U.S.
SUPREME COURT 2009-2010: Link
to the Court's order of business and recent files, in Washington, D.C.
"About
Town's" website notes on previous sessions, cases of major interest, in
reverse chronological order: 2008-2009;
2007-2008; 2006-2007;
2005-2006
Supreme
Court cuts short summer vacation. Justice Sotomayor not available
for mid-relief in AL playoffs, defers to Joba as right-handed relief.
CONTENTS
Upcoming
cases in the next
session according to the New York Times...and according to the
news, generally:
U.S. SUPREME COURT
2009-2010:
Members are, in alphabetical order (age
in
parenthesis*): Linda
Greenhouse on
the Court
Samuel Alito (58)
Stephen Breyer (70)
Ruth Bader Ginsberg (75)
Anthony Kennedy (72)
John Roberts (53)
Antonin Scalia (72)
Sonia Sotomayor (55)
John Paul Stevens (88) - retiring this term.
Clarence Thomas (60)
----------------
And the "10th member" of the Court, in my opinion, the one who has made
things clear for me thru the years, retires.
Now on the faculty at Yale Law School, her post NYTIMES-employment
comment here.
*= age by year of birth, as shown on the U.S. Supreme Court
website.
Court to hear challenge to employer sanctions law
YAHOO
By JACQUES BILLEAUD, Associated Press Writer
28 June 2010
PHOENIX – The U.S. Supreme Court agreed on Monday to hear an appeal
from business and civil rights groups trying to overturn a 2007 Arizona
law that prohibits employers from knowingly hiring illegal immigrants.
The state law was intended to lessen the economic incentive for
immigrants to sneak into the U.S. by holding employers accountable for
hiring them.
The prohibition is separate from a new Arizona immigration law that's
also being challenged in court and requires police to question the
immigration status of people they suspect are in the country illegally.
Supporters say the employer sanctions law was needed because the
federal government hasn't adequately enforced a similar federal law.
Critics say the law is an unconstitutional attempt by the state to
regulate immigration and that cracking down on illegal hires is the
sole responsibility of the federal government.
Julie Pace, a lawyer representing the business groups, said the object
of the legal challenge is to stop states from creating differing
immigration laws that make it cumbersome for businesses that operate in
multiple states.
"This is not a path that is good for the country," Pace said. "We need
uniform guidance for businesses so they can have a legal supply of
labor without having a patchwork of laws across the country."
The state's employer sanctions law has been upheld by a federal
district court and the San Francisco-based 9th U.S. Circuit Court of
Appeals.
Businesses found to have knowingly hired illegal immigrants can have
their business licenses suspended or revoked. The law also requires
employers to verify the work eligibility of new workers through a
federal database.
Authorities across Arizona have examined several dozen complaints of
employer sanctions violations since it went into effect in Jan. 2008.
So far, only two businesses — a west Phoenix sandwich shop and a
Glendale amusement park — have entered settlements in which they admit
violating the law.
Arizona Attorney General Terry Goddard, whose office is defending the
law in court, said in a written statement that he expects the court to
find the law valid and enforceable.
The Obama administration urged the high court to prevent the state from
enforcing the state's employer sanctions law, arguing that federal
immigration law trumps state efforts. The court's next term begins in
October and a decision is expected in the spring.
The case is Chamber of Commerce v. Candelaria, 09-115.
Supreme Court strikes down part of anti-fraud law
YAHOO
28 June 2010
WASHINGTON – The Supreme Court on Monday struck down part of the
anti-fraud law enacted in response to the Enron and other corporate
scandals from the early 2000s, but said its decision has limited
consequences.
The justices voted 5-4 that the Sarbanes-Oxley law enacted in 2002
violates the Constitution's separation of powers mandate. The court
says the president, or other officials appointed by him, must be able
to remove members of a board that was created to tighten oversight of
internal corporate controls and outside auditors.
Congress created the board to replace the accounting industry's own
regulators amid scandals at Enron Corp., WorldCom Inc., Tyco
International Ltd. and other corporations. The board has power to
compel documents and testimony from accounting firms, and the authority
to discipline accountants.
Chief Justice John Roberts, writing for the court, said that the
Sarbanes-Oxley law will remain in effect with one change. The Public
Company Accounting Oversight Board will continue as before, but the
Securities and Exchange Commission now will be able to remove board
members at will.
That change, Roberts said, cures the constitutional problem.
Florida Beach-Access Win a New Twist in Property Battle
TIME MAGAZINE
By ADAM COHEN
Jun 23, 7:30 am ET
When the weather gets hot, ordinary folks go to the beach - and
well-heeled coastal-property owners try to keep them away. Summer is
high season for fights over beach access, and the Supreme Court
ventured into those choppy waters earlier this week with a major ruling
in a Florida beach case. It did the right thing, but the ruling is not
going to stop the fighting.
The case involved a rare situation: newly created beachfront property.
To repair damage done by hurricanes, two Florida cities plan to add
sand to rebuild parts of the shoreline that are badly eroded. Under
state law, the new land would be public property. (Read about why
2010's hurricane season will be an active one.)
Nearby beachfront-property owners might have shown some gratitude,
since the restoration would, theoretically at least, protect them from
the next hurricane. Instead, they sued. If the new land was added,
their property would no longer touch the water - there would be a strip
of land separating their property from the ocean - and it would open
the way for unpropertied hordes to descend with beach towels and start
frolicking. The owners claimed the additions would be a "taking" of
their property, in violation of the Fifth Amendment.
The Supreme Court rejected the suit by an 8-0 vote. There was no
taking, it held, because the owners would still own the same property
they always had and they would still have access to the beach. There is
no right, the court said, to have your property continue to touch the
water. (Outgoing Justice John Paul Stevens, who owns a beachfront condo
in Florida, did not participate.) (See a photo gallery of Supreme Court
Justice John Paul Stevens.)
The decision was a victory for public beach access but a narrow one.
Unlike the Florida case, which had a federal-constitutional issue,
property-rights disputes are generally decided under state law, so
beach battles are being waged state by state. There is a long-standing
recognition in many states that the beaches belong to everyone - and
that everyone should have a right to get to them and enjoy them. In
practice, however, exercising this right is not always easy.
In Hawaii, the state's pristine beaches are a public trust, but
beachgoers complain that access is often restricted by nearby property
owners. There have been fights over gates being put up and, most
recently, strategic planting of vegetation. This month, Governor Linda
Lingle signed a law making it illegal for property owners to plant
vegetation to keep people away from the beach. The state is committed
to keeping clear a "lateral beach transit corridor" - in other words, a
path for the public to get to the beach. (Read Cohen's 1984 piece on
the gritty battle for beach access.)
New Jersey has a tradition of beach access dating back to colonial
times. Its courts have long recognized a "public trust doctrine" under
which the public has a broad right of reasonable access to the sea. It
includes a right to walk along the beach and swim in the water - and,
under some circumstances, to walk over nearby private land to get to
the water.
But the state's beach towns have been resourceful, the Associated Press
recently reported, in finding ways of keeping people away. One town
built a stone seawall to keep the public out. Others rely on a more
time-honored means of exclusion: keeping parking for outsiders
extremely limited.
New Jersey's Department of Environmental Protection this month proposed
scrapping beach-access rules that the coastal towns consider too
onerous like requirements to make parking and restrooms available. In
keeping with the deregulatory emphasis of the state's newly elected
Republican governor Chris Christie, the agency would substitute more
"reasonable" requirements. Many property owners are pleased, but some
beachgoers worry the new rules will make it easier to deny nonresidents
access.
On the West Coast, the California Coastal Commission has for years had
its hands full trying to stop localities along the Pacific from putting
up fences, misleading signs and vegetation to keep people from
accessing the beach. In May, Dana Point, an Orange County coastal city,
sued the commission in a fight over gates that cut off access to the
city's beaches. This month, an environmental group sued Dana Point to
get the gates taken down.
Popular support for the right of beach access seems to be strong. In
Texas last fall, a referendum to put beach-access rights in the state
constitution passed with more than 75% of the vote. But there is one
notable constituency that takes a much less favorable view of the
issue: coastal-property owners. And that virtually guarantees that the
fights over access will be around for many summers to come.
Cohen, a lawyer, is a former TIME
writer and a former member of the New York Times editorial board
Supreme Court Affirms Ban on Aiding Groups Tied to Terror
NYTIMES
By THE ASSOCIATED PRESS
June 21, 2010
Filed at 10:44 a.m. ET
WASHINGTON (AP) -- The Supreme Court has upheld a federal
law that bars ''material support'' to foreign terrorist organizations,
rejecting a free speech challenge from humanitarian aid groups.
The court ruled 6-3 Monday that the government may prohibit all forms
of aid to designated terrorist groups, even if the support consists of
training and advice about entirely peaceful and legal activities.
Material support intended even for benign purposes can help a terrorist
group in other ways, Chief Justice John Roberts said in his majority
opinion.
''Such support frees up other resources within the organization that
may be put to violent ends,'' Roberts said.
Justice Stephen Breyer took the unusual step of reading his dissent
aloud in the courtroom. Breyer said he rejects the majority's
conclusion ''that the Constitution permits the government to prosecute
the plaintiffs criminally'' for providing instruction and advice about
the terror groups' lawful political objectives. Justices Ruth Bader
Ginsburg and Sonia Sotomayor joined the dissent.
The Obama administration said the ''material support'' law is one of
its most important terror-fighting tools. It has been used about 150
times since Sept. 11, resulting in 75 convictions. Most of those cases
involved money and other substantial support for terror groups.
Only a handful dealt with the kind of speech involved in the case
decided Monday.
The aid groups involved had trained a group in Turkey on how to bring
human rights complaints to the United Nations and assisted them in
peace negotiations, but suspended the activities when the U.S.
designated the Turkish outfit a terrorist organization in 1997. They
also wanted give similar help to a group in Sri Lanka, but it, too, was
designated a terrorist organization by the U.S. in 1997.
Nearly four dozen organizations are on the State Department list,
including al-Qaida, Hamas, Hezbollah, Basque separatists in Spain and
Maoist rebels in Peru.
The humanitarian groups, including the Humanitarian Law Project; Ralph
Fertig, a civil rights lawyer; and Dr. Nagalingam Jeyalingam, a
physician, want to offer assistance to the Kurdistan Workers' Party in
Turkey or the Liberation Tigers of Tamil Eelam in Sri Lanka.
The government says the Kurdish rebel group, known as the PKK, has been
involved in a violent insurgency that has claimed 22,000 lives. The
Tamil Tigers waged a civil war for more than 30 years before their
defeat last year.
"East Side, West Side, All Around the Town..." clockwise:
Queens, Brooklyn, Manhattan and The Bronx
A New York Bloc on the Supreme Court
NYTIMES
By JAMES BARRON
May 11, 2010
The Supreme Court has some justices who are liberals and some who are
conservatives. It has some who see themselves as strict
constructionists and some who probably do not. And then it has
the justices who grew up riding the subway and the ones who grew up
turning right on red.
It has the justice who was the treasurer of the Go-Getters Club at
James Madison High School in Brooklyn. It has the justice who watched
“Perry Mason” on television in a housing project in the Bronx and
decided that the star defense lawyer was less important than the judge.
It has the justice who took part in a junior military training program
at Xavier High School in Manhattan and carried his rifle home on the
train to Queens.
If the nomination of Elena Kagan to the Supreme Court is confirmed, she
would join three others in a distinct bloc. For the first time in the
court’s history, said William Treanor, the dean of Fordham Law School,
it would have four justices who grew up in New York City.
The four are a portrait of the city, each carrying distinct New York
traits to Washington. “Kagan is so Manhattan, Scalia is so Queens,
Ginsburg is so Brooklyn and Sotomayor is so Bronx,” said Joan Biskupic,
the author of a biography of Justice Antonin Scalia. “They adopted in
their identities the whole New York sensibility.”
