Supreme Court Update: McCutcheon v. Federal Election Commission (12-536), United States v. Castleman (12-1371), Northwest, Inc. v. Ginsburg (12-462) and Order List

April 9, 2014 Supreme Court Update

Greetings, Court fans!

The Court surprised us with an early decision last week in McCutcheon v. Federal Election Commission (12-536), striking down aggregate limits on campaign contributions. Rather than waiting until the end of the Term, the Court handed down the weighty decision with two months to spare. This Update will cover McCutcheon as well as United States v. Castleman (12-1371), on what qualifies as "a misdemeanor crime of domestic violence" subject to 18 U.S.C. §922(g)(9)'s firearms ban; Northwest, Inc. v. Ginsburg (12-462), on whether the Airline Deregulation Act of 1978 preempts state-law claims for breach of the covenant of good faith and fair dealing; and two cert grants, bringing us up to date with the Court's recent activity.

There were two appellants in McCutcheon v. Federal Election Commission (12-536): Shaun McCutcheon, who had already contributed some $33,000, but wished to contribute another $1776 to a dozen more candidates; and the Republican National Committee which "wishes to receive the contributions that McCutcheon and similarly situated individuals would like to make." To set the stage: the Federal Election Campaign Act of 1971 (FECA) initially set limits on independent expenditures – monies spent in support of (but not directly given to) a candidate – as well as direct contributions to individual candidates ("base limits"), and direct contributions to candidates overall ("aggregate limits"). FECA was amended by the Bipartisan Campaign Reform Act of 2002 (BCRA). For the 2013-14 election cycle, BCRA set base limits of $2,600 per candidate per election (i.e., $5,200 total for a primary and general election) and aggregate limits of $48,600 to federal candidates and $74,600 to other political committees.

McCutcheon and the RNC filed a complaint before a special three-judge panel of the U.S. District Court for the District of Columbia in 2012, challenging the constitutionality of BCRA's aggregate limits. After the District Court denied McCutcheon and the RNC's motion for a preliminary injunction and granted the government's motion to dismiss, McCutcheon and the RNC took a direct appeal to the Supreme Court.

The Court ruled, 5-4, in the appellants' favor. The Chief Justice wrote a plurality opinion, joined by Justices Scalia, Kennedy, and Alito. Justice Thomas provided the fifth vote, but concurred in the judgment only – more on that later. For the plurality, the Court's decision in Buckley v. Valeo (1976) served as a touchstone and a foil. In Buckley, the Court subjected FECA's expenditure limits to strict scrutiny and struck them down as impermissible encroachments on First Amendment rights. The Buckley Court upheld the limits on direct contributions, however. Applying a "lesser but still ‘rigorous standard of review,'" Buckley held that base limits were constitutional because the State had demonstrated a "sufficiently important interest" in limiting quid pro quo corruption and the appearance of such corruption, and base limits were "closely drawn" to avoid unnecessary abridgement of First Amendment rights. Buckley also briefly discussed aggregate limits and found that they were a permissible corollary to the base limits because they prevented evasion of the base limits.

The plurality in McCutcheon declined to revisit Buckley's distinction between the standard of review for expenditure limits and contribution limits. The plurality also did not disturb Buckley's holding as to the constitutionality of base limits. But the plurality could not abide by Buckley's analysis of aggregate limits. Noting that Buckley spent only one paragraph of a 139-page opinion on aggregate limits, and that the parties in Buckley had not separately addressed the issue at length, the plurality determined that "this case cannot be resolved merely by pointing to three sentences in Buckley that were written without the benefit of full briefing or argument on the issue."

