Today the Court granted certiorari in two cases of interest to the business community. Amicus briefs in support of the petitioners are due on July 23, 1998, and amicus briefs in support of the respondents are due on August 24 (because August 22 is a Saturday). Any questions about these cases should be directed to Evan Tager (202-778-0618) or Alan Untereiner (202-778-0656) in our Washington office.

1.  Title VI of the Civil Rights Act — Private Right of Action. Title VI of the Civil Rights Act of 1964 provides that no person shall "be subjected to discrimination under any program or activity receiving Federal financial assistance." 42 U.S.C. § 2000d et seq. Section 602 of Title VI authorizes each federal agency that disburses financial assistance to issue regulations to further this anti-discrimination goal. 42 U.S.C. § 2000d-1. Pursuant to that authority, the United States Environmental Protection Agency (EPA) prohibits recipients of federal funding from using "criteria or methods * * * which have the effect of subjecting individuals to discrimination * * *." 40 C.F.R. § 7.35(b). The Supreme Court granted certiorari in Seif v. Chester Residents Concerned for Quality Living, No. 91-1620, to decide whether there is a private right of action under such "discriminatory effect" regulations.

The City of Chester, located in Delaware County, Pennsylvania, has approximately 40,000 residents, of whom 65% are black, while the county has approximately 500,000 residents, of whom 6.2% are black. Under the Solid Waste Management Act, Pa. Stat. Ann. tit. 35, § 6018.101 et seq., the Pennsylvania Department of Environmental Protection (DEP) has authority to issue permits to operate waste processing facilities. Since 1987, DEP has issued five waste facility permits for sites in the City of Chester that have a total annual waste capacity of 2.1 million tons. During that same time, for the rest of Delaware County DEP issued permits for two sites with a total annual capacity of 1,400 tons.

After DEP issued a permit to Soil Remediation Services, Inc. to operate a soil treatment site in the City of Chester, the citizen's group Chester Residents Concerned for Quality Living (CRQL) filed an action alleging that DEP violated the EPA's "discriminatory effect" regulations. The district court dismissed the claim, holding that no private right of action exists under which CRQL could enforce the EPA's "discriminatory effect" regulations. The Third Circuit reversed. 132 F.3d 925 (1997). Applying Cort v. Ash, 422 U.S. 66 (1975), the court found that Title VI's legislative history, structure, and purpose supported inferring a private right of action. With far less analysis, nine other circuits have also allowed private litigants to enforce "discriminatory effect" regulations.

This case has already attracted a great deal of amicus interest. The United States, along with the Trial Lawyers for Public Justice and the Southern Poverty Law Center, filed briefs in the lower courts supporting CRQL. The Washington Legal Foundation filed a brief in support of petitioners, urging the Court to consider whether "discriminatory effect" regulations are consistent with the Equal Protection Clause of the U.S. Constitution.

The recognition of a private right of action under Title VI could unsettle the expectations of businesses that have dealings with federally funded state and local agencies. Accordingly, such businesses should have a significant interest in the outcome of this case.

2.  Emergency Medical Treatment and Active Labor Act — Improper Motive Requirement. Under the Emergency Medical Treatment and Active Labor Act (EMTALA), 42 U.S.C. § 1395dd, hospitals must provide to any person who arrives with an emergency medical condition such medical examination and treatment as are necessary to stabilize the condition, or must transfer the patient to another medical facility in accordance with the procedures set forth in the statute. The Supreme Court granted certiorari in Roberts v. Galen of Virginia, Inc., No. 97-53, to decide whether a plaintiff suing a hospital under EMTALA must prove that the hospital acted with an improper motive.

Wanda Johnson was treated at a hospital operated by Galen of Virginia (Galen) for injuries sustained when she was hit by a truck. The Galen staff treated her injuries for two months and then arranged for her transfer to a nursing home. At the time of the transfer, Johnson was suffering from a urinary tract infection for which she had begun treatment with antibiotics. Johnson's guardian, Jane Roberts, subsequently brought suit under EMTALA, alleging that Johnson was transferred before her condition had been stabilized and in violation of Galen's discharge protocols. Roberts also claimed that Galen's administrators expedited Johnson's discharge because Johnson was unable to pay for continued care. Galen disputed the claim, contending that the physician who authorized Johnson's discharge had no knowledge of her financial status.

The district court granted summary judgment to Galen. Under the Sixth Circuit's decision in Cleland v. Bronson Health Care Group, 917 F.2d 266 (1990), the district court explained, plaintiffs suing under EMTALA are required to prove that the discharging physician acted because of an "improper motive" (such as the patient's inability to pay for medical care). Roberts, however, had failed to come forward with any evidence that the hospital employee who discharged Johnson had acted with an improper motive.

The Sixth Circuit affirmed. 111 F.3d 405 (1997). Noting that the EMTALA was not enacted to supplant state law malpractice actions, the Sixth Circuit held that to withstand summary judgment a plaintiff must come forward with something beyond a hospital's breach of the applicable standard of care. Id. at 409. The Sixth Circuit also rejected the proposition that EMTALA liability may attach upon mere proof that the plaintiff received disparate medical treatment. Ibid. The court reasoned that a disparate treatment standard would require hospitals to argue that they routinely subject all patients to the same (allegedly negligent) treatment that the plaintiff received. Id. at 409-410. To avoid that result, and to preclude reliance upon EMTALA as a federal remedy for malpractice, the Sixth Circuit held that a claim under EMTALA requires proof that a patient's discharge was caused by an improper motive. Id. at 411.

The Sixth Circuit's "improper motive" requirement conflicts with decisions of the First, Fourth, Eighth, and District of Columbia Circuits. See Correa v. Hospital San Francisco, 69 F.3d 1184 (1st Cir. 1995), cert. denied, 116 S. Ct. 1423 (1996); Power v. Arlington Hosp. Ass'n, 42 F.3d 851 (4th Cir. 1994); Summers v. Baptist Med. Ctr. Arkadelphia, 91 F.3d 1132 (8th Cir. 1996); Gatewood v. Washington Health Care Corp., 933 F.2d 1037 (D.C. Cir. 1991).

The case should be of interest to all hospitals that offer emergency medical evaluation and treatment.

* * * * *

The Court today also handed a major victory to companies threatened with environmental liability for the acts of subsidiary corporations. In United States v. Bestfoods (f/k/a CPC International, Inc.), No. 97-454, the Court unanimously rejected the government's contention - which had succeeded in the First, Second, Third, and Fourth Circuits, see slip op. 7 n.8, and was pressed vigorously in the Supreme Court - that a parent corporation may be held indirectly liable under CERCLA for the operations of its subsidiary if it exercises some degree of "control" over that subsidiary short of that necessary to permit piercing the corporate veil. The Supreme Court wrote: "[t]he Court of Appeals was * * * correct in holding that when (but only when) the corporate veil may be pierced, * * * a parent corporation [may] be charged with derivative CERCLA liability for its subsidiary's actions." Slip op. 10 (footnotes omitted). Although the Court remanded the case for a determination whether, on its particular facts, the parent was directly liable as an operator, the Court's rejection of the government's broad legal position was square and unanimous.

Mayer, Brown & Platt briefed and argued this case for respondent Bestfoods.

Copyright 1998 Mayer, Brown & Platt. This Mayer, Brown & Platt publication provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.