United States Court of Appeals For the First Circuit

No. 19-2113

KEN JOHANSEN, individually and on behalf of all others similarly situated,

Plaintiff,

v.

LIBERTY MUTUAL GROUP INC., Defendant/Third-Party Plaintiff-Appellee, SPANISH QUOTES, INC., d/b/a WeSpeakInsurance, Defendant, LIBERTY MUTUAL INSURANCE COMPANY, Third-Party Plaintiff-Appellee,

v.

DIGITAS, INC., Third-Party Defendant-Appellant, PRECISE LEADS, INC., Third-Party Defendant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Allison D. Burroughs, U.S. District Judge]

Before

Howard and Thompson, Circuit Judges, and Arias-Marxuach, District Judge.

 Of the District of Puerto Rico, sitting by designation. Laura Greenberg-Chao, Henshon Klein LLP, Michael Dockterman, and Steptoe & Johnson LLP on brief for Digitas, Inc., appellant. Manleen Singh, Anthony A. Froio, Eric Magnuson, and Robins Kaplan LLP on brief for Liberty Mutual, appellee.

September 25, 2024 HOWARD, Circuit Judge. When Ken Johansen sued Liberty

Mutual for violating the Telephone Consumer Protection Act (TCPA),

Liberty Mutual and Digitas, Inc. disputed whether Johansen's claim

triggered Digitas's duty to indemnify Liberty Mutual. Even after

Johansen's class action was settled and dismissed, the third-party

wrangling between Liberty Mutual and Digitas escalated, as each

day made the case more expensive to resolve. Today, we move this

protracted saga toward closure. The district court

found that Digitas violated its contractual duty to indemnify

Liberty Mutual and thus partially granted Liberty Mutual's motion

for summary judgment. Notwithstanding a thorny question of

appellate jurisdiction, we agree with the district court that

Digitas breached its warranty and that Liberty Mutual satisfied

the requisite preconditions to trigger Digitas's indemnity

obligation. We affirm.

I.

This appeal involves a small web of contractual

arrangements intended to help Liberty Mutual grow its customer

base.1 First and foremost, Liberty Mutual, a diversified auto

1 We take the facts from the parties' summary-judgment submissions and present them in the light most favorable to the non-moving party. See Lachance v. Town of Charlton,

, 17 n.1 (1st Cir. 2021). Though the parties filed cross-motions for summary judgment, we construe Digitas as the party that is due this favorable standard of review because only Digitas appealed the district court's summary-judgment ruling.

- 3 - insurer, contracted in 2012 with Digitas, a marketing services

provider. Under the agreement (the "Master Services Agreement" or

"MSA"), Digitas promised to deliver services as defined in ensuing

statements of work, which subsequently included "interactive

marketing" through "paid search, aggregator, affiliate and landing

pages (tracking and readout only)." Digitas warranted that these

services would "conform to [Liberty Mutual's] requirements as

specified in the applicable [statement of work]." Digitas also

extended its warranty to third-party contracts, promising to

provide to Liberty Mutual "the full benefit of all covenants,

warranties, representations and indemnities granted to Digitas by

third parties."

The MSA also contained an indemnification provision.

Each party agreed to indemnify the other against "all third[-]party

claims, damages, liabilities, costs and expenses, including

reasonable legal fees and expenses . . . , arising out of any

breach of any warranty . . . by the indemnifying party." In

addition to a breach of warranty, the MSA conditioned any indemnity

obligation on three prerequisites:

(i) prompt written notice by the indemnified party to the indemnifying party of any claim, action, or demand for which indemnity is claimed; (ii) the opportunity for complete control of the defense and settlement thereof by the indemnifying party; and (iii) such reasonable cooperation, at the indemnifying party's expense, by the indemnified party in

- 4 - the defense as the indemnifying party may request.

Liberty Mutual separately executed a similar marketing

agreement with Precise Leads, Inc. to " generat[e] call volume"

with prospective consumers. The Precise Leads contract also

contained an indemnification provision. For its part, Digitas

separately contracted with Spanish Quotes, Inc., which acted as an

insurance shopping tool to help customers find insurance quotes.

In doing so, Spanish Quotes warranted that its services would meet

Digitas's specifications and would not violate any laws, rules, or

regulations.

