Eighth Circuit Creates New Class Action Fairness Act Requirement, Sends Case to State Court

Cruz-Alvarez_FFeatured Expert Contributor – Civil Justice/Class Actions

Frank Cruz-Alvarez, Shook, Hardy & Bacon, L.L.P. (co-authored with Talia Zucker, Shook, Hardy & Bacon, L.L.P.)

On April 4, 2014, the U.S. Court of Appeals for the Eighth Circuit breathed new life into a proposed consumer class action lawsuit that was previously—and properly—dismissed with prejudice by the U.S. District Court for the District of Minnesota.     Instead of affirming the district court’s decision, the Eighth Circuit, in an attempt to save the lawsuit, reversed and remanded Melvin Wallace v. ConAgra Foods, Inc., — F.3d —-, 2014 WL 1356860 (8th Cir. Apr. 4, 2014), to the Minnesota state court where it originated. In doing so, the court’s ruling, either by design or by accident, undermined the framework and legislative purpose of the Class Action Fairness Act (“CAFA”).

The case originated in May of 2012, when a group of consumers purporting to represent a putative class sued ConAgra Foods, alleging that some of the company’s Hebrew National beef products are not 100% kosher, as the label claims. 2014 WL 1356860 at *1.ConAgra manufactures Hebrew National meat products using beef slaughtered by AER Services, Inc. (AER). Id. The slaughtering takes place in the facilities of American Foods Group, LLC (AFG), which sells kosher meat to ConAgra and any remaining meat to third parties. Id. AER employs the religious slaughterers, and a third party kosher certification entity named Triangle K, Inc., monitors whether AER, AFG, and ConAgra comply with the kosher rules. Id.

ConAgra promotes the kosher requirements as a reason to purchase Hebrew National products, which cost more than similar non-kosher products. Id. The consumers claim, however, that manufacturing quotas—not kosher rules—is the deciding factor in whether certain meat is certified as kosher; and with a quota of 70% for kosher meat, the kosher inspection process has become defective and unreliable. Id. at *2. Consequently, the consumers maintain they have been misled into paying an “unjustified premium for Hebrew National’s ostensibly kosher beef.” Id. at *1. Continue reading

Does FTC Glass Settlement Break the Efficiencies Mold?

amurinoFeatured Expert Column – Antitrust/Federal Trade Commission

Andrea Agathoklis Murino,Wilson Sonsini Goodrich & Rosati

(Editors note: The Legal Pulse would like to (belatedly) congratulate Andrea on her promotion to partner, the announcement for which at the end of last year escaped our discovery)

As expected, on April 11, 2014, the Federal Trade Commission (“FTC”) announced the resolution of their investigation and administrative court challenge into the $1.7 billion acquisition of Saint-Gobain Containers, Inc. (“St. Gobain”) by Ardagh Group SA (“Ardagh”). In order to allow the transaction to proceed and resolve the pending administrative trial, Ardagh agreed to sell six of its nine glass container manufacturing plants in the United States to an FTC-approved buyer within six months, including all tangible and intangible assets, and customer contracts. (All pleadings and filings for all parties, including the original complaint, which argued that the acquisition would harm competition in the markets for glass containers used to package beer and spirits, are available online.)

The fact that this litigation was resolved via a divestiture of brick-and-mortar facilities in an industry like glass manufacturing is not news of note to this FTC observer. What is worthy of pause, however, is that the vote to approve this consent was not unanimous (it was 3-1) and that the efficiencies defense stands front-and-center in the dispute between the majority and minority.

For the majority, Chairwoman Ramirez and Commissioners Brill and Ohlhausen, found that the transaction as originally structured would have resulted in a violation of Section 7 of the Clayton Act. When presented with a carefully crafted remedy, these Commissioners believed that the remedy would “fully replace[ ] the competition that would have been lost in both the beer and spirits glass container markets had the merger proceeded unchallenged.” Thus, they voted to accept the settlement. Continue reading

WLF Briefing Discusses FDA’s “Plaintiffs’ Bar Over Patients” Generic Drug Labeling Proposal

FDA’s Generic Drug Labeling Proposal: Unauthorized and Counterproductive Disturbance of the Hatch-Waxman Balance

Our Panelists

  • Ralph G. Neas, The Generic Pharmaceutical Association
  • Alex Brill, American Enterprise Institute
  • Richard A. Samp, Washington Legal Foundation

Accompanying Materials

 

EPA and the Army Corps’ “Waters of the U.S.” Proposal: Will it Initiate Regulatory Overflow?

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Lisa Jones, Sidley Austin LLP

On March 25, 2014, the Environmental Protection Agency (EPA) and the United States Army Corps of Engineers (Corps) (“the Agencies”), released a long-awaited Proposed Rule defining the scope of “waters of the United States” governed by the Clean Water Act (CWA or Act). Since its release, the proposal has been praised by some, questioned by many others, and already was the subject of hearings on Capitol Hill. If finalized, the proposal will most likely end up in court—and if it were allowed to stand as is, would most certainly cause significant impacts across multiple sectors of our economy, from agriculture to housing to energy.