Conducting the analysis afresh, the plurality found that aggregate limits could not survive even Buckley's lesser standard of review for contribution limits. The plurality stressed that only the prevention of quid pro quo corruption and the appearance of quid pro quo corruption – not "mere influence or access" – was a legitimate government interest. The plurality acknowledged that the "line between quid pro quo corruption and general influence may seem vague at times," but insisted that the distinction "must be respected in order to safeguard basic First Amendment rights." "No matter how desirable it may seem, it is not an acceptable governmental objective to ‘level the playing field,' or to ‘level electoral opportunities,' or to ‘equalize the financial resources of candidates.'" And while preventing quid pro quo corruption was a sufficiently important government interest to justify base limits, it did not justify aggregate limits, which essentially cap the number of candidates an individual may support within the base limits. "It is no answer to say that the individual can simply contribute less money to more people. To require one person to contribute at lower levels than others because he wants to support more candidates or causes is to impose a special burden on broader participation in the democratic process." Addressing the District Court's – and Buckley's – reasoning that aggregate limits were necessary to prevent evasion of the base limits, the plurality found that BRCA's aggregate limits were not "closely drawn" to achieve that goal, particularly in light of various anti-circumvention measures that have been adopted or strengthened since Buckley, for example: caps on contributions to political committees, rules prohibiting donors from creating or controlling multiple affiliated political committees, rules against earmarking donations for a particular candidate, and disclosure requirements that have real teeth in the internet age. The plurality dismissed the evasion scenarios set out by the dissent as unrealistic. In addition to the anti-circumvention measures in the law, there was also the documented fact that the recipients of contributions generally have "scant interest in regifting donations they receive."

Justice Thomas concurred in the judgment, but wrote separately to express that he would strike down Buckley's distinction between expenditures and direct contributions, and subject the aggregate limits to strict scrutiny, "which they would surely fail."

Justice Breyer wrote for the dissent, joined by Justices Ginsburg, Sotomayor, and Kagan. The dissenters criticized the plurality's narrow focus on quid pro quo corruption as inconsistent with the Court's precedents – at least until its decision in Citizens United v. Federal Election Comm'n (2010). Prior to Citizens United, the Court had repeatedly recognized a risk of corruption beyond quid pro quo bribery. Because Citizens United did not purport to overturn those prior decisions, language limiting the anticorruption interest to quid pro quo corruption must be, in the dissenters' view, "dictum … an overstatement … or limited to the context in which it appears." The dissenters also disagreed with the plurality's decision to frame the issue as one in which First Amendment rights are on one side of the scale and the interest in preventing corruption is on the other. Rather, preventing corruption and the appearance of corruption are "rooted in the constitutional effort to create a democracy responsive to the people," and thus, in the First Amendment itself. Justice Breyer spent a substantial portion of the dissenting opinion arguing how, even if quid pro quo corruption were the only recognized government interest, donors could evade the base limits in the absence of aggregate limits. Finally, Breyer excoriated the plurality for overturning an act of Congress without even returning the case to the District Court to develop an evidentiary record as in previous cases. "The result … is a decision that substitutes judges' understandings of how the political process works for the understanding of Congress; that fails to recognize the difference between influence resting on public opinion and influence bought by money alone … and that undermines, perhaps devastates, what remains of campaign finance reform."

Turning now to United States v. Castleman (12-1371), 18 U.S.C. §922(g)(9) forbids persons convicted of "a misdemeanor crime of domestic violence" from possessing firearms. The statute defines "a misdemeanor crime of domestic violence" in relevant part as an offense that "has, as an element, the use or attempted use of physical force" against a family member. James Castleman previously pled guilty to a misdemeanor offense under Tennessee law of having "intentionally or knowingly cause[d] bodily injury to" the mother of his child. After federal authorities learned that he was selling firearms on the black market, a grand jury indicted him on two counts of violating 18 U.S.C. §922(g)(9). Castleman moved to dismiss the §922(g)(9) counts, arguing that his Tennessee conviction did not qualify as a crime of "domestic violence" because it did not have as an element the use of physical force. The District Court agreed, as did the Sixth Circuit. The District Court reasoned that "physical force" for §922(g)(9) purposes required "violent contact" with the victim, but one could be convicted under the Tennessee law without any violent contact – for example, by tricking the victim into drinking a poisoned beverage. The Sixth Circuit applied slightly different reasoning to reach the same result.

