On January 23, 2012, the Supreme Court issued a unanimous opinion in the case of National Meat Association v. Harris, No. 10-224.  

On Monday, January 9, 2012, the Supreme Court heard argument in a case challenging the Environmental Protection Agency’s issuance of administrative compliance orders under the Clean Water Act, 33 U.S.C. §§ 1251 et seq. (the “CWA”).  Sackett v. United States Environmental Protection Agency, No. 10-1062. 

Chantell and Mike Sackett bought a vacant lot near Priest Lake, Idaho, intending to build their home there.  The lot is zoned residential and is located in a platted subdivision, with sewer and water hookups.  Surrounding lots already have homes built on them.  The Sacketts applied for and obtained the necessary building permits from the local authorities.  Once they began laying gravel, however, they were hit with a compliance order from the EPA.  The order declared the Sacketts’ property to be “wetlands,” and charged the Sacketts with discharging pollutants into the waters of the United States, absent a permit, in violation of 33 U.S.C. § 1311(a).  In the order, the EPA required the Sacketts to return the property to its prior condition and to seek a wetlands permit – costs that, according to the Sacketts, would add up to tens of thousands of dollars, many times the $23,000 they paid for the property.  Failure to comply with the order could result in fines of up to $37,500 per day. 

The Sacketts tried to challenge the wetlands finding – both before the EPA and in federal court under the Administrative Procedure Act, but their challenges were rejected.  The district court in Idaho concluded that the CWA precludes judicial review of compliance orders before the EPA has started an enforcement action in federal court, and granted the EPA’s motion to dismiss.  Sackett v. EPA, No. 08-CV-185-N-EJL, 2008 WL 3286801 (D. Idaho Aug. 7, 2008).  The Ninth Circuit affirmed.  Sackett v. EPA, 622 F.3d 1139 (9th Cir. 2010).  In other words, the only way in which the Sacketts could obtain judicial review of the order would be to violate the order and then raise their arguments in any enforcement action brought by the EPA. 

Arguing on behalf of the Sacketts, Damien Schiff of the Pacific Legal Foundation stated that his clients’ inability to seek relief from the courts when the EPA issues a compliance order under the CWA amounts to a denial of due process.  The majority of the justices seemed sympathetic with his argument.  Justice Stephen Breyer, for example, later commented that not allowing judicial review of administrative actions would represent a “huge upheaval” of federal practice, because “for 75 years the courts have interpreted statutes with an eye towards permitting judicial review, not the opposite.”  Justice Elena Kagan, however, suggested that the Sacketts had not exhausted all of their administrative remedies and could have obtained a wetlands permit from the Army Corps of Engineers.  Mr. Schiff disagreed, stating that having to go through the wetlands permit process before a second agency was not an adequate remedy. 

Deputy Solicitor General Malcolm Stewart argued for the EPA, and stuck to the EPA’s position that the Sacketts’ property is a wetland and that the CWA precludes any judicial review of compliance orders.  The Court did not appear to be persuaded.  In particular, Justice Anthony Scalia and Justice Samuel Alito sharply criticized the EPA’s argument.  Justice Alito remarked at one point that “most ordinary homeowners would say this kind of thing can’t happen in the United States,” adding later that the EPA’s conduct is even more “outrageous” because it can change its mind at any time after issuing the compliance order.

The case is being closely watched by industry and public interest groups alike.  Fifteen different amicus briefs have been filed, fourteen of them in favor of the Sacketts – including briefs filed by the Chamber of Commerce, the State of Alaska and various trade and industry groups.  The media is describing the case as a fight between the “little guy” and big government.  We’ll find out if David or Goliath wins this fight when a decision is issued this spring.  The Court’s decision could impact not only CWA enforcement authority, but possibly also review of compliance orders issued under other federal environmental statutes. 

Carmen R. Toledo is a partner at King & Spalding in Atlanta, Georgia.  

In a unanimous ruling, the U.S. Supreme Court adopted the “ministerial exception” developed in the lower courts and held that the First Amendment flatly prohibits the application of discrimination laws to the employment of “ministers” by religious institutions.  The Court’s decision in Hosanna-Tabor Evangelical Lutheran Church and School v. E.E.O.C., though fact-specific, affords broad discretion to churches and other religious entities to hire and fire employees engaged in preaching or teaching their faith, without fear of a discrimination suit.  

