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2006 Supreme Court review for Tennessee lawyers Two new justices joined the U.S. Supreme Court[1] in the last year. John G. Roberts replaced the late Chief Justice Rehnquist, and Samuel Alito, Justice O’Connor. Change will come, but initially the court stressed stare decisis[2] and reminded lower courts to follow its precedents.[3] Early in the term, dissents seemed respectful and less strident, but as the term ended, the justices took off the velvet gloves in polemical cases regarding the death penalty,[4] the Clean Water Act,[5] and the Guantanamo Bay detainees.[6] During the term, the court decided questions concerning arbitration, antitrust, Federal Tort Claims Act, physician assisted suicide, discrimination and retaliation, ERISA, bankruptcy, taxpayer suits, banks, jurisdiction, RICO, religious freedom, and First, Fourth, Sixth, Eleventh, and Fourteenth Amendments. This article summarizes those recent opinions that likely affect Tennessee lawyers. Individuals with Disabilities Education Act (IDEA): The IDEA, 20 U.S.C. §1400, ensures that children with disabilities receive a “free appropriate public education” and requires school districts to create an “individualized education program” (IEP) for each disabled child. If parents disagree with their child’s IEP, they may request an “impartial due process hearing.” The IDEA does not specify which party, parent or school district, bears the burden of persuasion at that hearing. In Schaffer ex rel. Schaffer v. Weast,[7] the court ruled that the burden lies with the party seeking relief, usually the parent. The IDEA has a fee-shifting provision, §1415(i)(3)(B): a court “may award reasonable attorneys’ fees as part of the costs” to a prevailing parent. In Arlington Central School Dist. Bd. of Educ. v. Murphy,[8] the court ruled that “costs” did not include expert fees. IDEA was enacted pursuant to the Spending Clause, which requires recipients to understand the conditions attached to accepting federal funds. Since “costs” is a term of art that normally does not include expert fees, the IDEA provision did not embrace expert fees. Disability advocates fear the outcomes undercut the law’s purpose: to ensure educational opportunities for disabled children. Parents often lack resources to fight a district’s proposed action. Schools argue the holdings prevent diverting scarce educational dollars from costly programs benefiting disabled children to litigation costs. Federal Arbitration Act (FAA): The high court has decidedly favored arbitration. In Buckeye Check Cashing Inc. v. Cardegna,[9] a consumer contract was usurious and violated Florida’s criminal law, but contained an arbitration clause. A consumer sued to challenge the validity of the contract as a whole, not just the arbitration clause. Under the FAA, 9 U.S.C. § 1, an arbitrator, not a court, must assess the contract’s validity, a rule applying both in federal and state courts. Antitrust, price-fixing: The court has construed antitrust narrowly. In Texaco Inc. v. Dagher,[10] Texaco and Shell had formed Equilon, a lawful economically integrated joint venture (JV) approved by regulators to refine and sell gasoline under Texaco and Shell brands in western U.S. The JV constituted a single entity and set prices for both brands. Texaco and Shell’s independent stations argued the JV unlawfully fixed prices. Under the Sherman Act, 15 U.S.C. § 1, the court ruled that the JV’s pricing was not per se illegal: a legitimate JV may set the prices for the products it sells. Tying arrangements (Tie-ins): Antitrust prohibits tie-ins [a seller with market power conditions a sale of a patented product (tying product) on the purchase of a second product (tied product)]. In Jefferson Parish Hosp. Dist. v. Hyde, 466 U.S. 2 (1984), the court repeated a “market power presumption” applicable to tie-ins involving a patented product: If the seller has a patent over a “product, it is fair to presume the inability to buy the product elsewhere gives the seller market power,” a presumption founded on the judicially created patent misuse doctrine. U.S. v. Lowe’s Inc., 371 U.S. 38 (1962). Later Patent Act amendments removed the presumption in patent misuse cases. 35 U.S.C. § 271(d). In light of academic criticism and its demise in patent law, in Ill. Tool Works Inc. v. Independent Ink Inc.,[11] the court eliminated the market power presumption for tie-ins. No market power presumption arises because a tying product is patented or renders a tie-in per se illegal under 15 U.S.C. § 1. Robinson-Patman (RP) Act: In Volvo Trucks North America Inc. v. Reeder-Simco GMC Inc.,[12] the court declined to find a manufacturer liable for a secondary line injury for price discrimination under the RP Act, 15 U.S.C. §[13]. Volvo competed with other heavy truck manufacturers and planned to reduce by one-half its franchised dealers. In that retail market (heavy trucks), buyers select which Volvo and non-Volvo dealers to invite to bid. A disfavored dealer claimed Volvo gave other dealers greater concessions to obtain retail customers’ business, but proved one head-to-head sale where it competed for and lost a sale with another Volvo dealer. Since antitrust favors interbrand over intrabrand competition, affected goods were not inventory stock, but sold in a competitive bid market, and over time no proof of discrimination was shown, Volvo won. State law independently afforded the dealer some remedy. Securities: Under Rule 10b-5 and 15 U.S.C. § 78j (b), the court has held that an investor has an implied right of action for deception, misrepresentation or fraud “in connection with the purchase or sale of any security.” A 1995 federal law made it far more difficult for investors to win federal securities fraud class action suits filed in federal court against publicly traded firms. Investors’ lawyers responded by filing state court class actions alleging investors held securities longer due to a firm’s misrepresentation (a state holder class, not a federal purchaser or seller class). Congress then passed the 1998 Securities Litigation Uniform Standards Act (SLUSA), 5 U.S.C. § 78bb(f)(1)(A). Under SLUSA, a “covered” class must be brought in federal (not state) court. A covered class means at least 50 people suing a publicly held firm whose securities are nationally traded on an exchange. In Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit,13 the court found SLUSA covered a state court class of holders, not just a federal class of purchasers and sellers, and upheld SLUSA’s limited preemption of state law.[14] Federal Tort Claims Act (FTCA): In U.S. v. Olson,[15] injured mine workers sued the U.S. for damages caused by federal mine inspectors’ negligence at an Arizona mine. The FTCA allows private tort claims against the U.S. “under circumstances” where a “private person would be liable to the claimant” under the law “where the act or omission occurred.” 28 U.S.C. § 1346(b)(1). Lower courts found a waiver of sovereign immunity by finding state law would impose liability on a state or municipality. The FTCA waives immunity for the U.S. in the “same manner and to the same extent as a private individual under like circumstances,” 28 U.S.C. § 2674, not if or when a state or municipality may be liable. “Like circumstances” are not the same circumstances, but require a court to “look further afield,” which here meant to examine state tort law liability. As a rule, waivers of sovereign immunity are strictly construed in favor of the sovereign, but the rule does not apply to the FTCA. Broadening its exceptions would defeat its purpose: compensating injured victims. In Dolan v. U.S. Postal Service,[16] Dolan slipped on mail negligently left on her porch. By law, the service is an independent establishment of the executive branch. Its enabling Act “waives” immunity from suit: it may sue and be sued, but the FTCA applies to tort claims arising out of its activities. Under the FTCA postal exception, § 2680(b), the service retains immunity for claims arising out of “loss, miscarriage, or negligent transmission of letters or postal matter.” The § 2680(b) exception gives the service tort immunity for claims based on misdirected or lost mail, but not for all tort claims relating to letters or mail. Here, the service had no immunity. Controlled Substances Act (CSA), Assisted Suicide, Religious Freedom Practices Act (RFPA): Oregon law permitted physician-assisted suicide: for the terminally ill, doctors may prescribe and dispense drugs scheduled under the federal CSA, 21 U.S.C. § 801. By Interpretive Rule, the AG wrote that “legitimate medical practice” under CSA did not cover a doctor’s prescribing drugs for assisted suicide. In Gonzales v. Ore.,[17] Oregon challenged the rule. The CSA divided regulatory power between two federal officials, the Health and Human Services Secretary who regulated technical health issues, e.g., placing drugs in one of five schedules, and the Attorney General (AG) who enforced the CSA and managed registration for doctors prescribing drugs. The CSA left the power to determine “legitimate medical practice” to states, not the AG, who lacked medical expertise. Finding the AG’s Rule was not entitled to deference under Chevron U.S.A. Inc. v. Na’l Res. Def. Council Inc., 467 U.S. 837 (1984), the court upheld Oregon law. In City of Boerne v. Flores, 521 U.S. 507 (1997), though finding that RFRA, 42 U.S.C. § 2000bb-1, did not apply to states, it still applied to the U.S., forbidding it from substantially burdening a person’s exercise of religion, unless it proved that imposing the “burden” was the “least restrictive means” to advance a compelling interest. A religious sect drank for communion a sacramental tea brewed from Amazon rainforest plants containing a hallucinogen, DMT, listed under the CSA’s Schedule