The Supreme Court's 2010-2011 term began in October, and it
is expected to conclude by the end of April. We have been
monitoring the decisions of our nation's highest court and you
may have already read some of the summaries of the major decisions
written by Larkin Hoffman attorneys. This update provides a brief
look at some of the cases that have been scheduled for oral
argument since our last update in November.
As we noted in our November update, Justice Elena Kagan recused
herself from deliberations in several upcoming cases. Because only
eight of the nine Supreme Court Justices will take part in these
decisions, there is an increased potential for split decisions
without a clear majority. Justice Kagan's recusals are noted
when applicable.
Employment & Labor
Borough of Duryea v. Guarnieri
(Docket No. 09-1476)
The First Amendment guarantees citizens the right to petition their
government for a redress of grievances. The Supreme Court is asked
to determine whether public employees can sue their employer for
retaliation under the First Amendment's Petition Clause if they
complain to the government about matters of purely personal concern
that do not benefit the public.
This case involves a decade long dispute between Charles Guarnieri,
a Pennsylvania Police Chief, and the Duryea Borough Council. In
2003, the chief filed a grievance against Duryea when he was
dismissed from his position. He won the grievance and was
reinstated. He claims that Duryea began a campaign of retaliation
against him, including issuing a directive about what he could or
could not do as chief of police, withholding overtime pay, and
refusing to extend health care coverage to his wife even after he
supplied the proper paperwork. Duryea argued that because
Guarnieri's original grievance was a matter of personal (as
opposed to public) concern, he could not sue for retaliation. The
chief argued that Duryea was attempting to interfere with his First
Amendment rights. The district court and the Third Circuit Court of
Appeals sided with Chief Guarnieri, and Duryea appealed to the
Supreme Court.
Oral Argument is scheduled for March 22, 2011.
CSX Transportation v. McBride (Docket No. 10-235)
The Supreme Court will consider whether a railway employee suing a
railroad under the Federal Employer's Liability Act because of
injuries sustained on the job must prove that his employer's
negligence was the main cause of his injuries, or if it is
sufficient to prove that the employer's negligence "played
a part, no matter how small."
Robert McBride was a train engineer conducting local runs for CSX
Transportation. He claimed that CSX provided the wrong type of
locomotive for the job, and as a result he had to operate the brake
in an unfamiliar manner for over eight hours. Nearing the
conclusion of his shift, his hand was numb and it hit the brake
lever, which caused him to sustain a considerable hand injury. At
trial the judge instructed the jury that CSX was liable for
McBride's injuries if CSX's negligence "played a part,
no matter how small, in bringing about the injury." The jury
awarded McBride $184,250. CSX appealed, claiming that the jury
should have been told that an employer is only liable if its
negligence is the main cause of the injury. The Seventh Circuit
Court of Appeals ruled that the jury received the correct
instruction, and CSX appealed to the Supreme Court.
Oral Argument is scheduled for March 28, 2011.
Bankruptcy
Stern v. Marshall (Docket No. 10-179)
When debtors file for bankruptcy, they are often required to file
all their counterclaims at the same time, or risk losing the right
to bring them later in a different court. The Supreme Court is
asked to decide whether a bankruptcy judge can issue a final
decision regarding such "compulsory counterclaims" or if,
instead, the counterclaims should be given a full review before a
district court.
Vickie Lynn Marshall (better known as Anna Nicole Smith, the late
reality TV star and Playboy model) makes her second Supreme Court
appearance in this case. This case requires the Court to determine
whether a multi-million-dollar verdict granted by a federal
bankruptcy judge in favor of Marshall was a final and binding
decision. The ultimate determination hinges on whether the claim in
bankruptcy court was a final decision in a "core"
proceeding, or merely a preliminary determination of an issue
"related to" her bankruptcy claim. The Ninth Circuit
Court of Appeals ruled that her counterclaim for tortious
interference was only "related to" her bankruptcy, and
Marshall's estate appealed to the Supreme Court.
