Civil Rights and Civil Liberties in the Supreme Court's 2002-2003 Term

Rights of Workers and Consumers

Pharmaceutical Research and Manufacturers of America v. Walsh, 123 S. Ct. 1855 (2003) presented the Court with a case concerning the rights of workers and consumers, as well as the rights of states, in light of federal Medicaid legislation. In a highly fragmented ruling with no majority rationale, the Court upheld the reversal of an injunction against a Maine prescription drug rebate program that had been attacked as unconstitutional on both preemption and Commerce Clause grounds. Justices Stevens, Souter, and Ginsburg explained that the challengers were required to show that there were no Medicaid-related goals in the state’s program in order to demonstrate that the injunction issued against the program was in fact valid, and that Maine’s program had several acceptable Medicaid-related goals. Furthermore, “Maine’s interest in protecting the health of its uninsured residents also provides a plainly permissible justification for a prior authorization requirement that is assumed to have only a minimal impact on Medicaid recipients’ access to prescription drugs.” 123 S. Ct. at 1869. And since there is a strong presumption against preemption when a state acts to foster public health, especially when it appears that the federal and state governments are pursuing a common purpose, these Justices upheld the constitutionality of Maine’s statute. Joined by Justice Breyer, these Justices also found that the Maine Act did not violate the Commerce Clause. Justices Scalia and Thomas concurred in the judgment of the Court, but not in its rationale. They contended that the negative Commerce Clause has “no foundation in the text of the Constitution,” and thus it should not be extended beyond its previous use. Id. at 1873. This extreme view could support the imposition of state barriers on interstate commerce, thereby further expanding state power at the expense of the people. The three dissenting Justices, O’Connor, Kennedy, and Chief Justice Rehnquist, found that the Maine program did not have any “Medicaid-related purpose, and it is not tailored to have such an effect.” Id. at 1878. Thus, the dissent would have upheld the injunction against the implementation of the drug rebate program.

In Barnhart v. Peabody Coal Co., 123 S. Ct. 748 (2003), a six-Justice majority ruled in favor of workers’ rights. Under the Coal Industry Retiree Health Benefit Act of 1992, the Commissioner of Social Security is empowered to assign to operating companies or related entities those coal industry retirees who are eligible for benefits under the Act, and such companies shall be responsible for funding the retirement benefits of the beneficiary, if necessary. The majority of the Court held that assignments made by the Commissioner beyond the deadline provided for in the statute were valid. The Court has never construed a provision that the government shall act within a specified time, without more, as a jurisdictional limit precluding later action, the majority explained, and if the legislation does not specify a consequence for noncompliance with a deadline, federal courts should not impose their own sanctions in most cases. Furthermore, since the Act was implemented to provide benefits to the greatest number of recipients possible, the majority stated, the reasonable interpretation is that assignments beyond the deadline were valid. Justice Scalia, joined by Justices O’Connor and Thomas, dissented, alleging that empowering the Commissioner with the ability to assign coal miners to signatory operators beyond the deadline is “irreconcilable with the text and structure of the Coal Industry Retiree Health Benefit Act… and finds no support in our precedents.” 123 S. Ct. at 762. These Justices would thus have limited the number of benefit recipients for which coal companies are responsible under the Act by their restrictive construction of the deadline provision, which could affect as many as 10,000 coal industry retirees.

In a 7-2 opinion, the Court held in Beneficial National Bank v. Anderson, 123 S. Ct. 2058 (2003) that an action filed in state court claiming a violation of usury laws could be removed to federal court because it arises under federal law based on the National Bank Act. Because the state law claim was considered preempted by the federal bank law, the majority explained, the claim is considered to have arisen under federal law. The Court has consistently construed the National Bank Act as “providing an exclusive federal cause of action for usury against national banks,” the majority stated, and the case was thus removable from state to federal court. 123 S. Ct. at 2064. Justices Scalia and Thomas dissented, claiming that the majority opinion finds little support in either precedent or law. In their opinion, preemption of a state-law claim does not justify removal, but rather requires that a state court completely dismiss the case. Scalia and Thomas would thus have left consumers who bring a usury claim in federal court with a dismissed case and no remedy for a usury violation.

In American Insurance Association v. Garamendi, 2003 U.S. LEXIS 4797 (2003), the Court held in a 5-4 ruling that California’s Holocaust Victim Insurance Relief Act of 1999 was preempted by conduct of the Executive Branch in matters of foreign relations. Justice Souter delivered the opinion of the Court, in which Justices Breyer, Kennedy, O’Connor, and Chief Justice Rehnquist joined. These Justices stated that “the historical gloss on the ‘executive Power’ vested in Article II of the Constitution has recognized the President’s ‘vast share of responsibility for the conduct of our foreign relations.’” 2003 U.S. LEXIS 4797 at 34. The majority found that California’s requirement of insurance companies’ disclosure of policies sold to people in Europe between 1920-1945 was in substantial conflict with federal executive policies that exist between the United States and Germany. The majority also suggested that there was a relatively weak state interest in this disclosure policy and that vindication of the claims of Holocaust survivors was a matter traditionally left to the federal government. Justices Ginsburg, Stevens, Scalia, and Thomas dissented, arguing that there was no federal policy that expressly preempted the disclosure requirements in the California Act, and that the Act should therefore have been upheld.

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