Justia U.S. Supreme Court Opinion Summaries

A former Army specialist was seriously injured in a suicide bombing at a U.S. military base in Afghanistan. The attack was carried out by Ahmad Nayeb, a Taliban operative hired by Fluor Corporation, a military contractor, as part of a program encouraging the hiring of Afghan nationals. The Army’s investigation concluded that Fluor was primarily responsible due to negligent supervision and failure to enforce proper security procedures, including allowing Nayeb to check out tools used in the bombing and to move about the base unsupervised. The plaintiff sued Fluor in federal court in South Carolina, seeking damages under state law for negligent supervision, negligent entrustment, and negligent retention of Nayeb.The United States District Court for the District of South Carolina granted summary judgment to Fluor, holding that state-law tort claims were preempted under Fourth Circuit precedent whenever they arose out of combatant activities in a wartime setting. The United States Court of Appeals for the Fourth Circuit affirmed, adopting a broad “battlefield preemption” doctrine. It reasoned that the Federal Tort Claims Act’s (FTCA) combatant-activities exception, which preserves government immunity for claims arising out of military combatant activities, reflected an intent to bar all tort suits against contractors connected with those activities, regardless of whether the contractor followed or violated military instructions.The Supreme Court of the United States vacated the Fourth Circuit’s judgment and remanded the case. The Court held that the Fourth Circuit erred in finding the state-law tort claims preempted where the federal government neither ordered nor authorized the challenged conduct. The Supreme Court clarified that neither the Constitution, federal statutes, nor its precedents support such broad preemption. Preemption applies only if the contractor was following government directives or if there is a significant conflict between federal interests and state law, which was not the case here. View "Hencely v. Fluor Corp." on Justia Law

During the Second World War, Chevron’s corporate predecessor operated oil fields in Plaquemines Parish, Louisiana, producing crude oil that was refined into aviation gasoline (avgas) for the United States military under federal contracts. Decades later, following the enactment of Louisiana’s State and Local Coastal Resources Management Act of 1978, which imposed permit requirements on certain uses of the coastal zone but exempted uses lawfully commenced before 1980, Plaquemines Parish and other parishes brought suit in state court. They alleged that Chevron and other oil companies had failed to obtain required permits and that some pre-1980 activities, including those during the war, were illegally commenced and not exempt.The parish’s expert report specifically challenged Chevron’s wartime crude-oil production methods, including its use of vertical drilling, canals, and earthen pits, as harmful to the environment and not in compliance with the Act. Chevron sought removal to federal court under the federal officer removal statute, 28 U.S.C. §1442(a)(1), arguing that the suit was “for or relating to” acts under color of its duties as a federal contractor refining avgas. The United States District Court granted the parish’s motion to remand to state court. The United States Court of Appeals for the Fifth Circuit affirmed, reasoning that although Chevron acted under a federal officer as a military contractor, the suit did not “relate to” those acts because the federal refining contract did not govern how Chevron obtained or produced crude oil.The Supreme Court of the United States held that Chevron plausibly alleged a close, not tenuous or remote, relationship between the challenged crude-oil production and its federal avgas refining duties. The Court concluded that the suit satisfied the “relating to” requirement for removal under §1442(a)(1), vacated the Fifth Circuit’s judgment, and remanded the case for further proceedings. View "Chevron USA Inc. v. Plaquemines Parish" on Justia Law

A company operating a private detention facility in Colorado under contract with U.S. Immigration and Customs Enforcement was sued in a class action by a former detainee. The lawsuit challenged two of the company’s work policies for detainees: a sanitation policy that required unpaid cleaning under threat of punishment, and a voluntary work program offering minimal pay. Plaintiffs alleged that the sanitation policy violated federal anti-forced-labor laws and that the voluntary work program constituted unjust enrichment under Colorado law.After discovery, the United States District Court for the District of Colorado considered the company’s argument that, under the Supreme Court’s decision in Yearsley v. W. A. Ross Construction Co., it could not be held liable for conduct that the government had lawfully “authorized and directed.” The District Court concluded that the government contract did not instruct the company to adopt the specific work policies at issue and that the company had developed those policies on its own. Therefore, the court held that the Yearsley doctrine did not shield the company from liability and allowed the case to proceed to trial.The company appealed immediately, but the United States Court of Appeals for the Tenth Circuit dismissed the appeal for lack of jurisdiction, holding that a denial of Yearsley protection is not subject to interlocutory appeal under Cohen v. Beneficial Industrial Loan Corp.The Supreme Court of the United States affirmed the Tenth Circuit’s decision, holding that Yearsley provides a merits defense, not an immunity from suit. Therefore, a pretrial order denying Yearsley protection cannot be immediately appealed; any review must wait until after final judgment. The Court remanded the case for further proceedings. View "Geo Group, Inc. v. Menocal" on Justia Law

