High Court Should Not “DIG” Dart Cherokee Basin Case

supreme courtDart Cherokee Basin Operating Co. v. Owens, which raises right-of-removal issues under the Class Action Fairness Act (CAFA), is among the more important civil justice cases being heard by the Supreme Court this term. Legal commentators are virtually unanimous in concluding that the trial court adopted an overly restrictive standard governing removal of cases from state to federal court. Yet, as Columbia Law Professor Ronald Mann noted in a recent column for ScotusBlog, questioning during the October 7 oral argument revealed that the Court may be reluctant to decide the case at all. Every question posed to counsel for Petitioner focused on “vehicle” issues, not on the merits of his CAFA arguments. Several justices even suggested that the case might be dismissed as improvidently granted—which would be a terrible mistake.

On closer examination, the procedural posture issues that troubled the Court at oral argument turn out to be insubstantial; they should not dissuade the Court from addressing the Question Presented by the petition. Moreover, as explained in Washington Legal Foundation’s amicus brief, it is critical that the Court retain jurisdiction in this case to unwind the judicially created doctrine that motivated the mistake below in the first place. Dart Cherokee provides the Court an ideal opportunity to end the rule of construction whereby federal courts continue to narrowly construe federal removal statutes against the party seeking removal, contrary to Supreme Court precedent and despite the utter lack of any textual basis for doing so. Continue reading

Update: World Trade Organization Rejects USDA Meat Rule on Country of Origin Labeling

WTOYesterday, a World Trade Organization (WTO) compliance panel publicly released its determination that the United States Department of Agriculture’s (USDA) country of origin labeling rule for certain cuts of muscle meat violated the international Technical Barriers to Trade agreement. Canada had sought such a determination, supported by other nations such as Argentina, Australia, and Japan.

News reports on this decision caught The WLF Legal Pulse‘s attention because U.S. meat producers had challenged the so-called COOL rule under the First Amendment in the U.S. Court of Appeals for the D.C. Circuit.  A number of posts (here and here) assessed the court’s July 29 en banc decision rejecting the producers’ challenge.

As we argued in the August 25 post, the majority improperly assisted the government by identifying the substantial government interests that the USDA rule advanced, including the protection of domestic farmers from foreign competition. Because of the pending proceedings at the WTO, the U.S. government had formally denied that protectionism was one of the goals of its COOL regulation.

The meat producers have asked the D.C. Circuit to reconsider its en banc holding, a motion on which the court has yet to rule. It is uncertain what impact the WTO determination will have on that request.

Federal Circuit Orders Eastern District of Texas Patent Suit Stayed

The WLF Legal Pufederal circuitlse has addressed the U.S. Court of Appeals for the Federal Circuit’s patent litigation venue jurisprudence in several posts (here and here). That court issued two rulings this past March (In re Apple Inc. and In re Barnes & Noble, Inc.) that, in our opinion, incorrectly applied factors the Federal Circuit had previously relied upon to order patent suits transferred to more appropriate venues. On October 9, a unanimous three-judge panel added another twist to the Federal Circuit’s venue case law with In re Google Inc.

Background. Last October, non-practicing entity Rockstar Consortium filed a patent infringement suit in the Eastern District of Texas (EDTX) against five companies whose technology utilized Google’s Android operating system. At the end of 2013, Google filed a declaratory judgment action against Rockstar in the Northern District of California (NDCA) that involved the same patents that Rockstar was suing to enforce in Texas. Rockstar countersued Google in the NDCA and concurrently added Google as a defendant in the EDTX action. Rockstar then moved to transfer or dismiss the California action, which the NDCA denied. Google and its five customers petitioned the EDTX to stay Rockstar’s infringement action pending an outcome in the NDCA, or to transfer the case to California. EDTX Judge James Rodney Gilstrap denied the order, and the six companies appealed. Continue reading

A Blow to Legal Ethics from an Unlikely Source

scales of justiceMark Chenoweth is General Counsel of Washington Legal Foundation

I cannot recall for sure when I first heard about the American Judicature Society (AJS), but it was probably about 20 years ago when my work-study job in college included re-shelving volumes of Judicature at the campus law library. There was a time when AJS was a pillar of the American legal establishment, led by the likes of the late Chief Justice and former Secretary of State Charles Evans Hughes, but that time has long since passed.

