The New York Times

October 18, 2017

By John Pfaff

 

 

A report released by ProPublica suggests that Supreme Court justices struggle with statistical data. Credit Gabriella Demczuk for The New York Times

 

Supreme Court justices have a tough job. They are required to hand down decisions that can affect millions of people and cost billions of dollars. And while some of the issues before them are purely legal, many turn on complex policy questions: Do black voters in the South still face substantial discrimination? How reliable are eyewitnesses? Are people convicted of sex offenses very likely to reoffend?

 

These questions can be answered only by understanding what the data says. Unfortunately, a report released by ProPublica on Tuesday suggests that the justices struggle with that task. Looking at a random sample of cases from 2011 to 2015, ProPublica found that the court cited faulty research or introduced its own errors in nearly a third of the 24 cases that relied on such facts.

   

In 2013, for example, Shelby County v. Holder invalidated a critical portion of the Voting Rights Act of 1965, making it arguably one of the most consequential cases in recent years. Justice John G. Roberts Jr., arguing that the South had taken great strides that made the protections of the act unnecessary, based his decision in part on a Senate Judiciary Committee analysis that misinterpreted how the Census Bureau reports race and ethnicity data and wrongly suggested that registration gaps between minorities and whites had shrunk significantly, an error that neither he nor his clerks caught.

 

As ProPublica itself acknowledges, its sample is too small to draw any solid statistical inferences, but the results are still troubling. They are also not particularly surprising. None of the justices has any serious training in statistics, and the clerks who assist them are almost all recent law school graduates, who rarely have any formal statistical background. Empirical facts are central to what the court does, but its members lack expertise. 

   

Sometimes justices seem almost amused by that lack. When presented with potentially critical empirical evidence in a major gerrymandering case this month, Chief Justice Roberts joked that “it may be simply my educational background” before describing the material as “sociological gobbledygook.”

 

Policy is a major part of the court’s docket now, whether it likes it or not. The justices cannot avoid adapting to this, and they cannot simply dismiss evidence they don’t understand as “gobbledygook.”

 

 The court has historically relied on amicus briefs, written by outside experts, to provide it with that broader empirical background and help compensate for its own institutional shortcomings. Unfortunately, these briefs are easily abused. In a 2014 article, Allison Orr Larsen, a law professor at William & Mary, pointed out that many amicus briefs include false or unsubstantiated empirical assertions, at least some of which make it into justices’ opinions. ProPublica similarly identified amicus-writing organizations that could not explain where specific numerical claims came from.

 

It would be easy to avoid the more egregious problems by simply refusing to rely on unsourced claims. But that fix would not go very far. It’s not hard to get factually dubious articles published. Some industry groups appear to have their own nominally peer-reviewed journals, which provide the illusion of respectability for results skewed to advance their interests. And major cases that make it to the Supreme Court often spend years in the trial and appellate stages, providing interested groups plenty of time to gin up favorable findings.

 

So what to do?

 

In the 1980s, the legal expert Kenneth Culp Davis proposed that the court create an outside research organization, akin to the Congressional Research Service, to do research on its behalf. However worthwhile, the idea went nowhere.

 

Perhaps a more viable idea is one that Mr. Davis rejected: establish a group of technical advisers to the court. A small team of social scientists and statisticians could help justices sift through empirical evidence. There is no shortage of scholars with Ph.D.s who would be eager to do that work for the court.

The court could take steps today, without any institutional change, by hiring clerks with empirical training instead of only recently minted J.D.s. Or if there is an immediate and specific need that the current clerks can’t address, justices could have the ability to hire experts to assist them with specific issues. (The president of the American Sociological Association offered to have a team of sociologists sit down with Chief Justice Roberts after his “gobbledygook” comment.)

 

Any proposal like this would face hurdles, but they are surmountable. Perhaps there is a concern that justices would hire highly partisan experts, arguably making things worse. We could instead ask the clerk of the court to make nonpartisan hiring decisions, or require that six of the nine justices agree to any such expert, so that a bare majority couldn’t just pick someone who favors its position.

