Category: Supreme Court

Key Takeaways from U.S. Supreme Court Decision in West Virginia v. EPA

On June 30, 2022, the U.S. Supreme Court issued its decision in West Virginia v. EPA, 597 U.S. __, 2022 WL 2347278 (June 30, 2022), a case involving the Obama Administration’s Clean Power Plan (CPP) and the Trump Administration’s Affordable Clean Energy (ACE) Rule. Applying the “major questions” doctrine, the Court held that EPA exceeded its statutory authority when promulgating the CPP. This decision has implications for the Biden Administration’s planned re-work and reissuance of the CPP and other options for reducing greenhouse gas (GHG) emissions from the electric power and other sectors. It also carries implications outside the environmental realm, providing litigants a powerful new administrative law precedent to challenge agency rules.

Key Takeaways and Issues to Watch

1. “Major questions” doctrine. The most significant takeaway of the opinion is the Court’s elaboration and application of the “major questions” doctrine, as a limit on federal agency regulatory authority. Chief Justice Roberts’ majority opinion held that in “certain extraordinary cases” where an agency asserts broad authority of “economic and political significance,” courts should look for a clear statement of congressional authorization before green-lighting the action. Based on the “major questions” doctrine, the Court rejected the CPP’s partial reliance on generation shifting (from coal-fired power plants to natural gas or renewable electricity generation) as a component of the “best system of emission reduction” (BSER) for reducing carbon dioxide from coal-fired power plants. The Court held that Clean Air Act Section 111(d), 42 U.S.C. § 7411(d), a rarely-used statutory provision, was not sufficient to support a rulemaking that “restructure[ed] the Nation’s overall mix of electricity generation….” Because the Court determined this result would carry consequences of economic and political significance, the Court found the rule triggered the “major questions” doctrine. The Court reiterated that although Section 111(d) authorizes EPA to establish emission guidelines for existing major sources of air pollution based on BSER, the Agency could not do so using such transformative measures.

This decision represents the Supreme Court’s first formal assertion of the “major questions” doctrine, applicable when an agency claims broad authority based on new interpretations of older statutes or statutes in which the grant of authority is not explicitly stated. Although this was not the first Supreme Court case employing this logic, this was the first case where the Court formally used the phrase “major questions” doctrine. Other cases the Court pointed to include a 2000 case rejecting the asserted authority of the Food and Drug Administration (FDA) to regulate tobacco products, like cigarettes, as drug-delivery “devices,” and more recent cases from this Supreme Court term concerning the authority of the Occupational Safety and Health Administration and the Centers for Disease Control and Prevention (CDC) to apply long-extant legal authorities in the context of COVID-19.

2. Chevron deference doctrine. The Court does not strike down Chevron as some parties had predicted or sought. That doctrine—requiring courts to defer to an agency’s reasonable construction of an ambiguous statute it is charged with administering—survives for now. Indeed, the majority opinion did not even cite Chevron deference.

3. Biden EPA. This decision immediately affects the scope of the Biden Administration’s approach to regulating power sector GHG emissions. The Administration has said that it wants to start these rules from a clean slate.

a. On-site measures. As noted in the decision, the Administration may be more likely to consider on-site measures as the BSER. Such options might include partial carbon capture and storage (CCS) or natural gas co-firing. The Obama EPA had declined to use those options for existing sources because it believed generation shifting was a less expensive way for industry to comply. But EPA had used partial carbon capture to set the limits for new sources, so it may review that issue now. Since the CPP’s issuance, the IRS Section 45Q tax credit for CCS and commercialization of CCS technologies that did not exist when the CPP was drafted may also affect the EPA’s approach now.

b. Generation shifting off the table. At least for setting the stringency of BSER, EPA will not be able to rely on generation-shifting measures. Advances in CCS technologies and the Section 45Q tax credit may also affect how EPA defines BSER for coal-fired plants in particular.

c. Seeking GHG reductions as “co-benefits” of other power sector rules. The Biden EPA may also consider other power plant emission rules under other CAA programs to achieve GHG reductions as “co-benefits.” Programs for regional haze, interstate air pollution, and hazardous air pollutants regulate other emissions, but often have the effect of reducing GHGs as well.

d. Other climate authorities will likely get a more intense look. The decision may also likely cause the Biden EPA to consider other, more clearly established GHG sources or authorities to seek additional GHG emissions reductions (e.g., mobile sources, HFCs).

4. Congressional action remains key. The Court’s decision underscores that certain rulemakings will need to rely on clear legislative authority to withstand legal challenges. Notably, the decision does not divest Congress from the ability to delegate “major questions” like this to federal agencies; it only requires that such delegations be clearly stated. Congress retains authority to act in any number of ways on climate change—including with economy-wide emissions programs (as it considered during the first Obama term), or by drafting clearer EPA authority—but with a narrowly-divided House and Senate, these actions seem unlikely.

