Greetings, Court Fans!
It’s getting down to crunch time – between last week and yesterday’s flurry of opinions we have nine outstanding summaries to give you, and the last four opinions will issue on Thursday. This Update will give you a very brief scorecard of what the Court has done so far, then launch into some of the outstanding summaries. We’ll keep them coming in (hopefully) digestible chunks throughout the week.
First, the really quick and dirty. Last week, the Court decided the following cases:
Credit Suisse Securities (USA) LLC v. Billing (05-1157): By a 6-3 vote (Justice Breyer), the Court held that federal securities laws preclude application of antitrust laws to “syndicates” of investment banks executing IPOs through the use of various tools such as “laddering” and “tying” to give priority to certain investors.
Tennessee Secondary School Athletic Ass’n v. Brentwood Academy (06-427): In a judgment announced by Justice Stevens, the Court unanimously found that a predominantly public-school athletic association’s restrictions on recruiting middle schoolers did not violate the First Amendment rights of a private high school. There was no true majority, however, as the Court split 4-4-1 on its reasoning (Justice Thomas was the one).
Tellabs, Inc. v. Makor Issues & Rights, Ltd. (06-484): The Court (Justice Ginsburg) held that a suit under the Private Securities Litigation Reform Act can survive a motion to dismiss only if it alleges a “strong inference” of the defendant’s intent to deceive investors that is “cogent and at least as compelling as any opposing inference of nonfraudulent intent.” The judgment was 8-1, but only six Justices adopted Ginsburg’s reasoning.
Rita v. United States (06-5754): In yet another splintered opinion, the Court (Breyer again) held that appellate courts, when reviewing criminal sentences for reasonableness, may presume that a sentence imposed within the relevant federal Sentencing Guidelines is reasonable.
Yesterday, the Court issued five more lengthy opinions, four of which were 5-4 decisions with the “conservatives” (the Chief and Justices Scalia, Kennedy, Thomas and Alito) forming the majority. The holdings are:
National Ass’n of Home Builders v. Defenders of Wildlife (06-340): Held 5-4 (Alito) that EPA’s transfer of certain permitting powers to state authorities pursuant to Clean Water Act requirements was not subject to the conflicting consultation requirements imposed on all agencies in separate provisions of the Endangered Species Act.
Hein v. Freedom from Religion Foundation (06-1657): Held in a splintered 5-4 vote (Alito again with the principal opinion) that federal taxpayers do not have standing to challenge the Bush Administration’s program of providing federal aid to faith-based initiatives.
Federal Election Comm’n v. Wisconsin Right to Life, Inc. (06-969): In another splintered 5-4 vote (the Chief with the principal opinion), held that certain “electioneering” issue advocacy communications aimed at Senators filibustering judicial nominees were not subject to McCain-Feingold restrictions on corporate campaign speech.
Morse v. Federick (06-278): Held 5-4 (the Chief again) that school officials did not violate the First Amendment rights of a student by confiscating his “Bong Hits 4 Jesus” banner displayed at a school-sponsored function surrounding the running of the Olympic torch.
Wilkie v. Robbins (06-219): Held 7-2 (Justice Souter) that governmental employees who allegedly harassed a landowner to get an easement are subject to no Bivens or RICO claim against them in their individual capacities, where they acted in their official capacities and not for personal benefit.
That’s it for the scorecard. On to the summaries . . .
In Tennessee Secondary School Athletic Ass’n v. Brentwood Academy (06-427), the Court held that a rule against “undue influence” in the recruiting of middle-school athletes did not violate a private high school’s First Amendment rights. The judgment was unanimous, but the reasoning was splintered. The TSSAA, a voluntary association of mostly public (and some private) high schools, had sanctioned private Brentwood Academy for contacting middle schoolers ahead of spring football practice, and the school argued that the recruiting rules impinged on its First Amendment rights and that it had been sanctioned without due process of law. In a previous ruling, the Court had held that TSSAA was a state actor, and the lower courts had ruled that the recruiting rules were content-based speech regulations that were not narrowly tailored. The Court reversed, however, with Justice Stevens announcing the principal opinion. For him (and Justices Souter, Ginsburg and Breyer), the key was that the First Amendment protected Brentwood’s ability to publish truthful information to the public at large about its athletic programs. The recruiting rules did not prohibit that speech – they merely prohibited direct, personalized communications in a coercive setting. Relying on Ohralik v. Ohio State Bar Ass’n (1978), which upheld a bar association rule prohibiting in-person solicitation of personal injury clients, these Justices analogized high-school coaches to a “lawyer chas[ing] an ambulance” in a setting with highly impressionable targets. Such conduct could be prohibited, and because the school remained free to send brochures and advertise about their sports teams, the rules did not run afoul of the First Amendment.
