Justia U.S. Supreme Court Opinion Summaries

Alice Corporation holds patents that disclose a scheme for mitigating “settlement risk,” i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation. The patent claims are designed to facilitate the exchange of financial obligations between parties, using a computer system as a third-party intermediary. The patents claim: a method for exchanging financial obligations; a computer system configured to carry out that method; and a computer-readable medium containing program code for performing that method. CLS, a global network that facilitates currency transactions, challenged the claims as not infringed, invalid, or unenforceable. Alice counterclaimed infringement. After the Supreme Court’s decision in Bilski, the district court held that the claims were ineligible for patent protection under 35 U.S.C. 101. The Federal Circuit and a unanimous Supreme Court affirmed. Section 101, which defines the subject matter eligible for patent protection, contains an implicit exception for laws of nature, natural phenomena, and abstract ideas. In applying the exception, patents that claim the building blocks of human ingenuity, which are ineligible for patent protection, must be distinguished from those that integrate the building blocks into something more, making them patent-eligible. The claims at issue are directed to a patent-ineligible concept: the abstract idea of intermediated settlement, which is “‘a fundamental economic practice long prevalent in our system of commerce.” The method claims, which simply require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention. Stating an abstract idea, adding the words “apply it with a computer,” simply combines two steps, with the same deficient result. Taking the claim elements separately, the functions performed by the computer at each step are purely conventional: creating and maintaining “shadow” accounts, obtaining data, adjusting account balances, and issuing automated instructions. They do not purport to improve the functioning of the computer itself or improve any other technology or technical field. The system claims are no different in substance from the method claims, reciting a handful of generic computer components configured to implement the same idea. View "Alice Corp. v. CLS Bank Int'l" on Justia Law

The Internal Revenue Service (IRS) issued summonses to four individuals, seeking information and records relevant to the tax obligations of Dynamo, 26 U.S.C.7602. When they failed to comply, the IRS brought an enforcement action. The individuals challenged the IRS’s motives in issuing the summonses and sought to question the responsible agents. The district court denied the request and ordered the summonses enforced. The Eleventh Circuit reversed, holding that refusal to allow questioning of the agents was an abuse of discretion. A unanimous Supreme Court vacated and remanded. A taxpayer has a right to examine IRS officials regarding reasons for issuing a summons when the taxpayer points to specific facts or circumstances plausibly raising an inference of bad faith. The proceedings at issue are “summary in nature,” and the only relevant question is whether the summons was issued in good faith. Prior cases support a requirement that a summons objector offer not just naked allegations, but some credible evidence to support a claim of improper motive. Circumstantial evidence can suffice; a fleshed out case is not required. The objector need only present a plausible basis for the charge. The Eleventh Circuit erroneously applied a categorical rule demanding the examination of IRS agents without assessing the plausibility of the claims. View "United States v. Clarke" on Justia Law

Lane, Director of CITY, a program for underprivileged youth operated by Central Alabama Community College (CACC), discovered that Schmitz, a state representative on CITY’s payroll, had not been reporting for work. Lane terminated her employment. Federal authorities later indicted Schmitz on charges of mail fraud and theft concerning a program receiving federal funds. Lane testified, under subpoena, regarding the events that led to Schmitz’s termination. Schmitz was convicted. Meanwhile, CITY experienced significant budget shortfalls. CACC’s president, Franks, terminated Lane and 28 others, citing those shortfalls. Franks rescinded all but two (Lane and another) of the terminations days later. Lane sued Franks in his individual and official capacities under 42 U.S.C. 1983, alleging retaliation for testifying against Schmitz. The district court granted Franks summary judgment, finding the individual-capacity claims were barred by qualified immunity and the official-capacity claims barred by the Eleventh Amendment. The Eleventh Circuit affirmed, reasoning that Lane acted pursuant to his official duties when he investigated and terminated Schmitz. A unanimous Supreme Court reversed in part, first holding that Lane’s sworn testimony outside the scope of his ordinary job duties was protected by the First Amendment. Lane’s testimony was speech as a citizen on a matter of public concern. The critical question is whether the speech at issue is itself ordinarily within the scope of an employee’s duties, not whether it merely concerns those duties. Corruption in a public program and misuse of state funds involve matters of significant public concern; the form and context of the speech, sworn testimony in a judicial proceeding, fortify that conclusion. There is no government interest that favors Franks: there was no evidence that Lane’s testimony was false or erroneous or that Lane unnecessarily disclosed confidential information. Franks is entitled to qualified immunity in his individual capacity. Based on existing Eleventh Circuit precedent, Franks reasonably could have believed that a government employer could fire an employee because of testimony given outside the scope of his ordinary job responsibilities. View "Lane v. Franks" on Justia Law

