How recent Supreme Court rulings may affect your business
Litigation has a way of disrupting a company like few other events. But it is not always the lawsuit your company files — or has filed against it — that has the most important implications. Sometimes the change comes in the form of a Supreme Court ruling.
Here are several recent decisions that may affect your business in 2015:
Michigan Supreme Court
Proof of sales/use tax exemption: Under Michigan law, a company can claim an exemption from the state use tax if sales tax was paid at the time of purchase on personal property that was later consumed. In Andrie Inc. v. Department of Treasury, the Michigan Supreme Court held that a company claiming this exemption must do so with records; there is no “presumption” sales tax has been paid.
Workers’ compensation: The Michigan Supreme Court in Auto-Owners Insurance Co. v. All Star Lawn Specialists Plus Inc. held that a worker is an independent contractor — and not an employee — if he or she maintains a separate business providing the service, holds himself or herself out as providing the service to the public, or is an employer under the act.
Pharmacy pricing: In Michigan ex rel. Gurganus v. CVS Caremark Corp., the Court held that Michigan’s generic drug substitution statute requires pharmacists to pass along the savings when they substitute a generic drug for an equivalent brand-name drug.
Multistate taxation: The Michigan Supreme Court held in IBM Corp. v. Department of Treasury that the Michigan Business Tax did not repeal the Multistate Tax Compact, allowing multistate taxpayers to use the compact’s apportionment method for calculating tax liability. Important note: The Michigan Legislature subsequently passed a law that effectively reversed the Court’s decision. The validity of that legislation is currently being litigated.
Shareholder oppression suits: In Madugula v. Taub, the Michigan Supreme Court held that there is no right to a jury trial when a plaintiff brings a shareholder oppression claim under the Business Corporation Act.
U. S. Supreme Court
Corporate religious freedom: The U.S. Supreme Court in Burwell v. Hobby Lobby Stores held that for-profit corporations can exercise the religion of their closely held owners. As a result, a corporation can bring a claim under the federal Religious Freedom Restoration Act when a federal law forces the company to act in a way that violates the owners’ religious beliefs.
Retiree health-care benefits: In a case that reversed decades of federal appeals court precedent in Michigan, the U.S. Supreme Court in M&G Polymers USA LLC v. Tackett held that courts should not presume that silence in a collective bargaining agreement regarding the duration of retiree health-care benefits means that the employer and employees meant such benefits to vest for the life of retirees. Such agreements should be interpreted just like any other contract.
Compensating employees for security screening: In Integrity Staffing Solutions v. Busk, the U.S. Supreme Court held that, under the Fair Labor Standards Act, employees are not entitled to compensation for the time they spend waiting for and taking part in a security screening before they leave work.
ERISA claims: In Heimeshoff v. Hartford Life & Accident Insurance Co.an employer through its ERISA plan can agree to a short limitations period for claims — even a period that starts to run before the cause of action accrues — provided the period is reasonable.
Truth in Lending: When a borrower exercises his or her right to rescind a financing transaction under the Truth in Lending Act, the borrower need only provide written notice to the financer or lender within three years. According to the U.S. Supreme Court’s decision in Jesinoski v. Countrywide Home Loans, the borrower need not file a lawsuit within that period to take advantage of TILA.
Finally, in King v. Burwell, a case the U.S. Supreme Court will hear March 4, the court will decide whether health-care coverage purchased through an Affordable Care Act exchange created by the federal government is eligible for the Act’s tax-credit subsidies. Why does that matter? If the court says “no,” then in states like Michigan, which did not establish their own exchanges, such subsidies will disappear, as will the Affordable Care Act’s employer mandate. Stay tuned.
John Bursch is a partner at Warner Norcross & Judd LLP and co-chairs the firm’s Appellate & Supreme Court Practice. He has argued 18 times in the Michigan Supreme Court and will soon argue his 9th and 10th cases in the U.S. Supreme Court. He can be reached at firstname.lastname@example.org.