U.S. Supreme Court. Spring 2011.

U.S. Supreme Court
Washington, D.C.
Knocking on the Door

     So, it’s Saturday night.  Bob Marley is on the turntable.  You’re hanging out with a couple of friends, laughing on the couch.  Cokes are in the icebox.  Thoughts are passed around in a pakalolo-packed calumet.  It’s all good, as they used to say last century.
     The next thing you know, the front door of your flat is kicked in, police officers ready to search your home.  Just a moment ago, the cops were pounding on the door, yelling “Police!” In that intervening moment, you got off the couch, shuffled around, put the pipe in its proper place and tried to make yourself presentable.  Is this situation one where an emergency exists, requiring the police to kick in your door and search your place without a warrant?
     That’s the fact pattern that resulted in this morning’s oral arguments at the U.S. Supreme Court, in the case of Kentucky v. King.
     Kentucky argued that the combination of the smell of marijuana smoke, the resident’s failure to respond to the officer’s knock and the sounds of movement inside the apartment justify a warrantless entry and search.  The police claimed that they could tell by the sounds from inside the apartment that evidence was being destroyed.  It’s a well-established principle that if police reasonably believe that evidence is being destroyed, they can enter a residence and conduct a search.  The issue the court must decide is if the police impermissibly create the emergency situation?  If they did, they cannot rely on the emergency situation to justify their warrantless search.
     King, who was sentenced to 11 years for drug related charges, argued that the police impermissibly created exigent circumstances when they engaged in conduct that would cause a reasonable person to believe that entry is imminent and inevitable.
     The court must also determine the proper test to evaluate police conduct.  Kentucky argued that the test is if the police acted in a lawful manner, they do not impermissibly create exigent circumstances.  King argued that police behavior must be analyzed by looking at the totality of the circumstances, and that no single factor – such as the lawfulness of the police actions or foreseeability of the destruction of evidence – establishes the exigent circumstances.
     A ruling by the court that all that is needed to justify a warrantless search is a police officer knocking on the door, announcing his presence and hearing a noise would seem to eviscerate all protection the fourth amendment provides against unreasonable searches.

U.S. Supreme Court
Washington, D.C.
Every Element of Information

     Thom Yorke, frontman for Radiohead, claims he lives in a town where he can’t smell a thing.  Maybe he took Zicam, a zinc-based cold remedy manufactured by Matrixx Initiatives, and lost the ability to smell.  Medical professionals call this condition anosmia.  Mr. Yorke’s condition, if reported by him or his doctor to the drug manufacturer, would then be included in an Adverse Event Report, or AER.  The AER is then filed with the Food and Drug Administration.

     Federal statutes make it unlawful for a company to make an untrue statement of material fact or to omit a statement of material fact.  A shareholder of a company may file a lawsuit under this law.  To prevail, the shareholder must show that the material statement or omission was made with the company’s knowledge and caused economic loss.
     This morning, the United States Supreme Court heard oral arguments in the case of Matrixx Initiatives v. Siracusano, to determine if the drug maker’s failure to disclose the AER’s of anosmia results in an actionable claim by the shareholders.  Out of the millions of consumers who bought Zicam, only 23 developed anosmia.  The issue is whether the manufacturer has to disclose information that is not statistically significant.  In this case, no connection has been shown between Zicam and anosmia.  The lower courts are divided on this issue.
     Matrixx argues that the shareholder’s lawsuit should be dismissed because the AER that was not released was not material.  Information is material if there is a substantial likelihood that a reasonable shareholder would consider it important.  Matrixx further argues that for the reports to be material, they must be shown to contain statistically significant evidence proving that Zicam caused anosmia.
     Siracusano and the shareholders argue that the lack of statically significant evidence should not preclude their lawsuit, claiming that reasonable investors would consider relevant information, even if it had not reached the level of statistical significance.  The federal government agrees with the shareholders and filed an amicus brief in support of their position.
     Justice Kagan was skeptical of Matrixx’s position, making the point that “the FDA takes action all the time as to drugs -- they force the withdrawal of a drug from the market, they force relabeling of a drug -- on the basis of findings that are not statistically significant,” and that those actions “severely affect the product's value to the company.”  Justice Sotomayor echoed this position, stating that reasonable evidence of a connection is required, not statistical significance.
     If the Court finds in favor of Matrixx, the adoption of the statistically significant test could result in cases being dismissed before a judge or a jury has an opportunity to evaluate the facts.  If the Court rules for Siracusano, companies may feel required to release every bit of information available, to avoid running afoul of the law.