Public Citizen in the Supreme Court

Public Citizen attorneys were involved in several cases before the Supreme Court during its 2016 term (July 2016-June 2017), including these:

BNSF Railway Co. v. Tyrrell

Kelli Tyrrell, a resident of South Dakota, sued BNSF Railway in Montana state court under the Federal Employers’ Liability Act (FELA) for a fatal injury her late husband, Brent, suffered while he was working for BNSF. Although the injury did not occur in Montana, the FELA provides that an action under the statute may be brought in any jurisdiction “in which the defendant shall be doing business at the time of commencing such action.” BNSF argued, though, that requiring it to defend itself in Montana violated the Due Process Clause of the Fourteenth Amendment, because Montana is neither BNSF’s place of incorporation nor its principal place of business. The Montana Supreme Court held that the FELA allows the plaintiff to bring suit in Montana because BNSF does business there and that the Constitution does not bar Congress from granting such authorization. BNSF petitioned the Supreme Court for review, and Public Citizen stepped in as counsel of record for the respondents in opposing cert. The Court granted cert in January 2017, and Litigation Group lawyer Julie Murray handled the case at the merits stage. Unfortunately, in a decision issued on May 30, the Court reversed the decision below.

United States ex rel. ABLE v. U.S. Bank, N.A.

Advocates for Basic Legal Equality, Inc. (ABLE), a non-profit organization devoted to advocating for the interests of low-income individuals, brought a False Claims Act (FCA) action against U.S. Bank alleging that the bank made false claims for government payments under the mortgage insurance program administered by the Federal Housing Administration (FHA). ABLE claimed that, in submitting insurance claims for losses incurred in foreclosing on FHA-insured loans, U.S. Bank falsely certified that it had complied with pre-foreclosure requirements, unique to the FHA program, that are intended to mitigate the government’s losses. The Sixth Circuit held that the action was barred by public disclosures in two documents, neither of which alleged that U.S. Bank (or any bank) had violated the FHA’s special loss-mitigation requirements. Public Citizen is serving as co-counsel for ABLE seeking review in the U.S. Supreme Court. The petition for certiorari asks whether, under the public disclosure bar, a qui tam action may proceed when it is based on specific allegations of fraud that were not the subject of prior public disclosures and that add substantial material information to the public disclosures, and when the publicly disclosed allegations “encompass” the qui tam allegations only if both sets of allegations are characterized at a very high level of generality. In October 2016, the Court requested the views of the United States as to whether to grant the petition. After the change in administrations, the Solicitor General’s office filed a brief recommending that the petition be denied although the decision below was likely incorrect. The Supreme Court denied certiorari on May 22, 2017.

Expressions Hair Design v. Schneiderman

A New York statute prohibits merchants from imposing a surcharge on customers paying by credit card, although it does not prohibit merchants from offering a discount to customers paying cash. Five New York businesses and their owners and managers sued to invalidate the statute. The plaintiffs argued that the statute violates their First Amendment right to free speech because it dictates the language they must use to describe any differential between a credit card price and a lower cash price. The plaintiffs also argued that the statute violates the Due Process Clause of the Fourteenth Amendment because it is impermissibly vague. The U.S. Court of Appeals for the Second Circuit rejected these challenges, and the plaintiffs petitioned the Supreme Court for review. The Supreme Court granted the plaintiffs’ petition, and Public Citizen filed an amicus brief in support of New York. Our brief explained that, regardless of the statute’s merit as a matter of public policy, it is a straightforward regulation of economic conduct and should not receive the heightened judicial scrutiny that courts apply to laws that burden First Amendment expression. In a decision issued in March 2017, the Court held that the state law did regulate speech but remanded to the lower court for a determination whether the regulation was permissible.

Matal v. Tam

Under the Lanham Act, the Patent and Trademark Office (PTO) may not register a trademark that is immoral, scandalous, or disparaging. Simon Shiao Tam, the front man for an Asian-American rock band self-consciously named “The Slants,” applied to register the band’s name as a trademark. The PTO disqualified the mark for registration, finding it to be disparaging toward people of Asian descent. The U.S. Court of Appeals for the Federal Circuit vacated the PTO’s decision, holding that the Lanham Act’s anti-disparagement provision is a speech restriction that is neither content- nor viewpoint-neutral and that does not satisfy the First Amendment’s stringent standards for such restrictions. The Supreme Court granted the PTO’s petition for certiorari, and Public Citizen filed an amicus brief supporting neither party. Expressing no view on whether the anti-disparagement provision violates the First Amendment, the brief explains that to the extent the Lanham Act regulates speech, it regulates only commercial speech. Accordingly, the brief argues that the Court should not employ the strict First Amendment scrutiny that the Federal Circuit used but should instead analyze the challenged law under the less stringent First Amendment standard that applies to regulations of commercial speech. The case was argued in January 2017. In a decision issued on June 19, 2017, the Court held that the disparagement clause violates the First Amendment. There was no majority opinion on the question whether the commercial speech standard of review applied.

California Public Employees Retirement System v. ANZ Securities, Inc.

This case concerned whether the filing of a class action complaint tolls the running of the three-year “repose” period in 15 U.S.C. 77m applicable to Securities Act claims for all members of the proposed class. The Supreme Court held long ago in a case called American Pipe v. Utah that the filing of a class-action complaint generally stops the running of the statute of limitations for all class members, even if the class is not ultimately certified or class members opt out. In this case, however, the defendants argued that this principle should not apply to the “repose” period established by limitations periods applicable to federal securities claims. The U.S. Court of Appeals for the Second Circuit agreed, and the Supreme Court granted the plaintiffs’ petition for certiorari. Public Citizen filed an amicus brief supporting the plaintiffs, arguing that application of the American Pipe rule to the “repose” period does not affect substantive rights in violation of the Rules Enabling Act and that not applying American Pipe would violate due process by impairing opt-out rights of class members. The Court, however, held that the repose period is not subject to equitable tolling.

Midland Funding, LLC v. Johnson

Midland Funding, LLC, purchases unpaid debt from lenders who have given up attempting to collect. In one such transaction, Midland purchased a ten-year-old credit card debt owed by Aleida Johnson. Because the relevant state law restricts the time for a creditor to collect an overdue debt to six years, Midland would have been unsuccessful had it sought to sue Johnson for the unpaid amount. Instead, Midland waited until Johnson entered bankruptcy proceedings. Under the Bankruptcy Code, a “creditor . . . may file a proof of claim” in a bankruptcy proceeding. Relying on this language, Midland filed a claim against Johnson’s bankruptcy estate for the amount of the debt it had purchased, even though it knew that the claim was time-barred. Johnson objected to Midland’s claim, and the bankruptcy court disallowed it. Johnson then sued Midland under the Fair Debt Collection Practices Act (FDCPA), a federal statute that prohibits professional debt collectors from engaging in “unfair” or “deceptive” practices in connection with the collection of a debt. Midland argued that it had not engaged in such practices because the Bankruptcy Code permits creditors to file any claims against the bankruptcy estate, whether or not those claims would be enforceable in court. The U.S. Court of Appeals for the Eleventh Circuit rejected Midland’s argument, holding that even if the Bankruptcy Code permits a debt collector to knowingly file a claim for a time-barred debt in a bankruptcy proceeding, such conduct is barred by the FDCPA. The Supreme Court granted Midland’s petition for certiorari, and Public Citizen filed an amicus brief in support of Johnson. In a 5-3 decision issued in May 2017, the Court ruled in favor of Midland Funding.