Articles Posted in U.S. Supreme Court

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The Lewises, driving on a Connecticut interstate, were struck by a vehicle driven by Clarke, a Tribal Gaming Authority employee, who was transporting Mohegan Sun Casino patrons. The Lewises sued Clarke in his individual capacity. The Supreme Court of Connecticut held that tribal sovereign immunity barred the suit because Clarke was acting within the scope of his employment when the accident occurred and did not consider whether Clarke should be entitled to sovereign immunity based on an indemnification statute. The U.S. Supreme Court reversed. In a suit against a tribal employee in his individual capacity, the employee, not the tribe, is the real party in interest; tribal sovereign immunity is not implicated. The suit is based on Clarke's personal actions. Clarke, not the Gaming Authority, is the real party in interest. The Connecticut Supreme Court extended sovereign immunity for tribal employees beyond what common-law sovereign immunity principles would recognize for either state or federal employees. An indemnification provision cannot, as a matter of law, extend sovereign immunity to individual employees who would otherwise not fall under its protective cloak. Connecticut courts exercise no jurisdiction over the Tribe or Gaming Authority and indemnification is not a certainty, because Clarke will not be indemnified should the Gaming Authority determine that he engaged in “wanton, reckless, or malicious” activity. View "Lewis v. Clarke" on Justia Law

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The Federal Employees Health Benefits Act (FEHBA) authorizes the Office of Personnel Management to contract with private carriers for federal employees’ health insurance; 5 U.S.C. 8902(m)(1) states that the “terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law . . . which relates to health insurance.” OPM’s regulations make a carrier’s “right to pursue and receive subrogation and reimbursement recoveries" a condition of the provision of benefits under the plan’s coverage. In 2015, OPM confirmed that subrogation and reimbursement rights and responsibilities “relate to the nature, provision, and extent of coverage or benefits” under section 8902(m)(1). Nevils, insured under a FEHBA plan offered by Coventry, was injured in an automobile accident. Coventry paid his medical expenses and asserted a lien against the settlement Nevils recovered from the driver who caused his injuries. Nevils satisfied the lien, then filed a state court class action, citing Missouri law, which does not permit subrogation or reimbursement in this context. The Missouri Supreme Court ruled in favor of Nevils. The Supreme Court reversed. Because contractual subrogation and reimbursement prescriptions plainly “relate to . . . payments with respect to benefits,” they override state laws barring subrogation and reimbursement. When a carrier exercises its right to reimbursement or subrogation, it receives from either the beneficiary or a third party “payment” respecting the benefits it previously paid. The carrier’s very provision of benefits triggers that right to payment. Strong and “distinctly federal interests are involved,” in uniform administration of the FEHBA program, free from state interference, particularly concerning coverage, benefits, and payments. The regime is compatible with the Supremacy Clause. The statute, not a contract, strips overrides state law View "Coventry Health Care of Missouri, Inc. v. Nevils" on Justia Law

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The Haegers sued Goodyear, alleging that the failure of a Goodyear G159 tire caused their motorhome to swerve and flip over. After years of contentious discovery, marked by Goodyear’s slow response to repeated requests for internal G159 test results, the parties settled. Months later, the Haegers’ lawyer learned that, in another lawsuit involving the G159, Goodyear had disclosed test results indicating that the tire got unusually hot at highway speeds. Goodyear conceded withholding the information. The district court exercised its inherent power to sanction bad-faith behavior to award the Haegers $2.7 million—their legal fees and costs since the moment, early in the litigation, of Goodyear’s first dishonest discovery response. The court held that in cases of egregious behavior, a court can award all attorney’s fees incurred in a case, without any need to find a causal link between the expenses and the sanctionable conduct. The court made a contingent award of $2 million, to take effect if the Ninth Circuit reversed the larger award, deducting fees related to other defendants and to proving medical damages. The Ninth Circuit affirmed the $2.7 million award. The Supreme Court reversed. When a federal court exercises its inherent authority to sanction bad-faith conduct by ordering a litigant to pay the other side’s legal fees, the award is limited to fees that the innocent party would not have incurred but for the bad faith. The sanction must be compensatory, not punitive. The Haegers did not show that this litigation would have settled as soon as Goodyear divulged the heat-test results and cannot demonstrate that Goodyear’s non-disclosure so permeated the suit as to make that misconduct a but-for cause of every subsequent legal expense. View "Goodyear Tire & Rubber Co. v. Haeger" on Justia Law

