The Supreme Court stepped into a partisan political battle on Monday that stems from three new Texas redistricting plans drawn up last summer. With the 2012 primary season heating up, the Court’s decision has the potential to affect local and national election outcomes.

Currently, voting districts for the Texas Legislature and those for the Texas delegation to the U.S. House of Representatives are in limbo. Two sets of maps have been drawn, one by the Texas Legislature and one by a federal court in San Antonio, but no decision has been made about the legality of either redistricting plan.

Texas wants to use the maps drawn by its state Legislature, while opposition groups claim those maps unfairly discriminate against minority groups. The new maps, critics claim, would cause minorities, and Hispanics in particular, to be underrepresented at the state and national level. The Supreme Court must decide which, if either, of the redistricting plans should be used in part or in its entirety.

Depending on the outcome of the dispute, Texas could add to its already significant conservative delegation or it could see an increase in Democratic representation in Washington.

On the surface, the question is narrow, involving the fairness of Texas voting districts and the fate of competing sets of redistricting maps. But lurking in the background are constitutional questions about the extent to which the federal government may play a role in the state election processes.

The controversy arises in part due to the interaction between Sections 2 and 5 of the 1965 Voting Rights Act. Section 2 prohibits electoral practices that discriminate against minority groups. [1] It applies to all states. Section 5 applies only to a handful of states and municipalities, mostly in the south, that have historically discriminated against minorities. It requires any changes to voting procedure, including redistricting, be approved before being legally implemented. This process, known as pre-clearance, can be accomplished through administrative review by the Justice Department or trial before the United States District Court for the District of Columbia. [2]

Texas is required to comply with Section 5. And redistricting maps, drawn as a result of the 2010 census, have pushed the state’s grievances into the national spotlight.

Between 2000 and 2010, Texas experienced the highest population growth of any state, at approximately 20 percent. [3] As a result, Texas received four additional seats in the U.S. House of Representatives. Texas needed to reapportion its voting districts for its state House, state Senate and the Texas delegation to the U.S. House of Representatives.

The Texas Legislature got to work redrawing districts in the summer of 2011. On July 19, Texas filed a request with the U.S. District Court for pre-clearance. Texas Attorney General Greg Abbott asked for summary judgment, or a ruling without a full trial. [4] The new maps would need to be approved before they could be used in the 2012 elections.

While the plans were under review for pre-clearance, six suits were filed in federal court contesting the legality of the new maps. The suits claim the new districts unfairly affect minorities, denying them the equal protection guaranteed by Section 2 of the Voting Rights Act. According to critics, the redistricting plans are a thinly veiled exercise in political gerrymandering designed to benefit conservatives in a state already run by majority Republican representation. A three judge panel was convened in San Antonio to hear arguments concerning the fairness of the new districts.

The San Antonio court faced an interesting dilemma; it was being asked to judge redistricting plans that were simultaneously under review for compliance with a different section of the Voting Rights Act by a different court. The judges refused to rule on the legality of the maps while they were under review, claiming they have no authority to do so. [5] Some of the suits have been tried and others postponed, but the court has not issued a final ruling in any of the cases.

In early November, with cases still pending in San Antonio, the D.C. federal court ruled that the Texas maps did not adequately protect minority voting rights. The court determined that the maps were “…adopted with discriminatory purpose,” and stated, “The Court finds and concludes that the State of Texas used an improper standard or methodology to determine which districts afford minority voters the ability to elect their preferred candidates of choice.” [6]

In response, the three judge panel in San Antonio drew new voter districts for interim use while the D.C. federal court holds a full trial on the issue.

Minority population increases accounted for almost 90 percent of Texas’s overall growth between 2000 and 2010. Hispanics led the way, adding approximately 2.8 million people to the state’s citizenry. [7] But the maps drawn by the Texas Legislature decreased the number of state House districts in which minorities had a likelihood of electing their preferred representative from 50 to 45. [8]

The San Antonio federal court made broad changes to the maps, redrawing the lines for 128 of the 150 state House seats and all 36 of the U.S. House Districts. [9] Critics of the interim maps complain that the court ignored the Texas Legislature’s plans and relied almost entirely on opposition complaints to form the new districts. Texas asked the court to place the interim maps on hold, and the court refused. Texas, believing the San Antonio court had overstepped its authority in drawing the new maps, appealed to the Supreme Court. The Court halted the implementation of the interim maps and agreed to hear the case on an expedited schedule.

Criticism of the competing maps fell along predictable partisan lines. Democratic State Representative Trey Martinez Fischer said that the maps drawn by the Legislature failed to take minorities into account. “We picked up four seats, and it’s important to look at the people who contributed to that,” he said. “It just seems very suspicious that the state of Texas is willing to accept that growth for political power in Congress but overlook those who brought them to the dance.” [10] Fischer belongs to a coalition challenging the Texas Legislature’s maps in court.

But Republican Representative Pete Sessions of Dallas was equally critical of the court’s plan. Sessions accused the judges of trying to “…run up the score for Democrats.” [11]

Because of the manner in which the case reached the Supreme Court, there is some speculation over how broadly the Court will choose to rule. During a standard appeals process, the questions before the Court must be clearly outlined by petitioners and respondents. However, Texas’ case found its way to the Supreme Court as a stay application, which requires no specific statement of issues. Even if the Court chooses to rule narrowly on the question of which maps to uphold, constitutional questions about the validity of Section 5 will be looming in the background.

Section 5 was not intended to be a permanent measure, but it has been renewed consistently over the past several decades. Most recently, in 2006, Congress overwhelmingly extended Section 5 for another 25 years with a vote of 98-0 in the Senate and 390-33 in the House. [12]

In original filings, Texas was clear that it was not challenging the constitutionality of Section 5. Texas asked for relief from what it views to be invalid redistricting maps, “…under the assumption that Section 5 complies with the United States Constitution.” Texas argued the only real issue was whether its own redistricting maps should be put in place, as drawn, for use in the 2012 election. [13]

In a new brief filed last Tuesday, Texas’ position on Section 5 is less clear. While still avoiding a direct challenge to Section 5, the brief cites “grave” concerns over its constitutionality. The brief also makes several additional references to Northwest Austin Municipal Utility District No. 1 v. Holder, a 2009 case in which the Supreme Court expressed serious reservations about the continued relevance of Section 5. [14]

States covered by Section 5 are becoming more impatient about meeting the requirement, questioning whether the law is an unconstitutional violation of state sovereignty. Voters in Kingston, North Carolina have brought a suit challenging the constitutionality of Section 5 as has the state of Arizona. [15]

Arguments in another case involving a Section 5 challenge, Shelby County, Alabama v. Holder, are scheduled to be heard by the U.S. Court of Appeals for the District of Columbia on January 19. [16] In September of 2011, at the district level, Judge John D. Bates, unquestioningly upheld the validity of Section 5. Judge Bates found the state sovereignty concern invalid, stating, “Congress acts at the pinnacle of its enforcement authority when it legislates to protect a fundamental right, or when it legislates to prohibit discrimination against a suspect class.” [17] It was the first ruling concerning Section 5 since the Supreme Court’s decision in Northwest Austin.

Given the uptick in recent Section 5 litigation, it is possible the Court is using Texas’ problem to set itself up for a future ruling on the law’s constitutionality. A decision modifying or declaring Section 5 invalid would have effects beyond future voting districts. Currently covered changes also include voter eligibility requirements, like voter identification laws, modifications to polling locations, candidate eligibility requirements and a host of other practices with potential discriminatory effect.

During arguments, conservative-leaning justices indicated a preference for implementing new voting districts based largely on the designs of Texas’ Republican controlled state Legislature, but still grappled with questions over how to do so. Justices Antonin Scalia and Samuel Alito, Jr. both suggested the three judge panel should have given more weight to the work of the Texas Legislature. Justice Scalia left little question to his preference, saying, “I suggest in that situation there is nothing to do but use the Texas plan.” [18] Scalia also took a swipe at Section 5, saying it was not an absolute rule forbidding Texas from using their own maps as an interim solution.

But Justice Alito was less clear, suggesting that Texas might need to further delay its primary election in order to get the redistricting dispute resolved. Alito asked, “Well, if we have a binary choice, if it’s either the plan enacted by the Texas Legislature or the plan that’s already been drawn up by the court, yes, that could be presumably resolved rather quickly. But what if neither of those is fully acceptable? Then is it — is it practicable to have the primary on the date that’s been agreed on?” [19]

Chief Justice John Roberts also indicated there was no clear choice to be made, saying, “…you have two wrong choices. How do we end up?” [20]

Only Justice Scalia’s claims that Section 5 is not an absolute rule went so far as to openly suggest changes should be made to the current legal understanding of the law. However, Justice Kennedy, the perennial swing vote, did offer a critique. Kennedy said, “Isn’t it odd that this is a Section 2 suit but Section 5 seems to be driving it? Texas is at a tremendous disadvantage here!” [21]

A decision must be reached by February 1 in order for Texas primaries to be held on April 3 as scheduled, and all of the Justices seemed troubled by the tight schedule. Barring any other changes to Texas’ election schedule, the indecision of the justices on the primary question before them may prevent the Court from issuing a ruling that addresses Section 5 at all.

The case is a consolidation of three suits, Perry v. Perez, Perry v. Davis and Perry v. Perez, docket No. 11-713, 11-714, and 11-715.

Sources
[1] http://www.justice.gov/crt/about/vot/sec_2/about_sec2.php

[2] http://www.justice.gov/crt/about/vot/sec_5/about.php

[3] http://www.texastribune.org/texas-counties-and-demographics/census/for-texas-a-larger-footprint-in-congress/

[4] http://www.brennancenter.org/content/resource/supreme_court_preview_future_of_the_voting_rights_act/

[5] http://www.scotusblog.com/2012/01/argument-preview-texas-the-courts-and-voting/

[6] http://www.cbsnews.com/8301-503544_162-57320890-503544/judges-order-texas-court-to-redraw-electoral-maps/

[7] http://www.nationaljournal.com/census-shows-minorities-outnumber-whites-in-texas-20110217

[8] http://www.abajournal.com/news/article/chemerinsky_the_eyes_of_texas_are_upon_supreme_court/

[9] http://www.scotusblog.com/2012/01/argument-preview-texas-the-courts-and-voting/

[10] http://www.usatoday.com/news/washington/story/2012-01-05/supreme-court-texas-redistricting/52397486/1

[11] http://www.mysanantonio.com/news/local_news/article/Texas-redistricting-clash-is-back-in-a-familiar-2448736.php#page-1

[12] http://blog.chron.com/texaspolitics/2012/01/legal-expert-precedent-should-guide-supreme-court-on-texas-redistricting/

[13] Brief for Rick Perry et al., online at http://sblog.s3.amazonaws.com/wp-content/uploads/2011/12/Texas-merits-brief-12-21-11.pdf

[14] http://www.scotusblog.com/2012/01/is-section-5-on-the-line-right-now/

[15] http://txredistricting.org/post/14467303113/backgrounder-other-challenges-to-the-constitutionality

[16] http://www.cadc.uscourts.gov/internet/sixtyday.nsf/fullcalendar?OpenView&count=1000

[17] http://theusconstitution.org/blog.history/?p=3160

[18] http://www.texastribune.org/texas-redistricting/redistricting/quotes-redistricting-arguments/

[19] Id.

