Supreme Court Update: Fisher v. University of Texas at Austin (11-345), Mutual Pharmaceutical Co. v. Bartlett (12-142), and United States v. Kebodeaux (12-418)

June 25, 2013 Supreme Court Update

Greetings, Court fans!

We continue our coverage of Monday's decisions with Fisher v. University of Texas at Austin (11-345), the Court's long-awaited decision on the University's affirmative action policies; Mutual Pharmaceutical Co. v. Bartlett (12-142), where the Court found that federal preemption required eradication of a $21 million verdict against the manufacturer of a generic prescription drug; and United States v. Kebodeaux (12-418), holding that the Sex Offender Registration and Notification Act ("SORNA") could be applied to a federal offender who completed his sentence before SORNA was enacted.

In Fisher v. University of Texas at Austin (11-345), the Court reversed the Fifth Circuit's decision upholding the University's use of race in its undergraduate admissions policies. The Court's narrow, compromise decision lets stand the basic principle established in Grutter v. Bollinger (2003) that the benefits of a diverse student body can be a compelling interest, but leaves the door open to a future challenge to that principle. Justice Kennedy wrote for a 7-1 majority, with Justice Ginsburg in dissent and Justice Kagan having recused herself.

Abigail Fisher, a white applicant denied admission, sued the University claiming that its consideration of race in its admissions process violated the Constitution. The aspect of the University's admissions process that she challenged was adopted in the wake of, and was devised specifically to conform to, the Supreme Court's earlier decision in Grutter. The policy included consideration of an applicant's race as part of a complicated, holistic evaluation of many aspects of an applicant's background and experience to help the University achieve the benefits of a racially diverse student body.

Justice Kennedy acknowledged that Grutter had established that the educational benefits of a racially diverse student body could be a compelling interest and that it is appropriate for a court to defer to a university's judgment that diversity is essential to its educational mission. However, under strict scrutiny, a university still must prove that its consideration of race in admissions is a narrowly tailored means to achieve diversity. On this point, the courts must give no deference to the university. On the contrary, it is the court's job, Justice Kennedy emphasized, to conduct a searching inquiry to determine whether the consideration of race is in fact narrowly tailored. That inquiry, in turn, requires a determination that "no workable race-neutral alternatives would produce the educational benefits of diversity." The Fifth Circuit erred in granting deference to the University on the issue of narrow tailoring, instead presuming that the University acted in good faith in considering race as a factor in its admissions process. That approach, according to the Court, is inconsistent with the core purpose of strict scrutiny, which doesn't allow a court to defer to a school's "good faith" use of race without a close analysis of whether race-neutral alternatives might be sufficient. As Justice Kennedy put it, the "higher education dynamic does not change the narrow tailoring analysis" required under strict scrutiny – which "must not be strict in theory but feeble in fact." The Court remanded for a determination of whether summary judgment was still warranted using the proper analysis.

While the Court accepted Grutter's conclusion that a racially diverse student body can be a compelling interest, it made it very clear that it was doing so only because neither party had asked the Court to revisit that part of the Grutter decision – a point Justice Scalia reiterated in his brief concurrence. That leaves open the possibility of a future, broader challenge to any use of race in the admissions process.

Justice Thomas penned a long concurring opinion arguing that Grutter should be overruled because there is no compelling interest that could ever justify the use of race in university admissions. He stressed that, in his view, any consideration of race ultimately works to the disadvantage of racial minorities, finding "no principled distinction between the University's assertion that diversity yields educational benefits and the segregationists' assertion that segregation yielded those same benefits."

Justice Ginsburg authored the lone dissent. She took issue with the majority's embrace of ostensibly race neutral alternatives, including Texas' top 10% plan, asserting that "only an ostrich could regard the supposedly neutral alternatives as race unconscious." She prefers programs that address the issue openly, rather than hiding their consideration of race. She would have upheld the University's admissions policy here because it "flexibly considers race only as a factor of a factor of a factor of a factor" in the admissions calculus, it was implemented only after an extensive review determined that race-neutral alternatives were inadequate, and it is subject to periodic review. Under Bakke and Grutter, that should have been enough to uphold it.

In the end, the Court side-stepped the deepest affirmative action issues. But the respite may be short-lived. Next term, the Court takes up Schuette v. Coalition to Defend Affirmative Action (12-682), a challenge to a Michigan constitutional provision that bars consideration of race or sex in admissions and hiring decisions.

