October 20, 2020

Volume X, Number 294

October 19, 2020

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Supreme Court Update: June Medical Services v. Russo (No. 18-1323), Seila Law LLC v. Consumer Financial Protection Bureau (No. 19-7), and Agency for International Development v. Alliance for Open Society International (No. 19-177)

Greetings, Court Fans!

When we last wrote, the Court had yet to issue decisions in at least eight cases, with only one decision day before the end of June, the date by which it typically wraps up its term. Suffice it to say that Tuesday did not break the record for the most decisions issued in one day. But the Court did make some progress, issuing two more decisions. In the much-watched Espinoza v. Montana Department of Revenue (No. 18-1195) a closely divided Court invalidated the “no-aid’ provision of Montana’s state constitution as inconsistent with the U.S. Constitution’s free-exercise clause. And in the not-at-all-watched U.S. Patent and Trademark Office v. Booking.com (No. 19-46) a nearly unanimous Court held that the name “Booking.com” could merit a federally registered trademark. We’ll be back tomorrow to summarize those two decisions. But what about the remaining six-plus cases, including the Trump subpoena blockbusters? Well, the Court has now set aside this Monday for the issuance of more opinions. And perhaps it will add even more depending on how Monday goes.

While you wait for those, though, you can tide yourself over with summaries of the Court’s three decisions from Monday: June Medical Services v. Russo (No. 18-1323)Seila Law LLC v. Consumer Financial Protection Bureau (No. 19-7), and Agency for International Development v. Alliance for Open Society International (No. 19-177).

At issue in June Medical Services LLC v. Russo (No. 18-1323) was the constitutionality of a Louisiana law regulating abortion providers that was nearly “word-for-word identical” to a Texas law the Court struck down four years ago in Whole Woman’s Health v. Hellerstedt. If you’re getting some déjà vu, that’s probably because it’s not the first time we’ve talked about June Medical around here. Last term, the Court’s four liberal Justices and Chief Justice Roberts teamed up to stay the mandate of a Fifth Circuit decision permitting the law to take effect (Whole Woman’s Health notwithstanding). That surprised many, because the Chief was among the dissenters in Whole Woman’s Health. But others (including us) saw the Chief’s vote as coming down to the fact that if someone was going to overrule Whole Woman’s Health, it definitely was not going to be the Fifth Circuit. Also receiving commentary at the time was then newly confirmed Justice Kavanaugh’s narrow dissent, which many saw as a bad (though perhaps not conclusive) sign for the theory held by some (Susan Collins) that Justice Kavanaugh may follow his predecessor, Justice Kennedy, in taking a more moderate line on Roe. Following the stay, the Court granted cert earlier this year to consider the full merits. So now that it’s gone through full briefing and argument, what do we have? Well, pretty much just the same thing as in the stay decision, only with more pages.

Let’s step back. In 2014, Louisiana adopted Act 620, which required any doctor who performs an abortion to hold active admitting privileges at a hospital within 30 miles of the location where the abortion is performed or induced. Five abortion clinics and four abortion providers challenged the Act. They scored an early win in the district court, with that court holding that the act was unconstitutional on its face and enjoining its enforcement. While it was proceeding through the Fifth Circuit and then the Supreme Court, the Court issued its decision in Whole Woman’s Health and vacated and remanded the lower courts’ decisions in June Medical for reconsideration in light of Whole Woman’s Health. On remand, the district court once again found the Act unconstitutional and entered a permanent injunction. The Fifth Circuit reversed and following the procedural history already recounted, June Medical once again found itself before the Supreme Court.

In a contentious 5-4 decision, the Court reversed the Fifth Circuit, declaring Act 620 unconstitutional, with Justice Breyer writing for a plurality of the Court’s four more-liberal voices. After quickly dealing with Louisiana’s argument, raised for the first time in the Supreme Court, that the petitioners lacked prudential standing, Justice Breyer recapped the standards articulated in Casey and expanded on in Whole Woman’s Health. A statute is unconstitutional if it imposes an “undue burden” on a woman’s right to obtain an abortion. It imposes an “undue burden” if it has the “purpose or effect of presenting a substantial obstacle to a woman seeking an abortion.” And last, but certainly not least, Whole Woman’s Health requires the court performing this analysis to consider whether the burden imposed by the law is justified by its claimed benefits. It’s this last part that is perhaps the most important: In the view of many, this principle, introduced for the first time into the Court’s abortion jurisprudence by Whole Woman’s Health, significantly elevated the scrutiny given to state regulations of abortion as compared with pre-2016 law.

