June 23, 2014 United States Supreme Court opinions

Loughrin v United States

Loughrin was charged with several counts of bank fraud under 18 USC 1344(2). He argued that the government must prove he intended to defraud a federally chartered bank and not the merchant he wrote forged checks to. The district court district court rejected his argument and the jury convicted Loughrin on all charges. The 10th Circuit affirmed. Resolving a circuit split, the Court, with three justices concurring in part and in judgment, affirmed. The majority held that under eh plain language of 1344(2), no intent to defraud a bank is required and further held that structure of 1344 demonstrated congressional intent to broadly cover fraudulent schemes and the term “by means of” limits the scope of 1344(2) to situations where it is reasonably foreseeable the bank will be induced to part with the funds or property in its control thus limiting the statute to situations where a significant federal interest is present. Justice Scalia, joined by Thomas, concurred I part an judgment arguing that the majority’s definition of “by means of” is contrary to common usage and in any event unnecessary in this case and the meaning should be left for another time. Justice Alito concurred in part and in judgemtn arguing the majority erred in requiring a purpose mens rea when the statute only requires knowing violation.

Utility Air Regulatory Group v Environmental Protection Agency

Agency issued rules limiting greenhouse gas emissions for cars and for certain stationary sites. Group and other interest parties challenged the rules on stationary sites but their challenge was rejected by the District of Columbia Circuit. The Court in a splintered decision affirmed in part and reversed in part. A five justice majority held that the language of Title V of eth clean Air Act did not require coverage of the stationary sites as it did not explicitly cover them and Agency had interpreted the provisions to exclude emissions from small sites for decades. This majority noted that the rule would expand the scope of Agency’s authority from thousands of sites to millions, impose costs and delays which would be without congressional authorization. This majority finally held that the purported increase in threshold levels before coverage kicks in were contrary to the plain language of the statute and therefore unauthorized. A different seven member majority held that rules requiring sources already subject to permitting to add greenhouse gas emissions to their compliance plans was a reasonable interpretation of the best technology standard and thus was afforded Chevron deference and upheld. Justice Breyer, joined by Ginsberg, Sotomayor and Kagen, dissented in part arguing that the higher threshold rule properly limits the statutory reach to sources which significantly contribute to the problem of greenhouse gas pollution while doing less violence to the text than the five member majority approach. Justice Alito, joined by Thomas dissented in part arguing that the Clean Air Act framework simply does not work in the greenhouse gas area and thus the extension of the compliance plans to emitters already covered was not authorized by the statute.

Halliburton Co. v Erica B. John Fund, Inc.

Fund brought a class action suit against Halliburton under a fraud on the market theory of securities fraud. At class certification, Halliburton presented evidence the alleged misrepresentations did not impact eh price of its shares. The 5th Circuit ultimately held that Halliburton was not allowed to present that evidence at class certification stage. The Court, resolving a circuit split and with three justices concurring in judgment, vacated and remanded. The majority held that the fraud on the market presumption of reliance should remain good law as the case establishing it understood that not all investors believe the exchange price is accurate and whatever the merits of academic debate on efficient markets, there is strong consensus that information from companies affect stock price. Thus, particularly as this is a statutory interpretation issue, stare decisis councils retaining the rule. However, the majority held that Halliburton must be allowed to use direct evidence that there was no price effect from any misrepresentation for without the effect there is no predominate common fact issue and class certification must be denied. The case was remanded to for further proceedings. Justice Ginsberg, joined by Breyer and Sotomayor, added a concurrence noting that because the defendant bears the burden of proving no price impact, the discovery costs on plaintiffs will not be heavy. Justice Thomas, joined by Scalia and Alito, concurred in judgment arguing that the fraud on the market presumption should be overruled as it is based on incorrect assumptions that markets accurately incorporate information into a stock price, is inconsistent with recent class certification precedent and the presumption effectively eliminates reliance in securities fraud cases. He also argued that stare decisis does not save the presumption because the presumption is judicial gloss on a regulation not a  statute, judicial error should be corrected by judicial action and congressional silence does not mean congressional approval of the presumption.   


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