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What’s Wrong With The Tax Court’s Hallmark Opinion: Part 4

Posted on Dec. 9, 2022

Before turning to the latest series in Carl’s discussion of the Hallmark opinion, we pass on from Professor Alice Abreu that the Temple Law School Low Income Taxpayer Clinic, which opened its doors in 2021, is ready to transition from part-time operation to full-time operation and is searching for a full-time Director, to begin as early as next month, but the position will remain open until filled.  Further information, including instructions for applying, is here. Les

This is the fourth of a multipart post discussing the recent Tax Court opinion in Hallmark Research Collective v. Commissioner, 159 T.C. No. 6 (11/29/22).

As I noted in the last part of this post, the Supreme Court has created a stare decisis exception to the rule that claim-processing rules (including filing deadlines) are no longer jurisdictional.  It appears fair to say that the primary reason that the Tax Court in Hallmark held the deficiency petition filing deadline jurisdictional is not the language of that deadline meeting the “clear statement” exception, but the existence of a 98-year-long string of opinions from courts below the Supreme Court that have uniformly held the filing deadline jurisdictional.

But, that string of opinions is irrelevant under the Supreme Court’s articulated stare decisis exception that applies for purposes of the jurisdictional test. Moreover, the Hallmark opinion fails to seriously confront the Boechler opinion’s disparagement of that deficiency precedent.

In this part of my post, I will discuss the stare decisis exception in general. Because of the length of the required discussion, I will leave the Tax Court’s misapplication of that exception in Hallmark to the next part of this post.

In Kontrick v. Ryan, 540 U.S. 443, 455 (2004), the Supreme Court noted that both it and lower courts had often carelessly overused the word “jurisdictional”, and the Court sought to bring some discipline to the word by saying that, henceforth, claim-processing rules would not be jurisdictional. In Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), however, the Court admitted that there should be an exception where Congress clearly stated that it wanted a claim-processing rule to be jurisdictional. The Court set out what it called a “readily administrable bright line” test for this exception, to avoid the usual litigation over what Congress intended: “If the Legislature clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue.” Id. at 515-516 (footnote and citation omitted).

In its opinion in Bowles v. Russell, 551 U.S. 205 (2007), the Supreme Court first found a deadline jurisdictional without there being a “clear statement” in the statute that Congress intended the deadline to be jurisdictional. The statute was at 28 U.S.C. § 2107(c), which sets out the deadline to file an appeal from a civil court judgment to the courts of appeal.  Bowles was an early opinion in the Supreme Court’s attempt to bring discipline to the use of the word “jurisdictional”. Unfortunately, its language is hard to fully reconcile with everything the Court has said about the stare decisis exception after Bowles. And the Hallmark opinion tries to exploit a bit of Bowles’ imprecise language.

Some things said by Justice Thomas (writing for the majority in Bowles) would likely now shock and offend the Boechler Court. For example, Bowles says, “Jurisdictional treatment of statutory time limits makes good sense.” Id. at 212. In contrast, in Henderson v. Shinseki, 562 U.S. 428 (2011) (involving a statutory filing deadline in the Court of Appeals for Veterans Claims), the Supreme Court (Alito, J.) wrote:  “Because the consequences that attach to the jurisdictional label may be so drastic, we have tried in recent cases to bring some discipline to the use of this term.”  Id. at 435.

Bowles pointed out that in many prior opinions going back to the 19th Century (even before the Courts of Appeals were created), the Supreme Court had held that the deadline to file an appeal from a civil judgment is jurisdictional. It also noted, “Reflecting the consistency of this Court’s holdings, the courts of appeals routinely and uniformly dismiss untimely appeals for lack of jurisdiction.” 551 U.S. at 210. Bowles distinguished its holding from Kontrick because Kontrick involved merely a bankruptcy court rule deadline (not a statutory deadline), and from Arbuagh because Arbaugh involved a statutory claim-processing rule that was not a filing deadline.

Further, in response to the dissent’s pointing out language from another Supreme Court opinion, in footnote 2 of Bowles, the Court wrote:

Regardless of this Court’s past careless use of terminology, it is indisputable that time limits for filing a notice of appeal have been treated as jurisdictional in American law for well over a century.  Consequently, the dissent’s approach would require the repudiation of a century’s worth of precedent and practice in American courts.  Given the choice between calling into question some dicta in our recent opinions and effectively overruling a century’s worth of practice, we think the former option is the only prudent course.