5. Power sector practical effects. The practical outcome for the power sector is limited. That sector, in many respects, has already decarbonized at a rate faster than provided for by the CPP, largely for economic reasons.

6. States. This decision will likely encourage some states to use their authority to regulate GHG emissions, given the narrowed scope of EPA’s authority.

7. Future challenges. Expect litigants to rely heavily on the West Virginia decision in other rulemaking challenges going forward, whenever agencies act under existing authorities in a way that, in the Chief Justice’s words, “raises an eyebrow.” This may include not only EPA regulatory efforts to address modern environmental challenges, but actions of other federal agencies such as efforts by the Federal Communications Commission to regulate internet service providers to impose net neutrality, or efforts by the Securities and Exchange Commission to establish ESG disclosure requirements. Litigants will have a powerful tool to challenge those rules if they can persuasively phrase the question in “major question” terms.

Article By Eric L. Christensen, Brook J. Detterman, David M. Friedland, Jennifer J. Leech, and Zachary B. Pilchen of Beveridge & Diamond PC

For more environmental law legal news, click here to visit the National Law Review.

© 2022 Beveridge & Diamond PC

US Supreme Court Holds That Airline Cargo Loaders Are Exempt From Arbitration

The US Supreme Court has held that airline cargo loaders who load and unload cargo from planes that travel across state lines are exempt from the Federal Arbitration Act (FAA) because they belong to a “class of workers engaged in foreign or interstate commerce” under § 1 of the FAA. Southwest Airlines Co. v. Saxon (June 6, 2020).

Background

Latrice Saxon worked for Southwest Airlines and was responsible for training and supervising teams of ramp agents who load and unload airplane cargo on Southwest planes that travel across state lines. Saxon brought a collective action alleging failure to pay proper overtime wages FLSA in the Northern District of Illinois. However, Saxon had signed an arbitration agreement requiring her to arbitrate her wage disputes, and Southwest moved to dismiss the lawsuit and to compel arbitration under the FAA.

Saxon opposed the motion, invoking § 1 of the FAA, which exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” She argued that ramp supervisors, like seamen and railroad employees, were an exempt “class of workers engaged in foreign or interstate commerce,” but the district court agreed with Southwest and found that only employees involved in “actual transportation,” not those who merely handle goods, fell within § 1 of the FAA. On appeal, the Seventh Circuit Court of Appeals disagreed with the District Court’s decision, holding that “[t]he act of loading cargo onto a vehicle to be transported interstate is itself commerce.” The Seventh Circuit’s decision conflicted with an earlier decision of the Fifth Circuit, Eastus v. ISS Facility Services, Inc., 960 F. 3d 207 (2020), and the Supreme Court granted certiorari to resolve the conflict between the two circuits.

The Supreme Court’s Decision

In a unanimous decision, the Supreme Court held that loaders who load and unload airplane cargo that travels intrastate play a direct role in the interstate transportation of goods and therefore belong to a “class of workers engaged in foreign or interstate commerce” under § 1 of the FAA. The Court engaged in a two-step analysis. First, it considered how to define the relevant “class of workers.” The Court rejected Saxon’s argument that the “class of workers” should be defined as virtually all airline employees, which would include shift schedulers or those who design Southwest’s website. Rather, the Court held that the inquiry must focus on the job duties of the employees themselves, rather than the employer’s business and that Saxon “belongs to a class of workers who physically load and unload cargo on and off airplanes on a frequent basis.”

Next, the Court considered whether that class of airplane cargo loaders “engaged in foreign or interstate commerce.” It determined that “one who loads cargo on a plane bound for interstate transit is intimately involved with the commerce of that cargo” and that workers like Saxon who load and unload airplane cargo that travels in interstate commerce are exempt from the FAA.

Takeaway for Employers

Though the Court did find a class of workers exempt from the Federal Arbitration Act, it expressly rejected the assertion that this exemption should apply to all employees of an employer engaged in foreign or interstate transportation. It went on to provide examples of positions that would not satisfy the exemption, such as workers engaged in the sale of interstate asphalt or workers who supply janitorial services to a corporation engaged in interstate commerce.

Employers engaged in interstate or foreign transportation commercial should consult legal counsel if they plan to utilize arbitration agreements as part of their dispute resolution process.

Article By John P. Zaimes and Natalie C. Kreeger of ArentFox Schiff LLP

For more arbitration legal news, click here to visit the National Law Review.

