Supreme Court Update: Arkansas Game and Fish Commission v. United States (11-597), Kloeckner v. Solis (11-184) and Order List

December 28, 2012 Supreme Court Update

Greetings, Court fans!

We've been slightly remiss in our Updates due to the crush of other December deadlines, but we're back with two decisions, a bevy of other interesting items, and a New Year's resolution to do better. The decisions came in Arkansas Game and Fish Commission v. United States (11-597), on whether government-induced temporary flooding constitutes a taking, and Kloeckner v. Solis (11-184), resolving a circuit split on whether government employees alleging unlawful discrimination must seek judicial review in the Federal Circuit or the district courts when their claims are dismissed on procedural grounds.

Arkansas Game and Fish Commission v. United States (11-597) concerns a tract of forest land along the banks of the Black River, owned and managed by the Arkansas Game and Fish Commission. The U.S. Army Corps of Engineers operates a dam some 115 miles upstream. Between 1993 and 2000, at the request of downstream farmers, the Corps released water more slowly than usual in the fall, to extend the farmers' harvest time. This meant more water had to be released in the spring and summer, causing more frequent and more prolonged flooding during the forests' tree growing season. The flooding weakened the trees' root systems, such that a moderate drought in 1999-2000 brought "catastrophic mortality": more than 18 million board feet of timber were destroyed or degraded. The Commission sought compensation under the Takings Clause, and the Court of Federal Claims awarded the Commission $5.7 million for the value of the lost timber and the projected cost of reclamation efforts. The Federal Circuit reversed, holding that government-induced flooding could give rise to a takings claim only if the flooding were "permanent or inevitably recurring."

The Court reversed right back, 8-0, with Justice Ginsburg taking the pen. (Justice Kagan did not participate.) The Court's World War II-era cases firmly establish that temporary takings can be compensable. Notable example: frequent overnight flights constituted a taking where they deprived a property owner of his ability to operate a chicken farm, United States v. Causby (1946). The Federal Circuit's decision here appeared to be based on a mistaken reading of an earlier case, Sanguinetti v. United States (1924). In Sanguinetti, the Court found no taking where a landowner failed to show a causal connection between the government's construction of a canal and later flooding of his property. Sanguinetti contained a passage suggesting that an "actual, permanent invasion of the land" was needed to establish a taking. But that reference was dicta, and in any event, was superseded by the Court's World War II-era cases. Justice Ginsburg waved off the Government's slippery slope argument that any of its flood control projects could now be the subject of a takings claim: the Court had heard these arguments time and again in Takings Clause cases, and the sky had not fallen. The Court remanded for the ultimate determination of whether a taking had occurred.

Kloeckner v. Solis (11-184) lies at the "complicated, at times confusing" intersection of federal civil rights statutes and civil service law. While employed by the Department of Labor, Kloeckner filed a complaint with the agency's civil rights office, alleging sex and age discrimination and a hostile work environment. The complaint proceeded along EEOC guidelines. The DOL subsequently fired Kloeckner. Under the Civil Service Reform Act of 1978, Kloeckner was now permitted to appeal the termination decision to the Merit Systems Protection Board (MSPB), which she did. Rather than have two cases proceeding on parallel tracks, however, Kloeckner obtained leave to amend her EEOC case to include the claim of discriminatory termination, and asked that the MSPB case be dismissed without prejudice for four months to allow the EEOC process to go forward. More than four months later, the EEOC administrative law judge threw out Kloeckner's case for bad-faith conduct in connection with discovery, and the DOL made that decision final. Kloeckner tried to appeal the DOL's decision to the MSPB, but the MSPB viewed the appeal as a belated effort to reopen her old MSPB case, and dismissed it as untimely. Kloeckner then sought judicial review of the MSPB's decision in the District Court. But the District Court held that it lacked jurisdiction because it could only review MSPB cases decided on the merits; cases decided on procedural grounds had to go to the Federal Circuit. The Eighth Circuit affirmed.

The Court reversed, 9-0. This time, Justice Kagan wrote for the Court. While the Civil Service Reform Act (CSRA) generally provides that petitions to review MSPB decisions should be filed in the Federal Circuit, it carves out "mixed cases" alleging both violations of the CSRA and anti-discrimination statutes, and sends them to the district courts for judicial review. In offering an alternative reading of the CSRA, the Government would have the Court take what Justice Kagan called a "mazelike tour" of the statute. First, the Government would have the Court read a statute of limitations provision – requiring any district court cases to be filed within 30 days after notice of the "judicially reviewable action" – to mean that only certain "judicially reviewable actions" could be reviewed. Second, the Government would have the Court read another time limitation provision – requiring the MSPB to "decide . . . the issue of discrimination" within 120 days of the employee's filing – to mean that the MSPB takes a judicially reviewable action only when it actually rules "on the issue of discrimination," i.e., on the merits. The Court rejected this byzantine interpretation of the CSRA: "If Congress had wanted to send merits decisions to the district court and procedural dismissals to the Federal Circuit, it could have just said so."

