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1997 Term, Number 10 / March 2, 1998

Today the Court granted certiorari in one case of interest to the business community. Amicus briefs in support of the petitioner are due on April 16, 1998, and amicus briefs in support of the respondents are due on May 18 (because May 16 is a Saturday). Also on Friday, February 27, the Supreme Court agreed to review a federal district court's decision invalidating the presidential line item veto and set an expedited schedule to permit the case to be decided this Term. Amicus briefs in support of the appellant are due on March 13, 1998, and amicus briefs in support of the appellees are due on April 3. Finally, on its February 23 Order List, the Court requested the views of the Solicitor General in two cases of interest to the business community. Any questions about these cases should be directed to Evan Tager (202-778-0618) or Alan Untereiner (202-778-0656) in our Washington office.

1.  Collective Bargaining Agreements — Private Right of Action Under Federal Anti-Discrimination Statutes. The Supreme Court granted certiorari today in Wright v. Universal Maritime Service Corp., No. 97-889, to decide whether a general arbitration clause in a collective bargaining agreement bars a covered employee from filing his own lawsuit under a federal anti-discrimination statute.

Petitioner, a longshoreman in the Port of Charleston, was injured in 1992. Claiming permanent and total disability, petitioner sought benefits under the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. 901, et seq. Subsequently, petitioner entered into a settlement of his claims. Ultimately, however, petitioner claimed that his injuries had healed spontaneously, and, supported by a note from his doctor, presented himself for work. After petitioner worked for a short time, respondent employers refused to accept petitioner for further work, asserting that he had been previously certified as permanently and totally disabled. Petitioner's union protested respondents' actions, but did not file a grievance for petitioner under the collective bargaining agreement, instead advising him to retain private counsel and pursue a statutory claim under the Americans with Disabilities Act (ADA), 42 U.S.C. 12101, et seq. The collective bargaining agreement, which covered "all matters affecting wages, hours, and other terms and conditions of employment," and provided for a grievance and arbitration procedure that applied to "matters under dispute between the parties," did not refer to the ADA or to any other federal statute barring employment discrimination.

Petitioner thereafter filed charges of discrimination with the Equal Employment Opportunity Commission (EEOC) against the respondent employers. After receiving a right-to-sue notice from the EEOC, petitioner filed suit. Shortly after the suit was filed, the Fourth Circuit held that an applicable labor arbitration agreement "ousts a court of jurisdiction" to hear statutory claims of discrimination brought by individual employees. Austin v. Owens-Brockway Glass Container, Inc., 78 F.3d 875, 878 n.1 (4th Cir.), cert. denied, 117 S. Ct. 432 (1996). On the authority of Austin, the district court granted respondents' motion for summary judgment. In an unpublished decision, the Fourth Circuit, invoking Austin, affirmed. Wright v. Universal Maritime Serv. Corp., No. 96-2850 (July 29, 1997).

In his petition for a writ of certiorari, petitioner asserted that the Fourth Circuit's decision conflicts with the holdings of seven other Circuits and with the Supreme Court's decisions in Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974), and Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991).

This case presents an issue of great significance to all businesses that have entered into collective bargaining agreements containing arbitration provisions.

2.  Line Item Veto Act — Standing — Constitutionality. The Line Item Veto Act authorizes the President to "cancel in whole - (1) any dollar amount of discretionary budget authority; (2) any item of new direct spending; or (3) any limited tax benefit." 2 U.S.C. 691(a). The statute defines these items as, inter alia, spending on "the entire dollar amount * * * required to be allocated for a specific program, project, or activity" (id. ' 691e(7)(A)); "any revenue-losing provision which provides a Federal tax deduction, credit, exclusion, or preference to 100 or fewer beneficiaries" (id. 691e(9)(A)); and "any Federal tax provision that provides temporary or permanent transitional relief for 10 or fewer beneficiaries" (id. 691e(9)(A)). Cancellation automatically takes effect unless Congress passes a "disapproval bill" reinstating a canceled provision. Id. 691b, 691d. The Supreme Court noted probable jurisdiction in Clinton v. City of New York, No. 97-1374, pursuant to the statute's provision for direct appeal from the U.S. District Court for the District of Columbia. Id. 692.

