Tax Courts Have Exclusive Jurisdiction Over Interest Abatement Actions

Hinck v. United States

IRS code section 6404(e) allows the Secretary of the Treasury to forgive (in whole or in part) any interest accrued on unpaid taxes if the assessment of the interest on a deficiency is attributable to an unreasonable error or delay on the part of the IRS. 6404(h), passed as part of the taxpayers bill of rights, allows for judicial review over the Secretary’s decision not to grant such an abatement. The question in this case is whether that review is available in district court, as opposed to tax court.

6404(h) states that “In general.—The Tax Court shall have jurisdiction over any action brought by a taxpayer who meets the requirements referred to in section 7430… to determine whether the Secretary’s failure to abate interest under this section was an abuse of discretion, and may order an abatement, if such action is brought within 180 days after the date of the mailing of the Secretary’s final determination.” “A precisely drawn, detailed statute pre-empts more general remedies.” “When Congress enacts a specific remedy when no remedy was previously recognized, or when previous remedies were ‘problematic’ the remedy provided is generally regarded as exclusive.” Both of these axioms fit the tax statute. That the primary argument against judicial review no longer applies (when Congress supplied a standard of review the argument that the agency’s determination should not be disturbed for lack of judicially manageable standards ceased to apply) does not affect the issue of the exclusivity of jurisdiction.

Petitioners argue that this interpretation impliedly repeals preexisting jurisdiction, something that is disfavored in statutory construction, but in actuality there had been no jurisdiction preexisting before this statute. Nor does this interpretation depart from the normal understanding of the metaphysical relationship between the tax courts and district courts, since granting any jurisdiction to the Tax Court, as Congress clearly did, breaks the general scheme whereby prepayment actions are brought in Tax Court and postpayment actions brought in District Court. The fact that there are no issues of substantive tax law in interest abatement claims suggests that the Tax Courts are at least as well situated to address these claims as the District Court. Finally, it is not odd that this interpretation prevents persons with wealth exceeding $2m, and companies with wealth exceeding $7m, from seeking judicial review, since this reflects Congress’ judgment that these classes of persons are more likely to be able to pay the interest.

Counsel’s Failure to Investigate Mitigating Evidence Caused No Prejudice

Schriro v. Landrigan

Landrigan was convicted of second-degree murder in 1982 and sentenced to death. At sentencing Landrigan requested that his mother and ex-wife not testify. His lawyer explained that he advised very strongly that it was in his client’s interests to have these two women testify, but that his client had refused. The court verified this with Landrigan, and Landrigan actively prevented the information from coming to light by interrupting the judge’s attempt to bring it out. He later filed a petition for postconviction relief on the basis that he had ineffective assistance of counsel because his lawyer failed to investigate other possible mitigating circumstances. The ninth circuit held that Landrigan was entitled to an evidentiary hearing on his ineffective assistance of counsel claim because he raised a colorable claim that his counsel’s assistance fell below the Strickland standard since he did little to prepare for the sentencing phase, and because investigation would have revealed a wealth of opportunity. It also held that it was unreasonable for the lower court to conclude that Landrigan would have objected to the admission of any mitigating evidence, as opposed to the testimony of his ex-wife and mother. Finally, none of Landigran’s actions excuse counsel’s failure to properly investigate the matter.

Under AEDPA habeas relief is available only when the state court’s adjudication of a claim resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court, or an unreasonable determination of the facts. Before granting an evidentiary hearing the court must determine that such a hearing could enable the applicant to prove the allegations which, if true, would entitle him to federal habeas relief. This comports with AEDPA’s purpose – “[i]f district courts were required to allow federal habeas applicants to develop event he most insubstantial factual allegations in evidentiary hearings, district courts would be forced to reopen factual disputes that were conclusively resolved in the state courts.”

If Landrigan instructed his counsel not to offer any mitigating evidence, the failure to admit such evidence could not be prejudicial under Strickland. It was not unreasonable for the court to conclude that when Landrigan answered the question as to whether there was any mitigating evidence by saying “Not as far as I’m concerned” he was objecting to the admission of any mitigating evidence. Moreover, counsel’s investigation (or lack thereof) notwithstanding, Landrigan was aware of the mitigating evidence at issue.

Nor was it unreasonable for the court to hold that, assuming Landrigan did not want any mitigating evidence presented, his claim was “frivolous, and meritless.” In Wiggins the Court addressed the sufficiency of the investigation to support counsel’s decision not to enter any mitigating evidence. In Rompilla v. Beard the defendant refused to cooperate in the investigation, but did not affirmatively hinder it.

Even assuming that Landrigan’s waiver must have been informed and knowing (a standard the Court has never applied to these cases), (1) this issue was not raised below, and (2) counsel indicated that he carefully explained the matter, and (3) Landrigan’s statements (e.g. “I think if you want to give me the death penalty, just bring it right on”), taken as a whole, indicate that he understood the consequences.

Finaly, the court had most of the evidence that Landrigan now wants investigated before it, and the court could reasonably conclude that what evidence it didn’t (that Landrigan might have been genetically predisposed to violence) would not have made a difference in sentencing.

Justices Stevens, Souter, Ginsburg, and Bryer, dissenting, argue that (a) no one seriously contends that counsel’s investigation of possible mitigating circumstances was adequate (for example, counsel failed to perform a psychological evaluation that would have shown a serious organic brain disorder); (b) it is well established that a citizen’s waiver of a constitutional right must be knowing, intelligent, and voluntary (Zerbst), specifically in the context of the waiver of trial rights; and (c) a capital defendant has the right to have his sentence reflect a reasoned moral judgment as to all possible mitigating evidence. Therefore, if Landrigan can show that his waiver was not knowing intelligent and voluntary he has a valid claim, and since it would be possible for him to do so, it was unreasonable to conclude that he was not entitled to an evidentiary hearing to explore this claim. Also, the only claim he is making here is ineffective assistance of counsel, so any waiver of the right to present additional evidence is irrelevant. Landrigan could not have known about his organic brain disorder because counsel did not adequately investigate the mater.

The record, also, does not support the contention that Landrigan waived his right to present mitigating evidence – only that he did not want his family to testify. Landrigan also consented to a continuance for counsel to investigate mitigating circumstances, which does not square with the understanding that he wanted no such thing admitted.

Finally, the evidence of Landrigan’s organic brain disorder is sufficiently strong evidence to draw the sentence into doubt and create prejudice, and the aggravating evidence was no stronger than in similar cases where an attorney’s failure to investigate mitigating circumstances was held to constitute a cognizable claim of ineffective assistance of counsel.

Habeas cases requiring evidentiary hearings have been few in number and there is no clear evidence that this particular class has burdened the dockets of the federal courts. Even before AEDPA evidentiary hearings only occurred in 1.17% of all federal habeas cases. “We ought not take steps which diminish the likelihood that [federal] courts will base their legal decision on an accurate assessment of the facts.”

Must a “Component” be Physical?

Microsoft Corp. v. AT&T Corp.

Generally, there is no patent violation when a patented product is made and sold in another country except when one supplies from the United States, for combination abroad, a patented invention’s components. AT&T claims that Windows contains potentially infringing components (software to process voice). The issue is whether Microsoft’s liability extends to computers made in another country when they are loaded with Windows software copied from a master disk or electronic transmission dispatched by Microsoft from the United States, which is then copied onto the potentially offending computers (this was the compiled version, also known as “object code,” as opposed to the human-readable set of instructions known as “source code”).

