Justia Government & Administrative Law Opinion Summaries

Shareholders of Fannie Mae and Freddie Mac, acting derivatively on behalf of these entities, challenged the federal government’s actions following the 2008 financial crisis. After the housing market collapse, Congress passed the Housing and Economic Recovery Act of 2008 (HERA), creating the Federal Housing Finance Agency (FHFA) and authorizing it to act as conservator for the Enterprises. The FHFA placed both entities into conservatorship, and the U.S. Treasury entered into agreements to provide financial support in exchange for senior preferred stock and other rights. In 2012, a “net worth sweep” was implemented, redirecting nearly all profits from the Enterprises to the Treasury, effectively eliminating dividends for other shareholders. The plaintiffs, as preferred shareholders, alleged that this arrangement constituted an unconstitutional taking under the Fifth Amendment.The United States Court of Federal Claims previously reviewed the case and granted the government’s motion to dismiss. The Claims Court relied on the Federal Circuit’s prior decision in Fairholme Funds, Inc. v. United States, which held that, under HERA, the Enterprises lost any cognizable property interest necessary to support a takings claim because the FHFA, as conservator, had broad authority over the Enterprises’ assets. The Claims Court found the plaintiffs’ claims indistinguishable from those in Fairholme and dismissed them accordingly.On appeal, the United States Court of Appeals for the Federal Circuit reviewed the dismissal de novo. The court affirmed the Claims Court’s decision, holding that claim preclusion barred the plaintiffs’ derivative takings claims because the issues had already been litigated in Fairholme. The court rejected arguments that the prior representation was inadequate or that the Supreme Court’s subsequent decision in Tyler v. Hennepin County fundamentally changed takings law. The Federal Circuit concluded that Fairholme remained binding precedent and affirmed the dismissal. View "FISHER v. US " on Justia Law

Victory Insurance Company, a Montana property and casualty insurer, issued workers’ compensation policies to several businesses in 2019. Later that year, Victory entered into an agreement with Clear Spring Property and Casualty Company to reinsure and then purchase Victory’s book of business, including the relevant policies. Victory notified its insureds by phone and sent a single email on December 31, 2019, stating that their policies would be “upgraded” to Clear Spring policies effective January 1, 2020. All policies were rewritten under Clear Spring as of that date.The Montana Commissioner of Securities & Insurance (CSI) initiated an enforcement action in December 2022, alleging that Victory had illegally cancelled its policies and could be fined up to $2.7 million. After discovery, both parties moved for summary judgment before a CSI Hearing Examiner. The Hearing Examiner found that Victory committed 165 violations of Montana’s insurance code and recommended summary judgment for the CSI. The CSI adopted this recommendation, imposing a $250,000 fine with $150,000 suspended, payable only if further violations occurred within a year. Victory sought judicial review in the First Judicial District Court, Lewis and Clark County, which affirmed the CSI’s decision.The Supreme Court of the State of Montana reviewed the case, applying the same standards as the district court. The Court held that the Hearing Examiner properly granted summary judgment because Victory’s actions constituted cancellations under the insurance code, regardless of whether they could also be considered assignments. The Court also held that Victory’s due process rights were not violated during the fine imposition process, that the statutory delegation of fine authority to the CSI was constitutional, and that Victory was not entitled to a jury trial because there were no material factual disputes. The Supreme Court affirmed the district court’s order. View "Victory Insurance v. State" on Justia Law

