The Justices returned from their holiday break for a busy week on the bench. The Court issued two opinions: a unanimous one from Justice Ginsburg in a bankruptcy case, and a unanimous per curiam one in an ERISA case. The Court added eight cases to this term’s docket and another case for next term. And the Justices heard five hours of oral argument, including in the high-profile “Bridge-gate” case from 2013. Here’s your brief for the Week of January 13.
Cases Decided: 5
Cases Remaining: 68
Weeks Left in Term: 23
The Court returned from its winter recess and issued an orders list on Friday. The Justices granted three cases. Two will be decided this term and one next term. In Rutledge v. Pharmaceutical Care Mgmt. Ass’n, the Court will determine whether the 1974 Employee Retirement Income Security Act preempts an Arkansas statute that regulates the drug-reimbursement rates of pharmacy benefit managers. In Barr v. American Ass’n of Political Consultants, the Justices will face the intersection of the First Amendment and the 1991 Telephone Consumer Protection Act (TCPA). The questions presented are whether the government-debt exception to the TCPA’s automated call restriction violates the First Amendment, and if so, whether that provision can be severed from the rest of the statute. And in Salinas v. United States Railroad Retirement Board (the case to be decided next term), the Court will decide whether, under federal railroad benefits laws, the Railroad Retirement Board’s denial of a request to reopen a prior benefits determination is a “final decision” that is subject to judicial review.
First thing Monday morning, the Court issued another orders list. It denied a host of petitions and didn’t grant any new ones. Two denials are worth mentioning: First, the Court left in place the conviction of Michelle Carter, the high-profile prosecution of a Massachusetts girl who urged her boyfriend to commit suicide over texts. Second, the Court turned down a mainstay on my list of high-profile petitions: Lilley v. New Hampshire. This case involved a challenge to a Laconia, NH city ordinance that prohibits a woman from publicly exposing her breast “with less than a fully opaque covering of any part of the nipple.” Three women charged with violating the ordinance challenged their convictions on the ground that, since the regulation applies to women but not to men, it violates the Equal Protection Clause of the Fourteenth Amendment. Evidently, the Court must have determined that there is a compelling state interest to justify the cleavage in treatment toward men and women. Finally, the Court issued two GVRs (“grant, vacate, and remand”) and two CVSGs (“call for the views of the U.S. Solicitor General”).
Next, the Court heard oral argument in two cases. In Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc., the Justices are confronting a circuit split over the scope of issue preclusion. The law of preclusion has two central prongs: First, claim preclusion prohibits litigation of the same claim by the same parties (“res judicata”). Second, issue preclusion prohibits the same parties from litigating the same issue of fact or law that a court has already decided (“collateral estoppel”). Three federal appeals courts have held that neither prong applies where a party, in a case with the same parties but involving a new claim, seeks to litigate a defense that it could have argued in a prior case but chose not to. However, the Second Circuit recently held differently; such litigation is collaterally estopped, even though the claims themselves are not barred by res judicata. The Justices are tasked with resolving this circuit split. The oral argument in Lucky Brand Dungarees is available via audio and transcript.
The other case was Thole v. U.S. Bank N.A. Thole, also sporting a circuit split, is yet another case concerning the 1974 Employee Retirement Income Security Act (ERISA). ERISA imposes a fundamental duty on employers (“fiduciaries”): It “protect[s] . . . the interests of participants in employee benefit plans . . . by establishing standards of conduct, responsibility, and obligation for fiduciaries . . . and by providing for appropriate remedies, sanctions, and ready access to the Federal courts” (29 U.S.C. §1001(b)). So, if a fiduciary breaches its obligations and, as a result, loses some of the money to a participant’s benefit plan, ERISA creates legal remedies for that participant. These include litigation to recover the losses (29 U.S.C. §1132(a)(2)) and the chance to seek a preliminary injunction to stop fiduciary misconduct (29 U.S.C. §1132(a)(3)).
