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Mayer Brown's Supreme Court and Appellate Practice Group distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community. We also email the Docket Report to our subscribed members and if you don't already subscribe to the Docket Report and would like to, please click here.

October Term 2009 - November 2, 2009

Today the Supreme Court granted certiorari in three cases of interest to the business community:

Tax Injunction Act—Federal Jurisdiction

The Tax Injunction Act (“TIA”), 28 U.S.C. § 1341, provides that federal district courts “shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.” Historically, moreover, principles of comity and federalism have been interpreted to limit federal jurisdiction over challenges to state taxation schemes. But Hibbs v. Winn, 542 U.S. 88 (2004), in which the Supreme Court construed the TIA, has generated uncertainty as to the scope of these prudential limitations. Today, the Court granted certiorari in Levin v. Commerce Energy, Inc., No. 09-223, to decide whether either the TIA or principles of comity and federalism bar federal jurisdiction over a case in which taxpayers allege, on equal protection and dormant Commerce Clause grounds, that their tax assessments are discriminatory relative to other taxpayers’ assessments.

This case is of interest to the business community because out-of-state businesses often seek to compete in states with taxation schemes favorable to local businesses. This case raises the question of when an out-of-state business may go to federal court to challenge the constitutionality of a discriminatory state tax scheme.

The respondents in Levin, Commerce Energy, Inc. and Interstate Gas Supply, Inc., are retail natural gas suppliers who market and sell natural gas to Ohio consumers. The companies sued the state of Ohio in federal district court, alleging that the State’s taxation scheme was unconstitutionally discriminatory under the Equal Protection Clause, the Commerce Clause, or both. The Sixth Circuit held that neither the TIA nor the prudential doctrines of comity and federalism barred the suit. In finding federal jurisdiction notwithstanding the principles of comity and federalism, the Sixth Circuit joined the First, Seventh, and Ninth Circuits, but split with the Fourth Circuit, which has taken a broader view of those doctrines.

Absent extensions, amicus briefs in support of the petitioner will be due on December 24, 2009, and amicus briefs in support of the respondents will be due on January 26, 2010. Any decisions about this case should be directed to Charles Rothfeld (+1 202 263 3233) in our Washington, D.C. office.

National Labor Relations Act—Agency Jurisdiction

The National Labor Relations Act (“NLRA”) grants enforcement power to a five-member National Labor Relations Board (“Board”), but specifically allows for the full Board to delegate some or all of its powers to three-member panels. Although the NLRA generally states that “three members of the Board shall, at all times, constitute a quorum of the Board,” it also provides that when the Board delegates power to a three-member panel, “two members shall constitute a quorum of any [such] group.” 29 U.S.C. § 153(b). Today the Supreme Court granted certiorari in New Process Steel, L.P. v. NLRB, No. 08-1457, to decide whether the NLRA allows the Board to operate with only two sitting members if those members act as part of a panel previously authorized by the full Board.

This case is of considerable interest to companies whose employees are, or seek to be, unionized. The NLRB has had only two sitting members since December 31, 2007, when the terms of two other members expired shortly after the term of the Board’s fifth member had expired. Prior to the loss of those members, the full Board delegated all of its powers to a three-member panel that included the two remaining members. The two remaining members have since issued several hundred decisions, and the Supreme Court will determine whether those decisions are valid.

In the decision below, the Seventh Circuit upheld a decision by the two-member Board, which found that New Process Steel had unlawfully withdrawn recognition from a union representing its workers following a dispute over whether the union had properly ratified the collective bargaining agreement. Yet on the very same day as the Seventh Circuit issued its decision, the D.C. Circuit ruled in a different dispute that the NLRA does not grant the Board authority to act unless it has at least three sitting members.

Absent extensions, amicus briefs in support of the petitioner will be due on December 24, 2009, and amicus briefs in support of the respondent will be due on January 26, 2010. Any decisions about this case should be directed to Andrew Rosenman (+1 312 701 8744) in our Chicago office.

Bankruptcy—Calculation of Debtor’s “Projected Disposable Income”

A Chapter 13 bankruptcy permits an individual with regular income who has fallen into debt to propose a repayment plan that entitles her to make installment payments to creditors. The debtor’s plan must then be confirmed by the bankruptcy court. If the bankruptcy trustee objects to the repayment plan, it can be confirmed only if the plan provides that all of the debtor’s “projected disposable income” during the applicable period “will be applied to make payments to unsecured creditors under the plan.” 11 U.S.C. § 325(b)(1)(B). Today the Supreme Court granted certiorari in Hamilton v. Lanning, No. 08-998, to decide whether, in calculating the debtor’s “projected disposable income,” a bankruptcy court may consider evidence suggesting that the debtor’s income or expenses during the plan period are likely to be different from her income or expenses during the pre-filing period. The case is important to companies that make loans to individuals, because it addresses the methodology used to determine how much a debtor must commit to repaying unsecured creditors to secure confirmation of a contested Chapter 13 plan.

The debtor in Hamilton filed for bankruptcy after she had accumulated nearly $37,000 in unsecured debt. The bankruptcy trustee argued that the debtor’s projected disposable income must be calculated based on the income she earned in the six-month period prior to her filing for bankruptcy. According to the trustee, 11 U.S.C. § 325 provides a rigid formula for determining “disposable income” and that amount must be “projected” over the plan period to arrive at “projected disposable income.” This “mechanical” approach leaves no room for judicial discretion.

Disagreeing with the trustee’s interpretation of the statute, the bankruptcy court concluded that the “forward-looking” approach, which permits the amount of projected disposable income to be rebutted upon a showing of special circumstances at the time of confirmation, was the better methodology. The Bankruptcy Appellate Panel (“BAP”) affirmed the decision of the bankruptcy court, and the Tenth Circuit affirmed the decision of the BAP. The Tenth Circuit observed that both the “mechanical” and “forward-looking” approach were in some tension with the statute and that courts had applied both methods to determine projected disposable income. Ultimately, because Congress defined “disposable income” but not “projected disposable income,” the Tenth Circuit concluded that the terms must have different meanings. The Tenth Circuit also believed that the “forward-looking” approach, which is the majority view, better comported with congressional intent.

The bankruptcy trustee petitioned for certiorari, and the Supreme Court requested the views of the Solicitor General. The United States took the position that the Tenth Circuit’s decision was correct but that the Court should grant certiorari to resolve the circuit conflict on the issue.

Absent extensions, amicus briefs in support of the petitioner will be due on December 24, 2009, and amicus briefs in support of the respondent will be due on January 26, 2010. Any questions about this case should be directed to Andrew Tauber (+1 202 263 3324) in our Washington, D.C. office.

Today the Supreme Court also invited the Solicitor General to file briefs expressing the views of the United States in two other cases of interest to the business community:

Pfizer Inc. v. Abdullahi, No. 09-34: The questions presented involve the viability, under the Alien Tort Statute, of complaints filed in federal court against a pharmaceutical company that conducted a clinical trial of antibiotic medication in Nigeria.

Chamber of Commerce of the U.S. v. Candelaria, No. 09-115: The question presented is whether an Arizona statute that imposes sanctions on employers who hire unauthorized aliens and requires employers to participate in an electronic employment verification system is preempted by federal law.

Mayer Brown's Supreme Court & Appellate practice distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community and distributes a Docket Report-Decision Alert whenever the Court decides such a case. We hope you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at atauber@mayerbrown.com or +1 202 263 3324).

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Mayer Brown Supreme Court Docket Reports provide information and comments on legal issues and developments of interest to our clients and friends. They are not a comprehensive treatment of the subject matter covered and are not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed. 

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