In DeepSouth, a case about a patented shrimp deveiner, the Court held that patent law stopped a the water’s edge, and that it was not a violation to sell the component parts of a patented item for assembly abroad. Congress specifically overturned the second portion of that ruling by enactment of the statute at issue here. Essentially, whoever supplies all or a substantial portion of the components of a patented item, in such a manner as to actively induce their later combination outside the United States in a manner that would infringe the patent if it occurred in the United States; or sells abroad a component of a patented item that is specially made for that device, which is not suitable for substantial non-infringing use, and which would violate the patent if sold in the United States, is liable as an infringer.

Neither Windows itself, nor a computer, standing alone, violate AT&T’s patent. The infringement does not occur until they are combined. Microsoft stipulated that it was liable in the United States but argued that because its software was intangible it could not be considered a component of the item at issue, and that foreign-generated copies of Windows (from the master shipped or copied from Redmond) were not supplied from the United States. The case comes down to the moment at which Windows becomes something that can constitute as component of AT&T’s patent.

“until it is expressed as a computer-readable ‘copy’ e.g., on a CD-ROM, Windows software – indeed any software detached from an activating medium – remains uncombinable. It cannot be inserted into a CD-ROM drive or downloaded from the Internet; it cannot be installed or executed on a computer.” AT&T’s argument that once you compile the object code the source code is useless and irrelevant “[does] not persuade [the Court] to characterize software, uncoupled from a medium, as a combinable component.” “[B]efore software can be contained in and continuously performed by a computer, before it can be updated and deleted, an actual physical copy of the software must be delivered by CD-ROM or some other means capable of interfacing with the computer.” “Abstracted from a usable copy, Windows code is … more like notes of music in the head of a composer than ‘a roller that causes a player piano to produce sound.’” Just because the step required to make the object code machine readable (putting it on a CD, etc) is trivial does not mean it has no metaphysical significance.

Of importance, I think, is footnote 13 – “If an intangible method or process, for instance, qualifies as a ‘patented invention’ … the combinable components of that invention might be intangible as well. The invention [in this case], however, AT&T’s speech-processing computer, is a tangible thing.”

The lower court held that the act of copying is subsumed in the act of supplying. The law at issue prohibits the supply of components “from the United States … in such manner as to actively induce the combination of such components.” The components supplied, and not copies thereof, are what trigger liability. This opinion does not express an opinion on whether Microsoft would be liable for copies of Windows shipped on a disc from the U.S. and installed on machine where the disc was then removed from that machine. “The absence of anything addressing copying in the statute weighs against a judicial determination that replication abroad of a master dispatched from the United States ‘supplies’ the foreign-made copies fro the United States.”

To the extent that this is a close case it is controlled by the presumption against extraterritorial effect of American patent law, and the fact that the statute was designed to expand its reach does not make that presumption inapplicable. If this in fact leaves a “loophole,” that can be addressed by Congress; the Court is not persuaded that “dynamic judicial interpretation” of the statute is in order.

Justices Alito, Thomas and Bryer agree that a component of a machine must be a physical thing, and that a computer loaded with the right software would be an infringing item even after the component CD-ROM is taken out. “There is nothing in the record to suggest that any physical part of the [master] disk became a physical part of the foreign-made computer.”

Justice Stevens, dissenting, argues that the relevant component in this case is not a physical item and therefore the manner in which it is transmitted abroad from the United States is irrelevant. Moreover, Justice Stevens does not agree that because software is analogous to an abstract set of instructions like a blueprint that it cannot be considered a “component” within the meaning of the law because it is a constituent part, and not merely passively like blueprints. It is, Justice Stevens argues, more like a roller that causes a player piano to produce sound.

The More Specific Statute Controls the More General

EC Term of Years Trust v. United States

The IRS code provides that if someone fails to pay a demand made by the IRS, the IRS may impose a lien on their property. Where, as here, that lien is asserted against property in which a third party has an interest (in this case a trust), that party may bring a civil action against the IRS under §7426, but must do so within 90 days. The question in this case is whether, after that 90 day period, that third party can bring a different action under §1346. The lower court held that §7426is the exclusive remedy for third party challenges.

“A precisely drawn, detailed statute pre-empts more general remedies.” “Resisting the force of the better-fitted statute requires a good countervailing reason.” Here, Congress specifically tailored §7426 the third party claims for wrongful levy, and if third parties could avail themselves of the general tax refund jurisdiction of §1346 they could effortlessly evade the levy statute’s 9-month limitations. Cases holding that §1346 was expansive enough to cover third party claims were premised on the notion that no other remedy was available. The proposed distinction between classes of claims under the respective statues directly contravenes the express terms of the statute. Congress had a good reason for passing the 9 month limitation – to speedily settle tax levies and put the government in the position to act unhindered by concern that a third party claim would later arise.

Patent Obviousness

KSR Int'l Co. v. Teleflex Inc.

Teleflex sued KSR for patent infringement on a patent it held for an assembly whereby the position of a pedal would be measured electronically and transmitted to the portion of a vehicle that controls the throttle. As a defense KSR argued the patent was invalid under the Patent Act which forbids issuance of a patent when “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.” The Court of Appeals applies a test whereby if there had been some academic suggestion (“teaching, suggestion, or motivation”) (TSM test) to combine the prior art and teachings the subject matter is held obvious.

The previous state-of-the-art for car pedals (a very complicated and technical mechanical-relay-and-feedback system -- a wire and a spring) did not allow for adjustment to fit the stature of the driver. In 1989 Asano filed a patent for an adjustable pedal, which required that at least one pivot point remain the same so that the pressure required to make speed adjustments was always the same. Patents testing electronic control methods showed that it was best to put the sensor near the pedal, but not on the footpad. Redding filed a patent application for an electronic pedal which was rejected, then Engelgau filed another one which was accepted. The latter was more specific in that it required that the sensor be contained in a fixed pivot point.

An issued patent is presumed to be valid. The District court found that the patent simply combined two existing patents and teachings, but was required by precedent to applyteh TSM test which the District court held was satisfied. Suffice it to say, the more technical you get, the more innovations you can see in Engelgau patent, which the Court of Appeals held was valid.

The Court of Appeals was wrong in applying such a strict approach. Graham set forth a broad inquiry and invited courts, where appropriate, to look at any secondary considerations that would prove instructive. “A patent for a combination which only united old elements with no change in their respective functions … obviously withdraws what is already known into the field of its monopoly and diminishes the resources available to skillful men.” Under Adams, when a patent uses a structure that is already known but substitutes that structure’s elements (changing chemicals in a battery) that combination must do more than yield a predictable result, but when the prior art teaches away from combining certain known elements, discovery of a successful means of combining them is more likely to be non-obvious. In Anderson’s-Black Rock the Court held that where the combination of two pre-existing mechanisms (a radiant heat burner and a paving machine) did no more together than the mechanisms would do separately, though the combination performed a useful function in tandem, it was obvious. Finally, in Sakraida the Court concluded that when a patent “simply arranges old elements with each performing the same function it had been known to perform” and yields no more than one would expect from such an arrangement, the combination is obvious.

