On this episode of ILR’s Cause for Action podcast, we reflect on the latest U.S. Supreme Court term, which wrapped up on June 30. Jennifer Dickey, deputy chief counsel at the U.S. Chamber of Commerce Litigation Center, is joined by Chris Michel, partner at Quinn Emanuel, to discuss a few noteworthy cases and what they mean for businesses.
Jennifer and Chris discuss several cases, including Twitter v. Taamneh, Sackett v. EPA, Axon Enterprise, Inc. v. FTC, and SEC v. Cochran. These cases are among the 17 victories the Litigation Center helped secure that will have a significant impact across the business community.
The Litigation Center continues to be the preeminent legal advocate for the business community. Click here to learn more about their work.
Subscribe to Cause for Action on Apple Podcasts, Google Podcasts, Spotify, or Amazon Music.
On this episode of ILR’s Cause for Action podcast, we reflect on the latest U.S. Supreme Court term, which wrapped up on June 30. Jennifer Dickey, deputy chief counsel at the U.S. Chamber of Commerce Litigation Center, is joined by Chris Michel, partner at Quinn Emanuel, to discuss a few noteworthy cases and what they mean for businesses.
Jennifer and Chris discuss several cases, including Twitter v. Taamneh, Sackett v. EPA, Axon Enterprise, Inc. v. FTC, and SEC v. Cochran. These cases are among the 17 victories the Litigation Center helped secure that will have a significant impact across the business community.
The Litigation Center continues to be the preeminent legal advocate for the business community. Click here to learn more about their work.
Subscribe to Cause for Action on Apple Podcasts, Google Podcasts, Spotify, or Amazon Music.
Welcome to another Litigation Center takeover of the Cause for Action podcast, released by the U.S. Chamber of Commerce's Institute for Legal Reform. Many of you already know me, I'm Jenn Dickey, Deputy Chief Counsel over at the Chamber's Litigation Center, and I work on a lot of our Supreme Court matters. Many months ago now I took over this podcast with my friend Brenton Lucas from Jones Day to give you a preview of this court's term. Now, I'm pleased to sort of be back to take over the podcast again and give you a wrap up of the term with another good friend, Chris Michel from Quinn Emanuel. Chris is an extraordinarily impressive lawyer and an even better human being. He is co chair of Quinn Emanuel's National Appellate Practice. Before joining Quinn, he served in the office of the Solicitor General at the U.S. Department of Justice, arguing 10 cases before the Supreme Court and briefing roughly 200. He also served as a law clerk to then judge Brett Kavanaugh on the DC Circuit and Chief Justice Roberts on the Supreme Court. He and I were actually clerks the same year at the Supreme Court, which is how I got to know Chris. He's a stellar writer with a deep knowledge of the court, and I'm glad to be working with him again on the outside of government. So, turning to the meat of the podcast, I thought we'd start with sort of high level impressions. On the whole, I thought it was a pretty good term for business at the court. The chamber filed 23 amicus briefs in cases granted review, which is a significant uptick from the last few terms, despite the overall docket not being much larger. And we had a pretty favorable record, 17 favorable decisions, five unfavorable, one improvidently granted. So what did you think, Chris?
Chris Michel:Well first off, I have to say, 17, 5, and 1 is a winning percentage that most Supreme Court advocates would gladly accept. So congratulations to the Chamber of Litigation team. And thanks so much to you, Jenn, for the invitation to join you on the podcast. I agree, this was, on balance, a good term for business. In some senses, I think the single most important development for business this term might have been a bullet dodged, when the Court decided not to resolve the scope of Section 230 of the Communications Decency Act in Gonzales v. Google, which many observers feared could be a major case that would radically disrupt the Internet. Now the reason the court avoided deciding that case was because of its decision in the companion case called Twitter v. Taamneh. The question in Twitter was whether social media companies could be liable for aiding and abetting a terrorist attack, essentially because they failed to remove ISIS content from their platforms. The court said no, because even taking the plaintiff's allegations as true. The companies had not provided knowing and substantial assistance for the terrorist attack. The court's opinion was unanimous and it was written by Justice Clarence Thomas. It lays out a comprehensive theory of aiding and abetting liability and the limitations on that liability that I expect will be cited favorably by defendants in aiding and abetting cases for decades to come. On another important question of statutory liability, the court decided a case called Sackett v. EPA. This resolved, at long last, which wetlands constitute waters of the United States under the Clean Water Act. Now, as followers of environmental and administrative law know, this question has caused uncertainty for decades. In fact, this is the Sackett family's second appearance at the Supreme Court, their first coming 11 years ago. But now, they can finally declare victory. To oversimplify just a bit, the court held that the term waters of the United States includes only a limited category of wetlands. Those with a continuous surface connection to traditional waters. That narrower definition should simplify land regulation and remove a major obstacle to new construction for businesses and other property owners alike. There was another significant administrative law development at the court this term in a pair of cases called Axon v. FTC and Cochran v. SEC. These cases involved challenges to the constitutionality of administrative agency structure and whether such claims can be brought directly in district court or first have to proceed through an initial administrative adjudication process. The court held that those claims can be brought directly in federal district court as opposed to through the in house agency process. That holding was announced in another unanimous opinion, this one by Justice Kagan. Now, it will affect only a limited category of suits, but it's an especially important category of suits, especially given the recent success of constitutional challenges to administrative agency structures at places like the CFPB, the SEC, The PCAOB and other places that many businesses are unfortunately familiar with. Finally, continuing another recent trend, the court unanimously reined in the federal government's interpretation of white collar fraud statutes in a pair of cases called Simonelli v. United States and Percoco v. United States. In Simonelli, the court held that the right to control property does not itself constitute property for purposes of the federal property fraud crime statute. And in Percoco, the court held that a private citizen's mere influence on a public official is not enough to trigger liability. for depriving the public of honest services under federal criminal law. Those two cases join the recent Bridgegate prosecution, a case called Kelly v. United States, and a major prosecution arising out of the Enron collapse, Skilling v. United States, as precedents in which the court has shown skepticism about overly broad and vague positions by the federal government in white collar fraud cases.
