Litigation Update - Summer 2006
In this issue:
Major Business Rulings from the U.S. Supreme Court's 2005–2006 Term
The Supreme Court’s 2005-2006 Term came to an end on June 29, 2006, when the Court announced its long-awaited ruling on the
legality of trial by military commissions. The Court’s last days yielded high profile opinions on congressional redistricting,
campaign finance, and the death penalty as well. The Supreme Court also decided numerous cases this past Term that will have
a significant impact on business interests in the marketplace. Most noticeable may be the rulings on antitrust and patent
law, both areas in which the Court appears to be increasing the number of cases it reviews. In addition, several cases this
Term will have a direct impact on employment practices. We analyze below the trends in these three areas. We also take a brief
look at some of the other significant business cases involving environmental regulation, securities law, banking, RICO, and
arbitration.
Trio of Antitrust Rulings Reversing Liability
By W. Stephen Smith
The Supreme Court addressed a range of antitrust issues this Term and, in each of three cases, reversed an appellate court’s
finding of liability. The trio of cases underscores the Court’s continuing focus on economic substance rather than legal formalism
in evaluating whether business conduct gives rise to the kinds of competitive effects that the antitrust laws proscribe.
Click here to read the entire article.
A Significant Patent Ruling on Injunctive Relief
By Beth S. Brinkmann
Expectations were high this Term for the Court’s opinions on patent law. The opinions provided less guidance, however, than
anticipated.
The most watched case this Term in the patent area was eBay v. MercExchange, L.L.C., 126 S. Ct. 1837, where the Court unanimously, but narrowly, held that requests for injunctive relief against patent infringers
are not to be automatically granted. Rather, a plaintiff must meet the traditional four-factor test applied by courts when
considering whether to award permanent injunctive relief to a prevailing plaintiff, i.e., irreparable injury; inadequacy of legal remedies; balance of hardships; and the public interest. The Court ruled that the
Federal Circuit had erred in adopting a categorical rule that a permanent injunction should be denied in a patent case only
in the “unusual” case, but that the district court also did not properly apply the traditional test because it relied on “plaintiff’s
willingness to license its patents” and “its lack of commercial activity in practicing the patents” as sufficient to establish
that the patent holder would not suffer irreparable harm if an injunction did not issue. The Court stated that “traditional
equitable principles do not permit such broad classifications” and noted that some patent holders, “such as university researchers
or self‑made inventors, might reasonably prefer to license their patents” and “may be able to satisfy the traditional four‑factor
test.”
Click here to read the entire article.
Major Employment Rulings Tend to Favor Employees
By Seth M. Galanter
The Court this Term tended to rule in favor of employees in discrimination cases. In three cases alleging violations of Title
VII of the Civil Rights Act of 1964 (which prohibits discrimination in employment on the basis of race, religion, or sex),
the Court held that the lower court had improperly ruled in favor of the employer. In Ash v. Tyson Foods, Inc., 126 S. Ct. 1195, the Court held that a hiring officer’s use of the term “boy” to refer to African-American men may be evidence
of racial bias depending on context, inflection, tone, local custom, or historical usage. The opinion also confirmed that
the disparity in qualifications between selected and rejected job applicants can demonstrate that an employer’s explanation
was a pretext for discrimination.
Click here to read the entire article.
Business Cases to Watch for Next Term
By Brian R. Matsui
The Supreme Court already has granted review in 31 cases that will be heard by the Justices during the next Term of Court,
which begins on the first Monday in October 2006. There are at least a dozen business cases on the docket that are well worth
watching. Listed below are the questions presented by those cases for decision by the Court and, where available, the dates
on which the Court is scheduled to hear oral argument. The Court will grant review in additional cases beginning at the end
of September when the summer recess concludes.
Click here to read the entire article.
Court Recalibrates Federalism Balance
By Seth M. Galanter
The Supreme Court held this Term in Goodman v. Georgia, 126 S. Ct. 877, (consolidated with United States v. Georgia, No. 04-1203), that Congress has the power to require States that engage in conduct that violates the Americans with Disabilities
Act of 1990 to pay damages to persons with disabilities if that conduct also violates the Constitution. The decision was a
rebuke to the lower court, which had held that Congress lacked the power to subject States to the requirement to pay damages
even when their mistreatment of people with disabilities, such as prisoners who use wheelchairs, leads to injuries.
Click here to read the entire article.
Inside the Court
The Solicitor General
The Solicitor General of the United States, commonly referred to as the “SG,” is nominated by the President and confirmed
by the Senate. The SG serves in the United States Department of Justice and manages an office of approximately 20 attorneys
who are responsible for briefing and arguing cases on behalf of the United States government before the Supreme Court.
In addition to litigating the cases where the federal government is a party, the SG regularly gets involved in litigation
between private parties by filing briefs as amicus curiae to inform the Court about the impact that a case will have on a matter of importance to the federal government. An amicus brief by the SG carries special weight because that office is held in high regard by the Court; indeed, the SG has been referred
to by some as the “Tenth Justice,” in part because of this unique relationship in advising the Court.
Generally, the SG participates as amicus after review is granted, but sometimes the Court issues an “Invitation” to the SG to file a brief at the certiorari stage when the Court is deciding whether to grant review in the case. Invitations (also known as CVSGs for “Call for the
Views of the Solicitor General”) are issued in approximately 10 to 20 cases per year.
When an Invitation to the SG is issued, it is critical for the parties and amici following the case to determine how their interests may be affected by the position taken by the SG. There is often opportunity
at this juncture to confer with the SG’s office. By doing so, parties and their supporters can explain to the SG the impact
of the case beyond the particular facts before the Court. A failure to take this opportunity can place a party at a significant
disadvantage when the SG is formulating the position that the federal government will take in its brief to the Court.