With these standards out of the way, the case then turned on the district court’s factual determinations. The most important of which were that Act 620 would have a detrimental impact on access to abortion in Louisiana and that the Act served no “significant health-related interest.” With respect to the impact of Act 620 on abortion access, the district court observed that plaintiffs’ attempts to obtain admission privileges were largely rejected for non-competence related reasons. Providers’ inability to obtain admission privileges threatened to reduce the number of abortion providers from six to at most two, and more likely one. As a result, the demand for abortions would exceed providers’ capacity, and those women who are able to access abortions would be forced to contend with burdensome travel and wait times.

The plurality rejected the Fifth Circuit’s finding that the providers’ lack of effort to obtain admitting privileges, not the Act, was the cause of any obstacle to abortion access. To the plurality, it boiled down to the standard of review: under a proper application of the clearly erroneous standard, the record supported the district court’s finding that the Act imposed a substantial obstacle. The plurality next turned to the putative benefits of Act 620. While Louisiana argued that Act 620 protected women’s health, the district court found, and the plurality agreed, that it served no such function. The Act made “no improvement to women’s health ‘compared to prior law’” because it served “no relevant credentialing function,” there was no evidence that patients treated by providers with admissions privileges had better outcomes, and transfer agreements would be sufficient to provide continuity of care. Thus, the district court’s factual findings brought the case squarely within Whole Woman’s Health.

Chief Justice Roberts wrote separately to concur in the judgment. Although he continued to believe that Whole Woman’s Health was wrongly decided, he saw no justification under principles of stare decisis for overruling it, just four years later. He also expressed his disagreement with Whole Woman’s Health’s major innovation—its tasking courts to balance a law’s burden against its benefits—arguing that “nothing in Casey commands such a consideration.” Nonetheless, he voted with the plurality to reverse, in light of the district court’s not clearly erroneous factual finding that the Act imposed a substantial obstacle to abortion access sufficient to render the Act unconstitutional (regardless of how this burden measures up against the law’s benefits).

Each of the Court’s remaining justices penned separate dissents. Proceeding by seniority, Justice Thomas, disagreed with the majority’s view that Louisiana’s standing argument was raised too late. Considering the argument on its merits, he would conclude that third-party standing doctrine is inconsistent with Article III’s case or controversy requirement and that plaintiffs therefore lacked standing. Turning to the merits, Justice Thomas opined, once again, that there exists no constitutionally protected right to abortion. In his view, “the putative right to abortion is a creation that should be undone.” Justice Thomas spent the remainder of his dissent debunking the “legal fiction” of substantive due process and its progeny, including GriswoldRoeCasey, Whole Woman’s Health, and now, June Medical.

Next, Justice Alito, joined in his strenuous dissent by Justice Gorsuch, Justice Thomas (in part), and Justice Kavanagh (in part), echoed Chief Justice Robert’s rejection of the balancing test articulated in Whole Woman’s Health and applied in June Medical. Applying the balancing test for the sake of argument, Justice Alito further dissented from the district court’s factual findings. To him, there was “ample evidence in the record” to support the conclusion that Act 620 serves the valid purpose of protecting women’s health. Justice Alito also cast dispersions on the use of stare decisis, stating that the difference in procedural posture (pre-enforcement vs. post-enforcement) should make it “obvious . . . that this Court’s decision in Whole Woman’s Health is not controlling.” Next, Justice Alito criticized the use of the “good faith” standard to evaluating physicians’ attempts to obtain admitting privileges. In his view, the test was elusive and failed to take into account the doctors’ incentives not to obtain privileges. To Justice Alito, the Court should “have asked whether the doctors’ efforts to acquire privileges were equal to the efforts they would have made if they knew that their ability to continue to perform abortions was at stake.” Even under the incorrect good faith standard, Justice Alito insisted, “the record fail[s] to show that the doctors made anything more than perfunctory efforts to obtain privileges.” Under “the correct standard, June Medical failed to prove that Act 620 would drive . . . doctors out of the abortion practice.” Justice Alito would remand the case and require the joinder of a party with standing, i.e., a woman wishing to obtain an abortion.

