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Stare Decisis and Judge-Made Law

What today's decision in South Dakota v. Wayfair might tell us about the future of qualified immunity

One of this morning's more consequential Supreme Court decisions was South Dakota v. Wayfair, where the Supreme Court overruled its 51-year-old and 26-year-old decisions in Bellas Hess and Quill to hold that states may require out-of-state retailers to collect and remit sales tax. The decision was 5-4 (and as Jonathan notes, with an unusual lineup), but interestingly all nine justices agreed that the original decision in Bellas Hess was wrongly decided. What they disagreed about was stare decisis -- should the prior decision stand? -- especially given the context of the Court's jurisprudence under the so-called "dormant" Commerce Clause.

Normally the Court adheres more strongly to precedent in cases of statutory interpretation than in constitutional cases because Congress can fix the Court's mistakes of statutory interpretation but can't fix the Court's constitutional mistakes. The dormant Commerce Clause -- under which the courts strike down state laws that improperly burden interstate commerce, unless Congress authorizes those laws -- is somewhere in between. It purports to be an interpretation of the Constitution, but it is still subject to revision by Congress. So what form of stare decisis should apply?

From the majority opinion by Justice Kennedy:

"Although we approach the reconsideration of our decisions with the utmost caution, stare decisis is not an inexorable command." Pearson v. Callahan, 555 U. S. 223, 233 (2009) (quoting State Oil Co. v. Khan, 522 U. S. 3, 20 (1997); alterations and internal quotation marks omitted). Here, stare decisis can no longer support the Court's prohibition of a valid exercise of the States' sovereign power.

If it becomes apparent that the Court's Commerce Clause decisions prohibit the States from exercising their lawful sovereign powers in our federal system, the Court should be vigilant in correcting the error. While it can be conceded that Congress has the authority to change the physical presence rule, Congress cannot change the constitutional default rule. It is inconsistent with the Court's proper role to ask Congress to address a false constitutional premise of this Court's own creation. Courts have acted as the front line of review in this limited sphere; and hence it is important that their principles be accurate and logical, whether or not Congress can or will act in response. It is currently the Court, and not Congress, that is limiting the lawful prerogatives of the States.

And from Chief Justice Roberts's dissent:

I agree that Bellas Hess was wrongly decided, for many of the reasons given by the Court. The Court argues in favor of overturning that decision because the "Internet's prevalence and power have changed the dynamics of the national economy." Ante, at 18. But that is the very reason I oppose discarding the physical-presence rule. Ecommerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule. Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress. The Court should not act on this important question of current economic policy, solely to expiate a mistake it made over 50 years ago. ...

This Court "does not overturn its precedents lightly." Michigan v. Bay Mills Indian Community, 572 U. S. ___, ___ (2014) (slip op., at 15). Departing from the doctrine of stare decisis is an "exceptional action" demanding "special justification." Arizona v. Rumsey, 467 U. S. 203, 212 (1984). The bar is even higher in fields in which Congress "exercises primary authority" and can, if it wishes, override this Court's decisions with contrary legislation. Bay Mills, 572 U. S., at ___ (slip op., at 16) (tribal sovereign immunity); see, e.g., Kimble v. Marvel Entertainment, LLC, 576 U. S. ___, ___ (2015) (slip op., at 8) (statutory interpretation); Halliburton Co. v. Erica P. John Fund, Inc., 573 U. S. ___, ___ (2014) (slip op., at 12) (judicially created doctrine implementing a judicially created cause of action). In such cases, we have said that "the burden borne by the party advocating the abandonment of an established precedent" is "greater" than usual. Patterson v. McLean Credit Union, 491 U. S. 164, 172 (1989). That is so "even where the error is a matter of serious concern, provided correction can be had by legislation." Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U. S. 409, 424 (1986) (quoting Burnet v. Coronado Oil & Gas Co., 285 U. S. 393, 406 (1932) (Brandeis, J., dissenting)).

We have applied this heightened form of stare decisis in the dormant Commerce Clause context. Under our dormant Commerce Clause precedents, when Congress has not yet legislated on a matter of interstate commerce, it is the province of "the courts to formulate the rules." Southern Pacific Co. v. Arizona ex rel. Sullivan, 325 U. S. 761, 770 (1945). But because Congress "has plenary power to regulate commerce among the States," Quill, 504 U. S., at 305, it may at any time replace such judicial rules with legislation of its own, see Prudential Ins. Co. v. Benjamin, 328 U. S. 408, 424–425 (1946).

