Life is unfair, and life in the stock market is now just a little more unfair after the fallout from a precedent-setting federal appeals court decision that narrowed the definition of illegal insider trading. Congress could strike a blow for fair trading by writing an insider trading law with broader coverage, but securities law experts who favor such a step recognize that it is not going to happen, certainly not with this Congress.
U.S. Attorney Pareet Bahrara, the prosecutorial scourge of Wall Street, went into federal court last week [Oct. 22] with his head between his legs to drop charges against half a dozen confessed insider traders and a seventh who had been convicted after a jury trial. Bahrara acted under the compulsion of the Supreme Court’s decision earlier this month [Oct. 5] confirming the setback he suffered late last year in two separate insider trading cases.
The ruling by the influential New York-based Second U.S. Circuit Court of Appeals does not affect the most straightforward type of insider trading: stock trades by the insider himself or herself based on what securities law calls “material, non-public information.” But the ruling, issued in December 2014, will make it harder to prosecute a second category of cases. In those cases, an insider (called the “tipper”) leaks confidential information to a third party (called the “tippee”) who then uses the information to make money in the market before the general investing public gets a clue.
Bahrara’s office won securities fraud convictions and long prison sentences against two hedge fund managers. Todd Newman and Andrew Chiasson made millions as the end users of a network of market analysts who cultivated contacts with insiders at high-tech companies to get tipped about earnings reports before their release.
Newman made $4 million from the inside-information facilitated trading and was sentenced after his conviction to 54 months in prison. Andrew Chiasson made $68 million for the hedge fund he managed and owned in substantial part and was sentenced to 78 months. But the Second Circuit reversed those convictions and took the extra step of barring prosecutors from trying again in a retrial.
Writing for the unanimous three-judge panel, Judge Barrington Parker Jr. said the convictions could not stand because the prosecutors had failed to show that the “tippers” had gotten anything for leaking the information. A conviction in such cases, the court held, requires “an exchange that is objective, consequential, and represents at least a potential gain [for the tipper] of a pecuniary or similarly valuable nature.” Parker, a Democrat elevated to the Second Circuit by President George W. Bush, was joined by two Republican appointees: Ralph Winter and Peter Hall.
Parker said Bahrara’s office had prosecuted Newman and Chiasson on the basis of a “doctrinal novelty.” In appealing the case to the Supreme Court, the government countered by calling the Second Circuit’s decision “novel” and “unprecedented.” The government argued that the appeals court had contradicted an earlier Supreme Court decision, Dirks v. Securities and Exchange Commission (1983), that found passing information to a relative or friend sufficient to establish insider trading liability.
The tippers in the Newman and Chiasson were, oddly, never prosecuted, charged civilly, or immunized. The prosecutors never established their motives for leaking information, but common sense suggests that they felt a sense of self-importance as they gave up valuable information to friendly acquaintances in a bar and that they also hoped for some kind of payback from their friends sometime if not immediately. But that hope is not enough for a criminal prosecution under the Second Circuit’s decision.
At the time of the ruling, the New York Times financial columnist James B. Stewart wrote that this kind of insider dealing “undermines investor confidence in the integrity of the market and creates the perception of a rigged game stacked against the average investor.” In the ruling, Parker is unsympathetic. “Nothing in the law requires a symmetry of information in the nation’s securities markets,” he wrote.
Securities law expert Peter Henning at Wayne State Law School in Detroit is similarly unmoved. “On Wall Street, they’re all sharks,” Henning, a former SEC enforcement lawyer, says. “If you want to swim with sharks, be careful.”
The cases that Bharara dismissed last week included one good-sized shark: Michael Steinberg, a former high-ranking employee at the notorious SAC Capital, whose founder, Steven A. Cohen, has so far escaped prosecution altogether. Steinberg was convicted after trial; the six other cases dropped were against defendants who pleaded guilty, some of whom testified in the Steinberg, Newman, or Chiasson trials.
