Big Decisions: The 2014-15 U.S. Supreme Court Term in Review

The 2014-15 United States Supreme Court term featured a number of significant cases to the business community. The Faegre Baker Daniels appellate advocacy group is committed to helping our clients understand the Court’s rulings in these cases and the implications for their businesses.

The following is just a sample of the cases decided this term.

EMPLOYMENT  – PREGNANCY  DISCRIMINATION

Young v. United Parcel Service, Inc.

On March 25, 2015, the Supreme Court held that a pregnant worker who seeks to show disparate treatment under the Pregnancy Discrimination Act (PDA) may do so under the McDonnell Douglas burden-shifting framework if the employer accommodates others “similar in their ability or inability to work.”

With this new standard in place, employers should review their accommodation practices and policies and carefully analyze policies that provide accommodation for any type of non-pregnancy-related medical condition but do not offer accommodation to pregnant workers. Note also that this case pre-dated the Americans with Disabilities Act Amendments Act (ADAAA) of 2008 under which even relatively minor impairments and restrictions may constitute disabilities if they are other than temporary. Some courts have found, for example, that a pregnancy-related restriction against “heavy lifting” is arguably a disability under the ADAAA. Now, with Young, employers will likely face both ADAAA and PDA claims for non- accommodation of pregnant workers.

STATE TAXATION – INTERSTATE COMMERCE

Comptroller of the Treasury of Maryland v. Wynne

On May 18, 2015, the Supreme Court held that Maryland’s personal-income-tax scheme, which does not give state residents a full credit for income taxes that they pay to other states, violates the Commerce Clause of the United States Constitution. The unconstitutional law caused some of the income that Maryland residents earn outside the state to be taxed twice, thus creating an incentive for the state’s taxpayers to opt for intrastate rather than interstate economic activity.

This scheme failed what is known as the “internal-consistency test.” Internal consistency is preserved, the Court has said, when the imposition of a tax identical to the one in question by every other state would add no burden to interstate commerce that intrastate commerce would not also bear. The affirmation of internal consistency is important for corporate taxpayers. Had the Court abandoned the test, it would have created adverse consequences in apportionment and other types of tax cases.

EMPLOYMENT – RELIGIOUS ACCOMMODATIONS

EEOC v. Abercrombie & Fitch Stores, Inc.

On June 1, 2015, the Supreme Court held that to prevail on a disparate-treatment claim based on religion under Title VII of the Civil Rights Act of 1964, a job applicant need show only that the applicant’s need for a religious accommodation was a motivating factor in the employer’s decision, not that the employer had actual knowledge of the need.

Reversing summary judgment in favor of Abercrombie, the Court stated that “the rule for disparate-treatment claims based on a failure to accommodate a religious practice is straightforward: An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.”

HOUSING DISCRIMINATION – DISPARATE

Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.

On June 25, 2015, the Supreme Court held that a disparate- impact claim is cognizable under the Fair Housing Act. The Court added, however, that “[a] plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact.” Furthermore, even when courts find liability under a disparate-impact theory, the Court admonished that their “remedial orders must be consistent with the Constitution,” and should focus on eliminating the offending practice that operates to discriminate on the basis of race.

Following this decision, state agencies and real estate developers should carefully consider the effects of their low-income housing allocation decisions on minority communities and be prepared to justify their actions.

HEALTH INSURANCE – AFFORDABLE CARE ACT

King v. Burwell

On June 25, 2015, the Supreme Court held that tax credits authorized under the Patient Protection and Affordable Care Act (ACA) are available to individuals who purchase insurance through a federal exchange.

The ACA states that tax credits are available to individuals who enroll in a health insurance plan “established by the State,” and plaintiffs argued that a federal exchange did not satisfy that definition. Ultimately, the context and structure of the ACA compelled the Court to depart from what would otherwise have been the most natural reading of the plain language of the statute. Such an interpretation avoided what the Court characterized as the “calamitous result that Congress plainly meant to avoid,” namely, the destabilization of the insurance markets in states with federal exchanges.

CONSTITUTIONAL LAW – SAME-SEX MARRIAGE

Obergefell v. Hodges

On June 26, 2015, the Supreme Court held that the 14th Amendment’s Due Process and Equal Protection Clauses guarantee same-sex couples the right to marry in all states and require states to recognize same-sex marriages performed in other states.

Although the Court rejected the states’ arguments on all questions presented, it emphasized that the First Amendment ensures that opponents of same-sex marriage “may continue to advocate with utmost, sincere conviction.” Left open by the decision are, in Chief Justice John Roberts' words the “[h]ard questions” that will arise when people of faith exercise religion in ways that may be seen to conflict with the new right to same- sex marriage.

ENVIRONMENTAL REGULATION – CLEAN AIR ACT

Michigan v. Environmental Protection Agency

On June 29, 2015, the Supreme Court ruled that the EPA acted unreasonably, and hence unlawfully, when it refused to take costs into account in deciding whether to regulate hazardous air pollutants emitted by power plants under the Clean Air Act. The Court acknowledged that there are settings in which the statutory phrase “appropriate and necessary” does not encompass cost, but said, “this is not one of them,” because agencies “have long treated cost as a centrally relevant factor when deciding whether to regulate.”

The implications of this ruling are important for challenges to EPA’s upcoming Clean Power Plan regulations, which are due to be finalized in August 2015. Michigan marks the second time in two terms that a Supreme Court majority has taken the unusual step of limiting deference to EPA’s regulatory authority under the Clean Air Act.