One of the most difficult questions facing Supreme Court justices is when they should overrule a prior decision. In a pair of cases handed down this term, Chief Justice John Roberts gave a revealing answer to this question: Courts should apply a very strong presumption in favor of past decisions when those decisions benefit business interests, but not when they benefit workers.
With Justice Anthony Kennedy’s announcement on Wednesday that he will leave the Court, Roberts now becomes the only member of the Court’s Republican majority who could plausibly be convinced to vote with the liberals on any of the issues that currently divide the Court. So his bias in favor of business will now be a driving factor in the Court’s future decisions.
The first of the pair of cases was South Dakota v. Wayfair, which overruled a 1967 Supreme Court decision holding that states cannot charge sales taxes to businesses without a physical presence in that state — think of online retailers that do business entirely through the internet and the mail.
Every member of the Court agreed that this 1967 decision was wrongly decided, but they split 5-4 on whether stare decisis — the strong presumption that current judges should follow past decisions — should compel the Court to defer to this erroneous decision. Roberts wrote for the four dissenters, arguing that stare decisis should control.
The majority argued “in favor of overturning that decision because the ‘Internet’s prevalence and power have changed the dynamics of the national economy,'” Roberts wrote, “but that is the very reason I oppose discarding the physical-presence rule.”
As the Chief explained, businesses made decades worth of investment decisions on the assumption that they wouldn’t have to pay sales taxes in most states, and “any alteration to those rules” has “the potential to disrupt . . . a critical segment of the economy.”
It’s a powerful argument. Companies invested billions of dollars, and their employees made major career decisions, all based on the assumption that the courts wouldn’t abruptly upend a major feature of American tax law. Now some of these companies could go out of business, and workers could lose their jobs.
A few days later, the Supreme Court handed down Janus v. AFSCME, which overruled a 1977 decision governing public sector unions. Before that ruling, public sector unions could contract with employers to require their employees to reimburse the union for certain services the union provides to those employees. After Wednesday’s decision in Janus, however, many of these unions will now have to provide these services for free.
Many unions will be starved for funds because of Janus. Some could collapse. As was the case in Wayfair, unions made massive investments on the assumption that they would be reimbursed for their services. Workers made decisions about whether to unionize based on now-faulty assumptions about how effective the union could be at the bargaining table.
Unions provide a significant wage premium to employees and often guarantee better employment benefits to those workers. Millions of workers made the decision to remain teachers or cops or firefighters on the assumption that they would continue to enjoy the higher wages and superior benefits that unions can provide.
And yet Justice Samuel Alito’s opinion for the Court in Janus, which was joined by Roberts, was utterly dismissive of such reliance on the old legal rule.
Though Alito acknowledged his decision “may cause unions to experience unpleasant transition costs in the short term,” he wrote that this problem must be weighed “against the considerable windfall that unions have received under Abood for the past 41 years.” Unions collected “many billions of dollars” under the old legal regime. To Alito — and to Roberts — that represents nothing more than a lawless “windfall” that needed to be shut down.
Ultimately, the standard that emerges from Roberts’ two votes in these cases suggests the court should prioritize businesses over workers. If businesses rake in billions of dollars in windfall tax benefits — under the old tax regime, states lost an estimated “$8 and $33 billion every year” in tax revenue — courts should be very protective of those business’ reliance on those windfall benefits. But if millions of ordinary workers make financial decisions based on a court decision protecting the right to organize, the Court can just toss that decision out because its new majority doesn’t like it.