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As the U.S. Supreme Court reached the end of its term, the justices announced two decisions with significant implications for business. Both opinions were written by Justice Clarence Thomas. In the first of these cases, National Cable & Telecommunications Association v. Brand X Internet Services, the Court tweaked the Chevron standard used in administrative law making and called for greater deference to agency decision-making by the judiciary. In Graham County Soil & Water Conservation District v. United States ex. rel. Wilson, the Court held that because the federal False Claims Act was unclear as to what the statute of limitations period was for retaliation claims, the corresponding limitations period used in the closest state statute applied. In New York, that is one year. HIGH ECONOMIC STAKES Brand X involved an interpretation of a provision of the 1996 Telecommunications Act dealing with Internet access. The economic stakes were huge. On one side stood cable companies offering broadband Internet service. Confronting them were smaller service providers looking to use the cable lines to reach their own customers. Many cable companies had either excluded their Internet competitors or charged exorbitant fees for use of their lines. The dispute involved the way in which cable operators would be categorized under the 1996 Act. Under one label, they would have had to share their lines with independent Internet service providers and charge only a modest fee. But under a different label, the law did not require them to share their lines and allowed them to charge whatever fees they wanted to these independent providers. The U.S. Supreme Court opted for the second interpretation. The Chevron standard, named after the 1984 seminal case, Chevron v. Natural Resources, established a two-part test applied by courts in reviewing agency rules. The first step called on courts to first look at the language of a statute for clear instruction. If such clarity existed, a court could safely refer to congressional wishes. If the language offered no such clarity, a court would defer to the interpretation offered by the presiding agency as long as this interpretation was reasonable. Based on its reading of the 1996 Act, the Federal Communications Commission developed a rule favorable to the cable industry. The catch was that the 9th U.S. Circuit Court of Appeals already had its own interpretation of the applicable sections of the Act, which favored the independent Internet service providers. 9TH CIRCUIT OVERRULED Justice Thomas’ opinion for a 6-3 majority overruled the 9th Circuit. The majority emphasized that under the Chevron test, a court must grant an agency deference in interpreting a statute unless the language used in the statute was “unambiguous.” “If a statute is ambiguous, and if the implementing agency’s construction is reasonable, Chevron requires a federal court to accept the agency’s construction of the statute, even if the agency’s reading differs from what the court believes is the best statutory interpretation,” Justice Thomas wrote, laying out the traditional Chevron test. “A court’s prior judicial construction of a statute trumps an agency construction otherwise entitled to Chevron deference only if the prior court decision holds that its construction follows the unambiguous terms of the statutes and thus leaves no room for agency discretion,” Thomas continued. According to Tillman Lay of Spiegel & McDiarmid in Washington, D.C, “the overall impact of the decision will bolster the Chevron deference to agencies.” Lay said that where the statute is absolutely clear and not open to varying interpretations, the Supreme Court ruling would require deference to the agencies at the cost of not allowing judges to make their own interpretations. A dissenting opinion, written by Justice Antonin Scalia, emphasized this point, noting that “judicial decisions [are now] subject to reversal by Executive officers,” referring to executive branch agencies such as the FCC. WHISTLEBLOWER PROTECTION Graham County focused on the federal False Claims Act, a law that punishes any person for seeking fraudulent payments from the federal government. Part of the law includes a whistleblower provision protecting employees from retaliation for turning in their employers. In December 1995, Karen Wilson, a secretary of Graham County, N.C., informed federal officials that she suspected that county officials were making false claims for payments in connection with federal disaster relief and agricultural programs. After allegedly facing harassment from county officials for her action, Wilson resigned in March 1997. In January 2001, she brought an action against the county and its subsidiaries claiming that they retaliated against her. The question before the Court was what was the statute of limitations applicable to the case. The district court had dismissed Wilson’s claim, finding that North Carolina’s three-year limitations period applied. The 4th Circuit overruled the lower court. However, the Supreme Court rejected the appellate panel’s decision, turning again to North Carolina’s limitation period. “To determine the applicable statute of limitations for a cause of action created by a federal statute, we first ask whether the statute expressly supplies a limitations period,” wrote Thomas for the 7-2 majority. “If it does not, we generally ‘borrow’ the most closely analogous state limitations period.” The majority conducted an extended discussion of the False Claims Act, which had a six-year limitations period for several of its provisions. However, the specific whistleblower provision under which Wilson sued, Thomas wrote, was ambiguous as to whether the six-year limit applied. Rejecting the arguments made by the federal government and Wilson, the Court resolved this ambiguity against the application of the six-year period, thereby applying the limitations period used in North Carolina. Other states have shorter periods, noted Justice Stephen Breyer in his dissenting opinion joined by Justice Ruth Bader Ginsburg. The majority opinion, he wrote, “substitutes for a fairly lengthy — and uniform — 6-year limitations term, a crazy-quilt of limitations periods stitched together from the laws of 51 jurisdictions which, in some instances, might require a plaintiff to bring a retaliation claim within 90 days.” The decision’s impact may reach beyond the False Claims Act, said Gary Schulz, a counsel a Nixon Peabody’s Long Island, N.Y., office. “I think lawyers will look at this decision and argue by analogy” that the statute of limitations in ambiguous federal statutes should not apply, he said, and press instead for shorter state limitations periods.

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