© 2022 ArentFox Schiff LLP

Supreme Court Expands State Criminal Jurisdiction in Indian Country

In a 5-4 opinion issued Wednesday in Oklahoma v. Castro Huerta, No. 21-429, the Supreme Court expanded the authority of States to exercise criminal jurisdiction over non-Natives in Indian country without tribal consent or congressional authorization, upending a long-standing basic principle of Federal Indian Law and striking a blow to tribal sovereignty. Under federal law, “Indian country” has been interpreted as including Indian reservations, dependent Indian communities, Indian allotments, In Lieu sites (land outside reservation boundaries meant to replace lost Indian lands), and tribal trust lands. The majority opinion in Castro-Huerta, written by Justice Brett Kavanaugh, held that States presumptively have “inherent” jurisdiction over crimes committed in Indian country and “do not need a permission slip from Congress to exercise their sovereign authority,” dismissing the Court’s prior statements to the contrary as non-binding dicta. After concluding States presumptively have criminal jurisdiction in Indian country, the majority found that the General Crimes Act, 18 U.S.C. 1152, did not preempt that jurisdiction for crimes committed by non-Natives against Natives in Indian country. As a result, States now have concurrent criminal jurisdiction with the federal government to prosecute crimes committed by non-Natives against Natives in Indian country.

Castro-Huerta involved the prosecution of Defendant Victor Manuel Castro-Huerta, who was convicted in an Oklahoma State court of a crime against a Native child. Following the Supreme Court’s landmark decision in McGirt v. Oklahoma, 140 S. Ct. 2452 (2020), in which the Court concluded much of Oklahoma is Indian country, Castro-Huerta successfully argued that the State lacked jurisdiction to prosecute him because he committed his crime in Indian country. The State appellate court’s decision in Castro-Huerta’s favor followed the interpretation of the General Crimes Act that has prevailed since the statute’s 1948 reenactment. Under that interpretation, only the federal government has authority to prosecute non-Native individuals who commit crimes against Native individuals in Indian country.

Arguing before the Supreme Court, Oklahoma claimed that the prevailing interpretation is incorrect, and the majority agreed. The Court began its analysis by describing the details of Castro-Huerta’s crime and noting that of the 2 million people who live in Oklahoma, “the vast majority are not Indians.” Op. at 2. The Court also noted that Castro-Huerta had accepted a plea agreement with the federal government for a 7-year sentence followed by removal from the United States (he was in the United States unlawfully), receiving, in effect, a 28-year reduction in his sentence. Op. at 3. The majority stated that his case “exemplifies a now-familiar pattern in Oklahoma in the wake of McGirt” in which non-Indian criminals have received “lighter sentences in plea deals negotiated with the Federal Government” or have “simply gone free.” Op. at 3-4.

Citing the United States Constitution and prior Supreme Court decisions for the proposition that Indian reservations are “part of the surrounding State” and subject to State jurisdiction except as forbidden by federal law, the majority concluded that an “overarching jurisdictional principle dating back to the 1800s” is that “States have jurisdiction to prosecute crimes committed in Indian country unless preempted.” Op. at 5-6.

The majority then considered whether the State’s authority to prosecute non-Native v. Native crimes in Indian country had been preempted under the “ordinary principles of federal preemption” or because “the exercise of state jurisdiction would unlawfully infringe on tribal self-government.” Op. at 7. The majority found that the plain text of the General Crimes Act did not expressly provide for exclusive federal jurisdiction. Op. at 7-14. It then rejected Castro-Huerta’s argument that Public-Law 83-280 and similar statutes through which Congress authorized certain States to exercise jurisdiction in Indian country demonstrated Congress’s understanding that States presumptively lack such authority. The majority reasoned that, despite what Congress might have assumed, the question had not yet been decided and the statutes in question lacked language preempting State jurisdiction. Op. at 16-18. The statutes also provided for civil jurisdiction and State jurisdiction over Natives, in addition to criminal jurisdiction over non-Natives, so they were not entirely redundant.

Turning next to whether the exercise of State jurisdiction under the General Crimes Act would unlawfully infringe on tribal self-government, the majority applied the “Bracker balancing test,” which weighs tribal, federal, and state interests, and is generally used to determine whether a state tax is preempted when assessed against a non-Native on tribal land. The majority concluded that the Bracker factors supported State jurisdiction, dismissing any tribal preference for federal jurisdiction as irrelevant to the Court’s analysis, Op. 19 n.6, Op. 20 n. 7. Concluding the State’s inherent jurisdiction had not been preempted, the majority noted in its holding that, “Unless preempted, States may exercise jurisdiction to prosecute crimes committed by non-Indians against Indians in Indian country,” and this “applies throughout the United States,” including on Indian allotments. Op. 24 n.9.

In a scathing dissent, Justice Gorsuch, joined by Justices Breyer, Sotomayor, and Kagan, pushed back against the majority’s opinion, suggesting any future analysis would need to consider the specific context of each tribe, its treaties, and relevant laws. Dissent at 40-41 n.10. The dissent, appealing for a legislative fix, accused the majority of ignoring history, congressional action, precedent, and tribal sovereignty, and usurping “congressional decisions about the appropriate balance between federal, tribal, and state interests.” Dissent at 38.

