Power to repay

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NICK EICHER, HOST: It’s The World and Everything in It for this 27th day of April, 2026. We’re so glad you’ve joined us today. 

Good morning! I’m Nick Eicher.

MARY REICHARD, HOST: And I’m Mary Reichard. Time now for Legal Docket.

Today, two U.S. Supreme Court arguments, both focused on limits of power and how it’s applied.

ROBERTS: We'll hear argument next in Case 25-197, T.M. vs the University of Maryland Medical System Corporation.

This one’s over a deceptively technical question: if you are in the middle of a legal fight in state court, can you suddenly jump ship and sue in federal court instead?

Here are the facts: A woman from Maryland identified for privacy reasons only as “T.M.” … she was involuntarily committed following a psychotic episode linked to a medical condition triggered by gluten.

While she was hospitalized, T.M. challenged her commitment in state court. But before that case was even over, she filed a federal lawsuit claiming she was forced under pressure to sign a consent order that kept her in treatment longer. That federal lawsuit alleges due process violations under the Constitution.

EICHER: Lower federal courts threw out her case under something called the Rooker-Feldman doctrine. In plain terms, it says federal trial courts cannot act like appeals courts over decisions of state courts.

But here’s the wrinkle: timing. Does that rule apply even before the state case is finished?

T.M.’s attorney is Elizabeth Prelogar, a former Solicitor General. She points to a law known as Section 1257:

PRELOGAR: That rule follows from text, history, and structure. Section 1257 says nothing at all about district court jurisdiction when there's no final judgment of a state high court. …Yet lower courts haven't heeded that message.

REICHARD: Her argument: that rule only applies after a state case is fully complete—after a final judgment from the state’s highest court.

But the hospital’s lawyer, Lisa Blatt, turned that on its head: Letting people jump to federal court like this “short-circuits” the system and disrespects state judges.

BLATT: ….Congress wanted no federal review of state court judgments until the state's highest court has had the opportunity to correct any errors.

The justices saw trouble with the arguments from both sides. Justice Sonia Sotomayor looked to the mess of two court systems looking at the same case at the same time:

SOTOMAYOR: Tell me what the value is to having a federal district court and a state appellate court simultaneously reviewing a state court judgment? What's the value in that?

Justice Ketanji Brown Jackson worried that if T.M. were to win, everybody will just bypass the state court system altogether:

JACKSON: …why would anybody stay in the state system and get all the way to the state high court under your rule when they could just bring a collateral attack along the way? It just seems to undermine the whole point in my view.

EICHER: Justice Neil Gorsuch pointed out that other legal doctrines could address worries about duplicate litigation, so maybe Rooker-Feldman isn’t even necessary anymore.

GORSUCH: Litigants are sometimes vexatious. Now, I'm not accusing your client of that, but they…repeat suits all the time, sometimes in the same state court, sometimes in a different state court, sometimes in a federal district court, sometimes between two federal district courts, sometimes between two federal district courts in two different states. And all of those we handle under preclusion, we don't accuse the court, the second court, of exercising any kind of appellate review over the first court.

So the justices have to decide whether to keep, narrow, or scrap the rule altogether.

At its core, it’s about how to balance federal constitutional rights against the authority and independence of state courts.

REICHARD: Alright, now onto Case Two:

ROBERTS: We will hear argument first this morning in Case 25-466, Sripetch vs Securities and Exchange Commission.

This one turns on financial enforcement, and a slippery question: What is “disgorgement?”

Meaning, when can the government demand a defendant hand over ill-gotten profits?

The Securities and Exchange Commission alleges that a man named Ongkaruck Sripetch ran a stock manipulation scheme, sometimes referred to as “pump and dump.” He says the government cannott take that money unless it first proves actual losses to particular victims.

His lawyer, Daniel Geyser, cited case precedent to say the law only permits “equitable” relief, meaning the money has to return to the people who were actually harmed.

GEYSER: This Court in liu confirmed that disgorgement could not be a penalty or a deterrent, and it was limited to restoring the status quo and providing fair compensation to injured investors. …The government says disgorgement can serve as a penalty. It can focus solely on depriving wrongdoers and deterring misconduct, and the government can act without any remedial purpose, with no obligation to restore the status quo or return a single penny to investors. The government is wrong.

EICHER: Justice Sotomayor pointed out the practical burden that puts on the SEC:

SOTOMAYOR: So, basically, what you're saying is the government has to call every victim, prove every dollar of loss? Why bother? Why bother asking for disgorgement if they have to prove loss to that amount?

Geyser answered yes, that’s correct—the government does have that burden.

Justice Jackson questioned even the premise that taking back what’s stolen could be called a “penalty.”

JACKSON: Why is it a punishment if we're not taking anything more
from the defendant than he unlawfully gained? In other words... I could see a fine or a punishment if the defendant is actually paying out of his pocket some money that was rightfully his. That's a punishment. But, if we're just disgorging his ill-gotten gains, I guess I'm not sure I understand why that's a punishment. It's depriving him of money he didn't have, that was never his. Why is that a punishment?

GEYSER: It's a punishment because…the purpose is to deprive and the purpose is to deter.

REICHARD: Justice Samuel Alito focused on the language of the statute itself:

ALITO: Well, the statute… doesn't say equitable disgorgement, it just says disgorgement.

If Sripetch wins, the SEC’s enforcement power narrows a lot.

If the government wins, it’ll keep an effective tool to strip wrongful profits—even when victims are hard to identify. 

So, a remedial tool to help victims? Or a penalty to punish wrongdoers?And here again, the Court is weighing limits, this time on federal enforcement authority.

EICHER: Alright, before we go, two opinions handed down last week:

In Enbridge Energy v. Nassel, a unanimous court held that the 30-day deadline to remove a case from state to federal court is 30-days—no extensions.

This dispute is over a lawsuit by the state of Michigan against the Canadian pipeline and energy company Enbridge. The company waited 887 days after being served before it sought to remove the case to federal court.

That was nearly two and a half years—or 857 days too late. 

The case stays in state cour and it’s a win for state officials who want to apply their own environmental laws.

REICHARD: Alright, in the case of Hencely v. Fluor Corporation, the court decided that military contractors are not automatically protected from being sued. If the company was careless on its own—and wasn’t just following strict government orders—it can still be held liable in court.

The 6 to 3 decision stems from a 2016 suicide bombing at Bagram Airfield in Afghanistan. Army Specialist Winston Hencely was seriously injured. He sued Fluor, alleging negligent supervision of a subcontractor employee who carried out the attack.

EICHER: Justice Thomas wrote for the majority. Contractors can be held liable for their own negligence, even in war zones, if the military did not require the company to leave the attacker unsupervised.

Justice Gorsuch hinted at the outcome during oral argument:

GORSUCH: Well, maybe the military’d benefit most from having efficient contractors who are less likely to cause harm to military members.

REICHARD: The dissenters—the Chief Justice and Justices Alito and Brett Kavanaugh warned this might interfere with military operations. The case returns to lower court for Henceley’s case to proceed.

And that’s this week’s Legal Docket!

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