Linda Greenhouse’s Blatant Effort to Invoke “Greenhouse Effect” in Affordable Care Act Case Fails

NYTMark S. Chenoweth, WLF’s General Counsel, contributed to this post

Linda Greenhouse is at it again. The New York Times Supreme Court reporter-turned-opinion writer is deeply troubled by the possibility that the Supreme Court may actually construe the Affordable Care Act precisely as Congress wrote it. And she is up to her old tricks of trying to influence the justices by suggesting that they “will have a great deal of explaining to do—not to me, but to history” if they strike down the proposed IRS rule at issue in the case.

Now that the Supreme Court has agreed to decide the proper scope of tax credits available under the law, Ms. Greenhouse laments, “[n]ot only the Affordable Care Act but the court itself is in peril as a result.” Chief Justice Roberts, by her lights, “saved the day” last time around. “The fate of the statute hung in the balance then and hangs in the balance today,” she continues, but “… [t]his time, so does the honor of the Supreme Court.”

And yet King v. Burwell is precisely the sort of case that the Supreme Court is supposed to decide. Not only does it raise an issue of exceptional importance—whether the IRS is permitted to appropriate billions of dollars in tax credits each year absent an express authorization from Congress to do so—but the Fourth and D.C. Circuits have issued conflicting decisions on that question, and only the Supreme Court can resolve such a conflict.

Although the text of the ACA couldn’t be any clearer that only those taxpayers who purchase health insurance on exchanges “established by a State” are entitled to subsidies in the form of a tax credit, Ms. Greenhouse argues that the law’s “context” points in the opposite direction. But even if the law is ambiguous, Ms. Greenhouse strenuously avoids addressing the overriding reason for any ambiguity—the ACA was the sloppiest piece of legislative draftsmanship in a generation or more. Continue reading

Will the High Court Permit Backdoor Regulation of Natural Gas Industry Via State-Law Antitrust Suits?

oneokEarlier this month, the Supreme Court heard oral argument in ONEOK v. Learjet, an important case that hinges on the scope of the Federal Energy Regulatory Commission’s (FERC) field preemption under the Natural Gas Act (NGA). I attended to hear the argument in person because Washington Legal Foundation has been quite active in the case.

While it is undisputed that the NGA preempts state-law claims directed at conduct affecting the wholesale rates for natural gas, the Court must now consider whether such claims are preempted when the same alleged conduct affects both wholesale and retail rates. Reversing the district court, the Ninth Circuit rejected ONEOK’s preemption argument on the basis that the state-law claims brought by the plaintiff-purchasers arose from retail gas transactions.

On behalf of ONEOK, Neal Katyal argued that even though the alleged conduct at issue in this case affected both retail and wholesale rates, it still counts as a practice that affects wholesale rates for preemption purposes. The only relevant question, then, is whether plaintiffs’ state-law claims are directed at conduct in the field that the NGA occupies—and they are. The United States, representing FERC’s regulatory interests, filed an amicus brief and argued on the merits in support of ONEOK’s position.

From his questions, Justice Breyer seemed to appreciate the difficulty in setting a strict boundary between wholesale and retail sales in cases where the retail and wholesale prices are both affected by the same conduct. He could prove to be the decisive vote in the case.

Plaintiffs’ attorney Jeffrey Fisher insisted that FERC has no power over antitrust claims tied to retail prices, which the NGA excepts from federal regulation. The State of Kansas as amicus curiae, joined by 20 other states, argued in support of Plaintiffs, with attorney Steven McAllister emphasizing the states’ strong interest in policing antitrust violations.

Justice Kagan seemed fully prepared to side with the Plaintiffs, explaining that so long as no conflict exists between state antitrust liability and regulation by FERC, “I don’t really see a reason … why you would exclude the state entirely, even if nothing the state was doing was conflicting with federal regulation or federal policy.”

In all likelihood, the Supreme Court will issue its decision within the next few months. As WLF’s amicus brief argued, the stakes for the natural gas industry are high. The NGA promotes uniformity, not random regulation by jury verdicts in 50 states. Permitting private plaintiffs to pursue state-law antitrust remedies that second-guess FERC—including in states where antitrust remedies dwarf those available under federal law—would create industry-wide chaos and an unnecessary drag on investment in a vibrant and growing sector of the economy.

The Court agreed to grant review in the case following WLF’s brief in support of the petition for certiorari—and WLF’s separate online analysis of the Solicitor General’s unusual advice to the Supreme Court about (not) granting review in the case. WLF’s brief on the merits provides the Court with additional policy reasons to overrule the Ninth Circuit.

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

Supreme Court Observations: The Fair Housing Act and “Disparate Impact” Claims

supreme courtThe Supreme Court on Wednesday will hear arguments in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, a case that will determine whether the federal Fair Housing Act (FHA) applies to conduct that, although not intentionally discriminatory, has an allegedly disparate impact on protected groups. Assertions that disparate-impact claims are cognizable under the FHA are difficult to square with the statutory language, which bars housing discrimination “because of” race, color, religion, sex, familial status, or national origin. The phrase “because of” suggests volition by the defendant, not merely that the effects of his actions were felt more strongly by members of protected groups. Proponents of disparate-impact liability frequently respond that whatever the scope of the FHA when first adopted in 1968, Congress later expanded the statute by acquiescing to an unbroken line of court and Executive Branch decisions that had interpreted the FHA as encompassing disparate-impact claims.

But an examination of the federal appeals court decisions cited by the Solicitor General and other disparate-impact claims proponents indicates that lower courts’ endorsement of such claims has been anything but uniform. Thus, putting to one side whether it is ever appropriate to discern the meaning of a federal statute based on evidence of Congress’s inaction in the wake of decisions construing the statute, the case for using that method of statutory interpretation in this instance is particularly weak.

In making the case for congressional acquiescence, the Solicitor General’s brief focuses on 1988, when Congress amended several FHA provisions but did not amend the “because of” language set forth in 42 U.S.C.§ 3604(a). According to the Solicitor General, “Between the enactment of the FHA in 1968 and its amendment in 1988, all nine of the courts of appeals to consider the issue concluded that the Act authorizes disparate impact claims.” Based on that history, he asserts, the 1988 amendments “confirm” that Congress sanctioned disparate-impact claims under the FHA. Continue reading

Struggle over Federal Environmental Law Preemption of Public Nuisance Suits Heats Up in Kentucky

faulkFeatured Expert Column − Complex Serial and Mass Tort Litigation

by Richard O. Faulk, Hollingsworth LLP*

It’s been a long wait for those who believe the federal Clean Air Act preempts public nuisance claims under state common law.

When the Supreme Court reversed and remanded Connecticut v. American Electric Power in 2011, it refused to rule on the preemption issue—leaving the question for the U.S. Court of Appeals for the Second Circuit to resolve on remand.1 Before that could happen, however, the plaintiffs withdrew their complaints—and the opportunity vanished.2

When a federal district court granted dismissal of a public nuisance claim in Bell v. Cheswick Generating Station, the opportunity rose again. Hopes were high that the Third Circuit would affirm the dismissal, but alas, the court reversed. Nevertheless, the case rose to the Supreme Court on a petition for certiorari. Numerous amicus curiae briefs were submitted to support the petition, but the Supreme Court denied review. Many were left wondering whether the Supreme Court’s remand of the issue in AEP truly reflected the Court’s interest in the issue—or whether it was simply a matter of appellate housekeeping. Continue reading

Supreme Court Observations: “Dart Cherokee” Eliminates the Presumption against Removal of Class Actions

supreme court*Joining WLF’s Richard Samp as a guest commentator on this post is M.C. Sungaila, a partner with Snell & Wilmer LLP. Ms. Sungaila acted as counsel to the International Association of Defense Counsel and the Federation of Defense and Corporate Counsel, both of which joined WLF in its amicus brief in Dart Cherokee.

The Supreme Court’s ruling Monday, December 15 in Dart Cherokee Basin Operating Co. v. Owens, overturning a Tenth Circuit removal jurisdiction decision, was hardly surprising. After all, the Tenth Circuit’s restrictive interpretation of the federal removal statute, 28 U.S.C. § 1446(a)—that a defendant forfeits its removal rights unless the removal petition attaches documentary evidence supporting the jurisdictional allegations—conflicted with decisions from every other federal courts of appeal that has addressed the issue and elicited no supporting comments from the justices during October’s oral argument. Of far more lasting significance was Dart Cherokee’s rejection of a presumption against removal, in class-action cases and perhaps in other removal cases as well. That presumption had been adopted by 10 of the 11 regional courts of appeals and has been cited by countless district courts as the basis for remanding cases to state court. Organizations with which we are affiliated—the Washington Legal Foundation, the International Association of Defense Counsel, and the Federation of Defense and Corporate Counsel—are justly proud of having filed a brief that focused attention on the presumption-against-removal issue, an issue largely ignored by the parties.

Background. Dart Cherokee involved a class-action claim that an oil company breached a contract by underpaying royalties allegedly owed to lessors from production of oil wells located in Kansas. The oil company removed the case to federal district court, asserting jurisdiction under the Class Action Fairness Act (CAFA). CAFA permits removal of class actions even in the absence of complete diversity of citizenship, so long as the amount in controversy exceeds $5 million. The plaintiffs filed a motion to remand, asserting that the removal petition inadequately demonstrated the amount in controversy.