In this case, U.S. Bank offers a pension plan for petitioners. In 2007, the plan’s assets were worth $2.8 billion. U.S. Bank invested the entirety of those assets in high-risk equities. Following the 2008 market crash, the plan lost $1.1 billion—39.2% of the plan’s total assets. Had the plan been appropriately diversified, it would have lost $748 million less. The crash left the plan reeling: before, it was overfunded; after, it was 84% underfunded. Petitioners then sued U.S. Bank, seeking both an injunction against the bank’s plan investment practices and restoration of the $748 million. During litigation, U.S. Bank contributed $339 million to the plan, bringing its status back to “overfunded.” Armed with this development, the Eighth Circuit Court of Appeals affirmed the dismissal of petitioners’ suit. Following circuit precedent, it held that petitioners had not suffered an individual financial loss since the plan was no longer underfunded, and thus petitioners were not entitled to the restoration of the $748 million. It further dismissed petitioners’ claim for injunctive relief, cementing a circuit split regarding standing requirements for injunctive relief under ERISA. The Supreme Court will now review the Eighth Circuit’s decision. The Justices will answer the following questions: Where an ERISA plan participant has not demonstrated individual financial loss or an imminent risk thereof, does the participant have standing to seek (1) injunctive relief against the fiduciary or (2) restoration of plan losses? The argument in Thole is available via audio and transcript.
The Court released two opinions, bringing the total to five decisions in argued cases so far this term.
The first opinion came from Justice Ginsburg for a unanimous Court in Ritzen Group, Inc. v. Jackson Masonry, LLC. The case asks whether a bankruptcy court’s order denying relief from the automatic stay qualifies as a “final order” under the U.S. Bankruptcy Code (28 U.S.C. §158(a)). Ginsburg answered “yes,” and thus an order denying relief from the automatic stay is immediately appealable under §158(a).
During a long-running land sale dispute between Ritzen Group and Jackson Masonry, Jackson Masonry filed for bankruptcy. Under the U.S. Bankruptcy Code, that bankruptcy declaration automatically stayed (“put on hold”) the litigation between the parties (11 U.S.C. §362(a)). Ritzen Group then filed for relief from the automatic stay, seeking to continue the state court proceedings while the bankruptcy litigation commenced. The bankruptcy court denied the motion. Bankruptcy procedure says that a “final order” of a bankruptcy court must be appealed within 14 days (28 U.S.C. §158(c)(2); Fed. Rule Bkrtcy. Proc. 8002(a)). But Ritzen Group chose not to appeal the denial of relief from the automatic stay. Instead, it pursued a different legal claim. Long after the 14-day window had passed, it lost that claim. Thereafter, Ritzen Group reversed course and then attempted to appeal the denial of relief order, arguing that it did not qualify as a “final order” subject to a 14-day deadline. Now we have the question at hand.
Ginsburg, in answering yes, looks to the Court’s decision in Bullard v. Blue Hills Bank (2015). There, the Court noted that bankruptcy court orders are “final” if they “dispose of discrete disputes within the larger [bankruptcy] case.” Applying this to the issue of denying relief from the automatic stay, Ginsburg holds that such an order clearly resolves a “discrete dispute” within the “larger [bankrutpcy] case” between Ritzen Group and Jackson Masonry. When a party files a motion for relief from the automatic stay, that motion “initiates a discrete procedural sequence,” she writes. Working through that sequence involves notifying the parties and commencing a hearing. Moreover, the bankruptcy court must then determine how well the creditor’s qualifications for relief fit certain enumerated conditions. To Ginsburg, this sequence is clearly a “discrete dispute” under Bullard and an “independent ‘proceeding'” under §158(a). Finally, such a conclusion fits well within the larger text of the statute. For these reasons, Ginsburg concludes that a bankruptcy court’s order denying relief from the automatic stay is a “final” order subject to the 14-day appeal window under bankruptcy procedure.
The second opinion was a per curiam, unanimous opinion in Retirement Plans Committee of IBM v. Jander, a familiar ERISA case. A per curiam opinion is one written collectively by the Court’s majority, instead of a single Justice for the majority. Per curiam opinions are often issued when a case is decided on very narrow, procedural grounds, or in petitions that are not officially granted and heard. Jander was of the former category.