So, I was not surprised to hear that AJS decided to close its doors last month. After 101 years in the business of “promot[ing] fair and impartial courts through research, publications, education, and advocacy for judicial reform,” the AJS board has concluded that it can’t keep going.

There are always multiple reasons for the failure of a non-profit organization, but a primary factor is invariably the lack of revenue. And indeed AJS President Tom Leighton issued a statement suggesting that AJS’s “membership model has become more challenging” in recent years and that “new nonprofit entities with organizational and financial structures more suited to the times have joined AJS in the fight” for a fair and impartial justice system.

I had not seen anything about AJS or even thought about it for years when I heard the news of its demise, but I decided to visit its website to see what the group has been up to lately. I was shocked to discover that one source of revenue AJS has been seeking—I don’t know for how long—is money from judicial cy près awards. When an organization ostensibly devoted to fair and impartial justice, one whose slogan is “Advocating Integrity in American Justice,” resorts to hitting up judges for cy près funds, it has truly outlived its usefulness.

By all appearances, AJS does not seem to be the least bit embarrassed by this fundraising tactic. There is a prominent “Key Link” on the homepage to “Cy Pres.” I actually clicked on it thinking that AJS might have posted an eloquent explanation that I had missed about the ethical minefield represented by cy près awards. Instead, the link takes one to a page that says the following:

If you are a Federal Judge you can donate to AJS by giving Cy Pres damages amounts that were unclaimed in class action lawsuits. Simply fill in the information below to make your donation today!

And then there is a short form to fill out, though how exactly the short form suffices to accomplish a donation is not obvious. Perhaps AJS just views the form as a shorthand way of letting the organization know that cy près award funds are on the way.

In case you are not aware, cy près is highly controversial because it infects the settlement process with perverse incentives having nothing to do with the best interests of class members. An organization like AJS, which spends a significant share of its time and resources advocating for judicial ethics, should really know better than to tout such a discredited practice—let alone encourage judges to engage in it to AJS’s own benefit! At a bare minimum, AJS should counsel judges to consider carefully the ethical ramifications of awarding cy près funds to AJS before doing so. The ethical disconnect here astounds, though I trust that AJS’s hitting hard financial times has nothing to do with the oversight.

Meanwhile, in our own efforts to support fair and impartial justice, Washington Legal Foundation recently published a Working Paper by James Beck and Rachel Weil entitled “Cy Pres” Awards: Is the End Near for a Legal Remedy with No Basis in Law? In it they explain further the problems with cy près (including ethical conflicts of interest) and discuss several recent court opinions casting doubt on the practice. Rather than summarize the article here, I will simply recommend that you click on the link to check it out for yourself.

As it happens, at least once in the past year WLF itself was contacted as the designated recipient of cy près funds, but we figured out pretty quickly that the caller was looking for the Legal Foundation of Washington. Just to be clear, WLF does not accept cy près funds. So, if you are judge, please do not award us any leftover class action funds. Do, however, check out the Beck and Weil paper for a thoughtful discussion of the legal, constitutional, and ethical concerns with cy près awards in the class action litigation context.

Also published by Forbes.com at its WLF contributor site

Eleventh Circuit Ruling a Welcome Judicial Pushback against Criminal Enforcement of Regulations

strickly skillz

On a balmy late August day in Orlando, Florida, nearly a dozen Orange County police officers, some dressed in ballistic vests and masked helmets, swept into Strictly Skillz barbershop with their guns drawn. As their colleagues blocked off the parking lot entrances and exits, the officers declared that the shop was closed and ordered its patrons to leave, depriving the shop of business and perhaps deterring future patrons. Two barbers and the owner were handcuffed. A plain-clothed member of the raiding party demanded to see the barbershop’s business license.

Yes, you read that correctly. On August 21, 2010, a veritable SWAT team of heavily armed police conducted a warrantless inspection to check for barbers’ licensing violations. The Florida Department of Business and Professional Regulation (DBPR) inspector soon determined that Strictly Skillz barbers were properly licensed (which, as you’ll learn below, they already knew), so the police uncuffed the detained barbers and owner and left the shop.

