This is Bloomberg Law with June Brusso from Bloomberg Radio.
So I'm happy that we all combyying together.
So what were the Supreme Court justice is agreeing on or kumbayaing together to put it? In Justice Elena Kagan's words, Well, there seemed to be consensus that the minimum standard's set in nineteen seventy seven that's made it relatively easy for businesses to deny workers' religious accommodation requests is too minimal. Here's Justice Neil Gorsuch.
I think there's common ground too that deminimus can't be the test in isolation, at least because Congress doesn't pass civil rights legislation to have deminimous effect. Right, we don't think of the civil rights laws as trifling, which is the definition of deminimus. The law says since time immemorial, you know that the law does not concern its with trifles.
In this case, a Christian US postal service worker when he sued for religious discrimination. He lost at both the trial court and appellate court levels. Refused to work on Sunday to deliver Amazon packages, and the rural post office could not accommodate his religious requests. So the real question for the justices was coming up with a test to determine when accommodating the religious views of an employee would
mean an undue hardship for the employer. Here's how Justice Brett Kavanaugh posed it.
Do you understand undue hardship? I understand that term in the original statute to reflect a balance between two important values, one religious liberty and the other the rights of American businesses to thrive. And to thrive, you have to be able to make money.
My guest is Richard Garnett, a professor at Notre Dame Law School and the director of the Program on Church, State and Society. Rick tell us what the focus of the justice was in the oral arguments.
The Supreme Court's oral arguments focused on the interpretation of one of the federal civil rights laws, Title seven. And one of the things that Title seven does is it forbids religious discrimination in the workplace. And another thing that it does is that it requires at least some employers to provide reasonable accommodations. Is the word the statute uses
two employees who have special religious needs. And what had happened almost fifty years ago now in nineteen seventy seven was that the Supreme Court, in the case called Hartisan, had interpreted this religious accommodations language in a very narrow way, and a nutshell version is that the Court said that if accommodating a religious employee would impose anything more than a minimal cost on the employer, then an accommodation is
not required. And you know, interestingly, at the time, some of the Court's more liberal justices, like Justice Marshall, dissented from that, and over the years scholars have pointed out that that's seventy seven ruling really seems inconsistent with the language of the statute, but it's been in place for a long time. And what the Supreme Court was focusing on in its arguments was how to come up with a test for religious accommodations that lines up better with
the language of the statutes. So it's not really a case about the First Amendment itself. It's about this statute that Congress passed, you know, part of the Civil Rights Act again, and how to correct a mistaken interpretation to better bring the work of the courts in line with
the language of the statute. And interestingly, and this was something that Justice Gorsa and some of the other justices pointed out there was a fair bit of consensus among the justices that the nineteen seventy seven court had made a mistake, that they narrowed the statute too much. What the arguments focused on was how best to implement Congress's goal of protecting religious exercise in the workplace while at the same time taking account of employer's interests and other employees' interests.
Just going outside the argument from MoMA, the Supreme Court had repeatedly declined to revisit religious accommodation standards. In other case, why take this case where the post office had offered some accommodations to the worker, and times the postmaster himself did deliveries on Sunday because he couldn't find workers, some workers quit, So it seemed like this was well above a deminimus standard. I wonder why they took this case.
Yeah, And I don't have a firm theory on that. I mean, over the years, a number of justices and in a variety of cases, a number of justices have said, look, we really need to revisit this. And so this is a question, the statutory interpretation question that's been on their radar screen for a while, and this particular case in the lower court in the Third Circuit, you had a pretty detailed and clear disagreement among some of the judges and sort of it teed up the legal question pretty
well if you want. It could well be by the way that the Supreme Court corrects the nineteen seventy seven decision puts out a different rule, but that this particular employee still ends up losing. That that could happen. But right now the issue really is kind of the justices trying to decide should we promulgate a new standard that lines up with the statutory language better and tell the lower courts and tell employers follow this new standard.
The worker's attorney was urging the court to adopt a standard similar to that of the civil rights laws, like the Americans with Disabilities Act. Right, tell us about that argument.
Yeah, so the statute uses the term reasonable accommodation, and you know, we lawyers are familiar with the use of
the term reasonable, but it's not self defining. What mister Street, who's the lawyer for the employee here, was saying, Yeah, let's analogize this standard in the Title seven Religious discrimination provision to some other non discrimination laws like the Americans with Disabilities Act, and that statute has clearer language which says, look, employers have to accommodate employees who need it unless the accommodation would impose you know, a significant or a substantial hardship.
So that's kind of the language that the lawyer for the employee was after. And one of the things that the justices were trying to get their heads around was, well, is that feasible or would that impose too much cost on employers potentially? And could it in some circumstances impose excessive burdens on other employees. So again, the justices all seemed to agree that this nineteen seventy seven rule, which really watered down the statute and made it the case
employers almost never had to accommodate employees. They wanted them move away from that. But they were each of them in different ways. They were all sensitive to the fact that, you know, not every accommodation can be granted, So how do you come up with language that'll provide clear guidance but also you know, take account of all the competing factors.
Even though, as you mentioned, Justice Elena Kaigan even said that there was some level of kumba yang between the justices on the bench. But with regard to that making the standard like the Americans with Disabilities Act, it seemed like the three liberals were against that. They said that this case is based on statutory interpretation and it's up to Congress to decide that.
Yeah, and I think some of those judges, but again, not only do the liberal justices asked questions along this line, were wary of importing language into Title seven that isn't actually in that text and that might be more demanding. Now. The one response to that is, well, you know, the words in the nineteen seventy seven case deminimus aren't in there either, And instead the language you have in the
statute is reasonable accommodation and undue hardship. So I think mister Street, the lawyer for the employee, argued, Look, Congress did speak. Congress enacted a statute that said accommodate employees unless doing so would impose an undue hardship. We're not asking the court to rewrite what Congress did. We're asking
the court to give effect to what Congress did. The concern that you mentioned, and I think Justice Kagan mentioned as well, is well, look, Congress has known about this nineteen seventy seven case for a long time, and if Congress wanted to, they could give us clearer guidance about how to implement this statute. And so I think that's one reason why she was nervous about just pulling language from another statute, because she thought, well, let's wait and see if Congress wants us to do that.
How critical to the decision is it that Justices Amy Cony, Barrett and Brett Kavanaugh suggested that this request from the postal worker would have unduly burdened his coworkers by requiring them to cover his hours on Sundays.
Yeah. I took him to be raised in an issue which is going to come up in a lot of accommodations cases, right, which is, if we're asking whether an accommodation would impose an undue hardship on the employer, don't we also have to consider the burden that the accommodation
might put on other employees. Now, there have been some lower court cases where employers have denied accommodations and they've just said, well, you know, we can't afford to accommodate employee A, because that might make employee be sort of resentful of it. And I don't think the justices thought
that was a very persuasive argument. But if you do have an on the job situation where an effort to accommodate employee A really is difficult and would impose again undue hardships not only on the employer's bottom line, but also on other employees, I think that's a factor that Justices Kavanaugh and Barrett wanted to make sure it was part of the mix.
And so how do you think it'll come out.
I think the Court, I suspect this will be unanimous, to be honest, will acknowledge that the nineteen seventy seven hardest and ruling and the dominimous language doesn't really comport with the statute. And it does sound like there might well be some division among the justices about what kind of a standard the Court should supply, whether it's more accommodationist or more deferential to employers. And then I don't think the Court will resolve for itself whether this particular
employee should win. I would expect instead that the case would go back and proceed in line with the new standards.
You know, I'm just wondering. The Equal Employment Opportunity Commission said that the lower courts haven't you used Title seven's deminimous cost test. Is that true?
Well, there's some dispute about this, right, some argued, and I should say that I joined a brief that argued this that when you look over the full array of Title seven cases involving religious accommodations, that a whole lot of courts have denied accommodations when those accommodations would impose
really small costs. At the same time, the EEOC argued, as you pointed out, and I think Justice Kagan made this point also, and certainly the Solicitor General did that even with that deminimous language, at least in some cases, employees have secured accommodations. So this might be one of those things where how you see it depends on where
you start from. But in my view, it's pretty clear that employees have not been getting accommodated to the extent that Congress envisioned when it passed Title seven.