 

In the end, the question is a comparative one. It’s not, “Is there a perfect solution?” but rather, “Can the court make its policy decisions better?” The answer to the latter question is clear.

 

John Pfaff, a professor at Fordham Law School, is the author of “Locked In: The True Causes of Mass Incarceration and How to Achieve Real Reform.”

 

 

https://www.nytimes.com/2017/10/18/opinion/supreme-court-justices-factcheckers.html?smid=pl-share&_r=0

 

 

Daily Republic

October 19, 2017

By Ryan McCarthy

 

 

Judge Garry T. Ichikawa.

Courtesy photo

 

FAIRFIELD — Judge Garry T. Ichikawa – who likes to say he was born with a shovel in one hand and a book in the other – is retiring after more than 17 years on the bench, the Solano County Superior Court said Wednesday.

 

Gov. Gray Davis appointed Ichikawa in 2000 and the judge served his judicial career in Family Law and Juvenile Law, almost always holding the positions of Presiding Juvenile Judge or Supervising Family Law Judge, the court said.

Ichikawa is the third of five generations of family who have lived and worked in Solano County, the court said.

 

His grandparents immigrated to the Suisun Valley from Japan in the early 20th century and during World War II his parents spent time in an internment camp, the court said. Returning to Solano County after World War II, they were among the first people of Japanese ancestry to be able to purchase land in Suisun Valley, the court added.

 

Ichikawa graduated from Armijo High School, the University of California, Berkeley and, after his honorable discharge from the U.S. Army, graduated from the University of California, Davis School of Law, the court said.

 

He served as a deputy public defender for two years before going into private practice, where he soon specialized in family law, the court said.

 

Ichikawa was elected to the Solano Community College governing board and was twice elected to the Fairfield City Council.

 

He helped establish many successful court programs, including Dependency Drug Court, Domestic Violence Court, Adoption Day and educational rights for foster children, the court said.

 

Ichikawa has received local, state and national recognition for his work in the justice system and the community.

 

Presiding Judge Robert C. Fracchia said in a press release about the retirement that “The best justice is local justice, grounded in community values.”

 

“As a lifelong resident of Solano County, Judge Ichikawa understands Solano County and has always acted to promote its best interest,” Fracchia said. “He has been repeatedly recognized as one of the finest juvenile and family law judges in our state and many of our best programs are a product of his vision and direction. To say he will be missed is an understatement for our court and the legal community.”

 

In the press release, Judge Ichikawa said, “I thank the community for giving me the opportunity to serve it all these years, and I dedicate those years to the memory of my parents and all others like them.”

 

“They started with very little,” he said, “and lived their lives with honor so that their children could be accepted as Americans.”

 

 http://www.dailyrepublic.com/solano-news/fairfield/judge-ichikawa-retires-from-solano-county-superior-court/

 

 

Above The Law

October 19, 2017

By Jill Switzer

 

 

 It’s finally happening. Every California lawyer, whether dead or alive, active or inactive, disciplined or disbarred, is getting divorced. The State Bar of California is “deunifying,” leaving to itself the tasks of admission, discipline, public protection, and access to justice while launching the sixteen substantive sections, plus the Young Lawyers section, into uncharted seas of their own, effective January 1, 2018. The sections and the Young Lawyers Section will be a non-profit 501(c)(6) and voluntary to boot.

 

Hopefully, the divorce will be amicable, at least it is so far, but when it comes to divvying up assets and custody issues, it may be a different story. Bifurcation as to status is as of January 1, 2018; property division and custody issues may take longer. Governor Edmund G. (Jerry) Brown, Jr. signed SB 36 at the end of September.

 

Deunification has been some years in the making, given the State Bar’s actual ability to irritate, to an amazing degree, the California legislature, which holds the pursestrings for setting annual dues. Watching the State Bar fumble time and again over the past few years has been watching the proverbial train wreck: you hate to watch, but you just can’t turn away. It doesn’t say much when lawyers who are so good at advising others have trouble keeping their own house in order.

