CIGNA Corp. v. Amara

Issues

When a corporation’s summary plan description and actual retirement benefit plan are inconsistent, is the proper standard for measuring harm a standard of “likely harm” rebuttable by the defendant after a showing of “harmless error,” or must a plaintiff show “detrimental reliance” on the inconsistency?

 

CIGNA Corporation changed its employee retirement plan from a traditional defined benefits plan to a cash balance plan. Under the Employee Retirement Income Security Act (“ERISA”), companies that change their retirement plan must release a summary plan description (“SPD”) that outlines the changes for employees in a manner that the average employee can understand. CIGNA released an SPD that described the change but did not mention a “wear-away” period during which the enrolled employees would continue earning credits under the plan while their minimum benefit would remain the same for a period of time. The Respondents, current and former CIGNA employees, sued in federal court, alleging that the inconsistency between the SPD and the actual benefit plan violated ERISA. The district court found for the plaintiffs, using a standard of “likely harm” to determine whether the employees were harmed by the inconsistency between the SPD and the original plan, and the Second Circuit affirmed. CIGNA appealed, arguing that a showing of “detrimental reliance” on the part of the employees is required before they can receive a remedy. The Court’s decision will likely affect the contents of SPDs and the availability of pension benefit plan class actions.

Questions as Framed for the Court by the Parties

Whether a showing of "likely harm" is sufficient to entitle participants in or beneficiaries of an ERISA plan to recover benefits based on an alleged inconsistency between the explanation of benefits in the Summary Plan Description or similar disclosure and the terms of the plan itself.

Respondents, Janice C. Amara and others (collectively “Amara”), are current and former employees of CIGNA Corporation. See Amara v. CIGNA Corp., 534 F. Supp. 2d 288, 295 (D. Conn.

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Additional Resources

· United States Department of Labor: Employee Retirement Income Security Act

· Society for Human Resource Management, Allen Smith: Supreme Court Will Review ERISA Plaintiffs' Showing in Summary Plan Description Case (July 7, 2010)

· Richard Glass: Is It Time to Re-Examine What it Means to Fulfill Your 401(K) Fiduciary Responsibilities? (Mar. 10, 2008)

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Christopher v. SmithKline Beecham Corp.

Issues

Should a court provide deference to the Secretary’s interpretation of the FLSA and hold that pharmaceutical sales representatives are outside salesmen, thereby exempt from the required time-and-a-half overtime wages?

 

The Fair Labor Standards Act of 1938 (“FLSA”) requires employers to pay employees one-and-a-half times their normal wages for any time worked over forty hours in a given week, but exempts “outside salesmen” from this overtime pay requirement. Respondent GlaxoSmithKline (“GSK”) refused to pay overtime to petitioners Michael Christopher and Frank Buchanan, whom it employed as pharmaceutical sales representatives, because it considered them to be “outside salesmen.” Christopher and Buchanan sued, arguing that they were not “outside salesmen” under the Secretary of Labor’s interpretation. The Supreme Court will determine whether that interpretation is entitled to deference and whether Christopher and Buchanan are subject to the FLSA’s outside salesman exemption.

Questions as Framed for the Court by the Parties

The questions presented are: (1) Whether deference is owed to the Secretary of Labor’s interpretation of the FLSA’s outside sales exemption and related regulations; and (2) Whether that exemption applies to pharmaceutical sales representatives.

Congress enacted the FLSA in response to inequitable depression-era working conditions. See 29 U.S.C.

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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.

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Christian Legal Society v. Martinez

Issues

Whether a state law school may officially require that a student organization make its membership open to all students as a condition of receiving certain benefits associated with official recognition.