Article By Charlene Koski of Van Ness Feldman LLP

For more tribal law legal news, click here to visit the National Law Review.

© 2022 Van Ness Feldman LLP

Abortion-Related Travel Benefits Post-Dobbs

Immediately following the Supreme Court decision in Dobbs v. Jackson returning the power to regulate abortion to the states, a number of large employers announced that they would offer out-of-state travel benefits for employees living in states where abortion-related medical care is unavailable. Employers considering offering abortion-related travel benefits have several key considerations to keep in mind. The law currently allows health plans to provide reimbursement for travel primarily for and essential to medical care. Although this area of the law is evolving, employers with self-funded medical plans may amend their existing medical plans to provide abortion-related travel benefits while those with fully insured medical plans may face more obstacles in providing such benefits.

In Dobbs v. Jackson, an abortion clinic challenged a Mississippi law that would ban abortion after 15 weeks of pregnancy, with limited exceptions. In establishing the constitutional right to abortion in Roe v. Wade, the Supreme Court restricted states in their ability to limit or ban abortions before viability of the fetus, or 24 weeks from the time of conception. In upholding the Mississippi law, the Supreme Court overturned Roe and held that the protection or regulation of abortion is a decision for each state.

Alabama, Arkansas, Kentucky, Missouri, Oklahoma and South Dakota have already banned or made abortion illegal pursuant to trigger laws which went into effect as of the Supreme Court decision on June 24, 2022.  Also, a number of additional states are expected to soon have similar legislation in effect, either by virtue of expected legislative action or trigger laws with slightly delayed effective dates.  In response, a number of employers have announced that they will reimburse all or a portion of abortion-related travel expenses for employees in states where abortions are banned or otherwise not available.

Under Section 213(d) of the Internal Revenue Code, the definition of “medical care” includes transportation that is both “primarily for and essential to” the medical care sought by an individual. These types of travel benefits have historically been utilized in connection with certain specialized medical treatments, such as organ transplants.  However, Section 213(d) is not limited to particular types of procedures, and thus forms the framework for providing abortion-related travel benefits through existing medical plans.

Although Code Section 213(d) applies to both self-insured and insured medical plans, the substantive coverage provisions of insured medical plans will generally be governed by the state insurance code of the state in which the insurance policy is issued.  Coverage for abortion services or any related travel benefits may not be permitted under the insurance code of the state in which the policy is issued, or an insurer may not offer a travel benefit for such services even if permitted to do so.  Self-insured plans, by contrast, provide employers more flexibility in plan design, including control, consistent with existing federal requirements, over the types and levels of benefits covered under the plan. As noted above, existing plans may already cover travel-related benefits for certain types of medical procedures.

Employers with high-deductible health plans tied to health savings accounts (HSAs) will need to consider the impact of adding abortion-related travel benefits to such plans.  Travel-related benefits of any type would not appear to be eligible for first dollar coverage, and thus may be of minimal benefit to participants enrolled in high-deductible health plans.

Employers with fully insured medical plans that do not cover abortion-related travel benefits may be able to offer a medical travel reimbursement program through an integrated health reimbursement arrangement (HRA).  An integrated HRA is an employer-funded group health plan from which employees enrolled in the employer’s traditional group medical insurance plan are reimbursed for qualifying expenses not paid by the traditional plan.

Another potential option for employers with fully insured medical plans may be to offer a stipend entirely outside of any established group health plan. Such reimbursement programs may result in taxable compensation for employees who receive such reimbursements. Also, employers would need to be sensitive to privacy and confidentiality considerations of such a policy, which should generally be minimized if offered in accordance with the existing protections of HIPAA through a medical plan and under which claims are processed by an insurer or third-party administrator rather than by the employer itself.

Additionally, some state laws may attempt to criminalize or otherwise sanction so-called aiding and abetting actions related to the procurement of abortion services in another state.  This is an untested area of the law, and it is unclear whether any actions brought under such statutes would be legally viable.  In this regard, Justice Kavanaugh stated as follows in his concurring opinion in Dobbs:  “For example, may a State bar a resident of that State from traveling to another State to obtain an abortion? In my view, the answer is no based on the constitutional right to interstate travel.” (Kavanaugh Concurring Opinion, page 10.)  This is an area that will require continual monitoring by employers who offer abortion-related travel benefits.

Article By Thomas G. Hancuch, Philip L. Mowery, and Amal Rafiq of Vedder Price

For more labor and employment legal news, click here to visit the National Law Review.

