Monthly Archives: May 2014

Shearson/American Express Inc. v. McMahon

482 U. S. 220

June 8, 1987

The McMahons were customers of Shearson/American Express, and signed an agreement that all disputes would be subject to arbitration rather than litigation. All too typically, the McMahons changed their mind, and whined that they deserved the right to sue. As a general rule, contracts which submit disputes to arbitration are always enforceable, but they filed suit anyway under the Exchange Act, and under RICO, arguing that these particular claims were not arbitrable.

Unanimously, the Court rejected the RICO argument, and it also rejected the Exchange Act argument 5-4. O’Connor wrote the majority opinion, which found nothing in RICO’s text to suggest that its provisions were not arbitrable, and was unmoved by the contention that its purposes worked best with litigation. The Exchange Act was harder because it said that compliance with its provisions could not be waived, and it also said that District Courts would have jurisdiction over its subject matter. O’Connor said that this jurisdiction was not a duty requiring “compliance.”

In one of the very first Warren Court decisions ever, Wilko v. Swan, the Court had ruled that arbitration was forbidden for a very similar act, the Securities Act. O’Connor rather politely argued that the Wilko ruling was stupid, undermined by subsequent cases, and unduly hostile to arbitration. She also said that arbitration had come a long way since 1953, and that it was now subjected to some government oversight. While declining to overrule Wilko, she limited its reach to the case’s fact.

Blackmun, joined by Brennan and Marshall, dissented. He thought the majority exaggerated the extent to which Wilko had been undermined in subsequent cases, and the force of its logic in interpreting the Securities Act. He also disagreed that the government oversight of the arbitration was any good, and that arbitration was fair. Blackmun said that the companies still exercised a lot of control over the arbiters, and that there was insufficient review of arbitration decisions. In a brief dissent of his own, Stevens said that lower courts had thought Wilko applied to the Exchange Act, and that the Court ought to leave this consensus unchanged.

Arbitration is a wonderful thing, and I’m sorry judicial liberals loath it so much. The Bible discourages lawsuits, and wants believers to settle disputes amicably. The liberal distaste for arbitration is yet another example of valuing ‘rights’ and ‘entitlements’ over humility, forgiveness, and peacemaking.

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Utah Div. of State Lands v. United States

482 U. S. 193

June 8, 1987

The question in this case was who owned the bottom of a lake. Not the water in the lake, but the land beneath it. Under the old colonial rule, every state got the right to sub-water lands. But in 1888, Congress passed a law that gave the United States the power to reserve certain lakebeds for itself. By this law, the land under Utah Lake was reserved the next year. The state of Utah contended that it got title upon statehood in 1896.

In a 5-4 ruling, the Court said that Utah, and not the United States, had ownership of the lakebed. O’Connor wrote for the majority, and first noted that the government bears a heavy burden of proof to show that a state is divested of its traditional legal possession. After examining the history of federal land regulation in the 1880s, she concluded that it was far from clear that Congress meant to give the United States irrevocable ownership of submerged lands. Whatever evidence existed in the debates of Congress and in the work of geological surveyors, it wasn’t enough to overcome the presumption of state title to all lakebeds.

White dissented, and was joined by Brennan, Marshall, and Stevens. He found that the geological surveyors of the day were quite clear in asserting title of the lakebed against future state claims. He also showed that subsequent acts of Congress did demonstrate a knowledge of this ownership, rather than the apathy that the majority opinion claimed. White finished by talking about the government’s strong interest in retaining title due to potential compensation it would have to pay to a state for land use.

I’ve been amazed by the amount of times that either Blackmun or Stevens bailed out the more conservatives Justices when one of their number defected. You just don’t see that happen much anymore. As to the ruling itself, I have no clue which side was more legally correct. It’s cases like this that really make you understand why ideological voting would develop on the Supreme Court. Sometimes there isn’t a clear legal answer, and the most salient thing you can latch onto is the identity of the parties. Goodness knows I’m glad the state won, and not the federal government.

Rockford Life Ins. Co. v. Illinois Dept. of Revenue

482 U. S. 182

June 8, 1987

Fannie Mae has a lesser known spinoff called Ginnie Mae. Rockford Life Insurance issued Ginnie Mae certificates as a part of its business. Rockford was required to make payments on Ginnie Mae securities, but the US government was responsible for guaranteeing their validity if an issuer such as Rockford failed to. Rockford argued that Ginnie Mae instruments should be exempt from federal taxation, under both the doctrine that government payments were generally exempt, and under a specific statute.

