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Greetings, Court Fans!

 

We’re still catching up – here are yesterday’s opinions and orders plus one from last week, along with the news from yesterday’s order list. Once again, we owe many thanks to Tahlia Townsend for helping us out on the summaries.

 

First up from yesterday, in Florida Department of Revenue v. Piccadilly Cafeterias, Inc. (07-312), the Court held 7-2 that 11 U.S.C. § 1146(a) – a Bankruptcy Code provision prohibiting states from imposing a stamp tax on any asset transfer made “under a plan confirmed under” Chapter 11 – only exempts transfers accomplished after confirmation of a debtor’s reorganization or liquidation plan. The Eleventh Circuit had extended the exemption to “pre-confirmation transfers that are necessary to the consummation of a confirmed plan,” including Piccadilly’s $80 million liquidation. Writing for the Court, Justice Thomas reversed. The Court ultimately decided the case on federalism grounds – despite, as Justice Breyer’s dissent put it, “methodically combing the textualist beaches” for proof of meaning of “plan confirmed” (does a past participle always convey a completed action, as in “baked beans,” or is there a meaningful difference between “plan confirmed” and “confirmed plan”?). According to the majority, a narrow reading – applying the exemption exclusively to post-confirmation transfers – was required because courts should “proceed carefully when asked to recognize an exemption from state taxation that Congress has not clearly expressed.” Breyer (joined by Justice Stevens) rejected this invocation of federalism as an “effort to find the proverbial ‘any port’ in this interpretive storm.” The purpose of Chapter 11 is to maximize the property available to satisfy creditors, and Breyer lamented that the Court’s ruling would have the opposite effect.

 

In the second ruling from yesterday, a 5-4 Court held in Dada v. Mukasey (06-1181) that an alien who has requested voluntary departure in the face of removal proceedings must be given the chance to withdraw that request and reopen his proceedings before the end of his departure period. Dada, a Nigerian, overstayed his visa but claimed to have married an American citizen; his petition to stay in the United States on that basis was denied for failure to demonstrate a bona fide marriage. After the immigration courts denied him a continuance to file a second petition, he requested “voluntary departure,” which would allow him to leave at his own convenience for the country of his choice and avoid certain penalties that go along with being deported; the immigration courts approved that request and gave him thirty days to leave the country. Two days before that deadline, he sought to withdraw his voluntary departure request and reopen his proceedings, based on new documentary evidence that his marriage was bona fide. The immigration courts did not consider the request to withdraw and, waiting until after the thirty days had run, denied the motion to reopen on the ground that an alien who does not depart in a timely fashion cannot adjust his status. The Fifth Circuit affirmed.

 

The Court reversed, in an opinion by Justice Kennedy. The issue was how to reconcile two provisions of federal immigration law. On the one hand, every alien ordered removed from the United States has the right to file one motion to reopen his removal proceedings. On the other hand, an alien who has asked for voluntary departure must depart within the time period ordered by the courts, and doing so will waive any pending motion to reopen (and failing to depart on time voids an alien’s right to seek adjustment of his status and incurs other penalties). The Court rejected the government’s position that an alien who has agreed to voluntary departure has waived the right to move to reopen, for that interpretation would render the right a nullity for many aliens whose factual circumstances may have changed following their agreement to depart. Instead, the Court viewed voluntary departure as like a settlement – the alien avoids extended detention, can choose where to go, and has a chance for readmission one day, while the government avoids the costs of litigation and deportation. For that reason, it also rejected Dada’s argument that a motion to reopen should stop the voluntary departure clock until the motion is decided – that would allow the alien to stay here while depriving the government of the benefits of the deal. Instead, the Court held that the alien can withdraw his request for voluntary departure – giving up the benefits of the deal and making himself subject to removal and other penalties, in exchange for pursuing an administrative motion – so long as he does so before the voluntary departure period has expired. This leaves an alien with a pretty tough choice, but also with a meaningful right to move to reopen where there is new evidence, which the government’s position would have eliminated.

 

Justice Scalia dissented, joined by the Chief and Justice Thomas. For Scalia, losing the chance to reopen proceedings was just part of the quid pro quo that voluntary departure represents, in exchange for avoiding detention, departing when and for where the alien chooses, and maintaining the possibility of readmission. Moreover, he thought the Court lacked the authority to impose its solution to its self-created dilemma: while the government may be able to let aliens repudiate their agreements in certain cases, it is not clear that a court can do so. Justice Alito also dissented; he would leave the decision to allow an alien to repudiate a departure agreement to the agency, so he would remand for the immigration courts to rule on the request to withdraw.