For such combinations to be held obvious, however, there must have been some teaching on the subject, or some reason to believe that a person of ordinary skill in the relevant field would have combined the elements in the way the claimed new invention does. The error here was a narrow reading of the teaching requirement, and overemphasis on published materials. The court of appeals restricted its inquiry to the precise problem that the patentee was trying to solve, rather than the obviousness to a person of ordinary skill in the field trying to solve any given problem. The court of appeals also assumed that such an ordinary person would have been restricted to the previous knowledge, despite common sense or abstraction of the previous knowledge. Finally, while courts should be cognizant of hindsight bias, factfinders should not be prevented from employing common sense by rules prohibiting ex post evaluations per se.
Teleflex has defaulted on the issue of whether the patent actually covered the device in question because their argument was not specific, and given the importance of the argument, it would have been if they had tried to seriously challenge it.

The patent was obvious because it merely combined prior knowledge and teachings in a way that a person of ordinary skill in the profession would.

Finally, the court of appeals erred in finding a genuine issue of material fact where that fact did not draw into question any of the issues presented to the court.

Justice Scalia And the Whole Court Break Rule #1 of Appellate Review

Scott v. Harris

When Deputy Scott tried to pull someone over for going 77 in a 55 the driver sped off and initiated a high-speed chase. Lower courts ruled that the case for excessive force could go forward partly because Scott’s actions could constitute “deadly force.” This case addresses whether it is ever reasonable for officers to put a fleeing driver in serious risk of injury or death in order to bring such a chase to an end.

The initial question in a case such as this, where the officer asserts “qualified immunity” – essentially ‘I was just doing my job’ - is whether the facts, taken in the light most favorable to the party asserting the injury, show a violation of a constitutional right. Next is whether that right was clearly established at the time. While the facts must be those as alleged by the person asserting a violation, and all inferences taken in their benefit, and while there has been no factual finding yet (the case is still in summary judgment) there is a recording of the chase that clearly contradicts Respondant’s assertions that there was little or no danger to bystanders. Since there is no “genuine” dispute over the facts gleaned from the video tape. “When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgement.” “The Court of Appeals should not have relied on [the facts as recounted by the party asserting a violation]; it should have viewed the facts in the light depicted in the videotape.”

A Fourth Amendment seizure occurs when there is a governmental termination of freedom of movement through means intentionally applied. Respondent argues that before “deadly force” can be used certain preconditions must be met: (1) the suspect must have posed an immediate threat of serious physical harm to the officers or others; (2) deadly force must have been necessary to prevent escape; and (3) where feasible, the officer must have given the suspect some warning (Garner). Justice Scalia notes that the second prong was not about necessity, but rather about the need to prevent serious harm, and the need to prevent escape was just an example. A police car ramming a fleeing car is less deadly than shooting a fleeing suspect with a gun, and a fleeing suspect in a car poses a substantially greater risk than one on foot, as in Garner.

Now it is a straightforward balancing test. The officer’s actions posed a risk, but not a “certainty” of death (as in Garner). “So how does a court go about weighing the perhaps lesser probability of injuring or killing numerous bystanders against the perhaps larger probability of injuring or killing a single person? We think it appropriate in this process to take into account not only the number of lives at risk, but also their relative culpability.” The police were not required to take the risk of ceasing the chase in the interests of safety – “Respondent might have been just as likely to respond by continuing to drive recklessly as by slowing down and wiping his brow.” Anyway, such a requirement would be, most decidedly, bad policy.

Justice Ginsburg, concurring, joins the opinion but notes that this is not a per-se rule, and that Justice Bryer apparently agrees that the constitutional question here warrants an answer.
Justice Bryer, concurring, joins the opinion but wants the world to know that after having watched the video his mind was made up that no reasonable juror could afind that Officer Timothy Scott acted in violation of the Constitution. Justice Bryer also highlights the “fact-specific” nature of the case, and that this suggests that courts should not be required to address “constitutional questions” before the “qualified immunity question. It is relatively new, subject to much criticism, a waste of resources, and makes bad law. Finally, Justice Bryer disagrees with the per-se rule that “[a] police officer attempt to terminate a dangerous high-speed car chase that threatens the lives of innocent bystanders does not violate the Fourth Amendment, even when it places the fleeing motorist at risk of serious injury or death.”

Justice Stevens, dissenting, alone, takes issue with the majority’s “de novo” review of the video tape. “[T]he tape actually confirms, rather than contradicts, the lower courts’ appraisal of the factual questions at issue. More importantly, it surely does not provide a principled basis for depriving the respondent of his right to have a jury evaluate the question whether the officers’ decision to use deadly force to bring the chase to an end was reasonable.” Justice Stevens then recounts what the video portrays in a way that a reasonable juror could conclude that Respondent’s version of the facts was right. Moreover, it might have been more reasonable to discontinue the chase and pick up the driver after running the license plate – another question the jury should have addressed – especially since many police departments have adopted just such a rule. “If two groups of judges” (ie: the judges on the court of appeals) “can disagree so vehemently about the nature of the pursuit and the circumstances surrounding that pursuit, it seems eminently likely that a reasonable juror could disagree with the Court’s characterization of events.”

The Court today, Justice Stevens argues, sets forth a per se rule that presumes its own version of the facts: “[A] police officer’s attempt to terminate a dangerous high-speed car chase that threatens the lives of innocent bystanders does not violate the Fourth Amendment, even when it places the fleeing motorist at risk of serious injury or death.”

State Governments May Favor Public Business Over Private Business

United Haulers Assn., Inc. v. Oneida-Herkimer Solid Waste Management Authority

“Flow control” ordinances require trash haulers to deliver solid waste to particular facilities. When Oneida county found itself in a solid-waste crisis, the state legislature created the Onedia-Herkimer Solid Waste Management Authority, a public benefit corporation. As of 1989 private haulers could pick up the garbage, but had to deliver it to the Authority, which would collect “tipping fees,” making disposal more expensive than on the open market, but which allowed the Authority to provide additional services (hazardous waste disposal, recycling, etc). United Haulers sued, alleging that the flow control ordinance violated the Commerce Clause.

Under the Dormant Commerce Clause doctrine, the power granted to Congress to control interstate commerce implicitly prohibits states from doing so on their own. In Carbone a town granted a monopoly on garbage handling to a company for 5 years, after which time the town would buy the facility for one dollar. This law was held unconstitutional, over a dissent that argued that the private company was essentially a government facility. The majority implied that the business granted a monopoly was a private entity by stating that the only difference between that case and previous cases was that the business was a local one.
The majority is of the opinion that it is permissible for local government to favor local government over private enterprise, while it would be unconstitutional economic discrimination to favor local businesses over non-local businesses. The concept of discrimination presumes that one is comparing two entities of the same kind, but public and private businesses are not. Besides the obvious, one significant difference is that any burden arising from the law will fall on the very people with the political power to change it – “there is no reason to step in and hand local businesses a victory they could not obtain through the political process.”

Since the law does not discriminate on its face, it will be upheld unless “the burden imposed on [interstate] commerce is clearly excessive in relation to the putative local benefits.” Simply removing the waste from the national market does not satisfy this standard, so there is no reason to look to incidental burdens. While revenue generation is not a local interest that can justify discrimination against interstate commerce, this is not discrimination (because private and public is a genuine distinction) so that is a legitimate purpose.

Justice Scalia, concurring, argues that the dormant Commerce Clause doctrine “is an unjustified judicial invention, not to be expanded beyond its existing domain.” It should be limited to preventing state laws that facially discriminate against interstate commerce, and state laws indistinguishable from the type previously held unconstitutional.

