Supreme Court Poised to Tackle Census Question, Wages for Offshore Oil Workers and More

April 12, 2019 by Dan McCue

After a relatively quiet start to the month, oral arguments resume before the U.S. Supreme Court next week with several noteworthy cases on the docket.

As is their custom, the justices have scheduled hearings on cases that resolved splits among the nation’s circuit courts on applicable law and its interpretation. This includes a case out of the Ninth Circuit asking whether California labor law should apply to workers on oil rigs off the Pacific coast and another that asks when the statute of limitations clock starts running in civil rights cases.

The court will hear two very different due process-related cases: one that will determine when states can tax family trusts and the other likely to establish new ground rules for when police can take a blood sample from a suspected, but unconscious drunk driver.

Also on their agenda is a deep dive into whether a federal judge in New York appropriately handled a case involving a proposed citizenship question on the 2020 census.

Should State Law Govern Offshore Wages?

On Tuesday, April 16 the justices will be asked to overturn a Ninth Circuit ruling that the Outer Continental Shelf Lands Act allows laws of adjacent states to apply to drilling platforms as long as state law is “applicable” and “not inconsistent” with federal law.

The ruling by the Ninth Circuit in the wage-and-hour related case, vacated a lower court’s dismissal of litigation, and could, if allowed to stand, result in oil and gas companies owing past and present workers hundreds of millions of dollars in back-pay.

The plaintiff in the underlying case is Brian Newton, who worked for Parker Drilling Management services on an oil drilling platform off the coast of Santa Barbara, California.

In his lawsuit, Newton said his shifts on the platform lasted 14 days, and that he regularly works 12 hours a day. But the central issue in the cases revolved around meals. Newton claimed he typically ate a fast lunch and dinner without clocking out, and did so because his employer did not provide 30-minute meal periods for every five hours worked, as is required under California law.

After Parker Drilling fired him, Newton sued the company in state court asserting claims for wage-and-hour violations under state law. Parker Drilling successfully asked that the case be moved to federal court and promptly asked the case be dismissed.

A federal district court judge sided with the employer, holding that under the Outer Continental Shelf Lands Act, the federal Fair Labor Standards Act is a comprehensive statutory scheme that leaves no room for state law to address wage and hour grievances.

The Ninth Circuit disagreed, ruling the Outer Continental Shelf Lands Act allows the laws of adjacent states to apply to drilling platforms and that in this case, California’s wage and hour laws are not inconsistent with the Fair Labor Standards Act.

Until the Ninth Circuit’s ruling, every court that had considered similar cases uniformly agreed that federal, not state law applied.

For instance, in the 1969 case Cont’l Oil Co.v. London Steam-Ship Owners’ Mut. Ins. Ass’n,  the Fifth Circuit affirmed dismissal of a lawsuit filed under Louisiana law, explaining that federal law already provided the plaintiffs with a complete set of “substantive rights and remedies” to govern their dispute. Because there was “no void” and “no gaps” in the coverage of federal law, the Louisiana statute did not apply as surrogate federal law.

The case is 18-389 Parker Drilling Mgmt. Services v. Newton.

Due Process and Trusts

The second case the justices will hear on the 16th, North Carolina Department of Revenue v. the Kimberley Rice Kaestner 1992 Family Trust, also has big money implications.

The question before the high court will be whether the Due Process Clause of the 14th Amendment prohibits states from taxing trusts based on the in-state residency of trust beneficiaries.

The rights and responsibilities related to hundreds of millions of dollars of annual tax revenue hang on the justices’ decision.

In 1992, Joseph L. Rice III, co-founder of Clayton, Dubilier & Rice, one of the oldest private equity investment firms in the world, established a trust in New York, naming William Matteson as trustee and Rice’s descendants as the primary beneficiaries.

Ten years later, the original Trust was divided into three separate trusts, one for each of Rice’s children.

One of those children, a daughter, Kimberley Rice Kaestner, lived in North Carolina at the time.

In 2005, Matteson stepped down as trustee for the three trusts and Rice appointed a successor trustee, who resided in Connecticut. Over the next four years, the Kimberley Rice Kaestner 1992 Family Trust, paid state income taxes in North Carolina, despite the fact no funds were distributed,

In 2009, representatives of the trust sought a refund of those income taxes. When the state Department of Revenue rejected that claim, the trust sued, asking the court to declare a state statute enabling the North Carolina to collect taxes from the family insisted was a “foreign trust,” created and domiciled in another state.

The court granted the states motion to dismiss the trust’s claim for a refund of the taxes paid, but allowed the litigation over the constitutional claim to continue, and ultimately found for the trust. The department promptly appealed.

A state appeals court later found that the mere fact that a beneficiary of the trust lives in North Carolina was not sufficient enough to establish that state’s right to tax proceeds for it.

In coming to that decision, the state appeals court noted the trust location, its assets, and its trustee are all outside of the state. The North Carolina Supreme Court later affirmed the decision, prompting the appeal to the U.S. Supreme Court.

The case is 18-457 North Carolina Dept. of Revenue v. Kaestner Family Trust.

Election Fraud

On Wednesday, April 17, the justices will wade into a case stemming from a 2009 city council primary election in Troy, New York.

During that election, a number of individuals forged signatures and otherwise provided false information on more than 50 absentee ballots applications. Edward McDonough, the elections commissioner for Rensselaer County, New York, approved the applications, but later said he did not know they were fraudulent.

After the plot to corrupt the vote was uncovered, a state court appointed Trey Smith as a special district attorney to investigate the case and prosecute all involved. Eventually, Smith set his sights on McDonough, accusing him of committing 74 felonies.