In short, Jander involved the requirements for meeting the “more harm than good” pleading standard espoused in Fifth Third Bancorp v. Dudenhoeffer (2014), which is a standard used to establish a breach of fiduciary duty under ERISA. When the parties petitioned for cert, the parties’ arguments focused on this matter. But after the Court granted the petition, the parties focused on other matters. These arguments were brand new in the litigation. In other words, the lower court (the Second Circuit) never had the chance to hear and rule on these matters. So, the Court chose to send the case back to the Second Circuit so that it could have the first chance to adjudicate Petitioner’s new claims. Justice Kagan (joined by Justice Ginsburg) filed the first concurring opinion to make two points. First, in her mind the Second Circuit may choose not to hear Petitioner’s new claims on remand, based on its “usual rules of waiver or forfeiture.” This hinges on whether the Second Circuit finds that the claims were waived or not preserved when the parties agreed not to litigate them before that court. Her second point is that, if the lower court does decide to hear those claims, she would have the court decide whether Petitioner’s arguments are consistent with Dudenhoeffer. Finally, Justice Gorsuch wrote his own concurrence. He offers a response to Justice Kagan’s second point. Gorsuch is skeptical that the Second Circuit could even rule on the basis of Kagan’s suggestion. “Dudenhoeffer was silent on the argument now before us for the simple reason that the parties in Dudenhoeffer were silent on it too,” he says. In other words, Gorsuch feels the present argument is really just a “pure” question of law that federal courts have yet to answer. So, if on remand the Second Circuit chooses not to adjudge the parties’ new arguments, Gorsuch sees that as only delaying the “unavoidable.”
Following the opinions, the Court heard arguments in another two cases. First on the docket was Kelly v. United States, involving the September 2013 “Bridge-gate” scandal with the George Washington Bridge between New Jersey and Manhattan, NY. For four days, senior officials at the Port Authority of New York and New Jersey effectively shut down two lanes of public traffic over the George Washington Bridge, gridlocking the entire town of Fort Lee, NJ and decreasing traffic elsewhere. Why? Well, the officials stated they were conducting a “traffic study.” But at trial, this answer was found to be contrived. The real motive was that it was political retribution for Fort Lee mayor (then Mark Sokolich)’s refusal to endorse Chris Christie, the Governor of New Jersey at the time. The New Jersey District Attorney indicted the officials, charging them with “defrauding” “government property” (see 18 U.S.C. §§ 666(a), 1343). A jury convicted the officials, and the Third Circuit Court of Appeals affirmed. It reasoned, as to “defrauding,” that the officials’ contrived reason was tantamount to a lie, and this satisfied the deception element of the fraud offense. As to “government property,” the court held that the officials had seized “intangible property”—specifically, the government’s “control” of physical assets of the bridge (like the lanes themselves) and the “labor” of the public employees who manually effectuated the lane closures, thinking it was for the purposes of the traffic study.
Cue the petition to the Supreme Court. The question the Justices must decide is whether a public official “defrauds” the government of its “property” when the official offers a contrived, “public policy” reason for the action as opposed to the real reason. The oral argument in Kelly is available via audio and transcript.
The other case heard was Romag Fasteners, Inc. v. Fossil, Inc., a trademark law case. The 1946 Lanham Act prohibits a company from using another company’s distinctive mark to falsely represent the origin, support, or relationship of any product—in other words, trademark infringement. The Act provides that a company may recover damages if it can prove that another company “violat[ed] . . . [15 U.S.C.] §1125(a) or (d),” or “willful[ly] violat[ed] §1125(c).” Now, suppose a company is able to prove that another company violated §1125(a) or (d), but is unable to prove that the company willfully violated §1125(c). Must the company then prove a willful violation of §1125(a) or (d)? If it seems that the answer is fairly clear, don’t get ahead of yourself. All twelve regional circuit courts of appeals have weighed in; six have said yes, and six have said no. The Supreme Court will now resolve the even split. The argument in Romag Fasteners is available via audio and transcript.
The Court heard its last oral argument of the week on Wednesday. Babb v. Wilkie concerns the burden of proof for establishing age-discrimination claims for federal-sector employees under Title VII of the 1964 Civil Rights Act and the 1967 Age Discrimination in Employment Act (see 29 U.S.C. §633a(a)). The dispute is whether federal-sector employees must prove age was the factor in a discriminatory employment decision, or simply a factor in the decision. The Court has already decided a strikingly similar case with regard to private sector employees. Private-sector employees are subject to a different discrimination statute, 29 U.S.C. §623(a). §623(a) provides that an employer cannot make an employment decision “because of” an individual’s age. In Gross v. FBL Financial Services, Inc. (2006), the Court held that §623(a)’s language created a “but-for” causation requirement. In other words, an individual must prove that the employer would have made a different employment decision “but for” the individual’s age. Under Gross, private-sector employees must prove that age was the factor in an employment decision.
