On September 30, the justices will meet for the so-called “long conference” – the first regularly scheduled conference since early July at which they will consider new petitions for review. The court will have hundreds of petitions in front of it, but last year it agreed to add only 12 cases to its docket for the 2023-24 term.
The FAA and preemption
Two of the cases that the justices will consider next month are Lyft, Inc. v. California and Uber Technologies v. California, in which the ridesharing platforms have asked the justices to wade into yet another dispute arising out of the Federal Arbitration Act, a 1925 law providing that (as relevant here) agreements to arbitrate should generally “be valid, irrevocable, and enforceable.”
The platforms ask (but do not require) drivers who sign up to use the platform to agree to arbitrate any disputes with the company individually.
State officials brought lawsuits in 2020 on behalf of all Lyft drivers. They contend that – in violation of California law – the company classified drivers as independent contractors, when they should have been classified as employees. The officials rely on state laws that allow them to bring lawsuits on behalf of others – for example, “to restore to any person in interest any money or property . . . which may have been acquired by means of . . . unfair competition.”
The platforms contended that under the Federal Arbitration Act, state officials were required to arbitrate their claims seeking financial compensation for individual drivers.
California state courts rejected ridesharing companies’ motions to compel arbitration. They pointed to the Supreme Court’s 2002 decision in EEOC v. Waffle House, Inc., in which the justices ruled that an agreement between an employer and an employee to arbitrate employment-related disputes does not prohibit the EEOC from pursuing relief targeted at the employee, such as back pay, reinstatement, and compensatory damages, in a lawsuit alleging that the employer violated the Americans with Disabilities Act.
The California Court of Appeal also emphasized that the state officials had not themselves signed the agreements between the ridesharing companies and drivers. That mattered, it stressed, because “a government body exercising express statutory authority to seek judicial relief (including ‘victim-specific’ relief) cannot be barred from doing so” by “arbitration agreements between private parties.”
The ridesharing companies came to the Supreme Court this spring, asking the justices to weigh in. In its filing, Lyft contended that the ruling by the California Court of Appeal, as well as similar ones by other state courts, “rests on a grave misunderstanding of Waffle House, which is not binding or even especially relevant in assessing whether the FAA preempts state law that runs roughshod over arbitration agreements.”
Uber called the decision below “California’s latest attempt to create a loophole in the FAA.” If allowed to stand, the company suggested, it would allow state legislatures to deputize “just about anyone to litigate on behalf of just about anybody who agreed to arbitrate just about any dispute.”
California countered that the state court ruling merely “reflects a commonly understood and unremarkable proposition: a State’s designated law enforcement officials may file suit to remedy violations of state laws regardless of whether private parties have agreed to settle disputes among themselves by arbitration.” Citing one of the Supreme Court’s recent decisions on arbitration, the state noted that “the FAA’s policy favoring arbitration does not authorize federal courts to invent special, arbitration-preferring procedural rules.”
The scope of a federal ban on “false statements”
The justices will also consider a petition for review filed by a member of one of Chicago’s most famous political families. Patrick Daley Thompson is the grandson of Richard J. Daley, who served as the city’s mayor from 1955 to 1976, and the nephew of Richard M. Daley, who served as mayor from 1989 to 2011. Thompson himself was elected as a member of Chicago’s city council in 2015.
In 2011, Thompson borrowed $110,000 from Washington Federal Bank for Savings, a small bank in Chicago’s Bridgeport neighborhood, where the Daley family made its name. Thompson later took out two additional loans, totaling just under $100,000, for which he did not sign any paperwork. Thompson made only one payment on any of his loans, paying $389.58 in 2012; the bank did not ask him to pay anything else.
Washington Federal Bank for Savings shut down in 2017 in the wake of an embezzlement scheme by the bank’s executives, and a few days after the bank’s president died by suicide.
When Thompson spoke with a firm hired by the Federal Deposit Insurance Corporation to collect the money that he owed the bank, Thompson disputed that he owed $219,000 plus interest. Instead, he said, he had borrowed $110,000.
