SC Lawyer, November 2007, #3. Review of the 2006-2007 Supreme Court Term.

• Author: By Richard Gershon

South Carolina Lawyer

2007.

SC Lawyer, November 2007, #3.

Review of the 2006-2007 Supreme Court Term

South Carolina Lawyer November 2007 Review of the 2006-2007 Supreme Court Term By Richard Gershon I. Introduction

In the interest of full disclosure, I want to make it clear that I am not a U.S. Supreme Court scholar. On the contrary, I am a tax professor, and I find that the Supreme Court decisions in the area of tax are often misguided. In fact, at a speech Justice Roberts gave to the Charleston School of Law community in October 2006, he commented that the justices fight over who gets stuck with the tax opinions. Nonetheless, I will humbly do my best to recap the most important cases from the U.S. Supreme Court's 2006-07 term.

The 2006-07 term was the first full term of the Roberts Court. During that first term, Justice Anthony Kennedy assumed the role as the swing vote now that Justice O'Connor has retired. It is interesting that during the 2006-07 term, Kennedy voted with the majority in every 5-4 decision as well as every split decision.

Roberts' first term had its share of high-profile cases. The most notable were decisions dealing with abortion, affirmative action, the death penalty and the environment. The Court also dealt with questions in antitrust, administrative law and procedure, education and patents.

Here are some highlights of the 2006-07 term:

2. Cases Involving Governmental Regulation

   It is probably not good to start with a trash case, but United Haulers Assn., Inc. v. Oneida- Herkimer Solid Waste Mgmt. Auth. involved waste processing facilities. In this case, the concern was whether a flow-control ordinance impermissibly burdened interstate commerce. The Second Circuit found that the ordinance did not impermissibly burden interstate commerce because it favored a public rather than a private facility. By a margin of 6-3, the Supreme Court affirmed the Second Circuit's judgment.

   Chief Justice Roberts, who wrote the majority opinion, distinguished the ordinance in question from one that the Court had found impermissible in C & A Carbone, Inc. v. Clarkstown, 511 U. S. 383 (1994), "The only salient difference is that the laws at issue here require haulers to bring waste to facilities owned and operated by a state-created public benefit corporation. We find this difference constitutionally significant. Disposing of trash has been a traditional government activity for years, and laws that favor the government in such areas - but treat every private business, whether in-state or out-of-state, exactly the same - do not discriminate against interstate commerce for purposes of the commerce clause. Applying the commerce clause test reserved for regulations that do not discriminate against interstate commerce, we uphold these ordinances because any incidental burden they may have on interstate commerce does not outweigh the benefits they confer on the citizens of Oneida and Herkimer Counties."

   Qui Tam

   Rockwell International Corp. v. United States (05-1272) started as a qui tam suit initiated by a former Rockwell International engineer, who alleged environmental health and safety violations at Rockwell's Rocky Flats weapons production facility. Rockwell sought to dismiss the complaint by challenging the complainant's status as an original source. The Tenth Circuit Court of Appeals found in favor of the qui tam relator, holding that an independent source need only have "information underlying or supporting the fraud allegations." The Supreme Court granted certiorari to resolve a split in the circuits over the definition of an original source. In a 6-2 decision, the Court found that the complainant was not an "original source" and reversed the Tenth Circuit's decision. Only if the individual has "direct and independent knowledge" of the fraud, however, may that individual be considered an original source and therefore function as a qui tam relator.

   Federal regulation and jurisdiction

   In Watson v. Philip Morris Companies, Inc. (05-1284), the Supreme Court took up the question of whether parties in an industry subject to heavy federal regulation qualify under the federal officer removal statute 28 U.S.C. § 1442(a)(1). In what seems like an obvious decision, the Supreme Court said "no."

