Anza v. Idea Steel Supply Corp.

 

Ideal Steel Supply Corporation and National Steel Supply Inc. were competitors for many years in the New York area, with facilities in Queens and later the Bronx. They each sold steel mill products and other hardware, and the owners were even related by marriage. As Ideal Steel’s sales in the Bronx dropped and National Steel’s increased, despite both companies charging the same price for their product, Ideal Steel became suspicious. In particular, Ideal Steel was concerned about National Steel’s “cash, no tax” policy, in which customers of National Steel that paid with cash did not have to pay the sales tax required by New York State. Ideal Steel filed a civil suit in federal district court alleging that the “cash, no tax” policy constituted racketeering under the Racketeer Influenced and Corrupt Organizations Act, in that the failure to charge state sales tax and the filing of false sales tax returns was a pattern of mail and wire fraud intended to give National Steel an unfair competitive advantage over Ideal Steel. The district court dismissed Ideal Steel’s claim, ruling that Ideal Steel failed to allege that there was a sufficient connection between National Steel’s alleged illegal conduct and the harm to its business or lost profits. The Court of Appeals for the Second Circuit reversed and ordered that the suit should proceed, ruling that it was sufficient for Ideal Steel to prove that New York State relied on National Steel’s fraudulent conduct, which allowed the scheme to continue, and ultimately led to the harms alleged. The United States Supreme Court must now examine the Racketeer Influenced and Corrupt Organizations Act and determine whether a company such as Ideal Steel is injured by such violations where the company is not directly defrauded and did not rely on the illegal acts.  

The Alleged Scheme

Respondent Ideal Steel Supply Corporation (“Ideal Steel”) and Petitioner Anza’s company, National Steel Supply Inc., are direct competitors in the business of selling steel mill products and other hardware in the Bronx and Queens, New York. Brief for Respondent at 3.

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Amgen v. Connecticut Retirement Plans

Issues

1. To establish a class of investors in a lawsuit alleging securities fraud, must a plaintiff show that the defendant’s allegedly untrue statements materially affected the security’s price?

2. Additionally, to prevent a class from being established, may a defendant present evidence to refute that the alleged fraud materially affected the security’s price?

 

In 2004, biotechnology company Amgen Inc. was selling securities of two drugs that stimulate the production of red blood cells. After the Food and Drug Administration held an advisory committee meeting in May 2004 about the safety of those drugs, the market prices of their corresponding securities dropped. On behalf of the shareowners who suffered, Connecticut Retirement Plans and Trust Funds sought to certify the class of investors who held stock in Amgen at that time to sue Amgen for fraud regarding any misrepresentations of the drugs. Amgen argues that this kind of class action requires a plaintiff to show material reliance of the class of investors as part of the question as to whether a class exists. In contrast, Connecticut Retirement argues that during this class certification stage a plaintiff need not go beyond demonstrating that investors share a common question of reliance as a class rather than as individuals. If Amgen wins, then plaintiffs of securities fraud may face an unwieldy burden of proof at an early stage in litigation. If Connecticut Retirement wins, then defendants of securities fraud may face unfair pressures to settle cases.

Questions as Framed for the Court by the Parties

1. Whether, in a misrepresentation case under SEC Rule 10b-5, the district court must require proof of materiality before certifying a plaintiff class based on the fraud-on-the-market theory.

2. Whether, in such a case, the district court must allow the defendant to present evidence rebutting the applicability of the fraud-on-the-market theory before certifying a plaintiff class based on that theory.

Respondent Connecticut Retirement Plans and Trust Funds’ (“Connecticut Retirement”) purchased securities offered by petitioner Amgen, Inc. (“Amgen”), a biotechnology company that manufactures pharmaceutical drugs. See Connecticut Retirement Plans and Trust Funds v. Amgen, Inc., 660 F.3d 1170, 1172–73 (9th Cir.

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American Needle, Inc. v. National Football League, et al.

Issues

Is a professional sports league a single entity under Section 1 of the Sherman Act?

 

In 2001, the National Football League ("NFL") granted Reebok International Ltd. ("Reebok") an exclusive license to manufacture headwear featuring the logos and trademarks of every professional football team in the NFL. Because of this new arrangement, American Needle, Inc. (“ANI”) lost its 20-year license to manufacture such apparel. ANI argues that the NFL's contract with Reebok violates the Sherman Act, because the NFL and its member teams should not be considered a single economic entity. The NFL and Reebok contend that the member teams are united to produce a common product, namely professional football games, and thus are a single entity that is not subject to the regulations of the Sherman Act. In this case, the U.S. Supreme Court will decide whether or not the NFL is a single entity under Section 1 of the Sherman Act.

