Court to hear securities, porn cases
on Mar 26, 2007 at 10:03 am
UPDATE 2:05 p.m. Monday’s orders indicated no action by the Supreme Court on two new appeals by Guantanamo Bay detainees (Boumedine v. Bush, 06-1195, and Al Odah v. U.S., 06-1196). However, the parties have now been informed that the Court will consider at its Friday Conference both the motions to expedite the cases, and the question of granting or denying the two petitions themselves.
UPDATE 11:00 a.m.: Today’s orders can now be found here.
The Supreme Court agreed on Monday to spell out the scope of securities fraud law when a private firm or individual has a role in price manipulation, but made no public statements as part of the scheme. In a second order, the Justices agreed to rule on the constitutionality of a 2003 law passed by Congress to criminalize distribution of child pornographic materials over the Internet and through the mails. The newly granted cases will be heard in the new Term starting in October
The securities fraud case is Stoneridge Investment v. Scientific-Atlanta (06-43), testing when a supposedly “secondary” actor in deception about securities can be treated as a “primary” actor in terms of shared liability for the scheme. The case is a sequel to the Court’s 1994 ruling in Central Bank v. First Interstate Bank, holding that private securities fraud lawsuits may not be based on claims of aiding and abetting deception. Monday’s order granting review noted that Chief Justice John G. Roberts, Jr., and Justice Stephen G. Breyer are recused from the case.
The underlying dispute in the Stoneridge case arises over claims that Scientific Atlanta, Inc., and Motorola, Inc., engaged in efforts to help a giant cable television firm, Charter Communications, inflate its financial statements artificially in order to bolster its stock’s price. The deal involved an alleged “sham” transaction that generated some $17 million in phony revenues from the supposed sale of TV set-top boxes. The scheme led to a federal indictment of two of Charter’s officers and a cease and desist order by the Securities and Exchange Commission. Stoneridge’s lawsuit claiming securities fraud was also aimed at Charter, but its appeal granted Monday only involves the dismissal of its claims against the vendor companies.
The case on pornography is U.S. v. Williams (06-694; cert. petition, reply). It involves the validity of the 2003 “PROTECT Act” that Congress passed to try to shore up federal controls on child porn after the Supreme Court struck down a 1996 federal law on the subject in Ashcroft v. Free Speech Coalition (2002). The PROTECT Act is separate from the law struck down last week by a federal judge in Philadelphia, involving a federal law that solely targets Internet distribution of sexually explicit materials in order to protect children with access to computers and other online devices.
Among orders denying review in new cases, the Justices refused Monday to take a new look at the constitutionality of state laws governing grandparent visitation with children. It refused to hear Fausey v. Hiller (06-863). The petition sought to raise the question of whether a law allowing for grandparent visitation over a parent’s objection is invalid if grandparents are not required to show that visitation is necessary to prevent actual or potential harm to the child. The Court’s last examination of grandparent visitation laws came in Troxel v. Granville in 2000; there was no decision for a five-Justice majority, so Troxel did not finally resolve the question of the constitutionality of grandparent visitation laws generally. The new case involved a Pennsylvania law that does not require a showing of harm as a predicate for a court to award grandparents’ visits over parental protest.
The Court also declined to examine the constitutionality of the former practice in a South Dakota county of requiring strip searches of all juveniles brought to a police station after any minor offense. The policy in Minnehaha County has since been modified by the state legislature. The denied case was Smook v. Minnehaha County (06-1034). The Eighth Circuit Court upheld the search that led to the challenge.
The Justices rejected an appeal seeking to test an equally divided Mississipi Supreme Court ruling that involved the admission of a confession to a crime that had been obtained illegally by police in violation of the suspect’s rights under Miranda v. Arizona. The state court found the admission was an error, but found that it was “harmless” because there was “overwhelming” evidence to support the conviction. The case was Haynes v. Mississippi (06-7827).
