Law in Plain English: Wellness International Network, Limited v. Sharif

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblog: Wellness International Network, Limited v. Sharif

Argument: Jan 14 2015 (Aud.)

Background: Richard Shariff was slapped with a judgment in excess of $650,000 as a sanction for his failure to engage in discovery. As a result, Sharif filed for Chapter 7 bankruptcy. Wellness International Network (WIN), one of his bankruptcy creditors, sought to prevent discharge of Sharif’s debts under 11 U.S.C. § 727, and sought a declaratory judgment that a trust of which Sharif was trustee was in fact Sharif’s alter ego. Sharif continued his evasive and dilatory tactics, failing to respond to WIN’s and the bankruptcy trustee’s discovery requests. The bankruptcy court ordered Sharif to comply with the discovery requests and warned him that failure to do so would result in a default judgment. Sharif tendered some discovery but his responses fell far short of full compliance. After a hearing, the bankruptcy judge issued an opinion and order entering default judgment in WIN’s favor and subsequently awarded attorney’s fees to WIN. On appeal, Shariff filed a supplementary motion based on the claim that a bankruptcy judge did not have the authority to enter final judgment under Stern v. Marshall, but had failed to make this argument in his earlier motions. The district judge denied both motions as untimely, holding that a Stern objection to a bankruptcy judge’s authority to enter final judgment is waivable and that Sharif’s failure to raise it earlier constituted waiver. The Seventh Circuit reversed on the Stern objection, finding that a constitutional objection based on Stern is not waivable because it implicates separation‐of‐powers principles. Additionally, the court held that that the bankruptcy judge lacked constitutional authority to enter a final judgment on the alter‐ego claim. The court affirmed the remainder of the judgment, holding that the bankruptcy judge had constitutional authority to enter final judgment on the first four counts of the adversary complaint, each of which were objections to the discharge of Sharif’s debts. Additionally, the court held that that the entry of default judgment and awarding of fees were proper sanctions under the circumstances.

Issue: The questions before the Court are (1) whether the presence of a subsidiary state property law issue in a 11 U.S.C. § 541 action brought against a debtor to determine whether property in the debtor’s possession is property of the bankruptcy estate means that such action does not “stem[] from the bankruptcy itself” and therefore, that a bankruptcy court does not have the constitutional authority to enter a final order deciding that action; and (2) whether Article III permits the exercise of the judicial power of the United States by the bankruptcy courts on the basis of litigant consent, and if so, whether implied consent based on a litigant’s conduct is sufficient to satisfy Article III.

Holding: In a 6-3 decision, the Supreme Court ruled that Article III permits bankruptcy judges to adjudicate Stern claims with the parties’ knowing and voluntary consent. Consent to adjudication by a bankruptcy court need not be express, but must be knowing and voluntary. The Court stated that the Seventh Circuit should decide on remand whether Sharif’s actions evinced the requisite knowing and voluntary consent and whether Sharif forfeited his Stern argument below. 

Law in Plain English: Mach Mining v. Equal Employment Opportunity Commission

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblog: Mach Mining v. Equal Employment Opportunity Commission

Argument: Jan 13 2015 (Aud.)

Background: The Equal Employment Opportunity Commission (EEOC) received a charge of discrimination in early 2008 from a woman who claimed Mach Mining had denied a number of her applications for coal mining jobs because of her gender. After investigating the charge, the agency determined there was reasonable cause to believe Mach Mining had discriminated against a class of female job applicants at its mine near Johnston City, Illinois. In late 2010, the EEOC notified the company of its intention to begin informal conciliation. Title VII of the Civil Rights Act of 1964 directs the Equal Employment Opportunity Commission to try to negotiate an end to an employer’s unlawful employment practices before suing for a judicial remedy. In September 2011, the EEOC told Mach Mining that it had determined the conciliation process had been unsuccessful and that further efforts would be futile. The EEOC filed its complaint in the district court two weeks later. Mach Mining’s answer asserted several affirmative defenses, including the allegation that the suit should be dismissed because the EEOC failed to conciliate in good faith. The district court held that judicial review of conciliation is appropriate in the form of an affirmative defense. The Seventh Circuit reversed, noting that language of the statute, the lack of a meaningful standard for courts to apply, and the overall statutory scheme convinced the court that an alleged failure to conciliate was not an affirmative defense to the merits of a discrimination suit.

Issue: The question before the Court is whether and to what extent a court may enforce the Equal Employment Opportunity Commission's mandatory duty to conciliate discrimination claims before filing suit.

Holding: TBD

Law in Plain English: Harris v. Quinn

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblog: Harris v. Quinn

Argument: Jan 21 2014 (Aud.)

Background: Pamela Harris and others provide in-home care to disabled individuals through Medicaid-waiver programs run by the Illinois Department of Human Services. Some are part of the Home Services Program administered by the Division of Rehabilitation Services ("Rehabilitation Program"). The others are part of the Home Based Support Services Program administered by the Division of Developmental Disabilities ("Disabilities Program").

In 2003, a majority of the approximately 20,000 Rehabilitation Program personal assistants voted to designate SEIU Healthcare Illinois & Indiana as their collective bargaining representative with the State. The Union and the State negotiated a collective bargaining agreement, including a "fair share" provision requires "all Personal Assistants who are not members of the Union...to pay their proportionate share of the costs of the collective bargaining process, contract administration and pursuing matters affecting wages, hours and other conditions of employment." Harris and the others allege that a collective bargaining agreement that requires Medicaid home-care personal assistants to pay a fee to a union representative violates the First Amendment. The Seventh Circuit held that that personal assistants in the Illinois home-care Medicaid waiver program were State employees that may be compelled to support legitimate, non-ideological, union activities germane to collective-bargaining representation.

The Disabilities Program plaintiffs successfully rejected unionization and were not subject to fair share fees, but feared that may change at any time. The Seventh Circuit dismissed the Disabilities Program plaintiffs' claims for lack of jurisdiction because they were not ripe for adjudication.

Issue: The questions before the Court are (1) whether a state may, consistent with the First and Fourteenth Amendments to the United States Constitution, compel personal care providers to accept and financially support a private organization as their exclusive representative to petition the state for greater reimbursements from its Medicaid programs; and (2) whether the lower court erred in holding that the claims of providers in the Home Based Support Services Program are not ripe for judicial review.

Holding: In a 5-4 decision, the Supreme Court ruled that the First Amendment prohibits the collection of an agency fee from Rehabilitation Program PAs who do not want to join or support the union.

Law in Plain English: Clark v. Rameker

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblog: Clark v. Rameker

Argument: Mar 24 2014 (Aud.)

Why did the Supreme Court take this case? In this case, the Seventh Circuit held that individual retirement account that a debtor has inherited are exempt from the debtor's bankruptcy estate. On the other hand, the Fifth Circuit ruled in an earlier case that such payments are subject to taxation. So-called "circuit splits" are perhaps the most common way cases make it to the Supreme Court.

Discussion: At her death, Ruth Heffron owned an IRA worth approximately $300,000. Ruth's daughter Heidi Heffron-Clark was the designated beneficiary. Ruth's account passed to Heidi. When Heidi and her husband Brandon initiated bankruptcy proceedings, they sought to protect the inherited IRA pursuant to 11 U.S.C. § 522(b)(3)(C) and (d)(12), which exempt retirement funds from creditors' claims in bankruptcy. The bankruptcy judge held that an inherited IRA does not represent "retirement funds" in the hands of the current owner and so is not exempt. The District Court reversed, adopting the view that any money representing "retirement funds" in the decedent's hands must be treated the same way in successors' hands. The Seventh Circuit reversed the District Court, finding that inherited IRAs represent an opportunity for current consumption, not a fund of retirement savings.

Issue: The question before the Court is whether an individual retirement account that a debtor has inherited is exempt from the debtor's bankruptcy estate under Section 522 of the Bankruptcy Code, 11 U.S.C. § 522, which exempts "retirement funds to the extent that those funds are in a fund or account that is exempt from taxation" under certain provisions of the Internal Revenue Code.

