Supreme Court Update: Husted v. Philip Randolph Institute (16-980), Sveen v. Melin (16-1432), China Agritech, Inc. v. Resh (17-432)

June 14, 2018 Supreme Court Update

Greetings, Court Fans!

This morning, the Court made some headway (emphasis on "some") on the roughly two dozen cases left to decide by the end of the month. Specifically, in Minnesota Voters Alliance v. Mansky (No. 16-1435), the Court held 7-2 that Minnesota's ban on wearing political t-shirts while voting violates the First Amendment. And in Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. (No. 16-1220), a unanimous court held that courts should give "respectfully consideration" but not "conclusive effect" to a foreign state's submission in a federal-court proceeding advising the court of the details of the foreign state's law. We'll have more to say about those decisions before long, but in the meantime, we're back with summaries of three cases decided earlier this week.

The biggest decision of the week was Husted v. Philip Randolph Institute (No. 16-980), which sanctioned Ohio's system of purging voter rolls. The National Voter Registration Act requires States to adopt a reasonable process for removing from state voter rolls persons who are ineligible "by reason of" a change in residence. The Act prohibits States from adopting a process that results in the removal of a person from the rolls "by reason of the person's failure to vote." However, it sets forth a procedure States can permissibly use, which would treat a person's failure to vote as evidence or confirmation that the person has moved. Before a person can be removed from the rolls, the State must send him or her a preaddressed, postage prepaid "return card." If the card is not returned, the State must keep the person's name on the rolls for a period covering two general federal election cycles (generally four years), after which—if the person still has not voted, the name may be removed from the rolls. The NVRA envisions that a State will send out a return card after the individual has submitted a change-of-address request with the Post Office, but it does not prohibit a State from sending out a return card under other circumstances.

Unlike most States, Ohio does not wait until it has received notice of a change-of-address request to send out a return card. Instead, the State sends a return card to any registered voter who has "not engage[d] in any voter activity for a period of two consecutive years." If the person fails to respond to the card and continues to be inactive for an additional period of four years (including two federal election cycles), then the person is removed from the voter rolls. Respondents challenged this system, claiming it violated the NVRA's prohibition on purging voters "by reason of" their failure to vote. The Sixth Circuit agreed, holding that Ohio's process violated the NVRA because the State sends return cards "based ‘solely' on a person's failure to vote."

The Supreme Court reversed, 5-4. Writing for the majority, Justice Alito maintained that Ohio's process "follows [the NVRA] to the letter." In his view, the NVRA prohibits States from removing voters solely based on their failure to vote, but it does not preclude a State, like Ohio, from using the failure to vote as evidence of a change of address. Ohio's process complies with the NVRA because it "removes registrants only if they have failed to vote and have failed to respond to a notice." Underscoring that the issue in the case was one of statutory construction, Justice Alito brushed off the arguments of the Respondents, and dissenters, as signaling "a policy disagreement, not just with Ohio, but with Congress." Because the NVRA (especially as amended by the Help America Vote Act of 2002) permits a state to purge a voter who has failed to vote for four years and has failed to respond to a return card, Ohio's process does not violate federal law.

Justice Thomas joined the majority opinion in full, but wrote separately to stress that, even if Ohio's process purged voters by reason of their failure to vote alone, the NVRA could not be read to preclude that, because "States have the exclusive authority to set voter qualifications and to determine whether those qualifications are satisfied."

Justice Breyer led the charge for the dissenters. He painstakingly set forth the statutory structure of the NVRA and made the case that it permits States to use the failure to vote as a means of confirming that a registrant has moved, not as a means of identifying voters who may have moved in the first place. Ohio's process violates the NVRA, Breyer maintained, because it used the failure to vote as the sole basis for starting the removal process in the first place. The NVRA compels states to use a "reasonable" method to identify persons who have likely moved, and its text, structure, and purpose make clear that the failure to vote is not a reasonable basis for drawing that conclusion. Justice Sotomayor joined Breyer's dissent, but penned a solo salvo of her own, criticizing the majority for "entirely ignor[ing] the history of voter suppression against which the NVRA was enacted and uphold[ing] a program that appears to further the very disenfranchisement of minority and low-income voters that Congress set out to eradicate."

While there was considerable division in Husted, the Court found near unanimity in Sveen v. Melin (No. 16-1432), ruling that a Minnesota law that revoked any revocable beneficiary designation to a former spouse upon divorce did not violate the Contracts Clause of the Constitution when applied retroactively to designations made before the law's passage.

