State AGs And SCOTUS: Term Preview

Cozen O'Connor

State Attorneys General (“AGs”) continue to be active as both litigants and amici in cases before the U.S. Supreme Court. This term there are several cases with significant State AG amici involvement that implicate important state issues. The following is a preview of these major cases for which certiorari has been granted to date.

Weyerhaeuser Company v. U.S. Fish and Wildlife Service[1]

This case arises from the U.S. Fish and Wildlife Service (“FWS”) designating a portion of petitioner Weyerhaeuser Company’s land critical habitat under the federal Endangered Species Act (“ESA”) which was unoccupied and uninhabitable by the target endangered species.  The Court must determine (1) whether the ESA prohibits designation of private land as unoccupied critical habitat that is neither habitat nor essential to species conservation, and (2) whether an agency decision, such as the FWS’s decision in this case, not to exclude an area from critical habitat designation because of the economic impact of designation is subject to judicial review.

Twenty AGs filed an amicus brief in support of the petitioner arguing that the lower court’s expansive definition of areas “essential” for conservation goes against the plain text of the ESA, and that habitat exclusion decisions are judicially reviewable. The AGs also argue that critical habitat designations have significant financial effects on states and private parties.

Knick v. Township of Scott, Pennsylvania[2]

This case presents the issue of whether the Court should reconsider a requirement that property owners must exhaust state court remedies in order to ripen federal takings claim, which was suggested in Williamson County Regional Planning Commission v. Hamilton Bank, 473 U.S. 172, 194-96 (1985). The federal circuit courts are split as to whether Williamson County’s ripeness doctrine bars review of takings claims asserting that a law causes an unconstitutional taking on its face, as the Third Circuit held in the decision on appeal.

The Texas and Oklahoma AGs filed an amicus brief in support of the petitioner, while seventeen AGs filed an amicus brief in support of the respondents. The Texas and Oklahoma AGs argue that the ripeness rule portion of Williamson County should be overruled because it essentially strips federal courts of jurisdiction over specific takings claims, and warn that the challenged portion of Williamson County jeopardizes’ Fifth Amendment plaintiffs’ access to lower federal courts.

The 17 AGs supporting the respondents argue that the Williamson County rule properly reflects the special nature of takings claims, and that, without completed state adjudication, many federal takings claims are hypothetical or contingent. They also argue that the Williamson County rule is not unfair to property owners, and that it serves core state interests such as primacy in matters of state property law and enforcement of state law limits on regulatory action.

New Prime Inc. v. Oliveira[3]

This case involves interpretation of an exemption from the Federal Arbitration Act (“FAA”) for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The Court is evaluating: (1) whether a dispute over the applicability of the exemption must be resolved in arbitration, and (2) whether the exemption is inapplicable to independent contractor agreements. Petitioner New Prime, Inc. (New Prime) is a trucking company that engages both company drivers and independent contractors. Respondent Dominic Oliveira is a former New Prime truck driver who became an independent contractor.

Fifteen AGs filed an amicus brief in support of Oliveira, arguing that the exemption applies to truck drivers, regardless of whether they are employees or independent contractors. They argue that the Congress that enacted the FAA would have understood the “class of workers” to include independent truck drivers, and that Congress exempted certain workers—like independent truck drivers—from the FAA because it wanted to enact more specific legislation for those engaged in transportation.

Frank v. Gaos[4]

The Court will review a Ninth Circuit decision upholding an $8.5 million class action settlement that disposed of absent class members’ claims while providing them with no monetary relief, and diverting the settlement award to third-party organizations selected by the defendant and class counsel under the doctrine of cy pres. Cy pres is a trust law doctrine that, in its traditional application, allows a court to direct a portion of a trust to a charitable purpose that reasonably approximates the purpose stated in the trust if the stated purpose is impossible or impracticable. The question presented is whether a class action award that provides no direct relief to class members but is diverted to a third party under cy pres meets the federal procedural requirement that a settlement that binds class members be “fair, reasonable, and adequate.”