Unanimously, the Supreme Court ruled that Ginnie Mae certificates were not exempt from taxation. Stevens said that under the relevant statute, only government obligations which were certain could be exempt. Because the government would only be liable if Rockford failed to make payments, the Ginnie Mae securities were technically not classifiable as government obligations. Finding that the statute provided a sufficiently good overview of the more general government immunity doctrine, Stevens rejected the Constitutional argument for tax exemption as well.

I would have liked to have read a dissent. I don’t think it’s quite as cut and dried as Stevens makes it out to be. I don’t have too much else to say about this case – it was so boring that even the Court admitted in a footnote that they wouldn’t have even taken it except for being statutorily required to by some provision in the US Code.

Bowen v. Yuckert

482 U. S. 137

June 8, 1987

Janet Yuckert was trying to apply for some federal disability payment created by the Social Security Act. Regulations enacted to administer this disability benefit created a five step screening system to identify citizens who qualified. After being denied, Yuckert claimed that the second step in the regulatory system conflicted with the text of the law. The law said that disability benefits will be given in consideration of the claimant’s “age, educations, and work experience.” The second step in the regulatory process required that those factors be set aside for the moment, and the claimant would only move on to the next stage if they were severely disabled independent of those factors.

The Court ruled 6-3 that the regulatory system was Constitutional. Powell wrote for the majority, and said that no one was entitled to disability benefits without a severe disability. Thus, a step which focused merely on figuring out if such a disability existed was fine. That the vocational factors were not considered until a subsequent step was fine too, since disability itself was a crucial prerequisite. Powell further noted that Congress amended the Social Security Act in 1984, and seemed to express satisfaction at that time with the regulatory process, both in theory and in practice. Thus, the majority found no problem with the disability benefits system.

O’Connor concurred, and was joined by Stevens. She admitted that a great many potentially meritorious claims had been thrown out by step two in the regulatory process, but concluded that the system could be reformed from within, and that declaring the system in violation of the law was not necessary. Blackmun dissented, and was joined by Brennan and Marshall. He thought the law and the regulations were simply textually inconsistent, since the first said to consider vocational factors and the second said not to (at least at one stage). He provided some good inter-textual evidence to support his argument, and also tried to show that the legislative history supported his view as well. Blackmun dismissed the legislative history surrounding the 1984 amendments, calling it ambiguous.

As is often the case in statutory interpretation cases, I’m not quite sure who’s right. It’s possible that neither side is. It hardly takes a cynic to realize that sometimes Congress doesn’t know what the h*ll it’s passing. On occasion, a law simply will not be drafted thoughtfully enough to provide a decent answer to certain legal questions. The Supreme Court is stuck having to come up with an answer anyway – it’s no surprise then that the splits tend to be highly ideological. If the regulations enlarged the pool of disability beneficiaries rather than contracted it, I truly believe that the dissenters would be on the other side.

Texas v. New Mexico

482 U. S. 124

June 8, 1987

Texas and New Mexico had a long running dispute about who got to use the water of the Pecos River. A compact was finally signed in 1949, which said that Texas should be able to take water from the river as it could in 1947. What the “1947 condition” meant was endlessly debated, until the Supreme Court stepped in during the 1980s, and appointed a Special Master to figure out how to interpret the compact. The Special Master decided that New Mexico had been cheating Texas for a while, and ordered that the Land of Enchantment deliver a large amount of extra water to the Lone Star State for ten years as compensation. New Mexico balked, and said the Special Master should only have the power to interpret the compact prospectively.

White wrote for a unanimous Court (Stevens did not participate). He said that a compact was essentially just like any other contract, and that retrospective damages could be awarded by the Special Master, even if New Mexico was not aware at the time of what the compact entailed. Nonetheless, the Court reject the Special Master’s contention that monetary damages would be insufficient as a remedial measure under the compact. White disagreed, and noted that specific performance is hardly the only remedy for breach of contract. The case was remanded to determine what sort of remedy was most appropriate. To further ensure that New Mexico’s riparian obligations to Texas would be correctly fulfilled, the Court called for the appointment of a River Master. Finally, the Court promised that a more extensive decree would be forthcoming soon.

