The transcript of oral argument in United States v. Davis is available on the Supreme Court’s website; the transcript in McDonough v. Smith is also available.
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New rules mean tighter deadlines, fewer words
The Supreme Court issued revisions to its rules today. The changes largely mirror the amendments proposed late last year, with one notable exception: Although the justices reduced the word limits for opening briefs on the merits, they left the existing word limits for reply briefs in place.
Changes to two rules – Rules 14.1 and 15.2 – require the parties to a case before the Supreme Court to identify any lower-court cases that are directly related to the Supreme Court proceedings. This change, a comment to the rules explains, “will assist in evaluating whether a Justice’s involvement in a case before the Court might require recusal.” The new requirement comes just a little over a year after Justice Anthony Kennedy – who has since retired – had to recuse himself from a tribal-fishing-rights case when he belatedly realized that he had participated in the case before joining the Supreme Court in 1988, as a judge on the U.S. Court of Appeals for the 9th Circuit. With Kennedy sitting out the case, the court deadlocked 4-4, leaving the lower court’s decision in place.
Another modification will reduce the time to file a reply brief on the merits in some cases. Reply briefs are normally due 30 days after the respondent files its opening brief on the merits, but no later than 2 p.m. seven days before a case is scheduled for oral argument. Under the new rule, the reply brief must be filed no later than 2 p.m. 10 days before the oral argument.
Changes to Rules 29.1. and 29.2 make clear that, despite the arrival of electronic filing at the Supreme Court in recent years, “paper remains the official form of filing,” and the filing of paper copies determines whether a document was filed on time.
A revision to Rule 33.1(g) reduces the word limit for opening briefs on the merits from 15,000 to 13,000 words. However, the court did not adopt a proposed change that would have reduced the word limit for reply briefs from 6,000 to 4,500. A group of Supreme Court practitioners had opposed both changes, but had described the proposed reduction to the word count for reply briefs as “particularly harmful.”
The new rules go into effect on July 1, 2019.
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Relist Watch: The Muller Report
John Elwood reviews Monday’s relists.
I normally try to have Relist Watch written up by Wednesday after the court issues its order list. Here it is late Thursday and I’m just getting it out. It’s not just that I’m lazy, though I am. It’s that I’ve been mulling over the five new relists, and what I think their prospects are for Supreme Court review. In fact, I’ve been mulling these cases so deeply that you could call today’s installment the “Muller Report.” I like the ring of it.
I’ve also spent the extra time coming up with especially funny jokes, dank memes and hilarious GIFs. In fact, they are so good that there’s a danger that if people could just read everything, unrestrained mirth would disrupt the workplace. So I’ve taken the precautionary measure of temporarily obscuring the jokes that pose the greatest risk of disruption until some future national holiday when they can be safely read. I know some of you will be frustrated to read this entire document just to find that all the best bits are blacked out. But the redactions were compelled by the need to prevent harm to ongoing matters.
So let’s get started. Because this first case involves a fatality, there will be no “Cruller Report” jokes even though it also involves a store that sells donuts. City of Newport Beach, California v. Vos, 18-672, presents an issue like one that the Supreme has seen before: whether Title II of the Americans with Disabilities Act requires law enforcement officers to provide accommodations to a violent and mentally ill suspect in the course of bringing the suspect into custody. Gerritt Vos, who was both schizophrenic and under the influence of amphetamines, was acting erratically in a 7-Eleven store in Newport Beach, California, brandishing scissors and cutting the hand of one clerk. Eventually, everyone else fled, leaving Vos alone in the store. Police prepared a “less lethal” weapon that fired rubber projectiles while other officers stood by with AR-15 rifles. When Vos charged out of the store, the officer in charge yelled “Shoot him!” The officer with the rubber projectile weapon fired, but so did the two officers with AR-15s. Vos was fatally wounded. Vos’ parents sued the city and the officers arguing both excessive force and violation of Title II of the ADA.