Jenn Dickey:Yeah, I'd say the theme of skepticism of government runs throughout almost all of the cases you just talked about, Chris. And I think it also goes to a few additional ones we should talk about, which is to start the court's ongoing interest in property rights. So in Tyler v. Hennepin, the Supreme Court held that although a state may be able to take one's real property and sell it to satisfy unpaid property taxes, the state can't then keep any surplus made on the sale. The second, Glacier Northwest, it's a little more complicated, but it basically concerned whether a business could bring state tort claims against a union when the union had called for a work stoppage at a time calculated to destroy the employer's property. So basically the union in this case waited till truck drivers were mixing a bunch of concrete and loading it into ready mix trucks for deliveries and then told the drivers to stop work. The employer was able to save its trucks by getting the concrete out, but of course it all hardened and became useless. The Supreme Court has long given the National Labor Relations Act unusually broad preemptive effect over state court claims, but here it held that the act did not preempt because the union's conduct was not even arguably protected. In addition, importantly, the court clarified in Coinbase that district courts should not undermine the arbitration right. by allowing trial litigation to continue while an appeal from the denial of a motion to compel arbitration is pending. That's a big win for all of our members who use arbitration. Finally, in Polanski, the court confirmed the federal government's authority to dismiss meritless suits under the False Claims Act, even if the government didn't initially intervene in the suit. Importantly, three justices of the Supreme Court, Justices Thomas, Kavanaugh, and Barrett, all signaled a willingness to hear Article 2 based challenges to the entire False Claims Act scheme. The court was a little bit less helpful to the business community in the other False Claims Act case heard this term though, SuperValu. Where it held that when the False Claims Act imposes liability on someone who knowingly submits a false claim to the government, that knowledge refers to what the defendant knew and subjectively believed. Not to what an objectively reasonable person may have known or believed. That kind of standard can obviously increase costs of litigation about what a company actually knew about a particularly vague or ambiguous standard. That's not the kind of legal rule that can be addressed simply on a motion to dismiss usually. On the more traditional legal reform type subjects, I think we also continue to see some other warning signs for businesses. The court seemed perhaps less concerned about practical consequences. Or at least is perhaps willing to let businesses hammer out those issues in the political process as opposed to sort of step in. Chris, what did you think?
Chris Michel:I agree. I actually think one of the most fascinating cases of this term was one called National Pork Producers versus Ross. And this is a case where the court somewhat surprisingly upheld a California law that banned the in state sale of pork that came from pigs raised in conditions that did not include a specified amount of space. This is a decision where the court issued a sharply divided set of opinions. Although, interestingly, the division was not among what people would typically describe as the usual ideological lines. Instead the majority in this case consisted of Justices Thomas, Sotomayor, Kagan, Gorsuch, and Barrett, which is not your usual 5-4 alignment. The crux of the court's holding was that California's law did not... cross any of the limits imposed by the so called dormant commerce clause, which is the constitutional limitation on state laws that undermine interstate commerce in certain ways. The court's decision will make it easier for states to adopt regulations that affect out of state businesses, both in the area of agriculture and animal cruelty, as was at issue here, and potentially in many other areas as well. That's, in some senses, bad news for the business community, where regulation is not usually welcome. But the decision, as you suggested, Jenn, does leave the key public policy decisions to the people of each state. And so businesses have a way to advance their interests through the democratic process.
Jenn Dickey:I would say something similar about the Mallory case, Mallory versus Norfolk Southern. There the court retreated from what it seemed like had been its clear general jurisdiction versus specific jurisdiction framework. In which businesses were largely subject only to suits arising out of their conduct in a particular state. Unless the state was their place of incorporation or headquarters here, the Supreme Court held that a state could subject a business to general jurisdiction as a condition of registering to do business there, assuming that the state was clear enough about the viewing registration as consent. So, as a practical matter, only two states currently are explicit about treating business registration as consent to jurisdiction, uh, general jurisdiction, I should say. That would be Pennsylvania, which was the statute at issue in the case, and then Georgia, where the statute is not quite so clear, but the Georgia Supreme Court has long ago held that the statute constitutes consent, and so it has subsequently been treated as being a sufficiently clear legal regime that, courts can exercise their jurisdiction over businesses who have registered there. So this is definitely an issue that our ILR friends are going to be keeping an eye on in state legislatures. There may be a move to try to change the law in some of the states that are more favorable and more restrictive in their exercises of general jurisdiction. And so we'll definitely be following up from the public policy side to try to allow businesses the freedom and to organize their affairs as they see fit. I think it's helpful now, just like after that high level overview to kind of transition to talking about the themes and maybe lessons for business going forward from this term. Chris, did you have any sort of big takeaways?