Commissioner v. Asphalt Products Co.

482 U. S. 117

June 1, 1987

Asphalt Products filed a tax return for 1974 which did not adequately reflect its true income and costs. In particular, the IRS objected to the deduction of some truck transportation expenses, and charged that Asphalt Products was negligent to have claimed this deduction. According to the tax code, if underpayment of taxes is even partially due to negligence, a 5% penalty on the total amount of taxes owed is levied. Asphalt Products protested that the 5% penalty should only be assessed on the amount of underpayment caused by negligence, and not on the entire amount of taxes.

The Court rejected this contention 7-2. In a per curiam decision, the Court simply declared that the text of the tax code was crystal clear on the issue. The Court hinted that they did believe the penalty was unfair, but concluded that only Congress could decide whether or not to change the law. Blackmun dissented – he wanted the case to at least get oral argument. “I hope the Court’s action is not due to an innate reluctance to review a federal income tax case,” he muttered. Marshall dissented too, as he almost always did in summary judgments. In addition, he actually thought that the Court’s ruling might have been against the intent of Congress.

Legally, the decision was probably correct, even though the underlying statutory rule was awful. But what really upset me as I read this decision was one remark in the Marshall dissent. He said “it appears the reason for summarily reversing the judgment of the Court of Appeals in this case is simply that the majority perceives it to be wrong. But this Court routinely denies petitions for certiorari seeking review of decisions that, on the face of the petitions or the petitions and responses, appear to be wrong.

Even though it’s easy enough to guess, there it is in black and white – the Supreme Court routinely declines to overturn lower court rulings that it believes are wrong. This is an utter abdication of judicial duty, an abominable moral failing of the Court as an institution. Every year, hundreds of poor, innocent people, whose only hope for justice is the Supreme Court, are denied that justice merely because their case is not doctrinally important enough. Caring more about doctrine than the men and women who suffer from unjust court rulings is appalling and evil. If I were a Supreme Court Justice, I would file an angry dissent to every single unjust denial of certiorari, to expose the Court as the lair of heartless apathy that it is.

Turner v. Safley

482 U. S. 78

June 1, 1987

A prison in Missouri prohibited inmates from corresponding with non-relative inmates, and required any marriages involving inmates to be subjected to approval from the superintendent. Both of these rules were challenged as undue burdens on the Constitutional rights of prisoners.

The Court ruled unanimously that the marriage rule could not stand, but upheld the correspondence rule 5-4. Justice O’Connor reviewed several prison precedents, and concluded that prison regulations should be upheld if they reasonably related to their aims, and were not exaggerated responses. She stressed that deference needs to be given to the judgments of those who run prisons, since they must control dangerous environments. Because of the danger of incipient conspiracies, and the impossibility of reading all correspondence, O’Connor felt the communication rule was reasonable. At the same time, she found the marriage rule overbroad, since only a few marriages would potentially cause trouble, and since marriage was such a fundamental human right.

Stevens, joined by Brennan, Marshall, and Blackmun, dissented. He observed that the rules in this Missouri prison were not necessary because they were stricter than those used in most other prisons, and that less restrictive means to control prisoners could be found. More importantly, he pointed out that the majority opinion rejected the factual findings of the District Court, and accepted unjustified claims of the prison without any scrutiny. Stevens wondered aloud why the majority did not similarly accept at face value the prison’s contentions about the marriage rule.

I think Stevens is right that the majority was inconsistent in its treatment of the two rules. But I would go the opposite direction from him and say that both rules were Constitutional. Prohibiting prisoners from marrying is just good public policy. Scripture says that a husband who cannot provide for his family is worse than an unbeliever. There is no ‘right’ to marriage – instead it must be seen as a privilege for those able to handle its immense responsibility.

United States v. Hohri

482 U. S. 64

June 1, 1987

Japanese Americans seeking reparations for internment filed a hybrid claim in the DC Court of Appeals. There was a Federal Tort Claims Act (FTCA) claim, and a Little Tucker Act claim as well. Usually the Federal Circuit would have jurisdiction for all Little Tucker claims, but the DC Circuit ruled that they could hear the case due to the presence of the FTCA claim.

