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SCOTUS Rulings: Past And Preview

The Supreme Court issued a series of landmark rulings this term, and more are on the way next year.

Like the members of the U.S. Congress, the nine justices who sit on the Supreme Court of the United States are on hiatus. While federal lawmakers will be back in their Washington, D.C. offices next week, however, the Supreme Court, or “SCOTUS,” is out of session until October.

Before adjourning, the nation’s highest court issued some big decisions that could have serious implications for businesses. The court also decided cases that could affect federal elections for years to come. This week, we’ll look at some of these decisions and also will preview two cases the justices plan to hear when they return to their chambers in the fall.

Supreme Court Rulings Will Affect U.S. Elections

As The Guardian reported, “After years of limiting voting rights,” during its 2022-23 term, the Supreme Court “issued two surprising rulings in voting rights cases … both of which are likely to have significant consequences for the 2024 presidential race.”

Specifically, as The Guardian explained, in a 5-4 decision in Allen v. Milligan, the court agreed that Alabama’s map for congressional districts needs to be redrawn. As Ballotpedia explained, a group of Alabama voters and organizations sued the Alabama secretary of state and others, alleging the congressional map enacted in November 2021 was discriminatory and violated the rights of Black voters. The plaintiffs asked the lower court to invalidate the map and order a new map with instructions to include a second majority-Black district.

After a series of decisions – and appeals – SCOTUS rule that policymakers in Alabama will have to do just that – and, potentially, more.

The case also has revived challenges to congressional district maps in other states. With the balance of power so thin in the U.S. House of Representatives, a challenge to a map in one state, not to mention several, could significantly alter the partisan makeup of Congress in coming years.

A second voting rights ruling, this one in Moore v. Harper, rejected the independent state legislature theory, which held that state legislatures have exclusive and independent authority to set the rules regarding federal elections. Justices said that interpretation was incorrect and that state courts do have jurisdiction to review state election rules.

According to the campaigns and elections blog FiveThirtyEight, “The fact that the court rejected this version of the independent state legislature theory is a big deal, since even partially accepting it would have had drastic consequences for election administration. If the court had ruled that state supreme courts can’t overturn legislatively drawn congressional maps, it would have removed one of the few checks in states where one party has total control over the redistricting process, opening the door to much more aggressive gerrymanders.”

Additionally, according to FiveThirtyEight, state courts would have lost the ability to strike down any laws dealing with federal elections, including voter-ID requirements or restrictions on absentee voting.

SCOTUS Decisions Have Major Implications For Businesses

While the court’s nine justices waited until the end of their 2022-23 term to issue rulings in some of SCOTUS’ most controversial cases, back in April it released a unanimous decision that could have serious implications for the Federal Trade Commission and other federal agencies.

As the law firm Gibson Dunn explained, in Axon Enterprise, Inc. v. FTC and SEC v. Cochran, the justices ruled federal district courts can resolve certain challenges to the structure or existence of the FTC and the Securities and Exchange Commission (SEC). This case rejected the argument that litigants can raise appeals courts challenges only after review of a final agency action.

What does this ruling mean in practice?

Here is how Gibson Dunn attorneys explain it: The “decision allows people and businesses subjected to FTC and SEC (and potentially other) administrative enforcement actions to promptly raise certain structural challenges in court, without having to first complete long and costly agency proceedings.”

The ruling was not the court’s only check on regulatory power during its 2022-23 session.

While a broader challenge to federal agencies regulatory powers is still to come (more on that case below), in Sackett v. Environmental Protection Agency (EPA), the nine justices set a clear test for when the EPA could exercise its authority under the Clean Water Act (CWA) over bodies of water on private land. According to the law firm Holland & Knight, “This test is a significant setback for any future attempt to expand CWA authority to wetlands and streams that are isolated, ephemeral or not obviously connected to a navigable lake or stream.”

It is significant that all nine justices agreed the EPA overstepped its authority in this case given the ideological divide on the bench. This ruling clearly shows there is an opening for private property owners and businesses to challenge federal agencies’ rulemaking power.

The court also made it more difficult for businesses to control employees’ schedules. In Groff v. DeJoy, the court ruled in favor of an evangelical Christian U.S. Postal Service (USPS) worker who asked for Sundays off for church and rest. The government argued Groff's demands caused scheduling conflicts and burdened his colleagues. As USA Today explained, the unanimous ruling could have broad impact on U.S. workplaces since the court said employers must show “granting an accommodation would result in substantial increased costs.”