I found this debate interesting in its own right, but also because I wondered what it implies about other judge-made doctrines that might hit the Court's docket in the future. For instance, some scholars (including last week's guest Joanna Schwartz, and me) have critcized the Court's doctrine of qualified immunity from suits for constitutional violations, a doctrine created by the Court in the second half of the twentieth century. Others, such as Aaron Nielson and Chris Walker have defended that doctrine on stare decisis grounds, and argued that the Court should leave any correction of the doctrine to Congress.

A few recent cert. petitions have asked the Court to reconsider the doctrine, and the Court has called for a response in at least two of them, Spencer v. Abbott and Allah v. Milling. It struck me that this same debate might play out again in that context. Perhaps members of the Wayfair majority will be more likely to be willing to reconsider qualified immunity if they agree that it is a "false ... premise of th[e] Court's own creation" and one in an area where "[c]ourts have acted as the front line of review." (Indeed, one member of the majority, Justice Thomas, has already expressed his interest in reconsidering the doctrine.) By contrast, perhaps members of the Wayfair dissent will be more likely to insist that the Court should not be the one "to expiate a mistake it made over 50 years ago." (Though one member of the dissent, Justice Sotomayor, signalled at least some concerns about the doctrine in a recent dissent.)

And now that I think about it, some of the same analogies could be made in the debate about whether to limit Chevron ...

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  • California Right To Carry||

    Congress can correct the Supreme Court's mistakes by a variety of methods, but it doesn't. The most well-known example is the Judicial Procedures Reform Bill of 1937. There are others but this example is all that is needed to inflame the tinfoil hat crowd.

  • Lee Moore||

    Normally the Court adheres more strongly to precedent in cases of statutory interpretation than in constitutional cases because Congress can fix the Court's mistakes of statutory interpretation but can't fix the Court's constitutional mistakes. The dormant Commerce Clause -- under which the courts strike down state laws that improperly burden interstate commerce, unless Congress authorizes those laws -- is somewhere in between. It purports to be an interpretation of the Constitution, but it is still subject to revision by Congress.

    This makes no sense to me. The bit about "unless Congress authorizes those laws" seems perfectly irrelevant. Such Congressional action would fall directly within Congress's Commerce Clause power, obviously there's no constitutional problem with that. But since Congress hasn't acted, there's no federal statute in sight. Hence it's pure Constitutional interpretation. Why isn't this a straightforward case of correcting the Court's previous constitutional error – if error there was ?

    What's this business about being somewhere in between ?

  • Lee Moore||

    OK, I think I've got it. Not somewhere in between constitutional and statutory, but somewhere in between unreachable by Congress and already reached by Congress - ie reachable by Congress but as yet unreached.

    Would this not also apply to things like, oh to pluck something out of thin air, partisan gerrymandering ?

  • MatthewSlyfield||

    "Would this not also apply to things like, oh to pluck something out of thin air, partisan gerrymandering ?"

    My understanding is that the constitution doesn't give Congress any authority to regulate state redistricting, so No.

  • Lee Moore||

    Presumably because you feel that drawing districts does not fall within the meaning of "manner" for the purposes of Article 1 Section 4. If so then Article 1 Section 4 doesn't give the State Legislature the power to draw districts either, and you must be relying on Article 10's reservation of powers to the States.

    But Arizona State Legislature v Arizona Independent Redistricting Commission seems to be based on the idea that districting is part of "manner." Moreover, it's not just the majority who thought that. The dissent grounds its argument on districting being an Article 1 Section 4 "manner' also. The whole argument about "Legislature" would make no sense if they were arguing about an Article 10 power.

  • ||

    I agree with the holding today; however, I don't think it was wrongly decided at the time. Requiring out of state retailers to collect sales tax, in 1992, was a huge burden on those retailers. Today, with software that can easily calculate and keep track of taxes per jurisdiction, it's not.

  • apedad||

    I thought you righties were for reduced government.

    But here, you're saying is a mom-n-pop business that sells and mails marmalade will have to obey 49 other state laws or face their wrath.

    A touch hypocritical I'd say. . .

  • Bored Lawyer||

    It is only hypocritical in the leftie world where policy preferences are confused with Constitutional principles.

    In the rightie world, whether something is Constitutional and whether it is a good idea I support are two different things.

    The Constitution allows states to collect sales tax. Including on sales of goods shipped from one state to another. Every one of the justices agreed to that proposition. The dissent just wanted to keep an old rule because it was on the books.

