Small Business at the Supreme Court: 2020-2021 Term Preview

Date: October 12, 2020

To say that there exists any small business before the Supreme Court of the United States is an oxymoron. However, each term the Supreme Court hears cases that have significant consequences for small business owners and the economy in general. As it has in previous terms, the NFIB Small Business Legal Center continues to advocate for the rights and interests of small businesses nationwide, in front of the Supreme Court.

Thus far, the Small Business Legal Center has submitted a brief in two cases for the upcoming term.

  1. CIC Services LLC v. IRS – The Legal Center filed an amicus brief in this case arguing that taxpayers should be able to challenge illegal Internal Revenue Service regulations before paying tax penalties. The case revolves around the Anti-Injunction Act’s prohibition of lawsuits that seek to restrain the collection of taxes. The issue is whether a taxpayer can challenge agency regulations and administrative procedures before paying taxes. Read more about this case here.
  2. U.S. Fish and Wildlife Service v. Sierra Club – The Legal Center also filed an amicus in this case, supporting the Sierra Club’s bid for increased transparency in government. The case centers around the Freedom of Information Act, a piece of legislation that allows the public to request government documents. The issue is whether an exemption to the open records requirement allows an agency to withhold drafts of a final rule or regulation. Also joining in the brief with NFIB were the American Forest Resource Council, National Association of Home Builders, and American Farm Bureau Federation. Read more about this case here.

Also set for this term are cases in which NFIB has not taken a legal position, but will undoubtedly impact small businesses going forward:

  1. California v. Texas/Texas v. United States – In yet another case challenging the Affordable Care Act (“ACA”), the Supreme Court must determine what effect a Congressional amendment has on the original legislation. The ACA’s original text required that Americans purchase health insurance (“individual mandate”), or pay a penalty to the IRS. In 2012, the Supreme Court determined the penalty was a tax and because of this, the individual mandate was constitutional. In 2017, Congress amended the ACA, setting the penalty for non-purchase of insurance to $0, negating the individual mandate. Fast forward to present day, and the issue before the Court is whether the penalty now being $0 eliminates its status as a tax since the IRS collects no money, rendering the individual mandate unconstitutional.
  2. Ford Motor Company vs. Montana Eighth Judicial District Court – This case asks the Supreme Court to clarify when a state has specific personal jurisdiction over a defendant. For a defendant to be properly sued in a state, the state must have either general personal jurisdiction or specific personal jurisdiction over the defendant. To establish specific personal jurisdiction, a defendant’s contacts with the state must have somehow caused the plaintiff’s injury forming the basis of the lawsuit (i.e. a Texas small business sells and ships a product to a person in California, and that product explodes, injuring the buyer). In this case, Ford sold a vehicle to a Washington dealership, which sold it to an Oregon resident, and years later was purchased by a Montana person and driven on a Montana road. After the vehicle malfunctioned, the plaintiff sued Ford. The Montana Supreme Court held that Montana had specific personal jurisdiction over Ford because Ford sells other cars in Montana and has widespread activity in the state, albeit unrelated to this accident. While technical and not one usually impacting small business, the Court’s determination on how much of a causal connection the Due Process Clause requires will have ramifications on business liability when participating in interstate commerce.

*** This case is consolidated with another out of Minnesota, involving similar facts and legal issues.

Much is going on at the Court besides these cases. With the recent passing of Justice Ginsburg, the Court currently sits only 8 members. Each term brings the possibility of retirements, with the next term being no different. Depending on the results of this year’s presidential election, the Court’s eldest Justice (Justice Breyer) may decide to retire or the Court’s longest tenured Justice (Justice Thomas), may do the same. Regardless of vacancies, the work of the Court continues. So too will NFIB continue the fight at the Court to protect the rights and interests of small businesses.

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