Articles Posted in Constitutional Law

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Under 42 U.S.C. 1485, the USDA's Rural Housing Service (RHS) makes loans for construction of affordable rental housing. From 1972-1982, each of 10 limited partnerships (with a common general partner, Olsen) entered into a 50-year loan agreement that stated that each borrower could pay off the loan and convert its properties to conventional housing after 15 or 20 years. The 1987 Emergency Low Income Housing Preservation Act, 42 U.S.C. 1472(c)), provided that before accepting prepayment, the USDA must attempt to enter into an agreement with the borrower. In 2002, Olsen was negotiating to sell to a nonprofit organization. He notified the RHS of “intent . . . to convert [some] units into conventional housing” and sought approval to pay off the mortgages. RHS responded with a checklist. Olsen did not proceed; the potential acquirer decided against purchasing the properties. In 2011, Olsen submitted more definite prepayment requests. RHS responded with an incentive offer concerning four properties, which Olsen accepted, remaining in the program. For three other properties, RHS informed Olsen that prepayment was not an option. Olsen purportedly believed that pursuing prepayment on any properties was futile. He did not submit additional applications. In 2013, the partnerships sued, alleging that the government, through the 1987 enactment or the 2011 correspondence, violated their prepayment rights. The Federal Circuit reversed the Claims Court's dismissal. The 2002 correspondence did not trigger the RHS’s duty to accept prepayment; RHS did not take any steps inconsistent with prepayment. The government did not breach its contractual obligation in 2002. Because the alleged breaches occurred no earlier than 2011, the contract claims are not barred by the six-year limitations period. The Claims Court implicitly premised the dismissal of takings claims on the same erroneous rationale. View "Airport Road Associates, Ltd. v. United States" on Justia Law

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Shareholders lacked standing to challenge, as an illegal exaction, U.S. government’s acquisition of AIG stock as loan collateral. In 2008, during one of the worst financial crises of the last century, American International Group (AIG) was on the brink of bankruptcy and sought emergency financing. The Federal Reserve Bank of New York granted AIG an $85 billion loan, the largest such loan to date. The U.S. Government received a majority stake in AIG’s equity under the loan, which the Government eventually converted into common stock and sold. One of AIG’s largest shareholders, Starr, filed suit alleging that the Government’s acquisition of AIG equity and subsequent actions relating to a reverse stock split were unlawful. The Claims Court held that the Government’s acquisition of AIG equity constituted an illegal exaction in violation of the Federal Reserve Act, 12 U.S.C. 343, but declined to grant relief for either that or for Starr’s reverse-stock-split claims. The Federal Circuit vacated in part, holding that Starr and the shareholders it represented lack standing to pursue the equity acquisition claims directly, as those claims belong exclusively to AIG, rendering the merits of those claims moot. The court affirmed as to Starr’s reverse-stock-split claims. View "Starr International Co. v. United States" on Justia Law

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Veterans Access, Choice, and Accountability Act (VACAA) provisions vesting significant authority in administrative judges violates Appointments Clause. In 2014, Congress investigated reports that senior executives in the Department of Veterans Affairs (DVA) had manipulated hospital performance metrics by maintaining secret wait lists of veterans who needed care. The resulting VACAA established new rules for the removal of DVA Senior Executive employees, 38 U.S.C. 713. Previously, senior DVA executives could only be removed under the Civil Service Reform Act, 5 U.S.C. 1101, and were entitled to appeal to the Merit Systems Protection Board (MSPB), to a hearing, and to attorney representation. Section 713 created an accelerated timeline for MSPB appeals and required the MSPB to refer all appeals to an administrative judge (AJ) for decision within 21 days. Helman, the Director of the Phoenix Veterans Affairs Health Care System, was removed from her position under section 713. An MSPB AJ affirmed. Helman sought review from the full Board. Citing section 713(e)(2), the Board refused to take any further action. The Federal Circuit remanded, holding that, by prohibiting Board review under section 713(e)(2), Congress vested significant authority in an AJ in violation of the Appointments Clause. Section 713(e)(2) and two related sections are severable, leaving the remainder of the statute intact. View "Helman v. Department of Veterans Affairs" on Justia Law