Justice Thomas, concurring, argues that the dormant Commerce Clause “has no basis in the Constitution and has proved unworkable in practice.” The “application of the negative Commerce Clause turns solely on policy consideration, not the Constitution.” Justice Thomas points to the shifting rationale for the dormant Commerce Clause (economic protectionism, slippery slope, national unity, political power, etc).

Justice Alito, with Justices Stevens and Kennedy, dissenting, argues that “the public-private distinction drawn by the Court is both illusory and without precedent.” The private facility in Carbone was not actually private, and the facility here is distinguishable only as the Carbone facility after the town had purchased it. Indeed, the majority in Carborne referred to the facility as if it were owned by the town. Laws discriminating against the sale of liquor from out of state vendors were held unconstitutional until the 21st Amendment (giving States direct control of alcohol), and there is no similar power granted to the states to control trash.

Under the market-participant doctrine, a State is permitted to exercise ‘independent discretion as to parties with whom it will deal’ so long as it acts as a participant and not a regulator. Here, the local government is acting as a regulator, and the fact that the government does not raise the market participant doctrine as a defense does not detract from the policy implications. Justice Alito then responds to the majority’s three principle arguments.

1) That laws favoring local government may be directed to legitimate means, while laws favoring local business are often the product of simple economic protectionism: favoring local government is often a vehicle for economic protectionism, and laws favoring private businesses can have legitimate purposes. If a state favors public business over private business with public shares, that is economic protectionism because it reserves benefits to those who benefit from the local government. The problem here is a focus on means rather than goals.

2) That waste disposal is a traditional government function, and therefore deference to legislation is particularly appropriate: First, any analysis that turns on what functions are integral or traditional is unsound in principle, and where the Court has tried to do so, such attempts have been abandoned. Second, it is not the case that most garbage is handled publicly.

3) That the law in question here simply treats in-state private businesses the same as out-of-state ones: This is a rhetorical trick to avoid the issue of whether there is discrimination against interstate commerce – the real question at issue. “a burden imposed by a State upon interstate commerce is not to be sustained simply because the statute imposing it applies alike to the people of all the States, including the people of the State enacting such a statute.” Brimmer v. Rebman.

Again: A Jury Must Be Able to FULLY Consider ALL Mitigating Evidence in Death Cases

Smith v. Texas

Penry I held that Texas special issue questions presented to juries in the sentencing phase were unconstitutional because they did not allow for proper consideration of all mitigating evidence. Penry II held that an instruction to the jury to nullify those special issues in the case that mitigating evidence convinced the jury that the accused did not deserve the death penalty was insufficient because it presented the jury with the ethical dilemma of following the judges instructions to return a false answer on the special question. Smith was sentenced in the interim between Penry I and Penry II. When Smith’s case was remanded by the Supreme Court under Penry II the lower court denied relief, holding that Smith had not preserved the issue for appeal, and had not demonstrated “egregious harm.”

Smith filed motions before voir dire (1) alleging that the jury instructions violated Penry I because the trial court was not authorized to give any instruction on mitigation; (2) alleging that the jury instructions violated Jurek because the Supreme Court had upheld the instructions on the assumption that the Texas courts would give the terms of those instructions a broader interpretation than those courts actually had; and (3) asking to be notified of the wording of the instructions so he could exercise his jury challenges intelligently. The first two were denied and to the third the trial court presented an instruction that the jury would receive, directing it to answer “no” to one of the special questions if it thought that the answer to both was “yes” but also believed, from the mitigating evidence, that the accused did not deserve the death penalty. While Smith was appealing his sentence Penry II was decided. While Smith continued to press his Penry I challenge, he added his Penry II challenge. The lower court found no Penry I error because the special issues were broad enough to include mitigating evidence and any excluded evidence was not constitutionally significant. The lower court, in the alternative, held that Smith’s case was distinguishable from Penry II because the nullification charge was sufficient to cure any Penry I error. The Supreme Court overruled the lower court’s “constitutionally significant” test, held that there was a Penry I violation because the jury’s decision was tied to findings that had nothing to do with the mitigating evidence, and that Smith’s case was not distinguishable from Penry II.

On remand the lower court assumed some issues were kept from the jury, and decided the case under Almanza, requiring a showing of actual harm in the case that Smith had preserved the issue of instructional error, and requiring a showing of egregious harm if he had not. The lower court was of the mistaken view that the Penry II decision rested on an error arising from the nullification charge, when it was actually just an extension of the violation in Penry I. Therefore, Smith did not abandon the Penry I issue by appealing on the basis of Penry II – the substance was the same. It follows under Almanza that all Smith was required to show was “some” [actual] harm. Finally, the lower court is obliged to defer to the Supreme Court’s finding of Penry error – “that there was a reasonable likelihood that the jury interpreted the special issues to foreclose adequate consideration of his mitigating evidence” – and therefore the state’s harmless error analysis should not bar relief.

Justice Souter, concurring, suggests that harmless error analysis may be per se unwarranted in Penry violations.

Justice Alito, with the Chief Justice and Justices Scalia and Thomas, dissenting, argue that while Smith did object that the jury instructions violated Penry I, he did not object that the trial court’s nullification instruction was insufficient to cure that problem. It is not the case that no instruction can cure the Penry I problem. Additionally, a court is not obligated to address state procedural bars before ruling on the merits where they are not briefed, and because Almana is a state-law procedural bar, the lower court’s decision rests on independent and adequate state grounds.

In order for Almanza to be an “adequate and independent state ground sufficient to support a state judgment” it must be “a firmly established and regularly followed state practice” furthering a “legitimate state interest.” Smith argues that the Almanza rule is arbitrary and discretionary because (1) it was meant to be applied on direct review, not habeas review; (2) it was intended to control non-constitutional claims; and (3) has never been applied to Penry claims. The Court cites cases to counter the first and last arguments, and since Penry claims are constitutional in nature, those cases also counter the factual basis of Smith’s second argument. Moreover, it has been regularly applied, if not universally, and furthers the legitimate sate interest of avoiding flawed trials and minimizing costly retrials.

Finally, while a penalty phase instruction violates the Eighth Amendment if there is a reasonable likelihood that the jury applied the instruction in a way that prevents consideration of constitutionally relevant evidence, that is not always sufficient to constitute “egregious harm.” Whether there was “egregious harm” in this case or not was a question that was properly decided by the lower court.

A Jury Must Be Able to FULLY Consider ALL Mitigating Evidence in Death Cases

Brewer v. Quarterman

In this case Brewer was convicted of murder committed during a robbery. He offered evidence that he was depressed, manipulated, had been abused, and had a drug problem. Brewer’s proffered jury instructions giving effect to this evidence were denied and the jury was instructed only to answer whether Brewer had committed the crime and whether he would constitute a continuing threat to society. As in Penry, Brewer’s evidence was a double edged sword – however mitigating it was, it was equally inculpating as a demonstration of future dangerousness
A Penry violation occurs whenever a statute or judicial gloss on a statute prevents the jury from fully considering (in the sense that it may give effect to a considered moral judgment) all evidence that may justify the imposition of a life sentence rather than a death sentence. Neither quantity nor quality (ie: transitory nature of a mental condition) qualify this rule. The lower court erred when it equated “full effect” with “sufficient effect.”

