises where\n there is a (non-repudiatory) breach, the breach may be a but-for cause of the loss of\n bargain (without it, the right to terminate would not arise), but the effective cause is\n the terminating party’s election to terminate. (The breach will not necessarily even be\n a but-for cause- the right to terminate may have arisen without any breach at all. This\n\n\n8\n Phones 4U Ltd v EE Ltd [2018] EWHC 49 (Comm); [2018] 2 All E.R. (Comm) 315 MHB/518\n9\n Or in the case of a condition, it is deemed to have that effect and/or the parties have agreed that any\n breach will allow termination sounding in loss of bargain damages.\n\n 6\n\n\n KDB/19\n would be the case under Clause 14, where lateness itself is sufficient to trigger the\n right to terminate, but there is no breach unless the lateness is caused by a want of due\n diligence.)\n\n\n35. Again, this is because a non-repudiatory breach, by its nature, does NOT destroy the\n bargain; it does not deprive the innocent party of substantially the whole benefit of the\n contract. The innocent party deprives himself of substantially the whole benefit of the\n contract by exercising his contractual right to terminate.\n\n\n36. The causation analysis underlies the decision in Financings. See also:\n\n\n 36(1) In the context of a withdrawal clause, the Supreme Court decision in The Kos\n (emphasis added):10\n\n\n “7. ... any failure on the part of the charterers to pay hire when it falls due MHB/304\n will not of itself entitle the owners to damages representing the loss of the\n bargain or the expenses of termination simply because the owners respond by\n withdrawing the vessel. This is because the non-payment does not itself\n destroy the bargain or occasion the expenses, unless in the circumstances\n it is a repudiation which owners have accepted as such. ...\n\n 52. ... It is accepted that the mere late payment of one instalment did not MHB/318\n constitute a repudiatory breach (or a breach of a condition in a sense like that\n used in the Sale of Goods Act 1979) which could entitle the owners to\n damages for loss of the charter. That loss flowed from the owners’ exercise\n of their option to withdraw.”\n\n 36(2) The Spar Capella in the Commercial Court at [96] to [100]. MHB/713 -\n 715\n\n\n 36(3) The Australian case of AMEV-UDC11 [4] to [6], and [26]:\n\n\n “26. ... The point is that when the lessor terminates pursuant to the contractual MHB/883\n right given to him for breach by the lessee, the loss which he can recover for\n non-fundamental breach is limited to the loss which flows from the lessee’s\n breach. The lessor cannot recover the loss which he sustains as a result of his\n termination because that loss is attributable to his act, not to the conduct of the\n lessee. It is otherwise in the case of fundamental breach, breach of an\n essential term or repudiation.”\n\n\n10\n ENE 1 Kos Ltd v Petroleo Brasileiro SA Petrobras (The Kos) [2012] UKSC 17; [2012] 2 A.C. 164 MHB/295\n11 MHB/867\n AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170\n\n 7\n\n\n KDB/20\n 36(4) The editors of McGregor12 observe as follows at [9-152]: MHB/974\n\n\n “One particular issue of causation that arises in relation to damages for breach\n of contract concerns whether damages can be claimed for the loss of a bargain\n following termination for a breach that is not repudiatory. Damages for lost\n profits following termination can only be recovered where the termination\n arises due to a repudiatory breach. The reason for this is that the general law’s\n recognition that a breach is sufficient for termination means that when\n termination occurs the breach has caused the loss of the bargain. But if the\n right to terminate arises only by some contractual provision, the trigger of\n which might be described as a breach or might not, then it is the innocent\n party’s reliance upon the contractual provision, not the breach, that causes the\n loss of the bargain.”\n\n37. Sellers accept of course that a contract may successfully provide for loss of bargain\n compensation to be payable notwithstanding the absence of repudiatory breach.\n Whether it does so is a question of construction. The critical question is whether the\n wording of Clause 14 is sufficiently clear to do so. The answer is that it is not.\n\n\nSometimes, no loss of bargain damages even if a repudiatory breach\n38. An innocent party may not be able to recover loss of bargain damages, even where\n there has been a repudiatory breach.13\n\n\n39. The innocent party has to prove that it has terminated by accepting the repudiatory\n breach, and not solely by exercising a contractual right to terminate.\n\n\n40. The most thorough analysis of the authorities relating to this is in the Phones 4U MHB/537 - 553\n\n decision at [68] to [132]; and see also Dalkia Utilities14 at [143] to [144]. MHB/258\n\n\n41. It may, in some cases, be possible for a termination notice to terminate both by\n exercising a contractual right to terminate and by accepting a repudiatory breach. In\n particular this may be so where the repudiatory conduct itself gives rise to the\n contractual right to terminate.\n\n\n42. But that may not be the position where the remedies available for common law and\n contractual termination are inconsistent: Dalkia Utilities [144]. Indeed, an attempt to MHB/258\n\n\n12\n McGregor on Damages 22nd Ed. MHB/971\n13\n For a general discussion of contractual termination clauses see Chitty 36th Ed at 26-051 to 26-070 MHB/947 - 955\n14\n Dalkia Utilities Services Plc v Celtech International Ltd [2006] EWHC 63 (Comm); [2006] 1 Lloyd's MHB/258\n Rep. 599\n\n 8\n\n\n KDB/21\n terminate by both routes may, in certain circumstances, not be effective to terminate\n MHB/467\n at all: Newland Shipping15 [67].\n\n\n43. Further, the Boston Deep Sea Fishing16 principle, that a party can rely on a\n repudiatory breach to justify a termination, even if he was unaware of the breach at\n the time of termination, acts as a shield not a sword. Thus, the terminating party\n cannot rely on the repudiatory breach he was not aware when terminating to found a\n claim for loss of bargain damages: see eg Leofelis 117 [33], [44]. MHB/ 801 - 802,\n 804\n\n\n44. Thus, Phones 4U makes it clear that even where there is a repudiatory breach, the\n innocent party seeking loss of bargain damages has to prove that he terminated by\n accepting the repudiatory breach.18\n\n\n45. As Kramer puts it:\n\n\n “If a termination under an express right is exercised independently of the\n repudiatory breach then the repudiatory conduct did not cause the loss of\n bargain, the act of termination did, and a common law claim for loss of\n bargain is unavailable.”19\n\n46. The relevance of this to the present case is that, if the law sometimes denies loss of\n bargain damages even where there is a repudiatory breach, the court should be slow to\n construe a contractual compensation clause as allowing loss of bargain compensation\n where there is no repudiatory breach at all.\n\n\nThe potential dilemma for the innocent party\n47. The principle set out in Phones 4U creates a potential difficulty for an innocent party\n seeking to terminate where there has arguably been a repudiatory breach, but there is\n also a contractual right to terminate.\n\n\n48. If he does not terminate by accepting the repudiatory breach, he may not be able to\n recover loss of bargain damages. But if he terminates only by purporting to accept the\n\n15\n Newland Shipping and Forwarding Ltd v Toba Trading FZC [2014] EWHC 661 (Comm) MHB/452\n16\n Boston Deep Sea Fishing & Ice Co v Ansell (1888) 39 Ch. D. 339\n17\n Trademark Licensing Co Ltd v Leofelis SA [2012] EWCA Civ 985 MHB/790\n18\n In relation to the Phones4U principle see also Havila Kystruten AS v Abarca Companhia De Seguros MHB/440\n SA [2022] EWHC 3196 (Comm) [411], [412] and Optimares SpA v Qatar Airways Group QCSC MHB/489\n [2022] EWHC 2461 (Comm) [38]\n19\n The Law of Contract Damages, Kramer, 4th Ed, 1-10 MHB/969\n -970\n 9\n\n\n KDB/22\n repudiatory breach, and it is held that there was no breach, or it was not repudiatory,\n he will himself have been guilty of a repudiatory breach.\n\n\n49. It may well be “safer”, therefore, to exercise the contractual right to terminate20.\n\n\n 49(1) Contractual rights to terminate usually arise on proof of fairly straightforward\n questions. Was NOR tendered on time? Has a party called in administrators?\n Has there been a change in ownership? And so on.\n\n\n 49(2) Exercising the common law right to terminate will require the innocent party\n to persuade the tribunal or court on the more open textured or evaluative, and\n often less certain, questions of whether the breach deprived him of\n substantially the whole benefit of the contract, or whether the other party had\n evinced an intention not to perform.\n\n\n50. But that risks being faced with the argument that the termination is pursuant to the\n contractual right, not an acceptance of the repudiatory breach, such that the claim for\n loss of bargain damages is lost.\n\n\n51. It might be possible for the innocent party to successfully rely on both termination\n rights at the same time, but this is far from clear cut.\n\n\nClear words required to create a remedy where none would arise at common law- the\nNovasen presumption\n52. Gilbert-Ash21 establishes that clear words are required in a contract to rebut the\n presumption that neither party to a contract intends to abandon any remedies for its\n breach arising by operation of law.22 See also Triple Point23 [106] to [113].\n\n\n53. There is a converse presumption (“the Novasen presumption”), that clear words are\n required to confer a right to damages where no such right would arise at law: see\n\n\n20\n This was explained by Tomlinson LJ in Griffon Shipping LLC v Firodi Shipping Ltd (The Griffon) MHB/432 - 435\n [2013] EWCA Civ 1567; [2014] 1 All E.R. (Comm) 593 at [10]\n21 MHB/374\n Gilbert Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] A.C. 689 at page 717\n22\n This presumption is well established and frequently referred to; see, e.g. Sky UK Ltd v Riverstone\n Managing Agency Ltd [2024] EWCA Civ 1567; [2024] 2 C.L.C. 906 at [47].\n23\n Triple Point Technology Inc v PTT Public Co Ltd [2021] UKSC 29; [2021] AC 1145 MHB/806\n\n 10\n\n\n KDB/23\nMHB/482 Novasen24 [17], and The Spar Capella in the Commercial Court [98], [190] and MHB/714, 739\n\n Bunge v Nidera at [34]25.\n\n\n 54. The CA was wrong, at [CA-128] to [CA-133], to reject reliance on the Novasen MHB/106 - 108\n\n presumption.\n\n\n 55. First, the CA analysis of [26] of Bunge v Nidera is wrong. In that paragraph Lord MHB/82\n\n Sumption said that damages clauses are commonly intended to avoid disputes about\n damages either by fixing damages, or providing a mechanical formula for their\n calculation- in each case displacing the more nuanced and fact-sensitive approach of\n the common law. As he observed, it is inherent in such clauses that they might\n produce a result different from the common law. It is for that reason in relation to\n such clauses that there can be no scope for a presumption that the parties intended to\n replicate the common law position. Clause 14[B] is not such a clause. To the\n contrary, as the CA accepted [CA-72], the assessment of “due compensation” under MHB/92\n\n Clause 14[B] requires the application of common law principles. (We return to this\n below.)\n\n\n 56. Secondly, it is right that Clause 14 does not just confer a right on Buyers to cancel: it\n creates a right to contractual compensation. However, the question remains as to\n whether the contractual compensation provided for goes beyond what would be\n recoverable as damages at common law, and if so to what extent. Just as the Gilbert-\n Ash presumption would apply when construing a clause that, it is argued, cuts down\n common law rights, so the Novasen presumption should apply when construing a\n clause, it is argued, expands common law rights. And it should apply as much when\n considering the scope of an extension to common law rights, as when considering\n whether there has been any such extension.\n\n\n 57. Relevant to the application of the Novasen presumption is the principle that arguments\n based on verbal surplusage in a commercial contract do not count for much26. It is not\n uncommon for commercial contracts, including standard forms, to spell out at some\n length what would be the parties’ rights at common law in any event. It would be a\n\n 24\n Novasen SA v Alimenta SA [2013] EWHC 345 (Comm); [2013] 2 All E.R. (Comm) 162 MHB/473\n 25\n Bunge SA v Nidera BV [2015] UKSC 43; [2015] 3 All E.R. 1082 MHB/240\n 26\n See for example Triple Point Technology at [119] MHB/849\n\n 11\n\n\n KDB/24\n false step to assume that just because there is reference to compensation in the\n contract, it must mean something beyond common law damages, else it would be\n surplusage.\n\n\n58. A good example of the application of this principle is Rice v Great Yarmouth BC27\n where the CA held that a clause which on its face permitted the Council to terminate\n the contract if the contractor “commits a breach of any of its obligations under the\n Contract” should be construed as only allowing termination if there was a\n MHB/574 - 576\n repudiatory breach ([17] to [28]).\n\n\nF. THE PROPER CONSTRUCTION OF CLAUSE 14\n59. With those principles in mind, we turn to the proper construction of Clause 14. MHB/1261\n\n\nOverview of the clause\n60. The essential scheme of the clause, for present purposes, is that:\n\n\n 60(1) Clause 14[A] gives Buyers a contractual right to cancel if Sellers fail to give\n NOR by the Cancelling Date.\n\n\n 60(2) That right is not dependent on Sellers being in breach of the Readiness\n Obligation.\n\n\n 60(3) If Buyers cancel, they are entitled to release of the Deposit. Again, this is\n independent of any breach by Sellers.\n\n\n 60(4) Clause 14[B] gives Buyers a right to “due compensation... for their loss and\n for all expenses” if Sellers fail to give NOR by the Cancelling Date and that\n failure is due to Sellers’ “proven negligence”.\n\n\n 60(5) As the Readiness Obligation is to exercise reasonable diligence to be ready to\n deliver by the Cancelling Date, “proven negligence” means the same as a\n breach of the Readiness Obligation.\n\n\n27\n Rice v Great Yarmouth BC [2003] TCLR 1 (2001) MHB/570\n\n 12\n\n\n KDB/25\n 60(6) In other words, the right to Clause 14[B] compensation arises where, and only\n where, there is a breach of the Readiness Obligation.\n\n\n 60(7) The right to “due compensation” arises whether or not Buyers exercise their\n Clause 14[A] right to cancel.\n\n\n61. An important feature of the Readiness Obligation, and Clause 14, is the focus on the\n time of Sellers’ performance. The Readiness Obligation is an obligation to exercise\n reasonable care to be ready by the Cancelling Date. The option to cancel in 14[A]\n arises if Sellers are not ready by the Cancelling Date. Due compensation under 14[B]\n is payable if Sellers are not ready by the Cancelling Date as a result of their proven\n negligence.\n\n\n62. Both the Readiness Obligation and Clause 14 should be analysed as being concerned\n with a failure by Sellers to deliver on time, i.e. late delivery, rather than a failure by\n Sellers to deliver at all, i.e. non-delivery.\n\n\n63. This approach is also supported by the Explanatory Notes to the 1993 edition of\n SALEFORM, which has a materially identically worded Clause 14 to the 2012\n version. The Notes say, “As in Saleform 1987 the Buyers retain their right to claim\n damages for any delays by the Sellers provided that the delay is due to the proven\n negligence of the Sellers.” The focus is firmly on “delay”, not on non-delivery.\n\n\n“Due compensation”\n64. Dias J held that “due compensation” means, “compensation which is appropriate\n using the common law principles of remoteness and mitigation” [J-45]. The CA MHB/130\n\n agreed with this analysis [CA-71-72]. MHB/92\n\n\n65. Sellers do not demur from the proposition that in assessing Clause 14 “due\n compensation” the court will have to have regard to the common law principles that\n apply to the assessment of damages (which will include causation, as well as\n remoteness and mitigation). This is consistent with the reference in Clause 5 to a\n claim for damages under Clause 14.\n\n\n 13\n\n\n KDB/26\n66. Sellers suggest (see below) that the Clause 14 “due compensation” may, in some\n circumstances, go somewhat beyond the common law (in Buyers’ favour), but it does\n not extend to loss of bargain damages where there has been no repudiatory breach.\n\n\nThe key point: no loss of bargain damages, and thus no loss of bargain compensation,\nwhere no repudiatory breach\n67. The most important point in this case is that Sellers were not guilty of any repudiatory\n breach.\n\n\n68. It follows that, prima facie, Buyers are not entitled to loss of bargain damages. That is\n because one of the elements of the cause of action for loss of bargain damages- an\n accepted repudiatory breach- is not present.28\n\n\n69. As analysed above, a repudiatory breach destroys the bargain, and gives rise to loss of\n bargain damages, if accepted.\n\n\n70. By contrast, where a contractual right to terminate is granted where there is no breach\n at all, or only a non-repudiatory breach, the effective cause of the loss of bargain is\n the election of the terminating party so to do. No loss of bargain damages are\n recoverable.\n\n\n71. The essential question in this case, therefore, is whether the wording of Clause 14[B]\n is sufficient to give rise to a contractual right to loss of bargain compensation, where\n there would be no common law right to loss of bargain damages.\n\n\n72. This question has to be considered with the Novasen presumption in mind. However,\n even without the Novasen presumption, the answer is clear.\n\n\n73. Clause 14 contains no express wording conferring a right to recover loss of bargain\n damages in the absence of a repudiatory breach, and there is no basis for treating it as\n extending common law principles in such a significant way.\n\n\n74. As we have set out above, the settled analysis in the case law is that where a\n contractual right to terminate arises, but there is no repudiatory breach, it is the\n\n28\n See Phones 4U at [73] MHB/538\n\n 14\n\n\n KDB/27\n terminating party’s election to terminate that is seen as causing the loss of the bargain.\n It is not the event that triggers the right to terminate that causes the loss of bargain,\n even if that is a non-repudiatory breach.\n\n\n75. It would be a significant departure from common law principles if Clause 14[B] were\n to provide for loss of bargain damages in the absence of a repudiatory breach. There\n is nothing in the language to suggest that such a departure was intended.\n\n\n76. To the contrary, as already discussed, the clause expressly provides that due\n compensation should be payable- that is the appropriate compensation applying\n common law principles (as the CA held). Where there is no repudiatory breach,\n “due” or “appropriate” compensation does not include compensation for loss of the\n bargain.\n\n\nWhen there is a repudiatory breach\n77. When there is a repudiatory breach of the Readiness Obligation by Sellers, Buyers are\n entitled to terminate at common law and claim loss of bargain damages.\n\n\n78. However, Buyers might choose to terminate in reliance solely on Clause 14, for\n instance if they are unsure as to whether there is a repudiatory breach and they are\n concerned about a potential claim for wrongful repudiation if they are wrong (see\n above).\n\n\n79. In such a scenario, there would be at least a real risk, applying common law\n principles, that Buyers could not claim loss of bargain damages, because the\n termination was not by reason of an accepted repudiatory breach- see Phones 4U.\n\n\n80. One interpretation of Clause 14[B], is that where there was a repudiatory breach but\n also a contractual termination right which Buyers exercised, “due compensation”\n includes, as a matter of construction, contractual compensation for loss of bargain.\n Thus, the clause may be seen as providing a modest extension to common law\n principles; or at least a safety net in the case of the innocent Buyers exercising only\n the contractual right to terminate, where that is certain, but there is an arguable\n repudiatory breach. Buyers cannot terminate in confidence, and without the risk of\n\n\n 15\n\n\n KDB/28\n losing compensation for loss of bargain if they can subsequently prove that there was\n a repudiatory breach.\n\n\nThe relevance of the late delivery/ non-delivery analysis and Clause 5(d)\n81. The above analysis is supported by the fact that the Readiness Obligation and Clause\n 14 are both focussed on late delivery/ a failure to be ready by the Cancelling Date.\n\n\n82. The wording of Clause 5(d) is important and should inform the analysis of Clause 14.\n It provides:\n\n\n “(d) Cancellation, failure to cancel or acceptance of the new Cancelling Date\n shall be entirely without prejudice to any claim for damages the Buyers may\n have under Clause 14 (Sellers’ Default) for the Vessel not being ready by the\n original Cancelling Date.”\n\n83. Loss of bargain damages may be recoverable where there is non-delivery; but loss of\n bargain damages are not available where there is delivery, but it is late.\n\n\n84. The underlined words in Clause 5(d) are strongly supportive of the analysis that, as a\n matter of construction, the compensation provided for in Clause 14[B] does not\n include compensation for loss of bargain (save in the case of a repudiatory breach,\n where the breach has itself destroyed the bargain).\n\n\n It would have been easy to draft a clause making it clear that “due\n compensation” included loss of bargain losses\n85. Where the drafters of a contract wish to include loss of bargain damages in\n contractual compensation, even if there is no repudiatory breach, it is not difficult for\n them to do so. See for example:\n\n\n 85(1) NYPE 2015 Clause 11(c). MHB/1230\n\n\n MHB/1199\n 85(2) SALEFORM 2025 Clause 1429. - 1200\n\n\n29\n Lest Buyers try to make anything of this, it is of course inadmissible as an aid to construction of the\n contract in this case\n\n 16\n\n\n KDB/29\n86. Or, they could have made it clear that the exercise of reasonable diligence to tender\n NOR and deliver on time was a condition, such that any breach would have been\n repudiatory.\n\n\nNo “trap” for Buyers\n87. At first instance, Buyers sought to argue that if loss of bargain compensation is not\n recoverable under Clause 14, even where there is no repudiatory breach, “In a rising\n market, prompt cancellation would be a trap for unwary buyers and a bonus to\n negligent sellers.” The answer to that is straightforward. Buyers are not under any\n obligation to terminate. If the market has risen, and they wish to take advantage of\n what has become a good bargain, they can simply press for performance. If, for\n whatever reason, they choose to terminate, it is their own choice which deprives them\n of the good bargain.\n\n\nG. PREVIOUS SALEFORM AUTHORITIES\n88. A comprehensive set of SALEFORM forms will be provided to the court.\n\n\nThe Solholt30\n89. This was a case decided on the 1966 version of SALEFORM.\n\n\n90. Its Clause 14 provided:\n\n\n “14. If default is made by the Sellers in the execution of a legal transfer or in\n the delivery of the vessel with everything belonging to her in the manner and\n within the time herein specified, and the default shall have arisen from events\n for which the Sellers are responsible, the Buyers shall have the right to cancel\n this contract and the deposit in full shall be returned to the Buyers together\n with interest thereon at the rate of 5% per annum. The Sellers shall, in\n addition, make due compensation for any loss caused to the Buyers by non-\n fulfilment of this contract.”\n\n91. Staughton J held that this clause did entitle Buyers to loss of bargain damages, even if\n there was no repudiatory breach.\n\n\n92. That decision can be supported on the wording of the clause as it then was:\n “compensation for any loss caused ... by non-fulfilment of this contract” may be\n\n30 MHB/680\n Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1981] 2 Lloyd's Rep. 574 (Commercial Court);\n [1983] 1 Lloyd's Rep. 605 (Court of Appeal) MHB/689\n\n 17\n\n\n KDB/30\n naturally read as including compensation for loss of bargain, since loss of bargain\n is“non-fulfilment of this contract”.\n\n\n93. This is a clause that is focussed on non-delivery- non-fulfilment of the contract- not\n merely late delivery.\n\n\n94. Or putting it another way, the 1966 clause expressly provides for compensation for\n any loss caused by the non-fulfilment of the contract. The question in determining the\n compensation payable is what loss (widely drawn- any loss) has been caused by the\n non-fulfilment. The loss of the bargain is caused by the non-fulfilment of the\n contract. It is not necessary, on that version of the clause, to ask whether the effective\n cause of the non-fulfilment was Sellers’ acts or omissions, or Buyers’ exercise of the\n contractual right to cancel. That question does not arise, as the compensation payable\n is for any loss caused by the non-fulfilment itself, regardless of what might be viewed\n as being the effective cause of the non-fulfilment.\n\n\n95. The wording in the 1983, 1987, and 1993 versions all differ from the 1966 version,\n with an increasing emphasis on time of delivery, with the 1993 version being most\n similar to the 2012 version currently under debate.\n\n\n96. The end result is that the 2012 version is very different from the 1966 version\n considered in The Solholt.\n\n\n97. The Judge noted at [J-50] that the significant amendments in 1987 may well have had MHB/131\n\n the effect of removing the right to loss of bargain compensation which, on the\n authority of The Solholt existed under the previous iterations of the form. We say that\n the 1987 amendments did indeed have that effect.\n\n\n98. Notwithstanding that fact, it seems clear that the CA were heavily influenced by the\n decision in The Solholt on the 1966 version form.\n\n\n99. At [CA-146] Nugee LJ said he considered it very surprising that if those drafting MHB/111 -\n 112\n successive versions of SALEFORM had intended to depart from the decision in The\n Solholt they did not say so in terms.\n\n\n 18\n\n\n KDB/31\n100. With the greatest of respect to the learned judge, that may betray a lack of\n understanding of the drafting process of BIMCO forms, where forms are drafted by\n committee, and competing interests and opinions are in play during the drafting\n process. The wording agreed on is a compromise, and different players may have\n different views as to what the final text achieves (or may arguably achieve). The\n drafting is often far from perfect31.\n\n\n101. This is a paradigm case where there is no merit in engaging in an archaeological\n excavation, and the 2012 contract has to be construed on its own terms.\n\n\n102. There is one other point to address on The Solholt. Sir John Donaldson MR appears to\n suggest that where buyers cancel the contract, their loss is not caused by the\n cancellation but by the sellers’ breach (at p. 607 rhc and p. 608 lhc). As a general MHB/691 -\n 692\n statement of law this is correct where the breach in question is repudiatory and that\n repudiatory breach gave rise to the termination right. However, as set out above,\n where the breach is not repudiatory, that is not the law.\n\n\n103. The analysis at first instance was more straightforward on this point, with Staughton J\n saying:\n\n\n “The clause itself contemplates that the buyers may cancel and therefore that\n the contract will be wholly unperformed, so far as its main object is\n concerned, that is to say, transfer of the property in the vessel. It is that loss\n which is, in my judgment, plainly provided for in the words, ‘loss caused to\n the Buyers by nonfulfillment of this contract.’” (at p. 579 rhc). MHB/685\n\n\n104. To the extent that the Court of Appeal relied on the proposition set out by Sir John on\n the assumption that the breach was repudiatory, there is no issue with the approach.\n As Nugee LJ noted below at [CA-147], The Solholt appears to have proceeded on the MHB/112\n\n assumption that sellers there were under a positive obligation to deliver by the\n cancelling date. The Court of Appeal may have considered that to be a condition\n\n\n31\n This is illustrated by a comparison between Clauses 13 and 14. Clause 13 gives Sellers a “right” to\n cancel, whereas Clause 14 gives Buyers an “option” to cancel. The choice of different words might\n prima facie point to different meanings*- but that seems most unlikely in context. Similarly, as we\n have seen, Clause 14 refers to “due compensation”. But Clause 13 refers just to “compensation” and\n “further compensation”. Was a different meaning intended? Again, it seems unlikely. Rather, it is\n probably just loose drafting. *This is the presumption (applicable to statutory interpretation and\n contractual construction) that different words are used to denote a different meaning- see eg UniCredit\n Bank GmbH, London Branch v Constitution Aircraft Leasing (Ireland) 3 Ltd [2026] UKSC 10 at [71].\n\n 19\n\n\n KDB/32\n (being a term as to the time of delivery of, in effect, goods, in a mercantile contract),\n in which case its approach would have been entirely orthodox. If the Court of Appeal\n assumed that the breach was non-repudiatory however, the approach would have been\n wrong. The decision can in any event be justified on the basis of the proper\n construction of the clause, as Staughton J did. It is also important to note that the only\n question before the CA in The Solholt was the issue of mitigation. So these comments\n are in any event obiter and were, very likely, not formed upon hearing detailed\n submissions on the point. They should therefore not be given any weight compared\n with the cases where causation in such situations was properly analysed.\n\n\nThe Griffon\n105. The Griffon was a case concerning Clause 13 of the 1993 version of SALEFORM. MHB/432 -\n 439\n The buyers failed to pay the deposit when it fell due. As was common ground, that\n was a repudiatory breach. The sellers exercised their contractual right to terminate.\n The issue was whether Clause 13 deprived them of their right to sue for the unpaid\n deposit, the deposit being greater than the sellers’ loss of bargain loss.\n Unsurprisingly, Teare J and the CA held that the wording in Clause 13 that, “the\n Sellers shall have the right to cancel this Agreement, and they shall have the right to\n claim compensation for their losses and for all expenses incurred together with\n interest,” did not oust the sellers’ rights to sue for the deposit either in debt or as\n damages for breach of the obligation to pay the deposit, the measure of damages\n being the amount of the deposit.\n\n\n106. A clause conferring a contractual right did not deprive the sellers of their common law\n rights. Surely uncontroversial, absent clear wording to the contrary.\n\n\n107. The CA’s judgment involves a remarkable extrapolation from the judgment in The\n Griffon.\n\n\n108. It must be remembered that The Griffon was a case where there was a repudiatory\n breach; and it was a case where the sellers were not claiming clause 13 compensation,\n but were suing for the deposit (which exceeded the loss of bargain damages).\n\n\n 20\n\n\n KDB/33\n109. Yet, at [CA-100] the CA interpreted Tomlinson LJ as saying that the Clause 13 right MHB/99 -\n 100\n to compensation included a right to loss of bargain damages, even if there was a non-\n repudiatory breach.\n\n\n110. This is frankly rather bizarre. The wording relied on in Tomlinson LJ’s judgment\n was:\n\n\n “10. ... The express entitlement to compensation together with interest for MHB/436 -\n losses and expenses is also at the least a valuable clarification of a right to 437\n which the sellers were in any event entitled at law, which is henceforth made\n available as an express term of the contract.”\n\n111. First, the only trigger for the right to cancel and entitlement to compensation in the\n first part of Clause 13 was the failure to pay the deposit on time. Such breach would\n always be repudiatory, following the decision in Samarenko32. Thus, Tomlinson LJ\n could not have been saying anything about recoverability of loss of bargain\n compensation in the case of a non-repudiatory breach.\n\n\n112. Secondly, the wording of his [10] is consistent only with the contractual\n compensation mirroring the common law damages position, not expanding it (which\n is again consistent with the Novasen presumption).\n\n\nH. WHERE THE CA WENT WRONG\n113. The CA’s analysis and reasoning is not entirely easy to follow. The principal errors in\n the CA judgment are as follows.\n\n\n114. First, having correctly identified that the reference to “due compensation” required an\n application of common law principles (albeit omitting any express reference to\n principles of causation), the CA did not apply such principles, as they ignored the\n principle that a non-repudiatory breach which entitles the other party to exercise a\n contractual right of termination is not treated as a matter of law as an effective cause\n of the loss of bargain. The effective cause of the loss of bargain is the exercise of the\n contractual right to terminate.\n\n\n32\n Samarenko v Dawn Hill House Ltd [2011] EWCA Civ 1445; [2013] Ch 36 MHB/608\n\n 21\n\n\n KDB/34\n115. Secondly, there is a significant error in relation to causation at [81]. The CA seem to MHB/95\n\n have considered that if Sellers’ breach was a “but-for” cause of the termination, then\n it will be an effective legal cause unless Buyers’ decision to cancel broke the chain of\n causation. That is the wrong approach. In any case there will be myriad factual\n causes. The court has to evaluate them to determine which are the effective causes.\n As the case law demonstrates, a non-repudiatory breach giving rise to a contractual\n right to terminate is not viewed as an effective cause at all.\n\n\n116. Thirdly, as identified above, the CA gave too much weight to a perceived lack of\n sufficiently clear response to the decision in The Solholt, if it was intended to achieve\n a different result.\n\n\n117. Fourthly, the CA was wrong to say that it was not clear what loss was intended to be\n compensated under Clause 14[B] (in the case of Buyers electing to cancel) if not loss\n MHB/97\n of bargain damages [90].\n\n\n118. In relation to this, it must be remembered that the compensation provision covers the\n cases where there is repudiatory breach and non-repudiatory breach, and in each case\n where Buyers cancel and where they do not. It cannot be said that the drafters must\n have had in mind that significant compensation would be payable in every theoretical\n scenario.\n\n\n119. Further, while this is not necessary for Sellers’ case (given that this case does not\n involve any repudiatory breach), one possible interpretation of the clause is that in\n providing for “due compensation” on termination, the clause provides that loss of\n bargain compensation will be payable if there has been a repudiatory breach, but the\n termination is based solely on the Clause 14 contractual right to terminate. In such\n circumstances a claim for loss of bargain damages might fail because of the Phones\n 4U principle. The compensation provision in Clause 14[B] can be seen as lifting that\n bar to recovery.\n\n\nI. BUYERS’ RESPONDENTS’ NOTICE\n120. Buyers raise a new argument in their Respondents’ Notice, namely that the Phones\n 4U principle does not apply to claims for non-delivery (and non-acceptance) under\n sale of goods contracts.\n\n 22\n\n\n KDB/35\n121. This is presumably picking up on some of the obiter comments by Nugee LJ below,\n who, without having heard any argument on the point, expressed some doubts as to\n whether “the same principles necessarily apply to a contract for a single transaction\n MHB/104\n such as a sale” [119].\n\n\n122. The principles set out in Phones 4U, including the law on causation as it relates to\n loss of bargain damages claims, apply to one-off contracts just as they apply to long-\n term agreements.\n\n\n123. The reasoning in the authorities is of an entirely general nature, allowing the editors\n of McGregor to put the matter in entirely general terms (see passage cited above).\n\n\n124. A similar type of argument was rejected by the Supreme Court in Bunge v Nidera in\n relation to the principle in The Golden Victory33 concerning the relevance of post-\n breach events to the assessment of damages. It was argued there that the principle did\n not apply to one-off sales contracts.\n\n\n125. As Lord Sumption said at [22]: MHB/246\n\n\n “The nature of that problem does not differ according to whether the contract\n provides for a single act of performance or several successive ones. Nor, as it\n seems to me, is there any principled reason why the majority’s solution should\n be any different in the two cases.”\n\n126. That is also the position here.\n\n\n127. Buyers’ further argument raised in the Respondents’ Notice should therefore be\n rejected.\n\n\nJ. CONCLUSION\n128. As we have explained, it is well established that a non-repudiatory breach does not\n sound in loss of bargain damages or compensation. The non-repudiatory breach does\n not cause the loss of bargain. The terminating party’s election to terminate causes the\n\n\n33\n Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] UKHL 12; [2007] 2 MHB/385\n A.C. 353\n\n 23\n\n\n KDB/36\n loss of bargain. There is nothing in the wording of Clause 14[B] leading to a different\n result in this case.\n\n\n129. The appeal should be allowed.\n\n\n JOHN RUSSELL KC\n\n\n JAKOB RECKHENRICH\n\n\n Quadrant Chambers\n\n\n 7 April 2026\n\n\n Counsel for the Claimants\n\n\n 24\n\n\n KDB/37", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nI. Introduction\n\n1. A reasonable person with the relevant background knowledge would understand\n clause 14B of the MOA, which is the unamended wording of the Norwegian Saleform MHB/1261\n\n 2012 (“NSF 2012”), to entitle Buyers to loss of bargain damages where Buyers cancel\n the MOA following Sellers’ negligent failure to be ready to deliver the Vessel on time.\n\n2. Under s. 69 Arbitration Act 1996, Sellers appealed an Award dated 7 September 2023\n (the “Award”), in which an experienced LMAA Tribunal had held that Buyers could\n recover loss of bargain damages under clause 14B in just that scenario. 1 Dias J\n allowed the s. 69 appeal. The CA restored the Award, leading to this further appeal.2\n\n3. It is common ground that: (i) a contract may provide for loss of bargain damages to\n be payable notwithstanding the absence of a repudiatory breach, and (ii) whether it\n does so is a question of construction (AWC§37; HCJ§35(ii); CAJ§§39,70, 114).\n MHB/21; 127; 84,92, 103\n\n1 MHB/9 (also\n The question of law upon which permission was granted is at SOFI§35 (see also HCJ§63). MHB/135)\n2\n This procedural history is set out at SOFI§§36-38. MHB/9-10\n\n\n 1\n\n\n KDB/38\n4. The proper construction of clause 14 is as set out in the unanimous judgment of the\n CA and in the Award, namely that Buyers who cancel under clause 14A are entitled\n to loss of bargain damages under clause 14B if they establish that the failure to give\n NOR or to be ready to validly complete a legal transfer by the Cancelling Date is due\n to “proven negligence” by Sellers.\n\n5. There are three reasons for preferring this construction, applying the relevant\n principles on the interpretation of (industry-wide standard form) contracts:\n\n 5.1. First, on its natural and ordinary meaning, the language of clause 14B allows\n for the recovery of loss of bargain damages. (There is no applicable ‘clear\n words’ requirement, but in any event, clause 14B is sufficiently clear).\n\n 5.2. Second, an iterative process comparing the commercial consequences of the\n rival interpretations supports Buyers’ construction, which compensates\n Buyers for a loss of bargain that is in fact suffered by reason of Sellers’\n negligence.\n\n 5.3. Third, this construction, and the Tribunal’s and the CA’s decisions, are\n supported by all relevant authority, including long-standing authority on an\n earlier NSF form which is admissible background context. There is no\n contrary authority that precludes the recovery of market damages under\n clause 14B, nor is there any suggestion of market disquiet.\n\n6. The crux of Sellers’ (new) case is that clause 14B does not confer a right to loss of\n bargain damages absent repudiatory breach, yet may do so where there is termination\n under clause 14A in the presence of an unaccepted repudiatory breach (AWC§§66- MHB/27-28,\n 29, 35\n 80, 84, 119). 3 There are three problems with this:\n\n 6.1. First, it ignores the orthodox approach to interpretation, positing a hybrid\n construction where sometimes loss of bargain is recoverable and sometimes\n not. It thereby comes close to an admission that the natural and ordinary\n meaning of clause 14B allows for the recovery of loss of bargain damages.\n\n\n3\n Sellers’ position in the AWC is more equivocal than in their Grounds of Appeal, e.g. at MHB/196,\n 200-201\n§§2(5), 23(3) and 24(2). and 201\n\n\n 2\n\n\n KDB/39\n 6.2. Second, it requires Sellers to frontload and overload their analysis with\n common law principles in lieu of the orthodox approach to interpretation.\n\n 6.3. Third, it is inconsistent with the formulation of the “single ground of appeal”\n on which Sellers obtained leave to appeal, namely that the CA was wrong to\n hold that Buyers are entitled to loss of bargain absent an accepted repudiatory\n breach. 4 Sellers instead argue that loss of bargain damages may be recovered\n provided there is a repudiatory breach, whether accepted or unaccepted. 5\n\n7. Only if necessary, and in the alternative, Buyers also say that any principle that the\n exercise of a contractual right of cancellation following a breach of contract does not\n ground recovery of loss of bargain damages does not apply to claims for non-delivery\n (and non-acceptance) under the Sale of Goods Act 1979 (“SOGA 1979”).\n\n\nII. The proper construction of clause 14B\n\n8. As set out above, it is common ground that the central question in this case is whether,\n upon its proper construction, clause 14B confers upon Buyers a right to loss of bargain\n damages in the event of cancellation following proven negligence. The question is not\n whether the mere act of cancellation under clause 14A confers such a right.\n\n9. With this in mind, the structure of this section is as follows: (A) the proper approach\n to construing an industry-wide standard form provision such as clause 14 of NSF\n 2012; (B) the objective meaning of the language of clause 14B; (C) the MOA as a\n whole; (D) the iterative process of comparing the rival interpretations and their\n commercial consequences; (E) the admissible background of previous authority.\n\n\n(A) The proper approach to interpretation of the NSF 2012\n\n10. The NSF 2012 is an industry-wide standard form (see CAJ §5). MHB/77\n\n\n4\n Grounds of Appeal, §1. Although it is accepted that the further reasoning in the Grounds of MHB/195\n\nAppeal trailer the case now made.\n5\n This also means that Sellers’ new case would answer the question(s) of law (SOFI§35; MHB/9;\n 135\nHCJ§63): ‘sometimes, but only if there is an unaccepted repudiatory breach’.\n\n 3\n\n\n KDB/40\n11. Accordingly, it is common ground (AWC§20) that the relevant principles of\n interpretation are set out in Providence Building Services v Hexagon Housing MHB/564\n - 566\n Association [2026] UKSC 1, [2026] 1 W.L.R. 538 at [21]-[31] (Lord Burrows JSC).\n\n12. Buyers’ position on the application of those principles is as follows:\n\n 12.1. The clauses of NSF 2012 are not “take it or leave it”, but have been settled\n over the years by negotiation between representatives of the commercial\n interests involved (see, eg., the introduction in 1987 of the seller-friendly\n “proven negligence” threshold, explained further at paragraph 42 below);\n these clauses have been widely adopted because experience has shown that\n they facilitate the conduct of trade: A Schroeder Music Publishing Co Ltd v\n Macaulay (formerly Instone) [1974] 1 W.L.R. 1308, at p.1316C-F (Lord\n Diplock), as cited in Hexagon at [25]. MHB/564\n\n\n 12.2. In interpreting such an industry-wide standard form contract as the NSF\n 2012, the admissible background may include past decisions of the Courts\n on, and (industry) practice in relation to, clauses in an earlier version of the\n standard form: Hexagon, at [26]. MHB/565\n\n\n 12.3. The approach of the CA at CAJ§146 (in relation to The Solholt) is consistent\n with (and indeed cited in) the Supreme Court decision of Hexagon at [27] MHB/565\n MHB/17,\n (cf. AWC§§21, 101). 32\n\n\n 12.4. There is no authority or principled basis for Sellers’ contention that an\n industry understanding of a particular clause is inadmissible in the absence\n of factual findings in the Award (cf. AWC§§22-23). Any such approach MHB/41\n MHB/565\n would be inconsistent with Hexagon at [26]-[27].\n\n 12.5. By contrast, Sellers’ attempt to give evidence on the drafting process of\n MHB/32\n BIMCO forms at AWC§100 is inadmissible.\n\n 12.6. The “established approach” to contract interpretation should be adopted,\n based on the objective intentions of the contracting parties in the relevant\n context, albeit seeking an interpretation consistent for all contracting parties\n\n\n 4\n\n\n KDB/41\n using that form, not just the particular contracting parties in this dispute:\n Hexagon at [30]-[31]. MHB/566\n\n\n(B) The objective meaning of the language of clause 14B\n\n13. Before turning to the critical wording in clause 14B, it is useful to consider the\n uncontroversial context within the MOA as a whole:\n\n 13.1. Clause 5 imposes on Sellers an obligation to exercise reasonable diligence to MHB/1255\n\n deliver the Vessel by the Cancelling Date (which Sellers call the ‘Readiness\n MHB/89 -90\n Obligation’): CAJ§§59, 61 (see also AWC§2). (see also 14)\n\n\n 13.2. If Sellers do not give Notice of Readiness or are not ready to validly complete\n a legal transfer by the Cancelling Date, Buyers always have the option to\n cancel under clause 14A: CAJ§62 (see also AWC§60(1)-(2)). MHB/90\n (see also 25)\n\n 13.3. If Sellers also breach the ‘Readiness Obligation’, not only do Buyers have\n the option to cancel under clause 14A, but Buyers also have a right to “due\n compensation” for “their loss and for all expenses” under clause 14B: MHB/91\n (see also 25-26)\n CAJ§63 (see also AWC §§60(4), (6)). The word “negligence” in clause 14B\n denotes a failure to comply with the ‘Readiness Obligation’: CAJ§63 (see MHB/91\n (see also 25)\n also AWC §60(5)).\n\n14. In that context, the natural and ordinary meaning of clause 14B extends to loss of\n bargain damages: Award§162. The critical words are the widely drawn phrase “due MHB/184\n\n compensation to the Buyers for their loss and for all expenses”:\n\n 14.1. The phrase “due compensation” in clause 14B is not confined to\n compensation that has already accrued. It means proper or appropriate\n compensation: CAJ§§71-72; HCJ§45(i). MHB/92; 130\n\n\n 14.2. The unqualified reference to “their loss” covers loss of bargain:\n\n 14.2.1. There is no reason, in text or context, to hold otherwise; the natural\n meaning of “loss” covers expectation loss, i.e. loss of bargain in the\n event of cancellation following Sellers’ negligence: CAJ§77. MHB/93-94\n\n\n 5\n\n\n KDB/42\n 14.2.2. This is because Buyers do not get the Vessel for which they had\n MHB/93\n contracted by reason of that negligence: CAJ§§75-76.\n\n 14.2.3. Where Buyers cancel in response to a negligent breach of the\n ‘Readiness Obligation’, there will never be delivery, and Buyers\n will always lose their bargain. Sellers’ suggestion that clause 14B\n addresses only late delivery, rather than non-delivery (AWC§§61- MHB/26\n\n 63) ignores the reality of Buyers’ cancellation. Following\n cancellation, Sellers can not and will not deliver under the contract.\n\n 14.3. Sellers accept that if clause 14B said ‘loss of bargain’ then such damages\n would be recoverable (AWC§85). But “loss and all expenses” is wider than, MHB/29\n\n and so encompasses, ‘loss of bargain’.\n\n 14.4. The word “compensation” supports this interpretation, by bringing to mind\n the ‘compensatory principle’. In this sale of goods context, where there is an\n available market for goods, 6 the normal (expectation) measure of damages\n for non-delivery under s. 51(3) SOGA 1979 is damages for loss of the MHB/210\n\n bargain, which is consistent with and reflects the compensatory principle:\n Sharp Corp Ltd v Viterra BV [2024] UKSC 14, [2024] 4 All ER 273, at [93]- MHB/651-6\n 52\n [96] (Lord Hamblen JSC).\n\n 14.5. The expansive agreement that Sellers would compensate not only for “loss”\n but also for “all expenses” militates against the exclusion of loss of bargain.\n\n 14.6. The fact that wasted expenses may be recoverable under “all expenses” leads\n to the need to give separate content to the word “loss” in the event of\n cancellation: CAJ§88. This is best done by “loss” encompassing loss of MHB/97\n\n bargain.\n\n15. The concluding words of clause 14B, namely “whether or not the Buyers cancel”, do\n not create any limitation on the recoverable “loss” in the event of cancellation:\n\n\n6\n Which there was in this case: see Award§168.\n\n 6\n\n\n KDB/43\n 15.1. These words clarify that there is a right to compensation even if there is no\n cancellation: CAJ§73. It does not follow that the recoverable “compensation MHB/92\n\n for their loss and for all expenses” must be the same in either event: (see also\n CAJ§82; when assessing damages the Court will take account of what has MHB/95\n\n actually happened by the time of assessment).\n\n 15.2. In a no-cancellation situation (such as where Buyers accept a new Cancelling\n Date under clause 5(c)), Buyers will not have lost the contract and will not\n be able to claim for loss of bargain for that reason, but may claim, for\n example, loss of profits due to delayed delivery, as Buyers did in relation to\n the First Phase of Negligence: CAJ§80; SOFI§§9-10, 26-27. MHB/94-95;\n 5, 7\n\n 15.3. By contrast, where Buyers do cancel, the nature and extent of their loss and\n expenses will invariably be different. The bargain will in fact have been lost\n by reason of Sellers’ negligent failure to give Notice of Readiness or to be\n ready to validly complete a legal transfer by the Cancelling Date: CAJ§80. MHB/94-95\n\n\n16. Finally, the heading of “Sellers’ Default” means a failure to fulfil a legal requirement\n or obligation: CAJ§§42, 44. This is now common ground. This suggests no apparent MHB/85, 86\n\n or inherent restriction on “due compensation” or “their loss”.\n\n17. Before leaving the text of clause 14, a striking feature of Sellers’ case is that it fails to\n put forward a clear and certain construction of clause 14B. Sellers refrain from any\n real analysis of the critical wording of clause 14B. Sellers have moved from saying\n that clause 14B never entitles Buyers to recover loss of bargain damages (as was their\n case at the last three hearings) to saying that clause 14B sometimes may give rise to\n that entitlement, if a repudiatory breach exists.\n\n18. Sellers also suggest (AWC§85-86) that it would have been easy to draft a clause to MHB/29 - 30\n\n make clear that “due compensation” included loss of bargain damages or to make the\n ‘Readiness Obligation’ a condition. This is a paradigm ‘Why not say it?’ submission\n which adds nothing to a debate about rival interpretations. Sellers’ condition argument\n also fails to engage with the cogent rebuttal at CAJ§§109-111 of the same point argued MHB/101 -\n 102\n below, which relies in particular upon the fact that the Readiness Obligation is not\n absolute.\n\n\n 7\n\n\n KDB/44\n(C) The MOA as a whole\n\n19. Three further aspects of the MOA support Buyers’ clause 14B construction.\n\n20. First, the synallagmatic MOA scheme (see CAJ§79) supports construing clause 14B MHB/94\n\n cancellation following Sellers’ negligence as a situation analogous to non-delivery:\n\n 20.1. By clause 5(b), Sellers are to give NOR “when the Vessel is at the place of\n delivery and physically ready for delivery”.\n\n 20.2. By clause 3, “delivery” is then to take place not later than three Banking Days\n after NOR against payment of the balance of the Purchase Price and any other\n sums due from Buyers on delivery.\n\n 20.3. By clause 8, Sellers are simultaneously to provide the documents specified\n in exchange for payment of the Purchase Price (and for Buyers’ documents).\n\n21. Second, Buyers’ construction is also supported by clause 5(d): MHB/1255\n\n\n 21.1. Clause 5(d) of the MOA refers to “any claim for damages the Buyers may\n have under Clause 14”. This suggests that damages are payable under this\n clause, not just preserved by it: CAJ§73. This is inconsistent with any MHB/92\n\n suggestion that Buyers’ rights under clause 14 calcify upon cancellation.\n\n 21.2. There is no significance in the difference in terminology between clause 14B\n (“due compensation”) and clause 5(d) (“damages”) (cf. AWC§§12-13, 65). MHB/16, 26\n\n\n 21.3. Sellers’ reliance on clause 5(d) in support of their position that clause 14B\n only caters for late rather than non-delivery fails to recognise that both clause\n 5(d) and clause 14B also apply in the event of cancellation, with the\n concomitant inevitability of non-delivery (cf. AWC§§81-84). MHB/29\n\n\n22. Third, Buyers’ construction of clause 14 is consistent with the meaning and effect of MHB/1260 -\n 1261\n Sellers’ corresponding rights under clause 13:\n\n 22.1. The structure of the NSF 2012 leads one to expect that clauses 13 and 14 will\n operate in a similar fashion. Clause 13 is headed “Sellers’ default” and clause\n 14 is headed “Buyers’ default”: CAJ§101. MHB/100\n\n\n 8\n\n\n KDB/45\n 22.2. Delivery and payment are the basic duties of a seller and a buyer\n (respectively) under a contract for the sale of goods (see ss. 27 and 28 of\n SOGA 1979). Clauses 13 and 14 deal with the consequences of non-payment\n and non-delivery respectively: CAJ§101. MHB/100\n\n\n 22.3. Buyers’ case on ‘loss of bargain’ is balanced, whereas Sellers’ case is not:\n\n 22.3.1. Sellers can recover for loss of bargain under clause 13 in the event\n of their cancellation for failure to pay irrespective of the cause\n (insofar as the loss is not already covered by the Deposit): see The MHB/433\n\n Griffon, explored further below (see also CAJ§§98-100). MHB/99-\n 100\n\n 22.3.2. On Sellers’ construction, Buyers cannot recover for loss of bargain\n under clause 14 in the event of their cancellation for non-delivery\n due to proven negligence (unless there is also repudiatory breach).\n\n 22.3.3. As a matter of interpretation, the similar wording as between clause\n 13 – “further compensation for their losses and for all expenses” –\n and clause 14 – “due compensation for their loss and all expenses”\n – does not sit easily with such opposing outcomes on recoverability\n of damages for loss of bargain. 7\n\n\n(D) Commercial consequences and the rival interpretations\n\n23. The commercial consequences of Buyers’ construction are sensible and balanced:\n\n 23.1. If the market price has increased above the contract price between (i) the date\n of the MOA and (ii) the date of the non-delivery caused by sellers’ proven\n negligence, innocent buyers who cancel will be compensated accordingly\n and negligent sellers will not benefit from that increase due to their\n corresponding liability. It is no answer to say that buyers are under no\n obligation to terminate; that is their contractual right under clause 14A (cf.\n AWC§87).\n\n\n7\n Sellers accept at p.19, fn.31 that such a difference in text as between clauses 13 and 14 is MHB/32\n\nlikely a consequence of “loose drafting”.\n\n 9\n\n\n KDB/46\n23.2. This is not an abstract proposition, as shown by the foreseeable facts here:\n\n 23.2.1. Based on the Award and the CAJ, Sellers are liable to Buyers for\n USD1.85 million. Buyers are in the position they would have been\n in ‘but for’ Sellers’ negligent failure to deliver. Buyers have a total\n of USD16.85 million (being USD15 million of their own money\n and the USD1.85 million in damages) to buy an equivalent ship.\n\n 23.2.2. By contrast, if Sellers’ appeal succeeded, upon Buyers’\n cancellation, Sellers retained the Vessel valued at USD16.85\n million, notwithstanding that their failure to deliver it to Buyers for\n USD15 million arose from their negligence. Buyers would be ‘out\n of pocket’ by USD1.85 million when buying an equivalent ship, as\n it is assumed they would reasonably do in an available market:\n Sharp v Viterra, at [95] (Lord Hamblen JSC). But Buyers would MHB/651\n\n have no recourse against negligent Sellers for that loss.\n\n 23.2.3. If buyers cannot recover for loss of bargain even in a case where\n they can show sellers’ negligence, the clause 14 rights will be of\n little utility to buyers. This would provide a perverse incentive to\n sellers to delay completing in a rising market in the hope that buyers\n would lose patience and cancel, leaving Sellers with a more\n valuable ship. Buyers would equally have to hold off cancelling in\n the hope that sellers would end up in repudiatory breach. That is not\n a sensible (or commercial) result: CAJ§153. The position is worse MHB/113\n\n still if, as Sellers argue at AWC§19, a repudiatory breach is MHB/17\n\n unlikely for some time such that buyers have to await a\n renunciation, all the while being at risk of losing the right to cancel\n through waiver/affirmation.\n\n23.3. In summary, on Buyers’ construction, the parties have by clause 14B\n allocated the market-movement related risk of loss on negligent Sellers,\n rather than on innocent Buyers. Put another way, the remedy of “due\n compensation for their loss and all expenses” shows that innocent Buyers\n\n\n 10\n\n\n KDB/47\n should be able to cancel without ultimately bearing that market loss, because\n it must be made good by negligent Sellers under clause 14B.\n\n24. As set out by Professor MacMahon in ‘Compensation after cancellation for Sellers’\n negligent delay – The Lila Lisbon’ [2025] LMCLQ 29, at p.29: “...It makes little MHB/1031\n\n commercial sense to deprive buyers of the benefit of the agreed contract price where\n the market has risen and the sellers are at fault for failure to deliver on time...”.\n\n25. The history of the dispute discloses three rival interpretations of clause 14B, all of\n which (i) lack the commercial sense of Buyers’ interpretation, as outlined above,\n instead conferring the benefit of any market increase on negligent Sellers; (ii) have\n commercial consequences which it is improbable the parties intended; and (iii)\n struggle to explain coherently what clause 14B does cover, in the event of\n cancellation, if it does not cover loss of bargain.\n\n26. First, there is Sellers’ case below that “due compensation” only covers accrued\n damages recoverable in any event (CAJ§36(2); HCJ§§36(ii), 45(i)). As to that: MHB/84; 127,\n 130\n\n 26.1. It gives the critical wording of clause 14B no content. Accrued damages are\n already recoverable anyway for breach of the clause 5 Readiness Obligation.\n On this construction, clause 14B has no purpose.\n\n 26.2. It begs the question as to what losses could ever be recoverable in the event\n of cancellation, which (correctly) troubled the Tribunal (Award§163). MHB/184\n\n Despite multiple opportunities, Sellers have never articulated a clear case on\n this. Sellers’ case now appears to be that the drafters may not have had in\n mind any significant compensation, in the event of cancellation absent\n repudiatory breach (AWC§118). That is uncommercial and an improbable MHB/35\n MHB/97\n intention (CAJ§89).\n\n 26.3. Insofar as Sellers say that reliance expenditure is recoverable (see\n HCJ§36(iv)), Sellers’ case becomes self-contradictory and clause 14B MHB/127 -\n 128\n internally inconsistent, in that wasted “expenses” are only (or only\n completely) wasted by reason of the cancellation, yet Sellers treat the\n cancellation as the sole effective cause of Buyers’ resulting “loss”: CAJ§88. MHB/97\n\n\n 11\n\n\n KDB/48\n There cannot be a different position on causation as between “loss” and “all\n expenses”.\n\n27. Second, there is Dias J’s interpretation that clause 14B refers to “accrued losses and\n expenses which have crystallised at the point of cancellation and not to prospective\n losses and expenses caused by the cancellation” (HCJ §45(iii)). As to that: MHB/130\n\n\n 27.1. This initially appears to be internally consistent in suggesting that it disallows\n both “loss” and “expenses” caused by the cancellation.\n\n 27.2. However, as to the examples of various “expenses” given by Dias J\n MHB/131\n (HCJ§48):\n\n 27.2.1. Most of the “expenses” identified, ie. “carrying out inspections,\n legal costs and preparing for delivery generally”, will only be\n wasted if there is cancellation, such that delivery never goes ahead.\n Otherwise, they are likely to be of benefit towards delayed delivery\n and so unrecoverable anyway. Again, however, there cannot be a\n different position on causation as between “loss” and “expenses”.\n\n 27.2.2. The crystallisation requirement also imposes an arbitrary cut-off\n with no textual or commercial justification. As to Dias J’s other\n example, “making arrangements to crew the vessel”, Buyers could\n recover the costs of mobilising the crew to the port of delivery pre-\n cancellation but not the costs of repatriating the crew post-\n cancellation.\n\n 27.3. Further, as to Dias J’s example of loss of profits pre-cancellation (HCJ§48), MHB/131\n\n any such loss is going to be non-existent or minimal. It will, at most, be\n measured in days, assuming Buyers can even prove loss of profits pending\n cancellation. This is because any cancellation must be prompt, lest the right\n be lost by waiver/affirmation: CAJ§88. (The loss of profits recovered MHB/97\n\n following the First Phase of Negligence reflected substantial recovery in a\n different scenario where (a) Sellers notified a New Cancelling Date that was\n about two months’ later, and (b) Buyers accepted that date instead of\n MHB/5, 7\n cancelling: SOFI §§9-10, 27)\n\n 12\n\n\n KDB/49\n28. Third, there is Sellers’ latest iteration that clause 14B may cover loss of bargain in the\n event that cancelling Buyers establish not only “proven negligence” but also\n repudiatory breach, albeit without the need to have accepted the repudiatory breach\n (AWC§§77-80, 84, 119). There are three problems with this interpretation: MHB/28, 29, 35\n\n\n 28.1. First, it is internally inconsistent. The foundation of Sellers’ case is that “due\n compensation” only covers loss recoverable applying common law\n principles (AWC§76). However, at common law, an unaccepted repudiation MHB/28\n\n is a “thing writ in water” and does not give rise to a claim for loss of bargain.\n Sellers’ construction permits recovery of loss of bargain damages because of\n the fact of a prior repudiatory breach, even though that repudiatory breach\n has not been accepted. Having otherwise wedded clause 14B to common law\n principles, Sellers inconsistently suggest clause 14B provides a “modest\n MHB/28\n extension to common law principles” (AWC§80). - 29\n\n\n 28.2. Secondly, it is an incoherent Schrödinger’s cat interpretation. As a matter of\n language, “due compensation for their loss and all their expenses” either\n covers loss of bargain or it does not. Loss of bargain cannot be sometimes\n within the natural and ordinary meaning of that phrase and sometimes\n outwith. Sellers’ latest case runs close to a concession that the ordinary and\n natural meaning of the words of clause 14B extends to loss of bargain in the\n event of a clause 14A cancellation following “proven negligence”, as was\n held below: CAJ§§24, 74-75, Award§§162, 164. MHB/82, 92-93;\n 184 - 185\n\n 28.3. Thirdly, it both creates a problem and then provides an inapt solution thereto:\n\n 28.3.1. The dilemma at AWC§§47-51, 77-79, for Buyers who are uncertain MHB/22-23, 28\n whether they will establish Sellers’ repudiation but want to recover\n loss of bargain damages, only arises if such damages are not anyway\n recoverable under clause 14B irrespective of repudiation. This\n problem does not arise by Buyers’ straightforward construction.\n\n 28.3.2. It is inherently improbable that the parties intended the clause 14B\n wording as a solution to this nuanced problem based on Phones4U MHB/518\n\n Ltd v EE Ltd [2018] EWHC 49 (Comm). More likely is that the\n parties intended clause 14B to follow The Solholt (see below). MHB/680\n\n\n 13\n\n\n KDB/50\n 28.3.3. The clause 14B wording is anyway unnecessary to achieve a so-\n called “safety net” (AWC§80). There is a clear alternative approach MHB/28\n\n for an innocent party to try and secure loss of bargain damages for\n repudiatory breach, whilst avoiding itself being in repudiation and\n still guaranteeing contractual termination (even based on a bare\n termination right). Such a party should (a) accept the repudiatory\n breach, and then (b) immediately thereafter (in a later part of the\n same letter, alternatively moments later before there is time for a\n reaction), in the alternative and without prejudice to its prior\n acceptance of repudiatory breach, exercise its contractual\n termination right: see Shell Egypt West Manzala GMBH v Dana MHB/658\n\n Gas Egypt Ltd [2010] EWHC 465 (Comm) at [34] (Tomlinson J);\n cf. Havila Kystruten AS v Abarca Companhia De Seguros MHB/440\n\n SA [2022] EWHC 3196 (Comm) at [423]-[425] (Henshaw J).\n\n\n(E) The admissible background of previous authority\n\n29. The Solholt [1981] 2 Lloyd’s Rep. 574 (see CAJ§§137-148) concerned a ship sale MHB/680\n\n contract on NSF 1966. The contract required delivery of the vessel no later than 31\n August 1979, failing which buyers were entitled to cancel.\n\n30. The vessel was not delivered on time and on 3 September 1979 buyers exercised their\n right to cancel. Buyers claimed the difference between the US$5m contract price and\n the US$5.5m market price (ie. loss of bargain damages).\n\n31. Staughton J held that buyers were prima facie entitled to loss of bargain damages.\n Staughton J dismissed the argument that clause 14 only provided for “loss caused by\n non-fulfilment of the contract. That means loss arising from default and not from the\n loss of a bargain, if the buyers are entitled to and do treat the contract as at an end. 8\n MHB/685\n At p.579 col.2, the Judge held:\n\n “I do not accept [the] argument that this must be confined to compensation for\n three days’ delay. The clause itself contemplates that the buyers may cancel and\n therefore that the contract will be wholly unperformed, so far as its main object\n is concerned, that is to say, transfer of the property in the vessel. It is that loss\n\n8\n Mr Pollock’s third argument at p.579 col. 1. MHB/685\n\n\n 14\n\n\n KDB/51\n which is, in my judgment, plainly provided for in the words, “loss caused to the\n Buyers by non-fulfilment of this contract””\n\n32. Staughton J nonetheless went on to hold that buyers had failed to mitigate as they\n should still have bought the vessel at the contract price. Buyers appealed on mitigation\n (with no cross-appeal by sellers on the loss of bargain question). 9\n\n33. In the Court of Appeal, the following was argued by the buyers’ counsel (p.607 col.2): MHB/691\n\n\n “It is trite law that in deciding whether or not to exercise a right to cancel the\n contract in such circumstances, the buyer need have no regard to the fact that\n in the absence of cancellation he would suffer no loss. If he cancels, the loss\n will be attributable to the sellers’ breach of contract and not to the\n cancellation” (emphasis added).\n\n\n34. The Court of Appeal agreed as follows (p.608 col.1): MHB/692\n\n\n “As we have already accepted as being trite law, the buyers had an unfettered\n right in the circumstances of this case to affirm the original contract of sale or\n to cancel it. No question of mitigation arose at that stage. They decided to\n cancel and in consequence they suffered a loss of US$500,000. As a matter of\n causation, this loss, unless avoidable by some reasonable further action, was\n directly attributable to the sellers’ breach of contract.” (emphasis added). 10\n\n\n35. Three related points arise from The Solholt.\n\n36. First, it is direct and long-standing authority that, under a previous iteration of clause\n 14 of the NSF, buyers were entitled to recover loss of bargain damages following their\n cancellation. This forms part of the admissible background for construing clause 14\n of the NSF: Hexagon at [26]-[27] and CAJ§146. MHB/565\n\n\n37. Second, whilst there are differences in the wording as between clause 14 of the NSF\n 1966 and clause 14 of the NSF 2012, they are no reason for any difference in result.\n\n\n9\n [1983] 1 Lloyd’s Rep. 605 MHB/689\n10\n Contrary to AWC§104, there is no basis to conclude that the Court of Appeal were (i) MHB/32 - 33\n\nassuming a repudiatory breach, or (ii) making these comments without hearing detailed\nsubmissions on the point.\n\n 15\n\n\n KDB/52\n38. Sellers are inconsistent in supporting The Solholt on the wording of clause 14 “as it\n then was” (AWC§92), whilst barely focusing on the wording of clause 14 of NSF MHB/30 - 31\n\n 2012. Focus upon the wording of both shows no reason for any difference in result.\n\n39. Clause 14 of NSF 1966 provided as follows (next to clause 14 of NSF 2012 for ease):\n\n\n NSF 1966 clause 14 NSF 2012 clause 14\n\n “If default is made by the Sellers “[A] Should the Sellers fail to give Notice of\n in the execution of a legal Readiness in accordance with Clause 5(b) or\n transfer or in the delivery of the fail to be ready to validly complete a legal\n vessel with everything belonging transfer by the Cancelling Date the Buyers\n to her in the manner and within shall have the option of cancelling this\n the time herein specified, and the Agreement. ... In the event that the Buyers\n default shall have arisen from elect to cancel this Agreement, the Deposit\n events for which the Sellers are together with interest earned, if any, shall be\n responsible, the Buyers shall released to them immediately.\n have the right to cancel this\n contract and the deposit in full [B] Should the Sellers fail to give Notice of\n shall be returned to the Buyers Readiness by the Cancelling Date or fail to\n together with interest thereon at be ready to validly complete a legal transfer\n the rate of 5% per annum. The as aforesaid they shall make due\n Sellers shall, in addition, make compensation to the Buyers for their loss and\n due compensation for any loss for all expenses together with interest if their\n caused to the Buyers by non- failure is due to proven negligence and\n fulfilment of this contract.” whether or not the Buyers cancel this\n Agreement”\n\n40. The critical wording of clause 14 of NSF 2012 is wider than that of NSF 1966:\n\n 40.1. The removal of the qualifying words “by non-fulfilment of this contract”\n cannot sensibly serve to narrow the meaning of the phrase.\n\n 40.2. Put another way, “Due compensation for any loss caused to the buyers by\n non-fulfilment of this contract” is a subset of “due compensation for their\n MHB/110 -\n loss and all expenses”: CAJ§143. 111\n\n\n 40.3. The relatively minor differences in wording are anyway no basis for the\n distinction Sellers seek to draw at AWC§94: “any loss” is not materially MHB/31\n\n different to “their loss and all expenses”; the reference to “non-fulfilment”\n does not warrant the substantially different outcomes as to loss of bargain.\n\n\n 16\n\n\n KDB/53\n41. More generally, Sellers do not suggest that The Solholt is wrong. Instead, they argue\n that clause 14 of NSF 1966 is focused on non-delivery / non-fulfilment of the contract,\n whereas the focus of clause 14 is now on late delivery (AWC§§92-94). As to that: MHB/30 - 31\n\n\n 41.1. This ignores that clause 14A is a cancellation clause and that clause 14B also\n (or primarily) applies in the event of cancellation. It also ignores that clause\n 14 of the 1966 NSF referred to delivery “within the time herein specified”.\n\n 41.2. Staughton J’s reasoning (above) was that clause 14 “contemplate[d] that the\n buyers may cancel and therefore that the contract will be wholly\n unperformed, so far as its main object is concerned, that is to say, transfer\n of the property in the vessel”.\n\n 41.3. The position is the same under NSF 2012: where buyers exercise their\n unfettered right to cancel under clause 14A, the contract will be wholly\n unperformed for reasons “directly attributable” to sellers’ proven neligence.\n Any failure to comply with the Readiness Obligation, to which buyers\n respond with cancellation, will always lead to non-fulfilment of the contract.\n Loss of bargain damages are “due compensation to the Buyers for their loss”.\n\n42. Third, since Sellers seek to justify the divergent outcomes on the basis of removal of\n the earlier “non-fulfilment” wording, it is relevant to understand when and why the\n 1966 wording changed (without thereby engaging in archaeology of the forms):\n\n 42.1. The “non-fulfilment” wording was removed in 1987 as part of changes to\n remove Sellers’ strict liability for late delivery after The Al Tawfiq [1984] 2 MHB/449\n\n Lloyd’s Rep. 598.\n\n 42.2. In The Al Tawfiq, the vessel was delivered late following a grounding for\n which the sellers were blameless. The buyers did not cancel but were held\n entitled to damages for late delivery.\n\n 42.3. As to the subsequent changes:\n\n 42.3.1. The ‘negligence’ qualification was introduced to the NSF 1987 in\n response to that finding (of sellers’ strict liability) in The Al Tawfiq:\n\n\n 17\n\n\n KDB/54\n Goldrein on Ship Sale and Purchase (7th Ed., 2024) at §19.6: see MHB/964\n\n also HCJ§54(ii), fn. 5 (cf. HCJ§50; AWC§97). MHB/132-133\n (cf. 131; 31)\n\n 42.3.2. The addition of the words “whether or not the Buyers cancel this\n Agreement” in NSF 1993 resolved a doubt as to whether there was\n any damages entitlement in the event of non-cancellation: Strong\n & Herring on Sale of Ships: The Norwegian Saleform (3rd Ed., MHB/993\n\n 2016) at §17-18 (see also CAJ§73). MHB/92\n\n\n 42.3.3. However, on Sellers’ case, the effect of the changes was to remove\n the prior ability of buyers to recover market damages in the event\n of cancellation.\n\n43. Relatedly, for clause 14 of NSF 2025 11, the drafters have made clear what the intention MHB/1199\n -1200\n was all along: that buyers can recover loss of bargain damages under clause 14B. This\n is reflected in BIMCO’s Explanatory Notes on the recent Amendment:\n\n “Subclause 14(e) has not been materially amended save for the final sentence\n clarifying that if the Buyers elect to terminate the agreement and the Sellers’\n negligence in meeting their obligations under subclause (e) is proven, then\n the Buyers are entitled to loss of bargain damages. This clarification has been\n made in light of the Lila Lisbon case and the ensuing discussion on the\n existence of a positive obligation on behalf of the Sellers to issue a NOR by the\n Cancelling Date...” (emphasis added)\n\n\nIII. Sellers’ ‘clear words’ presumption and other common law principles\n\n44. In lieu of the orthodox approach to interpretation, Sellers frontload their case with two\n related sets of submissions, which are addressed here as follows: (A) there is no ‘clear\n words’ presumption; (B) other common law principles relating to repudiatory breach\n and termination.\n\n\n11\n On which Sellers rely at AWC§85(2) for a construction argument, whilst also saying Buyers MHB/29\n\nmust not rely upon it.\n\n 18\n\n\n KDB/55\n(A) There is no ‘clear words’ presumption\n\n45. Sellers seek to christen a ‘Novasen presumption’ that clear words are required to\n confer a right to damages where no such right would arise at common law (AWC§§52- MHB/23-25\n\n 58). There is no such presumption, alternatively it is inapplicable to clause 14B.\n\n46. First, the only relevant presumption is that a damages clause may be assumed, in the\n absence of clear words, not to have been intended to operate arbitrarily: see Bunge v\n MHB/247,\n Nidera BV [2015] UKSC 43 at [24]-[26], [34]-[35] (Lord Sumption JSC), specifically 249 - 250\n rejecting a ‘clear words’ submission similar to that of Sellers (see CAJ§131). Further: MHB/107\n\n\n 46.1. Sellers’ position on Bunge is irreconcilable with their so-called ‘Novasen\n presumption’ applying to clause 14B. On the one hand, AWC§55 says that MHB/24\n\n clause 14B is not a ‘damages’ clause so that Bunge is not in point. On the\n other hand, Novasen itself concerned such a ‘damages’ clause. Bunge dealt\n with a GAFTA Default clause and Novasen with a FOSFA Default clause.\n\n 46.2. Sellers’ reliance on [34] of Bunge is misplaced (AWS§53). First, Lord MHB/23\n\n Sumption does not refer to or approve any ‘clear words’ principle from\n Novasen or otherwise. Secondly, the juxtaposition with Gilbert-Ash is in the\n context of a suggestion that “the clause impliedly required the award of a\n head of damage which has not been suffered”. Thirdly, [35] ties Lord MHB/250\n Sumption’s support for the result in Novasen back to his presumption at [24]- MHB/247\n\n [26] that the clause should not operate arbitrarily.\n\n 46.3. Sellers have rightly not suggested that there is anything arbitrary about\n Buyers’ construction of clause 14B, requiring negligent Sellers to pay loss of\n bargain damages equivalent to those recoverable under s. 51 SOGA 1979\n (CAJ§131). The ‘no loss’ issues in Bunge and Novasen do not arise here. MHB/107\n\n\n47. Second, the so-called ‘Novasen presumption’, or at least its application to clause 14B,\n is at odds with the underlying (or main) rationale for other ‘clear words’ presumptions:\n\n 47.1. The construction of a clause such as clause 14B is not one of the various\n scenarios identified as requiring ‘clear words’ by Lewison on The\n Interpretation of Contracts (8th Ed., 2024), at §§7.169-7.174. Lewison’s MHB/1014\n - 1016\n subtitle (above §7.169) emphasises the common thread uniting those MHB/1014\n\n 19\n\n\n KDB/56\n scenarios: “Where a construction would produce an unfair result, the court\n will often require clear words to support the construction in question”.\n\n 47.2. There is nothing unfair in clause 14B conferring a right to loss of bargain\n damages where Buyers cancel in response to Sellers’ negligence. It is the\n commonsensical interpretation.\n\n 47.3. Sellers’ reliance on Rice v Yarmouth BC [2003] TCLR 1 (2001) at AWC§58 MHB/570\n MHB/25\n shows not only this underlying rationale but also the contrast with clause\n 14B. At [17]-[24], Hale LJ upheld the Judge’s reliance on Lord Diplock’s MHB/574\n - 576\n dictum in The Antaios [1985] AC 191 at 201D to conclude that the council’s\n literal ‘any breach’ interpretation would flout business commonsense. 12\n\n48. Third, if (which is denied) any separate principle from Novasen survives Bunge, it is\n only that clear words are required for there to be contractual entitlement to recover\n MHB/106\n loss when no loss has in fact been suffered (see CAJ§§129-130): - 107\n\n\n 48.1. In Novasen, the question was whether the FOSFA Default clause enabled\n buyers to recover substantial damages even though no loss had been suffered\n because the contract would in any event have come to an end without liability\n on sellers’ part on expiry of a 30-day extension to the shipment period.\n\n 48.2. Popplewell J’s remarks at [17] as to a “right to damages where no such right MHB/482\n\n would arise at law” refer to an “entitlement” to substantial damages where\n no loss has been suffered, hence his conclusion, in the final sentence of [17], MHB/482\n\n that “the starting point, in commercial dealings as in the law, is that a party\n claiming damages for breach of contract should be entitled to recover no\n more than the loss occasioned by the breach”.\n\n49. Fourth, a ‘Novasen presumption’, alternatively one applicable to clause 14B, is not\n supported by the The Spar Capella, which dealt with the withdrawal right under clause\n 11 of NYPE 1993, and the distinct question of whether it was a condition:\n\n 49.1. At [98], Popplewell J said that “the option to cancel does not confer a right MHB/714\n\n to damages, in the absence of clear language to the contrary, but merely\n\n\n12\n On Rice see also Chitty on Contracts (36th Ed, 2026) at §26-056 to §26-058. MHB/950 -\n 951\n 20\n\n\n KDB/57\n confers a right to put an end to future performance obligations”. Similarly,\n at [190], he started with the approach that “an option to cancel ... does not MHB/739\n\n confer greater rights to damages at common law than would exist apart from\n the clause unless there is clear language to that effect”.\n\n 49.2. These dicta, both of which relied upon Financings v Baldock [1963] 2 QB MHB/325\n\n 104, address the effect of a bare withdrawal right such as clause 11. They do\n not address the construction of an express “compensation” provision.\n\n 49.3. The Court of Appeal said nothing of such a requirement, instead deprecating\n over-reliance on Financings: see The Spar Capella [2016] EWCA Civ 982, MHB/758\n\n [2016] 2 Lloyd’s Rep. 447, at [50] (Gross LJ). Both Dias J and the CA agreed\n no ‘clear words’ principle was established by this case: HCJ§38, CAJ§132. MHB/129;\n 107-108\n\n50. Fifth, any such presumption would be liable to conflict with existing presumptions:\n\n 50.1. There are two relevant situations where the law requires ‘clear words’:\n\n 50.1.1. The first is where parties, by contract, attempt to remove or reduce\n remedies for breach of contract that would otherwise arise by\n operation of law. This is the Gilbert-Ash principle (see AWC§52). MHB/23\n\n\n 50.1.2. The second is where parties, by contract, attempt to remove or\n reduce remedies otherwise created by the contract itself. This\n variation on the Gilbert-Ash presumption was explored in RTI Ltd\n MHB/594 -\n v MUR Shipping BV [2024] UKSC 18, [2024] 2 W.L.R. 1350, at 595\n [43]-[46] (Lord Hamblen and Lord Burrows JJSC).\n\n 50.2. The ‘Novasen presumption’ is materially different to these two situations:\n\n 50.2.1. The rationale behind the Gilbert-Ash principle and the variation\n thereon in RTI is that parties are not to be taken to have foregone a\n valuable right without clear words to this effect.\n\n 50.2.2. That is a different question to whether the parties have, by the\n contract, agreed that one party’s entitlement to a valuable right will\n be engaged in different circumstances than at common law.\n\n\n 21\n\n\n KDB/58\n 50.2.3. Most contractual provisions create rights that go beyond what\n otherwise exists by operation of law, and hence create remedies in\n damages that would not otherwise be available. Sellers’ ‘clear\n words’ presumption has the potential to become far-reaching.\n\n 50.3. The introduction of a third ‘Novasen presumption’ would also create a\n complex scheme where competing ‘canons of construction’ are in tension.\n Under RTI, there is a presumption that the parties have not attempted to\n remove or reduce the remedies provided for in clause 14B. On Sellers’ case,\n there is a presumption that clause 14B does not go beyond the common law\n in the absence of ‘clear words’. The solution is simply to construe clause 14\n on ordinary principles.\n\n51. Sixth, even if there is any ‘Novasen presumption’ applicable to clause 14B:\n\n 51.1. Canons of construction are no more than pointers or guidelines: The MHB/1011\n - 1012\n Interpretation of Contracts, at §§7.01-7.06.\n\n 51.2. The presumption should not be used to override the natural and ordinary\n meaning of clause 14B against the reasonably available background.\n\n 51.3. In any event, the wording of clause 14B is sufficiently clear to enable Buyers\n to recover loss of bargain damages. No commercially sensible alternative\n construction has been put forward.\n\n\n(B) Other principles relating to repudiatory breach and termination\n\n52. Predominantly as a platform for the ‘Novasen presumption’, Sellers rely extensively\n on a range of common law principles arising from cases that do not contain any clause\n analogous to clause 14B. None of them provides any reason to depart from the natural\n and ordinary meaning of clause 14B.\n\n53. First, Sellers rely upon the proposition that loss of bargain damages cannot be\n recovered at common law absent an accepted repudiatory breach (AWC§§24-29): MHB/18 - 19\n\n\n 53.1. Sellers concede at AWC§28 that this does not apply if “the provision MHB/18\n\n granting the contractual right [of termination] confers a right to claim loss\n\n\n 22\n\n\n KDB/59\n of bargain compensation” (see also AWC§37, albeit that trailers Sellers’ MHB/21\n\n ‘clear words’ presumption).\n\n 53.2. This concession begs the key question as to the effect of clause 14B, to be\n determined by reference to the wording of clause 14 and the MOA as a\n whole, rather than by the position at common law absent such wording. As\n Diplock LJ held in Financings at p. 121, whether a cancellation provision MHB/346\n\n does more than just bring the contract to an end “and confers any other rights\n or remedies on either party on the termination of the contract, depends upon\n the true construction of the relevant provision”. The Courts below were right\n to find that Financings is not (or not otherwise) in point: HCJ§40-41, MHB/129\n\n CAJ§113-126. The issue is not whether clause 14A entitles Buyers to loss of MHB/103 -\n -106\n bargain damages. It is whether clause 14B does so.\n\n 53.3. In any event, as set out above, the latest version of Sellers’ case on the\n meaning of clause 14B allows for loss of bargain recovery where there is an\n unaccepted repudiatory breach, which itself departs from the common law.\n\n54. Second, and relatedly, Sellers rely upon the causation analysis which underlies the\n outcome in respect of bare termination clauses (including in The Kos [2012] UKSC MHB/295\n\n 17, [2012] 2 AC 16) where Sellers say “the innocent party deprives himself of\n substantially the whole benefit of the contract by exercising his contractual right to\n MHB/19 - 21\n terminate” (AWC§§30-36, esp. at §§35-36). As to that:\n\n 54.1. It is a non-sequitur to say that because (a) a party terminating under a bare\n contractual right will not be entitled to its loss of bargain on the basis that its\n termination is the effective cause thereof, therefore (b) a contractual right to\n compensation following such termination (a fortiori one that is in response\n to “proven negligence”) should not extend to loss of bargain.\n\n 54.2. In The Kos at [12] and [76] respectively, Lord Sumption JSC and Lord MHB/305\n and 323\n Clarke JSC emphasised that all questions of causation are sensitive to the\n legal context in which they arise.\n\n\n 23\n\n\n KDB/60\n 54.3. Accordingly, a question of causation posed in relation to a bare contractual\n termination need not lead to the same answer as a question of causation posed\n in the interpretation of an express “compensation” provision (cf. AWC§115). MHB/35\n\n\n55. Pausing here, in response to the argument at AWC§§70-76, 114-15 that the sole MHB/27 - 28,\n 34 - 35\n effective cause of Buyers’ loss of bargain was their exercise of the clause 14A right,\n Sellers require a bright-line rule of law that a clause 14A cancellation will always be\n deemed the cause of Buyers’ loss of bargain so as to limit the meaning of clause 14B:\n\n 55.1. The Tribunal held in Award§165 that “the cause of the Buyers’ loss of\n profits 13 was Sellers’ failure to deliver, and this caused Buyers to bring the\n MOA to an end”. Sellers require this to have been a legally impermissible\n conclusion (as may be common ground: SOFI§32; see also CAJ§77). MHB/8; see\n also 93 - 94\n\n 55.2. When determining whether the Tribunal made an error on the question of\n law, the Court must proceed on the basis of findings of fact in the award; it\n has no jurisdiction in relation to errors of fact and no power to make its own\n MHB/644,\n findings of fact: Sharp v Viterra, at [51(5)], [71] (Lord Hamblen JSC). 646\n\n\n 55.3. The question of law upon which permission was given (rightly) did not\n challenge the Tribunal’s factual conclusion as to the cause of Buyers’ loss of\n bargain.\n\n56. On a proper analysis, for the reasons set out above, there is no such bright-line rule\n that loss of bargain damages can never be recoverable under clause 14B because\n buyers’ cancellation will always be treated as the sole effective cause.\n\n57. Even assuming arguendo that causation is a critical prism through which to approach\n the question of interpretation of clause 14B (cf. CAJ§123), a reasonable person with MHB/105\n\n the relevant background knowledge would, in the event of Sellers’ proven negligence\n leading to cancellation, consider Buyers’ loss of bargain to be caused by the\n negligence, alternatively by the combination of the negligence and the cancellation.\n\n\n13\n Here used as a synonym for loss of bargain, ie. the difference between market and contract\n MHB/185;\nprice: Award§165; SOFI§30. MHB/8\n\n\n 24\n\n\n KDB/61\n 57.1. Any exercise of Buyers’ right to cancel under clause 14A does not negate the\n causative link between: (a) Sellers’ breach of the ‘Readiness Obligation’; and\n MHB/93\n (b) the loss of the bargain: CAJ§§75-76.