Questions as Framed for the Court by the Parties

1. Are the NFL and its member teams a single entity that is exempt from rule of reason claims under Section 1 of the Sherman Act simply because they cooperate in the joint production of NFL football games?

2. Is the agreement of the NFL teams among themselves and with Reebok International, in which the teams agreed not to compete with each other in the licensing and sale of consumer headwear and clothing decorated with the teams' respective logos and trademarks, and not to permit any licenses to be granted to Reebok's competitors for a period of ten years, subject to a rule of reason claim under Section 1 of the Sherman Act?

Respondent, National Football League (“NFL”), is an unincorporated association of 32 professional football teams that produces an annual season of football games and the Super Bowl championship game. See American Needle, Inc. v.

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·      Wex: Antitrust

·      Washington Post: Trust-busting the NFL

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American Electric Power Co. v. Connecticut

Issues

Whether a party can assert a federal common claim challenging a company’s carbon dioxide emissions as a public nuisance, or whether such efforts to curb emissions should be brought solely through the legislative process.

 

Several states brought suit against various power companies, arguing that the companies’ carbon emissions create a public nuisance – i.e. harm the public welfare – by contributing to global warming and damaging the environment. The district court dismissed the claim before trial, holding that disputes concerning global warming are “political questions” that should be resolved by the legislature, not the courts. However, the Second Circuit Court of Appeals held that courts are allowed to hear such cases, and that such disputes are not restricted to resolution in the political arena. Furthermore, the Second Circuit held that allowing such cases does not alleviate a plaintiff’s heavy burden of proving its side of the dispute in court. The decision will depend on whether the Supreme Court feels that the judiciary can properly handle such claims, or whether the complexity, controversy, and volume of such cases counsel in favor of dismissing this initial suit.

Questions as Framed for the Court by the Parties

1. Whether States and private parties have standing to seek judicially-fashioned emissions caps on five utilities for their alleged contribution to harms claimed to arise from global climate change caused by more than a century of emissions by billions of independent sources.

2. Whether a cause of action to cap carbon dioxide emissions can be implied under federal common law where no statute creates such a cause of action, and the Clean Air Act speaks directly to the same subject matter and assigns federal responsibility for regulating such emissions to the Environmental Protection Agency.

3. Whether claims seeking to cap defendants' carbon dioxide emissions at "reasonable" levels, based on a court's weighing of the potential risks of climate change against the socioeconomic utility of defendants' conduct, would be governed by "judicially discoverable and manageable standards" or could be resolved without "initial policy determination[s] of a kind clearly for nonjudicial discretion." Baker v. Carr, 369 U.S. 186, 217 (1962).

In July 2004, the States of Connecticut, New York, California, Iowa, New Jersey, Rhode Island, Vermont, and Wisconsin, and the City of New York (collectively “Connecticut”) filed a complaint against American Electric Power Company, Southern Company, the Tennessee Valley Authority, Xcel Energy, and Cinergy (c

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Alvarez v. Smith

Issues

When law enforcement officers seize personal property in the course of a drug investigation, how quickly should they be required to provide property owners with an opportunity to contest the validity of the seizure?

 

Civil forfeiture statutes allow law enforcement agencies to seize personal property without a warrant if the property is connected to illegal drug activity. A group of Chicago residents whose vehicles were seized organized a class action challenging the Illinois civil forfeiture statute on constitutional grounds. Specifically, they alleged that civil forfeiture improperly deprived them of due process because of the extensive delay the statute allowed before requiring actual civil forfeiture proceedings. After the trial court dismissed their complaint, the Seventh Circuit held the statute unconstitutional. The Supreme Court granted certiorari and now has an opportunity to clarify exactly what process is due to property owners facing statutory civil forfeiture proceedings.

Questions as Framed for the Court by the Parties

In determining whether the Due Process Clause requires a State or local government to provide a post-seizure probable cause hearing prior to a statutory judicial forfeiture proceeding and, if so, when such a hearing must take place, should district courts apply the “speedy trial” test employed in United States v. $8,850, 461 U.S. 555 (1983) and Barker v. Wingo, 407 U.S. 514 (1972) or the three-part due process analysis set forth in Mathews v. Eldridge, 424 U.S. 319 (1976)?

Forfeiture Laws

The Fourteenth Amendment guarantees that no citizen can be deprived of property without due process of law. See U.S. Const. amend.