I. Use or possession of a Schedule I drug carries criminal penalties. After Customs seized the tea, the sect won a preliminary injunction. In Gonzales v. O Centro Espirita Beneficente Uniao Do Vegetal,[18] the court upheld the injunction, rejecting the U.S.’s proffered justifications (Schedule I drugs are dangerous and have no accepted medical use; the tea’s use undercut CSA uniformity; and the tea may be used illegally). The U.S. has let Native Americans use peyote for religious purposes, which the CFA also regulates. The U.S. failed to justify burdening individuals’ religious practices. Accordingly, the sect could use the tea. ERISA: In Sereboff v. Mid Atlantic Medical Services Inc.,[19] an ERISA-covered employer health insurance plan paid medical expenses to beneficiaries for injuries sustained in a wreck. The beneficiaries settled with third party tortfeasors. The Plan Administrator sued to recover expenses it had paid on their behalf. Under § 502(a)(3) [29 U.S.C. § 1132(a)(3)], a plan fiduciary may sue to enjoin any act violating a plan’s terms or obtain other “appropriate equitable relief.” The administrator relied upon the plan’s “Acts of Third Parties” provision (beneficiary recovering from a third party must reimburse the plan) and sought equitable relief. Since specifically identifiable funds (tort recovery proceeds) were owed and due under the plan’s terms, controlled by the beneficiary and kept in a special account, the administrator sought equitable relief, a constructive trust or equitable lien on identified funds, not legal relief (personal liability on a contract to pay money), not permitted by ERISA. The court distinguished Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) (Plan tried to recover funds in special needs trust that under state law beneficiary did not control). ERISA plans will now press to recover their medical expenses from a beneficiary’s tort recovery. Standing, Jurisdiction: To encourage manufacturers to continue production, city and state officials offered them special tax breaks not available to others. In Daimler Chrysler Corp. v. Cuno,[20] local taxpayers argued the tax breaks forced them to bear tax burdens disproportionately, increased their taxes, and ran afoul of the Commerce Clause. Finding they had no standing, the court dismissed the suit. The court has long ruled federal taxpayers cannot challenge a federal tax or expenditure based upon the Commerce Clause and imposed the same limitation on state and local taxpayers. No Article III case or controversy existed: the alleged injury was remote and indirect; the small comparative loss was shared with countless others; and courts could not redress their claims. In Marshall v. Marshall,[21] the court limited judge-made exceptions restricting federal courts’ authority to hear probate and domestic relations cases. Federal Question: 28 U.S.C. § 1331 confers federal court jurisdiction over “civil actions arising under” U.S. “laws.” The Federal Employees Health Benefits Act, 5 U.S.C. § 8901 (FEHBA), established federal employees health insurance programs and allowed the Office of Personnel Management (OPM) to contract with private carriers for coverage. FEHBA preempted state law as to a plan’s coverage or benefits, provided federal court jurisdiction only in actions against the U.S., but did not address subrogation or reimbursement rights, which by contract with OPM, carriers must pursue. In Empire Healthchoice Assur. Inc. v. McVeigh,[22] the court ruled that state courts must hear a carrier’s subrogation suit against a plan beneficiary who recovers damages in state court against a third party; § 1331 did not give federal courts jurisdiction to hear these suits. Diversity: Under the diversity statute, 28 U.S.C. § 1332(a)(1), federal courts have jurisdiction over civil actions between citizens of different states where the amount in controversy exceeds $75,000. Under § 1332, a corporation is a citizen of the state where it (i) is incorporated and (ii) has its principal place of business. The comptroller of the currency charters national banks, not a state. Under § 1348, national banks are “deemed citizens of the states in which they are respectively located.” In Wachovia Bank v. Schmidt,[23] the court held a national bank’s citizenship for diversity purposes is determined by the place designated as its main office in its articles of association, and it is not a citizen in each state where it has a branch. A contrary holding would unfairly limit national banks’ access to federal courts. Removal: Plaintiffs often prefer to litigate in state courts, and defendants, federal courts. In Lincoln Property Co. v. Roche,[24] state courts favored plaintiffs.