Featured Expert Column—Civil Justice/Class Actions
Frank Cruz-Alvarez, a Partner in the Miami, FL office of Shook, Hardy & Bacon L.L.P., with Rachel A. Canfield, an Associate with the firm.
Most litigants are familiar with the federal sanction powers as promulgated under Federal Rules of Civil Procedure 11, 26, 30 and 37, as well as pursuant to 28 U.S.C. § 1927. Each sanction power is codified in the applicable Rule or statute and limited in scope to a particular type of misconduct.1 However, a court’s inherent power to levy sanctions is arguably broader and more amorphous in nature than any of the other sanction powers. As a result, many litigants are unclear about the full extent and application of a court’s inherent power to sanction.
On April 18 in Goodyear Tire & Rubber Co. v. Haeger, the United States Supreme Court provided more clarity on such limitations when it resolved a split of authority among federal appellate courts regarding the breadth of a federal court’s inherent authority to sanction a litigant for bad-faith misconduct. Continue reading
Featured Expert Contributor — Corporate Governance/Securities Law
Stephen M. Bainbridge, William D. Warren Distinguished Professor of Law, UCLA School of Law.
Disgorgement of ill-gotten gains long has been a basic tool in the Securities and Exchange Commission’s (SEC) penalty toolkit, despite a paucity of statutory authorization.1 The equitable nature of disgorgement has meant courts have had to resolve many questions without the benefit of statutory guidance. In Kokesh v. SEC,2 the US Supreme Court took up the seemingly technical—but surprisingly important—question of what statute of limitations applies to SEC disgorgement actions.
Appellant Charles Kokesh owned and controlled a pair of investment adviser firms that, in turn, managed four business development corporations (BDCs). Both the investment advisers and the BDCs were registered with SEC. SEC alleged that Kokesh misappropriated almost $35 million from the BDCs for the benefit of himself and the investment adviser firms. After a civil trial, a jury agreed that Kokesh had fraudulently misappropriated the funds. The trial judge ordered Kokesh to disgorge $34.9 million, which it found “reasonably approximates the ill-gotten gains causally connected to Defendant’s violations.” Continue reading
By Mark R. Robeck, Kelley Drye & Warren LLP. Mr. Robeck is a Partner in the firm’s Washington, DC office and a contributor to its Fracking Insider blog.
In 2016, the Sierra Club filed suit in Oklahoma alleging that use of state-permitted deep wastewater injection wells was causing increased seismic activity—both in frequency and severity. Sierra Club v. Chesapeake Operating, LLC, et al., Case No. CIV-16-134-F, United States District Court for the Western District of Oklahoma.
In an April 4, 2017 Order the court dismissed the case, declining to exercise jurisdiction because doing so would interfere with the state regulators’ efforts to address the alleged increased seismic activity from wastewater injection. Continue reading
Featured Expert Column—Judicial Gatekeeping of Expert Evidence
Evan M. Tager, a Partner in the Washington, DC office of Mayer Brown LLP, with Carl J. Summers, an Associate with Mayer Brown LLP.
In a victory for keeping junk science out of courtrooms, Missouri recently enacted H.B. 153, which adopts the Daubert standard.
H.B. 153 establishes four criteria for an expert witness’s testimony:
(1) The expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (2) The testimony is based on sufficient facts or data; (3) The testimony is the product of reliable principles and methods; and (4) The expert has reliably applied the principles and methods to the facts of the case.
These criteria mirror Federal Rule of Evidence 702 and the Daubert standard.
