June 17, 2013
Today the Supreme Court granted certiorari in three cases of interest to the business community:
Aviation and Transportation Security Act — Qualified Immunity For Voluntary ATSA Reporting
To encourage airlines to report actual and potential security threats, Section 125 of the Aviation and Transportation Security Act provides that airlines and their employees who make a “voluntary disclosure” to specified law-enforcement agencies “of any suspicious transaction relevant to a possible violation of law or regulation, relating to air piracy, a threat to aircraft or passenger safety, or terrorism . . . shall not be civilly liable to any person under any law or regulation . . . for such disclosure.” 49 U.S.C. § 44941(a). Section 125 does not, however, confer immunity for any disclosure made with “actual knowledge that the disclosure was false, inaccurate, or misleading,” or with “reckless disregard as to [its] truth or falsity.” Id. § 44941(b). Today the Supreme Court granted certiorari in Air Wisconsin Airlines Corp. v. Hoeper, No. 12-315, to decide whether courts can deny immunity to airlines and airline employees who make voluntary disclosures otherwise covered by Section 125 without first determining whether the reported information was actually false.
Because the Court’s ultimate decision will help determine the extent to which airlines and their employees are subject to liability for voluntarily reporting perceived security threats to the Transportation Security Administration and other law-enforcement agencies, it should be of interest to all airlines that operate in the United States.
Respondent William Hoeper was an airline pilot employed by petitioner Air Wisconsin until the aircraft model that he piloted was discontinued and he was unable to obtain certification to pilot another type of aircraft. After failing in his fourth attempt to pass a flight-proficiency test, Hoeper accused his test administrators of sabotaging his examination. While Hoeper waited to board his flight home, Air Wisconsin reported to the TSA that a “disgruntled employee” who “may be armed” was about to board a commercial flight, and that Air Wisconsin employees were “concerned” about Hoeper’s “mental stability.” Based on that report, the TSA arrested Hoeper at the airport and searched him for weapons. When he learned of the reason for his arrest, Hoeper sued Air Wisconsin in Colorado state court for defamation, among other claims. After the trial court denied Air Wisconsin’s motion for summary judgment, the jury found that Air Wisconsin was not immune from suit under Section 125 of the ATSA because its statements to the TSA were made “knowing that they were false, or so recklessly as to amount to a willful disregard for the truth.” The jury then found Air Wisconsin liable for defamation, and Hoeper was awarded approximately $1.4 million in damages and costs.
The Supreme Court of Colorado affirmed, holding that because the “record evidence” established that Air Wisconsin’s statements were, in the court’s view, “made with reckless disregard as to their truth or falsity,” the court “need not . . . decide” for itself whether Air Wisconsin’s statements were actually “true or false,” but could instead defer to the jury’s determination. __ P.3d __, 2012 WL 907764, at *6 & n.6 (Colo. 2012).
The Colorado Supreme Court’s decision is consistent with decisions of the Sixth and Eighth Circuits and four state supreme courts. It conflicts with decisions of the First, Second, and D.C. Circuits and three other state supreme courts holding that First Amendment protections for speech regarding matters of public concern impose a duty for appellate courts to conduct a de novo review of the record to ensure that a defendant is not held liable unless the statements at issue are actually false. But the U.S. Supreme Court limited its grant of certiorari to the statutory issue whether courts can rule on a defendant’s immunity under the ATSA without addressing the actual truth or falsity of the disclosures at issue, so the Supreme Court’s decision is unlikely to resolve the broader constitutional issue.
Absent extensions, which are likely, amicus briefs in support of the petitioner will be due on August 8, 2013, and amicus briefs in support of the respondent will be due on September 10, 2013. Any questions about the case should be directed to Andrew Tauber (+1 202 263 3324) in our Washington office.
Fair Housing Act—Disparate-Impact Claims
The Fair Housing Act makes it unlawful “to refuse to sell or rent . . . , or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status or national origin.” 42 U.S.C. § 3604(a). Today, the Supreme Court granted certiorari in Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., No. 11-1507, to decide whether disparate-impact claims are cognizable under the FHA. The Court’s decision on this issue will be important to state and local governments as well as to real-estate developers involved in urban redevelopment.
