The Volokh Conspiracy

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Equity in United States v. Texas, Part 2


I've begun a series of posts on equity in United States v. Texas. (The first post was here, and if you need a quick primer on what equity is, go here.) This will be the first of several posts on Grupo Mexicano. It's a Supreme Court case from the 1990s that says that the equitable jurisdiction of the federal courts is the jurisdiction of the English Court of Chancery (because of the Judiciary Act of 1789). Therefore, the Court concluded, the remedy requested by the plaintiff—a preliminary injunction to freeze the defendant's assets, sometimes called a Mareva injunction—could not be issued by federal courts.

That decision was bitterly contested, with Scalia writing for the five-justice majority and Ginsburg writing a vigorous dissent. The Scalia opinion isn't perfect. Among other things, it takes a legislature-first approach to equity that is a bit mind-boggling given that the equity is not a creature of statute (nor—this is an understatement—is it an area of particular legislative expertise). And there are passages in the majority opinion that could be read as saying that equity was fixed in 1789 and there can't be new developments.

But that's not the best reading of the majority opinion in Grupo Mexicano. Rather, the Court says that the equitable jurisdiction of the federal courts is the power to do what the Court of Chancery could do in 1789—and analogous things. So some development is allowed, but it has to be tied to the tradition of equity. And in taking this position, the Court in Grupo Mexicano was aligning with many other cases from the Supreme Court in the preceding century. Grupo Mexicano was a surprise to scholars who were done with the law/equity distinction, but its principles were not novel. (I work through Grupo Mexicano in my article The Supreme Court and the New Equity.)

The dissent in Grupo Mexicano by Justice Ginsburg captured some of the freedom of movement in equity. But the real problem was that she identified no limiting principles. If equity was just "flexibility," then there was nothing a federal court couldn't do.

Since Grupo Mexicano the Supreme Court has had numerous equity cases. Some have been statutory, and some have been about background principles of equity. Some have been about ERISA; some have been about laches in copyright or patent; one recently was about equitable restitutionary remedies available to the SEC. And there have been many others.

In these cases, there has been a major turn toward the equity tradition. All of the justices have been involved in this, not just more conservative justices. For example, Justice Breyer wrote Amara and Taggart, Justice Kagan wrote US Airways, Justice Ginsburg wrote Petrella, and Justice Sotomayor wrote Liu. Over and over the Court has emphasized that it is looking at equity before the days of the divided bench, or traditional equitable principles, or historic equitable powers of the Court of Chancery, and so on.

So, in United States v. Texas, what have the different parties and the district court said about Grupo Mexicano?