The Chief Justice, with Justices Scalia, Thomas, and Alito, dissenting, argue that Jurek v. Texas, Franklin v. Lynaugh, Penry v. Lynaugh, Graham v. Collins, and Johnson v. Texas make up the Supreme Court’s guidance on this issue (until now) and that that guidance has amounted to – ‘it depends on the particular characteristics of the evidence.’ Under AEDPA the standard is that a state-court decision can only be set aside if it is “contrary to, or involved an unreasonable application of, clearly established Federal law as determined by the Supreme Court. Either this standard, whether right or wrong, was not misapplied, or the majority is cherry picking the one case that stands for the proposition it endorses today. In either case, the law was not “clearly established.” The dissent then rehashes its points from the previous case, particularly that the “limited view” of Penry, adopted in Graham, at the very least justified the lower courts in their application of the law; that even if it was wrong as a constitutional matter, it was reasonable under the AEDPA.

Justice Scalia, with Justices Thomas and Alito, dissenting, while they agree with the above dissent, maintain that “limiting a jury’s discretion to consider all mitigating evidence does not violate the eighth Amendment.

Jury Must Be Able to Give Full Effect to All Mitigating Evidence in Death Penalty Sentencing

Abdul-Kabir v. Quarterman

Cole and his stepbrother robbed and killed a relative in 1987. After trial, the jury was asked to decide whether Cole’s conduct was deliberate, and whether there was a probability that he would commit criminal acts of violence that would constitute a continuing threat to society. The trail judge did not instruct the jury to consider mitigating evidence, including evidence of childhood neglect and abandonment and neurological impairment reducing his capacity for self control. To support Cole’s continuing threat to society his prior convictions for murder and sexual assault as well as his diary which, according to an expert, revealed a compulsive attraction to young boys and an obsession with criminal activity. The lower court denied Cole’s assignment of error that mitigating evidence was not able to be evaluated, but agreed that his appellate counsel had been ineffective for failing to challenge the absence of an instruction that the jury could consider mitigating evidence, and denied the argument that failure to so instruct the jury was error.

Under Pendry I when the defendant presents mitigating evidence the court must instruct the jury that it may give effect to that evidence in deciding whether to impose the death penalty. The fifth circuit interpreted that case to require that the evidence show (1) a uniquely severe permanent handicap with which the defendant is burdened, by no fault of his own, and (2) that the criminal act was attributable to this severe permanent condition. This interpretation was overturned in Dretke. On remand the Texas court decided that the questions presented to the jury allowed it to give full consideration and effect to the mitigating evidence. Under the AEDPA the question is whether this decision “resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court.”

In Woodson v. North Carolina a blanket imposition of the death penalty for all first degree murders was overturned for its failure to allow particularized consideration of the character and record of each defendant. In Proffit v. Florida, and Jurek v. Texas, death penalty statutes were upheld on the assumption that they allowed unrestricted admissibility of mitigating evidence. Then in Lockett v. Ohio the Court held that the Constitution requires that in all but the rarest kind of capital case the jury must be allowed to consider, as a mitigating factor, any aspect of the defendant’s character, record, or circumstances of the offense, when determining whether to impose the death penalty. This rule was later reaffirmed in Hitchcock v. Dugger, finding that restriction of mitigating evidence to statutorily defined types was unconstitutional. The result of these cases is that the imposition of the death penalty must be a moral judgment, and that a jury must not only be allowed to hear mitigating evidence, but must have the opportunity to give it effect.

“The right to have the sentencer consider and weigh relevant mitigating evidence would be meaningless unless the sentencer was also permitted to give effect to its consideration.” To that end, special questions must invite the jury to consider all mitigating evidence in its answer. Neither the question of deliberateness nor of future dangerousness necessarily does so. The judge in this case decided that the issue of “whether the mitigating evidence can be sufficiently considered” was one that “must be determined on a case by case basis, depending on the nature of the mitigating evidence offered and whether there exists other testimony in the record that would allow consideration to be given.” The Texas courts misunderstood the weight of precedents when they arrived at a different standard.

The lower court ruling violated Penry itself because first, even though the mitigating evidence was not persuasive on the special question issues, it was relevant to moral culpability. Second, the assumption that it would be appropriate to look to other testimony to determine whether the jury could give mitigating effect to the mitigating evidence is not supported by that decision. Third, that the jury could clearly weigh some mitigating evidence is not sufficient to satisfy the rule that it be able to give effect to all mitigating evidence. For example, in Johnson v. Texas, youth was a factor that is universally understood as applicable, and was specifically applicable in the special questions presented. Prosecutors’ arguments to the jury that they must put mitigating evidence out of their mind and go ‘just by the facts’ contravenes these cases and the rules they stand for.

The Upshot: The majority asserts that it does not endorse what Graham foreclosed, but only requires a special instruction, where mitigating evidence that does not fall within one of the special questions, that all mitigating evidence may be considered.

The Chief Justice, for the dissent, argues first that Penry I does not create “clearly established Federal law,” in the light of its surrounding and somewhat conflicting cases. Jurek, for example, upheld as facially constitutional Texas’ use of special questions, leaving open the possibility that some mitigating evidence would not be relevant to those issues. Franklin explained that this foreclosed the rule that the jury must be able to give independent effect to mitigating evidence, outside the special questions. The majority relies on Justice O’Connor’s observation that all mitigating evidence in that case fell within those questions. Penry I was an as applied challenge which found unconstitutional the jury’s inability to consider the defendant’s mental retardation, a fact that was relevant to moral culpability. Grahm foreclosed the requirement that there always be an additional special question, opening up the issue of additional mitigating evidence. Johnson then reaffirmed Graham’s limited view of Penry, relying on the Franklin plurality, and not the concurrence. The dissent in that case made the same point about how to read the Franklin concurrence and dissent as the majority does here, but that argument did not carry.

A reviewing state court “would see four dissenters in Graham and Johnson—including every remaining Member of the Penry I majority—arguing that the Court was failing to follow or sharply limiting Penry I in those cases. On the flip side, the state court would see four dissenters in Penry I—every one later joining the majorities in Graham and Johnson—suggesting that the Penry I majority departed from Jurek.” This does not create clearly established law in the context of AEDPA. Also, in Penry, the evidence had no mitigating effect, so whatever rule the majority attributes to that decision is questionable.
The majority holds that the jury instructions did not permit Cole’s evidence to have mitigating effect beyond the scope of the special issues, but that requirement was foreclosed in Graham and Johnson. Also, under the AEDPA, it is improper for the majority to draw support from cases that post-date the state court ruling.

Finally, the lower court’s decision as to the mitigating evidence’s effect on future dangerousness was a consideration of its character, not its weight. The Chief Justice concludes that “there is hope yet for the views expressed in this dissent, not simply down the road, but tun pro nuc. Encouraged by the majority’s determination that the future can change the past, I respectfully dissent.”

