State Court Docket Watch

Brush & Nib Studio v. City of Phoenix

April 3, 2020

Docket Watch 2020

By Jonathan Scruggs

For the last decade, courts and commentators have penned many pages about anti-discrimination norms and religious liberty. Since the U.S. Supreme Court decided Masterpiece Cakeshop v. Colorado Civil Rights Commission,[1] lower courts have tried to balance these interests and begun to protect creative professionals from anti-discrimination laws that force them to speak messages against their conscience. The Arizona Supreme Court’s decision in Brush & Nib Studio v. City of Phoenix exemplifies this trend.[2]

Brush & Nib involved two artists who operate a Phoenix art studio called Brush & Nib Studio.[3] Brush & Nib offers both pre-made artwork and custom commissioned artwork, such as paintings for home decor, hand-lettered signs, wedding vows, and wedding invitations.[4] And though Brush & Nib offers to sell its artwork to anyone, its artists do not create artwork conveying messages contrary to their religious beliefs—such as artwork promoting racism, demeaning others, or celebrating same-sex weddings.[5]

Phoenix has a law forbidding public accommodations from discriminating on the basis of sexual orientation.[6] The law penalizes violators up to $2500 and six months in jail for each day of non-compliance.[7]

Brush & Nib and its artists brought a pre-enforcement challenge to stop the law from forcing them to create custom artwork celebrating same-sex weddings.[8] Forcing them to do so, they argued, would compel them to speak, substantially burden their religion, and therefore violate both the Arizona Constitution’s Free Speech Clause and Arizona’s Free Exercise of Religion Act (FERA)[9]—the Arizona version of the Religious Freedom Restoration Act.

Phoenix countered that (1) the artists and their studio lacked standing; (2) its law regulated discriminatory business activity and only burdened speech incidentally; (3) its law did not compel Brush & Nib’s speech because people would attribute that speech to Brush & Nib’s clients; (4) its law merely required equal treatment and that its effect on the artists was too attenuated to substantially burden their religious beliefs about marriage; and (5) applying its law to the studio served the compelling interest of stopping discrimination and helped prevent widespread discrimination.[10]

Rejecting these arguments, the Arizona Supreme Court ruled 4-3 that Phoenix would unconstitutionally compel speech and violate FERA by forcing Brush & Nib to create custom wedding invitations celebrating same-sex weddings.[11]

As for standing, the majority only analyzed Brush & Nib’s wedding invitations because its other artwork did not sufficiently appear in the record. But the majority found a credible threat that Phoenix would prosecute the artists for declining to create same-sex wedding invitations, particularly because Phoenix conceded its law required this.[12]

As for compelled speech, the majority emphasized that public accommodations laws facially and typically regulate discriminatory business conduct. But these laws still compel speech when applied to “speech itself”—in this case when compelling artists to write words and paint paintings they disagree with. These artists did not forfeit their free speech rights by offering to create speech on commission.[13]

Nor did Brush & Nib’s artwork speak only for their clients. The majority cited tattoo artists, parade organizers, and professional fundraisers as proof that speakers often work with others to create expression. Even when collaborating, artists still have an interest in choosing what they write, paint, or say.[14]

As for religious exercise, the majority found a substantial burden because the law’s steep penalties forced the artists to do something they considered religiously objectionable. Citing Burwell v. Hobby Lobby Stores, Inc.,[15] the majority refused to dismiss this objection as too attenuated from the artists’ fundamental religious beliefs. Doing that would force the court to question the reasonableness of their religious beliefs—something courts should not and cannot accurately do.[16]

And finally, the majority recognized Phoenix’s interest in stopping discrimination but denied its relevance here. Because the studio objected to conveying a message celebrating same-sex marriage for anyone and served LGBT persons generally regardless of their status, the studio did not discriminate against anyone. So compelling the studio to speak did not further Phoenix’s anti-discrimination interest.[17]

This point also negated any slippery-slope concerns. According to the majority, Phoenix can still use its laws to stop actual status-based discrimination. It just cannot use its laws in the rare situation when doing so would compel speech, like writing words or creating paintings. For the majority, this struck the right balance of respecting freedom while still allowing the government to stop status discrimination.[18]

In response to these conclusions, three dissenting opinions echoed arguments made by Phoenix. The first two dissents emphasized that Phoenix’s law textually regulated discriminatory conduct, and that it did not require the artists to endorse any view but merely required them speak their clients’ views, and therefore only burdened speech incidentally—a burden justified by the state’s compelling interest in stopping status discrimination.[19]

These two dissents also denied any substantial burden on the Brush & Nib artists, saying the law did not affect “fundamental tenets” of their beliefs and that courts should inquire into the “nexus” between a religious belief and a particular practice to decide whether a substantial burden exists.[20]

And all three dissents raised line-drawing and slippery-slope concerns: that the majority opinion would open the door to discrimination of different sorts in the future, whether based on sexual orientation, race, or religion.[21]

The Brush & Nib decision will have far-reaching consequences inside and outside Arizona. In its 52-page decision, the Arizona Supreme Court tackled most of the arguments in this controversial area of law and provided a blueprint for balancing anti-discrimination norms and constitutional rights—protecting dissent and good-faith disagreement on one hand yet still giving officials the tools to stop status discrimination on the other. And because the majority relied almost entirely on federal caselaw, other courts will surely cite and grapple with the Brush & Nib analysis when similar questions pop up elsewhere.

Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Alliance Defending Freedom represented Brush & Nib Studio and the studio’s artists in their case against the City of Phoenix, with Mr. Scruggs serving as lead counsel throughout the litigation. Mr. Scruggs’ view expressed here are his own and do not necessarily reflect the view of his clients.

To view this article on the Federalist Society’s website, click here.


[1] Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Comm’n, 138 S. Ct. 1719 (2018).

[2] Brush & Nib Studio, LC v. City of Phoenix, 448 P.3d 890 (Ariz. 2019).

[3] Id. at 898.

[4] Id. See also http://www.brushandnib.com; https://www.instagram.com/brushandnib (depicting some of these art pieces).

[5] Brush & Nib, 448 P.3d at 897-98.

[6] Id. at 898.

[7] Id.

[8] Id. at 899.

[9] Id. at 899-900.

[10] Id. at 900, 905, 911-12, 916, 920-21, 923.

[11] Id. at 926.

[12] Id. at 901-02.

[13] Id. at 914, 928-29.

