Articles Posted in U.S. Supreme Court

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Illinois’ Home Services Rehabilitation Program allows Medi­caid recipients who would normally need institutional care to hire a personal assistant (PA) to provide homecare. Under state law, homecare customers control hiring, firing, training, supervising, and disciplining of Pas and define the PA’s duties in a “Service Plan.” Other than compensating PAs, the state’s role is minimal. Its employer status was created by executive order, solely to permit PAs to join a labor union and engage in collective bargaining under the Illinois Public Labor Relations Act (PLRA). SEIU–HII was designated the exclusive union representative and entered into collective-bargaining agreements with the state that contained an agency-fee provision, which requires all bargaining unit members who do not wish to join the union to pay the cost of certain activities, including those tied to collective-bargaining. PAs brought a class action, claiming that the PLRA violated the First Amendment by authorizing the agency-fee provision. The district court dismissed. The Seventh Circuit affirmed, holding that the PAs were state employees. The Supreme Court reversed in part. Preventing nonmembers from free-riding on union efforts is generally insufficient to overcome First Amendment objections. Noting its “questionable foundations” and that Illinois PAs are quite different from full-fledged public employees, the Court refused to extend the 1977 holding, Abood v. Detroit Bd. of Ed., which was based on the assumption that the union possessed the full scope of powers and duties available under labor law. The PA union has few powers and duties. PAs are almost entirely answerable to customers, not to the state. They do not have most of the rights and benefits of state employees, and are not indemnified by the state for claims arising from actions taken in the course of employment. The scope of collective bargaining on their behalf is very limited. PAs receive the same rate of pay and the union has no authority with respect to grievances against a customer. Because Abood does not control, generally applicable First Amendment standards apply and the agency-fee provision must serve a “compelling state interes[t] ... that cannot be achieved through means significantly less restrictive of associational freedoms.” None of the cited interests in “labor peace” or effective advocacy are sufficient. View "Harris v. Quinn" on Justia Law

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Department of Health and Human Services (HHS) regulations implementing the 2010 Patient Protection and Affordable Care Act (ACA) require that employers’ group health plans furnish preventive care and screenings for women without cost sharing requirements, 42 U.S.C. 300gg–13(a)(4). Nonexempt employers must provide coverage for 20 FDA-approved contraceptive methods, including four that may have the effect of preventing a fertilized egg from developing. Religious employers, such as churches, are exempt from the contraceptive mandate. HHS has effectively exempted religious nonprofit organizations; an insurer must exclude contraceptive coverage from such an employer’s plan and provide participants with separate payments for contraceptive services. Closely held for-profit corporations sought an injunction under the 1993 Religious Freedom Restoration Act (RFRA), which prohibits the government from substantially burdening a person’s exercise of religion even by a rule of general applicability unless it demonstrates that imposing the burden is the least restrictive means of furthering a compelling governmental interest, 42 U.S.C. 2000bb–1(a), (b). As amended by the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA), RFRA covers “any exercise of religion, whether or not compelled by, or central to, a system of religious belief.” The Third Circuit held that a for-profit corporation could not “engage in religious exercise” under RFRA and that the mandate imposed no requirements on corporate owners in their personal capacity. The Tenth Circuit held that the businesses are “persons” under RFRA; that the contraceptive mandate substantially burdened their religious exercise; and that HHS had not demonstrated that the mandate was the “least restrictive means” of furthering a compelling governmental interest. The Supreme Court ruled in favor of the businesses, holding that RFRA applies to regulations that govern the activities of closely held for-profit corporations. The Court declined to “leave merchants with a difficult choice” of giving up the right to seek judicial protection of their religious liberty or forgoing the benefits of operating as corporations. Nothing in RFRA suggests intent to depart from the Dictionary Act definition of “person,” which includes corporations, 1 U.S.C.1; no definition of “person” includes natural persons and nonprofit corporations, but excludes for-profit corporations. “Any suggestion that for-profit corporations are incapable of exercising religion because their purpose is simply to make money flies in the face of modern corporate law.” The Court rejected arguments based on the difficulty of ascertaining the “beliefs” of large, publicly traded corporations and that the mandate itself requires only insurance coverage. If the plaintiff companies refuse to provide contraceptive coverage, they face severe economic consequences; the government failed to show that the contraceptive mandate is the least restrictive means of furthering a compelling interest in guaranteeing cost-free access to the four challenged contraceptive methods. The government could assume the cost of providing the four contraceptives or could extend the accommodation already established for religious nonprofit organizations. The Court noted that its decision concerns only the contraceptive mandate, not all insurance-coverage mandates, e.g., for vaccinations or blood transfusions. View "Burwell v. Hobby Lobby Stores, Inc." on Justia Law

