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.
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case of interest to the business community and distributes a
Docket Report-Decision Alert whenever the Court decides such a
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