Justices Scalia, Thomas, and Alito, dissenting, “remain of the view that limiting a jury’s discretion to consider all mitigating evidence does not violate the Eighth Amendment.” That notwithstanding, the lower court rulings were not objectively unreasonable, as the Chief Justice notes. Worse yet, the majority overrules Johnson sub silentio and reinstates the Penry rule that juries must be able to give all mitigating evidence must full effect. Johnson is not distinguishable on the basis that the mitigating evidence was relevant to the special questions presented because constitutional rights do not turn on the beneficence of the prosecutor. Nor does prosecutorial style (apparently referring to the arguments made about the jury setting aside in their mind the mitigating evidence) have any bearing on whether the Eighth Amendment test is ‘some effect’ or ‘full effect.’ Moreover, youth in Johnson, did not require jurors to alter their answer to the special questions, just as the mitigating factors here do not have any bearing on the answers to the special questions in this case.

“[T]he meaning of the Eighth Amendment is to be determined not by the moral perceptions of the Justices du jour, but by the understanding of the American people who adopted it… this Court’s vacillating pronouncements have produced grossly inequitable treatment of those on death row.”

Is Entering with Intent To Commit an Offense a Violent Felony?

James v. United States

Under the Armed Career Criminal Act (ACCA) possession of a firearm by a convicted felon carries a 15 year prison sentence if the defendant has three prior convictions ‘for a violent felony or a serious drug offense.” The question here is whether attempted burglary, defined by Florida law as entering or remaining in a structure or conveyance with the intent to commit an offense therein (unless the premises are at the time open to the public or the defendant is licensed or invited to remain therein), is a “violent felony.” This is not a violent felony under ACCA because it does not have, as an element, the use, attempted use, or threatened use of physical force against the person of another.

James (Appellant) argues that because Congress included offenses that have as an element the attempted use of physical force (clause (i)), and its failure to include attempted burglary in its enumeration of specifically covered crimes (clause (ii)) categorically excludes attempt offenses. The Court is not convinced because clause (i) is couched in narrow language while clause (ii) is couched in broad language – “…or otherwise involve[e] conduct that presents a serious potential risk of physical injury to another.” Nor is the fact that all enumerated crimes in clause (ii) (burglary, arson, extortion, and use of explosives) are completed crimes convincing. First of all, crimes involving the use of explosives are not necessarily completed crimes. Second, the common feature of those crimes is not their completion, but their risk of bodily injury.

Next, James argues that Congress rejection of a version of clause (ii) that included conspiracy to commit those completed crimes suggests that Congress intended to exclude attempt offenses. However, the expansive language cited in clause (ii) was added by a later Congress, which might have had different motivations.

The elements of the crime of which James was convicted must still independently qualify as a crime involving “conduct that presents a serious potential risk of physical injury to another.” Finding that attempted burglary poses the same threat of confrontation, and thereby, the same threat of physical harm, as its closest enumerated analogue (completed burglary), the Court finds that it fits into the category of clause (ii). Indeed, all courts of appeal, and the federal sentencing commission, have agreed.

James also challenges the law’s application as applied to his case. However, due to the Taylor precedent, and the fact that the nature of the inquiry is already probabilistic, the Court declines to consider the statute as applied. The dissent interprets the law to require at least as much probability as the completed crime, but the text does not support this requirement, and the dissent’s approach does not achieve its stated objective – providing guidance to the lower courts.

Nor does Florida’s inclusion of the cartilage (area around the house) in its definition reduce the danger presented by the elements of the offense. Finally, since the inquiry here is a matter of statutory interpretation, and not impermissible judicial fact-finding, the law does not violate the Sixth Amendment under Aprendi (in short, that the jury must find the facts of all the elements of a crime, not the judge).

Justice Scalia, dissenting, argues for a bright line rule that will give guidance to lower courts. Is driving under the influence more analogous to burglary, arson, extortion, or a crime involving the use of explosives? Nor is Justice Scalia of the opinion that an unenumerated offense that presents less risk than its closest analogue, but more than another enumerated offense, should be excluded for that reason alone. One approach would be to limit ACCA to its enumerated crimes. Another would be to categorically consider attempted crimes to be the same as completed crimes for the purposes of ACCA. Justice Scalia would determine whether the crime in question poses less of a risk of bodily injury than the least risky enumerated crime, which he determines to be burglary. At this point, instead of following the majority, Justice Scalia concludes that attempted burglary categorically poses a less serious risk of potential physical injury to others than completed burglary, and therefore must be excluded from clause (ii).

How “Per-Pupil Expenditures” Actually Means Student Population

Federal law requires a State’s Secretary of Education to calculate the disparity of expenditures per-pupil when determining whether the State’s public school funding program “equalizes expenditures” (for purposes of certain federal grants). However, when doing so, the Secretary is directed to “disregard” school districts “with per-pupil expenditures above the 95^th percentile or below the 5^th percentile of such expenditures,” and shall also take into account special additional costs, such as those borne by geographically isolated districts. Where the greatest measured district per pupil expenditures exceed the least measured district per-pupil expenditures by more than 25%, that state is not eligible for federal grants. The question here is whether the Secretary may identify these disregarded districts by looking to the number of the district’s pupils as well as the expenditure per pupil.

If Congress’ language is ambiguous then there is a gap for the agency to fill and the Secretary’s interpretation must be upheld under Chevron. “The matter here is the kind of highly technical, specialized interstitial matter that Congress often does not decide itself, but delegates to specialized agencies.” Also, the original method was left entirely to the Secretary, and never seems to have been challenged. The Court also finds the Secretary’s method objectively reasonable while it questions the reasonableness of the method based on number of districts alone since the secretary’s method actually excludes outliers while excluding based on the number of districts could exclude a larger or smaller portion of the population depending on the geographic characteristics of the school district lines.

And, finally, the text of the statute: How does “per-pupil expenditures” translate into student population? “A customs statute that imposes a tariff on ‘clothing’ does not impose a tariff on automobiles, no matter how strong the policy arguments for treating the two kinds of goods alike.” N-percentile is defined as a “the value Xn/100 such that n per cent of the population is less than or equal to Xn/100.” Congress did not delineate the relevant population to be divided for the purposes of evaluating “per-pupil expenditures.” Since the population is not defined the Secretary could define it – here he did so on the basis of students, not districts – and any reasonable definition passes Chevron. Where Congress wanted to be more specific, it has been, and the population should be defined based on Congressional intent (apparently, intent to allow ambiguity that can be filled in by the Secretary).

Justice Stevens, concurring, cites then Chief Justice Rehnquist for the proposition that “in rare cases the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters, and those intentions must be controlling.” “Justice Scalia’s argument today,” he continues, “rests on the incorrect premise that every policy-driven interpretation implements a judge’s personal view of sound policy, rather than a faithful attempt to carry out the will of the legislature.” He further cites Chevron for the proposition that “if a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.” This case is one “in which the legislative history is pellucidly clear and the statutory text is difficult to fathom” (the paucity of comments is a sign of faith in the statute’s sponsors who introduced it on behalf of the administration who implemented this method both before and after the statute was passed, and as for what is left of the law – “any competent counsel challenging the validity of a presumptively valid federal regulation would examine the legislative history of its authorizing before filing suit”)

Justices Kennedy and Alito, concurring, argue that “only if Congress has not directly addressed the precise question at issue should a court consider whether the agency’s answer is based on a permissible construction of the statute.” The plain language is ambiguous, so Chevron deference applies.

