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What’s Maryland Got to Do With It?
Fourth Circuit Cases in the SCOTUS 2014–15 Term
Marisa A. Trasatti and Jhanelle A. Graham
In its 2013–2014 term, the Supreme Court of the United States (“SCOTUS”) addressed controversial topics such as campaign finance restrictions, racial discrimination, pro-life speech outside of abortion clinics, unions, legislative prayer, and the Patient Protection and Affordable Care Act (“ACA”). Notably, the Court issued unanimous decisions in a record forty-five (45) of seventy (70) cases, and only eleven (11) cases were decided by 5–4 plurality opinions (compared to twenty-three (23) 5–4 plurality opinions in the 2012–13 term). Of those 5-4 decisions, six (6) cases divided the Court along party lines (i.e., Justices Ginsburg, Breyer, Sotomayor, and Kagan (“liberals”) against the votes of Chief Justice Roberts and Justices Scalia, Thomas, and Alito).1
The 2014–15 term promises to be equally exciting — the Court will hear cases involving free speech, voting rights, religious freedom, and prisoners’ rights, in addition to possibly tackling yet another challenge to the ACA and same-sex marriage. So, what does Maryland have to do with the Court’s 2014–15 term? Let us review four (4) cases arising out of the Fourth Circuit which were granted certiorari by the Supreme Court.
1) Pregnancy Discrimination Act — Young v. United Parcel Service, Inc., 2011 WL 665321, D. Md. (Feb. 14, 2011); 707 F.3d 437 (4th Cir. 2013); 134 S.Ct. 2898 (2014).
In Young v. United Parcel Service, Inc., the Supreme Court was asked to decide for the first time whether the Pregnancy Discrimination Act (“PDA”) requires an employer to provide light duty to a pregnant employee. In Young, Plaintiff, Peggy Young, a pregnant United Postal Service (“UPS”) delivery driver in Landover, Maryland, was instructed by her medical provider to not lift more than twenty (20) pounds while working. UPS’s employee policy requires their employees to be able to lift up to seventy (70) pounds. Due to Young’s inability to fulfill this work requirement, as well as the fact that she had used all her available family/medical leave, UPS instructed Young to take an extended, unpaid leave of absence, during which time she lost her medical insurance coverage. Young gave birth in April 2007 and resumed working at UPS thereafter.
Young sued UPS, alleging that she had been the victim of gender and disability discrimination under the Americans with Disabilities Act and the Pregnancy Discrimination Act. UPS moved for summary judgment and argued that Young could not show that UPS’s decision was based on her pregnancy or that she was treated differently than a similarly-situated coworker. Furthermore, UPS argued that it had no obligation to offer Young accommodations under the Americans with Disabilities Act because Young’s pregnancy did not constitute a “disability.” The Maryland district court dismissed Young’s claim, and the United States Court of Appeals for the Fourth Circuit affirmed.
In a 6–3 vote, the Supreme Court vacated and remanded the Fourth Circuit’s decision. The opinion, authored by Justice Breyer on March 25, 2015, held that a plaintiff alleging a denial of an accommodation constitutes disparate treatment under the Pregnancy Discrimination Act may make a prima facie case by showing that she belongs to the protected class, that she sought accommodation, that the employer did not accommodate her, and that the employer did accommodate others similar in their ability or inability to work. The employer may then seek to justify its refusal to accommodate the plaintiff by relying on “legitimate, nondiscriminatory” reasons for denying accommodation. According to the Supreme Court, the record showed that Young created a genuine dispute as to whether UPS provided more favorable treatment to at least some employees whose situations could not be reasonably distinguished from hers. Thus, the Fourth Circuit must now determine on remand whether Young also created a genuine issue of material fact as to the motive behind UPS’ less favorable treatment of Young compared with other nonpregnant employees.
Justice Alito filed an opinion concurring in the judgment, Justice Scalia filed a dissenting opinion in which Justices Kennedy and Thomas joined, and Justice Kennedy filed a separate dissenting opinion.
2) Double Taxation — Comptroller of Treasury of Maryland v. Wynne, 431 Md. 147 (2013); 135 S.Ct. 425 (2014).
In 2015, the Supreme Court will decide whether the United States Constitution prohibits a State from taxing all the income of its residents—wherever earned—by mandating a credit for taxes paid on income earned in other States.2 In Comptroller of Treasury of Maryland v. Wynne, Howard County, Maryland residents — Brian Wynne and his wife, Karen Wynne (collectively, “the Wynnes”) — own stock in Maxim Healthcare Services, Inc. (“Maxim”), a company that provides healthcare services nationally. In 2006, Maxim filed income tax returns in thirty-nine (39) States and allocated a share of taxes paid to each shareholder. The Maryland State Comptroller of the Treasury claims that the Supreme Court has recognized a State’s right to tax all of its residents’ income, whether earned inside or outside of the State, even where the result is multiple taxation of the same income. To the contrary, the Wynnes argue that Maryland’s tax scheme unduly burdens interstate commerce — and thereby violates the Commerce Clause — because it does not offset multiple taxation through a credit. The Maryland district court determined that Maryland’s tax unduly restricts interstate commerce and thereby violates the Commerce Clause, and the Comptroller petitioned the Supreme Court successfully for a writ of certiorari.
The Supreme Court’s ruling will determine the constitutionality of so-called “double taxation”3 in light of a State’s sovereign power to tax its residents, as well as constitutional requirements against discriminatory tax schemes. Not only will this decision impact Maryland directly, but it will affect similar partial credit tax schemes nationwide, and may impact States’ abilities to collect revenue in order to provide public services to residents. The Court’s ruling will also address issues of State sovereignty and the extent to which a State must yield its sovereign authority to another.
