Supreme Court Update: Harris v. Arizona Independent Redistricting Commission (14-232), Franchise Tax Board of California v. Hyatt) 14-1175, Welch v. United States (15-6418), Molina-Martinez v. United States (14-8913) and Hughes v. Talen Energy Marketing, LLC (14-614)

April 25, 2016 Supreme Court Update

Greetings, Court Fans!

With roughly two months left in the term, the Supremes have kicked opinion production into high gear, issuing five decisions this past week. While many of us at Update were doing the Batdance, and pondering what it looks like When Doves Cry, the Eight were busy taking on voter redistricting (Harris v. Arizona Independent Redistricting Commission), the Full Faith and Credit Clause (Franchise Tax Board of California v. Hyatt), the retroactivity of a decision to strike down portions of the Armed Career Criminals Act (Welch v. United States), Sentencing Guidelines miscalculations (Molina-Martinez v. United States), and federal preemption of state efforts to increase electricity generation (Hughes v. Talen Energy Marketing, LLC). Now let's get to this Princely set of cases.

For the second time in as many weeks, the Court took on a voting rights case to major fanfare, and for the second time the decision did not live up to the hype. In Harris v. Arizona Independent Redistricting Commission (14-232), the Court considered a challenge to Arizona's voter redistricting plan approved by that state's independent redistricting commission. When the Court granted cert in Harris and in the recently decided Evenwel v. Abott, many commentators predicted a major shift in voting rights law. But just as in Evenwel, the Court's narrow—and unanimous—decision in Harris showed those concerns were unfounded (at least for now).

Harris arose out of alleged gerrymandering in Arizona following the 2010 census. The Arizona Constitution establishes a bipartisan redistricting commission to adjust the State's voting districts after each census. The commission first draws a grid of 30 legislative districts of nearly equal population. It then tweaks that grid to reflect geographic and political boundaries and to comply with the federal constitution and the Voting Rights Act.

Following the 2010 census, the commission set to work, creating an initial map whose districts only varied 4.07% in population from most- to least-populous. It then moved to step two, adjusting the grid to account for geography and the demands of the law. The final map's voting districts roughly doubled the maximum population variation to 8.8%. The commission approved that map, over the dissent of its two Republican members, and the redistricting proposal was pre-cleared by the Department of Justice in 2012. Plaintiffs immediately challenged the redistricting as partisan gerrymandering. But a three-judge district court disagreed, finding that the population variations were primarily the result of efforts to comply with the Voting Rights Act.

Justice Breyer, writing for a unanimous Court, agreed. While the Fourteenth Amendment requires an honest and good faith effort to create legislative districts of nearly equal populations, it does not demand mathematical perfection. Instead, states can deviate from perfect equality for legitimate reasons, such as geography or compliance with the VRA. If the population variation between legislative districts is less than ten percent, a challenger must show "that it is more probable than not" that the variation is the result of illegitimate considerations, like partisanship. In light of the factual history of the commission's plan, the Court concluded the challengers had not met this burden because the population variations were primarily the result of the commission's attempt to comply with the VRA. In particular, the commission had tried to create a plan that did not diminish the number of districts in which minority groups can elect their preferred candidates (called "ability-to-elect" districts). The Court rejected the challengers' argument that the plan was suspect because Republican-leaning districts were overpopulated relative to Democratic-leaning districts. The Court noted that that because minority voters tend to favor Democrats, this discrepancy was a natural result of complying with the VRA.

Only at the end of its opinion did the Court address the elephant in the room: Shelby County v. Holder, the 2013 decision that held that the VRA's coverage formula was unconstitutional. The challengers had argued that in light of Shelby County, the commission's attempt to comply with the VRA was not a legitimate state interest at all. But the Court quickly rejected that argument, noting that when the plan was created in 2010, Arizona was still subject to the VRA, no matter what happened in 2013. There was therefore nothing inappropriate about the commission taking into account the preclearance requirements that then applied. These narrow rationales, however, provide little insight into how the Court will address future challenges to redistricting, particularly once states develop redistricting plans without being subject to the VRA.