   The facts in this case were that Philip Morris removed a class action tobacco lawsuit from an Arkansas state court to the Federal District Court for the Eastern District of Arkansas. Plaintiffs Watson and Lawson sought to remand the case to state court, but their motion was denied. Surprisingly, the Eighth Circuit held that Philip Morris was a corporation qualifying as a "person acting under a federal officer" and thus entitled to removal under 28 U.S.C. § 1442(a)(1). In a unanimous decision, the Court reversed the Eighth Circuit's decision, confirming the boundary between regulatory compliance and government officer status.

3. Public Education Cases

   Individuals with Disabilities Education Act (IDEA)

   Winkelman v. Parma City School District (05-983) Citing disagreement among the circuit courts, the Supreme Court granted cert. to consider whether non-lawyer parents of disabled children may pursue an IDEA claim pro se in federal court. In its decision, the Court reviewed the IDEA statute, discussing specific instances in which it anticipated parents initiating and participating in administrative proceedings. The Court also found language that presumes and affirms parents' rights under the act. Concluding that parents do indeed have enforceable rights under the IDEA, the Court reversed the ruling of the Sixth Circuit.

   It should be noted that school districts often raise unauthorized practice of law claims against parents who raise issues under IDEA. This case should help to clarify the rights of parents in these situations.

   Affirmative Action - Using Race as A Factor in School Placement

   In the final week of its term, the Court handed down its decision in two public education affirmative action cases: Parents Involved in Community Schools v. Seattle School District No. 1 (05-908) and Meredith v. Jefferson County Board of Education (05-915). These cases involved school districts that used race as a factor to determine placement among students competing for spots in the same public school. The Court decided by a margin of 5-4 that the programs in question impermissibly used individual racial classifications to place students in particular schools. The opinions in this case showed that there is still a great deal of disagreement among the justices on the use of race as a factor, particularly in public education.

   "BONG HiTS 4 JESUS"

   Morse v. Frederick (06-278) involved a public event heavily attended and endorsed by the local public high school. At that gathering, students displayed a banner that read "BONG HiTS 4 JESUS." School administrator Morse demanded that the students remove the banner. When student Frederick refused, Morse confiscated the banner and suspended Frederick. Frederick sued, alleging a violation of his first amendment right to free expression, further arguing that the school administrators should not be immune from liability. The Ninth Circuit found a First Amendment violation because the school did not establish a "risk of substantial disruption" from Frederick's speech. The Supreme Court reversed citing the "'special characteristics of the school environment,' Tinker, 393 U. S., at 506, and the governmental interest in stopping student drug abuse - reflected in the policies of Congress and myriad school boards - allow schools to restrict student expression that they reasonably regard as promoting illegal drug use."

4. Environmental Protection Agency (EPA)'s Refusal to Regulate

   In the case of Massachusetts v. Environmental Protection Agency (05-1120) Justice Stevens, writing for the majority, strongly reproached the EPA's deference to executive priorities, holding that Massachusetts does have standing to sue the EPA, that the EPA does have the authority to regulate greenhouse gas emissions from new vehicles and that the EPA's refusal to regulate despite its authority to do so "rests on reasoning divorced from the statutory text." The decision was 5-4 in favor of the petitioners.

   The controversy arose from a 1999 rulemaking petition in which the International Center for Technology Assessment (CTA) urged the EPA to regulate "greenhouse gas emissions from new motor vehicles under §202 of the Clean Air Act." The EPA denied the rulemaking petition, reasoning that it had no authority to regulate global greenhouse gas emissions. More importantly, the EPA stated that even if it could regulate such emissions, it would refuse to do so as a political matter.