[14] Id. at 907-08, 910-11.

[15] Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014).

[16] Brush & Nib, 448 P.3d at 919-22.

[17] Id. at 909-10, 914-15, 922-26.

[18] Id. at 908, 916, 923-26.

[19] Id. at 929-34, 937-38.

[20] Id. at 934-35, 939-40.

[21] Id. at 937-39, 941.

Zarate v. Tennessee of Cosmetology and Barber Examiners

November 30, 2018

Why should a barber have to graduate high school? Barbers cut hair. They don’t need to know calculus, or explore themes of alienation in King Lear. So why does Tennessee require barbers have a high school diploma or a GED even before they can attend barber school? And then once in barber school, barbers are still required to get 1,500 of training, and then pass a state exam. Won’t that ensure everything a barber could possibly need to know to ensure public safety? This is the question posed in Tennessee in Zarate v. Tennessee of Cosmetology and Barber Examiners.

The high school requirement appears irrational enough on its own. But when compared to other professions that do not require a high school degree, it becomes downright mind-blowing. Cosmetologists don’t need to graduate high school and they have virtually the same job description. Other jobs in Tennessee that a person can do without a high school degree include Emergency Medical Responders, who provide lifesaving interventions in emergency situations, as well as governor, senator, and representative. If Elias wanted to save a life or write a law, his educational level would not disqualify him. Unfortunately, it does disqualify him from cutting hair.

Elias is the picture of the American determination, with a particular kind of spirit only found in a city as soulful as Memphis. He has not had an easy life. When he was a boy, his mother was pushing their stranded car off a busy road when a truck slammed into the back of the car, crushing her and sending Elias into a coma. Not long after, his father abandoned the family. At age thirteen (13), Elias was on his own in the streets of Memphis. Grandparents first cared for his younger brother and sister, but the situation was to get still worse.

Elias, although essentially homeless, still made it to his senior year of high school, attending classes by day, working odd jobs at night, and couch surfing when he needed sleep. But he had to drop out to begin assuming care of his brother and sister. His academic career was derailed for good. In the middle of his senior year, he dropped out and dedicated himself solely to their needs.

Now, ten (10) years later, Elias is settled down and a father of his own baby girl. He is ready for something more satisfying than just a job. He wants a career. And he has always had a dream of becoming a barber.

When he was a boy, he grew up around barbershops. He found the calling endlessly fascinating. He loves the scissors, the gowns, the white shirt, and the barber pole. Barbering is the perfect career for someone like Elias who is likeable, creative, hardworking and social. And it is one of the few stable professions with a pathway to business ownership available to persons without a high school degree. So why would Tennessee deny that to him?

Nothing is more American than Elias’s relentless determination to rise in the face of this adversity. He wants nothing other than to redeem the most American of promises – to make sure that his family has it better than he did. He has sacrificed enough by delaying his dream in service of others. This would be his time, but for a Tennessee law with no legitimate justification.

It is hard not to see the hand of protectionism behind the scenes. The challenge is to try and even dream up another justification other than protecting licensed barbers from upstarts. And the high school requirement is not some relic; it was passed in 2015 as part of a sprawling “clean up” bill that never even mentioned that it was upping the standards for barbers. The legislators didn’t even seem to know about it. Unsurprisingly, there is no record of consumer complaints over insufficiently educated barbers mentioned in the legislative record.

Typically, review of economic liberty claims falls under the rational basis test. Under this form of review, the government is given extreme latitude, a fact the government makes evident when responding to these claims. The government will argue that there is no such thing as a constitutionally arbitrary law when it comes to taking away a person’s right to earn a living. Why should that be when we spend most of our time at our jobs? After our families, what else is more important? And even more arbitrary is the decision to a greater burden on barbers then are placed on other jobs, including ones that would seem to pose an equal (cosmetology) or greater (EMR) risk to public safety. If any case was calculated to test for whether such a thing as a constitutionally arbitrary law exists, this is it.

Tennessee typically follows the example of federal courts when it comes to economic liberty claims, but it has not really been put to the test recently. Of course, the states have their own constitutions. Those can and often do have different constitutional protections for liberty as befits a separate and equal sovereign. There’s no reason why Tennessee or any other state should feel obligated to give the government this much rope to intrude on one of our most precious rights – the right to earn a living.

Tennessee was one of the first states created after the original thirteen. The principle interests of its founders were all economic as small farmers streamed across the Appalachian Mountains in search of good land after the Revolutionary War. Its people had a different experience. Its Constitution is a reflection of a distinct heritage. Economic liberty should be considered a vital and fundamental right in Tennessee.

What is at stake for Elias sure feels like a fundamental right. He can only hope that Tennessee courts recognize the importance of economic liberty, if not as a matter of federal law, then as a matter of Tennessee state law. He has sure earned it.

Herr v. U.S. Forest Service

November 30, 2018

On Monday, the U.S. Supreme Court denied certiorari in SWC, LLC v. Herr, ending a 25-year battle for property rights in Michigan’s Upper Peninsula.   The case concerned the U.S. Forest Service’s (“USFS”) criminal prohibition on motorboat use on Crooked Lake, where private landowners share the lake with a national wilderness.   At issue was whether Congress delegated the full scope of its Property Clause power in Article IV, Section 3 to the USFS when it passed the Michigan Wildness Act (“MWA”).

Congress passed the MWA in 1987, designating lands as the Sylvania Wilderness and placing them in the National Wilderness Preservation System.  Section 5 of the MWA provides: “[s]ubject to valid existing rights, each wilderness area designated by this Act shall be administered by the Secretary of Agriculture in accordance with the provisions of the Wilderness Act ….” 101 Stat. at 1275–76.  The saving clause, “subject to valid existing rights,” is frequently used by Congress and the Executive Branch to protect existing rights and legitimate expectations from subsequent changes in the law.

Approximately 95% of Crooked Lake is within the boundaries of the Sylvania Wilderness. There are approximately a dozen private lots along the north shore of the lake that are outside the wilderness.  Respondents David and Pamela Herr own two of these lots.

