The California Supreme Court’s Iskanian Opinion: Two Steps Forward, One Step Back

jenkinsGuest Commentary

by Kirk C. Jenkins, Sedgwick LLP*

On June 26, 2014, the California Supreme Court issued its long-awaited opinion in Iskanian v. CLS Transportation Los Angeles LLC. The decision was something of a mixed bag for the defense bar: two major steps forward in the California Supreme Court’s class action jurisprudence, but one step back of uncertain significance.

The plaintiff in Iskanian worked as a driver for the defendant in 2004 and 2005. Halfway through his employment, he signed an agreement providing that “any and all claims” arising out of his employment would be submitted to binding arbitration before a neutral arbitrator. The plaintiff agreed not to bring a representative action either in court or before the arbitrator.

A year after leaving his employment, the plaintiff filed a putative class action complaint, alleging failure to pay overtime, provide meal and rest breaks, reimburse business expenses and various other violations of the Labor Code. The defendant moved to compel arbitration and the trial court granted the motion. But while the matter was pending before the Court of Appeal, the California Supreme Court decided Gentry v. Superior Court, holding that most class action waivers were unenforceable in employment cases. The defendant dropped its motion to compel. Continue reading

New York Court of Appeals Upholds Local Ordinances Restricting Hydraulic Fracturing

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Joel F. Visser, Sidley Austin LLP

*Editor’s note: Washington Legal Foundation filed an amicus brief in support of the Petitioners in the case discussed below.

Across the country, companies are using hydraulic fracturing techniques to develop shale oil and gas resources that create jobs and provide for economic growth. However, developers face a determined opposition that is using referenda, court challenges, and municipal ordinances in an effort to stymie development. In a long-awaited ruling issued today in In re: Mark S. Wallach, as Chapter 7 Trustee for Norse Energy Corp. USA v. Town of Dryden, Case No. 130, and Cooperstown Holstein Corp. v. Town of Middlefield, Case No. 131, the New York Court of Appeals gave this round to the opponents of development, finding the towns’ home rule authority gave it the power to ban development unless explicitly preempted by state statute.

The Court affirmed the appellate court decision that the towns’ prohibitions on oil and gas development were valid zoning ordinances and not preempted by New York’s Oil, Gas and Solution Mining Law (“OGSML”). Two judges dissented from the opinion and would have held that the complete prohibitions on oil and gas activities essentially regulated how oil and gas development can occur and are preempted by the OGSML. The Court made clear, however, that its decision did not address the merits of hydraulic fracturing generally and asserted that such decisions involved policy questions that should be left to the coordinate branches of government.

The OGSML’s supersession clause at issue states: “The provisions of this article [i.e., the OGSML] shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law.” ECL 23-0303(2)). Continue reading

Common Sense Prevails as D.C. Circuit Overturns Trial Court’s Denial of Attorney-Client Privilege Protection

829-Brower_GregjohnsonGuest Commentary

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

Government contractors and other companies subject to internal investigation requirements won some relief from the United States Court of Appeals for the D.C. Circuit last week with a decision that firmly reiterated that Upjohn v. United States does indeed stand for the proposition that confidential employee communications made during a business’s internal investigation led by company lawyers are privileged.

In United States of America ex rel. Harry Barko v. Halliburton Company, et al, defendant Halliburton’s subsidiary, Kellogg, Brown & Root (KBR) filed a petition for writ of mandamus seeking to reverse a district court’s order that KBR produce in discovery, certain reports created as part of internal investigations conducted at the direction of in-house counsel.   Over KBR’s objection, the district court had ordered production of the documents, reasoning 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. For more on the trial court’s opinion, see our March 24 Legal Pulse commentary here.

A three-judge panel of the D.C. Circuit disagreed and vacated the district court’s order.  In so doing, the panel found that the privilege claim by KBR was “materially indistinguishable” from the assertion of the privilege in the seminal Upjohn case.  Specifically, the court of appeals found that because, as in Upjohn, KBR initiated an internal investigation to gather facts and ensure compliance with the law after being informed of potential misconduct, and because the investigation was conducted under the auspices of KBR’s in-house legal department, the privilege applied.  Continue reading

No Name Calling in My Court: Judge Bans Use of Term “Patent Troll” in Jury Trial

thumbnailTrollThis recent item from Law360 (subscribers only) caught our eye: “Judge Koh Bars Apple From Calling Rival ‘Patent Troll’ At Trial.”

