Plaut v. Spendthrift Farm Inc.

Plaut v. Spendthrift Farm Inc.: The Background

The case of Plaut v. Spendthrift Farm Inc. began in 1987, when several Spendthrift Farm shareholders, including Mr. Ed Plaut, filed suit against the underlying corporation claiming stock sales in 1983 through 1984 were in direct violation of the Securities and Exchange Act of 1934.

The United States Supreme Court Ruling in a previous case set a universal time constrain of three years following an alleged violation for suits stemming from the relevant aspects of the Securities and Exchange Act. Based on this decision, a district court dismissed the shareholders’ case in August of 1991. On December of the same year, U.S. Congress enacted the FDIC Improvement Act, which mandated the court system to reinstate cases dismissed under the limitations set forth in Lampf. In response, the shareholders filed a motion to reinstate. The District Court then agreed that the act required the case to be put back in place, but denied the request on the basis that Congress had violated separation of powers in requiring the court system to reopen settled matters. On appeal, the United States Court of Appeals for the Sixth Circuit of the United States affirmed the lower court’s conclusion on the same basis.

Plaut v. Spendthrift Farm Inc.: The Question

The question of Plaut v. Spendthrift Farm Inc. asked the question of whether or not Congress violated the separation of powers by requiring federal courts to reopen settled cases as part of the FDIC Improvement Act.

Plaut v. Spendthrift Farm Inc.: The Question

The case of Plaut v. Spendthrift Farm Inc., in a 7 to 2 vote, held that Congress did indeed violate the separation of powers by requiring the federal courts to reopen settled cases as part of the Improvement Act.

The 7 to 2 vote was issued by Justice Antonin Scalia. The case of Plaut v. Spendthrift Farm Inc. concluded that Congress had abused powers that were assigned to the judiciary by Article III and as a result had violated the separation of powers principle. Justice Scolia, when reciting the opinion of the Court in Plaut v. Spendthrift Farm Inc, stated that Article III assigns judicial powers to the courts and the power to say what the law is. According to the Supreme Court in Plaut v. Spendthrift Farm Inc. this includes the power to render final judgments. Congress therefore abused the powers of the courts to issue last word of the judicial system with regards to particular cases.