[25] After leasing an apartment, plaintiffs-Virginians became ill. Finding mold, they sued Lincoln in state court. Lincoln removed to federal court under 28 U.S.C. §1441 (removal allowed when action originally could have been filed in federal court). When jurisdiction rests on “diversity,” 28 U.S.C. § 1332, removal is allowed “only” if no party in interest properly joined as defendants is a citizen of the state where the action was brought. Admitting it was a Texas corporation and its regional office managed the dwelling, Lincoln did not claim another entity was responsible. Plaintiffs did not name other non-diverse parties. After Lincoln won summary judgment, but before entry of judgment, plaintiffs moved to remand to state court for lack of diversity, claiming Lincoln was not a corporation but a partnership with one in-state partner (destroying diversity). The court held that an entity not named as a defendant would not be deemed a real party in interest whose presence would destroy diversity. Lincoln won. Defendants may remove an action on diversity grounds when there is complete diversity between all named plaintiffs and all named defendants, and no defendant is a citizen of the forum state. A named defendant need not negate the existence of a potential defendant who would destroy diversity. In Martin v. Franklin Capital Corp.,[26] the court repeated the rule: once removed to federal court, the “case shall be remanded” if the federal court lacks jurisdiction, §1441. When remanding a removed case to state court, a federal court “may” award plaintiff attorney’s fees, § 1447(c). The court ruled that attorney’s fees for improper removal may be awarded only where the removing party lacked an “objectively reasonable basis for seeking removal,” but district courts retain discretion to depart from the rule when unusual circumstances warrant. Improperly removing a case to federal court and having it remanded causes delay, adds costs, and wastes resources. The standard deterred improper removal to prolong litigation, but protected defendants’ right of removal. Procedure: When a party believes the evidence is legally insufficient to support an adverse verdict in a civil case, before the case is submitted to the jury he must move for a judgment as a matter of law under Fed. R. Civ. Proc. 50(a). If it is not granted and the jury rules against him, he must file a Rule 50(b) motion. Here, the losing party made a Rule 50(a) motion before the verdict, but afterwards not a Rule 50(b) or Rule 59 motion for a new trial. In Unitherm Food Systems Inc. v. Swift-Eckrich Inc.,[27] since the losing party did not file Rule 50 (b) and 59 motions, the court dismissed the appeal without considering the merits. Discrimination: 42 U.S.C. § 1981 gives “all persons” subject to the U.S. “jurisdiction” the right to “make and enforce” contracts without regard to race. In Domino’s Pizza Inc. v. McDonald,[28] the court held a corporation’s president and sole shareholder (a black male) had no separate cause of action against a defendant for violating §1981. The §1981 right to “make contracts” was not the insignificant right to act as an agent for another to contract, but the common law right denied blacks in some states to give and receive contractual rights on one’s own behalf. Section 1981 requires a plaintiff to identify an impaired “contractual relationship” under which he has rights. When race discrimination blocks creation of or impairs an existing contractual relationship (if plaintiff has rights by existing or proposed contractual relationship), the law affords relief. Title VII of the 1964 Civil Rights Act forbids employment discrimination against a person based on “race, color, religion, sex, or national origin.” 42 U.S.C. § 2000e-2(a). The act’s anti-retaliation provision forbids employers from discriminating against an employee or job applicant because he “opposed” an unlawful employment practice or made a charge, testified, or participated in a Title VII investigation, § 2000e-3(a). In Burlington N. & Santa Fe Ry. Co.,[29] the court ruled that the anti-retaliation provision is not limited to acts and harms forbidden by the act related to employment or that occur at the workplace, but extend to employer actions that are materially adverse or harmful such that they may dissuade a reasonable worker from supporting or making a discrimination charge. Thus, the court upheld a jury verdict for retaliation against the employer though the employee was reinstated with backpay under company grievance procedures. In Ash v. Tyson Foods Inc.,[30] white men were promoted over black men, who sued, claiming race discrimination. 