Just two weeks after tax day, the Court weighed in for a second time on the continuing saga of Gilbert P. Hyatt, a former California resident who really doesn't want to pay back taxes. Franchise Tax Board of California v. Hyatt (14-1175), was Mr. Hyatt's second trip to the Supreme Court in this case, and both times the Supremes have applied the Full Faith and Credit Clause. This time, the Court reminded Nevada that it had a constitutional obligation to be a good neighbor. In short, it could not shield Nevada citizens from the actions of California, if those citizens didn't have the same protections from Nevada's own actions.

The saga began when Hyatt had moved from California to Nevada in the early ‘90s—he said in 1991, California said in 1992. If California was right, Hyatt owed over $10 million in unpaid taxes. Hyatt sued the California Tax Board (an agency of the state) in Nevada state court, claiming that the Tax Board had committed abusive audit and investigation practices, rifling through Hyatt's private mail and garbage. The Tax Board moved to dismiss, claiming that it had sovereign immunity under California law. Nevada's Supreme Court held that, as a matter of comity, it would only immunize California entities where Nevada law would similarly immunize Nevada. Because Nevada law did not provide immunity under the facts of this case, the Tax Board was not immune either. The Supreme Court affirmed. See Franchise Tax Bd. of Cal. v. Hyatt, 538 U.S. 488, 499 (2003).

On remand, the case went to trial and Hyatt won almost $500 million in damages and fees. The Tax Board appealed and argued that, if the case had been against Nevada officials, Nevada law would cap damages to $50,000. The Full Faith and Credit Clause, it argued, required Nevada to limit damages against California.

The Nevada Supreme Court rejected that argument, reasoning that California's blanket immunity provisions provided an inadequate remedy for Nevada citizens. Nevada, it reasoned, had a "policy interest in providing adequate redress" to its citizens that overrode California's immunity policy. But it did not apply Nevada's statutory cap because California's agencies operate with less "public accountability" than Nevada's.

The Supreme Court vacated and remanded. The Court divided 4-4 on whether Nevada courts had jurisdiction over California under Nevada v. Hall, 440 U.S. 410 (1979), which held that one state can "open the doors of its courts to a private citizen's lawsuit against another State" without that state's consent. This leaves the door open for the Court to revisit the issue if/when a ninth Justice is appointed.

But, in an opinion by Justice Breyer (joined by Justices Kennedy, Ginsburg, Sotomayor, and Kagan), the Court held that Nevada couldn't apply a special, discriminatory rule of unlimited damages to California. Such a home-state advantage, the Court reasoned, violates the Full Faith and Credit Clause. A state can apply its own law when another state's law is contrary, but it must not adopt a "policy of hostility" to another state without a sufficient policy reason. While the Full Faith and Credit Clause did not require Nevada to give the Tax Board complete immunity under California law, even Nevada law immunized its own agencies from damages greater than $50,000. The Nevada courts' failure to apply that cap, consistent with the law of both Nevada and California, evidenced hostility toward a sister state and was unconstitutional.

Justice Alito concurred in the Court's judgment, but he did not explain why he did not join the majority opinion. Chief Justice Roberts (joined by Justice Thomas) dissented, opining that the Nevada court had articulated a constitutionally sufficient policy reason to justify the award of damages greater than Nevada's damages cap for suits against an agency.

The Court's decision in Welch v. United States (15-6418) may have set a land-speed record for time from argument to opinion (19 days). In fact, based on the oral argument a few weeks ago, one might have expected a bench ruling were it not for that pesky Justice Thomas and his idiosyncratic (though principled) dissenting views.

