Typically in my term-ending review of U.S. Supreme Court decisions, I focus on 2-3 “big” decisions. For the 2015 edition, not only do I find myself separating what is normally one post into two (in order to give due treatment to the landmark Obergefell v. Hodges decision), but the number of cases covered is substantially larger this year.
What’s the method to my madness? First, there just happened to be a larger number of important Supreme Court cases decided this term. Second, I have intentionally included some cases that impact the everyday lives and businesses of ordinary Americans, in order to show that the United States Supreme Court is much more than a group of ivory tower intellectuals passing judgment on abstract legal questions.
I also picked cases that show how varied the Court’s philosophy can be. In our society of sound bites, two often commentators draw incorrect inferences by analyzing only one or two hot button cases. For example, in years past, the Citizens United decision drew criticism from liberals for evidencing the Court “being in the pocket of big business.” This term, it is the conservatives who rely upon the Obergefell decision legalizing same-sex marriage and King v. Burwell (discussed later on in this post) as evidence of “activist judges.” In truth, it is hard to glean any consistent philosophy from the nine individuals who comprise the current Court.
There are, however, trends. Two decisions this term curtail the regulatory authority of the Federal Government. One of these finds for individuals and the other finds for the states and against the Federal government. Obergefell and others show a preference to individual rights over states rights.
Here are summaries of the other decisions this term:
Reigning in the Regulators
Horne v. Department of Agriculture
This case involves a Federal law called the Agricultural Marketing Agreement Act of 1937, which authorizes the Secretary of Agriculture to promulgate “marketing orders” to help maintain stable markets for particular agricultural products. Raisins are one of the products covered by the Act and there exists a Raisin Administrative Committee that imposes a reserve requirement; i.e., raisin growers in the U.S. must set aside a certain percentage of their crop for the account of the Government, free of charge. The Government makes use of the reserve raisins by selling them in noncompetitive markets, donating them or disposing of them. Any profits left over after subtracting the Government’s expenses are returned to the growers. Marvin and Laura Horne are raisin farmers who refused to set aside any raisins and challenged the program under the Fifth Amendment to the U.S. Constitution, which prohibits the Government from taking private property without paying just compensation. The issue in this case was whether the Fifth Amendment applied not only to real property, but to personal property as well (such as raisins). The Supreme Court held that it certainly does apply and removed fines imposed against the Hornes for refusing to turn over a portion of their raisin crop.
Michigan v. Environmental Protection Agency
This case again cuts against the Federal Government, this time in favor of individual states. The Environmental Protection Agency has the authority under the Clean Air Act to impose regulations against power plants if it finds regulation “appropriate and necessary” after studying hazards to public health posed by power-plant emissions. The issue in this case was, though, that the cost of compliance with the EPA’s regulations was estimated to be $9.6 billion annually; the economic value of the benefits from the regulations (to the extent that the EPA could quantify them) was estimated to be $4 million – $6 million per year. In other words, the cost of the regulations was 1,600-2,400 times the value of the benefits. The Court, in finding for the states against the EPA, held that under the longstanding framework established in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., found that the EPA strayed “far beyond” the bounds of reasonableness by ignoring the costs when deciding to regulate power plants.
Arizona State Legislature v. Arizona Independent Redistricting Commission
This case – one of the last opinions issued this term – is illustrative of the time honored struggle that the United States has had with being a “democratic republic.” This case deals with a 2000 Arizona voter initiative that took redistricting authority away from the Arizona Legislature (who was, supporters contended, partial to gerrymandering legislative and congressional districts to keep incumbents in safe seats) and delegated it instead to an independently appointed commission. The Arizona Legislature commenced a lawsuit claiming that this delegation violated the Elections Clause in Article I, Section 4, clause 1 of the U.S. Constitution which states that “The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations….” The issue in this case was interpretation of the word “Legislature” – is redistricting solely a matter for the Legislature –meaning the elected body so named – or can others have a say in the process? The Court, in an opinion authored by Justice Ginsburg, held that the delegation of redistricting authority to an “independent” commission does not violate the Elections Clause.
As someone who was involved in prior legal actions involving redistricting maps (which happens almost every time the issue must be dealt with after a Census is taken), I am skeptical as to whether the Arizona voters’ desire for “independent” redistricting will practically be served through their chosen system, but at a minimum, the Supreme Court has given them the opportunity to find out.