Many average investors will be surprised to learn that there is no statute that makes insider trading illegal. The prosecutions stem from the SEC’s interpretation of the broad anti-fraud Rule 10(b) that has been upheld and shaped by the courts. Congress has been urged to write a statute to make the rules clearer and more definite.
Henning and fellow securities law expert Thomas Hazen at the University of North Carolina Law School are among those who want Congress to do just that. One approach would be to establish a bright line that trading on confidential information is illegal — putting tipper and tippee alike in the crosshairs. Hazen said a congressional staffer asked for some advice on the issue, but he doubts that this Congress will actually tackle the subject. So for now insiders in the Second Circuit's territory can leak and their friends can trade just as long as nothing more than friendship is exchanged.
Sunday, October 25, 2015
Sunday, October 18, 2015
Business Groups Eye Court for Limits on Class Actions
Even for Supreme Court nerds, the legal issue in the case argued on Wednesday [Oct. 14] might have seemed impenetrably technical and minimally significant at most. But the stakes in Campbell-Ewald Co. v. Gomez are actually quite high as business groups join the Michigan-based marketing company in backing a legal tactic to kill potential class action suits before they can get started.
Jose Gomez sued Campbell-Ewald under the federal Telephone Consumer Protection Act for an unsolicited recruiting message the company sent out under contract with the U.S. Navy. The company offered to pay Gomez $1,503 for each unsolicited message and to promise to send no more. Gomez, who had filed the suit as a potential class action on behalf of other privacy-invaded text message users, never accepted the settlement.
At the Supreme Court, the company’s high-priced Washington lawyer, former U.S. solicitor general Gregory Garre, argued the case was over: moot, in legal terms. Gomez’s attorney, Stanford law professor Jonathan Mitchell, said, in essence, not so fast. And, however technical the issue might seem, the justices divided predictably along ideological lines, with three conservatives eager to kick the case and three liberals not so much.
The case is one of three that the Roberts Court conservatives have teed up for the term in what appears to be a continuing campaign to rein in class actions. Consumers, workers, and investors use this legal device to pool low-figure legal injuries into financially viable lawsuits against business defendants. Business interests regard them as a form of legal blackmail that companies settle to avoid expensive litigation and the risk of seven- or eight-figure damage awards.
Two more class action cases are set for argument in November. In Tyson Foods Co. v. Bouaphakeo, the big food processing company wants to thwart a class action brought by workers who say they are being denied overtime for time spent putting on or taking off work-required protective gear (argument: Nov. 10). In the other, Spokeo, Inc. v. Robins, the search engine company is seeking to avert a class action brought under the Fair Credit Reporting Act by a Chicago man allegedly injured by inaccurate information reported about him (argument: Nov. 2).
The U.S. Chamber of Commerce has joined in each of the cases with various other business and conservative interest groups to urge the court to rule for the companies and limit legal tactics for plaintiffs in future cases. The Chamber has an impressive 69 percent win rate with the Roberts Court: higher than the 56 percent win rate with the Rehnquist Court, according to the Constitutional Accountability Center.
Those business victories includ several big ones that limit class actions. In the highest-profile decision, the court in 2011 spared Walmart, the nation’s largest private employer, from a big sex discrimination suit brought on behalf of women employees. The 5-4 ruling in Wal-Mart Stores, Inc. v. Dukes, divided along ideological lines, forced plaintiffs’ attorneys to slice the suit into smaller pieces under procedural rules that still blocked success.
In last week’s case, Garre made clear that class actions are the target in Campbell-Ewald’s seemingly arcane civil procedure question. “As a practical matter,” Garre told the justices, plaintiffs in class actions “get pennies on the dollars for their claim. The big money goes to the class-action lawyers.”
From the bench, Justice Elena Kagan tried to steer the argument away from that debate. “Both sides have these class action policy arguments,” Kagan told Garre. “But it’s important not to let those drive this pretty technical mootness question.” Kagan, along with liberal colleagues Ruth Bader Ginsburg and Sonia Sotomayor, repeatedly insisted that Campbell-Ewald had not offered Gomez “complete” relief for his claim because he still had a request for attorney’s fees and a permanent court-ordered injunction.
