Supreme Court: The Term in Review (2009-2010) Part 2 of 2
Articles,  Blog

Supreme Court: The Term in Review (2009-2010) Part 2 of 2

Welcome back. Some of the most interesting and important
decisions the Court reached this term involved the First Amendment. They address questions of free speech, religious
freedom, and freedom of association. Suzanna Sherry and Erwin Chemerinsky are here
to help us understand those opinions and their implications. Perhaps the most important decision of
this term and certainly one of the most anticipated was Citizens United v. Federal Election Commission. In 2003 the Court upheld the portion of the Bipartisan
Campaign Finance Reform Act, otherwise known as the McCain-Feingold Act,
that prohibited independent expenditures by corporations and unions 30 days before a primary or 60 days
before a general election for advertisements over broadcast media for or against an identifiable candidate. That decision was McConnell v. Federal Election
Commission. Citizens United, a conservative political action corporation, made a highly critical video about Hillary
Clinton to be shown over video-on-demand services. The original question was whether McCain-Feingold
applied to video-on-demand. But after holding the case over for re-
argument this term, the Court had the parties argue whether its McConnell decision or an earlier decision allowing restrictions
on corporate expenditures, Austin v. Michigan Chamber of Commerce, should be overturned. Erwin, how did the Court deal with these
precedents? The Court overruled them. The Supreme Court in a 5-4 decision said that prior cases established that spending money
in elections is core political speech. The Court said that corporations have the same
free speech rights as individuals; therefore, corporations have the same right to
engage in independent expenditures. The earlier cases were based on the premise that the government can prevent the distorting
effects of corporate wealth on the election process. The Supreme Court expressly overruled that. Did the Court leave any way for Congress to
regulate campaign expenditures, Suzanna? Yes, it did. First the Court upheld the
disclaimer and disclosure provisions of the law because those provisions don’t prevent anybody
from speaking. So the Court says those provisions need to be justified only by an important
state interest, and informing the electorate is a sufficiently important state interest. The Court also explicitly did not decide whether Congress has a compelling interest in regulating expenditures by foreign corporations.
How widespread do you think this decision will be felt? Well, if Congress acts to reenact limitations,
the courts will have to consider the constitutionality of any new laws under the principles that
the Court announced in this case. And what the Court has told us is that direct
limits on corporate political speech have to be narrowly tailored to achieve a compelling
state interest, and that combating the distorting effects of wealth, as Erwin mentioned was an
earlier interest, is not such a sufficient interest. I agree with Susanna, but I think the effects are
going to be even broader than that. This means that any state or local campaign
finance law limiting what corporations and unions can spend
is unconstitutional. I also think that limits on contributions
are likely to be vulnerable. Now, the Court here didn’t deal with laws that prevent
corporations and unions from contributing money to candidates. But once the Supreme Court says that corporations have the same free speech rights
as individuals, it’s hard to see then why they wouldn’t have the same right to make contributions to candidates that individuals
have. The constitutionality of another federal statute
was in question in our next case, Holder v. Humanitarian Law Project. Here the federal law was 18 U.S.C. section
2339B, which prohibits provision of material support
or resources to foreign groups designated as terrorist
organizations. The plaintiffs of this case wanted to provide
humanitarian aid, legal training, and political advocacy to 2
organizations designated as terrorist groups by the U.S. State Department. These were a pro-Kurdish independence organization,
called the PKK, and a group supporting the Tamils in Sri Lanka,
called the LTTE. The plaintiffs challenged the law on 3
grounds: first, that it was unconstitutionally vague; second, that it violated their First Amendment speech rights; and third, that it violated their First Amendment association
rights. The Supreme Court upheld the law on all 3
challenges. Suzanna, can you explain why they did that?
