Category: Politics

Tom Keatinge is director for the Centre for Finance & Security at RUSI. Kinga Redlowska is head of the Centre

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United States v. Miller presents the kind of simple facts that populate law-school hypotheticals. A business is in financial distress. The shareholders (who control the business) use some of its funds to pay off their own debts, including taxes owed to the federal government. When the business files for bankruptcy, the creditors of the business justifiably complain that the shareholders should not have used the business’s money to pay off the shareholders’ personal tax liabilities. Can the Internal Revenue Service keep the money? The Supreme Court held last week that the answer is yes.

Justice Ketanji Brown Jackson’s opinion (joined by all the justices except for Justice Neil Gorsuch) presents this as a straightforward textual exercise, turning on “the interplay” between two sections of the Bankruptcy Code. The first is Section 544, which creates a federal cause of action allowing the bankrupt to recover funds it paid out before bankruptcy whenever the transfer “is voidable under applicable law.” The second is Section 106, which waives the federal government’s sovereign immunity for a long list of particular sections of the Bankruptcy Code, including Section 544.

For Jackson, the key to the case is the reality that under Utah law (the applicable fraudulent conveyance statute), the creditors of the failed business could not recover from the IRS, because the IRS’s sovereign immunity would protect it from a suit under the Utah statute. Thus, she concludes, the transfer to the IRS is not “voidable under applicable law” for purposes of Section 544. Jackson explains that the text of Section 106, “read as a whole, makes clear that it … does not establish any substantive rights against the Government.” All that Section 106 does is “give courts jurisdiction to hear [Section 544] claims against the government.” It does not change “the substantive requirements of the claim itself.”

Working from those premises, Jackson easily can reject the effort to “transform [Section 106] from a jurisdiction-creating provision into a liability-creating provision.” Jackson goes on to point out that her reading does not render useless the inclusion of Section 544 in the listed sections for which sovereign immunity is waived, because it would still allow creditors to invalidate improperly perfected tax liens under Section 544(a). Given the strong tradition of a narrow reading of waivers of sovereign immunity, the bankrupt cannot prevail.

Context is everything here. Congress included a waiver of sovereign immunity in the Bankruptcy Code in 1978. As I’ve written elsewhere, the Supreme Court in several cases nevertheless upheld claims of sovereign immunity by state and federal governments, concluding that the statutory waiver was insufficiently specific. Congress responded in 1994 by adding to Section 106 a list of pretty much every section of the Bankruptcy Code that grants an important power to sue and recover funds from third parties.

In Miller, the court essentially tells Congress, again, that it needs to do its homework better. If it actually wants to impose liability on the federal government, it will have to try even harder than it has in the past. Time will tell whether the third time will be a charm.

The post Justices validate IRS’s right to retain fraudulent pre-bankruptcy tax payments appeared first on SCOTUSblog.

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The Supreme Court will hear oral arguments on Tuesday in the latest chapter of the justices’ efforts to lay out rules for personal jurisdiction – whether courts have the power to hear a case against certain defendants. Tuesday’s case is a particularly high-profile dispute, and one that the federal government says has national security and foreign policy implications. At issue is whether a law enacted by Congress six years ago to allow U.S. victims of terrorist attacks to sue the Palestinian Authority and the Palestine Liberation Organization in federal courts in the United States violates the Constitution’s guarantee of due process.

The case has had a long and circuitous route to the Supreme Court. The plaintiffs are U.S. citizens injured in terrorist attacks in Israel, as well as the families of U.S. citizens killed in such attacks. They filed a lawsuit in U.S. court against the Palestine Liberation Organization, which is the Palestinian people’s official representative for foreign affairs, and the Palestinian Authority, the governing body for parts of the West Bank and Gaza Strip, under the Anti-Terrorism Act, which allows U.S. nationals to bring lawsuits to recover for injuries resulting from “an act of international terrorism.”

The plaintiffs say that both bodies encouraged the attacks, including by paying the families of Palestinians killed in suicide attacks or in prison for attacks in Israel. The PLO and the PA made monthly payments to families of prisoners held in Israel for political crimes, killed in conflict, or imprisoned in Israel for terrorism — 70% of Palestinian families have one or more relatives detained in Israel.

