When Fidelity First Home Mortgage Company was found liable by a jury under the doctrine of respondeat superior when one of its loan officers engaged in a fraudulent foreclosure rescue scheme, it sued the loan officer seeking indemnification and contribution. The loan officer claimed that Fidelity’s claims were discharged in his prior no-asset Chapter 7 bankruptcy, and that Fidelity’s negligence in supervising him precluded its claims. The circuit court granted summary judgment to Fidelity, and the Court of Special Appeals, in a unanimous panel opinion by Judge Graeff, affirmed. First, noting that the loan officer had failed to list Fidelity as a creditor in his bankruptcy, the Court held that the circuit court therefore had concurrent jurisdiction to determine whether Fidelity’s debt was discharged. It then held that since the loan officer’s conduct involved fraud, Fidelity’s claim was nondischargeable under the fraud exception even though it was seeking indemnification and contribution, as opposed to claiming that it had been defrauded. Finally, the Court held that there was no finding at trial that Fidelity engaged in “active, independent negligence” that would bar it from seeking indemnification against the loan officer. The opinion in Fox v. Fidelity First Home Mortgage Company, issued on July 1, 2015, is here.
The U.S. Supreme Court issued the final three opinions of the 2014 term on June 29, 2015, and is now adjourned until the first Monday of October.
The death penalty case of Glossip v. Gross concerned whether an inmate slated to die by lethal injection could stay his impending demise in order to challenge whether midazolam, the drug used to render the felon unconscious before the lethal drugs are administered, worked. The Court, in a 5-4 decision authored by Justice Alito, held that the inmate failed to prove at this preliminary stage that the drug created a demonstrated and substantial risk of severe pain compared to known and available alternatives as required under the plurality opinion of Baze v. Rees, 553 U.S. 35 (2008), and thus he was not entitled to a stay. The majority noted that those alternative drugs, sodium thiopental and pentobarbital, were unavailable, and that no other alternatives were proposed, and placed significant weight on the factual findings of the district court as to midazolam’s effectiveness. Justice Sotomayor authored the principal dissent, joined by Justices Ginsburg, Breyer, and Kagan, arguing that the district court’s factual findings were erroneous, attacking the opinions of the experts relied upon by the State, and arguing that the inmate should not have to present an alternative in order to make an Eighth Amendment claim. Justice Breyer, joined by Justice Ginsburg, filed a lengthy dissent arguing his opinion that the death penalty should be barred under the Eighth Amendment entirely. Justice Scalia and Justice Thomas each filed concurrences, joined by the other, directly addressing Justice Breyer’s abolitionist argument, arguing that whether the death penalty was cruel and unusual was a question best left to the people and juries, not the Court. A link to the opinion is here.
In an effort to combat gerrymandering, the voters of Arizona approved an amendment to that State’s Constitution vesting redistricting authority in an independent commission. Arizona’s legislature challenged that shift in power, claiming that it violated the Elections Clause of the U.S. Constitution that expressly vested such authority in the legislature. The district court held that the legislature had standing to bring suit, but ruled against it on the merits. The Court, in another 5-4 opinion by Justice Ginsburg, upheld the district court’s ruling on both issues. First, since the amendment “completely nullified” any vote by the legislature to redraw districts, the legislature had suffered a concrete and particularized injury that gave it standing. Second, the majority held that the dominant purpose of the Elections Clause was to give the power of redistricting to the people, which was validly exercised through the amendment. The Chief Justice, joined by Justices Scalia, Thomas, and Alito, dissented, arguing that it was impossible for a clause that grants power to "the Legislature" to simultaneously permit the legislature to be divested of that power by referendum. Justice Scalia, joined by Justice Thomas, argued that the case concerned a political question that was not a "case or controversy" for the Court to hear, and should have been dismissed for want of jurisdiction, but he joined in the Chief Justice’s dissent because the majority’s opinion was "so outrageously wrong." Justice Thomas, joined by Justice Scalia, entered a separate dissent noting how the majority’s implied support for federalism and State policies contradicted with recent decisions, like Obergefell, that struck down State action. A link to the opinion in Arizona State Legislature v. Arizona Independent Redistricting Commission is here.
The final opinion of the term struck down the EPA’s interpretation of the portion of the Clean Air Act authorizing it to regulate power plants only if such regulation "is appropriate and necessary" where the EPA refused to consider the costs of the regulation. Justice Scalia, for the 5-4 majority, held in Michigan v. EPA that the EPA’s decision not to consider whether the costs of its regulations (nearly $10 billion a year) outweighed the benefits ($4-6 million per year), was not "reasoned decisionmaking" that could be upheld under the Act, and rejected the EPA’s argument that costs were irrelevant to its analysis. Justice Thomas filed a separate concurrence arguing that, in his view, Chevron deference to the interpretations of agencies has gone too far, and has allowed many instances of unconstitutional action. Justice Kagan, joined by Justices Ginsburg, Breyer, and Sotomayor, dissented, agreeing that the EPA was obligated to consider the costs of a regulation, but then arguing that the EPA was allowed to start the regulatory process based on harms alone, and could consider costs further down the regulatory assembly line. A link to the opinion is here.
The D.C. Circuit, U.S. Court of Appeals, released two opinions on Friday, June 26, 2015, regarding the court’s jurisdiction in certain partnership cases dealing with tax shelters. In Petaluma FX Partners, LLC v. Comm’r, No. 12-1364 (D.C. Cir. 2015) and Tigers Eye Trading, LLC v. Comm’r, No. 12-1148 (D.C. Cir. 2015) the appellate court applied the recent decision of the Supreme Court in U.S. v. Woods, 134 S.Ct. 557 (2013), which made it clear that a court adjudicating partnership matters has jurisdiction to apply "any penalty that could result from an adjustment to a partnership item." 134 S.Ct. at 564. The D.C. Circuit held that the Tax Court has jurisdiction regarding the imposition of the gross valuation misstatement penalty on Partners who invested in a Son-of-BOSS tax shelter partnership, but that the Tax Court does not have jurisdiction to determine the Partners’ outside adjusted bases in their partnership interests. This was because the court was reviewing matters involving only the partnership in both Petaluma FX Partners and Tigers Eye Trading. The Son of BOSS (Bond Option Sales Strategy) investment strategy was found to be a tax shelter without substance in previous litigation, which invalidated losses used to offset the gross income of the partners.
The U.S. Supreme Court issued two more opinions on June 26, 2015, leaving just three decisions for the Court to issue on Monday, June 29.