Well, before I do I have to talk about interpreting the statute,
because the Court had to interpret the statute before it reached the constitutional issue. The plaintiffs had argued that the statute
should be interpreted to require an intent to further an organization’s terrorist activities. But the Court rejected that because the
statute requires only that the person providing material support knows that it has been designated
a terrorist organization or that it engages in terrorist acts. Once the Court interpreted the statute that
way, then it said that the language was not vague, because a person of ordinary intelligence would know whether the activities he wanted to
engage in were prohibited. And the Court did say that many of the activities
that the plaintiffs wanted to engage in were prohibited by the statute. What about their First Amendment speech rights? The Court found the speech at issue in this
case was not protected by the First Amendment. It’s important to note that some of what the
individuals wanted to do was just expressive activity. One group of the plaintiffs said that they wanted to advise one of the groups with regard to how to use international law for
peaceful purposes. But the Supreme Court said that could be used to aid terrorist activity. Another group of plaintiffs wanted to be able
to help a group raise money for humanitarian purposes. The Supreme Court said that could be diverted to terrorist activity. So the Supreme Court said, since this was speech coordinated with a foreign terrorist organization, it was not protected by the First Amendment. The Court actually took a sort of a middle road
with regard to the speech at issue. The plaintiffs had argued that this was pure
speech, and the government had argued that it was
pure conduct with only incidental effects on speech. And the Court
rejected both of those. It rejected the government’s argument
that the Court should apply intermediate scrutiny
under U.S. v. O’Brien, and instead the Court applied what it called a more demanding standard
and then upheld the statute under that demanding standard. How do you think these decisions–this decision
is going to play out in the future? That’s actually a little hard to tell because
of the standard of review question. The majority never says that it’s applying strict scrutiny, although some of its language seems to … to
sound like strict scrutiny. For example, the Court talks about the “government’s urgent
objective of the highest order” and says that courts can’t abdicate their responsibilities
on questions of free speech. So it might have been–applied strict scrutiny
and then have been persuaded by the evidence that the statute was necessary to prevent
terrorist activity. But there is other language in the opinion that suggests a more deferential approach. For example, the Court says that the views
of the political branches are “entitled to deference” and that there is “no reason to question” congressional findings. So it’s possible that the Court is applying
a more deferential standard. I want to emphasize that latter point. There
is a good deal of language in Chief Justice Robert’s majority opinion about the need to defer to Congress and the
Executive when it comes to fighting foreign terrorism. And that’s the ultimate distinction
the Court focused on with regard to speech. The Court says anybody has the right to engage in independent advocacy, even for the goals of a foreign terrorist
organization, but coordinated speech with a foreign terrorist
organization is not protected by the First Amendment, and it can be punished. The First Amendment rights of student religious
groups were the issue in our next case, Christian Legal Society v. Martinez. Hastings Law School in San Francisco had a policy that in order for a student group to be recognized, and therefore financially assisted by the school, the group had to agree not to deny membership to
any student on the basis of several factors, including religion and sexual orientation. The CLS chapter on campus wanted to deny membership to non-Christians and what it called “unrepentant” gays and
lesbians. When the law school refused to recognize
the chapter as a Registered Student Organization, or RSO, CLS sued the school for violation of its free speech, expressive association, and free exercise rights under the First Amendment. The district court granted the school summary
judgment, and the appeals court affirmed. Same result on the Supreme Court, Suzanna?
Same result. They affirmed, but the important part of the case was the framework that the Court
used to analyze the question. What the Court said is that Hastings, in recognizing these student organizations,
had created a “limited public forum” and that the jurisprudence of limited public forum doctrine applied to both the speech claims and the expressive
conduct claims. And then under that jurisprudence, a– restrictions on speech or on expressive conduct are constitutional as long as they are reasonable and viewpoint neutral. And the Court called Hastings’ “all comers” policy a textbook example of viewpoint neutrality
because it requires all student organizations to accept all students. The Court also emphasized that this wasn’t the
situation where the school was forcing student groups
to accept members. So this is about the school deciding what student groups it wanted to fund. Also, the Court emphasized that there were other
ways in which the Christian Legal Society could reach out to and meet with its members. Erwin’s last point is very important because the
majority notes that the limited public forum jurisprudence is based on that distinction–on the distinction between a state prohibition on
speech and a state refusal to support speech. So this case is limited only to cases where
the state refuses to support the speech. Erwin, you’re the dean at a law school at a public
university. What does this decision mean to you? I think it’s a very important decision. This is a hard case because there’s a tension between
the school’s desire to stop discrimination by student groups and
the freedom of association claim. I think what this means for public university
law schools is to say that every student group has to be available to
all students. Where does the money for students groups come from?
It comes from a student activity fee and it also comes from the state. And what the Supreme Court is saying here is
it’s wrong to force students to pay money to support groups
that they can’t be a member of. But the Court did say it had to be strictly applied across those settings, right?
