Supreme Court of the United States

U.S. Supreme Court Clarifies Legal Standard for Threatening Speech in Counterman v. Colorado

The U.S. Supreme Court’s recent ruling in Counterman v. Colorado addressed the longstanding ambiguity surrounding the standards for criminal prosecution based on perceived threats of violence. The Court held that such a prosecution requires proof that the defendant subjectively understood the threatening nature of the statement such that making the statement was at least reckless. This case not only delves deep into First Amendment protections but also has broad implications for online communications and interactions.

In this case, Billy Counterman, the criminal defendant, sent numerous unwelcome messages via Facebook to a local musician, raising questions about the delicate balance between free speech and threatening conduct. After multiple block attempts by the musician, Counterman continued his messages from different accounts, leading the musician to believe she was under surveillance and in potential danger.

Colorado prosecutors charged Counterman solely based on his Facebook interactions, asserting that his messages transcended the bounds of protected speech under the First Amendment. Counterman contended that his messages were not “true threats,” arguing that he lacked a subjective understanding of their threatening nature. The lower courts, relying on an objective reasonableness standard, rejected this assertion, deeming the messages as unlawful threats.

The Supreme Court, however, overturned the lower courts’ decisions, opining that while “true threats of violence” are not shielded by the First Amendment, establishing whether a statement is a true threat necessitates a subjective test. The Court emphasized that an objective standard could potentially stifle legitimate speech. A subjective analysis is therefore crucial to reconcile the tension between safeguarding speech and enabling lawful prosecution for illicit expressions.

The ruling specified the requisite intent prosecutors must establish, decreeing that they must demonstrate that defendants made threatening statements recklessly, by ignoring a substantial risk of their statements being perceived as genuine threats.

Justice Kagan, writing for the majority, acknowledged that the balance the Court struck is an imperfect one. As she explained, “[a]s with any balance, something is lost on both sides: The rule we adopt today is neither the most speech-protective nor the most sensitive to the dangers of true threats. But in declining one of those two alternative paths,” she continued, “something more important is gained: Not ‘having it all’ — because that is impossible — but having much of what is important on both sides of the scale.”

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Paula Spicer is an attorney with Fraser Trebilcock with expertise in family law, juvenile justice law, mental health law, neurological disorders, and specialized “state of mind” defenses in criminal law. You can reach her at (517) 377-0823 or at pspicer@fraserlawfirm.com.

Supreme Court Strikes Down Affirmative Action in Higher Education

On June 29, 2023, in a 6–3 decision, the U.S. Supreme Court ruled that Harvard’s and the University of North Carolina’s admissions programs violate the Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution, as well as Title VI of the federal Civil Rights Act.

The Court’s Ruling

In the cases Students for Fair Admissions v. President and Fellows of Harvard College and Students for Fair Admissions v. University of North Carolina (the “Cases”), a group of Asian-American students brought suits against Harvard and UNC alleging anti-Asian discrimination in the schools’ admissions process. In previous affirmative action cases, the Supreme Court held that universities could utilize “race-conscious” admissions policies when deciding whether to admit a student.

The Supreme Court held that both universities’ admissions programs violated equal protection. While the Court had permitted race-based college admissions as an exception to the Equal Protection Clause in the past, it did so on the basis that such programs satisfy the “strict scrutiny” standard, could not utilize race as a stereotype, and had to be finite.

According to the Court, Harvard and UNC’s admissions programs failed on all three counts. The Court stated in its opinion: “the student must be treated based on his or her experiences as an individual—not on the basis of race.”

However, the Court explained that universities may consider an applicant’s explanation of how race has impacted their life and experiences as part of an application process, as long as this information is considered as part of an assessment of an applicant’s “character” or “unique ability to contribute to the university.”

Broader Impact

The Court’s decision may have consequences beyond higher education and affect employers’ hiring and promotion policies across all sectors of the economy. Accordingly, employers should examine their approach to DE&I initiatives, particularly in the context of existing policies related to an organization’s diversity goals. Policies which consider race and ethnicity in a manner similar to Harvard and UNC should be carefully considered in light of the Court’s ruling.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Ryan K. Kauffman is a Shareholder at Fraser Trebilcock with more than a decade of experience handling complex litigation matters. You can contact him at rkauffman@fraserlawfirm.com or 517.377.0881.

