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Supreme Court hears arguments on electricity contracts, bankruptcy

[JURIST] The US Supreme Court [official website; JURIST news archive] heard oral arguments [day call, PDF; merit briefs] Tuesday in three cases. In NRG Power Marketing v. Maine Public Utilities [oral arguments transcript, PDF; JURIST report], the Court heard arguments on whether the Mobile-Sierra doctrine applies when an entity not party to an interstate electricity contract contests the contract as not being "just and reasonable" as required by Section 206 of the Federal Power Act [text]. Under the Mobile-Sierra doctrine, the Federal Energy Regulatory Commission (FERC) [official website] must presume a wholesale rate contract is "just and reasonable," and that presumption can be overcome only by showing that the contract "seriously harms the public interest." The US Court of Appeals for the DC Circuit held [opinion, PDF] that the Mobile-Sierra doctrine does not apply when challenged by an entity not party to the contract. Counsel for petitioners argued that, "the court of appeals ruling can't be reconciled with Mobile-Sierra's foundation and the need for contractual certainty." Counsel for the FERC argued in support of petitioners. Counsel for the respondents argued against application of the Mobile-Sierra public interest standard.

In Schwab v. Reilly [oral arguments transcript, PDF], the Court heard arguments on whether, under § 522 of the Bankruptcy Code [text], a debtor may keep the full value of property exempted, even after assigning a lesser dollar value, and whether the trustee has to object within 30 days or lose the right to claim the excess value for creditors. The US Court of Appeals for the Third Circuit held [opinion, PDF] that the debtor intended to fully exempt the asset and that the trustee had to object within 30 days. Counsel for the trustee-petitioner argued that the debtor is only entitled to the dollar amount she claimed, not the full value of the asset. Counsel for the US government argued as amicus curiae on behalf of the petitioner. Counsel for the respondent argued that, "[t]here was nothing more that [the respondent] could have done to indicate her intent to exempt the property in full."

In Hemi Group, LLC v. City of New York [oral arguments transcript, PDF; JURIST report], the Court heard arguments on whether city government meets the Racketeer Influenced and Corrupt Organizations Act (RICO) [text] standing requirement that a plaintiff be directly injured in its "business or property" by alleging non-commercial injury resulting from non-payment of taxes by non-litigant third parties. The US Court of Appeals for the Second Circuit ruled [opinion, PDF] that the city of New York has standing to bring a RICO suit against Hemi Group, which operates websites offering cigarettes for sale "tax-free." Counsel for the petitioners argued:

Yet reinstating the one RICO claim was improper because the city does not have standing to sue, based on the injuries that it has alleged. It does not have standing because the city's claim that it lost the sovereign opportunity to tax is not an injury to - to business, and it's not an injury to property.
Counsel for the respondent argued that the city should have standing. Justice Sonia Sotomayor was a member of the three-judge panel on the Second Circuit and has recused herself from the case.

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