SUPREME COURT NOTEBOOK

Court won't hear appeal from ex-Qwest CEO

WASHINGTON (AP) - The Supreme Court won't hear an appeal from former Qwest Communications International Inc. CEO Joseph Nacchio seeking an $18 million tax refund on money he gained from illegal stock sales.

The justices on Monday left in place a lower court ruling that said the money was not tax deductible.

Nacchio was convicted in 2007 of selling $52 million in stock of Denver-based Qwest based on inside information. He was ordered to forfeit $44 million and to pay a $19 million fine. He also was sentenced to five years and 10 months in prison.

Nacchio claimed the $44 million he forfeited was deductible as a business expense or loss and that he should get a refund. A federal judge agreed, but a federal appeals court in Washington, D.C., overturned that ruling.


Gorsuch has unanimous first opinion for court

By Mark Sherman
Associated Press

WASHINGTON (AP) - A measure of melodic phrasing. A rigorous reading of the law at issue. A nod to the proper role of the courts.

Justice Neil Gorsuch's first Supreme Court opinion Monday stayed true to what Gorsuch promised in his nomination hearing and to the reputation for good writing he developed as an appellate judge.

Gorsuch was the author of a unanimous decision in favor of a company involved in a debt collection dispute. The court ruled that Santander Consumer USA does not fall under a federal law aimed at unscrupulous debt collectors. The company purchased defaulted car loans and sought to collect the money owed.

"Disruptive dinnertime calls, downright deceit and more besides drew Congress' eye to the debt collection industry," Gorsuch began his opinion in a case that was argued less than two months earlier.

But he quickly framed the issue not about whether the company's practices are prohibited, but instead whether it can be called a "debt collector" that is covered by the law.

"Everyone agrees that the term embraces the repo man - someone hired by a creditor to collect an outstanding debt. But what if you purchase a debt and then try to collect it for yourself - does that make you a 'debt collector' too?" Gorsuch wrote.

It does not, he concluded in the balance of his 11-page opinion that included a brief grammar lesson on participles, past and present. Santander does not qualify as a debt collector because it purchased the loans in question and was not trying to collect on someone else's behalf, Gorsuch wrote.

In the end, he said, Congress can change the Fair Debt Collection Practices Act, to cover anyone who tries to collect a debt.

Courts "apply, not amend, the work of the people's representatives," Gorsuch wrote.


Justices side with Microsoft in Xbox 360 class action

By Sam Hananel
Associated Press

WASHINGTON (AP) - The Supreme Court is giving Microsoft Corp. another chance to stop a class action lawsuit filed by owners of the Xbox 360 video game system who claim the console has a design defect that scratches game discs.

The unanimous ruling on Monday said game owners could not use a procedural tactic to appeal a lower court decision denying them class action status. Such appeals typically aren't allowed until a lower court makes a final ruling on the merits of the case.

Business groups, including the U.S. Chamber of Commerce, had urged the court to side with Microsoft. They said a ruling for the Xbox 360 owners would have made defending against class action lawsuits more expensive and pushed businesses to settle claims.

Microsoft has sold millions of Xbox 360 consoles since 2005 and says only 0.4 percent of owners report disk scratching. The company says damage in many cases was caused by consumer misuse and that that game contains warnings not to move the console while a disk is inside.

When a handful of Xbox 360 owners sued, a federal judge initially said the lawsuit couldn't proceed as a class action. An appeals court declined to consider an appeal of that decision. The Xbox 360 owners then asked the judge to dismiss their case, a procedural move designed to get the appeals court to weigh in. Microsoft said that shouldn't be allowed to happen.

Justice Ruth Bader Ginsburg said for the court that voluntary dismissal does not count as a final decision that can be appealed. She said the tactic "invites protracted litigation and piecemeal appeals."

Ginsburg's majority opinion was joined by Justices Anthony Kennedy, Stephen Breyer, Sonia Sotomayor and Elena Kagan.

Justice Clarence Thomas agreed with the outcome, but wrote separately to offer different reasons. He said the game owners no longer had a case at all against Microsoft once they agreed to dismiss their claims. Thomas was joined by Chief Justice John Roberts and Justice Samuel Alito.

Justice Neil Gorsuch did not participate in the case, which was argued before he was confirmed to the court.


Justices strike down gender differences in citizenship law

By Sam Hananel
Associated Press

WASHINGTON (AP) - A unanimous Supreme Court on Monday struck down part of an unusual immigration law that treats fathers and mothers differently when it comes to conferring citizenship on children born outside the U.S.

