2018-2019 U.S. Supreme Court Term in Review&

Preview of 2019-2020 Term

The Supreme Court &

Class Actions – The Basics

• Class Action Fairness Act (“CAFA”)

• Equitable Tolling and Rule 23(f)

• Arbitration

Class Actions: Removal Makes for Strange BedfellowsHome Depot U.S.A., Inc. v. Jackson, 139 S. Ct. 1743 (2019)

Ruling: 5-4 Majority: Thomas, J. (Ginsburg, Breyer, Sotomayor, Kagan)

Issue: Should the Court’s holding in Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941), that an original plaintiff may not remove a counterclaim against it, extend to third-party counterclaim defendants?

Holding: A third-party counterclaim defendant cannot remove a class action claim from state to federal court.

Nutraceutical v. Lambert, 139 S. Ct. 710 (2019)Ruling: 9-0 Majority: Sotomayor, J.

Issue: Do equitable exceptions apply to mandatory claim-processing rules, such as Federal Rule of Civil Procedure 23(f), which sets a 14-day deadline to file a petition for permission to appeal an order granting or denying class certification?

Holding: Because Rule 23(f)’s time limitation is found in a procedural rule, it is properly classified as a nonjurisdictional claim-processing rule. It is therefore not subject to equitable tolling. A party must file a petition for permission to appeal with the circuit clerk within 14 days after the order is entered.

Equitable Tolling and Rule 23(f)

Lamps Plus Inc. v. Varela, 139 S. Ct. 1407 (2019)Ruling: 5-4 Majority: Roberts, C.J.

Issue: Whether the Federal Arbitration Act forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements.

• Employer arbitration clause was ambiguous on the permissibility of class arbitration: “arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings relating to my employment.”

Holding: “The statute . . . requires more than ambiguity to ensure that the parties actually agreed to arbitrate on a classwide basis.” Id. at 1415.

Takeaway: Contrary to the usual rule that a contract of adhesion is construed against the drafter, in instances of classwide arbitration, contracts shall not be interpreted to permit classwide arbitration unless the contract expressly states that classwide arbitration is permitted.

Lights Out on Class Arbitration?

Antitrust & “App” Markets

Antitrust / Price Inflation / App StoreApple, Inc. v. Pepper, 139 S. Ct. 1514 (2019)Ruling: 5-4 Majority: Kavanaugh, J.

Issue: Consumers’ price-inflation / antitrust claims against Apple, asserting that they charge too much for apps by controlling App Store market; do consumers qualify as “direct purchasers,” as necessary to bring claims under Illinois Brick Co. v. Illinois (1977)?

Illinois Brick rule derives from Sherman Act § 2 and Clayton Act § 4

* Sherman Act § 2 – makes it unlawful for any person to “monopolize any part of the trade or commerce among the several States”

* Clayton Act § 4 – private right of action for “any person … injured … by reason of anything forbidden by the antitrust laws” treble damages

* Proximate causation principles must purchase directly from antitrust defendant

Antitrust / Price Inflation / App StoreApple, Inc. v. Pepper, 139 S. Ct. 1514 (2019)Ruling: 5-4 Majority: Kavanaugh, J.

Decision: Because Apple / App Store controls marketplace for apps, both delivering app products and receiving money from consumer, consumer qualifies as direct purchaser under Illinois Brick

• cf. Illinois Brick – Brick company sold bricks to general contractors (middle man), who then sold bricks to Illinois for its large construction projects (downstream consumer)

• With App Store, alleged overcharge paid directly to Apple

• It matters not that a third-party (the app seller) sets the final price; markup theory vs. commission theory (Apple charges $99 fee to developers and 30% commission of sale price)

Maritime Tort Standards – The “Bare-Metal” Defense

Maritime Tort Standards / AsbestosAir & Liquid Systems Corp. v. Devries, 139 S. Ct. 986 (2019)Ruling: 6-3 Majority: Kavanaugh, J. (Thomas, Alito, Gorsuch dissent)

• Issue: In maritime tort cases, do manufacturers of non-asbestos equipment (e.g., blowers, pumps, and turbines for Navy ships) have a duty to warn of asbestos later integrated into their products?

• Three possible standards:• bare-metal defense (no duty)

• foreseeability standard (most plaintiff-friendly)

• required component likely to be dangerous in normal use (middle ground)

Maritime Tort Standards / AsbestosAir & Liquid Systems Corp. v. Devries, 139 S. Ct. 986 (2019)Majority: Kavanaugh, J.

In the maritime tort context, a product manufacturer has a duty to warn when:

i. its product requires incorporation of a part,

ii. the manufacturer knows or has reason to know that the integrated product is likely to be dangerous for its intended uses, and

iii. the manufacturer has no reason to believe that the product’s users will realize that danger.

Maritime Tort Standards / AsbestosAir & Liquid Systems Corp. v. Devries, 139 S. Ct. 986 (2019)Dissent: Gorsuch

• Black letter law only requires duty to warn regarding one’s own product.

• Manufacturers will be encouraged to over-warn, which confuses consumers and makes them more likely to ignore all warnings.

• Holding creates great uncertainty about scope of a manufacturer’s duty to warn.

• Fair notice problem: Manufacturers of lawful products are decades later held retrospectively liable for failing to warn about others’ products. They could not have anticipated this duty and cannot discharge it now.

