Supreme Court Action: Protests at Military Bases and State Law Based Securities Class Actions

I was intending to write the summary of the Supreme Court’s most recent opinions released last week much earlier than when I published this post.  The delay was caused by a medical emergency in that my oldest cat, William, became comatose on Wednesday evening.  His condition continued to worsen and he had to be euthanized the following day.  He was 14 when he died.  He was a great companion, full of affection, and I will miss him.  Now, back to business.

The Court issued two opinions last Wednesday.  The first of these is United States v. Apel (12-1038).  Apel was convicted of violating 18 U.S.C §1832 which makes it a crime to reenter a military installation after being ordered not to by the officer in command.  The location here is the Vandenberg Air Force Base in California.  There are two highways which bisect the Base and these are fenced from the rest of the installation.  These exist by operation of an easement granted by the United States to California as the Base sits exclusively on federal land.  The Base commander has additionally set up an area to be used for peaceful protest adjacent to one of the highways.

The record shows that Apel went beyond the designated protest areas in 2003 and 2007 and trespassed on base property where he threw blood at the Base sign.  These actions resulted in convictions where he was incarcerated for a nominal amount of time.  He was specifically restricted from entering the base but ignored the Base commander’s order in 2008 and 2009.  He was completely barred from the base as a consequence, including the highway and protest areas.  Apel ignored that order and continued to use the protest area.  He was escorted off the base each time he appeared.

A Magistrate Judge fined Apel $355 dollars for his conduct in violation of §1382.  The District Court upheld the fines and that the conviction would not violate the First Amendment.  The Ninth Circuit reversed.  It held that the statute does not apply.  The government would have to prove it had exclusive right of possession and that the easement precludes enforcement of the statute for conduct in the protest area.

The Supreme Court reversed.  It held that the boundaries of the Base define the authority of the Base commander and that included the areas covered by the easement.  The Court rejected precedent that said the Government had no jurisdiction for off-Base housing:

But Phisterer only confirms our conclusion that §1382 does not require exclusive use, possession, or control. For there we interpreted “military station” to mean “a place where troops are assembled, where military stores, animate or inanimate, are kept or distributed, where military duty is performed or military protection afforded,—where something, in short, more or less closely connected with arms or war is kept or is to be done.” Id., at 222. To describe a place as “more or less closely connected” with military activities hardly requires that the military hold an exclusive right to the property.  Rather, “military duty” and “military protection” are synonymous with the exercise of military jurisdiction. And that, not coincidentally, is precisely how the term “military installation” is used elsewhere in federal law.

The Court further rejected Executive Branch documents stating that §1382 requires “exclusive possession” as these are not definitive as they may rely on law in flux.  These documents do not create rights and are not entitled to deference. The Court called the rest of Apel’s argument conclusory.  One point about the case is that the Court makes no ruling on the First Amendment issue lurking in the case.  The Court of Appeals never reached this issue and as such it is not before the Court.  The case was returned to the lower courts for further review.

Chief Justice Roberts delivered the opinion for a unanimous Court.  Justice Ginsburg filed a concurring opinion that was joined by Justice Sotomayor.  Justice Alito also filed a concurring opinion.

The other opinion filed last Wednesday is Chadbourne & Parke, LLP v. Troice (12-79).  It involves the application of the Securities Litigation Uniform Standards Act of 1998 (Litigation Act or Act) to class actions brought under state law against defendants who helped Allen Stanford effectuate his Ponzi scheme.  The Justice Department successfully prosecuted Stanford for fraud.  The Stanford International Bank was subject to $6 billion in fines.  The respondents, plaintiffs at trial, filed class actions against Stanford agents in Texas and Louisiana under each state’s law.  The Litigation Act prohibits large securities class actions brought under state law.

The relevant portion of the Litigation Act for this case is the phrase “misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security.”  The Act further specifies that the securities in question must be traded on a national exchange for the Act to apply.  The cases were consolidated in federal court where the District Court judge dismissed the actions. The judge concluded that the securities in this case were not “covered” securities nor traded on national exchanges. However, there were allegations that the securities were represented to be backed by “covered” securities.  This was enough of a connection to apply the Act and dismiss the action.  The Fifth Circuit reversed, holding that the connection was too tangential to apply the law.

The Supreme Court affirmed the Fifth Circuit largely on the basis of the statutory language compared to the alleged facts in the case.  It agreed that by statutory definitions that the Act did not apply when the securities in question were neither covered under the Act’s language nor traded on a national exchange.  The Court further stated that its holding is consistent with precedent.  A good portion of the opinion rebuts the dissent’s view that the holding in this case will diminish the Government’s ability to prosecute fraud cases under the various Securities Acts.

Justice Breyer delivered the opinion of the Court and was joined by Chief Justice Roberts, and Justices Scalia, Thomas, Ginsburg, Sotomayor, and Kagan.  Justice Kennedy filed a dissenting opinion and was joined by Justice Alito.  –Mark

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