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Employee benefits plans regulated by the Employee Retirement Income Security Act (ERISA) often contain subrogation clauses requiring participants to reimburse the plan for medical expenses if they later recover money from a third party. Montanile was seriously injured by a drunk driver. His ERISA plan paid more than $120,000 for his medical expenses. Montanile sued the drunk driver, obtaining a $500,000 settlement. The plan administrator sought reimbursement from the settlement. Montanile’s attorney refused and indicated that the funds would be transferred from a trust account to Montanile unless the administrator objected. The administrator did not respond. Montanile received the settlement. Six months later, the administrator sued under ERISA 502(a)(3), which authorizes plan fiduciaries to file suit “to obtain . . . appropriate equitable relief . . . to enforce . . . the plan.” 29 U.S.C. 1132(a)(3). The district court rejected Montanile’s arguments, The Eleventh Circuit affirmed, holding that even if Montanile had completely dissipated the fund, the plan was entitled to reimbursement from Montanile’s general assets. The Supreme Court reversed and remanded for determination of whether Montanile had dissipated the settlement. When an ERISA-plan participant wholly dissipates a third-party settlement on nontraceable items, the plan fiduciary may not bring suit under section 502(a)(3) to attach the participant’s separate assets. Historical equity practice does not support enforcement of an equitable lien against general assets. View "Montanile v. Bd. of Trs. of Nat'l Elevator Indus. Health Benefit Plan" on Justia Law

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Respondent, a California resident, filed suit against OBB, an Austrian state-owned railway, after she suffered injuries from falling off the railroad tracks at the Innsbruck, Austria, train station. Respondent had purchased a Eurail pass over the Internet from a Massachusetts-based travel agent. The district court granted OBB's motion to dismiss pursuant to the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. 1605(a)(2). The Ninth Circuit reversed, concluding that the Eurail pass sale by the travel agent could be attributed to OBB through common law principles of agency, and that respondent’s suit was “based upon” that Eurail pass sale. The Court held, however, that respondent's suit falls outside the commercial activity exception and is barred by sovereign immunity where the suit is not "based upon" the sale of the Eurail pass for purposes of section 1605(a)(2), and respondent's contention that her claims are "based upon" OBB's entire railway enterprise is forfeited. In this case, respondent's action is "based upon" the railway's conduct in Innsbruck. Therefore, the Court reversed the judgment of the Ninth Circuit. View "OBB Personenverkehr AG v. Sachs" on Justia Law

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The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. 960, contains a provision (section 9658) that preempts statutes of limitations applicable to state-law actions for personal injury or property damage arising from the release of a hazardous substance, pollutant, or contaminant into the environment. Section 9658 adopts the discovery rule, so that statutes of limitations begin to run when a plaintiff discovers, or reasonably should have discovered, that the harm was caused by the contaminant because person who is exposed to a toxic contaminant may not develop or show signs of resulting injury for many years. CTS sold property on which it had stored chemicals as part its operations as an electronics plant; 24 years later, owners of parts of that property and adjacent landowners, sued, alleging damages from the stored contaminants. CTS moved to dismiss, citing a state statute of repose that prevented subjecting a defendant to a tort suit brought more than 10 years after the defendant’s last culpable act. Because CTS’s last act occurred when it sold the property, the district court granted the motion. The Fourth Circuit reversed, holding that the statute’s remedial purpose favored preemption. The Supreme Court reversed in part, concluding that section 9658 does not pre-empt state statutes of repose. Statutes of limitations promote justice by encouraging plaintiffs to pursue claims diligently and begin to run when a claim accrues. Statutes of repose effect a legislative judgment that a defendant should be free from liability after a legislatively determined amount of time and are measured from the date of the defendant’s last culpable actor omission. Under the language of the statute, pre-emption is characterized as an exception to the regular rule that the “the statute of limitations established under State law” applies; it is proper to conclude that Congress did not intend to preempt statutes of repose. View "CTS Corp. v. Waldburger" on Justia Law

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Walden, a Georgia police officer working as a DEA agent at a Georgia airport, searched plaintiffs and seized a large amount of cash. Plaintiffs claim that after they returned to their Nevada residence, Walden helped draft a false probable cause affidavit in support of forfeiture and forwarded it to a Georgia office of the U.S. Attorney. No forfeiture complaint was filed and the funds were returned. Plaintiffs filed a tort suit in a Nevada District Court. The district court dismissed, finding that the Georgia search and seizure did not establish a basis for personal jurisdiction in Nevada. The Ninth Circuit reversed, reasoning that Walden submitted the affidavit with the knowledge that it would affect persons with significant Nevada connections. The Supreme Court reversed, holding that the district court lacked personal jurisdiction over Walden. The Due Process Clause limits state authority to bind a nonresident defendant to a judgment of its courts, requiring that the nonresident have “certain minimum contacts” with the forum state. For a state to exercise jurisdiction consistent with due process, a relationship must arise out of contacts that the defendant himself created with the forum itself, not with persons residing there. The plaintiff cannot be the only link between the defendant and the forum. Walden lacks those “minimal contacts” with Nevada. None of his conduct occurred in Nevada, and he formed no jurisdictionally relevant contacts with that forum. Mere injury to a forum resident is not a sufficient connection to the forum. The injury occurred in Nevada simply because that is where plaintiffs chose to be when they desired to use the seized funds. The Court also rejected an argument based on the origin of the funds. View "Walden v. Fiore" on Justia Law

