Merits Review
Each term the United States Supreme Court issues a number of decisions that materially impact the legal landscape for our clients. But which cases are likely to have relevant impacts on your business? And what might the ramifications for your business be? In this series, Quarles attorneys will highlight the key cases in the current term that merit your review. Use our pre-term previews of these cases to identify which ones to watch, then come back for key updates as these cases develop throughout the term.
Latest Update
Supreme Court Appears Poised to Overrule a Key Portion of the Voting Rights Act, Which Could Lead to a Sea Change in Congressional Districting and Lead To Ripple Effects Across the Law of Discrimination
Oral Argument Analysis
The Supreme Court recently heard extended oral argument in a case that will address whether race-based redistricting is an appropriate remedy when a state-drawn map is held to violate Section 2 of the Voting Rights Acts. The Court specifically asked the parties to address whether the State’s intentional creation of a second majority-minority district violates the Fourteenth or Fifteenth Amendments.
By way of background, the map Louisiana initially drew after the 2020 census was found to be in violation of Section 2 of the Voting Rights Act. This initial map only contained one majority-Black district out of a possible six in a state where roughly one-third of the population is Black. In response, Louisiana drew a new map in 2024 that contained two majority-Black districts. This map, also known as S.B. 8, has been challenged by a group of non-Black voters who contend the map is the product of unconstitutional racial gerrymandering because it sorts voters based on race, which they contend violates the equal protection clause of the Fourteenth Amendment.
During the argument there were signs that members of the Court are inclined to further limit Section 2 of the Voting Rights Act or at least the remedies available under it. Justice Kavanaugh for example noted that “race-based remedies are permissible for a period of time, sometimes for a long period of time, decades in some cases, but . . . they should not be indefinite and should have an end point.” Chief Justice Roberts indicated that prior related decisions, including the opinion he authored in Allen v. Milligan, “took the existing precedent as a given,” indicating that now the Court may be considering the validity of prior precedents in this area.
Other Justices indicated that the arguments before the Court in this case were rejected in Milligan two years ago. Justice Kagan noted that the arguments being made now were also made by Alabama (the state involved in Milligan) in Milligan and that “it seems to me that you repeated each and every one of those arguments that we rejected.” And Justice Jackson pushed back on the concept of a time limit applying to Section 2 because Section 2 “is not a remedy in and of itself,” but merely “the mechanism by which the law determines whether a remedy is necessary” and that the remedy required may, or may not, involve the consideration of race.
While the outcome remains uncertain, one theme that emerged from the argument is the role of political objectives in redistricting and whether political objectives can serve as sufficient justification to support a particular map drawn by a state even though political objectives can be intertwined with racial issues. Justice Kavanaugh at least viewed considerations of political objectives, i.e., the interest of the political party drawing the map in furthering its own interests, in the analysis as “new.” Justice Kavanaugh appeared to view consideration of this factor as proper given the recent decision in Rucho which supported that a political party’s partisan interests in benefiting itself can serve as a legitimate justification for how a particular map is drawn.
Whatever the outcome, it is likely that the decision will have ripple effects throughout the law of discrimination, in which race-conscious remediation of past discrimination is increasingly in the cross-hairs. For example, in Students for Fair Admissions Inc. v. President & Fellows of Harvard College the Court severely curtailed the use of affirmative action, holding that a student “must be treated based on his or her experiences as an individual — not on the basis of race.” While the Court’s decision in Callais may only address the role of race in the context of Section 2 of the Voting Rights Act, it is likely the decision will provide insight into other areas of law where race plays a role and is considered. Areas such as employment, housing, and lending where race is a factor under Title VII, the Fair Housing Act, and the Equal Credit Opportunity Act.
Overview of Cases Being Followed from 2025-26 Term
Cox Communications v. Sony Entertainment, et al.
Of interest to internet service providers and to clients seeking to enforce intellectual property rights
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In Cox Communications v. Sony Entertainment et al., the Supreme Court will grapple with the level of culpability required for internet service providers (“ISPs”) to be held liable for contributory copyright infringement based on the infringing activity of their subscribers. Sony Entertainment and numerous other copyright holders have sought to hold ISPs liable under a theory of contributory liability when an ISP does not take sufficient steps to prevent copyright infringement by its users or turns a blind eye to such activity. The Court’s decision should bring needed clarity regarding what amount of knowledge by an ISP of its users’ behaviors is sufficient to subject the ISP to liability as currently there is no consensus about what the appropriate test should be. Depending on the outcome, ISPs and other entities that provide services to users may need to re-assess their policies to ensure they are taking appropriate steps to protect themselves against liability.
FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd.
Of interest to investment companies, especially those who deal with activist investors
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In Saba the Court will resolve a circuit split about whether § 47(b) of the Investment Company Act of 1940, 15 U.S.C. § 80a-46(b) creates an implied private right of action to sue for rescission of contracts that violate the Act. This case is particularly relevant to mutual funds, exchange-traded funds, closed-end funds, and other registered investment companies that are governed by the ICA. Typically, enforcement of the ICA is reserved for the SEC. The outcome here will either close this avenue of private enforcement that is sometimes utilized by activist investors or open the doors to these types of suits across the U.S.—instead of just in the Second Circuit, where this private right was first recognized in Oxford University Bank v. Lansuppe Feeder, LLC, 933 F.3d 99 (2d Cir. 2019).
Gallet v. New Jersey Transit Corp. & New Jersey Transit Corp. v. Colt
Of interest to clients involved in litigation with state governments or working with public-private partnerships
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A New Jersey train winds its way through the tri-state apex of north Jersey, New York, and Pennsylvania. The conductor fails to notice the train veering off the tracks. Suddenly, the train fails completely; it careens into a row of parked cars in Port Jervis, New York and grinds to a halt in Matamoras, Pennsylvania. No one is hurt, but crumpled heaps of downed trees, power lines, and pile-ups are left in the train’s wake. Who pays for the property damage?
Under current law, the New Jersey Transit Authority would only have to pay for the damage in New York but would not cover the damage in Pennsylvania. How could this be? Current, conflicting decisions from the high courts of Pennsylvania and New York render the New Jersey Transit Authority’s sovereign immunity – i.e., its protection from any lawsuit – to “toggle” on and off across state lines, even for the same entity, and even for the same accident.
A pair of pending Supreme Court cases seek to resolve this conflict; Gallet v. New Jersey Transit Corp. and New Jersey Transit Corp. v. Colt will reconcile two high-court decisions that both weighed whether the New Jersey Transit Authority is an arm of the sovereign state of New Jersey but came to different conclusions.
This pair of cases will provide clarity on the test for interstate sovereign immunity; stay tuned if you routinely contract with, sue, or are sued by state governments, work with public-private partnerships, or represent clients who do.
Little v. Hecox & West Virginia v. B.P.J.
Blockbuster transgender athletics case, of interest to universities, human resources departments, and all who follow civil rights law
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Perhaps two of the most anticipated and publicized cases in the Supreme Court’s term are the companion cases Little v. Hecox and West Virginia v. B.P.J., which both revolve around transgender athletes’ participation in team sports. The attention both cases have received in the media makes sense, as the Supreme Court’s rulings will have major implications in education settings at all levels across the country. Both cases challenge state bans on transgender students’ participation in their gender’s sports teams under the Equal Protection Clause of the Fourteenth Amendment. In West Virginia v. B.P.J, the plaintiff also challenges such bans under Title IX of the Education Amendments of 1972 (Title IX), which prohibits discrimination based on sex in education programs and activities receiving federal funding.
In Little, the plaintiff, a transgender woman who sought to compete on the women’s track and cross-country team at Boise State University, challenges Idaho’s ban on transgender females participating on female sports teams. Now, with over 20 states enacting similar laws, the Court’s ruling will determine whether such categorical exclusions are constitutional. The Court’s ruling in Little will have immediate implications for school districts, athletic associations, and education-focused entities.
West Virginia v. B.P.J. challenges West Virginia’s ban on transgender children participating on their gender’s sports teams from both an Equal Protection Clause and Title IX angle. The case will allow the Supreme Court the opportunity to clarify how gender identity fits into the framework of sex discrimination under Title IX, and will undoubtedly have national consequences, as it will impact how institutions define and enforce gender-related policies across K–12 and higher education settings.
