The company, Ragingwire Inc., argued that it rightfully fired Ross because all marijuana use is illegal under federal law, which does not recognize the medical marijuana laws in California and 11 other states.

The justices upheld that argument in a 5-2 decision.

"No state law could completely legalize marijuana for medical purposes because the drug remains illegal under federal law," Justice Kathryn Werdegar wrote for the majority.

The U.S. Supreme Court declared in 2005 that state medicinal marijuana laws don't protect users from prosecution. The Drug Enforcement Administration and other federal agencies have been actively shutting down major medical marijuana dispensaries throughout California over the last two years and charging their operators with felony distribution charges.

Ragingwire said it fired Ross because it feared it could be the target of a federal raid, among other reasons.

The Santa Clara Valley Transportation Authority and the Western Electrical Contractors Association Inc. had joined Ragingwire's case, arguing that companies could lose federal contracts and grants if they allowed employees to smoke pot.

The conservative nonprofit Pacific Legal Foundation said in a friend-of-the-court filing that employers could also be liable for damage done by high workers.

Ross had argued that medical marijuana users should receive the same workplace protection from discipline that employees with valid painkiller prescriptions do. California voters legalized medicinal marijuana in 1996.

The nonprofit marijuana advocacy group Americans for Safe Access, which represents Ross, estimates that 300,000 Americans use medical marijuana. The Oakland-based group said it has received hundreds of employee discrimination complaints in California since it began tracking the issue in 2005.

Safe Access attorney Joe Elford said the group will now focus on urging the Legislature to pass a law protecting workers who use medical marijuana.

"We remain confident that there will be a day when medical marijuana patients are not discriminated against in the workplace," he said.

Assemblyman Mark Leno, a Democrat who represents part of San Francisco, said he will introduce legislation addressing those concerns in the next few weeks.

The ruling "strikes a serious blow to patients' rights," he said.

Eleven states have adopted medical-marijuana laws similar to California's: Alaska, Colorado, Hawaii, Maine, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont and Washington.

The American Medical Association advocates keeping marijuana classified as a tightly controlled and dangerous drug that should not be legalized until more research is done.

A federal appeals court has for the second time generally sided with Justice Department efforts to use the names and urine samples of about 100 Major League baseball players who tested positive for steroids four years ago.

But the convoluted 119-page ruling likely means federal investigators will still be unable use the controversial test results for the foreseeable future because the issue is expected to be tied up in the courts for some time.

The 9th U.S. Circuit Court of Appeal's conclusions could ultimately expose yet more names of players who tested positive for steroids in the league's 2003 anonymous testing program, beyond the recently released Mitchell report on steroids in baseball. Federal investigators seized the drug testing records of dozens of players in 2004 in connection with the Balco steroids scandal.

The showdown over the drug tests could have an impact on the perjury case against former Giants star Barry Bonds if the government obtained evidence of steroid use, although the slugger's lawyers have always insisted it has no bearing on him. The perjury indictment against Bonds already alleges that he failed a separate steroids test in 2000.

Meanwhile, the 9th Circuit - as it did in a 2006 ruling - mostly rejected the arguments of the players' union, which has insisted the seizure of the drug-testing records trampled on the medical privacy rights of the athletes and violated federal protections against unreasonable search and seizure. The appeals court in 2006 had overturned rulings in San Francisco, Los Angeles and Nevada in which the federal judges there found the government searches illegal. This recent decision upheld the majority of that previous ruling.

But it did hand the government one setback by concluding that prosecutors botched their appeal of the Los Angeles judge's ruling by filing it too late. As a result, the government may encounter a stumbling block to using some of the seized information out of the Los Angeles case, although the 9th Circuit's ruling appears to give investigators access to virtually all of the testing information they sought.

The 9th Circuit invited both sides to ask the appeals court to rehear the case with an 11-judge panel, which could delay the case.

Elliot Peters, the lawyer for the players' union, said they would need to review the ruling before deciding whether to press another appeal. Assistant U.S. Attorney Matthew Parrella declined comment.

Federal investigators connected to the Balco case seized computer files in 2004 that contained results from the 2003 testing program, which was designed to evaluate the scope of steroid use in the sport. The players' union and baseball owners had agreed to keep the results of the testing confidential.

The government originally sought the results for 10 players linked to Balco, including Bonds, New York Yankees slugger Jason Giambi and Detroit Tigers outfielder Gary Sheffield. But when investigators seized the records of dozens of other players, it triggered a legal battle pitting government powers to search computer databases with sensitive medical information against the privacy rights of the players.

9th Circuit Judge Sidney Thomas, who dissented in both the 2006 and Thursday's rulings, warned that allowing the searches would have "profound consequences for the constitutional right against illegal search and seizure."

A fast-growing labor and employment law firm from Atlanta has planted its flag in San Francisco.

Ogletree Deakins Nash Smoak & Stewart PC raided two law firms in the city for partners to launch its newest location.

Thomas McInerney joined from Thelen Reid Brown Raysman & Steiner LLP, where he was a partner in the firm's labor and employment law group. Douglas Farmer, formerly a partner at Sheppard Mullin Richter & Hampton LLP, is Ogletree's new managing partner in the San Francisco office.

Ogletree, with more than 400 attorneys in 33 offices across the country, is the nation's third largest labor and employment law firm -- behind Jackson Lewis LLP and San Francisco-based Littler Mendelson PC. Ogletree said it represents more than half of the Fortune 50 corporations in the United States. McInerney and Farmer bring clients to Ogletree in a number of industries, including television, retail, health care and engineering.

