October Term, 2013
December 10, 2013
Today the Supreme Court issued two decisions, described below, of interest to the business community.
Federal Courts—Younger Abstention
Sprint Communications Co. v. Jacobs, No. 12-815 (previously discussed in the April 15, 2013, Docket Report)
Under the judicially created doctrine of abstention, federal courts are required to abstain from deciding certain cases over which they otherwise have jurisdiction, in order to prevent “interference” with related state-court proceedings. In Younger v. Harris, 401 U.S. 37 (1971), the Supreme Court held that when there is a parallel, pending state criminal proceeding, federal courts must refrain from enjoining the state prosecution. Younger has since been extended to certain state civil proceedings. Today, in Sprint Communications Co. v. Jacobs, the Supreme Court clarified Younger’s scope and reiterated that Younger abstention applies only in exceptional circumstances.
The case is significant for the business community because it will affect which cases will be heard by federal, rather than, state courts.
The petitioner, Sprint, had a dispute with Windstream, an Iowa communications company, over access charges for “voice over Internet protocol” calls. Sprint sought declaratory relief from the Iowa Utilities Board, which found that Sprint was required to pay the access charges. In seeking to overturn the Board’s decision, Sprint commenced two lawsuits. The first was a complaint filed in federal district court, arguing that the Board’s decision was preempted by the Telecommunications Act of 1996. In the second suit, Sprint petitioned for review of the Board’s order in Iowa state court. Sprint claimed that it filed the state suit as a protective measure in the event that the federal court required it to first exhaust state remedies.
In light of the state suit, the district court dismissed the federal case on abstention grounds. The Eighth Circuit affirmed based on its reading of Middlesex County Ethics Committee v. Garden State Bar Association, 457 U.S. 423 (1982), holding that Younger abstention is warranted whenever “an ongoing state judicial proceeding . . . implicates important state interests, and . . . the state proceedings provide adequate opportunity to raise [federal] challenges.” 690 F.3d 864, 867.
In a unanimous opinion by Justice Ginsburg, the Supreme Court reversed. The Court stated that the Eighth Circuit had misinterpreted its decision in Middlesex to extend Younger to “virtually all parallel state and federal proceedings, at least where a party could identify a plausibly important state interest.” Slip op. 11. Citing its decision in New Orleans Public Service, Inc. v. Council of City of New Orleans, 491 U.S. 350 (1989) (NOPSI), the Court reaffirmed that “[o]nly exceptional circumstances justify a federal court’s refusal to decide a case in deference to the States.” Id. at 7. Those “exceptional circumstances” exist in three types of proceedings: (1) ongoing state criminal prosecutions, (2) certain “civil enforcement proceedings” and (3) pending “civil proceedings involving certain orders . . . uniquely in furtherance of the state courts’ ability to perform their judicial functions.” Id. at 7-8.
The Court concluded that the Board proceeding at issue did not fall within any of NOPSI’s three exceptional categories. In particular, the Court rejected the respondent’s argument that the proceeding was equivalent to a state enforcement action for which Younger abstention is appropriate, noting that it was neither “akin to a criminal prosecution” nor was it “initiated by the State in its sovereign capacity.” Id. at 9.
Any questions about this case should be directed to Andrew Pincus (+1 202 263 3220) or Archis Parasharami (+1 202 263 3328) in our Washington office.
Labor-Management Relations Act—Effect of Anti-Bribery Statute on Voluntary-Recognition Agreements
Unite Here Local 355 v. Mulhall, No. 12-99 (previously discussed in the June 24, 2013, Docket Report)
The Supreme Court granted certiorari in Unite Here Local 355 v. Mulhall to decide whether “neutrality agreements”—in which an employer agrees to remain neutral with respect to attempts to organize its workforce and gives a labor union access to its premises and employees—violate Section 302(a) of the Labor Management Relations Act. That section makes it a crime for an employer “to pay, lend, or deliver, or agree to pay, lend, or deliver, any money or other thing of value” to a labor union that “represents, seeks to represent, or would admit to membership, any of the employees of such employer.”
Today, the Supreme Court dismissed the petition as improvidently granted in a one-line per curiam opinion. Although the majority did not explain its decision, Justice Breyer filed a written dissent (joined by Justices Sotomayor and Kagan), arguing that the Court should have sought additional briefing on mootness, standing, and whether there is a private right of action under Section 302.
The result in Unite Here leaves the circuit split on the legality of neutrality agreements unresolved. As Justice Breyer noted in his dissent, the Court’s decision to dismiss the writ as improvidently granted preserves the case’s “precedential effect” in the Eleventh Circuit, making employer or union officials in that circuit potentially guilty of a crime for entering into neutrality agreements—a result that could “negatively affect the collective-bargaining process.”
Any questions about the case should be directed to Andrew S. Rosenman (+1 312 701 8744) in our Chicago office.
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