Monday, October 2, 2023

Court to Test CFPB's Funding Mechanism

The Supreme Court will hear oral arguments on Tuesday in CFPB v. Community Financial Services Association, the case testing whether CFPB's funding mechanism violates the Appropriations Clause. Here's my preview, from the ABA Preview of United States Supreme Court Cases (with permission):

ISSUE

Does the CFPB’s funding mechanism violate the Appropriations Clause, and, if so, was the Fifth Circuit right to vacate the Payday Lending Rule?

FACTS

In 2010, in response to the 2008 economic crisis, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act. Among many other things, the Act created the Consumer Financial Protection Bureau (CFPB) and vested it with authority to enforce over 18 federal statutes that were previously overseen by seven different agencies. Under the Act, the CFPB is an “independent bureau” within the Federal Reserve System.

In contrast to most federal agencies, which receive direct annual appropriations from Congress, the CFPB receives its funding directly from the Federal Reserve. Each year, the CFPB asks the Federal Reserve for funding in an amount up to 12 percent of the Federal Reserve’s operating expenses. The Federal Reserve, in turn, generates its budget through the operations of the Federal Reserve Banks. The Banks “buy and sell bonds and securities, receive fees for services provided to banks, credit unions and other depository institutions, and generate interest on loans to depository institutions.”

As part of the Act, Congress specified that the funds transferred to the CFPB “shall not be subject to review by” the House and Senate Appropriations Committees. But at the same time, the CFPB director must submit regular reports to and appear before other congressional committees to “justif[y]” the CFPB’s “budget requests of the previous year.” 12 U.S.C. § 5496(c)(2). Moreover, the Comptroller General (a congressional officer) must conduct annual audits of the CFPB and submit reports to Congress.

This unique funding mechanism is designed to help ensure that the CFPB can operate independently of political influences.

In 2017, the CPFB issued a final rule entitled “Payday, Vehicle Title, and Certain High-Cost Installment Loans” (the Payday Lending Rule). The Rule came in two parts. The first part prohibited lenders from making payday loans “without reasonably determining that consumers have the ability to repay the loans according to their terms.” 12 C.F.R. § 1041.4 (2018). (This portion of the Rule is called “the Underwriting Provision.”) The second part limited a lender’s ability to collect repayments through a borrower’s preauthorized account access. In particular, it prohibited lenders from trying to withdraw payments for loans from a borrower’s account after two consecutive withdrawal attempts failed for lack of sufficient funds. 12 C.F.R. § 1041.7. (This portion of the Rule is called “the Payment Provision.”) The CFPB later rescinded the Underwriting Provision, but ratified the Payment Provision and left it intact.

Two associations of companies regulated by the Payday Lending Rule sued the CPFB, arguing that the Payments Provision violated the Administrative Procedure Act and that it was invalid because the CFPB’s funding mechanism itself was invalid under several constitutional principles and provisions, including the Appropriations Clause. (In other words, because the CFPB was invalid, it’s Rule was invalid.) The district court ruled against the plaintiffs on all counts. The United States Court of Appeals for the Fifth Circuit reversed on the Appropriations Clause and vacated the Payday Lending Rule. (The Fifth Circuit ruled for the CFPB on the other counts.) This appeal followed.

CASE ANALYSIS

As a general matter, Congress has the power to appropriate and spend federal funds. The Appropriations Clause, in Article I, Section 9, Clause 7 of the Constitution, says, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law . . . .” This case tests that Clause’s application to an executive agency that receives its funding from another executive agency, the Federal Reserve, which itself earns money through the operation of the Federal Reserve Banks (and not direct annual congressional appropriations).

The government argues first that the constitutional text, history, and precedent all support the CFPB’s funding mechanism. As to text, the government claims that the Appropriations Clause “does not limit Congress’s authority to determine the specificity, duration, and source of appropriations.” It contends that the Constitution’s “special restriction” on appropriations for the military—that “no Appropriation of Money” to raise and support an army “shall be for a longer Term than two Years,” Article I, Section 8, Clause 12—“confirms that the Constitution otherwise leaves it to Congress to determine the specificity, duration, and source of appropriations.” As to history, the government asserts that ever since the Founding the government has funded agencies through lump-sum appropriations and fees, assessments, investments, and similar mechanisms, particularly for financial regulatory agencies. As to precedent, the government says that “other than the Fifth Circuit below, no court has ever held that an Act of Congress violated the Appropriations Clause.”

The government argues next that the plaintiffs and the Fifth Circuit “fail[ed] to grapple with” these sources. The government contends that the plaintiffs and the Fifth Circuit rested their conclusion only on the argument that the CFPB’s funding mechanism is “unprecedented.” But the government says that this is wrong: “the CFPB’s funding mechanism accords with Congress’s longstanding practice of authorizing agencies to spend money indefinitely from sources other than annual appropriations.” Moreover, the government contends that the mechanism squares with statutes funding other financial regulators, like the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board.

Finally, the government argues that even if the CFPB’s funding mechanism is flawed, the Fifth Circuit erred in vacating the Payday Lending Rule. Instead of vacating, the government says that the lower court should have “excised and severed any problematic provisions” in the CFPB’s funding mechanism, and ruled only that the CFPB couldn’t use those provisions to enforce the Payday Lending Rule going forward. (Under this approach, Congress could rewrite the CFPB’s funding mechanism, and the CFPB could then enforce the Payday Lending Rule.) The government claims that this would have been consistent with historical practices when courts rule that executive branch officials spend public money in excess of a congressional appropriation. And the government says that vacatur (as the Fifth Circuit ruled) could “inflict[] significant disruptions on the Nation’s economy and the consumers, financial institutions, regulators, and others who have reasonably relief on the CFPB’s past actions.”

The plaintiffs counter that the CFPB’s funding mechanism violates the Appropriations Clause, because Congress ceded away its power of the purse to the CFPB. “The CFPB’s funding . . . is not ‘drawn . . . in Consequence of Appropriations made by Law’ . . . but rather taken based on the agency’s say-so.” The plaintiffs contend that this is especially problematic, because it is hard-wired into federal law, and because this unique funding mechanism gives the CFPB both appropriations power and executive power—“combining the purse with the sword in the most dangerous manner.” The plaintiffs claim that the government offers no limit “that would prevent Congress from writing the President a blank check,” and that there there is no precedent in our history for such an agency. “Whether one looks back in time or down the slippery slope, the threat to separated powers and individual liberty is obvious.”

The plaintiffs argue next that the CFPB is wrong to say that text, history, and precedent support its funding mechanism. They claim that the CFPB’s funding mechanism isn’t a valid exercise of congressional authority; instead, “it is a void delegation of exclusive legislative power” to the executive branch. Moreover, the plaintiffs say, contrary to the CFPB’s examples, there is no precedent for “permanently eliminating all fiscal oversight from both the People’s Representatives and the People themselves.” The plaintiffs contend that the CFPB can only support its funding mechanism based on “out-of-context dicta” from the Court’s cases and deference to the political process. But as to deference, the plaintiffs assert that the CFPB’s structure itself has warped the political process.

