Plaintiffs’ Bar Effort To Game Class Action Fairness Act Expands To Tenth Circuit

10th CircuitCross-posted at WLF’s contributor site

Last month in Ninth Circuit Endorses Gaming of Class Action Fairness Act & Creates Circuit Split, we discussed the U.S. Court of Appeals for the Ninth Circuit’s decision in Romo v. Teva Pharmaceuticals USA, Inc.. The two-judge majority in that case allowed plaintiffs’ lawyers to divide their 1,500 clients into groups of less than 100 for the sole purpose of evading the Class Action Fairness Act’s (CAFA) dictate that such mass actions be removed to federal court. Thanks to an October 18 ruling from the Western District of Oklahoma, the Tenth Circuit will be the next venue to consider this CAFA circumvention strategy.

In Halliburton et al. v. Johnson & Johnson et al., Federal District Court Judge Tim Leonard ordered the remand of eleven essentially identical cases to Oklahoma state court. Each case alleged the same violations of Oklahoma state law and featured at least one Oklahoma and one New Jersey plaintiff. Each suit was filed by the same lawyers in front of the same state judge. Before Judge Leonard, the defendants argued that the plaintiffs’ act of filing their 11 suits in a one-judge county court reflected their intention that the cases be tried jointly. Johnson & Johnson also argued that the judge should give no weight to the plaintiffs’ declaration that no two suits would be tried jointly. The defendants further urged Judge Leonard to sever the claims of the New Jersey plaintiffs as they were fraudulently joined for the purpose of defeating diversity jurisdiction (Johnson & Johnson is a New Jersey company).

Judge Leonard rejected each of the defendants arguments and ordered the 11 suits remanded to the state judge. On October 28, Johnson & Johnson filed a permission to appeal the District Court’s decision to the Tenth Circuit. Under CAFA, the appeals court must accept or deny the defendant’s permission to appeal within ten days.

On a related note, the defendants in Romo v. Teva have sought rehearing en banc in the Ninth Circuit. WLF has filed an amicus brief supporting their arguments.

Additional WLF resource:

Gaming Of CAFA’s Jurisdiction Exemption For “Mass Actions”: How It Can Be Stopped
WLF Legal Opinion Letter, by Victor E. Schwartz, Co-Chairman, and Cary Silverman, Counsel, of the Washington, D.C.-based Public Policy Group of Shook, Hardy & Bacon L.L.P.

The Foreign Sovereign Immunities Act Doesn’t Protect Deadbeat Debtors

ArgentinaCross-posted at WLF’s contributor site

Argentina’s efforts to overturn adverse court decisions regarding repayment on its defaulted bonds have been reduced to a last-ditch effort to persuade the U.S. Supreme Court to review the case.  An often-overlooked obstacle to Argentina’s efforts to obtain such review:  the only federal issue that it can realistically raise in its petition for certiorari is a claim that the injunctive relief granted by the lower courts violates a federal statute, the Foreign Sovereign Immunities Act (FSIA).  A careful examination of this federal statute indicates, however, that FSIA does not prohibit the relief granted to holdout bondholders and that no federal court has ever interpreted the FSIA in the manner espoused by Argentina.

Congress adopted the FSIA in 1976 to establish clear rules regarding when foreign governments are entitled to assert sovereign immunity from the orders of American courts.  The statute replaced the former system under which courts looked to the Executive Branch on a case-by-case basis for guidance on sovereign immunity issues.  A key provision of the FSIA provides that a foreign government is generally immune from suit in U.S. court, but that its immunity is subject to waiver.  That general immunity provision is of no help to Argentina, however, because it explicitly waived its immunity in connection with the bonds currently at issue and agreed that disputed issues would be resolved in accordance with New York law.

Argentina argues that even though it was properly subject to suit in federal court in New York based on its non-payment, the court’s injunctions violated the FSIA.  Section 1609 of the FSIA provides that, with limited exceptions, property belonging to a foreign government is “immune from attachment, arrest, and execution” by a U.S. court.  Argentina argues that the injunctions issued in this case effectively “attach” its property in violation of the FSIA. Continue reading “The Foreign Sovereign Immunities Act Doesn’t Protect Deadbeat Debtors”

The Federal Government is Coming For Your Magnets

Magnetic regulation?
Magnetic regulation?

