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Court returns to campaign finance (UPDATED to 12:08 p.m.)

NOTE TO READERS: The final updates of this post were made at 12:08 p.m.

The Supreme Court on Monday moved into the center of a spreading legal controversy over public subsidies for political candidates, granting review of a pair of cases involving Arizona’s so-called “clean elections” law.  That was one of three grants as the Court returned to public session after a two-week recess.  It took no immediate action, however, on the much-awaited case involving the employment practices of the popular discount retailer, Wal-Mart Stores, Inc.

The Court also agreed to hear an important patent case, appealed by Microsoft Corp., testing the proof that the challenger to a patent’s validity must offer — clear and convincing evidence, or a lesser showing.  The case involves a nearly $290 million award against the software giant for allegedly infringing on a patent for computer “language” that dictates the formatting of a digital document.  Chief Justice John G. Roberts, Jr., did not take part in the order on that case.  The case is Microsoft v. i4i Limited Partnership (10-290).   In another intellectual property case, the Court passed up its first opportunity to clarify the amount of damages due to music recording companies when someone downloads copyrighted songs from the Internet, an issue that involves the scope of the “innocent infringer” defense.  Justice Samuel A. Alito, Jr., dissented alone from the denial of review in Harper v. Maverick Recording Co. (10-94).

The third granted case, involving CSX Transportation, Inc., involves a dispute over the proof needed when a railroad worker or a seaman claims that an accident on the job, causing injury, was the fault of the employer.   The issue is the whether the employer must be found to have actually caused the harm, even if its actions were not the sole cause, before it can be found liable under the Federal Employers’ Liability Act. That law applies to rail workers; the issue also arises under the Jones Act, for seaman.  The granted case is CSX v. McBride (10-235).

The election subsidies cases from Arizona was before the Court in a preliminary way in June. Then, without noted dissent, the Court blocked the matching funds provision of state law, thus barring the scheduled payment of subsidies to state candidates who had qualified for public funds because they had agreed to limit the private donations they would accept for their campaigns.   The cases to be heard — consolidated for one hour of oral argument (probably in March) — are Arizona Free Enterprise Club v. Bennett (10-238) and McComish, et al., v. Bennett (10-239).

Although election law experts regard the new cases as a major test of the entire concept of public financing of candidacies, it is unclear whether the final ruling will sweep that broadly.  For example, the federal program of public grants to presidential candidates, if they abide by spending limits, is not an attempt to equalize the competition for the presidency, while Arizona’s program and similar programs in other states have that specific goal at their center.  Under the Arizona law, a candidate who is running under donation and spending limits is eligible for subsidies only when that is necessary to allow them to catch up — at least part of the way — with a self-financed candidate who raises and spends more than the subsidized candidate.

Thus, that type of program more closely implicates the federal campaign finance law’s “millionaire’s amendment,” which the Supreme Court struck down in 2008 in Davis v. Federal Election Commission.  That provision was designed to aid candidates for the House of Representatives who were running against opponents paying their own way.  The amendment, however, did not involve public subsidies, but only changes in the limits that applied o candidates not paying for their own campaigns to help them compete against wealthier opponents.  The Ninth Circuit Court, in upholding the Arizona scheme, found significant differences between the Arizona scheme and the “millionaire’s amendment.”

The Supreme Court upheld the federal presidential public funds provision in Buckley v. Valeo in 1976.   Since that time, however, a new Supreme Court majority has grown significantly more skeptical of much of the entire range of campaign finance law.

The Court’s decision to hear the Microsoft patent case provides a basic test of the long-standing rule of the Federal Circuit Court that a challenger to a patent’s validity must prove that point by “clear and convincing evidence,” rather than by a mere “preponderance of the evidence.” In the software company’s appeal, buttressed by an unusually heavy outpouring of support from amici, it has argued that the standard of proof should be relaxed especially in cases in which the U.S. Patent Office, in granting a patent, had not been told of precursors of the patented invention.

At issue, legally, is a provision of federal patent law that provides that “a patent shall be presumed valid,” with the burden of proving its invalidity assigned to the challenger.  In this case, involving a patent on so-called “metacodes” or “markup language” for formatting digital documents on a computer, Microsoft was held to a “clear and convincing” evidence requirement.  A jury ruled that it had infringed the patent, and awarded i4i Partnership $200 million.  The award has since grown to about $290 million, with interest as well as a court-imposed sanction of $40 million for misconduct during the trial by Microsoft’s legal team.

While the Court took on that case, it chose not to get drawn back into the continuing controversy over damages for copyright violations in downloading music via the Internet.  The new case involves a San Antonio young woman, Whitney Harper, who at age 16 had downloaded from the Internet a sizeable list of copyrighted music. Her lawyers later defended her against an infringement claim, arguing that she was an “innocent infringer” because she was naive and had no idea that the songs were protected by copyright.   The Fifth Circuit Court ruled against here, concluding that the “innocence” defense is not available if copyrighted music has been sold in record stores with their copyright marked on the album or other cover.  It made no difference, the Circuit Court concluded, that Harper had not seen those marks when she chose to download the songs.  She faces damages that may reach beyond $30,000.

