Hardt v. Reliance Standard Life Insurance Co. (09-448), United States v. Marcus (08-1341) and United States v. O'Brien (08-1569)

May 28, 2010 Supreme Court Update

Greetings, Court fans!

As promised, this Update covers the Court's three other opinions from Monday: Hardt v. Reliance Standard Life Insurance Co. (09-448), which addresses attorney's fees under a specific ERISA provision, but has relevance for all fee-shifting statutes that aren't explicitly limited to a "prevailing party"; United States v. Marcus (08-1341), on the "plain error" rule under Federal Rule of Criminal Procedure 52(b); and United States v. O'Brien (08-1569), on whether, under a federal firearm statute, the fact that the firearm is a machine gun is an element of the offense or merely a sentencing factor.

Unlike most fee-shifting provisions, which specify that a court may award attorney's fees only to a "prevailing party," Section 1132(g)(1) of ERISA simply states that "the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." In Hardt v. Reliance Standard Life Insurance Co., a nearly unanimous Court rejected the Fourth Circuit's attempt to read a "prevailing party" requirement into Section 1132(g)(1), holding instead that a district court had discretion to award attorney's fees to any party who had achieved "some success on the merits." Petitioner Hardt sued Reliance after it rejected her application for long term disability benefits. The district court denied Reliance's motion for summary judgment, finding that Reliance's decision to deny benefits was based on incomplete information. Although the court saw compelling evidence on the record that Hardt was totally disabled, the court also denied Hardt's motion for summary judgment. Instead, the court remanded to Reliance as the initial decision-maker under ERISA, and ordered it to "act on Ms. Hardt's application by adequately considering all the evidence." After conducting the court-ordered review, Reliance found Hardt to be eligible for benefits and paid her. Hardt then moved for attorney's fees and costs under Section 1132(g)(1). The district court awarded the fees, but the Fourth Circuit reversed. Relying on its own caselaw that ERISA fee awards could only be awarded to a "prevailing party," and Supreme Court caselaw that a "prevailing party" is one who has obtained an "enforceable judgment on the merits," the Fourth Circuit found that Hardt did not qualify for a fee award as a prevailing party.

The Court reversed in an opinion by Justice Thomas. To begin, the text of Section 1132(g)(1) did not include the term "prevailing party" or otherwise indicate that attorney's fees would be available only to "prevailing parties." As such, the Court's precedents on "prevailing party" fee-shifting statutes did not apply. The leading case on fee-shifting statutes not limited to prevailing parties, Ruckelshaus v. Sierra Club (1983), provided that courts would have discretion to award attorney's fees under such statutes as long as the fee claimant could show "some degree of success on the merits." In this case, even though Hardt did not secure summary judgment, she did secure the benefits she sought on remand. Thus, the district court properly exercised its discretion to award attorney's fees. (The Court declined to address whether a remand order, without more, would qualify as "some success on the merits.") Justice Stevens concurred in the judgment, and concurred with the Court's opinion except to the extent that it relied on Ruckelshaus, which, in his view, had been based on an incorrect reading of the Clean Air Act. Justice Stevens cautioned that the text, structure, and history of each fee-shifting statute should be examined on its own merits, without any special weight given to Ruckelshaus.

Moving on to the criminal cases, in United States v. Marcus, the Court reiterated that appellate courts can correct a "plain error" not brought to the attention of the district court only if there was a reasonable probability that the error affected the outcome of the trial. Respondent Marcus was charged with engaging in forced labor and sex trafficking "between January 1999 and October 2001," and was convicted on both charges. On appeal to the Second Circuit, he argued for the first time that the statutes he was convicted of violating did not become law until October 28, 2000. Although Second Circuit precedent permits a defendant to be convicted for a "continuing offense" as long as the conviction rests at least in part upon postenactment conduct, Marcus argued that his conviction violated the Ex Post Facto Clause of the Constitution because the indictment and evidence at trial permitted the jury to convict him solely on the basis of preenactment conduct. The Second Circuit agreed in a per curiam decision, holding that a retrial is necessary "whenever there is any possibility, no matter how unlikely, that the jury could have convicted based exclusively on pre-enactment conduct."

A 7-1 majority of the Court quickly snuffed out this departure from its "plain error" cases. (Justice Sotomayor did not participate. As a member of the Second Circuit panel, however, she wrote a concurring opinion expressing concern that the Circuit's precedent with regard to plain-error review of ex post facto violations did not "fully align with the principles inhering in the Supreme Court's recent applications of plain-error review."). Federal Rule of Criminal Procedure 52(b) permits an appellate court to recognize a "plain error that affects substantial rights," even if the claim of error was not raised in district court. The Court has interpreted Rule 52(b) to give appellate courts discretion only where, among other things, the error affected the appellant's substantial rights, which in the ordinary case means that there was a reasonable probability it affected the outcome of the trial. The Second Circuit's "any possibility, no matter how unlikely" standard conflicted with the Court's interpretation. Although the Court has recognized that there are some "structural errors" (for example, lack of counsel or lack of an impartial judge) that affect substantial rights regardless of their actual impact on a defendant's trial, the Court found that the error in this case did not rise to the level of a "structural error." To the contrary, it was possible that the error (i.e., the risk that the jury would convict solely on the basis of preenactment conduct) could have been cured with a jury instruction. While the error here was not unimportant, the Court could find no good reason to treat it differently from other serious errors subject to the Court's plain error rule (for example, the failure to submit an element of the crime to the jury). The Court remanded the case for the Second Circuit to apply the proper plain error standard, leaving open the possibility that the error in this case satisfied the standard.