In February, President Mahmoud Abbas ended the payments and indicated that welfare payments will now be allocated based on families’ financial need. The move was seen as an overture to the United States to comply with U.S. law that would allow for foreign aid. The Palestinian Authority has been in increasing economic distress in recent years, struggling to make employees’ monthly salary payments.

In 2015, a jury awarded the plaintiffs in one such case $218.5 million – which the ATA tripled, to $655.5 million. But on appeal the Supreme Court ruled that federal district courts did not have jurisdiction over either the PLO or PA.

In 2019, Congress enacted the Promoting Security and Justice for Victims of Terrorism Act. The law provides that the PLO and the PA “shall be deemed to have consented to personal jurisdiction” in any civil case brought under the Anti-Terrorism Act, no matter when the act of international terrorism occurred, if they make payments to the families of terrorists who injured or killed a U.S. citizen or engaged in any activities within the United States. The law carves out a few narrow exceptions to the latter criterion – for example, for conduct relating to official United Nations business or meeting with government officials.

The Supreme Court sent the dispute back to the lower courts for another look in light of the new law. The U.S. Court of Appeals for the 2nd Circuit ruled that the lawsuit could not go forward. It reasoned that the PLO and the PA had not consented to U.S. courts exercising jurisdiction over them. Moreover, the court of appeals added, the PLO and the PA did not engage in the kind of activities from which it would be fair to infer consent, such as conduct related to litigation in the United States or the receipt of a benefit from the U.S. government. The full court of appeals, over a dissent by four judges, declined to reconsider the decision.

Both the federal government, which had joined the lawsuit to defend the law’s constitutionality, and the plaintiffs came to the Supreme Court, which agreed in December to weigh in.

In its brief at the Supreme Court, the federal government begins by observing that the Supreme Court has never decided whether the due process clauses in the 14th Amendment (which applies to cases brought in state courts) and the Fifth Amendment (which applies to cases brought in federal courts) impose the same limits on jurisdiction. But the law at the center of this case passes constitutional muster, the government insists, even under the more stringent test that applies to state courts.

The PSJVTA, the government explains gives the PA and the PLO “a choice tailored to their unique status and vital U.S. foreign-policy and national-security interests.” They could stop payments to the families of terrorists who injured U.S. citizens, as well as activities in the United States that are not necessary for their diplomatic representation or legal representation in U.S. courts. But if they continue that conduct, the government contends, they will be deemed to have consented to lawsuits against them under the PSJVTA. The PLO and the PA, the government writes, “knowingly chose the latter option.”

But in any event, the government continues, cases brought in federal courts are not subject to the same restrictions on personal jurisdiction that apply to cases in state courts. For purposes of the 14th Amendment’s due process clause, the government contends, an inquiry into personal jurisdiction inquiry focuses on a defendant’s contacts with the state that is seeking to bring it into court. But because the federal government has broader interests, such as foreign policy and trade, courts should undertake a “more flexible” inquiry that is “calibrated to the circumstances at hand.” In particular, the government suggests, courts should look at whether, “in the circumstances of the case, a federal court’s exercise of personal jurisdiction is so burdensome as to be fundamentally unfair to the defendant.” The PLO and the PA, the government notes, “have never attempted to establish that the Act is unfair in that sense.”

Here, the government emphasizes, Congress believed that deeming the PLO and the PA to have consented to jurisdiction in federal courts was the best way to prevent terrorism. Such a determination is entitled to deference, it concludes.

The U.S. victims and families tell the justices that the PSJVTA law provides the kind of due process that the Founding Fathers recognized as adequate. Under the law, they say, the PLO and the PA can still defend themselves in court – with an independent judge and a trial. And the law is not arbitrary: “It advances the Federal Government’s legitimate foreign-policy and national-security interests by deterring and disrupting terrorism, protecting and compensating Americans, and” providing an incentive for the PLO and the PA to “end their official program of financially rewarding terrorism.”

