Court Strikes Down "Repugnant" Railroad Bankruptcy Law after Firm's Challenge
On this day in 1982, the U.S. Supreme Court ruled in favor of our client Henry Crown, the largest bond holder in the Chicago, Rock Island and Pacific Railroad Co., in Railway Labor Executives' Assn. v. Gibbons. The case arose out of the railroad’s bankruptcy reorganization, which commenced on March 17, 1975. In 1980 -- three days before the bankruptcy court would order the railroad abandoned, with no obligation on the part of the railroad to pay employee labor protection out of its assets -- Congress passed special legislation called the Rock Island Railroad Transition and Employee Assistance Act (RITA), which required the railroad to pay employee benefits of up to $75 million, to the detriment of its secured bond holders, including Col. Crown. In oral argument before the Supreme Court, Dan Murray argued that RITA represented an uncompensated taking of private property and an unconstitutional non-uniform law in bankruptcy. The Supreme Court declared RITA “repugnant to … the Bankruptcy Clause of the Constitution” because it was a non-uniform bankruptcy law. In its unanimous opinion authored by then-Justice William Rehnquist, the Court called RITA “nothing more than a private bill such as those Congress frequently enacts under its authority to spend money.”
Firm Wins Dismissal of Harassment Claims in Landmark Matter
The firm successfully defended national trucking company CRST Van Expedited, Inc., in a landmark harassment matter brought by the U.S. Equal Employment Opportunity Commission. The EEOC sued in 2007, claiming that the company intentionally tolerated a practice and pattern of sexual harassment of its women drivers. CRST argued that the EEOC failed to show evidence of its claims. An Iowa federal trial court dismissed 268 of the 270 claims; on this day in 2012, the Eighth Circuit Court of Appeals affirmed all but two of the individual claims. According to a Law360 account of the dismissal, the majority ruling of the Eighth Circuit “held that the EEOC had not tried to ascertain the size of its putative class of employees, and that as a result it had not tried to investigate the claims of the 67 women during its investigation of the sexual harassment charge — brought by a single CRST employee — that led to the litigation.” Two years later, the victory was capped when a judge awarded CRST $4.6 million in attorneys fees, believed to be the largest of its kind in an EEOC case. John Mathias led the team that included Carla Rozycki, James Malysiak, Sally Sears Coder, Richard Campbell, Emma Sullivan, Ashley Schumacher and Christine Bowman.
Firm Helps Secure Pro Bono Client’s Release
On this day in 2013, the Seventh Circuit took the unusual step of ordering pro bono client Nicole Harris released on bond from prison, setting the stage for what ultimately became a successful effort by the firm and Northwestern University Law School’s Bluhm Legal Clinic Center on Wrongful Convictions to exonerate her. "I just feel overwhelmed with joy," she told reporters covering the high-profile case. Ms. Harris had been convicted in 2005 of murdering her 4-year-old son and sentenced to 30 years in prison. The firm and the CWC became involved after trial, appealing the case through state and federal courts and losing at each turn until October 2012, when the Seventh Circuit held that the trial judge had excluded the testimony of Ms. Harris’ surviving son, 5 years old at the time, that he had seen his younger sibling strangle himself with the elastic from a bed sheet when their mother was not in the room. With her conviction reversed, the team asked the Seventh Circuit to order Mrs. Harris released on bond pending further proceedings. “We are grateful to have achieved this result for Ms. Harris,” said Bob Stauffer, who led the firm’s team. “It is very unusual for a federal appellate court to find it necessary to order a state prisoner released pending further proceedings; that the Seventh Circuit did so here suggests that it believes not only that her conviction was unconstitutional, but that it agrees with us that Ms. Harris is actually innocent.” On June 17, Ms. Harris’ freedom was secured when the state announced it would not retry her. Other members of the firm’s team included current attorneys Matt Hellman, Kara Kapp, Andrew Kennedy and Elin Park.
William Von Hoene Joins Exelon
Many firm alumni remain connected to the firm through in-house positions for clients and colleagues. Bill Von Hoene worked at Jenner & Block for nearly 20 years, from 1983 to 2002, focusing on complex civil and white-collar criminal litigation and serving on the Management, Pro Bono and Diversity Committees. In 2002, Bill joined Exelon as deputy general counsel. He held a variety of positions before being named Exelon’s senior executive vice president and chief strategy officer two years ago this month. In that role, Bill oversees corporate development, corporate strategy, legal, regulatory, government affairs, investments and communications for the major energy provider.
Contract Buyers League
In honor of “Black History Month,” we look back at the Contract Buyers League (CBL) cases of the late 1960s and 1970s. It was a time when racial segregation still marred one foundation of the American Dream for hundreds of Chicago African-American families: buying a home.
Read More It is impossible fairly to summarize in a few paragraphs the extensive litigation, in both federal and state courts, spanning more than 15 years, involving hundreds of African-American home owners who were our clients. They purchased homes on the west and south sides of Chicago after the end of World War II. On the west side, the sellers engaged in blockbusting-panic tactics, purchasing from frightened white owners with predictions that black buyers were moving into their neighborhoods. The houses were then sold at highly inflated prices to unsophisticated black families. Owing to racial prejudice, the buyers were unable to obtain regular mortgage financing, because Chicago-area banks were unwilling to make mortgage loans to African-Americans, and the federal supervisory agencies were not authorized to take corrective action. As a result, the buyers were required to make significant down payments and sign contracts that extended for many years. The terms of the contracts provided that if the buyers missed a single payment, the sellers were entitled to declare the contracts terminated, retain all previous payments, and repossess the homes. The same situation existed on the south side, except that the homes were newly built, but were sold at similarly inflated prices on land contracts with the same harsh forfeiture provisions.
We filed two cases in the federal District Court in Chicago, one for the west side buyers, and the other for the south side buyers. We also brought suit against the federal lending agencies, alleging illegal racial discrimination in refusing to provide mortgage financing. We litigated the cases in the Court of Appeals for the Seventh Circuit.
To prepare the cases for trial, we held countless weekly meetings at churches located on the west and south sides. The lawyers from Jenner & Block included Tom Sullivan, John Tucker (deceased), Dick Franch, John Stifler (deceased), Carol Thigpen (deceased), Jeff Colman, and many others, including paralegals who served without fee. We were assisted by several Jesuit seminarians, including Jack Macnamara, the instigator of the CBL movement, and the young lady who later became his wife, Peggy. We were assisted by two of the finest lawyers in Chicago, William R. (Bob) Ming (deceased) and Thomas J. Boodell, Jr.
When we were unable to settle the cases or obtain a trial, the clients staged what became known as “the hold outs” — they refused to make their monthly payments, thus risking being foreclosed and evicted. Wide publicity followed. We sought relief from evictions from both the Illinois Supreme Court and then Mayor Richard J. Daley. Many of the evictions were halted, and settlements obtained. Eventually, we renegotiated contracts for over 450 families, which yielded a savings to the buyers of at least $7 million, or more than $30 million in today’s dollars.
The CBL cases resulted in two jury trials and a bench trial in the federal court. The publicity engendered by these cases, including that related to the holdouts, contributed to the end of exploitive contract sales, the availability of mortgage financing for African-American home buyers, and significant restrictions on racial profiling in the housing market.
The CBL cases have been the subject of numerous news and magazine articles, several books, and have been the subject of master and doctoral theses. We made lifelong friends of many of the client members of the Contract Buyers League.
Apart from the savings obtained by our CBL clients, the publicity engendered by the CBL cases were a major influence in bringing about a number of major reforms:
• Changes to the Illinois Forcible Entry and Detainer Act(the eviction law), to allow buyers to raise defenses for non-payment, and to remove the requirement that they post an appeal bond of one year’s payment.
• Passage of an Illinois statute requiring contracts to be treated like mortgages.
• Passage of the federal Home Mortgage Disclosure Act, which forced banks to disclose where they made their loans, thereby making it possible to prove that banks were racially discriminating in their lending policies.
• Passage of the federal Community Reinvestment Act, which by the early 1990s was responsible for the reinvestment of $18 billion dollars in more than 70 U.S. cities.
Firm Wins U.S. Supreme Court Victory for Client NextWave
On this day in 2003, the U.S. Supreme Court ruled in favor of firm client NextWave in FCC v. NextWave Personal Communications Inc., returning billions of dollars worth of wireless phone spectrum licenses. The FCC had attempted to repossess the licenses after NextWave failed to make installment payments while reorganizing under Chapter 11 of the Bankruptcy Code. The agency argued that the licenses were automatically cancelled when the company missed its first payment-deadline and denied NextWave’s petition for reconsideration of the cancellation. The Court of Appeals for the D.C. Circuit held that the cancellation violated 11 USC section 525(a), which provides that a "governmental unit may not...revoke...a license...to...a debtor...solely because such...debtor...has not paid a debt that is dischargeable in the case.” The Supreme Court upheld the appellate court ruling 8-1. Former partner Don Verrilli, later appointed U.S. solicitor general, argued the case in the Supreme Court. Former partners Ian Gershengorn (now principal deputy solicitor general in the U.S. Department of Justice) and Bill Hohengarten were also on the team.