Oral Argument was scheduled for January 18, 2011.
Corporate Privacy
FCC v. AT&T (Docket No. 09-1279)
The Freedom of Information Act requires the government to provide
documents and other information upon request, subject to several
exemptions. Exemption 7(c) allows the government to refuse to
provide information compiled for law enforcement if it could
reasonably be expected to constitute an unwarranted invasion of
privacy. The Supreme Court is asked to determine if the right to
privacy in Exemption 7(c) should be extended to corporations.
SBC Communications (now part of AT&T) provided advanced
telecommunications technology to public schools. The company
reported that it may have overcharged some of the schools, and the
FCC's Enforcement Bureau investigated. The investigation
required SBC to turn over many documents related to the sale and
installation of the technology, including internal emails that
included information about pricing, names of employees, and the
company's own confidential assessments of its practices. SBC
settled the case with the FCC, and never admitted to any formal
wrongdoing. Later, CompTel, a trade group of competitors to
AT&T filed a Freedom of Information Act request for the
information produced as part of the FCC's investigation into
SBC. The FCC refused to give CompTel some of the documents that
included individual's personal information, but refused
AT&T's request to exclude documents that included private
corporate information, arguing that corporations do not have a
right to "personal privacy" under the Act. The Third
Circuit Court of Appeals agreed with AT&T and required the FCC
to consider whether releasing documents to CompTel would violate
AT&T's right to personal privacy. The FCC and the United
States appealed to the Supreme Court.
Oral Argument was scheduled for January 19, 2011, and did not
include Justice Kagan, who recused herself.
Wal-Mart v. Dukes (Docket No. 10-277)
The Supreme Court will determine whether sex-discrimination claims
that have the potential for billions of dollars in back pay can be
certified as a class action under Rule 23(b)(2) of the Federal
Rules of Civil Procedure.
Wal-Mart v. Dukes is the largest sex-discrimination class
action in history. The plaintiffs claim that they were denied
training needed to obtain management positions in the company
because of their gender. In this instance, the Supreme Court will
not decide the merits of the sex-discrimination case, but will only
determine whether the group that includes about 1.6 million current
and former employees of the company throughout the country have
sufficiently similar claims to justify certification of a class
action. If class-action certification is allowed, the
plaintiffs' claims could be worth billions of dollars. In 2004,
a U.S. District Court in San Francisco ruled that a class action
was appropriate, and the Ninth Circuit Court of Appeals later
agreed. Wal-Mart appealed to the Supreme Court.
Oral Argument is scheduled for March 29, 2011.
Foreign Corporations & Jurisdiction
J. McIntyre Machinery, Ltd. v. Nicastro (Docket No.
09-1343)
The Supreme Court will determine if an injured plaintiff can sue a
foreign manufacturer in state court if the manufacturer never
directly sold any products within the state.
J. McIntyre Machinery makes industrial scrap metal processing
equipment in the United Kingdom. J. McIntyre never sold directly to
U.S. manufacturers; instead, J. McIntyre sold to an independent
distributor located in Ohio, which in turn sold to end users. The
Ohio distributor sold a machine to a New Jersey company in 1995.
Six years later the machine injured Robert Nicastro while he was
using it at work. Nicastro sued the U.S. distributor and J.
McIntyre in New Jersey state court. The trial court dismissed the
claims against J. McIntyre, holding that J. McIntyre did not have
the "minimum contacts" with New Jersey necessary for the
court to exercise jurisdiction over the lawsuit. On appeal, the New
Jersey Appellate Court reversed the decision, holding that although
J. McIntyre had sold its products to only one Ohio company, it had
targeted the entire United States for sales and could have expected
that one of its machines would end up in New Jersey. The New Jersey
Supreme Court affirmed, and J. McIntyre appealed to the Supreme
Court.