The group next echoes the government’s suggestion that the concerns underlying limitations on personal jurisdiction in state courts – ensuring that states do not encroach on other states’ authority by hearing disputes that have little connection to the state – do not apply to jurisdiction in federal court. The Supreme Court, they write, “has repeatedly taught that federal courts can adjudicate federal cases arising from” conduct that takes place outside the United States “when Congress so provides.”

The victims also point to the Supreme Court’s 2023 decision in Mallory v. Norfolk Southern Railway, in which the justices rejected a challenge to a Pennsylvania law that created jurisdiction through consent – specifically, out-of-state corporations were deemed to have consented to be sued in state courts when they registered as corporations in the state. The Supreme Court, the victims explain indicated that a defendant could constructively consent to personal jurisdiction by accepting a benefit in the state or by “engaging in conduct specified by law … as happened here.”

Moreover, the victims add, the law in this case serves legitimate government interests – which the Pennsylvania law in Mallory did not – because it “applies only to cases involving terrorism against American victims and their families.” And in any event, the PLO and the PA did receive benefits from the United States – the “privilege of residing and conducting business in the United States — not to mention furthering their political goals at the expense of American lives.”

The Palestinian Authority and the PLO denounce the PSJVTA as “the latest legislative attempt to undo an unbroken line of cases holding that” they cannot be haled into U.S. courts “for their alleged involvement in terrorist attacks in Israel and Palestine.”

Courts have repeatedly held, they write, that subjecting them to suits in federal courts “would violate due process because the attacks did not target Americans, and” because the PLO and the PA do not have “other constitutionally-sufficient connections to the United States.” Moreover, they add, in decisions issued before the enactment of the PSJVTA, courts have consistently ruled that payments by the Palestinian Authority, “which occur entirely outside the United States, do not support personal jurisdiction because they are not connected to the forum or to” the plaintiffs’ claims.

The PLO and the Palestinian Authority also push back against any suggestion that they consented to be sued in the United States, insisting that they had not done anything that could be interpreted as consent. They did not sign a contract agreeing to be sued in the United States, they note. And they did not accept any benefit from the federal government in exchange for being subject to suit, they continue. Nothing in the PSJVTA offers the PLO and the PA any “benefits,” they maintain. The PA ended the payment program in February, but the law subjects them to lawsuits in U.S. courts “for making payments that the United States had no power to permit or prohibit in the first place.”

Moreover, they tell the justices, the United States can bar (and has barred) the PLO and the PA from operating in the country. But the provision in the law subjecting the PLO and the PA to jurisdiction based on their activities in the United States also does not confer a “benefit” on them. Under the government’s reasoning, the PLO and the PA, say, the “benefit” that they receive is the benefit of not being subject to lawsuits under the Anti-Terrorism Act. But that is “entirely circular,” they argue, and would mean that Congress could always impose jurisdiction by consent.

It is also not enough, the PLO and the PA assert, that the PSJVTA may have provided them with advance notice that they would be subject to lawsuits in U.S. courts if they engaged in the conduct outlined in the law. “If due process required nothing more than notice,” they suggest, “then nothing would stop Congress from decreeing that a defendant shall be ‘deemed’ to have ‘consented’ to personal jurisdiction by engaging in any activity anywhere in the world.” Such a rule, they warn, would also increase the likelihood that other countries would enact similar laws, resulting in an increase in lawsuits against U.S. citizens and companies in foreign courts.

Like the federal government, the PLO and the PA resist the victims’ contention that the PSJVTA provides the kind of due process that was required in the Founding era history. “As members of this Court have explained,” they say, “when the proponent of a historical claim that would overturn longstanding precedent admits that it is speculative, wisdom counsels against adopting that position.”

And in any event, they conclude, the Supreme Court can uphold the 2nd Circuit’s ruling on the ground that the law violates the doctrine of the separation of powers by taking over the job of the courts. Specifically, they contend, the law tells courts that if the PLO or the PA engage in the activities described in the PSJVTA, they must find that the groups have consented to jurisdiction. But it is the job of the courts, rather than Congress, to determine whether a defendant has agreed to jurisdiction. And courts have already concluded, they write, that the activities of the PLO and the PA “are insufficient to support the exercise of jurisdiction under the” due process clause.

