Tag: Supreme Court

Even Lawyers Should Be Paid More for Good Performance

Another oral argument I attended this week was in the case of Perdue v. Kenny A., in which Cato filed a brief at the end of August.  The issue is whether a court can ever increase the statutorily set fees attorneys receive from the government when they successfully bring civil rights challenges to state action.

In order to enforce civil rights guarantees, Congress had two choices: either expand the Department of Justice to cover all civil rights cases, or privatize the system and allow free market principles to encourage private attorneys to prosecute violations. Congress chose the latter, creating a system of market incentives to encourage private attorneys to enforce civil rights and hold elected representatives responsible for the waste of taxpayer dollars lost in the defense of legitimate civil rights violations and repayment of “reasonable” attorney fees.

Here a group of attorneys won an important case for foster children in Georgia, and the court awarded them $6 million in fees based on prevailing hourly rates — the “lodestar” method — and an additional $4.5 million enhancement for the exceptional quality of work and results achieved. At Georgia’s request, the U.S. Supreme Court decided to review the case and determine whether quality of work and results are appropriately considered components of a reasonable fee.

Cato, joining six other public interest legal organizations, filed an amicus brief supporting the attorneys. We argue that the enhancement in this case is necessary to preserve incentives in the privatized market. Not only does it encourage attorneys to pursue civil rights abuses, but it provides a powerful disincentive for governments to draw out litigation in the hope that attorneys will no longer be able to afford pursue it. In addition, quality of performance and attained results are rightly considered as part of the attorney fee calculus. The enhancement here helps to promote the free market of privatized civil rights prosecutions and encourages governments to resolve civil rights cases quickly.

Unfortunately, the Court didn’t seem to be convinced at oral argument that there was a problem with the way civil rights attorneys are compensated under the lodestar method.  Chief Justice Roberts and Justice Scalia, in particular, were aggressive in questioning a very well prepared Paul Clement (the former solicitor general, with whom I had the privilege to work on a different case that will be argued next month).  They expressed concern about how to evaluate the “exceptional results” needed to justify a fee enhancement.  Clement said that the Court could leave this to the trial judges’  discretion,to which Justice Scalia replied: “You say discretion.  I say randomness.”

Only Justice Sotomayor, who was again an active questioner, suggested a standard to guide judges, citing such factors as a discrepancy between the market in which the attorney practices and the market on which fees are based, as well as the attoney’s experience (for example, the justices frequently referred to a “brilliant” second-year associate who might be paid at a partner rate).  But several justices, at least, would never agree to such a standard. Even Justice Breyer, typically friendly to civil rights claims, expressed skepticism over whether millions of taxpayer dollars should be paid to already well-compensated lawyers.

Still, while it would be strange for district judges to have the ability to reduce fee awards for various reasons (such as inferior performance, even if technically victorious) while not being able to increase them, that’s the result we’ll have if the Court rules as all indications now suggest.

Due Process Case to be Decided on Procedural Grounds

Yesterday I went to the Supreme Court to watch the argument in Alvarez v. Smith, a case about civil forfeiture in which Cato filed an amicus brief

Civil forfeiture, the practice in which the police seize cars, money and other kinds of property that they say has some connection to crime, can raise various of legal and policy issues – from property rights to due process.  The question in Alvarez is the basic one of whether people seeking to get their property back are entitled to a prompt hearing before a judge. 

Illinois’ forfeiture law allows the State to wait as long as six months before having to prove the legitimacy of the seizure, which proceeding may then be delayed indefinitely for “good cause.” The six plaintiffs in Alvarez — three of whom were never charged with a crime — had their cars or money seized without a warrant for months or years without any judicial hearing, and sued the state and city authorities for violating their rights to due process. The Seventh Circuit found the Illinois law to be unconstitutional because of the delay between the seizure and the forfeiture proceeding and ruled that the plaintiffs must be afforded an informal hearing to determine whether there is probable cause to detain the property. The Supreme Court agreed to review the case at the request of the Cook County State Attorney.

