With all eyes on how the newest U.S. Supreme Court justices are reshaping the bench, the high court plans to weigh in on high-profile litigation over whether gay and transgender employees are protected under Title VII of the Civil Rights Act and several other big-stakes battles that could shake up the legal landscape for U.S. businesses.
The Supreme Court has 43 cases on its docket so far as well as one case set for reargument. The Title VII cases, which the justices heard on Tuesday, have made the biggest headlines, but there also are other disputes that raise important questions for corporations about the power of administrative agencies, when plaintiffs are required to file suit and what proof is needed in race discrimination litigation.
Court watchers said they are still trying to figure out how the two justices appointed by President Donald Trump are influencing the Supreme Court and what kind of court it's becoming, especially after Justice Anthony Kennedy, the longtime swing vote on the bench, retired in July 2018.
Justice Brett Kavanaugh is starting his first full term since filling Justice Kennedy's seat a little late last term following a tumultuous confirmation battle. Justice Neil Gorsuch, who began his tenure in April 2017 after Justice Antonin Scalia died suddenly, issued the most dissents in the 2018 term, a sign that he's beginning to settle in.
"We're all used to a Justice Kennedy court, and now we're in a new era," said Adam Unikowsky, a partner at Jenner & Block LLP. "It will take some time to understand the dynamics and what makes it tick."
Justices Kavanaugh and Gorsuch have found themselves on opposite sides in several rulings, including the Apple Inc. v. Robert Pepper et al. case. Justice Kavanaugh aligned with the court's four liberal justices and wrote in the majority opinion that Apple customers had standing to sue the company for allegedly operating its App Store as an illegal monopoly. The ruling sparked a dissent from Justice Gorsuch, calling it "senseless."
"Everyone is watching carefully how often Justice Kavanaugh and Justice Gorsuch vote together and how often they vote in different directions," said Elaine Goldenberg, a Munger Tolles & Olson LLP partner. "It's unusual how often they've parted ways so far even though they were appointed by the same president."
Here are the top cases at the high court to watch this term:
Title VII Cases
The Advocates
The trio of cases involves employers accused of discriminating against LGBT workers. Skydiving instructor Donald Zarda alleged that Altitude Express wrongly fired him after he told a client he was gay. Gerald Bostock, a former Clayton County, Georgia, worker, claimed he was terminated because of his sexual orientation. The U.S. Equal Employment Opportunity Commission sued a funeral parlor for firing Aimee Stephens after she told her boss she planned to transition to a female gender identity and wear women's clothing to work.
The Lower Court's Take
The Second Circuit ruled en banc that Title VII's ban on gender bias covers sexual orientation discrimination, reviving Zarda's case, which is now being pursued by his estate. In the funeral home case, the Sixth Circuit held that discrimination because of employees' transgender or transitioning status is illegal under Title VII. It also found that firing transgender workers for not conforming to gender norms is illegal sex-based stereotyping under the Supreme Court's 1989 Price Waterhouse v. Hopkins plurality ruling. Meanwhile, the Eleventh Circuit found Bostock had no viable claim under Title VII. The U.S. Department of Justice has argued that Title VII's sex discrimination bar refers to unequal treatment of men and women in the workplace, breaking from the EEOC's recent position supporting broader Title VII coverage.
The Questions
In the consolidated Zarda and Bostock suits: Does discrimination against employees because of sexual orientation constitute prohibited discrimination "because of … sex" within the meaning of Title VII of the Civil Rights Act of 1964?
In the funeral home case: Does Title VII prohibit discrimination against transgender people based on their status as transgender or sex-stereotyping under Price Waterhouse v. Hopkins?
What's At Stake?
If the employers prevail, workers won't be able to assert federal protection from job discrimination on the basis of sexual orientation or gender identity. Several states, cities and companies already prohibit discrimination against LGBT workers, but those in places without such protections will be left without recourse.
The Tea Leaves
This blockbuster litigation is expected to lead to 5-4 splits, and Chief Justice John Roberts, who has been concerned with the court's reputation as a nonpartisan institution, will be the one to watch. While public support for LGBT rights has surged in the last decade and a business-backed bill ensuring protections for LGBT workers passed the U.S. House of Representatives this year, some attorneys say there's enough ambiguity within the text of Title VII that would allow five justices to read Title VII as excluding gender identity or sexual orientation.
The consolidated cases are Altitude Express Inc. v. Melissa Zarda et al., case number 17-1623, and Gerald Bostock v. Clayton County, Georgia, case number 17-1618. The additional case is R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment Opportunity Commission et al., case number 18-107.
Financial Oversight and Management Board for Puerto Rico v. Aurelius
The Advocates
As a major bondholder in the largest municipal bankruptcy case ever, hedge fund Aurelius Capital in 2017 sought to dismiss Puerto Rico's reorganization proceedings, saying the financial board overseeing them was invalid because its members were appointed by President Barack Obama without the Senate vote required under the U.S. Constitution for "officers of the United States." A similar challenge came from an electrical workers' union.
The Lower Court's Take
A federal court in 2018 held that the oversight board was an entity of the U.S. territory and not the federal government, but the First Circuit in February concluded the board members were appointed unconstitutionally. However, it declined to invalidate what the board has done since it was formed in 2016, saying the members should be seen as "de facto" officers who have carried out their duties in good faith.
The Questions
Does the appointments clause govern the appointment of members of the Financial Oversight and Management Board for Puerto Rico? Can unconstitutionally appointed officers continue acting while leaving those who challenged their appointment without relief?
What's At Stake?
Puerto Rico's case involves about $125 billion in public debt and pension liabilities. If the court affirms the First Circuit's decision, it would expand the de facto officer doctrine. If the court finds the board was unconstitutionally appointed and invalidates its decisions, it would hit reset on which claimants get repaid and in what order, adding a new layer of complexity to the proceedings. A decision here also could have implications for other separation of powers challenges, like those over appointments to the Federal Housing Finance Agency and the Consumer Financial Protection Bureau.
The Tea Leaves
If the court agrees with the Solicitor General that the board members are territorial officers, the de facto officer doctrine issue drops out of the case. But if the court does find a constitutional violation, it will have to address the question about remedies, which could provide greater insight into how the justices think about powers of administrative agencies.
The cases are Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment LLC et al., case number 18-1334; Aurelius Investment LLC et al. v. Commonwealth of Puerto Rico et al., case number 18-1475; Official Committee of Unsecured Creditors v. Aurelius Investment LLC et al., case number 18-1496; U.S. v. Aurelius Investment LLC et al., case number 18-1514; and Unión de Trabajadores de la Industria Eléctrica y Riego Inc. v. Financial Oversight and Management Board for Puerto Rico et al., case number 18-1521.
Moda Health Plan v. U.S.
The Advocates
Health insurers accused Congress of unlawfully reneging on $12 billion owed under an Affordable Care Act program. The risk corridors program was meant to cap financial losses for insurers during the ACA's first few years by shifting funds from highly profitable ACA insurers to money-losing ones, but when it became clear there weren't enough profits to cover the losses, Congress refused to make up the difference. Lawmakers then barred spending on risk corridors, with Republicans deeming the program a "bailout."
The Lower Court's Take
A split Federal Circuit in 2018 held that Congress suspended the government's obligations to make risk corridor payments through clear intent via appropriations riders. It also held that the circumstances of the legislation and regulation didn't create a contract promising the full amount of risk corridor payments. Three cases involving four insurers were consolidated before the Supreme Court.
The Question
Can Congress evade its promise to pay health insurers for losses already incurred by enacting appropriations riders restricting the sources of funds available to satisfy the government's obligation?
What's At Stake?
Billions of dollars are at issue here for the health insurance industry, and if the Supreme Court upholds the Federal Circuit's ruling, attorneys say it could deter businesses from participating and investing in public-private partnerships of all kinds.
The Tea Leaves
There aren't many precedents in large-scale disputes where the federal government is accused of backing out of its commitments to a public-private partnership, making it a difficult ruling to predict. But the Supreme Court did hold in a plurality opinion in U.S. v. Winstar Corp. in 1996 that the implementation of the Financial Institutions Reform, Recovery and Enforcement Act, which eliminated incentives promised to financial institutions that bought struggling savings and loan associations, could be construed as a breach of contract. That decision set off a slew of suits against the government.
The cases are Land of Lincoln Mutual Health Insurance Co. v. U.S., case number 18-1038; Moda Health Plan Inc. v. U.S., case number 18-1028; and Maine Community Health Options v. U.S., case number 18-1023.
Thryv v. Click-To-Call
The Advocates
Click-To-Call filed suit in 2012, alleging YellowPages.com infringed its anonymous phone call system patent. In 2013, YellowPages.com asked the Patent Trial and Appeal Board to review the patent. Click-To-Call argued that YellowPages.com was time-barred under the America Invents Act, which gives accused infringers one year to request an inter partes review after being sued, because YellowPages.com's predecessor had been sued over the patent in 2001.
