Sunday, January 5, 2014
Senator Ron Johnson (R-Wis) writes in the Wall Street Journal that he'll file suit today to stop the congressional "exemption" from Obamacare. Senator Johnson writes that the OPM rule allowing members of Congress and staffers to use the exchange and also get an employer subsidy violates the Affordable Care Act and exceeds executive authority.
The dispute over the congressional "exemption" goes way back. But it turns out, there's no such exemption at all. The ACA contained a provision that required members of Congress and their staffers to get health insurance on an exchange. But that was unusual, because members and staffers already had employer-subsidized coverage under the Federal Employee Health Benefit Plan. (Exchanges are for the uninsured or employees of small corporations, not for employees of large corporations who already have coverage. Congress, which previously provided subsidized health insurance to members and staffers, nevertheless inserted a provision in the ACA that required members and staffers to use an exchange.) As a result, members and staffers would have lost their subsidy. So OPM stepped in and ruled this fall that members and staffers would qualify for an employer subsidy on the exchange if they purchased insurance in a Small Business Health Options Program, or SHOP.
As PolitiFact, Factcheck.org, and WaPo's Fact Checker all explain, this treatment is different and unusual, but it's hardly an exemption. Instead, the employer subsidy simply attempts to put members and staffers back in the position they would have been in if they were treated as employees with employer-subdized health insurance in any large corporation. In other words, the ACA treated members and staffers differently (worse) than similarly situated employees in large corporations; OPM merely tried to return them to their previous situation--so that they would be treated like everybody else.
Still, there's the question whether OPM had authority to authorize subsidies for member and staffer insurance purchases on an exchange, or whether that required a congressional fix to the ACA. Senator Johnson says OPM exceeded its authority--that this was a job (were it to be done at all) only for Congress.
The D.C. Circuit on Friday ruled that an opinion of the Office of Legal Counsel that provided a legal justification for the FBI to use "national security letters" to subpoena telephone and financial records that it certifies are connected to an authorized national security investigation is exempt from public disclosure under the FOIA. The ruling in Electronic Frontier Foundation v. U.S. DOJ means that the OLC opinion will remain classified.
The court held that the OLC opinion met the deliberative process privilege because it was requested by the FBI in response to an Office of Inspector General Investigation into the Bureau's use of national security letters:
On the record before us, we hold that the OLC Opinion, which was requested by the FBI in response to the OIG's investigation into its information-gathering techniques, is an "advisory opinion, recommendation and deliberation comprising part of a process by which governmental decisions and policies are formulated," and is therefore covered by the deliberative process privilege. We also hold that the FBI did not "adopt" the OLC Opinion and thereby waive the deliberative process privilege. The OIG mentioned the OLC Opinion in its report, and a congressional committee inquired about the OLC Opinion, but the FBI never itself adopted the OLC Opinion's reasoning as its own. Finally, because the entire OLC Opinion is exempt from disclosure under the deliberative process privilege, we need not decide whether particular sections were properly withheld as classified, or whether some material is reasonably segregable from the material properly withheld.
Op. at 3.
Thursday, January 2, 2014
Chief Justice Roberts again highlighted the lack of resources for the judicial branch in his 2013 year-end report, emphasizing the effects of the sequestration in particular. At the same time, he emphasized the courts' cost-cutting measures.
Chief Justice Roberts wrote that the lack of resources is causing problems across the board:
Sequestration cuts have affected court operations across the spectrum. There are fewer court clerks to process new civil and bankruptcy cases, slowing the intake procedure and propagating delays throughout the litigation process. There are fewer probation and pretrial services officers to protect the public from defendants awaiting trail and from offenders following their incarceration and release into the community. There are fewer public defenders available to vindicate the Constitution's guarantee of counsel to indigent criminal defendants, which leads to postponed trials and delayed justice for the innocent and guilty alike. There is less funding for security guards at federal courthouses, placing judges, court personnel, and the public at greater risk of harm.
Chief Justice Roberts wrote that our judiciary is a "model for justice throughout the world." Still, he wrote, foreign jurists "do raise an eyebrow when I also point out the vital role of the Legislative Branch of government."
The report warned that foregoing requested funding (of $5.05 billion) for a "hard freeze" at the sequester level would have dire consequences:
The future would be bleak: The deep cuts to Judiciary programs would remain in place. In addition, faced with inflation-driven increases in the "must-pay" components of this account, the Judicial Conference would need to cut allocations to the courts nationwide by an additional three percent below fiscal year 2013 levels. Those cuts would lead to the loss of an estimated additional 1,000 court staff. The first consequence would be greater delays in resolving criminal cases. In the civil and bankruptcy venues, further consequences would include commercial activity, lost opportunities, and unvindicated rights. In the criminal venues, those consequences pose a genuine threat to public safety.
The report also warns of dangers to public defender services.
Still, there's a hopeful conclusion:
Both A Christmas Carol and It's a Wonderful Life have happy endings. We are encouraged that the story of funding for the Federal Judiciary--though perhaps not as gripping a tale--will too.
Monday, December 30, 2013
Judge Lee H. Rosenthal (S.D. Texas) on Friday enjoined the government from applying regulations that require "nonprofit religious organizations" to execute the self-certification forms that enable their health insurers to provide health insurance coverage for emergency contraception under Obamacare.
The ruling in East Texas Baptist University v. Sebelius says that the plaintiffs, "nonprofit religious organizations," have a substantial likelihood of success on the merits of their challenge to the regulations under the Religious Freedom Restoration Act.
The ruling is now at least the twelfth on the issue, and the cases are split. Judge Rosenthal cites the cases in footnote 2, starting on page 2. (These are different than the challenges to the contraception mandate by secular for-profit corporations, the case going to the Supreme Court.)
The challenged government regulations require "religious employers" that are not exempt from the contraception mandate to self-certify that they meet the criteria for "eligible organization" (opposes contraception coverage, is a nonprofit, and holds itself out as a religious organization) to their insurer or third-party administrator. If the employer so certifies, the insurer or third-party administrator must expressly exclude contraception coverage from the group plan, but must also provide separate payments for contraception for plan participants. (The issuer must segregate premium revenue collected from the eligible organization from the monies used to make payments for contraception services.)
The regs attempt to build a firewall between an eligible organization and contraception provided by the insurer or third-party administrator. They were designed as a compromise for these organizations that aren't churches (on the one hand) or for-profit corporations (on the other, whose challenge to the contraception mandate is going to the Supreme Court), but organizations that have a religious dimension.
Still, many of these organizations have balked at the certification requirement. And here (and elsewhere), they've won.
Judge Rosenthal ruled that the RFRA uses a subjective standard, from the perspective of the organization, to determine whether the government regs create a substantial burden:
But under RFRA case law, if the plaintiffs are themselves compelled or pressured by threat of punitive fines to: 1) themselves take or forbear from an action; and 2) it is their own action or forbearance that they find religiously offensive, there is a substantial burden.
Op. at 36.
Here he said there was a substantial burden--the self-certification process:
The plaintiffs have demonstrated that the mandate and accomodation will compel them to engage in an affirmative act and that they find this act--their own act--to be religiously offensive. That act is completing and providing to their issuer or TPA the self-certification forms. The act of self-certification does more than simply state the organization's religious objection to covering or paying for its employees to get emergency contraception. The self-certification act designates the organization's TPA as the TPA for contraception coverage. The act tells the TPA or issuer that it must provide the organization's employees coverage that gives those employees free access to emergency contraceptive devices and products. That act tells the TPA or issuer that it must notify the employees of that benefit.
. . .