In addition to being referenced regularly at this blog for her food labeling class action rulings, Judge Lucy Koh of the U.S. District Court for the Northern District California has been presiding over a number of high-profile skirmishes in the “Smartphone Patent Wars.”

The case before her is GPNE Corp. v. Apple, Inc. GPNE alleged in its complaint last June that Apple iPads and iPhones infringe patents GPNE holds on data transmission. GPNE’s business model is arguably similar to that of other entities commonly labeled “patent trolls.” It does not practice its patents; rather, it seeks revenue through licensing and litigation. GPNE views the term as prejudicial and urged Judge Koh to prohibit its use before the jury.

In her June 24 Pretrial Order Re: Motions In Limine, Judge Koh dictated:

Apple may not refer to GPNE as a ‘patent troll,’ ‘pirate,’ ‘bounty hunter,’ ‘privateer,’ ‘bandit,’ ‘paper patent,’ ‘stick up,’ ‘shakedown,’ ‘playing the lawsuit lottery,’ ‘corporate shell game,’ or ‘a corporate shell.’

She did, however, permit Apple to use other terms when referring to GPNE:

Apple may refer to GPNE as a ‘non-practicing entity,’ ‘licensing entity,’ ‘patent assertion entity,’ ‘a company that doesn’t make anything,’ or ‘a company that doesn’t sell anything.’ The Court finds that this conclusion strikes the balance between allowing Apple to argue that GPNE’s status as a non-practicing entity is relevant to the calculation of reasonable royalties and to secondary considerations of non-obviousness without unduly prejudicing GPNE or confusing the jury. See Fed. R. Evid. 403.

Judge Koh’s order reflects how this once “inside baseball” term has become part of the broader patent law and technology policy lexicon. “Patent troll” was coined, ironically, in 1999 by an Intel attorney, Peter Detkin.  Detkin left Intel and eventually co-founded Intellectual Ventures, a non-practicing entity which some have called “a patent troll on steroids.”

For years, only those who were narrowly involved with patent licensing and litigation uttered the term. Lately, however it is being utilized in everyday discussions on patents and technology. While President Obama did not specifically use the term is his February 2013 “Fireside Hangout” on Google Plus,  he did accuse entities “that don’t produce anything themselves” of “extort[ing] money” out of technology producers. A document issued by the White House Task Force on High-Tech Patent Issues last June, however, did utilize the term “patent trolls” when discussing the need for reform.

One could argue that “patent troll” has become so widely used that it has lost its “punch” as a pejorative in characterizing those whose singular business is sticking up or shaking down technology-producing companies through opaque demand letters and playing the lawsuit lottery. Obviously, Judge Koh does not see it that way, and declared her courtroom a troll-free zone. Whether that helps GPNE prevail in its claim, however, is uncertain.

Also published at WLF’s Forbes.com contributor page

Supreme Court Observations: Don’t Buy the Spin, EPA Lost the Utility Air Regulatory Group v. EPA Case

peterglaserGuest Commentary

by Peter S. Glaser, Troutman Sanders LLP

*Editor’s note: On June 23, the U.S. Supreme Court issued its opinion in Utility Air Regulatory Group v. Environmental Protection Agency. The author of this commentary represented Washington Legal Foundation pro bono in the case for our amicus briefs at both the petition for certiorari and merits stages.

EPA lost; it didn’t win 

Although you wouldn’t know it from the way EPA and environmental NGOs are portraying the decision.  Industry opposed EPA’s Tailoring Rule with essentially two alternative arguments.  Industry’s maximum position was that EPA could not regulate greenhouse gasses ( GHGs) at all under the Prevention of Significant Deterioration (PSD) or Title V permit programs.  Industry’s alternative position was essentially that if a source is subject to PSD because of its non-GHG emissions (with some caveats), it could be required to do best available control technology (BACT) for both its non-GHG and its GHG emissions.  The Court adopted a variant of industry’s alternative argument.  During briefing, EPA resisted both of industry’s positions.  So it’s a little much for EPA to be claiming victory.