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During Mayberry’s tenure as a civilian employee with the FBI, he elected Becker to receive survivor benefits under the Federal Employees Retirement System upon his death. They were married for less than nine months and had no children together when Mayberry died. Becker applied for survivor benefits with the Office of Personnel Management, which denied her application, citing 5 U.S.C. 8441(1), which identifies a widow as a “surviving wife” who: “was married to [the covered decedent] for at least [nine] months immediately before his death” or “is the mother of issue by that marriage.” An administrative judge for the Merit Systems Protection denied her request to seek information regarding whether OPM had ever waived the nine-month requirement for prior applicants, and whether OPM had ever sufficiently explained the nine-month requirement to Mayberry. The denial became the final decision of the Board. The Federal Circuit affirmed, rejecting arguments that 5 U.S.C. 8441(1) is unconstitutional and that the Board improperly denied her discovery requests. The court applied the rational basis test and cited Supreme Court precedent. View "Becker v. Office of Personnel Management" on Justia Law

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In the 1980s, Simonson began exploring for deposits of pumicite, a porous volcanic rock, which he thought had potential commercial applications. Simonson found high quality pumicite in Kern County and located 23 mining claims in his name. For two decades, Simonson commissioned scientific testing. Lab reports and industry analyses confirmed that pumicite could be useful in industrial paint and plastic manufacture; Simonson began taking orders. In 1987, Simonson submitted a Plan of Operations to Bureau of Land Management to mine 100,000 tons per year. BLM conditionally approved the plan, specifying that it had not yet determined whether Simonson had discovered valuable minerals under the General Mining Law, 30 U.S.C. 22. Simonson postponed mining until BLM completed its common/uncommon variety determination, but hired a consultant to generate investor interest. In 1989, the BLM concluded that Reoforce pumicite was an uncommon mineral, locatable under federal law, but did not establish that Simonson had a right to patent his claims. From 1987-1995, Simonson mined only 200 tons of pumicite and sold only five. In 1995, BLM stated that the lands encompassing 10 of the claims would be transferred to become part of Red Rock Canyon State Park. An agreement between BLM and California permitted some mining claimants to continue operating, depending on prior use of the mine, subject to California’s Surface Mining and Reclamation Act. Ultimately, BLM found pumicite not marketable and the claims invalid. The Department of the Interior later granted Simonson a conditional right to mine some claims. Simonson then sought compensation for a temporary taking (1995-2008). The Federal Circuit affirmed rejection of the claims. Although the character of the government's action did not weigh heavily against the taking claim, the economic-impact and reasonable-investment-backed-expectations factors weighed heavily against Simonson. View "Reoforce, Inc. v. United States" on Justia Law

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Utah Trooper Swenson attempted to stop a car near the Uncompahgre Ute Reservation. The car entered the reservation. About 25 miles later, it stopped. Kurip, age 17, and Murray emerged and ran. Swenson caught Kurip and requested back-up. Vernal City Officer Norton and others responded. Norton claims that Murray shot at Norton, then shot himself. The officers found an illegally-purchased gun near Murray. No officer administered medical assistance to Murray while waiting for an ambulance. FBI agents took charge, and, with local officers, allegedly denied a tribal officer access. After Murray was declared dead (off-reservation), an officer allegedly photographed Murray nude and manipulated his remains. After an external examination, the medical examiner concluded that the bullet entered the back of Murray’s head, above and behind his left ear. Murray was right-handed. No soot was found on Murray’s hands. When the investigation into the gun concluded, the FBI destroyed it. Plaintiffs sued under 42 U.S.C. 1983. The district court held that there was no seizure, that the pursuit was reasonable, and that Murray had fired at Norton. The Tenth Circuit affirmed. Meanwhile, plaintiffs sued the United States in the Claims Court, alleging violations of an 1868 Treaty and of the government’s trust obligations. The Claims Court concluded that the Treaty was limited to affirmative criminal acts committed on reservation lands and dismissed allegations regarding failure to take custody of and secure Murray’s body against desecration, spoliation of evidence, failure to ensure a proper autopsy, and failure to protect the Tribe’s reservation boundary and sovereign interest in the crime scene. The court found allegations concerning acts on the reservation barred by issue preclusion. The Federal Circuit vacated. The Claims Court improperly limited the scope of claims cognizable under the Treaty and erred in applying issue preclusion without considering a spoliation issue. View "Jones v. United States" on Justia Law

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In 2015, Abbas sued the federal government, alleging taking of his property rights in certain pre-World War II German bonds that were underwritten and payable in the U.S. After the war, Germany was reluctant to pay off the bonds, some of which were in unauthorized hands. Several post-World War II treaties between the U.S. and Germany established procedures for determining the validity of the bonds and the rights of the holders. It appears that Germany finished paying settling holders of validated German pre-war bonds in 2010. The Federal Circuit affirmed dismissal of the claim, finding it barred by the statute of limitations, 28 U.S.C. 2501, which requires that claims brought in the Court of Federal Claims be filed within six years of accrual of the cause of action. Abbas’s claim is that the U.S. caused a regulatory taking of his right to sue Germany for payment of his bonds when the U.S. entered into a 1953 Treaty. View "Abbas v. United States" on Justia Law

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Freddie Mac is a privately-owned, publicly-chartered financial services corporation, 12 U.S.C. 1452, created to provide stability in the secondary residential mortgage market. Piszel began working as the CFO of Freddie Mac in 2006. Piszel with a signing bonus of $5 million in Freddie Mac restricted stock units that would vest over four years, an annual salary of $650,000, and performance-based incentive compensation of $3 million a year in restricted stock. If terminated without cause, Piszel would receive a lump-sum cash payment of double his annual salary and certain restricted stock units would continue to vest. In 2008, facing Freddie Mac's potential collapse, Congress passed the Housing and Economic Recovery Act,12 U.S.C. 4511, establishing the FHFA as Freddie Mac's new primary regulator, with authority to disaffirm any contract, after which damages for the breach would be limited to “actual direct compensatory damages.” The Act contained a limit on “golden parachutes.” Piszel alleges that he was terminated without cause and Freddie Mac “refused to provide him with any of the benefits to which he was contractually entitled.” The Claims Court dismissed his allegations of an unconstitutional taking. The Federal Circuit affirmed, noting that Piszel’s breach of contract claim remains intact despite the legislation, particularly in light of Piszel’s assertion that his contract called for “deferred compensation,” rather than a golden parachute. View "Piszel v. United States" on Justia Law

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The High Line is an elevated “linear park” in New York City that runs along the west side of Manhattan from Gansevoort Street to 34th Street. The park, used for walking, jogging, and other recreational purposes, occupied the elevated viaduct of a former railway line. In 2005, the elevated viaduct was converted to a public recreational trail under the authority of the National Trails System Act. Before the Federal District Court of Appeals was a takings matter: appellant Romanoff Equities, Inc., contended that the conversion of the railway property to a trail entailed a taking of its property without just compensation. The Court of Federal Claims held, on summary judgment, that the conversion did not result in a taking of Romanoff’s property. Finding no reversible error, the Federal District appellate court affirmed. View "Romanoff Equities, Inc. v. United States" on Justia Law

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In 2012, one in five female veterans and one in 100 male veterans reported that they experienced sexual abuse in the military, and an estimated 26,000 service members “experienced some form of unwanted sexual contact.” The trauma stemming from sexual abuse in the military (military sexual trauma (MST)) can result in severe chronic medical conditions, including Post-Traumatic Stress Disorder, depression, and anxiety. Generally, veterans with service-connected disabilities are entitled to disability benefits, 38 U.S.C. 1110, 1131. In response to what they viewed as the VA’s inadequate response to MST-based disability claims, veterans’ groups submitted a petition for rulemaking which requested that the VA promulgate a new regulation regarding the adjudication of certain MST-based disability claims. The Secretary of Veterans Affairs denied the petition. The Federal Circuit upheld the denial, noting its limited and deferential review and stating that the Secretary adequately explained its reasons for denying the petition. The court rejected a claim that in denying the petition, the Secretary violated the equal protection clause by intentionally discriminating against women without providing an exceedingly persuasive justification or discriminating against survivors of MST-based PTSD without providing a legitimate reason. View "Serv. Women's Action Network v. Sec'y of Veterans Affairs" on Justia Law