This article was originally published at Howe on the Court.

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The Supreme Court on Monday appeared sympathetic to the argument by a Catholic Charities chapter that Wisconsin violated the Constitution when it refused to give the group the same exemption from the state’s unemployment tax that it provides to churches, religious schools, and some religious groups. Justices from both sides of the ideological spectrum seemed to agree that the state’s denial of the exemption amounted to discrimination against Catholic Charities, with Justice Elena Kagan suggesting that it was “pretty fundamental that we don’t treat some religions better than others. And we certainly don’t do it based on the content of the religious doctrine that those religions preach.”

Catholic Charities is a social ministry arm of each Roman Catholic diocese in Wisconsin. This case was brought by the chapter for the diocese of Superior, which is in the northwestern part of the state, as well as four separate groups operating under the Catholic Charities umbrella that provide social services to people with disabilities.

The dispute began in 2016, when Catholic Charities sought an exemption from having to pay a Wisconsin unemployment tax for its employees. It contended that its employees are covered by a provision of the statute that carves out from the definition of “employment” anyone who works for (as relevant here) “an organization operated primarily for religious purposes” because the group carries out its charitable works to put Catholic principles into operation.

A state labor commission ruled that the exemption did not apply because even if Catholic Charities has religious motivations, its activities are secular.

The Wisconsin Supreme Court agreed that the exemption was not available. Although Catholic Charities may have religious motivations, it acknowledged, the group was not operated primarily for religious purposes because it does not “attempt to imbue” people who participate in its programs “with the Catholic faith nor supply any religious materials to program participants or employees.” Moreover, the state supreme court noted, Catholic Charities both employs people of all faiths and provides its services to them.

At the Supreme Court on Monday, lawyer Eric Rassbach, representing Catholic Charities, told the justices that the Wisconsin Supreme Court had improperly interpreted the unemployment tax exemption “to favor what it called ‘typical’ religious activity.” Moreover, he added, it “held that helping the poor can’t be religious, because secular people help the poor too. To resolve this case,” he stressed, “this Court need do nothing more than say that the Constitution doesn’t allow courts to do that.”

Rassbach faced some skeptical questions about the limits of his proposed rule. Kagan asked whether any group that contended it was a religious group with religious activities and a religious purpose would qualify for the exemption.

Rassbach countered that the group’s beliefs must be sincere, and they must be religious, rather than philosophical.

Justice Ketanji Brown Jackson, perhaps the state’s strongest supporter, suggested that the Wisconsin Supreme Court was asking the wrong questions about what it means to be an organization “operated primarily for religious purposes.” The Wisconsin law mirrors a federal unemployment tax law, she noted. And when Congress enacted that law, she explained, it distinguished between institutions like “a college devoted to preparing students for the ministry” on the one hand, which would be entitled to the exemption, and – on the other hand – a church-affiliated orphanage or nursing home, which would not be entitled to the exemption. That history, she contended, indicates that for the federal law, Congress intended to draw a line between charitable organizations run by the church – like Catholic Charities – and “organizations run by the church that are like training programs for priests.”

And Justice Amy Coney Barrett questioned Rassbach’s argument that the exemption violates the church autonomy doctrine – the principle that the government should not interfere in internal church affairs, and in particular in how a religious institution governs itself. “It seems to me,” Barrett said, “that there’s a difference between telling a church what to do or interfering in its internal affairs” and giving the church an incentive “to do certain things.”

Rassbach pushed back, countering that it “really matters what the incentives are.”

Representing Wisconsin, Assistant Attorney General Colin Roth told the justices that the state’s unemployment tax exemption was intended to address “a particular problem” – specifically, to avoid having the state decide whether employees complied with religious doctrine when churches and religious institutions fire their employees, who then file for unemployment benefits. “So Wisconsin gives those kinds of employers a wide berth by prophylactically exempting them,” Roth explained. But to limit the number of employers who do not pay into the unemployment system, Roth added, only the “employers most likely to draw the state into doctrinal disputes” qualify for the exemption.