The district court granted the defendants summary judgment on all claims. A divided panel of the U.S. Court of Appeals for the 9th Circuit affirmed the grant of qualified immunity on the excessive-force claim, but remanded for the district court to consider claims that the city violated Vos’ Fourth Amendment rights. It also held that the city and officers were not entitled to summary judgment on the parents’ ADA and Rehabilitation Act claims, concluding that there were material issues of fact about whether the officers had the time and opportunity to assess the situation and employ accommodations of Vos’ mental illness, including de-escalation, communication or specialized help. Judge Carlos Bea dissented in part, arguing that the use of deadly force in the circumstances was reasonable. The city of Newport Beach and the officers now seek to revisit the 9th Circuit’s ruling. The Supreme Court took a case raising a similar question in City and County of San Francisco v. Sheehan, but dismissed it as improvidently granted. I think the court is definitely going to remind people that it’s important to redact a PDF, not just use black highlighting in the document, or people can still read everything.
Next up is Dahne v. Richey, 18-761. Thomas Richey, a Washington state prisoner serving a sentence for murder, filed a prison grievance in which he alleged that a guard unfairly deprived him of his right to use the prison yard, to shower and to obtain clean clothes. Purportedly because he did not know the guard’s name, he identified her in the grievance as an “extremely obese Hispanic female guard.” But the grievance continued:
It is no wonder why guards are assaulted and even killed by some prisoners. When guards like this fat Hispanic female guard abuse their position as much as they abuse their calorie intake, it can make prisoners less civilized than myself … resort to violent behavior.
As a matter of advocacy, that falls in the “questionable” camp. Prison administrator Dennis Dahne took one look at that off-color report and directed Richey to remove the “unnecessary and inappropriate” language. When the revised grievance still included the rude commentary, Dahne refused to process the grievance, and Richey filed suit alleging violation of his First Amendment right to petition.
The 9th Circuit held that although prison officials may constitutionally request that a petitioner rewrite a grievance, it was a violation of Richey’s rights to refuse to process the grievance because it contained offensive language. Prisons can restrict disrespectful language in the broader prison environment to preserve harmonious relationships, the court held, but there was no legitimate penological objective in restricting speech in a grievance, which it said “did not raise any substantial security concern.” The state of Washington contends that the 9th Circuit is “[a]lone among the circuits” in ruling that prisoners have a First Amendment right to disrespectful language, and that certiorari is warranted to bring the courts into alignment. Tune in next week, when you learn what will happen next week.
Q: What do you call a preview piece discussing CITGO Asphalt Refining Co. v. Frescati Shipping Co., Ltd., 18-565?
A: The “Duller Report.”
Although I won’t question petitioner’s statement that CITGO Asphalt Refining involves an “important issue of contract law concerning risk-allocation in the maritime setting,” the issue is a bit on the dry side. CITGO Asphalt Refining Co. and affiliated companies chartered an oil tanker to carry crude oil to its refinery on the Delaware River. The tanker struck a submerged anchor while docking, spilling crude oil into the river. The case concerns whether a contractual “safe port” or “safe berth” clause in the contract governing the charter providing that CITGO would direct the tanker to a “safe place or wharf” constituted a warranty of safety (as the U.S. Court of Appeals for the 3rd Circuit held in this case), or merely required CITGO to exercise due diligence (as the U.S. Court of Appeals for the 5th Circuit held in 1990). CITGO sought review of that holding previously, but in 2014, the Supreme Court denied review and the case returned to district court, which imposed damages of $ 99.4 million. CITGO again seeks review. The government acknowledges that the 5th Circuit has adopted a different test than other courts, but argues that review is not warranted because its interpretation of the customary safe-berth clause “has attracted no following in the courts or the maritime industry” during the three decades since it was decided, and review is no more warranted now than in 2014. Perhaps the relist means someone at the court disagrees. Disclosure: If you’ve gone to the trouble of copying and pasting this, you now know that Goldstein & Russell, P.C., whose attorneys contribute to this blog in various capacities, is among the counsel to the respondents in this case.
Barton v. Barr, 18-725, involves a fairly arcane question of immigration law. If a lawfully admitted permanent resident is removable from the United States, he may seek cancellation of removal if, among other things, he has “resided in the United States continuously for 7 years after having been admitted in any status.” But the permanent resident’s period of continuous residence is “deemed to end” when, as relevant here, he has “committed an offense referred to in section 1182(a)(2) of this title that renders the alien inadmissible to the United States under section 1182(a)(2) of this title or removable from the United States under section 1227(a)(2) or 1227(a)(4) of this title.” This provision is commonly referred to as the “stop-time rule” because it specifies the circumstances under which the time period for continuous residence is stopped.
Andre Martello Barton, a Jamaican citizen, was not convicted for fraud; his case is no guller report. Just a few months shy of his seventh year in the United States, Barton was convicted of assault, property damage and firearm possession; he was later convicted of drug possession. Thus, unless the “stop-time rule” applied to his offenses, he became eligible for cancellation of removal in about mid-1996. Although Barton was then a lawful permanent U.S. resident, the government argued only that the stop-time rule had been triggered because Barton’s crimes had rendered him inadmissible; it did not argue the crimes had rendered him removable. Barton argued that his crimes could not render him “inadmissible” when he was not actually seeking admission (having been admitted long earlier). The U.S. Court of Appeals for the 11th Circuit denied Barton relief, holding that “an alien can be rendered inadmissible regardless of whether he is actually seeking admission,” but noted that there is a circuit split on the issue. Barton seeks review. The government acknowledges that “the Ninth Circuit has reached a contrary conclusion,” but argues that “intervention would be premature” because the Board of Immigration Appeals has yet to issue an precedential opinion addressing the issue, and “further percolation in the courts of appeals would be beneficial.” The court’s decision to relist definitely means that we’ll have to wait at least another week to find out what they’re doing.
Last up is McGee v. McFadden, 18-7277. Shannon McGee was convicted of criminal sexual contact with his minor stepdaughter and sentenced to life imprisonment without parole. McGee argued that the state failed to disclose Brady evidence when it withheld until a post-trial hearing a letter from a jailhouse snitch saying that “he was willing to help and testify” at McGee’s trial “because he needed the [state lawyer’s] help.” The district court denied McGee’s habeas petition and denied him a certificate of appealability. McGee petitioned the U.S. Court of Appeals for the 4th Circuit to issue a certificate of appealability, but that court denied his request and dismissed the appeal, holding that McGee had not made the required “substantial showing of the denial of a constitutional right.” McGee filed a 39-page handwritten petition arguing that the snitch’s letter was material evidence impeaching a critical state witness that the state was required to disclose under Brady. The court called for the record, clearly indicating it wanted a fuller report. It has now called for a response, and has relisted the case, indicating that one of the justices – I’m guessing her name rhymes with “Yotomayor” – is taking a close look at it.
That’s all for this week. My undying gratitude to Tom Mitsch for compiling the relists.
New Relists
CITGO Asphalt Refining Co. v. Frescati Shipping Co., Ltd., 18-565
Disclosure: Goldstein & Russell, P.C., whose attorneys contribute to this blog in various capacities, is among the counsel to the respondents in this case.
Issue: Whether under federal maritime law a safe-berth clause in a voyage charter contract is a guarantee of a ship‘s safety, as the U.S. Courts of Appeals for the 2nd and 3rd Circuits have held, or a duty of due diligence, as the U.S. Court of Appeals for the 5th Circuit has held.
(relisted after the April 12 conference)
City of Newport Beach, California v. Vos, 18-672
Issues: (1) Whether Title II of the Americans with Disabilities Act requires law enforcement officers to provide accommodations to an armed, violent and mentally ill suspect in the course of bringing the suspect into custody; (2) whether, under the Fourth Amendment “totality of the circumstances” analysis for assessing the reasonableness of force used against a suspect who attacks law enforcement officers, a court must take into account allegedly unreasonable police conduct that took place before the use of force, but foreseeably created the need to use that force; and (3) whether, under the Fourth Amendment’s analysis for use of force, a law enforcement officer’s interest in using deadly force against a suspect threatening an officer’s life is diminished if the assailant is mentally ill.
(relisted after the April 12 conference)
Issue: Whether a lawfully admitted permanent resident who is not seeking admission to the United States can be “render[ed] … inadmissible” for the purposes of the stop-time rule, 8 U.S.C. § 1229b(d)(1).
(relisted after the April 12 conference)
Issue: Whether prison inmates have a First Amendment right to include threatening, abusive and irrelevant language in grievances.
(relisted after the April 12 conference)
Issues: (1) Whether the U.S. Court of Appeals for the 4th Circuit erred when it found no constitutional error when the state failed to disclose Brady evidence, a letter from a jailhouse snitch, until the post-trial hearing for a motion for a new trial; (2) whether the state and federal courts’ decisions were contrary to Giglio v. United States, United States v. Bagley, Brady v. Maryland and Napue v. Illinois when the state failed to disclose material impeachment evidence, a letter from a jailhouse snitch who testified that petitioner confessed to him; and (3) whether the state and federal courts erred in finding that trial counsel rendered effective assistance of counsel when he failed to interview Michael Jones and call him as a witness.
(relisted after the April 12 conference)
Returning Relists
Bostock v. Clayton County, Georgia, 17-1618
Issue: Whether discrimination against an employee because of sexual orientation constitutes prohibited employment discrimination “because of … sex” within the meaning of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2.
(relisted after the January 4, January 11, January 18, February 15, February 22, March 1, March 15, March 22, March 29 and April 12 conferences)
Altitude Express Inc. v. Zarda, 17-1623
Issue: Whether the prohibition in Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a)(1), against employment discrimination “because of … sex” encompasses discrimination based on an individual’s sexual orientation.
(relisted after the January 4, January 11, January 18, February 15, February 22, March 1, March 15, March 22, March 29 and April 12 conferences)
R.G. and G.R. Harris Funeral Homes Inc v. Equal Employment Opportunity Commission, 18-107
Issues: (1) Whether the word “sex” in Title VII’s prohibition on discrimination “because of … sex,” 42 U.S.C. § 2000e-2(a)(1), meant “gender identity” and included “transgender status” when Congress enacted Title VII in 1964; and (2) whether Price Waterhouse v. Hopkins prohibits employers from applying sex-specific policies according to their employees’ sex rather than their gender identity.
(relisted after the January 4, January 11, January 18, February 15, February 22, March 1, March 15, March 22, March 29 and April 12 conferences)
Box v. Planned Parenthood of Indiana and Kentucky, Inc., 18-8
Issues: (1) Whether a state may require health-care facilities to dispose of fetal remains in the same manner as other human remains, i.e., by burial or cremation; and (2) whether a state may prohibit abortions motivated solely by the race, sex or disability of the fetus and require abortion doctors to inform patients of the prohibition.
(relisted after the January 4, January 11, January 18, February 15, February 22, March 1, March 15, March 22, March 29 and April 12 conferences)
Roman Catholic Archdiocese of San Juan, Puerto Rico v. Feliciano, 18-921
Issue: Whether the First Amendment empowers courts to override the chosen legal structure of a religious organization and declare all of its constituent parts a single legal entity subject to joint and several liability.
(relisted after March 22, March 29 and April 12 conferences)
Department of Homeland Security v. Regents of the University of California, 18-587
Issues: (1) Whether the Department of Homeland Security’s decision to wind down the Deferred Action for Childhood Arrivals policy is judicially reviewable; and (2) whether DHS’ decision to wind down the DACA policy is lawful.
(relisted after the January 11 conference; now held)
Issues: (1) Whether the Department of Homeland Security’s decision to wind down the Deferred Action for Childhood Arrivals policy is judicially reviewable; and (2) whether DHS’ decision to wind down the DACA policy is lawful.
(relisted after the January 11 conference; now held)
Issues: (1) Whether the Department of Homeland Security’s decision to wind down the Deferred Action for Childhood Arrivals policy is judicially reviewable; and (2) whether DHS’ decision to wind down the DACA policy is lawful.