The issue in the case was whether last year's decision in Johnson v. United States (2015) should apply retroactively to cases that were final before Johnson was decided. Johnson held that the residual clause of the Armed Career Criminal Act—which subjected a defendant convicted of being a felon in possession of weapons to a fifteen-year mandatory minimum sentence if the defendant had three prior convictions that "involve[d] conduct that presents a serious potential risk of physical injury to another"—is unconstitutionally vague. When Johnson was decided last year, any defendant sentenced under the residual clause could challenge his sentence if it the conviction was still on direct appeal. The question in Welch is whether other prisoners, whose convictions became final before Johnson was decided, could also use it to challenge their convictions in collateral proceedings. That question, in turn, depended on whether Johnson announced a substantive or procedural rule of law. (As the Court explained in its recent decision in Montgomery v. Louisiana (2016), in general, defendants whose convictions are final do not get the benefit of new constitutional rulings, but the Court has recognized an exception to that rule for rulings that announce "new substantive rules," as well as "watershed rules of criminal procedure.")

By a 7-1 vote, the Court held that Johnson announced a substantive rule of law that applies retroactively to prisoners seeking collateral review of their otherwise final sentences. Writing for the majority (as he did in Montgomery), Justice Kennedy concluded that Johnson created a "class of persons" that cannot be constitutionally punished under the residual clause. Before Johnson, the residual clause could cause an offender to face a prison sentence of at least 15 years instead of at most 10. After Johnson, the residual clause can no longer mandate or authorize any sentence. Kennedy rejected the arguments of court-appointed amicus (the Government actually agreed that Johnson announced a substantive rule), who argued that Johnson was procedural because the void-for-vagueness doctrine itself is based on procedural due process. The majority decided that the retroactivity analysis turns on whether the function of a rule is substantive or procedural, not on its underlying constitutional source. Accordingly, because the function of the Johnson rule was to prevent a certain category of prisoners from being sentenced to the mandatory minimum, Johnson announced a substantive rule that applies retroactively to cases on collateral review.

Justice Thomas dissented alone, arguing both that Johnson should not be applied retroactively and that the Court didn't have jurisdiction to decide the question in the first place. In order to appeal the denial of a motion for postconviction relief, a petitioner must obtain a certificate of appealability, which requires a showing of the denial of a constitutional right. In the Supreme Court, Welch was technically arguing that the Eleventh Circuit erred in failing to grant him a certificate of appealability, but as Justice Thomas noted, Welch had not raised the retroactivity issue in his motion for a certificate of appealability and Johnson had not even been decided when the motion was denied. By reaching the question anyway, Justice Thomas argued, the Court was effectively telling lower courts that they must consider all possible constitutional issues that might warrant relief as part of their determination whether to grant a certificate of appealability in a habeas case. "That," Thomas argued, "is preposterous." Turning to the merits, Justice Thomas argued that Johnson's new constitutional rule is not procedural because it does not "preclude the Government from prohibiting particular conduct or deem any conduct constitutionally protected." The Government remains as free to enhance sentences based on predicate violent-felony convictions; it just must use more specific language to accomplish that same end. Thomas rejected the majority's focus on the effect of a new decision, contending that it "breaks down all meaningful distinctions between ‘new' and ‘old rules, or ‘substantive' and ‘procedural' ones." Just as in Montgomery, Thomas lamented, the majority had embarked on an unprincipled expansion of the retroactivity doctrine, ignoring society's interest in the finality of criminal convictions, with the result that "every end is instead a new beginning."

As most loyal Update subscribers know, the Sentencing Guidelines have been a fruitful source for litigation, and a headache for lower court judges. In Molina-Martinez v. United States (14-8913), the Eight grappled with what to do when a district judge relies on a miscalculation of the Guidelines, but the defendant fails to object. Part of an effort to promote uniformity in sentencing, the ever-expanding Guidelines Manual is now over 500 pages long. Judges use the Manual to calculate two numbers: a defendant's "offense level" and his "criminal history score." The combination of these two numbers results in a guidelines range. Although this range is not mandatory, see United States v. Booker (2005), the district judge must still take into account a correctly calculated guidelines range when issuing a sentence.

As many enter the law with the express purpose of avoiding math, sometimes no one realizes that there is a mistake in the guidelines calculation until after sentencing. That is exactly what happened to Saul Molina-Martinez, who had pleaded guilty to unlawfully reentering the United States after having been deported for an aggravated felony. After calculating his offense level criminal history category, the Probation Office calculated a guidelines range of 77 to 96 months. The district judge adopted the Probation Office's calculations, and sentenced Molina-Martinez to the lowest guidelines sentence: 77 months.

After sentencing, Molina-Martinez noticed an error in the calculation of his criminal history category, which would have resulted in a guidelines range of 70 to 87 months. His sentence, therefore, fell in the middle of this corrected range, not the bottom. But when Molina-Martinez appealed, the Fifth Circuit reviewed the district court's decision for "plain error" under Federal Rule of Criminal Procedure 52(b) because Molina-Martinez had not objected to the guidelines calculations. An error is only "plain error" if it affects the defendant's substantial rights—i.e., when there is a reasonable probability that the error changed the outcome of the proceeding. The Fifth Circuit affirmed, reasoning that, because the sentence fell within the guidelines ranges, Molina-Martinez had to point to some "additional evidence" in the record to show an effect on his substantial rights.

The Supreme Court reversed, with Justice Kennedy writing for the Chief and for Justices Ginsburg, Breyer, Sotomayor, and Kagan. The Court held that Rule 52(b) did not include an "additional evidence" standard. Rather, "[w]hen a defendant is sentenced under an incorrect guidelines range—whether or not the defendant's ultimate sentence falls within the correct range—the error itself can, and most often will, be sufficient to show a reasonable probability of a different outcome absent the error." The Court stressed the "centrality' of the Guidelines to the federal sentencing process, calling them "the framework for sentencing" and the "lodestar" of the sentencing process. In general, the Court noted, a defendant has demonstrated the "reasonable probability of a different outcome" when he shows that the district court relied on a miscalculation of the guidelines range.

Justice Alito, joined by Justice Thomas, concurred in part and as to the judgment. Alito agreed that Molina-Martinez showed a reasonable probability that the district court would have imposed a different sentence because the court imposed the lowest within-guidelines sentence without any real explanation. But Alito did not agree with the Court's predictions of how the reasonable probability test might play out in future cases. He noted that the Court assumed that "sentencing judges will continue to rely very heavily on the Guidelines in the future, but that prediction may not turn out to be accurate." Alito emphasized that the Guidelines are "entirely advisory" and "in time the lower courts may increasingly drift away from the Guidelines." Only time will tell whether the guidelines continue to play a central role in sentencing (as Kennedy's opinion assumes) or whether courts will increasingly issue sentences outside the guidelines range (as Alito and Thomas forecast).

Finally, in Hughes v. Talen Energy Marketing, LLC (14-614), the Court held 8-0 that state efforts to increase electricity generation were preempted because they intruded on the domain of the Federal Energy Regulatory Commission ("FERC").

FERC has total control over wholesale energy markets, while states have total control over retail energy markets. But the increase in interstate marketing has complicated the division of labor. New Jersey and Maryland wanted to make sure they would have sufficient supplies of energy to meet demand. Unsatisfied with FERC's assurance that its regional auction markets would provide enough power, the two states made a deal to subsidize in-state generators to build more capacity in exchange for the option to sell the energy they generated to the regional auctioneers.

Justice Ginsburg took the pen for the Court, writing that although states can construct new in-state power-generating facilities, the impact of Maryland's scheme to generate more energy was preempted. Congress has given FERC comprehensive authority over wholesale markets. By subsidizing the generators, the states guaranteed wholesale rates to the generators that were different from the clearing prices set by FERC. States, however clever they may be, cannot interfere with FERC's authority, even when they are exercising legitimate authority over retail rates or in-state power generation. Maryland could build new or clean generators—just as long as doing so would not drive down FERC's interstate wholesale rates.

We'll be back again soon to give an update on Bank Markazi v. Peterson, and to update you on what the Court continues to bring us in its April sitting.