Only Staten Island — “the forgotten borough,” as a woman who answered
the telephone in the borough president’s office described it on Tuesday
— would be without a justice to call its own if the Senate confirms Ms.
Kagan.
The first chief justice, John Jay, was a New Yorker. But Vincent M.
Bonventre, a professor at Albany Law School, said that Jay considered
the Supreme Court as a comedown after contributing to the Federalist
Papers and serving as president of the Continental Congress.
“He left the Supreme Court because he didn’t think it was prestigious
or important, and it wasn’t, back then,” Professor Bonventre said. Jay
resigned as chief justice in mid-1795 to take a job that interested
him: governor of New York.
Other notable justices spent all or part of their youth in the city,
including Felix Frankfurter and Benjamin N. Cardozo. But if Ms. Kagan
takes the seat being vacated by Justice John Paul Stevens, a Chicagoan,
it will be an unusual moment for a city whose political influence has
been slowly shrinking since the nation outgrew the original 13 colonies.
Now the Supreme Court stands to have as many justices from New York
City as New York State’s highest court, the Court of Appeals. (The
Supreme Court is larger, with nine justices to the Court of Appeals’
seven.)
Justice Scalia — like Justice Samuel A. Alito Jr. — was born in
Trenton. But Justice Scalia’s family left for Queens when he was a
young child, and he “defines himself as a man from Queens rather than a
boy from Trenton,” Ms. Biskupic said.
“He loved that borough,” she said.
Justice Scalia grew up in Elmhurst, in what he once called “a really
mishmash sort of a New York,” with Germans, Irish and Puerto Ricans. He
went to Public School 13, where he got straight A’s, and Xavier, the
Jesuit school in Manhattan, where he was first in his class and was in
the military program.
He said he realized that New Yorkers were assertive when his high
school band went to march in a parade in Washington.
“These people just stood there and looked at us, you know?” he told the
CBS News program “60 Minutes” in 2008. “In New York, people say, ‘Hey,
play something for us, you know? You bums, why don’t you play
something?’ They were — they were alive, they were confrontational.”
Justice Sonia Sotomayor has described herself as a Nuyorican who grew
up in the Bronxdale Houses and later in Co-op City, where the talk of
the neighborhood was that her mother had bought an Encyclopaedia
Britannica. She was the valedictorian of the class of 1972 at Cardinal
Spellman High School and became a prosecutor in the Manhattan district
attorney’s office after attending Princeton and law school at Yale.
One of her answers to a questionnaire from the Senate Judiciary
Committee was a peephole into her New York background. Asked to list
the 10 most significant cases she had handled, she mentioned one that
involved a shooting in a housing project.
Justice Ruth Bader Ginsburg was born in the Flatbush section of
Brooklyn; her father owned small clothing stores, and she was an editor
of the newspaper at James Madison High School.
She went to Cornell as an undergraduate and to Harvard for law school.
But she transferred to Columbia Law School after her husband got a job
in New York. She made the law reviews at Harvard and Columbia and was
the first woman to become a tenured law professor at Columbia.
And then there is Ms. Kagan, whose father was a community board leader
on the Upper West Side and who attended the prestigious Hunter College
High School, Princeton and Harvard Law, later becoming its dean.
“They would all say the identities forged in these various boroughs
propelled them forward and contributed to how they see themselves and
how others see them,” said Ms. Biskupic, the Scalia biographer. “I was
interviewing Justice Alito about jumping in at oral argument when
you’re a new justice and how do you get a word in edgewise. We were
talking about the temperament of a Scalia and a Ginsburg, and he said,
as somebody from Trenton, he knows how to mix it up with them.”
Three of the four New Yorkers — Justices Ginsburg and Sotomayor and Ms.
Kagan, if she is confirmed — would form the court’s liberal wing with
Justice Stephen G. Breyer. Professor Bonventre of Albany Law School
said that the “ethnic-gender-religious composition of the liberals on
the court” would underscore their differences with the conservative
majority.
“For most New Yorkers, they will look at the liberal minority and say,
‘That’s us, that’s our America,’ ” Professor Bonventre said, “and so
when the court renders liberal decisions and you have all of those
four, the three women and the Jewish guy, it will make complete sense
to New Yorkers, whereas for the South and the Bible Belt, people are
going to say, ‘They don’t understand the rest of America.’ ”
But Martin Flaherty, a professor at Fordham Law School who knew Ms.
Kagan when they were undergraduates at Princeton, said that being a
judge from New York did not mean “everyone is going to be a liberal or
a conservative.”
“Witness Scalia,” Mr. Flaherty said. “But there’s a certain toughness,
mental toughness, to spending time in New York. That is true of all
four New Yorkers. None of them is a pushover.”
A.C.L.U. d. A.S.P.C.A.
Pebbles, a New Jersey Rat Terrior, is proud of Justice Alito,
also from New Jersey, who was the sole vote for dogs and President Obama's position...
Court voids law aimed at animal cruelty videos
YAHOO
By MARK SHERMAN, Associated Press Writer
20 April 2010
WASHINGTON – The Supreme Court struck down a federal law Tuesday aimed
at banning videos that show graphic violence against animals, saying it
violates the right to free speech.
The justices, voting 8-1, threw out the criminal conviction of Robert
Stevens of Pittsville, Va., who was sentenced to three years in prison
for videos he made about pit bull fights.
The law was enacted in 1999 to limit Internet sales of so-called crush
videos, which appeal to a certain sexual fetish by showing women
crushing to death small animals with their bare feet or high-heeled
shoes.
The videos virtually disappeared once the measure became law, the
government argued.
But Chief Justice John Roberts, writing for the majority, said the law
goes too far, suggesting that a measure limited to crush videos might
be valid. Animal cruelty and dog fighting already are illegal
throughout the country.
In dissent, Justice Samuel Alito said the harm animals suffer in
dogfights is enough to sustain the law.
Alito said the ruling probably will spur new crush videos because it
has "the practical effect of legalizing the sale of such videos."
Animal rights groups, including the Humane Society of the United States
and the American Society for the Prevention of Cruelty to Animals, and
26 states joined the Obama administration in support of the law. The
government sought a ruling that treated videos showing animal cruelty
like child pornography, not entitled to constitutional protection.
But Roberts said the law could be read to allow the prosecution of the
producers of films about hunting. And he scoffed at the
administration's assurances that it would only apply the law to
depictions of extreme cruelty. "But the First Amendment protects
against the government," Roberts said. "We would not uphold an
unconstitutional statute merely because the government promised to use
it responsibly."
Stevens ran a business and Web site that sold videos of pit bull
fights. He is among a handful of people prosecuted under the animal
cruelty law. He noted in court papers that his sentence was 14 months
longer than professional football player Michael Vick's prison term for
running a dogfighting ring.
A federal judge rejected Stevens' First Amendment claims, but the 3rd
U.S. Circuit Court of Appeals in Philadelphia ruled in his favor.
The administration persuaded the high court to intervene, but for the
second time this year, the justices struck down a federal law on free
speech grounds. In January, the court invalidated parts of a
63-year-old law aimed at limiting corporate and union involvement in
political campaigns.
Free speech advocates cheered Tuesday's ruling.
"Speech is protected whether it's popular or unpopular, harmful or
unharmful," said David Horowitz, executive director of the Media
Coalition. The group submitted a brief siding with Stevens on behalf of
booksellers, documentary film makers, theater owners, writers' groups
and others.
The case is U.S. v. Stevens, 08-769.
High court goes high tech: Justices to hear employee texting case
YAHOO
Thu Apr 15, 9:45 pm ET
As the high court’s 2009-2010 term winds down, Yahoo! News will look at
some key cases whose decisions have potential to impact the lives of
everyday people.
Most of us have done it: Sent personal emails from the company
computer, texted a friend or significant other on the BlackBerry they
gave you for work. No harm, no foul, you say — our lives are so crazy
these days that it's hard not to blur the lines between the personal
and the professional. Of course that's true, but company time isn't the
only issue — what about your privacy? What if the boss reads your
messages? Would you be embarrassed — or worse? Does your employer
even have that right?
The rules surrounding workplace communication in the digital age are
pretty fuzzy; so fuzzy, in fact, that we still largely rely on parts of
a federal law enacted in 1986 — back when fax machines were all the
rage — to govern our privacy on technologies we use today. Calling
someone on the phone or sending them postal mail isn’t remotely the
same as sending a text or an email, so as technology develops, so must
the laws that protect the privacy of our communication.
"[The laws don't] really make any sense in the modern era," says
Jennifer Granick, civil liberties director of the Electronic Frontier
Foundation, which advocates for free-speech rights in digital
communication. "It's just not the way the technology evolved."
Important court battles being waged all over the country are helping to
shape this area of law, but one case has made it all the way to the top
of the legal system.
At issue in City of Ontario v. Quon is whether a SWAT officer — a
public employee — had a reasonable expectation of privacy when sending
personal text messages on a police-department-owned pager. The official
policy at the Ontario, Calif., police department had prohibited
personal use of things like email and the Internet at work, and
employees were explicitly told they should have no expectation of
privacy in that regard, but the policy never said anything about text
messages.
At some point, pagers were issued to members of the SWAT team, who were
later told at a meeting (i.e. not in writing) that texts sent and
received on them would be considered by the department to be
email, and therefore subject to monitoring or audit. The officers
were also told they'd be responsible for paying any charges incurred
when going over the character limit in the department’s contract with
the pager service. Eventually this arrangement eased into an informal
understanding between officers and their superiors that as long as they
paid the extra charges, the department wouldn't look at their messages.
Sgt. Jeff Quon went over the monthly character limit a few times, but
he faithfully paid the overages. He also sent text messages — sometimes
sexually explicit ones — to his wife … and to a co-worker with whom he
was having an affair. As he understood department policy, his superiors
would not be reading his messages. But the department — tired of acting
like a bill collector for overage charges — later changed its mind and
requested Quon’s transcripts from the wireless service provider. (Quon
was one of the officers who had exceeded the character limit more than
once.) After the provider, Arch Wireless, provided the transcripts,
Quon's superiors were able to read his, ahem, personal messages.
Quon and others, including his wife, who was not a department employee,
sued, claiming the police department had violated their Fourth
Amendment right against unreasonable search. (In other words, the suit
involves not only the employee's privacy rights but those of the people
sending and receiving messages to and from him.) They also sued Arch
Wireless, claiming the provider had violated a federal statute when it
gave the police department Quon's transcripts without his permission.
After losing their battle in federal district court, Quon and his
co-plaintiffs prevailed in the 9th U.S. Circuit Court of Appeals in
California, with that court ruling they all had a reasonable
expectation that the department would not read the text messages. And
now it will be up to the Supreme Court to decide if the city violated
the Fourth Amendment, which protects people against unreasonable search
and seizure by the government. (The high court will not be hearing a
separate appeal concerning the wireless service provider.)
Although the ruling is likely to be narrow (sticking strictly to legal
questions concerning the public sector), it will come at a time when
there is great need for the high court to shed light on how the Fourth
Amendment affects electronic communication. Hard to believe that when
this case comes before the justices on Monday, it will be the first
time the Supreme Court will consider how the Constitution affects so
much of what we now take for granted in our workplace communications —
indeed, many of us hardly pick up a phone anymore.
It’s difficult to see where the high court will go with this legally
nuanced case, especially because there are so few similar cases to
provide guidance, says Susan Freiwald, a law professor at the
University of San Francisco who teaches cyberspace and information
privacy law.
The ideological makeup of the court doesn’t help much either.
“Ideas about privacy don’t always correlate to traditional labels of
conservative or liberal,” Freiwald notes. “You don't really know how
the justices are going to feel and how those positions translate.”
Whether this case has a broad or narrow ruling, the hope is that it
will be a guide for both employers and employees as advancing
technology makes it easier for us to blur the lines between private and
professional communication.
The court likely won't release its opinion until June, but for now,
what’s the advice? A little bit of common sense, of course.