 

The Hastings Christian Legal Society (“CLS”) required that members agree with its core religious beliefs and pledge to live accordingly. Due to this requirement, the University of California-Hastings College of Law refused to recognize CLS as a registered student organization. Specifically, CLS’s membership requirement violated a nondiscrimination policy prohibiting registered student organizations from discriminating on the basis of religion or sexual orientation. CLS argued that Hastings violated its First Amendment right to free association and free exercise of religion by denying it an exemption from the nondiscrimination policy. The Ninth Circuit rejected CLS’s claims, holding that the school’s policy was viewpoint-neutral and reasonable in light of the school’s educational mission. The Supreme Court’s decision will settle a circuit split over whether a public school can require a religious student organization to open its membership to all students, regardless of their beliefs

Questions as Framed for the Court by the Parties

Whether the Ninth Circuit erred when it held, directly contrary to the Seventh Circuit’s decision in Christian Legal Society v. Walker, 453 F.3d 853 (7th Cir. 2006), that the Constitution allows a state law school to deny recognition to a religious student organization because the group requires its officers and voting members to agree with its core religious viewpoints.

Respondent University of California-Hastings College of Law (“Hastings”) is a public law school in San Francisco. See Brief for Petitioner, Hastings Christian Legal Society (“CLS”) at 2. Hastings maintains a program to support registered student organizations (“RSO”), providing, among other benefits, funding and access to school facilities. See 

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Additional Resources

• Annotated U.S. Constitution: First Amendment, Right of Association

• Michael C. Dorf, The Supreme Court Reviews a Conflict Between Equality and Freedom of Association, Findlaw’s Writ (Dec. 14, 2009).

• Dorf on Law: Another Perspective on Christian Legal Society v. Martinez (Dec. 14, 2009)

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Cherokee Nation of Oklahoma v. Thompson; Thompson v. Cherokee Nation of Oklahoma

 

This case raises important issues regarding the nature of the federal government's contractual obligations, particularly in the context of ongoing relations with the Native American nations. The U.S. Supreme Court granted certiorari to resolve a split between the between the Court of Appeals for the Federal Circuit and the Tenth Circuit Court of Appeals over whether Indian tribes were contractually or statutorily entitled to recover administrative costs incurred while performing self-determination contracts under the Indian Self-Determination and Education Assistance Act ("ISDA"). The Court must decide whether the government is obligated to fully fund programs based on contracts with the tribes, whether there are any limits to what the government is required to provide under these arrangements, and whether the government possessed the funding to cover the administrative costs of these programs.

In 1975, Congress passed the ISDA to promote tribal autonomy and self-governance by allowing Indian tribes to manage programs and services that benefit Indian tribes but which had previously been administered by the federal government. Congress believed that transferring control of these programs would help tribes develop leadership skills crucial to the realization of self-government. See 25 U.S.C.A. § 450. The ISDA requires the Secretary of Health and Human Services ("Secretary") to enter into contracts with any tribe that requests control of a federally-funded service program. Tribes that enter into such "self-determination contracts" must receive the same amount of federal funding that the Secretary would have been provided ("the secretarial amount") to operate the program. Tribes then manage, on behalf of themselves, these programs which the Secretary would otherwise manage on their behalf.

By 1987, many tribes had implemented ISDA programs for education, health, and job training. Unfortunately, government funding was sometimes insufficient to cover the full cost of the programs; while funding levels comprehended direct program costs, additional administrative costs that the Secretary had not previously incurred were not included in the funds distributed to the tribes. In an effort to rectify this problem, Congress passed the Indian Self-Determination Amendments of 1988, which required the Secretary to provide contract support costs ("CSC") for the full administrative costs incurred by the tribes. However, these funds are "subject to the availability of appropriations," ("the Appropriations Clause") and "the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization." 25 U.S.C § 450j-1(b). In addition to the availability clause in 25 U.S.C § 450j-1(b), Congress tried to contain cost escalation by passing the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999 Pub.L. No. 105-277, § 314, (1998), which imposed a mandatory cap on the total amount of CSC funding for new and expanded self-determination programs.

In resolving the circuit split over whether the Indian tribes were entitled to recover costs incurred in performing self-determination contracts under ISDA, the Court will examine the appropriations clause of the ISDA as well as the 1998 Omnibus Act to determine the limits of the government's obligations to fund administrative costs. If the Court agrees with the Tenth Circuit and rules that the government incurs no liability because Congress limited the amount of money available to the tribes for administrative costs, the ruling may discourage Indian tribes from entering into self-determination contracts, thus defeating one of the primary policy objectives of the ISDA. Such a ruling may have a chilling effect and discourage future private parties from contracting with the government, fearing that the government might abuse its power and retroactively limit the funds available to pay the contract. However, if the Court agrees with the Federal District, Congress's ability to limit cost overruns and instill financial discipline could be severely curtailed. In the long run, this may discourage Congress from relinquishing control of programs and services traditionally managed by the federal government.

Questions as Framed for the Court by the Parties

02-1472 CHEROKEE NATION OF OKLAHOMA v. THOMPSON

1. Whether the federal government can repudiate, without liability, express contractual commitments for which it has received valuable consideration, either by spending down discretionary agency appropriations otherwise available to pay its contracts, or simply by changing the law and the contracts retroactively.

2. Whether government contract payment rights that are contingent on "the availability of appropriations" vest when an agency receives a lump-sum appropriation that is legally available to pay the contracts, as is the law of the Federal Circuit under Blackhawk Heating & Plumbing Co. v. United States, 622 F.2d 539 (Fed. Cir. 1980), or is the government's liability calculated only at the end of the year after the agency has spent its appropriations on other activities, as the Tenth Circuit ruled below.

03-853 THOMPSON v. CHEROKEE NATION OF OKLAHOMA

The Indian Self-Determination and Education Assistance Act (ISDA), 25 U.S.C. §§ 450-450n, authorizes the Secretary of Health and Human Services (the Secretary) to enter into contracts with Indian Tribes for the administration of programs the Secretary otherwise would administer himself. The ISDA also provides that the Secretary shall pay "contract support costs" to cover certain direct and indirect expenses incurred by the Tribes in administering those contracts. The ISDA, however, makes payment "subject to the availability of appropriations," and declares that the Secretary "is not required to reduce funding for programs, projects or activities serving a tribe to make funds available" for contract support and other self-determination contract costs. 25 U.S.C. § 450j-l(b). The questions presented are:

1. Whether the ISDA requires the Secretary to pay contract support costs associated with carrying out self-determination contracts with the Indian Health Service, where appropriations were otherwise insufficient to fully fund those costs and would require reprogramming funds needed for noncontractable, inherently federal functions such as having an Indian Health Service.

2. Whether Section 314 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Pub. L. No.105-277, 112 Stat. 2681-288, bars respondent from recovering its contract support costs.

In 1994, under the terms of the Indian Self-Determination and Education Assistance Act ("ISDA"), see 25 U.S.C.A. § 450, the Shoshone-Paiute and the Cherokee Nation Tribes of the Duck Valley Reservation ("Plaintiffs") entered into self-determination contracts to administer a range of health care programs for their tribal members with the Secretary of Health and Human Services ("Secretary"). Under the ISDA, Indian tribes could manage, on behalf of themselves, certain programs which the Secretary would otherwise manage for them.

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Chase Bank USA, N.A., v. McCoy

Issues

Under the pre-2009 version of Banking Regulation Z, are creditors required to give notice prior to implementing the right to increase interest rates upon cardholder default if that right was part of the initial disclosure of terms?

 

James McCoy alleges that Chase Bank (“Chase”) retroactively increased his credit card interest rate, without notice, in violation of the Truth in Lending Act’s Regulation Z. The Regulation has since been revised to require notice in this particular situation. McCoy argues that the plain language of Regulation Z mandated that he receive notice prior to an increase of his interest rate. Chase argues that the bank provided adequate notice. In support of its argument, Chase cites unofficial commentary promulgated by Federal Reserve Board, the agency which implements the Truth in Lending Act. The Supreme Court’s ruling will clarify the level of notice required prior to raising interest rates, and will provide advice on what sources may be used in interpreting complex statutes.

Questions as Framed for the Court by the Parties

When a creditor increases the periodic rate on a credit card account in response to a cardholder default, pursuant to a default rate term that was disclosed in the contract governing the account, does Regulation Z, 12 C.F.R. § 226.9(c), require the creditor to provide the cardholder with a change-in-terms notice even though the contractual terms governing the account have not changed?

Respondent James McCoy filed suit in California federal court, alleging that Petitioner Chase Bank USA, N.A. (“Chase”) violated the Truth in Lending Act. See McCoy v.

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Additional Resources

· Wex: Consumer Credit

· Office of the Comptroller of the Currency: Truth in Lending Act – Comptroller’s Handbook

· Banking Law Prof Blog, Ann Graham: Can a Credit Card Issuer Increase a Customer’s Rate without a Change-in-Terms Notice? (Nov. 22, 2011)

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Chambers v. United States

Issues

Whether a defendant’s failure to report for confinement creates a serious potential risk of physical injury to another person under the Armed Career Criminals Act, 18 U.S.C. § 924 (e) such that it can be considered a violent felony. 

 

The Seventh Circuit in United States v. Chambers, 473 F.3d 724, 725 (7th Cir. 2007) held that failure to report to a penal institution constitutes a violent crime under the Armed Career Criminals Act. Petitioner Deondery Chambers pleaded guilty to being a felon in possession of a firearm and was sentenced to 188 months in jail under the Armed Career Criminals Act because of his prior conviction for failing to report on schedule to a penal institution. Without the additional punishment mandated by the Armed Career Criminals Act, Chambers’ sentencing range would have been 130 to 162 months. The U.S. Supreme Court considers in this case whether or not a defendant’s failure to report for confinement involves conduct that presents a serious potential risk of physical injury to another such that it constitutes a violent felony under the Armed Career Criminals Act.

Questions as Framed for the Court by the Parties

Whether a defendant’s failure to report for confinement “involves conduct that presents a serious potential risk of physical injury to another” such that a conviction for escape based on that failure to report is a “violent felony” within the meaning of the Armed Career Criminals Act, 18 U.S. C. § 924 (e).

Petitioner Deondery Chambers pled guilty to being a felon in possession of a firearm in the United States District Court for the Southern District of Illinois. See United States v. Chambers, 473 F.3d 724, 725 (7th Cir.

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Chamber of Commerce v. Brown

 

The California state legislature passed an act, AB 1889, which bars private employers receiving state funds from using the funds to assist, promote, or deter union organizing. AB 1889 also prohibits private employers who participate in state programs and who receive state funds from using those funds for the purpose of promoting or hindering union organization. The United States Chamber of Commerce claims that this statute is preempted by the National Labor Relations Act ("NLRA"). A finding for the Chamber of Commerce would protect employer free speech over attempts by states to define neutrality between management and labor. Conversely, a finding for California would provide unions potential safeguards in their struggle against employers seeking to stave off union organizing while furthering the overall policy of California of remaining neutral in the struggle between management and labor.

 
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    Chamber of Commerce of the United States v. Whiting

    Issues

    Whether federal immigration law preempts Arizona’s statute that both sanctions employers who hire unauthorized workers by rescinding their business licenses, and mandates employer participation in E-Verify, a federal pilot program that verifies a prospective employee’s employment eligibility.

     

    The state of Arizona passed the Legal Arizona Workers Act in 2007 (“LAWA”). The law authorizes the Arizona Attorney General and county attorneys to sue employers who knowingly or intentionally employed unauthorized workers such as illegal aliens as a means of combating illegal immigration. Congress, however, previously enacted the Immigration Reform and Control Act, which imposes different sanctions on employers for hiring illegal immigrants. The Chamber of Commerce of the United States, along with various business and civil rights organizations, claimed that federal law preempts LAWA, thus making it invalid. In addition, the Chamber of Commerce argued that LAWA fostered employment discrimination against “foreign-looking” individuals and unduly harmed businesses. However, those in support of LAWA claimed that the state has the authority under its “police powers” to enforce the statute and that it was not preempted by federal law. The Supreme Court’s decision in this case will shed light on the extent to which a state may enforce its own laws in an area that is also covered by federal law. Additionally, the Court’s ruling will affect the ability of states to use certain measures to deter employers from hiring illegal immigrants.

    Questions as Framed for the Court by the Parties

    1. Whether an Arizona statute that imposes sanctions on employers who hire unauthorized workers is invalid under a federal statute that expressly “preempt[s] any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit or refer for a fee for employment, unauthorized workers.” 8 U.S.C. § 1324a(h)(2).

    2. Whether the Arizona statute, which requires all employers to participate in a federal electronic employment verification system, is preempted by a federal law that specifically makes that system voluntary. 8 U.S.C. § 1324a note.

    3. Whether the Arizona statute is impliedly preempted because it undermines the “comprehensive scheme” that Congress created to regulate the employment of workers. Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137, 147 (2002).

    Congress first imposed sanctions for hiring unauthorized workers when it passed the Immigration Reform and Control Act of 1986 (“IRCA”), which criminalized the knowing or intentional hiring or continued employment of “unauthorized aliens” in the United States. See Chicanos Por La Causa, Inc. v. Napolitano, 544 F.3d 976, 980 (9th Cir.

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    Additional Resources

    · Immigration Impact, Beth Werlin: Supreme Court to Hear Two Cases Affecting Immigrants, Including a Case Challenging a Recent Anti-Immigrant Law (Oct. 7, 2010)

    · ABA Journal, Debra Cassens Weiss: Supreme Court Docket Has a 9th Circuit ‘Flavor’ (Oct. 5, 2010)

    · Fordham Law Review, Maria Marulanda: Preemption, Patchwork Immigration Laws, and the Potential for Brown Sundown Towns

    · U.S. Citizenship and Immigration Services: E-Verify—History and Milestones

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    Chaidez v. United States

    Issues

    Does the recent Supreme Court decision Padilla v. Kentucky, which allows an individual to contest a conviction based on a lawyer’s failure to provide information of the deportation consequences to pleading guilty, apply to individuals with convictions made final before the Court decided Padilla? 

     

    In 2003, Roselva Chaidez pleaded guilty to an “aggravated felony” under the Illegal Immigration Reform and Immigrant Responsibility Act (“IIRIRA”), but her lawyer failed to inform her that her plea made her eligible for deportation. Subsequently, the Supreme Court held in Padilla v. Kentucky that the right to effective assistance of counsel includes a duty to inform defendants of deportation consequences of a plea deal if the consequences are clear. Nevertheless, the Seventh Circuit Court of Appeals held that Padilla did not apply retroactively to Chaidez’s conviction. Chaidez argues that the Supreme Court should hold that Padilla was dictated by precedent (and therefore not a new rule) and is retroactively applicable to her case. The United States counters that Padilla was not dictated by precedent (and therefore was a new rule) and is not retroactively applicable to Chaidez’s conviction. Chaidez argues that Padilla should be retroactively applied because to hold otherwise would undermine the obligation of prosecutors to “seek justice,” which requires using their knowledge of immigration consequences when considering to alter convictions. In response, the United States counters that retroactively applying Padilla would allow defendants to avoid the consequences of their convictions based on a minor error by a lawyer. 

    Questions as Framed for the Court by the Parties

    In Padilla v. Kentucky, 130 S. Ct. 1473 (2010), this Court held that criminal defendants receive ineffective assistance of counsel under the Sixth Amendment when their attorneys fail to advise them that pleading guilty to an offense will subject them to deportation.

    The question presented is whether Padilla applies to persons whose convictions became final before its announcement.

    Roselva Chaidez was born in Mexico and has been a lawful, permanent resident of the United States since 1977. See Chaidez v. United States, 655 F.3d 684, 686 (7th Cir.

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    Chadbourne and Parke LLP v. Troice; Willis of Colorado Inc. v. Troice; Proskauer Rose LLP v. Troice

    Issues

    The Supreme Court has consolidated for oral argument three Fifth Circuit cases that deal with the Securities Litigation Uniform Standards Act (SLUSA). These cases address a circuit split as to the standard for determining when an alleged misrepresentation is "material" enough to the purchase or sale of a covered security to satisfy the "in connection with" requirement and thus trigger SLUSA’s preclusive effect.

