This Supreme Court Term

The U.S. Supreme Court has wrapped up another term -- John Paul Stevens' last.

There were several remarkable decisions this year, and I'll pass them in quick review, in no particular order.

JONES v. HARRIS ASSOCIATES concerns mutual funds, and the fees they can charge without violating their fiduciary obligation to their investors. Nobody is sure how it will affect actual mutual fund operations, but there is a general consensus that it is important.

In terms of the standard to be applied, the respondent and the petitioner in the case before SCOTUS agreed. They both wanted the court to endorse for the first time a standard laid down by the second circuit in 1982, in Gartenberg v. Merrill Lynch. The standard since then has been that to be guilty of a breach of fiduciary obligation "the adviser-manager must charge a fee that is so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product of arm’s length bargaining.”

The matter got to SCOTUS this year because the seventh circuit disagreed with Gartenberg. The seventh circuit then (despite a dissent by Judge Posner) refused to rehear the case en banc.

The original panel's justification for blocking Gartenberg lawsuits was that allowing trial courts to second-guess market rates is a bad idea, and that mutual fund managers can only be said to have violated their duty if it can be shown that they had lied to their directors. Posner's own inclinations are laissez-faire, so I find it impressive that he thought this wrong, that some sort of objective reasonableness standard, as with Gartenberg, is appropriate.

SCOTUS agreed with Posner and embraced Gartenberg rather than the Seventh Circuit approach, and it remanded for further proceedings. Still, it is not clear how big a difference this will prove to make. Will it encourage some disgruntled investors to sue their managers to get their fees back, now that it is clear they can at least get their foot inside the courthouse door? Yes, probably.

Should we be worried about that? I don't believe so. There has after all been no flood of mutual fee related lawsuits over the decades since Gartenberg, even in the 2d Circuit where that decision has been binding.

DOE v. REED denied a request by an organization, "Protect Marriage Washington," to keep the personal information of the signers of a petition private, affirming the constitutionality of a law in that state that requires disclosure in most cases (though allowing for ad hoc exemptions).

It was not a "clean win" for transparency, though. The decision allows PMW to ask the district court in Washington for an exemption from public disclosure.

The lead counsel for PMW said in a statement, "While we wish the Court had agreed with us and found that petition signers speaking on any issue should be protected from having personal information disclosed to the public, we are looking forward to returning to Washington and showing the Court that supporters of traditional marriage should have their personal information protected from disclosure."

SCOTUS voted for this result 8-1, with only Justice Thomas dissenting. Thomas would have held that "compelled disclosure of signed referendum and initiative petitions" is unconstitutional because it chills citizen participation in democratic assembly and speech.

I have no sympathy for the whole protect-traditional-marriage cause, but Thomas' decision seems right to me. I am cynical enough to wonder whether he would have written just this decision had it been a gay rights group on the other side of this issue that was asking for anonymity.

CITIZENS UNITED v. FEDERAL ELECTION COMM'N struck down decisions on what various affected parties, including for-profit corporations, may say during the course of a campaign. Much has been said and written on this subject. I won't add a lot to it.

I will note that this was the decision that provoked President Obama to criticize the Justices during the State of the Union address. The presence of the Justices at the SOTU speech has long been considered a non-controversial formal gesture, which allows for the presence of the top level of all three branches of our federal government in the same room at the same time. But Obama chose to make it an opportunity for face-to-face confrontation.

Justice Alito responded to that by mouthing the words "not true."

Stuffy people have bemoaned that exchange. I think both men acted appropriately. Let's be less stuffy and more honestly confrontational in our politics! It may help us learn to get beyond politics, and beyond the myth of sovereignty -- though I'm sure that idea was far from both of their minds at that YouTube-able moment.

BERGHUIS v. THOMPKINS is the latest example of SCOTUS' long entanglement in the specifics of police interrogation rules. Specifically, two officers of the state police of Michigan interrogated suspect Thompkins, after informing him of his Miranda rights.

For three hours he remained silent, although he did not first say "I invoke my right to remain silent" or "I want a lawyer" or anything of that sort. After 2 hours and three quarters, the police did manage to get him to speak, in a highly incriminating way.

By a 5-4 vote, SCOTUS allowed the statement. "Police are not required to rewarn suspects from time to time. Thompkins’s answer to Helgert’s question about praying to God for forgiveness for shooting the victim was sufficient to show a course of conduct indicating waiver," says Justice Kennedy.

I think Sotomayor, writing for the four dissenters, has the better of the argument, though, and will give her the last word here.

"I cannot agree with the Court’s much broader ruling that a suspect must clearly invoke his right to silence by speaking. Taken together with the Court’s reformulation of the prosecution’s burden of proof as to waiver, today’s novel clear-statement rule for invocation invites police to question a suspect at length—notwithstanding his persistent refusal to answer questions—in the hope of eventually obtaining a single inculpatory response which will suffice to prove waiver of rights. Such a result bears little semblance to the “fully effective” prophylaxis, 384 U. S., at 444, that Miranda requires."

SKILLING v. UNITED STATES granted a partial victory to former Enron CEO Jeffrey Skilling. More important, it trimmed back the overly luxuriant prosecutorial interpretations of the "honest services" statute.

I've discussed this one at length on my other blog, and I'll just link you to that.

Here's another discussion of the case.

BILSKI v. KAPPOS is the much-anticipated decision on "business method" patents and on the machine-or-transformation test of what is or isn't patentable.

Here, too, I have said much on the subject on my other blog, so I will say very little on this one. The good guys won.

To grant this opinion would give Bilski and his partner, Rand Warsaw, a license to file patent-infringement lawsuits in a wide variety of cases of routine commodity hedging, simply because they have reduced to paper a sort of algorithm for that common process. It is a bit like describing the flapping of wings in the hope of suing the birds -- businesses have been hedging their commodity price exposure for as long as anyone can remember.

Still, it is not clear what the court is saying about business method patents as a rule.

I do think Elena Kagan, as our solicitor general, submitted a fine brief in defense of the patent office's refusal to grant Bilski and Warsaw their requested monopoly. Those who are complaining that her experience does not qualify her as a Supreme Courty Justice might want to consider how vastly sup[erior that brief is in its reasoning to any of the three opinions the litigation produced (authored by Justices Kennedy, Breyer, and Stevens.)