Finally, the plaintiffs argue that the government is wrong to say that the Fifth Circuit shouldn’t have vacated the Payday Lending Rule. The plaintiffs claim that the government ignores the fact “that critical defects” in the CFPB’s funding mechanism “can be cured only through legislative revision.” Moreover, they say that the APA requires courts to “set aside” invalid rules. And they claim that the government is wrong to worry about any economic impacts of vacating the Payday Lending Rule, because the plaintiffs challenged the Rule before it went into effect.

 

SIGNIFICANCE

Given the CFPB’s broad jurisdiction over consumer financial protection laws, and given the sweeping nature of the Fifth Circuit’s ruling, this case could have enormous consequences. Just since the Fifth Circuit vacated the Payday Lending Rule, defendants in several other CFPB enforcement cases have moved to dismiss based on that decision. If the Court affirms the Fifth Circuit’s ruling, we can expect all defendants in CFPB enforcement actions to move to dismiss. Such a ruling could effectively decimate the CFPB, unless Congress creates a new funding mechanism, and quickly. (To state the obvious: this seems unlikely in the current political climate.)

Such a result would sharply curtail federal consumer financial protection. It could also shock or destabilize the entire financial industry. That’s because regulated corporations adjusted their activities based on CFPB regulations. If those regulations go away, regulated corporations will re-adjust, affecting consumers and the financial markets as a whole. The government provided this example in its petition for certiorari: “If . . . regulations [making adjustments and exceptions to certain mortgage-related disclosure requirements] were vacated, mortgage lenders would have to immediately modify the disclosures they give millions of consumers each year, and borrowers could seek to rescind certain mortgage transactions that had relied on regulatory disclosure exceptions.” Moreover, because the Fifth Circuit vacated a past agency action, a ruling upholding it could threaten other past actions by the CFPB, as well.

Outside the CFPB, a ruling for the plaintiffs could threaten the funding mechanisms for certain other federal agencies that regulate financial markets, even the Federal Reserve. While funding mechanisms for other agencies are not before the Court—and while the plaintiffs do not appear to challenge them in this case—a Court ruling that strikes the CFPB funding mechanism could reach downstream to other federal agencies in future cases.

This is not the first time that the CFPB’s structure has come before the Court. Just three years ago, the Court ruled that the Bureau’s structure—in particular, its single director, who could be fired by the President only for cause—impermissibly interfered with the president’s power as chief executive. Seila Law LLC v. Consumer Financial Protection Bureau, 140 S. Ct. 2183 (2020). (The CFPB director’s “for cause” protection was another way that Congress sought to insulate the CFPB from political influences.) Moreover, this case and Seila Law are part of a larger trend by litigants and the Court to restrict the power of federal administrative agencies. (Indeed, there’s another important case on the Court’s docket this Term, Loper Bright Enterprises v. Raimondo, not yet set for argument, which could limit agencies’ discretion to interpret and apply federal law.)

That said, this move—vacating a CFPB regulation based on the Bureau’s funding mechanism—may be a bridge too far for this Court. In addition to the reasons described above, I’ll add this: The Fifth Circuit’s ruling is, in fact, an extreme outlier for both its reasoning and its result. The D.C. Circuit and at least six district courts—every other court that considered the issue—ruled the other way.

Still, we’ve seen the Roberts Court in a variety of cases move aggressively to alter existing law; to effect significant political, social, economic, and environmental change; and to upset settled expectations in politics, the markets, and society. A ruling for the plaintiffs—based on a full-throated endorsement of the Fifth Circuit’s ruling, or based on some other more modest approach—shouldn’t be a surprise.

October 2, 2023 in Cases and Case Materials, Congressional Authority, News, Separation of Powers | Permalink | Comments (0)

Friday, September 8, 2023

Fifth Circuit Temporarily Stays Order on Abbott's Rio Grande Barrier

The Fifth Circuit temporarily stayed an earlier order by a district court that required Texas Governor Greg Abbott to remove the Rio Grande border barrier. The brief appellate court order didn't say anything about the merits. The ruling means that the border barrier stays in place pending further litigation.

September 8, 2023 in Cases and Case Materials, Courts and Judging, Federalism | Permalink | Comments (0)

Thursday, September 7, 2023

Court Says Texas's Rio Grande Barrier Violates Federal Law

A federal court ruled that Texas Governor Greg Abbott's border barrier in the Rio Grande likely violates the federal Rivers and Harbors Appropriation Act of 1899. The court ordered the state to reposition the barrier by September 15 pending the outcome of the case. Texas is appealing.

The court said that the barrier is either a "boom" or "other structure" in the Rio Grande, and therefore violated the RHA, which prohibits erecting such things that obstruct the navigable waters of the U.S. without the federal government's permission. (The state argued that the Rio Grande isn't navigable where the barrier is located. The court, in a lengthy discussion, rejected that argument.)

More interestingly, the court rejected the state's argument that the barrier was authorized by the Constitution's Self-Defense Clause in Article I, Section 10, Clause 3. That provision says that "[n]o State shall, without the Consent of Congress . . . engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay." The court said that it's the federal government's job (not the states') to determine when there's an "invasion," and that it's not a job for the federal courts.

In response to the state's claim that the Clause allows Governor Abbott to "engage in War" whenever he determines that there's an invasion, the court noted the Governor's power to wage war would be "subject to no oversight" and "would give the Governor of Texas more power than is possessed by the President of the United States without authorization from Congress." The court called the claim "breathtaking."

September 7, 2023 in Cases and Case Materials, Federalism | Permalink | Comments (0)

Wednesday, September 6, 2023

Court Against Rejects Alabama's Congressional Map

A three-judge district court again rejected Alabama's congressional map, which again includes only one opportunity district for Alabama Black voters. The ruling comes after the state legislature took another stab in response to the Supreme Court case this summer, Allen v. Milligan, upholding the lower court's ruling that the first map likely violated Section 2 of the Voting Rights Act.

The legislature's delays and intransigence are bold, to say the least. Here's what the court said in its most recent ruling:

We are disturbed by the evidence that the State delayed remedial proceedings but ultimately did not even nurture the ambition to provide the required remedy. And we are struck by the extraordinary circumstances we face. We are not aware of any other case in which a state legislature--faced with a federal court order declaring that its electoral plan unlawfully dilutes minority votes and requiring a plan that provides an additional opportunity district--responded with a plan that the state concedes does not provide that district. The law requires the creation of an additional district that affords Black Alabamians, like everyone else, a fair and reasonable opportunity to elect candidates of their choice. The 2023 Plan fails to do so.

The district court appointed experts to draw new maps, due by September 25. Meanwhile, the state's appealing to the Supreme Court. If Alabama manages to drag this out long enough, it could as a practical matter avoid drawing a second opportunity district for the 2024 congressional election, even if the courts rule against it. That's because of the Purcell principle--the idea, applied with increasing force by the Court, that courts shouldn't force changes to election laws too close to an election, for fear of confusing voters. Given that it's only September 2023, that may seem far-fetched. But really, who knows? Alabama's gambits have put this case in unchartered territory.