Cato’s brief, joined by the Goldwater Institute and Reason Foundation, supports the individuals whose property was seized. Written by David B. Smith, who previously supervised all forfeiture litigation for the Department of Justice and is now the nation’s leading authority on civil and criminal forfeiture, the brief makes three arguments: 1) Because the Illinois law, unlike the federal Civil Asset Forfeiture Reform Act of 2000, is stacked in favor of law enforcement agencies and lacks protections for innocent property owners, the Court should apply the due process analysis from Mathews v. Eldridge, rather than the more lenient test the State proposes; 2) What has become known as a Krimstock hearing has proven to be an effective and not overly burdensome means of preventing government delay and a meaningful opportunity to contest seizure; and 3) the State’s comparison of the time limits in CAFRA with those in its own law is misleading.

Unfortunately, though some justices appeared at argument inclined to rule that at least some prompt process was due – many other states require that the police quickly come before a judge to make a showing equivalent to the one necessary to get a search warrant – several seemed to want to avoid the due process question for another day because Alvarez was procedurally flawed, so to speak.  That is, Justice Scalia pointed that none of the six plaintiffs have a live claim any more – three have had their cars returned, two defaulted on their claims, and the State reached agreement with one – so the case was “moot.”  And Justice Stevens noted that the appellate court left it to the trial court to determine the details of the hearing to which the plaintiffs were entitled.  (Of course, if the latter “problem” ends up being the key to the case, the Court will simply dismiss the appeal and let the Seventh Circuit’s ruling stand, which is good news – but only for people in Illinois, Indiana, and Wisconsin.)

For more on the case, see George Mason law professor and Cato adjunct scholar Ilya Somin’s oped, and his related blog post at the Volokh Conspiracy.

The Government Robbed Chrysler Creditors

In January 2009, Chrysler stood on the brink of insolvency.  Purporting to act under the Emergency Economic Stabilization Act, the Treasury extended Chrysler a $4 billion loan using funds from the Troubled Asset Relief Program (TARP).  Still in a bad financial situation, Chrysler initially proposed an out-of-court reorganization plan that would fully repay all of Chrysler’s secured debt.  The Treasury rejected this proposal and instead insisted on a plan that would completely eradicate Chrysler’s secured debt, hinging billions of dollars in additional TARP funding on Chrysler’s acquiescence. 

When Chrysler’s first lien lenders refused to waive their secured rights without full payment, the Treasury devised a scheme by which Chrysler, instead of reorganizing under a chapter 11 plan, would sell its assets free of all secured interests to a shell company, the New Chrysler.  Chrysler was thus able to avoid the “absolute priority rule,” which provides that a court should not approve a bankruptcy plan unless it is “fair and equitable” to all classes of creditors. 

Cato joined the Washington Legal Foundation, Allied Educational Foundation, and George Mason law professor Todd Zywicki on a brief supporting the creditors’ petition asking the Supreme Court to review the transaction’s validity.  We argue that the forced reorganization amounted to the Treasury redistributing value from senior, secured creditors to debtors and junior, unsecured creditors. 

The government should not be allowed, through its own self-dealing, to hand-pick certain creditors for favorable treatment at the expense of others who would otherwise enjoy first lien priority.  Further, a lack of predictability and consistency with regard to creditors’ expectations in bankruptcy will result in a destabilization of existing and future credit markets. 

The Court will be deciding whether to hear the case later this fall.  Thanks very much to Cato legal associate Travis Cushman for his help with the brief.

Supreme Court Mulls Gladiators and the “Human Sacrifice Channel”

Following up on David’s post about the Stevens “depictions of animal cruelty” case, my takeaway from this morning’s argument is that there’s not a single vote to uphold the law.  The closest the government came to sympathy for its position came when Chief Justice Roberts wondered whether, if a narrower statute proscribing the “crush videos” that were the ostensible target of this legislation, the Court might uphold this broad statute on its face but also welcome many as-applied challenges in instances of prosecutorial overreach.  (For a pithy discussion of facial versus as-applied challenges, noting that the Court generally favors facial attacks in First Amendment cases, see Roger Pilon’s foreword to this year’s Cato Supreme Court Review.)

A less technical line of questioning involved the constitutionality of a statute banning a hypothetical “human sacrifice channel” or the broadcast of fight-to-the-death gladiatorial battles – from a foreign country where that sort of thing is legal.  (Justice Scalia quipped that the rule cannot be that you satisfy the broad legislation’s “historical value” exception if you dress up as an ancient Roman.)