We turn next to preemption. The Court has grappled in recent years with the question of what product liability claims against pharmaceutical manufacturers are preempted by federal law. The newest installment in this saga is Mutual Pharmaceutical Co. v. Bartlett (12-142), where the Court addressed the "tragic" consequences of one woman's use of a prescription drug to treat her shoulder pain with "a straightforward application of pre-emption law." The local drugstore filled Karen Bartlett's prescription with a generic version of Clinoril, known as sulindac, manufactured by Mutual. This anti-inflammatory pain reliever carries a very small risk of a serious skin reaction, and it was Bartlett's bad fortune to learn how serious this could be – with nearly two-thirds of her skin destroyed, leading to a months-long medically induced coma, multiple eye surgeries leaving her nearly blind, and severe disfigurement. A federal court jury awarded her over $21 million on her pharmaceutical design defect claim under New Hampshire state law, and the First Circuit affirmed. The Supreme Court reversed in a 5-4 decision.

Justice Alito, joined by the Chief and Justices Scalia, Kennedy, and Thomas, wrote for the Court that "state-law design-defect claims that turn on the adequacy of a drug's warnings are preempted by federal law." But the analysis was really not so simple. The Court had previously held that failure-to-warn claims against generic drug manufacturers are preempted because the companies (unlike brand-name manufacturers) under federal law cannot change or improve upon the label's warnings. But New Hampshire (unlike some states) also permits a plaintiff to assert a design defect claim for FDA-approved drugs, and Bartlett pursued that route, seeking to prove that sulindac's design was unreasonably dangerous, meaning its danger outweighs its utility. State law outlines three factors for the risk-utility test, asking the jury to weigh the usefulness of the product, the ability to reduce danger without significant impact on the drug's effectiveness or cost, and the presence and efficacy of a warning to avoid unreasonable risk of harm from hidden dangers or from foreseeable uses. For a generic drug, however, Justice Alito pointed out that the manufacturer (bound to the brand-name drug's formulation) could not improve upon usefulness or reduce the risk of danger. Because Mutual could not redesign the drug, it was left with one option to avoid state-law liability for a design defect: improve the adequacy of the warnings on the label to avoid unreasonable danger and shift the balance of factors under the risk-utility test. Yet, federal law prohibits Mutual, a generic drug maker, from taking remedial action by changing its label, making it impossible for Mutual to comply with both federal and state law. So, in the end, just like failure-to-warn claims against generic drug companies, the state's "warning-based design-defect cause of action is pre-empted with respect to FDA-approved drugs."

Justice Breyer, joined by Justice Kagan, wrote the first dissent. He did not see a literal impossibility because Mutual could comply with both federal and state law either by not selling sulindac in New Hampshire or by paying tort damages under state law as the penalty for doing business and complying with federal law – choices that Mutual could make. The majority opinion, though, took a dim view of this solution, holding that preemption law was not intended to eliminate commerce and that a company should be able to continue in business while complying with federal law without contradiction from state law.

Justice Sotomayor, joined by Justice Ginsburg, wrote a second, impassioned dissent to uphold the role of state law where FDA approval does not ensure product safety, where there is no express or obstacle preemption, and where the state's design defect law did not mandate any regulatory changes in the composition or labeling of the drug in conflict with federal law but merely prescribed factors for a jury to consider in weighing the drug's risks and utility. A jury verdict under state tort law does not mandate any action by a drug maker, it only provides incentives. Plus, the warning label was just one factor among several in a design defect claim and was not the central focus of the plaintiff's case after the plaintiff lost her separate failure-to-warn claim on summary judgment for lack of causation (as her physician had not consulted the product warnings or label before prescribing the drug). Tort law did not require a particular label change, and even altering the label may not have protected Mutual from liability for a design defect. Like Justice Breyer, Justice Sotomayor viewed this system as merely giving Mutual a choice to play by the state's rules to ensure reasonably safe drugs or exit the market.

One final note from the majority opinion: Justice Alito wrote for the Court that preemption has "repeatedly vexed" the Court in recent years in the prescription drug context, producing "widely divergent views" – and so "the Court would welcome Congress' ‘explicit' resolution of the difficult pre-emption questions."

Finally, in United States v. Kebodeaux (12-418), the Court returned to a topic it has addressed in each of the last three Terms: the reach of the federal Sex Offender Registration and Notification Act ("SORNA"). Enacted in 2006, SORNA requires those convicted of federal sex offenses to register in the states where they live, study, and work. SORNA followed the Jacob Wetterling Crimes Against Children and Sexually Violent Offender Registration Act of 1994, and was intended to lend uniformity to what had been a "patchwork of federal and 50 individual state registration systems." By regulation, SORNA applies to federal sex offenders who had already completed their sentences at the time it became law.