Louisiana v. Callais
Of interest to those following the ongoing fight over congressional redistricting, with likely broader implications for the use of “disparate impact” as a tool for assessing discrimination
Oral Argument Analysis
The Supreme Court recently heard extended oral argument in a case that will address whether race-based redistricting is an appropriate remedy when a state-drawn map is held to violate Section 2 of the Voting Rights Acts. The Court specifically asked the parties to address whether the State’s intentional creation of a second majority-minority district violates the Fourteenth or Fifteenth Amendments.
By way of background, the map Louisiana initially drew after the 2020 census was found to be in violation of Section 2 of the Voting Rights Act. This initial map only contained one majority-Black district out of a possible six in a state where roughly one-third of the population is Black. In response, Louisiana drew a new map in 2024 that contained two majority-Black districts. This map, also known as S.B. 8, has been challenged by a group of non-Black voters who contend the map is the product of unconstitutional racial gerrymandering because it sorts voters based on race, which they contend violates the equal protection clause of the Fourteenth Amendment.
During the argument there were signs that members of the Court are inclined to further limit Section 2 of the Voting Rights Act or at least the remedies available under it. Justice Kavanaugh for example noted that “race-based remedies are permissible for a period of time, sometimes for a long period of time, decades in some cases, but . . . they should not be indefinite and should have an end point.” Chief Justice Roberts indicated that prior related decisions, including the opinion he authored in Allen v. Milligan, “took the existing precedent as a given,” indicating that now the Court may be considering the validity of prior precedents in this area.
Other Justices indicated that the arguments before the Court in this case were rejected in Milligan two years ago. Justice Kagan noted that the arguments being made now were also made by Alabama (the state involved in Milligan) in Milligan and that “it seems to me that you repeated each and every one of those arguments that we rejected.” And Justice Jackson pushed back on the concept of a time limit applying to Section 2 because Section 2 “is not a remedy in and of itself,” but merely “the mechanism by which the law determines whether a remedy is necessary” and that the remedy required may, or may not, involve the consideration of race.
While the outcome remains uncertain, one theme that emerged from the argument is the role of political objectives in redistricting and whether political objectives can serve as sufficient justification to support a particular map drawn by a state even though political objectives can be intertwined with racial issues. Justice Kavanaugh at least viewed considerations of political objectives, i.e., the interest of the political party drawing the map in furthering its own interests, in the analysis as “new.” Justice Kavanaugh appeared to view consideration of this factor as proper given the recent decision in Rucho which supported that a political party’s partisan interests in benefiting itself can serve as a legitimate justification for how a particular map is drawn.
Whatever the outcome, it is likely that the decision will have ripple effects throughout the law of discrimination, in which race-conscious remediation of past discrimination is increasingly in the cross-hairs. For example, in Students for Fair Admissions Inc. v. President & Fellows of Harvard College the Court severely curtailed the use of affirmative action, holding that a student “must be treated based on his or her experiences as an individual — not on the basis of race.” While the Court’s decision in Callais may only address the role of race in the context of Section 2 of the Voting Rights Act, it is likely the decision will provide insight into other areas of law where race plays a role and is considered. Areas such as employment, housing, and lending where race is a factor under Title VII, the Fair Housing Act, and the Equal Credit Opportunity Act.
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A rare carry-over from a previous term, the Court will once again wade into the murky waters of re-districting and electoral maps. Unable to reach a decision in the 2024–25 Term about whether Louisiana’s map of congressional districts known as S.B. 8 is constitutional, the Court asked the parties to address a specific question this time around: whether Louisiana’s intentional creation of a second majority-Black district violates either the 14th or 15th Amendments. The answer to this question is likely to materially impact the Voting Rights Act and its remaining viability.
In addition, the answer to this question is likely to shed light on the future of liability based on disparate impact. If disparate impact liability is deemed inappropriate, there could be repercussions of other areas of law, such as employment and housing, where it currently serves as a basis for liability. Oral argument is scheduled for mid-October.
M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund
Of interest to employers participating in multiemployer pension plans
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In M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund, the Supreme Court is set to weigh in on a key question for employers participating in multiemployer pension plans: Whether pension plans may retroactively apply new assumptions to increase withdrawal liability for employers under 29 U.S.C. § 1391.
