In the Department of Revenue of Kentucky vs. Davis, the court must decide if Kentucky can give tax breaks on interest from municipal bonds sold within its borders, while taxing interest earned on bonds sold in other states.

Justice David Souter disagreed with a characterization by Eric Brunstad, a lawyer for George and Catherine Davis -- Kentucky residents who hold out-of-state bonds -- that municipal bonds, like other securities, were traded like commodities.

"Yes, but it's not taxing an out-of-state commodity in the sense of a commodity which is manufactured or produced out-of-state," Souter said.

Still, Justice Anthony Kennedy said the tax breaks go against the commerce clause of the U.S. Constitution.

"All states want to protect their residents and make it look like they're doing something for their residents. And that's exactly the purpose of commerce clause prohibition against explicit discrimination, which is what this is," he said.

The justices also plumbed the strength of the municipal bond market. Justice Souter noted it was "enormous" and the Supreme Court did not know what would happen if it were interrupted.

Shareholders of Office Depot Inc. (ODP) filed a lawsuit in federal court in Florida against the company seeking class-action status and damages for alleged violations of federal securities laws.

Saxena White P.A., representing shareholders that acquired Office Depot securities between April 26, 2006 and Oct. 26., said an announcement concerning the delayed release of the 2007 third-quarter report due to an independent review of vendor program funds led to a falling stock price.

A company spokesperson declined to comment on the suit.

"I would like to ask forgiveness from my mother, my wife and my children for having to leave them alone as I serve a life sentence," Arellano-Felix said at a sentencing hearing in U.S. District Court in San Diego.

"Most importantly, I would like to ask forgiveness from all those people, on both sides of the border, who I have affected by my wrongful decisions and criminal conduct," he said.

In pleading guilty, Arellano-Felix, 37, admitted directing the Arellano-Felix drug cartel, which controlled much of the narcotics trade across the U.S.-Mexico border over the past decade, acting Deputy Attorney General Craig Morford said.

He also admitted committing and ordering murders in connection with the cartel's illicit business, Morford said.

"Francisco Javier Arellano-Felix will spend the rest of his life in prison for leading a violent Mexican drug cartel that was responsible for trafficking hundreds of tons of cocaine and marijuana and committing countless acts of violence and corruption," Morford said.

Arellano-Felix was arrested along with Manuel Arturo Villarreal-Heredia, 31 in August while deep-sea fishing 15 miles off the coast of La Paz, Mexico, on their yacht, the Dock Holiday.

Villarreal-Heredia also pleaded guilty and is scheduled for sentencing in January.

The state appealed to the Supreme Court. The justices said they would decide whether Hoffman is entitled to the plea deal, even though he was later convicted and sentenced in a fair trial.

Hoffman was one of three men charged with the murder of a woman who served as a police informant in a drug deal. Hoffman slit Denise Williams' throat and another man stabbed her. Both men tried to bury her beneath rocks, eventually killing her with a blow from a rock.

The other two defendants avoided the death penalty. Hoffman, however, refused to plead guilty on the advice of his attorneys, even though prosecutors told him that if he refused the plea deal they would seek the death penalty.

One of Hoffman's attorneys — William Wellman — told Hoffman he believed that a recent appellate court ruling out of Arizona showed that Idaho's similar death penalty scheme was unconstitutional, and that it was only a matter of time before Idaho's death penalty scheme would be overturned in court.

But Idaho's death penalty scheme wasn't immediately overturned, and on June 9, 1989, Hoffman was sentenced to death.

The appeals court said Wellman made two mistakes that warranted overturning the death sentence.

"We do not expect counsel to be prescient about the direction the law will take," Judge Harry Pregerson wrote for the three-judge panel. "We nonetheless find that Wellman's representation of Hoffman during the plea bargaining stage was deficient for two reasons: first, Wellman based his advice on incomplete research, and second, Wellman recommended that his client risk much in exchange for very little."

That error, combined with Hoffman's compliant personality, meant that he was harmed by the attorney's recommendation, the court found.

Idaho's lawyers told the Supreme Court that the 9th Circuit made it too easy for defendants to prove that their lawyers were ineffective. The decision shouldn't turn on whether the advice was right or wrong, but on whether a competent lawyer would have made the same recommendation, the state said.

A law firm said on Monday it had filed an investor lawsuit against Washington Mutual Inc, alleging it pressured a unit of First American Corp to inflate the appraisal value of homes.

The lawsuit comes after New York Attorney General Andrew Cuomo sued First American and its unit eAppraiseIT last week for allegedly colluding with Washington Mutual to inflate the appraisal values of homes. Cuomo did not name Washington Mutual as a defendant in his case.

The latest suit, which seeks to represent investors who bought Washington Mutual shares between July 19, 2006 and Oct. 31, 2007, also names certain officers and directors of the largest U.S. savings and loan, the law firm, Wolf Popper LLP, said in a statement.

Washington Mutual spokeswoman Libby Hutchinson said the company doesn't comment on the specifics of litigation.

But she added, "The integrity of our appraisal process is very important to us, and we work hard to make sure that it operates properly."

The suit, which was filed in U.S. District Court in New York, alleges claims for securities fraud, the law firm said.

The complaint alleges that inflated appraisals led to Washington Mutual's financial results to be misstated, it said.