Thanks for being on the show, Rick. That's Professor Richard Garnett of Notre Dame Law School in a case with legal, economic, and political ramifications, the Supreme Court issued a mixed decision over whether the United States can bring criminal charges against Turkey state owned Hawk Bank over allegations that helped Durand to evade economic sanctions by laundering billions of dollars through
the US financial system. The Justice has rejected Hawkbank's primary argument that federal law prohibits prosecutions of foreign governments and the companies they own. Justice Brett Kavanaugh, who made his view clear during the oral arguments, wrote the opinion for seven of the justices.
I think it's pretty bizarre for this Court to tell the President of the United States, as a matter of his national security exercise, that even though the Constitution doesn't prohibit what you're doing, even though a statute doesn't prohibit what you're doing, this Court's going to prohibit your exercise of national security authority. That talk about big steps, it is. That's huge.
But the opinion left the bank with an out, sending the case back to the second Circuit, where Hallbank will have a chance to make an argument for sovereign immunity from prosecution under the common law. Two Justices Neil Gorsuch and Samuel Alito said they would have ruled definitively that the prosecution of Halkbank can go forward. Joining me is an expert on constitutional law, Harold Krant, a professor with the Chicago Kent College of Law. So how start by explaining Halkbank's arguments here?
Well?
Haulk Bank argued is the second circuit in the Supreme Court that they could not be subject to criminal jurisdiction in the United States courts, and they focus on a provision in the Foreign Sovereign's Community to Act, which was enacted in nineteen seventy six and four in Starned Immunity Act most clearly relates to civil proceedings and confers partial immunity on foreign instrumentalities for suits in the federal courts, but in one provision it does talk more generally, suggesting
that foreigness mentalities will be immune from any kind of
jurisdiction in the US courts. So the Supreme Court had to determine whether that one provision in the Foreign Sovereign's Muniact conferred immunities in criminal cases as well as in civil and the Court concluded that given all of the other provisions of Oren Cyberg's Muniact, which were plainly targeted only at civil activities of foreigness frutalities that they would construe a Foreign Cerberus Muniact in that manner and only to focus on civil activities of foreigness and mentalities and
not cover at all any kind of potential criminal jurisdiction and.
Tell us about the line above the justices in the case.
The decision was seven to two, but the dissent disagreed with the analysis under the Foreign Cyber's Muni Act, but would have reached the same type of conclusion, which would be that it's very likely that Hawk Bank will be found to be not immune by the Second Circuit on reman from the Supreme Court, But they would arrived at that conclusion in a different manner than the seven justices the majority by saying that the Foreign Sovereignties uniac applies,
but that Hawk Bank falls within the commercial activity exception.
So the opinion gives Haulbank a possible out, sending the case back to the Second Circuit where the bank will have a chance to argue for sovereign immunity from prosecution under the common law. But didn't that argument already fail in the Lower courts.
So what's bizarre about the majority opinion is that it remands the case back to the Second Circuit to determine whether any common law immunities would immunize hawk Bank from the criminal trial. But in the end of the opinion, the Second Circuit already said that even if the Foreign Sovereigny's uniac didn't apply, and we had to look at common law immunities, we would find that hawk Bank is
not immune for two separate reasons. So it's a little unclear why the Supreme Court remanted this case back the Second Circuit, and the two justices in descent sort of berated their colleagues for leaving the Second Circuit scratching its collective heads about what it's supposed to do now, because it had already ruled pretty clearly on the common law munity issue and explain.
The common law immunity issue for us.
So, even if there's no statutory immunity for hawk Bank, in other words, that the Foreign Sovereigns Communities Act did not protect them or cloak them with immunity, they might still enjoy some common law immunities from suit given the fact that they are a foreign newsru mentality, so they're
part of the foreign government. The Second Circuit combed those authorities and said, there's two reasons to think that any kind of immunity that existed at common law, they may have been adopted by the United States, et cetera, wouldn't apply.
The first is because there is a line of precedent, which was mentioned in the concurring opinions in the Supreme Court, which hold that it's the executive that gets to make it the decision as to whether foreigns some mentality should be hauled into court for criminal purposes, that that's really a political issue, and that court should defer to the executive,
meaning the precedent, in determining whether prosecutions should pursue. There's another line of decisions that say that foreigns some mentalities have never been immune from criminal jurisdiction as long as the crimes arise out of commercial activities, which everybody has held that they did in this case because it was a banking effort to shield billions of dollars of Iranian
oil revenue. So on those two grounds, the Second Circuits said, you know, in either one of this, there's an exception for common law immunity if the President says, go ahead and prosecute, and if the actions arose out of commercial activities. So those are the two common law immunities so far that there have been exceptions, and the Second Circuit has already articulated them, so presumably they will do so again upon Remand if the.
Second Circuit rejects this, as we expect they will, since they've done it already, can this go to trial?
Then absolutely it'll go for trial, and Hawk Bank stands to lose stands and be fined a tremendous amount if they are found to be in fact liable for trying to basically shield all of this Iranian oil money despite our sanctions that we had applied to Iran.
Is there a possibility that they could work out a deal with the US government about a penalty to pay.
Yeah.
Plea barkins are always possible, and indeed pre bargains, as you know, are frequently entered into avoid the cost and uncertainty of a major trial like this. So if the Second Circuit does reject the immunity claim by Hawk Bank, it's likely they will consider some kind of plea agreement which might then avoid the ugliness of a protracted trial, leaving the end result unclear for Hawk, but also in meshing or emboiling us in continuing friction with the Turkish government.
I just want to note that Bloomberg Intelligence senior litigation analyst Elliott Stein estimates that it's seventy percent likely that Hulk Bank will fail to get immunity and wind up paying a penalty that exceeds one billion dollars. Now, there's never been a criminal prosecution of a state owned bank before, so is this decision then precedent setting?
Well, this is the first time the Supreme Court is ever plainly and unequivocally said that the Foreign subverigers and UNIAC, which again was agreed to in nineteen seventy six, only applies to civil cases. That Congress was not concerned about criminal cases when it enacted this statute, and it was only focused on twitter contract actions against foreign instrumentalities. So that is the clear president setting feature of this case.
Most people thought that the Foreign muniac did not apply to criminal activities, but people weren't sure, and there were some different sort of dicta in lower court decisions. So that's been put to rest, and we know that the foreign carverge maniac only addresses civil conduct.
This is a case that didn't go down ideological lines.
Not at all. And indeed, the two concurring justices Justice of course, that justice you know, Alito, are obviously usually voting along with Justices Kavanaugh and Thomas, but they split in this case.
So how let's turn now to another case where there was no ideological split. The Supreme Court unanimously said that companies and people facing agency investigations or complaints by the SEC or FTC can go straight to federal court with some constitutional challenges. So following the trend of the Supreme Court to ham in the administrative state.
And again it's a decision which did not reflect ideological lines. Although I agree with you, it follows a trend of the justices to terrain in the power of the administrative state. Those were continuing at a very heavy pace. The case concerning the question about whether individuals and companies we are subject to enforcement orders by administrative agencies can in the midst of those proceedings stop and file a lawsuit in district court to get the district court to rule on
what is termed structural challenges to the agency. Issues such as the fact that the agency is unconstitutionally structured under Article two of the Constitution, or that Congress delegated too much authority to the agency under Article one of the Constitution, or the fact that they are entitled to a jury trial because the issue at stake relates to something that was subject to jury trials at the time but founding. So obviously, there's a whole panoply of these challenges that
are pending around the country. And prior to the case Exxon that the Supreme Court decided, every lower court case said, this is crazy to interrupt these administrative proceedings to allow a list of some unknown constitutional questions to be aired, because it just means it's more of a ping pong ball between the Court of Appeals and the District Court
and the agencies. And let's group all these claims in one together and have them aired if the party loses before a court, and the court will then be able to assess both statutory, procedural and constitutional claims together. Indeed, who in Justice Cavanaugh was on the DC Circuit, he similarly ruled that these challenges have to be grouped together. You don't want to interrupt an administrative process while it's going on to give the incentive to the parties to
raise these constitutional challenges. But surprisingly, in my mind, the unanimous Supreme Court has held that we don't know what a special claim is. They didn't give very good guidance to the lower courts. But if you raise this certain kind of constitutional challenges to an administrative agency, you can go write to district court and have that adjudicated prior to completion of an enforcement proceeding against your company or against an individual.
What I don't quite understand is, so you have these challenges that are constitutional challenges, so there are challenge is that anyone can bring up? So doesn't this mean that everyone who gets sued by the SEC or the FTC is going to bring up these challenges and try to take it to district court.