Decades in the making, the Proposed Rule would supersede existing agency guidance, and replaces the Obama Administration’s previous effort to issue its own “waters of the United States” guidance. The 370-page notice proposes to define “waters of the United States” by regulation, after allowing agency guidance documents and various Supreme Court decisions* to define the phrase on a case-by-case basis since 1975. The definition is critical, because the scope of the “waters of the United States” is the cornerstone of the Clean Water Act; it sets the parameters of the jurisdiction Congress established in the Act. Thus, the breadth of this definition will determine when EPA and the Corps may regulate all manner of development under the Act. Continue reading

Patents for “Real Inventions with Computers”?: The High Court Hears Arguments in CLS Bank Case

bethShaw-0580editConvertedProfile-e1360002102239Featured Expert Column — Patent Law

Beth Z. Shaw, Brake Hughes Bellermann LLP

On Monday, March 31, the Supreme Court heard argument in the much anticipated patent case Alice Corporation v. CLS Bank International. The arguments focused on the scope of application of Section 101 to claims for a patent related to computer data processing. In a previous divided opinion, the U.S. Court of Appeals for the Federal Circuit failed to agree on any standard as to why the computer-related patent claims were not patent eligible.

Justice Breyer, who questioned the parties more than any other justice, asked the Petitioner how the process claims at issue were different from King Tut applying calculations using an abacus. He queried how to come to a result that might have broader policy implications. Justice Breyer appeared to struggle with the idea of allowing a broad rule that might result in “competition on who has the best patent lawyer,” yet also expressed concern about ruling out “real inventions with computers.”

Justice Sotomayor asked if the Petitioners are “trying to revive the patenting of a function.” She also questioned whether the medium, system, and method claims stand or fall together, an issue that has plagued the divided Federal Circuit for some time. Justice Sotomayor wondered, however, if the Court actually needs to “announce a general rule with respect to software” to resolve this case.

The Petitioners argued that Congress intended the courts apply Section 102 to invalidate patents based on novelty, yet continue a liberal interpretation of Section 101. Justice Ginsburg seemed reluctant to accept that line of reasoning, stating that there are “four Justices” who don’t “buy that argument.” Justice Scalia noted, however, that “four is not five.” Justice Scalia’s questions suggest that he believes that a Section 101 patent-eligibility question should not be confused with the question of whether an invention is novel based on prior art.

Focusing on the practical application of the law by judges, Justice Kagan asked, “[w]hat do we want a judge to do at this threshold level in terms of trying to figure out whether the description is sufficient to get you past [101]?”

It appears that at least some of the justices may prefer to invalidate the patent here without reaching a broader question of when computer-related inventions should be patent-eligible. There also appear to be a group of justices, including Justice Scalia, who want to more clearly differentiate between the question of novelty and the question of an “abstract idea” as defined by previous case law applying Section 101. The questions from the oral argument at the Supreme Court reflect a philosophical debate and potentially divided Court, which could result in a decision with multiple opinions, not unlike that of the Federal Circuit in this case.

Finger on the Pulse: From Our Blogroll and Beyond

  • Pepsico General Counsel (and new member of WLF’s Legal Policy Advisory Board) Larry D. Thompson has a new scholarly article on the Foreign Corrupt Practices Act (FCPA Professor)
  • SEC Commissioner Gallagher speaks out on reforms needed to address proxy wars initiated by gadfly shareholder activists (Reuters)
  • More troubling revelations on FDA and meningitis B vaccine, which we’ve blogged on here (and here) (Forbes.com The Apothecary)
  • Green activism has consequences: Desert smelt prevails over California water supply (Perkins Coie)
  • In battle of NIMBY activists and wind power advocates, wind power advocates win this round (DLA Piper)
  • Electric car maker’s efforts to sell directly to consumers tests retail distribution model and state laws (Truth on the Market)
  • State AGs inject themselves into scrutiny of Comcast-Time-Warner merger (Reuters via State AG Monitor)
  • Federal trial judge properly excludes “expert” testimony based solely on extrapolation from unreliable case reports (Product Liability Monitor)
  • POM Wonderful brings food labeling dispute to the Supreme Court; will it impact cases in the Food Court? (Private Surgeon General Class Action Defender)
  • Whistleblowers succeed in expanding controversial “implied certification” theory of qui tam liability under California false claims law (Original Source)
  • The real and ugly facts of litigation financing (D&O Diary)
  • Plaintiffs can’t evade removal under Class Action Fairness Act by suing for only declaratory relief (Class Defense)
  • Daimler v. Bauman SCOTUS decision and U.S. jurisdiction over foreign corporations scrutinized (Corporate Counsel)

Supreme Court Observations: Lexmark Int’l v. Static Control Components

Villafranco_John_web Lynch_Michael_web Garcia_Paul_webGuest Commentary

by John E. Villafranco, Michael C. Lynch, and Paul R. Garcia, Kelley Drye & Warren LLP*

(Ed. Note: Villafranco and Lynch authored an October 2013 WLF Legal Opinion Letter previewing the Lexmark case which can be accessed here)

On March 25, 2014, a unanimous Supreme Court in Lexmark Int’l, Inc. v. Static Control Components, Inc. ruled that a manufacturer of components for use in refurbished toner cartridges has standing under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), to sue the maker of printers in which the cartridges could be used for false advertising. Static Control Components, Inc., the component manufacturer, alleged that Lexmark International, Inc., the printer company, falsely told consumers that they could not lawfully purchase replacement cartridges made by anyone other than Lexmark, and falsely told companies in the toner cartridge remanufacturing business that it was illegal to use Static Control’s components.