The Supreme Court ruled unanimously that the DC Circuit lacked jurisdiction, and sent it off to the Federal Circuit (Scalia did not participate). Powell wrote for the majority, and pointed out that the Federal Circuit was given jurisdiction for all claims based “in whole or in part” on the Little Tucker Act. Although the law conferring jurisdiction was not very clear about hybrid suits, Powell concluded that the quoted language was the best there was to go on. He also found evidence that Congress did not care as much about which courts handled FTCA claims, but were more particular about what jurisdiction they wanted for the Federal Circuit.

Blackmun wrote a concurring opinion. In it, he made the eminently reasonable observation that the whole jurisdiction issue was stupid, and that the merits ought to be addressed with minimal administrative delay. I totally agree, and it’s a shame he didn’t outright dissent. Most of the time, jurisdiction defects are asinine, and the United States should have been ashamed of delaying justice for internment victims over such a trivial matter. Nothing was gained, and thousands of dollars in legal fees were lost.

Fall River Dyeing & Finishing Corp. v. NLRB

482 U. S. 27

June 1, 1987

A dyeing company called Sterlingwale went out of business. A few months later, Fall River Dyeing & Finishing came along, bought most of the old buildings and machinery, and hired back a good many of the former Sterlingwale employees, who all belonged to a union. But this new company refused to negotiate with these former employees about getting a collective bargaining agreement. Under labor law, a ‘successor’ corporation had to at least negotiate with the former corporation’s union if a majority of the employees were the same. Fall River argued that by the time the plant was fully up and running again the old Sterlingwale employees had become the minority.

The Court ruled 6-3 that Fall River had still been unfair to the union in refusing to negotiate. Blackmun wrote for the Court, and found that the facilities, processes, and overlap in employees were substantial enough to call Fall River the successor of Sterlingwale. Even though eventually the old employees constituted a minority, when Fall River was first able to start some operations, they were a majority, and thus entitled to collective bargaining negotiation. In saying that such a “substantial and representative complement” triggered the duty to negotiate, Blackmun deferred to the views of the NLRB. He closed by saying that a union need only demand negotiation once – and it will be required once the “complement” of employees is present.

Powell, joined by Rehnquist and O’Connor, dissented. He did not think Fall River was a clear successor to Sterlingwale – their was a gap of several months between the two companies, the scale of operations was very different, and Fall River ultimately had a majority of new employees. Even if Fall River was a successor, Powell disagreed with the “substantial and representative complement” test, because it could easily result in a collective bargaining agreement being negotiated before a majority of the employees bound by it were even hired, which would be unfair to them.

I’m not sure who’s right legally, though I strongly lean toward Powell. Regardless, the legal rule announced in the case is atrocious as a matter of policy. It’s remarkable how solicitous American law is of patently unbiblical organizations in open rebellion against authority. The majority opinion repeatedly makes reference to the goal of “industrial peace” – a rather Orwellian turn of phrase, since true peace can never come from anything except Christlike submission (Cf. 1 Peter 2:13ff.).

Fort Halifax Packing Co. v. Coyne

482 U. S. 1

June 1, 1987

Maine had a law that required companies to give employees enormous severance pay in the event of mass layoffs. After making such a mass layoff, Fort Halifax Packing argued that this law was preempted by the Employee Retirement Income Security Act (ERISA), which superseded all state laws relating to “employee benefit plans.”

The Court ruled 5-4 that the Maine law was not preempted. Brennan, writing for the Court, argued that requiring severance pay for mass layoffs did not affect “employee benefit plans.” The Maine law did not force companies to change their standard plans – it only imposed an easy to calculate requirement that would only accrue in rare situations. He tried to show through legislative history that the main purpose of ERISA was to make the law respecting the actual written retirement policies of companies more uniform. Brennan also turned back a claim that the National Labor Relations Act (NLRA) prohibited states from imposing laws that upset the balance between employee and employer, finding the minimal regulation of Maine’s law not troubling on that front

White, joined by Rehnquist, O’Connor, and Scalia, dissented. His argument was short and too the point – Maine’s law directly regulated and controlled the employee benefits that companies had to provide, and these companies would have to take administrative steps to do so. He found nothing in ERISA to suggest that only laws affecting a company’s formal written policies would be preempted. And I absolutely agree. This strikes me as very much a results-oriented judgment – had the Maine law favored employers rather than employees, I have no doubt the case would have gone the other way.