Unless something special turns up, the Supreme Court tomorrow opens the last round of scheduled hearings for its current term. A two-week sitting begins Monday with cases on deportation of individuals who commit crimes and on the rights of investors to reliable information in the financial markets. (If the Court agrees soon to step into the nationwide controversy over access to the abortion pill, a special hearing might be held.)
The Court will broadcast “live” the audio (no video) of the hearings on its homepage, supremecourt.gov To listen, click on “Live Audio” and follow the prompt when the courtroom scene appears lower on the page. The audio also will be available, under the title of each case, on C-Span TV at this link: cspan.org/supremecourt
First hearing Monday: Pugin v. Garland, U.S. Attorney General, combined with Garland v. Cordero-Garcia The hearing is scheduled for one hour; it begins at 10 a.m.
Background: The highly complex set of federal laws that control the entry into the U.S. of foreign citizens, or their right to remain once in the country, is a separate branch of the work of Congress. But the meaning of those laws can be influenced as courts compare them to other federal or state laws, such as those that seek to punish crimes.
That is what is happening in these two cases. Although they directly involve moves to deport foreign individuals, they may have broader impact because they involve a rather ordinary crime that prosecutors at all levels frequently charge – “obstruction of justice.” What does that phrase mean? The answer could have a spillover impact on, for example, the federal law against witness-tampering.
The Constitution’s Sixth Amendment guarantees that anyone accused of a crime – including a non-citizen living here – has a right to be “informed of the nature and cause of the accusation.”
At the core of these two cases is a federal immigration law, passed in 1996, that requires that a non-citizen living legally in the U.S. be deported if convicted of a federal or state crime “relating to obstruction of justice.” Such a conviction also takes away that person’s option to ask for permission to stay in the country or to seek asylum.
Facts of these cases: In both, the individual was convicted of a state crime and now faces deportation unless the Supreme Court narrows the definition of the immigration law on what “obstruction of justice” means. Foreign nationals can be deported for conviction of an “aggravated felony,” and “obstruction of justice” is treated as one.
In a Virginia case, Jean Francois Pugin got into trouble after being in the country for years. A native of Mauritius, he entered the U.S. legally in 1985, and qualified for permanent residence. He lived in a suburb near Washington, D.C. More than a quarter-century later, in 2014, he was accused of aiding another individual in a serious crime (a felony).
The filings in the Supreme Court do not describe what the other person’s crime was, except that it did not involve murder. Pugin pleaded guilty, and was given a one-year sentence, with nine months of that suspended.
In a California case, Fernando Cordero-Garcia entered the U.S. from Mexico in 1965 and qualified as a legal permanent resident. In 1990, he began working as a psychologist for Santa Barbara County, treating individuals who were moving through the criminal court system.
In 2009, he was convicted of several crimes under state law, based on claims that he repeatedly sexually abused patients he was treating. Among the guilty verdicts were two counts of trying to persuade two of his victims not to report his assaults.
In both of Monday’s cases, immigration officials moved to deport the two men, contending that their crimes qualified as attempts to “obstruct justice” under immigration law. Both men challenged those claims, arguing that neither in Virginia nor California does an obstruction of justice crime require a direct link to a trial or other legal proceeding going on at the time. “Justice,” they argued, meant something formal, occurring after authorities learn of a crime and act on it.
Lawyers for the two men asserted that, as long ago as 1893, the Supreme Court had ruled that to win a conviction under federal law for obstructing justice, there had to be direct proof that the crime was linked directly to a pending or ongoing proceeding.
Pugin lost on that argument in a federal appeals court, but Cordero-Garcia won with the same plea in a separate appeals court. Pugin appealed to the Supreme Court in his case, U.S. Attorney General appealed the Cordero-Garcia case to the Court, and the Justices agreed to rule on the two cases together, to clear up the conflict among lower courts.
The question before the Court: Under immigration law, may an individual be deported after being convicted of “obstructing justice” if the crime did not occur while a formal legal proceeding was in progress?
Significance: Deportation is a drastic action of the government, especially for a foreign national who has long established ties in the U.S. And deportation based on a criminal conviction can be especially punitive, because it takes away any chance that the individual could ever qualify to remain or to seek asylum.
Lawyers for foreign nationals who get into trouble with the law regularly resist attempts by immigration officials to expand the scope of laws that could lead to their client being sent back to a homeland years after their arrival.