© 2022 Vedder Price

Update: In Opioid Liability Ruling for Doctors, SCOTUS Deals Blow to DOJ

On June 27, 2022, the United States Supreme Court ruled that doctors who act in subjective good faith in prescribing controlled substances to their patients cannot be convicted under the Controlled Substance Act (“CSA”).  The Court’s decision will have broad implications for physicians and patients alike.  Practitioners who sincerely and honestly believe – even if mistakenly – that their prescriptions are within the usual course of professional practice will be shielded from criminal liability.

The ruling stemmed from the convictions of Dr. Xiulu Ruan and Dr. Shakeel Kahn for unlawfully prescribing opioid painkillers.  At their trials, the district courts rejected any consideration of good faith and instructed the members of the jury that the doctors could be convicted if they prescribed opioids outside the recognized standards of medical practice. The Tenth and Eleventh Circuits affirmed the instructions.  Drs. Ruan and Kahn were sentenced to 21 and 25 years in prison, respectively.

The Court vacated the decisions of the courts of appeals and sent the cases back for further review.

The question before the court concerned the state of mind that the Government must prove to convict a doctor of violating the CSA.  Justice Breyer framed the issue: “To prove that a doctor’s dispensation of drugs via prescription falls within the statute’s prohibition and outside the authorization exception, is it sufficient for the Government to prove that a prescription was in fact not authorized, or must the Government prove that the doctor knew or intended that the prescription was unauthorized?”

The doctors urged the Court to adopt a subjective good-faith standard that would protect practitioners from criminal prosecution if they sincerely and honestly believed their prescriptions were within the usual course of professional practice.  The Government argued for an objective, good-faith standard based on the hypothetical “reasonable” doctor.  The Court took it one step further.

Justice Breyer delivered the opinion of the Court.  He said that for purposes of a criminal conviction under the CSA, “the Government must prove beyond a reasonable doubt that the defendant knowingly or intentionally acted in an unauthorized manner.”  To hold otherwise “would turn a defendant’s criminal liability on the mental state of a hypothetical ‘reasonable’ doctor” and “reduce culpability on the all-important element of the crime to negligence,” he explained.  The Court has “long been reluctant to infer that a negligence standard was intended in criminal statutes,” wrote Justice Breyer.

Justice Samuel Alito wrote a concurring opinion, which Justice Clarence Thomas joined and Justice Amy Coney Barrett joined in part.  Although Justice Alito would vacate the judgments below and remand for further proceedings, he would hold that the “except as authorized” clause of the CSA creates an affirmative defense that defendant doctors must prove by a preponderance of the evidence.

The Court’s decision will protect patient access to prescriptions written in good faith.  However, for the government, the Court’s decision means prosecutors face an uphill battle in charging, much less convicting, physicians under the CSA.  Indeed, the Court’s decision may have a chilling effect on the recent surge in DOJ prosecutions of medical practitioners and pain clinics.

Article By Lindsay K. Gerdes and Madeline R. Pinto of Dinsmore & Shohl LLP

For more litigation legal news, click here to visit the National Law Review.

© 2022 Dinsmore & Shohl LLP. All rights reserved.

U.S. Supreme Court Sides with Public High School Coach in Free Speech/Freedom of Religion Case

The U.S. Supreme Court issued a ruling which will have wide-ranging effects on the ability of governmental entities to react to religious and other speech of public employees. In Kennedy v. Bremerton Schools, the Court ruled that a public high school could not discipline or disfavor a football coach for his practice of kneeling on the 50-yard line and praying at the conclusion of each game, eventually growing to include most of the football team and opposing players as well. The school district had attempted to accommodate the coach’s desire for prayer, but concerns mounted when one parent complained that her son felt compelled to participate despite being an atheist. The coach was eventually placed on administrative leave and not extended an offer to return to coaching the next school year. Both the district court and the U.S. Court of Appeals for the Ninth Circuit rejected the coach’s First Amendment challenges.

With a 6-3 majority, the Supreme Court reversed. In doing so, the Court first found a violation of the Free Exercise Clause.  The Court discounted the school district’s stated concerns that the coach’s practice could violate the Establishment Clause or interfere with students’ right of free exercise. The Court held that absent evidence of “direct” coercion the Establishment Clause was not implicated and then concluded that the coach’s position of authority over the players was insufficient to constitute direct coercion.  The Court distinguished earlier cases involving prayers at football games and civic meetings, by emphasizing that the speech for which the coach was disciplined was not publicly broadcast or recited to a captive audience. Additionally, students were not required or formally expected to participate.

With respect to the Free Speech issue, the Court concluded that the coach’s prayers were not unprotected “government speech,” and in doing so applied a restrictive view of what could be considered “government speech.”  The Court held that because the coach’s job duties did not include leading prayers, the fact that the speech occurred on the field immediately after the game was insufficient to transform it from private speech to government speech.  “To hold differently,” the Court stated, “would be to treat religious expression as second-class speech and eviscerate this Court’s repeated promise that teachers do not ‘shed their constitutional rights to freedom of speech or expression at the schoolhouse gate.’”