But the self-certification form requires the organizations to do much more than simply protest or object. The purpose of the form is to enable the provision of the very contraceptive services to the organization's employees that the organization finds abhorrent. . . . The purpose and effect of the form is to accomplish what the organization finds religiously forbidden and protests. If the organizations do not act in the way the accomodation requires, they face onerous fines.
. . .
But under the accommodation, the plaintiffs' employees would obtain coverage and no-cost-sharing payments for emergency contraception only because the employees are otherwise covered by the plaintiffs' group health plan. The government has taken significant steps to separate this payment from the group health plan. But the coverage and payment for employees to obtain emergency contraceptive products and devices is because those employees are covered by the group health plan that the plaintiff put into place.
Op. at 36-39.
Having determined that there was a substantial burden, Judge Rosenthal proceeded to apply strict scrutiny. As to the fit under strict scrutiny, the court said that the government didn't satisfy the least-restrictive-means test, because there were other ways for the government to achieve its interests:
The courts have identified several "less restrictive means" of serving the interests the government has identified [in promoting public health and ensuring equal access by women to health care services] than a total denial of the religious exemption request. One is to have the government provide the contraceptive services or coverage directly to those who want them but cannot get them from their religious-organization employers. . . . Another alternative would be to have the government work with third parties to provide emergency contraception without requiring the plaintiffs' active participation. Still another alternative could be to have the employee self-certify on an as-needed basis that their employer is a religious nonprofit that does not provide coverage for such services.
Op. at 43.
The ruling now adds to the body of lower-court case law. With the growing split, this is surely yet another issue (in addition to the question whether the contraception mandate violates the religious rights of secular for-profits) headed for the Supreme Court.
Friday, December 27, 2013
Ilya Shapiro (Cato) wrote a list this week in Forbes of President Obama's Top Ten Constitutional Violations of 2013.
The top five are (not surprisingly) all related to Obamacare: (1) the delay of out-of-pocket caps; (2) the delay of the employer mandate; (3) the delay of the requirement to purchase compliant plans; (4) the exemption of Congress; and (5) the expansion of fines for employers who don't provide coverage in states where the exchanges are established by the federal government. We posted on President Obama's authority for delays here, here, and here.
Number 8, recess appointments, is before the Court next month in Noel Canning, the case testing whether President Obama's intra-session recess appointments of three members to the NLRB violated the Recess Appointments Clause. Number 10 is the mini-DREAM Act.
Monday, December 23, 2013
The Director of National Intelligence this weekend released previously classified DNI and NSA declarations in support of the government's assertions of the state secrets privilege in litigation challenge the TSP program. We posted on the government's assertion of the state secrets privilege in Jewel v. NSA here.
The cases, Jewel v. NSA and In re National Security Agency Telecommunications Record Litigation, both in the Northern District of California, challenged the NSA's "dragnet" surveillance program. The declarations say that no such program exists, and that to defend the cases would reveal national security secrets.
Saturday, December 21, 2013
Robert J. Spitzer (SUNY Cortland) recently posted perhaps the most recent comparison of assertions of executive power in the Bush and Obama presidencies coming out of the political science world: Comparing the Constitutional Presidencies of George W. Bush and Barack Obama: War Powers, Signing Statements, Vetoes. As the title suggests, Spitzer compares the presidencies just in three dimensions. But his piece also briefly summarizes the political science literature comparing other dimensions. Here's Spitzer . . .
On war powers:
Nevertheless, in constitutional terms, Bush had the congressional authorization he needed [for the Iraq war]; Obama did not [for Libya]. Ironically, the grotesque scale of, and web of deception surrounding, the Iraqi war suggest that its precedential value for future presidents may be limited, whereas the presidential consequences of Obama's actions--another instance of an intervention without congressional approval, and the first instance of violation of the 60 day limit [in the War Powers Act]--are more likely to encourage future presidents tempted to engage in unilateral military actions.
On signing statements:
Presidents surely have interpretive latitude, especially when legislative language is vague or ambiguous, and therefore open to interpretation. This is nothing new. . . . What presidents may not do, Bush's unitary executive theory notwithstanding, is to rewrite legislation at the point at which a bill is presented for signature through signing statement in what some have called a de facto item veto. As James Pfiffner concluded, "Bush's systematic and expansive use of signing statements constitutes a direct threat to the separation of powers system in the United States." Obama has, to date, skirted, if not walked away from, this ambition, especially after the criticism of his 2009 signing statement of P.L 111-8 [directing that legislation that calls for congressional committee approval of spending decisions by federal agencies is to be treated as "advisory" and "not . . . dependent" on committee approval]. Contrary to the claim of some that Obama has assumed the mantle of a unitary president, his signing statement use to date has been comparable to, or less than that of any predecessor from Reagan on. And Bush II's signing statement use continues to keep him in a class by himself.
On protective return pocket vetoes:
Unlike the other powers discussed in this paper, the Bush and Obama protective returns were nearly identical in form, and both appeared to arise from the bowels of the "deep structure" of the executive bureaucracy rather than from top political aides seeking to expand executive authority. Here is one of the most important, if underappreciated, aspects of executive power accretion: secular bureaucratic power incrementalism. A day may come where a constitutional challenge or political flare-up may drag the protective return pocket veto into the intense lights of the legal or political stage, and where a full airing, and final disposition, of this arcane executive power grab may be vetted and resolved. Absent such a moment, however, the executive's "deep structure" will continue to advance the protective return for every subsequent chief executive.
Friday, December 20, 2013
Catharine MacKinnon Awarded Ruth Bader Ginsburg Award for Lifetime Achievement from AALS Section on Women in Legal Education
Professor Catharine MacKinnon, author of the books Feminism Unmodified and Toward a Feminist Theory of the State, as well as Are Women Human? has been announced as the recipient of the Ruth Bader Ginsburg Lifetime Achievement Award. There will be an event January 3, 2014 at the AALS Conference in NYC .
More from Feminist Law Professors here.
For those unfamilar with MacKinnon's recent work, this video from a 2011 talk at U Chicago Law School "Trafficking, Prostitution and Inequality" provides a good introduction.
Friday, December 13, 2013
Judge John D. Bates (D.D.C.) earlier this week dismissed Rep. Charles Rangel's suit against House Speaker John Boehner and others growing out of Rangel's censure in 2010 for a variety of improprieties.
Rangel sued Boehner and others after politico.com posted a memo purportedly written by the chief counsel of the House Ethics Committee. Rangel argued that that memo undermined the integrity of his censure proceeding--so much so that he had a cause of action.
The defendants moved to dismiss the case, arguing that Rangel lacked standing, the case raised a political question, the defendants enjoyed immunity from suit under the Speech and Debate Clause, Rangel's complaint failed to state a claim upon which relief could be granted, and even if the court had jurisdiction it should exercise its discretion not to reach the merits.
Judge Bates agreed. He concluded that Rangel lacked standing based on injury to his reputation (causation was too attenuated), his loss of status on the House Ways and Means Committee (again, no causation, because the Democrats lost seats on the Committee after the 2010 election, and it wasn't clear that Rangel's censure caused him to lose a subcommittee seat), the political exploitation of his censure by a primary opponent (because that's not an injury), or a due process injury (again, no injury).
Judge Bates also concluded that Rangel's claims were political questions, and that each defendant is immune under the Speech or Debate Clause.
The Senate yesterday confirmed Nina Pillard (Georgetown) to the D.C. Circuit, after previously filibustering her nomination. (The Senate earlier this week confirmed Patricia Millett, another earlier filibustered nominee.)
