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Legal news from Monday, June 28, 2010




Senators offer opposing views on Kagan's experience as confirmation hearings begin
Sarah Miley on June 28, 2010 3:06 PM ET

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[JURIST] The US Senate Judiciary Committee [official website] began confirmation hearings [materials] Monday for Supreme Court [official website] nominee Elena Kagan [JURIST news archive], with Democratic and Republican senators offering contrasting interpretations of Kagan's judicial philosophy and lack of experience on the bench. In his opening statement Senator Ted Kaufman (D-DE) [official website], who replaced Vice President Joe Biden [official profile] after the 2008 presidential election, welcomed Kagan's lack of judicial experience, stating that her experience with all three branches of government would help to diversify the bench and bring a fresh perspective to a court that is composed of all former judges. Addressing Kagan and the committee, Kaufman stated [transcript]:
I was noting the fact that the current Justices all share very similar professional backgrounds. Every one of them served as a federal circuit court judge before being appointed to the Supreme Court. Not one of them has ever run for political office, like Sandra Day O'Connor or Earl Warren or Hugo Black.

Some pundits, and some Senators, have suggested that your lack of judicial experience is somehow a liability. I could not disagree more. While prior judicial experience can be valuable, the Court should have a broader range of perspectives than can be gleaned from the appellate bench.

Kagan's lack of experience was not similarly embraced by Ranking Member Jeff Sessions (R-AL) [official website] who applauded her work as outside the courtroom, but held that there is no replacement for first-hand judicial experience:
Ms. Kagan certainly has numerous talents and many good qualities, but there are serious concerns about this nomination. Ms. Kagan has less real legal experience of any nominee in at least 50 years. And it's not just that the nominee has not been a judge. She has barely practiced law and not with the intensity and duration from which I think real legal understanding occurs.

Ms. Kagan has never tried a case before a jury. She argued her first appellate case just nine months ago. While academia certainly has value, there is no substitute, I think, for being in the harness of the law, handling real cases over a period of years.

Kagan concluded Monday's hearing by pledging to consider every case impartially, modestly, with commitment to principle and in accordance with law. The Senate's confirmation vote is expected to take place by the end of July and puts the Senate on track to meet President Barack Obama's goal of confirming Kagan by the time the court begins its new session in the fall.

Earlier this month, a letter [text, PDF] was released by a group of 69 current and former law school deans [JURIST report], describing her as "superbly qualified." The letter, addressed to Senate Judiciary Committee chair Patrick Leahy (D-VT) and Sessions, was authored by Stanford Law School [academic website] Dean Larry Kramer [professional profile] and represented the views of deans from a diverse group of schools in a variety of states. The group cited Kagan's academic accomplishments, including the qualities she exhibited as former dean of Harvard Law School [official website], to bolster their recommendation. Obama nominated Kagan [JURIST report] in May to replace Justice John Paul Stevens [official profile; JURIST news archive], who announced his retirement [JURIST report] in April. Kagan became the first woman confirmed as Solicitor General [JURIST report] in 2009.




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Supreme Court to rule on Arizona immigration employment law
Hillary Stemple on June 28, 2010 2:25 PM ET

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[JURIST] The US Supreme Court [official website; JURIST news archive] on Monday granted certiorari [order list, PDF] in six cases. In Chamber of Commerce v. Candelaria [docket; cert. petition, PDF], the court will determine whether an Arizona statute imposing sanctions on employers that hire illegal immigrants is preempted by federal law. According to 8 USC § 1324(a)(h)(2) [text], federal law preempts any "[s]tate or local law imposing civil or criminal sanctions upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens," except in cases of state licensing laws. The US Court of Appeals for the Ninth Circuit upheld [opinion, PDF; JURIST report] the Legal Arizona Workers Act [materials] on the basis that the state statute is a licensing law, which exempts it from being preempted by the federal law.

The court will also hear the case of Janus Capital Group v. First Derivative Traders [docket; cert. petition, PDF], where it will determine if a service provider can be held primarily liable in a private securities fraud suit for aiding and participating in another company's misstatements. Section 10(b) of the Securities and Exchange Act [materials] prohibits any manipulation or deception in connection with the purchase or sale of securities, but it is unclear whether the liability associated with the act extends to service providers who aided in the selling of securities where misinformation was involved. The US Court of Appeals for the Fourth Circuit overturned the district court decision [opinion, PDF] and allowed a class action against the petitioner to proceed, holding that a service provider may be liable for securities fraud. There is currently a circuit split on this issue.

