Gearing-Up for the Supreme Court’s October Term: Four Cases to Watch

Date: October 02, 2017

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This is shaping-up to be a big year for small business in the Supreme Court. With Neil Gorsuch on the bench, leading legal commentators are now forecasting that the Court will begin, once again, to wade into those difficult controversies that so often break-down along ideological lines. As such, we’re doubling-down on our efforts to draw the Court’s attention to those issues that we think most important.

The good news is that last term, with only eight justices on the Court, we managed to secure four important (though low-profile) victories for small business—with one non-decision, and only one loss. Coming off such a successful year, there is even greater reason for optimism now. Here is a snap-shot preview of a few pending cases.

Arbitration Agreements

Out the gate, the Court will hear arguments in three consolidated cases, which should kick-off the 2017-18 term with a bang. As background, the federal courts of appeal are divided on a hugely important question of labor law. Notwithstanding repeated decisions, from the Supreme Court, affirming that the Federal Arbitration Act (FAA) means what it says in guaranteeing the right to enter and enforce arbitration agreements, some lower courts have ruled that employers cannot require employees to enter into arbitration agreements that may require waiver of the right to bring a class action lawsuit. But other courts have (properly) construed the FAA as allowing these sort of arbitration agreements in employment contracts.

While the plaintiffs’ bar argues that these arbitration agreements violate the National Labor Relations Act in limiting legal options for employees, we maintain that Congress spoke clearly when enacting the FAA to protect the freedom of contract. Simply put, there is no basis for denying employer’s the right to utilize arbitration—which can be a much less costly, and more efficient, means of resolving employment disputes. But, as ever, the Supreme Court will have the last word here.

Public Employee Unions

The Supreme Court has agreed to hear arguments in Janus v. American Federation of State, County and Municipal Employees, Council 31. This may prove the biggest case of the term because the Court is considering overturning a three decades old precedent authorizing states to compel public employees to give financial support to public employee unions. We maintain that these regimes violate the First Amendment and should be struck-down. We detailed discuss this case in more depth here and here.

Overcriminalization of Tax Law

The Supreme Court is also gearing-up to hear arguments in a case that may potentially affect any small business taxpayer. In Marinello v. United States, the Court will decide whether federal prosecutors went too far in charging a business owner with obstruction of justice for failing to keep records that were not affirmatively required by law. Shockingly, the government argues that business owners may be prosecuted for doing anything that might make a future Internal Revenue Service audit more difficult. For example, if federal prosecutors allege a “corrupt” motive, a small business owner might be prosecuted for an otherwise legal decision to structure business finances in a way that might make the source of certain income unclear, or for failing to keep receipts. As such, we argue that the Internal Revenue Code’s obstruction provisions should be construed more narrowly (and more reasonably), to make a crime only for those acts intended to interfere with a pending legal action or audit.

Clean Water Act Jurisdiction

Additionally, as part of our ongoing efforts to winnow-down Clean Water Act (CWA) regulation, we filed in NAM v. Department of Defense. The case was borne out of the National Federation of Independent Business’s lawsuit challenging a proposed expansion of CWA jurisdiction, which would have negatively affected many small business landowners. But before the courts can decide the full reach and limitations of the CWA, the Supreme Court must first decide which courts should initially hear our case. We argue that challenges to federal CWA jurisdiction should be heard in local courts, where affected landowners reside, because they best understand conditions on the ground.

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