 

Just in the past several years, the State Bar has endured litigation which morphed into binding arbitration by a terminated Executive Director (he lost), the resignation of the Chief Trial Counsel about the same time that the Executive Director left the building, the failure of the bar to get a dues bill passed for 2017, the re-working of proposed changes to the California Rules of Professional Responsibility, a scathing audit of bar operations by the state auditor….should I go on? 

 

All you need to do is Google State Bar of California and “audit” or “deunification” or “cut score,” the current hot topic, and you can spend hours reading about the mishaps of what has been the country’s largest unified bar association. In fact, the Los Angeles Times recently editorialized that the bar exam cut score, presently the second highest in the nation, should be lowered. 

 

Another reason for deunification has been the valid concern about the anti-trust impact of the United States Supreme Court decision in the North Carolina Dental Examiners v. Federal Trade Commission case. 

So, in response and effective January 1, 2018, there will be some changes to the State Bar Board of Trustees governance to reduce the likelihood of a similar situation here in the Golden State.

 

Proponents of deunification have pointed to the State Bar’s apparent inability to multi-task, and by stripping the Bar of all jobs except admissions and discipline, public protection and access to justice, the hope is that the Bar will be better able to focus on its delineated responsibilities. 

 

Fingers crossed.

 

However, as a dinosaur, I will look back nostalgically at those days when the State Bar was unified, both a regulatory agency and a trade association for lawyers, the latter term which seems to have now an evil connotation. Pity. I think lawyers would like to have someone, preferably its regulator, say some good things about what lawyers do, rather than just castigating the entire profession for the sins of the few.

Hopefully the new “trade association” of the bar will do that, in addition to providing continuing legal education for its members. Some organization needs to speak up on behalf of the profession, rather than just continue to be everyone’s punching bag for real and imagined ills. We don’t make the facts; we just do the best that we can with the facts we’re given.

 

We lawyers seem to be wimps when it comes to telling our story. Not every lawyer is evil, not every lawyer overbills her clients, not every lawyer abandons his client, not every lawyer steals from the client trust account. I always thought (I know that for some readers that’s assuming facts not in evidence) that one of the missions of a unified bar was to be the voice of its members to the public, not just for public protection purposes, but to educate the non-lawyer community about what lawyers do. Silly me.

 

I digress. There are a number of deunified State Bars around the country, but 37 state bars are unified. 

 

According to the ABA resource page, the premise behind bar unification has been seen as a way to better regulate lawyers within a particular jurisdiction. That premise has hit the wall in California, and it will be fascinating to see if the deunified bar does a better job in its stated mission of public protection. It’s going to take some years to see what happens and whether de-unification does the job it’s supposed to do.

 

The State Bar of California, which is the largest unified bar in the country, was created ninety years ago in 1927, and while assailed for years for issues such as failure to discipline errant attorneys, managerial incompetence and the like, it has managed to survive as a unified bar until now.

 

The issue of compulsory membership in the State Bar is not new here. In the early 1990s, Keller v. State Bar of California went all the way up to the United States Supreme Court. Could the State Bar use mandatory dues for lobbying on issues that members disagreed with? The Supreme Court said no and that unified bar associations had to create some way for members who disagreed with lobbying policies to take a deduction from the mandatory dues. The Keller case was one of the first chinks in the armor of the unified bar.

 

So, as the State Bar of California now boldly goes where no California bar association has ever been before (sorry, Trekkies, for mangling the introduction to the original series) I and other lawyers of similar vintage may not be around to see how this shape-shifting experiment turns out. It hopefully will not be any worse than what has come before.

 

 Jill Switzer has been an active member of the State Bar of California for 40 years. She remembers practicing law in a kinder, gentler time. She’s had a diverse legal career, including stints as a deputy district attorney, a solo practice, and several senior in-house gigs. She now mediates full-time, which gives her the opportunity to see dinosaurs, millennials, and those in-between interact — it’s not always civil.

https://abovethelaw.com/2017/10/california-state-bar-makes-radical-shift-to-right-the-ship/?rf=1

 

 

ABA Journal News

October 18, 2017

By Debra Cassens Weiss

 

 

California National Guard photo.