Think Progress has a really nice piece comparing Pillard to Ruth Bader Ginsburg on her contribution to women's rights, and predicting that she'll "imediately rocket to the top of the Democratic shortlist of potential nominees to the Supreme Court." From TP:
Pillard was a member of the legal team in United States v. Virginia, which eliminated the Virginia Military Institute's discriminatory policies against women and cemented the rule that no law may engage in gender discrimination unless there is an "exceedingly persuasive justification" for doing so. Seven years later, Pillard argued and won Nevada Department of Human Resources v. Hibbs, an important case helping women (and men) with families have a fair opportunity to participate in the workplace.
Indeed, it is likely that there is only one other judge currently on the bench who accomplished as much as a litigator for women's rights as Judge Pillard did in her career as an attorney--Justice Ruth Bader Ginsburg.
Wednesday, December 11, 2013
The Senate confirmed Patricia Millett to the D.C. Circuit and Mel Watt to head the Federal Housing Finance Agency under its new, filibuster-free majority rule for confirmations (except Supreme Court confirmations). WaPo's Post Politics blog reports here. We posted earlier on Millett's nomination and on the Senate's move to do away with the filibuster for confirmations.
Wednesday, December 4, 2013
The Ninth Circuit earlier this week upheld a congressional ban on paid advertisements for for-profits, issues of public importance or interest, and political candidates. The 9-2 (or 8-1-1) ruling in Minority Television Project, Inc. v. FEC said that the ban, at 47 U.S.C. Sec. 399b, did not violate the First Amendment.
The ruling is most notable for Chief Judge Kozinski's call for the Supreme Court to reconsider its approach to the First Amendment for broadcast media. If Chief Judge Kozinski is reading the tea leaves right, this case may just be the vehicle for the Court to change course on its traditional lower-level review (and therefore greater tolerance) for speech restrictions on broadcast media.
The majority applied the traditional intermediate scrutiny test set out in League of Women Voters and ruled that 399b comfortably satisfied it:
We conclude that substantial evidence before Congress supported the conclusion that the advertising prohibited by Section 399b posed a threat to the noncommercial, educational nature of NCE programming and that the additional evidence bears out Congress's predictive judgment in enacting Section 399b.
Op. at 16. As to fitness:
In contrast [to the statute overturned in League of Women Voters], Section 399b's restrictions are narrowly tailored to the harms Congress sought to prevent. Having documented the link between advertising and programming, Congress reaffirmed the long-standing ban on advertising on NCE stations, but in a more targeted manner. In place of the prior absolute ban on promotional content, which swept within its reach a wide range of speech that did not pose a significant risk to public programming, Congress enacted targeted restrictions that leave untouched speech that does not undermine the goals of the statute. The restrictions leave broadcasters free to air enhanced underwriting, which both the FCC and Congress determined did not pose the same risk to programming as advertisements. Broadcasters may air any promotional content for which consideration was not receieved. Finally, the statute permits non-profit advertisements. As to this latter category, the government offered evidence that non-profit advertisements, which are few in number and perceived by the public as consistent with the mission of public broadcasting, do not pose the same threat as other forms of advertising.
Op. at 26-27.
The court declined the plaintiff-petitioner's invitation to apply strict scrutiny under Citizens United. The court said that "Citizens United was not about broadcast regulation; it was about the validity of a statute banning political speech by corporations." Citizens United did not "overrule decades of precedent sub silentio--especially given that the Court there expressly overruled two other cases with no mention of League of Women Voters or an intent to change the level of scrutiny for broadcasting." Op. at 13.
Judge Callahan concurred as to the prohibition against paid advertisements by for-profits, but dissented (for the same reasons as Chief Judge Kozinski) as to the prohibition on ads on issues of public importance and for political candidates.
Chief Judge Kozinski dissented (joined by Judge Noonan) with a full frontal assault on the intermediate scrutiny standard for speech restrictions in broadcast media. He wrote that the rationale for that standard "no longer carries any force." He said that intermediate scrutiny was too squishy and was undermined for broadcast media by "intervening developments" in the media. He pointed to an earlier Ninth Circuit ruling in which the court defied Supreme Court precedent based on changed circumstances, but was nevertheless affirmed by the Supreme Court. "So I guess the lesson is, we must not get ahead of the Supreme Court--unless we're right."
He obviously thinks he's right in predicting the downfall of intermediate scrutiny here.
Gerard Magliocca (Indiana) appeared recently on Your Weekly Constitutional, a pod-cast and radio show affiliated with James Madison's Montpelier, to discuss his new book American Founding Son: John Bingham and the Invention of the Fourteenth Amendment. Magliocca talks about John Bingham and the creation of the Fourteenth Amendment in this terrific hour-long segment with YWC host Stewart Harris.
Tuesday, December 3, 2013
Opponents of the Affordable Care Act, or Obamacare, have set off a new wave of challenges to the Act, according to today's NYT. Among these: the religious challenges to the contraception mandate; cases challenging President Obama's extension of the employer mandate deadline; and challenges to the IRS rule providing a subsidy to purchasers of health insurance on the federal exchange.
As to that last one: plaintiffs in a spate of cases argue that Section 1401(a) of the ACA provides that purchasers of health insurance on a state exchange, but not the federal exchange, get a federal subsidy; yet the IRS issued a rule that extends the federal subsidy (in the form of a tax credit) to purchasers on the federal exchange. This, they say, violates the Administrative Procedures Act and the Tenth Amendment.
Why the Tenth Amendment? Opponents say that under the ACA an employer who declines to extend coverage has to pay a penalty if and when the federal government gives the employer's employees a subsidy for purchasing health insurance on a state exchange. Opponents say that the IRS rule extends this federal subsidy, and also the employer penalty, when the employer's employees purchase health insurance on the federal exchange. According to opponents, that undermines the state's policy decision not to open a state exchange in the first place. Or, as Indiana put it in paragraph 10 of its complaint in State of Indiana v. IRS:
[The IRS rule] contravenes the text of the ACA, thwarts Indiana's ability to execute State policy sparing employers from Employer Mandate penalties, induces Plaintiffs to reduce the hours of certain employees, including part-time and intermittent employees, to avoid having to provide all such employees with minimum essential coverage, and requires Plaintiffs to file onerous reports with the IRS detailing insurance coverage decisions. It thereby violates both the Administrative Procedure Act and the Tenth Amendment, and the Court should permanently enjoin Defendants from putting it into effect.
Later, in paragraph 17, it says:
In light of the IRS Rule, the State will be forced to reduce the hours of several part-time or intermittent employees in order to avoid the "assessable payment" or employer penalty of the ACA.
According to the Notice of Final Rulemaking, the IRS considered and rejected claims that the ACA itself limits subsidies to purchasers on state exchanges when it took comments on the proposed rule. The IRS said:
The statutory language of section 36B and other provisions of the Affordable Care Act support the interpretation that credits are available to taxpayers who obtain coverage through a State Exchange, regional Exchange, subsidiary Exchange, and the Federally-facilitated Exchange. Moreover, the relevant legislative history does not demonstrate that Congress intended to limit the premium tax credit to State Exchanges.
The Supreme Court heard arguments today in Northwest, Inc. v. Ginsberg, the case testing whether the Airline Deregulation Act preempts a state-law claim for breach of implied covenant of good faith and fair dealing arising out of an airline's termination of a customer's membership in its frequent flyer program. Our argument preview is here.
