WASHINGTON — The Supreme Court has struck down part of the anti-fraud law enacted in response to Enron and other corporate scandals from the early 2000s.
The justices, in a 5-4 vote Monday, say that the Sarbanes-Oxley law enacted in 2002 violates the Constitution’s separation of powers mandate. The court says the president must be able to remove members of a board that was created to tighten supervision of internal corporate controls and outside auditors.
Congress created the board to replace the accounting industry’s own regulators amid scandals at Enron Corp., WorldCom Inc., Tyco International Ltd. and other corporations. The board has power to compel documents and testimony from accounting firms, and the authority to discipline accountants.
In another big ruling, the court rejected appeals by the Obama administration and the nation’s largest tobacco companies to get involved in a legal fight about the dangers of cigarette smoking that has stretched more than 10 years.
The court’s action, issued without comment Monday, leaves in place court rulings that the tobacco industry illegally concealed the dangers of smoking for decades. But it also prevents the administration from trying to extract billions of dollars from the industry either in past profits or to fund a national campaign to curb smoking.
In asking the court to hear its appeal, the administration said the industry’s half-century of deception “has cost the lives and damaged the health of untold millions of Americans.”
The appeal was signed by Elena Kagan, the solicitor general, a couple of months before President Barack Obama nominated her to the Supreme Court.
Philip Morris USA, the nation’s largest tobacco maker, its parent company Altria Group Inc., R.J. Reynolds Tobacco Co., British American Tobacco Investments Ltd. and Lorillard Tobacco Co. filed separate but related appeals that took issue with a federal judge’s 1,600-page opinion and an appeals court ruling that found the industry engaged in racketeering and fraud over several decades.
In 2006, U.S. District Judge Gladys Kessler ruled that the companies engaged in a scheme to defraud the public by falsely denying the adverse health effects of smoking, concealing evidence that nicotine is addictive and lying about their manipulation of nicotine in cigarettes to create addiction. A federal appeals court in Washington upheld the findings.
At the same time, however, the courts have said the government is not entitled to collect $280 billion in past profits or $14 billion for a national campaign to curb smoking. The high court previously denied the government’s appeal on that issue.
In other decisions released Monday:
• The court won’t stop a lawsuit that accuses the Vatican of transferring a priest from city to city despite repeated accusations of sexual abuse.
The high court on Monday refused to hear an appeal from the Holy See, the legal name for the Vatican.
The Vatican wanted the federal courts to throw out the lawsuit that seeks to hold the Roman Catholic Church responsible for moving the Rev. Andrew Ronan from Ireland to Chicago to Portland despite the sex abuse accusations. The case is Holy See v. John Doe, 09-1.
• The court rejected an appeal from a woman who wants to sue Halliburton for the brain injury her husband suffered when a truck in a fuel convoy crashed in Iraq.
The justices, without comment Monday, let stand a federal appeals court ruling dismissing the lawsuit filed by Annette Carmichael of Atlanta, on behalf of her husband, Sgt. Keith Carmichael. The Obama administration recommended denial of the appeal. The case is Carmichael v. Kellogg, Brown & Root, 09-683.
• Justices turned away an appeal from the Christian Legal Society, which sued to get funding and recognition from the University of California’s Hastings College of the Law.
The CLS requires that voting members sign a statement of faith and regards “unrepentant participation in or advocacy of a sexually immoral lifestyle” as being inconsistent with that faith. But Hastings said no recognized campus groups may exclude people due to religious belief or sexual orientation.
The court upheld the lower court rulings saying the Christian group’s First Amendment rights of association, free speech and free exercise were not violated by the college’s decision.
• The court refused to hear an appeal from Pirate Investor LLC — now known as Stansberry and Associates Investment Research — and Frank Porter Stansberry. The Securities and Exchange Commission says they violated a law that forbids any “untrue statement” as well as “fraud or deceit” in connection with the purchase or sale of any security.