The Supreme Court must be a very strange place to work. The nine justices get roughly 10,000 requests from litigants seeking review of their cases each year. In the end, they accept only 60 to 70 cases for review resulting in a published opinion. Many of the cases involve the most highly charged social or political issues. A number of them involve issues that the framers of the U.S. Constitution could not begin to imagine, such as DNA evidence. This term, the Court, in TikTok v. Garland, recounted the advice of Justice Felix Frankfurter from 80 years earlier:
“[I]n considering the application of established legal rules to the ‘totally new problems’ raised by the airplane and radio, we should take care not to ‘embarrass the future.’” [See Northwest Airlines, Inc. v. Minnesota, 322 U.S. 292 (1944)].
While the Court was called upon to address a large number of hot-button social issues this term, its below-the-radar opinions serve as a primer for the complete lifecycle of a claim. It also provides claims adjusters and claims managers with an (extremely verbose) checklist for examining a claim from a procedural perspective.
Jurisdiction
In short, jurisdiction addresses the question of what court has the right to hear the case. By example, a workers’ compensation court does not have jurisdiction to grant a divorce. There is a related concept of which, amongst equal jurisdictions, does the case belong in. That is called venue and that question was not before the Court this term.
In Royal Canin U.S.A. v. Wullschleger, the plaintiff sued Royal Canin in state court asserting violations of state and federal statutes. Since there were federal statutes in the lawsuit, Royal Canin removed the case to the federal court where it felt it had a better chance of prevailing. In response, Wullschleger voluntarily dismissed the federal actions and then argued that the federal court no longer had jurisdiction. The Supreme Court agreed that, without a federal claim, the federal court no longer had jurisdiction, and the matter had to be returned to the state court.
The Takeaway: From a practice perspective, if defendants want a case to be heard in a state court, focus should be given to getting the federal claims dismissed so that only the state claims remain. Thereafter, remove the case to the state court and fight the battle there.
In Commissioner v. Zuch, a couple was found to owe the IRS back taxes. The couple entered into a settlement that implicated $50,000 in estimated taxes. By then, the couple had divorced. The wife sought to have the money credited to her account, entitling her to a $22,000 refund. Instead, the IRS levied against her, and she sought relief from the United States Tax Court.
Over the many years of litigation, she got credits for overpayments that were used to satisfy the levy. When the balance reached zero, the IRS moved to dismiss the case arguing that, while the court had jurisdiction to hear a challenge to a levy, now that the IRS was no longer pursuing the levy the court no longer had jurisdiction.
The trial court agreed and dismissed the claim. The Third Circuit Court of Appeals held that the IRS’ abandoning of the levy did not make the issue moot. The Supreme Court reversed the Third Circuit, finding that the court no longer had jurisdiction. In doing so, the Court noted that the tax court is one of limited jurisdiction and that it could only review an appeal officer’s “determination.” In this case, the determination was regarding the appropriateness of the levy. Once the IRS no longer was pursuing the levy, the determination was moot.
Standing
While a court may have the jurisdiction to hear a type of case (e.g., a divorce action or a workers’ compensation claim), not everyone is allowed to bring the action. By example, if you think that your neighbors should not be married, you do not have the right to file suit, even if you take it to the matrimonial court. This seems extremely basic, but, if it were, the highest court in the nation would not be weighing in on the issue.
Getting to the Supreme Court is no easy task. As a starting point, a litigant must have standing—that is, he or she must be able to assert a right to ask the Court to hear the case. While the federal courts’ power derives from Article III of the Constitution, and states get their authority from their state constitutions or statutes, the standards are often parallel.
In Diamond Alternative Energy, LLC v. EPA, plaintiffs challenged the EPA’s approval of California’s regulation requiring automakers to produce ever-increasing percentages of electric vehicles. The Court held that fuel producers had standing to challenge the EPA’s approval since they would feel a direct financial impact by the regulation.
In Nuclear Regulatory Commission v. Texas, the Court denied standing, this time to the State of Texas and a company that had submitted comments to the Nuclear Regulatory Commission regarding the proposed licensing of a spent nuclear fuel facility. The NRC granted the license. The state and the company sued for review. The Court held that, since the state and the private company were not parties to the Commission’s licensing proceeding, they do not have standing to challenge the decision even though they had a financial interest in the court’s decision.
In a third standing case, Stanley v. City of Sanford, a firefighter who was hired at a time when certain benefits were offered had to take an early retirement due to a disability. Thereafter, the city changed its health insurance benefits, a move that adversely affected the firefighter, Stanley. She sued, claiming the city violated the Americans with Disabilities Act (ADA) by offering retirees with 25 years of service or longer certain medical benefits while offering those who had to retire due to a disability lesser medical benefits.
The Court, noting that the ADA protects those who “hold or seek to hold” a job, denied Stanley’s standing to challenge the plan since she was retired: She neither held a job nor was she seeking to hold a job and therefore was not the subject of the intent of the law.