Maritime Tort Standards / AsbestosAir & Liquid Systems Corp. v. Devries, 139 S. Ct. 986 (2019)Key Considerations

• Holding limited to maritime law

• Unclear whether rule applies to manufacturers of ships themselves

• Increased importance of other defenses:• Sophisticated User and Intermediary Defense• Government Contractor Defense

Political Gerrymandering

Gerrymandering / JusticiabilityRucho v. Common Cause, 139 S. Ct. 2484 (2019)Ruling: 5-4 Majority: Roberts, C.J.

Issue: Whether partisan gerrymandering claims may be heard in federal court and finds those claims nonjusticiable.

• Last term, the Court addressed standing to assert such a claim, leaving open whether these claims are justiciable. Gill v. Whitford, 138 S. Ct. 1916 (2018).

• Court now holds they are not, because there is no manageable standard to resolve them. The problem is that partisan considerations are relevant, and the question of how much partisanship is too much is not one a court is equipped to answer.

Gerrymandering / JusticiabilityRucho v. Common Cause, 139 S. Ct. 2484 (2019)Ruling: 5-4 Majority: Roberts, C.J.

• Dissent: Justice Kagan’s dissent argues that manageable standards exist to address equal protection (vote dilution) and First Amendment (disfavored treatment based on political views) concerns. Modern technology not only makes effective partisan gerrymandering easier to do (by allowing more accurate prediction of partisan gains), but also easier to detect (by determining how far from the median a state’s districting plan strays based on partisan gain). A court could use this technology to determine whether a district map “substantially” dilutes the votes of a rival party’s supporters.

• The Aftermath: Gerrymandering claims may only be pursued under state law, if jurisdiction permits (e.g., North Carolina case, Pennsylvania case)

Census Citizenship Question

Census Citizenship QuestionDep’t of Commerce v. New York, 139 S. Ct. 2551 (2019)

Ruling: Various 5-4 Majority: Roberts, C.J.

Decision: Addresses challenges to the Trump administration’s attempt to reinstate a question about citizenship on the 2020 census questionnaire

• Fractured opinion arising out of a contentious dispute; Supreme Court relied upon extensive fact-finding by District Court

• Ultimately, Part V was dispositive: Secretary Ross’s decision was not “adequately explained” by the stated rationale that the information was necessary to enforce voting-rights laws; there was “a significant mismatch” between the decision and the rationale (joined by Ginsburg, Breyer, Sotomayor, and Kagan)

• Alito, dissenting: “To put it bluntly, the Federal Judiciary has no authority to stick its nose into the question whether . . . the reasons given by Secretary Ross for that decision where his only reasons or his real reasons.”

Tracking the New Term (2019-2020)

Title VII – The Supreme Court Showdown Over LGBTQ Discrimination

Background of the Battle• Title VII: No explicit protections

for sexual orientation, gender identity, or transgender status

• Price Waterhouse v. Hopkins (S.C. 1989)

• EEOC (2009): Title VII prohibits discrimination based on sexual orientation/gender identity

• Circuit split

On April 22, 2019, SCOTUS agreed to hear three LGBTQ cases.

• Sexual Orientation:• Altitude Express v. Zarda• Bostock v. Clayton County, GA

• Gender Identity/ Transgender Status:• R.G. & G.R. Harris Funeral Homes

Inc. v. EEOC

All three were argued on October 8, 2019.

Altitude Express, Inc. v. Zarda (No. 17-1623)• Don Zarda, a skydiver, was terminated after

revealing his sexual orientation to a customer.

• Losses in the trial court and initially in the Second Circuit (relying on precedent).

• En banc panel of the Second Circuit overturned the district court, ruling that discrimination based on sexual orientation constitutes sex discrimination prohibited by Title VII.

• Mr. Zarda passed away in 2014, and the case is being continued by his estate, managed by his sister and his former partner.

• Gerald Bostock, a child welfare services coordinator in Clayton County, Georgia, was terminated after participating in a gay recreational softball league.

• The Eleventh Circuit affirmed a district court dismissal, relying on precedent.

Bostock v. Clayton County (No. 17-1618)

R.G. & G.R. Harris Funeral Homes Inc. v. EEOC (No. 18-107)

• Aimee Stephens (formerly Anthony Stephens), a funeral director in Michigan, was terminated when she informed her employer that she intended to transition from male to female.

• EEOC brought suit, and ultimately the Sixth Circuit reversed a district court decision granting summary judgment to the funeral home.

• In addition to the sexual orientation question in Altitude Express and Bostock, this case asks whether discrimination on the basis of transgender status is prohibited by Title VII.

Insights from The ArgumentsText Versus Intent?

Broader Implications?

Congress or The Courts?

Whither now, without Justice Kennedy?

Other Upcoming Issues• Louisiana’s abortion-clinic law (cf. Texas law, Whole Woman’s Health

(2016)

• DACA – whether DHS’s decision to wind down DACA is judicially reviewable, whether policy lawful (DHS v. Regents of Univ. of Calif.)

• Constitutionality of Consumer Financial Protection Board as independent agency, under separation of powers doctrine (Seila Law LLC v. CFPB)

• Does Sixth Amendment guarantee of unanimous verdict apply to states, via incorporation under Fourteenth Amendment (Ramos v. Louisiana)

• Possible Executive Privilege Issues related to Impeachment Inquiry, Tax Returns

QUESTIONS?