Supreme Court Update: CompuCredit Corp. v. Greenwood (10-948), Minneci v. Pollard (10-1104), Smith v. Cain (10-8145), Gonzalez v. Thaler (10-895) and Order List

January 11, 2012 Supreme Court Update

Greetings, Court fans!

The Court has been busy since returning from its extended holiday recess, issuing four decisions yesterday, three decisions today, and two order lists. We start with yesterday's decisions: CompuCredit Corp. v. Greenwood (10-948), where the Court enforced another arbitration agreement (shocking, we know); Minneci v. Pollard (10-1104), finding no Bivens action available against private prison employees; Smith v. Cain (10-8145), regarding a prosecutor's pretty horrendous Brady violation; and Gonzalez v. Thaler (10-895), which had some interesting things to say about "truly jurisdictional rules" versus "nonjurisdictional ‘claim-processing rules'" in the course of addressing the requirements for federal appellate jurisdiction over habeas appeals and state prisoners' time to bring federal habeas petitions.

CompuCredit Corp. v. Greenwood (10-948) is another installment in the Court's series of pro-arbitration decisions. The issue in CompuCredit was whether a credit card agreement requiring all claims to be resolved by arbitration precluded a class action lawsuit under the federal Credit Repair Organizations Act ("CROA"). CROA prohibits certain practices by credit repair organizations, establishes a right to cancel, and provides a private cause of action to enforce the Act (which discusses procedures in individual and class action cases in court). In addition, CROA requires that credit repair organizations provide consumers with a disclosure statement that includes this statement: "You have a right to sue a credit repair organization that violates the Credit Repair Organizations Act." CROA elsewhere prohibits "[a]ny waiver . . . of any protection provided by or any right . . . under this subchapter . . . ." Greenwood filed a class action against CompuCredit and others in federal district court alleging that defendants violated CROA by marketing a credit card that was advertised to help repair credit and to provide a $300 credit line with no down payment when in fact the card did not repair credit and defendants charged numerous fees that were deducted from the credit limit. Greenwood also alleged that defendants failed to provide the required CROA disclosure statement. CompuCredit moved to compel arbitration, but the district court and Ninth Circuit declined, finding that CROA's disclosure statement providing that consumers "have a right to sue," combined with CROA's nonwaiver provision, prohibited agreements barring suit in court.

The Court, in a 6-2-1 decision, reversed. Writing for the majority, Justice Scalia explained that CROA's disclosure provisions didn't create any new substantive rights, but merely explained in more colloquial fashion the rights already created in other parts of the law. The only "right" created by the disclosure provisions was the right of the consumer to receive the piece of paper containing them. In this light, the "right to sue" language contained in the disclosure statement was merely a reiteration in plain English of the private right of action that was created elsewhere in the statute. Moreover, the fact that the section of CROA establishing a private right of action mentions courts and court-based procedures is not enough to show that Congress intended to prohibit arbitration because "it is utterly commonplace for statutes that create civil causes of action to describe the details of those causes of action, including the relief available, in the context of a court suit." Given the command of the Federal Arbitration Act and the Court's prior precedent interpreting it, Congress would be expected to speak far more clearly if it truly intended to prohibit arbitration. Justice Sotomayor, joined by Justice Kagan, concurred in the judgment only. While they agreed with the outcome, they felt that the case was a far closer call, and therefore didn't join the majority's reasoning. Justice Ginsburg dissented. In her view, CROA's disclosure statement would be misleading if in fact a consumer didn't have a "right to sue" and Congress could not have intended that result. Moreover, the language used to create CROA's private cause of action speaks only about courts and contemplates class actions. These provisions, combined with CROA's nonwaiver provision, make clear that Congress did not intend for the right to proceed in court to be overridden by a "form contract that barred class proceeding" in favor of individual arbitration.

In Minneci v. Pollard (10-1104), the Court considered whether, under the doctrine established in Bivens v. Six Unknown Federal Narcot­ics Agents (1971), it could find an implied right of action under the Eighth Amendment for damages against employees of a privately operated federal prison. Pollard, a prisoner at a federal prison operated by a private company, sued several of the company's employees for allegedly depriving him of medical care in violation of his Eighth Amendment rights after he sustained injuries in a prison accident. Reversing the district court, the Ninth Circuit determined that the Eighth Amendment provided Pollard a Bivens action; the Supreme Court granted cert to resolve a circuit split.