The legal battle began in 1992 when the USFS prohibited the use of sailboats and houseboats on the portions of Crooked Lake within the Sylvania Wilderness.  Landowners sued, claiming that the restrictions infringed upon their littoral rights in violation of the saving clause, “[s]ubject to valid existing rights.”  Stupak-Thrall v. United States, 843 F. Supp. 327, 328–29 (W.D. Mich. 1994), aff’d, 70 F.3d 881 (6th Cir. 1995), vacated, 81 F.3d 651 (6th Cir. 1996), aff’d by an equally divided en banc court, 89 F.3d 1269 (6th Cir. 1996) (“Stupak-Thrall I”).

In May 1995, while Stupak-Thrall I was pending, the USFS issued another rule, which prohibited the use of gas-powered motorboats on those portions of Crooked Lake within the wilderness.  In Stupak-Thrall II, the plaintiffs challenged those restrictions on the grounds that the restrictions also infringed on their littoral rights in violation of the saving clause.  Stupak-Thrall v. Glickman, 988 F. Supp. 1055 (W.D. Mich. 1997) (“Stupak-Thrall II”).  The district court recognized that, under Michigan law, littoral landowners “share in common the right to use the entire surface of the lake for boating and fishing, so long as they do not interfere with the reasonable use of the waters by the other riparian owners[,]” and that this right includes the right to use gas-powered motorboats.  Because the USFS’s authority to manage the wilderness is “subject to valid existing rights,” the court ruled that the USFS lacked the authority to restrict the plaintiffs’ ability to use gas-powered motorboats on Crooked Lake.  Accordingly, the court declared the restrictions invalid and permanently enjoined the USFS from enforcing its restrictions against the plaintiffs.

But the saga would not end there.

In 2010, David and Pamela Herr purchased two littoral lots on Crooked Lake with the specific intent to use gas-powered motorboats over the entire surface of Crooked Lake.  In 2013, however, the Herrs received a letter from the USFS stating that it planned to enforce the same motorboat restriction against them—a criminal penalty.  It claimed the Stupak-Thrall II ruling did not apply to the Herrs because they purchased the property in 2010.

The Herrs filed suit under the Administrative Procedure Act.  The district court granted summary judgment in favor the USFS and Intervenors.  Although the court recognized that the Herrs’ littoral rights granted them the right to use their gas-powered motorboat, it ruled that they were not protected by the saving clause, because the Herrs did not own those rights in 1987 when the MWA was enacted.

The Herrs appealed to the Sixth Circuit.  In a 2-1 decision, the Sixth Circuit reversed the district court and found that the motorboat restrictions violated the MWA’s saving clause because they infringed on the Herrs’ rights under well-established Michigan property law.  The Sixth Circuit found that “Michigan courts have repeatedly indicated” that recreational boating “amounts to a reasonable use.”  Moreover, those property rights run with the land and were thus transferred to the Herrs upon purchase.

The U.S. Forest Service did not seek certiorari.  However, a coalition of environmental groups that had intervened in the case did.  Petitioners alleged that the Sixth Circuit’s opinion conflicted with the Supreme Court’s decisions in Camfield v. United States, 167 U.S. 518 (1897) and Kleppe v. New Mexico, 426 U.S. 529 (1976) because it was a direct challenge to Congress’s exercise of its Property Clause power.  Respondents argued that, unlike in Kleppe and Camfield, the Sixth Circuit’s decision had nothing to do with the constitutionality of a statute.  Rather, the crux of Herr was the MWA’s saving clause and littoral rights under Michigan law.

In denying certiorari, the U.S. Supreme Court affirmed a huge property rights victory for Michigan landowners.

Christian B. Corrigan is an attorney at Mountain States Legal Foundation, a nonprofit, public interest law firm which has represented Respondents David and Pamela Herr in their battle against the U.S. Forest Service.  He is a member of the Federalism and Separation of Powers Practice Group Executive Committee.  

State of Indiana v. Norfolk S. Ry. Co., 2018 Ind. LEXIS 560

November 30, 2018

The Indiana Supreme Court unanimously held that Indiana’s blocked-crossing statute is expressly preempted by the Interstate Commerce Commission Termination Act (“ICCTA”). Indiana’s blocked-crossing statute prohibits railroads from blocking highway grade crossings for more than ten (10) minutes. A violation is a Class C infraction and subject to a $200 fine.

Between December 2014 and December 2015, Norfolk Southern Railway Company (“Norfolk Southern”) received twenty-three (23) citations for blocking railroad crossings near its train yard in Northeastern Indiana. Norfolk Southern moved for summary judgment on the citations for violations arguing that the ICCTA and Federal Railroad Safety Act (“FRSA”) expressly preempted Indiana’s blocked-crossing statute. The trial court granted summary judgment finding that the ICCTA and the FRSA preempt the blocked-crossing statute. The State appealed, and the Court of Appeals reversed because neither the ICCTA nor the FRSA explicitly list blocked-crossing statutes as preempted.

The issues considered by the Indiana Supreme Court were: 1) whether the presumption against preemption applied in this case; and 2) whether the ICCTA and the FRSA expressly preempted Indiana’s railroad blocked-crossing statute. The Court applied the presumption against preemption, and held that the blocked-crossing statute is expressly preempted by the ICCTA without addressing the FRSA.

First, the Court determined that the presumption against preemption applied. Generally, there is a strong presumption, rooted in federalism, against preemption. An exception to the rule applies in instances where the conduct being regulated has historically been within the purview of the federal government. United States v. Locke, 529 U.S. 89, 108 (2000). Norfolk Southern argued that the presumption should not be applied since rail transportation has historically been regulated by the federal government.  In the case of railroads, the federal government has for well over a century provided regulation and oversight. However, while the Court considered the federal government’s long-standing regulation of railroads, the Court distinguished between the regulation of railroads and the regulation of railroad crossings.  Indiana has regulated blocked railroad crossings, the regulation of which remains a part of the State’s police power, going back to the 1860s, and the blocked-crossing statute in its current form goes back to 1972. Because of the State’s longstanding concern with blocked crossings, the Court applied CSX Transp., Inc. v. Easterwood, and held that the presumption against preemption applies since the presumption covers those matters that are traditionally regulated by the State as railroad crossings are. 507 U.S. 658 (1993).