42 U.S.C. § 1981, § 2000e. The plant manager who made hiring decisions had called the black men “boy.” Whether calling them “boy” showed racial animus or was benign depended upon context, speaker inflection, tone, local custom, and historical usage. A remand was ordered. In Arbaugh v. Y & H Corp.,[31] federal-court “subject-matter” jurisdiction over a controversy about sex discrimination was distinguished from the elements of a Title VII claim. Under § 2000e-5(f) (3), federal courts may hear Title VII suits. Under 28 U.S.C. § 1331, federal courts have subject-matter jurisdiction over civil actions “arising under” U.S. laws, including Title VII suits. Congress limited Title VII to employers with 15 or more employees, § 2000e. The court held Title VII’s numerical qualification of “employer” was a Title VII claim “element” not affecting subject-matter jurisdiction. After a verdict for sexual harassment, an employer moved to dismiss for want of jurisdiction claiming it had fewer than 15 employees, but waived this non-jurisdictional defense by not timely raising it.[32] Medicaid Liens on Tort Settlements: When a seriously injured tort victim has insufficient health insurance coverage, state Medicaid pays the medical bills. In Arkansas, a Medicaid recipient settled a tort suit, and state law imposed a lien on the settlement in an amount equal to the costs that Medicaid had paid on her behalf. When the amount that Medicaid paid exceeded the portion of the settlement attributable to medical costs, the state law lien required payment from settlement proceeds meant to compensate the victim for damages separate from medical costs, such as pain and suffering and lost wages. In Ark. Dept. of Health & Human Services v. Ahlborn,[33] the court declined to defer to agency interpretation of federal law and ruled that the statutory lien seeking to obtain from the victim monies other than the medical costs that Medicaid had paid on her behalf violated federal law and was unenforceable. Injunctions, Patent Disputes: Before granting a permanent injunction, traditionally courts applied a four-part test: a showing of irreparable injury and inadequate remedy at law, the balance of hardships favors plaintiff, and issuing an injunction is in the public interest. In EBay Inc. v. MercExchange LLC,[34] the court held when a patent holder’s proving infringement, he must still satisfy the four-part test to obtain an injunction. First Amendment: Some law schools require employers who recruit their students to affirm that they do not discriminate because of sexual orientation. The military refused to subscribe to the policy, and schools barred military recruiters. Federal law, 10 U.S.C. § 983, provides that if a college denies military recruiters access equal to that given other employers, it will lose certain federal funds. In Rumsfeld v. Forum for Academic and Institutional Rights Inc.[35] (FAIR), an association of law schools argued the law violated First Amendment speech and association freedoms by forcing inclusion and equal treatment of military recruiters. By threat of withholding federal funds, the law schools claimed they were forced to choose between First Amendment rights and the anti-discrimination policy. The court upheld the law. By the spending clause, Congress may attach reasonable conditions to federal funding, but recipients are not required to accept the funds. The unconstitutional conditions doctrine prevents the government from denying a benefit to a person on a basis that infringes constitutionally protected freedom of speech even if he has no entitlement to that benefit. U.S. v. Amer. Library Assn. Inc., 539 U.S. 194 (2003). The First Amendment does not bar Congress from directly imposing an access requirement or indirectly imposing a condition on receipt of federal funds. The law regulates conduct, not speech, and affects what schools must do — afford recruiters equal access. Law schools may keep federal funds and express their views. The conduct was not inherently expressive and not protected by the First Amendment. See Tex. v. Johnson, 491 U.S. 397 (1989) (flag burning). If combining speech and conduct created expressive conduct, by mere talk, a party could easily change conduct into protected speech. A neutral regulation promoted a substantial government interest, and an incidental burden on speech did not render it unconstitutional. A citizen sued postal investigators under Bivens[36] for inducing a criminal prosecution in retaliation for his speech criticizing the Postal Service. In Hartman v. Moore,[37] the court ruled that an individual must plead and prove “lack of probable cause” for pressing the criminal prosecution. In Garcetti v. Ceballos,[38] upon a defense lawyer’s request, a deputy district attorney (DDA) reviewed an affidavit signed by a deputy sheriff used to obtain a search warrant, concluded it contained falsehoods, and recommended dismissing the case to his superiors. The sheriff was upset, and a heated meeting followed between the DA and sheriff’s offices. The DA continued the prosecution. By motion, the defense challenged the warrant. At the hearing, the DDA was called to testify for the defense, but the trial court sided with the state. The DDA then was subjected to adverse employment actions and claimed retaliation. The court ruled for the state. A state cannot infringe an employee’s constitutionally protected freedom of speech