In 2014, a person identified as "Rita Johansen" visited

autoquotesdirect.com, expressed interest in purchasing car

insurance, and consented to fielding calls from insurers,

including Liberty Mutual. Months later, Ken Johansen received a

phone call from a representative of Auto Insurance Services.

Johansen confirmed that he had requested a car insurance quote,

and Auto Insurance Services transferred the call to Liberty Mutual.

After three similar calls and transfers, Johansen complained to

Liberty Mutual that telemarketers had been calling his home.

Because it was apparent that the calls originated from a Spanish

Quotes call source, Liberty Mutual contacted Digitas to inform

Digitas of Johansen's allegations and to request that Spanish

Quotes "track down the source based on the caller ID and shut them

- 5 - down." Digitas confirmed that its work, and the work of its

contractual partners, should not include outbound calls that were

then transferred to Liberty Mutual.

Johansen filed a putative class-action complaint in July

2015 against Liberty Mutual and Spanish Quotes under the TCPA.2

See

. Johansen alleged that Spanish Quotes violated

the TCPA by, among other acts, solicitating members of the National

Do-Not-Call Registry multiple times in a year. He also alleged

that Liberty Mutual was responsible for ensuring that Spanish

Quotes complied with the TCPA.

Liberty Mutual promptly informed Digitas of Johansen's

lawsuit and referenced the MSA's indemnity provision. Digitas

responded five months later that it was "inclined to enter into an

agreement with Liberty to fund 40% of the defense of the underlying

TCPA action if Precise Leads [did] the same." Shortly thereafter,

Digitas again offered to pay for the defense under certain

conditions, one of which included Liberty Mutual covering a portion

of its costs of cooperation. Liberty Mutual rejected the offer,

pointing to the MSA's requirement that indemnitee cooperation come

"at the indemnifying party's expense."

2 "The TCPA restricts the making of telemarketing calls and the use of automatic telephone dialing systems and artificial or prerecorded voice messages. The rules apply to common carriers as well as to other marketers." FCC, FCC Actions on Robocalls, Telemarketing (July 23, 2018), https://www.fcc.gov/general/ telemarketing-and-robocalls [https://perma.cc/77EZ-UJEZ].

- 6 - Unable to agree on indemnification, Liberty Mutual filed

a third-party complaint against Digitas and Precise Leads, thus

beginning the litigation now before us. The third-party complaint

would come to include claims for breach of contract and negligence

against Digitas and Precise Leads, as well as a cross-claim for

contractual indemnity against Spanish Quotes. The district court

denied Digitas's motion to dismiss, finding that the MSA required

only an opportunity for control -- not actual tender -- of the

defense. Meanwhile, Digitas continued to attempt to negotiate the

scope of its indemnity obligation with Liberty Mutual. Digitas's

third offer contemplated resolving any indemnity issues through

private mediation. Its fourth and final offer excluded from

Digitas's indemnity obligation fees for the third-party litigation

and nullified any further obligations under the MSA unless Liberty

Mutual suffered an adverse judgment based on a specific finding of

Digitas's breach.

Johansen proposed to settle his individual claims in

January 2018. Throughout the settlement negotiations, Digitas

maintained that it had no duty to indemnify Liberty Mutual because

Liberty Mutual had not met the preconditions in the MSA.

Nevertheless, Liberty Mutual worked with Digitas to draft and

finalize an agreement to settle Johansen's claims. Johansen

eventually agreed to a five-figure settlement, and the district

court dismissed his claims against Liberty Mutual with prejudice.

- 7 - The third-party squabbling between Liberty Mutual and

Digitas persisted,3 even after Liberty Mutual settled its

third-party claims against Precise Leads. Liberty Mutual and

Digitas filed cross-motions for summary judgment on February 28,

2019. Liberty Mutual sought attorney's fees and its share of the

Johansen settlement payment. Digitas sought dismissal of the

third-party claims.