Given that the Court has ruled in Wolens that the ADA does not preempt an ordinary breach-of-contract claim, arguments today turned on whether the claim for breach of implied covenant of good faith and fair dealing is simply an incorporated contract requirement or a rule of contract interpretation (so that it's actually part of the contract, and thus not preempted), or whether it's an additional state-imposed obligation on top of the plain terms of the contract (and thus preempted). This question is informed by the deregulatory purpose of the ADA. Justice Breyer framed the issue this way:
I absolutely agree wtih you that--that a free market in price is at the heart of the Deregulation Act. Given.
I also think frequent flyer programs are simply price discounts. Given.
I also think that if you don't have contracts, you can't have free markets. Given.
But I also think the State cannot, under the guise of contract law, regulate the prices of airlines. If you allow that, you're going to have worse than we ever had. It'll be 50 different systems, all right?
Justice Kagan framed it this way, suggesting a solution that would preserve the implied covenant claim:
I guess what I'm suggesting is that the implied covenant here, it's just an interpretive tool. It says that there are certain kinds of provisions that are written very broadly or very vaguely, and an implied covenant comes in to help us interpret those kinds of provisions. And viewed in that way, it's just a contractual device that in light of Wolens ought to be permitted.
Justice Sotomayor said it this way, and proposed a standard for distinguishing between ordinary breach-of-contract claims and implied covenant claims:
My simpler standard comes from quoting Hennepin: "Does the implied covenant claim extend to actions beyond the scope of the underlying contract, or can it override the express terms of the agreement? If the answer is no, it's not preempted."
The question is complicated by the fact that the frequent flyer program in this case gave Northwest the "sole discretion" to terminate. So: Is an implied covenant part of that contract, or is it an additional state-law requirement? And what's the standard for sorting that out?
As an initial matter, any standard may not answer the preemption question categorically. That's because different states interpret their implied covenant laws differently. This gave the Court another problem: Does it have to sort out the particular state law on implied covenants in order to determine whether a claim in a particular state is preempted? And might the answer change depending on the state, leading to inconsistent results and undermining the deregulatory purpose of the ADA? Justice Scalia put this point on it:
Wow, somebody's really been given a raw deal. You know, that's still going to be possible even if we rule for [Ginsberg] here. It depends on what State he's from, right?
Complicating things yet more, the answer may turn on the implied covenant's waivability. Justice Kagan made this point:
But if it can't be waived, it sure seems as though it is operating independently of the parties' reasonable expectations.
It may also turn on the fact that frequent flyer programs work for airline miles, but also for other goods and services--and thus state regulation of them may not amount to a regulation of airline price, in violation of the ADA. Justice Alito put it this way:
I don't want to take up your rebuttal time, but if the facts were that under a particular program 90 percent of the miles were earned by purchasing things other than flying and 90 percent of the miles were spent on things other than flying, wouldn't that be very different?
This could give the Court a way out of the problem, by ruling that state implied-covenant claims based on frequent flyer programs aren't preempted because they don't regulate the price of airline tickets. This seems unlikely, though: even if frequent flyer programs work for other goods and services, they still also work for airline tickets.
Finally, there's the presumption against preemption--and whether it has any bearing on this case. Chief Justice Roberts seemed to think so:
I do agree, it seems pretty inconsistent with the normal presumption against preemption that we apply out of respect for the State legal regimes to say we're going to adopt a broad prophylactic rule.
But Justice Scalia thought not:
But the whole purpose of the ADA was to preempt State laws. I mean, I can understand applying that presumption to other statutes which say nothing about preemption. The whole purpose of the ADA was to deregulate airlines, was to say there was going to be no Federal regulation. Let the free market handle it and there will be no State regulation.
On the one hand, a narrow ruling in this case--one that address Ginsberg's particular claim, under Minnesota law, recognizing that this particular program gave the airline "sole discretion" to terminate--seems both likely and appropriate, especially given the particularities of this case. But on the other hand, as at least some on the Court suggested, an overly narrow ruling, without a broader standard, leaves open the possibility (or even probability) that this very same issue, or one like it, could give the lower courts a headache in the 49 other states (where implied covenant claims might work differently).
If Ginsberg loses, and his claim is preempted, the U.S. Department of Transportation can still investigate Northwest's frequent flyer program. But that remedy doesn't do anything for Ginsberg.
Ever since the Supreme Court upheld the Affordable Care Act's individual mandate in NFIB, we've been treated to a new and surprising argument by constitutional conservatives. That argument is in favor of judicial activism. Yes, that's right: after years of railing against activist judges, conservatives now claim that the federal courts aren't activist enough, in particular, in checking out-of-control exercises of legislative power.
In a series of new books this fall, and reviews in the WSJ here and here (h/t Jon Gutek), constitutional conservatives argue that government regulation has gone wild, and that the courts have not properly checked this growth. Exhibit A: the Supreme Court's ruling upholding the individual mandate in NFIB.
For example, Randy Barnett, reviewing Clark M. Neily III's Terms of Engagement, argues that Chief Justice Roberts rewrote the individual mandate as a tax, using a "saving construction" as an exercise in judicial restraint in order to uphold a law validly enacted by the legislature. George Melloan, reviewing Josh Blackman's Unprecedented and Ken Cuccinelli's The Last Line of Defense, similarly argued that Chief Justice Roberts saved the mandate by "call[ing] the act's penalty for noncompliance . . . a 'tax' and waved the ACA through."
But this turns history on its head. The government always defended the individual mandate under both its Commerce Clause authority and its taxing power. It argued the tax point explicitly to the Supreme Court, starting at page 52 of its brief. It's hardly novel, then, let alone a rewrite of the Act, that the Court upheld the individual mandate under the taxing power. Indeed, it's exactly what the government argued. This may not be how constitutional conservatives read the Act's mandate, but it's how all three branches of government did. The Court's ruling on the taxing power wasn't a reach to defer to the legislature. Indeed, it wasn't a reach at all.
Barnett's argument that the courts aren't activist enough also ignores the startling activism of the Roberts Court. Remember, the Court rejected the individual mandate under the Commerce Clause, even as it upheld it under the taxing power. The Court also limited the Medicaid expansion component of the ACA. We could go on and on with examples of how this Court overturned state and federal legislative acts, but this one is undoubtedly the biggest: the Court last summer rejected the coverage formula for preclearance under the Voting Rights Act--a provision enacted by a breathtaking bipartisan majority in Congress and signed by a Republican president (no big government types, these). Given the history, it's hard to argue that this wasn't a supremely activist ruling. This Court has demonstrated its appetite for activism. But it's apparently not activist enough.
Barnett goes on to argue that judicial activism in the name of legislative restraint is necessary because voters don't know enough to hold their elected representatives accountable:
In practice, the claim that laws and administrative regulations reflect the will of the public is often a fiction. In the economic sphere, regulations are more commonly the product of pressure from politically connected and well-established companies at the expense of upstart entrepreneurs. Because voters know little about these laws and their impact, they can't hold their representatives accountable for enacting them, and the few affected individuals can hardly influence a general election.
This seems a remarkable claim, given the political backlash to the ACA, or Obamacare, and, as Melloan notes, the political blows that Obamacare supporters suffered in the 2008 mid-terms and beyond. Voters apparently knew how to hold Obamacare supporters accountable. But the claim is also ironic: the very problem that Barnett describes only gets worse with more money in politics--a result that the activist Supreme Court ensured when it overturned congressional regulation of corporate campaign expenditures in Citizens United.
These constitutional conservative talking points fall apart on their own terms. And that's not even getting to the merits.
