November Cases of Note

November brings cases involving state secrets and whistleblowers, voting rights protections against racial gerrymandering, presidential powers in the context of Israel/Palestine, securities fraud, and rights of mortgage borrowers.

Monday, November 3

November arguments begin with a case that will be viewed as an Israel-Palestine issue, although the legal question is one of separation of powers.  Long-standing State Department policy is that when a US Citizen is born in a disputed territory, the consular report of birth abroad and the passport should list the city or area only (without choosing a country).  The plaintiffs’ child was born in Jerusalem in 2002, and the consulate, citing this policy, refused their request to add “, Israel” after the city name.  This case (Zivotofsky v. Kerry) challenges the constitutionality and enforceability of a Congressional enactment directing State to comply with such a parental request.  Traditionally, most everything that implicated international diplomacy, including recognition of states in disputed territories, has been within the scope of Presidential powers.  It is an open question whether Congress can direct an executive branch agency like State to go against the President’s determination of foreign policy.  In signing the bill into law in 2002, President Bush stated that this provision would not be interpreted as mandatory because otherwise it would “interfere with the President’s constitutional authority to formulate the position of the United States, speak for the Nation in international affairs, and determine the terms on which recognition is given to foreign states.”  The Obama Administration has taken the same position.

The second case this morning involves allegations of securities fraud.  Purchasers of stock may sue if the SEC registration “contained an untrue statement of material fact or omitted to state a material fact [causing the statement to be] misleading.”  (Securities Act § 11, 15 U.S.C. § 77k.)  The investors, a union pension fund, allege that the company was engaged in illegal activities, including a kickback scheme and defrauding Medicare, which it failed to disclose in SEC filings.  The company would later settle with DoJ for $124 million.  At issue in this case, Omnicare, Inc. v. Laborers Dist. Council Construction Indus. Pension Fund, is the level of intent that must be alleged to make out a claim under this provision of the Securities Act:  Must the investor show intentional misrepresentation and that the filer held a subjective intent to mislead, or only that, objectively, material facts were omitted that made the filing misleading.  The Sixth Circuit held that an objectively wrong statement is actionable, while the Second, Third, and Ninth Circuits have required a subjective element, that the filer’s true understanding was different from what was represented on the filing.

Tuesday, November 4

Department of Homeland Security v. MacLean, filed by a former TSA worker, raises the issue of state secrets and whistleblower protection.  His publication of the TSA plan to cut back on air marshals led to public outcry, Congressional investigation, and eventual abandonment of the plan, but he was fired nonetheless.  By statute, whistleblower protection does not apply if the information made public was “specifically protected by law from exposure,” but the plaintiff argues that this provision is intended to cover highly classified information under Congressionally enacted law, not a staffing plan that is made private only by TSA-issued regulation.  The unusual twist is that this is a law enforcement official, disclosing information in order to obtain greater levels of security, but of course the ruling will have implications for whistleblowers seeking to curtain the scope of “national security” measures.

The second case involves procedural issues regarding the right to rescind a home loan.  Under the Truth in Lending Act, a borrower has the right to rescind the mortgage up to three days after closing or after all receiving all legally required loan documents, but this right expires three years after closing (regardless of whether or not all documents have been provided).  In Jesinoski v. Countrywide Home Loans, the borrowers claim they were never provided all the required paperwork and they sent a letter to the bank attempting to rescind their mortgage within the three year timeframe, but they did not file a lawsuit until after that timeframe.  The Court must decide if the three year limit is akin to a statute of limitations (requiring filing of a lawsuit) or rather is governed by the related, three-day statutory procedures for rescinding the loan (which is to send a letter to the bank).

 Wednesday, November 5

Just a quick note on today’s criminal law cases.  Yates v. U.S. involves a commercial fisherman who is alleged to have caught undersized fish and then destroyed them before he could be prosecuted for that crime, so he is instead charged with impeding or obstructing an investigation.  The statutory language is directed to anyone who “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object” with the intent to impede or obstruct an investigation; the Court must decide if this covers only business records and the like or “tangible objects” like fish, which there is no independent requirement to retain.  Johnson v. U.S. involves interpretation of the Armed Career Criminal Act, and asks whether possession of a short-barreled shotgun constitutes a “violent felony” for purposes of that sentencing scheme.

[Nov. 10th’s cases are important but focused on procedural issues.  The Court is closed on Nov. 11 for Veterans Day.]

Wednesday, November 12

This racial gerrymandering case comes with the interesting twist that the state accused of race discrimination had been arguing that Section 5 of the Voting Rights Act prohibited them from drawing districts any differently–but last term the Court, to the dismay of voting rights advocates, rendered that provision inoperable.  The two cases, Alabama Democratic Conference v. Alabama and Alabama Legislative Black Caucus v. Alabama, are consolidated for argument in the first hour of the day but raise extremely important issues, especially after the decision in Shelby County last year and the denial of cert. in the Texas Voter ID case in October.  The cases are receiving a great deal of attention, especially from voting rights advocates.  Scotusblog has a useful write-up, and the Lawyers Committee for Civil Rights Under Law has urged the Court not to reach the substantive issues at this time due to serious shortcomings in the factual record.

The Court will also hear a tax law case, questioning whether a state may tax all of its residents’ income, even if earned in another state.  Maryland State Comptroller v. Wynne