Finally, according to AXIOS, even SCOTUS’ controversial decision to end affirmative action for college admissions could have implications for businesses even though the case has nothing to do with companies’ ability to implement diversity, equity, inclusion, and accessibility programs. (Those programs remain lawful.) AXIOS said the ruling could create a “talent pipeline problem.” Indeed, companies like Apple and Google made this argument in briefs filed with SCOTUS.

Those assertions are backed up by data. AXIOS explained a 2013 study by economist Fidan Ana Kurtulus found that “when states have banned affirmative action, enrollment of Black students in universities declined — and that decrease in campus diversity could translate into a less diverse workforce.”

During its 2022-23 session, the nation’s highest court also struck down President Joe Biden’s student loan forgiveness plan, ruled that the federal government (and not states) get to set guidelines for immigration enforcement, and said, based on free speech grounds, states cannot force businesses to serve customers with whom they (the business owners) disagree.

What Cases Will SCOTUS Hear This Fall?

When the justices reconvene in the fall, they plan to hear major cases related to the federal government’s ability to tax and its regulatory power. Let’s look at the cases concerning federal rulemakings first.

As SCOTUSblog has explained, in Chevron v. Natural Resources Defense Council, a case decided nearly 40 years ago, justices ruled federal courts should defer to a federal agency’s interpretation of an ambiguous statute as long as that interpretation made a reasonable assertion about the extent of the agency’s ability to regulate. After the National Marine Fisheries Service (NMFS) issued a rule to require the fishing industry pay for certain third party costs, commercial fishers challenged that precedent, arguing in Loper Bright Enterprises v. Raimondo that the NMFS clearly went beyond its congressionally-granted power.

The Cato Institute, which supports the challenge, has argued the Chevron precedent is unconstitutional for three reasons: it takes the power to interpret the meaning of the law away from the courts and gives it to federal agencies; it biases courts toward agencies and denies litigants their due process rights; and it does not arise out of the original understanding of the constitution, “but rather out of the administrative bloat of the New Deal era.”

If the court sides with the fisheries and not the government, it would seriously curtail all federal agencies’ rulemaking capabilities. Going forward, every agency from the Consumer Financial Protection Bureau to the SEC would have to adhere to a much higher standard for rulemaking.

SCOTUSblog noted, “Some members of the court’s conservative majority have been critical of the Chevron doctrine in recent years.” Since those justices are in the majority, it is a good bet the Chevron doctrine will go down a year from now.

For the 2023-24 session, justices also agreed to hear a case concerning a portion of the Tax Cuts and Jobs Act (TJCA), the major tax code overhaul that former President Donald Trump signed into law in 2017 that reduced both personal and corporate income tax rates, that could have major implications for future tax policy.

In addition to the rate cuts, the TJCA included a mandatory repatriation tax to be levied on taxpayers who met a certain minimum threshold of ownership in certain foreign corporations and who earned a 2017 dividend from the corporation.

After the TJCA was signed into law, the U.S. government sent Kathleen and Charles Moore a large tax bill even though they reinvested their dividends. (In other words, their profits never went into their pockets, or bank account.) As the SCOTUS brief explains, while the constitution’s 16th amendment authorizes Congress to lay “taxes on incomes” and court precedent holds that “income” must have been realized by the taxpayer in order to be taxed, in Moore v. United States, a lower federal court ruled a married couple’s earning could be taxed even if they were reinvested.

That court the “realization of income is not a constitutional requirement” for Congress to lay an “income” tax. According to the Cato Institute, which supports the Moores, “If the bright‐​line rule requiring realization for an income tax to be imposed were jettisoned, then there would be no limit to the types of taxes the federal government could enact.”

Last, but certainly not least, the nine justices will consider the constitutionality of the Consumer Financial Protection Bureau’s funding structure. The case arose from a challenge by the payday-lending industry after the CFPB issued a regulation in 2017 opposed by the industry. If the majority of the SCOTUS agrees with challenge, it would potentially call into question the legality of all CFPB rulemakings and enforcement activity throughout the course of the agency’s 13-year history, and would likely set up a dramatic fight in Congress over the future shape, authorities, and structure of the Bureau.

Get some rest this summer. It’s going to be an interesting October.

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