Supreme Court decisions will reshape workplace and society at-large

To many in the country, the U.S. Supreme Court’s last session was among the most impactful in decades, causing changes to how we use affirmative action in university admissions, applying developing ideas of diversity, equity, and inclusion (DEI), and accommodating the expanding demands of religious beliefs. It appears, however, that more significant changes to fundamental beliefs and practices are coming in the current Supreme Court session.

Will Title VII be expanded or exploded?

Just what constitutes enough harm to make a claim under Title VII of the Civil Rights Act of 1964? Or, even more prudentially, what counts as “harm”? In the recently argued case Muldrow v. St. Louis, this issue was before the Court. In some appellate circuits, a “materially significant disadvantage” caused by a discriminatory act is required. In others, an employment decision tainted by discrimination is enough.

In Muldrow, a Black female police officer was transferred to a less desirable post to create a position for her white superior’s friend but lost no status, pay, or benefits. In the U.S. 8th Circuit Court of Appeals (which covers employers in Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota), this wasn’t enough to state a claim. The Supreme Court appears to have a different view.

Focusing on the language of the statute, a number of the Justices opined that a discriminatory act in the workplace was all the law required to state a case, especially acts including transfers. Regarding the possibility that such a rule would flood the courts, it was noted that no such flood had occurred where the rule already recognizes those claims. The Justices noted that launching a case with no tangible damages was also a deterrent to a cascade of plaintiffs.

Challenges to DEI

Looming in the background are the numerous lawsuits filed by special interest groups challenging alleged discrimination in DEI programs in employment and education, solely for the purpose of creating new law, with little concern for damages. Although the Justices seemed inclined to lower the Title VII standard, they also appeared to demand something more than hypothetical “damage.”

In this context, the stern questions about whether making promotions to increase diversity presage a ruling that will have some overly aggressive DEI programs facing challenge.

Confronting the administrative state

By espousing such doctrines as the “major questions issue” and the “nondelegation matter,” the High Court has clearly stated its intent to examine the interpretations of statutes made by the various executive agencies.

The Occupational Safety and Health Administration (OSHA) vaccine mandate cases and the challenge to the Environmental Protection Agency (EPA) regulations are the most memorable of those cutting back on what is known as the “Chevron doctrine,” a judicial posture that defers to the reasonable judgment of the agencies. These doctrines and the Chevron doctrine are front and center again this term.

ALJs versus jury trials

In Jarkesy v. SEC, a Securities and Exchange Commission (SEC) administrative law judge (ALJ) found that two hedge funds established by George Jarkesy committed securities fraud against investors. The SEC fined him and other parties $300,000 and required disgorgement of $685,000 in ill-gotten gains. The SEC Board of Commissioners upheld the decision and barred Jarkesy from participating in the securities industry.

The 5th Circuit (which covers employers in Louisiana, Mississippi, and Texas) reversed the decision in an extreme ruling, holding that not only are SEC ALJs unconstitutional under the Seventh Amendment’s right to a jury trial for common law claims such as fraud but also that Congress lacks the power to delegate to the SEC the ability to adjudicate securities fraud cases under the nondelegation doctrine.

The High Court seemingly had little interest in the 5th Circuit’s reasoning. Some Justices believed the issue had already been addressed in favor of ALJ’s. However, the majority was concerned that fraud claims such as those brought against Jarkesy were very like those “suits at common law” for which the Seventh Amendment requires a jury trial.

Most commentors believe the Court will try to draw a fine line, requiring a jury in cases derived from the common law, such as fraud, but permitting ALJ’s to adjudicate certain matters wholly derived from statute, such as Social Security claims and OSHA contests. The impact on the SEC may be dramatic, but the wholesale dissolution of agency enforcement, envisioned by the 5th Circuit, is in abeyance.

Who’s paying?

The very way we are governed—the balance of power between the three arms of government—will be before the Supreme Court this term.

This is expected to happen in Loper Bright Enterprises v. Raimondo—a case that, on its face, concerns a regulation determining who pays for the federal agents who monitor catches on fishing boats. The implications of the Court’s ruling will determine how laws are drafted, how regulations are crafted, and how courts will review them for decades to come.

Chevron Doctrine

The issue underlying Loper Bright is the Chevron doctrine. As noted, that doctrine has been relied on by judges to decide when an agency properly issues a regulation implementing the intent of the statute and stays within the boundaries the law establishes. This particularly matters when the language of the statute leaves room for interpretation or is otherwise ambiguous. At that point, a court becomes involved to make the final determination.

In Loper Bright, a group of commercial fishing companies challenged a rule issued by the National Marine Fisheries Service, the federal agency responsible for overseeing marine resources. The rule requires the fishing industry to pay for the costs of observers who monitor compliance with fishery management plans. The companies objected to the fees and claimed the agency had no right to impose them.

Relying on Chevron, a divided panel of the U.S. Court of Appeals for the District of Columbia rejected the companies’ challenge to the rule. The fishing companies appealed to the Supreme Court in November, asking the Justices both to strike the regulation and to overrule Chevron.

Future of the administrative state

The reason this case is considered so significant is the potential impact of reversing Chevron. The diminution of the Chevron doctrine will expose countless regulations to judicial review. Modern government—the entire way our government has been approving drugs, issuing health and safety standards, environmental standards, accessibility rules, everything from clean air to zoological research—is in play. The case is scheduled to be heard on January 17, with a decision to follow most likely in June 2024.