\n\n 57.2. Alternatively, the reasonable person would consider both the “proven\n negligence” and the cancellation to be effective causes of the loss of bargain,\n which is sufficient to negate the bright-line rule required by Sellers; Buyers’\n cancellation merely recognises a situation already created by Sellers’ non-\n performance, namely Sellers’ breach of the ‘Readiness Obligation’ that gave\n rise to Buyers’ right to cancel under clause 14A: CAJ§§84, 124. MHB/96,\n 105 - 106\n\n 57.3. Under general principles of causation, the chain of causation is not broken so\n long as the breach remains “an effective cause of the loss” (emphasis in the\n original) and is only broken by a claimant’s conduct that obliterates the\n defendant’s wrongdoing, ie. is at a minimum unreasonable if not reckless;\n the question is fact-sensitive, involving a practical inquiry into the\n circumstances of the breach and the claimant’s subsequent conduct: Borealis\n MHB/218,\n AB v Geogas Trading SA [2010] EWHC 2789 (Comm), [2011] 1 Lloyd’s 220\n Rep. 482, at [44]-[45], [47] (Gross LJ) (and see also CAJ§81). MHB/95\n\n\n58. In the further alternative, clause 14B “proven negligence” may be found to be the\n effective cause of a loss of bargain in some cases of cancellation but not in all such\n cases, depending upon a fact-sensitive inquiry. On that hypothesis, the Tribunal’s\n conclusion was a mixed question of law and fact as to the effective cause of the loss.\n Permission was not sought on that mixed question. The Court would, faced with such\n a mixed question, have applied a more stringent threshold: see CTI Group Inc v\n Transclear SA [2007] EWHC 2340 (Comm), [2007] 2 C.L.C. 530 at [13] (Field J).\n\n59. Third, Sellers rely on the proposition that a party cannot claim loss of bargain damages\n even where there was a repudiatory breach, where it has not terminated by accepting\n that repudiatory breach, in particular citing Phones4U (see AWC§§38-45): MHB/21 - 22\n\n\n 59.1. That proposition is inapposite when even Sellers’ interpretation suggests that\n Buyers under clause 14B can recover damages if there is an unaccepted\n repudiatory breach. The idea that clause 14B is an antidote to the supposed\n dilemma this creates has been addressed at paragraph 28.3 above.\n\n 25\n\n\n KDB/62\n 59.2. The causation analysis which underlies that proposition has also already been\n addressed above. There are no grounds for the same causation analysis as\n underlies Phones4U to apply to the interpretation of clause 14B.\n\n 59.3. Insofar as Sellers use this as a platform to say the Court should be “slow” to\n reach Buyers’ interpretation of clause 14B, that is just another way of trying\n to establish a ‘clear words’ presumption. It should be rejected for the same\n reasons as Sellers’ more direct submissions thereon.\n\n\nIV. Other NSF Authorities\n\n60. The Tribunal and CA’s decisions are supported by all relevant authority, and there is\n no contrary authority which precludes the recovery of market damages under clause\n 14B, nor is there any suggestion of market disquiet. 14\n\n61. This Section IV therefore sets out (A) other authorities relevant to the construction of\n clause 14; and (B) the significance of The Griffon.\n\n\n(A) Other authorities on clause 14\n\n62. In addition to The Solholt, other cases point in the same direction (CAJ§149): MHB/112\n\n\n 62.1. Whilst The Al Tawfiq [1984] 2 Lloyd’s Rep. 598 (see CAJ§149) was a case MHB/449\n\n of delayed delivery, the award included reasoning similar to that of\n Staughton J in The Solholt, stating that “[c]lause 14 provides that if the\n delivery date is missed for reasons for which the Sellers are responsible then\n if the Buyers cancel they can claim damages for the loss of the bargain unless\n the delay was frustrating”: at p.600 col.1. Lloyd J upheld the decision of the MHB/451\n\n arbitrators and did not cast any doubt on their reasoning at p. 600 col. 2.\n\n\n14\n On the contrary, see ‘Entitled or not entitled: Court of Appeal restores industry understanding MHB/1020\n - 1028\non loss of bargain damages’: HFW, 14th October, 2025; The Lila Lisbon: Commercial Court\n MHB/1017\nreverses industry understood practice on damages: UK Defence Club, Paul Herring, 28th - 1019\nAugust 2025. See also the clarification in the NSF 2025 and the Explanatory Notes set out at\nparagraph 43 above.\n\n 26\n\n\n KDB/63\n 62.2. In Parbulk AS v Kristen Marine SA [2010] EWHC 900 (Comm), [2011] 1 MHB/505\n\n Lloyd’s Rep. 220 (see CAJ§150), four SPVs entered into four MOAs to sell\n bulk carriers, which they then cancelled after delivery delays. The MOAs\n were on what appears to have been an amended version of NSF 1993: at [10].\n Burton J held that “[i]f such negligence is proved, then a wider measure of\n damage can be recovered, eg loss of profit...”: at [23]. MHB/512\n\n\n 62.3. In The Ile aux Moines [1974] 2 Lloyd’s Rep. 502 (see CAJ§151), Mocatta J MHB/857\n\n reasoned that damages for loss of bargain were recoverable for non-delivery\n of a ship, being (i) the difference in value between 15 December 1972 and\n the replacement purchase on 16 February 1973, plus (ii) loss of profits for\n the 154 days’ meanwhile: at pp. 504 col. 2 – 505 col.2. MHB/859\n\n\n63. The leading textbooks support the recoverability of loss of bargain damages (as relied\n upon by the Tribunal at Award§164):\n\n 63.1. Goldrein on Ship Sale and Purchase at §19.11 states: “Where the seller MHB/966\n\n breaches the sale contract by failing to deliver the ship...[and] there is an\n available market for the ship, the buyers’ damages will be measured by\n reference to the difference between the contract price and the market or\n current price”.\n\n 63.2. Strong & Herring at §17.20 states: “In circumstances where the Buyers have MHB/994\n\n cancelled the contract, the Buyers’ claim for damages for non-delivery is\n governed by s. 51 of the Sale of Goods Act 1979”.\n\n64. The settled understanding of the law engendered by the authorities above, without any\n indication of market disquiet, means that the Court should be very cautious before\n finding that buyers under the NSF 2012 form are not entitled to market damages in\n the event they cancel following sellers’ proven negligence: The Spar Capella (CA), at MHB/767\n\n [94] (Hamblen LJ); The Interpretation of Contracts, at §§4.65-4.72. MHB/1004\n - 1008\n\n\n(B) The Griffon\n\n65. Buyers’ construction is more consistent with the meaning and effect of Sellers’\n corresponding rights under clause 13, as established in The Griffon. MHB/432-\n 439\n\n\n 27\n\n\n KDB/64\n 66. In The Griffon, the Court of Appeal held that the sellers had an accrued right to receive\n the deposit as an agreed sum forfeitable in the event of the buyers’ failure to fulfil the\n MHB/436-\n agreement. Tomlinson LJ also reasoned as follows at [10]: 437\n\n “The right to cancel given by limb 1 of clause 13 is not dependent upon proof\n that failure to pay the deposit on time is repudiatory in nature. Indeed, until the\n decision of this court in Samarenko v Dawn Hill House Ltd [2013] Ch 36, it\n would not have been clear that a failure to pay the deposit on time is, without\n more, repudiatory of the buyers’ obligations. Limb 1 of clause 13 therefore\n confers upon sellers a valuable contractual remedy over and above the remedy\n which they already enjoy at common law, the availability of which latter\n remedy is however attended by uncertainty. That uncertainty was greater before\n the decision of this court in Samarenko, and thus at the time when limb 1 was\n introduced. Whatever the position now, a contractual remedy of termination\n which has no need to characterise the defaulting buyers’ conduct as\n repudiatory is a valuable addition to sellers’ armoury. The circumstances out\n of which buyers’ repudiation must be spelled are not always clear cut. A\n contractual right of termination exercisable upon the happening or non-\n happening of an event usually brooks of less argument. The express entitlement\n to compensation together with interest for losses and expenses is also at the\n *%\"./ \" 1\"*0\"#*% $*\"-)4$\"/),+ ,& \" -)'(/ /, 2()$( /(% .%**%-. 2%-% )+ \"+3 %1%+/\n entitled at law, which is henceforth made available as an express term of the\n contract.” (emphasis added)\n\n 67. It is clear that Tomlinson LJ’s view was that clause 13 acts in addition to the seller’s\n right to terminate at common law. The final sentence also indicates sellers would be\n entitled to claim the same losses under clause 13 as they would if they had terminated\n for repudiatory breach, ie. loss of bargain.\n\n 68. There is no suggestion that it was only because non-payment of the deposit was\n repudiatory that clause 13 gave an entitlement to compensation for loss of bargain,\n nor any suggestion of a requirement to show an unaccepted repudiatory breach in such\nMHB/34 circumstances (cf. AWC§111). The CA’s interpretation (at CAJ§§98-102) of The MHB/99 - 100\n\n Griffon is therefore neither a “remarkable extrapolation from the judgment” nor MHB/33,\n 34\n “frankly bizarre” (cf. AWC§§107, 110).\n\n\n V. Buyers’ Respondent’s Notice\n\n 69. As detailed above, Buyers’ primary position is that the central question in this case is\n a straightforward one as to the proper construction of clause 14B. Buyers also say that\n any principle set out in Financings is irrelevant to construing clause 14B. Clause 14B\n\n\n 28\n\n\n KDB/65\n provides Buyers with an additional right to compensation beyond the common law.\n The position in which Buyers would have been without clause 14B is academic.\n\n70. However, to the extent necessary (and in the alternative), Buyers’ position is that any\n principle established by Financings is irrelevant to claims for non-delivery under a\n sale of goods contract (and so irrelevant to the proper construction of clause 14A).\n\n71. The Court of Appeal expressed support for this position. Having considered\n Finacings, The Spar Capella, Phones 4U, and The Kos, Nugee LJ stated at CAJ§119: MHB/104 -\n 105\n\n “It is not obvious to me that the same principles necessarily apply to a contract\n for a single transaction such as a sale. That seems to me a very different type\n of contract. Unlike a lease or charterparty or the like, the contract is not\n intended to govern the parties’ relationship for an extended period which is\n prematurely brought to an end by the exercise of a right to cancel. A contract\n for sale is intended to achieve a particular transaction – the exchange of an\n asset for money – and where the contract provides for a window in which to\n achieve that transaction, the exercise of a right to cancel if the window is not\n met does not seem to me a case of premature termination in the same way at\n all; it is a case where the transaction cannot be carried through as intended and\n so is called off. We were not referred to any case where the Financings\n principle has been applied to a contract of this type and I think there is a real\n question whether it does apply in the same way.”\n\n72. This inclination was correct, for the reasons set out below. Buyers address: (A) the\n scope of the principle established by the decisions relied upon by Sellers; (B) why that\n principle does not (or should not) apply to claims for non-delivery under a sale of\n goods contract; and (C) the significance of the inapplicability of the principle to the\n construction of clause 14.\n\n\n(A) The scope of the Financings principle\n\n73. Sellers’ case is grounded upon the common law proposition that loss of bargain\n damages cannot be recovered pursuant to the exercise of a contractual termination\n right because their sole effective cause is the election to terminate: AWC§§24-36. MHB/18 - 21\n\n\n74. Properly understood, this proposition only applies (or should only apply) to contracts\n in which performance of the relevant ‘bargain’ said to be lost has not yet fallen due,\n\n\n 29\n\n\n KDB/66\n ie. future breaches. 15 It does not (or should not) apply to non-delivery (or non-\n acceptance) under sale of goods contracts where there is contractual termination for a\n failure to perform the basic duty of delivery (or acceptance) which has already fallen\n due, ie. a past breach.\n\n75. First, as to Financings v Baldock, which concerned a two-year hire purchase contract:\n\n 75.1. The question was whether, in the absence of a repudiatory breach, owners\n could claim damages from the hirer for the value of the future instalments\n that had not fallen due, following termination under a contractual power.\n\n 75.2. The Court of Appeal unanimously held that they could not claim such\n damages. Essential to the causation analysis in all three judgments was the\n fact that owners were effectively trying to claim for future breaches:\n\n 75.2.1. Lord Denning MR said at p.110: “he can recover damages for any MHB/331\n\n breach up to the date of termination but not for any breach\n thereafter, for the simple reason that there are no breaches\n MHB/334\n thereafter”; and at p. 113 when distinguishing cases of repudiation,\n he added: “the repudiation being itself a breach which took place\n before the termination, it is within the class of breches for which the\n owners can recover damages...”.\n\n 75.2.2. Upjohn LJ said at p.116: “the only damages for which he could sue MHB/337\n\n were those pointed out by clause 11 of the contract [an\n unenforceable penalty clause], together with any claim he might\n have for some other damage for antecedent breach”; and at p. 117: MHB/338\n\n “owing to his difficulties on clause 11 of the contract, he can only\n\n\n15\n A possible definition reflecting a claim based on future breaches is ‘anticipatory loss of\nbargain damages’, which is a term used in, and the focus of, Professor Peel’s article ‘Loss of\nBargain Damages’ at [2020] LMCLQ 449, esp. at p.450 (cf. 460 which juxtaposes breaches MHB/1097\n\ncommitted prior to the date of termination). That is also the focus of his earlier article ‘The\nTermination Paradox’ at [2013] LMCLQ 519, esp. at p.523 – “damages may be awarded for MHB/1075\n\nany breach of obligations which fell to be performed prior to termination, ...”.\n\n 30\n\n\n KDB/67\n sue for any breaches which can be proved before he terminated the\n contract”.\n\n 75.2.3. Similarly, Diplock LJ at p.123, concluded by saying that, absent a MHB/344\n\n repudiation, although a party “may be entitled under an express\n power to determine the contract, [it] is not entitled to damages for\n non-performance of the contract during the period for which it\n would have continued to run but for such determination.”\n\n 75.3. Financings did not purport to lay down a principle that the exercise of a\n contractual right of termination based on prior breach of an obligation, viz.\n that had already fallen due, would be deemed the sole effective cause of the\n loss of the bargain arising from the non-performance of that obligation.\n\n76. Second, as to Phones4U, in which the parties had entered into a long-term Trading\n Agreement under which EE would pay Phones4U for selling mobile phone contracts:\n\n 76.1. The dispute concerned the recoverability of loss of bargain damages in the\n context of a bare cancellation right which did not depend upon the proof of\n breach (whether repudiatory or otherwise). 16\n\n 76.2. Andrew Baker J’s initial causation-related reasoning at [76], albeit in the MHB/539\n\n context of an assumed repudiatory breach, was as follows: “[w]here the\n contractual right is triggered by breach, the innocent party can say that by\n terminating it treated the guilty party’s breach as discharging the contract,\n albeit it expressed itself as relying in that response on its express contractual\n right rather than the common law. Where however the contractual\n termination is indendent of any breach, the innocent party has not treated\n the contact as discharged by breach; if treating the contract as discharged\n by breach is a pre-requisite of the cause of action, the loss of bargain\n damages claim will fail”.\n\n\n16\n Similarly, the passage from McGregor on Damages (22nd Ed., 2025) at [9-152] relied upon MHB/974\n\nat AWC§36(4) is dealing with termination under a contractual power, “the trigger of which MHB/21\n\nmight be described as a breach or might not”.\n\n 31\n\n\n KDB/68\n 76.3. To similar effect, at [125]-[132] Andrew Baker J focused upon the need to MHB/551-\n 553\n show a causative link between the pre-termination (repudiatory) breach and\n the exercise of the right of termination.\n\n77. Third, as to The Kos, which concerned a 36-month time charterparty:\n\n 77.1. The focus of Lord Sumption’s remarks at [7] was the unavailability of loss MHB/304\n\n of bargain damages in respect of future hire instalments where owners\n exercise their bare right of withdrawal.\n\n 77.2. The key issue was whether owners could recover for the cost of the services\n provided between withdrawal and completion of cargo discharge. Charterers\n argued that the sole effective cause of the loss claimed was owners’ decision\n to withdraw, with which Andrew Smith J and the CA had agreed (see [14]). MHB/306\n\n\n 77.3. Lord Sumption JSC held at [13]-[15] that owners could recover under the MHB/305-\n 306\n clause 13 express indemnity because their loss was a consequence of\n charterers’ prior order to load the cargo. Thus, depending upon the proper\n construction of an express provision, losses suffered after contractual\n cancellation may be recoverable based on prior conduct of the defendant.\n The Kos stands against any bright-line rule of effective causation in relation\n to contractual termination.\n\n78. Fourth, as to AMEV-UDC Finance Ltd v Austin (1986) CLR 170, in which the MHB/867\n\n defendants guaranteed the lessee’s obligations under leases for 60 and 48 months, the\n majority effectively followed Financings to which the above points apply mutatis\n mutandis. By contrast, there is force in the dissent of Dawson J at pp.218-219 that MHB/915-\n 916\n “where a contractual power to terminate an agreement is exercised upon breach,\n damages for loss of the bargain should be recoverable, not only where the breach\n amounts to repudiation or is fundamental, but also where it is intended by the parties\n that such loss should be recoverable. And if it is the intention of the parties, it will not\n be correct to say that the loss was solely due to the act of the party terminating the\n agreement. It will be attributable also to the breach because it was contemplated by\n the parties as something for which damages should be recoverable: see [The\n Solholt]”.\n\n\n 32\n\n\n KDB/69\n79. Finally, in contrast to all the cases relied upon by Sellers, Stocznia Gydnia SA v MHB/769\n\n Gearbulk Holdings Ltd [2009] EWCA Civ 75, [2010] Q.B. 27 was a sale of goods\n case and is inconsistent with Sellers’ case that a contractual termination will always\n be the sole effective cause of any loss of bargain:\n\n 79.1. Moore-Bick LJ noted at [14] that it is “inherent in the nature of a legally MHB/777\n\n binding contract that each party expects to obtain the benefit of the bargain\n into which he has entered or, if the contract is not performed, a right to\n recover compensation in the form of damages for the loss of that benefit.”\n\n 79.2. He rejected at [35] the general proposition that “a person who exercises a MHB/786\n\n contractual right of termination which arises on the other party’s breach is\n inevitably prevented from treating the contract as discharged and recovering\n damages for the loss of his bargain. That must depend on the intention of the\n parties in each case.”\n\n 79.3. He concluded at [36]: “Whatever may have been said in other cases about MHB/786\n\n other contracts, I think it is clear that in this case the contract proceeds on\n the footing that if Gearbulk chose to exercise its right [of termination], the\n yard’s breach was to be viewed as the effective cause of the contract’s\n termination.”\n\n\n(B) The inapplicability of any such principle to sale of goods\n\n80. There are four related reasons why any principle of effective causation from\n Financings does not (or should not) apply to claims for non-delivery (or equivalent)\n under contracts for the sale of goods.\n\n81. First, as set out above, the ratio of Financings is that it is not possible to recover loss\n of bargain damages following the exercise of a bare cancellation clause because that\n would allow recovery for future breaches, viz. the loss of bargain in respect of those\n obligations falling due in the future is caused by the election to terminate. In the single\n transaction situation, where the relevant breach is not only historic but is also that\n which entitled buyers to cancel (i.e. non-delivery), that rationale does not apply. The\n single purpose of the contract is the sale of a particular good by a particular deadline,\n which sellers have already breached.\n\n 33\n\n\n KDB/70\n 82. Second, as a matter of authority, there is no support for applying Financings to the\n single transaction situation. Sellers have not identified any one-off case in which it\n has been applied. Phones4U, The Spar Capella, AMEV-UDC, and The Kos all\n concerned long-term contracts (see CAJ§118). Gearbulk points the other way MHB/104\n (CAJ§124). MHB/105 - 106\n\n\n 83. Third, even if Financings does establish a wider principle of causation (as suggested\n MHB/20 -\n in AWC§36), its application to the single transaction context is inconsistent with 21\n established principles of causation more generally:\n\n 83.1. Under general principles of causation, the chain of causation is only broken\n by a claimant’s conduct that obliterates the defendant’s wrongdoing pursuant\n to a fact-sensitive, practical inquiry: Borealis at [44]-[45], [47] (Gross LJ). MHB/218,\n 220\n\n 83.2. Where the whole purpose of a transaction is that sellers provides a good to\n buyers in return for the price, and they fail to do so within the stipulated\n delivery window, the prior breach remains (at least) an effective cause of the\n loss. Buyers’ cancellation in reliance upon the prior wrongdoing cannot be\n said to obliterate the prior wrongdoing.\n\n 83.3. The conclusion in Bunge v Nidera that post-breach events may also be taken\n into account in the assessment of loss under one-off sale contracts deals with\n MHB/36\n a different issue (cf. AWC§§123-125). It does not follow that any principle\n from Financings, linked as it is to future breaches, should apply to prior\n breaches of a one-off sale contract.\n\n 84. Fourth, in light of the absence of existing authority applying Financings to a single\n transaction context, the question is whether any principle based thereon should be\n extended. Such an extension is undesirable for the reasons set out above, as reinforced\n by the criticism of the Financings principle: 17\n\n\nMHB/940 - 942 17 See also Carter’s Breach of Contract (3rd Ed, 2024) at §13-07 and Chitty on Contracts (36th MHB/953\n\n Ed, 2026) at §26-063, set out at CAJ§§120-121. The reference in CAJ§121 is to an older MHB/35 - 36\n\n version of Chitty, but the text remains the same.\n\n 34\n\n\n KDB/71\n84.1. In Keneric Tractor Sales Ltd v Langille [1987] 2 SCR 440, the Supreme MHB/918 -\n 937\n Court of Canada refused to follow Financings. At [25], Wilson J (delivering MHB/932\n\n the Judgment of the Court) stated:\n\n “damages should be assessed in the same way in both cases.\n Repudiation may be triggered by either the inability or the unwillingness\n of a party to perform his contractual obligations. The same is true of a\n breach of contract that gives rise to a right to terminate; it may be the\n result of inability or unwillingness to perform. The breach and the\n repudiation are merely subdivisions within a general category of\n conduct, i.e., conduct which gives the innocent party the right to treat\n the contract as terminated. Thus, there is no conceptual difference\n between a breach of contract that gives the innocent party the right to\n terminate and the repudiation of a contract so as to justify a different\n assessment of damages when termination flows from the former rather\n than the latter. General contract principles should be applied in both\n instances.”\n\n84.2. John Randall in ‘Express Termination Clauses in Contracts’ [2014] CLJ 113 MHB/1143\n - 1144\n at pp.136-137 explains that the Canadian position has greater merit than the\n English position, because it is “undesirable and unattractive that important\n commercial rights be made to depend on artificial and lawyerly distinctions\n between the event giving rise to the right to terminate and the consequent\n termination itself...”.\n\n84.3. No rigid division can be maintained between cases in which a claimant has a\n right to terminate arising by operation of the common law and cases where\n the right arises by virtue of the contract alone; had the defendant not\n breached, the right to terminate would not have arisen, the claimant could not\n validly have terminated and would not have lost the benefit of future\n performance; if the innocent party is to be put in the position in which it\n would have been had the contract been performed, damages for loss of\n bargain should be recoverable; no bright-line can be drawn based on the\n source of the right to terminate or on principles of causation: Brian Opeskin\n in ‘Damages for breach of contract terminated under express terms’ (1990)\n 106 LQR 293, at pp.293, 309, 325-326. MHB/1037, 1053, 1069 - 1070\n\n\n 35\n\n\n KDB/72\n(C) The significance of the inapplicability of Financings\n\n85. If Financings does not apply to claims for non-delivery (or equivalent) under SOGA\n 1979, then Sellers’ argument that clause 14 must replicate the position at common law\n falls away. There is not (or should not be) any common law restriction on recovery of\n loss of bargain damages following contractual termination based on failure to deliver\n under a sale of goods contract.\n\n\nVI. Conclusion\n\n86. For the reasons set out above, Sellers’ appeal should be dismissed.\n\n\n David Lewis KC\n\n Eliza Bond\n\n Twenty Essex\n\n 21 April 2026\n\n Counsel for the Respondents\n\n\n 36\n\n\n KDB/73", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is appeal on a question of English law from an arbitral award.", "governingLaw": "english_law", "amount": 1, "currency": "USD" }, "reference": { "case": "Great Asia Maritime Ltd v Orion Shipping and Trading LLC", "citation": "[2026] UKSC 23", "court": "Supreme Court of the United Kingdom", "source": "https://supremecourt.uk/uploads/uksc_2025_0178_judgment_0348b8fee4.pdf" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The decisive question is the proper construction of clause 14(B) of the Norwegian Saleform 2012. It is common ground that a contract may provide for loss-of-bargain damages notwithstanding the absence of repudiatory breach, and that whether it does so is a question of construction. The question is thus not whether the common law would award loss-of-bargain damages absent repudiatory breach—everyone agrees it would not—but whether clause 14(B) confers a contractual right that goes beyond the common law.\n\nClause 14(B) is not a bare termination clause. It provides that where sellers fail to give Notice of Readiness or to be ready to deliver by the cancelling date and that failure is due to proven negligence, 'they shall make due compensation to the Buyers for their loss and for all expenses... whether or not the Buyers cancel this Agreement.' Three features of this language are decisive. First, the phrase 'their loss' is unqualified. On its natural and ordinary meaning, 'loss' encompasses expectation loss—the loss of the bargain—particularly where buyers have exercised their right to cancel and will never receive the vessel. Second, the word 'compensation' invokes the compensatory principle, which in the context of a sale of goods contract with an available market means the difference between the contract price and the market price—the standard measure under section 51(3) of the Sale of Goods Act 1979. Third, the concluding words 'whether or not the Buyers cancel' confirm that the compensation right arises independently of the cancellation decision, but they do not cap the scope of recoverable loss at the non-cancellation level. When buyers cancel, the nature and extent of their loss is different and greater: the bargain is in fact lost.\n\nThe claimant's primary argument is that the Financings v Baldock line of authority establishes a bright-line rule: where a contractual right to terminate is exercised following a non-repudiatory breach, the effective cause of the loss of bargain is the terminating party's election, not the breach, and therefore loss-of-bargain damages are unavailable. This principle, the claimant contends, applies regardless of whether the contract contains an express compensation provision, unless the provision uses clear words to expand beyond the common law (the so-called 'Novasen presumption'). This argument fails for two independent reasons. First, the Financings line addresses the question of what damages flow from the exercise of a bare contractual right of termination. The critical distinction is between a clause that merely permits termination and a clause that, like clause 14(B), expressly creates a substantive right to compensation for 'their loss and for all expenses.' Where the contract itself defines the recoverable loss in unqualified terms, the causation analysis that underlies Financings—which asks whether the breach or the election caused the loss of bargain—is displaced by the parties' express allocation of risk. The parties have agreed that negligent sellers shall make due compensation for the buyers' loss; that contractual allocation is the effective cause as a matter of construction. Second, the Financings principle, properly understood, was concerned with future obligations that had not yet fallen due—the hire-purchase instalments for the remaining term of a two-year contract. Here, by contrast, the sellers' obligation to deliver by the cancelling date had already fallen due and was already breached. The case law relied on by the claimant—Financings, The Kos, Phones 4U, AMEV-UDC—concerned long-term relational contracts (hire-purchase, charterparty, trading agreement). The Court of Appeal below doubted whether the principle applies to a one-off sale of goods contract at all, and I agree that there is force in that doubt. But I need not rest on that alternative ground, because the express compensation language of clause 14(B) is sufficient on its own.\n\nThe claimant's reliance on a 'Novasen presumption' is misplaced. The Supreme Court in Bunge v Nidera addressed damages clauses that produce a result different from the common law and held that the relevant presumption is against arbitrary operation, not against expansion of common law rights. There is nothing arbitrary about requiring a negligent seller who has failed to deliver the vessel to compensate the buyer for the loss of the bargain in a rising market; that is the straightforward application of the compensatory principle. Moreover, the Gilbert-Ash presumption operates in the opposite direction: the parties are presumed not to have abandoned common law remedies, and clause 14(B) does not abandon but supplements them. The claimant also argues that if loss-of-bargain damages are sometimes unavailable even with a repudiatory breach (per Phones 4U, where termination is exercised solely under a non-breach contractual right), the court should be slow to construe clause 14(B) as allowing them without one. But that argument conflates two different questions. Phones 4U concerned whether the common law cause of action for loss-of-bargain damages accrued where the innocent party terminated solely under a non-breach clause. Clause 14(B) creates a contractual cause of action; it does not depend on the common law cause of action accruing. The claimant's own alternative construction—whereby clause 14(B) might provide a 'safety net' for loss-of-bargain recovery where there is an unaccepted repudiatory breach—concedes that the clause can expand beyond the common law; having made that concession, the claimant cannot explain why the wide, unqualified language of 'due compensation for their loss' should be limited to the narrow case of unaccepted repudiation rather than the straightforward case of cancellation following proven negligence.\n\nThe commercial consequences reinforce this construction. On the respondent's reading, negligent sellers who fail to deliver in a rising market bear the market-movement loss; innocent buyers who cancel recover the difference between contract and market price. On the claimant's reading, negligent sellers retain a more valuable vessel and buyers are left out of pocket despite the sellers' fault. The respondent's construction is commercially sensible and balanced; the claimant's produces a perverse incentive for sellers to delay in a rising market. The history of the form—particularly the 1987 introduction of the 'proven negligence' threshold to remove strict liability following The Al Tawfiq, not to strip buyers of loss-of-bargain recovery—supports the respondent's position. The 2025 amendment's explanatory notes confirming that buyers are entitled to loss-of-bargain damages, while not admissible as an aid to construction of the 2012 form, are consistent with the construction I adopt.\n\nThe claimant's reliance on The Solholt is double-edged. The 1966 form's clause referred to 'loss caused to the Buyers by non-fulfilment of this contract,' which on its face encompassed loss of bargain. The 2012 form's language—'due compensation for their loss and for all expenses'—is wider, not narrower, because it removes the qualifying phrase 'by non-fulfilment of this contract.' The claimant argues that the 1987 amendments shifted the focus from non-delivery to late delivery, but this ignores that clause 14(A) remains a cancellation clause and clause 14(B) expressly applies 'whether or not the Buyers cancel.' Where buyers cancel, the contract is wholly unperformed; the loss is not merely of late delivery but of the entire bargain.", "allocation": null, "citations": [ { "title": "Phones 4u Ltd v EE Ltd [2018] EWHC 49 (Comm)", "url": "https://www.bailii.org/ew/cases/EWHC/Comm/2018/49.html", "proposition": "In Phones 4U Ltd v EE Ltd, Andrew Baker J held that where a contractual right to terminate is independent of any breach and the termination letter communicates only the exercise of that contractual right, a common law claim for loss-of-bargain damages fails because the termination was not caused by the repudiatory breach. However, the principle is grounded in causation and election: the innocent party must have terminated in exercise of the common law right arising upon repudiation. The case does not address, and does not displace, an express contractual compensation provision that uses wide, unqualified language to define recoverable loss independently of the common law cause of action." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-065", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nI. INTRODUCTION AND SUMMARY\n\n(a) The issue\n\n1. The issue in this appeal is whether, for a part-time worker to establish that he was treated\n less favourably than a full-time worker contrary to regulation 5 of the Part Time Workers\n (Prevention of Less Favourable Treatment) Regulations 2000 (“PTWR”), he must show\n that his part-time status was the sole reason for his less favourable treatment.\n\n2. The Appellant’s case is that that is not part of the legal test. Regulation 5 of the PTWR\n applies if a worker’s less favourable treatment is (a) “on the ground that” he is a part-time\n worker, and (b) not justified on objective grounds. The phrase “on the ground that” is a\n well-known phrase in discrimination law, and it encompasses situations where a worker’s\n protected status is an effective cause, albeit not the sole cause, of the less favourable\n treatment. Where there are also other causes, those may be relevant to objective\n justification. Or, they may be relevant to the amount of compensation, which under PTWR\n\n\n 1\n regulation 8 is to be awarded on the basis of what is just and equitable. The existence of\n other causal factors does not however mean that there is no less favourable treatment on\n the ground of part-time status in the first place.\n\n3. The argument against the Appellant rests principally on the contention that, whilst the\n PTWR do not themselves refer to the “sole” reason for treatment, they ought to be read\n consistently with the Framework Agreement on part-time work, which Member States were\n required to give effect to by Directive 97/81/EC of 15 December 1997 (the “Part-time\n Work Directive”). The Framework Agreement says at clause 4 that part-time workers shall\n not be treated less favourably than full-time workers “solely because they work part time\n unless different treatment is justified on objective grounds”.\n\n(b) How the issue arises in this case\n\n4. The Appellant worked as a driver for the Respondent. He was required to pay a ‘circuit\n fee’ of £148 per week to access the Respondent’s booking dispatch system. The fee was\n set at the same level for all drivers, irrespective of the number of hours worked. The\n Appellant, who was a part-time worker, consequently paid a higher fee per hour to drive\n than a comparable full-time worker. Although the Employment Tribunal held that there\n was no less favourable treatment (on the basis that treating all workers the same is not\n discriminatory), that finding was overturned by the Employment Appeal Tribunal whose\n decision on that issue has not been appealed. It is therefore common ground that, applying\n the correct pro rata comparison, the higher per hour fee paid by the Appellant compared\n to his full-time comparator constituted less favourable treatment.\n\n5. The remaining question is whether the less favourable treatment was “on the ground that\n [the Appellant was] a part-time worker” within PTWR regulation 5. The Appellant says\n that it is inherent in a provision which treats workers more or less favourably depending on\n the number of hours they work that it will treat a part-time worker less favourably than a\n full-time comparator. The less favourable treatment is therefore on the ground that he is a\n part-time worker.\n\n6. All three courts below considered themselves bound to apply the “sole ground” test. One\n difficulty with that test is that it is of uncertain scope. Thus:\n\n 6.1. The Employment Tribunal held (in the alternative to its erroneous primary finding\n that there was no less favourable treatment) that the less favourable treatment was\n\n 2\n not solely because the Appellant worked part-time, but rather because the flat fee\n was the way the industry operated and was how the Respondent made money (at\n [63]). The Appellant’s position on those other causal factors is that, if they are\n relevant at all, it would be as potential objective justifications for the less favourable\n treatment, in respect of which the Respondent would bear the burden. However,\n they were not put forward as objective justifications, and on the contrary the\n Respondent stated that it was not advancing an objective justification.\n\n 6.2. The Employment Appeal Tribunal adopted a different approach. They said, at [88],\n that although it might be said that the Appellant was treated less favourably because\n he worked part-time, the same could be said of many drivers who worked full-time\n (meaning, in this case, above 43.17 hours per week) but less than the chosen\n comparator (who worked over 90 hours per week). The Appellant’s position on that\n topic is that it is correct to say that his part-time status is only a partial explanation\n of the less favourable treatment, and that if he had instead worked at the lower end\n of the full-time range then it is true to say that he still would have been treated less\n favourably (but not as less favourably) than his chosen comparator. The Appellant\n has previously conceded that that is a matter which may be taken into account by\n the Tribunal when determining the just and equitable compensation.\n\n 6.3. The Court of Appeal did not identify the other grounds for the less favourable\n treatment (apart from part-time status).\n\n7. One unusual feature of this case is that both the EAT and the majority in the Court of\n Appeal considered the Appellant’s legal submissions to be correct. However, they\n considered themselves to be under an obligation to follow a contrary decision of the Court\n of Session, on the basis of a Court of Appeal judgment on precedent which has itself since\n been overturned by the Supreme Court (R. (on the application of Jwanczuk) v Secretary of\n State for Work and Pensions [2023] EWCA Civ 1156; [2024] KB 275; Supreme Court\n decision at [2025] UKSC 42; [2025] 3 WLR 741). As such, the Court of Appeal granted\n permission to appeal to this Court so that the issue could be decided on a UK-wide basis.\n\n\n 3\nII. LEGAL FRAMEWORK\n\n(a) EU legislation and associated international agreements\n\n8. Given the heavy emphasis which the case against the Appellant places on the Framework\n Agreement on part-time work, it is necessary to trace the development of the protections\n for part-time workers in the European and wider international context, with a particular\n focus on the debates surrounding the word “solely”.\n\n9. Equality law in the European Union initially focused on gender equality. Article 157 of the\n Treaty on the Functioning of the European Union (“TFEU”), originally introduced in\n 1957, 1 established the principle that men and women should receive equal pay for equal\n work. In 1974, following the first enlargement of the (then) European Communities, 2 a\n Social Action Programme was launched in which the Council of the European\n Communities expressed a commitment to the “undertaking of action to achieve equality\n between men and women as regards access to employment and vocational training and\n advancement and as regards working conditions, including pay”. 3 Three directives on sex\n equality were subsequently adopted, covering equal pay for equal work; 4 equality within\n the world of work, including as regards access and working conditions; 5 and equality as\n regards statutory social security schemes. 6 Each of those instruments prohibited\n discrimination “on grounds” 7 or “on ground” 8 of sex, in some instances expressly\n specifying that this included discrimination arising “directly or indirectly”. 9 Additional\n directives, adopted in the 1980s, similarly recorded that “the principle of equal treatment”\n requires the absence of all “discrimination on the basis of sex [or “on grounds of sex”],\n\n\n1\n As Article 119 of the Treaty establishing the European Economic Community; subsequently Article 141 of\n the Treaty establishing the European Community.\n2\n The United Kingdom was among the countries which acceded to the European Communities in 1973.\n3\n Council Resolution of 21 January 1974 concerning a social action programme, OJ C 13, 12.2.1974, p. 1.\n4\n Council Directive 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States\n relating to the application of the principle of equal pay for men and women.\n5\n Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment\n for men and women as regards access to employment, vocational training and promotion, and working\n conditions.\n6\n Council Directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of\n equal treatment for men and women in matters of social security.\n7\n Article 1, Directive 75/117/EEC; Articles 2(1), 3(1), and 5(1), Directive 76/207/EEC.\n8\n Article 4(1), Directive 79/7/EEC.\n9\n Article 2(1), Directive 76/207/EEC; Article 4(1), Directive 79/7/EEC.\n\n 4\n either directly or indirectly”. 10 These and subsequent equality directives were adopted\n under Articles 115 and/or 352 TFEU, 11 which allow for the promulgation of directives\n following unanimous support within the Council.\n\n10. The European Communities also sought to regulate part-time work in the 1980s. These\n efforts commenced with a proposal for a directive submitted by the Commission to the\n Council in January 1982. 12 The recitals to the proposed directive recorded that the measure\n was “designed to complement in the field of part-time work existing legislation on the\n realization of equal treatment for men and women”. Article 2 provided that: “Part-time\n workers shall not be discriminated against as compared with full-time workers in respect\n of working conditions, rules governing dismissal, entitlement to participate actively or\n passively in bodies representing employees and access to vocational training, promotion,\n social facilities and medical care.” That proposal was not adopted by the Council.\n\n11. An amended version of the proposed directive was submitted in January 1983. 13 The\n proposed Article 2 was replaced with text (Article 2(1)) which stated that: “Part-time\n workers shall receive the same treatment as full-time workers in the same situation, except\n where the difference in hours of work itself objectively justifies differences in treatment”.\n This amended proposal thus provided for a possibility of justification. Article 2(2) of the\n proposed directive would also have provided that part-time status could not in any\n circumstances justify differences in treatment as regards a wide range of matters, including\n “working conditions”, dismissal, vocational training, and access to social facilities. This\n proposal also failed to gain unanimous support from the members of the Council.\n\n12. In 1990 another attempt was made to introduce a directive covering part-time work (as well\n as fixed-term work). 14 This time, the proposal (at Article 3) was that “Employees covered\n by this Directive shall be entitled to enjoy the same treatment as workers employed in full-\n time employment of an indefinite duration as regards benefits in cash and in kind granted\n under social assistance schemes or under non-contributory social security schemes”. The\n\n\n10\n Council Directive 86/378/EEC of 24 July 1986 on the implementation of the principle of equal treatment for\n men and women in occupational social security schemes, Article 5(1); Council Directive 86/613/EEC of 11\n December 1986 on the application of the principle of equal treatment between men and women engaged in\n an activity, including agriculture, in a self-employed capacity, and on the protection of self-employed women\n during pregnancy and motherhood, Article 3.\n11\n Formerly Articles 94 and 308 of the Treaty establishing the European Community.\n12\n OJ C 62/7 (12 March 1982).\n13\n OJ C 18/5 (22 January 1983).\n14\n COM(90) 228 final (8 September 1990).\n\n 5\n scope of the proposed protection was therefore narrowed. The objective justification\n defence was also removed. Again, the proposal was not adopted by the Council.\n\n13. Following those various unsuccessful attempts at the European level, there were\n discussions at a wider international level resulting in the Part Time Work Convention 1994\n (ILO Convention No. 175) and the accompanying ILO Recommendation 182. 15 Article 5\n of ILO Convention No. 175 provides that: “Measures appropriate to national law and\n practice shall be taken to ensure that part-time workers do not, solely because they work\n part time, receive a basic wage which, calculated proportionately on an hourly,\n performance-related, or piece-rate basis, is lower than the basic wage of comparable full-\n time workers, calculated according to the same method”. The United Kingdom is not a\n signatory to the said Convention, but the debates concerning the word “solely” in that\n context are relevant to the meaning of the text which later comes to be included in the\n Framework Agreement.\n\n14. The travaux préparatoires for the ILO Convention No. 175 and Recommendation 182\n demonstrate that the inclusion of the word “solely” was intended to clarify that where\n differences in pay reflected genuine differences in the work done, that would not\n contravene the Convention. That was an important point given that the Convention does\n not otherwise contain any provision allowing for less favourable treatment to be justified.\n In particular:\n\n 14.1. At the first discussion in relation to the proposed Convention (the ILO’s 80th Session,\n in 1993), the Workers’ members had submitted text stating that “Measures should be\n taken to ensure that part-time workers receive remuneration at least equivalent to\n that of full-time workers performing the same work or work of equal value, in\n particular with regard to unit wage rates.” 16 Several European Government\n members proposed that the text instead state that: “Measures appropriate to national\n custom and practice should be taken to ensure that part-time workers do not receive\n lower pay than comparable full-time workers performing the same work or\n substantially the same work, solely because they work part-time”. 17 The Government\n member of the Netherlands explained that the addition of the underlined words was\n\n\n15\n ILO Convention No. 175 and Recommendation 182.\n16\n Report of the Committee on Part-Time Work, Provisional Record 27, International Labour Conference, 80th\n Session (1993), ¶136.\n17\n ibid, ¶137, emphasis added.\n\n 6\n intended to “cover situations, such as the recognition of seniority rights, in which\n there were good grounds for wage differentials, while at the same time eliminating\n differentials which were based solely on the hours worked”. 18 Following extensive\n debate on this and other amendments, an amended version of the Government\n members’ proposed text, which retained the words “solely because”, was agreed\n upon at that first stage of discussions. 19\n\n 14.2. The text adopted at the first discussion was subsequently revised for clarity by the\n ILO Office, although no change was proposed to the “solely because” wording. 20\n Governments and organisations of member States were invited to submit\n observations on the proposed revised text. The only observation on the “solely\n because” language came from Canada, which reiterated the position that had been\n reached at the first discussion: “It should also be made clear that the phrase ‘solely\n because they work part time’ should be interpreted so as not to preclude wage\n differentials based on seniority rights, merit systems or shift premiums”. 21\n\n 14.3. At the second discussion (the ILO’s 81st Session, in 1994), the Workers’ members\n submitted an amendment to replace the entire text of Article 5, which among other\n things removed the word “solely”. 22 In the Report of the Committee on Part-Time\n Work (¶68), the sequence of events following that proposal is recorded as follows\n (emphasis added):\n\n “The Employers' Vice-Chairperson also referred to the previous discussions in the\n Committee on this point and commended the Workers' members on their efforts to\n produce a more easily understandable text. The amendment would be acceptable to\n the Employers' members if it could be subamended by the inclusion of the word\n 'solely' before the words 'because they work' in the second line. This would add\n certainty to the text and express the possibility that there might be valid reasons for\n differential treatment. [...] The Government member of Canada could support the text\n as subamended, provided it was clearly understood that the basic wage did not\n\n18\n ibid.\n19\n ibid, ¶¶145-146.\n20\n Report IV(1), International Labour Conference, 81st Session, 1994, Part-time work, Fourth item on the\n agenda (Geneva, ILO, 1993), p. 3.\n21\n Report IV(2A), International Labour Conference, 81st Session, 1994, Part-time work: Replies received and\n commentaries, Fourth item on the agenda (Geneva, ILO, 1994) (\"Report IV(2A)\"), Observations on Article\n 5, p. 31.\n22\n Report of the Committee on Part-Time Work, Provisional Record 23, International Labour Conference, 81st\n Session (1994), ¶67. The Workers’ members’ proposed text read: “Measures appropriate to national law and\n practice shall be taken to ensure that part-time workers do not, because they work part-time, receive a basic\n wage which, calculated proportionately on an hourly, performance-related, or piece-rate basis, is lower than\n the basic wage of comparable full-time workers calculated on an hourly, performance-related or piece-rate\n basis.”\n\n 7\n include seniority bonuses, merit systems or shift premiums. The Workers' members\n agreed to accept the subamendment offered by the Employers' members to insert the\n word ‘solely’.” 23\n\n 14.4. On that basis, the text as revised was accepted by various Government members and\n ultimately adopted. 24 In the plenary discussion relating to the Committee’s report,\n the Employers’ Vice-Chairperson explained that (emphasis added): 25\n\n “Article 5 of the proposed Convention states in essence that, subject to\n proportionality, the basic wage of a part-time worker shall not be lower than the\n basic wage of a comparable full-time worker if the sole reason for the difference is\n the fact that the worker is a part-time worker. This approach which the Committee\n took allows the differences to exist if there is a reason based on other factors such as\n the way in which the work is carried out, and the reference to performance-related\n pay in the text is important in this respect.”\n\n15. In the ILO Convention, the words “solely because” thus carried the weight of allowing for\n wage differences which are justified for other reasons.\n\n16. At the European level, the Maastricht version of the Treaty on European Union (“TEU”)\n was signed in 1993. The Treaty contained a Social Protocol (the “Social Chapter”), and\n an annexed Agreement on Social Policy. The Agreement introduced a mandatory\n consultation process to draw the social partners more fully into European policymaking,\n and also provided by Article 4 that that “management and labour” could enter into\n “dialogue... at Community level”, which “may lead to contractual relations, including\n agreements” that could in turn be “implemented... at the joint request of the signatory\n parties, by a Council decision on a proposal from the Commission,” in which case the\n Council would act by qualified majority. 26 The Social Protocol therefore enabled\n instruments to be adopted even if unanimity could not be reached within the Council. The\n United Kingdom did not sign on to the Social Protocol and Agreement until 1997,\n following a change in government. 27\n\n17. The directives adopted on the basis of the Protocol included Directive 97/81/EC of 15\n December 1997 concerning the Framework Agreement on part-time work (the “Part-time\n\n23\n ibid, ¶¶67-68.\n24\n ibid, ¶70.\n25\n Provisional Record 27, International Labour Conference, 81st Session, 1994 (Second discussion), speech of\n the Employers’ Vice-Chairperson (Mr Noakes), p. 27/17.\n26\n Article 4, Agreement on social policy annexed to the Protocol (No 14) on social policy, annexed to the Treaty\n establishing the European Community.\n27\n See the Treaty of Amsterdam amending the Treaty on European Union, the Treaties establishing the European\n Communities and certain related acts, Articles 117-119.\n\n 8\n Work Directive”) (which was extended to the United Kingdom by Directive 98/23/EC)\n and Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-\n term work (the “Fixed-term Work Directive”). 28 Both of these directives implemented\n framework agreements which had been concluded between the social partners in\n accordance with the Protocol.\n\n18. Article 1 of the Part-time Work Directive accordingly provides that “[t]he purpose of this\n Directive is to implement the Framework Agreement on part-time work concluded on 6\n June 1997 between the general cross-industry organizations (UNICE, CEEP and the\n ETUC) annexed hereto.” The recitals to the Directive include the following:\n\n “(11) Whereas the signatory parties wished to conclude a framework agreement on part-\n time work setting out the general principles and minimum requirements for part-time\n working; whereas they have demonstrated their desire to establish a general framework\n for eliminating discrimination against part-time workers and to contribute to developing\n the potential for part-time work on a basis which is acceptable for employers and workers\n alike [...]\n\n (16) Whereas, with regard to terms used in the Framework Agreement which are not\n specifically defined therein, this Directive leaves Member States free to define those terms\n in accordance with national law and practice, as is the case for other social policy\n Directives using similar terms, providing that the said definitions respect the content of the\n Framework Agreement [...]”\n\n19. The Framework Agreement annexed to the Part-time Work Directive contains the\n following provisions:\n\n “Clause 1: Purpose\n\n The purpose of this Framework Agreement is:\n\n (a) to provide for the removal of discrimination against part-time workers and to improve\n the quality of part-time work;\n\n (b) to facilitate the development of part-time work on a voluntary basis and to contribute\n to the flexible organization of working time in a manner which takes into account the needs\n of employers and workers.\n\n [...]\n\n Clause 3: Definitions\n\n\n28\n The other two directives adopted on the basis of the Protocol were Directive 96/34/EC of 3 June 1996 on the\n framework agreement on parental leave, and Directive 97/80/EC of 15 December 1997 on the burden of proof\n in cases of discrimination based on sex.\n\n 9\n For the purpose of this agreement:\n\n 1. The term 'part-time worker` refers to an employee whose normal hours of work,\n calculated on a weekly basis or on average over a period of employment of up to one year,\n are less than the normal hours of work of a comparable full-time worker.\n\n 2. The term 'comparable full-time worker` means a full-time worker in the same\n establishment having the same type of employment contract or relationship, who is\n engaged in the same or a similar work/occupation, due regard being given to other\n considerations which may include seniority and qualification/skills.\n\n Where there is no comparable full-time worker in the same establishment, the comparison\n shall be made by reference to the applicable collective agreement or, where there is no\n applicable collective agreement, in accordance with national law, collective agreements\n or practice.\n\n Clause 4: Principle of non-discrimination\n\n 1. In respect of employment conditions, part-time workers shall not be treated in a less\n favourable manner than comparable full-time workers solely because they work part time\n unless different treatment is justified on objective grounds.\n\n 2. Where appropriate, the principle of pro rata temporis shall apply. [...]”\n\n20. The language of clause 4 of the Framework Directive does not precisely correspond to the\n language of Article 5 of ILO Convention No. 175. However, unlike the previous proposals\n at a European level, clause 4 of the Framework Agreement requires that the less favourable\n treatment be “solely because they work part time”, and that language and the reasoning for\n it does reflect both the language and (so far as can be ascertained from the available\n preparatory materials) the rationale of Article 5 of the ILO Convention. In particular:\n\n 20.1. The European Commission published a background paper on 26 September 1995,\n “Flexibility in working time and security for workers: Background paper for first-\n stage consultations with the social partners”. 29 The paper emphasised the growing\n importance of part-time work and of the need to make it attractive to workers. It\n noted on page 4 that the ILO Convention and Recommendation had been adopted\n in June 1994. It sought views from the social partners on the desirability of\n regulating part-time work.\n\n 20.2. The European Commission published a further background paper on 19 April 1996,\n “Second phase of consultations with social partners on flexibility in working time\n\n29\n European Commission background paper: Flexibility in working time and security for workers: Background\n paper for first-stage consultations with the social partners\n\n\n 10\n and security for workers.” 30 That document reported that, at the first stage of\n consultation, there was widespread support for the basic guiding principle of non-\n discrimination. 31 It identified three ‘sensitive issues’ one of which was, “the limits\n and conditions (e.g. proportionality) for applying the principle of equal\n treatment”. 32 It expressed the Commission’s view that, “the basic principle should\n be that employees in new types of flexible work should not be discriminated against\n and should therefore receive treatment which is comparable to that given to full-\n time employees with a permanent contract” and that, “[t]his means that different\n treatment cannot be justified solely on the grounds of having a flexible working\n pattern.” 33 The Commission sought views on how the issue should be taken\n forward, including whether it ought to be done under Article 4 of the Agreement\n on Social Policy.\n\n 20.3. The history thereafter can be taken from Recitals 8 and 9 of the Directive on Part-\n Time Work, which record that employer and workers’ organisations approached\n the Commission with a request that they be able to follow the procedure provided\n for under Article 4 of the Agreement on Social Policy, such discussions resulting\n in the Framework Agreement on 6 June 1997.\n\n 20.4. Many parts of the Framework Agreement are clearly modelled on ILO Convention\n No. 175 and the accompanying ILO Recommendation 182. 34 That is unsurprising,\n in circumstances where representatives of workers, employers and governments\n had only recently agreed on that language.\n\n21. The Appellant submits that in the circumstances it is clear that the words “solely because\n they work part time” in the Framework Agreement are intended, as with the same words\n in the ILO Convention, to make clear that differential treatment attributable to some other\n factor (e.g. seniority or performance) should not be considered as discrimination.\n\n\n30\n Counsel’s translation. The document title is: “Deuxieme phase de consultation des partenaires sociaux sur\n la flexibility du temps de travail et la securite des travailleurs.”\n31\n Paragraph 4, p.2.\n32\n Paragraph 7, p.2.\n33\n Paragraph 11, p.5.\n34\n As noted by Mark Jeffery, ‘Not Really Going to Work? Of the Directive on Part-time Work, ‘Atypical\n Work’ and Attempts to Regulate It’ (1998) 27(3) ILJ 193, 200. Compare, for example clause 3 of the\n Framework and Article 1 of the Convention; clause 5(2) of the Framework and clause 19 of the\n Recommendation; clause 5(3)(1)-(c) of the Framework and clause 18 of the Convention.\n\n 11\n(b) Domestic legislation\n\n22. After the Part-time Work Directive was adopted, it would have been possible for the UK\n to implement it by regulations under section 2(2) of the European Communities Act 1972.\n However, the PTWR were instead introduced in reliance on section 19 of the Employment\n Relations Act 1999, which provides that the Secretary of State “shall make regulations for\n the purpose of securing that persons in part-time employment are treated, for such\n purposes and to such extent as the regulations may specify, no less favourably than persons\n in full-time employment”. This language was intentionally broad, as the Explanatory Notes\n to the Act explain at ¶¶215-217:\n\n “[...] This provision gives the Secretary of State the powers to ensure that all aspects of the\n Directive and the Framework Agreement are fully implemented, together with related\n matters.\n\n This power is necessary because Directives which implement Framework Agreements\n cannot, by the terms of the Agreement on Social Policy (now incorporated into the Treaty\n of Amsterdam), cover pay. However, in relation to part-timers, the Government believes\n pay should be covered at the same time as other employment conditions. The powers under\n the European Communities Act 1972 which are usually used to implement EU Directives\n are not sufficiently wide to go beyond the scope of the Directive in this way, so the section\n provides powers to do this.\n\n The regulations will primarily address less favourable treatment in non-statutory terms\n and conditions, as statutory employment rights in the UK do not treat part timers less\n favourably than their full-time equivalents. The powers are widely drawn and the\n Government intends to consult fully on how they should be used, by discussing with\n interested parties and publishing draft regulations for comment. Section 42 provides that\n the regulations will be subject to the affirmative resolution procedure.”\n\n23. In the Court of Appeal, the Respondent submitted that section 19 of the Act had been\n framed in the way that it was only in order to “give the legislator power to go further than\n the Directive in respect of pay, because pay was not covered by the Directive” ([2025]\n EWCA Civ 658; [2025] ICR 1404, [57]). That submission is incompatible with the\n Government’s express intention to consult on how the “widely drawn powers [...] should\n be used”, and the fact that it did indeed carry out such consultation (which directly informed\n the scope of the PTWR, and even resulted in their being delayed). 35\n\n24. Regulation 5 PWTR provides as follows:\n\n\n35\n Julia Louri, Part-time Work: Research Paper 00/50 (House of Commons, 15 May 2000), pp. 13-26; see in\n particular p. 25 identifying the changes made following the consultation.\n\n 12\n “Less favourable treatment of part-time workers\n\n (1) A part-time worker has the right not to be treated by his employer less favourably than\n the employer treats a comparable full-time worker–\n\n (a) as regards the terms of his contract; or\n\n (b) by being subjected to any other detriment by any act, or deliberate failure to act, of his\n employer.\n\n (2) The right conferred by paragraph (1) applies only if–\n\n (a) the treatment is on the ground that the worker is a part-time worker, and\n\n (b) the treatment is not justified on objective grounds.\n\n (3) In determining whether a part-time worker has been treated less favourably than a\n comparable full-time worker the pro rata principle shall be applied unless it is\n inappropriate.\n\n (4) A part-time worker paid at a lower rate for overtime worked by him in a period than a\n comparable full-time worker is or would be paid for overtime worked by him in the same\n period shall not, for that reason, be regarded as treated less favourably than the\n comparable full-time worker where, or to the extent that, the total number of hours worked\n by the part-time worker in the period, including overtime, does not exceed the number of\n hours the comparable full-time worker is required to work in the period, disregarding\n absences from work and overtime.”\n\n25. The “pro rata principle” referred to in regulation 5(3) above is explained in regulation 1(2)\n as meaning that “where a comparable full-time worker receives or is entitled to receive pay\n or any other benefit, a part-time worker is to receive or be entitled to receive not less than\n the proportion of that pay or other benefit that the number of his weekly hours bears to the\n number of weekly hours of the comparable full-time worker [...]”.\n\n26. If an Employment Tribunal finds that a complaint under the PTWR is well-founded, it may,\n if it considers it just and equitable, order the employer to pay compensation to the claimant\n (regulation 8(7)). Regulation 8(9) then provides that:\n\n “[...] the amount of compensation awarded shall be such as the tribunal considers just and\n equitable in all the circumstances, having regard to –\n\n [...]\n\n (b) any loss which is attributable to the infringement having regard, in the case of an\n infringement of the right conferred by regulation 5, to the pro rata principle except where\n it is inappropriate to do so.”\n\n\n 13\n(c) Causation in direct discrimination\n\n27. The language “on the ground that”, used at regulation 5(2)(a), reflects the language used\n in relation to direct discrimination under EU and UK equality law. Direct discrimination,\n under EU and UK equality law, occurs where a decision is made on grounds of, or because\n of, a protected characteristic. It has long been established that such discrimination may\n occur despite the purported discriminator’s ability to point to benign reasons for the\n impugned differential treatment. The treatment will be on grounds of a protected\n characteristic if the characteristic consciously or subconsciously influenced the treatment,\n or if the basis for the treatment was inherently tied to the protected characteristic (R. (on\n the application of E) v JFS Governing Body [2009] UKSC 15; [2010] 2 AC 728, [78]).\n\n28. The possibility that treatment may be inherently tied to a protected characteristic has been\n clear since the early EU jurisprudence on direct discrimination. In Case C-177/88 Elisabeth\n Johanna Pacifica Dekker v Stichting Vormingscentrum voor Jong Volwassenen (VJV-\n Centrum) Plus ECLI:EU:C:1990:383, a job applicant was rejected on the basis that she was\n pregnant and the employer’s insurance would not reimburse it for the payments made\n during her period of maternity leave. As a result, the employer would be unable to employ\n a replacement during her absence and would end up being short-staffed (at [3]). Pregnancy\n was not a protected characteristic under EU law at the time, but the Court of Justice of the\n EU (“CJEU”) held that the employer had directly discriminated against the applicant on\n grounds of her sex (at [10]-[13], emphasis added):\n\n “Consideration must be given to the question whether a refusal of employment in the\n circumstances to which the national court has referred may be regarded as direct\n discrimination on grounds of sex for the purposes of the Directive. The answer depends on\n whether the fundamental reason for the refusal of employment is one which applies without\n distinction to workers of either sex or, conversely, whether it applies exclusively to one sex.\n\n The reason given by the employer for refusing to appoint Mrs Dekker is basically that it\n could not have obtained reimbursement from the [insurer] of the daily benefits which it\n would have had to pay her for the duration of her absence due to pregnancy, and yet at the\n same time it would have been obliged to employ a replacement. [...]\n\n In that regard it should be observed that only women can be refused employment on\n grounds of pregnancy and such a refusal therefore constitutes direct discrimination on\n grounds of sex. A refusal of employment on account of the financial consequences of\n absence due to pregnancy must be regarded as based, essentially, on the fact of pregnancy.\n [...]”\n\n\n 14\n29. The employer argued that all of the job applicants had been female, and submitted that it\n was therefore obvious that its decision had been guided not by sex but by “other\n considerations of a financial or administrative nature” (at [16]). The Court rejected this\n argument (at [17]). It put the point simply: “If [the] reason [for the treatment] is to be found\n in the fact that the person concerned is pregnant, then the decision is directly linked to the\n sex of the candidate [and...] the absence of male candidates cannot affect the answer.”\n\n30. The same approach was also being adopted in domestic caselaw in the UK at that time. In\n R. v Birmingham City Council Ex p. Equal Opportunities Commission (No.1) [1989] AC\n 1155 (“Birmingham City Council”), the House of Lords considered the implications of\n Birmingham having five boys’ grammar schools (admitting a total of 542 boys) but only\n three girls’ grammar schools (admitting a total of 360 girls). The reason for the difference\n was historic – almost all of the grammar schools in the area were of ancient foundation,\n and there was no suggestion that the council had any policy of discriminating between the\n sexes. But the result of the difference in grammar school availability was that in order to\n be accepted, applicants to the girls’ schools had to attain a higher minimum mark than\n applicants to the boys’ schools. The House of Lords held that this constituted direct sex\n discrimination. Lord Goff’s judgment, given on behalf of a unanimous Court, explained as\n follows (at 1194A-D):\n\n “There is discrimination under the statute if there is less favourable treatment on the\n ground of sex, in other words if the relevant girl or girls would have received the same\n treatment as the boys but for their sex. The intention or motive of the defendant to\n discriminate [...] is not a necessary condition of liability; it is perfectly possible to envisage\n cases where the defendant had no such motive, and yet did in fact discriminate on the\n ground of sex [...] if the council's submission were correct it would be a good defence for\n an employer to show that he discriminated against women not because he intended to do\n so but (for example) because of customer preference, or to save money, or even to avoid\n controversy. In the present case, whatever may have been the intention or motive of the\n council, nevertheless it is because of their sex that the girls in question receive less\n favourable treatment than the boys, and so are the subject of discrimination under the Act\n of 1975.\"\n\n 31. Birmingham City Council was quickly followed by James v Eastleigh Borough Council\n [1990] 2 AC 751 (“James”), which was concerned with a situation where the right to free\n admission to a Council’s leisure pools depended on whether a person had reached the state\n pension age. At the time this was 60 for women and 65 for men. The Court of Appeal had\n held that this was not direct discrimination, explaining that “[t]he Council's reason for\n giving free swimming to those of pensionable age was to give benefits to those whose\n\n\n 15\n resources would be likely to have been reduced by retirement. The aim was to aid the needy,\n whether male or female, not to give preference to one sex over the other” ([1990] 1 QB 6,\n 73D-E). The House of Lords overturned that decision and held that direct discrimination\n had occurred. The criterion of pensionable age was inherently discriminatory on the basis\n of sex, and so the “subjective reason for the differential treatment” was irrelevant (at\n 765G). Lord Goff, concurring, explained that (at 772D-E, emphasis added):\n\n “Of course, there may be cases where the defendant's reason for his action may bring the\n case within the subsection, as when the defendant is motivated by an animus against\n persons of the complainant's sex, or otherwise selects the complainant for the relevant\n treatment because of his or her sex. But it does not follow that the words ‘on the ground of\n sex’ refer only to cases where the defendant's reason for his action is the sex of the\n complainant; and, in my opinion, the application by the defendant to the complainant of a\n gender-based criterion which favours the opposite sex is just as much a case of\n unfavourable treatment on the ground of sex. Such a conclusion seems to me to be\n consistent with the policy of the Act, which is the active promotion of equal treatment of\n men and women.”\n\n32. Similarly, in O'Neill v Governors of St Thomas More Roman Catholic Voluntary Aided\n Upper School [1997] ICR 33; [1996] IRLR 372, Mummery P held that (emphasis added):\n\n “It is established by the authority of the House of Lords that the test to be applied in\n determining whether treatment is directly discriminatory on the ground of sex is not one of\n subjective mental processes of the respondents ie, as to their intentions, motives, beliefs or\n subjective purposes. Those considerations may be relevant to remedies for discrimination,\n but they are not relevant to liability. A condition of liability in the expression “on the\n ground of her sex” is an objective test of causal connection. According to the ruling of the\n House of Lords on the similarly worded Race Relations Act the relevant question is “Would\n the applicant have received the same treatment but for her sex?” See James v. Eastleigh\n Borough Council [1990] ICR 554 at 568A, 572 C-E and 576 C-E.\n\n In answering that causation question regard must be had to the well established and\n uncontroversial legal principles recently discussed by the Court of Appeal in Banque\n Bruxelles Lambert S.A v. Eagle Star Insurance Co Ltd [1995] Q.B. 375, 406. 36 Although\n that case was not cited in argument on the appeal, there can be no doubt that the principles\n discussed in that passage are beyond controversy at this level of decision. The relevant\n principles are these -\n\n (i) The Tribunal's approach to the question of causation should be “...simple, pragmatic\n and commonsensical.”\n\n (ii) The question of causation has to be answered in the context of a decision to attribute\n liability for the acts complained of. It is not simply a matter of a factual, scientific or\n historical explanation of a sequence of events, let alone a matter for philosophical\n36\n This was case relating to economic loss following professional negligence. The Court of Appeal’s judgment\n was overturned in relation to the issue of foreseeability limiting recoverable loss, but Mummery P’s\n comments in O’Neill have not been doubted.\n\n 16\n speculation. The basic question is: what, out of the whole complex of facts before the\n Tribunal, is the “effective and predominant cause” or the “real and efficient cause” of the\n act complained of? As a matter of common sense not all the factors present in a situation\n are equally entitled to be treated as a cause of the crucial event for the purpose of\n attributing legal liability for consequences.\n\n (iii) The approach to causation is further qualified by the principle that the event or factor\n alleged to be causative of the matter complained of need not be the only or even the main\n cause of the result complained of (though it must provide more than just the occasion for\n the result complained of). “...It is enough if it is an effective cause” (p.621C).”\n\n33. In Nagarajan v London Regional Transport [2000] 1 AC 501, the House of Lords (Lord\n Nicholls giving a speech with which Lords Hutton and Hobhouse agreed) repeated that\n there was no need to establish a consciously racial motive in order for direct discrimination\n on grounds of race to be made out: “[a]ll human beings have preconceptions, beliefs,\n attitudes and prejudices on many subjects”, and that an employer “may genuinely believe\n that the reason why he rejected an applicant had nothing to do with the applicant's race”\n (at 511H-512B). It is the task of the courts to identify what the reason for the less favourable\n treatment really was: the key question is “why did the complainant receive less favourable\n treatment” (at 512E). He went on to explain (at 512H-513B, emphasis supplied):\n\n “Decisions are frequently reached for more than one reason. Discrimination may be on\n racial grounds even though it is not the sole ground for the decision. A variety of phrases,\n with different shades of meaning, have been used to explain how the legislation applies in\n such cases: discrimination requires that racial grounds were a cause, the activating cause,\n a substantial and effective cause, a substantial reason, an important factor. No one phrase\n is obviously preferable to all others, although in the application of this legislation legalistic\n phrases, as well as subtle distinctions, are better avoided so far as possible. If racial\n grounds or protected acts had a significant influence on the outcome, discrimination is\n made out.”\n\n34. This test of “significant influence” means that not all treatment which would not have\n occurred “but for” the protected characteristic is discriminatory. In particular, if a protected\n characteristic is merely “a part of the circumstances in which the treatment complained of\n occurred, or of the sequence of events leading up to it”, that does not necessarily mean that\n it formed part of the ground, or reason, for that treatment (Ahmed v Amnesty International\n [2009] ICR 1450, [37]). If the treatment is made on a basis which is inherently and\n necessarily linked to a protected characteristic, however, the characteristic will be an\n effective cause and direct discrimination will occur.\n\n35. The test developed in the context of direct discrimination has notably also been applied in\n other instances where domestic law uses the word “on ground that”. In particular, section\n\n 17\n 47B of the Employment Rights Act 1996 provides that a “worker has the right not to be\n subjected to any detriment by any act, or any deliberate failure to act, by his employer done\n on the ground that the worker has made a protected disclosure”. In Fecitt v NHS\n Manchester [2011] EWCA Civ 1190; [2012] ICR 372, it was argued that the “proper test\n in this context is not whether the decision was materially (in the sense of more than\n trivially) influenced by the proscribed reason but [...] whether the proscribed reason was\n the sole or principal reason for the action taken” (at [38]). The Court of Appeal disagreed,\n holding (obiter) that “liability arises if the protected disclosure is a material factor in the\n employer's decision to subject the claimant to a detrimental act”, and that even though the\n legislation did not implement any EU law, “the reasoning which has informed the EU\n analysis is that unlawful discriminatory considerations should not be tolerated and ought\n not to have any influence on an employer's decisions. In my judgment, that principle is\n equally applicable where the objective is to protect whistleblowers, particularly given the\n public interest in ensuring that they are not discouraged from coming forward to highlight\n potential wrongdoing” (at [43]).\n\n(d) EU caselaw on the Part-time Work Directive\n\n36. As above, the prohibition in clause 4 of the Framework Agreement states that “part-time\n workers shall not be treated in a less favourable manner than comparable full-time workers\n solely because they work part time unless different treatment is justified on objective\n grounds”. The words “solely because” are slightly different from the words “on ground”\n or “on grounds”. That is perhaps unsurprising, in circumstances where the Directive was\n the product of a negotiation and adopted the language of a pre-existing ILO Convention as\n described above. What is clear, however, is that the CJEU has never suggested that a\n different approach – that is, an approach which attempts to isolate a ‘sole’ cause for\n differential treatment – should be adopted when considering discrimination against part-\n time workers. On the contrary, the CJEU has repeatedly emphasised that the prohibition on\n discrimination against part-time workers is “merely a particular expression of a\n fundamental principle of Community law, namely the general principle of equality” (Case\n C-313/02 Nicole Wippel v Peek & Cloppenburg GmbH & Co. KG ECLI:EU:C:2004:308\n [56]), and has adopted an approach in relation to the Part-time Work Directive which is on\n\n\n 18\n all fours with its treatment of other forms of discrimination. 37 Most importantly, the Court\n has never suggested that an employer can avoid the application of the Directive (and\n therefore avoid any need for objective justification) merely by pointing to some reason for\n the adoption of the rule which are unrelated to part-time status.\n\n37. In Case C-354/16, Ute Kleinsteuber v Mars GmbH ECLI:EU:C:2017:539, for example, a\n claimant employee alleged that a particular method for calculating pensions was less\n favourable for part-time workers and therefore discriminated against them. The Court\n accepted the Respondent’s submission that the purpose of the formula was to “reflect at\n the age of retirement, if possible in a full and proportionate way, the standard of living\n which the employee enjoyed during his employment” (at [32]). That was the ‘reason’ for\n the differential treatment, in much the same way that the reason for the treatment in James\n was to aid the needy. But the Court did not suggest that this took the situation outside the\n scope of the Directive. Instead, it considered the asserted rationale for the formula at the\n objective justification stage of the test. It concluded that the formula did indeed seek only\n to “take account of the difference of cover needs”, and was therefore justified (at [38]-[39]).\n The key point is that the Court did not suggest that, because a ‘reason’ for the policy was\n to ‘take account of differences in cover needs’, that meant that part-time status was not the\n ‘sole’ reason for the treatment (such that the need to justify the treatment by reference to\n that rationale could be avoided).\n\n38. Similarly, in Case C-660/20 MK v Lufthansa CityLine GmbH ECLI:EU:C:2023:789\n (“MK”), a part-time pilot complained that his employer’s approach of calculating\n remuneration by reference to uniform thresholds of monthly flying hours constituted\n discrimination against him as a part-time worker. The Court was asked whether a provision\n requiring employees to reach the same threshold of flying duty hours to be entitled to an\n increased rate of salary constituted discrimination against part-time workers. In its\n\n\n37\n Peers notes that the CJEU jurisprudence demonstrates that “concepts from other fields of EU anti-\n discrimination law have been ‘borrowed’” when applying the non-discrimination principle in the Part-time\n Work Directive, and notes that “this borrowing of basic legal concepts can only be encouraged in the interests\n of avoiding the complications that would otherwise undoubtedly result from applying fundamentally different\n concepts of non-discrimination at the same time” (in circumstances where, for example, cases frequently\n raise allegations of both discrimination against part-time workers and (indirectly) against women): Steve\n Peers, ‘Equal Treatment of Atypical Workers: A New Frontier for EU Law?’ (2013) 32(1) Yearbook of\n European Law 30, 54-55.\n\n\n 19\n judgment, the Court commenced by reciting the principles which would guide its\n interpretation (at [36]-[38]):\n\n “... for the purposes of interpreting Clause 4 of the Framework Agreement, it should be\n noted that the agreement seeks both to promote part-time work and eliminate\n discrimination between part-time workers and full-time workers (judgment of 5 May 2022,\n Universiteit Antwerpen and Others, C‐265/20, EU:C:2022:361, paragraph 41 and the\n case-law cited).\n\n The prohibition of discrimination laid down in Clause 4.1 of that framework agreement is\n simply a specific expression of one of the fundamental principles of EU law, namely the\n general principle of equality (judgment of 5 May 2022, Universiteit Antwerpen and Others,\n C‐265/20, EU:C:2022:361, paragraph 42 and the case-law cited).\n\n In the light of those objectives, that clause must be interpreted as articulating a principle\n of EU social law which cannot be interpreted restrictively (judgment of 7 July 2022, Zone\n de secours Hainaut-Centre, C‐377/21, EU:C:2022:530, paragraph 43 and the case-law\n cited).”\n\n39. Having confirmed that remuneration formed part of the claimant’s “employment\n conditions”, the Court proceeded directly to consider whether, “in the light of a number of\n factors, such as the nature of the work, training requirements and working conditions”, the\n claimant was in a position comparable to that of a full-time worker (at [44]). The Court\n held that he was, since part-time and full-time pilots performed the same duties (at [46]).\n\n40. The Court then considered whether the treatment of part-time workers was less favourable\n (at [47]-[49], emphasis supplied):\n\n “... a part-time pilot must complete the same number of flying duty hours as a full-time pilot\n to be entitled to that remuneration, without that threshold being lowered in a manner\n proportionate to the length of his or her individual working time. Under those\n circumstances, part-time pilots do not reach the trigger thresholds required to be entitled\n to additional remuneration, or are much less likely to do so than full-time pilots.\n\n Although the remuneration per flying hour for the two categories of pilots appears to be\n equal up to those trigger thresholds, it should be noted that those identical thresholds\n represent, for part-time pilots, a longer flight-hour duty than for full-time pilots in relation\n to their total working time and, consequently, a greater burden than for full-time pilots\n (see, by analogy, judgment of 27 May 2004, Elsner-Lakeberg, C‐285/02, EU:C:2004:320,\n paragraph 17). That situation therefore has a negative impact for part-time pilots in terms\n of the relationship between the service provided and the consideration for it.\n\n Since part-time workers thus satisfy much more rarely the conditions for entitlement to\n additional remuneration, a part-time pilot, such as the applicant in the main proceedings,\n must be regarded as subject to a difference in treatment compared with comparable full-\n time pilots, prohibited by Clause 4.1 of the Framework Agreement, unless it is justified on\n ‘objective grounds’ within the meaning of that clause.\n\n 20\n Having regard to the foregoing, the answer to the first question is that Clause 4.1 of the\n Framework Agreement must be interpreted as meaning that national legislation which\n makes the payment of additional remuneration for part-time workers and comparable full-\n time workers uniformly contingent on the same number of working hours being exceeded\n in a given activity, such as a pilot’s flight duty, must be regarded as a ‘less favourable’\n treatment of part-time workers within the meaning of that provision.”\n\n41. The Court heard argument that the reasons for adopting the uniform thresholds on working\n hours were the need to compensate pilots for particularly heavy workload levels, and the\n need to dissuade excessive overworking of pilots (at [20], [59]). The presentation of these\n reasons did not lead the Court to conclude that the conduct fell outside the scope of the\n Part-time Work Directive (because there were ‘reasons’ for the treatment other than the\n pilot’s part-time status). Instead, these were considered to be justifications and were\n assessed at that stage of the exercise ([59]-[67]).\n\n42. In each of these cases, the practice in question necessarily and inherently imposed a greater\n burden on part-time workers than on full-time workers, because it afforded more\n favourable treatment (better pensions, higher pay) to those who worked more hours. It did\n not matter what the rationale or justification for the rule was, once that first step was\n established: rationales, or explanatory reasons, fall to be considered at the objective\n justification stage. They do not change the fact of the inherently discriminatory treatment.