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This week at the Court: In Plain English

On Monday, the Court decided the last case argued this Term, Nevada Commission on Ethics v. Carrigan, proving once again that when a case is argued does not always determine when it is decided (a case in point:  we still anxiously await the violent video games case from November).  The case involved Michael A. Carrigan, an elected member of the City Council in Sparks, Nevada, who voted on a casino construction project in which his campaign manager was involved.  Although Carrigan disclosed his connection, he was censured by the Nevada Commission on Ethics, which concluded that he violated a state law prohibiting public officials voting on, or arguing for or against, any matter about which a reasonable person would have difficulty being impartial, in part because of a close relationship to someone affected by the vote.  [Disclosure:  I mooted John Elwood, counsel for petitioner in this case, but I had no other involvement in the case.]

Although the law might sound logical and clear, Carrigan argued that there were two problems with it:  his right to vote was protected by the First Amendment, and the specific provision of the law that he had been accused of violating was too broad because it prohibits someone from voting if his relationship to the person affected by the vote “substantially similar” to a close family member or relative.  In other words, how was a legislator to know what “substantially similar” meant?  And wouldn’t that restriction prevent too many votes from being cast, out of caution?

After the Nevada Supreme Court agreed with Carrigan on both arguments, the U.S. Supreme Court agreed to review the case.

Many people were watching the case closely, because recusal laws like Nevada’s are common in the United States; a ruling in Carrigan’s favor could have had a real impact on our political system.  But the Court on Monday unanimously agreed that the law was not too broad.  In an opinion written by Justice Scalia, the Court held focused mostly on a larger issue – whether legislators have the right, under the First Amendment, to vote on a particular issue or bill.  The Court looked to the history and tradition of recusal laws going back to our country’s early years, when the Constitution was first drafted (a practice of which Justice Scalia, in particular, is a big fan).  Because these laws have been part of our tradition and history, the Court explained, we presume that they are constitutional.  The Court also distinguished between a lawmaker’s vote and his speech, explaining that a lawmaker simply votes on behalf of his constituents; he does not have a personal right to vote.

One final note about Carrigan – the Court decided it quickly, probably because the vote was unanimous.  Not so for Flores-Villar v. United States, a case argued in November that challenged a federal law which treats citizenship claims differently for children born outside the United States depending on whether his citizen parent is the mother or the father.  On Monday, the Court announced that it would affirm the lower court’s decision  because – with Justice Kagan not participating – it was divided four to four.

How did that happen, and why did it take the Court so long to announce it?  We may never know (at least until one of the current Justices releases his or her papers, which probably won’t happen for decades).  But one possibility is that, when the Justices met for their private meeting after the oral argument in November, at least five Justices voted together, and one of them was assigned to write the majority opinion.  After a draft opinion circulated, however, one of the five may have announced that he or she could not join it, leading to negotiations – ultimately unsuccessful – to try to keep that Justice from switching votes.

The four-four tie was exactly the type of outcome that some Court watchers predicted when President Obama nominated then-Solicitor General Kagan to the Court; she wound up recusing herself from approximately a third of this Term’s merits cases, probably because she was involved in them as the Solicitor General.  The concern was that a four-four split results in the lower court’s decision being affirmed, and no precedent is set.  To some, that is a waste of judicial resources (it takes a long time and a lot of work for the Court to decide a case) and a wasted opportunity to make law on a presumably important issue. However, so far this year the predictions of many such splits have not panned out, as this was only the second four-four tie of the Term.      Moreover, although Justice Kagan was recused from this case, nothing would keep her from participating in a future case involving the same question.

Let’s move on to securities fraud and the Court’s opinion on Monday in Janus Capital Group v. First Derivative Traders.   The case was brought by a group of investors, who claimed that a mutual fund adviser – petitioner Janus Capital Group (“JCG”) – was responsible for misleading statements in the mutual fund prospectuses of Janus Investment Fund.  Although all the officers of Janus Investment Fund are employees of JCG, the two are technically (and legally) separate entities.  Although there is no doubt that JCG provided some of the information in the prospectuses to Janus Investment Fund, the Court – by a vote of five to four – held that investors could not bring a lawsuit against JCG for its role in the misleading statements.  Its reasoning?  Government rules prohibit the “mak[ing of] any untrue statement of a material fact” in connection with the purchase or sale of things like mutual funds and stocks.  But JCG, the Court explained, did not “make” the statement; the mutual fund itself did.    The Court was clearly worried that, if it agreed with the investors, every person who ever uttered a misleading statement that eventually found its way in a mutual fund prospectus could be held liable. Thus, it held instead that only the person or organization who has ultimate authority over the statement actually “makes” it (for example, the Court explained, a speechwriter writes a speech, but the speaker is the one responsible for its final delivery).

Looking forward, what will happen now?  The government says that, even after the Court’s decision in Janus, it can still pursue securities fraud cases against people who aid and abet in making fraudulent statements.  Still, investors might be wary, concerned that their remedies against anyone other than the entity publishing the prospectus might be limited.

Finally, the Court also issued its opinion in United States v. Jicarilla Apache Nation.  The case arose because the U.S. government acts as a manager (or fiduciary) of funds that come from mining on land belonging to Native Americans.  The tribe sued to get a detailed report on the activity of the funds because it believed that the government was mismanaging the money.  The government resisted giving the tribe some of its documents, arguing that because they contained legal advice from government attorneys regarding the management of the funds, they were protected by the attorney-client privilege – a doctrine that shields confidential communications between a lawyer and her client from disclosure to someone else.   The lower courts ordered the government to hand over the documents, concluding that they fell within an exception to the attorney-client privilege for fiduciaries; the exception is based on the idea that because the U.S. only is managing the funds for the tribe, the tribe is the “real” client and therefore should be able to see the documents.  But by a vote of seven to one (with Justice Kagan recused), the Court reversed the lower court’s decision and held that the fiduciary exception to the attorney-client privilege does not apply to the trust relationship between the United States and the Native American tribes. In an opinion by Justice Alito, the Court focused on the fact that the tribal fund trust was created by statute (one that did not spell out the exception) and was therefore different from a private trust fund. Specifically, the Court held that the reasons that have been given to justify the fiduciary exception in private trusts do not apply in the case of the government and Native American tribes; the tribe is not the “real” client because the government’s attorneys are paid from government money and not from the fund, and the legal advice was for the government’s own interest, not the tribe’s. What’s more, the government has many complicated legal concerns and additional duties other than those to the tribe.

We are expecting more opinions tomorrow; we will probably have them on at least two days next week as well.  With nineteen cases still to be decided, there will be a lot to discuss in Plain English.

Recommended Citation: Lisa Tucker, This week at the Court: In Plain English, SCOTUSblog (Jun. 15, 2011, 2:43 PM),