SCOTUS News 2017 Finale! Abood, Abortion, and Proclamation Tension

The news of Justice Kennedy’s impending retirement has stolen some of the limelight from five heavy SCOTUS opinions out this week. The Supreme Court released opinions on credit card company policies, congressional districting, labor unions, abortion, and President Trump’s travel ban. All in all, it’s quite a finale, with each decision split at the predictable 5-4 fault line. Let’s dive in, one last time, before FantasySCOTUS cools down for the rest of summer.


Ohio v. American Express

Amex requires merchants who accept its credit cards to agree to an “antisteering” contractual provision. This provision requires that merchants not discourage customers from paying with Amex. This provision is part of the cost-benefit tension between merchants and their customers that all credit card companies try to resolve. Amex’s solution has been slightly different from Visa’s and Mastercard’s, though. Amex charges merchants fees in order to provide better rewards for customers. The antisteering provision in Amex’s contracts helps to regulate this balancing act. Without antisteering, merchants would likely encourage customers to use Visa or Mastercard, which don’t charge merchant fees.

The District Court originally ruled that antisteering provisions violated the Sherman Antitrust Act. The District Court found the antisteering provisions – and the higher fees they create – to be anticompetitive. The Second Circuit reversed the District Court, though. And SCOTUS now affirms the Second Circuit in a 5-4 decision authored by Justice Thomas.

To prove that the antisteering provision violates the Sherman Act, it must satisfy a three-step framework. The Supreme Court rules that the first step – in which a plaintiff must prove anticompetitive effects – has not been met. Thomas writes: “Price increases on one side of [a two-sided] platform … do not suggest anticompetitive effects without some evidence that they have increased the overall cost of the platform’s services.” Petitioners cannot show that “Amex’s antisteering provisions increased the cost of credit-card transactions above a competitive level, reduced the number of credit-card transactions, or otherwise stifled competition in the credit-card market.”

Breyer, with Ginsburg, Sotomayor, and Kagan (Dissenting)

Breyer leads the dissent. Antisteering, he writes, makes no difference to shoppers, because they pay the same price no matter what. Amex is afraid of steering, because it would mean that charging merchants more for services would no longer be viable. “Thus, American Express dislikes steering; the merchants like it; and the shoppers may benefit from it, whether because merchants will offer them incentives to use less expensive cards or in the form of lower retail prices overall.”

The antisteering provisions affect competition in ways that other strategies would not. Amex could, for example, lower its merchant fees, or enhance its card rewards, to reassert market power without resorting to anticompetitive behavior. Furthermore, Breyer writes, the majority carves out a new definition for “two-sided transaction platforms” like credit card companies. This despite the fact that plenty of similar economic relationships remain defined in more commonplace ways.


Abbott v. Perez

Somewhat confusingly, this case is consolidated with another case named Abbott v. Perez. We refer to case number 17-586 throughout this post, due to its more accurate Justice Predictions.

After a back-and-forth spanning about seven years, a Texas redistricting plan comes before SCOTUS again. Challengers to the districting plan claim that the Texas legislature did not take necessary steps to “purge” the “taint” of proposed districts that could be violations of the Voting Rights Act (VRA).

SCOTUS’s holding in this case is complex. First, they reverse the ruling from the three-judge District Court panel that required the State government to reject a districting plan originally drafted in 2011. The three-judge panel found that the use of the plan by the legislature in 2013, with only minimal changes, amounted to intentional discrimination. But, Alito writes for the majority, the burden to prove intentional discrimination is on the challenger of a redistricting plan. And there is insufficient evidence to draw the conclusion that the legislature acted in bad faith by enacting the plan.

From there, SCOTUS considers four specific voting districts that prevail past this first hurdle. Next, the majority applies the test that resulted from the Court’s unanimous opinion in Thornburg v. Gingles, some thirty years ago. This three-part test is used to prove whether a district violates the anti-discrimination principles of the VRA. Three of the four districts withstand the test. The fourth and final district, SCOTUS rules, is in fact an impermissible racial gerrymander as the three-judge panel originally ruled.

