Tag for anything related to SCOTUS.

Unanimous U.S. Supreme Court rejects appointments clause challenge to Puerto Rican debt board

On June 1, a unanimous U.S. Supreme Court ruled that the Appointments Clause of the U.S. Constitution does not require members of the Puerto Rican Financial Oversight and Management Board (FOMB) to face confirmation by the U.S. Senate.

The Appointments Clause gives the president authority to appoint officers of the United States, subject to confirmation by the U.S. Senate. These officers include ambassadors, heads of Cabinet-level departments, and federal judges. The U.S. Supreme Court ruled that because FOMB members have primarily local powers and duties that the Appointments Clause does not restrict how they are selected.

Congress created the FOMB in 2016 and authorized the board to begin debt adjustment proceedings on behalf of the Puerto Rican government. The seven-member board is made up of one member chosen at the president’s discretion and six other members selected by the president from a list written by members of Congress.

Aurelius Investment LLC and the Unión de Trabajadores de la Industria Eléctrica y Riego challenged the FOMB’s authority, arguing that board members’ appointments violated the Appointments Clause. Aurelius and the union claimed that the board members are “Officers of the United States” who must be nominated by the president and confirmed by the Senate. The board argued that because its activities are primarily local in nature its members do not qualify as “Officers of the United States.” The U.S. Supreme Court ruled in favor of the board and sent the case to the U.S. Court of Appeals for the First Circuit for further proceedings.

Justice Clarence Thomas wrote a concurring opinion arguing that the court made the right decision for the wrong reasons. He would have relied on the original public meaning of the phrase _officers of the United States_ to resolve the case.

Justice Sonia Sotomayor wrote a separate concurring opinion arguing that “territorial status should not be wielded as a talismanic opt out of prior congressional commitments or constitutional constraints.” She stated that because the parties in the case did not address the implications of Puerto Rican home rule on the Appointments Clause she chose to concur in the judgment of the court.

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Administrative State Project

Click here to read the U.S. Supreme Court decision.

U.S. Supreme Court rejects challenge to California law limiting church attendance

On May 29, 2020, the United States Supreme Court rejected a challenge to California’s religious gathering limits, which order attendance in churches or places of worship to a maximum of 25% or 100 attendees.

The 5-4 decision was joined by Chief Justice Roberts who warned against intervening in emergencies: “Where those broad limits are not exceeded, they should not be subject to second-guessing by an ‘unelected federal judiciary,’ which lacks the background, competence, and expertise to assess public health and is not accountable to the people.”

Justice Kavanaugh joined the remaining three Republican-appointed justices in dissenting from the ruling, arguing that the California limits “indisputably discriminates against religion.”

U.S. Supreme Court rules plaintiffs can seek punitive damages for 1998 bombings

The U.S. Supreme Court issued an opinion in Opati v. Republic of Sudan. The case originated in the United States Court of Appeals for the District of Columbia Circuit and was argued on February 24, 2020. It concerned the Foreign Sovereign Immunities Act (FSIA) and questioned if the Act prohibited plaintiffs from recovering punitive damages against Sudan for its role in embassy bombings in Kenya and Tanzania in 1998.

From 1991 to 1996, the terrorist group al Qaeda maintained an operations base in Sudan, from which it launched terrorist cells in Kenya and Tanzania. Al Qaeda bombed U.S. embassies in Kenya and Tanzania in 1998, killing more than 200 people and injuring thousands. In 2001 and in following years, various plaintiffs sued Sudan, arguing the bombings were “extrajudicial killings” under the FSIA. Sudan denied the allegations.

In 2014, the U.S. District Court for the District of Columbia issued final judgments awarding more than $10.2 billion in punitive damages against Sudan. Sudan appealed the cases. On appeal, the U.S. Court of Appeals for the D.C. Circuit vacated the damages awarded. The Opati plaintiffs appealed to the U.S. Supreme Court, asking it to clarify whether “the FSIA may be applied retroactively to impose punitive damages on a state sponsor of terrorism.”

In an 8-0 ruling (Justice Brett Kavanaugh recused himself), the U.S. Supreme Court vacated the D.C. Circuit Court’s ruling. The court held that the FSIA may be applied retroactively and punitive damages are permissible for federal claims under the FSIA against foreign states for terrorist activities. In the opinion, Justice Neil Gorsuch wrote, “Congress was as clear as it could have been when it authorized plaintiffs to seek and win punitive damages for past conduct” under an amended version of the FSIA.