Abramski offered to purchase a gun for his uncle. Form 4473 asked whether he was the “actual transferee/buyer” of the gun and warned that a straw purchaser (buying a gun on behalf of another) was not the actual buyer. Abramski falsely answered that he was the actual buyer. Abramski was convicted for knowingly making false statements “with respect to any fact material to the lawfulness of the sale” of a gun, 18 U.S.C. 922(a)(6), and for making a false statement “with respect to the information required ... to be kept” in the gun dealer’s records, section 924(a)(1)(A). The Fourth Circuit affirmed. The Supreme Court affirmed, holding that the misrepresentation was material and rejecting Abramski’s argument that federal gun laws are unconcerned with straw arrangements. While the law regulates licensed dealer’s transactions with “persons” or “transferees” without specifying whether that language refers to the straw buyer or the actual purchaser, read in light of the statute’s context, structure, and purpose, the language clearly refers to the true buyer rather than the straw. The law establishes an elaborate system of in-person identification and background checks to ensure that guns are kept out of the hands of felons and other prohibited purchasers and imposes record-keeping requirements to assist authorities in investigating serious crimes through the tracing of guns tor buyers. The provisions would mean little if they could be avoided simply by enlisting the aid of an intermediary to execute the paperwork. The statute’s language is thus best read in context to refer to the actual rather than nominal buyer. While Abramski’s uncle could, possibly, have legally bought a gun for himself, Abramski’s false statement prevented the dealer from insisting that the true buyer appear in person, provide identifying information, show a photo ID, and submit to a background check. The dealer could not have lawfully sold the gun had it known that Abramski was not the true buyer, so the misstatement was material to the lawfulness of the sale. View "Abramski v. United States" on Justia Law

A former congressman filed a complaint with the Ohio Elections Commission alleging that SBA violated an Ohio law that criminalizes some false statements made during a political campaign. SBA had stated that his vote for the Patient Protection and Affordable Care Act was a vote in favor of “taxpayer funded abortion.” After he lost his re-election bid the complaint was dismissed. SBA pursued a separate challenge on First Amendment grounds. COAST also challenged the law, arguing that it had planned to disseminate a similar message but refrained because of the suit against SBA. The district court consolidated the suits and dismissed them as nonjusticiable, concluding that neither suit presented a sufficiently concrete injury to establish standing or ripeness. The Sixth Circuit affirmed. A unanimous Supreme Court reversed and remanded, finding that the plaintiffs alleged a sufficiently imminent injury under Article III. An “injury in fact” must be “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” Challenging a law before enforcement requires alleging “an intention to engage in a course of conduct arguably affected with a constitutional interest, but proscribed by a statute, and there exists a credible threat of prosecution.” The plaintiffs alleged a credible threat of enforcement. Their intended future conduct is arguably proscribed by the statute. The statute sweeps broadly; the Elections Commission already found probable cause to believe that SBA violated the law when it made statements similar to those they plan to make in the future. SBA’s insistence that its previous statements were true did not preclude finding probable cause. The threat of future enforcement is substantial. There is a history of past enforcement; a complaint may be filed by “any person,” not just a prosecutor or agency. Commission proceedings impose a burden on electoral speech. The target of a complaint may be forced to divert significant time and resources in the crucial days before an election. Those proceedings are backed by the additional threat of criminal prosecution. The Court found the “prudential factors” of fitness and hardship “easily satisfied.” View "Susan B. Anthony List v. Driehaus" on Justia Law