In other Court news, as the Circuit Justice for the Tenth Circuit, Justice Sotomayor denied an application for an injunction pending appeal in Hobby Lobby Stores, Inc. v. Sebelius (No. 12A644). Hobby Lobby and another family-owned company have brought suits challenging the Affordable Care Act's contraception-coverage requirement, arguing that it forces them to provide insurance coverage for certain drugs and devices they believe can cause abortions, contrary to their religious beliefs. The District Court denied the applicants' motion for a preliminary injunction, and Tenth Circuit denied their motion for an injunction pending resolution of the appeal. In this procedural posture, the Court could issue an injunction under the All Writs Act only if doing so were "[n]ecessary or appropriate in aid of [the court's] jurisdiction," and "the legal rights at issue are indisputably clear." Justice Sotomayor found that the applicants' entitlement to relief was not "indisputably clear" because the Court had never before addressed these types of religious freedom claims as asserted by closely held for-profit corporations and their controlling shareholders. The applicants also could not show how an injunction was necessary in aid of the Court's jurisdiction: the applicants could always file a petition for a writ of certiorari following an adverse final judgment.

The blockbuster cert grants came in Hollingsworth v. Perry (12-144) and United States v. Windsor (12-307). Hollingsworth asks: "Whether the Equal Protection Clause of the Fourteenth Amendment prohibits the State of California from defining marriage as the· union of a man and a woman." The Court directed the parties to also brief and argue whether the petitioners have standing under Article III, §2. Windsor asks whether Section 3 of the Defense of Marriage Act "violates the Fifth Amendment's guarantee of equal protection of the laws as applied to persons of the same sex who are legally married under the laws of their State." The Court directed the parties to also brief and argue "Whether the Executive Branch's agreement with the court below that DOMA is unconstitutional deprives this Court of jurisdiction to decide this case; and whether the Bipartisan Legal Advisory Group of the United States House of Representatives has Article III standing in this case."

The Court also granted cert in the following cases:

Assoc. for Molecular Pathology v. Myriad Genetics, Inc., (12-398), brought by medical professionals against a company that has obtained patents on two human genes that correlate with increased risk of breast or ovarian cancer, asks simply: "Are human genes patentable?"

Mutual Pharmaceutical Co. v. Bartlett (12-142) asks whether the First Circuit erred in holding that "federal law does not preempt state law design-defect claims targeting generic pharmaceutical products because the conceded conflict between such claims and the federal laws governing generic pharmaceutical design allegedly can be avoided if the makers of generic pharmaceuticals simply stop making their products."

Oxford Health Plans LLC v. Sutter (12-135) asks "Whether an arbitrator acts within his powers under the Federal Arbitration Act . . . or exceeds those powers . . . by determining that parties affirmatively ‘agreed to authorize class arbitration' [under Stolt-Nielsen v. AnimalFeeds International Corp. (2010)] based solely on their use of broad contractual language precluding litigation and requiring arbitration of any dispute arising under their contract."

Federal competition law generally prohibits an incumbent firm from agreeing to pay a potential competitor to stay out of the market. Federal Trade Commission v. Watson Pharmaceuticals (12-416) asks whether "reverse-payment agreements" – settlement agreements in patent infringement lawsuits wherein the seller of a brand-name drug agrees to pay would-be generic competitors millions of dollars, and the competitors agree not to sell competing generic drugs for a number of years – "are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud . . . or instead are presumptively anticompetitive and unlawful."

Dan's City Used Cars, Inc. v. Pelkey (12-52) asks: "Whether state statutory, common law negligence, and consumer protection act enforcement actions against a tow-motor carrier based on state law regulating the sale and disposal of a towed vehicle are related to a transportation service provided by the carrier and are thus preempted by 49 U.S.C. §14501(c)(1)."

The Court asked the SG to weigh in on a pro se cert petition in Law v. Siegal (12-5196), a dispute between a Chapter 7 debtor and Trustee. We usually take our questions presented from the petition, but the pro se debtor/petitioner's statement was so difficult to understand that we had to turn to the Trustee's response. The Trustee posits that the case raises the following questions: (1) "Can the Bankruptcy Court for cause enter an order surcharging a Chapter 7 Debtor's otherwise allowed homestead exemption, when the Debtor fraudulently manufactured fictional secured claims for the purpose of preventing the Chapter 7 Trustee from selling the home?" and (2) "Did the lower courts' earlier decisions overturning and remanding the Bankruptcy Court's first surcharge order — expressly without prejudice to the Trustee renewing the surcharge motion on proper grounds — preclude the Trustee from bringing a second surcharge motion?"

Justice Sotomayor dissented from the denial of cert in Hodge v. Kentucky (11-10974). After being convicted and sentenced to death for murder, Hodge argued that his trial counsel had been ineffective for failing to investigate and present mitigating evidence that he had suffered extensive abuse as a child. Hodge was permitted to present the evidence in post-conviction proceedings, and the Kentucky Supreme Court credited it. But the court denied Hodge relief, concluding that there was no reasonable probability that the jury would not have sentenced Hodge to death anyway, in part because the mitigation evidence "offer[ed] virtually no rationale" for the premeditated and particularly cold-blooded murders he committed. Justice Sotomayor disagreed that mitigation evidence was relevant only if it could "explain" or provide some "rationale" for the defendant's conduct. In Smith v. Texas (2004), for example, the Court rejected the Texas courts' attempt to require a defendant to show a "nexus" between his troubled childhood or limited mental abilities and the crime in order to receive a mitigation instruction. Justice Sotomayor would have granted cert to vacate the judgment and remand for further consideration.

Thanks for reading, and best wishes for the new year!

Kim, Jenny & Julie

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