as a condition of government employment, but the First Amendment does not protect a government employee from discipline based on speech made pursuant to his official duties. A different rule applies when the employee speaks as a mere citizen. Fourth Amendment: In Hudson v. Mich.,[39] police obtained a valid warrant to search a home, but violated the “knock-and-announce” rule when they forced their way inside. By 5-4 decision, the court held that the exclusionary rule did not apply and act to suppress the evidence. The state could use the evidence to prosecute the defendant. The court found that violation of the ancient knock-and-announce rule did not proximately cause or result in seizing the evidence: it was obtained through a valid warrant. Observing that society paid a heavy price by enforcing the exclusionary rule — suppressing evidence[40] of crimes permitted dangerous criminals to remained at large — the court noted that civil rights laws provided a remedy, and professionalism of police served as a check. Kennedy concurred, stressing the narrow holding. Critics blasted the outcome, arguing: the court let expediency trump a constitutional principle, turning it into an optional guideline that petty officials may disregard; due to the court’s retrenching on civil rights claims, any civil remedy was illusory; and professionalism was no substitute for accountability. This watershed ruling carried serious implications. In U.S. v. Grubbs,[41] the court found that the Fourth Amendment did not forbid an “anticipatory warrant” (one based on an affidavit showing probable cause that at some future time evidence of a crime will be located at a specified place). In principle, anticipatory warrants are similar to other warrants, but subject execution to some condition precedent [other than passage of time], a “triggering condition.” They require a magistrate to find it is now probable that contraband, evidence of a crime, or a fugitive will be on described premises when the warrant is executed. There must be probable cause that the triggering condition will occur and that criminal evidence or a person to be seized will be found at a particular location. In Ga. v. Randolph,[42] the court ruled when one occupant gave permission to police to search the home, but another physically present co-occupant expressly refused to consent, the seizure violated the Fourth Amendment. Refusing to consent made the warrantless search unreasonable, but police may avoid Randolph’s impact.[43] In Brigham City, Utah v. Stuart,[44] responding to an early morning call about a loud party at a home, police arrived, heard shouting from inside, saw juveniles drinking beer in the yard, and through a screen door, saw a fight taking place inside. They announced their presence, entered and cried out again, and fighting stopped. Searches and seizures inside a home with no warrant are presumptively unreasonable under the Fourth Amendment, but here due to exigent circumstances, no warrant was required. When police have an objectively reasonable basis to believe a person faces imminent threat of serious injury, they may enter a home without a warrant. In Samson v. Cal.,[45] the court ruled police did not violate the Fourth Amendment when conducting a suspicionless search of a parolee under a state law that required parolees before release to agree in writing to be subject to search or seizure by a parole officer or police any time, with or without cause or a warrant. Abortion: In Ayotte v. Planned Parenthood of N. New Eng.,[46] a 2003 New Hampshire Act required 48 hours’ notice to a minor’s parents before she could obtain an abortion. The act did not expressly contain an exception permitting the procedure to be performed without 48 hours’ notice if a medical emergency arose, which the court’s precedents require. To avert irreversible or life threatening health risks, on occasion a minor may need an abortion immediately, and a 48 hour delay may jeopardize her health. Remedy was the issue on remand: Should courts imply the exception — the 48 hours’ notice requirement — did not apply in a medical emergency, and save the act or strike it due to its omission? Racketeer Influenced & Corrupt Organizations Act (RICO): RICO, 18 U.S.C. §1961 et seq., prohibits any person from engaging in specified predicate acts involving a “pattern of racketeering activity.” In Scheidler v. NOW Inc.,[47] NOW sued pro-life groups for unlawfully picketing at and coordinating violence against clinics performing abortions, asserting federal RICO violations, based upon predicate Hobbs Act [18 U.S.C. § 1951 (a)] breaches. Under § 1951 (a), the court ruled that the statutory term “physical violence” referred to violence furthering a plan or purpose to “affect commerce … by robbery or extortion.” NOW did not prove robbery or extortion and lost, ending this 20-year litigation. RICO gives a private action to any person injured in his