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U.S. Supreme Court rules Lucky Brand not barred from raising new claims in trademark infringement case

Lucky Brand Dungarees v. Marcel Fashion Group was argued on January 13, 2020. The case came on a writ of certiorari to the U.S. Court of Appeals for the 2nd Circuit. It concerned trademark infringement and three legal challenges between apparel companies Marcel Fashion Group, Inc. (“Marcel”) and Lucky Brand Dungarees, Inc. (“Lucky Brand”).

The case: Marcel and Lucky Brand filed several lawsuits for trademark infringement in 2003, 2005, and 2011. In the 2011 action, Marcel sued Lucky Brand for trademark infringement. The U.S. District Court for the Southern District of New York granted summary judgment to Lucky Brand, ruling the 2003 lawsuit barred Marcel from suing Lucky Brand.

On appeal, the 2nd Circuit reversed the decision and remanded the case. On remand, Lucky Brand moved to dismiss the suit, arguing a settlement agreement resulting from the 2003 lawsuit prevented Marcel from suing Lucky Brand. Marcel countered that Lucky Brand could not use this argument because Lucky Brand could have pursued this defense in the 2005 litigation but did not. The district court granted Lucky Brand’s motion to dismiss. Marcel appealed again to the 2nd Circuit, which vacated the lower court’s ruling. Lucky Brand appealed to the U.S. Supreme Court, arguing the 2nd Circuit’s decision conflicted with decisions from other circuit courts on similar issues.

The outcome: The court reversed the U.S. Court of Appeals for the 2nd Circuit’s judgment and remanded the case. In a unanimous opinion written by Justice Sonia Sotomayor, the court held that Marcel cannot prevent Lucky Brand from raising new defense arguments in the case because the 2003 and 2005 lawsuits challenged different actions involving different trademarks occurring at different times.

In her opinion, Justice Sotomayor wrote, “This Court is asked to determine whether Lucky Brand’s failure to litigate the defense in the earlier suit barred Lucky Brand from invoking it in the later suit. … Marcel’s 2011 Action challenged different conduct—and raised different claims—from the 2005 Action. Under those circumstances, Marcel cannot preclude Lucky Brand from raising new defenses.”

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Maryland Sports Betting Expansion Measure will appear on November ballots

The Maryland Sports Betting Expansion Measure, a legislatively referred state statute, was certified for the ballot on May 7. The ballot measure would authorize sports and events wagering at certain licensed facilities. The state revenue generated by such activities would be primarily dedicated to funding public education.

On May 14, 2018, the U.S. Supreme Court ruled 7-2 in Murphy v. NCAA that the federal government could not require states to prohibit sports betting, thereby overturning the federal ban and allowing states to legalize sports betting. As of March 2020, 16 states had active sports betting industries, three of which legalized sports betting by approving a statewide ballot measure. South Dakota voters will vote on a legislatively referred constitutional amendment in November that would legalize sports betting within the city limits of Deadwood, South Dakota.

The Maryland Constitution requires that the Maryland General Assembly refer laws expanding commercial wagering to voters at a general election. In Maryland, a simple majority vote is needed in each chamber of the Maryland General Assembly to refer a state statute to the ballot. The governor is able to veto bills proposing legislatively referred state statutes. The governor has 30 days to sign or veto the bills after they are presented to him. If the governor does not sign a bill by the deadline, the bill is enacted without his signature.

On March 14, 2020, the Maryland House of Representatives voted 129-3 in favor of the measure. On March 18, the Maryland State Senate voted 45-0. Governor Larry Hogan (R) did not sign or veto the bill by the May 7 deadline. Therefore, the sports betting measure was certified for the ballot on May 7 without his signature.

During the 2020 legislative session, the Maryland General Assembly also referred to the 2020 ballot the Legislative Authority over State Budget Amendment, which would authorize the Maryland General Assembly to increase, decrease, or add items to the state budget as long as such measures do not exceed the total proposed budget submitted by the governor.

Since 1996, 34 measures appeared on Maryland ballots. Of that total, 31 were approved, and three were defeated. One legislatively referred state statute appeared on Maryland ballots between 1996 and 2019, and it was approved.

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U.S. Supreme Court agrees to hear case about judicial review of IRS regulations

On May 4, the U.S. Supreme Court agreed to hear CIC Services, LLC v. Internal Revenue Service, which asks whether a law that blocks preemptive lawsuits against tax collection applies to potentially unlawful regulations issued by agencies that are not taxes.

Plaintiff CIC Services, LLC argues citizens should be able to “challenge illegal regulations in court, without having to violate the regulation first and then raise its invalidity as a defense to an enforcement action.”