McInerney's and Farmer's jump to Ogletree illustrates a growing tendency among labor and employment partners: They are bolting general practice firms to join speciality shops. One big reason: rates. Many general practice law firms charge higher hourly rates for labor and employment work than do specialty firms. By moving their labor practice to a boutique, labor lawyers can offer lower rates and hold onto cherished clients.

Clients are another factor fueling partners' lateral moves. Fortune 500 companies are cutting back on the number of labor firms they use. To make themselves more attractive to these clients, some lawyers are joining specialty labor and employment firms to be able to cater to those companies' needs.

Farmer said Ogletree is seeking additional partners for its San Francisco office. He would like the firm to have 12 attorneys in the city within two years.

Founded in 1977 , Ogletree already has a presence in California. The firm opened a branch in Los Angeles in 2003. Ogletree opened seven offices across the country last year, including Cleveland, Philadelphia, Memphis, Tenn., and St. Louis.

The extortion was revealed during the investigation into another embarrassing incident for Atlanta police: the fatal 2006 police shooting of an elderly woman in a botched drug raid.

Daniel Betts, who resigned from the police force Wednesday, pleaded guilty to one federal count of interfering with interstate commerce by means of extortion under color of official right.

Betts admitted taking payoffs from the owner of the complex, which functions as a rehabilitation facility for recovering drug addicts. Prosecutors said he took $120 a week from the apartment owner over at least a four-month period last year.

Betts, 26, told U.S. District Judge Julie Carnes he didn't know his conduct was illegal at the time, but he does now.

House Speaker Nancy Pelosi said Congress would act on the agreement — hammered out in a week of intense negotiations and uncustomary bipartisanship — "at the earliest date, so that those rebate checks can be in the mail."

President Bush praised the agreement at the White House, saying it "has the right set of policies and is the right size."

The rebates, which would go to about 116 million families, had appeal for both Democrats and Republicans. Pelosi's staff noted that they would include $28 billion in checks to 35 million working families who wouldn't have been helped by Bush's original proposal. Republicans, for their part, were pleased that the bulk of the rebates — more than 70 percent, according to an analysis by Congress' Joint Tax Committee — would go to individuals who pay taxes.

Individuals who pay income taxes would get up to $600, working couples $1,200 and those with children an additional $300 per child under the agreement. Workers who make at least $3,000 but don't pay taxes would get $300 rebates.

The first rebate payments could begin going out in May, and most people could have them by July, said Treasury Secretary Henry Paulson, noting that the IRS will already be overwhelmed processing 2007 tax returns. The rebates were expected to cost about $100 billion, and the package also includes close to $50 billion in business tax cuts.

The principal players in pulling the deal together were Pelosi, House Republican leader John Boehner and Paulson. The package would allow businesses to immediately write off 50 percent of purchases of plants and other capital equipment and permit small businesses to write off additional purchases of equipment. A GOP-written provision to allow businesses suffering losses now to reclaim taxes previously paid was dropped.

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes.

"I can't say that I'm totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come," Pelosi said.

Boehner said the agreement "was not easy for the two of us and our respective caucuses."

"You know, many Americans believe that Washington is broken," the Ohio Republican said. "But I think this agreement and I hope that this agreement will show the American people that we can fix it and will serve to move along other bipartisan agreements that we can have in the future."

Paulson said he would work with the House and Senate to enact the package as soon as possible, because "speed is of the essence." But he also cautioned that "the work is far from over."

The Treasury Department has already been talking to the IRS about getting the checks out "as quickly as possible, recognizing that the tax filing season is ongoing," said Treasury spokesman Andrew DeSouza.

The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000, aides said. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps are higher for those with children.

The agreement left some lawmakers in both parties with a bitter taste, and they complained that their leaders had sacrificed too much in the interest of striking a deal. Many senior Democrats were particularly upset that the package omitted the unemployment extension.

"I do not understand, and cannot accept, the resistance of President Bush and Republican leaders to including an extension of unemployment benefits for those who are without work through no fault of their own," Rep. Charles B. Rangel, D-N.Y., the Ways and Means Committee chairman, said in a statement.

Sen. Max Baucus, D-Mont., the Finance Committee Chairman, said leaving out the unemployment extension was "a mistake," as he announced plans to craft a separate stimulus package in the Senate starting next week.

Majority Leader Harry Reid said the goal is to send the package to the White House by Feb. 15 for Bush's signature, but he noted the Senate would likely try to add more spending to the package.

"I expect that the (Finance) Committee and other senators will work to improve the House package by adding funds for other initiatives that can boost the economy immediately, such as unemployment benefits, nutrition assistance, state relief and infrastructure investment," Reid said in a statement.

Asked about this, Paulson praised Reid's leadership but said, "I don't know what he has in mind."

Bush has supported larger rebates of $800-$1,600, but his plan would have left out 30 million working households who earn paychecks but don't make enough to pay income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center. An additional 19 million households would receive only partial rebates under Bush's initial proposal.

To address the mortgage crisis, the package raises the limit on Federal Housing Administration loans from $362,000 to as high as $729,750 in expensive areas, allowing more subprime mortgage holders to refinance into federally insured loans. To widen the availability of mortgages across the country, it also provides a one-year boost to the cap on loans that Fannie Mae and Freddie Mac can buy, from $417,000 up to $729,750 in high-cost markets.