It's an absolute invitation for anyone subject to FDIC or THEDA or the SEC, FDC and so forth to figure out some kind of challenge because delay means money, and so if your client is subject to some kind of losing of a license or a permit or something else, you know that time is money, and so it's a wonderful incentive to go and figure out some kind of So called constitutional claim that's never been raised with force been raised by other parties, because that will then force
the district courts to schedule those arguments and gain possibly delay for your client, and delay is money. So it's a very impractical decision. But I think that you're right to know that this goes along with the decisions that
are certain inscribing administrative authority. That the legal issue turns on the question of what's Congressional intent when Congress sets up the scheme with review of the administrative agency's final decision in the Court of Appeals, did it intend to implicitly preclude interlocutory or non final challenges to agency authority.
That's a legal issue, and I think it's pretty clear in thinking about the final judgment rule that Congress has imposed in the federal courts that when kind of sets up these review mechanisms, it intends non final challenges to be only decided when the review of the entire case goes the Court of Appeals. But the Court decided otherwise unanimously, and indeed Justice Gorcius says that we as the Court have an unflagging obligation to exercise jurisdiction unless Congress very
very clearly tells us we shouldn't do so. And so he's suggesting that all of these administrative review schemes unless Congress says, and no other challenge shall be cognizable in court prior to review on off the final decision, unless Congress says that that just courts can entertain challenges to administrative agencies. And what's striking about that is that simply not the way our federal court system is set up.
Because individuals who lose summary judgment motions or companies that lose motions to dismiss can't get those challenges, even if they're very similar to the ones that are at play in the Exxon case itself, they can't get those into court of appeals until after they go through the trial of all of their claim it's more efficient. That's what
Congress is determined. But the Court has said that even though Congress has structured the system of appeals in that way in the federal courts, that it has a very different idea for the administrative agencies, that it didn't want to give administrative agencies the same kind of respect that district courts have.
Why are the conservatives on the Court so intent on trying to dismantle the administrative state to give more power to the judiciary.
I think there's a number of sort of paradoxes here. I mean, the Court has been very accepting of strong executive authority, but very suspicious of administrative authority. And I guess the positive aspect of their decisions is that they were trying to prod Congress to take more responsibility for policy decisions that affect us all, as opposed to delegating
or allowing administrative agencies to reach such important decisions. That is the positive part about the suspicion of administrative agency power, because the administrative agencies do exercise these powerful policy preferences or do reflect those policy preferences in a way that affects all of our business and private laws, from the
pandemic to export controls to emissions of carbon dioxide. But there is a problem because the problem is if Congress doesn't go into the weeds and craft all these policies with great care, the question is who's going to pick
up the slack. And so our government has been shaped for the last seventy five years in a way that encourages Congress to delegate to agencies and the Court is in the process of trying to pull that back and to say that if there's going to be any kind of important rules, those rules should come from Congress and not from these administrative agencies. So it's a view of going back to the way the country was seventy five five years ago, and there is some merit to it.
But if one doesn't have faith that Congress will take up the challenge and exercise all of these important roles that the Court wants it to play, then we're going to be left in a situation where we're not being governed by any entity very effectively.
I mean, I'm just wondering why the liberals went along with this decision. Are they just throwing up their hands and saying, we can't fight this anymore.
It's a great question why the liberal justices on the Court decided to cut back the power of administrative agencies in the Exxon case. It may be that they were afraid that there would be a worse decision if they didn't go along with their majority colleagues in this case. That's one hypothesis, or for another, they may have thought that it's healthy to air all of these constitutional challenges
the agency authority. And finally, when the courts reject most of them, then that will be less room for disagreement in the future, and then administrative enforcement actions can proceed without this kind of ping pong balls in terms of
being hauled into court on these constitutional actions. But there are dozens, if not hundreds of cases that are pending now in which these constitutional questions have been raised, and so these were the next five years you will see just a courts having to decide case after case of these innovative challenges to administrative agency authority. And that can't be in a good and the short term for the individuals, the courts or for the administrative agencies.
Thanks so much, Hal. That's Professor Harold Krent of the Chicago Kent College of Law. And that's it for this edition of The Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify, and at www dot Bloomberg dot com, slash podcast Slash Law, and remember to tune into The Bloomberg Law Show every weeknight at ten pm Wall Street Time. I'm June Grosso and you're listening to Bloomberg