Justice Stevens was the lone dissenter. In his reading of the record, most of the evidence supporting the sex trafficking charge, and some of the evidence supporting the forced labor charge, related to preenactment events. That created a "very real possibility" that the jury convicted Marcus of sex trafficking solely on the basis of preenactment conduct, as well as the possibility that both the sex trafficking and forced labor convictions rested on an incorrect belief that the preenactment conduct was unlawful. Justice Stevens would therefore affirm the Second Circuit's judgment on the ground that the error prejudiced Marcus and seriously undermined the integrity of the proceedings. Justice Stevens also took the opportunity to express his discomfort with the Court's "ever more intensive efforts" to rationalize plain-error review, which have "trapped the appellate courts in an analytic maze that . . .is more liable to frustrate than to facilitate sound decisionmaking."

In the final opinion from Monday, United States v. O'Brien, the Court (once again virtually unanimous) held that, under 18 U.S.C. § 924(c), the fact that a firearm is a machinegun is an element of the offense that must be proven to a jury beyond a reasonable doubt, not merely a sentencing factor that can be proved to the judge at sentencing. Justice Kennedy delivered the Court's opinion. Among other things, § 924(c) imposes a mandatory minimum sentence of 5 years for using, carrying, or possessing a firearm in connection with a crime of violence or a drug trafficking crime; 30 years if the firearm is a machinegun. Respondents O'Brien and Burgess were arrested after a foiled attempt to rob a bank. According to the FBI, one of the firearms used during the attempted robbery had been converted from a semiautomatic to a fully automatic weapon, i.e., a machinegun. The Government initially charged the respondents with use of a firearm, and with use of a machinegun. Later, the Government moved to dismiss the machinegun count on the ground that it would be unable to establish the count beyond a reasonable doubt, but took the position that the machinegun provision was a sentencing factor that the court could apply at sentencing if the respondents were convicted of the general firearm count. The district court granted the Government's motion to dismiss the machinegun count, but ruled that the machinegun provision was an element of the crime. The court refused to consider the machinegun element as a sentencing factor. The First Circuit affirmed; as did the Court.

In an earlier decision, Castillo v. United States (2000), the Court had examined an analogous machinegun provision in § 924 as it existed prior to certain amendments enacted in 1998, and found that the provision was an element of the crime. The Court reached that decision after looking at five factors: (1) language and structure, (2) tradition, (3) risk of unfairness, (4) severity of the sentence, and (5) legislative history. In O'Brien, the Court, led by Justice Thomas, found that, overall, the factors still supported the conclusion that the machinegun provision was an element of the crime in the current version of § 924. First, the most apparent effect of the 1998 amendments was to divide up a lengthy principal sentence into separate subparagraphs. The machinegun provision was now its own subsection, positioned between several sentencing factors. Although the Court has indicated in the past that use of subsections might be a signal that that Congress was referring to sentencing factors rather than elements, that structural consideration was overwhelmed in this case by factors pointing in the other direction. Second, characteristics of the offense are still traditionally treated as elements, as opposed to characteristics of the offender (e.g., recidivism, cooperation, and acceptance of responsibility), which are traditionally treated as sentencing factors. Third, the 1998 amendments did not alter the risk of unfairness that might result in cases involving several weapons, if the judge imposed a sentence based on the use of a weapon that was not one the jury had believed to be used. Fourth, the contrast between a mandatory minimum of 5 years and one of 30 years exceeded the sort of "incremental changes to the minimum" that one expects to see in sentencing factors. The Court rejected the Government's argument that, because the 1998 amendments made sentences mandatory "minimums" as opposed to just "mandatory," any firearm conviction could result in a 30-year sentence, even without a finding that the firearm was a machinegun. Even if the Government's observation were true in theory, it was not found in practice. Fifth, the legislative record on the 1998 amendments was silent on this issue, which, if anything, suggested that Congress did not intend to make a substantive change to the provision.

Justice Stevens wrote a concurring opinion, and Justice Thomas wrote an opinion concurring in the judgment, to express their disagreement with other decisions in which the Court had held that factors which only limited a sentencing court's discretion within a range were merely sentencing factors, not elements. Justice Stevens wrote that "any fact mandating the imposition of a sentence more severe than a judge would otherwise have discretion to impose should be treated as an element of the offense." Likewise, Justice Thomas noted that "If a sentencing fact either raises the floor or raises the ceiling of the range of punishments to which a defendant is exposed, it is, by definition, an element."

In addition to its six opinions Monday, the Court also dismissed the writ of cert as improvidently granted in Robertson v. Watson (08-6261), a case that would have decided whether a private person could bring an action for criminal contempt or whether such an action must be brought in the name of and pursuant to the power of the United States. Chief Justice Roberts, joined by Justices Scalia, Kennedy and Sotomayor dissented from the dismissal. In their view, the case raised an important question that should be answered with an unqualified "no." "The terrifying force of the criminal justice system may only be brought to bear against an individual by society as a whole, acting through a prosecution brought on behalf of the government." The dissenters also pointed out that the majority's decision to DIG the case could not be taken as any indication of the majority's view on the merits.

The Court also issued an order list on Monday, granting cert in a number of additional cases. I'll be back soon with the questions presented. The Court has been quiet since its flurry of activity Monday. Perhaps the Justices are enjoying an early Memorial Day holiday, and resting up for the traditional end-of-term deluge. I'll be back when they are. Until then, enjoy the holiday!


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