June 25, 2014 United States Supreme Court opinions

Fifth Third Bancorp v Dudenhoeffer

Dudenhoeffer brought a class action suit against fifth third alleging imprudent management of the company’s employee stock ownership plan. The district court dismissed under a presumed prudence standard. The 6th Circuit reversed on the grounds that the presumption did not apply at pleading stage. The Court vacated and remanded. It held the plan was subject to ERISA and the prudence standard for all ERISA fiduciaries applies to the types of plans here except there is no duty to diversify. The Court instructed the 6th Circuit to evaluate the complaint in this case under the Twombly standard and noted Fifth Third cannot be required to violate securities laws in order to act in what Dudenhoeffer argues in a prudent manner.

American Broadcasting Cos., Inc. v Aereo, Inc.

American sued Aereo alleging its streaming of broadcast television to its subscribers violated the Copyright Act of 1976. The district court denied a preliminary injunction and the 2nd Circuit affirmed. The Court, 6-3, reversed. The majority held that Aereo’s streaming service is like cable systems in that its equipment amplifies broadcast signals and delivers them to subscribers. Thus, as the 1976 Act explicitly brought cable systems within the term “performance’, Aereo services are performances. The majority held that the streaming is transmission and it is done to the public as the use of dedicated folders on servers is legally no different from the cable system’s use of one big antennae and end users turning channels and the subscribers are not friends and family with each other and thus are part of the public as the term is used in the 1976 Act. Justice Scalia, joined by Thomas an Alito, dissented arguing Aereo’s service is more like a copy shop with patrons using a library card. Thus, as the customers choose what is anything is sent to them, there is no volitional act by Aereo and no direct liability. The dissent also argued the majority’s looks like cable TV rule will sow confusion as new technologies come on the scene. It concluded with a call for the courts to apply the 1976 Act as written and leave to Congress the job of closing any loopholes.

Riley v California

Riley’s smart phone was seized from his person when he was arrested for driving with a suspended license. In a companion case, a flip phone was seized from the defendant’s person after arrest for drug sales. Both moved to suppress. Both were denied at trial. The denial was affirmed in riley’s case and was reversed in the other case. The Court, with one justice concurring in part and in judgment, reversed in riley and affirmed n the companion case. The majority held that warrantless searches of cell phones seized from an arrested person are not allowed under the 4th Amendment. It reasoned that there is no basis to conclude the removed cell phone poses a threat to officer safety and the fears about the destruction of evidence are overblown and there are meads to prevent distant wiping and to overcome encryption. On the other hand, because cell phones are ubiquitous and have immense storage capacity with data that can reveal past crimes and give a detailed picture of a person’s life, the privacy interest is great. Thus, the majority concluded the warrant requirement applied. The majority noted that other exceptions may apply such as exigent circumstances when a bomb is about to go off, but, the normal search of a cell phone must be done after obtaining a warrant. Justice Alito concurred in part and in judgment arguing that search incident to arrest is a reasonable search authorized at common law and not founded on safety and destruction of evidence as stated by the majority. He also argued that the result here favors digital information over physical formats, but, there needs to be a clear rule and the warrant requirement is clear. He finally argued that legislatures are better suited to balancing the interests in this area and he would be willing to revisit the issue if Congress or the states enact laws in this area.  




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