Chris Michel:Sure, you know, I think the thing that stood out to me the most is that this is the, from a business perspective, is that this is the second term in a row in which the court ended its term with a significant decision invalidating a federal agency action under the major questions doctrine. Last year the doctrine was applied to the EPA's Clean Power Plan. This year it was applied to the Education Department's Student Debt Relief Measure. Now the Major Questions Doctrine has received some criticism from both the legal left and the right, but I think after these two decisions, along with a few others, it's safe to say that the doctrine is here to stay. And I expect that business and other litigants will continue to invoke it frequently in challenging federal agency overreach in both the lower courts and the Supreme Court. One of the most interesting parts of the Student Loan case was Justice Barrett's concurring opinion in which she tries to add more of a doctrinal and theoretical structure for the Major Questions Doctrine. I thought that was a very helpful addition to the court's understanding of the Major Questions Doctrine and I expect we'll be seeing it cited a lot by both litigants and lower courts as the doctrine continues to be applied in the days ahead. I think that opinion also could have an interesting impact in some other areas of statutory interpretation that are important to businesses, including perhaps preemption.
Jenn Dickey:Yes, I think that's well worth a read for our members. If you have time to read one sort of separate writing this term, that would be the one I'd recommend, justice Barrett's separate writing in the student loans case.
Chris Michel:I think that's exactly right. And to continue the theme of administrative law, the court has started granting cases for next term. It's got about half of it's docket filled right now and it already has several major administrative law and separation of powers questions. So these issues are certainly going to be front and center again next term. Among other issues, the courts will consider overruling the Chevron Deference Doctrine, which of course looms large in many administrative law cases, particularly in the lower courts. The court will address the funding mechanism for the CFPB, which could also affect several other major. federal agencies and the court will confront fundamental questions about administrative agency adjudication, which is a hallmark of many agencies across the federal government. If these cases all come out the challenger's way, there's certainly no guarantee of that, it could amount to the worst term for the administrative state since perhaps the 1930s. Of course, another lesson of the past term is that the federal government is always capable of pulling out unexpected victories. So these big administrative law cases could end up reinforcing the administrative state in certain ways. In any event, it's certainly going to be interesting to watch.
Jenn Dickey:I agree. I thought there were a few other interesting takeaways. One I had was the amount of times that the common law came up. I thought it was a really good reminder to businesses that even though this court is often viewed as textualist or originalist, the common law continues to govern in some areas and can be an important tool for understanding text. And Justice Barrett's concurrence that Chris just mentioned, you know, it talked a lot about context and how the major questions doctrine is rooted in the idea of context, which common law, the common law can be context as well. We saw the common law used really successfully on behalf of businesses in the Twitter case to reject a broad swath of aiding and abetting claims that had been advanced basically whenever a product was used by criminal actors. We saw it used less successfully, the common law that is, in the super value case, where the court ultimately concluded that the common law weighed against an objective reasonableness standard for scienter. So I think going forward, it's important to keep in mind, uh. The common law as a potential source of help and something to at least be prepared to proactively address some academics, for example, have suggested that the general law, which is not exactly common law, but a similar type of source of law might be marshaled as a partial solution to Mallory imposing limits on expansive exercises of personal jurisdiction by the states. Another lesson I am taking away from the court. This term is that it's not always uninterested in practical consequences. It just may be that a particular type of practical consequence is most persuasive or most likely to move the court. And that's the one that they can't imagine. As Chris mentioned at the top, we saw this in Gonzales v. Google, the case about liability protection in the Communications Decency Act, they're the justices at Oral Argument. All seem very concerned about breaking the Internet. You know, Justice Kagan had one of her infamous quips about not being the nine most expert people about the Internet and I think that's true. The justices were a lot less moved by concerns advanced in, for example, the pork producers case or in Mallory about economic balkanization from retaliatory state laws. Perhaps they think that the political process is more of a check on those consequences compared to, you know, whatever. Blips they experience with the internet that they can't even imagine, or perhaps they think there's more room for courts to step in incrementally, you know, a decision crosses the line, they have another shot at it, whereas they might not have an immediate way to sort of undo harm that, you know, would flow from breaking the internet. I think we'll have to wait and see how this plays out, but I do think it's something to think about as we're making consequentialist arguments to this court. And I guess we should all be glad, for this podcast that the court did not break the internet. Many thanks to Chris for joining me for this very interesting wrap up, to ILR for allowing me to take over this episode, and to all of you for listening. As always, keep tuning in to Cause for Action as the Institute for Legal Reform will keep you posted on the key changes to the legal environment that may impact your business.