But §633a(a)—the federal-sector statute—has different language. It states that an employment decision must “be made free from any discrimination based on age.” So, if a federal-sector employee feels he has been discriminated in the workplace on account of his age, must he prove that age was the motivating factor or simply a motivating factor? That is the question the Court will decide. The argument in Babb is available via audio and transcript.
The Court held no proceedings on Thursday.
The Court released more orders on Friday, granting three sets of consolidated cases for this term. The first set, Ford Motor Co. v. Montana Eighth Judicial District Court, asks whether the Burger King Corp. v. Rudzewicz (1985) standard for establishing state court jurisdiction over a non-resident is met where a plaintiff would have brought the exact same claims even if the defendant had not made any residential contacts.
The other two sets are (respectfully) much more intriguing. In Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania, the Court will deal with the Trump Administration’s “conscience exemption” to the Affordable Care Act’s mandate for employers to provide contraceptive care in healthcare packages. The Justices will consider administrative challenges to the Administration’s expansion of the exemption, as well as an appellate procedure matter. Finally, the Court granted Chiafalo v. Washington, a mainstay in my list of high-profile petitions. Chiafalo concerns “faithless electors,” or members of the Electoral College who cast their vote for a different candidate than the one for whom a majority of a state voted. Washington recently passed a state law fining “faithless electors.” Those electors challenged the constitutionality of that law under the Electoral College Clauses of the Constitution and the Free Speech Clause of the First Amendment.
In addition, the Court met for its weekly private conference. There the Justices reviewed the petitions on their docket and discussed whether to grant review for any of them. We can expect more news from this conference in the Court’s next orders list next Tuesday. Some high profile cases the Justices are considering include:
- Box v. Planned Parenthood of Indiana & Kentucky, Inc. This case challenges an Indiana state abortion law that requires women who seek an abortion to, among other things, undergo a fetal ultrasound eighteen hours before the abortion is performed. The question presented is whether such an ultrasound requirement violates a woman’s Fourteenth Amendment rights.
- United States v. California. This case involves the Trump administration’s challenge to California’s statewide “sanctuary” law. The law prohibits state law-enforcement officers from providing information about immigrants (both legal and illegal) to federal immigration officials. The question before the Court is whether federal immigration law preempts California’s sanctuary law—and others like it in cities and states around the country—under the Supremacy Clause of the Constitution.
- Worman v. Healey. This case concerns a Massachusetts state law that bans, inter alia, semiautomatic “assault weapon[s]” and magazines capable of accepting 10+ rounds of ammunition. The question presented is whether that law violates the Second Amendment to the Constitution.
- Bell v. Pennsylvania. This is the case of Thomas Bell, a Pennsylvania motorist who refused under the Fourth Amendment to consent to a warrantless blood test. Instead of obtaining a warrant, the officers decided to use Bell’s refusal as evidence at trial that he was guilty of driving under the influence. The question presented is whether such a refusal can be used as evidence at trial of guilt for the offense of driving under the influence.
- Collins v. Mnuchin. This case concerns a constitutional challenge to the structure of the Federal Housing Finance Agency (FHFA), a mirror-image case to that of Seila Law v. CFPB, the challenge to the structure of the Consumer Financial Protection Bureau. The questions presented in Collins are (1) whether the structure of the FHFA violates the separation of powers, and if so (2) whether the actions of the FHFA must be annulled and the statute creating its structure struck down.
The Week Ahead
The Court is off on Monday due to the federal holiday. On Tuesday, the Court will release more orders from Friday’s conference. The Court also hears oral argument in two cases: Shular v. United States and GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC. On Wednesday, the Justices will hear arguments in one more case: Espinoza v. Montana Dep’t. of Revenue, a consequential Establishment Clause case. On Friday, the Court will meet for their weekly private conference.