McDonough was acquitted twice of forgery and possession of a forged instrument charges, with the second acquittal coming on Dec. 21, 2012.

Almost exactly three years later, McDonough sued Smith, investigators and witnesses in the case seeking $8 million in damages.

In his lawsuit, McDonough claimed Smith and the other defendants violated his due process rights by fabricating evidence and using it against him before a grand jury and in two trials.

The defendants filed a motion to dismiss, claiming, among other things, that McDonough’s claim was barred by the three-year statute of limitations because the allegedly fabricated evidence had been disclosed to McDonough over three years before he filed his Section 1983 claim.

A federal judge dismissed McDonough’s due process claims, citing the statute of limitations.

The Second Circuit affirmed that decision in August 2018 that McDonough filed his suit too late, deciding that he should have filed the suit after his first trial when he would have realized that false evidence was allegedly being used against him. The decision created a split in circuit courts.

The justices will decided whether the Second Circuit was correct in holding, contrary to the holdings of a majority of other circuits, that the statute of limitations for a Section 1983 claim based on fabrication of evidence in criminal proceedings begins to run when the defendant becomes aware of the tainted evidence and its improper use.

The non-partisan Brennan Center filed an amicus brief arguing that the Second Circuit’s ruling interferes with the fair and efficient administration of criminal justice and should be overturned.

Because criminal proceedings often take years to conclude, adhering to the Second Circuit’s rule would force many defendants to make a difficult choice: either forgo bringing a Section 1983 suit or initiate parallel civil actions while their criminal proceedings are ongoing,” the center  said.

“Regardless of which choice a defendant makes, the justice system and our trust in it suffer,” the brief said.

The case is 18-485 McDonough v. Smith.

Census Citizenship Question

Perhaps the most closely watched oral arguments over the next two weeks will be those for Department of Commerce v. New York, otherwise known as the Census/Citizenship Question case, on Tuesday, April 23.

The Justices are being asked to decide whether a federal judge erred in enjoining Secretary of Commerce Wilbur Ross from reinstating a question about citizenship to the 2020 census questionnaire.

In addition they will consider whether, when someone is seeking to set aside an agency action, a federal judge can order discovery outside the administrative record to probe the mental processes of the agency decision matter.

In considering this second element, the justices will weigh in on whether a lower court can compel the testimony of high-ranking executive branch officials when there is no evidence that the decision maker disbelieved the objective reasons for enacting the policy as stated in the administrative record, and that they acted in an illegal manner to adopt the policy.

After Commerce Secretary Ross announced he was reinstating a citizenship question on the 2020 Census questionnaire, a coalition of states, cities, and counties challenged the decision in federal court.

The challengers claim the Secretary’s decision was arbitrary and capricious and that it violates various regulatory, statutory, and constitutional provisions.

The case was heard in the U.S. District Court for the Southern District of New York which authorized, at the challengers’ request, depositions of executive branch officials to determine Ross’s subjective motivations in making the decision at issue.

The government sought a stay blocking that testimony, but their request was denied to give the court of appeals a chance to weigh in on the issue.

The court of appeals denied mandamus relief to quash the deposition of Secretary Ross and the deposition of other high-ranking officials, so the government renewed its application for a stay. The U.S. Supreme Court then blocked the deposition of Secretary Ross but allowed others to proceed.

The government then filed a petition asking the justices to direct the trial court to exclude fact-finding beyond the official records, or, in the alternative, review the appellate court decision itself.

Before the Court could rule, however, the district court issued its decision enjoining the Secretary from reinstating the question at issue. That action rendered the original case moot but raised the question of whether the district court properly issued the injunction.

The case is 18-966 Department of Commerce v. New York.

The Rights of An Unconscious Motorist

Also on April 23, the justices will consider whether a state statute authorizing a blood draw from an unconscious motorist provides an exception to the Fourth Amendment warrant requirement.

The underlying facts of the case are these: In May 2013, Gerald Mitchell, a resident of Wisconsin, was arrested on suspicion of drunken driving.

While en route to the police station, the arresting officer noticed Mitchell had become lethargic and drove him to a nearby hospital instead.

The officer read Mitchell a statutorily mandated form regarding the state implied consent law, but by then the driver was too incapacitated to indicate his understanding or consent and then fell unconscious.

Without a warrant, at the request of the police, hospital workers drew Mitchell’s blood, which revealed his blood alcohol concentration to be .22.

It was Mitchell’s seventh offense for driving under the influence. During his trial, Mitchell moved to suppress the results of the blood test on the ground that his blood was taken without a warrant and in the absence of any exceptions to the warrant requirement.

Prosecutors argued that under the implied-consent statute, police did not need a warrant to draw his blood.

Wisconsin, like 28 other states, has an implied consent law that says that by driving a vehicle, motorists consent to submit to chemical tests of breath, blood, or urine to determine alcohol or drug content.

The trial court sided with the prosecution and allowed the results of the blood test into evidence. Mitchell was convicted and sentenced to three years in prison.

Mitchell appealed and the case was ultimately sent to the Supreme Court of Wisconsin with respect to the issue of whether the warrantless blood draw of an unconscious motorist pursuant to Wisconsin’s implied consent law violates the Fourth Amendment.

The Fourth Amendment protects citizens from unreasonable searches and seizures by law enforcement officers. A search and seizure is considered unreasonable if it is conducted by police without a valid search warrant, and does not fall under an exception to the warrant requirement.

A divided Supreme Court of Wisconsin upheld the search, but left unresolved questions about its constitutionality.

The case is  18-6210 Mitchell v. Wisconsin.

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