Sveen et al. v. Melin

Certiorari To The United States Court Of Appeals For The Eighth Circuit

No. 16-1432. Argued March 19, 2018--Decided June 11, 2018

The legal system has long used default rules to resolve estate litigation in a way that conforms to decedents’ presumed intent. In 2002, Minnesota enacted a statute establishing one such default rule. The statute provides that “the dissolution or annulment of a marriage revokes any revocable . . . beneficiary designation . . . made by an individual to the individual’s former spouse.” Minn. Stat. 524.2–804, subd. 1. Under the statute, if one spouse has made the other the beneficiary of a life insurance policy or similar asset, their divorce automatically revokes that designation so that the insurance proceeds will instead go to the contingent beneficiary or the policyholder’s estate upon his death. The law does this on the theory that the policyholder would want that result. But if he does not, he may rename the ex-spouse as beneficiary.

Mark Sveen and respondent Kaye Melin were married in 1997. The next year, Sveen purchased a life insurance policy, naming Melin as the primary beneficiary and designating his two children from a prior marriage, petitioners Ashley and Antone Sveen, as contingent beneficiaries. The Sveen-Melin marriage ended in 2007, but the divorce decree made no mention of the insurance policy and Sveen took no action to revise his beneficiary designations. After Sveen passed away in 2011, Melin and the Sveen children made competing claims to the insurance proceeds. The Sveens argued that under Minnesota’s revocation-on-divorce law, their father’s divorce canceled Melin’s beneficiary designation, leaving them as the rightful recipients. Melin claimed that because the law did not exist when the policy was purchased and she was named as the primary beneficiary, applying the later-enacted law to the policy violates the Constitution’s Contracts Clause. The District Court awarded the insurance money to the Sveens, but the Eighth Circuit reversed, holding that the retroactive application of Minnesota’s law violates the Contracts Clause.

Held: The retroactive application of Minnesota’s statute does not violate the Contracts Clause. That Clause restricts the power of States to disrupt contractual arrangements, but it does not prohibit all laws affecting pre-existing contracts, see El Paso v. Simmons, 379 U. S. 497, 506–507. The two-step test for determining when such a law crosses the constitutional line first asks whether the state law has “operated as a substantial impairment of a contractual relationship.” Allied Structural Steel Co. v. Spannaus, 438 U. S. 234, 244. In answering that question, the Court has considered the extent to which the law undermines the contractual bargain, interferes with a party’s reasonable expectations, and prevents the party from safeguarding or reinstating his rights. See id., at 246; El Paso, 379 U. S., at 514–515; Texaco, Inc. v. Short, 454 U. S. 516, 531. If such factors show a substantial impairment, the inquiry turns to whether the state law is drawn in an “appropriate” and “reasonable” way to advance “a significant and legitimate public purpose.” Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U. S. 400, 411–412.

The Court stops after the first step here, because three aspects of Minnesota’s law, taken together, show that the law does not substantially impair pre-existing contractual arrangements. First, the law is designed to reflect a policyholder’s intent—and so to support, rather than impair, the contractual scheme. It applies a prevalent legislative presumption that a divorcee would not want his former partner to benefit from his life insurance policy and other will substitutes. Thus the law often honors, not undermines, the intent of the only contracting party to care about the beneficiary term. Second, the law is unlikely to disturb any policyholder’s expectations at the time of contracting, because an insured cannot reasonably rely on a beneficiary designation staying in place after a divorce. Divorce courts have wide discretion to divide property upon dissolution of a marriage, including by revoking spousal beneficiary designations in life insurance policies or by mandating that such designations remain. Because a life insurance purchaser cannot know what will happen to that policy in the event of a divorce, his reliance interests are next to nil. And that fact cuts against providing protection under the Contracts Clause. Last, the law supplies a mere default rule, which the policyholder can undo in a moment. If the law’s presumption about what an insured wants after divorcing is wrong, the insured may overthrow it simply by sending a change-of-beneficiary form to his insurer.

This Court has long held that laws imposing such minimal paperwork burdens do not violate the Contracts Clause. It has repeatedly sustained so-called recording statutes, which extinguish contractual interests unless timely recorded at government offices. See Jackson v. Lamphire, 3 Pet. 280; Vance v. Vance, 108 U. S. 514; Texaco, Inc. v. Short, 454 U. S. 516. The Court has also upheld laws mandating other kinds of notifications or filings against Contracts Clause attack. See Curtis v. Whitney, 13 Wall. 68; Gilfillan v. Union Canal Co. of Pa., 109 U. S. 401; Conley v. Barton, 260 U. S. 677. The Minnesota law places no greater obligation on a contracting party than these laws—while imposing a lesser penalty for noncompliance. Filing a change-of-beneficiary form is as easy as satisfying the paperwork requirements that this Court’s prior cases approved. And if an insured wants his ex-spouse to stay as beneficiary but does not send in his form, the result is only that the insurance money is redirected to his contingent beneficiaries, not that his contractual rights are extinguished. Pp. 6–14.

853 F. 3d 410, reversed and remanded.

Kagan, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Thomas, Ginsburg, Breyer, Alito, and Sotomayor, JJ., joined. Gorsuch, J., filed a dissenting opinion.


Husted, Ohio Secretary of State v. A. Philip Randolph Institute et al.

Certiorari To The United States Court Of Appeals For The Sixth Circuit

No. 16-980. Argued January 10, 2018--Decided June 11, 2018

The National Voter Registration Act (NVRA) addresses the removal of ineligible voters from state voting rolls, 52 U. S. C. 20501(b), including those who are ineligible “by reason of” a change in residence, 20507(a)(4). The Act prescribes requirements that a State must meet in order to remove a name on change-of-residence grounds, 20507(b), (c), (d). The most relevant of these are found in subsection (d), which provides that a State may not remove a name on change-of-residence grounds unless the registrant either (A) confirms in writing that he or she has moved or (B) fails to return a preaddressed, postage prepaid “return card” containing statutorily prescribed content and then fails to vote in any election during the period covering the next two general federal elections.

In addition to these specific change-of-residence requirements, the NVRA also contains a general “Failure-to-Vote Clause,” 20507(b)(2), consisting of two parts. It first provides that a state removal program “shall not result in the removal of the name of any person . . . by reason of the person’s failure to vote.” Second, as added by the Help America Vote Act of 2002 (HAVA), it specifies that “nothing in [this prohibition] may be construed to prohibit a State from using the procedures” described above—sending a return card and removing registrants who fail to return the card and fail to vote for the requisite time. Since one of the requirements for removal under subsection (d) is the failure to vote, the explanation added by HAVA makes clear that the Failure-to-Vote Clause’s prohibition on removal “by reason of the person’s failure to vote” does not categorically preclude using nonvoting as part of a test for removal. Another provision makes this point even more clearly by providing that “no registrant may be removed solely by reason of a failure to vote.” 21083(a)(4)(A) (emphasis added).

Respondents contend that Ohio’s process for removing voters on change-of-residence grounds violates this federal law. The Ohio process at issue relies on the failure to vote for two years as a rough way of identifying voters who may have moved. It sends these nonvoters a preaddressed, postage prepaid return card, asking them to verify that they still reside at the same address. Voters who do not return the card and fail to vote in any election for four more years are presumed to have moved and are removed from the rolls.

Held:The process that Ohio uses to remove voters on change-of-residence grounds does not violate the Failure-to-Vote Clause or any other part of the NVRA. Pp. 8–21.

(a) Ohio’s law does not violate the Failure-to-Vote Clause. Pp. 8–16.

(1) Ohio’s removal process follows subsection (d) to the letter: It does not remove a registrant on change-of-residence grounds unless the registrant is sent and fails to mail back a return card and then fails to vote for an additional four years. See 20507(d)(1)(B). Pp. 8–9.

(2) Nonetheless, respondents argue that Ohio’s process violates subsection (b)’s Failure-to-Vote Clause by using a person’s failure to vote twice over: once as the trigger for sending return cards and again as one of the two requirements for removal. But Congress could not have meant for the Failure-to-Vote Clause to cannibalize subsection (d) in that way. Instead, the Failure-to-Vote Clause, both as originally enacted in the NVRA and as amended by HAVA, simply forbids the use of nonvoting as the sole criterion for removing a registrant, and Ohio does not use it that way. The phrase “by reason of” in the Failure-to-Vote Clause denotes some form of causation, see Gross v. FBL Financial Services, Inc., 557 U. S. 167, 176, and in context sole causation is the only type of causation that harmonizes the Failure-to-Vote Clause and subsection (d). Any other reading would mean that a State that follows subsection (d) nevertheless can violate the Failure-to-Vote Clause. When Congress enacted HAVA, it made this point explicit by adding to the Failure-to-Vote Clause an explanation of how the clause is to be read, i.e., in a way that does not contradict subsection (d). Pp. 9–12.