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The nominations of three members of the National Labor Relations Board were pending in the Senate when it passed a December 17, 2011, resolution providing for a series of “pro forma session[s],” with “no business ... transacted,” every Tuesday and Friday through January 20, 2012. The President appointed the three members between the January 3 and January 6 pro forma sessions, invoking the Recess Appointments Clause, which gives the President the power “to fill up all Vacancies that may happen during the Recess of the Senate,” Art. II, section 2, cl. 3. The D.C. Circuit held that the appointments fell outside the scope of the Clause. The Supreme Court affirmed. The Clause reflects the tension between the President’s continuous need for “the assistance of subordinates,” and the Senate’s early practice of meeting for a single brief session each year and should be interpreted as granting the President power to make appointments during a recess, but not offering authority routinely to avoid the need for Senate confirmation. Putting “significant weight” on historical practice, the Court found that the Clause applies to both intersession and intra-session recesses of substantial length. A three-day recess would be too short. In light of historical practice, a recess of more than three but less than 10 days is presumptively too short. The phrase “vacancies that may happen during the recess of the Senate” applies both to vacancies that come into existence during a recess and to vacancies that initially occur before a recess but continue during the recess. Although the Senate’s own determination of when it is in session should be given great weight, deference is not absolute. When the Senate is without the capacity to act, under its own rules, it is not in session even if it so declares. Under these standards, the Senate was in session during the pro forma sessions at issue. It said it was in session, and, under Senate rules, it retained the power to con-duct business. Because the Senate was in session, the President made the recess appointments at issue during a three-day recess, which is too short a time to fall within the scope of the Clause, so the President lacked the authority to make the appointments. View "Nat'l Labor Relations Bd. v. Canning" on Justia Law

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Massachusetts amended its Reproductive Health Care Facilities Act to make it a crime to knowingly stand on a “public way or sidewalk” within 35 feet of an entrance or driveway to any “reproductive health care facility,” defined as “a place, other than within or upon the grounds of a hospital, where abortions are offered or performed.” Mass. Gen. Laws, 266, 120E½. Exemptions cover “employees or agents of such facility acting within the scope of their employment.” Another provision proscribes knowing obstruction of access to an abortion clinic. Abortion opponents who engage in “sidewalk counseling” sought an injunction, claiming that the amendment displaced them from their previous positions and hampered their counseling efforts; attempts to communicate with patients are also thwarted by clinic escorts, who accompany patients to clinic entrances. The district court denied the challenges. The First Circuit affirmed. The Supreme Court reversed, first noting the involvement of a traditional public forum. The Court employed “time, place, and manner” analysis, stating that the Act is neither content nor viewpoint based and need not be analyzed under strict scrutiny. Although it establishes buffer zones only at abortion clinics, violations depend not “on what they say,” but on where they say it. The Act is justified without reference to the content of speech; its purposes include protecting public safety, patient access to health care, and unobstructed use of public sidewalks and streets. There was a record of crowding, obstruction, and even violence outside Massachusetts abortion clinics but not at other facilities. The exemption for employees and agents acting within the scope of their employment was not an attempt to favor one viewpoint. Even if some escorts have expressed views on abortion inside the zones, there was no evidence that such speech was authorized by any clinic. The Act, however, burdens substantially more speech than necessary to further the government’s legitimate interests. It deprives objectors of their primary methods of communicating with patients: close, personal conversations and distribution of literature. While the Act allows “protest” outside buffer zones, these objectors are not protestors; they seek to engage in personal, caring, consensual conversations with women about alternatives. Another section of the Act already prohibits deliberate obstruction of clinic entrances. Massachusetts could also enact legislation similar to the Freedom of Access to Clinic Entrances Act, 18 U.S.C. 248(a), which imposes sanctions for obstructing, intimidating, or interfering with persons obtaining or providing reproductive health services. Obstruction of driveways can be addressed by traffic ordinances. Crowding was a problem only at the Boston clinic, and only on Saturday mornings; the police are capable of ordering people to temporarily disperse and of singling out lawbreakers. View "McCullen v. Coakley" on Justia Law