We don’t need to relitigate whether industry should have presented alternative positions or whether industry should have presented the Court with an all-or-nothing position:  either uphold the Tailoring Rule, which we know you don’t want to do, or rule that GHGs cannot be regulated under PSD or Title V at all.  Certainly, a maximum victory would have been preferable to the victory we got, where large facilities triggering PSD for their non-GHG emissions must undertake GHG BACT—a result that is not too far off from at least steps one and two of the Tailoring Rule.  In the end, only two justices (Alito and Thomas) expressed a preference for industry’s maximum position even when presented with the alternative argument.  Whether the other three justices in the majority would have endorsed industry’s maximum position if there had been no alternative position—or whether not presenting an alternative would have resulted in losing the case—is something we will never know. Continue reading

Supreme Court Observations: Alice Corp. v. CLS Bank

LangdonSmith,DanielF-48047-87-bwrGuest Commentary

by Evan H. Langdon and Daniel F. Smith, Adduci, Mastriani & Schaumberg, LLP*

The Supreme Court’s ruling in Alice Corp. v. CLS Bank is notable for what it does not say. Though the Court struck down a software invention directed to mitigating settlement risk through a computer intermediary as patent ineligible, the Court did not rule that software patents or patents that implement software on a computer are per se ineligible. The Court was careful to leave open the door for patent protection of software inventions. In a 9-0 ruling, the Supreme Court affirmed the en banc U.S. Court of Appeals for the Federal Circuit ruling that Alice Corp.’s patent was invalid as directed to ineligible subject matter under 35 U.S.C. § 101. In so doing, the Court reiterated its ruling in Bilski v. Kappos that it is the invention itself that must be patent eligible and whether a claim is directed to software or is tied to a computer does not alter the analysis.

CLS Bank initiated the case by filing for declaratory judgment that the asserted patent was invalid, unenforceable, and not infringed; Alice Corp. counterclaimed for infringement. The parties cross-moved for summary judgment on whether the asserted claims are eligible for patent protection. After the Supreme Court issued Bilski, the District Court granted CLS Bank’s motion finding the claims ineligible for patent protection because they were directed to an abstract idea. On appeal, the Federal Circuit panel reversed the District Court, finding it was not “manifestly evident” that the claims were directed to an abstract idea. A divided en banc Federal Circuit upheld the District Court’s conclusion with a five judge plurality concluding that the claims draw on an abstract idea and the use of a computer added nothing of substance to that idea.

Reliance on Mayo and Gottschalk

In analyzing the claims at issue, the Court relied heavily on its established precedent under 35 U.S.C. § 101 and concluded that Alice Corp.’s claims did not cover patentable subject matter. The Court emphasized the long-standing principle that laws of nature, natural phenomena, and abstract ideas are not patentable because upholding such a patent would effectively grant a monopoly and pre-empt the claimed approach in all fields. Continue reading

In Oklahoma, Class Action Fairness Act Comes Up Short, But Daimler v. Bauman Does The Trick

OklahomaConcerns that businesses were being victimized by abusive lawsuits filed in state courts—in particular, nationwide class actions and mass actions—led Congress to adopt the Class Action Fairness Act (CAFA) in 2005. Congress intended that CAFA ease removal of class and mass actions from state to federal court. The law has had mixed results in that regard, , as plaintiffs’ lawyers have devised a variety of clever ways to evade CAFA and thereby ensure that their nationwide suits can remain in state court. If a recent Oklahoma state-court decision is any indication, however, the plaintiffs’ bar may finally have met its match: the Supreme Court’s January 2014 decision in Daimler AG v. Bauman. That decision imposed strict limitations on a court’s exercise of general jurisdiction over out-of-state defendants. The Oklahoma court invoked Daimler to dismiss hundreds of plaintiffs from a mass action that the U.S. Court of Appeals for the Tenth Circuit already had deemed not removable under CAFA.

The case involved product liability claims by 702 individuals from 26 States, each of whom alleged that she had suffered injuries from pelvic mesh surgical devices manufactured by Ethicon, Inc. (a subsidiary of Johnson & Johnson). CAFA permits removal to federal court of “mass actions” filed by 100 or more plaintiffs raising substantially similar claims. To reduce the risk of removal, the plaintiffs’ lawyers grouped the claims into 11 separate lawsuits, each containing fewer than 100 plaintiffs. Nonetheless, it was obvious that the plaintiffs wanted the cases tried together: they filed the lawsuits in a tiny Oklahoma county with only a single trial judge, thereby ensuring that all 702 claims would be heard by a single judge. They also took steps to prevent removal based on diversity of citizenship: they included at least one New Jersey resident as a plaintiff in each of the 11 lawsuits. Because the defendants have their principal places of business in New Jersey, the inclusion of one New Jersey plaintiff in each case eliminated complete diversity of citizenship and thus precluded removal based on diversity. Continue reading