The Supreme Court Does Care About Contracts! Well, Sometimes . . .

I have posted about a series of First Amendment cases that implicated contractual obligations in which the U.S. Supreme Court paid little or no attention to those contractual obligations.  Here is the most recent, and links to two other blog posts are imbedded there.  Last week, the Court issued its decision in Cummings v. Premier Rehab Keller, P.L.L.C., in which no contracts rights were directly implicated.  Nonetheless contracts law played a leading role in the opinion of Chief Justice Roberts (right), who wrote for the majority, as it did in Justice Breyer’s opinion on behalf of the three dissenting Justices.

Cummings, who is deaf and legally blind, sought physical therapy at Premier Rehab Keller (PRK).  Cummings requested an American Sign Language interpreter, which PRK refused to provide.  Cummings then got her therapy elsewhere and sued PRK for discrimination based on a disability in violation of the Rehabilitation Act of 1973.   The issue was whether Cummings could recover damages for emotional distress. 

The Chief Justice begins his opinion by noting that, when Congress enacts legislation pursuant to the spending power, it gives rise to something “much in the nature of a contract: in return for federal funds, the [recipients] agree to comply with federally imposed conditions.”  From this language, the Chief Justice reasons, following some prior case law, that recipients of federal funding are on notice that they might be liable for breaches, but that liability should be limited to the relief a plaintiff might recover in a claim for breach of contract.  In a prior case, the court concluded that punitive damages were not available; here, Chief Justice Roberts held, damages for emotional distress are not recoverable under Spending Clause anti-discrimination statutes.

The majority was unpersuaded by Cummings’ argument, echoed in Justice Breyer’s dissent, that the common law of contracts damages does allow for an award of emotional distress damages in cases of especially egregious breaches likely to give rise to such harms (citing R.2d § 353).  The test, says the majority, is whether such damages are available “generally” under contracts law, not whether they are available in special circumstances.  Moreover, Chief Justice Roberts notes, R.2d § 353 has not been adopted in the majority of U.S. jurisdictions.

The Chief thinks it unfair to expose recipients of federal funding to risks of liability to which they did not knowingly consent. 

The approach offered by Cummings, by contrast, pushes the notion of “offer and acceptance,” [citation omitted] past its breaking point. It is one thing to say that funding recipients will know the basic, general rules. It is quite another to assume that they will know the contours of every contract doctrine, no matter how idiosyncratic or exceptional. Yet that is the sort of “clear notice” that Cummings necessarily suggests funding recipients would have regarding the availability of emotional distress damages when “engaged in the process of deciding whether” to accept federal funds.  [citation omitted]. Such a diluted conception of knowledge has no place in our Spending Clause jurisprudence. 

That may be so as a matter of Spending Clause jurisprudence.  I do not think it is an accurate representation of contracts law, which is filled with traps for the unwary.  The Court, especially in the context of its robust enforcement of mandatory arbitration and class action waivers, has been very happy to push notions of “offer and acceptance” well past the point where ordinary consumers can be realistically described as having taken on contractual obligations knowingly.  

Justices Kavanaugh (left) and Gorsuch concurred, rejected the contracts law analogy.  Rather, they reiterated the Court’s long-standing suspicion of implied causes of action.  They would have preferred to decide this case on the basis of the Court’s hesitancy to recognize new implied causes of action and to restrict the remedies for those implied causes of action already recognized to those that Congress specifically contemplated.  And perhaps their approach represents a doctrinally more satisfying way to reach the same result.  The analogy to contracts law seems to me quite strained, and little would be lost if the Court were to abandon it.  The Court’s reluctance to recognize implied causes of action and to fashion remedies for unlawful conduct will have to be a subject for another day — or a different blog.