Corner Post, Inc. v. Board of Governors of the Federal Reserve System: Implications for Litigation Against Regulatory Agencies

The recent Supreme Court decision in Corner Post, Inc. v. Board of Governors of the Federal Reserve System marks a transformative moment for lawsuits against regulatory agencies like the FDA. This landmark ruling not only clarifies how the statute of limitations is applied to claims under the Administrative Procedure Act (APA), but also has tangible effects on small businesses, consumers, regulatory accountability, public health, and the fairness of the legal system. By allowing affected parties to seek justice even years after regulatory actions are implemented, the decision potentially alters the landscape for future litigation.

Case Summary

Corner Post, Inc., a merchant, challenged Regulation II (Debit Card Interchange Fees and Routing) under the APA [1], arguing that the regulation allowed higher interchange fees than permitted by the statute. Initially dismissed by the District Court as time-barred under the six-year statute of limitations per 28 U.S.C. §2401(a), the Supreme Court overturned this decision. The Court held that an APA claim accrues when the plaintiff is injured by final agency action, not simply when the action becomes final [2].

Key Points of the Decision

1. Accrual of APA Claims: The Court emphasized that an APA claim accrues when the plaintiff suffers an injury from final agency action, aligning with the traditional rule that a claim accrues when a plaintiff has a "complete and present cause of action."
2. Statute of Limitations: The decision underscores that the six-year statute of limitations under §2401(a) begins to run only after the plaintiff is injured, not merely when the agency action is final.
3. Congressional Intent and Statutory Interpretation: The ruling highlights the importance of congressional intent and statutory language. The Court noted that Congress could have specified a different rule if it intended for the statute of limitations to begin at the time of final agency action, but it did not.

Complete and Present Cause of Action

A cause of action refers to a set of facts sufficient to justify a right to sue to obtain a remedy from a court. It includes both the existence of a legal right and the violation of that right. For a claim to be "complete and present," all elements of the cause of action must exist. A claim accrues when the plaintiff has the right to bring suit in court. This occurs when the plaintiff can point to a specific injury caused by the defendant’s conduct that violates the plaintiff’s rights. At this point, the plaintiff has a "complete and present cause of action."

In the context of Corner Post, Inc. v. Board of Governors of the Federal Reserve System, the Supreme Court clarified that:

• A plaintiff must experience an actual injury resulting from a final agency action before the statute of limitations for an APA claim begins to run.
• The mere existence of a final agency action is not enough to start the limitations clock; the plaintiff must have suffered harm due to that action.

This principle prevents plaintiffs from being barred from suing before they have actually suffered harm. It ensures that individuals and entities have the opportunity to seek redress once they are affected by the actions in question.

For example:

• In Regulatory Contexts: If a regulatory agency like the FDA issues a rule, a potential plaintiff cannot file a lawsuit merely based on the issuance of the rule. They must wait until the rule has a direct and adverse impact on them.
• Ensuring Fairness: This approach ensures fairness by allowing plaintiffs to file claims when they have all the necessary elements to support their case, preventing premature lawsuits that might lack concrete harm or injury.

Implications for Lawsuits Against the FDA

The Corner Post decision has several important implications for litigation involving the FDA and other regulatory agencies:

1. Extended Timeframe for Filing Claims: Plaintiffs now have a clearer and potentially extended timeframe to file claims against regulatory actions, as the clock starts ticking only after they suffer an injury. This could lead to more challenges against longstanding regulations.
2. Increased Judicial Review: The decision reinforces the APA's presumption of judicial review, ensuring that individuals and entities affected by agency actions have their day in court. This could result in more frequent judicial scrutiny of FDA regulations.
3. Impact on Regulatory Stability: While the decision supports plaintiffs' rights, it may introduce uncertainty for regulated entities. Longstanding regulations might face challenges even years after their implementation, affecting businesses that have relied on them.
4. Policy and Administrative Considerations: Regulatory agencies like the FDA may need to consider the potential for increased litigation when drafting and implementing new regulations. This could lead to more rigorous justifications and documentation for regulatory actions to withstand future legal challenges.

Does This Ruling Amplify Departure from Chevron Deference?

The Corner Post decision places a significant emphasis on judicial review of agency actions, underscoring the ability of plaintiffs to challenge regulations even after they have been in effect for some time, provided they suffer an injury. Historically, Chevron deference guided courts to defer to an agency’s interpretation of a statute it administers, provided the interpretation was reasonable. However, with Chevron deference no longer in place, courts must independently assess the reasonableness of agency interpretations without automatic deference [3].

As a result, courts might encounter more cases requiring them to thoroughly evaluate an agency's interpretation of statutes. This could lead to a more stringent judicial review process, where courts carefully scrutinize agency actions to ensure they align with congressional intent and do not disproportionately harm regulated parties. For example, if an FDA regulation issued years ago starts to cause unforeseen adverse effects on small businesses, these businesses now have a clearer path to challenge the regulation. Courts reviewing such cases may take a closer look at whether the FDA’s interpretation of its governing statutes was truly reasonable and in line with legislative intent.

In summary, while the Corner Post decision does not directly address the end of Chevron deference, its implications for judicial review and the timing of regulatory challenges could lead to a more rigorous examination of agency interpretations, ensuring that they are both reasonable and just.

Conclusion

The Supreme Court's ruling in Corner Post, Inc. v. Board of Governors of the Federal Reserve System marks a pivotal shift in how the statute of limitations is applied to APA claims. This landmark decision has far-reaching significance, reshaping the regulatory landscape to be more equitable and accountable. For legal and regulatory professionals, it highlights the need for careful consideration of the timing and impact of agency actions. Regulated entities must remain vigilant in monitoring potential challenges and understanding the broader implications of this ruling. Staying informed about such legal developments is crucial for navigating and influencing the evolving regulatory environment effectively.

References

[1] Regulation II (Debit Card Interchange Fees and Routing). Board of Governors of the Federal Reserve System. Available at: https://www.federalreserve.gov/paymentsystems/regii-about.htm#:~=Regulation%20II%20(Debit%20Card%20Interchange%20Fees%20and%20Routing)%20establishes%20standards,with%20respect%20to%20the%20transaction.

[2] Corner Post, Inc. v. Board of Governors of the Federal Reserve System. Available at: https://www.supremecourt.gov/opinions/23pdf/22-1008_1b82.pdf

[3] Loper Bright Enterprises v. Raimondo. Available at: https://www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf