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Session Summary: Supreme Court Update (Business and Regulatory Issues)

Submitted by Louis Virelli:

On Monday afternoon, July 29th, the SEALS annual meeting featured a panel titled “Supreme Court and Legislative Update: Business and Regulatory Issues”. The panel offered a recap of some of the more important cases from the Supreme Court’s October 2018 term. The moderator was Professor Michael Dimino from Widener University Commonwealth Law School. The panelists were, in order of appearance: Joan MacLeod Heminway, Rick Rose Distinguished Professor of Law from the University of Tennessee College of Law; Gary Myers, Earl F. Nelson Professor of Law from the University of Missouri School of Law; Lou Virelli, Professor of Law from Stetson University College of Law; and Thomas Metzloff, Professor of Law from Duke University School of Law.

Professor Heminway kicked off the proceedings with a discussion of Lorenzo v. Securities and Exchange Commission, which held that a person may be held liable for disseminating a false statement of fact under Rule 10b-5(a) or (c) even if that person is not the “maker” of the statement under the rule in Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011). She went on to introduce, among others, Tennessee Wine & Spirits Retailers Association v. Byrd, which held that a residency requirement for obtaining a liquor license in Tennessee “expressly discriminates against nonresidents and has at best a highly attenuated relationship to public health or safety,” in violation of the dormant Commerce Clause, and Iancu v. Brunetti, holding that Section 2(a) of the Lanham Act, which prohibits the federal registration of “immoral” or “scandalous” marks, violates the Free Speech Clause of the First Amendment.

Professor Myers built on Professor Heminway’s introduction of Iancu from an intellectual property perspective, noting the majority’s’ refusal to entertain the government‘s suggestion that the Court apply a limiting construction to the statute’s ban on “immoral or scandalous” trademarks. Professor Myers next addressed the Court’s recent decision in Apple, Inc. v. Pepper, in which it held that iPhone owners were direct purchasers under the Supreme Court’s decision in Illinois Brick Co. v. Illinois, and could thus bring an antitrust claim against Apple for unlawfully monopolizing the aftermarket for iPhone apps. Professor Myers concluded with Return Mail, Inc. v. United States Postal Service, which involved a patent dispute over methods of processing undelivered mail. The Court held that the Postal Service was not a person under the America Invents Act, and therefore that it was not eligible to have Return Mail’s patent claim against it resolved through administrative procedures in the Patent and Trademark Office, rather than in the Court of Federal Claims.

The third presenter was Professor Virelli, who examined three administrative law cases from the October 2018 term. In Kisor v. Wilkie, the Court rejected an invitation to do away with Auer (sometimes called Seminole Rock) deference, the controversial doctrine that requires courts to defer to agency interpretations of their own regulations. A narrow majority of the Court voted to uphold Auer deference over a strong dissent from Justice Gorsuch. In Gundy v. United States, the Court was invited to strike down a portion of the Sex Offender Registration and Notification Act (SORNA) for being an unconstitutional delegation of power to the Attorney General to determine SORNA’s applicability to pre-Act sex offenders. A majority of the Court voted (5-3) to uphold the delegation in Gundy (Justice Kavanaugh recused, ostensibly because he was not on the Court at the time of oral argument in the case). But Justice Alito, who provided the majority’s fifth vote, made clear he did so only on stare decisis grounds, and would be willing to reconsider the 84-year-old non-delegation doctrine “if a majority of this Court” were willing to do so. This is important, Professor Virelli noted, because Justice Gorsuch wrote a stinging dissent for three justices, calling the nondelegation doctrine a “misadventure.” If Justice Alito and the three dissenters are already willing to reconsider the Court’s nondelegation jurisprudence, Justice Kavanaugh may well represent the decisive vote on the fate of the current non-delegation doctrine, and that vote may be coming soon. The third case Professor Virelli introduced was Department of Commerce v. New York, a challenge to Commerce Secretary Wilbur Ross’s decision to add a citizenship question to the 2020 census. The Court concluded that the case was justiciable and that the decision to add the question was neither arbitrary nor in violation of the Census Act, but nevertheless held that the issue must be remanded to the Secretary because the rationale provided for adding the question—improved enforcement of the Voting Rights Act—was pretextual and thus  could not support the agency’s action.

The final presenter, Professor Metzloff, reviewed some interesting statistics from the Court’s prior term. He went on to discuss a takings case, Knick v. Township of Scott, Pennsylvania. The petitioner in Knick sought to overrule a prior Court decision, Williamson County Regional Planning Comm’n v. Hamilton Bank of Johnson City, which required that a clamant seek compensation through state inverse condemnation procedures before filing a federal takings claim. The Court reversed the lower court decision and overruled Williamson on the grounds that the takings claim’s viability is based on the state’s conduct, rather than the existence of a state condemnation claim. Professor Metzloff concluded by discussing three arbitration decisions from the past term. Two of the cases were unanimous. In New Prime v. Oliveira, the Court held (8-0, with Justice Kavanaugh recused) that claims by independent contractors fit within the Federal Arbitration Act’s (FAA’s) exemption for “contracts of employment” based on the plain meaning of the term when the statute was drafted. In Henry Schein, Inc. v. Archer & White Sales, Inc., the Court unanimously held that when a contract delegates the question of arbitrability to an arbitrator, the FAA prohibits a court form overriding the contract, even where the claim for arbitrability is “wholly groundless.” The third arbitration case from this past term, Lamps Plus v. Varela, held that, in a 5-4 decision, an ambiguous arbitration agreement cannot, under the FAA, be grounds for concluding that the parties agreed to submit to class arbitration.

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