Second, the test applied by the Court was whether Indiana’s blocked-crossing statute had “the effect of managing or governing rail transportation.” Delaware v. Surface Transp. Bd., 859 F.3d 16, 19 (D.C. Cir. 2017) (internal quotations omitted). The ICCTA provides that the Surface Transportation Board’s (“STB”) jurisdiction over transportation by rail carriers and the remedies provided under the ICCTA are “exclusive and preempt the remedies provided under . . . State law.” 49 U.S.C. § 10501(b). The Court held that because Norfolk Southern would have to have shorter trains, move at faster speeds, or otherwise change its operational choices to comply with the statute, the blocked-crossing statute regulates transportation. The State argued that the ICCTA would only preempt the blocked-crossing statute if the regulatory impacts were economic, but the Court rejected that argument because the plain text of the ICCTA does not limit preemption to economic regulations. However, the Court was clear that State maintains its traditional authority over rail crossings. Because the ICCTA preempts Indiana’s blocked-crossing statute, the Court did not address the FRSA.

Over the last year, several municipalities in and around central Indiana have had problems with trains blocking crossings for extended periods of time. Given the Court’s ruling, municipalities have little recourse other than to, as the Court suggested, file complaints with the STB’s Rail Customer and Public Assistance Program. Meanwhile, frustrated commuters are at the mercy of Congress and the federal government to provide relief at blocked railroad crossings.

1A Auto, Inc. v. Sullivan

November 30, 2018

Massachusetts law bans for-profit corporations and other business entities from contributing to political candidates and committees. And, unlike federal law, it doesn’t even allow businesses to make contributions indirectly through a PAC.

On the other hand, Massachusetts allows unions to give as much as $15,000 to the political candidates, committees, and parties they favor, and it allows them to create PACs to give even more.

In 2015, two small businesses represented by the Goldwater Institute sued to challenge this scheme for violating their rights under the First Amendment, the Equal Protection Clause of the Fourteenth Amendment, and similar provisions of the Massachusetts Constitution. In September 2018, the Massachusetts Supreme Judicial Court ruled against them.

The Massachusetts court concluded it was bound to uphold the ban under FEC v. Beaumont, in which the U.S. Supreme Court rejected a First Amendment challenge to the federal ban on corporate political contributions.

But the court did note that “the landscape of campaign finance law has changed significantly since Beaumont,” particularly with Citizens United v. FEC. And it acknowledged that Beaumontupheld the federal ban based partly on two supposed government interests that Citizens Uniteddeclared to be illegitimate purposes for campaign finance rules: protecting dissenting corporate shareholders and countering the “misuse” of corporate wealth to wield “undue influence [over] an officeholder’s judgment.” Still, the court believed it had to follow Beaumont because Citizens Uniteddidn’t overrule it.

The plaintiffs, however, maintain that Beaumont shouldn’t have doomed their claims in any event because the federal ban it upheld differed from the Massachusetts ban in two key respects: It gave corporations the option to make contributions indirectly through a PAC, and it applied equally to corporations and unions.

The Massachusetts court also rejected the plaintiffs’ equal protection claim. It concluded that, if the ban on corporate contributions would tend to prevent corruption or the appearance of corruption at all (as the court assumed it would), it could survive the less-than-strict scrutiny the Supreme Court prescribed for challenges to campaign-contribution limits in Buckley v. Valeo. The court saw no problem with the state’s failure to likewise limit unions, citing a Supreme Court decision stating that “policymakers may focus on their most pressing concerns.”

A separate opinion from Massachusetts Chief Justice Scott L. Kafker concurred in the result but criticized the majority for so easily brushing aside the statute’s discrimination in favor of unions and against businesses. But he too found Beaumont controlling unless and until the Supreme Court applies the reasoning of Citizens United to subject corporate-contribution bans to greater scrutiny.

The plaintiffs will file a petition for certiorari asking the U.S. Supreme Court to take their case on December 5.  If accepted, the case could give the Court the opportunity to: (1) clarify that Beaumontdoesn’t require courts to automatically uphold state bans on corporate contributions; and (2) direct lower courts to subject campaign finance schemes that favor some donors over others to more rigorous scrutiny than the Massachusetts court (among others) has given them.

Black v. Central Puget Sound Regional Transit Authority

November 30, 2018

This lawsuit, now pending appeal to Washington’s intermediate appellate court, seeks to enforce a constitutional limit on legislative power. Article II § 37 of the state constitution requires that “No act shall ever be revised or amended by mere reference to its title, but the act revised or the section amended shall be set forth at full length.” Plaintiffs are challenging a 2015 act that purported to allow a local government (Sound Transit, a regional transportation district) to levy a motor vehicle excise tax (“MVET”).  A 2006 statute was already in place that specified how vehicles would be valued.  The 2015 act didn’t use the current valuation schedule, but instead directed the use of a repealed 1996 act in lieu of the 2006 statute as the basis for calculating a motor vehicle excise tax. Instead of setting forth “at full length” the 2006 statute and showing how it was being amended, the 2015 act simply said “Notwithstanding any other provision . . . .”  Article II § 37 of the state constitution provision has repeatedly been invoked, successfully, by Sound Transit, to invalidate legislation obliging it to reduce taxes. Plaintiffs intend to see it applied to require the same level of strict compliance with the state constitution when legislation raises taxes.

An MVET is an annual tax levy, paid together with vehicle registration. The tax is calculated by multiplying the tax rate times a vehicle’s starting value (often MSRP), times a valuation schedule or depreciation schedule that establishes by statute the decrease in value of a vehicle by age. MVETs have had a rocky and contentious history in Washington state, leading to the current litigation. CPSRTA, or Sound Transit, first received authority to levy an MVET at 0.3% of vehicle value starting in 1999. It issued bonds secured by that MVET revenue. The measure met with substantial opposition after imposition, in part due to the perception that the valuation schedule taxed vehicles based on gross overstatements of value. A statewide initiative repealed the authorization, and in ensuing litigation the state supreme court held that the repeal substantially impaired those bond contracts. Further, it held, it could not require Sound Transit to exercise its contractual authority to retire the bonds immediately, and therefore, Sound Transit could continue to levy the MVET for so long as the bonds remained outstanding.

In 2006, the legislature enacted a new valuation schedule, codified at RCW 82.44.035. The schedule lowered taxable value of vehicles by about 25% as compared to the repealed schedule. The schedule applies to “any locally imposed motor vehicle excise tax,” but Sound Transit took the position that it was not required to use the new schedule for its existing MVET. Legislative history documents confirm that the 2006 legislature discussed the cost to Sound Transit of paying the Department of Licensing to use two valuation schedules in parallel only if and when it instituted a new MVET while its old MVET remained in force, and in 2010 the legislature confirmed that Sound Transit could continue to use the repealed schedule for the 1999 MVET.