After the Republic of Argentina defaulted on its external debt, NML, one of its bondholders, prevailed in 11 debt-collection actions filed against Argentina in New York. To execute its judgments, NML sought discovery of Argentina’s property, serving subpoenas on nonparty banks for records relating to global financial transactions. The district court granted motions to compel compliance. The Second Circuit affirmed, rejecting Argentina’s argument that the order transgressed the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. 1330, 1602. The Supreme Court affirmed; the FSIA does not immunize a foreign-sovereign judgment debtor from post-judgment discovery of information concerning its extraterritorial assets. The FSIA replaced factor-intensive loosely-common-law-based immunity with “a comprehensive framework for resolving any claim of sovereign immunity” so that any sort of immunity defense made by a foreign sovereign in a U.S. court must stand or fall on its text. The FSIA established jurisdictional immunity, section 1604, which was waived here. FSIA execution immunity under sections 1609, 1610, 1611, generally shields “property in the United States of a foreign state” from attachment, arrest, and execution. Nothing forbids or limits discovery in aid of execution of a foreign-sovereign judgment debtor’s assets. Even if Argentina is correct that section 1609 execution immunity implies coextensive discovery-¬in-aid-of-execution immunity, there would be no protection from discovery a foreign sovereign’s extraterritorial assets. Section 1609 immunizes only foreign-state property “in the United States.” The prospect that NML’s general request for information about Argentina’s worldwide assets may turn up information about property that Argentina regards as immune does not mean that NML cannot pursue its discovery. View "Republic of Argentina v. NML Capital, Ltd." on Justia Law

POM, which produces and sells a pomegranate-blueberry juice blend, filed a Lanham Act suit (15 U.S.C. 1125) against Coca-Cola, alleging that the name, label, marketing, and advertising of a Coca-Cola juice blend mislead consumers into believing the product consists predominantly of pomegranate and blueberry juice when it actually consists of less expensive apple and grape juices, and that the confusion causes POM to lose sales. The district court granted Coca-Cola partial summary judgment, ruling that the Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. 321(f), 331, and its regulations preclude Lanham Act challenges to the name and label of the juice blend. The Ninth Circuit affirmed. The Supreme Court reversed, holding that competitors may bring Lanham Act claims challenging food and beverage labels regulated by the FDCA. The Court noted that the issue was preclusion, not pre-emption. Even if the Court’s task is to reconcile or harmonize the statutes instead of to determine whether one is an implied repeal in part of another, the best way to do that does not require barring POM’s Lanham Act claim. Neither the Lanham Act nor the FDCA expressly forbids or limits Lanham Act claims challenging labels that are regulated by the FDCA. The laws complement each other in major respects: both touch on food and beverage labeling, but the Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety. The FDCA’s enforcement is largely committed to the FDA, while the Lanham Act allows private parties to sue competitors to protect their interests on a case-by¬case basis. Allowing Lanham Act suits takes advantage of synergies among multiple methods of regulation. Because the FDA does not necessarily pursue enforcement measures regarding all objectionable labels, preclusion of Lanham Act claims could leave commercial interests, and indirectly the general public, with less effective protection in the food and beverage labeling realm than in other less regulated industries. Neither the statutory structure nor the empirical evidence indicates there will be any difficulty in fully enforcing each statute. View "POM Wonderful LLC v. Coca-Cola Co." on Justia Law

When petitioners filed for Chapter 7 bankruptcy, they sought to exclude $300,000 in an inherited individual retirement account (IRA) from the bankruptcy estate using the “retirement funds” exemption, 11 U.S.C. 522(b)(3)(C). The Bankruptcy Court concluded that an inherited IRA does not share the same characteristics as a traditional IRA and disallowed the exemption. The district court reversed. The Seventh Circuit reversed the district court. The Supreme Court affirmed, holding that funds in inherited IRAs are not “retirement funds” within the meaning of the code, based on three characteristics. The holder of an inherited IRA may never invest additional money in the account; is required to withdraw money from the account, no matter how far the holder is from retirement; and may withdraw the entire account at any time and use it for any purpose without penalty. Allowing debtors to protect funds in traditional and Roth IRAs ensures that debtors will be able to meet their basic needs during their retirement, but nothing about an inherited IRA’s legal characteristics prevent or discourage an individual from using the entire balance immediately after bankruptcy for purposes of current consumption. The “retirement funds” exemption should not be read to create a “free pass,” The possibility that an account holder can leave an inherited IRA intact until retirement and take only the required minimum distributions does not mean that an inherited IRA bears the legal characteristics of retirement funds. View "Clark v. Rameker" on Justia Law

