balancing of interests

St. Peter Catholic Church was built in 1923 in Boerne, Texas. Its structure replicates the mission style of the region's earlier history. The church seats about 230 worshippers, a number too small for its growing parish. Some 40 to 60 parishioners cannot be accommodated at some Sunday masses. To meet the needs of the congregation, the Archbishop of San Antonio gave permission to the parish to plan alterations to enlarge the building. A few months later, the Boerne City Council passed an ordinance authorizing the city's Historic Landmark Commission to prepare a preservation plan with proposed historic landmarks and districts. Under the ordinance, the commission must preapprove construction affecting historic landmarks or buildings in a historic district. Soon afterwards, the Archbishop applied for a building permit so construction to enlarge the church could proceed. City authorities, relying on the ordinance and the designation of a historic district which they argued included the church, denied the application. The Archbishop brought this suit challenging the permit denial in the United States District Court for the Western District of Texas. The complaint contained multiple claims, but to this point the litigation has centered on RFRA and the question of its constitutionality. The District Court concluded that by enacting RFRA Congress exceeded the scope of its enforcement power under section 5 of the Fourteenth Amendment. The court certified its order for interlocutory appeal and the Fifth Circuit reversed, finding RFRA to be constitutional. The Supreme Court granted certiorari and now reverses. Congress enacted RFRA in direct response to the Court's decision in Employment Div., Dept. of Human Resources of Ore. v. Smith. RFRA prohibits government from substantially burdening a person's exercise of religion even if the burden results from a rule of general applicability. Unless the government can demonstrate that the burden is in furtherance of a compelling governmental interest, it must also show that the burden is the least restrictive means of furthering that interest. The Act applies to all federal and state law, and the implementation of that law, whether statutory or otherwise, and whether adopted before or after the enactment of RFRA.

In July 1976, Dun & Bradstreet, a credit reporting agency that provides subscribers with confidential financial and related information about businesses under subscription agreements prohibiting further disclosure, sent a report to five subscribers stating that Greenmoss Builders, Inc., a construction contractor, had filed a voluntary petition for bankruptcy. The report was false and grossly misrepresented respondent's assets and liabilities because the petition had actually been filed by one of Greenmoss's former employees. On the same day, Greenmoss's president learned of the report while discussing the possibility of future financing with the company's bank, immediately called Dun & Bradstreet's regional office to explain the error, requested a correction, and asked for the names of the firms that had received the report so he could assure them of the company's solvency. Dun & Bradstreet promised to investigate but refused to divulge the names. After confirming the report was inaccurate, it issued a corrective notice on or about August 3, 1976, to the five subscribers stating that a former employee had filed for bankruptcy and that Greenmoss continued in business as usual. Greenmoss expressed dissatisfaction with the notice and again requested the subscriber names, which Dun & Bradstreet again refused to provide. Greenmoss then brought a defamation action in Vermont state court alleging injury to its reputation and seeking compensatory and punitive damages. At trial, evidence established that the error had been caused by a 17-year-old high school student paid to review Vermont bankruptcy pleadings who inadvertently attributed the petition to Greenmoss, and that Dun & Bradstreet did not attempt to verify the information with the company before reporting it despite routine practice to do so. The jury awarded Greenmoss $50,000 in compensatory damages and $300,000 in punitive damages. The trial court granted Dun & Bradstreet's motion for a new trial due to dissatisfaction with its charge to the jury. The Vermont Supreme Court reversed the trial court's grant of a new trial. The United States Supreme Court granted certiorari.

Lexmark International, Inc. manufactures and sells laser printers along with the toner cartridges designed exclusively for those printers. It introduced a Prebate program that offered customers a 20-percent discount on new cartridges if they agreed to return the empty cartridges to Lexmark once used. The program terms were communicated to consumers through notices printed on the toner-cartridge boxes. Static Control Components, Inc. manufactures and sells components necessary for remanufacturers to refurbish used Lexmark toner cartridges. Static Control developed a microchip that could mimic the microchip in Lexmark Prebate cartridges, enabling remanufacturers to refurbish and resell those cartridges after replacing the original chip. In 2002 Lexmark sued Static Control alleging violations of the Copyright Act and the Digital Millennium Copyright Act. Static Control counterclaimed under section 43(a) of the Lanham Act, alleging that Lexmark misled end-users into believing they are legally bound by the Prebate terms. Static Control further alleged that Lexmark sent letters to remanufacturers falsely advising that it was illegal to sell refurbished Prebate cartridges and to use Static Control products. Static Control alleged that these statements caused it lost sales and damage to its business reputation. The district court granted Lexmark’s motion to dismiss the Lanham Act counterclaim on prudential standing grounds. The Sixth Circuit reversed after applying the reasonable-interest test. The Supreme Court granted certiorari to decide the appropriate analytical framework.