Legal Docket: Time constraints

MARY REICHARD, HOST: It’s The World and Everything in It for this 18th day of March, 2024. We’re so glad you’ve joined us today. Good morning! I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. It’s time for Legal Docket.

Well, we’re now in the part of the Supreme Court’s term when opinions will start to come more frequently.

On Friday, a unanimous decision gave the courts a new test to determine when social media use by a public official is subject to liability under the First Amendment.

Two disputes with similar facts arose when public officials deleted comments from citizens (or completely blocked a citizen) on social media sites.

They sued claiming those public officials violated their first amendment rights. Different circuit courts came to opposite conclusions, so the Supreme Court stepped in.

REICHARD: The high court’s new test requires lower courts to ask two questions: One, does a public official possess authority to speak for the government? For example, it doesn’t really matter what a city alderman might think about interest-rate policy by the Federal Reserve; it’s clearly out of his lane. The second question: was that public official speaking in his or her public capacity? When the county executive says online she’s shutting down businesses because of Covid. That would certainly seem to qualify as an official pronouncement.

But it’s going to require a different sort of fact finding in each case, so the justices remanded both to lower courts to find those facts and apply the new test.

EICHER: One other opinion came down in a dispute over the First Step Act. That’s a law President Donald Trump signed in 2018 to reduce mass incarceration of people convicted of low-level drug crimes. It came down to the meaning of the word “and,” and it occurred in a series of requirements to qualify for a lesser sentence.

Bottom line? Six justices declined to let more nonviolent drug offenders qualify for lesser sentences.

And not the six you might expect.

Liberal Justice Elena Kagan wrote the opinion, joined by five conservatives. Conservative justice Neil Gorsuch wrote the minority opinion, with liberal justices Sonia Sotomayor and Ketanji Brown Jackson.

REICHARD: Didn’t see that one coming!

Now onto our two oral arguments for today. The first is a copyright dispute called Warner Chappell Music versus Nealy. It involves the song we played a few minutes ago:

MUSIC: [Pretty Tony version of “Jam the Box”]

It’s from 1984, called “Jam the Box” by Tony Butler, also known as Pretty Tony.

That song was produced by a rapper by the name of Sherman Nealy. Nealy owned a music production company back then. And the song was one of many that his company released. Nealy says he owns the rights.

But Nealy went to prison for several years starting in 1989. His company stopped operations.

When he got out of prison, Nealy learned that music publisher Warner Chappell and another publisher put out a song called “In the Ayer” by an artist known as Flo Rida. The song hit the top 10. Here’s a little of that:

MUSIC: [Flo Rida In the Ayer (2008 Samples) “Jam the Box”]

EICHER: You can hear the clear similarity, and there’s no dispute that Flo Rida “intTERpolated” the original, meaning he inserted elements of that song and put them into his.

But Nealy says that the original was used without his permission, and he wants money damages for that.

REICHARD: For the other side, music publisher Warner Chappell argues the way to deal with this dispute is to just follow the statute. And the Copyright Act gives three years to sue after a claim “arises.”

Doing the math, Flo Rida’s song came out in 2008. So under the law, Nealy had to sue by 2011. Which he didn’t do. He sued in 2018, a decade later.

Here’s Warner Chappell’s lawyer, Kannon Shanmugam:

KANNON SHANMUGAM: Under the applicable statute of limitations, a civil action must be brought within three years after the claim accrued. A claim accrues when the plaintiff has a complete cause of action.

EICHER: Going on to explain that a “complete cause of action” arose when someone used the song without Nealy’s permission.

But Nealy’s lawyer pointed to something else that gives his client more time to sue: the “discovery rule.”

EARNHARDT: It has to be actual notice. And it has to be a particular type of actual notice and express repudiation. All of those things can only delay the statute of limitations running, but it's a discovery rule. It turns on what the plaintiff knows, not on what the defendant did.

REICHARD: So which is it? When Nealy found out? Or when Flo-Rida did it?

The circuit courts are split on the answer, which is why the high court stepped in. The justices accepted the case to answer a specific question. Does the discovery rule allow for damages outside the three-year statute of limitation?

EICHER: But the argument veered into something else: whether copyright law should even use the discovery rule in the first place.

That rabbit hole led to some judicial head scratching.

Here’re Justices Samuel Alito, Sonia Sotomayor, and Neil Gorsuch:

JUSTICE ALITO: Well, let me map out what would happen if, we were to dismiss this petition as improvidently granted.

JUSTICE SOTOMAYOR: That wasn’t what we granted cert on.

JUSTICE GORSUCH: If it's a bad vehicle, does that not suggest we should dismiss this as improvidently granted?

REICHARD: “Dismissed as improvidently granted.” Known as a “DIG.” Sometimes the justices accept disputes for review that wind up a bad fit for the court. Sometimes, as happened here, the petitioner switched legal theories.