Coincidentally timed on the anniversary of the decisions in Lawrence v. Texas and U.S. v. Windsor, two prior gay-rights cases, Justice Kennedy announced the majority opinion in Obergefell v. Hodges, in which the five-person majority held that the Fourteenth Amendment required requires all states to license marriages between same-sex couples, and to recognize same-sex marriages of other states. The majority opinion found that "the nature of injustice is that we may not always see it in our own times. The generations that wrote and ratified the Bill of Rights and the Fourteenth Amendment did not presume to know the extent of freedom in all of its dimensions, and so they entrusted to future generations a charter protecting the right of all persons to enjoy liberty as we learn its meaning." The Court then analyzed the principles the Court had used to define the right to marry, and found that they applied "with equal force to same-sex couples." While recognizing the ongoing democratic debate regarding same-sex marriage, the majority determined that enforcement of the fundamental right of marriage was needed now to prevent harm to same-sex couples. Chief Justice Roberts, joined by Justices Scalia and Thomas, filed a dissent, arguing that while "many people will rejoice at this decision, and I begrudge none of their celebration," the majority’s holding "is an act of will, not legal judgment," that "will for many cast a cloud over same-sex marriage, making a dramatic social change that much more difficult to accept." In his view, the "Constitution does not enact any one theory of marriage," and the states should have been left to decide the issue. Justice Scalia, joined by Justice Thomas, penned a separate dissent arguing that the majority’s pronouncement was a "threat to American democracy," as it permitted "a majority of the nine lawyers on the Supreme Court," in a "naked judicial claim to legislative—indeed, super-legislative—power," to shut down the public debate over same-sex marriage that was "American democracy at its best." Justice Thomas, joined by Justice Scalia, expressed his concern that the Due Process Clause be used as "a font of substantive rights" as the Court’s whims saw fit, and arguing that there was no cognizable liberty interest in forcing the states to recognize same-sex marriage. Justice Alito, joined by Justices Scalia and Thomas, filed the final dissent, arguing that since the Due Process Clause only protects fundamental rights deeply rooted in the nation’s history, the majority’s holding is based on present-day belief, not evidence, worrying that "if a bare majority of Justices can invent a new right and impose that right on the rest of the country, the only real limit on what future majorities will be able to do is their own sense of what those with political power and cultural influence are willing to tolerate." A link to the opinion is here.
In another Due Process Clause case, this time under the Fifth Amendment, the Court held 8-1 in Johnson v. United States that the Armed Career Criminal Act’s residual clause that permitted a prison term to be lengthened for any felony the "involves conduct that presents a serious potential risk of physical injury to another" violated that clause because it was unconstitutionally vague. Here, Johnson was given 15 additional years of jail when the district court determined that his unlawful possession of a short-barreled shotgun qualified under that clause. Justice Scalia’s majority opinion held that the clause gave no clear way of assessing risk, nor a way to gauge how much risk was necessary for the conduct to qualify, and thus it invited arbitrary enforcement that did not give people fair notice of what was being punished. Accordingly, Johnson’s sentence was vacated and remanded. Justice Kennedy, concurring in the judgment, argued that the statute was not unconstitutionally vague under a categorical or record-based approach, but agreed that Johnson’s acts did not qualify for the enhancement. Justice Thomas, also concurring in the judgment, argued that there was no need to resolve a constitutional question—and was "wary" of holding the residual clause as vague—because mere possession of the shotgun plainly did not qualify as a violent felony. Justice Alito, dissenting, argued that the residual clause had been previously upheld by the Court twice (both over Justice Scalia’s objections), and should be upheld again under stare decisis, and also argued that the bar for unconstitutional vagueness was high, and the residual clause should have instead been interpreted to avoid any constitutional infirmity. A link to the opinion is here.
The U.S. Supreme Court issued two blockbuster opinions on June 25, 2015, with more to come on June 26.
One of the most anticipated opinions the day, and perhaps of the term, was the decision in King v. Burwell, in which the Court held, 6-3, that the tax credits granted by the Affordable Care Act to individuals who purchase health insurance through "an Exchange established by the State" are also available to individuals in States that have a federal exchange. Chief Justice Roberts’ majority opinion first declined to apply Chevron deference to the IRS’s interpretation of the statute. His opinion then concluded that while arguments about the plain meaning of the phrase "Exchange established by the State" were "strong" and the "most natural reading" of it, the phrase was nonetheless ambiguous given the overall context and structure of the Act, acknowledging that the law was the product of "inartful drafting." The majority then held that subsidies available in an "Exchange established by the State" must also be available to federal exchanges as otherwise "it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very ‘death spirals’ that Congress designed the Act to avoid." Justice Scalia, joined by Justices Thomas and Alito, dissented, arguing that “words no longer have meaning if an Exchange that is not established by a State is ‘established by the State.’" In the dissent’s view, the majority simply favored the Act and repeatedly engaged in "somersaults of statutory construction” to save it, leading to the suggestion that "we should start calling this law SCOTUScare." A link to the opinion is here.
In a 5-4 decision, the Court held in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. that disparate-impact claims may be brought under the Fair Housing Act, but the Court put substantial limits on those claims. The Project brought suit alleging that the allocation of tax credits to predominately black inner-city areas as opposed to predominately white suburban neighborhoods caused a disparate impact in violation of the Act based solely on statistical evidence. Justice Kennedy’s majority opinion held that such claims needed to be “limited in key respects that avoid the serious constitutional questions that might arise . . . If such liability were imposed based solely on a showing of a statistical disparity” without a showing direct causation by a policy. The housing authorities should also be given “leeway to state and explain the valid interest served by their policies . . . Analogous to the business necessity standard” under the Civil Rights Act, to defend against a disparate impact claim. Justice Alito, joined by the Chief Justice and Justices Scalia and Thomas, dissented, arguing that the text of the Fair Housing Act does not permit such claims, and alleging that the majority’s ruling will actually make things worse for the poor who need housing as it will penalize good-faith efforts by housing authorities. Justice Thomas, in a separate dissent, articulated his view that the Court’s precedent allowing disparate impact claims under the Civil Rights Act was flawed, and that same rationale should not be extended to allowing such claims under the Fair Housing Act. A link to the opinion is here.
The U.S. Supreme Court issued six new opinions on June 18, 2015.
When the Texas DMV refused to issue specialty license plates emblazoned by the Confederate battle flag, the Sons of Confederate Veterans claimed that the decision violated their freedom of speech under the First Amendment. In a 5-4 decision, an unusual majority of the Court held that specialty license plates constitute government, not private, speech, and thus the DMV could constitutionally refuse to issue the plates. Justice Breyer, joined by Justices Thomas, Ginsburg, Sotomayor, and Kagan, wrote that the fact that a private group might participate in the design or message on a license plate did not extinguish the governmental nature of the message or transform the government into a forum provider for speech. Justice Breyer acknowledged that just as Texas could not require a private group to convey “the State’s ideological message,” private groups could not force Texas to put the Confederate flag on its license plates. Justice Alito, joined by the Chief Justice and Justices Scalia and Kennedy, dissented, arguing that the majority’s opinion “passes off private speech as government speech” and in so doing “takes a large and painful bite out of the First Amendment.” A link to the opinion in Walker v. Sons of Confederate Veterans, Inc. is here.
The prosecution at the murder trial of a Hispanic man peremptorily struck seven minority jurors, and the defendant’s counsel objected under Batson v. Kentucky that the strikes were impermissibly race-based. The trial judge permitted the prosecutor to explain the reasons for the strikes without defense counsel present, and upheld the strikes as race-neutral. The California Supreme Court held that this was error, but a harmless one. The Ninth Circuit held that the ex parte proceeding violated the defendant’s federal constitutional rights, and the error was not harmless. The Court, in a 5-4 opinion by Justice Alito, reversed, holding that the California court’s finding of harmlessness should stand unless it unreasonably applied clearly established federal law or was based on an unreasonable determination of the facts. Examining each of the seven jurors stricken and the reasons given by the prosecution, the Court found that the California court was correct in its findings, thereby reversing the Ninth Circuit. Justice Kennedy, in a concurrence that diverged from the issues of the case, noted his concerns about solitary confinement, which the defendant has been in for roughly 20 years, exacting a “terrible price” on prisoners. Justice Thomas filed a brief concurrence in response to Justice Kennedy, noting that the defendant’s confinement is “more spacious that those in which his victims . . . now rest.” Justice Sotomayor, joined by Justices Ginsburg, Breyer, and Kagan, dissented, arguing that defense counsel’s presence during the Batson proceedings could have had a significant effect on the trial court’s ruling as to at least one juror, and thus there were “grave doubts” that the error was harmless. The opinion in Davis v. Ayala is here.
