The Supreme Court’s October 2011 term is turning out to be a bit of a sleeper for businesses, according to Tom Goldstein, founder both of SCOTUSblog and the Supreme Court-focused firm Goldstein & Russell. The term seems to be marked by a focus on social issues—from GPS tracking to affirmative action.
“I don’t think this is going to be a watershed term for business,” Goldstein says. “There’s not a Dukes v. Wal-Mart; there’s not an AT&T v. Concepcion.”
The cases the court is set to hear, although generally low-key, could still yield some noteworthy holdings. Among the business-related cases the high court will hear this term, a common theme seems to be the presentation of issues with a remarkably narrow scope. However, many of them hold the potential for broader impact across the business world.
“The court has been tending more to cases that have broad civil litigation or regulatory significance to the business community,” says Don Falk, a partner at Mayer Brown with an extensive appellate practice. “That’s salutary, to get the final word on some of these legal issues with hundreds of millions or billions of dollars in significance to the economy, and which require authoritative interpretations so that businesses can plan their primary conduct as well as their litigation strategy accordingly.”
Of those that had been granted certiorari at press time, the following cases are the ones experts say businesses should be watching in the current term.
Hosanna-Tabor Church v. EEOC
The setup: Lower courts have adopted a ministerial exception to federal discrimination law—a woman barred from becoming a Catholic priest, for instance, can’t sue the Catholic Church under Title VII. The same applies to other employees of religious organizations who perform religious functions. The circuits have adhered to this exception, based on First Amendment doctrine, and the Supreme Court has never squarely addressed the issue.
The question: Hosanna-Tabor Church v.EEOC arises in the context of a teacher at a sectarian school who teaches a primarily secular curriculum that includes one religion class a day. The 6th Circuit has held that because the teacher’s primary role was not religious, the exception doesn’t apply.
“The question is to what extent religious organizations have protection from discrimination statutes when they make hiring or firing decisions based in part on their religious doctrines,” says Adam Charnes, a partner in the appellate and Supreme Court practice at Kilpatrick Townsend & Stockton. “Clearly the First Amendment says the government can’t regulate when they hire their minister, but how far from the ministered can you go before Congress can regulate that?”
The impact: The case gives the Supreme Court its first opportunity to define what kind of immunity exists for religious institutions that make hiring decisions based on factors that would be illegal under federal law. Depending on how broadly the court rules, its language here could apply to other religious organizations.
Golan v. Holder
The setup: Golan v. Holder involves a constitutional challenge to U.S. implementation of the 1994 Uruguay Round Agreements Act, which restores copyright protection to numerous foreign works that have entered the public domain because their copyrights have expired.
The question: Does the Copyright Clause, or the Progress Clause, allow copyright reinstatement of foreign works in the public domain, and does the law at issue violate First Amendment rights?
“It will require the court to go back to the original purpose for the Copyright Clause in a way they haven’t really done before,” Charnes says. “The purpose is to encourage people to create works that are subject to being protected—after a number of years, the work goes into the public domain. The point is to encourage people to create the works to begin with by allowing them to reap the monopoly benefits for a certain number of years.”
The impact: The 10th Circuit has rejected challenges to the law under both the Copyright Clause and the First Amendment. Scott McBride, an IP shareholder at McAndrews, Held & Malloy, notes that constitutionality arguments are tough to win, especially with respect to IP laws. But he also wonders whether the court will try to craft a rule similar to patent law, where statute permits intervening rights to a party when a patent’s scope has changed after issuance of the patent. The reasoning is that it’s not fair to hold a party responsible for infringement if it wasn’t aware of the final scope of the patent claims.
“I’m not aware of a similar provision in the Copyright Act,” McBride says. “The argument is: These copyrights expired, certain parties used them and now the copyrights are going to be reinstated—that’s not fair to the parties who acted in the interim, and, as the argument goes, it’s unconstitutional.”
Broadly speaking, if the court upholds constitutionality of the law, it could give Congress more freedom in the future to expand existing rights or to resurrect old rights.