Next up, Justice Gorsuch set forth an “array of rules” overlooked “one after another” by the plurality. First, he engaged in an extensive review of the legislative record and chastised the plurality for failing to take the legislature’s factual findings into account despite the required “’deferential’ if not ‘uncritical’” standard of review. Second, Justice Gorsuch opined that Louisiana did not waive its standing argument and, what’s more, the plaintiffs lacked standing. Third, he stressed that the Court flipped the standard for facial challenges “on its head.” To him, “[r]ather than requiring that a law be unconstitutional in all its applications to fall, [the decision] requires that Louisiana’s law be constitutional in all its applications to stand.” Fourth, Justice Gorsuch contended that the Court shirked the standard for granting a preliminary injunction by failing to find that irreparable harm was likely. Fifth, the plurality improperly treated the factual record in Whole Woman’s Health as binding in June Medical. Sixth, Justice Gorsuch rejected the plurality’s benefit-burden balancing test as “little more than the judicial version of a hunter’s stew: Throw in anything that looks interesting, stir, and season to taste.” And finally, Justice Gorsuch cast Chief Justice Roberts’s concurrence aside as contrary to the very precedent that the Chief claimed to uphold.

Finally, we come to Justice Kavanaugh. And just as he had done the last time around, he dissented on somewhat narrower grounds than his colleagues. He agreed with their uniform rejection of Whole Woman’s Health’s cost-benefit balancing. And he agreed that the district court’s record was insufficient to support its injunction. But rather than go beyond that, he would remand to the district court for further fact-finding, something he likewise recommended the first go around.

The second biggest decision from Monday was Seila Law LLC v. Consumer Financial Protection Bureau (No. 19-7), where the Court considered whether the structure of the Consumer Financial Protection Bureau (CFPB)—with a single Director not removable by the President except for inefficiency, neglect, or malfeasance—is a violation of the Constitution’s separation of powers. A bare majority of the Court answered that question “yes.” But, far more importantly, a larger majority concluded that this provision regarding the removal of the CFPB’s Director can be severed from the rest of the statute creating it, allowing the agency to continue to exist in a slightly modified form.

The facts giving rise to Seila Law begin at a time many of us would love to forget. Even today’s youngest lawyers remember the devastating financial crisis of 2008—the collapse of the subprime mortgage market, the wiping out of $10 trillion in American household wealth, and the loss of millions of Americans’ jobs. In the aftermath of that catastrophe, the Obama administration embraced an idea by “then-Professor Elizabeth Warren” (as the Court’s majority calls the senior Senator from Massachusetts) to create a new, independent federal agency that would regulate consumer financial products and hold substantial power to implement and enforce a large body of financial consumer protection laws. Professor Warren and the Obama administration envisioned a traditional independent agency run by a multi-member board. But Congress took a slightly different approach: it passed the Dodd-Frank Act in 2010 creating, among other things, a powerful CFPB led not by a multi-member board, but by a single Director appointed by the President (with the advice and consent of the Senate) to a five-year term, during which the President could remove the Director from office only for cause. Fast forward to 2017, when the CFPB issued a civil investigative demand to a California law firm called Seila Law LLC that provides debt-related legal services. Seila Law refused to comply on the ground that the agency’s leadership by a single Director removable only for cause violated the separation of powers. The matter quickly ended up in litigation, but the district court and then the Ninth Circuit both rejected Seila Law’s argument, holding that the removal restrictions do not violate the Constitution’s separation of powers.