Led by Justice Kagan, the eight-Justice majority reasoned that the law did not amount to a substantial impairment of contracts for several reasons. First, estate law has long used default rules in similar contexts. For example, many states' laws automatically revoke testamentary gifts upon divorce. These default rules are designed to effectuate the presumed intent of most divorcing spouses (who, according to the Court, don't generally wish to leave each other assets beyond those required by the divorce decree). While wills are not contracts like insurance policies are, insurance policies and other testamentary substitutes serve the same purpose. Thus the law often "honors, not undermines, the intent of the only contracting party to care about the beneficiary designation." Second, the policyholder cannot rely on the notion that a designation will never be altered since divorce courts have wide discretion to divide property. Third, the law can be viewed as merely imposing a paperwork requirement and an easy one at that. For the rare divorcee who wishes to continue to designate her ex, the policyholder need only file a new beneficiary designation after divorce to maintain the lucky ex. It is as easy as the "stroke of a pen." Alternatively, the spouses can make the designation part of their divorce decree or settlement. Because the Court found no substantial impairment, it did not analyze whether the impairment was "reasonable."

Justice Gorsuch penned a lone dissent. He first took issue with the modern test for determining whether a law violates the Contracts Clause. As he emphasized, the Clause does not prohibit "substantial" impairments, but "any" impairments no matter how minor. But even under the modern test, the Minnesota law plainly failed as the beneficiary designation is the "whole point" on a life insurance contract. Nobody pays for life insurance in the hopes of giving money to just anyone. The beneficiary is the critical term. There are at least some people who in fact wish to leave insurance proceeds to a former spouse. For those people, the law is a fundamental impairment. Moreover, the majority cannot justify the law's legality by arguing that most people fail to change their beneficiary designations due to inattentiveness while simultaneously assuming that those individuals who want to retain their former spouse as beneficiaries will be hyper vigilant to changes in the law and the need to file a new beneficiary designation to name the same person in their existing designation! Because Gorsuch would find that the law substantially impairs contracts, he would reach the question of reasonableness. As there are many less burdensome ways of accomplishing the State's objectives, the law is not reasonable and is unconstitutional.

Last up is China Agritech, Inc. v. Resh (No. 17-432), where the Court addressed whether the filing of a class action tolls the statute of limitations for unnamed class members, allowing the class member to bring its own, later class-action lawsuit if class certification is denied in the initial class effort. Ever since the Supreme Court's decisions in American Pipe (1974) and Crown, Cork (1983), the absent class member who was not a named plaintiff in the initial class action was protected from the running of the statute of limitations until the denial of class certification, and the class member could rely on tolling to assert its own timely, individual, non-class claim following denial of certification. The Supreme Court, however, had never ruled whether tolling would allow that class member to bring a new action in its own name to seek class-wide relief—i.e., to get another bite at the class-action certification apple even if the limitations period expired while the first action was pending. The circuits were split, with the Ninth Circuit siding in this case with the putative class.

The Supreme Court reversed, holding that American Pipe and Crown, Cork tolling does not extend to subsequent class-action complaints but only protects individual class members salvaging their individual claims following denial of class certification. Writing for the entire Court (except, in part, for Justice Sotomayor), Justice Ginsburg put the brakes on class members filing one putative class action after another without fear of the statute of limitations. The Court had previously allowed tolling for efficiency, so individuals would not need to multiply claims to protect their rights if content to rely on a class-action complaint already pending in court; but Justice Ginsburg wrote that the efficiency calculus is the exact opposite for claimants seeking to bring a complaint on behalf of a class. Instead, efficiency favors having all claimants who want to be lead plaintiffs in a putative class action come forward early in the process so that a court could manage numerous class-action complaints and resolve once and for all the viability of the class mechanism based on all of the would-be lead plaintiffs. The Court expressed a preference for a multiplicity of class-action complaints early in the litigation over what it feared would occur if the Ninth Circuit's view prevailed: limitless bites at the apple of seeking class certification, with no limit on successive class-action lawsuits. It is worth noting that the claims in this case, arising under the Securities Exchange Act of 1934, are subject to a statute of repose in addition to a statute of limitations, so there is an effective end in sight for the defendant, but Justice Ginsburg pointed out that many causes of action do not have a statute of repose that cannot be tolled.

Justice Sotomayor concurred in the judgment, agreeing with her colleagues only for cases like this one governed by the Private Securities Litigation Reform Act of 1995 (PSLRA). The PSLRA has express mechanisms for issuing notice of the filing of a class action, to facilitate attracting all prospective lead plaintiffs to the courthouse and the court then appointing a lead plaintiff. But for other non-PSLRA class actions, Justice Sotomayor thought it unfair to cut off later class-action efforts by absent class members who might not know of the first-filed class action and could lose the opportunity to act on their own desire to be named lead plaintiffs.

That's all we've got for now. We'll be back next week with summaries of the Court's two-most recent decisions.