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Upcoming Cases in the United States Supreme Court’s 2010 Term: Volume II
February 15, 2011
by Ashlee M. Bekish and John A. Kvinge*

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.

Larkin Hoffman’s Business Litigation practice group will continue to keep you informed as the Supreme Court issues decisions on these cases.

* John A. Kvinge is a law clerk at Larkin Hoffman Law Firm and is currently attending the University of Minnesota Law School.

  
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