Justice Scalia (joined by the Chief Justice, Justice Thomas, and Justice Souter) goes back to his Church of the Holy Trinity lecture: in that case the court said that sometimes “a thing may be within the letter of the statute and yet not within the statute, because not within its spirit, nor within the intention of its makers,” a proposition with which Justice Scalia humbly differs. Justice Scalia observes the “suspicious order of proceeding” that the majority takes by discussing what the statute does not say before commenting on what it does. Percentile, as used in the statute, refers to a division of some population, and concerns the percentile of “per-pupil expenditures or revenues.” The population at issue here is clear – the local education agency – and it does not suggest that the state may use each student’s individual per-pupil revenue. The only population mentioned in the statute is that of the LEA: “local education agencies with per-pupil expenditures or revenues …”

As for Justice Stevens’ concurrence, “once one departs from [the actual meaning of the text] … fidelity to the intent of Congress is a chancy thing. The only thing we know for certain both Houses of Congress … agreed upon is the text. Legislative history can never produce a ‘pellucidly clear’ picture.” “What judges believe Congress ‘meand’ (apart from the text) has a disturbing but entirely unsurprising tendency to be whatever judges think Congress must have meant, ie., should have meant.” Finally, Justice Scalia argues that the cases that Justice Stevens cites for the proposition that congressional intent is prior to statutory interpretation do not support that proposition at all.

By using this convoluted interpretation the Secretary managed to exclude approximately 26% of New Mexico’s LEAs. “To be governed by legislated text rather than legislators’ intentions is what it means to be ‘a Government of laws, not of men.’”

How “Per-Pupil Expenditures” Actually Means Student Population

Zuni Public School Dist. No. 89 v. Department of Education

Federal law requires a State’s Secretary of Education to calculate the disparity of expenditures per-pupil when determining whether the State’s public school funding program “equalizes expenditures” (for purposes of certain federal grants). However, when doing so, the Secretary is directed to “disregard” school districts “with per-pupil expenditures above the 95^th percentile or below the 5^th percentile of such expenditures,” and shall also take into account special additional costs, such as those borne by geographically isolated districts. Where the greatest measured district per pupil expenditures exceed the least measured district per-pupil expenditures by more than 25%, that state is not eligible for federal grants. The question here is whether the Secretary may identify these disregarded districts by looking to the number of the district’s pupils as well as the expenditure per pupil.

If Congress’ language is ambiguous then there is a gap for the agency to fill and the Secretary’s interpretation must be upheld under Chevron. “The matter here is the kind of highly technical, specialized interstitial matter that Congress often does not decide itself, but delegates to specialized agencies.” Also, the original method was left entirely to the Secretary, and never seems to have been challenged. The Court also finds the Secretary’s method objectively reasonable while it questions the reasonableness of the method based on number of districts alone since the secretary’s method actually excludes outliers while excluding based on the number of districts could exclude a larger or smaller portion of the population depending on the geographic characteristics of the school district lines.

And, finally, the text of the statute: How does “per-pupil expenditures” translate into student population? “A customs statute that imposes a tariff on ‘clothing’ does not impose a tariff on automobiles, no matter how strong the policy arguments for treating the two kinds of goods alike.” N-percentile is defined as a “the value Xn/100 such that n per cent of the population is less than or equal to Xn/100.” Congress did not delineate the relevant population to be divided for the purposes of evaluating “per-pupil expenditures.” Since the population is not defined the Secretary could define it – here he did so on the basis of students, not districts – and any reasonable definition passes Chevron. Where Congress wanted to be more specific, it has been, and the population should be defined based on Congressional intent (apparently, intent to allow ambiguity that can be filled in by the Secretary).

Justice Stevens, concurring, cites then Chief Justice Rehnquist for the proposition that “in rare cases the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters, and those intentions must be controlling.” “Justice Scalia’s argument today,” he continues, “rests on the incorrect premise that every policy-driven interpretation implements a judge’s personal view of sound policy, rather than a faithful attempt to carry out the will of the legislature.” He further cites Chevron for the proposition that “if a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.” This case is one “in which the legislative history is pellucidly clear and the statutory text is difficult to fathom” (the paucity of comments is a sign of faith in the statute’s sponsors who introduced it on behalf of the administration who implemented this method both before and after the statute was passed, and as for what is left of the law – “any competent counsel challenging the validity of a presumptively valid federal regulation would examine the legislative history of its authorizing before filing suit”)

Justices Kennedy and Alito, concurring, argue that “only if Congress has not directly addressed the precise question at issue should a court consider whether the agency’s answer is based on a permissible construction of the statute.” The plain language is ambiguous, so Chevron deference applies.

Justice Scalia (joined by the Chief Justice, Justice Thomas, and Justice Souter) goes back to his Church of the Holy Trinity lecture: in that case the court said that sometimes “a thing may be within the letter of the statute and yet not within the statute, because not within its spirit, nor within the intention of its makers,” a proposition with which Justice Scalia humbly differs. Justice Scalia observes the “suspicious order of proceeding” that the majority takes by discussing what the statute does not say before commenting on what it does. Percentile, as used in the statute, refers to a division of some population, and concerns the percentile of “per-pupil expenditures or revenues.” The population at issue here is clear – the local education agency – and it does not suggest that the state may use each student’s individual per-pupil revenue. The only population mentioned in the statute is that of the LEA: “local education agencies with per-pupil expenditures or revenues …”

As for Justice Stevens’ concurrence, “once one departs from [the actual meaning of the text] … fidelity to the intent of Congress is a chancy thing. The only thing we know for certain both Houses of Congress … agreed upon is the text. Legislative history can never produce a ‘pellucidly clear’ picture.” “What judges believe Congress ‘meand’ (apart from the text) has a disturbing but entirely unsurprising tendency to be whatever judges think Congress must have meant, ie., should have meant.” Finally, Justice Scalia argues that the cases that Justice Stevens cites for the proposition that congressional intent is prior to statutory interpretation do not support that proposition at all.

By using this convoluted interpretation the Secretary managed to exclude approximately 26% of New Mexico’s LEAs. “To be governed by legislated text rather than legislators’ intentions is what it means to be ‘a Government of laws, not of men.’”

What Can the FCC Declare to be Unreasonable?

Global Crossing Telecommunications, Inc. v. Metrophones Telecommunications, Inc.

The FCC requires telecommunication carriers to compensate payphone operators for free calls (eg. 1-800 calls), and has declared failure to do so “unjust and unreasonable” as it has the power to do under language substantially copied from the Interstate Commerce Act of 1887. “Unjust and unreasonable” practices are statutorily defined as “unlawful” and allow injured person to recover “damages” for “unlawful” charges or practices. Until 1887 reasonableness was a question for the courts, not a commission. Payphone operators are authorized to recover damages in court when they are “damaged.” The question here is whether payphone operators may bring suit when a carrier refuses to pay compensation for free calls.

Where “Congress would expect the agency to be able to speak with the force of law when it addresses ambiguity in the statute or fills a space in the enacted law,” a court “is obliged to accept the agency’s position if Congress has not previously spoken to the point at issue and the agency’s interpretation” is “reasonable.” Chevron. Appellants argue that the law authorizes actions seeking damages only for statutory violations, not for regulations designed to promote the objectives of that statute. Previous cases holding that an agency cannot determine accessibility of courts were based on the text of the enabling statute. Nor does the text suggest that only violations of “interpretive” regulations can amount to unjust or unreasonable practices since this legislation was passed before the interpretive/substantive-regulatory distinction came into existence.

