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Mayer Brown's Supreme Court and Appellate Practice Group distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community. We also email the Docket Report to our subscribed members and if you don't already subscribe to the Docket Report and would like to, please click here.

October Term 2007 - No. 6 - December 7, 2007

The Supreme Court granted certiorari today in two cases of interest to the business community:

Americans with Disabilities Act -- Definition of "Reasonable Accommodation." The Americans with Disabilities Act (ADA) requires covered employers to provide "reasonable accommodations" to employees who become disabled. The ADA defines reasonable accommodation to include, among other things, "reassignment to a vacant position." 42 U.S.C. 12111(9)(B). The Supreme Court granted certiorari in Huber v. Wal-Mart Stores, Inc., No. 07-480, to decide whether the ADA requires an employer to reassign a disabled employee to an equivalent position if one is vacant and the employee is qualified to fill it, or whether instead the ADA merely requires an employer to give such an employee the opportunity to compete for such a position.

This case is of great importance to all employers covered by the ADA. If the Supreme Court reverses, all standardized, non-discriminatory hiring policies requiring that the most qualified candidate be hired will be vulnerable to challenge under the ADA.

The plaintiff in Huber, Pam Huber, sustained an injury while working for Wal-Mart that rendered her unable to perform the essential functions of her job as a grocery order filler. Wal-Mart permitted Huber to apply for an equivalent vacant position that she could perform, but ultimately hired another candidate under the company's policy of hiring the most qualified applicant for a given position. Wal-Mart then placed Huber in a janitorial position in a different facility that paid less than half her previous hourly wage. Huber sued under the ADA, arguing that the Act entitled her to be assigned to the equivalent vacant position as a "reasonable accommodation." The district court held that it did, but the U.S. Court of Appeals for the Eighth Circuit reversed, concluding that the ADA is "not an affirmative action statute" and thus does not require an employer to turn away a more qualified applicant. Wal-Mart, the Court of Appeals held, satisfied its obligation to provide a reasonable accommodation by placing Huber in the janitorial position.

The Eighth Circuit's decision deepened an existing split among the circuits. While the Tenth and D.C. Circuits have held that a qualified disabled employee must be reassigned to a vacant position, the Seventh and now Eighth Circuits have held that the employee need only be provided the opportunity to compete for the position.
Amicus briefs in support of the petitioner will be due on January 28, 2008; amicus briefs in support of the respondent will be due on February 27, 2008. Any questions about this case should be directed to Andrew Tauber (202-263-3324) in our Washington, D.C. office.

Bankruptcy Code -- Tax Exemption for Pre-Confirmation Asset Transfers. Section 1146(a) of the Bankruptcy Code exempts from stamp or other similar taxes any asset transfer "under a plan confirmed under" Chapter 11 of the Code. 11 U.S.C. 1146(a). The Supreme Court today granted certiorari in State of Florida Department of Revenue v. Piccadilly Cafeterias, Inc., No. 07-312, to resolve a circuit split over whether this provision exempts from such taxes asset transfers that occur prior to the confirmation of a plan.

As indicated by the amicus support Florida received from other jurisdictions at the petition stage, this case is significant for all taxpayers in bankruptcy proceedings seeking to transfer assets prior to the confirmation of a reorganization plan under Chapter 11.

During Piccadilly Cafeterias' Chapter 11 proceedings, but before confirmation of its reorganization plan, the bankruptcy court approved the sale of Piccadilly's assets to a third party and held that the sale was exempted from stamp taxes pursuant to Section 1146(a) (then codified at Section 1146(c)). The Florida Department of Revenue filed an adversary action seeking a declaration that the assets were not exempt under section 1146(a) because the sale took place before the confirmation of the plan. The bankruptcy court and the district court both held that the sale was a transfer "under" the confirmed plan and that the assets were therefore tax-exempt. On appeal, the Eleventh Circuit agreed, declining to follow the Third and Fourth Circuits which have held that Section 1146(a) exempts only transfers that occur after a plan has been confirmed. According to the Eleventh Circuit, Section 1146(a)'s tax exemptions may apply to pre-confirmation transfers that are necessary to the consummation of a confirmed plan if there is some nexus between the pre-confirmation transfer and the confirmed plan.

Amicus briefs in support of the petitioner will be due on January 28, 2008; amicus briefs in support of the respondent will be due on February 27, 2008. Any questions about this case should be directed to Andrew Tauber (202-263-3324) in our Washington, D.C. office.

Mayer Brown Supreme Court Docket Reports provide information and comments on legal issues and developments of interest to our clients and friends. They are not a comprehensive treatment of the subject matter covered and are not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed.

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