September 6, 2023 in Cases and Case Materials, Elections and Voting | Permalink | Comments (0)

Saturday, July 1, 2023

Court Says Free Speech Trumps Antidiscrimination for Website Designer

The Supreme Court ruled on Friday that Colorado's anti-discrimination law violated the free-speech rights of a website designer who does not wish to create custom wedding websites for same-sex couples.

The ruling leaves the anti-discrimination law in place, but prohibits enforcement that would compel speech.

The Court didn't define "speech," however, at least not with any precision. The case therefore promises to bring new rounds of litigation as individuals and businesses seek to get out from under anti-discrimination laws--including laws that prohibit discrimination by sexual orientation or, apparently, any other characteristic--by defining their products and services as "speech." In short, we don't know exactly how far this ruling extends--to what kinds of objections based on what kinds of characteristics, and what constitutes "speech."

The ruling, while dealing with free speech (not religion), also follows the Court's trend in its Religion Clause cases of inviting and compelling religion and religious beliefs to play a greater and greater role in public life. That's because the plaintiff in the case, Lorie Smith, who owns 303 Creative, objects to creating custom wedding websites for same-sex couples because of her religious beliefs. But just to be clear: nothing in the ruling protects only a person or business who objects based only on religion; instead, the ruling prohibits the government from applying anti-discrimination laws in a way that would compel a speaker to communicate in violation of any of their beliefs.

The case, 303 Creative v. Elenis, tested whether Colorado's anti-discrimination law (which prohibits discrimination by public accommodations because of sexual orientation, among other characteristics) impermissibly compelled Smith, who sought to provide custom wedding websites for customers, to create websites for same-sex couples. The Court said yes: the Colorado law compelled Smith to speak against her beliefs in violation of the First Amendment.

Justice Sotomayor wrote a lengthy and scathing dissent, joined by Justices Kagan and Jackson.

July 1, 2023 in Cases and Case Materials, First Amendment, News, Opinion Analysis, Religion, Speech | Permalink | Comments (0)

Supreme Court Strikes Biden Student-Debt Relief

The Supreme Court ruled on Friday that the Biden Administration's student-debt relief plan exceeded authority under the HEROES Act. That is: the Court said that the plan's illegal.

The ruling means that the plan won't go into effect. But President Biden quickly announced that his Administration would move to implement a similar plan under the Higher Education Act (which gives the Administration greater authority than the HEROES Act). But that'll take some time to implement, because it requires rulemaking processes. President Biden announced short-term relief in the interim.

Even these moves won't end the story, however. Given the political opposition to student-debt relief, we'll certainly see a spate of new lawsuits challenging any action the Administration takes.

The case, Biden v. Nebraska, tested the Secretary of Education's 2022 plan to cancel student-loan debt up to $10,000 for any borrower with income less than $125,000 (or $250,000 for couples) and up to $20,000 for any Pell Grant borrowers. All told, the plan would cancel about $430 billion in federal student loan debt, with about 90 percent of the benefits going to borrowers with incomes under $75,000.

As authority for the plan, the Secretary pointed to the HEROES Act. Under that Act, the Secretary "may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs . . . as the Secretary deems necessary in connection with a war or other military operation or national emergency" and "as may be necessary to ensure" that student debtors "are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals."

States and individuals sued, arguing that the Secretary exceeded his authority under the HEROES Act. In particular, the plaintiffs said that the plan wasn't a "waiver" or "modification," but instead was a top-to-bottom overhaul of the law, in violation of the separation of powers. (The president can enforce the law, not make it.)

The Court agreed. The Court parsed the phrase "waive or modify" and concluded that the plan far exceeded anything that the phrase could support. In sum,

The Secretary's comprehensive debt cancellation plan cannot fairly be called a waiver--it not only nullifies existing provisions, but augments and expands them dramatically. It cannot be mere modification, because it constitutes "effectively the introduction of a whole new regime." And it cannot be some combination of the two, because when the Secretary seeks to add to existing law, the fact that he has "waived" certain provisions does not give him a free pass to avoid the limits inherent in the power to "modify." However broad the meaning of "waive or modify," that language cannot authorize the kind of exhaustive rewriting of the statute that has taken place here.

The Court went on to apply the major questions doctrine from West Virginia v. EPA. The Court said that the plan was unprecedented, and had "staggering" "economic and political significance," and that Congress had not clearly authorized it. Importantly, the Court rejected the government's argument that the major questions doctrine applied only to government regulatory programs, not government benefit programs.

Justice Barrett concurred, arguing that the major questions doctrine squares with textualism ("The doctrine serves as an interpretive tool reflecting 'common sense as to the manner in which Congress is likely to delegate a policy decision of such economic and political magnitude to an administrative agency.'") and the Court's power ("the major questions doctrine is neither new nor a strong-form canon," from footnote 2), and arguing that the major questions doctrine "reinforces" the Court's holding "but is not necessary to it."

Justice Kagan dissented, joined by Justices Sotomayor and Jackson. She argued that "the Court today exceeds its proper, limited role in our Nation's governance," first by accepting the case at all (because the states lack standing) and next by rejecting the plan, which "fits comfortably within" the HEROES Act authority.

 

July 1, 2023 in Cases and Case Materials, Congressional Authority, Courts and Judging, Executive Authority, News, Opinion Analysis, Separation of Powers | Permalink | Comments (0)

Friday, June 30, 2023

Supreme Court (Effectively) Ends Affirmative Action in Higher Education

The Supreme Court ruled on Thursday that race-based affirmative action programs at Harvard and the University of North Carolina violated Title VI of the Civil Rights Act and the Equal Protection Clause, respectively.

Still, the Court didn't categorically overturn all race-based affirmative action programs; instead, it seemed to leave a theoretical possibility that a school could design a program to meet its tightened test. But at the same time, under the ruling it's hard to see how a school could "narrowly tailor" a program to serve a sufficiently "compelling interest" to meet the strict-scrutiny test that the Court applied in the cases.

The ruling doesn't address whether programs at the military academies violate equal protection. And it suggests that schools could use race-neutral means to achieve racial diversity, including considering student admission essays that focus on a student's race (by overcoming racial adversity, for example). But the Court also cautioned that schools shouldn't use this kind of admission statement in ways that would undermine the Court's core holding--that government labeling by race (for any purpose) is highly suspect, and subject to the most rigorous judicial scrutiny.

All this means that schools that seek racial diversity will scramble now to figure out how to achieve it in race-neutral ways. And that, in turns, means that we'll see new rounds of litigation for years to come, challenging those efforts as merely alternative forms of racial discrimination in disguise.

In short, the Court in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College held that the schools' programs didn't satisfy strict scrutiny, because (1) their interest (achieving the educational benefits of diversity) was too loosely defined to be "compelling," and (2) their programs don't serve this interest, anyway, because the racial categories that the schools use are "imprecise." Moreover, the Court said that the schools' use of race stereotypes applicants of the same race (by assuming they all think alike), harms certain students of other races, and lack an endpoint.

The Court noted in footnote four that the ruling doesn't necessarily apply to the U.S. military academies--that they have "distinct interests" that might set them apart. The Court also  noted that "nothing in this opinion should be construed as prohibiting universities from considering an applicant's discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise." But the Court quickly warned that schools shouldn't use this opening to side-step its ruling--to use race, but try to put it under the radar.

