Supreme Court Update: Montgomery v. Louisiana (14-280), Federal Energy Regulatory Commission v. Electric Power Supply Association (14-840), Menominee Indian Tribe of Wisconsin v. United States (14-510) and Musacchio v. United States (14-1095)

January 29, 2016 Supreme Court Update

Greetings, Court Fans!

We're back with summaries of the four signed decisions the Court handed down this week, which included a couple of biggies and a couple of quickies.

The decision in Montgomery v. Louisiana (14-280) was a biggie, and not just because it retroactively applied the Court's 2012 holding that mandatory sentences of life without parole for juvenile offenders violate the Eighth Amendment. Perhaps as important, the Court also clarified that its entire retroactivity jurisprudence is rooted in the Constitution, meaning that new substantive constitutional rules must be applied retroactively, even to those pursing state collateral review.

Henry Montgomery is a 69-year-old juvenile offender. Convicted for killing a deputy sheriff in 1963, when he was 17, Montgomery was sentenced to life in prison without the possibility of parole. Almost fifty years later, in 2012, the Supreme Court held in Miller v. Alabama that a juvenile convicted of a homicide offense cannot be sentenced to life without parole absent consideration of his or her "diminished culpability and heightened capacity for change." Though Miller did not actually prohibit sentences of life without parole in all juvenile cases, it made clear that such a sentence should be reserved for "the rarest of children, whose crimes reflect irreparable corruption." After Miller was decided, Montgomery sought collateral review in the Louisiana courts. The Louisiana Supreme Court denied him relief, holding that Miller did not have retroactive effect in cases on state collateral review. The Supreme Court reversed, 6-3, with Justice Kennedy writing for the Chief and the left.

Before addressing whether Miller should be applied retroactively, Kennedy had to determine whether the Court had jurisdiction to decide the case in the first place, as it came up from a state collateral proceeding. Though the parties agreed that the Court did have jurisdiction, amicus counsel appointed by the Court argued that a State is under no obligation to give a new rule of constitutional law retroactive effect in its own collateral-review proceedings, because those proceedings are creatures of state law and it is for the state courts to define their own principles of retroactivity. But, as Justice Kennedy noted, if the Supreme Court's retroactivity rules are themselves derived from the Constitution, then state courts would have to adhere to them pursuant to the Supremacy Clause. Kennedy then gave a constitutional gloss to the Court's earlier retroactivity jurisprudence, particularly Justice O'Connor's plurality opinion in Teague v. Lane (1989). Teague held that new rules should generally not be retroactively applied, but identified two exceptions: (1) courts must give retroactive effect to new substantive rules of constitutional law, including rules "forbidding criminal punishment of certain primary activity" and "rules prohibiting a certain category of punishment for a class of defendants because of their status or offense"; and (2) courts must give retroactive effect to new "watershed rules of criminal procedure," such as the right to counsel announced in Gideon v. Wainwright (1963). Although Teague technically was an interpretation of the federal habeas statute, and not the Constitution, Justice Kennedy announced that "[t]he Court now holds that when a new substantive rule of constitutional law controls the outcome of a case, the constitution requires state collateral review courts to give retroactive effect to that rule." (Here the majority drew a distinction between new substantive rules of constitutional law and new watershed rules of criminal procedure, which need not be applied retroactively in state collateral proceedings.)

Having decided that threshold question, Kennedy already performed much of the work required to answer the substantive question—whether Miller's prohibition on mandatory life without parole for juvenile offenders did in fact announce a new substantive rule, that under the Constitution, must be applied retroactively. Recalling Teague, Kennedy noted that new substantive rules of constitutional law include those that prohibit certain categories of punishment for a class of defendants because of their status or offense. Although Miller had not completely prohibited the sentence of life without parole for juvenile offenders (it only forbade such sentences from being mandatorily implemented, without individualized consideration of the juvenile's diminished culpability and heightened capacity for change), Kennedy concluded that, by insisting that by "bar[ring] life without parole for all but the rarest of juvenile offenders, those whose crimes reflect permanent incorrigibility," Miller did in fact prohibit a certain category of punishment (life without parole) for a class of defendants because of their status (non-incorrigible juveniles). Accordingly, the Court held that Miller did announce a new substantive rule of constitutional law that must be applied retroactively in both state and federal collateral proceedings.

Justice Scalia took the lead for the dissenters (joined by Thomas and Alito), excoriating both aspects of the majority's holding. With respect to the Court's jurisdiction, Scalia accused the majority of "creat[ing] jurisdiction by ripping Teague's first exception [for new substantive rules] from its moorings, converting an equitable rule governing federal habeas relief to a constitutional command governing state courts as well." While the Court's earlier decisions, including Griffith v. Kentucky (1987), held that the Constitution requires retroactive application of new rules to cases still on direct appeal, the Teague plurality's discussion of retroactivity in the habeas context did not discuss constitutional requirements at all. Unlike the majority, Scalia argued, Teague appreciated the distinction between direct and collateral review, which turns on "considerations of finality in the judicial process." "That line of finality demarcating the constitutionally required rule in Griffith from the habeas rule in Teague supplies the answer to the not-so-difficult question whether a state post-conviction court must remedy the violation of a new substantive rule: No." In Scalia's view, "[o]nce a conviction has become final, whether new rules or old ones will be applied to revisit the conviction is a matter entirely within the State's control; the Constitution has nothing to say about that choice." Justice Thomas penned a separate opinion offering further support for the dissenters' view that the majority's resolution of the jurisdictional question lacked "any foundation in the Constitution's text or our historical traditions."

