Plaut v. Spendthrift Farm, Inc. case brief

Plaut v. Spendthrift Farm, Inc. case summary
514 U.S. 211 (1995)

PROCEDURAL HISTORY: Petitioner investors sought review of the order from the United States Court of Appeals (Sixth Circuit), which denied petitioner's motion to reinstate its action against respondent securities investment company, as the court found that § 27A of the Securities Exchange Act was unconstitutional.

FACTS:
-The investors previously brought an action against a securities investment company for fraud and deceit in the sale and exchange of stock in violation of §10(b) of the Securities Exchange Act of 1934 Rule 10b-5 of the Securities Exchange Commission.
-Petitioners' action was dismissed with prejudice and became final after the petitioner did not file an appeal.
-Subsequently, §27A of the Securities Exchange Act of 1934 was codified.
-The investors then sought to have their action reinstated pursuant to §27A.
-The district court found that the section required the reinstatement of petitioners' action, however, the court found the section to be unconstitutional.
-The investor's motion was denied, which was affirmed by the appellate court.

HOLDING:
-After granting certiorari, the Court found §27A to be unconstitutional and affirmed the decision of the lower court.

ANALYSIS:
-Section 27A, by retroactively commanding federal courts to reopen final judgments, violated the fundamental principle that a judgment conclusively resolves the case.
-Thus, the separation of powers principle was violated by §27A, when the section was codified by Congress.

RULES:

It is the obligation of the last court in the hierarchy that rules on the case to give effect to Congress's latest enactment, even when that has the effect of overturning the judgment of an inferior court, since each court, at every level, must decide according to existing laws. Having achieved finality, however, a judicial decision becomes the last word of the judicial department with regard to a particular case or controversy, and Congress may not declare by retroactive legislation that the law applicable to that very case was something other than what the courts said it was. Finality of a legal judgment is determined by statute, just as entitlement to a government benefit is a statutory creation; but that no more deprives the former of its constitutional significance for separation-of-powers analysis than it deprives the latter of its significance for due process purposes

CONCLUSION: The court affirmed the lower court's finding which stated that a provision of the Act was unconstitutional.
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