SCOTUS: Employment Law & Healthcare Law Updates in 2024

SCOTUS NL 16 081324

SCOTUS: Employment Law & Healthcare Law Updates in 2024

Last November, we sent a newsletter previewing certain cases before the Supreme Court. Specifically, we summarized the matters most likely to “directly impact the employment law or healthcare law sectors on a day-to-day basis.”  Well, the results are now in—let’s take a look at how things shook out and what impact the decisions could have. 

Regulatory Agencies & Chevron 

As we warned last time, the biggest focus of the term was the 1980’s-era topic of “Chevron deference”—a judicial approach of deferring to regulatory agencies’ interpretations of statutory meaning when a statute is uncertain. Essentially, the agencies got to say what they thought an ambiguous statute meant—including when and how to issue penalties—when Congress did not make it clear. The concerns surrounding Chevron deference were the agencies’ bureaucracies lacking accountability and Congress passing unclear statutes. And, again, the judges (Administrative Law Judges) ruling on such cases are not part of the judiciary, they are typically in the Executive branch. The two cases that challenged Chevron were    Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce. Both overruled Chevron. And both will immediately impact every agency in the federal government; we’ll see what impact they have on state agencies. 

Chief Justice Roberts wrote both opinions; Loper Bright was a 6-2 decision (with J. Kagan and J. Sotomayor dissenting); Relentless was 6-3 (same voting bloc, but J. Jackson also dissented.) The majority in both cases found the Administrative Procedure Act required the courts to exercise their own judgment and not defer to agencies when deciding whether the agencies followed an applicable statute—regardless of the statute’s ambiguity. The Act, as the Court has noted, was “a check upon administrators whose zeal might otherwise have carried them to excesses not contemplated in legislation…” Deferring to those—possibly (over) zealous—administrators runs afoul of the Act. Both dealt with cases where courts deferred to the enforcing agency’s view of its own rule, which allowed the government to prevail. The cases’ impact is that courts—not the regulating agencies—will now decide how to apply unclear laws.

The dissent argued Chevron had served the country—and especially the administrative law apparatus—for decades and was a useful tool. Specifically, if there is an ambiguity in a law, who should decide the meaning: the courts or the regulators that were created by the Legislature to administer the law? The dissenters argued that, on technical matters, it would be better to allow the technically minded bureaucrats to fill in the gaps in legislation. As to problems regarding separation of powers with administrative agencies, the dissent notes the bureaucrats, ultimately, report to the President, who is answerable to the voters—plus, Congress could amend an ambiguous law to remove the ambiguity. 

Of course, most of this could be avoided if Congress simply approved new regulations before they went into effect—but that is a topic for another time…In the meantime, these decisions likely provide help for business owners in an administrative dispute with the government—but there is no guarantee a reviewing court will disagree with the agency’s interpretation, it just won’t defer to it anymore. 

More help for those under regulatory scrutiny came from Corner Post v. Board of Governors of the Federal Reserve System. J. Barrett wrote the opinion for the 6-3 decision—with the same dissenters as above. The issue was: with a statute of limitations impacting when you can challenge a regulation, does the clock start when the regulation was enacted, or when it hurt your business? The court ruled the latter. 

J. Jackson’s dissent expressed concern that the majority essentially destroyed the historical distinction between “facial” and “as-applied” challenges. The former typically means you must challenge a new law or regulation within a certain time if “on its face” it is illegal—regardless of whether you were hurt by it. After the time for facial challenges lapses, only “as applied” challenges were allowed: “the law is constitutional, but as applied to me, it is illegal because…” If in fact J. Jackson is correct in this interpretation it will, indeed, allow for a tremendous increase in facial challenges to existing laws and regulations. 

Wilkinson v. Garland was yet another 6-3 decision, but this time it was C.J. Roberts, J. Alito, and J. Thomas who dissented. The case considered whether courts could consider agency determinations “established facts.” As we wrote before, this can impact civil (or potentially criminal) cases where—for example—a Medical Board Administrative Law Judge has ruled on an issue. Those are rulings not made by a jury nor by anyone in the Judicial Branch. Should, then, a superior court be bound by the ALJ’s determination? The majority, written by J. Sotomayor, ruled courts can review determinations that involve “mixed questions” of law and fact. As the dissent highlighted, this does not fully resolve the problem. 