[20] http://www.rollcall.com/news/high_profile_texas_redistricting_case_hits_supreme_court-211410-1.html

[21] http://www.slate.com/articles/news_and_politics/supreme_court_dispatches/2012/01/the_u_s_supreme_court_tries_to_solve_a_looming_texas_redistricting_crisis_.2.html

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The big, albeit unsurprising, news of the current term is the Supreme Court’s decision to hear challenges to the Patient Protection and Affordable Care Act, President Obama’s signature health care legislation. But the Court is also hearing some less publicized cases that could have an impact on heath care costs and consumer access to generic drugs.

The Supreme Court tackled one such case on Monday involving a patent dispute between two drug manufacturers. During an hour of oral arguments, the Court was asked to weigh competing claims as to when the manufacturer of a generic drug may legally file counterclaims against the patent holder of a brand name drug. The decision may have an impact on the ease with which generic drugs can be produced and introduced to the market in the US.

At its core, the case revolves around the textual interpretation of a specific section of the Drug Price Competition and Patent Term Restoration Act, known commonly as the Hatch-Waxman Act. The Supreme Court is considering the question of whether generic drug manufacturers being sued for patent infringement can file a counterclaim under the Hatch-Waxman Act to force brand name manufacturers to modify their patent description. [1]

When a brand-name manufacturer wishes to produce and market a new drug, it will procure a patent for the drug from the Patent and Trademark Office and file a New Drug Application (NDA) with the FDA for approval of the drug’s use. [2] The FDA can approve multiple uses for the same medication. In cases where the FDA does approve multiple uses, the manufacturer might hold a patent for only one or two of the approved uses. This is known as a method-of-use patent. Manufacturers of generics may submit an abbreviated new drug application (ANDA) to the FDA for approval to manufacture a generic drug for non-patented uses. [3]

The FDA has approved three uses for the type 2 diabetes drug, repaglinide. Novo Nordisk (Novo) manufactures repaglinide under the brand name Prandin, and has a patent for one of its approved uses. The patent specifies the use of repaglinide in combination with another drug, metformin. Novo held the patent for the use of repaglinide by itself, but that patent expired in 2009. None of the parties involved dispute the fact that Novo holds a patent for only one use of the drug. [4]

Patents are extremely valuable to the pharmaceutical industry, and the FDA tends to defer to pharmaceutical manufacturers by taking a hands-off approach to the evaluation and interpretation of pharmaceutical patents. Every year, the FDA produces a list, known as the Orange Book, of all drugs it has approved for safety and effectiveness. The Orange book is not a list of the patents themselves, but is rather a list of descriptions of patent uses. [5] When a manufacturer submits a patent for an Orange Book listing, they must also file a patent use code specifying, “…the approved indications or other conditions of use covered by [the] patent.” [6] The FDA references these patent use codes when considering a generic drug manufacturer’s ANDA to help determine whether the proposed generic will violate an existing method-of-use patent.

Caraco Pharmaceutical Laboratories, Ltd. (Caraco), anticipating the expiration of Novo’s patent, planned to produce a generic version of Prandin. In 2005, Caraco filed an abbreviated new drug application with the FDA, requesting approval to market the generic. Novo sued Caraco for patent infringement, and Caraco amended their application to specify they would not market the drug combination, only the use of repaglinide by itself, to ensure they would not be infringing on any existing patents. [7]

While the litigation was pending, Novo amended its Orange Book use code. The newly submitted code was much broader, removing the reference to using the drug in combination with metformin. [8] The new description of the drug’s use undermined Caraco’s application.

In response, Caraco invoked the counterclaim provision of the Hatch-Waxman Act in an attempt to force Novo to change its use code. The counterclaim provision states that, “…the applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder…on the ground that the patent does not claim an approved method of using the drug.” [9]

The U.S. District Court for the Eastern District of Michigan agreed with Caraco and issued an injunction ordering Novo to change its use code to accurately reflect the scope of its patent. Novo appealed, and in a split 2-1 opinion the U.S. Court of Appeals for the Federal Circuit reversed, allowing Novo’s modified use code to stand. Caraco appealed to the Supreme Court.

The policies of the FDA and its interface with the Patent and Trademark Office in drug patenting and approval are an issue in this case. Since the patent office is not involved in drug approval, the branded manufacturer itself is responsible for describing the scope of its patent to the FDA. The process essentially involves the manufacturer telling the FDA how to interpret its patent, with no questioning or review by the governing body. The FDA depends on the manufacturer’s description and does not independently check the accuracy of the use codes manufacturers submit.

The majority opinion of the Federal Court set forth a narrow interpretation of the Hatch-Waxman Act. The court agreed with Novo in its reading of the statutory language. An approved method of using a drug, according to the majority, did not refer to a singular use but actually meant any method of using a drug. The opinion then went further, defining patent information to be only “…the patent number and the expiration date”, making the actual patent use description irrelevant. [10] The dissenting judge on the panel expressed concern about the majority’s interpretation, arguing that it would allow brand name drug manufacturers to use manipulative language to avoid competition from generics. [11]

In a brief to the Court and in oral arguments, Caraco claimed that the statutory language was clear. But they came to the opposite conclusion as to its meaning than that of the Federal Court. An approved use, they argue, means one use, in this case the use of repaglinide by itself and that use only. Since Novo does not hold the patent for that specific use, they argue, Caraco is clearly within its rights to request a correction of the code. [12]

During arguments, justices seemed conflicted over how broadly to interpret the language, and arguments over semantics ensued. In one opening exchange, Justice Samuel Alito asked attorney James Hurst, representing Caraco, “Suppose I said your brief does not cite a Supreme Court decision. Would that be a correct statement?” [13] (Justice Alito was implying that in his question the word “a” would mean any.) Hurst replied that it would be a fair statement, but disagreed with Justice Alito’s underlying assumption. Mr. Hurst claimed that if a justice were to say to him, “…you are going to lose this case because you didn’t cite an applicable precedent,” he would, “…hear that to mean I didn’t cite a specific particular case.” [14]

He continued, saying that the word “an” is routinely used to refer to one specific thing, and that the Court must look at the context of the language when considering the case. He then gave examples, including, “I got lost on my way to the party because I failed to make a turn,” and, “My cake fell because I did not include an ingredient.” [15] Justice Alito responded that there were oddities in the way Mr. Hurst was reading the text.

Justice Sotomayor appeared skeptical about the practical application of allowing such broad patent descriptions to stand. Questioning Mark Perry, counsel for Novo, she asked, “What this means practically I believe is that when your patent expires no generic can come in with a use that’s different than yours because they’re going to be boxed out by this indication, this overbroad indication. Do you actually think that’s what Congress intended? I thought…what Congress intended was to ensure that drugs got onto the market as quickly as possible.” [16]

Several parties submitting supporting briefs for Caraco, including the Generic Pharmaceutical Association, the AARP and the Obama Administration, worry about the consequences of allowing brand name manufacturers to broadly state their patent uses with no challenge from generic manufacturers. They argue that were the Federal Court’s decision to stand, branded manufacturers could arbitrarily push generics out of the market, resulting in increased costs to the consumer. [17]

Assistant to the Solicitor General Benjamin Horwich presented arguments on behalf of the Unites States during oral arguments. According to the Solicitor General, “Under the Federal Circuit’s decision, a brand-name manufacturer can effectively preclude generic competition by submitting an overbroad description of its method-of-use patent to FDA. Congress enacted the counterclaim provision at issue here to combat precisely that sort of manipulation.” [18]

Novo and other branded pharmaceutical manufacturers also argue that the Supreme Court’s decision could have unintended consequences. The Court, they argue, must consider the cost to the original creators of new drug therapies. They claim that if branded manufacturers are forced to spend money on patent litigation and face tougher competition from generic manufacturers, it could produce a chilling effect that discourages research and innovation. [19]

Parties on both sides of the case argue that the language of the Hatch-Waxman Act is clear, but come to opposite conclusions about its meaning. Both also both argue that a decision for the other party could result in unintended costs to consumers. The Supreme Court often splits along ideological lines in these types of cases, and discussions during oral arguments point to such an outcome. The question remains whether Justice Kennedy will once again have the deciding vote.

The case is Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S. A decision is expected in June.

Sources
[1] http://www.oyez.org/cases/2010-2019/2011/2011_10_844

[2] http://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/NewDrugApplicationNDA/default.htm

[3] http://www.law.cornell.edu/supct/cert/10-844

[4] http://www.scotusblog.com/2011/11/argument-preview-federal-circuit-faces-uphill-battle-in-latest-generics-case/

[5] http://www.fda.gov/Drugs/InformationOnDrugs/ucm129662.htm

[6] http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearch.cfm?fr=314.53

[7] Brief for Caraco Pharmaceutical Laboratories et al., available online at http://www.americanbar.org/content/dam/aba/publishing/previewbriefs/Other_Brief_Updates/10-844_petitioner.pdf

[8] http://jolt.law.harvard.edu/digest/patent/kappos-v-hyatt-caraco-pharm-labs-ltd-v-novo-nordisk-as

[9] http://www.law.cornell.edu/uscode/21/355.html

[10] http://www.bloomberglaw.com/public/document/Novo_Nordisk_v_Caraco_Pharmaceutical_Labs_Ltd_601_F3d_1359_95_USP

[11] Id.

[12] Reply brief for Caraco Pharmaceutical Laboratories et al., available online at http://sblog.s3.amazonaws.com/wp-content/uploads/2011/12/Caraco-Novo-SCT-Reply-Brief-for-Petitioners-FINAL.pdf

[13] No. 10-844, Arguments, available online at http://www.supremecourt.gov/oral_arguments/argument_transcripts/10-844.pdf

[14] Id.

[15] Id.

[16] Id.

[17] Brief for the United States of America, No. 10-844, available online at http://www.americanbar.org/content/dam/aba/publishing/previewbriefs/Other_Brief_Updates/10-844_petitioneramcuusa.pdf

[18] http://www.orangebookblog.com/2011/05/obama-administration-urges-supreme-court-to-grant-cert-in-case-on-orange-book-patent-use-codes.html

[19] Brief for Novo Nordisk A/S and Novo Nordisk Inc., available online at http://www.americanbar.org/content/dam/aba/publications/supreme_court_preview/briefs/10-844_respondent_amcu_novo_nordisk.pdf

The SEO | Law Firm™ News Center extends editorial freedom to their staff writers thus the views expressed in this column may not reflect the views of SEO | Law Firm™, Adviatech Corp., or any of its holdings, affiliates, or advertisers.

A case involving a nine-year-old boy and his passport is raising a centuries-old constitutional question about the roles of Congress and the presidency in creating foreign policy. The Supreme Court heard arguments in the case on Monday during which justices questioned attorneys for both sides with a healthy dose of skepticism.

The case is the first dealing with the issue of presidential power to come before the Supreme Court in several years. At its heart is a power dispute between two co-equal branches of government that each want to be able to determine foreign policy. The case may decide when the president can tell Congress what to do, when Congress can override the president and when the courts have jurisdiction to step in and resolve the conflict. It goes to the core of the constitutional designation for the roles each of the three branches of government have.

