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LII Supreme Court Bulletin: Oral Argument Previews

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Prepared by the LIIBULLETIN editorial board

Beard v. Kindler (08-992)

Oral argument: Nov. 2, 2009

Appealed from: United States Court of Appeals for the Third Circuit (Sept. 3, 2008)

HABEAS CORPUS, ADEQUATE STATE GROUNDS DOCTRINE, FUGITIVE, DISCRETIONARY REVIEW

Joseph Kindler was convicted and sentenced to death by a Pennsylvania court for murder. While Kindler’s post-conviction motions were pending, he escaped and remained at large for years. The court then decided on the basis of a discretionally applied fugitive forfeiture rule that Kindler had waived his rights to make these motions when he fled. After Kindler was returned, he moved to reinstate his motions. The Pennsylvania courts denied this motion and Kindler subsequently petitioned the federal court for habeas review, which the district court granted and the circuit court affirmed. In this case the Supreme Court will decide if a federal court may grant a habeas petition when Pennsylvania’s highest court declared that Kindler forfeited his relief claims when he fled. Pennsylvania argues that its fugitive forfeiture rule is an adequate state ground that bars federal review. Kindler, however, claims the discretionally applied fugitive forfeiture rule was not applied with sufficient consistency in Pennsylvania courts to preclude habeas review.

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Hemi Group, LLC v. City of New York (08-969)

Oral argument: Nov. 3, 2009

Appealed from: United States Court of Appeals for the Second Circuit (Sept. 2, 2008)

RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT, RICO, TAXES, STANDING, INJURY

Both the State and the City of New York have enacted laws that require the imposition of taxes on all cigarettes sold or used within their boundaries. The City of New York sued a group of Internet cigarette retailers under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The City of New York claimed that the retailers had violated federal and state laws in selling cigarettes to New York residents without charging a tax on tobacco products, constituting a form of consumer fraud as well as tax evasion. The District Court for the Southern District of New York dismissed the City's claims, holding that the City did not plead that the Internet retailers were an enterprise as defined by RICO. The Court of Appeals for the Second Circuit vacated the judgment of the lower court and held that the State could hold the retailers liable for its loss of tax revenue. The Supreme Court's decision in this case will affect the ability of Internet sites to sell tobacco products at a discounted price, as well as refine the application of RICO in civil suits.

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Jones v. Harris Associates, L.P. (08-586)

Oral argument: Nov. 2, 2009

Appealed from: United States Court of Appeals for the Seventh Circuit (Aug. 8, 2008)

INVESTMENT COMPANY ACT, MUTUAL FUNDS, INVESTMENT ADVISOR FEES

In 2004, Jerry Jones sued Harris Associates, L.P. under § 36(b) of the Investment Company Act for breach of its fiduciary duty with respect to the fees it receives for advising mutual funds of which Jones was a shareholder. Harris Associates created and advised the mutual funds in question. The board of trustees for the mutual funds approved the fees Harris Associates received. Jones’s case was dismissed on summary judgment in the Northern District of Illinois. The district court applied the Second Circuit’s Gartenberg v. Merrill Lynch Asset Management, Inc. standard to analyze the advising fees and found that the fees could have been the product of a normal, arms-length negotiation. The Seventh Circuit affirmed, but rejected the Gartenberg standard, and adopted a more lenient standard that allows court interference in fee arrangements only when there is evidence that the adviser failed to disclose relevant information or misled the board during fee negotiations. The Supreme Court’s decision will define the contours of a mutual fund adviser’s fiduciary duty with regard to compensation.

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NRG Power Marketing v. Maine Pub. Utilities (08-674)

Oral argument: Nov. 3, 2009

Appealed from: United States Court of Appeals, District of Columbia Circuit (Mar. 28, 2008)

FEDERAL ENERGY REGULATORY COMMISSION, FEDERAL POWER ACT, MOBILE-SIERRA DOCTRINE

The Federal Energy Regulatory Commission (“FERC”) declared that future challenges to contract rates relating to New England's energy market will be evaluated under Mobile-Sierra’s public interest standard, which presumes that freely negotiated rates are just and reasonable as long as there is no serious threat to the public interest. Petitioners, NRG Power Marketing, LLC, et al. (“NRG Power”) support FERC’s use of the public interest standard. However, respondents, Maine Public Utilities Commission, et al. (“Maine Public Utilities”) contend that the use of the public interest standard deprives non-contracting third party challengers of their statutory right to evaluation under a more scrutinizing just and reasonable standard. Maine Public Utilities finds the statutory standard preferable because challengers merely have to prove that a rate is unjust and unreasonable to succeed in challenging the contract rate. The D.C. Circuit Court of Appeals agreed with Maine Public Utilities that the just and reasonable standard is the appropriate standard of review when challenges are initiated by non-contracting third parties. The Supreme Court's decision in this case will impact the stability of the electrical energy market, influence future investments in it, and, ultimately, affect New England’s supply of electricity. 

