Constitutional Law Prof Blog

State Price-Gouging Laws Don't Violate Dormant Commerce Clause for Products on Amazon

Steven D. Schwinn, University of Illinois Chicago School of Law

The Sixth Circuit ruled that enforcement of Kentucky's anti-price-gouging laws to Kentucky products sold on Amazon doesn't clearly violate the dormant commerce clause. The preliminary ruling allows the Kentucky AG to enforce the state's anti-price-gouging laws against Kentucky businesses who sell products on Amazon, even though Amazon rules mean that those businesses must sell their products for the same price to customers in different states.

The case, Online Merchants Guild v. Cameron, arose when Kentucky businesses started charging outsized prices for hand sanitizer, disinfecting wipes, masks, and other cleaning and COVID-protective products on Amazon. The state AG opened civil price-gouging investigations, and the businesses sued.

The businesses argued that application of the state's anti-price-gouging laws would require them to drop their prices for products sold in Kentucky and, under Amazon's rule that retailers sell their products for a single price to customers in different states, other states as well. They claimed that this meant that Kentucky's laws would apply extraterritorially and thus create a nationwide "price ceiling," in violation of the dormant commerce clause.

The district court agreed and granted a preliminary injunction. But the Sixth Circuit reversed.

The court held that any extraterritorial effect of the state's laws was due to Amazon, not the laws themselves, and that Amazon's rules broke any "direct or inevitable" link between the state laws and their effects:

It does not follow, however, that Kentucky's price-gouging laws are unconstitutional--a state law's effect on out-of-state commerce must be direct or inevitable to be invalid under the extraterritoriality doctrine. That is not the case here because the effect of Kentucky's price-gouging laws depends entirely upon Amazon's independent decisions in how it structures its online marketplace. If Amazon allowed for state-specific pricing or allowed third-party sellers to limit where their goods were sold--and no one contends that Amazon lacks the power to structure its marketplace in this fashion--then there would be no effect at all on interstate commerce (or at most the effect would be de minimis).

In other words, without Amazon's rule, the Kentucky AG could enforce state laws against these Kentucky businesses, reducing the prices they charge to Kentuckians, but still allowing them to charge outsized prices to customers in other states.

The court vacated the district court's preliminary injunction and remanded for further proceedings.

Second Circuit Rejects Bar Applicant's Disability Claim Citing State Sovereign Immunity

Steven D. Schwinn, University of Illinois Chicago School of Law

The Second Circuit ruled that the New York State Board of Law Examiners didn't waive state sovereign immunity under the federal Rehabilitation Act, even though certain state courts of original jurisdiction did. As a result, a bar applicant who was denied an accommodation could not sue the Board for monetary damages.

The case, T.W. v. New York State Board of Law Examiners, began when the Board denied T.W. a requested accommodation for the bar exam. T.W. sued under the Rehabilitation Act, but the Board argued that it enjoyed state sovereign immunity under the Eleventh Amendment. The Board claimed that it didn't waive immunity under the Rehabilitation Act, because it didn't receive federal funding and it wasn't a "program or activity" of a "department, agency . . . [or] instrumentality" that had received funding. (The Rehab Act conditions the receipt of federal funds on waiver of state sovereign immunity.)

The Second Circuit agreed with the Board. The court first rejected T.W.'s claim that the Board received federal funding (and thus waived state sovereign immunity) because other state agencies provide reimbursement to bar applicants for the applicants' own out-of-pocket exam fees. "No money from [the other state agencies] ever gets paid to the Board; the money gets paid directly to the candidate after she has paid her examination fees." Moreover, "[t]he Board is, at most, an indirect beneficiary of the federal funding that [the other state agencies] receive, but this alone does not waive the Board's immunity."

Next, the court held that while some state trial courts received federal funding, the Board wasn't part of those courts. The court acknowledged that some state specialty trial courts received federal funding. It held that the relevant "department or agency" that received federal funding was therefore the state courts of original jurisdiction (and not the state's overall Unified Court System). But because the Board isn't part of the state's courts of original jurisdiction, the Board didn't waive immunity.