(3) Respondents’ and the dissent’s alternative reading is inconsistent with both the text of the Failure-to-Vote Clause and the clarification of its meaning in 21083(a)(4). Among other things, their reading would make HAVA’s new language worse than redundant, since no sensible person would read the Failure-to-Vote Clause as prohibiting what subsections (c) and (d) expressly allow. Nor does the Court’s interpretation render the Failure-to-Vote Clause superfluous; the clause retains meaning because it prohibits States from using nonvoting both as the ground for removal and as the sole evidence for another ground for removal (e.g., as the sole evidence that someone has died). Pp. 12–15.

(4) Respondents’ additional argument—that so many registered voters discard return cards upon receipt that the failure to send cards back is worthless as evidence that an addressee has moved—is based on a dubious empirical conclusion that conflicts with the congressional judgment found in subsection (d). Congress clearly did not think that the failure to send back a return card was of no evidentiary value, having made that conduct one of the two requirements for removal under subsection (d). Pp. 15–16.

(b) Nor has Ohio violated other NVRA provisions. Pp. 16–21.

(1) Ohio removes the registrants at issue on a permissible ground: change of residence. The failure to return a notice and the failure to vote simply serve as evidence that a registrant has moved, not as the ground itself for removal. Pp. 16–17.

(2) The NVRA contains no “reliable indicator” prerequisite to sending notices, requiring States to have good information that someone has moved before sending them a return card. So long as the trigger for sending such notices is “uniform, nondiscriminatory, and in compliance with the Voting Rights Act,” 20507(b)(1), States may use whatever trigger they think best, including the failure to vote. Pp. 17–19.

(3) Ohio has not violated the NVRA’s “reasonable effort” provision, 20507(a)(4). Even assuming that this provision authorizes federal courts to go beyond the restrictions set out in subsections (b), (c), and (d) and strike down a state law that does not meet some standard of “reasonableness,” Ohio’s process cannot be unreasonable because it uses the change-of-residence evidence that Congress said it could: the failure to send back a notice coupled with the failure to vote for the requisite period. Ohio’s process is accordingly lawful. Pp. 19–21.

838 F. 3d 699, reversed.

Alito, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Thomas, and Gorsuch, JJ., joined. Thomas, J., filed a concurring opinion. Breyer, J., filed a dissenting opinion, in which Ginsburg, Sotomayor, and Kagan, JJ., joined. Sotomayor, J., filed a dissenting opinion.


China Agritech, Inc. v. Resh et al.

Certiorari To The United States Court Of Appeals For The Ninth Circuit

No. 17-432. Argued March 26, 2018--Decided June 11, 2018

American Pipe & Constr. Co. v. Utah, 414 U. S. 538, established that the timely filing of a class action tolls the applicable statute of limitations for all persons encompassed by the class complaint and that members of a class that fails to gain certification can timely intervene as individual plaintiffs in the still-pending action, shorn of its class character. American Pipe’s tolling rule also applies to putative class members who, after denial of class certification, “prefer to bring an individual suit rather than intervene.” Crown, Cork & Seal Co. v. Parker, 462 U. S. 345, 350. The question presented in this case is whether American Pipe tolling applies not only to individual claims, but to successive class actions as well.

This suit is the third class action brought on behalf of purchasers of petitioner China Agritech’s common stock, alleging materially identical violations of the Securities Exchange Act of 1934. The Act has both a two-year statute of limitations and a five-year statute of repose, 28 U. S. C. 1658(b). Here, the accrual date for purposes of the Act’s limitation period is February 3, 2011, and for the repose period, November 12, 2009. Theodore Dean, a China Agritech shareholder, filed the first class-action complaint on February 11, 2011. As required by the Private Securities Litigation Reform Act of 1995 (PSLRA), his counsel posted notice of the action and invited any member of the purported class to move to serve as lead plaintiff. Six shareholders sought lead-plaintiff status. On May 3, 2012, the District Court denied class certification; the action settled in September 2012, and the suit was dismissed. On October 4, Dean’s counsel filed a new complaint (Smyth), still timely, with a new set of plaintiffs. Eight shareholders sought lead-plaintiff appointment in response to the PSLRA notice, but the District Court again denied class certification. Thereafter, the Smyth plaintiffs settled their individual claims and dismissed their suit.