551 U.S. at 209 n.2.

Why do I point to this footnote? Because the DOJ always quotes from that footnote when it urges courts to follow “a century’s worth of precedent and practice in American courts” involving the deficiency filing deadline, even though the cited precedent is only from the Board of Tax Appeals, the Tax Court, and the Circuit Courts of Appeals, not the Supreme Court. Moreover, the Tax Court in Hallmark used that quote from the Bowles footnote on p. 37 of its slip opinion as part of its justification for following “a century’s worth of precedent and practice in American courts” relating to the deficiency filing deadline. That sentence from Bowles has clearly been taken out of its context. Bowles involved a situation where the century of precedent could be found in Supreme Court cases, first. There is no suggestion in any later Supreme Court opinion that precedents only from courts below the Supreme Court would have been followed as part of the stare decisis jurisdictional exception.

The only other case in which the Supreme Court has applied the stare decisis exception to the new rule that filing deadlines are no longer jurisdictional is John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (2008). There, the Court held that the Tucker Act’s catchall 6-year filing deadline in 28 U.S.C. § 2501 for filing a complaint in the Court of Federal Claims is jurisdictional because a long line of Supreme Court opinions going back over 100 years had held the filing deadline jurisdictional.

In United States v. Kwai Fun Wong, 575 U.S. 402 (2015), the Court held that the deadlines at 28 U.S.C. § 2401(b) to file (1) an administrative claim and (2) a court suit under the Federal Tort Claims Act are not jurisdictional and are subject to equitable tolling. When the government cited John R. Sand in Kwai Fun Wong as support for holding the FTCA filing deadlines jurisdictional, the Court said that what distinguished John R. Sand was “two words:  stare decisis”. Id. at 416. “What is special about the Tucker Act’s deadline, John R. Sand recognized, comes merely from this Court’s prior rulings, not from Congress’s choice of wording.” Id.

Note the reference to “this Court’s prior rulings”.  In every one of the Supreme Court’s 9 opinions where it has described the stare decisis exception from its recent jurisdictional rules that make claim-processing rule non-jurisdictional, the Court has articulated the exception as applying in the case of Supreme Court precedent.  See Boechler, 142 S. Ct. at 1500; Fort Bend Cnty. v. Davis, 139 S. Ct. 1843, 1849 (2019); Hamer v. Neighborhood Housing Servs., 138 S. Ct. 13, 20 n.9 (2017); Kwai Fun Wong, 575 U.S at 416; Sebelius v. Auburn Regional Medical Center, 568 U.S. 145, 153-154 (2013); Gonzalez v. Thaler, 565 U.S. 134, 142 n.3 (2012); Henderson, 562 U.S. at 436 (2011); Reed Elsevier v. Muchnick, 559 U.S. 154, 168 (2010); Union Pacific R. Co. v. Locomotive Engineers, 558 U.S. 67, 82 (2009).  The articulated reason for this exception is that Congress no doubt reads Supreme Court case law and considers that case law in legislating.  John R. Sand & Gravel Co., 552 U.S. at 139 (“Congress has long acquiesced in the interpretation we have given.”)

Even though Justice Ginsburg (the prime mover for the Court’s new jurisdictional jurisprudence) only wrote it in a concurrence, she objected to any attempt to expand this stare decisis exception to include merely a long line of consistent authority in courts below the Supreme Court.  Reed Elsevier, 559 U.S. at 173-174 (Ginsburg, J, concurring, joined by Stevens and Breyer, JJ.) (“[I]n Bowles and John R. Sand & Gravel Co. . . . we relied on longstanding decisions of this Court typing the relevant prescriptions ‘jurisdictional.’ Amicus cites well over 200 opinions that characterize [17 U.S.C.] § 411(a) as jurisdictional, but not one is from this Court. . . .”; emphasis in original; citations omitted). The Supreme Court has never said courts should presume Congress reads appellate court opinions and legislates in reliance on those opinions in interpreting what procedural requirements are jurisdictional. Expanding the stare decisis exception to include a long line of lower court opinions would be to drive a truck through what the Supreme Court no doubt expected to be a very narrow exception.

In the next part of this post, I will explain how the Hallmark court misapplied the stare decisis exception by converting it to a legislative reenactment doctrine exception.

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