What Should Small Business Expect in the Supreme Court 2016-17 Term?

Date: October 03, 2016 Last Edit: October 05, 2016

In the midst of a raucous, drama-filled, and high-stakes election season, the U.S. Supreme Court opens its 2016-17 term with an almost prosaic docket this week. While it is not uncommon for the Court to grant certiorari in major cases later in the fall, the Court usually has at least some highly controversial cases in the queue by this time. But there will not likely be any major blockbuster cases this year—not with the Court waiting to see who will fill Justice Scalia’s vacancy. Still, the National Federation of Independent Business is closely following several cases raising issues of importance for small business. 

Reigning-In the Regulatory State

SW General v. NLRB might be described as the follow-up to Noel Canning v. NLRB—which was a major decision from 2013, speaking to the constitutional limits on the President’s power to make appointments for high level positions. Likewise, in SW General, the Court is set to determine whether the President properly impaneled a high level officer at the NLRB. And this is important as a practical matter because NLRB only has power to bring cases against businesses when its officers are properly appointed. 

At issue as an arcane statute, the Federal Vacancies Reform Act, that imposes limitations on the President’s prerogative to fill temporary vacancies. But the real reason that we thought this case important is because the NLRB is relying heavily on a single agency memorandum, which endorsed the President’s interpretation. Of course, this is a problem that we see time-and-again in regulatory cases. Federal agencies love to issue informal statements of law (or “guidance”), while asserting that courts should defer to their statutory interpretations. But, NFIB argues that such informal guidance should only be given weight to the extent it may be deemed persuasive, and that a guidance document or memorandum cannot be deemed persuasive in the absence of textually grounded analysis.

Defending Property Rights

In Murr v. Wisconsin, the Court will decide whether government can completely deny you the right to develop a parcel, if it adjoins another lot on which you have been allowed to develop. We argue emphatically that government must respect your right to make economically beneficial uses of both properties; however, the government insists that it can prohibit development without paying a dime. Accordingly, this case may have a major impact on anyone owning multiple lots within close proximity. 

Putting an End to Unfair Litigation Tactics

Microsoft Corp. v. Baker is an important case because it will effectively set the ground rules for class action lawsuits against manufacturers and employers for years to come. While the general rule is that parties must wait for a final decision on all the issues before a case may be appealed, the plaintiffs are asking the Supreme Court to bless an unorthodox litigation ploy that would give them an opportunity for an immediate appeal. The Ninth Circuit held that plaintiffs could dismiss their own case voluntarily and then seek to appeal a denial of class certification at that juncture; however, we argue that a case is no longer alive once the plaintiff seeks voluntary dismissal. Moreover, we maintain that this controversial tactic should be prohibited because it gives plaintiffs an unfair advantage in litigation. Indeed, a defendant cannot voluntarily dismiss a suit just to gain an opportunity for a quick appeal. So why should courts allow plaintiffs to do so?  

Cutting-Out Paper Requirements

Finally, it is worth noting that there NFIB Small Business Legal Center is urging the Court to take-up a few other important cases in the next few months. One especially worthy case is Direct Marketing v. Brohl, which concerns a Colorado statute that imposes reporting requirements and other regulatory burdens on out-of-state companies selling to Colorado consumers, for whom the State cannot affirmatively require the collection of sales tax. The Tenth Circuit Federal Court of Appeals recently upheld these regulatory requirements—which means potentially crippling paperwork requirements for small business merchants doing business online.

We argue that Colorado’s newly imposed requirements violate the Dormant Commerce Clause because they apply only to out-of-state businesses and therein affirmatively discriminate between in-state and out-of-state companies. And, if left undisturbed, the Tenth Circuit’s decision will embolden other states to adopt similar regimes—therein imposing further complications on small business internet retail companies. To be sure five states have already adopted similar (but inconsistent) requirements for out-of-state businesses, which means things are getting out of control. So our hope is that the Supreme Court will take this case to make clear that states cannot impose these sorts of burdens on out-of-state merchants. 

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