United States: Supreme Court Docket Report - June 30, 2015

Today, the Supreme Court granted certiorari in three cases of interest to the business community:

Securities Exchange Act of 1934—Scope of Federal Jurisdiction

Section 27 of the Securities Exchange Act of 1934 (the "Act") provides that federal courts "shall have exclusive jurisdiction" over "violations of [the Act] or the rules and regulations thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by [the Act] or the rules and regulations thereunder." 15 U.S.C. § 78aa(a). But the lower courts have disagreed as to whether Section 27 creates federal jurisdiction or merely precludes state-court actions that rest on alleged violations of the Act or regulations issued under the Act.

Today, the Supreme Court granted certiorari in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Manning, No. 14-1132, to resolve that division of authority.

In this case, the defendants removed to federal court a suit asserting state-law causes of action based on alleged violations of the SEC's Regulation SHO, which governs "short sales." The district court refused to remand the suit to state court, ruling that Section 27 established federal jurisdiction over the claims. The Third Circuit agreed that the claims fell under Section 27 but held that Section 27 could not provide jurisdiction because it does not itself create jurisdiction. The Third Circuit based its reasoning on a Supreme Court decision interpreting similar "exclusive jurisdiction" language in Section 22 of the Natural Gas Act. See Pan Am. Petroleum Corp. v. Sup. Ct. of Delaware for New Castle Cty., 366 U.S. 656 (1961). In Pan American, the Court stated that "'[e]xclusive jurisdiction' is given to the federal courts but it is 'exclusive' only for suits that may be brought in the federal courts. Exclusiveness is a consequence of having jurisdiction, not the generator of jurisdiction because of which state courts are excluded." Id. The defendants contend that Pan American does not govern Manning because in Pan American the Natural Gas Act was the basis for a defense, not a cause of action.

Among the other courts of appeals, the Second Circuit has agreed with the Third Circuit that Section 27 does not confer jurisdiction. The Fifth and Ninth Circuits have held that Section 27 does confer jurisdiction.

The Supreme Court's decision should be of interest to the wide range of public companies, market professionals, and others regulated by the federal securities laws.

Absent extensions, amicus briefs in support of the petitioners will be due on August 21, 2015, and amicus briefs in support of the respondents will be due on September 21, 2015.

First Amendment and Collective Bargaining—Validity of Agency-Shop Arrangements

In Abood v. Detroit Board of Education, 431 U.S. 209 (1977), the Supreme Court held that the First Amendment does not prohibit "agency shop" arrangements under which state employees who decline to join a public-sector union are required to pay an agency fee to support union work that is related to the collective-bargaining process. In two recent decisions, the Court expressed doubt about Abood's continued validity but did not expressly overrule it. See Harris v. Quinn, 134 S. Ct. 2618 (2014); Knox v. Serv. Employees Int'l Union, 132 S. Ct. 2277 (2012). Today, the Court granted certiorari in Friedrichs v. California Teachers Association (No. 14-915) to consider whether to overrule Abood and declare public-sector "agency shop" arrangements unconstitutional.

Friedrichs was brought by California public school teachers to challenge the state's union laws. California law permits public school employee unions to establish "agency shop" arrangements within their school districts and thereby require all employees, "as a condition of continued employment," either to join the union or to pay an agency fee. According to the law (and consistent with Abood), however, agency fees can be used only for activities "germane" to collective bargaining. Unions therefore must notify nonmembers about which portion of their fees will and will not go to such activities; nonmembers may avoid the "non-chargeable" portion of the fees only by affirmatively objecting to them. Plaintiffs' complaint challenged both the agency-shop arrangement and the opt-out procedure, arguing that they violated plaintiffs' rights to free speech and association under the First Amendment.

The case arrives at the Supreme Court with little procedural history. Recognizing that both claims were foreclosed by binding precedent (the first by Abood and the second by a Ninth Circuit decision upholding similar opt-out procedures), plaintiffs moved for judgment on the pleadings in favor of defendants. The district court granted judgment to defendants pursuant to plaintiffs' request, and the Ninth Circuit summarily affirmed. Relying on Harris and Knox, the petition for certiorari principally focuses on overruling Abood. The petition argues that public-sector unions' collective bargaining is materially indistinguishable from political speech and thus its compelled subsidization can be justified only by a sufficiently compelling state interest. According to the petition, the state's interests in labor peace and preventing non-members from "free-riding" on the collective-bargaining efforts of the unions do not justify agency-shop arrangements. Alternatively, the petition contends that California's opt-out procedure imposes an unconstitutional burden on plaintiffs' First Amendment rights.

