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Case number 20-7117.

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Theodore Westby et al.

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Appellants.

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Antoine Colbert as personal representative of the estate of Ethelbert D. Lewis versus District of Columbia et al.

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Mr. Economos for the Appellants.

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Ms.

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Anderson for the District of Columbia Appellees.

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Good morning.

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My name is Lucia Gwine and I'd just like to introduce the student arguing this case on behalf of Plaintiff Appellants.

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I'm a law fellow and supervising attorney in Georgetown's civil rights clinic, who is counsel to plaintiffs in this case.

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And Mr. Orlando Economos is a third year law student in the clinic who will be arguing the case under circuit rule 46G.

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So unless the court has any questions about that, I will turn it over to Mr. Economos.

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Thank you.

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Good morning.

[00:00:56] Speaker 01:
Good morning, your honor.

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Thank you.

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And may it please the court, my name is Orlando Economos and I'm here on behalf of Appellants.

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Restitution is a remedy that is granted by the court only after a careful evaluation of the equities of the parties before it.

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Here, the district court granted restitution to appellees without balancing the equities.

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That was an error of law.

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The court created a categorical rule that a legally unenforceable judgment always warrants restitution.

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It held in the opening paragraph of its opinion, plaintiffs must pay restitution to defendants because the legal process has coerced from defendants money not legally owed.

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And I'm looking at 401 in the joint appendix there, Your Honor.

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But that is not what the law of restitution requires.

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By definition, it can only be awarded after a careful evaluation of the parties before the court.

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The Supreme Court held as much in Atlantic Coast where it stated it, quote, will not order restitution where the justice of the case does not call for it.

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And that's the equitable analysis that's required, Your Honor, and that's what we're looking for today.

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Regardless of why the underlying judgment was vacated or reversed,

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Atlantic Coast stated that all suits for restitution are subject to an equitable analysis including those made on a reversal of judgment.

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They further stated there that the claim for restitution yields to the impact of these converging equities with all their cumulative power.

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And this- Can I take you up and ask?

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I'm a little, it's a little hard for me.

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Some parts of the district court opinion sound like what you said, where it found like once it found an invalid judgment, a payment had been made under a substantively invalidated judgment.

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The that was in Justin Richmond and they had a payment so that kind of sounds like that on the page you cited, and it kind of sounds like that on page 407 but then on 405.

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You know the doctor district talks about it's a it's a it's a it's an equitable remedy.

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You always look at the equitable circumstances.

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And so, how, how do I know which page.

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If I, if at times the district court seems to be acknowledging the application of equitable circumstances.

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And other times doesn't what's the, how am I supposed to know that there was a legal error here to call it, as opposed to he just didn't quite explain it.

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Your honor, yes, both at 401 and at 407 the court talks about how it is compelled to order restitution here, because of the nature of the underlying judgment.

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And although the court discusses the requirement of you know considering the equitable circumstances.

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If one takes a look at the opinion in its entirety, effectively what it's doing, there are only two sentences that recite a mere two of plaintiff's assertions without any further analysis or evaluation.

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Well, I think if you look at 406, what he says is in this context, invalidated judgment, personal circumstances play a diminished role.

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It doesn't say no role, just play a diminished role.

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And that's quoting the restatement.

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And he gave any recognizable ability for affirmative defenses.

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So before he found unjustness, he recognized a role.

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And then after finding unjustness, he allowed sort of equitable Lee based affirmative defenses as well, but there wasn't a relevant one.

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Your honor, two points in response.

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And first, the court in the very next section says that regardless, regardless of plaintiff's personal circumstances, the payment and satisfaction of a legally groundless judgment warrants restitution.

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And when it comes to actually discussing the assertions raised by plaintiffs, again, there is no evidence that the court actually evaluated the weight of those arguments, the weight that they played in the order for restitution.

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And second, your honor,

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The apologies.

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We see nowhere, for example, a discussion of the public interest in the opinion we see nowhere your honor discussion of the high levels of debt anywhere from $5,000 to $330,000 that each plaintiff retains the very few assets if any that they have.

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And all of these considerations would have played a role in the analysis had the district court, taking them taking them into account with the district court did was recognized that generally equity requires consideration these these factors, but then found that in this context in the context of substantively reverse judgment.

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that there was no need to do so that in such a context restitution is compelled because of the nature of the underlying judgment.

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But again that's not what law restitution requires and this court has incorporated the principles from Atlantic Coast in Williams where it stated that it has the authority to deny restitution altogether if compelling equitable circumstances so dictate that there it could not

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Apologies, Judge Tatel, if you want.

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No, no, you go ahead.

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You finish your sentence.

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Sorry.

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Simply that there, the court could not, quote, ignore the realities of Metro Transit's financial experience during the years in question, and then took several pages of its opinion to discuss precisely those financial realities.

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Here, we see no such discussion.

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So I just have two quick questions for you.

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Number one is, is it your position that none of your clients should have to pay restitution?

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You're on earth.

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It is our position that this court should vacate Merman so that the district court can take proper consideration of all of the equitable factors before it in making that determination in the first instance.

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I would be hard put to do that balancing given that the factual record was not as developed as it could have been had the district court taken consideration of those very equitable factors.

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And again, I would turn to you.

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I hear you acknowledging then that if the district court

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under your view or to have properly balance the equities that some of your clients might actually have to pay, right?

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Because they do have some financial resources, correct?

[00:07:35] Speaker 01:
Indeed, some clients do have some financial resources, but

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looking to each individual plaintiff, whether some have some small amount of positive net income on a monthly basis, those plaintiffs will also have large amounts of debt.

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Second question is, and I just maybe you can help me understand this, let's assume we were to affirm this.

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What then happens, the District of Columbia then has to collect

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It's judgment.

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Right.

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And I assume with a lot of these, a lot of your clients, they'd have to go to court, because according to the records I see here, some of them have nothing.

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Right.

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Would their financial condition be taken into account at that point?

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Your honor.

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Yes and no.

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It would be taken into account in terms of the fact that it would be very difficult for the district to collect simply because these plaintiffs lack the assets to pay the judgment.

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But even if they were unable to pay it, the fact that they've been ordered to do so would certainly impact their credit.

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What few assets, if any, they retain would be depleted.

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At bottom, to order restitution here would be to further impoverish these plaintiffs.

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I understand.

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Thank you.

[00:08:53] Speaker 01:
Thank you.

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I would turn you then, if I could, Your Honors, to the First Circuit's analysis in Texaco, which we find particularly instructive.

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Texaco versus Department of Consumer Affairs, the district court there considered a motion for restitution and considered the equity of the parties with painstaking care, discussing five distinct equitable factors over three pages of its opinion before- Why do you need a First Circuit decision given Thompson?

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Doesn't Thompson do everything you want?

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Sorry, once again, Your Honor.

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Doesn't Thompson provide the support you need for your argument about the district court's decision to consider all of the equities?

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Indeed, Your Honor.

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Thompson does everything we need it to and specifically discuss plaintiff's ability to make that.

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Yeah.

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Okay.

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And the reason I say to Texaco is merely because we find it illustrative on the point, and specifically with regards to the circuit courts capacity to review the district courts decision the district courts point by point analysis was then taken point by point by the circuit court.

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If you were to attempt to do such a review here, it would be very difficult because the district court did not make the findings, did not say specifically which equities it was considering.

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And to go to Judge Millett's question earlier regarding the affirmative defenses that plaintiffs raised, quite frankly, the district court did not fully, did not consider one of the affirmative defenses that plaintiffs raised, that of undue hardship to the parties.

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And so again, I would stress that

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Can I clarify too, the district court said that you had conceded that you didn't have a change of circumstances, their financial circumstances didn't change and he treated that as a concession

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of the change of position defense.

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And I wanted to ask whether that's what you meant by that statement when you said they didn't change their financial circumstances based on these payments.

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They were already extremely poor and they remained extremely poor.

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Did you mean to concede the change of position defense or did you have a different angle or theory of the change of position defense?

[00:11:08] Speaker 01:
No, Your Honor.

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We did concede the change in position defense quite simply because plaintiffs did not have the financial resources to change their position.

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They had to spend the money that they received on basic life necessities, on debt service.

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They were not able to make the sort of large investments that would have put them in a position of having, or rather to have changed their position in reliance on the judgment.

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I see that I'm well over my time, Your Honors.

