SUPREME COURT NOTEBOOK

Broad use ofanti-bank fraud law upheld WASHINGTON (AP) - The Supreme Court on Monday unanimously upheld the broad application of a federal anti-bank fraud law. The justices sustained the bank fraud conviction of Kevin Loughrin, who used stolen checks as part of a scheme to take merchandise and cash from a Target store in Utah. Using checks from a bank brought Loughrin under the bank fraud statute. He was sentenced to three years in prison. Justice Elena Kagan said for the court that the law does not require the government to prove that a defendant intended to defraud a bank. Lower courts had come to different conclusions on that topic. The Obama administration had argued that the law should be read broadly because banks lose about $1 billion a year to fraud. Loughrin said that a broad application of the federal law would sweep under it many crimes that are usually prosecuted by state authorities. He also said Congress would have written the law differently if it had wanted his crime to fall under it. Kagan said, "Neither argument is without force, but in the end, neither carries the day." The case is Loughrin v. U.S., 13-316. Court raises bar for securities class action cases By Sam Hananel Associated Press WASHINGTON (AP) - The Supreme Court on Monday made it tougher for investors to join together to sue corporations for securities fraud, a decision that could curb the number of multimillion-dollar legal settlements companies pay out each year. But the unanimous ruling was only a modest step. It stopped short of tossing out a quarter-century-old legal theory that might have ended securities class action lawsuits altogether. Only three of the nine justices said they would have gone that far. Writing for the court, Chief Justice John Roberts said companies should have a chance in the early stages of a lawsuit to show that any alleged fraud was not responsible for a drop in the company's stock price. The change could make it more expensive and time consuming for plaintiffs at the early stages of litigation. That gives corporations a better chance to mount a defense and could discourage lawyers from bringing weaker securities cases. The ruling is a partial victory for Halliburton Co., which is trying to block a class-action lawsuit claiming the energy services company inflated its stock price. A group of investors claims they lost money when Halliburton's stock price dropped after revelations the company misrepresented revenues, understated its liability in asbestos litigation and overstated the benefits of a merger. Halliburton attorney Aaron Streett said he was pleased "that the Supreme Court restored a measure of rationality and balance to securities class actions." The case now goes back to the lower courts, where Halliburton will have another chance to block the investors from joining together as a class. The decision is a minor win for business groups that complain the growth of such class actions is a drain on corporate profits and a windfall for plaintiff lawyers. Investor groups say the lawsuits help deter corporate fraud and abuse. But the justices rejected Halliburton's broader request to overturn the court's 1988 decision in Basic v. Levinson, a case that sparked a surge in securities class-action lawsuits against publicly traded companies and has led to an estimated $73 billion in settlements since 1997. Under Basic's "fraud on the market" theory, shareholders who claim fraud don't need to show they actually relied on specific false statements. The theory presumes a company's false statements inflated its stock price. Roberts said Halliburton offered no "special justification" for overruling Basic's fraud-on-the-market presumption. He said even the biggest critics of the theory "acknowledge that public information generally affects stock prices." "Halliburton has not identified the kind of fundamental shift in economic theory that could justify overruling a precedent on the ground that it misunderstood, or has since been overtaken by, economic realities," Roberts said. While the court's judgment was unanimous, Justice Clarence Thomas wrote a separate opinion saying that Basic should be overruled because economic realities have "undermined the foundation of the Basic premise." He was joined by Justices Antonin Scalia and Samuel Alito. "The court's rather superficial analysis does not withstand scrutiny," Thomas said. "It cannot be seriously disputed that a great many investors do not buy or sell stock based on a belief that the stock's price accurately reflects its value." In her own separate opinion, Justice Ruth Bader Ginsburg said it was her understanding that the ruling "should impose no heavy toll on securities-fraud plaintiffs with tenable claims." She was joined by Justices Stephen Breyer and Sonia Sotomayor. Business groups including the U.S. Chamber of Commerce and the National Association of Manufacturers had urged the court to overturn Basic. They argued that the doctrine has led to significant costs for investors and businesses and bred confusion in the courts. But the Obama administration asked the court not to overrule the precedent, saying its premise remains sound. "The business community can't be disappointed that they got an addition to their defense arsenal they previously didn't have," said John Donovan, a securities lawyer in Boston. He said the defendants "won a small battle in a war that was lost 25 years ago in Basic." The Alliance for Justice, a coalition of liberal advocacy groups, said the court "has placed new barriers in front of shareholders that could make it far more difficult for them to stand up for their rights in court against corporations that have defrauded them out of their hard-earned money." The case is Halliburton Co. v. Erica P. John Fund Inc., 13-317. Justices rapenvironmental agency, but uphold warming rules By Mark Sherman Associated Press WASHINGTON (AP) - The U.S. Supreme Court largely left intact Monday the Obama administration's only existing program to limit power plant and factory emissions of the gases blamed for global warming. But a divided court also rebuked environmental regulators for taking too much authority into their own hands without congressional