Turning to the merits, Scalia argued that Miller never actually announced the rule that the majority seeks to apply retroactively to state collateral proceedings. On the contrary, the Miller court expressly stated that it was not categorically barring life without parole for juveniles; it was merely requiring that sentences consider an offender's youth before imposing that sentence. In Scalia's view, the majority's "distortion of Miller is just a devious way of eliminating life without parole for juvenile offenders," something Justice Kennedy couldn't do outright, because he had used the existence of mandatory life without parole as a justification for outlawing the juvenile death penalty in Roper v. Simmons (2005). Instead of outlawing juvenile life without parole, the Court had, in Scalia's view, simply made that penalty a practical impossibility.

Next up, in Federal Energy Regulatory Commission v. Electric Power Supply Association (14-840), the Court clarified the Federal Energy Regulatory Commission's (FERC's) powers under the Federal Power Act to regulate the rules used by operators of wholesale electricity markets to pay for commitments to reduce energy consumption during peak periods. FERC is a federal agency with the power to regulate wholesale electricity sales. The regulation of retail sales is left to the states alone. At issue in this case was FERC's attempted regulation of "demand response" programs, under which operators of wholesale electricity markets pay electricity consumers for commitments not to use power during times of peak consumption. Demand response programs aim to bring electricity supply and demand into equipoise by incentivizing consumers to abstain from electricity use at peak times, thereby reducing the need to pay inefficient generators to produce ever more electricity. To further this goal, FERC issued a rule requiring market operators, under certain circumstances, to pay the same price to demand response providers for conserving energy as to generators for making more of it. The Court of Appeals for the D.C. Circuit vacated FERC's rule, holding that FERC lacked authority to issue the order because it directly regulates the retail electricity market, as opposed to the wholesale market, and holding in the alternative that the rule's compensation scheme was arbitrary and capricious.

Writing for a 6-2 majority (with Justice Alito recused), Justice Kagan reversed the D.C. Circuit. The Court held that the Federal Power Act gives FERC the authority to regulate wholesale market operators' compensation of demand response bids. First, the practices at issue directly affect wholesale rates. The Court adopted a "common-sense construction" of the FPA's language, holding that it bestows jurisdiction on FERC over rules or practices that "directly affect the [wholesale] rate." Under such an interpretation, FERC's regulation of wholesale demand response "directly affects" wholesale rates, since market operators employ demand response bids in competitive auctions that balance wholesale supply and demand, thereby setting wholesale rates. Operators accept bids only if they bring down the wholesale rate by displacing more expensive generation costs. Accordingly, "[w]holesale demand response . . . is all about reducing wholesale rates; so too, then, the rules and practices that determine how those programs operate."

Second, FERC has not regulated retail sales, which are the exclusive domain of the states. Acknowledging that the wholesale and retail energy markets "are not hermetically sealed from each other," and "transactions that occur on the wholesale market have natural consequences at the retail level," the Court noted that FERC had only set rules respecting wholesale transactions. That the rule also may produce collateral consequences in the retail market does not mean that FERC has impermissibly attempted to directly regulate that market: "the Commission's justifications for regulating demand response are all about, and only about, improving the wholesale market." Accordingly, because it directly affects wholesale rates and is wholly concerned with the benefits that demand response programs could bring to the wholesale market, the rule comports with the FPA's plain terms.

Third, the contrary view—that FERC cannot regulate demand response programs—would conflict with the FPA's core purposes. The FPA "leaves no room . . . for direct state regulation of the prices of interstate wholesales." If neither the states nor FERC can regulate wholesale demand response, then "by definition no one can." However, under the FPA, "no electricity transaction can proceed unless it is regulable by someone." Congress passed the FPA "precisely to eliminate vacuums of authority over the electricity markets." Some entity must have jurisdiction to regulate "each and every practice that takes place in the electricity markets, demand response no less than any other." To hold that FERC does not have jurisdiction over demand response programs would "extinguish the wholesale demand response program in its entirety." That outcome would flout the FPA's core objects, because the statute aims to protect "against excessive prices" and ensure effective transmission of electric power. Wholesale demand response achieves these goals by reducing costs and preventing service interruptions during peak periods.

Finally, the Court held that FERC's decision to compensate demand response providers the same as generators was not arbitrary and capricious. The Court emphasized that it "may not substitute [its] own judgment for that of the Commission," especially in such a "technical area like electricity rate design." Here, FERC gave "a detailed explanation of its choice" of rate and relied on "an eminent regulatory economist's views." "All of that together," the Court held, "is enough." The Commission made technical and policy judgments in regulating the demand response rates, addressing the issue "seriously and carefully, providing reasons in support of its position and responding to the principal alternative advances." Accordingly, the Court deferred to FERC's expertise, refusing to substitute its own judgment for that of the Commission.