In CIGNA Corp. v. Amara [docket; cert. petition, PDF] the court will determine what "showing" is required to entitle participants of the Employee Retirement Income Security Act (ERISA) [materials] to recover benefits where there has been an alleged inconsistency between the explanation of benefits and the terms of the plan. The US Court of Appeals for the Second Circuit applied a "likely harm" standard when affirming the district court's ruling. The circuit courts are deeply divided over this issue, with some requiring a showing of prejudice or reliance in order to recover benefits and others only requiring a discrepancy between the explanation of benefits and the terms of the plan. The Second Circuit has been the only circuit to apply the "likely harm" standard.

The court also granted certiorari in Henderson v. Shinseki, Milner v. Dept. of Navy and Pepper v. United States [dockets].

The court denied certiorari in Philip Morris v. United States [cert. petition, PDF] and six other cases involving tobacco companies, where the tobacco companies were asking the court to overturn a 2006 district court ruling [JURIST reports] that held the tobacco industry [JURIST news archive] liable under civil racketeering laws for deceiving American consumers as to the health effects of their products. The tobacco companies had argued that the district court's decision did not properly consider issues involving the First Amendment [text] and that the government's application of the Racketeer Influenced and Corrupt Organizations Act (RICO) [18 USC §§ 1961–1968] was overbroad. The court declined to hear the cases without comment.

The court also denied certiorari in Holy See v. John Doe [cert. petition, PDF], where the Holy See [official website] was asking the court to consider whether it is entitled to immunity under the Foreign Sovereign Immunities Act (FSIA) [28 USC § 1602 et seq text]. The plaintiff filed a respondeat superior claim against the Vatican alleging that he was a victim of clergy sexual abuse [JURIST news archive] and that the church could be held responsible as the offending priest's employer. The US Court of Appeals for the Ninth Circuit affirmed [opinion, PDF] the district court's ruling that the tort claim fell under the exemptions to FSIA and the Vatican, therefore, did not have immunity. The court declined to hear the case without comment.




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Supreme Court rules Sarbanes-Oxley oversight board unconstitutional
Sarah Miley on June 28, 2010 1:49 PM ET

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[JURIST] The US Supreme Court [official website; JURIST news archive] on Monday ruled [opinion, PDF] 5-4 in Free Enterprise Fund and Beckstead and Watts, LLP v. Public Company Accounting Oversight Board [Cornell LII backgrounder; JURIST report] that the Sarbanes-Oxley Act of 2002 [text] violates constitutional separation of powers by affording members of the Public Company Accounting Oversight Board (PCAOB) [board website] executive power while removing any presidential authority to control the exercise of such power. The US Court of Appeals for the District of Columbia Circuit held [opinion, PDF; JURIST report] that the act is constitutional because Congress is able to restrict the president's removal power in any way it "deems best for the public interest" and because the constitutional authority to appoint implies the authority to limit, restrict and regulate the removal of such appointments. The Supreme Court reversed the circuit court's ruling, holding that the PCAOB was too attenuated from presidential authority because the act created a multilevel tenure provision that protects board members from removal except for good cause. Additionally, board members could be removed only by the Securities and Exchange Commission (SEC) [official website] rather than by the president directly, withdrawing from the chief executive any decision on whether that good cause exists. Chief Justice John Roberts, writing the opinion of the court, held that because the SEC cannot remove a board member at will, the president cannot hold the commission fully accountable for the board's conduct. The president is limited to reviewing the commissioner's good-cause determination for removal and is powerless to intervene on that determination unless it is so unreasonable as to constitute "inefficiency, neglect of duty, or malfeasance" in office. Roberts noted the effects of expanding legislative power in this area:
This arrangement contradicts Article II's vesting of the executive power in the President. Without the ability to oversee the Board, or to attribute the Board's failings to those whom he can oversee, the President is no longer the judge of the Board's conduct. He can neither ensure that the laws are faithfully executed, nor be held responsible for a Board member's breach of faith. If this dispersion of responsibility were allowed to stand, Congress could multiply it further by adding still more layers of good-cause tenure. Such diffusion of power carries with it a diffusion of accountability; without a clear and effective chain of command, the public cannot determine where the blame for a pernicious measure should fall. The Act's restrictions are therefore incompatible with the Constitution's separation of powers.
Roberts went on to say that the unconstitutional removal provision was severable from the rest of the Sarbanes-Oxley Act, holding that the statute remains fully operative as a law with the good-cause restrictions excised, leaving the members of the PCAOB subject to removal by the commission without restriction. Justice Stephen Breyer, joined by Justices John Paul Stevens, Ruth Bader Ginsburg and Sonia Sotomayor, dissented, listing several other federal agencies and boards whose appointees are similarly insulated from presidential control. Breyer concluded that the act did not "significantly interfere" with the president's executive power and that the majority's opinion "threatens to disrupt severely the fair and efficient administration of the laws."