The decision, together with Shurtleff v. Boston decided earlier this Term, suggests a sharp break with past Court jurisprudence on the balance between the dictates of the Establishment and Free Exercise Clauses.  Government entities should review their policies on religious activity on government property or by employees in connection with their positions in light of these two decisions.

Article By Ahmad Chehab, Scott R. Eldridge, and Robert T. Zielinski of Miller Canfield

For more civil rights legal news, click here to visit the National Law Review.

© 2022 Miller, Canfield, Paddock and Stone PLC

Preparing Corporate Messaging in the Wake of Dobbs

The United States Supreme Court (“SCOTUS”), in Dobbs v. Jackson Women’s Health Organization, has held that there is no constitutional right to abortion, overruling Roe v. Wade and Casey v. Planned Parenthood.

Employers, who increasingly are finding themselves on the front lines of many societal issues, will need to decide quickly whether and how they might address the Dobbs decision, as public reaction has been and is likely to remain strong. Board members, employees, and shareholders may advocate for corporations to take a visible stand on the issue of abortion and reproductive rights. And employees may want to speak up themselves (possibly via employer social media accounts).

It is important to remember that company communication decisions and actions regarding the Dobbs ruling, as well as other political and social issues, can have practical and legal implications.

The first question is whether your company will comment on Dobbs. If you decide to comment, there are many factors to consider. Your message is an important starting point. Who is your intended audience? Will your employees consider it an opportunity to join in the conversation? What will you say? Even if your message is internal, keep in mind that it may not stay that way, given the nature of social media. And before you think, “I’ll just stay out of it,” remember that some will view silence or neutrality as a statement in and of itself. If you choose not to speak, are you prepared to deal with any potential reaction from customers, employees, or shareholders?

Internally, employees may have questions about health benefits or other terms and conditions of employment because of Dobbs. It will be important to arm all key stakeholders, including leadership, corporate communications, and human resources, with tools to consistently manage these communications and responses.

Whether it’s internal or external communications, expect feedback! How that feedback is handled is as important as the initial communication (or lack thereof).

Certain industries, like healthcare and insurance, may also feel compelled to make an affirmative statement if the Dobbs decision has a direct impact on services and/or products. In those cases, the need to consider all implications is even more pressing.

In thinking through these decisions, employers should also consider who may need to approve any messaging. The board of directors, senior executives, legal, and marketing and communications teams are among the key stakeholders who may need to be consulted. And don’t forget that your public-facing employees may bear the brunt of your response. Are they prepared?

Employers should also keep in mind various laws that may govern their reaction, including those they might otherwise not consider. For example, the National Labor Relations Act protects employees’ rights to collectively discuss terms and conditions of employment at work and off duty – and that applies to employers with and without a unionized workforce. The current Biden-appointed General Counsel of the National Labor Relations Board has taken an expanded view of topics that are connected to the workplace. Moreover, some states, including California and New York, have enacted off-duty conduct laws that prohibit employers from disciplining employees for lawful conduct outside of work, which may include political advocacy. There may also be anti-discrimination laws and potential civil and criminal liability associated with your statements, depending on their wording.

Reactions to the Dobbs decision may vary. Some reaction may be comparable to what we’ve seen with respect to other recent political and/or social justice movements, such as Black Lives Matter and #MeToo; others may react differently, or not at all. In these rapidly changing times, companies — particularly publicly traded and consumer-facing ones — need to be make informed decisions. Clear, consistent messaging is key to establishing confident and consistent responses to potential concerns by employees and other stakeholders.

Article By M. Carter DeLorme, Frank C. Morris, JR, Susan Gross Sholinsky, Jennifer Barna, and Erin E. Schaefer of Epstein Becker & Green, P.C.

For more civil rights legal news, click here to visit the National Law Review.

©2022 Epstein Becker & Green, P.C. All rights reserved.

U.S. Supreme Court Overturns Roe and Casey: What This Decision Means for Employers

As many expected based on the draft opinion that was leaked months ago, the U.S. Supreme Court has held the U.S. Constitution does not protect the right to obtain an abortion. Dobbs v. Jackson Women’s Health Organization, No. 19-1392 (June 24, 2022).

Dobbs overturns nearly 50 years of precedent from the Court’s decision in Roe v. Wade and Planned Parenthood Pennsylvania v. Casey on the issue.

The impact of Dobbs will vary, as states are now at liberty to enforce and create abortion legislation without restrictions arising out of constitutional protections.

What does this mean for employers?

As pressure mounts on this issue, some employers may be considering what, if anything, they can or should do. Many states have enacted legislation that restricts individual abortion rights and potentially third parties who assist individuals who seek abortions. To the extent any state laws were not enforced because of the Court’s holding in Roe or Casey, states can move forward now to implement and enforce those laws.

