Federal Courts Must Enforce Limits on President’s Appointment Powers

CFPBNo one any longer contests that President Obama acted in excess of his constitutional powers when, on January 4, 2012—a day on which the Senate was not in recess—he purported to grant a recess appointment to Richard Cordray to head the Consumer Financial Protection Bureau (CFPB).  Yet, in a troubling decision issued last week, the U.S. District Court for the District of Columbia indicated that it was of no moment that for a period of 18 months Cordray, although no more than a private citizen, issued dozens of significant decisions in the name of CFPB.  Judge Ellen Huvelle ruled in State National Bank of Big Springs v. Lew that Cordray, after finally receiving Senate confirmation, could simply wave a magic wand and retroactively approve all of his unauthorized acts.  That decision eviscerates the Constitution’s explicit limitations on the President’s appointment powers and encourages future Presidents to disregard those limitations. Continue reading

The Supreme Court’s “Universal Health” Ruling: A Net Win for Federal Government Contractors

supreme courtThe U.S. Supreme Court’s June 16, 2016 decision in a closely watched False Claims Act (FCA) case, Universal Health Services, Inc. v. United States ex rel. Escobar, had a little bit in it for everyone.  It held (as had most of the federal appeals courts) that a contractor can be held liable under the FCA for making a fraudulent claim for payment from the federal government, even if the claim was never expressly made but was merely implied.  On the other hand, Universal Health unanimously vacated a First Circuit ruling that had reinstated the plaintiffs’ claims, concluding that the First Circuit applied an insufficiently rigorous test for determining whether the defendant’s allegedly false claims were “material.”

So which side really “won” the case?  If the correct answer to that question turns on whether the Court’s decision will make it more difficult for private relators to prevail in future FCA cases, then the decision was a win for FCA defendants.  For example, the Court unequivocally rejected assertions—frequently raised by FCA plaintiffs—that an FCA claim is proven any time a contractor submits a claim for payment of a contractual claim despite awareness that it has breached a significant provision of its contract. Continue reading

Sería Prematuro Para La Justicia Federal Levantar La Medida Cautelar Sobre Los Bonos Argentinos

Argentina*Editor’s Note: This is the Spanish-language version of a WLF Legal Pulse post, It Would Be Premature for Federal Court to Lift the Argentina Bond Injunction, published earlier today.

El gobierno argentino afirma haber dado vuelta la página y que son serios acerca de tomar las medidas necesarias para recuperar el visto bueno de la comunidad financiera internacional. El gobierno del nuevo presidente, Mauricio Macri, ha entrado en negociaciones extendidas con los tenedores de bonos en default, algunos de los cuales no han recibido ningún pago hace más de 15 años. Esa aparente predisposición a un compromiso merece un aplauso. Pero las acciones hablan más fuerte que las palabras. El pedido argentino de levantar la orden judicial vigente (realizado en los escritos presentados el jueves pasado en el juzgado y para ser presentado hoy por vía oral ante del juez) no se justifica hasta que la Nación lleve a cabo sus negociaciones en la buena fe prometida. Continue reading

It Would Be Premature for Federal Court to Lift the Argentina Bond Injunction

ArgentinaThe Argentinian government claims to have turned over a new leaf and become serious about taking the steps necessary to get back into the good graces of the international financial community. The regime of new President Mauricio Macri has entered into extended negotiations with holders of defaulted government bonds, some of whom have received no payments in over 15 years. That apparent willingness to compromise is to be applauded. But actions speak louder than words. Argentina’s request to lift the existing court injunction (made in court papers filed last Thursday and to be orally argued before the court today) is unwarranted until the nation carries through fully with its promised good-faith negotiations. Continue reading

“Sorrell v. IMS Health” Is Gaining Traction in the Federal Appeals Courts

9thCirSome legal commentators heralded the U.S. Supreme Court’s 2011 decision in Sorrell v. IMS Health, Inc. as a marked expansion of First Amendment protections for commercial speech. Sorrell held that content- or speaker-based restrictions on non-misleading commercial speech regarding lawful goods or services should be subjected to “heightened” judicial scrutiny. But whether Sorrell would have any practical effect on challenges to commercial-speech restrictions was far from clear, particularly because the Court did not explain what it meant by “heightened” scrutiny and because it struck down the speech restrictions at issue under the more relaxed “intermediate scrutiny” standard that it had been applying in commercial-speech cases for more than 30 years. Continue reading

Sixth Circuit Ruling Shows Preemption is Possible in Brand-Name Drug Design-Defect Cases

6th CircuitMost product-liability claims against drug manufacturers fall into one of two categories—the plaintiff alleges that his/her injury was caused by: (1) the manufacturer’s failure to include adequate safety warnings on its label; or (2) a defect in the drug’s design. In a major defeat for drug-company defendants, the U.S. Supreme Court ruled in 2009’s Wyeth v. Levine that state-law failure-to-warn claims against brand-name drug companies are not preempted by federal law in most instances, even though (as is virtually always the case) the product bears labels approved and mandated by the federal Food and Drug Administration (FDA). Some commentators concluded that Wyeth foreshadowed a similar rejection of preemption defenses in design-defect cases. However, a December 11, 2015 decision from the U.S. Court of Appeals for the Sixth Circuit suggests that those commentators likely erred; the appeals court concluded in Yates v. Ortho-McNeil-Janssen Pharmaceuticals, Inc. that design-defect claims are preempted in most instances. Continue reading

Supreme Court Ought to Re-examine Second-Guessing of FDA-Approved Drug Labeling by State Tort Law

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The U.S. Supreme Court’s 2009 decision in Wyeth v. Levine placed significant limits on the ability of brand-name drug manufacturers to defend against failure-to-warn state tort-law claims. Even though manufacturers invariably label their products precisely as the Food and Drug Administration (FDA) has mandated, Wyeth held that state courts could penalize manufacturers for failing to include additional health warnings on their labels. The Court explained that it was possible for manufacturers to simultaneously comply with both FDA and state-court-determined labeling requirements because FDA’s “Changes Being Effected” (CBE) regulation permits brand-name companies to unilaterally change the FDA-mandated label and then seek FDA’s after-the-fact approval of the changes. But as the Court recognized, the CBE regulation limits the circumstances under which unilateral label changes are permissible—and when a unilateral change is not permitted, any tort claim premised on a state-law duty to make such a change is still preempted.

Unfortunately, many lower courts have failed to recognize this important limitation imposed by Wyeth on tort liability. At its January 8, 2016 conference, the U.S. Supreme Court will consider a certiorari petition that provides it with an opportunity to clear up the confusion among the lower courts regarding when federal law preempts failure-to-warn claims against the manufacturers of drugs bearing FDA-mandated labels. The Court should seize that opportunity by granting review in Johnson & Johnson v. Reckis, a case in which the Massachusetts Supreme Judicial Court upheld a $140 million judgment against a manufacturer of ibuprofen—a generic over-the-counter pain-relief medication sold under such brand names as Advil and Motrin. Continue reading