(relisted after the January 11 conference; now held)
Daniel v. United States, 18-460
Issues: (1) Whether the Feres doctrine bars service members, or their estates, from bringing claims for medical malpractice under the Federal Tort Claims Act when the medical treatment did not involved any military exigencies, decisions or considerations, and when the service member was not engaged in military duty or a military mission at the time of the injury or death; and (2) whether Feres should be overruled for medical malpractice claims brought under the Federal Tort claims Act when the medical treatment did not involve any military exigencies, decisions or considerations, and when the service member was not engaged in military duty or a military mission at the time of the injury or death.
(relisted after the March 29 and April 12 conferences)
Klein v. Oregon Bureau of Labor and Industries, 18-547
Issues: (1) Whether Oregon violated the free speech and free exercise clauses of the First Amendment by compelling the Kleins to design and create a custom wedding cake to celebrate a same-sex wedding ritual in violation of their sincerely held religious beliefs; (2) whether the Supreme Court should overrule Employment Division, Department of Human Resources of Oregon v. Smith; and (3) whether the Supreme Court should reaffirm Smith’s hybrid-rights doctrine, applying strict scrutiny to free exercise claims that implicate other fundamental rights, and resolve the circuit split over the doctrine’s precedential status.
(relisted after the March 29 and April 12 conferences)
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Abortion providers ask Supreme Court to take up appeal
In early February, the Supreme Court put a temporary hold on a Louisiana law that requires doctors who perform abortions in the state to have the authority to admit patients at a nearby hospital. Chief Justice John Roberts joined the court’s four more liberal justices in granting a request from abortion providers to bar the state from enforcing the law until the providers could file a petition for review of a ruling by the U.S. Court of Appeals for the Fifth Circuit upholding the law. That petition was filed today, setting up the prospect of a major showdown on abortion next term.
Today’s petition was not the first time that the justices have been asked to weigh in on a law requiring abortion providers to have admitting privileges at local hospitals. Less than three years ago, after the death of Justice Antonin Scalia, the court – by a vote of 5-3 – struck down a similar law from Texas. In that case, Texas had defended the law by arguing that the admitting-privileges requirement was intended to protect the health of pregnant women, but Justice Anthony Kennedy joined the court’s liberal justices in holding that there was no evidence that the requirement actually promoted that interest, while at the same time the requirement made it significantly more difficult for women to obtain an abortion.
In the appeal filed today, the Louisiana abortion providers portray the Louisiana law at the heart of their case as virtually identical to the Texas law that the justices struck down in 2016. “If anything,” the providers suggest, the Louisiana law imposes an even greater burden on a woman’s ability to obtain an abortion than the Texas one: The Louisiana law “would shutter every clinic in Louisiana but one, leaving only one doctor to care for every woman seeking an abortion in the state” – which would mean that many women would effectively be unable to get an abortion. Moreover, the providers add, there would be no doctors at all to provide abortions for women after 17 weeks of pregnancy.
The abortion providers urge the justices to grant their petition for review and reverse the 5th Circuit’s ruling upholding the Louisiana law. In their view, that ruling is so at odds with the justices’ decision in the Texas case that briefing and oral argument on the merits are not even necessary. But the makeup of the court has changed substantially since the ruling in the Texas case: The vacancy left by Scalia’s death was filled by Justice Neil Gorsuch, while Justice Brett Kavanaugh has replaced Kennedy, who retired last summer. The justices are likely to rule on the abortion providers’ petition before the court’s summer recess.
This post was originally published at Howe on the Court.
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Argument analysis: Spinning heads and swimming constitutional rights in debates over an accrual rule
McDonough v. Smith, argued Wednesday, saw justices and attorneys repeating metaphors about heads spinning and constitutional rights swimming. The justices seemed inclined to rule for the petitioner (supported by the United States) that his claim was timely and that the limitations period on a civil action should not begin until favorable termination of criminal proceedings. But the likely scope of the ruling remains uncertain.