From the opposite perspective, Chief Justice John G. Roberts Jr. wondered why a court should “waste its time” on Gomez’s case, but he recognized what was at stake. “This is all about class certification,” Roberts told Gomez’s attorney, Mitchell. Conservatives Antonin Scalia and Samuel A. Alito Jr. signaled their distaste for the suit just as bluntly. Alito in particular echoed Garre’s unfavorable opinion about class action lawyers.
As usual, Justice Anthony M. Kennedy appeared likely to hold the decisive vote. In an early exchange with Garre, Kennedy indicated he was not buying the argument for ditching the case, as a matter of civil procedure. Kagan’s effort to defuse the policy arguments may have been intended to give Kennedy a narrow ground to join the liberal bloc without going back on his previous votes to limit class actions.
The Obama administration backed the plaintiffs’ side of the case — in contrast to the Bush administration’s support for business defendants in previous class action cases. Liberal groups backed Gomez, but so did the conservative National Right to Work Legal Defense Foundation, which uses class actions to sue labor unions.
The plaintiffs’ bar fears that a ruling for Campbell-Ewald will give business defendants a road map for blocking class actions by paying off individual plaintiffs one at a time — in effect, for pennies on the dollar of the potential awards in a mass suit. Given the Roberts Court’s pro-business track record, they have reason to worry.
Jose Gomez sued Campbell-Ewald under the federal Telephone Consumer Protection Act for an unsolicited recruiting message the company sent out under contract with the U.S. Navy. The company offered to pay Gomez $1,503 for each unsolicited message and to promise to send no more. Gomez, who had filed the suit as a potential class action on behalf of other privacy-invaded text message users, never accepted the settlement.
At the Supreme Court, the company’s high-priced Washington lawyer, former U.S. solicitor general Gregory Garre, argued the case was over: moot, in legal terms. Gomez’s attorney, Stanford law professor Jonathan Mitchell, said, in essence, not so fast. And, however technical the issue might seem, the justices divided predictably along ideological lines, with three conservatives eager to kick the case and three liberals not so much.
The case is one of three that the Roberts Court conservatives have teed up for the term in what appears to be a continuing campaign to rein in class actions. Consumers, workers, and investors use this legal device to pool low-figure legal injuries into financially viable lawsuits against business defendants. Business interests regard them as a form of legal blackmail that companies settle to avoid expensive litigation and the risk of seven- or eight-figure damage awards.
Two more class action cases are set for argument in November. In Tyson Foods Co. v. Bouaphakeo, the big food processing company wants to thwart a class action brought by workers who say they are being denied overtime for time spent putting on or taking off work-required protective gear (argument: Nov. 10). In the other, Spokeo, Inc. v. Robins, the search engine company is seeking to avert a class action brought under the Fair Credit Reporting Act by a Chicago man allegedly injured by inaccurate information reported about him (argument: Nov. 2).
The U.S. Chamber of Commerce has joined in each of the cases with various other business and conservative interest groups to urge the court to rule for the companies and limit legal tactics for plaintiffs in future cases. The Chamber has an impressive 69 percent win rate with the Roberts Court: higher than the 56 percent win rate with the Rehnquist Court, according to the Constitutional Accountability Center.
Those business victories includ several big ones that limit class actions. In the highest-profile decision, the court in 2011 spared Walmart, the nation’s largest private employer, from a big sex discrimination suit brought on behalf of women employees. The 5-4 ruling in Wal-Mart Stores, Inc. v. Dukes, divided along ideological lines, forced plaintiffs’ attorneys to slice the suit into smaller pieces under procedural rules that still blocked success.
In last week’s case, Garre made clear that class actions are the target in Campbell-Ewald’s seemingly arcane civil procedure question. “As a practical matter,” Garre told the justices, plaintiffs in class actions “get pennies on the dollars for their claim. The big money goes to the class-action lawyers.”