Writing for a majority of eight, Justice Breyer reinforced the Court's recent decision in Wilkie v. Robbins (2007), in which it explained that deciding whether to imply a Bivens remedy first requires that a court determine whether there is "any alternative, existing process for protecting the [constitutionally recognized] interest" that would suggest that the "Judicial Branch [should] refrain from providing a new and freestand­ing remedy in damages." Second, even if there is no such alternative, a court "must make the kind of remedial determination that is appropriate for a common-law tribunal, paying particular heed . . . to any special factors counseling hesitation be­fore authorizing a new kind of federal litigation." Applying Wilkie's approach, the Court determined that Pollard's claims fell within the scope of traditional state tort law, which provided an "alternative, existing process" for seeking damages against employees of a private corporation. The majority distinguished Carlson v. Green (1980), in which the Court permitted a prisoner to bring an Eighth Amendment-based Bivens action against federal prison personnel. In Carlson, the prisoner sought damages from government – not private sector – employees. Prisoners generally cannot bring state tort law damages claims against government employees, which means that they lack the "alternative, existing process" available to Pollard. Justice Breyer also dismissed Pollard's claim that, because of the "vagaries" of state tort law, the Court should consider only whether he had an adequate remedy under federal law: "State tort law, after all, can help to deter constitutional violations as well as to provide com­pensation to a violation's victim." The majority further determined that California's state tort remedies – like those in other states – were adequate to protect the specific constitutional interests at issue. Damages caps or other limitations that state law may impose do not alone provide a "sufficient basis to determine state law inadequate." The Court acknowledged – skeptically – that theoretically there could be Eighth Amendment claims that state tort law would not reach, but said it could address the need for a Bivens action in those circumstances "when and if such a case arises." But there is no Bivens remedy for a federal prisoner like Pollard who seeks damages from privately employed prison personnel for alleged Eighth Amendment violations based on conduct that "typically falls within the scope of traditional state tort law."

Justice Scalia, joined by Justice Thomas, penned a separate concurrence to attack the doctrine of Bivens more generally as "‘a relic of the heady days in which this Court assumed common-law powers to create causes of action' by constitutional implication." Justice Scalia would limit Bivens, Carlson, and a third case finding an implied right of action for damages – Davis v. Passman (1979) – to their precise facts.

Justice Ginsburg dissented, noting that "were Pollard incarcerated in a federal- or state-operated facility, he would have a federal remedy for the Eighth Amendment violations he alleges." Although state tort law might afford Pollard a remedy, an aggravated tort, "when it is engaged in by official ac­tors, also offends the Federal Constitution." Noting that allowing a Bivens action against the private employees of the federal facility housing Pollard would serve the purpose of individual deterrence that was central in Bivens itself, Justice Ginsburg would have permitted Pollard a federal remedy despite the relief potentially available to him under state tort law.

Chief Justice Roberts, writing for himself and seven of his colleagues, made short work of Smith v. Cain (10-8145). A Louisiana jury convicted Juan Smith of five counts of first degree murder based on the testimony of a single eyewitness who identified Smith as the first of several gunmen to enter the home where the murders occurred, and who claimed to have been face-to-face with Smith at the outset of the armed robbery. No other witness or physical evidence linked Smith to the crime. After his conviction, Smith obtained the files of the lead detective, including notes stating that the eyewitness could not describe the perpetrators and "could not ID anyone because [he] couldn't see faces." Because the prosecution never disclosed the eyewitness's exculpatory statements, Smith challenged his conviction under Brady v. Maryland (1963), which held that the State violates a defendant's due process rights if it fails to disclose evidence favorable to the defense that is also material to the defendant's guilt or punishment. The State did not dispute that the witness's statements were favorable and were withheld; instead, it contended that they were not material to the jury's finding of guilt. Evidence is material "when there is a reasonable probability that, had the evidence been dis­closed, the result of the proceeding would have been dif­ferent." Cone v. Bell (2009). In a Brady analysis, a "reasonable probability" means simply that "the likelihood of a different result is great enough to ‘undermine[] confidence in the outcome of the trial.'" The majority – stressing that the eyewitness provided the only link between Smith and the crime, and that the undisclosed statements directly contradicted his testimony – found that the statements were "plainly material," and discounted the State's arguments that the jury might have discounted the undisclosed statements. The Court reversed Smith's conviction and remanded to the Louisiana state court.