Ninth Circuit Upholds California's Worker-Contractor Classification Law Against Federal Preemption

Steven D. Schwinn, University of Illinois Chicago School of Law

The Ninth Circuit ruled that the Federal Aviation Administration Authorization Act did not preempt California's law that classifies workers as either employees or independent contractors. The ruling means that the state law stays on the books.

The case is a win for workers, because employers are much more likely to have to treat their workers as "employees" under state law (with all the attendant benefits) rather than contractors.

The case splits with the First Circuit, which held in Schwann v. FedEx that the FAAAA did not preempt an identical Massachusetts law.

The case, California Trucking Association v. Bonta, arose when the CTA sued the state AG to halt to the state's enforcement of its "AB-5 test" for classifying workers as either employees or independent contractors. The AB-5 test says that workers are "employees," not independent contractors, "unless the hiring entity demonstrates that all of the following conditions are satisfied":

(A) the person is free from the control and direction of the hiring entity in connection with the performance of the work . . . . (B) The person performs work that is entirely outside the usual course of the hiring entity's business. (C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

As compared to prior state law, the test leans heavily in favor of "employee," because it presumes a worker is an employee unless a "hiring entity" could establish all three parts of the test, one of which (part (B)) was previously only a factor (not a determinate element) in the analysis.

According to CTA, SB-5 would increase its members' costs "by as much as 150% or more," because they'd have to treat more workers as "employees."

CTA claimed that the FAAAA preempted SB-5. It pointed to the FAAAA's express preemption clause, which says that the federal act preempts any state law "related to a price, route, or service of any motor carrier . . . with respect to the transportation of property."

The Ninth Circuit rejected the claim. The court ruled that AB-5 applies across industries (and doesn't single out the trucking industry) and only affects the employment relation, not "a price, route, or service" (at least not directly).

Because AB-5 is a generally applicable law that impacts a motor carrier's business at the point where the motor carrier interacts with its workers, and the law affects motor carriers' relation with their workers in a manner analogous to the worker classification laws we have previously upheld . . . AB-5 is not significantly related to rates, routes, or services. Therefore, we conclude that the [FAAAA] does not preempt AB-5 as applied to motor carriers.

Judge Bennett dissented, arguing that "the majority's rule ignores the possibility [as here] that a state law might affect a motor carrier's relationship with its workforce and have a significant impact on that motor carrier's prices, routes, or services . . . ."

Second Circuit Recognizes Standing for Increased Risk of Identity Theft for Unauthorized Data Disclosure

Steven D. Schwinn, University of Illinois Chicago School of Law

The Second Circuit recognized that plaintiffs in an unauthorized-disclosure-of-data case may have standing based on an increased risk of identity theft. In so ruling, the Second Circuit joins several other circuits in recognizing standing based on an imminent risk of identity theft in data breach cases. (At least three circuits have suggested that there's a split on the issue, but the Second Circuit denied that, saying that "in actuality, no court of appeals has explicitly foreclosed plaintiffs from establishing standing based on a risk of future identity theft--even those courts that have declined to find standing on the facts of particular cases.")

At the same time, the court held that the particular plaintiffs in the case failed sufficiently to establish such an injury.

The case, McMorris v. Carlos Lopez & Associates, LLC, arose when an employee at CLA accidentally sent out an e-mail to all employees that included Social Security Numbers, dates of birth, and other personal information of current and former employees. Three individuals filed a class-action against CLA. As the parties moved toward settlement, the district court ruled that the plaintiffs lacked standing.

The Second Circuit recognized that plaintiffs in a case like this could have standing. The court looked to three non-exhaustive factors in sorting this out: "(1) whether the plaintiffs' data has been exposed as the result of a targeted attempt to obtain that data; (2) whether any portion of the dataset has already been misused, even if the plaintiffs themselves have not yet experienced identity theft or fraud; and (3) whether the type of data that has been exposed is sensitive such that there is a high risk of identity theft or fraud."

The court ruled that the plaintiffs in this case, however, failed to establish imminent harm of identity theft.

The court also rejected the plaintiffs' theory that the data breach caused them to take action to protect themselves against identity theft. The court said that the plaintiffs had to allege a substantial risk of future identity theft in order to use their protective actions as a basis for standing. If it were otherwise, the court said, plaintiffs could harm themselves into standing based only on fears of hypothetical future injuries.