Respondent Youel Smith prosecuted petitioner Edward McDonough, a former election official, for fraud arising from a primary election; the prosecution was initiated and continued on allegedly fabricated evidence, fabricated affidavits, false testimony and faulty DNA analysis. McDonough was indicted and tried twice, the first trial ending in a mistrial and the second ending in an acquittal. Less than three years after the acquittal, McDonough filed an action in federal district court under 42 U.S.C. § 1983, alleging malicious prosecution and fabrication of evidence before the grand jury and at the two trials, in violation of the Fourth, Fifth, Sixth and 14th Amendments. The lower courts dismissed the fabrication-of-evidence claim as untimely, because the three-year statute of limitations began to run when McDonough became aware of the use of fabricated evidence, which occurred well before his acquittal and thus more than three years before he filed the federal civil action. The issue before the Supreme Court is whether the limitations period instead began to run only when the state criminal proceedings terminated in McDonough’s favor with his acquittal, making his Section 1983 action timely.
Arguments of petitioner McDonough
Neal Katyal represented McDonough, launching the parade of metaphors. Justice Samuel Alito complained that the case had his head spinning because he could not understand how to discuss rules for when a claim accrues without identifying the constitutional right at issue or the elements of that right. Katyal responded that it was unnecessary to identify the source, because either the Fourth Amendment or 14th Amendment “swim to exactly the same result,” prompting Justice Neil Gorsuch to quip that “they don’t swim at all.” (The justices would refer to swimming several more times during the argument.) But Katyal stuck to his position that it did not matter whether this was a Fourth Amendment case, requiring the plaintiff to show lack of probable cause, or a 14th Amendment procedural due process claim, requiring the plaintiff to show a “reasonable probability” that the prosecutor would not have proceeded but for the fabricated evidence. Although these rights might diverge in a hypothetical case, the outcome in this case would be the same.
Justices Ruth Bader Ginsburg and Elena Kagan questioned whether Smith would enjoy absolute prosecutorial immunity for this claim, as he enjoyed absolute immunity from the malicious prosecution claim. Katyal argued that the fabrication claim was different than malicious prosecution, because it focused on the “use and maintenance of the criminal prosecution” and did not require malice as an element, only fabrication of evidence, even reckless fabrication, and a deprivation of liberty.
Gorsuch questioned how the court could adopt a favorable-termination requirement for limitations purposes without deciding whether favorable termination is part of the claim; he wondered whether the court should look for a case allowing it to identify the elements of the fabrication claim, rather than a case in which happenstance caused the plaintiff to “create this rather bespoke tort” to obtain a longer limitations period. Katyal argued that favorable termination is significant as a way to allow criminal defendants to defend themselves without having to pursue simultaneous civil litigation. It serves policy goals of avoiding duplicative and collateral litigation, allowing plaintiffs to pursue their criminal defenses to the end before seeking compensation and deterrence through Section 1983. Katyal added, in response to a question from Ginsburg, that having the federal court stay the civil action is not sufficient because stays are discretionary and many federal courts decline to issue them.
Katyal returned to these policy concerns in his rebuttal, emphasizing the need for the criminal case to conclude and for the plaintiff to wait until favorable termination of that case before seeking civil damages. Katyal added that “it’s quite remarkable to actually have the federal government agreeing with this former criminal defendant” on the need to hold the limitations period pending favorable termination of the prosecution.
Arguments of amicus curiae United States
Principal Deputy Solicitor General Jeffrey Wall argued for the United States as amicus curiae urging reversal. Wall said the “parties’ presentations may make this case seem more difficult than it is,” arguing that favorable termination is an element of a Section 1983 claim for fabrication of evidence. In an exchange with Alito, Gorsuch and Justice Brett Kavanaugh, Wall identified the claim as grounded in procedural due process, akin to claims that prosecutors failed to disclose exculpatory evidence, in which the use of fabricated evidence or perjured testimony is the same as failing to disclose evidence. Wall then clarified that favorable termination is an element of the Section 1983 damages claim, although not of the constitutional claim. The United States could prosecute a line attorney who fabricated evidence and used it at trial; an individual can sue for damages, which collaterally attacks the state criminal process, only if that process terminated in the individual’s favor.