The Takeaway: Claims professionals should stop and think—and ask their counsel—if the party seeking relief is entitled to it; not because the party may be at fault, which is the concept of comparative negligence (the concept of damages), but rather, does the law allow them to come into the courtroom to be heard?
The Court’s guidance in Diamond Alternative Energy provides a playbook to challenge a court’s authority to consider a case. The Court reiterated that a plaintiff in the federal court must establish three elements to obtain standing: (1) an injury in fact, (2) causation, and (3) redressability.
Statute of Limitations
Over the last five years, the Court has shown a willingness to find ways to avoid the onerous results of a Statute of Limitations (SoL). In prior terms, when the Court refused to impose the harsh results of the SoL, its argument has been that, unless the legislature specifically imposed an SoL in the statute, the general SoL is nothing more than a docket control mechanism that can be altered as equity deems appropriate.
This term, the Court, in Soto v. United States, was faced with a veteran who sought military disability benefits. The Secretary of the Navy approved the benefits but, citing The Barring Act (31 U.S.C. §3702), limited them to the last six years. The Barring Act subjects most claims to a six-year limitations period. The Act, however, provides an exception that if the claim involves another law conferring greater rights, those rights control.
In this case, Soto was asserting the greater rights pursuant to a combat-related special compensation statute (10 U. S. C. §1413a). The Court agreed that Soto’s rights survived the six-year limitation.
The Takeaway: The case was not decided as an SoL case. However, in the context of the most recent Court decisions, it reminds plaintiffs and defendants alike that the SoL is not the firewall that we like to believe it is. When faced with a plaintiff seeking to enlarge the SoL, it should be remembered that the Court looks to see if the Legislature specifically addressed the issue in the statute versus the statute relying on the general SoL. In addition, the Court’s actions have been directed toward specific federal legislation.
While a litigant may seek to use the reasoning of the Supreme Court to enlarge a state SoL, state interpretation of the SOL may well take precedence over the Supreme Court’s opinions on the issue. Many state courts view the SoL as a jurisdictional issue. They see the litigant as having a key to unlock the courthouse door. The key only works for certain claims. Again, using the analogy of asking the workers’ compensation court to grant a divorce, the “divorce key” would not unlock the “WC courthouse door.” The prevailing rule in state courts is, absent a Rule of Court, when the SOL runs, the litigant has the key taken away and cannot access the court.
Damages
While we are on the issue of damages, the Court opined on a 42 U.S.C. §1983 case that is important for civil rights cases. In Lackey v. Stinnie, the claimants challenged the constitutionality of a statute that suspended driving privileges for failure to pay court fines. The trial court entered a Preliminary Restraining Order against the enforcement of the statute. Thereafter, the Legislature repealed the statute and restored all affected parties. The parties then agreed to dismiss the pending case as moot. Plaintiffs sought attorneys’ fees as permitted in §1988 as the prevailing party. The Court denied the application for fees, opining that no court conclusively resolved their claim by granting an enduring judicial relief on the merits.
The Takeaway: For those involved in §1983 litigation, plaintiff’s attorney’s fees often dwarf the underlying recovery. Lackey may, at least for a short while, be a sleeper case that gets missed by the plaintiff’s bar due to its fact pattern.
…And Finally
In the waning hours of this term, the Court was asked to weigh in on a long-recognized constitutional right. Its decision may have a profound im pact on the federal court docket. In Trump v. CASA, the government challenged the concept of birthright citizenship—the concept that if you were born in the U.S., that you are automatically a U.S. citizen even if your parents are not. The case arose from a single federal trial judge imposing a nationwide injunction against the government’s intended practice to strip citizenship from “birthright citizens.”
To no one’s surprise, the Court did not decide the constitutional question. Nearly 100 years ago, the Supreme Court articulated the Constitutional Avoidance Doctrine, which essentially states that federal courts should interpret the Constitution only when it is “strictly necessary.” Using this doctrine, the Court declared that national injunctions are to be avoided. It then sent the case back to the trial court for further litigation.
Limiting national injunctions cuts both ways: Those on the left of the political spectrum took issue with a trial judge issuing a national injunction on Mifepristone, while those on the right of the political spectrum took issue with the national injunctions involving deportation issues.
The Takeaway: The decision appears to state that only the litigants are entitled to the injunction, as opposed to imposing it on the entire nation. The decision reduces the ability to forum shop to a court that sees the world the same as the party seeking a national injunction. This case may be an issue for the claims and litigation world though, as now multiple cases may have to be filed throughout the nation, resulting in higher defense litigation costs, extreme increases in court dockets, and resulting delays in trial dates. The first test of this decision has just occurred with a plaintiff seeking to have a class action certification as the first step. If successful, it would allow the injunction to apply to everyone in the class; possibly millions of litigants.
Time—and perhaps the Court— will tell.