The October 2020 Supreme Court Term will be an unusual one. The passing of Justice Ruth Bader Ginsburg — the trailblazing advocate for women’s rights and second woman on the Supreme Court — just weeks before the term began set up a fierce political battle over her replacement.  

On Saturday, September 26th, President Trump appointed Seventh Circuit Judge Amy Coney Barrett to the United States Supreme Court. Judge Barrett is an accomplished scholar, jurist, and mother of seven. The Judiciary Committee is scheduled to hold confirmation hearings for Judge Barrett the week of October 12th with a confirmation vote taking place in the following weeks. 

Because a justice does not ordinarily participate in cases argued before she has been sworn in, the October sitting will see a Court made up of just eight justices. If Judge Barrett is sworn in before November 2nd, however, she will participate in a number of high profile cases in the November sitting including the challenge to the Affordable Care Act.

The Supreme Court’s fall docket contains a number of important cases summarized below:

Fulton v. City of Philadelphia

On November 4th, the Supreme Court will hear oral argument in Fulton v. City of Philadelphia, an important religious liberty case. In the midst of a severe shortage for foster families, Philadelphia excluded Sharonell Fulton and Toni Simms-Busch from taking in foster children simply because they partner with Catholic Social Services, a faith-based foster agency. Catholic Social Services was banned from placing foster children in Philadelphia because of the Catholic Church’s teaching on traditional marriage. This case asks whether Philadelphia violated the First Amendment when it conditioned the agency’s ability to participate in the foster care system on a willingness to operate in violation of Catholic teaching. 

Fulton also asks whether the Supreme Court’s decision in Employment Division v. Smith should be revisited. In Smith, the Supreme Court held that a neutral and generally applicable criminal law does not violate the First Amendment. That decision has spawned confusion in the lower courts and the Supreme Court has since made clear that a law must actually be neutral — a government cannot discriminate against an entity because of its religious status nor can it or preclude a religious organization from participation in a generally available program. In Fulton, the Supreme Court will consider whether Smith should be overturned.

California v. Texas

On November 10th, just days after the election, the Supreme Court will hear oral arguments in California v. Texas. This case involves the latest challenge to the Affordable Care Act. The states challenging the ACA argue that by reducing to zero the penalty for failure to comply with the individual health insurance mandate, Congress rendered that provision unconstitutional under the Taxing Power. The States have a good argument under the Supreme Court’s decision in NFIB v. Sebelius which held that the essential feature of a tax is that it raises some government revenue. 

If the Court determines that the individual mandate cannot be upheld as a valid exercise of the Taxing Power, the Court will then address whether that provision is severable from the rest of the ACA or whether the entire statute must fall. Severability is a question of congressional intent. While the challenging states and the Department of Justice argue that the entire statute must be held invalid, because Congress left the rest of the ACA in place when it zeroed out the mandate, the Court is likely to find that the individual mandate is severable from the ACA.

CIC Services, LLC v. Internal Revenue Service

On December 1, the Court will hear oral argument in CIC Services, LLC v. Internal Revenue Service, a case that pits taxpayers against the IRS. The case involves the question whether the Anti-Injunction Act’s bar on lawsuits for the purpose of restraining the assessment or collection of taxes also bars challenges to regulatory mandates enforced by a tax penalty.  

CIC Services is a tax firm that challenged IRS guidance that requires it to report certain transactions arguing that the guidance was an unlawful rule that should have gone through notice-and-comment rule-making. In Direct Marketing Association v. Brohl, the Supreme Court held that tax-reporting requirements do not implicate the AIA because they do not restrain the assessment or collection of any tax. (Direct Marketing involved a state tax regime and thus the Tax Injunction Act rather than the Anti-Injunction Act but the Supreme Court has held the two are interpreted similarly.)

The IRS argues that this case is different because the reporting requirement is enforced by a tax penalty. The Sixth Circuit  agreed, holding that CIC had limited choices: it could comply with the costly reporting requirements or it could ignore them and face large financial penalties or even prison time in order to raise its arguments in court. 

Pre-enforcement review of administrative action is the norm. Without pre-enforcement review, individuals would be required to “bet the farm” to test the validity of a regulation. And the Court has been clear there is no law for tax law alone. The Supreme Court’s somewhat surprising grant of certiorari in this case signals that it views with skepticism the IRS’s claim that CIC Services must risk a hefty fine and prison time to challenge a regulation.

Collins v. Mnuchin

Collins v. Mnuchin is the second case in as many years to present the question of whether the separation of powers forbids the creation of an independent agency run by a single person removable by the president only for cause. 

In July 2008, Congress created the Federal Housing Finance Agency to regulate Freddie Mac and Franny Mae. In certain circumstances, Congress authorized FHFA to appoint itself conservator over the companies. Acting as conservator, FHFA entered into a Net Worth Sweep that diminished outside shareholders’ value. Collins argues that FHFA’s structure is identical to that of the CFPB which the Court found to violate the separation of powers last term in Seila Law LLC v. CFPB, 140 S. Ct. 2183 (2020). The en banc Fifth Circuit found the FHFA to be indistinguishable from the CFPB and thus unconstitutional.

Collins also argues that, contrary to the decision of the en banc Fifth Circuit below, the appropriate remedy for the FHFA’s unconstitutional structure is to set aside the Net Worth Sweep. Collins has a good argument that separation of powers violations are structural error and thus not subject to harmless error analysis.