14 Penn Plaza LLC v. Pyett, Entergy Corp. v. Riverkeeper, Hawaii v. Office of Hawaiian Affairs, Rivera v. Illinois, Harbison v. Bell and Philip Morris USA Inc. v. Williams

April 8, 2009 Supreme Court Update

Greetings, Court fans!

The Court has been busy, issuing six decisions last week, two more this week and a number of orders. To break up the reading, this Update will cover last week's decisions and the remaining decisions and orders will be summarized separately. After this barrage, the Court will be on recess until the week of April 20th.

The Court handed down a key labor ruling in 14 Penn Plaza LLC v. Pyett (07-581), where it held that a collective-bargaining agreement ("CBA") may require union members to arbitrate statutory discrimination claims under the Age Discrimination in Employment Act ("ADEA"). Plaintiffs worked as night lobby watchmen at defendant 14 Penn Plaza's building, and were members of the Service Employees International Union ("Union"). After 14 Penn Plaza – with the Union's consent – hired licensed security guards to staff the lobby, plaintiffs were reassigned to other jobs. Plaintiffs asked the Union to file grievances alleging, among other things, that 14 Penn Plaza had engaged in age discrimination in connection with the reassignments, but the Union eventually decided not to pursue the discrimination claims (reasoning that its earlier consent precluded it from bringing the claim). Plaintiffs then filed a claim with the EEOC alleging that defendant violated the ADEA and obtained a right-to-sue notice. In the ensuing lawsuit, 14 Penn Plaza moved to compel arbitration pursuant to the CBA, which expressly required arbitration of statutory discrimination claims. Relying on past Supreme Court precedent, the district court and the Second Circuit concluded that a Union could not waive an employee's right to a federal forum for the vindication of such claims. A hotly divided Court reversed.

For the majority (Justice Thomas, joined by the Chief, Scalia, Kennedy, and Alito), the analysis was straightforward. The National Labor Relations Act ("NLRA") allowed the Union to bargain on behalf of its members, and this included the right to bargain for arbitration. Since nothing in the ADEA itself precluded an agreement to arbitrate (and the Court previously had held that individual employees could agree to arbitrate statutory discrimination claims), the NRLA authorized the Union to bargain for arbitration of ADEA claims and the Federal Arbitration Act required enforcement of this agreement. Congress could have precluded arbitration of ADEA claims if it wished to do so, but the Court could not engage in judicial lawmaking out of a concern that unions would too readily contract away their members' federal forum rights. The majority adopted a narrow view of the Court's ruling in Alexander v. Gardner-Denver Co. (1974), which addressed a CBA that prohibited "discrimination against any employee on account of race, color, religion, sex, national origin, or ancestry," and required arbitration of "any differences…as to the meaning and application of" the agreement. The Gardner-Denver Court concluded that these provisions did not bar a union member from bringing a Title VII claim in federal court even when the union had already arbitrated a parallel discrimination claim under the CBA. The majority cabined Gardner-Denver's holding to circumstances where the CBA's arbitration clause did not expressly cover statutory claims. Thus, it was not controlling here. To the extent that Gardner-Denver and its progeny contained language critical of arbitration for the vindication of statutory antidiscrimination rights, such criticism "rested on a misconceived view of arbitration that this Court has since abandoned."

The dissent, led by Justice Souter, chastised the majority for failing to adhere to prior precedent, observing that "the" holding of the Gardner-Denver case identified by the majority was in fact just one ground for the decision. In the dissent's view, Gardner-Denver and its progeny recognized that an individual's statutory right to equal employment opportunities stood on a different footing from statutory rights relating to collective bargaining for economic benefits, and "imposed a 'seemingly absolute prohibition on union waiver of employees' federal forum rights'" to vindicate the former. With respect to the majority's statement that only Congress could exempt the ADEA from union-agreements to arbitrate, the dissent parried back that Congress had no reason to do so since courts had almost uniformly concluded that unions could not waive members' rights to a federal forum for such claims. The fact that Congress allowed this interpretation of Gardner-Denver to stand for over 30 years suggested that Congress was satisfied with it. Justice Stevens dissented separately to register his "concern regarding the Court's subversion of precedent to the policy favoring arbitration."