5. Partial Birth Abortion

   In one of the most publicized cases of the term, the Supreme Court considered the constitutionality of a congressional ban on partial-birth abortion. In Roe v. Wade, 410 U.S. 113, 153 (1973), the Court found that the due process clause of the Fourteenth Amendment protects a woman's right to terminate a pregnancy. In 1992, the Court further held that the state may regulate abortion, but it may not impose an "undue burden" on a woman's right to choose abortion prior to viability. Planned Parenthood of Southeastern Pennsylvania v. Casey, 505 U.S. 833, 877 (1992). In Stenberg v. Carhart, the Court applied Casey to a Nebraska ban on "partial-birth" abortion, holding that the Nebraska law was unconstitutional because it lacked a health exception. 530 U.S. 914, 930 (2000). In 2003, the U.S. Congress passed the Partial Birth Abortion Ban Act. In Gonzales v. Carhart (05-380); Gonzales v. Planned Parenthood Federation of America, Inc., (05-1382) Carhart and Planned Parenthood, respectively, sought to enjoin enforcement of this act, arguing that it was vague and overbroad. The Supreme Court held, by a 5-4 margin, that the act "is not void for vagueness, does not impose an undue burden from any overbreadth, and is not invalid on its face."

6. Establishment Clause

   Hein v. Freedom from Religion (06-157) was a taxpayer standing case involving the Freedom from Religion Foundation's challenge to the Faith Based and Community Initiatives (FBCI). FBCI is a program that used funds appropriated by Congress to fund a series of conferences on providing social services through religious organizations. The Supreme Court granted certiorari to determine whether taxpayers have the ability to challenge the actions of the executive branch based on the establishment clause of the First Amendment. In a split decision, the Court distinguished this case from Flast v. Cohen, 392 U.S. 83, 88 (1968). In Flast, taxpayers were found to have standing to challenge a direct appropriation of federal funds for parochial school educational materials. In Hein, the Court found that taxpayers did not have standing to challenge the FBCI program.

7. Employment Cases

   Consequences of past discrimination

   Ledbetter v. Goodyear Tire & Rubber Co. (05-1074) When an employee believes she has been subject to discrimination under Title VII, she has 180 days to file a charge with the EEOC. In this case, the plaintiff argued that even though the alleged discriminatory acts had taken place years before she filed her claim, each paycheck in which her pay differed from that of her male colleagues was a new discriminatory act. By a 5-4 majority, the Court found that "a pay-setting decision is a discrete act," and thus it affirmed the Eleventh Circuit's decision that the plaintiff could only use the pay decision that immediately preceded the allegedly discriminatory paychecks.

   Household caregivers employed by third-party service providers

   In Long Island Care at Home v. Coke (06-593) Coke, a homecare worker employed by third-party provider Long Island Care at Home, brought suit questioning the validity of 29 C.F.R. § 552.109(a), exempting third-party homecare service providers from the Fair Labor Standards Act. That act sets the minimum wage and other mandatory benefits for workers. The Second Circuit Court of Appeals held that the regulation was unenforceable. In a unanimous decision, the Supreme Court reversed the judgment of the Second Circuit, finding that the courts should defer to the Department of Labor.

   ERISA

   When Crown Vantage, Inc. entered into bankruptcy proceedings, it terminated its existing single-employer defined-benefit pension plan by purchasing an annuity, rather than merging the plan into a group of plans administered by PACE International Union (PACE), which represented a number of Crown's employees. PACE then sued Crown for failure to discharge its ERISA duties because it failed to consider merging its retirement plan with PACE. The Court of Appeals for the Ninth Circuit upheld the lower court's decision that Crown's failure to adequately consider the merger as an option was a violation of its fiduciary duty under ERISA. In Beck v. PACE Int'l Union (05-1448), the Supreme Court reversed the Ninth Circuit. The unanimous holding stated that Crown was not required to consider a merger. The Court then went even further, stating that Crown was not even permitted to merge as a way of terminating this type of pension plan.

8. Campaign Reform

   The cases of Federal Election Commission v. Wisconsin Right to Life (06-969) and McCain v. Wisconsin Right to Life 06-970 arose when Wisconsin Right to Life (WRTL) sought a preliminary injunction to allow it to continue running ads at a time when campaign ads were restricted by the Bipartisan Campaign Reform Act of 2002. The Supreme Court affirmed the judgment of the lower court in favor of Wisconsin Right to Life. Chief Justice Roberts wrote in his opinion for the Court, ". . . the First Amendment requires us to err on the side of protecting political speech rather than suppressing it. We conclude that the speech at issue in this as-applied challenge is not the 'functional equivalent' of express campaign speech. We further conclude that the interests held to justify restricting corporate campaign speech or its functional equivalent do not justify restricting issue advocacy, and accordingly, we hold that BCRA §203 is unconstitutional as applied to the advertisements at issue in these cases."

