Chief Justice John Roberts Jr. Credit: Diego M. Radzinschi / ALM

A first-time advocate had one message for the U.S. Supreme Court in Tuesday's arguments involving Puerto Rico's fiscal crisis: Take this "perfect opportunity" to overrule the high court's discredited, race-based "Insular Cases." But Chief Justice John Roberts Jr., responding to the lawyer, said he didn't see the "pertinence."

The Insular Cases, a series of decisions from the early 1900s, created a distinction between incorporated and unincorporated territories, with U.S. citizens of the former enjoying full constitutional rights and an ultimate guarantee of statehood, and citizens of the latter having limited constitutional protections and no guarantee of statehood. Decided by the same court that ruled in Plessy v. Ferguson, they are now regarded as being infused with racial bias.

"The court-made doctrine of territorial incorporation means that when my client, and even myself, return to Puerto Rico, we will have a lesser set of constitutional rights than what we have standing here today," said Jessica Mendez-Colberg, counsel to a labor union that participated in Tuesday's arguments.

In Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment, Mendez-Colberg, partner in Bufete Emmanuelli in Ponce, Puerto Rico, shared time with Theodore Olson, partner in Gibson, Dunn & Crutcher. They argued that the board created by Congress to deal with the island's multibillion-dollar debt load violated the Constitution's appointments clause because its members were "officers of the United States" who had not been nominated by the president and confirmed by the U.S. Senate. Olson represented Aurelius Investment, a creditor.

Ted Olson, of Gibson, Dunn & Crutcher. Credit: Diego M. Radzinschi / ALM

The U.S. Court of Appeals for the First Circuit agreed with their argument and noted that the Insular Cases hovered "like a dark cloud" over the appointments clause challenge. But the appellate court declined to overrule them because, it said, it could reach a decision on alternative grounds.

In the high court, Donald Verrilli Jr., partner at Munger, Tolles & Olson, and Deputy Solicitor General Jeffrey Wall countered that the appointments clause did not apply to the board members because they were territorial officers acting on behalf of Puerto Rico.

Mendez-Colberg told the justices that her opponents had been relying on the Insular Cases since the beginning of the litigation to establish that even the structural provisions of the Constitution—such as the appointments clause—do not apply to Puerto Rico.

Roberts twice said he did not see the relevance of the Insular Cases because the other parties in the case were not relying on them in the high court.

"I thought the argument was that the appointments clause does apply to Puerto Rico and the question is simply whether it's implicated on these particular facts with respect to this particular agency?" Roberts asked Mendez-Colberg. When she answered yes, Roberts added, "I guess again, I just don't see the pertinence of the Insular Cases."

Mendez-Colberg said it was "very convenient" for her opponents to rely extensively on the Insular Cases in the district court, which had no authority to overrule them, but to declare them irrelevant when the case was before the Supreme Court.

Mendez-Colberg reminded the justices that the court, in the travel-ban ruling Trump v. Hawaii from last year, disavowed Korematsu v. United States.

The Supreme Court had long been pressed to overturn Korematsu, a World War II decision approving the internment of Japanese Americans. In the travel ban decision, Roberts did reject the ruling even though, he said, the Korematsu opinion "has nothing to do with this case."

"But still it was a morally repugnant doctrine that was purely on the basis of race," she said, referring to Korematsu. "The same here with the Insular Cases. And I cannot stress enough that the parties have relied on the Insular Cases in this case. That is why it's the perfect opportunity to address them."

Five amicus briefs were filed in support of overruling the Insular Cases. The briefs were on behalf of the American Civil Liberties Union and the ACLU of Puerto Rico, scholars of constitutional law and legal history, former federal and local judges from the territories of Guam, Puerto Rico and the U.S. Virgin Islands, Equally American Legal Defense and Education Fund, and the U.S. Virgin Islands Bar Association.

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