The IRS argues that the Anti-Injunction Act (AIA), a federal law that bars lawsuits to stop the assessment or collection of taxes, also applies to the regulatory penalties at question in this case because the penalties are deemed to be taxes, which means courts may only review challenges seeking a refund after paying the penalties.

The IRS cited a 2015 opinion from the U.S. Court of Appeals for the D.C. Circuit written by then-judge Kavanaugh concluding that penalties like the ones at issue in this case are in fact treated as taxes under the Tax Code.

The case originates with a 2016 IRS Notice that added transactions taxpayers must report to the agency at the risk of penalty when filing tax returns between $5,000 and $200,000.

In 2017, CIC Services, LLC (CIC) sued, arguing that the IRS published its 2016 Notice without following the procedural requirements of the Administrative Procedure Act (APA) and the Congressional Review Act (CRA).

The U.S. District Court for the Eastern District of Tennessee dismissed the lawsuit citing lack of jurisdiction because of the Anti-Injunction Act. On appeal, the U.S. Court of Appeals for the Sixth Circuit agreed with the district court’s decision to dismiss the case because of the AIA.

The court held that successful challenges to the regulatory aspect of a regulatory tax would invalidate the associated taxes, so the AIA applies no matter how plaintiffs frame their lawsuits.

The U.S. Supreme Court will hear the case during its October 2020-2021 term.

Click here to read the U.S. Supreme Court order.
Click here to read the petition for certiorari.

Click here to read the Sixth Circuit decision.

Supreme Court issues opinions on cases involving property fraud and immigration

On May 7, the Supreme Court of the United States (SCOTUS) issued rulings in two cases argued during its October 2019 term. The court has issued 31 decisions this term.

Kelly v. United States concerned a scheme to reduce local traffic lanes on the George Washington Bridge as retaliation after Fort Lee’s mayor refused to endorse New Jersey Governor Chris Christie’s (R) 2013 re-election bid. The scheme is known as Bridgegate. The case originated from the U.S. Court of Appeals for the 3rd Circuit and was argued on January 14, 2020.

  • The issue: Whether the defendants committed property fraud.
  • The outcome: In a unanimous ruling, the court reversed the 3rd Circuit’s decision, overturning Kelly’s and Baroni’s wire fraud and fraud from federally funded programs convictions. The court held Kelly and Baroni could not have violated the federal program fraud or wire fraud laws because their actions were regulatory in nature and did not seek to obtain money or property. Justice Elena Kagan delivered the opinion.

United States v. Sineneng-Smith concerned 8 U.S.C. §1324, which makes it a federal felony to “encourag[e] or induc[e] an alien to come to, enter, or reside in the United States, knowing or in reckless disregard of the fact that such coming to, entry, or residence is or will be in violation of the law.” The case originated from the U.S. Court of Appeals for the 9th Circuit and was argued on February 25, 2020.

  • The issue: “Whether the federal criminal prohibition against encouraging or inducing illegal immigration for commercial advantage or private financial gain, in violation of 8 U.S.C. 1324(a)(1)(A)(iv) and (B)(i), is facially unconstitutional.”
  • The outcome: The court vacated the judgment of the 9th Circuit and remanded the case in a 9-0 ruling. The court held that the 9th Circuit’s departure from the principle of party presentation, as set forth by Greenlaw v. United States (2008), by reaching to decide a question that was not raised by the respondent in the case constituted an abuse of discretion.

The party presentation principle is a legal principle where parties frame the issues for decision and courts generally serve as neutral arbiters of matters the parties present.

SCOTUS declines to take up challenge against Pennsylvania order curtailing non-essential business operations

On May 6, the Supreme Court of the United States declined to intervene in a lawsuit over a Pennsylvania order curtailing the operations of non-essential businesses, allowing the state supreme court’s ruling, which upheld the order, to stand.

On March 24, the plaintiffs (a number of Pennsylvania businesses) petitioned the Supreme Court of Pennsylvania to vacate Governor Tom Wolf’s (D) March 19 order restricting the operations of non-essential businesses in the state. The plaintiffs alleged that the order violated their constitutional rights to free speech, assembly, and judicial review. The plaintiffs also argued that the order violated their rights by depriving them of their property without due process or just compensation.

On April 13, the state supreme court rejected the plaintiffs’ claims, allowing the order to stand. On April 27, the plaintiffs appealed the decision to the Supreme Court of the United States, seeking a stay of enforcement of the order pending disposition of the case.

On May 6, the high court denied the plaintiffs’ application without comment.

SCOTUS grants review in two cases for October Term 2020-2021

On May 4, the Supreme Court of the United States (SCOTUS) accepted two cases to its merits docket for its upcoming term scheduled to begin on October 5, 2020. The cases have not yet been set for argument.