9. Criminal Law and Procedure

   Fourth Amendment

   In Brendlin v. California (06-8120), the state claimed that passengers were free to leave the scene of a traffic stop and were thus not seized for Fourth Amendment purposes. In a 9-0 decision, the Court disagreed with the state, saying, "When a police officer makes a traffic stop, the driver of the car is seized within the meaning of the Fourth Amendment. The question in this case is whether the same is true of a passenger. We hold that a passenger is seized as well and so may challenge the constitutionality of the stop."

   Even a tax professor would have gotten this one right!

   Eighth Amendment

   Panetti v. Quarterman (06-6407) was an appeal of the Fifth Circuit's holding that a mentally ill death row inmate who understood his crime but believed that his execution was being imposed for fantastical reasons was nonetheless competent to be executed. In a 5-4 decision, the Supreme Court reversed the Fifth Circuit's judgment but declined to establish a test for competency.

   Courtroom conduct

   Carey v. Musladin 05-785 is an interesting case involving the effect of conduct by private individuals on the constitutional rights of the defendant. During Musladin's murder trial in a California district court, the victim's family wore pictures of the victim on buttons. Musladin requested the judge to instruct the family members to stop wearing the buttons to avoid prejudicing the jury. The judge denied the request, and Musladin was convicted of murder. He appealed to the California Court of Appeals, which upheld the district court's ruling, holding that, although the buttons were an impermissible prejudicial factor, the buttons did not brand Musladin as guilty.

   Musladin filed for a writ of habeas corpus in federal district court, suing under 28 U.S.C. § 2254(d)(1) of the Anti-Terrorism and Effective Death Penalty Act. He argued that the state court unreasonably applied clearly established federal law that guaranteed him a right to a fair trial. The district court denied the writ of habeas corpus. On appeal, the United States Courts of Appeals for the Ninth Circuit reversed, holding that the buttons were an impermissible factor and that there was no requirement of "branding."

   The Supreme Court reversed the Ninth Circuit. Justice Thomas' opinion on behalf of the Court states, "This Court has recognized that certain courtroom practices are so inherently prejudicial that they deprive the defendant of a fair trial. Estelle v. Williams, 425 U. S. 501, 503-506 (1976); Holbrook v. Flynn, 475 U. S. 560, 568 (1986). In this case, a state court held that buttons displaying the victim's image worn by the victim's family during respondent's trial did not deny respondent his right to a fair trial. We must decide whether that holding was contrary to or an unreasonable application of clearly established federal law, as determined by this Court. 28 U. S. C. §2254(d)(1). We hold that it was not."

   Jurisdiction and Late Filing

   Bowles v. Russell (06-5306) Petitioner Bowles was convicted of felony murder in state court. After unsuccessfully appealing within the state court system, Bowles filed a habeas petition in federal court. After his petition was denied, he moved for a new trial on the petition. The district court denied that motion, but Bowles was not informed of the denial. The district court, following the applicable provision in the Federal Rules of Appellate Procedure, re-opened the period for Bowles to file an appeal. In its order, however, it gave a deadline 17 days after the new period began. This extended the period 3 days beyond the allowable 14 days. Bowles filed his appeal 16 days later. The Sixth Circuit, noting the lateness, found that the district court did not have the authority to extend the deadline by three days and dismissed it based on lack of jurisdiction.

   In a 5-4 decision, the Supreme Court affirmed the Sixth Circuit's decision, finding that even though Bowles had relied upon the District Court's order, the appellate court still had no jurisdiction. Justice Thomas, writing for the majority, stated, "Today we make clear that the timely filing of a notice of appeal in a civil case is a jurisdictional requirement. Because this Court has no authority to create equitable exceptions to jurisdictional requirements, use of the 'unique circumstances' doctrine is illegitimate."