From the bench, Justice Elena Kagan tried to steer the argument away from that debate. “Both sides have these class action policy arguments,” Kagan told Garre. “But it’s important not to let those drive this pretty technical mootness question.” Kagan, along with liberal colleagues Ruth Bader Ginsburg and Sonia Sotomayor, repeatedly insisted that Campbell-Ewald had not offered Gomez “complete” relief for his claim because he still had a request for attorney’s fees and a permanent court-ordered injunction.
From the opposite perspective, Chief Justice John G. Roberts Jr. wondered why a court should “waste its time” on Gomez’s case, but he recognized what was at stake. “This is all about class certification,” Roberts told Gomez’s attorney, Mitchell. Conservatives Antonin Scalia and Samuel A. Alito Jr. signaled their distaste for the suit just as bluntly. Alito in particular echoed Garre’s unfavorable opinion about class action lawyers.
As usual, Justice Anthony M. Kennedy appeared likely to hold the decisive vote. In an early exchange with Garre, Kennedy indicated he was not buying the argument for ditching the case, as a matter of civil procedure. Kagan’s effort to defuse the policy arguments may have been intended to give Kennedy a narrow ground to join the liberal bloc without going back on his previous votes to limit class actions.
The Obama administration backed the plaintiffs’ side of the case — in contrast to the Bush administration’s support for business defendants in previous class action cases. Liberal groups backed Gomez, but so did the conservative National Right to Work Legal Defense Foundation, which uses class actions to sue labor unions.
The plaintiffs’ bar fears that a ruling for Campbell-Ewald will give business defendants a road map for blocking class actions by paying off individual plaintiffs one at a time — in effect, for pennies on the dollar of the potential awards in a mass suit. Given the Roberts Court’s pro-business track record, they have reason to worry.
Sunday, October 11, 2015
Hope in Congress for Sentencing Reform?
Criminal justice reformers have joined with fiscal conservatives in an improbable alliance to reduce the population of the nation’s federal prisons. It turns out that sending low-level drug offenders into overcrowded prisons for years on end, based on mandatory minimum sentences with little leeway for judges to exercise discretion or even common sense, is both expensive and counterproductive. Who knew?
The broad agreement on federal sentencing reform is behind the impending release of some 6,000 drug offenders at the end of the month under a policy adopted more than a year ago by the U.S. Sentencing Commission with acquiescence by Congress. The long-planned release made front-page news last week, but it “barely scrapes the surface” of the problems in the 30 percent overcapacity federal prison system, according to the Marshall Project, the invaluable compendium of criminal justice news.
Sentence reformers are now turning their lonely eyes to Congress after broad measures with bipartisan cosponsors were introduced in both the Senate and the House of Representatives. Douglas Berman, a professor at Ohio State University’s Moritz College of Law and author of the comprehensive blog Sentencing Law and Policy, was so encouraged as to foresee the possibility that a bill could reach the president’s desk for signature by the end of this year.
Berman’s optimism seems at odds with the evidence of dysfunctionality on Capitol Hill, accentuated by Republicans’ chaotic inability to choose their candidate for Speaker of the House. Still, the reformers appear to have succeeded in overcoming their biggest single obstacle by getting the very skeptical Senate Judiciary Committee chairman, Iowa’s Charles Grassley, to sign on as lead sponsor of the Senate measure along with three other Republicans and five Democrats.
The Senate bill, introduced Oct. 1, runs 141 pages, so long that Berman confessed on his blog that he was not yet ready to analyze it in detail. Grassley confirmed his support in an op-ed in his home state Des Moines Register by describing the provisions as “carefully crafted sentencing reforms . . . that do not compromise public safety or national security.”
The House bill, a more compact 18 pages, was introduced on Oct. 8 with bipartisan support from the chairman, ranking Democrat, and other members of the House Judiciary Committee. On his blog, Berman described introduction of the Senate bill as a “huge development.” The House measure made him “a bit more optimistic” about possible enactment in 2015.
