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 “Supreme Court Observations: Lexmark Int’l v. Static Control Components”

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

District Court’s Attorney-Client Privilege Ruling Counteracts Incentives to Perform Internal Investigations

829-Brower_GregjohnsonGuest Commentary

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

It has long been assumed that under the U.S. Supreme Court’s decision Upjohn Co. v. United States, reports generated during an internal investigation undertaken at the direction, and under the supervision, of corporate attorneys are protected from discovery by the attorney-client privilege.  It came as a significant surprise then that the U.S. District Court for the District of Columbia recently held that the privilege does not apply when an investigation is conducted pursuant to a legal requirement, and not purely for the purpose of obtaining legal advice.  Unless reversed, this decision could pose a significant new dilemma for regulated companies, and especially for government contractors, that perform internal investigations to determine whether “credible evidence” of actual wrong-doing exists.

The decision in United States of America ex rel. Harry Barko v. Halliburton Company, et al. is the latest in a long-running False Claims Act (“FCA”) suit against Halliburton and its former subsidiary, Kellogg, Brown & Root (“KBR”).  In the course of pre-trial discovery, the relator sought the production of reports created by KBR in the course of conducting internal investigations into alleged violations of the company’s Code of Business Conduct (“COBC”).  KBR objected to the production of the COBC reports, contending they were protected from discovery by the attorney-client privilege and work-product doctrine.  On the relator’s motion to compel, the court rejected KBR’s argument that Upjohn was dispositive of the issue, and ordered that the reports be produced.  The court reasoned 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.

Continue reading “District Court’s Attorney-Client Privilege Ruling Counteracts Incentives to Perform Internal Investigations”

Is Argentina Paying for Amicus Briefs in Foreign Debt Case Before U.S. Supreme Court?

supreme courtIn a last-ditch effort to stave off defeat in its long-running battle with bondholders who want to be paid, Argentina in February asked the U.S. Supreme Court to hear its appeal from an adverse appeals court decision.  It is now busy trying to line up amici curiae (“friends of the court”) to file supporting briefs with the High Court.  The deadline for filing amicus briefs is next Monday, and a number of groups and foreign countries have given official notice of their intent to file briefs in support of Argentina.

However, there are some indications that Argentina has paid for one or more of the anticipated amicus filings.  The Supreme Court takes a dim view of that practice; it wants each amicus filer to truly be a “friend of the court,” not a “friend of a party.”  The Court does not strictly prohibit the filing of amicus briefs that have been paid for by a party.  But it requires that the fact of payment be explicitly disclosed in the opening footnote of the amicus brief.

Lawyers who practice regularly before the Court know that a disclosure of payment in Footnote 1 is a black mark; the Court is unlikely to pay much attention to a paid-for brief.  The justices view such briefs as simply a second brief from one of the parties, an effort to evade the strict word limit that the Court imposes on parties’ briefs.

Brazil’s potential brief is particularly suspect.  Accounts appearing this week in the Brazilian press (here, here, here, here, and here; translated stories here) relate that Brazil has agreed to a request from Argentina to file an amicus brief in support of Argentina’s petition for review.  The press accounts claim that Brazil agreed to the request in return for financial favors.  In return for agreeing to file, Brazil allegedly received commitments from Argentina for: (1) removal of trade barriers, particularly in the automobile industry; and (2) financing for Argentine car dealerships, to allow them to purchase more Brazilian cars.

Mexico has already filed its intent to file an amicus brief in support of Argentina. Argentina may also be courting France to file with the Court; President Kirchner met today with President Hollande It’s hard to say if Argentina is using the same tactics with Mexico and France, but if any sort of financial encouragement is on the table, both nations should be aware of the “Footnote 1” ramifications and take heed.

If the Brazilian press accounts are accurate, then its lawyers will be required under Supreme Court rules to disclose in the opening footnote of their brief the payments made by Argentina to finance the brief.  Would Brazil still decide to file once its lawyers inform it of the required disclosures?  An amicus brief submitted by a disinterested South American country urging the Court to hear a case raising issues deemed important by that country might have some influence on the Court’s decision-making process.  In contrast, an amicus brief filed by a country that has been paid for the filing by one of the parties is likely to sit on a shelf gathering dust.

The Federal Circuit Muddies Its Venue Transfer Jurisprudence

federal circuit Patent plaintiffs, especially those resembling “patent trolls,” routinely sue in plaintiff-friendly forums, such as the Eastern District of Texas, or in other forums thousands of miles away from a defendant’s home base. Plaintiffs use the attendant inconveniences as leverage when pursuing quick settlements. Such venue manipulation is an item of significant concern to repeat player defendants of patent lawsuits.

Congress considered and rejected venue reforms as part of the America Invents Act of 2011, which may be one reason such provisions are not included in current reform efforts on Capitol Hill. Another reason may be that over the last five years, the U.S. Court of Appeals for the Federal Circuit has built up a robust jurisprudence which gives defendants a fair chance at having lawsuits transferred to a more convenient forum. Our 2010 Legal Pulse post The Federal Circuit Messes with (the Eastern District of) Texas Yet Again examined a series of Federal Circuit rulings which together have provided predictable standards for judging venue transfer requests under 28 U.S.C. § 1404(a).

However, two Federal Circuit decisions issued on the same day—February 27—by the same panel of judges now threaten the prevailing clarity on patent litigation transfer of venue. In both cases, Judges Prost and Reyna affirmed the lower courts’ denial of defendants’ motions to transfer with Judge Newman twice dissenting. In re Apple Inc. originated in the Eastern District of Texas, while In re Barnes & Noble, Inc. was filed in the Western District of Tennessee. The plaintiff in In re Apple is a Luxembourg company with one employee which has a Plano, Texas subsidiary whose six employees manage the company’s patent portfolio. The plaintiff in In re Barnes & Noble registered to do business in Tennessee just before filing this suit (as well as 19 other identical suits in the same court) and is a one-employee company with a home office. Continue reading “The Federal Circuit Muddies Its Venue Transfer Jurisprudence”