The question before the Court was not whether Static Controls has constitutional standing under Article III, but whether it has so-called “prudential standing.” The Court initially noted that “prudential standing” is a misnomer, and that the real question “is whether Static Control falls within the class of plaintiffs whom Congress authorized to sue under § 1125(a).” Slip Op. 8-9. If it does, a court “cannot limit a cause of action that Congress has created because ‘prudence’ dictates.” Slip Op. 9. Rejecting the various approaches of the lower courts—from the competitor-only test, to antitrust standing, to the reasonable interest inquiry—the Supreme Court instead adopted a two-party inquiry.

Continue reading

District Court’s Attorney-Client Privilege Ruling Counteracts Incentives to Perform Internal Investigations

829-Brower_GregjohnsonGuest Commentary

by Greg Brower and Brett W. Johnson, Snell & Wilmer LLP*

It has long been assumed that under the U.S. Supreme Court’s decision Upjohn Co. v. United States, reports generated during an internal investigation undertaken at the direction, and under the supervision, of corporate attorneys are protected from discovery by the attorney-client privilege.  It came as a significant surprise then that the U.S. District Court for the District of Columbia recently held that the privilege does not apply when an investigation is conducted pursuant to a legal requirement, and not purely for the purpose of obtaining legal advice.  Unless reversed, this decision could pose a significant new dilemma for regulated companies, and especially for government contractors, that perform internal investigations to determine whether “credible evidence” of actual wrong-doing exists.

The decision in United States of America ex rel. Harry Barko v. Halliburton Company, et al. is the latest in a long-running False Claims Act (“FCA”) suit against Halliburton and its former subsidiary, Kellogg, Brown & Root (“KBR”).  In the course of pre-trial discovery, the relator sought the production of reports created by KBR in the course of conducting internal investigations into alleged violations of the company’s Code of Business Conduct (“COBC”).  KBR objected to the production of the COBC reports, contending they were protected from discovery by the attorney-client privilege and work-product doctrine.  On the relator’s motion to compel, the court rejected KBR’s argument that Upjohn was dispositive of the issue, and ordered that the reports be produced.  The court reasoned that because the KBR investigators who prepared the reports were not lawyers, and because the subject investigations were done pursuant to legal requirements and corporate policy, and not solely for the purpose of obtaining legal advice, the reports were not privileged.

Continue reading

Department of Energy Task Force Issues Report on FracFocus

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Ben Tannen, Sidley Austin LLP

The scope and extent of disclosure of hydraulic fracturing fluids continues to be an issue with which regulators are wrestling on both the state and federal levels.  In the most recent addition to the discussion, on February 24, 2014, the U.S. Department of Energy’s (DOE) Secretary of Energy Advisory Board (SEAB) N1 released its Task Force Report on FracFocus 2.0 (“Report”).  This Report makes recommendations related to FracFocus, the web-based, publicly available national hydraulic fracturing chemical constituent registry, on topics ranging from trade secret claims to future funding.  The Report was developed in response to a November 2013 request by Secretary of Energy Ernest J. Moniz asking SEAB to create a task force to focus on seven discrete issues related to FracFocus.  N2  In 2011, a SEAB subcommittee had previously studied the potential environmental impacts of unconventional gas production.  N3

FracFocus, operated by the Ground Water Protection Council and Interstate Oil and Gas Compact Commission, started in April 2011.  N4  In its first year of operation, it publicized information on over 14,000 wells from 231 companies.  N5  Since then, the number of wells registered on the website has more than quadrupled, to over 62,000.  N6  By the end of 2013, 14 states required some sort of disclosure on FracFocus, while companies located in other states voluntarily disclosed information on the site.  N7  According to the Report, “FracFocus has greatly improved public disclosure quickly and with a significant degree of uniformity.”  N8

The issue the Report examines most closely is the extent to which companies rely on the trade secret exemption in making disclosures on FracFocus.  The current FracFocus disclosure exemption is based on an OSHA regulation.  N9  The task force asserted its belief that, as a general principle, “full disclosure of all known constituents added to fracturing fluids is desirable.”  N10 Continue reading

WLF Program to Address FTC’s Dual Role in Administrative Litigation: Prosecutorial and Adjudicative

FTC’S ADMINISTRATIVE LITIGATION PROCESS:

Should the Commission Be Both Prosecutor and Judge?

A Washington Legal Foundation Briefing

Tuesday, March 11, 9:30-10:30 a.m.

RSVP to attend in person (2009 Massachusetts Ave., NW) to glammi@wlf.org

To view live online click HERE to register

Our Speakers: