Freeman v. Quicken Loans, Inc.

Issues

Whether the Real Estate Settlement Procedures Act extends its prohibition to all cases where a settlement services provider retains fees for services it did not  perform,  or is more limited in prohibiting only kickback and referral arrangements where the service provider shares fees with a third party.

 

Quicken Loans charged three couples with mortgage discount fees that were allegedly unearned. One couple, the Freemans, initiated a civil action under Section 2607(b) of the Real Estate Procedures Act of 1974 (“RESPA”), claiming that RESPA prohibits a settlement services provider from charging any unearned fees. The district court dismissed the suit, holding that Section 2607(b) only applies to fees split with another culpable party. The Fifth Circuit affirmed. Now, after consolidating their case with the other couples’ claims, the Freemans argue that the Fifth Circuit’s decision should be overturned because the intent of RESPA was to proscribe all unearned fees, including fees charged by settlement service providers acting unilaterally. Quicken Loans counters that Congress intended to restrict only split fees, protecting consumers such as the Freemans through extensive disclosure requirements. The Supreme Court’s decision will clarify the judicial interpretation of Section 2607(b) and determine which fees RESPA forbids.

Questions as Framed for the Court by the Parties

Whether Section 8(b) of the Real Estate Settlement Procedures Act prohibits a real estate settlement services provider from charging an unearned fee only if the fee is divided between two or more parties.

Tammy and Larry Freeman secured a mortgage from Quicken Loans ("Quicken"), a settlement services provider, and were charged a “loan discount fee” of $980. See 

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Free Enterprise Fund and Beckstead and Watts, LLP v. Public Company Accounting Oversight Board

Issues

Whether the Sarbanes-Oxley Act violates the Constitution’s separation of powers doctrine by stripping the President of authority to select or remove members of the Public Company Accounting Oversight Board (“Board”), and whether the Board members are properly categorized as “inferior officers”, the Securities and Exchange Commission (“SEC”) is properly categorized as a “Department”, and the five commissioners are properly the “Head” of the SEC, so as to be consistent with the Constitution’s Appointments Clause.

 

In 2002, Congress passed the Sarbanes-Oxley Act in reaction to the perceived failures of the self-regulatory system for accounting procedures that led to the infamous Enron and WorldCom scandals. The Act established the Public Company Accounting Oversight Board to supervise the audit of public companies. Although the Board is under the authority of the Securities and Exchange Commission, its members are not subject to direct removal or appointment by the President and it retains the power to set and raise its own budget. In this case, the Supreme Court will determine whether the Act’s establishment of the Board is an unconstitutional violation of separation of power principles and whether the Board’s structure violates the Appointments Clause. Petitioners argue that the Act violates  separation  of powers by diminishing the President’s ability to control or supervise Board members. Respondents argue that the Act does not violate  separation  of powers because Congress can grant exclusive appointment and removal authority to the Heads of Departments. Petitioners additionally argue that the Board’s structure violates the Appointment Clause because Board members are Principal Officers and, even if they were to be construed as Inferior Officers, their appointment is still unconstitutional, because the SEC is not a “Department” and its Commissioners are not the SEC’s “Head,” as required by the Clause. In response, Respondents argue that Board members are inferior officers because they are controlled directly by the  SEC,  and that the SEC  is in fact  a “Department” over which the President can exercise broad control and the Commission is its “Head” because it exercises the SEC’s collective powers. The case will ultimately determine the permissibility of the scheme currently in place that regulates US financial markets.

Questions as Framed for the Court by the Parties

1. Whether the Sarbanes-Oxley Act of 2002 violates the Constitution's separation of powers by vesting members of the Public Company Accounting Oversight Board ("PCAOB") with far-reaching executive power while completely stripping the President of all authority to appoint or remove those members or otherwise supervise or control their exercise of that power, or whether, as the court of appeals held, the Act is constitutional because Congress can restrict the President's removal authority in any way it "deems best for the public interest."

2. Whether the court of appeals erred in holding that, under the Appointments Clause, PCAOB members are "inferior officers" directed and supervised by the Securities and Exchange Commission ("SEC"), where the SEC lacks any authority to supervise those members personally, to remove the members for any policy-related reason or to influence the members' key investigative functions, merely because the SEC may review some of the members' work product.

3. If PCAOB members are inferior officers, whether the Act's provision for their appointment by the SEC violates the Appointments Clause either because the SEC is not a "Department" under Freytag v. Commissioner, 501 U.S. 868 (1991), or because the five commissioners, acting collectively, are not the "Head" of the SEC.

The notorious financial accounting scandals involving Enron and Worldcom demonstrated the inadequacies of the self-regulatory reporting requirements governing many public companies. See Free Enterprise Fund v.

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Additional Resources

• Wex: Law about Securities

• Wex: Law about Separation of Powers

• Securities Prof Blog, Law Professor Blogs Network: Securities

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Franchise Tax Board of the State of California v. Hyatt

Issues

May a private citizen sue a state agency in a foreign state’s court? If so, must that state’s court treat the foreign state agency at least as favorably as it would a similar agency from its own state?

Court below

 

The Supreme Court must determine the boundaries of Eleventh Amendment sovereign immunity and comity as applied to a state that has been unwillingly brought into another state’s courts. See Brief for Petitioner, Franchise Tax Board of the State of California at 1. The Franchise Tax Board of the State of California (“FTB”) looks to reverse Nevada v. Hall by expanding sovereign immunity to suits brought by private citizens in other states or, alternatively, to find that Nevada violated principles of full faith and credit, comity, and equality, by treating the FTB differently than it would a similar Nevada agency. See id. at 25. Conversely, Hyatt argues that Nevada v. Hall must be upheld as a matter of stare decisis and that the privilege of comity does not require the forum state, in all circumstances, to treat another state’s agency the same as the forum state’s equivalent agency. See Brief for Respondent, Gilbert P. Hyatt at 17. The Supreme Court’s decision will determine where states may be haled into court by a private citizen and to what degree states can be civilly liable for violating the law. See Brief of Amicus Curiae Multistate Tax Commission in Support of Petitioner at 4, 6.

Questions as Framed for the Court by the Parties

  1. May Nevada refuse to extend to sister States haled into Nevada courts the same immunities Nevada enjoys in those courts?
  2. Should Nevada v. Hall, 440 U.S. 410 (1979), which permits a sovereign State to be haled into the courts of another State without its consent, be overruled?

In 1991, Gilbert P. Hyatt (“Hyatt”) began to receive large amounts of income from licensing fees for a computer chip patent. See Franchise Tax Board v. Hyatt, 335 P.3d 125, 131 (Nev.

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Fox v. Vice

Issues

1. When a plaintiff asserts both frivolous and nonfrivolous claims based on the same set of facts, can a court award the defendant attorneys’ fees for the frivolous claims under 42 U.S.C. § 1988, even though the defendant still has to defend against the nonfrivolous claims?

2. When a court awards a defendant attorneys’ fees under Section 1988 after dismissing a frivolous claim, must the court attempt to match the amount of the fees to the cost of defending the frivolous claim?

 

In 2005, Petitioner Ricky D. Fox ran for Police Chief of Respondent Vinton, Louisiana ("the Town"). During the campaign, Respondent Billy Ray Vice, the incumbent Police Chief, attempted to blackmail Fox and damage his public image. Fox won the  election,  but sued Vice and the Town for attempting to derail his campaign. Among Fox’s claims was a civil rights allegation under a federal statute, 42 U.S.C. § 1983. Following discovery in Fox’s civil case, Vice and the Town moved for summary judgment on the federal claim. Fox withdrew the claim, conceding that he failed to assert the required elements, but continued to pursue his state-based tort claims. The defendants then moved for attorneys’ fees under 42 U.S.C. § 1988, arguing that Fox’s federal claim was frivolous. The district court granted the defendants’ motion, and the Fifth Circuit affirmed on appeal. Fox argues that in a case with factually intertwined claims, a defendant must prevail over an entire lawsuit in order to receive attorneys’ fees. Vice and the Town, however, claim that nothing in Section 1988 prevents defendants from receiving attorneys’ fees for individual frivolous claims. The Supreme Court’s  decision in this case  will address Section 1988’s purpose of encouraging meritorious civil rights  claims,  while discouraging groundless claims.

Questions as Framed for the Court by the Parties

1. May a court award attorneys’ fees to a defendant under 42 U.S.C. § 1988 based on a voluntary dismissal of one claim in an action where the defendants must still defend against nonfrivolous claims that are factually intertwined?

2. May a court award defendants all of the attorneys’ fees they incurred in an action under § 1988 without any effort to isolate the fees attributable to the single dismissed claim?

In early 2005, Ricky D. Fox, a retired state trooper, announced his intention to run for Police Chief of his hometown of Vinton, Louisiana ("the Town"). See Fox v. Vice, 594 F.3d 423, 425 (5th Cir. 2010); Brief for Petitioner, Ricky D.

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Acknowledgments

The authors would like to thank former Supreme Court Reporter of Decisions Frank Wagner for his assistance in editing this preview.

Additional Resources

• Section 1983 Blog: Attorneys’ Fees in Civil Rights Cases: A Brief Summary (Sept. 1, 2009)

• Crime & Federalism: Sec. 1988/Attorneys’ Fees Case (July 19, 2005)

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Fowler v. United States

Issues

Whether the government must only prove that the transfer of information regarding the commission of a federal crime to federal law enforcement officers or judges was "possible” absent the homicide; or whether some higher level of certainty is required under 18 U.S.C. § 1512(a)(1)(C).

 

Petitioner Charles Fowler murdered a local police officer after the officer approached him and his associates, who were preparing to rob a bank. Fowler was convicted under 18 U.S.C. § 1512(a)(1)(C), which makes it a federal crime to murder a witness to a federal crime with the intent of preventing that witness from communicating with federal law enforcement officials. Fowler challenged his conviction, arguing that the government did not show with sufficient certainty that the officer he murdered was reasonably likely to communicate with federal authorities, had he not been killed. Fowler asserts that failing to require the government to show at least a reasonable likelihood of such communication is inconsistent with the statutory language, and would disrupt the balance between state and federal criminal jurisdiction. The United States responds that requiring such a standard would undermine the statute’s purpose of maintaining the integrity of the federal justice system, and that allowing a lower standard will not disrupt the state-federal balance. The Supreme Court’s decision will clarify the standard the government must meet in prosecuting Section 1512(a)(1)(C) violations, and resolve uncertainty among the circuit courts on this point.

Questions as Framed for the Court by the Parties

Whether a defendant may be convicted of murder under 18 U.S.C. § 1512(a)(1)(C) without proof that information regarding a possible federal crime would have been transferred from the victim to federal law enforcement officers or judges.

In March 1998, Haines City Police Officer Christopher Todd Horner was found dead in a Florida cemetery with a bullet in the back of his head. See United States v. Fowler, 603 F.3d 883, 884–85 (11th Cir.

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Foster v. Chatman

Issues

Should the Georgia courts have recognized race discrimination under Batson v. Kentucky, which held that race cannot be used as a basis for striking jurors, where the prosecution used peremptory challenges to strike each potential black juror, resulting in an all-white jury in the petitioner’s death penalty case?

 

This case presents the Supreme Court with an opportunity to determine whether the Georgia courts erred in determining that the prosecution’s peremptory challenges were not based on race discrimination. See Brief for Petitioner, Timothy Tyrone Foster at 2–4; Brief for Respondent, Bruce Chatman, Warden, at 1–2. Petitioner Timothy Tyrone Foster contends that he was denied due process and the right to an impartial  jury,  because the prosecution used peremptory challenges to strike black jurors on the basis of race. See Brief for Petitioner at 2–3. Foster argues that the prosecution’s jury selection notes demonstrate intent to exclude black jurors from the jury and that the prosecution’s purported reasons for striking the black prospective jurors are insufficient in light of the corresponding notes. See id. at 27–28. Respondent Bruce Chatman counters that the prosecution established sufficient justification for striking each prospective black juror and that the notes were prepared in anticipation of a Batson challenge. See Brief for Respondent at 1–2. The Supreme Court’s  decision in this case  will provide greater clarity as to what constitutes a violation  under  Batson v. Kentucky.

Questions as Framed for the Court by the Parties

Did the Georgia courts err in failing to recognize race discrimination under Batson v. Kentucky in the extraordinary circumstances of this death penalty case?

In 1986, Timothy Tyrone Foster was arrested for the murder of 79-year-old Queen Madge White in Rome, Georgia. See Foster v.

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Forest Grove School District v. T. A.

Issues

Whether a school district is liable for the expenses that a disabled student incurred by pursuing private education when that student did not first attempt to seek help in a public school facility, as mandated by statute.

 

In 2000, T.A.'s parents realized that their son was a troubled teenager, and though it was suspected that he might have a learning disability, his school district determined that he was not disabled and therefore not entitled to special education under the Individuals with Disabilities Education Act. T.A.'s problems continued and in 2003 his parents placed him in a private school. In 2004, a hearing officer determined that T.A. was disabled, and that because Forest Grove School District had failed to offer him free appropriate public education, the district had to reimburse T.A.'s parents for the cost of the private school. The school district appealed, and the Ninth Circuit reversed, holding that damages were not required because T.A.'s parents removed him unilaterally, without his ever having received special education services from a public agency. In this case, the Court will determine whether parents can unilaterally make this decision and then expect the school district to reimburse them, or if they must wait for action by the school district.

Questions as Framed for the Court by the Parties

Whether the Individuals with Disabilities Education Act permits a tuition reimbursement award against a school district and in favor of parents who unilaterally place their child in private school, where the child had not previously received special education and related services under the authority of a public agency.

After years spent in the Forest Grove School District, T.A. left in the middle of his junior year of high school, when his parents decided to put him in a private school. See Forest Grove School District v. T.A., 523 F.3d 1078, 1081 (9th Cir. 2008). T.A.

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Florida v. Powell

Issues

Must police officers expressly advise a suspect of his or her right to an attorney during questioning?

Court below

 

Kevin Powell was arrested on suspicion of illegally owning a firearm and, after allegedly waiving his rights to counsel as required by Miranda v. Arizona, confessed during questioning. Powell was convicted on the basis of that confession. On appeal, Powell's conviction was overturned on the ground that the warnings read to Powell failed to adequately inform him of his right to have an attorney present during questioning. The Florida Supreme Court affirmed, holding that a suspect must be expressly advised of his or her right to have an attorney present while he or she is being questioned. The Supreme Court's decision will clarify Miranda’s requirements regarding advising a suspect of his or her right to counsel during questioning. This case will resolve a circuit split on the issue and affect law enforcement practices during interrogations.

Questions as Framed for the Court by the Parties

(1) Whether the decision of the Florida Supreme Court holding that a suspect may be expressly advised of his right to counsel during custodial interrogation, conflicts with Miranda v. Arizona and decisions of federal and state appellate courts.

(2) And if so, does the failure to provide express advice of the right to the presence of counsel during questioning vitiate Miranda warnings which advise of both (a) the right to talk to a lawyer “before questioning” and (b) the “right to use” the right to consult a lawyer “at any time” during questioning?

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Additional Resources

· Annotated U.S. Constitution: Fifth Amendment

· Stephen Brunette, Miranda Warning Under Scrutiny, Brunette Law Blogs (Jan. 29, 2009)

· Crawford, Kimberly A. Constitutional Rights to Counsel During Interrogation: Comparing Rights Under the Fifth and Sixth Amendments, 71 The FBI Law Enforcement Bull. 28 (2002)

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Ziglar v. Abbasi

Issues

Did the Second Circuit err in deciding that non-citizens’ Fifth Amendment claims did not require Bivens “new context” analysis, that the relevant government officials were not entitled to qualified immunity, and that those non-citizens’ claims met Ashcroft v. Iqbal pleading requirements?

This case first asks the Supreme Court to determine whether non-citizens’ claims against government officials who arrested them in connection with the September 11, 2001 attacks and subjected them to harsh conditions during their detention arose in a “new context” under Bivens. Second, it asks whether the government officials were erroneously denied qualified immunity, which would preclude the government officials’ liability for their involvement in the non-citizens’ arrest and detention. Third, this case asks whether the pleading requirements of Ashcroft v. Iqbal are satisfied where the pleading relies on hypothetical scenarios and assumed discriminatory intent. James W. Ziglar, the petitioner, argues that a Bivens remedy is not applicable in this case because Bivens applies to individual government officials’ behavior, not policy concerns such as national security and immigration. Ziglar also argues that the government officials’ actions were reasonable within the context, given the national security concerns, and that the government officials should, therefore, be precluded from liability for their actions. Lastly, Ziglar argues that the respondent Ahmer Iqbal Abbasi failed to demonstrate sufficient evidence to support his claim against the government officials. Meanwhile, Abbasi argues that harsh treatment in federal detention is not a new context under Bivens, that government officials are aware that the Equal Protection Clause categorically prohibits race-based government action, and that Abbasi’s claim satisfied Iqbal’s facial plausibility standard. The Supreme Court’s decision in this case will impact the balance between government officials’ qualified immunity and detained non-citizens’ constitutional rights.

