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Supreme Court rules federal tobacco regulation no basis for case removal

[JURIST] The US Supreme Court [official website; JURIST news archive] handed down decisions in five cases Monday, including Watson v. Philip Morris [Duke Law case backgrounder], where the Court held that a lawsuit against the tobacco company could not be removed from state to federal court solely based on an argument that the tobacco industry is regulated by the Federal Trade Commission. Philip Morris was sued in an Arkansas court for alleged violations of the Arkansas Deceptive Trade Practices Act, and the company sought to have the case heard in federal court instead. Both the federal district court and the US Court of Appeals for the Eighth Circuit allowed the removal [8th Circ. decision] under 28 USC 1442(a)(1) [text], which allows a defendant to remove a case to federal court when the lawsuit is based on actions taken under direction of a federal officer. The Supreme Court reversed, holding that "the fact that a federal regulatory agency directs, supervises, and monitors a company's activities in considerable detail" does not permit removal under the federal officer removal statute. Read the Court's unanimous opinion [text] per Justice Breyer.

In Long Island Care at Home v. Coke [Duke Law case backgrounder; JURIST report], the Court upheld a 30-year-old Department of Labor regulation [29 CFR 552.109(a) text] that eliminates overtime for home health care workers providing "companionship services" employed by outside agencies and not directly by families. The DOL regulation creates an exemption to the general requirement under the Fair Labor Standards Act (FLSA) [PDF text] that overtime workers be paid "time and a half" compensation. Evelyn Coke sued her former employer seeking compensation for more than 20 years of overtime, and the US Court of Appeals for the Second Circuit struck down the regulation [opinion, PDF] in 2004, finding it violated congressional intent for the FLSA to provide overtime compensation to employees. The Supreme Court reversed, saying the regulation is "valid and binding." Read the Court's unanimous opinion [text] per Justice Breyer.

In United States v. Atlantic Research Corp. [Duke Law case backgrounder], the Court held that a party potentially liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) [text] for cleaning up areas contaminated by hazardous materials may sue under Section 107(a) [42 USC 9607 text] of the Act for contribution from other parties. Atlantic voluntarily cleaned up contamination caused by the company's work retrofitting rocket motors for the US government and later sought to recover some of its costs from the government. The US Court of Appeals for the Eighth Circuit ruled [PDF text] that the company could pursue its lawsuit under Section 107(a), even if it was barred from bringing an action for contribution under Section 113(f) [42 USC 9613 text] of the law because the clean-up was not compelled by a CERCLA enforcement action. The Supreme Court affirmed the federal appeals court ruling. Read the Court's unanimous opinion [text] per Justice Thomas.

In Beck v. PACE International Union [Duke Law case backgrounder; JURIST report], the Court held that Crown Vantage, Inc., a pension plan sponsor, did not breach its fiduciary duties by failing to consider a termination plan advocated by PACE International Union when Crown filed for bankruptcy. PACE proposed that Crown terminate pension plans by merging them with PACE's multiemployer plan, but Crown's directors instead opted for a standard termination by purchasing annuities. The Supreme Court reversed the Ninth Circuit's decision [PDF text] in the case, ruling that Crown did not breach fiduciary duties under the Employee Retirement Income Security Act (ERISA) [text] by not considering PACE's merger proposal because "merger is not a permissible method of terminating a single-employer defined-benefit pension plan" under ERISA. Read the Court's unanimous opinion [text] per Justice Scalia.

Finally, in Fry v. Plilar [Duke Law case backgrounder; JURIST report], the Court held that a federal court must apply the "substantial and injurious effect" standard of Brecht v. Abrahamson [opinion] in a federal habeas proceeding when examining the prejudicial impact of constitutional error in a state court criminal trial. The Supreme Court affirmed the Ninth Circuit's decision [PDF text], ruling that federal courts must apply the Brecht standard whether or not a state appellate court recognized that there was a constitutional error and reviewed it under the "harmless beyond a reasonable doubt" standard found in Chapman v. California [opinion]. Read the Court's opinion [text] per Justice Scalia, along with a concurrence and dissent in part [text] from Justice Stevens and a second concurrence and dissent in part [text] from Justice Breyer.

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