Star NFL running back Warrick Dunn cast a long shadow over the case of Brumfield v. Cain, which involved a murderer’s claim of intellectual disability in order to avoid the death penalty. Brumfield was sentenced to death in Louisiana for killing Dunn’s mother in 1993. After his conviction, the Court decided Atkins v. Virginia, 536 U.S. 304 (2002), which prohibited the execution of intellectually disabled persons under the Eighth Amendment. The Louisiana Supreme Court subsequently held that to raise an Adkins claim, the claimant had to show (1) subaverage intelligence measured by an objective standardized IQ test; (2) significant impairment in several areas of adaptive skills; and (3) manifestations of this neuro-psychological disorder in the development stage. Brumfield raised an Atkins claim, but the state trial court, with holding an evidentiary hearing or granting funds to conduct an investigation, rejected it. Brumfield’s claim made its way to the federal district court, which held under AEDPA that the state court’s denial was an unreasonable application of federal law and was based on an unreasonable determination of the facts, ruling that Brumfield was intellectually disabled and thus was ineligible for execution. The Fifth Circuit reversed, and the Court, in a 5-4 opinion authored by Justice Sotomayor, held that the state court’s denial was based on an unreasonable determination of the facts, and this Brumfield was entitled to have his Atkins claim heard on the merits in federal court. Justice Thomas, largely joined by the Chief Justice and Justices Scalia and Alito, dissented, arguing that the state court’s findings were supported by sufficient evidence under Louisiana law, and that no Court precedent mandated that funds be provided to assist Brumfield in pursuing his Atkins claim. Justice Alito, joined by the Chief Justice, filed a one-paragraph dissent noting that Justice Thomas’ use of Dunn’s successful life after his mother’s murder, in contrast to Blumfield’s, “is inspiring” but was not “essential to the legal analysis in this case.” A link to the opinion is here.
While the Sixth Amendment’s Confrontation Clause generally prohibits the introduction of “testimonial” statements by a nontestifying witness, the Court held in Ohio v. Clark that the statements of a three year-old to his teachers about abuse by the defendant, which were introduced at trial and led to his arrest and conviction, were not subject to exclusion under that Clause because they were not made with the “primary purpose” of being evidence for the defendant’s prosecution, but were offered only in the context of an ongoing emergency involving suspected child abuse. Justice Alito’s majority opinion, reversing the Supreme Court of Ohio, declined to adopt a categorical position that statements to persons other than law enforcement officers were exempt from the Confrontation Clause, but opined that such statements “are much less likely to be testimonial” in nature, and that the three year-old’s statements in the context of this case were not testimonial. The majority also suggested that “statements by very young children will rarely, if ever, implicate the Confrontation Clause.” Justice Scalia, joined by Justice Ginsburg, concurred only in the judgment, arguing that a child’s statements to his teachers are far from testimonial in nature, and that the majority’s dicta beyond that point only served to “shovel fresh dirt upon the . . . grave” of the Confrontation Clause. Justice Thomas, also concurring only in the judgment, stated that he would have held statements to private persons to the same standard as statements to law enforcement officers for the purpose of determining whether they are testimonial, by assessing only “whether those statements bear sufficient indicia of solemnity.” A link to the opinion is here.
In a unanimous ruling, the Court held that in order to convict someone under 21 U.S.C. sec. 841(a)(1) for selling a controlled substance, the government must prove that the seller knew he was dealing with a controlled substance, and when that substance is an analogue, the defendant must be shown to know that the analogue was covered under the Act, or knew the specific features of the substance that made it a controlled substance analogue. The analogue at issue in McFadden v. United States was bath salts that McFadden was selling, which had effects upon ingestion similar to those of cocaine and other controlled substances. At trial, the district court approved a jury instruction that did not require the jury to find that McFadden himself knew the bath salts were analogues. The Fourth Circuit affirmed, holding that the only mental state necessary for guilt was whether McFadden meant for the bath salts to be consumed by humans. Justice Thomas’ majority opinion vacated that ruling and remanded the case back to the Fourth Circuit to determine whether the omission of the proper mental state in the jury instruction constituted harmless error, given evidence that McFadden had knowledge that the bath salts he was selling were controlled substances. The Chief Justice filed a concurrence noting that a person’s knowledge of the identity of a substance may not, in every case, indicate knowledge that the substance is controlled. A link to the opinion is here.
Finally, the Court struck down a town’s Sign Code as applied to “temporary directional signs” as a “content-based regulation of speech” that did not survive strict scrutiny under the First Amendment. In Reed v. Town of Gilbert, the town had regulations governing a variety of signs based on their content, and mandated that temporary directional signs used by nonprofit organizations be removed within an hour after the event advertised had ended. A church was cited for violating that portion of the Sign Code, and it filed suit requesting an injunction on the basis that the Code infringed the church’s First and Fourteenth Amendment rights. The district court and Ninth Circuit held that the Code was content-neutral, and thus did not violate any constitutional rights. Justice Thomas’ majority opinion reversed, finding that the sign regulations on their face were content-based, and there was no compelling reason why directional signs should be treated more restrictively than, say, ideological or political signs. The town’s arguments in favor of aesthetics and traffic safety were deemed insufficient to address the “hopelessly underinclusive” distinctions in the Code. Justice Alito, joined by Justices Kennedy and Sotomayor, filed a concurrence suggesting certain sign rules that would not be content based and thus would have passed muster. Justice Kagan, joined by Justices Ginsburg and Breyer, concurred in the judgment only, arguing that the majority opinion’s application of strict scrutiny may be broad enough to sweep under its broad ambit a variety of typical sign ordinances. Justice Breyer filed a separate concurrence arguing that “content discrimination” should not automatically trigger a strict scrutiny analysis, but “is better considered in many contexts.” A link to the opinion is here.
In a published opinion entered on June 16, 2015, the U.S. District Court of Appeals for the D.C. Circuit resolved an unsettled issue of D.C. law in favor of lenders concerning the doctrine of equitable subrogation. The facts of In re Stevenson were simple: Stevenson and Smith owned a property in DC burdened by a deed of trust secured a loan to Wells Fargo. Stevenson decided to refinance, and got a loan from HSBC Bank, but Smith refused to sign the paperwork for the new loan. HSBC closed on the loan anyway. On its face, then, HSBC’s loan was only secured against Stevenson’s half of the property, not Smith’s. When Stevenson declared bankruptcy, Smith argued that his interest in the property was free from the bank’s lien. The bankruptcy and district courts both held that HSBC’s loan was equitably subrogated to the position of Wells Fargo’s loan as a lien on Smith’s half, and Judge Kavanaugh, for a unanimous panel, affirmed. Although noting “some sympathy for the commonsense premise . . . [that] no signature means no signature,” the Court held that all five prongs of the equitable subrogation test as set forth in Eastern Savings Bank, FSB v. Pappas, 829 A.2d 953, 961 (D.C. 2003) were met. Although the requirement that subrogation would “not work any injustice to the rights of” Smith was “less straightforward” in this case, the Court held that since HSBC’s loan would only be subrogated to the same terms as the prior Wells Fargo loan, he was only prevented “from enjoying a windfall.” Smith alternatively argued that HSBC was precluded from relief because it had “actual knowledge” that Smith refused to sign its deed of trust. Noting that the D.C. Court of Appeals had not resolved whether actual knowledge barred subrogation, the panel held that prior decisions of that court, plus its reliance on the Restatement (Third) of Property: Mortgages, indicated a “liberal approach” to equitable subrogation that would not permit actual knowledge to be a bar. A link to this important opinion is here.