It’s very important–Suzanna said it– here the Supreme Court, because of a stipulation in the trial court, assumed that this was an “all comers” policy. However, I think where you’ll see litigation in
the future is challengers arguing that schools aren’t applying their policies in an even-handed
way– that whatever it may say in the language of the
policy, it’s discriminatory in enforcement. And the Supreme Court is very much left with open challenges on that basis. Group rights were also at the heart of the decision
in Doe #1 v. Reed. Washington state adopted a law expanding
the rights of same sex partners. A private group named Project Marriage Washington gathered more than a hundred and thirty-seven
thousand signatures to put on a referendum on the ballot to have the law repealed. Under another Washington state law, public
documents like the petitions listing the names and addresses of the referendum supporters are available on request. Referendum opponents sought to obtain these petitions in a plan to post them on the Internet
so the names of the referendum supporters were made public. The petitioner in this case, known only as Doe #1, and others sued in federal court to enjoin the petition’s
release, arguing that the public records law was unconstitutional as applied to petitions to
referenda and initiatives, and that applying the
public records law here was unconstitutional because it would likely lead to threats, harassment,
and reprisals. The district court agreed with the plaintiffs
on Count 1 and so never reached Count 2. The Ninth Circuit Court of Appeals reversed. Erwin, what did the Supreme Court decide? The
Supreme Court affirmed the Ninth Circuit and remanded the case. The Supreme Court said that it does not inherently
violate the First Amendment to disclose the signers for a ballot petition. The Supreme Court said that signing a petition for a referendum like this is political speech. The Court emphasized how the state has many
interests in that disclosure. Disclosure can prevent fraud. Also apart from fraud, it might disclose individuals who signed more
than one petition or signed the petition more than once, or a situation where individuals who signed weren’t registered voters. I think that’s right on the doctrine, but there
was a dissent and so many concurrences that it–it’s not exactly clear where we go
from here. For example, Justice Thomas finds that any
disclosure of names would violate the First Amendment. And Justice Alito, in a concurrence,
indicates that he would be likely to find that the disclosures in this case violate
the First Amendment because they impose such a severe burden on the plaintiffs. But on the other hand, Justices Stevens, Ginsburg, and Breyer and
Sotomayor think that plaintiffs face a very heavy burden in trying to show that
disclosures violate their rights, and that plaintiffs are unlikely to be able
to satisfy that burden in this case or in most cases. And Justice
Scalia doesn’t think that there’s any right to anonymity at all. He doesn’t think the First
Amendment is implicated. So by my count, that makes 2 votes to block most releases of information and
5 votes, counting Justice Stevens, to allow most releases
of this information. So I think the Chief Justice, Justice Kennedy, and the new justice will be the deciding votes
in future cases. Thanks, Suzanna. Thanks, Erwin. Erwin and Suzanna will be back in a moment with
Stephanie to talk about some federalism decisions. The Court’s federalism decisions can sometimes seem
a bit arcane when compared to other opinions dealing with
more meat and potato issues, like search and seizure or habeas corpus. But the two federalism decisions we’re going
to talk about next deal with such real world problems as gun violence and the legal rights
of federal prisoners deemed to be sexually dangerous. McDonald v. the City of Chicago follows on the Court’s historic decision from
2 terms ago in the District of Columbia v. Heller, where the Court held that the Second Amendment
protected the rights of individuals in D.C. to have firearms in their homes for protection. Because the district is a federal enclave, the Court in Heller did not decide whether
the Second Amendment right applied to the states. Now, in McDonald, it does. A 5 justice
majority finds the Second Amendment right is applicable to state and local governments. Suzanna, what was the majority’s reasoning here? Well, Justice Alito wrote the opinion for the
majority, and he used historical analysis to determine whether the rights that are protected
by the Second Amendment are fundamental to our system of ordered liberty and therefore
applicable against the state, and he said that the Heller case had already answered those questions,
self-defense is a basic fundamental right, and it is the essential element or the core
element of the Second Amendment. So it does apply to the states. Now, Justice Thomas
agreed with the result, and he agreed with much of the majority’s historical
analysis, but he would not have gone with the Due Process Clause. He would have rested
application of the Second Amendment to the states on the Privileges or Immunities Clause
instead. So does this mean all gun regulation is
unconstitutional? No, no, the Court was careful, as it was in Heller, to limit the right to
handgun ownership for self-defense in the home. And it explicitly did not talk
about whether there could be other limits on who could own guns or where they could
have them and so on. Okay. What do you think the effect of this decision
will be on the lower courts? I think this case opens the door to challenges in
the federal courts to all sorts of state and local gun control laws. But, as you remember, the Court did not specify the standard of review– the level of scrutiny to be used. The Court was clear, as Suzanna said, that the government can’t ban all ownership or possession of handguns, especially in the home for purposes
of self-defense. But beyond that, it’s uncertain what regulation
would be allowed. And I think it’s important to note that the challenges have already begun. Not long after McDonald struck down the Chicago
ordinance, Chicago adopted a new gun control law that
had many parts. It said that people could only have one gun. It said that the gun has to be–if there’s