A group of professional auctioneers in Tennessee, including both licensed and unlicensed individuals, challenged a state law requiring auctioneers to obtain a license before conducting extended-time online auctions. The law, originally enacted in 1967 and updated in 2019 to address online auction formats, exempts certain types of online sales, such as fixed-price listings and timed listings that do not extend based on bidding activity. The plaintiffs, who conduct extended-time online auctions, argued that the licensing requirement infringed on their First Amendment rights by restricting their ability to communicate with potential buyers and craft narratives about auction items.Previously, one of the plaintiffs, McLemore, filed a lawsuit in the United States District Court for the Middle District of Tennessee, challenging the law under both the First Amendment and the Dormant Commerce Clause. The district court granted summary judgment on the Dormant Commerce Clause claim but did not address the First Amendment issue. The United States Court of Appeals for the Sixth Circuit vacated that decision for lack of standing and remanded with instructions to dismiss. Subsequently, McLemore and additional plaintiffs filed a new lawsuit, focusing on the First Amendment claim. The district court dismissed the case, holding that the law regulated professional conduct rather than speech and applied rational basis review, relying on the Sixth Circuit’s prior decision in Liberty Coins, LLC v. Goodman.On appeal, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s dismissal. The court held that Tennessee’s licensing requirement for auctioneers regulates economic activity and professional conduct, not speech, and that any burden on speech is incidental. The court applied rational basis review and concluded that the law is rationally related to the state’s legitimate interest in preventing fraud and incompetence in auctioneering. The judgment of the district court was affirmed. View "McLemore v. Gumucio" on Justia Law

Two limited liability companies, majority-owned by California residents, applied for provisional licenses to operate marijuana dispensaries in New York under the state’s Adult Use application program. New York law gives “Extra Priority” to applicants who meet three criteria: (a) membership in a community disproportionately impacted by cannabis prohibition, (b) income below 80% of the county median, and (c) a conviction for a marijuana-related offense under New York law (or a close relative with such a conviction). The plaintiffs met the first two criteria but had marijuana convictions under California, not New York, law, making them ineligible for Extra Priority. They alleged that this licensing scheme discriminates against out-of-state applicants in violation of the dormant Commerce Clause.The U.S. District Court for the Northern District of New York denied the plaintiffs’ request for preliminary relief, holding that the dormant Commerce Clause does not apply to markets that Congress has criminalized, such as marijuana. The plaintiffs appealed, arguing that the state’s prioritization scheme was protectionist and that they had standing to challenge both the December Pool (in which they applied) and the November Pool (which was processed first and favored prior CAURD applicants, mostly New Yorkers).The United States Court of Appeals for the Second Circuit held that the plaintiffs have standing to challenge the December Pool’s Extra Priority regime and the November Pool’s precedence, but not the CAURD program. The court found the dormant Commerce Clause applies to New York’s marijuana licensing, as Congress has not clearly authorized state protectionism in this area. The court held that New York’s prioritization of applicants with New York marijuana convictions is a protectionist measure that violates the dormant Commerce Clause. The district court’s denial of preliminary relief was vacated and the case remanded for further proceedings. View "Variscite NY Four, LLC v. New York State Cannabis Control Board" on Justia Law

A coastal town in Maine, known for its small population and proximity to a national park, experienced a significant increase in cruise ship tourism, with large vessels bringing thousands of passengers daily. In response to concerns about congestion, public safety, and the impact on local amenities, residents approved an ordinance capping the number of cruise ship passengers who could disembark in the town to 1,000 per day. The ordinance imposed fines for violations and was intended to address issues primarily at the waterfront and, to a lesser extent, in the downtown area.Several local businesses, a business association, and a pilots’ association challenged the ordinance in the United States District Court for the District of Maine. They argued that the ordinance was preempted by federal and state law, violated the Commerce Clause (including its dormant aspect), and infringed on due process rights. After a bench trial, the District Court largely ruled in favor of the town and an intervening resident, rejecting most claims but finding that the ordinance was preempted by federal regulations only to the extent it restricted crew members’ shore access. The court declined to enjoin the ordinance, noting the town’s intent to address this issue through further rulemaking.On appeal, the United States Court of Appeals for the First Circuit affirmed the District Court’s rejection of the state law preemption, federal preemption (except for the now-moot crew access issue), and due process claims. The First Circuit also affirmed the dismissal of discrimination-based Dormant Commerce Clause claims, finding no similarly situated in-state and out-of-state competitors. However, the court vacated and remanded the District Court’s dismissal of the Pike balancing Dormant Commerce Clause claim, instructing further analysis of whether the ordinance’s burdens on interstate commerce are clearly excessive in relation to its local benefits. The court dismissed as moot the appeals related to the crew access issue. View "Ass'n to Preserve and Protect Local Livelihoods v. Town of Bar Harbor" on Justia Law