The U.S. Supreme Court issued three (3) new opinions on June 15, 2015, with more opinions to come on June 18.
In Kerry v. Din, a fractured 5-member majority held that the denial of a non-citizen’s visa application did not violate the due process rights of that non-citizen’s resident wife when the explanation for the denial was no more than a citation to the applicable statute barring admission of those who engage in “terrorist activities.” Justice Scalia, joined by the Chief Justice and Justice Thomas, held in the principle plurality opinion that the wife did not have a sufficient liberty interest in her husband’s immigration status for her to be entitled under due process for an explanation of the denial of his application, emphasizing that the only rights at issue were the husband’s interest in traveling to the United States, and declining to find an amorphous liberty interest in a married couple living together. Justice Kennedy, joined by Justice Alito, held that whether the wife had a liberty interest or not, the government’s explanation for the visa denial was sufficient to afford due process, given that the non-citizen husband was a former Taliban civil servant. Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, dissented, arguing that there is a liberty interest in married couples living together, and that the government should have been required to provide a factual basis for its decision to deny the application. A link to the opinion is here.
In another immigration case, the Court held that the Courts of Appeals have jurisdiction to consider a ruling of the Bureau of Immigration Appeals (“BIA”) that a motion to reopen a removal proceeding was untimely. A resident alien can reopen his or her proceedings pursuant to statute if timely filed, or the BIA can reopen them sua sponte through its own regulatory authority. In Mata v. Lynch, Mata filed an untimely motion to reopen pursuant to the statute, arguing that the deadline should have been equitably tolled. The BIA disagreed and dismissed the motion. The Fifth Circuit, choosing to interpret Mata’s motion as requesting the case be reopened under the BIA’s sua sponte authority, declined to find that it had jurisdiction to hear Mata’s appeal. The Court, in an opinion by Justice Kagan, reversed, holding that even if Mata’s motion was without merit, the Fifth Circuit should have asserted jurisdiction to affirm the BIA’s holding. Justice Thomas filed a solo dissent. While he agreed that the Fifth Circuit was wrong and had jurisdiction, he was troubled by the Fifth Circuit’s decision to recharacterize Mata’s pleading instead of addressing it as written, and would have remanded the case without the “burden” of the recharacterization. A link to the opinion is here.
Finally, in a case that will have a significant effect on the bankruptcy bar, the Court held 6-3 in Baker Botts LLP v. ASARCO, LLC that a bankruptcy court may not award attorney’s fees under 11 U.S.C. sec. 330(a)(1) for work performed in defending a fee application. Justice Thomas’ majority opinion, reaffirming the American Rule prohibiting awards of attorney’s fees except in certain limited circumstances, held that the language of 330(a)(1) limited attorney’s fee awards to “actual, necessary services rendered” by the attorney, which by its terms could not include work performed in requesting fees from the court, since those activities do not actually assist the client. The majority opinion rejected Baker Botts’ argument that “services” includes any fee defense litigation since that interpretation would permit awards for unsuccessful fee defense, and the government’s argument that such work should be seen as part of the compensation for the underlying services benefiting the client since that interpretation conflicted with the text of the statute and failed on policy grounds. Justice Sotomayor filed a short concurrence only to state that she saw no need to go into the policy arguments against the government’s position, and thus did not join in that part of the majority opinion. Justice Breyer, joined by Justices Ginsburg and Kagan, dissented, arguing that the government’s interpretation was correct, and the fees spent defending a fee application should be considered a “relevant factor in calculating reasonable compensation.” A link to the opinion is here.
Confronting the “delicate subject” of a dispute between Congress and the White House as to who gets to recognize whether Israel has sovereign rule over Jerusalem, a divided Court sided with the President, holding that he has the exclusive power to recognize state sovereigns. In Zivotofsky v. Kerry, U.S. parents of a child born in Jerusalem requested that their child’s passport reflect “Israel” as his place of birth pursuant to section 214(d) of the Foreign Relations Authorization Act. Embassy officials refused to make that notation due to the White House’s longstanding position that the United States does not, for foreign policy relations purposes, recognize any country as having sovereignty over Jerusalem. Justice Kennedy’s majority opinion held that the text and structure of the Constitution, particularly the clause concerning the President’s power to “receive Ambassadors,” vested exclusive authority to recognize foreign sovereigns in the President, and thus that portion of the Act was unconstitutional. Justice Breyer, in a brief concurrence, noted his belief that the issue was a political question inappropriate for judicial resolution, but joined the majority on the basis of precedent. Justice Thomas concurred in the result, agreeing that the Act was unconstitutional as applied to passports, but disagreeing that it was unconstitutional as applied to consular reports of births abroad, which were “developed to effectuate the naturalization laws,” which are the purview of Congress. Justice Scalia, joined by the Chief Justice and Justice Alito, dissented, arguing that section 214(d) fell within Congress’ constitutional powers, and that while the President was vested with some power to recognize foreign sovereigns, that power was not exclusive, nor are passports relevant to recognition. Chief Justice Roberts, joined by Justice Alito, wrote a separate dissent emphasizing the “unprecedented” nature of the decision, arguing that the majority’s holding rested on tenuous extensions of the Constitution’s text. A link to the June 8, 2015 opinion is here.
The Maryland Court of Appeals held in Breeding v. Koste that the “woodlands exception” applied in cases involving prescriptive easements also applies to adverse possession where the land at issue is unimproved or otherwise in a general state of nature. The exception holds that in such circumstances, there is a legal presumption that the claimant’s use is by the owner’s permission, thus defeating a claim of adverse possession. The Court then held that “unimproved land is undeveloped land that lacks additions that increase the land’s value or utility or enhance the land’s appearance.” Under that definition, the Court determined that the woodlands exception did not apply in this case because certain improvements had been made to the property at issue, including a road, a storage box, duck blinds, and “no trespassing” signs, and those improvements were sufficient to put the owner of the property on notice of the adverse use. A link to the unanimous May 22, 2015 opinion by Judge Watts is here.
The U.S. Supreme Court issued five new opinions on June 1, 2015.
Perhaps the most-watched opinion from today was in Elonis v. United States, in which a man posted violent threats against his wife and others on his Facebook page, which he argued were protected under the First Amendment. Elonis was charged with violation of 18 U.S.C. sec. 875(c), which makes it illegal to “transmit . . . any threat.” At trial, Elonis argued that he should only be guilty if he intended to communicate a “true threat” through his posts. The district court instead instructed the jury that Elonis be found guilty if he intentionally made a statement that a reasonable person in his position would foresee being interpreted as a serious intent to cause harm. The Third Circuit affirmed, holding that 875(c) required only the intent to communicate words that the defendant understands and a reasonable person would view as a threat. The Court, in an opinion by the Chief Justice, reversed, holding that a defendant must transmit the communication for the purpose of issuing a threat, or with knowledge that the communication would be viewed as a threat, to be guilty under 875(c), while reserving judgment on whether recklessness alone would satisfy the statute, completely sidestepping the First Amendment issue. In other words, the Court rejected any negligence-based standard for guilt, requiring that the defendant’s state of mind be proven. Justice Alito, concurring and dissenting in part, argued that the Court’s decision “is certain to cause confusion and cause problems” because it did not address the recklessness issue and fully settle the issue of what mental state is required under 875(c), and indicated that he would hold recklessness to be sufficient for guilt. Justice Thomas filed a dissent, agreeing with Justice Alito that the Court’s decision leaves “uncertainty” in its wake, and arguing that the Third Circuit’s “general intent” standard was correct, and that Elonis’ threats were not protected by the First Amendment. A link to the Court’s opinion is here. A link to the Court’s opinion is here.