In 2015 the legislature passed a bill that, among other things, authorized a new Sound Transit MVET. In doing so, it rendered the 2006 valuation schedule inapplicable for so long as the 1999 bonds remained outstanding. It did so by broad reference to the chapter in which the valuation schedule is codified, stating that the existing contents of that chapter should be disregarded in favor of the chapter as it existed in 1996 until such time as the old bonds have been retired.

Plaintiffs sued on behalf of the class of aggrieved taxpayers, and moved for summary judgment of the constitutional question prior to addressing class issues. The challenged act reads, in pertinent part, “Notwithstanding any other provision of this subsection or chapter 82.44 RCW . . . [a new MVET] must comply with chapter 82.44 RCW as it existed on January 1, 1996 . . .” According to plaintiffs, this amends existing RCW 82.44.035, which on its face provides the valuation schedule “For the purpose of determining any locally imposed motor vehicle excise tax.” However, the amended section is not set out at full length in the new, amendatory act, triggering review under Article II § 37 of the constitution. While the state supreme court has identified a few exceptions to the requirement, this act does not fall into any of them. Relevant to the arguments presented to the trial court, it is not a complete act that incorporates existing law by reference, because it instead renders existing law inapplicable. It is also not an incidental amendment, because the act establishes an MVET, and the valuation schedule is key to the calculation of the MVET.

The state deferred any defense of constitutionality to Sound Transit, which argued that the first question was not whether the new act amended the old, but whether it was a “complete act.” If so, amendatory or not, Art. II § 37 did not apply. Reading the entire five sentences as though everything referred to in them were actually reproduced in full, a person would understand his tax liability, rendering it a complete act. If it amended an existing act, it did so only incidentally, because the main purpose of the act was to authorize a tax, not establish a valuation schedule. Other statutes had similarly used the word “notwithstanding” to avoid application of existing law, including by suspending application of a law, and yet avoided the Supreme Court evaluating them under Art. II § 37. Therefore, they claimed, Art. II § 37 also did not govern this statute.

In the words of local news coverage, the trial court “provided little rationale for her choice” in adopting Sound Transit’s position. The plaintiffs have noted their appeal to the state’s intermediate appellate court.

Savely v. Utah Highway Patrol

November 30, 2018

Suppose a police officer takes cash from you saying it is being forfeited but that you can go to the local state courthouse and ask for it back. What would you think when you got to court and the government insisted you had to go to federal court instead? Is it just for government to change the rules halfway through the game? Does it comply with due process?

Savely v. Utah Highway Patrol [1]  grappled with that issue. In technical terms: when a state law enforcement officer seizes money for forfeiture under color of state law but the state fails to initiate forfeiture proceedings and a federal law enforcement agency initiates them instead, do state courts or federal court have in rem jurisdiction over the money? By unanimously deciding that the state court has jurisdiction, the Utah Supreme Court has provided important guidance on which procedures and protections – federal or state – apply in a given case.

In November, 2016, Utah Highway Patrol seized nearly $500,000 cash from Kyle Savely. A UHP trooper stopped Mr. Savely for a minor traffic violation. When Mr. Savely refused a consensual search of his car, the trooper brought a K9 to the scene. After the dog alerted to the presence of drugs, the car was searched. No illicit substances were found, but the trooper did find fifty-two bundles of cash. The trooper seized the money and provided Mr. Savely an asset seizure notification form as required by Utah state law. [2]

Although the government later alluded to potential interstate criminal activity by Mr. Savely, no such charges have been brought against him. In fact, Mr. Savely was eventually found not guilty of the traffic offense after a bench trial that he himself did not even attend. [3]

After the seizure, the money sat in a UHP bank account. State law gives officials seventy-five days to begin forfeiture proceedings,[4]  but no forfeiture proceedings were ever filed in state court. During this time, however, the DEA obtained a seizure warrant for the money from a federal magistrate judge so they could initiate federal forfeiture proceedings.

At the expiration of the seventy-five days Mr. Savely petitioned a state court for the return of his money. Although the state court originally agreed that the funds should be returned to Mr. Savely, the court reversed itself on a motion to reconsider and found that the seizure warrant issued by the federal magistrate had deprived state courts of in rem jurisdiction. Mr. Savely appealed.

All parties agreed that the first court to obtain in rem jurisdiction does so to the exclusion of all other courts. The question was whether the state district court or the federal district court did so first.

Mr. Savely contended that the state district court acquired in rem jurisdiction when UHP provided him with a notice of intent to seek forfeiture. Amicus for Mr. Savely, the Libertas Institute, argued that the relevant code provisions imbued state courts with in rem jurisdiction from the moment of seizure by a state agent.[5]  UHP and its amicus, the United States, argued that in rem jurisdiction does not begin until there is a court filing. Thus, they contended that the federal court obtained in rem jurisdiction when the federal seizure warrant was requested.

To begin with, the Utah Supreme Court reviewed relevant state and federal law and concluded that it is possible for a state court to exercise in rem jurisdiction of a res even without any court filing. (This section of the opinion is particularly relevant for practitioners facing that issue in other courts.[6]) The question was whether Utah’s statutes actually gave state courts jurisdiction without a filing in this situation.

On that question, the Court noted that various provisions of state law could be used to defend any of the positions taken by the parties. Finding ambiguity in the law, the court called it “one of those rare circumstances” where it was appropriate to turn to legislative history, which in this case was a contentious citizens’ initiative. The history around the initiative “overwhelmingly” showed that “one of the main goals of the Act is to provide additional protections to property owners when the state holds their property for forfeiture.” Thus, the Court found the ambiguity should be resolved in favor of ensuring that forfeitures in Utah would be under the protections provided by state law and not the lesser protections provided under federal law.

The Court then made two important findings. First, state courts obtain in rem jurisdiction over property no later than when the state holds it for forfeiture even if no proceedings have been filed in court. And second, Mr. Savely was correct: one way that property becomes held for forfeiture is when a seizing agency serves a notice of intent to seek forfeiture.

This ruling brought much needed clarity to the effect of serving a seizure notice: such notices imbue state courts with in rem jurisdiction with no further action needed.

However, the ruling left numerous other questions unresolved:

When a state officer seizes property for forfeiture but fails to provide the required notice, when does in rem jurisdiction begin? Can a federal agency intervene between the seizure and the giving of notice and obtain federal jurisdiction?