    The ideal would be if Congress created some kind of a national clearing house (computerized) to collect sales taxes on interstate shipments. That would allow for administrative convenience and the mom-n-pop store to operate.

  • nonzenze||

    SD made a big thing about the $100K in-state sales to trigger the holding.

    At that point, it's not marmalade money anymore.

  • David Nieporent||

    First, it's $100K or 200 sales. The latter is not that high a threshold.

    Second, that's SD's current law. But other states don't have that threshold. And nothing guarantees that SD won't lower it. Nothing in the court's opinion turns on that threshold being a minimum requirement.

  • Craig Johnston||

    The problem isn't calculating the sales tax, it's having to comply with all of the laws and regulations around collecting taxes. Registering to do business in the state, collecting the sales tax correctly, record keeping the state, county, city for every transaction and reporting the same, being audited, in person, ... . I've done taxes for my wife's home businesses and dealing with California's sales tax reporting took more time than the federal income taxes.
    If the states were actually interested in leveling the playing field, they already had the option of eliminating sales tax for brick and mortar businesses; this is all about expanding revenue sources. What's next, collecting income tax based on where the work is performed instead of where the company does business or the employees reside? After all, it isn't fair to disadvantage local businesses in favor of businesses that have escaped to friendlier states.

  • ||

    And that is a problem. Congress should not allow that type of system when it finally gets around to passing something. But that isn't really the issue here.

    And income tax is already based on where work is performed. It's not generally enforced, but for consultants who work 3-4 months at a client's site, they definitely get W-2s for each state.

  • Krayt||

    There was a GM factory in Detroit that had a corner sticking into Highland Park, which, not being a giant bloated city, had no income tax. 90% of the workers "worked in that corner."

  • MatthewSlyfield||

    It's not just consultants who work at the client's site. I read once that a couple of the Arthur Anderson partners lived in states with not reciprocal tax agreements and given that, combined with how the firm assigned income to the partners, those partners had to file state income taxes in all 50 states.

  • perlchpr||

    those partners had to file state income taxes in all 50 states

    Oh, what a fucking nightmare.

  • ||

    Right, exactly. If you work remotely (in another state) for a few days no one will say anything, but professional sports players definitely have to pay income taxes in each state where they play games. So an NBA player plays 82 games a year, 1/82nd of his salary is allocated to each state where a game is played.

  • ||

    I apparently missed the "burden" clause of the Constitution.

  • ||

    That's the entire point of the dormant Commerce Clause jurisprudence, is that you can't burden interstate commerce.

  • Krayt||

    Which is fine but logically the power was given to Congress in the Constitution to allow it to thwart or regulate states messing with interstate trade crossing their borders.

    If the states start doing something wrong, Congress can address it. Or preempt it. But it wasn't a blanket preemptive ban on state activity.

    Having said that, at this point I'm with the dissent anyway. Such major change to interstate commerce (especially given the acknowledged phenomenal geowth with the rules as-is) should be done via Congress and its granted power. I was against the Net Neutrality rule for much the same reason -- Not-Congress changed its mind and inhaled control over the Internet, too.

    In both cases, Congress should get off its cowardly butts and do its job.

  • ||

    My guess is the Court wants to force Congress to act, for whatever reason.

  • David Bremer||

    Except this does the opposite. It allows Congress to punt and figure the state legislatures can do it. Especially since the big lobbying forces like Amazon are suddenly for state taxation (since, because of their volume, compliance costs are now a competitive advantage).

    If we want Congress and state legislatures to write better laws, we need to stop letting them off the hook through regulations, executive orders, and judicial decisions.

  • ||

    I disagree. States and local governments will create such a mess of regulation that Congress will be forced to come up with something that is administratively doable.

  • perlchpr||

    States and local governments will create such a mess of regulation that Congress will be forced to come up with something that is administratively doable.

    It does raise my spirits to see such unbridled optimism.

  • mad_kalak||

    Careful, you're sounding like a living constitutionalist.

  • ||

    I don't agree. The whole Dormant Commerce Clause is already a judicial creation. Just like what is a "reasonable" search and seizure changes with the time, what is an undue burden on interstate commerce changes with the time as well. It's not like the Due Process penumbra BS.

  • David Bremer||

    The issue gets to be more complicated than just e-commerce. Lots of other businesses will be affected as well. I first started learning about this area the law because we represented mom-and-pop trucking companies.

    About 15 years ago, several states began cracking down on trucks traveling through their state. Basically, the state patrol would pull over the truck (or get them at a weigh station). They'd ask if you had paid the state business tax. If not, they'd seize the truck and hold it until you paid that tax (and several years' taxes before that), plus penalties and interest. This could amount to thousands (or tens of thousands) of dollars. We'd then get into arguments about what level of activity constituted a "physical presence" in the state.

    Nor is South Dakota limiting it to e-commerce. In fact, if you appear pro hac vice in South Dakota, they'll demand you collect and report state and municipal sales taxes. In the past, you'd just point out that you weren't physically located there and couldn't be compelled to do so. Not so anymore. I'm not sure how many law firms have software to do this, especially since I'm not aware of any other states that tax legal services.

  • David Bremer||

    I should note that South Dakota does not *yet* require out-of-state attorneys to collect, report, and remit sales tax. But this removes the physical-presence barrier, and I am confident they will go back to requiring it for everyone performing services for South Dakota residents.

  • RoyMo||

    SoDak is one of two states west of the Mississippi where I always drive exactly the speed limit.

  • Bored Lawyer||

    "In fact, if you appear pro hac vice in South Dakota, they'll demand you collect and report state and municipal sales taxes."

    Legal services are subject to sales tax in South Dakota?

  • David Bremer||

    Yes.

    Now imagine you have a client that has some business out there. You attend a few meetings with the client in Pierre. Well, as it stands, South Dakota says you owe them use tax. And, with the Wayfair decision, it's just a matter of time before you will be responsible for getting a sales-tax permit, reporting the income, and remitting the tax.

    See examples #2 and #5 from here: http://dor.sd.gov/Taxes/Busine.....s/PDFs/Tax Facts/Attorneys.pdf

  • David Bremer||

    Grr... Let's try it with HTML formatting. Here's the link.

  • Lastseer||

    I wonder how South Dakota would react if Amazon and other large retailers just stopped accepting orders from SD residents. They obviously can't do this to CA, TX, or NY, but they could strong arm SD.

  • Michael Ejercito||

    Qualified immunity is basically the "ignorance of law" defense, limited to public officials.

  • MatthewSlyfield||

    Exactly.

  • Krayt||

    Officials can't be held to account if the law is not clear, but officials can hold The People to account even if the law is not clear, even changing interpretation after the fuzzy crime, because Chevron.

    "When the people fear the government, ..."

  • MatthewSlyfield||

    "People shouldn't be afraid of their government. Governments should be afraid of their people."

    ― Alan Moore, V for Vendetta

  • loki13||

    Roberts is correct.

    To the extent that this was a mistake, then that mistake was clearly good for the growth of the internet.

    Given that this can be easily changed by Congress, and that Congress is in the better position to make detailed factual and policy findings*, then the Supreme Court should let it stay as it is.

    *Theoretically, this is how government is supposed to work. The actuality that one party in a two-party system has abdicated from, you know, governance shouldn't factor into this.

  • ||

    Except that the SCOTUS revoked a lawful power of the States. They should be empowered to correct their own errors in jurisprudence.

  • loki13||

    They are empowered to do whatever they want. That's sort of a "whoosh" moment.

    It's whether they should. And as Roberts points out, they shouldn't in this case.

    Because we've had decades of reliance on a ruling that worked. To the extent that it doesn't, someone else (Congress) can "fix it."

    Hey, thanks for your contribution.

  • ||

    "worked" is a judgement call. Roberts dissent is certainly consistent with his "go with the flow" philosophy. But sometimes you just have to step up. Thomas is constantly arguing that the court needs to dispense with concern about whether things "work" or whether they are a "burden" and simply be logically consistent in regards to interpretation. Leave it to Congress to make actual value based decisions. I've never been a fan of allowing states to levy sales tax on Internet retailers, but as a matter of law, it was good to see a majority here have the stones to favor a rollback of court created legislation.

  • loki13||

    " Leave it to Congress to make actual value based decisions. "

    Well, then, do that. That's not what happened.

    See, here's the thing. When Congress legislated, there's input, there is a lot of fact finding, there is fair warning.

    When the Court releases an opinion, it's BOOM. That's why we don't like the Court to change things unless there is a really good reason (stare decisis). While that factor isn't that large for Constitutional issues (because only the Court can change it), it should be huge here, BECAUSE CONGRESS CAN CHANGE IT ANYTIME.

    In the end, who gives an EFF if Thomas has second thoughts. Screw him and his feels.

