State Attorneys General Advance Their Citizens’ Interests in Supreme Court Foreign Debt Case

supreme courtIn the long-running legal battle between Argentina and its “holdout” bondholders, each side has been seeking to line up high-profile allies in pending Supreme Court proceedings.  Last week, a few foreign governments filed amicus curiae briefs in the Court in support of Argentina.  Today, the bondholders lined up what may prove to be a more important set of allies: 21 States filed an amicus curiae brief urging the Court to rule against Argentina.

The States are not simply disinterested observers of these court proceedings, which will determine the power of U.S. courts to issue injunctions designed to force foreign countries to honor their commitments to repay bond debt.  Through their public pension funds, States have invested billions of dollars in foreign sovereign debt.  It’s not surprising, therefore, that they oppose Argentina’s contention that the Foreign Sovereign Immunities Act (FSIA) largely bars U.S. courts from taking steps to enforce judgments entered against issuers of defaulted sovereign debt.  The States’ willingness to come forward so publicly should serve as an important reminder to the High Court that American taxpayers and pensioners will be badly harmed if foreign governments are permitted to walk away from their contractual commitments.

The dispute between Argentina and its holdout bondholders actually encompasses two separate Supreme Court proceedings.  The States’ brief (one of several filed today in support of the bondholders) was filed in the proceeding that addresses whether Argentina can be required to answer questions regarding the location of its commercial assets.  Bondholders want that information to assist in their efforts to seize non-exempt Argentine assets in satisfaction of court judgments they previously obtained.  The FSIA provides that a sovereign’s commercial assets (but not its governmental assets) may be seized by judgment creditors.  U.S. courts have the power to order seizure of commercial assets located within the United States, while judgment creditors must seek the assistance of courts in a foreign country if they wish to seize the sovereign’s commercial assets located in that country.  The question before the Supreme Court:  may a sovereign debtor be required by a U.S. court to answer questions regarding the location of its commercial assets in foreign countries, or would such a requirement affront the nation’s sovereign dignity?

The States’ amicus curiae brief strongly urges the Court to grant bondholders access to that information.  They argue that even though Argentina waived its sovereign immunity and agreed to be subject to suit in New York courts when it borrowed money from the States and other bondholders, those concessions would be meaningless if bondholders were denied the tools necessary to enforce their repayment rights.  They note that unless bondholders are granted the ability to discover the location of a sovereign nation’s commercial assets, they will have no way of knowing where to turn to initiate enforcement proceedings.

Those arguments may persuade the Supreme Court.  More importantly, the Supreme Court filing by 21 States (represented by a bipartisan group of Attorneys General) reinforces the breadth of the opposition to Argentina’s position.  Their presence also serves as a reminder to the Court that allowing foreign governments to walk away from their debts would harm millions of Americans.

Also published on Washington Legal Foundation’s Forbes.com contributor page

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.

Behavior of Plaintiffs’ Lawyers in Food “Misbranding” Class Actions Called into Question

scalesOver the last two years at The Legal Pulse, we’ve expended a lot of digital ink on food labeling class action lawsuit rulings from the Northern District of California (aka “The Food Court”). Our focus here shifts to similar suits from the Central District of California. Two recent decisions from that jurisdiction spotlight some questionable behavior by plaintiffs’ lawyers.

Jovel v. Boiron, Inc. Plaintiff Jovel alleged in a class action suit that the non-pharmaceutical flu remedy he purchased at GNC, Oscillo, did not relieve his flu-like symptoms as the product label claimed it would. Boiron opposed Jovel’s motion for class certification on a number of grounds, including that Jovel was not an adequate representative of the class under Federal Rule of Civil Procedure 23(a).

What was it that made Jovel inadequate? During his deposition, Boiron’s counsel asked Jovel when he first read the flu-relieving claims on the product label. He stated that he hadn’t read it until after he finished the entire box—a week  after purchase. That fact is, of course, rather important in a case where the plaintiff must prove he relied on the label’s claims to make his purchase.

After a break in the deposition, Jovel’s story had changed. He said he had read the label before buying the Oscillo. Boiron’s counsel then asked:

Counsel: “Did you have a discussion with your counsel that refreshed your recollection about when you read the box?”

Jovel: “Yes”

Judge Stephen Wilson held that such “inconsistency” in his testimony on a material issue in the case reflected poorly on Jovel’s credibility, and he denied class certification on that basis. Continue reading

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

Update: U.S. Government Fails to Answer Argentina’s Call for Help, Declines Filing Brief in Sovereign Debt Case

DOJArgentina this week received some support (in the form of several amicus curiae briefs) for its efforts to obtain Supreme Court review of the setback it suffered in Second Circuit at the hands of Argentine bondholders. Argentina needs all the help it can get; it is nearing the end of the line in its thus-far unsuccessful efforts to ignore the claims of “holdout” bondholders. However, the most important news from the Court this week was who did not file: the United States government declined entreaties by Argentina to urge the High Court to review the case. Without the support of the United States, Argentina has little hope of convincing the Supreme Court to hear its appeal.

The holdouts will file their brief in May, and the Justices will convene in early June to decide whether to hear the case. If, as is likely, they decide not to hear it, that will be the end of the line for Argentina in U.S. courts on this issue.

Among the briefs filed this week, one that stands out is the brief filed by Brazil. Its principal argument was that the injunction issued against Argentina—requiring Argentina to treat all its bondholders equally—“offends the sovereignty and dignity of Brazil.” It is hard to understand how that is so, unless Brazil wants to join Argentina in refusing to pay its bondholders. Moreover, Brazil seems to overlook that the Second Circuit did not order Argentina to pay anything. The court’s injunction merely said, in effect, “You are a sovereign nation and cannot be forced to use your non-commercial assets to repay your debts. But you can’t have it both ways; if you refuse to make any payments to creditors whose claims have been upheld by our courts, you cannot expect to be granted easy access to American equity markets.” Brazil need not worry that it too will be denied access to equity markets so long as it abides by its contractual commitments to treat all bondholders fairly.

Like all of the other amicus briefs filed this week, Brazil’s fails to cite a single U.S. court decision that conflicts with the Second Circuit decision. In the absence of such a conflict, the U.S. Supreme Court is likely to deny review. Indeed, of the many thousands of petitions it receives each year, it agrees to hear on average only 70. Nor is the Court usually impressed by the sheer number of amicus curiae briefs (ten were filed in support of Argentina); it is identity of the filer (e.g., briefs submitted by the United States carry significant weight) rather than quantity of filings that the Justices focus on most closely. For example, the Court is unlikely to give much weight to Brazil’s brief, in light of press reports suggesting that Brazil decided to file only after demanding and receiving trade concessions from Argentina (as discussed here at The Legal Pulse). The Court takes a dim view of amicus briefs that are, in effect, paid for by one of the parties.

Update: FDA Drags Feet on Approval of Internationally-Accepted Vaccine While Drexel Student Dies of Meningitis B

Drexel University

Drexel University

The Centers for Disease Control and Prevention (CDC) have concluded that a Drexel University student who died in early March was infected with the same strain of meningitis, “serogroup B,” that some Princeton University students contracted in late 2013. The two schools are separated by about an hour in the greater Philadelphia area.

We discussed the outbreak at Princeton, as well as another one at the University of California Santa Barbara, and the need for those schools to “import” a meningitis B vaccine from overseas, in a December 19 post, The Meningitis B Outbreak: Heavy Doses of Government Can Be Costly. The vaccine had to be imported under an emergency exception because the Food and Drug Administration (FDA) has still not approved its use in the United States.

The situation at Drexel could parallel the developments at Princeton as opposed to those at UCSB. The Drexel student was reportedly in contact with Princeton students who had visited her at Drexel just a week before her death. In response, Princeton, which obtained and administered Novartis’s Bexsero vaccine after a lengthy federal government-required process, will be offering another round of vaccinations next week. News reports do not indicate whether the Princeton students in contact with the deceased Drexel student had received the inoculations that were made available on their campus, but only 80% of Princeton students have received both recommended doses of vaccine. One hopes that any students who bypassed the inoculations last time around have learned their lesson and will take full advantage of the next round of inoculations being offered.

Meanwhile, students at Drexel and their families will have to be satisfied with CDC’s conclusion that because there are no other meningitis B cases identified at the university, “members of the Drexel community are not considered to be at increased risk.”  Continue reading