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If there's nothing else, I will return on rebuttal.

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All right, thank you very much.

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We'll go ahead and hear from the district and I'll give you a minute or two for rebuttal.

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Good morning, Your Honor.

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Ms.

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Anderson.

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Thank you, Your Honor.

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Good morning and may it please the Court, Stacey Anderson on behalf of the District of Columbia, Appalachia.

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Your Honors, the Court should affirm in this case because there was no error of law or abuse of discretion here.

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The District Court did not impose a categorical requirement

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restitution be ordered.

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Ms.

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Anderson, what do you do?

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Let's just go right to the heart of the matter here.

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Mr. Economist cited, he quoted this sentence, this comes at the end, at the end of the analysis.

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So it's a district court's concluding argument.

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He says, quote, regardless, regardless of the party's personal circumstances, it's a payment, the satisfaction of a legally groundless judgment, unjustly enriches the recipient.

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And then

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and thus wars restitution.

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And he cites the second circuit case, and he emphasizes the word compelled to rule that restitution is required.

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I mean, that looks like the district court concluded here that, as he said, in a situation like this, regardless of the plaintiff's financial condition, he had no choice but to impose, but to require a restitution.

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Right, Your Honor, I don't read the opinion that way.

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I think the district court's included.

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Just tell me about this sentence, but I know you don't read the, you're totally right.

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There are places where it suggests that, you know, maybe the district court did at one point consider the plaintiff's condition.

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And in fact, he asked, he allowed them to submit data about it, but these are the last, this is the last sentence of his analysis, this sentence, regardless of their condition, he says.

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Correct, Your Honor.

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And my point on that is that I think the district court felt compelled on the facts of this case to reach that conclusion because after weighing the equities, it concluded the district's right to recover here was overwhelming.

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If we begin with the premise.

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Excuse me, I'm sorry, but it says, it says, regardless of the party's, regardless of the party's personal circumstances, that's the way the sentence starts.

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It's not suggesting there that I've considered their personal circumstances.

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He says, regardless of, he's compelled to order restitution.

[00:14:05] Speaker 05:
Correct, Your Honor.

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And again, I think if we go back and we start with the basic concept of equity in this context, equity is focused on the fairness and the relationship between the parties.

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And in looking at the relationship between the parties, both the restatement and decisional law focuses on the legal obligations and responsibilities between the parties.

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As between the two parties, would it be equitable to allow the plaintiffs to retain the monies that the district was

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The district paid under legal compulsion from an order that was subsequently vacated and the district correctly recognized that in this context personal circumstances.

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Do play a diminished role and district questions, whether or not again what what is the definition of personal circumstances.

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I think plaintiffs offer a broad construct of that concept here to go outside the relationship of the parties to consider other matters that don't bear on the legal rights and responsibilities as between the parties, I think that.

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In that.

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I'm sorry, just take a lead.

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I'm rather confused, I will say, because the district court said for them the fact that they were spending money on ordinary living expenses.

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isn't relevant to the equitable analysis.

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But in the case that Judge Tiddle referred to earlier, Thompson versus Washington, the District of Columbia itself, your client, persuaded this court that it would be unjust and inappropriate to order restitution quote, by reason of the financial difficulties currently being experienced quote, by the government.

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and that the government was facing a progressively worsening financial situation of its own accord, not caused by these parties and nothing about their relationship between them, and that their income of this agency was insufficient to meet needs.

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And that sounds

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Those equitable factors that the District of Columbia said apply when it's a District of Columbia client that's arguing against restitution were properly considered.

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But here you argued and the District Court agreed that those exact same types of financial circumstances, dire financial circumstances, income less than out go,

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are legally irrelevant.

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Can you please tell me how both can be true?

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Sure, Your Honor.

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I'd be happy to address that, Your Honor.

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First of all, I see Thompson is a very different case than the one presented here because there was an underlying legal liability between the parties.

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There was a right to a rent increase.

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The rent increase decision was overturned on procedural grounds, so there was still a claim of liability between the parties.

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And the restatement recognizes in that context where there is an underlying claim of liability between the parties.

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based on their transactional history that other equitable.

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Excuse me, the nature of it, I'm getting an echo, I think.

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We said there that the burden on DC was to show by compelling equitable considerations, compelling, not just a basic ordinary balancing.