Maybe the justices will find a way to resolve the circuit split on how to handle damages in copyright cases.

Or maybe they’ll just DIG the whole thing.

EICHER: Even if they dig the song.

This next dispute also deals with time limits. This one involves debit card fees.

The facts revolve around a convenience store and truck stop in North Dakota called the Corner Post. It opened for business six years ago.

Corner Post accepts debit card payments, and therefore pays the fees banks charge for those transactions. But, of course, not before passing them along to customers in the form of higher prices.

The Federal Reserve bank sets those fees, having that authority from the Dodd-Frank Act of 2011. Dodd-Frank said the Fed can fix the maximum fee banks can charge for debit card transactions.

Banks earn billions of dollars off these transactions 21 cents at a time.

REICHARD: Trade associations representing retailers (among others) brought a challenge against the Board of Governors of the Fed. These associations argue the fees are too high, they’re arbitrary and capricious, and they violate the Administrative Procedure Act.

The core dispute bounced around for a while before lead petitioner Corner Post joined the litigation in 2021.

Here’s its lawyer, Bryan Weir:

BRYAN WEIR: Corner Post opened for business in 2018. Since then, it's paid several hundred thousand dollars in debit card fees that it thinks are unlawful. But the government says that Corner Post's clock to challenge those fees actually started in 2011, seven years before Corner Post pumped a single gallon of gas. The government is wrong. Corner Post's clock started when it swiped its first debit card and paid its first fee. That is the right outcome here for three main reasons.

EICHER: Reason one, the text of the law. Two, good policy. And three, Congress.

The Administrative Procedure Act says the time period to challenge an agency regulation starts when a “claim first accrues.” Then you have six years to act.

Weir for Corner Post argued that first accrual came with its first customer. There’s no good policy argument for this or that fee, either.

Besides, if there’s a problem, it’s up to Congress to fix it.

REICHARD: But the Federal Reserve argues this lawsuit was filed much too late. Here’s its lawyer, Benjamin Snyder:

BENJAMIN SNYDER: Here, Congress's standard practice when it's focused on the time for challenging agency action has been to run the limitations period for that type of claim from the date of the agency action at issue.

Standard practice or not, Chief Justice John Roberts had a fundamental question for Snyder:

JUSTICE ROBERTS: You have an individual or an entity that is harmed by something the government is doing, and you're saying, well, that's just too bad, you can't do anything about it because other people had six years to do something about it and maybe another person, a business organization or whatever, did do something about it. I -- I mean, your friend on the other side said everybody is entitled to their day in court, and it doesn't say unless somebody else had a day in court or unless the government gave other people or anybody six years, but you didn't -- you weren't injured in six years, you were injured -- injured in seven years. I -- I just -- I guess I am -- must be missing something because I don't understand why this wasn't settled 60 years ago.

EICHER: Snyder answered that’s how Congress does things, and he pointed to 29 other time limitations that are pretty much the same.

So Congress doesn’t share the chief’s thinking.

JUSTICE ROBERTS: Okay, yeah, Congress doesn't share it, but, I mean, it has -- it's not exactly an uninterested party. It has set up an agency and they'd just as soon not -- it not be challenged. We don't say when there's a legal challenge to something else that Congress is happy with it, so go home.

REICHARD: Snyder argued Corner Post could have brought a lawsuit using some other part of the APA. Their back-and-forth continued:

JUSTICE ROBERTS: Well, but they weren't -- they weren't in existence six years after the regulation was adopted.

SNYDER: So that's true. It's also true in the Hobbs Act context, it's true in dozens of other contexts as well --

JUSTICE ROBERTS: Well, we have a whole bunch of things that are illegal.

SNYDER: I -- I don't think anyone has suggested that those are illegal, I mean --

JUSTICE ROBERTS: Well, I –

SNYDER: -- except for the Chief Justice of the United States. (Laughter)

This case has blockbuster potential. Several justices worried about the implications of deciding to end Chevron deference. That’s a doctrine affirmed forty years ago by the high court. It says courts must defer to an agency’s reasonable interpretation where a statute leaves room for an agency to fill in details or is somehow ambiguous.

Justice Elena Kagan tackled that worry head on:

JUSTICE KAGAN: There is obviously another big challenge to the way courts review agency action before this Court….And, …if Chevron were reinforced, were affirmed, if Chevron were reversed, how does that affect what you're talking about here?

SNYDER: I think what I'd say is that a decision for Petitioner here would magnify the effect of any other decisions changing the way that this Court or other courts have approached administrative law questions, because it would -- it would potentially mean that those changes would then be applied retroactively to every regulation that an agency has adopted in the last, I don't know, 75 years or something.

Whether the court unsettles years of administrative law or not, a decision here has broader implications for all of us -far beyond paying “swipe fees” to use our debit cards.

And that’s this week’s Legal Docket!

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