Five Stories that Matter in Michigan This Week – July 15, 2022

Supreme Court Ruling Shouldn’t Affect Michigan’s Healthy Climate Plan

The Supreme Court’s recent ruling limiting the EPA’s ability to regulate carbon emissions from power plants should not affect Michigan’s course of following through with the MI Healthy Climate Plan, which was first released in April 2021. The MI Healthy Climate plan seeks interim reductions of 28% by 2025 and 52% by 2030.

Why it Matters: Businesses should continue to plan for the implementation of the MI Healthy Climate plan and other regulations as the state continues to shift towards the goal of net-zero greenhouse gas emissions no later than 2050. If you have environmental issues with state and/or federal agencies, contact our environmental attorneys.

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Several Groups Send Letter to LARA Seeking Adoption of International Energy Standards

Several groups have sent the department of Licensing and Regulatory Affairs seeking them to adopt a set of international energy standards for residential and commercial buildings in preparation of electric vehicle charging and to help reduce climate impact.

Why it Matters: Including reducing climate impact, the groups have touted hundreds of dollars in energy cost savings for Michigan residents with the adoption of the new standards. “These provisions will lower costs for Michigan residents and businesses, increase household resilience from extreme weather events, and help reduce climate impacts from the building sector,” the groups wrote.

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Tax Reform Goals Priority for New “Fund MI Future” Coalition

A collection of 20 organizations have formed a newly created coalition with the aim of better funding Michigan’s public services with changes to the state’s tax policy. Following the release of Michigan’s next annual budget, the group plans to revise the state’s tax system and close tax loopholes so that wealthy individuals and organizations will now “pay what they owe” to support clean water access, job funding, and school support.

Why it Matters: If the new coalition’s plans for altering the state’s tax policy succeeds, organizations and wealthy individuals are expected to have higher tax bills.

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Mixed Signals in Michigan Marijuana Sales Data

One the one hand, the Michigan legal marijuana industry is booming. Sales in Michigan hit $1.03 billion in the first half of 2022, up by 26.9% from the same period last year, according to the Michigan Marijuana Regulatory Agency (“MMRA”). A Detroit News article reported that Michigan has become the third largest marijuana market in the country. On the other hand, not all news is rosy in the industry. There are now more than 1,000 licensed marijuana retailers in Michigan, and while sales numbers are at all-time highs, the competition in the state is driving down prices. MMRA reported that the average price for flower at $1959 per pound in June, down 41.6% from the same period in 2021.

Why it Matters: With inflation surging across the economy, falling prices in the marijuana industry mean that profits may be hard to come by. This may lead to more consolidation within the industry as operators and investors seek to achieve economies of scale.

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Bipartisan Bills Would Allow Alcohol Sales at Some College Sporting Events in Michigan

New bipartisan bills in the Michigan Legislature would allow alcohol sales at college basketball, football and hockey games. House Bill 6289 and Senate Bill 1125 would allow the Michigan Liquor Control Commission to issue licenses to be used for events within the public areas of university football, basketball and hockey stadiums. Sales would be permitted two hours before and after each game.

Why it Matters: Sponsors of the bills point to data showing that allowing alcoholic beverages in venues during sporting events lowers the probability of excessive alcohol consumption that might otherwise happen during tailgating before a game or if alcohol is snuck into a stadium.

Related Practice Groups and Professionals

Environmental Law | Michael Perry

Business & Tax| Ed Castellani

Taxation | Paul McCord

Cannabis | Klint Kesto

Energy, Utilities & Telecommunication | Michael Ashton

Rucho et al v Common Cause

The United States Supreme Court today issued a long-awaited ruling in Rucho et al v Common Cause, et al that immediately highlights the value of Michigan’s recent Voters Not Politicians ballot initiative to pass Proposal 2 ending partisan gerrymandering in Michigan.

Michigan has already insulated itself from much of the harsh impact of today’s federal decision, by moving forward to adopt Proposal 2 to amend Michigan’s Constitution, which will result in the formation of a citizen’s commission to redistrict the state for the 2022 elections.

The Fraser Trebilcock election team represented Voters Not Politicians in VNP’s successful 2018 litigation winning a ruling from the Michigan Supreme Court mandating that Proposal 2 appear on that year’s ballot, and changing Michigan law in the process.

To view the full opinion, click here.

Trust Income: SCOTUS to Consider State Tax Nexus Case Based on Beneficiary’s Residence

Last year, the U.S. Supreme Court decided South Dakota v. Wayfair upending 51-years of precedence holding that a state could require an out-of-state seller with no physical presence in the state to collect and remit sales taxes on goods the seller ships to customers in the state. In January, the U.S. Supreme Court announced that it will hear another state tax nexus case, Kaestner 1992 Family Trust v North Carolina. Kaestner will address whether the due process clause prohibits states from taxing trusts based on the in-state residency of a beneficiary. In light of last year’s Wayfair decision and the Court’s apparent reluctance to take up nexus cases, the result is expected to have broad implications.

Background

In Kaestner, the trust’s only connection with the taxing state during the tax years at issue was a resident beneficiary. The Kimberly Rice Kaestner 1992 Family Trust, was created in New York and governed by New York Law. The Trust documents, financial books and records, and legal records were kept in New York and all tax returns and Trust accountings were prepared in New York. At the time it was created, neither the settlor nor any of the beneficiaries resided in North Carolina. The trustee was a Connecticut resident, and the trust held financial instruments located in Massachusetts. The beneficiary had no absolute right to the Trust’s assets or income, as distributions were made at the sole discretion of the trustee. No distributions were made to the beneficiary during the years at issue. The terms of the Trust provided that the trustee was to distribute the assets to Kimberly Kaestner when she reached a specified age, which did not occur until after the tax years at issue.

State Law

North Carolina tax law imposes a tax on the taxable income of trusts. The statute provides, in part: “The tax is computed on the amount of the taxable income of the estate or trust that is for the benefit of a resident of this State.” Adding to this, the North Carolina Department of Revenue issued administrative guidance interpreting the statute application based on the “beneficiary’s state of residence on the last day of the taxable year of the trust.” At this point it should be noted that Michigan law differs from that of North Carolina. In Blue v Department of Treasury, the Michigan Court of Appeals held that Michigan may not tax trust income if all trustees, beneficiaries and trust administration occurs outside of the state (even if there is non-income producing property in the state – including real property).

The Dispute

At first the trust in Kaestner paid the tax for tax years 2005 through 2008, but later filed a refund claim on the basis that the taxing statute is unconstitutional as the presence of a resident beneficiary was not a sufficient connection with North Carolina for the state to impose its income tax on the trust. The North Carolina Department of Revenue denied the claim and the underlying refund suit followed.

In a divided opinion, the North Carolina Supreme Court ruled in the trust’s favor finding that the presence of an in-state beneficiary alone was not enough to establish tax jurisdiction. The court reasoned that the trust is an entity separate from individual beneficiaries and distinguished cases in Connecticut and California that reached contrary results under similar facts. The dissent, argued that the trust had subjected itself to North Carolina’s taxing power because it, in the dissent’s view, purposely availed itself to the state through the in-state beneficiary.

Reasons to Watch

Trusts are a common planning tool and subjecting them to state income taxation based only upon an in-state beneficiary could have significant consequences. The states that have faced this issue are split on this question. The split is among nine states – four have said “Yes”; California, Missouri, Connecticut, and Illinois allow taxing a trust based on the presence of an in-state beneficiary, and five states have said “No”; New York, New Jersey, Minnesota, Michigan, and now, North Carolina. Nearly every state taxes trust income. As a result, the outcome of the Kaestner case could have important implications for tax planning and state tax policy. Some commentators have surmised that from the states’ perspective, a loss in Kaestner could nudge them away from extending the economic nexus reach of Wayfair into the area of state income taxation. All of this remains to be seen and deserves a close watch.

Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.