SCOTUS Corner Post Inc. v. Board of Governors Impacts Businesses

On October 16, 2023, we reported on the decision of the Supreme Court of the United States to grant certiorari review in Corner Post, Inc. v. Board of Governorsa case of significant importance to the business community.(1) The Supreme Court heard oral arguments on February 20, 2024, and the Court issued its ruling on July 1, 2024.

In a 6-3 decision, the Court reversed the Eighth Circuit and sided with Corner Post Inc. In an opinion by Justice Barrett, the Court held that: “An APA claim does not accrue for purposes of § 2401(a)’s 6-year statute of limitations until the plaintiff is injured by a final agency action.” The Court explained that a right of action “accrues” when a plaintiff has a “complete and present cause of action,” which occurs only after the plaintiff is injured and has the right to “sue and obtain relief.” The Court explained that the traditional rule is that the statute of limitations begins to run at the time the plaintiff has the right to sue for relief. The Court further explained that this traditional rule “establishes a strong presumption of background,” and nothing in the legislative history or text of Section 2401 suggests that Congress intended to depart from the traditional rule. In this way, Section 2401(a) reflects the traditional plaintiff-centered rule, under which the limitations period begins to run only when a plaintiff has a complete and present cause of action, i.e., an injury and a right to sue and seek relief.

Background

The case involved three plaintiffs, two business associations and Corner Post Inc., who sued the Board of Governors of the Federal Reserve over a provision of the APA that set debit card processing fees at 21 cents per transaction.(2) The case attracted attention when the district court held that the plaintiffs’ claims were barred by the statute of limitations under 28 U.S.C. § 2401(a).(3) Section 2401(a) provides that “any civil action brought against the United States is barred unless the action is brought within six years from the date the action is brought.” the right to take action is granted in the first instance.”(4) The parties’ dispute centered on when a “right to bring a claim” “first arises” under the statute. Plaintiffs appealed that decision to the Eighth Circuit.(5)

On appeal, the plaintiffs argued that a right to bring a claim first arises when the plaintiff suffers a legal wrong, and therefore the statute of limitations begins to run when the plaintiff becomes the subject of and is harmed by the agency rule. Thus, a company has six years from the time it first becomes the subject of a government regulation to bring a lawsuit challenging the regulation.

In contrast, the government argued that the right of action first arises when the agency rule is published. Under this theory, a business can challenge a government regulation only within six years of its publication. After six years, the rule cannot be challenged under the APA by an entity or individual.

The Eighth Circuit ultimately sided with the Government, holding that: “(W)hen a plaintiff challenges a final agency action, the right to challenge arises and the statute of limitations begins to run on the date the regulation is published.”(6) Corner Post Inc. appealed the Eighth Circuit’s decision, and the Supreme Court granted certiorari review. Before the Court, the Government raised several policy arguments, focusing primarily on the alleged burdens that would be imposed on federal agencies and courts if businesses were allowed to challenge federal regulations in perpetuity. The Government went so far as to claim that the Court’s decision would “destroy the functioning of the Federal Government.” The Court found the Government’s concerns to be overstated.

Practical implications

Now, both individuals and businesses can challenge unlawful government regulations regardless of when they were enacted—as long as they file a lawsuit within six years of the time they were first harmed by the regulation. Thus, businesses that were in business when the unlawful regulation was enacted and are subject to and harmed by the regulation must file a lawsuit within six years of the regulation’s publication. However, businesses like Corner Post Inc. that were not in business when the regulation was enacted are no longer barred from challenging the regulation simply because the regulation was enacted more than six years earlier.

(1) The U.S. Supreme Court agrees to hear a case with potentially major implications for the business community; see also Predicting the Impact of the Supreme Court’s Debit Card Ruling

(2) 2 See Debit Card Interchange Fees and Routing, 76 FR 43394-01 (July 20, 2011).

(3) Corner Post, Inc. against Bd. of Governors of Fed. Reserve Sys.1:21-CV-00095, 2022 WL 909317, at *10 (DND March 11, 2022).

(4) 28 U.S.C. § 2401(a).

(5) N. Dakota Retail Ass’n v. Bd. of Governors of the Fed. Reserve Sys.55 F.4th 634 (8th Cir. 2022).

(6) ID. at number 641.