Supreme Court Ruling Opens Floodgates to Legal Challenges ‘A Tsunami of Lawsuits’

The U.S. Supreme Court has opened the floodgates to legal challenges against years-old regulations, a move that Justice Ketanji Brown Jackson warned could lead to “a tsunami of lawsuits” with “the potential to devastate the functioning of the Federal Government,” reported Politico.

The court’s 6-3 decision allows North Dakota truck stop Corner Post to sue the Federal Reserve over a 2011 rule on credit card swipe fees. In her dissent, Justice Jackson expressed grave concerns about the implications of this ruling. “Congress can make clear that lawsuits bringing facial claims against agencies are not personal attack vehicles for new entities created just for that purpose,” Jackson wrote.

Under the Administrative Procedure Act, which governs the process of adopting new regulations, there is typically a six-year statute of limitations. However, the court ruled that Corner Post could still sue, despite not opening until 2018. The court decided in the store’s favor by determining that the clock starts running when the company is first legally harmed. Jackson called on Congress to “address this absurdity and forestall the coming chaos,” stressing the potential for widespread disruption.

However, the National Retail Federation (NRF) praised the ruling. “The bottom line is that a small business harmed by a faulty regulation should not be denied its day in court based on a technicality, especially one that has been in dispute,” said NRF chief administrative officer and general counsel Stephanie Martz, who was co-counsel on the case.

This decision has significant implications for regulatory agencies and businesses alike. The ruling sets a precedent that could allow numerous entities to challenge regulations long after they have been enacted, provided they can demonstrate legal harm. While advocates for small businesses see this as a victory for fair legal recourse, critics fear it will lead to an overwhelming number of lawsuits that could cripple governmental operations.

As the legal and political communities digest the ramifications of this ruling, the balance between regulatory stability and the rights of businesses to seek redress remains a contentious issue. Justice Jackson’s dissent underscores the urgency for legislative action to clarify the scope and limitations of such lawsuits to prevent potential chaos in the regulatory landscape.