Does the executive or legislative branch have the power to craft foreign relations, and is that power exclusive to either branch? What does the Constitution say when foreign policy, as articulated by the executive branch, disagrees with a law passed by Congress? In this case, actions taken by the executive branch plainly violate the law, but the State Department claims it has the constitutional authority to do so. [1]

The seemingly innocuous question of a birthplace designation on a newborn’s passport was the initial cause of contention. Menachem Zivotofsky was born in Jerusalem in 2002. Since both of his parents are American citizens, he was automatically awarded U.S. citizenship. His mother requested that American authorities record his place of birth on both his birth certificate and passport as “Jerusalem, Israel”. The State Department refused on the basis that it does not officially recognize the sovereignty of any government over the city of Jerusalem. [2] All passports list the birthplace of a U.S. citizen born anywhere in Jerusalem as simply “Jerusalem”.

The official status of Jerusalem has been a divisive issue for decades. Israel considers Jerusalem to be its capital and has done so since it was established as an independent state in 1948. [3] However, the city has subsequently been separated, reunited, and fought over, often through armed clashes, with the local Palestinian Arab population. Few see hope that the conflict will end anytime soon.

Non-recognition of the sovereignty of any nation over the city of Jerusalem has therefore been official U.S. policy for more than 60 years when President Harry Truman refused to intervene in the foreign conflict. The designation of Jerusalem, according to the State Department, must be worked out in negotiations between Israel and Palestine. [4]

However, when Naomi Zivotofsky petitioned officials to add Israel to her son’s birth certificate, her timing was just right. In 2002, Congress passed the Foreign Relations Authorization Act, Fiscal Year 2003. Section 214 of the Act states, “For purposes of the registration of birth, certification of nationality, or issuance of a passport of a United States citizen born in the city of Jerusalem, the Secretary [of State] shall, upon the request of the citizen or the citizen’s legal guardian, record the place of birth as Israel.” [5] The law went into effect just a month before Mrs. Zivotofsky’s request.

In 2002, President George W. Bush chose not to veto the bill. Instead, he attached a signing statement declaring Section 214 as not mandatory. That part of the law was simply to be construed as advice. When signing the bill, the President stated that Section 214 “…impermissibly interferes with the President’s constitutional authority to conduct the Nation’s foreign affairs.” [6] Putting aside the fact that the concept of the signing statement raises its own constitutional questions, the declaration clearly put the policy of the State Department in direct violation of the law.

In 2003, buoyed by the new law, Menachem Zivotofsky, joined by his parents, sued the State Department. The suit demanded they follow the Foreign Relations Authorization Act as passed by Congress. In response, the State Department has insisted that Congress overstepped its bounds when it passed a law, albeit somewhat indirectly, that named Jerusalem as the capital of Israel.

The Supreme Court may choose to decide two questions. The original petition for certiorari asked the Court only to rule on the issue of whether the case could be adjudicated by federal courts. However, when granting certiorari, the Court also instructed both parties to explore the separation of powers issue. The request instructed attorneys for both parties to consider, “Whether Section 214 of the Foreign Relations Authorization Act, Fiscal Year 2003, impermissibly infringes the President’s power to recognize foreign sovereigns.” [7]

At the lower level, both the District Court and D.C. Circuit Court have declared that the case involves a nonjusticiable political question. [8] The case was dismissed at the District level, but then reversed and sent back by a Circuit Court judge. The District Court reaffirmed its initial ruling, and when the case was again appealed, the Circuit Court this time agreed.

The lower courts each relied heavily upon the political question doctrine in their decisions. The political question doctrine holds that a federal court may refuse to hear any case that deals with a purely political issue. [9] Federal courts can certainly hear a case involving controversial issues, as this is at the heart of their stated constitutional duty of interpreting the law. The political question doctrine applies only to lawsuits that attempt to involve the courts in disputes that deal with powers the Constitution clearly designates to either of the two political branches of government.

The Supreme Court has declared in the past that if there is a conflict involving a power and the Constitution clearly assigns a power to either the president or Congress, it is up to them to fight it out among themselves. Such disputes do not belong in federal courts. [10] There is direct precedent on the political question of foreign policy; the Court has held foreign relations are the exclusive province of the executive branch. [11]

During oral arguments, the Court questioned attorneys for both sides about whether it should even weigh in on the case. During the first half of arguments, Justice Antonin Scalia asked Nathan Lewin, arguing on behalf of the Zivotofskys, “Why is it any of our business which is the better foreign policy position?” Justice Scalia continued, “I would let…them conduct the usual inter-branch hand wrestling that goes on all the time, which probably means that if Congress cares enough Congress will win, because…it has an innumerable number of clubs with which to beat the executive. Why don’t we just let them go at it?” [12]

However, he seemingly reversed course during the second half of the arguments, saying, “You have a dispute between the two branches, and where that happens, I find it hard to say, well, you know, we can’t get into it…It seems to me we have to resolve that question.” [13]

Justice Steven Breyer also questioned whether judges could decide on the question of what constitutes foreign policy, stating, “Our real problem is these…words may really disrupt coherent foreign policy. Viewed that way, there are billions of words that might have the same effect. And do we know that these words will and some other words won’t? No, judges don’t know that.” [14]

However, justices also noted that if they decide the question is purely political and not an issue for the Court, that constitutes a de facto ruling in favor of the executive. In making the argument that the case is nonjusticiable, U.S. Solicitor General Donald Verrilli essentially claims that the executive branch can ignore any act of Congress that disagrees with presidential opinion as long as the president deems it to be a foreign policy issue. Justices seemed uneasy settling the issue in that manner, essentially allowing the executive branch to claim unchallenged authority when recognizing foreign nations and diminishing Congress’ role in shaping foreign policy.

Justice Sonia Sotomayor expressed this hesitation, asking, “What entitles Congress to trench on a presidential power that has been exercised virtually since the beginning of the country?” [15] Justice Sotomayor also questioned whether such extensive executive power was an appropriate precedent. “If we call this a political question and don’t address the merits, the outcome is that the president is saying that he’s entitled to ignore the Congress,” she said. “I don’t know what kind of message that sends, but it’s a little unsettling that a court charged with enforcing the laws passed by Congress are basically saying we are not going to determine whether this law is constitutional or unconstitutional.” [16]

Congress claims that the law just addresses a little passport issue that the executive branch is ascribing much more symbolism to than was intended. But it is hard to argue that Congress was not intentionally making a foreign policy declaration by implying that Jerusalem is a part of Israel. Justices clearly recognized the symbolism and seem to be leaning toward issuing a ruling on the merits.

The case is M.B.Z. v. Clinton, no. 10-699.

Sources
1. http://www.law.cornell.edu/supct/cert/10-699

2. http://www.scotusblog.com/2011/11/argument-preview-how-separate-are-the-powers/

3. http://www.mfa.gov.il/MFA/Jerusalem+Capital+of+Israel/

4. http://www.theatlantic.com/national/archive/2011/11/how-a-trivial-decision-could-land-the-supreme-court-in-foreign-policy-hell/248069/

5. Foreign Relations Authorization Act, Fiscal Year 2003, online at http://www.gpo.gov/fdsys/pkg/PLAW…/pdf/PLAW-107publ228.pdf

6. http://www.gpo.gov/fdsys/pkg/WCPD-2002-10-07/html/WCPD-2002-10-07-Pg1658-2.htm

7. http://lawprofessors.typepad.com/conlaw/2011/05/court-to-hear-challenge-to-presidents-foreign-affairs-power.html

8. Zivotofsky v. Secretary of State, 610 F. 3d 84 – Court of Appeals, Dist. of Columbia Circuit 2010, online at http://scholar.google.com/scholar_case?case=2250270912556877399&hl=en&as_sdt=2,10&as_vis=1

9. http://www.law.cornell.edu/wex/political_question_doctrine

10. http://www.oyez.org/cases/1960-1969/1960/1960_6

11. http://openjurist.org/246/us/297/oetjen-v-central-leather-co

12. http://www.slate.com/articles/news_and_politics/supreme_court_dispatches/2011/11/mbz_v_clinton_at_supreme_court_playing_politics_with_passports.2.html

13. Id.

14. http://www.politico.com/blogs/joshgerstein/1111/Supreme_Court_wrestles_with_Jerusalem_passport_case.html

15. http://www.scotusblog.com/2011/11/argument-recap-who-controls-foreign-policy/

16. http://www.nytimes.com/2011/11/08/us/dispute-over-jerusalem-engages-supreme-court.html

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The Supreme Court will hear a number of cases this term with potential ramifications for the nation’s criminal justice system. Today, the Court is holding a conference on one such case involving the legality of strip searches under the Fourth Amendment.

States are divided on policy concerning the frequency and necessity of strip searches. While 18 states outlaw strip searches for those arrested on minor or non-criminal offenses, the majority of the nation’s population resides in those states. [1] Several large jurisdictions ban blanket strip search policies on the grounds that they violate an individual’s civil rights.

In conference, the Court will be asked to clarify the issue of a jailed person’s Fourth Amendment rights. The question presented is whether the Fourth Amendment allows a jail to administer suspicionless strip searches to everyone, in every circumstance, and even to minor offenders.

The case began in 2005, when Albert Florence was arrested after his wife was pulled over for a routine traffic stop in Burlington County, New Jersey. Mr. Florence was a passenger in the vehicle along with the couple’s four-year-old daughter. The three were on their way to a family dinner.

Although he was a passenger, Mr. Florence was asked to provide identification as the owner of the vehicle. A check of his ID brought up an outstanding warrant for his arrest.

The warrant, an outdated bench warrant, was originally issued for failure to pay a fine, a non-indictable civil offense in New Jersey. Mr. Florence challenged the validity of the warrant claiming he had paid the fine immediately after it was issued. He also carried a copy of the court record showing proof of payment in his vehicle, which his wife provided to the officer at the time of the traffic stop. The officer did not accept the document as proof, and Mr. Florence was detained and then taken to Burlington County Jail on the basis of the disputed warrant.

Mr. Florence was held in Burlington County for six days, even though New Jersey law requires jailed individuals be brought before a judge within 72 hours. [2] He was then transferred to a facility in Essex County, where the original warrant had been issued. There, he was brought before a judge who ordered his immediate release, dismissing all charges. While he was being held, Mr. Florence claims he was subject to two strip and visual body cavity searches, one at each facility. [3]

At the time, both counties had a blanket strip search policy in place that called for all arrested individuals to be searched regardless of the reason for the person’s arrest. However, performing strip searches on all jailed individuals, including minor civil offenders, is a violation of New Jersey law that states persons arrested for anything “other than a crime” cannot be strip searched unless “…there exists probable cause that a weapon, drug or evidence of a crime will be found.” [4] The law should preclude anyone taken in on minor charges from enduring a strip search.

After his release, Mr. Florence sued officials and jail employees of both Burlington and Essex counties in federal court. He sought class status and sued on behalf of himself and all other non-criminal arrestees who had been subjected to a strip search in either facility since 2003. In the suit, he claimed that his Fourth Amendment rights had been violated when he was searched since there was no reason to suspect he was carrying contraband or was in any way a security threat. [5]

At the district level, the judge agreed that Mr. Florence’s Fourth Amendment rights had been violated. According to the decision, “…blanket strip searches of non-indictable offenders, performed without reasonable suspicion for drugs, weapons, or other contraband, [are] unconstitutional.” [6] Upon appeal, the Third Circuit Court reversed.

The Fourth Amendment protects citizens from unreasonable searches, stating that, “The right of the people to be secure in their persons…against unreasonable searches…shall not be violated.” [7] Attorneys for Albert Florence acknowledge that while jails have considerable power to conduct searches for security reasons, such power does not justify suspicionless strip searches.