  • ||

    You can certainly make the FEELZ argument about Roberts and the stare decisis crowd as well. Can't touch this...I HAZ SCARED.

    Or it's the Hammer Time argument. Depends on how old you are.

  • Voize of Reazon||

    "allowing states to levy sales tax on Internet retailers"

    In Wayfair as in Bellas Hess and the earlier decisions it relied on the issue was whether the out-of-state seller could be required to collect and remit sales taxes for the purchaser's State. There was never a question of taxing the seller, or even of whether the transaction could be taxed.
    South Dakota could only go after the purchasers to pay, which had an unsurprising compliance rate of pretty close to zero, and that is what they were challenging.

    This reversal allows each state to require that collection but also to impose its own requirements on paperwork, registration, record keeping, and tax audit compliance. Avalara (whose stock is up about 15% this week) can't smooth all that over, but if Congress had made this change they would at least have had the option of combining it with some chaos-reducing regulation, maybe even making inter-state taxation uniform. With SCOTUS though there is no such opportunity, and some level of chaos is going to be inevitable.

  • Bob from Ohio||

    "one party in a two-party system has abdicated from, you know, governance"

    The House has passed dozens of bills this session that the Senate has not even taken up because 9 Democrats will not even agree to let the bills come up for a vote.

    So, while you are right about "one part", its not the one I assume you mean.

  • apedad||

    Ah yes...erryting is da Dems fault.

    You control all three branches of the federal govt.

    The majority of state governments.

    And yet....NOBODY LIKES US!!!

    You are pathetic.

  • Bob from Ohio||

    You still need 9 votes from Dem senators to pass anything nationally.

  • Voize of Reazon||

    They need 9 votes to invoke cloture and force a vote on the issue, unless it is one (like confirmations) that has been "nuclear optioned" and only requires a simple majority. Is that what you meant?

    I checked the senate roll call votes from this session for cloture votes that failed for lack of a supermajority, and found seven:

    S. 140 Amendment; A bill to amend the White Mountain Apache Tribe Water Rights Quantification Act of 2010 . (twice)
    Amdt. No. 1958 As Modified; Of a perfecting nature. (?)
    Amdt. No. 1948; To ensure that State and local law enforcement may cooperate with Federal officials
    Amdt. No. 1955; To provide relief from removal and adjustment of status of certain individuals who are long-term United States residents
    To amend the National Child Protection Act of 1993 to establish a voluntary national criminal history background check system
    S. 2311; A bill to amend title 18, United States Code, to protect pain-capable unborn children
    A bill to amend title 44, United States Code, to restrict the distribution of free printed copies of the Federal Register

  • Lee Moore||

    But as you obviously know, the Senate majority is hardly ever going to bring a Bill to a cloture vote that it knows it's going to lose, because that wastes valuable floor time that they want to use for confirmations and stuff. So the number of failed cloture votes is nothing like a complete list of Bills that would pass if there was no filibuster.

    Failed cloture votes will generally be either very narrow failures that you thought you were going to win, or cosmetic things to make those of your political enemies who are up for re-election this time vote against motherhood and apple pie. Or from your list to make them vote in favor of sanctuary cities and late abortion. Which may play well in New York and California, but perhaps less well in Missouri and Indiana.

  • RoyMo||

    So when can Louisiana get back to granting monopolies on Mississippi river shipping?

  • Lee Moore||

    On reflection, it seems to me that the Roberts view - let's forget our prior screw up, because Congress can correct it if it wants to - suffers from a logical probelm of recurson - the weakness that if the Court does decide to correct its previous screw up, Congress can correct that just as easily as it could correct the original screw up.

    loki argues above that the Court changes its mind in an earth shattering KABOOM that comes without warning, while Congress slowly and deliberately thinks things through with plenty of warning. But I'm not sure that's right in practice. Congress is quite capable of producing a hurried pile of nonsense that takes decades to get to the bottom of (see Obamacare) while cases seldom reach SCOTUS more rapidly than Bills wend their way through the Congress.

    In practice, because of the Senate's filibustering rules, the requirement for both Houses to agree, and for the President to agree, passing a Bill through Congress is not that easy. Yes, it's easier than changing the Constitution, but it's hardly a trivial matter. Consequently, if SCOTUS finds that it has left some poop on the sidewalk it seems to me that it should take responsibility for tidying it up, rather than leaving the mess for other people to clear up. Twould be different in SCOTUS was merely unsure - then it should leave things alone. But here Roberts agrees - it's definitely poop.

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