Court Says SSA Applicants Need Not Raise Appointments Clause Challenges with Agency

Steven D. Schwinn, University of Illinois Chicago School of Law

The Supreme Court ruled last week that individuals whose applications for Social Security disability benefits were denied did not have to raise their Appointments Clause challenges with the agency; instead, they could raise those challenges for the first time in court. The ruling means that applicants who failed to raise constitutional challenges to the appointments of their administrative law judges could nevertheless raise those challenges in court.

The case, Carr v. Saul, arose when SSA ALJs rejected the appeals of certain applicants for SSA disability benefits. The applicants appealed to the agency's Appeals Council, but the Council denied review.

The Supreme Court then issued its ruling in Lucia v. SEC, holding that the appointment by SEC ALJs by lower-level staff violated the Appointments Clause. (The Court held that ALJs were "officers" under the Appointments Clause and thus couldn't be appointed by SEC staff.)

Based on Lucia, the applicants argued in federal court that the SSA ALJs who decided their cases were similarly invalidly appointed, and that the ALJs' decisions should be vacated. The SSA claimed that the applicants forfeited that argument, because they didn't raise it before the agency in the first place.

The Supreme Court agreed with the applicants. The Court held that ALJ proceedings weren't sufficiently adversarial to trigger an issue-exhaustion requirement. Moreover, it held that "agency adjudications are generally ill suited to address structural constitutional challenges," and that agency review would be futile, anyway.

The ruling's a victory for the applicants in this case, and for any other individuals who seek to challenge the appointment of an ALJ in the wake of Lucia.

Eleventh Circuit Says No Clearly Established Right to Photo Police on Highway

Steven D. Schwinn, University of Illinois Chicago School of Law

The Eleventh Circuit ruled last week that a witness to a highway accident didn't have a clearly established right to photograph police activity on the median. The court granted an officer qualified immunity against the witness's First Amendment claim and dismissed the case.

The case, Crocker v. Beatty, arose when James Crocker stopped to take pictures of an accident on the median of I-95 in Florida. Martin County Deputy Sheriff Steven Beatty confiscated Crocker's phone and placed him in a patrol vehicle. Crocker sued, alleging a violation of his First Amendment right to free speech, among other things.

The Eleventh Circuit ruled that Beatty enjoyed qualified immunity, because Crocker had no clearly established right to photograph police activity on a highway median. The court said that circuit precedent, Smith v. City of Cumming, established only that "[t]he First Amendment protects the right to gather information about what public officials do on public property, and specifically, a right to record matters of public interest." The court said that this was too vague a statement to create a clearly established right to photograph police "on the median of a major highway at the rapidly evolving scene of a fatal crash," in "the chaos of a fatal car crash," by "a citizen who (as we will explain shortly) might well have been photographing the incident from an unlawful vantage point" (although Beatty specifically told Crocker that he wasn't violating the law).

Judge Martin dissented, arguing that Smith clearly established the right.

First Circuit Rebuffs Officer's Free-Speech Retaliation Claim

Steven D. Schwinn, University of Illinois Chicago School of Law

The First Circuit ruled last week that a Massachusetts police department did not violate an officer's free-speech rights by taking disciplinary action against the officer after the officer first reported another officer's misconduct, and later made threats and false claims to his superior and an independent investigator. The court ruled that the department would've taken the same disciplinary action regardless of the officer's protected speech.

The case, Gutwill v. City of Framingham, started when officer Matthew Gutwill filed a complaint against another officer that the other officer gave false testimony at a suppression hearing. The department concluded that Gutwill had "good cause" to make the complaint, but that the allegations were unsubstantiated.

The department later rotated Gutwill out of his DEA taskforce position and made other changes that affected his overtime and privileges. Gutwill complained about those changes to senior officers, including a call to the department chief, where Gutwill made threatening comments, told the chief that federal agents had recorded the deputy chief on a wiretap as part of a drug investigation, and told the chief that he (Gutwill) had reported his concerns to the FBI.

The chief reported the call, and the department appointed an independent investigator. The investigator initially concluded that Gutwill had not been truthful in denying his threats to the chief. The department placed Gutwill on administrative leave pending the completion of the investigation. The investigator later concluded that Gutwill lied to her (the investigator), too, about his (Gutwill's) statements about the deputy chief. In response, the department suspended Gutwill for five days without pay for dishonesty and conduct unbecoming an officer. An independent hearing officer concluded that Gutwill violated department regulations on honesty and conduct.

Gutwill sued. The district court ruled against him, and the First Circuit affirmed. The court held that the department demonstrated that it would've taken the same disciplinary actions whether or not Gutwill engaged in protected speech. The court said that the chief had good cause to report the call with Gutwill, and that the hearing officer's conclusion that Gutwill violated department rules was "an adequate, non-retaliatory basis for Gutwill's discipline." It also noted that the investigator's conclusion that Gutwill was dishonest with her provided yet another independent reason for Gutwill's discipline.

Seventh Circuit Upholds Anti-Patronage Consent Decrees Against Cook County Clerk

Steven D. Schwinn, University of Illinois Chicago School of Law

The Seventh Circuit yesterday rebuffed the Cook County Clerk's challenge to a pair of consent decrees designed to monitor political patronage practices in that office and others. The ruling means that the decrees stay on the books (or, more precisely, on the district court's docket). But at the same time, the court warned that federalism concerns counsel in favor of resolving the case, and clearing the decrees from the court's docket, "swift[ly]."

The case, Shakman v. Clerk of Cook County, originated with two consent decrees, the "Shakman Decrees," from 1972 and 1991. The 1972 Decree enjoined Chicago and Cook County officials from "conditioning, basing or knowingly prejudicing or affecting any term or aspect of governmental employment, with respect to one who is at the time already a governmental employee, upon or because of any political reason or factor." The 1991 Decree expanded the 1972 Decree to cover hiring decisions: among other things, it required officials to post "prior public notice of the opportunity to apply for and be hired for" all positions, with just a few exceptions. (The City of Chicago and the Chicago Park District have since demonstrated substantial compliance and have been dismissed.)

While the Shakman Decrees remained on the district court's docket, there wasn't really any significant activity until 2019. That's when Shakman, the Voters Organization, and other plaintiffs moved for the appointment of a special master to monitor the Clerk's compliance with the Decrees. The plaintiffs claimed that the Clerk's hiring practices violated the 1991 Decree and that the Clerk took retaliatory actions against employees in violation of the 1972 Decree.

The Clerk opposed the motion and asked the magistrate judge to vacate both Decrees. After discovery and an evidentiary hearing, the magistrate judge found that the Clerk violated the Decrees, appointed a special master, and rejected the Clerk's request to vacate the Decrees. The Clerk appealed, arguing that the plaintiffs lacked standing, that the case raised nonjusticiable political questions, and that the Clerk's actions didn't violate the Decrees.

The Seventh Circuit disagreed. The court ruled first that the plaintiffs had standing, because at least one member of the Voters Organization was a current employee in the Clerk's office who refused to engage in political patronage and suffered reprisal. The court said next that the case didn't raise a nonjusticiable political question, because "both the legal right and applicable standard here"--free association under Elrod v. Burns--"are evident and judicially manageable." Finally, the court held that the magistrate judge didn't clearly err in concluding that the Clerk's "ongoing violations reflect the precise political patronage the Consent Decrees seek to end."

The court noted, however, that federalism considerations counsel in favor of ending the Decrees now, or very soon:

Our federal structure, including the Article III Case or Controversy requirement, does not contemplate federal courts putting units of state or local government under what amounts to static and permanent consent decrees. Federal injunctions interfere with local control over local decision making, and, in turn, local democracy does not work as our federal constitutional design envisions.

Full Sixth Circuit Rejects Facial Challenge to Ohio's Down Syndrome Abortion Restriction

Steven D. Schwinn, University of Illinois Chicago School of Law

The full Sixth Circuit rejected a facial challenge to Ohio's law that bans doctors from performing an abortion with the knowledge that the woman's reason for abortion is that the fetus has Down syndrome. The ruling means that the law stays on the books, but may be subject to as-applied challenges when it goes into effect.