Laws often referred to as “trigger laws,” those that are in place but unenforceable due to overriding federal restrictions, become enforceable once those federal restrictions are lifted. As a result of Dobbs, abortion-related “trigger laws” previously unenforceable can take effect, creating new standards for individuals and others that will redefine the national abortion law landscape.

Some existing state laws and trigger laws may affect employers and put employers at risk of violating state law if they implement policies to assist employees seeking an abortion or even continue to cover abortions under group health plans. For example, a state law may create liability for anyone who “aids or abets” a person who obtains an abortion. Employers also must be cognizant of how they apply their leave policies, who may seek accommodations based on a sincerely held religious belief, and whether certain provisions of the Pregnancy Discrimination Act apply to women who are seeking or who have had an abortion.

In addition, the Court’s ruling may affect employee benefit plans. Many employers are considering additional benefits for their employees, and their covered dependents, such as travel reimbursement for seeking an abortion outside of the local jurisdiction due to state law restrictions. There are many legal issues to consider in connection with the coverage of abortion-related services under employee benefit plans. (For additional guidance on the issue, see our article, Group Health Plan Considerations in the Face of (Potentially) Changing Abortion Laws.) Depending on how the state laws are enacted, there also may be issues with relying on ERISA preemption provisions to avoid these obligations.

Corporate management and directors should plan for changes and be aware of policies and fiduciary responsibilities. This can include preparing for public and employee reactions (for and against), legislative and law enforcement threats, social media posts, and other employee demonstrations. Pressure from a variety of groups to take a corporate public opinion also may occur.

Whether changes to leave policies, employee benefits, travel reimbursement, or handling accommodation requests, employers considering policies or benefit offerings in response to Dobbs must carefully review and consider federal and state laws, including state abortion-related legislation to evaluate the risk of potential liability.

Article By Patricia Anderson Pryor, Joy Napier-Joyce, Melissa Ostrower, and Tasos C. Paindiris of Jackson Lewis P.C.

For more labor and employment legal news, click here to visit the National Law Review.
Jackson Lewis P.C. © 2022

BREAKING: Supreme Court Reverses California Court of Appeal in Viking River Cruises v. Moriana

On June 15, 2022, the U.S. Supreme Court issued its decision on Viking River Cruises, Inc. v. Moriana (Case No. 20-1573) reversing the California Court of Appeal’s decision to affirm the denial of Viking’s motion to compel arbitration Moriana’s “individual” PAGA claim and to dismiss her other PAGA claims.

As previously reported, the question presented in Viking River Cruises involved whether the Federal Arbitration Act (“FAA”) preempts the California Supreme Court’s decision in Iskanian v. CLS Transp. Los Angeles, LLC, 58 Cal.4th 380 (2014), which invalidates contractual waivers of representative claims under California’s Labor Code Private Attorneys General Act (“PAGA”).

In a majority opinion authored by Justice Alito, the Court held that while Iskanian’s prohibition on “wholesale waivers” of PAGA claims is not preempted by the FAA, Iskanian’s rule that PAGA actions cannot be divided into “individual” and “non-individual claims” is preempted.

Applying this holding to the parties, the Court held that Viking was entitled to enforce the parties’ arbitration agreement insofar as it mandated arbitration of Moriana’s individual PAGA claim.  As for Moriana’s non-individual PAGA claims,  because PAGA itself “provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding,” Moriana lacks “statutory standing” under PAGA to litigate her “non-individual” claims separately in state court.  Accordingly, “the correct course is to dismiss her remaining claims.”

Article By Timothy Kim and Michele J. Beilke of Hunton Andrews Kurth

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Copyright © 2022, Hunton Andrews Kurth LLP. All Rights Reserved.

Supreme Court Declines to Resolve Circuit Split on Exercise of Personal Jurisdiction in FLSA Collective Actions

On June 6, 2022, the Supreme Court of the United States declined to hear petitions seeking review of whether federal courts may exercise personal jurisdiction over claims of nonresident plaintiffs who join Fair Labor Standards Act (FLSA) collective actions when their claims are not connected to the defendant’s activities in the forum state. The petitions sought review of rulings on the issue by the First and Sixth Circuit Courts of Appeals in Waters v. Day & Zimmermann NPS, Inc. and Canaday v. The Anthem Companies, Inc., respectively. As a result of the Supreme Court’s decision declining to hear the petitions, there remains a circuit split as to whether the Court’s 2017 ruling in Bristol-Myers Squibb Co. v. Superior Court applies to FLSA collective actions, and employers with nationwide footprints remain subject to uncertainty depending on jurisdiction.

