Three U.S. Supreme Court (“SCOTUS”) decisions on June 17, 2010 — Stop the Beach Renourishment v. Florida, Schwab v. Reilly, and City of Ontario, California v. Quon — demonstrate litigator hubris. In each case, the original plaintiff was greedy. Plaintiffs in Stop the Beach and Quon asserted rights over property that was never theirs to begin with. And in Schwab, the Chapter 7 debtor wrongfully attempted to retain property that she had voluntarily given up when she filed for bankruptcy. Here is a brief look at each court opinion:
Stop the Beach Renourishment v. Florida, (9-0, with Justices Kennedy and Breyer concurring).
The State of Florida restored beachfront along the panhandle by dumping sand. Beachfront landowners sued, claiming the new expanse between their land and the water deprived them of water access – a element critical to the value of their property, and the State had “taken” their waterfront without just compensation. Florida refused to pay them anything, and the Florida Supreme Court ruled in favor of the State. (The Fifth Amendment to the U.S. Constitution says private property shall not be taken for public use without just compensation.)
Was there a taking? SCOTUS said “no”. Essentially, the reasoning was that land underwater belonged to Florida to begin with, and when Florida added sand to make that land emerge from the surface as a wider beach, the land still belonged to Florida. The property line had not moved, and landowners had not been deprived of water access. Hence, there was no deprivation of property and no obligation to pay anything to property owners facing the Gulf of Mexico. The case goes into detail about the differences among accretion, avulsion and reliction; and explains that it makes no difference which branch of government (the legislature or the judiciary) takes land if there is a taking.
Schwab v. Reilly (8-1 with Justice Ginsburg dissenting).
Reilly’s catering business failed, so she filed a Chapter 7 bankruptcy petition to protect herself from creditors. Simplifying the facts, she had $17,000 of kitchen equipment she wanted to keep and listed the equipment as being worth $10,000 in an exemption category where $10,000 was the maximum value that she was allowed to retain. The bankruptcy trustee did not object to this exemption claim within the thirty days available for objections, so Reilly argued all the way to the Supreme Court that the $17,000 of kitchen items was all hers.
Was it too late for the trustee to auction the items, pay Reilly $10,000 and distribute the rest of the proceeds to her creditors? SCOTUS said “no”. The 30-days were only a limitation on disputing the identity of property being exempted, or the right to exempt $10,000 of the value of that property. The exemption category never allowed a debtor to retain any equity above the statutory ceiling. To put it another way, the “property claimed as exempt” language of 11 U.S.C. § 522 does not include value exceeding the allowed exemption. The ceiling applies to the value of an item, not to the description of the item.
Here’s the interesting thing: If Reilly’s attorney had listed the equipment as Fair Market Value (FMV) or 100% of FMV instead of under-stating the value as being $10,000 – and the trustee had not objected within 30 days – then Reilly would have been entitled to keep the equipment. The trustee would have been on actual notice that the debtor intended to exempt the property’s full value!
City of Ontario, California v. Quon (9-0 with JJ. Stevens and Scalia concurring).
Quon was a California cop with an employer-owned cell phone. He repeatedly exceeded the monthly text limit reimbursable by his employer, the City of Ontario. The City wanted to verify whether the text messages were job-related. If so, they might raise the number reimbursed. They looked at two months of messages, and redacted the personal ones. In the redaction process, they noticed few messages had anything to do with work (52 / 456 in August 2002) and some were sexual in nature. Quon felt his privacy had been invaded, despite multiple prior warnings that the City could monitor and log Internet, Email and text messages utilizing City resources – and that he had no right of privacy. Hello, Officer Quon. What is it about these explicit, unambiguous warnings that you did not understand?
SCOTUS said Quon was warned, and the examination of his text messages was reasonable in scope and purpose. The Court made clear that the decision only applies to government employees, and that SCOTUS is proceeding slowly in an area of technological innovation where features and societal expectations of privacy are rapidly evolving.