The Sarbanes-Oxley Act was passed in 2002 to reform business practices and prevent corporate fraud by overseeing the accounting industry and punishing corrupt auditors. In 2006, the Free Enterprise Fund, a non-profit public interest organization promoting economic growth, lower taxes and limited government, and a Nevada accounting firm, Beckstead and Watts, LLP [corporate website], challenged [JURIST report] certain portions of the legislation, alleging that it violated separation of powers doctrine because it did not give the president sufficient control over the agency. Consistent with the overall purpose of Sarbanes-Oxley, the PCAOB was created in response to the collapse of Enron and the other corporate fraud scandals [JURIST news archives] that made headlines in 2002. The five-member PCAOB is appointed and overseen by the SEC.




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Supreme Court rules Second Amendment applies to states
Hillary Stemple on June 28, 2010 11:15 AM ET

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[JURIST] The US Supreme Court [official website; JURIST news archive] on Monday ruled [opinion, PDF] 5-4 in McDonald v. Chicago [Cornell LII backgrounder; JURIST report] that the Due Process Clause of the Fourteenth Amendment makes the Second Amendment [texts] right to bear arms applicable to the states as well as the federal government. The case arose over a city of Chicago ordinance effectively banning the possession of handguns. The US Court of Appeals for the Seventh Circuit upheld the handgun ban [opinion, PDF; JURIST report], emphasizing that the Supreme Court had not directly ruled on the application of the Second Amendment to the states. Justice Samuel Alito, delivering the opinion of the court, cited the court's 2008 opinion in District of Columbia v. Heller [opinion, PDF; JURIST report] and reversed and remanded the case for further proceedings, stating:
In Heller, we held that the Second Amendment protects the right to possess a handgun in the home for the purpose of self-defense. Unless considerations of stare decisis counsel otherwise, a provision of the Bill of Rights that protects a right that is fundamental from an American perspective applies equally to the Federal Government and the States. We therefore hold that the Due Process Clause of the Fourteenth Amendment incorporates the Second Amendment right recognized in Heller.
Justice Clarence Thomas wrote a concurring opinion, in which he argued for incorporation under the Privileges or Immunities Clause of the Fourteenth Amendment rather than the Due Process Clause. Justice Antonin Scalia also wrote a concurring opinion. Justice John Paul Stevens wrote a dissenting opinion, arguing that the question of incorporation was previously settled by the court and that the only remaining question is whether the right to bear arms is a fundamental right. Justice Stephen Breyer, joined by Justices Ruth Bader Ginsburg and Sonia Sotomayor, also dissented.

Based on Heller, the court's ruling was somewhat expected. In Heller, the court ruled that the Second Amendment bestows upon citizens, an individual right to own firearms for lawful purposes, but that the right is not unlimited. Chicago's mayor has previously defended the law [AP report] and indicated that the city would continue trying to limit gun possession in a constitutional manner. During oral arguments, counsel for the city of Chicago, argued against application [JURIST report] of the Second Amendment to the states on the basis that state and local governments have historically been "primary locus" of gun control.




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Supreme Court rules some business methods patentable subject matter
Christian Ehret on June 28, 2010 11:08 AM ET

