Supreme Court Rules It Has Final Say on Lawsuits

The Supreme Court, in a strong assertion of its own final authority, ruled Tuesday that Congress cannot reopen cases that have been finally decided by the federal courts.

The 7-2 ruling brings to an end several large lawsuits alleging investment fraud, which the court in 1991 said were filed too late.

Upset by the court’s reading of the securities law, Congress took the rather unusual step of hurriedly passing a new measure that specifically revived those lawsuits.

On Tuesday, the high court determined to have the last word.

“The framers crafted this (Constitution) with an expressed understanding that it gives the federal judiciary the power not merely to rule on cases but to decide them conclusively,” wrote Justice Antonin Scalia for the court. “The Constitution forbids the legislature to interfere with the courts’ final judgments,” he added.

Congress can certainly pass new laws that change the rules for the future. Lawmakers can even change the rules for old cases that are still pending in the courts. But it cannot revive a case that is final, the justices said.

In his 30-page opinion, Scalia focused on Colonial history and the troubles that arose when state legislatures passed special bills to overturn court rulings. By 1787, the men who wrote the Constitution were convinced that the legislature and the judiciary must have separate and distinct powers, he said.

While the justices were most interested in the constitutional issue, Tuesday’s ruling adds a clarification of securities law.

Before 1991, the states maintained different time deadlines for filing lawsuits by those who claimed that they had been cheated in a securities fraud. That year, the high court adopted a national standard that said a suit must be filed within one year after a fraud is discovered or within three years after it occurred.

Until Tuesday, it had been unclear whether lawsuits that missed those deadlines could still proceed under the more liberal rules passed retroactively by Congress. They cannot, the court said in the case (Plaut v. Spendthrift Farms, 93-1121).

The plaintiffs, Ed and Nancy Plaut, had filed a suit in 1987 contending that they were deceived by the owners of a Kentucky horse farm when they bought stock in 1983.

Under Tuesday’s ruling, their suit is dismissed for having been filed late.

Justices John Paul Stevens and Ruth Bader Ginsburg dissented, saying that Congress was trying to clean up loose ends but was not engaged in “judicial usurpation.”

James M. Finberg, a San Francisco lawyer who filed a brief with the court on behalf of the National Assn. of Securities and Commercial Law Attorneys, said that the ruling would affect only a relatively small number of cases, although he estimated that the cases could involve claims of as much as $400 million.

In another ruling, the court cleared the way for makers of large trucks that do not have antilock brakes to be sued in state courts for causing accidents (Freightliner Corp. vs Myrick, 94-286).

The truck makers contended that they were immune from such damage suits because federal regulators alone set standards for highway safety. But the justices unanimously rejected that claim because the U.S. Department of Transportation had not set a standard for brakes.

However, the department announced last month it will soon require antilock brakes on all new tractor-trailers.

Times staff writer Scot J. Paltrow in New York contributed to this story.