Justice Kennedy wrote separately, joined by the Chief and Justices Scalia and Alito, to disagree with the reliance on Ohralik, which the Court had never before extended beyond the narrow confines of the attorney-client relationship. For them, the key was that Brentwood voluntarily had joined the TSSAA with its code of conduct on solicitation; relying on Ohralik without regard to this fact unnecessarily opened the door to freestanding state regulation of speech by any school, even a TSSAA nonmember. Justice Thomas also wrote separately. He too thought relying on Ohralik was wrong; instead, he simply would have overruled the Court’s previous holding that TSSAA was a state actor, a decision he viewed as departing dramatically from the court’s state-action precedents. (On the due process issue, all the Justices apparently agreed with the portion of Stevens’ opinion finding that any due-process flaws in the TSSAA hearing, which involved some ex parte evidence, were harmless beyond a reasonable doubt.)
Next up, in Tellabs, Inc. v. Makor Issues & Rights, Ltd. (06-484), the Court held that a suit under the Private Securities Litigation Reform Act, which requires securities fraud plaintiffs to allege facts giving rise to a “strong inference” of a defendant’s intent to deceive investors, can survive a motion to dismiss only if the inference of intent is “cogent and at least as compelling as any opposing inference of nonfraudulent intent.” In a class-action suit against Tellabs and its CEO, the Seventh Circuit had adopted a less stringent standard – whether a reasonable person could infer the requisite intent – but the Court reversed in an opinion by Justice Ginsburg. She began by noting that Congress enacted the PSLRA to stop abusive securities fraud suits and, in particular, to establish a uniform, heightened pleading standard for intent. Noting that the lower courts had since split on the meaning of “strong inference,” defeating the effort at uniformity, the Court then set out a framework for applying the requirement. First, on a motion to dismiss the court must accept all allegations in the complaint as true. Second, the court must assess the complaint and other sources considered on motions to dismiss in their entirety to see if they establish intent, rather than test individual allegations in isolation. Third, the court must consider competing inferences – by requiring a “strong inference” of intent. Congress clearly meant for the test to be comparative. The inference need not be irrefutable, but it must be more than merely permissible – it must be cogent and compelling in light of the alternatives. This weighing of inferences would not usurp the jury’s role as factfinder; so long as plaintiffs had satisfied Congress’s heightened rule for making intent an issue, the jury would still weigh in on whether it was more likely than not that the defendant had acted with the requisite intent. The Court then sent the case back for the lower courts to reexamine the complaint against Tellabs in light of this ruling.
Justice Scalia concurred only in the judgment. He disagreed that an inference that was only “as compelling as any opposing inference” could count as a “strong inference.” He cited the example of a jade falcon stolen from a room to which only two people had access; while there was a strong possibility that either could be the thief, there was not a strong inference either way (because inference implied a well-founded belief). Instead, he would give the PSLRA its “natural reading” and require an inference of intent that was “more plausible” than any inference of innocence. He also criticized the Court’s reliance on legislative history, which he characterized as “its frequent indulgence of the last remaining legal fiction of the West: that the report of a single committee of a single House expresses the will of Congress.” Justice Alito also concurred in the judgment. He agreed with Scalia’s “more plausible” construction and, echoing Federal Rule 9(b)’s requirements for pleading fraud, noted that only facts alleged “with particularity” should be considered in the analysis.
Justice Stevens dissented. While he viewed the majority’s rule as “perfectly workable,” he thought “probable cause” would be a better standard because it would avoid, in some circumstances, the requirement to weigh alternative inferences – if a known drug dealer leaves a building after a confirmed drug deal with a suspicious package, the inference of drug possession is strong enough without having to consider if he might have been doing something else.
In another decision from last Thursday, Rita v. United States (06-5754), the Court held that federal appellate courts, when reviewing criminal sentences for reasonableness, may presume that a sentence imposed within the relevant federal Sentencing Guidelines is reasonable. The case is yet another of the Court’s opinions flowing from a long line of cases leading to the 2005 decision in United States v. Booker, in which the Court held that the then-mandatory Guidelines ran afoul of the Sixth Amendment because sentences were necessarily imposed based on facts found by judges rather than juries. In a splintered decision, the Court held that the remedy was not to require jury factfinding to support mandatory Guidelines sentences, but rather to make the Guidelines merely “advisory” for judges, whose sentences would then be reviewed on appeal for reasonableness. Rita was convicted of perjury, and the court sentenced him to a term at the low end of the relevant Guidelines range; on appeal. the Fourth Circuit held that a properly calculated Guidelines sentence was “presumptively reasonable” and upheld the sentence. Led by Justice Breyer (himself instrumental in writing the Guidelines some years ago), the Court affirmed. First, the presumption was not binding, imposed no burden on either prosecution or defendant, and simply reflected that the sentencing judge and the Sentencing Commission had reached the same conclusion as to the proper sentence. (The opinion discussed at length the nature of Congress’s delegation of sentencing functions at two levels – to the Sentencing Commission at the “wholesale” or regulation level, and to the judge at the “retail” level – and noted that when the two agree, the sentence is probably reasonable). Also, because “reasonableness” review merely asks whether a sentencing court has abused its discretion, the presumption obviously only applies on appellate review and does not itself guide the trial judge. The assumption also does not run afoul of the Sixth Amendment, even though sentencing judges will sometimes issue sentences based on facts not found by juries – the presumption simply has nothing to do with the sentencing judge’s decision. In the case at hand, the Court found that while the sentencing judge could have said more about his reasons for issuing Rita’s sentence, the arguments before him were straightforward, he clearly listened to both sides, and his statement of reasons was sufficient.
Justice Stevens, joined in large part by Justice Ginsburg, concurred. For him, the key was that an appellate court still must review the sentencing judge’s individualized determination for abuse of discretion only – it may presume that a within-Guidelines sentence is reasonable, but it still must defer to the sentencing judge whether or not the sentence is within the range. Further, he noted that the presumption must indeed be rebuttable – the Guidelines truly are advisory, not mandatory, after Booker.
Justice Scalia concurred in part and in the judgment, joined by Justice Thomas. He worried that the majority had reintroduced the Sixth Amendment problem Booker purported to resolve, in that some sentences would survive on appeal because the sentencing judge, contrary to Booker, had found facts beyond those authorized by the jury’s verdict. As a result, he would rather see a system in which appellate courts only reviewed sentences for procedural propriety, rather than having any substantive component (i.e., was the sentence unreasonably high or low). Scalia’s opinion is quite lengthy, and discusses the Sixth Amendment issue at length – we can’t do it justice here, so if you are interested in post-Booker jurisprudence you would be well advised to check it out in its entirety.
Finally, Justice Souter dissented. In his view, the presumption of reasonableness for within-Guidelines sentences would undo Booker, in that the Guidelines would essentially go back to being mandatory – why would a sentencing judge go through all the factfinding necessary to justify a sentence outside the Guidelines, when he could avoid reversal simply by sticking within the range? For Souter, the only real solution to the problem is for Congress to reenact the mandatory Guidelines, but with a provision for jury factfinding for any facts necessary for sentencing.
We’ll be back with more summaries tomorrow. Until then, thanks for reading!
Ken & Kim
From the Appellate Practice Group at Wiggin and Dana
For more information, contact Kim Rinehart, Ken Heath, Aaron Bayer, or Jeff Babbin at 203-498-4400