Pacific Operators Offshore, LLC v. Valladolid
The setup: The Outer Continental Shelf Lands Act provides that workers are eligible for compensation for “any injury occurring as the result of operations conducted on the outer Continental Shelf.” The outer continental shelf is made up of U.S. offshore areas that don’t fall under the jurisdiction of any U.S. states.
The question: If an outer continental shelf worker is injured on land, under what circumstances is the worker eligible for compensation?
The impact: The facts of the case are quite narrow, and the court will likely focus on interpreting the specific statute in question. But the issues at hand have broader implications, for instance in employment and wage and hour cases.
Michael Fox, a labor and employment shareholder at Ogletree Deakins, relates Pacific Operators v. Valladolid to the California case Oracle v. Sullivan, which asked whether California wage and hour laws apply to a worker based out of state who performs some work in California.
“There’s not a lot of law dealing with the question of, ‘How do you deal in a mobile society where an employee’s working this month in one state, and next month in another—what law should apply?’” Fox says. “This case is different, but it’s sort of the same issue: extraterritorial application of employment laws in a mobile society. The Supreme Court may need to address this down the road.”
National Meat Association v. Harris
The setup: The Federal Meat Inspection Act says that slaughterhouses must hold nonambulatory animals—that is, animals unable to walk or, in industry parlance, “downers”—for observation. A California state law requires that such animals be immediately killed.
The question: Does the federal law pre-empt the state law? Although the Federal Meat Inspection Act has an express pre-emption clause, here the 9th Circuit interpreted the provision narrowly and applied the presumption against pre-emption.
The impact: National Meat Association v. Harris is another case in the confines of a narrow regulatory statute that could have potentially broader significance—here, due to the ongoing battles over federal pre-emption and the question of when federal legislation imposes a uniform nation standard.
“How explicit does Congress have to be? Does it matter if the court determines that the additional regulation is more stringent and serves the same policies? There is a whole slew of issues like that surrounding pre-emption,” Falk says.
CompuCredit Corp. v. Greenwood
The setup: One of last term’s most-watched cases was AT&T Mobility v.Concepcion, in which the justices held 5-4 that the Federal Arbitration Act pre-empted California’s law deeming certain class action waivers in arbitration agreements unenforceable.
“In the arbitration world, we thought AT&T Mobility v. Concepcion would put more of a final touch on things, but there has been a lot of post-Supreme Court litigation on it, so maybe it was not as definitive a ruling as some of us thought it would be at the time,” Fox says.
The question: CompuCredit Corp.v. Greenwood deals with the much narrower issue of whether the Credit Repair Organizations Act (CROA) pre-empts arbitration clauses in credit card holders’ agreements. The 9th Circuit held that CROA provides consumers with the unwaivableright to sue. Concepcion made clear that states have essentially no leeway to placing certain claims off-limits to arbitration. But Congress can and has done so explicitly in statutes such as CROA.
The impact: “Because it involves credit cards, it could have a fairly wide-ranging impact,” says Paul Smith, a litigation partner at Jenner & Block. “But it’s nothing like Concepcion.”
The impact, however, may go beyond CROA, a rather obscure federal statute. The court is likely to lay down some analytical markers for determining similar issues in the lower courts where, post-Concepcion, it is argued that certain federal statutes or policies are inconsistent with arbitration.
“It’s generally an argument the Supreme Court has rejected over the past 30 years and in a number of settings,” Falk says. “This may be limited to statements that are more explicit than what’s in [CROA]. CompuCredit is going to affect the next round of cases that comes out, and I’m sure over the next few terms there will be a couple of those making their way up.”
Caraco v. Novo Nordisk
The setup: Generic drug manufacturers can submit an abbreviated new drug application (ANDA) for copies of drugs listed in the FDA’s Orange Book, which lists approved Drug Products with Therapeutic Equivalence Evaluations. The Hatch-Waxman Act allows a generic manufacturer to make a counterclaim seeking to require the brand to modify the patent information it submitted. That ability is an important defense in Hatch-Waxman ANDA litigation, which often involves high-stakes and well-known companies. But the Federal Circuit, in this case, said Caraco only could change “patent information” covered by the narrow statutory definition of the phrase—the patent number and expiration date.
