Recent Court Rulings
In North Carolina State Board of Dental Examiners v. FTC the Court held 6-3 that if the majority of state board members are active market participants, antitrust immunity applies only if the state actively supervises the board. The SLLC's amicus brief argued that active supervision was unnecessary.
The North Carolina State Board of Dental Examiners is a state agency principally charged with licensing dentists. Six of its eight members must be actively practicing, licensed dentists. After the Board issued cease-and-desist letters to non-dentist teeth whitening service providers, the Federal Trade Commission (FTC) charged it with violating federal antitrust law.
In Parker v. Brown the Court held that states receive state-action immunity from federal antitrust law when acting in their sovereign capacity. In this case the Court held that non-sovereign entities controlled by active market participants receive state-action immunity only if the challenged restraint is clearly articulated in state policy and the policy is actively supervised by the state. Here the parties assumed the clear articulation requirement was met and agreed the Board wasn’t actively supervised by the state. So the Court denied the Board state-action immunity.
Justice Kennedy, writing for the majority, reasoned that without active supervision, boards and commissions made up of a majority of market participants may act in their own interest rather than the public interest. “Limits on state-action immunity are most essential when the State seeks to delegate its regulatory power to active market participants, for established ethical standards may blend with private anticompetitive motives in a way difficult even for market participants to discern.”
In a dissenting opinion Justice Alito, joined by Justices Scalia and Thomas, concluded that under Parker state-action immunity applies to state agencies regardless of how they are structured.
This case will reduce the authority of governors and state legislatures to compose state agencies, boards, and commissions as they prefer and/or be difficult to comply with. As the SLLC’s amicus brief points out, states typically have hundreds of boards and commissions largely staffed by market participants. States now have to either staff them differently or actively supervise them. Governors and state legislatures may be reluctant to not include a majority of market participants on boards and commissions because market participants have needed expertise. Active supervision will likely be onerous and expensive.
The Court was not specific about what kind of active supervision should have been occurring in this case. According to the Court, active supervision is “flexible and content-dependent” and should provide “realistic assurance” that an agency’s anticompetitive conduct “promotes state policy, rather than merely the party’s individual interests.”
Seth P. Waxman, Thomas G. Sprankling, and Alan Schoenfeld of WilmerHale wrote the SLLC’s brief. TheNational Governors Association, the National Conference of State Legislatures, and the Council of State Governments joined the brief.
In T-Mobile South v. City of Roswell the Supreme Court held 6-3 that the Telecommunications Act (TCA) requires local governments to provide reasons when denying an application to build a cell phone tower. The reasons do not have to be stated in the denial letter but must be articulated “with sufficient clarity in some other written record issued essentially contemporaneously with the denial,” which can include the council meeting minutes.
The Court agreed with the position in the State and Local Legal Center (SLLC)’s amicus brief that the reasons for a local government’s decision need not be in the same letter or document that denies the application and that council meeting minutes can be a sufficient source for the reasons for the denial. The Court disagreed, however, with the SLLC’s argument that the council minutes need not be issued contemporaneously with the document denying the wireless provider’s application.
T-Mobile applied to construct a 108-foot cell tower in a residential zoning area. Two days after a council hearing on the application, where city councilmembers voted to deny the application and stated various reasons for why they were going to vote against it, Roswell sent T-Mobile a brief letter stating that the application was denied and that T-Mobile could obtain hearing minutes from the city clerk. Twenty-six days later the minutes were approved and published.
The TCA requires that a state or local government's decision denying a cell tower construction permit be “in writing and supported by substantial evidence contained in a written record.”
The majority of the Court, in an opinion written by Justice Sotomayor, held that local governments have to provide reasons for why they are denying a cell tower application so that courts can determine whether the denial was supported by substantial evidence. The Court rejected, however, T-Mobile’s argument that the reasons must be set forth in a formal written decision denying the application instead of council meeting minutes because nothing in the TCA “imposes any requirement that the reasons be given in any particular form.” But the Court also held that, because wireless providers have only 30 days after an adverse decision to seek judicial review, the council meeting minutes setting forth the reasons have to be issued “essentially contemporaneous[ly]”with the denial.
The Court’s ruling that written minutes can meet the TCA’s “in writing” requirement is favorable to local governments, many of which routinely compile meeting minutes regardless of whether a cell tower application is being considered. But the Court’s requirement that a local government issue a denial letter and minutes at more or less the same time will be new to many local governments, and, as Chief Justice Roberts points out in his dissenting opinion, “could be a trap for the unwary hamlet or two.”
Tim Lay, Jessica Bell, and Katharine Mapes of Spiegel & McDiarmid in Washington, D.C., wrote the SLLC’s brief which was joined by the National League of Cities, the United States Conference of Mayors, the National Association of Counties, the International City/County Management Association, and the International Municipal Lawyers Association.
In a unanimous opinion in Integrity Staffing Solutions v. Busk the Court held that the Fair Labor Standards Act (FLSA) does not require hourly employees to be paid for the time they spend waiting to undergo and undergoing security screenings. State and local government employees who work in courthouses, correctional institutions, and warehouses routinely go through security screening at the beginning and/or end of the workday.
Jesse Busk and Laurie Castro worked at warehouses filling Amazon.com orders. They claimed that they should have been paid for the time they spent waiting and going through security screenings to prevent theft at the end of each shift.
Under the FLSA employers only have to pay “non-exempt” employees for preliminary and postliminary activities that are “integral and indispensable” to a principal activity. According to the Court, an activity is “integral and indispensable” to a principal activity “if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” The Court concluded that security screenings were not intrinsic to retrieving and packing products and that Integrity Staffing Solutions could have eliminated the screenings altogether without impairing employees’ ability to complete their work.
The SLLC’s amicus brief made similar arguments to those the Court adopted. This case is a significant victory for state and local government employers who will now not be faced with higher payroll costs for employee security screenings or a mandate to reduce screenings to a de minimis amount.
James Ho, Ashley Johnson, and Andrew LeGrand, of Gibson, Dunn & Crutcher, Dallas, Texas wrote the SLLC’s brief which was joined by the National League of Cities, the National Association of Counties, the International City/County Management Association, the United States Conference of Mayors, the International Municipal Lawyers Association, Government Finance Officers Association, National Public Employer Labor Relations Association, and the International Public Management Association for Human Resources.