Questions as Framed for the Court by the Parties

  1. Did the United States Court of Appeals for the Second Circuit, in finding that respondents' Fifth Amendment claims did not arise in a "new context" for purposes of implying a remedy under Bivens v. Six Unknown Named Agents Of The Federal Bureau Of Narcotics, 403 U.S. 388 (1971), err by defining "context" at too high a level of generality where respondents challenge the policy decisions taken in the immediate aftermath of the attacks of September 11, 2001, by petitioner James W. Ziglar, then the Commissioner of the United States Immigration And Naturalization Service, the then-Attorney General of the United States, and the then-Director of the Federal Bureau of Investigation regarding the conditions of confinement of persons illegally in the United States whom the FBI had lawfully arrested and detained in connection with its investigation of the September 11 attacks, each of whom came from the same part of the world as, and shared ethnic and religious affiliations with, the September 11 attackers (many of whom themselves were illegally in the United States), thereby implicating concerns regarding national security, immigration, and the separation of powers that strongly counsel against judicial creation of such a remedy?
  2. Did the court of appeals, in denying qualified immunity to petitioner Ziglar for his official actions in the immediate aftermath of the attacks of September 11, 2001, err: (A) by defining "established law" at too high a level of generality, thereby failing to recognize that clearly-established law did not make it apparent to all but the plainly incompetent or those who knowingly violate the law that Mr. Ziglar's specific conduct violated the rights of those detainees in the specific context of this case; and (B) by finding that even though the applicability of 42 U.S.C. § 1985(3) to the actions of federal officials like petitioner Ziglar was not clearly established at the time in question, respondents nevertheless could maintain a§ 1985(3) claim against Mr. Ziglar so long as his conduct violated some other clearly established law?
  3. Did the court of appeals err in finding that respondents' Fourth Amended Complaint meets the pleading requirements of Ashcroft v. Iqbal, 556 U.S. 662 (2009), because that complaint relies on allegations of hypothetical possibilities, conclusional assumptions, and unsupported insinuations of discriminatory intent that, at best, are merely consistent with petitioner Ziglar's liability, but which are also consistent with the conclusion that Mr. Ziglar acted with a non-punitive and nondiscriminatory intent to detain in restrictive confinement aliens who were illegally in the United States and who had potential connections to those who had committed terrorist acts, thereby rendering respondents' claims implausible under Iqbal?

This case began over thirteen years ago when eight Arab and Muslim non-citizens brought a claim against high-ranking federal officials who were involved in the government’s investigation into the events of September 11, 2001, when al Qaeda’s attack on American soil caused the death of nearly 3,000 people. See Turkmen, et al. v. Hasty, et al., 789 F.3d 216, at 3 (2nd Cir. 2015).

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Midland Funding v. Johnson

Issues

Is it unlawful for a creditor to file an accurate proof of claim for a time-barred debt in a bankruptcy proceeding?

This case provides the Supreme Court with the opportunity to resolve a conflict over the interplay between the Fair Debt Collection Practices Act (“FDCPA”) and the Bankruptcy Code. The parties disagree over whether a creditor may file an accurate proof of claim for a time-barred debt in a bankruptcy proceeding. Petitioner, Midland Funding, LLC (“Midland Funding”) argues that the Bankruptcy Code creates a right to file time-barred claims and that filing such claims does not violate the FDCPA. Midland Funding asserts that filing claims for time-barred debts helps to fulfill the objectives of the Bankruptcy Code, such as collectively addressing all claims against the bankruptcy estate. Respondent, Aleida Johnson, argues alternatively that filing time-barred claims is an unfair, misleading practice that violates the FDCPA and does nothing to further the goals of the bankruptcy process. Johnson contends that creditors file stale claims solely in hopes of taking advantage of malfunctions in the legal process and that these claims waste judicial resources.

Questions as Framed for the Court by the Parties

  1. Whether the filing of an accurate proof of claim for an unextinguished time-barred debt in a bankruptcy proceeding violates the Fair Debt Collection Practices Act.
  2. Whether the Bankruptcy Code, which governs the filing of proofs of claim in bankruptcy, precludes the application of the Fair Debt Collection Practices Act to the filing of an accurate proof of claim for an unextinguished time-barred debt.

In 2014 Respondent, Aleida Johnson, filed for bankruptcy under Chapter 13 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Alabama. See Johnson v. Midland Funding, 823 F.3d 1334, 1335 (2016). Petitioner, Midland Funding, LLC, had previously purchased Johnson’s $1,879.71 defaulted credit card debt.

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