A Mixed-Bag for Small Business in the Supreme Court this Term

Date: May 23, 2016

As we draw near the end of this year’s Supreme Court term, we can already say that this year’s decisions have been a mixed-bag for small business. On one level that should not be surprising given the unfortunate passing of Justice Antonin Scalia, who had long been a predictable vote in favor of strict textualism and constitutional principles. We felt his absence poignantly when the Court divided 4-4 in Friedrichs v. California Teachers Union on the question of whether states may compel public employees to financially support unions. A similar result will likely come in United States v. Texas—where NFIB Small Business Legal Center weighed-in to challenge the Obama Administration’s liberal use of guidance to establish substantive rules without allowing opportunity for the regulated community to voice concerns or objections. But a surprising number of Supreme Court cases are decided unanimously or near unanimously. And that trend continues even in the wake of Justice Scalia’s passing.
 
So far this term we’ve seen both good and bad decisions. For example, earlier this term we were disappointed by the Supreme Court’s 6-2 decision in Tyson Foods, Inc. v. Bouaphakeo, holding that class action lawsuits may be certified on the basis of statistical evidence that both under- and over-estimates actual injuries suffered by class members. But we’re expecting a near-unanimous win in Army of Engineers v. Hawkes, which concerns the right of landowner’s to challenge a government determination that federal environmental restrictions apply to private property.

Supreme Court holds Employees May Advance Stale Discrimination Claims

The mixed-bag theme continued with the 7-1 decision on May 23, 2016 in Green v. Brennan, Postmaster General. The case concerned the statutory requirements for pursuing an allegation of discrimination in cases where an employee quits his or her job in an alleged “constructive discharge.” Specifically, the Court considered whether the employee’s decision to leave his or her job may be considered part of the employer’s discriminatory conduct for the purpose of determining the applicable statute of limitations. The majority ruled that for practical reasons the statute of limitations runs from the time the employee quits—as opposed to from the time of the last allegedly discriminatory act of the employer.
 
Justice Thomas argued, in dissent, that the majority’s rationale defied common sense and the plain language of Title VII. The problem for small business employers is that the Green decision allows employees to control the statute of limitations and necessarily extends the timeline for filing lawsuits against employers. This was a disappointing decision because statutes of limitations serve an essential purpose; they help ensure justice because, with passage of time, memories fade, witnesses scatter and employment records become unavailable. Still, in any event, the best course for employers is—as always—to avoid any action or statement that might be construed as potentially discriminatory.
A Major Victory Against Lawsuit Abuse
 
Yet however rocky this term may have been so far, we helped secure victory in two important cases. First on May 16, 2016, the Court ruled 6-2 that individuals cannot bring suit against a business without demonstrating that they’ve been injured in some concrete manner. 
 
That is an important win because lower courts had allowed lawsuits to proceed in the absence of any concrete injury, on the assumption that a statutory violation alone should be enough to allow a plaintiff to bring suit against a business. Thus the Court’s decision in Spokeo Inc. v. Robins set an important precedent that will help businesses defendant against certain claims. As our Executive Director, Karen Harned, explained, in tightening standing requirements, the Supreme Court made clear that “Plaintiffs whose claims are more theory than fact should never make it to federal court.”
 
A Substantial Win for Employers over EEOC
 
NFIB Legal Center also proclaimed victory for small business in CRST Van Expedited, Inc. v. EEOC. Previously in Mach Mining v. EEOC we helped secure a 9-0 decision holding that Equal Employment Opportunity Commission (EEOC) cases must be dismissed if the EEOC has failed to diligently pursue conciliation before initiating suit against an employer. And in the wake of that decision a defendant-company succeeded in obtaining a court order dismissing an EEOC lawsuit at least in part because EEOC had failed to make good faith efforts to investigate and conciliate prior to suing. Thereafter the company sought attorney’s fees for the expenses incurred in defending the suit; however, the Federal Court of Appeals for the Eighth Circuit ruled that attorney’s fees could not be awarded under the governing statute because the business won the case on procedural grounds—as opposed to winning on the merits. 
 
Before the Supreme Court NFIB Legal Center argued that the Eighth Circuit was wrong, and that the business should have been awarded attorney’s fees under the governing statute as a “prevailing party.” And on May 19, 2016, in an 8-0 decision, the Supreme Court largely agreed ruling that a defendant is a prevailing party under the statute if the defendant succeeds in dismissing the case, whether on merits or on procedural grounds and remanded the case for a final determination on whether the defendant should get attorney’s fees. This decision adds teeth to Mach Mining; it means EEOC will face financial liabilities if it pursues litigation without complying with its statutory obligation to fully investigate and conciliate prior to filing lawsuits. 
 
And that’s a good thing because its exorbitantly expensive to defend against a frivolous claim—especially when advanced by a federal agency with a bottomless litigation budget. So we’ll mark this one down in the win column.
 

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