Drew S. Days, III, Of Counsel in the Washington, D.C., office served as Solicitor General of the United States from 1993 through 1996. In addition, Beth S. Brinkmann served as an Assistant to the Solicitor General for eight years, and
Seth M. Galanter served as a Bristow Fellow for the Solicitor General.
Law Clerks
The staff of a Supreme Court Justice is small compared to the typical government office. Each Justice is assisted by two secretaries,
an aide to Chambers, and usually four law clerks. The law clerks serve for only one year and are recent law school graduates
who have just completed a year clerking for a judge on a federal court of appeals. The law clerks play different roles in
the Chambers of the different Justices depending on each Justice’s personal style.
One area in which the influence of law clerks has been discussed recently is the process by which the Court decides which
cases to review. Each year thousands of petitions for writs of certiorari are filed to seek review by the Court, but in recent years only 75 to 80 have been granted. At the certiorari stage, eight of the nine Justices (all except Justice Stevens) assign their four law clerks to the “cert pool” (for a total
of 32), which is a mechanism that distributes the certiorari petitions among the pool members so that a single clerk writes a memorandum for the pool analyzing whether the Court should
grant certiorari. Twice a week, each law clerk in the pool generally receives a pile of petitions. They must prepare their pool memos on each
of these cases within the following one or two weeks, and those are then distributed to the eight participating Justices on
a rolling basis before the Conference at which the Justices will vote on whether to grant review in the cases. Often a Justice
will have one of his or her own law clerks add comments to a pool memo before reviewing it, or will independently research
and analyze particularly meritorious petitions. But the pool memo can sometimes represent the first or only analysis that
the Justice reviews.
The large number of certiorari petitions filed each year, and the fact that law clerks play this role in the screening of certiorari petitions, are factors to be taken into account when drafting a petition. The certiorari system requires greater navigation than a case filed in any other appellate court. A petition for a writ of certiorari must be drafted in a concise manner than can easily translate into a pool memo. A petition must be framed in a manner that
is accessible to someone who has basic, not advanced, knowledge of the subject matter of the case, and it must grab the attention
of a Court that is more inclined to deny now and see if the same issue arises again later.
Recent Morrison & Foerster Victories in Lower Appellate Courts
New Hampshire Motor Transport Ass’n v. Rowe (1st Circuit): Won affirmance of summary judgment for trade associations of motor carriers on ruling that key provisions of state
law regulating certain aspects of the sale and delivery of tobacco products are preempted by the Federal Aviation Administration
Authorization Act of 1994.
Schwam v. XO Communications (4th Circuit): Won affirmance of a trial court victory on summary judgment for client XO Communications in ruling that an employment
agreement was not unconscionable and rejecting claim for unjust enrichment of hundreds of thousands of dollars.
Carlos A. Amado v. Microsoft Corp. (Federal Circuit): Won affirmance of a $6.1 million jury verdict finding infringement by Microsoft Corporation of our client’s
patent involving a software application that links a spreadsheet to a database in a live link fashion.
University of Illinois v. Fujitsu, et al. (Federal Circuit): Won affirmance of summary judgment for Fujitsu in a patent infringement case brought by a university and
its licensing entity on two related patents pertaining to driver circuits for display panels.
In re EchoStar Communications Corp. (Federal Circuit): Obtained writ of mandamus for EchoStar vacating trial court order that compelled disclosure of attorney
work product based on an erroneous determination that reliance on an opinion of counsel as part of a willfulness defense in
patent litigation waives the work-product protection for the opinion counsel’s uncommunicated work product.
Minebea Co., Ltd. v. Think Outside, Inc. and Peripheral Technologies, Inc. (Federal Circuit): Won affirmance of trial court victory on summary judgment of non-infringement for client, Think Outside,
which had been sued for infringement in a case involving a patent on a structure designed to prevent the tilting of keytops
on keyboards. Appellate victory resulted in dismissal of additional case against Chicony Electronics, involving different
structure.
Californians for Disability Rights v. Mervyn’s, Inc. (California S. Ct.): Won landmark ruling that directs application to all pending cases of Proposition 64, which amended the
California unfair competition law to change the open-ended standing requirements so that a plaintiff must have suffered “injury
in fact” and lost money or property in order to bring suit under the statute.
Environmental Protection Information Center v. California Dep’t of Forestry & Fire Protection (Cal. Ct. App.,1st App. Dist.; California S. Ct. pending): Prevailed on appeal on behalf of the Pacific Lumber Company with
an order upholding $480 million agreement between client and state and federal regulators involving various state plans, permits,
and approvals, and issues of first impression under California’s Endangered Species Act and Sustained Yield Plans, which are
a part of the timber harvest approval process by which sustained production is ensured over time. The California Supreme Court
granted review on March 29, 2006.
Sebesta v. Schaden (Colorado Ct. App.): Won affirmance of trial court approval of settlement of class action challenging Quizno’s going-private
transaction by former shareholders alleging breach of fiduciary duty.
Johnson Controls, Inc. v. Rudolph (Kentucky Ct. App.): Won reversal and ruling in favor of our clients on due process grounds that a retroactivity period created
by state law for tax refund claims was unconstitutional.
Lanco v. Dir., Div. of Taxation (New Jersey S. Ct. pending): Won grant of discretionary review by The New Jersey Supreme Court on question of whether physical
presence is a prerequisite to income and franchise taxation under the Commerce Clause. Argument is expected before the end
of 2006.