The district court agreed and ordered a remand. It did so despite acknowledging that the oil company’s response to the motion adequately demonstrated that the amount in controversy exceeded $5,000,000 and that the plaintiffs conceded as much. The court concluded that under Tenth Circuit case law, evidence supporting federal removal jurisdiction must be included within the removal petition itself and not added later. The court explained that its decision to remand was “guided by the strong presumption against removal.” It noted that the Tenth Circuit “narrowly construes removal statutes, and all doubts must be resolved in favor of remand.” Continue reading

FTC Commissioner Looks Back, and Ahead, on Patent Litigation Reform Efforts

FTC_Man_Controlling_TradeCommissioner Julie Brill of the Federal Trade Commission (FTC) offered some interesting year-end thoughts on abusive litigation by patent-assertion entities (“PAE”, or to some, “patent trolls”) in a speech last week. Most notable in Commissioner Brill’s comments was her call for legislative change even as FTC and the federal courts are addressing some of the legal and economic incentives for abusive patent litigation.

Brill discussed the Commission’s ongoing study of patent-assertion entities (the so-called 6(b) study), for which a final report is anticipated by the end of 2015. She emphasized that one of the issues FTC is assessing is the practice of “privateering,” where an operating company sells or licenses a patent to an assertion entity, which in turn enforces the patent against the operating entity’s market rivals. A May 2014 Washington Legal Foundation Web Seminar, Patent Assertion and “Privateering”: When Do Antitrust Law Concerns Arise When the Patent Is the Product?, focused on this practice.

The speech also referenced the Commission’s first enforcement action against a patent-assertion entity, which resulted in a November 13 consent decree. The action involved notorious “scanner troll” MPHJ, which sent thousands of licensing demand letters that threatened litigation unless the target business paid MPHJ upwards of $1,000 per employee. FTC charged that MPHJ had fraudulently asserted that it had entered into licenses with some of its targets, and falsely claimed that litigation was imminent.

thumbnailTrollCommissioner Brill went on to stress the impact several 2014 Supreme Court decisions had on the larger patent-assertion problem. She focused on the indefinite nature of many PAE-held patents, an issue that the Court addressed in Nautilus Inc. v. Biosig Instruments, Inc.; the tendency of PAEs to “pass off old abstract ideas as inventions merely by implementing them using a computer,” which arose in Alice Corp. Pty. Ltd. v. CLS Bank Int’l; and the difficulty patent defendants had in seeking attorneys’ fees when they prevailed in court against PAEs, which the justices addressed in Octane Fitness, LLC v. Icon Health & Fitness, Inc. and Highmark v. Allcare Health Mngt. Systems, Inc.

She then stated that “despite these recent cases, there are still important issues for Congress to address.” We were pleased to see that among the areas Commissioner Brill highlighted as meriting continued congressional attention was that patent “complaints [must] provide specific allegations of what infringes a patent’s claim and how the defendant infringes them.” The current pleading standard, governed by the antiquated form (Form 18) Federal Rule of Civil Procedure 84 dictates for patent suits, encourages frivolous litigation, as we’ve argued previously.

It is unclear what lies ahead for patent litigation reform in the 114th Congress. But one can trust that with so much at stake, Senators and Representatives will heed Commissioner Brill’s admonition that Congress not “wait for completion of our 6(b) study” to move the debate forward.

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

“Direct Marketing” Supreme Court Case Points Out Federal Courts’ Obligation to Exercise Jurisdiction

supreme courtYesterday’s oral argument in Direct Marketing Assoc. v. Brohl indicated that the Supreme Court does not think very highly of the Tenth Circuit’s expansive interpretation of the Tax Injunction Act (TIA). The appeals court concluded that the TIA deprived federal courts of jurisdiction to hear a challenge to a Colorado statute that imposes notice and reporting requirements on out-of-state retailers. Questions at yesterday’s argument suggested that most justices interpret the TIA’s limitations on jurisdiction as inapplicable when, as here, the plaintiff is not seeking to enjoin the collection of a state tax. However, Direct Marketing’s greater significance may lie in its illustration of lower federal courts’ continued resistance to hearing matters involving States and their laws. That resistance, largely the byproduct of overcrowded dockets and a sense that state issues are often of insufficient importance to warrant the attention of federal judges, is inconsistent with federal courts’ obligation to hear each case in which jurisdiction has been properly invoked.

The Petitioner in Direct Marketing is a trade group that represents online and mail-order retailers. They object to a statute adopted by the Colorado legislature to assist the State in collecting sales and use taxes from its own citizens who purchase products from out-of-state retailers. The Supreme Court’s 1992 Quill decision held that a State may not require out-of-state retailers to collect sales/use taxes on such purchases, even if the retailer ships its product into the State. Colorado’s response: it adopted a statute imposing onerous notice and reporting requirements on any out-of-state retailer that does not voluntarily collect sales/use taxes on such sales, including requiring submission to tax officials of an annual Customer Information Report that details all purchases made by Colorado residents. The Petitioner asserts that the statute violates numerous provisions of federal and state law. Continue reading