   The strong dissent joined in by all four minority justices is worth reading. It accuses the majority of allowing a "bait and switch."

10. Antitrust Cases

    Vertical price agreements and the per se rule

    In a decision that overturned a long-standing precedent, Leegin Creative Leather Products v. PSKS, Inc. 06-480 involved a vertical-pricing agreement in which a manufacturer required retailers not to sell their products below a minimum price. Under Dr. Miles Medical Co. v. John D. Park & Sons, 220 U.S. 373 (1911), such resale price maintenance agreements were per se illegal under section one of the Sherman Antitrust Act as restraints on competition.

    In the 5-4 Leegin decision, Justice Kennedy wrote for the majority, "The Court has abandoned the rule of per se illegality for other vertical restraints a manufacturer imposes on its distributors. Respected economic analysts, furthermore, conclude that vertical price restraints can have procompetitive effects. We now hold that Dr. Miles should be overruled and that vertical price restraints are to be judged by the rule of reason."

    Specificity of antitrust complaints

    In Bell Atlantic Corporation v. Twombly 05-1126, Twombly sued Bell Atlantic for violating section one of the Sherman Antitrust Act, found in 15 U.S.C. § 1. He complained that the companies created by the breakup of AT&T agreed not to compete with each other and to hinder other companies from entering the local telephone service market. The district court dismissed the case, stating that Twombly needed to establish at least one "plus-factor" in his complaint, which requires a reason why individual self-interest is an unlikely explanation for the companies' behavior.

    On appeal, the United States Court of Appeals for the Second Circuit reversed the district court's decision, remanding the case to the district court. The court of appeals held that all that is necessary in an antitrust complaint is an allegation of a conspiracy and sufficient facts that establish the conspiracy, and that plus-factors are not necessary.

    Twombly's complaint, however, pointed only to "conspiracy" and "parallel conduct," which the district court found to be insufficient to survive a motion to dismiss under rule eight of the Federal Rules of Civil Procedure. The Second Circuit reversed the lower court, and the Supreme Court, by a 7-2 majority, reversed the Second Circuit.

    Writing for the Court, Justice Souter explained, "This case presents the antecedent question of what a plaintiff must plead in order to state a claim under §1 of the Sherman Act. Federal Rule of Civil Procedure 8(a)(2) requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests,' Conley v. Gibson, 355 U. S. 41, 47 (1957)." Although it did not overturn the Conley v. Gibson precedent, which articulated that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," the Court did increase the pleadings burdens for antitrust plaintiffs seeking to compel discovery.

    Justice Stevens dissented in Twombly, writing, "I would not rewrite the Nation's civil procedure textbooks and call into doubt the pleading rules of most of its States without far more informed deliberation as to the costs of doing so. Congress has established a process - a rulemaking process - for revisions of that order. I fear that the unfortunate result of the majority's new pleading rule will be to invite lawyers' debates over economic theory to conclusively resolve antitrust suits in the absence of any evidence."

11. Patents

    The Patent Bar was especially interested in the outcome of KSR International Co. v. Teleflex, Inc. 04-1350, which dealt with the issue of obviousness. The Patent Act of 1952 provides that an invention cannot be patented if it "would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." (35 U.S.C. §103). Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966).

    In the appeal of Teleflex's patent-infringement suit against KSR, KSR claimed that Teleflex's patented technology was obvious and therefore the patent invalid. The Supreme Court dismissed the Federal Circuit's holding that a patent was not obvious because the party claiming obviousness failed to establish that some "'suggestion, teaching, or motivation' would have led a person of ordinary skill" in the field "to combine the prior art teachings" to create the patented device. Unfortunately, the Supreme Court passed up the opportunity to create a rule for establishing obviousness, even though it struck down the Federal Circuit's determination.

    Richard Gershon is Dean of the Charleston School of Law.