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Supreme Court hears arguments on state secrets, personal jurisdiction, preclusion

By Andrea Bottorff

[JURIST] The US Supreme Court [official website; JURIST news archive] heard oral arguments [day call, PDF; merit briefs] Tuesday in the consolidated cases of General Dynamics Corp. v. United States [oral arguments transcript, PDF; JURIST report] and The Boeing Company v. United States on the ability of the government, under the Fourteenth Amendment's Due Process Clause [Cornell LII backgrounder], to keep a claim against a party after invoking the state secrets privilege [JURIST news archive] and preventing that party from defending the claim. General Dynamics and Boeing had a contract with the government to build a version of the "stealth" fighter plane, but failed to meet the terms of the agreement, prompting the government to end the contract. The companies claimed that they could not complete the work because the Navy refused to release access to secret technology about the "stealth" fighter under the state secrets doctrine. The US Court of Appeals for the Federal Circuit held [opinion, PDF] that the Navy was justified in canceling the contract because the companies were not fulfilling their contractual obligations. Counsel for the government argued that the "state-secrets privilege will be used to bar a claim at most only when the party that is relying on secret information is trying to use the Federal court to alter the legal status quo." Counsel for General Dynamics argued that the government is unable to prove that the contractor defaulted on the contract, meaning that the government terminated the contract for convenience and the company should keep the money paid for the partially performed services.

In Smith v. Bayer Corp. [oral arguments transcript, PDF; JURIST report], the court heard arguments on two issues. First, under the re-litigation exception of the Anti-Injunction Act [28 USC § 2283], whether a district court can prohibit parties from seeking class certification in state court after denying certification to a similar class, and when the parties and claims are not identical to those in the state court action. Second, whether the district court has personal jurisdiction over absent class members that would allow the court to prevent them from requesting class certification in state court. The US Court of Appeals for the Eighth Circuit held [opinion, PDF] that the re-litigation exception permitted an injunction preventing parties denied class certification in district court from seeking class certification in state court. The court also held that the protections available to absent class members in the context of an adverse class certification ruling satisfy due process and are sufficient to bind them to the district court's decision. Counsel for the petitioners argued that his clients, individuals who were not named in the district court class action, should not be precluded by the district court's decision:

They never received notice of that prior proceeding; they never received an opportunity to appear and be heard; they never received an opportunity to opt out; and they never received an opportunity to appeal the decision denied by certification. No precedent of this Court would justify treating ... people as parties under preclusion principles under these circumstances.

Counsel for Bayer argued that the petitioners had "adequate representation," despite lacking "notice and opportunity to be heard," and should be bound by the district court's judgment.

In Stern v. Marshall [oral arguments transcript, PDF; JURIST report], the court heard arguments on whether a bankruptcy court has jurisdiction to adjudicate proof of claims. The case revisits the estate battle [JURIST report] of model Anna Nicole Smith (Vickie Lynn Marshall). The US Court of the Appeals for the Ninth Circuit held [opinion, PDF] that the bankruptcy court exceeded its jurisdiction in ruling on the case. The case had returned to the Ninth Circuit after the Supreme Court's 2006 ruling in Marshall v. Marshall [Duke Law backgrounder; JURIST report] that federal courts can in some cases decide disputes which involve state probate laws. Counsel for the petitioner argued that the bankruptcy court had jurisdiction to rule on the case under Article III [Cornell LII backgrounder] of the US Constitution. Counsel for the respondent argued that court precedent gave the bankruptcy court the proper jurisdiction.

Full post as published by JURIST - The Paper Chase on January 18, 2011 (boomark / email).