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Sunday, May 27, 2007

Supreme Court Update from Aaron Street

Greetings, sportsfans!  Lawyers are all about delayed gratification.  We can walk by a perfectly good Frisbee game or lawn party to enter the law library, content in the knowledge that in another 10 years we’ll have a satisfying career generating discovery requests and a head start on a comfortable retirement.  And so Court watchers placidly slog through soul-sapping opinions on the rules for contributory negligence all year long certain that at least they’ll get something juicy at the end of the Term.  This week’s action tests exactly how far that faith can be pushed: despite resolution of 6 cases, the offerings barely moved the needle in terms of pure interest.  It’s like emptying out your trick-or-treat bag to find only apples.  But take heart, dear reader; at least they’re good for you.  The same is true for one of this week’s offerings.

Bell Atlantic Corp. v. Twombly, 05-1126

A couple times each Term, the Court takes a relatively minor case and unexpectedly turns it into a casebook-leading decision endlessly cited by millions of practitioners for foundational legal principles.  Bell Atlantic may turn out to be this Term’s surprise 800-pound gorilla. 

Plaintiffs sued the 4 enormous telecom companies known by the increasingly incongruous term “Baby Bells” (or ILECs, to telecom geeks) under § 1 of the Sherman Act, claiming that they conspired (1) not to compete in each other’s geographic territories, and (2) to resist other competitors (CLECs) who were encouraged to enter the market by the 1996 Telecom Act’s deregulation provisions. The only factual basis pleaded for this claim, however, was that the defendants engaged in parallel conduct. DHS (+6) held that these allegations could not survive a motion to dismiss because they did not plausibly support an inference of an agreement not to compete.  Longstanding Sherman Act precedents require an actual agreement; even consciously parallel conduct, without more, is not enough.  Thus, at the pleading stage, a plaintiff must allege parallel conduct that makes the existence of an agreement plausible.  Or he must allege an actual agreement, but conclusory allegations of an agreement are not sufficient without factual specifics. 

The Court explained that this standard is consistent with Rule 8(a)(2)’s requirement of “a short and plain statement of the claim showing that the pleader is entitled to relief” and Conley v. Gibson (1957)’s requirement of “fair notice” of the “the grounds” upon which the claim rests.  While a plaintiff need not give “detailed factual allegations,” he must plead sufficient facts that, if true, “raise a right to relief above the speculative level.”  In other words, the factual allegations must “plausibly suggest” unlawful conduct, not merely be “consistent with” it.  Notably, DHS restated this standard as requiring “enough fact to raise a reasonable expectation that discovery will reveal evidence” to support a claim.  Proving that evolving standards of decency aren’t just for death penalty cases, the Court explicitly tied this pleading safeguard to the crushing expense of modern-day discovery (especially in antitrust cases) and the danger of plaintiffs’ using that threat to extort settlements in even “anemic cases.”  Citing a 24-year-old footnote sure to be cut-and-pasted into countless motions to dismiss (and proving once and for all that David Souter is the king of marginalia), the Court held that “a district court must retain the power to insist upon some specificity in pleading before allowing a potentially massive factual controversy to proceed.”

DHS rejected a literal reading of Conley’s oft-quoted saw that dismissal is improper unless “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”  That passage must be read in light of Conley’s other passages requiring factual notice of “the grounds” that entitle a plaintiff to relief.  And the “no set of facts” formulation is simply inconsistent with later decisions like Dura Pharmaceuticals v. Broudo (2005), which require a “reasonably founded hope that a plaintiff would be able to make a case.”  Nor does Swierkiewicz v. Sorema (2002), which held that a discrimination plaintiff need not plead “specific facts” to support a Title VII claim, cut against the Court’s decision.  That case simply corrected one lower court’s requirement of unduly “particularized” pleading; Swierkiewicz did not mean that a plaintiff need not plead enough facts to “plausibly” support relief. 

Finally, the Court applied its new standard to the complaint at hand.  The parallel conduct alleged by plaintiffs—resisting new market entrants and declining to enter newly deregulated markets with extremely high barriers to entry—is consistent with rationally competitive behavior.  Therefore, because plaintiffs did not plead some factual basis to infer an unlawful agreement, they “have not nudged their claims across the line from conceivable to plausible,” and their complaint must be dismissed.

In a 28-page dissent, JPS (+RBG) accused the Court of abandoning good, old-fashioned notice pleading for judicial assessments of “plausibility.”  Rule 8 was designed to eliminate the fact pleading required in the bad old days.  As much as Justice Stevens apparently loved the white-knuckle two-lane driving of the old days, he could do without its white-knuckle pleading rules.  Conley and Swierkiewicz squarely refute fact pleading, notwithstanding the majority’s historical revisionism and ill-advised scrapping of the “no set of facts” test.  JPS read the complaint as alleging an actual agreement supported by parallel conduct, and this should be more than enough to survive a motion to dismiss.  Any concerns about discovery costs should be addressed by careful management of the discovery process, not by applying a summary-judgment-style standard at the pleadings stage, JPS wrote.

OPINION WATCH: DHS’s authorship of this opinion almost surely means that the conservatives have prevailed in the school-integration cases.  Counting those as one, only two cases now remain from December, and only the Chief and SAA have yet to write.  I’m sticking by my prediction that the Chief is keeping the race cases, which is well-deserved since he is adopting more than his fair share of dogs this Term (see Hinck below).

Los Angeles County, California v. Rettele, 06-605

When the Court gets jittery, it reaches for its equivalent of a nicotine patch to calm its nerves: a good old per curiam summary reversal of the Ninth Circuit.  Everyone on First Street is a little calmer after Monday.  The plaintiffs in this case, who are white, sued under § 1983 after officers mistakenly searched their home looking for 4 black suspects.  Turns out the plaintiffs had bought the home from the suspects shortly before the police got their search warrant.  Just as it only rains when you forget your umbrella, going to sleep naked more or less guarantees that the cops will arrive that night.  And so it was here.  The officers rousted the plaintiffs out of the bed and forced them to make like Greek statues for 3 minutes (but probably minus the placid expressions on their faces), while police searched the rest of the house.  The CA9 found that this treatment unnecessarily denuded the plaintiffs of their dignity and therefore their Fourth Amendment rights.  Proving that turnabout is fair play, the CA9 stripped the officers of their qualified immunity.  The court of appeals reasoned that once the officers saw the white occupants of the house, they should have known they had the wrong house and stopped the search.

It took the Court 7 pages to set the law aright.  Police may reasonably detain a house’s occupants during a search, to protect officer safety and the integrity of the search.  Here, they did not have to abandon their search simply because they encountered persons of a different race than the suspects—“the presence of some Caucasians in the residence did not eliminate the possibility that the suspects lived there as well.”  This was the rare case in which the CA9 was not politically correct enough, for the Court had to instruct that “it is not uncommon in our society for people of different races to live and work together”, or for that matter, to commit crimes together.  Finally, the plaintiffs’ brief au naturel detention was reasonable because the suspects were believed to be armed and could have been hiding a gun under the bed covers.  There was no allegation that the police left plaintiffs unclothed any longer than necessary to secure the room.

JPS (+RBG) penned a two-page concurrence in the judgment, blasting the CA9 for issuing a hotly contested 2-1 decision as an unpublished opinion (a well-known CA9 tactic for hiding summary reversal candidates).  He also restated his long-held view that the Court should not decide the constitutional merits of a case when it can more easily be resolved on qualified immunity grounds, as this one could.  Justice Souter would have simply denied cert.

Winkelman v. Parma City School District, 05-983

The Individuals with Disabilities in Education Act requires federally funded school districts to provide disabled children with a “free appropriate public education.”  A “party aggrieved” by the Individual Education Plan (IEP) formulated by the district may, after exhausting certain administrative procedures, file suit in federal court.  The question in this case is whether parents may proceed pro se in district court either (1) as representatives of their children’s interests or (2) because parents have interests of their own under the IDEA.  The CA6 said no on both counts, citing the common law rule against parents representing their children and holding that parents have no rights under the IDEA, except those that are derivative of their children’s rights.

AMK (+6) reversed.  The Court held that IDEA grants parents independent and enforceable rights.  While no provision explicitly grants parents the right to bring their own lawsuit, IDEA is replete with references to parental rights and involvement throughout the administrative proceedings.  Parents participate in creating the IEP, may request an “impartial due process hearing” to challenge it, and may seek reimbursement of private school tuition if the IEP is inadequate.  AMK concluded that it made no sense to read the statute as “barring parents from seeking to vindicate the rights accorded to them once the time comes to file a civil action.”  Moreover, one of the statute’s stated purposes is protecting the rights of parents.  Citing the “good” line of Lochnerian substantive due process cases—Pierce v. Society of Sisters (1925) and Meyer v. Nebraska (1923)—AMK opined that parents’ rights under IDEA cannot be lightly dismissed as merely derivative of their children’s.  Viewed in light of the overall statutory structure, a parent is “a party aggrieved” under IDEA’s judicial review provision, and may therefore proceed pro se in the federal court.  Finally, the Court rejected a Spending Clause argument that IDEA did not give states fair notice that parents have independent rights.  The Spending Clause was not implicated because the Court’s ruling does not impose any additional monetary obligations on the state.

Justice Scalia (+CT) concurred in the judgment in part and dissented in part.  He would have held that parents have only two types of rights under IDEA that may be vindicated pro se in federal court—a right to private-tuition reimbursement and certain procedural rights during the administrative process.  Parents are not, however, granted a blanket right to challenge the government’s failure to provide a free appropriate public education for their child.  That right obviously inheres in the child, and “the Court’s spraying statutory sections about like buckshot cannot create a substantive parental right to education where none exists.” 

Hinck v. United States, 06-376

The Chief took under a month to crank out this unanimous affirmance of the Federal Circuit.  (In retrospect, I guess it’s not fair to call them the Ninth Circuit With Pocket Protectors—when was the last time the CA9 was unanimously affirmed?).  Given JGR’s quick turnaround, it looks like the New Chief is faithfully following the Old Chief’s dreaded “10-day Rule” for a clerk’s first draft of an opinion.  The most memorable thing about this opinion is its pithy first line: “Bad things happen if you fail to pay federal income taxes when due.  Unless you’re Marion Barry.”  (In the interests of strict accuracy, I should point out that, technically, not all of that quote appears in the actual opinion.)  In any event, a 1996 amendment to 26 U.S.C. § 6404(h)(1) provided judicial review, for the first time, to tax delinquents who wished to challenge the amount of interest the Secretary of the Treasury charged on a tax debt.   The amendment granted jurisdiction to the Tax Court to hear challenges within 180 days of the Secretary’s decision.  Relying copiously on last week’s tax snoozer, EC Term of Years Trust, the Chief held that the Tax Court had exclusive jurisdiction, and rejected plaintiff’s attempt to file in the Court of Federal Claims.  A “precisely drawn, detailed statute” that provides a “specific remedy” for a recognized problem is understood to be exclusive of other general statutes.  Enough said.


Roper v. Weaver, 06-313

The Court had granted this AEDPA case to review the CA8’s reversal of Weaver’s death sentence due to the prosecutor’s inflammatory closing argument.  But in a per curiam opinion for 5 Justices, the Court dismissed the writ as improvidently granted.  The Court explained that it had become aware that the CA8 had granted habeas relief in two other pre-AEDPA cases (including Weaver’s codefendant’s case) where the same prosecutor used the same closing argument.  The Court had also learned that one reason Weaver’s habeas petition fell under AEDPA was because the district court had incorrectly dismissed his pre-AEDPA petition for failure to exhaust state remedies, forcing Weaver to refile after AEDPA’s effective date.  Thus, the Court DIG’d the case to prevent Weaver’s case from being treated in “a needlessly disparate manner” from the two other “virtually identically situated litigants.”  JGR concurred in the result, although he did not agree with all the reasons given by the per curiam opinion.

AS (+CT, SAA) dissented.  He would have reached the merits and reimposed the death sentence.  The Court was wrong to DIG the case because Weaver was not similarly situated to the other litigants. Even though the district court wrongly forced him to file under AEDPA, that was no reason to hold that AEDPA did not apply.  Nor was there any equitable reason to favor Weaver, because he failed to exhaust his appeals of the district court’s improper dismissal, and more importantly, because Weaver challenged AEDPA’s applicability for the first time in his merits brief in the Supreme Court.  Nino chided the Court for rewarding Weaver’s flouting of the Court’s rules and allowing the CA8’s “flagrant misapplication” of AEDPA to remain on the books.  He suggested that other courts ignore the CA8’s decision and view the Court’s DIG as “a rare manifestation of judicial clemency unrestrained by law.”

Dayton v. Hanson, 06-618

To continue the Halloween candy metaphor, this case is like one of those giant orange spongy peanut things: devoid of substance and wholly unsatisfying.  This was the employment discrimination case brought by a fired Senate staffer under the Congressional Accountability Act, which applied civil rights laws to Congress.  The Act provided for mandatory appellate jurisdiction in the Supreme Court over any ruling “upon the constitutionality” of the Act.  The CADC rejected Senator Dayton’s motion to dismiss under the Speech or Debate Clause of the Constitution, but noted that the Clause may limit the scope of the lawsuit in some respects.  In a unanimous 4-page opinion, JPS held that the Court lacked appellate jurisdiction.  He explained that the Act itself states that it is to be construed not to impinge on the Speech or Debate Clause.  The CADC’s opinion doing just that does not constitute a judgment on the constitutionality of the Act.  Treating the appeal as a cert petition, the Court denied cert since there was no circuit split.  JGR was recused.


Here’s the quick rundown on this week’s Orders List.  The Court granted 3 cases, perhaps most notably Department of Revenue of Kentucky v. Davis (06-666), which despite its docket number has nothing to do with the Antichrist.  Although on second thought, AS and CT do see the “Dormant” Commerce Clause as something close to satanic spawn.  The QP here is whether Kentucky violated that clause by exempting its own municipal bonds from taxation, while taxing bonds issued by other states.  Danforth v. Minnesota (06-8273) asks whether state courts may apply a Supreme Court criminal-procedure decision retroactively on collateral review, when it would not be retroactive in federal court under Teague v. Lane.  Last and least, Klein & Co. Futures, Inc. v. NY Board of Trade (06-1625) deals with whether futures commission merchants have statutory standing under the Commodities Exchange Act.

The Court CVSG’d in yet another Dormant Commerce Clause taxation case, General Electric v. New Hampshire Department of Revenue (06-1210), as well as Wyeth v. Levine (06-1249), which asks whether FDA’s drug labeling requirements preempt state-law product liability claims.

Until next time, that’s today’s baseball.

Aaron M. Streett is an associate in the Houston office of Baker Botts LLP and a member of the firm’s Appellate and Supreme Court Practice. The statements, opinions, and subtle emotions expressed herein do not necessarily represent those of Baker Botts LLP; to the extent they are correct, insightful, and not offensive, they most definitely represent the views of the author.  Made in Bangladesh, assembled in USA. If you would like to subscribe to these updates, please send an e-mail to [email protected]

Posted by Administrators on May 27, 2007 at 04:23 PM in Constitutional thoughts | Permalink


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