In Bank of America v. Caulkett, the Court declined to allow a Chapter 7 bankruptcy debtor to “strip down” a mortgage lien that is junior to liens that claim all of the equity in a home, thus allowing those “underwater” liens to survive a discharge. Caulkett owned a house where the senior mortgage lien was greater than his property’s current market value, and he sought under Chapter 7 to void a junior mortgage lien under section 506 of the Bankruptcy Code on the basis that the junior lien was not “an allowed secured claim.” The Eleventh Circuit affirmed ordered voiding the junior lien, and the Court, in a unanimous opinion by Justice Thomas, reversed. Although such underwater liens would appear to be “unsecured” under the definition of 506(a)(1), the Court held that its opinion in Dewsnup v. Timm, 502 U.S. 410 (1992), mandated that such liens were “secured” regardless of whether the value of the property was sufficient to cover the claim, regardless of whether the subject lien was partially or wholly uncovered. Justices Kennedy, Breyer, and Sotomayor joined in the opinion except with regard to a single footnote that pointed out the unpopularity of Dewsnup, which the parties had not argued to overrule—perhaps indicating that the other six justices might favorably entertain such a future challenge. A link to the Court’s opinion is here.
When Abercrombie & Fitch refused to hire Ms. Elauf because her Muslim headscarf violated the company’s “Look Policy” that governs employee dress, the EEOC filed suit under Title VII of the Civil Rights Act for its “disparate treatment” of Elauf. A trial, Elauf won a $20,000 judgment, but the Tenth Circuit reversed, holding that Elauf had to provide the retailer with actual knowledge of her need for an accommodation, and since she had not said anything about her headscarf being for religious purposes, the retailer was entitled to summary judgment. The Court, in an opinion by Justice Scalia, reversed, holding that the headscarf only had to be a “motivating factor” in the adverse employment decision for there to be proof of disparate treatment—the retailer’s knowledge of Elauf’s religious need to wear it was irrelevant. Justice Alito, in a concurrence, argued that Title VII required proof that the retailer knew of Elauf’s religious need, and there was sufficient evidence of such knowledge in the record to warrant reversal. Justice Thomas, concurring and dissenting in part, argued that the retailer’s Look Policy was neutral and did not amount to intentional discrimination that would result in liability under Title VII. A link to the opinion in Elauf v. Abercrombie & Fitch Stores, Inc. here.
A legal alien may be deported after being “convicted of a violation of . . . any law or regulation of a State, the United States, or a foreign country relating to a controlled substance” as defined by federal law. 8 U.S.C. sec. 1227(a)(2)(B)(i). Mellouli was caught with four unmarked pills in his sock and pled guilty to a misdemeanor under Kansas law that treated the sock as “drug paraphernalia,” and the authorities subsequently moved to deport him. Justice Ginsburg, for the majority, held that this was insufficient for deportation under federal law, because Kansas’ drug paraphernalia law differed in scope from the federal version, the latter excluding a common item like a sock from qualifying. The Court also declined to adopt the federal government’s view that an alien could be deported for offenses not directly derived from the list of drugs illegal under federal law, as that could allow a person to be convicted of an offense only relating to a state-banned drug that is not also banned under federal law. Justice Thomas, joined by Justice Alito, dissented, arguing that since Mellouli was convicted for an offense related to a controlled substance under federal law, as he admitted after the fact that the pills were Adderall, that was sufficient under the plain language of the statute for his deportation, and criticized the majority’s failure to properly define the scope of section 1227. A link to the opinion in Mellouli v. Lynch is here.
Finally, the Court, in a unanimous per curiam opinion, held that government officials were entitled to qualified immunity against a civil rights claim brought by the widow of a mentally disturbed man who hung himself while incarcerated. The Court found, contra to the decision of the Third Circuit, that there was no “right to the proper implementation of adequate suicide prevention protocols” as of the date of the man’s death, and thus the prison officials were not “contravening clearly established law” at the time, even if the suicide prevention system in place had the shortcomings alleged by the widow. The Court further rejected the Third Circuit’s belief that such a right had been established by that circuit’s prior opinions. A link to the opinion in Taylor v. Barkes is here.
In Buckingham v. Fisher, the Maryland Court of Special Appeals held that in order for a defense to a foreclosure sought under Md. Rule 14-211 to be sufficiently valid on its face to require a hearing on the merits, it must be pled “with particularity” in a similar fashion to a fraud claim. Vague or general allegations are not sufficient. Judge Friedman, for a unanimous panel, went on to apply that standard to the appellant’s claims of forgery and defects in notice, and found that those claims did not meet the requisite particularity standard, thus affirming the trial court’s dismissals. A link to the May 27, 2015 opinion is here.
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The U.S. Supreme Court issued three new opinions on May 26, 2015.
In Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, the Court unanimously held that the Wartime Suspension of Limitations Act, which suspends “the running of any statute of limitations applicable to any offense” involving fraud against the Federal Government, only applies to criminal offenses, and not civil claims. The Carter matter began as a qui tam action under the False Claims Act accusing Kellogg of fraudulent billing to the U.S. government, but initial efforts to litigate the matter were dismissed under the FCA’s “first to file” bar to new claims related to claims already pending before a court. When the FCA’s impediment was finally resolved, in what the Court characterized as a “remarkable sequence of dismissals and filings,” the qui tam claim was filed after the statute of limitations had passed. Justice Alito’s opinion, reversing the Fourth Circuit, held that the “text, structure, and history of the WSLA show that the Act applies only to criminal offenses,” and thus the latest civil action was untimely. It also held that the FCA’s “first to file” bar is extinguished once a prior related case is dismissed. A link the opinion is here.
By scrupulously keeping the issues of patent infringement and validity separate, the Court in Commil USA, LLC v. Cisco Systems, Inc. held that a good-faith belief that a patent is invalid is not a defense to a claim of induced infringement. Under the Patent Act, a defendant is liable for inducement to infringe on a patent if the defendant has knowledge of the patent and “the induced acts constitute patent infringement.” Cisco wished to introduce evidence at trial that it had a good-faith belief that Commil’s patent was invalid. The district court excluded that evidence, the Federal Circuit reversed, and the Court, in an opinion by Justice Kennedy, joined by five other justices (Breyer recused), reversed the Federal Circuit, affirming that evidence of the defendant’s belief in the validity of a patent did not weigh on whether the induced acts infringed on the patent, as patents are “presumed valid,” and thus the evidence was properly excluded. Justice Scalia, joined by the Chief Justice, dissented, arguing that “since there can be no infringement (and hence no knowledge of infringement) of an invalid patent; good-faith belief in invalidity is a defense.” A link the opinion is here.
Although the Court had previously decided in Stern v. Marshall, 131 S.Ct. 2594 (2011), that Article III of the Constitution prohibited bankruptcy courts from entering final judgment on claims that “exis[t] without regard to any bankruptcy proceeding,” the Court in Wellness Intl. Network, Ltd. v. Sharif held that this prohibition could be waived by the litigants, much in the way that litigants can agree to have their case heard before a magistrate judge instead of a district court judge. Justice Sotomayor’s majority opinion relied on Commodity Futures Trading Commission v. Schor, 478 U.S. 833 (1986), in characterizing Article III’s guarantee of adjudication by a judiciary as a “personal right” instead of a constitutional imperative. The majority also held that such waiver could be implied as well as express. Justice Alito lodged a concurrence indicating that he would not have decided whether consent could be implied. Chief Justice Roberts, joined by Justice Scalia in full and Justice Thomas in part, dissented, arguing that Article III did not preclude the bankruptcy court’s ruling in this particular case, which solely addressed the assets of the estate rather than “traditional actions at common law,” and thus the Court should not have reached the waiver issue at all. The Chief Justice further argued that Article III’s mandates were “an inseparable element of the constitutional system of checks and balances” that cannot be waived. Justice Thomas filed a solo dissent arguing that the majority failed to address several complex issues in its rush to allow consent to override an apparent constitutional violation. A link the opinion is here.
It was a busy day at the U.S. Supreme Court, as the Justices handed down six (6) new opinions on May 18, 2015, including one case which declares Maryland’s personal income tax scheme unconstitutional.
The day’s only 5-4 decision, striking down Maryland’s personal income tax under the dormant Commerce Clause, caused the Justices to split among non-ideological lines. Justice Alito, joined by Chief Justice Roberts and Justices Kennedy, Breyer, and Sotomayor, reaffirmed the “negative command” of the Commerce Clause, which precludes States from taxing interstate incidents more heavily than those that are purely intrastate. Maryland’s state income tax scheme violated that command by refusing to provide a credit to those Maryland residents who paid income tax to another State—thus effectively taxing out-of-state income twice—under the decades-old internal consistency test. Justice Ginsburg, joined by Justices Scalia and Kagan, authored the principal dissent, arguing that the dormant Commerce Clause does not require States from having internally consistent tax regimes, and should not force one State to concede tax authority to another just because a resident of one state earns income in the other. Justice Thomas, joined in part by Justice Scalia, reiterated his position that the dormant Commerce Clause is a judge-made fiction that, as construed by the majority, conflicts with the actual scope of the Commerce Clause. Justice Scalia, joined in part by Justice Thomas, expanded on Justice Thomas’ dissent, adding that the dormant Commerce Clause lacks a “governing principle,” and that the Maryland tax is not discriminatory because the tax rate for intrastate income was no different than for interstate income. The opinion in Comptroller of Treasury of Maryland v. Wynne is here.
Although the appellant in City and County of San Francisco v. Sheehan prevailed, it did so after pulling a bait-and-switch that left some on the Court none too happy. The case started when Sheehan, who had a diagnosed mental illness, sued San Francisco for violating the Americans with Disabilities Act when it failed to accommodate her disability during her arrest, when she was armed and threatening to kill anyone who entered her home. She also sued the arresting officers. The Ninth Circuit held that Sheehan’s ADA claim was proper for a jury, and that the officers were not entitled to qualified immunity. In petitioning for certiorari, San Francisco argued that the ADA did not require that officers provide any accommodation to a violent mentally ill subject during the course of an arrest—an issue where there was a split among the circuits. On the merits, however, San Francisco argued only that Sheehan did not qualify for protection under the ADA—an argument not raised before. Justice Alito, joined by five justices (Justice Breyer recused), dismissed the ADA issue as improvidently granted, as it was not properly briefed and argued. The majority further held that the officers were entitled to qualified immunity (and thus reversal) because their failure to accommodate Sheehan’s mental illness did not violate clearly established law. Justice Scalia, joined by Justice Kagan, would have dismissed the entire case as improvidently granted, arguing that the majority’s reversal rewarded San Francisco’s bait-and-switch by giving a ruling on an issue that would have otherwise not been cert-worthy. A link the opinion is here.
In Tibble v. Edison International, the Ninth Circuit affirmed the dismissal of an ERISA complaint alleging that a 401(k) savings plan’s fiduciaries violated their duties to the plan participants by offering six overpriced mutual funds. Three funds were offered in 1999, three in 2002. The participants sued in 2007. The Ninth Circuit held that the 1999 funds were beyond the six-year statute of limitations under 29 U.S.C. sec. 1113, as there were no changes in circumstances that would have triggered a new fiduciary duty within the limitations period. The Court, in a unanimous opinion by Justice Breyer, reversed. Without expressing a view on the scope of the fiduciaries’ duties in this case, the Court held that they had a continuing common law duty to monitor and, as necessary, remove imprudent investments. The Court remanded for further consideration of whether that continuing duty was violated. A link the opinion is here.
The case of Harris v. Viegelahn concerns a fight over a mere $5,519.22, but winds up creating a rule that will have many debtors considering a switch from Chapter 13 to Chapter 7 bankruptcies. Harris filed for Chapter 13 bankruptcy and the court there approved a plan in which a portion of his wages would go directly to the trustee to be paid to creditors. Harris fell behind on his mortgage, though, and his mortgage lender foreclosed on his house. Thereafter, the trustee stopped making payments to the mortgage lender (who was presumably satisfied in full), and the $5,519.22 accumulated in the trustee’s account. Harris then converted to a Chapter 7. The trustee then disbursed most of those funds to Harris’ creditors. Harris objected, and the Court, in a unanimous opinion by Justice Ginsburg that resolved a circuit split, overruled the Fifth Circuit and held that Harris was entitled to a return of the funds. Once Harris converted to a Chapter 7 (which relates back to the date of his original filing of the Chapter 13 barring bad faith), his post-petition assets were no longer part of his estate. The Chapter 13 trustee’s powers to distribute assets to creditors ended immediately upon the conversion. Therefore, Harris was entitled to his remaining post-petition wages from the trustee. Future Chapter 13 creditors should expect to request that any plan include a provision for the distribution of such accumulated post-petition funds, just in case. A link the opinion is here.
Limiting the ability of incarcerated litigants to abuse their in forma pauperis status to file numerous baseless complaints, 28 U.S.C. sec. 1915(g) withholds such status from a jailhouse litigant whose complaints were dismissed as frivolous, malicious, or failed to state a claim on three or more occasions. In Coleman v. Tollefson, the prisoner, Coleman, had three cases so dismissed, but had appealed the dismissal of the third case. He then filed four more cases, seeking in forma pauperis status for each. The Sixth Circuit held that Coleman was not entitled to that status based on the three dismissals, and Justice Breyer, for a unanimous Court, affirmed. The fact that the third dismissal was on appeal did not avoid the “three strikes” rule. A link the opinion is here.
Although the Justices have split along ideological lines concerning gun rights in the past, they all appear to agree on one thing: a convicted felon can request that his or her guns be transferred to a third party under 18 U.S.C. sec. 922(g) so long as doing so would not allow the felon control, use, or the ability to direct the use of those firearms. Justice Kagan, for a unanimous Court, rejected the government’s view that the statute only permitted transfers to a firearms dealer or someone who would sell the weapons. So long as the transfer puts the firearms out of the felon’s use or control, the purpose of the statute—keeping guns out of the hands of felons—was satisfied. The opinion in Henderson v. United States is here.
Resolving a split among the Circuit Courts of appeal, the U.S. Supreme Court, in a unanimous decision authored by the Chief Justice, held in Bullard v. Blue Hills Bank that a bankruptcy court’s denial of a Chapter 13 plan did not constitute a “final order” that could be appealed. The Court noted that while confirmation of a plan, or the dismissal of a proceeding for failure to provide a plan, each fix the legal rights of various parties and thus are appealable, a denial of a plan with leave to amend “changes little.” The Court further noted that it trusted the lower courts to “certify and accept interlocutory appeals from plan denials in appropriate cases.” A link to this May 4, 2015 opinion is here.
The U.S. Supreme Court issued two new opinions on April 29, 2015, the last day of oral arguments for this term.