business or property “by reason of” a RICO violation, § 1964(c). In Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (1992), the court held that a private RICO plaintiff must show factual injury, meet the “but for” test, and strictly establish proximate cause. In Anza v. Ideal Steel Supply Corp,[48] the court imposed another limitation: only direct victims of unlawful racketeering scheme may sue. Thus, when a competitor gained sales at a business’s expense by not paying state sales tax, plaintiff, a business competitor, did not meet RICO’s “directness” requirement. The state was the scheme’s direct victim and could file a RICO suit, but not the business indirectly affected by it. Sixth Amendment: In Crawford v. Wash., 541 U.S. 36 (2004), the court ruled that the Sixth Amendment Confrontation Clause barred admitting “testimonial statements” of a witness not appearing at trial unless he was unavailable to testify and the defendant had a prior opportunity for cross-examination. In Davis v. Wash.,[49] the court distinguished testimonial from nontestimonial statements. When circumstances objectively indicate that there is no ongoing emergency and police interrogation’s primary purpose is to establish past events potentially relevant to later criminal prosecution, statements are testimonial and the Confrontation Clause requirements must be met before they can be admitted, but when statements are made during police interrogation under circumstances objectively indicating the interrogation’s primary purpose is to enable police to assist and meet an ongoing emergency, they are non-testimonial. In U.S. v. Gonzalez-Lopez,[50] the court ruled that by wrongly depriving a criminal defendant of his choice of counsel [retained, not appointed], his Sixth Amendment right to counsel was violated. The Sixth Amendment commands that a defendant may choose his lawyer, and a violation results in a “structural” defect, not subject to harmless error review; but in Wash. v. Recuenco,[51] a jury convicted defendant for assault “with a deadly weapon.” Based on his own factual findings — not a jury’s — a trial judge imposed a three-year firearm enhancement on the sentence contrary to Blakely v. Wash., 542 U.S. 296 (2004) (Except for prior convictions, a fact that increases the penalty for a crime beyond its statutory maximum must be submitted to a jury and established beyond a reasonable doubt). The court ruled that a Blakely violation does not require automatic reversal, but harmless error review applies. Bankruptcy Code, Eleventh Amendment, American with Disabilities Act (ADA): The Bankruptcy Code, at 11 U.S.C. § 507(a)(5), sets a priority for unsecured creditors’ claims for unpaid contributions to “an employee benefit plan,” or employee fringe benefits. In Howard Delivery Service Inc. v. Zurich Amer. Ins. Co.,[52] the court held that (a)(5) did not cover unpaid premiums on employers’ workers compensation policy. Since Seminole Tribe of Fla. v. Fla., 517 U.S. 44 (1996), often by 5-4 vote, the court has ruled usually that states’ Eleventh Amendment immunity from private suit trumps Congress’s Article 1 powers, subject to a narrow Fourteenth Amendment exception. Thus, states usually enjoy immunity from private suit under federal law; however, the court has wrestled with states’ immunity under the code and the ADA. In Central Va. Community College v. Katz,[53] a trustee sued to recover preferential transfers made by a debtor to state agencies and not just to affect a debt in an in rem proceeding involving a state as in Tenn. Student Assistance Corp. v. Hood, 541 U.S. 440 (2004). Under Art. I, § 8, cl. 4 (congress may establish “uniform Laws … on Bankruptcies”), the court ruled that congress may abrogate State Eleventh Amendment immunity and upheld § 106 of the code (abrogating state immunity). Thus, state agencies could not defend based on sovereign immunity. In Northern Ins. Co. of N.Y. v. Chatham Co., Ga.,[54] a county could not assert sovereign immunity to defend a tort by its employees in an admiralty suit. That defense is limited to a state or an “arm of the state.” Under the ADA, 42 U.S.C. §12131, “no qualified individual with a disability shall, by reason of such disability … be excluded from [participating in] … programs or denied the benefits of the services … of a public entity,” or face discrimination by them. Congress subjected states to the ADA, Title II. In U.S. v. Georgia,[55] an inmate, a paraplegic, sued a state claiming in his small cell he could not turn his wheelchair to use the toilet, was left to sit in feces, and received no help to shower. Congress may allow suits against states for Fourteenth Amendment violations. Since some inmate claims alleged ADA and constitutional violations, on remand, lower courts were to separate ADA from constitutional claims and consider if Congress may abrogate state immunity for stand-alone ADA violations. Fourteenth Amendment, Due