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. 960, contains a provision (section 9658) that preempts statutes of limitations applicable to state-law actions for personal injury or property damage arising from the release of a hazardous substance, pollutant, or contaminant into the environment. Section 9658 adopts the discovery rule, so that statutes of limitations begin to run when a plaintiff discovers, or reasonably should have discovered, that the harm was caused by the contaminant because person who is exposed to a toxic contaminant may not develop or show signs of resulting injury for many years. CTS sold property on which it had stored chemicals as part its operations as an electronics plant; 24 years later, owners of parts of that property and adjacent landowners, sued, alleging damages from the stored contaminants. CTS moved to dismiss, citing a state statute of repose that prevented subjecting a defendant to a tort suit brought more than 10 years after the defendant’s last culpable act. Because CTS’s last act occurred when it sold the property, the district court granted the motion. The Fourth Circuit reversed, holding that the statute’s remedial purpose favored preemption. The Supreme Court reversed in part, concluding that section 9658 does not pre-empt state statutes of repose. Statutes of limitations promote justice by encouraging plaintiffs to pursue claims diligently and begin to run when a claim accrues. Statutes of repose effect a legislative judgment that a defendant should be free from liability after a legislatively determined amount of time and are measured from the date of the defendant’s last culpable actor omission. Under the language of the statute, pre-emption is characterized as an exception to the regular rule that the “the statute of limitations established under State law” applies; it is proper to conclude that Congress did not intend to preempt statutes of repose. View "CTS Corp. v. Waldburger" on Justia Law

BIA filed a voluntary chapter 7 bankruptcy petition. The bankruptcy trustee filed a complaint alleging fraudulent conveyance of assets. The bankruptcy court granted the trustee summary judgment. The district court affirmed. While appeal was pending, the Supreme Court held, in Stern v. Marshall, that Article III did not permit a bankruptcy court to enter final judgment on a counterclaim for tortious interference, even though final adjudication of that claim by the bankruptcy court was authorized by statute. The Ninth Circuit affirmed, acknowledging the trustee’s claims as “Stern claims,” i.e., claims designated for final adjudication in the bankruptcy court as a statutory matter, but prohibited from proceeding in that way under Article III, but concluding that defendants had impliedly consented to jurisdiction. The court stated that the bankruptcy court’s judgment could be treated as proposed findings of fact and conclusions of law, subject to de novo review by the district court. A unanimous Supreme Court affirmed. Under 28 U.S.C. 157, federal district courts have original jurisdiction in bankruptcy cases and may refer to bankruptcy judges “core” proceedings and “non-core” proceedings. In core proceedings, a bankruptcy judge “may hear and determine . . . and enter appropriate orders and judgments,” subject to the district court’s traditional appellate review. In non-core proceedings—those that are “otherwise related to a case under title 11,” final judgment must be entered by the district court after de novo review of the bankruptcy judge’s proposed findings of fact and conclusions of law, except that the bankruptcy judge may enter final judgment if the parties consent. Lower courts have described Stern claims as creating a statutory gap, since bankruptcy judges are not explicitly authorized to propose findings of fact and conclusions of law in a core proceeding. However, the gap is closed by the Act’s severability provision; when a court identifies a Stern claim, the bankruptcy court should simply treat that claim as non-core. The fraudulent conveyance claims, which Article III does not permit to be treated as “core” claims are “related to a case under title 11” and fit comfortably within the category of claims governed by section 157(c)(1). View "Exec. Benefits Ins. Agency v. Arkison" on Justia Law