Circuit Precedent and Supreme Court Decisions

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In Vensure HR, Inc. v. United States, No. 20-728T, 2023 U.S. Claims LEXIS 90 (Fed. Cl. Feb. 15, 2023) the Court of Federal Claims faced the issue of whether a three-judge circuit panel can overturn prior circuit precedent in light of subsequent Supreme Court precedent which logically undermines but does not specifically overrule the circuit precedent. The Department of Justice (DOJ) representing the IRS takes a very narrow view of the ability of a three-judge circuit panel to interpret the meaning of Supreme Court decision unfavorable to the government in the face of prior Federal Circuit precedent supporting the government’s position.  The Court of Federal Claims rejects DOJ’s take on a Federal Circuit panel’s authority.


At issue in Vensure is jurisdiction of a refund claim.  The Tax Clinic at the Legal Services Center of Harvard Law School has directly, or through amicus briefs, made arguments regarding jurisdiction in numerous cases including the case of Brown v. United States, 22 F.4th 1008 (Fed. Cir. 2022) at issue in Vensure.  In Brown, the Federal Circuit held that the improper signing of the claim for refund was not jurisdictional.  In Vensure, DOJ argued that Brown should not be followed on the jurisdictional issue because a three-judge panel could not overrule prior precedent of the same circuit.

The Vensure court described the government’s argument as follows:

In this case, defendant [the IRS] contends that the Brown decision is not binding on this court because the Brown panel improperly overruled prior Federal Circuit decisions holding that the requirements of §7422(a) are jurisdictional.  According to defendant, these prior decisions may only be overruled by an en banc court or by supervening statutory or Supreme Court authority that expressly addresses the issue.  Because “[t]here has been no statutory change to §7422(a)“ and “[n]either the Supreme Court nor the Federal Circuit en banc has held” that §7422(a) is not jurisdictional, defendant argues that Brown is not controlling.  Therefore, defendant contends, §7422(a)’s “duly filed” requirement remains jurisdictional and its motion to dismiss is properly brought pursuant to RCFC 12(b)(1).  Defendant does, however, alternatively argue that its motion to dismiss may be granted pursuant to RCFC 12(b)(6). 

Taxpayers argument in Vensure on the issue of jurisdiction was simple since it relied on the Federal Circuit’s decision in Brown that the “duly filed” requirement of §7422(a) is not a jurisdictional requirement.  After stating the position of the parties, the court held for the taxpayer stating:

The court agrees with plaintiff that Brown is controlling. The Federal Circuit “applies the rule that earlier decisions prevail unless overruled by the court en banc, or by other controlling authority such as intervening statutory change or Supreme Court decision.” Tex. Am. Oil Corp. v. U.S. Dep’t of Energy, 44 F.3d 1557, 1561 (Fed. Cir. 1995). Under this rule, “supervening Supreme Court authority is an established basis for treating an earlier panel opinion as no longer binding.” Elbit Sys. Land & C4I Ltd. v. Hughes Network Sys., LLC, 927 F.3d 1292, 1305 (Fed. Cir. 2019). In accordance with this rule, the Federal Circuit in Brown relied on the Supreme Court’s Lexmark decision to treat earlier Federal Circuit decisions regarding the jurisdictional nature of the “duly filed” requirement as no longer binding. See Brown, 22 F.4th at 1011. The panel’s reliance on Lexmark is a permissible basis on which to overrule prior panel opinions. See Elbit, 927 F.3d at 1305.

The issue of the role of prior circuit precedent in the face of a Supreme Court decision indirectly undercutting that precedent was raised by DOJ in two other recent cases involving jurisdiction.  In Culp the Third Circuit denied DOJ’s motion for summary affirmance based on prior Third Circuit precedent on the issue of the jurisdiction of the Tax Court in deficiency cases where the taxpayer files an untimely petition.  In Allen, the Eleventh Circuit granted such a motion on the same issue.  In both cases the application of the Supreme Court’s decision in Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022) and the application of its reasoning to deficiency cases was at issue.