Both bills take significant swipes at the mandatory-minimum craze in Congress from the 1980s and ’90s that gave drug offenders and armed felons long sentences beyond federal judges’ ability to soften. Both bills reduce some of the mandatory minimums for drug offenses and eliminate the current three-strike mandatory life provision. That provision parallels laws enacted in several states and upheld by the Supreme Court in 2003 against a challenge under the Eighth Amendment’s Cruel and Unusual Punishment Clause (Ewing v. California, Lockyer v. Andrade).
The two bills also widen somewhat the existing “safety valve” provision to give federal judges somewhat more leeway to soften sentences in individual cases. The Senate bill creates a second safety-valve to allow judges to sentence some offenders below 10-year minimums, but stresses that defendants convicted of “serious violent and serious drug felonies” will not benefit from the provision. And both bills would apply the provisions retroactively.
Smooth passage of bills is by no means assured in either chamber. Writing on the blog Crime and Consequences of the pro-law enforcement Criminal Justice Legal Foundation, former federal prosecutor William Otis began picking the Senate bill apart by noting a provision to ease add-on minimums for defendants convicted of using a firearm in a drug felony.
Otis, an outspoken opponent of sentencing reform as the issue has gained support, noted that senators introduced the bill on the same day as the mass shooting at a community college in Oregon. “What were these people thinking?” Otis asked, even while acknowledging that the Oregon shooter had no apparent connection to drug-dealing.
Criminal justice reformers have long argued that the long, mandatory sentences that Congress authorized and presidents of both parties signed into law scooped up many low-level offenders. The advocacy group Families Against Mandatory Minimums lobbied to soften the terms and slowly picked up support from libertarians and fiscally-minded conservatives.
Congress took a modest step in 2010 by passing a bill that eliminated the racial disparity between sentences for crack and powder cocaine. With support for broader steps increasing among conservatives, the Republicans’ gains in the 2014 midterm elections stirred speculation that sentencing reform’s time could be coming.
Earlier, however, the Sentencing Commission, the independent judicial agency, had voted in April 2014 to authorize two-step reductions in sentences for some federal drug offenders. Once Congress had failed to block the so-called “drugs -2” policy, the seven-member commission directed that releases were to begin in November 2015. The one-year lead time gave federal judges time to rule on individual cases; about 2,000 applications for reduced sentences have been denied so far.
With bills pending in Congress, Berman raised the question whether the Sentencing Commission could institute some of the reforms on its own. Berman is entitled to his optimism, but longtime Capitol Hill observers may rightly see the latter suggestion as more fruitful than hoping for Congress to act.
The broad agreement on federal sentencing reform is behind the impending release of some 6,000 drug offenders at the end of the month under a policy adopted more than a year ago by the U.S. Sentencing Commission with acquiescence by Congress. The long-planned release made front-page news last week, but it “barely scrapes the surface” of the problems in the 30 percent overcapacity federal prison system, according to the Marshall Project, the invaluable compendium of criminal justice news.
Sentence reformers are now turning their lonely eyes to Congress after broad measures with bipartisan cosponsors were introduced in both the Senate and the House of Representatives. Douglas Berman, a professor at Ohio State University’s Moritz College of Law and author of the comprehensive blog Sentencing Law and Policy, was so encouraged as to foresee the possibility that a bill could reach the president’s desk for signature by the end of this year.
Berman’s optimism seems at odds with the evidence of dysfunctionality on Capitol Hill, accentuated by Republicans’ chaotic inability to choose their candidate for Speaker of the House. Still, the reformers appear to have succeeded in overcoming their biggest single obstacle by getting the very skeptical Senate Judiciary Committee chairman, Iowa’s Charles Grassley, to sign on as lead sponsor of the Senate measure along with three other Republicans and five Democrats.
The Senate bill, introduced Oct. 1, runs 141 pages, so long that Berman confessed on his blog that he was not yet ready to analyze it in detail. Grassley confirmed his support in an op-ed in his home state Des Moines Register by describing the provisions as “carefully crafted sentencing reforms . . . that do not compromise public safety or national security.”