The Supreme Court reversed in a majority opinion written by the Chief Justice and joined in full by Justices Alito and Kavanaugh and in part by Justices Thomas and Gorsuch. All five of the Court’s conservatives agreed on the merits of the constitutional challenge to the single Director structure. As the majority saw it, “[t]he entire ‘executive Power’ belongs to the President alone.” Of course, it’s impossible for one person to single-handedly manage the business of the country and so a variety of “lesser executive officers” assist the President. But “[t]hese lesser officers must remain accountable to the President, whose authority they wield.” Crucially, the President generally must have the ability to remove executive officials. There are, as always, a couple exceptions. First, in a 1935 case called Humphrey’s Executor v. United States, the Court upheld a statute that protected the Commissioners of the Federal Trade Commission from removal except for cause. The majority referred to this as the exception “for multimember expert agencies that do not wield substantial executive power.” Second, in a 1988 case called Morrison v. Olson, the Court upheld a provision granting good-cause tenure protection to an independent counsel appointed to investigate and prosecute alleged crimes by high-ranking government officials. The majority here refers to this as the exception “for inferior officers with limited duties and no policymaking or administrative authority.”

According to the majority, the CFPB’s Director—a superior officer with substantial executive power who cannot be removed except for cause—doesn’t fit into either of the established exceptions. And the Court declined to create a new exception for this situation, holding that an agency led by such a Director “has no basis in history and no place in our constitutional structure.” First, with respect to history, there is a “lack of historical precedent” for providing good-cause tenure to principal officers who wield power alone rather than as members of a board or commission. (There are a few precedents including the Social Security Administration and the Federal Housing Finance Agency, but the majority brushes these and a few other precedents away as either “aberrations” or “modern and contested.”) Second, as to constitutional structure, the Court goes on for several pages about the three branches of government, dividing power everywhere except for the Presidency, and how individual executive officers “will still wield significant authority, but that authority remains subject to the ongoing supervision and control of the elected President.” Because “[t]he CPFB’s single-Director structure contravenes this carefully calibrated system by vesting significant governmental power in the hands of a single individual accountable to no one,” it violates the separation of powers.

From there, the Chief’s opinion turns to the issue of severability and the majority parts ways into two camps. The Chief, joined by Justices Alito and Kavanaugh, has little difficulty concluding that the removal restrictions can be separated from the rest of the Dodd-Frank Act. “The provisions of the Dodd-Frank Act bearing on the CFPB’s structure and duties remain fully operable without the offending tenure restriction. Those provisions are capable of functioning independently, and there is nothing in the text or history of the Dodd-Frank Act that demonstrates that Congress would have preferred no CFPB to a CFPB supervised by the president.” To the contrary, the Act contains a standard severability clause demonstrating what Congress wanted: if “any provision of this Act” is “held to be unconstitutional,” “the remainder of this Act” should “not be affected.” Combining the Chief’s three-justice opinion on severability with the dissent’s view that the removal provision can be severed, there was a seven-justice majority holding that the CFPB can continue to operate, “but its Director . . . must be removable by the President at will.” (With this, many forward-looking commentators see a sign of what’s to come with one of the most-watched cases of next term, California v. Texasanother Obamacare case, where a number of states contend seek to use Congress’s elimination of the monetary penalties attached to the individual mandate as a judo move to invalidate the entirety of the Affordable Care Act.)

Justice Thomas penned a separate opinion, joined by Justice Gorsuch, concurring in part and dissenting in part. As Justice Thomas saw it, the Court got it right that the CFPB’s single-leader structure is a violation of the Constitution. But, he argued, the Court was too reluctant to overrule Humphrey’s Executor. That decision “poses a direct threat to our constitutional structure and, as a result, the liberty of the American people.” When these issues come up “in a future case,” Thomas stated that he will “repudiate what is left of this erroneous precedent.” Presumably Thomas and Gorsuch would, therefore, find all multimember agencies with removal protection for commissioners—including the Federal Trade Commission, National Labor Relations Board, Securities and Exchange Commission, etc.—to be violations of the Constitution’s separation of powers. Thomas also disagreed with the Chief’s severability analysis. He laid out his general “concerns about our modern severability doctrine.” (The Chief derisively says in his opinion: “Justice Thomas would have us junk our settled severability doctrine and start afresh, even though no party has asked us to do so.”) Given his concerns about severability jurisprudence and the facts here, Thomas “would simply deny” the CFPB’s petition to enforce the civil investigative demand.