Stamatios Kousisis and Alpha Painting and Construction Co. were awarded two contracts by the Pennsylvania Department of Transportation (PennDOT) for painting projects in Philadelphia. Federal regulations required subcontracting a portion of the contract to a disadvantaged business enterprise. Kousisis falsely represented that Alpha would obtain paint supplies from Markias, Inc., a prequalified disadvantaged business. However, Markias functioned only as a pass-through entity, funneling checks and invoices to and from Alpha’s actual suppliers, violating the requirement that disadvantaged businesses perform a commercially useful function. Despite this, Alpha completed the projects to PennDOT’s satisfaction and earned over $20 million in gross profit.The Government charged Alpha and Kousisis with wire fraud and conspiracy to commit wire fraud, based on the fraudulent-inducement theory. After a jury convicted them, they moved for acquittal, arguing that PennDOT received the full economic benefit of its bargain, so the Government could not prove they schemed to defraud PennDOT of money or property. The United States Court of Appeals for the Third Circuit rejected this argument, affirming the convictions and deepening the division over the validity of a federal fraud conviction when the defendant did not seek to cause the victim net pecuniary loss.The Supreme Court of the United States held that a defendant who induces a victim to enter into a transaction under materially false pretenses may be convicted of federal fraud even if the defendant did not seek to cause the victim economic loss. The Court explained that the text of the wire fraud statute does not mention economic loss and that the common law did not establish a general rule requiring economic loss in all fraud cases. The Court affirmed the Third Circuit’s decision, concluding that the fraudulent-inducement theory is consistent with both the text of the statute and the Court’s precedent. View "Kousisis v. United States" on Justia Law

The case involves the Indian Self-Determination and Education Assistance Act (ISDA), which allows an Indian tribe to enter into a "self-determination contract" with the Indian Health Service (IHS) to administer healthcare programs that IHS would otherwise operate for the tribe. The San Carlos Apache Tribe and the Northern Arapaho Tribe sued the Government for breach of contract, arguing that although they used the Secretarial amount and program income to operate the healthcare programs they assumed from IHS under their self-determination contracts, IHS failed to pay the contract support costs they incurred by providing healthcare services using program income. The Ninth and Tenth Circuits concluded that each Tribe was entitled to reimbursement for such costs.The Supreme Court of the United States affirmed the decisions of the Ninth and Tenth Circuits. The Court held that ISDA requires IHS to pay the contract support costs that a tribe incurs when it collects and spends program income to further the functions, services, activities, and programs transferred to it from IHS in a self-determination contract. The Court reasoned that the Tribe's self-determination contract incorporated ISDA, which required the Tribe to spend third-party program income on healthcare. Those portions of the Tribe’s healthcare programs funded by third-party income thus constituted “activities which must be carried on by [the Tribe] as a contractor to ensure compliance with the terms of the contract,” and the contract support costs associated with those activities were incurred “in connection with the operation of the Federal program.” The Court concluded that the text of ISDA, therefore, indicated that IHS was required to reimburse the Tribe for those costs. View "Becerra v. San Carlos Apache Tribe" on Justia Law

The case involves a dispute between Coinbase, Inc., a cryptocurrency exchange platform, and its users. The users had agreed to two contracts with Coinbase. The first contract, the User Agreement, contained an arbitration provision stating that an arbitrator must decide all disputes, including whether a disagreement is arbitrable. The second contract, the Official Rules for a promotional sweepstakes, contained a forum selection clause stating that California courts have sole jurisdiction over any controversies regarding the promotion. The users filed a class action in the U.S. District Court for the Northern District of California, alleging that the sweepstakes violated various California laws. Coinbase moved to compel arbitration based on the User Agreement’s arbitration provision. The District Court denied the motion, ruling that the Official Rules’ forum selection clause controlled the dispute. The Ninth Circuit affirmed this decision.The Supreme Court of the United States affirmed the Ninth Circuit's decision. The Court held that when parties have agreed to two contracts—one sending arbitrability disputes to arbitration, and the other either explicitly or implicitly sending arbitrability disputes to the courts—a court must decide which contract governs. The Court rejected Coinbase's arguments that the Ninth Circuit should have applied the severability principle and that the Ninth Circuit erroneously held that the Official Rules’ forum selection clause superseded the User Agreement’s arbitration provision. The Court also dismissed Coinbase's concern that its ruling would invite chaos by facilitating challenges to delegation clauses. The Court concluded that a court, not an arbitrator, must decide whether the parties’ first agreement was superseded by their second. View "Coinbase v. Suski" on Justia Law

