Hillside Dairy Inc. v. Lyons (01-950), Nguyen v. United States (01-10873), Desert Palace, Inc. v. Costa (02-679), Fitzgerald v. Racing Assn of Central Iowa (02-695), Dow Chemical Company v. Stephenson (02-271) and order list

June 9, 2003 Supreme Court Update

Greetings Court fans!
We're in the last few weeks of the Term, and so, predictably, the Court issued a handful of decisions today. Five to be exact. Before I turn to those decisions, let me address a few orders.
First, late last week, the Court noted probable jurisdiction (read: granted) in the campaign finance law cases. Twelve (!) parties had filed jurisdictional statements, so after noting probable jurisdiction, the Court's first order of business was to consolidate the cases. More significantly, the Court established a briefing schedule and set the case for four hours of argument on September 8, 2003. Two points to note. First, four hours of argument is a long time for argument, especially for this Court under the direction of the Chief who is known for his rigid adherence to strict time limits. Second, September 8 is a full four weeks before the traditional opening of the Court's Term on the First Monday in October. (Wasn't there a really bad tv show called "First Monday"?) Again, this is a very unusual move for this Court. This is an institution fanatical about protecting its summer vacation, and traditionally, summer doesn't end until they return for the first Conference, usually scheduled for the last week of September. Pure speculation, but maybe there are members of the Court who are untroubled by these departures from accepted practice because they don't plan to be around. (Since I get asked about this periodically, I should emphasize that I am merely speculating here. I have absolutely no inside knowledge of potential retirements.)
In more mundane news, the Court granted cert in two cases today:
1. Engine Manufacturers Assn v. South Coast Air Quality Management Dist. (02-1343): This is a case about the preemptive scope of the Clean Air Act with the following question presented: Are local government regulations prohibiting the purchase of new motor vehicles with specified emission characteristics -- which are otherwise approved for sale by state and federal regulators -- preempted by the Clean Air Act?
2. Crawford v. Washington (02-9410): This is an IFP case, so I don't know much about it yet. Once I get more information, I'll pass it along.
On to the decisions. I'll start with Stevens' two majority opinions.
First, in Hillside Dairy Inc. v. Lyons (01-950), Stevens (for everyone but Thomas) tackled the surprisingly complex regulatory world of milk production and processing. To simplify greatly, California law establishes a pricing scheme for milk products, including guaranteed minimum prices for milk producers, and creates standards for the composition of milk products, including minimum percentages of fat and "solids-not-fat" in dairy products. (For those of us who didn't grow up on farms, Stevens helpfully explains that "solids-not-fat" include protein, calcium, lactose and other nutrients.) Federal law governs similar topics (milk prices, milk composition, etc.), although California law is more complex, and in some cases, more demanding. In response to these disparities, California convinced Congress to pass a law (Section 144) that allows it to establish standards for the composition of milk products that differ from federal standards. As relevant to this case, prior to 1997, the California price support plan arguably encouraged milk processors to purchase milk from from out-of-state producers, but in that year, California amended its plan to eliminate this incentive.
This suit involves a Commerce Clause and Privileges and Immunities Clause challenge by out-of-state dairies to California's 1997 price support amendments, although in today's opinion, the Court did not reach the merits of either constitutional claim. The Court began, rather, by holding that Section 144 does not immunize the California law from scrutiny under the Commerce Clause. The federal law only allowed California to adopt different milk composition standards; it did not authorize different price support plans. Thus, the Ninth Circuit erred when it dismissed the dairies' Commerce Clause claims on the basis of the federal statute. With respect to the Privileges and Immunities Clause claim, the Court held that the Ninth Circuit erred as well. The lower court had rejected the dairies' claim because the California law did not "on its face" create classifications based on residency or citizenship. The Court held that the absence of an express statement discriminating against out-of-staters was an insufficient reason for rejecting the claim. With that, the Court returned the case to the Ninth Circuit for further proceedings. (Thomas dissented on the Commerce Clause issue because, according to Thomas, the "negative Commerce Clause" shouldn't exist and so shouldn't be used to strike down a state statute.)