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[JURIST] The US Supreme Court [official website; JURIST news archive] on Monday ruled [opinion, PDF] in Bilski v. Kappos [Cornell LII backgrounder] that business method patents [Jones Day backgrounder] may qualify as patentable subject matter but that a specific method for hedging risks in commodities trading is ineligible for patent protection because it is an abstract idea. Justice Anthony Kennedy, writing for a divided court and affirming the invalidity of the patent at issue, rejected the ruling [opinion, PDF; JURIST report] of the US Court of Appeals for the Federal Circuit that the "machine-or-transformation test" is the exclusive consideration for determining whether a process is patentable subject matter under 35 USC § 101 [text]. Instead of premising the patentability of a process on whether it is "tied to a particular machine or apparatus" or "transforms a particular article into a different state or thing," the court suggested that such a test is merely a helpful inquiry rather than a per se rule. Declining to construct any new tests for determining what processes are patentable, the court stressed the importance of flexible patent protection for emerging technologies, stating that:
The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age; for example, inventions grounded in a physical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age. ... In the course of applying the machine-or-transformation test to emerging technologies, courts may pose questions of such intricacy and refinement that they risk obscuring the larger object of securing patents for valuable inventions without transgressing the public domain. ... This Age puts the possibility of innovation in the hands of more people and raises new difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. Nothing in this opinion should be read to take a position on where that balance ought to be struck.
The ruling rejects the argument that business methods are not subject to patent protection by pointing to the statutory definition of "processes," the mention of business method patents in 35 USC § 273 [text] and prior Supreme Court cases including Gottschalk v. Benson and Parker v. Flook [opinions text]. Chief Justice Roberts and Justices Clarence Thomas and Samuel Alito joined the full opinion, while Justice Antonin Scalia joined except for Parts II-B-2 and II-C-2. Justice John Paul Stevens filed an opinion concurring in the judgment, which Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor joined. Breyer also filed a concurring opinion, which Scalia joined in part. Stevens' opinion concurs that the "machine-or-transformation test" is not the exclusive means of determining patentability for processes but disagrees with the overall patentability of business methods, stating:
But the Court is quite wrong, in my view, to suggest that any series of steps that is not itself an abstract idea or law of nature may constitute a process within the meaning of § 101. The language in the Courts opinion to this effect can only cause mischief. The wiser course would have been to hold that petitioners method is not a process because it describes only a general method of engaging in business transactions and business methods are not patentable.
Breyer's concurring opinion also rejects business methods as patentable subject matter. The short concurrence attempts to clarify the points in the opinions that all the Justices seem to agree on: that patentable subject matter is not without limit, that the "machine-or-transformation" test is still an important consideration in determining what processes are patentable, although not the sole consideration, and that the Federal Circuit's previous "useful, concrete, and tangible result" test is also incapable of wholly deciding patentability.

The patentability of business methods and software as "processes" is a controversial subject among practitioners. Monday's opinion has been long anticipated in the patent law community and adds to a significant line of cases spanning several decades defining patentable "processes." The court granted certiorari in June 2009 and heard oral arguments [JURIST reports] in November of that year. During arguments, the court approached the issue of classifying business methods and other processes as patentable subject matter broadly and with skepticism.




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Supreme Court upholds 'all comers' mandate for student group funding at public school
Sarah Miley on June 28, 2010 9:25 AM ET

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[JURIST] The US Supreme Court [official website; JURIST news archive] on Monday ruled [opinion, PDF] 5-4 in Christian Legal Society v. Martinez [Cornell LII backgrounder; JURIST report] that the "all comers" policy at the University of California-Hastings School of Law [official website], which limits funding to student organizations that adopt the school's nondiscrimination policy, is reasonable and viewpoint neutral and does not violate the First Amendment. Christian Legal Society [advocacy website] filed the suit after Hastings rejected the local chapter's application for registered student organization (RSO) status because the CLS bylaws exclude students based on religion and sexual orientation. Hastings' RSO policy mirrors the state discrimination policy and mandates that RSOs must allow "all comers" to participate regardless of status or beliefs. CLS claimed that Hastings' refusal to grant the group RSO status violated its First and Fourteenth Amendment rights to free speech, expressive association and free exercise of religion, and sought an exemption from the school's open-access requirement. The US Court of Appeals for the Ninth Circuit found in favor of Hastings, holding that a state institution may impose restrictions on First Amendment rights that are viewpoint neutral and reasonable in light of the institution's purposes. The Supreme Court affirmed the circuit court's ruling, holding that Hastings' policy met these specifications under the school's educational mission, but limited its opinion to "all comers" policies at public institutions. Justice Ruth Bader Ginsburg, writing the opinion of the court, held that the school's policy is a reasonable restriction because it does not involve regulations that force student organizations to include unwanted members with no choice to opt out. The court also noted that CLS could function effectively without RSO status, citing that Hastings still allowed the group access to school facilities and that improvements in social-networking services allowed CLS to communicate efficiently with fellow students. Ginsburg also stated that an "all comers" policy was not only reasonable, but "textbook viewpoint neutral" and stayed within constitutional limits:
In requiring CLS—in common with all other student organizations—to choose between welcoming all students and forgoing the benefits of official recognition, we hold, Hastings did not transgress constitutional limitations. CLS, it bears emphasis, seeks not parity with other organizations, but a preferential exemption from Hastings' policy. The First Amendment shields CLS against state prohibition of the organization's expressive activity, however exclusionary that activity may be. But CLS enjoys no constitutional right to state subvention of its selectivity. ... Hastings, caught in the crossfire between a group's desire to exclude and students' demand for equal access, may reasonably draw a line in the sand permitting all organizations to express what they wish but no group to discriminate in membership.
Justice Samuel Alito wrote a dissent, joined by fellow conservatives Chief Justice John Roberts and Justices Antonin Scalia and Clarence Thomas. Alito called the majority's opinion "a serious setback for freedom of expression in this country." He also said that "the proudest boast of our free speech jurisprudence is that we protect the freedom to express 'the thought that we hate.' Today's decision rests on a very different principle: no freedom of expression that offends prevailing standards of political correctness in our country's institutions of higher learning."

In 2004, CLS became the first group to seek exemption from Hastings' nondiscrimination policy. CLS chapters exclude from affiliation anyone who engages in "unrepentant homosexual conduct" or holds religious convictions different from those in the Statement of Faith, which all members are required to sign. After Hasting rejected the group's application for RSO status and denied its exemption request, CLS continued to operate independently on campus. In 2005, CLS filed suit claiming that Hastings violated the group's First Amendment rights by not exempting it from the nondiscrimination clause. The district court issued a summary judgment for the law school, which was affirmed by the Ninth Circuit.




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Rights group urges Honduras to investigate violations stemming from 2009 coup
Hillary Stemple on June 28, 2010 9:04 AM ET

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[JURIST] Amnesty International (AI) [official website] on Monday accused the Honduran government of failing to address human rights violations [press release] stemming from the June 2009 coup [JURIST report] that removed Manuel Zelaya [BBC profile; JURIST news archive] from power. AI contends that hundreds of people opposed to the coup have been beaten and detained since the coup. The group cited evidence that judges critical of the coup have "suffered a series of arbitrary transferrals and unfair disciplinary proceedings" as well as threats and intimidation. AI also expressed concern about attacks on members of the media, which have risen since the new government came to power. The Honduran government established a Truth and Reconciliation Commission [JURIST report] last month to determine what happened before, during and after the coup, but AI argues that the commission will not go far enough to prevent future human rights violations, saying "[t]ruth commissions should be one part of a comprehensive national plan devised to protect the rights of victims of human rights violations. In addition to this, the government must ensure investigation, justice and reparation for victims." Zelaya supporters have rejected the commission as a farce and have pledged not to cooperate with investigators. A final report by the commission is expected in January.

Last January, Honduran President Porfirio Lobo [NYT profile] granted amnesty to both Zelaya and military leaders accused of participation in the coup. Also in January, the Honduran Supreme Court [official website, in Spanish] exonerated six military leaders [JURIST report] accused of abuse of power for their alleged roles in the coup. In December, the Honduran Congress voted 111-14 not to reinstate [JURIST report] Zelaya. His ouster was the result of a judicial order [press release, in Spanish] that asserted Zelaya had broken Honduran law by attempting to conduct a controversial referendum on constitutional reform [JURIST report], contrary to a Supreme Court ruling.




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Noriega money laundering trial begins in France
Sarah Miley on June 28, 2010 8:41 AM ET

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[JURIST] The trial of former Panamanian dictator Manuel Noriega [BBC backgrounder; JURIST news archive] began Monday in a Paris criminal court. Noriega faces money laundering charges in France for allegedly laundering $3 million in drug profits by purchasing property in Paris. He was extradited [JURIST report] to France in April by the US, where he had served a 17-year sentence on drug charges. Noriega was already sentenced in absentia [Reuters report] to 10 years in jail by a French court in 1999, but under French law is entitled to a new trial. The trial is set to last for three days.

Last month, the Paris Court of Appeals [official website, in French] denied a request [JURIST report] by Noriega to be released from jail while awaiting his trial. Noriega claimed that he is too well-known to be a flight risk and that because of his partial paralysis and poor health, he was not receiving adequate care in Paris's La Sante prison. The court rejected his appeal, remanding him to custody. In April, the French Justice Ministry denied [JURIST report] Noriega's request to be treated as a prisoner of war (POW). Justice Ministry spokesperson Guillaume Didier said that Noriega would not be treated as a POW [AFP report] because the charges are based on breaches of common law not related to military service. Earlier that week, Panamanian President Ricardo Martinelli [official profile, in Spanish] said that his government would seek Noriega's extradition [JURIST report] to face charges of human rights violations in Panama. Noriega had fought extradition [JURIST report] from the US since 2007. In March, the US Supreme Court declined to reconsider [JURIST report] Noriega's petition to stop the extradition process.




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