Greetings, sportsfans! In most Junes, as the landmark constitutional cases of each Term are decided, it can sometimes be said that the Court does more legislating than Congress. It's a rare June indeed when Congress steals the spotlight. But with the immigration debate, the issuance of subpoenas to most of the DOJ, and the indictment of William Jefferson and subsequent freezing of his assets (which, you will recall, had theretofore been only refrigerated), Congress is providing plenty of entertainment so far. By contrast, the Court has issued 9 utterly unremarkable decisions in June, all but 3 of them unanimous in result. And you wonder why I've been putting off writing this report. But when the Court announced it would be handing down more (and hopefully more interesting) opinions today, I realized I better get on the ball. Off to the cases!

June 11 Opinions

Watson v. Philip Morris Cos., 05-1284

The federal officer removal statute, 28 U.S.C. § 1442(a)(1), permits a federal officer "or any person acting under that officer" to remove a case to federal court. Philip Morris successfully removed a state lawsuit on the ground that it "acted under" the Federal Trade Commission because it had to comply with detailed FTC regulations in connection with the testing of "light" cigarettes. The unanimous Supreme Court reversed. SGB explained that the purpose of the officer removal statute was to prevent hostile state courts from impeding federal officers and their private agents from carrying out federal law. For example, the statute was frequently used to remove state prosecutions against private individuals who helped federal revenuers enforce Prohibition-era liquor laws. Viewed in light of this history and statutory purpose, the term "under" refers to a relationship between a private subordinate who acts at the direction of a federal superior. The Court distinguished between Philip Morris's "compliance" with federal regulations and a person's assistance of a federal officer in carrying out federal purposes or enforcing federal law. While not fully resolving the question, SGB suggested that many federal contractors may invoke the officer removal statute since they assist in carrying out federal purposes. Finally, SGB rejected Philip Morris's argument that the government actually "delegated" cigarette-testing authority to private entities. The Court found no evidence of delegation, only intensive regulation and monitoring.

Long Island Care at Home, Ltd. v. Coke, 06-593

In the 1974 amendments to the Fair Labor Standards Act, Congress exempted from minimum wage and overtime requirements anyone "employed in domestic service employment to provide companionship services for individuals who . . . are unable to care for themselves." The question here was whether that exemption covers a companionship worker who is employed by an outside agency rather than the recipient of care. In its 1975 implementing regulation, the Labor Department helpfully answered this question both yes (in a section labelled "Interpretations") and no (in a section labelled "General Regulations"). Cleaning up the DOL's mess, SGB's unanimous opinion held that the more specifically applicable "Interpretations" part of the regulation governed. This result was supported by a 2006 DOL "Advisory Memorandum" deciphering the 1975 regulation, to which the Court gave Auer deference as a reasonable gloss on the regs. SGB concluded that DOL's regulatory view that the exemption covers agency workers was a valid interpretation of the FLSA under Chevron because Congress left a definitional gap to be filled by DOL, and DOL did so reasonably in accord with the statutory text and intent (at least once you get past the whole contradictory regulations thing). In the only part of the opinion that really makes any new law, the Court held that the mere fact that DOL's view was found in a section of the regulation called "Interpretations" did not make it a nonbinding "interpretive rule." Regardless of the label, the rule governs primary conduct, fills a statutory gap, and was issued after full notice-and-comment procedures. It is therefore worthy of Chevron deference.

United States v. Atlantic Research Corp., 06-562

The Court administered a unanimous smackdown to the SG in this case, reconciling two provisions of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). A couple of terms ago in Cooper Industries, Inc. v. Aviall Services, Inc. (2004), the Court held that § 113(f) provides a "potentially responsible party" (PRP)—a party responsible for cleaning up a contaminated site—a right to seek contribution from other PRPs only after being sued itself under § 106 or § 107(a). The question here was whether § 107(a)(4)(B) provides a PRP a cause of action to sue other PRPs for "costs of response" even before being sued itself. In other words, whether a Good Samaritan PRP that starts cleaning up a site voluntarily can recover its costs from other PRPs without waiting to be sued. CT, the author of Cooper, unanimously held that the Good Samaritan was in luck. The plain terms of § 107(a)(4)(B) give a right of action to "any other person" to seek "costs of response" from other PRPs, and any other person naturally refers to anyone not covered by the preceding subparagraph (everyone but the U.S., states, or Indian tribes). The Court rejected the government's argument that this reading makes § 107(a)(4)(B) conflict with § 113(f). To the contrary, § 107 provides for recovery of "costs of response"—costs actually incurred in cleanup—while § 113(f) gives a right to "contribution"—i.e., the right to recover amounts paid pursuant to a judgment or settlement. Naturally, an action under § 107 may come before any lawsuit is filed, while § 113(f) requires a pending action. The remedies are complementary, not conflicting.

