Legal Docket: Disputes still pending

NICK EICHER, HOST: It’s The World and Everything in It for this 20th day of May, 2024. We’re so glad you’ve joined us today. Good morning! I’m Nick Eicher.

MARY REICHARD, HOST: And I’m Mary Reichard. It’s time for Legal Docket.

We’re getting down to crunch time, with just weeks remaining in the Supreme Court term. And so today we need to catch up on more disputes still pending.

This first one is a big deal, although you might not think so when I tell you what’s involved, namely bankruptcy law and the involvement of insurance companies.

But consider the opioid crisis and the drug companies to blame. If any find themselves bankrupted by judgments, it’ll be a key question how the companies that insure them compensate the victims. Same thing for power companies responsible for sparking wildfires. Even the Johnson and Johnson talcum-powder settlement may be affected.

Our first case today stems from the legal claims of thousands of people who say exposure to asbestos caused them cancer.

EICHER: Here, two manufacturers of asbestos products filed for bankruptcy under Chapter 11. That’s the type of bankruptcy that permits a debtor to reorganize, pay off creditors, and still stay in business.

The manufacturers both have insurance policies with a company called Truck Insurance Exchange. Truck is financially responsible to pay the claims, and the bankruptcy court oversees the process.

REICHARD: The problem is, that according to Truck the insurer, this plan doesn’t have the necessary safeguards to root out claims that might be fraudulent. And without them that would greatly increase its risk of greater cost.

So, Truck objected.

But lower courts said it couldn’t object. It lacked legal standing. They said it wasn’t what bankruptcy law calls a “party of interest.”

So Truck took the case to the high court.

Here’s Allyson Ho, lawyer for Truck:

ALLYSON HO: If anyone is a party in interest entitled to be heard in this Chapter 11 case, it’s the insurer, Truck, who will pay virtually every dollar the debtors owe the asbestos claimants.

EICHER: But lawyer for the manufacturers point to a legal doctrine called “insurance neutrality.” The law says “neutrality” means insurers ought not to be able to challenge bankruptcy plans. That is, so long as the plan changes none of the obligations insurers had originally.

The manufacturers’ lawyer is Kevin Marshall:

KEVIN MARSHALL: It’s good to keep in mind if we’re going to be talking about the policy concerns that bankruptcy is not just about getting everybody to the table. It's also about having an efficient and expeditious proceeding that makes it possible to resolve what is ultimately a question about the debtor and its creditors or in some cases its shareholders.

The justices didn’t seem to buy his argument, though. Justice Amy Coney Barrett:

JUSTICE BARRETT: Why do you want Truck to not even be heard? What is your motivation to be fighting this so hard?

MARSHALL: We have a deal with the creditors. We think it’s a valid deal and a good deal, and we want to be done with bankruptcy. Truck is coming in to try to blow up the deal that we have.

REICHARD: Then came the lawyer representing the asbestos victims. His clients voted for this plan, and they want their money. Lawyer David Frederick:

DAVID FREDERICK: Delay is profit-maximizing. Every day insurers do not have to pay on their claims is a good day for the insurers, and so they have every incentive to tell their lawyers: Go in and object to everything because that will delay the process.

The justices’ questions lead me to think Truck Insurance will be deemed an interested party and allowed to intervene with the bankruptcy plan.

That will be a big change if it happens.

EICHER: Okay, on to oral argument number two. This one is almost purely about why some people hesitate to fight city hall. It asks: what happens when the government retaliates against citizens for exercising their rights?

The question presented involves the doctrine of qualified immunity. This is a frequent flier at the high court, so this case is another chance to curb government officials from using it as a shield when they want to put their critics behind bars.

Let’s start with some relevant facts: Sylvia Gonzalez lives near San Antonio in a town called Castle Hill, Texas. She ran for a seat on her local city council in 2019 and won.

Her constituents told her they disapproved of the city manager because he wasn’t handling things, like pot-hole filled streets.

So she spearheaded a petition drive to remove him.

REICHARD: This has been going on awhile. I talked with her lawyer back in 2022, Ben Field with the Institute for Justice.

Here’s what he told me about the facts:

BEN FIELD: The city manager was tightly connected to the mayor, and to the prosecutor, and they concocted this elaborate conspiracy to target Sylvia for her speech. And what they ended up doing is they took a law that is really about targeting people who use a false driver's license or something like that. And they applied it to her saying that when she accidentally picked up her own petition at a city council meeting, that she was absconding with a government file.

Now, the facts about her intent in moving the petition are in some dispute.

But that’s not the issue here.

Let’s rewind a few years earlier when things were moving fast. After she picked up the fateful petition, police arrested her and jailed her briefly. Eventually, another prosecutor dropped the charges, but she was so upset that she quit her council seat.

Gonzalez sued the mayor, the police chief, and a detective he’d appointed for retaliatory arrest.

But she lost in lower courts that pointed to the doctrine of qualified immunity, a Supreme Court precedent from 1982. That doctrine says government workers are shielded from lawsuits in most cases.

EICHER: Now she’s at the Supreme Court. And beyond qualified immunity there’s one other important precedent in the mix, a decision from five years ago:

That’s Nieves v Bartlett. It affirmed that if an officer has probable cause to arrest a person for a crime, that person cannot sue the officer on grounds that the real reason was retaliation.

JUSTICE ROBERTS: But there is an exception.

Chief Justice John Roberts …

JUSTICE ROBERTS: There are many things people can be arrested for, but almost never are, like jaywalking. If you are jaywalking and say something a policeman doesn’t like or are wearing a shirt with a message he doesn’t like and he arrests you, he may have perfectly clear probable cause, no doubt about it you were jaywalking. But we do not think it would be sufficiently protective of the First Amendment to say that probable cause in a case like that defeats a retaliatory arrest claim. We think if you can show that people mostly aren’t arrested for what you were doing, even though it is against the law, you can proceed with your First Amendment claim.

Gonzalez lawyer Anya Bidwell argued that exception applies to her client:

ANYA BIDWELL: Picture the thin-skinned bureaucrat scouring for a crime to pin on his critics.

Political retaliation is dangerous. First Amendment has to mean something. Mayors should not be allowed to launder animus through warrants. Common law understood that. We respectfully ask that this court understand that too.

REICHARD: Not only that, but other officers looked into this and found nothing to warrant an arrest. That’s why a later prosecutor dismissed the charges.

For the other side, the lawyer representing city officials Lisa Blatt:

LISA BLATT: Throughout history, probable cause has foreclosed retaliatory arrest suits. Nieves created one narrow exception for warrantless arrests, where officers typically look away or give warnings or tickets. This court should not blow up that exception.

EICHER: But Justice Neil Gorsuch pointed out the enormous scope of modern criminal law, making virtually everyone a potential criminal given a zealous-enough prosecutor.

Listen to this exchange with Blatt:

JUSTICE GORSUCH: How many --how many statutes are there on the books these days, many of which are hardly ever enforced? Last I read, there were over 300,000 federal crimes --

BLATT: Mm-hmm.

GORSUCH: --counting statutes and regulations. I can't imagine how many there are at the state and local level. And you're saying they can all sit there unused, except for one person who alleges that I was the only person in America who's ever been prosecuted for this because I dared express a view protected by the First Amendment and that's not actionable?

BLATT: Well, I'm going to --if --if --I'm going to try to convince you otherwise, but I have to try to do that.

GORSUCH: Yeah. I’d like…good luck. (laughter)

BLATT: Well let me just try this, Justice Gorsuch …

REICHARD: Several justices expressed interest in knowing what Blatt thinks happens if Gonzalez is allowed to sue for retaliatory arrest.

BLATT: I mean, I really would advise every criminal to put a political bumper sticker on their car and (laughter)

… thereby never allowing an officer to make an arrest without worrying he or she will get sued.

It’s good to get a laugh from the justices, but that doesn’t always translate into victory.

EICHER: So much for the Seinfeld school of law.

OK, final case today, this one about the kind of proof needed to show criminal intent: the important element of what lawyers call mens rea, the guilty mind.

Here are the facts. An American citizen named Delilah Diaz drove from Mexico to California. At the San Ysidro Port of Entry, she rolled down her car window. The border agent reported a “crunching” sound, that prompted an investigation and ultimate discovery of nearly 60 pounds of meth hidden in the door panels.

Diaz said it was her boyfriend’s car and then claimed she knew nothing about it. Still, she was arrested and charged for violating the Controlled Substances Act.

REICHARD: Here’s where mens rea comes into play:

The Controlled Substances Act requires the government to prove that Diaz knew she was transporting drugs. To try to do that, the government brought in an expert. He said that usually drug couriers know they’re transporting drugs, and traffickers don’t trust big quantities of illegal drugs to unknowing couriers.

But that’s what Diaz objects to: a general observation attributed specifically to her. Her lawyer Jeffrey Fisher:

JEFFREY FISHER: Our rule is simple. If you talk about “the” defendant herself, or a class of people including the defendant, you’re covered by Rule 704(b). Here’s the class of people, Agent Flood is quite specific, people carrying large quantities of drugs across the border. That’s the class. The defendant here is unquestionably a member of that class. And so his testimony is about the defendant.

…therefore, inferring criminal intent, mens rea, on nothing more than an expert’s opinion that Diaz is part of a class.

The government didn’t provide other evidence of her specific knowledge. The jury must make an independent determination about that. Fisher cites the Federal Rules of Evidence that restrict experts from commenting on whether a criminal defendant has knowledge of the drugs.

Yet Justice Elena Kagan wasn’t sure it really makes any difference when it comes down to it:

JUSTICE KAGAN: If you say that, I don’t really understand what the point of your rule is. I mean, it just suggests that all the expert has to do is, you know, tweak the way he says something and the exact same testimony can come in.

EICHER: Justice Samuel Alito thought other rules could handle the situation here, without having to infer anything from expert testimony alone.

Still, the lawyer for the government had a warning for the court. Assistant to the Solicitor General Matthew Guarnieri:

MATTHEW GUARNIERI: P 56 Agent Flood’s testimony did not violate Rule 704(b) for the simple reason that he did not express any opinion at all about whether Petitioner herself knew about the drugs hidden in her car. Indeed, he did not mention Petitioner a single time in his entire testimony.

P 57 and whatever the court says in this case will also govern future expert testimony offered by the defense on issues like insanity or battered women’s syndrome.

REICHARD: …as well as the hundreds of charges brought every year against people who bring illegal drugs into this country and then claim ignorance. It’s the most common defense. But, of course, it doesn’t mean she’s like everybody else.

And that’s this week’s Legal Docket!

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