Opinions: Bitcoin, Officers, and Appropriate Notice

In addition to Wayfair, (discussed here) the Supreme Court issued a second tax opinion on the same day in Wisconsin Central, Ltd. v. United States. Although the case is about interpreting a federal statute, the Railroad Retirement Tax Act of 1937 (RRTA), Wisconsin Central made headlines in the cryptocurrency community because Justice Breyer used the term “bitcoin” in his opinion—the first time the term appeared in a Supreme Court opinion.

The central issue in Wisconsin Central is whether transferable stock from a railroad company to its employee if a form of taxable “compensation,” which is defined as “any form of money remuneration paid to an individual for services rendered as an employee,” under the RRTA. Writing the opinion for the 5-4 decision, Justice Gorsuch explained that stock is not a taxable form of compensation, noting that “few of us buy groceries or pay rent or value goods and services in terms of stock.” Although the majority opinion conceded—to the dissent’s point—that technology nowadays allows one to trade stock easily and quickly, and collect money on trades to be used in exchange for goods or services as a “medium of exchange,” the Court concluded that an actual stock, defined in 1937 or the present, is not defined by Congress or by the courts as a form of money.

In dissent, Justice Breyer argued that the phrase “any form of money remuneration paid to an individual for services rendered” includes stock awarded to railroad employees because it is a form of compensation for their labor. He referred to Bitcoin to analogize that, like compensation in the form of stock options, and companies may one day pay employees via a cryptocurrency. Although Wisconsin Central only references Bitcoin in passing, cryptocurrency enthusiasts rejoiced in the modicum of legitimacy awarded to what the Securities and Exchange Commission calls a “commodity” and not a “currency.” Time will tell whether the Court will hear legal challenges to the validity, or lack thereof, of cryptocurrencies.

Also on Thursday, June 21, the Court released opinions in two additional cases.  Lucia v. Securities and Exchange Commission addressed whether an administrative law judge (ALJ) for the  Securities and Exchange Commission (SEC) was “an officer of the United States, and therefore could only be appointed by the President or “Heads of Departments” pursuant to the Constitution. Initially, the SEC argued that the ALJs are mere employees, but the federal government switched positions in its response to Lucia’s petition to the Supreme Court.

The Court, in an opinion by Justice Kagan, joined by the Chief Justice and Justices Kennedy, Thomas, Alito, and Gorsuch, agreed with the federal government’s new position. As discussed in the New York Times, the Court accordingly held that SEC ALJs are officers of the United States and therefore subject to the Constitution’s Appointments Clause. The Washington Post discusses the cases and compares the rationale underlying the various opinions written in Lucia. In discussing the narrow nature of the opinion, the LA Times says the Court “brushed aside” a request from the current administration to declare that the president has the power to fire any top federal official. Meanwhile, CNBC describes the opinion as a victory for the president because of the government’s decision to change its opinion to side with Lucia.

In its opinion in Pereira v. Sessions, the Court addressed whether notices to appear for immigration removal hearings must state the place and time of the hearing in order for the immigrant to be eligible for removal cancellation under 8 U.S.C. § 1229b(b)(1), which applies as long as the individual has been in the U.S. for 10 years. Once a notice is issued however, the clock stops counting. The Court ruled that if the notice does not specify the time and place of the hearing, it is not a “notice to appear” and does not trigger the statute’s “stop-time” rule. Courthouse News Service notes that Justice Sonia Sotomayor, writing for the majority, stated the date and time of the removal hearing is “critical” to the notice. She further stated that the time and place must be specified in order for §1229(b)(1) to have any meaning, and it helps prevent the government from sending out ambiguous notices. Justice Alito was the lone dissenter in this case. He was concerned with the government’s ability to accurately include the date and time on every notice it sends. Check out The Washington Examiner, Newsweek, and WBUR News  for more information on this ruling.

ISCOTUS Editorial Coordinator Anna Jirschele, Chicago-Kent Class of 2018, contributed to this post, which was overseen by ISCOTUS Co-Director and Chicago-Kent faculty member Carolyn Shapiro.

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