The case, Preterm-Cleveland v. McCloud, tested Ohio's law that prohibits doctors from performing abortions when the doctor knows that the woman seeks an abortion because the fetus has Down syndrome. The court said that the law "advances the State's legitimate interests" in

protecting: (1) the Down syndrome community from the stigma associated with the practice of Down-syndrome-selective abortions, (2) pregnant women and their families from coercion by doctors who advocate abortion of Down-syndrome-afflicated fetuses, and (3) the integrity and ethics of the medical profession by preventing doctors from becoming witting participants in Down-syndrome-selective abortions.

The court also said that the law doesn't have "the purpose or effect of placing a substantial obstacle in the path of a woman seeking an abortion." Here, the court emphasized that the law only prohibits a doctor from performing an abortion when the doctors knows that the woman seeks an abortion because the fetus has Down syndrome. The court asked, and answered:

Would any woman who is otherwise set on having an abortion choose not to have that abortion (and instead have the baby) solely because she could not have the abortion performed by the specific doctor to whom she desires to reveal (or has revealed) that her reason for the abortion is that she does not want a child with Down syndrome? Taking the next step, would a significant number of such women do so? We think the answer to both questions is clearly no, but more importantly, the plaintiffs have certainly made no such showing.

As to any accidental reveal, the court said that a woman would only have to go to a different doctor--one who didn't know of her purpose.

The court also declined to halt the law based on its lack of exception for the life or health of the woman. It said that the plaintiffs had to raise this claim in an as-applied challenge, not a facial one.

Ninth Circuit Denies Qualified Immunity for Judicial Deception Resulting in Minors' Medical Exams

Steven D. Schwinn, University of Illinois Chicago School of Law

The Ninth Circuit denied qualified immunity to two social workers who knowingly and falsely represented to a juvenile court that they had made reasonable efforts to notify parents about medical examinations of their children. The false representations led to court-ordered exams without the knowledge or consent of the parents. The ruling means that the parents' civil-rights suit against the social workers can move forward.

The case, Benavidez v. County of San Diego, arose when social workers falsely told a juvenile court, as part of child removal proceedings, that they had made reasonable efforts to notify the children's parents when they sought a court order for medical examinations of the children. Based on the social workers' false statements, the court ordered medical exams of the children. The parents only learned of the exams after they occurred.

The parents sued, arguing that the social workers violated their due process rights by deceiving the juvenile court in procuring the orders for medical exams. The social workers argued that they enjoyed qualified immunity. The Ninth Circuit disagreed.

The court ruled that "Plaintiffs' claims sufficiently alleged a violation of their constitutional right to family association, which 'includes the right of parents to make important medical decisions for their children, and of children to have those decisions made by their parents rather than the state.'" More particularly, the court said that "[w]e have previously recognized a constitutional right under the Due Process Clause of the Fourteenth Amendment to be free from judicial deception and fabrication of evidence in the context of civil child custody cases." The court ruled that the plaintiffs sufficiently pleaded facts to support a violation here.

The court went on to say that the right was well established at the time of the violation.

At the same time, the court rejected the plaintiffs' Monell claim for county liability. The court said that the plaintiffs failed to allege that county policy or the county's failure to train the social workers led to the violations. (County policy, in fact, required the social workers to obtain parental consent before the examination.)

D.C. Circuit Effectively Erases Judicial Review of FEC Nonenforcement

Steven D. Schwinn, University of Illinois Chicago School of Law

The D.C. Circuit ruled on Friday that a private party can't challenge an Federal Election Commission decision not to enforce election law if the decision was based in any measure on agency discretion. The ruling effectively gives commissioners who successfully oppose enforcement action a get-out-of-judicial-review card simply by invoking discretion as any part of their explanation for not enforcing the law. The ruling also adds to the structural features that have paralyzed the FEC. (The FEC is comprised of six commissions, no more than three of either major political party. But it requires four votes to initiate an enforcement action. Partisan deadlock and quorum issues have created an impotent agency. This ruling only adds to those features, because it allows commissioners who vote against enforcement to insulate their decision simply by mentioning "discretion.")

The case, CREW v. FEC, arose when CREW sued the FEC for deciding not to enforce election law against New Models, a now-defunct non-profit. CREW filed a complaint against New Models for failing to comply with FECA's registration and reporting requirements for "political committees." But the FEC, by a 2-2 vote, decided not to pursue an investigation. The two commissioners who voted against an investigation wrote a 31-page, single-spaced opinion explaining their legal reasons why New Models wasn't a "political committee" under FECA. They added a final sentence, "For these reasons, and in exercise of our prosecutorial discretion, we voted against finding reason to believe that New Models violated the Act . . . ." (The commissioners dropped a footnote to their reference to "prosecutorial discretion" with a brief explanation: "Given the age of the activity and the fact that the organization appears no longer active, proceeding further would not be an appropriate use of Commission resources.")