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·      Wex: Law about Due Process

·      Wex: Law about Forfeiture

·      Rules governing Krimstock hearings in New York City

·      Though civil forfeiture proceedings are necessarily civil in nature, readers may find the LII Wex Overview of Criminal Procedure helpful to understand the basic investigative process, including probable cause and exceptions to the warrant requirement.

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Altria Group, Inc. v. Good

Issues

Can smokers sue for misrepresentations in cigarette advertising under state law, or does the Federal Cigarette Labeling and Advertising Act prohibit such state-law claims?

 

Stephanie Good and other smokers (“Good”) brought a class action suit against Altria Group (“Altria”) and its subsidiary, Philip Morris, for fraudulent misrepresentation under Maine state law. Good and the other plaintiffs claim that the use of descriptors such as “light” and “lower in tar and nicotine” in cigarette advertisements are misrepresentations because Federal Trade Commission mandated testing does not reflect the actual tar and nicotine delivery of “light” cigarettes. Altria argues that state law claims of fraudulent misrepresentation against cigarette companies are preempted by federal law. The First Circuit rejected Altria’s argument, and the Supreme Court will review that decision. Given the diversity of state laws and the widespread use of “light” descriptors, the outcome of this case could expose tobacco companies to different levels of liability based on the content of their advertising. This case may affect other federally regulated industries, potentially subjecting them to state law claims for fraudulent misrepresentation on the ground that federally permissible advertising and testing is misleading under various state laws.

Questions as Framed for the Court by the Parties

To ensure that interstate commerce is "not impeded by diverse, nonuniform, and confusing cigarette labeling and advertising regulations," Congress has precluded the States from imposing any "requirement or prohibition based on smoking and health . . . with respect to the advertising or promotion of any cigarettes," and has authorized the Federal Trade Commission to regulate "unfair or deceptive acts or practices in the advertising of cigarettes." 15 U.S.C. §§ 1331, 1334, 1336. Based on studies suggesting that cigarettes with comparatively lower tar and nicotine yields may present fewer health risks, the FTC requires tobacco companies to disclose those yields as measured using an FTC-mandated test, and has authorized tobacco companies to advertise cigarettes using "descriptors," such as "light," as shorthand references to the numerical test results. Respondents in this case contend that such descriptors are misleading, in violation of a state deceptive trade practices statute.

The question presented is whether state-law challenges to FTC-authorized statements regarding tar and nicotine yields in cigarette advertising are expressly or impliedly preempted by federal law.

Defendants Altria Group and Philip Morris (Altria’s subsidiary) manufactured and sold two brands of cigarettes, “Marlboro Lights” and “Cambridge Lights.” See Good v. Altria Group, Inc., 501 F.3d 29, 30 (1st Cir.

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Allison Engine Co. v. United States

Issues

The False Claims Act has a number of subsections under which contractors may be found liable for defrauding the federal government. Contractors may be found liable under subsection (a)(1) only if someone presented a fraudulent bill to the federal government. Subsections (a)(2) and (a)(3) do not spell out the same  "presentment" requirement in explicit terms. Do these subsections still include a "presentment" requirement that there be proof that a false bill was sent to the government, or is it enough to show that the fraudulent bill was paid with federal funds?  

 

In 1985, the U.S. Navy contracted with two shipyards for the production of a new fleet of destroyers. Each destroyer required an electrical generator set to provide electricity. Several companies became involved in the project to build the generator sets. None of these companies billed the federal government, but rather billed the company directly above them in the chain of production. The company directly above them did not include these bills when submitting for payment from the government. This case began when two whistleblowers sued their former employer and other government subcontractors under the False Claims Act. The U.S. District Court for the Southern District of Ohio dismissed their claim after holding that no FCA violation could occur without evidence that the federal government actually relied on a fraudulent bill. On appeal, the U.S. Court of Appeals for the Sixth Circuit held that the case should continue because the False Claims Act does not categorically require proof that the fraudulent bill was actually presented to the federal government. The ultimate decision by the Supreme Court could have important economic consequences for taxpayers, government contractors, and any party who seeks to file suit under the False Claims Act.

Questions as Framed for the Court by the Parties

Whether a plaintiff asserting a cause of action under Section 3729(a)(2) or Section 3729(a)(3) of the False Claims Act is required to prove that a false claim was submitted to the federal government, or whether it is sufficient to establish that the claim was paid using federal funds.

In 1863, Congress passed the False Claims Act ("FCA") to address problems associated with private contractors who had cheated the federal government throughout the Civil War. United States v. Allison Engine Co., 471 F.3d 610, 614 (6th Cir.