Although H.B. 153 applies broadly, it is not universally applicable. It does not apply in certain family and juvenile court proceedings. In addition, H.B. 153 does not permit an expert witness in a criminal case to testify “whether the defendant did or did not have a mental state or condition that constitutes an element of the crime charged or of a defense.” Continue reading
By Lawrence A. Kogan*
For decades, federal agencies have incrementally extended their control over agricultural lands by expanding the definition of “waters of the US” (WOTUS) under the Clean Water Act (CWA) and asserting broad legal jurisdiction over WOTUS-adjacent “wetlands.” Those efforts triggered intense legal conflicts, facilitated the CWA’s growth into a “regulatory hydra,” and caused a “reversal of terms [in our unique relationship with government] that is worthy of Alice in Wonderland.”1
President Trump recently issued Executive Order 13778 as the first step aimed at curtailing this government juggernaut. The order directs the heads of the US Environmental Protection Agency (EPA) and the US Army Corps of Engineers (the Corps) to review for substantial revision or rescission their jointly issued 2015 CWA regulation that expanded the definition of “WOTUS.” Presumably, EPA’s review of this regulation will be undertaken while the October 9, 2015 federal court-issued stay of its implementation remains in place.2 Continue reading
Here we go again. Lawsuits over allegedly deceptive food labels have become commonplace—a tried-and-true tactic for some plaintiffs’ attorneys to earn an easy buck. By claiming that the labels were intentionally misleading in some way, these lawyers and the purportedly confused clients they represent, seek to leverage the specter of a class action to force quick settlements. Unfortunately, this tactic often works. In fact, it has worked so well that entire subsets of labeling lawsuits have sprung up, among them “healthy food” labels, “all natural” labels, and slack-fill cases. We can now add a new category to the list: plaintiffs alleging they were deceived because their beer was not brewed where they thought it was.
Plaintiffs Sara Cilloni and Simone Zimmer filed a putative class action, Cilloni v. Craft Brew Alliance, Inc., in the Food Court (also known as the US District Court for the Northern District of California) against Craft Brew Alliance, the owners of Kona Brewing Company (Kona). Kona was founded in 1995 on Hawaii’s Big Island. Taking pride in the company’s origins, Kona stylizes each of its beers in an overtly Hawaiian theme, inviting customers to enjoy the “Liquid Aloha” and “Catch A Wave.” With names like Big Wave Golden Ale, Longboard Island Lager, and Wailua Wheat, Kona’s products celebrate their history and ties to Hawaiian culture.
According to plaintiffs, however, this branding is merely an elaborate plan to “exploit strong consumer sentiment for Hawaiian-made products.” Plaintiffs allege that the labeling on Kona’s products is false and misleading because, even though Kona was founded in Hawaii and produces beer in Hawaii for that state’s market, none of the beer Kona sells in the continental United States is produced in Hawaii. Thus, Kona “intentionally misleads” its consumers into purchasing Hawaiian beer, when in fact the beer is produced in several states throughout the continental US. According to plaintiffs, consumers “would not have purchased the beer, or would have paid significantly less for the beer, had they known the true origins of the Kona … beer they purchased.” Plaintiffs join an increasing list of litigants claiming that beer labels are false or misleading because a beer with foreign origins is actually produced in the US. The owners of Fosters, Becks, Guinness, and Kirin Ichiban have all faced mislabeling claims.
By Sara Kobak, W. Michael Gillette, and Aukjen Ingraham, Shareholders with Schwabe, Williamson & Wyatt, P.C. in Portland, OR.
Since the US Supreme Court clarified the due-process limits on the exercise of general or all-purpose jurisdiction in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), plaintiffs have reached for new arguments to support the exercise of general jurisdiction over corporate defendants in forums where the defendants cannot fairly be considered “at home.” With notable exceptions—including the decisions at issue in Bristol-Myers Squibb Co. v. Superior Court of California, Case No. 16-466, and Tyrell v. BNSF Railway Co., Case No. 16-405, both scheduled for argument before the Supreme Court on April 25, 2017—the majority of lower courts have rejected these attempts to evade Daimler and its due-process requirements. The most recent examples of decisions enforcing Daimler come from the high courts of Oregon and Missouri, with the Washington Legal Foundation submitting an amicus brief in the Oregon case. Continue reading