Greetings, Court Fans!

The Court hit us with three opinions and a “decree” yesterday, just before leaving for a recess until late February. By then, there may be a new Associate Justice on the Court, so this batch of opinions might well be the last to involve Justice O’Connor. As you’ll see below, there was one decision for which she made the difference – and with that as the teaser, we’ll get right to it.

The most headline-friendly opinion of the day (topically, at least) was also the shortest. In Wisconsin Right to Life, Inc. v. Federal Election Commission (04-1581), the Court issued a unanimous per curiam opinion in which it sent a constitutional challenge to the Bipartisan Campaign Reform Act back to a District Court for consideration as an “as-applied” challenge. BCRA bars corporations from using general funds to pay for “electioneering communications”; Wisconsin Right to Life argued that the law was unconstitutional as applied to several “grassroots lobbying advertisements” it wanted to run during the 2004 election. A three-judge District Court panel dismissed the case, interpreting a footnote in the Court’s 2003 opinion in McConnell v. Federal Election Commission as foreclosing as-applied challenges to the ban. The Court corrected that misinterpretation, noting that while McConnell held that the law was constitutional on its face, that did not foreclose future challenges to its application to a given advertisement. So the case goes back to the District Court, for now. (Resemblances to the Court’s decision last week in Ayotte, remanding a parental-notification abortion law for consideration of a limited, as-applied remedy, have not gone unnoticed).

Now . . . on to the case that so divided the court, Central Virginia Community College v. Katz (04-885), where a 5-4 Stevens-led majority held that, when the states accepted the Bankruptcy Clause of the Constitution, they waived their sovereign immunity to suit by a bankruptcy trustee seeking to void a preferential transfer. This was quite a surprise, since other provisions in Article I of the Constitution (such as the power of the federal government to provide patent/copyright protection) consistently had been held not to waive state sovereign immunity. (In fact, even prior cases dealing with the Bankruptcy Clause implied that the Constitution’s ratification had not waived sovereign immunity.) Thus, this case carves new ground in the area of sovereign immunity. It also will be of interest to those intrigued by the role of stare decisis in the Court: The majority admitted that its holding went against language in a prior case, but noted that “we are not bound to follow our dicta in a prior case in which the point now at issue was not fully debated” (as you might guess, the dissent disagreed about the status of this “dicta”).

By way of background, federal bankruptcy laws generally give the federal courts exclusive jurisdiction over the property of a person who declares bankruptcy. Two years ago, in Tennessee Student Assistant Corp. v. Hood, the Court held that a debtor could sue a state agency seeking a declaration of the dischargeability of a student loan debt. The Court rejected Tennessee’s claim that it was immune from such a suit, finding that the proceeding was incidental to the federal court’s in rem jurisdiction (that is, its jurisdiction over the “res,” or property of the debtor). In Katz, the Court faced a more difficult question – whether a state could be sued to give back property already in its possession because that property constituted a “preferential transfer” under the bankruptcy laws. Preferential transfers (i.e., transfers made just before the debtor files for bankruptcy) are prohibited because the law wants to ensure that debtors don’t favor certain creditors (such as their friends) over other creditors. If such transfers occur, the bankruptcy trustee may petition to have them declared void, get back the property, and administer it as part of the bankruptcy estate in which all the creditors will share. The majority found that this authority also was incidental to a federal court’s in rem powers and inherent in the Bankruptcy Clause, which empowered the federal government to make “uniform laws” respecting bankruptcies. The majority emphasized the unique and compelling need for a uniform set of laws with respect to bankruptcy – because the patchwork quilt of state laws left debtors who had gone through one state’s bankruptcy process (and had all of their assets distributed) subject to suit and imprisonment by another state. The Bankruptcy Clause clearly empowered a federal court to issue a writ of habeas corpus (which would involve a suit against a state officer) to free a debtor who had gone through the federal bankruptcy process from imprisonment for such discharged debts in a state jail. For the majority, suing a state to recover assets of the bankrupt estate (the preferential transfers) was similarly incidental to the bankruptcy court’s in rem authority and necessary to its powers. Thus, when the states ratified the Constitution, they waived their immunity with respect to suits involving the federal bankruptcy laws.

Justice Thomas, joined by the Chief, Scalia and Kennedy, issued a powerful dissent (and one may well wonder if a new, post-O’Connor Court would have produced this as a majority opinion). According to Thomas, there is no historical basis for giving the Bankruptcy Clause a special and unique interpretation not applied to anything else in Article I. Further, while the Bankruptcy Clause gave the federal government authority to enact legislation in this arena, it did not waive states’ right to immunity from suits for monetary relief. The fact that the writ of habeas corpus was available does not challenge this notion, because it was a well-recognized power and was not seen as compromising states’ immunity generally. There is a great deal more to say about this case (including some fascinating history that must have been compiled by an extremely over-worked law clerk), but we must move on.

The last opinion of the day continued the Court’s recent string of lessons in appellate procedure – and made clear just how crucial it can be to file a post-verdict motion. In Unitherm Food Systems, inc. v. Swift-Ekrich, Inc. dba ConAgra Refrigerated Foods (04-597), the Court held 7-2 that a losing party who fails to file a post-verdict motion for judgment or new trial under Federal Rule 50(b) cannot challenge the sufficiency of the evidence on appeal. Rule 50 allows a party in a civil jury trial who believes the evidence cannot support a verdict against him to seek judgment as a matter of law – usually, the party files a Rule 50(a) motion before the verdict, arguing that the case should not even go to the jury, and then, if he loses that motion and then the trial, a Rule 50(b) motion for judgment notwithstanding the verdict or for a new trial. ConAgra lost a patent case against Unitherm after filing a pre-verdict 50(a) motion, but it did not file a post-verdict 50(b) motion. ConAgra nevertheless challenged the sufficiency of the evidence on appeal to the Federal Circuit, which reviewed the evidence and ordered a new trial. Led by Justice Thomas, the Court reversed, referring to past decisions holding that the failure to file a 50(b) motion deprives an appellate court of the power to order a judgment contrary to the jury’s verdict. Such a ruling requires review first by the judge who heard the evidence and has “the feel of the case,” and a timely post-trial motion to that judge is an essential matter of fairness. That the Federal Circuit only ordered a new trial rather than judgment did not change the analysis – having never asked the trial court for a new trial, ConAgra forfeited the right to seek one on appeal. Justice Stevens dissented along with Justice Kennedy, arguing that, because “Murphy’s law apples to trial lawyers as well as pilots,” the Rules should be read to preserve an appellate court’s power to avoid manifestly unjust results in exceptional cases. If you’re a true appellate junkie, there’s even more detail (and back-and-forth between Thomas and Stevens) in the footnotes.

Finally, the Court issued a “decree” in a rare original jurisdiction case, Alaska v. United States (128 Orig.), resolving a dispute between Alaska and the federal government over title to various “submerged lands” in the Alexander Archipelago and Glacier Bay National Park. You might remember a ruling in the case from last Term – particularly Justice Scalia’s “ursine rhapsody” dissent lamenting the Court’s fixation on the swimming habits of brown bears – but we doubt it. In essence, last Term the Court overruled Alaska’s exceptions to the Special Master’s report on the case, and today’s decree essentially disposed of the case in favor of the United States.

No cert grants this week, and once again no action on the cert petition in the Padilla enemy combatant case. The Court is away until Feb. 21, so 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