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SCOTUS News, June 9th, 2017: Kokesh, Honeycutt, and More

The Supreme Court released four opinions this week. A fifth, North Carolina v. Covington, was decided per curiam in light of the Court’s ruling two weeks ago in Cooper v. Harris. Let’s look at the rest.

Town of Chester v. Laroe Estates

We provided a brief description of this case some weeks ago. The issue before SCOTUS is a very narrow one concerning rights of an intervenor in a regulatory takings claim.

Sherman entered into foreclosure on his property, and Laroe made an investment in his property in order to keep the development alive. The bank foreclosure went ahead anyway. Sherman then sued the Town of Chester for regulatory takings that contributed to the foreclosure. Laroe argued that it had the right to intervene because it retained ownership rights in Sherman’s original property. Laroe sought damages in the same suit that Sherman filed.

The question in this case is whether Laroe has standing. Establishing standing for a lawsuit is quite strict, and requires a unique claim. In this case, there is ambiguity over whether Laroe claimed the exact same monetary relief as Sherman. If so, this would deny Laroe standing. Because the exact relief sought is not clear, Alito writes for the unanimous Court, Laroe may well have the right to sue Chester. For these reasons, SCOTUS vacates the earlier dismissal of Laroe’s suit, and remands back to the Court of Appeals.

Honeycutt v. US

This case concerns joint liability in a criminal conspiracy. Tony Honeycutt owned a hardware store, and knowingly sold products used to produce methamphetamine. He pled guilty to drug distribution, and made a sizeable forfeiture payment as part of his sentence.

Tony’s brother Terry is the subject of this case, however. Terry was only a salaried employee, and received none of the proceeds of the illicit sales. The relevant law used for the forfeiture of property is limited to “tainted” property, property a defendant obtains as a result of their crimes. Terry Honeycutt, however, had no ownership stake in the store, and thus did not obtain proceeds from the sales. The Supreme Court holds that this means Terry is not liable for the remainder of the forfeiture.

The Supreme Court reverses, declaring Terry not jointly liable. This is another unanimous decision, authored by Sotomayor.

Kokesh v. SEC

This case concerns a five-year statute of limitations on fines, penalties, or forfeitures handed down by the SEC. In this case, the SEC ordered Kokesh to pay a disgorgement penalty to the government. This is the important distinction.

A disgorgement is a public penalty, levied when someone commits a violation against the United States. The Tenth Circuit originally ruled that disgorgement is not a punitive measure. This would place disgorgement outside the purview of the statute of limitations. SCOTUS declares that this is inaccurate. Kokesh’s crimes were of a public nature. He did not commit a private wrong against an individual party. Kokesh’s disgorged profits went to the courts, and because of this, the disgorgement is a penalty under the law. (Though the courts may distribute the funds to other parties later, this is a discretionary action.) SCOTUS rules that taking noncompensatory funds is inherently punitive, and thus falls under the statute of limitations for “penalties” under SEC rules.

SCOTUS reverses the Tenth Circuit, in a unanimous opinion authored by Sotomayor.

Advocate Health Care Network v. Stapleton

We broke down some of the facts of this case in a post a few months back.

ERISA establishes rules and regulations about retirement and pension funds. Churches are exempt from these rules and regulations, and so are “church-affiliated” organizations. The employees of church-affiliated hospitals filed suit because their retirement plans did not comport with ERISA. This matters because the churches themselves were not managing the employee plans, and thus, the third party organizations should not be “exempt”.

The language of ERISA’s church-affiliated exemption is quite expansive, though. The distinction lies, in part, in the difference between “establish” and “maintain”. The retirement plans are maintained by a church, but the employees aver that the plans were not established by the church, and thus not exempt as church-affiliated plans under ERISA. The district court and court of appeals affirmed this interpretation.

SCOTUS, once again ruling unanimously, reverses. Amended language from the 1980s emphasizes the “maintained” aspect. Because the plans are maintained by an organization affiliated with a church, they fall under ERISA’s broad grant of exemption for church-affiliated plans.

The Crowd and the Algorithm

{Marshall}+ hit wide of the mark this week. Losses across the board. Kokesh v. SEC, in particular, seemed to throw the Algorithm for a loop.

One factor: the very narrowly tailored rulings in each of the opinions released this week. Two of the four opinions this week come from the 8-Justice era, when the Court chose cases carefully, and often without even a whiff of ideological underpinning. As we’ve seen before, {Marshall}+ has more difficulty with these quiet rulings. This is evident in the relatively mixed Justice predictions by the Algorithm. Usually, more variance exists for {Marshall}+ than for the Crowd. This variance increases the narrower the issue. Kokesh, in particular, provides an instructive example of this trend:

kokesh sec

Kokesh v. SEC

Meanwhile, the decision in Honeycutt has the appearance of a stark failure for the Algorithm. In reality, however, {Marshall}+ very nearly came close, Justice-by-Justice, to swinging toward what ultimately became the unanimous reversal:

honeycutt

Honeycutt v. US

Additionally, Honeycutt is a criminal case. This ruling favored a criminal defendant, something that {Marshall}+ cannot be blamed for missing.

SCOREBOARD

The FantasySCOTUS Crowd widened their lead this week. {Marshall}+ may yet outshine its prior years, though. Never turn a blind eye to the Algorithm.

SCOREBOARD:
Crowd: 37/44 cases; Accuracy Rate: 86.36%
{Marshall}+: 26/44 cases; Accuracy Rate: 59.09%

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