From The Highest Court In The Land:
Key Recent Decisions
A Review of the United States Supreme Court's Last Term
John D. Shakow
Ann M. Driscoll
Tuesday, June 15, 2004
12:30 – 1:30 p.m. EDT
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Speaker Biographies
John Shakow is a senior associate in the Litigation & Antitrust
Practice Group in King & Spalding’s Washington, D.C. office. Mr.
Shakow's practice includes complex civil, criminal and regulatory
litigation, Congressional representation and arbitration.
John D. Shakow
[email protected]
202.626.5523
Mr. Shakow graduated from the University of Virginia School of Law
in 1997, where he was Articles Development Editor of the Journal of
Law & Politics. He earned his undergraduate degree in economics
and public policy from Swarthmore College in 1991. From 1991 to
1994, Mr. Shakow worked for Carville & Begala, a strategic political
consulting firm.
He is a member of the bars of the District of Columbia and Virginia,
the U.S. District Court for the District of Columbia and the U.S.
District Court for the Eastern District of Virginia.
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Speaker Biographies
Ann M. Driscoll is an associate in the Litigation Practice Group of
the New York office of King & Spalding. She handles a wide
variety of complex commercial litigation and arbitration matters
including securities fraud, mass tort, antitrust, consumer fraud and
class action litigation.
Ann M. Driscoll
[email protected]
212.556.2349
Ms. Driscoll co-authored “Fast Food: The Next Tobacco?” 4
Engage 121 (Spring 2003), comparing the recently filed obesity
lawsuits against the food industry to lawsuits filed against the
tobacco industry.
Ms. Driscoll graduated with distinction from Hofstra University
School of Law in 1998 and graduated magna cum laude from
Union College in 1994. She is admitted to the New York State bar
as well as to the federal courts in New York.
From The Highest Court In The Land:
Key Recent Decisions
A Review of the United States Supreme Court's Last Term
John D. Shakow
Ann M. Driscoll
Tuesday, June 15, 2004
12:30 – 1:30 p.m. EDT
1
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Supreme Court of the United States
2003/2004 Term
• First Monday in October — First Monday in October of the
following year.
• More than 7000 cases per term.
• Approximately 100 cases are granted plenary review with oral
argument.
• Formal written opinions are delivered in 80-90 cases.
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Decisions from the Supreme Court of the United
States are available on the Internet at:
www.supremecourtus.gov
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Vieth v. Jubilirer
•
No. 02-1580, 124 S.Ct. 1769
•
Decided April 28, 2004
•
Opinion by Scalia for Rehnquist, O’Connor and Thomas
•
Concurring opinion by Kennedy
•
Dissenting opinions by Stevens, Souter and Ginsburg, and
Breyer
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Vieth v. Jubilirer
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Vieth v. Jubilirer
Factual Background:
•
Pre-2000 Census, Pennsylvania’s 21 seats in the House were
split equally
•
Congressional redistricting plan enacted, yielding a possible 145 GOP edge
•
“Packing,” “cracking” and “pairing”
•
Davis v. Bandemer, 478 U.S. 109 (1986)
•
Heard by a three-judge court pursuant to 28 U.S.C. § 2284,
appealed directly to Supreme Court
6
Vieth v. Jubilirer
Arguments
Vieth
• Equal protection: an extreme
partisan gerrymander that consigns
electoral majorities to minority status
deprives those voters of an equal
voice based on their political
viewpoint
– One Person, One Vote
– First Amendment governmental
viewpoint discrimination
• Partisan gerrymandering violates the
very idea of the House as set out in
Article I
Jubilirer
• Pennsylvania is a Republican state
• Appellants fail to meet the Bandemer
standards
– Intentional political discrimination is
expected
– “Registered Democrats” are not an
identifiable group
– Cannot show actual discriminatory effect
• The nongerrymandered Senate is equally
partisan
• Article I does not prohibit partisan
gerrymandering
• Nonjusticiable, purely political question
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Vieth v. Jubilirer
Holding:
•
Claims are nonjusticiable because no judicially discernible
and manageable standards exist
•
Neither Article I nor the Equal Protection Clause provides an
enforceable limit on the political considerations that may be
taken into account when redistricting
•
18 years since Bandemer and no standards have evolved
•
Bandemer’s standard is unmanageable in application
•
Appellants’ proposed standards are not discernible or
manageable
•
“Fairness” is not a judicially manageable standard
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Vieth v. Jubilirer
•
Justice Kennedy concurred, but refused to foreclose the
possibility that a justiciable claim may yet be found
•
All dissenters thought the Court had an obligation to step in
when the districts are drawn for no reason other than to put
one political party at an advantage over another
•
Dissent: Justice Stevens — racial gerrymandering cases
show that there are enforceable standards
•
Dissent: Justices Souter and Ginsburg — the Bandemer
standard, that a group be “shut out of the political process,” is
too high
•
Dissent: Justice Breyer — presents a hypothetical set of
circumstances which a court could test
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Green Tree Financial Corp. v.