 

 

Fire victims in eight Northern California counties who can’t afford a lawyer can call a new hotline to receive free legal assistance.

 

The hotline number is 415-575-3120, according to a press release (PDF) and the Napa Valley Register.

 

The ABA’s Young Lawyers Division is operating the hotline in partnership with the Federal Emergency Management Agency, the Bay Area Resilience Collaborative and the Legal Aid Association of California.

 

The hotline is currently available to survivors of fires in Butte, Lake, Mendocino, Napa, Nevada, Orange, Sonoma and Yuba counties.

 

Callers to the hotline can get help with FEMA and other government benefits, home repair contracts, replacement of wills and other legal documents, consumer protection issues, mortgage-foreclosure problems, and landlord-tenant problems.

 

Two other hotline numbers are also available. Napa County residents can call the Bay Area Legal Aid Legal Advice Hotline at 800-551-5554. Residents of Napa and Sonoma Counties can call the Health Care Consumer Center at 855-693-7285 for help with Medi-Cal and medical insurance coverage issues.

 

The ABA Young Lawyers Division has developed similar hotlines for the individuals affected the recent hurricanes.

 

 http://www.abajournal.com/news/article/aba_partners_to_provide_legal_hotline_for_california_fire_victims

 

 

East Bay Times

October 17, 2017

By Nate Gartrell

 

 

Judge Bruce C. Mills was charged with willful misconduct and could be removed from the bench. (Susan Tripp Pollard/Bay Area News Group  

  

MARTINEZ — A Contra Costa judge with a history of ethics violations was charged with judicial misconduct that could warrant his removal from the bench, records obtained Tuesday show.

 

The two counts of misconduct include allegations that Judge Bruce C. Mills illegally doubled the sentence of a judicial rights advocate who Mills had found to be in contempt of court. Mills jailed the man for discussing his divorce online, a decision that First Amendment experts called, “outrageous” and a free speech violation.

 

The two charges were filed Friday by the Commission on Judicial Performance, the California government body that investigates ethical complaints into judges. Mills is required to provide a written answer to the charges within 20 days.

   

Per the California Constitution, Mills faces removal or admonishment if the charges are found true. The CJP’s action carries no criminal penalties. Mills could not be reached for comment.

 

Mills, a judge since 1995, has been disciplined five times since 2001. He was admonished in 2013 after the commision found 10-0 that he had “created an appearance of impropriety that undermined public confidence in the impartiality and integrity of the judiciary” when he interfered with a case in which his son was a defendant. In 2001, he was found to have coerced a guilty plea out of a DUI defendant.

 

Last year, Mills sentenced San Ramon resident Joseph Sweeney to 25 days in jail for contempt, after finding that Sweeney’s online writings violated another judge’s restraining order not to disclose the contents of his ex-wife’s cellphone or computer. But Sweeney argued that his writings were sourced from publicly-available court documents filed by his ex-wife.

 

In the hearing, Mills claimed that “matters that are put into court pleadings and brought up in oral argument before the court do not become public thereby,” a statement several First Amendment experts say wildly misstates the nature of court records.

 

According to the hearing transcript, Mills also made it clear that Sweeney’s 25-day sentence — the maximum for five counts of contempt of court — qualified for 50 percent good time credits, meaning Sweeney would likely only serve half his sentence. Under state law, people convicted of nonviolent crimes are set free after serving half their sentences, assuming they have no disciplinary problems.

 

But days later, after Sweeney was in the West Contra Costa Jail, Mills allegedly directed a court clerk to modify the sentence and revoke Sweeney’s good time credits. The CJP alleges Mills did so without notifying the parties in the case or giving them time to respond, a violation of ethics guidelines.

 

When Sweeney found out his good time credits had been revoked, he contacted his attorney, Jim Morrison, from jail. In a 2016 interview, Morrison said he faxed the copy of the original order — which said Sweeney would serve 50 percent time — to the sheriff and to Mills. Sweeney’s good time credits were reinstated later that day, Morrison said.