Justice Thomas concurred, writing "to offer an originalist defense of the colorblind Constitution; to explain further the flaws of the Court's [affirmative action] jurisprudence; to clarify that all forms of discrimination based on race--including so-called affirmative action--are prohibited under the Constitution; and to emphasize the pernicious effects of all such discrimination." Justice Gorsuch concurred, joined by Justice Thomas, "to emphasize that Title VI of the Civil Rights Act of 1964" also (in addition to the Equal Protection Clause) prohibits the schools' race-based affirmative action programs. Justice Kavanaugh concurred, arguing that the ruling "is consistent with and follows from the Court's equal protection precedents . . . ."

Justice Sotomayor wrote a scathing dissent, joined by Justices Kagan and Jackson, arguing that the ruling "stands in the way [of the promise of Brown v. Board of Education] and rolls back decades of precedent and momentous progress."

Justice Jackson wrote an equally scathing dissent, joined by Justices Sotomayor and Kagan. She wrote "to expound upon the universal benefits of considering race in this context" and to point out how the plaintiffs' position and the Court's ruling "blinks both history and reality in ways too numerous to count."

Both dissents offered a fabulous history lesson on race . . . and a thorough rejoinder to Justice Thomas's "originalist" view.

June 30, 2023 in Affirmative Action, Cases and Case Materials, Equal Protection, Fourteenth Amendment, News, Opinion Analysis | Permalink | Comments (0)

Tuesday, June 27, 2023

Supreme Court Rejects Strong Independent State Legislature Theory

The Supreme Court today flatly and unequivocally rejected a strong version of the independent state legislature theory (ISL)--the theory that state legislatures have plenary authority over rules for federal elections in their states. But it left open federal judicial review of state-court decisions on state election laws that are out of line (to one degree or another, the Court didn't specify) with state law.

ISL is the theory that a state legislature--and a state legislature alone--can set state election law for federal elections. It's based on a literal reading of the U.S. Constitution's Election Clause, which says "the Legislature" of each state shall prescribe "[t]he Times, Places and Manner of holding Elections for Senators and Representatives . . . ." According to ISL, "the Legislature" means the state legislature alone, and not the broader lawmaking authority of the state under the state constitution (which includes state-court judicial review of state legislative acts, the governor's signature or veto, etc.). The Constitution's Electors Clause reads similarly, and similarly grants authority to "the Legislature" to direct the process for the appointment of the state's electors in a presidential election.

The ruling means that state courts can continue to rule state election laws unconstitutional under the state constitution, and that they can continue to interpret state election laws in light of their own state law. In other words, state courts continue to have the power of judicial review in the area of state election law. But at the same time, state court review itself is subject to federal court review if the state court goes too far out of line. (Again, how far we do not know.)

It's not clear how this'll all play out. But there are some certainties. For one, the Court flatly rejected the strong version of ISL--that state legislatures have plenary power to set state election law for federal elections, without review by state courts and not subject to state constitutional requirements. For another, to the extent that former President Trump's team relied on the strong version ISL to overturn the electoral results in several states in the 2020 presidential election (it was central to that effort), and to the extent that the Court's approach to ISL is the same under the Elections Clause and the Electors Clause (they appear to be exactly the same), the Court closed the door to these kinds of shenanigans in future presidential elections. In particular, today's ruling seems to flatly foreclose any effort by a state legislature to circumvent existing state law and state-court rulings and unilaterally appoint electors to whomever it wishes.

And just to put an exclamation point behind all of that, Chief Justice Roberts wrote the Court's opinion (joined by Justices Sotomayor, Kagan, Kavanaugh, Barrett, and Jackson). That's significant, because Chief Justice Roberts dissented in Arizona State Legislature v. Arizona Independent Redistricting Commission, the Court's latest foray into the Elections Clause, upholding Arizona's independent redistricting commission against an ISL-type challenge. Chief Justice Roberts argued that the Court got it wrong, with a full-throated defense of ISL.

Less clear, however, is how the Supreme Court may intervene in future state-court cases involving more run-of-the-mill (but nevertheless hugely important) state election-law issues--what standard it'll use to assess those rulings, how much deference the Court will give to state courts to interpret their own state laws and state constitutions, and how the Court is likely to rule in those cases.

The case, Moore v. Harper, arose when the North Carolina legislature gerrymandered its congressional districts. Plaintiffs sued in state court, arguing that the gerrymander violated the state constitution. (They didn't sue in federal court or raise a federal claim, because the Supreme Court ruled in Rucho v. Common Cause that partisan gerrymandering claims under the federal Constitution are nonjusticiable "political questions.") The North Carolina Supreme Court agreed with the plaintiffs, ruled the congressional map unconstitutional under the state constitution, and remanded the case to the state trial court to oversee the drawing of a new map.

North Carolina legislative leaders sought Supreme Court review, arguing that the state supreme court violated the federal Constitution's Elections Clause by overturning the state legislature's election law (the congressional districting map). After the Court agreed to hear the case, however, the state supreme court (after a judicial election) reversed course and ruled that partisan gerrymandering isn't justiciable under the state constitution. The court withdrew and "overruled" its earlier decisions.

After that latest move by the state supreme court, the case raised two issues at the U.S. Supreme Court: (1) Is the case moot in light of the state supreme court's latest ruling, and (2) does the state supreme court's first ruling (the one overturning the legislature's partisan gerrymander under the state constitution) violate the federal Elections Clause.

As to mootness, the Court held that the case still presented a live controversy, because the state supreme court's most recent ruling didn't change that court's first judgment that halted the state's use of its gerrymandered map. (It only ruled that the question was nonjusticiable.) Moreover, the Court said that federal law authorized it to hear the case. "The record shows that Harper I finally decided the Elections Clause question, the judgment in that case continues to bind the parties before us, and the 2021 congressional maps would again take effect in North Carolina were we to reverse. Accordingly, we have jurisdiction under both Article III and [28 U.S.C. Sec. 1257(a)]."

As to the merits, the Court held that the idea that state courts can review state legislative acts under the state constitution and state laws was hard-wired into our federal constitutional system even before the framing, that state-court judicial review is therefore part of the state's lawmaking authority, and that state-court judicial review is part of "the Legislature" under the Election Clause. The Court said that Court precedent supported this result.

The Court went on to say that the Supreme Court could still review those state-court rulings that are out of line with the federal Constitution or state law (including the state constitution). But it didn't provide a standard or rule for this kind of review, instead leaving it open for future cases.

Justice Kavanaugh concurred, noting that the Court didn't set a standard, but arguing for the standard that Chief Justice Rehnquist pushed in Bush v. Gore: "whether the state court 'impermissibly distorted' state law 'beyond what a fair reading required.'"

Justice Thomas dissented on mootness (joined by Justices Alito and Gorsuch) and on the merits (joined only by Justice Gorsuch). He also noted the Court's lack of standard for future cases,  saying that he "would hesitate long before committing the Federal Judiciary to this uncertain path," especially in "an advisory opinion, in a moot case . . . ."