The owner and three barbers sued a number of the officers involved for violating their Fourth Amendment rights against unreasonable search and seizure, and a federal district court denied the defendants’ motion for summary judgment on qualified immunity grounds. On September 16, the U.S. Court of Appeals for the Eleventh Circuit issued a strongly worded opinion affirming the lower court (Berry v. Leslie). The ruling provides a forceful reminder that the Fourth Amendment protects businesses (and their employees) from overzealous regulatory inspections. Continue reading

Profit, Not Ideology, Motivates Cyberlockers that Facilitate Copyright Infringement

copyrightwarningInformation wants to be free” is a standard rejoinder to criticism of online entertainment piracy. Such a sentiment may motivate some copyright thieves, but profit, not ideology, drives the proprietors of “cyberlockers” whose business is trafficking pirated entertainment content. A recent study by the Digital Citizens Alliance (DCA)—”Behind the Cyberlocker Door“— has laid bare that reality. These websites generate profit margins that lawful businesses can only dream of, and they do so on the backs of countless workers in the music, movie, and television industries.

DCA analyzed data from the 15 top direct download cyberlockers and 15 top streaming cyberlockers. It found that 78% of the files on the direct download sites, and 84% on the streaming sites, were infringing content such as music, movies, and TV shows. Total annual revenue for the 30 businesses was $96.2 million, which averages out to $3.2 million a site. The average profit ratio of the direct download sites was 63.4%, with one site enjoying 88.5%. For the streaming cyberlockers, the average ratio was 87.6%, with the highest coming in at 96.3%.

Much like people who run the illicit cyberlockers, some of those who unlawfully access and share copyright-protected content may claim to be advancing an extreme public commons ideology or “sticking it to Big Entertainment,” but the volume of such piracy reflects a baser motivation. Pirated content consumers’ catchphrase shouldn’t be “information wants to be free;” it should be  “we want free information.” Continue reading

White House Boosts Fictional “Food Addiction” Concept to School Kids

BSFriesAs we’ve discussed numerous times here, some nutrition nanny activists, regulators, and plaintiffs’ lawyers have embraced and promoted the concept that food can be “addictive.” The term grabs people’s attention, conjuring up disturbing mental images of helplessness and withdrawal. It’s no wonder, then, that the notion of “food addiction” is often invoked in the context of greater government regulation, taxes, and advertising restrictions designed to redirect our dietary choices.

On September 26, the concept received its highest profile reference yet, from First Lady Michelle Obama, during an interview broadcast to millions of students on the in-school “Channel One News.” When asked about the criticism the federal government’s new school lunch rules have faced, the First Lady responded:

It’s natural. Change is hard. And the thing about highly processed, sugary, salty foods is that you get addicted to it. I don’t want to just settle because it’s hard. I don’t want to give up because it’s expensive. I don’t want that to be the excuse.

The interview appears to have been very carefully scripted, so her mention of “addiction” was hardly spontaneous or casual, nor was her referencing it in the context of “highly processed, sugary, salty foods.” Federal government regulation is taking direct aim at those demonized products and their ingredients.

For instance, the Department of Agriculture has proposed banning the sale of certain foods in public schools that don’t meet “Smart Snacks” guidelines, as well as banning advertising of those products in schools. Also, as part of its update of the Nutrition Facts label affixed to all packaged foods, the Food and Drug Administration (FDA) is proposing a new “added sugars” item. FDA is pursuing this mandate even though the agency acknowledges that no chemical difference exists between naturally occurring and added sugars in food. The “added sugars” mandate would also expose federal regulators to constitutional challenges under the First and Fourth Amendments, as leading food regulation attorneys Richard Frank and Bruce Silverglade argue in a September 26 WLF Legal Backgrounder.

The First Lady’s reference to “food addiction” was ill-advised, especially considering the age and maturity level of her captive audience on Channel One News. The concept of addiction has been significantly dumbed down and politicized over the past few decades to the point where it has almost lost any objective meaning. Reputable scientists have questioned not only the methodology behind “food addiction” studies, but also the researchers’ motivation.

The “Let’s Move” effort led by the First Lady advances the indisputably worthy goal of a healthier America, but that goal cannot be met by fomenting faulty food addiction concerns. Such a concept creates a serious moral hazard—people struggling to lose weight may throw up their hands because they believe addiction to (insert high-calorie product) has taken hold. Talk of addiction, and the choice-restrictive public policies it fuels, also diverts attention and resources from actual solutions to obesity in America.

Also published by Forbes.com at WLF’s contributor page