Legal Docket: An international custody dispute

NICK EICHER, HOST: It’s Monday morning and we’re back to a regular schedule for The World and Everything in It. Today is the 30th of December, 2019. Good morning to you, I’m Nick Eicher. 

MARY REICHARD, HOST: And I’m Mary Reichard. It’s good to be back into the routine of things! Did you enjoy your Christmas break for the day or two you had? Eating your “re-jitas” as I heard you tell Megan on Friday?

EICHER: Yeah, we had plenty of food …

REICHARD: Excellent. So did I. Lots of family time, lots of food. And now for the newly necessary New Year’s Resolutions! Lose weight. Well, lose physical weight. I want to gain spiritual weight.

EICHER: I like it! I’ll aspire to the same.

Well, time to get back to work. The Supreme Court returns for oral arguments in two weeks.  So we’ll use that time to catch up as much as possible.

REICHARD: We will. Today, three cases. 

And this first one asks a question at the core of a heartrending situation: Where should a child born to an estranged international couple be raised?

Here are the facts. 

The father, Domenico Taglieri, is an Italian citizen who was studying in Chicago when he met American Michelle Monasky. They married in the United States in 2011 and moved to Milan two years later. 

Their relationship deteriorated. Monasky became pregnant in 2014. She says Taglieri abused her. She wanted a divorce. After living in a domestic-abuse safe house in Italy for a time, Monasky returned to the United States with their two-month old baby.

EICHER: But Taglieri wanted the baby back with him in Italy. An Italian court terminated the mother’s parental rights. Then Taglieri sued in United States federal court under part of the Hague Convention. 

That treaty says a child wrongfully removed from the child’s country of habitual residence must be returned to that country. 

Pay attention to the phrase “habitual residence.” 

The lower courts found that evidenced by several facts: the parents looked for an au pair in Italy. They established their child with a doctor in Italy. They found jobs in Italy.

REICHARD: Based on that reasoning, the courts handed victory to the father. Monasky complied and took their daughter back. By that point, the girl was two years old. 

Monasky then appealed to the U.S. Supreme Court. In court documents, the child is known by her initials, “A.M.T.” 

Her lawyer, Amir Tayrani, agreed with the Hague Convention’s purpose: that of protecting children from the harmful effects of wrongful removal from a country.

TAYRANI: In this case, however, the Convention was applied to separate two-year-old A.M.T. from her mother, the only caregiver A.M.T. had ever known, and to return the child to Italy, a country where A.M.T. had spent only the first eight weeks of her life.

Tayrani is essentially saying an infant can have no habitual residence. And Chief Justice John Roberts agreed, finding the whole concept meaningless in this context:

ROBERTS: Well, that’s kind of a meaningless concept, where the child usually lives, if you’re talking about somebody who’s eight-weeks-old…. I mean, it’s not as if they’d laid down roots….Eight-year-old — eight-week-old infants don’t have habits, well, other than one or two, but — (Laughter.) — but it doesn’t seem to me that that’s the notion that the Convention drafters were looking at.

Still, Justice Ruth Bader Ginsburg reminded the court that the whole idea of the Hague Convention was to discourage a parent from unilaterally taking a child out of the country. If you don’t include infants, you cut out much of the treaty’s protection.

But Tayrani had a distinction to make:

TAYRANI: First of all, we’re talking in this case only about infants. Older children are evaluated under a different standard and in all likelihood based on their connections their acclimatization to the country in which they reside they would have a country of habitual residence.

But the father’s lawyer, Andrew Pincus, argued what that matters is where the child lived with both of her parents. And that’s Italy, her “habitual residence” at the time her mother tried to take her away. 

Justice Ruth Bader Ginsburg could see another dark side in this exchange with Pincus, again lawyer for the father:

GINSBURG: — In this case — and it’s a troublesome case because she alleged that she was abused, so you’re putting that mother in the position of, if she wants to escape domestic violence, she has to leave her child behind.