Cross-posted at WLF’s contributor page

The U.S. Consumer Product Safety Commission held a public hearing Tuesday on its proposed safety standard for magnet sets.  Although the proposed standard originally issued last year, the agency failed to do the required oral hearing at that time and is now making up for that oversight.  In the interim, however, the agency filed a lawsuit against a manufacturer of magnet sets and its CEO, a lawsuit that is still pending in front of an Administrative Law Judge.  The Commissioners will sit in judgment as an appellate body if any party appeals the ALJ’s ruling in that case.  If any Commissioner thinks it inappropriate to nonetheless proceed with a ban on the product in question, it went unremarked at the hearing.  Does anyone believe that the Commission could impartially oversee such an appeal having already banned the product about which the ALJ is ruling?

The ostensible purpose of a public hearing is to ensure that all views are heard, yet not a single opponent of the regulations appeared to testify.  Not one.  Given that the written comments submitted to the agency last year included many comments opposing the agency’s action, it seems unlikely that no one wanted to testify in person against the agency’s proposal.  The agency apparently did a much better job of inviting supporters of the regulation from the medical and advocacy communities than from, say, the companies whose employees will lose their jobs when this product ban goes into effect.  One founder of a company directly affected by the agency’s action complained that he did not receive any notice of the event prior to the cutoff for submitting testimony.  One need not go very far out on a limb to speculate that the doctors who testified in front of the CPSC did not learn about the hearing from reading the Federal Register notice themselves.  Shame on the biased CPSC for not doing more to seek out the views from the affected industry at this hearing.  The agency did at least leave the hearing record open until Oct. 29, in case any latecomers want to file additional written comments. Continue reading “The Federal Government is Coming For Your Magnets”

A Dissent to Chief Judge Wood’s Call to Remove Exclusive Patent Appeal Jurisdiction from Federal Circuit

bethShaw-0580editConvertedProfile-e1360002102239Featured Expert Column

Beth Z. Shaw, Brake Hughes Bellermann LLP

*Editor’s note: The Legal Pulse welcomes Guest Commentary submissions offering a contrary perspective on the Federal Circuit’s exclusive patent appeal jurisdiction. Anyone with an interest in doing so please comment on this post with an offer to write.

In a recent speech, Chief Judge Diane Wood of the U.S. Court of Appeals for the Seventh Circuit proposed abolishing the U.S. Court of Appeals for Federal Circuit’s exclusive jurisdiction in patent cases. Judge Wood is not the first to suggest reevaluating the Federal Circuit jurisdiction, and she won’t be the last. But while her idea is interesting and worth examining, it does not present a better approach to resolve what she called “the problems” that the Federal Circuit’s exclusive jurisdiction was designed to address.

Over thirty years ago, Congress created commissions to study the number of cases appealed to federal courts and the Supreme Court. The commissions found that filings in federal courts had increased substantially—but judgeships had not increased at all. The commissions also identified four major consequences of the courts’ inability to deal with increased caseloads: circuit splits on issues of national law; delay; burden on the Supreme Court to resolve circuit splits; and uncertainty even without circuit splits. The commissions therefore recommended a national court of appeals, and Congress created the Court of Appeals for the Federal Circuit on October 1, 1982.

Critics worried that specialization would produce a court with tunnel vision, judges becoming overly sympathetic to the policies promoted by the law that they administer, or judges who are biased in favor of the attorneys that regularly appear before them. Partly out of appreciation for the dangers of specialization, the law did not limit the Federal Circuit’s jurisdiction to patent cases. Intellectual property appeals make up less than half of the court’s docket. The rest of the court’s docket includes personnel appeals, veterans’ appeals, international trade cases, takings cases, tax, contracts, and other issues.

Judge Wood acknowledged these facts, but questions the effectiveness of the Federal Circuit to exclusively handle patent appeals. She is not proposing the elimination of the Federal Circuit itself, but rather the removal of its exclusive jurisdiction over patent appeals. She argues that this will provide the Supreme Court with the benefit of various appellate court viewpoints on patent issues. Continue reading “A Dissent to Chief Judge Wood’s Call to Remove Exclusive Patent Appeal Jurisdiction from Federal Circuit”

WLF Briefing Critiques an FDA Gone Astray on Medical Device Regulation

PodiumPic1This morning, Washington Legal Foundation is hosting a Media Briefing program at 9:30, FDA Goes Astray On Device Oversight: Proposed Guidance On 510(K) Review, Adverse Events Reporting, And Recalls.