Next up, in Entergy Corp. v. Riverkeeper (07-588), the Court addressed the EPA's national performance standards for certain power plant cooling water intake structures under the Clean Water Act ("CWA"). The cooling water systems of the 500 power plants regulated by these standards kill roughly 3.4 billion aquatic organisms per year by either trapping them on the intake screens ("impinging" them) or sucking them into the system itself ("entraining" them). The CWA required the EPA to set standards based on "the best technology available for minimizing adverse environmental impact," but was silent on whether the EPA could consider costs or conduct a cost-benefit analysis to make this determination. The EPA's chosen standards sought to reduce impingement by 80 to 95% and entrainment by 60 to 90% at certain existing facilities, but did not mandate that these facilities use a better technology (a closed-cooling system) that EPA required for new facilities, because retrofitting existing plants with closed-cooling systems would be 9 times more expensive than using other available technologies, and would yield only marginal environmental benefits. The regulations also allowed existing facilities to apply for variances if the costs of compliance were "significantly greater than" the costs considered by EPA in setting the standards.

The Second Circuit held that the CWA's cooling water intake "best technology available" standard did not permit cost-benefit analysis, and the EPA could only consider whether the costs of this technology could be reasonably borne by the industry. Thus the EPA's variance procedure was unlawful, and it had to explain whether it used cost-benefit analysis in crafting the national performance standards. As in 14 Penn Plaza, the Court was divided, and the conservative block came out on top. The majority, led by Justice Scalia, reversed and remanded, holding that the "best technology available" language could be reasonably interpreted as either the technology that achieves the most environmental benefit or the technology that is the most efficient (i.e., produces environmental benefits at the lowest cost) – and it was EPA's choice under Chevron, not the Court's. The majority reviewed the other technology-based standards under the CWA, all of which allowed some consideration of costs, but not necessarily a full-blown cost-benefit analysis. From this general statutory context, it was reasonable for the EPA to conclude it could conduct some form of cost-benefit analysis when applying the "best technology available" standard. For the majority, the fact that this standard was completely silent on costs demonstrated Congress' reluctance to "tie the agency's hands." Employing some you-can't-be-a-little-bit-pregnant logic, the majority rejected the dissent's, the Second Circuit's, and Riverkeeper's view that even though statutory silence precluded full-blown cost-benefit analysis, the EPA could nonetheless consider costs when they were so extreme that they could not be borne by the regulated industry. Having recognized that some consideration of costs was permissible, there was no basis in the CWA's language to preclude EPA from undertaking a cost-benefit analysis.

Justice Stevens, joined by Justices Ginsburg and Souter, dissented. The dissent exposed the fundamental problem with cost-benefit analysis of environmental regulations: the cost of installing new pollution control equipment is easy to quantify, while the benefit from such equipment is squishy (like a fish sucked through an intake structure). Based on the text and legislative history of the CWA, the dissent argued that Congress was fully aware of this cost-bias and tightly controlled when EPA could use cost-benefit analysis. The dissent believed that silence in this context was a prohibition, not a delegation, and costs could only come into play if they were so prohibitive as to render the technology "unavailable" to the industry. Justice Breyer concurred in part and dissented in part, generally agreeing with the majority that EPA could use some form of cost-benefit analysis based on the text, context, and legislative history, but also agreeing with the dissent that rigorous, formal, quantitative cost-benefit analysis was of limited utility in the environmental context. Breyer also would have remanded to the EPA to explain why, after thirty years of analyzing whether costs were "wholly disproportionate" to benefits, EPA decided to change to an analysis of whether costs were "significantly greater than" benefits, and to explain whether there was any practical difference between the two.

