Connelly v. United States

Michael and Thomas Connelly were the sole shareholders in Crown C Supply, a small building supply corporation. The brothers entered into an agreement to ensure that Crown would stay in the family if either brother died. Under that agreement, the surviving brother would have the option to purchase the deceased brother’s shares. If he declined, Crown itself would be required to redeem (i.e., purchase) the shares. To ensure that Crown would have enough money to redeem the shares if required, it obtained $3.5 million in life insurance on each brother. After Michael died, Thomas elected not to purchase Michael’s shares, thus triggering Crown’s obligation to do so. Michael’s son and Thomas agreed that the value of Michael’s shares was $3 million, and Crown paid the same amount to Michael’s estate. As the executor of Michael’s estate, Thomas then filed a federal tax return for the estate, which reported the value of Michael’s shares as $3 million. The Internal Revenue Service (IRS) audited the return. During the audit, Thomas obtained a valuation from an outside accounting firm. That firm determined that Crown’s fair market value at Michael’s death was $3.86 million, an amount that excluded the $3 million in insurance proceeds used to redeem Michael’s shares on the theory that their value was offset by the redemption obligation. Because Michael had held a 77.18% ownership interest in Crown, the analyst calculated the value of Michael’s shares as approximately $3 million ($3.86 million x 0.7718). The IRS disagreed. It insisted that Crown’s redemption obligation did not offset the life-insurance proceeds, and accordingly, assessed Crown’s total value as $6.86 million ($3.86 million + $3 million). The IRS then calculated the value of Michael’s shares as $5.3 million ($6.86 million x 0.7718). Based on this higher valuation, the IRS determined that the estate owed an additional $889,914 in taxes. The estate paid the deficiency and Thomas, acting as executor, sued the United States for a refund. The District Court granted summary judgment to the Government. The court held that, to accurately value Michael’s shares, the $3 million in life-insurance proceeds must be counted in Crown’s valuation. The Eighth Circuit affirmed.

Held: A corporation’s contractual obligation to redeem shares is not necessarily a liability that reduces a corporation’s value for purposes of the federal estate tax.

In Cantero v. Bank of America, the Supreme Court reviewed a Second Circuit decision that struck down a New York bank regulation, finding that the State's authority was preempted by federal law. The Court held that Dodd-Frank requires a nuanced analysis -- rather than a bright line test -- on the issue of federal preemption. Justice Kavanaugh, writing for a unanimous Court, reversed and remanded with instructions on the analysis required to determine preemption.

Petitioner National Rifle Association (NRA) sued respondent Maria Vullo—former superintendent of the New York Department of Financial Services (DFS)—alleging that Vullo violated the First Amendment by coercing DFS-regulated parties to punish or suppress the NRA’s gun-promotion advocacy. The Second Circuit held that Vullo’s alleged actions constituted permissible government speech and legitimate law enforcement. The Court granted certiorari to address whether the NRA’s complaint states a First Amendment claim. The NRA’s “well-pleaded factual allegations,” Ashcroft v. Iqbal, 556 U. S. 662, 678–679, are taken as true at this motion-to-dismiss stage. DFS regulates insurance companies and financial services institutions doing business in New York, and has the power to initiate investigations and civil enforcement actions, as well as to refer matters for criminal prosecution. The NRA contracted with DFS-regulated entities— affiliates of Lockton Companies, LLC (Lockton)—to administer insurance policies the NRA offered as a benefit to its members, which Chubb Limited (Chubb) and Lloyd’s of London (Lloyd’s) would then underwrite. In 2017, Vullo began investigating one of these affinity insurance policies—Carry Guard—on a tip passed along from a gun-control advocacy group. The investigation revealed that Carry Guard insured gun owners from intentional criminal acts in violation of New York law, and that the NRA promoted Carry Guard without the required insurance producer license. Lockton and Chubb subsequently suspended Carry Guard. Vullo then expanded her investigation into the NRA’s other affinity insurance programs. On February 27, 2018, Vullo met with senior executives at Lloyd’s, expressed her views in favor of gun control, and told the Lloyd’s executives “that DFS was less interested in pursuing” infractions unrelated to any NRA business “so long as Lloyd’s ceased providing insurance to gun groups, especially the NRA.” App. to Pet. for Cert. at 199– 200, ¶21. Vullo and Lloyd’s struck a deal: Lloyd’s “would instruct its syndicates to cease underwriting firearm-related policies and would scale back its NRA-related business,” and “in exchange, DFS would focus its forthcoming affinity-insurance enforcement action solely on those syndicates which served the NRA.” Id., at 223, ¶69. On April 19, 2018, Vullo issued letters entitled, “Guidance on Risk Management Relating to the NRA and Similar Gun Promotion Organizations.” Id., at 246–251 (Guidance Letters) . . .

Held: The NRA plausibly alleged that respondent violated the First Amendment by coercing regulated entities to terminate their business relationships with the NRA in order to punish or suppress gun-promotion advocacy.

Read by Jeff Barnum.

Thornell v. Jones

Respondent Danny Lee Jones was convicted of the premeditated firstdegree murders of Robert and Tisha Weaver and the attempted premeditated murder of Robert’s grandmother Katherine Gumina. Arizona law at the time required the trial court to “impose a sentence of death” if it found “one or more” statutorily enumerated “aggravating circumstances” and “no mitigating circumstances sufficiently substantial to call for leniency.” Ariz. Rev. Stat. Ann. §13–703(E). The trial court found three aggravating circumstances that applied to both Robert’s and Tisha’s murders: Jones committed multiple homicides, §13– 703(F)(8); he was motivated by “pecuniary” gain, §13–703(F)(5); and the murders were “especially heinous, cruel or depraved,” §13– 703(F)(6). The trial court found an additional aggravating circumstance with respect to Tisha’s murder: she was a young child, §13– 703(F)(9). The trial court also concluded that Jones had established four mitigating circumstances: long-term substance abuse, drug and alcohol impairment at the time of the murders, head trauma, and childhood abuse. 9 Record 2465. The court concluded that these mitigating circumstances were “not sufficiently substantial to outweigh the aggravating circumstances,” so it sentenced Jones to death. Ibid. The Arizona Supreme Court affirmed after “review[ing] the entire record” and “independently weighing all of the aggravating and mitigating evidence presented.” 185 Ariz. 471, 492, 917 P. 2d 200, 221. Jones later sought state postconviction review on the theory that defense counsel was ineffective, but the Arizona courts rejected Jones’s claims. Jones next filed a federal habeas petition in District Court and reasserted his ineffective-assistance-of-counsel claims. The District Court held an evidentiary hearing but ultimately concluded that Jones could not show prejudice because the additional information he presented “ ‘barely. . . alter[ed] the sentencing profile presented to the sentencing judge.’ ” Jones v. Schriro, 450 F. Supp. 2d 1023, 1043 (quoting Strickland v. Washington, 466 U. S. 668, 700). The Ninth Circuit reversed, but this Court vacated that judgment and remanded for the Ninth Circuit to determine whether, in light of Cullen v. Pinholster, 563 U. S. 170, it had been proper to consider the new evidence presented at the federal evidentiary hearing. See Ryan v. Jones, 563 U. S. 932. On reconsideration, the Ninth Circuit again granted habeas relief. The panel held that it was permissible to consider the new evidence and concluded that there was a “ ‘reasonable probability’ ” that “Jones would not have received a death sentence” if that evidence had been presented at sentencing. Jones v. Ryan, 52 F. 4th 1104, 1137. Ten judges dissented from the denial of en banc review. One dissent, joined by eight judges, asserted that the Ninth Circuit panel flouted Strickland by crediting “questionable, weak, and cumulative mitigation evidence” as “enough to overcome . . . weight[y] . . . aggravating circumstances.” Id., at 1155. Held: The Ninth Circuit’s interpretation and application of Strickland was in error.

Reversed and remanded.

ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and THOMAS, GORSUCH, KAVANAUGH, and BARRETT, JJ., joined. SOTOMAYOR, J., filed a dissenting opinion, in which KAGAN, J., joined. JACKSON, J., filed a dissenting opinion.


Read by RJ Dieken

Coinbase v. Suski

The dispute here involves a conflict between two contracts executed by petitioner Coinbase, Inc., operator of a cryptocurrency exchange platform, and respondents, who use Coinbase. The first contract—the Coinbase User Agreement that respondents agreed to when they created their accounts—contains an arbitration provision with a delegation clause. Per this provision, an arbitrator must decide all disputes under the contract, including whether a given disagreement is arbitrable. The second contract—the Official Rules for a promotional sweepstakes respondents entered—contains a forum selection clause providing that California courts “shall have sole jurisdiction of any controversies regarding the [sweepstakes] promotion.” Respondents ultimately filed a class action in the U. S. District Court for the Northern District of California, alleging that the sweepstakes violated various California laws. Coinbase moved to compel arbitration based on the User Agreement’s delegation clause. The District Court determined that the Official Rules’ forum selection clause controlled the parties’ dispute and accordingly denied the motion. The Ninth Circuit affirmed. Held: Where parties have agreed to two contracts—one sending arbitrability disputes to arbitration, and the other either explicitly or implicitly sending arbitrability disputes to the courts—a court must decide which contract governs.