children in the home– either with a trigger lock or in a locked box. It said that people, in order to have a gun, have to
have training. And the challenge has already been brought to that law. Thank you. Our second federalism
opinion, United States v. Comstock, explores the limits of congressional power. Under the Adam Walsh Child Protection Act
of 2006, the U.S. Attorney General can request indefinite
civil commitment of prisoners in the custody of the Federal Bureau of Prisons who have finished serving their criminal sentence. The prisoner must be found to be “sexually
dangerous” by clear and convincing evidence in federal court and can have their commitment reviewed every
6 months to determine whether they should still be considered sexually dangerous. A number of prisoners who have been civilly committed
under the Act challenged it constitutionally as a violation of their due process and equal
protection rights, a violation of the Double Jeopardy and Ex Post Facto Clauses, and finally, for exceeding the powers granted to
Congress under Article 1 section 8 of the Constitution. How did the Court respond to these arguments,
Suzanna? The Court focused on the Article 1 section
8 question, and a 7 to 2 majority gave a very broad reading to the Necessary
and Proper Clause. The Court says that a statute is constitutional
under that clause if it’s rationally related to the implementation of a constitutionally
enumerated power, and the relationship can be quite attenuated. So, for example, in this case the Court found
that the right to pass the underlying criminal statutes for which the defendants were incarcerated was implied from an enumerated power,
although, interestingly, the Court didn’t specify which enumerated power. And then the power to build and run prisons
was implied from the power to pass the criminal statutes, and the power to civilly commit
these defendants was implied from the power to run–to build and run prisons. So under the Necessary and Proper Clause,
then, Congress did have the authority to put a civil hold on prisoners
who were found to be sexually dangerous. And it’s important to note that the Supreme Court
focused only on the issue of federal power. In 1997, in Kansas v. Hendricks,
the Supreme Court said that states can provide for the indefinite commitment
of the sexually dangerous even if they complete their sentence. The Supreme Court said here it wasn’t going
to reconsider that ruling and remanded to the lower court for consideration of any other issues beyond the one it resolved, the scope of federal power. I think we also should note that the Court
gave a very narrow reading to the Tenth Amendment and states’ sovereignty. What the Court said is that the powers
that are delegated to Congress, including by the Necessary and Proper Clause and including the
implied powers, are not powers that are reserved to the states
under the Tenth Amendment. The Court cited quite a few of the older
Tenth Amendment decisions, and I think that’s a signal that the Court is … is not likely to expand the reach of the Tenth
Amendment anytime soon. I agree. And I think that’s very important. I think when constitutional historians look
back at the Rehnquist Court they will say its greatest changes in the law were in the area
of federalism, narrowing the scope of Congress’s power, expanding the reach of the Tenth Amendment. Here at least the Robert’s Court has shown
that it doesn’t want to go down that path. Thank you, Erwin. And thank you, Suzanna. Suzanna and I will be back in a moment with
Evan Lee to look at some opinions regarding the power and jurisdiction of the federal courts. Hello. Evan Lee has joined Suzanna Sherry and me
to talk about several decisions the justices reached this term regarding the authority and
jurisdiction of the federal courts. In our first case, Wanda Krupski injured
herself aboard a cruise ship owned by an Italian firm named Costa Crociere. When she sued to recover damages, however,
she initially filed against the firm’s U.S. subsidiary, Costa Cruises, in a diversity action in
federal court. Costa Cruises tried 3 times to make
Krupski aware of its Italian parent company. Finally, Krupski filed an amended complaint
against Costa Crociere, but not until the statute of limitations
period had expired. The question before the Supreme Court was
whether the amended complaint related back to the original filing under Federal Rule of
Civil Procedure 15(c)(1)(C). Suzanna, did Krupski meet the requirements for that
rule to allow the amended complaint to relate back? She did. There are 3 requirements under Rule 15(c)
for an amended complaint to relate back. First, the amended claim has to arise out
of the same set of facts as the original claim. Second, the newly named defendant has
to have notice of the suit within 120 days, and finally–and this is the key question for
the Court in this case–the new party has to know or should know that the action would
have been brought against it, but for a mistake on the part of the plaintiff. So what was Costa Crociere arguing? The cruise line argued successfully in the lower courts that Krupski’s
amended complaint did not relate back because she knew of Costa Crociere’s existence. I mean
you have to remember that the U.S. subsidiary had told her of its existence 3 times and that she made a deliberate decision not to sue that company. And then the cruise line’s fallback
position was that even if she had not made a deliberate decision,
but instead had, you know, made a mistake, she took so long to amend her complaint that
it showed a lack of diligence on her part, and therefore that should prevent it from
relating back. How did the Supreme Court respond to these
arguments? They rejected them unanimously. The Court said that what Krupski knew or should have known was irrelevant
to the question. What was important was what Costa Crociere knew or should have known– that it did know or should have
known, but for her mistake, it would have been named. Yeah, the Court said the amending party’s mental status will sometimes be relevant, but only indirectly in that it may create the impression of
mistake versus strategic maneuver in the mind of the party to be added to
