Articles Posted in US Supreme Court

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The Securities Act of 1933 creates private rights of action pertaining to securities offerings, grants both federal and state courts jurisdiction over those suits, and bars their removal from state to federal court. The 1995 Private Securities Litigation Reform Act includes substantive reforms, applicable in all courts, and procedural reforms, applicable only in federal court. To avoid the new obstacles, plaintiffs began filing securities class actions under state law. The 1998 Securities Litigation Uniform Standards Act (SLUSA), 15 U.S.C. 77p, disallows, in state and federal courts, “covered class actions,” in which damages are sought under state law on behalf of more than 50 persons,” alleging dishonest practices in the purchase or sale of a "covered security,” listed on a national stock exchange. Section 77v(a) (the “except clause”) now provides that state and federal courts shall have concurrent jurisdiction over 1933 Act cases, “except as provided in section 77p . . . with respect to covered class actions.” Investors brought a class action in state court, alleging 1933 Act violations. A unanimous Supreme Court affirmed the denial of a motion to dismiss, rejecting arguments that SLUSA’s “except clause” stripped state courts of jurisdiction over 1933 Act claims in “covered class actions.” The “except clause” ensures that in any case in which sections 77v(a) and 77p conflict, 77p controls. Section 77p bars certain state law securities class actions but does not deprive state courts of jurisdiction over federal law class actions. The alternative construction would prevent state courts from deciding any 1933 Act large class suits, even suits raising no particular national interest, which would be inconsistent with SLUSA’s "purpose to preclude certain vexing state-law class actions.” Wherever 1933 Act class suits proceed, the substantive protections necessarily apply. SLUSA does not permit defendants to remove class actions alleging only 1933 Act claims from state to federal court. View "Cyan, Inc. v. Beaver County Employees Retirement Fund" on Justia Law

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Lakeridge. a corporation with a single owner (MBP), filed for Chapter 11 bankruptcy, owing U.S. Bank $10 million and MBP $2.76 million. Lakeridge submitted a reorganization plan, proposing to impair the interests of both. U.S. Bank refused, blocking Lakeridge’s reorganization through a consensual plan, 11 U.S.C. 1129(a)(8). Lakeridge then turned to a “cramdown” plan, which would require consent by an impaired class of creditors that is not an “insider” of the debtor. An insider “includes” any director, officer, or “person in control” of the entity. MBP, unable to provide the needed consent, sought to transfer its claim to a non-insider. Bartlett, an MBP board member and Lakeridge officer, offered MBP’s claim to Rabkin for $5,000. Rabkin purchased the claim and consented to Lakeridge’s proposed reorganization. U.S. Bank objected, arguing that Rabkin was a nonstatutory insider because he had a “romantic” relationship with Bartlett. The Bankruptcy Court, Ninth Circuit, and Supreme Court rejected that argument. The Ninth Circuit correctly reviewed the Bankruptcy Court’s determination for clear error (rather than de novo), as “mixed question” of law and fact: whether the findings of fact satisfy the legal test for conferring non-statutory insider status. The standard of review for a mixed question depends on whether answering it entails primarily legal or factual work. Using the Ninth Circuit’s legal test for identifying such insiders (whether the transaction was conducted at arm’s length, i.e., as though the parties were strangers) the mixed question became: Given all the basic facts, was Rabkin’s purchase of MBP’s claim conducted as if the two were strangers? Such an inquiry primarily belongs in the court that has presided over the presentation of evidence, i.e., the bankruptcy court. View "U. S. Bank N. A. v. Village at Lakeridge, LLC" on Justia Law

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Murphy was awarded a judgment in his federal civil rights suit against two prison guards, including an award of attorney’s fees; 42 U.S.C. 1997e(d)(2) provides that in such cases “a portion of the [prisoner’s] judgment (not to exceed 25 percent) shall be applied to satisfy the amount of attorney’s fees awarded against the defendant.” The district court ordered Murphy to pay 10% of his judgment toward the fee award, leaving defendants responsible for the remainder. The Seventh Circuit reversed, holding that section 1997e(d)(2) required the district court to exhaust 25% of the prisoner’s judgment before demanding payment from the defendants. The Supreme Court affirmed. The mandatory phrase “shall be applied” suggests that the district court has some nondiscretionary duty to perform. The infinitival phrase “to satisfy the amount of attorney’s fees awarded” specifies the purpose of the preceding verb’s nondiscretionary duty and “to satisfy” an obligation, especially a financial obligation, usually means to discharge the obligation in full. The district court does not have wide discretion to pick any “portion” that does not exceed the 25% cap. This conclusion is reinforced by section 1997e(d)’s surrounding provisions, which also limit the district court’s pre-existing discretion under section 1988(b). View "Murphy v. Smith" on Justia Law

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Artis filed a federal-court suit against the District of Columbia, alleging a federal employment discrimination claim and three allied claims under D.C. law; nearly two years remained on the statute of limitations for the D.C. claims. More than two years later, the district court rejected the federal claim and dismissed the D.C.-law claims under 28 U.S.C. 1367(c). Artis refiled those claims in the D.C. Superior Court 59 days later. That court dismissed them as time-barred. The D.C. Court of Appeals affirmed. The Supreme Court reversed. Section 1367(d) provides that the “period of limitations for” refiling in state court a state claim “shall be tolled while the claim is pending [in federal court] and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.” The Court rejected an argument that the section merely provides a grace period, permitting the statute of limitations to run while the claim is pending in another forum and averting the risk of a time bar by according the plaintiff a fixed period in which to refile. Considering the ordinary meaning of the statutory language, the section is a tolling provision. It suspends the statute of limitations both while the claim is pending in federal court and for 30 days post-dismissal. The stop-the-clock interpretation of section1367(d) does not present a serious constitutional problem. View "Artis v. District of Columbia" on Justia Law

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The Clean Water Act, 33 U.S.C. 1362, prohibits “any addition of any pollutant to navigable waters,” defined as “the waters of the United States.” Section 1311(a) contains exceptions, including permitting schemes under the EPA's National Pollutant Discharge Elimination System (NPDES) program and an Army Corps of Engineers program, which encompass the “waters of the United States.” The EPA and the Corps proffered the “Waters of the United States (WOTUS) Rule,” which “imposes no enforceable duty on any state, local, or tribal governments, or the private sector,” 80 Fed. Reg. 37102 and “does not establish any regulatory requirements.” Objectors challenged the Rule in district courts. Many filed “protective” petitions in Circuit Courts to preserve their challenges should their district court lawsuits be dismissed for lack of jurisdiction under 33 U.S.C. 1369(b), which enumerates EPA actions for which review lies directly and exclusively in the federal courts of appeals. Such actions include EPA actions “approving or promulgating any effluent limitation or other limitation under section 1311, 1312, 1316, or 1345,” and EPA actions “issuing or denying any permit under section 1342.” The Sixth Circuit denied motions to dismiss consolidated actions. The Supreme Court reversed. The Rule falls outside section 1369(b)(1), so challenges must be filed in district courts. It is not an “effluent limitation,” “on quantities, rates, and concentrations” of pollutants, nor is it an “other limitation under section 1311; it simply announces a regulatory definition. The Rule was promulgated under section 1361(a), which grants the EPA general rulemaking authority. The Rule neither issues nor denies NPDES permits under section 1342. View "National Association of Manufacturers. v. Department of Defense" on Justia Law

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Hamer filed an employment discrimination suit. The district court granted the defendants summary judgment, entering final judgment on September 14, 2015. Before October 14, the date Hamer’s notice of appeal was due, her attorneys filed a motion to withdraw and for an extension of the appeal filing deadline to give Hamer time to secure new counsel. The court granted a two-month extension, even though Federal Rule of Appellate Procedure, 4(a)(5)(C), confines such extensions to 30 days. Concluding that Rule 4(a)(5)(C)’s time prescription is jurisdictional, the Seventh Circuit dismissed Hamer’s appeal. A unanimous Supreme Court vacated. Rule 4(a)(5)(C)’s limitation on extensions of time to file a notice of appeal is a court-made rule and not jurisdictional. It is a mandatory claim-processing rule that may be waived or forfeited. If a time prescription governing the transfer of adjudicatory authority from one Article III court to another appears in a statute, the limitation is jurisdictional; otherwise, the time specification fits within the claim-processing category. View "Hamer v. Neighborhood Housing Services of Chicago" on Justia Law

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In 2007-2008, Lehman Brothers raised capital through public securities offerings. Petitioner, the largest public pension fund in the country, purchased some of those securities. A 2008 putative class action claimed that financial firms were liable under the Securities Act of 1933, 15 U.S.C. 77k(a), for their participation as underwriters in the transactions, alleging that certain registration statements for Lehman’s offerings included material misstatements or omissions. More than three years after the relevant offerings, petitioner filed a separate complaint with the same allegations. A proposed settlement was reached in the putative class action, but petitioner opted out. The Second Circuit affirmed dismissal of the individual suit, citing the three-year bar in Section 13 of the Act. The Supreme Court affirmed. Section 13’s first sentence states a one-year limitations period; the three-year time limit is a statute of repose, not subject to equitable tolling. Its instruction that “[i]n no event” shall an action be brought more than three years after the relevant securities offering admits of no exception. The statute runs from the defendant’s last culpable act (the securities offering), not from the accrual of the claim (the plaintiff’s discovery of the defect). Tolling is permissible only where there is a particular indication that the legislature did not intend the statute to provide complete repose but instead anticipated the extension of the statutory period under certain circumstances. The timely filing of a class-action complaint does not fulfill the purposes of a statutory time limit for later-filed suits by individual class members. View "California Public Employees’ Retirement System v. ANZ Securities, Inc." on Justia Law