The question: Can generics make such a counterclaim when there is an approved method of using the drug that the patent does not claim and the brand submits patent information to the FDA that misstates the patent’s scope?
The impact: The decision as it stands now is favorable to the brand manufacturers. Very specific rules apply to the ANDA litigation regime, and they disfavor generics compared to regular patent litigation rules. ANDA litigation, for instance, allows parties to request a 30-month stay so the FDA can’t consider or approve the generics’ application.
According to McBride, seeking this declaration on the ANDA litigation could effectively re-level the playing field for Hatch-Waxman ANDA litigation. “It’s going to be a big deal,” he says. “Hatch-Waxman ANDA litigation is very important, and I think the end result would be that there would be just as much (or more) ANDA litigation, but it would be ultimately beneficial to generics if the case is reversed.”
Knox v. Service Employees Int’l Union, Local 1000
Argument: Unscheduled at press time
The setup: Under the Supreme Court’s holding in Chicago Teachers Union v. Hudson, public sector unions send out an annual, so-called Hudson notice informing nonmembers about special union assessments that go toward nonrepresentational activity, such as political and ideological expenditures. This gives nonmembers the chance to decline to pay the percentage of the dues and fees that cover such activities. The Service Employees International Union Local 1000 temporarily increased its union fees to support political activity after its annual Hudson notice went out and without circulating another notice.
The question: What is the breadth of unions’ ability to require public employees to pay union dues used for political advocacy by the union?
The impact: While this case deals with public employees, it could have broad consequences for unions.
“It’s most clear that the government can’t force public employees to be union members and pay fees because the government is subject to the First Amendment, but there also are all kinds of restrictions on unions’ ability to require employees to pay fees generally,” Goldstein says. “So while this is a public employee union case, you can see it having implications for private employers.”
Federal Communications Commission v. Fox Television Stations, Inc.
Argument: Unscheduled at press time
The setup: The case, dealing with “fleeting expletives” and indecent broadcasts, returns to the Supreme Court for a second round.
The question: Are the FCC’s television indecency standards unconstitutionally vague?
The impact: The interesting thing that could come out of this case isn’t necessarily the answer but rather the court’s potential analysis, which experts say could raise questions of content regulation on broadcast television and radio that have been settled for years and start moving the court toward a more 21st-century analysis of the government’s ability to regulate content. Content regulation in the broadcast media setting has for decades relied upon two overarching rationales. One is scarcity—the idea that because the government is allocating a scarce resource it can exercise more control over the speaker.
“As the development of the Internet as a medium of distributing video becomes more prevalent, and as cable/satellite distribution becomes very common, the scarcity rationale kind of breaks down,” Smith says.
The second rationale is saturation/involuntary exposure—the idea that broadcast television is uniquely intrusive into the home. In this case, children can turn the television on and watch absolutely anything.
But, Falk says, “If [the saturation rationale] continues to cover broadcasting and allow more government regulation of the content of speech, why doesn’t that extend to, say, mobile Internet or Internet generally? And if that’s so, then you’re starting to allow government content regulation over a range of speech that is one of the principal ways people communicate with each other in the 21st century.”
Sidebar: Health Care Constitutionality
Although the Supreme Court hasn’t yet granted cert in any of the cases dealing with the constitutionality of the Patient Protection and Affordable Care Act, experts say a grant is virtually guaranteed.
“There’s no chance in the world they don’t grant cert,” Goldstein says. “There’s a serious circuit conflict, and the U.S. has said they need to step in. It’s a phenomenally important statute, and a court of appeals has declared a law of Congress unconstitutional. In these circumstances, it’s essentially automatic that they grant cert.”
Goldstein says there’s a 90 percent chance the court will grant cert in the 11th Circuit case, which found unconstitutional not only the law’s individual mandate, but also the entire act.
“Conventional wisdom has been and remains—and I think it’s right—that the law will be upheld,” Goldstein says. “The court has taken a pretty broad view on Congress’s commerce power, and this is activity that affects many tens of billions of dollars of economic transactions, so I think the law’s very likely to be upheld.”