That takes us to the Court’s longest opinion: the dissent penned by Justice Kagan and joined by Justices Ginsburg, Breyer, and Sotomayor. Besides agreeing that the CFPB should be allowed to continue operating, Kagan found virtually no agreement with her colleagues in the majority. To begin with, she rejected their understanding of the constitutional structure, deriding it as a simplistic “Schoolhouse Rock definition” of “separation of powers.” The problem, Kagan notes, is that the separation of powers “is, by design, neither rigid nor complete.” Far from creating three separate spheres of government, the spheres intersect in various ways. For example, the Constitution “giv[es] Congress broad authority to establish and organize the Executive Branch.” Moreover, Kagan rejected entirely the notion that removal powers are constitutional in origin. After all, the Constitution says “nothing at all” about “the President’s removal authority.” So it is that Congress has “wide latitude” to create independent agencies like the CFPB. Indeed, the CFPB’s single Director structure is hardly unique. The Social Security Administration, which is headed by a single director, “runs the Nation’s largest government program.” The Federal Housing Finance Agency, also headed by a single director, “plays a crucial role in overseeing the mortgage market.” Kagan also dismissed the majority’s distinction between single director and multimember agencies, noting that the “Constitution does not distinguish” between such agencies and, in all events, “instructs Congress, not this Court, to decide on agency design.” She also noted the lack of logic behind the majority’s single director/multimember agency dichotomy, noting that “a multimember commission may be harder” for the President “to control than an individual director.” After all, “[i]t’s easier to get one person to do what you want than a gaggle.”

Last up for today’s issue, in Agency for International Development v. Alliance for Open Society International (19-177), the Court refused to extend the First Amendment right of U.S.-based non-governmental organizations to be protected from the government conditioning their federal funding on the adoption of a government-endorsed viewpoint to their foreign affiliates. At issue was a specific provision of the Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003 (the Leadership Act) that prohibits the appropriation of federal funds to any NGO that does not espouse “a policy explicitly opposing prostitution and sex-trafficking.” 22 U.S.C. § 763(f). In 2013, a group of U.S.-based NGOs engaged in combatting HIV/AIDS overseas whose primary source of federal funding is the Leadership Act challenged this policy as an unconstitutional restriction on their right to freely express a policy favoring neutrality toward sex work. In a 5-3 decision written by Chief Justice Roberts (and bearing an identical caption, which we’ll call AIOSI I), the Court held that this policy did indeed violate the NGOs’ first amendment rights.

Shortly after the Court’s decision in AOSI I, the same plaintiffs commenced a second lawsuit in the Southern District of New York, seeking to invalidate the policy requirement as applied to their foreign affiliates. The district court found that “those corporate formalities” that distinguished the foreign affiliates from their U.S.-based counterparts “did not meaningfully change the First Amendment calculus” set forth in AOSI I. And it found significant the “global reach” of plaintiffs’ work and the necessity they had to “operate through legally separate affiliates incorporated abroad” to carry out their work. Accordingly, it sided with the U.S.-based NGOs, declaring the policy unconstitutional as applied to their foreign affiliates. A divided Second Circuit affirmed, and the Supreme Court granted cert.

Justice Kavanaugh, joined by Chief Justice Roberts and Justices Alito and Gorsuch, reversed. In his view, plaintiffs could not “export their own First Amendment rights” to protect their legally distinct foreign affiliates from Congress’s funding conditions. Justice Kavanaugh cited “two bedrock principles of American law” that led to his conclusion. First, Justice Kavanaugh found that the “long-settled” principal that foreign citizens located outside U.S. territory “do not possess rights under the U.S. Constitution” was an insurmountable barrier to a finding that the foreign affiliates could “assert” any First Amendment right. Justice Kavanaugh stated that a converse finding would undermine U.S. interests abroad by, for example, providing constitutional rights to foreign citizens against U.S. military and intelligence action abroad. Second, Justice Kavanaugh found it significant that the foreign affiliates, despite their close association with the U.S.-based NGOs, are “as a matter of American corporate law . . . separate legal units with distinct legal rights and obligations.” In his view, the government’s treatment of foreign affiliates as distinct from their U.S.-based counterparts was borne out in “the historical practice regarding American foreign aid,” particularly the frequency with which Congress conditions foreign aid. In the majority’s view, to extend the First Amendment protections enjoyed by U.S.-based NGOs to their foreign affiliates would place Congress in the “untenable position” of deciding to either fold certain aid programs altogether, or risk funding organizations that espouse views and positions antithetical to U.S. values.