Under ERISA and the Multiemployer Pension Plan Amendments Act (“MPPAA”), employers who exit underfunded multiemployer plans must pay withdrawal liability, essentially their share of the unfunded pension promises. The statute states that this liability must be calculated “as of the end of the plan year” before the withdrawal. But in this case, the IAM National Pension Fund (“The Fund”) changed its interest rate assumptions after that date, which dramatically increased the amount owed by the withdrawing employer. The Supreme Court will decide whether that retroactive adjustment is lawful, or whether it violates ERISA’s timing rules.
Why it matters: If the Court affirms the lower ruling, pension plans could continue to revise assumptions after the fact, potentially exposing exiting employers to unpredictable and escalating liabilities. This could discourage participation in multiemployer plans and complicate exit strategies for participating employers. Either way, the Court’s decision will clarify important details regarding how pension withdrawal liability is calculated.
Montgomery v. Caribe Transport II, LLC
Of interest to clients connected with the interstate transportation industry
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In this case the Court will address whether the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”) preempts state common-law claims for negligent hiring or selection of motor carriers by freight brokers and related third-party stakeholders. Congress enacted the FAAAA as a component of deregulation in the broader transportation industry, specifically preempting state laws “related to a price, route, or service of any motor carrier.” However, preemption under the FAAAA does not apply to state laws concerning the “safety regulatory authority of a State with respect to motor vehicles” (the “safety exception”).
The Court’s decision will have a monumental effect on the division of liability among various stakeholders engaged in the interstate transportation industry nationwide. An affirmance of the lower court’s decision would largely eclipse the current safety exception, substantially insulating freight brokers from exposure over the selection and derivative negligence of the carriers with whom they contract. A reversal would grossly increase the liability for freight brokers in the context of carrier selection and likely spur an overhaul of industry safety standards as it relates to selection and operation of motor carriers across the country. Either way, the Court’s decision should bring national uniformity and interpretive guidance to the safety exception.
Trump v. V.O.S. Selections, Inc. & Learning Resources, Inc. v. Trump
Blockbuster case addressing the lawfulness of the Trump tariffs
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In the consolidated case of Learning Resources v. Trump, and Trump v. V.O.S. Selections, Inc., the United States Supreme Court will determine the constitutionality of the presidential imposition of tariffs under the International Emergency Economic Powers Act (“IEEPA”). The IEEPA authorizes the president to “regulate . . . importation” to deal with a foreign threat to the national security, foreign policy, or economy of the United States.
Five executive orders issued by President Trump imposed duties on trade partners of the United States in response to a claimed national emergency declared by the president under IEEPA, known as “Reciprocal Tariffs” and “Trafficking and Immigration Tariffs.” This marks the first time the IEEPA has been used to justify tariffs, making this a matter of first impression.
After the Court of International Trade (“CIT”) and the U.S. District Court for the District of Columbia held that imposing these tariffs under the IEEPA was unlawful, the Supreme Court granted review on September 9, 2025, on an expedited schedule. Oral argument is set to take place in the first week of November 2025.
Urias-Orellana v. Bondi
Of interest to employers navigating the changing world of immigration
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In Urias-Orellana v. Bondi, the Supreme Court will determine how much deference federal courts of appeals should give to determinations by the Board of Immigration Appeals (“BIA”) regarding whether an asylum seeker has faced “persecution” in their home country (thereby potentially entitling them to asylum as a refugee). There is an entrenched circuit split regarding the standard of review that should be applied to persecution determinations. By statute, courts are required to review BIA administrative “findings of fact” using the “substantial evidence” standard. Under this highly deferential standard, courts must accept the BIA’s “findings of fact” as long as the record contains evidence sufficient to support the agency’s determinations. However, generally, courts reviewing conclusions of law use the “de novo” standard, in which they review a case as if for the first time without giving deference to the lower court’s conclusions. Urias-Orellana v. Bondi involved undisputed facts, and the petitioner argues that the application of law to undisputed facts is a legal question requiring de novo review. The government argues that the question of whether an asylum seeker has suffered “persecution” often involves a “fact-dependent” inquiry into the degree of harm suffered and should therefore be viewed as a finding of fact subject to substantial evidence review. Why this case matters: the outcome will determine how much deference courts should give to an immigration judge’s analysis when an asylum application is denied, which will impact how difficult appealing such decisions will be.