Holding: In a unanimous decision, the Supreme Court ruled that funds held in an inherited IRA account are not "retirement funds" within the meaning of the Bankruptcy Code.

Law in Plain English: Robers v. United States

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblog: Robers v. United States

Argument: Feb 25 2013 (Aud.)

Background: Benjamin Robers pleaded guilty to conspiracy to commit wire fraud in violation of 18 U.S.C. § 371, based on his role as a straw buyer in a mortgage fraud scheme. Robers signed mortgage documents seeking loans which were based on false and inflated income and assets and based on his claim that he would reside in the houses as his primary residence and pay the mortgages. The loans went into default and the real estate which served as collateral for the loans were later foreclosed upon and resold. For his role in the scheme, the District Court sentenced Robers to three years' probation and ordered him to pay $218,952 in restitution to the victims — a mortgage lender of one property and the mortgage insurance company which had paid a claim on the other defaulted mortgage. Robers' restitution is governed by the Mandatory Victims Restitution Act of 1996, 18 U.S.C. § 3663A ("MVRA"), which required the court to determine an "offset value." Robers argued that the offset value should be based on the fair market value of the real estate collateral at the time the victims obtain title to the houses. The government argued that the court should determine the offset value based on the eventual amount recouped by the victim following sale of the collateral real estate. The Seventh Circuit agreed with the government, ruling that the value of the property returned on the date of its return is the amount of cash recovered at the time the foreclosed real estate was eventually resold.

Issue: The question before the Court is whether a defendant – who has fraudulently obtained a loan and thus owes restitution for the loan under 18 U.S.C. § 3663A(b)(1)(B) – returns “any part” of the loan money by giving the lenders the collateral that secures the money.

Holding: In a unanimous decision, the Supreme Court ruled that the phrase “any part of the property...returned” refers to the property the banks lost, namely, the money they lent to Robers, and not to the collateral the banks received, namely, the houses.

Law in Plain English: Sandifer v. United States Steel Corporation

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblog: Sandifer v. United States Steel Corporation

Argument: Nov 4 2013 (Aud.)

Background: The Fair Labor Standards Act (FLSA), 29 U.S.C. § 203(o), excludes, from the time during which an employee is entitled to be compensated at the minimum hourly wage "any time spent in changing clothes...at the beginning or end of each workday which was excluded from measured working time...by the express terms of or by custom or practice under a bona fide collective-bargaining agreement applicable to the particular employee." A group of workers at U.S. Steel filed a collection action lawsuit against the company for failing to compensate them for the time they spent putting on and taking off their work clothes in a locker room at the plant. The clothes consist of flame-retardant pants and jacket, work gloves, metatarsal boots (work boots containing steel or other strong material to protect the toes and instep), a hard hat, safety glasses, ear plugs, and a "snood" (a hood that covers the top of the head, the chin, and the neck). The District Court ruled that the FLSA does not require that the clothes-changing time in this case be compensated, and the Seventh Circuit agreed.

Issue: The question before the Court is what constitutes “changing clothes” within the meaning of Section 203(o) of the FLSA?

Holding: In a unanimous decision (except for Justice Sotomayor, who did not join in footnote 7), the Supreme Court ruled that most of the items identified by the workers were indeed clothes, and as a result, the time that petitioners spend donning and doffing their protective gear is not compensable by the operation of federal law. Consequently, the FLSA does not require that the clothes-changing time in this case be compensated and the Seventh Circuit's decision was affirmed.

Gary Works, U. S. Steel’s largest manufacturing plant, is situated on the south shore of Lake Michigan.

Law in Plain English: Madigan v. Levin

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblog: Madigan v. Levin

Argument: Oct 7 2013 (Aud.)

