The Supreme Court’s NOT Top 10: October Term 2016 Cert Petitions the Justices Should Have Granted

supreme courtIn a year when the U.S. Supreme Court heard six(!) cases where Washington Legal Foundation supported grants of certiorari with  amicus curiae briefs (leading all non-profit groups “by quite a large margin,” according to EmpiricalSCOTUS.com), it seems a bit churlish to pick on the Court for rejecting a number of important cases.  Then again, the entire point of this feature is to identify such oversights.  Even though the Court granted some 43 percent of the cases in which WLF supported cert, it still overlooked a host of worthwhile appeals, once again taking on an exceedingly light docket.

One thing stands out in this fourth annual retrospective look at last term’s disappointeds docket: namely, how many so-called business cases the Court granted.  Although many commentators have called this a “boring” term, court watchers who value clarity and certainty couldn’t help but appreciate the Court’s resolving multiple controversies that, while minor in the grand scheme of things, have nonetheless vexed litigants and divided lower courts.  Perhaps because the Court was down a justice and evenly divided for over a year, it took the opportunity to grant cert to cases on lower-profile subjects that might get passed over when meatier fare is desired.  If it did so in a quest for consensus, the happy results are the silver lining of the Court’s unusually long interregnum.

From WLF’s free-market vantage point, the cases that matter most are those where limited government, market competition, individual and business civil liberties, and the rule of law are on the line.  Hence, as ever, this list will limit discussion to cases affecting economic liberty, especially as it pertains to obtaining certainty around statutes, regulations, and precedents.  As per usual, no more than half of the cases mentioned below are ones in which WLF supported a grant of certiorari.  Now, putting caveats aside, here are the top 10 cases the U.S. Supreme Court erroneously denied certiorari to last term:

  1. Gordon v. Consumer Financial Protection Bureau—since Mr. Gordon was WLF’s client, there is admittedly bias at work here. Still, the Ninth Circuit’s decision below sent a message to the Executive Branch that violations of the Recess Appointments Clause will not carry any consequences.  The Supreme Court effectively ruled CFPB Director Richard Cordray’s recess appointment unconstitutional in Noel Canning.  Lacking a properly installed director—and therefore any standing to sue—CFPB nonetheless brought an enforcement action in federal court against Mr. Gordon.  Once the Senate properly confirmed Cordray, CFPB purported to ratify all of his past conduct by putting a meager four-line ratification statement into the Federal Register.  But such a perfunctory blanket ratification cannot possibly cure the standing defect nor rectify actions that were invalid when undertaken.  This sorry outcome encourages future Presidents to run through the Court’s Noel Canning stop sign, but Director Cordray is not quite out of the woods yet.  The constitutionality of his pre-confirmation actions at CFPB is being challenged in other cases making their way up to the Supreme Court (e.g., State National Bank of Big Spring v. Lew), so the Court may yet tackle this issue.  It certainly should.
  2. American Municipal Power, Inc. v. EPA—the Environmental Protection Agency’s so-called Boiler MACT (maximum achievable control technology) regulation under Clean Air Act § 112(d) sets emission standards that require impossible perfect performance at all times, outlawing accidental releases. But even the best controlled and maintained equipment malfunctions sometimes.  Because a high probability exists that every entity governed by this regulation will violate it eventually, this D.C. Circuit decision subjects hundreds of thousands of boiler operators to civil and criminal penalties whenever their equipment fails.  No citizen should have to rely on EPA’s exercise of prosecutorial discretion to avoid civil and criminal penalties.  A more frontal assault on the rule of law is hard to fathom.  The Supreme Court should have taken this key case.
  3. ABM Industries, Inc. v. Castro and
  4. Bloomingdale’s v. Vitolo—though separate and unrelated matters, both of these petitions showed that plaintiffs’ attorneys have caught on that they can evade federal law in the Ninth Circuit by bringing claims under California’s Private Attorney General Act (PAGA). ABM Industries is a PAGA case that undermines the Class Action Fairness Act, while Bloomingdale’s enables an end-run of the Federal Arbitration Act (as explained further in a WLF Legal Backgrounder).  The Court should not so blithely allow such large and significant areas of national policy to be abrogated in America’s most populous state.  While perhaps taking either of these cases in lieu of the other to arrest the trend can be justified, failing to take both of them cannot.
  5. Home Depot U.S.A., Inc. v. Bauer—the U.S. Supreme Court made clear in the 2014 Dart Cherokee Basin Operating Co. v. Owens case that when it comes to the Class Action Fairness Act (at least), no presumption exists against removal of class actions to federal court. Ignoring that precedent, the Seventh Circuit held that a company joined as a co-defendant to a consumer’s counterclaim in state court cannot remove the action to federal court.  This decision contradicted the CAFA statute, federal class-action policy, and Supreme Court precedent.  To prevent any further erosion of CAFA, the Court must abolish this latest judicially created loophole to CAFA removal at its next opportunity.
  6. FCA US LLC v. The Center for Auto Safety—the plaintiffs bar’s abuse of litigation discovery as a means of obtaining public access to confidential business documents is a growing problem that the Supreme Court has rarely addressed. Fiat Chrysler’s case afforded an excellent opportunity to weigh in on that important issue.  The Ninth Circuit decided that if confidential documents are attached to a motion in district court, then they are subject to public disclosure unless a party can demonstrate “compelling reasons” for nondisclosure.  That standard sets the bar for maintaining confidentiality way too high and invites plaintiffs’ attorneys simply to attach barely relevant documents to motions as a way to get around confidentiality requirements that they do not like.
  7. Tilton v. SEC—the Securities and Exchange Commission has a constitutional problem with its administrative law judges (ALJs). They appear to “exercise significant authority” and frequently provide the agency’s final decision such that they are Officers of the United States subject to the Appointments Clause.  Yet, they are neither presidentially appointed nor senate confirmed.  This issue has been raised in more than 30 SEC proceedings, and multiple cases pointing out this same deficiency are making their way through the federal courts of appeals.  In fact, a cert petition has just been filed in another of these cases, Lucia v. SEC.  The Supreme Court should take up one of these subsequent vehicles promptly, even though it found fault with Tilton.  Perhaps the Court balked at the second issue in Tilton, having to do with whether federal-court challenges to ALJs must await completion of administrative proceedings, fearing a procedural obstacle to reaching the merits of the constitutional question.  Other cases in the pipeline do not have the same wrinkle, as administrative proceedings have concluded in them.
  8. Common Sense Alliance v. San Juan County, Washington—this takings/unconstitutional conditions case involved a county ordinance that forces shoreline property owners seeking a building permit to set aside large portions of their land as a buffer to filter pollutants coming from storm-water runoff originating elsewhere in the watershed. Because the rule is not limited to filtering water from just the parcel for which the permit is being sought, it takes the land for a public use.  Supreme Court precedent—specifically Nollan v. California Coastal Commission—forbids conditioning a permit on alleviating harms not attributable to the parcel itself.  The Supreme Court should not allow local permitting authorities to abuse their leverage over landowners by demanding extortionate land-use conditions without compensation.  The Court eventually must resolve the split among the lower courts as to whether legislatively mandated exactions like this are subject to Nollan, Dolan v. City of Tigard, and Koontz v. St. Johns River Water Mgmt. District.
  9. Blackman v. Gascho—class-action settlement objector (and South Texas College of Law Professor) Joshua Blackman challenged a settlement with Global Fitness Holdings, LLC over certain gym membership contract charges. The so-called claims-made settlement calculated the fee to class counsel based on the value of payments to all potential claimants, rather than just actual claimants (less than 10% of potential claimants).  This method of calculation, which the Sixth Circuit approved, vastly overcompensated class counsel, harmed class members, and furthered a circuit split in the courts of appeals on the permissibility of this method under Federal Rule of Civil Procedure 23(e)(2).  The Court needs to resolve this issue dividing the circuits, and this case provided a perfectly viable vehicle to do so.
  10. DeCoster v. United States and Farha v. United States—Jack and Peter DeCoster and Todd Farha sit in federal prison because the Supreme Court refused to hear these important cases dealing with the proof required to convict a criminal defendant. The Eighth Circuit approved a conviction of the DeCosters (for shipment of adulterated eggs) under the Park doctrine, which tolerates personal criminal liability based on a defendant’s mere position in a company regardless of his knowledge or participation in the actual violation.  The Eleventh Circuit approved a conviction of Mr. Farha despite a jury instruction that permitted a finding of deliberate indifference to satisfy proof of knowledge under the federal healthcare-fraud statute, which requires “knowingly and willfully execut[ing]” a fraud.  The Due Process Clause prohibits imposing terms of imprisonment for Responsible Corporate Officers, and the Court should overrule United States v. Park at its next opportunity—or at a minimum clarify that RCO convictions are ineligible for jail time.  Likewise, the Court must rein in courts of appeals that insist upon watering down statutory mens rea.