The district court found that Digitas violated its duty

to indemnify Liberty Mutual and partially granted Liberty Mutual's

cross-motion for summary judgment. It also partially denied

Liberty Mutual's cross-motion, insofar as Liberty Mutual's claim

of negligence was premised upon a finding that Digitas was liable

to Johansen for violating the TCPA. Accordingly, the district

court also partially denied and partially granted Digitas's

cross-motion. The court closed the case without determining

damages. Twenty-nine days later, Digitas filed this appeal.

With our leave, Liberty Mutual filed a motion under

Federal Rule of Civil Procedure 60(a)4 asking the district court

3 The dispute between Liberty Mutual and Spanish Quotes also continued. But because Spanish Quotes never moved for summary judgment, that dispute is not a part of this appeal. 4 Rule 60(a) allows a court to "correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record." Fed. R. Civ. P. 60(a). "[A]fter an appeal has been docketed in the appellate court and while it is pending, such a mistake may be corrected only with the appellate court's leave,"

which we granted here.

- 8 - to reopen the case and assess damages. The district court denied

the motion. Because, it reasoned, Rule 60(a) is intended to fix

"mechanical or mathematical mistake[s]," it was an "inappropriate

mechanism" through which to add damages. In response to our

subsequent request for clarification, the district court specified

that it had intended the judgment to be final. The court explained

that it had "assumed that the indemnification dispute involved a

sum certain and that the parties did not want or need an

evidentiary hearing" because Liberty Mutual had never submitted

damages evidence, even during the twenty-nine days between

judgment and appeal. "Should such a hearing be necessary," the

court suggested, it could conduct one once we dispensed of

Digitas's pending appeal.

II.

Before proceeding to the merits of Digitas's appeal, we

must first address Liberty Mutual's insistence that we lack

appellate jurisdiction. Liberty Mutual argues that we lack

jurisdiction under

because a judgment, like the

one here, that "adjudicates only liability and not damages[ ]is

not a final order." Mullen v. St. Paul Fire & Marine Ins. Co.,

(1st Cir. 1992) (quoting Domegan v. Fair,

(1st Cir. 1988)); 15B Charles Alan Wright, Arthur

R. Miller & Edward H. Cooper, Federal Practice and Procedure §

3914.28 n.6 (2d ed. 2024) (collecting cases). The adjudication of

- 9 - attorney's fees, however, comprises an exception to this general

principle. See Ray Haluch Gravel Co. v. Cent. Pension Fund of

Int'l Union of Operating Eng'rs and Participating Emps.,

(2014) ("Whether the claim for attorney's fees is based

on a statute, a contract, or both, the pendency of a ruling on an

award for fees and costs does not prevent, as a general rule, the

merits judgment from being final for purposes of appeal."). The

parties argue at length, and on the backdrop of an imperfect

record, about whether that exception applies to the attorney's

fees at issue here and whether Liberty Mutual's damages claim

comprises more than attorney's fees.

"The parties' arguments weave a jurisdictional riddle,

which is both intricate and difficult to resolve." Akebia

Therapeutics, Inc. v. Azar,

(1st Cir. 2020).

Thankfully, "the exigencies of [this] particular case do not

require" a "rush to decide" this issue.

(quoting Privitera v.

Curran,

(1st Cir. 2017)). Where a "case poses a

question of statutory, not Article III, jurisdiction" and where "a

decision on the merits will favor the party challenging the court's

jurisdiction," we may assume that we have jurisdiction to reach

the merits of an appeal. Caribe Chem Distribs., Corp. v. S. Agric.

Insecticides, Inc.,

(1st Cir. 2024) (quoting Doe

v. Town of Lisbon,

(1st Cir. 2023)); see Akebia

Therapeutics,

("Although hypothetical

- 10 - jurisdiction is generally disfavored, such a barrier is

insurmountable only when Article III jurisdiction is in issue."

(internal citations omitted)). Here, the only potential

jurisdictional barrier is statutory, see

,

and -- as discussed below -- our merits decision favors Liberty

Mutual, the party challenging our jurisdiction. See United States

v. Ayala-Lopez,

(1st Cir. 2006) ("[T]here is no

need to reach a more difficult non-Article III issue of appellate

jurisdiction [under § 1291] if the case may be easily disposed of

on the merits."); Doe,

(same); 15A Wright, Miller

& Cooper, supra, § 3905 (deeming "clearly appropriate" our practice

of "affirm[ing] a judgment if the result on the merits is easier

to reach than a thorny question of [appellate] jurisdiction"); id.