Justice Ruth Bader Ginsburg called the 1940s-era law "stunningly anachronistic" in the way it stereotypes men and woman. Her opinion cites several landmark discrimination cases that she successfully argued before the high court for the principle that having one rule for mothers and another for fathers is unconstitutional.

But in a twist, the ruling failed to provide any relief to Luis Ramon Morales-Santana, the New York resident who successfully challenged the law. The court said tougher - not easier - standards for attaining citizenship should apply to everyone.

The ruling affects a law that applies to children born abroad to one parent who is an American and one who isn't. The law made it harder for children of unwed American fathers to gain citizenship themselves.

Under the law, a child born outside the United States to an unwed citizen father and a noncitizen mother can become a U.S. citizen at birth if the father lived in the U.S. for five years, with at least two of those years coming after the age of 14. But an American mother must only have lived in the U.S. continuously for one year to meet the requirement.

A challenge came from Morales-Santana, who was born in the Dominican Republic to an unwed U.S. citizen father and a Dominican mother and moved to the U.S. when he was 13. He asserted he was a U.S. citizen after authorities sought to deport him following convictions for robbery and attempted murder. But his father did not satisfy the five-year requirement.

A federal appeals court struck down the law and said the shorter one-year period must apply to both unwed fathers and mothers. The Obama administration appealed.

Ginsburg said the law was based on flawed and outdated assumptions about men and women that pervaded the country's citizenship laws: "In marriage, husband is dominant, wife subordinate; unwed mother is the natural and sole guardian of a nonmarital child."

For close to a half century, she said, the court "has viewed with suspicion laws that rely on overbroad generalizations about the different talents, capacities or preferences of males and females." Ginsburg said the gender line Congress drew "is incompatible with the Constitution's guarantee of the equal protection of the laws to all persons."

The government had urged the justices to uphold the law's gender-based differences. The Justice Department said Congress wanted to make sure there is a strong connection between a child born overseas and the United States before granting citizenship. The law also considered the practices of other countries.

But while the court struck down the gender differences in the law, Ginsburg said the longer five-year period should continue apply to both mothers and fathers until Congress decides on a different length of time. That means Morales-Santana is still unable to win his citizenship case.

"Going forward, Congress may address the issue and settle on a uniform prescription that neither favors nor disadvantages any person on the basis of gender," Ginsburg said.

Ginsburg's opinion was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Stephen Breyer, Sonia Sotomayor and Elena Kagan.

Justice Clarence Thomas agreed with the outcome, but wrote separately to say that it was not necessary to rule on the constitutionality of the law since Morales-Santana could not get any relief. He was joined by Justice Samuel Alito.

Justice Neil Gorsuch did not take part in the case, which was argued before his confirmation to the court.


Ruling speeds up generic biotech drug approval

By Sam Hananel
Associated Press

WASHINGTON (AP) - A unanimous Supreme Court is speeding up the time for generic biotech drugs to become available to the public in a ruling that means a loss of billions in sales to the makers of original versions.

The justices ruled Monday in favor of generic drug maker Sandoz in its dispute with rival Amgen over a near-copy of Amgen's cancer drug Neupogen.

The case involves biologics - drugs made from living cells instead of chemicals. The drugs have led to major advances in treating diseases, but come at steep prices.

A 2010 law allows cheaper generic versions known as biosimilars to be produced after a 12-year exclusive run for the original.

Writing for the court, Justice Clarence Thomas said the law does not require companies making biosimilars to wait an extra six months after gaining Food and Drug Administration approval before selling the drugs.

The extra time can add billions of dollars in additional sales to the original drug makers before biosimilars enter the market.

The dispute involves the drug Zarxio, a generic that Sandoz developed to compete with Neupogen that sells for about 15 percent less than the original product. The drugs help boost red blood cells in cancer patients.

California-based Amgen filed a patent infringement lawsuit claiming that Sandoz violated the 2010 Biologics Price Competition and Innovation Act. That law requires biosimilar makers to give a six-month notice of sales to rivals.

A federal appeals court sided with Amgen in 2015, ruling that the notice can't take place until after biosimilar makers gain approval from federal regulators.

Sandoz, a unit of Swiss drug giant Novartis, argued that the appeals court had it wrong and was unfairly giving an additional six months of exclusive sales to the original drugmaker.

Published: Wed, Jun 14, 2017

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