The Culp case is now scheduled for oral argument before the Third Circuit on March 7 and will be the first circuit test of the Hallmark decision.  The Third Circuit is taking the Culp case very seriously – to the point of unusually asking amicus to do part of the oral argument.  I will be doing that amicus oral argument.  Pro bono counsel Oliver Roberts of Jones Day will be arguing for the Culps.

DOJ will probably continue to press the argument in Culp that it made in Vensure seeking to have the panel follow old circuit precedent that predates the Supreme Court’s decision in Boechler.  Like the Federal Circuit, the Sixth Circuit rejected this argument in Hoogerheide v. IRS, 637, F.3d 634, 636 (6th Cir. 2011) in a case involving IRC § 7433:

The district court had good reason to assume that a plaintiff’s failure to exhaust the IRS’s administrative remedies deprives the federal courts of subject matter jurisdiction over a § 7433 damages action. We have said as much before. See, e.g., Fishburn v. Brown, 125 F.3d 979, 982 (6th Cir. 1997)Romp v. United States, 96 F. App’x 978, 980 (6th Cir. 2004).

Since these decisions, however, the Supreme Court has changed course. Concerned about the vanishing distinction between the mandatory requirements of a cause of action and jurisdiction over that cause of action, the Court in 2006 drew an “administrable bright line” between the two. Arbaugh v. Y & H Corp., 546 U.S. 500, 516, 126 S. Ct. 1235, 163 L. Ed. 2d 1097 (2006). Here is the line:

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. . . . But when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character.

Id. at 515-16. Since Arbaugh, we have re-assessed the line between jurisdictional and claims-processing requirements in several settings. See, e.g., Winnett v. Caterpillar, Inc., 553 F.3d 1000, 1005-06 (6th Cir. 2009) (existence of union contract goes to the merits, not to jurisdiction over a claim under the Labor Management Relations Act); Allen v. Highlands Hosp. Corp., 545 F.3d 387, 401-02 (6th Cir. 2008) (administrative exhaustion goes to a plaintiff’s right to relief, not to jurisdiction over a claim under the Age Discrimination in Employment Act); Thomas v. Miller, 489 F.3d 293, 296 n.3 (6th Cir. 2007) (numerosity requirement goes to the scope of liability, not to jurisdiction over a claim under the Family Medical Leave Act).

In the aftermath of Arbaugh,  it no longer is appropriate to treat the exhaustion requirements for bringing a § 7433 claim as jurisdictional. Mandatory though the exhaustion requirement in § 7433(d) may be, it is not jurisdictional.

Similarly, in Hassen v. Gov’t of the V.I., 861 F.3d 108, 112-115 (3d Cir. 2017) Judge Schwartz writing for the Third Circuit also found its earlier precedent regarding § 7433 did not bind a subsequent panel in light of intervening Supreme Court discussion of jurisdiction:

More than two decades ago, in Venen v. United States, 38 F.3d 100, 103 (3d Cir. 1994), we characterized this exhaustion requirement as jurisdictional. Since then, as one court put it, the United States Supreme Court has cautioned against confusing “mandatory requirements of a cause of action” with a jurisdictional prerequisite “over that cause of action.” Hoogerheide v. IRS, 637 F.3d 634, 636   (6th Cir. 2011) (citing Arbaugh v. Y&H Corp., 546 U.S. 500, 516, 126 S. Ct. 1235, 163 L. Ed. 2d 1097 (2006))

. . . .

Thus, applying Arbaugh‘s directive and considering that § 7433(d) does not speak in jurisdictional terms or convey that Congress intended to permit a court to exercise jurisdiction only if the claim was exhausted, we join our sister circuits and hold that § 7433(d)‘s exhaustion requirement is not jurisdictional and hence need not be satisfied for the district court to entertain a claim under § 7433(a).5 Gray, 723 F.3d at 798; Hoogerheide, 637 F.3d at 636-38see also Kim v. United States, 632 F.3d 713, 718, 394 U.S. App. D.C. 149 (D.C. Cir. 2011) (treating § 7433(d) as an affirmative defense, and by implication not viewing it as a jurisdictional prerequisite).


5. Although IOP 9.1 says that a subsequent panel cannot overrule a prior panel’s precedential opinion, “this rule gives way when the prior panel’s holding is in conflict with Supreme Court precedent.” Mennen Co. v. Atl. Mut. Ins. Co., 147 F.3d 287, 295 n.9 (3d Cir. 1998)Nationwide Ins. v. Patterson, 953 F.2d 44, 46 (3d Cir. 1991) (observing that “[o]rdinarily, a panel of this court is bound to follow the holdings of published opinions of prior panels of this court unless overruled by the court [e]n banc or the holding is undermined by a subsequent Supreme Court case”). Arbaugh is such a precedent and thus, we are no longer bound by Venen‘s holding that the exhaustion requirement is jurisdictional.

Judge Schwartz is on the three-judge panel in Culp.

There are many circuit and lower court decisions on the books regarding jurisdiction of courts on a variety of matters.  Most of those decisions were written by the courts before the Supreme Court began sharpening its language regarding jurisdiction.  DOJ and the IRS seek to cling to the old decisions citing the old circuit precedents as binding in the new cases challenging jurisdictional rulings.  As these cases move forward, we will see how citing to prior circuit precedent binds the circuit courts as they face the jurisdiction issues in a new era.  Will circuit courts cling to their prior precedent as the 11th Circuit seemed to do in Allen forcing the matter either to an en banc level or back to the Supreme Court or will the circuits follow the decisions in the Federal Circuit, the Third and the Sixth Circuit recognizing the change in landscape dictated by the Supreme Court decisions?


  1. Robert Kantowitz says

    This issue, of course, transcends tax. US courts deal with specific cases. They are not (or at lease are not supposed to be) super-legislatures. So it is sometimes not clear when a case is overruled or when a new rule is announced, by a higher court what the scope is relative to cases that have different facts or deal with different statutes. Sometimes, the higher court just does not provide enough basis to extrapolate to other situations. It’s even harder where the new case seems irreconcilable with an old one, but the court does not mention or overrule the old one.

    One area where this comes up is in cases arguing whether government officials have qualified immunity for civil rights violations: the standard there is whether a reasonable official would have known that what he did was unlawful, and you get arguments over things like, “Well, the prior case law dealt with a traffic stop for running a red light, but in this case the stop was for speeding.”

    You see it in substantive tax law as well, where the result in this case cannot be justified or explained unless the rule as to question X is “yes” (where prior case law has split on whether the answer to question X, which comes up in many other contexts, is yes or no). Does that establish the answer across the board as yes, or can the relevant party argue that the recently decided case, for example, deals only with whether an obligation of a corporation is debt or equity and that here we have debt of a partnership?

    Sometimes, I have been surprised. There are litigants (and there may even be courts) that take the position that they will do business as usual unless and until overruled explicitly. Thay creates havoc. Fairness demands better, on the part of both the governments and the taxpayers.

  2. Jack Townsend says

    Keith, you quote Hassen v. Gov’t of the V.I., 861 F.3d 108, 112-115 (3d Cir. 2017) which includes the following:

    [T]he United States Supreme Court has cautioned against confusing “mandatory requirements of a cause of action” with a jurisdictional prerequisite “over that cause of action.”

    You also quote Hoogerheide v. IRS, 637, F.3d 634, 636 (6th Cir. 2011):

    In the aftermath of Arbaugh, it no longer is appropriate to treat the exhaustion requirements for bringing a § 7433 claim as jurisdictional. Mandatory though the exhaustion requirement in § 7433(d) may be, it is not jurisdictional.

    I would have thought the exhaustion requirement was mandatory, whether it is jurisdictional or just mandatory. Hence, trying to determine whether it is jurisdictional or just mandatory is a waste of mental effort to no particular purpose.

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