 

Returning to last week’s decisions, in Republic of Philippines v. Pimentel (06-1204) the Court considered an issue only procedure junkies could love: the operation of federal interpleader rules in the context of foreign sovereign immunity. We’ll do our best on this one, but for most of you the upshot is that federal courts cannot blithely allow cases to proceed in the absence of foreign sovereigns who, though immune from suit, have interests at stake. Pimental began as a class action against the estate of former Philippine President Ferdinand Marcos on behalf of his human rights victims. The class obtained a $2 billion judgment for the class, and sought to enforce it by attaching the assets of one of Marcos’s companies, now held by Merrill Lynch. Faced with competing claims on the assets, Merrill Lynch then filed an interpleader action in U.S. district court, naming all the various claimants, including the human rights class as well as two Philippine entities, the Republic itself and a presidential commission (on good governance, no less; for convenience sake, we’ll refer to them both as the Republic). To complicate matters further, at the same time a court in the Philippines was considering whether Marcos’s assets should be forfeited to the Republic. In the U.S. case, the Republic claimed immunity under the Foreign Sovereign Immunities Act and sought dismissal under Federal Rule 19(b), which provides for dismissal where required parties cannot feasibly be joined (here, because they were immune) but proceeding without them would cause them unavoidable prejudice. The district court dismissed the Republic but allowed the case to proceed, holding that the Republic’s claim to the assets would have failed anyway because it was time-barred under New York law. Ultimately, the court awarded the assets to the human rights class. The Republic appealed, despite having been dismissed from the case, but the Ninth Circuit affirmed.

 

The Court, led by Justice Kennedy, reversed and held that the case could not proceed without the Republic. The Court had asked the parties to brief whether the Republic even had the right to appeal (or seek cert) once it was dismissed from the case, but decided not to reach that question because other parties, still in the case, also had sought cert on Rule 19(b) grounds. It then held that the balance of factors under Rule 19(b) required the lower courts to dismiss the case. Rule 19 used to refer to “indispensable parties,” but now simply refers to parties “required to be joined if feasible.” Here, the Republic was “required” in that its interests were unprotected in its absence. The lower courts had given short shrift to the Republic’s entitlement to sovereign immunity, in that they effectively had decided the merits of its claim to the assets by awarding them to the human rights class – and the whole point of sovereign immunity is that such claims cannot be decided on the merits. (The Court also noted the comity interest in allowing foreign states to decide how to compensate victims of a previous government.) It also found that the lower courts’ ruling that the Republic’s claim would have been time-barred anyway was improper, in that the outcome of the case still pending in the Philippine courts might render New York law inapplicable. The Court also saw no way to lessen or avoid prejudice to the Republic by proceeding in its absence using alternative remedies, and found that resolving the case without the Republic served no public interest in settling disputes because the Republic would not be bound by any judgment. So the Court remanded the case with instructions that it be dismissed.

 

There were two partial dissents as to this remedy. Justices Stevens and Souter, writing separately, each would have remanded the case and either stayed proceedings pending the outcome of the action in the Philippines or simply reassigned the case to another district judge. (Notably, Stevens called out the district judge for giving reasons for the Republic to think he was biased; the Republic apparently had invoked sovereign immunity only for that reason, as it had waived sovereign immunity in other cases before other judges.)

 

There were three cert grants on yesterday’s order list. The biggest came in Ashcroft v. Iqbal (07-1015), where the Court will consider the weighty question of whether cabinet officials can be held personally liable for the unconstitutional actions of subordinates. The questions presented are: (1) Whether a conclusory allegation that a cabinet-level officer or other high-ranking official knew of, condoned, or agreed to subject a plaintiff to allegedly unconstitutional acts purportedly committed by subordinate officials is sufficient to state individual-capacity claims against those officials under Bivens. (2) Whether a cabinet-level officer or other high-ranking official may be held personally liable for the allegedly unconstitutional acts of subordinate officials on the ground that, as high-level supervisors, they had constructive notice of the discrimination allegedly carried out by such subordinate officials. If that flies, things could get awfully interesting . . . .

 

In addition, the Court will hear Peake v. Sanders (07-1209), which asks “[w]hether the court of appeals erred in holding that a failure of the [Department of Veterans Affairs] to give the notice required by the [Veterans Claims Assistance Act regarding decisions on veterans benefits] must be presumed to be prejudicial.” The third grant came in Haywood v. Drown (07-10374), which asks “[w]hether a state’s withdrawal of jurisdiction over certain damages claims against state corrections employees – from state courts of general jurisdiction – may be constitutionally applied to exclude federal claims under Section 1983, especially when, as here, the state legislature withdrew jurisdiction because it concluded that permitting such lawsuits is bad policy?”

 

Finally, the Court asked the SG for his views on the petition in Weldon v. Norfolk Southern Railway Co. (07-1152), which asks the Court to consider “[w]hether a state law may impose on plaintiffs bringing asbestos claims preliminary evidentiary medical requirements in cases brought in state court as a condition precedent to the exercise of rights under the Federal Employers’ Liability Act and the Locomotive Boiler Inspection Act.”

 

That’s it for now. We’re almost caught up from last week, though we may get more opinions later this week as the Court does its best to finish up the Term. Until next time, thanks for reading!

 

Ken & Kim

From the Appellate Practice Group at Wiggin and Dana
For more information, contact Kim Rinehart, Ken Heath, or any other member of the Practice Group at 203-498-4400