the suit. The Court found that the lower courts had been mistaken to focus on
the plaintiff’s mental state and conduct rather than the mental
state of the party to be added. On the conduct question, the Court
explicitly said that the plaintiff’s diligence, or in this case lack of diligence, plays no role in determining whether an amended complaint relates back under the
rule. The Court did add one very important caveat, though. The Court said that if a plaintiff, fully understanding the roles of all the various
parties, chooses to sue one party rather than another, then that’s not a mistake and the claim–
the new claim will not relate back. The Court didn’t explain, though, whether this
failure to relate back is because without a mistake Rule 15(c) is not applicable at all
or because in those circumstances the defendant had no way of suspecting a mistake. If we could
go back to the diligence question for just a second– while diligence plays no part under Rule 15 in determining if an amended
complaint relates back to the original complaint, the Court did say that diligence is a factor
that courts can consider in deciding whether to allow an amendment at all under Rule 15 and the Court’s decision in Foman v. Davis. So the district court in Krupski’s case might
have been within its discretion to simply deny her the right to amend at all. Thank you. Our next decision, Dolan v. United States,
deals with restitution not in a civil but in a criminal case, and what happens with
the victim’s rights when the court misses a deadline. Brian Dolan pled guilty to a federal charge of
physical assault that made restitution to his victim mandatory under federal law. But while noting in his judgment that Dolan had
to pay restitution, the judge wrote that he lacked enough information
to say how much Dolan owed and did not order it at that time. Chapter 18 of the U.S. Code section 3664(d)(5) requires that “the court shall set a date for the
final determination of the victim’s losses, not to exceed 90 days after sentencing.” Nevertheless, the court scheduled a restitution
hearing for a date about 3 months after the 90-day deadline expired. Neither side objected at the time, but at the hearing Dolan noted that the deadline had passed
and that the law no longer authorized the court to order restitution. Evan, did the Supreme Court agree that the
sentencing court no longer had jurisdiction to order restitution? No, the court had jurisdiction. The 5 justice majority held that missing that 90-day deadline does not
deprive a sentencing court of the power to eventually order restitution, at least where
the court had previously made it clear within that 90-day
deadline that it would order restitution whenever that amount becomes available. Yeah, the Court divided–said that there
were 3 different kinds of statutory deadlines. The first are the truly jurisdictional deadlines,
and those are absolute. There’s a second kind of deadline,
which is a claims processing deadline, and those are forfeited by the non-claiming
party if he or she fails to raise the objection
in a timely manner. And then the third kind of directive is what the Court called a “time-
related” directive, and those violations don’t deprive the courts of the power to
act. And the Court held that section 3664(d)(5) is one of these third
kinds, a time-related directive. So the sentencing judge did not
lose the power to order restitution just by missing the 90-day deadline. I see. In our next case, Mohawk Industries,
Inc. v. Carpenter, the trial court may or may not have made
a mistake, and the question was, who gets to decide? The specific question was whether
court-ordered disclosure of information that a party claims is protected by attorney-client
privilege is immediately appealable under the collateral order doctrine. Suzanna, there was a split among the circuits for this question
prior to this decision, wasn’t there? That’s right. The Third, Ninth, and D.C. Circuits had
allowed interlocutory appeals in these sorts of attorney-client privilege cases, but the
Supreme Court in this case disagreed. It said that the purpose … the Supreme Court said
the purpose of the collateral order doctrine is to allow a review of
interlocutory orders that were “otherwise unreviewable,” and these kinds of orders didn’t fit
that characterization. The Court said also that the lack of an immediate
appeal wasn’t going to chill attorney-client communications
because, first of all, the applicability of the privilege in any given case is always
uncertain, and the–there’s a distance in time between
the disclosure and any appeal. And did the Court give other reasons not
to extend the collateral order doctrine to this situation, Evan? Yeah, it did. It did.
The Court said that counsel and the court had other options for dealing
with this situation. One, appellate courts can remedy the improper disclosure of privileged
material by vacating an adverse final judgment and
then remanding for a new trial where the protected material and its
fruits would be excluded from evidence. Two, the trial court could certify the interlocutory appeal
under section 1292B. Three, the party can file a writ of mandamus. And four, the party could just ignore the order, which would be contempt and which is immediately appealable. So with all of these other avenues available,
the justices didn’t think it was necessary to enlarge the collateral order doctrine. And not enlarging the collateral order doctrine
follows a trend in recent years. The Court’s been very reluctant to add anything new to the
collateral order doctrine, and in fact in this case the majority stressed that
courts in general shouldn’t expand the collateral order doctrine category, because
that should be done by rule making instead. While all 9 justices concurred in Mohawk–
in the Mohawk Industries judgment, our next decision is one of those fractured opinions that make
it harder to understand. The Shady Grove Orthopedic Association brought a state law class action suit under Federal
Rule of Civil Procedure 23 against Allstate Insurance in federal court in the Southern
District of New York. Its purpose was to recover statutory interest penalties for itself and
others similarly situated. But New York’s Civil Practice section 901(B)