§ 3905 n.22 (collecting cases). We tarry no further. Because the

merits squarely favor Liberty Mutual, we bypass the jurisdictional

conundrum and resolve this case on straightforward contractual

interpretation.

III.

We review the district court's summary-judgment order de

novo. See Dukes Bridge LLC v. Beinhocker,

(1st

Cir. 2017); Bukuras v. Mueller Grp., LLC,

(1st

Cir. 2010). The presence of cross-motions for summary judgment

"neither dilutes nor distorts [our] standard of review." Great

Lakes Ins. SE v. Andersson,

(1st Cir. 2023)

- 11 - (quoting Mandel v. Bos. Phoenix, Inc.,

, 205 (1st Cir.

2006)); Bukuras,

. "Cross motions simply require

us to determine whether either of the parties deserves judgment as

a matter of law on facts that are not disputed." Anvar v. Dwyer,

(1st Cir. 2023) (quoting Barnes v. Fleet Nat'l Bank,

N.A.,

(1st Cir. 2004)).

Because the parties agree that the indemnification

provision presents "a pure question of law regarding the

interpretation of unambiguous terms," we also review the district

court's contractual interpretation de novo. See Caldwell Tanks,

Inc. v. Haley & Ward, Inc.,

(1st Cir. 2006).

Following the parties' lead, we apply Massachusetts law, under

which the intention of the parties guides our interpretation. See

Farmers Ins. Exch. v. RNK, Inc.,

(1st Cir. 2011);

Bukuras,

. As ever, we understand words to carry

their "usual and ordinary" meaning and read the whole contract "in

a reasonable and practical way, consistent with its language,

background, and purpose." Bukuras,

(quoting Cady

v. Marcella,

(2000)).

The district court found that Digitas violated its

contractual duty to indemnify Liberty Mutual because Digitas

breached its warranty and Liberty Mutual satisfied the

prerequisites to trigger Digitas's indemnity obligation. Digitas

argues on appeal that it could not have breached warranty absent

- 12 - a finding of actual liability and that Liberty Mutual did not

satisfy the MSA's prerequisites because its extracontractual

demands burdened Digitas's assumption of the defense. Finding

these objections unpersuasive, we affirm the district court.

A.

The MSA conditioned indemnity on the indemnitor's

"breach of any warranty, representation, covenant, obligation or

agreement." Liberty Mutual argues that Digitas breached its

warranty by allowing "warm transfers" in its campaign, some of

which formed the basis of Johansen's complaint and about which

Digitas knew. Digitas disputes none of these facts on appeal.5

Instead, Digitas argues that demonstrating Digitas's breach of

warranty required finding "a violation of the TCPA by Digitas," a

finding the district court did not make. We disagree.

"Where, as asserted here, the duty to indemnify arises

out of contract instead of as a matter of law, 'the question of

whether actual liability is a prerequisite to the duty to indemnify

5 In the customer-service industry, a "warm transfer" is the routing of a customer call from an operative to a colleague after the operative has explained to the colleague the context of the call. Vonage, Warm Transfer vs. Cold Transfer (Jan. 18, 2024), https://www.vonage.com/resources/articles/warm-transfer [https:// perma.cc/LW4N-QYTB]. The parties attach to the term a slightly different meaning, which incorporates an "outbound dial" to a potential customer. It is this outbound dialing that Johansen alleged violated the TCPA. To be clear, however, these technical details do not bear on the third-party action here. For our purposes, it is sufficient to note that Digitas does not dispute that it breached its warranty by allowing warm transfers.

- 13 - is answered by reference to what the parties . . . intended, as

reflected in the [contractual] language.'" Fashion House, Inc. v.

K mart Corp.,

(1st Cir. 1989) (quoting

Bainville v. Hess Oil V.I. Corp.,

(3d Cir.

1988)). Here, the parties agreed to indemnify each other from

"any and all third[-]party claims, damages, liabilities, costs,

and expenses . . . arising out of any breach of any warranty."

The plain language of the provision clearly encompasses a

"third[-]party claim" like Johansen's. See Samos Imex Corp. v.