Instead, they argue, the Fourth Amendment requires a standard of reasonable suspicion before a strip search can be performed. Decisions about the type of search necessary for people entering jails or correctional facilities should be made on an individual basis according to the danger each new inmate poses. Strip searches, Florence claims, are dehumanizing and may have damaging psychological effects. As such, they violate the expectation of privacy guaranteed under the Fourth Amendment. Florence also claims strip searches are unnecessary since other methods can be used to check non-violent or minor offenders for weapons or contraband. [8]

In response, Essex County officials claim that the searches are necessary for both health and safety reasons and do not violate the rights of jailed individuals. The county then goes further, arguing that the Fourth Amendment does not even apply in this case. Because of the nature of the prison setting and the relationship between guard and inmate, they say, no right to or expectation of privacy exists. In their brief, they state that there is an “…overriding security interest in protecting inmates and staff against which privacy interests must yield.” [9]

Many of the arguments defending the blanket use of strip searches rely heavily on a 1979 Supreme Court case, Bell v. Wolfish. In that case, the Court issued a divided 5-4 opinion stating that strip searches without reasonable suspicion did not constitute a violation of inmates’ rights. [10] But, a distinction between Bell and Albert Florence’s does exist. In Bell, the Court held that a policy of blanket strip searches for all inmates after contact with an outside visitor was constitutional. Jails had to be able to ensure that no one was being used to smuggle in contraband received during a visit.

Here, however, the blanket strip search policy applied to everyone being processed. Since most non-violent civil offenders have no reason to suspect they are about to be arrested, there is, according to the petitioner, less danger of them carrying illegal weapons. Someone who has failed to pay a parking ticket or forgotten to use a turn signal, they argue, does not carry contraband expecting to be arrested so they can smuggle it into jail.

Cases like this one require a balancing standard: the weight for prison safety versus the weight of individual rights under the Fourth Amendment. Until 2008, district courts remained in agreement on the issue, all favoring the need to protect inmate rights. In the 10 relevant cases decided at the district level since Bell, each held that policies requiring blanket strip searches were unconstitutional. [11]

However, since 2008, both the Eleventh and the Ninth Circuit Courts have revisited and overruled their earlier decisions. Both have since decided that subjecting all inmates to a strip search regardless of the reason for arrest is constitutional. [12] The weight of District Court precedent is in Mr. Florence’s favor, but the division among the District Courts does justify the Supreme Court’s involvement.

Several other states and counties as well as some police organizations have filed briefs in support of Burlington and Essex counties. They are joined by the United States, which fully endorses the counties’ position. The ACLU has written a brief on behalf of several former New Jersey attorneys general in support of Florence. The American Bar Association, the National Association of Criminal Defense Lawyers, some medical groups and several others have also filed briefs in support of the petitioner. [13]

The case is Florence v. Board of Chosen Freeholders of the County of Burlington, N.J. Given the nature of the arguments, the decision is likely to be split 5-4 along ideological lines, once again giving Justice Kennedy a chance to cast the tiebreaking vote.

Sources
1. http://www.scotusblog.com/?p=129238

2. http://blog.nj.com/njv_frank_askin/2011/09/is_strip_searching_inmate_arre.html

3. Brief for Petitioner Albert W. Florence, online at http://sblog.s3.amazonaws.com/wp-content/uploads/2011/06/Florence_Merits-Final.pdf

4. http://blog.nj.com/njv_linda_stamato/2011/10/florence_v_board_of_chosen_fre.html

5. US Court of Appeals for the Third Circuit, Nos. 09-3603 & 09-3661, online at http://www.ca3.uscourts.gov/opinarch/093603p.pdf

6. Id. at 11

7. http://www.lectlaw.com/def/f081.htm

8. http://www.law.cornell.edu/supct/cert/10-945

9. Brief for Respondent Essex County, online at http://sblog.s3.amazonaws.com/wp-content/uploads/2011/08/10-945bsEssexCounty.pdf

10. http://www.oyez.org/cases/1970-1979/1978/1978_77_1829

11. http://www2.americanbar.org/SCFJI/Lists/New%20Case%20Summaries/DispForm.aspx?ID=247

12. Id.

13. http://www.scotusblog.com/case-files/cases/florence-v-board-of-chosen-freeholders-of-the-county-of-burlington/

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The U.S. Supreme Court will open its 2011 October Term by hearing arguments in a Medicaid funding case that could have an impact on future enforcement of the Affordable Care Act.

As states contend with mounting budget shortfalls in the face of an economy still struggling to recover, many are choosing to cut funding for assistance programs like Medicaid to help balance the books. Patients’ rights advocates argue that it is wrong to balance budgets by taking benefits away from those that need them the most. [1] In the case of Medicaid, those more affected by funding cuts are the poor, pregnant women, children, individuals with disabilities and seniors. Medicaid funding is also in peril in part because changes to Medicaid affect fewer people than those made to other programs, like Medicare and Social Security, and the people such changes do affect are least able to challenge the new rules.

At issue in the case coming before the Supreme Court is whether private parties have the legal standing to challenge cuts to state Medicare funding under the Supremacy Clause of the Constitution. The case is a consolidation of three cases filed in reaction to proposed cuts in California’s Medicaid payment disbursements.

In 2008, the California Assembly passed legislation that amended the California Welfare and Institutions Code by reducing payments made to health care providers under Medi-Cal, California’s Medicaid equivalent, by 10 percent. [2] Independent Living, a coalition of health care providers, senior citizen’s groups and other beneficiaries of Medi-Cal, filed suit asking for an injunction prohibiting the director of the California Department of Health Care Services from enforcing the cuts. [3]

The funding cuts, they argued, violated the Medicaid Act (Title XIX of the federal Social Security Act) because they were so severe they would limit access to services Medicaid is federally mandated to provide. [4] Specifically, they stated that the cuts are incompatible with 42 U.S.C. § 1396(a)(30)(A), known as the Equal Access Provision, that requires state plans to provide payment for care and services, and states that such payments be “consistent with efficiency, economy and quality of care” and “sufficient to enlist enough providers so that care and services are available under the plan.” [5] States must administer the program in an economical manner but are also required to take into consideration how funding levels affect health care quality and access.

Initially, a federal court denied Independent Living’s request. However, the Ninth Circuit held that the state was in violation of the Equal Access Provision and sent the case back to the district court for reconsideration.

The case raises two distinct issues relating to the Equal Access Provision of the Medicaid Act. One is the question of what does and does not constitute a violation of the statute. At what level do cuts constitute a violation of federal law? This is an issue that states must tackle as they evaluate budget priorities. The second is the question of who has standing to challenge funding cuts under the Supremacy Clause, which states that federal law trumps state law when the two are in conflict. [6] The U.S. Supreme Court will not be discussing the legal determinations as to what constitutes a violation of the Equal Access Provision, but will only be ruling on the standing issue.

Medicaid is a joint federal-state program that gives states leeway to determine their own eligibility standards and funding structure. Medicaid programs are funded predominately by states with the help of contributions from the federal government. State plans must cover certain procedures such as vaccines for children, prenatal care, and inpatient and outpatient hospital visits in order to be eligible to receive federal funds. [7]

Medicaid is means tested; only a small group of low income individuals qualify for benefits. States are traditionally given broad leeway to organize and administer their Medicaid programs. Courts have been hesitant to decide on cases involving Medicaid funding since it is seen to be more of a political rather than a legal question.

The courts’ hesitation to decide the issue has not prevented private groups across the country from challenging cuts to Medicaid rates. Medicaid advocates and patients’ rights groups argue that such cuts limit access by forcing providers out of the program, and making it harder for beneficiaries to find doctors and hospitals willing to provide care. [8] When states pull money from their Medicaid programs, the reductions often come in the form of rate cuts to doctors and other providers of medical care. Such cuts have sparked legal battles as patients and providers file suit to block cuts to the program on the basis that they limit coverage in violation of federal law.

For the past several decades, plaintiffs have filed challenges to changes in state Medicaid rules as section 1983 cases. 42 U.S.C. § 1983 was passed as a part of the Civil Rights Act of 1871, largely in response to the actions of the Ku Klux Clan. Section 1983 states that anyone who deprives a United States citizen of his or her rights under the Constitution or federal laws can be held legally liable by the injured party. [9]

This avenue of petition was closed in 2002 with the Supreme Court’s decision in Gonzaga University v. Doe. While the case did not directly involve Medicaid, it drastically changed the way that section 1983 cases are interpreted. In Gonzaga, the Court held that section 1983 did not confer any enforceable rights under the Spending Clause. [10] Since Medicaid was enacted under the Spending Clause, neither Medicaid recipients nor providers could continue to claim any rights under section 1983.

Courts have historically placed no such limit on cases involving federal preemption. Over 200 years of case law indicate that individuals do have legally enforceable rights when state and federal laws conflict. [11] Patients’ rights activists and advocates for Medicare beneficiaries are hopeful that the Supreme Court will apply this standard to Medicare recipients and providers as well.

The Obama administration surprised many of those watching the case by filing an amicus brief in support of the position of the director of the California Department of Health Care Services. Initially, acting Solicitor General Neal Katyal urged the Court not to take the case, an action that would have allowed the Ninth Circuit’s decision favoring Medicaid beneficiaries to stand. [12] However, when the Court did take the case, Katyal filed an amicus brief taking the opposite position, a move that has worried many Medicaid supporters.

In the brief, the Solicitor General recognizes precedent, stating that the Court’s decisions, “…reflect a longstanding practice of permitting private parties to bring suit in federal court to enjoin state regulatory action from which the plaintiffs claim immunity under federal law.” [13] However, the brief then makes a distinction because Medicaid imposes obligations under the Spending Clause and because it is a joint federal-state program. As such, the brief argues, the Medicaid program acts more like a contract between the states and the federal government that confers no third party rights. The Solicitor General also argues that Congress could have specified certain rights in the Medicaid Act, but chose not to do so.

Several members of Congress filed a brief opposing Katyal’s position. They state that the Solicitor General is wrong in concluding that just because Congress did not specifically delineate enforceable rights in the statute, these rights do not exist. Congress, they argue, relies on the Court’s practice of granting rights under the Supremacy Clause. Because Congress understands such rights exist, they do not necessarily have to be outlined in every law. Congress, they claim, “…has long understood that an action for equitable relief will be available to individuals harmed by state law that is inconsistent with federal law.” [14] This, they say, applies to Medicaid beneficiaries as well.

If the Court agrees with California and the U.S. Solicitor General, advocates for Medicaid recipients worry that it will be difficult to force states to fulfill their obligations under federal law. The only recourse if states fail to comply with the law will be for the federal government to withhold Medicaid funds from the state. This action will only hurt those who need relief the most by continuing the downward spiral of benefit cuts.

Others who are watching the case also worry that a broad decision against Medicaid recipients and providers could undermine the Patient Protection and Affordable Care Act. The Affordable Care Act relies on states to carry out and enforce new federal rules. Executive director of the Tennessee Justice Center, Gordon Bonnyman, said of the Solicitor General’s argument, “What is more remarkable … [is that] they took a position that was antithetical to the effective implementation of the Affordable Care Act and they addressed questions that were somewhat gratuitous in doing that.” [15]

The case is Douglas v. Independent Living Center of Southern California. Arguments are scheduled for October 3.

Sources
1. http://www.reuters.com/article/2011/08/11/us-usa-health-medicaid-idUSTRE77A5DB20110811

2. http://www.ama-assn.org/amednews/2008/06/09/gvsa0609.htm

3. Brief for Respondent Independent Living Center of Southern California, Inc., et al., online at http://www.americanbar.org/content/dam/aba/publishing/previewbriefs/Other_Brief_Updates/09-958_respondentindependentlivingctr.pdf

4. Id.

5. http://www.law.cornell.edu/uscode/42/1396a.html

6. http://www.law.cornell.edu/wex/Supremacy_Clause

7. http://www.medicalnewstoday.com/info/medicare-medicaid/

8. http://healthcarejusticeblog.org/2011/04/when_access_to.html

9. http://www.constitution.org/brief/forsythe_42-1983.htm

10. http://www.americanbar.org/publications/preview_home/09-958.html

11. Opinion of the Ninth Circuit No. 08-56422, online at http://www.ca9.uscourts.gov/datastore/opinions/2009/07/15/08-56422.pdf

12. http://www.acslaw.org/acsblog/all/douglas-v.-independent-living-center-of-southern-california

13. Brief for the United Statesin Support of Petitioner, online at http://www.americanbar.org/content/dam/aba/publishing/previewbriefs/Other_Brief_Updates/09-958_petitioner_amcu_unitedstates.pdf

14. Brief for Members of Congress in Support of Respondents, online at http://sblog.s3.amazonaws.com/wp-content/uploads/2011/08/09-958-09-1158-AND-10-283-bsac-Members-of-Congress.pdf

15. http://www.politico.com/news/stories/0611/56349.html

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Challenges continue to mount for lawmakers on Capitol Hill, with a bleak June jobs report adding heat to ongoing arguments over budget priorities and a looming deadline for action on the debt ceiling. Congress has serious issues to address in the face of rising unemployment, rising deficits and continued financial uncertainty for many middle and working class Americans.

President Obama meets with (from left) Chief of Staff Bill Daley; Rob Nabors, Assistant to the President for Legislative Affairs; Bruce Reed, Chief of Staff to the Vice President; National Economic Council Director Gene Sperling; Jason Furman, Principal Deputy Director of the National Economic Council; Office of Management and Budget Director Jack Lew; Senior Advisor David Plouffe; and Treasury Secretary Timothy Geithner. - White House Photo by Pete Souza

Jobs were a major issue during the 2010 midterm elections. The party in power never does well in an election when the country faces high unemployment, and 2010 was no exception. In a New York Times/CBS News poll conducted in January, shortly after the ceremonial swearing in of the 112th Congress, 51 percent of respondents said that the economy and jobs was the most important problem facing the country. At 6 percent, the budget deficit and national debt came in as the second highest priority. [3]

Despite months of argument over budgets, spending, the national deficit and the debt ceiling, polls show very little shift in public opinion. A CBS News/New York Times poll conducted June 24 to June 28 asked the open-ended question, “What do you think is the most important problem facing this country today?” The majority, 53 percent, chose the economy and jobs. The second-highest priority was again the national deficit/debt at 7 percent. [4]

The media is expending a tremendous amount of energy speculating about the debt ceiling, job creation and potential cuts to domestic programs. Crisis is in the air. Congress has a clear mandate to act on jobs, but lawmakers seem distracted by other issues.

Of the 23 bills passed by the 112th Congress and signed into law, one can marginally be referred to as a jobs bill. Congress has been most prolific at naming public buildings. Five new laws concern the official designation of post office branches and courthouses. The Smithsonian Institute received attention with three laws naming citizens to its Board of Regents. [5]

Congress has also been busy with five continuing appropriations bills, the Airport and Airway Extension Acts (parts I, II and III), a Surface Transportation Extension Act, an extension of programs under the Small Business Act of 1958 and two extensions of the PATRIOT Act. [6] In a move broadly supported by both parties, Congress repealed new reporting requirements for businesses that had been included in the Patient Protection and Affordable Care Act. [7]

The jobs bill, also an extension of a law currently on the books, aims to provide continued investment in small businesses. The Small Business Additional Temporary Extension Act of 2011 reauthorized the SBA’s Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. The SBIR and STTR programs allow the Department of Defense to invest in research and development at small technology companies. The fund provides up to $1 billion for investment in technologies that may benefit the DoD and the private sector. [8]

The House of Representatives has passed several ideologically driven measures that have very little chance of being introduced in the Senate, let alone passed and signed into law. One of the most famous, H.R.2 – Repealing the Job-Killing Health Care Law Act, was passed less than a month into the new session. [9] The House also tackled women’s health with H.R.3, the No Taxpayer Funding for Abortion Act, despite the fact that the Hyde Amendment already prohibits federal funding of abortions. [10] Environmental legislation, most notably cap and trade, died last year. But the House did pass H.R.910, the Energy Tax Prevention Act of 2011, which declassifies greenhouse gasses as a pollutant and prohibits the EPA “from promulgating any regulation concerning, taking action relating to, or taking into consideration the emission of a greenhouse gas to address climate change.” [11]

That is not to say that jobs legislation has not been introduced. Representative Keith Ellison (D-MN) sponsored H.R.2368, the Put America to Work Act of 2011. Ellison’s bill would provide grants for job development in distressed communities. [12] Rep. John Conyers (D-MI), sponsored H.R.870, the Humphrey-Hawkins 21st Century Full Employment and Training Act to establish a National Full Employment Trust Fund. [13] In the Senate, Senators Rockefeller (D-WV) and Lautenberg (D-NJ) introduced S.936, the American Infrastructure Investment Fund Act of 2011, which would create a fund within the Department of Transportation to encourage private investment in transportation and infrastructure projects. [14]

President Obama said in his press conference on Monday that, “We’re still going to have to have a strong jobs agenda.” [15] The president, however, has failed to outline a comprehensive jobs plan and is instead focusing on small measures that may stand a chance of getting through both chambers of Congress.

One such item is patent reform. The Senate passed a patent reform bill, The Patent Reform Act of 2011 (S.23) earlier in the year, and the House passed its version, the America Invents Act in late June. The House and Senate now need to merge the bills into one bill that will be voted on again by both chambers of Congress. The Patent Reform Act of 2011 modifies the patent approval process by replacing the current first-to-invent system with a first-to-file system. [16]

Having a patent helps businesses and innovators secure funding for new projects. The theory is that if patents can be obtained more easily, more money will be invested in new ideas, therefore creating jobs. Like all plans, patent reform has its detractors. Critics argue that the bill will make it easier for larger entities with greater resources to infringe on the ideas of small innovators. The changes could encourage foreign companies to challenge U.S. patents, potentially taking investment and jobs overseas. One lawmaker, U.S. Rep. Don Manzullo (R-Ill), goes so far as to say the America Invents Act is probably unconstitutional. [17]

In his Monday press conference, the president also urged Congress to act on trade agreements. According to supporters, free trade agreements promote an increase in U.S. exports, creating jobs to fill increased production needs. [18] Three trade agreements are pending in the House and Senate, with South Korea, Columbia and Panama. A sticking point in both chambers is disagreement over the Trade Adjustment Assistance program. The TAA program provides job training and health care aid to workers who lose their jobs because of trade agreements. Republicans would like to hold a separate vote on the TAA program while Democrats would prefer the program be included in trade agreement legislation.

Critics of trade agreements argue that such agreements may actually result in a net job loss. [19] While an increase in exports may create jobs in the US, an increase in the trade deficit with free trade partners could end up doing more harm than good. The positive effect of increased exports could be diminished by simultaneous increases in imports.

Despite wide gaps in political philosophy, lawmakers and lobbying groups on both sides agree that boosting employment will help address long-term deficit problems. A lower unemployment rate means more tax revenues and falling deficits. The ideologically opposed U.S. Chamber of Commerce and ALF-CIO held dueling press events on Monday encouraging Congress and the president to raise the debt ceiling and focus on jobs. Although they do not agree on much, both groups are concerned about the bleak jobs picture, and both even agreed that new infrastructure is a good way to add to payrolls. [20]

Poll after poll shows that Americans are tired of dealing with economic uncertainty. [21] Lawmakers have proven they can effectively target that frustration to vilify political rivals. For the 112th Congress, passing laws that address the challenges Americans face has proven more difficult.

Sources

1. http://www.bloomberg.com/news/2011-07-08/u-s-employment-situation-report-for-june-text-.html

2. http://www.kansascity.com/2011/06/30/2984665/unemployment-benefit-applications.html

3. http://www.cbsnews.com/htdocs/pdf/Jan11_Econ.pdf

4. http://www.pollingreport.com/prioriti.htm

5. http://thomas.loc.gov/home/LegislativeData.php?n=PublicLaws

6. Id.

7. Id.

8. http://www.acq.osd.mil/osbp/sbir/

9. http://www.opencongress.org/bill/112-h2/show

10. http://www.opencongress.org/bill/112-h3/show

11. http://www.opencongress.org/bill/112-h910/show

12. http://www.opencongress.org/bill/112-h2368/show

13. http://www.govtrack.us/congress/bill.xpd?bill=h112-870

14. http://www.govtrack.us/congress/bill.xpd?bill=s112-936

15. http://latimesblogs.latimes.com/washington/2011/07/obama-news-conference-text-deficit-talks-with-republicans.html

16. http://www.govtrack.us/congress/bill.xpd?bill=s112-23&tab=summary

17. http://www.sfexaminer.com/opinion/op-eds/2011/07/proposed-patent-reform-threatens-us-jobs

18. http://latimesblogs.latimes.com/washington/2011/07/obama-news-conference-text-deficit-talks-with-republicans.html

19. http://www.sfgate.com/cgi-bin/blogs/opinionshop/detail?entry_id=84296

20. http://www.npr.org/2011/07/11/137773355/unions-business-owners-face-off-in-jobs-debate

21. http://www.pollingreport.com/prioriti.htm

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The Supreme Court issued an opinion on Monday barring a group of investors from proceeding with a lawsuit against Janus Capital Group for allegedly making misleading statements in Janus mutual fund prospectuses.

The Justices' Conference Room, where the Justices meet in private to discuss cases. Photograh by Steve Petteway

At issue was whether Janus Capital Management (JCM), in its role as adviser to the Janus Investment Fund, could be held primarily liable for false or misleading statements made in the fund’s prospectus. In its appeal, Janus argued that because the mutual funds were a separate legal entity, owned by investors, neither the adviser nor its subsidiaries could be held liable in a private securities fraud action. The Supreme Court agreed.

In the decision, the Justices addressed the question of how to assign liability to legally independent companies that nonetheless conduct business as a seemingly singular entity with mutual actors and interests.

In 2003, the New York State Attorney General announced that an ongoing investigation had uncovered evidence of secret deals between JCM and several hedge finds. According to the discreet arrangements, the hedge funds were allowed to engage in market-timing trades using assets from Janus Investment Funds. [1] While a few large investors were allowed to privately make risky day trades, the Janus funds were advertised publicly as safe for long-term investors. The prospectus indicated that market-timing was discouraged and that steps were taken to curb the practice.