These cases concern the application of the Armed Career Criminal Act to state drug convictions that occurred before recent technical amendments to the federal drug schedules. ACCA imposes a 15-year mandatory minimum sentence on defendants who are convicted for the illegal possession of a firearm and who have a criminal history thought to demonstrate a propensity for violence. As relevant here, a defendant with “three previous convictions” for “a serious drug offense” qualifies for ACCA’s enhanced sentencing. 18 U. S. C. §924(e)(1). For a state crime to qualify as a “serious drug offense,” it must carry a maximum sentence of at least 10 years’ imprisonment, and it must “involv[e] . . . a controlled substance . . . as defined in section 102 of the Controlled Substances Act.” §§924(e)(1), (2)(A)(ii). Under the categorical approach, a state drug offense counts as an ACCA predicate only if the State’s definition of the drug in question “matche[s]” the definition under federal law. Shular v. United States, 589 U. S. 154, 158. The question presented is whether a state crime constitutes a “serious drug offense” if it involved a drug that was on the federal schedules when the defendant possessed or trafficked in it but was later removed. Petitioners Justin Rashaad Brown and Eugene Jackson were separately convicted of the federal crime of possession of a firearm by a convicted felon in violation of §922(g)(1). In both cases, an ACCA enhancement was recommended based on prior state felony drug convictions. And both defendants argued that their prior convictions did not qualify as “serious drug offense[ s].”

Held: A state drug conviction counts as an ACCA predicate if it involved a drug on the federal schedules at the time of that offense. Pp. 4– 19.

ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and THOMAS, SOTOMAYOR, KAVANAUGH, and BARRETT, JJ., joined. JACKSON, J., filed a dissenting opinion, in which KAGAN, J., joined, and in which GORSUCH, J., joined as to Parts I, II, and III.

Alexander v. NAACP

The Constitution entrusts state legislatures with the primary responsibility for drawing congressional districts, and legislative redistricting is an inescapably political enterprise. Claims that a map is unconstitutional because it was drawn to achieve a partisan end are not justiciable in federal court. By contrast, if a legislature gives race a predominant role in redistricting decisions, the resulting map is subjected to strict scrutiny and may be held unconstitutional. These doctrinal lines collide when race and partisan preference are highly correlated. This Court has endorsed two related propositions when navigating this tension. First, a party challenging a map’s constitutionality must disentangle race and politics to show that race was the legislature’s “predominant” motivating factor. Miller v. Johnson, 515 U. S. 900, 916. Second, the Court starts with a presumption that the legislature acted in good faith. To disentangle race from other permissible considerations, plaintiffs may employ some combination of direct and circumstantial evidence. Cooper v. Harris, 581 U. S. 285, 291. Where race and politics are highly correlated, a map that has been gerrymandered to achieve a partisan end can look very similar to a racially gerrymandered map. Thus, in Easley v. Cromartie, 532 U. S. 234, the Court held that the plaintiffs failed to meet the high bar for a racial-gerrymandering claim when they failed to produce an alternative map showing that a rational legislature sincerely driven by its professed partisan goals would have drawn a different map with greater racial balance. Id., at 258. Without an alternative map, the Court also found it difficult for plaintiffs to defeat the starting presumption that the legislature acted in good faith.

Held: 1. The District Court’s finding that race predominated in the design of District I in the Enacted Plan was clearly erroneous.

2. Because the same findings of fact and reasoning that guided the court’s racial-gerrymandering analysis also guided the analysis of the Challengers’ independent vote-dilution claim, that conclusion also cannot stand. The District Court also erred in conflating the two claims. A plaintiff pressing a vote-dilution claim cannot prevail simply by showing that race played a predominant role in the districting process, but rather must show that the State “enacted a particular voting scheme as a purposeful device to minimize or cancel out the voting potential of racial or ethnic minorities.” Miller, 515 U. S., at 911. In other words, the plaintiff must show that the State’s districting plan “has the purpose and effect” of diluting the minority vote. Shaw v. Reno, 509 U. S. 630, 649. In light of these two errors in the District Court’s analysis, a remand is appropriate. Pp. 34–35. Reversed in part and remanded in part. ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and GORSUCH, KAVANAUGH, and BARRETT, JJ., joined, and in which THOMAS, J., joined as to all but Part III–C. THOMAS, J., filed an opinion concurring in part. KAGAN, J., filed a dissenting opinion, in which SOTOMAYOR and JACKSON, JJ., joined.

In Harrow v. Department of Defense, Stuart Harrow appealed an adverse administrative decision after the 60-day deadline -- claiming that he was unaware of the deadline. He filed this appeal to the Federal Circuit. Because the Federal Circuit saw the mandatory "shall" language in the statute (that is, it shall be filed within 60 days), the Court denied his request, reasoning that it lacked jurisdiction. The issue in front of the Supreme Court was whether this provision was jurisdictional. Justice Kagan, writing for a unanimous Court, decided that the provision was mandatory, but not jurisdictional, and the lower court therefore, could exercise its discretion to hear the case. Vacated and remanded.