Petitions of the week
Big banks and raisin referenda
on Feb 11, 2022 at 3:21 pm
This week we highlight cert petitions that ask the Supreme Court to consider, among other things, whether Washington state’s surtax on banks violates the dormant commerce clause when 150 of 153 affected institutions are out of state and whether “one person, one vote” means that California’s statutory scheme allowing raisin cooperatives to vote as a bloc in referenda violates the Constitution.
Big banks challenge a Washington state surtax on Washington-based bank income
Washington Bankers Association v. Washington raises a question under the dormant commerce clause. As the Washington Bankers Association details in its petition, the Washington state legislature passed a surtax on financial institutions in the final two days of its 2019 legislative session to cover a budget shortfall. The law imposed a surtax of 1.2% on the gross Washington income of financial institutions that are affiliated with financial institutions with a global net income of one billion dollars the previous year.
The banking association challenged the law in a state trial court as a violation of the commerce clause. Although the law only taxed banks’ Washington-based income, the association argued that the effect was to tax out-of-state banks and to spare in-state banks. Of 153 institutions that had to pay the surtax because global net income of all affiliates exceeded one billion dollars, only three have their principal place of business in Washington. These three paid 0.26% of all the money paid under the surtax. After the trial court agreed with the association, the Washington Supreme Court granted direct review. The supreme court reversed, emphasizing that the surtax applies only to Washington-based income and that the law’s effect on out-of-state banks merely raised costs but did not prohibit interstate commerce.
Raisin grower challenges regulatory referendum under “one person, one vote”
Lion Raisins, Inc. v. Ross presents a question of voting rights in special regulatory elections. The California Marketing Act of 1937 provides for industry referenda by individual farmers before the government may issue marketing orders regulating affected farmers. Cooperative associations may vote as a bloc on behalf of all their members, on the board’s vote without polling their members. Lion Raisins, which describes itself as the largest independent raisin farm in the United States, considered itself disadvantaged by collective marketing policies of the California Raisin Marketing Board and opposed a marketing order. However, according to Lion Raisins’ petition, two cooperatives that collectively represented a majority of raisin producers voted as two blocs in the referendum to pass the order.
A state trial court and the California Court of Appeal both upheld the statutory scheme. The appellate court rejected Lion Raisins’ argument that the principle of “one person, one vote” from Reynolds v. Sims meant that the cooperatives’ bloc voting violated the Constitution. Instead of applying a high standard known as “strict scrutiny,” the court used a low standard of “rational basis” and found the scheme “rationally related” to “legitimate governmental purposes,” including “encouraging producers to join cooperative marketing associations.” The California Supreme Court denied review. In its petition, Lion Raisins maintains that courts are split on whether “one person, one vote” applies to such schemes.
These and other petitions of the week are below:
Educational Commission for Foreign Medical Graduates v. Russell
Issue: Whether, when an action involves both common and individual questions, a court may certify common questions for class treatment under Federal Rule of Civil Procedure 23(b)(3) without finding that the common questions predominate over the individual questions.
United States, ex rel. Polansky v. Executive Health Resources, Inc.
Issue: Whether the government has authority to dismiss a False Claims Act suit after initially declining to proceed with the action, and what standard applies if the government has that authority.
Washington Bankers Association v. Washington
Issue: Whether a law that is triggered by a proxy for participating in interstate commerce and that burdens out-of-state entities almost exclusively violate the dormant commerce clause.
Lion Raisins, Inc. v. Ross
Issue: Whether the Supreme Court’s voting rights jurisprudence permits the government to empower a private association (here, an agricultural cooperative) to cast all its members’ votes as a bloc on the theory that such voting schemes are subject to rational-basis review and the government may “give greater influence to some voters as long as the apportionment of power is not ‘wholly irrelevant’ to the [government’s] objectives.”