June 27, 2023 in Cases and Case Materials, Elections and Voting, Federalism, News, Opinion Analysis, Political Question Doctrine | Permalink | Comments (0)

Court Clarifies True Threats, Requires Subjective Recklessness

The Supreme Court today clarified the "true threats" threats exception to the First Amendment, holding that true threats require that a speaker had a subjective understanding of the threatening nature of their statements, under a recklessness standard. In short, "The State must show that the defendant consciously disregarded a substantial risk that his communications would be viewed as threatening in nature."

In so ruling, the Court rejected an objective standard--that a reasonable person would understand their statements as threats. As a result, the Court narrowed the range of unprotected true threats, and protects more threats, again, so long as the speaker didn't have a subjective understanding of the threatening nature of their statements.

The ruling is consistent with a string of cases in recent years narrowing the familiar "categories" of unprotected speech.

The case, Counterman v. Colorado, arose out of a series of threatening Facebook posts by Billy Counterman and directed at a local singer and musician. As a result of the posts, the recipient "stopped walking alone, declined social engagements, and canceled some of her performances, though doing so caused her financial strain."

Counterman was convicted under a Colorado stalking statute. He raised a free-speech defense, but the Colorado courts rejected it, applying an objective standard and holding that the statements were objectively threatening.

The Court reversed. It ruled that the First Amendment requires a subjective standard--that Counterman had a subjective understanding that his statements were threatening. The Court said that anything else would chill too much otherwise protected speech.

The Court went on to set the subjective bar relatively low, however, at recklessness. Here's why:

In advancing past recklessness, we make it harder for a State to substantiate the needed inferences about mens rea (absent, as is usual, direct evidence). And of particular importance,we prevent States from convicting morally culpable defendants. For reckless defendants have done more than make a bad mistake. They have consciously accepted a substantial risk of inflicting serious harm.

Justice Sotomayor concurred, joined in part by Justice Gorsuch. She wouldn't've "reach[ed] the distinct and more complex question whether a mens rea of recklessness is sufficient for true-threats prosecutions generally," although she agreed with the Court that a subjective, reckless standard was appropriate here. She wrote, "Furthermore, requiring nothing more than a mens rea of recklessness is inconsistent with precedent, history, and the commitment to even harmful speech that the First Amendment enshrines."

Justice Thomas dissented, taking aim at New York Times v. Sullivan and the Court's use of that case in crafting the subjective, reckless standard.

Justice Barrett dissented, joined by Justice Thomas, arguing that the Court's reckless standard "unjustifiably grants true threats preferential treatment" under the First Amendment.

 

June 27, 2023 in Cases and Case Materials, First Amendment, News, Opinion Analysis, Speech | Permalink | Comments (0)

Court Allows Suit Against Out-of-State Corporation that Registers and Agrees to "any cause of action"

The Supreme Court ruled today that a plaintiff can sue an out-of-state corporation in a state where the corporation registered as a foreign corporation and agreed to appear in the state courts on "any cause of action" against it.

The ruling reaffirms a longstanding caselaw on state courts' jurisdiction over foreign corporations.

The case, Mallory v. Norfolk Southern, arose when a former railroad worker sued the railroad under the Federal Employers' Liability Act in Pennsylvania state court. At the time, Mallory resided in Virginia; Norfolk Southern was incorporated and headquartered in Virginia; and Mallory suffered harms while an employee in Ohio and Virginia.

But under Pennsylvania law, a foreign corporation that seeks to do business in the state must register, and agree to appear in Pennsylvania courts on "any cause of action" against them.

The Court ruled today that the Pennsylvania law meant that Mallory's suit against Norfolk Southern in Pennsylvania's courts didn't violate due process. In so ruling, the Court applied Pennsylvania Fire Insurance v. Gold Issue Mining & Miling, a 1917 case that the Pennsylvania courts thought the Supreme Court had implicitly overruled. Not so, said the Court today, and it wasn't the Pennsylvania courts' job to say so, anyway.

June 27, 2023 in Cases and Case Materials, News, Opinion Analysis | Permalink | Comments (0)

Sunday, June 25, 2023

High Court Says States Lack Standing to Challenge Biden Immigration Enforcement Priorities

The Supreme Court ruled that Texas and Louisiana lacked standing to challenge the Biden Administration's immigration-enforcement priorities. The 8-1 ruling--on justiciability, not the merits--means that the priorities stay in place.

The ruling is a win for the Biden Administration and its enforcement priorities. The ruling also deals a blow to states trying to sue to challenge non-enforcement decisions by the Executive Branch. This could have wide-ranging implications in the states-sue-the-federal-government-over-everything times that we live in.

The case, United States v. Texas, arose when DHS Secretary Mayorkas promulgated priorities for enforcement of federal immigration law. Secretary Mayorkas issued the priorities in order to deal with a chronic lack of resources to fully enforce immigration law against an estimated 11 million unauthorized noncitizens. The priorities focused enforcement efforts on suspected terrorists and dangerous criminals who recently entered the country without authorization. The lack of full congressional funding was nothing new. Congress has failed to fully fund DHS enforcement efforts for 27 years, and five presidential administrations have had to make similar enforcement decisions, one way or another.

Still, Texas and Louisiana didn't like the Biden Administration priorities, so they sued. They argued that Secretary Mayorkas violated federal immigration law, which says that DHS "shall" arrest and detain certain unauthorized noncitizens. They said that the priorities would cost them money (the basis for their standing), and that they violated the government's obligations under immigration law (on the merits). The district court ruled in their favor; the Fifth Circuit and the Court both declined to stay that judgment; and the Court then granted cert. before judgment.

The Court ruled that the states lacked standing based on precedent or longstanding historical practice. In particular, the Court said that the states couldn't point to anything supporting third party standing to sue the government over a prosecution decision when the plaintiff was neither prosecuted nor threatened with prosecution. In fact, just the opposite: the Court pointed to Linda R.S. v. Richard D. (1973) as precedent cutting the other way.

The Court went on to riff on judicial review of decisions not to prosecute--and why that's a bad idea. At the same time, the Court acknowledged that it has reviewed exercises of prosecutorial discretion in certain areas.

Justice Gorsuch concurred, joined by Justices Thomas and Barrett, focusing on the lack of redressability. Justice Barrett concurred, joined by Justice Gorsuch, and argued that the Court got it wrong not to focus on redressability. Justice Alito dissented.

June 25, 2023 in Cases and Case Materials, Courts and Judging, News, Opinion Analysis, Standing | Permalink | Comments (0)

Tuesday, June 13, 2023

Fifth Circuit Says President Can Impose Vaccine Mandate on Guardmembers, but not Punish Them for Noncompliance

The Fifth Circuit ruled that President Biden likely lacked authority to enforce a federal COVID vaccine mandate on state national guard members who aren't called up for federal service. The ruling gives state governors broad authority to decline to enforce (and thus undermine) certain federal readiness requirements on state national guard members.