The Supreme Court hears oral arguments today in Northwest, Inc. v. Ginsberg, the case testing wether the federal Airline Deregulation Act preempts a state-law claim for breach of implied covenant of good faith and fair dealing arising out of an airline's termination of a customer's membership in its frequent flyer program. Here's my preview of the oral argument from the ABA Preview of United States Supreme Court cases, with permission:
S. Binyomin Ginsberg was an active member of WorldPerks, the Northwest Airline’s frequent flyer program, since 1999. Ginsberg, an expert in education and administration, travelled frequently on Northwest to give lectures, conduct seminars and workshops, and advise other educators and administrators. In 2005, Ginsberg earned Platinum Elite Status in the WorkPerks program, the highest level of benefits available.
But in June 2008, Northwest revoked Ginsberg’s WorldPerks membership. A Northwest representative explained by phone that Northwest was revoking his membership because he had abused the program by complaining too many times and strategically booking himself on full flights in order to get bumped. A Northwest Customer Care Coordinator later sent Ginsberg an e-mail citing Paragraph 7 of the WorldPerks General Terms and Conditions and saying that “[a]buse of the WorldPerks program . . . may result in cancellation of the member’s account and future disqualification from program participation, forfeiture of all mileage accrued and cancellation of previously issued but unused awards.” The e-mail also said that Northwest may determine “in its sole judgment” whether a passenger has abused the program. The e-mail did not give any specific information about how Ginsberg had abused the program.
Ginsberg filed suit on January 8, 2009, asserting four causes of action: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) negligent misrepresentation; and (4) intentional misrepresentation. The district court dismissed the case, ruling that Ginsberg failed to show sufficient facts to support his breach-of-contract claim, and that the federal Airline Deregulation Act preempted Ginsberg’s other three claims.
Ginsberg appealed, but only as to his claim for breach of the implied covenant of good faith and fair dealing. The United States Court of Appeals for the Ninth Circuit reversed, and this appeal followed.
Congress enacted the Airline Deregulation Act (ADA) in 1978, concluding that “maximum reliance on competitive market forces” would best further “efficiency, innovation, and low prices” as well as “variety [and] quality . . . of air transportation services.” As part of the Act, and in order to ensure that states would not frustrate deregulation by enacting their own regulations, Congress included a preemption provision barring any state from “enact[ing] or enforce[ing] a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier.” At the same time, Congress retained the Act’s already-existing “savings clause,” which preserved common law and statutory remedies.
The Supreme Court addressed the ADA’s preemption clause in two important cases. In the first case, Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992), the Court ruled that the ADA preempted state regulation of airlines’ fare advertisements. The Court held that the preemption clause’s phrase “related to” was quite broad, and that the ADA sought to preempt any state enforcement actions “having a connection with or reference to airline ‘rates, routes, or services’ . . . .” The Court had little trouble concluding that state regulation of airlines’ fare advertisements fell comfortably within that definition.
In the second case, American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995), a case very similar to Ginsberg’s, the Court ruled that the ADA preempted state enforcement suits against an airline arising under state-imposed obligations (as in a state law regulating an airline), but not under an airline’s breach of its own, self-imposed obligations (as in the airline’s own contract with its customers). According to the Court, “[a] remedy confined to a contract’s terms simply holds parties to their agreement,” and does not impose additional obligations related to a price, route, or service. Wolens sued American Airlines for making retroactive changes to the terms and conditions of its frequent flyer program. The Court held that the ADA preempted Wolens’s claim under the state Consumer Fraud Act, but that it did not preempt Wolens’s claim for routine breach of contract.
Considering the broad reading of the preemption clause in Morales, the parties here argue whether Ginsberg’s claim for breach of the implied covenant of good faith and fair dealing looks like more a state-imposed obligation or whether it looks more like an airline-imposed obligation under Wolens.
Northwest argues first that the plain language of the ADA preempts Ginsberg’s claim. It says that Ginsberg’s suit, which seeks reinstatement of program membership and renewed access to the reduced prices and enhanced services that come with it, is plainly “related to” Northwest’s prices, routes, and services, especially given the Court’s broad approach to the ADA’s preemption provision. Moreover, Northwest contends that Ginsberg’s claim seeks to enlarge the program’s General Terms and Conditions, a voluntary agreement between the parties, by invoking state law that is external to the agreement. In other words, Northwest says that Ginsberg’s implied covenant of good faith and fair dealing claim is no ordinary breach-of-contract claim, designed simply to enforce the terms of the agreement between the parties. Instead, it says that Ginsberg’s claim goes above-and-beyond simple enforcement of the agreement and, if allowed, would enforce state policies outside the four corners of the agreement, external to the contract. Northwest argues that this violates the Court’s rule in Wolens.
Next, Northwest argues that preemption of Ginsberg’s claim is consistent with the policies underlying the ADA. Northwest contends that Ginsberg’s implied covenant claim is amorphous and subject to different interpretations, and, if enforced here and elsewhere, would lead to a patchwork of state regulations over agreements like this. (In contrast, Northwest says that simple breach-of-contract claims are uniform enough across jurisdictions to avoid a patchwork result.) Moreover, Northwest argues that Ginsberg’s claim, if recognized, would create a risk of state interference with competition and commercial activity in the airline industry by substituting state law for market forces. Northwest claims that the patchwork result and state interference are both inconsistent with the goals of the ADA, to further “efficiency, innovation, and low prices” in the airline industry through “maximum reliance on competitive market forces.” (Northwest also notes that the U.S. Department of Transportation (DOT) has authority to investigate unfair practices in frequent flyer programs, so that Ginsberg and others like him may seek federal administrative relief.)
The federal government weighed in to support Northwest. Like Northwest, the government argues that the ADA preempts Ginsberg’s claim, because Ginsberg’s claim is external to his contract with Northwest. The government contends that because the district court rejected Ginsberg’s breach-of-written-contract claim on the basis that it gave Northwest complete discretion to determine Ginsberg’s status in the program, and because Ginsberg did not appeal that portion of the ruling, Ginsberg’s implied-covenant claim necessarily seeks to impose an additional, non-contractual obligation on Northwest. The government says that under Wolens this claim is preempted. But unlike Northwest the government does not argue for a categorical rule that all implied-covenant claims are preempted by the ADA, because, it says, some implied-covenant claims may require only adjudication of routine breach-of-contract claims, consistent with Wolens. The government says that only those implied-covenant claims that seek to enforce policies outside the contract, like Ginsberg’s, are preempted.
Ginsberg argues first that his implied covenant of good faith claim is not preempted under Wolens. Ginsberg says that his claim does not look outside the contract; instead, it stays within the contract. According to Ginsberg, that’s because a contract includes both express and implied terms, and his claim simply seeks to put an implied-obligation-of-good-faith gloss on the contract language that gives Northwest “sole judgment” to determine whether he abused the program. Ginsberg claims that this gloss is no extra-contractual obligation; rather, it is part-and-parcel of the contract itself. He says that courts read in an implied covenant of good faith to a contract in order to protect the contract’s express terms, and not to add an additional or external obligation or policy. Moreover, Ginsburg contends that his decision not to appeal the dismissal of his claim for a breach of the written contract does not transform his implied covenant of good faith claim into one based on extra-contractual policies, as argued by the federal government. Again, he says that the contract includes both express and implied terms, and his implied claim simply seeks to enforce the contract itself. Ginsberg says that holding Northwest to implied terms furthers the aims of the ADA, because enforcement in good faith increases the stability of contracts and reduces the costs of entering into them. Ginsberg claims that DOT enforcement does not replace the role of the courts in resolving contract disputes, whether they involve express or implied terms of a contract.