The Lower Court's Take
The PTAB found the 2001 case didn't bar YellowPages.com's petition and invalidated several patent claims, spurring Click-To-Call's appeal. The Federal Circuit initially held time-bar decisions can't be appealed. But after the U.S. Supreme Court ruled in Cuozzo Speed Technologies v. Michelle Lee in 2016 that IPR institution decisions can be appealed in some circumstances, the full Federal Circuit reversed its position with a 2018 ruling in another case, Wi-Fi One v. Broadcom. Applying that ruling, the court decided the petition by Yellowpages.com, now part of Thryv, was time-barred.
The Question
Are Patent Trial and Appeal Board decisions to institute an inter partes review upon finding a patent challenger's petition is not time-barred subject to appellate review?
What's At Stake?
The case is an important one for patent owners and accused infringers, particularly when the patent at issue previously has been litigated by the same or related parties, and may help crystallize what kinds of decisions by the PTAB are subject to review by the Federal Circuit.
The Tea Leaves
Court watchers are interested in what the Supreme Court justices will say about judicial review and agency power. The patent office has said PTAB time-bar decisions shouldn't be reviewable on appeal, and Justices Ruth Bader Ginsburg and Sonia Sotomayor tend to be more deferential to the agency, but there has been growing interest among conservative justices, like Justice Gorsuch, to scale back agencies' authority, especially when they are construing ambiguous statutes and regulations.
The case is Thryv Inc. v. Click-To-Call Technologies LP et al., case number 18-916.
Rotkiske v. Klemm
The Advocates
Kevin Rotkiske sued in 2015 over a default judgment entered against him without his knowledge in a debt collection suit six years earlier. He claimed that an attorney had served the collection action to the wrong person, and he argued that the one-year statute of limitations under the Fair Debt Collection Practices Act could be tolled until a consumer discovers alleged wrongdoing by a collector.
The Lower Court's Take
In an en banc ruling in 2018, the Third Circuit upheld a lower court decision against Rotkiske, finding that FDCPA claims must be filed "within one year from the date on which a violation occurs." The holding conflicts with rulings from the Ninth and Fourth Circuits that the so-called discovery rule, which dictates that the statute of limitations begins when a litigant discovers the cause of action, applied to FDCPA litigation.
The Question
Can the "discovery rule" be used to toll the one-year statute of limitations under the FDCPA?
What's At Stake?
While the case might seem narrow, the language in the statute of limitations under the FDCPA is nearly identical to others in the U.S. Code, like the Truth in Lending Act, the Equal Credit Opportunity Act and the Electronic Funds Transfer Act, so a ruling here could implicate statutes of limitations far beyond the FDCPA. Rotkiske also essentially argues that a discovery rule should be implied in every federal statute of limitations or at least in cases alleging fraud.
The Tea Leaves
In TRW v. Andrews, the Supreme Court in 2001 unanimously held that the statute of limitations in the Fair Credit Reporting Act didn't incorporate the discovery rule. Justice Antonin Scalia said in a concurrence, joined by Justice Clarence Thomas, there was no "general federal rule" that a statute of limitations starts running upon discovery of an injury, and the Supreme Court should have made that point clear. Sources predict that the court will find the suit time-barred and may be ready to put more limits on discovery rule arguments.
The case is Kevin Rotkiske v. Paul Klemm et al., case number 18-328.
Comcast v. National Association of African American-Owned Media
The Advocates
A production company owned by former comedian Byron Allen and the National Association of African American-Owned Media filed a $20 billion race discrimination suit against Comcast, alleging it refused to carry his production firm's channels because he is black.
The Lower Court's Take
A California federal judge in 2016 dismissed the case, finding Comcast's decision not to work with Allen's studio could have been based on legitimate business reasons. But the Ninth Circuit in 2018 revived the suit, concluding that the plaintiffs only needed to show that racial bias was a factor in Comcast's rejections for the case to proceed. Comcast has argued that the plaintiffs need to prove bias was the deciding factor.
The Question
Does a race discrimination claim under Section 1981 of the Civil Rights Act require the plaintiff to show race bias was the deciding factor in an adverse action?
What's At Stake?
If the court finds for Comcast, plaintiffs in race bias suits will need to show that discrimination didn't just contribute to an adverse action, but that it was the actual cause of the adverse action – a tougher standard to meet. In contrast, a holding for the plaintiffs would make it harder for companies to get such suits dismissed early. A ruling here also is likely to affect a related race suit by Allen's company against Charter Communications.