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Pottawattamie County, IA v. McGhee (08–1065)

Oral argument: Nov. 4, 2009

Appealed from: United States Court of Appeals, Eighth Circuit (Nov. 21, 2008)

DUE PROCESS, IMMUNITY, PERJURY, FABRICATED EVIDENCE

In 2005, Curtis W. McGhee and Terry J. Harrington, both convicted of murder in 1978, sued Pottawattamie County, Iowa, and former county attorneys Joseph Hrvol and David Richter under 42 U.S.C. § 1983, alleging, inter alia, that the Pottawattamie prosecutors coerced false testimony from third party witnesses and then introduced that testimony in their murder trials. The prosecutors argued that they were immune from the lawsuit based on the doctrine of absolute immunity, but both the district court and the Eighth Circuit disagreed. The Supreme Court’s decision will reveal the extent to which prosecutors are immune from liability for their pre-trial misconduct. This clarification may affect the way prosecutors try cases, and will, undoubtedly, influence the degree to which defendants can hold their prosecutors accountable for due process violations.

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Schwab v. Reilly (08-538)

Oral argument: Nov. 3, 2009

Appealed from: United States Court of Appeals for the Third Circuit (July 21, 2008)

BANKRUPTCY, CHAPTER 7, SCHEDULE C, EXEMPTIONS, “IN KIND” EXEMPTION

In 2005, Nadejda Reilly filed a Chapter 7 bankruptcy petition. On the petition she listed her business property as an exemption, demonstrating her intent to retain the entire property by declaring the property’s exemption amount to be equal to her estimation of the asset’s value. The bankruptcy trustee assigned to the case, William Schwab, did not object to Reilly’s exemption but later determined the business property had a higher value than Reilly’s estimation and sought to sell the property to recoup the difference. Reilly argued that Schwab’s failure to object within the thirty-day statutory period rendered the property exempt. Schwab countered that Reilly’s exemption was limited to the specific amount claimed and did not serve to fully exempt the property from distribution. Schwab also argued that the objection deadline applied only to the type of property claimed as exempt, not to the value. The United States Court of Appeals, Third Circuit disagreed, holding that Schwab was on notice that Reilly intended to fully exempt the property and failure to object in time rendered the property exempt. The U.S. Supreme Court’s decision will determine whether a debtor in a Chapter 7 proceeding successfully claimed a full exemption in an asset by declaring that the exemption value equals the asset’s value, and whether the thirty-day objection period applies.

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Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Company (08-1008)

Oral argument: Nov. 2, 2009

Appealed from: United States Court of Appeals for the Second Circuit (Nov. 19, 2008)

FEDERAL COURTS, ERIE DOCTRINE, CLASS ACTIONS, CHOICE OF LAW

Shady Grove Orthopedic Associates filed a class action lawsuit in federal court, arguing that Allstate Insurance Company violated New York law in failing to pay interest to policyholders. The district court dismissed the case on the grounds that New York law prevented a class action lawsuit in this context, and the Second Circuit affirmed. This case concerns the application of state law in federal court under the Erie Doctrine, particularly whether New York class action law applies in federal court and whether it conflicts with Rule 23 of the Federal Rules of Civil Procedure. Shady Grove argues that Rule 23 is the comprehensive class action rule for federal courts, and that New York law cannot undermine federal court procedure. Allstate claims that state law applies because plaintiffs would have different rights in state and federal court. The case will address Rule 23 and the ability of states to restrict class action lawsuits.

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Wood v. Allen (08-9156)

Oral argument: Nov. 4, 2009

Appealed from: United States Court of Appeals for the Eleventh Circuit (Sept. 16, 2008)

HABEAS CORPUS, DEATH PENALTY, ANTI-TERRORISM AND EFFECTIVE DEATH PENALTY ACT, AEDPA, SIXTH AMENDMENT, INEFFECTIVE ASSISTANCE OF COUNSEL

In 1994, Petitioner Holly Wood was convicted of capital murder for sneaking into his ex-girlfriend’s bedroom and shooting her in the head with a shotgun. The judge imposed the death penalty, as recommended by the jury. Wood claims that, during sentencing, he did not receive effective assistance of counsel as guaranteed by the Sixth Amendment. He argues that defense counsel failed to further investigate or present evidence of his mental disabilities. According to Wood, the state court’s rejection of this argument was an unreasonable application of federal law. He also argues that the Eleventh Circuit’s standard of review in habeas corpus proceedings abdicates the court’s judicial review function under the Antiterrorism and Effective Death Penalty Act of 1996 (“AEDPA”). The State of Alabama counters that the Eleventh Circuit properly deferred to the reasonable determinations of the state courts as required by the AEDPA. This decision will better define the appropriate level of deference due to state court factual determinations during federal habeas corpus proceedings.

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