The case, Abbott v. Biden, tested the federal government's authority to punish not-called-up state national guard members for failing to comply with the federal COVID vaccine requirement. (Everybody agreed that the federal government could punish national guard members who are called up to federal service. But that wasn't at issue in the case.) Governor Abbott argued that President Biden lacked authority to punish, and that punishment was arbitrary and capricious in violation of the Administrative Procedure Act.

The Fifth Circuit ruled for Abbott. The court said that under the Constitution's militia clauses, the President can impose a vaccine requirement, but the President can't punish not-called-up guard members for noncompliance. The court's analysis turned on the language of the "organizing clause," which says (with emphasis),

To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress.

The court held that only the states, and not the federal government, could enforce the vaccine mandate against not-called-up guard members, because enforcement is part of "governing." The court said that enforcement is not part of "disciplining" (which would have allowed the federal government to enforce even against not-called-up guard members), because "disciplining" at the founding meant educating and instructing, not enforcing or punishing.

As to the APA issue, the court remanded the case for further consideration of whether federal punishment was arbitrary and capricious in light of Abbott's argument that punishing guard members would undermine the guard's ability to do its job. The court quoted Abbott's argument:

Guardsmen are not mere supplement to the federal military, but a vital part of each State's ability to secure its citizens' property, liberty, and lives--a vitality that is sapped by drumming Guardsmen out of militia service [as punishment for failure to take the vaccine]. The Defendants' failure to weigh those considerations before upending the Texas National Guard's chain of command requires that the Enforcement Memoranda be set aside.

June 13, 2023 in Cases and Case Materials, Executive Authority, Federalism, News, Opinion Analysis, War Powers | Permalink | Comments (0)

Friday, June 9, 2023

The Trump Indictment

Here it is, alleging that former president Trump unlawfully retained documents related to the national defense and conspired to obstruct justice, among other things. There's quite a lot in it, but here are some highlights:

3. The classified documents TRUMP stored in his boxes included information regarding defense and weapons capabilities of both the United States and foreign countries; United States nuclear programs; potential vulnerabilities of the United States and its allies to military attack; and plans for possible retaliation in response to a foreign attack. The unauthorized disclosure of these classified documents could put at risk the national security of the United States, foreign relations, the safety of the United States military, and human sources and the continued viability of sensitive intelligence collection methods.

6. On two occasions in 2021, TRUMP showed classified documents to others, as follows:

a. In July 2021, at Trump National Golf Club in Bedminster, New Jersey ("The Bedminster Club"), during an audio-recorded meeting with a writer, a publisher, and two members of his staff, none of whom possessed a security clearance, TRUMP showed and described a "plan of attack" that TRUMP said was prepared for him by the Department of Defense and a senior military official. TRUMP told the individuals that the plan was "highly confidential" and "secret." TRUMP also said, "as president I could have declassified it," and, "Now I can't, you know, but this is still a secret."

b. In August or September 2021, at the Bedminster Club, TRUMP showed a representative of his political action committee who did not possess a security clearance a classified map related to a military operation and told the representative that he should not be showing it to the representative and that the representative should not get too close.

7. . . . TRUMP endeavored to obstruct the FBI and grand jury investigations and conceal his continued retention of classified documents by, among other things:

a. suggesting that his attorney falsely represent to the FBI and grand jury that TRUMP did not have documents called for by the grand jury subpoena;

b. directing defendant WALTINE NAUTA to move boxes of documents to conceal them from TRUMP's attorney, the FBI, and the grand jury;

c. suggesting that his attorney hide or destroy documents called for by the grand jury subpoena;

d. providing to the FBI and grand jury just some of the documents called for by the grand jury subpoena, while claiming that he was cooperating fully; and

e. causing a certification to be submitted to the FBI and grand jury falsely representing that all documents called for by the grand jury subpoena had been produced--while knowing that, in fact, not all such documents had been produced.

June 9, 2023 in Cases and Case Materials, Executive Authority, News, Separation of Powers | Permalink | Comments (0)

District Court Rebuffs Challenge to Private Securities Regulator

The D.C. District ruled that a securities firm failed to show that the Financial Industry Regulatory Authority was likely unconstitutional. The court denied the firm's motion for a temporary restraining order against FINRA enforcement action.

The arguments against FINRA play on familiar separation-of-powers themes that the Supreme Court has developed and used in recent Terms to limit the power of administrative agencies. But those arguments haven't gained traction in challenges to FINRA, and the D.C. District's ruling in Scottsdale Capital Advisors v. FINRA aligns with other federal courts that have ruled FINRA constitutional.

FINRA is a private corporation that's responsible for regulating broker-dealers in the securities industry. Under the Securities and Exchange Act, FINRA enforcement actions are subject to internal review and appeal, and de novo appeal to the SEC. If the SEC rules against a firm, the firm can seek judicial review.

In this case, FINRA initiated enforcement action against Alpine Securities Corporation. Alpine moved for a TRO, arguing that FINRA was unconstitutional on several grounds. In particular, Alpine claimed that FINRA's double-insulation structure impermissibly encroached on executive authority, that FINRA board members are "officers" who haven't been validly appointed, that the Exchange Act improperly delegates lawmaking power to FINRA, that FINRA's proceedings violate due process and the right to a jury, and that forced association with FINRA violates the First Amendment.

The district court rejected all but the First Amendment claim on the ground that FINRA's not a state actor. (As to private non-delegation, the court said that the Act didn't impermissibly delegate lawmaking power to a private entity, because FINRA is subject to SEC control. But even assuming FINRA were a state actor, the court said that the Exchange Act didn't delegate lawmaking authority in violation of the non-delegation doctrine, because the Act gave FINRA "intelligible principles" to act.)

As to Alpine's First Amendment claim, the court said that the government had "a significantly compelling government interest embodied in the Exchange Act to justify mandatory FINRA membership": "to 'prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, foster cooperation and coordination' among all industry players, 'remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest."

June 9, 2023 in Cases and Case Materials, Congressional Authority, Executive Authority, News, Opinion Analysis, Separation of Powers | Permalink | Comments (0)

Thursday, June 8, 2023

Court Strikes Alabama's Congressional Map, Reaffirms VRA Redistricting Test

The Supreme Court today upheld a lower court's ruling that Alabama's congressional map likely violated Section 2 of the Voting Rights Act. The Court applied (and reaffirmed the validity of) a longstanding test for Section 2 redistricting claims--a test that many expected the Court to narrow or even overrule. The ruling means that Alabama has to add a second majority Black district to its seven-district congressional map.

The ruling is surprising and significant, given that the Court has sharply curtailed other portions of the VRA in recent Terms. This case goes directly against that trend, and provides a sign that the Court will fully enforce the VRA in the redistricting context--even as it's eviscerated the VRA's preclearance requirement and all but eviscerated the Act's Section 2 protections against other voting procedures.

The case, Allen v. Milligan, tested Alabama's congressional map. The map include one majority Black district out of seven congressional districts, even though Black residents accounted for 27 percent of Alabama's population, and even though the legislature could easily--and more sensibly--have drawn a second majority Black district.

A three-judge district court held that the map likely violated Section 2--indeed, that it wasn't even a close case--and preliminarily enjoined the state from using the map in future elections. The Supreme Court stayed the injunction last year, allowing Alabama to use the map for the 2022 mid-terms. But today the Court affirmed the lower-court ruling.