Ginsberg argues next that his claim is not preempted because it does not seek to “enact or enforce a law, regulation, or other provision.” Ginsberg says that the Court unanimously held that a statutory provision in the Federal Boat Safety Act that preempts enforcement of “a law or regulation” does not preempt common-law claims. For the same reasons that that provision did not preempt, Ginsberg contends that the ADA should not preempt. He also says that the word “provision” does not extend to common-law duties. As a result, Ginsberg contends that the ADA’s preemption clause does not apply, even aside from his Wolens argument.
Finally, Ginsberg argues that his claim is not preempted because it does not relate to airline prices, routes, or services. He says that his claim, unlike the claim in Wolens, does not challenge access to flights and upgrades or the number of miles needed to obtain a ticket. Instead, Ginsberg argues that his claim goes only to the termination of his WorldPerks membership. He says that this claim does not reference, does not seek to regulate, and will not affect the price, route, or service of air transportation. (Ginsberg argues that the WorldPerks program is not a “service” within the meaning of the ADA.) Ginsberg underscores this point by noting that frequent flyer miles can be earned and spent on many things other than air transportation, and that consumers can participate in a frequent flyer program without buying a single airline ticket. Finally, Ginsberg says that the DOT advises consumers to “consider legal action through the appropriate civil court” if they are unhappy with the way a frequent flyer program is administered. He says that is exactly what he did here.
On one level, this case simply addresses a claim that falls between the cracks of the sharp distinction between contract-based claims and extra-contractual claims that the Court drew in Wolens. By this reckoning, the case is only another opportunity for the Court to round out its analysis of ADA preemption and to give guidance to lower courts and litigants for the next round of claims against the airlines. The case is significant, but only insofar as it deals with ADA preemption of a particular kind of claim. The parties do not argue that the Court should overturn Wolens, and they do not argue that the ADA does not preempt an ordinary breach-of-contract claim. Thus, whatever the Court likely rules in this case, Ginsberg and plaintiffs like him will continue to be able to assert an ordinary breach-of-contract claim against an airline, even if they cannot assert more. (The fact that Ginsberg appealed his implied covenant claim, but not his breach-of-contract claim, says that the implied covenant claim sweeps more broadly, and could be easier to prove, than the breach-of-contract claim. If so, a ruling favoring preemption could mean that plaintiffs would lose a broader class of claims (implied covenant claims), even if they would retain a basic breach-of-contract claim.)
On another level, the case, like many preemption cases, pits significant considerations of federal-state relations against an individual plaintiff’s ability to seek redress for injuries under state law against a corporation. In this way, the case is significant for how it balances federalism against state law remedies against corporations. To put a finer point on it, this case, like some other recent federalism cases, is likely to be seen in pro-corporation or pro-plaintiff terms, depending on the outcome.
These cases involving federalism and individual state-law remedies sometimes come down with surprising alliances among the justices. In Wolens, for example, Justice Ginsberg wrote the Court’s opinion; it was joined by Chief Justice Rehnquist and Justices Kennedy, Souter, and Breyer. But the composition of the Court has changed in critical ways since Wolens, making predictions here even more difficult than usual. Look to Chief Justice Roberts and Justice Kennedy as the likely pivotal votes.
Monday, December 2, 2013
The Supreme Court today heard oral arguments in Michigan v. Bay Mills Indian Community, the case asking whether a Native American Indian tribe enjoys tribal sovereign immunity against a state's suit against it for operating an illegal casino outside of Indian lands.
One thing seemed clear: the Court is prepared to reconsider the scope of tribal sovereign immunity.
One problem is the odd result under the Tribe's position that a state could sue a tribe for operating a casino on its lands, but not off its lands. The Tribe's position is that the state has a number of other ways to regulate a casino outside Indian lands, short of a suit against the Tribe, which would require relinquishing tribal sovereign immunity. For example, the state could deal with the problem under the required compact between the state and the Tribe; it could sue Tribal officials for injunctive relief under an Ex Parte Young theory; the state could prosecute individuals who work at or frequent the casino; or it could get the federal government to enforce federal law against an illegal, off-Indian land casino. But it's not clear that any of these alternatives would be effective--and the Court seemed skeptical of each of them. In other words, practically speaking, relinquishing tribal sovereign immunity may be the only way that the state could regulate an off-Indian land casino. (The Tribe and federal government both noted that the casino isn't currently operating--that it's waiting for a defiinitive answer to the question whether it can operate legally.)
At the end of the day, this problem may come down to the state's ability to collect money damages--something it can't do if the Tribe enjoys tribal sovereign immunity. Justice Kagan proposed this modification to tribal sovereign immunity to the Tribe's attorney, Neal Katyal:
JUSTICE KAGAN: Mr. Katyal, what is the difference--the State can really--it can shut down these gambling operations easily if it's off Indian lands. What the State can't do is get any kind of damages or money remedies; is't that really the difference?
MR. KATYAL: I do think so. I think that's--I think that that's underlying some of this, absolutely.
JUSTICE KAGAN: Maybe that's an important difference. I mean, maybe we should give the State the ability to collect damages.
Justice Kennedy came at it from a different angle, the problem with the definition of the land where the casino is located:
But if the tribe takes such an obscure position, such a changing position, as to whether or not we are dealing with . . . Indian land, maybe that's a reason why we should confine and limit [tribal immunity as defined in] Kiowa so that it doesn't apply to Indian gaming and we won't have this problem.
Another problem is the odd result that under the Tribe's theory a Native American Indian tribe would enjoy wider sovereign immunity than other states and foreign sovereigns. Chief Justice Roberts put this fine point on the problem:
[Native American Indian tribes are] [d]ependent sovereigns, which is surprising that the scope of their immunity exceeds that of States or foreign sovereigns.
Combining the two problems, Justice Ginsburg proposed this to the Deputy Solicitor General:
Mr. Kneedler, you went through the development of foreign sovereign immunity, and whether the courts were influenced by the government, it was the courts that recognized this distinction between commercial activity and governmental activity.
Why couldn't the court extend that same distinction to Indian tribes and say it makes sense in the foreign country context, it also makes sense in the context of the tribes, to distinguish commercial from governmental?
Finally, there's the problem of who decides on tribal sovereign immunity. Both the Tribe and the federal government argues that Congress should decide. But that didn't sit well with the Court. Justice Ginsburg said this on the question:
Mr. Katyal, isn't it odd to say that when this is the Court--the doctrine of tribal immunity is something that was announced by this Court. Congress never passed a law that said the tribes have immunity. It's all this Court. And then you say what this Court made only Congress can unmake. That seems strange to me.
In all, it seems likely that the Court will redefine the scope of tribal sovereign immunity. It's less clear exactly how: whether the Court will carve out a limited exception to tribal sovereign immunity for off-Indian land commercial activity, or whether it will more substantially restrict tribal sovereign immunity.
The Supreme Court today declined to review a Fourth Circuit ruling upholding the Affordable Care Act's employer mandate. Our post on the Fourth Circuit ruling is here.
The order rejecting cert. means that the Fourth Circuit ruling stays on the books and that the Supreme Court won't take on the employer mandate (now, and likely ever). The Obama administration delayed implementation of the mandate (sparking bills in Congress and lawsuits to override the delay); it's now scheduled to go into effect in 2015 (and not January 1, 2014, as the law seems to require).