The Court reversed unanimously, but with three separate opinions. Justice Sotomayor wrote for the Court, joined in full by the Chief and Justices Kennedy, Ginsburg, Breyer, and Kagan. The Court started with the principle of interpretation that "absent other indication, Congress intends to incorporate the well-settled meaning of the common-law terms it uses." The common-law meaning of "force" was simply offensive touching, without the requirement that it be violent. The Court saw no reason to depart from that common-law meaning here. Indeed, it was a good fit because "‘[d]omestic violence' is not merely a type of ‘violence'; it is a term of art encompassing acts that one might not characterize as ‘violent' in a nondomestic context." For example, a squeeze of an arm that causes a bruise might not be described as "violence" generally, but could be understood to be "domestic violence," particularly when such acts accumulate over time. (By contrast, the Court explained, the common-law meaning of "force" had not been a good fit for defining "violent felony" under 18 U.S.C. §924(e)(1), a statute designed to keep firearms away from "armed career criminals," in Johnson v. United States (2010)). The Court defended its reference to social science definitions of domestic violence, including those "used by the organizations most directly engaged with the problem and thus most aware of its dimensions."

Having settled on the common law meaning of force for domestic violence under §922(g)(9), the Court's next analytical step was to determine whether Castleman's conviction involved the use of force, so defined. While violation of the Tennessee statute at issue does not categorically involve the use of force (because an individual could be convicted of the statute through threatening conduct or by recklessly causing injury without "us[ing]" force), the Court was able to look beyond the bare elements of the offense to the actual provision of the statute that Castleman pleaded guilty. Applying this "modified categorical approach," the Court had no trouble concluding that Castleman's plea to having "intentionally or knowingly caused bodily injury" to the mother of his child necessarily involved common-law physical force, which simply means force exerted through concrete bodies (as opposed to intellectual or emotional force).

Justice Scalia concurred in part and concurred in the judgment. For Scalia, the analysis should start and end with Johnson's definition of "physical force" under §924(e)(2)(B)(ii) as violent force, that is, force causing physical pain or injury to another person. Under the presumption of consistent usage – most commonly applied to terms appearing in the same statute, but also applicable where Congress uses the same language in two statutes having similar purposes – "physical force" should have the same meaning in defining a crime of domestic violence for purposes of § 922(g)(9) as it does in defining "violent felony" under §924(e)(2)(B)(ii); after all, both statutes were designed to promote public safety by deterring a class of criminals from possessing firearms. Scalia also criticized the Court's "inventive, nonviolent" definition of domestic violence based on advocacy groups' amicus briefs and social science sources, preferring instead dictionary definitions of domestic violence as "violence," "assault" or "physical abuse." Imposing the advocacy groups' "all-embracing" definition of domestic violence, in Scalia's view, "not only distort[ed] the law," but "impoverish[ed] the language": "When everything is domestic violence, nothing is. Congress will have to come up with a new word (I cannot imagine what it would be) to denote actual domestic violence."

Justice Alito, joined by Justice Thomas, concurred in the judgment only. Alito would simply hold – as he argued in dissent in Johnson – that the term "physical force" incorporated the meaning of "force" under the common law of battery, which did not require violent force.

Next, in Northwest, Inc. v. Ginsberg (12-462), the Court considered whether the Airline Deregulation Act of 1978 (ADA) preempts state-law claims for breach of the covenant of good faith and fair dealing. In a unanimous opinion authored by Justice Alito, the Court held that it does, at least when the claim "seeks to enlarge contractual obligations that the parties voluntarily adopt."

Binyomin Ginsberg became a member of Northwest Airlines' "World-Perks" frequent flier program in 1999 and, by 2005, he'd reached "Platinum Elite" status, the highest level offered. Think George Clooney in Up in the Air. But, unlike the Clooney character, who insisted on travelling light, Ginsberg often checked bags and had a habit of complaining any time they didn't arrive at the carousel on time. He complained about other things, too, and by 2008, Northwest decided it had had enough of Ginsberg and terminated his membership pursuant to a contractual provision that allowed it to cancel a membership if, in its "sole judgment," it concluded that the member had "abuse[d]" the program.