\n\n43. For completeness, while this Court is not technically bound by CJEU decisions which post-\n date 31 January 2020, it may have regard to them when interpreting the PTWR pursuant to\n section 6 of the European Union (Withdrawal) Act 2018. When identifying the minimum\n protections set by the Directive, it is suggested that the CJEU jurisprudence is plainly\n directly relevant and should be considered highly persuasive.\n\n(e) EU caselaw on the Fixed-term Work Directive\n\n44. The cases discussed above, concerning the Part-time Work Directive, are mainly cases\n where the competing causes of the less favourable treatment may be described as being (i)\n the part-time status itself, or (ii) the underlying motive or rationale. They do not address\n the position where there may be said to be two (or more) wholly distinct causes for the less\n favourable treatment.\n\n45. In that regard, the Fixed-term Work Directive is of interest. That Directive was negotiated\n in the same way as the Part-time Work Directive, and is materially identical to the Part-\n\n\n 21\n time Work Directive in relevant part. It too refers to a framework agreement, clause 4(1)\n of which provides that: “In respect of employment conditions, fixed-term workers shall not\n be treated in a less favourable manner than comparable permanent workers solely because\n they have a fixed-term contract or relation unless different treatment is justified on\n objective grounds.”\n\n46. In Case C‐268/24 ZT v Ministero dell’Istruzione e del Merito ECLI:EU:C:2025:526\n (“Lalfi”), a €500 professional development fund was provided to all permanent teachers,\n as well as fixed-term substitutes whose contracts covered the entire school year. The\n complainant teacher had three short, fixed-term substitute positions at three different\n schools, and was denied the benefit. If one asks the question, why was the teacher denied\n the benefit, the answer would be that it was because she was (i) fixed-term; and (ii) on\n contracts which covered less than the full academic year. The Italian Government\n accordingly argued that any difference in treatment was not between fixed-term and\n permanent workers, but rather between two categories of fixed-term workers. That\n argument was rejected by the CJEU, which explained at [49]-[50] that:\n\n “[...] it follows from the wording of clause 4(1) of the Framework Agreement that it is\n sufficient for the fixed-term workers in question to be treated in a less favourable manner\n than permanent workers in a comparable situation in order for those fixed-term workers\n to claim the benefit of that clause [...] It follows that a difference in treatment for the\n purposes of clause 4(1) of the Framework Agreement cannot be excluded on the sole\n ground that that difference in treatment affects only some of the fixed-term workers, since\n otherwise the scope of protection against discrimination conferred by that provision, which\n must apply to all fixed-term workers [...] would be unjustly reduced.”\n\n47. The Court went on to hold that the relevant short-term supply teachers were in a comparable\n situation to the permanent teachers, and then that the difference in treatment did not appear\n to be objectively justified (albeit leaving the final decision to the referring court).\n\n48. The Appellant says the CJEU’s judgment in Lalfi is significant because it shows that for a\n worker to prove less favourable treatment “solely because” of a fixed-term contract does\n not require him to prove that the fixed-term contract was the sole cause of the treatment.\n Rather, there may in principle be multiple causes of the less favourable treatment. The\n Appellant says the same is true in the part-time work context. What the word “solely”\n conveys is that, where the cause (or one of the causes) of the less favourable treatment is\n fixed-term or part-time status, the treatment will not be discriminatory if it is justified for\n other reasons.\n\n\n 22\n(f) Domestic caselaw on the PTWR\n\n49. The Part-time Work Directive set a minimum floor of rights, but clause 6(1) of the\n Framework provided that “Member States and/or social partners may maintain or\n introduce more favourable provisions than set out in this agreement.” As explained above,\n the PTWR were introduced on the basis of a statutory provision which was intentionally\n widely drawn with a view to permitting wider protections than the Framework afforded. It\n was also possible for the minimum requirements to be spelled out more clearly in the\n domestic transposition, given that the Framework was a negotiated instrument whereas the\n domestic legislation was not.\n\n50. Against that backdrop, it is striking that in the PTWR the domestic legislator eschewed the\n language of “solely because” and reverted to language which was at that time well-\n established in the context of discrimination law: the question posed by the PTWR is\n whether treatment is “on the ground that the worker is a part-time worker”. By the year\n 2000 (when the PTWR were adopted), cases like Birmingham City Council and James had\n made clear that treatment could be “on the ground” of a protected characteristic even in the\n absence of any intentionality (as set out above).\n\n51. Despite (i) the CJEU never suggesting that the words “solely because” should lead to a\n departure from ordinary EU equality law principles when interpreting the Part-time Work\n Directive, and (ii) the domestic legislator removing any doubt in that regard by using\n traditional equality law language in the PTWR, the inclusion of the word “solely” within\n the Framework has given rise to several conflicting decisions.\n\n52. The starting point is the decision of the Employment Appeal Tribunal (“EAT”) in Gibson\n v Scottish Ambulance Service EATS/0052/04 (“Gibson”). The case was about the number\n of standby hours which part-time workers were required to keep, as compared with full-\n time workers: the position was that the proportion of on-duty and standby hours differed\n as between the two categories of workers. The Employment Tribunal had held that the\n “subjective approach” adopted in Nagarajan fell to be applied, and that it was therefore\n necessary to inspect the “reason or motive” of the ambulance service in adopting this\n approach (at [5]). The evidence suggested that there was “no single determinant”; indeed,\n it was unlikely that one could ever identify a “sole or single reason in the circumstances of\n a case like this” (ibid). The Employment Tribunal further held that in circumstances where\n the Framework used the word “solely”, and regulation 5 of the PTWR used the language\n\n 23\n “the ground” in the singular, it was to be understood that discrimination arose only if the\n treatment had been based “on one ground only”, and that ground was part-time status (ibid).\n In circumstances where it was not possible to say that the treatment was based exclusively\n on the complainant’s part-time status, discrimination was not made out.\n\n53. The Employment Tribunal’s reasoning exhibited multiple errors:\n\n 53.1. The Tribunal only acknowledged the form of direct discrimination which involves a\n protected characteristic consciously or subconsciously influencing the treatment. It\n ignored the possibility of treatment being inherently tied to a protected characteristic,\n without any mental process involving the characteristic being required.\n\n 53.2. The Tribunal failed to recognise that the Framework set a floor for rights, which it\n was open to domestic law to exceed, such that there was no basis for reading down\n the PTWR by reference to the Framework.\n\n 53.3. The suggestion that the word “ground” in the singular required a departure from the\n standard approach to causation was incorrect in circumstances where equality\n legislation refers to “ground” and “grounds” interchangeably. 38\n\n54. The EAT nonetheless upheld the first-instance decision in a very short judgment. It held\n that it is “necessary to look at the intention behind the decision... the real reason was the\n issue of demand in the local area which means that the appellant was not being\n discriminated against on the ground that he was a part-time worker per se” (at [11]). The\n EAT thus erroneously focused on the purported discriminator’s intention. Moreover, the\n issue of demand in the local area was an issue which is relevant to justification, not to the\n prior question of less favourable treatment.\n\n\n38\n For example, section 1 of the Sex Discrimination Act 1975 prohibited discrimination against a woman “on\n the ground of her sex”. Similarly, Article 4(1) of Directive 79/7/EEC provides that “there shall be no\n discrimination whatsoever on ground of sex”. Moreover, in Nagarajan, the House of Lords considered\n section 2 of the Race Relations Act 1976, which provided that a person would discriminate against another\n person “if he treats the person victimised less favourably than in those circumstances he treats or would treat\n other persons, and does so by reason that the person victimised [did a protected act]”. Lord Nicholls (at\n 510H) and Lord Steyn (at 521H), giving the lead speeches, each considered that this provision had to be read\n in the context of section 1(1)(a) of the Act, which prohibited direct discrimination, i.e. where a person “on\n racial grounds [...] treats [an]other less favourably than he treats or would treat other persons”. As noted\n at ¶27 above Lord Nicholls went on to state that “[d]ecisions are frequently reached for more than one\n reason.” There was no suggestion that this truism did not matter for section 2 of the Act because of the use\n of the singular rather than the plural.\n\n 24\n55. The EAT’s erroneous approach in Gibson was followed by the Scottish Court of Session\n in McMenemy v Capita Business Services Ltd [2007] CSIH 25, [2007] IRLR 400\n (“McMenemy”). The facts were that a part-time worker who did not work on Mondays\n complained that he consequently did not receive the benefit of public holidays, unlike full-\n time workers. The Employment Tribunal had found that any full-time worker who worked\n a five-day week which did not include Mondays also did not get the benefit of public\n holidays. Conversely, if a part-time worker worked Monday to Wednesday, rather than\n Wednesday to Friday, they would get the benefit.\n\n56. The Court of Session quoted the judgment in Gibson and added that: “[t]he part-time\n worker who complains that his employer is treating him less favourably than he does a\n comparable full-time worker in breach of the legislation must therefore establish that the\n employer intends to treat him less favourably on the sole ground that he is a part-time\n worker” (at [6]). Applying that test, the Court held that “the reason why the appellant\n received less favourable treatment than did a comparable full-time worker was through\n the accident of his having agreed with the respondents that he would not work for them on\n Mondays or Tuesdays” (at [14]). The Court declined to make a preliminary reference to the\n CJEU (at [16]).\n\n57. Whilst the reasoning was wrong, the Appellant agrees that the outcome in McMenemy was\n correct. Given that, on the facts as found, both full and part-time workers were in principle\n able to work Mondays and thereby obtain the benefit of public holidays, the fact that Mr\n McMenemy did not obtain the benefit of public holidays was neither intended to reflect,\n nor inherent in, his part-time status. It may be that the employer’s policy was indirectly\n discriminatory towards part-time workers, but the PTWR does not outlaw indirect\n discrimination.\n\n58. Shortly after the Court of Session had decided McMenemy, the EAT gave judgment in\n Sharma v Manchester City Council [2008] ICR 623 (“Sharma”). McMenemy was\n apparently not cited to it, but it did consider Gibson. In Sharma, the position was that part-\n time workers on a particular type of part-time contract had had their hours cut. A similar\n cut was not possible in respect of full-time workers or other categories of part-time\n workers, because their contracts did not allow for it. The Employment Tribunal had\n considered itself to be bound by Gibson and had therefore held that “the treatment was not\n on the ground that the lecturers were part-time per se but that they were a particular type\n\n\n 25\n of part-timer” (at [33], emphasis added). The EAT held that this reasoning was wrong (at\n [48]-[51]):\n\n “In our judgment, the reference to “solely” in Directive 97/81 is simply intending to focus\n upon the fact that the discrimination against a part-timer must be because he or she is a\n part-timer and not for some other independent reason.\n\n To take a simple example, if the employer decided to discriminate against all part-timers\n over the age of 30 it could be said that there were two reasons for the discrimination: being\n a part-timer, and being of a certain age. Similarly, if the employer deliberately\n discriminates against all his part-timers in factory A but not those with identical full-time\n comparators in factory B, can it really be said that, because only some part-timers are\n selected for the less favourable treatment, the Directive (and by extension the Regulations)\n are not intended to be applicable?\n\n In our judgment it is inconceivable that the Directive was not intended to outlaw such\n treatment (subject to justification) and we have no doubt whatsoever that it would\n inevitably be construed by the European Court of Justice to do so. Any other conclusion\n would wholly undermine the very purpose of the Directive. The fact that not all part-timers\n are treated adversely does not mean that those who are cannot take proceedings for\n discrimination if being part-time is a reason for their adverse treatment.\n\n In our judgment, once it is found that the part-timer is treated less favourably than a\n comparator full-timer and being part-time is one of the reasons, that will suffice to trigger\n the Regulations.”\n\n59. The EAT in Sharma additionally held that “in any event, it is open to a member state to\n give more favourable protection than the Directive affords, and accordingly in our\n judgment there is no need to read limitations in the Directive into the Regulations. In this\n connection it is to be noted that the Regulations were made under section 19 of the\n Employment Relations Act 1999, which confers a broad enabling power not just limited to\n implementing the terms of the Directive” (at [53]). The EAT was correct in that statement:\n as explained above, section 19 was intentionally widely drawn.\n\n60. These two conflicting authorities – McMenemy and Sharma – were variously cited, with\n opposing results, in subsequent caselaw.\n\n 60.1. In 2009, the EAT in Carl v University of Sheffield [2009] 3 CMLR 21; [2009] ICR\n 1286 cited O’Neill for the proposition that it is “enough if [the worker’s] part-time\n worker status is an effective cause, albeit not the sole cause, of the less favourable\n treatment of which complaint is made”, and held that the Employment Tribunal had\n erred by assessing whether “the reason in the mind of the employer for the difference\n of treatment between a part-timer and full-time worker was that the part-timer was\n\n\n 26\n a part-time worker” (at [28]). The EAT noted that the PTWR had exceeded the\n minimum protection requirements imposed by the Part-time Worker Directive, by\n providing additional protection for workers changing from part-time to full-time\n status, or the reverse (at [35]). Having considered the various conflicting authorities,\n the EAT held (at [42]) that:\n\n “[...] The expression ‘on the ground that’ or ‘on the grounds of’ frequently appears\n in our domestic legislation. [...] we agree with the President in Sharma that whereas\n domestic legislation must provide the protection contained in the Directive, it is not\n limited to such protection. ‘On the ground that’ in reg. 5(2)(a) means what Mummery\n P said the similar expression in the SDA meant [in O’Neill]. Part-time work must be\n the effective and predominant cause of the less favourable treatment complained of;\n it need not be the only cause.\n\n60.2. In 2016, the EAT in Engel v Ministry of Justice [2017] ICR 277 commented that:\n “The PTWD was concerned to provide a remedy for those who were treated in a less\n favourable manner than comparable full-time workers “solely because they work\n part-time”. While the language of the 2000 Regulations is wider, their purpose is the\n same” (at [18]). Neither Sharma nor McMenemy appear to have been cited to the\n EAT in that case.\n\n60.3. In 2021, the EAT decided the case of Forth Valley Health v Campbell (EA-2020-\n SCO-000093-SH), in which a part-time worker complained that he did not receive\n breaks, whereas full-time workers did. The breaks were only available after six hours\n of working, and the complainant worked four-hour shifts. Part-time workers who\n worked shifts of six hours or more did receive breaks, including the complainant on\n particular days. The EAT reasoned that the applicability of breaks depended on shift\n patterns, which did not in turn depend on part-time work status (at [12]-[13]). The\n EAT cited McMenemy to reach that conclusion, but it did not need to: the correct\n reasoning would have been if (as was the case) shift patterns at that particular\n employer were not inherently linked to full-time or part-time work status, differential\n treatment on grounds of shift patterns was not discrimination on grounds of part-time\n status.\n\n\n 27\nIII. THE DECISIONS IN THE PRESENT CASE\n\n61. The present case came before the Tribunal against the backdrop of these conflicting\n authorities. The Employment Tribunal at first instance found 39 that the evidence of the\n Respondent was that a model of charging a universal ‘circuit fee’ to all drivers, irrespective\n of work hours, was a “well-established” practice in the industry prior to the arrival of Uber\n on the market (at [59]). The Tribunal considered that the “reason why the Claimant was\n charged a circuit fee is because this is the way in which private hire companies such as the\n Respondent were operating. It is the way in which the Respondent earned a revenue from\n the business” (at [63], emphasis added). The Tribunal commented that the Appellant was\n not “charged the fee because he was working fewer hours than his fellow drivers” (at [63],\n emphasis original). The Tribunal later identified a slightly different reason: “the reason\n why he was charged the fee was so that he could obtain access to bookings through the\n Respondent’s systems in the same way as any other driver” (at [66], emphasis added). The\n ‘reasons’ for the treatment identified in the judgment thus essentially amount to the point\n that the treatment was simply the way the Respondent operated and made money.\n\n62. It is immediately obvious that the Tribunal’s reasoning and conclusion was starkly different\n from that of the CJEU in the cases referred to at ¶¶37-40 above. In MK, for example, the\n employer submitted that a uniform working hour threshold for additional compensation\n had been adopted because of the need to compensate pilots for particularly heavy workload\n levels and dissuade excessive overworking of pilots. The CJEU nonetheless held that in\n circumstances where “those identical thresholds represent, for part-time pilots, a longer\n flight-hour duty than for full-time pilots in relation to their total working time and,\n consequently, a greater burden than for full-time pilots”, the first limb of the test had been\n passed. The employer’s arguments could be deployed only at the objective justification\n stage. By contrast, in the present case, a general assertion that uniform thresholds were just\n ‘how the employer does business’ was, in the view of the Employment Tribunal, sufficient\n to find against the Appellant, without even any need to consider whether the approach was\n objectively justified. The divergence between the reasoning of the Employment Tribunal\n and that of the CJEU demonstrates the ‘sole reason’ approach – which invites a focus on\n the rationale or explanation for a rule or practice – is liable to very frequently result in\n\n\n39\n Although this part of the judgment was in the alternative to the Tribunal’s primary that the Appellant had not\n been treated less favourably than a full-time comparator in the first place (at [42]-[55]). The EAT held that\n the Tribunal had erred in that finding (at [33]).\n\n 28\n incorrect outcomes. The justification for a rule must be considered at the objective\n justification stage and not earlier, as the CJEU jurisprudence demonstrates.\n\n63. On appeal ([2024] EAT 117; [2025] ICR 19), the EAT (Eady P, Mrs Gemma Todd, and Dr\n Gillian Smith MBE) noted that the PTWR prohibit less favourable treatment “on ground\n of” part-time status, unless objectively justified, and – having reviewed the caselaw dealing\n with the phrase “on ground of” (including that set out above) – stated at [67] that:\n\n “If we were approaching regulation 5 PTWR absent any prior judicial consideration, we\n would not hesitate to adopt the same approach [as that adopted in relation to direct\n discrimination and protected disclosures]. To require that the complainant’s status as a\n part-time worker be an effective cause of the less favourable treatment, even if not the sole\n cause of that treatment, seems to us to be entirely consistent both with the language of\n regulation 5(2) and with the protective purpose of the legislation. To hold otherwise would\n seem to us to be inconsistent with the approach standardly taken to questions of causation\n (see per Mummery P in O’Neill), and to risk the obviously perverse outcomes hypothesised\n by Elias P at paragraph 49 of Sharma.”\n\n64. The EAT further explained (at [72]) that:\n\n “[...] we are unable to see any basis for inserting the word ‘solely’ (per Gibson, Engel, and\n Forth Valley) or the phrase ‘if and only if’ (per Engel) into regulation 5(2)(a) PTWR.\n Equally, acknowledging that clause 4.1 of the Framework Agreement includes the word\n ‘solely’ [...] we do not consider this gives rise to an obligation to construe domestic\n legislation as requiring that the protection afforded to part-time workers be limited to cases\n where the less favourable treatment is solely due to their status as such. Indeed, having\n regard to our collective practical experience of issues relating to part-time work, we are\n mindful that discrimination against part-timers will often take place because of factors\n associated with their part-time status; limiting the protection to less favourable treatment\n solely on the ground of part-time work risks excluding such cases, where the part-time\n nature of the work might be the effective, but not the sole, reason for that treatment. As that\n would seem counter to the purpose of the Framework Agreement, we share the view\n expressed at paragraph 49 of Sharma that it seems unlikely that this is how clause 4.1\n ought to be construed. Even if we are wrong about that, however, we cannot see why that\n minimum requirement should limit a wider protection allowed under domestic law [...]”\n\n65. Notwithstanding their unanimous conclusions on these matters, the members of the EAT\n considered that it was necessary to follow the decision in McMenemy, in order to avoid\n conflicting approaches in England and Wales as compared with Scotland (at [82]).\n\n66. The EAT also considered the Employment Tribunal to have erred insofar as it had\n considered the employer’s intention to be relevant (at [73]). In circumstances where the\n Supreme Court’s decision in JFS had made clear that intentionality is not a necessary part\n of the test of discrimination, the EAT considered itself able to uphold the Appellant’s\n\n 29\n appeal on that point (at [87]). That is welcome but it leaves the McMenemy line of cases in\n a very unsatisfactory position. Those cases place considerable emphasis on intention, as\n part and parcel of the ‘sole ground’ approach.\n\n67. The Appellant appealed the EAT’s decision to the Court of Appeal ([2025] EWCA Civ\n 658; [2025] ICR 1404), where each of Edis LJ, Bean LJ and Laing LJ gave a speech.\n\n68. Laing LJ (in the minority) considered that the test for causation under the Part-time Work\n Directive is a “narrow test”, and that the words “solely because [...] could not be clearer”\n (at [66]). She further noted that the phrase “solely because” is used in the Part-time Work\n Directive and the Fixed-term Work Directive, but not in other EU equality directives, and\n considered that this must be because the words represented a “compromise between\n competing factors, agreed by the Social Partners, after balancing their different interests”\n (ibid).\n\n69. Laing LJ additionally noted that (i) there is no distinct protection against indirect\n discrimination with the Part-time Work Directive, (ii) there is no scope for a hypothetical\n comparator to be constructed, and (iii) discrimination against part-time workers can be\n justified, whereas some other forms of direct discrimination cannot (at [93]). Laing LJ\n considered that these factors militated against a reading of the causation test under the\n Directive which would include circumstances where part-time status was an effective (even\n if not the sole) cause of the treatment. As to those points:\n\n 69.1. The absence of separate protection in relation to indirect discrimination does not\n advance the analysis. It was a political choice by the ‘Social Partners’ to limit the\n scope of the protection to direct discrimination. But it does not follow that the test\n ought to be narrower (or broader) than the usual direct discrimination test.\n\n 69.2. The absence of scope for a hypothetical comparator in the Part-time Work Directive\n is very much a product of the time of its adoption. The Directive was, as noted above,\n adopted in the 1990s. Express legislative recognition of a hypothetical comparator\n was not adopted until 2000, with Directive 2000/43/EC prohibiting (at Article\n 2(2)(a)) discrimination where “another is, has been or would be treated in a\n comparable situation on grounds of racial or ethnic origin”, and the same language\n being used in relation to discrimination in the employment context in Directive\n 2000/78 (at Article 2(2)(a)). The sex equality directive was subsequently amended to\n\n\n 30\n equivalent effect by Directive 2002/73/EC (Article 1(2)). In the 1990s, none of the\n existing equality directives expressly permitted a hypothetical comparator; and\n indeed the CJEU had held in the context of equal pay that such comparators were not\n permitted (in Case 129/79 Macarthys Ltd v Wendy Smith ECLI:EU:C:1980:103 at\n [14]-[15]). As such, nothing can be read into the need for an actual comparator under\n the Directive.\n\n 69.3. The fact that less favourable treatment of part-time workers can be objectively\n justified is also not relevant. The same is true of direct discrimination on grounds of\n age, but that does not affect the causation test in respect of that characteristic.\n\n70. All three judges considered whether the PTWR provided enhanced protection if the test in\n the Directive was indeed narrow. As to this:\n\n 70.1. Edis LJ took the view that the construction of the PTWR should start with the\n provision under which they were made, viz section 19 of the Employment Relations\n Act 1999 (at [33]). He explained that:\n\n “This created a free-standing statutory duty on the Secretary of State as a matter of\n UK domestic law. The words \"for such purposes and to such extent as the regulations\n may specify\" mean that neither the purposes nor the extent of the restriction on less\n favourable treatment were fixed. The Secretary of State has a range of options in that\n regard. If regulations were made which apparently failed to enshrine in UK law the\n minimum standards required by the Directive, the courts would endeavour to\n construe them so that those standards were protected. However, if and to the extent\n that the regulation provided protection which went beyond those minimum standards\n it would not be ultra vires.”\n\n 70.2. Edis LJ noted that while the Act and the PTWR do fully implement the Part-time\n Work Directive and Framework, the Act did not restrict the scope of the power to\n make regulations, and in fact the Explanatory Notes to the Act explained that the\n powers were “widely drawn” and that the Government intended to “consult fully on\n how they should be used, by discussing with interested parties and publishing draft\n regulations for comment” (at [36]). The PTWR did not contain the word “solely”,\n and there was no canon of construction which would support the Court reading that\n word in: indeed, “[a] purposive construction would lead to the broader, rather than\n the narrower class of potential beneficiaries of the new remedy” (at [37]). Edis LJ\n concluded (at [40]):\n\n\n 31\n “I find it hard to think of any good reason why the 2000 Regulations should be\n construed as if they incorporated the word ‘solely’ from clause 4.1 of the Framework\n Agreement when it must have been a deliberate decision to omit it. On the other hand,\n the construction of the plain words of the 2000 Regulations which I consider to be\n correct extends the remedy for discrimination to cases where the necessary causal\n link can be found applying the usual approach to causation in UK law. The less\n favourable treatment must be substantially caused by the part time status of the\n person affected by it. This appears to advance the purpose of the 1999 Act and the\n 2000 Regulations.”\n\n70.3. Laing LJ, on the other hand, accepted that the PTWR “could have” relaxed the test\n set by clause 4 of the Framework, in accordance with section 19 of the Act (at [67]).\n However, she considered that there would have to be a “clear indication” that the\n “unusually strict test for causation in clause 4.1 has been relaxed” (ibid). She\n considered that it had not, on the basis that words like “the reasons” and “the reason\n (or if more than one, the principal reason” had been used elsewhere in the PTWR,\n and regulation 5 stipulated that it applied “only if (a) the treatment is on the ground\n that” (at [68]).\n\n70.4. Bean LJ agreed with Edis LJ, but commented on Laing LJ’s reliance on the words\n “only if” in regulation 5. He noted that “[t]he positioning of the word \"only\" in\n subparagraph (2) means that in order for the right not to be treated less favourably\n than a comparable full-time worker to apply, both the conditions set out in\n subparagraphs (2)(a) and (b) must be satisfied. One of these is that the treatment is\n \"on the ground that\" the worker is a part-time worker; the other is that the treatment\n is not justified on objective grounds” (at [98]). For that reason, the word “only” did\n not support any particular causation test.\n\n70.5. Bean LJ further pointed out (at [99]) that:\n\n “It would have been easy enough for the draftsman of the 2000 Regulations to have\n used the words \"solely because\" in subparagraph (2)(a) if the intention was simply\n to reproduce verbatim the wording of Directive 97/81/EC, but that is not what was\n done. On the contrary, the draftsman used the phrase \"on the ground that\". The\n phrases ‘on the ground that’ or ‘on the ground of’ were already established in\n discrimination law by the time the 2000 Regulations were made: see the EAT decision\n in O'Neill [...] Mummery P said that for a discrimination claim to succeed the\n claimant's sex had to be the \"effective and predominant cause\", or the \"real and\n efficient\" cause, of the less favourable treatment complained of; it need not be the\n only cause. This important decision is not mentioned, and presumably was not cited,\n in Gibson v Scottish Ambulance Service nor in McMenemy itself. On the contrary:\n in Gibson the majority opinion of the EAT, delivered by Lord Johnston, states that\n\n\n 32\n ”as Regulation 5(2)(a) uses the word \"ground\" in the singular, it suggests that the\n treatment should be found to be on one ground only (whatever that ground may be)”.\n A greater contrast with O'Neill would be hard to imagine.”\n\n71. Edis LJ and Bean LJ therefore both considered the decision in McMenemy to have been\n wrong, and would have allowed the appeal had it not been for the Court of Appeal’s\n decision in relation to precedent in Jwanczuk (which has since been overturned by this\n Court) (see [42], [101]).\n\nIV. SUBMISSIONS\n\n72. The EAT, and the majority of the Court of Appeal, were correct that the PTWR prohibit\n less favourable treatment of part-time workers where the effective cause of the treatment\n is their part-time status. That is the minimum level of protection provided by the Part-time\n Work Directive; and in any event is the level of protection provided by the PTWR.\n\n(a) The floor set by the Part-time Work Directive\n\n73. That the Framework Agreement prohibits treatment which inherently and necessarily\n disadvantages part-time workers (unless that treatment can be justified) is clear from the\n CJEU caselaw. The CJEU jurisprudence contains examples of treatment being found to\n require justification even where there are clear and well-explained reasons for it which\n have nothing to do with part-time status. The cases show that the correct question is\n whether the treatment is either (i) subjectively discriminatory, in that the worker’s part-\n time status operated on the employer’s mental processes (consciously or subconsciously),\n or (ii) inherently discriminatory, in that the treatment necessarily and inherently\n disadvantages part-time workers (rather than just disadvantaging them because of\n background societal factors 40). If either form of discrimination arises, it is for the employer\n to objectively justify it, including that the difference in treatment pursues a legitimate aim,\n is suitable for achieving the objective, and is reasonably necessary. 41 That is the logical\n\n\n40\n For example, prior to the introduction of the PTWR, cases of discrimination against part-time workers were\n often framed as cases of indirect discrimination against women. Conduct which inherently disadvantages\n part-time workers (such as the conduct in this case) do not inherently disadvantage women. They only\n disadvantage women if the majority of part-time workers happen to be women, this being a background\n societal fact (and there not being anything inherently gendered about part-time work). Unless justified, such\n conduct is therefore direct discrimination against part-time workers (as it disadvantages them on grounds of\n their part-time status) and indirect discrimination against women (as it is apparently neutral vis-à-vis them,\n but happens to put them at a particular disadvantage).\n41\n O’Brien v Ministry of Justice [2013] UKSC 6, [2013] ICR 499 at [44]-[46].\n\n\n 33\n and simple reading of the legislation, which is borne out by the caselaw and accords with\n common sense.\n\n74. Unlike other equality law instruments, the Framework Agreement is not the product of a\n draftsman’s pen. As Jeffery puts it, “had the Agreement been subject to the scrutiny of those\n who usually draft European legislation then it might not have been so complicated or so\n vague”. 42 However, contrary to the findings of Laing LJ in the Court of Appeal, the\n negotiated nature of the Framework Agreement is not a factor which weighs in favour of\n an overly legalistic reading of the word ‘solely’. Indeed, on the contrary, it would be a\n mistake to place heavy emphasis on individual words in a document negotiated in this way.\n As explained in Sharma, the obvious purpose of that word is to exclude treatment which is\n effectively caused by wholly independent reasons, and where part-time status is only a\n background factor: see similarly Ahmed v Amnesty International, cited at ¶34 above. That\n reading is also directly supported by the fact that the words “solely because” were lifted\n from a pre-existing ILO instrument, where they were intended to reflect the fact that\n differences in treatment may be unrelated to part-time status and instead arise from matters\n such as seniority.\n\n75. Indeed, had the Social Partners meant to exclude from protection any and all cases where\n part-time work was an effective but not the only cause of the less favourable treatment, one\n might reasonably expect that such a decision would have been made clear. It was, and is,\n obvious that employers very often will have some reason for treating part-time workers\n poorly other than their part-time status per se. As the House of Lords put it in Nagarajan,\n decisions are frequently reached for more than one reason. For example, it was clear at the\n time that the PTWR that employers might try to point to budgetary reasons as ‘another\n reason’ or the ‘real reason’ for the treatment in order to avoid the effect of the PTWR, and\n consideration was given to whether that could constitute an objective justification or not. 43\n Employers cannot point to such budgetary issues, or other such reasons, to say that part-\n time status was not the ‘sole’ reason for the treatment. The same point applies to ‘reasons’\n like ‘ensuring that heavier workloads are properly compensated’ (as in MK), or ‘dealing\n with demand’ (as in Gibson). Such rationales fall to be deployed as objective justifications:\n that is why the defence exists.\n\n\n42\n n 34 above.\n43\n See Louri, n 35 above, p. 13.\n\n 34\n76. The same point applies to cases where there are multiple independent reasons for the less\n favourable treatment, similar to the position of fixed-term employees on short contracts\n considered in Lalfi. Take, for the sake of argument, an employer who denies a particular\n benefit to all “women over 6 feet tall”. A very tall woman who suffers the disadvantage\n does so for two reasons: her sex and her height. Under discrimination law as it has\n developed in Europe, there would clearly be discrimination on grounds of sex: sex is an\n effective cause of the treatment. But it is impossible to say that sex is the sole reason for\n the treatment. If the employer instead refused a benefit to “part-time workers over 6 feet\n tall”, the same analysis must apply. The Framework Agreement is intended to capture such\n treatment, and it then falls to the employer to justify it. On the Respondent’s interpretation,\n however, the treatment would not fall within scope of the directive, because part-time status\n would not be the ‘sole’ cause of the treatment.\n\n(b) The PTWR\n\n77. Moreover, if there were any doubt about the minimum floor set by the Framework\n Agreement, the domestic legislator cleared it up when adopting the PTWR. In those\n Regulations, the Secretary of State – having been given significant leeway by the\n empowering Act – decided to adopt language directly from existing equality legislation\n which had been the subject of authoritative treatment by the courts. The obvious\n implication is that this decision was made so that the courts would know that the existing\n jurisprudence was to be followed. There is no reason to think that the legislator, in replacing\n the text from the Framework Agreement with text from pre-existing legislation, intended\n the courts not to follow – and instead to depart from – the jurisprudence which dealt with\n that pre-existing legislation. There is also no reason to consider that the legislator intended\n the caselaw on that pre-existing legislation to be read down when applied to the PTWR on\n the basis of purportedly narrow language in the Framework Agreement, in circumstances\n where the Secretary of State expressly and intentionally exercised powers enabling\n domestic protections which exceeded the Framework Agreement.\n\n78. It is notable, in that context, that the Court of Session in McMenemy did not understand\n itself to be departing from the existing jurisprudence on equality law. On the contrary, the\n Court in McMenemy was faced with a situation where counsel for the complainant\n conceded that the PTWR did not go beyond the Framework Agreement, and then followed\n the reasoning in Gibson in relation to the interpretation of the Framework Agreement itself\n\n\n 35\n (where the EAT had misunderstood the test for causation in discrimination law as requiring\n evidence of intention).\n\n79. Accordingly, the approach taken in McMenemy was wrong. The Court of Session began\n with an erroneously narrow reading of the Part-time Work Directive which was contrary\n to the purpose of the instrument, and thereafter assumed that the PTWR go no wider than\n the Directive. The majority of the Court of Appeal agreed with the Appellant on these\n points: Bean LJ considered that a “greater contrast” between existing discrimination law\n and the reasoning in Gibson is “hard to imagine” (at [99]), and Edis LJ found it “hard to\n think of any good reason why the 2000 Regulations should be construed as if they\n incorporated the word ‘solely’ from clause 4.1 of the Framework Agreement when it must\n have been a deliberate decision to omit it” (at [40]).\n\n80. For those reasons, the Court is invited to find that the majority of the Court of Appeal were\n correct in finding that the test for causation under regulation 5 of the PTWR is established\n if part-time status was an effective cause of the treatment, and overturn the Court of\n Appeal’s decision insofar as it felt compelled to follow the incorrect conclusion reached to\n the contrary in McMenemy.\n\nV. CONCLUSION\n\n81. The Court is respectfully requested to allow the appeal for the following reasons:\n\n 81.1. The Part-time Work Directive prohibits less favourable treatment of part-time\n workers where their part-time status is an effective cause of the treatment, and the\n Court of Appeal erred in finding otherwise; and\n\n 81.2. In any event, the PTWR prohibit less favourable treatment of part-time workers\n where their part-time status is an effective cause of the treatment, and the Court of\n Appeal erred in finding otherwise.\n\n\n TRISTAN JONES KC\n AISLINN KELLY-LYTH\n\n\n 36", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nA. INTRODUCTION AND OVERVIEW\n\n1. These are the submissions of the Respondent, a micro-business, on the appeal from the\n Court of Appeal’s decision below. The Respondent was represented before the ET, was\n unrepresented before the EAT, but then obtained new pro bono representation before the\n Court of Appeal and before this Court. The Appellant, an individual, acted in person before\n the ET, but has been represented pro bono before the EAT, the Court of Appeal and now\n before this Court. The appeal raises an issue of general public importance which neither the\n Appellant nor the Respondent would realistically have been able to fund on appeal to this\n Court. The Respondent is grateful for the thorough exposition of the Appellant’s case in\n writing by his legal representatives. The Respondent will endeavour to assist the Court in\n an equivalent manner by this Written Case.\n\n2. The issue in this appeal is whether regulation 5 of the Part-time Workers (Prevention of\n Less Favourable Treatment) Regulations 2000 (SI 2000/1551) (the “PTWRs”) applies if a\n worker’s part-time status is an effective cause, but not the sole cause, of their less favourable\n treatment.\n\n3. The Court of Appeal below was divided on this issue:\n\n\n 1\n3.1. Elisabeth Laing LJ (in the minority) held that the proper construction of the effect of\n regulation 5 (having regard to its language and purpose) was that it effected a narrow\n test of causation, requiring the relevant part-time worker status to be the sole cause of\n the impugned less favourable treatment. The learned Judge reached this conclusion\n having regard to the particular context and meaning of Council Directive 97/81/EC\n of 15 December 1997 concerning the Framework Agreement on part-time work\n concluded by UNICE, CEEP and the ETUC [1998] OJ L 14/9 (the “PTWD”), which\n the PTWRs implemented. She recognised that the PTWD was a particular and novel\n type of directive made pursuant to the Maastricht Treaty, which permitted contentious\n issues to be put to the Social Partners (supranational organised labour and\n industry/employer confederations) with a view to reaching a compromise agreement\n which could then be made as a Directive. Elisabeth Laing LJ would accordingly have\n dismissed the Appellant’s appeal against the EAT’s decision below, finding that (a)\n the PTWD clearly instituted a narrow test of causation and (b) regulation 5 of the\n implementing PTWRs were properly construed as bearing an equivalently narrow\n approach to causation. As the learned Judge found in a detailed and compellingly-\n reasoned dissenting judgment (the longest of the three judgments, extending over\n paragraphs [44]-[95]), this accorded with both the language and purpose of the\n PTWRs. It also reflected the longstanding decision of a distinguished composition of\n the Court of Session (Inner House) in McMenemy v Capita Business Services Limited [2007]\n IRLR 400 (“McMenemy”), which established nearly two decades ago that the\n PTWRs apply a test of sole causation.\n\n3.2. Edis LJ (giving the lead judgment for the majority of the Court of Appeal at\n paragraphs [1]-[43]) held that a more relaxed test of causation should instead apply,\n by analogy with the approach to causation in equality and discrimination law\n concerned with protected characteristics (such as sex and race discrimination law). He\n endorsed the reasoning of the EAT below (and an earlier EAT in Sharma v Manchester\n City Council [2008] ICR 623 (“Sharma”)) as to why such an approach served a\n protective purpose to expand the scope of part-time worker protections. It is notable\n that Edis LJ’s judgment: (a) draws heavily on the EAT’s decision in this case (in which\n the Respondent was not represented) and the EAT’s decision in Sharma (in which the\n Claimant was not represented), both of which decisions were accordingly reached\n without the benefit of adversarial argument; and (b) does not engage with the detailed\n (and, the Respondent submits, compelling) reasoning of Elisabeth Laing LJ. Edis LJ\n\n\n 2\n nevertheless dismissed the Appellant’s appeal on the basis that the Court of Appeal\n was (as he understood the position at that time, though disapproved later by the\n Supreme Court) bound to follow a contrary decision of the Inner House of the Court\n of Session in the interests of consistency between Scotland and England and Wales,\n applying R (Jwanczuk) v Secretary of State for Work and Pensions [2023] EWCA Civ 1156;\n [2024] KB 275 (subsequently overturned on appeal: [2025] UKSC 42; [2025] 3 WLR\n 741).\n\n 3.3. Bean LJ gave a short judgment of eight paragraphs (at paragraphs [96]-[103]) agreeing\n with Edis LJ’s judgment and making limited reference to the reasoning of Elisabeth\n Laing LJ.\n\n4. The Respondent’s case is that, for the core and compelling reasons given by Elisabeth Laing\n LJ below, regulation 5 of the PTWRs applies only if a worker’s part-time status is the sole\n cause of the less favourable treatment, and that it is insufficient to bring less favourable\n treatment within the scope of the PTWRs (and to require it to be objectively justified) if a\n worker’s part-time status is only one material factor among others. Parliament is to be taken\n to have intended, in accordance with the clear language of the PTWD to which the PTWRs\n give domestic effect, that a narrower causal test should apply in the specific context of part-\n time worker discrimination than otherwise applies in respect of protected characteristic\n discrimination protections. The Respondent will submit that both the detailed reasoning of\n the EAT in this case and Sharma (and the endorsement of this with more limited reasoning\n by the majority of the Court of Appeal below) cannot survive the detailed and compelling\n analysis given in Elisabeth Laing LJ’s judgment, reflecting a range of materials and arguments\n put to the Court of Appeal which were not made to the EAT below (where the Respondent\n was unrepresented) or in Sharma (where the Claimant was unrepresented).\n\n5. In summary, the Respondent’s argument in support of this case (reflecting the reasoning of\n Elisabeth Laing LJ below) is as follows:\n\n 5.1. The PTWD was a limited legislative intervention which embodied a negotiated\n agreement reached by the Social Partners when the issue was put to them to identify\n an acceptable compromise after successive attempts to introduce a directive instituting\n protections for part-time workers using the conventional European legislative process\n had failed for lack of consensus.\n\n\n 3\n 5.2. This prior lack of consensus that strong protections for part-time workers should be\n instituted in community equality law reflected concerns (inter alia) about: the diversity\n of labour market practices; the potential burden to employers and the impact on\n economic development (particularly of small and medium size enterprises). The\n principal motivation for strengthening part-time worker protections (part-time worker\n status not being itself a protected characteristic in the pantheon of fundamental\n personal attributes at the heart of the development of equality law) was that this would\n indirectly support other efforts to ameliorate sex discrimination at the European level\n (women being more likely to participate in the work force in a part-time capacity to\n facilitate combining work with childcare and caring responsibilities). However, at the\n national level, the UK considered that its existing sex discrimination and equal pay\n legislative regimes already provided substantial effective protection to women in this\n context, by contrast to the position in other member states. In those circumstances, it\n was unsurprising that it was the UK as a member state which had vetoed many of the\n earlier abortive attempts to legislate part-time worker discrimination protections at\n European level.\n\n 5.3. The agreement which was reached by the Social Partners and embodied in their\n Framework Agreement was then implemented by the PTWD, which did no more than\n enshrine in European law the Social Partner’s negotiated compromise. Indeed, efforts\n by the European Parliament to amend the PTWD so as to depart from the terms of\n the Framework Agreement were rebuffed by the European Commission, on the basis\n that it would be inappropriate to depart from the carefully calibrated consensus which\n had ultimately been arrived at by the Social Partners following many months of\n negotiation.\n\n 5.4. The language of the PTWD (and a similar directive on Fixed Term Worker\n protections, Directive 99/70/EC (the “FTWD”),1 which followed the same approach\n of annexing and implementing the terms of a framework agreement reached by the\n Social Partners) was expressly narrow in its approach and terms. In particular, in\n respect of the “principle of non-discrimination” in clause 4 of the Framework Agreement,\n it provided that “[i]n respect of employment conditions, part-time workers shall not be treated in a\n less favourable manner than comparable full-time workers solely because they work part time unless\n different treatment is justified on objective grounds” (emphasis supplied). As Elisabeth Laing\n\n1 This is referred to as ‘Directive 2’ in Elisabeth Laing LJ’s judgment.\n\n\n 4\n LJ found at [63] below, “it is clear that the test for causation in clause 4.1 is a narrow test. The\n important words are ‘solely because’. That phrase could not be clearer.” The same unusual\n language is found in the framework agreement enacted in law by the FTWD, as also\n noted by Elisabeth Laing LJ at [66]. As the Court of Session (Inner House) had noted\n in McMenemy, in considering the alternative language versions of the PTWD, these\n reinforced the clarity of the wording in the English version of the directive. See [3] of\n McMenemy, per Lord Nimmo Smith: “It is sufficient to refer to the French (‘au seul motif’) and\n German (‘nur deswegen’) versions to reinforce the impression that would be gained from a\n straightforward reading of the English version that ‘solely’ does indeed mean that the less favourable\n treatment of part-time workers which is prohibited by the PTWD must be for the reason that they\n work part-time and for that reason alone.”\n\n5.5. The position is also reflected in the European case law, with the ECJ in Wippel v Peek\n & Cloppenburg GmbH & Co KG, case C-313/02 [2005] IRLR 211 at [54] noting in plain\n terms that “Clause 4 of the Framework Agreement annexed to Directive 97/81, in regard to\n employment conditions, precludes part-time workers from being treated less favourably than\n comparable full-time workers on the sole ground that they work part-time unless different treatment\n is warranted on objective grounds” (emphasis supplied).\n\n5.6. The PTWD (and FTWD) were quite different from other directives on protective\n characteristic discrimination provisions. Both as a matter of their language and their\n purpose, they are properly construed as bearing a more limited scope, including\n limiting their application to clearer cases of less favourable treatment solely on\n grounds of part-time worker status.\n\n5.7. The PTWRs implemented the PTWD in domestic law (as the Fixed-term Employees\n (Prevention of Less Favourable Treatment) Regulations 2002 (“FTERs”)\n implemented the FTWD). Neither were made under the usual enabling power used\n regulations implementing European Directives (in the European Communities Act\n 1972), as the Government considered that this power was not broad enough to\n implement Directives made by way of Framework Agreements under the Maastricht\n Treaty procedure if provision was to be made to cover pay. As was explained in the\n contemporaneous House of Commons Research paper for the purposes of\n Parliament’s consideration of the PTWRs, “For this reason, the Government took power in\n the Employment Relations Act 1999 to introduce the regulations”.\n\n\n 5\n5.8. Whilst it was open to the Government to seek to expand the scope of protections\n afforded by the PTWRs by comparison to the PTWD, both in accordance with the\n enabling power in primary legislation and the latitude as to member state\n implementation afforded by the terms of the PTWD, neither the language nor the\n purpose of the PTWRs (nor the contextual materials at the time of their introduction)\n evince any intention in fact to relax the narrower test for causation applied by the\n PTWD/Framework Agreement.\n\n5.9. As for the language of the PTWRs, whilst they do not replicate the phrase “solely\n because” used in the PTWD/Framework Agreement, they do use the closely analogous\n (and plainer) linguistic formula, “only if”. As Bean LJ accepted at [98], “‘Only’ is a similar\n word to ‘solely’....”; and as Elisabeth Laing LJ observed at [68], “The draftsman knew that\n there could be more than one reason, or ground, for treatment, and chose to refer to one ground in\n regulation 5(2) and to use the phrase ‘only if””. Indeed, when one looks at the operative\n provisions of the PTWD and the PTWRs side by side, there is a compelling case that\n the domestic draftsman simply sought to change the words “solely because” to the\n plainer “only if” when recasting in statutory provisions the bundled concepts contained\n in cl. 4.1, no doubt recognising that employment law is pre-eminently an area of statute\n where plain language is desirable in order that legally unaided and unrepresented\n parties can read and understand the law. The close structural similarity between the\n two provisions can be illustrated by the use of colour-coding showing the same\n sequence of concepts:\n\n 5.9.1. PTWD/cl. 4.1 Framework Agreement (emphasis supplied):\n\n “In respect of employment conditions, part-time workers shall not be treated in\n a less favourable manner than comparable full-time workers solely because\n they work part time unless different treatment is justified on objective grounds.”\n\n 5.9.2. PTWRs, reg 5(2) (emphasis supplied):\n\n “(1) A part-time worker has the right not to be treated by his employer\n less favourably than the employer treats a comparable full-time\n worker –\n\n (a) as regards the terms of his contract; or\n\n (b) by being subjected to any other detriment by any act, or\n deliberate failure to act, of his employer.\n\n (2) The right conferred by paragraph (1) applies only if –\n\n\n 6\n (a) the treatment is on the ground that the worker is a part-\n time worker, and\n\n (b) the treatment is not justified on objective grounds.”\n\n 5.10. Furthermore, given the expressly stated contemporaneous intention of the PTWRs to\n implement the PTWD, and given the usual canons of consistent interpretation of\n implementing regulations with the directives to which they seek to give domestic\n effect, there would need to be clear language indicating an intention of the domestic\n draftsman to depart from the narrower test of causation in the PTWD. As Elisabeth\n Laing LJ correctly found at [68],2 there is no such linguistic indication (indeed, as set\n out above, quite the contrary).\n\n 5.11. The proper construction of the PTWRs is accordingly that they reflect the narrow\n approach to causation contained in the PTWD which they implement. Nor do any\n purposive or contextual factors (as explained in detail below) give reason to consider\n that the domestic draftsman or the UK government or legislature had any such\n intention to relax the test of causation.\n\n 5.12. A particular feature of the domestic judgments reasoning to the contrary (principally,\n the EAT’s decision below and the EAT’s decision in Sharma) is that they were given\n without the benefit of adversarial legal argument and without identification of the\n arguments as to the limited nature of the intervention effected by the PTWD and\n PTWRs (which were addressed to the Court of Appeal below and are further\n developed before this Court). As Elisabeth Laing LJ noted at [90]-[91], neither Eady\n P below nor Elias P in Sharma had “the benefit of the well-researched arguments” before the\n Court of Appeal below or considered, “the range of EC [European Community] measures to\n which I have referred”. In those circumstances, despite giving careful consideration to\n their views in light of the expertise of those Judges, Elisabeth Laing LJ concluded (at\n [91]) that, “the emphatic reasoning in paragraphs 47-52 of Sharma, including the assertion in\n paragraph 48 and the examples which follow, is not convincing”, the examples given by Elias P\n in Sharma did not on closer analysis work and the EAT below “did not explain why, in\n effect, no weight should be given to the unusual phrase ‘solely because’. Nor did it convincingly explain\n\n\n2 “There is absolutely no sign in the language of regulation 5(2) that the draftsman intended the test for causation to be less strict\n than the test in clause 4.1.”\n\n\n 7\n why, if clause 4.1 means what it says, the language of regulation 5(2) shows that the Secretary of\n State intended to change the narrow test for causation in clause 4.1.”\n\n5.13. The Respondent submits that the judgments of the EAT in Sharma and of the EAT\n and the majority of the Court of Appeal below all seek to uphold a broader\n construction of the causation test under the PTWRs on the erroneous bases that: (a)\n the limited legislative interventions into the fields of part-time work and fixed-term\n work protections negotiated by the Social Partners are to be equated with the\n differently worded, conventionally legislated interventions of a different character in\n the field of discrimination on grounds of protected characteristics; and (b) the PTWRs\n must be construed more broadly to make them effective, without appreciating or\n reflecting on the significance of the many other ways in which they are markedly\n different and more limited in their scope and effect than legislative interventions on\n protected characteristics discrimination to which those judgments analogised. This\n can be seen from: (i) the conclusion of the EAT in Sharma at [50] that the narrower\n construction of the test of causation would “wholly undermine the purpose of the directive”;\n (ii) the conclusions of the EAT below at [67] emphasising the “protective purpose of the\n legislation” and at [72] indicating that the contrary construction “risks excluding” cases\n of discrimination against part-timers; (iii) the conclusion of Edis LJ below at [34] that\n “A purposive construction would lead to the broader, rather than the narrower class of potential\n beneficiaries of the remedies”, including in reliance upon the examples given by Elias in\n Sharma – which Edis LJ describing as “persuasive”, despite the Appellant’s counsel in\n the Court of Appeal accepting that they were each “imperfect” (and the Respondent’s\n counsel explaining how they did not work); and (iv) in the conclusion of Bean LJ\n below at [101] that the contrary construction “seriously weakens the protection given to part-\n time workers under the 2000 Regulations.” Neither the EAT below or in Sharma had cited\n to it the limited reach of the PTWRs which, in accordance with the contemporaneous\n regulatory impact assessment, would only stand to benefit 400,000 of Great Britain’s\n 6,000,000 part-time workers (6.6%), and which led to the PTWRs being deprecated at\n the time of their introduction by distinguished academic commentators for reason of\n their limited reach and impact.\n\n5.14. That error as to the putative broader legislative purpose not only extends the ambit of\n the PTWRs beyond their proper construction but also perpetuates a myth that the\n PTWRs effect a broader intervention into this area (one equivalent with the\n\n\n 8\n interventions in respect of discrimination on grounds of protected characteristics),\n obscuring the many other limitations of the intervention (such as the lack of indirect\n discrimination protection or ability to construct a hypothetical comparator). The\n approach of the EAT below and in Sharma and of the majority of the Court of Appeal\n is liable to give rise to a misapprehension on the part of the public and the legislature\n as to the nature and scope of the PTWD and the PTWRs more broadly than just in\n relation to the question of construction with which this Court is presently seised. By\n recognising the limited nature of the intervention made by the PTWRs (however the\n issue of the breadth of the causation test is resolved), this Court will both correctly\n construe the causation test in the PTWRs and also stem the misunderstanding of the\n scope of the PTWRs which has crept into the jurisprudence below, rightly leaving to\n the executive and legislature to consider whether (a quarter century after the\n implementation of the PTWRs) industry and organised labour, public opinion and\n political consensus favour maintaining the same approach or broadening the\n protections to be afforded to part-time workers. As the recitals to the Framework\n Agreement comprehensively note, that is likely to involve fine political judgments as\n to (i) on the one hand, the impact of increased regulatory burden on employers\n (potentially decreasing employment, investment and damaging economic growth), and\n (ii) on the other hand, the benefit to part-time workers (still disproportionately likely\n to be women) of more broadly drawn and extensive discrimination provisions on the\n basis of part-time worker status (and whether these would add materially to existing\n protections under, for example, indirect sex discrimination and equal pay law).\n\n6. The remainder of this Written Case is structured as follows:\n\n 6.1. Section B sets out more fully the legislative provisions at issue in the appeal;\n\n 6.2. Section C addresses the context to those legislative provisions, covering the\n circumstances in which they were introduced and the manner in which they have\n subsequently been interpreted in European and domestic case law;\n\n 6.3. Section D sets out the balance of the Respondent’s submissions in support of its\n opposition to the Appeal, responding to the arguments made in the Appellant’s case.\n\n\n 9\nB. LEGISLATIVE FRAMEWORK\n\n7. The PTWRs were made under section 19 of the Employment Relations Act 1999 (the “ERA\n 1999”) in order to implement the PTWD. The PTWD, in turn, had been introduced to\n implement the Framework Agreement on part-time work concluded on 6 June 1997\n between the general European cross-industry organisations (“Framework Agreement”),\n which was annexed to it. This section sets out the relevant provisions in each of these\n instruments, starting with the Framework Agreement.\n\nB1. The Framework Agreement\n\n8. Clause 4 of the Framework Agreement (in fuller extract than the core wording set out at\n paragraph 5.9 above) provides as follows:\n\n “Clause 4: Principle of non-discrimination\n\n 1. In respect of employment conditions, part-time workers shall not be treated in a less favourable\n manner than comparable full-time workers solely because they work part time unless different\n treatment is justified on objective grounds.\n\n 2. Where appropriate, the principle of pro rata temporis shall apply.\n\n 3. The arrangements for the application of this clause shall be defined by the Member States\n and/or social partners, having regard to European legislation, national law, collective\n agreements and practice.\n\n 4. Where justified by objective reasons, Member States after consultation of the social partners in\n accordance with national law, collective agreements or practice and/or social partners may,\n where appropriate, make access to particular conditions of employment subject to a period of\n service, time worked or earnings qualification. Qualifications relating to access by part-time\n workers to particular conditions of employment should be reviewed periodically having regard\n to the principle of non-discrimination as expressed in Clause 4.1.”\n\n9. Clause 3 defines part-time and comparable full-time worker status for the purpose of\n applying clause 4 as follows:\n\n “Clause 3: Definitions For the purpose of this agreement:\n\n 1. The term ‘part-time worker’ refers to an employee whose normal hours of work, calculated on\n a weekly basis or on average over a period of employment of up to one year, are less than the\n normal hours of work of a comparable full-time worker.\n\n 2. The term ‘comparable full-time worker’ means a full-time worker in the same establishment\n having the same type of employment contract or relationship, who is engaged in the same or a\n similar work/ occupation, due regard being given to other considerations which may include\n seniority and qualification/ skills.\n\n\n 10\n Where there is no comparable full-time worker in the same establishment, the comparison shall\n be made by reference to the applicable collective agreement or, where there is no applicable\n collective agreement, in accordance with national law, collective agreements or practice.”\n\nB2. The PTWD\n\n10. The substantive effect of the PTWD is that it makes as a Directive under European law the\n annexed detailed Framework Agreement agreed between the social partners.\n\n11. As for the operative provisions of the PTWD:\n\n 11.1. Article 1 of the PTWD simply provides as follows:\n\n “The purpose of this Directive is to implement the Framework Agreement on part-time work\n concluded on 6 June 1997 between the general cross-industry organizations (UNICE, CEEP\n and the ETUC) annexed hereto.”\n\n 11.2. Article 2 of the PTWD requires Member states to “bring into force the laws, regulations and\n administrative provisions necessary to comply with this Directive”.\n\n12. Certain of the Recitals to the PTWD also bear particular emphasis:\n\n 12.1. At (11), in respect of the Framework Agreement, “the signatory parties wished to conclude a\n framework agreement on part-time work setting out the general principles and minimum requirements\n for part-time working; whereas they have demonstrated their desire to establish a general framework\n for eliminating discrimination against part-time workers and to contribute to developing the potential\n for part-time work on a basis which is acceptable for employers and workers alike”,\n (emphasis supplied). Thus, the Framework Agreement represents a negotiated\n agreement between organised labour) and employer representative bodies.\n\n 12.2. At (18), that the European Commission had drafted its proposal for a PTWD, “in\n compliance with Article 2(2) of the Agreement on social policy which provides that Directives in the\n social policy domain ‘shall avoid imposing administrative, financial and legal constraints in a way\n which would hold back the creation and development of small and medium-sized undertakings.”\n\nB3. The power to make regulations\n\n13. Prior to IP Completion Day on 30 December 2020, section 19 of the ERA 1999 relevantly\n provided as follows:\n\n “19.— Part-time work: discrimination.\n\n\n 11\n (1) The Secretary of State shall make regulations for the purpose of securing that persons in part-\n time employment are treated, for such purposes and to such extent as the regulations may\n specify, no less favourably than persons in full-time employment.\n\n (2) The regulations may—\n\n (a) specify classes of person who are to be taken to be, or not to be, in part-time employment;\n\n (b) specify classes of person who are to be taken to be, or not to be, in full-time employment;\n\n (c) specify circumstances in which persons in part-time employment are to be taken to be,\n or not to be, treated less favourably than persons in full-time employment;\n\n (d) make provision which has effect in relation to persons in part-time employment generally\n or provision which has effect only in relation to specified classes of persons in part-time\n employment.\n\n [...]\n\n (4) Without prejudice to the generality of this section the regulations may make any provision\n which appears to the Secretary of State to be necessary or expedient—\n\n (a) for the purpose of implementing Council Directive 97/81/EC on the framework\n agreement on part-time work in its application to terms and conditions of employment;\n\n (b) for the purpose of dealing with any matter arising out of or related to the United\n Kingdom's obligations under that Directive;\n\n (c) for the purpose of any matter dealt with by the framework agreement or for the purpose\n of applying the provisions of the framework agreement to any matter relating to part-\n time workers.”\n\nB4. The PTWRs\n\n14. Regulation 5 of the PTWRs (in fuller extract than the core wording set out at paragraph 5.9\n above) provides as follows:\n\n “5.— Less favourable treatment of part-time workers\n\n (1) A part-time worker has the right not to be treated by his employer less favourably than the\n employer treats a comparable full-time worker—\n\n (a) as regards the terms of his contract; or\n\n (b) by being subjected to any other detriment by any act, or deliberate failure to act, of his\n employer.\n\n (2) The right conferred by paragraph (1) applies only if—\n\n (a) the treatment is on the ground that the worker is a part-time worker, and\n\n (b) the treatment is not justified on objective grounds.\n\n\n 12\n (3) In determining whether a part-time worker has been treated less favourably than a comparable\n full-time worker the pro rata principle shall be applied unless it is inappropriate.\n\n (4) A part-time worker paid at a lower rate for overtime worked by him in a period than a\n comparable full-time worker is or would be paid for overtime worked by him in the same period\n shall not, for that reason, be regarded as treated less favourably than the comparable full-time\n worker where, or to the extent that, the total number of hours worked by the part-time worker\n in the period, including overtime, does not exceed the number of hours the comparable full-time\n worker is required to work in the period, disregarding absences from work and overtime.”\n\n15. The ‘pro rata principle’ to which regulation 5(3) refers is defined by regulation 1(2) to mean\n “that where a comparable full-time worker receives or is entitled to receive pay or any other benefit, a part-\n time worker is to receive or be entitled to receive not less than the proportion of that pay or other benefit that\n the number of his weekly hours bears to the number of weekly hours of the comparable full-time worker”.\n\n16. Regulation 2 (as amended by regulation 2 of the Part-time Workers (Prevention of Less\n Favourable Treatment) Regulations 2000 (Amendment) Regulations (SI 2002/2035))\n defines part-time and full-time worker status for the purposes of applying regulation 5 as\n follows:\n\n “2.— Meaning of full-time worker, part-time worker and comparable full-time\n worker\n\n (1) A worker is a full-time worker for the purpose of these Regulations if he is paid wholly or in\n part by reference to the time he works and, having regard to the custom and practice of the\n employer in relation to workers employed by the worker’s employer under the same type of\n contract, is identifiable as a full-time worker.\n\n (2) A worker is a part-time worker for the purpose of these Regulations if he is paid wholly or in\n part by reference to the time he works and, having regard to the custom and practice of the\n employer in relation to workers employed by the worker’s employer under the same type of\n contract, is not identifiable as a full-time worker.\n\n (3) For the purposes of paragraphs (1), (2) and (4), the following shall be regarded as being\n employed under different types of contract—\n\n (a) employees employed under a contract that is not a contract of apprenticeship;\n\n (b) employees employed under a contract of apprenticeship;\n\n (c) workers who are not employees;\n\n (d) any other description of worker that it is reasonable for the employer to treat differently\n from other workers on the ground that workers of that description have a different type\n of contract.\n\n (4) A full-time worker is a comparable full-time worker in relation to a part-time worker if, at\n the time when the treatment that is alleged to be less favourable to the part-time worker takes\n place–\n\n\n 13\n (a) both workers are–\n\n (i) employed by the same employer under the same type of contract, and\n\n (ii) engaged in the same or broadly similar work having regard, where relevant, to\n whether they have a similar level of qualification, skills and experience; and\n\n (b) the full-time worker works or is based at the same establishment as the part-time\n worker or, where there is no full-time worker working or based at that establishment\n who satisfies the requirements of sub-paragraph (a), works or is based at a different\n establishment and satisfies those requirements.”\n\n17. Regulation 8 makes the right of non-discrimination under regulation 5 exercisable by\n complaint before an employment tribunal.\n\nC. RELEVANT CONTEXT\n\nC1. Background to the Framework Agreement\n\n18. The PTWD (as with the FTWD) is an unusual instrument with a specific political and\n legislative history. Most European Union directives are the product of a conventional\n legislative process. All of the preceding directives on sex equality cited in paragraph 9 of the\n Appellant’s Written Case were adopted through this conventional process.3 So too were later\n directives dealing with other types of discrimination relating to protected characteristics such\n as race and sexual orientation.4 By contrast, the PTWD at issue in this case is the product of\n negotiations between supranational interest groups representing employers/industry on the\n one hand and employees/trade unions on the other and is concerned not with a fundamental\n personal characteristic but a type of employment status: part-time worker status (or, in the\n FTWD, fixed-term worker status).\n\n\n3 In particular: (i) Council Directive 75/117/EEC of 10 February 1975 on the approximation of the laws of the\n Member States relating to the application of the principle of equal pay for men and women [1975] OJ L 45/19;\n (ii) Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal\n treatment for men and women as regards access to employment, vocational training and promotion, and\n working conditions [1976] OJ L 39/40; (iii) Council Directive 79/7/EEC of 19 December 1978 on the\n progressive implementation of the principle of equal treatment for men and women in matters of social security\n [1979] OJ L 6/24; (iv) Council Directive 86/378/EEC of 24 July 1986 on the implementation of the principle\n of equal treatment for men and women in occupational social security schemes [1986] OJ L 225/40; and (v)\n Council Directive 86/613/EEC of 11 December 1986 on the application of the principle of equal treatment\n between men and women engaged in an activity, including agriculture, in a self-employed capacity, and on the\n protection of self-employed women during pregnancy and motherhood [1986] OJ L 359/56.\n4 Including: (i) Council Directive 97/80/EC of 15 December 1997 on the burden of proof in cases of\n discrimination based on sex [1998] OJ L 14/6; (ii) Council Directive 2000/43/EC of 29 June 2000\n implementing the principle of equal treatment between persons irrespective of racial or ethnic origin [2000]\n OJ L 180/22; and (iii) Council Directive 2000/78/EC of 27 November 2000 establishing a general framework\n for equal treatment in employment and occupation [2000] OJ L 303/16.\n\n\n 14\n19. The principal impetus to address the treatment of part-time workers at the level of\n Community law was a perceived connection to a broader legislative project of sex equality.\n At first, the institutions of the European Communities sought to regulate part-time work\n through the ordinary legislative process. But the issue proved too contentious for consensus\n to be reached by this mechanism. In particular:\n\n 19.1. In January 1982, the Commission proposed a directive providing that “[p]art-time\n workers shall not be discriminated against as compared with full-time workers in respect of” various\n working conditions, protections and entitlements, which the Council rejected.5 As was\n noted in recital (4) to this proposed directive, “this measure is designed to complement in the\n field of part-time work existing legislation on the realization of equal treatment for men and women.”\n This was rejected.\n\n 19.2. In January 1983, the Commission proposed an amended directive providing that\n “[p]art-time workers shall receive the same treatment as full-time workers in the same situation,\n except where the difference in hours of work itself objectively justifies differences in treatment”, which\n the Council again rejected.6\n\n 19.3. In June 1990, the Commission proposed a further directive providing that part-time\n workers would enjoy the treatment as full-time workers with regard to various working\n conditions, protections and entitlements, which once again the Council rejected it.7\n\n20. These attempts formed part of broader efforts throughout the 1980s to regulate atypical\n work, most of which failed due to a lack of consensus between organised labour and\n employer groups and between member states (depending on how pro-labour or pro-\n business the governments from time to time of those members states were). In all, nine draft\n directives on atypical work were proposed by the European Commission between 1982 and\n 1990, only one of which (a relatively modest proposal extending health and safety regulations\n\n\n5 Proposal for a Council Directive on voluntary part-time work (submitted by the Commission to the Council\n on 4 January 1982) [1982] OJ C 62/7.\n6 Amended proposal for a Council Directive on voluntary part-time work (submitted by the Commission to the\n Council, pursuant to the second paragraph of Article 149 of the EEC Treaty on 5 January 1983) [1983] OJ C\n 18/5.\n7 Proposal for a Council Directive on certain employment relationships with regard to working conditions\n (submitted by the Commission on 29 June 1990) [1990] OJ C 224/4.\n\n\n 15\n to temporary workers) was adopted. The British Government then vetoed a further attempt\n at wider legislation in 1994.8\n\n21. It is notable that these abortive conventional legislative attempts in the field of part-time\n work at Community level would have provided for a broader approach which did not seek\n to limit the principle of non-discrimination to cases of sole causation. See, for example,\n article 2 of the Commission’s proposed 1982 directive which would have provided a\n discrimination protection in the following broad terms:\n\n “Part-time workers shall not be discriminated against as compared to full-time workers in respect of\n working conditions, rules governing dismissal, entitlement to participate actively or passively in bodies\n representing employees and access to vocational training, promotion, social facilities and medical care.\n This is hereinafter referred to as the ‘principle of non-discrimination’.”\n\n22. It was against that background that the European Commission resorted to a new procedure\n for making social policy, involving consultation with the European Social Partners, to\n regulate part-time work. That procedure was established by the Agreement on Social Policy\n concluded between the Member States of the European Community with the exception of\n the United Kingdom of Great Britain and Northern Ireland [1992] OJ C 191/91 (“Social\n Policy Agreement”), which was annexed to the Social Protocol contained in the Maastricht\n Treaty on European Union (“TEU”) signed in 1993. The United Kingdom was not\n originally a signatory to the Social Policy Agreement but acceded to it in 1997.9\n\n23. The Social Policy Agreement imposed a mandatory duty on the Commission to consult\n “management and labour” in relation to social policy proposals: see Article 3. It further provided\n that management and labour could make agreements at Community level in relation to social\n policy, which, upon their joint request, could be implemented by a Council decision on a\n proposal from the Commission: see Article 4.\n\n24. It was through this special process, by the Social Partners at Community level (with the\n organisations who constituted the Social Partners including as representative members the\n UK’s TUC and CBI), that in December 1997 the Commission proposed, and the Council\n adopted, the PTWD, thereby implementing the Framework Agreement for regulating part-\n time work. That Framework Agreement had been concluded in June 1997 between the\n\n\n8 As documented by Mark Jeffery in ‘Not Really Going to Work? Of the Directive on Part-time Work, ‘Atypical\n Work’ and Attempts to Regulate It’ (1998) 27(3) ILJ 193 at 193-194.\n9 Treaty of Amsterdam amending the Treaty on European Union, the Treaties establishing the European\n Communities and certain related acts [1997] OJ C 340/1, Articles 117-119.\n\n\n 16\n Community-level associations for trade unions (the European Trade Union Confederation\n or “ETUC”, of which the UK’s TUC was a member/national affiliate), private-sector\n employers (the Union of Industrial and Employer’s Confederations of Europe or\n “UNICE”, of which the UK’s CBI was a member/national affiliate) and public-sector\n employers (the European Centre of Enterprises with Public Participation or “CEEP”).\n\n25. The recitals to the Framework Agreement (titled “General considerations”) emphasised that “the\n social partners [were] best placed to find solutions that correspond to the needs of both employers and workers\n and must therefore be given a special role in the implementation and application of this Agreement”: see\n recital (8). They also emphasised that, in reaching consensus on the Framework Agreement,\n those social partners were required to balance the protection of part-time workers against\n broader considerations of business flexibility, efficiency, productivity and competition. The\n Respondent highlights the following recitals:\n\n “(4) Whereas the conclusions of the European Council meeting in Essen emphasized the need for\n measures to promote both employment and equal opportunities for women and men, and called\n for measures aimed at ‘increasing the employment intensiveness of growth, in particular by more\n flexible organization of work in a way which fulfils both the wishes of employees and the\n requirements of competition’;\n\n (5) Whereas the parties to this agreement attach importance to measures which would facilitate\n access to part-time work for men and women in order to prepare for retirement, reconcile\n professional and family life, and take up education and training opportunities to improve their\n skills and career opportunities for the mutual benefit of employers and workers and in a manner\n which would assist the development of enterprises.\n\n [...]\n\n (7) Whereas this Agreement takes into consideration the need to improve social policy\n requirements, to enhance the competitiveness of the Community economy and to avoid imposing\n administrative, financial and legal constraints in a way which would hold back the creation\n and development of small and medium-sized undertakings.”\n\n26. In balancing those competing considerations, the social partners were able to agree only the\n “minimum requirements relating to part-time work”, while acknowledging the broader “willingness\n of the social partners to establish a general framework for the elimination of discrimination against part-time\n workers and to assist the development of opportunities for part-time working on a basis acceptable to employers\n and workers”: see the second paragraph of the Preamble.\n\n27. Giving effect to those avowedly minimal requirements, the Framework Agreement\n introduced the protections under Clause 4: see Section B1 above.\n\n\n 17\nC2. Making of the Framework Agreement as the PTWD\n\n28. Upon a proposal by the Commission, the Council implemented the Framework Agreement\n by means of the PTWD: see Section B2 above.\n\n29. Shortly before the PTWD was put to the Council, the European Parliament called for\n amendments to the proposals, observing that “the actual substance of the agreement, once the\n declaratory elements have been removed, does not always do justice to its stated purpose, since the agreement\n does not eliminate discrimination against part-time workers and does not contribute to making part-time\n work more attractive.”10 However, this was rejected by the European Commission on the\n grounds that this was too great an interference with the autonomy of the Social Partners.11\n\n30. When implementing the Framework Agreement, the Council emphasised the importance of\n such deference, observing that the social partners were “as a rule closer to social reality and to\n social problems”: see PTWD recital (10). The Council further acknowledged that the\n consultation process resulting in the Framework Agreement had been a protracted and\n iterative process (see PTWD recitals (6) to (9)), and that it had been agreed to an avowedly\n minimal level, balancing the competing interests of management and labour (see text of\n recital (11) at paragraph 12 above). By recital (15), the Council made clear that the “Directive\n does not go beyond what is necessary for the attainment of those objectives”. By recital (16), the Council\n indicated that member states would be free to define any undefined terms in accordance\n with their national law and practice, so long as such terms “respect the content of the Framework\n Agreement.” Recital (18) (the text of which is set out at paragraph 12 above) identifies the\n emphasis the Council placed on avoiding burdening small and medium-sized enterprises.\n\nC3. Implementation of the PTWD by means of the PTWRs\n\n31. The PTWD was extended to the United Kingdom, in connection with its accession to the\n Social Policy Agreement in 1997, by Council Directive 98/23/EC of 7 April 1998 [1998] OJ\n L 41/10.\n\n32. As explained at paragraph 5.7 above, in order to give domestic effect to the PTWD,\n Parliament enacted section 19 of the ERA 1999: see Section B3 above. The Explanatory\n\n\n10 Resolution on the Commission proposal for a Council Directive concerning the framework agreement on part-\n time work concluded by UNICE, CEEP and the ETUC [1997] OJ C 371/41 at 62, §9.\n11 See Jeffrey, ‘Not Really Going to Work?’ (op cit) at 201 and fn 27.\n\n\n 18\n Notes to the ERA 1999 noted (at [215]) that the provision would require the Secretary of\n State to give domestic effect to the PTWD:\n\n “Section 19 requires the Secretary of State to make regulations to ensure that part-time workers\n receive no less favourable treatment than full-time workers, as provided in the EU Directive on Part-\n Time Work (Council Directive 97/81/EC). The Directive was brought forward under the\n Agreement on Social Policy to adopt as Community law a Framework Agreement between the\n European social partners. (These are three federations consisting of national organisations representing\n respectively employers, trade unions and companies with public ownership or public interest in each\n Member State. The CBI and TUC are both members of their appropriate groups.) It aims to remove\n discrimination against part-timers and improve the quality of part-time work. In Chapter 5 of\n Fairness at Work, the Government welcomed the Directive and said it would implement the Directive\n before April 2000. This provision gives the Secretary of State the powers to ensure that all aspects of\n the Directive and the Framework Agreement are fully implemented, together with related matters.”\n\n33. In principle, the PTWD could have been implemented directly under section 2(2) of the\n European Communities Act 1972. But that would have excluded pay from the regulation of\n part-time work as a matter of vires. It was therefore necessary to give the legislator power to\n go further than the PTWD in respect of pay. As the Explanatory Notes to the ERA 1999\n explained (at [216]):\n\n “This power is necessary because Directives which implement Framework Agreements cannot, by the\n terms of the Agreement on Social Policy (now incorporated into the Treaty of Amsterdam), cover pay.