The Oyez Project: 2006 Term Opinions by Breyer

Credit Suisse First Boston Ltd. v. Billing

Billing and other investors filed a class action lawsuit against Credit Suisse and other Wall Street investment firms. The lawsuit alleged that the firms had violated the Sherman Antitrust Act by conspiring to drive up the cost of initial public offering (IPO) securities during the stock market boom of the 1990s. The firms allegedly entered into illegal contracts with IPO purchasers, requiring subsequent investors to pay artificially inflated prices for the secutities. Credit Suisse argued that the suit should be dismissed, because the firms had implied antitrust immunity. It claimed that the firms' conduct was normal business practice, and was closely regulated by the Securities and Exchange Commission. If plaintiffs were able to bring antitrust suits against investment firms for securities violations, Credit Suisse argued, the plaintiffs would be able to subvert the securities laws that Congress intended to govern such suits.

The federal District Court agreed with Credit Suisse and dismissed the lawsuit. On appeal, however, the U.S. Court of Appeals for the Second Circuit reversed the lower court and reinstated the suit. The Second Circuit held that there was no evidence that Congress had intended securities laws like the Securities Act of 1933 to foreclose antitrust suits challenging practices like those engaged in by Credit Suisse.

Global Crossing Telecommunications v. Metrophones Telecommunications

In the Telecommunications Act of 1996, Congress declared that payphone service providers (PSPs) must be compensated for every completed call using their payphones. Previously, PSPs were not compensated for coinless "dial-around" long-distance calls in which the caller pays a long distance carrier rather than the PSP. The Federal Communications Commission (FCC) adopted rules requiring the carriers to pay the PSPs on a per-call basis. Metrophones Telecommunications, a PSP, sued Global Crossing Telecommunications, a long-distance carrier, alleging that Global Crossing had failed to pay for calls placed from Metrophones's payphones.

The District Court dismissed Metrophones's first complaint because the Telecommunications Act of 1996 did not create a private right of action to recover compensation from long-distance carriers. Metrophones then filed an amended complaint based on Section 201(b) of the Communications Act of 1934, which deals with "unjust and unreasonable" practices of carriers. Global Communications argued that Metrophones had no right to sue under this statute either, but the District Court disagreed and ruled for Metrophones.

The Ninth Circuit Court of Appeals affirmed this decision. The Circuit Court relied heavily on the FCC's interpretation of the statute, which was that failure to pay compensation to PSPs is an "unjust and unreasonable" practice in violation of Section 201(b) and that PSPs have a private right of action to sue carriers for such violations. The Circuit Court held that though the FCC rule on the subject was brief, it was entitled to deference from the courts in the absence of specific guidance from the statute.

Gonzales v. Duenas-Alvarez

Luis Duenas-Alvarez, a Peruvian citizen living in California, was convicted of unlawful driving or taking of a vehicle. The Immigration and Nationality Act (INA) allows for the deportation of aliens who are convicted of an aggravated felony, which includes "theft offenses." The Department of Homeland Security began deportation proceedings against Duenas-Alvarez. An immigration judge ruled in favor of the government and ordered Duenas-Alvarez deported to Peru, and the Board of Immigration Appeals affirmed.

On appeal to the U.S. Court of Appeals for the Ninth Circuit, Duenas-Alvarez argued that he was not guilty of a theft offense for purposes of the INA because he had only aided and abetted the theft of the car. The California anti-theft law did not distinguish between auto-theft and merely aiding an auto-theft, but the Ninth Circuit had ruled that the INA "theft offense" includes only the person who actually stole and took possession of the car, and not necessarily anyone who aided in the theft. Accordingly, the Circuit Court ruled in favor of Duenas-Alvarez and reversed the lower courts.

Long Island Care at Home, Ltd. v. Coke

Long Island Care at Home (Long Island) employed Evelyn Coke as a "home healthcare attendant" for the elderly. Coke sued her employer, claiming rights to overtime and minimum wage under the Fair Labor Standards Act (FLSA). The District Court ruled for Long Island, holding that Coke fell under the FLSA's exemption for employees engaged in "companionship services." The court gave deference to the Department of Labor's regulation 29 CFR Section 552.109(a), which applies the exemption to employees in "companionship services" who are "employed by an employer or agency other than the family or household using their services."

The U.S. Court of Appeals for the Second Circuit reversed. It ruled that the regulation was a misinterpretation of the statute, and was therefore unenforceable. The Second Circuit declined to give the Department's regulation any of the judicial deference normally due to administrative regulations. No Chevron deference ("strong deference") was due, because the regulation was under a section titled "Interpretations." Regulations that are interpretive rather than legislative are not entitled to Chevron deference. The Court of Appeals also ruled that the regulation was "unpersuasive in the context of the entire statutory and regulatory scheme," and thus not entitled to Skidmore deference ("weak deference") either.

