The U.S. Supreme Court is the final arbiter of the law. While Congress and the President can take actions, it’s up to the Court to decide whether they are constitutional. A previous blog covered cases of interest to small businesses that were decided earlier in the Court’s 2024-2025 term. Here are some from later in the term, which ended June 30, 2025.
Businesses can challenge government actions
Businesses face a barrage of regulations from federal, state, and local governments. These regulations make it challenging to conduct business; they result in added costs for compliance and often considerable time delays. Can businesses fight city hall?
Case: The Environmental Protection Agency (EPA) approved California regulations that required automakers to manufacture more electric vehicles and fewer gasoline-powered vehicles with a goal of decreasing emissions. Several producers of fuels such as gasoline and ethanol sued EPA, arguing that EPA lacked authority to approve the California regulations because they target global climate change rather than local California air quality problems as required by the Clean Air Act. These fuel producers were indirectly regulated. The question before the Supreme Court concerned “standing,” which is the right to bring a suit. Did these indirectly impacted parties have the right to challenge the regulations?
Decision: In a 7-2 decision, the Court said the fuel producers had standing to proceed. It rejected lower court decisions requiring increased standards for indirectly regulated parties trying to obtain judicial relief. The NFIB, which filed an amicus brief on behalf of the fuel producers, said “Small businesses have the right to challenge overreach by government agencies and seek relief from harmful regulatory actions.”
Timing is everything when challenging an IRS levy
If the IRS imposes a levy because a taxpayer has an outstanding tax bill, a case can be brought in Tax Court to question that matter. But what happens when the liability is paid?
Case: A married couple filed separately, and the IRS applied estimated tax payments toward the husband’s balance due. Later, the wife reported additional income, causing tax liability for her. She wanted the estimated tax payments applied toward this liability, but the IRS had already used it up for the husband’s benefit. The IRS then put a levy on her property, and she appealed this to the Tax Court (those estimated tax payments should have been used for her benefit). While the case was pending, she paid off the liability. The IRS then said the case was moot; because she had no outstanding tax, the Tax Court couldn’t hear the case.
Decision: In an 8-1 decision, the Court said the IRS was correct. Once an IRS Appeals Officer determined the levy was property, she had the right to go to Tax Court. But once there was no outstanding liability, the levy disappeared and jurisdiction in Tax Court also disappeared. The dissent noted that this decision leaves the wife with “no meaningful way to pursue her argument that the IRS erred or to recoup the overpayments she believes the IRS wrongly retained.” The lesson from this decision for a small business owner with an IRS levy is to decide whether to challenge the matter in Tax Court or just pay off the tax bill and ignore possible relief.
Former employees can’t sue under ADA
The Americans with Disabilities Act (ADA) provides certain legal protections for employees with disabilities. They cannot be discriminated against, and must be given reasonable accommodations and other benefits. But are retirees covered under this law?
Case: A firefighter who retired because of a disability received employer-provided health insurance for a certain period. Her city provided health insurance up to age 65 for retirees with 25 years of service, but only 24 months of coverage for those who retired earlier due to disability. When her coverage ran out, she sued for alleged discrimination under the ADA. She said that the different health-insurance benefits to those who retire with 25 years of service and those who retire due to disability (like her) was discriminatory.
Decision: The Court said that retired employees are not protected by the ADA for discrimination. To claim the protection of the ADA, a person must prove that he or she held or desired a job, and could perform its essential functions with or without reasonable accommodation, at the time of an employer’s alleged act of disability-based discrimination. This decision gives employers more clarity in setting retiree benefits. But changes in benefits should be reviewed by an employment law attorney to ensure they do not violate the law.
RICO relief can cover economic harms resulting from personal injuries
The Racketeer Influenced and Corrupt Organizations Act–RICO—allows a party to recover treble damages for harm to business or property. Are economic harms resulting from personal injuries the types of harms recoverable under RICO?
Case: A commercial trucker with hip and shoulder injuries from a car accident bought a product to help with pain. The product was advertised as having 0% THC. A random drug test on him revealed otherwise, and he lost his job and benefits. He sued for false advertising under RICO and various state laws. A lower court said he lacked standing to pursue the case because he sued for loss of earnings (a “derivative antecedent personal injury).
Decision: The Court said plaintiff may seek treble damages for business or property loss even if the loss resulted from a personal injury. This decision has the effect of expanding the potential liability of marijuana and CBD businesses (e.g., dispensaries) and could ensnare employers that fire employees for failed drug tests. Just saying….
Final thought
The Court’s next term begins October 1, 2025. The Court has already agreed to hear a number of cases, including one case involving copyright infringement on the internet. Let’s see what happens.
