Fall 2012 • Issue 45, page 1

An Amazing Couple of (Supreme Court) Terms

By Chemerinsky, Erwin*

It is an amazing couple of years in the Supreme Court. It is hard to think of any two years in which the Court has had before it so many cases that affect not only key areas of the law, but also all of us, often in the most important and intimate aspects of our lives.

On June 25, in Arizona v. United States, the Supreme Court struck down key provisions of Arizona’s restrictive immigration law, SB 1070. The Court invalidated provisions which required that non-citizens carry papers with them at all times documenting their immigration status, that prohibited those not lawfully in the United States from apply for or receiving employment in Arizona, and which allowed police to arrest without warrants those who were suspected of being deportable. The Court emphatically ruled that immigration is in the exclusive control of the federal government and that such state efforts to regulate immigration are preempted by federal law.

On June 28, in National Federation of Independent Business, the Court upheld the key provisions of the Patient Protection and Affordable Care Act. Most importantly, the Court held that the centerpiece of the Act, the individual mandate, was constitutional as an exercise of Congress’s power to tax and spend for the general welfare. The individual mandate requires that by 2014 individuals either have to purchase health insurance or pay a tax penalty. Chief Justice Roberts, writing for the Court, explained that the individual mandate was effectively a tax: individuals either had to buy insurance or pay 1% of their income or $95. In 2015, this becomes 2% of their income or $235. The funds are collected by the Internal Revenue Service in its regular tax collection operations and go the federal treasury. The four dissenting justices would have struck down the entire 2,700 page statute, but instead virtually all of it was upheld.

During October Term 2011, there were no bankruptcy cases of the magnitude of Stern v. Marshall. But two bankruptcy cases were decided. In RadLAX Gateway Hotel, LLC v. Amalgamated Bank (2012), the Court unanimously held that Debtors may not obtain confirmation of a Chapter 11 cramdown plan that provides for the sale of collateral free and clear of the bank's lien, but does not permit the bank to credit-bid at the sale. Debtors filed for bankruptcy and sought to sell assets to repay funds owed to a bank, but without allowing the bank to bid on these assets. The Court ruled, though, that debtors could not prevent this practice, which is known as credit bidding.

In Hall v. United States (2012), the Court held that capital gains tax liability arising from postpetition sale of debtors’ farmland was not tax liability “incurred by the estate” under Chapter 12. Therefore, the federal government could impose and collect the taxes. Interestingly, this was a 5-4 decision, with the key difference between the majority and the dissent over whether to focus on the plain language of the statute (as preferred by the majority) or its purpose (as preferred by the dissent).

This term, on October 1, the Supreme Court heard oral arguments in Kiobel v. Dutch Petroleum, as to whether corporations can be sued under the Alien Tort Statute for international human rights violations occurring in foreign countries. On October 10, the Court heard arguments in Fisher v. University of Texas, Austin, as to whether colleges and universities may continue to use race as a factor in admissions decisions to benefit minorities and advance diversity. This decision could be crucial in determining the racial composition of American universities for years to come.

It is expected that in the weeks to come the Court will grant review and then decide this term whether Section 5 of the Voting Rights Act is constitutional. Section 5 requires that the Attorney General approve changes in election systems in states with a history of race discrimination in voting. In Shelby County v. Alabama, the Court is being asked to consider whether Congress had the power to extend this provision for 25 years.

And it is widely predicted that this term the Supreme Court will decide whether there is a right to marriage equality for gays and lesbians. Already there are two cases presenting the issue to the Court. In Department of Health and Human Services v. Massachusetts, the Court is being asked to consider the constitutionality of section 3 of the federal Defense of Marriage Act, which provides that for purposes of federal law and benefits marriage must be between a man and a woman. The United States Court of Appeals for the First Circuit declared this provision unconstitutional and it is expected that the Supreme Court will grant review as it almost always hears cases when a federal law has been declared unconstitutional.

In Hollingsworth v. Perry, the Court is being asked to review the decision of the United States Court of Appeals for the Ninth Circuit which invalidated California’s Proposition 8, which amended the California Constitution to provide that marriage must be between a man and a woman. The Ninth Circuit’s ruling was limited only to California. It said that once the California Supreme Court extended the right to marry same sex and opposite sex couples, to take it away from only same sex couples lacked a legitimate purpose and violated equal protection.

Long ago, Alexis de Toqueville wrote in Democracy in America that there is scarcely any issue in the United States that does not sooner or later come before the courts. Neither he nor the framers of the Constitution could imagine the extent to which that is true today.

*Erwin Chemerinsky is Dean and Distinguished Professor of Law at University of California, Irvine School of Law.