Oral Argument was scheduled for January 11, 2011.
Goodyear v. Brown (Docket No. 10-76)
The Supreme Court is asked to decide if a consumer can sue a
foreign manufacturer in a state court if its parent company manages
distribution of its products in the United States.
A bus rollover in France caused by a tire blowout left two North
Carolina teenagers dead. Three foreign Goodyear subsidiaries
manufactured the tires. Although they were not normally sold or
imported into the United States, Goodyear's U.S. parent company
centrally manages distribution of the tires worldwide. The parents
of the teenagers sued the foreign subsidiaries and the U.S. parent
company in North Carolina state court. The foreign subsidiaries
moved for dismissal of the complaint, arguing they were outside of
the court's jurisdiction. The trial court disagreed, holding
that jurisdiction was appropriate because the distribution of tires
was managed in the United States. The North Carolina Court of
Appeals affirmed. After the North Carolina Supreme Court denied
review, Goodyear appealed to the Supreme Court.
Oral Argument was scheduled for January 11, 2011.
Intellectual Property
Global-Tech Appliances v. SEB S.A. (Docket No.
10-6)
In addition to suing individuals who directly infringe a patent, a
patent owner can sue anyone who "actively induces
infringement." The Supreme Court is asked to determine if the
individual must deliberately encourage infringement, or if it is
sufficient that the individual recklessly disregarded the risk of
infringement.
A Global-Tech subsidiary called Pentalpha purchased a deep fryer in
Hong Kong. SEB manufactured the deep fryer, and although it did not
include U.S. patent markings, it was covered by a valid U.S.
patent. Pentalpha proceeded to copy the design of the deep fryer
and sell it under a variety of brand names in the United States.
SEB sued, alleging Pentalpha intended to infringe on its patent
because Pentalpha acted with deliberate indifference to the
possibility that a valid patent existed. Pentalpha argued that the
law requires actual knowledge of a patent in order to create
liability for induced infringement. The district court instructed
the jury that Pentalpha should be found liable if it "knew or
should have known" that the deep fryer was covered by a valid
patent, and the jury returned a verdict in favor of SEB. The
Federal Circuit Court of Appeals affirmed the district court's
decision, and Pentalpha appealed to the Supreme Court.
Oral Argument is scheduled for February 23, 2011.
Leland Stanford Junior University v. Roche (Docket No.
09-1159)
The Supreme Court is asked to determine if a university employee
can give away the rights to a patented invention, created with
federal funds, without the university's consent.
A Stanford University researcher joined a lab in 1988, while the
lab was working on an HIV detection test. When he joined the lab,
he signed an agreement that gave Stanford University the rights to
any patents produced as a result of his work at the University.
Later, while still employed by the University, the researcher had
significant interactions with Cetus, a company developing
biochemical testing techniques. While at Cetus, the researcher
signed an agreement that gave Cetus the rights to any patents
developed as a result of his work with the company. Cetus was later
purchased by Roche, and Roche attempted to license some of the
researcher's patented HIV testing technology from Stanford,
without success. Roche decided to use the patented technology
anyway, believing it had rights in the technology as a result of
the researcher's signed agreement. Stanford sued for patent
infringement arguing that because the tests were developed in part
with government grants, the Bayh-Dole Act gave Stanford exclusive
title to the patent. The Federal Circuit Court of Appeals dismissed
the suit, holding that the researcher's agreement with Cetus
gave Roche an ownership interest in the patent. Stanford appealed
to the Supreme Court.
Oral Argument is scheduled for February 28, 2011.
Products Liability
Actavis Elizabeth, LLC v. Mensing (Docket No 09-1039),
Actavis Inc. v. Demahy (Docket No. 09-1501) &
PLIVA Inc. v. Mensing (Docket No. 09-993)
The Supreme Court will determine whether individuals injured by
generic versions of brand-name drugs can bring state-court lawsuits
for failure to warn of dangerous side effects.