In 1973, Fred Krug committed murder and other violent crimes while on parole, leading to his conviction and a life sentence plus additional consecutive terms. Over the years, Krug accumulated numerous disciplinary infractions in prison but had maintained a largely clean record since 2003, aside from a single incident in 2017. He was denied parole in 1994, 1995, 2012, and 2016. In 2022, at age 75, Krug became eligible for parole again. A two-member panel of the New Jersey State Parole Board denied his application in 2023, citing both old and new information, including his criminal history and institutional behavior, and set his next eligibility for thirty-six months later.Krug appealed the denial to the full Parole Board, arguing that the panel violated the 1979 Parole Act by failing to present new evidence since his last denial, as that Act required only “new information” to be considered at subsequent hearings. The full Board affirmed the denial, explaining that a 1997 amendment had removed the new-information limitation, allowing consideration of the entire record at each hearing. Krug then appealed to the Superior Court, Appellate Division, which upheld the Board’s decision, relying on its earlier ruling in Trantino v. State Parole Board (Trantino V) that the 1997 amendment was a procedural change and did not violate ex post facto protections.The Supreme Court of New Jersey reviewed the case and held that constitutional ex post facto prohibitions bar only punishment beyond what was contemplated at the time the crime was committed. Since the law in effect when Krug committed his offenses (the Parole Act of 1948) permitted the Board to consider all available information, the retroactive application of the 1997 amendment did not increase his punishment. The Court therefore rejected Krug’s ex post facto challenge and affirmed the lower court’s judgment as modified. View "Krug v. New Jersey State Parole Board" on Justia Law

A former Massachusetts State Police trooper retired in March 2018 after a 21-year career. While assigned to overtime patrol programs funded by federal grants, he falsely reported working over 700 overtime hours in 2015 and 2016, receiving more than $50,000 in unearned pay. He attempted to conceal his conduct by submitting falsified motor vehicle citations. In July 2018, he pleaded guilty in federal court to one count of embezzlement from an agency receiving federal funds, was sentenced to three months in prison, one year of supervised release, and ordered to pay restitution.Following his conviction, the State Board of Retirement suspended his pension and held a hearing. The hearing officer recommended, and the board adopted, a finding that under G. L. c. 32, § 15 (4), the plaintiff and his beneficiaries were not entitled to any retirement benefits due to his conviction for an offense involving violation of laws applicable to his office. The board ordered the return of his accumulated contributions, less certain deductions. The plaintiff sought judicial review in the Massachusetts District Court, raising constitutional challenges under Article 26 of the Massachusetts Declaration of Rights, arguing the forfeiture was an excessive fine and cruel or unusual punishment. The District Court judge entered judgment for the retirement board.The Supreme Judicial Court of Massachusetts reviewed the case on certiorari. It held that the pension forfeiture constituted a fine under Article 26 but was not excessive, adopting the United States Supreme Court’s multifactor analysis for excessive fines under the Eighth Amendment. The court also held that, even assuming Article 26’s cruel or unusual punishment provision applied to fines, the forfeiture was not cruel or unusual. The court affirmed the District Court’s judgment and the retirement board’s decision. View "Raftery v. State Board of Retirement" on Justia Law