prohibits class actions to recover penalties. The question was, under the Erie Doctrine
which rule controls, the state or the federal? Evan? The federal rule controls. But the problem was the justices couldn’t exactly
agree on why. You had a plurality of 4 justices, including
the Chief Justice, Justice Scalia, Justice Thomas,
and Justice Sotomayor. They reasoned that because state and federal laws conflicted and provided, you know, that Rule 23 “really regulates” procedure, then under the precedents, it governs. And they say that Rule 23, like all joinder
devices, “really regulates procedure.” And the other justices? Well the 4 dissenters, Justices Ginsburg,
Kennedy, Breyer, and Alito, believed the issues of federalism compel an interpretation of section 901 that does not conflict with Rule 23 so that section 901 could continue to govern. That seems to leave Justice Stevens. Yes,
it does. And his is probably the most important opinion. He concurred with the plurality but only in
part. So he agreed for– that Rule 23 conflicts with section 901,
and then the question is what to do about it. He would not ask merely whether Rule 23
“really regulates procedure,” the standard from Sibbach v. Wilson which was applied
by the plurality. But he would also ask whether the state
law was, in his words, “so bound up with” or “so interwoven with” state substantive
rights that it should count as substantive. And if
it does count as substantive, then Rule 23 can’t displace it because the Rules Enabling Act, which authorizes the Federal Rules of Civil Procedure in the
first place, prohibits rules from abridging, enlarging,
or modifying any substantive right under state law. Ultimately, though, he agreed with
the majority–he voted with–I’m sorry, with the plurality because he concluded that section 901 was not substantive in that sense. It wasn’t
bound up with substantive rights, so Rule 23 could govern. I think that
his opinion is the narrowest, and so it should govern. Now, of course, with him leaving the court, there
is an issue as to, you know, where the Erie doctrine is going to go
from here. And in that sense, you know, that’s not really out of line with the Court’s
set of, or series of, inconsistent rulings in this area over the last 20 years. Sometimes the Court has interpreted
the federal rules broadly and created a conflict, and then sometimes it’s
interpreted them narrowly to avoid a conflict, and you’re never really quite sure when it’s going to do which of those two. Well, if the Shady Grove decision represents
the Court searching for the right answer, our next decision might be seen as the justices
returning to old certainties. In Hertz Corporation v. Friend, et al., the Court addresses that question familiar
to every attorney who sat through civil procedure in law school: Where is a corporation’s chief place of business for purposes of diversity
in federal court? Evan, could you explain the issue for us? Well, old
certainties indeed. In 1954, Judge Edward Weinfield created the “nerve center” test for truly national corporations, but that description didn’t seem to apply to companies that only did business in
a few states. So over the years the courts tried to improve on that formulation by creating various tests, including the “business activities” test, the “total activities”
test, the “center of gravity” test, and the “locus of operations” test. So in this decision the Supreme Court returns
to the “nerve center” test and defines it as “the place where the corporation’s high level officers direct, control, and coordinate the corporation’s activities.” But the Court was careful to note that the
principal place of business really has to be the nerve center. It can’t just be a mailbox or
a place where that board of directors meets for its annual meeting. And, of course,
the burden is still on the parties seeking federal jurisdiction. So if the place–the principal place of business is
challenged, the corporation has to come forward
with evidence that this is its nerve center. Thank you. In our next case, Samantar v. Yousuf,
immunity from federal law was the issue. The plaintiffs were Somali natives suing former
Prime Minister Mohammed Al Samantar, charging that he failed to stop numerous murders and
tortures by Somali armed forces during the 1980s. They sued under the Torture Victims Protection
Act of 1991 and the Alien Tort Statute. What was Samantar’s defense? He argued that he was immune from suit in U.S. court under the Foreign Sovereign Immunities
Act, which grants immunities–immunity to foreign states. And he argued that it should
grant immunity to foreign officials as well. And did the Court agree with that interpretation?
No. Justice Stevens wrote for the Court that in reading the text of the FSIA as a whole, interpreting the term “foreign state” to include
officials would be really kind of nonsensical. And, moreover, he wrote that the legislative
history of the Act points to an intent to leave official immunity outside the scope of the
statute. Of course, we should note that
the Court also said that even though he didn’t have immunity under the
Foreign Sovereign Immunities Act, he might have some other defenses. So, for example, he might still have immunity
under the common law that predated the Foreign Sovereign Immunities Act. Or a foreign state might be an indispensible party, in which case the case would have to
be dismissed. Or perhaps if it’s a suit against a foreign
official acting in his official capacity seeking relief from the state, then that would be dismissed under the FSIA.
So the Court had to remand to see whether there were any objections–other objections
to jurisdiction. Our final discussion is also about a federal court’s
power to grant compensation, but this time it is not to the plaintiff or the defendant, but to the attorneys. In section 1983 civil rights
cases, plaintiffs’ attorneys who prevail are paid by the losing side based on what is called the “lodestar” method, which is the number of hours worked multiplied
by the hourly rates prevailing in the community. Courts can grant the attorneys more than the lodestar amount
for superior performance, but the question in this case is when? Suzanna, how did the question comes up in this case?