Recall that the Fourth Circuit ruled in Liberty University v. Lew that Congress had authority under both the Commerce Clause and the Taxing Clause to impose a mandate on employers to provide health insurance to employees. The case was notable, because it held that Congress had authority under the Commerce Clause to impose the employer mandate, even though five justices on the Supreme Court ruled in NFIB v. Sebelius that Congress lacked authority under the Commerce Clause to impose the individual mandate. The Fourth Circuit said that in enacting the employer mandate Congress wasn't creating commerce to regulate it (as Chief Justice Roberts wrote in NFIB about the individual mandate). Instead, the Fourth Circuit said that the employer mandate was just another federal regulation on the terms and conditions of employment between an employee and an employer, who is already in interstate commerce.
That's the question before the Supreme Court today in Michigan v. Bay Mills Indian Community. More particularly, the case asks whether the federal courts have jurisdiction to hear a state's claim that a Native American tribe's off-reservation casino violates the Indian Gaming Regulatory Act, and whether the tribe enjoys immunity from such a suit.
With the rapid proliferation of tribal gaming, including off-reservation gaming, the case could make an important statement about the regulatory authority of the tribe, the state, and the federal government over off-reservation gaming. It could also make an important statement about federal court jurisdiction over a state's claim that a tribe's off-reservation gaming violates federal law, and about tribal immunity for such gaming.
Here's my oral argument preview of the case, republished, with permission, from the ABA Preview of U.S. Supreme Court Cases:
Congress enacted the Indian Gaming Regulatory Act of 1988 (IGRA) in order to regulate gaming activities on “Indian lands.” The IGRA divides gaming into three separate classes and specifies how each class is regulated. Class I gaming includes social games and traditional tribal games; it is under the exclusive jurisdiction of the tribe. Class II gaming includes bingo and certain card games like poker; it is primarily within the jurisdiction of the tribe but subject to federal oversight.
Class III gaming, the class at issue here, includes everything else, such as slot machines and casino-style games. Class III gaming is not regulated by a uniform structure. Instead, an Indian tribe wishing to conduct Class III gaming has to adopt a gaming ordinance that is approved by the National Indian Gaming Commission (NIGC), a federal agency. The tribe also has to negotiate with the state where it is located and enter into a compact that will govern the gambling.
The Bay Mills Indian Community, a federally-recognized Indian tribe with a reservation in Michigan’s northern peninsula, entered into a compact with Michigan in 1993. Soon after the compact was finalized, the NIGC approved Bay Mills’s gaming ordinance. Bay Mills then proceeded to establish its own Gaming Commission. Bay Mills has continuously operated one or more gaming facilities on its reservation ever since.
In 1997, Congress passed the Michigan Indian Land Claims Settlement Act. The Act appropriated funds to Bay Mills and other Michigan Indian tribes to satisfy judgments that the Indian Claims Commission had entered in favor of the tribes. The Settlement Act directed that 20 percent of the funds awarded to Bay Mills be deposited in a “Land Trust” and required that earnings from the Trust “be used exclusively for improvements on tribal land or the consolidation and enhancement of tribal landholdings through purchase and exchange.” It also said that “[a]ny land acquired with funds from the Land Trust shall be held as Indian lands are held.”
In August 2010, Bay Mills used the funds from the Settlement Act land trust to purchase approximately 40 acres of land in Vanderbilt, Michigan, about 100 miles from the Tribe’s reservation. Bay Mills constructed a small casino on the property (initially with 38 electronic gaming machines, but later expanded to 84 machines) and began operating it on November 3, 2010. The U.S. Department of the Interior and the NIGC later issued letters concluding that the Vanderbilt casino was not located on “Indian lands” as defined by the IGRA, that it was therefore not eligible for gaming under the IGRA, and that the NIGC had no jurisdiction over it.
The state filed suit against Bay Mills in federal court. The state’s counts I and II alleged that the Vanderbilt land did not constitute “Indian lands” under the IGRA, and that Bay Mills therefore violated the compact. The state’s count III alleged that Bay Mills violated the IGRA by conducting gaming outside of Indian lands and that even if the Vanderbilt land constituted “Indian lands,” Bay Mills violated 25 U.S.C. § 2719 (and therefore the compact’s requirement that gaming comply with federal law) by operating a gaming facility on land acquired after October 17, 1988, that does not satisfy any statutory exception. The Little Traverse Bay Bands of Odawa Indians, which operated a competing casino about 40 miles away, filed a separate suit with similar claims the next day.
The district court consolidated the cases and entered a preliminary injunction halting the Bay Mills casino. Bay Mills appealed and moved for a stay of the injunction; the district court and the United States Court of Appeals for the Sixth Circuit both denied a stay.
While Bay Mills’s appeal was pending, the state amended its complaint to add three additional claims. Count IV alleged that Bay Mills violated federal common law by operating a casino that exceeds the scope of its authority. Count V alleged that Bay Mills failed to obtain a state license for a gaming facility in violation of Michigan law. Count VI alleged that the casino was a public nuisance under state law. The state also added several defendants—the Bay Mills Tribal Gaming Commission, the Commission’s members in their official capacities, and the members of the Bay Mills Executive Council in their official capacities.
On appeal, the Sixth Circuit reversed and vacated the preliminary injunction. The court held that the district court lacked jurisdiction as to counts I, II, and III. The court held that the district court had jurisdiction as to counts IV, V, and VI against Bay Mills, but that those counts were barred by tribal sovereign immunity. The court remanded the case to the district court to address the state’s counts IV-VI against the additional individual defendants.
The state brought this appeal. Little Traverse is not a party to it; neither are the individuals named in the state’s amended complaint.
Federal courts are courts of limited jurisdiction. This means that their jurisdiction must be defined by statute. One common source of federal jurisdiction is found in 28 U.S.C. § 1331, which creates the so-called “federal question” jurisdiction. Under § 1331, federal district courts have original jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.”
Another source of federal jurisdiction—one that goes particularly to gaming on Indian lands—is found in 25 U.S.C. § 2710(d)(7)(A)(ii), part of the NIGC. That provision says that federal district courts have jurisdiction over “any cause of action initiated by a State or Indian tribe to enjoin a class III gaming activity located on Indian lands and conducted in violation of any Tribal-State compact . . . .”
The parties here dispute whether the federal courts have jurisdiction over the state’s claims. In particular, they dispute whether the state’s claims arising out of the Bay Mills’s alleged violation of the compact fall under § 1331 (because these claims might amount to a violation of the IGRA, a federal statute), and whether the Vanderbilt casino is “a class III gaming activity located on Indian lands” under § 2710.
But even if a federal court has jurisdiction (under §§ 1331, 2710, or some other federal statute), certain parties, like Indian tribes, enjoy immunity from suit. The Supreme Court has recognized tribal sovereign immunity, and both parties agree that “the doctrine is now part of this Court’s settled precedent . . . .” But they disagree sharply over the extent of that immunity.
The state argues first that the district court has jurisdiction over its suit pursuant to § 2710. The state says that the Vanderbilt casino is “a class III gaming activity located on Indian lands,” because Bay Mills authorized, licensed, and operated the casino from its reservation. More particularly, it contends that § 2710 extends federal court jurisdiction to the gaming itself, but also to the gaming activity, which, the state argues, includes authorizing, licensing, and operating the casino. The state claims that its interpretation of the text is consistent with the congressional intent.
The state argues next that the district court has jurisdiction over its federal claims pursuant to § 1331. The state says that it alleged a violation of the IGRA, a federal statute, when it claimed that Bay Mills violated the compact (in counts I, II, and III). It also says that nothing in the IGRA limits the federal courts’ federal question jurisdiction under § 1331.