As a result of the attorney general’s complaint against JCM, investors left en masse, quickly removing $14 billion from the funds. Reacting to the rapid loss of capital, shares of Janus Capital Group, Inc. (JCG), owner of JCM, suffered a 12.7 percent loss between September 2 and September 4 of 2003. [2]

Investors engaged in market-timing take advantage of differences in the opening and closing times of foreign markets to make short-term purchases or sales of foreign securities. Since markets on the other side of the world close before markets in New York, investors can make speculative trades based on news that is released after the foreign markets have closed. Janus’s favored investors could, for example, buy a foreign security at an artificially low price with the knowledge that the security was likely to open higher due to post-closing developments. [3] This was done without the knowledge and at the expense of the long-term investors.

Craig Wiggins filed the original complaint against JCG in a Colorado district court in November of 2003. In 2004, the case was transferred to the District of Maryland so that it could be integrated with other similar actions. The district court appointed First Derivative Traders as the lead plaintiff. Shareholders of JCG, led by First Derivative, added JCM to the class action suit against JCG, (collectively Janus), alleging both had violated federal securities laws by misleading long-term investors. [4]

First Derivative’s amended complaint observed that JCG used JCM, a wholly owned subsidiary, as its primary operating company. The boards of both JCG and JCM have common members, and JCG derives the majority of its revenue through JCM. The complaint charged that as an investment adviser, JCM was “responsible for the day-to-day management of [the] investment portfolio and other business affairs of the funds.” [5] Furthermore, the prospectuses were published publicly on a joint Janus funds-JCG-JCM website.

Janus, First Derivative asserted, violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission. Section 10(b) and Rule 10b-5 in prohibit fraud in connection with the purchase or sale of any security. Companies that perpetrate fraud or deception can be held privately civilly liable. Rule 10b-5 makes it “unlawful for any person, directly or indirectly” [6] to manipulate or mislead investors in the sale or purchase of a security.

The district court dismissed the case, saying that the shareholders had failed to meet the requirements of a claim under Section 10(b) because the complaint, “contain[ed] no allegations that JCG actually made or prepared the prospectuses.” [7]

The Fourth Circuit reversed upon appeal, saying both JCG and JCM had “helped” draft the incorrect documents. The court stated that Janus, “by participating in the writing and dissemination of the prospectuses, made the misleading statements contained in the documents.” [8] Because of the close relationship between the Janus companies, investors could reasonably assume Janus had directed or at least approved of the false claims.

In accepting the case, the Supreme Court addressed two questions: whether an adviser can be held legally responsible for participating in false statements made by another company and whether an adviser can be held liable in securities fraud actions for statements it did not make directly.

The Supreme Court addressed the issue of indirect liability for aiding and abetting deceptive practices in the 1994 case Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A. The case involved manipulative practices that ultimately led to a bond default. First Interstate Bank and other bondholders sued several entities, including Central Bank, who they claimed was “secondarily liable” for adding and abetting in the fraud. [9]

The Court found that Section 10(b) and Rule 10b-5 do not allow a private plaintiff to bring an aiding and abetting suit. The case marked a turning point in the interpretation of securities fraud rules. Prior to the ruling, secondary actors like trustees, attorneys, and banks were often found guilty of misconduct under Rule 10b-5. [10]

In its brief to the Court, Janus argued that according to Central Bank, no aiding and abetting liability exists in private 10(b) claims. Janus, as an adviser and service provider, merely assisted another company and could not be held legally responsible for statements made by that company. Janus also claimed that reinterpreting the aiding and abetting standard would create an overly litigious climate in which investors would rush to sue other service providers. [11]

First Derivative countered that should the Court adopt Janus’s position, it “would provide a roadmap for unscrupulous companies to commit securities fraud.” [12] A firm would simply have to create a shell company that could be used to distribute misleading or manipulative information, insulating itself from charges of fraud.

During oral arguments, much of the questioning centered on the interpretation of the word “make.” Justice Sotomayor seemed skeptical of Janus’s claim that they could not be held liable for information they wrote simply because the false statements were attributed to the mutual funds. During questioning, Sotomayor asked Mark Perry, attorney for Janus, “Do you mean to tell me that puppets become a legal defense for someone who intentionally manipulates the market information?” [13]

Justices Kennedy and Sotomayor also questioned Perry about who controlled the day-to-day activities of the mutual funds. Perry argued that control was irrelevant. The fact that the funds were a separate legal entity automatically precluded JCG and JCM from any civil liability. [14] To make and to cause to be made, Perry argued, are two legally distinct actions. Janus simply could not make a statement that was attributed to an independently governed company.

David Frederick, arguing for First Derivative, attempted to narrow the focus of the case from all service providers to the specific actions of JCM. At the same time, Frederick argued for a broader interpretation of the word make. In response to questions from Justice Scalia, Frederick said, “We address the definition of ‘make’ under the SEC’s interpretation, which is entitled to deference, as being to create or to compose or to accept as one’s own.” [15]

Assistant to the Solicitor General Curtis Gannon, representing the United States, also argued on behalf of First Derivative. Gannon stated that to make a statement and to create a statement are the same thing. [16] In an amicus brief, the U.S. argued that, “the Court can resolve this case by holding that a defendant ‘makes’ a false statement actionable under § 10(b) and Rule 10b-5 when the defendant creates or causes a misstatement to exist, falsely describes its own conduct, and disseminates that statement.” [17] Since Janus, as a manager, developed the language for the mutual fund prospectuses, they could be said to have created the false statements.

The 5-4 decision was split along ideological lines, with Justice Thomas issuing the opinion and Justices Kagan, Breyer, Sotomayor and Ginsburg dissenting. The Court said that Janus could not be held liable since they did not actually make the false statements. In the opinion, Thomas wrote, “One who prepares or publishes a statement on behalf of another is not its maker. And in the ordinary case, attribution within a statement or implicit from surrounding circumstances is strong evidence that a statement was made by – and only by – the party to whom it is attributed.” [18]

Chicago-Kent College of Law associate professor William Birdthistle, who wrote an amicus brief in support of First Derivative, called the ruling simplistic. Birdthistle said, “What this ruling says is that as long as there are separate legal entities, even if management totally dominates all aspects, there’s no liability.” [19]

The decision is regarded as important because it further defines the limitations of private liability under Rule 10b-5. More mutual fund companies may choose to adopt a split management structure in order to shield owners and subsidiaries from liability. According to Robert Skinner, a partner at Ropes & Gray LLP, “This is a very big decision for the industry. With this decision, the Supreme Court is saying that just being significantly involved in making prospectus statements isn’t enough.” [20]

The case is Janus Capital Group, Inc. v. First Derivative Traders No. 09-525.

Sources

1. http://www.ag.ny.gov/media_center/2003/sep/sep03a_03.html

2. http://topics.law.cornell.edu/supct/cert/09-525

3. http://www.usatoday.com/money/perfi/funds/2004-04-27-janus-settlement_x.htm

4. Fourth Circuit Opinion, available online at: http://pacer.ca4.uscourts.gov/opinion.pdf/071607.P.pdf

5. http://www.theracetothebottom.org/securities-issues/will-bad-funds-make-good-law-janus-v-first-derivative-trader.html

6. http://www.seclaw.com/seclaw.htm

7. Fourth Circuit Opinion, available online at: http://pacer.ca4.uscourts.gov/opinion.pdf/071607.P.pdf

8. Id.

9. Opinion, Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A., et al. (1994), available online at http://supreme.justia.com/us/511/164/case.html

10. http://en.wikipedia.org/wiki/Central_Bank_of_Denver_v._First_Interstate_Bank_of_Denver

11. Brief for Petitioner Janus Capital Group, available online at http://www.americanbar.org/content/dam/aba/publishing/preview/publiced_preview_briefs_pdfs_09_10_09_525_Petitioner.authcheckdam.pdf

12. Brief for Respondent First Derivative Traders, available online at http://www.abanet.org/publiced/preview/briefs/pdfs/09-10/09-525_Respondent.pdf

13. Janus Capital Group v. First Derivative Traders – Oral Argument of Mark A. Perry, available online at http://www.oyez.org/cases/2010-2019/2010/2010_09_525/argument

14. Id.

15. Janus Capital Group v. First Derivative Traders – Oral Argument of David C. Frederick, available online at http://www.oyez.org/cases/2010-2019/2010/2010_09_525/argument

16. http://www.scotusblog.com/?p=110379

17. Brief for the United States of America in Support of Respondent, available online at http://www.abanet.org/publiced/preview/briefs/pdfs/09-10/09-525_RespondentAmCuUSA.pdf

18. Janus Capital Group, Inc., et al. v. First Derivative Traders (564 U. S. ____ (2011), available online at http://www.supremecourt.gov/opinions/10pdf/09-525.pdf

19. http://www.reuters.com/article/2011/06/13/us-janus-lawsuit-court-idUSTRE75C3CC20110613

20. http://www.investmentnews.com/article/20110613/FREE/110619988

The SEOLawFirm.com Newsroom extends editorial freedom to their staff writers thus the views expressed in this column may not reflect the views of SEOLawFirm.com, Adviatech Corp., or any of its holdings, affiliates, or advertisers.

Information gained from a Freedom of Information Act request cannot be used to pursue a claim under the federal False Claims Act, according to the Supreme Court.

In a 5-3 vote on Monday, the court narrowed the scope of the False Claims Act, a potential setback for whistleblowers attempting to prove fraud. The ruling reversed a 2010 decision by the 2nd U.S. Circuit Court of Appeals.

The False Claims Act outlaws fraud against the federal government. The act contains a qui tam provision that permits private individuals with knowledge of fraud to sue on behalf of the federal government. Individuals who sue are entitled to recover a percentage, up to 30 percent, of any damages recovered in a successful FCA claim. [1]

Daniel Kirk worked for Schindler Elevator Corp. until 2003. After leaving the company, Kirk filed a qui tam suit under the FCA alleging that the company had failed to file mandatory reports required under the Vietnam Era Veterans Readjustments Assistance Act. VEVRAA requires that companies contracting with the federal government “take affirmative action to employ and advance” Vietnam veterans, invite veterans to identify themselves to their employer, and file yearly reports about the number of Vietnam veterans employed at the company. [2]

Kirk claimed that he was never asked to identify himself as a veteran during his time at the company and that he knew of several other employees, also veterans, who had not been asked. Kirk claimed his suspicions that Schindler was non-compliant were verified by FOIA requests made by his wife. Kirk, using the FCA, accused Schindler of failing to file reports between 1998 and 2003 and of filing false reports in 2004, 2005 and 2006.

The False Claims Act is a civil war era law that was originally intended to address rampant fraud against the Union Army, such as selling faulty ammunition or inedible food rations. [3] The law has been twice amended, most recently in 1986, in an attempt to strike a balance between frivolous lawsuits and the need to pursue fraudulent activity that ultimately costs taxpayers billions of dollars a year. According to Department of Justice statistics, approximately 60 percent of all damages recovered by the government over the last 20 years are the result of private actions under the qui tam provision of the FCA. [4]

Originally, the FCA was overbroad, allowing a false claim based on any available information. In an attempt to prevent an influx of parasitic cases in which plaintiffs sue based on information the government already knows, Congress amended the act to include a public disclosure bar. According to the FCA, cases are excluded that are “publicly disclosed … in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.” [5]

Arguments from both Kirk and Schindler hinge on the interpretation of the term “report” as used in the FCA. The word may seem simple, but federal courts have been split on its precise meaning in the context of a qui tam suit.