Nineteen AGs filed an amicus brief in support of petitioners arguing that the doctrine of cy pres harms consumer class members and that, if the Court does not bar all cy pres class action awards, it should confirm that cy pres-only awards are per se invalid and cy pres amounts cannot support a determination that fees were “fair.” The AGs also argue that cy pres diverts compensation from class members and magnifies problems consumers already face in class action settlements.

Virginia Uranium, Inc. v. Warren[5]

The question presented in this case is whether a state statute that facially regulates an activity within the state’s jurisdiction, but has the purpose and effect of regulating an activity within the jurisdiction of a federal agency, is preempted by federal law. Specifically, petitioners Virginia Uranium claim that the federal Atomic Energy Act (“AEA”) preempts a Virginia statute regulating uranium mining because the state statute has the purpose and effect of regulating the radiological safety hazards of milling uranium ore, which is an activity within the federal Nuclear Regulatory Commission’s jurisdiction.

The amicus brief filed by ten AGs in support of the respondents argues that the petitioners’ theory is unsupported by the text of the AEA, which contains a savings clause clearly allowing for preemption only where a state law regulates an activity also regulated by the federal government, and that provision does not apply to the uranium mining at issue in this case. Even if the AEA savings clause is unclear, the AGs argue, the Court’s longstanding presumption against preemption supports the respondents’ interpretation of the law. Further, the AGs point to prior federal court decisions reflecting a narrow view of AEA preemption of state law, and warn that petitioners’ theory could jeopardize other state laws that Congress has expressly authorized states to adopt. Finally, the AGs take the position that federal courts should not inquire into a state’s purpose behind legislation in adjudicating preemption questions.

Apple Inc. v. Pepper [6]

In this antitrust case, the Court will consider the question of whether the bar against indirect purchaser recovery under the antitrust laws established by Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) prevents claims by purchasers of applications bought through the Apple App Store (“apps”).  Owners of iPhones who purchased apps from the Apple App Store asserted claims against Apple for monopolization of the market for such apps, which they claimed resulted in the payment of “supracompetitve” prices to Apple. The U.S. District Court for the Northern District of California dismissed the consumers’ action on the basis of the Court’s holding in Illinois Brick.  The Ninth Circuit reversed that dismissal, finding that app purchasers were direct purchasers from Apple.

Thirty-one AGs filed an amicus brief in support of the consumers, arguing that the Court should overrule Illinois Brick. The AGs argue that since the Illinois Brick decision was decided, the states have overwhelmingly rejected the limitation of damages actions to only direct purchasers.  As a result of the decades of state experience in allowing indirect purchaser recovery, the states argue that the policy judgments and predictions anticipated by the Court in Illinois Brick have not come to fruition, and therefore no longer support the policy underpinnings of the holding.

Franchise Tax Board of California v. Hyatt[7]

This case involves a question as to the scope of state sovereign immunity and asks the Court to consider whether Nevada v. Hall, 440 U.S. 410 (1979), which permits a state to be haled into another state’s courts without its consent, should be overruled. The Franchise Tax Board of the State of California (“FTB”) audited Gilbert P. Hyatt’s income tax returns and found that he was deficient on his taxes because he had moved to Nevada later than he had claimed. Hyatt first challenged the FTB’s findings through California’s administrative processes. While administrative review of the FTB’s findings was underway, Hyatt brought a lawsuit against the FTB in Nevada state court alleging that the FTB had committed torts against him in auditing his tax returns.

Forty-three AGs filed an amicus brief in support of the FTB, arguing that Nevada v. Hall was wrongly decided and that state sovereign immunity includes immunity from suits brought in other states’ courts. The AGs’ brief contends that state sovereign immunity is not limited to the text of the Eleventh Amendment, that Hall contravenes the history and purpose of the Eleventh Amendment, and that later cases conflict with Hall. The AGs also emphasize that allowing states to be haled into other states’ courts harms state sovereignty, and is particularly harmful in the tax context.

*The authors would like to thank our intern Emily Yu for her contributions to this article.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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