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Under the Civil Service Reform Act, the Merit Systems Protection Board (MSPB) has the power to review certain personnel actions against federal employees. If an employee asserts rights under the CSRA only, MSPB decisions are subject to judicial review exclusively in the Federal Circuit, 5 U.S.C. 7703(b)(1). If the employee invokes only federal antidiscrimination law, the proper forum is federal district court. An employee who complains of a serious adverse employment action and attributes the action, in whole or in part, to bias based on race, gender, age, or disability brings a “mixed case.” When the MSPB dismisses a mixed case on the merits or on procedural grounds, review authority lies in district court, not the Federal Circuit. Perry received notice that he would be terminated from his Census Bureau employment for spotty attendance. Perry agreed to early retirement. The settlement required Perry to dismiss discrimination claims he had filed separately with the EEOC. After retiring, Perry appealed to the MSPB, alleging discrimination based on race, age, and disability, and retaliation for his discrimination complaints. He claimed the settlement had been coerced. Presuming Perry’s retirement to be voluntary, an ALJ dismissed his case for lack of jurisdiction. The MSPB affirmed, stating that Perry could seek review in the Federal Circuit. Perry instead sought review in the D.C. Circuit, which transferred the case to the Federal Circuit. The Supreme Court reversed. The proper review forum when the MSPB dismisses a mixed case on jurisdictional grounds is district court. A nonfrivolous claim that an agency action appealable to the MSPB violates an antidiscrimination statute listed in section 7702(a)(1) suffices to establish district court jurisdiction. Had Congress wanted to bifurcate judicial review, sending merits and procedural decisions to district court and jurisdictional dismissals to the Federal Circuit, it could have said so. View "Perry v. Merit Systems Protection Board" on Justia Law

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Plaintiffs, most of whom are not California residents, sued BMS in California state court, alleging that the pharmaceutical company’s drug Plavix had damaged their health. BMS is incorporated in Delaware and headquartered in New York; it maintains substantial operations in New York and New Jersey. BMS engages in business activities in California and sells Plavix there, but did not develop, create a marketing strategy for, manufacture, label, package, or work on the regulatory approval for Plavix in California. The nonresident plaintiffs did not allege that they obtained Plavix from a California source, that they were injured in California, or that they were treated for their injuries in California. The California Superior Court found that it had general jurisdiction. The state supreme court found that BMS’s “wide-ranging” contacts with the state supported a finding of specific jurisdiction over the nonresident plaintiffs’ claims. The Supreme Court reversed. For general jurisdiction, the “paradigm forum” is an “individual’s domicile,” or, for corporations, “an equivalent place, one in which the corporation is fairly regarded as at home.” Specific jurisdiction requires the suit to “aris[e] out of or relat[e] to the defendant’s contacts with the forum.” The primary concern is the burden on the defendant. The California Supreme Court found specific jurisdiction without identifying any adequate link between the state and the nonresidents’ claims. It is not relevant that BMS conducted research in California on matters unrelated to Plavix. BMS’s decision to contract with a California company to distribute Plavix nationally does not provide a sufficient basis for personal jurisdiction. View "Bristol-Myers Squibb Co. v. Superior Court of California" on Justia Law

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The owners of Microsoft’s videogame console, Xbox 360, filed a putative class action alleging a design defect. The district court struck class allegations from the complaint. The Ninth Circuit denied permission to appeal that order under FRCP 23(f), which authorizes permissive interlocutory appeal of class certification orders. Instead of pursuing their individual claims, plaintiffs stipulated to a voluntary dismissal, then appealed, challenging only the interlocutory order striking their class allegations. The Ninth Circuit held it had jurisdiction to entertain the appeal under 28 U.S.C. 1291, applicable to “final decisions of the district courts,” and that the rationale for striking the class allegations was impermissible. The Supreme Court reversed. Federal courts of appeals lack jurisdiction under section 1291 to review an order denying class certification (or an order striking class allegations) after the named plaintiffs have voluntarily dismissed their claims with prejudice. Section 1291’s final-judgment rule preserves the proper balance between trial and appellate courts, minimizes the harassment and delay that would result from repeated interlocutory appeals, and promotes the efficient administration of justice. Under plaintiffs’ theory, plaintiffs alone could determine whether and when to appeal an adverse certification ruling, allowing indiscriminate appellate review of interlocutory orders. Plaintiffs in putative class actions cannot transform interlocutory orders into section 1291 final judgments simply by dismissing their claims with prejudice. Finality “is not a technical concept of temporal or physical termination.” View "Microsoft Corp. v. Baker" on Justia Law