“Employees in general need to be a lot more careful about what they
commit to writing,” says Robert Brownstone, a lawyer who advises
employers on information privacy. “And if they do, they should not use
their work computer, because that's a whole different level of privacy.”
Breyer: Health overhaul could come before court
YAHOO
By MARK SHERMAN, Associated Press Writer
15 April 2010
WASHINGTON – Justice Stephen Breyer is predicting the Supreme Court
will one day pass judgment on this year's health care overhaul.
Breyer told a congressional panel Thursday that the massive health care
law, like most major federal legislation, is a good candidate for high
court review.
Breyer said the court's relatively light caseload in recent years will
soon be a thing of the past.
Editorial: The Legal Assault on
Health Reforms
NYTIMES
March 29, 2010
No sooner had President Obama signed comprehensive health care reform
than the attorneys general of 14 states scurried to the federal courts
to challenge the law. Their claims range from far-fetched to arguable
and look mostly like political posturing for the fall elections or a
“Hail Mary” pass by disgruntled conservatives who cannot accept what
Congress and the president have done.
They seem unlikely to succeed because the law was carefully drafted to
withstand just this kind of challenge.
There are two separate suits by the attorneys general. The main one,
led by Bill McCollum, a Florida Republican, has been joined by 12 other
attorneys general, all but one Republicans. Many if not most are either
running for higher office or seeking re-election. A separate suit by
Virginia’s Republican attorney general is based on that state’s attempt
(sure to be ineffective) to nullify the federal law by enacting a state
law declaring that Virginians need not obey it.
A central contention of both suits is that Congress has no power under
the Constitution to compel individuals to buy health insurance or pay a
penalty. Congress has never before compelled people to buy anything
from a private company, so there is no precisely apt Supreme Court
precedent. Still, two provisions in the Constitution give Congress
broad powers to regulate economic activity — the power to impose taxes
for the general welfare and the power to regulate interstate commerce.
The new law has been framed to fall within both of those provisions.
The penalties for not buying insurance have been structured as a tax,
to be collected by the Internal Revenue Service. And the law’s text
includes a series of Congressional findings: that health insurance and
health care comprise a significant part of the economy, that most
policies are sold and claims paid through interstate commerce, and that
the mandate is essential to achieving the goals of creating effective
health insurance markets and achieving near-universal coverage.
Such findings don’t make the new law bullet-proof, but they help to
insulate it from attack. It seems a long shot that the Supreme Court
would invalidate the mandate, if the cases ever reach that level.
A second contention, emphasized by the 13 state attorneys general, is
that the new law amounts to an unprecedented encroachment on the
sovereignty of the states. It will require them to greatly expand their
Medicaid programs, imposing substantial costs, and add administrative
burdens in setting up new insurance exchanges that will offer an array
of private policies.
That seems a stretch. No state is required to set up an exchange. If
states fail to do so, the federal government will take over. Nor is any
state required to participate in Medicaid, a joint federal-state
program in which Washington pays half or more of the costs.
It is true, as the suit contends, that it may not be practical for
states to drop out of a Medicaid program that serves many of their
poorest residents. But it is well established that Congress can attach
conditions to the money it supplies, and Congress has long imposed
Medicaid requirements that states must meet.
The attorneys general are doing a disservice to their constituents by
opposing Medicaid expansion and a mandate that everyone buy insurance,
with subsidies for low- and middle-income people. The mandates are
needed to push enough healthy young people into insurance pools to help
subsidize the cost of covering sicker people and make it feasible for
insurers to cover people with pre-existing conditions. Alternative
approaches to entice people to obtain coverage would likely be less
successful.
Supreme Court may weigh coverage mandate
Washington Times
Kara Rowland
Monday,
March 29, 2010
The same Supreme Court justices whom President Obama blasted during his
State of the Union address this year may ultimately decide the fate of
his crowning achievement as more than a dozen states have called on the
courts to strike down the health insurance mandate of Democrats' health
care overhaul - a move that would threaten the entire law.
Two major constitutional challenges have been levied against the new
law, one by the state of Virginia, which enacted a law exempting its
citizens from the federal health insurance mandate, and another by
Florida and 12 other states. Legal scholars are divided on the merits
of the cases, and even Congress - through its research service and its
budget scorekeeper - has said it's an open question whether the
provision could pass constitutional muster.
At issue is the scope of the federal government's power over states and
individuals. Critics of the law say the requirement that all Americans
buy insurance or pay a fine, if allowed, would mean that Congress has
virtually boundless authority to compel actions. Proponents argue that
legal precedents support an expansive reading of the legislative
branch's license to regulate such activity.
"This is one of the most consequential lawsuits in our generation,"
said Baker Hostetler lawyer David B. Rivkin Jr., who is serving as
outside counsel to the 13 states that have filed suit. "The fact you
have so many different state attorneys general, Republicans and
Democrats, from a variety of states coming together to do this just
underscores how strongly they feel that the act infringes core
constitutional interests of their respective states."
The mandate, which doesn't take effect until 2014, is central to
Democrats' goal of insuring about 32 million more Americans. The law
would offer tax credits to low-income individuals and allow young
adults to remain on their parents' policies longer.
Both of the state lawsuits challenge the federal government's authority
under the Commerce Clause, which grants Congress the power to regulate
commerce among the states. The Florida case also cites a violation of
the 10th Amendment, which reserves those powers not spelled out under
the federal government in the Constitution to the state governments,
and argues that the health care law's expansion of state Medicaid
programs threatens state sovereignty.
Among the arguments against the law is that because it does not allow
for purchasing insurance across state lines - the insurance exchanges
are state-based - the buying of health insurance does not constitute
interstate commerce. In addition, the plaintiffs say, not purchasing
health insurance does not constitute an economic activity.
"Thus far in our history, it has never been held that the Commerce
Clause, even when aided by the Necessary and Proper Clause, can be used
to require citizens to buy goods or services," Virginia Attorney
General Kenneth T. Cuccinelli II argues in his state's lawsuit. "To
depart from that history to permit the national government to require
the purchase of goods or services would ... create powers
indistinguishable from a general police power in total derogation of
our constitutional scheme of enumerated powers."
While a requirement to buy health insurance might be new, some legal
analysts say, Congress can in fact define an economic activity as
something that results from not taking an action.
"The 1964 Civil Rights Act prohibits hotels and restaurants from
discriminating based on race and thus prohibits inactivity," said Erwin
Chemerinsky, dean of the University of California Irvine School of Law,
noting that law relied upon the Commerce Clause. "The Supreme Court has
said that Congress can regulate economic activity that has a
substantial effect on interstate commerce. Buying or refusing to buy
insurance is economic activity. The effect on the economy is enormous."
As an example, Mr. Chemerinsky cited cases in which the high court
upheld Congress' authority to regulate the amount of wheat that farmers
grow for their own home consumption or prohibit the cultivation of
marijuana for medicinal purposes.
"If that fits within the commerce power, surely the health industry
does," he said.
Mr. Rivkin, who served in various legal capacities for the Reagan
administration and the George H.W. Bush administration, strongly
disagreed. If that were the case, he argued, there would be no limits
to the government's power as the Founding Fathers intended. He said the
cases cited by Mr. Chemerinsky involve the cultivating of commodities
and therefore clearly economic activities, unlike the refusal to
purchase health insurance.
"The remarkable thing about an individual insurance purchase mandate is
you are not being subject to a requirement by virtue of any economic
activity you engage in - you're not doing a damn thing; you just
exist," he said. "If this is upheld, then the federal government can do
everything it wants subject only to the restrictions contained in the
Bill of Rights."
Democratic leaders and the White House have scoffed at the legal
challenges. Last week, press secretary Robert Gibbs said administration
attorneys advised him "we'll win these lawsuits."
Jack M. Balkin, a professor at Yale Law School, noted that the new law
structures the mandate as an amendment to the tax code and includes a
discussion of the impact on state commerce, suggesting that the
administration will defend it by citing the Commerce Clause as well as
Congress' power to tax under the "general welfare" provision. That
provision says the federal government may impose taxes - in this case,
the penalty for those who don't buy insurance would be the tax - in
order to provide for the "general welfare" of the country.
Not everyone agrees with that reasoning.
"It is a taxation and spending power, not an open-ended general welfare
clause," said Michael W. McConnell, a Stanford law professor and former
circuit court judge appointed by President George W. Bush. "And by the
way, 'general' had a very specific meaning in the late 18th century -
it meant nationwide in scope, which is why some of the state-specific
provisions are constitutionally dubious."
Both lawsuits are in federal district courts, but analysts expect the
issue to end up before the Supreme Court. If the high court were to
rule in favor of the plaintiffs, the ramifications for Congress could
be sweeping.
"It would be difficult for the court to hold that the law is outside of
the power to tax and spend for the general welfare without calling into
question various regulatory devices that both parties use in crafting
legislation," Mr. Balkin said. "Since the New Deal, both parties have
used the taxing and spending power for a wide range of regulatory
purposes and this is what the challenge to the health care bill calls
into question."
However, the justices have not been averse to striking down
congressional laws favored by Mr. Obama. The president used his State
of the Union address to attack, with the justices present, a decision
that struck down limits on corporate and union spending for political
campaigns on First Amendment grounds.
In his speech, Mr. Obama warned of foreign influence over U.S.
elections while Justice Samuel A. Alito Jr. silently mouthed that Mr.
Obama was not telling the truth. Chief Justice John G. Roberts Jr., in
response to a questioner at a speech some weeks later, called the
president's words "very troubling."
The Scalia v. Stevens Smackdown: In President Obama's view,
corporations are anathema.
By DANIEL HENNINGER
Feb. 11, 2010
Nothing—not even George W. Bush—has sent liberaldom screaming into the
streets more than the Supreme Court's recent 5-4 decision in Citizens
United v. Federal Election Commission. The Court's ruling that
corporations have a free-speech right to express opinions about
politicians running for office really let the furies out.
President Obama's in-their-face criticism of the Supreme Court over
Citizens United at his State of the Union speech got pundits on every
blogger barstool chattering about the propriety of this public
smackdown.
That's nothing compared to how the Supremes smack each other inside
their public decisions.
Justice John Paul Stevens dismissed the majority's opinion, written by
Anthony Kennedy, as lacking "a scintilla of evidence" for its argument
and making "only a perfunctory attempt" to root its reasons in the
First Amendment views of the Constitution's Framers.
Justice Antonin Scalia then wrote a majority concurrence solely so that
he could go mano a mano with Justice Stevens. A mere three sentences
in, he unloads: "The dissent attempts this demonstration, however, in
splendid isolation from the text of the First Amendment."
While the commentary on Citizens United rightly emphasized First
Amendment law, the scrum inside the decision between Justices Stevens
and Scalia, over the status of corporations in America, deserves more
attention than it got.
Their dispute, and especially Justice Stevens's view of corporations,
reveals a lot about why Mr. Obama and liberalism's left wing went nuts.
It isn't just corporate political advertising that's anathema.
Corporations themselves are anathema.
In his State of the Union swipe, Mr. Obama said the Citizens United
decision would "open the floodgates for special interests." The
"special interests," of course, is Democode for corporate interests.
This week we learned Mr. Obama will try to convey his pro-business
sentiments Feb. 24 to the Business Roundtable. Don't buy it.
Justice Stevens offered the historic and psychological basis for this
foundational antipathy.
"Thomas Jefferson," he notes, "famously fretted that corporations would
subvert the Republic." A citation quoted by the justice notes that "the
word 'soulless' constantly recurs in debates over corporations"; and
"corporations, it was feared, could concentrate the worst urges of
whole groups of men."
But here's the public-philosophy belief that flows from this view: "The
Framers thus took it as a given," in Justice Stevens's opinion, "that
corporations could be comprehensively regulated (my emphasis) in the
service of the public welfare."
In short, private corporations have not much, if anything, to do with
the public good.
In his crack-back concurrence, Justice Scalia ridicules "the
corporation-hating quotations the dissent has dredged up." He notes
that most corporations back then had "state-granted monopoly
privileges" (sort of like Fannie and Freddie today—columnist's
footnote) and that modern corporations without these state privileges
"would probably have been favored by most of our enterprising
Founders—excluding, perhaps, Thomas Jefferson and others favoring
perpetuation of an agrarian society."
He ends with a conservative belief: "To exclude or impede corporate
speech is to muzzle the principal agents of the modern free economy."
America's Democrats and Republicans, crudely defined, are with this
presidency and this Congress living today on opposite sides of a moon
that they both call the United States.
In the universe inhabited by Justice Stevens and President Obama,
corporations—the private sector—are a suspect abstraction, ever tending
toward "the worst urges" which have to be "comprehensively regulated."
The saints regulate the sinners.
If you think this way, what one does to the private sector, such as the
proposed $90 billion bank tax, can never be wrong in any serious way,
so long as the rationale offered is the "public good." Private-sector
players are seen as barely more than paid galley slaves on the ship of
state. So it is with the health-care bill's mammoth, comprehensive
regulation of American medicine and insurance.
Mr. Obama seems genuinely perplexed that the opposition can't just, you
know, sign onto it. What's their problem?
Evidently, the voters of Massachusetts have a problem with that and
more.
In the past year, Mr. Obama and the Democratic Congress passed a $787
billion stimulus, seized banks and the auto industry, embarked on a $1
trillion reorganization of the private health-care system, and passed a
fiscal 2010 budget that put spending as a percentage of GDP at 24.1%.
These are very large claims for the public good.
This public-private tension is an ancient and never-ending debate in
the U.S. But what we are seeing this year, in Massachusetts and
elsewhere, is American voters arriving at a tipping point over the
scale and role of government. Most Americans still go to work each day
inside a private economy organized around tens of thousands of
corporations. Their basic view of the world and that found inside
Justice Stevens's dissent and this White House are out of sync.
Supreme court blocks broadcasting of gay marriage case
YAHOO
January 11, 2010
WASHINGTON (Reuters) – The U.S. Supreme Court on Monday temporarily
blocked a federal judge's plan to broadcast the trial over California's
ban on gay marriage by posting video on YouTube.
Lawyers defending the ban filed an emergency request with the Supreme
Court arguing that broadcasting the trial would turn the case into a
"media circus" and that witnesses would be intimidated.
The closely watched trial, which could produce a landmark ruling and
lead to an overturn of bans in other states, begins in federal court in
San Francisco on Monday before U.S. District Court Chief Judge Vaughn
Walker.
Walker had agreed to limited televised coverage by taping proceedings
and making them available to YouTube at the end of the day. Walker
acted based on a recent rule change by the U.S. appeals court based in
California allowing televised coverage of some civil cases.
The Supreme Court blocked the broadcasting of the trial through
Wednesday afternoon to give it more time for further consideration of
the issue.
Of the nine high court members, only Justice Stephen Breyer dissented.
He said he agreed that further consideration was warranted and was
pleased that order would be in effect only for a limited amount of time.
But Breyer said he did not believe those seeking to block the
broadcasting of the trial had shown a likelihood of "irreparable harm."
The Supreme Court's order was at least a temporary victory for those
defending the ban.
Opponents of the ban and a coalition of media organizations had told
the Supreme Court that televised viewing of the trial should be
allowed. They said there is a public benefit to complete access to
public trials.
Editorial:
The Supreme Court Returns
NYTIMES
October 5, 2009
The Supreme Court starts its new
session this week with cases on its docket that could reshape the law
in campaign finance, gun control and sentencing for juvenile crimes,
and with the first new Democratically appointed justice in 15 years.
That newest member, Justice Sonia Sotomayor, has been getting a lot of
attention, but Justice Anthony Kennedy is likely to continue to wield
the real power, on the most controversial issues.
Among the most anticipated cases so
far are two that raise the question of whether it is constitutional to
sentence juvenile offenders to life without parole. One of the
defendants was just 13 when he raped an elderly woman in her home — an
appalling and brutal crime, but one that did not involve homicide. We
should not be giving up on a person for an act committed at 13. A few
years ago, the court ruled that the death penalty for juvenile
offenders amounted to cruel and unusual punishment. It should extend
that reasoning to these cases.
The court has also agreed to hear
the case of a man prosecuted for selling videos of dogfights, in which
he was not involved. A federal appeals court ruled that his conviction
violated the First Amendment. Animal abuse videos are truly loathsome,
but the right approach is to criminalize animal cruelty, as all 50
states do, and not to infringe on free speech.
Following on a major case from last
year in which the court struck down parts of the District of Columbia’s
gun control law, the justices have decided to consider whether state
and local gun control laws can also be challenged under the Second
Amendment. The court should not use the case to prevent states and
localities from enacting reasonable restrictions on guns.
The court will hear a First
Amendment challenge to a cross that stands on land in California that
once belonged to the federal government. The government gave the land
to a private group to get around a court order that the cross violated
the prohibition on state support for religion. The court should rule
that despite the land transfer, the cross is unconstitutional.
The docket is heavy with business
cases. One asks whether a way of hedging financial risk can be
patented. Patents should be limited to more physical creations.
The most important business case,
however, is one the court heard last month. In Citizens United v.
F.E.C., the court could wipe out a longstanding ban on corporate
spending on federal elections, which would allow big business to swamp
democracy. We hope the court will avoid such recklessness, and rule
narrowly.
The Citizens United argument marked
Justice Sotomayor’s debut and she asked several questions that cut to
the heart of the matter. A new justice always changes the dynamic of
the court, but in ideologically charged cases, Justice Sotomayor’s
positions are likely to be similar to those of Justice David Souter,
whom she replaced.
That means the court is likely to
remain divided between four moderate-liberals and a very conservative
bloc of four, with the moderate conservative Justice Kennedy providing
the swing vote. Barring any new changes in the Supreme Court’s
composition, or any sudden changes of heart among the sitting justices,
the law on many issues is likely to be, as it has been for several
years now, what Justice Kennedy says it is.
U.S.
court term has major gun rights, business cases
YAHOO
By James Vicini
Sun Oct 4, 2009 8:26 am ET
WASHINGTON (Reuters) – The U.S. Supreme Court will again consider gun
rights and decide an important case that could loosen restrictions on
corporation spending in political campaigns in its new term beginning
on Monday. The nine-member panel now includes Justice Sonia
Sotomayor. Appointed by President Barack Obama, she is the first
justice named by a Democratic president in 15 years and the first
Hispanic on the high court. Sotomayor succeeded Justice David
Souter, who retired in June. She generally is expected to vote with the
three other liberals as Souter did.
"The 2009 term seems likely to produce important decisions on free
speech, government accountability and criminal justice," Steven Shapiro
of the American Civil Liberties Union said. "And it certainly will tell
us more than we now know about the role that Justice Sotomayor will
play on a Supreme Court that remains closely divided along ideological
lines."
The term could reveal whether the five-member conservative majority led
by Chief Justice John Roberts overturns past precedents on issues like
corporate spending limits for congressional and presidential races.
"This term is going to be an enormous test for Chief Justice Roberts
and the conservatives on the court," said Doug Kendall, founder and
president of the Constitutional Accountability Center, a liberal think
tank and law firm.
The court heard arguments in the campaign finance case in a special
session last month. The conservatives appeared ready to rule that
corporate spending limits for federal campaigns violated the
free-speech rights of businesses.
The conservatives include two appointees of Republican President George
W. Bush -- Roberts and Justice Samuel Alito, who in 2006 replaced the
more moderate Justice Sandra Day O'Connor. The others are Justices
Antonin Scalia, Clarence Thomas and Anthony Kennedy.
Besides Sotomayor, the liberals are Justices Ruth Bader Ginsburg and
Stephen Breyer, both appointees of Democratic President Bill Clinton,
and Justice John Paul Stevens, at 89 the court's oldest and
longest-serving member.
SPECULATION STEVENS MIGHT RETIRE
There has been speculation Stevens might retire at the end of the term
in June. That would give Obama another appointment but probably would
not change the court's balance of power.
On Wednesday, the court said it would step back into the legal battle
over gun rights and decide whether state and local laws violated an
individual's constitutional right to bear arms. The ruling could open
the door for new challenges to gun control laws across the country.
Robin Conrad of the National Chamber Litigation Center, the U.S.
Chamber of Commerce's public policy law firm, said the business cases
this term covered a broad range of issues.
Potential major business rulings could involve patent, antitrust and
securities law, white-collar crime and a challenge to the 2002 law that
created a national board to oversee U.S. public company auditors.
Another important business case concerns whether a shareholder who
claims that a mutual fund's investment adviser charged an excessive fee
must also show the adviser misled the fund's directors who approved the
fee.
"This implicates the current debate over whether the market system can
be relied upon to set a fair and sensible compensation for executives,"
Gene Schaerr of the law firm Winston & Strawn said at a Washington
Legal Foundation briefing to preview the term.
Is 'Jones v. Harris Associates' a
Referendum on Mutual Funds?
YAHOO
By Rob Silverblatt
November 18, 2009
As the Supreme Court mulls over mutual funds' fees, analysts have lined
up to read between the lines. And while a decision in Jones v. Harris
Associates is probably months away, there is no shortage of opinions
about its implications.
On its surface, the question at the heart of the case is narrowly
constructed: Should courts intervene when investors claim that asset
managers' fees excessively favor certain clients? In particular, the
plaintiffs are shareholders in the Oakmark funds, which are run by
Harris Associates. The Oakmark shareholders say that at the time they
filed the suit in 2004, they were being charged management fees nearly
twice as high--0.88 percent vs. 0.45 percent--as those assigned to
Harris's institutional clients.
Still, this veneer of simplicity hasn't prevented an outpouring of
speculation as to how potential outcomes could affect the broader
financial industry. With that in mind, U.S. News takes a look at three
of the most common claims and examines how likely the suggested impacts
are to materialize. This is the last article in a three-part series.
[See Part I: How
the Supreme Court May Make Mutual Funds More Expensive and Part II:
Why
the Mutual Fund Case Isn't About Executive Pay.]
Claim: This case highlights the structural weaknesses of mutual funds.
Disputes over mutual fund fees are hardly uncommon. Actually, the
tendency of expenses to gradually erode returns is perhaps the biggest
complaint that investors have about their funds. But while these
discussions were previously relegated to dinner-table banter or buried
in congressional bills, this case has propelled them into the national
spotlight at a time when investors were already smarting from
disastrous 2008 returns.
So with exchanged-traded funds and other less expensive options gaining
traction in the retirement-savings market, does this controversy hold
any clues to the future viability of the mutual fund industry? "I wish
that were the case, but I think that so few people understand what's
going on because of [funds'] lack of transparency," says Andy Rachleff,
CEO of the Silicon Valley venture capital start-up kaChing, a
portfolio-building website that bills itself as an alternative to
mutual funds.
[See A
New Way to Invest?]
While Rachleff sees Harris Associates' fees as representative of a
larger problem plaguing funds, he doesn't expect investors to shift
their behavior as a result of the case, nor does he believe that the
Supreme Court's decision will change the industry's dynamics.
"Unfortunately, I don't think it's going to make a big difference," he
says.
Instead, he maintains that legislation aimed at transparency is the
only solution to what he sees as funds' fatal flaws. "Mutual funds'
interests are typically not aligned with those of investors. Their No.
1 goal doesn't seem to be to make money for investors. Their No. 1 goal
seems to be to make money for their firms," he says. "Until those
interests are aligned, we're going to continue to see these problems."
Still, others maintain that the case does not point to more general
problems with funds' price structures. "Investors have an ability to
move funds if they think that the fees are too high," says Adam Bold,
the founder of The Mutual Fund Store, an investment management firm
with more than 65 U.S. locations. "In our society, you have to be able
to sell a good product at a reasonable price, or people will go
elsewhere."
Ultimately, in this regard, the case cuts to the core of the
controversy that has long surrounded mutual funds: Do investors
understand the full scope of the fees that they pay, and if not, would
such knowledge be a kiss of death for the industry?