The House bill, a more compact 18 pages, was introduced on Oct. 8 with bipartisan support from the chairman, ranking Democrat, and other members of the House Judiciary Committee. On his blog, Berman described introduction of the Senate bill as a “huge development.” The House measure made him “a bit more optimistic” about possible enactment in 2015.
Both bills take significant swipes at the mandatory-minimum craze in Congress from the 1980s and ’90s that gave drug offenders and armed felons long sentences beyond federal judges’ ability to soften. Both bills reduce some of the mandatory minimums for drug offenses and eliminate the current three-strike mandatory life provision. That provision parallels laws enacted in several states and upheld by the Supreme Court in 2003 against a challenge under the Eighth Amendment’s Cruel and Unusual Punishment Clause (Ewing v. California, Lockyer v. Andrade).
The two bills also widen somewhat the existing “safety valve” provision to give federal judges somewhat more leeway to soften sentences in individual cases. The Senate bill creates a second safety-valve to allow judges to sentence some offenders below 10-year minimums, but stresses that defendants convicted of “serious violent and serious drug felonies” will not benefit from the provision. And both bills would apply the provisions retroactively.
Smooth passage of bills is by no means assured in either chamber. Writing on the blog Crime and Consequences of the pro-law enforcement Criminal Justice Legal Foundation, former federal prosecutor William Otis began picking the Senate bill apart by noting a provision to ease add-on minimums for defendants convicted of using a firearm in a drug felony.
Otis, an outspoken opponent of sentencing reform as the issue has gained support, noted that senators introduced the bill on the same day as the mass shooting at a community college in Oregon. “What were these people thinking?” Otis asked, even while acknowledging that the Oregon shooter had no apparent connection to drug-dealing.
Criminal justice reformers have long argued that the long, mandatory sentences that Congress authorized and presidents of both parties signed into law scooped up many low-level offenders. The advocacy group Families Against Mandatory Minimums lobbied to soften the terms and slowly picked up support from libertarians and fiscally-minded conservatives.
Congress took a modest step in 2010 by passing a bill that eliminated the racial disparity between sentences for crack and powder cocaine. With support for broader steps increasing among conservatives, the Republicans’ gains in the 2014 midterm elections stirred speculation that sentencing reform’s time could be coming.
Earlier, however, the Sentencing Commission, the independent judicial agency, had voted in April 2014 to authorize two-step reductions in sentences for some federal drug offenders. Once Congress had failed to block the so-called “drugs -2” policy, the seven-member commission directed that releases were to begin in November 2015. The one-year lead time gave federal judges time to rule on individual cases; about 2,000 applications for reduced sentences have been denied so far.
With bills pending in Congress, Berman raised the question whether the Sentencing Commission could institute some of the reforms on its own. Berman is entitled to his optimism, but longtime Capitol Hill observers may rightly see the latter suggestion as more fruitful than hoping for Congress to act.
Friday, October 2, 2015
For Court's Conservatives, New Term Starts Now
The Supreme Court opens a new term on Monday [Oct. 5], with conservative justices still licking their wounds after a term when they were on the losing side of most of the most important decisions. But for conservatives, this may be the new season that diehard sports fans are always told to wait until.
The court has already teed up cases that give the conservatives the chance to deliver a gut punch to public employee unions, limit racial preferences in college and university admissions, and make class actions a little bit harder for consumers and workers. Farther back in the pipeline are new cases on state laws regulating abortion clinics and a second round on the contraception coverage mandate under the Affordable Care Act.
Out on the hustings during the summer recess, two of the conservatives, Antonin Scalia and Samuel A. Alito Jr., both restated the losing arguments in their dissents from the 5-4 decision to recognize a constitutional right to marriage equality for gay and lesbian couples. Speaking at Rhodes College in Memphis, Tenn. [Sept. 21], Scalia called the decision “the furthest imaginable extension of the Supreme Court doing whatever it wants.”