In CompuCredit Corp. v. Greenwood, 10-948, the Court held that pre-dispute agreements to arbitrate claims under the Credit Repair Organizations Act (CROA) are valid and enforceable.  Although the CROA requires that consumers be informed of their “right to sue,” the Court held that this is simply “a colloquial method of communicating to consumers that they have the legal right, enforceable in court, to recover damages from credit repair organizations that violate the CROA.”  These provisions do not require that the action proceed in court, as opposed to in a arbitration.  Furthermore, the statute’s use of terms such as “action” and “court” in its liability provision do not require a judicial forum either.  The Court recognized that it was “utterly commonplace” for statutes to use such language.  In light of these points, the CROA’s non-waiver provision does not preclude arbitration.

Perhaps most significantly, the Court’s opinion emphasizes that if Congress had meant to prohibit arbitration agreements, it would have spoken much more clearly.  Citing several other federal statutes that expressly precluded predispute arbitration agreements, the Court found it “unlikely” that the use of “right to sue” and “action” signaled an intent to do the same in this context.

Linda Coberly is a partner in Winston & Strawn's litigation practice and serves as vice chair of the firm's appellate and critical motions practice group. She is also the author of DRI's Amicus brief filed in this case.  Contact Linda at lcoberly@winston.com.

The Supreme Court heard argument on November 7 in Zivotofsky v. Clinton, No. 10-699, a case involving the “political question” doctrine and the scope of the President’s authority over the conduct of foreign relations.

In 2002, as part of the Foreign Relations Authorization Act, Congress enacted Section 214, entitled “United States Policy with Respect to Jerusalem as the Cpaital of Israel.”  Subsection 214(d) provides that, for purposes of issuing a passport to a United States citizen born in Jerusalem, the Secretary of State, upon request, must record the citizen’s place of birth as “Israel.”  In a statement issued at the time he signed the bill, the President took the position that Section 214 is merely advisory because, if it is instead directory, Section 214 would impermissibly infringe upon the President’s constitutional authority to formulate the United States’ position on the recognition to be given to foreign states.

Menachem Zivotofsky, who was born in Jerusalem in 2002 to U. S. citizens, applied through his mother for a passport, requesting that the place of birth be listed as “Jerusalem, Israel.”  The State Department responded that its policy precluded listing “Israel” as Zivotofsky’s birthplace, and issued a passport listing the place of birth as “Jerusalem.”  Menachem, through his parents, then filed an action for declaratory and injunctive relief, seeking an order compelling the State Department to comply with Section 214(d).  Both the district court and the Court of Appeals held that the issues presented by Zivotofsky’s action raised non-justiciable political questions. The Supreme Court granted certiorari to consider both the political question and whether Section 214 is an unconstitutional infringement of the President’s authority.

During oral argument, Zivotofsky’s attempt to defend Section 214 met with skepticism.  Zivotofsky took the position that Congress has authority to legislate in the area of foreign policy, and that Congress acted appropriately in concluding the designation on a passport of “Jerusalem, Israel” as an American citizen’s birthplace would do no harm to U. S. foreign policy.

However, Chief Justice Roberts, and Associate Justices Kennedy, Ginsburg, Scalia, Sotomayor and Kagan, all expressed doubt that Congress could legislate in this area without encroaching upon the President’s authority to conduct the foreign relations of the United States.  As Justice Sotomayor put it:

“[W]hat entitles Congress to trench on a presidential power that has been exercised virtually since the beginning of the country?”

The Court was more receptive to the Solicitor General’s argument that the President’s authority over foreign affairs, including the extent to which foreign governments are recognized, is exclusive, and that Section 214 necessarily infringes upon that authority.  Justice Breyer suggested that the Court might want to abstain from entering this controversy between the legislative and executive branches by upholding the Court of Appeals’ conclusion that this case involves a non-justiciable political question. However, Justices Kennedy and Sotomayor suggested that the Court should reach the merits of the controversy in order th eliminate uncertainty concerning the allocation of responsibility for the conduct of foreign affairs.

A decision in this case is expected by the end of the current Supreme Court term.

David Axelrad is an attorney with Horvitz & Levy in Los Angeles.  Contact David here.

On June 20, the U.S. Supreme Court issued its much-anticipated Wal-Mart Stores, Inc. v. Dukes decision in which the Court held that the nationwide class certification approved by the lower courts was not consistent with Federal Rule of Civil Procedure 23(a) governing class actions. The class of plaintiffs consisted of some 1.5 million women who worked at Wal-Mart throughout the U.S. and allegedly suffered discriminatory pay and promotion practices at any point during or after December 1998.  Writing for the Court, Justice Antonin Scalia concluded that the millions of plaintiffs and their claims did not have enough in common: “Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why I was disfavored.”