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Riley was stopped for a traffic violation, which led to his arrest on weapons charges. An officer searching Riley incident to the arrest seized a cell phone from Riley’s pants pocket, accessed information on the phone, and noticed repeated use of a term associated with a street gang. At the police station two hours later, a detective specializing in gangs further examined the phone’s digital contents. Based in part on photographs found, the state charged Riley in connection with a shooting and sought an enhanced sentence based on gang membership. The trial court denied a motion to suppress. His conviction was affirmed. Wurie was arrested after police observed him participate in an apparent drug sale. At the station, the officers seized a cell phone from Wurie’s person and noticed that the phone was receiving calls from a source identified as “my house” on its screen. The officers opened the phone, accessed its call log, and traced that number to what they suspected was Wurie’s apartment. They secured a warrant and found drugs, a firearm and ammunition, and cash in the ensuing search. Wurie was charged with drug and firearm offenses. The district court denied a motion to suppress. Wurie was convicted. The First Circuit reversed and vacated the convictions. The Supreme Court reversed as to Riley and affirmed as to Wurie. The police generally may not, without a warrant, search digital information on a cell phone seized from an individual who has been arrested. The exception for searches incident to arrest does not apply; such searches must be limited to the area within the arrestee’s immediate control, where it is justified by the interests in officer safety and in preventing evidence destruction. A search of digital information on a cell phone implicates substantially greater individual privacy interests than a brief physical search; data stored on a cell phone cannot itself be used as a weapon to harm an arresting officer or to effectuate an escape. To the extent that a search of cell phone data might warn officers of an impending danger,, such a concern is better addressed under case-specific exceptions to the warrant requirement, such as exigent circumstances. There is little indication that either remote wiping or encryption is prevalent or that the opportunity to perform a search incident to arrest would be an effective solution. View "Riley v. California" on Justia Law

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Fifth Third maintains a defined-contribution retirement savings plan for its employees. Participants may direct their contributions into any of several investment options, including an “employee stock ownership plan” (ESOP), which invests primarily in Fifth Third stock. Former participants sued, alleging breach of the fiduciary duty of prudence imposed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1104(a)(1)(B) in that the defendants should have known—on the basis of both public information and inside information available to Fifth Third officers—that the stock was overpriced and risky. The price of Fifth Third stock fell, reducing plaintiffs’ retirement savings. The district court dismissed; the Sixth Circuit reversed. A unanimous Supreme Court vacated. ESOP fiduciaries are not entitled to any special presumption of prudence, but are subject to the same duty that applies to ERISA fiduciaries in general, except that they need not diversify the fund’s assets. There is no requirement that plaintiffs allege that the employer was, for example, on the “brink of collapse.” Where a stock is publicly traded, allegations that a fiduciary should have recognized, on the basis of publicly available information, that the market was over- or under-valuing the stock are generally implausible and insufficient to state a claim. To state a claim, a complaint must plausibly allege an alternative action that could have been taken, that would have been legal, and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it. ERISA’s duty of prudence never requires a fiduciary to break the law, so a fiduciary cannot be imprudent for failing to buy or sell in violation of insider trading laws. An allegation that fiduciaries failed to decide, based on negative inside information, to refrain from making additional stock purchases or failed to publicly disclose that information so that the stock would no longer be overvalued, requires courts to consider possible conflicts with complex insider trading and corporate disclosure laws. Courts confronted with such claims must also consider whether the complaint has plausibly alleged that a prudent fiduciary in the same position could not have concluded that stopping purchases or publicly disclosing negative information would do more harm than good to the fund. View "Fifth Third Bancorp v. Dudenhoeffer" on Justia Law

