The Supreme Court’s Mind Is Still on the Mischief of the Administrative State

T he Supreme Court resolved six cases on its docket this morning, after issuing five opinions on Monday. While none of these were the big, high-profile decisions, they did include some interesting subplots, and they revealed a Court still very much concerned about the executive branch and its administrative agencies pushing the limits of their power — and also with not overextending its own power. A quick roundup of the highlights:

The Court originally agreed to hear American Hospital Association v. Becerra in order to decide “(1) Whether deference under Chevron U.S.A. v. Natural Resources Defense Council permits the Department of Health and Human Services to set reimbursement rates based on acquisition cost and vary such rates by hospital group if it has not collected adequate hospital acquisition cost survey data; and (2) whether petitioners’ suit challenging HHS’s adjustments is precluded by [statute].” While the issues surrounding HHS’s Medicare-reimbursement rates are technical (and there are still two other Medicare-reimbursement cases left on the docket, Becerra v. Empire Health Foundation and Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita Inc.), the Chevron issue is a big one that has been heavily contested at the Court in recent years: Should the justices defer to an agency’s interpretation of its own statutory power to enact a regulation, at least in a close case where the statutory language is arguably ambiguous?

Despite its being front and center in the question presented, however, neither Chevron nor deference is mentioned even once in the unanimous American Hospital Association opinion written by Justice Brett Kavanaugh. The decision simply concludes that, “after employing the traditional tools of statutory interpretation, we do not agree with HHS’s interpretation of the statute,” a result that leaves the Chevron-deference rule nominally in place. The fact that the Court rejected the agency’s interpretation of the statute without even considering deference can be read one of two ways: as a unanimous conclusion that there was no arguable statutory ambiguity, or an implicit message that courts should try to resolve these cases themselves by reading the statute, rather than using Chevron as a crutch to prop up agency rules. It may be that Kavanaugh stripped his opinion of any references to Chevron precisely so that the Court could decide an easy case unanimously without any of the justices’ compromising their own stance on the Chevron question. And it is possible that one reason for this is that in some of the 18 cases still on the docket this term, it will be much harder to avoid disputes over that question.

An agency misfire was also at issue in George v. McDonough, a case dealing with veterans’ benefits. A Marine discharged for schizophrenia was denied VA benefits in 1977, under a regulation that the VA concluded it lacked the authority to enact, and thus withdrew, in 2003. The veteran filed in 2014 for reconsideration under a rule allowing “clear and unmistakable error” to be grounds for reversal of a prior VA-benefits decision. Much as in yesterday’s double-jeopardy-clause case, Justice Amy Coney Barrett wrote the majority opinion, and Justice Neil Gorsuch wrote a blistering dissent. Barrett concluded from the history of how Congress has used the term “clear and unmistakable error” in the past that “the correct application of a binding regulation does not constitute ‘clear and unmistakable error’ at the time a decision is rendered, even if that regulation is subsequently invalidated,” while Gorsuch once again stressed the absurd injustice of saddling a citizen with the consequences of a bureaucratic agency’s blunder.

Gorsuch also continued another of his major themes in his opinion in Ysleta del Sur Pueblo v. Texas, siding with a Texas Native American tribe against the state in a fight over Texas’s effort to ban bingo on the tribe’s reservation.

The day’s other major anticlimax came in Arizona v. City of San Francisco, in which the petition posed the question of “whether states with interests should be permitted to intervene to defend a rule when the United States ceases to defend [it].” In other words: When a new presidential administration comes in and decides to stop defending actions taken by its predecessor, does that mean that nobody can defend those actions’ legality in court? In this case, the Trump administration wrote a “Public Charge Rule” defining when immigrants can be excluded from the country on the grounds that they are “likely at any time to become a public charge.” Predictably, the rule prompted lawsuits. When the Biden administration came to power, it stopped defending the government against those suits, and some Republican-run states wanted to intervene in defense of the rule. The Court agreed to hear Arizona to decide whether that was allowed, but then today, it decided unanimously, without elaboration, to throw the case off the docket as “improvidently granted.” Chief Justice John Roberts, in a concurring opinion joined by Justices Clarence Thomas, Samuel Alito, and Gorsuch, explained that there were simply too many procedural wrinkles: a “mare’s nest” of issues such as standing, mootness, and the scope of injunctive power under the Administrative Procedures Act.

