United States: Supreme Court Round-Up: A Summary Of The Court's Opinions, Cases To Be Argued This Term, And Other Developments

Overview

The Supreme Court Round-Up previews upcoming cases, summarizes opinions, and tracks the actions of the Office of the Solicitor General. Each entry contains a description of the case, as well as a substantive analysis of the Court's actions.

October Term 2018

Decided Cases

1. Azar v. Allina Health Servs., No. 17-1484 (D.C. Cir., 863 F.3d 937; cert. granted Sept. 27, 2018, with the Question Presented limited by the Court; argued Jan. 15, 2019). Whether 42 U.S.C. § 1395hh(a)(2) or § 1395hh(a)(4) required the Department of Health and Human Services to conduct noticeand-comment rulemaking before providing the challenged instructions to a Medicare Administrator Contractor making initial determinations of payments due under Medicare.

Decided June 3, 2019 (587 U.S. __). D.C. Circuit/Affirmed. Justice Gorsuch for a 7-1 Court (Breyer, J., dissenting; Kavanaugh, J., took no part in the consideration or decision). The Court held that the Government failed to satisfy the requisite notice-and-comment period under the Medicare Act, 42 U.S.C. § 1395hh(a)(2), when it established a "substantive legal standard" by posting on its website a new policy that significantly and retroactively "reduced payments to hospitals serving low-income patients." Section 1395hh(a)(2) requires the Government to satisfy a notice-and-comment period for any "rule, requirement, or other statement of policy . . . that establishes or changes a substantive legal standard governing . . . the payment for services" under Medicare. The phrase "substantive legal standard" in the Medicare Act is "more expansive" than the phrase "substantive rule" in the Administrative Procedure Act ("APA") for at least three reasons. First, the Medicare Act contemplates that statements of policy can establish or change a "substantive legal standard," but statements of policy under the APA are by definition not substantive. Second, the Medicare Act permits substantive changes to interpretive rules and statements of policy, but that statutory authority would make no sense if the Medicare Act's use of "substantive" was the same as the APA's "because, again, interpretive rules and statements of policy—and any changes to them—are not substantive under the APA." Third, the Medicare Act explicitly cross-references the APA's good-cause exemption from notice and comment, but does not also cross-reference the APA's exemption for interpretive rules and policy statements, strongly suggesting that Congress acted "intentionally and purposefully in the disparate" treatment.

Russello v. United States, 464 U.S. 16, 23 (1983). Here, the Government's announcement of "a new policy on its website that dramatically—and retroactively—reduced payments to hospitals serving low-income patients" easily qualifies as a "substantive legal standard" affecting Medicare benefits and, as such, the Government cannot make the change without first affording the public notice and providing a chance to comment under § 1395hh(a)(2), regardless of whether notice and comment would be required under the APA. And "[b]ecause affected members of the public received no advance warning and no chance to comment first, and because the government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations, . . . the new policy cannot stand."

2. Taggart v. Lorenzen, No. 18-489 (9th Cir., 888 F.3d 438; cert. granted Jan. 4, 2019; argued Apr. 24, 2019). Whether, under the Bankruptcy Code, a creditor's good-faith belief that the discharge injunction does not apply precludes a finding of civil contempt.

Decided June 3, 2019 (587 U.S. __). Ninth Circuit/Vacated and remanded. Justice Breyer for a unanimous Court. The Court held that courts may hold a creditor in civil contempt for violating a bankruptcy court's discharge order "when there is no objectively reasonable basis for concluding that the creditor's conduct might be lawful under the discharge order." At the end of a bankruptcy proceeding, a bankruptcy court typically enters a "discharge order" that "bars creditors from attempting to collect any debt covered by the order." The Ninth Circuit concluded that civil contempt sanctions for violating a discharge order are improper if the creditor has a subjective "good faith belief" that the order does not apply to the creditor's claim. That was error. Two provisions of the Bankruptcy Code are relevant. First, section 524 provides that a discharge order "operates as an injunction against the commencement or continuation of an" attempt to collect a discharged debt. 11 U.S.C. § 524(a)(2). Second, section 105 provides that a court may "issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." Id. § 105(a). These provisions "incorporate the traditional standards in equity practice for determining when a party may be held in civil contempt for violating an injunction." Those traditional standards, in turn, prohibit civil contempt sanctions "where there is [a] fair ground of doubt as to the wrongfulness of the defendant's conduct." Cal. Artificial Stone Paving Co. v. Molitor, 113 U.S. 609, 618 (1885). This is an objective standard. Accordingly, although a party's subjective intent might be relevant to the nature of an appropriate sanction, "traditional civil contempt principles apply straightforwardly to the bankruptcy discharge context," and permit civil contempt sanctions "when the creditor violates a discharge order based on an objectively unreasonable understanding of the discharge order."

