The Oyez Project: 2006 Term Opinions by Souter

Bell Atlantic Corporation v. Twombly

William Twombly and other consumers brought a class action lawsuit against Bell Atlantic Corp. and other telecommunications companies. Twombly alleged that the companies had violated Section 1 of the Sherman Act by conspiring to end competition among themselves and to stifle new competition. In the suit, Twombly claimed that the companies had agreed not to branch out into and compete in one another's territories, even though the Telecommunications Act of 1996 might have made it relatively inexpensive to do so.

The District Court granted Bell Atlantic's motion to dismiss the suit, however, because Twombly had failed to "allege sufficient facts from which a conspiracy can be inferred." In order to sufficiently claim a Section 1 violation, the court held, the plaintiffs needed to establish a "plus factor" - a piece of evidence showing that the defendants' behavior would be against their economic self-interest unless there was a conspiratorial agreement. Twombly had not established a plus factor, the court held, because the companies' defensive behavior could have been motivated by economic factors rather than conspiracy.

Twombly appealed to the U.S. Court of Appeals for the Second Circuit, which reversed the lower court. The Second Circuit ruled that Twombly needed only to allege a conspiracy and specific facts that would support a Section 1 violation. Since he had alleged that the companies had engaged in suspicious "parallel conduct" and conspired to preserve monopoly conditions, his claim was sufficient and the suit could proceed.

Brendlin v. California

Police stopped Karen Simeroth's car for having expired registration tabs. Bruce Brendlin, who had a warrant out for his arrest, was riding in the passenger seat. Police found methamphetamine, marijuana, and drug paraphernalia in the car and on Simeroth's person. In a California trial court, Brendlin filed a motion to suppress the evidence obtained at the traffic stop, claiming that the stop was an unreasonable seizure in violation of the Fourth Amendment. The trial court found that Brendlin had never been detained or "seized" within the meaning of the Fourth Amendment. It denied the motion, and Brendlin pleaded guilty to manufacturing methamphetamine. A California Court of Appeal reversed, holding that a traffic stop necessarily results in a Fourth Amendment seizure.

The California Supreme Court reversed the Court of Appeal and ruled for California. The court held that the driver of the car is the only one detained in a traffic stop. The movement of any passengers is also stopped as a practical matter, but the court considered this merely a necessary byproduct of the detention of the driver. The court held that Brendlin had been free to leave the scene of the traffic stop or to simply ignore the police. Since he was never "seized," however, he could not claim a violation of the Fourth Amendment.

EC Term of Years Trust v. United States

The Internal Revenue Service (IRS) contended that Elmer and Dorothy Cullers had established a trust for the purpose of evading taxes. The IRS filed tax liens against the trust, freezing the trustees' assets until the outstanding taxes were paid. The trustees disagreed with the IRS, but opened a bank account to settle the tax dispute. A month later, the IRS collected the outstanding taxes from the bank account. EC Term of Years Trust sued the IRS pursuant to 26 U.S.C. 7426, which entitles trustees to challenge wrongful IRS collections, and 28 U.S.C. 1346(a)(1), which entitles taxpayers to recover erroneously collected taxes. A district court decided that only 26 U.S.C. 7426 allowed third-party tax recoveries, so the court lacked jurisdiction under 28 U.S.C. 1346(a)(1), the general provision for tax recovery. The court dismissed the 26 U.S.C. 7426 claim because the nine-month filing time limit had expired. EC Trust claimed in a second suit that the Supreme Court's opinion in United States v. Williams meant that the possibility of a suit under 26 U.S.C. 7426 did not preclude suits under 28 U.S.C. 1346(a)(1). The District Court rejected the argument, and the U.S. Court of Appeals for the Fifth Circuit affirmed.

Environmental Defense v. Duke Energy Corporation

A 1977 amendment to the Clean Air Act created the Prevention of Significant Deterioration program (PSD), which requires power companies that want to make emissions-increasing modifications to their facilities to first apply for permits. Between 1988 and 2000, Duke Energy Corporation (Duke) made twenty-nine extensive improvements to its power plants without obtaining PSD permits. When the government, along with Environmental Defense and several other environmental groups, sued Duke, the company pointed to a PSD regulation explicitly defining "modification" for purposes of PSD as any change that increases the hourly rate of emissions from a facility. Duke's improvements increased the number of hours the plants remained open, and therefore also increased the total annual emissions from the plants. But since the improvements left the hourly rate of emissions unchanged, Duke argued that it did not have to obtain PSD permits. The government countered by citing the Environmental Protection Agency's current interpretation of the PSD regulations, which holds that a power company making improvements that increase the hours of operation of its plants does need to obtain a permit in all cases where construction is involved.

The District Court ruled in favor of Duke. The judge refused to rely on the EPA's current interpretation, ruling that it was inconsistent with the wording of the PSD regulations. Environmental Defense appealed to the Fourth Circuit Court of Appeals, and the Circuit Court affirmed the District Court's decision. The Fourth Circuit pointed out that the 1977 PSD amendment had taken its definition of "modification" directly from a 1975 Clean Air Act amendment concerning the New Source Performance Standards program (NSPS). In the 1975 amendment, the term "modification" explicitly excluded improvements that merely increase the hours of operation of a facility. Therefore, the Fourth Circuit held, the EPA did not have statutory authority to interpret "modification" differently for the PSD program. Environmental Defense appealed to the Supreme Court, with the added argument that the Fourth Circuit never should have heard the case, because challenges to Clean Air Act regulations can only be brought in the D.C. Cricuit.

Lopez v. Gonzales

Jose Lopez, a Mexican national living in South Dakota, was convicted of aiding and abetting the possession of cocaine. The crime is a felony under South Dakota law, but only a misdemeanor under the federal Controlled Substances Act.

The Immigration and Naturalization Service began proceedings to remove Lopez from the country. Lopez applied for a cancellation of his removal, citing the Immigration and Naturalization Act (INA). The INA allows an alien to avoid removal if he meets certain qualifications and has no prior "aggravated felony" convictions. Lopez argued that he was eligible for cancellation of his removal because his drug offense was only a misdemeanor under federal law.

An Immigration Judge denied Lopez's request for cancellation, and the Board of Immigration Appeals affirmed, on the grounds that Lopez had committed an aggravated felony. Lopez then sued the Attorney General and brought his case to the Court of Appeals for the Eighth Circuit. The Circuit Court affirmed the lower courts, ruling that a crime is an aggravated felony under the INA if it is a felony under either federal or state law.

Safeco Insurance Company of America, et al. v. Charles Burr

In No. 06-100, Edo, a consumer, sued GEICO General Insurance Company, alleging that GEICO had violated the requirement in the Fair Credit Reporting Act (FCRA) that insurance companies give consumers notice before raising rates. Edo sought statutory and punitive damages, which the FCRA awards only when a company "willfully" violates the law. Similarly, in 06-84, several consumers sued Safeco for failing to notify them that better credit ratings would have entitled them to better premiums. It was GEICO's policy to notify new applicants only if their credit ratings were worse than a certain "neutral" (average) value, while Safeco as a matter of policy did not give "adverse action" notices to any new applicants. GEICO argued that it was unaware that the FCRA applied to the setting of premiums for new applicants such as Edo, and thus could not be considered to have acted willfully. The District Court ruled for GEICO and Safeco, holding that their actions did not qualify as willful.

On appeal, the Court of Appeals for the Ninth Circuit reversed, holding that that the concept of willfulness includes "reckless disregard" for the law as well as actual knowledge that the conduct was illegal. The ruling put the Ninth Circuit in conflict with most other circuit courts, but the court argued that its interpretation was more consistent with Supreme Court precedent and the purpose of the FCRA.

Wilkie v. Robbins

Harvey Robbins owned a private dude ranch which was intermingled with federal lands. The previous owner had granted the Bureau of Land Management (BLM) right-of-way across the private land, but after Robbins bought the ranch he refused to re-grant it. Robbins alleged that BLM officials harassed him with threats and meritless criminal charges, with the aim of forcing him to grant the government right-of-way. Robbins sued the BLM officials for extortion in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). He also brought a Bivens action (an action seeking monetary damages from a federal agent for a constitutional violation). Robbins argued that the Fifth Amendment protects a "right to exclude" government officials from one's property, and that the BLM agents had retaliated against him for his exercise of this right. The District Court dismissed both claims, but the U.S. Court of Appeals for the Tenth Circuit reversed. On appeal to the Supreme Court, the government argued that the BLM officials, while acting on behalf of the government, had qualified immunity and therefore could not be sued for extortion under RICO. The government also claimed that no Bivens action could be brought, because review of the BLM's actions was already available under the Administrative Procedure Act.