A pharmaceutical company challenged the federal government’s implementation of a new program created by the Inflation Reduction Act of 2022, which authorizes the Centers for Medicare and Medicaid Services (CMS) to negotiate prices for certain high-expenditure prescription drugs under Medicare. The company’s drug was selected for the program, and it signed an agreement to participate “under protest” while filing suit. The company alleged that the program violated its constitutional rights under the First, Fifth, and Eighth Amendments, and that CMS failed to follow required notice-and-comment procedures under the Administrative Procedure Act (APA) when issuing the standard agreement for participation.The United States District Court for the District of Connecticut granted summary judgment to the government on all claims. The district court found that participation in the program was voluntary, so there was no unlawful deprivation of rights. It also held that the program did not impose unconstitutional conditions on participation in Medicare and Medicaid, and that the Inflation Reduction Act expressly allowed CMS to implement the program for its first three years without notice-and-comment rulemaking.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court’s judgment. The Second Circuit held that, under its precedent in Garelick v. Sullivan, participation in the Medicare Drug Price Negotiation Program is voluntary, and thus the program does not effect a taking, deprive the company of property without due process, or compel speech in violation of the First Amendment. The court further held that the program does not impose unconstitutional conditions because it is designed to control Medicare spending and does not regulate the company’s private market conduct. Finally, the court concluded that the Inflation Reduction Act expressly exempted CMS from the APA’s notice-and-comment requirement for the program’s initial years. View "Boehringer Ingelheim Pharms., Inc. v. Dep't of Health & Hum. Servs." on Justia Law

A group of individuals and organizations challenged a longstanding policy of the Securities and Exchange Commission (SEC), codified as Rule 202.5(e), which requires defendants in civil enforcement actions to agree not to publicly deny the allegations against them as a condition of settlement. This “no-deny” provision has been in place since 1972 and is incorporated into settlement agreements, with the SEC’s remedy for a breach being the ability to ask the court to reopen the case. The petitioners argued that this rule violates the First Amendment and was improperly adopted under the Administrative Procedure Act (APA).Previously, the New Civil Liberties Alliance (NCLA) petitioned the SEC to amend Rule 202.5(e) to remove the no-deny requirement, citing constitutional concerns. The SEC denied the petition, explaining that defendants can voluntarily waive constitutional rights in settlements and that the rule preserves the agency’s ability to litigate if a defendant later denies the allegations. After the denial, the petitioners sought review in the United States Court of Appeals for the Ninth Circuit, asserting both First Amendment and APA violations.The United States Court of Appeals for the Ninth Circuit reviewed the SEC’s denial. Applying the Supreme Court’s framework from Town of Newton v. Rumery, the court held that voluntary waivers of constitutional rights, including First Amendment rights, are generally permissible if knowing and voluntary. The court concluded that Rule 202.5(e) is not facially invalid under the First Amendment, as it is a limited restriction tied to the settlement context and does not preclude all speech. The court also found that the SEC had statutory authority for the rule, was not required to use notice-and-comment rulemaking, and provided a rational explanation for its decision. The petition for review was denied, but the court left open the possibility of future as-applied challenges. View "POWELL V. UNITED STATES SECURITIES AND EXCHANGE COMMISSION" on Justia Law

In response to the COVID-19 pandemic, Congress enacted legislation to provide financial assistance to small businesses, including relief payments on certain small business loans. PACEM Solutions International, LLC applied for a $5 million loan under the Small Business Administration's (SBA) 7(a) loan program. Due to repeated missed payments, PACEM and its lender, Atlantic Union Bank, modified the loan multiple times. When the CARES Act was passed, PACEM's loan was not in "regular servicing status," a requirement for receiving relief payments under the Act. The SBA determined that PACEM's loan was ineligible for relief payments and requested the return of previously disbursed funds.The United States District Court for the Eastern District of Virginia granted summary judgment in favor of the SBA. The court found that the SBA did not violate the CARES Act, as PACEM's loan was not performing appropriately and was in default. The court also concluded that the SBA did not act arbitrarily or capriciously in its decision to withhold payments and that any notification defects were harmless.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision. The Fourth Circuit held that the SBA acted reasonably in determining that PACEM's loan was ineligible for relief payments under the CARES Act. The court found that the SBA provided a satisfactory explanation for its actions and did not violate the terms of the CARES Act. The court also declined to address PACEM's constitutional claim regarding the Fifth Amendment's Due Process Clause, as PACEM sought only a declaratory judgment without requesting a hearing before the SBA. The court affirmed the district court's grant of summary judgment to the SBA. View "PACEM Solutions International, LLC v. U. S. Small Business Administration" on Justia Law