J. Alito’s dissent, joined by C.J. Roberts and J. Thomas, argued the statute at issue explicitly did not allow courts to review agency-determined “facts” and the majority circumvented this point by blending “law and facts” under a “mixed question” banner. The problem, however, is that such an approach eviscerates the law stating “no review of fact findings,” as almost all reviews of the law require some application of facts—so, the dissent argued, it was a backdoor way to review the factual findings after all—the exact thing the law at issue prohibited. 

The final regulation-impacting case we flagged in November was: Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited. That case considered whether a regulation is valid if enacted when the regulating agency was potentially out of compliance with the Constitution. J. Thomas wrote the 7-2 opinion and J. Alito and J. Gorsuch dissented. The majority found the agency’s funding complied with the Constitution’s Appropriations Clause—in an opinion that surveyed government funding through the Middle Ages, England’s Glorious Revolution, and the American founding. All this, because a federal agency had issued a regulation that trade associations challenged on the ground that the agency was not funded in a constitutional manner. Thus, the rule should not be applied, as the agency’s very existence was, functionally, illegal. 

The dissent by J. Alito, joined by J. Gorsuch, mainly focused on the Appropriations Clause, not regulation making. So, we still don’t have an answer to the question: Is a regulation made by an unconstitutional agency a valid regulation? The door, however, seems open for regulatory challenges when agencies are not properly formed or funded. 

Another notable regulatory decision, which we did not preview last year, was the 9-0 ruling in favor of the FDA’s approval of, and subsequent relaxing of restrictions on, mifepristone. The case was FDA v. Alliance for Hippocratic Medicine and was decided on standing grounds and not on the regulatory process under the Administrative Procedure Act. Thus, it is relevant as to the specific drug, but not as relevant to the larger theme surrounding federal regulations this term—other than regarding the wonkish issue of who can sue the regulators. 

All in all, this was an important term for those impacted by administrative agencies, including their regulations, investigations, enforcement, and administrative-law cases. Long term, it should promote better legislative drafting. Short term, it should provide defendants in agency actions several new ways to challenge an enforcement action. 

Whistleblower Retaliation 

Murray v. UBS Securities, LLC was a 9-0 decision, authored by J. Sotomayor. It looked at the Sarbanes-Oxley Act’s whistleblower-retaliation protections for employees reporting financial improprieties. The ruling makes it harder for employers to prevail under the statute, as it only requires a plaintiff to show the reporting was a “contributing factor” in the employer’s adverse action. The company, UBS, had argued for a higher standard, saying the plaintiff had to show it had “retaliatory intent.” With the ruling, employers who’ve taken an adverse action against a complaining employee now have to prove they would’ve fired the complainer regardless of the complaint. As we previously explained, the case directly impacts public companies’ ability to defend whistleblower-retaliation cases under the Act. But its broader import is how much the ruling could indirectly impact the interpretation of similar anti-retaliation statutes at the state and federal levels. There are numerous laws in both employment and healthcare covering whistleblower retaliation.  

Title VII 

Muldrow v. City of St. Louis, Missouri, was another 9-0 decision, this one authored by J. Kagan. Interestingly, of the 59 opinions this term, 25 were unanimous—42%—whereas 21 went 6-3 (with not always the same 3 in dissent.) Muldrow considered a female police officer’s claim her job was transferred because she is a woman, violating Title VII. Her new job had different hours, job duties, and potential loss in overtime pay—but she kept her compensation and rank. The appellate court found no proof of “materially adverse” harm, affirming the district court’s granting summary judgment for her employer. The Supreme Court held Title VII does not require a plaintiff to show a heightened level of harm from the transfer, she must simply demonstrate some harm. Removing the requirement to show “materially adverse” harm will embolden plaintiffs to bring such claims—making both discrimination and reverse discrimination claims more likely. Moreover, in California, interpretation of FEHA—the state statute banning such discrimination—often parallels Title VII. So, this case will have both state and federal law impact for employers. 