 

Ironically, Sweeney is a well-known judicial reform advocate who has publicly criticized the commission’s handling of judicial misconduct cases. He testified in front of the state legislature last year, calling for a state audit of the CJP. Mills jailed Sweeney two days after the legislature approved the audit.

   

“Finally, (the CJP) feels pressured to be doing something about judicial misconduct, which is a good indication,” Sweeney said in an interview Tuesday when asked for a response to the action against Mills.

 

After his release from jail, Sweeney filed multiple complaints against Mills and appealed the judge’s decision. Last November he received a response from then-presiding Judge Steve Austin, who said that altering the order was improper, but suggested that Mills simply didn’t know he’d violated a rule.

 

“I view this as a training issue and not as something more serious as you have described it in your letter,” Austin wrote. “I have taken appropriate corrective action.”

 

Similarly, the Contra Costa District Attorney’s Office reviewed the matter and determined Mills hadn’t committed a crime, chief deputy Doug MacMaster wrote in a letter to Sweeney last year.

 

The second misconduct charge alleges Mills had a courtroom conversation with the prosecutor in a DUI case Mills was presiding over, where the two discussed the case. During the conversation, Mills compared the case to one he handled as a prosecutor and suggested that someone may have to look into whether breathalyzer systems were faulty.

 

 “You did not disclose on the record your conversation with (the prosecutor) or recuse yourself from further proceedings in the case until April 1, 2016, after the district attorney’s office disclosed the ex parte conversation to a supervising judge and to defense counsel,” CJP Chairperson Hon. Ignazio Ruvolo wrote in the charging records.

 

 

 http://www.eastbaytimes.com/2017/10/17/controversial-contra-costa-judge-charged-with-willful-misconduct-could-face-removal/

 

The Sacramento Bee

October 17, 2017

By Adam Ashton

 

 

SEIU Local 1000 sponsored a bill that will allow about 500 workers in the California Judicial Council to join a union. They had been banned from collective bargaining. Manny Crisostomo Sacramento Bee file photo, 2014

 

 

About 500 state judicial employees who had been banned from collective bargaining can vote to join a union under a new law Gov. Jerry Brown signed last weekend.

 

The law, by Assemblyman Miguel Santiago, D-Los Angeles, allows administrative employees of the California Judicial Council to join a union. Most of them work in San Francisco for the organization that sets policies for California courts.

 

The law gives Judicial Council employees the same bargaining rights that are granted to rank-and-file state workers, as well as to employees of California trial courts. Trial courts, such as Sacramento Superior Court, allow collective bargaining through local unions.

 

State government’s largest union, Service Employees International Union Local 1000, sponsored the bill. The union represents 96,000 workers, including ones in administrative and information technology positions that are common at the Judicial Council.

 

“Today is a great day for Judicial Council employees,” said SEIU 1000 President Yvonne Walker. “Every day more workers are choosing to come together in a union. They know that together we have the power to negotiate better wages, benefits and retirement security.”

                

Gov. Brown vetoed a similar bill last year, writing that “the state has no experience collective bargaining with employees from the third branch of government.” He wrote last year’s bill was not “ready to become law.”

 

The new version of Santiago’s bill spelled out how Judicial Council employees could petition to join a union and detailed a process for the department to work with a union.

 

A legislative analysis said the law could increase annual expenses for the Judicial Council in the “high hundreds of thousands of dollars.”

http://www.sacbee.com/news/politics-government/the-state-worker/article179395761.html

 

The Recorder

October 16, 2017

By Tony Mauro, The National Law journal 

 

 

U.S. Supreme Court building.

The NLJ/ Diego M

 

 

Updated 10/16/17, 11:05 a.m.

 

A long-running dispute between Microsoft and the Justice Department over providing the government with certain customer emails in criminal investigations will be refereed by the U.S. Supreme Court.

 

Without comment, the justices agreed to hear arguments in United States v. Microsoft, responding to the government’s dire assertion that a lower court ruling siding with Microsoft is causing “immediate, grave, and ongoing harm to public safety, national security, and the enforcement of our laws.”

 

For its part, Microsoft counters that “the government is in the wrong forum,” asserting that it is up to Congress, not the courts, to expand existing law to require email providers to turn over customer content stored overseas. Veteran high court advocate and Orrick, Herrington & Sutcliffe partner E. Joshua Rosenkranz represents Microsoft in the case.

 

In a blog post Monday, Microsoft Chief Legal Officer Brad Smith said the company would continue to press its case that the Electronic Communications Privacy Act "was never intended to reach within other countries' borders.

 

"[A]s we have said from the beginning of this litigation, there's a broader dimension to this issue as well. … If U.S. law enforcement can obtain the emails of foreigners stored outside the United States, what's to stop the government of another country from getting your emails even though they are located in the United States," Smith wrote.

 

The case originated in December 2013 when the Justice Department obtained a warrant in the Southern District of New York for emails of an as-yet-unnamed person based on probable cause that the account was being used in narcotics trafficking. Microsoft agreed to provide noncontent information about the account. But the company refused to turn over the actual emails, which had been “migrated” to one of its data centers in Ireland, citing “impermissible extraterritorial application” of the Stored Communications Act.

 

The U.S. Court of Appeals for the Second Circuit agreed with Microsoft, triggering a petition for an en banc hearing that was turned down by a 4-4 Second Circuit vote. Judge Jose Cabranes, one of the dissenters, wrote that the Second Circuit ruling “has indisputably, and severely, restricted an essential investigative tool used thousands of times a year in important criminal investigations around the country.” He also said the rulings “created a roadmap” for criminal suspects to shield their emails.

 

In opposing Supreme Court review, Microsoft said that in addition to the extraterritoriality issue, that a ruling in favor of the Justice Department would “adversely affect U.S. technology companies” by putting them in “the untenable position of being forced to violate foreign privacy laws to comply with U.S. warrants.” It would also, according to the brief, “hamstring U.S. companies’ ability to compete in the multi-billion dollar cloud-computing industry.” Rosenkranz added, “Only Congress can balance these interests against those of law enforcement.”

 

 

 http://www.therecorder.com/id=1202800467533/SCOTUS-Takes-Up-Microsoft-Case-on-Email-Privacy?et=editorial&bu=The%20Recorder&cn=20171016&src=EMC-Email&pt=Breaking%20News&slreturn=20170917143944

2018 Term commencing in January and ending in December.

 

OFFICERS                                    

PRESIDENT – Denise Bashline

VICE-PRESIDENT – Vincent Yasay

TREASURER – Dalia Liang

SECRETARY – Albert Chen

 

DIRECTORS-AT-LARGE

Arnie  Alter

Felix Hernandez

Leticia Jimenez

Gregory Johnson

Trinh Johnson

Bernice Jaclyn Ledino

Olivia Lombard

Michael Schiraldi

California Courts Newsroom

October 16,2017

 

 

 

Get the latest information on court closures and changes to court calendars.

Last update: Oct 16, 2017

Judicial Council Public Affairs

415-865-7740

 

 

Courts Impacted by Wildfires:

 

Lake County Superior Court: Open

 

Marin County Superior Court: Open

 

Mendocino County Superior Court: Open

 

Napa County Superior Court: Cancellation of Jury Service Oct 16–20
All jurors summoned for Monday, Oct 16 have been excused. If you have questions, please call (707) 299-1150 or (707) 299-1100. 
NOTICE: General Order Emergency Relief Authorized by Chief Justice Tani G. Cantil-Sakauye, Chair of the Judicial Council of California 

 

Solano County Superior Court: The Court expects to resume full operations in Civil, Family and Probate matters on Monday, Oct 16. If fire conditions worsen and the court is unable to return to full operations, an announcement will be posted.