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Alabama v. North Carolina

Issues

Whether the Eleventh Amendment bars the Southeast Interstate Low-Level Radioactive Waste Management Commission, jointly with four compacting States, from asserting claims in a Supreme Court original action, that North Carolina has violated the Southeast Interstate Low-Level Radioactive Waste Management Compact and is subject to the Commission’s sanctions order.

Court below
Original Jurisdiction

 

Original Jurisdiction: On Motion of North Carolina to Dismiss Claims of the Southeast Interstate Low-Level Radioactive Waste Management Commission

This case involves a lawsuit brought by several states and the Southeast Interstate Low-Level Radioactive Waste Management Commission against the State of North Carolina for its alleged breach of contract under the Southeast Interstate Low-Level Radioactive Waste Management Compact to license a waste disposal facility. In June 2002, the member states of the Compact and the Commission filed a Bill of Complaint, which the Supreme Court granted. The Special Master then filed his Preliminary and Second Reports with this Court on April 2, 2009. The Supreme Court subsequently received these Reports and ordered them filed. This case is now before the Supreme Court as both an original and exclusive jurisdiction case; it also addresses issues of contract law. The Supreme Court’s decision in Alabama v. North Carolina may have significant effects on constitutional law, most notably on the extent of the Court’s original and exclusive jurisdiction over a judicial case or controversy between States.

Questions as Framed for the Court by the Parties

Plaintiffs except to the following conclusions of the Special Master:

1.     Article 79F) of the Southeast Interstate Low-Level Radioactive Waste Management Compact (the “Compact”), which states that the Commission may “sanction[]” “[a]ny party state which fails to comply with the provisions . . . or . . . fulfill the obligations” of “this compact,” does not give the Commission the authority to level monetary sanctions against a party State when it fails to comply with the Compact. Preliminary Report 15–25.

2.     Even if North Carolina violated the Compact, it was not subject to the sanctions authority of the Commission because it withdrew from the Compact before sanctions were imposed. Preliminary Report 25–29.

3.     North Carolina did not waive its right to contest the legality of the sanctions proceedings even though it attended and refused to participate in the hearing. Preliminary Report 29–30.

4.     Even though the Compact expressly provides that the Commission is “the judge of the [party States’] compliance with the conditions and requirements of this compact,” Art. 7(C), the Commission’s determination that North Carolina breached the Compact is neither conclusive nor entitled to any deference from the Court. Second Report 1920.

5.     While it is undisputed that North Carolina ceased taking any steps to license a facility in December 1997, more than 18 months before it withdrew from the Compact, North Carolina, as a matter of law, did not breach its duty under the Compact to “take appropriate steps to ensure that an application for a license to construct and operate a facility . . . is filed.” Art. 5 (C). Second Report 10?24.

6.     The implied duty of good faith and fair dealing does not apply to interstate compacts and North Carolina did not withdraw from the Compact in bad faith. Second Report 29–35.

7.     North Carolina did not repudiate the Compact when it informed the Commission that it would take no further steps to license a facility. Second Report 24–28.

The State of North Carolina takes exception to the following conclusions of the Special Master:

1.     The recommended denial of North Carolina’s motion to dismiss all claims brought by plaintiff Southeast Interstate Low-Level Radioactive Waste Management Commission. Under both the Eleventh Amendment and common-law sovereign immunity principles, only the United States or a sister State may sue a non-consenting State in federal court, absent a valid congressional abrogation of the State’s sovereign immunity. Because North Carolina has not waived, and Congress has not abrogated, North Carolina’s sovereign immunity from suit by the Commission, the Commission’s claims cannot proceed in this Court. In this case, this Court has jurisdiction to the Special Master’s recommendation, North Carolina’s motion to dismiss the Commission’s claims should be granted.

2.     The failure to recommend granting North Carolina’s motion for summary judgment on the quasi-contract claims asserted in Counts III, IV, and V of the Bill of Complaint. It is a settled common-law rule that where the parties’ relationship concerning a given subject matter is governed by the terms of an express contract, no equitable claim will lie in addition to a claim for breach of contract. The Special Master declined to address North Carolina’s motion at this stage in the proceedings, but the motion is legally and factually ripe for adjudication, and should be granted.

This is an original jurisdiction case brought by the States of Alabama, Florida, Tennessee, and Virginia, joined by the Southeast Interstate Low-Level Radioactive Waste Management Commission (the "Commission") (collectively "petitioners") seeking remedy for the State of North Carolina's alleged breach of the Southeast Interstate Low-Level Radioactive Waste Management Compact (the "Compact").

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