This Week At The Ninth: Short Sales And Ripeness

• Published date: 07 March 2022
• Subject Matter: Finance and Banking, Insolvency/Bankruptcy/Re-structuring, Debt Capital Markets, Charges, Mortgages, Indemnities, Financial Services, Insolvency/Bankruptcy
• Law Firm: Morrison & Foerster LLP
• Author: Ms Lena H. Hughes and Adam L. Sorensen

This week, the Ninth Circuit explores whether Twitter's conflict with the Texas AG's office over content moderation was ripe for review and when taxpayers may deduct mortgage interest payments after a short sale.

TWITTER, INC. V. KEN PAXTON

The Court holds that Twitter's First Amendment challenge to the Texas attorney general's demand to produce documents relating to content moderation decisions was prudentially unripe.

Panel: Judges Bennett, Nelson, and Bumatay, with Judge Nelson writing the opinion.

Key Highlight: "The issues here are not fit for judicial decision because the facts require further development, and the relative hardships to the parties support delaying review. The case thus is not prudentially ripe."

Background: Twitter banned President Trump's account after the events at the U.S. Capitol on January 6, 2021. Texas AG accused the social media company of "closing conservative accounts," and vowed that "[a]s AG, I will fight them with all I've got." A few days later, Paxton's office served Twitter with a civil investigative demand seeking documents on its content moderation decisions. Rather than respond to the demand or wait for an enforcement suit in Texas state court, Twitter sued Paxton in the Northern District of California, seeking to enjoin the investigation as unlawful retaliation for the company's protected speech. The district court dismissed because, under the Supreme Court's decision in Reisman v. Caplin, 375 U.S. 440 (1964), pre-enforcement challenges to non-self-executing document requests are not ripe.

Result: The Ninth Circuit affirmed. First, the Court distinguished between constitutional and prudential ripeness. Constitutional ripeness, the Court explained, is a jurisdictional prerequisite to suit, requiring that "the issues presented are definite and concrete, not hypothetical or abstract." Prudential ripeness, by contrast, is a non-jurisdictional threshold question, allowing the court to "evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." While courts generally address their jurisdiction first, "there is no mandatory sequencing of nonmerits issues," and they may "dismiss a case on a non-merits threshold ground, if doing so is 'the less burdensome course.'"

That was the case here, and the Court dismissed for lack of prudential ripeness without reaching any jurisdictional issues. The issues presented were not fit for judicial review, the Court...