Supreme Court ignites wave of lawsuits against federal regulations
Major businesses and their lobbying groups have seized on a set of recent Supreme Court decisions that sharply limit the government’s regulatory powers, aiming to advance dozens of lawsuits that could invalidate a vast array of federal climate, education, health and labor rules.
The moves underscore the lasting significance of the justices’ findings – and the risks to President Joe Biden’s signature economic policies – ahead of an election in which the two candidates have presented starkly different visions for the future of federal regulations.
In a closely watched case last term, the high court jettisoned a long-standing legal doctrine that had afforded agencies broad latitude to craft rules even without express instructions from Congress. The justices also restricted how certain federal watchdogs can pursue alleged wrongdoers, and they opened the door for some companies to launch new lawsuits over seemingly settled government rules – some of them decades old.
Since then, the three separate yet intertwined rulings have influenced a groundswell of litigation, particularly from conservative and corporate interests that chafe at the power of the federal bureaucracy. Between June and mid-October, the cases have factored into more than 150 new or ongoing legal challenges, according to court records analyzed by the Washington Post and data amassed by Democracy Forward, a legal advocacy group that had urged the Supreme Court to rule differently. The new citations include new and updated lawsuits, briefings and rulings.
The lawsuits touch on virtually every aspect of the U.S. economy, especially federal labor law. Major companies including Amazon and SpaceX, and leading lobbying groups for restaurants and other industries, have incorporated elements of the new Supreme Court decisions into a range of lawsuits against regulations on wages, overtime pay, whistleblower protections or union organizing, court records show. (Amazon founder Jeff Bezos owns the Post.)
Lobbying groups for AT&T and Verizon have cited the opinions in their campaign to thwart federal regulations that would prevent them from interfering with internet traffic. Airlines including American, Delta and United have referenced one of the cases to keep the government from requiring them to disclose baggage fees. And some companies have argued the Supreme Court decisions should prohibit federal punishment for allegedly overcharging consumers, offering faulty products or committing other misdeeds.
The maker of the popular TurboTax software, for example, has relied in part on the justices’ recent reasoning to try to ward off a federal fine, after the government charged that the company had deceived consumers that some of its services are “free.” The case has the backing of the U.S. Chamber of Commerce, which has lobbied for years to weaken the Federal Trade Commission, an agency that broadly polices deceptive corporate practices.
“If the government continues to try to stretch the law … it’s going to lose a lot of cases in court,” said Daryl Joseffer, the executive vice president of the Chamber’s legal arm.
Like many of the companies, groups and regulators contacted for this story, spokespeople for Intuit and the FTC declined to comment.
The surge of legal challenges illustrates the tectonic shifts underway in Washington, as voters cast ballots in a highly contested presidential contest.
Much as he did during his first term, former president Donald Trump has broadly called for rolling back a vast array of federal climate, education, health-care and labor regulations, arguing that they hamper economic growth. Vice President Kamala Harris, in contrast, has called for new federal initiatives to fight fraud, combat high fees and lower the costs that Americans face for prescriptions and other necessities. The victor will face key, early decisions about which rules to issue or rescind, and which judges to nominate to adjudicate disputes over them. All those choices will unfold amid a greatly changed legal landscape, after the Supreme Court struck down a long-standing shield for federal regulation.
For roughly four decades, the Supreme Court’s ruling in Chevron v. Natural Resources Defense Council essentially instructed judges to defer to federal agencies’ interpretations of the law, on the grounds that those regulators could best divine the intentions of an imprecise Congress. In June, though, the court threw out that framework, known as the Chevron doctrine, sending immediate shock waves through the judicial system.
Republican policymakers soon seized on the development in their fights against the Biden administration, targeting its initiatives on climate change and its protections for transgender students. Major businesses also looked to capitalize on the rulings to strike at the government agencies that oversee them.
In October, for example, a federal appeals court ruled in favor of KalshiEx, a betting website that initially sought to allow wagers as high as $100 million on the outcome of the presidential election. Regulators viewed such bets as an emerging threat to democracy, but the judges sided with the company, which had argued that Congress had never explicitly granted the Commodity Futures Trading Commission the authority to outlaw the practice.
An organization representing insurance marketers has looked to capitalize on the ruling in its long-running fight with the Federal Communications Commission over robocalls. After the agency tried to crack down on some of the unwanted, automated contacts, the Insurance Marketing Coalition told a federal judge in August that regulators did not have Congress’ blessing to issue any such rules, citing the Supreme Court’s overturning of Chevron.