To date, only the First, Sixth, and Eighth Circuits have ruled on the issue. On August 17, 2021, the Sixth Circuit was the first to address the issue in Canaday. There, the Court held that federal courts may not exercise personal jurisdiction over claims of nonresident plaintiffs who join FLSA collective actions when their claims are not connected to the defendant’s activities in the forum state. Just one day later, on August 18, 2021, the Eighth Circuit came to the same conclusion in Vallone v. CJS Solutions Group, LLC.

On January 13, 2022, in Waters, the First Circuit held to the contrary, concluding that federal courts do have personal jurisdiction over claims asserted by nonresident opt-in plaintiffs.

The Significance of Bristol-Myers

The Supreme Court’s decision in Bristol-Myers provides the basis for the current circuit split. Bristol-Myers involved a mass tort action under state law for alleged defects in a blood-thinning drug, Plavix, which the company manufactured. Residents and nonresidents of California sued Bristol-Myers in California state court, alleging injuries related to the drug. The nonresident plaintiffs claimed no relationship with the forum state, nor did they purchase Plavix in California or suffer any harm from it in California. The Supreme Court reasoned that any similarity between the resident and nonresident plaintiffs’ claims was an “insufficient basis” to exercise specific jurisdiction. Unless nonresident plaintiffs could demonstrate that their claims arose out of the defendant’s contacts with the forum state, personal jurisdiction over the company did not exist, no matter “the extent of a defendant’s unconnected activities in the State.”

In ruling that the California state court lacked jurisdiction over the claims of the nonresident plaintiffs, the Supreme Court acknowledged that its holding might ultimately generate more litigation in the form of separate actions by nonresident plaintiffs in their respective states. But the Supreme Court also noted that all plaintiffs to the action could have brought a mass tort action against Bristol-Myers in New York (the company’s headquarters) or Delaware (its place of incorporation) because courts in those states would have had general personal jurisdiction over the company. Instead, the California state court could exercise only specific personal jurisdiction over the company based on its activities in the state. Notably, Bristol-Myers was limited to Rule 23 class actions, leaving lower courts to determine whether its holding applied to FLSA collective actions, which differ procedurally.

The Circuit Split

In Canaday, the Sixth Circuit reiterated the basic tenet that, pursuant to the Due Process Clause of the Fourteenth Amendment, the question of whether a court has personal jurisdiction over a defendant depends on the defendant’s contacts with the state in which the plaintiff filed the lawsuit. Because Anthem is both incorporated and headquartered in Indiana and not otherwise “at home” in the state of Tennessee, the district court in Tennessee lacked general jurisdiction over Anthem as a defendant. At issue was whether the district court in Tennessee had specific personal jurisdiction over Anthem, and thus, whether there was a claim-specific and Anthem-specific relationship between the nonresidents’ FLSA claims and the state of Tennessee.

Applying Bristol-Myers, the Sixth Circuit held that there was not. The court found that the nonresident plaintiffs did not bring claims arising out of or relating to Anthem’s conduct in Tennessee, because Anthem neither employed nor paid the nonresident plaintiffs within the state. The Sixth Circuit went on the explain that adherence to this approach should not change the way FLSA collective actions are filed, because plaintiffs traditionally file their actions where courts have general jurisdiction, or where the conduct occurred. Of note, Sixth Circuit Judge Bernice Donald dissented in Canaday, contending that Bristol-Myers does not apply to FLSA collective actions because the Supreme Court in that case addressed only the limitations of state courts, not federal courts, in their exercise of personal jurisdiction over nonresidents.

In Waters, the First Circuit largely followed the reasoning in Judge Donald’s dissent, concluding that the Supreme Court’s decision in Bristol-Myers Squibb “rest[ed] on Fourteenth Amendment constitutional limits on state courts exercising jurisdiction over state-law claims” and thus did not control whether a federal court could exercise jurisdiction over federal claims asserted by nonresident plaintiffs. The First Circuit also observed that the plain language of Rule 4(k) of the Federal Rules of Civil Procedure merely concerns the service of summonses and does not “constrain[] a federal court’s power to act once a summons has been properly served, and personal jurisdiction has been established.”

Key Takeaways

The Supreme Court’s decision to deny the petitions means that employers with nationwide footprints continue to live with potentially inconsistent rulings on the question of whether a federal district court has jurisdiction to hear claims of out-of-state workers when the defendant is neither headquartered nor incorporated in the state. Canaday and Vallone stand to significantly limit the size and geographic scope of FLSA collective actions in the Sixth and Eighth Circuits, absent a district court’s exercise of general jurisdiction over a corporate defendant, while Waters permits nationwide jurisdiction in the First Circuit. For now, at least, multistate employers face continued uncertainty on the issue until courts of appeals in the remaining circuits weigh in.

Article By Maggie (Hanrahan) Santen, Monica Lacks, and Samuel H. Ottinger of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

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