These three cases have been consolidated into one hour of oral
argument. Reglan and its generic equivalent, metoclopramide, are
used to treat gastrointestinal symptoms caused by diabetes. The
plaintiffs in this case developed a serious neurological condition
after taking the generic version of Reglan. The Supreme Court has
previously ruled that failure-to-warn claims are not preempted by
the Federal Food and Drug Act, which regulates the contents of drug
labels. The generic manufacturers claim that their situation is
different. Because the generic label must be identical to its
brand-name counterpart, the generic manufacturers argue that they
cannot be sued for failure to warn as long as they reproduced the
brand-name label accurately. The Fifth and Eighth Circuits ruled
against the manufacturers, who appealed to the Supreme Court.
Oral Argument is scheduled for March 30, 2011.
Constitutional Rights and Freedoms
Arizona Free Enterprise Club v. Bennett (Docket No
10-238) & McComish v. Bennett (Docket No.
10-239)
The Supreme Court is asked to determine if a law that gives
matching funds to publicly financed candidates violates privately
financed candidates' and interest groups' freedom of
speech.
These two cases deal with identical issues and have been
consolidated into one hour of oral argument. Arizona election laws
include a matching funds trigger for publicly financed candidates.
If privately financed candidates or independent groups spend
certain dollar amounts campaigning against a publicly financed
candidate, the publicly financed candidates get an additional
influx of state money. Privately financed candidates claim this law
punishes them for exercising their First Amendment right to freedom
of speech by giving extra money to their opponents each time they
purchase ads. The privately financed candidates and interest groups
sued in federal court, but the Ninth Circuit Court of Appeals
upheld the law as constitutional. The privately financed groups
appealed to the Supreme Court, which granted a preliminary
injunction preventing the distribution of matching funds until the
Supreme Court reaches a decision.
Oral Argument is scheduled for March 28, 2011.
Civil Rights
Fox v. Vice (Docket No. 10-114)
A civil rights statute allows a recovery of attorney's fees for
plaintiffs if they win their case and for defendants if a
plaintiff's case is ruled frivolous. The Supreme Court must
decide if a defendant can recover attorney's fees if a
plaintiff files frivolous federal claims along with non-frivolous
state-law claims.
Ricky Fox sued Chief of Police Vice in Louisiana state court,
claiming violations of federal and state laws. The case was removed
to federal court, where the federal civil rights claims were
dismissed, and the remaining claims were sent back to state court.
In dismissing the federal civil rights claims, the federal district
court awarded attorney's fees to Chief Vice. Because the main
focus of the complaint was the federal civil rights claim, the
district court awarded all of the defendant's attorney's
fees up to the point where the claim was dismissed. Fox appealed
the decision, claiming that the award was not allowed because he
still had valid state claims proceeding in state court, and some of
the work done by the attorney on the federal claims was equally
useful in defending the non-frivolous state-law claims. The Fifth
Circuit Court of Appeals upheld the complete award of fees, and Fox
appealed to the Supreme Court.
Oral Argument is scheduled for March 22, 2011.
Classified Information
Boeing v. U.S. (Docket No. 09-1302) & General
Dynamics v. U.S. (Docket No. 09-1298)
The Supreme Court will decide if the United States Government can
sue a federal defense contractor for breach of contract, and claim
that the state-secrets doctrine prevents the contractor from
asserting a specific defense that would require disclosure of
classified information.
These two cases have nearly identical facts, and the Supreme Court
has consolidated them into a single appeal. The cases involve a
contract for the design and construction of the A-12 Avenger, a
stealth fighter plane created for the United States Navy. Cost
overruns and missed deadlines convinced the Pentagon to cancel the
contract in January 1991. In the resulting breach-of-contract claim
against the United States Government, the contractors tried to
prove that the government refused to share essential stealth
technology with the contractors as promised. The government argued
that the stealth technology was a state secret protected from
disclosure. Under the state-secrets doctrine, litigation of an
issue is not allowed if it would require a party to disclose state
secrets. The Court of Federal Claims agreed, and it entered
judgment in favor of the United States Government. The Federal
Circuit Court of Appeals affirmed, and the contractors appealed to
the Supreme Court.