Nextel Commc'ns, Inc.,

(D. Mass. 1998)

(finding an indemnification clause activated upon claim alleging

liability, "and not just on final judgment of liability," where

clause extended to claims). A "claim" is a "demand for money,

property, or a legal remedy." Claim, Black's Law Dictionary (12th

ed. 2024). "Such a sensitive trigger cannot function with the

actual-liability standard acting as a safety," especially because

the MSA further lowered the bar by modifying "claim" with "any and

all." Warren Drilling Co. v. Equitable Prod. Co.,

(6th Cir. 2015) ("The words 'any' [or] 'claim' . . .

indicate an intent to displace an actual-liability rule."); see

also Fashion House,

(binding an indemnitor to

an indemnitee's settlement where "broad" and "sweeping"

indemnification clause extended to any "liability, loss, claim,

suit, judgment and cause of action, or expense"); Trs. of N.Y.,

- 14 - New Haven & Hartford Co. v. Tileston & Hollingsworth Co.,

(1963) (allowing an indemnitee "to bind the

indemnitor to the result of a settlement" when indemnification

clause extended to "loss, damage[,] or injury").

We conclude that the parties did not intend "breach of

warranty" to necessitate a finding of actual liability. Because

Liberty Mutual provides undisputed evidence that Digitas allowed

"warm transfers" and that these transfers breached Digitas's

warranty to Liberty Mutual, we affirm the district court's finding

that Digitas breached its warranty under the MSA without reaching

the question of whether Digitas violated the TCPA.

B.

Breach of warranty notwithstanding, the MSA further

conditioned indemnity on the following three prerequisites:

(i) prompt written notice by the indemnified party to the indemnifying party of any claim, action, or demand for which indemnity is claimed; (ii) the opportunity for complete control of the defense and settlement thereof by the indemnifying party; and (iii) such reasonable cooperation, at the indemnifying party's expense, by the indemnified party in the defense as the indemnifying party may request.

The parties agree that Liberty Mutual provided prompt written

notice, satisfying the first requirement, but dispute whether the

remaining requirements were satisfied. We conclude that Liberty

- 15 - Mutual satisfied the second requirement and that Digitas's refusal

to assume the defense rendered the third requirement unripe.

Undisputed facts in the record provide evidence that

Liberty Mutual gave Digitas multiple opportunities for control of

the defense. "[T]o establish tender of an opportunity to defend"

under Massachusetts law, "[a]n indemnitee is 'not bound to make

any formal and explicit demand,' beyond providing information

alerting the indemnitor to the existence of the claim."

Psychemedics Corp. v. City of Bos.,

, 735-36 (2021)

(quoting Tileston & Hollingsworth,

). "Where the

parties have an existing contractual relationship," as they do

here, "it takes very little on the part of the indemnitee to

indicate an intent to charge the indemnitor with the defense."

. Liberty Mutual easily met this low burden in August

2015 when it notified Digitas of the Johansen claim and referenced

the MSA's indemnification clause. The parties' subsequent and

extensive communications about Digitas's indemnity obligation

supply further undisputed evidence that Liberty Mutual provided

the opportunity to control the defense.

On appeal, Digitas assumes its stance, twice rejected by

the district court, that "Liberty Mutual was required to turn over

the defense to Digitas or forfeit its right to indemnity." This

interpretation of the MSA remains patently incorrect. The MSA

required that Liberty Mutual give Digitas "opportunity" to control

- 16 - the defense, not that Liberty Mutual actually tender the defense.

Digitas's reading of the MSA disregards clear contractual language

and conflicts with Massachusetts caselaw, see

;

Tileston & Hollingsworth,

.

Once Liberty Mutual gave Digitas notice and opportunity

to control the defense, "the burden shift[ed] to [Digitas]

proactively to attempt to assume the defense." Psychemedics Corp.,

486 Mass. at 726 ("To attempt proactively to assume the defense

entails good faith efforts promptly to assume and control the

defense of the claims asserted."); see City of Bos. v. Worthington,

, 498–99 (1858). Of course, Liberty Mutual

had a corresponding duty to allow Digitas to assume the defense.