Justice Scalia (joined by Justice Thomas) dissented. He took a narrower view of what is wholesale, placing a stronger burden on FERC to show that a regulation falls within its statutory jurisdiction. Because the regulation acts on retail customers, it is outside of FERC's authority, period. He was not concerned that there might be a regulatory gap preventing either FERC or the states to regulate in this area.

The decision in Menominee Indian Tribe of Wisconsin v. United States (14-510) highlights the high bar to invoke equitable tolling to save a stale claim. The Indian Self-Determination and Education Assistance Act (ISDA) makes tribes eligible for federal funding of aid programs and establishes an administrative dispute-resolution process. The ISDA imposes a six-year statute of limitations on the presentation of a claim to the contracting agency. In this case, the Menominee tribe submitted several years' worth of claims to the Indian Health Service, but the agency denied some claims as time-barred. The tribe sought to excuse its delay, first through "class-action tolling" because of a putative class action brought by a different tribe raising similar claims, but the courts rejected that ground for tolling because the Menominee Tribe was not an eligible class member, having failed to present its own claims to the agency at the time the putative class action was pending. The tribe also sought to invoke "equitable tolling," which the Federal Circuit had allowed in a different case in similar circumstances, but the D.C. Circuit disagreed and rejected equitable tolling.

The Supreme Court unanimously affirmed the D.C. Circuit in an opinion by Justice Alito. As he explained, equitable tolling of a time limitation is only warranted where (1) the claimant has diligently pursued its rights and (2) some extraordinary circumstance has stood in its way and prevented timely filing. Here, the Tribe argued that the limitations period should be equitably tolled because it had failed to present its own claims to the agency in reliance on an erroneous district court decision in another matter, which held that such presentation was not a prerequisite to class membership in a class action raising systemic challenges. It argued that the Court should adopt a flexible approach to equitable tolling that would account for its good-faith error. This wasn't enough for Justice Alito, however, who wrote that the "extraordinary circumstances" element is limited to circumstances outside a claimant's control, i.e., an external obstacle to timely filing. Because the Tribe's mistake of law, even if reasonable, was not an obstacle beyond its control, it was responsible for its own error and ineligible for equitable tolling. Alito also rejected the Tribe's argument that the special relationship of trust between Indian tribes and the United States warranted a more lenient standard, holding that the federal government's obligations under that relationship are governed by statute, not common law, and the trust relationship therefore does not override the specific six-year statutory limitation.

Statutes of limitation were also addressed in Musacchio v. United States (14-1095), which additionally concerned a question that had split the circuits regarding whether the prosecution must prove elements that a trial court erroneously adds to an offense when giving jury instructions. Musacchio was an executive who left his company to form a rival but continued to access his former company's computer system. He was indicted and convicted under a statute prohibiting the intentional, unauthorized access of a computer. The case was governed by the general 5-year statute of limitation for criminal cases in 18 U.S.C. § 3282(a), which the defendant never raised in the trial court even after a superseding indictment amended the charges seven years after his crime. He sought for the first time on appeal to argue that the amendment did not relate back to the original, timely indictment. Writing for a unanimous court, Justice Thomas concluded that the time bar in § 3282(a) did not implicate subject-matter jurisdiction, so it could be waived if not raised as a defense in the trial court. Moreover, the time limit could not be reviewed on appeal under the criminal rule permitting correction of plain error affecting substantial rights even if not raised below. As Justice Thomas reasoned, if the defendant did not invoke the time bar in the trial court, the prosecution had no burden to prove a timely indictment; hence "there is no error for an appellate court to correct—and certainly no plain error."

Musacchio also resolved this circuit split: If a jury instruction erroneously adds an extra element to the charged crime, does the prosecution have to prove that extra element to sustain the conviction even if the trial record was sufficient to prove the actual elements of the crime? In this case, the criminal statute prohibited either accessing a computer without authorization or exceeding the scope of an authorized access. Though the indictment correctly charged Musacchio in the alternative (with an "or"), and Musacchio conceded there was sufficient evidence to convict him on the prong of unauthorized access, the trial court mistakenly instructed the jury (using "and") that the Government had to prove both types of access beyond a reasonable doubt. Justice Thomas, still writing for all the Justices, concluded that a conviction can be upheld against a claim of insufficient evidence if the evidence would allow a rational trier of fact to find the elements of the actual crime beyond a reasonable doubt. Under that standard, a jury charge is irrelevant, and the prosecutor need not have introduced evidence to support an element of the crime that was not needed to convict, even if it is included in the jury charge without objection. An erroneous instruction in the trial court does not become the "law of the case" binding a reviewing court on a legal question. So, despite the clever efforts of Musacchio's appellate counsel, the Court upheld the conviction against both challenges.

And with that, we're all caught up. The Court is out until mid-February, and therefore so are we. Until then!