Thompson eventually agreed to repay $219,000 – the amount that he had borrowed, but without interest. He was later charged with (as relevant here) violating a federal law that makes it a crime to make a false statement to influence financial institutions and federal agencies. Arguing that he had received special treatment with the loans because of “his status in the community and his role as an elected official,” prosecutors pointed to Thompson’s statements that he had only owed $110,000.
Thompson was convicted and served four months in prison. On appeal, he argued that the federal law under which he was convicted does not bar statements that are misleading but not false – such as his assertion that he had borrowed $110,000, which left out the “important contextual information” that he had later borrowed nearly $100,000 more. A federal appeals court in Chicago rejected that contention, prompting him to go to the Supreme Court.
In his petition for review in the Supreme Court, Thompson asserts that the federal courts of appeals are divided over whether the ban on making a “false statement” also prohibits statements that are misleading but true. Three courts of appeals have adopted a literal interpretation of the law, he says, “to criminalize only the making of statements that are false,” while four others (including the one in which he was convicted) “interpret the statute more broadly” to apply also to misleading statements. The latter interpretation, he suggests, “also threatens to criminalize a vast and ill-defined range of statements,” such as those made during mortgage negotiations.
The federal government urges the justices to allow Thompson’s conviction to stand. Thompson, U.S. Solicitor General Elizabeth Prelogar writes, was convicted not only for saying that he borrowed $110,000 but also because he said that “any higher amount was incorrect” and for misrepresenting the purpose for which he had borrowed the money – both of which were unquestionably false, not merely misleading. The government also disputes Thompson’s contention that the federal courts of appeals are divided on the central question in his case.
A challenge to Michigan’s ban on public aid for private schools
In 1970, Michigan voters adopted an amendment to the state’s constitution that prohibited the use of any public funding for any private schools. In Hile v. Michigan, a group of Michigan parents ask the Supreme Court to decide whether that amendment violates the U.S. Constitution.
The challengers have children in private religious schools in Michigan. They went to federal court, arguing that the state constitutional provision violates the U.S. Constitution’s guarantee of equal protection because it bars religious people and institutions in Michigan from being able to seek relief – such as public funding – from the state legislature on the same terms as other citizens.
The district court rejected their argument and dismissed their claim. A federal appeals court in Cincinnati upheld that ruling. Calling the decision not to provide any funding for private schools a “legitimate policy choice,” it stressed that the ban on public funding was facially neutral – that is, it applied to all private schools, both religious and nonreligious.
But even if the original decision in 1970 to adopt the constitutional provision was motivated by a hostility to religion, the court of appeals added, that hostility was effectively erased in 2000, when the state’s voters rejected a ballot proposal to allow school vouchers.
The parents came to the Supreme Court in April, calling the lower court’s decision “egregiously wrong.” In a series of decisions over the past seven years, the parents note, the Supreme Court struck down “state constitutional provisions and rules that deprive religious schools and families of an equal opportunity to public benefits.”
The parents dismiss the amendment’s “alleged neutrality” as a “sham.” When the amendment was adopted in 1970, they observe, 98% of all students in private schools attended religious schools: The amendment was therefore clearly intended to target funding to religious schools, they write.
Unless the Supreme Court intervenes, the parents caution, “Michigan’s workaround will become the loophole through which many states discriminate against religious families and individuals.”
Opposing review, Michigan questions whether the parents even have a legal right, known as standing, to pursue their claim. The parents’ “complaint does not allege that they are religious or subscribe to any religious tradition,” the state points out. Nor, the state continues, does it contend that “they have any plans to lobby the Legislature to enact a law that would” conflict with the constitutional amendment.
The parents’ claims also fail on the merits, the state continues, because the Supreme Court cases on which the parents rely “all involved laws targeting religious entities by excluding only them from public benefits.” By contrast, the state stresses, the constitutional provision at issue in this case prohibits “taxpayer funding for any private school, religious or not.”
