Job Bias Challenge Opens New Term
The U.S. Court of Appeals for the Seventh Circuit held that the Section 1983 claims were not precluded—a ruling out of step with at least four other circuits.
Scodro barely had time to address the main question because nearly half his argument time he spent dealing with whether the appellate court had jurisdiction to rule on that issue when the case came to it as an interlocutory appeal about qualified immunity. Another issue that troubled the justices was the district court’s ruling—affirmed on appeal—that former Illinois senior assistant attorney general Harvey Levin was not covered by the Age Discrimination in Employment Act because he was an appointee in a policymaking position.
The Levin age discrimination case was one of two arguments Monday morning. The second was in three consolidated cases that could determine whether third parties such as law firms can be held liable in securities fraud class actions. The cases, led by Chadbourne & Parke v. Troice, stem from the Allen Stanford $7 billion Ponzi scheme.
Victims sued Chadbourne as well as Proskauer Rose and the insurance company Willis Holdings under state law. The defendants, represented before the high court by Paul Clement of Bancroft, argue that the lawsuits are precluded by the Securities Litigation Uniform Standards Act, which prohibits state class actions for fraud committed "in connection with the purchase or sale of a covered security." The plaintiffs, for their part, argue that the suits should go forward because they involved certificates of deposit that victims bought from Stanford’s bank—not covered securities.
As a result, the entire hour of argument was taken up with questions aimed at deciding whether the Stanford scheme involved such covered securities. No mention was made of third-party liability.
"This is a bank that doesn’t issue securities," said Tom Goldstein of Goldstein & Russell, who argued for the class action plaintiffs. Clement defined the term more broadly, prompting justices to ask whether transactions ranging from home loans to prenuptial agreements would be covered by the law.
Tony Mauro contributed to this report. Contact Marcia Coyle at email@example.com.