Justices make it easier to sue over 401(k) plans
WASHINGTON (AP) - The Supreme Court ruled unanimously Monday in favor of participants in employee retirement plans who object to companies' investment decisions that eat into retirement savings.
The justices revived claims by current and former employees of energy company Edison International. The employees argued that the company chose mutual funds with excessive fees.
Edison offers employees roughly 40 mutual funds to choose from in deciding how to invest. The case involved a few higher-cost funds open to the general public instead of identical investments with lower costs that are open only to institutional investors. The Edison employees contend that the company did not act in their best interests by choosing the higher-cost funds.
Even a modest jump in fees can have a significant effect on earnings. Higher fees of just 1 percent a year would erase $70,000 from an average worker's account over a four-decade career compared with lower-cost options, according to a study last year by the Center for American Progress, a liberal think tank.
A federal appeals court dismissed the Edison employees' claims under the federal Employee Retirement Income Security Act, known as ERISA. The appeals court said the employees' lawsuit was filed too late to contest the original choice of funds and that executives who make those decisions only have to reconsider them if circumstances change dramatically.
The Supreme Court disagreed with the appellate decision in an opinion by Justice Stephen Breyer. People in charge of investment options have an ongoing responsibility to monitor the situation, Breyer said. "The continuing duty to review investments includes a duty to remove imprudent investments," Breyer said.
The Supreme Court's consideration of the case came amid heightened scrutiny of the management of Americans' retirement investments. The 401(k) accounts, in particular, have increasingly supplanted traditional pension plans. Fifty-three million people held about $4.5 trillion in 401(k) accounts as of Sept. 30, according to the Investment Company Institute, an industry group.
The case is Tibble v. Edison International, 13-550.
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Court won't hear appeal over concealed evidence
WASHINGTON (AP) - The Supreme Court won't hear an appeal from two Los Angeles police detectives found liable for withholding evidence that showed the innocence of a man they arrested and kept in jail for 27 months.
The justices on Monday let stand an appeals court ruling that said police violated Michael Walker's constitutional rights.
Walker was arrested in 2005 and charged with robbing several Los Angeles businesses by handing employees a note demanding money. While Walker was in jail, detectives did not reveal that other similar robberies were still taking place.
After his release, Walker filed a civil rights action against police. A jury awarded him $106,000 and a federal appeals court affirmed.
The city argued police did not violate Walker's constitutional rights because there was no trial resulting in his conviction.
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Appeal from former New Jersey official rejected
WASHINGTON (AP) - The Supreme Court won't hear an appeal from a former Newark, New Jersey, official convicted of conspiracy to commit extortion.
The justices on Monday let stand a ruling by a federal appeals court that upheld the 2011 conviction of former deputy mayor Ron Salahuddin.
Salahuddin was accused of using his position to illegally steer demolition contracts to the owner of a wrecking company in which he had a financial stake. He was sentenced to a year in prison.
Salahuddin argued that he could not be convicted of conspiracy because there was no proof he obtained any benefits in the scheme.
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Justices turn down appeal over campaign probe
WASHINGTON (AP) - The Supreme Court won't hear an appeal from a conservative group seeking to end an investigation into possible illegal coordination between Wisconsin Gov. Scott Walker's 2012 recall campaign and independent groups.
The justices on Monday let stand an appeals court ruling that said Wisconsin Club for Growth and its director, Eric O'Keefe, must resolve their claims in state courts.
No one has been charged as a result of the investigation which has sought documents and testimony about possible violation of state campaign finance laws.
The investigation is on hold while a separate legal challenge is pending before the Wisconsin Supreme Court.
The club and O'Keefe argued that the investigation was a violation of their First Amendment rights and an attempt to criminalize political speech.
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Maryland tax law struck down
By Sam Hananel
Associated Press
WASHINGTON (AP) - The Supreme Court on Monday struck down as unconstitutional a Maryland tax that has the effect of double-taxing income residents earn in other states.
Maryland officials say the 5-4 ruling means the loss of hundreds of millions of dollars in tax revenues. It also could affect similar tax laws in nearly 5,000 local jurisdictions in other states, including New York, Indiana, Pennsylvania and Ohio.
The justices agreed with a lower court that the tax is invalid because it discourages Maryland residents from earning money outside the state.
The unusual split wasn't along ideological lines. Writing for the court, Justice Samuel Alito said the tax "is inherently discriminatory" under the Constitution's Commerce Clause. The court has interpreted that provision to ban states from passing laws that burden interstate commerce.
Alito was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Stephen Breyer and Sonia Sotomayor.
Maryland allowed its residents to deduct income taxes paid to other states from their Maryland state tax, but it did not apply that deduction to a local "piggy back" tax collected for counties and some city governments.
Maryland officials argued that the state has authority to tax all the income its residents earn to pay for local services like public schools and fire protection and police services.
The case arose after Maryland residents Brian and Karen Wynne challenged their tax bill. They had been blocked from deducting $84,550 that they had paid in income taxes to 39 other states. Brian Wynne's out-of-state income resulted from his ownership stake in a health care company that operates nationwide.
The Wynnes argued that Maryland was unfairly subjecting them to double taxation and taxing earnings that have no connection to the state.
Maryland's highest court ruled in 2013 that the tax violates the Constitution's Commerce Clause.
Maryland officials estimate the ruling will cost the state about $200 million in refunds it will have to pay residents going back seven or eight years. The decision also will cost local governments about $42 million annually.
In dissent, Justice Ruth Bader Ginsburg said nothing in the Constitution requires a state to avoid taxing its residents just because another state has a similar tax regime targeting the same income. She was joined in dissent by Justices Antonin Scalia and Elena Kagan.
Scalia also wrote separately to note his longtime opposition to "a judge-invented rule under which judges may set aside state laws that they think impose too much of a burden on interstate commerce." Clarence Thomas wrote separately to say the Commerce Clause cannot be used to strike down a state law.
Joe Henchman, vice president for legal projects at the Tax Foundation, a conservative Washington-based think tank, said the decision could jeopardize tax laws in other states. That includes telecommuter taxes that New York and some other states impose on people who work from home. These workers also face double taxation on income by their home state and the state in which their employer is located, he said.
"Any law that is justified by the idea that 'We're going to tax the out-of-staters more heavily than in-staters,' those laws should now be evaluated very closely to see their harms on interstate commerce," Henchman said.
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Associated Press writer Brian Witte in Annapolis, Maryland, contributed to this report.
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Police immune over arrest of mentally ill woman
By Sam Hananel
Associated Press
WASHINGTON (AP) - The Supreme Court ruled Monday that police are immune from a lawsuit arising from the arrest and shooting of a mentally ill woman in San Francisco.
But the justices left undecided the question of whether police must take special precautions when arresting armed and violent people suffering from mental illness.
The case involved a 2008 incident in which two police officers forced their way into Teresa Sheehan's room at a group home and shot her five times after she came at them with a knife. Sheehan claimed the officers should have used less confrontational tactics because they are covered by the Americans with Disabilities Act. That law requires "reasonable accommodations" for people with mental illnesses.
Writing for the court, Justice Samuel Alito said the justices wouldn't take up the disability rights issue because it hadn't been fully considered by lower courts.
Qualified immunity protects public officials from being sued for damages unless the official violated a constitutional right that was clearly established at the time of the misconduct.
Six justices agreed that the police officers could not be sued in this case. Justices Antonin Scalia and Elena Kagan wrote separately to say they would have dismissed the case entirely. Justice Stephen Breyer took no part in the case, as his brother was the federal judge who heard the case.
The case had attracted attention from mental health advocates who said that failing to take account of a suspect's disability often results in unnecessary shootings by police.
Law enforcement groups also weighed in, saying a ruling in Sheehan's favor could undermine police tactics, place officers and bystanders at risk and open them to additional liability.
The ADA generally requires public officials to make "reasonable accommodations" to avoid discriminating against people with disabilities. But lower courts have split on how the law should apply to police conduct when public safety is at risk.
The Supreme Court initially took up the case because the city argued that the disability act does not apply when police face armed and dangerous suspects. But then attorneys for the city changed their argument to say that Sheehan was not "qualified" for an accommodation under the law. Alito said it would not be "prudent" to decide a question that hadn't been fully considered by lower courts.
In Sheehan's case, her social worker called police for help in restraining her so she could be taken to a hospital for treatment. Officers entered her room with a key, but Sheehan threatened them with a knife, so they closed the door and called for backup. But they said they weren't sure whether Sheehan had a way to escape, and were concerned that she might have other weapons inside.
The officers then forced their way in and tried to subdue her with pepper spray. But she continued to come toward them with the knife and was shot five times.
A federal district court sided with the police, ruling that it would be unreasonable to ask officers trying to detain a violent, mentally disabled person to comply with the ADA before protecting themselves and others. But the 9th U.S. Circuit Court of Appeals said a jury should decide whether it was reasonable for the officers to use less confrontational tactics.
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Convicted felons can sell their guns
By Sam Hananel
Associated Press
WASHINGTON (AP) - A unanimous Supreme Court ruled Monday that the government can't prevent a convicted felon who is barred from possessing firearms from trying to sell his guns after they are confiscated by authorities.
The justices sided with Tony Henderson, a former U.S. Border Patrol agent who agreed to turn over his collection of 19 firearms to the FBI as a condition of release after he was arrested and charged with distributing marijuana.
After he pleaded guilty, Henderson wanted to sell the weapons valued at more than $3,500 to a friend, or transfer them to his wife. But lower courts found that doing so would technically give Henderson possession of the weapons in violation of the law. Prosecutors also said they were concerned that Henderson's friend or wife might give him access to the weapons.
Writing for the court, Justice Elena Kagan said letting a convicted felon sell or transfer guns is allowed as long as a court is satisfied that the person getting the weapons won't give the felon control over them.
"A felon cannot evade the strictures of (the law) by arranging a sham transfer that leaves him in effective control of his guns," Kagan said.
Kagan said the district court could have ordered the guns turned over to a federally-licensed firearms dealer, who would sell them with proceeds going to Henderson. She said the lower court also could allow Henderson to transfer the guns to another person who will not allow him "to exert any influence over their use."
She said the government's reading of the law goes too far in saying Henderson would illegally "possess" the weapons just by being allowed to sell them.
The case had drawn the attention of gun-rights groups, including the National Rifle Association, which argued that the government's attempt to prohibit any sale or transfer prevents law-abiding citizens who want to buy the guns from doing so.
Published: Wed, May 20, 2015