Edwards v. Vannoy came on a writ of certiorari to the U.S. Court of Appeals for the 5th Circuit and concerns the U.S. Supreme Court’s 2020 decision in Ramos v. Louisiana.
  • The case: A non-unanimous jury found Thedrick Edwards guilty of five counts of armed robbery, one count of attempted armed robbery, two counts of aggravated kidnapping, and one count of aggravated rape. Edwards was sentenced to 30 years imprisonment on each armed robbery count and to life imprisonment on the aggravated kidnapping and aggravated rape counts. Edwards appealed his conviction and sentence, which was denied in state and federal court. He then filed a petition for habeas corpus with the U.S. District Court for the Middle District of Louisiana. The district court denied Edwards’ claim. Edwards appealed to the U.S. Court of Appeals for the 5th Circuit, which refused to issue a certificate of appealability.
  • The issue: Whether the U.S. Supreme Court’s decision in Ramos v. Louisiana (2020) applies retroactively to cases on federal collateral review. In Ramos v. Louisiana, the U.S. Supreme Court held that the 6th Amendment’s right to a unanimous jury verdict to support a conviction applies in both federal and state courts.
CIC Services v. Internal Revenue Service came on a writ of certiorari to the U.S. Court of Appeals for the 6th Circuit and concerns the Anti-Injunction Act, a federal law that bars lawsuits to stop the assessment or collection of taxes.
  • The case: In 2004, Congress authorized the Internal Revenue Service (IRS) to identify and gather details about potential tax shelters. The IRS set up requirements regarding transactions that are required to be reported to the IRS. In 2016, the IRS published a notice identifying certain “micro-captive transactions” as “transactions of interest,” under the umbrella of reportable transactions. In 2017, risk management consulting firm CIC Services challenged the updated requirements in district court as being beyond the scope of the IRS’ authority and sought to stop the notice’s enforcement. The IRS moved for the complaint’s dismissal for lack of subject matter jurisdiction. The court granted the defendant’s motion. On appeal, the Sixth Circuit affirmed the district court’s dismissal.
  • The issue: “Whether the Anti-Injunction Act’s bar on lawsuits for the purpose of restraining the assessment or collection of taxes also bars challenges to unlawful regulatory mandates issued by administrative agencies that are not taxes.”

As of May 4, 2020, the court had agreed to hear 10 cases during its 2020-2021 term.

U.S. Supreme Court decision in County of Maui v. Hawaii Wildlife Fund signals uncertain future for Chevron deference

A recent U.S. Supreme Court case suggests that the court will not rely on Chevron deference as much as it had in the past. On April 23, the U.S. Supreme Court issued an opinion that did not rely on the deference doctrine in a case involving ambiguous legal language.

Chevron deference is an administrative law principle that compels federal courts to accept agency interpretations of ambiguous statutes that Congress empowered the agency to administer.

The court ruled in County of Maui v. Hawaii Wildlife Fund that an ambiguous U.S. Environmental Protection Agency (EPA) permit requirement applied to facilities discharging pollutants that end up in navigable waters. The court’s decision did not rest on Chevron deference, but both the majority and dissenting opinions discussed the doctrine in a way that may shed light on how the court will approach judicial deference in future cases.

Writing for the majority, Justice Stephen Breyer claimed that neither party in the case asked the court to give Chevron deference to the EPA’s interpretation of the permit requirement. He wrote, “Even so, we often pay particular attention to an agency’s views in light of the agency’s expertise in a given area, its knowledge gained through practical experience, and its familiarity with the interpretive demands of administrative need.”

Breyer concluded that the EPA’s interpretation in this case was “neither persuasive nor reasonable” and cited Skidmore v. Swift (1944), which imposes a less stringent deference requirement than Chevron. He also wrote that following the agency’s reading of the law would open a loophole that would allow people to evade the basic purposes of the statute. This suggests that the court may weigh the consequences of deference more when deciding whether deferring to an agency interpretation of a law is appropriate.

In his dissenting opinion, Justice Clarence Thomas gave two reasons why he believed the EPA interpretation of the statute was not entitled to deference. First, no party in the case requested that the court defer to the EPA interpretation. Second, Thomas said the EPA’s reading of the law was not the best one. He argued that Chevron deference might violate the Vesting Clauses of the U.S. Constitution, which give legislative powers to Congress, give the executive power to the president, and give the judicial power to the courts.

Click here to learn more about judicial deference. Click here to read the U.S. Supreme Court opinion.

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