Similar arguments have been deployed at times against federal efforts to promote energy-efficient home appliances, protect retirees from subpar investment advice and prevent stock market manipulation. The American Securities Association, a lobbying group representing major financial firms and brokers, tried to convince a court this year that the Securities and Exchange Commission had no legal basis to monitor trades closely in real time – likening the oversight to “tyranny.”
“These claims would have been laughed out of the room just a couple years ago,” said Tyler Gellasch, the president of the Healthy Markets Association, which has advocated for greater SEC authority in the decade since the 2010 “flash crash” that gashed markets. He warned the SEC stands to have “have less info about trading markets than it’s had since the advent of the personal computer.”
Like many battles between industry and regulators, the war over the SEC audit system predates the Supreme Court decisions last term – and the new lawsuit relies on more than those precedents to argue that the government is acting unconstitutionally. But Mark Chenoweth, the president of the New Civil Liberties Alliance (NCLA), said the dynamic illustrates how companies and other interests could become “more willing to stand their ground” in fights against federal policymakers.
A conservative-leaning outfit, NCLA spent years seeking to chip away at Chevron. The group has served as counsel to Relentless, a fishing company that sued over federal rules that would require such firms to pay for federal monitors. The Supreme Court heard its arguments in tandem with another company, Loper Bright, which charged that Congress had never given the Commerce Department the explicit power to require industry-funded oversight.
“I don’t think there’s been enough time for the effects to really be well understood,” Chenoweth said of the aftermath, noting that lower courts must still adjudicate the original claims brought by Relentless and Loper Bright. But he predicted the cases would have a “disciplining effect” on regulators broadly.
In the immediate aftermath, some conservative groups and major corporations have been especially quick to leverage the Supreme Court rulings against the Labor Department, targeting a vast array of rules issued under Biden that aim to protect workers and their wages.
For years, the Restaurant Law Center has opposed Biden-era rules that aim to raise pay for tipped workers. But the group, whose board of directors includes executives from Chipotle and Yum! Brands, incorporated the Loper Bright decision into its broad legal strategy this July, leading an appeals court the following month to strike down the administration policy.
The decision left some experts fearful about the future of federal labor law, particularly at a time when Congress is too gridlocked to address some of the issues facing employees and employers nationwide.
“Congress is going to have to quickly adjust to policymaking that bears in mind this new legal landscape,” said Skye Perryman, the president of Democracy Forward.
Some major companies, including Amazon, Starbucks and SpaceX, have specifically looked to neuter the National Labor Relations Board, the government’s leading labor watchdog. They have targeted the NLRB with the aid of another key case that came before the Supreme Court last term: Jarkesy v. SEC, which sharply limited the SEC’s use of in-house tribunals to adjudicate alleged securities fraud.
The ruling carried vast implications for other federal regulators, including the NLRB, which relies extensively on its own internal administrative law judges to hear workers’ complaints and award back pay when necessary. (Its rulings can be appealed to federal court.)
Jennifer Abruzzo, the board’s general counsel, acknowledged the wave of litigation already has forced the NLRB to “divert some of its scarce resources to defend itself in cases that cite this Supreme Court precedent.”
In July, for example, the rocket-maker SpaceX successfully seized on the justices’ decision – and the ambiguity in their ruling – to halt lawsuits stemming from its allegedly unfair labor practices. The Elon Musk-owned company pointed to the fact that the Supreme Court deliberately did not address one of the issues it was asked to consider: whether agencies like the NLRB are unconstitutional because they are overseen by presidential appointees who cannot be removed by Congress.
Amazon has raised similar arguments in its own fight with the NLRB over union organizing efforts, faulting the government in September for “illegitimate proceedings led by an illegitimate decision-maker.” Others have leveraged the Jarkesy case to fight off whistleblowers: The poultry giant Perdue Farms, for example, has challenged whether the board can hear a case and award damages to a former worker who sounded the alarm years ago about the company’s alleged mistreatment of chickens.
Catherine Ruckelshaus, the general counsel at the pro-labor National Employment Law Project, described some of the litigation as “part of a really aggressive, multipronged broadside against the government’s ability to protect workers and other consumers, the environment, anything the government does.”
“We’re concerned about those cases and their implications,” she said.