If the Court overrules Abood, its decision will have far-reaching ramifications for public-sector union membership and on the collective-bargaining regimes of the more than twenty states that use agency-shop arrangements. It may also reflect a more fundamental shift in the Court's approach to unions and collective bargaining, with consequences for private employers as well.  

Absent extensions, amicus briefs in support of the petitioner will be due on August 21, 2015, and amicus briefs in support of the respondent will be due on September 21, 2015.

Statutes of Limitations—Equitable Tolling

The Supreme Court granted certiorari today in Menominee Indian Tribe of Wisconsin v. United States, No. 14-510, which concerns the proper standard for federal courts to apply when deciding whether to "equitably toll" a statute of limitations. The Court's decision in this case will be important because it will affect claims brought under countless federal statutes, against both the government and private parties, including claims brought by federal contractors.

Like many other Indian tribes, petitioner Menominee Tribe of Wisconsin ("Menominee Tribe" or "Tribe") has an agreement with the Department of Health and Human Services ("HHS") whereby HHS reimburses the Tribe for expenditures it makes in providing healthcare services to its members. This agreement is governed by a federal statute—the Indian Self-Determination and Education Assistance Act ("ISDA")—that specifies many of the rules for reimbursement.

The ISDA specifies that another federal statute—the Contract Disputes Act of 1978 ("CDA")—applies to "self-determination contracts" of the type at issue here. If a claim for payment under the CDA is denied, a party can appeal that decision through one of two avenues. One avenue leads to the U.S. Court of Appeals for the Federal Circuit; the other leads, potentially, to any of the other circuits, depending on the choice of forum. Regardless of which avenue of appeal a party chooses, it must submit its initial claim within six years of the date that the claim accrues.

For over 20 years, Indian tribes and HHS have disputed the meaning of some key language in the ISDA. This disagreement spawned litigation in the 1990s and 2000s. The Menominee Tribe, however, largely remained on the sidelines and did not submit a claim for any of its disputed payments until 2005. When the Tribe did finally submit claims, HHS denied the claims for payments owed before 1998 as untimely. The Tribe sought judicial review of that decision in the U.S. District Court for the District of Columbia, which, following an initial remand from the D.C. Circuit, ultimately granted summary judgment to the government. The Tribe then appealed again to the D.C. Circuit.

The issue before the D.C. Circuit was whether the Tribe was entitled to have the statute of limitations for its claims "equitably tolled." Under Holland v. Florida, 560 U.S. 631 (2010), a federal court may equitably toll a statute of limitations when a party shows "(1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way and prevented timely filing." Id. at 649. The Tribe made two main arguments in the D.C. Circuit. First, it argued that it had reasonably assumed that a pending class action filed by another tribe would toll the statute. Second, the Tribe argued that until the Supreme Court finally clarified the meaning of the ISDA—in a 2005 decision called Cherokee Nation v. Leavitt, 543 U.S. 631 (2005)—it would have been futile to submit a claim for payment because HHS would simply have denied it.

The D.C. Circuit rejected these arguments and affirmed. As to the class-action argument, the court held that the Tribe had never fulfilled the requirements to become a member of the class. It should have been clear to the Tribe, the court reasoned, that it would not be a part of the class and that tolling would therefore be unavailable. As to the argument about the futility of filing a claim before the Supreme Court decided Cherokee Nation, the D.C. Circuit held that the circumstances at issue fell far short of futility. The court explained that the law was plainly unsettled, that the plaintiffs had the statutory option of choosing a judicial forum, and that HHS's stance on the legal issue was irrelevant, because the ultimate question was for the courts to decide. The court of appeals thus concluded that the Tribe had failed to present any "extraordinary circumstances" and that this failure was sufficient to preclude equitable tolling, without any independent consideration of due diligence.

In so ruling, the D.C. Circuit acknowledged that it was creating a conflict with the Federal Circuit. Applying a much looser equitable-tolling analysis, the latter court had found tolling appropriate in a materially identical case. In light of the circuit split on an important question of federal law and the fact that the Solicitor General agreed with the petitioner that review was warranted, it is not surprising that the Supreme Court granted certiorari.

Absent extensions, amicus briefs in support of the petitioner will be due on August 21, 2015, and amicus briefs in support of the respondents will be due on September 21, 2015.

Please visit us at appellate.net

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2015. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions