Court Opinion

ID: 9484047
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:39:04.418169+00
Date Added: 2024-06-11T17:49:59.186954
License: Public Domain

SHADUR, Senior District Judge,
concurring in the result.
Judge Flaum’s opinion provides an admirably clear exposition of an extremely complex subject matter, especially overlaid as that subject matter is in this case by a tortuous history of repeated litigation. And the result — REA’s inability to enforce its 1990 preemption regulation against Wabash Valley — is equally unexceptionable. Where I must regretfully part company with the majority is in its having gone beyond that issue to one that I believe to be unnecessary to the decision: the validity or invalidity of the preemption regulation on its face (that is, whether the regulation is potentially viable against REA borrowers other than Wabash Valley under circumstances other than the unique set of facts in this case).
Not only is that added reach of the opinion unnecessary to the resolution of the two-party controversy before us, but it also seems to me that:
1. Invalidation of the regulation on its face, rather than simply as sought to be applied against Wabash Valley, is at odds with the sound jurisprudential approach counseled by Justice Brandéis in his famous concurrence in another power case—Ashwander v. TVA, 297 U.S. 288, 346-48, 56 S.Ct. 466, 482-83, 80 L.Ed. 688 (1936). Even though Ashwander dealt with the wisdom of avoiding constitutional questions as to Congress’ legislative power unless those questions had to be reached to decide the particular case, I believe that the same notion of judicial restraint should extend to our not deciding on the general power of an adminis*1492trative agency to “legislate,” where resolving that question is equally nonessential to the current decision.
2. Invalidation of the regulation also gives insufficient credence to one of the prospects for implied preemption specifically held out by the Supreme Court in Arkansas Elec. Coop. Corp. v. Arkansas Pub. Serv. Comm’n, 461 U.S. 375, 389, 103 S.Ct. 1905, 1915, 76 L.Ed.2d 1 (1983). To be sure, that statement is dictum. But just as district judges are expected to pay heed to dicta from their Courts of Appeals — at least in situations where there is no need to evaluate the force (or lack of force) of such dicta in order to decide the specific case at issue — so the basic concept of our judicial hierarchy calls for Courts of Appeals to approach Supreme Court dicta in the same gingerly fashion.
Although no extended discussion is required to explain those points of departure from the majority opinion, a brief explanation is certainly in order.
First, REA must lose this case under established principles of claim preclusion. My principal reason for generally preferring the terms “claim preclusion” and “issue preclusion” over the more traditional “res judicata” and “collateral estoppel” terminology is to avoid any confusion that might stem from the fact that “res judica-ta” is often used as the generic term for both branches of preclusion stemming from prior litigation (see Justice Blackmun’s opinion for the Court in Migra v. Warren City School Dist. Bd. of Educ., 465 U.S. 75, 77 n. 1, 104 S.Ct. 892, 894 n. 1, 79 L.Ed.2d 56 (1984)). In this instance, though, the contrasting “claim preclusion” versus “issue preclusion” usage also serves to highlight the reason that Wabash Valley should prevail here on the former ground.
REA’s claim before us is the same claim that it eschewed asserting against Wabash Valley in the original Indiana litigation between them, and that we therefore barred it from advancing on claim preclusion grounds in Wabash I, 903 F.2d at 455: the claim that federal law preempts the Indiana regulation because it has set too low a rate. In Wabash I we scotched REA’s attempted use of an agency letter as the means by which it sought to preempt state law. Even though REA now seeks to place that old wine into the new bottle of a regulation, its legal claim of implied preemption is no different than before. REA is no more entitled to litigate that claim, having forgone the opportunity to do so in the prior litigation between the same parties, than any losing plaintiff in any other lawsuit is free to assert the same claim a second time around by developing another legal theory for holding the defendant liable.
Thus the majority opinion’s parsing of REA’s current argument as one “asserting the implied authority to engage in preemptive rulemaking rather than the authority to impliedly preempt” (at 1488) gives REA more than its due. That type of distinction is one without a difference for claim preclusion purposes — it is fundamental to claim preclusion, in contrast to issue preclusion, that the former bars not only every issue that was urged by the losing party but also every issue that could have been urged in support of its position (Leal v. Krajewski, 803 F.2d 332, 334-35 (7th Cir.1986) (applying Indiana law)). Indeed, the majority’s stated distinction could readily be paraphrased to give every disgruntled litigant a second bite at the apple in another lawsuit, by the mere device of its dreaming up a fresh theory that it did not tender to the court the first time around.
Hence REA must lose on its implied preemption claim as against Wabash Valley, because it has already had its day in court and it then chose not to argue that claim (as we held in Wabash I, 903 F.2d at 455). And that leads to my second point of departure from the majority opinion, which— despite its having quoted Arkansas Electric and that opinion’s two potential bases for preemption (at 1486) — then avoids any discussion of the second of those bases for the entire balance of the text (at 1488-91) that follows the res judicata discussion.
*1493To repeat, here is the second prospect held out in Arkansas Electric, 461 U.S. at 389, 103 S.Ct. at 1915:
Moreover, even without an explicit statement by the REA, a particular rate set by the [state regulatory authority] may so seriously compromise important federal interests, including the ability of the [cooperative] to repay its loans, as to be implicitly preempted by the Rural Electrification Act.
We cannot fairly gloss over such a statement by the Supreme Court by being silent about it. That language unquestionably holds out the possibility of implied preemption of state rates without any need to identify a specific source in the Rural- Electrification Act (unlike Arkansas Electric’s first potential exception, which occupies the entire substantive discussion at pages 1488-91 of the majority opinion here).
To be sure, the just-quoted statement from the ultimate judicial source (though concededly via dictum) leaves all of its readers — courts, administrative agencies, lawyers — with the task of divination, a process that has occupied lesser mortals at least since the Delphic Oracle began to issue its pronouncements. And REA has now engaged in that process: It reads that language as permitting it to issue a regulation to announce the rule that it would contemplate applying in future situations where state regulatory authority has “seriously eompromise[d] important federal interests, including the ability of the [cooperative] to repay its loans.”
It appears from footnote 10 to the majority opinion that I may not have made the difficulty that I find with the approach taken there entirely clear. At the risk of repetition, let me summarize briefly. REA itself has not pointed to any express authority in the Rural Electrification Act for promulgation of its preemption regulation, and Judge Flaum has painstakingly and persuasively demonstrated that no such express statutory authority exists. Hence I believe that REA must seek to prevail here — if it can — only on the ground that implied preemption is available on the basis that I have just set out: that the regulation does no more than to announce the prospect of the kind of preemption held out as a possibility by the Arkansas Electric statement that I have quoted. And that argument was indeed available to REA, but was not made by it, in the earlier litigation. That was therefore a matter that could have been urged and determined in the first litigation — and, as already stated, that is the test for claim preclusion in Indiana (as everywhere).
In that view, it does not serve any useful purpose (and indeed I would suggest that it undercuts sound jurisprudential principles) for this Court to decide two issues that it need not resolve in order to rule against REA in light of the litigation history here:
1. whether the prospect of implied preemption is indeed held out as a possibility by what the Supreme Court said in Arkansas Electric, and
2. whether a regulation — essentially an agency’s advance announcement of the existence of such a possibility and of the general principles that will govern its exercise — is an appropriate way to apprise the legal community of REA’s position in those respects.
If both of those questions merit an affirmative answer, then the regulation is valid despite its lack of grounding in express statutory authorization. But those questions are better left for decision by a court in the future if, at some later date, REA were to apply that new regulation to a concrete case involving an inadequate rate approved by a state agency in the face of the preemption regulation (a very different situation from the one that we confront here).
Accordingly, although I agree entirely with the emptiness of REA’s position in this case because it has forfeited its right to argue implied preemption against Wabash Valley, I regret that I cannot subscribe to a decision that forecloses REA from taking the Supreme Court at its word in dealing in the future with others who are not parties to this litigation, in circumstances where REA has not tied its own hands as it has against Wabash- Valley. For the reasons stated here, I concur in the *1494result reached by the majority but not in its rationale for arriving at that result.