Well, in this case the district court enhanced the lodestar amount by 75 percent
because of the exceptional skill and efforts of the attorneys and also because of
the financial risks that they took, and then the Eleventh Circuit affirmed this enhancement. And what did the Supreme Court
hold? Well, they did approve enhancements in theory. Enhancements can be awarded, but
only in extraordinary circumstances. And the Court found that the district court
judge in this case didn’t sufficiently document the existence of these extraordinary circumstances,
so the Court had to remand for that documentation. I see. Did the Court give the lower court some guidance
on how to make this type of a decision? Yes. The Court listed both the criteria for governing the award of fees and then some circumstances when those fees may be enhanced. It said that there’s a strong presumption
that the lodestar is adequate compensation, and as Suzanna said earlier, that enhancement is reserved for truly rare
and exceptional cases. The Court said that the burden of proving
the need for a fee enhancement is always on the fee applicant and that the applicant must
produce specific evidence supporting the award. But the Court also cited some of the rare circumstances when an enhancement
would be permitted. One was where the method used to determine the hourly rate was inadequate. Another would be where counsel was required
to make an extraordinary outlay of expenses and then the litigation was exceptionally
protracted. And a third would be where there’s
an exceptional delay in the payment of the fees. The Court also said that there has to
be documentation and that the enhancement should be made in such a way as to allow meaningful appellate review. So the Court didn’t rule out the possibility
that the enhancement in this case might stand, but it remanded so that the district court
could provide the documentation under the principles that it laid out in
its opinion. Thank you, Suzanna, and thank you, Evan. We want to tell you about 2 more decisions in
this area. The first is Lewis v. Chicago. Title 7 of the Civil Rights Act of 1964
prohibits employers from using an employment practice that causes a disparate impact on a group
of employees or potential employees because of race, among other factors. But it also requires plaintiffs bringing a
disparate impact claim to file a timely charge of discrimination with the Equal Employment Opportunity Commission. In Lewis v. City of Chicago, this term
the Court held that a plaintiff who fails to file a timely charge of discrimination regarding the adoption of a discriminatory practice may still assert a disparate impact claim
in a timely charge challenging the application of that practice as long as the employee alleges each of
the elements of a disparate impact claim. Finally, in Rent-a-Center, West v. Jackson,
the Court held that under the Federal Arbitration Act, when an agreement to arbitrate includes a clause
stating that the arbitrator will determine the enforceability of the agreement, if a party challenges specifically the enforceability
of that clause of the agreement the district court considers the challenge, but if the party challenges the enforceability of
the agreement as a whole, as Jackson did here by charging the whole agreement as unconscionable, that challenge is for the arbitrator to decide. Finally, we have a number of decisions affecting
attorney’s fees in ERISA cases, bankruptcy law, and the kinds of inventions that can and
cannot be patented. We’ll start with the patent decision. The patent bar waited anxiously until the very
last day of the term for the Court’s decision in Bilski v. Kappos. The invention in question was a method that explains how buyers and sellers of commodities in the energy market can protect,
or hedge, against the risk of price changes. The underlying question: Is such a method too abstract to be given
patent protection? The case came to the Supreme Court from the
Federal Circuit Court of Appeals. The court upheld the patent examiner’s rejection of petitioner’s application and ruled, more broadly, that the so-called “machine-or-transformation” test was the sole test to be used to determine the
patentability of a process under the Patent Act. The Supreme Court overturned the ruling by
the appellate court as a misreading of both the Patent Act and the Supreme Court’s precedents in this
area. “The machine-or-transformation test,” it wrote, “is not the sole test for deciding whether an invention is a patent-
eligible ‘process.'” The majority opinion went on to say, “Section 101 similarly precludes a
reading of the term ‘process’ that would categorically exclude business
methods.” But Professor John Thomas of the Georgetown
Law Center doesn’t think the Court necessarily clarified
the issue. “Unfortunately, the Supreme Court didn’t give us
a lot of clues as to which sort of business methods could be patented and which ones could not. So the lower courts and the Patent Office
will be left to use various tests from older Supreme Court cases to decide.” Thomas believes that inventions like software, tax strategies, and genetic materials may still be able to
obtain patents after the Court’s ruling in this decision, but … “I believe that the Bilski v. Kappos decision
will engender a lot more litigation and in
its search for more of a loosely defined standard rather than a more
precise rule is going to leave a lot more room for
clever lawyering and good patent drafting than the Federal Circuit’s decision would
have done.” Clever lawyers and others who represent clients in ERISA
claims will be interested in the Supreme Court’s
decision in Hardt v. Reliance Standard Insurance Company. Citing what it called the “plain text” of the
statute, the Court rejected a Fourth Circuit decision. The appellate court held that in order to be awarded attorney’s fees
in an ERISA case, the movant had to be “a prevailing party.” The Supreme Court held instead that a trial court may “in its discretion” award fees and costs “to either party” as long as the fee claimant had achieved “some degree of success on the merits.” The Court also rejected as necessary the appellate court’s use of a 5-factor
test for determining if the award of attorney’s
fees in ERISA cases is appropriate. Paul Ondrasik, who has practiced ERISA law for more than twenty years, thinks the Court should have given the lower
courts more guidance on how to exercise their discretion. “Certainly the plaintiff or the defendant will have
to show that they have some degree of success on the merits, some non-trivial degree of
success, before they will be eligible for an award, but then what happens next? If the courts go back to employing the same
5-factor standard they’ve used in the past, my guess is the decision will not have much
impact. If they depart from that 5-factor test, I
think all bets are off.” Next we have 4 bankruptcy-related decisions
we want to tell you about. Members of the bankruptcy bar got some good
news and some not so good news from the Court in
its decision in Milavetz, Gallop and Milavetz v. United States. The not so good news is that attorneys who
provide bankruptcy assistance to their clients come under the definition and regulations of “debt
relief agencies” in the Bankruptcy Abuse Prevention and Consumer Protection Act, or BAPCPA. Bankruptcy attorneys were concerned that a BAPCPA provision applying to debt
relief agencies would prohibit them from talking fully and candidly with their clients about incurring debt in
contemplation of filing a bankruptcy case. So the good news is that the Court clarified that the provision
only prohibits lawyers from advising clients to take on more debt solely because they’re declaring bankruptcy rather than to
take on debt for a valid purpose. The Court helped elucidate what might
constitute valid purposes in a footnote to the decision. The Court also upheld BAPCPA provisions
requiring certain disclosures by debt relief agencies as reasonably related to the government’s interest in preventing the deception
of consumers. The Fair Debt Collection Practices Act, or FDCPA, imposes civil liability on debt collectors
who use prohibited debt collection practices. But the statute provides that a debt collector
is not liable under the Act if that person can show “the violation was not intentional and resulted from a bona fide error notwithstanding
the maintenance of procedures reasonably adapted to avoid any such error.” In Jarman v. Carlisle, this term the Supreme Court held that the bona fide
error defense is not available for violations resulting from a debt collector’s mistaken interpretation of the
legal requirements of the FDCPA. When a debtor seeks to have student loan
obligations discharged on the grounds of “undue hardship,” the Bankruptcy Rules require that the court
make its determination in an adversary proceeding initiated by the debtor. A bankruptcy court confirmed Francisco
Espinosa’s chapter 13 plan that proposed to discharge a portion of his
student loans without first holding such a proceeding and without first making an undue hardship finding. The creditor received notice of the plan but did not object to it, nor to Espinosa’s failure to initiate the
required proceeding. It also didn’t file a timely appeal after the court confirmed the
plan. When the creditor later sought to collect the discharged
debt, Espinosa asked the bankruptcy court to enforce its final judgment and tell the creditor to cease any collection efforts. The creditor, in turn, moved that the final judgment be set aside as void under Federal Rule of Civil Procedure 60(b)(4) because the court had not made the undue
hardship finding nor held the required adversary proceeding and because the creditor’s due process rights were
violated when Espinosa failed to serve it with the required summons and complaint. In United Student Aid Funds, Inc. v. Espinosa, the Supreme Court held that the bankruptcy court’s confirmation order
was not void under Rule 60(b)(4). The Court wrote that 60(b)(4) allows a party to seek relief from a judgment
that is void only in the rare instance where a judgment is premised
either on a certain type of jurisdictional error or on a violation of due process that deprives a party of notice or the
opportunity to be heard. The bankruptcy court’s error fell into neither category, said the Court. Espinosa’s failure to serve United with a summons and complaint denied it a right granted by a procedural rule. The
deprivation did not amount to a deprivation of due process, since United
had actual notice of Espinosa’s plan. So what the Supreme Court calls the legal
error of the bankruptcy court in failing to make the hardship determination did not entitle
United to relief under 60(b)(4). Notably, however, the Court reaffirmed the bankruptcy court’s
responsibility to make an independent determination of undue hardship before a plan is confirmed, and disavowed the Ninth Circuit’s view that the bankruptcy court must confirm a plan
proposing the discharge of a student loan without a determination of undue hardship in an adversary proceeding, unless the creditors file a timely objection. It also noted that the penalties faced by debtors and attorneys for unscrupulous litigation
conduct should deter bad faith attempts to discharge
student loan debts without the required findings and procedures. Finally, in Hamilton v. Lanning the Supreme Court provided bankruptcy courts
with some greater leeway in determining a debtor’s projected disposable
income when confirming Chapter 13 plans. Resolving a split between the circuits, the justices ruled that the bankruptcy court
did not have to “solely” use the so-called “mechanical approach,” calculating current monthly income by averaging the debtor’s income during a
six-month “look-back” period and then multiplying it minus reasonable necessary expenses by the number of months in the plan. Instead, the High Court said, bankruptcy judges may take into account changes
in the debtor’s income or expenses that are known or virtually certain at the time of confirmation. That’s it for this portion of our program.
Now here is John Cooke. That’s our program for this year. We hope you found it interesting and useful. Please take the time to fill in the evaluation
form that’s included with the written materials that are at our website. It’s the only way for us to know how we can
improve this program and make it even more useful for you in your work for the courts. I want to thank our faculty for helping us
explore and explain these important topics and all the people here at the FJC who were
responsible for this program. I’m John Cooke. Thank you for watching.


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