SCOTUS will hear cases pertaining to small business issues.
We are still waiting to see how many cases the U.S. Supreme Court will hear in its upcoming 2018–2019 term, which begins in October. But we already know the Court will hear at least two cases of significance to the small business community, says Luke Wake, Senior Staff Attorney for NFIB’s Small Business Legal Center. Both cases involve land ownership and could be a boon for small businesses that feel burdened by federal or state regulations. Here’s what you need to know:
Weyerhaeuser Co. v. U.S. Fish and Wildlife Service
This case centers on the U.S. Fish and Wildlife Service’s designation of 1,500 acres of private land in Louisiana as critical habitat for the dusky gopher frog, an endangered species. The frog doesn’t actually live in this area, and the owners of the land are challenging the designation—which would require them, in part, to halt timber management on the land.
“If part of your land is designated within a ‘critical habitat,’ it means there’s a whole lot of red tape you have to jump through to do anything with your land,” says Wake.
There are two questions being asked in this case. The first question is whether the Endangered Species Act prohibits the designation of private land as “critical habitat” if the land is neither habitat nor essential to species conservation. The second is whether a landowner may challenge a critical habitat designation if it causes economic harm—which may be crucial for affected businesses.
According to the U.S. Fish and Wildlife Service, “critical habitat” is a designated geographic area that contains the features essential to the conservation of a threatened or endangered species. The Service contends that a “critical habitat” can include areas not currently occupied by the species and which may require special management and protection.
Wake says the central issue is: “Can a business seek relief in court where it is adversely affected by a critical habitat designation? In other words, are courts allowed to consider the economic impact?”
In Weyerhaeuser’s case, for instance, the “critical habitat” designation is standing in the way of plans to develop the land—meaning the critical habitat designation imposes costs of up to $34 million. “A win in this would be a positive development in the law for our members,” says Wake.
Knick v. Township of Scott, Pennsylvania
In Knick v. Township of Scott, Pennsylvania, the Supreme Court will decide if they should reconsider Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, which was decided in 1985. Controversially, Williamson County essentially closed the federal courthouse doors for owners seeking vindication of their Fifth Amendment right to receive just compensation for a taking of property. More precisely, Williamson County held that in order to bring a claim in federal court, an owner must first sue (and lose) in state court; however, the trouble is federal courts are barred from rehearing cases already decided in state court.
“This is something we’ve been hoping the Supreme Court would take up for a long time,” says Wake. “We think that Williamson County got it wrong.”
Rose Mary Knick owns and lives on 90 acres of land in rural Pennsylvania, which includes a private cemetery. In 2012, the town in which Knick’s property is located passed an ordinance that required all owners of cemeteries to provide public access to those sites. Knick challenged the ordinance in Pennsylvania court, but the court declined to rule on her lawsuit because the town had yet to file a civil enforcement action against her—which would only happen if she violated the ordinance by continuing to exclude trespassers. Knick tried to challenge the law in federal court; however, the district court dismissed her suit under Williamson County because she had not exhausted her state court options. The U.S. Court of Appeals likewise ruled for the town. But now the Supreme Court has agreed to hear her case—and to decide whether to abandon Williamson County once and for all.
Wake agrees Knick should have been able to challenge her town in Federal Court. “You’re going to get a fairer shake on a lot of these cases in Federal Court,” he says. And small business owners will have a broader win, if the court decides in Knick’s favor. “In the world of property rights, this has been a big problem, and it’s going to be a big step forward if we can change this.”
2017–18 Supreme Court Term Recap
NFIB’s Small Business Legal Center Reports three significant wins for small business:
Marinello v. United States
The case: The owner of a freight service, Carlo Marinello, was convicted for several tax-related offenses. One of the charges was that he had obstructed justice because his accounting practices had made it difficult for IRS to conduct its audit; however, this was controversial. NFIB filed an amicus brief arguing businesses should not be held liable for obstruction of justice on the basis of lawful business practices unless it is shown the business acted with corrupt intent to interfere with a known investigation.
The Decision: The court decided 7–2 that to obstruct or impede the IRS investigation, the court required proof the defendant acted with knowledge of a pending IRS action. “If that had gone the other [way], it would have been a real problem for business owners,” says Wake.
Janus v. American Federation of State, County, and Municipal Employees, Council 31
The case: This case asked whether public employees could be compelled to provide financial support to a labor union—even where the employee has refused to join the union. Illinois state employee Mark Janus challenged a 1977 Supreme Court ruling, which held that public employees who do not belong to a union can be required to pay a “fair share” or “agency” fee to cover union costs to negotiate a contract that applies to all public employees, including those not in a union.
The Decision: In a 5-4 ruling, the Court decided demanding non-union public sector employees pay union fees violated the First Amendment. As a result, no further public-sector union can collect funds from employees without their affirmative consent. “We think it’s a good step forward in protecting First Amendment rights,” says Wake. “You don’t sacrifice your First Amendment rights just because you are engaged in economic conduct.”
Encino Motorcars, LLC v. Navarro
The case: At the heart of the case was a wage dispute. Hector Navarro sued Encino Motorcars, saying the company violated the Fair Labor Standards Act by failing to pay “service advisers” overtime wages.
The Decision: In a a 5-4 decision, the Court decided “service advisers” are exempt from overtime wages under the Fair Labor Standards Act. But the decision has broader implications because the Supreme Court rejected the idea courts should construe ambiguous FLSA provisions in favor of the employee. For NFIB members, the case “has one of the greatest day-to-day practical impacts” of any case heard last session,” says Wake. “It may be a game-changer in a lot of wage cases going forward because it means that the courts must give employers a fair shake without automatically siding with the employee.”