The Tea Leaves
The Supreme Court in 2013 ruled 5-4 along party lines in University of Texas v. Naiel Nassar that workers bringing Title VII retaliation claims must show that retaliation was the "but for" cause of an adverse employment action, raising the bar for plaintiffs. Sources predict that the court will come to a similar conclusion in this case.
The case is Comcast Corp. v. National Association of African American-Owned Media et al., case number 18-1171.
Intel Corp. Investment Policy Committee v. Sulyma
The Advocates
Former Intel employee Christopher Sulyma sued the company's retirement plans for allegedly mismanaging participants' investments in violation of the Employee Retirement Income Security Act. The Intel plans have argued that Sulyma filed suit after ERISA's three-year statute of limitations and that companies can trigger "actual knowledge" of potential ERISA claims by distributing financial documents. Sulyma has countered that merely providing participants with plan documents doesn't create conditions that start the clock.
The Lower Court's Take
A federal magistrate judge in 2017 granted the retirement plans' summary judgment bid, pointing to evidence showing Sulyma knew about the investment strategy, but the Ninth Circuit in 2018 reversed, holding that workers can only be said to have "actual knowledge" of an ERISA violation when they have read financial documents that would clue them into the existence of wrongdoing or have been told of the wrongdoing.
The Question
Does the three-year limitations period under ERISA, which runs from "the earliest date on which the plaintiff had actual knowledge" of a violation, bar a suit where relevant disclosures were made more than three years prior to the filing of the complaint, but the plaintiff didn't read them?
What's At Stake?
If the court sides with Sulyma, employers and plan fiduciaries should brace for more ERISA litigation. Because there will need to be discovery and possibly depositions over whether employees read plan disclosures and when, the suits also would be costlier to defend.
The Tea Leaves
The current composition of the Supreme Court is not likely to have much appetite for a rise in ERISA litigation over disclosures that plaintiffs received but didn't review in a timely manner. Sources say it's hard to see how a statute of limitations could function if plaintiffs are able to get around it by claiming they never read the fund documents. In the securities context, the court has given businesses more leeway to dismiss cases at an early stage, and it might hold similarly here.
The case is Intel Corp. Investment Policy Committee et al. v. Christopher Sulyma, case number 18-1116.
County of Maui v. Hawaii Wildlife Fund
The Advocates
Solicitor General Noel Francisco is representing the government in support of Maui.
Environmental groups accused Maui County in 2012 of violating the Clean Water Act by not obtaining a National Pollution Discharge Elimination System permit for sewage wastewater injection wells that discharged pollution into the Pacific Ocean through groundwater.
The Lower Court's Take
A Hawaii federal court found that Maui violated the CWA by allowing pollutants from four wells to seep into the Pacific Ocean. The Ninth Circuit in 2018 affirmed, saying Maui's activities constituted "point source" discharges that were subject to the CWA's permitting requirements, even though they didn't directly discharge the pollutants into the ocean. The Fourth Circuit backed the Ninth Circuit's view in a similar case, while the Sixth Circuit disagreed with both courts, finding the act didn't cover discharges made through groundwater.
The Question
Does the CWA require a permit when pollutants originate from a point source, but are conveyed to navigable waters by a nonpoint source, such as groundwater?
What's At Stake?
A decision affirming the Ninth Circuit would expand the pollution sources that are subject to federal permitting requirements and create greater liability for businesses and property owners. Environmentalists have argued that a reversal would create a loophole for polluters to use groundwater to convey harmful discharges into navigable waters.
The Tea Leaves
It's still unclear whether the case will ultimately be heard by the Supreme Court after the Maui County Council voted in September to settle the case, a move the county's mayor has vowed to block. But if it is heard, the Supreme Court is expected to scale back the CWA's reach as laid out in the Ninth Circuit decision.
The case is County of Maui, Hawaii v. Hawaii Wildlife Fund et al., case number 18-260.
Law360 received input for this story from the following attorneys: Adam Unikowsky of Jenner & Block LLP; Andrew Grossman of BakerHostetler; Bridget Smith of Lowenstein & Weatherwax LLP; Daniel Geyser of Geyser PC; Derek Shaffer of Quinn Emanuel Urquhart & Sullivan LLP; Elaine Goldenberg of Munger Tolles & Olson LLP; Gabriel Arkles of the American Civil Liberties Union; Joseph Re of Knobbe Martens; Kwaku Akowuah of Sidley & Austin LLP; and Samuel Estreicher of New York University School of Law.
Erin Coe is a features reporter for Law360. She last wrote about the legal fallout from U.S. Supreme Court plurality decisions. Graphics by Chris Yates. Editing by Jocelyn Allison and Pamela Wilkinson.