PINCUS: Well, she…can escape domestic violence by separating from her husband and staying in the country…before she left, she spent two weeks …in safe houses under the protection of the mechanisms that Italy has for that purpose. So I don’t think that…the test requires that she stay with the husband.

Most justices seemed reluctant to take on the role of lower courts. Listen to Justice Stephen Breyer suggest the nine people on the high court step aside in this:

BREYER: This is family law. You know, families differ. They’re vast differences. Don’t treat these words ‘habitual residence’ as if it’s like a black-letter tax code. They’re more like a factual matter. And let the judge who’s closest to it, … let them hear all the evidence and decide it. And that’s it … . And as soon as nine people who know—I, speaking for myself, know very little about this, start laying down black-letter standards, all we’re going to do is maybe help people in some cases and just cause chaos and hardship in others.

The child is now nearly five years old, having spent the last three years in Italy. So “habitual residence” may depend on where you put your finger on the timeline of her life. 

Either way, a very hard case.

This next dispute asks the question: Who owns a tax refund? A really big tax refund: $4 million. 

Here, a bank and its subsidiaries file joint tax returns. The bank got that big tax refund check. But a subsidiary says it is the rightful owner of the money because the tax refund was based on its operating losses.

The bank and subsidiaries signed a contract allocating taxes among themselves, but they don’t agree on what it means. And these banks are in bankruptcy proceedings, making matters even more complicated.

So who does own the $4 million tax refund? The subsidiary’s lawyer, Michael Huston, laid it out in plain language:

HUSTON: Think about an example where my coworkers appoint me as their agent to go to the deli and pick up lunch. They say, Michael, you will be our agent. The order at the deli will  be placed in your name. Bring us back the sandwiches and bring us back the change, too. When I’m on my way back to the office, if I suddenly declare bankruptcy, everyone understands that the sandwiches and the change are the property of my coworkers. They don’t become part of my bankruptcy estate.

Lawyer Huston making the point that the subsidiary is like those co-workers; they still own the money. Just like the subsidiary still owns the tax refund.

It seemed to me that the justices are likely to kick this case back to lower court, because the parties wound up agreeing with one another on a key point. 

Justice Neil Gorsuch put it this way:

GORSUCH: Who cares about the refund in this case? All right. I know you guys care terribly about it. I know your colleagues on the other side care terribly about it.  But the Supreme Court of the United States is here to resolve circuit splits on questions of law.

And now for our final case today. This one involves IBM employees who invested their 401(k)s in company stock. 

They say fund managers failed to do their jobs. This, after company stock dropped big time once it came out that IBM’s microchip-making division was overvalued. Fund managers didn’t disclosed that overvaluation.  They hadn’t prevented participants from buying the stock. And that, employees say, is a breach of fiduciary duty to protect retirement savings from fraud, according to ERISA, the Employee Retirement Income Security Act.

So, they sued the fund managers. 

But the fund managers say ERISA doesn’t require them to disclose insider corporate information. That would violate other laws.

Fund manager lawyer Paul Clement seemed to have the upper hand. ERISA law isn’t the solution to this problem, he argued. Securities law is. 

And in typical Clement fashion, he pounded on that in his close:

CLEMENT: One thing I want to be emphatic that I disagree with my friend on the other side is he says that the reason that we want these insiders to serve as fiduciaries is so they can be sort of canaries in the coal mine. They can take early action based on their unique access to inside information. That is absolutely wrong.  All these funds are set up to make sure that doesn’t happen. Because if that did happen, these would all be latent security violations.

This area of the law is a mess. That’s why it comes up so often at the high court. Just this term, the justices will hear three ERISA disputes. 

And that’s this week’s Legal Docket!

(AP Photo/J. Scott Applewhite, File) In this March 20, 2019, file photo, the west facade of the Supreme Court Building bears the motto “Equal Justice Under Law,” in Washington.

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