Dissenting, Justice Thomas disagreed that Smith had shown a "reasonable probability" that the jury would have found the undisclosed evidence persuasive. Underscoring that the materiality determination must be made "in the context of the entire record," Justice Thomas pointed to the eyewitness's vivid recollection of the crime and his description of one perpetrator that closely matched Smith's appearance. In Justice Thomas's view, despite the witness's conflicting statements, Smith had "not established a reasonable probability that the cumulative effect of this evidence would have caused the jury to change its verdict." Nor was Justice Thomas persuaded that additional evidence included in the detective's undisclosed files (and not addressed by the majority) warranted reversal of Smith's conviction. He chided his colleagues for departing from the court's "usual practice of declining to review alleged mis­applications of settled law to particular facts," and would have found no Brady violation.

Continuing the string of 8-1 decisions, in Gonzalez v. Thaler (10-895) the Court led by Justice Sotomayor held that (1) while a "certificate of appealability" granting permission to appeal a district court's habeas decision should indicate how the prisoner made a substantial showing of the denial of a constitutional right, the absence of such a recitation does not deprive a Court of Appeals of jurisdiction; and (2) for state prisoners who decide to forgo direct appellate review in the state's highest court, the clock to bring federal habeas petitions starts ticking as soon as the time for seeking such review expires. The convoluted procedural history of this case began with Gonzalez' murder conviction in a Texas state court. The intermediate state court affirmed his conviction on July 12, 2006, but did not issue its mandate until September 26, 2006. In the meantime, Gonzalez allowed his time for seeking discretionary review with Texas' highest court to expire on August 11, 2006. Gonzalez petitioned unsuccessfully for state habeas relief, then filed a federal habeas petition on January 24, 2008. The district court held that, counting from August 11, 2006 and tolling the time his state habeas petition was pending, Gonzalez had exceeded the statute of limitations by over one month.

Section 2253(c)(1) of the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA") provides that a habeas appeal "may not be taken to the court of appeals" unless a circuit justice or judge first issues a certificate of appealability ("COA"). Section 2253(c)(2) provides that a COA may issue "only if the applicant has made a substantial showing of the denial of a constitutional right." Section 2253(c)(3) provides that the COA "under paragraph (1) shall indicate which specific issue or issues satisfy the showing required by paragraph (2)." In Gonzalez' case, the district court refused to issue a COA, but the Fifth Circuit did, on the question of whether the statute of limitations should have started running from August 11, or September 26, 2006, when the Texas intermediate appellate court issued its mandate. On appeal, the Fifth Circuit affirmed, finding that a judgment becomes final for purpose of AEDPA limitations at the conclusion of direct review or the expiration of the time for seeking such review, here, August 11, 2006.

After Gonzalez petitioned the Court for cert, the State argued for the first time that the Fifth Circuit lacked jurisdiction to adjudicate Gonzalez' appeal because its COA did not specifically indicate a constitutional issue as required by § 2253(c)(3). The Court addressed this jurisdictional argument first, and rejected it. In a passage with potential applications beyond the habeas context, the Court observed that it had "endeavored in recent years to ‘bring some discipline' to the use of the term ‘jurisdictional.' . . . Recognizing our ‘less than meticulous' use of the term in the past, we have pressed a stricter distinction between truly jurisdictional rules, which govern a ‘court's adjudicatory authority,' and nonjurisdictional ‘claim-processing rules,' which do not." Because subject-matter jurisdiction can never be waived or forfeited, and may be raised at any point in a litigation, causing many months of work on the part of the attorneys and the court to be wasted, courts "should not lightly attach those ‘drastic' consequences to limits Congress has enacted." Here, clear jurisdictional language appears in § 2253(c)(1), but not subsections (c)(2) or (c)(3). Congress would have spoken in clearer terms if it had wanted the latter requirements to have jurisdictional force. Thus, the absence of a COA is jurisdictional, but defects in the issuance of a COA are not. That distinction makes sense, as petitioners have no control over how a judge drafts a COA. The Court rejected the State's argument that the mandatory language of § 2253(c)(3) – i.e., that a COA "shall" indicate the constitutional issue(s) – meant that a COA with no indication was no COA at all. "[C]alling a rule nonjurisdictional does not mean that it is not mandatory or that a timely objection can be ignored." The State could have raised the defect before the Court of Appeals, and the Court of Appeals would have been required to address it. But nothing in § 2253(c)(3) establishes that an omitted indication should remain an open issue throughout the case.