Unlike Riverkeeper and 14 Penn Plaza, the Court's decision in Hawaii v. Office of Hawaiian Affairs (07-1372) was uncontroversial, garnering the support of all nine Justices. By way of brief background, when Hawaii was annexed to the United States in 1893, it ceded all its lands to the United States in "absolute fee" (without regard to any native Hawaiian property interests). A little over half a century later, the 1959 Admission Act passed all U.S. title in the ceded lands to the new State of Hawaii. In 1993, Congress issued a Joint Resolution apologizing for the United States' role in "the illegal overthrow of the Kingdom of Hawaii." The preamble of this "Apology Resolution," noted that "the indigenous Hawaiian people never directly relinquished their claims . . . over their national lands to the United States," and the Resolution wrapped up with the disclaimer that "[n]othing in this Joint Resolution is intended to serve as a settlement of any claims against the United States." The Office of Hawaiian Affairs (OHA) – established by Hawaii to manage funds from the use or sale of the once-ceded lands for the benefit of native Hawaiians – interpreted these portions of the Apology Resolution as a congressional recognition of unextinguished native Hawaiian claims to the once-ceded lands. Accordingly, when Hawaii's affordable housing agency (HFDC) made plans to develop a parcel of the once-ceded land, OHA demanded that the transfer of title include a disclaimer preserving any native Hawaiian claims to the land. HFDC balked at imposing such a cloud on title and OHA sued for an injunction preventing any transfer or sale of once-ceded land that didn't preserve native claims. The Hawaiian Supreme Court agreed with OHA's interpretation of the Apology Resolution and enjoined Hawaii from transferring title to any once-ceded lands until native Hawaiian claims to those lands could be resolved. Justice Alito, writing for a unanimous Court, first concluded that the Court had federal question jurisdiction based on the lower court's reliance on the Apology Resolution (OHA had argued that there was no federal question because the state court's decision could be interpreted as resting on independent state law grounds), and reversed.

The Court gave short shrift to the Hawaiian Supreme Court's construction of the Apology Resolution. Digging up an 1889 precedent, the Court issued a stern reminder that the preamble of a statute does not have operative effect and "the necessity of resorting to it to assist in ascertaining the true intent and meaning of the legislature is in itself fatal to the claim set up." That left the Resolution's disclaimer of any intent to settle claims against the United States, which Justice Alito dismissed as "irrelevant" to the question whether Hawaii's disposition of its lands could be trammeled by native claims because "we know of no justification for turning an express disclaimer of claims against one sovereign into an affirmative recognition of claims against another." (While this interpretation might render the disclaimer a nullity, that "is not a judicial license to turn an irrelevant statutory provision into a relevant one.") Moreover, even if the text could support it, Justice Alito explained that the Hawaiian Supreme Court's interpretation fell foul of both the doctrine disfavoring repeal by implication and the canon of constitutional avoidance. This is because the recognition of native claims would be inconsistent with title having been transferred to Hawaii in absolute fee through the 1959 Admission Act, and because retroactively clouding Hawaii's title would be an impermissible interference with the sovereignty conveyed on Hawaii upon admission to the Union.

Rivera v. Illinois (07-995) also yielded a unanimous Court. Rivera was convicted of first-degree murder and sentenced to 85 years. On appeal, he claimed that the trial court improperly denied his peremptory (non-cause based) challenge to potential juror Deloris Gomez, and thus, deprived him of his rights under the Due Process Clause of the Fourteenth Amendment. Led by Justice Ginsburg, the Court explained that as long as the resulting jurors were qualified and unbiased, the denial of a peremptory challenge – while potentially improper under state law – did not result in a violation of the defendant's right to due process. Peremptory challenges are not required by the Federal Constitution at all. They are creatures of state law and just as "state law controls the[ir] existence . . . so state law determines the consequences of an erroneous denial of such a challenge." Here, the trial court denied Rivera's challenge to potential juror Gomez out of concern that it was discriminatory and thus prohibited under Batson v. Kentucky (1986). Rivera never argued that Gomez was subject to dismissal for cause and the record did not suggest that Gomez was in any way biased or unqualified for jury service. The Illinois Supreme Court concluded that while the denial of Rivera's peremptory challenge was improper, it was harmless, and affirmed his conviction. This ends the matter because "[t]he Due Process Clause . . . safeguards not the meticulous observance of state procedural prescriptions, but ‘the fundamental elements of fairness in a criminal trial.'"

The Court next considered the scope of a federal public defender's representation of an individual sentenced to death in Harbison v. Bell (07-8521). Specifically, the Court considered whether 33 U.S.C. § 3599 authorized the federal public defender who represented Harbison (a state prisoner) in a federal habeas petition under 28 U.S.C. § 2254 to represent him in subsequent state clemency proceedings. Before turning to the merits, the Court addressed the preliminary question of whether a certificate of appealability was required before Harbison could appeal the denial of federally appointed counsel. All of the Justices easily concluded that it was not because the denial of counsel was not a "final order," disposing of the merits of a habeas proceeding. That was where the unanimity ended, however. On the substance, the Justices were deeply divided (and frankly a bit snarky to one another).

