Justices seem doubtful of SEC’s authority
WASHINGTON — Conservative Supreme Court justices on Wednesday seemed open to a challenge to how the Securities and Exchange Commission fights fraud, in a case that could have far-reaching effects on other regulatory agencies. A majority of the nine-member court suggested that people accused of fraud by the SEC should have the right to have their cases decided by a jury in federal court, instead of by the SEC's in-house administrative law judges. The justices heard more than two hours of arguments in the Biden administration's appeal of a lower-court ruling that threw out stiff financial penalties imposed on hedge fund manager George R. Jarkesy by the SEC, which regulates securities markets. "That seems problematic to say that the government can deprive you of your property, your money, substantial sums in a tribunal that is at least perceived as not being impartial," Justice Brett Kavanaugh said. Justice Department lawyer Brian Fletcher warned the justices that their decision could have effects reaching far beyond the SEC, noting that roughly two dozen agencies have similar enforcement schemes. "I don't want you to think it's just about the SEC," Fletcher said. The case is just one of several this term in which conservative and business interests are urging the court to constrict federal regulators. The court's six conservatives already have reined them in, including in May's decision sharply limiting their ability to police water pollution in wetlands. In the Jarkesy case, the Democratic administration is relying on a 50-year-old decision in which the court ruled that in-house proceedings did not violate the Constitution's right to a jury trial in civil lawsuits. But Chief Justice John Roberts, signaling his concerns with the power of federal regulators, noted that "the impact of governmental agencies on daily life today is enormously more significant than it was 50 years ago." The court's three liberal justices seemed sympathetic to the Biden administration's arguments. Justice Elena Kagan, responding to Roberts, said that "our problems have only gotten more complicated and difficult." Last year, a divided panel of the New Orleans-based 5th U.S. Circuit Court of Appeals ruled in favor of Jarkesy and his Patriot28 investment adviser group on three issues. It found that the SEC's case against him, resulting in a $300,000 civil fine and the repayment of $680,000 in allegedly ill-gotten gains, should have been heard in a federal court instead of before one of the SEC's administrative law judges. Although the Supreme Court basically dealt only with the federal court issue, the appellate panel also said Congress unconstitutionally granted the SEC "unfettered authority" to decide whether the case should be tried in a court of law or handled within the executive branch agency. And it said laws shielding the commission's administrative law judges from being fired by the president are unconstitutional. Judge Jennifer Walker Elrod wrote the appellate opinion, joined by Judge Andrew Oldham. Elrod was appointed by President George W. Bush, and Oldham by President Donald Trump. Bush and Trump are Republicans. Judge Eugene Davis, a nominee of President Ronald Reagan, also a Republican, dissented. Jarkesy's lawyers noted that the SEC wins almost all the cases it brings in front of the administrative law judges but only about 60% of cases tried in federal court. The SEC was awarded more than $5 billion in civil penalties in the 2023 government spending year that ended Sept. 30, the agency said in a news release. It was unclear how much of that money came through in-house proceedings or lawsuits in federal court. A decision in SEC v. Jarkesy, 22-859, is expected by early summer.
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$120M judgment entered against failed dam’s owner
DETROIT — The former owner of a Michigan dam is on the hook for roughly $120 million sought by the state for environmental damage when the structure failed after days of rain in 2020, a judge said. But it's not known how the state will ever collect: Lee Mueller has filed for bankruptcy protection in Nevada. "I don't have $120 million," Mueller told The Associated Press, calling the figure an "absurdity." After three days of rain, the Edenville Dam failed May 19, 2020, releasing a torrent that overtopped the downstream Sanford Dam and flooded the city of Midland about 128 miles northwest of Detroit. Thousands of people were temporarily evacuated, and 150 homes were destroyed. Wixom Lake, a reservoir behind the Edenville Dam, disappeared. U.S. District Judge Paul Maloney on Monday granted the state's request for a $120 million judgment against Mueller, who didn't contest it. The state said much of that amount is related to damage to fisheries and the ecosystem for mussels. The state insists that the Edenville Dam collapsed as a result of poor maintenance and a lack of critical repairs. "The failures of the Edenville and Sanford dams caused impacts that were devastating but avoidable," said Phil Roos, director of the state environment agency. Mueller said he believes the dam failed because of a defect during construction about a century ago. The Federal Energy Regulatory Commission asked experts to study what happened at the Edenville and Sanford dams. The 2022 report said failure was "foreseeable and preventable" but could not be "attributed to any one individual, group or organization." Separately, the state faces a flood of litigation from affected property owners. They accuse regulators of making decisions that contributed to the disaster, including setting higher water levels in Wixom Lake.
Minneapolis stores where Floyd was killed sue city
MINNEAPOLIS — Several stores at the location where George Floyd was killed by Minneapolis police in 2020 have sued the city, accusing it of neglecting the area and hurting business. The lawsuit, filed in mid-November in state court, also names Mayor Jacob Frey and other officials and accuses the city of not properly policing the area since Floyd's death. It also accuses the city of blocking the intersection that is now known as George Floyd Square with concrete barriers for more than a year after Floyd's death, keeping customers from entering. The combination has turned the area into a hub for violent crime, the lawsuit says. "The mayor, the city, the city council, and the Minneapolis Police Department collectively agreed to severely limit police response in the barricaded area surrounding plaintiffs' businesses," with police responding to only the most serious calls and otherwise actively avoiding the area, according to the lawsuit. "Criminals know the area lacks police protection, and they have now made the area so dangerous that it has become known as the 'No Go Zone,'" the lawsuit says. The businesses include Cup Foods, the convenience store where Floyd was suspected of trying to pass a counterfeit $20 bill that led to the fatal encounter with police. The other businesses, including a tobacco shop and investment business, are run from inside Cup Foods or nearby and are all owned by the same family, according to the lawsuit. The businesses are seeking about $1.5 million in damages. A spokesman for the city said officials are aware of the lawsuit and have no comment on it. Frey's office said in a statement Wednesday that it did "everything possible to open the street safely amid very tenuous circumstances." "When we finally did open the street, the city did so in a planned way where no one was hurt and the area remained safe for residents," Frey spokeswoman Ally Peters said in the statement. Floyd, who was Black, died on May 25, 2020, after former officer Derek Chauvin, who is white, pressed a knee on his neck for 9½ minutes on the street outside Cup Foods. Bystander video captured Floyd's fading cries of "I can't breathe." His death touched off protests worldwide, some of which turned violent, and forced a national reckoning with police brutality and racism. Chauvin is concurrently serving a 21-year federal sentence for violating Floyd's civil rights and a 22½-year state sentence for second-degree murder. Three other former officers received lesser state and federal sentences for their roles in Floyd's death.
Verdicts & Settlements
Crash with truck gravely injures sports car driver; $4.75 million settlement
Action: Personal injury Injuries alleged: Comminuted intra articular fracture of the femur, tibial plateau fracture, proximal fibular fracture, right patella fracture, sternal fracture, rib fractures, right pleural effusion, right manubrial fracture, L1 fracture, forehead puncture wound, right knee puncture wound. Case name: Withheld Court/case no.: Withheld Judge: Withheld Amount: $4.75 million Date: June 14, 2023 Most helpful experts: Steve Farlow of PE Accident Reconstructionist, Raleigh; Kevin Rider of Forensic Human Factor, Columbus, Ohio Attorneys: Robert Whitley and Ann C. Ochsner of Whitley Law Firm, Raleigh; James Scherr and Maxey Scherr of Scherr Legate, El Paso Plaintiff, who was driving a 1980s sports car, suffered numerous serious injuries after being hit head-on by a truck at 11 a.m. July 3, 2020. The collision happened on a clear, sunny day on a main thoroughfare in a business district where the speed limit was 45 mph. Plaintiff, who had preexisting medical conditions that required him to walk with the aid of a cane, has not completely recovered from injuries suffered in the collision and now must walk with the aid of a walker. Contributory negligence (driving in turn lane) was alleged by the defendants. The defendant was issued a citation for a moving violation; he pleaded responsible about a year later. Plaintiff's Rule 414 medical expenses were $169,851.
Defamation claim arises over surgical procedure; $1.8 million settlement
Action: Defamation Injuries alleged: Damage to reputation due to reading of a transesophageal echocardiogram Case name: Robinson v. Willaims Court/case no.: United States District Court, Eastern District of North Carolina / 4:17-cv-112-FL Mediator: U.S. Magistrate Judge Robert Gates Amount: $1.8 million Date: July 7, 2023 Attorneys: Mary-Ann Leon of The Leon Law Firm, Greenville (for the plaintiff); Laura McHenry of the N.C. Department of Justice, Raleigh (for the defendant) Plaintiff maintained that defendant, an attending surgeon, damaged plaintiff's reputation as a cardiothoracic surgeon when he stated that a patient's aborted valve replacement was due to plaintiff's failure to interpret an intra-operative transesophageal echocardiogram (TEE). However, plaintiff recorded the post-operative conversation between her and defendant in which defendant admitted that the aborted operation was his fault for not having reviewed a pre-operative TEE. Defendant was unaware of the audio recording until about two-thirds of his deposition testimony had been given. Nevertheless, the defendant's position was that plaintiff should have interpreted the intra-operative transesophageal echocardiogram as a backup. Defendant's statement about the plaintiff was communicated to the National Practitioner's Data Bank through a medical malpractice payment report, which was seen by every prospective employer to whom plaintiff applied for attending surgeon positions.
Plaintiff wrongly charged with firearm offense; $75,000 settlement
Action: Civil rights Injuries alleged: Emotional distress Case name: Samantha M. Fugate v. Hoke County, et al. Amount: $75,000 Date: Sept. 25, 2023 Most helpful expert: Jimmy Henley Jr., law enforcement expert Attorneys: Patrick R. Anstead of The Richardson Firm, Fayetteville (for the plaintiff) The Hoke County Sheriff’s Office agreed to a pre-suit settlement of the plaintiff’s civil rights claims for wrongful arrest and unlawful detention after deputies charged her with felon in possession of a firearm on Oct. 3, 2022. Despite having no criminal record, the plaintiff spent two days in the Hoke County Detention Center before she was able to post bond. The charges were later dismissed by the Hoke County District Attorney’s Office. The plaintiff was arrested while in lawful possession of a firearm registered in her name because of deputies’ mistaken belief that she had a felony conviction in Colorado. Deputies encountered the plaintiff while responding to a routine call and arrested her after she voluntarily produced her identification and disclosed the weapon inside her vehicle. The Hoke County Sheriff’s Office agreed to resolve the claim without admission of liability. By doing so, the sheriff’s office never disclosed whether deputies ran a criminal background check on the plaintiff prior to swearing out a warrant to the magistrate or how they formed their belief that she had a felony conviction in another state. •