Respondent Anthony James Kebodeaux was convicted of a sex offense by a special court-martial while serving in the Air Force in 1999. After completing a three-month sentence, he was released with a bad conduct discharge and moved to Texas. He registered as a sex offender, and updated the registration when he moved within Texas from San Antonio to El Paso in 2007. But he failed to update the registration when he moved back to San Antonio later that year. As a consequence, he was charged with violating SORNA and convicted. The Fifth Circuit initially upheld the conviction, but then reversed by a vote of 10-6 en banc. The Fifth Circuit found that the Government lacked power under the Necessary and Proper Clause to regulate Kebodeaux's intrastate movements under SORNA because he had "fully served" his sentence and been "unconditionally" set free before SORNA was enacted.

The Court reversed, 5-2-2. Writing for a majority that included Justices Kennedy, Ginsburg, Sotomayor, and Kagan, Justice Breyer explained that the Court need not go much further than the Fifth Circuit's erroneous assumption that Kebodeaux's release was "unconditional." To the contrary, the 1994 Wetterling Act applied to Kebodeaux at the time of his offense, conviction, and release from federal custody, and imposed upon him registration requirements very similar to those that SORNA later imposed. There was no dispute that the Wetterling Act, as applied to military sex offenders, fell within Congress' authority under the Military Regulation Clause to "make Rules for the … Regulation of the land and naval Forces," and the Necessary and Proper Clause to "make all Laws which shall be necessary and proper for carrying into Execution" the powers vested in the federal government. The Court viewed Congress' decision to impose civil registration requirements as "eminently reasonable": "Congress could reasonably conclude that registration requirements applied to federal sex offenders after their release can help protect the public from those federal sex offenders and alleviate public safety concerns." While SORNA made a few changes for persons already subject to the Wetterling Act, none of the parties contended that the changes were unreasonable or that Congress could not reasonably have found them "necessary and proper" means for furthering its pre-existing goals.

The Chief and Justice Alito each penned decisions concurring in the judgment only. The Chief agreed with the majority's conclusion that Congress had power under the Military Regulation and Necessary and Proper Clauses to require Kebodeaux to register as a sex offender. But he strongly disagreed with the majority's discussion of the benefits of the registration system, as "public safety benefits are neither necessary nor sufficient to a proper exercise of the power to regulate the military." While such surplusage might not ordinarily warrant a separate writing, the Chief "worr[ied] that incautious readers will think they have found in the majority opinion something they would not find in either the Constitution or any prior decision of ours: a federal police power." He therefore wrote separately to stress that a federal police power was immaterial and "could not be material to the result in this case—because it does not exist."

Justice Alito focused on the fact that the exercise of military jurisdiction in certain sex offense cases could cause those cases to "fall through the cracks of a state registration system." He therefore concurred in the judgment insofar as that when Congress "in validly exercising a power expressly conferred by the Constitution," (here, the Military Regulation Clause power), "creates or exacerbates a dangerous situation (here, the possibility that a convicted sex offender may escape registration)," it "has the power to try to eliminate or at least diminish that danger."

Justice Thomas dissented, joined in large part by Justice Scalia. In the dissenters' view, SORNA did not carry into execution any enumerated federal power, but, rather, usurped the police power vested in the States. Thomas rejected each of the enumerated powers the Government had posited as a basis for applying SORNA. The Spending Clause was a "nonstarter": while Congress had provided federal funding for states' registration and notification programs, Congress doesn't gain power to regulate private individuals merely by providing money to the states in which they reside. SORNA also did not fit within the scope of the Commerce Clause, because it was not limited to sex offenders who crossed state lines, and did not constitute economic activity. And the Military Regulation Clause could not apply in Kebodeaux's case because he was no longer a member of the military when SORNA was enacted. Rather than "carrying into execution" any federal power enumerated in the Constitution, SORNA is aimed at protecting society from sex offenders and child predators. That is an important and laudable endeavor, but one that is part of the general police power reserved to the States or the people.

Justice Scalia wrote a separate dissent to make clear that he would have sustained SORNA's registration requirement if he thought it were "reasonably adapted" to executing some other, valid enactment. But he found the proposition that the Wetterling Act's registration requirement was a valid exercise of federal power to be "dubious," and the proposition that SORNA was designed to carry the Wetterling Act into execution "obviously untrue."

One thing you can be sure of? We'll be back shortly with more decisions!

Kim, Jenny & Julie

From the Appellate and Complex Legal Issues Practice Group at Wiggin and Dana. For more information, contact Kim Rinehart or any other member of the Practice Group at 203-498-4400