By contrast, Roth asserted, Catholic Charities asks the court to adopt a “motive-only test” without any limits. That test, he warned, “would leave potentially over one million employees nationwide without unemployment coverage, like nurses and janitors at religiously affiliated hospitals, even though the state can virtually always determine their benefit eligibility without confronting religious doctrine.”

If a few justices had pressed Rassbach, almost all of them had questions for Roth. Thomas queried whether Catholic Charities would qualify for the exemption if it were incorporated as part of the church, rather than as a separate nonprofit.

When Roth answered that it would, Thomas shot back, “What’s the difference? If the function is exactly the same, but it’s a separate entity, what’s the difference? Religiously?”

Perhaps to highlight what he saw as the artificial line that the law draws, Chief Justice John Roberts asked Roth to explain “the simplest thing that Catholic Charities would have to do to qualify for the religious exemption in Wisconsin.”

Roth responded that proselytization – soliciting others to join the Catholic faith – as a condition of receiving a service from Catholic Charities would qualify.

Justice Neil Gorsuch then jumped in, asking Roth where to draw the line. Does Catholic Charities have to require the people receiving their services to “repent,” he asked, or it won’t receive the exemption? Or, Gorsuch continued, “is mandatory church attendance versus optional church attendance, that’s the line?”

Roberts later interjected, “You want a test that is the easiest one for you to apply.”

Gorsuch and Barrett both suggested that a rule that hinges on whether the religious nonprofit is proselytizing would result, as Gorsuch observed, in the government becoming involved in religion “a whole lot more than” a rule that requires the government not to discriminate between religions.

Kagan acknowledged that there “are lots of hard questions in this area.” But, she continued, the Wisconsin Supreme Court’s ruling focuses on two issues – the idea that Catholic Charities serves people of all faiths, which the state is no longer defending, and the idea that it does not proselytize. “Some religions proselytize,” Kagan said. “Other religions don’t. Why are we treating some religions better than others based on that element of religious doctrine?” The state’s rule, she concluded, “basically puts the state on the side of some religions with some doctrine versus other religions with a different doctrine.”

Gorsuch echoed Kagan’s concerns a few minutes later. “Isn’t it a fundamental premise of our First Amendment,” he asked Roth, “that the state shouldn’t be picking and choosing between religions, between certain evangelical sects, and Judaism and Catholicism on the other, for example?”

In his rebuttal, Rassbach stressed that the United States is a “religiously pluralist society. And that calls,” he said, “for a generous approach to religious exemptions, not a stingy one.” A majority of the justices seemed inclined to agree.

This article was originally published at Howe on the Court.

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Under the federal law governing efforts by state prisoners to seek post-conviction relief in federal courts, prisoners who lose at the trial level can only appeal that decision if they can show that reasonable judges could disagree with the ruling or that the case should be allowed to move forward. The Supreme Court declined on Monday to decide whether prisoners can make that showing as long as at least one appeals court judge votes to grant them permission to appeal.

Justice Sonia Sotomayor dissented from the denial of review in the case of Lance Shockley, who was convicted and sentenced to death for the 2005 murder of a Missouri highway patrol officer who had been investigating a fatal car accident in which Shockley had been the driver. Justice Ketanji Brown Jackson joined Sotomayor’s six-page dissent.

The brief unsigned order denying review was part of a list of orders from the justices’ private conference on Friday, March 28.

Shockley contended that his trial counsel violated his Sixth Amendment right to have effective representation by an attorney. Although the foreman at Shockley’s trial had self-published a “fictionalized autobiography” depicting the protagonist’s attempt to seek “vengeance” after his wife was killed by a drunk driver but was only sentenced to probation, Shockley’s lawyers did not learn of the book until after Shockley had already been convicted. When they eventually became aware of it, before Shockley’s sentencing, they failed to take advantage of the judge’s suggestion that they develop the facts to support their motion for a new trial – for example, by questioning the foreman about whether he had discussed the novel with other members of the jury, which he had.