Process: In Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950), the court held that due process requires “notice and opportunity for hearing appropriate to the nature of the case.” The “means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.” Courts assess a particular form of notice’s adequacy by balancing the state interest against the “individual interest” protected by due process. In Jones v. Flowers,[56] a state official sent a home owner at the home address certified letters about a pending tax sale of his home, but they were returned, marked “unclaimed.” The official later published a newspaper notice. The state then negotiated a sale with a buyer and by certified letter advised the owner that unless redeemed, he would lose the home. The redemption time passed, and the buyer filed a detainer warrant against the occupant, who notified the home owner. The court found state law notice procedures violated due process and held for the owner. When mailed notice of a home’s pending tax sale is returned unclaimed, the state must take reasonable, practical steps to try to notify the owner before selling. Since letters were returned, the state knew the owner did not have notice, and other reasonable steps were available. Due process does not require an owner to receive actual notice before the state may take his property, but the state must provide “notice reasonably calculated, under all the circumstances, to apprise interested parties” of the pending action and give an opportunity to object. In Holmes v. S. C.,[57] by a state rule of evidence, an accused could not offer proof of third-party guilt when prosecutors had presented forensic evidence strongly supporting guilt. The arbitrary rule violated the accused’s due process right to offer a meaningful defense. In Clark v. Ariz.,[58] a delusional defendant, diagnosed as paranoid schizophrenic, killed a cop. The state limited evidence of his mental illness solely to his insanity defense and refused to permit his mental illness to affect the requisite mens rea. The court held these limitations did not violate due process. Duress may be a defense to a charge of criminal conduct, but in Dixon v. U.S,[59] no due process violation resulted by requiring a defendant to prove duress by a preponderance of the evidence. Briefly noted: The Social Security Act’s anti-attachment provision, 42 U.S.C. § 407(a), makes Social Security benefits not subject to execution, levy or attachment. In Lockhart v. U.S.,[60] the court held amendments permitted an offset from those benefits to repay federally insured student loans, even when they were 10 years old. In League of United Latin Amer. Citizens v. Perry,[61] by a plurality, the court ruled that legislatures may redraw state congressional districts along partisan lines more frequently than once a decade, but may not protect an incumbent by violating the Voting Rights Act and create a district that dilutes minority voting. The 1974 Speedy Trial Act, 18 U.S.C. § 3161, requires federal criminal trials to start within 70 days after a defendant is charged or makes an initial appearance. Detailed provisions exclude specified delays from the 70 days. In Zedner v. U.S.,[62] the court held a defendant may not prospectively waive the act’s application for all time and was not estopped from challenging a trial court’s continuance, to grant a continuance based on the “ends of justice” provision, on the record a judge must make detailed findings, and violating the act is not harmless error. In House v. Bell,[63] the court set forth the exceptional circumstances when a federal habeas court may hear an inmate’s gateway “actual innocence” challenge for defaulted claims of constitutional error. Last, the 1996 Prison Litigation Reform Act, 42 U.S.C. § 1997e(a), requires inmates to exhaust internal prison grievance procedures before filing federal suits. In Woodford v. Ngo,[64] the court held that proper exhaustion required a prisoner to timely file his grievance under a 15-day rule set for inmates. By not timely filing a grievance, he did not properly exhaust his remedies and could not sue in federal court. • • • Notes
• • • Perry A. Craft and Michael G. Sheppard are friends and partners in the law firm of Craft & Sheppard PLC. Craft, a former Tennessee deputy attorney general, lectures on the Supreme Court and constitutional law trends and developments. He has practiced law for nearly 30 years and litigated cases including class actions, antitrust, trade regulation and constitutional law in state and federal courts. Sheppard, a former claims executive with more than 25 years’ experience in personal injury, insurance law, and business transactions, is a trial attorney admitted to practice in both Tennessee and Ohio. Either may be reached at (615) 370-5617 or through their Web site, www.craftsheppardlaw.com. • • •
Tennessee Bar Journal
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