As was reported this week, plaintiffs’ counsel have now move the fight to the states, amending their original complaint filed in federal district in California to limit the class to female Wal-Mart employees in California and filing a new action on behalf of Texas Sam’s Club and Wal-Mart female employees.  It is anticipated that these represent the first of many additional class-action lawsuits to be filed against Wal-Mart on the state or regional level.

At first blush, these state and regional actions appear to suffer from some of the same defects as the action rejected by the U.S. Supreme Court.  Among other things, it remains undisputed that Wal-Mart store supervisors retained discretion over promotion and pay policies, making challenges on anything above the store-level problematic.  In addition, the proposed classes appear to include female associates as well as the female supervisors who may have supervised them and made the very promotion and pay decisions they deem objectionable. 

What’s the likely outcome of the state/regional Wal-Mart class actions?  If you were representing Wal-Mart, what would you argue?  What are the chances one of these “Daughter of Dukes” cases ends up back before the nation’s high court?

The Supreme Court heard oral argument on two consolidated cases, Florence v. The Board of Chosen Freeholders of the County of Burlington.  Two well-known and experienced members of the United States Supreme Court appellate bar, Thomas C. Goldstein and Carter Phillips, squared off as the Court considered whether the Fourth Amendment permits a jail to conduct a suspicion-less search whenever an individual is arrested, including for minor offenses.  DRI, which has an active committee for lawyers engaged in representing local governments, filed an amicus brief in support of the county jails.  Written by Mary Massaron Ross, the brief focused on the difficult problems of administration that would arise with a “reasonable suspicion” rule as urged by the class action plaintiffs and reminded the Court of past precedent adopting a bright line rule for Fourth Amendment searches in some categories of cases.  DRI argued that a bright line rule was necessary to give guidance to jailers, to facilitate their efforts to ensure that contraband is not introduced into jail, to help with prison security by identifying those with gang tattoos, and to ensure that lice and other health issues are identified and addressed. 

On October 11, 2011 the Supreme Court heard argument in CompuCredit Corp. v. Greenwood, No. 10-948, confronting the intricacies of application of pre-dispute arbitration agreements, supported by strong federal policy favoring arbitration, and federal statutes containing non-waiver of “rights” provisions in the consumer arena.  Specifically, the Question Presented was:

Recently, a federal magistrate allowed a putative class action plaintiff to serve discovery regarding a defendant’s consumer arbitrations as part of an effort to invalidate a class waiver in an arbitration clause.  In Newton v. Clearwire Corp., No. 2011-CV-00783-WBS-DAD (E.D. Cal. Sept. 23, 2011), the plaintiff is pursuing California consumer fraud, contract, unjust enrichment, and injunctive relief claims based on the internet service provider illegally throttling customers’ internet connection speeds.  The defendant moved to compel arbitration, but the court allowed the plaintiff “limited” discovery regarding the defendant’s arbitration and litigation experience with customers.  At issue were interrogatories seeking information regarding the number of instances of Clearwire or customers initiating arbitration or non-arbitration proceedings and the outcomes of those proceedings.  Slip Op. at 2-3.  Note that the magistrate refused to compel production of all documents relating to Clearwire’s policies and procedures for arbitration disputes.      

Following the Court’s recent opinion in AT&T Mobility LLC v. Concepion, 131 S. Ct. 1740 (2011), some commentators proclaimed the end of consumer class action whenever an arbitration clause existed.  While Concepion is a watershed opinion holding that the Federal Arbitration Act preempts many state law doctrines that would invalidate arbitration clause class action waivers, it is not the final word on the topic.  In prior articles, I noted the existence of the Arbitration Fairness Act of 2011 (H.R. 1873), which would exempt consumer, civil rights, and employment disputes from the FAA as well as reverse Rent-A-Center West, Inc. v. Jackson, 120 S. Ct. 2772 (2010).  Likewise, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. Law 111-203) calls on the bureau of Consumer Financial Protection and the SEC to consider administrative rules that could invalidate certain arbitration clauses in specified transactions.  Developments since the Court published Conception demonstrate that lower courts are splitting on how to interpret that authority, including in novel ways to continue invalidating class action waivers.