In a maritime insurance dispute between Great Lakes Insurance, a German company, and Raiders Retreat Realty, a Pennsylvania company, the Supreme Court of the United States ruled that choice-of-law provisions in maritime contracts are presumptively enforceable under federal maritime law, with certain narrow exceptions not applicable in this case.The dispute originated when Raiders Retreat Realty's boat ran aground, and Great Lakes Insurance denied coverage, alleging that Raiders breached the insurance contract by failing to maintain the boat’s fire-suppression system. The insurance contract contained a choice-of-law provision that selected New York law to govern future disputes. Raiders argued that Pennsylvania law, not New York law, should apply. The District Court ruled in favor of Great Lakes, finding that the choice-of-law provision was presumptively valid and enforceable under federal maritime law. The Third Circuit Court of Appeals vacated this decision, holding that choice-of-law provisions must yield to the strong public policy of the state where the suit is brought.The Supreme Court reversed the Third Circuit's decision, emphasizing the importance of uniformity and predictability in maritime law. The Court concluded that choice-of-law provisions allow maritime actors to avoid later disputes and the ensuing litigation and costs, thus promoting maritime commerce. Therefore, such provisions are presumptively enforceable under federal maritime law. The Court further clarified that exceptions to this rule exist but are narrow, and none of them applied in this case. View "Great Lakes Insurance SE v. Raiders Retreat Realty Co." on Justia Law

CARCO sub-chartered an oil tanker from tanker operator Star, which had chartered it from Frescati. During the tanker’s journey, an abandoned ship anchor punctured the tanker’s hull, causing 264,000 gallons of heavy crude oil to spill into the Delaware River. The 1990 Oil Pollution Act, 33 U.S.C. 2702(a), required Frescati, the vessel’s owner, to cover the cleanup costs. Frescati’s liability was limited to $45 million. The federal Oil Spill Liability Trust Fund reimbursed Frescati for an additional $88 million in cleanup costs.Frescati and the government sued, claiming that CARCO had breached a clause in the subcharter agreement that obligated CARCO to select a berth that would allow the vessel to come and go “always safely afloat,” and that obligation amounted to a warranty regarding the safety of the selected berth. Finding that Frescati was an implied third-party beneficiary of the safe-berth clause, the Third Circuit held that the clause embodied an express warranty of safety.The Supreme Court affirmed. The safe-berth clause's unqualified plain language establishes an absolute warranty of safety. That the clause does not expressly invoke the term “warranty” does not alter the charterer’s duty, which is not subject to qualifications or conditions. Under contract law, an obligor is strictly liable for a breach of contract, regardless of fault or diligence. While parties are free to contract for limitations on liability, these parties did not. A limitation on the charterer’s liability for losses due to “perils of the seas,” does not apply nor does a clause requiring Star to obtain oil-pollution insurance relieve CARCO of liability. View "CITGO Asphalt Refining Co. v. Frescati Shipping Co." on Justia Law

In 2016, a hacker tricked an employee into disclosing tax information of about 1,300 Lamps employees. After a fraudulent federal income tax return was filed in the name of Varela, he filed a putative class action on behalf of employees whose information had been compromised. Relying on the arbitration agreement in Varela’s employment contract, Lamps sought to compel arbitration on an individual rather than a classwide basis. The Ninth Circuit affirmed the rejection of the individual arbitration request, authorizing class arbitration. Although Supreme Court precedent held (Stolt-Nielsen, 2010) that a court may not compel classwide arbitration when an agreement is silent on the availability of such arbitration, the Ninth Circuit concluded that Stolt-Nielsen did not apply because the Lamps agreement was ambiguous, not silent, concerning class arbitration.The Supreme Court reversed, Under the Federal Arbitration Act, 9 U.S.C. 2, an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration. Arbitration is strictly a matter of consent. Class arbitration, unlike the individualized arbitration envisioned by the Act, “sacrifices the principal advantage of arbitration—its informality—and makes the process slower, more costly, and more likely to generate procedural morass than final judgment.” Courts may not infer consent to participate in class arbitration absent an affirmative “contractual basis for concluding that the party agreed to do so.” Silence is not enough and ambiguity does not provide a sufficient basis to infer consent. View "Lamps Plus, Inc. v. Varela" on Justia Law

Oliveira is a driver for a trucking company, under an agreement that calls him an independent contractor and contains a mandatory arbitration provision. Oliveira filed a class action alleging that the company denies its drivers lawful wages. The company invoked the Federal Arbitration Act, arguing that questions regarding arbitrability should be resolved by the arbitrator. The First Circuit and Supreme Court agreed that a court should determine whether the Act's section 1 exclusion applies before ordering arbitration. A court’s authority to compel arbitration under the Act does not extend to all private contracts. Section 2 provides that the Act applies only when the agreement is “a written provision in any maritime transaction or a contract evidencing a transaction involving commerce.” Section 1 provides that “nothing” in the Act “shall apply” to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The sequencing is significant. A “delegation clause,” giving the arbitrator authority to decide threshold questions of arbitrability is merely a specialized type of arbitration agreement and is enforceable under sections 3 and 4 only if it appears in a contract consistent with section 2 that does not trigger section 1’s exception. Because “contract of employment” refers to any agreement to perform work, Oliveira’s contract falls within that exception. At the time of the Act’s 1925 adoption, the phrase “contract of employment” was not a term of art; dictionaries treated “employment” as generally synonymous with “work," not requiring a formal employer-employee relationship. Congress used the term “contracts of employment” broadly. View "New Prime Inc. v. Oliveira" on Justia Law