For this reason, the Justices reverse in part and affirm in part. Pound for pound, however, this case represents a nearly complete reversal of Texas’ three-judge panel, and thus we have tallied this case in FantasySCOTUS as “Reversed”.

Sotomayor, with Ginsburg, Breyer, and Kagan (Dissenting)

Sotomayor leads off by stating that SCOTUS simply doesn’t have jurisdiction here. The majority disregards appellate jurisdiction to infer an injunction the District Court never actually granted or denied. This means that SCOTUS had no jurisdiction over this case, despite what the majority avers. Moving on to the facts themselves, the dissent writes that the District Court ruled on the facts correctly, finding plausible evidence pointing to discrimination.

Finally, Sotomayor addresses the usual standard of review for factual disputes in cases like this. The standard is not de novo, which the majority embarked upon, and even if it were the standard, the majority “does not meaningfully engage” with the facts the District Court obtained in their original ruling.


Janus v. American Federation of State, County, and Municipal Employees (AFSCME)

In yet another 5-4 split, the Court rules against labor unions that charge so-called “agency fees”. These fees on union non-members cover only the collective bargaining pursuits of the union in their sector. Both the District Court, and the Seventh Circuit, previously affirmed the unions’ right to extract agency fees. SCOTUS now reverses, overruling precedent in the process.

Agency fees cannot be charged to employees who are not members of labor unions, Alito writes for the conservative majority. Agency fee structures violate the First Amendment because they require individuals to subsidize the speech of other members of labor unions, whether or not they agree with them. In addition, labor unions operating in many States do not charge agency fees, and those unions still operate effectively despite this lack.

In ruling this way, SCOTUS overrules the precedent set by Abood v. Detroit Board of Education. Alito writes, however, that overturning Abood does not upset stare decisis. The difference in the precedential record turns on whether States allow agency fees, as opposed to cases – such as this one – where States and labor unions attempt to require agency fees. Alito writes that “…the designation of a union as exclusive representative and the imposition of agency fees are not inextricably linked.”

In addition, there are other “very strong reasons” for overturning Abood. The Abood precedent did not comport with the free speech rights of the First Amendment, was “poorly reasoned”, and “led to practical problems”.

Kagan, with Ginsburg, Breyer, and Sotomayor (Dissenting)

Overturning Abood disrupts the “stable balance” between public employees’ First Amendment rights, and government interests. It also requires a massive legislative and private-sector response, and, in general, “trivialize[s] stare decisis.” Not only will unions “lose a secure source of financial support,” but “the relationships of public employees and employers will alter in both predictable and wholly unexpected ways.”

Abood’s imposition of agency fees achieved “labor stability” without infringing First Amendment rights, because the primary goal of agency fees has always been to fund unions in their collective-bargaining efforts. Agency fees prevent employees from “reaping all the benefits … while leaving it to others to bear the costs.”

Kagan also writes about how unions are unique institutions because they are required by law to support even non-members. And “[w]here the state imposes upon the union a duty to deliver services, it may permit the union to demand reimbursement for them.” The majority believes that Abood was unworkable to such an extent that it needed to be overturned. The dissent disagrees, especially considering the high bar that must be met in any situation where a precedent is overruled.


National Institute of Family Life Advocates (NIFLA) v. Becerra

California’s FACT Act requires pregnancy centers and other clinics that primarily serve pregnant women to provide certain notices. These notices involve explaining to clients all the options available to them, including free and low-cost abortions. These notices also inform women whether they are receiving care from licensed or unlicensed professionals. Petitioners – both licensed and unlicensed “crisis pregnancy centers” that are pro-life – filed suit claiming violation of First Amendment rights.

The District Court and the Ninth Circuit both ruled that the licensed notices survive strict scrutiny, partly on the basis that it is “professional speech”. The conservative majority reverses, with Thomas writing that these notices are not content-neutral, and likely violate the First Amendment. This content-based approach only represents one reason why the notices are not protected by exceptions for “professional speech”. If a State only needs to call speech “professional” in order to raise the bar of scrutiny, that is a slippery slope. But another reason is that the notices inform women of state-sponsored services, which automatically fails a test of whether these notices provide only “purely factual and uncontroversial information.”

The minutiae of California’s law surrounding these notices does not pass constitutional scrutiny, but the majority leaves a tiny bit of daylight by stating that they “do not foreclose the possibility that some such reason exists” to justify a certain dissemination of these notices. A public information campaign, for instance, might suffice. Currently, though, the burden is spread unequally between some pregnancy centers, but not others, and the “speaker-based laws run the risk that the State has left unburdened those speakers whose messages are in accord with its own views.”

Kennedy writes a separate concurrence, joined by Roberts, Alito, and Gorsuch. He briefly remarks on the dangers of viewpoint discrimination, and state-sponsored endorsement of one viewpoint over another.

Breyer, with Ginsburg, Sotomayor, and Kagan (Dissenting)

There is nothing unconstitutional about asking licensed facilities and unlicensed facilities to disclose their license or lack thereof. To rule otherwise “threatens considerable litigation over the constitutional validity of much, perhaps most, government regulation.” Disclosure laws, under the majority ruling here, could all easily be considered “content based” now, because “virtually every disclosure law requires individuals to speak a particular message.”

The Court used to take the view that States can impose reasonable requirements on licensing of physicians. “Medical professionals do not … have a right to use the Constitution as a weapon” to control the content of a State’s “reasonable conditions.” The Court, in fact, has historcially “been wary of claims that regulation of business activity, particularly health-related activity, violates the Constitution.”

It is the dissent’s view that the FACT Act and its requirements are reasonable. Prior precedents, particularly Planned Parenthood v. Casey, lawfully require doctors to “tell a woman seeking an abortion about adoption services.” There is no significant difference between the medical professionals and their conduct in Casey, and the situation in this case. Furthermore, there are “material differences between disclosure requirements and outright prohibitions on speech.” A doctor’s professional speech is “protected precisely because of its informational value to patients.”


Trump v. Hawaii

The dispute in this case concerns the genesis of the reasoning behind President Trump’s “travel ban”, enacted soon after his inauguration last year. After much back and forth in the courts, and several revisions, the ban, as a Presidential Proclamation, finally arrives at SCOTUS. In another 5-4 decision, the majority rules that the Proclamation is legal under the authority given by the Constitution to the President to regulate entry of aliens into the United States.

Respondents originally argued that the Proclamation violated both the Immigration and Nationality Act (INA) and the Establishment Clause. The Ninth Circuit ruled in favor of respondents. SCOTUS rules that the Proclamation falls within the acceptable boundaries of the INA, and declines to rule on Establishment Clause lines. The INA, though, “vests the President with “ample power” to impose entry restrictions in addition to those elsewhere enumerated in the INA.” The President issued the Proclamation based on findings from DHS and other agencies. These findings show that the Proclamation targeted only “foreign states whose systems for managing and sharing information about their nationals” were deemed inadequate by the President.

The plaintiffs/respondents’ argument “ignores the basic distinction between admissibility determinations and visa issuance that runs throughout the INA.” One clause of the INA determines admissibility of aliens, while a different clause prohibits discrimination in granting immigrant visas. This distinction matters, because plaintiffs/respondents and the dissent attempt to conflate the two clauses into a new requirement not actually present in the INA. For this and other reasons, the logic of the Proclamation is sound and within the bounds of the law. Statements by the President and his advisors amounting to discrimination are not significant enough to overcome the “facially legitimate and bona fide reason” for the Proclamation, backed up by the research and policy of the DHS and other agencies that led to the Proclamation.

In addition, the subsequent removal – due to improvement of information managing and sharing – of some countries from the list, numerous exceptions for certain categories of foreign nationals, and the creation of a waiver program all “set forth sufficient … justification to survive rational basis review.”

Thomas writes a separate concurrence, concerned about the nationwide “universal” injunction invoked in this case. He argues that such nationwide injunctions damage the normal judicial process, and may not even be constitutional. The system of equitable relief established at common law is the preferred method for large groups to bring suits.

Breyer, with Kagan (Dissenting)

Breyer writes a relatively short dissent, joined by Kagan. He argues that religious animus played a significant role in the Proclamation’s promulgation. The evidence suggests this, including the fact that the number of granted waivers to the Proclamation is inexplicably low compared to the total number of waiver requests that meet the criteria necessary for waiver. He writes that the District Court, on remand, should have leave to decide these questions of “exemption and waiver.”

Sotomayor, with Ginsburg (Dissenting)

Sotomayor writes a more substantial dissent. The Court, she writes, “leaves undisturbed a policy first advertised … as a “total and complete shutdown of Muslims entering the United States” because the policy now masquerades behind a façade of national-security concerns.” The President has made several formal and informal statements expressing animus toward Muslims, and there is a clear relationship between these statements and the Proclamation. Neither the inclusion of non-Muslim majority countries, nor the subsequent removal of some of the Muslim-majority countries, justifies ignoring this communicated intent of the Proclamation. Such evidence constitutes a clear violation of the Establishment Clause.

Not only that, but the Court’s ruling just a few weeks ago in Masterpiece Cakeshop forecloses exactly these kinds of government actions when the government shows obvious animus. Despite this new precedent, the majority ignores it to rule in the opposite direction here.

“Although national security is unquestionably an issue of paramount public importance,” Sotomayor writes, “it is not “a talisman” that the Government can use “to ward off inconvenient claims – a “label” used to “cover a multitude of sins.” “


The FantasySCOTUS Crowd

The opinions were hot, the dissents hotter, but the Crowd weathered this week quite well. In American Express, much as we saw with cases from last week, the Crowd had favored a unanimous ruling, but with room for the probable 5-4 divide that usually defines late-term opinions. This was, in fact, the only such miss, and barely much of a miss at that:

ohio amex american express credit card

Ohio v. American Express

The Crowd similarly hedged their bets with Abbott v. Perez, but here their individual Justice Accuracy was far better.

abbott perez 17-586

Abbott v. Perez, case no. 17-586

The Crowd made the right call for Kennedy in Trump v. Hawaii. Though many in the media lament the retirement of the “swing justice” this week, the Crowd knows full well where Kennedy usually falls. Indeed, in all of the cases this week the Crowd easily foresaw the 5-4 split. Even the comparatively weak prediction for Kagan in NIFLA v. Becerra only means that the Crowd members paid close attention to her grilling of both sides during oral argument.

NIFLA becerra national institute of family and life advocates

NIFLA v. Becerra



All of this to say, the FantasySCOTUS Crowd has performed admirably this term. The Crowd’s performance weighs in at just a shade under last year’s accuracy, with a Case Accuracy rate well above 2015. All in all, the Crowd guessed the case outcome correctly in 48 out of 61 argued cases written with full opinions this term.

End of 2017 Term, side-by-side comparison with past two Terms

The increase in accuracy rates may get even better over the course of the coming terms. With a full term under his belt, Justice Gorsuch will be easier to predict next year. Meanwhile, speculation is mounting that President Trump will nominate a replacement for Kennedy who resides farther to the ideological right. Whether that happens or not, we have no doubt the Crowd will be able to handle the challenge.

This marks the end of the FantasySCOTUS season for the 2017 Supreme Court term. In the coming weeks, we will announce the winners of FantasySCOTUS 2017, as well as other news on what’s coming next for FantasySCOTUS and the Supreme Court.

Speaking of Kennedy’s retirement, we have re-activated FantasyJustice. FantasyJustice is the crowd-sourcing algorithm that correctly predicted Gorsuch’s nomination last year. For more on crowd-sourcing the Supreme Court, click here to view the paper by Daniel Martin Katz, Michael J. Bommarito II, and Josh Blackman. LexPredict is interested in crowd-sourcing more than just the Supreme Court, too. LexSemble by LexPredict finds ways to leverage the wisdom of crowds to improve organizations and processes.

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