See Psychemedics Corp., 486 Mass. at 742. Any "affirmative acts

by [Liberty Mutual] thwarting, refusing, or in any way blocking

efforts by [Digitas] to assume the defense" would relieve Digitas

of its indemnity obligation. Id. at 743.

Digitas argues at length that Liberty Mutual did just

that, burdening Digitas's assumption of the defense with

extracontractual conditions.6 As a legal matter, an indemnitee

6Digitas's briefs occasionally suggest that Liberty Mutual's alleged intransigence represented a "lack of cooperation" that precluded satisfaction of the MSA's third requirement: "such reasonable cooperation, at the indemnifying party's expense, by the indemnified party in the defense as the indemnifying party may request." But Liberty Mutual could not cooperate, nor did Digitas request any cooperation, "in the defense" because Digitas never assumed the defense and still disputes its status as "the

- 17 - clearly cannot condition assumption of the defense on

extracontractual demands. But as a factual matter, it was Digitas,

not Liberty Mutual, who insisted on extracontractual conditions.

Digitas, at various points, offered to assume the defense only if:

Precise Leads did the same, Liberty Mutual covered its own costs

of cooperation, indemnity disputes would be resolved through

private mediation, previous legal fees were subject to Digitas's

consideration, third-party-litigation fees were excluded, or any

further obligations under the MSA were nullified absent an adverse

judgment based on Digitas's breach. Each of these conditions

either did not appear in or directly conflicted with the MSA.

Thus, Liberty Mutual's rejection of them did not constitute

thwarting, refusing, or blocking Digitas's assumption of the

defense. See id.

We do not dispute Digitas's right to contest the scope

of its indemnity obligation, as many of Digitas's proposed

conditions did. But none of these scope-of-obligation objections

affect what is, according to Digitas, "[t]he only issue on

appeal[:] whether Liberty Mutual properly triggered Digitas'[s]

indemnity obligations." Digitas could have assumed the defense

indemnifying party." Reading the MSA "in a reasonable and practical way," Bukuras,

, Liberty Mutual is correct that "[t]he third condition was never ripe." Nevertheless, we construe Digitas's lack-of-cooperation allegations as support for the distinct argument that Liberty Mutual burdened Digitas's assumption of the defense.

- 18 - under a reservation of rights, "the common-sense solution" to

circumstances in which a party cannot "obtain[] a determination of

[its] rights and obligations before the claimed performance is

due." Restatement (Third) of Restitution and Unjust Enrichment

§ 35 cmt. a (Am. L. Inst. 2011); see id. § 35 cmt. c (explaining

"a dispute over an indemnity obligation in an ordinary

contract . . . might be resolved in a proper case by performance

under protest and a subsequent claim in restitution");

Psychemedics Corp., 486 Mass. at 726 n.5. But Digitas has staked

its appeal on the proposition that "Liberty Mutual failed to

fulfill conditions precedent under the MSA." The appeal cannot

survive our conclusion to the contrary.

IV.

Digitas finally argues that, even if we affirm the

district court, we should dismiss the case because "there is

nothing further to be done below." According to Digitas, Liberty

Mutual has no options to seek damages because it did not introduce

damages evidence, file a timely post judgment motion, or appeal

the final judgment. These are paradigmatic district-court issues.

See, e.g., 11 Charles Alan Wright et al., Federal Practice and

Procedure § 2857 (3d ed. 2024) ("Appellate review [of Rule 60(b)

motions] is limited to determining whether the district court

abused its discretion."); id. § 2872. We leave them to the

district court.

- 19 - ***

For all these reasons, we AFFIRM the district court's

judgment and remand for any further proceedings. Each party shall

bear its own costs.

-Dissenting Opinion Follows-

- 20 - ARIAS-MARXUACH, District Judge, dissenting. I do not

disagree with the majority's analysis of the merits of Digitas,

Inc.'s appeal. Instead, I respectfully dissent due to my concerns

about the majority's reliance on the hypothetical jurisdiction

doctrine. With some exceptions, the subject-matter jurisdiction

of the courts of appeals is limited to "final decisions of the

district courts."

. Appellate courts have a duty

to verify the existence of their own subject-matter jurisdiction.

See United States v. Horn,

(1st Cir. 1994).