In a fractured ruling, the Court upheld Florida’s rule prohibiting judges from personally soliciting campaign funds when striving to be elected to the bench, a rare instance when such a regulation has passed muster under strict scrutiny. Chief Justice Roberts, joined by Justices Breyer, Sotomayor, and Kagan, held in Williams-Yulee v. Florida Bar that the regulation upheld the state’s compelling interest in ensuring that elected judges would have the full confidence of the public by avoiding any appearance of corruption or favoritism, and was narrowly tailored to allow judicial candidates to speak in support of their campaigns without being fatally over- or under-inclusive. Justice Ginsburg joined most of the Chief Justice’s opinion except for the part about campaign speech being subject to strict scrutiny—in her concurrence, she re-stated her position that States should have “substantial latitude . . . to enact campaign-finance rules geared to judicial elections.” Justice Scalia, joined by Justice Thomas, authored the principal dissent, arguing that the majority opinion “flatten[ed] one settled First Amendment principle after another.” While agreeing that strict scrutiny should apply to such regulations, and that the State had a compelling interest, Justice Scalia argued that the regulation was not narrowly tailored because “it applies even when the person asked for a financial contribution has no chance of ever appearing in the candidate’s court,” and that the First Amendment should not be “abridged for the benefit of the Brotherhood of the Robe.” Justice Kennedy filed his own dissent, joining Scalia’s in full, and noting certain ironies he saw in the majority’s ruling. Justice Alito also filed a dissent, joining with Scalia, arguing that Florida’s rule “is about as narrowly tailored as a burlap bag” and a potential threat to future implementation of strict scrutiny analysis.
A link to the opinion is here.
In a much less colorful opinion, Justice Kagan, for a unanimous Court, held in Mach Mining, LLC v. EEOC that the courts have narrow authority to review whether the EEOC fulfilled its duty under Title VII to attempt conciliation of a discrimination complaint. The Court held that in order to comply with Title VII, the EEOC must inform the employer about the specific discrimination allegation, describing what the employer allegedly did wrong and which employees allegedly suffered. The EEOC must then try to engage the employer in a discussion to allow the employer a chance to remedy the alleged discriminatory practice. The Court held that a sworn affidavit from the EEOC stating that such actions were taken would fulfill the Title VII requirements, subject to concrete rebuttal evidence from the employer, at which point the courts could engage in fact-finding and, if the employer prevails, order the EEOC to take appropriate action.
A link to the opinion is here.
The U.S. Supreme Court issued two (2) new opinions on April 21, 2015.
First, a divided Court held that once a traffic stop is completed, the officer violates the Fourth Amendment by continuing to hold a driver so that the police can conduct a dog sniff of the vehicle. In Rodriguez v. United States, the driver in question was pulled over for driving on the shoulder of a road. After the policeman issued a written warning, he asked for consent to allow his dog to sniff the vehicle. When consent was denied, the policeman waited until another officer arrived, then conducted the canine search, finding a bag of methamphetamines. The driver moved to suppress the evidence. The lower courts, including the U.S. Court of Appeals for the Eighth Circuit, determined that the extra seven or eight minutes added to the stop was a de minimus intrusion on the driver’s Fourth Amendment rights, and thus was permissible. Justice Ginsburg, joined by five other justices, reversed, holding that once the purpose of a traffic stop is complete, the officer is not then allowed to continue detaining a driver for an unrelated criminal investigation, although the majority distinguished the routine check of the driver’s license, registration, and insurance as being part of the overall enforcement of the traffic code. Justice Thomas, joined by Justices Kennedy and Alito, dissented, arguing that this decision conflicted with the holding of Illinois v. Caballes, 543 U.S. 405 (2005), which held that a dog sniff did not change the nature of the traffic stop. Justice Thomas also argued that there was probable cause to allow the dog sniff. Justice Kennedy filed a separate dissent noting that the Eighth Circuit had not examined whether there was probable cause, and so did not join in that part of Justice Thomas’ dissent. Justice Alito filed a dissent arguing that the majority’s new rule was “arbitrary” and “perverse,” in that it punished the officer for acting to protect the safety of himself and others by waiting for another policeman to arrive before conducting the search. A link to the opinion is here.
Second, the Court held that state-law antitrust claims lodged by purchasers of natural gas against the owners of the interstate pipelines were not preempted by the Natural Gas Act. After examining the history of regulation of the natural gas industry, Justice Breyer, joined by six other justices, held in OneOK, Inc. v. Learjet, Inc. that claims involving antitrust activities that affected retail prices remain “firmly on the States’ side of [the] dividing line,” even if the same practices might affect wholesale prices that would be subject to the Act. The majority relied on the way the Act “was drawn with meticulous regard for the continued exercise of state power” in this area. Justice Thomas filed a concurrence, noting his position that pre-emption only exists under the Supremacy Clause where the text of the law so states, rejecting prior findings of preemption based on a perceived “objective” of a law. Justice Scalia, joined by Chief Justice Roberts, dissented, arguing that the majority’s “make-it-up-as-you-go approach” did not properly consider how the Act divided responsibilities between the states and the federal government. A link to the opinion is here.
2014 Amendments To D.C. Condo Act: Why Adopted and How Are They Working?
The 2014 Amendments to the D.C. Condominium Act are significant and address numerous concerns, but fail to tackle other vexing aspects of D.C. condo existence. Please come and hear from a panel of experts on these and related D.C. condo topics. David H. Cox will be the moderator. Thursday, May 21, 2015 from 12:00 pm to 2:00 pm; No CLE Credit.
In Armstrong v. Exceptional Child Center, Inc., the U.S. Supreme Court held that Medicaid providers could not sue under the Supremacy Clause of the U.S. Constitution, Art. VI, cl. 2, to enforce section 30(A) of the Medicaid Act against the State of Idaho. Justice Scalia, joined by Chief Justice Roberts and Justices Thomas, Breyer, and Alito, held that the Supremacy Clause only “instructs courts what to do when state and federal law clash” but does not address “who may enforce federal laws in court.” The majority also held that the language of section 30(A) foreclosed an alternative equitable cause of action for injunctive relief to prevent a state from violating federal law. Justice Breyer filed a separate concurrence explaining his separate rationale for why section 30(A) precluded a private cause of action for injunctive relief. Justice Sotomayor, joined by Justices Kennedy, Ginsburg, and Kagan, dissented, arguing that equitable relief should be available to the providers to stop a state’s violation of section 30(A) only unless Congress specifically foreclosed that option.
In a per curiam order issued March 30, 2015, the Court made it clear that attaching a GPS ankle bracelet on a person does indeed constitute a search under the Fourth Amendment pursuant to United States v. Jones, 132 S.Ct. 945 (2012), in which the Court had held that affixing a GPS tracking unit to a car constituted a search. The state courts of North Carolina ruled that Jones did not apply when the ankle bracelet was required as part of a civil proceeding. The Court reversed, without the need for oral argument or a full briefing on the merits, leaving the state courts to decide whether the ankle bracelet was reasonable under a totality of the circumstances. A link to the order in Grady v. North Carolina is here.
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The U.S. Supreme Court issued two more opinions on March 25, 2015.