Earlier, Alito had complained that the marriage decision opened the door to striking down all sorts of laws under an expansive definition of liberty under the Due Process Clause. “There’s no limit,” Alito said in a friendly interview with conservative commentator Bill Kristol.
Other liberal victories last term included the 6-3 ruling to uphold health insurance subsidies under the Affordable Care Act and the 5-4 decision to ratify a broad definition of discrimination under the Fair Housing Act. But the final day saw two significant conservative victories, both on 5-4 votes. The court threw out the Environmental Protection Agency’s rules on toxic emission by power plants and rejected a challenge to the drugs used in lethal injection executions.
Turning the page, liberal experts and advocacy groups are now bracing for a conservative term. The conservative bloc appears to be the driving force in getting some potential game-changers on to the calendar.
The public employee union case, Friedrichs v. California Teachers Association, is the prime example. In a 5-4 decision in 2014, the court’s conservatives stopped just short of overruling a 1977 decision (Abood) upholding so-called “fair share” laws. Those laws, on the books in 20 states, require non-union members to pay the part of union dues used to represent them in collective bargaining. The new case, financed by anti-union groups, asks the court directly to overrule the prior decision, a ruling that would give non-union members a free ride and hitt unions hard in their treasuries.
The affirmative action case, Fisher v. University of Texas, also gives the court’s conservatives a second chance to take a bite out of a liberal precedent. UT’s flagship Austin campus uses race as a factor in admitting about 20 percent of its incoming first-year class, as allowed under a 2003 decision (Grutter). Ruling in the first round of this challenge, the court in 2013 told the federal appeals court in Texas to take a harder look at the policy. Now, the justices will be taking a hard look at the appeals court’s conclusion that the university’s policy passes constitutional muster.
The court’s conservatives have time and again signaled their disquiet with class actions, the procedural tool used to turn de minimis injuries suffered by large numbers of consumers or workers into a viable lawsuit. Among several civil litigation cases, the most important appears to be Tyson Foods, Inc. v. Bouaphakeo, a case brought by workers at an Iowa meat processing plant claiming that Tyson has failed to pay overtime as required by federal law. The company did not keep good records, so the workers used statistical projections to calculate damages. The conservatives are likely to flinch at what they have previously called “trial by formula.”
The court has not heard an abortion case since the 5-4 decision in 2007 (Carhart II) that upheld the federal law banning so-called partial birth abortions. Anti-abortion groups have used the court’s silence to enact laws regulating abortion clinics, ostensibly to promote women’s health but in reality to close as many clinics as possible. A Mississippi law would close the only clinic in the state; Texas’s law would leave only 10 clinics operating, none in the western part of the state. Those laws seem to run afoul of the court’s 1992 decision, Planned Parenthood v. Casey, that states cannot impose an “undue burden” on abortion rights. But anti-abortion forces hope the Roberts Court will take a relaxed view of that standard.
The Obamacare contraception mandate is headed back to the court in cases brought by religious nonprofits: examples, a Catholic charity or college. They object on religious freedom grounds to signing a form for their health plans to provide cost-free coverage of contraceptives as required under an Affordable Care Act regulation. Seven out of eight federal courts of appeals to rule on the issue have rejected the argument. But the Roberts Court conservatives took an expansive view of religious freedom in the earlier decision (Hobby Lobby) allowing a private employer to skirt the regulation.
With 13 cases added on Thursday [Oct. 1], the court now has enough to fill the calendar into January. As always, many cases are only partly ideological; and some, not at all. But on opening day, the court’s conservatives may well be thinking that this, indeed, is their year.
The court has already teed up cases that give the conservatives the chance to deliver a gut punch to public employee unions, limit racial preferences in college and university admissions, and make class actions a little bit harder for consumers and workers. Farther back in the pipeline are new cases on state laws regulating abortion clinics and a second round on the contraception coverage mandate under the Affordable Care Act.
