On June 21, 2018, the United States Supreme Court did what it rarely does. It overruled itself!
Stare decisis is a legal doctrine that (literally translated from Latin) means ‘to stand by things decided’. In use it means that once an issue has been decided by a court, that decision becomes “the law of the land” – thus providing stability to society.
Stability in the law is necessary for citizens to go about their daily lives knowing the parameters of their conduct. Without stability, businesses are unable to make decisions about the future. For government, stability delineates the limits of its authority. Because stability is vital to a well-functioning society, the stare decisis doctrine limits the power of courts to change the ruling they previously declared.
Like all legal doctrines stare decisis is not absolute. When courts are confronted with a prior case (precedent) that declared the law but which has subsequently created confusion or become outmoded they can declare new law. That’s what they did June 21, in South Dakota v Wayfair, Inc.
The case involved interpretation of the “Commerce Clause” of the United States Constitution (Art I, Sec 8, cl 3) – hardly a glamorous part of that great document. (It’s not even exciting to lawyers who aren’t law school professors!)
Wayfair is an internet company not based in South Dakota, nor does it have any stores or employees in that state. Like many states (including Florida) South Dakota has a sales tax which businesses are required to collect at the point of sale and remit to the state. South Dakota sued Wayfair to collect taxes on internet sales to South Dakota residents.
The Supreme Court’s precedents declared that since Wayfair had no business locations or employees in South Dakota, and none of its sales physically occurred there, Wayfair did not have to pay the sales tax. That was the ‘law of the land’ – until June 21, 2018. Now Wayfair has to pay sales tax in South Dakota. If Florida has a similar tax law, it can now collect on internet sales as well.
In a five-to-four decision the court explained that, because of the internet, its precedents no longer reflected current business models. Those precedents have created an unfair competitive disadvantage for local businesses who have to pay the sales tax.
The fault line between the majority, and the dissenters, is stare decisis. The majority decided that to fix the court’s own prior mistake required them to disregard the doctrine.
The dissent argued that even if their precedents are mistaken, the court is bound by stare decisis, and that it’s the responsibility of the legislative branch to fix the unfairness by statute — as the Commerce clause authorizes Congress to do. Since Congress can, but hasn’t done so since 1992 (when the precedent was decided), the citizens who elect Congress must like it that way.
A majority of the Supreme Court decided they had to fix what they call a “serious inequity in the law” (which the Court created nearly 30 years ago) because Congress (which could have fixed it) didn’t do so! For the majority to fix it they deviated from one of our most fundamental legal principles.
That the majority was composed of mostly ‘conservatives’ plus ‘liberal’ Justice Ginsburg as the fifth vote, while the dissent was mostly ‘liberals’ along with ‘conservative’ Chief Justice Roberts, shows how meaningless those labels are.
For us consumers, it means we pay more taxes.