The Court held that the lower court properly applied the time-tested framework for assessing redistricting plans under Section 2. Under that framework, from Thornburg v. Gingles, a plaintiff must first satisfy three preconditions: (1) that the "minority group must be sufficiently large and [geographically] compact to constitute a majority in a reasonably configured district"; (2) that "the minority group must be able to show that it is politically cohesive"; and (3) that "the minority must be able to demonstrate that the white majority votes sufficiently as a bloc to enable it . . . to defeat the minority's preferred candidate." If a plaintiff can establish the three Gingles preconditions, then the courts look to the totality of the circumstances to determine whether the political process is not "equally open" to racial minority voters.

In affirming the lower-court ruling, the Court leaned heavily on precedent--the many cases applying the Gingles framework to redistricting--and thus validated and reinforced the approach. (Again, this stands in stark contrast to the Court's evisceration of the preclearance requirement and Section 2's application to ordinary voting restrictions in recent Terms.)

At the same time, the Court flatly rejected Alabama's several arguments to overturn or significantly narrow Gingles and adopt some version of a race-blind requirement to redistricting.

Chief Justice Roberts wrote for the Court, including Justices Sotomayor, Kagan, Kavanaugh (for all but a portion), and Jackson. Justice Thomas dissented, joined by Justice Gorsuch and in part by Justices Alito and Barrett. Justice Alito dissented, joined by Justice Gorsuch.

The principal cleavage involved whether and how race could play a role in a plaintiff's "illustrative" maps. In Section 2 redistricting litigation, a plaintiff offers illustrative maps to demonstrate that the state could have created another majority-minority district, consistent with the VRA. In practice, this allows a plaintiff to satisfy the first Gingles precondition. The justices hotly disputed whether a plaintiff's illustrative maps can consider race at all, if so how much, and whether the plaintiffs' maps in this case considered race too much.

Chief Justice Roberts wrote that a plaintiff can consider race in drawing illustrative maps, but that race can't predominate. He wrote that the plaintiffs' maps met that test. Justice Kavanaugh did not join this portion of the Chief's opinion, but he nevertheless concurred "that Alabama's redistricting plan violates Section 2 of the Voting Rights Act as interpreted in Thornburg v. Gingles," and that Section 2 "requires in certain circumstances that courts account for the race of voters so as to prevent" the dilution of racial minority voters' votes.

Justice Thomas argued that Section 2 doesn't apply to redistricting (a portion of his dissent not joined by Justices Barrett and Alito); that any benchmark for a Section 2 challenge must be race neutral; that the plaintiffs' illustrative maps were impermissibly race-based; and that Section 2 as construed by the Chief would exceed congressional authority under the Fourteenth and Fifteenth Amendments.

Justice Alito argued that under Gingles race cannot predominate in a plaintiff's illustrative maps. He "would vacate and remand for the District Court to apply the correct understanding of Gingles in the first instance."

June 8, 2023 in Cases and Case Materials, Elections and Voting, Fifteenth Amendment, News, Opinion Analysis | Permalink | Comments (0)

Court Says Individual Can Sue to Enforce Rights Under Federal Nursing Home Reform Act

The Supreme Court ruled today that an individual can sue to enforce rights under the Federal Nursing Home Reform Act. The Court declined the defendant's invitation to rewrite the law on individual suits to enforce rights in spending-power legislation, and reaffirmed its long-standing approach to individual suits under such acts.

The ruling is a win for plaintiffs, insofar as it didn't disturb the Court's approach to individual lawsuits to enforce rights in conditioned-spending programs.

The case, Health and Hospital Corporation of Marion County v. Talevski, arose out of a nursing-home patient's lawsuit against the home for administering certain restraints and discharging him without meeting certain preconditions, both in violation of the FNHRA. The home argued in response that Talevski couldn't sue (under 42 U.S.C. Sec. 1983) to enforce provisions of the FNHRA, because Congress enacted the FNHRA under its spending power. (The FNHRA is a conditioned-spending program: Congress imposes conditions under the FNHRA on states when they accept federal funds--in this case, Medicaid funds--and the federal government can enforce those conditions by withholding federal funds. The conditions are different than an ordinary federal regulatory requirement, enacted under one of Congress's regulatory powers (like the Commerce Clause), because states that object to the conditions can opt out by declining federal funds.)

The home argued that individual plaintiffs could never sue under Section 1983 to enforce rights under conditioned-spending programs. The argument went like this: conditioned-spending programs are like contracts between the federal government and a state; an individual protected by anything in a conditioned-spending program is a third-party to the contract; and common law at the time of the adoption of Section 1983 did not allow third parties to sue to enforce contractual provisions.

The Court flatly rejected this argument. The Court said that the common law was ambiguous on this point, that a plaintiff's suit was more like a tort (not a third-party enforcement of a contract), and that Court precedent long recognized that individuals could sue to enforce rights in conditioned-spending programs.

The Court went on to apply that precedent and say that the FNHRA unambiguously conferred individual rights, and that nothing in the statute precluded private enforcement of those rights.

Justice Jackson wrote the majority opinion, joined by all but Justices Thomas and Alito. Justice Gorsuch wrote a concurrence arguing that these cases may raise anti-commandeering problems--an issue for another day. Justice Barrett wrote a concurrence, joined by Chief Justice Roberts, emphasizing that the standard for individual enforcement of rights in spending-power legislation is high.

Justice Thomas dissented, arguing that Congress's spending authority is much narrower than the Court has acknowledged, and that it doesn't include a regulatory power (including power to authorize individual lawsuits to enforce rights in conditioned-spending programs). Justice Alito also dissented, joined by Justice Thomas, arguing that the remedial scheme in the FNHRA forecloses any individual cause of action to enforce the rights in the Act.

June 8, 2023 in Cases and Case Materials, Congressional Authority, Federalism, News, Opinion Analysis, Spending Clause | Permalink | Comments (0)

Wednesday, June 7, 2023

Court Halts Florida's Ban on Transgender Care for Minors

A federal district court this week preliminarily enjoined Florida officials from enforcing the state's ban on medical care for transgender minors against the three plaintiffs and their healthcare providers.

The court in Doe v. Ladapo held that the ban likely violated equal protection and the right to parent. In short, it said that Florida had no good reason for the ban, especially in light of the overwhelming medical evidence supporting treatment, and that its stated purposes were plainly pretextual.

The ruling follows Brandt ex rel. Brandt v. Rutledge, a ruling from the Eighth Circuit and the only circuit court ruling on the issue.

June 7, 2023 in Cases and Case Materials, Equal Protection, Family, Fundamental Rights, News, Opinion Analysis | Permalink | Comments (0)

Court Says NLRA Doesn't Preempt Employer's State Lawsuit Against Union

The Supreme Court ruled last week that the National Labor Relations Act didn't preempt an employer's state lawsuit against a union for damages resulting from a strike. The ruling is a blow to employees' right to strike under the NLRA and the role of the National Labor Relations Board in determining the scope of that right.

The case, Glacier Northwest, Inc. v. Teamsters, arose when employees of Glacier, a cement company, began a strike when they were slated to deliver cement. Because wet cement dries quickly, Glacier had to figure out how to save or dispose of cement already in the trucks, and what to do to protect its trucks.

Glacier sued the union in state court for lost cement, but the union argued that the employees' right to strike in the NLRA preempted the suit. The state supreme court sided with the union, and Glacier took the case to the Court.

The Court, in an 8-1 ruling by Justice Barrett, reversed. The Court ruled that the right to strike in the NLRA was a qualified (not absolute) right, and, citing NLRB precedent, that it didn't protect workers who failed to take "reasonable precautions" to protect the employer's property. The Court acknowledged that under Court precedent the NLRB preempts state law even when the two only arguably conflict--Garmon preemption, after San Diego Building Trades Council v. Garmon--but it held that the union's strike wasn't even arguably protected, because the employees so clearly failed to take "reasonable precautions" to protect Glacier's property (at least on Glacier's complaint, as this was all on the pleadings).

The ruling allows Glacier's case to move forward in the state courts.

Still, there may be a hitch. That's because after the state supreme court ruled, the NLRB general counsel filed an unfair labor practices complaint with the NLRB on behalf of Glacier's employees. The complaint alleged that Glacier violated the employee's right to strike under the NLRA. The NLRB hasn't yet ruled on the complaint. But if it concludes that Glacier violated the employees' right to strike, any state court ruling for Glacier would conflict, and under ordinary conflict preemption, the state case would have to be dismissed. (The NLRB could conclude that the employees have a right to strike, even though the Supreme Court said the opposite, because the NLRB will conduct a full adversarial hearing on the evidence, while the Court ruled only on Glacier's complaint.)

Justice Thomas concurred, joined by Justice Gorsuch, and argued that the Court should reconsider Garmon preemption in an appropriate case. Justice Alito also concurred, joined by Justices Thomas and Gorsuch, arguing that the case was even easier than the majority said, because the employees intentionally damaged Glacier's property.

Justice Jackson filed a lone dissent. She argued that the Court had no business hearing the case until the NLRB ruled on the complaint (because that's how Garmon preemption is supposed to work, and a ruling for the employees would mean that the NLRA and state tort liability would at least arguably conflict), and that in any event the Court misapplied the "reasonable precaution" rule.

June 7, 2023 in Cases and Case Materials, Federalism, News, Opinion Analysis, Preemption | Permalink | Comments (0)

Thursday, May 25, 2023

Court Curtails EPA Authority Under Clean Water Act

The Supreme Court today curtailed EPA's authority to regulate wetlands under the Clean Water Act. The sharply divided ruling is a victory for property owners and a blow to federal regulatory authority over certain wetlands.

The case, Sackett v. EPA, tested whether and how EPA could regulate wetlands that aren't connected on the surface to "waters of the United States." Five justices said that EPA could only regulate wetlands that are connected on the surface to "waters of the United States." (Two of the five would've limited the Act even further, so that EPA couldn't regulate any wetlands, unless they were actually navigable waters of the United States.) Four justices disagreed and argued that the CWA authorized EPA to regulate wetlands that were connected to waters of the United States, even if that connection wasn't on the surface.

All nine agreed that the lower court applied the wrong test.

The CWA prohibits the discharge of pollutants into "navigable waters," defined as "the waters of the United States" and waters that are "adjacent" to them. EPA regulations provide that "adjacent wetlands are covered by the Act if they 'possess a "significant nexus" to' traditional navigable waters." This means that wetlands are "adjacent" when they "neighbor" covered waters, even if the wetlands and the covered waters are separated by dry land.

The plaintiffs, Michael and Chantell Sackett argued that EPA's regulation violated the CWA when EPA ordered them "to restore the Site," including wetlands, after they backfilled their property to build a home.

The Court ruled for the Sacketts and agreed that EPA's regulation violated the CWA. The court held that the CWA authorizes EPA to regulate only those wetlands that are "as a practical matter indistinguishable from waters of the United States," such that it is "difficult to determine where the 'water' ends and the 'wetland' begins." This means that the CWA covers only those wetlands that have "a continuous surface connection to bodies that are 'waters of the United States' in their own right, so that there is no clear demarcation between 'waters' and wetlands." 

The Court said that EPA needs "clear [statutory] language" if it seeks "to significantly alter the balance between federal and state power and the power of the Government over private property." The Court said that the CWA (even its use of "adjacent") didn't provide this clear authority. The Court also said that EPA's interpretation "gives rise to serious vagueness concerns in light of the CWA's criminal penalties," because the EPA's interpretation may not define the statute "with sufficient definiteness that ordinary people can understand what conduct is prohibited" and "in a manner that does not encourage arbitrary and discriminatory enforcement."

Justice Thomas, joined by Justice Gorsuch, argued that the CWA is even narrower, extending only to actually navigable waters of the United States--those that are "capable of being used as a highly for interstate or foreign commerce." Under this approach, the CWA probably wouldn't apply to any wetlands. He tied this standard to Congress's Commerce Clause power, and then took aim at the Court's Commerce Clause jurisprudence, arguing that today it "significantly depart[s] from the original meaning of the Constitution."

Justices Sotomayor, Kagan, Kavanaugh, and Jackson argued (in separate concurrences) that the Court's approach erroneously narrowed the CWA. They argued that "adjacent" waters under the CWA include not just "adjoining" wetlands (as the majority would have it) but also "wetlands separated from a covered water only by a man-made dike or barrier, natural river, berm, beach dune, or the like." Justice Kavanaugh (joined by Justices Sotomayor, Kagan, and Jackson) argued for this more expansive reading. Justice Kagan, joined by Justices Sotomayor and Jackson, went further, arguing that the Court erred in creating and applying the plain statement rule and that the Court (once again) mangled an environmental statute in order to achieve its preferred policy objectives.

 

 

 

 

 

 

May 25, 2023 in Cases and Case Materials, Congressional Authority, News, Opinion Analysis, Separation of Powers | Permalink | Comments (0)

County Violates Takings by Keeping Property Surplus Over Tax Arrears

The Supreme Court ruled today that a county violates the Takings Clause when it seizes and sells property for taxes due, but retains the surplus value above the outstanding tax bill. The ruling means that Hennepin County, Minnesota, owes property owner Geraldine Tyler the $25,000 surplus that it retained after satisfying her overdue tax bill.

The case, Tyler v. Hennepin County, arose when the County seized and sold Tyler's property after she failed to pay $15,000 in taxes. The County sold the property for $40,000 and kept the extra $25,000. Tyler sued, arguing that the County violated the Takings Clause.

A unanimous Court agreed. Chief Justice Roberts wrote that history and precedent both say that the government can't take more than it's owed, and that a taxpayer is entitled to the surplus.

Justice Gorsuch wrote a concurrence, joined by Justice Jackson, arguing that the lower courts also erred in dismissing Tyler's Eighth Amendment Excessive Fines Clause claim.

May 25, 2023 in Cases and Case Materials, News, Opinion Analysis, Takings Clause | Permalink | Comments (0)