CREW sued under FECA's provision that authorizes a private suit to challenge an FEC nonenforcement decision if it is "contrary to law." The D.C. Circuit ruled that the court couldn't review the decision, though, because it was "based even in part on prosecutorial discretion."

The court said that the ruling was a simple application of its previous ruling in Commission on Hope. In that case, the court said that under Heckler v. Chaney it couldn't review an FEC nonenforcement decision based on agency discretion. (Discretion formed a much more significant portion of the justification for nonenforcement in Commission on Hope, however.) It also said that FECA doesn't contain any standards for a court to judge an FEC decision based on discretion.

Judge Millett wrote a lengthy dissent, arguing that "the majority opinion creates an easy and automatic 'get out of judicial review free' card for the Federal Election Commission."

Seventh Circuit Says Governor Can Limit Media Access to Press Conferences

Steven D. Schwinn, University of Illinois Chicago School of Law

The Seventh Circuit ruled on Friday that a state governor can limit media access to press conferences, so long as the limits are reasonable and viewpoint neutral. The ruling rebuffs the plaintiffs' challenges and allows the governor to continue to limited access to press conferences based on viewpoint neutral criteria.

The case, MacIver Institute for Public Policy v. Evers, arose when Wisconsin Governor Tony Evers prevented two reporters from the MacIver Institute from attending his limited-access press conferences. Evers restricted access based on a set of criteria that included things like the length of time that a media outlet has published news, whether a media outlet is a periodical or has an established television or radio presence, whether the reporters are paid or full-time correspondents, and whether the reporters and media outlet are "bona fide" and "of repute in their profession," among other similar criteria. The Institute sued, arguing that free speech and free press guaranteed a right to equal access for all media.

The court rejected the Institute's challenge. It ruled that the governor's limited-access press conferences were "nonpublic" forums, and that the governor permissibly limited access based on criteria that had nothing to do with a media outlet's viewpoint. Moreover, the court noted that the Institute provided no evidence that Evers applied the viewpoint neutral criteria in a viewpoint-based way. The court noted that under the governor's viewpoint-neutral criteria, the governor allowed access to a variety of media across the range of political ideologies, and that the governor similarly disallowed access to a variety of media across the range of political ideologies.

 

Supreme Court Halts California's At-Home COVID Restriction Pending Appeal

Steven D. Schwinn, University of Illinois Chicago School of Law

The Supreme Court on Friday granted a motion to enjoin California's at-home COVID restrictions pending appeal at the Ninth Circuit. (The Ninth Circuit previously denied the same motion.) The ruling means that California cannot apply its restriction on at-home religious gatherings to three households to the plaintiffs, at least for now (though likely forever).

The Court compared the state's treatment of private, at-home religious gatherings (restricted to three households) with its treatment of "hair salons, retail stores, personal care services, movie theaters, private suites at sporting events and concerts, and indoor restaurants" (allowing more than three households at a time). The Court said that the different treatment meant that the state had to justify its at-home restrictions under strict scrutiny as to these plaintiffs--and that it couldn't.

Justice Kagan, joined by Justices Breyer and Sotomayor, dissented. Justice Kagan wrote that the Court looked to the wrong comparators:

California limits religious gatherings in homes to three households. If the State also limits all secular gatherings in homes to three households, it has complied with the First Amendment. And the State does exactly that: It has adopted a blanket restriction on at-home gatherings of all kinds, religious and secular alike. California need not, as the per curiam insists, treat at-home religious gatherings the same as hardware stores and hair salons--and thus unlike at-home secular gatherings, the obvious comparator here.

She also argued that the state had good reason to treat at-home gatherings differently than gatherings in stores and salons: the district court found, and the Ninth Circuit acknowledged, that "those activities do pose lesser risks . . . ."

Chief Justice Roberts would've denied the motion, although he did not join Justice Kagan's dissent.