In this case, however, the majority relies on a doctrine of

hypothetical jurisdiction to sidestep that question and reach the

merits of the appeal.

The hypothetical jurisdiction doctrine provides that if a

"case poses a question of statutory, not Article III,

jurisdiction," then "the question of jurisdiction 'need not be

resolved if a decision on the merits will favor the party

challenging the court's jurisdiction.'" Caribe Chem Distribs.

Corp. v. S. Agric. Insecticides, Inc.,

(1st Cir.

2024) (quoting Doe v. Town of Lisbon,

(1st Cir.

2023)). The doctrine has been used to avoid jurisdictional

questions arising under laws as varied as the Eleventh Amendment,

the Illegal Immigration Reform and Immigrant Responsibility Act,

the bankruptcy code, and the procedure governing appellate review

of remands following removal. See Parella v. Ret. Bd. Of R. I.

- 21 - Emps.' Ret. Sys.,

(1st Cir. 1999) (Eleventh

Amendment); Seale v. INS,

(1st Cir. 2003)

(immigration law); Parkview Adventist Med. Ctr. v. United States

ex rel. Dep't of Health & Hum. Servs.,

(1st Cir.

2016) (bankruptcy code); Caribe Chem Distribs., Corp.,

(removal procedure); see also Joshua S. Stillman, Hypothetical

Statutory Jurisdiction and the Limits of Federal Judicial Power,

, 511 (2016) ("Courts have used hypothetical

statutory jurisdiction to bypass a wide array of statutory subject-

matter jurisdiction issues, such as those under the Foreign

Sovereign Immunities Act, the Contract Disputes Act, the False

Claims Act, the Freedom of Information Act, the supplemental

jurisdiction statute, the Administrative Procedure Act, and the

Alien Tort Statute.").

The hypothetical jurisdiction doctrine was generally rejected

by a majority of the justices of the Supreme Court in Steel Co. v.

Citizens for a Better Env't,

(1998), because it

"offends fundamental principles of separation of powers."

. The Court reiterated that determining jurisdiction is "the

first and fundamental question" in every appeal."

(quoting

Great S. Fire Proof Hotel Co. v. Jones,

(1900))

(emphasis added). "This question," the majority continued, "the

court is bound to ask and answer for itself, even when not

otherwise suggested."

(emphasis added). "Jurisdiction is

- 22 - power to declare the law, and when it ceases to exist, the only

function remaining to the court is that of announcing the fact and

dismissing the cause."

(quoting Ex parte McCardle,

(1868)). "This conclusion should come as no

surprise," the Steel Co. majority wrote, as "[t]he requirement

that jurisdiction be established as a threshold matter 'spring[s]

from the nature and limits of the judicial power of the United

States' and is 'inflexible and without exception.'"

(quoting

Mansfield, C. & L.M. Ry. Co. v. Swan,

(1884)).

Despite Steel Co.'s strong condemnation of hypothetical

jurisdiction, a First Circuit panel concluded in Parella v.

Retirement Board of Rhode Island Employees' Retirement System that

"the rule does not appear to be an absolute one."

.

The panel observed that two justices in the five-justice majority

wrote a concurrence noting that the rule that jurisdictional

questions be decided first had been diluted.

The Parella

court also noted that the four justices that did not fully join

the majority opinion disagreed that jurisdictional issues should

always be decided before reaching the merits.

.

Finally, the panel in Parella emphasized that "[t]he decision in

Steel Co. distinguishes between Article III jurisdiction questions

and statutory jurisdiction questions, holding that the former

should ordinarily be decided before the merits, but the latter

need not be."

. Thus, Parella held that "[t]he various

- 23 - opinions in the case, read as a whole, are not entirely clear as

to whether (or to what extent) Steel Co. undermines our earlier

practice [of bypassing jurisdictional issues]."

(citation

omitted).

The above reading of Steel Co. notwithstanding, the

separation-of-powers concerns implicated by reaching the merits of

cases without ascertaining jurisdiction are far from trivial, even

when dealing with statutory jurisdiction. Article III vests the

judicial power in "one supreme Court, and in such inferior Courts

as the Congress may from time to time ordain and establish." U.S.