     

    The Securities Litigation Uniform Standards Act (“SLUSA”) precludes certain state-law class actions when a “misrepresentation” is made “in connection with the purchase or sale of a covered security.” The Supreme Court will address a circuit split over the scope and meaning of this standard; in particular, at what point an alleged misrepresentation is sufficiently related to the sale or purchase of a covered security to satisfy the "in connection with" requirement. The Court has consolidated for oral argument three state law securities class actions from the Fifth Circuit Court of Appeals. The district court, adopting the Eleventh Circuit’s test, found that SLUSA precluded the plaintiffs' claims because misrepresentations were made in connection with the sale of SLUSA-covered securities. The Fifth Circuit, adopting the Ninth Circuit’s test, reversed and reinstated the plaintiffs' state law class-actions. The Court’s ruling will implicate the scope and application of SLUSA, SLUSA's impact on state-law class actions, and SLUSA's effect on U.S. securities markets.

    Questions as Framed for the Court by the Parties

    Chadbourne & Parke LLP V. Troice

    The Securities Litigation Uniform Standards Act ("SLUSA") precludes most state-law class actions involving "a misrepresentation" made "in connection with the purchase or sale of a covered security." 15 U.S.C. § 78bb(f)(1)(A). The circuits, however, are divided over the standard for determining whether an alleged misrepresentation is sufficiently related to the purchase or sale of a covered security to satisfy the "in connection with" requirement. The Fifth Circuit in this case adopted the Ninth Circuit standard and held that the complaint here was not precluded by SLUSA, expressly rejecting conflicting Second, Sixth, and Eleventh Circuit standards for construing the "in connection with" requirement, all of which would result in SLUSA preclusion here. 

    Additionally, and also in conflict with several other circuits, the Fifth Circuit held that SLUSA does not preclude actions alleging aiding and abetting of fraud in connection with SLUSA-covered security transactions when the aiders and abettors themselves did not make any representations concerning a SLUSA-covered security. 

    The questions presented are: 

    1. Whether SLUSA precludes a state-law class action alleging a scheme of fraud that involves misrepresentations about transactions In SLUSA-covered securities. 
    2. Whether SLUSA precludes class actions asserting that defendants aided and abetted SLUSA-covered securities fraud when the defendants themselves did not make misrepresentations about the purchase or sale of SLUSA-covered securities. 

     

    Willis of Colorado Inc. v. Troice

    The Securities Litigation Uniform Standards Act of 1998 ("SLUSA") precludes state law class actions that allege a misrepresentation or omission "in connection with" the purchase or sale of a covered security. 15 U.S.C. § 78bb(f)(1). The complaints at issue in this case plainly included such alleged misrepresentations. The district court, applying Eleventh Circuit precedent, recognized as much and dismissed the complaints. However, the Fifth Circuit disagreed and, purporting to apply the Ninth Circuit's test, found the fact that the complaints included alleged misrepresentations in connection with a covered security insufficient to invoke SLUSA because the complaints also included other misrepresentations that were not made "in connection with" a covered securities transaction. In doing so, the Fifth Circuit acknowledged that it was departing from the holding of the Eleventh Circuit and several other circuits. 

    The question presented is whether a covered state law class action complaint that unquestionably alleges "a" misrepresentation "in connection with" the purchase or sale of a SLUSA-covered security nonetheless can escape the application of SLUSA by including other allegations that are farther removed from a covered securities transaction.

     

    Proskauer Rose LLP v. Troice

    1. Does the Securities Litigation Uniform Standards Act of 1998 ("SLUSA"), 15 U.S.C. §§ 77p(b), 78bb(f)(1), prohibit private class actions based on state law only where the alleged purchase or sale of a covered security is "more than tangentially related" to the "heart, crux or gravamen" of the alleged fraud? 
    2. Does SLUSA preclude a class action in which the defendant is sued for aiding and abetting fraud, but a non-party, rather than the defendant, made the only alleged misrepresentation in connection with a covered securities transaction? 

    In 1995, Congress enacted the Private Securities Litigation Reform Act (“PSLRA”) to curtail abusive class action litigation involving nationally traded securities. See Roland v.

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