Oral Argument was scheduled for January 18, 2011.
Health Care
Astra USA v. Santa Clara County (Docket No.
09-1273)
The Supreme Court will determine if a third party can sue drug
companies for violating price limitations present in contracts with
the United States Government.
Drug manufacturers regularly enter into Pharmaceutical Pricing
Agreements (PPAs) with the United States Government. Under a PPA,
the manufacturers agree to sell their products to health care
providers at or below a "best price" calculated relative
to the average manufacturing cost of the drugs. The federal
government has the authority to enforce the provisions of the
contract, but the contract does not say whether the health care
providers (as third-party beneficiaries to the contract) can sue
the manufacturers. In general, unless a federal statute gives
private citizens the right to sue they must rely on the federal
government to enforce the statute. Government staffing and
budgetary constraints have prevented enforcement by the federal
government in this case.
The federal district court dismissed the health care provider's
lawsuit, ruling that the contract did not provide a private right
to sue. The Ninth Circuit Court of Appeals disagreed, holding that
federal common law provides a third-party beneficiary of a
government contract with the right to sue to enforce the provisions
of the contract. The drug manufacturers appealed to the Supreme
Court.
Oral Argument was scheduled for January 19, 2011, and did not
include Justice Kagan, who recused herself.
Securities
Matrixx Initiatives, Inc. v. Siracusano (Docket No.
09-1156)
The Supreme Court is asked to decide if a report of adverse side
effects must be statistically significant in order to be material
information required for disclosure under the Securities and
Exchange Act.
Matrixx Initiatives ("Matrixx") makes Zicam Nasal Spray,
a homeopathic nasal spray containing Zinc. Some Zicam users
reported the loss of their sense of smell after using Zicam.
Although Matrixx was aware of this problem, it believed the problem
occurred at a statistically insignificant rate, and continued to
issue press releases promoting the benefits of Zicam and predicting
increased brand growth. Eventually lawsuits piled up, stock price
plummeted, and Matrixx recalled Zicam. Matrixx shareholders then
brought a claim for securities fraud under Section 10(b) of the
Securities and Exchange Act. The shareholders claimed the company
misrepresented the risks associated with Zicam and the potential
for resulting lawsuits. Matrixx argued that the Securities and
Exchange Act only requires disclosure of material facts, and the
reports of loss of smell were statistically insignificant, and
therefore immaterial. The district court granted Matrixx's
motion to dismiss, and the Ninth Circuit reversed, holding that it
was for the jury to decide if the reports had enough statistical
significance to require disclosure. Matrixx appealed to the Supreme
Court.
Oral argument was scheduled for January 10, 2011.
Telecommunications
Isiogu v. Michigan Bell Telephone Co. (Docket No.
10-329) & Talk American v. Michigan Bell Telephone
(Docket No. 10-313)
The Supreme Court will decide whether state utility commissions may
require major telephone companies, such as AT&T and Verizon, to
provide smaller competitors with access to their transmission lines
and infrastructure at cost (as opposed to market rates).
The Telecommunications Act of 1996 requires local telephone
monopolies to share their equipment and services with competitors.
This dispute is over the amount the incumbent monopolies are
entitled to charge for access. The monopolies, understandably, wish
to charge profitable rates; the competitors want access at the
monopolies' cost. The Sixth Circuit ruled that the local
telephone monopoly can charge competitive rates for access to
certain networks. The small competitors and the state utility
commission appealed to the Supreme Court.
Oral Argument is scheduled for March 30, 2011, and will not include
Justice Kagan, who recused herself
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