Lynn W. Bazzle, et. al.
•
No. 02-634, 123 S. Ct. 2402, 156 L. Ed. 2d 414.
•
June 23, 2004
•
Opinion delivered by Justice Breyer and joined in by Justices
Scalia, Souter and Ginsburg. Justice Stevens filed a
concurring opinion as to the judgment but dissenting in part
as to the reasoning. Chief Justice Rehnquist filed a
dissenting opinion in which Justices O’Connor and Kennedy
joined. Justice Thomas filed a separate dissenting opinion.
10
Green Tree Financial Corp. v.
Lynn W. Bazzle, et. al.
Factual Background:
•
Bazzle obtained a home improvement loan from Green Tree.
The contract was governed by South Carolina law and
contained the following arbitration clause:
“All disputes, claims, controversies, arising from or relating to
this contract or the relationships which result from this
contract… shall be resolved by binding arbitration by one
arbitrator selected by us with consent of you.”
•
Green Tree failed to provide the Bazzles with a legally
required form explaining to them that they had the right to
name their own lawyers and insurance agents and providing
them the opportunity to do so.
11
8
Green Tree Financial Corp. v.
Lynn W. Bazzle, et. al.
Factual Background:
•
The Bazzles filed this lawsuit and in 1997 asked the court to
certify a class of plaintiffs. Green Tree sought to stay the
proceeding and compel arbitration. The South Carolina
Supreme Court certified the class and entered an order
compelling arbitration. Green Tree selected its arbitrator as
required by the contract and the Bazzles agreed to the
selection. Green Tree appealed the arbitrators award
claiming that the class arbitration was legally impermissible.
•
Supreme Court of South Carolina held that the contract was
silent as to whether arbitration was permissible and therefore,
under South Carolina law, the contract was interpreted as
permitting class arbitration.
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Green Tree Financial Corp. v.
Lynn W. Bazzle, et. al.
Holding:
•
Whether or not the contracts forbid class arbitration was a
question for the arbitrators. “Under the terms of the parties'
contract, the question — whether the agreement forbids class
arbitration — is for the arbitrator to decide.”
•
Because the parties here had not yet presented this issue to
an arbitrator, the Court remanded the case.
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9
Green Tree Financial Corp. v.
Lynn W. Bazzle, et. al.
Dissenting Opinions:
•
Chief Justice Rehnquist
– The determination of whether a class action was allowed
under the contract is one for the Court and not for an
arbitrator.
– The parties specification as to how the arbitration must be
selected by Green Tree with the consent of the customer
is contrary to allowing a class arbitration where a class
plaintiff would not be giving consent to the arbitrator.
•
Justice Thomas
– “I continue to believe that the Federal Arbitration Act does
not apply to proceedings in State Courts.”
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General Dynamics Land Systems Inc. v.
Dennis Cline
•
No. 02-1080, 124 S. Ct. 1236, 157 L. Ed. 2d 1094.
•
February 24, 2004
•
Opinion delivered by Justice Souter and joined in by Chief
Justice Rehnquist and Justices Stevens, O’Connor, Ginsburg
and Breyer. Justice Thomas filed a dissenting opinion in
which Justice Kennedy joined. Justice Scalia filed a separate
dissenting opinion.
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10
General Dynamics Land Systems Inc. v.
Dennis Cline
Factual Background:
•
General Dynamics Land Systems and United Auto Workers
entered into a collective bargaining agreement that
eliminated General Dynamic’s obligation to provide health
benefits to subsequently retired employees, except as to
then-current workers at least fifty years old.
•
Respondents are General Dynamics’ employees between 40
and 50 years old who alleged that the collective bargaining
agreement violated the Age Discrimination and Employment
Act of 1967, § 621 et seq., because it favored older workers
against the younger.
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General Dynamics Land Systems Inc. v.
Dennis Cline
Factual Background:
•
The District Court dismissed the lawsuit as one of “reverse
age discrimination”, stating that this had never been a proper
cause of action under the ADEA. The Sixth Circuit reversed
the dismissal saying that the provision in § 623 that covered
discrimination against any individual because of the
individual’s age, is so clear on its face that if Congress had
mean it to protect only the older workers then it would have
said so.
•
The Sixth Circuit decision was in opposition to decisions from
the Seventh and First Circuit Courts of Appeals.
17
11
General Dynamics Land Systems Inc. v.
Dennis Cline
Arguments
General Dynamics
Cline and the EEOC
The ADEA is concerned with
protecting the older worker from
discrimination that works to the
advantage of the younger.
Prohibition against age
discrimination works both ways and
the statute does not refer to older or
younger employees. The statute’s
meaning is plain on its face. The
arguments on the floor of Congress
indicate that Congress meant to
include both the old and the young
and the Court should give
deference to interpretations of the
ADEA by the EEOC.
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General Dynamics Land Systems Inc. v.
Dennis Cline
Holding:
•
The ADEA does not prohibit favoring the old over the young. The
“social history” reveals an understanding of age discrimination as
aimed against the old, and the statutory reference to age
discrimination in the idiomatic sense is confirmed by legislative
history.
•
The term “age” was used elsewhere in the ADEA with different
meanings.
•
The Court is not bound to follow statements of bill sponsors that
“cannot stand against a tide of context and history not to mention
thirty years of judicial interpretation producing no apparent
legislative qualms.”
•
There was no need to give the EEOC deference because the
EEOC was clearly wrong.
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General Dynamics Land Systems Inc. v.
Dennis Cline
Dissenting Opinions:
•
Justice Scalia
– The EEOC’s interpretation of the ADEA is neither
foreclosed by the statute nor unreasonable and the Court
should give deference to the agency’s interpretation.
•
Justices Thomas and Kennedy
– The plain language of the ADEA mandates the outcome
that the respondents be able to sue for discrimination.
Also, the Court drastically departed from the cannons of
statutory interpretation by relying on “social history,”
which has never been used and remains undefined.
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U.S. v. Galletti
•
No. 02-1389, 124 S.Ct. 1548
•
Decided March 23, 2004
•
Opinion by Thomas for a unanimous Court
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13
U.S. v. Galletti
Factual Background:
•
California partnership failed to pay certain employment taxes
from 1992 to 1995
•
The IRS assessed the partnership within three years as
required by the code, but the taxes were never paid
•
General partners filed for bankruptcy protection, and objected
when the IRS filed proof of claims against them for the
partnership’s unpaid taxes
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U.S. v. Galletti
Factual Background:
•
The bankruptcy court, the District Court and the Ninth Circuit
sustained the general partners’ objections, holding that the
partnership is a separate “taxpayer” from the general
partners and that the assessment had reached only to the
partnership
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U.S. v. Galletti
Arguments
United States
Galletti
• The IRS may enforce derivative
liability of the partners without
making separate assessments
• Based on state partnership law, not
federal tax law
• Affirming would create severe and
impracticable burdens for routine
enforcement of the tax laws -nearly $10 billion will be lost by the
government if assessments are
required to be made on partners as
well as partnerships
• Individual general partners are
primarily, not derivatively, liable;
thus they must be assessed or sued
within three years
• Federal law prohibits the collection
of tax liabilities of the partnership
from the partners unless separate
assessments have been made
against the partners individually
• Three year limit has run
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U.S. v. Galletti
Holding:
•
An individual partner can be a “taxpayer,” as can a partnership
•
The “employer” that fails to deduct and withhold employment
taxes is the liable taxpayer
•
In this case, the partnership — separate from the general
partners — is the employer
•
Nonetheless, the IRS Code does not require separate
assessments of a single tax debt against persons secondarily
liable for that debt
•
It is the tax that is assessed, not the taxpayer
•
The assessment’s consequences attach to the debt without
reference to special circumstances of the secondarily liable
parties
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15
State Farm Mutual Automobile Insurance
Company v. Campbell
• No. 01-1289, 123 S. Ct. 1513, 155 L. Ed. 2d 585
• April 7, 2003
• Opinion delivered by Justice Kennedy and joined in by Chief
Justice Rehnquist, and Justices Stevens, O’Connor, Souter,
and Breyer. Justices Scalia, Thomas and Ginsburg filed
dissenting opinions.
26
State Farm Mutual Automobile Insurance
Company v. Campbell
Factual Background:
• Fatal automobile accident. State Farm refuses to settle and
Utah jury finds Campbell 100% liable and awards $185,849.
• Campbell brings Bad Faith claim against State Farm. Jury
awards $2.6 million in compensatory damages and $145
million in punitive damages.
• Trial court reduced the award but the Utah Supreme Court
reinstated it.
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16
State Farm Mutual Automobile Insurance
Company v. Campbell
Arguments
State Farm
Campbell
Punitive damages award of
$145 million is
unconstitutional because the
Court failed to consider
Utah’s interest in such an
award.
Punitive damages award is
not excessive because State
Farm practiced a national
scheme of fraud and a lesser
award would not be a
penalty.
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State Farm Mutual Automobile Insurance
Company v. Campbell
Holding:
•
$145 million punitive damages award is unconstitutional.
•
Defendants cannot be punished for conduct that was lawful where it
occurred.
•
There is no legitimate state interest in punishing unlawful out-ofstate conduct.
•
Ratio: reasonable and proportionate
•
1. Single digit
2. 4:1
3. 9:1
4. 1:1
Wealth cannot justify an otherwise unconstitutional award.
•
Punitive damages are not a substitute for criminal penalties.
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17
State Farm Mutual Automobile Insurance
Company v. Campbell
Dissenting Opinions:
•
Justice Scalia: Due Process Clause provides no substantial
protections against excessive or unreasonable awards.
•
Justice Thomas: The constitution does not constrain the size
of damage awards.
•
Justice Ginsburg: Punitive damage awards are traditionally
within the State’s authority.
30
U.S. Postal Service v.
Flamingo Industries Ltd.
•
No. 02-1290, 124 S.Ct. 1321
•
Decided February 25, 2004
•
Opinion by Kennedy for a unanimous Court
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18
U.S. Postal Service v.
Flamingo Industries Ltd.
Factual Background:
•
Flamingo had a contract with the USPS to manufacture
mail sacks
•
USPS terminated the contract
•
Flamingo sued, alleging, inter alia, violations of the federal
antitrust laws
•
District Court dismissed, finding USPS immune from
antitrust liability
32
U.S. Postal Service v.
Flamingo Industries Ltd.
Factual Background:
•
Ninth Circuit reversed:
– Congress intended to waive USPS sovereign immunity
when it reorganized the USPS in 1970, making it more
commercial
– USPS is a “person” within the definition of the Sherman
and Clayton Acts
– USPS could assert conduct-based immunity, however, if
the challenged action was taken at the command of
Congress
33
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U.S. Postal Service v.
Flamingo Industries Ltd.
Arguments
United States Postal Service
• USPS is the “quintessential” agency
or instrumentality of the United States
• Notwithstanding waiver of sovereign
immunity, entity cannot be sued
unless it is evident that the source of
substantive law upon which claimant
relies provides an avenue for relief
• “Sue and be sued” clause is not
enough — substantive basis under
antitrust laws for imposing liability to
USPS required
Flamingo Industries Ltd.
• 1970 reform fundamentally changed
the USPS into an enterprise that can
“sue or be sued”
• No specific antitrust exclusion in the
1970 reform
• USPS’s status as a “person” is
sufficient independent substantive
basis
• USPS is protected by conduct-based
immunity
34
U.S. Postal Service v.
Flamingo Industries Ltd.
Holding:
•
USPS is part of the federal government -- not a separate
“person” — and is therefore not subject to antitrust liability
•
Two step analysis:
– Waiver of sovereign immunity? Yes.
– Substantive prohibitions of the antitrust laws apply to the
USPS? No. USPS is not a “person” separate from the
United States for purposes of the antitrust laws
•
USPS lacks the means of engaging in anticompetitive
behavior
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King & Spalding
Currently Before the Supreme Court
F. Hoffmann-La Roche v. Empagran, No. 03-724
Leocal v. Ashcroft, No. 03-583
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