The state argues that tribal sovereign immunity does not bar its suit for two independent reasons. First, the state contends that the IGRA abrogated tribal sovereign immunity. The state says that the Court uses a “more holistic approach” in determining whether a federal statute abrogates tribal sovereign immunity, and that the IGRA viewed as a whole (and not just § 2710) makes clear that Congress intended that a state could enforce its gaming laws in federal court against an Indian tribe engaged in off-reservation gaming. The state claims that the opposite rule would lead to an absurd result—that the state could obtain a federal court injunction to stop illegal gaming on Indian lands, but not on its own sovereign state lands. The state says that Congress could not have intended this result.
Second, the state argues that even if the IGRA does not abrogate tribal sovereign immunity, the Court should decline to extend immunity here. The state says that the Court has never expressly extended tribal immunity to a tribe’s off-reservation commercial activities, and, especially given tribal immunity’s “dubious foundation,” the Court should decline to extend it to those activities in this case.
In response, Bay Mills first argues that the state cannot claim that the Vanderbilt casino is “on Indian lands,” as it does in its first point. Bay Mills says that that argument falls outside the questions presented, which speak solely to gaming activities “outside of Indian lands.” But even if this argument were properly before the Court, Bay Mills contends that the state is wrong: the IGRA itself says that a tribe’s decision to open a gaming facility is not a “class III gaming activity.”
Next, Bay Mills argues that it is immune from Michigan’s suit under § 1710. Bay Mills claims that § 1710 only abrogates tribal sovereign immunity “on Indian lands,” and that the whole premise of the state’s claim is that the Vanderbilt casino is off Indian lands. Bay Mills says that under the plain language of § 1710, “Michigan has simply pled itself out of court.”
To the extent that Michigan and its amici argue for a Court-created exception to tribal sovereign immunity, Bay Mills argues that the Court has already rejected the proposed exceptions. Bay Mills also says that the Court has rejected pleas to overrule its tribal sovereignty immunity precedents. Bay Mills contends that it is Congress’s prerogative, not the Court’s, to alter the scope of tribal sovereign immunity, and that Congress has only reaffirmed it. Bay Mills claims that tribal sovereign immunity “has deep roots in this country’s jurisprudence,” and that there is no reason for the Court to abrogate it now.
Finally, Bay Mills argues that the Ninth Circuit decision will not leave the state without a remedy, as the state argues. Bay Mills says that Michigan most obviously can invoke the dispute resolution procedure in the compact. Bay Mills claims that Michigan could also sue tribal officials for injunctive relief. Additionally, Bay Mills argues that the state could negotiate a waiver of sovereign immunity in the next round of compact negotiations, seek federal intervention in the dispute, or even outlaw gaming throughout the state.
The federal government, as amicus in support of Bay Mills, also argues that the federal courts lack jurisdiction over Michigan’s claims. The federal government says that § 2710 does not extend jurisdiction of the state’s claims to the district court. Contrary to the state’s argument, the federal government says that numerous provisions in the IGRA demonstrate that the phrase “class III gaming activities” refers to the games themselves, and not to authorizing, licensing, and operating games. And because the games themselves are not located on Indian lands, § 2710 is not a basis for jurisdiction. Moreover, the federal government says that § 1331 does not extend jurisdiction, because the state’s federal claims (counts I, II, and III) do not fall within § 2710, and because the compact does not contain a provision agreeing to federal court review of the state’s other claims.
Next, the federal government argues that Bay Mills enjoys tribal sovereign immunity. The federal government says that § 2710 did not abrogate sovereign immunity, because the state alleged that the Vanderbilt casino is not on Indian lands. The federal government contends that 18 U.S.C. § 1166 also does not abrogate sovereign immunity, because that statute gives the federal government (not the states) enforcement authority in Indian lands for violations of assimilated state gambling laws. The federal government says that § 1166 does not give states authority to enforce state gambling laws outside Indian lands, and even less to sue the tribe itself. The government contends that tribal sovereign immunity already extends to a tribe’s commercial activities wherever they take place, and that the Court should leave it to Congress to balance the interests of the tribes and the states and to determine the scope of immunity.
Finally, the federal government argues that Michigan has other remedies. Like Bay Mills, the federal government says that the state could seek injunctive relief against an individual tribal official. The federal government claims that the state could also negotiate a waiver of sovereign immunity in the compact. Moreover, the federal government contends that the state could request approval from the NIGC of a site-specific gaming ordinance for the Vanderbilt casino, forcing the NIGC to determine whether the site is eligible for gaming, and appeal the decision in court. Finally, the federal government notes that the state can enforce its own gaming laws against individuals involved in gaming at the Vanderbilt casino. With all these options, the federal government argues that there is no need to diminish tribal sovereign immunity to create a remedy that would resolve this dispute.
At its core, this case is about the allocation of power between states and Indian tribes over the operation of an activity, tribal-sponsored gambling, that has seen astonishing growth in recent decades and today is worth tens of billions of dollars nationwide. (The NIGC tracks this growth in Gaming Revenue Reports, available at http://www.nigc.gov/Gaming_Revenue_Reports.aspx.) Both Indian tribes and states use legalized gaming more and more for revenue, economic development, and economic activity and opportunity. Within this broader context, the regulation of tribal gaming, even at the margins, is itself a high-stakes game.
To be sure, this case deals with only a small part of this larger question, that is: off-reservation gambling. And it involves only special federal jurisdictional and immunity questions that come up in the particular case when an Indian tribe purchases land to build an off-reservation casino.
Still, in the rapidly growing sector of Indian gaming, the case already matters. As Michigan indicates, it “is already aware of at least three additional lawsuits where parties have cited the Sixth Circuit’s decision here in support of a tribe’s operation (or planned operation) of a casino in violation of IGRA or tribal-state gaming compacts.” The state notes that “[a]s tribes continue to look for better casino locations . . . or new ways to profit from the explosion of casino gaming, the friction between state authority and tribal immunity will inevitably increase.” That’s not to say that Michigan’s positions in the case are (necessarily) right, but only that the issues are already significant, and only likely to grow in importance.
Moreover, the issues are highly controversial. On the one hand, many favor expanding off-reservation gaming opportunities, because Indian tribes and states can use off-reservation gaming to generate more revenue and economic development in more attractive locations off the reservations (like closer to urban centers). On the other hand, many oppose off-reservation gaming, because it encroaches on local communities. The debate is playing out in communities across the country where Indian tribes are seeking permission to conduct off-reservation gaming. The debate is also playing out in Washington, where the Obama administration moved in 2011 to loosen requirements for some off-reservation gaming, and where some in Congress have introduced legislation to tighten them. Again, this case sits right at the center of these debates.
Whatever happens in this case, though, it cannot change the basic statutory framework under the IGRA: Indian tribes will still have to adopt a gaming ordinance and negotiate a compact with the state. The compact requirement ensures that both states and Indian tribes will have a significant hand in regulating casino-like tribal gaming. But the outcome of the case may affect how Indian tribes and states negotiate their compacts and the terms they include in them.
It is important to remember that the Department of the Interior and the NIGC issued opinions that the Vanderbilt casino was not on “Indian lands” and was therefore not eligible for gaming under the NGRA. The federal government does not disavow these opinions. Indeed, the federal government sets out an array of options for Michigan to regulate the Vanderbilt casino (and other future casinos), notwithstanding (as the federal government argues) the federal courts’ lack jurisdiction over the state’s claims and Bay Mills’s immunity from suit. In other words, the Sixth Circuit ruling does not mean that Bay Mills can operate its casino, or that other tribes could operate like casinos off reservation, without at least some state and federal oversight and permission.
Finally, the case is significant because it will resolve splits in the circuits. There is disagreement among the circuits on both questions presented—the scope of federal jurisdiction, and the scope of tribal sovereign immunity.