“Obamacare” – Third in the Series
King v. Burwell
And now we come to the latest in the “Obamacare” trilogy of cases. To refresh your memory, in 2012, just months before the Presidential election, the Court – with Chief Justice John Roberts (a George W. Bush appointee) writing the majority opinion in NFIB v. Sebellius – held that while the individual insurance mandates set forth in the Patient Protection and Affordable Care Act (colloquially named “Obamacare” and also referred to as the “ACA”) violated the Commerce Clause of the Constitution, they were permissible under the Taxing Clause. This decision infuriated opponents of President Obama’s, who saw the Court as the means for the controversial law to be struck down. The Chief Justice, in relying upon the Federal Government’s alternative argument as to the law’s constitutionality, did not oblige.
The second case was the Hobby Lobby case, decided last term, which found that under the Religious Freedom Restoration Act of 1993 (“RFRA”), certain exemptions from the ACA’s contraceptive mandates which have been made for the benefit of religious employers (i.e., churches and religious nonprofits) should be extended to closely-held corporations whose owners have similar religious beliefs. In a 5-4 decision, the Supreme Court answered that question in the affirmative.
After Hobby Lobby, one was left wondering as to where would the Court go next on Obamacare. Did the Chief Justice uphold the law in 2012 only to preside over its piece-by-piece dismantling over multiple decisions? Or is the ACA here to stay? Or is something else going on entirely.
The most recent decision in King v. Burwell again leaves many scratching their heads.
The third in the series of “Obamacare” decisions pertains to the subsidies provided to those who sign up for health insurance through the exchanges. As envisioned under the ACA, each state would create an exchange through which individuals would purchase the required health insurance coverage. The Federal government then offered tax credits to those individuals who purchase coverage through such exchanges. Significantly, the ACA contains a provision which exempts from its mandatory coverage requirements anyone who would be required to spend more than eight percent of their income on health insurance.
This case arose from the fact that a number of states – most where state officials opposed the passage of the ACA – opted not to set up state-based exchanges. As a result, individuals seeking to purchase the required insurance were instead forced to purchase such insurance through the Federal exchange created by the Department of Health and Human Services. The petitioners in King v. Burwell were individuals residing in states that opted not to set up exchanges. They contended that the tax credits did not apply to the Federal exchange, that they would then exceed the eight percent cap and thus be exempt from the ACA’s mandatory coverage requirements. If the Court were to find in favor of the petitioners, the number of individuals required to purchase health insurance under the ACA would be greatly reduced.
The case turned on the Court’s interpretation of Section 36B of the Internal Revenue Code:
In the case of an applicable taxpayer, there shall be allowed as a credit against the tax imposed by this subtitle…an amount equal to the premium assistance credit amount.
Section 36B then defines “premium assistance credit amount” as “the sum of the premium assistance amounts determined under paragraph (2) with respect to all coverage months of the taxpayer occurring during the taxable year.” The statute goes on to define “premium assistance amount” and “coverage month” in part by referring to an insurance plan that is enrolled in through “an Exchange established by the State….” It is that last phrase that defines the King v. Burwell decision. Chief Justice Roberts, again writing the majority opinion, engages in significant legal gymnastics to read the phrase to include the Federal exchange. Justice Scalia, author of the dissent, calls the Chief Justice on this, and essentially accuses the Chief Justice of deciding first to save the ACA – again – and then authoring an opinion to give his decision basis in the law.
In this case, I believe that Justice Scalia is correct. There is not much in the way of precedent cited in the Chief Justice’s opinion. In fact, at one point he states that the ACA “does not reflect the type of care and deliberation that one might expect of significant legislation.”
So, you ask, why would the Chief Justice save such a law? To understand his reasoning, a few history lessons are in order.
First, recall back to 2000, when the Presidential election was thrown into the Supreme Court after the Florida recount debacle. Democrats strongly criticized the Court’s decision in Bush v. Gore which awarded the Presidency to George W. Bush over Al Gore, and in so doing cast doubt on the Court’s ability to function without regard to political affiliation (since it was five Republican-appointed Justices that rendered the Bush v. Gore decision and four Democratic-appointed Justices who dissented). The standing of the Supreme Court as being “above the fray” has been a key objective of Chief Justice Roberts; hence he has passed twice on striking down President Obama’s signature piece of legislation when the arguments – and the votes – were there to do so.
Second, I believe that Chief Justice Roberts is seeking to avoid a confrontation with President Obama that could lead to tinkering with the Court. There is historical precedent to support such a concern. In 1937, after several of his New Deal initiatives were held to be unconstitutional by the Supreme Court, President Franklin Delano Roosevelt proposed the Judicial Procedures Reform Bill of 1937, which would have added more justices to the U.S. Supreme Court. In the Chief Justice’s mind, perhaps preserving the integrity of the Court beyond this President is a more important objective than finding grounds to strike down the ACA.
A final theory is that the Chief Justice believes that the ACA is better than nothing when it comes to health insurance, and so he has kept it on life support until after President Obama leaves office and his successor and/or the Congress can address some of the drafting issues which the Chief Justice notes in his opinion.
