Breaking News

Justices take up cases on veterans’ education benefits and 16th Amendment

The Supreme Court on Monday added two new cases to its docket for the 2023-24 term, involving educational benefits for veterans and a rare appearance by the 16th Amendment. At the same time, the justices took two cases in which they had granted review off their docket. They dismissed one case, in which they had been asked to review a district court’s order requiring Louisiana’s legislature to draw a new congressional map with an additional majority-Black district, while they sent a dispute over the right of individual members of Congress to bring a lawsuit seeking information back to the court of appeals for it to dismiss the case. 

In Moore v. United States, the justices agreed to hear a challenge to the constitutionality of a provision of the 2017 Tax Cuts and Jobs Act known as the “mandatory repatriation tax,” which required U.S. taxpayers who owned shares in foreign corporations to pay a one-time tax on their share of the corporation’s earnings, even if those earnings were reinvested in the corporation and the taxpayers did not receive them.

Article I of the Constitution requires Congress to apportion any “direct taxes” among the states. The 16th Amendment carves out an exception to that rule, allowing Congress to tax “incomes, from whatever source derived,” without apportioning that tax among the states.

A Washington state couple, Charles and Kathleen Moore, went to federal court to challenge the tax. They own a 13% stake in an Indian corporation that supplies power tools to small Indian farms. The corporation reinvested its earnings rather than distributing dividends, and the Moores never received any income from their shares. The couple contended that the mandatory repatriation tax – which increased their tax liability by approximately $15,000 – violated the 16th Amendment. Under the Supreme Court’s cases interpreting the 16th Amendment, they argued, income must be distributed before it can be taxed, and therefore the mandatory repatriation tax is a direct tax that is not apportioned among the states.

The U.S. Court of Appeals for the 9th Circuit rejected that argument and denied rehearing, over a dissent by Judge Patrick Bumatay that was joined by three other judges. The Moores came to the Supreme Court, asking the justices to weigh in. After considering the case at two consecutive conferences, the court granted review.

In the second case, Rudisill v. McDonough, the justices agreed to weigh in on a dispute over the interpretation of the Montgomery GI Bill and the Post-9/11 GI Bill, both of which provide educational benefits to veterans.

The justices dismissed Ardoin v. Robinson, in which Louisiana had asked the justices to review a ruling by a federal district court that would have required the state’s legislature to draw a new congressional map that included a second majority-Black district. An order by the Supreme Court in June 2022 cleared the way for the state to use a Republican-drawn map in the November 2022 elections, in which Republicans won five of the state’s six seats in the U.S. House of Representatives.

The case had been on hold for nearly a year, waiting for the court to issue its ruling in Allen v. Milligan, an Alabama voting-rights case involving similar issues. On June 8, a divided court ruled that the map drawn by Alabama’s Republican-controlled legislature likely violates Section 2 of the Voting Rights Act, which bars racial discrimination in voting. In a decision by Chief Justice John Roberts, the court rejected the state’s invitation to narrow the scope of the Voting Rights Act.

In the wake of that decision, the justices on Monday dismissed the Louisiana case and lifted the stay that they had issued last year, reinstating the district court’s order in favor of the challengers. In a brief order, they emphasized that doing so “will allow the matter to proceed before the Court of Appeals for the Fifth Circuit for review in the ordinary course and in advance of the 2024 congressional elections in Louisiana.”

The justices sent Carnahan v. Maloney, a case originally slated for argument in the fall, back to the lower court with instructions to dismiss the case. The case arose from efforts by a group of Democratic members of Congress to obtain information from the General Services Administration about a 2013 lease for the Old Post Office, a government-owned building in Washington D.C., between the GSA and a company owned by former President Donald Trump.

The question before the court was whether the individual members of Congress have a right to sue, known as standing, an executive agency to compel it to disclose information that the members have requested. After the U.S. Court of Appeals for the District of Columbia Circuit ruled that they did, the Biden administration asked the justices to weigh in, which they agreed to do in May. But after the government’s petition for review was granted, the members of Congress voluntarily dismissed their case in the federal district court. In the wake of that development, both sides of the dispute agreed that the D.C. Circuit’s decision should be vacated and the case sent back to that court with instructions to dismiss the case.

Justice Ketanji Brown Jackson disagreed; she would instead have dismissed the case as improvidently granted.

Over a dissent from three justices, the court denied review in Waleski v. Montgomery, McCracken, Walker & Rhoads, which had asked the justices to weigh in on a procedural question: When the question before a federal appeals court is whether it has the power (known as jurisdiction) to hear the case at all, can the court instead assume that it has jurisdiction to dismiss the claims based on state law?

The issue came to the court in a dispute arising from environmental contamination from a wood-treatment plant operated by Kerr-McGee in Avoca, Pennsylvania. Stanley Waleski filed a legal malpractice claim in a Pennsylvania state court against the lawyers who had represented him and other Avoca residents in bankruptcy proceedings against the company that Kerr-McGee spun off to bear responsibility for the contamination. The law firm moved the case to a federal court in Pennsylvania, arguing that the proceeding “arose in” and was “related to” the ongoing bankruptcy proceedings. The case was eventually transferred to a New York bankruptcy court.

Waleski asked the bankruptcy court to return the case to Pennsylvania state court, arguing that it did not have jurisdiction over his case. But both the bankruptcy court and the district court (the first stop on appeal from the bankruptcy court) disagreed. Waleski then appealed to the U.S. Court of Appeals for the 2nd Circuit, which did not decide the jurisdictional question at the center of Waleski’s appeal. Instead, it assumed that the case was properly in federal court but dismissed the case anyway on state law grounds.

Waleski came to the Supreme Court in March, asking the justices to take up his case. They declined to do so, but Justice Clarence Thomas penned a brief dissent from the denial of review, joined by Justices Neil Gorsuch and Amy Coney Barrett. Thomas observed that the courts of appeals are divided on the use of “hypothetical jurisdiction”; moreover, in his view, its use “raises fundamental questions of constitutional law.” Therefore, he would have granted Waleski’s petition for review.

Thursday, June 22, was the last regularly scheduled conference of the 2022-23 term. However, the justices traditionally hold a “clean-up” conference before their summer recess. Normally, the primary purpose of that conference is to dispose of petitions for review that have been on hold until the justices issue their decisions on the merits in cases involving similar issues. However, in recent years, the court has also granted new petitions for review on the order list from the clean-up conference, so it is likely that Monday’s grants are not the last set of grants before the justices leave for the summer.

This article was originally published at Howe on the Court

Recommended Citation: Amy Howe, Justices take up cases on veterans’ education benefits and 16th Amendment, SCOTUSblog (Jun. 26, 2023, 12:06 PM),