When a state officer happens to be cross-deputized as a federal agent, can the officer choose to issue a federal seizure notice instead of state seizure notice as is seemingly required by the statute?

When state officers participate on a multi-jurisdiction taskforce with federal agents, how do state law requirements apply to their work?

Future cases and legislative battles will be fought over these issues. However, Savely represents an important step in ensuring state-level protections are honored in forfeiture cases.

[1] 2018 UT 44.

[2] Utah Code Ann. 24-4-103(1).

[3] Utah v. Savely, No. 165204385 (Summit Co. Just. Ct. Feb. 21, 2018)

[4] Utah Code Ann 24-4-104(1)(a).

[5] The Utah Supreme Court declined to consider this argument because the seizure and notice occurred concurrently.

[6]  2018 UT 44 at ¶¶19-24.

King v. Mississippi Military Department

November 30, 2018

In an 8-0 decision on June 7, 2018, the Mississippi Supreme Court announced that it will no longer give any deference to state agencies’ interpretations of their gov¬erning statutes. King v. Miss. Military Dep’t, 245 So. 3d 404 (Miss. 2018). This holding marks a sharp departure from the traditional deference the Mississippi state courts had shown to state agencies, although as the decision correctly states, that deference had been eroding in recent years.

Background and Proceedings

Cindy King worked as a supervisor in the Environmental Office at Camp Shelby, Mississippi, and her employer was the Mississippi Military Department. The Department suspected her of misconduct, and after an investigation, terminated her employment pursuant to Miss. Code Ann. § 33 3 11(a) (Adjutant General “may remove any of [the Department’s employees] at his discretion”).

King appealed to the state Employee Appeals Board. The Department moved to dismiss her appeal because she was an at-will employee, rather than a state-service employee entitled to the Board’s procedural protections. The Board’s hearing officer interpreted § 33 3 11 as giving the Department’s head the authority to fire King at his sole discretion, and when King appealed to the full Board, it affirmed that decision. King’s appeal to Mississippi circuit court was likewise ineffective, and she appealed finally to the Mississippi Supreme Court.

Ruling

The decision in King v. Mississippi Military Department ultimately affirmed the ruling for the agency, but made it clear that the Court sees the judicial branch as the sole authority under the Mississippi Constitution when it comes to interpreting statu-tory law.

Writing for a unanimous Court,  Justice Josiah Coleman [1] took note of the Court’s precedents providing for de novo review of an administrative agency’s interpretation of rules or statutes governing its operation, which however also required the courts to give “great deference to the agency’s interpretation,” based on the agency’s presumed experience with everyday activities pursuant to those statutes. Nonetheless, the Court also noted, its recent decisions have tended to back away from “the contradic¬tion inherent in de novo but deferential review” (¶  9).

Furthermore, the Court held, Mississippi’s constitution provides for “strict consti-tutional separation of powers” in the first section of its first article: while it is for the Legislature to enact statutes, it is for the judicial branch to interpret statutes once en-acted. Article 1, Section 2 of the state constitution further forbids anyone in one branch of government to exercise any powers belonging to another branch. The Court held that, while executive-branch agencies must decide for themselves what statutes mean when the judicial branch has not spoken, it violates Article 1, Section 2 for the courts to give any deference to an agency’s interpretation of a statute when that statute comes before the courts for interpretation.

The Court thus went on to hold (at ¶  12):

Pursuant to the foregoing reasoning, we announce today that we abandon the old standard of review giving deference to agency interpretations of statutes. Our pronouncements describing the level of deference were vague and contradictory, such that the deference could be anywhere on a spectrum from “great” to illusory. Moreover, in deciding no longer to give def-erence to agency interpretations, we step fully into the role the Constitution of 1890 provides for the courts[,] and the courts alone, to interpret statutes.

In so holding, the Court stated that it found “persuasive” the reasoning in a con-curring opinion to Gutierrez-Brizuela v. Lynch, 834 F.3d 1142 (10th Cir. 2016) (Gorsuch, J.). Concurring with his own decision for the court, then-Judge Gorsuch observed that, in the absence of judicial deference to the statutory interpretations of administrative agencies, “courts would then fulfill their duty to exercise their inde-pendent judgment about what the law is.” Gutierrez-Brizuela, 834 F.3d at 1158 (Gorsuch, J., concurring) (quoted in King at ¶  12).

Moving on to the merits of the case before it, the Court held that § 33 3 11 is in apparent conflict with § 25 9 131 and related statutes pertaining to the Employee Appeals Board. Applying the canon of statutory interpretation that a specific statute will control over a general one, the Court held that § 33 3 11 is the more specific statute as regards the termination of Department employees. Rejecting as fruitless King’s argument for reading the statutes in pari materia, because even if the Board found for King it could not compel the Department to rehire her, the Court thus affirmed the Department’s decision, but on the basis of its own de novo reading of the relevant statutes.

The King decision places Mississippi in the minority of state jurisdictions that squarely reject anything resembling Chevron deference, along with Delaware and Michigan, whose courts likewise cited their constitutional separation of powers in rejecting deference to agencies’ statutory interpretations. Pub. Water Supply v. DiPasquale, 735 A.2d 378, 382 (Del. 1999); In re Complaint of Rovas v. SBC Michigan, 754 N.W.2d 259, 271–72 (Mich. 2008).  Whether Mississippi will apply its new rule to agencies’ interpretations of their own regulations, however, is not addressed by King, and thus remains a question for another day.

[1] Chief Justice William L. Waller, Jr., who attained the rank of brigadier general in the Mississippi Army National Guard, did not participate in the decision of the case.

 

Andy Lowry is a partner in the Jackson, Mississippi office of Balch & Bingham, LLP.

Eyman v. Wyman; Ball and Gottlieb v. Wyman

November 30, 2018

The Washington Supreme Court issued decisions in two cases addressing procedural mandates of the state constitution’s 1906 amendment that reserved to the people the right to legislate by initiative. In Eyman v. Wyman, addressing initiatives to the legislature, all nine justices agreed that the legislature could not adopt and amend an initiative during the same session. In Gottleib v. Wyman, addressing initiatives to the people, the unanimous Court held that neither the Secretary of State nor the courts had any authority to police and enforce the constitutional mandate that the full text of a proposed initiative appear on signature petitions.