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Using FOIA requests directed to the South Carolina DMV, attorneys obtained names and addresses, then sent letters to more than 34,000 individuals, seeking clients for a lawsuit against car dealerships for violation of a state law. The letters were headed “ADVERTISING MATERIAL,” explained the lawsuit, and asked recipients to return an enclosed card to participate in the case. Recipients sued the attorneys, alleging violation of the Driver’s Privacy Protection Act of 1994 (DPPA), 18 U.S.C. 2721(b)(4), by obtaining, disclosing, and using personal information from motor vehicle records for bulk solicitation without express consent. The district court dismissed, based on a DPPA exception permitting disclosure of personal information "for use in connection with any civil, criminal, administrative, or arbitral proceeding," including "investigation in anticipation of litigation." The Fourth Circuit affirmed. The Supreme Court vacated and remanded. An attorney’s solicitation of clients is not a permissible purpose under the (b)(4) litigation exception. DPPA’s purpose of protecting privacy in motor vehicle records would be substantially undermined by application of the (b)(4) exception to the general ban on disclosure of personal information and ban on release of highly restricted personal information in cases there is any connection between protected information and a potential legal dispute. The Court noted examples of permissible litigation uses: service of process, investigation in anticipation of litigation, and execution or enforcement of judgments and orders. All involve an attorney’s conduct as an officer of the court, not a commercial actor, seeking a business transaction. A contrary reading of (b)(4) could affect interpretation of the (b)(6) exception, which allows an insurer and certain others to obtain DMV information for use in connection with underwriting, and the (b)(10) exception, which permits disclosure and use of personal information in connection with operation of private tollroads. View "Maracich v. Spears" on Justia Law

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Nigerian nationals, having been granted asylum in the U.S., filed suit under the Alien Tort Statute (ATS), alleging that Dutch, British, and Nigerian corporations aided and abetted the Nigerian Government in committing violations of the law of nations in Nigeria. The complaint alleges that in the 1990s Nigerian government forces attacked villages, beating, raping, killing, and arresting residents and destroying or looting property and that the corporations provided food, transportation, compensation, and a staging ground. The ATS provides that “district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States,” 28 U. S. C. 1350. On interlocutory appeal, the Second Circuit dismissed, holding that the law of nations does not recognize corporate liability. The Supreme Court affirmed. The presumption against extraterritoriality applies to ATS claims. The danger of unwarranted judicial interference in foreign policy is magnified where the question is not what Congress has done but what courts may do. Nothing in the ATS indicates extraterritorial reach. Violations of the law of nations affecting aliens can occur either within or outside the United States. The question is whether the court has authority to recognize a cause of action under U. S. law to enforce a norm of international law. There is no indication that Congress expected causes of action to be brought under the statute for violations of the law of nations occurring abroad. View "Kiobel v. Royal Dutch Petroleum Co." on Justia Law

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The Federal Tort Claims Act (FTCA) waives the government’s sovereign immunity from tort suits, but excepts from that waiver certain intentional torts, 28 U. S. C. 2680(h). Section 2680(h) contains a proviso that extends the waiver of immunity to claims for six intentional torts, including assault and battery, that are based on the “acts or omissions” of an “investigative or law enforcement officer” “who is empowered by law to execute searches, to seize evidence, or to make arrests.” A federal prisoner, sued the United States under the FTCA, alleging assault and battery by correctional officers. The district court granted the government summary judgment; the Third Circuit affirmed, reasoning that the “law enforcement proviso” applies only to tortious conduct that occurs during the course of executing a search, seizing evidence, or making an arrest. The Supreme Court reversed. The law enforcement proviso extends to law enforcement officers’ acts or omissions that arise within the scope of employment, regardless of whether the officers are engaged in investigative or law enforcement activity, or are executing a search, seizing evidence, or making an arrest. Congress intended immunity determinations to depend on a federal officer’s legal authority, not on a particular exercise of that authority. Nor does the proviso indicate that a waiver of immunity requires the officer to be engaged in investigative or law enforcement activity. View "Millbrook v. United States" on Justia Law