Arbitration 

Still another 9-0 decision, authored by J. Jackson, was the contract and arbitration decision in Coinbase v. Suski. It followed a 9th Circuit ruling arising out of a dispute in California. In a departure from the historical stereotype of the Supreme Court reversing 9th Circuit rulings, here it unanimously affirmed the lower court. In short, it ruled: if there are two contracts that conflict as to deciding arbitrability (meaning: does an arbitrator or a court decide if something should be arbitrated?) a court should decide the issue. 

The other arbitration-related case we tracked was Bissonnette v. LePage Bakeries Park St., LLC. The case affects employees seeking to avoid arbitration via an exemption to the Federal Arbitration Act. It was a class-action case involving wage issues. The question was: are drivers for bakeries in the bakery or transportation business? The latter includes an FAA exemption. C.J. Roberts wrote for another unanimous court that being drivers meant the employees—regardless of what industry they drove for—were covered by the FAA exemption to arbitration for those involved in transportation work. The decision ruled: “A transportation worker need not work in the transportation industry to fall within the exemption from the FAA provided by §1 of the Act.” So, regardless of your business, note the possible impact on your business’s drivers from the Bissonnette decision. 

ADA 

The last case we previewed was Acheson Hotels, LLC v. Laufer. It involved an ADA “tester” plaintiff who has sued hundreds of hotels, often for disability-access issues on their websites—mostly at hotels she had no plans to stay at and without ever booking a room. It seems she and her attorneys had a cottage industry of forcing settlements with businesses for their websites’ lack of accessibility under the ADA. She would simply look at a hotel’s website and if she found it did not provide required-accessibility information, she’d sue. The case was taken up by the Supreme Court to resolve a split in circuit decisions—a split, it seems, Laufer herself caused with her numerous cases! The question was to be: Can someone bring such ADA cases against businesses they are not actually using? But before the ruling the case took an unusual twist. A lower court subsequently suspended her lawyer from practicing law because of his fraud against hotels. Laufer then dismissed her case and others with prejudice. She told the Supreme Court the case was, therefore, moot. But the hotel had already briefed the important issues of who has standing to bring these claims and the Court had heard oral arguments. Ultimately, it did not rule on the standing question, and J. Barrett wrote a unanimous opinion, holding the case was moot and opting not to decide the standing issue. She unequivocally, however, warned the Court might not do the same in future cases: Laufer “represented to this Court that she will not file any others. Laufer’s case against Acheson is moot, and we dismiss it on that ground. We emphasize, however, that we might exercise our discretion differently in a future case.” So, the question remains: can an unharmed party, who doesn’t even plan to use a business, have standing to sue the company under the ADA?  

Conclusion 

ADA, discrimination, whistleblower retaliation, arbitration agreements, and regulatory agencies—this was a big Supreme Court term for employers and those in the healthcare space. One interesting result is that all of the non-regulatory cases we highlighted ended up consistent in two ways. First, all the employer-related cases were unanimously decided by a court the mainstream press regularly describes as ideologically divided along strict lines. Second, none of the cases were in favor of the employers. Both points have to be considered when thinking about potential relief for employers from the courts, especially the appellate courts. Despite everyone’s perception that the Supreme Court is hopelessly divided and that there should be a staunchly pro-employer majority, this term simply did not live up to those views. For many of the cases we tracked—ones that don’t garner the headlines of some other cases—the fact is: this appears to be a very unified court on many, many issues. And the unity is not in a blind “pro-employer” direction. 

The agency decisions, however, did reveal a more divided court—often along the media’s “6-3 Conservative-Liberal” divide. The implications of those rulings will warrant close observation. As we noted last year, everyone reading this newsletter is highly regulated by any number of agencies—so life should get just a little easier. But it will not be immediate. And, as to the Court, even the agency decisions were not uniformly along the generally perceived 6-3 lines. Notably, even when the vote was 6-3, the same justices were not always in the majority or minority. On some of these 6-3 cases, C.J. Roberts, J. Alito, J. Gorsuch, and J. Thomas were in the minority. In essence, we do not feel there is a monolithic block of justices when it comes to the cases we follow for our clients. And, as noted, the justices this term seemed to break uniformly against employers’ interests. 

Should you need a closer analysis of any of the cases discussed—or the numerous cases we did not review, please send us a note at info@cjattorneys.com and we will do a deep dive for you. 

Best, 

Keith W. Carlson and Nima A. Jalali

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