3. Fort Bend Cty., Tex. v. Davis, No. 18-525 (5th Cir., 893 F.3d 300; cert. granted Jan. 11, 2019; argued Apr. 22, 2019). Whether Title VII's administrative exhaustion requirement is a jurisdictional prerequisite to suit, or a waivable claim-processing rule.

Decided June 3, 2019 (587 U.S. __). Fifth Circuit/Affirmed. Justice Ginsburg for a unanimous Court. The Court held that Title VII's requirement that employment-discrimination plaintiffs present their claims to the Equal Employment Opportunity Commission ("EEOC") before filing suit is a mandatory claim-processing rule subject to ordinary principles of waiver and forfeiture, not a jurisdictional prerequisite that can be raised at any point during litigation. Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., requires employees to file a charge with the EEOC before suing an employer for discrimination. When it receives a charge, the EEOC must notify the employer and investigate the allegations. If the EEOC chooses not to sue, or if the EEOC cannot complete its investigation within 180 days, the employee is entitled to a "right-to-sue" notice. That notice allows the employee to sue the employer for the claim(s) presented in the charge. In this case, an employer litigated a religiousdiscrimination claim for five years before arguing that the plaintiff did not properly raise the claim in her EEOC charge. The district court agreed, reasoned that Title VII's charge-filing requirement is a non-waivable jurisdictional rule, and dismissed the case for lack of jurisdiction. The Fifth Circuit correctly reversed that decision. Title VII's charge-filing requirement is not a jurisdictional rule because it does not speak to the court's ability to "exercise adjudicatory authority." Instead, it is a mandatory claim-processing rule that "require[s] complainants to submit information to the EEOC and to wait a specified period before commencing a civil action." As a claim-processing rule, the charge-filing requirement is "subject to forfeiture if tardily asserted."

4. Mont v. United States, No. 17-8995 (6th Cir., 723 F. App'x 325; cert. granted Nov. 2, 2018; argued Feb. 26, 2019). Whether a period of supervised release for one offense is tolled under 18 U.S.C. § 3624(e) during a period of pretrial confinement that upon conviction is credited toward a defendant's term of imprisonment for another offense.

Decided June 3, 2019 (587 U.S. __). Sixth Circuit/Affirmed. Justice Thomas for a 5-4 Court (Sotomayor, J., dissenting, joined by Breyer, Kagan, and Gorsuch, J.J.). The Court held that a "convicted criminal's period of supervised release is tolled . . . during his pretrial detention for a new criminal offense" if the court imposing the sentence for the new offense credits as "time served" the period of pretrial detention for the new offense. During petitioner's five-year period of federal supervised release, he violated the terms of his release by, among other things, trafficking marijuana—a crime for which he was indicted in state court and pleaded guilty. While he was incarcerated for those new state charges and awaiting trial, the term of his federal supervised release period was scheduled to end. After that period ended, the petitioner pleaded guilty, and the state court judge imposed a (new) six-year sentence and credited as "time served" the ten months he had already been incarcerated for the charges. A few days later, the federal district court issued a warrant for petitioner, revoked his supervised release, and ordered him to serve an additional 42 months of imprisonment to run consecutively with his new state sentence. Petitioner argued that the federal court lacked jurisdiction to take these actions because the scheduled period of his supervised release ended while he was incarcerated on the state charges, and the federal court did not act until after the scheduled period had ended. The Sixth Circuit correctly rejected this argument. The plain language of 18 U.S.C. § 3624(e) tolled the supervised release period while petitioner was incarcerated for the state crimes. That statute provides that a "term of supervised release does not run during any period in which the person is imprisoned in connection with a conviction for a . . . crime unless the imprisonment is for a period of less than 30 consecutive days." The phrase "'is imprisoned' may well include pretrial detention," and "the phrase 'in connection with a conviction' encompasses a period of pretrial detention for which a defendant receives credit against the sentence ultimately imposed." Accordingly, "pretrial detention tolls the supervised-release period, even though the District Court may need to make the tolling determination after the conviction."

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