In a 5-4 decision, the Court sharply split on whether the appellants in Alabama Legislative Black Caucus v. Alabama properly raised racial gerrymandering claims before the trial court, perhaps sending a signal that even poorly pled and argued claims should receive a favorable ear. The majority opinion authored by Justice Breyer, joined by Justices Kennedy, Ginsburg, Sotomayor, and Kagan, held that the trial court misapplied the law under Section 5 of the Voting Rights Act in rejecting the appellants’ claims, while the dissenters, lead by Justice Scalia, argued that those claims were so confusing and opaque, or outright waived, that there was no error. For example, the majority opinion held that the trial court must analyze racial gerrymandering with regard to one or more specified electoral districts, and not the state as a whole—a principle the dissenters agreed with. The disagreement was whether the appellants had actually raised that argument in the first place. The majority even identified a particular district that it believed violated Section 5 had the trial court applied the proper analysis. Justice Thomas filed a separate dissent arguing that the Court’s jurisprudence for the Voting Rights Act was flawed, and has created segregated districts contrary to its ultimate intent. A link to the opinion is here.
The Court in Young v. UPS wound up rejecting the parties’ and the federal government’s interpretations of the Pregnancy Discrimination Act to hold that a pregnant worker can make out a prima facie case of discrimination under the framework set forth in McDonnell Douglas v. Green, 411 U.S. 792 (1973) by (1) showing she was pregnant, (2) sought accommodation from her employer, (3) the employer did not accommodate her, and (4) the employer did accommodate others similar in their ability or inability to work. If the employer presents a legitimate, nondiscriminatory reason for its actions, the claimant may still reach a jury by providing sufficient evidence that the employer’s policies impose a “significant burden” on pregnant workers, and the employer’s reasons are not “sufficiently strong” to justify the burden. The majority opinion, penned by Justice Breyer and joined by Chief Justice Roberts and Justices Ginsburg, Sotomayor, and Kagan, rejected the expansive “most favored nation” rights sought by the pregnant employee, but also declined the narrow reading offered by UPS and the views of the EEOC. Justice Alito, concurring in the judgment only, provided his interpretation of the Act that came to the same result as the Court, with slightly different emphases. Justice Scalia, joined by Justices Kennedy and Thomas, dissented, arguing that the Court made up the “significant burden” and “sufficiently strong” tests out of whole cloth, “splendidly unconnected with the text and even the legislative history of the Act.” The dissenters would instead limit the Act to prohibit practices that discriminate against pregnant women relative to workers of similar ability or inability only. A link to the opinion is here.
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The U.S. Supreme Court issued two (2) new opinions on March 24, 2015.
In B&B Hardware, Inc. v. Hargis Industries, Inc., the Court ruled 7-2 that findings of the Trademark Trial and Appeal Board can be used to preclude subsequent litigation of the same issue before a district court. In this case, B&B attempted to use the Board’s determination that Hargis’ trademark should not be registered because it was likely to cause confusion with B&B’s trademark to preclude Hargis from arguing the confusion issue in a subsequent infringement lawsuit. Justice Alito, writing for the majority, reversed the U.S. Court of Appeals for the Eighth Circuit, and held that when an agency was authorized by Congress to resolve disputes, its decisions can have preclusive effect if the ordinary elements of issue preclusion are met. The majority also noted that since the Board’s decisions could be appealed to a district court for de novo review, there was no reason to treat the Board’s unchallenged decision as being any different from that of a district court. Justice Ginsburg filed a concurrence emphasizing the majority’s observation that issue preclusion would not normally apply in most trademark registration decisions. Justice Thomas, joined by Justice Scalia, dissented, arguing that administrative agency decisions historically were not given preclusive effect, and that the Board itself was not created to exert such an effect, noting also the constitutional concerns raised by providing agencies under the Executive Branch with powers normally reserved to the Judicial Branch. A link to the opinion in B&B Hardware, Inc. v. Hargis Industries, Inc. is here.
In a partial victory for publically-traded companies, the Court unanimously held that a company’s stated opinion that it was in compliance with federal and state laws was not “an untrue statement of a material fact” in violation of the Securities Act of 1933 merely because that opinion turned out to be incorrect. In Omnicare, Inc. v. Laborers Dist. Council Constr. Industry Pension Fund, Omnicare was sued by the Fund (which purchased Omnicare’s stock) under the Act for two legal opinion statements beginning with “We believe”. The district court dismissed the Fund’s complaint for failure to state a claim, and the U.S. Court of Appeals for the Sixth Circuit reversed, holding that the Fund needed only to allege that the statements were objectively false to state a claim. Justice Kagan’s opinion for the majority explained that while an opinion statement may violate the Act if it contains an untrue fact, the opinion itself is not a violation even if it winds up being objectively false. However, the Court noted that an opinion may contain an omission of material fact, in violation of the Act, if it fails to provide material facts about the speaker’s inquiry into, or knowledge concerning, the opinion, and those facts conflict with what a reasonable investor would interpret the opinion to imply. Thus the decision of the U.S. Court of Appeals for the Sixth Circuit was reversed on first issue, and remanded for a determination as to whether Omnicare’s opinions improperly omitted facts. Justice Scalia filed a concurrence stating his view that the majority’s opinion allowed for more material facts to be inferred in an opinion than would otherwise be reasonable. Justice Thomas concurred in the judgment only, arguing that the Court should not have opined on what might constitute an omission in violation of the Act because that issue was not before the Court. A link to the opinion is here.
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The U.S. Supreme Court issued two new opinions on March 9, 2015.
The Court ruled that Amtrak is a governmental entity under the Constitution for the purpose of issuing metrics and standards for passenger railroad service, as authorized by Congress, and thus there was no violation of the nondelegation doctrine or the Due Process Clause. Justice Kennedy, joined by six justices, held that despite certain statutory pronouncements, the substantial control and supervision the political branches held over Amtrak precluded it from being considered an autonomous private enterprise, and remanded the matter back to the D.C. Circuit for consideration of other constitutional concerns. Justice Alito filed a lengthy concurrence to highlight the fact that “it does not by any means necessarily follow [from the Court’s holding] that the present structure of Amtrak is consistent with the Constitution[,]” and set forth several such issues. Justice Thomas, concurring in the result only, set forth an originalist framework by which he would have the lower courts analyze the constitutional issues raised by Amtrak on remand—a dissertation that appears to be targeted to revitalize discussion about the separation of powers and the Court’s role in policing that doctrine. A link to the opinion in Dept. of Transportation v. Assn. of American Railroads is here.
Distinguishing between “legislative rules,” which are issued by agencies using notice-and-comment rulemaking and have the force of law, and “interpretive rules,” which do not, the Court held in Perez v. Mortgage Bankers Association that the Department of Labor did not need to engage in notice-and-comment procedures under the Administrative Procedure Act when it withdrew an opinion letter finding that mortgage-loan officers qualify for the administrative exemption to overtime pay requirements. Justice Sotomayor, joined by five justices in full and Justice Alito in part, overruled the D.C. Circuit’s decision in Paralyzed Veterans of America v. D.C. Arena L.P., 117 F.3d 579 (D.C. Cir. 1997), which imposed a procedural obligation beyond what the “clear text” of the APA requires for interpretive rules, and rejected the Association’s arguments for adopting the D.C. Circuit’s approach. Justice Alito filed a concurrence suggesting that while the D.C. Circuit’s decision improperly conflicted with the APA, the policy reasons behind the D.C. Circuit’s decision were valid and may need to be re-examined. Justice Scalia, concurring in the judgment, wrote that the Court’s history of deference to the agencies caused the problem the D.C. Circuit sought to correct, that he would overturn Auer v. Robbins, 519 U.S. 452 (1997), and give no deference to agency interpretations as the proper solution. Justice Thomas, also concurring only in the result, called into question the Court’s history of deference to agencies, going back to Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945), as undermining the judicial “check” on agencies. A link to the opinion is here.
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