Justice Alito, in dissenting from the denial of review of Harper’s petition, argued that the Circuit Court’s interpretation of the “innocent infringer” law may have been based on out-of-date perceptions about access to copyrighted music, since the law at issue was passed in 1988, “well before digital music files became available on the Internet.”   Alito, though, noted that lower courts are not split on the scope of that law, but “if a conflict in the Circuits develops in the future,” the Court should take it on and rule.

The Court also refused to hear another case arising out of Internet activity — an appeal by the luxury jewelry firm, Tiffany & Co., asking the Justices to clarify what kind of proof is needed to hold an Internet marketplace, eBay, legally to blame for allowing vendors to sell “knockoffs” of trademarked merchandise.  All new Tiffany merchandise is sold in the U.S. only through Tiffany;s own stores, catalogs or websites, and does not sell overstock goods.  Thus, it concluded that active buying and selling of goods on eBay as “Tiffany” merchandise likely involved imitations, not the real goods — a fact that it confirmed by conducting its own test with eBay.

Tiffany’s contributory infringement claim against eBay failed in the Second Circuit when that court concluded that the jewelry firm had not shown that eBay knew of specific listings that were bogus.  The denied case was Tiffany v. eBay Inc. (10-300).  Justice Sonia Sotomayor did not take part in the order denying review.

Missing from the Court’s list of orders on Monday was any action on the appeal by Wal-Mart Stores (docket 10-277), seeking to head off a nationwide class-action lawsuit perhaps affecting as many as 1.5 million women who now work or previously worked for the discount retail chain in the U.S.  Wal-Mart’s petition asks the Court to bar any award of money payments to workers who sue in a class-action lawsuit under a federal court rule that specifies that only corrective court orders are available as a remedy.

The six women who filed the case against Wal-Mart, contending that its store managers routinely engage in rampant discrimination against their female workers, represent a nationwide class that is seeking what Wal-Mart estimates to be billions of dollars in damages.   The issue it is seeking to raise before the Court, at this stage, is only the validity of a federal judge’s order allowing the Title VII lawsuit to go to trial as a class-action claim.

While the Court is known to have considered the petition at last week’s private Conference, the Justices, of course, had no obligation to take action on it, nor any duty to indicate Monday why there was no action yet.

The Court did take action on a number of other significant new cases, denying review of them.  Among those was a plea by Travelers Indemnity Co. for the Justices to finally put an end to the controversy over the binding effect of 24-year-old federal court orders curbing the right to sue for injury or death due to exposure to asbestos, in the famous Johns-Mansville bankruptcy case.  Travelers was an insurer of Mansville, but obtained a series of court orders insulating it against lawsuits for its own conduct — lawsuits that supposedly were barred by a massive settlement deal in the Mansville case.   At issue in two petitions by Travelers (10-244 and a mandamus petition, 10-245) was a Second Circuit Court ruling that exempted some of the lawsuits against Travelers from the settlement’s bar to such claims.  Justice Sotomayor took no part in the order denying both petitions.

Among other cases denied review on Monday were these:

** Educational Media Co. v. Swecker (10-278), testing whether it is unconstitutional for a state to ban all liquor advertising in college publications without proof that the ban will actually reduce students; abuse of alcohol.

** A pair of new petitions, seeking to reopen the question of whether a public agency that transfers polluted waters from one water body to another must get a federal permit even if the transfer itself does not add any new pollutants — sequels to a 2005 Supreme Court ruling involving transfers of water from polluted canals into Florida’s pristine Lake Okeechobee.  All parties in the case, except the U.S. Environmental Protection Agency, urged the Court to hear the two cases: Friends of the Everglades v. South Florida Water Management District (10-196) and Miccosukee Tribe v. South Florida Water Management District (10-252).  Justice Elena Kagan took no part in the orders denying review.

** A new petition in Montejo v. Louisiana (10-416), a sequel to a Louisisna murder case that was decided last year by the Court, this time testing whether it is unconstitutional for police to chastise a suspect they are questioning when the suspect asks for a lawyer; the theory of the challenge is that this kind of police tactic made invalid any waiver of the right to counsel.   Justice Kagan took no part in the denial order.

Four Justices filed a separate opinion in response to the Court’s denial of review in Gamache v. California (10-5196), a case challenging a murder conviction in California because the jury, during deliberations, had watched a videotape in which Gamache was seen confessing.  That tape, however, had not been admitted into evidence.  The California Supreme Court found that the incident was a “harmless error.”  Justice Sotomayor, writing for herself and for JusticesKagan, Stephen G. Breyer and Ruth Bader Ginsburg, did not dissent from the denial, but wrote separately to caution lower courts about assigning to the defense, not the prosecution, the burden of proof on whether a trial error was harmless.

Recommended Citation: Lyle Denniston, Court returns to campaign finance (UPDATED to 12:08 p.m.), SCOTUSblog (Nov. 29, 2010, 10:07 AM),