Seven Key Supreme Court Cases for Retailers to Watch

The Supreme Court of the United States is ending its summer recess and will start hearing oral arguments next week. There are seven key cases on the Court’s docket for the current term that could affect retailers. Here is a quick run-down of the important cases for retailers to watch and a summary of the issues at stake in each.

1. Dart Cherokee Basin Operating Company, LLC v. Owens, No. 13-719 (oral argument scheduled for October 7, 2014)

At issue in this case is how much evidence an employer seeking removal to federal court pursuant to the Class Action Fairness Act of 2005 is required to include in its notice of removal and whether it is enough to provide only a “short and plain statement of the grounds for removal” or whether more specific evidence of federal jurisdiction is required. In the case below, the Tenth Circuit Court of Appeals affirmed a district court judge’s ruling against the employer holding that the employer needed to establish the amount in controversy by a preponderance of evidence. Retailers that are frequent targets of state court class action cases and that rely heavily on removal pursuant to the Class Action Fairness Act will want to watch this case as it could change the requirements for removal petitions.

2. Holt v. Hobbs, No. 13-6827(oral argument scheduled for October 7, 2014)

While this case concerns prisoners’ right, pitting a prisoner’s religious beliefs against a prison’s grooming policy, it is an important one for retailers to watch because the Supreme Court’s ruling in the case could have broader implications for cases involving religious rights. For example, the Court’s ruling could impact religious accommodation and grooming cases in the future. At issue is whether a Muslim inmate should be allowed to grow a beard as his faith requires despite an Arkansas Department of Corrections policy, which permits only inmates with dermatological problems to grow beards up to one-quarter inch. The prison’s rationale for the policy is that beards pose a security risk because inmates can hide weapons and other contraband in them.

3. Integrity Staffing Solutions v. Busk, No. 13-433(oral argument scheduled for October 8, 2014)

In this case, the Supreme Court will decide an issue that has been a vexing one for retailers: whether time spent by employees in security screenings before and after their shifts is compensable under the Fair Labor Standards Act, as amended by the Portal-To-Portal Act. In the wake of the Ninth Circuit Court of Appeals’ decision on this issue in favor of employees, numerous class action lawsuits have been filed against retailers seeking back pay for time spent undergoing security screenings. If the Supreme Court lets the Ninth Circuit’s decision stand, retailers could face even more cases of this nature and many will need to change their pay practices as well.

4. Young v. United Parcel Service, No. 12-1226 (oral argument scheduled for December 3, 2014)

The issue of whether retailers that provide work accommodations to non-pregnant employees with work limitations are required to provide accommodations to pregnant employees who are “similar in their ability or inability to work” will be decided in this case, which has been generating significant attention in Congress and beyond. This case will require the Supreme Court to determine congressional intent in enacting the Pregnancy Discrimination Act of 1978. More than 100 Congress members have urged the Supreme Court to overturn the Fourth Circuit Court of Appeals’ decision against the pregnant employee on this issue. A decision in favor of the employee in this case would require retailers to offer accommodations to pregnant employees in the same way it offers accommodations to other employees with work limitations, lest they face possible liability under the Pregnancy Discrimination Act.

5. Direct Marketing Association v. Brohl, No. 13-1032(oral argument scheduled for December 8, 2014)

This case concerns the constitutionality of a Colorado statute requiring the collection of a state use tax from in-state buyers who acquire goods by direct shipment from out-of-state vendors. This is a case all retailers engaging in catalog and Internet sales should watch. In Quill Corporation v. North Dakota, 504 U.S. 298 (1992), the Supreme Court previously held that a customer’s state cannot require an out-of-state vendor to collect and remit state sales or use taxes on sales to customers receiving deliveries in the state if the vendor has no “presence” in the state. The Colorado statute at issue threatens to undermine the victory achieved by retailers in Quill Corp. The statute subjects an out-of-state vendor to fines unless the vendor (a) voluntarily relinquishes its Quill Corp. rights; or (b) satisfies several notice and reporting requirements that Colorado hopes will boost voluntary compliance by Colorado residents to pay use taxes on goods purchased from out-of-state vendors that did not collect Colorado sales tax. For example, vendors failing to collect Colorado sales tax are required to include a notice with every shipment telling the buyers that they must pay Colorado use taxes on their purchases.

Ogletree Deakins filed an amicus curiae brief in support of Direct Marketing Association’s position on behalf of the NFIB Small Business Legal Center, Association of National Advertisers, NetChoice, Electronic Retailing Association, and American Catalog Mailers Association.

6. Mach Mining LLC v. Equal Employment Opportunity Commission, No. 13-1019 (oral argument to be scheduled)

In this case, the Supreme Court will decide whether and to what extent courts may enforce the U.S. Equal Employment Opportunity Commission’s (EEOC) duty to conciliate a case prior to bringing a lawsuit. In the case below, Mach Mining had raised the EEOC’s failure to conciliate as an affirmative defense. On an interlocutory appeal certified by the district court, the Seventh Circuit Court of Appeals held that the EEOC’s conciliation efforts were not reviewable. This ruling stands in sharp contrast to contrary holdings on the same issue made by courts in other circuits. Given that retailers have been a frequent target for EEOC enforcement actions in recent years, this is an important case for retailers to watch as it could affect their ability to mount failure to conciliate as an affirmative defense in the future.

7. Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc., No. 14-86 (oral argument to be scheduled)

In this case, the Supreme Court takes up the issue of whether an employer can be held liable under Title VII of the Civil Rights Act of 1964, as amended, for refusing to hire an applicant based on a “religious observance and practice” where the employer had no notice that a religious accommodation was required and there was no request for accommodation made by the applicant. In this case, a Muslim woman who was not hired by the retailer had applied for a position wearing a hijab, along with Abercrombie clothes. However, the applicant t did not inform the retailer that she was Muslim, that she wore the headscarf for religious reasons, or that she would need a religious accommodation if hired due to a conflict between her religious practices and the retailer’s dress policy. The Tenth Circuit Court of Appeals ruled in favor of the retailer below. Retailers entering the busy holiday hiring season will want to watch this case for guidance on similar hiring issues.