Clinton concerns two exercises of the line item veto authority. The City of New York, a hospital, two hospital associations and two labor unions challenged the President's cancellation of Section 4722(c) of the Balanced Budget Act of 1997, which would have established that "New York State expenditures derived from certain health care provider taxes" qualified for federal matching funds under the Medicaid program. City of New York v. Clinton, 1998 WL 63070, at *3-*4 (D.D.C. Feb. 12, 1998). Before the provision was enacted, the Department of Health and Human Services (HHS) had determined that the taxes in question would not qualify for federal matching funds. Accordingly, unless HHS were to grant a waiver, the State would be required to refund matching funds received in the past based on these taxes. By operation of state law, health care providers that had been excluded from the taxes in question would then be required to make the State whole. Ibid.

Appellee Snake River Potato Growers sought review of the cancellation of Section 968 of the Taxpayer Relief Act, a provision that allowed "the owner of the stock of a qualified agricultural refiner or processor to defer recognition of capital gains on the sale of such stock to an eligible farmers' cooperative," such as the appellee. Id. at *4. The cooperative claimed that it had been poised to purchase a processing facility from a seller that could have benefitted from Section 968, but negotiations ceased after the President vetoed the provision.

The district court first considered and rejected the Government's contention that the plaintiffs lacked standing. Id. at *6-*10. Turning to the merits, the court held that the Act violated both Article I and separation of powers principles. The court reasoned that Article I's procedural requirements had not been fulfilled because "[t]he laws that emerged after the Line Item Veto are not the same laws that proceeded through the legislative process." Id. at *11. Furthermore, the Bicameralism and Presentment Clauses were violated by the President's unilaterally amending laws that had already been enacted. Id. at *12. The court also noted that the Act was unconstitutional because it "impermissibly attempts to evade the requirement that the President sign or reject a bill in toto." Id. at *13. Finally, the court refused to consider the statute a valid congressional delegation of authority, holding that the Act violated separation of powers principles because it authorized the "surrender to the President of an inherently legislative function, namely, the authority to permanently shape laws and package legislation." Id. at *14.

The Supreme Court will review the district court's decision that appellees have standing to sue and, if it concludes that they do have standing, the constitutionality of the Act. The case should be of interest to members of the business community that have an interest in beneficial tax provisions of relatively limited scope, governmental disbursements tied to particular projects, or any other targeted spending or revenue-reducing measure.

* * * * *

The Court invited the Solicitor General to express the views of the United States in the following cases of interest to the business community:

1. Pinal Creek Group v. Newmont Mining Co., No. 97-795: The question in this case is whether Section 107(a) of CERCLA, which authorizes the government or "any other person" who incurs qualified environmental cleanup costs to recover those costs from any party liable under CERCLA, confers a private cost recovery remedy only upon those nongovernmental persons who are (1) not themselves liable or potentially liable under CERCLA's strict liability provisions, or (2) even if strictly liable under CERCLA, blameless of actual fault. Decision below: 118 F.3d 1298 (9th Cir. 1997).

2. Chase Manhattan Bank v. City & County of San Francisco, No. 97-1054: The question presented is whether a declaratory judgment action brought by an ERISA trustee challenging certain actions by local taxing authorities as preempted by ERISA is barred by the Tax Injunction Act, 28 U.S.C. 1341, which precludes federal courts from exercising jurisdiction over challenges to state or local taxes when the plaintiff has a "plain, speedy and efficient remedy" in state court. Decision below: 121 F.3d 557 (9th Cir. 1997).

Copyright 1995 Mayer, Brown & Platt. This Mayer, Brown & Platt publication provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

This Mayer, Brown, Rowe & Maw Supreme Court Docket Report provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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