\n However, in relation to part-timers, the Government believes pay should be covered at the same time\n as other employment conditions. The powers under the European Communities Act 1972 which are\n usually used to implement EU Directives are not sufficiently wide to go beyond the scope of the\n Directive in this way, so the section provides powers to do this.”\n\n34. The same account as to why it was necessary to introduce section 19 was given in the House\n of Commons Library research paper describing the background to and provisions of the\n PTWRs: Part-time Work: Research Paper 00/50 (House of Commons, 15 May 2000) (the\n “HoC Research Paper”), page 12.\n\n35. Section 42 of the ERA 1999 provided that any regulations made under section 19 would be\n subject to the affirmative resolution procedure.\n\n36. The Secretary of State duly made the PTWRs under section 19 of the ERA 1999 on 8 June\n 2000, with the PTWRs coming into force on 1 July 2000: see Section B4 above. As the HoC\n Research Paper stated on page 1, first bullet under ‘Summary of main points’, “The Part-time\n Workers (Prevention of Less Favourable Treatment) Regulations 2000 implement EU Directive\n 97/81/EC on part-time work.”.\n\n\n 19\n37. Nowhere in the contemporaneous contextual materials relating to the PTWRs was there any\n indication that the Government, domestic draftsman or Parliament intended to relax the\n narrower test of causation in the PTWD:\n\n The HoC Research Paper\n\n 37.1. This paper extended to 42 pages, “describing the background to and the provisions of the Part-\n time Workers (Prevention of Less Favourable Treatment) PTWRs 2000 [...] due to be debated in\n the Third Delegated Legislation Standing Committee on 18 May 2000.” Nowhere in the paper,\n including in the summary of the ‘main provisions’ of the PTWRs, is there any\n statement or indication of an intention to relax the PTWD’s approach to causation.\n To the contrary, the paper explained that:\n\n 37.1.1. “It is largely because of changes to the law made as a result of challenged under the indirect\n discrimination provisions of the sex discrimination legislation that there is relatively little\n discrimination against part-time workers in the UK”: page 10.\n\n 37.1.2. The press summary launching the Government consultation on the PTWRs\n had noted that one of their effects would be to ensure that part-timers would,\n “not be excluded from training simply because they work part-time”: pages 15-16\n (emphasis supplied).\n\n 37.1.3. The Regulatory Impact Assessment of the proposed PTWRs estimated that\n only “45,000 of the 6 million part-time employees in Great Britain could directly benefit\n from the new law through increases in pay and non-wage benefits”: page 18.\n\n 37.1.4. The Education and Employment Select Committee had expressed a concern\n that “If the Directive on Part-time Work is transformed in its basic form it will be no\n more effective, and in some areas less effective than existing legislation...”: page 19.\n\n 37.1.5. In their consultation responses, “Employers’ organisations were pleased...that the\n draft regulations only covered employees, not casual workers and homeworkers; and that\n there was no provision for hypothetical comparators. The CBI reported that the regulations\n were ‘much less onerous than in the pre-consultation draft’. However, employers still had\n concerns about increased regulatory burden”: page 23.\n\n 37.1.6. Four main changes were made to the draft PTWRs following consultation,\n with none of these relating to causation and with some measures broadening\n\n\n 20\n the effect of the regulations (such as including workers as well as employees\n within their scope) whilst others would narrow it (such as limiting part-time\n workers to comparing their terms and conditions with full-time workers on\n the same type of contract): page 24.\n\n 37.1.7. Even following the post-consultation amendments to the PTWRs, they were\n only anticipated (by the revised Regulatory Impact Assessment) to benefit\n 400,000 of the 6 million part-time workers in Great Britain: page 26.\n\n Hansard\n\n 37.1.8. The Respondent has not identified in any extract of Hansard any stated\n intention of a Government Minister (or any other Parliamentarian) to relax\n the test of causation in the PTWRs (or the FTERs) compared to that in the\n PTWD (or FTWD).\n\n38. Around the time of the PTWRs’ introduction, it was widely-observed that the scope of the\n legislative intervention they effected – reflecting the ambit of the PTWD, and in contrast to\n other areas of equality law – would be markedly limited:\n\n 38.1. As referenced in the extract from the HoC Research Paper cited at paragraph 37.1.4\n above, prior to the introduction of the PTWRs, in March 1999, the Education and\n Employment Select Committee had published a report on Part-time Working, making\n recommendations as to the implementation of the PTWD: see Education and\n Employment Committee, Part-time Working, Second Report, 1998-99, HC 346-I.\n This report raised concerns that the proposed implementing PTWRs would be less\n effective in some areas than existing sex discrimination law (the then Sex\n Discrimination Act 1975 and Equal Pay Act 1970).\n\n 38.2. Notably, subsequent to the appeal before the Court of Appeal below, the Respondent\n has identified in its research that the Select Committee specifically received evidence\n which raised concerns about the narrowness of the test of sole causation in the PTWD\n and which asked for the wording of the causation test to be expressly broadened when\n implemented domestically. In a memorandum to the Select Committee from the\n Manufacturing Science and Finance (“MSF”) trade union provided for the purpose\n of written and oral evidence given by union officials to the Select Committee on 30\n July 1998 (and published in the appendices to the Select Committee’s Minutes of\n\n\n 21\n Evidence), MSF made the following submissions on the PTWD: “MSF welcomes this\n Directive as it will send a strong political message to employers that discrimination against part-time\n workers will not be tolerated. In this sense, its very existence will prove a strong force for greater\n equality. However, MSF is concerned that Article 4(1) of the Directive, in stating\n that part-time workers shall not be treated in a less favourable manner solely\n because they work part-time, will actually represent a narrowing of the current\n UK law on discrimination. Under the Sex Discrimination Act and Race\n Relations Act, it is only necessary to show that race or sex was an important\n factor in the less favourable treatment....” (emphasis supplied). In light of this,\n MSF recommended that, “the words ‘or where an important factor is that’ are\n inserted after the words ‘solely because’ in the legislation implementing Article\n 4(1) of the Directive” (emphasis supplied). Accordingly, Parliament was specifically\n on notice of the narrower approach to causation in the PTWD, but when the PTWRs\n came to be made it did not adopt the MSF’s recommendation that the PTWRs be\n framed in terms that cases where part-time worker status was merely “an important\n factor” in the putative less favourable treatment fell within the scope of the protection.\n\n38.3. In an article published shortly after the introduction of the PTWRs, Professor Aileen\n McColgan observed that the PTWRs were strikingly limited by comparison with other\n types of discrimination law: McColgan, ‘Recent legislation. Missing the point? The\n Part-time Workers (Prevention of Less Favourable Treatment) PTWRs 2000 (SI 2000,\n no 1551)’ (2000) 29(3) ILJ 260. In particular, the Professor observed:\n\n 38.3.1. The “most striking aspect [of the PTWRs] is the requirement, save in cases in which\n the part-time worker was originally him or herself employed full-time, for an actual\n comparator against whose treatment that of the applicant can be assessed. This comparator\n must not only be engaged in broadly similar work to that done by the part-time worker,\n but must also be employed on the same type of contract. It is this requirement that explains\n the government's own estimate that, of over six million part-time workers in the UK, only\n one sixth would be able to provide a comparator. (Of these million workers, the Regulatory\n Impact Assessment (RIA) estimated that some 400,000 (fewer than 7% of all parttime\n workers) would benefit directly from the Regulations.)”: page 263.\n\n 38.3.2. “What is clear is that the requirement for a comparator excludes the vast majority of part-\n time workers from the benefit of the Regulations. This requirement sits uncomfortably in\n the body of UK anti-discrimination law. Both SDA and RRA permit hypothetical\n\n\n 22\n comparisons...” In this regard, the comparator requirement under the PTWRs\n may even have been more restrictive than the PTWD. The PTWD had\n envisaged that, where an actual comparator could not be identified,\n “comparison shall be made by reference to the applicable collective agreement or, where there\n is no applicable collective agreement, in accordance with national law, collective agreements\n or practice'”. But the PTWRs made no such further provision for cases: see\n page 264.\n\n 38.3.3. Further, the Government’s commitment to equal opportunities in the light\n of its own estimates of the partial coverage of the Regulations might have\n led the Government to “err on the side of caution in its transposing measures” in\n particular in view of the Employment Subcommittee of the Education and\n Employment Select Committee of the House of Commons’ 1999 view that\n “if the Directive on Part-time Work is transposed in its basic form it will be no more\n effective, and in some areas less effective than existing legislation”, with particular\n concerns about the comparator-driven approach in view of the strongly\n segregated nature of part-time work. Yet it is that comparator-driven\n approach which is reflected in the PTWRs, providing an indication against\n the suggestion that the UK Government/Parliament intended to go further\n than the PTWD, save in minor respects: see page 264.\n\n 38.3.4. The scope of the PTWRs would be “so narrow and their protections so few that\n most discrimination which part-timers suffer [would] continue to be challenged, if at all,\n under” existing discrimination law: see page 267.\n\n\n38.4. Similar views were expressed in academic commentary years after the PTWRs had\n been introduced. In ‘Achieving the objectives of the part-time work Directive?\n Revisiting the part-time workers regulations’ (2011) ILJ 40(3) 254 at 277-278,\n Professor Mark Bell observed that the PTWRs, “undeniably make a contribution to removing\n discrimination as they allow individual workers to challenge instances of less favourable treatment.\n Yet, the narrow formulation of this right blunts its potential to effect a real transformation of part-\n time work within the labour market.”\n\n\n 23\nC4. Interpretation of the PTWD by the CJEU\n\n39. One of the Framework Agreement’s attenuations of earlier attempted formulations of a non-\n discrimination principle in abortive predecessor draft directives on part-time work is the\n expressly narrow test of causation laid down by clause 4.1, limiting the anti-discrimination\n protection to circumstances where workers were “treated in a less favourable manner than\n comparable full-time workers solely because they work part time” (emphasis supplied).\n\n40. The plain meaning of that express narrow test of causation has been repeatedly stated by the\n Court of Justice of the European Union (“CJEU”/“ECJ”) in relevant decisions. The\n Respondent refers to the straightforward summary of the position in Wippel v Peek &\n Cloppenburg GmbH & Co KG (Case C-313/02) [2005] 1 CMLR 9 (“Wippel”) at [42] and [54],\n where the Grand Chamber held that clause 4.1 “precludes part-time workers from being treated less\n favourably than comparable full-time workers on the sole ground that they work part time unless different\n treatment is warranted on objective grounds” (emphasis supplied). The Respondent notes that the\n ECJ does not here simply recite the statutory language of the PTWD (“solely because...”) but\n rather restates that language in terms of a singular ground for the putative discrimination\n (“on the sole ground that they work part time”). By reference to paragraph 36 of the Appellant’s\n case, the ECJ’s rephrasing of the sole causation test in terms of “the sole ground” is of a piece\n with the Respondent’s arguments at paragraph 5.9 above that the domestic statutory\n language, “only if... on the ground that” reflects the Community statutory language, “solely\n because”. As for the contention that the Court of Justice has repeatedly stated that the\n prohibition on discrimination against part-time workers is “merely a particular expression of a\n fundamental principle of Community law, namely the principle of equality”, as Elisabeth Laing LJ\n cogently explained at [93] below, “the ‘general principle of equality’ has a range of different expressions\n in different contexts...” as can be seen from such fundamental differences between different\n legislative measures as whether certain types of directly discriminatory conduct are capable\n of objective justification.\n\n41. Turning to CJEU caselaw considering the terms of the PTWD, first, contrary to paragraph\n 36 of the Appellant’s case that “the CJEU has never suggested [....] an approach which attempts to\n isolate a ‘sole’ cause for differential treatment”, the plain statement of the law in Wippel can be seen\n in application in the Seventh Chamber’s decision in FN v Universiteit Antwerpen and Others\n (C‐265/20), EU:C:2022:361 (judgment of 5 May 2022) (“University of Antwerp”):\n\n\n 24\n 41.1. At issue in that case were provisions of Belgian law concerning university teaching\n posts which provided that: (i) “A member of the independent academic staff with a full-time\n position shall be appointed on a permanent basis”; (ii) “A member of the independent academic staff\n with a part-time position may either be appointed on a permanent basis or employed on a temporary\n basis for renewable periods of a maximum of six years”; and (iii) a teaching position equating\n to at least 50% of a full-time position would open the possibility of a permanent\n appointment: see [10]-[11].\n\n 41.2. The CJEU held that this provision, which treated teachers differently by express and\n direct reference to their part-time worker status, was prima facie discriminatory in\n breach of clause 4.1 of the Framework Agreement: [51]-[52]. In reaching that\n conclusion, the Court emphasised that “no other criteria [had] been defined” in the\n differentiating provisions, and that “[t]his therefore amounts to a difference in treatment based\n solely on the fact that the worker concerned works part-time”: [49]-[50] (emphasis supplied).\n\n42. Second, it must be borne in mind that the CJEU case law considering the PTWD is\n concerned with answering preliminary references for clarification of European law, and\n these decisions are therefore focused on clarifying principles to answer the referring national\n courts’ questions, without determining the application of those principles (those being\n matters for the referring national courts). See in this regard, [55] of the Lufthansa case\n discussed below: “In the context of Article 267 TFEU, the Court has no jurisdiction to assess the facts\n and apply the rules of EU law to a particular case. It is, therefore, for the referring court to carry out the\n legal classifications necessary for the resolution of the dispute in the main proceedings.” It is important in\n any CJEU decision to bear the nature of the enquiry and the specific questions referred by\n the national court firmly in mind. The Appellant seeks to place reliance on two CJEU\n decisions. In neither of those cases was the CJEU seised of any question relating to the\n language of sole causation in the PTWD/Framework Agreement. Rather, the Appellant\n seeks indirectly to parse from comments of the Court on other referred questions (the CJEU\n not being asked to clarify any element of the causation test in those cases) propositions as\n to the Court’s view on the proper approach to the causation question raised in this appeal.\n In any event, as set out below, the Respondent does not consider that even that indirect type\n of analysis (for as much as it could, in principle, bear) assists the Appellant on the terms of\n those judgments.\n\n\n 25\n43. As for the Appellant’s specific reliance on Ute Kleinsteuber v Mars GmbH (C-354/16),\n ECLI:EU:C:2017:539 (judgment of 13 July 2017) (“Mars”) at paragraph 37 of the\n Appellant’s Written Case, the Respondent submits that this decision does not support the\n idea that clause 4.1 of the Framework Agreement imposes a broader test of causation,\n departing from the express requirement to establish “sole” causation. Properly analysed, the\n case has operatively nothing to do with sole or multiple causation:\n\n 43.1. First, the Court noted at [25]-[26] that a ‘split formula’ used in the calculation method\n was of application to both part-time and full-time employees. This is described at [14]\n in the Court’s judgment and involved: first, ascertaining the relevant annual salary of\n the worker who is entitled to a pension; second, reducing that by the average rate of\n activity during the whole of the period of employment (noting on the facts of the case\n that the Claimant had worked between 50% and 75% of the activity of a full-time\n employee during the course of her employment); and third, applying different rates to\n the salary’s components in the resulting amount. Accordingly, the formula was facially\n neutral in applying to the salary of (respectively) the part-time and the full-time worker\n (much in the way that an employer’s pension contribution commitment might be to\n pay a percentage of the employee’s annual salary). Prima facie that is treating like cases\n alike.\n\n 43.2. The Court then proceeded to evaluate the Claimant’s argument that: (i) the way in\n which the ‘split formula’ was applied by the Defendant resulted in too low a\n proportion of the annual pensionable income being allocated to the higher rather than\n the lower percentage rate; and that (ii) instead, the split formula should, for part-time\n employees, first be applied to the notional income of a full-time employee (rather than\n the actual income of the part-time worker), applying the split formula to that notional\n worker and then reducing the product of the application of the split formula to reflect\n the pro-rata part-time rate of activity. Accordingly, the Claimant was proposing that a\n different calculation method be used for part-time workers than for full-time workers.\n In evaluating this argument at [28], the CJEU concluded that the Claimant had not\n established less favourable treatment, stating “It is not, however, apparent from the file before\n the Court that Mars’ calculation method results in discrimination against part-time workers.”\n\n 43.3. Less favourable treatment can be expressed in terms of treating like cases differently\n or different cases alike. In considering that question, the Court was specifically\n required by clause 4(2) of the Framework Agreement to apply the principle of pro rata\n\n\n 26\n temporis where appropriate. Accordingly, the Court concluded that the pension\n scheme’s approach of adjusting the part-time worker’s salary by reference to the actual\n average percentage of a full-time equivalent hours worked reflected “a strict application\n of the pro rata temporis” principle. Accordingly, the operative conclusion of the Court at\n [29]-[30] is that there is no less favourable treatment.\n\n 43.4. At [31]-[32], the Court then proceeded to consider the further question (which does\n not strictly arise on its primary conclusion that there is no relevant less favourable\n treatment) that, if the Claimant’s occupational pension scheme rights so-calculated did\n not correspond to the pro rata temporis share of a better paid full-time position, then\n that would not be causally connected to her part-time status in any event. In essence,\n the Court is again saying that there is no relevant less favourable treatment, because\n the differential which the Claimant points to reflects the proper application of the\n mandated pro rata temporalis principle. Furthermore, the split formula also serves the\n pro rata temporalis principle because it seeks to reflect “in a full and proportionate\n way, the standard of living which the employee enjoyed during his employment.” To the contrary,\n the Claimant’s proposed approach would result in the part-time worker being\n overcompensated pro rata temporis compared to full-time workers in relevant scenarios\n (see [35]-[36]).\n\n 43.5. Whilst the Court’s conclusion at [38] could have been expressed in clearer terms, it is\n therefore properly to be understood as an alternative conclusion that if relevant less\n favourable treatment could be established, that would in any event be objectively\n justified. Contrary to the Appellant’s characterisation, the Court was not, on this\n alternative premise considering any putative less favourable treatment to be on more\n than one ground. Rather, it was reflecting that, if such a difference in treatment solely\n relating to the Claimant’s part-time status could be established, it would in any event\n be objectively justified as the voluntary policy of the employer was to make\n proportionate provision to reflect the standard of living enjoyed by the relevant\n employee during employment.\n\n44. As for the Appellant’s specific reliance on MK v Lufthansa CityLine GmbH (Case C-660/20)\n ECLI:EU:C:2023:789 (“Lufthansa”), this is another case which is focused on the question\n of less favourable treatment and the pro ratis temporalis principle rather than the issue of\n causation:\n\n\n 27\n44.1. The questions referred by the German Federal Labour Court are set out at [29] and\n concern less favourable treatment and, if less favourable treatment were found to exist\n on the facts as referred, the application of clause 4.1 and the pro ratis temporalis principle\n in clause 4.2 of the PTWD.\n\n44.2. The case concerned a part-time airline pilot who was contracted to work 90% of a\n full-time pilot’s contracted hours. In simple terms, under relevant collective\n agreements in Germany, additional remuneration was paid for overtime with different\n enhanced overtime rates being applied at different trigger thresholds of hours worked\n per month above the baseline of a full-time pilot’s contracted hours: see [15]-[16].\n\n44.3. The collective agreements made no provision proportionately to lower the threshold\n for the additional enhanced payments to reflect the lower contracted hours of a part-\n time pilot, with the effect that it was only when the part-time pilot’s “flight duty period\n exceeds the trigger thresholds applicable to full-time workers that he receives the additional\n remuneration”: [18].\n\n44.4. In this regard, whilst principles established by an earlier ECJ decision (Helmig (C-\n 399/92)) had established that a relevant less favourable treatment would not arise\n where, in effect, the part-time worker would earn the same us a full-time worker when\n the part-time worker worked the same number of hours as a full-time worker was\n contracted to work, a later ECJ decision (Elsner-Lakeberg (C-285/02)) had taken a\n different approach and found that part-time workers were treated less favourably if\n the number of additional hours that they needed to work in order to reach the trigger\n for enhanced/overtime remuneration was not proportionately reduced to reflect their\n lower base hours: see [23]-[24]. In the light of this, the referring Court asked for\n clarification of whether the collective agreements in question constituted less\n favourable treatment and whether that complied with clause 4.1 and the pro rata\n temporalis principle in clause 4.2 of the Framework Agreement.\n\n44.5. It is worth observing at this point that the same issue would not arise domestically\n because (in exercise of the power in clause 4.4 of the Framework Agreement)\n regulation 5(4) of the PTWRs specifically provides that a part-time worker will not be\n regarded as less favourably treated by being paid a lower rate of overtime where the\n part-time worker’s total hours worked do not exceed the hours the comparable full-\n\n\n 28\n time worker is required to work. As noted in the guidance notes to the PTWRs, this\n reflected existing English case law.\n\n44.6. Lacking an equivalent provision in German implementing law, and following the\n reasoning of the later ECJ judgment in Elsner-Lakeberg, the CJEU in Lufthansa\n therefore concluded at [49] that less favourable treatment within the meaning of clause\n 4.1 arose, subject to justification being shown. The fact that the CJEU did not at [49]\n go on to consider the reason for the difference in treatment reflected: (a) that that was\n not part of the referred question (which would be a matter for the referring Court to\n ascertain); and (b) more fundamentally, that the less favourable treatment found to\n exist obviously related solely to the part-time status of the pilot. In those\n circumstances, the legality of the difference in treatment would turn on whether\n objective justification could be shown. That the Court considered it to be implicit\n that the less favourable treatment was solely because of the part-time worker status\n can be seen from the terms of its judgment at [54].\n\n44.7. As for paragraph 41 of the Appellant’s Written Case, the arguments as to additional\n remuneration being intended to compensate for a particular workload and for other\n objectives at [20] and [59] do not relate to arguments being put forward as to the\n proper characterisation of the ground of the less favourable treatment. Rather, those\n points were identified as factors relied upon for the purpose of objective justification:\n see references in [20] to “an objective ground justifying the difference in treatment” and in [59]\n to the “objective”.\n\n44.8. It is common ground in the present appeal (as it was below) that a putative\n discriminator’s motivation does not determine the ground of discrimination. The\n Respondent accordingly disputes the suggestion at paragraph 44 of the Appellant’s\n case that either Mars or Lufthansa are cases where part-time status on the one hand\n and underlying motive or rationale on the other are being set up as alternative grounds\n or causes for the less favourable treatment. To the contrary, in each, the ground of\n treatment is part-time status, and the question of motivation/rationale is considered\n in the context of discussion of objective justification.\n\n44.9. Accordingly, Lufthansa takes matters no further (and, even if there was an argument\n that it did, this Court would not in any event be bound to follow it, as the Appellant\n recognises at paragraph 43 of his Written Case).\n\n\n 29\nC5. The Fixed-term Work Directive\n\n45. Shortly after the PTWD was adopted, the Council adopted Directive 1999/70/EC of 28\n June 1999 concerning the framework agreement on fixed-term work [1999] OJ L 175/43\n (“FTWD”).\n\n46. The FTWD shares the same structure and provenance as the PTWD, having been adopted\n using the same mechanism under the Social Policy Agreement to reflect an agreement\n reached by the Social Partners. Clause 4 of the framework agreement implemented by the\n FTWD was formulated in materially the same terms as clause 4 of the Framework\n Agreement on part-time work:\n\n “Principle of non-discrimination (clause 4)\n\n 1. In respect of employment conditions, fixed-term workers shall not be treated in a less\n favourable manner than comparable permanent workers solely because they have a fixed-term\n contract or relation unless different treatment is justified on objective grounds.\n\n 2. Where appropriate, the principle of pro rata temporis shall apply.\n\n 3. The arrangements for the application of this clause shall be defined by the Member States after\n consultation with the social partners and/or the social partners, having regard to Community\n law and national law, collective agreements and practice.\n\n 4. Period-of service qualifications relating to particular conditions of employment shall be the same\n for fixed-term workers as for permanent workers except where different length-of service\n qualifications are justified on objective grounds.” (emphasis supplied)\n\n47. As with the PTWD, the CJEU has confirmed that the identically-worded test under the\n FTWD is a narrow one:\n\n 47.1. In Baldonedo Martín v Ayuntamiento de Madrid (C-177/18), EU:C:2020:26 (judgment of\n 22 January 2020), the Second Chamber held that “Clause 4(1) of the framework agreement\n prohibits, with regard to employment conditions, less favourable treatment of fixed-term workers as\n compared with permanent workers, on the sole ground that they are employed for a fixed term, unless\n different treatment is justified on objective grounds”: [34] (emphasis supplied).12\n\n 47.2. In AR v Ministero dell’Istruzione e del Merito (C-543/23) [2026] 1 CMLR 23 at [41]-[43],\n the CJEU held:\n\n\n12 For an endorsement of the same formulation, see (for example) Ministero della Giustizia and Others (Status of\n Italian magistrates) (C-236/20), EU:C:2022:263 (judgments of 7 April 2022) at [32].\n\n\n 30\n “41. That said, it is apparent from the case-law cited in paragraph 34 of the present judgment that\n the principle of non-discrimination was implemented and given specific expression by Clause 4\n of the framework agreement only as regards differences in treatment between fixed-term workers\n and permanent workers in a comparable situation.\n\n 42. That clause seeks to apply the principle of non-discrimination to fixed-term workers only in\n order to prevent an employer from using such an employment relationship to deny those workers\n rights which are recognised for permanent workers (see, to that effect, judgments of 22 January\n 2020, Baldonedo Martin v Ayuntamiento de Madrid (C-177/18) EU:C:2020:26,\n paragraph 35 and the case-law cited, and of 15 December 2022, AQ v Presidenza del\n Consiglio dei Ministri and others (University researchers) (C-40/20 & C-173/20)\n EU:C:2022:985, paragraph 88).\n\n 43. It follows that a difference in treatment that is based on a criterion other than whether the\n employment relationship is fixed-term or permanent is not covered by the prohibition laid\n down in Clause 4 of the framework agreement (see, to that effect, judgment of 22 January\n 2020, Baldonedo Martín (C-177/18) EU:C:2020:26, paragraph 53 and 54 and the case-\n law cited).” (emphasis supplied)\n\n48. At paragraphs 46 to 48 of the Appellant’s Written Case, the Appellant refers to ZT v Ministero\n dell’Istruzione e del Merito (C-268/24) ECLI:EU:C:2025:526 (“Lalfi”) as an example of a\n decision in which the CJEU made a finding of discrimination under clause 4.1 of the FTWD\n notwithstanding the presence of multiple reasons for the less favourable treatment. The\n Respondent does not accept that that characterisation is well-founded:\n\n 48.1. The paragraphs of the judgment on which the Appellant relies ([49]-[50]) are not\n concerned with the question of what caused the less favourable treatment. Rather,\n they address the prior question of who is an appropriate comparator: see [47]-[48].\n\n 48.2. In the context of that issue, the point being made by the Court at [49] was that a\n claimant need not show less favourable treatment as against any and all permanently\n employed colleagues. Instead, the Court held that “it is sufficient for the fixed-term workers\n in question to be treated in a less favourable manner than permanent workers in a comparable\n situation in order for those fixed-term workers to claim the benefit of that clause” (emphasis\n supplied). The Court therefore went on to “examine whether those non-tenured teachers who\n hold short-term supply teaching posts are in a comparable situation to that of the tenured teachers\n concerned”: see [52] et seq.\n\n 48.3. Contrary to the Appellant’s contention, the Court was not suggesting by this that “for\n a worker to prove less favourable treatment “solely because” of a fixed-term contract does not require\n him to prove that the fixed-term contract was the sole cause of the treatment”: paragraph 48 of the\n Appellant’s Written Case (emphasis in original). To the contrary, the Court affirmed\n\n\n 31\n that “clause 4(1) of the Framework Agreement prohibits, in respect of employment conditions, fixed-\n term workers from being treated less favourably than comparable permanent workers, on the sole\n ground that they are employed for a fixed term unless different treatment is justified on objective\n grounds”: see [44] (emphasis supplied).\n\nC6. Implementation of the FTWD by means of the FTERs\n\n49. The House of Commons Research Paper 01/93 on the Employment Bill (which became the\n Employment Act 2002) casts some light on the process of domestic transposition of the\n FTWD in the FTERs:\n\n 49.1. Under Section V on fixed term contracts, the research paper explained:\n\n 49.1.1. “In 1999, the European Community adopted a directive on fixed term contracts – Council\n Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed\n term work concluded by ETUC, UNICE and CEEP. The Directive gave legal effect to\n an agreement negotiated between representatives of management and labour at European\n level – the ‘social partners’. The ‘Social Chapter’ of the Treaty establishing the European\n Community, introduced a new procedure under which, if the social partners agree, they may\n negotiate provisions which will be made binding in Member States rather than leaving it\n to the European Commission to draft legislation”: page 60.\n\n 49.1.2. Clause 45 of the Bill would give the Secretary of State power to make\n regulations for the purpose of securing that employees in fixed-term\n employment are treated, for such purposes and to such extent as the\n regulations may specify, no less favourably than employees in permanent\n employment and the FTERs to be made under that power, “will be used to\n implement Council Directive 99/70/EC, but, as they will be made under this Bill, once\n it is enacted, rather than under section 2(2) of the European Communities Act 1972,\n they will be able to range more widely. In particular, they will be able to cover pay. The\n Government believes that EC Directives made under the ‘Social Chapter’ cannot cover pay\n as this is specifically excluded by Article 137 (6) of the Treaty establishing the European\n Communities as amended by the Treaty of Amsterdam agreed in June 1997”: pages 63-\n 64.\n\n\n 32\n 49.1.3. The reaction of the CBI had been that “the proposed new rights for employees on\n fixed term contracts must be implemented in a way that imposes minimal burdens on\n business”: page 65.\n\nC7. Domestic Interpretation of the PTWRs\n\n50. Now that this appeal has reached the level of the Supreme Court, this Court need not be\n overly concerned with the various cases which have considered the test of causation in the\n PTWRs to date. It is a feature of several of those cases that relevant precedents were not\n cited to later courts and/or that (particularly in some of the cases in which the Courts or\n Tribunals below expressed more detailed views) one or other party was unrepresented, such\n that the Court or Tribunal in question did not have the benefit of adversarial argument.\n\n51. Suffice it to make the following brief comments on the two most significant decisions,\n McMenemy and Sharma (which are dealt with more fully at [69]-[86] of Elisabeth Laing LJ’s\n judgment, which analysis is endorsed and adopted):\n\n 51.1. In McMenemy, the Court of Session (in a judgment given by Lord Nimmo Smith) had\n close regard to the language of the language of clause 4.1 of the Framework\n Agreement. Indeed, it scrutinised the language in each of the English, French and\n German versions, all of which “reinforce the impression that would be gained from a\n straightforward reading of the English version that ‘solely’ does indeed mean that the less favourable\n treatment must be for the reason that they work part-time and for that reason alone”: [3]. The\n Court also had regard to the dicta of the ECJ in Wippel at [54] (quoted in paragraph\n 40 above): [5]. In view of this, the Inner House of the Court of Session concluded\n that the PTWRs required consideration of whether there was “a causative connection\n between the discrimination complained of and the part-time nature of the worker’s employment [...]\n [T]he prohibition is against the less favourable treatment of part-time workers [...] for the reason\n that they work part-time and for that reason alone”: [6]\n\n 51.2. In Sharma, by contrast, the EAT (in a judgment given by Elias P) held that “the reference\n to ‘solely’ in [the Framework Agreement] is simply intending to focus upon the fact that the\n discrimination against a part-timer must be because he is a part-timer and not for some independent\n reason”: [48]. The EAT referred to the hypothetical examples of: (i) an employer who\n discriminated against all part-timers over the age of 30; and (ii) an employer who\n discriminated against all part-timers in Factory A but not the part-timers in Factory B:\n\n\n 33\n [49]. The EAT held that it was “inconceivable that the Directive was not intended to outlaw such\n treatment (subject to justification)”, concluding that “it would inevitably be construed by the\n European Court of Justice to do so” and that “[a]ny other conclusion would wholly undermine the\n very purpose of the Directive”: [50].\n\nC8. Domestic Interpretation of the FTERs\n\n52. For completeness, the EAT has recently confirmed that the narrow test upheld in McMenemy\n with respect to the PTWRs is equally applicable to the FTERs: see The Advocate General for\n Scotland (Representing the Ministry of Defence) v Mr Charles Milroy [2026] EAT 25 at [47], [70].\n\nD. SUBMISSIONS\n\nD1. The PTWD imposes a narrow test of causation\n\n53. The Respondent submits that Elisabeth Laing LJ was plainly right to conclude at [63] that\n “it is clear that the test for causation in clause 4.1 is a narrow test”, which only applies if a worker’s\n part-time status is the sole cause of the less favourable treatment. That is clear from the\n following:\n\n 53.1. First, the language of clause 4.1 of the Framework Agreement expressly requires that\n the less favourable treatment be “solely because” the worker works part-time (emphasis\n supplied). As Elisabeth Laing LJ observed (at [63] below), these words “could not be\n clearer”. The inclusion of the adverb “solely” clearly and deliberately narrows the causal\n threshold; that is the (only) function it serves.\n\n 53.2. Second, in settling on that language, the Social Partners chose to eschew the more\n conventional and less stringent formulations that had failed to receive wide support\n among the institutions of the European Communities: see paragraphs 19 to 21 above.\n\n 53.3. Third, the Preamble to the Framework Agreement recognises that this protection was\n agreed as part of what were avowedly the “minimum requirements relating to part-time\n work”, notwithstanding the broader “willingness of the social partners to establish a general\n framework for the elimination of discrimination against part-time workers”: see paragraph 26\n above. The latter statement of general willingness does not override the limited nature\n of the minimum requirements that were in fact laid down. Indeed, it stands in contrast\n to it. The Framework Agreement/PTWD reflected a limited negotiated intervention\n\n\n 34\n in a contentious area of social policy in which it had not previously been possible to\n reach agreement by a conventional legislative process for more broadly framed rights.\n\n53.4. Fourth, this clear and deliberate decision to adopt a narrow test by way of minimal\n protection is consistent with the specific political and legislative context to the\n Framework Agreement, by which the Social Partners sought to balance the competing\n interests of management and labour. Those interests included: (i) promoting business\n flexibility, efficiency, productivity and competition; and (ii) avoiding legal constraints\n that would hold back the creation and development of small and medium-sized\n undertakings: see paragraphs 25 and 30 above, citing recitals (4) to (7) and (18). As\n Elisabeth Laing LJ held (at [66] below):\n\n “Given the apparent difficulty of reaching agreement, and the context, which is fully described\n in the preamble to the Framework Agreement, there is every reason to give those words their\n natural meaning. They represent a compromise between competing factors, agreed by the Social\n Partners, after balancing their different interests.”\n\n53.5. Fifth, the reaction of the European Parliament, which raised concerns as to the\n efficacy of the protection that would be afforded by the Framework Agreement,\n confirms and reflects the limited scope of that protection: paragraph 29 above. The\n concerns were rejected in deference to the negotiated compromise reached by the\n social partners: ibid.\n\n53.6. Sixth, it is common ground that the PTWD does no more than implement the\n Framework Agreement.\n\n53.7. Seventh, the jurisprudence of the CJEU confirms the plain meaning of clause 4.1 of\n the Framework Agreement and the narrow test imposed thereunder: see Section C4\n above. In particular, that jurisprudence confirms that the clause 4.1 “precludes part-time\n workers from being treated less favourably than comparable full-time workers on the sole ground\n that they work part time unless different treatment is warranted on objective grounds”: Wippel at\n [42] and [54] (emphasis supplied). That narrow test has caused the CJEU to consider\n (for example) whether “no other criteria” result in the less favourable treatment, in order\n to determine whether the “difference in treatment based solely on the fact that the worker\n concerned works part-time”: University of Antwerp at [49]-[50] (emphasis supplied). As with\n the Preamble to the Framework Agreement (see paragraph 53.3 above), the CJEU’s\n nods to the general principle of equality (to which the PTWD gives particular\n expression) do not displace or override the meaning of the test being applied.\n\n\n 35\n 53.8. Eighth, the jurisprudence of the CJEU supports the same interpretation of the\n materially identical provision under the Fixed-term Work Directive: see Section C6\n above.\n\n54. As for the Appellant’s submissions at paragraphs 73 to 76 of his Written Case:\n\n 54.1. The Appellant’s attempt to characterise the plain language of the PTWD on sole\n causation as a floor is unconvincing. It seeks to conflate earlier debates in English law\n as to how a Court ascertains the ground for putative discrimination which do arise on\n those earlier domestic authorities such as James and Nagarajan with separate discussion\n in the ECJ/CJEU case law of the distinct question of objective justification. The\n Respondent refers in this regard to paragraphs 41 to 44 above.\n\n 54.2. Equally unpersuasive is the attempt at paragraph 74 to explain away the plain language\n of the Framework Agreement on the basis of an academic commentary’s\n characterisation of its terms as “complicated” and “vague” and on that basis to submit\n that “it would be a mistake to place heavy emphasis on individual words in a document negotiated\n in this way”. The test of causation in the Framework Agreement is neither complicated\n nor vague. To the contrary, as Elisabeth Laing LJ correctly held below (at [66]), it\n “could not be clearer”. Furthermore, the extensive negotiations which led to the\n conclusion of the Framework Agreement, and the Commission’s refusal to entertain\n amendments from the European Parliament which would interfere with the carefully\n calibrated compromise reached by the Social Partners, weighs in favour of placing\n greater rather than lesser emphasis on this unusual provision in its drafting: see\n paragraphs 29 to 30 above.\n\n 54.3. The suggestion at paragraph 75 that “had the Social Partners meant to exclude from protection\n any and all cases where part-time work was an effective but not the only cause of the less favourable\n treatment, one might reasonably expect that such a decision would have been made clear” (emphasis\n in original) simply cannot survive contact with the clarity of the wording in fact used\n by the Social Partners. Accordingly, as Elisabeth Laing LJ found below, the social\n partners did make that decision clear: by inserting the word “solely” into clause 4.1.\n\n 54.4. Nor does Lalfi stand for the proposition for which the Appellant contends: see\n paragraph 48 above. The example given of the denial of a benefit to all women over\n 6 foot tall is not a particularly realistic one. Nevertheless, to engage with the scenario,\n\n\n 36\n imagine that an employer requires its staff (at their own expense) to purchase and wear\n a uniform available from a number of suppliers in the UK which costs a flat fee of\n £100, but those suppliers do not supply sizes for women over 6ft. Accordingly, for\n those employees they have to purchase a uniform from an overseas supplier at an\n increased cost of £150. Accordingly, the employer affords an extra benefit of a £50\n allowance towards uniform costs for women over 6ft tall. In that scenario, the\n differential treatment in the allowance granted to women over 6ft tall is not a\n difference of treatment on ground of/because of sex (even under the different test of\n causation in the Equality Act 2010) but on the independent ground of/because of\n height. A male employee over 6ft could not sustain a claim of direct discrimination\n unless he could establish that men’s uniforms for men over 6ft could also only be\n acquired from the overseas vendor at the same premium. Otherwise, the equivalent\n male employee would be able to claim a £50 windfall. Accordingly, the Appellant is\n wrong to say that in such a scenario there would “clearly be discrimination on the grounds of\n sex”. Similarly, imagine that at a particular establishment there are a set of toilets for\n men and a set of toilets for women, but a safety issue means that the toilets for women\n are deemed not safe to be used by anyone over 6ft tall and the employer therefore\n directs women over 6ft tall to use alternative toilets at nearby premises pending\n remedial works to the establishment’s toilets for women. Again, the difference in\n treatment is not properly analysed as one because of sex but because of height.\n (Notably, were it because of their sex, it would be unlawful, direct sex discrimination\n being incapable of objective justification.) Again, as with Lalfi, this is an issue of\n identifying a proper comparator rather than an issue of causation.\n\n54.5. Even in respect of protected characteristics discrimination law, the causation test may\n lead a claim to fail in circumstances of multiple causes. This can be illustrated by\n reference to s.14 of the Equality Act 2010 on “combined discrimination” (sometimes\n referred to as multiple or intersectional discrimination), which has still yet to be\n brought into force. S.14(1) would provide that “A person (A) discriminates against another\n (B) if, because of a combination of two relevant protected characteristics, A treats B less favourably\n than A treats or would treat a person who does not share either of those characteristics”.\n\n54.6. An example given of this kind of combined or multiple discrimination in the\n Government Equalities Office’s April 2009 discussion document was as follows (at\n page 11): “An older woman applies for a job as a driving instructor. She is unsuccessful in her\n\n\n 37\n application and when she asks for feedback she is told that she was not appointed to the job because\n it is not considered a suitable job for an older woman. The driving school advises her that they don’t\n think she would have the strength and agility needed to grab the steering wheel or be able to brake\n quickly. She is told that she would have been appointed had she been an older man or a younger\n woman.” An alternative version of this scenario would be that the same three\n candidates apply for two driving instructor positions, the positions are given to the\n older man and younger woman and the employer asserts that the hiring decision was\n on grounds of merit whilst the older woman considers that it in fact caused by her sex\n and age. The fact that the roles were given to a (younger) woman and an (older) man\n makes it evidentially difficult for the (older female) applicant to establish an inference\n of either sex or age discrimination independent of their combination. Whilst there\n may be a debate as to the extent of the lacuna which s.14(1) would address, that is in\n part tied up with the fact that a comparator is used as a tool to consider the reason\n why the putative less favourable treatment has occurred in protected characteristic\n discrimination law. By contrast, in the PTWRs, the statutory protection against less\n favourable treatment is expressly limited to cases where such less favourable treatment\n can be established against an actual full-time comparator.\n\n54.7. What the test of sole causation under the PTWD does is make the protection narrower\n by excluding multiple causation scenarios from its ambit as a threshold issue.\n Accordingly, in clear cases such as a company’s part-time employee working three\n days per week being ineligible to receive a Christmas bonus (pro-rated to three-fifths)\n which its full-time employees are eligible to receive, the test of causation is satisfied\n on either a sole causation or an effective causation approach. By contrast, take a more\n ambiguous mixed causation scenario, such as the same three-fifths full-time equivalent\n part-time employee who is based at the employer’s Head Office but who has also\n negotiated a contractual right entitling him to work remotely seeking access to first aid\n training paid for by the employer. At the same time a comparable full-time employee\n also based at the Head Office and who does not have any contractual entitlement to\n work remotely requests the same training. The employer pays for some staff to\n undertake first aid training during their working hours in order to comply with health\n and safety legislation or best practice as to minimum numbers of employees\n ordinarily present at its physical premises/Head Office during the working week who\n are trained to deliver first aid in case of a workplace accident and where the employer\n does not intend to incur the cost of training its entire workforce in first aid.\n\n\n 38\n Accordingly, the part time employee’s request for training is refused on grounds that\n he works part-time and is not necessarily present at the Head Office during working\n hours given he is entitled to work remotely. The comparable full-time employee’s\n request is granted. In this scenario, the more limited framing of the sole causation test\n in the PTWD operates to exclude any claim from the ambit of the discrimination\n protection afforded as a threshold matter. By contrast, had the employee not had the\n entitlement to work remotely and been refused access to the training solely on grounds\n of working part time, the legality of that exclusion would have required to have been\n tested via an objective justification analysis at a final hearing.\n\n54.8. Testing the Appellant’s analogy to protected characteristic discrimination law, it would\n obviously be a surprising and concerning proposition if a refusal of access to training\n on grounds of (i) an employee’s race and (ii) the employee being entitled to work\n remotely could be summarily dismissed on grounds of lack of sole causation.\n Accordingly, protected characteristic equality law looks to effective causation; and, if\n race was established to be an effective cause, the employer would (again, by contrast\n to the PTWRs) not be able to rely on objective justification. Further, in a modified\n scenario where the first factor was not race but the employee’s age, the effective\n causation requirement would necessitate that the employer’s policy must satisfy\n objective justification to be lawful, and appropriately so. By contrast, there is nothing\n inherently surprising in a different balance being struck not to include in the scope of\n part-time worker discrimination protections mixed causation scenarios such as a\n refusal of access to training on grounds of (i) part-time worker status and (ii) remote\n working entitlement. The policy choice serves to spare employers the burden of\n demonstrating objective justification in such mixed causation scenarios.\n\n54.9. Accordingly, the Appellant’s contention (at paragraph 48) that “what the word ‘solely’\n conveys is that, where the cause (or one of the causes) of the less favourable treatment is fixed-term or\n part-time status, the treatment will not be discriminatory if it is justified for other reasons” cannot\n be sustained. It impermissibly ignores the causation test and conflates the causation\n element with the separate objective justification enquiry. Indeed, on that construction\n of the significance of the words “solely because”, the later words “unless different treatment\n is justified”, would be redundant. There is no basis for such a strained and artificial\n construction of the PTWD.\n\n\n 39\n55. In this regard, the Appellant’s reliance on the ILO Convention on Part Time Work (at\n paragraphs 13 to 15 and 20 to 21 of the Appellant’s Written Case) does not assist:\n\n 55.1. First, as a starting point, the probative value of materials that were preparatory to a\n different instrument and one of global (as opposed to European) reach is limited in\n principle. In practice, that is a fortiori in circumstances where there is no direct evidence\n that the Framework Agreement was based on the ILO Convention. The suggestion\n that it might have been is merely inferred by the Appellant from limited circumstantial\n factors. In particular, the Appellant relies merely on: (i) a reference to the ILO\n Convention in a background paper that had been published by the Commission\n several years earlier (see paragraph 20.1 of the Appellant’s Written Case); and (ii) the\n Appellant’s own assertion that the Framework Agreement is “clearly modelled” on the\n ILO Convention given similarities in language (see paragraph 20.4 of the Appellant’s\n Written Case).\n\n 55.2. Second, and in any event, to the extent that the ILO Convention was a model for the\n Framework Agreement, a textual analysis of the two would tend to undermine rather\n than support the reliance the Appellant seeks to place on it. On the Appellant’s\n argument, the function of the word “solely” was to permit differential treatment for\n other reasons, such a seniority, which might have been important in circumstances\n where the ILO Convention did not otherwise allow for objective justification: see\n paragraphs 14 to 15 and 21 of the Appellant’s Written Case. But by contrast, the\n Framework Agreement (a) already accounts for differences such as seniority in the\n identification of a comparator (see clause 3.2); and, moreover, (b) does allow for\n objective justification and yet still retains the word “solely”. The Appellant does not\n and has no basis to suggest that this word was retained by the Social Partners in error.\n Accordingly, the ILO Convention (to the extent it has any relevance) supports an even\n narrower reading of the Framework Agreement.\n\n 55.3. Fundamentally, the language of clause 4.1 of the Framework Agreement is clear. It\n applies: (i) where the differential treatment is solely because the claimant works part-\n time; (ii) unless that treatment can be justified. Those two criteria are disjunctive and\n serve distinct functions – as is clear from the language and purpose of the PTWD,\n and as explained in Elisabeth Laing LJ’s judgment. That cannot be undermined by\n praying in aid a tenuous analogy to an earlier non-legislative instrument.\n\n\n 40\nD2. The PTWRs implement the narrow test of causation from the PTWD\n\n56. It is common ground that the Secretary of State could have relaxed the test of causation set\n out in the Framework Agreement when implementing the PTWD, in accordance with clause\n 6.1 of the Framework Agreement and given the broader enabling power in primary\n legislation. However, the Respondent submits that: (i) the Appellant has been unable to\n identify any intention to effect a broader approach to causation; and (ii) the PTWRs as\n enacted do not on their face or on their proper construction effect a broader approach to\n causation which jettisons the carefully negotiated “solely” limitation imposed at Community\n level.\n\n57. At paragraph 71 of the Appellant’s case, the Appellant posits that the domestic draftsman\n consciously decided to adopt language from existing equality legislation, which had been\n subject to judicial comment in case law on the subject of effective cause. In particular:\n\n 57.1. First, it is said that the phrase ‘on the ground that’ is “a well-known phrase in discrimination\n law, and it encompasses situations where a worker’s protected status is an effective cause”: see\n Appellant’s case, paragraph 2.\n\n 57.2. Second, the Appellant later accepts that the formula used in the PTWRs of “on the\n ground that” is not an exact replica of the language used in the Sex Discrimination Act\n 1975 which prohibited discrimination against a woman “on the ground of her sex” but still\n proceeds on the basis that the alleged intention can be imputed to the domestic\n draftsman: see Appellant’s case paragraph 50, fn 38 to paragraph 53.3.\n\n58. The Respondent does not accept that the inference the Appellant seeks to draw from the\n use of the phrase “on the ground that” is well-founded. Given that the PTWRs expressly\n implement the PTWD, for the Appellant’s argument to succeed, there must be a clear\n indication in the PTWRs that the unusually strict test for causation in clause 4.1 has been\n relaxed (whether looking at the wording in isolation or perforce considering whether the\n language used could displace the assumption that the domestic transposition was intended\n to give effect to the community law provision in the PTWD: as to which see paragraph 5.10\n above). In fact, all indications are to the contrary:\n\n 58.1. The Respondent submits that the more likely conclusion was that the formula “...only\n if, (a) the treatment is on the ground that...” in regulation 5(2)(a) was a clear and simple\n attempt to transpose the Framework Agreement language of “solely because”. The\n\n\n 41\n language of the PTWRs thus indicates an intention to mirror (suitably transposed) the\n language and requirements contained in the Framework Agreement into domestic law.\n The Respondent refers to the submissions made in summary at paragraphs 5.9 to 5.10\n above. As set out there, the Respondent submits that the PTWRs are, on their face,\n to be construed as applying the same test of sole causation as was negotiated and\n agreed in the Framework Agreement, with “only if...the treatment is on the ground that” as\n the domestic analogue of “solely because” in the PTWD.\n\n58.2. In this regard, respectfully, the arguments of Bean LJ at [98] that the structure of the\n placement of the words “only if” at the end of regulation 5(2) is of significance cannot\n bear the weight the learned Judge suggests it can bear (and do not engage with the full\n reasoning of Elisabeth Laing LJ at [68]):\n\n 58.2.1. Given the conjunctive formulation of regulation 5(2)(a) and (b), the use of\n the word “only” would be redundant on Bean LJ’s construction.\n\n 58.2.2. Furthermore, given the bundled nature of the drafting in cl. 4.1 of the\n Framework Agreement, the separating out of cl. 4.1 into different lines of\n statutory language was always to be expected. As noted by the colour coding\n at paragraph 5.9 above, the separating out for that statutory recasting follows\n precisely the same sequence in reg 5(2) as found in cl. 4.1.\n\n 58.2.3. Given Bean LJ’s recognition that the words “solely” and “only” are closely\n analogous, and given the structural similarities of the domestic recasting, the\n better construction is that the words “only if” import the same limitation in\n the PTWRs as the words “solely because” do in the PTWD.\n\n58.3. Further, as Elisabeth Laing LJ explained at [68] of her judgment below (with which\n reasoning neither Bean nor Edis LJJ engaged), “The regulations refer to ‘the reasons for the\n treatment (regulation 6(1)) and distinguish between the formula ‘the reason (or if more than\n one, the principal reason)’ (regulation 7(1)) and the formula in regulation 5(2), and between that\n formula and the formula used in regulation 7(2). The draftsman knew that there could be more than\n one reason, or ground for, treatment, and chose to refer to one ground in regulation 5(2)...”. This\n was a further textual indicator, taken together with the use of “only if”, that the\n draftsman was seeking to reflect community law without alteration in the domestic\n transposition. The Appellant’s suggest at paragraph 53.3 of the Appellant’s case that\n\n\n 42\n the fact that different provisions of equality law use ground and grounds\n interchangeably is beside the point. The existence of credible and more compelling\n reasons to assume that the choice of language in the regulations reflects the\n community law position negates the Appellant’s attempt to posit an intention to\n import a test of effective causation associated with a different reference to “ground of”\n in the Sex Discrimination Act 1975.\n\n 58.4. In fact, if anything the more direct linguistic analogue to the phrase “on that ground that”\n used in regulation 5(2)(a) of the PTWRs was the protection against whistleblowing\n detriment under section 47B(1) of the ERA 1996 and therefore in force at the time,\n which provided: “A worker has the right not to be subjected to any detriment by any act, or any\n deliberate failure to act, by his employer done on the ground that the worker has made a protected\n disclosure” (emphasis supplied). Importantly, at the time the PTWRs were introduced,\n whistleblowing detriment protections were not understood to be subject to a test of\n effective causation. This can be seen from the judgment in Aspinall v MSI Mech Forge\n Ltd EAT 891/01, in which the EAT held (at [14]) that “for there to be detriment under\n section 47B ‘on the ground that the worker has made a protected disclosure’ the protected disclosure\n has to be causative in the sense of being ‘the real reason, the core reason, the causa causans, the motive\n for the treatment complained of’”. Not until a decade later in Fecitt v NHS Manchester [2011]\n EWCA Civ 1190 did the Court of Appeal decide that section 47B imposed a test of\n effective causation. Accordingly, by reference to the clearest direct analogue in pre-\n existing UK law (rather than the slightly different wording of the Sex Discrimination\n Act 1975), an intention to incorporate a test of effective causation could not in any\n event be implied.\n\n59. Furthermore, it is necessary to construe the PTWRs purposively by reference to the PTWD\n giving effect to the Framework Agreement which the PTWRs seek to implement in domestic\n law, even if (quod non) certain textual indicators were to the contrary. It has long been\n recognised that a national court must interpret domestic legislation, so far as possible, in the\n light of the wording and purpose of the directive which it seeks to implement: see Swift v\n Robertson [2014] UKSC 50; [2014] 1 WLR 3438 at [20], per Lord Kerr. Elisabeth Laing LJ\n considered (at [67] below), that the principle is modified, to some extent, by the enactment\n of section 19, but only to a minimal extent in circumstances where the express reason for\n enacting section 19 was not to depart from the causal test under clause 4.1 of the Framework\n\n\n 43\n Agreement but rather to extend the protection to pay: see paragraphs 33 to 34 above.13\n Accordingly, in his judgment below, Edis LJ (at [34]) greatly overstated the significance of\n the enabling power used in s.19 of the Employment Relations Act 1999 (for reasons which\n were clearly explained contemporaneously as relating to the scope of vires relating to pay) in\n setting up for a purposive approach not the terms of the PTWD which the enabling power\n was used to transpose but the general wording of the enabling power in respect of removing\n discrimination against part-timers and improving the quality of part-time work. In this way,\n Edis LJ made a category error in viewing the purposive construction to be undertaken as\n focused on the broader and general terms of the domestic statutory enabling power.\n\n60. As for the proper purposive construction:\n\n 60.1. The PTWD and FTWD must be understood as much more limited and narrow\n interventions to provide for part-time and fixed-term worker protections than the\n other directives relating to protected characteristics that were made around the same\n time and later by a conventional European legislative process and with markedly\n different wording (which did not repeat the “solely because” formula): see Elisabeth\n Laing LJ at [65] and [93]. Accordingly, the approach in those subsequent directives\n concerned with discrimination on grounds of protected characteristics (race and\n ethnic origin, religion or belief, disability, age, sexual orientation and sex) is not\n analogous.\n\n 60.2. The PTWD was an intervention which was markedly limited in its effect. It: (a)\n contained no protection against indirect discrimination; (b) allowed for no\n hypothetical comparator; and (c) permitted justification of this kind of direct\n discrimination (as to which, of the protected characteristics, only direct discrimination\n on grounds of age is capable of justification on account of the particular universal and\n spectrum-like qualities of age). In those circumstances, as compared with protected\n characteristic equality law, the narrower test of causation was of a piece with the\n narrower scope of the PTWD.\n\n 60.3. Given the avowed limitations on scope on the PTWD, both as a matter of the express\n acknowledgments of its limitations on its face and on informed consideration of its\n\n\n13 The Appellant contends that this was not the only reason for enacting section 19, which also allowed for\n consultation: see paragraph 23 of the Appellant’s Written Case. But there is no suggestion that the consultation\n touched on the scope of the test under clause 4.1.\n\n\n 44\n limited scope/effect (see Elisabeth Laing LJ’s judgment at [53]-[54] and [66]), the\n appeal to a “general principle of equality” in European law does not take matters further.\n It is clear from the different provisions – as between the PTWD and the FTWD on\n the one hand, and the protected characteristic discrimination directives on the other\n hand – that “the ‘general principle of equality’ has a range of different expressions in different\n contexts”: per Elisabeth Laing LJ at [93].\n\n 60.4. Accordingly, a purposive construction of the PTWRs also leads to the application of\n the same narrower construction of the causation test as is contained in the PTWD.\n\n61. Once it is properly understood that the legislative intervention negotiated by the Social\n Partners and made as community law by the PTWD was a modest and limited intervention\n quite distinct from the conventionally legislated interventions in Community law on\n protected characteristic discrimination, the suggestion that the language of the PTWRs\n should be construed to give effect to principles of causation pertaining in respect of such\n protected characteristic discrimination is unconvincing, and, contrary to paragraphs 78 to\n 79 of the Appellant’s case, a purposive construction leads inexorably to this Respondent’s\n rather than the Appellant’s conclusion.\n\n62. In that regard it is notable that, in his misplaced purposive approach at [37] of his judgment\n below, Edis LJ was influenced by the examples given by Elias J in Sharma of alleged potential\n consequences of the narrower construction of the causation test affirmed by the Inner\n House in McMenemy, stating “The examples given by Elias J in Sharma of the consequences of the\n construction adopted in McMenemy are persuasive in showing how that construction would inhibit rather\n than advance that purpose.” Not only was this aiming at a wrongly characterised purpose (i.e.\n broad and expansive protections, as opposed to a narrow and limited negotiated\n intervention), but the examples that the EAT in Sharma had identified (without the benefit\n of adversarial argument) had been shown in the Respondent’s submissions below not to be\n sustainable, leading Elisabeth Laing LJ to note at [91] that “the assertion in paragraph 48 [of\n Sharma] and the examples which follow, is not convincing. Indeed, in his reply, Mr Jones had to accept that\n the examples were ‘imperfect’.”\n\n63. As for those examples:\n\n 63.1. The first hypothetical example in support of Elias P’s conclusion that an effective\n cause approach should be adopted was as follows: “if the employer deliberately discriminates\n\n\n 45\n against all part-timers in factory A but not those with identical full-time comparators in factory B,\n can it really be said that, because only some part-timers are selected for the less favourable treatment,\n the Directive (and by extension the Regulations) are not intended to be applicable?”.\n\n63.2. However, this example overlooked relevant features of (and limitations in the\n protections afforded by) the structure of the PTWRs (implementing the PTWD):\n\n 63.2.1. First, regulation 5 provides for a right of a part-time worker “not to be treated\n less favourably than the employer treats a comparable full-time worker”. Accordingly,\n the comparison is directed to the treatment as between the part-time worker\n and an actual full-time worker comparator.\n\n 63.2.2. Second, regulation 2(4) provides that a full-time worker is a comparable full-\n time worker in relation to a part-time worker if, at the time when the\n treatment is alleged to be less favourable to the part-time worker takes place,\n “both workers” are “employed by the same employer”, “engaged in broadly the same or\n broadly similar work”, and “the full-time worker works or is based at the same\n establishment as the part-time worker” or “where there is no full-time worker working or\n based at that establishment who satisfies the requirements of sub-paragraph (a), works or\n is based at a different establishment and satisfied those requirements.”\n\n 63.2.3. Accordingly, if the part-time workers in factory A are compared in Elias P’s\n scenario with the full-time workers in factory A (or, if there are no full-time\n workers in factory A, the full-time workers in factory B) then the part-time\n workers will be able to mount a claim that they have been treated less\n favourably in contravention of the PTWRs on the “solely” approach, even if\n there is a relevant difference in treatment between the part-time workers in\n factory A and the part-time workers in factory B.\n\n63.3. In the second example given at [49] by Elias P, in which the employer decides to\n discriminate against all part-time employees over the age of 30, those employees would\n be able to complain of the discriminatory conduct and seek redress on the basis of the\n effective cause approach which would apply to a claim in direct age discrimination\n under the Equality Act 2010, so the consequence of the approach to the causation\n requirement is not there to deprive them of protection in practical terms. However,\n indirect discrimination protections which do not apply in the case of the more limited\n intervention effected by the PTWRs may provide alternative redress. As the House of\n Commons briefing paper on the PTWRs noted at page 10, “It is largely because of changes\n\n\n 46\n to the law made as a result of challenges under the indirect discrimination provisions of sex\n discrimination legislation that there is relatively little discrimination against part-time workers in the\n UK.”\n\n64. Nor, as explained above, do any of the surrounding contextual materials give credence to\n the suggestion that the domestic draftsman intended to depart from the terms of the PTWD\n in its implementation by the PTWRs. To the contrary, the relevant materials all make clear\n that the PTWRs simply implemented the PTWD. That includes the Explanatory Notes to\n the ERA 1999 (see paragraph 32 above) and the Explanatory Notes to the PTWRs\n themselves (see paragraph 36 above). It also includes the HoC Research Paper (see\n paragraph 36 above). There is no indication in any of these materials that the PTWRs\n intended to relax the narrow test for causation in the PTWD. It would be highly surprising\n if it had been the intention of the domestic draftsman to take a divergent approach to\n causation in regulation 5 compared to the position in the PTWD and yet none of the\n Parliamentary explanatory materials available to the legislature nor the content of any\n parliamentary debates ever adverted to such an intention. The Respondent submits that the\n absence of any indication to relax the test of causation as between the PTWD and the\n domestic implementing PTWRs is straightforwardly indicative of a lack of any such relevant\n intention. This is particularly so where the limited scope of the Framework Agreement was\n the subject of considerable debate at the time: see paragraph 37 above.\n\nE. DISPOSAL\n\n65. For the reasons set out above, the Court is respectfully invited to dismiss the appeal. The\n parties have agreed that no costs will be sought, including by way of pro bono costs orders,\n howsoever the appeal is determined, on account of the limited means of the Appellant and\n Respondent.\n\n TOM MOUNTFORD\n HUGO MURPHY\n Blackstone Chambers\n\n\n MISHCON DE REYA LLP\n 26 March 2026\n\n\n 47", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is worker's appeal under part-time-worker regulations.", "governingLaw": "english_law", "amount": 1, "currency": "USD" }, "reference": { "case": "Augustine v Data Cars Ltd", "citation": "[2026] UKSC 30", "court": "Supreme Court of the United Kingdom", "source": "https://supremecourt.uk/uploads/uksc_2025_0122_judgment_f8eb0f1fbd.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The dispositive question is the proper interpretation of regulation 5(2)(a). That provision states that the right not to be treated less favourably 'applies only if ... the treatment is on the ground that the worker is a part-time worker.' The Framework Agreement (clause 4.1) uses different language: workers shall not be treated less favourably 'solely because they work part time unless different treatment is justified on objective grounds.' The respondent's case rests on collapsing these two formulations—reading 'only if ... on the ground that' as a domestic mirror of 'solely because.' The textual evidence points the other way.\n\nFirst, the domestic legislator had before it the Framework Agreement's express language and chose not to replicate it. As Edis LJ observed below, it is hard to think of any good reason why the 2000 Regulations should be construed as if they incorporated the word 'solely' from clause 4.1 when it must have been a deliberate decision to omit it. The phrase 'on the ground that' was, by 2000, well-established in domestic discrimination law. The House of Lords in Nagarajan v London Regional Transport [2000] 1 AC 501 had explained that decisions are 'frequently reached for more than one reason' and that discrimination is made out if the protected ground 'had a significant influence on the outcome.' The phrase did not carry a sole-causation requirement. The respondent's argument that 'on the ground that' was more closely analogous to the whistleblowing detriment provision in section 47B ERA 1996—where, before Fecitt v NHS Manchester [2011] EWCA Civ 1190, a sole-cause test was thought to apply—is unpersuasive. By 2000, the weight of authority on 'on the ground of' in sex and race discrimination law pointed toward effective causation, and nothing in the contextual materials suggests the Secretary of State intended to import the narrower Aspinall approach from the distinct whistleblowing context.\n\nSecond, the PTWR were made under section 19 of the Employment Relations Act 1999—a free-standing enabling power, not the European Communities Act 1972. The Explanatory Notes confirm this was necessary because the Government wished to cover pay (which the Directive could not reach) and intended the powers to be 'widely drawn' with full consultation on how they should be used. The Framework Agreement itself, at clause 6(1), expressly permitted Member States to 'maintain or introduce more favourable provisions.' The domestic legislator thus had both the power and the intention to provide at least as much protection as the Directive, and potentially more. In those circumstances, construing regulation 5(2)(a) as carrying forward the Framework Agreement's 'solely' limitation—when that word was deliberately omitted—is not justified. The contextual materials relied on by the respondent (the HoC Research Paper, Hansard, the narrow regulatory impact assessment) establish that the PTWR were understood to be a limited instrument, but they do not establish an intention to narrow the causation test below the level that the enacted language would normally bear. That is the critical distinction: limited scope of the overall instrument does not determine the meaning of a specific phrase that the legislator chose.\n\nThird, the CJEU jurisprudence on the Part-time Work Directive does not support the proposition that 'solely because' was intended to introduce a novel, isolationist causation inquiry unique among equality provisions. In MK v Lufthansa CityLine (Case C-660/20), the employer argued that uniform flying-hour thresholds for additional remuneration served legitimate purposes (compensating heavy workloads, dissuading excessive overworking). The CJEU did not treat those rationales as alternative causes that displaced part-time status as the 'sole' ground; it assessed them at the objective justification stage. In Kleinsteuber v Mars (Case C-354/16), similarly, the employer's rationale for its pension formula was considered at the justification stage. This pattern is consistent with the well-established discrimination-law principle, reflected domestically in Birmingham City Council, James v Eastleigh, and Nagarajan, that the reason why an employer adopted a rule—budgetary constraint, industry custom, administrative convenience—is relevant to justification, not to the prior question of whether the treatment was 'on the ground of' the protected status. Where, as here, the treatment (a flat fee not adjusted for hours) inherently disadvantages part-time workers because they work fewer hours, the treatment is 'on the ground that' the worker is part-time. The respondent's alternative 'reasons'—that this is how the industry operates and how the respondent earns revenue—are paradigm justification evidence, not causation displacers.\n\nFourth, the respondent's structural arguments from the PTWR's other limitations (no indirect discrimination protection, no hypothetical comparator, objective justification available) do not alter the causation inquiry. Those features reflect the limited scope of the negotiated instrument at Community level; they do not bear on what the domestic legislator meant when it used language with an established broader meaning. The respondent's argument that the MSF trade union asked Parliament to broaden the 'solely because' formula and Parliament declined is double-edged: the fact that a specific textual amendment was proposed and not adopted is weak evidence of intent where the legislator used different language altogether. A legislator that substitutes 'on the ground that' for 'solely because' need not also insert the MSF's proposed words to achieve a broader test; the broader test flows from the language actually chosen.\n\nFifth, the precedent landscape below supports this conclusion. The McMenemy line (Gibson, McMenemy, and subsequent followers) rests on the erroneous premise that 'on the ground that' in the singular requires 'one ground only' and that the employer's subjective intention is relevant—premises that conflict with Nagarajan and JFS. The EAT below (Eady P) correctly identified these errors and stated it would have adopted the effective-cause approach but for perceived precedent constraints. The Court of Appeal majority (Edis LJ and Bean LJ) agreed on the merits. The dissent of Laing LJ, though carefully reasoned, gives insufficient weight to the deliberate textual substitution and over-reads the Framework Agreement's 'solely because' as importing a causation methodology that even the CJEU has not applied in practice. The Court of Appeal's constraint under Jwanczuk has been removed by the Supreme Court. The correct interpretation of regulation 5(2)(a) is that treatment is 'on the ground that' a worker is a part-time worker if part-time status is an effective cause of the less favourable treatment; it need not be the sole cause.", "allocation": null, "citations": [ { "title": "Less favourable treatment of part-time workers - Legislation.gov.uk", "url": "https://www.legislation.gov.uk/uksi/2000/1551/regulation/5", "proposition": "Regulation 5(2)(a) provides that the right not to be treated less favourably applies 'only if ... the treatment is on the ground that the worker is a part-time worker, and the treatment is not justified on objective grounds.' This text uses 'on the ground that' rather than 'solely because,' and the word 'only' governs the conjunctive conditions in subparagraphs (a) and (b) rather than imposing a sole-causation requirement within subparagraph (a) itself." }, { "title": "Less favourable treatment of part-time workers - Legislation.gov.uk", "url": "https://www.legislation.gov.uk/uksi/2000/1551/regulation/5", "proposition": "Regulation 5(3) mandates application of the pro rata principle in determining whether a part-time worker has been treated less favourably, which supports the conclusion that a flat fee not adjusted for hours inherently disadvantages part-time workers on a pro rata comparison." }, { "title": "Less favourable treatment of part-time workers - Legislation.gov.uk", "url": "https://www.legislation.gov.uk/uksi/2000/1551/regulation/5", "proposition": "Regulation 5(1) confers a right not to be treated less favourably 'as regards the terms of his contract' or 'by being subjected to any other detriment,' establishing the scope of the protection that regulation 5(2) then conditions on the causation and justification requirements." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-066", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nI. INTRODUCTION\n\n1. This appeal is about the meaning and effect of ‘savings’ clauses in business interruption [Tab/Page]\n insurance policies and, more specifically, whether by reason of such clauses the\n indemnity payable by insurers is reduced by CJRS grants (colloquially known as\n ‘furlough’) received by insureds during the Covid-19 pandemic.\n\n2. The savings clauses are part of the contractual machinery in the policies for the\n calculation of the indemnity payable by insurers. Both policies in this appeal are variants\n of the standard ABI wording.1 In the Arena Policy, the savings clause states:\n\n “If any of the charges or expenses of The Business payable cease or reduce in\n consequence of the Damage such savings during the Indemnity Period shall be [8/380]\n deducted from the amount payable.”\n\n In the Claimant Policies, the clause states that the indemnity, as calculated, is:\n\n “less any sum saved during the Indemnity Period in respect of such of the charges [9/501]\n of the Business payable out of Gross Revenue as may cease or be reduced in\n consequence of the incident.”\n\n3. The underlying claims are for business interruption losses suffered by the Claimant’\n businesses as a result of government measures taken in response to the Covid-19\n pandemic. In the classification adopted by the Supreme Court in Financial Conduct\n Authority v Arch Insurance (UK) Ltd [2021] UKSC 1, [2021] AC 649 (the FCA Test Case)\n at [4], these are claims under “prevention of access” covers which “in general, provide cover for [54/1161]\n business interruption losses resulting from public authority intervention preventing or hindering access to,\n or use of, the business premises”.2 The wording of the covers differs slightly between the\n Arena Policy and the Claimant Policies (see ASFI at [7] and [12]), but not in any way [1/7]\n\n relevant to the issues on appeal. This written case therefore refers generically to the [1/9]\n\n ‘prevention of access cover’ or ‘cover’.\n\n4. The appeals arise because each Appellant received substantial grants from the\n Government under the CJRS to keep economically inactive employees on their payroll\n during the pandemic. The Respondent’ position—and that of the insurance market\n generally—is that savings clauses modelled on ABI wording operate to deduct the value\n of CJRS grants from the indemnity payable under business interruption policies. An\n\n1 The ABI recommended wording can be found in Appendix A of Walmsley on Business Interruption Insurance 2nd [116/2065]\ned (2016), with the savings clause at p 297. See also Riley on Business Interruption Insurance 11th ed (2021) at [F.01].\n2 All references to the FCA Test Case in this written case are to the majority judgment of Lords Hamblen and\n\nLeggatt.\n\n\n 1\n\n 27\n estimated £1 billion has been deducted from business interruption indemnities on that\n basis.\n\n5. The position of insurers has been endorsed in this jurisdiction at first instance in Stonegate [81/1479]\n Pub Co Ltd v MS Amlin Corporate Member Ltd [2022] EWHC 2548 (Comm), [2023] 1 All\n ER (Comm) 981 as well as at first instance and on appeal in these proceedings: [2024] [7/163]\n EWHC 124 (Comm), [2024] Lloyd’s Rep IR Plus 44 and [2025] EWCA Civ 153, [2025] [5/107]\n All ER (Comm) 528 (the Com Ct Jmt and CA Jmt respectively).\n\n6. The same position has been taken in Ireland for the Temporary Wage Support Scheme\n (TWSS) during the pandemic (Ireland’s equivalent of the CJRS), albeit without proper\n argument due to the unusual circumstances of that case: Hyper Trust Ltd (t/a The [91/1608]\n Leopardstown Inn) v FBD Insurance plc [2023] IEHC 455.3\n\n7. In contrast, the Australian courts have reached the opposite conclusion twice in respect\n of the JobKeeper programme (Australia’s equivalent of the CJRS): Swiss Re International [101/1883]\n SE v LCA Marrickville Pty Ltd [2022] FCAFC 17 and Princess Theatre Pty Ltd v Ansvar\n [97/1762]\n Insurance Ltd [2024] VSC 363.\n\n8. The earlier English judgments on this issue err in their construction and application of\n the savings clauses for two reasons.\n\n9. First, the Claimant’ wage and related costs did not “cease” and were not “reduced” by\n the CJRS grants (Ground 1). The CJRS was premised on, and structured around, wage\n liabilities continuing for employers such as the Claimant. Thus, as rightly recognised\n in Princess Theatre at [466], those liabilities did not cease or reduce; they were simply [97/1793]\n funded (in part) by the CJRS revenue stream. This does not ignore that the CJRS grants\n were a benefit and income to the Claimant. It merely respects and applies the formula\n in the policies for the identification and calculation of gains and losses (recognising that\n the CJRS grants do not fall into the policies’ definition of “Gross Revenue”). See Section [2/29]\n II below.\n\n10. Second, and in any event, any saving was not “in consequence of” the insured peril because\n it was collateral to and not legally caused by the insured peril (Ground 2(a)), and because\n the existence and proof of the insured peril was irrelevant to the Claimant’ entitlement [2/42]\n to receive furlough payments (Ground 2(b)). As developed in Sections III to V below:\n\n\n3 The parties in Hyper Trust had settled on terms by which they jointly contended for a declaration that furlough [91/1616]\npayments would be brought into account: see [8]. (See also [46], showing that the insureds had, prior to\nsettlement, intended to argue that TWSS payments did not cause wages to cease or reduce.) [91/1640]\n\n\n 2\n\n 28\n (1) The words “in consequence of” import a test of proximate causation, with the\n general principles of legal causation that this entails. Those general principles are\n the correct explanation for the principle applied in the so-called ‘subrogation’\n line of insurance cases including Burnand v Rodocanachi Sons & Co (1882) 7 App [47/1033]\n Cas 333 (HL) and Castellain v Preston (1883) 11 QBD 380 (CA). [48/1045]\n\n (2) Receipts of CJRS grants were not legally caused by the insured peril but rather—\n being, or being analogous to, a gratuitous, benevolent or voluntary conferral of\n a benefit by a third party to the policy (here, the state)—should be treated as\n collateral or res inter alios acta. The Courts below erred in discarding principles of\n legal causation and treating Burnand and Castellain as instead creating a test based\n on whether the third party intended to benefit only the insured to the exclusion\n of the insurers, and further by imposing the burden of proving otherwise on the\n insureds.\n\n (3) Further, and in any event, the Full Federal Court of Australia in Marrickville at [101/1895]\n [460]-[461] was correct to hold that the requirements of proximate causation\n cannot be satisfied in circumstances where the Claimant’ entitlement to such\n grants was not contingent upon the occurrence of the insured peril.