Kagan asked whether the claim could be one for substantive due process, in that simple fabrication of evidence is so awful as to shock the conscience and violate the Constitution. Wall rejected that position, emphasizing the Supreme Court’s reluctance to expand substantive due process and precedent holding that presentation of false evidence is a procedural due process concern. The key, Wall argued, was the deprivation of the defendant’s liberty — the restrictions on travel while on bail and perhaps the obligation to appear for trial.
Arguments of respondent Smith
Thomas O’Connor argued for Smith, insisting that “my head has been spinning from this case for a lot longer than yours.” O’Connor pushed the point that McDonough’s claimed constitutional right to be free from fabricated evidence did not exist, but if it did, it sounded in substantive due process. Ginsburg challenged that point, because a fair trial is the “most fundamental procedural right” and the dramatic allegations of perjury throughout made this a “corrupt process.” O’Connor declined to dispute that, prompting Justice Sonia Sotomayor to suggest that each use of fabricated evidence until acquittal constitutes “either a continuing violation or a finishing of the accrual time.” O’Connor responded that each isolated, distinctive use would be a distinct violation, with the claim accruing when the use occurred. Kagan summarized O’Connor’s argument, a summary with which he agreed — a favorable termination element makes sense when a claim has as a component the deprivation of liberty, but not when the claim, like this one, arises from the fabrication itself and does not require that deprivation.
Chief Justice John Roberts, Justice Stephen Breyer, Sotomayor and Kavanaugh engaged O’Connor on policy reasons for a favorable-termination requirement, regardless of the source of the constitutional right or how the action is characterized. All expressed concern for the confusion created by simultaneous civil and criminal proceedings; for interfering with the orderly division between criminal proceedings and civil tort suits; for complicating strategy for the defendant and perhaps prejudicing him in his criminal proceeding; and for rendering prosecutors (the targets of any civil action) less inclined to enter a plea agreement. Why not, Kavanaugh asked, “choose the more orderly, practical approach” of allowing the criminal proceedings to conclude rather than encouraging plaintiffs to routinely file Section 1983 actions during the criminal case? O’Connor urged the court not to “sacrifice[] the correct to the convenient,” suggesting a stay of civil proceedings as the remedy. But Roberts doubted that a stay eliminated the complications and burdens on the criminal defendant. And Kavanaugh suggested that routine stays reflect that these cases should not proceed simultaneously, but that the criminal defendant should be able to await conclusion of the criminal case before the clock begins to run on his civil action.
Editor’s Note: Analysis based on transcript of oral argument.
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Argument analysis: Court worries that state trust tax may tax trust income that is never distributed to in-state beneficiary
On Tuesday, the Supreme Court heard oral argument in North Carolina Department of Revenue v. Kimberley Rice Kaestner 1992 Family Trust. North Carolina hopes to convince the court that its method of taxing trusts, with jurisdiction based on an in-state beneficiary, passes constitutional muster. The court greeted the state’s arguments with significant skepticism.
As a quick recap, North Carolina’s Department of Revenue is defending tax liability imposed on income earned by the Kimberley Rice Kaestner 1992 Family Trust between 2005 and 2008. During this period, the trust’s beneficiaries were all North Carolina residents, but the trust itself was administered in New York by trustees who were not North Carolina residents, and the trust made no distributions in the relevant period. (The trust concedes, as it must, that distributions actually paid to a North Carolina beneficiary would be taxable in that state as income to the beneficiary.)
North Carolina Solicitor General Matthew Sawchak, representing the Department of Revenue, opened his argument by emphasizing that the trust beneficiaries are the “true owners of trust income” and “the benefits and protections” provided by the state to its residents provided sufficient ground for the state to tax a beneficiary’s income, even while held in trust.
Several justices, however, seemed unpersuaded by Sawchak’s true-ownership argument. Sawchak conceded that the trustee had complete discretion over both the timing of distributions and their allocation among beneficiaries. As Justice Sonia Sotomayor asked Sawchak, “What makes it your right under any circumstance to tax all of the trust income where there’s no guarantee that she is going to receive all of it at any point?”