Our speakers are:

For those who cannot attend the program in person at WLF’s headquarters, below are the materials constituting press packet:

Novo Nordisk A/S v. Lukas-Werner: A Supreme Court Petition Up for Conference Friday That’s Worth Watching

MollerLOLThis Friday, the U.S. Supreme Court will consider global healthcare company Novo Nordisk’s request to review a decision from Oregon, Novo Nordisk A/S v. Lukas-Werner. Our friends over at SCOTUSblog failed to include it in their “Petitions to Watch” column today, which we feel is an unfortunate oversight on their part.

In a WLF Legal Opinion Letter, released today, DePaul University College of Law Professor Mark Moller explains the facts of the case and argues that it offers the Court a unique opportunity to address personal jurisdiction, an area of law which legal commentators “widely agree is a ‘erratic,’ ‘confused,’ ‘incoherent’ mess.” Novo Nordisk, a Danish company, sold its pharmaceutical products to an independent American distributor, which in turn resold it to a consumer in Oregon. The consumer subsequently contracted cancer and sued Novo Nordisk in Oregon state court. The trial court held that it had jurisdiction over the foreign corporation, a result with which the state appeals court concurred. The Oregon Supreme Court denied review.

Professor Moller provides two reasons for the Court to grant cert. First, “the Court might use the case to clarify when activities of independent distributors and other middlemen subject a defendant to jurisdiction.” Second, “Novo Nordisk also presents opportunities to dispel confusion in a completely different corner of personal jurisdiction doctrine—application of the specific jurisdiction test’s “reasonableness” prong to transnational disputes.”

WLF, along with a number of other prominent organizations, supported Novo Nordisk’s petition with an amicus brief.

Reform of Federal Civil Procedure Rules May Lead to Heightened Pleading Standard in Patent Suits

patentsCross-posted by at WLF’s contributor page

As the process of amending the Federal Rules of Civil Procedure (FRCP) enters a critical juncture, most discussion and attention (including here at The Legal Pulse) have deservedly focused on proposed changes to rules governing the pre-trial discovery process. However, one particular proposed change, overlooked for the most part, would require plaintiffs alleging patent infringement to provide more information in their initial complaints. The Advisory Committee on Civil Rules proposes to abrogate Rule 84 and along with it, the sample complaint forms to which the rule refers, including one relating to patent suits: Form 18.

What Is Form 18? This form has become well-known to patent litigants, especially accused infringers. The judiciary created Form 18 in 1938. It permits plaintiffs to provide a bare minimum of information: a jurisdictional statement, general assertion of patent ownership, a claim of infringement, and a request for relief. A complaint crafted in compliance with Form 18 would thus be in accord with another Federal Rule of Civil Procedure, Rule 8, which dictates pleading standards. In its 2007 Bell Atlantic v. Twombly and 2009 Ashcroft v. Iqbal rulings, the Supreme Court found that the then-existing interpretation of Rule 8—that some relief is “possible”—was incorrect and ruled that plaintiffs must demonstrate that its version of the events is “plausible.” The Court pointedly said that Rule 8 “demands more that an unadorned, the-defendant-unlawfully-harmed-me accusation.”

Form 18 Trumps Rule 8. Patent infringement complaints drafted in minimal conformance with Form 18 are decidedly “unadorned.” Defendants are denied fair notice of their alleged violation, a fault which is magnified exponentially in some patent litigation, such as suits brought by “patent-assertion entities.” As stated in a 2011 letter urging the Administrative Office of the U.S. Courts to address Form 18’s flaws:

[Its] limitations are immediately apparent when the template is used—as is frequently the case—to accuse an entire website or channel of commerce of infringing, in some unspecified manner, a method or software patent. Continue reading “Reform of Federal Civil Procedure Rules May Lead to Heightened Pleading Standard in Patent Suits”