Washington’s Initiative Amendment

Since 1906, voters in Washington can engage in direct legislation by initiative. The initiative process allows both initiatives to the people and initiatives to the legislature. If an initiative to the people gathers sufficient qualified signatures no later than four months prior to a general election, and is qualified by the Secretary of State, it appears on the November ballot.

Initiatives to the legislature are qualified prior to the start of the legislative session and are first presented for optional legislative action. The legislature may enact an initiative, may reject it including by taking no action on it, or may “propose a different [measure] dealing with the same subject.” If the legislature enacts the initiative, it becomes law. If it rejects the initiative, the measure appears on the following general election ballot. If it proposes a different measure, both the initiative and the legislature’s measure appear on the ballot, with tiered choices for voters: First whether to legislate at all, and second, which of the two measures to adopt. Notably, measures adopted by popular vote cannot be amended by the legislature within two years except by 2/3 supermajority.

Notably, in the 106 year history of the state initiative process, the legislature has not often adopted initiatives proposed to it, and only twice proposed a different measure for the fall ballot.

Eyman v. Wyman

The Secretary of State certified to the 2018 legislature Initiative No. 940, an initiative proposing changes to Washington police use-of-force and training law. After hearings on the initiative, and through discussions with initiative sponsors and representatives of state law enforcement agencies, the legislature drafted a bill amending the initiative. On the final day of the 2018 legislative session, the legislature adopted this amendatory bill. The bill expressly stated that it “amends I-940.” The legislature established that it would take effect 91 days after passage, albeit conditioned on the adoption of I-940. The bill received majority votes in both chambers, and the governor’s signature. The legislature immediately thereafter adopted I-940 by simple majority in both chambers, with the new law purportedly coming into force 90 days later, one day before the amendatory bill came into force. According to the legislature, I-940, as drafted by the sponsors and signed by several hundred thousand voters, would be law for 24 hours, after which the compromise amendatory bill, adopted a few hours earlier, would become and remain law. Neither measure would appear on the November 2018 ballot.

Prolific initiative sponsor Tim Eyman, joined by State Senator Michael Padden, sued the Secretary of State, seeking an order of mandamus that she place both I-940 and the amendatory measure on the November ballot. The Secretary of State took no position on her legal obligations. The Attorney General’s office defended the legislature’s actions as enacting both the initiative and amendatory measure, and the initiative sponsors intervened to argue in favor of both the enactment of the initiative and the amendatory measure.

Eyman and Padden argued that the legislature did not “adopt [I-940] without change or amendment.” It adopted amendments, then adopted the initiative. No member voting on the initiative could consider that the initiative would become law as drafted and certified to the legislature. As such, the “amend then adopt” strategy constituted rejection of the initiative under the constitution. Any form of rejection – ignoring it, voting it down, or this novel approach of amending it first, then adopting it – resulted in a constitutional mandate to the Secretary to place the initiative on the November ballot. The amendatory measure, which passed by majority vote in both chambers, was a “different measure dealing with the same subject,” which the constitution also compelled the Secretary to place on the November ballot.

The state and sponsors argued that the court could not entertain either argument. The “enrolled bill doctrine” limited the court to examining the face of the bill as enrolled in the legislature, and as voted on. The four corners of each document that the legislature voted on showed only that the legislature voted in favor of the exact text of I-940 and voted in favor of the amendatory bill, which would take effect later in time. The enrolled bill of I-940 did not contain amendments, and neither enrolled bill showed which had passed earlier in time. They agreed that the Court might reject such actions but only if its review of the full text of the initiative and amendment revealed an obvious attempt to circumvent the initiative power. Because of the negotiated agreement between initiative sponsors and the legislature, they argued, the amendments advanced the policies of I-940 without “needlessly contorting the legislative process.”

Eyman and Padden, in response, argued that in asking the Court to investigate and compare the policy objectives of the initiative and amendment, the state and sponsors invited their own violation of the enrolled bill doctrine, by encouraging the Court to look beyond the face of a bill that stated “this amends I-940,” and made plain on its face that it was adopted prior to a vote on I-940. If the Court first decided whether an amendment advanced the policies of an initiative before determining whether the initiative had or had not been “adopted without change or amendment,” it would exceed its proper role and ignore the plain mandate of the constitutional text.

The state supreme court ordered I-940 onto the November ballot, but declared that the amendatory bill had no force or effect. It issued three opinions and one concurrence. In an unusual structure, the court labeled the two opinions joined by five justices as to the disposition of I-940 as dissents, while it identified as “the lead opinion” a position joined by only four justices, which would have held that I-940 became law during the 2018 regular session. Ultimately, five justices agreed that I-940 was not adopted without change or amendment during the 2018 regular session, and therefore had to appear on the November ballot. Four of those same justices would have held that the amendatory act constituted a “different [measure] dealing with the same subject” and also had to appear. One justice who voted for I-940 appearing on the ballot noted that the amendatory measure contained a clause that voided the measure if I-940 did not become law during the regular session. Giving force and effect to that legislative statement, the alternative no longer had any force and could not appear on the ballot.

Four justices would have held that the legislature, by voting on a document that contained the precise text of the initiative, thereby adopted it as law in the state. It therefore should not appear on the November ballot. Those four justices also agreed that the alternative measure could not become law because the legislature, by enacting it, violated the constitutional allocation of powers between the legislature and the people established by the initiative process.

Despite the very unusual organization and labeling of the various opinions, the final order to the Secretary was clear: I-940 would appear on the November ballot, alone, for a vote of the people. The amendatory measure would not. In fact, the legislature’s position, that it had plenary power to enact and amend initiatives during a session, garnered no vote from any member of Washington’s Supreme Court.

In a final interesting footnote, the legislative Office of Code Reviser has subsequently taken the position that I-940 was adopted and is law, and that the November vote is “advisory.” As of this writing, in September 2018, it remains an unanswered question what law governs police use of force, and whether amendments to I-940, if it is adopted in the fall, require a supermajority in the legislature. At least one police officer facing legal action over use of force during the pendency of the litigation is considering a due process challenge based on the remaining open questions over the law governing police conduct in the state.