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The Copyright Act of 1976 gives a copyright owner the “exclusive righ[t]” to “perform the copyrighted work publicly,” 17 U.S.C. 106(4), including the right to “transmit or otherwise communicate ... the [copyrighted] work ... to the public, by means of any device or process, whether the members of the public capable of receiving the performance ... receive it in the same place or in separate places and at the same time or at different times,” section 101. Aereo sells a service that allows subscribers to watch television programs over the Internet. Aereo’s server tunes an antenna, which is dedicated to the use of one subscriber, to the broadcast carrying the selected show. A transcoder translates the signals received by an antenna into data that can be transmitted over the Internet. A server saves the data in a subscriber-specific folder and streams the show to the subscriber, a few seconds behind the over-the-air broadcast. The owners of program copyrights unsuccessfully sought a preliminary injunction, arguing that Aereo was infringing their right to “perform” their copyrighted works “publicly.” The Second Circuit affirmed. The Supreme Court reversed and remanded, holding that Aereo performs the works within the meaning of section 101 and does not merely supply equipment that allows others to do so. The Court noted that the Act was amended in 1976 to make the law applicable to community antenna television (CATV) providers by clarifying that an entity that acts like a CATV system “performs,” even when it only enhances viewers’ ability to receive broadcast television signals. Aereo’s activities are similar; it sells a service that allows subscribers to watch television programs, many of which are copyrighted, virtually as they are being broadcast. That Aereo’s system remains inert until a subscriber indicates that she wants to watch a program is not critical. Aereo transmits a performance whenever its subscribers watch a program. The Court stated that when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it “transmit[s] ... a performance” to them, regardless of the number of discrete communications it makes and whether it makes an individual personal copy for each viewer. Aero subscribers are “the public” under the Act: a large number of people, unrelated and unknown to each other. View "Am. Broad. Cos. v. Aereo, Inc." on Justia Law

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The Clean Air Act requires permits for stationary sources, such as factories and powerplants. The Act’s “Prevention of Significant Deterioration” (PSD) provisions make it unlawful to construct or modify a “major emitting facility” in “any area to which [PSD program] applies” without a permit, 42 U.S.C. 7475(a)(1), 7479(2)(C). A “major emitting facility” is a stationary source with the potential to emit 250 tons per year of “any air pollutant” (or 100 tons per year for certain sources). Facilities seeking a PSD permit must comply with emissions limitations that reflect the “best available control technology” (BACT) for “each pollutant subject to regulation under” the Act and it is unlawful to operate any “major source,” wherever located, without a permit. A “major source” is a stationary source with the potential to emit 100 tons per year of “any air pollutant,” under Title V of the Act. In response to the Supreme Court decision, Massachusetts v. EPA, the EPA promulgated greenhouse-gas (GHG) emission standards for new vehicles, and made stationary sources subject to the PSD program and Title V, based on potential GHG emissions. Recognizing that requiring permits for all sources with GHG emissions above statutory thresholds would render the programs unmanageable, EPA purported to “tailor” the programs to accommodate GHGs by providing that sources would not become newly subject to PSD or Title V permitting on the basis of their potential to emit GHGs in amounts less than 100,000 tons per year. The D.C. Circuit dismissed some challenges to the tailoring rule for lack of jurisdiction and denied the rest. The Supreme Court affirmed in part and reversed in part, finding that the Act does not permit an interpretation requiring a source to obtain a PSD or Title V permit on the sole basis of potential GHG emissions. The Massachusetts decision held that the Act-wide definition of “air pollutant” includes GHGs, but with respect to PSD and Title V permitting provisions, EPA has employed a narrower, context-appropriate meaning. Massachusetts did not invalidate the long-standing constructions. “The Act-wide definition is not a command to regulate, but a description of the universe of substances EPA may consider regulating.” The presumption of consistent usage yields to context and distinct statutory objects call for different implementation strategies. EPA has repeatedly acknowledged that applying PSD and Title V permitting requirements to GHGs would be inconsistent with the Act’s structure and design, which concern “a relative handful of large sources capable of shouldering heavy substantive and procedural burdens.” EPA lacked authority to “tailor” the Act’s unambiguous numerical thresholds to accommodate its GHG-inclusive interpretation. EPA reasonably interpreted the Act to require sources that would need permits based on emission of conventional pollutants to comply with BACT for GHGs. BACT, which has traditionally been about end-of-stack controls, may be fundamentally unsuited to GHG regulation, but applying BACT to GHGs is not "disastrously unworkable," and need not result in a dramatic expansion of agency authority. View "Util. Air Regulatory Grp. v. Envtl. Prot. Agency" on Justia Law