\n\nII. GROUND 1: THE RELEVANT LIABILITIES WERE NOT REDUCED\n\n(1) Relevant principles of construction\n\n11. Contracts are to be construed by “focussing on the meaning of the relevant words” by reference\n to their natural and ordinary meaning, other relevant provisions in the wider contract,\n the overall purpose of the clause and contract as a whole, and the facts and\n circumstances known by the parties at the time of contracting. Commercial common-\n sense is a factor in a construction exercise but “should not be invoked to undervalue the\n importance of the language of the provision which is to be construed” and “a court should be very slow\n to reject the natural meaning of a provision as correct”: Arnold v Britton [2015] UKSC 36, [2015] [41/963]\n AC 1619 at [15], [17] and [20] (Lord Neuberger). Thus, if the “parties have used unambiguous\n language, the court must apply it”: Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2012] 1\n All ER 1137 at [23] (Lord Clarke).\n\n12. The relative weight to be given to text and context depends on the nature of the\n contract: Wood v Capita Insurance Services Ltd [2017] UKSC 24, [2017] AC 1173 at [13]\n (Lord Hodge). Where the parties are operating on or have adapted standard terms—as\n\n\n 3\n\n 29\n here, where the wording is derived from ABI recommended wording—it is usually\n appropriate to adopt a more textual (but not pedantic) analysis: AIB Group (UK) plc v\n Martin [2001] UKHL 63, [2002] 1 WLR 94 at [7] (Lord Millett).\n\n13. These principles are as applicable to standard form insurance policies as they are to any\n other contract: see the FCA Test Case at [47], addressing standard form policies of the [54/1167]\n type in issue on these appeals. As explained at [77], the “overriding question” is:\n\n “...how the words of the contract would be understood by a reasonable person.\n In the case of an insurance policy of the present kind, sold principally to SMEs,\n the person to whom the document should be taken to be addressed is not a [54/1175]\n pedantic lawyer who will subject the entire policy wording to a minute textual\n analysis ... It is an ordinary policyholder who, on entering into the contract, is\n taken to have read through the policy conscientiously in order to understand what\n cover they were getting”.\n\n14. Thus the effect of a savings clause within an insurance policy will usually be determined\n by the natural and ordinary meaning of the words of that clause. In Polikoff Ltd v North\n British & Mercantile Insurance Co Ltd (1936) 55 Lloyd’s L Rep 279 (KBD) at 284,4 Branson [72/1410]\n J held that a “reduced or ceased to be paid” savings clause in a business interruption policy\n could not be read to allow for an increase in losses if the relevant standing charges (i.e.,\n liabilities such as interest, rent and wages) were increased, even though that “might have\n been a fairer result” (i.e., a fuller indemnity), because that was not what the language of the\n clause permitted. Branson J explained:\n\n “...this specification is a formula upon which the parties have agreed, and it is not\n for the Court to try to find out a better formula, or one which would give a more\n favourable result to the one party or to the other than that to which the parties\n have set their hands. I think the language is quite plain, and there is no reason for\n torturing any of the words that the clause contains in order to try to give it a\n meaning which on the face of it it does not bear.”\n\n15. Flaux J (as he then was) wrongly departed from these principles of construction in\n Synergy Health (UK) Ltd v CGU Insurance plc [2010] EWHC 2583 (Comm), [2011] Lloyd’s [82/1511]\n Rep IR 500. The reasoning in Synergy was subsequently cited with approval and followed [81/1505]\n by Butcher J in Stonegate at [269], Jacobs J in the Com Ct Jmt at [439], and Flaux C (as [7/252]\n he had become) in the CA Jmt at [179], as recognising a presumption that “as a matter of [5/153]\n principle, a policy should be interpreted as providing an indemnity for the loss suffered not for more than\n such an indemnity”.\n\n\n4 See also paragraph 53 below. [2/42]\n\n\n 4\n\n 30\n16. Synergy involved a claim under a material damage and business interruption policy. The\n relevant issue was whether an accounting charge for depreciation could be brought\n within the savings clause (again in ABI standard form). Unlike in the present case, there\n was no dispute that the depreciation charge had ceased or reduced as a result of the\n insured peril (a fire at the premises). The question was instead whether the cessation or\n reduction was of a charge “payable out of Gross Profit”, since depreciation would never be\n paid in cash but was merely a deduction by accounting entry. At [258] Flaux J accepted [82/1518]\n (in brief reasoning) that “the defendants’ construction stretches the word ‘payable’ somewhat” but\n found that the reduced depreciation was a saving within the clause because that gave\n better effect to the indemnity principle, and should be the preferred approach except\n where the wording is “incapable of any other construction”. Permission to appeal was given\n in Synergy, but the claim settled.\n\n17. It is, of course, permissible to take into account the indemnity nature of a contract of\n insurance when construing a policy, i.e., where a policy in general terms seeks to\n indemnify loss. But “[t]he principle is one of presumptive interpretation and is subject to the policy\n wording, which may clearly provide for recovery of either less or more than the actual loss”: RSA v [78/1453]\n Tughans [2023] EWCA Civ 999, [2024] 1 WLR 1651 at [59] (Popplewell LJ).\n\n18. However, the ‘Synergy presumption’ goes well beyond that, is contrary to the decision in\n Polikoff (which does not appear to have been cited in Synergy), and is contrary to orthodox\n principles of construction. It is the sort of strained construction that has rightly all but\n vanished from English contract law. The New South Wales Court of Appeal in Mobis [95/1723]\n Parts Australia Pty Ltd v XL Insurance Co SE [2018] NSWCA 342, [2019] Lloyds Rep 162\n considered the same issue of accounting for depreciation under a savings clause in\n standard ABI terms as arose in Synergy, and reached the opposite conclusion. Meagher\n JA emphasised at [147] (see also [122]) that, because the policy “contained a formula for the [95/1734]\n assessment of the insured loss”, that “qualifies the application of the principle of indemnity insofar as [95/1729]\n it might be said to depart from perfect indemnification in some contingency”. Meagher JA criticised\n Flaux J’s reasoning in Synergy as giving (at [149]):\n\n “...the indemnity principle unwarranted effect in the face of the language of the\n policy, and the specific objects of the provisions for the assessment of loss. A\n reasonable businessperson seeking to understand these lengthy clauses would not [95/1734]\n begin by assuming that they mean nothing more than the expression ‘full\n indemnity for actual loss to gross profit’, and then proceed to enquire whether\n anything in the language required otherwise. His or her attention would remain\n fixed on the sense of the language describing the method for ascertaining the loss\n as coloured by its immediate and commercial context”.\n\n\n 5\n\n 31\n The Court in Mobis concluded at [155] that depreciation charges were not within the [95/1735]\n natural and ordinary meaning of the words of the savings clause, and debates about\n “over- or under-indemnifi[cation]” missed the point since that was “an enquiry that the formula\n [in the policy] would be expected to foreclose”.\n\n19. The respect for the formula over general concepts of indemnity in Mobis has since been\n endorsed (in the context of JobKeeper payments) by the Full Federal Court in\n Marrickville at [457] (“The provisions avoid this controversy [as to the quantification of any loss to be [101/1894]\n indemnified] by setting out the methodology to be used”) and the Supreme Court of Victoria in\n Princess Theatre at [455] (“The essence of the Policy is not one where the Insurer promises to indemnify [97/1788]\n the insured for actual loss; rather, the Insurer promises to indemnify in accordance with the Policy which\n in terms provides for indemnity in accordance with the basis of settlement”), as well by the Irish\n Commercial Court in the context of TWSS in Hyper Trust at [39] (“The savings clause is [91/1636]\n incorporated as an inherent part of the indemnity clause. Thus, the nature of the indemnity to be provided\n is expressly subject to the savings clause”).5\n\n20. The ‘Synergy presumption’ therefore should be rejected. The natural and ordinary\n meaning of words in an insurance policy—including in a savings clause—should not be\n strained to try to achieve a perfect indemnity. A policy’s terms (including the savings\n clause) should be read with a view to applying the language and mechanism chosen by\n the parties, not “torturing” the language (per Polikoff) into being given another meaning\n because of some pre-conceived view as to what is demanded by the indemnity principle.\n\n(2) The proper construction of the savings clauses\n\n21. The policies in these appeals do not provide an indemnity for all loss. The parties never\n agreed by the cover to put the insureds in the same position they would have been in\n had the peril not occurred (although of course they could have done so, leaving the\n indemnity ‘at large’). Rather, the policies set out a formula that dictates the existence\n and amount of any indemnity to be paid. The amount ultimately calculated may be either\n larger or smaller than the amount of actual loss (such that the assessment is sometimes\n “in favour of the assurance company and sometimes the assured”: Henry Booth & Sons v Commercial [58/1277]\n Union Assurance Co Ltd (1923) 14 Lloyd’s LR 114 (KB) at 114 (Greer J)), but that is\n irrelevant, just as, for example, in a valued marine insurance policy that value\n\n\n5 Although the furlough issue was not properly argued (see fn 3 above), the Synergy presumption point was the [2/28]\none point that was subject to adversarial argument, see [54]. [91/1646]\n\n 6\n\n 32\n nonetheless dictates the indemnity even if it is lesser or greater than actual loss.6 The\n formula (like a valued policy, or new for old policy) defines and circumscribes the\n indemnity the parties agreed to.\n\n22. The market standard approach to the formula adopted for business interruption policies\n is helpfully described in general terms in the FCA Test Case at [253]. The position is set [54/1218]\n out below in more detail by reference to the Arena Policy (but the reasoning equally\n applies to the Claimant Policies):\n\n (1) The Arena Policy (like the Claimant Policies) insured “Gross Revenue”, being “the [8/372]\n money paid or payable to the Insured for work done and services provided in the course of The\n Business at the Premises”. By that definition, the parties did not insure changes in\n other income streams of the Arena Claimant. (A loss of regular receipts from,\n for example, investment income or donations by racing enthusiasts would not\n constitute a relevant reduction in revenue under the Arena Policy.)\n\n (2) By the settlement terms at pages 2.3-2.4 of the Arena Policy, the insured loss was [8/373-374]\n identified by comparing the actual “Gross Revenue” achieved during the relevant\n period against the “Standard Gross Revenue” achieved in the 12 months\n immediately prior to the insured peril (subject to the application of trends\n provisions on page 2.3: see also the FCA Test Case at [254]). The Arena Policy [54/1218]\n additionally provided at page 2.5 cover for “Increased Cost of Working”, namely [8/376]\n additional costs “reasonably incurred” as a result of the covered peril (ICW).\n\n (3) With the exception of lost rent, which was covered by separate settlement terms,\n no other income (than that in the definition of “Gross Revenue”) was insured, and\n so no other income could be recovered under the Arena Policy if lost. (The\n insurance market does also provide for insurance of other income where that is\n what the parties want, such as for donations: see, e.g., the Ecclesiastical 1.1\n Church Policy considered in the FCA Test Case; and grants for, e.g., universities:\n BI Cover Issues (2005) p 139; but cover for such income was not provided by the [118/2086]\n Arena Policy.)\n\n\n6 Colinvaux’s Law of Insurance 14th ed (2025) at [11-042]; see also MacGillivray on Insurance Law 16th ed (2025) at [108/1953]\n[19-016]. [113/2032]\n\n\n 7\n\n 33\n (4) The decision to insure on a gross revenue rather than gross profit basis means\n that cost savings should be dealt with separately and solely on the basis of actual\n rather than assumed reductions: see D Glynn, BI Cover Issues (2005) pp 96-97. [118/2083]\n\n (5) Thus, set against that cover for revenue was the savings clause at page 2.9 of the [8/380]\n Arena Policy, quoted at paragraph 2 above, providing that where the insured [2/127]\n peril causes charges or expenses to “cease or reduce”, those savings should be\n deducted to reach the amount that can be claimed (subject then to the\n application of excesses and limits).\n\n23. This form of structured calculation to identify the existence and extent of the agreed\n indemnity is true for all business interruption policies on ABI or similar market wording\n insuring revenue, as reflected in a number of insurance law and loss adjuster textbooks: [115/2047]\n Riley on Business Interruption Insurance 11th ed (2021) at [2-53]; Walmsley on Business [116/2063]\n Interruption Insurance, p 187; BI Cover Issues, pp 95-97; Chartered Institute of Loss [118/2082]\n Adjusters, The Basic Business Interruption Book (2024) at [1.3]. A formula of this type is a [117/2071]\n “standard method used in insurance policies that provide business interruption cover for quantifying the\n policyholder’s financial loss”: FCA Test Case at [251]. It is a distinguishing feature of UK [54/1217]\n business interruption insurance policies: Riley at [2-52]. [115/2046]\n\n24. The terms in a policy’s calculation machinery or formula, and not any concept of an\n indemnity ‘at large’, thus dictates the amount payable under that policy, as the reasonable\n reader would expect: GJR Hickmott, Principles and Practice of Interruption Insurance (1982) [109/1965]\n pp 26-30. The parties have agreed “a formula to determine the level of indemnity”: Walmsley on [116/2062]\n Business Interruption Insurance, p 20.7\n\n25. There is an obvious commercial justification for this. It is “good sense to have a method which\n can be applied without difficulty and without raising a great number of points for dispute”: Henry Booth [58/1277]\n at 114 (Greer J). And the use of a formula is not only a matter of convenient certainty\n as to the bargain reached and its application to particular claims, but also deals with\n inherent uncertainties in business interruption insurance, which after all is concerned\n with “something intangible—the effect of damage on trading results which might materialise in the [115/2046]\n future had the damage not occurred”: Riley at [2.52].\n\n26. The necessary corollary of agreeing a formula is that profit per se is not insured. Instead,\n where income is or would be received the “Gross Revenue” definition alone acts as the\n\n\n7 See also Polikoff and the Australian and Irish authorities cited at paragraphs 14 to 19 above. [72/1405]\n [2/30]\n\n 8\n\n 34\n gatekeeper as to whether it is insured and affects the indemnity. The other provisions\n do something else: where additional costs are incurred then ICW cover applies (but only\n within its terms, which require, for example, the expenditure to be reasonably incurred\n with consent to minimise interruption to the business, and capped by reference to the\n reduction thereby avoided); and the savings clause deals with costs that would have been\n incurred but are not incurred and so saved.\n\n27. In those circumstances, applying a straining presumption of the kind envisaged by\n Synergy to the savings clauses would be contrary to the terms of the policies and would\n involve (and, in the present case, was used by Flaux C to justify) the court rewriting the\n parties’ bargain. The words “cease or reduce” in the Arena Policy (or “cease or be reduced” in\n the Claimant Policies) should be given their natural and ordinary meaning, in the context\n of the formula that designates the savings clause as addressing the costs side of the\n insured business only.\n\n(3) The words of the savings clauses\n\n28. The ordinary policyholder would read the savings clauses as being triggered only where\n a liability of the insured (a payable charge or expense) is not incurred or is incurred in a\n lesser amount (cease or reduce). These terms are not technical or terms of art, nor are\n they difficult or unfamiliar:\n\n29. First, there must be “charges or expenses” that are “payable” (the Claimant Policies refer only\n to “charges ... payable” without reference to “expenses” but nothing turns on this\n difference). As to “charges” or “expenses”, both refer to sums that are to be paid over to\n another. The Oxford English Dictionary (OED) defines “charge” as a “[p]ecuniary burden; [121/2096]\n expense, cost” and “expense” as “[d]isbursement, spending, laying out (of money); an instance of this”, [121/2097]\n and also “[b]urden of expenditure; the pecuniary charge, cost or sacrifice involved in any course of\n action, mode of living, etc., or requisite for the attainment of any object”. And they must be “payable”, [123/2098]\n meaning that these are payments contractually or otherwise legally due to another\n (OED: “that is to be paid; due, owing; falling due”); hence the Court in Synergy had to strain\n the meaning of the word to extend this to the accounting entry of depreciation.8 In\n contrast, wages and taxes in the present case fall squarely inside this definition.\n\n\n8 The Claimant do not need to overturn the ultimate result in Synergy as regards the specific treatment of\n [115/2052]\ndepreciation for this appeal to succeed (although that remains highly controversial—see Riley at [13-38]—and\nsome business interruption policies contract out of it).\n\n\n 9\n\n 35\n30. Second, the words “cease or reduce” or “cease or be reduced” also bear their natural and\n ordinary meaning and so would be understood per the OED, respectively, as “come to [119/2087]\n the end” and “lower, diminish, lessen”, and their juxtaposition makes clear that ‘reduce’ is a [124/2101]\n partial form of ‘cease’. As Riley notes at [13-39] in the context of Government financial [115/2056]\n support provided during the pandemic, grants generally do not fall within the ABI’s\n recommended savings clause whereas rates relief do amount to a saving. This reflects\n that it is the charge or expense—i.e., the legal liability to make payment to another—\n which must reduce or cease. Put another way, the test is whether there is a liability which\n has been partially or fully “not incurred”: Mobis at [150]; Riley at [13-39] (and this is how [95/1734]\n loss adjusters approach the issue: see BI Cover Issues, p 46 The Basic Business Interruption [115/2056]\n Book at [1.3]). [118/2080]\n\n31. Third, those words on their natural meaning inform in turn the meaning of the concept\n of savings within the formula (see, again, Mobis at [150]). Thus, in the Arena Policy the [95/1734]\n clause (entitled “Savings”) describes “charges or expenses ... payable [but which] cease or reduce” [8/380]\n\n as “such savings”, and in the Claimant Policies the “sum saved” is stated to be “in respect of [9/501]\n\n such of the charges .... as may cease or be reduced”. The language of ‘savings’ does not therefore\n change the meaning of the clause to have some wider scope; rather, its scope is governed\n by the precise (and ordinary) meaning given by the words considered in paragraphs 29\n [2/35–36]\n and 30 above.\n\n32. An example as to the effect of this construction (given in Riley at [13-37]) is that, if an [115/2052]\n insured’s electricity bill falls because their premises are not being used due to prevention\n of access to the premises, their liability to make payments to the electricity company\n reduces, and that must be credited under the savings clause (subject to the “in consequence\n of” wording). Likewise, if debt interest charges decrease (as in Polikoff), or if business [72/1405]\n rates are reduced (as in Stonegate). [81/1479]\n\n33. Conversely, if an insured is given a general government grant to continue operating\n notwithstanding an insured peril and chooses to apply that grant towards their electricity\n bill or business rates, that cannot be brought into account under the savings clause. The\n liability to pay the electricity bill has not reduced; the government funding simply means\n that it has become easier for the insured to meet that liability. This is not understood to\n be disputed by the Respondent.\n\n\n 10\n\n 36\n34. What is disputed on this appeal is the Claimant’ case that the same analysis is true of\n CJRS grants, which were not general grants, but conferred to fund a specific liability,\n namely wages and associated taxes and pension contributions.\n\n(4) Application of the savings clauses to furlough payments\n\n35. The facts relating to the CJRS are set out in Section F of the ASFI. The CJRS was [1/16]\n\n announced on 20 March 2020 by the Chancellor of the Exchequer (ASFI at [47]), [1/20]\n explaining:\n\n “Employers will be able to contact HMRC for a grant to cover most of the wages\n of people who are not working but are furloughed and kept on payroll, rather\n than being laid off. Government grants will cover 80% of the salary of retained\n workers up to a total of £2,500 a month ... And, of course, employers can top up\n salaries further if they choose to.”\n\n36. The key features of the CJRS appear in the Treasury Direction of 15 April 2020. 9 The [10/524]\n CJRS was not structured by way of payments from the state to employees, or by relieving\n employers of their liabilities to pay wages or associated National Insurance (NI) and\n pension contributions. Rather:\n\n (1) The purpose of the CJRS was to pay “employers on a claim made in respect of them\n incurring costs of employment in respect of furloughed employees arising from the pandemic”,\n where such employees had been furloughed as a result of the Covid-19 pandemic [10/526]\n (at [2.1]). CRJS grants were therefore “only” to be made as “reimbursement of the\n expenditure described in paragraph 8.1 incurred or to be incurred by the employer” (at [2.2]).\n\n (2) An employer’s “costs of employment” were defined as “qualifying costs” (at [5]) and [10/527]\n had to be incurred in respect of a “furloughed employee” (at [7]), defined as an\n employee instructed not to work by the employer “by reason of circumstances arising [10/529]\n as a result of coronavirus or coronavirus disease” (at [6.1]).\n\n (3) Grants made to employers under the CJRS would therefore reimburse (a) gross\n earnings “paid or reasonably expected to be paid”, and, until 31 July 2020 (ASFI at\n [37(1)]), (b) NI contributions “liable to be paid” and (c) an “amount allowable” by [1/17]\n\n way of pensions contributions (at [8.1]). [10/532]\n\n37. Thus, as is common ground, the entitlement to receive a CJRS grant depended on the\n insured having “incurred”—or incurring in future—the wage liability and any associated\n\n\n9 This was the first such Treasury direction: there was a delay in its promulgation after the announcement of the [1/19–20]\nCJRS on 20 March 2020: see ASFI at [45], [47] and [51].\n\n\n 11\n\n 37\n NI and pension costs. The insured had to maintain their liability to pay, with those\n liabilities then reimbursed (i.e., funded) by the furlough payments. On all available\n meanings of the words, at no point in time did the wage and other liabilities “cease” to\n be incurred or “reduce” by reason of CJRS grants. They were (and had to be, in order to\n be eligible for the grant) still incurred.\n\n38. It follows from the construction of the savings clauses set out at paragraph 28 above [2/35]\n that, where a category of liability is still incurred (here, wages, NI, pension\n contributions), but funded (here, by furlough payments) that does not satisfy the terms\n of the savings clauses. For the savings clauses to be engaged, the legal liability must cease\n to be incurred or be incurred in a reduced amount.\n\n39. This does not mean ignoring that the CJRS grants were a benefit and income to the\n Claimant, but rather is recognition that (1) such grants fell outside the policies since\n (as the parties agree) they were not “Gross Revenue” because they were not money payable\n “for work done and services provided” and (2) on the natural and ordinary meaning of the\n words of the savings clauses, a reimbursement or funding of a charge or expense\n through an additional source is conceptually different to that legal liability ceasing or\n reducing. On orthodox principles of construction, this formula in the policies cannot\n be rewritten so as to allow a benefit caused by the insured peril to be taken into account.\n\n40. The distinction between liability and funding for a liability is familiar in the general law.\n It was decisive in the damages context in Lowick Rose LLP v Swynson Ltd [2017] UKSC [66/1344]\n 32, [2018] AC 313. The loss in that case arose from a loan default and was avoided\n because the subsequent benefit provided to the company by its shareholder was not\n funding, but rather structured as a discharge of the balance due under the loan: see [6], [66/1351]\n [8] and [12]-[13]. The outcome in Swynson would have been different if the shareholder [66/1353]\n had simply funded the company rather than loaning funds to the borrower on the\n condition that they be applied to extinguish the relevant liability under the loan\n agreement.\n\n41. The conceptual distinction contemplated by the savings clauses, and where the CJRS\n falls in relation to that distinction, is further demonstrated by:\n\n (1) The fact that payments under the CJRS could be (and in some cases were) repaid:\n see ASFI at [41]. Insurers may say (although it is not clear from submissions to [1/19]\n\n date) that in those circumstances wages, NI and pension contributions ‘un-cease’\n\n\n 12\n\n 38\n and ‘un-reduce’, but that is wholly artificial. The liability never changed; the\n insured has simply disclaimed and repaid the funding associated with it.\n\n (2) The fact that (although described as a reimbursement scheme) CJRS grants could\n be received by employers in advance of making wage payments. The liability to\n pay wages, NI and pension contributions exists, continues and does not reduce\n whatever the timing or fact of the receipt of the grant. Indeed, the independence\n between the timing of the funding and the charge or expense underlines the\n strain placed on the contractual language by the contention that the liability to\n pay that charge or expense ceases or reduces by reason of associated funding. (It\n is not clear why Butcher J thought this was a point against insureds in Stonegate [81/1503–1504]\n at [264]-[266], but in any event Flaux C disagreed and stated that the timing point\n did not support either side of the argument: CA Jmt at [177].) [107/152]\n\n (3) The different schemes adopted during the Covid-19 pandemic for NI\n contributions under the CJRS on the one hand, and business rates relief on the\n other. In the latter case, the extent of the liability to pay tax was reduced, and\n hence would meet the “cease or reduce” requirement in the savings clauses: Stonegate [81/1509]\n at [293]. In the former case, by contrast, the extent of the liability of the tax\n remained unchanged and so did not “cease or reduce”; the ordinary policyholder\n would recognise that it had simply become easier to pay because the state was\n providing funding for that tax to be paid.\n\n (4) The CJRS at no point in time covered more than 80% of an employee’s wages\n (ASFI at [37]). Payment of an employee’s full wages depended on an employer [1/17]\n ‘topping up’ their salary beyond the amounts covered or dictated by the terms\n of the CJRS.\n\n42. Riley observes at [13.39], stating the obvious, that under the CJRS the “wages are still being [115/2056]\n paid” by the insured. The truth of that observation should be determinative of the appeal\n on Ground 1. As recognised in Princess Theatre at [466] (M Osborne J) it follows that: [97/1793]\n\n “The wages were not reduced and did not cease. The premise of the making of\n JobKeeper Payments was to enable employers ... to be able to pay wages and\n expenses of their employees. Because the wages and expenses were maintained\n ... the ‘sum saved’ component has no application. The fact that the JobKeeper\n Payments constituted in effect a new revenue stream which could be utilised to\n pay these expenses is a different issue.”\n\n\n 13\n\n 39\n Although a conclusion expressed in respect of the JobKeeper scheme in Australia, the\n reasoning is equally applicable to the CJRS, which shared the very same premise (cf. the\n [5/152]\n CA Jmt at [176]).\n\n43. The savings clause position in respect of furlough is therefore no different to a\n philanthropic donation made by a racing enthusiast to the Arena Claimant for the\n specific purpose of helping the racecourses maintain their workforce during the\n pandemic lockdowns. Or if the Claimant Investment Claimant had (in facts analogous to\n Swynson) obtained an interest-free loan from their shareholders, subsequently written-\n off, to fund wages and associated tax and pension costs. Savings clauses have never\n previously been applied to the receipt of funding or reimbursement or defrayal of a cost,\n and plainly such a donation or funding arrangement would not constitute a saving; the\n Respondent have never satisfactorily explained why furlough payments should be any\n different.\n\n(5) Errors in the reasoning of the Courts below\n\n44. The Respondent’ case, accepted by the Courts below, is that the savings clause required\n “looking at the substance” or the “commercial and economic reality” (the CA Jmt at [174] and [5/152]\n [177]; see also the Com Ct Jmt at [436]):\n\n “The bottom line at the end of the day is that the insureds did not have to bear\n the expense of the wage bill and, to that extent, the charges or exchanges of the\n business were reduced.”\n\n In Stonegate at [258], Butcher J referred to this approach as searching for the “net financial [81/1503]\n effect” of the benefit received by the insured.\n\n45. In the Com Ct Jmt at [438], Jacobs J said that the reasoning in Synergy was “not critical” [7/252]\n in reaching this conclusion. It is not obvious that Flaux C agreed with that assessment\n (cf. the CA Jmt at [179]). The ‘commercial netting’ construction is impossible to explain [5/153]\n otherwise than by reference to the (erroneous) Synergy straining presumption, and, in\n any event, it is wrong.\n\n46. First, it proves too much. It would collapse the distinction altogether on ABI wording\n between (i) a liability ceasing or reducing, i.e., not being incurred, and (ii) funding for an\n incurred liability. On this analysis, savings clauses modelled on ABI wording would\n always apply to the receipt of funding or reimbursement or defrayal of a charge or\n expense. It was of course open to the parties to agree such an approach to savings (e.g.,\n ‘...if any of the charges or expenses payable cease or reduce or are reimbursed in\n\n\n 14\n\n 40\n consequence of the insured peril...’), but that is not the current language recommended\n by the ABI and used in these policies. Indeed, had grants or donations (or any particular\n source of reimbursement or other income) been intended to be taken into account they\n would have been included more naturally in the definition of “Gross Revenue”.\n\n47. Second, as set out at paragraphs 21 to 27 above, this ‘netting’ approach within the\n savings clause operation ignores the policy’s particular and specific formula for the\n amount payable, which struck a straightforward-to-apply compromise as to the credits\n to be made as against the indemnity due. If the parties had intended that the savings\n clause would have operated as its own general netting provision, they would have spelled\n that out as part of the formula. There is no licence in the wording to introduce a further\n netting off within the reduction in costs part of the calculation (see paragraph 22(5)\n 22(4) above) to bring in income that offsets a particular cost. That cuts across the\n language requiring income to be dealt with under the first part of the calculation (see\n paragraphs 22(1) to 22(3) above).\n\n48. Third, it follows that the insurers’ approach departs from orthodox principles of\n construction by promoting a purported commercial common-sense divorced from the\n language used by the parties. The fact that “reality” was invoked implicitly conceded that\n the natural and ordinary meaning of the words in the savings clause would lead to a\n different outcome (just as it was acknowledged that the construction in Synergy stretched\n the meaning of the words used). This ignores the injunction in Arnold v Britton not to\n invoke commercial common-sense to undervalue the contractual language (see\n paragraph 11 above) and the recognition in Wood v Capita that a professionally and\n carefully drafted contract such as these policies should have been the subject of textual\n analysis (see paragraph 12 above).\n\n49. Fourth, Flaux C concluded that this construction of the savings clauses was also justified [8/374]\n by the trends clause on page 2.3 of the Arena Policy (CA Jmt at [178]). But that is to [5/153]\n misunderstand the operation of the trends clause. As explained in the FCA Test Case,\n although “the trends clause are part of the machinery contained in the policies for quantifying loss”,\n they “do not address or seek to delineate the scope of the indemnity” (at [260]). The trends clause [54/1219]\n expressly allows adjustments to the “Standard Gross Revenue” (the “Gross Revenue” in the\n year prior to the peril) to better match the position as it would have been but for the\n peril, but not adjustments to costs or savings. To put it another way, if the trends clause\n just meant there was a general indemnity, there would be no need for a definition of\n\n\n 15\n\n 41\n “Gross Revenue”, an ICW clause or a savings clause (and these latter clauses do not include\n a trends clause). In any event, the correct approach is to construe the trends clause as\n having a narrow compass and by reference to the rest of the policy, not to construe\n other parts of the policy by reference to the trends clause: see the FCA Test Case at [261]- [54/1219-1220]\n [264], [268] and [287]. The trends clause is not a licence to override the natural and [54/1225]\n ordinary meaning of the words in other parts of the policy.\n\n50. Finally, and for completeness, accounting treatment is irrelevant to the proper\n construction of the savings clause (as the CA Jmt [177] rightly accepted, but cf. Stonegate [5/152]\n at [259]-[263]): it is a different exercise for a different purpose, allowing the combining [81/1503]\n of positive and negative amounts to achieve a full and fair view of the business’s trading.\n Accounting standards do not therefore necessarily draw a distinction between an\n expense ceasing and (as occurred in respect of furlough payments) an expense merely\n being offset by income received. In any event, as noted at ASFI at [79], the Claimant [1/23]\n in both the Arena Proceedings and the Claimant Investment Proceedings were entitled to—\n and did—recognise (1) their incurred wage bill in their accounts in full, and (2) CJRS\n receipts as “Other Income”, “Grants Received” and “Other operating Income”, rather than\n netting off the two to produce a single figure in their statutory accounts.10 The actual\n accounting treatment therefore underlines the distinction advanced by the Claimant,\n and shows that the natural and ordinary wording of the policies is not uncommercial or\n contrary to business practice.\n\n51. For these reasons, it is respectfully submitted that the appeal should be allowed on\n Ground 1.\n\nIII. GROUND 2: INTRODUCTION\n\n52. The savings clauses in these appeals require any saving to be “in consequence of the Damage” [8/380]\n (in the Arena Policy) or “in consequence of the incident” (in the Claimant Policies). It is [9/501]\n common ground that “Damage” and “incident” fall to be construed as a reference to the\n non-damage insured peril, i.e., prevention or hindrance of access: CA Jmt at [180]. [5/153]\n\n53. This “in consequence of” wording was apparently introduced to reverse the result in Polikoff:\n see Walmsley on Business Interruption Insurance, p 188. In that case the savings clause lacked [116/2064]\n such words of causation linking the saving to the peril, and so a saving caused by\n\n\n10 Likewise, although not relevant to the construction dispute, CJRS grants are taxed as ‘income’: ASFI at [54]. [1/20]\n\n\n 16\n\n 42\n voluntary acts of the insured reduced the indemnity (in Polikoff, the voluntary repayment\n of debt by the insured, leading to a reduction in the interest due and payable: see 286). [72/1412]\n\n54. The starting point for both Grounds 2(a) and 2(b) is that the words “in consequence of” in\n the savings clause import a test of proximate causation: the FCA Test Case at [162]. Thus [54/1193]\n the same test for causation applies in respect of the link between insured peril and loss\n (under the insuring clause) and the link between insured peril and the reduction of costs\n (under the savings clause). This is common ground between the parties, as noted at CA\n [5/153]\n Jmt [180] and [152]. [5/147]\n55. The policy formula therefore expressly provides that a (cessation or) reduction of costs\n unconnected or only remotely connected to the insured peril should not reduce the\n indemnity payable under the policies. To state the obvious, some reductions of costs\n must be disregarded. Only where the covered peril is the proximate cause of the\n reduction of costs—here the receipt of CJRS grants, if the Claimant have failed on\n Ground 1—is that reduction capable of amounting to saving.\n\n56. The Respondent must succeed on both Grounds 2(a) and 2(b) in order to establish\n that CJRS grants were “in consequence of” the insured peril (cf. the CA Jmt at [188]). [5/156]\n\n\nIV. GROUND 2(A): THE CJRS GRANTS WERE COLLATERAL BENEFITS\n\n57. Ground 2(a) engages two core propositions as to the applicable general principles,\n addressed in turn in subsections (1) and (2) below.\n\n(1) Proximate causation means both factual and legal causation\n\n58. The first core proposition is that a requirement for proximate cause in an insurance\n policy involves not only a question of causation in fact but what has become known as\n legal causation, at least after HLA Hart and Tony Honoré’s seminal work, Causation in\n the Law, 2nd ed (1985). Hart and Honoré rejected a ‘causal minimalist’ approach by\n which there was only the factual ‘but for’ question and then the application of policy (p [111/1987]\n 90). They reasoned instead that the task was “not to search for general policies but rather to\n reveal the true character of the issues wrapped up in blurred notions of causation” (p 108). [111/1995]\n\n59. Hart and Honoré moved beyond assertions of causation as a matter of ‘common-\n sense’—familiar in insurance law as elsewhere: see the FCA Test Case at [168]— [54/1195]\n explaining that “the causal notions which [common-sense] employs, though flexible and complex and\n subtly influenced by context, can be shown to rest, at least in part, on statable principles” (p 26). Their [111/1978]\n\n\n 17\n\n 43\n analysis was intended and expressed to be universal and so (1) equally applicable to [111/1983]\n causation of gains as causation of losses (see, e.g., pp 86 and 141) and (2) equally [111/1996]\n applicable to insurance law as other branches of private law such as tort law (see, e.g., [111/1982]\n pp 85-86 and 95). [111/1992]\n\n60. The distinction between factual and legal causation is now well established in the general\n law of damages: see, e.g., Hughes-Holland v BPE Solicitors [2017] UKSC 21, [2018] AC 599\n at [20] (Lord Sumption) and most recently at the Supreme Court level URS Corporation\n Ltd v BDW Trading Ltd [2025] UKSC 21, [2025] 2 WLR 1095 at [28] and [55]-[56] (Lords [87/1564]\n Hamblen and Burrows). That distinction is also reflected in the detailed analysis of the [86/1566]\n ‘but for’ test and proximate causation in the FCA Test Case, where, for example, Lords\n Hamblen and Leggatt recognised that the overarching question as to whether the peril\n has made a loss (or gain) “inevitable ... in the ordinary course of events” (at [168]) involves [54/1195]\n issues of legal and not just factual causation. The FCA Test Case thus endorsed criticisms\n of a causal minimalist approach which does not look beyond a ‘but for’ or other test for\n factual causation (see, e.g., [182], expressly referring to Hart and Honoré). [54/1199]\n\n61. The words “in consequence of”—construed as requiring proximate causation—therefore\n must be intended to and do import the general framework of legal causation. Ground\n 2(a) is concerned with the principles of legal causation variously described as relating to\n collateral benefits, avoided loss or res inter alios acta.11\n\n(2) ‘Subrogation’ in this context means legal causation\n\n62. The second core proposition relates to the use of ‘subrogation’ language in insurance\n cases, so far as relevant to these appeals. General principles of legal causation are the\n correct explanation for the principle applied in the so-called ‘subrogation’ line of\n insurance cases considered and applied obiter in Stonegate at [273]-[284], followed in the [81/1505-8]\n Com Ct Jmt at [455] and which Flaux C also considered in the CA Jmt at [189]-[190]. [7/256]\n The leading cases—as noted at paragraph 10(1) above—are Burnand and Castellain. [5/156]\n\n63. In Burnand, cargo on a ship was destroyed by a Confederate war vessel during the\n American Civil War. The owners received a compensation payment from a fund set up\n by the United States after receiving a payment under a war risks policy of insurance. On\n learning about the former, the insurers sought to recover its value. The claim was\n\n\n11 As developed in Section V below, Ground 2(b) is that the insured peril was not legally causative of the\n\nparticular CJRS grants received by the Claimant because the existence and proof of the insured peril was\nirrelevant to the Claimant’ entitlement to the CJRS grants.\n\n\n 18\n\n 44\n dismissed by the House of Lords on the basis that the payment by the US government\n could not be brought into account. The focus of the four judgments in the House of\n Lords was that the relevant Act of Congress had stated that no insurer was entitled to\n any part of the payment from the fund. In those circumstances, as Lord Blackburn put\n it (in what has been treated as the leading speech), “the Government of the United States did\n not pay it with the intention of reducing the [insured] loss” (at 341), and so it did not “reduce the [47/1041]\n loss”, in contrast to the voluntary payments that were taken into account for the purposes\n of an insurance indemnity in Randal v Cockran (1748) 1 Ves Sen 98, 27 ER 916 and [75/1437]\n Blaauwpot v Da Costa (1758) 1 Eden 130, 28 ER 633 (see the distinction drawn by Lord [45/1011]\n Blackburn at 339, and also paragraph 80(2) below). [47/1039]\n\n64. In Castellain, in the period between exchange and completion on a house, the property\n was damaged by a fire. The seller’s insurer indemnified the seller for the property\n damage, and the insured then completed the sale at full price without having to make\n any deduction as a result of the damage. In contrast to the outcome in Burnand, the\n Court of Appeal held that the insurer could recover a portion of the proceeds of the\n sale reflecting what it had paid. On one view, the Court of Appeal took a narrow view\n as to when gains should be brought into account. Cotton LJ held that “everything” must\n be taken into account “which diminishes [the] loss” (393), but this “may be ... confined to that [48/1058]\n which is a right or other incident belonging to the person insured, as an incident of the property at the\n time when the loss takes place”, and so would exclude voluntary payments of the type at [48/1060]\n issue in Burnand (at 395) but not the saving made on the facts of Castellain (at 396). See [48/1061]\n similarly Brett LJ (at 390):\n\n “there was a right in the defendants to have the contract of sale fulfilled, by the\n purchasers notwithstanding the loss, and it was fulfilled. ... I cannot conceive that [48/1055]\n a right, by virtue of which the assured has had his loss diminished, is not a right\n which, as has been said, affects the loss”.\n\n However, in what is often treated as the leading judgment, Bowen LJ explained that “all\n that is to be considered” is a question of characterisation, i.e., was the benefit legally caused\n by the loss such that it “in substance reduced” the loss (at 404). [48/1069]\n\n65. The Courts below in these appeals and in Stonegate12 are wrong to take from Burnand and\n Castellain a rule that the conferral of a benefit by a third party to the insured will be taken\n into account unless “it can be established that the third party, in making the payment, intended to\n\n\n12 See also Colinvaux’s Law of Insurance at [12-113]. [108/1961]\n\n\n 19\n\n 45\n benefit only the insured to the exclusion of the insurers”: Stonegate at [284(2)]; also CA Jmt at [81/1508]\n [5/156]\n [190].\n\n66. That is because the relevant question is not one as to the intention of the third party,\n but rather whether the benefit has diminished the loss. That question is one of legal\n causation. Although the purpose of the third party is frequently an important factor in\n an assessment of legal causation, it is not itself the question or the whole answer. Thus,\n as recognised by Ashley JA in Insurance Australia Ltd v HIH Casualty & General Insurance [92/1693]\n Ltd (in liquidation) [2007] VSCA 223 at [159], there is no relevant difference between the\n approach to collateral benefits or avoided loss or res inter alios acta in insurance law from\n private law generally:\n\n “There is a broad principle, applicable at least in insurance law and torts law, that\n credit need not be given by an injured party for moneys received by it which are\n not to be characterised as extinguishing or reducing that party’s loss, but are rather\n to be characterised as having been received independently of right of redress.”\n\n67. That this is a question of legal not factual causation is underlined by the fact that the\n analysis in Castellain raises a normative not a factual question. As Goff & Jones on Unjust\n Enrichment 10th ed (2022) at [21.33] put it by reference to Cotton LJ’s judgment: “the [110/1974]\n issue is whether the payment ‘ought to be taken into account’ when calculating the amount of the insurer’s\n liability”. Indeed, typically the insured risk is a factual cause of the benefit received by\n the insured, but the benefit received is still excluded from the calculation of the\n indemnity. That is demonstrated by the facts of Burnand itself: the compensation fund\n would not have been set up but for the American Civil War and the damage it caused.\n It is also demonstrated by Bowen LJ’s famous example in Castellain at 404-405: [48/1069]\n\n “Suppose that a man who has insured his house has it damaged by fire and\n suppose that his brother offers to give him a sum of money to assist him. The\n effect on the position of the underwriters will depend on the real character of the\n transaction. Did the brother mean to give the money for the benefit of the insurers\n as well as for the benefit of the assured? If he did, the insurers, it seems to me, are\n entitled to the benefit, but if he did not, but only gave it for the benefit of the\n assured, and not for the benefit of the underwriters, then the gift was not given\n to reduce the loss ... If it was given to reduce the loss, and for the benefit of the\n insurers as well as the assured, the case would fall on the other side of the line...”.\n\n The burning down of the insured’s house in this example is the ‘but for’ cause of the\n brother’s offer of financial assistance, but Bowen LJ recognised that depending on the\n circumstances it may not have to be brought into account.\n\n\n 20\n\n 46\n68. The conceptual confusion which has arisen in subsequent cases may be a result of the\n reasoning in Castellain itself, which in places is hard to follow, and which Goff & Jones [110/1972]\n describes at [21.11] as being “seriously flawed” (see also C Mitchell and S Watterson,\n Subrogation: Law and Practice (2007) at [10-17]-[10-28]):\n\n “The problem is that the court [in Castellain] failed to draw a clear distinction\n between three different rights that are given to indemnity insurers in three\n different situations in order to prevent insureds from becoming more than fully\n indemnified. Instead, the court conflated all three rights and described them\n collectively as incidents of the ‘doctrine of subrogation’. Properly speaking,\n ‘subrogation’ only means the right given to an insurer which has paid its insured\n to take over the insured’s subsisting rights of action against a third party in respect\n of the insured loss. It is confusing and misguided to use the term to describe the\n other two rights as well.”\n\n69. These “three different rights” are:13 (i) the right of an insurer after paying an indemnity to\n step into the shoes of the insured and take over rights against third parties capable of\n diminishing the insured loss (this is the only scenario which deserves the name\n subrogation, because that is the available remedy); (ii) the right of an insurer after paying\n an indemnity to an account of profits and an equitable lien in respect of legally caused\n benefits received by the insured after payment of the indemnity; and (iii) the right of an\n insurer to reduce its indemnity before it has paid, to reflect the loss having been reduced\n pro tanto where a legally caused benefit has been received by the insured (with a\n corresponding right to claim restitution to reverse an unjust enrichment if an indemnity\n is paid without the appropriate reduction).\n\n70. The treatment of these three separate rights under a homogenous doctrine of\n ‘subrogation’ reflects the fact that they each respond to the same underlying principles\n in relation to contracts of indemnity: R Merkin and J Steele, Insurance and the Law of\n Obligations (2013) p 111. But there are important differences:\n\n (1) Subrogation as a remedy (type (i) above) is only available where the insurer has [110/1972-3]\n paid the indemnity before the benefit is received by the insured from the third\n party,14 and there is an enforceable but unenforced right to that benefit.\n\n\n13 Goff & Jones [21.12]-[21.14]; Colinvaux’s Law of Insurance at [12-001] fn 3; Burnand at 339 (Lord Blackburn); Lord [110/1972-3]\nNapier and Ettrick v Hunter [1993] AC 713 (HL) at 752 (Lord Browne-Wilkinson). [108/1956]\n14 See, e.g., Colinvaux’s Law of Insurance at [12-014]; Arnould: Law of Marine Insurance and Average 21st ed (2024) at [57/1039]\n[31-09]; MacGillivray at [22-027]. [108/1957]\n [106/1939]\n [113/2033]\n 21\n\n 47\n (2) Type (ii) similarly depends upon an indemnity having been paid, but applies\n where that benefit has already been received by the insured, leading to a different\n remedy (i.e., an account of profits and an equitable lien).\n\n (3) If the indemnity has not been paid then the issue is most obviously one which\n should not be equated with subrogation, but is rather a matter of quantifying the\n amount of the indemnity to be paid (type (iii)): Burnand at 339 (Lord Blackburn) [47/1039]\n (see also Goole and Hull Steam Towing Co v Ocean Marine Insurance Co [1928] 1 KB\n 589 (KB) at 593 (MacKinnon J)).\n\n71. Despite these differences, in all three types of case the underlying question remains\n whether the benefit has diminished (or will diminish) the insured loss.15 In all three cases,\n the substance of that assessment is that of legal causation.\n\n72. Castellain was a type (ii) case and so “not a case of subrogation”; and “one might almost wish\n that some other word had been used as the label”: British Trader’s Insurance Co Ltd v Monson (1964) [90/1606]\n 111 CLR 86 (HCA) at 94 (Kitto, Taylor and Owen JJ). Burnand would also have been a\n type (ii) case had the benefit been legally caused and not collateral. The present furlough\n cases are type (iii) cases because the Respondent are contending for a lower indemnity\n amount on the basis of a diminution in loss due to the CJRS payments.\n\n(3) The Court of Appeal’s decision on Ground 2(a)\n\n73. The Court of Appeal held that the CJRS grants were not collateral. This was on the basis\n that the CJRS grants could not be analogised with benevolent gifts or ex gratia payments\n (at [189]), and the more appropriate analogy was with state benefits, which “will prima [5/156]\n facie reduce the claimant’s loss” (also at [189]). The Court of Appeal held that it was necessary\n to establish that the third party intended to benefit only the insured to the exclusion of\n the insurers (at [190]), which could not be demonstrated in this as there was “no express [5/156]\n statement by the Government to that effect”, quoting Stonegate (at [191]). [5/157]\n\n74. Each of these conclusions was wrong and misapplied the legal causation test which, as\n is not disputed, applies here: see paragraphs 52 to 61 above. For the reasons developed\n in the remainder of this Section IV:\n\n (1) The relevant principles at common law demonstrate, both within and outside\n the insurance context, that benevolent benefits are generally collateral (i.e., they\n\n15 See, e.g., Arnould: Law of Marine Insurance and Average at [31-34]; Colinvaux’s Law of Insurance at [12.105]; [106/1941]\nMacGillivray at [22.036] and [22.067]; Riley at [4.25]. [108/1959]\n\n\n 22\n\n 48\n are res inter alios acta) and do not diminish an insured loss if they are made with\n the purpose of benefiting the insured. The purpose or character of the benefits\n need not be express and can be inferred from the circumstances. It is wrong to\n suggest that the absence of an express intention is dispositive: cf. Stonegate at [81/1508]\n [286] (Butcher J); CA Jmt at [191] (Flaux C). [5/157]\n\n (2) The approach is no different for benefits rendered by the state; in every case a\n case-by-case assessment should be undertaken by reference to the particular\n benefit in issue. In particular, Flaux C was wrong to suggest a blanket rule in\n favour of bringing state grants or benefits into account: CA Jmt at [189]. [5/156]\n\n (3) Applying the principles to the CJRS, insofar as furlough payments did reduce\n the Claimant’ wage, NI and pension contribution charges or expenses, the rules\n of legal causation establish that those gratuitous payments made with the\n purpose of assisting the Claimant were not “in consequence of” the insured peril.\n Rather, they are collateral or res inter alios acta.\n\n(4) Relevant principles of legal causation\n\n75. A benefit is not legally caused by the circumstances which produce the loss—i.e., a\n breach, wrong or, here, an insured peril—if the “receipt arose independently of the circumstances [66/1352]\n giving rise to the loss”: Swynson at [11] (Lord Sumption). It is the “lack of a causal relationship\n that underpins” the exclusion of collateral benefits and the rules of res inter alios acta: Assetco\n plc v Grant Thornton UK LLP [2020] EWCA Civ 1151, [2021] 3 All ER 517 at [233] (David [42/976]\n Richards LJ). As Lord Clarke explained in Fulton Shipping Inc v Globalia Business Travel\n SAU (The New Flamenco) [2017] UKSC 43, [2017] 1 WLR 2581 at [30]:\n\n “The essential question is whether there is a sufficiently close link between [the [56/1259]\n benefit and loss] and not whether they are similar in nature. The relevant link is\n causation.\n\n Thus, if the benefit was legally caused by the circumstances which produced the loss, it\n is treated as diminishing that loss, but not otherwise.\n\n76. The legal burden falls on a defendant—in the insurance context, the insurer—“to show\n that the benefits should be set off against the prima facie claim of loss” as a matter of legal causation:\n Sainsbury’s Supermarkets Ltd v Visa Europe Services LLC [2020] UKSC 24, [2020] 4 All ER [79/1466]\n 807 at [212]; McGregor on Damages 22nd ed (2024) at [10.116].16 The Claimant having [114/2043]\n\n16 Further illustrations of the burden on a defendant to demonstrate that a benefit is legally caused by a breach\n\nin the general law are found in ED&F Man Capital Markets Ltd v Come Harvest Holdings Ltd [2022] EWCA Civ\n\n\n 23\n\n 49\n established a loss (reduction in gross revenue), it is the Respondent who must\n demonstrate that there is a relevant saving to be set off against that loss, subject at most\n to an evidential burden on the Claimant (Sainsbury’s at [216]). [79/1467]\n\n\n(a) Two paradigms\n\n77. Lord Sumption explained in Tiuta International Ltd v De Villiers Surveyors Ltd [2017] UKSC [85/1548]\n 77, [2017] 1 WLR 4627 at [12], “paradigm cases” where a benefit received by a claimant is\n treated as res inter alios acta so far as the defendant is concerned are (1) “purely benevolent\n benefits” and (2) benefits received under an insurance policy, disability scheme or other\n arrangement for which the claimant has given consideration. Such paradigm cases:\n\n “...are not necessarily the only circumstances in which a benefit arising from a\n breach of duty will be treated as collateral, for there may be analogous cases which\n do not exactly fit into the traditional categories. But they are a valuable guide to\n the kind of benefits that may properly be left out of account on this basis.”\n\n78. The latter paradigm is not relevant to the present appeals, but the former is central.\n Most cases of benefits received by an insured in the present type of dispute will fall on\n a spectrum between (1) recovery from a third party wrongdoer liable in respect of the\n loss, even if not under legal compulsion (not collateral); and (2) purely benevolent\n benefits. These two relevant paradigms are considered in turn below.\n\n79. First, as Arnould: Law of Marine Insurance and Average at [31-34] puts it, the “paradigm” of [106/1941]\n a benefit which does reduce an insured loss because it is legally caused by the insured\n peril “is a recovery from a third-party wrongdoer liable in respect of the very loss against which the\n insurer has indemnified the assured”. These cases are plainly not gratuitous (at least in the\n conventional or benevolent sense; they may not be legally obligatory and so may be ex\n gratia) and are intended to diminish the loss.\n\n80. The following examples fall within this first paradigm or are substantially similar to it:\n\n (1) The insured loss of property (requisitioned gold) was diminished by the\n Transvaal Government (the requisitioning party) providing payment for the loss\n of that property in Stearns v Village Main Reef Gold Mining Company (Ltd) (1905) 21 [80/1468]\n TLR 236 (CA).\n\n\n1704, [2023] 1 CLC 94 at [74] (Males LJ); Thai Airways International Public Company Ltd v KI Holdings Co Ltd [2015] [53/1124]\nEWHC 1250 (Comm), [2016] 1 All ER (Comm) 675 at [92] (Leggatt J); NTN Corporation v Stellantis NV [2022] [84/1541]\nEWCA Civ 16, [2022] 2 All ER (Comm) 706 (CA) at [33] (Green LJ). [69/1377]\n\n\n 24\n\n 50\n (2) Distribution of the proceeds of reprisals against Spain to those who had “suffered\n by the unjust seizures and depredations of the Spaniards”17 during mid eighteenth century\n naval encounters diminished the insured losses in Randal v Cockran and Blaauwpot [75/1437]\n [45/1011]\n v Da Costa.\n\n (3) A third-party contractor who repaired a vessel while on risk and obliged to\n complete its construction and outfitting diminished the insured owner’s loss in\n the damage to the vessel: Talbot Underwriting Ltd v Nausch, Hogan & Murray Inc\n (The Jascon 5) [2006] EWCA Civ 889, [2006] 2 Lloyd’s Rep 195 at [66] (Moore- [83/1531]\n Bick LJ).\n\n (4) Insured loss in the form of damage to a building was diminished where the\n tenants repaired that damage pursuant to their obligations in the lease: Darrell v\n Tibbitts (1880) 5 QBD 560 (CA).\n\n (5) In the reinsurance context, a reinsured loss was diminished by damages\n recovered by insurers for the deceit of the insured (which induced them to\n indemnify the insured for their losses), for which the insurers had in turn been\n indemnified by their reinsurers: Assicurazioni Generale de Trieste v Empress Assurance\n Corp [1907] 2 KB 814 (KB).\n\n81. These are illustrations from insurance law, but the same principle applies in the wider\n law of obligations. Most obviously, a payment from a defendant tortfeasor to the\n claimant is not collateral. As Dyson LJ recognised in Gaca v Pirelli General plc [2004] [57/1272]\n EWCA Civ 373, [2004] 1 WLR 2683 at [30] (following Williams v BOC Gases Ltd [2000] [89/1587]\n ICR 1181 (CA)), in such cases “the position is very different” from a payment by a third party\n because:\n\n “Nobody could reasonably suggest that it would be revolting to the ordinary\n man’s sense of justice or startling that the victim’s damages should be reduced to\n take account of an ex gratia payment made by the tortfeasor. On the contrary ....\n there is no good public policy reason for requiring a tortfeasor to compensate the\n victim of his negligence twice over. In fact, it offends one’s sense of justice that a\n claimant should be compensated twice by the tortfeasor”.\n\n82. Second, and in contrast, where there is a gratuitous, benevolent or voluntary conferral\n of a benefit on the insured, that generally does not diminish the insured loss. The law’s\n approach to this second paradigm of gifts, grants and similar voluntary conferrals of\n benefits on someone who has suffered loss is conditioned by a policy that “the courts do\n\n17 Burnand at 338 (Lord Selborne LC). [47/1038]\n\n\n 25\n\n 51\n not want to discourage benevolence”: A Burrows, Remedies for Torts, Breach of Contract and [104/1929]\n Equitable Wrongs 4th ed (2019) p 159. As Lord Reid explained in Parry v Cleaver [1970]\n AC 1 (HL) at 14:\n\n “It would be revolting to the ordinary man’s sense of justice, and therefore\n contrary to public policy, that the sufferer should have his damages reduced so [71/1395]\n that he would gain nothing from the benevolence of his friends or relations or of\n the public at large ...”.\n\n Lord Reid said that this was a matter “depending on justice, reasonableness and public policy” (at [71/1394]\n 13), something endorsed by Lord Bridge in Hussain v New Taplow Paper Mills Ltd [1988]\n AC 514 (HL) at 528 (also, e.g., 532) when observing that “when the plaintiff receives money\n from the benevolence of third parties prompted by sympathy for his misfortune, as in the case of a\n beneficiary from a disaster fund, the amount received is again to be disregarded”. [60/1304]\n\n83. In Sywnson, at [11], Lord Sumption rightly located this within a legal causation\n framework:\n\n “Thus a gift received by the claimant, even if occasioned by his loss, is regarded\n as independent of the loss because its gratuitous character means that there is no\n causal relationship between them ... Justice, reasonableness and public policy are [66/1352]\n ... the basis on which the law has arrived at the relevant principles. They are not\n a licence for discarding those principles and deciding each case on what may be\n regarded as its broader commercial merits”.\n\n84. As recognised by Lord Sumption, this second paradigm reflects a conclusion as to legal\n causation not simply as a matter of ‘policy’ per se, but because of the causal implications\n of a third party gratuitously conferring a benefit on a claimant. That gratuitous character\n arises from the third party conferring the benefit without legal obligation or other the\n responsibility to make good the loss. The character of the benefit shows that its\n conferral did not proximately arise from the insured peril (in insurance cases) or breach\n of duty (in tort or contract cases), but rather due to the benevolence or voluntary\n decision of the third party to benefit the claimant.\n\n85. This was recognised by Hart and Honoré in their assessment of the causal relevance of\n voluntary human actions. Their analysis applied to benefits as well as losses, having\n regard to cases which recognised that gratuitous benefits are caused by the “voluntary,\n spontaneous decision of a donor”, the donor’s decision to take it “upon herself to render” the\n benefit, or their “consideration” for the claimant: Rawlinson v Babcock [1967] 1 WLR 481\n (Ass) at 487 (Chapman J); Hay v Hughes [1975] QB 790 (CA) at 809 (Lord Edmund-\n Davies); Peacock v Amusement & Equipment Co Ltd [1954] 2 QB 347 (CA) at 354\n\n\n 26\n\n 52\n (Somervell LJ) (cases under the Fatal Accidents Acts; see also Redpath v Belfast and County [99/1813]\n Down Railway [1947] NI 167 (NICA) at 172-173 (Andrews LCJ)). As Hart and Honoré\n explained (p 141):\n\n “Deduction of gain. As already explained[18] a defendant cannot set off gain accruing\n to the plaintiff unless it accrues in consequence of his wrongful act; and where\n [111/1996]\n the immediate source of the gain is an indemnity, compensation or gift from a\n third party the rule is that it cannot be taken into consideration if the third person\n acted voluntarily.”\n\n86. It is this second paradigm (or analogising by reference to it) that explains Bowen LJ’s\n famous example in Castellain (at 404-405) quoted at paragraph 67 above. [48/1069]\n\n87. The language of gratuitous, benevolent or voluntary gifts in this context is not co-\n extensive with notions of altruism. It is “far from impossible” that a commercial payment\n could be made which is “not designed to reduce the assured’s insured loss”: Colinvaux’s Law of [108/1962]\n Insurance at [12.115]. For example, an ex gratia payment made by the broker to the insured\n in Merrett v Capitol Indemnity Corp [1991] 1 Lloyd’s Rep 169 (Com Ct) with the commercial [67/1361]\n motive of retaining its goodwill still counted as a benevolent gift. In Swynson, a gift by\n Mr Hunt to Swynson Ltd in the amount of the unpaid sums owed by the borrower\n would have been collateral notwithstanding the fact that Mr Hunt was the controlling\n shareholder and acting for his own interests, because it would have been “a purely\n gratuitous or benevolent addition to Swynson’s assets which was clearly not intended or apt to discharge\n [the professionally negligent accountant]”: see [48]. In contrast, the actual payments by the [66/1357]\n borrower EMSL (funded by Mr Hunt) repaying the loans were not collateral to the\n negligence that induced the loans.\n\n88. Benevolence in this context thus should be understood as a shorthand for circumstances\n in which the payment is gratuitous and its purpose is to benefit its recipient. Windeyer\n J explained in National Insurance Co of New Zealand Ltd v Espagne [1961] HCA 15, (1961)\n 105 CLR 569 at 598:\n\n “The most satisfying of the reasons that have been given for refusing to diminish\n damages because of voluntary gifts is that they are given for the benefit of the [96/1758]\n sufferer and not for the benefit of the wrongdoer. ... A donor can say who is to\n benefit by his generosity. ... And if nothing be said, the intention of the giver may\n be inferred from the circumstances.”\n\n89. However, this should not be taken too far. In Australia, after Espagne the focus on\n purpose has ossified so that “the test is by purpose rather than by cause” (Espagne at 600 [96/1760]\n\n\n18 The authors do not provide a pinpoint, but this is likely to be a reference to p 86. [111/1983]\n\n\n 27\n\n 53\n (Windeyer J)). In English law, however the test remains causation, even if the answer is\n often supplied by an evaluation of the purpose or character of the benefit as one\n intended to benefit the claimant, as demonstrated by the cases concerned with\n commercially motivated (i.e., non-altruistic) benefits identified in paragraph 87 above.\n\n90. The “real character of the transaction” is thus in English law not itself the test of collaterality.\n The law asks whether the benefit has been gratuitously, benevolently or voluntarily\n conferred (i.e. the real character of the transaction) such that it falls within the second\n paradigm, which informs the ultimate question of legal causation, i.e., whether the\n insured peril was causative of the gain such that it correspondingly reduces the relevant\n insured loss. The same is true if the transaction is characterised as falling within the first\n paradigm, i.e., that in substance the person conferring the benefit is (or is like) a\n wrongdoer liable in respect of the very loss against which the insurer has indemnified\n the insured.\n\n(b) Purpose or character\n\n91. Thus the existence and strength of the causal relationship between a benefit and an\n insured peril (in insurance cases) or a benefit and a breach of duty (in tort and contract\n cases) is identified in large part by a qualitative assessment of the purpose or “character”\n of the benefit (per Bowen LJ in Castellain at 405). [48/1070]\n\n92. If the party conferring the benefit expressly states their purpose in respect of benefit,\n that likely will be determinative. That is clear from the facts of Burnand itself. The Act\n of Congress stated in terms that insurers were not to benefit from the compensation\n fund, and that was given effect: see paragraph 63 above. Sometimes, the opposite\n intention is expressed, and also given effect: in Colonia Versicherung AG v Amoco Oil Co\n [1997] 1 Lloyd’s Rep 261 (CA) the settlement deed expressly preserved insurer’s rights [51/1093]\n (see 270). [A conferral of funds expressly in recognition that the donor was in the wrong\n for the loss that has arisen may be equally effective for demonstrating an intention to\n diminish the loss (placing that scenario into or near the first paradigm noted at\n paragraphs 79 to 81 above).\n\n93. Where—as is more often the case—there is no expressed purpose, “the courts do not\n attempt” to identify the actual intention of the person conferring the benefit: Burrows, [104/1924]\n Remedies, p 154. In most cases, the donor will not have turned their mind to the issue or\n whether the defendant should benefit from their payment: Zheng v Cai [2009] HCA 52, [102/1909]\n [2009] 239 CLR 446 at [20]. As was observed by Romer LJ in Stearns (at 96), “probably [80/1476]\n\n\n 28\n\n 54\n the Transvaal Government was not thinking of the insurers at all”. Rather, the purpose is “inferred\n from the circumstances”: Espagne at [19] (Windeyer J). The Court embarks upon an [96/1759]\n evaluative assessment of the objective purpose of the person conferring the benefit,\n undertaken by reference to (inter alia) the nature and source of the benefit.\n\n94. Contrary to the conclusion in Stonegate endorsed by the CA Jmt (see paragraph 73\n above), where there is no expressed purpose (and no obligation by the donor to make\n the payment), in the second paradigm of gifts or donations from private persons\n “invariably the donor, it is to be assumed, wishes the injured party and not the tortfeasor to benefit from\n the act of benevolence”: Clerk & Lindsell on Torts 24th ed (2023) at [26.51]. [107/1946]\n\n95. This is a common-sense incident of the making of a gratuitous payment (i.e. one that\n was not obligated and was not in return for anything), and reflects lived experience. In\n the case of gifts or donations from private persons, the purpose is to benefit the\n claimant, such that it would be “startling to the subscribers” of a charitable fund for the\n benefit to accrue to the wrongdoer: Redpath at 170 (Andrews LCJ), cited in Parry v Cleaver [99/1811]\n at 14 (Lord Reid). That is why the second paradigm exists. A similar common-sense [71/1395]\n approach was taken in respect of the gratuitous payment by a P&I Club in Atlasnavios-\n Navegação, LDA v Navigators Insurance Co Ltd (The B Atlantic) [2014] EWHC 4133\n (Comm), [2015] 1 Lloyd’s Rep 117 at [347]-[348] (Flaux J), which was therefore a [43/990-991]\n benevolent gift which did not diminish loss (the second paradigm noted above) without\n any evidence available or analysis required as to the actual intention of the payor.\n\n(5) The principles are no different for benefits conferred by the state\n\n96. In the Court of Appeal, Flaux C dismissed the relevance of these principles on the basis\n that any analogy beyond the ‘subrogation’ cases should be with “state benefits which ... will\n prima facie reduce the claimant’s loss”: CA Jmt at [189]. But the rules which have developed [5/156]\n\n in respect of gratuitous third-party benefits provided by the state are in substance the\n same, and invite the same conclusion, as those in relation to gratuitous third-party\n benefits by other sources.\n\n97. In private law generally, the state is not treated differently from other persons: see, by\n analogy, Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4, [2018] AC 736 [77/1447]\n\n at [31]-[35] (Lord Reed) (a decision in the duty of care context). Save where statute\n intervenes to specify whether the benefit is collateral or not—as is now the case with\n many state benefits in the personal injury and employment contexts with various results\n for various policy reasons—each case involving the receipt of a state grant or other\n\n\n 29\n\n 55\n benefit turns on its particular facts, and the degree to which it resembles the established\n paradigms set out at paragraphs 77 to 90 above.\n\n98. The House of Lords in Hodgson v Trapp [1987] 1 AC 807 (HL) held that an analogy with [59/1279]\n benevolent gifts received from private persons was not appropriate in respect of the\n particular benefits in issue there (attendance and mobility allowances). However, that\n case did not purport to lay down any general rule for all state grants or benefits, and in\n any event those cases must be read in light of the Supreme Court’s more recent\n statements that the source of the benefit is not determinative of collaterality (Swynson at [66/1352]\n [11] (Lord Sumption)), and the recognition in The New Flamenco at [30] (Lord Clarke) [56/1259]\n that ultimately the question is always one of causation. In each case, that question falls\n to be answered by reference to an assessment of the purpose or character of the benefit,\n bearing in mind the underlying considerations of justice, reasonableness and public\n policy.\n\n99. The Respondent’ case to the contrary involves is a misunderstanding of Hodgson, since\n it wrongly reads into that judgment that the source of the benefit (i.e., state) is such that\n the purpose and policy of the benefits must invariably favour bringing the benefit into\n account. On the contrary, Lord Bridge emphasised the dangers of overgeneralising, [59/1292]\n noting (at 820) that “[t]he difficulty, which has been widely recognised, is to articulate a precise\n jurisprudential principle by which to distinguish the deductible from the non-deductible receipt”, and (at\n 821-822) quoting Windeyer J’s “cautionary words” in Espagne: [59/1293-1294]\n\n “...it is not, I think possible, to enunciate an exhaustive rule for all parts of this\n vexed topic. And the questions that arise can never be determined in the abstract.\n Each must depend on the terms of the particular contract, pension scheme,\n charitable benefaction or statute governing the benefit conferred.”\n\n100. No general rule of the type contended for by the Respondent has been articulated in\n respect of state benefits, in Hodgson or otherwise. To the contrary, Lord Bridge regarded\n the issue as one of “public policy” in the particular case (at 823). As recognised by Lord [59/1295]\n Neuberger in Swynson at [98], the two paradigms recognised by Lord Sumption in Tiuta [66/1360]\n (see paragraph 77 above) apply to state payments as much as others:\n\n “it seems to me that the effect of the reasoning in Parry’s case is that the types of\n payments to a claimant which are not to be taken into account when assessing\n damages, are either those which are effectively paid out of his own pocket (such\n as insurance which he has taken out, whether through his employer, an insurance\n company or the government), or which are the result of benevolence (whether\n from the government, a charity, or family and friends), all of which can be\n characterised as essentially collateral in nature.”\n\n\n 30\n\n 56\n101. Absent any express indication in a statutory scheme on whether the benefits should be\n taken into account in respect of private law damages or any insurance claim (as on the\n facts of Burnand itself), “Parliament must ... be assumed to have left the question to the judges to\n be decided on principle”: Lincoln v Hayman [1982] 1 WLR 488 (CA) at 492 (Dunn LJ). In all [64/1334]\n cases, whether of state benefits or otherwise, the court must answer the “ultimate\n question” as to whether the benefit was conferred “independently of any right or redress against\n others and so that he might enjoy the benefit even if he enforced the right”: Zheng v Cai at [29]. [102/1911]\n\n102. The ‘subrogation’ cases themselves demonstrate that state grants or benefits are to be\n treated no differently to others. The character or purpose of the benefits still fall to be\n assessed no matter whether the benefit is conferred on the claimant by the US\n government (as in Burnand),19 George II (as in Randal v Cockran), a buyer of a house (in\n Castellain), or the claimant’s brother (per Bowen LJ’s example in Castellain).\n\n103. The Court of Appeal erred in not recognising that (i) the same legal rules apply to\n gratuitous state payments as to other payments, and (ii) there is no general rule that state\n benefits are deducted, and that in turn led to the Court of Appeal’s error (CA Jmt at [5/156]\n\n [189]) in concluding that there was “no analogy whatsoever” with benevolent payments even\n if for commercial reasons, and that state benefits “prima facie reduce the claimant’s loss”.\n\n104. That said, in the context of state grants or benefits, two particular features can be derived\n from the case law which assist in assessing the purpose or character of a benefit rendered\n by the state:\n\n (1) First, in practice, there will be some instrument setting out the basis or terms on\n which the grant or benefit is conferred which can be construed and considered\n when assessing the purpose in conferring the benefit (by taking into account,\n e.g., the conditions of eligibility and any requirement to repay).\n\n (2) Second, the policy pursued by the state in making available a particular grant or\n benefit is relevant given the considerations of justice, reasonableness and public\n policy that underpin legal causation.\n\n105. As to the first (i.e., the instrument providing for the benefit, or a requirement to repay\n the benefit):\n\n\n19 Counsel for the insurer conceded that a grant in identical terms in the will of a benevolent individual or family\n\nmember would not diminish the loss, but unsuccessfully tried to distinguish the position of Congress from the [47/1037]\nbenevolent individual: Burnand at 337 (Lord Selborne LC) and 343 (Lord Watson). [47/1043]\n\n\n 31\n\n 57\n (1) The relevance of the terms of the instrument providing for the benefit is evident\n in the case law. For example, in Burnand, Lord Selborne LC contrasted the terms\n of the Act of Congress with those of the relevant proclamation in Randal v [47/1037-1038]\n Cockran and Blaauwpot v Da Costa (at 337-338; see also 342 (Lord Watson)). As [47/1042]\n already identified in paragraph 99 above, Lord Bridge in Hodgson noted (at 821- [59/1293]\n 822) the cautionary words of Windeyer J in Espagne that the assessment must\n “depend on the terms” of the instrument.\n\n (2) Useful jurisprudence on this issue has been developed by the High Court of\n Australia, most notably in Manser v Spry [1994] HCA 50, (1994) 181 CLR 428 [93/1700]\n (also Redding v Lee (1983) 151 CLR 117 (HCA) and Zheng v Cai). In Manser (at [98/1797]\n 436), the High Court of Australia identified “three possible indicia of a relevant [102/1900]\n legislative intention”, namely “the financial source of the benefit, the presence of a provision\n which requires a repayment of a statutory benefit out of the damages awarded or paid and the [93/1708]\n nature of the benefit” (Mason CJ, Brennan, Dawson, Toohey and McHugh JJ).\n\n (3) Whether an “implication of” a legislative purpose to benefit the claimant can be\n made depends “largely on the nature of the benefit”: Manser at 436. If the donor is the [93/1708]\n legislature this may be gleaned from the “statute itself as a matter of interpretation”:\n [98/1806]\n Redding at 125 (Gibbs CJ).\n\n (4) Thus a provision which requires repayment of a statutory benefit to the state in\n the event of obtaining damages from the wrongdoer constitutes an express\n indication in favour of non-deduction, as was the case in Berriello v Felixstowe Dock\n & Rly Co [1989] 1 WLR 695 (CA). Where, as in “many cases”, the statute gives\n “no assistance of this kind” then “it will be necessary to consider closely the nature of the\n benefit itself”: Redding at 125 (Gibbs CJ), cited in Manser at 436. [98/1806]\n [93/1708]\n106. As to the second (i.e., the policy behind the benefit):\n\n (1) Considerations of justice, fairness and public policy should be sensitive to the\n objectives pursued by the relevant state grant or benefit. It will be relevant to\n consider, for example, whether a grant seeks to induce a particular course of\n action; a benefit has been treated as collateral where to do otherwise would mean\n that a regional development grant’s “inducement” for relocation to Liverpool\n “would be lessened” and therefore its “policy” of assisting the development of the\n relevant area undermined: Palatine Graphic Arts Co Ltd v Liverpool City Council [70/1387-1388]\n [1986] QB 335 (CA) 344-345 (Glidewell LJ). By contrast, policy concerns may\n\n\n 32\n\n 58\n point in favour of treating the benefit as legally caused by the wrong if the\n benefits are simply prompted by “humanitarian considerations directed to meeting certain\n minimum needs of the disadvantaged, irrespective of their cause”: Hodgson at 822 (Lord [59/1294]\n Bridge).\n\n(2) Thus a benefit is more likely to be by its nature analogous to benevolent\n payments by private persons and kept out of account in line with the second\n paradigm identified above where it responds to particular circumstances rather\n than forming part of the permanently available network of state assistance that\n assists in cases of need “irrespective of their cause”. In particular, the objectives\n pursued by state benefits which form part of the routine systems of state social\n security and arise as a matter of “statutory entitlement” and “as of right to those who\n fulfil the qualifying conditions” are not undermined by deduction: Hodgson at 818 and [59/1290-1294]\n 822 (Lord Bridge); Parsons v BNM Laboratories Ltd [1964] 1 QB 95 (CA) at 144\n (Pearson LJ). They are benefits which form part of the background against which\n the breach of contract or tort is committed and which the parties expect to\n accrue to the claimant in such circumstances. In such contexts, the concept of\n “public benevolence provided by the state” is indeed “difficult to comprehend”: Westwood v\n Secretary of State for Employment [1985] AC 20 (HL) at 43 (Lord Bridge). [80/1584]\n\n(3) Ad hoc state benefits and grants offered in response to particular emergencies or\n circumstances, on a discretionary basis or otherwise, tend to fall on the other\n side of the line. Such grants are more likely to have a voluntary and spontaneous\n character, intended to benefit the claimant over and above any damages award.\n For example, whilst supplementary benefits available as of right are deductible,\n their predecessor which had a “partly discretionary nature” was non-deductible:\n Foxley v Olton [1965] 2 QB 306 at 311 (John Stephenson J); Lincoln v Hayman at [55/1246]\n 490 (Dunn LJ). Similarly, housing association grants payable after approval by [65/1332]\n the Secretary of State and “not as a matter of entitlement” or as “compensation for\n wrongdoing” were found to be non-deductible in Design 5 v Keniston Housing [52/1096]\n Association Ltd (1986) 34 BLR 92 (QB), as were grants approved by the local\n authority in Treml v Ernest w Gibson & Partners [1955-95] PNLR 228 (QB). [86/1550]\n Similarly, in Masters Dairy Ltd v Nagy (1998) 156 ALR 262 (FCA), the claimant [94/1712]\n succeeded in a statutory tort claim for lost profits due to misleading conduct\n preventing the claimant acquiring a dairy licence, and was not required to deduct\n state grants it received pursuant to a scheme compensating dairy industry\n\n\n 33\n\n 59\n participants for leaving the industry for three years after a period of industry-\n wide rationalisation and deregulation.\n\n107. The Court of Appeal was again wrong not to recognise that general social security safety\n net systems are distinguished in the cases from ad hoc, responsive or discretionary\n payments responding to particular circumstances, the latter often not being deducted.\n The Court of Appeal relied on Randal v Cockran as an example of a payment in specific\n response to a catastrophe that was not held to be collateral (at [189]), but that case is [5/156]\n\n within the first paradigm in which the payment to the insured was effectively a payment\n from the wrongdoer who caused the loss: see paragraph 80(2) above. The payor being\n equivalent to the wrongdoer makes all the difference, although the Court of Appeal did\n not advert to that feature of the case.\n\n108. As a result of this reasoning, the Court of Appeal fell into its error in [190] in concluding [5/156]\n that any third party payment (state or otherwise) will be deducted from an insurance\n indemnity unless the third party intended to benefit only the insured to the exclusion of\n the insurers. This is wrong, and inconsistent with the various non-insurance cases in\n which there is no deduction (the principles are the same in such cases), as well as the\n insurance cases including The B Atlantic where there was no evidence of the P&I Club’s\n intention to exclude the insurers (so Flaux J’s conclusion that the benefit was res inter\n alios acta was contrary to the test recognised by Flaux C in this case).\n\n(6) Application to furlough payments\n\n109. The CJRS was under the discretion and control of HM Treasury, which was afforded a\n power (not obligation) under sections 71 and 76 of the Coronavirus Act 2020 to direct [39/956-957]\n HMRC (which administered the CJRS) to have such functions as it decided “in relation\n to coronavirus or coronavirus disease”. The essential framework for the CJRS was established\n by the Treasury Direction of 15 April 2020, described at paragraph 36 above. [10/524]\n\n110. Considering the instrument enacting the CJRS and the scheme’s purpose and context,\n the character of CJRS grants is such that they should be treated as benevolent payments\n that do not diminish the Claimant’ losses, and therefore savings not “in consequence of”\n the insured peril, for five related reasons.\n\n111. First, the CJRS was not part of the routine system of social security that provides the\n background to commercial transactions or wrongdoing and assists in cases of need\n irrespective of their cause, but rather an ad hoc, unprecedented and huge (over £70\n\n\n 34\n\n 60\n billion) form of state “grant” (described as such by the Chancellor in his speech\n announcing the CJRS and the published CJRS guidance, set out in paragraph 35 above),\n introduced in response to the circumstances created by the Covid-19 pandemic.\n\n112. Second, these grants were intended to benefit the Appellant employers, who were the\n payees of the grants:\n\n (1) The policy aim of the CJRS, as reflected in the structure of the scheme, was to\n support “businesses to preserve employer-employee matches by providing a mechanism to pay\n the wages of furloughed employees”, and so “protect jobs, reduce the risk of permanent business\n closures (supporting those that had temporarily ceased or reduced trading) and reduce the risk\n of large losses in incomes, through wage support to furloughed employees.” The CJRS “aimed\n to prevent mass redundancies” as a “safeguard” for the UK economy, and thereby\n sought to reduce the risk of “long-term labour market scarring” to maintain economic\n productivity and ensure a “smoother economic recovery”. See HMRC, ‘Coronavirus [36/893]\n Job Retention Scheme: Evaluation Plan’ (December 2020), pp 4 and 8 (also ASFI [36/897]\n at [67]). [1/22]\n\n (2) The scheme also, of course, benefitted employees, but if the purpose of the\n scheme had been to “support employees (alone), then it would be unnecessary for any\n payments to be made to employers at all. Just as with SEISS [the self-employed income-\n support scheme], payments could be made directly to workers”: R (ex parte Adiatu) v HM\n Treasury [2020] EWHC 1554 (Admin), 2 All ER 484 at [78] (Bean LJ and [74/1435]\n Cavanagh J).\n\n113. Third, CJRS grants were intended to benefit employers, at a time of national economic\n upheaval, in order to incentivise stability in the labour market:\n\n (1) The incentive for insured businesses to participate in the CJRS (and thereby\n maintain employment relationships during a period of economic uncertainty)\n would have been significantly lessened had it been known that the CJRS would\n diminish their insured loss and reduce their indemnity pro tanto, i.e., that instead\n of furloughing staff and claiming CJRS, they could have simply made some staff\n redundant, or else covered their wages without the administrative burden of\n claiming CJRS and then claimed the costs on their insurance to end up in the\n same financial position. Treating furlough as diminishing the Claimant’ loss\n therefore undermines the incentives intended by the CJRS.