Next, in Nguyen v. United States (01-10873), the Court decided a case that arises out of the Ninth Circuit's "junket argument circuit": Whenever possible, the Ninth Circuit schedules arguments in exotic locations such as Alaska, Hawaii, and as relevant here, Guam and the Commonwealth of the Northern Mariana Islands (CNMI). (Although you can say a lot of things about the Ninth Circuit, can you really blame them for this practice?) In a recent sitting in Guam, the Chief Judge of the Ninth Circuit asked the Chief Judge of the District Court for the CNMI to sit by designation on the panel. It turns out, though, that the Chief Judge from CNMI is not an Article III judge, but rather an Article IV judge. (Article IV, among other things, grants Congress the power to "make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States," which here includes the power to appoint judges for the CNMI.) Article IV judges, unlike their Article III brethren, are appointed for a term of years and can be removed for cause. Thus, when petitioners' appeals from their drug convictions were heard before the "Ninth Circuit," the panel included two Ninth Circuit (Article III) judges, and one Article IV judge.
Today, Stevens (for himself, O'Connor, Kennedy, Souter, and Thomas) held that this panel composition required reversal of the Ninth Circuit's decision. Section 292(a) authorizes the chief judge of an appellate court to assign a "district judge" to an appellate court panel, and according to Stevens, judges of the district court for the CNMI are not "district judges" within the meaning of that statute. "District judge" refers to judges of the federal district courts, and it is clear that "district court" only includes the Article III district courts established in Title 28 of the US Code. Moreover, Title 28 identifies "district judges" as judges holding office "during good behavior," and this limitation only applies to Article III judges. The Government conceded that the panel was improper, but argued nevertheless that the convictions should be upheld. The Court rejected these arguments. First, although the Court has in the past upheld actions taken by officers acting under color of official title even though there was later discovered some defect in that person's appointment, that doctrine does not apply here. In those cases, the challenged action could have been taken if it had been done properly, but here, the action (decision by a non-Article III judge) could not be taken under any circumstances. Second, even though petitioners failed to object to the composition of the panel until they filed a cert petition, the Court declined to apply "plain error review." The issue in this case was not the validity of the petitioners' convictions, but the validity of the composition of the panel. Even if the parties had agreed to the participation of the non-Article III judge, that action could not have cured the defect in the panel composition. Finally, the fact that two judges of a three-judge panel constitute a quorum legally able to conduct business does not save the Ninth Circuit's decision. The Court has never hesitated to vacate a judgment entered by an improperly constituted court of appeals, even when there was a quorum of judges competent to consider the case. Moreover, the statutory authority allowing the appellate courts to sit in panels requires the inclusion of at least three judges in the first instance.
Rehnquist (joined by the unlikely line-up of Scalia, Ginsburg and Breyer) dissented. According to the dissenters, because petitioners had failed to lodge a timely objection to the panel, the decision below should have been reviewed for "plain error" and upheld under that standard. See Federal Rule of Criminal Procedure 52(b).
Next, in a major case in the employment arena, Desert Palace, Inc. v. Costa (02-679), the Court held that in an employment discrimination case, a plaintiff does not have to present direct evidence of discrimination to obtain a "mixed motive" instruction under Title VII. Title VII makes it unlawful to discriminate in employment "because of" race, color, religion, sex, or national origin. What happens, though, when both legitimate and illegitimate factors (i.e., mixed motives) motivate an employment decision? In 1989, the Court held that an employer could avoid liability if it could show that it would have made the same employment decision even if it had not allowed the impermissible factor to play a role. In that same decision, the Court was divided over when the burden of proof shifted to an employer to prove this affirmative defense. This decision (and others) prompted a re-writing of Title VII in 1991. Under the new provisions, a plaintiff can establish an unlawful employment practice by showing that race, color, etc. was a "motivating factor" in the decision. If the plaintiff makes this showing, an employer can avoid liability for damages (although not liability all together) by showing that it would have taken the same action in the absence of the impermissible motivating factor. After this revision to Title VII, some appellate courts held that to prove liability under this statute, a plaintiff must establish by direct -- and not just circumstantial -- evidence that an impermissible factor was a motivating factor in the employment decision.