Discussion: Levin worked as an Illinois Assistant Attorney General until he was terminated in 2006. He filed a lawsuit alleging age discrimination under the Age Discrimination in Employment Act (ADEA), Title VII of the Civil Rights Act of 1964, and the Equal Protection Clause of the Fourteenth Amendment via 42 U.S.C. § 1983. Madigan (the Attorney General of Illinois) argued that Levin's 1983 claim is precluded by the ADEA because the ADEA is the exclusive remedy for age discrimination claim. The District Court ruled that Levin's 1983 claim could preceed and the Seventh Circuit agreed, finding that nothing in the text of ADEA expressly precluded a 1983 claim, and that the rights protected by ADEA and § 1983 were sufficiently different to allow the 1983 claim.

Issue: The question before the Court was whether the Seventh Circuit erred in holding, in an acknowledged departure from the rule in at least four other circuits, that state and local government employees may avoid the federal Age Discrimination in Employment Act’s comprehensive remedial regime by bringing age discrimination claims directly under the Equal Protection Clause and 42 U.S.C. § 1983.

Holding:The Supreme Court dismissed the writ of ceriorari as improvidently granted. A "DIG" is essentially the Court saying that it should not have accepted the case.

Law in Plain English: Vance v. Ball State University

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

Vance v. Ball State University

Vance was an African American employee of Ball State University. She complained about racially offensive comments by another employee who was responsible for assigning her work on a day-to-day basis, but wasn't otherwise responsible for hiring, firing, transferring, demoting, disciplining, or promoting decisions. Vance filed a Title VII complaint against the University. The question before the Court was whether Vance's fellow employee qualified as "supervisor" which would subject the University to the harassment claims. In a 5-4 decision, the Supreme Court ruled that an employee is a “supervisor” for purposes of vicarious liability under Title VII only if he or she is empowered by the employer to take tangible employment actions against the victim. As a result, Vance's claim against the University fails. The practical impact of this decision is that claims of vicarious liability will be subject to a stricter definition of "supervisor."

Law in Plain English: Peugh v. United States

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

Peugh v. United States

Peugh was convicted of federal bank fraud in 2009, and sentenced in 2010. At the time of his offense (1999-2000), the U.S. Sentencing Guidelines suggested a range of 30-37 months. Subsequent amendments to the Sentencing Guidelines made the base level for his conduct more severe, so that in 2010 the same conduct suggested a range of 70-87 months (and he was sentenced to 70 months). The District Court rejected Peugh's Ex Post Facto claim, and the Seventh Circuit affirmed. The question before the Court was whether a sentencing court violates the Ex Post Facto Clause by using the U.S. Sentencing Guidelines in effect at the time of sentencing rather than the Guidelines in effect at the time of the offense, if the newer Guidelines create a significant risk that the defendant will receive a longer sentence. In a 5-4 decision, the Supreme Court ruled that that the Ex Post Facto Clause is violated when a defendant is sentenced under Guidelines promulgated after he committed his criminal acts and the new version provides a higher sentencing range than the version in place at the time of the offense. As a result, the Seventh Circuit's decision was reversed and Peugh's sentence will have to be recalculated using the original sentencing guidelines at the time he committed the offense. The practical impact of this decision is that changes to Sentencing Guidelines will not be retroactive; sentences will have to be calculated using the guidelines at the time the offense was originally committed (as opposed to when the sentencing occurs).

Law in Plain English: Chaidez v. United States

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

Chaidez v. United States

Chaidez pleaded guilty to mail fraud in 2004. Immigration officials started proceedings to deport her in 2009. She challenged the proceedings, claiming that her lawyer did not advise her that pleading guilty would subject her to deportation. While her immigration case was pending, the Supreme Court held in Padilla v. Kentucky that criminal defendants that receive ineffective assistance of counsel under the Sixth Amendment when their attorneys fail to advise them that pleading guilty to an offense will subject them to deportation. The issue here was whether the Court's decision in Padilla was retroactive to Chaidez's case (because the mail fraud judgment against her was final before Padilla was decided). The Supreme Court ruled that Padilla does not apply retroactively to cases that have already been decided. As a result, Chaidez could not challenge the ineffectiveness of her counsel. The practical impact of this decision is that criminal defendants will not be able to benefit from new rules of criminal procedure decided after their case is final.