But the reason Roberts wrote his concurring opinion was to note his displeasure with the games played by the Biden administration:

A new administration is of course as a general matter entitled to [reverse course and drop its defense of prior regulations]. But the Government then took a further step. It seized upon one of the now-consent judgments against it—a final judgment vacating the Rule nationwide, issued in a different litigation—and leveraged it as a basis to immediately repeal the Rule, without using notice-and-comment procedures. . . . This allowed the Government to circumvent the usual and important requirement, under the Administrative Procedure Act, that a regulation originally promulgated using notice and comment (as the Public Charge Rule was) may only be repealed through notice and comment. . . . As part of this tactic of “rulemaking-by-collective-acquiescence” . . . the Government successfully opposed efforts by other interested parties—including petitioners here — to intervene in order to carry on the defense of the Rule, including possibly before this Court. These maneuvers raise a host of important questions.

The most fundamental is whether the Government’s actions, all told, comport with the principles of administrative law.

Roberts clearly would like to signal that such tactics may raise the Court’s ire in a later case.

The other case decided this morning that involved some inside-baseball fireworks was Viking River Cruises v. Moriana, which concerned arbitration. Here, the Court ruled — as it has so many times before, often in cases coming from California — that the Federal Arbitration Act overrides state laws that are designed to thwart mandatory arbitration. The opinion was by Justice Alito, and only Thomas dissented, on his longstanding objection to the FAA’s applying in state courts.

The underlying lawsuit in Viking River Cruises was brought under California’s Private Attorneys General Act (PAGA). As is true of federal labor-law litigators, state-level labor-law litigators want the law to allow uninjured parties to be deputized to bring labor-law grievances in court on behalf of injured parties — the kind of tactic that progressives loved for decades until the Texas abortion law imitated it, at which point they claimed in near-unison that nobody had ever done such a thing before. PAGA is not quite as sweeping as some other such mechanisms — the “aggrieved employee” at least has to have some claim of his or her own — but it nonetheless reaches quite far afield, as Alito details in Part I of his opinion:

The legislature . . . decided to enlist employees as private attorneys general to enforce California labor law. . . . By its terms, PAGA authorizes any “aggrieved employee” to initiate an action against a former employer “on behalf of himself or herself and other current or former employees” to obtain civil penalties that previously could have been recovered only by the State. . . . The primary function of PAGA is to delegate a power to employees to assert “the same legal right and interest as state law enforcement agencies.” . . . An employee with statutory standing may “seek any civil penalties the state can, including penalties for violations involving employees other than the PAGA litigant herself.” . . . An employee who alleges he or she suffered a single violation is entitled to use that violation as a gateway to assert a potentially limitless number of other violations as predicates for liability. This mechanism radically expands the scope of PAGA actions. The default penalties set by PAGA are $100 for each aggrieved employee per pay period for the initial violation and $200 for each aggrieved employee per pay period for each subsequent violation. . . . Individually, these penalties are modest; but given PAGA’s additive dimension, low-value claims may easily be welded together into high-value suits.

This is different from a class-action suit, in which the plaintiff can join other claims so long as they are functionally identical to his or her own grievance. The employee in Viking River Cruises brought a PAGA claim of this sort, asserting her own claim and also trying to represent the claims of other employees who suffered different injuries. The employer tried to force her into arbitration, and cited a clause in their contract that prevented her from bringing other employees’ grievances into arbitration. The California courts said, fine: A PAGA claim must be all or nothing, so if the employee can’t raise the claims of others in arbitration, then the employee’s own PAGA claim can’t be sent to arbitration, either. The Supreme Court ruled in favor of the employer.

What happens to the rest of the lawsuit? In Parts III and IV of his opinion, Alito concluded that “PAGA provides no mechanism to enable a court to adjudicate nonindividual PAGA claims once an individual claim has been committed to a separate proceeding,” so the state court should toss the rest of the case. This went too far for some of his colleagues: Barrett wrote a concurring opinion, joined by Kavanaugh, complaining that the “discussion in Parts II and IV of the Court’s opinion is unnecessary to the result, and much of it addresses disputed state-law questions as well as arguments not pressed or passed upon in this case.” A footnote simply added, “The same is true of Part I” — but Roberts joined Barrett’s concurrence “as to all but the footnote,” which meant that he had no such quarrels with Part I of the opinion. Meanwhile, Justice Sonia Sotomayor said she was joining the whole opinion, but then added “if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word. Alternatively, if this Court’s understanding is right, the California Legislature is free to modify the scope of statutory standing under PAGA within state and federal constitutional limits.” (Non-lawyer readers may be forgiven if they are shaking their heads at the maze-tracing required to tease out what each justice agreed to.)

All in all, it was a busy and consequential day at the Court, even if the biggest opinion left to be issued this term didn’t come down. And by resolving eleven cases this week, the Court has left itself a small enough workload that it should be able to comfortably finish its term by the end of June, as is customary, if it so chooses.