Respondent Michael Resh, who did not seek lead-plaintiff status in the earlier actions, filed the present class action in 2014, a year and a half after the statute of limitations expired. The other respondents moved to intervene in the suit commenced by Resh, seeking lead-plaintiff status. The District Court dismissed the class complaint as untimely, holding that the Dean and Smyth actions did not toll the time to initiate class claims. The Ninth Circuit reversed, holding that the reasoning of American Pipe extends to successive class claims.

Held: Upon denial of class certification, a putative class member may not, in lieu of promptly joining an existing suit or promptly filing an individual action, commence a class action anew beyond the time allowed by the applicable statute of limitations. Pp. 5–15.

(a) American Pipe and Crown, Cork addressed only putative class members who wish to sue individually after a class-certification denial. The “efficiency and economy of litigation” that support tolling of individual claims, American Pipe, 414 U. S., at 553, do not support maintenance of untimely successive class actions such as the one brought by Resh. Economy of litigation favors delaying individual claims until after a class-certification denial. With class claims, on the other hand, efficiency favors early assertion of competing class representative claims. If class treatment is appropriate, and all would-be representatives have come forward, the district court can select the best plaintiff with knowledge of the full array of potential class representatives and class counsel. And if the class mechanism is not a viable option, the decision denying certification will be made at the outset of the case, litigated once for all would-be class representatives.

Federal Rule of Procedure 23 evinces a preference for preclusion of untimely successive class actions by instructing that class certification should be resolved early on. The PSLRA, which governs this litigation, evinces a similar preference, this time embodied in legislation providing for early notice and lead-plaintiff procedures. There is little reason to allow plaintiffs who passed up opportunities to participate in the first (and second) round of class litigation to enter the fray several years after class proceedings first commenced.

Class representatives who commence suit after expiration of the limitation period are unlikely to qualify as diligent in asserting claims and pursuing relief. See, e.g., McQuiggin v. Perkins, 569 U. S. 383, 391. And respondents’ proposed reading would allow extension of the statute of limitations time and again; as each class is denied certification, a new named plaintiff could file a class complaint that resuscitates the litigation. Endless tolling of a statute of limitations is not a result envisioned by American Pipe. Pp. 5–11.

(b) If Resh’s suit meets the requirements of Rule 23(a) and (b), respondents assert, the suit should be permitted to proceed as a class action in keeping with Shady Grove Orthopedic Associates, P. A. v. Allstate Ins. Co., 559 U. S. 393. Shady Grove, however, addressed a case in which a Rule 23 class action could have been maintained absent a state law proscribing class actions, while Resh’s class action would be untimely unless saved by American Pipe’s tolling exception. Rule 23 itself does not address timeliness of claims or tolling and nothing in the Rule calls for the revival of class claims if individual claims are tolled.

The clarification of American Pipe’s reach does not run afoul of the Rules Enabling Act by abridging or modifying a substantive right. Plaintiffs have no substantive right to bring claims outside the statute of limitations. Nor is the clarification likely to cause a substantial increase in the number of protective class-action filings. Several Courts of Appeals have already declined to read American Pipe to permit a successive class action filed outside the limitations period, and there is no showing that these Circuits have experienced a disproportionate number of duplicative, protective class-action filings. Multiple filings, moreover, could aid a district court in determining, early on, whether class treatment is warranted, and if so, who would be the best representative. The Federal Rules provide a range of mechanisms to aid district courts in overseeing complex litigation, but they offer no reason to permit plaintiffs to exhume failed class actions by filing new, untimely class claims. Pp. 11–15.

857 F. 3d 994, reversed and remanded.

Ginsburg, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Thomas, Breyer, Alito, Kagan, and Gorsuch, JJ., joined. Sotomayor, J., filed an opinion concurring in the judgment.