Today, in an opinion for a unanimous Court, Thomas rejected this rule. According to the Court, a requirement of "direct evidence" is inconsistent with the language of the statute. The statute merely requires that a plaintiff "demonstrate" that an employer used a forbidden factor when making the employment decision; it does not require any quantum of evidence. The statute defines "demonstrate" as "meet the burdens of production and persuasion." If Congress had intended it to require a particular type of evidence, it could have done so, as it has done in other statutes. Congressional failure to announce a heightened proof requirement means that the general rules of civil litigation -- including rules on standard proof requirements -- apply in Title VII cases. And in general civil litigation (as well as criminal cases), the Court has never questioned the sufficiency of circumstantial evidence. O'Connor concurred in a separate opinion. Because it was her separate opinion in the 1989 case that had first suggested to courts that direct evidence might be required, she wrote separately here to emphasize that while direct evidence might have been required in the past, the 1991 revisions codified a new standard.
In another unanimous opinion, Fitzgerald v. Racing Assn of Central Iowa (02-695), Breyer upheld Iowa's taxation of slot machines against an equal protection challenge under rational basis review. Iowa taxes revenue from slot machines at racetracks at a maximum rate of 36%, while limiting to 20% the tax rate for revenues from slot machines on riverboats. Racetrack owners claimed this violated the equal protection clause, and the Iowa Supreme Court agreed, noting that the high tax rate frustrated the statute's basic purpose, namely rescuing racetracks from economic distress. The Court reversed. Applying rational basis review, Breyer noted that laws can sometimes serve multiple, and even contradictory, purposes. Moreover, even though the statute imposed a high tax rate on racetrack slot machines, it could be understood to advance racetrack economic interests merely by allowing slot machines at all. Breyer goes on to point out the different ways in which the different tax rates might be seen as rational, but you get the picture: rational basis review means the legislature, not the courts, get to decide.
Finally, the Court issued a one-page per curiam opinion in Dow Chemical Company v. Stephenson (02-271). In this case, 2 Vietnam War veterans (Isaacson and Stephenson) sued various manufacturers of Agent Orange claiming that they were injured by exposure to that substance while serving in Vietnam. The district court dismissed these suits noting that virtually identical claims had already been resolved in a "global" class action settlement in 1984. On appeal, the Second Circuit held that the vets were not bound by the prior settlement because they were not adequately represented in that settlement. Today, the Supreme Court punted. With respect to Isaacson's claims, the Court GVR'd for reconsideration in light of Syngenta Crop Protection v. Henson. Isaacson had filed suit in state court, and the manufacturers had removed claiming removal jurisdiction was proper under the All Writs Act. In Syngenta (earlier this Term), the Court held that the All Writs Act does not support removal jurisdiction, and thus it seems that Isaacson's claims will be headed back to state court unless there is some other basis for removal to federal court. On Stephenson's claims, the judgment was affirmed by an equally divided Court. This affirmance has no precedential effect, but rather leaves the Second Circuit's decision as the final decision in the case. (Stevens did not participate in the case, and although the Justices do not give reasons for their recusals, the press is reporting that his only son was a Vietnam veteran who apparently died of cancer in 1996.)
That's all for this week. The Court will hand down more decisions next Monday. Until then, thanks for reading.
From the Appellate Practice Group at Wiggin & Dana.
For more information, contact Mark Kravitz, Jeff Babbin, or Sandy Glover
at 203-498-4400, or visit our website at www.wiggin.com.