But the most important facet of this case is how the Justices, in the final ruling, spell out the necessary elements of the crime of obstructing justice. If prosecutors do not have to prove that there was an ongoing trial or other proceeding, they can pursue an obstruction charge for a wide variety of criminal conduct that interferes in any way with police work, no matter how remote from an actual trial or formal hearing in court.
Second hearing tomorrow: Slack Technologies LLC v. Pirani This hearing will begin as soon as the deportation cases are concluded; it is scheduled for one hour.
Background: For 90 years, a federal law passed in the aftermath of the stock market crash of October 1929 has protected people with money to invest from being duped by misleading promotion and sale of a company’s stock.
As President Franklin Roosevelt and his advisers sought to ease the Great Depression, one of the economic reforms they persuaded Congress to pass was the Securities Exchange Act of 1933. A basic theory behind that law is that required disclosure of a publicly owned company’s business condition was necessary to give investors – especially small investors – vital data.
At issue in this case are sections of the 1933 law that give investors a right to sue if the disclosure papers misrepresent or fail to disclose information that an investor would want.
For more than a half-century, federal appeals courts all agreed that an investor claiming that an offering document (technically, a “registration statement”) was misleading could sue only if they had bought stock covered by that. In this case, an appeals court broke ranks with that line of decisions, mainly because this incident involves a novel form of stock offering by a company as it “goes public” – begins selling its stock to the public.
Facts of this case: Slack Technologies, LLC, is a San Francisco-based firm that develops computer software for improving communications within a workplace, what it calls “business collaboration.” In 2019, taking advantage of a rule adopted in 2018 by the New York Stock Exchange, Slack offered what is called a “direct listing.”
Unlike the more common situation when a company first enters a market to sell shares to raise money for its business (an “initial public offering”), a direct listing is offered by the company itself rather than through an underwriter who manages the sale. A direct offering raises no money for the company because the shares being sold are not new shares, but existing shares owned by officers, directors or closely allied private investors.
While a company seeking to go public must prepare a registration statement with required disclosures about its current business and its outlook, it only needs to issue such a statement for shares being sold for the first time to investors outside of the company.
In this case, Slack decided to go public on the New York exchange on June 20, 2019. It offered a total of 283 million Slack shares that could be sold by the company or by existing shareholders within the company or by a close ally. Slack’s registration statement covered 118 million of those shares. It offered another 165 million internal or restricted shares that did not need a registration statement under government rules. Those other shares had been acquired internally and privately – say, by stock options for officers or directors, or private sales to early investors (here, three venture capital firms).
An individual California investor, Fiyyaz Pirani, bought 30,000 shares at $38.50 a share on the first day and another 220,000 later in the year. During that time, Slack’s computer business faltered with interruptions of its services and fierce competition by rival Microsoft Corporation, and its stock price fell below $25.
Pirani sued Slack, some of its officers, directors and the venture capital shareholders, for himself and also on behalf of other investors who had bought the stock. The lawsuit claimed that the registration statement was misleading in failing to report Slack’s business problems, and in particular the company’s generous guarantees to customers about the reliability of its systems.
The company and those sued with it challenged Pirani’s right to sue, arguing that he could not show that the specific shares he bought were covered by the registration statement that he challenged. The 1933 law provides a right to sue based on purchases covered by such a disclosure form.
The federal courts ruled that the lawsuit could go forward, on the theory that whatever shares those investors had bought were of the same nature as those that were covered by the registration statement. Slack and the shareholders appealed to the Supreme Court. In the case now before the Court, it will not decide whether the investors will win, but only whether they had a right to sue.
The question before the Court: If an investor bought stock on a public market but could not prove that the particular shares were covered by a defective registration statement, may the investor sue anyway?
Significance: Despite the complexity of the stock trading rules and disclosure rules at issue, this case comes down to a simple proposition: when does federal law protect investors from being misled about a sale of stock when a new form of offering is created?
Investment advisers from time to time devise alternative ways to set up stock sales, and those must fit regulations written by the federal Securities and Exchange Commission.
A vital part of enforcing the disclosure rules under the 1933 securities law is the opportunity for investors, individually or grouped together in a class, to go to court when they believe the rules have been broken. This dispute will affect that opportunity directly. It also is a test of how investors will be expected to adapt to new forms of public sale of company shares.
From a company’s point of view, the case is a significant test of whether existing securities laws will be enforced strictly, or given new meanings in court as stock trading patterns change.
On Tuesday, the Court will return to a frequent topic, religious freedom, in the first hearing. A second hearing will be on defining when a person knows that they have broken a law.