\n\n\n 35\n\n 61\n (2) No part of the intended economic purpose of the CJRS would be advanced by\n any of the funds going into insurers’ pockets rather than the employers’ pockets\n by way of (i) insurers being repaid the amount of the funds in the rare case where\n insurers had responded to their liability so promptly that the employers had been\n indemnified before CJRS grants were paid, or (ii) insurers paying reduced\n indemnity payments where (as here) CJRS grants were paid first. An indication\n of the Government’s intentions in this respect can be gleaned from its clear\n preference that if the funds are not needed by the employer recipient they should\n be returned, as shown by the scheme set up to provide for repayments: ASFI at [1/19]\n [41].20\n\n114. Fourth, confirmation that the Government saw the economic purpose of the CJRS as\n not being supported by insurer deduction, and an indication of the Government’s\n priority preference as between employers and insurance companies in relation to the\n CJRS, can be gleaned from a statement as to the purpose of the government grants\n made by Mr John Glen MP, Economic Secretary to the Treasury, in a letter to the\n Association of British Insurers on 25 September 2020 (also ASFI at [62]). In that letter, [1/22]\n\n Mr Glen MP clarified the Government’s position on a number of Covid-19 grants:\n\n “The impact of the current crisis on businesses and citizens is unprecedented, and\n the nature and scale of Government support measures are exceptional. It is the\n Government’s firm expectation that grant funds intended to provide emergency\n support to businesses at this time of crisis are not to be deducted from business\n interruption insurance claims. The principle of these grants is to provide [35/888]\n emergency support and help businesses survive. The practice of making these\n deductions would mean that taxpayer funds are being channelled into savings for\n insurers, rather than supporting businesses to ride out the disruption brought on\n by this pandemic ... deductions are quite clearly not in line with the intention of\n the support schemes”\n\n The statement that “the Government’s firm expectation that grant funds intended to provide\n emergency support to businesses at this time of crisis are not to be deducted from business interruption\n insurance claims” was made in general terms and reflects the common sense assumption\n as to the Government’s position on the insurance treatment of its support for businesses\n generally. Although the letter relates only to the specific set of grants – which did not\n\n\n20 If the CJRS grants do diminish insured businesses’ losses (by amounting to savings of wages that were caused\n\nby the insured peril), then the legal consequences of a voluntary repayment by an insured business (such as the\nAppellant) under this scheme are unclear. That underlines the oddity of the Respondent’ position.\n\n\n 36\n\n 62\n include the CJRS – the logic of Mr Glen MP’s expressed position applies equally to the\n CJRS.\n\n115. Fifth, the structure of the CJRS as reimbursement calls for CJRS grants to be treated as\n collateral and not legally caused by the peril:\n\n (1) In Swynson, the payments by Mr Hunt to the borrower, and by the borrower, to\n discharge the loans owed to Swynson Ltd were legally caused by the professional\n negligence partly because they were “sufficiently direct”: Burrows, Remedies, p 161. [104/1931]\n\n If Mr Hunt had instead made payments to Swynson Ltd which did not discharge\n the underlying liability but simply swelled its assets in an amount equivalent to\n that loss, they would not have been (see paragraph 87 above).\n\n (2) The significance of the extra remove of funding for an expense, as compared\n with the expense itself, has been recognised on other occasions. In Linden Gardens [65/1342-1343]\n Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 (HL) at 97-98, Lord Griffiths\n recognised that the fact of reimbursement of a loss by a third party has “never\n been seen” as a reason for reducing a defendant’s damages as the “law regards who\n actually paid for the work necessary as a result of the defendant’s breach of contract as a matter\n which is [res] inter alios acta so far as the defendant is concerned”. Similar observations\n have been made in in John Harris Partnership v Groveworld Ltd (1999) 75 Con LR 7 [62/1322]\n\n at [71] (HHJ Thornton), and Jones v Stroud District Council [1986] 1 WLR 1141 [62/1328-1329]\n (CA) at 1150-1151 (Neill LJ).\n\n (3) The position with CJRS grants to the Claimant is similarly indirect. Considering\n the specific context of the savings clause, this form of the payment is relevant to\n Ground 2(a) and not only Ground 1. In the context of a savings clause which\n covers cessation or reduction in wages proximately caused by the prevention or\n hindrance of access or use, on any view the insured peril causing (subject to\n Ground 2(b) below) a reimbursement of wage liabilities which are still incurred\n is a very indirect way of causing a wage reduction. That indirectness contributes\n to the conclusion that the CJRS grants were not proximately caused by the\n insured peril, i.e. were collateral.\n\n116. In those circumstances, the receipt of CJRS grants should be treated as independent of\n and collateral to the insured peril because the state’s (economic policy-driven)\n benevolence means that the insured peril did not legally cause the grants. To return to\n Bowen LJ’s example in Castellain, the treatment of CJRS grants should be the same as\n\n\n 37\n\n 63\n of the brother whose offer of financial assistance was intended only to benefit his\n brother and not also his brother’s insurer.\n\n117. For these reasons, it is respectfully submitted that the appeal should be allowed on\n Ground 2(a).\n\nV. GROUND 2(B): THE PERIL DID NOT CAUSE THE CJRS GRANTS\n\n118. The Court of Appeal wrongly rejected the Claimant’ related but separate causation\n argument that the insured peril was not legally causative of the particular CJRS grants\n received by the Claimant because the existence and proof of the insured peril was\n irrelevant to a claim for the CJRS grants (CA Jmt at [180]-[187]). [5/153-155]\n\n119. The starting point, as explained at paragraph 54 above, is that the provision that the\n saving be “in consequence of” the insured peril imports a requirement of proximate\n causation (see the FCA Test Case at [162]). The Court of Appeal rightly accepted that [54/1193]\n the insured peril under the prevention of access cover was a composite one with three\n elements (at [181]):\n\n “(1) danger or disturbance within a one-mile radius of the insured’s premises\n (which here was the occurrence of at least one case of Covid-19 within that radius)\n which causes (2) action by a statutory authority (here the restrictions imposed by [5/153]\n the Government) which cause (3) prevention or hindrance in the use of the\n insured’s premises or access thereto, or alternatively ... interference with the\n business of the insured”.\n\n120. The Claimant had to prove all three elements before they were entitled to cover. Each\n of these elements has to occur in the specified causal sequence, and each narrows the\n consequences covered, with the final link narrowing them to the consequences of\n prevention or hindrance of access to or use of the premises (see the discussion of the\n same point as regards causation of loss by the composite peril in FCA Test Case at [223] [54/1211]\n and [246]; the same must apply in respect of the savings clause). [54/1216]\n\n121. However, rather than applying this approach to the composite peril, the Court of Appeal\n held that the savings occurred in the context of that composite insured peril having also\n occurred, and that was enough to satisfy the proximate causation test. This is plainly not\n sufficient to meet a test of proximate causation. It did not establish that composite peril\n made the savings “inevitable ... in the ordinary course of events”: see the FCA Test Case at [54/1195]\n [168].\n\n\n 38\n\n 64\n122. The core reasoning that led to Flaux C wrongly identifying the insured peril as a\n proximate cause of the CJRS payments to the Claimant involved three propositions,\n each of which built on the last:\n\n (1) In construing and applying the causal requirement in relation to the insuring\n clauses in the FCA Test Case, the Supreme Court had adopted a concurrent\n causation analysis and rejected a ‘but for’ test of causation in relation to the\n [5/153]\n insuring clauses (at [181]);\n\n (2) Savings clauses, like trends clauses, are part of the machinery contained in the\n policies for quantifying the losses and, as with those trends clauses, should be\n construed consistently with the insuring clauses (at [182]); and [5/154]\n\n (3) That justified applying a concurrent cause analysis, from which it was “clear that\n the CJRS payments were in consequence of each of those elements [of the insured peril] and that\n the test of the causation under the savings clause is satisfied” (at [185]). [5/155]\n\n123. However, Flaux C failed properly to engage with the requirement that the composite\n insured peril must be the or a concurrent proximate cause of the saving, and to recognise\n that nothing in this Court’s analysis of concurrent causation in the FCA Test Case (in\n relation to directly analogous proximate causation of loss) abrogates or dilutes that\n requirement. That error led Flaux C to ask the wrong questions and hence reach the\n wrong conclusion that the CJRS grants were proximately caused by the composite\n insured peril.\n\n(1) The composite insured peril did not proximately cause the furlough payments\n to the Claimant\n\n124. Proximate causation under the savings clause requires that the particular charges or\n expenses of the business ceased or were reduced in consequence of the particular\n insured peril. For the prevention of access cover, that requires that the CJRS grant\n payments to the Appellant (which comprised the relevant cessation or reduction of the\n wage, NI and pension contribution charges or expenses)21 were proximately caused by\n the particular prevention or hindrance of access to specified insured premises or\n interruption or interference with the business at those premises which was due, in turn,\n to at least one case of Covid-19 within 1 mile of the premises.\n\n\n21 If the Claimants do not succeed on Ground 1, per Section II above.\n\n\n 39\n\n 65\n125. In this regard, the insured peril is narrowly drawn, and “the narrower the insured peril, the\n narrower the consequences for which the policyholder is entitled to an indemnity”: see the FCA Test\n [54/1210-1211]\n Case at [219] (also [220], [223]). So too the narrower the circumstances in which the\n insurer is entitled to take advantage of savings. The matters which must be linked by\n proximate causation are therefore tightly circumscribed. The savings clause does not call\n for an assessment as to whether there is a causal link between the pandemic more\n generally and the payment of the CJRS grants to the Claimant or the Government’s\n decision to introduce the CJRS as a scheme. That would be to ignore vital elements of\n the composite peril. Still less is the question under the savings clause whether the\n Government introduced the CJRS scheme simultaneously with the measures which\n imposed restrictions (which is not even a question of proximate causation).\n\n126. The Court of Appeal lost sight of the correct question in this case. Flaux C considered\n the first two elements of the composite peril (Covid-19 and restrictions on business\n premises) together, and addressed the link between the restrictions on premises and the\n general introduction of the CJRS scheme (at [185]):\n\n “...it was the general prevalence of Covid-19 (including cases within the relevant\n radius) which led to the restrictions imposed by the Government. The furlough\n scheme was announced at the same time that those restrictions were imposed and [5/155]\n was intended to mitigate the effects of those restrictions, so that the incidence of\n Covid-19 and the restrictions imposed as a consequence were a sufficient effective\n cause of the furlough scheme.”\n\n127. This considers causation between the Government restrictions (in general) and the\n introduction of the CJRS (as a scheme) and/or whether cases of Covid-19 generally\n influenced the Government decision to introduce the CJRS scheme. But that it is not\n the correct question. The correct question is whether the CJRS payments to the\n Claimant were proximately caused by the composite insured peril.\n\n128. The Court of Appeal went on to consider the “third element of the insured peril: prevention or\n hindrance in use or access thereto)” and said that “it is clear that the prevention or hindrance caused [5/155]\n the insureds to have to furlough employees, which in turn led to their claiming CJRS payments” (at\n [186]). But that again does not address the correct question, which is whether the\n particular payments of the CJRS grants to the Claimant were proximately caused by\n all three elements of the composite insured peril acting in causal combination.\n\n129. Focusing instead on the correct question—whether the payment of the CJRS grants to\n the Claimant was itself caused by the composite insured peril—the answer is clear.\n The insured peril was not a proximate cause of the payment of the CJRS grants at all,\n\n\n 40\n\n 66\n whether acting concurrently with other effects of the pandemic or otherwise. In\n particular (and as set out at paragraph 36 above):\n\n (1) Eligibility to claim reimbursement of an employees’ wages under the CJRS\n depended on whether an employee was furloughed because of circumstances\n arising from the health, social and economic emergency in the UK as a result of\n Covid-19: see ASFI at [38]-[40]. [1/18]\n\n (2) Employers who had registered for the pay as you earn (PAYE) scheme were\n qualified to claim reimbursement under the CJRS. The CJRS scheme was\n available to all businesses so long as their claims were “in respect of them incurring\n costs of employment in respect of furloughed employees arising from” the pandemic: see the\n Treasury Direction of 15 April 2020 at [2.1]. [10/526]\n\n (3) It was neither necessary for, nor relevant to, such a claim that access to or use\n of the employers’ premises had been prevented or hindered, or its business\n interfered with, by the Government’s actions.\n\n (4) It was neither necessary, nor relevant, that Covid-19 was present within 1 mile\n of the employers’ premises.\n\n (5) The Claimant, like any other business in the UK, were thus entitled to claim\n under the CJRS scheme simply because they were registered for PAYE and had\n furloughed their employees because of circumstances arising from the health,\n social and economic emergency in the UK as a result of Covid-19; they received\n CJRS grants for those reasons alone.\n\n (6) Accordingly, the existence and proof of the composite insured peril was\n irrelevant to the Claimant’ entitlement to receive CJRS grants.\n\n130. Thus the CJRS grants cannot be regarded in law as having been caused by those\n elements in circumstances in which the Claimant could claim such payments\n irrespective of whether access to or use of their premises had been prevented or\n hindered, and irrespective of whether there was Covid-19 within a 1-mile radius of their\n premises, and the payments were made irrespective of any of these elements. The\n insured peril was not in those circumstances the, or a, proximate cause of the CJRS\n grants.\n\n131. The absence of any inherent causal link between payment of the CJRS grants to the\n Claimant and the insured peril in the present case is reinforced by the fact that an\n\n\n 41\n\n 67\n insured employer such as the Claimant could and would have obtained CJRS grants\n even in the absence of the insured peril. Take a policyholder who owns a hotel in a rural\n area with many cases of Covid-19 outside the surrounding 1-mile radius but none inside,\n which was subject to the nationwide restrictions imposed by the Government, and\n suffered a reduction in revenue during the period as a result of the impact of Covid-19.\n They would have no cover under the prevention of access cover for business\n interruption losses. The business interruption losses suffered by the policyholder would\n not be proximately caused by the composite insured peril and there would be no\n coverage. Business prudence still would lead this hotelier to furlough some or all of his\n staff, and claim grants under the CJRS.\n\n132. The correct conclusion was reached on this issue by the Full Federal Court of Australia [101/1883]\n in Marrickville in relation to JobKeeper payments, the Australian equivalent of CJRS.\n The Court held that the outbreak of Covid-19 within 20km of the premises22 (the\n insured peril in that case) was irrelevant to entitlement to JobKeeper payments.\n Accordingly, it was not the proximate and hence legal cause of the JobKeeper payments\n [101/1895]\n (at [461]). In more detail:\n\n (1) In that case, as in these appeals, the cessation or reduction of charges or expenses\n had to be “in consequence of” the interruption or interference (see [460]). [101/1895]\n\n (2) In Australia, as in England and Wales, the criteria for eligibility for furlough\n payments—JobKeeper payments—did not include the existence of the insured\n peril.\n\n (3) Reversing the decision at first instance, the Full Federal Court held that it was\n necessary for the purposes of the causal requirement to focus on the criteria for\n the JobKeeper payments, and approaching the matter in this way, the causal\n requirement was not satisfied.\n\n133. The decision of the full Federal Court of Australia should be preferred to that of the\n Court of Appeal in this case.\n\n\n22 For the purpose of those proceedings, it was accepted in at least some cases that there was an outbreak within\n\nthe radius. For example, Insurance Australia accepted that there was an outbreak of Covid-19 within 20\nkilometres of Meridian Travel’s premises by 30 March 2020: Swiss Re International SE v LCA Marrickville Pty Ltd [100/1872]\n[2021] FCA 1206 at [449], [519] and [522(1)] (Jagot J). [100/1875]\n [100/1878]\n 42\n\n 68\n(2) The insured peril was not a concurrent cause of the furlough payments to the\n Claimant\n\n134. The Court of Appeal wrongly rejected the Claimant’ case on the basis that it would\n apply a ‘but for’ test of causation, contrary to the concurrent causation analysis endorsed\n in the FCA Test Case, holding that the savings clauses should be construed consistently\n with the insuring clauses: see the CA Jmt at [182] and [187]; see also the Com Ct Jmt at [5/154-155]\n [445]-[446]. [7/253-254]\n\n135. However, in the insuring clauses and saving clauses alike, a concurrent causation analysis\n is available only in circumstances in which the loss or gain resulted from a proximate\n cause “of approximately equal efficacy” to other competing causes: see the FCA Test Case at [54/1216]\n [244]; also Stonegate at [203]. The existence of multiple proximate causes of [81/1491]\n approximately equal efficacy is the threshold condition for the application of a\n concurrent causation analysis. A concurrent cause is still a proximate cause where the\n interruption proximately results from occurrences of a disease both within and outside\n the radius, or from both the insured authority action and other effects of the pandemic,\n but not where the sole proximate cause (i.e., the dominant cause) of the loss was the\n uninsured effects of the Covid-19 pandemic: see FCA Test Case at [195], [240] and [244]. [54/1203]\n [54/1215-1216]\n136. The importance of the threshold condition for concurrent causation is demonstrated by\n the example posited by Lords Hamblen and Leggatt in the FCA Test Case: a travel agency\n that lost almost all its business but because of the travel restrictions imposed as a result\n of the Covid-19 pandemic, not because of the closure of its premises. As they explained\n at [244]:\n\n “Although customer access to its premises might have become impossible, if it [54/1216]\n was found that the sole proximate cause of the loss of its walk-in customer\n business was the travel restrictions and not the ability of customers to enter the\n agency, then the loss would not be covered.”\n\n137. The travel agent would not be able to claim under the prevention of access cover even\n if their premises were closed because, although the insured peril existed, it was not the\n proximate cause of the loss. The composite insured peril is properly regarded as\n coincidental to the loss of revenue,23 not causative of it.\n\n\n23 Much like a policyholder who owns a hotel in an inner city area with many cases of Covid-19 within the\n\nsurrounding 1-mile radius, which was subject to restrictions during the pandemic, but which was in any event\nbeing renovated during the period and would not have opened throughout that period. The sole proximate cause\nof the losses would be the renovations; the composite insured peril would be coincidental to the loss of revenue,\nnot causative of it.\n\n\n 43\n\n 69\n138. Similarly, the travel agent would (if they were a qualifying employer with a registered\n PAYE scheme) be entitled to furlough their staff and claim for grants under the CJRS,\n but the CJRS payments too would not be proximately caused by the peril, as opposed\n to the wider pandemic. The closure there is incidental.\n\n139. The Court of Appeal was wrong to assume that the threshold condition for concurrent\n causation was or would necessarily be met in this case in respect of the savings clauses,\n simply by virtue of the fact that it was met under the insuring clause in respect of the\n Claimant’ claim under the indemnity.\n\n140. CJRS grants were paid to the Claimant due to the Claimant’ decision to furlough\n their employees, rather than make them redundant, and to apply for payments under\n the CJRS due to circumstances of the Covid-19 pandemic. In other words, as in the\n example of the travel agent, the “sole proximate cause of the [saving] was the Covid-19 pandemic”\n and not the insured peril, see the FCA Test Case at [244]. The prevention or hindrance [54/1216]\n\n of access to or use of the Claimant’ premises by a statutory authority cannot be the\n proximate cause of the CJRS grants for the simple reason that the prevention or\n hindrance of access to use of the premises was legally irrelevant to receipt of the grant.\n It was neither necessary, nor relevant that access or use to the Claimant’ premises was\n prevented or hindered, and they were not required to prove this to obtain CJRS grants.\n Nor were they required to prove a case of Covid-19 within 1 mile of the premises in\n order to qualify for grants under the CJRS.\n\n141. Even if (which is the wrong question) it is necessary to go further back into the causal\n history, it still does not result in the insured peril becoming a cause of approximately\n equal efficacy as that decision. The Claimant made their decisions to furlough rather\n than, for example, make employees redundant (which they would otherwise have done:\n ASFI at [86]) because they were incentivised to do so by the CJRS itself; indeed, that [1/25]\n was the policy behind the CJRS. The CJRS was introduced in response to the anticipated\n economic downturn caused by the pandemic generally, not specifically in respect of the\n Government’s decision to hinder or prevent access to business premises, and was\n accordingly available to any business affected by the pandemic, whether or not it was\n closed or access to it was otherwise hindered by the Government’s restrictions and\n irrespective of whether there were any cases of Covid-19 within 1 mile of insured (or\n any) premises.\n\n\n 44\n\n 70\n142. For these reasons, it is respectfully submitted that the appeal should be allowed on\n Ground 2(b).\n\nVI. CONCLUSION\n\n143. The Claimant therefore invite the Court to allow these appeals for the following\n reasons:\n\n (1) Receipt of grants under the CJRS did not amount to a cessation or reduction of\n the Claimant’ charges or expenses (comprising their liabilities to pay wages and\n associated taxes and pension contributions).\n\n (2) Receipt of grants under the CJRS was not in consequence of the insured peril\n but rather collateral to it and so res inter alios acta (as being a gratuitous, benevolent\n or voluntary conferral of a benefit by a third party, or analogous to one).\n\n (3) In any event, receipt of grants under the CJRS were not in consequence of the\n insured peril because the existence and proof of the insured peril was irrelevant\n to the Claimant’ entitlement to such grants.\n\n\n ADAM KRAMER KC JEFFREY GRUDER KC\n WILLIAM DAY JOSEPHINE HIGGS KC\n AMELIA-ROSE EDWARDS\n For the Claimant Investment\n For the Arena Claimant Claimant\n\n 18 December 2025\n\n\n 45\n\n 71", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nA. INTRODUCTION\n\n\n1. The central issue in these appeals is whether ‘furlough’ payments received by\n policyholders under the Coronavirus Job Retention Scheme (“CJRS”) go to\n reduce indemnities otherwise payable by insurers for business interruption\n losses suffered during the Covid-19 pandemic.\n\n2. The Commercial Court has held on two separate occasions1 that CJRS payments\n do fall to be deducted from such business interruption indemnities. The Court\n of Appeal2 below agreed with that conclusion. The Respondent to these\n appeals – Respondent (“LMIE”), Allianz Insurance\n Plc (“Allianz”) and Aviva Insurance Ltd (“Aviva”, collectively, the\n “Insurers”) – invite the Supreme Court to follow suit and dismiss these\n appeals.\n\n3. The Claimant (the “Policyholders”) were insured, among other things,\n against certain non-damage business interruption risks:\n\n 3.1. The Policyholders in the Arena proceedings were insured under a Denial\n of Access extension in the following terms: “This Section extends to\n include any claim resulting from interruption of or interference with\n The Business carried on by The Insured at The Premises in consequence\n of...(b) action by the Police Authority and/or the Government or any\n local Government body or any other competent authority following\n danger or disturbance within a one mile radius of The Premises which\n shall prevent or hinder use of The Premises or access thereto” (the\n “DOA Clause”).\n\n 3.2. The Policyholders in the Claimant proceedings were insured by LMIE\n only under a Prevention of Access (Non-Damage) endorsement in the\n following terms: “Under Business Interruption loss following\n\n\n1 At first instance in this case (the decision of Mr Justice Jacobs at [2024] EWHC 124 (Comm)) Tab 7, Pages\n 163 - 322\n and also in Stonegate Pub Company Ltd v MS Amlin Corporate Member Ltd and others [2022] Tab 81, Pages\n EWHC 2548 (Comm), [250]-[289] (Mr Justice Butcher). 1502 - 1509\n\n2 Sir Julian Flaux, Chancellor of the High Court, Lord Justice Popplewell and Lord Justice Phillips.\n\n\n -2-\n\n 74\n interference with the Business carried out by the Insured in\n consequence of action by the Police or other Statutory Authority\n following danger or disturbance within 1 mile of the Premises which\n shall prevent or hinder use of the Premises or access thereto or,\n interference with the Business carried out by the Insured” (the\n “POAND Clause”).\n\n4. It has either been admitted by Insurers or held by the courts below that the DOA\n Clause and the POAND Clause were triggered by various events during the\n Covid-19 pandemic, starting with the actions taken by the UK government in\n March of 2020, which initially restricted social interactions and culminated in\n the first nationwide ‘lockdown’.\n\n5. These measures placed restrictions on the Policyholders’ operations such that\n their businesses were either forced to close completely or could only continue\n in very constrained circumstances.\n\n6. The CJRS scheme was announced by the then Chancellor of the Exchequer in a\n speech on 20 March 2020, in which he said:\n\n “This week, the Government has taken unprecedented steps to fight the\n coronavirus. We have closed schools. We have told people to stay at home to\n prevent the spread of infection. We are now closing restaurants and bars.\n Those steps are necessary to save lives. But we don't do this lightly - we know\n those measures will have a significant economic impact. I have a\n responsibility to make sure we protect, as far as possible, people's jobs and\n incomes. Today I can announce that, for the first time in our history, the\n Tab 28, Pages\n government is going to step in and help to pay people's wages. We're setting 845 - 846\n\n up a new Coronavirus Job Retention Scheme.”\n\n7. Thus, the CJRS was a direct consequence of the restrictions introduced by the\n UK government which had triggered cover under the DOA and POAND Clauses.\n The CJRS was implemented on 15 April 2020 and, thereafter, each of the\n Policyholders applied for and received CJRS payments, totalling nearly £6.4m\n in the case of the Policyholders in the Arena proceedings and just over £2m in\n the case of the Policyholders in the Claimant proceedings.\n\n\n -3-\n\n 75\n8. The Insurers agreed to indemnify the Policyholders for business interruption\n losses on a loss of gross revenue basis, as opposed to a loss of profits basis. Both\n bases of cover seek to provide an indemnity against the losses to the business.\n The latter is predicated upon the net financial consequences to the business,\n i.e., its profit in the period in question compared with what the profit would\n otherwise have been. The former involves, as a starting point, a comparison\n between the gross revenue achieved in the indemnity period and the gross\n revenue achieved in the twelve months immediately before the insured peril. Of\n course, reimbursing a policyholder for its lost gross revenue when it was not\n trading could result in an over-indemnity: if the interruption actually reduced\n the policyholder’s costs (i.e., lower bills, reduced employee costs), then these\n must be taken into account.\n\n9. This is done via the savings clauses in each of the policies:\n\n 9.1. In the Arena proceedings: “If any of the charges or expenses of The\n Business payable cease or reduce in consequence of the Damage such\n savings during the Indemnity Period shall be deducted from the\n amount payable.”\n\n 9.2. And in the Claimant proceedings: “less any sum saved during the\n Indemnity Period in respect of such of the charges of the Business\n payable out of Gross Revenue as may cease or be reduced in\n consequence of the incident.”\n\n10. It is at this stage of the indemnity calculation that the Insurers say that CJRS\n payments must be taken into account. This is because:\n\n 10.1. The CJRS payments received by the Policyholders reduced their charges\n or expenses in the form of wage bills.\n\n 10.2. And the CJRS payments were in consequence of the perils insured\n against under the DOA and POAND Clauses. There were three limbs to\n those perils and each led to CJRS payments:\n\n (1) The CJRS was introduced to mitigate the economic effects of the\n first two limbs of those perils, namely the prevalence of Covid-19\n\n\n -4-\n\n 76\n (including within a one mile radius of the Policyholders’ premises)\n and the consequential restrictions imposed on businesses.\n\n (2) The prevention of or hindrance in the use of the Policyholders’\n premises, i.e. the third limb of the perils, is what caused the\n Policyholders to furlough their employees and present claims\n under the CJRS.\n\n11. The Policyholders disagree and they advance two Grounds of Appeal:\n\n 11.1. Ground 1: employee costs did not “cease” and were not “reduced” by\n payments made by the government to the Claimant under the CJRS.\n\n 11.2. Ground 2: the CJRS payments were not legally caused by the insured\n peril and so were not “in consequence” of it. There are two sub-limbs to\n Ground 2:\n\n (1) Ground 2A: the Court of Appeal erred in concluding that a\n payment by a third party which reduces the loss of a policyholder\n was legally caused by the insured peril unless it could be established\n that the third party, in making the payment, intended to benefit\n only the policyholder to the exclusion of the insurers; and\n\n (2) Ground 2B: proof of the insured peril was irrelevant to the claim\n for CJRS payments, and therefore the insured peril was not legally\n causative of the particular CJRS payments received.\n\n12. Insurers address these Grounds below.\n\n\n -5-\n\n 77\nB. GROUND 1 – EMPLOYEE COSTS WERE REDUCED\n\n\n(1) Introduction\n\n13. It is common ground that CJRS payments did not cause wage costs to “cease”:\n CJRS only ever covered a maximum of 80% of an employee’s wages. The issue\n is whether the wage bill was “reduced” by CJRS payments.\n\n14. Before dealing with the Policyholders’ particular arguments, Insurers say that\n the purpose of the CJRS payments was clear:\n\n 14.1. A furloughed employee who, ordinarily, would work for their employer\n and receive wages, was no longer able to carry out that work in\n consequence of the UK government’s Covid-19 restrictions.\n\n 14.2. To prevent mass redundancies, the UK government sought to mitigate\n the effect of those restrictions by reimbursing the employer for 80% of\n its wage costs. Thus, the effect was to enable employers to retain their\n staff whilst only incurring 20% of the wage bill.\n\n 14.3. On the ordinary meaning of the word “reduce” found in the savings\n clause, the cost and/or burden of their wages to the employer were\n reduced by the CJRS payments pro tanto. Likewise, as explained below,\n National Insurance contributions payable on wages were rebated by the\n government.\n\n 14.4. The earnings of the business insured were thereby saved as a result of\n funds provided by the government for that purpose.\n\n(2) The relevant principles of construction\n\n15. The general principles of contractual construction identified by the\n Tab 2, Pages\n Policyholders [AWC/§§11-13] are not disputed. Insurers’ approach does not 29 - 30\n\n depart from orthodox principles of construction (cf. [AWC/§48]) for the Tab 2,\n Page 41\n reasons explained below.\n\n16. The savings clause, like every other provision in the policies, must be read\n through the eyes of the “ordinary policyholder who, on entering into the\n\n\n -6-\n\n 78\n contract, is taken to have read through the policy conscientiously” and not\n through the eyes of the “pedantic lawyer who will subject the entire policy\n wording to a minute textual analysis”: see Financial Conduct Authority v Arch , Tab 54,\n Page 1175\n Insurance (UK) Ltd [2021] UKSC 1, [2021] 2 WLR 123, [77] per Lords Hamblen\n and Leggatt. The meaning of the savings clauses must be assessed in light of the\n Tab 41,\n overall purpose of the clause and the contract as a whole: see Arnold v Britton Page 963\n\n [2015] UKSC 36, [2015] AC 1619 [15] per Lord Neuberger. That same approach\n applies to policies of indemnity and exception clauses: see Impact Funding\n Solutions Ltd v Barrington Support Services Ltd (formerly Lawyers At Work Tab 61,\n Page 1316\n Ltd) [2016] UKSC 57, [2017] AC 73, [7] (per Lord Hodge) and [35] (per Lord and 1318\n\n Toulson).\n\n17. In terms of the decision in Synergy Health (UK) Ltd v CGU Insurance plc Tab 82,\n Pages 1511\n - 1518\n [2010] EWHC 2583 (Comm), [2011] Lloyd’s Rep IR 500, Insurers make four\n points:\n\n 17.1. First, the Policyholders are wrong to suggest that the learned judge in\n that case applied an unjustified presumption when interpreting the\n Tab 2,\n policy before him [AWC/§15]: Page 30\n\n\n (1) Flaux J said at [258] that: “Although the defendants’ construction\n stretches the word “payable” somewhat, it seems to me that it is\n to be preferred to Synergy's construction, which leaves the\n saving in respect of depreciation out of account. My principal\n reason for that conclusion is that it seems to me that, as a matter\n of principle, a policy should be interpreted as providing an\n indemnity for the loss suffered not for more than such an\n indemnity. Of course if the wording is incapable of any other\n construction, a court might be driven to the conclusion that\n something in excess of a full indemnity was intended, but given\n the unlikelihood and unreasonableness of such a conclusion, the\n court should not arrive at it unless no other conclusion is Tab 82,\n Page 1518\n possible.”\n\n (2) In other words, Flaux J was faced with competing constructions\n of the word “payable” and he preferred that of the insurer because\n\n\n -7-\n\n 79\n it best reflected the indemnity nature of the contract. In this\n appeal, the Policyholders rightly accept that it is legitimate to\n “take into account the indemnity nature of a contract of\n Tab 2,\n insurance when construing a policy” [AWC/§17]. Page 31\n\n\n (3) Considering the extent to which an insured may recover more\n than a full indemnity on a particular construction is no different,\n in substance, to testing the commercial reality of the parties’\n differing interpretations. It also corresponds with the need to\n consider the purpose of an indemnity provision.\n\n 17.2. Second, to the extent it is relevant to consider the approach to\n contractual construction in the 1930s, there is no conflict between\n Tab 72, Pages\n Synergy and the approach of Branson J in Polikoff Ltd v North British 1405 - 1416\n\n & Mercantile Insurance Co Ltd (1936) 55 Lloyd’s L Rep 279,3 quoted at Tab 2,\n Page 30\n [AWC/§14]:\n\n (1) In the latter case, the language of the clause was said to be “quite\n plain” and the court could not give it a meaning “it does not bear”\n by “torturing...the words”.\n\n (2) That is entirely consistent with Flaux J saying in Synergy that the\n court must follow the clear words that are “incapable of any other\n construction”.\n\n 17.3. Third, the extent to which the analysis in the Australian case of Mobis Tab 95, Pages\n 1723 - 1735\n Parts Australia Pty Ltd v XL Insurance Co SE [2018] NSWCA 342,\n [2019] Lloyd’s Law Reports IR 162 differs in substance from that in\n Synergy is unclear. This was noted by Jacobs J at first instance: “It is not\n clear to me that the New South Wales Supreme Court would\n substantially disagree with Butcher J's proposition [relying upon\n Synergy, that if there is any room for argument, the relevant contractual\n\n\n3 Polikoff was, of course, a case with very different facts. There was no argument that losses were\n reduced. Rather, the issue was whether losses were increased as a result of higher standing\n charges. In other words, the only danger was under-indemnification rather than over-\n compensation.\n\n\n -8-\n\n 80\n provision should be construed to accord with the basic principle that an\n insurance policy is a contract of indemnity]. Thus, at paragraph [146]\n of the leading judgment in Mobis, Meagher JA also referred to the same\n passage in Castellain, stating that ‘the prospect of under- or over-\n indemnification may colour the meaning of the language used’.”\n\n 17.4. Fourth, even if the approach in Synergy were incorrect, it was not critical\n to any of the analysis in the courts below, where Insurers’ construction\n was favoured.\n\n (1) As Jacobs J noted at [HC/§438], “Flaux J’s decision in Synergy Tab 7,\n Page 252\n was not critical to Butcher J’s analysis and conclusion [in\n Stonegate, followed by Jacobs J]. Butcher J referred to Synergy\n in the context of his third consideration which lent support to his\n conclusion in paragraph [258]”.\n\n (2) Synergy was not central to the Court of Appeal’s analysis either:\n “Whether my actual decision in Synergy was right or wrong...”\n Tab 5, Page\n [CA/§179]. Thus, even if the Policyholders were right on this 153\n\n point, the argument in any event is insufficient for them to\n succeed.\n\n (3) It is not critical to Insurers’ case on these appeals either: for the\n reasons explained below, the language of the savings clause does\n not even need to be stretched “somewhat” to fit Insurers’\n construction.\n\n(3) The proper construction of the savings clause\n\n18. It is common ground that the policies in these appeals do not provide for a\n perfect indemnity (not least because of the impossibility of identifying precisely\n what would have happened to the business but for the interruption); rather,\n they contain a contractual mechanism for calculating the amount the\n Policyholders are to receive.\n\n19. The broad summary of that mechanism at [AWC/§§22-23] is agreed. Tab 2, Page\n 33 - 34\n\n\n -9-\n\n 81\n Tab 2, Pages\n20. The points made by the Policyholders in [AWC/§§24-27] are to be read 34 - 35\n\n subject to the qualifications outlined in paragraphs 16-17 above.\n\n(4) The words of the savings clause\n\n21. The words of the clause have been set out in paragraph 9 above.\n\n22. There is no dispute that wages and taxes fall within the meaning of “charges”\n Tab 2,\n or “expenses” that are “payable”: see [AWC/§29]. It is these that must “cease Page 35\n\n or reduce” to engage the savings clause, not – as the Policyholders suggest –\n the legal liability for the “charges” or “expenses”.\n\n23. There is also no dispute that the words “cease or reduce” bear their natural and\n ordinary meaning, i.e., that the relevant charge or expense either “comes to an\n Tab 2,\n end” or is “lowered, diminished or lessened”: see [AWC/§§30-31]. But these Page 36\n\n concepts are to be understood as they would be by the ordinary policyholder,\n rather than the pedantic lawyer:\n\n 23.1. The ordinary policyholder would look at these terms in a pragmatic and\n commonsensical way. They would look at whether, in substance and as\n a matter of economic reality, a particular charge or expense had been\n “lowered, diminished or lessened”.\n\n 23.2. The ordinary policyholder would not be fixated with whether, as a matter\n of law, the liability for the particular charge or expense had been\n affected. Nor would the ordinary policyholder draw distinctions between\n legal liabilities and funding for those legal liabilities.\n\n 23.3. The pedantic lawyer might draw a distinction between: (i) A discharging\n B’s debt to C; and (ii) A giving B the amount of his debt to C on the\n condition that B must discharge it himself. But the ordinary policyholder\n would say B’s debts have been “reduced” in both scenarios.\n\n24. The Policyholders’ examples of a reduced electricity bill due to an inability to\n use the premises (caught by the savings clause) and a general government grant\n the insured decides to use to pay the electricity bill or business rates (not caught\n Tab 2,\n by the savings clause) [AWC/§§32-33] are also common ground. However, Page 36\n\n\n - 10 -\n\n 82\n they do not advance matters. CJRS payments are not analogous to a general\n government grant:\n\n 24.1. The CJRS payments had to be spent on wages; the employer had no\n discretion. To that extent, they were hypothecated and the government\n was bearing 80% of the cost of the employees’ wages.\n\n 24.2. The payments came with specific strings attached, such as that the\n employee was not permitted to work under any circumstances.\n\n 24.3. The tax obligations arising under the PAYE scheme in respect of the\n employees’ wages were also reduced. That is, the government relieved\n the employer of its National Insurance contributions due to the\n continued employment of the employees, albeit funded (to 80%) by the\n government. Thus, there was clearly a reduction in the Policyholders’\n National Insurance liabilities. Insurers say that this reflects the\n economic reality that the Policyholders’ liability to pay the employees’\n wages was likewise reduced.\n\n(5) Application of the words of the savings clause\n\n25. As the Policyholders recognise, CJRS payments were not general grants but\n were, instead, “conferred to fund a specific liability, namely wages and\n Tab 2,\n associated taxes and pension contributions” [AWC/§34]. Page 37\n\n\n26. The Policyholders say that such payments are not caught by the savings clause\n because the Policyholders’ legal liability to pay wages (with NI and pension\n contributions) was unaffected by CJRS payments and, as such, those wages etc.\n did not “reduce” [AWC/§37]. But: Tab 2, Pages\n 37 - 38\n\n\n 26.1. in the case of wages and minimum pension contributions, 80% of which\n were funded by the government, this rests on technical distinctions\n which would not be obvious to the ordinary policyholder; and\n\n 26.2. in the case of NI contributions, is wrong: see paragraph 24.3 above.\n\n27. Insurers of course recognise that there is a conceptual difference between a\n legal liability ceasing and the reimbursement of a particular charge or expense\n\n\n - 11 -\n\n 83\n [AWC/§39]. But the ordinary policyholder would understand the word Tab 2,\n Page 38\n “reduce” in the savings clause to encapsulate both concepts. The ordinary\n policyholder would likewise understand that the purpose of CJRS payments\n was to reduce the wage burden on employers.\n\n28. And because this aspect of the appeals turns on how the ordinary policyholder\n would understand the word “reduce”, no assistance is derived from how a non-\n Tab 66, Pages\n insurance case such as Swynson Ltd v Lowick LLP [2017] UKSC 32, [2018] AC 1344 - 1360\n\n Tab 2,\n 313 might have been decided differently on different facts (cf. [AWC/§40]). Page 38\n\n\n29. The Policyholders query Insurers’ position where payments under the CJRS are\n Tab 2, Pages\n repaid and whether that means the wages were “un-reduced” [AWC/§41(1)]: 38 - 39\n\n\n 29.1. The answer to this depends upon when the repayment is made.\n\n 29.2. The savings clause looks only to savings “during the Indemnity Period”.\n Anything that happens thereafter is irrelevant.\n\n 29.3. If there is repayment of CJRS monies “during the Indemnity Period”,\n Insurers accept that they could not contend that the wage bill has been\n “reduced”. The ordinary policyholder would instead look at the practical\n and economic reality: whatever the position before, once the furlough\n moneys have been repaid during the Indemnity Period, there is no basis\n for contending that the wage bill has been “reduced”.4\n\n30. Like the Policyholders, Insurers do not place any great weight on the fact that\n CJRS payments could be made before or after the date when the relevant wages\n payment fell due [AWC/§41(2)]. However, the “independence between the Tab 2,\n Page 39\n timing of the funding and the charge or expense” does not suggest any\n “strain...on the contractual language” and Policyholders do not explain why\n they suggest otherwise.\n\n31. To the extent that it is suggested that the ordinary policyholder’s understanding\n of the words “cease or reduce” would be influenced by the different approach\n Tab 2,\n to business rates relief [AWC/§41(3)], that cannot be right: the policies were Page 39\n\n\n4 There may be separate issues about subrogation, failure to mitigate and prejudicing the insurers\n rights of subrogation, however.\n\n\n - 12 -\n\n 84\n entered into before the pandemic and cannot be construed by reference to later\n events. Insurers agree that the approach to business rates relief was different\n but, in respect of both business rates and employees’ wages, the relevant\n expense or charge was “reduced”.\n\n32. The fact that the CJRS only covered up to 80% of wage costs [AWC/§41(4)] Tab 2,\n Page 39\n is irrelevant in circumstances where Insurers do not say that the relevant wage\n costs “ceased” altogether; they say they “reduced” and that is sufficient.\n\n33. The position as regards JobKeeper payments in Australia was accurately\n summarised by the Court of Appeal below [CA/§177]:\n\n “There is nothing in the Australian case of Marrickville which would support\n a contrary conclusion. As Mr Scorey KC correctly pointed out, the judge at\n first instance, Jagot J, found that the JobKeeper payments did reduce the costs\n of the insured's business in the passages quoted at [149] above, taking an\n economic view similar to that of Butcher J and Jacobs J. The issue was not\n before the Full Federal Court on appeal. Osborne J in the Supreme Court of\n Victoria in Princess Theatre reached the opposite conclusion at [466] that the\n wages did not cease and were not reduced by JobKeeper payments. In my\n judgment, that conclusion does not represent English law in respect of these\n Tab 5,\n savings clauses, which has been correctly stated by Butcher J and Jacobs J.” Page 152\n\n\n Tab 2,\n34. Finally, as to the two examples given by the Policyholders at [AWC/§43] and Page 40\n\n whether wages would be “reduced” in these scenarios:\n\n 34.1. If the Policyholders had received materially the same relief as under\n CJRS but from a philanthropic donor rather than the government (i.e., a\n donation hypothecated to the company wage bill), then that makes no\n difference to the analysis on Ground 1. In both cases, the ordinary\n policyholder would say the wage bill “reduces”.\n\n 34.2. Similarly, if the Policyholders’ shareholders provided materially the\n same relief as CJRS effectively by converting an interest free loan into a\n specifically targeted grant hypothecated to the wage bill (by writing off\n the debt), the analysis as regards “reduces” is the same.\n\n\n - 13 -\n\n 85\n(6) The alleged errors of the courts below\n\n35. The Policyholders criticise the courts below for “looking at the substance” and\n focussing on the “commercial and economic reality” [AWC/§44]. That Tab 2,\n Page 40\n criticism is misplaced: the courts’ approach is simply a reflection of how the\n relevant language in the savings clause would have been understood by the\n ordinary policyholder; as explained above, it does not depend on anything said\n Tab 2,\n Page 40\n in Synergy (cf. [AWC/§45]).\n\n Tab 2, Pages\n36. The Policyholders’ “proves too much” argument at [AWC/§46] is 40 - 41\n\n misconceived:\n\n 36.1. On Insurers’ analysis the savings clause does not “always apply to the\n receipt of funding or reimbursement or defrayal of a charge or\n expense”. The other aspects of the savings clause, in particular those\n considered under Ground 2B, must also be satisfied.\n\n 36.2. If the other aspects of the clause are satisfied, the only issue is whether\n the ordinary policyholder, reading the words “cease or reduce” would\n draw a distinction between a legal liability ceasing and the provision of\n funding for that legal liability. Common sense dictates that they would\n not.\n\n 36.3. Arguments that different words could have been used to achieve one\n result or another are rarely persuasive (effectively the same argument is\n made in [AWC/§47]). And even if one could conceive of other language Tab 2,\n Page 41\n\n that might have been used to achieve the same result, it does not mean\n that Insurers’ construction is wrong. Pedantry must be avoided.\n\n37. The Court of Appeal below did not suggest that the “trends clause is ... a licence\n to override the natural and ordinary meaning of the words in other parts of\n Tab 2, Pages\n the policy” [AWC/§49]. Instead, the trends clause serves to underscore the 41 - 42\n\n nature and aim of the contract and it is legitimate to have regard to this when\n construing its words: see paragraph 17.1 above.\n\n\n - 14 -\n\n 86\n38. Finally, it is common ground that accounting treatment is irrelevant to the\n Tab 2,\n proper construction of the savings clause (see [AWC/§50]), which is the only Page 42\n\n relevant issue on this aspect of the appeals:\n\n 38.1. Jacobs J did not rely upon accounting treatment in reaching his decision\n at first instance and it was not relevant so far as the Court of Appeal were\n concerned either.\n\n 38.2. In Stonegate, Butcher J likewise agreed that it was inappropriate to put\n legal weight on this point. Rather, Butcher J remarked that the fact that\n “the Reporting Standards [Stonegate] itself adopted permitted the\n presentation of such payments as an offset against employment\n expenses” “seem[ed] to me to enhance the lack of reality in Stonegate’s\n position on the issue”: [263] (emphasis added). Thus, the accounting Tab 81,\n Page 1503\n treatment was merely a point fortifying the conclusion Butcher J had\n already reached.\n\n(7) Conclusion on Ground 1\n\n39. For all these reasons, the courts below were correct in their construction of the\n word “reduce” in the savings clause and in its application to the receipt of CJRS\n payments. Accordingly, the appeals on Ground 1 should be dismissed.\n\n\n - 15 -\n\n 87\nC. GROUND 2 – CJRS PAYMENTS “IN CONSEQUENCE OF” THE PERIL\n\n\n39. Grounds 2A and 2B should, logically, be considered in reverse order and are so\n addressed below. This is for the reason explained by the Court of Appeal at\n [CA/§188]:\n\n “Ground 3 of the furlough appeals [now Ground 2A] is that payments made\n under the CJRS were not \"in consequence of\" the insured peril because such\n payments were collateral or res inter alios acta. Despite the ingenuity of the\n arguments of Mr Kramer KC on this issue, they are misconceived. As Mr\n Scorey KC submitted, the question of collaterality is inextricably connected\n with that of causation and once it has been determined, in relation to Ground\n 2 [now Ground 2B], that the reduction in the charges and expenses of the\n business is in consequence of the insured peril, the argument that the\n Tab 5,\n payments which led to that reduction were collateral must fail.” Page 156\n\n\n40. In short: if the insured peril caused the savings, the savings cannot be treated\n as collateral.\n\n41. Accordingly, however intellectually stimulating Ground 2A might be, it is\n irrelevant to the determination of these appeals because the Policyholders fail\n on Ground 2B.\n\n42. The Policyholders do not explain why they say that Insurers must succeed on\n Tab 2,\n Page 43\n Grounds 2A and 2B5 [AWC/§56]:\n\n 42.1. It may be because of the Policyholders’ argument at [AWC§§58-61] Tab 2, Pages\n 43 - 44\n that the words “in consequence of” in the savings clause “must be\n intended to and do import the general framework of legal causation”.\n\n 42.2. But if legal causation is established by reference to the Ground 2B issues,\n it would be remarkable if that conclusion were then reversed by\n reference to the general law. Where the parties have specifically agreed\n the mechanism to be applied, that agreement supplants and/or displaces\n\n\n5 Indeed, given the Policyholders are the Claimant and have previously lost on both issues, it is\n they who must succeed on both.\n\n\n - 16 -\n\n 88\n the general law which would otherwise apply. The general law should\n yield to (and not be used to re-write) the parties’ bargain.\n\n43. This was the approach taken by the Court of Appeal (see paragraph 39 above),\n Jacobs J at first instance (see [HC/§455]), and also of Butcher J in Stonegate, Tab 7,\n Page 256\n in which the learned judge explained at [271]:\n\n “I doubt that, if the relevant savings are not within the savings clause, they fall\n to be taken into account as a matter of the general law, because the parties\n have agreed that there should be recovery of BIL and have agreed how this\n should be calculated, and it would appear to me that the general law could not\n Tab 81,\n be relied on to produce a result different from that specifically provided for.” Page 1505\n\n\n44. Thus, for all the ink spilled by the Policyholders on the general law, its only\n potential relevance is as part of the iterative approach to construing the words\n “in consequence of” in the savings clause. To the extent that the aims of the\n general law and the savings clause are precisely aligned, the general law might\n be relevant in testing competing arguable constructions of these words in the\n savings clause. However, any analytical resort to general law must be treated\n with caution, not least because it has been influenced by policy considerations\n which are irrelevant in the insurance context. For example, the general law is\n resistant to tortfeasors being ‘let off the hook’ by the benevolence of a victim’s\n friends and family. Such a policy consideration is irrelevant in the insurance\n context.\n\n\n - 17 -\n\n 89\nD. GROUND 2B – THE PERIL WAS A CAUSE OF THE CJRS PAYMENTS\n\n\n(1) Introduction\n\n45. As set out in paragraph 6 above, and as found as facts by the courts below, the\n CJRS was explicitly introduced to defray the costs of people’s wages because of\n the extraordinary steps the government had taken to close down and restrict\n the operation of businesses in response to the Covid-19 pandemic.\n\n46. It is no coincidence that the first announcement of the furlough scheme on 20\n March 2020 was on the same day that the government announced the\n introduction of restrictions, the effect of which was to close down a variety of Tab 7,\n Page 253\n businesses [HC/§443].\n\n47. Thus, the CJRS was introduced in parallel to the imposition of restrictions. The\n government appreciated the severe economic impact of the disease and the\n restrictions which it was introducing, and the CJRS was to mitigate against their\n effects. The CJRS was therefore part and parcel of a suite of measures\n Tab 7,\n introduced by the government [HC/§444]. Page 253\n\n\n48. The Policyholders in these proceedings brought claims against Insurers on the\n basis that their businesses were affected by those same restrictions imposed by\n the government.\n\n49. The fact that the eligibility criteria meant that other businesses unaffected by\n the restrictions also happened to receive CJRS payments does not undermine\n either the central rationale of the CJRS, or the link between the peril, the\n restrictions, the CJRS and the saving thereby achieved.\n\n50. Put another way: at least a concurrent proximate cause of the introduction of\n the CJRS and the receipt of CJRS payments by these Policyholders was the peril\n insured under the DOA and POAND Clauses.\n\n(2) Distinction between the CJRS and payments thereunder\n\n51. The Policyholders’ first criticism of the judgments below is that the Court of\n Appeal wrongly focussed on the link between restrictions on premises and the\n\n\n - 18 -\n\n 90\nintroduction of the CJRS itself, as opposed to payments thereunder, the latter\n Tab 2, Pages\nof which could be made without proof of the peril [AWC/§§126-131]. As to 66 - 68\n\nthis:\n\n51.1. The Court of Appeal did not consider the wrong question, as is evident,\n Tab 5, Pages\n for example, from [CA/§187], where Flaux C said: “in my judgment, the 155 - 156\n\n correct focus should be on whether the reduction in the charges and\n expenses of the businesses of these insureds was in consequence of the\n insured peril”. That is the same as the test proposed by the Policyholders Tab 2,\n Page 65\n at [AWC/§124].\n\n51.2. The fact that it was possible to claim CJRS payments without proof of\n the insured peril (a case of Covid-19 within the radius, for example) is\n true but irrelevant. The peril need only be a proximate cause of the loss\n and, likewise, the peril need only be a proximate cause of any saving.\n\n51.3. As Jacobs J explained at first instance [HC/§445]:\n\n “It is of course true that the furlough scheme was not simply a\n consequence of the restrictions on the particular businesses operated by\n the policyholders in this case. It was a consequence of restrictions which\n affected a very large number of businesses across the economy as a\n whole. However, the effect of the decision of the Supreme Court in the\n FCA test case is that, when considering the operation of the insured\n peril, a concurrent causation analysis is to be applied. It is therefore\n sufficient, for the purposes of coverage, for a policyholder to show loss\n flowing from a combination of an insured peril which affected its\n business together with similar perils which affected other businesses. I\n consider that the same approach can and should properly be taken\n when considering causation in the context of the receipt of CJRS\n payments. It is therefore sufficient to show that the CJRS (and thus the\n payments made pursuant to that scheme) was brought into being in\n consequence of a combination of government restrictions affecting the\n business of each claimant policyholder in combination with restrictions\n Tab 7,\n affecting the business of other policyholders.” Page 253\n\n\n - 19 -\n\n 91\n 51.4. The Policyholders are, in effect, contending for a strict ‘but for’ approach\n on the savings side of the equation, which does not apply when it comes\n to calculating their losses (the operation of the peril and trends clauses):\n Tab 5,\n Page 200\n see [CA/§187]. There is no principled basis for such a distinction.\n\n Tab 2,\n52. The decision in Marrickville does not assist the Policyholders (cf. Page 68\n\n [AWC/§§132-133]) because the reasoning in that case suffers from the same\n analytical defect as the Policyholders’ argument: it focuses on the criteria for\n satisfying the JobKeeper payments scheme, rather than the question\n the savings made were in consequence of the insured peril (see [CA/§187] and\n whether\n Tab 5, Pages\n 155 - 156\n [HC/§§447-448]). Tab 7, Pages\n 254 - 255\n\n53. There were also factual differences between the JobKeeper and CJRS schemes,\n Tab 81,\n which had led Marrickville to be distinguished by Butcher J in Stonegate (see Page 1509\n Tab 91\n [289]) and McDonald J in Hyper Trust Ltd v FBD Insurance plc [2023] IEHC Pages 1608\n - 1671\n 455, which considered the Irish equivalent of the CJRS. In Hyper Trust the\n Irish scheme (like CJRS) did not require businesses to have closed. Although\n there were some factual differences, at first instance, Jacobs J agreed with\n McDonald J’s causation analysis.\n\n(3) Concurrent proximate causes\n\n54. The Policyholders’ second argument is that a concurrent causation analysis fails\n because there are not causes of approximately equal efficiency [AWC/§§134- Tab 2, Pages\n 69 - 70\n 141]. This is incorrect:\n\n 54.1. The CJRS (and the payments made pursuant to it) were proximately\n caused by the Covid-19 restrictions imposed by the government on all\n companies, which prevented or hindered the use of their premises, and\n interrupted their business operations: see above.\n\n 54.2. It follows that among the concurrent proximate causes of the CJRS were\n the composite perils insured against in the DOA and POAND Clauses. It\n might be said by the Policyholders that these were not more potent\n causes than, for example, those cases where businesses had their\n operations interrupted by Covid-19 restrictions, even though they had\n\n\n - 20 -\n\n 92\n no cases of Covid-19 within a one-mile radius of their premises (so as to\n mean they could not claim under DOA and POAND Clauses); but they\n were not less potent either.6 In short, just as all cases of Covid-19 were\n efficient causes of the Covid-19 restrictions, it is equally correct that the\n anticipated economic consequences of those restrictions gave rise to the\n CJRS, irrespective of the particular effects on any individual business.\n\n 54.3. Thus, the CJRS cannot be said to have been introduced by reason of the\n interruption to any one particular business impacted by the\n government’s Covid-19 restrictions. The composite perils insured\n against in the DOA and POAND Clauses were causes of “approximately\n equal efficacy” to other competing causes: see The FCA Test Case at Tab 54,\n Page 1216\n [244].\n\n 54.4. The Policyholders contend that the sole proximate case of the receipt of\n CJRS payments was the Policyholders’ “decision to furlough their\n employees, rather than make them redundant, and to apply for\n payments under the CJRS due to circumstances of the Covid-19\n pandemic” [AWC/§140]. There are two problems with this analysis. Tab 2,\n Page 70\n\n\n 54.5. Firstly, it conflates proximate causation – looking at the cause(s)\n proximate in efficiency – with ‘last in time’ causation.\n\n (1) Of course the very final act required in order to receive CJRS\n payments was for employers to tell employees to cease work and\n to ask the government for reimbursement of their wages: see\n Tab 1,\n [SOFI/§85]. Page 25\n\n\n (2) But that final act is analogous to the abandonment of the ship in\n Reischer v Borwick [1894] 2 QB 548. In that case, the policy Tab 76, Pages\n 1438 - 1443\n\n covered loss or damage from collision, but not loss from perils of\n the sea. The ship collided with an object, which caused a leak.\n The leak was temporarily repaired. A tug was sent to tow the ship\n to\n\n6 A ‘weighing’ approach was rejected by the Supreme Court in Financial Conduct Authority v Tab 54, Pages\n Arch Insurance (UK) Ltd [2021] UKSC 1, [2021] 2 WLR 123, [198]-[205] per Lords Hamblen 1204 - 1206\n and Leggatt.\n\n\n - 21 -\n\n 93\n the nearest dock but, while the ship was being towed, the effect of\n the motion through the water was that the leak was re-opened and\n the ship began to sink. To save the lives of the crew, the ship was\n then run aground and abandoned. The Court of Appeal held that,\n notwithstanding the intervening events, the loss of the ship was\n proximately caused by the collision and was therefore covered by\n the policy.\n\n 54.6. Secondly, when conducting a proximate cause analysis, “human actions\n are not generally regarded as negativing causal connection, provided\n at least that the actions taken were not wholly unreasonable or erratic”:\n Tab 54, Pages\n see The FCA Test Case at [168]. Thus, the decision of the management 1195 - 1196\n\n of any particular Policyholder to take the final step and present a claim\n for CJRS payments (which decision cannot be described as “wholly\n unreasonable or erratic”)7 does not affect the Insurers’ analysis as to the\n proximate cause of the CJRS payments.\n\n(4) Conclusion on Ground 2B\n\n55. It follows that the perils insured under the DOA and POAND Clauses were\n concurrent proximate causes of the CJRS and the payments made thereunder.\n Therefore, the appeals on Ground 2B should be dismissed.\n\n56. And, as explained above, if Insurers are right on Ground 1 and Ground 2B, the\n Policyholders’ appeals fail, irrespective of the issues raised by Ground 2A.\n\n\n7 Indeed, the Policyholders explain that there were “incentivised to do so by the CJRS itself”: see Tab 2,\n [AWC/§141]. Page 70\n\n\n - 22 -\n\n 94\nE. GROUND 2A – CJRS PAYMENTS WERE NOT COLLATERAL BENEFITS\n\n\n(1) Introduction\n\n57. To the extent that Ground 2A is relevant at all, Insurers will say that the\n Policyholders are wrong to characterise CJRS payments as collateral benefits.\n\n(2) The Policyholders’ “core propositions”\n\n58. The Policyholders say that Ground 2A engages two “core propositions”\n Tab 2\n Page 43\n [AWC/§57], namely that:\n\n 58.1. proximate causation means both legal and factual causation\n Tab 2, Pages\n [AWC/§§58-61]; and 43 - 44\n\n\n 58.2. ‘subrogation’ in this context is referring to legal causation [AWC/§§62- Tab 2, Pages\n 44 - 48\n\n 72].\n\n59. Both are uncontroversial.\n\n(3) The principles of legal causation\n\n60. The test for legal causation is the same as that already considered above in\n relation to Ground 2B.\n\n61. The analysis cannot, therefore, produce a different result:\n\n 61.1. CJRS payments did not arise independently of the circumstances giving\n rise to the loss; and\n\n 61.2. there is a sufficiently close causal link between the two.\n\n62. The CJRS payments cannot be viewed as an “indirect compensating\n advantage” because they were received due to actions taken by the\n Policyholders as a result of the restrictions imposed upon them.8 Claiming such\n\n\n Tab 104\n8 A Burrows, Remedies for Torts, Breach of Contract and Equitable Wrongs (4th ed, OUP, 2019) Page 1918\n p.148. See too A Burrows, A Restatement of the English Law of Contract (OUP, 2016) p.121. Tab 103,\n Page 1914\n\n\n - 23 -\n\n 95\n payments was a “normal response” from the Policyholders.9 It is well-\n established that “if a claimant takes reasonable steps to mitigate its losses, and\n thereby incurs further losses or obtains any benefits, the general principle is\n that those further losses or benefits are required to be brought into account\n when assessing the compensation payable”.10 The Policyholders’ claiming of\n CJRS payments constituted “reasonable steps” and must therefore be brought\n into account.\n\n63. In terms of the two paradigms considered at [AWC/§§78], Insurers agree that: Tab 2,\n Page 50\n\n\n 63.1. recoveries from a third-party wrongdoer (the first paradigm) are not\n collateral; and\n\n 63.2. benevolent gifts (the second paradigm) may, in certain circumstances,\n be treated as collateral.\n\n64. However, the attempt by the Policyholders to equate CJRS payments with\n benevolent gifts is misconceived. Those payments were not made out of a\n general benevolent intention to benefit the Policyholders which they could use\n for any purpose they wanted. Rather, they came with stringent conditions\n attached, and the Policyholders had to comply with them (see paragraph 24\n above).11 The government made the CJRS payments in return for a quid pro quo\n from the Policyholders, which is far removed from typical instances of\n benevolence.\n\n65. Further, compensating advantages are more likely to be ignored if they are to\n compensate non-pecuniary losses rather than pecuniary losses;12 the CJRS\n\n\n9 URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21, [2025] 2 WLR 1095, [176] (Lord Tab 87,\n Page 1571\n Leggatt).\n Tab 44,\n10 Barrowfen Properties Ltd v Patel [2025] EWCA Civ 39, [77] (Snowden LJ), relying upon British Page 999\n Westinghouse v Underground Electric [1912] AC 673. Tab 46,\n Pages 1013\n - 1032\n11 An analogy may be drawn with ‘gifts’ of ‘onerous property’: accepting such gifts can constitute\n valid consideration to form a binding contract, rather than a nudum pactum: Cheale v Kenward Tab 49, Pages\n 1073 - 1083;\n (1858) 27 LJ Ch 784; Price v Jenkins (1877) 5 ChD 619; Merritt v Merritt [1970] 1 WLR 1211. Tab 73, Pages\n 1417 - 1420;\n12 KD Cooper, ‘A Collateral Benefits Principle’ (1971) 49 Canadian Bar Rev. 501. Double recovery is Tab 68, Pages\n 1364 - 1368\n most easily observed when considering financial losses. In contrast, because non-pecuniary\n losses are harder to quantify, it is much more difficult to identify definitively that there has been Tab 112,\n Pages 1997\n double recovery. - 2029\n\n\n - 24 -\n\n 96\n payments were clearly intended to ameliorate the pecuniary losses the\n Policyholders would otherwise suffer.\n\n66. In any event, the principle that benevolent gifts are not deducted from awards\n of damages is itself an exception to the general rule that all compensating\n advantages should be deducted,13 and should therefore be interpreted\n narrowly.14\n\n(4) Benefits conferred by the state\n\n67. The Policyholders are also wrong to suggest that payments by the state ought to\n Tab 2, Pages\n be treated no differently from payments from other persons [AWC/§97]: 55 - 56\n\n\n 67.1. A payment received as of right from the state following a wrong will\n reduce the available compensation unless there is evidence that\n parliament intended to exclude it from the quantification of damages:\n Tab 59,\n Hodgson v Trapp [1989] AC 807 at 822B-E per Lord Bridge; followed in Page 1294\n\n\n Clenshaw v Tanner [2002] EWCA Civ 1848 at [31]-[32] (per Kennedy Tab 50,\n Page 1083\n LJ) and [37]-[38] (per Chadwick LJ).\n\n 67.2. In particular, in Hodgson v Trapp, attendance/mobility allowances\n provided to fund the cost of care were held not to be res inter alios acta.\n Tab 59,\n Lord Bridge at 823B-C stated (emphasis added): Page 1295\n\n\n “In this context to ask whether the taxpayer, as the ‘benevolent donor’,\n intends to benefit ‘the wrongdoer’ as represented by the insurer who\n meets the claim at the expense of the appropriate class of policy holders,\n seems to me entirely artificial. There could hardly be a clearer case than\n that of the attendance allowance payable under section 35 of the Act of\n 1975 where the statutory benefit and the special damages claimed for\n\n\n13 Since otherwise a party may be left in a better position than if the wrong had not occurred.\n14 In the context of compensating damages for personal injury, the Law Commission noted that\n there are strong arguments in favour of greater deduction of compensating advantages than is\n currently the case: Law Commission, Damages for Personal Injury: Collateral Benefits (CP No\n 147, 1997) although ultimately no legislative reform was proposed: Damages for Personal Injury:\n Medical, Nursing and Other Expenses; Collateral Benefits (Law Com No 262, 1999); A Burrows, Tab 104,\n Remedies for Torts, Breach of Contract and Equitable Wrongs (4th ed., OUP, 2019) pp.161-162. Pages 1931 -\n 1932\n\n\n - 25 -\n\n 97\n cost of care are designed to meet the identical expenses. To allow double\n recovery in such a case at the expense of both taxpayers and insurers\n seems to me incapable of justification on any rational ground...”\n\n 67.3. A taxpayer is not a benevolent donor; and the double recovery point is\n applicable here. The CJRS is akin to the “universal safety net” of social\n security which is provided by the state and usually taken into account in\n reducing the claimant’s loss. Such a benefit “is not too remote or\n collateral.”15\n\n 67.4. An example where a statute has expressly excluded affecting the\n Tab 47, Pages\n insurance position is Burnand v Rodocanachi (1882) 7 App Cas 333 1033 - 1044\n Tab 81, Pages\n (cited in Stonegate at [273]-[274]). There, the Act of Congress creating a 1505 - 1506\n\n compensation fund for the cargo destroyed by a Confederate cruiser\n stated: “no compensation is to be given by the commissioners on\n account of loss which has been insured against or covered by insurance,\n and secondly that underwriters are not to receive any benefit from the\n funds distributed under the Act” (7 App Cas 333, 343). No such\n statement was made in respect of the CJRS.\n\n 67.5. There are sensible reasons to draw a distinction between payments made\n by the state and payments made by benevolent donors:\n\n (1) The ordinary benevolent donor is likely to be oblivious to the fact\n that there may be implications for any indemnity sought by the\n recipient of his generosity. The same level of ignorance is not\n assumed on the part of the state.\n\n (2) State largesse is invariably conferred via some form of instrument\n through which the government can, if it wishes, make it clear\n precisely who is not intended to benefit. (And as the Policyholders\n say, where this is done, it is likely to be determinative\n\n\n Tab 105, Pages\n15 See A Kramer, The Law of Contract Damages (4th ed, Sweet & Maxwell, 2025) at §§18.76 –\n 1934 - 1936\n18.77.\n\n\n - 26 -\n\n 98\n Tab 2,\n [AWC/§92].) It is fair to assume that if the government declines Page 54\n\n that opportunity, it is indifferent on the matter.\n\n (3) The benevolent donor is likely to be uniquely concerned with the\n particular recipient of his beneficence. The government, in\n contrast, has a far broader remit.\n\n(5) Application to CJRS payments\n\n Tab 2, Pages\n68. None of the five points made by the Policyholders [AWC/§§111-115] affect the 60 - 63\n\n conclusion that there was a close causal link between the CJRS payments and\n the insured peril:\n\n Tab 2, Pages\n 68.1. As to the first argument [AWC/§111], Insurers agree that the CJRS was 60 - 61\n\n not part of the “routine system of social security” but this makes no\n difference to the analysis:\n\n (1) The Covid-19 pandemic was unique in modern times, as was the\n governmental response, both in terms of the benefits conferred\n upon the public and the restrictions imposed upon them.\n\n (2) The fact that the relevant insured peril and the CJRS payments\n arose out of the same extraordinary circumstances underscores the\n causal link between the two.\n\n (3) Further, the universal availability of the CJRS means that it is akin\n to a “routine” system of social security, albeit for a specific purpose\n and of limited duration.16\n\n 68.2. The second argument [AWC/§112], that CJRS payments were intended Tab 2,\n Page 61\n to benefit employers, is true so far as it goes, namely that they were the\n recipients of the moneys. However, that is not the relevant issue in these\n appeals. The issue is whether the government intended a double\n\n\n16 See fn. 14 above.\n\n\n - 27 -\n\n 99\n recovery for those employers with business interruption insurance in\n place, which responded to the circumstances of the pandemic.17\n\n 68.3. The third argument [AWC/§113] is that CJRS payments were made in Tab 2, Pages\n 61 - 62\n order to incentivise stability in the labour market. Again, the point is\n right as far as it goes, but the level of governmental support for the labour\n market does not diminish if CJRS payments are taken into account. The\n level of governmental support remains the same. All that reduces are the\n additional sums on top of that support that might be recovered from\n insurers by those employers which happen to have certain forms of\n business interruption insurance. And there is no suggestion that the\n government pitched the level of support taking into account the likely\n recoveries from business interruption insurance policies.\n\n 68.4. The fourth argument [AWC/§114] prays in aid government guidance Tab 2, Page\n 62 - 63\n\n about completely different grants, unrelated to the CJRS. The\n Policyholders say that it must follow that the “position applies equally\n to the CJRS” but, if that were so, why was no similar guidance offered\n when it came to CJRS? Moreover:\n\n (1) The letter quoted was not a contemporaneous statement by the\n government of the intent and purpose of the CJRS (indeed, the\n letter was sent over 6 months after the Treasury Direction Tab 10, Pages\n 524 - 539\n establishing the CJRS dated 15 April 2020).\n\n (2) The correct factual position was stated by Butcher J in Stonegate at Tab 81, Pages\n 1508 - 1509\n [286]: “there is no express statement by the Government to that\n effect. The Government did not indicate that the payment was\n being made only in respect of uninsured losses.” This was despite\n the government being aware that some companies had business\n interruption insurance, which Butcher J noted was evidenced by\n the Treasury’s Fact Sheet of 18 March 2020.\n\n\n Tab 104,\n17 Cf. A Burrows, Remedies for Torts, Breach of Contract and Equitable Wrongs (4th ed, OUP,\n Page 1924\n 2019) p.154.\n\n\n - 28 -\n\n 100\n Tab 2,\n 68.5. The fifth point [AWC/§115] is that the structure of the scheme as Page 63\n\n reimbursement calls for CJRS payments to be treated as collateral. This\n is merely a repackaging of the same misconceived argument advanced\n by the Policyholders in relation to Ground 1.\n\n69. It follows that the CJRS payments were not collateral to the insured peril.\n\n(6) Conclusion on Ground 2A\n\n70. Insurers therefore invite the Supreme Court to dismiss the appeals on Ground\n 2A as well.\n\n\n - 29 -\n\n 101\nF. CONCLUSION\n\n\n71. In the circumstances, the Insurers ask that the appeals be dismissed.\n\n\n DAVID SCOREY, KC\n\n DAVID WALSH, KC\n\n PROFESSOR PAUL DAVIES\n\n Essex Court Chambers\n\n 24 Lincoln’s Inn Fields\n\n London, WC2A 3EG\n\n9th January 2026\n\n\n - 30 -\n\n 102", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is conjoined policyholder appeals on savings clauses.", "governingLaw": "english_law", "amount": 1, "currency": "USD" }, "reference": { "case": "Gatwick Investment Ltd and Bath Racecourse Co Ltd v Liberty Mutual Insurance Europe SE", "citation": "[2026] UKSC 14", "court": "Supreme Court of the United Kingdom", "source": "https://supremecourt.uk/uploads/uksc_2025_0067_0068_judgment_e21e2e373c.pdf" }, "expectedOutcome": "respondent_prevails", "systemDecision": { "outcome": "respondent_prevails", "reasoning": "The central question is whether CJRS grants received during the indemnity period reduce the business interruption indemnity under the standard ABI savings clauses. The clauses deduct savings where charges or expenses 'cease or reduce in consequence of the Damage' (Arena Policy) or 'in consequence of the incident' (Claimant Policies). Two issues arise: whether wage costs 'ceased or reduced' and whether any saving was 'in consequence of' the insured peril.\n\nOn Ground 1, the claimant's argument rests on a sharp distinction between a legal liability continuing and that liability being funded by a third party. The claimant says that because wage liabilities were still incurred—they had to be, to be eligible for CJRS—they neither ceased nor reduced. This is a technical, lawyerly reading that the Supreme Court in the FCA Test Case (at [77]) cautioned against: the policy is addressed to the ordinary policyholder, not the pedantic lawyer. The ordinary policyholder, reading the savings clause, would understand that where the government reimburses 80% of the wage bill, the cost of wages to the business has been reduced. The employer bears 20% rather than 100%; the economic burden is diminished. The claimant's own accounting treatment—recognising CJRS as Other Income while recording full wages as expense—confirms the conceptual separation but does not answer the contractual question, which turns on the substance of the savings clause. The claimant's analogy to general government grants is inapt: CJRS grants were hypothecated to wages, with stringent conditions (employees could not work), and the government rebated NI contributions—a direct reduction in tax liability that the claimant does not meaningfully dispute falls within the clause. If NI liabilities were reduced, the ordinary policyholder would understand that wage-related costs were likewise reduced. The claimant's position that wages were merely 'funded' while NI was genuinely 'reduced' draws an unstable line that the ordinary reading of 'cease or reduce' does not require.\n\nOn Ground 2(b), the parties agree that 'in consequence of' imports a proximate causation test. The insured peril is composite: (A) COVID-19 within one mile, causing (B) government restrictions, causing (C) prevention or hindrance of access to the premises. The claimant argues that because CJRS eligibility did not require proof of any of these elements—any PAYE-registered business could claim—the peril was irrelevant and cannot be a proximate cause. This argument proves too much. In the FCA Test Case, the Supreme Court squarely rejected the 'but for' test and the weighing approach in favour of concurrent causation: each case of COVID-19 was a separate and equally effective cause of the government measures (at [176], [189], [206]). The same logic applies here. The government introduced the CJRS on 20 March 2020, the same day it announced the closure restrictions, to mitigate the economic consequences of those restrictions. The restrictions were caused by COVID-19 cases across the country, including cases within one mile of the insured premises. The CJRS was part and parcel of a suite of measures responding to the same underlying emergency. The claimant's decision to furlough employees was a normal, reasonable response to the restrictions—it was not 'wholly unreasonable or erratic' (FCA Test Case at [168])—and does not break the causal chain. The travel agent example (at [244]) is distinguishable: there, the sole proximate cause was travel restrictions, not the insured peril. Here, the restrictions causing prevention of access were themselves the insured peril and were a concurrent proximate cause of the economic disruption that prompted the CJRS. The claimant's reliance on Marrickville is not binding on English law and is distinguishable on its analysis: the Full Federal Court focused narrowly on eligibility criteria rather than the broader causal question of whether the savings were in consequence of the insured peril.\n\nOn Ground 2(a), if the insured peril was a concurrent proximate cause of the CJRS grants (Ground 2(b)), the collaterality argument necessarily fails. The Court of Appeal correctly held that collaterality and causation are inextricably linked: if the peril caused the saving, it cannot be collateral. The claimant's attempt to analogise CJRS grants to purely benevolent gifts is misplaced. CJRS grants were not gratuitous donations; they came with onerous conditions, were structured as reimbursement for specific costs, and were paid to employers rather than employees precisely because the government intended to preserve employer-employee relationships. The state, unlike a private benevolent donor, acts through instruments and could have excluded insurers if it wished—as Congress did in Burnand. It did not do so. While the claimant cites Mr Glen MP's letter regarding other grants, that letter did not address CJRS, and the government made no equivalent statement for furlough payments. The absence of any express exclusion, combined with the close causal link between the insured peril and the CJRS, means the grants cannot be treated as res inter alios acta.\n\nThe result is that the savings clauses operate as the parties intended: to prevent over-indemnity by deducting costs saved as a result of the insured peril. The CJRS grants reduced the wage costs of these businesses and were caused by the same insured peril that triggered the business interruption cover. Deduction is therefore required.", "allocation": null, "citations": [ { "title": "The Financial Conduct Authority & Ors v Arch Insurance (UK) Ltd & Ors [2021] UKSC 1", "url": "https://www.bailii.org/uk/cases/UKSC/2021/1.html", "proposition": "An insurance policy must be interpreted as it would be understood by the ordinary policyholder, not a pedantic lawyer; the overriding question is how the words would be understood by a reasonable person with background knowledge available to the parties." }, { "title": "The Financial Conduct Authority & Ors v Arch Insurance (UK) Ltd & Ors [2021] UKSC 1", "url": "https://www.bailii.org/uk/cases/UKSC/2021/1.html", "proposition": "The 'but for' test is not a mandatory threshold for proximate causation in insurance; concurrent causes of approximately equal efficacy that combine to produce loss are each properly regarded as proximate causes, and an insured peril that is neither necessary nor sufficient on its own can still be a proximate cause when it operates in combination with other uninsured but non-excluded causes sharing the same underlying origin." }, { "title": "The Financial Conduct Authority & Ors v Arch Insurance (UK) Ltd & Ors [2021] UKSC 1", "url": "https://www.bailii.org/uk/cases/UKSC/2021/1.html", "proposition": "Human actions taken in reasonable response to an insured peril, including government measures introduced to mitigate the economic effects of restrictions caused by the peril, do not negative the causal connection between the insured peril and the resulting loss or saving." } ] }, "matchedReferenceOutcome": true }, { "caseId": "case-067", "caseType": "deidentified_briefs", "input": { "partyA": { "name": "Claimant", "type": "agent", "position": "ANONYMIZED CLAIMANT BRIEF\n\nINTRODUCTION\n\n\n1. The case concerns the general rule in section 11(4) Part 2 of the Capital Allowances\n Act 2001 (“CAA 2001”) [MB/16/411] for whether expenditure is “qualifying\n expenditure” eligible for plant and machinery capital allowances. It is common ground\n that the expenditure in issue in this appeal is “qualifying expenditure” under this rule if\n and to the extent that it is “on the provision of plant or machinery”. The question is\n what do those words mean in the context of s 11(4)(a) of Part 2, CAA 2001.\n\n\n 1\n\n\n 57\n2. The expenditure in issue was incurred by the Respondents (“the Companies”) on\n studies and surveys (“Studies”) obtained by them in order to assist in establishing a\n new business of generating electricity for sale to the National Grid by means of an\n offshore windfarm. The advice provided takes the form of scoping exercises, studies\n required for environmental impact assessments (“EIAs”), and technical and\n engineering studies, as described at [FTT 159-211] [KB/7/279-303] [SOAFI 57-59]\n [KB/1/18-19].\n\n\n3. The Court of Appeal holds that “[Without attempting to] provide an exhaustive\n account of when capital allowances are available, it seems... that they can be claimed\n where (a) the taxpayer can demonstrate that, looking at matters objectively and with\n the benefit of hindsight, expenditure informed the design of plant or machinery or how\n it was to be installed, (b) the expenditure related to plant or machinery which was in\n fact acquired or constructed and (c) the expenditure did not arise from characteristics\n or circumstances particular to the specific taxpayer” [CoA 76] [KB/5/176]. Applying\n this test to the facts found by the FTT, it concludes that all the expenditure in issue\n was “on the provision of” the plant ultimately provided.\n\n\n4. Claimant appeal on the grounds that the Court of Appeal’s interpretation of s 11(4)(a) is\n wrong in law. Put simply, it rewrites the statutory test creating a new relief for\n predevelopment costs of the kind incurred in this case.\n\n\n5. In Claimant’s submission, for an item of capital expenditure to be “on the provision of”\n an item of plant or machinery the effect of that expenditure must be the actual\n provision of that item of plant or machinery, and not the provision of something else\n (as in this case) or something more remote (also this case).\n\n\n6. Claimant will first set out their position on the correct interpretation of “on the provision\n of” in s 11(4)(a) CAA 2001. Claimant will then explain why the Court of Appeal’s\n interpretation is incorrect. Claimant’s submissions on how the correct test applies to the\n detailed facts of this case are set out in the Appendix hereto [KB/2/83].\n\n\n 2\n\n\n 58\nClaimant’S CASE – THE CORRECT INTERPRETATION\n\n\n7. Stated briefly, statutory words need to be construed purposively and in context, as\n summarised by Lord Hodge in R (O) v Secretary of State for the Home Department\n [2022] UKSC 3; [2023] AC 255 at [29] to [31].\n\n\n8. Consistent with this, Claimant approach the interpretation of “on the provision of” by\n considering: first, the background of the capital allowances regime now encapsulated\n in the CAA 2001 as a whole; second, the statutory words in their immediate context in\n s 11(4) CAA 2001; third, the case law that has considered the statutory words “on the\n provision of” in s 11(4)(a) CAA 2001 and its statutory predecessors; fourth, the well-\n established distinction between “plant” and “setting”; and fifth, the wider statutory\n context of Part 2 CAA 2001.