Section 3599(a)(1) provides for federally funded counsel for defendants financially unable to pay for counsel in all criminal proceedings in which a defendant is charged with a crime punishable by death. While not expressly limited, all of the parties agreed that subsection (a)(1) applied only to federal capital defendants because Section 3599 was originally enacted as part of a statute creating a new federal capital offense and was "primary concerned with federal criminal actions." Section 3599(a)(2), on the other hand, provides that in "post conviction proceedings under section 2254 [which are federal habeas proceedings available to state prisoners] . . . seeking to vacate or set aside a death sentence" a defendant unable to pay for counsel "shall be entitled to appointment of one or more attorneys . . . in accordance with subsections (b) through (f)." Subsection (e) then provides that "each attorney so appointed shall represent the defendant throughout every subsequent stage of available judicial proceedings . . ., and all available post-conviction process . . ., and shall also represent the defendant in such . . . proceedings for executive or other clemency as may be available to the defendant." Harbison had been sentenced to death by a Tennessee court, had exhausted state challenges to his conviction and sentence, and finally brought a writ of habeas corpus in federal court, where he was represented by federally-appointed counsel under Section 3599. After the habeas petition was denied, Harbison's counsel moved to expand the authorized scope of her representation to include state clemency proceedings – Harbison's last hope. The District Court denied the motion, and the Sixth Circuit affirmed.

Justice Stevens, writing for the majority (which included Justices Kennedy, Souter, Ginsburg and Breyer), reversed. The plain language of Section 3599 dictated that federally funded counsel appointed to represent a state prisoner in federal habeas proceedings "shall" also represent him in "proceedings for executive or other clemency as may be available to the defendant." State clemency proceedings, the Court noted, are both "available" and "other." In fact, "other clemency" proceedings could refer only to state proceedings, since federal clemency proceedings are exclusively the province of the executive. Confronted with the specter of federally-appointed counsel being compelled to represent a successful petitioner even in a state court retrial, the Court drew the line: Section 3599(e) only provides counsel for "subsequent stages" of judicial proceedings, and a retrial must be understood not as a subsequent stage, but as a new judicial proceeding. Chief Justice Roberts, concurred in the judgment (and "much of the Court's opinion"), but was careful to cabin its holding, reasoning that the statutory meaning of "subsequent stages" does not include any state court litigation (not just retrials) because such litigation would best be understood as "new proceedings rather than ‘subsequent stages' of the proceedings for which federal counsel is available." Thus, Roberts concluded, "federal counsel is available for state clemency, but not for subsequent state court litigation." Justice Thomas also concurred in the judgment, but didn't agree with the Court's and (particularly) the Chief's attempts to cabin the ruling. As an initial matter, those issues were not before the Court and any analysis on them was dicta. More importantly, the plain language of the statute did not impose a federal limitation in any part of § 3599. However bad this may be as a policy matter, it was not the Court's task to second guess the wisdom of Congress's actions. Finally, Justice Scalia, joined by Alito, dissented (from all but the Court's certificate of appealability holding). Marking a departure from Justice Scalia's usual adherence to "plain language" and abhorrence for legislative history, he read an implied limitation into Section 3599 and cited the "drafting history" of the statute. The context of the statute's enactment – a bill creating a new federal capital offense – made it reasonable to imply a federal limitation to all parts of Section 3599. The Court, the Chief, and the parties would read a federal limitation into subsection (a)(1), but then disclaim this limitation in other parts of Section 3599. Such a result was "absurd." Because § 3599 was "such a paragon of shoddy draftsmanship," Scalia rejected the majority's textual arguments as strained and illogical.

Finally, the Court dismissed cert as improvidently granted in Philip Morris USA Inc. v. Williams (07-1216), a case involving a massive punitive damages award against Philip Morris. The case had been before the Court twice before, and each time the Court had remanded to the Oregon Supreme Court with instructions for it to reconsider the award. The Oregon Supreme Court stood its ground, though, this time resting its ruling on Philip Morris' purported error in seeking a jury instruction – an independent state law ground seemingly aimed at avoiding constitutional review of the award by the Court. While the Court seemed poised to intervene yet again, it has now dismissed cert. The saga continues, however, as Philip Morris is pursuing yet another avenue to overturn the award in state court.

And with that, I'll conclude for now, with thanks (as always) for reading.


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