Const. art. III, § 1. Congress has the power to create inferior

courts, and only it may define their jurisdiction. See Sheldon v.

Sill,

(1850). Consequently, as this

Court has repeatedly recognized, the inferior "[f]ederal courts

are courts of limited jurisdiction." Am. Fiber & Finishing, Inc.

v. Tyco Healthcare Grp.,

(1st Cir. 2004). "Thus,

they can hear cases only if and to the extent that they are

authorized to do so by statute." Rhode Island v. EPA,

(1st Cir. 2004) (citing Bell v. New Jersey,

(1983)).

While other circuits also rely on hypothetical jurisdiction

to sidestep statutory subject-matter jurisdiction questions,7 the

7 The Second, Third, Sixth, Eighth, Ninth, Tenth, D.C., and Federal Circuits appear to allow the exercise of hypothetical

- 24 - desire to continue to rely on this doctrine is not monolithic.

The Eleventh Circuit rejected the doctrine over a decade ago. See

Friends of the Everglades v. EPA,

(11th

Cir. 2012). Reasoning that "[w]e cannot exercise hypothetical

jurisdiction any more than we can issue a hypothetical judgment,"

the Eleventh Circuit declined to reach the merits of a controversy

because

(b)(1) did not grant the court subject-

matter jurisdiction.

. Even in circuits where

hypothetical jurisdiction remains in use, judges have written in

detail to critique the doctrine. See Kaplan v. Central Bank of

the Islamic Republic of Iran,

(D.C. Cir. 2018)

(Edwards, J., concurring); Butcher v. Wendt,

(2d Cir. 2020) (Menashi, J., concurring in part); cf. Stillman,

supra, at 512-33 (arguing the exercise of hypothetical statutory

jurisdiction is unconstitutional).

During the Supreme Court's last term, three justices would

have granted certiorari to resolve the "entrenched Circuit split"

regarding the continuing use of hypothetical jurisdiction and

statutory subject-matter jurisdiction. See Butcher v. Wendt,

(2d Cir. 2020); Jordon v. Att'y Gen. of the U.S.,

, 325 n.8 (3d Cir. 2005); Khodr v. Holder,

, 664 n.4 (6th Cir. 2013); Lukowski v. INS,

, 647 n.1 (8th Cir. 2002); NLRB v. Barstow Cmty. Hosp.–Operated by Cmty. Health Sys., Inc.,

(9th Cir. 2012); Yancey v. Thomas,

, 555 n.1 (10th Cir. 2011); Kramer v. Gates,

(D.C. Cir. 2007); Minesen Co. v. McHugh,

(Fed. Cir. 2012).

- 25 - stated that "the lower courts' distinction between 'statutory

jurisdiction' and 'Article III' jurisdiction seems untenable."

Waleski v. Montgomery, McCracken, Walker & Rhoads, LLP,

, 2027 (2023) (Thomas, J., dissenting). They reiterated that,

"[t]he jurisdiction of federal courts is limited both by the bounds

of the 'judicial power' as articulated in Article III, § 2, and by

the extent to which Congress has vested that power in the lower

courts as required by Article III, § 1." Id. (internal quotation

marks and citation omitted). The justices argued that although

assuming statutory jurisdiction may sometimes be efficient, that

is not enough justification for a court to forego examining its

jurisdiction. See id. at 2028. "Although [s]ome cases might cry

out for decision on the merits, and sometimes it is convenient to

assume away difficult jurisdictional questions to decide a case on

easier merits grounds, courts’ threshold duty to examine [their]

own jurisdiction is no less obligatory in such cases.” Id.

(internal quotation marks and citation omitted). The three

justices underscored that "[m]uch more than legal niceties are at

stake here." Id. (quoting Steel Co.,

). "For

a court to pronounce upon the meaning or the constitutionality of

a state or federal law when it has no jurisdiction to do so is, by

very definition, for a court to act ultra vires."

Because the continuing currency of the hypothetical

jurisdiction doctrine, even in its present form, appears to offend

- 26 - separation-of-powers principles, I would resolve the doubts over

the Court’s jurisdiction before addressing the merits of the appeal

and, should those doubts prove irreducible, would dismiss the

appeal for lack of jurisdiction.

- 27 -