Beck v. PACE International Union, 05-1448

Petitioner Crown Paper Co. went bankrupt and decided to terminate its pension plan by purchasing an annuity that would pay plan participants all the benefits they were due. PACE, the union representing plan participants, argued that Crown violated a fiduciary duty by refusing to consider merging the Crown plan with a PACE multiemployer plan. Speaking through Justice Scalia, the unanimous Court found no fiduciary violation because merger is not a permissible means of terminating a plan under ERISA § 1341(b)(3)(A). The Court deferred to the reasonable view of the Pension Benefit Guaranty Corporation that the termination provision does not include mergers. The structure of ERISA confirms PBGC's interpretation because it treats mergers and terminations in fundamentally different ways.

Fry v. Pliler, 06-5247

On direct review, a state court criminal defendant need only show that a constitutional error was not harmless beyond a reasonable doubt (the Chapman standard) in order to obtain reversal. But once a case moves to the habeas stage, the defendant must meet a much higher burden: He must show that the error had a "substantial and injurious effect" on the verdict (the Brecht standard). The question here was whether the Brecht standard applies on habeas even when the state appellate court failed to catch the constitutional error on direct review and thus never had a chance to apply the Chapman standard. Justice Scalia, writing for a unanimous Court on this point, held that the CA9 was correct to apply the Brecht standard. The reasons underlying Brecht's deferential standard—finality, state sovereignty over criminal law, etc.—apply whether or not the state court properly assessed the constitutional error on direct appeal. AS declined to apply the Brecht standard to the facts of the case at hand, finding that issue outside of the question presented. Thus, the Court affirmed the CA9's denial of habeas relief.

JPS (+DHS, RBG, & SGB (in part)) agreed that Brecht applied, but would have gone on to hold that the defendant was entitled to habeas relief even under that demanding standard. The constitutional error—exclusion of evidence implicating another person in the murder—was obviously harmful where the defendant was convicted after two hung juries.

SGB, while agreeing with JPS that any error was harmful, would have vacated and remanded to the CA9 to determine what he saw as the logically antecedent question: whether there was constitutional error in the first place.

June 4 Opinions

Uttecht v. Brown, 06-413

You know it's a bad term for the CA9 when even Judge Kozinski's majority opinions get reversed. Of course, Judge Kozinski should have questioned the wisdom of this opinion when it was joined by Judge Berzon—and when Judge Reinhardt signed on, he should have considered inserting "not" before every verb. On habeas, the CA9 reversed a death sentence on the ground that the trial judge improperly excused a juror for expressing reluctance to impose the death penalty. While the juror said many times that he could impose the death penalty, he also said he would do so only if there were a risk of release and recidivism. That is an impossibility under Washington law because life without parole is an option for first-degree murder. The juror's limited willingness to impose the death penalty also conflicted with Washington's law on when the death penalty is appropriate. Indeed, defense counsel did not even object when the judge granted the prosecution's motion to excuse for cause. Reversing, AMK (+4) recounted the governing precedents, which hold that a juror may be excused if his views would "substantially impair the performance of his duties as a juror in accordance with his instructions and his oath." AMK explained that the juror's conflicting answers and apparent unwillingness to follow state law more than supported the trial judge's ruling. The deference due to the trial judge (who observed the juror's demeanor) and defense counsel's failure to object further bolstered this conclusion. The CA9 impermissibly second-guessed the state court's holding in violation of AEDPA's stringent standard for relief, AMK concluded.

JPS (+3) penned an impassioned dissent. (Do all these venomous dissents by him and RBG presage major losses for the liberals in the Term's remaining major cases???) He accused the Court of sanctioning the exclusion of a juror who repeatedly stated that he could impose the death penalty and would follow the law, merely because the juror had qualms about when the death penalty should be imposed. Under JPS's reading of the precedent, this type of juror must be allowed to remain on the jury. The majority "has gotten it horribly backwards" and "appears to be under the impression that trial courts should be encouraging the inclusion of jurors who will impose the death penalty rather than only ensuring the exclusion of those who say that, in all circumstances, they cannot." In an odd conclusion, JPS referred to Judge Kozinski's clerkship with Chief Justice Burger to support his argument that the majority was ignoring long-established precedent. While this is the first time JPS has explicitly referred to a clerkship, his clerkship with Wiley Rutledge has taken center stage in terrorism cases, with JPS adopting obscure Rutledge dissents as the law of the land. In another strange twist, Stevens's footnote 1 chastises AMK for including a "graphic description" of the defendant's crimes. But that is nowhere to be found in AMK's opinion. This may be one of those rare instances where a Justice mistakenly refers to something that was in an earlier draft of an opinion but did not make it into the final version. I wouldn't be surprised if JPS's comment itself disappears in the softbound version of Volume 551.

SGB (+DHS) briefly dissented to fault AMK for relying on defense counsel's failure to object to the juror's exclusion. Washington law does not require an objection, and the Court should not have used the non-objection to infer that defense counsel agreed the juror was unfit.

Safeco Ins. Co. v. Burr, 06-84/ Geico General Ins. Co. v. Edo, 06-100

Geckos 1, Consumers 0. The Fair Credit Reporting Act, 15 U.S.C. § 1681m(a), requires notice to any consumer subjected to "adverse action based in whole or in part on any information contained in a consumer [credit] report" and provides statutory damages if a company "willfully fails" to provide notice, § 1681n(a). An "adverse action" includes "an increase" in the charge for insurance. § 1681a(k)(1)(B(i). Justice Souter's nifty 19-page opinion deftly guides us through numerous interpretive questions under these FCRA provisions, all with the shocking result that the CA9 (and Judge Reinhardt) are reversed yet again.

This was a lawsuit against insurance companies for failure to provide adverse action notices when first-time customers did not get the best possible rate because of their credit reports. First, DHS (+all) held that "willful failure" to give notice includes a violation committed in "reckless disregard" of the notice requirement. That is the typical common law meaning of willfulness in civil statutes, and there is no evidence that Congress meant anything different in FCRA. Next, the Court (all but CT & SAA) held that an initial offer of insurance can be an "increase," and therefore an adverse action, because "the newly insured who gets charged more owing to an erroneous report is in the same boat with the renewal applicant," as far as the statutory purpose is concerned. However, the Court (all but JPS & RBG) reasoned that an initial offer is an "increase" only if the company offers a higher rate than the plaintiff would have received if he had no credit history whatsoever (the "neutral" rate), not if the plaintiff does not receive the company's best possible rate. To require notice every time a customer does not get the best rate would make the notices so frequent that they would likely be ignored. Finally, interpreting the term "based . . . on," the rate must be higher because of the plaintiff's bad credit report. Applying these rules, the Court (all but JPS & RBG) found that Geico did not violate the statute at all, since the plaintiffs did not receive higher-than-neutral rates. While it was unclear whether Safeco violated the statute, the Court unanimously held that it did not do so recklessly. Safeco's view that the statute did not cover initial offers was reasonable (though ultimately wrong) and did not pose a "high risk" of violating the statute.

JPS (& RBG) dissented in part and would have held that adverse action notices are required whenever customers do not receive the best rate. The Court's holding allows companies to adopt a low "neutral" rate and thereby avoid the statute.

CT (+SAA) concurred in part. He would not have decided whether initial offers are covered by the statute since that holding was unnecessary to decide whether Safeco and Geico were liable.

Sole v. Wyner, 06-531

Justice Ginsburg delicately described respondent Wyner as someone who wanted to create "an antiwar artwork" on a Florida beach. Florida officials became interested because "the work" was to consist of "nude individuals assembled into a peace sign," which Florida claimed would violate its rather self-explanatory "Bathing Suit Rule." Wyner successfully got a preliminary injunction allowing her "expressive activities" as long as she put up a cloth barrier to shield the eyes of unwitting beachgoers. But, alas, at the appointed hour, the free-spirited artists broke the surly bonds of cloth and "went into the water in the nude." This fiasco caused the district judge to deny Wyner a permanent injunction against the Bathing Suit Rule. Nonetheless, the CA11 held that Wyner was a "prevailing party" under 42 U.S.C. § 1988 and awarded her attorney fees. The unanimous Supreme Court reversed. A party who wins a preliminary injunction is not a prevailing party when the preliminary relief "is reversed, dissolved, or otherwise undone by the final decision in the same case." A preliminary injunction ruling is based on the mere "probability" of prevailing, is often made with little time for briefing or argument, and frequently becomes moot before appellate review is available. The Court declined to address whether a party who obtains a preliminary injunction may be a prevailing party if the case never proceeds to a final decision.

Erickson v. Pardus, 06-7317

In the Court's first application of last month's blockbuster civ-pro decision in Twombly, the Court summarily reversed the CA10's dismissal of a pro se prisoner's 8th Amendment claim. The CA10 held that the plaintiff made "conclusory" allegations of his harm from the prison's discontinuation of his hepatitis C medication. Emphasizing the limiting language of Twombly, the Supreme Court held that the prisoner alleged sufficient facts to give notice of the grounds of his claim—that he had hepatitis C; that the prison stopped his medication; and that this endangered his life. The Court held this petition for several months while Twombly was pending and apparently decided to issue a written opinion to signal the boundaries of Twombly's new requirement that a plaintiff plead sufficient facts to support the "plausibility" of his claim. Just a guess, but the opinion reads like RBG's handiwork; perhaps she is taking out her frustration with her recent 5-4 losses by engaging in some good ol' error correction. Justice Scalia would have denied cert, and Justice Thomas dissented based on his view that the 8th Amendment does not cover misconduct by prison officials.

Grants

Federal Express Corp. v. Holowecki, 06-1322

The Court will address a scintillating question left open in last month's Ledbetter decision: Whether filing an EEOC "intake questionnaire," as opposed to a formal "Charge of Discrimination," can satisfy the 180-day statute of limitations in 29 U.S.C. § 626(d).

Sprint/United Management Co. v. Mendelsohn, 06-1221

Cert to the CA10, which held that an employment discrimination plaintiff must be allowed to introduce "me too" evidence—testimony by other employees of defendant who claim that they were discriminated against by someone other than the decision maker who terminated the plaintiff. Not surprisingly, 5 circuits go the other way.

Gall v. United States, 06-7949

This is the case the Court granted to replace Claiborne v. United States (06-5618), which became moot last week when Claiborne was murdered while on parole. The issue is the proper standard of review for downward departures from the now advisory sentencing Guidelines.

Kimbrough v. United States, 06-6330

Kimbrough is somewhat related to the Gall issue, but the Court saw it as sufficiently distinct to grant on its own. The issue is whether a district judge may depart from the Guidelines on the basis that the Guidelines' extremely harsh punishment for crack cocaine possession is unfair (possessing 5 grams of crack gets you the same sentence as 500 grams of cocaine powder). The problem is that Congress itself mandated the 100:1 sentencing disparity, so it is far from clear that district judges can ignore the congressional mandate. This will probably be set for argument the same day as Gall.

CVSG

Teck Cominco Metals., Ltd., v. Pakootas, 06-1188

Even though a former SG (Ted Olson) filed this petition, the Court didn't take his word for it. The QPs concern (1) liability under CERCLA for lawful disposal of waste in Canada that later enters the U.S. and (2) "arranger" liability under 42 U.S.C. § 9607(a)(3).

Sprint Nextel Corp. v. National Ass'n of State Utility Consumer Advocates, 06-1184

The issue here is whether the Federal Telecom Act, 47 U.S.C. § 332(c)(3)(A), preempts state laws prohibiting the itemization of certain charges on cell phone bills.

Until next time, that's today's baseball.

Aaron M. Streett is an associate in the Houston office of Baker Botts L.L.P. and a member of the firm's Appellate and Supreme Court Practice. The statements, opinions, and subtle emotions expressed herein do not necessarily represent those of Baker Botts L.L.P.; to the extent they are correct, insightful, and not offensive, they most definitely represent the views of the author. EOE/AA/MFDV/ADA.

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