The definition of a “practice” as one that only harms carrier customers, and not carrier suppliers is not supported by the text or history of the legislation. “The long-distance carrier ordered by the FCC to compensate the payphone operator is so ordered in its role as a provider of communications services, not as a consumer of office supplies or the like.” Next, while the FCC has not provided reasons for its determination, those reasons are obvious (and have been elucidated elsewhere). Nor does this determination violate another statutory section (§276), but it rather serves the same purpose. Finally, even if this regulation goes beyond the mandate of §276, it still furthers the same purpose and, therefore, is reasonable under Chevron.

Justice Scalia, dissenting, argues that the Court’s outcome must either be premised on (1) the idea that such practices are independently unreasonable, or (2) that these practices are unreasonable simply because they violate FCC regulations. As for (1), it would be “neither unjust nor unreasonable for a carrier to decline to act as collection agent for payphone companies.” And under (2), the enabling Act only provides a private cause of action for violations of the Act (interpretive regulations) and not mere FCC regulatory actions. Justice Scalia also believes that both the text of the statute explicitly refers to the interpretive/substantive distinction in another section and that this distinction should carry over to the section at issue lest the careful delineations marked in the rest of the law be abolished by a “backdoor” in the section at issue.

Jutice Thomas, dissenting, does not believe that the word “practice,” as used in this statute, extends to business practices, as opposed to activities of telecommunication firms as providers of services. Basically, he says that section (a) sets out the duties and powers of a common carrier, and section (b) requires them to be reasonable (describing them jointly as “practices”). Since section (a) only applies does not set out duties related to the receipt of services from suppliers, whether those are reasonable or not is no matter for section (b). At the same time, since “unjust and unreasonable” is a statutory term, a court cannot abdicate its responsibility to construe that term independently in the name of Chevron deference. Finally, the FCC’s determination is overbroad, he argues, because it regulates both interstate and intrastate calls where the “unreasonable[ness]” portion of the statute only applies to interstate calls.

Is a National Bank’s Subsidiary Regulated as a National Bank?

Watters v. Wachovia Bank, N. A.

The business of national banks is controlled by the National Bank Act (NBA) and the Office of the Comptroller of Currency (OCC) which has the largely exclusive power to audit the banks’ records, to the exclusion of local or state regulation. National banks retain incidental banking powers including opening subsidiaries. This case presents the question of whether Wachovia’s wholly owned state subsidiary is governed by the OCC’s exclusive audit power – really, whether a subsidiary is still a national bank.

National banks are still governed by state laws of general application where they do not interfere with the letter or purpose of federal law but remain free from “any visitorial powers,” defined as “a superior or superintending officer, who visits a corporation to examine into its manner of conducting business , and enforce an observance of its laws and regulations,” except as provided by Federal law. Subsidiaries are distinguished in Federal law from mere affiliates (over which states may exert control) as those entities that can only do business subject to the same terms and conditions as the national bank.

The Court has focused on the operations, rather than the corporate structure, of national banks in defining the scope of the NBA. Waters, the state regulator for Michigan who wishes to assert oversight powers over Wachovia’s subsidiary there, argues that if Congress intended to exempt subsidiaries it would have extended the ban on state inspection to affiliates. However, operating subsidiaries were not authorized until after that law was passed, and operating subsidiaries are a special subset of affiliates (termed “financial subsidiaries”) and retain a more limited set of powers.

Justice Stevens, dissenting, argues that only where laws of general application “forbid” or “impair significantly” the activities of the national bank are they unconstitutional. Stevens recounts an expanding national banking system alongside a shrinking and more heavily regulated state system. The legislation explicitly allowing national banks to own subsidiaries that can engage in activities that the national banks may not, while subjecting them to heightened regulation implied that operating subsidiaries could not. Basically, Justice Stevens points out that whereas the majority draws the line at significant impairment, he and the dissent would draw the line at explicit Federal preemption. Additionally, the Michigan acts, by their terms, exempt “depository financial institutions.” Since operating subsidiaries are created as the negative of what the statute defines (financial subsidiaries) Congress has not demonstrated a “clear and manifest purpose” to preempt state laws, except as it did so explicitly and meticulously.

That being the case, Stevens then addresses whether the OCC can assume the power to displace state law. Congress can do so explicitly, and has not. Even so, OCC has not exerted such control, and even if it did, that interpretation of the law granting it the power to do so is not due Chevron deference, without which it fails on analysis. First it fails statutory construction (above), and second it fails the purpose of the statute, because the value of a subsidiary has nothing to do with federal preemption – it is about operating liabilities.

EPA Rulemaking May Be Inconsistent

Environmental Defense v. Duke Energy Corp.

In the 1970s Congress passed the New Source Performance Standards (NSPS) and Prevention of Significant Deterioration (PSD) amendments to the Clean Air Act, governing modified, as well as new, stationary sources of air pollution. The term “modification” is defined in NSPS as “any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted.” This definition is included in the PSD’s definition of “construction” of a new facility, to which that act applies. To put the problem simply, under NSPS the EPA defines “modification” by reference to kilograms of carbon per hour, and under PSD by reference to kilograms per year. The consequence of this disparity is that an increase in hours of production would trigger NSPS requirements but not PSD requirements.[1] Duke Energy fell into this very trap, and the lower court held that PSD must be read with the assumption that pre-modification production hours be maintained. This case concerns whether the EPA must conform its PSD regulations on “modification” to their NSPS counterparts, in light of the Act’s restrictions on judicial review of EPA regulations in the Clean Air Act – that is, whether the EPA’s construction of a statutory term must be uniform.

In Rown Cos v. United States the Court held against various definitions of the term “wages” in tax law. However, “[m]ost words have different shades of meaning and consequently may be variously construed, not only when they occur in different statutes, but when used more than once in in the same statute or even in the same section.” For example, in Robinson v. Shell Oil, the term “employee” was held to have different meanings depending on the section of Title VII in which it is found. The Court synthesizes these two opinions into the principle that a court should rely on “a manifest ‘congressional concern for the interest of simplicity and ease of administration.’” In fact, it suggests that if Congress intended that the terms be defined identically it should have explicitly so required. Incidentally, the regulatory scheme that Congress intended to codify included at least three different definitions of this term.

The statute itself suggests this interpretation in its requirement that there be both a modification and a resulting increase in emissions, and in its preamble where it notes that requiring companies to obtain a permit merely when changing hours of operation would “severely and unduly hamper the ability of any company to take advantage of favorable market conditions.” This purpose indicates that where hours are increased as part of a construction program (a “modification”) this increase does not fall into the exception mentioned above. Since the appeals court “interpreted” these provisions out of conformity with the legislative scheme that court was engaged in judicial review (reaching the validity of the enactments) prohibited when such review “could have been obtained” in the Court of Appeals for the District of Columbia within 60 days of EPA rulemaking.

Thomas, concurring (?), believes that a word, when repeated, and especially when cross-referenced, should be presumed to mean the same thing each time, and that those who would hold otherwise have “the burden of stating why our general presumption does not control the outcome here.”

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[1] In 1980 EPA regulations limited PSD to “any physical change in or change in the method of operation of a major stationary source that would result in a significant net emissions increase of any pollutant…” A mere increase in hours of operation or in production rate does not trigger the Clean Air Act requirements under NSPS because emissions are measured in kilograms per hour. Under PSD a permit for modification is only required if that modification is a major one, measured in annual output

Consistency? I Think Not

Time to dump all the write-ups I've been holding onto.