Ginsberg kept right on complaining, but this time he filed his complaint in the Southern District of California. In a putative class-action complaint under Minnesota law (don't ask why), Ginsberg alleged Northwest had actually cancelled his and others' memberships as a cost-cutting measure related to its merger with Delta. Among other claims, he alleged breach of the covenant of good faith and fair dealing. The District Court dismissed the claim, holding that it was preempted by the ADA, which expressly preempts state "law[s], regulation[s], or other provision[s] having the force or effect of law," which "relate to rates, routes, or services." The Ninth Circuit reversed, holding that the claim was "too tenuously connected to airline regulation to trigger preemption under the ADA."

The Supreme Court reversed yet again. First, it brushed aside Ginsberg's argument that the ADA preempts only legislation enacted by state legislatures and regulations issued by state administrative agencies and not common-law rules like the covenant of good faith and fair dealing. The ADA's preemption clause expressly applies to "law[s], regulation[s], and other provision[s] having the force and effect of law," and "[i]t is routine to call common-law rules ‘provisions,'" which have the "force and effect of law." The Court acknowledged a prior decision, Sprietsma v. Mercury Marin (2002), which held that the Federal Boat Safety Act did not preempt common-law tort claims, but noted that the preemption clause in that case applied only to a state "law or regulation," and not to the broader category of "provisions having the force and effect of law." Recalling that the ADA's preemption clause was included specifically to prevent the States from interfering with the Act's deregulatory purpose, the Court reasoned that it would be inconsistent to allow common-law rules to do what state statutory and regulatory law cannot.

Next, the Court considered whether Ginsberg's breach of covenant claim, specifically, "relates to" "rates, routes, or services." Ginsberg argued that his claim did not relate to routes, rates, or services because he was contesting the termination of his membership, but the Court found that this distinction "has no substance" because it "ignores [Ginsberg's] reason for seeking reinstatement of his membership, i.e. to obtain reduced rates and enhanced services."

The Court then turned to the central issue in the case: whether Ginsberg's implied covenant claim was based on a state-imposed obligation (and therefore preempted) or simply an obligation that the parties voluntarily undertook (and therefore not preempted). The Court held that an implied covenant claim will be deemed preempted only where it "seeks to enlarge [the] contractual obligations that the parties voluntarily adopt." Like most states, Minnesota prohibits parties from "contracting out of" the implied covenant of good faith and fair dealing. For this reason, a claim of breach of the implied covenant in effect alleges violation of a state-imposed obligation, and not a voluntarily assumed contractual obligation. In other states (like California, where the case was filed), parties may disclaim the implied covenant of good faith and fair dealing through their contract. In these states, a breach of covenant claim would be no different than a breach of contract claim, and would not be preempted by the ADA. The Court was not concerned that this holding would, as Northwest argued, result in a "baffling patchwork of rules," because in those states where the implied covenant is not obligatory, airlines can simply disclaim the covenant in their frequent-flier program contracts. Neither was the Court concerned for passengers. The ADA was meant to allow market forces to govern rates, routes, and services. "If an airline acquires a reputation for mistreating the participants of its frequent flyer program . . . customers can avoid that program." A message, perhaps, for legacy members of the former Northwest's "Platinum Elite"?

In addition to these decisions, the Court has also added a pair of procedural question cases to its docket:

Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. (13-854) asks: "Whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires … or only for clear error, as Rule 52(a) [of the Federal Rules of Civil Procedure] requires."

Dart Cherokee Basin v. Owens (13-719) asks: "Whether a defendant seeking removal to federal court is required to include evidence supporting federal jurisdiction in the notice of removal, or is alleging the required ‘short and plain statement of the grounds for removal' [under 28 U.S.C. § 1446(a)] enough?"

We know we've covered a lot in this Update, but the Court doesn't have its next scheduled conference until April 18, so there should be plenty of time to digest these latest offerings before the next course is served up.

Kim, Jenny & Tadhg

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