Court Opinions: US Supreme Court Opinions for May 16

Editor’s Note: Law Week Colorado edits court opinion summaries for style and, when necessary, length.

Harrow v. Department of Defense

When the Department of Defense furloughed Stuart Harrow for six days, he challenged that decision before the Merit Systems Protection Board. After a five-year delay, the board ruled against him.

Harrow had the right to appeal that decision to the Court of Appeals for the Federal Circuit, provided he did so “within 60 days” of the board’s final order. But Harrow didn’t learn about the board’s decision until the 60-day period to appeal had run out and he filed his appeal late. Given the circumstances, Harrow asked the federal circuit to overlook his untimeliness and equitably toll the filing deadline. But the circuit, believing the deadline was an unalterable “jurisdictional requirement,” denied his request.

The U.S. Supreme Court held Section 7703(b)(1)’s 60-day filing deadline isn’t jurisdictional. 

The court noted although the procedural rules that govern the litigation process are often phrased in mandatory terms, they’re generally subject to exceptions like waiver, forfeiture and equitable tolling. But when Congress enacts a “jurisdictional” requirement, it “mark[s] the bounds” of a court’s power, and a litigant’s failure to follow the rule “deprives a court of all authority to hear a case,” with no exceptions. 

Mindful of those repercussions, the high court “treat[ed] a procedural requirement as jurisdictional only if Congress ‘clearly states’ that it is.” Under that approach, “most time bars are nonjurisdictional,” even when “framed in mandatory” and “emphatic” terms. 

No language in the provision Harrow violated suggests a different result, the court determined. Although the deadline in Section 7703(b)(1) is stated in mandatory terms, this fact is “of no consequence” to the jurisdictional issue. “What matters instead” is whether the time bar speaks to the court’s jurisdiction. And the high court ruled Section 7703(b)(1) does not.

The Supreme court vacated the decision and remanded the case. Justice Elena Kagan delivered the opinion for a unanimous Court.

Smith v. Spizzirri

The Federal Arbitration Act sets forth procedures for enforcing arbitration agreements in federal court. Section 3 of the FAA provides that when a dispute is subject to arbitration, the court “shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.”

Petitioners, who are current and former delivery drivers for an on-demand delivery service operated by the respondents, filed suit against respondents in state court alleging violations of federal and state employment laws. Respondents then removed to federal court and filed a motion to compel arbitration and dismiss the suit.

The drivers agreed their claims were arbitrable, but contended Section 3 of the FAA required the district court to stay the action pending arbitration rather than dismissing it entirely. The district court issued an order compelling arbitration and dismissed the case without prejudice. The 9th Circuit Court of Appeals affirmed.

The U.S. Supreme Court held when a district court finds that a lawsuit involves an arbitrable dispute and a party has requested a stay of the court proceeding pending arbitration, Section 3 compels the court to issue a stay, and the court lacks discretion to dismiss the suit. 

Statutory text, structure and purpose all point to this conclusion, according to the high court. The plain text of Section 3 requires a court to stay the proceeding upon request. The statute’s use of the word “shall” “creates an obligation impervious to judicial discretion.” The obligation is to “stay” the proceeding. 

Respondents insist “stay” “means only that the court must stop parallel in-court litigation, which a court may achieve by dismissing,” but the court found respondents’ reading disregards the long-established legal meaning of the word “stay” as a “temporary suspension” of legal proceedings. And respondents’ attempt to read “stay” to include “dismiss” cannot be squared with the surrounding statutory text, the Supreme Court found, which anticipates that the parties can return to federal court if arbitration breaks down or fails to resolve the dispute. 

The FAA’s structure and purpose confirm that a stay is required, the court determined.

The Supreme Court reversed the decision and remanded the case. Justice Sonia Sotomayor delivered the opinion for a unanimous court.

Consumer Financial Protection Bureau v. Community Financial Services Assn. of America, Ltd.

The Constitution gives Congress control over the public fisc subject to the command that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” For most federal agencies, Congress provides funding through annual appropriations. For the Consumer Financial Protection Bureau, however, Congress provided a standing source of funding outside the ordinary annual appropriations process. Specifically, Congress authorized the bureau to draw from the Federal Reserve System an amount that its director deems “reasonably necessary to carry out” the bureau’s duties, subject only to an inflation-adjusted cap.

In this case, several trade associations representing payday lenders and credit-access businesses challenged regulations issued by the bureau pertaining to high-interest consumer loans on statutory and constitutional grounds. As relevant here, the 5th Circuit Court of Appeals accepted the associations’ argument that the bureau’s funding mechanism violates the appropriations clause.

The U.S. Supreme Court held Congress’ statutory authorization allowing the bureau to draw money from the earnings of the Federal Reserve System to carry out the bureau’s duties satisfies the appropriations clause. 

First the court noted, under the appropriations clause, an appropriation is a law that authorizes expenditures from a specified source of public money for designated purposes. The bureau’s funding is “drawn from the Treasury” and is therefore subject to the requirements of the appropriations clause. 

The issue is whether the bureau’s funding mechanism constitutes an “Appropriatio[n] made by Law.” The court concluded the answer is yes based on the Constitution’s text, the history against which that text was enacted and congressional practice immediately following ratification. 

The associations argue the bureau’s funding is not “drawn . . . in Consequence of Appropriations made by Law” because the agency itself decides the amount of annual funding to draw from the Federal Reserve System. But, the Supreme Court noted appropriations of “sums not exceeding” a certain amount were commonplace immediately after the founding. So it found Congress didn’t violate the appropriations clause by permitting the bureau to decide how much funding to draw up to a cap. 

The associations also suggested the appropriations clause requires both chambers of Congress to periodically agree on an agency’s funding, which ensures each chamber reserves the power to unilaterally block those funding measures through inaction. While the Constitution expressly provides that “no Appropriation of Money” to support an army “shall be for a longer Term than two Years,” the high court found the Constitution doesn’t explicitly limit the duration of appropriations for other purposes. 

The associations contended if the bureau’s funding mechanism is consistent with the appropriations clause, then Congress could do the same for any — or every — civilian agency, allowing the executive branch to operate free of any meaningful fiscal check. But, the court noted the appropriations clause is simply a limitation on Congress’ power over the purse, and it found the associations erred by reducing the power of the purse to only the principle expressed in the appropriations clause. 

The Supreme Court reversed the decision and remanded the case.

Justice Clarence Thomas delivered the opinion of the court, in which Chief Justice John Roberts Jr. and Justices Sonia Sotomayor, Elena Kagan, Brett Kavanaugh, Amy Coney Barrett and Ketanji Brown Jackson joined. Kagan filed a concurring opinion, in which Sotomayor, Kavanaugh and Coney Barrett joined. Brown Jackson filed a concurring opinion. 

Justice Samuel Alito Jr. filed a dissenting opinion, in which Justice Neil Gorsuch joined. 

The dissenting justices asserted the court upheld a novel statutory scheme under which the bureau may bankroll its own agenda without any congressional control or oversight. The justices noted they differ in opinion on what the appropriations clause was understood to mean when it was adopted. 

The dissenting justices explained that in England, Parliament had won the power over the purse only after centuries of struggle with the crown. Steeped in English constitutional history, the justices reasoned the framers placed the appropriations clause in the Constitution to protect this hard-won legislative power.

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