Much of the analysis about these types of extreme scenarios turns on whether the broadcast/depiction creates a market for such activities – which is the rationale for banning child pornography (i.e., fewer children are subject to sexual abuse if there is not a legal market for pictures and videos of children being sexually abused).  Thus, a narrow statute banning the aforementioned crush videos would be kosher, as it were, but not the broad legislation at issue – which could potentially sweep in, to take one example, promotional videos put out by the Spanish board of tourism that include bullfighting clips.

For a more detailed report, see Lyle Denniston on SCOTUSblog (whom you can also see all week on C-SPAN’s excellent Supreme Court documentary mini-series).  And again, to read Cato’s view, see our amicus curiae brief.

Think Tanks Should Be Able to Opine on Public Policy Without Running Afoul of Campaign Finance Regulations

In 2005, political opponents filed a complaint against the Independence Institute for not complying with the Colorado constitution and other campaign finance regulations when it spoke against a state ballot initiative. These regulations require, among other things, disclosure of the identity of anyone who has donated more than $20 to a cause and imposes registration and contribution limits on groups who have major interests in ballot issues.

The Independence Institute challenged the constitutionality of Colorado’s state ballot issue requirements and the issue is petitioning the Supreme Court for certiorari in Independence Institute v. Buescher. Cato has filed an amicus brief, in cooperation with Wyoming Liberty Group, the Center for Competitive Politics, the Sam Adams Alliance, the Montana Policy Institute, and the Goldwater Institute in support of the Independence Institute. We argue that Colorado’s ballot campaign regulations run roughshod over constitutional protections for political speech and association, which lie at the very heart of the First Amendment—particularly for think tanks and other organizations that regularly comment on public policy matters. Loss of these First Amendment protections will chill think tanks’ future attempts to educate the public about issues that are the subject of ballot campaigns. The Court should thus review this case and ensure that citizens maintain their associational rights—including the right to remain anonymous when donating to non-profits—and associations their freedom of expression.

You can download the entire brief here. A special thanks to Cato Legal Associate Travis Cushman for his assistance on this brief.

First Amendment Exceptions

The Supreme Court today is considering the case of United States v. Stevens, a challenge to a 1999 federal law outlawing depictions of animal cruelty. The government says that such depictions are “unprotected” speech. Many First Amendment advocates and news organizations are supporting the challenge to the law.

It seems an easy enough case to decide, given the plain language of the First Amendment:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press, except in the case of depictions of animal cruelty.

Right?

For a more substantive discussion of the issues in United States vs. Stevens, see the Cato Institute’s amicus curiae brief.

A New Court Term: Big Cases, Questions About the New Justice

Today is the first Monday in October, and so is First Monday, the traditional start of the Supreme Court term.  The Court already heard one argument – in the Citizens United campaign finance case – but it had been carried over from last year, so it doesn’t really count.

In any event, continuing its trend from last term, the Court has further front-loaded its caseload – with nearly 60 arguments on its docket already.  Fortunately, unlike last year, we’ll see many blockbuster cases, including:

  • the application of the Second Amendment to state gun regulations;
  • First Amendment challenges to national park monuments and a statute criminalizing the depiction of animal cruelty;
  • an Eighth Amendment challenge to life sentences for juveniles; a potential revisiting of Miranda rights;
  • federalism concerns over legislation regarding the civil commitment of “sexually dangerous” persons;
  • a separation-of-powers dispute concerning the agency enforcing Sarbanes-Oxley;
  • judicial takings of beachfront property; and
  • notably in these times of increasing government control over the economy, the “reasonableness” of mutual fund managers’ compensation.

Cato has filed amicus briefs in many of these cases, so I will be paying extra-close attention.

Perhaps more importantly, we also have a new justice – and, as Justice White often said, a new justice makes a new Court.  While Sonia Sotomayor’s confirmation was never in any serious doubt, she faced strong criticism on issues ranging from property rights and the use of foreign law in constitutional interpretation to the Ricci firefighters case and the “wise Latina” speeches that led people to question her commitment to judicial objectivity.  Only time will tell what kind of justice Sotomayor will be now that she is unfettered from higher court precedent – and the first term is not necessarily indicative.

Key questions for the new Court’s dynamics are whether Sotomayor will challenge Justice Scalia intellectually and whether she will antagonize Justice Kennedy and thus push him to the right.  We’ve already seen her make waves at the Citizens United reargument – questioning the scope of corporations’ constitutional rights – so it could be that she will decline to follow Justice Alito’s example and jump right into the Court’s rhetorical battles.

In short, it’s the first day of school and I’m excited.