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We applied a compelling equitable considerations test, which sounds to me a lot like the type of requirement that's applied when you're dealing with an invalid judgment, a substantively invalid judgment here.

[00:17:40] Speaker 05:
I disagree, Your Honor, where you have a substantively invalid judgment with no underlying legal liability on the part of the district here.

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We do have a right to restitution, an overwhelming right to restitution based on the equities just simply from that fact.

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Was a district agency's charge, increased charge of rents found to be substantively

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I don't believe so.

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In Thompson, it was a procedural error.

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There was a right to a rent increase.

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The question was how much.

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That's the way I read Thompson.

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That doesn't sound like a procedural error.

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That sounds like a substantive error.

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You were charging more than you were legally entitled to charge.

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It wasn't like you could go back and have a new hearing.

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You just forgot to introduce some evidence or something.

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It was legally invalid what you charged them.

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Full stop.

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But we were entitled to charge something.

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The amount we charged was incorrect, granted.

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But we had a right to collect something.

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Here, plaintiffs have no right to collect anything.

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And was the restitution there for the full rent or the difference, the illegal difference?

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I think ultimately, I don't know the ultimate outcome on remand, Your Honor, but I do believe that restitution was not ordered for a variety of reasons.

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But even the illegal, even that illegal difference, the substantively illegal difference.

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Well, again, I'm not going to concede that there was a substantively illegal difference.

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It was reversed on the amount charged.

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I don't know that there was ultimately a determination as to what would have been the appropriate amount given the disposition of the case.

[00:19:03] Speaker 06:
No, but there would have been, if that amount, I'm sorry, I just want to make sure I'm following your argument.

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If a court holds that amount X is legally invalid, you can't charge that.

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Now you can apply something minus X, lower than X.

[00:19:22] Speaker 06:
But whatever that delta is between minus X and X is substantively legally invalid.

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Correct, Your Honor.

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In the same way that their judgment was legally invalid.

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Not in the same way, Your Honor.

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I would disagree with that.

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The difference here is there is no delta.

[00:19:39] Speaker 05:
The delta here is zero.

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They have no legal entitlement to keep any part of the judgment in this case.

[00:19:46] Speaker 06:
No, but as between the X and the minus X, there's also no legal right whatsoever.

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for the District of Columbia to have collected, no right, zero.

[00:19:56] Speaker 05:
But they had a right to something at the end of the day, Your Honor.

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If they're not trying to get everything, if they're only trying to get the delta, there's zero right.

[00:20:03] Speaker 04:
Can I just interrupt?

[00:20:05] Speaker 04:
Ms.

[00:20:05] Speaker 04:
Anderson, your answers to Judge Millett are confusing to me.

[00:20:09] Speaker 04:
I thought your position was that the District Court did have to take it under equitable standards of the plaintiff's financial situation and that he did.

[00:20:21] Speaker 04:
Your honor, he didn't understand your argument.

[00:20:23] Speaker 04:
It sounds to me like you're arguing the judge well that's question that he had no legal obligation to do in fact he couldn't know your what is the district's position.

[00:20:35] Speaker 05:
Yeah, the district's position is.

[00:20:37] Speaker 05:
in the mine run of cases where a judgment is vacated.

[00:20:41] Speaker 04:
Don't tell me about the mine run of cases.

[00:20:43] Speaker 04:
Just answer the question about, in a case like this, where the reversal of the judgment was substantive, does the district court have an obligation to consider equity, including the financial condition of the plaintiffs, or does he not?

[00:21:03] Speaker 04:
That's all.

[00:21:04] Speaker 05:
Your Honor.

[00:21:04] Speaker 05:
That's all I wanted to know.

[00:21:06] Speaker 05:
Correct, Your Honor.

[00:21:07] Speaker 05:
Plaintiffs have not, Your Honor, plaintiffs have not, I'm sorry.

[00:21:12] Speaker 05:
I meant to say, I understand your question, Your Honor.

[00:21:15] Speaker 05:
Plaintiffs has not cited any authority for the proposition that their inability to repay the restitution is a consideration here.

[00:21:23] Speaker 04:
Now, is that- That's not, Ms.

[00:21:25] Speaker 04:
Anderson, please answer my question.