The dispute in Mount Holly centers on the plans by the township of Mt. Holly, New Jersey, to demolish and redevelop the Gardens, a low-income neighborhood that is afflicted with blight and crime but also is home to the highest concentration of minority residents within Mt. Holly. The township’s final plan called for the complete destruction the buildings in the Gardens and the construction of 520 new housing units, most of which would be beyond the financial means of the neighborhood’s current residents. According to census data compiled before the redevelopment plan began, the demolition of the Gardens would affect more than 22% of the African-American households and more than 32% of the Hispanic households in Mount Holly, but less than 3% of the white households.
After a number of unsuccessful challenges to Mt. Holly’s redevelopment plans in New Jersey state courts, an association of Gardens residents and several individual residents filed suit in the federal district court for the District of New Jersey, alleging violations of the FHA. The district court found that the plaintiffs had provided no evidence of discriminatory intent, and also rejected the plaintiffs’ disparate-impact claim, finding both that the plaintiffs’ statistics failed to establish disparate impact and that Mt. Holly had shown that its legitimate goals of reducing blight and crime could not be accomplished by less discriminatory means.
The Third Circuit reversed the district court’s grant of summary judgment on the disparate-impact claim, concluding that the plaintiffs’ statistical evidence and evidence of a less discriminatory alternative redevelopment plan raised issues of material fact that could not be decided on summary judgment. The Third Circuit also determined that the district court erred in conflating disparate impact with disparate treatment.
The defendants filed a petition for certiorari, seeking review on (1) whether disparate-impact claims are cognizable under the FHA, and if so (2) what test should be applied to such claims. The Supreme Court granted certiorari, butonly on the first of those questions.
Absent extensions, which are likely, amicus briefs in support of the petitioner will be due on August 8, 2013, and amicus briefs in supports of the respondents will be due on September 10, 2013. Any questions about this case should be directed to Andrew Tauber (+1 202 263 3324) in our Washington office.
Appealability—Finality of Decision Leaving Request for Contractual Attorney’s Fees Unresolved
In Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1998), the Supreme Court held that a district-court decision that fully resolves the merits of the litigation, but without addressing attorney’s fees under a statutory fee-shifting provision, is a “final decision” under 28 U.S.C. § 1291 that must be appealed within 30 days. Today, the Supreme Court granted certiorari in Ray Haluch Gravel Co. v. Central Pension Fund, No. 12-992, to address whether the same rule applies when attorney’s fees are authorized by a contractual fee provision rather than by statute. Mayer Brown represents the petitioners in this case.
In the decision below, the district court issued an initial decision on the merits of the parties’ contract dispute and then, more than a month later, issued a separate order awarding attorney’s fees. Respondents filed a notice of appeal within 30 days after the order granting attorney’s fees, but not within 30 days of the earlier decision resolving the merits. Eschewing Budinich’s “bright-line rule” (486 U.S. at 202), the First Circuit held that the notice of appeal was timely as to both decisions. The court reasoned that, unlike the statutory attorney’s fees in Budinich, the contractual attorney’s fees in this case “are part of the merits of” the contract claim. 695 F.3d 1, 7.
The courts of appeals have divided on whether contractual fee awards are collateral, like the statutory attorney’s fees in Budinich, or are instead part of the merits that must be resolved before any appeal is taken. The Second, Fifth, Seventh, and Ninth Circuits have held that contractual fee awards are always collateral. The Eleventh Circuit has held that they are never collateral. And the First, Third, Fourth, and Eighth Circuits have held that they are sometimes collateral, depending on case-specific facts.
The Court’s decision could have a significant impact on businesses because contacts containing attorney-fee provisions are commonplace in commercial transactions. This case will determine the procedures that must be followed by parties appealing a decision in a case involving a claim for contractual attorney’s fees, with a failure to follow those procedures potentially resulting in a waiver of the party’s appeal of the decision on the merits of the case.
Absent extensions, which are likely, amicus briefs in support of the petitioners will be due on August 8, 2013, and amicus briefs in supports of the respondents will be due on September 10, 2013. Any questions about this case should be directed to Dan Himmelfarb (+1 202 263 3035) or Charles A. Rothfeld (+1 202 263 3233) in our Washington office.
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Mayer Brown's Supreme Court & Appellate practice distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community and distributes a Docket Report-Decision Alert whenever the Court decides such a case. We hope you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at email@example.com or +1 202 263 3324).
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