Paul Atkins, managing director of the consulting firm Patomak Partners
and a former commissioner of the Securities and Exchange Commission,
says that investors really do pay attention to fees. "It's a
price-sensitive marketplace, which is what you want," he says.
"Investors are savvy to that. I think that they look for value and they
look for convenience, and they weight that against the fees that
they're charged."
Retail
Investors Get Their Day in High Court
YAHOO
By Ben Baden
Posted: November 3, 2009
Some mutual fund investors fed up with what they believe to be
excessive fees had their day in court Monday—the Supreme Court. In oral
arguments in the case of Jones v. Harris Associates, retail
shareholders of Oakmark Funds said the fund's adviser, Harris
Associates, charged them fees that were twice as high as they charged
other types of investors, such as institutional customers, but provided
essentially the same services.
[Congress is considering a proposal that could change the way funds do
business with new investors.]
The core legal issue in the case is whether Harris Associates, as the
adviser to Oakmark Funds, breached its fiduciary duty under the
Investment Company Act of 1940 by charging excessive fees. The
shareholders were, in effect, asking the court to consider whether the
adviser committed a breach of its fiduciary duty when the board of
Oakmark Funds voted for what the plaintiffs consider an overly generous
fee structure. The ICA was amended by Congress in 1970 to include a
rule regarding fiduciary duty for mutual funds related to compensation,
but exactly what constitutes such a duty was never defined. The case
highlights the question of whether or not courts should intervene in
issues related to executive compensation.
[See why investors overlook mutual fund costs.]
The high court heard arguments from both sides and from Assistant
Solicitor General Curtis Gannon, who appeared because Solicitor General
Elena Kagan filed a brief in support of the petitioners' claim that
funds shouldn't be allowed to charge investors excessive fees.
David Frederick, the lawyer representing Oakmark shareholders, was
questioned by Chief Justice John Roberts and Justice Antonin Scalia
about whether it was the court's place to rule in matters of fees and
compensation, while John Donovan Jr., who represented Harris in the
case, was pressed about the petitioners' claim that the services
provided to institutional customers and retail customers were similar.
For mutual fund customers, the big issue is the relationship between
the fund's adviser and its board of trustees. Harris Associates
appoints members of the board of trustees for Oakmark Funds, who then
approve the fees that Harris Associates set. The arrangement, critics
say, creates a conflict of interest.
"Right now, advisers bargain for their fees with fund boards who the
advisers initially appoint," says Ryan Leggio, a Morningstar fund
analyst who attended the hearing. "The investment adviser usually stays
with the mutual fund, and it's very rare that they're fired."
The counterargument, skeptics say, is that if investors aren't happy
with a fund's fee structure, they can simply withdraw their money and
invest it elsewhere. Chief Justice Roberts made that point, noting that
fund information is available to all investors. "These days, all you
have to do is push a button and you find out exactly what the
management fees are," Roberts said. "You just look it up on
Morningstar, and it's right there and you can make . . . whatever
determination you'd like, including to take your money out."
While that's generally true, Leggio notes that some investors, like
those in some 401(k) plans, face barriers to simply selling and walking
away because their employers offer only funds managed by the offending
adviser. "Shareholders have a difficult time leaving because sometimes
their funds are in 401(k) plans," Leggio says. "In that context, if
you're in the 401(k) plan, the directors aren't going to fire the
advisers, and you can't leave your fund."
As to the question of excessive fees, Leggio adds that for the most
part services for institutional investors are fairly similar to those
for retail investors. "There are plenty of examples in the
industry—exactly as in this case—where the strategy, the fund holdings,
the personnel, the process, etc., are almost identical for both
institutional and retail other than services you can strip out like
marketing, administrative, and regulatory that you might not have for
the institutional," he says. Using that argument, the petitioners in
the case are questioning why the fees for retail investors are double
the fees for institutional investors.
Most of the questioning in the hearing hovered around the differences
in institutional and retail fees. Leggio says that "it's likely there
will be some downward pressure eventually on retail mutual fund fees,"
but he said that no one can predict anything after this hearing.
Ultimately, the case could have far-reaching effects. "If the SEC
decides to be proactive they could see increased fee disclosure, but
the other impact would be reduced fees for their funds," Leggio says.
It is still unclear how the case might alter existing fee structures
for the mutual fund industry since litigation could take years. Leggio
says the fee structure is only part of the issue and highlights what he
believes to be an overarching problem of full disclosure when it comes
to fund fees. "Morningstar thinks the disclosure of fees in the mutual
fund industry really hampers an investor's ability to choose funds
wisely because right now with regulations you get a total expense ratio
and you get this big management fee, but you don't know where the fund
fees are going," he says.
A decision in Jones v. Harris Associates is expected to be announced
sometime between March and June, says Leggio.
Click here for report of 2008
decision
EDITORIAL: Kagan's kabuki theater
Senate hearings expose broken
confirmation process
By THE WASHINGTON TIMES
7:22 p.m., Tuesday, June 29, 2010
The most important question members of the Senate
Judiciary Committee should ask Supreme Court nominee Elena Kagan is,
"Who do you think you are kidding?"
The hearings process for high court nominees has become ritualized to
the point that it is almost useless. Nominees are extensively coached
to avoid voicing a real opinion. There is no intellectual give and
take. Spontaneity is largely absent. Anyone who can reasonably keep his
cool and regurgitate platitudes for a few hours can enjoy a lifetime
appointment to the most important judicial body in the land.
Ms. Kagan is playing her expected role in the predictable manner. We
saw the same kabuki dance during the hearings for Justice
Sonia Sotomayor less than a year ago. When asked by the sympathetic
Sen. Patrick J. Leahy, Vermont Democrat, if she agreed that "the
Supreme Court decided in Heller that the personal right to bear arms is
guaranteed by the Second Amendment of the Constitution against federal
law restrictions," Ms. Sotomayor answered: "It is." Yet her answer to
this obviously staged question was untruthful. On Monday, Justice
Sotomayor joined the Supreme Court minority in saying that there is
"nothing in the Second Amendment's text, history or underlying
rationale that could warrant characterizing it as 'fundamental,'
insofar as it seeks to protect the keeping and bearing of arms for
private self-defense purposes." In other words, when she said the right
to bear arms was guaranteed, she lied...
Justices extend gun owner
rights nationwide
YAHOO
By MARK SHERMAN, Associated Press Writer
28 June 2010
WASHINGTON – The Supreme Court held Monday that Americans have the
right to own a gun for self-defense anywhere they live, advancing a
recent trend by the John Roberts-led bench to embrace gun rights.
By a 5-4 vote, the justices cast doubt on handgun bans in the Chicago
area, but signaled that some limitations on the Constitution's "right
to keep and bear arms" could survive legal challenges.
Justice Samuel Alito, writing for the court, said that the Second
Amendment right "applies equally to the federal government and the
states."
The court was split along familiar ideological lines, with five
conservative-moderate justices in favor of gun rights and four liberals
opposed. Chief Justice Roberts voted with the majority.
Two years ago, the court declared that the Second Amendment protects an
individual's right to possess guns, at least for purposes of
self-defense in the home.
That ruling applied only to federal laws. It struck down a ban on
handguns and a trigger lock requirement for other guns in the District
of Columbia, a federal city with unique legal standing. At the same
time, the court was careful not to cast doubt on other regulations of
firearms here.
Gun rights proponents almost immediately filed a federal lawsuit
challenging gun control laws in Chicago and its suburb of Oak Park,
Ill, where handguns have been banned for nearly 30 years. The Brady
Center to Prevent Gun Violence says those laws appear to be the last
two remaining outright bans.
Lower federal courts upheld the two laws, noting that judges on those
benches were bound by Supreme Court precedent and that it would be up
to the high court justices to ultimately rule on the true reach of the
Second Amendment.
The Supreme Court already has said that most of the guarantees in the
Bill of Rights serve as a check on state and local, as well as federal,
laws.
Monday's decision did not explicitly strike down the Chicago area laws.
Instead, it ordered a federal appeals court to reconsider its ruling.
But it left little doubt that the statutes eventually would fall.
Still, Alito noted that the declaration that the Second Amendment is
fully binding on states and cities "limits (but by no means eliminates)
their ability to devise solutions to social problems that suit local
needs and values."
Justices John Paul Stevens and Stephen Breyer, joined by Justices Ruth
Bader Ginsburg and Sonia Sotomayor, each wrote a dissent. Stevens, in
his final day on the bench after more than 34 years, said that unlike
the Washington case, Monday's decision "could prove far more
destructive — quite literally — to our nation's communities and to our
constitutional structure."
The ruling seemed unlikely to resolve questions and ongoing legal
challenges about precisely what sort of gun control laws are
permissible.
The response of the District to the court's ruling in 2008 is
illustrative of the uncertainty.
Local lawmakers in Washington, D.C. imposed a series of regulations on
handgun ownership, including requirements to register weapons and to
submit to a multiple-choice test, fingerprinting and a ballistics test.
Owners must also show they have gotten classroom instruction on
handling a gun and have spent at least an hour on the firing range.
Some 800 people have now registered handguns in the city.
Anticipating a similar result in their case, Chicago lawmakers are
looking at even more stringent regulations.
But the new regulations themselves are likely to themselves be the
subject of lawsuits, a fact noted by the dissenting justices Monday.
Already in Washington, Dick Heller, the plaintiff in the original case
before the Supreme Court, has sued the city over its new laws.
Heller argues that the stringent restrictions violate the intent of the
high court's decision. So far a federal judge has upheld the
limitations, but the case has been appealed.
Wayne LaPierre, executive vice president of the National Rifle
Association, said his politically powerful group "will continue to work
at every level to insure that defiant city councils and cynical
politicians do not transform this constitutional victory into a
practical defeat through Byzantine regulations and restrictions."
New York Mayor Michael Bloomberg, an ardent proponent of gun control,
said the ruling allows cities "to keep guns out of the hands of
criminals and terrorists while at the same time respecting the
constitutional rights of law-abiding citizens."
High
court looks at reach of Second Amendment
YAHOO
By MARK SHERMAN, Associated Press Writer
March 2, 2010
WASHINGTON – The Supreme Court
appeared willing Tuesday to say that the Constitution's right to
possess guns limits state and local regulation of firearms. But the
justices also suggested that some gun control measures might not be
affected.
The court heard arguments in a case
that challenges handgun bans in the Chicago area by asking the high
court to extend to state and local jurisdictions the sweep of its 2008
decision striking down a gun ban in the federal enclave of Washington,
D.C.
The biggest questions before the
court seemed to be how, rather than whether, to issue such a ruling and
whether some regulation of firearms could survive. On the latter point,
Justice Antonin Scalia said the majority opinion he wrote in the 2008
case "said as much."
The extent of gun rights are "still
going to be subject to the political process," said Chief Justice John
Roberts, who was in the majority in 2008.
At the very least, Tuesday's
argument suggested that courts could be very busy in the years ahead
determining precisely which gun laws are allowed under the Second
Amendment's "right to keep and bear arms," and which must be stricken.
James Feldman, a Washington-based
lawyer representing Chicago, urged the court to reject the challenges
to the gun laws in Chicago and its suburb of Oak Park, Ill. Handguns
have been banned in those two places for nearly 30 years.
The court has held that most of the
rest of the Bill of Rights applies to state and local laws. But Feldman
said the Second Amendment should be treated differently because guns
are different. "Firearms are designed to injure and kill," he said.
But Feldman ran into difficulty with
some of the five justices who formed the majority in 2008. Justice
Anthony Kennedy, who joined Scalia's opinion two years ago, said it
seemed to him that Feldman was arguing that the court got it wrong two
years ago.
Kennedy said other constitutional
provisions have been applied, or "incorporated," against the states
without stripping them of the authority to impose reasonable
regulations. "Why can't we do the same thing with firearms?" he asked.
Of the other two justices in the
majority then, Justice Samuel Alito also appeared to agree that the
Second Amendment should be extended to state and local laws and Justice
Clarence Thomas said nothing, as is his custom during argument.
Tuesday's statements from the court
also left little doubt that it would not break new ground in how it
might apply the Second Amendment to states and cities.
As in earlier cases applying parts
of the Bill of Rights to the states, the justices suggested they use
the due process clause of the 14th Amendment, passed in the wake of the
Civil War, to ensure the rights of newly freed slaves.
The court has relied on that same
clause — "no state shall deprive any person of life, liberty or
property without due process of law" — in cases that established a
woman's right to an abortion and knocked down state laws against
interracial marriage and gay sex.
This is the approach the National
Rifle Association favors.
For years, Scalia has complained
about the use of the due process clause. But Tuesday he said, "As much
as I think it's wrong, even I have acquiesced in it."
Alan Gura, the lawyer for the
Chicago residents challenging the statute, urged the court to employ
another part of the 14th amendment, forbidding a state to make or
enforce any law "which shall abridge the privileges or immunities of
citizens of the United States."
They argue this clause was intended
as a broad guarantee of the civil rights of the former slaves, but that
a Supreme Court decision in 1873 effectively blocked its use.
Breathing new life into the
"privileges or immunities" clause might allow for new arguments to
shore up other rights, including abortion and property rights, liberal
and conservative legal scholars have said.
But why use that approach, calling
for overturning 140 years of law, Scalia said, "unless you're bucking
for a place on some law school faculty?"
Gura assured the court he is not in
search of a job.
A decision is expected by the end of
June.
The case is McDonald v. Chicago,
08-1521.
Supreme court
to decide how far gun rights extend
YAHOO
By James Vicini
Wed Sep 30, 2009, 2:43 pm ET
WASHINGTON (Reuters) – The U.S. Supreme Court revived the
legal battle over gun rights in America, saying it would decide whether
the constitutional right of individuals to own firearms trumped state
and local laws. In a brief order on Wednesday, the court said it
would settle the question by ruling in a dispute over a strict gun
control law in Chicago that bans the ownership of handguns in most
cases. Individuals and gun rights groups had challenged the law.
Eighty percent of Chicago's 510 murders in 2008 were committed with
guns -- among them 34 Chicago schoolchildren. Gun control
advocates said the decision was no surprise. They expected the court
would merely reinforce last year's ruling upholding a constitutional
right to bear arms narrowly limited to guns in the home for
self-defense.
Gun rights cases have been among the country's most divisive social,
political and legal issues. The
Supreme Court split, in a 5-4 vote, between the conservative and
liberal factions, in the 2008 ruling.
The ruling last year prohibited the federal government from imposing
certain restrictions, but it left unclear whether the right also
applied to state and local gun control laws. The justices are
expected to hear arguments early next year with a decision likely by
late June.
GUNS CROSS STATE BORDERS
The United States is estimated to have the world's highest civilian gun
ownership rate. Gun deaths average about 80 a day, 34 of them
homicides, according to U.S. government statistics.
Many researchers believe the few U.S. cities that have gun control laws
are acting largely symbolically in a country with 250 million guns that
can be easily transported across city and state boundaries. Gun
shops are clustered outside Chicago's borders.
"The fact that there are two exceptions in the U.S. does not change the
perception of the rest of the world that we are a gun-toting place,"
said Jens Ludwig, a sociologist at the University of Chicago and
director of the school's Crime Lab.
"(Gun control advocates are) worried if the bans fall all hell is going
to break loose. But it's not clear that lifting the bans will have the
extreme adverse impact people fear," Ludwig said.
Gun control laws do not appreciably change the rate of household gun
ownership, he said, and historically Chicago has had a low rate.
New York has a strict permit process that amounts to a gun ban and if
Chicago's ban is struck down it could create similar barriers to gun
ownership, unless the Supreme Court rules broadly and forbids all
restrictions.
Justices Overturn Key Campaign
Limits
NYTIMES
By ADAM LIPTAK
January 22, 2010
WASHINGTON — Sweeping aside a century-old understanding and overruling
two important precedents, a bitterly divided Supreme Court on Thursday
ruled that the government may not ban political spending by
corporations in candidate elections.
The ruling was a vindication, the majority said, of the First
Amendment’s most basic free speech principle — that the government has
no business regulating political speech. The dissenters said allowing
corporate money to flood the political marketplace will corrupt
democracy.
The 5-to-4 decision represented a sharp doctrinal shift, and it will
have major political and practical consequences. Specialists in
campaign finance law said they expected the decision, which also
applies to labor unions and other organizations, to reshape the way
elections are conducted.
“If the First Amendment has any force,” Justice Anthony M. Kennedy
wrote for the majority, which included the four members of its
conservative wing, “it prohibits Congress from fining or jailing
citizens, or associations of citizens, for simply engaging in political
speech.”
Justice John Paul Stevens read a long dissent from the bench. He said
the majority had committed a grave error in treating corporate speech
the same as that of human beings. His decision was joined by the other
three members of the court’s liberal wing.
Senator Russ Feingold of Wisconsin, an author of the McCain-Feingold
campaign finance law, called the ruling “a terrible mistake.”
“Ignoring important principles of judicial restraint and respect for
precedent, the Court has given corporate money a breathtaking new role
in federal campaigns,” said Mr. Feingold, a Democrat.
Senator Mitch McConnell of Kentucky, the Republican leader and a
longtime opponent of that law, praised the Court’s decision as “an
important step in the direction of restoring the First Amendment rights
of these groups by ruling that the Constitution protects their right to
express themselves about political candidates and issues up until
Election Day.”President Obama issued a statement calling on Congress to
“develop a forceful response to this decision.”
“With its ruling today,” he said, “the Supreme Court has given a green
light to a new stampede of special interest money in our politics. It
is a major victory for big oil, Wall Street banks, health insurance
companies and the other powerful interests that marshal their power
every day in Washington to drown out the voices of everyday Americans.”
The case had unlikely origins. It involved a documentary called
“Hillary: The Movie,” a 90-minute stew of caustic political commentary
and advocacy journalism. It was produced by Citizens United, a
conservative nonprofit corporation, and was released during the
Democratic presidential primaries in 2008.
Citizens United lost a suit that year against the Federal Election
Commission, and scuttled plans to show the film on a cable
video-on-demand service and to broadcast television advertisements for
it. But the film was shown in theaters in six cities, and it remains
available on DVD and the Internet.
The lower court said the Bipartisan Campaign Reform Act of 2002,
usually called the McCain-Feingold law, prohibited the planned
broadcasts. The law bans the broadcast, cable or satellite transmission
of “electioneering communications” paid for by corporations in the 30
days before a presidential primary and in the 60 days before the
general election. That leaves out old technologies, like newspapers,
and new ones, like YouTube.
The law, as narrowed by a 2007 Supreme Court decision, applies to
communications “susceptible to no reasonable interpretation other than
as an appeal to vote for or against a specific candidate.” It also
requires spoken and written disclaimers in the film and advertisements
for it, along with the disclosure of contributors’ names.
The lower court said the film was a prohibited electioneering
communication with one purpose: “to inform the electorate that Senator
Clinton is unfit for office, that the United States would be a
dangerous place in a President Hillary Clinton world and that viewers
should vote against her.”
The McCain-Feingold law does contain an exception for broadcast news
reports, commentaries and editorials.
On its central point, Justice Kennedy’s majority opinion was joined by
Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Samuel
A. Alito Jr., and Clarence Thomas. Justice Stevens’s dissent was joined
by Justices Stephen G. Breyer, Ruth Bader Ginsburg and Sonia Sotomayor.
When the case was first argued last March, it seemed a curiosity likely
to be decided on narrow grounds. The court could have ruled that
Citizens United was not the sort of group to which the McCain-Feingold
law was meant to apply, or that the law did not mean to address
90-minute documentaries, or that video-on-demand technologies were not
regulated by the law. Thursday’s decision rejected those alternatives.
Instead of deciding the case in June, the court set down the case for a
rare re-argument in September. It now asked the parties to address the
much more consequential question of whether the court should overrule a
1990 decision, Austin v. Michigan Chamber of Commerce, which upheld
restrictions on corporate spending to support or oppose political
candidates, along with part of McConnell v. Federal Election
Commission, the 2003 decision that upheld the central provisions of the
McCain-Feingold campaign finance law.
On Thursday, the court answered its own questions with a resounding yes.
'Hillary:
The Movie' Gets New Airing at High Court
NYTIMES
By THE ASSOCIATED PRESS
September 9, 2009
Filed at 9:52 a.m. ET
WASHINGTON (AP) -- ''Hillary: The Movie'' is returning to the Supreme
Court for a limited engagement and with the chance to overhaul laws
governing federal campaigns ranging from the White House to
Congress.
The justices were hearing arguments in the case Wednesday for the
second time. It began as a dispute over whether a 90-minute movie
attacking Hillary Rodham Clinton's presidential ambitions should be
regulated as a campaign ad.
But it took on greater significance after the justices decided to use
the case to consider whether to ease restrictions, established in two
earlier decisions now at issue, on how corporations and labor unions
may spend money to influence elections. The public argument
session
will be the first for Justice Sonia Sotomayor, who was welcomed to the
court Tuesday in a ceremony that was attended by President Barack Obama
and Vice President Joe Biden.
The court will release an audio recording of the arguments soon after
they conclude and the C-SPAN cable network has said it will air the
material. Like most campaign finance lawsuits, this case pits the
court's conservatives, generally skeptical of campaign finance limits,
against its liberals. Sotomayor is not expected to play a pivotal role
in the case.
Instead, the focus will be on the willingness of two conservatives,
Chief Justice John Roberts and Justice Samuel Alito, to overrule
earlier decisions. Both justices spoke at length in their Senate
confirmation hearings about the importance of abiding by precedents
even if they would have voted the other way. The other three
conservative-leaning justices, Anthony Kennedy, Antonin Scalia and
Clarence Thomas, are on record opposing the restrictions on
corporations and unions.
The details of the anti-Clinton movie have faded in prominence now that
the court is looking more broadly at campaign finance law. A
conservative not-for-profit group, Citizens United, wanted to air ads
for the anti-Clinton movie and distribute it through video-on-demand
services on local cable systems during the 2008 Democratic primary
campaign.
But federal courts said the movie looked and sounded like a long
campaign ad, and therefore should be regulated like one. The
movie was
advertised on the Internet, sold on DVD and shown in a few theaters.
Campaign regulations do not apply to DVDs, theaters or the
Internet.
The film is filled with criticisms of the former first lady, whom Obama
defeated in the primaries and then made his secretary of state. It
includes Dick Morris, a former adviser to President Bill Clinton who is
now a Clinton critic, saying the one-time candidate is ''the closest
thing we have in America to a European socialist.''
It's ''not a musical comedy,'' Justice Stephen Breyer said after
watching the movie.
But the lawyer for Citizens United, Theodore Olson, said federal law is
wrongly preventing corporations and unions from airing their views, no
matter how strongly held.
''Why is it easier to dance naked, burn a flag or wear a T-shirt
profanely opposing the draft,'' Olson said in July at an event
sponsored by the conservative Federalist Society, ''than it is to
advocate the election or defeat of a president? That cannot be right.''
In 2003, Olson was President George W. Bush's top Supreme Court lawyer
and he defended the campaign finance provision he now is
challenging.
The current solicitor general, Elena Kagan, is making her first
argument at the high court in support of the laws under attack. Kagan
was a finalist for the seat that went to Sotomayor. Also involved
in
the case is Sen. John McCain, R-Ariz., whom Obama defeated in November.
McCain, Sen. Russ Feingold, D-Wis., and other members of Congress are
siding with Obama in asking that the restrictions be kept in place.
Justice Roberts' big test arrives this week
DAY
Posted: 09/04/2009 11:54:54 PM EDT
Updated: 09/04/2009 11:55:07 PM EDT
President Obama's health care speech tomorrow will be only the second
most consequential political moment of the week. Judged by the
standard of an event's potential long-term impact on our public life,
the most important will be the argument before the Supreme Court (on
the same day, as it happens) about a case that, if decided wrongly,
could surrender control of our democracy to corporate interests.
This sounds melodramatic. It's not. The court is considering
eviscerating laws that have been on the books since, in one case, 1907
and in the other, 1947 banning direct contributions and spending by
corporations in federal election campaigns. Doing so would obliterate
precedents that go back two and three decades.
The full impact of what the court could do in Citizens United v.
Federal Election Commission has only begun to receive the attention it
deserves. Even the word "radical" does not capture the extent to which
the justices could turn our political system upside down. Will it use a
case originally brought on a narrow issue to bring our politics back to
the corruption of the Gilded Age?
Citizens United, a conservative group, brought suit arguing that it
should be exempt from the restrictions of the 2002 McCain-Feingold
campaign finance law for a movie it made that was sharply critical of
Hillary Clinton. The organization said it should not have to disclose
who financed the film.
Instead of deciding the case before it, the court engaged in a
remarkable act of overreach. On June 29, it postponed a decision and
called for new briefs and a highly unusual new hearing, which is
Wednesday's big event. The court chose to consider an issue only
tangentially raised by the case. It threatens to overrule a 1990
decision that upheld the long-standing ban on corporate money in
campaigns. I don't have the space to cite all the precedents the
court would have to set aside, going back to the Buckley campaign
finance ruling 1976, if it threw out the prohibition on corporate
money. Suffice it to say that there is one member of the court who has
spoken eloquently about the dangers of ignoring precedents.
"I do think that it is a jolt to the legal system when you overrule a
precedent," he said. "Precedent plays an important role in promoting
stability and evenhandedness. It is not enough -- and the court has
emphasized this on several occasions -- it is not enough that you may
think the prior decision was wrongly decided. That really doesn't
answer the question, it just poses the question."
This careful jurist continued: "And you do look at these other factors,
like settled expectations, like the legitimacy of the court, like
whether a particular precedent is workable or not, whether a precedent
has been eroded by subsequent developments."
He learnedly cited Alexander Hamilton who wrote in Federalist 78: "To
avoid an arbitrary discretion in the judges, they need to be bound down
by rules and precedents."
Chief Justice John Roberts, the likely swing vote in this case, was
exactly right when he said these things during his 2005 confirmation
hearings. If he uses his own standards, it is impossible to see how he
can justify the use of "arbitrary discretion" to discard a
well-established system whose construction began with the Tillman Act
of 1907.
Were the courts that set the earlier precedents "legitimate"? This ban
was upheld over many years by justices of a variety of philosophical
leanings. We are not talking about overturning a single decision by a
bunch of activists in robes seizing a temporary court majority.
Are the precedents "workable"? The answer is clearly yes, which is why
there is absolutely no popular demand to let corporate cash loose into
our politics. Our system would be less "workable" if the court abruptly
changed the law.
Has the precedent been "eroded"? Absolutely not. In case after case, no
matter where particular court majorities stood on particular campaign
finance provisions, the ban on corporate contributions was taken for
granted. As the court stated just six years ago, Congress' power to
prohibit direct corporate and union contributions "has been firmly
embedded in our law." That's what you call "settled expectations."
This case is the clearest test Justice Roberts has faced so far as to
whether he meant what he said to Congress in 2005. I truly hope he
passes it. If he doesn't, he will unleash havoc in our political system
and greatly undermine the legitimacy of the court he leads.
E.J. Dionne is a columnist for the
Washington Post Writers Group.
BANNING BOOKS?
By BRADLEY A. SMITH
September 2, 2009 --
THE Supreme Court seems poised to reshape cam paign-finance law, affirm
ing fundamental First Amendment rights by overturning restrictions on
corporate political speech when it rehears Citizens United v. FEC next
Tuesday.
At issue is whether the government can ban distribution of a political
documentary, "Hillary: The Movie," produced by Citizens United, a
conservative group that received some corporate funding to make the
film.
The government argues that it can -- relying on a 1990 case, Austin v.
Michigan Chamber of Commerce, that upheld a state law banning corporate
political spending, and McConnell v. FEC, the 2003 case that upheld the
constitutionality of the McCain-Feingold campaign finance law.
In fact, at a remarkable oral argument in March, the government claimed
that Austin and McConnell give it the authority to ban books con-
taining even one line of ad- vocacy for or against a poli- tical
candidate, if (like most books) they produced or distributed by a
corporation.
In June, the high court announced that instead of deciding the narrower
issue of "Hillary: The Movie," it would rehear the case to consider
overruling Austin and McConnell.
In anticipation of the reargument, groups that support onerous
campaign-finance restrictions have launched a series of hyperbolic
attacks on corporate political speech. In a typical outburst, Fred
Wertheimer of Democracy 21 claims that if Austin is overruled, "Banks
like Citigroup, investment firms like Merrill Lynch, insurance
companies like AIG and corporations like General Motors will be free to
spend hundreds of millions," and will "drown out the voices of average
Americans."
Nonsense. In 2002, the last election cycle in which soft money
contributions from corporations were allowed in federal races, the
largest corporate donor spent only $9.3 million. Fewer than 10
corporations spent as much as $2.5 million. (Surprisingly to some, the
three largest corporate donors gave all of their contributions to
Democrats.) None were banks, investment firms or insurance companies.
The overwhelming majority of some $2 billion in political spending came
from individuals.
The evidence is even more convincing in the states.
Today, 26 states allow unlimited corporate electioneering in state
races -- independent ads advocating for or against candidates. Are
these 26 states hopelessly lost in a cesspool of corporate influence?
Certainly not.
Furthermore, 28 states allow direct contributions from corporations to
candidates -- in seven states, such contributions are unlimited. (New
Mexico recently passed limits that haven't yet gone into effect;
Nebraska has no limit except candidates may not accept over 40 percent
of their funds from businesses or other groups.)
Yet states like Utah and Virginia, with no limits, are consistently
ranked among the best governed in the nation.
Those who support restrictions on speech bear the burden of proof to
show that unfettered speech by corporations corrodes democracy. That is
clearly not the case in the states that already allow corporations to
speak in elections. In fact, the opposite is true -- corporate (and
union) political speech enriches debate and increases voter knowledge.
As the Center for Competitive Politics noted in our friend-of-the-court
brief to the Supreme Court in Citizens United, prior to the 1930s,
courts routinely struck down economic regulation on constitutional
grounds.
However, in United States v. Carolene Products Co., a 1938 case, the
high court established a core constitutional principle: Congress has
broad constitutional authority to regulate the economy -- but only so
long as all Americans, including corporate shareholders, have robust
political rights allowing them to defend their economic interests in
the political process.
Silencing corporate speech -- that is, the speech of millions of
Americans who have pensions, college savings accounts, or other
investments in corporate stocks -- is not compatible with Carolene
Products' assurance that an open political process will allow all
Americans to protect their economic liberties when Congress sets out to
tax and regulate commerce. It's time to strike down laws restricting
such participation.
Protection of economic liberty is important, but the implications of
banning corporate speech go even further.
If political speech can be banned merely because it is produced or
distributed by a corporation or with some corporate funding, then (as
the government now argues) books, movies, newspapers, TV and radio
could be prohibited from any political speech or programming. Surely
this is anathema to the First Amendment.
As currently interpreted by the Supreme Court, the First Amendment
provides greater protection for flag burning, nude dancing, simulated
child pornography and tobacco ads than for core political speech.
The Citizens United case provides an opportunity for the court to
return to first principles and declare that the words of the First
Amendment, "Congress shall make no law . . ." apply to all Americans,
not just those whose speech is favored by politicians.
Bradley A. Smith is the chair man of
the Center for Competi tive Politics and the Blackmore/ Nault
Designated Professor of Law at Capital University Law School in
Columbus, Ohio.
Supreme Court to Revisit ‘Hillary’
Documentary
NYTIMES
By ADAM LIPTAK
August 30, 2009
WASHINGTON — The Supreme Court will cut short its summer break in early
September to hear a new
argument in a momentous case that could transform the way political
campaigns are conducted.
The case, which arises from a minor political documentary called
“Hillary: The Movie,” seemed an oddity when
it was first argued in March. Just six months later, it has turned into
a juggernaut with the potential to shatter a
century-long understanding about the government’s ability to bar
corporations from spending money to support
political candidates.
The case has also deepened a profound split among liberals, dividing
those who view government regulation of
political speech as an affront to the First Amendment from those who
believe that unlimited corporate campaign
spending is a threat to democracy.
At issue is whether the court should overrule a 1990 decision, Austin
v. Michigan Chamber of Commerce, which
upheld restrictions on corporate spending to support or oppose
political candidates. Re-arguments in the Supreme
Court are rare, and the justices’ decision to call for one here may
have been prompted by lingering questions about
just how far campaign finance laws, including McCain-Feingold, may go
in regulating campaign spending by
corporations.
The argument, scheduled for Sept. 9, comes at a crucial historical
moment, as corporations today almost certainly
have more to gain or fear from government action than at any time since
the New Deal.
The court’s order calling for re-argument, issued in June, has
generated more than 40 friend-of-the-court briefs.
As a group, they depict an array of strange bedfellows and uneasy
alliances as they debate whether corporations
should be free to spend millions of dollars to support the candidates
of their choice.
The American Civil Liberties Union and its usual allies are on opposite
sides, with the civil rights group fighting
shoulder to shoulder with the National Rifle Association to support the
corporation that made the film.
To the dismay of many of his liberal friends and clients, Floyd Abrams,
the celebrated First Amendment lawyer,
is representing Senator Mitch McConnell of Kentucky, the Republican
leader, a longtime foe of campaign finance
laws.
“Criminalizing a movie about Hillary Clinton is a constitutional
desecration,” Mr. Abrams said.
Most of the rest of the liberal establishment is on the other side,
saying that allowing corporate money to flood the
airwaves would pollute and corrupt political discourse.
“This is rough business,” said Fred Wertheimer, a veteran advocate of
tighter campaign regulations. “We’re not
dealing with campaign finance laws. We’re dealing with the essence of
power in America.”
The case involves “Hillary: The Movie,” a mix of advocacy journalism
and political commentary that is a relentlessly
negative look at Mrs. Clinton’s character and career. The documentary
was made by a conservative advocacy
group called Citizens United, which lost a lawsuit against the Federal
Election Commission seeking permission to
distribute it on a video-on-demand service. The film is available on
the Internet and on DVD. The issue was that
the McCain-Feingold law bans corporate money being used for
electioneering.
A lower court agreed with the F.E.C.’s position, saying that the sole
purpose of the documentary was “to inform
the electorate that Senator Clinton is unfit for office, that the
United States would be a dangerous place in a
President Hillary Clinton world and that viewers should vote against
her.”
At the first Supreme Court argument in March, a government lawyer,
answering a hypothetical question, said the
government could also make it a crime to distribute books advocating
the election or defeat of political candidates
so long as they were paid for by corporations and not their political
action committees.
That position seemed to astound several of the more conservative
justices, and there were gasps in the courtroom.
“That’s pretty incredible,” said Justice Samuel A. Alito Jr.
The discussion of book banning may have helped prompt the request for
re-argument. In addition, some of the
broader issues implicated by the case were only glancingly discussed in
the first round of briefs, and some justices
may have felt reluctant to take a major step without fuller
consideration.
The question of what Congress may do to regulate books is a
hypothetical one: the relevant law, the Bipartisan
Campaign Reform Act of 2002, more commonly called McCain-Feingold,
applies only to broadcast, satellite or
cable transmissions. That leaves out old technologies, like newspapers
and books, and new ones, like the Internet.
But the constitutional principles involved, some of the justices
suggested, ought to apply regardless of the medium.
In an interview, Mr. Wertheimer seemed reluctant to answer questions
about the government regulation of books.
Pressed, Mr. Wertheimer finally said, “A campaign document in the form
of a book can be banned.”
The McCain-Feingold law does contain an exception for broadcast news
reports, commentaries and editorials.
But a brief supporting Citizens United filed in January by the
Reporters Committee for Freedom of the Press
questioned whether the government should be making decisions about what
is and is not news.
“ ‘Hillary: The Movie,’ ” the brief said, “does not differ, in any
relevant respect, from the critiques of presidential
candidates produced throughout the entirety of American history.”
In a measure of the importance of that group’s support, Theodore B.
Olson, who represents Citizens United,
referred twice to the brief at the argument in March. (He stumbled both
times, though, calling the group the
“Reporters Committee for Freedom of Speech” and the “Reporters
Committee for the Right to Life.”)
After the argument, Mr. Wertheimer pushed hard to persuade the group to
alter its stance.
“He e-mailed, he memo-ed, he advocated, he called a couple of people
who were donors, and he cost us some
money,” said Lucy Dalglish, the executive director of the committee.
But the group filed a second brief supporting Citizens United in July.
“I got fair treatment,” Mr. Wertheimer said,
“and they basically disagreed with my position.”
The disagreement echoes one within the civil rights community, said
Burt Neuborne, the legal director of the
Brennan Center for Justice at New York University School of Law and a
former official of the A.C.L.U.
Mr. Neuborne said he disagreed with the A.C.L.U.’s longstanding
position that regulation of corporate campaign
spending may violate the First Amendment. The A.C.L.U.’s position was
the product of “a huge fight” within the
group, he said, adding that “it never was more than a 60-40 split on
the board.”
The Brennan Center filed a brief supporting the government in the case,
Citizens United v. Federal Election
Commission, No. 08-205, while the A.C.L.U. filed one supporting
Citizens United.
Mr. Neuborne and four other former A.C.L.U. officials took a middle
ground, urging the court to rule narrowly
to protect the documentary without making a major constitutional
statement.
Indeed, it would not be hard for the court to rule in favor of Citizens
United on narrow grounds. The court could
say the film was not the sort of “electioneering communication” that
McCain-Feingold, which mostly concerned
television advertisements, was meant to address. It could say that
communications that people had to seek out
might be treated differently from uninvited advertisements. Or it could
say that Citizens United was not the sort of
corporation that can be regulated.
But the request for re-argument suggests that the court is on the verge
of bolder action.
DON'T
ASK DON'T TELL ?
San
Francisco Judge background; like
"Dirty Harry" movie (the one where he was in hot pursuit and didn't
wait for a search warrent)?
Court Rules U.S. Seized 2003 Tests Improperly
NYTIMES
By MICHAEL S. SCHMIDT
August
27, 2009
A federal appeals court in California ruled Wednesday that prosecutors
improperly seized the drug tests for the roughly 100 major league
baseball players who tested positive for performance-enhancing drugs in
2003.
“This was an obvious case of deliberate overreaching by the government
in an effort to seize data as to which it lacked probable cause,” Chief
Judge Alex Kozinski wrote in support of a 9-to-2 decision by the United
States Court of Appeals for the Ninth Circuit, in San Francisco.
The ruling is a significant victory for the Major League Baseball
Players Association, which has been fighting in the courts since 2004,
when authorities from the United States attorney’s office for the
Northern District of California seized the tests as part of a wider
investigation into the distribution of performance-enhancing drugs.
Prosecutors would like to use the drug-testing information to question
the players about where they received their substances in order to take
aim at distributors. They and officials from the Department of Justice
must now decide whether to appeal the decision to the United States
Supreme Court. If they do not appeal, the drug-testing information will
be destroyed.
The United States attorney’s office declined comment.
The test results from 2003, the first year baseball tested for
steroids, have created a continuing problem for the sport. In the last
year, the sluggers Alex Rodriguez, Sammy Sosa, Manny Ramirez and David
Ortiz were identified in published reports as having tested positive
that year. Rodriguez and Ortiz admitted that their names were on the
list.
“If the government had never unconstitutionally seized the tests
results, there would never have been any leaks,” Elliot Peters, a
lawyer for the players union, said in a telephone interview, referring
to the published reports that cited anonymous sources.
The union said in a statement, “We are very gratified by this decision,
and hope that this will finally bring this long litigation to a close.”
The tests were supposed to be conducted as an anonymous survey. Not
even the players were supposed to know the results. If more than 5
percent tested positive, the program would continue the following
season with penalties imposed for those who tested positive.
Ultimately, more than 5 percent tested positive, and players began
facing suspensions for steroids in 2004. But for reasons never made
clear, the test results were not immediately destroyed after the 2003
season.
The prosecutors wanted the test results to determine whether 10 players
— the most prominent being Barry Bonds, Jason Giambi and Gary Sheffield
— had been truthful when they testified before a grand jury
investigating the Bay Area Laboratory Co-operative. The prosecutors
secured search warrants to seize the 10 tests, and when agents raided
the companies overseeing the testing, they found the results for the 10
players on a computer mixed with the results of the roughly 100 players
who tested positive.
The agents took all the drug-testing information, and the union filed
court papers challenging the seizure.
At issue in the case is what prosecutors can legally take from a
computer when they use a warrant to search it.
“These types of issues often come up in white-collar investigations,”
said Daniel C. Richman, a professor of law at Columbia University and a
former federal prosecutor. “The government goes in searching for
evidence tied to an alleged fraud and stumbles upon child pornography.
At that point, the question is, what can the government keep and use in
court?”
The government argued that because it could not decipher the
information it found in the computer at the lab, it was entitled to
take all the information it contained so that agents could try to find
what the search warrant said they were entitled to. The prosecutors
found evidence — the list of all players who tested positive — that
they believed was essential to their investigations.
In his ruling, Kozinski said that if the government had the right to
take all of the information on computers, it could lead to huge
seizures of information that the government might not be entitled to.
He set out several rules that he believed would prevent the government
from stumbling upon evidence it was not originally entitled to under
search warrants.
Kozinski has tried to prevent the government from seeing what
individuals look at on the Internet. In 2001, he helped lead a group of
federal employees who fought government monitoring of their computers.
In 2008, he himself was the subject of a judicial conduct panel for
having a Web site that included sexually explicit images.
If prosecutors indeed seek a review from the Supreme Court, it will
require the approval of the Department of Justice’s solicitor general.
Supreme Court to Hear Case on Executive Pay
NYTIMES
By ADAM LIPTAK
August 18, 2009
WASHINGTON
Last summer, Richard A. Posner, a federal appeals court judge, issued a
surprising and prescient dissent. Executive pay is out of control, he
said, and the marketplace cannot be trusted to rein it in. Judge
Posner is a conservative with libertarian leanings, and he is a leader
of the law and economics movement associated with the University of
Chicago. He often relies on economic analysis in his judicial
decisions, and he believes that many questions are best sorted out by
the marketplace.
But corporate America has insulated pay decisions from market
discipline, Judge Posner wrote. “Executive compensation in large
publicly traded firms often is excessive,” he added, “because of the
feeble incentives of boards of directors to police compensation.”
The Supreme Court will hear the case this fall, as anger over huge
bonuses paid to the executives of failing firms continues to grow. The
case, Jones v. Harris Associates, may turn out to be the court’s first
significant statement on the corporate culture that helped lead to the
Great Recession. The case arose from the enormous fees mutual
funds pay to their investment advisers. A three-judge panel of Judge
Posner’s court, the United States Court of Appeals for the Seventh
Circuit, in Chicago, threw out a lawsuit brought by the investors in
three Oakmark mutual funds who said the funds had overpaid their
investment adviser, Harris Associates.
The panel decision, written by Chief Judge Frank H. Easterbrook,
another leader of the law and economics movement, said the marketplace
can be trusted to regulate fees. Judge Posner, dissenting from the full
court’s decision not to rehear the case, said competition had not been
effective in the keeping compensation under control. Before last
year’s market collapse, the mutual fund industry held more than $11
trillion in retirement and personal savings, and it paid advisers
perhaps $100 billion in fees. Mutual funds are odd enterprises.
They are typically formed and run by their investment advisers, which
select the fund’s board of directors. That board then negotiates the
adviser’s fees.
Here is how Warren
Buffett analyzed the situation in his 2003 letter to
shareholders: “Year after year, at literally thousands of funds,
directors had routinely rehired the incumbent management company,
however pathetic its performance had been. Just as routinely, the
directors had mindlessly approved fees that in many cases far exceeded
those that could have been negotiated.”
The plaintiffs in the case before the Supreme Court claimed that Harris
Associates had charged their funds twice as much as it charged its
unaffiliated clients, like pension funds.
The Oakmark funds paid Harris Associates 1 percent of the first $2
billion in assets; independent clients were charged roughly one-half of
1 percent of the first $500 million. One percent of a billion dollars
is nice work if you can get it.
“Mutual funds rarely fire their advisers,” Judge Easterbrook
acknowledged. But, he continued, “investors can and do ‘fire’ advisers
cheaply and easily by moving their money elsewhere.” A 2007 study from
John C. Coates IV and R. Glenn Hubbard supported this conclusion,
finding that mutual fund fees are kept in check by the movement of
investors’ money.
But a brief supporting the plaintiffs filed in the Supreme Court by
three economists, Ian Ayres, Robert E. Litan and Joseph R. Mason,
questioned that study. New research in behavioral economics, the brief
said, showed that most investors have a very poor grasp of rudimentary
truths about probability and a disproportionate aversion to taking
losses. Mutual fund investors thus tend to look at past
performance rather than fees. And they have a tendency to sell winning
investments too early and hold losing ones too long.
Even if mutual fund investors could be counted on to act rationally,
the economists’ brief said, they do not have ready access to the
information they need to make sensible choices.
Instead of counting on investor behavior to keep fees in check, the
brief concluded, courts should look to how much advisers charged
independent clients like pension funds. A supporting brief from the
federal government made the same point. There is academic
research to support this view, too.
“In contrast to mutual fund investors,” Diane Del Guercio and Paula A.
Tkac wrote in a 2002 study , “pension clients punish poorly performing
managers by withdrawing assets under management and do not flock
disproportionately to recent winners.”
But Judge Easterbrook questioned the value of such comparisons. The two
kinds of clients, he said, may have different needs. In its brief
urging the Supreme Court not to hear the case, Harris Associates added
that the Oakmark funds had outperformed “virtually every fund in their
peer groups.”
Still, the tide seems to be turning toward skepticism about outsize
compensation. In April, a month after the Supreme Court agreed to hear
an appeal from Judge Easterbrook’s decision, the federal appeals court
in St Louis allowed a suit against another investment adviser,
Ameriprise Financial, to go forward. It was the first ruling in favor
of unhappy mutual fund investors suing over advisers’ fees since
Congress imposed a fiduciary duty on advisers in 1970.
Judge Easterbrook said the law had only a minor role to play, requiring
no more than making sure that advisers “make full disclosure and play
no tricks.”
But when public sentiment, economic research and even Judge Posner
argue for more vigorous judicial examination of whether compensation is
fair, the Supreme Court may just agree.
US Chief Justice Says He, Sotomayor
Must Get Along
NYTIMES
By THE ASSOCIATED PRESS
September 11, 2009
Filed at 1:11 p.m. ET
ANN ARBOR, Mich. (AP) -- U.S. Supreme Court Chief Justice John Roberts
says it's vital he and new Justice Sonia Sotomayor get along well
because they could spend the next quarter century working together in
close quarters.
A sometimes wisecracking Roberts let the University of Michigan's law
dean and about a dozen students and others put a wide range of
questions to him Friday.
Roberts came to Ann Arbor for an on-stage discussion.
Roberts says Sotomayor's long experience as a trial judge will aid the
high court.
He also says it's better to get a 9-0 vote on a narrowly written
decision than a 5-4 vote on a sweeping ruling.
Asked if too many justices came from elite schools, he said no -- some
went to Yale. He's a Harvard law grad.