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 False Claims Act (FCA) imposes civil liability on those who present false or fraudulent claims for payment to the federal government, 31 U.S.C. 3729–3733, and authorizes private parties (relators) to bring “qui tam actions” in the name of the government. A relator may receive up to 30% of any recovery. The relator must file his complaint under seal and serve a copy and supporting evidence on the government, which has 60 days to decide whether to intervene. As a “real party in interest,” the government can intervene after the seal period ends, if it shows good cause.Polansky filed an FCA action alleging Medicare fraud. The government declined to intervene during the seal period. After years of discovery, the government decided that the burdens of the suit outweighed its potential value, and moved under section 3730(c)(2)(A) (Subparagraph (2)(A)), which provides that the government may dismiss the action notwithstanding the objections of the relator if the relator received notice and an opportunity for a hearing.The Third Circuit and Supreme Court affirmed the dismissal of the suit. The government may move to dismiss an FCA action whenever it has intervened, whether during the seal period or later. It may not move to dismiss if it has never intervened. A successful motion to intervene turns the movant into a party; it can assume primary responsibility for the case’s prosecution, which triggers the Subparagraph (2)(A) right to dismiss, consistent with the FCA’s government-centered purposes. The government’s motion to dismiss will satisfy FRCP 41 in all but exceptional cases. The government gave good grounds for believing that this suit would not vindicate its interests. Absent extraordinary circumstances, that showing suffices for the government to prevail. View "United States ex rel. Polansky v. Executive Health Resources, Inc." on Justia Law

Petitioners sued retail pharmacies under the False Claims Act (FCA), 31 U.S.C. 3729, which permits private parties to bring lawsuits in the name of the United States against those who they believe have defrauded the federal government and imposes liability on anyone who “knowingly” submits a “false” claim to the government. Petitioners claim that the pharmacies defrauded Medicaid and Medicare by offering pharmacy discount programs to their customers while reporting their higher retail prices, rather than their discounted prices, as their “usual and customary” charge for reimbursement. The Seventh Circuit concluded that the pharmacies could not have acted “knowingly” if their actions were consistent with an objectively reasonable interpretation of the phrase “usual and customary.”The Supreme Court vacated. The FCA’s scienter element refers to a defendant’s knowledge and subjective beliefs—not to what an objectively reasonable person may have known or believed. The FCA’s three-part definition of the term “knowingly” largely tracks the traditional common-law scienter requirement for claims of fraud: Actual knowledge, deliberate ignorance, or recklessness will suffice. Even though the phrase “usual and customary” may be ambiguous on its face, such facial ambiguity alone is not sufficient to preclude a finding that the pharmacies knew their claims were false. View "United States ex rel. Schutte v. Supervalu Inc." on Justia Law

Then-New York Governor Cuomo’s “Buffalo Billion” initiative administered through Fort Schuyler Management Corporation, a nonprofit affiliated with SUNY, aimed to invest $1 billion in upstate development projects. Investigations later uncovered a scheme that involved Cuomo’s associates--a member of Fort Schuyler’s board of directors and a construction company made payments to a lobbyist with ties to the Cuomo administration. Fort Schuyler’s bid process subsequently allowed the construction company to receive major Buffalo Billion contracts.The participants were charged with wire fraud and conspiracy to commit wire fraud 18 U.S.C. 1343, 1349. Under the Second Circuit’s “right to control” theory, wire fraud can be established by showing that the defendant schemed to deprive a victim of potentially valuable economic information necessary to make discretionary economic decisions. The jury instructions defined “property” as including “intangible interests such as the right to control the use of one’s assets,” and “economically valuable information” as “information that affects the victim’s assessment of the benefits or burdens of a transaction, or relates to the quality of goods or services received or the economic risks.” The Second Circuit affirmed the convictions.The Supreme Court reversed. Under Supreme Court precedents the federal fraud statutes criminalize only schemes to deprive people of traditional property interests. The prosecution must prove that wire fraud defendants “engaged in deception,” and also that money or property was “an object of their fraud.” The "fraud statutes do not vest a general power in the federal government to enforce its view of integrity in broad swaths of state and local policymaking.” The right-to-control theory applies to an almost limitless variety of deceptive actions traditionally left to state contract and tort law. The Court declined to affirm Ciminelli’s convictions on the ground that the evidence was sufficient to establish wire fraud under a traditional property-fraud theory. View "Ciminelli v. United States" on Justia Law

Cummings, who is deaf and blind, sought physical therapy services from Premier, requesting an American Sign Language interpreter at her sessions. Premier declined. Cummings sought damages, alleging discrimination on the basis of disability under the Rehabilitation Act and the Affordable Care Act. Premier is subject to those statutes because it receives reimbursement through Medicare and Medicaid. The district court determined that the only compensable injuries allegedly caused by Premier were emotional in nature.The Fifth Circuit and Supreme Court affirmed the dismissal of the complaint. Spending Clause legislation, including the statutes at issue, operates based on consent; a particular remedy is available in a private Spending Clause action only if the funding recipient is on notice that, by accepting federal funding, it exposes itself to liability of that nature. Because the statutes at issue are silent as to available remedies, the Court followed the contract analogy. A federal funding recipient is on notice that it is subject to the “usual” remedies traditionally available in breach of contract suits; emotional distress is generally not compensable in contract.The Court rejected an argument that such damages may be awarded where a contractual breach is particularly likely to result in emotional disturbance. Even if it were appropriate to treat funding recipients as aware that they may be subject to rare contract-law rules, they would lack the requisite notice that emotional distress damages are available under these statutes. There is no majority rule on what circumstances may trigger the allowance of such damages. View "Cummings v. Premier Rehab Keller, P.L.L.C." on Justia Law

New York requires cable operators to set aside channels for public access. Those channels are operated by the cable operator unless the local government chooses to operate the channels or designates a private entity as the operator. New York City designated a private nonprofit corporation, MNN, to operate public access channels on Time Warner’s Manhattan cable system. Respondents produced a film critical of MNN. MNN televised the film. MNN later suspended Respondents from all MNN services and facilities. They sued, claiming that MNN violated their First Amendment free-speech rights. The Second Circuit partially reversed the dismissal of the suit, concluding that MNN was subject to First Amendment constraints.The Supreme Court reversed in part and remanded. MNN is not a state actor subject to the First Amendment. A private entity may qualify as a state actor when the entity exercises “powers traditionally exclusively reserved to the State” but “very few” functions fall into that category. Operation of public access channels on a cable system has not traditionally and exclusively been performed by government. Providing some kind of forum for speech is not an activity that only governmental entities have traditionally performed and does not automatically transform a private entity into a state actor. The City’s designation of MNN as the operator is analogous to a government license, a government contract, or a government-granted monopoly, none of which converts a private entity into a state actor unless the private entity is performing a traditional, exclusive public function. Extensive regulation does not automatically convert a private entity's action into that of the state. The City does not own, lease, or possess any property interest in the public access channels. View "Manhattan Community Access Corp. v. Halleck" on Justia Law

The Medicare program offers additional payments to institutions that serve a “disproportionate number” of low-income patients, 42 U.S.C. 1395ww(d)(5)(F)(i)(I), calculated using the hospital’s “Medicare fraction.” The fraction’s denominator is the time the hospital spent caring for patients entitled to Medicare Part A benefits; the numerator is the time the hospital spent caring for Part-A-entitled patients who were also entitled to income support payments under the Social Security Act. Medicare Part C (Medicare Advantage) was created in 1997. Part C, beneficiaries may choose to have the government pay their private insurance premiums rather than pay for their hospital care directly. Part C enrollees tend to be wealthier than Part A enrollees, so counting them makes the fraction smaller and reduces hospitals’ payments. In 2014, the Medicare website indicated that fractions for fiscal year 2012 included Part C patients. Hospitals sued, claiming violation the Medicare Act’s requirement to provide public notice and a 60-day comment period for any “rule, requirement, or other statement of policy . . . that establishes or changes a substantive legal standard governing . . . the payment for services.”The Supreme Court affirmed the D.C. Circuit in agreeing with the hospitals. The government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations. The 2014 announcement established or changed a “substantive legal standard” not an interpretive legal standard. The Medicare Act and the Administrative Procedures Act do not use the word “substantive” in the same way. The Medicare Act contemplates that “statements of policy” can establish or change a “substantive legal standard." Had Congress wanted to follow the APA in the Medicare Act and exempt interpretive rules and policy statements from notice and comment, it could have cross-referenced the APA exemption, 5 U.S.C. 553(b)(A). View "Azar v. Allina Health Services" on Justia Law