We may never know why the Chief Justice has twice breathed life into a law that appeared to be DOA. Perhaps some day Chief Justice Roberts himself will explain what his objectives were in upholding the ACA. Until then, and unless modified or repealed in the years to come, “Obamacare” is the law of the land.
On to the “Practical” Cases
The final four cases to be discussed are not as groundbreaking as the ones discussed previously, but they are nonetheless significant in their impact upon Americans’ everyday lives.
Bankruptcy and a Second Mortgage
Bank of America, N.A. v. Caulkett
This case deals with a bankruptcy debtor’s ability to strip off a junior mortgage on a property in a Chapter 7 bankruptcy where the mortgage is unsupported by the value of the property. This was a common practice in the recent real estate crash, where owners of underwater properties filed bankruptcy in an attempt to sidestep their obligations to repay loans which now exceeded the value of their collateral. The Court, in a rare instance of all nine justices essentially agreeing as to the result (although Justices Kennedy, Breyer and Sotomayor dissented from a footnote in Justice Thomas’ opinion), held that a debtor in a Chapter 7 bankruptcy cannot void a junior mortgage lien under Section 506(d) of the Bankruptcy Code, as the fact that the amount of the mortgage lien exceeds the value of the collateral does not make the claim of the holder an “unsecured claim.”
Kimble v. Marvel Entertainment, LLC
Under United States law, a patent is a right granted to the inventor of a (1) process, machine, article of manufacture, or composition of matter, (2) that is new, useful, and non-obvious. A patent is the right to exclude others from using a new technology. Specifically, it is the right to exclude others from making, using, selling, offering for sale, importing, inducing others to infringe, and/or offering a product specially adapted for practice of the patent. Under current law, the term of a patent lasts for twenty years after it is issued.
This case pertained to a patent for “Spider-Man” gloves that shoot spider webs just like the popular comic book character. The patent holder, Stephen Kimble, originally sued Marvel Enterprises, Inc. for patent infringement and the parties’ settlement called for royalty payments which went beyond the expiration date of Mr. Kimble’s patent. Upon discovering this, Marvel Entertainment, LLC (the successor to Marvel Enterprises, Inc.) sought a declaratory action to declare the payment obligations beyond the patent term void. The Supreme Court, in noting that the Patent Act fails to address this issue, held that royalty payments expire upon the expiration of the patent.
With many businesses operated under patents held by others and licensed under a royalty payment structure, the Kimble decision is of great practical significance.
Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc.
Title VII of the Civil Rights Act of 1964 prohibits a prospective employer from refusing to hire an applicant in order to avoid accommodating a religious practice that it could accommodate without undue hardship.
This case arose from an Equal Employment Opportunity Commission (“EEOC”) complaint brought against Abercrombie & Fitch Stores, Inc. on behalf of Samantha Elauf. Ms. Elauf is a practicing Muslim who wears a headscarf as required by her religion. She applied for a position with Abercrombie & Fitch and was given a rating that qualified her for employment. However, the store’s assistant manager expressed concern that her headscarf violated the store’s “Look Policy” that governs employees’ dress, a policy which prohibits “caps” (an undefined term under the policy). The Court reversed the Tenth Circuit’s grant of summary judgment in favor of Abercrombie & Fitch and remanded for further consideration, and held that regardless of whether a prospective job applicant requests an accommodation or not, an employer may not make an applicant’s religious practice a factor in determining whether to employ said individual. This decision was near unanimous, with Justice Scalia authoring the majority opinion. Justice Thomas concurred in part and dissented in part, stating that he believed that a refusal to accommodate amounted to intentional discrimination.
Young v. United Parcel Service, Inc.
We close out the 2015 edition of “Making Sense of the SCOTUS Decisions” with another employment-related case. This time, the Court addresses discrimination under the Pregnancy Discrimination Act. In this case, a UPS employee was given lifting restrictions from her doctor. UPS informed her that she could not work with lifting restrictions and put her on leave without pay. Ms. Young brought suit and offered evidence of UPS making reasonable accommodations for other workers on other varied grounds. The Supreme Court vacated the summary judgment awarded by the Fourth Circuit in favor of UPS and remanded the case for further proceedings.
So, with all of the Court’s decisions this term, where does it go from here? According to a recent New York Times article, coming next term will be cases involving solitary confinement, the death penalty, racial preferences, public employee unions and the meaning of “one person one vote.” And how will these cases be determined? Your guess is as good as mine!
One final word – if you want to read these decisions for yourself, you can visit the Supreme Court’s website.
Jeffrey O’Brien is a shareholder and attorney at Lommen Abdo, P.A. He can be reached via email at email@example.com.