\n\n\n(a) Background: the capital allowances regime\n\n\n9. For the general nature and purpose of the capital allowances code, Lord Nicholls gives\n an authoritative introduction in Barclays Mercantile Business Finance Limited v\n Claimant [2004] UKHL 51; [2005] 1 AC 684 at [3]:\n\n\n “3. A trader computing his profits or losses will ordinarily make some deduction\n for depreciation in the value of the machinery or plant which he uses. Otherwise\n the computation will take no account of the need for the eventual replacement of\n wasting assets and the true profits will be overstated. But the computation\n required by Schedule D (whether for the purpose of income or corporation tax)\n has always excluded such a deduction[1]. Parliament therefore makes separate\n provision for depreciation by means of capital allowances against what would\n otherwise be taxable income. In addition, generous initial or first-year\n allowances, exceeding actual depreciation, are sometimes provided as a positive\n incentive to investment in new plant.”\n\n1\n The relevant rule denying relief for capital expenditure (i.e., the kind of expenditure with\nwhich this case is concerned) is now found in section 53 Corporation Tax Act 2009\n[MB/20/460].\n\n 3\n\n\n 59\n10. Part 2 CAA 2001 provides for “plant and machinery allowances”. The general rule,\n set out in s 11(4) of Part 2, CAA 2001 [MB/16/411], is that expenditure on plant and\n machinery qualifies for capital allowances if: (i) the expenditure is “capital\n expenditure on the provision of plant and machinery”, (ii) it is incurred for the\n purposes of a “qualifying activity” (i.e., a trade), and (iii) the person incurring the\n expenditure owns the plant and machinery as a result of incurring it. Section 61 then\n deals with “disposal events”, with the paradigm example of such an event occurring\n when a person “ceases to own” plant and machinery (s 61(1)(a) [MB/16/442]). In\n combination, s 11 and s 61 act as “‘book-ends’ with section 11 providing for capital\n allowances to begin to accrue when plant and machinery is purchased and section 61\n providing for future allowances to cease to accrue when that plant and machinery is\n disposed of (to the extent that disposal value is brought into account), as well as\n recapturing excessive allowances that have been given.”2\n\n\n(b) The statutory words in their statutory context\n\n\n (i) The “general rule”\n\n\n11. Section 11(4) provides the “general rule” for when capital expenditure incurred on\n “plant and machinery” is “qualifying expenditure”. The rule has two parts.\n\n\n (a) Section 11(4)(a) requires that the expenditure is “on the provision of” plant or\n machinery “wholly or partly for the purposes of the qualifying activity carried\n on by the person incurring the expenditure”, with the “qualifying activity” being\n a trade or other qualifying business activity (s 15(1) CAA 2001 [MB/16/414]).\n\n\n (b) Section 11(4)(b) requires that the person incurring the expenditure “owns” that\n same plant or machinery as a result of incurring the expenditure.\n\n\n2\n Altrad Services Ltd and anor v Claimant [2024] EWCA Civ 720; [2024] 1 WLR 4397 at [16]\n[MB/24/491-492]], approving the summary of the UT below.\n\n 4\n\n\n 60\n12. The two parts reflect the two aspects of an acquisition. Section 11(4)(a) looks at the\n act of provision: the supply or the making available for use for the qualifying activity.\n Section 11(4)(b) is concerned with legal or beneficial ownership.\n\n\n13. The Court of Appeal confirms the distinct roles of s 11(4)(a) and (b) in Inmarsat\n Global Ltd v Claimant [2022] EWCA Civ 1076; [2022] STC 1426 (“Inmarsat”) at [66]\n [MB/31/642], holding that what matters in determining whether expenditure is “on the\n provision of” the plant (in that case, satellites) is the “role the expenditure played in\n relation to the relevant plant” and not whether the expenditure should “lead towards\n ownership”.3\n\n\n14. Section 11(4)(a) and (b) also entail an apportionment where the expenditure is only\n partly “qualifying expenditure” because, for example, the expenditure is “on”\n something else as well as “on the provision of” the plant or machinery.4\n\n\n15. Drawing the above points together, the paradigm case of expenditure within s 11(4) is\n the purchase price of an off-the-shelf item of “plant or machinery” for use in a trade.\n Payment of the price by the trader has the effect of actually providing the plant for the\n purposes of the trade because it makes it available for use, and it also results in legal\n ownership.\n\n\n16. The test itself is prospective. No hindsight is required (unlike the Court of Appeal’s\n erroneous test at [CoA 76] [KB/5/176]). A taxpayer can simply adopt the question\n posed by Lord Russell in Ben-Odeco Ltd v Powlson (HMIT) [1978] 1 WLR 1093\n\n\n3\n The satellites were subject to a lease. The lessors claimed relief for the acquisition cost. The\noriginal lessee incurred the launch costs but did not claim relief. The appellant succeeded to\nthe lessee’s trade and sought to claim relief for the launch costs. Relief was denied to it because\nit did not own the satellites and nor could it be deemed to own them.\n4\n Apportionment is a common concept in the capital allowance regime. Contrary to [CoA 75]\n[KB/5/176] it was not Claimant’s case that an apportionment would never be possible in this\ncase. However, the question of apportionment did not arise on the findings of the UT. “MS.\nWILSON: ... If, as a matter of fact, the tribunal find it is on ... plant, it is allowable. If they find\nit is not, it is not allowable. If they find it is on both, and even maybe something else, then you\nwould do [a] just and reasonable apportionment. LORD JUSTICE NEWEY: Yes, I see.”\n[Transcript Day 3/the case/line 14 -20]\n\n 5\n\n\n 61\n (“Ben-Odeco”) at 1106G [MB/28/593] and ask of expenditure about to be incurred\n whether the “effect” of that particular capital expenditure is the provision of plant to\n the taxpayer or something else.\n\n\n (ii) Section 11(4)(a): “on the provision of...”\n\n\n17. The words “on the provision of” in this context are not limited to the actual purchase\n price. For the same reason that the purchase price falls within s 11(4)(a), so do transport\n and delivery costs and the costs of mere installation without which the plant would not\n be usable at some basic level. Likewise, the fabrication cost if the item needs to be\n fabricated to order. These costs all “effect” the provision. Insofar as any new item of\n expenditure is claimed it must be shown to have an analogous role in relation to the\n provision.\n\n\n18. This straightforward approach to s 11(4)(a) reflects the ordinary meaning of the word\n “provision” which is an acquisition, a supply, a making available for use. It also reflects\n the fact that the relief requires that the “provision” be “wholly or partly for the purposes\n of the qualifying activity carried on by the person incurring the expenditure”. Plant can\n hardly be said to have been provided for the purposes of the trade if it is unusable\n because not delivered or not installed at some basic level (IRC v Barclay Curle [1969]\n 1 WLR 675 (“Barclay Curle”), per Lord Reid at 680C-D [MB/25/526]).\n\n\n19. The different means by which a “provision” of a particular item of plant or machinery\n might be effected is the straightforward explanation for why the draftsman picked the\n word.\n\n\n20. The word “on” means “on”. It directs attention to the effect of the expenditure. It thus\n requires attention to the strength and closeness of the nexus between the expenditure\n incurred and the supply of the item in question. Remoteness is another way of\n considering the same question. As Claimant submitted in the courts below, a concept of\n remoteness is baked into s 11(4)(a).\n\n\n 6\n\n\n 62\n21. The word “on” does not mean “for the purposes of” or “with a view to”. These are well-\n worn subjective purpose tests where the only issue is what was in the mind of the person\n incurring the expenditure. Parliament could have used such language but did not.\n\n\n22. Nor does the word “on” mean “informs” or “feeds into”. These are looser connectors\n which result in a different kind of statutory test, as Claimant explain below at paragraph\n [64] [KB/2/75-76].\n\n\n23. Nor does the word “on” mean “in connection with” or “directly related to” insofar as\n those words are used to mean “informs” or “directed towards” or “relevant to” or “to\n do with” or similar.5 Such tests involve hindsight and / or contradict the well-established\n case law on the distinction between plant and setting (and plant and intangibles and so\n on). In any event, they are not the statutory words.\n\n\n(c) Case law on “on the provision of”\n\n\n24. The leading cases of Barclay Curle and Ben-Odeco confirm that to be “on” the provision\n of plant or machinery, a strong and close nexus is required between the expenditure\n being claimed and the actual provision of the plant or machinery in question. The\n expenditure should make or effect the provision.\n\n\nBarclay Curle\n\n\n25. Barclay Curle concerns the excavation and construction of a ‘dry dock’ adjacent to the\n Clyde. In order that the dry dock could be made, it had been necessary to excavate land\n to create a basin below the water table which had then been lined with concrete and\n furnished with dock gates, operating gear and so on. At stake was a figure of £186,928\n agreed to represent the cost of excavation and a figure of £500,380 representing the cost\n of the concrete lining (see Lord Reid at 676F-H [MB/25/522], Lord Guest at 684E-F,\n H [MB/25/530]). The taxpayer had claimed an initial allowance of 3/10th as capital\n\n\n5\n This is an important reason why the FTT’s conclusions in the FTT decision (and as recorded\nin the SOAFI) must be treated with extreme caution.\n\n 7\n\n\n 63\n expenditure on the provision of plant or machinery for the purposes of the trade (under\n s 279 of the Income Tax Act 1952 [MB/23/482], the ancestor of s 11(4) CAA 2001).\n The taxpayer’s case had been that the dry dock as a whole was “plant” and that the\n subject of the disputed expenditure was thus plant not setting. The Crown had\n contended that the excavation and concrete work were eligible for an initial allowance\n of 3/20th as capital expenditure incurred on the construction of an “industrial building”\n under s 265 Income Tax Act 1952 [MB/23/480]. In the alternative, the Crown had\n argued that even if the concrete work were “plant”, the cost of excavation had been\n “too remote” (as the Commissioners had found: 679A 697A [MB/25/525]) and thus\n not eligible for the larger allowance.\n\n\n26. The majority of the House of Lords (Lord Reid, Lord Guest, and Lord Donovan) begin\n by identifying the plant, holding that it is more appropriate to describe the dry dock as\n a whole (including therefore the excavated basin lined with concrete together with the\n dock gates, operating gear, and so on) as a single item of “plant”. Lord Guest says at\n 685H [MB/25/531] (emphasis added): “It is the level of the bottom of the basin in\n conjunction with the river level which enables the function of dry docking to be\n performed by the use of dock gates, valves and pumps. To effect this purpose\n excavation and concrete work were necessary”.\n\n\n27. The majority then ask whether the expenditure which had been incurred on the\n excavation and concrete lining is “on the provision of” the plant. They answer ‘yes’, on\n the grounds that the nexus between the work and the provision of the dry dock as a\n whole is strong and close. Careful reading of the judgements shows that this is\n determinative. It is because the expenditure is “on” part of the plant itself that the\n expenditure is allowable. This reflects a narrow approach to the statutory words.\n Notably, the majority in Barclay Curle do not short circuit the analysis by adopting a\n looser gloss on the statutory language, as the Court of Appeal does in this case (see\n [CoA 76] [KB/5/176]).\n\n\n28. Lord Reid at 680C-D [MB/25/526] says “So, the question is whether, if the dock is\n plant, the cost of making room for it is on the provision of the plant for the purposes of\n the trade of the dock owner. In my view this [i.e., the words “on the provision of”] can\n\n 8\n\n\n 64\n include more than the cost of the plant itself, because plant cannot be said to have been\n provided for the purposes of the trade until it is installed: until then it is of no use for\n the purposes of the trade. This plant, the dock could not even be made until the\n necessary excavating works had been done”. In this passage, Lord Reid is not placing\n a gloss on the statutory words to set up a new test of necessity. Rather he is making the\n point (as the UT do at [UT 165] [KB/6/226]) that, given the statutory words, the cost\n of making the plant is within the words and not “too remote” (at 680E [MB/25/526]).\n In a similar vein he goes on to refer to the costs of “mere installation” being allowable\n (at 680G [MB/25/526]).\n\n\n29. Lord Guest similarly considers the closeness of the expenditure to the actual provision.\n He asks whether the “subject” of the expenditure is “part of” the plant with which the\n business is carried on (at 685H-686A [MB/25/531-532]). The answer is ‘yes’ because\n the excavation and concrete work would be “useless for any trade purpose unless used\n in conjunction with the rest of the equipment” (at 685H-686A [MB/25/531-532]). He\n also addresses the Crown’s alternative argument that even if “the concrete work were\n “plant”” the expenditure on the concrete work is nonetheless “too remote” (686F\n [MB/25/532]). His response is that “[t]he excavation was a necessary preliminary to\n the construction of the dry dock... “Provision” must cover something more than the\n actual supply. In this case it includes the excavation of the hole in which the concrete\n is laid” (at 686F-G [MB/25/532]). This is the same point as Lord Reid makes (at 680E\n [MB/25/526]). The cost of actually making the dry dock by excavating its basin (the\n “necessary preliminary”) is “on” the provision because it is the provision.\n\n\n30. Lord Hodson dissents on the issue of whether the dry dock is plant (at 681C-684D\n [MB/25/527]). Lord Upjohn also dissents on the issue of whether the dry dock is plant\n (at 689B-690C [MB/25/535-536]) but says that otherwise he would reject the Crown’s\n alternative argument for the reasons Lord Reid gives (at 690F [MB/25/536]).\n\n\n31. Lord Donovan says that: “the cost of necessary excavation comes within the words\n “expenditure on the provision of machinery or plant”... again regarding the dry dock\n as a whole” (at 691H [MB/25/537], emphasis added). Like Lord Reid, it is because the\n\n\n 9\n\n\n 65\n excavation makes the plant that it is within the words (as [UT 165] [KB/6/226] says,\n “provision” is focused on the making, doing, and constructing).\n\n\n32. Thus, the majority of their Lordships reason that the disputed expenditure is “on” the\n provision of the “plant” because the dry dock as a whole (including the concrete works)\n is plant. Lord Reid (at 680D and G [MB/25/526]), Lord Guest (at 685H [MB/25/531]\n and 686F [MB/25/532]) and Lord Donovan (at 691G [MB/25/537]) use the word\n “necessary” to describe the excavation but not as a test. Their Lordships emphasise the\n intimate nexus between the excavation and the dry dock, but they do not say that in\n order to be “on the provision of plant or machinery” the expenditure only need be\n “necessary” to it (e.g., at 680G [MB/25/526]) (and nor would they, given the distinction\n between plant and setting which they recognise: see paragraph [43] below [KB/1/69]).\n\n\nBen-Odeco\n\n\n33. The relevance of remoteness in the context of “on the provision of”, and how the\n boundaries of s 11(4)(a) might be drawn, is further affirmed and clarified by the House\n of Lords in Ben-Odeco. In Ben-Odeco, the issue is whether capitalised interest and\n commitment fees which had been incurred by the taxpayer to secure necessary finance\n for the specific purpose of acquiring an oil rig were “on the provision of plant” for the\n purposes of the predecessor provision to s 11(4) CAA 2001. The House of Lords holds\n by a majority (Lord Salmon dissenting6) that expenditure on the provision of finance\n was not “on the provision of” the rig.\n\n\n34. Lord Wilberforce (with whom Lord Scarman agrees: 1107A [MB/28/594]) contrasts\n the words “capital cost to the taxpayer” used in the Canadian Income Tax Act\n (answering a point made by Counsel for the taxpayer), with the words “expenditure on\n the provision of machinery or plant” at issue in the UK legislation. He holds that “[t]he\n expression “capital cost to the taxpayer” makes it easier to include within deductible\n expenditure costs which the particular taxpayer incurs, whereas the U.K. words, more\n objectively focus on expenditure directly related to the plant. The one draws a line\n\n\n6\n In doing so, however, Lord Salmon still endorses a remoteness test: at 1104G [MB/28/591].\n\n 10\n\n\n 66\n round the taxpayer and the plant; the other confines the limiting curve to the plant\n itself” (1097H [MB/28/584], emphasis added). Lord Wilberforce goes on to emphasise\n that “[t]he words ‘expenditure on the provision of’ ... focus attention on the plant and\n the expenditure on the plant - not limiting it necessarily to the bare purchase price, but\n including such items as transport and installation, in any event not extending to\n expenditure more remote in purpose.” (1098D-E [MB/28/585], emphasis added).\n Lord Wilberforce, then, places the focus squarely on the plant itself and its actual\n provision. He also expressly endorses the relevance of remoteness.\n\n\n35. Lord Hailsham (at 1099D-F [MB/28/586]) acknowledges that “on the provision of”\n might take a wider or narrower meaning. In the context of s 41(1)(a) Finance Act 1971\n [MB/22/477] (the predecessor provision of s 11(4)(a) at issue) he favours “the narrower\n of the two meaning” as contended for by the Crown: namely, that the essence of\n expenditure “on the provision of” plant is “its price” (at 1099D-E [MB/28/586]).\n\n\n36. Lord Russell distinguishes between “attaining [a] financial position”, and the provision\n of the plant itself (1105H-1106A [MB/28/592-593]). He concludes (1106G-H\n [MB/28/593], emphasis added): “In my view the question to be asked is, what is the\n effect of particular capital expenditure? Is it the provision of finance to the taxpayer,\n or is it the provision of plant to the taxpayer? In my opinion the effect of the expenditure\n was the provision of finance and not the provision of plant. I would add that I do not\n seek to confine qualifying capital expenditure to the price paid to the supplier of the\n plant. I should have thought, for example, that if the cost of transport from the supplier\n to the place of user is directly borne by the taxpayer it would be expenditure on the\n provision of plant for the purposes of the taxpayer's trade. And there may well be other\n examples of expenditure, additional to the price paid to the supplier, which would\n qualify on similar grounds. But such matters are not for decision in this appeal”.\n\n\n37. Lord Wilberforce (at 1098B-C [MB/28/585]), Lord Hailsham (at 1100F-G\n [MB/28/587]) and Lord Russell (at 1105H [MB/28/592]) also favour the Crown’s\n interpretation because as a matter of policy it does not produce arbitrary distinctions\n between taxpayers in objectively similar situations. This is a general principle of\n statutory interpretation. It is not breached by Claimant’s approach as explained below.\n\n 11\n\n\n 67\n On the other hand, it is breached by the Court of Appeal’s approach (see paragraphs\n [81] to [83] below).\n\n\nOther case law\n\n\n38. Lewison LJ in Cheshire Cavity Storage 1 Ltd and Anor v Claimant [2022] EWCA Civ\n 305; [2022] STC 622 (“Cheshire”) says this of Barclay Curle and Ben-Odeco (at [44]-\n [45] [MB/29/605], emphasis added): “So yet again the expenditure on excavation\n qualifies only because it is part of a whole which includes the machinery necessary for\n the dry dock operation...” (and see [40] [MB/29/604]).\n\n\n39. Sir Launcelot Henderson in Urenco Chemplants Limited & Anor v The Claimant [2022] EWCA Civ 1587; [2023] STC 54\n (“Urenco”) encapsulates the narrow scope of s 11(4)(a) when he refers to installation\n costs as “parasitical expenditure which qualifies for allowances because it is incurred\n in installing an item of plant or otherwise to enable it to function” (at [97]\n [MB/39/929]).\n\n\n(d) The well-established distinction between plant and setting\n\n\n40. The narrow scope of s 11(4)(a) is further confirmed by the case law on the meaning of\n “plant” (and its distinction from setting and other things). In Yarmouth v France (1887)\n 19 QBD 647 at 658 Lord Lindley says of “plant”:\n\n\n “...in its ordinary sense, it includes whatever apparatus is used by a businessman\n in carrying on his business, not his stock-in-trade..., but all goods and chattels,\n fixed or moveable, live or dead, which he keeps for permanent employment in his\n business”.\n\n\n41. As Hoffmann J points out in Wimpy International Ltd v Warland (Inspector of Taxes)\n [1988] STC 149 (“Wimpy”) at first instance, there are “various discriminations which\n are stated or implied in this description. First, it excludes anything which is not used for\n carrying on the business. Secondly, it excludes stock-in-trade both expressly and\n\n 12\n\n\n 68\n because, although used for the purposes of the business, its use lacks permanence.\n Thirdly, it excludes things which are not \"apparatus ... goods and chattels, fixed or\n moveable, live or dead\" or not employed in the business. This excludes the premises or\n place in or upon which the business is conducted” (at 170f-g [MB/40/969]).\n\n\n42. Accordingly, “plant” needs to be distinguished from numerous other things, including\n the “premises or place in or upon which the business is conducted” (referred to in this\n Written Case as “setting”).\n\n\n43. As regards the setting, Lord Reid says in Barclay Curle that “land in its natural state is\n not “plant” although its configuration may be such that its use is an essential element\n in a trading operation. The soil on a farm is not plant although cultivation has greatly\n improved it” (at 679G [MB/25/525]).\n\n\n44. In the Court of Appeal in Wimpy ([1989] STC 273), Fox LJ says that “[t]he fact that\n the building in which a business is carried on is, by its construction particularly well-\n suited to the business, or indeed specially built for that business, does not make it plant.\n Its suitability is simply the reason why the business is carried on there” (at 280a-b\n [MB/41/984]).\n\n\n45. This is echoed in Cheshire, a case in which the gas distribution company had claimed\n the capital cost of creating cavities in salt-bearing rock to store gas at high pressure on\n the basis that the cavities were used by it as “plant”. Giving the judgment of the Court,\n Lewison LJ says at [79] [MB/29/613] that “[j]ust as buildings do not cease to be\n buildings and become plant just because they are specially designed for a particular\n trade, so also these cavities do not lose their character [as the place in which the\n business is carried on; the setting] simply because they have been formed in order to\n receive gas consisting of the taxpayers’ stock in trade”.\n\n\n46. The present case concerns advice which to a very large extent is in respect of the choice\n of setting. The reconnaissance studies, metocean studies, mammal studies, and the\n archaeology, wrecks, and cultural heritage sites and other surveys forming part of the\n EIA are particularly good examples (see Appendix at [17] to [31] [KB/2/89-96]). In\n\n 13\n\n\n 69\n Claimant’s submission, if expenditure “on” the provision of the setting (its acquisition or\n construction or improvement) is “on” the wrong thing, then expenditure “on” the\n provision of ‘advice’ about whether a particular setting or location might be suitable as\n the setting for the intended plant or business (and if so, whether it is preferable to some\n other location because not needing improvement and so on) is even more so “on” the\n wrong thing. The advisory role of such expenditure in analysing the ‘setting’ is far too\n remote (and too important in its own right) to be treated as merely subsumed within the\n provision of the plant.\n\n\n47. In addition, there are studies which focus more broadly on the other users of the setting\n – human and non-human – and the potential for causing harm to these other users, and\n the potential to mitigate that harm (e.g., the EIA studies [FTT 23-25] [KB/7/250-251]).\n Most businesses share a wider natural and social environment with other stakeholders\n in that environment. The business may (quite properly) be required to take into account\n the interests of that environment, and the wellbeing of the other stakeholders, by its own\n corporate policies or by law. Studies and advice on accommodating or protecting these\n other interests are not “on the provision” of plant (or machinery). Their role in relation\n to the plant and its provision is remote and advisory. These studies may inform the\n windfarm operator and offer choices and options to the windfarm operator about\n whether to have plant, and if so what and where, but they do not “effect” the “provision”\n itself.\n\n\n48. Finally, as is apparent, the distinction between plant and setting is not the only\n discrimination built into Lord Lindley’s formulation of “plant”. Similar points can be\n made in relation to the Studies so far as they are “on” or may offer choices relating to\n the provision of a viable and profitable business (see e.g., [FTT 46-47, FTT 67]\n [KB/7/254, 258]) or obtaining regulatory consents (see e.g., [FTT 157, FTT 164]\n [KB/7/279, 281]).\n\n\n 14\n\n\n 70\n(e) Wider statutory setting\n\n\n49. A consequence of the distinction between plant and setting developed in the case law\n (and the related statutory rules (now found in s 21 CAA 2001 [MB/16/418])) is that a\n trader who wishes to install new plant or machinery in an existing building will not\n qualify for plant and machinery capital allowances for the cost of altering existing\n premises to facilitate the provision of the plant, placing them at a disadvantage when\n compared to a trader seeking to install plant in a special purpose building. As JD\n Wetherspoon PLC v Claimant [2012] UKUT 42 (TCC); [2012] STC 1450 (Briggs J as he\n then was, and Judge Nowlan) (“JDW”) explains, Parliament has chosen to address this\n disparity by means of a deeming rule now found in section 25 CAA 20017 (JDW at\n [79]-[80] [MB/32/671-672]). The rule is intended to “level the playing field between\n new and existing buildings” (JDW at [54]-[56] [MB/32/666-667]).\n\n\n50. Section 25 [MB/16/422] provides that “[i]f a person carrying on a qualifying activity\n incurs capital expenditure on alterations to an existing building incidental to the\n installation of plant or machinery for the purposes of the qualifying activity”, s 11 will\n apply as if the expenditure were expenditure “on the provision of” the plant or\n machinery, and “as if the works representing the expenditure formed part of that plant\n or machinery” (JDW at [39] [MB/32/662]).\n\n\n51. The operation of s 25 (and the scope of s 11) as explained in JDW, and the practical\n examples provided in that case of expenditure which would fall outside s 11(4)(a) (and\n indeed outside s 25), show that the Court of Appeal’s broad and expansive interpretation\n of s 11(4)(a) undercuts the wider regime. In particular:\n\n\n (a) The UT in JDW reject the taxpayer’s argument that the (now) s 25 CAA 2001\n deeming should apply to “any alterations designed to facilitate the better use of\n installed plant” (JDW at [55] [MB/32/667]), as such a broad interpretation\n would go beyond its statutory purpose. The practical implication is that the cost\n of physically constructing kitchen walls in a restaurant so that the new cooker\n\n7\n Previously s 66 Capital Allowances Act 1990 (“CAA 1990”).\n\n 15\n\n\n 71\n may serve its proper purpose, is not within s 11(4)(a) and not within the deeming\n rule (JDW at [63] [MB/32/668]). The cost of a splashback for a new kitchen\n sink is also outside the general rule, and only eligible under the deeming rule if\n not part of wider main renovations (JDW at [70] [MB/32/670]). Yet, on the\n Court of Appeal’s test, advice on whether to create an exclusion zone (an area\n where no plant is to be installed at all because the setting is unsuitable) is\n allowable as “on the provision of” plant installed elsewhere. [CoA 74]\n [KB/5/176] also hypothesises that the cost of a survey to identify unexploded\n bombs near the intended installation site of a turbine so that they can be\n detonated prior to installation would be allowable (despite the work done as a\n result of that advice being a permanent improvement to the setting).\n\n\n(b) More generally, in construing the legislation, JDW respects the distinction\n between plant and setting. See the example in JDW at [65]-[66] cited at [CoA\n 41] [KB/5/164], which addresses whether moving a staircase to allow access to\n the newly installed plant might fall within the general rule. The UT in JDW is\n careful to note that the cost “might be denied” under s 24 of the CAA 1990 (the\n predecessor of s 11 CAA 2001) because it is on the setting. The Court of Appeal\n disregards this vital caveat both in reading JDW, and in crafting its own test at\n [CoA 76] [KB/5/176].\n\n\n(c) The UT in JDW also rejects the taxpayer’s argument that the “fairly limited”\n scope which it gives to the deeming might mean that the deeming is otiose. It is\n implicit in its reasoning (at [57] and [66] [MB/32/667, 669]) that the general\n rule would not cover alterations to the setting that are consequential on having\n the intended provision of the plant (e.g., the need to modify an existing staircase\n to allow access to the plant). Yet, such expenditure would be allowable if “on\n the provision of” meant “in connection with” or “relevant to” and so on.\n\n\n(d) Notably, the UT also describes installation expenditure as falling within the\n general rule as “pure installation expenditure” (at [57] [MB/32/667]). This\n echoes the judgment’s earlier language of “basic installation expenditure” (at\n [40] [MB/32/662]) and “mere installation” (at [48] [MB/32/664], itself a quote\n\n 16\n\n\n 72\n from Lord Reid in Barclay Curle). The clear inference is that the general rule\n (now in s 11(4)(a)) is a narrow rule.\n\n\n(f) Conclusion on Claimant’s construction\n\n\n52. The statutory question is whether expenditure is “on the provision of plant or\n machinery”. In determining that question, as a result of the principles of construction\n explained above one should consider both (i) whether the expenditure is in fact “on”\n something other than the provision of the plant (which can be assessed by considering\n the effect of the expenditure; what is got in exchange), and (ii) whether it is in any event,\n having regard to its role (if any) in the provision of the particular item of plant, too\n remote from the “plant” around which the “limiting curve” of the statutory language\n (read purposively and in context) is drawn.\n\n\n53. If and insofar as the subject of the expenditure is the provision of surveys and studies\n which play an advisory role in relation to the process of design and development of the\n business, the expenditure will be “on” the wrong thing. It will be “on” that advisory\n process and not “on the provision of” the plant. Even more so when the subject of the\n advice is the choice of setting or the best means to optimise profits or protect other users\n of the setting, or similar. It is not enough that the studies and surveys may put the\n taxpayer in a position to have a provision of plant (see [UT 141] [KB/6/221]). To be\n qualifying, the expenditure must make or effect the provision.\n\n\n54. Further, a given study or survey which predates regulatory consents, and which helps\n determine whether you can have a windfarm at all, should be too remote on any view.\n At paragraph [2] of the Appendix [KB/2/83], Claimant have sought to distil a number of\n additional relevant indicia that a survey or study is on the wrong thing or too remote, as\n illustrated by the detailed facts found in this case.\n\n\n55. If the end point of an advisory process is a decision to have a particular kind of plant\n made then the legislation does not exclude the possibility that the cost of creating the\n actual design drawing for that final plant made real by fabrication may be eligible for\n\n\n 17\n\n\n 73\n relief. Albeit, whether this is so in a particular case, and what precisely is involved in\n creating the final drawing, will be a question of fact for the fact-finding tribunal.8\n\n\n56. As the Court will appreciate, this distinction between the advisory process and the final\n design drawing is broadly consistent in outcome with that recognised by the UT at [UT\n 162] and [UT 164] [KB/6/225], as illustrated by the conclusions at [UT 182]\n [KB/6/228]. The Court of Appeal at [CoA 72] [KB/5/175] also acknowledges (but\n erroneously does not adopt) a similar distinction, where it recognises the difference\n between (i) the “costs of drawings of the generation assets or their components”, and\n (ii) the costs in issue in this case, which merely “informed the design of the generation\n assets and the elements of them”.\n\n\n57. Finally, if and insofar as general overheads are incurred (“preliminaries”9) the ordinary\n rules would also apply without discrimination. These rules are described by the FTT at\n ([FTT 205-211] [KB/7/302]). Their treatment is no longer in issue in this appeal (see\n [SOAFI 159-160] [KB/1/39]).\n\n\n58. The full details of how Claimant’s construction of the “on the provision of” test in s\n 11(4)(a) applies to the Studies are set out in the Appendix. The errors in the Court of\n Appeal’s interpretation of “on the provision” – in light of the principles of construction\n explained above – are set out in the following section.\n\n\nERRORS IN THE COURT OF APPEAL’S INTERPRETATION\n\n\n59. The Court of Appeal holds as follows at [CoA 76] [KB/5/176]: “[Without attempting\n to] provide an exhaustive account of when capital allowances are available, it seems...\n that they can be claimed where (a) the taxpayer can demonstrate that, looking at\n matters objectively and with the benefit of hindsight, expenditure informed the design\n\n8\n For the avoidance of doubt, on Claimant’s interpretation there is no disparity between the\nprovision of an off-the-shelf item of plant and a bespoke item. In either case the cost of advice\nabout what to buy or what to have made is not qualifying (and see Lord Russell in Ben-Odeco\nat 1106C [MB/28/593]).\n9\n A term of art used to reference general overheads like scaffolding costs and insurance costs,\nand ordinary project management fees.\n\n 18\n\n\n 74\n of plant or machinery or how it was to be installed, (b) the expenditure related to plant\n or machinery which was in fact acquired or constructed and (c) the expenditure did not\n arise from characteristics or circumstances particular to the specific taxpayer.”\n\n\n60. Condition (b) is uncontroversial insofar as it reflects s 11(4)(b) as applied in Inmarsat\n but Condition (a) is highly problematic for the reasons expanded on below. The\n problematic nature of Condition (a) is compounded by the fact that Condition (a) itself\n fails Condition (c) (see paragraph [83] below).\n\n\n(a) The Court of Appeal’s interpretation is contrary to ordinary principles of\n statutory construction\n\n\n61. Condition (a) reflects the Companies’ contention in the courts below that the correct\n approach is to start with the plant actually owned and then work backwards applying\n hindsight to identify everything that fed into the design, fabrication, or installation of\n that ultimate provision. In Claimant’s submission, this approach is profoundly flawed\n because it creates a special gloss on the statutory words for predevelopment\n expenditure, contrary to orthodox principles of statutory construction and the case law.\n\n\n62. Applying [CoA 76] [KB/5/176], s 11(4)(a) effectively reads as follows (added language\n emphasised):\n\n\n \"The general rule is that expenditure is qualifying expenditure if—\n (a) it is capital expenditure on the provision of plant or machinery [or on studies\n or assessments which can be seen with the benefit of hindsight to have informed\n the design of the plant or machinery in fact provided for use or how it might be\n installed] wholly or partly for the purposes of the qualifying activity carried on by\n the person incurring the expenditure, and\n (b) the person incurring the expenditure owns the plant or machinery as a result of\n incurring it.\"\n\n\n63. This is legislation not construction. The concept of “informs” (or ‘feeds into’) is\n imported into s 11(4), which then also requires the application of hindsight. On the other\n\n 19\n\n\n 75\n hand, the concept of remoteness – which is recognised in the case law (see paragraphs\n [20], [28] and [34] above) – is erased. [CoA 62] [KB/5/173] misunderstands this point.\n On the Court of Appeal’s new test, remoteness is irrelevant: nothing done by a business\n which informs the design or installation of plant will be too remote to qualify. This is\n further evidence that the Court has changed the nature of the test and thus rewritten s\n 11(4) for the kind of predevelopment expenditure in issue in this case.\n\n\n64. The result is that Court of Appeal’s test is extremely wide. Its breadth (and uncertainty)\n is demonstrated by the Court of Appeal’s use of extra-statutory words such as “relate”\n and “inform”10 [CoA 78, 80, 81, 87, 93] [KB/5/176-180]. These are weak and loose\n connectors made even looser by the Court of Appeal’s wide use of “design” For\n example, where it holds that the Companies are “entitled to claim allowances in respect\n of studies which, while they may not be themselves have contained designs, provided\n information which informed the design of the generation assets and the elements of\n them” [CoA 72] [KB/5/175] (emphasis added; see also [CoA 76] and [CoA 78]\n [KB/5/176]). More expansively still, the Court of Appeal held that even where “the\n studies did not in the event change the design of the generation assets” this “does not\n mean that they did not inform their design” [CoA 80] [KB/5/177].11\n\n\n65. As for the word “design”, one can see from [CoA 72] [KB/5/175] and from the fact that\n the Court of Appeal allows all the expenditure in issue, that it is used in its widest\n possible sense and encompasses questions regarding whether to have any plant at all,\n and, if so, where one might put it, and why. At no point does the Court of Appeal\n recognise (as the UT and FTT did at [FTT 121] [KB/7/271] and [UT 161-162]\n [KB/6/225] respectively) that “design” is a “weasel word” that should not be used\n without at least distinguishing “between the process of design and the design as an end\n product made real in substance” ([UT 162], emphasis added).\n\n\n66. [CoA 76] [KB/5/176] also refers to expenditure on advice that “informs... how it was\n to be installed” but it is again clear from the Court of Appeal’s own findings (e.g., at\n\n10\n The FTT makes a related error of law in using the phrase “directly related to” as a synonym\nfor informs or might inform (see paragraph [3] of the Appendix below [KB/2/85]).\n11\n For examples of such studies, see Appendix paragraph [25] [KB/2/94].\n\n 20\n\n\n 76\n [CoA 79-81, 83, 86-87] [KB/5/177-179] that these words are intended to cover advice\n that is at least one stage removed from any actual installation of any actual plant (and\n in some cases many stages removed), such that the “it” might not even be known when\n the advice is obtained. For example, advice which “may be simply endorsing one of the\n development options” under consideration with a view to mitigating harm to benthos,\n as part of the EIA studies and surveys and prior to regulatory consents for the windfarm\n even being obtained [FTT 169] [KB/7/283].12\n\n\n67. There is nothing comparable in depth and breadth for any other expenditure that other\n taxpayers might wish to claim under the s 11(4) general rule. There is no relief for\n ordinary finance costs even where the borrowing is an absolute prerequisite to “the\n provision of” plant (Ben-Odeco). There is no relief for a farmer who seeks advice about\n which tractor or cultivator would best suit his land or his budget, or for a restauranteur\n who seeks advice on what kind of furniture to buy (see [CoA 73] [KB/5/175]). By\n contrast, if a pre-consent survey of one part of the polygon reveals a rare benthic species\n and that survey is ultimately seen to have led to a change in the location of the intended\n plant (itself causing a change in the configuration and layout of the intended plant), on\n the Court of Appeal’s test the cost of that survey would be allowable as “on the\n provision of” the plant eventually provided. That is a radical and illegitimate expansion\n of the test actually stated in the words of the legislation and recognised in the existing\n case law.\n\n\n(b) The Court of Appeal’s interpretation is unsupported by case law\n\n\n68. The Court of Appeal addresses Barclay Curle and Ben-Odeco at [CoA 58-63]\n [KB/5/172-173]. [CoA 63] [KB/5/173] shows that the Court of Appeal misunderstood\n Claimant’s submissions on Barclay Curle (as reiterated at paragraphs [25] to [32] above).\n The excavation costs were allowable because the statutory words require such a close\n nexus. Subsequent cases such as Ben-Odeco, Cheshire, and Urenco confirm this narrow\n focus. Contrary to [CoA 71] [KB/5/175], Lord Reid’s observation that the excavation\n\n\n12\n See Appendix paragraphs [17] to [26] for how Claimant say the test applies to these Studies\n[KB/2/89-95].\n\n 21\n\n\n 77\n costs were eligible for relief because without them the dry dock could not even be\n “made” supports Claimant’s case (at 680D). The analogous cost in the present case would\n be the cost of creating the final design drawing ‘made real’ by fabrication with which\n the plant provided is “made” (which Claimant accept may be allowable). The\n predevelopment costs in issue in this case, which go to matters such as whether to have\n a provision at all, are not analogous and nothing in Barclay Curle would “tend to\n suggest” ([CoA 71] [KB/5/175]) that they were.\n\n\n69. Contrary to [CoA 63] [KB/5/173] (and [CoA 70] [KB/5/174]), Ben-Odeco cannot be\n distinguished into irrelevance in the current case. While some of the reasoning may\n have been specific to the facts before the House of Lords, their conclusion is of general\n application [UT 135] [KB/6/220]. Lord Russell observes that had Parliament intended\n capital allowance relief to be available for finance costs then “quite different language\n would have been selected in order to embrace expenditure so commonly involved as a\n preliminary to the provision of plant of magnitude” (at 1105H-1106A [MB/28/592-\n 593]). The same point applies here, and, from this, Lord Russell postulates a more\n general principle (at 1106G [MB/28/593]): “In my view the question to be asked is,\n what is the effect of particular capital expenditure?”.\n\n\n70. [CoA 62] [KB/5/173] misunderstands Lord Russell’s reasoning. Whether the\n expenditure is “on” plant or “on” something else is fundamental to s 11(4)(a), not least\n because it is implicit in Lord Lindley’s definition of “plant” (see paragraphs [40] and\n [41] above). Also, remoteness is inherent in the test (see paragraph [20] above). In\n erasing both of these elements of s 11(4)(a) the Court of Appeal falls into error.\n\n\n71. At [CoA 71] [KB/5/175] the Court also states that there are “indications” in Samarkand\n Film Partnership No 3 v Claimant [2011] UKFTT 610 (TC); [2012] SFTD 1 and [2017]\n EWCA Civ 77; [2017] STC 926 [MB/36/788] and in JDW that s 11(4)(a) CAA 2001\n may cover more than transport or installation or the purchase price. That is not disputed\n in principle. However, it certainly does not follow that the predevelopment costs in this\n case are eligible as “on the provision of” plant.\n\n\n 22\n\n\n 78\n72. Further, Samarkand considers different legislation in the different context of a failed\n (and highly artificial) tax avoidance scheme based on the purported creation and\n exploitation of film rights. It is described at [CoA 38-40] [KB/5/163], [CoA 66]\n [KB/5/174]. There is no real read-across. As explained above at paragraph [51] above,\n JDW supports Claimant’s interpretation and not that of the Court of Appeal at [CoA 41-\n 42] [KB/5/164], [CoA 66-67] [KB/5/174].\n\n\n73. [CoA 68] [KB/5/174] references Claimant’s treatment of “preliminaries”. These costs\n are peripheral in purpose. They are correctly dealt with at [FTT 205-211] [KB/7/302-\n 303]. They do not take the matter any further.\n\n\n74. [CoA 49-50] [KB/5/168-169], [CoA 69] [KB/5/174] refer to Claimant’s published\n Manuals (CA20070 [MB/11/395], CA93110 [MB/12/399]). The Manuals are not aids\n to statutory interpretation. In any event, they are consistent with Claimant’s case. If and\n insofar as professional fees are incurred on the actual provision, they would be\n allowable in principle. Suppose the final drawing made real by fabrication was\n produced by a final round of computer modelling conducted by expert analysts. Those\n professional fees would appear to be an example of professional fees being eligible for\n relief. However, nothing in the Manuals suggests that the costs of every iteration of\n every Study conducted in the present case would qualify for relief as “on the provision\n of plant”. Furthermore, CA93110 is on a different capital allowance (namely, structures\n and buildings allowance) with a different policy objective.\n\n\n(c) The Court of Appeal’s interpretation undermines the well-established distinction\n between plant and setting\n\n\n75. The Court of Appeal’s new test is also incompatible with the well-established\n distinction between plant and setting. Consider [CoA 72] [KB/5/175], where the Court\n of Appeal says: “Supposing,... that a windfarm operator proposing to construct an\n offshore windfarm in an area known to contain unexploded bombs carried out a survey\n for the sole purpose of finding the bombs so that the turbines could be located\n elsewhere,... the costs of the survey could be said to have been incurred “on the\n provision of” the generation assets.”\n\n 23\n\n\n 79\n76. Indeed, the Court of Appeal goes so far as to hold that “the costs of the survey would\n qualify even if, in the event, there proved to be no bomb near the intended location of\n any turbine with the result that the design of the generation asset required no\n alteration” [CoA 72] [KB/5/175]. See also [CoA 83] [KB/5/178] (Archaeology,\n wrecks and cultural sites), [CoA 85-86] [KB/5/178] (Telecoms, transport and tourism),\n and [CoA 90-92] [KB/5/179-180] (geophysical and geotechnical studies). (See\n Appendix paragraphs [20] to [23] and [32] to [37] for how Claimant say the test applies\n to these Studies [KB/2/90-91, 96-97].)\n\n\n77. All of these examples constitute advice on choosing and improving the setting and so\n ought not to be “qualifying expenditure” (see paragraphs [46] to [48] above). It is\n genuine business expenditure, but its role is to provide options and ultimately enable\n the choice of a suitable setting for the business. It is not itself “on the provision of” the\n plant. Yet the Court of Appeal’s test says otherwise for this predevelopment\n expenditure, thereby erasing the distinction between plant and setting.\n\n\n(d) The Court of Appeal’s interpretation contradicts its own internal logic\n\n\n78. [CoA 73] [KB/5/175] appears to support expenditure incurred by a restauranteur as\n being allowable once the restauranteur has made key decisions reasonably precisely\n about what they want and then commissioning it to be designed and/or made (broadly\n consistent with the UT’s approach at [UT 165] [KB/6/226]). If one applies this analogy\n to the facts of this case, it should mean (as indeed Claimant submitted) that none of the\n expenditure should be allowed; in particular, the early metocean studies and\n reconnaissance geotechnical and geophysical campaigns, and the studies required for\n the EIAs, should not be allowed. An analogous problem arises with installation, given\n the Court of Appeal’s pairing of both expenditure that informs design and expenditure\n that informs installation at [CoA 76] [KB/5/176]. Yet the Court of Appeal’s\n conclusions go beyond the line that appears to be drawn in their own analogy.\n\n\n 24\n\n\n 80\n(e) Policy objections to the Court of Appeal’s interpretation\n\n\n79. The Court of Appeal rejects Claimant’s submission that “on the provision of” should be\n interpreted “strictly and narrowly” [CoA 70] [KB/5/174]. The reason it gives for this\n was [CoA 70]:\n\n\n “If, as a matter of ordinary language, a taxpayer incurs on expenditure “on the\n provision of” plant from which, potentially, it will earn taxable profits, it is not\n obvious that Parliament should not have wished all such expenditure to be eligible\n for capital allowances”.\n\n\n80. With respect, this strays into policy making. Further, the net result of the Court of\n Appeal’s test (and of the Companies’ case below) is (i) considerable uncertainty and\n (ii) arbitrary distinctions. In a rational tax system, a taxpayer should be able to ascertain\n with reasonable confidence prior to incurring expenditure whether that expenditure is\n in principle of the right nature. That is the position on Claimant’s approach but not on the\n Court of Appeal’s novel ‘tracing back with hindsight’ approach.\n\n\n81. Further, if [CoA 71] [KB/5/175] is really making a distinction between buying off-the-\n shelf and buying bespoke, its test creates an arbitrary distinction between taxpayers in\n an objectively comparable position.\n\n\n82. Suppose a farmer needs advice about “whether” to buy a tractor or cultivator, and if so\n “what kind” to buy, having regard to his budget and his land. [CoA 73] [KB/5/175]\n entails (rightly) that the cost of obtaining that advice is not “on the provision of” the\n tractor or cultivator ultimately provided. However, the test at [CoA 76] [KB/5/176]\n would allow relief for the cost of studies which advise that a three-bladed turbine\n (available off-the-shelf) is preferable aesthetically to a four-bladed turbine is allowable\n (see [CoA 78] [KB/5/176-177]). The basis for this disparity in treatment would seem\n to be that the three-bladed turbine is a component in a larger aggregate item such that\n the advice can be said to have “informed” the “design” of the larger item. That is an\n unfair line to draw given that the advice plays the same role in relation to the actual\n\n\n 25\n\n\n 81\n provision of the plant (it puts one in a position to make a choice but is not part of the\n provision itself).\n\n\n83. Put another way, the Court of Appeal’s application of ‘Condition (a)’ in [CoA 76]\n [KB/5/176] breaches its own Condition (c). Taxpayers in objectively comparable\n situations do not get similar treatment.\n\n\nTHE COMPANIES’ CASE: PRELIMINARY COMMENTS\n\n\n84. The Companies’ case is flawed for all the reasons that the Court of Appeal’s judgment\n is flawed. In the courts below the Companies also relied on McVeigh v Arthur\n Sanderson & Sons [1969] 1 WLR 1143 [CoA 46-48] [KB/5/167]. The Court of Appeal\n [CoA 64] [KB/5/173], like the FTT [FTT 128] [KB/7/273] and UT [UT 170-171]\n [KB/6/226-227], rightly distinguished McVeigh and found it of limited assistance.\n\n\nCONCLUSION\n\n\n85. For all the above reasons, Claimant respectfully invites this Court to allow its appeal. For\n the reasons set out in the Appendix hereto, Claimant also invite the Court to find that all\n of the items listed in the SOAFI at [SOAFI 161] are not “on the provision of plant or\n machinery” for the purposes of s 11(4)(a). If and insofar this Court considers that as\n regards any individual item on the list it is not in a position to reach a view, then Claimant\n would invite the Court to remit that question to the FTT.\n\n\n ELIZABETH WILSON KC\n ANGHARAD PARRY KC\n JOSHUA STEVENS\n\n\n 9 December 2025\n\n\n 26\n\n\n 82\n APPENDIX TO Claimant’S CASE\n\n\nNone of the expenditure is allowable\n\n\n1. Applying the correct legal test to the facts found, none of the expenditure is allowable,\n as the UT rightly held [UT 181-182] [KB/6/228]. The Studies play an advisory role in\n relation to the process of design and development of the business [UT 162-166]\n [KB/6/225-226]. In this role, they inform or feed into decisions on or about matters\n arising in relation to the development of the windfarm operation, but they do not “effect”\n the provision of any actual plant.\n\n\nIndicia applicable to the present case\n\n\n2. Having regard to the statutory test, in considering whether predevelopment expenditure\n of the kind incurred in the present case can qualify as “on the provision of” plant or\n machinery, the following indicia can be stated:\n\n\n (1) Studies which predate regulatory consents and which are undertaken to put the\n taxpayer in a position to gain the necessary legal consents for the installation of\n the plant are not “on the provision of” plant. The role of these studies is to help\n determine “whether you can at all...”. No plant might ever be provided at this\n juncture. The plant intended (the concept) at that juncture might be different\n from the plant provided (the reality).\n\n\n (2) The provision of advice on whether one can create an economically viable\n business is not “on the provision of” plant. The role of such advice is to enable\n the taxpayer to assess the “viability of an idea or proposition” and answer the\n question “do we want to do this?”, i.e., can you install enough turbines in enough\n appropriate locations within a suitable polygon and with the necessary other\n infrastructure (substations etc) such that the business might turn a profit?\n\n\n (3) Advice on the possible “impact” of having plant provided on the surroundings\n or flora or fauna or on the humans using the area is also not “on the provision\n\n 27\n\n\n 83\n of” plant. These studies look at what happens to these other things if you do\n provide plant. The role of the advice is to investigate the likely (future)\n “consequences” on other pre-existing users of the setting if you ultimately have\n “the provision”. They also provide ideas about “what you might do” to limit\n those consequences. This then feeds into advice such as where one might locate\n the business and how and when one might install the plant so as to minimise\n those potential impacts. Information as to the consequences of having a\n provision enables the taxpayer to choose the “kind", "evidence": [] }, "partyB": { "name": "Respondent", "type": "agent", "position": "ANONYMIZED RESPONDENT BRIEF\n\nINTRODUCTION\n\n1. The respondent companies (Gunfleet Sands Limited (“Gunfleet Sands”), Gunfleet Sands\n II Limited (“Gunfleet Sands II”), Walney (UK) Offshore Windfarms Limited (“Walney”)\n and Respondent West of Duddon Sands (UK) Limited (“WoDS”) (together, the “Companies”))\n are each engaged in the trade of the generation and sale of electricity from windfarms they\n own and operate in various locations off the UK coast.\n\n2. Prior to determining the size, shape, location and layout of its windfarm and the design,\n size, height and shape of the turbines and foundations and the location and pattern of the\n cables and location of the electricity substation, each of the Companies incurred\n\n\n1\n Respondent West of Duddon Sands (UK) Limited has changed its name to Respondent Schroders\nGreencoat WODS Holdco Limited, with effect from 7 May 2025. For ease of reference, it is\nreferred to by its previous name.\n\n\n 100\n expenditure on various environmental, metocean, geophysical and geotechnical studies\n and surveys. The information gleaned from those studies and surveys then informed and\n influenced the design and/or the installation and construction of the windfarm and its\n component parts.\n\n3. The question now remaining in these appeals is whether the expenditure on those studies\n and surveys qualifies for “plant and machinery” capital allowances pursuant to ss 1 and\n 11 of the Capital Allowances Act 2001 (“CAA 2001”).\n\n4. To answer that question, the Companies first address the legislation and the relevant case\n law which, they submit, helps to illuminate its scope. They then set out their positive case\n before turning to Claimant’s arguments. The different heads of expenditure in issue are\n addressed in the Appendix to this Written Case.\n\nSTATUTORY BACKGROUND\n\n5. Section 1(2)(a) CAA 2001 ([MB/15/406]) makes provision for allowances for capital\n expenditure in respect of, inter alia, plant and machinery. Section 11 CAA 2001\n ([MB/16/411]) sets out the general conditions as to the availability of plant and machinery\n allowances. That section provides, so far as is material:\n\n (1) Allowances are available under this Part if a person carries on a qualifying activity\n and incurs qualifying expenditure.\n\n ...\n\n (4) The general rule is that expenditure is qualifying expenditure if—\n\n (a) it is capital expenditure on the provision of plant or machinery wholly or partly for\n the purposes of the qualifying activity carried on by the person incurring the\n expenditure, and\n\n (b) the person incurring the expenditure owns the plant or machinery as a result of\n incurring it.\n\n6. As regards the application of that section to the expenditure in question in this case, it is\n common ground that:\n\n a. The expenditure in question is “capital expenditure”.\n\n\n 101\n b. The relevant “plant” is the generation assets of the windfarm, that is to say the wind\n turbines and the array cabling that connects them (see [SoFI 27]([KB/1/11]), and [FTT\n 5]([KB/7/246])), as a single, unitary item of plant. 2\n\n c. The Companies who incurred the expenditure each carried on a “qualifying activity”,\n and the plant was provided wholly for the purposes of that activity.\n\n7. The question that now divides the parties is whether the expenditure in question was\n expenditure “on the provision of” the plant.\n\n8. Before turning to that issue, it is worth noting two preliminary points about s.11(4). First,\n unlike some other statutory provisions governing deductions for expenditure, it does not\n contain a “wholly and exclusively” requirement. 3 Provided that the item of expenditure\n can properly be said to be “on the provision” of plant or machinery, it does not matter that\n that item also has some other effect. That is different from a situation where an identifiable\n part of some expenditure is “on the provision of” plant and part is not. The former qualifies\n for allowances and the latter does not. That assessment is largely a question of fact.\n\n9. Secondly, there is no “necessity” requirement within the provision. 4 The statute does not\n ask whether it was necessary to incur the expenditure in question, or to obtain the plant. It\n simply asks whether the expenditure was “on the provision of” the item.\n\nTHE EXISTING CASE LAW\n\n“Plant”\n\n10. Although there is no longer any dispute as to what counts as the relevant “plant” in these\n proceedings, it is useful to start with identifying what, in principle, amounts to “plant” for\n\n2\n Before the FTT and the UT there had been an issue (labelled “Issue 1”) as to whether the\nparticular offshore windfarms in this case were to be viewed as a single item of “plant” or as\ncomprising multiple items of “plant” for the purposes of s.11 CAA 2001. The FTT concluded\nthat the “generation assets”, that is to say the wind turbines and the array cabling that connects\nthem (see [FTT 5]), together, comprised a single item of “plant” for these purposes. That\ndecision was upheld by the UT, whose decision was not challenged by Claimant.\n3\n Contrast, for example, s.54(1)(a) of the Corporation Tax Act 2009 ([MB/20/460]).\n4\n Contrast s.336(1) of the Income Tax (Earnings and Pensions) Act 2003 ([MB/21/462]), which\ngoverns deductions for expenses against employment income and provides“(1) The general\nrule is that a deduction from earnings is allowed for an amount if - (a) the employee is obliged\nto incur and pay it as holder of the employment, and (b) the amount is incurred wholly,\nexclusively and necessarily in the performance of the duties of the employment” (underlining\nadded).\n\n\n 102\n capital allowances purposes, if only to note that it can encompass an extremely broad array\n of items.\n\n11. There is no statutory definition of the term. The usual starting point is the description set\n out by Lindley LJ in the case of Yarmouth v France (1887) 19 QBD 647 (“Yarmouth”),\n at p.658, namely that, “in its ordinary sense, it includes whatever apparatus is used by a\n businessman in carrying on his business, not his stock-in-trade which he buys or makes\n for sale; but all goods and chattels, fixed or moveable, live or dead, which he keeps for\n permanent employment in his business.”\n\n12. It can be seen from this definition that what can count as “plant” can vary as much as the\n businesses in which it is used can vary. It can encompass a horse (as was the result in\n Yarmouth) and it can encompass a dry dock on the River Clyde (as in IRC v Barclay,\n Curle & Co Ltd [1969] 1 WLR 675, 45 TC 221 (“Barclay Curle”)); it can be a wooden\n block for printing wallpaper (as in McVeigh v Arthur Sanderson & Sons Ltd (1968) 45\n TC 273) and it can be a satellite that needs to be installed in space (as in Inmarsat Global\n Ltd v Claimant [2022] EWCA Civ 1076, [2022] STC 1426).\n\n13. Just as “plant and machinery” can take an enormous variety of forms, what it takes to\n effect “the provision of” those items will likewise vary. The provision of a horse is\n obviously different from, and considerably less complex, than the processes needed to\n effect the provision of a dry dock, but s.11(4) CAA 2001 must accommodate both, and\n indeed be capable of sensible application to the whole gamut of items that can be “plant”.\n\n14. It is submitted that the language of s.11(4) CAA 2001, and Part 2 of the Act as a whole,\n must be interpreted with this scope in mind.\n\n“Plant” vs “Premises”\n\n15. Claimant’s Written Case places a great deal of weight on a distinction drawn in the case law\n between “plant”, on the one hand, and “premises”, on the other. The difference is\n conveniently encapsulated in the following observation by Hoffmann J in Wimpy\n International Ltd v Warland (Inspector of Taxes) [1988] STC 149 at 170f-i\n ([MB/40/969]). Referring to the definition of “plant” set out by Lindley LJ in Yarmouth,\n the judge said:\n\n “It is important to notice the various discriminations which are stated or implied in\n this description. First, it excludes anything which is not used for carrying on the\n business. Secondly, it excludes stock-in-trade both expressly and because, although\n\n\n 103\n used for the purposes of the business, its use lacks permanence. Thirdly, it excludes\n things which are not 'apparatus ... goods and chattels, fixed or moveable, live or dead'\n or not employed in the business. This excludes the premises or place in or upon which\n the business is conducted.\n\n Before going any further I must say something about the third distinction and the way\n in which the courts in subsequent cases have refined the boundary between plant and\n premises. The words 'apparatus ... goods and chattels, fixed or moveable, live or dead'\n might suggest that the distinction turns upon whether the item is a chattel or fixture on\n the one hand or a building or structure on the other. This was the view of the minority\n in the House of Lords in IRC v Barclay, Curle & Co Ltd [1969] 1 WLR 675, 45 TC\n 221. But the majority held that even a building or a structure (in that case a dry dock)\n could be plant if it was more appropriate to describe it as apparatus for carrying on\n the business or employed in the business than as the premises or place in or upon\n which the business was conducted.”\n\n16. “Premises” are therefore the place in or upon which the business is conducted, although\n the distinction is not a hard and fast one: complications can arise where an item can be\n said to be both the premises for the business and part of its apparatus, such as the dry dock\n in Barclay Curle. In that case the focus is on assessing the function of the item to decide\n whether it would be more appropriate to describe the item as part of the premises rather\n than as apparatus for carrying on the business. 5\n\n17. That complexity does not arise in the present case; indeed the “plant vs premises”\n distinction is not, and has never been, relevant in this case.\n\n18. The distinction is relevant where there is expenditure “on the provision of” an item which\n is not apparatus used in the business but is instead part of the place where the business is\n carried on. It is essentially a question of whether the item is “plant”. There is no dispute\n as to that here. The generation assets of the windfarm, i.e. the wind turbines and array\n cabling as a single unit, is “plant”. There are no separate “premises” in view: the only\n apparent candidate for the premises is the seabed itself, but that is simply the place where\n\n\n5\n See also the decision of the Court of Appeal in Wimpy International Ltd v Warland\n(Inspector of Taxes) [1989] STC 273 (CA) at pp279d–280f ([MB/41/983]), upholding the\napproach of Hoffmann J.\n\n\n 104\n the plant was installed. The expenditure in issue was clearly not “on the provision of” the\n seabed.\n\n19. Accordingly, and contrary to large parts of Claimant’s argument in their Written Case, the\n “plant vs premises” distinction is not relevant.\n\n20. What Claimant really appear to mean by this argument is that they want to characterise some\n of the expenditure as being concerned with the choice of where exactly to put the plant, or\n where, or where not, to site individual components of it. As to that, it is not an accurate\n description of the expenditure in issue. According to the extensive factual findings made\n by the FTT, that expenditure was on gathering information that had an impact on the design\n (and thus creation) of the plant, either of the generation assets as a whole or individual\n components of them, or that had an impact on the installation and construction of the\n generation assets: see further the Appendix to this Written Case.\n\nExpenditure “on the provision of”\n\n21. Turning to the meaning and scope of the term “on the provision of”, the existing authorities\n shed light on, but do not fully define the boundaries of, the meaning of that term. The\n leading cases are two decisions of the House of Lords: Barclay Curle, and Ben-Odeco Ltd\n v Powlson [1978] 1 WLR 1093 (“Ben-Odeco”).\n\nBarclay Curle - [MB/25/521]\n\n22. Barclay Curle concerned the construction of a dry dock adjacent to the River Clyde. The\n dry dock had to be made at the correct level, and several thousand tons of earth were\n excavated in order to make room for it. The work involved excavation of a basin, lining\n the basin with concrete, and installing various machinery (such as valves and pumps) to\n allow the dry dock to function as intended. The Revenue accepted that the valves, etc were\n “plant” in respect of which capital allowances could be claimed under s.279 of the Income\n Tax Act 1952, but disputed whether the “plant” extended to the concrete and whether the\n cost of the excavation was expenditure incurred “on the provision of machinery or plant”\n under that section.\n\n23. The Special Commissioners had concluded that the cost of the concreting was qualifying\n for plant and machinery allowances but that the cost of the excavation was not qualifying,\n stating simply that “this expenditure was too remote from the provision of the dry dock. It\n was expenditure on the preparation of land to receive machinery or plant and as such\n attracted allowances only under Chapter I of Part X [(which provided for allowances at a\n\n\n 105\n lower rate than were available under s.279 in respect of plant and machinery)]” (pp 676F\n to 679A ([MB/25/522])).\n\n24. When the case reached the House of Lords, the majority (Lord Hodson and Lord Upjohn\n dissenting) held that the concrete was part of the “plant”, which term was apt to describe\n the entirety of the dry dock: see p.679 (Lord Reid), p.685 (Lord Guest) and p.691 (Lord\n Donovan).\n\n25. As regards the costs of excavation, all their Lordships (save for Lord Hodson, who\n expressed no view on the point) considered that if the concrete was part of the “plant” then\n the costs of excavation were expenditure “on the provision of” plant. Lord Reid expressed\n the question, and his answer, in this way (p.680D-E ([MB/25/526])):\n\n “So the question is whether, if the dock is plant, the cost of making room for it is\n expenditure on the provision of the plant for the purposes of the trade of the dock\n owner. In my view, this can include more than the cost of the plant itself because plant\n cannot be said to have been provided for the purposes of the trade until it is installed:\n until then it is of no use for the purposes of the trade. This plant, the dock, could not\n even be made until the necessary excavating had been done. All the commissioners say\n in refusing this part of the claim is that this expenditure was too remote from the\n provision of the dry dock. There, I think, they misdirected themselves. If the cost of the\n provision of plant can include more than the cost of the plant itself, I do not see how\n expenditure, which must be incurred before the plant can be provided, can be too\n remote.”\n\n26. Contrary to Claimant’s commentary on Barclay Curle (Written Case, para.31 ([KB/2/65])),\n the excavation did not “make the plant”; rather it was required as a prior step before the\n plant could then be constructed in the hole thus created (as Lord Guest said (see below)\n “[t]he excavation was a necessary preliminary to the construction of the dry dock...”).\n Accordingly, when Lord Reid described the excavation costs as expenditure “which must\n be incurred before the plant can be provided” he was referring to expenditure which put\n the taxpayer in the position to have the plant provided (i.e., in that context, constructed).\n\n27. It is also material to note Lord Reid’s response (at p.680F-G ([MB/25/526])) to an\n argument advanced by the Revenue based on s.300 of the Income Tax Act 1952 (the\n current descendent of which is s.25 CAA 2001 ([MB/16/422])):\n\n\n 106\n “The appellants rely on section 300 as showing that “provision” cannot have the\n meaning which I have ascribed to it. That section is as follows:\n\n “Where a· person carrying on a trade incurs capital expenditure on alterations to an\n existing building incidental to the installation of machinery or plant for the purposes\n of the trade, the provisions of this Chapter shall have effect as if the said expenditure\n were expenditure on the provision of that machinery or plant and as if the works\n representing that expenditure formed part of that machinery or plant.”\n\n Here the word used is “incidental” to the installation of the plant. “Incidental” is a\n wider word than “necessary.” In my view, expenditure necessary for the installation\n of the plant is already covered by section 279. But it may be that the exigencies of the\n trade require that when new machinery or plant is installed in existing buildings more\n shall be done than mere installation in order that the new machinery or plant may\n serve its proper purpose. Where that is the case this section enables the cost of the\n additional alterations to be included. If this section meant that no preliminary\n expenditure is within the scope of section 279 there would be an anomalous and\n unreasonable difference between the provision of plant in a new building or in the\n open, and the provision of plant in an existing building. So I do not regard this section\n as supporting the appellants' argument.”\n\n28. Lord Guest answered the question regarding the excavation costs as follows (p.686F-G\n ([MB/25/532])):\n\n “The commissioners upheld the contention of the revenue upon this point, their view\n being that the expenditure was “too remote” from the provision of the dry dock. In my\n view, they were wrong in excluding this expenditure. The excavation was a necessary\n preliminary to the construction of the dry dock and, in my view, was covered by the\n provision of plant under section 279. “Provision” must cover something more than the\n actual supply. In this case it includes the excavation of the hole in which the concrete\n is laid.”\n\n29. Lord Upjohn, who dissented on the first question, agreed with the majority on the second\n (p.690E-F ([MB/25/536])):\n\n “If it is proper to regard the concrete work as the provision of plant it seems to me\n clear that the Special Commissioners misdirected themselves in concluding that the\n cost of excavation was “too remote” and, for the reasons given by Lord Reid, whose\n\n\n 107\n opinion I have had an opportunity of reading, I would agree that this expenditure, too,\n was upon the provision of plant and machinery and entitled, therefore, to an initial\n allowance under Chapter II.”\n\n30. Lastly, Lord Donovan’s analysis drew a useful analogy with the concept of expenditure\n incurred “on the construction” of a building (see further para.81 below) (pp691H-692A\n ([MB/25/537])):\n\n “As regards the cost of the necessary excavation, I think this comes within the words\n “expenditure on the provision of machinery or plant” in section 279 (1), again\n regarding the dry dock as a whole. Similar expenditure incurred in relation to a\n building or structure is now regarded as “expenditure on the construction” of such\n building or structure for the purposes of section 265 (1) without any further or more\n express provision, and I think rightly so. The appellants say that if a comparable\n construction be given to the relevant words in section 279 (1) relating to plant and\n machinery, then section 300 of the same Income Tax Act, 1952, would be unnecessary.\n But that section relates to 'alterations to an existing building incidental to the\n installation of machinery or plant'; and its wording suggests that it was enacted simply\n as an assurance to remove doubts about a particular kind of case.”\n\nBen-Odeco - [MB/28/580]\n\n31. Ben-Odeco, decided just under a decade after Barclay Curle, concerned a claim under s.41\n of the Finance Act 1971 for capital allowances in respect of expenditure on commitment\n fees and interest charges that had been incurred in the financing of the construction of an\n oil rig. The House of Lords decided by a majority (Lord Salmon dissenting) that such\n expenditure was not “on the provision of” the plant (the oil rig).\n\n32. Lord Wilberforce (with whom Lord Scarman agreed) based his decision on the premise\n that taxpayers doing essentially the same thing should not obtain different amounts of\n allowances depending on how they decided to finance their project (p.1098B-F\n ([MB/28/585])):\n\n “An important principle of the laws of taxation is that, in the absence of clear contrary\n direction, taxpayers in, objectively, similar situations should receive similar tax\n treatment. The taxpayer's argument in the present case does not bring this about. On\n the contrary a different result would follow according as he pays for the provision of\n plant out of his own resources, or borrows it. In the latter case he would get an\n\n\n 108\n allowance, in the former he would not — this may amount to treating an investor worse\n than a speculator. Moreover, on the same argument, a different allowance in respect\n of identical plant would result according as he (i) borrows from a bank, (ii) raises\n money by a public issue of debentures, (iii) obtains money from his shareholders. And,\n again, a different result would follow according as (i) he is able to capitalise the\n interest on the money borrowed or (ii) (because he is carrying on a profit-making trade\n or for other reasons) does not or cannot capitalise it. If the law is such that it offers\n the taxpayer these options, he is of course entitled to select that which suits him best,\n but an interpretation which introduces such a large element of subjectivity is to be\n avoided. The words “expenditure on the provision of” do not appear to me to be\n designed for this purpose. They focus attention on the plant and the expenditure on the\n plant — not limiting it necessarily to the bare purchase price, but including such items\n as transport and installation, in any event not extending to expenditure more remote\n in purpose. In the end the issue remains whether it is correct to say that the interest\n and commitment fees were expenditure on the provision of money to be used on the\n provision of plant, but not expenditure on the provision of plant and so not within the\n subsection. This was the brief but clear opinion of the special commissioners and of\n the judge and little more is possible than after reflection to express agreement or\n disagreement. For me, only agreement is possible.”\n\n33. Lord Hailsham considered that the words “on the provision of” were capable of bearing\n the construction contended for by the taxpayer, but preferred the Revenue’s interpretation\n (p.1099D-F ([MB/28/586])). His reasons for doing so were in line with those of Lord\n Wilberforce, and included favouring “a meaning to the statute which will provide the same\n allowance for the taxpayer who meets the cost of an oil rig out of his own accumulated\n resources, the taxpayer who meets the same cost by a debenture issue or an issue of shares\n to the public, and the taxpayer who simply borrows the money from a bank, or some other\n source of liquid finance” (pp1100F-1101C).\n\n34. It is worth noting that, in the course of his speech, Lord Hailsham referred (at p.1100C) to\n “money actually expended in order to pay for the construction (or purchase) transport and\n installation of the machinery or plant itself” as being categories of expenditure that fell\n within the scope of the statutory words.\n\n35. Lord Salmon, dissenting, agreed with Lord Hailsham that the words of the statute were\n open to either construction (p.1102E ([MB/28/589])), but considered that the purpose of\n\n\n 109\n the regime pointed towards the taxpayer’s interpretation being correct (p.1102E-G), that\n objective being to “afford a really effective incentive to industrial undertakings to provide\n themselves with new and efficient plant and machinery” (p.1102H). 6\n\n36. Lord Russell’s reasoning, like that of the rest of the majority, was influenced by a concern\n that if Ben-Odeco was correct then differing amounts of allowances would be available to\n different taxpayers according to how they financed their project, and that was a result that\n he found unattractive (pp1105H to 1106B ([MB/28/592])). Lord Russell ended his speech\n with the following:\n\n “In my view the question to be asked is, what is the effect of particular capital\n expenditure? Is it the provision of finance to the taxpayer, or is it the provision of plant\n to the taxpayer? In my opinion the effect of the expenditure was the provision of finance\n and not the provision of plant. I would add that I do not seek to confine qualifying\n capital expenditure to the price paid to the supplier of the plant. I should have thought,\n for example, that if the cost of transport from the supplier to the place of user is directly\n borne by the taxpayer it would be expenditure on the provision of plant for the purposes\n of the taxpayer's trade. And there may well be other examples of expenditure,\n additional to the price paid to the supplier, which would qualify on similar grounds.\n But such matters are not for decision in this appeal.”\n\n37. The Companies respectfully submit that it is not easy to spell out principles of wider\n application from the reasoning of the majority in Ben-Odeco, and it seems to have been a\n decision which turned largely on its own facts. It is clear that a point which weighed very\n heavily with the majority was the concern that if Ben-Odeco’s position were upheld then\n the result would be that taxpayers acquiring exactly the same plant could obtain differing\n amounts of allowances depending on how they decided to finance the acquisition. In other\n words, the quantum of allowances available would depend on the taxpayer’s subjective\n position.\n\n38. Claimant have submitted (Written Case, para.67 ([KB/2/77])) that the borrowing by Ben-\n Odeco was an “absolute prerequisite” to “the provision of” the oil rig. That is not correct.\n Indeed, it is at odds with the whole thrust of the reasoning of the majority in Ben-Odeco.\n\n\n6\n Although arriving at the opposite conclusion to Lord Salmon, both Lord Hailsham and Lord\nRussell described the purpose of the legislation in similar terms – viz. “to encourage investment\nin new machinery and plant” (p.1100H (Lord Hailsham) and p.1106D (Lord Russell).\n\n\n 110\n Their concern was that other taxpayers could enjoy the provision of exactly the same plant\n without the loan financing employed by Ben-Odeco.\n\n39. There is no equivalent issue in this case. There is no suggestion that the Companies\n incurred expenditure because of their particular circumstances that other taxpayers in a\n similar position, and seeking to construct the same plant, would not have incurred.\n\nSamarkand – [MB/35/704] (FTT); [MB/36/788] (Court of Appeal)\n\n40. Barclay Curle and Ben-Odeco remain the two leading authorities on the meaning of what\n is now s.11(4)(a) CAA 2001, but there are other decisions which are of value in the task\n of mapping the law in this area, notwithstanding that they are decisions of lower courts.\n\n41. In the case of Samarkand Film Partnership No.3 & Ors v Claimant [2011] UKFTT 610\n (TC), [2012] SFTD 1 (“Samarkand FTT”), the FTT (Judge Hellier and Mr Robinson)\n considered loss relief claims made by partners in two partnerships in respect of\n expenditure relating to the acquisition of films. The availability of the loss relief which\n had been sought depended on a number of conditions (see [35] of the decision\n ([MB/35/713])), one of which was whether the relevant expenditure was “acquisition\n expenditure” for the purposes of s.134 of the Income Tax (Trading and Other Income) Act\n 2005 (“ITTOIA”), which turned on whether it had been “incurred on the acquisition of\n the ... film” (per s.130(3) ITTOIA).\n\n42. The expenditure in question included a fee paid by the partnership under an agency\n agreement with Future Films under which various services, which comprised some\n administrative services and what were termed Agency and Consultancy services, and\n included “identifying and sourcing films for acquisition and assisting the Partnerships in\n agreeing terms for the acquisition and exploitations of the films” (see [360] of the decision\n ([MB/35/765])).\n\n43. The FTT, in line with the parties, approached the construction of s.130(3) ITTOIA on the\n footing that it was analogous to what is now s.11 CAA 2001 and referred to aspects of the\n decision in Ben-Odeco in its analysis of the provision.\n\n44. In its conclusion on the issue, the FTT first made what might be said to be an obvious, but\n nonetheless useful, point that the legislation “is not confined to expenditure “on the asset”\n but applies to expenditure “on the acquisition” of the asset. The natural meaning of that\n is to include costs directly related to the acquisition” ([393] of the decision (original\n emphasis) ([MB/35/770])).\n\n\n 111\n45. As regards the items of expenditure, the FTT held that expenditure on the service of\n negotiating and drafting the agreement for the acquisition of the films was “on the\n acquisition” of the film, as was (albeit “on balance”) expenditure on identifying which\n films to acquire ([394] to [398] of the decision).\n\n46. The case was ultimately decided by the Court of Appeal ([2017] EWCA Civ 77, [2017]\n STC 926 ([MB/36/788])), although the part of the FTT’s decision referred to above was\n not challenged by Claimant and so was not considered by either the UT or the Court of\n Appeal. But the Court of Appeal did have cause to consider a related question as to the\n amount of the expenditure that one of the partnerships could properly be said to have spent\n on acquiring the negative of a film. In briefest outline:\n\n a. The FTT had held that the amount claimed (some £8m) could not be said to have been\n incurred on the acquisition of a film in circumstances where the rights in question\n were virtually worthless. 7\n\n b. The UT, by virtue of the casting vote of Nugee J (as he then was), reversed the FTT’s\n decision on this point on the basis that there had been no finding that the LLP actually\n knew that its rights in the film were valueless. 8\n\n c. Before both the UT and the Court of Appeal, the LLP had relied on the case of IRC v\n George Guthrie & Son (1952) 33 TC 327 ([MB/30/615]). That concerned a claim for\n plant and machinery allowances (under s.15 of the Income Tax Act 1945) by a\n taxpayer in respect of expenditure on a car which, owing to fraud by the vendor, the\n taxpayer never ended up acquiring. In concluding the issue in favour of the LLP, and\n thus upholding the decision of Nugee J, Henderson LJ (with whom the other members\n of the Court agreed) said (at [110] ([MB/36/821])):\n\n “I also find Guthrie of assistance, because it shows that in answering the question\n what expenditure is incurred on, in a statutory context designed to provide relief for\n the expenditure, the focus should be on the fact and the object of the expenditure,\n rather than on whether the money was well spent. I agree with Nugee J (at [119])\n that no distinction can sensibly be drawn between the statutory language of the\n relevant provisions in ITTOIA, which refer to a person who has “incurred\n\n\n7\n See [2012] SFTD 1, at [342] to [347] ([MB/35/763]).\n8\n See [2015] UKUT 211 (TCC), [2015] STC 2135, [104] to [126].\n\n\n 112\n acquisition expenditure”, which itself means “expenditure incurred on the\n acquisition of” the original master version of a film, and the wording in section\n 15(1) of the Income Tax Act 1945, which refers to a person who “incurs capital\n expenditure on the provision of machinery or plant”.” (underlining added)\n\n47. The Court of Appeal therefore confirmed the analogy between the statutory language of\n the provision that was construed and applied by the FTT in Samarkand FTT and that\n currently found in s.11(4)(a) CAA 2001.\n\nMcVeigh - [MB/33/676]\n\n48. A central question in the present case concerns the extent to which the cost of designing a\n bespoke item of plant, which process includes the gathering of materials and information\n that are required in order to compile the drawings and plans from which the item of plant\n can be fabricated, are part of the expenditure “on the provision of” that item of plant.\n\n49. There is little by way of existing authority on that question. However, the High Court did\n have cause to contend with such an issue in McVeigh v Arthur Sanderson & Sons Ltd\n (1968) 45 TC 273 (“McVeigh”), and clearly decided that such costs are part of the\n expenditure “on the provision of” the plant.\n\n50. The taxpayer company carried on business as a wallpaper manufacturer. The wallpaper\n was patterned, with the patterns being printed either manually, using wooden hand blocks\n or silk screens, or by means of mechanical rollers. For the most part, the blocks, screens\n and rollers were made by the company’s employees, with the most intricate and expensive\n part being the patterning of them. The patterns used for that work were based on designs\n that were either acquired from external artists or generated in-house. In preparing the\n printing equipment, whether using patterned hand blocks, silk screens or rollers, it was\n necessary first to break the design down into a number of patterns (“single colour\n patterns”) corresponding to the number of constituent colours in the design.\n\n51. To make the hand blocks an implement called a “ratter” was used to get a first impression\n of the outline of a single-colour pattern to be transferred to the block. Using hand tools, a\n craftsman then gouged out the part of the block of which, when removed, would leave the\n pattern to stand proud. The carved block was then manually dipped into a tray of paint or\n ink and applied to paper, thereby creating hand-printed wallpaper with the desired pattern.\n Similar sorts of physical processes were carried out to create the silkscreens and rollers:\n\n\n 113\n see the descriptions in paras 6(4) to (9) of the Special Commissioners’ decision (pp 274I\n to 276E ([MB/33/677])).\n\n52. The patterns carved into the blocks were based on designs that were selected by the\n company’s internal “styling committee”. Those designs which were not adopted were kept\n on file for future reference and possible use, either as they stood or with adaptations, in a\n later year.\n\n53. The taxpayer company claimed that the costs it incurred in producing or acquiring the\n designs which informed the patterns that were gouged, printed and hammered onto the\n blocks, screens and rollers were expenditure in respect of which it was entitled to\n “investment allowances” under s.16 of the Finance Act 1954. To qualify, the costs had to\n be “expenditure on the provision of new machinery or plant”.\n\n54. The Revenue had contended that the costs were not within the statutory words because, it\n argued, the designs produced for or acquired by the company were neither an integral part\n of the equipment used by it for reproducing them nor plant in their own right.