Philip Morris USA v. Williams

Jesse Williams died of lung cancer at age 67 after a life spent smoking three packs of Marlboro cigarettes per day. His widow sued Phillip Morris, the maker of Marlboro cigarettes, alleging that the company had engaged in a deliberate, wide-spread campaign of misinformation on the dangers of smoking. The jury found for Williams and awarded her $821,485.50 in compensatory damages and $79.5 million in punitive damages. However, the trial judge found the punitive damages excessive and reduced them to $32 million.

Under the Supreme Court's decision BMW v. Gore, punitive damages must be reasonably related to the harm done to the plaintiff, but larger punitive damage awards may be appropriate if the defendant displayed reprehensible conduct. Citing Gore, the Oregon Court of Appeals reinstated the $79.5 million award, holding that Phillip Morris's conduct was reprehensible enough to warrant the large amount.

The Oregon Supreme Court declined to take the case. However, the U.S. Supreme Court sent the case back for consideration in light of State Farm v. Campbell, which held that punitive damages can normally only be as much as nine times greater than compensatory damages. The Oregon Court of Appeals again affirmed the $79.5 million award, ruling that the reprehensibility of Phillip Morris's conduct justified the larger ratio. The Oregon Supreme Court upheld the decision.

Phillip Morris appealed to the Supreme Court, arguing that the court had unreasonably exceeded federal guidelines on punitive damages. Phillip Morris also argued that it was unfair to punish the company for its actions toward other smokers who were not parties to the suit.

Rita v. United States

Victor Rita received a thirty-three month sentence from a trial judge after a jury convicted him of perjury, obstruction of justice, and making false statements. Though the sentence fell within the range prescribed by the Federal Sentencing Guidelines and under the statutory maximum, Rita appealed to the U.S. Court of Appeals for the Fourth Circuit. He argued that the judge should not have sentenced him without explicitly considering factors enumerated in 18 U.S.C. 3553(a) that might justify imposing a lesser sentence. The government argued that the judge could presume the sentence reasonable if it fell within the guidelines, even without an explicit analysis of 18 U.S.C. 3553(a) factors. The Supreme Court had previously ruled in U.S. v. Booker that sentencing judges could only treat the guidelines as advisory, not as mandatory. The Fourth Circuit accepted the government's arguments and ruled that a presumption of reasonableness for within-Guidelines sentences did not violate Booker.

Watson v. Philip Morris

Lisa Watson filed a class action lawsuit against the tobacco company Philip Morris, claiming that the company had violated Arkansas law by misrepresenting the amount of tar and nicotine in cigarettes branded as "light." Seeking to have the case removed to federal court, Philip Morris invoked 28 U.S.C. 1442(a)(1), which allows removal when a party is sued for actions taken while "acting under" a federal officer. Philip Morris claimed that it was acting under the direct control of regulations promulgated by the Federal Trade Commission (FTC), so 28 U.S.C. 1442(a)(1) applied. After the federal District Court denied Watson's motion to have the case sent back to state court, Watson appealed.

The dispute centered on the degree of control exercised by the FTC over Philip Morris. The U.S. Court of Appeals for the Eighth Circuit affirmed the lower court's ruling in favor of Philip Morris, allowing the case to continue in the federal court system. The Eighth Circuit held that the question of whether 28 U.S.C. 1442(a)(1) applies "depends on the detail and specificity of the federal direction of the defendant's activities and whether the government exercises control over the defendant." In the case of the tobacco industry, the Eighth Circuit found "unprecedented" government involvement, including detailed FTC regulations concerning the testing and disclosure of tar and nicotine levels. Therefore, Philip Morris was "acting under a federal officer" and consequently entitled to remove the case to federal court.

Zuni Public School District v. U.S. Department of Education

The Department of Education certified that the state of New Mexico equalizes educational expenditures among school districts. The certification of equalization allowed New Mexico to offset its funding of districts located on Indian Reservations by a proportion of the federal Impact Aid payments made to those districts. Zuni Public School District objected to the certification, arguing that the Department had not followed the statutory formula for determining that a state's expenditures are equalized. Outlier school districts falling above the 95th or below the 5th percentile in per-pupil expenditures were excluded from consideration when the Department determined equalization. The Department calculated these percentiles based on the total student population, but Zuni argued that 20 U.S.C. Section 7709 had repealed that policy.

An administrative judge dismissed Zuni's complaint, and the Secretary of Education affirmed on the ground that the law was ambiguous. A divided panel of the U.S. Circuit Court of Appeals for the Tenth Circuit upheld the Secretary's decision as a valid interpretation of the statute. In a rehearing by the entire Circuit Court, the 12 judges split evenly, again upholding the ruling.