Truth be told, fewer cases were vying for inclusion on the above list this year than in years past.  Among other leading candidates were Lenz v. Universal Music Corp. (the dancing baby case involving fair use under the Copyright Act), SmithKline Beecham Corp. v. King Drug Co. (whether exclusive patent license grants made in the context of settling a patent-infringement suit are subject to antitrust scrutiny), The Ark Initiative v. Tidwell (how much awareness does a federal agency have to show that it is changing policy), and Direct Marketing Association v. Brohl (whether out-of-state companies must submit information to Colorado about their sales to customers in the state).

Perhaps clear-eyed corporate appellants were less willing to seek certiorari when faced with only eight potential votes for it, leaving fewer contenders for cert.  But to the extent that the Court actively avoided blockbusters and granted several cases that matter to markets, one hopes the Court will realize that deciding less controversial cases did not hurt—and it will now take more such housekeeping cases going forward even if it resumes a steadier diet of blockbusters.

There’s a certain irony in the Court’s taking more business-dispute cases in the wake of Justice Scalia’s passing.  Whether or not his absence explains the trend, he was notably not excited about these kinds of cases (outside, say, the arbitration and class action areas).  Although he usually voted in favor of the pro-market outcome in these cases once certiorari was granted, it is widely believed that his vote for cert was one of the harder ones to get for what he too deemed “boring” cases.

Though a ready-made excuse was available this term, the Roberts Court is still not taking enough cases.  As this compilation attests, there are plenty of additional cases to select, if only the Court would recognize that circuit splits should not be the only—or even the main—criterion for deciding whether or not the Court hears an appeal.  Continuing to take cases like those it took this term, alongside the kinds of cases the Court usually takes, would be a good way to start bringing the Court’s caseload back up to a healthier level.

Also published by Forbes.com on WLF’s contributor page.

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