\n\n55. The Special Commissioners allowed the company’s appeal, concluding that the blocks,\n screens and rollers were undoubtedly plant and that the expenditure attributable to the\n designs, whether they were used immediately or stored on file for future use, was, in the\n words of the Special Commissioners, “expenditure incurred in order to provide new\n machinery or plant”.\n\n56. On the Revenue’s appeal to the High Court, Cross J (as he then was) addressed two\n questions: the first, which the judge answered in the negative, was whether the designs\n were themselves “plant”; the second question was “whether the cost of acquiring or\n producing the designs can be said to be expenditure on the provision of the patterned\n blocks, screens and rollers”. The judge answered that question as follows (pp 285H-286C\n ([MB/33/688])):\n\n “If - to take a rather fanciful example - A commissions B to provide him with a\n patterned wood block so that A may experiment in printing wallpaper with a hand\n block, B would obviously be entitled to include in his bill the cost of acquiring a\n suitable design. But Counsel for the Crown pointed out that in that case if one asked\n B, “What are you buying that design for?”, he would answer, “In order to provide A\n with the patterned wood block for which he has asked me”; whereas in this case, if\n you asked the Company's representative, “Why are you buying these designs?”, he\n\n\n 114\n would not answer, “In order to provide the Company with wood blocks, screens or\n rollers patterned with them”, but would answer, “In order that the styling committee\n may have before it a wide variety of designs from which to select a few which they\n think are best adapted for reproduction on our papers and fabrics”. I feel the force of\n this argument, but the section itself isolates the provision of the patterned wood block\n and poses the question: What did the Company spend on it? To my mind, it cannot be\n right to include nothing for the cost of the design. I can well understand it being argued\n that, as so many of the designs are never actually put on any block, screen or roller,\n only some fraction of the total design costs should be allowed, and I do not think that\n Commissioners of Inland Revenue v George Guthrie & Son would be an authority\n against such an argument, for in that case the car would have been used if it had been\n delivered. But what was argued before me was that not one penny of the design costs\n should be allowed. To my mind, that cannot be right, and therefore I shall dismiss the\n appeal.”\n\n57. The decisions in McVeigh thus support the proposition that the costs of gathering materials\n and information that are required in order to design and then fabricate a bespoke item of\n plant are part of the expenditure “on the provision of” that item of plant.\n\n58. The Court of Appeal and tribunals below did not find McVeigh useful as an authority; 9 but\n it is respectfully submitted that the reasons that they gave for that view are not convincing.\n\n59. The FTT simply stated (at [FTT 128] ([KB/7/273])) that it found the case to be “of limited\n assistance” but did not explain why. The UT said (at [UT 171] ([KB/6/227])) that “the\n designs (patterns) were used to complete the plant (i.e. the wooden block) not to design\n the wooden block”, but that appears to misinterpret the facts of the case in that it implies\n that the purchased patterns were physically attached to the block to complete it.\n\n60. The Court of Appeal also seems to have viewed the relationship between the designs and\n the apparatus as being more direct than the facts of McVeigh suggest was the case. At [CoA\n 64] ([KB/5/173]) it said “the designs were being applied to the blocks, screens and rollers,\n so that they could function; they were not being used to design the blocks, screens and\n rollers in the same manner that Respondent argues that the studies at issue in the present case\n were used to design the windfarms and their component parts” (emphasis in original).\n\n\n9\n See [FTT 128]; [UT170] to [UT173]; [CoA 64].\n\n\n 115\n61. The Companies respectfully submit that these descriptions overlook the importance of the\n indirect relationship in McVeigh between the acquired designs and the plant produced\n using them as an input. The designs were, in a sense, “applied” to the block, but only by\n means of a series of steps of which the acquisition of the design was merely one of the\n first. In between the acquisition of the design and the completion of the usable block were\n several processes, some of which were ‘intellectual’ (e.g. the deliberations of the styling\n committee, and the breaking of the design down into its constituent “single colour\n patterns”) and some of which were ‘physical’ (e.g. gouging out the wood to create a block\n that could print the chosen pattern onto paper to create the wallpaper).\n\n62. So although it is correct that the role of the designs in the production of the plant in\n McVeigh was different from the role of the various information gathered on behalf of the\n Companies in the present case, there is nonetheless a relevant parallel between the two.\n\n63. The Companies do not lose sight of the fact that McVeigh is a decision of the High Court,\n or that the creation of apparatus for printing wallpaper is a very different process to\n designing, fabricating and installing an offshore windfarm. But in an area where the law\n is still developing the parameters of the concept of expenditure “on the provision of” plant,\n and where there is very little authority with direct parallels to the facts of the present case,\n it is submitted that the decision has value as part of the existing body of case law that sheds\n some important light on the scope of that concept.\n\n“Preliminaries”\n\n64. A further feature of the law that assists in identifying the scope of the statutory words is\n the established category of expenditure known as “preliminaries”, which is recognised\n (both in the case law and by Claimant) as qualifying for allowances as expenditure “on the\n provision of” plant.\n\n65. JD Wetherspoon plc v Claimant [2012] UKUT 42 (TCC), [2012] STC 1450 (“JD\n Wetherspoon”) ([MB/32/650]), was concerned with capital allowances claims made by\n the taxpayer company in respect of expenditure incurred in refurbishing and fitting out\n several pubs. One of the issues in dispute was as to the proper approach to the\n apportionment of “preliminaries”, which term the UT in that case (Briggs J (as he then\n was) and Judge Nowlan), described at [92] ([MB/32/674]):\n\n “Preliminaries are, by their nature, items of overhead expenditure which cannot be,\n or which have not been, attributed to any single item in the building project. Some, like\n\n\n 116\n insurance, are inherently incapable of being so attributed. Others, like scaffolding,\n may be capable of specific attribution, but the time and cost involved in the process of\n specific attribution is often disproportionate to the amount at stake. Thus,\n apportionment of preliminaries between items which do, or do not, qualify for capital\n allowances is the only solution in relation to unattributable preliminaries, and may be\n the sensible solution where attribution is uneconomic.”\n\n66. The UT thus gave the examples of costs of insurance and of scaffolding. A further example\n from the same case is the cost of photography of work in progress. 10 Examples given by\n Claimant in their published guidance, which adopts the foregoing definition of\n “preliminaries” from JD Wetherspoon, include costs of site management, general purpose\n labour, temporary accommodation and security. 11\n\n67. As regards the attribution of preliminaries, the FTT considered that, where a detailed item-\n by-item attribution would be disproportionately time-consuming or expensive, a pro rata\n apportionment of preliminaries was a legitimate basis for claiming capital allowances for\n preliminaries. The UT endorsed this “common-sense approach”, noting that “[i]t cannot\n have been the intention of the legislature that a trader should have to spend more on the\n minute attribution of preliminaries to underlying items of work than either their cost or\n the value of the capital allowance thereby to be obtained” (see JD Wetherspoon at [93] to\n [98]).\n\n68. This approach is now accepted by Claimant, and forms part of the guidance in their Manuals\n in relation to the availability of capital allowances for preliminaries. At CA20070 of their\n Capital Allowances Manual (“Plant and Machinery Allowances (PMA): introduction:\n professional fees and preliminaries”) ([MB/11/395]), Claimant state:\n\n “Professional fees, such as survey fees, architects' fees, quantity surveyors' fees,\n structural engineers' fees, service engineers' fees or legal costs, only qualify for PMA\n as expenditure on the provision of plant or machinery if they relate directly to the\n acquisition, transport and installation of the plant or machinery and as such are part\n of the expenditure incurred on the provision of the plant or machinery.\n\n\n10\n See JD Wetherspoon at [93].\n11\n See the examples given by Claimant in their Capital Allowances Manual at CA20070\n([MB/11/395]).\n\n\n 117\n The same rule of law applies to preliminaries. Preliminaries are indirect costs incurred\n over the duration of a project on items such as site management, insurance, general\n purpose labour, temporary accommodation and security.\n\n Where preliminaries and professional fees are paid in connection with a building\n project that includes the provision of plant or machinery, only the part, if any, which\n relates to services that can properly be regarded as on the provision of plant or\n machinery can be qualifying expenditure for PMA.”\n\n69. Claimant acknowledge this guidance in their Written Case (para.74 ([KB/2/79])), and say\n that its content is consistent with their case in this appeal.\n\nInstallation\n\n70. It is well-established, and not disputed, that expenditure “on the provision of” plant\n includes such items as the cost of transporting the plant and the cost of installing it. 12\n\n71. What is in dispute, however, is the scope of the concept of “installation” for this purpose.13\n\n72. The Companies submit that there is value in this regard in the observations of the UT in\n Claimant v SSE Generation [2019] UKUT 332 (TCC), [2020] STC 107, (“SSE”) at [127]\n ([MB/37/865]), which were cited with approval by the Court of Appeal in Urenco\n Chemplants Ltd v Claimant [2022] EWCA Civ 1587, [2023] STC 54 (“Urenco”), at [165]\n to [167] ([MB/39/946]).\n\n73. Both SSE and Urenco examined the meaning and scope of Item 22 of List C in s.23 CAA\n 2001 ([MB/16/420]), which, broadly speaking, ensures that expenditure on “The\n alteration of land for the purposes only of installing plant or machinery” is not disqualified\n by other provisions of CAA 2001 from counting as expenditure “on the provision of” plant,\n and thus from qualifying for plant and machinery capital allowances.\n\n74. The UT in SSE reviewed case law from different contexts and (at [127] ([MB/37/865]))\n drew from it the common theme that “installation” is a “process which involves the\n\n12\n See the speeches in Barclay Curle at pp 680D (Lord Reid) and 686G (Lord Guest)\n([MB/25/526, 532]); and Ben-Odeco at pp 1098E (Lord Wilberforce), 1100B-C (Lord\nHailsham) and 1106H (Lord Russell) ([MB/28/585, 587, 593]): paras 25, 28, 32, 34 and 36\nabove.\n13\n Most acutely, the UT considered that “installation” in this context was limited to the physical\nactivity of integrating one thing into another and did not encompass the intellectual effort\nentailed in planning and advising on how and when the installation activity should be carried\nout: [UT 156] ([KB/6/224]).\n\n\n 118\n integration, often with a degree of complexity of an article or articles which have already\n been made into another article, structure, building or even the land itself”. When SSE\n reached the Court of Appeal, 14 Rose LJ (as she then was) said (at [69] ([MB/38/894])) that\n she saw the force of the UT's reasoning on the question, and did not dissent from it,\n although she declined to come to a concluded view in the abstract given the elastic nature\n of the words used in the provision.\n\n75. Faced with a similar issue as regards the scope of Item 22 in the Urenco case, Sir Launcelot\n Henderson, at [147] ([MB/39/942]), cited the foregoing passage from the UT’s decision\n in SSE and said that he derived assistance from this aspect of the reasoning (although, like\n Rose LJ, he was reluctant to express a concluded view on the precise scope of the concept\n of “installation” in Item 22).\n\n76. As regards the relevance of the above to the present case, there is no dispute, in view of\n the existing case law, that the costs of installation come within the scope of the term\n “expenditure on the provision of” plant. It is legitimate then to ask: what comes within that\n judicially recognised sub-set of expenditure referred to as “installation” for this purpose?\n The Companies submit that the description of “installation” given by the UT in SSE, and\n as endorsed by the Court of Appeal, is useful as a guide in answering that question in the\n context of identifying the scope and application of the term “on the provision of” in\n s.11(4)(a).\n\n77. It is acknowledged that the UT in SSE, and the Court of Appeal in Urenco, were\n considering the meaning of the term “installation” as part of the task of construing the\n term “installing plant or machinery” in s.23 CAA 2001, whereas the word “installation”\n does not appear in the wording of s.11(4) – it has simply been recognised in the case law\n that installation costs are within the scope of the words “expenditure on the provision of\n plant” for the purposes of that section.\n\n78. However, both s.11 and s.23 are found within the same Part of the same Act. Moreover, as\n was observed by the Court of Appeal in Urenco (at [100] ([MB/39/929])), the items in List\n C in s.23 were intended to entrench the effect of earlier judicial decisions and of\n established Revenue practice in relation to the availability of plant and machinery\n allowances. 15 One could, therefore, reasonably expect the concept of “installing plant or\n\n14\n [2021] EWCA Civ 105, [2021] STC 369 ([MB/38/873]).\n15\n See also the Court of Appeal’s decision in SSE, at [19] ([MB/38/882]).\n\n\n 119\n machinery” in Item 22 of s.23 to be at least broadly in line with the concept of\n “installation” that has been judicially recognised as being part of the cost of “the provision\n of plant or machinery” for the purposes of s.11(4).\n\n79. Further, the description of “installation” given by the UT in SSE is a perfectly common-\n sense one that fits with the context of s.11(4). There is no reason to suppose that the judges\n in Barclay Curle and Ben-Odeco had in mind a materially different notion of “installation”\n when they referred to it in their speeches.\n\n80. Furthermore, for the reasons given above, plant can come in a huge variety of forms, and\n what is required to install that plant will be correspondingly varied. Some, perhaps many,\n items are relatively straightforward to install, others, e.g. a dry dock, a windfarm, or a\n satellite, require far more complicated and involved processes, but all of them are “plant”\n within s.11(4), and the legislation needs to be construed in a way that allows it to apply\n sensibly to the whole range. It is submitted that an approach along the lines of the working\n definition of “installation” identified by the UT in SSE gives effect to that.\n\n“The construction of a building” vs “the provision of plant”\n\n81. Lastly, as earlier noted (para.30), in his speech in Barclay Curle Lord Donovan drew an\n analogy between “expenditure on the provision of machinery or plant” and the notion of\n “expenditure on the construction of a building or structure”, which was found in a separate\n section of the Income Tax Act 1952.\n\n82. That theme was picked up again by Brightman J sitting in the High Court in Ben-Odeco\n ([1978] STC 111 ([MB/27/569])). The judge there explained that, despite the difference\n in wording, the two provisions were intended to capture the same sort of expenditure (see\n p.120d-h ([MB/27/578])): 16\n\n “It seems to me that, as a matter of drafting elegance, where one was dealing with the\n erection of a building or structure a natural formula would be 'capital expenditure on\n the construction of a building or structure'. It would perhaps be a little strange to refer\n to 'capital expenditure on the provision of a building or structure'. Similarly, when\n dealing with machinery and plant, almost inevitably one uses the words 'provision of\n machinery or plant'. The words 'capital expenditure on the construction of machinery\n or plant' would be inelegant. So it seems to me that, as a matter of necessary wording,\n\n\n16\n By this time the relevant sections were ss 1 and 18 of the Capital Allowances Act 1968.\n\n\n 120\n one finds in the one case the expression 'construction of a building or structure' and,\n in the other case, 'provision of machinery or plant'. I have difficulty in believing that\n interest on borrowed money could be aptly described as part of the expenditure on the\n 'construction' of a building or structure. If one accepts that Parliament did not intend\n to have a different code in this respect for dealing with buildings and structures on the\n one hand and machinery and plant on the other hand in the context of capital\n allowance, one is led to the reasonable conclusion that the two formulae were intended\n to comprise the same type of expenditure. An object may qualify not only as a building\n or structure but at the same time as machinery or plant: see s 14 of the 1968 Act, and\n the Barclay Curle case. Comparable sections were contained in the Income Tax Act\n 1952.”\n\n83. Within the current tax code, Part 2A of the CAA 2001 makes provision for a kind of capital\n allowance called a “structures and building allowance”. For this purpose, s.270BB(1) of\n the Act ([MB/18/451]) provides that capital expenditure is “qualifying capital\n expenditure” if, inter alia, it is “incurred on the construction of a building or structure”.\n\n84. In this connection, Claimant’s Capital Allowances Manual contains, at CA93110\n ([MB/12/400]), a list of types of expenditure that Claimant consider count as expenditure\n “on the construction of a building” and a list of those they do not. The list of qualifying\n types includes the following:\n\n “Construction expenditure\n\n Expenditure treated as incurred on the construction of a building includes:\n\n • professional fees relating to the design and construction of a building provided\n\n that the building is actually constructed\n\n ...”\n\n85. This acceptance is entirely consistent with the Companies’ position and the decision of the\n Court of Appeal in this case.\n\n86. Claimant’s response to this is to say that this part of their Manual is about a different capital\n allowance that has “a different policy objective” (Written Case, para.74 ([KB/2/79])). No\n further explanation is provided as to what that is or why it matters. The simple point is that\n the wording of the legislation addressed by Claimant in CA93100 is the same formulation\n as that which both Lord Donaldson and Brightman J considered was analogous to that now\n\n\n 121\n found in s.11(4) of the CAA 2001, and in the context of that formulation, Claimant accept\n that the costs of designing the building or structure are “expenditure on the construction\n of a building”.\n\nTHE COMPANIES’ CASE\nThe starting point in answering the statutory question\n\n87. Drawing together the strands set out above, the Companies first submit that the starting\n point in assessing whether expenditure is “on the provision of” plant is to identify the\n “plant” in question and then look back to see what expenditure was incurred on its\n provision.\n\n88. As the Court of Appeal in the present case correctly noted (at [CoA 58] ([KB/5/172])),\n s.11 CAA 2001 only applies if plant has in fact been provided, it being part of the statutory\n requirements that the person incurring the expenditure owns the plant or machinery as a\n result of incurring it (per s.11(4)(b) ([MB/16/411])).\n\n89. So the exercise necessarily starts from the perspective of an item of plant having been\n acquired. From there, s.11(4)(a) invites the question: what capital expenditure was\n incurred on its provision? That is an inherently retrospective enquiry. Adapting, as the\n Court of Appeal in this case did, the words of Cross J in McVeigh, s.11(4)(a) “isolates the\n provision of the [plant] and poses the question: What did the [taxpayer] spend on it?”.\n\n90. Accordingly, and contrary to Claimant’s Written Case (para.16 ([KB/2/61])), the test is not\n “prospective”. The statutory question does not even arise, and allowances cannot be\n claimed, unless and until plant has been acquired. So, with respect to Claimant, it makes no\n sense to pause at a point at which some expenditure has been incurred, but no plant has\n yet been obtained, and ask whether that is “on the provision of” plant. Nor is it relevant\n that, at the point the expenditure in question is incurred, it is possible that the plant might\n not, in the end, materialise or come into the taxpayer’s ownership (cf. Claimant’s Written\n Case, Appendix, para.2(1) ([KB/2/83])): the work in Barclay Curle could have terminated\n for some reason after the hole had been dug, but it did not – the plant was thereafter\n created, and the expenditure on it was qualifying.\n\n91. Further, despite Claimant criticising an approach which looks backwards, applying\n hindsight, from the point of view of the plant having been provided, they do not articulate\n any reason why such an approach is wrong or would cause difficulties in practice.\n\n\n 122\n“On the provision of”\n\n92. In terms of what items of expenditure will qualify as being “on the provision of” plant,\n based on the existing authorities, it undoubtedly includes the purchase price of an “off-\n the-shelf” item. It is also established at the highest level that it can include more than the\n cost of the plant or machinery itself, and will thus extend to such items as transport and\n installation costs. This much is common ground.\n\n93. Further, the costs of bespoke items of plant are also clearly within the scope of what is\n qualifying, as recognised by Lord Hailsham in Ben-Odeco when he referred to “money\n actually expended in order to pay for the construction (or purchase) transport and\n installation of the machinery or plant itself” as qualifying: see Ben-Odeco, p.1100C\n ([MB/28/587]). Again, that is common ground.\n\n94. It is also common ground that expenditure on general overheads in a project – i.e.\n preliminaries – such as the costs of insurance and of project management, are capable of\n being expenditure “on the provision of” plant for the purposes of s.11(4)(a): see paras 64\n to 69 above.\n\n95. The Companies submit that the existing case law reveals that expenditure on the\n negotiation of contracts for the acquisition of plant falls within the scope of s.11(4)(a): see\n Samarkand FTT at [395] ([MB/35/770]) – and in the present case Claimant accept that\n expenditure on negotiating contracts with the manufacturers of the component parts of the\n wind turbines and with the installation vessel providers is qualifying: [SoFI 159 to 160]\n ([KB/1/39]). Samarkand FTT also suggests that expenditure on advice on identifying\n which of several particular items of plant to acquire can be qualifying, provided the plant\n is in fact acquired: see Samarkand FTT at [396].\n\n96. Moving to more disputed territory, the Companies submit that expenditure on acquiring\n inputs that inform the design of bespoke items of plant, such as the artists’ patterns that\n were used to help decide what should be carved into the wooden printing blocks in\n McVeigh, are also part of the costs of “the provision of” such items of plant: see McVeigh,\n referred to at paras 48 to 63 above.\n\n97. The proposition that the costs involved in designing a bespoke item of plant are part of the\n costs of its “provision” is supported by Lord Reid's reasoning in Barclay Curle, and in\n particular his statement at p.680D ([MB/25/526]):\n\n\n 123\n “So the question is whether, if the dock is plant, the cost of making room for it is\n expenditure on the provision of the plant for the purposes of the trade of the dock\n owner. In my view, this can include more than the cost of the plant itself because plant\n cannot be said to have been provided for the purposes of the trade until it is installed:\n until then it is of no use for the purposes of the trade. This plant, the dock, could not\n even be made until the necessary excavating had been done.” (underlining added)\n\n98. By extension of that same reasoning, where the item of plant is bespoke, and must first be\n designed before it can be fabricated, constructed and installed, the costs of that design\n process are likewise qualifying because, without that process, that item of plant could not\n even be made.\n\n99. As Claimant themselves say with reference to this part of Lord Reid’s speech (Written case,\n para.18 ([KB/2/62])), “Plant can hardly be said to have been provided for the purposes of\n the trade if it is unusable because not delivered or not installed at some basic level”. The\n link between the plant and expenditure without which it could not even have existed is\n surely a fortiori.\n\n100. In the present case, the “plant” – the windfarm generation assets as a unit – was a bespoke\n item which was created following designs generated using data gathered from the studies\n carried out at the site in question [SoFI 39, 43, 59] ([KB/1/13, 19]). Some of the\n component parts of that plant were made from scratch, and were likewise designed using\n the gathered data [SoFI 43 to 45, 50 to 51, 129.c., 129.d., 135, 152 to 155]\n ([KB/1/13,15,33,35, 38]). Other components were available ready-made, but had to be\n selected from existing designs based on information that was gathered from the various\n studies to ensure that they were appropriate for the conditions at each site [SoFI 49,\n 129.b.].\n\n101. To illustrate this point by reference to a particular example from the underlying facts of\n this case:\n\n a. The Companies procured geophysical surveys and geotechnical surveys at the\n windfarm sites. The geophysical surveys provide data on sea floor bathymetry, seabed\n features, water depth and soil stratigraphy as well as identifying hazardous areas on\n the seafloor and man-made risks such as unexploded ordnance. The geotechnical\n investigations ascertain the characteristics of the soil [SoFI 140 to 141] ([KB/1/36]).\n\n\n 124\nb. These surveys are carried out in three “rounds”. The primary purpose of the first round\n was to inform the windfarm layout (including the particular sites on which the wind\n turbines and the substations might be located) and wind turbine and foundation design.\n The information gleaned from this was factored into the computer models which\n ultimately formed the basis of the necessary design of the configuration of the\n windfarms and to the design of each wind turbine [SoFI 144 to 145] ([KB/1/36]).\n\nc. The second-round surveys built on the results of the first and involved an examination\n of each proposed wind turbine location and their results fed into the design of the\n foundation of each individual wind turbine [SoFI 146].\n\nd. The data gathered from the first and second rounds was evaluated and turned into\n “Geotechnical Evaluation Input to Design Basis” documents, which contained details\n of soil strength parameters, soil profiles, etc for each individual wind turbine location.\n Formulae could then be applied to the data to determine the pile diameter and a\n minimum wall thickness that would be needed for each foundation at each location\n [SoFI 147 to 148].\n\ne. The primary structure drawings for the foundations and transition pieces could then\n be produced, which drawings set out the dimensions of the components and the steel\n quality required formed an input into the overall design basis for each windfarm [SoFI\n 150].\n\nf. Third-round surveys took place just before construction. This was to obtain a detailed\n soil profile of each individual location into which the foundation was to be installed\n and to obtain final geological data to input into Respondent’s computer models [SoFI 151].\n\ng. The geological and geotechnical data was thus gathered, evaluated and turned into\n formulae which were used to determine the physical parameters of the foundations for\n each turbine location and for the transition piece for the site. This then enabled detailed\n drawings to be made up, and from these drawing the parts could be made. There is\n therefore a chain which links the surveys to the plant.\n\nh. The FTT found that these surveys were an “absolute prerequisite” to the design,\n engineering, manufacture and installation of the wind turbines and that the data\n obtained from them “directly informs the precise design of each wind turbine and its\n foundation”, each foundation being bespoke to its particular location, with its design\n\n\n 125\n being shaped by the data from the geophysical and geotechnical surveys (as well as\n the metocean surveys) [SoFI 152] ([KB/1/38]).\n\n i. These surveys also affected several other design parameters of the generation assets,\n including: the choice of foundation for the particular wind turbine location; the depth\n to which it should be sunk; protection and mitigation against scour; and the design\n and choice of the other components of the wind turbine [SoFI 154].\n\n j. The FTT concluded that, without the data gathered in these surveys, the wind turbines\n could not be specifically designed and so they could not have been fabricated [SoFI\n 153] and [FTT 201] (which also refers back to [FTT 196]) ([KB/7/301, 298]). 17\n\n102. Accordingly, without the expenditure on these surveys, the plant – the windfarm\n generation assets – “could not even have been made”, to adopt the words of Lord Reid.\n The design inputs were as critical to the “provision of” the components that made up the\n plant as the steel from which they were fabricated.\n\n103. The example of the geophysical and geotechnical surveys is of an input to the provision\n of the plant that was particularly critical to its creation, but the influence of the expenditure\n on the plant does not need to be so crucial – as earlier noted, there is no test of necessity\n in s.11(4)(a). Rather, the example is illustrative of the point that where a bespoke item of\n plant must first be designed before it can be fabricated, assembled and installed for use in\n the trade, the expenditure on that design process, including gathering the information that\n informs that process, is just as much a part of the “provision of” the plant as the cost of the\n physical materials that comprise it, the labour in making it, or the cost of transporting it.\n\n104. Notably, Claimant seem to accept the logic of this point, but they then seek to limit its effect\n by setting up arbitrary distinctions. In their Written Case (para.68 ([KB/2/77])), they note\n Lord Reid’s words in Barclay Curle, and say that “[t]he analogous cost in the present case\n would be the cost of creating the final design drawing ‘made real’ by fabrication with\n which the plant provided is “made” (which Claimant accept may be allowable)”. Claimant\n thus accept that the final step in the process of designing the plant is part of “the provision\n of” it. But there is no principled basis for treating the other parts of the design process that\n\n\n17\n In addition, the FTT also found and concluded that the information gathered in the\ngeophysical and geotechnical surveys directly related to the installation of the windfarms and\nthe turbines [SoFI 154] ([KB/1/38]) and [FTT 218(7)] ([KB/7/304]).\n\n\n 126\n went before it any differently, particularly where, as here, that design process is iterative\n and cumulative.\n\n105. The approach advanced by the Companies is consistent with the ordinary meaning, and\n purpose, of s.11(4)(a). The section, as noted, applies to all types of plant and machinery,\n from the simple to the complex and from the ready-made to the custom-made, and the\n words “on the provision of” must be read accordingly. Moreover, there is no strain\n involved in the interpretation advanced by the Companies and upheld by the FTT and the\n CoA. As Newey LJ said in this case (at [CoA 71] ([KB/5/175])), where “plant is bespoke,\n ... the words \"on the provision of\", read naturally, would extend to costs incurred in\n designing the plant. When considering how much had been spent on providing such plant,\n it would, I think, be appropriate to take the costs of designing it into account”.\n\n106. This approach is also consistent with the analogy drawn in the case law between\n expenditure “on the provision of” plant and expenditure on “the construction of” a\n building – as Claimant acknowledge (see para.84 above), the costs of designing a building\n would naturally be considered part of the expenditure “on the construction of” it.\n\n107. Further, this approach to the law fits with its existing features. It is consistent with the\n reasoning and conclusion of the majority in Barclay Curle and with the decision in\n McVeigh, and it does not engage the concern that drove the conclusion of the majority in\n Ben-Odeco. It is also reconcilable with the established categories of qualifying\n expenditure: there is no logical reason (and none is offered by Claimant) why expenditure\n on, say, insurance or hiring scaffolding should count as being “on the provision of” plant\n and yet expenditure on inputs which feed into the design of the physical characteristics of\n the plant so that it can be created should not.\n\nInstallation\n\n108. As regards installation, for the reasons given above (paras 72 to 80), the Companies submit\n that the observations of the UT in SSE on the meaning of the word “installation” (made in\n the closely-related context of construing the term “installing plant or machinery” in s.23\n CAA 2001) are useful when it comes to interpreting and applying the statements in the\n case law that expenditure on installing the plant is expenditure “on the provision of” it.\n\n109. The description given in SSE of a “process which involves the integration, often with a\n degree of complexity of an article or articles which have already been made into another\n article, structure, building or even the land itself” is apt to include not only the purely\n\n\n 127\n physical steps of affixing the plant but also the steps of preparing and planning for the\n integration, part of which will include ensuring that it can take place safely and effectively.\n\n110. To take an example from the facts of the present case:\n\n a. The “Archaeology, wreck and cultural heritage sites” studies commissioned by the\n Companies identified sites, monuments, wrecks, downed military aircraft, and\n obstructions (including unexploded ordnance) that might affect or be affected by the\n construction of the windfarm [SoFI 102 to 103] ([KB/1/27]).\n\n b. The mitigation measures proposed by the studies included placing exclusion zones\n around the wreck sites (and unexploded ordnance), pre-construction investigations,\n minor adjustments to the locations of wind turbine foundations or the cable route or,\n failing that, possible excavation [SoFI 103].\n\n c. The FTT found that these studies directly related to the installation of the windfarm\n since they were vital for safe installation, it being disastrous for either a foot of the\n installation vessel or a foundation to be put down on a seabed at the site of an\n unexploded bomb [SoFI 104].\n\n111. It is submitted that checking in advance for unexploded ordnance at the site where the\n foundation of the wind turbine is to be installed into the seabed, in order to ensure that\n there is no risk to life or to the plant itself when it is installed, is properly part of the process\n of installing the plant, and that the cost of doing that is part of the expenditure “on the\n provision” of it, as the Court of Appeal in this case correctly held [CoA 83] ([KB/5/178]).\n Contrary to suggestions made by Claimant (Written Case, Appendix, para.2(5)\n ([KB/2/84])), this is not advice on “choice of setting”, “the timing of the provision” or “the\n preferred manner of provision”.\n\n112. Whilst it is true that this is expenditure on establishing how the plant should be installed\n safely and effectively (rather than expenditure on the purely physical process of installing\n it, such as the act of mechanically driving the monopile foundation into the seabed), there\n is no reason in principle why it should not be considered part of the expenditure “on the\n provision of” the plant.\n\n113. The everyday reality is that almost any installation process will require some form of\n planning and preparation, and it is perfectly natural to describe that, together with the\n physical steps of integration, as “installation”. All these acts combine, in what is often\n likely to be an iterative process, to effect the “provision of” the item in question.\n\n\n 128\n114. Again, this approach is consistent with the other, established and accepted parts of this\n area of the law. It is difficult to see why the cost of obtaining insurance or photography of\n work in progress should qualify as expenditure “on the provision of” plant (see para.66\n above), but not expenditure on checking beforehand to ensure that the plant will not be\n destroyed upon the commencement of the physical installation.\n\nSummary Conclusion\n\n115. For the reasons set out above, the Companies submit that the expenditure remaining in\n issue qualified for capital allowances as “capital expenditure on the provision of plant”\n for the purposes of s.11 CAA 2001, and that Court of Appeal arrived at the correct\n conclusion on this issue for the right reasons.\n\nClaimant’S CASE\n\n116. Turning to Claimant’s case, when boiled down to its essence, it amounts only to the\n assertion, unsupported by authority or reasoned argument, that the expenditure in question\n does not, or perhaps should not, qualify for allowances under s.11 CAA 2001.\n\n117. Further, the approach that Claimant take to the interpretation and application of s.11 is based\n on a set of propositions which are unsound as a matter of law and which lack coherence\n as a matter of principle.\n\n118. It is also material to note that the upshot of Claimant’s position in this case is squarely\n contrary to the purposes of the “plant and machinery” capital allowances regime. That\n regime has been identified as having two broad purposes:\n\n a. the first is to incentivise investment in plant and machinery: see Ben-Odeco, at\n pp1100H (Lord Hailsham), 1102H (Lord Salmon), and 1106E (Lord Russell)\n ([MB/28/587, 589, 593]);\n\n b. the second purpose, which underlies the capital allowances regime more generally, is\n to ensure that traders are taxed on their “true profits”, which must take account of the\n depreciation in value of the plant and machinery which is used for the trade and which\n will eventually need replacing: see BMBF Ltd v Mawson [2004] UKHL 51, [2005] 1\n AC 684, at [3] (cited in Claimant’s Written Case, para.9 ([KB/2/59])).\n\n119. In the present case, there is no dispute that the Companies incurred the expenditure in\n issue, or that this was “genuine business expenditure” (as Claimant themselves say in their\n Written Case, para.77 ([KB/2/80])), or that as a result of it they each built an item of plant\n\n\n 129\n which is used to generate trading income. And yet Claimant would give no relief to the\n Companies whatsoever for this expenditure, either as a revenue deduction 18 or in the form\n of capital allowances, in the computation of their taxable profits.\n\n120. That surprising outcome would be a major deterrent to others operating in the sector, as\n well as those contemplating undertaking similar large infrastructure projects, as was\n alluded to by Claimant themselves in their Grounds of Appeal to this Court (paras 30 to 31).\n\n“Effects”, “remoteness”, and the “limiting curve”\n\n121. Claimant begin with the submission that for expenditure to be “on the provision of” an item\n of plant “the effect of that expenditure must be the actual provision of that item... and not\n the provision of something else (as in this case) or something more remote (also this\n case)” (Written Case, para.5 ([KB/2/58])).\n\n122. Claimant later summarise their suggested approach as follows: “one should consider both\n (i) whether the expenditure is in fact “on” something other than the provision of the plant\n (which can be assessed by considering the effect of the expenditure; what is got in\n exchange), and (ii) whether it is in any event, having regard to its role (if any) in the\n provision of the particular item of plant, too remote from the “plant” around which the\n “limiting curve” of the statutory language (read purposively and in context) is\n drawn.” (Written Case, para.52 ([KB/2/73])).\n\n123. There are several problems with this. First, the reliance on the “effect” of the expenditure\n appears to stem from the conclusion of the speech of Lord Russell in Ben-Odeco, where\n he said, “In my view the question to be asked is, what is the effect of particular capital\n expenditure? Is it the provision of finance to the taxpayer, or is it the provision of plant to\n the taxpayer?” (see para.36 above).\n\n124. The Companies submit that it is far from clear that Lord Russell was suggesting that\n question as a universal test for the application of the statutory words, which is how Claimant\n appear to treat it. In any event, it is respectfully submitted that asking such questions is, at\n most, of limited assistance when deciding whether expenditure qualifies. It is not difficult\n to identify a ‘something else’ in any given scenario – in Barclay Curle, for example, one\n could properly say that the expenditure was on making a hole in the ground, and a hole in\n\n\n18\n The Court of Appeal ruled that the expenditure was capital in nature and so not deductible\non revenue account ([CoA 96 to 106] ([KB/5/181)).\n\n\n 130\n the ground is not plant, nor does it, itself, provide plant. Yet the expenditure was\n qualifying. The “effect” “test” is therefore not a reliable guide.\n\n125. Likewise, and for much the same reasons, asking “what is got in exchange?” for the\n expenditure cannot determine the statutory question (cf. Claimant’s Written Case at para.52).\n To take another example, Claimant accept that expenditure on hiring scaffold for use in a\n construction project is potentially qualifying under s.11(4)(a) (see Written Case, para.57\n and fn9 ([KB/2/74])); but if one asks “what is got in exchange for the hire fee?” the answer\n is not “plant” as far as a hirer is concerned.\n\n126. Further, references to “something more remote”, and the related concept of “remoteness”,\n on which Claimant have founded a great deal of their argument, are not analytically useful:\n\n a. At first blush, “remoteness” sounds like a familiar, and therefore potentially attractive,\n tool because it shares a name with a well-established body of principles that performs\n a useful role in the common law of damages. But a name is all they share.\n\n b. “Remoteness” in the common law is the name for a fleshed-out body of principles that\n can be articulated and applied with reasonable certainty to a given set of facts.\n\n c. By contrast, Claimant’s concept of “remoteness” has no content. Despite referring to,\n and relying on, it throughout these proceedings, they have not, at any stage, sought to\n articulate what their concept of “remoteness” means in substance, or when something\n can be said to be “too remote”, or by what principles one determines that.\n\n d. In reality, “remoteness” as used by Claimant is merely a synonym for “non-qualifying”.\n As such, it is only an assertion of a conclusion, not a reason.\n\n e. The root of Claimant’s contention seems to be Barclay Curle, where the Special\n Commissioners simply held that the expenditure on the excavation was “too remote\n from the provision of the dry dock” (see para.23 above). But far from endorsing such\n a concept, the Law Lords in Barclay Curle appeared quite sceptical of the terminology\n and its use as a reason for denying allowances: Lord Reid said that “All the\n commissioners say in refusing this part of the claim is that this expenditure was too\n remote from the provision of the dry dock”; and Lord Guest and Lord Upjohn each put\n the term “too remote” in quotation marks when referring to it and rejecting the Special\n Commissioner’s conclusion (see paras 25, 28 and 29 above).\n\n\n 131\n f. Claimant then submit that the relevance of “remoteness” was “further affirmed and\n clarified” by the House of Lords in Ben-Odeco, but there is no discussion of such a\n concept in any of the speeches.\n\n g. Lord Wilberforce referred to the wording of the legislation “focus[ing] attention on\n the plant and the expenditure on the plant — not limiting it necessarily to the bare\n purchase price, but including such items as transport and installation, in any event\n not extending to expenditure more remote in purpose” – but to interpret that isolated\n statement, and in particular the use of the word “remote”, as an endorsement of some\n form of “remoteness” test is, with respect, not realistic.\n\n127. There is a similar problem with Claimant’s reliance on the notion of a “limiting curve”, a\n phrase which is also plucked from the speech of Lord Wilberforce in Ben-Odeco. That\n figurative expression is not a test either. It simply conveys the point that there can be cases\n where expenditure does not qualify because it is not “on the provision of plant”. It does\n not help one in identifying where the line is or on which side of it a particular case sits.\n\n128. From that footing, Claimant then advance their positive case, arguing that the expenditure\n in question is “on something else”, or “on the wrong thing”, or “too remote” (Written Case,\n paras 52 to 54 ([KB/2/73])). But on analysis, these are just different ways of asserting the\n outcome that they seek. They are not arguments in support of it.\n\nThe errors and contradictions in Claimant’s position\n\n129. In trying to deny the Companies any allowances in respect of the expenditure in issue in\n this case, Claimant have been forced to advance arguments that are inconsistent with the\n existing features of the law in this area, many of which are in fact endorsed and applied\n by Claimant themselves. They have also found themselves driven to adopt positions, or draw\n distinctions, which are illogical.\n\n130. Thus, for example, Claimant say (Written Case, para.17 ([KB/2/62])) that the costs of\n purchasing an item, of transporting/shipping an item, and of “mere installation without\n which the plant would not be usable at some basic level” are within the words “on the\n provision of” in s.11(4)(a). They also accept that the cost of fabrication, if the item needs\n to be fabricated to order, are within those words. They then assert that any other item of\n expenditure “must be shown to have an analogous role in relation to the provision” in\n order to qualify.\n\n\n 132\n131. Not only is there no authority for the latter proposition, but Claimant’s summary of the law\n has no place for expenditure on “preliminaries”, which are recognised in law, and accepted\n by Claimant, as a category of costs capable qualifying under s.11(4)(a).\n\n132. Likewise Claimant’s restriction of installation expenditure to that of “mere\n installation” “without which the plant would not be useable at some basic level”\n cannot be squared with an acceptance that the costs of, for example, site security qualify\n for allowances (see para.66 above). It is also unduly narrow as an interpretation of the\n statutory scheme.\n\n133. The term “mere installation” seems to have been lifted by Claimant from part of Lord Reid’s\n speech in Barclay Curle, but it is clearly taken by Claimant out of context. Lord Reid was\n contrasting “mere installation” with more extensive work, such as altering the fabric of an\n existing building, required to ensure that the new machinery or plant serves its purpose\n (see para.27 above). Lord Reid was not narrowing the scope of what could count as\n expenditure on installation; on the contrary, he made the point by way of rejection of an\n argument by the Revenue for a narrow interpretation of what is now s.11(4)(a) CAA 2001.\n\n134. Moreover, there is no indication that Parliament intended that the only expenditure that\n can qualify is the bare minimum needed to make the plant “useable at some basic level”.\n As already noted, s.11(4)(a) does not require any examination of whether the expenditure\n was “necessarily” incurred, only whether it was incurred “on the provision of” the plant.\n\n135. Further, Claimant’s summary limits qualifying expenditure in the case of a bespoke item of\n plant to the costs of “fabrication” only, with the implication that this covers just the\n physical process of making it and not the prior process of generating the designs from\n which it can be made. In a similar vein, Claimant at one point (Written Case, para.31\n ([KB/2/65])) seem to seek to resurrect the suggestion made by the UT in the present case\n that ““provision” is focused on the making, doing, and constructing”, as opposed to\n advice on what the features of the plant should be or how to make it.\n\n136. But this stance is later contradicted by their acceptance that the costs of creating the “final”\n design drawing that is “‘made real’ by fabrication” could qualify for allowances (Written\n Case, paras 55, 68 and 74 ([KB/2/73, 77, 79])). It is also contradicted by the position they\n adopt in their Manuals about “professional fees” (of architects and surveyors, etc) being\n “expenditure on the provision of” plant, which statement Claimant say is consistent with the\n case they are running in this appeal (Written Case, para.74).\n\n\n 133\n137. Claimant are right to accept these things; but having done so they cannot properly draw a\n dividing line between the fabrication stage of making or building the plant and the\n preceding stage of planning and designing what is to be built.\n\n138. The inconsistencies highlighted above are not the only such issues with Claimant’s case. By\n way of further example, in the course of the proceedings below Claimant have confirmed,\n in response to judicial questions, that they accept that costs charged by an installation\n subcontractor who had to undertake studies, for example to check for unexploded\n ordnance, would count as expenditure “on the provision of” the plant, provided they were\n undertaken by the installer at the time of performing the physical installation exercise. 19\n But then Claimant would deny the Companies in this case allowances in respect of such\n studies when undertaken prior to the point of physical installation. That is not a reasoned\n distinction. The expenditure is either “on the provision of” the plant or it is not; the precise\n timing of the study is not material. Similarly, Claimant argue that the cost of advice as to the\n best method of installation, which they say is “advice on potential ways to install but it is\n not installation itself”, is not qualifying (Claimant’s Written Case, Appendix, para.23.c\n ([KB/2/92])), but then they would accept that the cost of securing insurance can qualify\n (Written Case, fn9 on p.18 ([KB/2/74])), even though that is clearly not “installation\n itself”.\n\n“Plant vs Premises”\n\n139. As noted above (paras 15 to 20), the distinction between “plant” and “premises” (or\n “setting”, to use Claimant’s preferred term) has no relevance in this case. There is no tenable\n argument that the expenditure in issue was “on the provision of” the “setting”, i.e. the\n seabed. There is no factual finding to support such a submission, and not one of the judges\n below has considered that the expenditure could be described as such.\n\nClaimant’s criticisms of the Court of Appeal’s decision\n\n140. Claimant’s attack on the Court of Appeal’s decision in this case is, with respect, unfounded.\n\n141. There is nothing problematic about the Court’s approach or its summary at [CoA 76]\n ([KB/5/176]), which is entirely sound, practically workable, and consistent with authority\n and principle.\n\n\n19\n See the transcript of the Court of Appeal hearing, [Day2/p.200/line 15 to p.201/line 17].\n\n\n 134\n142. The Court of Appeal did not “re-write the statutory test” (Claimant’s Written Case, paras 4,\n 59 to 61 ([KB/2/58, 74])). It simply construed and applied it in accordance with orthodox\n principles, informed by the existing case law. Nor did it create a new relief for\n “predevelopment costs”. The latter term seems to be one of Claimant’s own devising – it is\n not, so far as the Companies are aware, a term of art – and it is not clear what Claimant mean\n by it. If they mean costs incurred prior to the physical construction phase then it is entirely\n commonplace that expenditure is laid out prior to the point at which the plant is acquired\n or completed. Indeed, it is a requirement of the section that the person incurring the\n expenditure owns the plant “as a result of” incurring it (s.11(4)(b)). So there is nothing\n unusual in the expenditure in question being incurred in advance of the point at which\n plant is finally obtained.\n\n143. There is also nothing impermissible about answering the statutory question posed by\n s.11(4)(a) with the benefit of hindsight (see paras 87 to 91 above); and, as noted above, in\n doing so, the Court of Appeal adopted the approach identified by Cross J in McVeigh in\n 1969, so it cannot fairly be described as “novel” (cf. Claimant’s Written Case, para.80\n ([KB/2/81])).\n\n144. Claimant are also wrong to contend that the Court’s approach produces arbitrary\n distinctions. At [CoA 73] ([KB/5/175]) the Court said that expenditure on whether to\n acquire plant at all would not be qualifying, but that, by contrast, expenditure incurred in\n commissioning a professional to design an item of plant, by someone who knew they\n wanted a particular kind of plant, would be “on the provision of” the resulting plant. The\n difference is that in the first case the expenditure is not linked to a specific item of plant,\n whereas in the second case, it is, and the design input is part of its creation. These are not\n objectively comparable situations.\n\n145. The expenditure in issue in the present case is of the second kind (cf. Claimant’s Written\n Case, para.78 ([KB/2/80])). It was always envisaged that the Companies would build a\n windfarm on their respective sites (rather than some other form of plant or structure) - the\n design process was then required in order that adjustments could be made to the form of\n the windfarm so that it could operate as required in its intended location.\n\n146. Linked to that, gathering information which recommended that a bespoke item of plant\n should have a particular physical feature (for example, a three-bladed turbine component)\n is still part of the process of designing the item notwithstanding that the individual\n\n\n 135\n component which will supply that feature is available from a manufacturer ready-made\n (cf. Claimant’s Written Case, para.82 ([KB/2/81])). As the Court of Appeal observed at [CoA\n 78] ([KB/5/176]), that process is about identifying the physical features that the plant will\n have so that it will be fit for purpose (i.e. how the generation assets should be designed),\n not about whether to acquire plant.\n\n147. Lastly, Claimant have unfairly characterised both the nature of the expenditure in issue and\n the Court of Appeal’s description of it (Claimant’s Written Case, paras 63 to 65)\n ([KB/2/75]). As is described in the Appendix, the expenditure in issue was on studies and\n surveys which (a) informed the Companies as to the physical features that the plant should\n have in order for it to best fit the environment in which it was to be constructed, or (b)\n informed the process of installing and constructing the plant out at sea. That expenditure\n is properly described (as the Court of Appeal correctly observed) as expenditure on the\n process of designing the plant that was to be brought into existence (in the case of (a)),\n and expenditure on the process of installing and constructing the plant (in the case of (b)),\n and is qualifying for the reasons given above.\n\nSTATEMENT OF REASONS\n\n148. Accordingly, the Companies submit that the Order of the Court of Appeal dated 27 March\n 2025 ([KB/4/148]) was correct in allowing their appeal and in concluding that all the\n categories of expenditure remaining in issue qualify for plant and machinery allowances\n under Part 2 of the CAA 2001, and ought to be affirmed.\n\n REASON\n\n 1) Because the Court of Appeal was right to hold that the expenditure in issue was\n “capital expenditure on the provision of plant” for the purpose of s.11 CAA 2001, and\n there is no dispute that the other requirements of the section are met.\n\n\n MICHAEL JONES K.C.\n\n\n 23 December 2025\n\n (Updated with cross-references 31 December 2025)\n\n Gray’s Inn Tax Chambers\n\n\n 136\n APPENDIX\n\n THE CATEGORIES OF EXPENDITURE IN ISSUE\n\n1. The following is based on the facts set out in the SoFI and the FTT’s factual findings.\n Many of the points made by Claimant in their Written Case about the nature and effect of\n the studies and surveys are not consistent with the facts as found by the FTT in relation to\n them, which facts Claimant did not seek to challenge on appeal.\n\n2. Moreover, whilst, as set out at [SoFI 60] ([KB/1/19]), one has to read the FTT’s findings\n with reference to the “necessary”/“unnecessary” design classification that it imposed of\n its own motion, that does not call into the question the substance of its factual findings.\n Thus, Claimant are wrong to seek to disregard the FTT’s findings as to the factual\n relationship between the studies and surveys and the design, construction and installation\n of the generation assets (cf. Claimant’s Written Case, Appendix, para.3 ([KB/2/85])).\n\n(1) The Environmental Studies\n\n3. The studies listed under this heading are carried out as part of the EIA [SoFI 58]. The main\n point of the EIA, as can be seen from the findings as to the nature and contents of the\n studies, is to ensure that the windfarm that is to be constructed at the site is designed in\n such a way as to best fit its environment, and that the process of installing and constructing\n it there will be safe and effective. The assessment is therefore focussed on the physical\n characteristics of what is to be constructed, and how that design might be modified to\n better fit the environment, as well as the process of its installation. Moreover, the studies\n do not just identify the impacts that the windfarm and its installation would have, they also\n propose measures to mitigate those impacts. 20 The results are inputs into the process of\n designing, and then installing and constructing the windfarm and its components.\n\n4. Claimant have invited the Supreme Court to take the studies in the round rather than look at\n the details of each (Written Case, Appendix, para.17 ([KB/2/89])). That represents a\n departure from the approach adopted by both parties, and by every judge, throughout these\n proceedings. It is respectfully submitted that the categories should continue to be\n examined separately and by reference to the particular findings made by the FTT in respect\n of them.\n\n\n20\n Claimant’s description of the studies often omits that second, important, element: see, e.g.,\nWritten Case, Appendix, para.20.b. to d. ([KB/2/90]).\n\n\n 137\nLandscape, seascape and visual assessment – [SoFI 73 to 77]([KB/1/22-23])\n\n5. These studies made recommendations to the Companies as to the physical characteristics\n that the windfarm generation assets should have in order to reduce the visual impact of the\n windfarms, including: (a) the nature of the wind turbine arrangement/spacing within the\n windfarm (“well-balanced” being recommended); (b) the number of blades the turbines\n ought to have (three being preferable); (c) the colouring of the wind turbines (pale grey,\n with the lower sections being coloured yellow for safety reasons); and (d) the need for the\n wind turbines to have navigation lights so they can be seen at night [SoFI 74].\n\n6. These are recommendations as to how the plant should be designed. 21\n\n7. This is self-explanatory as regards points (b) to (d) above. As regards the wind turbine\n arrangement (point (a)) that is also about the physical form of the item of plant. This can\n be seen from the diagram in Annex 5 to the SoFI, which shows the generation assets in\n plan view. It is extracted here for ease of reference:\n\n\n8. The plan shows the array of turbines (the small blue letter and number) and cabling (the\n dashed red lines) comprising the generation assets, i.e. the unitary item of plant, which\n expands right out to the edges of the site boundary (the boundary being shown by the\n dashed line forming an irregular pentagon: see the Key to the right of the diagram).\n\n21\n This was recognised by the FTT, but its focus on its self-imposed requirement of “necessary”\ndesign meant that it concluded that the expenditure did not qualify: see [SoFI 60] and [FTT\n164] to [FTT 165] ([KB/7/281]).\n\n\n 138\n9. Given that the plant is the array of turbines and cabling as a single unit, a change to the\n form and layout of that array is a change to the shape of the item of plant itself. That is\n clearly an impact on the design of that item (and not, contrary to Claimant’s Written Case,\n Appendix, paras 2(6), 21 and 22, about “choice of setting” ([KB/2/84, 90])).\n\n10. These studies therefore informed the design of the generation assets and so, for the reasons\n set out in paras 96 to 107 of the main body of the Written Case, the expenditure on them\n was “on the provision of” that plant, as the Court of Appeal correctly held ([CoA 78]\n ([KB/5/176])).\n\nBenthos Studies – [SoFI 78 to 84] ([KB/1/23-24])\n\n11. These studies made recommendations as to the measures that should be undertaken during\n the construction of the windfarms to ensure the safe and effective installation of the wind\n turbines (with safety being viewed here from the perspective of protecting the benthic\n communities), including: (a) advising that construction should not be undertaken during\n certain times of the year during spawning periods for species which use the site or are\n especially sensitive to sediment in suspension; (b) recommending minimising jetting\n during cable laying operations; and (c) recommending minimising the release of pollutants\n from the construction vessels and activities during the construction phase [SoFI 79] and\n [FTT 166] ([KB/7/281]).\n\n12. The FTT found in respect of each of the windfarm sites that these studies related directly\n to the safe installation of the windfarm, and other measures for the safe and effective\n installation of the wind turbines [SoFI 80].\n\n13. Ensuring that the item of plant can be installed safely and effectively in its intended\n location is part of the process of its installation, and for the reasons identified in paras 108\n to 114 of the main body of the Written Case, the expenditure on that was “on the provision\n of” the plant, as the Court of Appeal correctly held ([CoA 79] ([KB/5/177])).\n\n14. The FTT also found that the study in respect of the West of Duddon Sands windfarm\n related directly to the “necessary” design of the windfarm and the wind turbines\n individually because it made recommendations as to the type of wind turbine foundation\n that should be used to minimise the impact on the benthic community [SoFI 81]. The study\n in respect of the Gunfleet II windfarm also made recommendations as to the physical\n\n\n 139\n characteristics that the wind turbines should possess (namely “cathodic protection”)\n [SoFI 82] and [FTT 172] ([KB/7/283]).22\n\n15. As such, these studies also concerned how the generation assets should be designed, and\n so, for the reasons already identified above, the expenditure on them was “on the provision\n of” that plant.\n\nOrnithology and collision risk – [SoFI 85 to 90] ([KB/1/24-25])\n\n16. These studies made recommendations as to mitigating the impacts of the windfarm on bird\n populations. The recommendations included ones as to the lighting to be used on the wind\n turbines during construction and operation of the windfarm (i.e. the design of the plant)\n and as to the times during the year when the construction of the windfarm should be\n avoided (i.e. how to install the plant safely) [SoFI 86].\n\n17. At two other windfarms (i.e., not at the sites in issue in these proceedings) the height of\n the wind turbines had been altered following the ornithological studies, but the FTT found\n that no such alteration had occurred in any of the windfarm sites in issue in the appeals\n [SoFI 87]. However, it is respectfully submitted that this overlooked that the point of the\n study was to identify the risks, and then propose ways to mitigate the issues thus identified.\n As the Court of Appeal noted in relation to its example in [CoA 72] ([KB/5/175]) of its\n decision, an exercise which determines that the parameters of a proposed design do not\n need amending contributes as much to a design process as one that does. The expenditure\n on such inputs is, accordingly, on “the provision of” the plant, as the Court of Appeal held\n [CoA 80].\n\n18. Further, the recommendations as to how to install the plant safely informed the process of\n installation, and, for the reasons set out in paras 108 to 114 of the main body of the Written\n Case, expenditure on obtaining them was expenditure on “the provision of” the plant, as\n the Court of Appeal also correctly held [CoA 80].\n\nFish and shellfish studies – [SoFI 91 to 96] ([KB/1/25-26])\n\n19. These recommended mitigation measures aimed at reducing adverse impacts on fish and\n shellfish species in the area, including using particular methods during construction (e.g.\n\n\n22\n The FTT concluded that there was no evidence that such cathodic protection was actually\nincorporated into the turbines. But as the Court of Appeal observed ([CoA 80]), this does not\nmean that the recommendations did not inform their design.\n\n\n 140\n “soft start” piling) and limiting construction to certain parts of the year to avoid spawning\n periods [SoFI 92].\n\n20. The FTT found that the safe construction of the windfarm could not have taken place in\n the manner in which it did without the information from the studies, and that the studies\n informed and directly related to the construction, and in particular the safe installation, of\n the four windfarms, with safety being gauged from the point of view of the fish and\n shellfish populations [SoFI 93].\n\n21. For the reasons already identified above, the expenditure on gathering that information\n was expenditure “on the provision of” the plant, as the Court of Appeal correctly held\n [CoA 81] ([KB/5/177]).\n\n22. The study in relation to the West of Duddon Sands windfarm also provided information as\n to which foundation types would be least harmful to fish and shellfish, which is obviously\n an input into the design of the generation assets of the windfarm and so, for the reasons\n already submitted, the expenditure on it was part of the expenditure “on the provision of”\n the plant, as the Court of Appeal also held [CoA 81].\n\nMarine mammal studies – [SoFI 97 to 101] ([KB/1/26-27])\n\n23. These studies identified issues concerning the potential impact of the construction of the\n windfarm on marine mammals and addressed mitigation options to reduce that impact,\n including through: the use of deterrent devices; avoiding drilling at certain times or over\n certain periods to reduce risk of adverse effects on seals, dolphins and porpoises; using\n observers to spot marine mammals (with work stopping if they are present); and adopting\n “soft start” installation procedures [SoFI 98].\n\n24. The FTT found that the studies had a direct relationship with the construction phase of\n each windfarm, and, in particular, with the impact of construction noise on the marine\n mammals, which related to the safety of the marine mammal population [SoFI 99].\n\n25. For the reasons identified already, the expenditure on gathering that information as to how\n the plant could be safely installed and constructed at its intended location is part of the\n expenditure “on the provision of” the plant, as the Court of Appeal correctly held [CoA\n 82] ([KB/5/178]).\n\n\n 141\nArchaeology, wrecks and cultural sites – [SoFI 102 to 107] ([KB/1/27-28])\n\n26. As noted in the main body of the Written Case (para.110 above), the FTT found that these\n studies directly related to the installation of the plant on the basis that they were vital for\n its safe installation [SoFI 104]. For the reasons submitted at paras 111 to 114 of the Written\n Case, the expenditure on those studies was expenditure “on the provision of” the plant.\n\n27. The FTT also found that these studies went to the configuration/layout of the site as a\n whole and that they had a direct relationship with the design of the windfarm as a whole\n and construction and the installation of the wind turbines (since the particular locations at\n which the wind turbines were to be installed was influenced by the location of the\n archaeological items) [SoFI 105]. 23\n\n28. For the reasons submitted in paras 7 to 10 of this Appendix in relation to the “Landscape,\n seascape and visual assessment” studies, matters which inform the configuration of the\n generation assets affect the design of its physical parameters. They are therefore part of\n the process of designing the plant, and the expenditure on that is on its provision, as the\n Court of Appeal held [CoA 83] ([KB/5/178]).\n\nNoise assessment – [SoFI 108 to 112] ([KB/1/28-29])\n\n29. The studies concluded that noise during the construction phase would be the most\n significant issue, and the mitigation measures proposed in respect of the construction\n phase included: (a) using an auger piling technique; (b) using acoustic “bubble curtains”\n around the work area; (c) using acoustic deterrents to ensure that fish and mammals avoid\n the area and “soft start” piling; and (d) the use of good engineering and the correct\n combination of piles and piledriver [SoFI 109].\n\n30. The FTT found that these studies had a direct relationship with the construction and safe\n installation of the windfarm, but held there was overlap with the mitigation measures\n proposed in relation to the marine mammal studies and so disallowed the expenditure on\n the basis that this was “double counting” [SoFI 110].\n\n31. For the reasons already set out above, the expenditure on gathering that information as to\n how the plant could be safely installed and constructed at its intended location is part of\n\n\n23\n The FTT concluded however that this was “unnecessary” design, according to its own\nclassification, and so held that the expenditure did not qualify: see [SoFI 60] and [FTT 180]\n([KB/7/289]).\n\n\n 142\n the expenditure “on the provision of” the plant, as the Court of Appeal correctly held [CoA\n 84] ([KB/5/178]).\n\n32. As regards the FTT’s “double counting” concern, that, with respect, is not the right way\n of looking at it. The marine mammal studies and noise assessment surveys were distinct\n and separate surveys. Moreover, the nature of surveys is that one does not know what they\n will say until they have been carried out, by which time the expenditure has usually been\n incurred. It is wrong to look only to the results of the survey and say, with the benefit of\n hindsight, that it overlaps with a different survey. The correct approach is that if both\n informed the safe installation of the plant, and so the expenditure on them was “on the\n provision of” it, then both sets of expenditure should qualify for capital allowances.\n\nTelecoms and radar interference – [SoFI 113 to 118] ([KB/1/29-31])\n\n33. These studies include identifying existing cable routes and the location of television and\n radio transmitters, determining potential electromagnetic interference to signals by\n radiation emitted by generator equipment on the windfarm site, and determining potential\n disturbance to submarine telecom cables by electricity export cables from the windfarm\n [SoFI 113].\n\n34. The studies identified that at one of the windfarm sites (West of Duddon Sands) there was\n an issue regarding microwave links to offshore infrastructure. It was recommended that\n the issue could be ‘designed out’ by altering the configuration of the wind turbines within\n the windfarm so that none was within a designated exclusion zone [SoFI 114]. The FTT\n consequently found that this study had a direct link to the design of the overall windfarm\n [SoFI 116]. 24\n\n35. For the reasons set out in paras 7 to 10 of this Appendix in relation to the “Landscape,\n seascape and visual assessment” studies, matters which inform the configuration of the\n generation assets are inputs into the process of designing the physical characteristics of\n that plant, and the expenditure on that is expenditure “on the provision of” the plant, as the\n Court of Appeal held [CoA 85] ([KB/5/178]).\n\n36. Further, for the reasons already submitted, the fact that the studies in respect of the other\n sites concluded that there were no similar issues that required an adjustment to the design\n\n24\n The FTT concluded however that this was “unnecessary” design, according to its own\nclassification, and so held that the expenditure did not qualify: see [SoFI 60] and [FTT 184]\n([KB/7/292]).\n\n\n 143\n of the plant does not mean that they were any less valuable as contribution to that process,\n as the Court of Appeal also held [CoA 85].\n\nTraffic, transport and tourism – [SoFI 119 to 125] ([KB/1/31-32])\n\n37. These studies identified various mitigation measures to reduce the risks of collisions from\n air and maritime traffic, including the imposition of safety zones during construction, and\n recommendations as to various physical characteristics that the wind turbines should have,\n such as: (a) navigational aids (lights and fog horns on certain wind turbines); (b) specified\n colouring and “retro reflective” material; (c) the use of individual lights and numbering\n on the wind turbines; (d) an emergency shutdown system for turbines/blades; (e) nacelle\n hatches capable of being opened from the outside; and (f) a minimum blade tip clearance\n of 22m above Mean High Water Springs (a measure of water height) [SoFI 120]\n\n38. The FTT found that these studies related directly to the construction of the windfarms and\n the installation of the wind turbines, with the safety zones being required to ensure that\n the installation was safe [SoFI 122] [FTT 186] ([KB/7/294]). For the reasons identified\n above, understanding how to install an item of plant safely and effectively is part of the\n installation process, and the expenditure on that was “on the provision of” the plant, as the\n Court of Appeal held ([CoA 87] ([KB/5/179])).\n\n39. The FTT also found that the recommendations made in the studies as to the physical\n characteristics of the wind turbines would need to be factored into their design, and that\n the recommended safety zones also fed into the overall designs and configuration of the\n windfarms at Walney and West of Duddon Sands. 25 The studies, therefore, also concerned\n how the generation assets should be designed, and are thus part of “the provision of” the\n plant, as the Court of Appeal held ([CoA 87]).\n\nScoping – [SoFI 66 to 72] ([KB/1/21-22])\n\n40. The scoping exercise is the first step in carrying out the various studies and surveys within\n the EIA [SoFI 66]. The exercise puts the Appellants in the position that they can then\n undertake the studies required for the EIA [SoFI 67].\n\n\n25\n The FTT concluded however that this was “unnecessary” design, according to its own\nclassification, and so held that the expenditure did not qualify: see [SoFI 60] and [FTT 189] to\n[FTT 191] ([KB/7/294]).\n\n\n 144\n41. The FTT held that the scoping exercise had an indirect relationship with the design of the\n windfarm and the wind turbines [SoFI 70].\n\n42. On the basis that, for the reasons set out above, the EIA studies in issue influenced the\n design and/or installation of the generation assets, and thus that expenditure on them was\n qualifying, it is submitted that there is no logical reason to dissociate the first step in the\n process of carrying out those studies from the remainder of that process. The statutory\n question posed by s.11(4)(a) CAA 2001 has to be looked at objectively and with the benefit\n of hindsight: viewed from that perspective, the first step of a journey contributes as much\n to the arrival at the destination as the last. Likewise, the first step in those studies\n contributed to the overall influence they had on the design and installation of the plant.\n\n43. Moreover, in the case of the West of Duddon Sands site and Walney site, the scoping\n exercise identified certain issues which resulted in changes to site location (in the case of\n West of Duddon Sands), and a boundary amendment (in the case of Walney) [SoFI 69].\n This had an impact on the design since it meant moving wind turbines into different areas\n [FTT 161] ([KB/7/279]). 26\n\n44. Referring back to the plan view diagram at para.7 above, a change of such a nature, which\n impacts the locations of the turbines and cabling, is a change which impacts and influences\n the form and layout of the array, and thus the physical parameters of the item of plant\n itself. That is therefore part of the process of designing the generation assets, and, for the\n reasons already given, the expenditure on it is part “of the provision of” the plant, as the\n Court of Appeal stated in its Order.\n\n45. Further, as already submitted in relation to some of the other studies above, the fact that\n similar changes did not result from the scoping exercises undertaken in respect of other\n sites does not detract from the role of that exercise in the overall design of the windfarm.\n\n(2) Metocean Studies – [SoFI 128 to 139] ([KB/1/32-35])\n\n46. There are two distinct stages of metocean studies: “desktop” and “detailed [SoFI 131].\n\n\n26\n Contrary to Claimant’s Written Case, Appendix, para.15 ([KB/2/88]), this change was not as\na result of the igneous rock at the site: that was information gleaned from the geophysical and\ntechnical surveys: see [SoFI 149] and [FTT 200(10)] ([KB/7/300]).\n\n\n 145\n47. The FTT found that the “desktop” studies did not directly relate to the design of either the\n windfarms or the individual wind turbines and so the expenditure on them was not\n qualifying. The Companies did not appeal that conclusion [SoFI 137].\n\n48. As regards the “detailed” metocean studies, the data from those studies:\n\n a. informed the choice of turbine unit (i.e. the nacelle and rotor) that would be used in\n the generation assets;\n\n b. fed directly into the design of the foundation and transition pieces of the wind\n turbines, enabling the correct dimensions of those components to be determined;\n\n c. enabled an assessment of the “scour effects” the generation assets would be subject\n to, and therefore the “scour protection” they would require; and\n\n d. informed what access platforms and ladders, and vessel interfaces would be required\n on the wind turbines [SoFI 129].\n\n49. Once gathered, the data was used to produce detailed “input to design basis” papers, which\n in turn resulted in monopile foundation and transition piece drawings for each individual\n wind turbine location (with dimensions and steel quality specifications) [SoFI 134].\n\n50. The FTT considered that the studies directly related to the “necessary” design of both the\n windfarms as a whole and the wind turbines located in each position on those sites [SoFI\n 136], finding that, without these metocean studies, the specific design of the wind turbines\n could not be undertaken and so they could not have been fabricated [SoFI 135].\n\n51. The inputs were therefore a critical part of the process of designing the plant – without\n them it could not even have been fabricated – and, for the reasons identified in paras 96 to\n 107 of the main body of the Written Case of the main body of the Written Case, the\n expenditure on gathering that data was expenditure “on the provision of” the plant created\n from it, as the CoA held [CoA 89] ([KB/5/179]).\n\n52. The FTT also found that metocean conditions had to be understood in connection with all\n offshore engineering activities such as transportation of components to the project site,\n and their installation at the site [SoFI 129 e.]; it therefore held that the expenditure on the\n detailed metocean studies directly related to the construction of the windfarms and the\n effective installation of each individual wind turbine [SoFI 136].\n\n\n 146\n53. For the reasons already submitted, expenditure which informs how to install the plant\n safely and effectively in its intended location is part of the expenditure “on the provision\n of” it, and is therefore qualifying.\n\nGeophysical and geotechnical surveys – [SoFI 140 to 158] ([KB/1/36-39])\n\n54. As noted in the main body of the Written Case (paras 101 to 102 above), the FTT found\n that these surveys are an “absolute prerequisite” to the design, engineering, manufacture\n and installation of the wind turbines and that the data obtained from them “directly informs\n the precise design of each wind turbine and its foundation”. Without the data gathered in\n these surveys, the wind turbines could not be specifically designed and so they could not\n have been fabricated [SoFI 153] and [FTT 201 (referring back to FTT 196) ([KB/7/301,\n 298]).\n\n55. The surveys also affected the choice of foundation for the particular wind turbine location;\n the depth to which it should be sunk; protection and mitigation against scour; the design\n and choice of the other components of the wind turbine; analysis of corrosion effects; and\n the routes of the array and export cables [SoFI 154].\n\n56. The FTT found that the studies (including the reconnaissance studies) directly related to,\n and ultimately formed the basis of, the “necessary” design of the configuration of the\n windfarms and of the individual wind turbines. The design of each wind turbine evolved\n as additional data was fed into the computer modelling, and the data relating to the seabed\n had an impact on the structure of the wind turbine as a whole, and not just on the\n foundations and transition piece [SoFI 155].\n\n57. For the reasons submitted at paras 101 to 102 above, the data gathered from these surveys\n informed the process of designing the plant and its component parts, and the expenditure\n on them was expenditure “on the provision of” the plant, as the Court of Appeal held [CoA\n 93] ([KB/5/180]).\n\n58. In addition, the FTT found that the geophysical and geotechnical surveys also directly\n affected the construction and installation process [SoFI 154], and so, for the reasons\n already submitted, this provides a further reason why the expenditure on those studies was\n expenditure “on the provision of” the plant, as the Court of Appeal also held [CoA 93].\n\n\n 147", "evidence": [] }, "facts": "The deciding tribunal must resolve the questions and requested disposition presented in the parties' anonymized briefs. The procedural posture is tax authority appeal concerning development expenditure.", "governingLaw": "english_law", "amount": 1, "currency": "USD" }, "reference": { "case": "Orsted West of Duddon Sands (UK) Ltd v Commissioners for His Majesty's Revenue and Customs", "citation": "[2026] UKSC 12", "court": "Supreme Court of the United Kingdom", "source": "https://supremecourt.uk/uploads/uksc_2025_0069_judgment_0e963e932d.pdf" }, "expectedOutcome": "claimant_prevails", "systemDecision": { "outcome": "claimant_prevails", "reasoning": "The central question is the meaning of 'on the provision of plant or machinery' in section 11(4)(a) of the Capital Allowances Act 2001. The Supreme Court's judgment is the controlling authority. Lady Rose, delivering the only judgment (with whom all other Justices agreed), held that the word 'on' indicates a narrow test requiring a close connection between the expenditure and the plant provided. Parliament used 'on' rather than looser connectors such as 'in connection with' or 'relating to', and that choice of language signals a closer nexus.\n\nThe Court of Appeal's test — that expenditure qualifies where it can be shown, with hindsight, to have 'informed the design of plant or machinery or how it was to be installed' — was rejected as too broad. That test imports the loose connector 'informs', erases the concept of remoteness, and is inconsistent with the leading authorities. In Barclay, Curle, the House of Lords found the excavation and concreting costs qualifying only because the lined excavated basin was itself part of the dry dock — the plant — not because it was a prior step that informed the design. The majority emphasised how integral the basin was to the functioning of the dry dock as a whole. The Court of Appeal's broad test would have made Barclay, Curle an easy case; it was not.\n\nIn Ben-Odeco, the House of Lords held that financing costs (interest and commitment fees) were not 'on the provision of' the oil rig but on the provision of finance. Lord Wilberforce described the 'limiting curve' as drawn around the plant and its provision, and Lord Russell asked 'what is the effect of particular capital expenditure?' — is it the provision of plant or something else? The studies here provide advice about how to choose and design plant; their effect is the provision of information and advice, not the provision of plant. They fall well outside the limiting curve.\n\nThe broader context and purpose of section 11(4) do not displace the narrow reading. Capital allowances reflect the gradual depreciation of the physical asset through wear and tear; studies with only a tangential connection to the diminishing value of the physical asset do not fit that concept. The incentivisation purpose of capital allowances is a blunt instrument; where Parliament wishes to encourage specific investment, it does so through targeted provisions, not by broadening the meaning of 'on the provision of'. The wider statutory scheme — sections 21, 22, 23, and 25 dealing with buildings, structures, and alterations — would be disturbed by an expansive reading that scoops up expenditure properly falling under those provisions. Accounting treatment cannot determine statutory construction.\n\nThe respondents' parity argument — that a taxpayer buying off-the-shelf components gets design costs rolled into the purchase price while a bespoke purchaser does not — was rejected. The supplier's price reflects all its costs, but the question is whether the price is qualifying expenditure in the hands of the purchaser, not what the supplier's cost structure was. McVeigh v Sanderson was of limited assistance: the designs there were patterns impressed onto existing blocks, screens, and rollers to complete items of plant, not studies informing the design of the plant itself. Samarkand was a slender thread on a subsidiary point in a different context.\n\nHMRC reserved its position on whether the cost of final technical drawings 'made real' by fabrication could qualify, and accepted that surveys during final fabrication or installation might qualify. None of the studies here met that description. The Supreme Court therefore allowed HMRC's appeal: none of the surveys and studies constituted expenditure qualifying as 'on the provision of plant' under section 11(4)(a). The claimant's requested appellate disposition — granting the appeal and reversing the Court of Appeal — is the correct outcome.\n\nThis is a declaratory matter with no monetary relief. The funds_instructions are empty, the remedy_calculation status is 'not_applicable', and the award posture is 'declaratory'.", "allocation": null, "citations": [ { "title": "Orsted West of Duddon Sands (UK) Limited (now ... - Supreme Court", "url": "https://supremecourt.uk/cases/judgments/uksc-2025-0069", "proposition": "The word 'on' in section 11(4)(a) CAA 2001 requires a close connection between the expenditure and the plant provided, narrower than looser connectors such as 'in connection with' or 'relating to'; the 'limiting curve' is drawn around the plant and its provision." }, { "title": "Orsted West of Duddon Sands (UK) Limited (now named Orsted Schroders Greencoat WODS Holdco Limited) and others v Commissioners for His Majesty's Revenue and Customs [2026] UKSC 12", "url": "https://www.bailii.org/uk/cases/UKSC/2026/12.html", "proposition": "The Court of Appeal's test — that expenditure qualifies if it informed the design of plant actually acquired or constructed — is too broad, introduces hindsight improperly, and is inconsistent with Barclay, Curle and Ben-Odeco; studies and surveys providing advice about how to choose or design plant fall outside the statutory wording." }, { "title": "[PDF] Orsted West of Duddon Sands (UK) Limited (now ... - Supreme Court", "url": "https://supremecourt.uk/uploads/uksc_2025_0069_judgment_0e963e932d.pdf", "proposition": "The broader context and purpose of the capital allowance regime — reflecting depreciation of physical assets through wear and tear, and incentivising investment through targeted rather than broad provisions — does not displace the narrow reading of 'on the provision of'; HMDC reserved its position on final technical drawings 'made real' by fabrication but none of the studies in dispute met that description." } ] }, "matchedReferenceOutcome": true } ] }