Bench Memos

A Fine Time to Refine Klein

The Supreme Court hears arguments tomorrow in Bank Markazi, The Central Bank of Iran v. Peterson, involving a challenge to the constitutionality of section 502 of the “Iran Threat Reduction and Syria Human Rights Act of 2012” (codified at 22 U.S.C. §8772). 

The provision at issue enacts a prospective rule of law governing the legal treatment of certain previously seized assets identified by the pending district court case in which they are involved and subject to various restraining orders in that case. The purpose of section 502 is to assure that the seized assets in question remain available to help satisfy judgments of parties suing for injuries resulting from Iranian sponsorship of terrorism. 

The question presented is whether section 502 violates the rule of United States v. Klein, 80 U.S. 128 (1872) because . . . well, because of whatever it is that Klein is supposed to stand for! The general idea for which Klein is invoked is that Congress cannot direct courts to decide specific cases in specific ways. To do so is supposed to be an unconstitutional interference with the judicial power under Article III. But what exactly is the scope of this principle? And how does it intersect with the unquestioned power of Congress to prescribe the governing substantive law, and to amend that substantive law prospectively – so that it applies even in still-pending cases – and to be as specific as it likes in its enactments?

Klein is the notoriously cryptic chestnut only “Federal Courts” mavens love, in part because they get to argue over what the case means. Nobody claims to have cracked the Klein code perfectly. Chief Justice Salmon Chase’s opinion for the Court says several different things and most everybody agrees that not all of them are as precisely stated as they might be. Many of Klein‘s statements are simply overstated. Some aspects of Klein’s (possible) rationale have clearly been superseded or qualified by subsequent cases. Yet the holding of Klein strikes most people as somehow right. (There are dueling amicus briefs of federal courts / constitutional law scholars in the Bank Markazi case, arguing over what Klein means – which is what prompted me to write this post.) 

For the uninitiated: Klein involved a suit by the estate of a guy named Wilson against the U.S. government to recover the value of proceeds of cotton seized by U.S. agents during the Civil War. A statute had authorized the seizure but permitted compensation if the person whose property was seized could prove that he had never aided the rebellion. Wilson’s estate won the in Court of Claims, in part on the basis that he had received a presidential pardon upon swearing an oath of loyalty pursuant to the terms of President Lincoln’s Amnesty Proclamation during the War. (The question of whether Wilson had never, in any way, provided aid and comfort to the Confederates was otherwise disputed.)  While the case was pending on appeal to the U.S. Supreme Court, Congress enacted legislation directing that receipt of a presidential pardon, far from establishing the claimant’s bona fides, established just the opposite: receive a pardon and your claim is hereby directed to be dismissed for lack of jurisdiction. The new statutory rule flew in the face of a prior Supreme Court decision, United States v. Padelford (1869), interpreting the scope and effect of the President’s constitutional pardon power.  

The opinion in Klein is a bit of a jumble, but the core of the Court’s reasoning was simply this: Congress may not prescribe a substantively unconstitutional rule of decision in the guise of a “jurisdictional” directive. The guts of Klein’s reasoning is that Congress may not impair the legal effect of a presidential pardon by directing that the courts give it a different, lesser, contrary legal effect – that it dismiss an otherwise valid claim, for supposed lack of jurisdiction, as a consequence of receipt of a presidential pardon: 

The court is required to ascertain the existence of certain facts and thereupon to declare that its jurisdiction on appeal has ceased, by dismissing the bill.  What is this but to prescribe a rule for the decision of a cause in a particular way?  … We are directed to dismiss the appeal, if we find that the judgment must be affirmed, because of a pardon granted to the intestate of the claimants.  Can we do so without allowing one party to the controversy to decide it in its own favor?  Can we do so without allowing that the legislature may prescribe rules of decision to the Judicial Department of the government in cases pending before it?

We think not; . . . Congress has already provided that the Supreme Court shall have jurisdiction of the judgment of the Court of Claims on appeal.  Can it prescribe a rule in conformity with which the court must deny to itself the jurisdiction thus conferred, because and only because its decision, in accordance with settled law, must be adverse to the government and favorable to the suitor?  The question seems to answer itself.

