On Monday April 25, the U.S. Supreme Court granted certiorari in United States v. Shaw, a closely watched case out of the Ninth Circuit addressing the bank fraud statute, 18 U.S.C. § 1344. That statute has two subsections, the first of which criminalizes schemes “to defraud a financial institution.” The question presented in Shaw is whether that subsection requires that a financial institution be the principal victim of a fraudulent scheme, or whether deceiving a financial institution in the course of victimizing a third party is enough for a violation. In its decision, the Ninth Circuit joined the Sixth and Eighth Circuits in holding that a violation does not require that a fraudulent scheme victimize a financial institution. The other nine circuits have all held the opposite.
Supreme Court Clarifies That Untainted Assets Cannot Be Frozen Pre-Trial By The Government
Last week the Supreme Court further clarified the procedures and limits regarding the government’s ability to freeze assets in connection with criminal prosecutions. Following the 2014 decision in Kaley v. United States, where the Court ruled (in the government’s favor) that a defendant could not challenge the legality of a pre-trial asset seizure by contesting the grand jury’s determination of probable cause, last week the Court added to the body of law on asset forfeiture by siding with defendants and limiting the government’s ability to freeze “untainted” assets. The Court’s March 30, 2016 decision in Luis v. U.S. holds that the government’s pre-trial freeze of “untainted” assets (meaning money not connected to the alleged crimes) violates the Sixth Amendment right to counsel by choice.
Supreme Court Denies Review of Second Circuit Insider-Trading Case
The Supreme Court today refused to grant review of the Second Circuit’s restrictive insider-trading decision in United States v. Newman. The Government, through the Solicitor General, had asked the Supreme Court to clarify the nature of the “personal benefit” that a tipper must receive in order to create liability for insider trading. But the Supreme Court declined to take the case.
Government Seeks Supreme Court Review In Second Circuit Insider-Trading Case
After months of will-he-or-won’t-he speculation about whether the U.S. Solicitor General would ask the Supreme Court to review the Second Circuit’s restrictive insider-trading decision in United States v. Newman, the question has now been answered. The Government filed a certiorari petition on July 30, 2015 asking the Supreme Court to clarify the nature of the “personal benefit” that a tipper must receive in order to create liability for insider trading – and to resolve what the Government characterizes as a split between the Second Circuit and other appellate courts, including the Ninth Circuit in its recent decision in United States v. Salman.
The $5 Million CAFA Question: Can You Provide Evidentiary Proof?
In December, we wrote about the recent Supreme Court decision in Owens v. Dart Cherokee Basin Operating Co. In Owens, the Court held that class action defendants need not provide evidentiary submissions in support of their notice of removal of a case from state to federal court. Rather, they need only include in their notices a “plausible allegation” that the amount in controversy exceeds the $5 million jurisdictional threshold set forth in the Class Action Fairness Act (“CAFA”).
In so holding, the majority relied on the wording of the removal statute itself, which merely requires a “short and plain statement” setting forth a good-faith basis supporting removal. The Court’s decision thus set forth for corporate class action defendants the minimum requirements their notices of removal must contain. The Court, however, neither held nor addressed whether a “plausible allegation” will sustain the removing defendants’ evidentiary burden of proof where the class action plaintiffs contest whether the amount in controversy exceeds $5 million.
Supreme Court Clarifies the Standard Governing Removal of Class Action Cases to Federal Court
The US Supreme Court ruled on Monday that class action defendants need not provide evidentiary submissions in support of their attempts to remove a case from state to federal court. Rather, they need only include in their notice of removal a “plausible allegation” that the amount in controversy exceeds the jurisdictional threshold.
In Owens v. Dart Cherokee Basin Operating Co., the plaintiff filed a putative class action in Kansas state court, alleging that the energy-company defendants underpaid royalties due on oil and gas leases. The defendants removed the action to the U.S. District Court for the District of Kansas pursuant to the Class Action Fairness Act (“CAFA”), which gives federal jurisdiction over class actions only if the amount in controversy exceeds $5 million. The defendants made the short and plain statement in their notice of removal that the alleged underpayments to putative class members totaled more than $8.2 million. In response, the plaintiff moved to remand the case to state court on the ground that the removal notice included no evidence demonstrating that the amount in controversy exceeded $5 million. The district court agreed with the plaintiff, finding that Tenth Circuit precedent required proof of the amount in controversy in the notice of removal under CAFA. The Tenth Circuit refused to review the district court’s ruling.
Justices Scalia and Thomas Amenable to Reexamining Deference to SEC Statutory Interpretations
Like Prince Charming searching for the foot that fit the glass slipper, Justice Scalia recently issued a statement advising that he and Justice Thomas would be receptive to granting certiorari to a petition properly presenting the issue of whether, in a criminal context, a court should grant deference to an administrative agency’s statutory interpretation. And, like the townspeople who lined up to offer their own feet for consideration, lawyers across the country undoubtedly will offer the Court a variety of cases from which to choose.
On November 10, 2014, the Supreme Court issued an order denying certiorari in a matter where the Second Circuit had affirmed a criminal conviction under the securities laws. Whitman v. United States, 574 U.S. ___ (November 10, 2014). The order also included a brief statement by Justice Scalia, joined by Justice Thomas, reflecting the two Justices’ interest in considering the issue of agency deference in an appropriate future case.
Supreme Court May Reject Argument that Opinion Statements Are Actionable Simply Because False
During oral arguments in Omnicare v. Laborers District Council last week, the Supreme Court appeared to signal a rejection of the Sixth Circuit Court of Appeals’ position that a sincerely held statement of opinion or belief may be actionable under the Securities Act of 1933 simply because it was incorrect.