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The bank fraud statute, 18 U.S.C. 1344(2), makes it a crime to “knowingly execut[e] a scheme ... to obtain” property owned by, or under the custody of, a bank “by means of false or fraudulent pretenses.” Loughrin was charged with bank fraud after he was caught forging stolen checks, using them to buy goods at a Target store, and then returning the goods for cash. The district court declined to give Loughrin’s proposed jury instruction that section 1344(2) required proof of “intent to defraud a financial institution.” A jury convicted Loughrin. The Tenth Circuit and Supreme Court affirmed. Section 1344(2) does not require proof that a defendant intended to defraud a financial institution, but requires only that a defendant intended to obtain bank property and that this was accomplished “by means of” a false statement. Imposing Loughrin’s proposed requirement would prevent the law from applying to cases falling within the statute’s clear terms, such as frauds directed against a third-party custodian of bank-owned property. The Court rejected Loughrin’s argument that without an element of intent to defraud a bank, section 1344(2) would apply to every minor fraud in which the victim happens to pay by check, stating that the statutory language limits application to cases in which the misrepresentation has some real connection to a federally insured bank, and thus to the pertinent federal interest. View "Loughrin v. United States" on Justia Law

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Investors can recover damages in a private securities fraud action only with proof that they relied on misrepresentation in deciding to buy or sell stock. The Supreme Court held, in "Basic," that the requirement could be met by invoking a presumption that the price of stock traded in an efficient market reflects all public, material information, including material misrepresentations; a defendant can rebut the presumption by showing that the alleged misrepresentation did not actually affect the stock price. EPJ filed a putative class action, alleging misrepresentations designed to inflate Halliburton’s stock price, in violation of the Securities Exchange Act of 1934 and SEC Rule 10b–5. The Supreme Court vacated denial of class certification, concluding that securities fraud plaintiffs need not prove causal connection between the alleged misrepresentations and their economic losses at the class certification stage. On remand, Halliburton argued that certification was nonetheless inappropriate because it had shown that alleged misrepresentations had not affected stock price. Without that presumption, investors would have to prove reliance on an individual basis, so that individual issues would predominate over common ones and class certification was inappropriate under FRCP 23(b)(3). The district court certified the class. The Fifth Circuit affirmed. The Supreme Court vacated and remanded, while declining to reject the Basic presumption. The Court rejected arguments that “a robust view of market efficiency” is no longer tenable in light of evidence that material, public information often is not quickly incorporated into stock prices and that investors do not invest in reliance on the integrity of market price. Congress could alter Basic’s presumption, given recent decisions construing Rule 10b–5 claims, but has not done so, although it has responded to other concerns. The Basic doctrine includes two presumptions: if a plaintiff shows that the misrepresentation was public and material and that the stock traded in a generally efficient market, there is a presumption that the misrepresentation affected price. If the plaintiff also shows that he purchased stock at market price during the relevant period, there is a presumption that he purchased in reliance on the misrepresentation. Requiring plaintiffs to prove price impact directly would take away the first presumption. Defendants, however, must have an opportunity to rebut the presumption of reliance before class certification with evidence of lack of price impact. That a misrepresentation has price impact is Basic’s fundamental premise and has everything to do with predominance. If reliance is to be shown by that presumption, the publicity and market efficiency prerequisites must be proved before certification. Because indirect evidence of price impact will be before the court at the class certification stage in any event, there is no reason to artificially limit the inquiry at that stage by excluding direct evidence of price impact. View "Halliburton Co. v. Erica P. John Fund, Inc." on Justia Law