The rule prescribed is also liable to just exception as impairing the effect of a pardon, and thus infringing the constitutional power of the Executive.  . . .  To the executive alone is intrusted the power of pardon; and it is granted without limit.  Pardon includes amnesty.  It blots out the offence pardoned and removes all its penal consequences.  It may be granted on conditions.  . . .

Now it is clear that the legislature cannot change the effect of such a pardon any more than the executive can change a law.  Yet this is attempted by the provision under consideration.  The court is required to receive special pardons as evidence of guilt and to treat them as null and void.  It is required to disregard pardons granted by proclamation on condition, though the condition has been fulfilled,  and to deny them their legal effect.  This certainly impairs the executive authority and directs the court to be instrumental to that end.

A related but distinct principle, embraced by Klein’s language in the course of making this core holding, is that Congress may not direct a court to decide a particular case a particular way so as to reach a particular result – that that is an intrusion on the judicial power and thus a violation of the separation of powers. (“What is this but to prescribe a rule for the decision of a cause in a particular way?”)

That principle is correct, but it ends up having surprising little force because of an important qualifying limitation: Congress may always change the governing substantive law applicable to a case (as long as the case has not reached final judgment) and thereby can accomplish a change in the resulting legal disposition of a matter in a pending case – much the same as if it were to direct a specific judicial result in a specific case. That is not a forbidden legislative exercise of the judicial power; it is a legislative exercise of the legislative power to make new prospective legal rules that govern pending cases.  And Congress can make such rules as specific it likes. It just can’t tell courts how to decide specific cases (and it can’t prescribe independently unconstitutional substantive rules of decision). So, the Klein “rule” – if that is really even part of the Klein holding – that Congress cannot dictate how a court decides a case does not amount to very much of a limitation in practice. Congress may change the substantive law, and it may change the substantive law governing a particular case.    

The Klein Court embraced this distinction, noting that Congress changed the applicable substantive law in Pennsylvania v. Wheeling Bridge Company by exercising one of its enumerated substantive constitutional powers in a valid way:

In that case, after a decree in this court that the bridge, in the then state of the law, was a nuisance and must be abated as such, Congress passed an act legalizing the structure and making it a post-road; and the court, on a motion for process to enforce the decree, held that the bridge had ceased to be a nuisance by the exercise of the constitutional powers of Congress, and denied the motion.  No arbitrary rule of decision was prescribed in that case, but the court was left to apply its ordinary rules to the new circumstances created by the act.     

Simply put: Congress can alter the situation by altering the substantive law in a constitutionally permissible manner. It just cannot direct that the court apply the law to specific facts in specific ways. It cannot forbid a court (in Klein’s words) “to give the effect to evidence which, in its own judgment, such evidence should have” and instruct a court “to give it an effect precisely contrary.”

Modern cases support the same distinction and accord Congress great freedom to be specific as to the cases and issues that a new legal standard is expected to govern. Most on point is Robertson v. Seattle Audubon Society (1992), in which the Court unanimously upheld a provision of law that prescribed the legal standard to be applied in two pending cases specifically identified by their docket numbers, rejecting the assertion that this violated Klein. Robertson goes a long way to resolving Bank Markazi.

The Bank Markazi case seems uncommonly easy – an entirely straightforward application of the basic principle that Congress can change the governing substantive law in a constitutional manner, and can do so even by identifying the particular matters or pending cases to which the change is intended to apply. The case presents no serious constitutional difficulty under any coherent understanding of Klein.  

But Klein of course is not a model of coherence. It gets the result right, and it articulates – mostly correctly – the right governing principles. But the opinion suffers somewhat from being written in an era before word processors and easy editing. As a result, Klein has baffled and confused – and delighted – commentators. It is time to end the bafflement, confusion – and the delight. Bank Markazi provides a good opportunity for the Court to clean up Klein.  

Michael Stokes Paulsen — Mr. Paulsen is a professor of law and distinguished university chairman at the University of St. Thomas, in Minneapolis.

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