When Schindler filed to have the case dismissed in district court, he argued two main points. First, that the documents provided by a FOIA request were a public disclosure, and second, that they qualified as a report. The district court agreed, finding the results of a FOIA request do trigger the public disclosure bar. The court looked to the dictionary definition of report and said any documents provided by the government clearly fit into that definition. [6]

The Second Circuit Court reversed upon appeal, relying heavily on a Ninth Circuit decision that argued for a more narrow interpretation of report under the FCA. According to the federal court, the whole of the language must be taken into account; the word report cannot be defined independently. The decision claims that report, when taken in context, means a “work product that represents governmental analysis or leg-work rather than the mechanistic production of documents that follows upon a FOIA request.” [7] Whether a FOIA request qualifies as a report, the court said, depends on the type of documents requested.

In this case, one FOIA request yielded no documents at all. The request proved the lack of compliance through the non-existence of several items.

In arguments before the Supreme Court, Steven Alan Reiss, representing Schindler, dismissed the Ninth Circuit’s reasoning, claiming that the district court had defined report correctly in its original ruling. Reiss claimed that any FOIA response constituted a report even if it revealed privately prepared records or failed to produce any documents at all. [8]

Jonathan A. Willens, on behalf of Kirk and Melissa Arbus Sherry, representing the United States in support of Kirk, defended a narrower interpretation. They argued that the context of a FOIA response was critical in determining whether or not it constituted a report, and that a request that produced no documents certainly did not qualify. [9]

According to Kirk, adding a FOIA response to the list of items that trigger the public disclosure bar would have a chilling effect on future fraud suits, while the aim of the original act was to encourage whistleblower claims. Kirk’s respondent’s brief maintained that Congress’ intent was to encourage whistleblower suits “based not only on evidence unavailable to the government, but also on records gathering dust in government files.” [10]

Justice Clarence Thomas wrote the decision, with Chief Justice John Roberts and justices Samuel Alito, Anthony Kennedy and Antonin Scalia concurring.

Thomas dismissed the idea that excluding all FOIA requests would lead to “unusual consequences” such as companies preemptively making requests in an effort to stop a whistleblower lawsuit. [11] Thomas said arguments that proving fraud would become more difficult were speculative and that the court was unconcerned with such consequences.

The court was also unimpressed with Kirk’s claim against Schindler. Thomas wrote, “The sort of case that Kirk has brought seems to us a classic example of the ‘opportunistic’ litigation that the public disclosure bar is designed to discourage.” [12]

Justice Ruth Bader Ginsburg wrote the dissent with justices Stephen Breyer and Sonia Sotomayor joining. Justice Elena Kagen did not participate in the case.

In her dissent, Justice Ginsburg said the court had misinterpreted the, “text, context, purpose, and history” of the public disclosure bar. Ginsburg said that picking the term report out of context and simply giving it a dictionary definition fails to stand up to the intent of the FCA. The decision, wrote Ginsburg, “weakens the force of the FCA as a weapon against fraud on the part of Government contractors.” She also urged Congress to reconsider the issue in light of the court’s opinion. [13]

Analysis of the case by Cornell Law School concluded that a decision in favor of Schindler would limit the number of whistleblower cases. [14] In the wake of the decision, Adina Rosenbaum, an attorney for Public Citizen, a group who filed an amicus brief in support of Kirk, said the court has put up “an additional barrier to people who uncover fraud against the government. It sometimes takes the knowledge of a person like Mr. Kirk to find the value in documents that the government possesses.” [15]

The case is Schindler Elevator Corp v. United States ex rel. Kirk, U.S. Supreme Court, No. 10-188.

Sources

1. 31 U.S.C § 3730, Civil actions for false claims. Online at: http://www.law.cornell.edu/uscode/31/usc_sec_31_00003730—-000-.html

2. 38 U.S.C. § 4212, Veterans’ employment emphasis under Federal contracts. Online at: http://www.law.cornell.edu/uscode/html/uscode38/usc_sec_38_00004212—-000-.html

3. http://www.okbar.org/obj/articles_05/040905lahman.htm

4. DOJ, Fraud Statistics – Overview (“DOJ Statistics”) (2006), online at http://www.taf.org/stats-fy2006.pdf

5. 31 U.S.C. § 3729-3733, online at http://www.taf.org/federalfca.htm

6. Brief for Petitioner Schindler Elevator Corporation, online at: http://www.abanet.org/publiced/preview/briefs/pdfs/09-10/10-188_Petitioner.pdf

7. http://scholar.google.com/scholar_case?case=11396284313389287867&hl=en&as_sdt=2&as_vis=1&oi=scholarr

8. http://www.scotusblog.com/?p=115061

9. Id.

10. Brief for Respondent United States of America Ex Rel. Daniel Kirk, online at: http://www.abanet.org/publiced/preview/briefs/pdfs/2010-2011/10-188_Respondent.pdf

11. 563 U. S.10-188 (2011), online at : http://www.supremecourt.gov/opinions/10pdf/09-804.pdf

12. 563 U. S.10-188 (2011)

13. 563 U. S.10-188 (2011), Justice Ruth Bader Ginsburg dissenting

14. http://topics.law.cornell.edu/supct/cert/10-188

15. http://newsandinsight.thomsonreuters.com/Legal/News/2011/05_-_May/Supreme_court_narrows_scope_of_whistle-blower_suits/

The SEOLawFirm.com Newsroom extends editorial freedom to their staff writers thus the views expressed in this column may not reflect the views of SEOLawFirm.com, Adviatech Corp., or any of its holdings, affiliates, or advertisers.

The Supreme Court will hear a case next week that will determine whether federal judges have a legitimate role in regulating greenhouse gas emissions. The case could open the door for the federal judiciary to begin shaping climate change policy in the event of continued inaction by the president or Congress.

Placing limits on greenhouse gas emissions is something typically left to congressional lawmakers or the president. Crafting policy in response to climate change is a complex process in which courts tend to avoid involvement. In the face of a reluctance to act on the federal level, states and local governments are increasingly using litigation in an attempt to force polluters to change their policies. [1]

One such case has finally made it to the Supreme Court, which is now being asked whether suit should be allowed to proceed. The case originated in 2004, when eight states and three private land trusts, led by the State of Connecticut, sued several utility companies in an attempt to force them to cap emissions and limit their contributions to climate change. [2]

The coalition claims that green house gas emissions produced by the fossil fuel-powered utilities are a “public nuisance.” Public nuisance claims rely on a centuries old concept derived from English common law. A public nuisance is something that unreasonably interferes with the “health, safety or morals” of a community. [3] Greenhouse gases, the coalition argues, constitute a public nuisance since they cause demonstrable harm to both people and property. The suit asks that emissions be subject to judicial scrutiny and regulation and requests a judicial order capping greenhouse gas emissions along with rules setting a timetable for future emission cuts. [4]

In 2005, a judge dismissed the case, saying that it involved a political issue that should not be left to courts to decide. The ruling was uncontroversial. Other climate change nuisance cases have also been dismissed in recent years. In Comer v. Murphy Oil, Gulf Coast residents sued several oil refineries, claiming emissions from the refineries had contributed to global warming and increased the strength of and damage done by Hurricane Katrina. [5] In the case Native Village of Kivalina v. Exxon, Residents of an Alaskan barrier island sued over the damage global warming induced rising water levels were causing to their homes and community. [6] Both cases were also dismissed at the district level.

The U.S. Court of Appeals for the 2nd Circuit reversed the dismissal in 2009, to the surprise of the legal community and many environmental groups. [7] The appeals court found that judges could resolve disputes over harm caused by climate. It also found that the defendants had standing; both states and some private entities have the legal right to pursue environmental public nuisance claims. Significantly, the appeals court also addressed the issue of the Clean Air Act and EPA regulations, finding that Congress did not invalidate common law nuisance claims by passing the Clean Air Act. At the time, the EPA had not yet begun to regulate greenhouse gases. The judges stated that even should the EPA being regulating greenhouse gases, only rules applied to the specific types of stationary power plants involved in the suit would render the case moot. [8]

The utilities appealed to the Supreme Court to reverse the appellate court ruling. In taking the case, the Court will be considering three questions: whether the parties have standing to sue, whether the federal common law public nuisance tort can address the issue of capping greenhouse gas emissions, and whether the questions raised by the case can be resolved by, “judicially discoverable and manageable standards.” [9]

Utility companies, some states, business groups and the Obama administration all claim that the courts have no authority to regulate polluters. In its brief in support of the petitioners, the U.S. Chamber of Commerce claims that the 2nd District Court overstepped its authority, saying, “If the decision of the Second Circuit is affirmed, this suit – and the countless others that inevitably follow – will destabilize our economy, undermine our democratic process, and impact sensitive foreign policy considerations.” [10]

The Obama administration issued a brief arguing that only the legislative and executive branches should be responsible for crafting carbon emissions rules. The brief also points to new EPA regulations as cause to render the suit unnecessary. [11]

Environmental groups, attorneys and other states have issued briefs in support of the respondents. A brief submitted by the states of North Carolina, Illinois, Maryland, and Massachusetts argues that environmental nuisance claims have a long history in the United States. The brief also states that congress and the EPA may not always act in the best interest of the states, saying, “too many times States have seen EPA fail to meet congressional deadlines to promulgate or update pollution control standards.” The states continue, claiming, “Even if resort to public nuisance actions may only be sporadic, it is nonetheless vital when it is needed.” [12]

Regulation of greenhouse gas emissions is a contentious topic among lawmakers; despite the fact that the scientific community has come to a general consensus that greenhouse gases are a “primary driver” of climate change. [13] In 2007, the Supreme Court found that carbon emissions are subject to regulation under the Clean Air Act and ordered the Environmental Protection Agency to determine whether carbon, the most common greenhouse gas, endangers the public health and welfare. [14] In 2009, the House passed the American Clean Energy And Security Act, which would have establish a limited cap and trade system for emissions. In 2010, under current EPA administrator Lisa Jackson, the agency issued new rules for greenhouse gases applying to light vehicles and large power plants, to be phased in beginning early this year. [15]

While lawmakers have been flirting with the idea of dealing with greenhouse gas emissions and climate change, little has been done on the issue in terms of concrete policy. Conservatives, under pressure from business groups and some hard right climate change deniers, are running away from the idea of cap and trade and regulation of carbon emissions as quickly as they can. On again off again presidential candidate Newt Gingrich claimed in the past that a cap and trade system was, “a package there that’s very, very good,” and something he would, “strongly support.” [16] Realizing that he might be caught openly agreeing with Democrats, Gingrich backtracked, calling President Obama’s initial cap and trade proposal “absolutely destructive.” [17] Former governors and potential 2012 Republican presidential contenders Tim Pawlenty and Sarah Palin have made similar flip flops, with Pawlenty going so far as to apologize for his former support of greenhouse gas regulation. [18]

Lawmakers from both parties are attempting to modify or overturn the new EPA rules. During recent budget debates, House Republicans managed to pass a rider stripping the EPA of its authority to regulate greenhouse gases. Senator Jay Rockefeller (D-W.Va) has introduced the EPA Stationary Source Regulations Delay Act, which would suspend implementation of the new rules on power plants for two years.

There is a risk that crafting environmental regulations on a case-by-case basis will lead to a somewhat chaotic web of overlapping or even conflicting regulations. And if the Court decides that the suit can proceed, federal courts will almost certainly see an increase in litigation attempting to control polluters and craft environmental regulations. Skepticism over how congress and the administration will ultimately act to control climate change is a driving force behind much public nuisance litigation, and environmental groups see the courts as an alternative route to implementing real policy changes. Litigation could be used as a bargaining chip for environmental groups and states wishing to set tougher standards than the EPA. [19]

Justice Sonya Sotomayor has recused herself because she was involved in the case at the appellate level. Arguments are scheduled for April 19. The case is American Electric Power Co., Inc. v. Connecticut.

SOURCES

1. http://www.pbs.org/wnet/need-to-know/environment/attractive-nuisance-can-federal-courts-help-tackle-global-warming/88/
2. http://www.csmonitor.com/USA/Justice/2010/1206/Supreme-Court-takes-global-warming-case-that-targets-power-companies

3. http://www.nolo.com/dictionary/public-nuisance-term.html

4. Brief for Respondents Connecticut, New York, California, Iowa, Rhode Island, Vermont, and The City of New York, http://www.americanbar.org/content/dam/aba/publishing/previewbriefs/Other_Brief_Updates/10-174_respondent_connecticut.pdf

5. http://www.pewclimate.org/judicial-analysis/Comer-v-MurphyOilUSA

6. http://en.wikipedia.org/wiki/Kivalina_v._ExxonMobil_Corporation

7. http://lawprofessors.typepad.com/environmental_law/2009/09/conn-v-amer-electric-p.html

8. id.

9. http://www.scotusblog.com/case-files/cases/american-electric-power-co-inc-v-connecticut-2/

10. Brief for the Chamber of Commerce of the United States of America in Support of Petitioner, http://www.americanbar.org/content/dam/aba/publishing/previewbriefs/10_174_brief_updates/10-174_PetitionerAmCuChamberofCommerce.pdf

11. http://online.wsj.com/article/SB10001424052748704156304576003323338816658.htm

12. Brief for the States of North Carolina, Illinois, Maryland, and Massachusetts in Support of Respondents, http://www.americanbar.org/content/dam/aba/publishing/previewbriefs/10_174_brief_updates/10-174_respondentamc4states.authcheckdam.pdf

13. http://www.ucsusa.org/ssi/climate-change/scientific-consensus-on.html

14. http://www.epa.gov/climatechange/endangerment.html

15. http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/ea1bf25579e541b1852577220055c20c!OpenDocument

16. http://www.pbs.org/wgbh/pages/frontline/hotpolitics/interviews/gingrich.html

17. http://www.time.com/time/politics/article/0,8599,1884571,00.html

18. http://swampland.blogs.time.com/2011/03/24/on-global-warming-no-clear-skies-for-most-2012-gop-contenders/

19. http://www.huntonbusinesstort.com/2010/05/articles/environmental-contamination-li/emergence-of-public-nuisance-theories-in-environmental-tort-cases/

The SEOLawFirm.com Newsroom extends editorial freedom to their staff writers thus the views expressed in this column may not reflect the views of SEOLawFirm.com, Adviatech Corp., or any of its holdings, affiliates, or advertisers.

President Barack Obama pressed for action on education Monday, directing Congress to complete an overhaul of No Child Left Behind by the start of the next school year. The request comes in the middle of an ongoing debate about what to cut and what to keep in the current federal budget, a signal that the president may be trying to regain control of a narrative that is increasingly focused on cuts over spending priorities.

The proposed overhaul of No Child Left Behind by President Obama could help preserve school funding and eliminate parts of the legislation that cause thriving school districts to receive failing status.

Obama stated that the intent of NCLB, which was passed with bipartisan support and signed into law by President Bush in 2002, remains laudable. He acknowledged the law has proven to be a valuable tool in highlighting previously underreported achievement gaps. However, he said, policies over the last 9 years have failed to achieve the aims of NCLB. The current methodology for implementation, according to the president, is flawed. [2]

In outlining his case for national education overhauls, Obama added his voice to the already heated budget debate. He recognized in his remarks that education reform will cost money. As House Republicans continue to threaten a government shutdown over proposed budget cuts, the president argued that investment education is too important to ignore. “We can’t cut the things that will make America more competitive,” he said. “A budget that sacrifices our commitment to education would be a budget that’s sacrificing our country’s future. And I will not let it happen.” [3]

It is a point of contention whether increasing educational opportunities will spur growth. The argument seems intuitive: a well-educated workforce will spur greater innovation and, ultimately, economic growth. Some recent studies have shown that is not always the case in the short term. [4] A comprehensive strategy to tackle job creation must include more than just an increase in spending on education.

While it may be true that simply throwing money at education will not automatically create jobs, a positive relationship between investment in education and future prosperity has been shown to exist. Countries that have invested most heavily in education since 1900 lead the world in per capita GDP. [5] This is also true for the health of a democracy. These same countries tend to have more stable democracies and less authoritarian rule over the long haul. [6]

The 2002 incarnation of the Elementary and Secondary Education Act represents the most comprehensive set of changes to the law since in was originally passed in 1965. It places emphasis on reading and math skills and requires that students in grades 3 through 8 and high school take standardized tests to determine whether schools are meeting their Annual Yearly Progress standards. Schools that do not meet AYP standards are labeled as needing improvement, or in more common parlance, failing. The law also requires that all schools be 100 percent proficient in reading and math by 2014. [7]

According to Education Secretary Arne Duncan, more schools fail to meet progress standards every year. Secretary Duncan told the House Committee on Education and the Workforce last week that up to 82 percent of schools could fail to meet standards this year, up from 37 percent last year. “The law has created dozens of ways for schools to fail and very few ways to help them succeed,” Duncan said. “We should get out of the business of labeling schools as failures and create a new law that is fair and flexible and focused on the schools and students most at risk.” [8]

Obama’s remarks on Monday echoed the concerns of Secretary Duncan and of critics who claim current measures of progress are too inflexible. Scoring school performance on a pass/fail basis, he said, misses many ways in which schools may actually be improving. Rather than focusing ridged reading and math standards, the president requested a new emphasis be placed graduating students who are prepared for college and careers. [9]

According to teachers and administrators, schools have for years been struggling to prove they are not failing even while they show considerable improvement. In 2005, a Hawthorne, Calif. middle school labeled as needing improvement worked tirelessly to meet its AYP goals. The school, Bud Carson Middle School, made exceptional progress, meeting goals in 20 of 21 areas, but still received a failing grade. [10]

Schools labeled needing improvement two years in a row are required to provide students with the means to attend other, better performing schools. According to California superintendent Jack O’Connell, this punishes schools unfairly and takes much needed funds away from actual education. “We have to take away resources that we can document are improving achievement and put them into transportation to bus kids to other schools,” he said. [11]

While research shows that NCLB has forced many schools within the United States to turn around, results in comparison to other countries are more mixed. Since its implementation, American students have not shown overall improvement in comparison to children around the world. [12]

Part of this phenomenon could be the result of a lack of common education standards. Each state is responsible for setting its own definition of passing and failing, and states have proven more than willing to lower standards in order to boost school performance. In 2007, 85 percent of students in Georgia tested proficient in reading according to state requirements. But only 28 percent tested proficient on the U.S. Department of Education’s National Assessment of Educational Progress exam. [13]

There is a strong tradition of state and local control of schools in America, resulting in a hodgepodge of state guidelines. The National Governors Association and the Council of Chief State School Officers drafted a new set of core reading and math standards last year to address this issue. [14] Many states have already indicated a willingness to adopt the benchmarks, but their implementation could be threatened by cuts in federal funding.

Education has been a top priority for the Obama Administration, although it has not provided splashy headlines like health insurance reform and a possible government shutdown. The recent push to focus media attention on education is another in a series of efforts to address reforms. The president also laid out his strategy for overhauling NCLB in his 2011 budget proposal, minus the timeline he requested on Monday.

Proposed changes to the law include removing the 2014 deadline for math and reading proficiency, broadening academic areas of testing for student progress, implementing a tiered system of evaluating schools and expanding the Race to the Top grant program. The target of assessment will shift from “grade level” testing to new criterion of “college and career readiness.” The timeline would change, with the goal of meeting new readiness standards by 2020. The president’s proposal also calls for more rewards and incentives to be offered to schools showing progress and the development of varying means for helping schools on different performance tiers. [15]

Implementing a growth model, where schools are judged on student advancement, is key to Obama’s plan. Since schools will no longer need to exert all their energy on getting enough children to test at grade level, the plan will offer more flexibility for many schools to try a variety of approaches for improving growth. The lowest performing schools would have tighter federal mandates for improvement, but no mandate to provide options for student transfers.

Getting an overhaul of No Child Left Behind passed by the fall looks to be a difficult process. Congress appears willing only to pass temporary budget measures while bickering over relatively small cuts to current fiscal year expenditures. The current two-week temporary funding measure expires on Friday. Congress managed to pass another three-week extension on Tuesday, but questions remain as to when this cycle of budgetary baby steps will end. Republicans seem eager to limit investment in education, with some going so far as to claim any federal involvement in education to be unconstitutional. [16]

Expanding Race to the Top funding is also controversial. Critics of the initiative come from both sides of the aisle, and some in the education field question the program’s effectiveness. Obama is calling for an additional $1.4 billion in funding for the program for the remainder of the fiscal year. Getting that money from a tight-fisted Congress (House Republicans voted last month to end funding for the program) will be a challenge.

According to Jack Jennings, president of the Center on Education Policy, “The reforms may be stillborn because there won’t be the money to put them in place.” [17]

Democrats may be able to fashion a bill that adheres to the president’s requests and timeline. Convincing enough Republicans to join them, given their refusal to compromise on many issues, will be the ultimate deciding factor.

Recommended Reading

Sources

1. http://www.npr.org/2011/03/15/134559942/the-root-reforming-schools-but-missing-goals

2. http://blogs.suntimes.com/sweet/2011/03/obama_on_education_fix_no_chil.html

3. http://www.cbsnews.com/8301-503544_162-20042891-503544.html

4. http://www.theatlantic.com/business/archive/2011/01/would-more-education-reduce-unemployment-and-income-inequality/69632/

5. http://economix.blogs.nytimes.com/2009/10/20/education-last-century-and-economic-growth-today/

6. http://economix.blogs.nytimes.com/2009/11/03/want-a-stronger-democracy-invest-in-education/

7. http://www2.ed.gov/nclb/overview/intro/execsumm.html

8. http://www.washingtonpost.com/wp-dyn/content/article/2011/03/09/AR2011030905748.html

9.http://www.detnews.com/article/20110314/SCHOOLS/103140388/1025/POLITICS03/Obama-urges-fix-to-No-Child-Left-Behind

10. http://www.time.com/time/magazine/article/0,9171,1625192-2,00.html#ixzz1GhbuW3cwman

11. id.

12. http://www.ernweb.com/public/892.cfm

13. http://articles.latimes.com/2010/jan/18/opinion/la-oe-winters18-2010jan18

14. http://www.csmonitor.com/USA/Education/2010/0310/Uniform-academic-standards-for-US-students-draft-released

15. http://www.csmonitor.com/USA/Education/2010/0314/No-Child-Left-Behind-overhaul-five-key-things-that-would-change

16. http://politicalcorrection.org/blog/201001200002

17. http://www.csmonitor.com/USA/Politics/2011/0314/No-Child-Left-Behind-Why-Congress-will-struggle-to-hit-Obama-s-deadline/%28page%29/2

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