Turning to the question of whether Gonzalez's petition was time-barred, the Court agreed with the courts below that it was. AEDPA's 1-year statute of limitations for state prisoners runs from, as relevant here, "the date on which the judgment became final by the conclusion of direct review or the expiration of time for seeking such review." § 2244(d)(1)(A). In Clay v. United States (2003), the Court held that under a similar statute of limitations for federal prisoners, a judgment of conviction becomes final when the Court affirms a conviction on direct review, denies the cert petition for direct review, or when the time to file the cert petition expires – not when the Court of Appeals issues its mandate. Gonzalez argued that state prisoners who choose not to appeal to the state's highest court should nevertheless get the benefit of starting the clock on "the date on which the judgment became final by the conclusion of direct review" – as defined by state law – if that date is later than "the expiration of time for seeking such review." Gonzalez submitted that under Texas law, direct review is not final until a mandate is issued. The Court rejected that reading of § 2244(d)(1)(A). The more natural reading is that the direct review process either "concludes" or "expires," depending on whether the petitioner pursues or foregoes direct appeal. If he forgoes direct appeal, then the expiration date applies.

Justice Scalia dissented on the jurisdictional issue. Reviewing the Court's precedent dating back to the 1840's, Justice Scalia found that the Court has "always – always, without exception – held that procedural conditions for appealing a case from one Article III court to another are jurisdictional." In Justice Scalia's view, the Court's opinion made "a hash" of AEDPA's COA requirements, by allowing appeal whenever a judge approves it, "for whatever reason or for no reason at all." Justice Scalia observed that the Court had performed "wondrous contortions" to find compliance with rules governing court-to-court appeals in the recent past, and feared that the Court would "continue and expand the process of simply converting those obnoxious prerequisites into the now favored ‘claims processing rules'" in order to reach the cases it wanted. "What began as an effort to ‘bring some discipline' to the use of the term ‘jurisdictional," in Scalia's view, "shows signs of becoming a libertine, liberating romp through our established jurisprudence."

The Court also granted cert in two cases:

Salazar v. Ramah Navajo Chapter (11-551), where the Court will determine: "Whether the government is required to pay all of the contract support costs incurred by a tribal contractor under the Indian Self-Determination and Education Assistance Act, 25 U.S.C. § 450 et seq., where Congress has imposed an express statutory cap on the appropriations available to pay such costs and the Secretary cannot pay all such costs for all tribal contractors without exceeding the statutory cap."

Florida v. Jardines (11-564), where the Court granted cert limited to the first question presented: "Whether a dog sniff at the front door of a suspected grow house by a trained narcotics detection dog is a Fourth Amendment search requiring probable cause?"

While we don't ordinarily report on cert denials, we do when they prompt a fight – which is just what happened in Cash v. Maxwell (10-1548). The case involved the decades-old conviction of Bobby Joe Maxwell for 10 murders of homeless men in Los Angeles. At trial, Sidney Storch, Maxwell's cellmate, was a key witness in the State's primarily circumstantial case. Storch testified that Maxwell made inculpatory statements to him while in jail. During lengthy State post-conviction proceedings, Maxwell argued that Storch lied and that this false testimony violated his due process rights. He also argued that the State violated his Brady rights by failing to produce evidence relating to Storch's history of testifying for the State and the difference in the plea deal Storch obtained as a result of his testimony in Maxwell's case. California ultimately denied relief. On federal habeas review, the Ninth Circuit reversed and granted relief, finding that California's decision was based on an "unreasonable determination of the facts." The Court denied cert, prompting Justices Scalia and Alito to issue a fiery dissent, arguing that the Ninth Circuit was once again misapplying the highly deferential standard for federal habeas relief.

While Scalia and Alito recognized that correcting this problem would require the Court to wade into messy fact-bound cases, it had not previously "shrunk from this task, which we have found to be particularly needful with regard to decisions of the Ninth Circuit." Justice Sotomayor disagreed in an opinion "respecting" the denial of cert, arguing that the federal habeas statute requires federal courts to overturn a state court decision based on an unreasonable determination of the facts. Doing anything else would be abdicating their authority. Here, in Justice Sotomayor's view, the Ninth Circuit applied the proper legal standard and its decision was supported by a mountain of evidence that Storch was an unreliable, notorious jail-house snitch and habitual liar. Under these circumstances, the Court properly denied cert.

We'll be back shortly with today's three decisions. To those of you who slogged through this lengthy Update, congrats and have a terrific 2012! For the rest of you slackers... well, we still wish you a great year ahead.

Kim & Jenny

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