Ball and Gottlieb v. Wyman

The state constitution requires that every initiative petition circulated for voter signature contain the full text of the proposed measure. That text is constitutionally mandated to appear in three places: filed with the Secretary of State’s office prior to circulating petitions, on the petitions, and in a voter information pamphlet. In early summer 2018, sponsors circulated Initiative No. 1639, which proposes new restrictions on firearms sales and storage in the state. While the text filed with the Secretary contains strikeouts and underlines showing deletions and additions to existing law, the petitions did not. Representatives of the Second Amendment Foundation and NRA sued, seeking an order of mandamus forbidding the Secretary of State to put the initiative on the fall ballot. According to plaintiffs, the courts were required to construe the initiative enabling statutes broadly to enforce the initiative amendment, which included the full text requirement. The statute further required the text to be readable, which the petitions were not. According to the plaintiffs, the appropriate broad reading of the statute requiring the Secretary to count signatures and certify the initiative also gave her the obligation to consider whether the petitions had the full text on them, and whether it was readable. Finally, they argued, the constitutional initiative amendment was “self-executing,” so that if the legislature had declined to assign to the Secretary the obligation to police and enforce the full text requirement, the courts must do it.

The sponsors intervened, arguing that neither the secretary nor the courts had authority to police the full text requirement. They also argued that the petitions did contain all the words of the initiative, so that it complied with the requirement. Finally, they argued, the courts applied statutes implementing the initiative to put proposals on the ballot, not exclude them.

The Secretary took the position that the legislature had given her no statutory authority to take any action beyond counting the number of signatures. She did, however, request that the court exercise its mandamus authority, evaluate whether the petitions complied with the constitution and statute, and order her to exclude the initiative if it did not.

The trial court agreed with the sponsors and Secretary that the legislature had not given the Secretary any authority other than to count signatures. However, it concluded, the Court’s constitutional mandamus authority extended to policing and enforcing the requirements of the initiative amendment to the constitution, including the full text requirement, as well as the statutory requirement that the text be readable. The petitions complied with neither, and the court ordered the secretary not to include the initiative on the November ballot.

The sponsors appealed to the state supreme court. In a 9-0 decision, the court agreed that the Secretary’s authority, granted by the legislature, did not include any authority to consider whether a petition contained the “full text” of an initiative measure. It also concluded, contrary to the trial court’s view, that the courts had no authority to police or enforce that requirement. Thus, whether or not the petitions had contained the full text of the measure, and whether or not that text was readable, because it garnered sufficient signatures, it must appear on the November ballot. As a result of this decision, absent legislative action to assign reviewing authority to the Secretary of State, no petition sponsor needs to comply with the first constitutional requirement of the state constitutional initiative process.

 

Joel Ard practices with Immix Law Group in Seattle and, together with David DeWolf, was counsel to plaintiffs in both cases. 

Lair v. Mangan

November 30, 2018

Is the Supreme Court of the United States set to expand First Amendment protection for political participation? Possibly. The Court is currently considering whether to grant review in Lair v. Mangan, a case out of the Ninth Circuit. If it does, the Court would have the opportunity to clarify the extent to which states may burden the First Amendment by imposing limits on campaign contributions.

The issues in Lair stem from a fundamental dichotomy at the heart of much of campaign finance law. Generally speaking, the government may not limit the amount of money a person independently spends in support of political candidates. Conversely, it may limit the amount of money a person contributes to those candidates. The Supreme Court established this distinction in the 1976 case of Buckley v. Valeo, and it has remained controversial ever since.

The Buckley Court reasoned that political speech and association, freedoms protected by the First Amendment, require the expenditure of funds to be effective. Any restriction on that spending is therefore subject to stringent judicial scrutiny (and likely invalidation). Campaign contributions, on the other hand, are “undifferentiated, symbolic act[s]” of support. Although contribution limits burden First Amendment rights to some degree, the burden is less substantial because the limits do not prevent contributors from conveying their support. Buckley directs courts to apply a standard of review to challenged contribution limits that, though still “rigorous,” is less searching than the standard applicable to expenditures.

Some critics argue that the Court’s distinction between political expenditures and political contributions is untenable. But even if one accepts Buckley’s reasoning, a difficult problem arises. As the Buckley Court acknowledged, contribution limits do burden First Amendment rights by limiting the ability of persons to pool their resources to communicate support of a candidate. So the government may not set contribution limits as low as it wants (an absolute ban on contributions, for example, would be unconstitutional). But how low is too low? That is a question that has troubled the judiciary at all levels for decades. The Court did provide some guidance in a 2006 case called Randall v. Sorrell, but courts have struggled with Randall’s application.

The Supreme Court has an opportunity to take a fresh look at the issue in Lair v. Mangan. James Bopp (the same lawyer who brought you Citizens United, among many others) is spearheading a lawsuit claiming that Montana’s contribution limits are unconstitutionally low. (One set of contribution limits at issue in the case, for example, ranges from $180 to $680 per individual, per election depending on the type of race.) The Lair plaintiffs have filed a petition for writ of certiorari with the Supreme Court claiming that the Ninth Circuit, which upheld Montana’s contribution limits, failed to apply a sufficiently demanding standard in its review of those limits. The petitioners also contend that the test set forth in Randall for reviewing the constitutionality of contribution limits is unworkable and should be overruled. (My group, the Wisconsin Institute for Law & Liberty, recently filed an amicus curiae brief recommending that the Supreme Court accept review of the case.)

If the petition is granted, Lair would likely throw into sharp relief two competing trends in Supreme Court campaign finance case law. The first is the ongoing crusade, championed by Justice Thomas and often supported by Justice Scalia (and to a lesser extent Justice Kennedy), to overrule Buckley.  The second is a more modest attempt by certain justices to close the constitutional gap between contributions and independent expenditures by lending teeth to the standard of review applicable to contribution limits.

In practice, these two trends have produced Supreme Court decisions that lacked majority opinions, most notably the fascinating 2014 decision of McCutcheon v. Federal Election Commission(another case in which James Bopp participated). There, Chief Justice Roberts authored a plurality opinion joined by justices Scalia, Kennedy, and Alito in which the four justices seemingly endeavored to clarify Buckley and explain that the test applicable to contribution limits was not so different from the test applicable to independent expenditures after all. That mission was torpedoed by Justice Thomas, who declined to transform the plurality opinion into a majority opinion with his vote and instead insisted that the Court do away with Buckley completely.

Justices Scalia and Kennedy have now been replaced by Justice Gorsuch and, perhaps, Justice Kavanaugh. What this new Court would do with a case like Lair v. Mangan is anyone’s guess, but additional guidance is sorely needed.