Now, to be sure, Justice Kavanaugh acknowledged that the NGOs did not challenge these “bedrock” concepts. Instead, they argued that, because the anti-prostitution views their foreign affiliates espouse in order to obtain federal funding could be misconstrued as the speech of the U.S.-based NGOs themselves, their First Amendment right against misattribution was being violated. But Justice Kavanaugh found this doctrine inapplicable, reasoning that any misattribution was “the product of choice” rather than government compulsion. Plaintiffs further argued that the scope of the Court’s decision in AOSI I had already invalidated the policy requirement as applied to foreign affiliates. However, Justice Kavanaugh summarily found such reading untenable because the Court’s prior decision did not facially invalidate the Act’s conditions on funding.

In true Justice Thomas fashion, Justice Thomas separately concurred to note his continued disagreement with AOSI I. In Justice Thomas’s view, the Constitution does not require a “viewpoint neutral government.” Indeed, Justice Thomas contended that the Constitution itself “imposes affirmative ideological commitments” and excludes “points such as communism and anarchism.” Because the Leadership Act compels nothing—U.S.-based NGOs may remain neutral towards prostitution and freely carry on their sensitive work without federal funding under the Act—Justice Thomas would find no violation of foreign affiliates’ First Amendment rights.

Justice Breyer, joined by Justices Ginsburg and Sotomayor, wrote a lengthy dissent. (Justice Kagan did not participate.) At bottom, he rejected the majority’s framing of the issue as concerning foreign citizens’ constitutional rights. Rather, in Justice Breyer’s view, the case was about “the First Amendment rights of American organizations.” He criticized at length the majority’s failure to focus on the context in which the U.S.-based NGOs perform their work, which makes their foreign affiliates necessary for the NGOs to carry out the very purpose of the Leadership Act. In his view, the risk of misattribution here is immeasurable: the U.S.-based NGOs and their foreign affiliates “are clearly identified with one another” and “[t]heir message is the same.” Because enforcing the policy requirement against the foreign affiliates “would plainly distort” the U.S. NGO’s own message, Justice Breyer concluded the requirement was facially unconstitutional.

That’s it for this week. We’ll be back tomorrow with summaries of the Court’s two other decisions of this week.

© 1998-2020 Wiggin and Dana LLPNational Law Review, Volume X, Number 183

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About this Author

Tadhg Dooley Appelate Attorney Wiggin Dana New Haven, CT
Partner

Tadhg is a Partner in the firm’s Litigation Department, where his practice focuses on appellate and complex civil litigation. He has extensive experience handling appeals in state and federal courts throughout the country and has obtained favorable results for a diverse range of clients, from federal prisoners to foreign presidents, big companies to small towns. Among other recent successes, Tadhg helped a municipality overturn a $6.8 million verdict in the Connecticut Appellate Court, and helped a dental practice overturn a $3.7 million verdict in the Georgia Supreme Court. Tadhg has also...

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David Roth Litigation lawyer Wiggin Dana
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David is Counsel in Wiggin and Dana’s Litigation Department and a member of the firm’s Appellate, Art and Museum Law, and Intellectual Property Litigation practice groups. He has assisted insurers, universities, large companies, cultural institutions, and sovereign nations in a variety of complex civil litigation and appeals. Representative matters include trademark, copyright, and patent cases; insurance class-actions; art-ownership disputes; and high-stakes business litigation. David has also represented private individuals and companies in several criminal matters and internal investigations.

David received his J.D. from the Yale Law School, where he was a Notes Editor for the Yale Law Journal. He earned an M.A. in Classics from the University of Virginia and a B.S. in Classics from the University of Oregon.

Before joining the firm, David held a clerkship with Judge Christopher Droney of the United States Court of Appeals for the Second Circuit.

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