After his efforts to obtain relief in the state courts were unsuccessful, Shockley went to federal court. The district court denied his petition for post-conviction relief, as well as permission to appeal.

Shockley then went to the U.S. Court of Appeals for the 8th Circuit, which – by a vote of 2-1 – also turned down his request for permission to appeal. The full court of appeals then denied his request to reconsider that decision, with a second judge joining the dissenting judge in voting for rehearing.

Shockley came to the Supreme Court in November, asking the justices to weigh in. He argued that the disagreement among judges about whether to hear his appeal indicated that, as federal law requires, reasonable judges could disagree on how his claim should be resolved. Moreover, he stressed, four other courts of appeals would have granted his request to appeal in light of that disagreement.

Missouri urged the justices to stay out of the dispute. It argued that both the Supreme Court and Congress had “left it to the circuit courts of appeal to decide how they handle applications for certificates of appealability.” Any inconsistencies on how the courts of appeals treat such applications are, therefore, it emphasized, “merely differences of administration on a procedural matter” and not deserving of the justices’ attention.

After considering Shockley’s petition for review at five conferences, the justices denied review.

Sotomayor would have granted review and, she suggested, allowed Shockley’s appeal to go forward. In her dissent, Sotomayor contended that there “are good reasons to think that Congress conditioned the right to an appeal on a single judge’s vote.” She observed that, under federal law, most cases “must be resolved by ‘a majority of the number of judges authorized to constitute a court or panel thereof’ or by the appropriate ‘court of appeals.’” Congress could have done the same for post-conviction cases, she noted, but instead indicated only that “’a circuit justice or judge’ can grant permission to appeal.”

Allowing an appeal to move forward as long as at least one judge votes to grant permission to appeal “also promotes efficiency,” Sotomayor contended. “Because appeals should proceed so long as they present a debatable issue,” she wrote, “the question whether to grant” permission “should not be a contentious one.”

Addressing the substance of Shockley’s appeal, Sotomayor concluded that it “is difficult to see how an attorney’s decision not to call witnesses in support of a credible mistrial motion, when invited to so by the presiding judge in a capital murder trial, could fail to constitute ineffective assistance of counsel.” The court of appeals, she wrote, was “plainly” wrong when it ruled that the district court’s contrary decision was “not even debatable.”

The court once again did not act on several high-profile petitions for review that have been pending for several weeks, including challenges to Rhode Island’s ban on large-capacity magazines and Maryland’s ban on military-style assault rifles, as well as a challenge to the transfer of federal land in Arizona that the San Carlos Apache Tribe regards as a sacred site to a mining company.

The justices will meet again for a private conference on Friday, April 4. Orders from that conference are expected at 9:30 a.m. on Monday, April 7.

This article was originally published at Howe on the Court.

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The justice will hear oral arguments in Catholic Charities Bureau v. Wisconsin Labor & Industry Review Commission and Rivers v. Guerrero this morning. Catholic Charities is one of three religious rights cases the justices will hear in the final weeks of the 2024-25 term’s arguments. The social ministry arm of the Catholic diocese in Wisconsin urges the justices to rule that the state violated the group’s constitutional rights when Wisconsin failed to give it a religious tax exemption from state unemployment tax.

Each weekday, we select a short list of news articles and commentary related to the Supreme Court. Here’s the Monday morning read:

• Supreme Court hears Catholic groups’ claim for religious tax exemption (Lawrence Hurley, NBC News)
• Is helping people with disabilities a religious act? The core question in a Supreme Court case (Maureen Groppe, USA Today)
• Will Religion’s Remarkable Winning Streak at the Supreme Court Continue? (Adam Liptak, The New York Times)
• Trump increasingly asks the Supreme Court to overrule judges blocking key parts of his agenda (Mark Sherman & Lindsay Whitehurst, The Associated Press)
• Trump Administration Asks Supreme Court for Power to Resume Deportation Flights (Jess Bravin, The Wall Street Journal)

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