[00:21:29] Speaker 04:
When I read you this sentence at the end of his opinion,

[00:21:35] Speaker 04:
where the court said, regardless of their circumstances, he's compelled.

[00:21:47] Speaker 04:
Your response to me was, well, he did consider the equities.

[00:21:51] Speaker 04:
That, right?

[00:21:52] Speaker 04:
If you look at the whole opinion.

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So I would like you to just state for the court, does the district believe that if you read the district court's opinion here, he considered their financial situation and balanced it and balanced it.

[00:22:07] Speaker 04:
And after balancing, considered that they had the pay restitution.

[00:22:11] Speaker 04:
Is that your view or is your view that the district court

[00:22:16] Speaker 04:
was required by law not to consider their financial condition.

[00:22:21] Speaker 04:
That is that he's, quote, compelled, as he says at the end.

[00:22:25] Speaker 05:
Your honor, I read the district court's use of the word compelled at the end of its decision to mean the equities were so overwhelmingly in favor of the district in this context that the court was compelled to grant restitution.

[00:22:39] Speaker 05:
And your honor, if I could just step back.

[00:22:40] Speaker 02:
Was that the first or the second of what Judge Tatel said?

[00:22:43] Speaker 02:
I'm still not clear.

[00:22:44] Speaker 02:
He gave you two.

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versions of how the law works.

[00:22:49] Speaker 02:
Do you agree with the first version or the second version?

[00:22:51] Speaker 05:
Your honor, I believe the district court did consider the arguments and the evidence that plaintiffs presented in this case, properly afforded it a diminished role, given the overwhelming equities here that go with the vacation of a court order.

[00:23:06] Speaker 02:
What's the difference between diminished role and no role?

[00:23:10] Speaker 02:
I think in a case where the reversal was on substantive.

[00:23:14] Speaker 05:
Again, I think it would be very, very difficult to overcome the equities in this case based on an inability to pay given how substantial they are.

[00:23:22] Speaker 05:
And if I could just make one point with respect to that.

[00:23:28] Speaker 04:
How could the court have considered, let's assume you're right, that the court did, that you can read this as suggesting that the court did consider the equities.

[00:23:39] Speaker 04:
The district court drew no distinction between any of the individual plaintiffs.

[00:23:44] Speaker 04:
Some of them have $1,000 or more of monthly income.

[00:23:51] Speaker 04:
Some are homeless, destitute.

[00:23:53] Speaker 04:
There's no indication in the court's decision that he considered those.

[00:24:00] Speaker 04:
And that's my understanding of what equity is.

[00:24:04] Speaker 04:
I mean, right?

[00:24:06] Speaker 04:
So.

[00:24:07] Speaker 05:
Your Honor, again, plaintiffs

[00:24:10] Speaker 05:
painted their clients as being all similarly situated.

[00:24:12] Speaker 05:
And I think the district took them at their word and considered them in that regard.

[00:24:16] Speaker 04:
That's not what Mr. Ekonos just told us.

[00:24:19] Speaker 05:
I suggest the briefing indicates otherwise in the district court and here as well.

[00:24:24] Speaker 04:
Unless you're well over time, unless either of my colleagues have any more questions, either do you?

[00:24:29] Speaker 02:
I'm still not clear.

[00:24:32] Speaker 02:
Please go ahead, Judge Walker.

[00:24:33] Speaker 04:
No, no, you go ahead.

[00:24:34] Speaker 04:
Go ahead, Judge Walker.

[00:24:36] Speaker 04:
Good luck.

[00:24:37] Speaker 04:
Ask it again and see the answer.

[00:24:39] Speaker 02:
I mean, because Ms.

[00:24:41] Speaker 02:
Anderson, there's a scenario where the district court considered the plaintiff's financial situations, decided that that was a factor, but it wasn't a strong enough factor to overcome other equitable factors, and then reached the conclusion that it did.

[00:25:04] Speaker 02:
Do you believe that's what the district court did?

[00:25:06] Speaker 05:
Yes, your honor, I believe that is what the district.

[00:25:09] Speaker 02:
One more question.

[00:25:10] Speaker 02:
Do you believe that's what the district court should have done.

[00:25:14] Speaker 05:
Your honor, I believe that the district court.

[00:25:19] Speaker 05:
Plaintiffs have not.

[00:25:21] Speaker 05:
I think whether the district court should have or not.

[00:25:24] Speaker 05:
It did here and I think that is clear from the record and I just want to make it if I could make that's a no that's a no that's a you're deciding not to answer the question, which is, which is okay that's that's your answer that's your answer if I could just make one I think one significant point here.

[00:25:39] Speaker 05:
Thank you, your honor.

[00:25:40] Speaker 05:
When we look at the district's motion to stay the court's mandate in this case, plaintiffs argued there would be no irreparable harm here.

[00:25:47] Speaker 05:
And rightly so, because this court is routinely her held an award of monetary relief does not give rise to irreparable harm because if you succeed in your litigation you get your money back.

[00:26:00] Speaker 05:
So we begin with that premise, the equity strongly favor almost automatic return where there's no underlying legal liability between the parties, and I think the district court correctly recognize it, it heard.

[00:26:14] Speaker 05:
plaintiffs' arguments regarding affirmative defenses as well as the financial situation of the plaintiffs, but at the end of the day, concluded that that overwhelming need to correct the coercive effect of that invalid legal judgment outweighed the equities.

[00:26:27] Speaker 05:
Indeed, it's the district's position here that it would have been an abuse of discretion had the district court ruled otherwise in this case, given these strong.

[00:26:36] Speaker 04:
Ms.

[00:26:36] Speaker 04:
Anderson, thank you very much.

[00:26:39] Speaker 04:
We have your argument.

[00:26:40] Speaker 05:
Thank you, Your Honors.

[00:26:41] Speaker 04:
Mr. Economist, you are out of time, but you can take one minute.

[00:26:47] Speaker 01:
Thank you, your honor.

[00:26:48] Speaker 01:
I'd like to just begin with the holding as the court stated it once again.

[00:26:53] Speaker 01:
The court now holds that as much as it sympathizes with plaintiff's financial circumstances, plaintiffs must pay restitution to defendants because- Mr. Economist, I appreciate it and we can read it.

[00:27:07] Speaker 02:
Let me ask you, what's your best precedent

[00:27:11] Speaker 02:
in a case where, as Judge Millett was saying, the delta is zero, or as Miss Anderson was saying in response to Judge Millett's question, the delta is zero.

[00:27:21] Speaker 02:
There was no substantive right to the money that was awarded in a judgment that was reversed.

[00:27:29] Speaker 02:
What's your best case that poverty matters, financial situations matter?

[00:27:35] Speaker 01:
I would turn you to Heller versus Fortis benefits, Your Honor, here in the DC Circuit, where there was an individual who had been receiving disability benefits.

[00:27:43] Speaker 01:
It was later shown that she had worked during the period that she received the disability benefits.

[00:27:48] Speaker 01:
Therefore, she was not entitled.

[00:27:49] Speaker 01:
And they nonetheless went into the equities and took point by point the personal circumstances of the parties.

[00:27:55] Speaker 01:
And I would like to just make one more point, if I may.

[00:27:57] Speaker 01:
I see I'm up on time.

[00:28:00] Speaker 01:
After we got off the point about whether equities are limited to the relationship between the parties, opposing counsel tried to distinguish on the basis of substantive versus procedural.

[00:28:14] Speaker 01:
But that's precisely what we see in Heller versus Fortis benefits.

[00:28:17] Speaker 01:
Also in Baltimore and Ohio Railroad Company and the United States Supreme Court.

[00:28:20] Speaker 01:
Again, I would say to Texaco and the booty versus United States in the Second Circuit.

[00:28:25] Speaker 01:
All of these cases hold that even in the event of a substantively overturned judgment, the equities have to be considered.

[00:28:31] Speaker 01:
That's what the district court failed to do here.

[00:28:33] Speaker 01:
And if it had taken into account the arguments plaintiffs raised, it certainly would have changed the outcome in the case.

[00:28:39] Speaker 01:
Thank you, your honors.

[00:28:40] Speaker 04:
Thank you.

[00:28:41] Speaker 04:
Mr. Economist, the court appointed the Georgetown program to represent the plaintiffs here and your briefs and oral argument have been very helpful to us.

[00:28:52] Speaker 04:
Thank you.