3) Obamacare’s Federal Exchanges — King v. Burwell, 997 F.Supp.2d 415 (E.D.Va. Feb. 18, 2014); 759 F. 3d 358 (4th Cir. 2014); 135 S.Ct. 475 (2014).
Another Fourth Circuit case before the Supreme Court in 2015 is King v. Burwell, which presents the issue of whether the Internal Revenue Service (“IRS”) may authorize subsidies for individuals who purchased insurance through a federal exchange, as opposed to a State-operated exchange, under Section 1321 of the ACA. In King, the plaintiffs argued that the ACA specifically authorizes subsidies for individuals who purchase insurance through State-run exchanges but does not permit subsidies for individuals who purchase insurance through federal exchanges. As of December 2014, thirteen (13) States (including Maryland)4 and the District of Columbia have State-operated exchanges, while the remaining States either have federally-operated exchanges or exchanges in partnership with the federal government.
On the same day that the Fourth Circuit decided King in favor of the IRS, a federal appellate court in Washington, D.C. decided Halbig v. Burwell to the contrary, holding that the relevant text of the Internal Revenue Code unambiguously restricts subsidies to insurance bought on an exchange “established by the State.” Halbig was one (1) of several cases across the country disputing the IRS’s interpretation of the ACA. In light of the Fourth Circuit’s ruling in King, the Halbig court granted the government’s request for a rehearing en banc. The plaintiffs in King petitioned the Supreme Court for certiorari, and the Supreme Court is expected to issue its decision by June 2015.
4) Fed. R. Civ. P. 4(m) — Chen v. Mayor and City Council of Baltimore, 292 F.R.D. 288 (D.Md. Feb. 22, 2013); 546 Fed.Appx. 187 (4th Cir. Nov. 12, 2013); 135 S.Ct. 475 (2014).
In Chen v. Mayor and City Council of Baltimore, Maryland, the Supreme Court granted certiorari to decide whether, under Federal Rule of Civil Procedure 4(m), a district court has discretion to extend the time for service of process absent a showing of good cause, as the Second, Third, Fifth, Seventh, Ninth, Tenth, and Eleventh Circuits have held, or whether the district court lacks such discretion, as the Fourth Circuit has held. In Chen, the plaintiff, Bobby Chen, was the owner of a residential property that was damaged when the city of Baltimore and the city’s contractor, P & J Contracting Company, were in the process of razing the adjacent rowhouse. Chen sued the city and contractor in 2009, alleging that the defendants razed Chen’s property on the pretext that it was an unsafe structure instead of repairing the damage they had caused. The district court dismissed the case due to Chen’s failure to meet various procedural deadlines. Chen filed a second action in 2011, but when the clerk of the court issued summonses, they were returned as undeliverable and the 120-day limit for the period of service lapsed. The court issued an order requiring Chen to show cause to justify the non-dismissal of his case, and Chen sought an extension of time to effect service of process. The Maryland district court granted Chen a further 60-day extension, and he was warned that failure to effect service of process during this time would result in dismissal. The 60-day period expired and the defendants moved for dismissal, which the trial court granted. The U.S. Court of Appeals for the Fourth Circuit affirmed the lower court’s dismissal, and the Supreme Court granted certiorari in July 2014.
Chen’s procedural failures did not end at the Fourth Circuit. The Justices were unable to decide the case on the merits because Chen failed to file a brief within forty-five (45) days of the order granting review, did not request an extension of time, and did not respond to correspondence sent to him. Consequently, the Supreme Court dismissed the case.
With one dismissal and one reversal of these Fourth Circuit cases, we eagerly await the Court’s decisions of the remaining impactful actions.
Marisa A. Trasatti is a partner at Semmes, Bowen & Semmes in Baltimore, Maryland. Her practice focuses primarily on civil litigation, with an emphasis on products liability litigation.
Jhanelle Graham is an associate at Semmes, Bowen & Semmes.
1 See Abramski v. United States, 134 S. Ct. 2259, 2267 (2014) (holding that a person who buys a gun on someone else’s behalf while falsely claiming that it is for himself makes a material misrepresentation punishable under 18 U.S.C. § 922(a)(6)); Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014) (holding that the regulations promulgated by the Department of Health and Human Services requiring employers to provide their female employees with no-cost access to contraception violate the Religious Freedom Restoration Act); Hall v. Florida, 134 S. Ct. 1986 (2014) (holding that Florida's threshold requirement, as interpreted by the Florida Supreme Court, that defendants show an I.Q. test score of 70 or below before being permitted to submit additional intellectual disability evidence, is unconstitutional); Harris v. Quinn, 134 S. Ct. 2618 (2014) (holding that the First Amendment prohibits the collection of an agency fee from the plaintiffs in this case, home health care providers who do not wish to join or support a union); Town of Greece v. Galloway, 572 U.S. __ (2014) (holding that the town’s practice of opening its town board meetings with a prayer offered by members of the clergy does not violate the Establishment Clause); McCutcheon v. FEC, 572 U.S. ___ (2014) (holding that aggregate limits restricting how much money a donor may contribute to candidates for federal office, political parties, and political action committees are invalid under the First Amendment).
2 Oral argument was held on November 12, 2014. See the transcript available at www.oyez.org/cases/2010-2019/2014/2014_13_485.
3 “Double taxation” is a system in which an individual’s income derived from economic activity in another State is taxed simultaneously by the individual’s state of residency and the state in which it was earned.
4 The thirteen (13) States (along with the District of Columbia) that have State-operated exchanges in place are California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, New York, Rhode Island, Vermont, and Washington.