Out on the hustings during the summer recess, two of the conservatives, Antonin Scalia and Samuel A. Alito Jr., both restated the losing arguments in their dissents from the 5-4 decision to recognize a constitutional right to marriage equality for gay and lesbian couples. Speaking at Rhodes College in Memphis, Tenn. [Sept. 21], Scalia called the decision “the furthest imaginable extension of the Supreme Court doing whatever it wants.”
Earlier, Alito had complained that the marriage decision opened the door to striking down all sorts of laws under an expansive definition of liberty under the Due Process Clause. “There’s no limit,” Alito said in a friendly interview with conservative commentator Bill Kristol.
Other liberal victories last term included the 6-3 ruling to uphold health insurance subsidies under the Affordable Care Act and the 5-4 decision to ratify a broad definition of discrimination under the Fair Housing Act. But the final day saw two significant conservative victories, both on 5-4 votes. The court threw out the Environmental Protection Agency’s rules on toxic emission by power plants and rejected a challenge to the drugs used in lethal injection executions.
Turning the page, liberal experts and advocacy groups are now bracing for a conservative term. The conservative bloc appears to be the driving force in getting some potential game-changers on to the calendar.
The public employee union case, Friedrichs v. California Teachers Association, is the prime example. In a 5-4 decision in 2014, the court’s conservatives stopped just short of overruling a 1977 decision (Abood) upholding so-called “fair share” laws. Those laws, on the books in 20 states, require non-union members to pay the part of union dues used to represent them in collective bargaining. The new case, financed by anti-union groups, asks the court directly to overrule the prior decision, a ruling that would give non-union members a free ride and hitt unions hard in their treasuries.
The affirmative action case, Fisher v. University of Texas, also gives the court’s conservatives a second chance to take a bite out of a liberal precedent. UT’s flagship Austin campus uses race as a factor in admitting about 20 percent of its incoming first-year class, as allowed under a 2003 decision (Grutter). Ruling in the first round of this challenge, the court in 2013 told the federal appeals court in Texas to take a harder look at the policy. Now, the justices will be taking a hard look at the appeals court’s conclusion that the university’s policy passes constitutional muster.
The court’s conservatives have time and again signaled their disquiet with class actions, the procedural tool used to turn de minimis injuries suffered by large numbers of consumers or workers into a viable lawsuit. Among several civil litigation cases, the most important appears to be Tyson Foods, Inc. v. Bouaphakeo, a case brought by workers at an Iowa meat processing plant claiming that Tyson has failed to pay overtime as required by federal law. The company did not keep good records, so the workers used statistical projections to calculate damages. The conservatives are likely to flinch at what they have previously called “trial by formula.”
The court has not heard an abortion case since the 5-4 decision in 2007 (Carhart II) that upheld the federal law banning so-called partial birth abortions. Anti-abortion groups have used the court’s silence to enact laws regulating abortion clinics, ostensibly to promote women’s health but in reality to close as many clinics as possible. A Mississippi law would close the only clinic in the state; Texas’s law would leave only 10 clinics operating, none in the western part of the state. Those laws seem to run afoul of the court’s 1992 decision, Planned Parenthood v. Casey, that states cannot impose an “undue burden” on abortion rights. But anti-abortion forces hope the Roberts Court will take a relaxed view of that standard.
The Obamacare contraception mandate is headed back to the court in cases brought by religious nonprofits: examples, a Catholic charity or college. They object on religious freedom grounds to signing a form for their health plans to provide cost-free coverage of contraceptives as required under an Affordable Care Act regulation. Seven out of eight federal courts of appeals to rule on the issue have rejected the argument. But the Roberts Court conservatives took an expansive view of religious freedom in the earlier decision (Hobby Lobby) allowing a private employer to skirt the regulation.
With 13 cases added on Thursday [Oct. 1], the court now has enough to fill the calendar into January. As always, many cases are only partly ideological; and some, not at all. But on opening day, the court’s conservatives may well be thinking that this, indeed, is their year.