approval. The justices said in a 5-4 vote along ideological lines that the Environmental Protection Agency cannot apply a permitting provision of the Clean Air Act to new and expanded power plants, refineries and factories solely because they emit greenhouse gases. The decision underscores the limits of using the Clean Air Act to deal with greenhouse gases and the administration's inability to get climate change legislation through Congress. "The Supreme Court put EPA on a leash but not in a noose," said Michael Gerrard, director of Columbia University's Center for Climate Change Law. "It reaffirmed that EPA can regulate greenhouse gases, but it can only go so far in reinterpreting the statute," Gerrard said. "The court invalidated a small corner of a secondary program. The main event - EPA's proposed rules on existing power plants - remains to be fought another day." The EPA and many environmental advocates said the ruling would not affect the agency's proposals for first-time national standards for new and existing power plants. The most recent proposal aims at a 30 percent reduction in greenhouse gas emissions from existing power plants by 2030, but won't take effect for at least another two years. The justices warned that the regulation of greenhouse gases is not automatic under every program of the Clean Air Act as the administration had assumed it was. Similar logic is driving the EPA's other actions on global-warming pollution. Justice Antonin Scalia, writing for his conservative colleagues, said EPA could not "just rewrite the statute" to bring greenhouse gases under a provision dealing with expanded and new facilities that would increase the overall amount of air pollution. Under the program, companies must evaluate ways to reduce carbon dioxide emissions in order to get a permit to build. Carbon dioxide is the chief gas linked to global warming. But by a wider, 7-2 margin, the court preserved EPA's authority over facilities that already emit pollutants that the agency regulates, other than greenhouse gases. "EPA is getting almost everything it wanted in this case," Scalia said. He said the agency wanted to regulate 86 percent of all greenhouse gases emitted from plants nationwide, and it will it be able to regulate 83 percent of the emissions under the ruling. Justices Samuel Alito and Clarence Thomas said they would go farther and bar all regulation of greenhouse gases under the permitting program. The EPA called the decision "a win for our efforts to reduce carbon pollution because it allows EPA, states and other permitting authorities to continue to require carbon pollution limits in permits for the largest pollution sources." The agency said that, as of late March, 166 permits have been issued by state and federal regulators since 2011. Permits have been issued to power plants, but also to plants that produce chemicals, cement, iron and steel, fertilizer, ceramics and ethanol. Oil refineries and municipal landfills also have obtained greenhouse gas permits since 2011, EPA said. Under Monday's ruling, the EPA can continue to require permits for greenhouse gas emissions for those facilities that already have to obtain permits because they emit other pollutants that the government has long regulated. The program at issue is the first piece of the EPA's attempt to reduce carbon output from large sources of pollution. The utility industry, the U.S. Chamber of Commerce and 13 states led by Texas had asked the court to rule that the EPA overstepped its authority by trying to regulate greenhouse gas emissions through the permitting program. The administration failed to get climate change legislation through Congress. In 2012, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit concluded that the EPA was "unambiguously correct" in using existing federal law to address global warming. The agency's authority came from the high court's 2007 ruling in Massachusetts v. EPA, which said the Clean Air Act gives EPA power to limit emissions of greenhouse gases from vehicles. Two years later, with Obama in office, the EPA concluded that the release of carbon dioxide and other heat-trapping gases endangered human health and welfare. The administration used that finding to extend its regulatory reach beyond automobiles and develop national standards for large stationary sources. Of those, electric plants are the largest source of emissions. When the Supreme Court considered the appeals in October, the justices declined requests to consider overruling the court's 2007 decision, review the EPA's conclusion about the health effects of greenhouse gas emissions or question limits on vehicle emissions. -------- Associated Press writer Dina Cappiello contributed to this report. Wisconsin appeal over abortionlaw rejected WASHINGTON (AP) - The Supreme Court has turned down Wisconsin's bid to begin enforcing a state law requiring abortion providers to have admitting privileges at nearby hospitals, while a legal fight over the law plays out in lower federal courts. A federal judge is weighing a challenge to the law from Parent Parenthood and others which claim that it would amount to restricting access to abortions in Wisconsin because of the difficulties doctors would face in getting the hospital privileges. U.S. District Judge William Conley is not expected to rule on the lawsuit before July, but he placed the law on hold last summer. The federal appeals court in Chicago upheld Conley's action. The justices did not comment Monday in declining to get involved in the case. Justices rebuff NJ's effort on sports betting WASHINGTON (AP) - The Supreme Court has left in place a ban on sports gambling in New Jersey, but a state lawmaker has introduced a bill that would make it legal under state law anyway. Both actions happened Monday. First, the justices let stand a lower court ruling of a state law to allow betting on sports. Later in the day, state Sen. Raymond Lesniak introduced a bill that would legalize sport gambling. He says he hopes the U.S. Justice Department will not challenge the bill if it is adopted. Gov. Chris Christie did not sound like he wanted to challenge the federal government, saying, "they said no, so we have to move on." Published: Wed, Jun 25, 2014