 

Sonoma County Superior Court: Court will reopen on Wednesday, Oct 18 See Release
(The court has been closed since Oct 10) 

 

Emergency Orders in the Judicial Branch:
Authority for Emergency Orders from the Chair of the Judicial Council
Government Code section 68115 authorizes the Chair of the Judicial Council (the Chief Justice) to issue judicial emergency orders, at the request of a superior court’s presiding judge, when war, insurrection, pestilence, or other public calamity, or the danger thereof, or the destruction of or danger to court buildings renders it necessary, or when a large influx of criminal cases resulting from a large number of arrests within a short period of time threatens the orderly operation of the courts.

Most requests for emergency orders are submitted by courts that face a large influx of criminal cases resulting from mass arrests or from courts affected by serious earthquakes, floods, fires, or other extraordinary circumstances that render a court facility partially or fully unusable. In an emergency order, the Chair of the Judicial Council can authorize a court, “notwithstanding any other provision of law,” to do one or more of the following, depending on the circumstances of the emergency:

Hold sessions anywhere within the county;
Transfer civil cases pending in the court to a court in an adjacent county;
Declare a holiday for purposes of computing time under certain statutes;
Extend the duration of a temporary restraining order;
Extend the time period for holding a preliminary examination;
Extend the time period within which a criminal trial must be held.

 

 https://newsroom.courts.ca.gov/news/courts-report-on-impacts-of-wildfires

 

 

Bloomberg Law

October 16, 2017

By Greg Stohr, Bloomberg News

 

 

The U.S. Supreme Court accepted a case that could roil the credit-card business, agreeing Monday to consider reviving government allegations that American Express Co. thwarts competition by prohibiting merchants from steering customers to cards with lower fees.

 

A federal appeals court had thrown out the lawsuit, saying the U.S. government and 11 states failed to prove that the American Express rules harmed cardholders as well as merchants.

 

The Supreme Court’s decision to take the case offers new hope to retailers trying to reduce the $50 billion in fees they pay to credit-card companies each year. It’s a boost for Discover Card Services, which says the rules undercut its ability to compete with American Express.

 

AmEx shares dropped 1.1 percent to $91.88 at 12:25 p.m. in New York, the biggest decline since September and the second- worst performance in the 67-company S&P 500 Financials Index.

 

Discover gained as much as 2 percent, the most since September.

 

The states asked the Supreme Court to intervene, pointing to the “astronomical number” of credit-card transactions each year — 22 billion totaling more than $2 trillion in 2011, according to court documents.

 

“Whether assessed from the perspective of consumers or from that of merchants, this case’s importance cannot be overstated,”
Ohio officials argued for the group.

 

While the U.S. Justice Department also sued American Express, it didn’t join the appeal to the Supreme Court. The Trump administration said that, while the appeals court ruling was wrong, the case didn’t meet the Supreme Court’s usual standards for review.

 

Using Leverage

 

The justices will hear arguments early next year and rule by June.

 

Antitrust enforcers accused American Express of using its leverage over merchants to thwart competition from cards that would charge retailers lower fees. American Express’s agreements with retailers contain an “anti-steering” provision that bars them from doing anything to encourage the use of competing cards, such as offering discounts.

 

The Justice Department and states said the effect was to thwart rivals like Discover, which tried in the 1990s to adopt a low-cost business model, and to ensure that retailers would continue to pay high fees.

 

American Express urged the Supreme Court not to hear the case, saying the appeals court was correct. That ruling “protects a consumer’s right to choose how they pay, prevents our card members from being discriminated against and promotes competition in the payments industry,” Andrew Johnson, a spokesman for AmEx, said in an emailed statement.

 

In court papers, the company said merchant fees help pay for cardholder rewards and that antitrust enforcers failed to account for those benefits.

 

“AmEx uses the vast majority of merchant discount fee revenue to pay valuable benefits to cardholders to incentivize them to obtain and use an AmEx card at that merchant rather than cards issued on other networks,” the company argued.

 

A spokesman for Discover declined to comment.

 

The lawsuits originally targeted Visa Inc. and Mastercard Inc. over their anti-steering policies as well. Those two companies settled the claims in 2010.

 

The case is Ohio v. American Express, 16-1454.

 

–With assistance from Jenny Surane.

 

 

https://biglawbusiness.com/american-express-fee-accusations-get-u-s-high-court-hearing/