Justice Stephen Breyer also questioned the fairness of the state’s pro-rata approach, which assumed trust beneficiaries would split trust income equally, even if the trust document granted the trustee discretion as to how to allocate distributions. Breyer was concerned with the possibility that a nonresident would end up with the lion’s share of trust distributions. In that case, North Carolina’s pro-rata division of trust income would overstate the income appropriately attributed to the state. Breyer, somewhat quixotically, also seemed to believe that the state should offer a present-value discount on trust income to reflect the fact that the beneficiary did not immediately receive the benefit of the income.
Finally, the justices also seemed concerned about how North Carolina’s tax would affect other states’ efforts to tax the trust income based on in-state administration or the residence of a trustee. Sawchak argued that North Carolina’s credit system solved any problems of multi-state taxation and tried to pivot to the state’s argument that jurisdiction based on beneficiary residence prevented tax avoidance. Sawchak’s point was that worries about multiple tax burdens on trust income were misguided given the ease with which trusts could move to avoid taxes based on other characteristics.
He was not allowed to linger on this point, however, because Justice Neil Gorsuch and Sotomayor both wanted to know how North Carolina’s position squared with existing precedent. Both justices suggested that the state’s position required the court to overrule prior decisions on state jurisdiction over trusts. Sawchak tried to distinguish two of these cases, Safe Deposit Trust Co. v. Virginia and Brooke v. Norfolk, as property tax cases. Gorsuch made clear that he was not persuaded, observing that Sawchak was “slicing the baloney a little too thinly.” Sawchak then fell back on the argument that the cases had been implicitly overruled by the court’s modern due process jurisprudence. Addressing questions about the court’s decision in Hanson v. Denckla, Sawchak argued that Hanson was about adjudicative and not tax jurisdiction. Sawchak returned to this point in his rebuttal, though Gorsuch seemed to remain skeptical.
David O’Neil, representing the trust, began by arguing that trust income does not belong to the beneficiary. As he observed, Kimberley Kaestner “didn’t possess it or control it. She didn’t access it. She couldn’t use it. … She didn’t receive any of it, and she had no guarantee that she would ever receive a penny of it in North Carolina or anywhere else.”
Justice Elena Kagan emerged as the justice most skeptical of the trust’s position. She flatly rejected O’Neil’s argument that the beneficiary does not benefit from undistributed trust income, noting that “a person in North Carolina who’s making $ 100,000 a year and a person in North Carolina who’s making that exact same amount of income and has a $ 20 million trust are really in two different positions.” As a result, Kagan suggested that as among establishing jurisdiction based on trust administration, trustee residence and beneficiary residence, beneficiary residence had the most compelling claim. As she noted, “all the benefit of this trust is going to this person who lives down in North Carolina.”
Other justices expressed far less skepticism, and O’Neil took several opportunities to rebut the state’s claims. For example, in response to Chief Justice John Roberts’ questions about the taxation of trust distributions, O’Neil addressed North Carolina’s concern that a taxpayer victory here would open the doors to tax abuse. O’Neil suggested that states already have a constitutional mechanism to solve this problem: throwback statutes that allow states to tax “income that had accumulated in previous years and that the trustee did not pay tax on.”
At one point, several justices engaged O’Neil in a colloquy about the constitutional limits of a state wealth tax, before Breyer concluded that “I can’t reach [this] really interesting legal question” because it wasn’t presented in this case.
O’Neil concluded by addressing the state’s argument that last year’s decision in South Dakota v. Wayfair, in which the court ruled that states can require retailers who don’t have a physical presence in the state to collect tax on sales to state residents, changes the result in this case. Noting that Wayfair focused on the taxpayer’s own conduct in the state, he suggested the proper analogy to that case would be the claim of jurisdiction over Wayfair’s income based on the residence of a beneficial shareholder.
Prior to the oral argument, court observers (including me) had suggested that this case offered the court an opportunity to clarify its due process doctrine in state tax cases. The court’s questions, focused as they were on the particular problems of trust taxation, suggest interest in a narrower opinion. And states hoping the court would bless the taxation of trust income based on in-state beneficiaries should probably start considering other ways of taxing this income. Now, about the state wealth tax …
Editor’s Note: Analysis based on transcript of oral argument.
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