Prevailing parties in patent suits can win attorneys’ fees from losing opponents in cases deemed “exceptional.” “Under the test used to identify exceptional cases, cases must be objectively baseless and brought in bad faith.” That is already a painfully narrow exception, allowing for large volumes of poorly founded litigation, but two cases before the Supreme Court this term may provide clarity on when courts can deem cases “exceptional” and suitable for a fee shift. Broader use of fee shifts — presumably by way of deeming at least some swath of losing cases “exceptional” — would be one way of addressing the patent troll problem that would not call for new legislation. [ABA Journal, related, Corporate Counsel (arguments that judiciary can deal with trolls on its own]
In other developments, the Federal Trade Commission has voted to proceed with an inquiry into the patent troll problem [New York Times] and the Government Accountability Office has released a long-awaited report on the issue [Mike Hogan and Gregory Hillyer, Legal Intelligencer]
Sean Lengell of the Washington Examiner quotes me in a preview of the upcoming Supreme Court case about whether the provision of federal labor law barring employers from giving a labor union a “thing of value” prohibits “neutrality agreements” in which an employer provides its employee lists or free office space to union organizers. A broad ruling to that effect would wrest a major weapon away from unions, which is one reason I’m doubtful it will happen:
“Those that would like to rein in this type of union agreement, whether it be business or conservatives, shouldn’t get too overconfident,” said Walter Olson, a senior fellow at the libertarian-leaning Cato Institute. “Getting the justices to see the logic of Mulhall’s argument is one thing; getting them to act and sign a decision [in his favor] is something else.”
Olson added the justices may be looking for a way out of having to make a definitive ruling.
“I think the court’s instincts are not to pull too hard at the columns of the temple on labor law, because they’re not sure where it’s going to fall,” he said.
Update: reactions to Mulhall oral argument from Jack Goldsmith (and more), Ben Sachs, Cato’s Trevor Burrus, and William Gould/SCOTUSBlog.
A testy exchange between Justice Stephen Breyer and Solicitor General Donald Verrilli Jr. “was not the only signal that the administration may have difficulty winning in the case of Bond v. United States, which began as a ‘lover’s triangle’ dispute from Pennsylvania but has mushroomed into a major test of the power of Congress to implement international treaties in ways that may interfere with the prerogatives of the 50 states.” [Tony Mauro, NLJ, Daniel Fisher, earlier on Bond] Michael Greve finds the administration’s stance “breathtakingly aggressive. … when the government stumbles into Court with no principle, rule, or line to cabin its assertion of power, it loses. That’s Lopez, that’s Morrison, that’s NFIB.” [Liberty Law] Related, Peter Spiro/OJ.
The Supreme Court has declined review in Marek v. Lane, a case arising from the settlement of a privacy lawsuit against Facebook, which had presented questions about the proper use of cy pres distributions (in which money goes not to victims of the sued-over conduct, but to non-profits or other third parties). Writing in a separate statement, however, Chief Justice John Roberts indicated that the issues are of genuine concern to him, whether or not this case was the right one in which to address them. Excerpt:
I agree with this Court’s decision to deny the petition for certiorari. Marek’s challenge is focused on the particular features of the specific cy pres settlement at issue. Granting review of this case might not have afforded the Court an opportunity to address more fundamental concerns surrounding the use of such remedies in class action litigation, including when, if ever, such relief should be considered; how to assess its fairness as a general matter; whether new entities may be established as part of such relief; if not, how existing entities should be selected; what the respective roles of the judge and parties are in shaping a cy pres remedy; how closely the goals of any enlisted organization must correspond to the interests of the class; and so on. This Court has not previously addressed any of these issues. Cy pres remedies, however, are a growing feature of class action settlements. See Redish, Julian, & Zyontz, Cy Pres Relief and the Pathologies of the Modern Class Action: A Normative and Empirical Analysis, 62 Fla. L. Rev. 617, 653–656 (2010). In a suitable case, this Court may need to clarify the limits on the use of such remedies.
[Adam Steinman, Civil Procedure and Federal Courts Blog, earlier here, here; see also Archis Parasharami, Mayer Brown "Class Defense"] Relatedly, “Taking on Class Action abuse: A conversation with Ted Frank, founder of the Center for Class Action Fairness” is a new podcast at Liberty Law.
It looks as if someone really doesn’t want the Obama administration’s treasured but shaky “housing disparate impact” theory to come under review by the Supreme Court [Josh Blackman on reports of settlement mooting Mount Holly, N.J. case granted certiorari and pending before the Court; earlier on controversial tactics used to moot St. Paul case through settlement]
More: Piscataway v. Taxman also dropped off the Court’s docket via a mootness tactic. And shorter Doug Kendall/Constitutional Accountability Center: how dare PLF, Cato and IJ take the Court’s word on what the issue is in Mt. Holly? [Ilya Shapiro]
Josh Blackman on yesterday’s oral argument in Schuette v. Coalition To Defend Affirmative Action.
It’s debunked by Adam Liptak’s sources in a good piece this weekend: “If judicial activism is defined as the tendency to strike down laws, the court led by Chief Justice John G. Roberts Jr. is less activist than any court in the last 60 years.” [New York Times; Jonathan Adler] More: Watch author Clark Neily, cited in Liptak’s article, speak recently at Cato about his new book Terms of Engagement.
Reporter Paul M. Barrett:
Growing judicial skepticism toward such suits and toward the lucrative settlements they generate has caused plaintiffs’ attorneys to shy away from accepting lengthy, complicated cases. That’s tilting the legal playing field decisively in favor of Big Business—and as the Supreme Court reconvened on Oct. 7 for its 2013-14 term, trial lawyers are bracing for more setbacks.
Not everyone is shedding tears. Walter Olson, a legal expert at the libertarian Cato Institute in Washington, attributes the decline of mass lawsuits to a predictable—and welcome—backlash against “a wild carnival” of frivolous damage claims and outrageous conduct by plaintiffs’ lawyers.
Ted Frank has some further reactions.
I moderated a panel at Cato’s annual Constitution Day September 17 with Mark Moller of DePaul speaking on the Supreme Court’s class action jurisprudence last term, and David Olson of Boston College and Gregory Dolin of University of Baltimore speaking on the life-science patent cases. I also warned viewers (this part is at the beginning) to use only the Twitter hashtags #CatoCD2013 or #CatoCD13 to comment, because the hashtag #CatoCD without numbers is already in use as #CatOCD to post pictures of cats with Obsessive-Compulsive Disorder. If the embedded version doesn’t work, you can watch here.
Previewed by Daniel Fisher at Forbes and, in a Constitution Day video, by a Cato panel including Howard Bashman, Tom Goldstein and Marcia Coyle, moderated by Ilya Shapiro. Oral arguments begin today. More: an Ilya Shapiro preview for the Daily Beast.
In this video from Cato’s Constitution Day, the Baker & Hostetler attorney (and friend of this site) discusses the Supreme Court’s recent decision according deference to agencies’ determinations of their own jurisdiction. The case, which split the conservative justices, was one of the rare defeats for a Cato Institute amicus position last term.
Related: Michael Greve, John Yoo and Mike Rappaport on rethinking administrative law and the era of deference.
The Supreme Court yesterday granted certiorari in Harris v. Quinn, a case raising potentially major issues of federal labor law and forced political association. Via SCOTUSBlog:
Issue: (1) Whether a state may, consistent with the First and Fourteenth Amendments to the United States Constitution, compel personal care providers to accept and financially support a private organization as their exclusive representative to petition the state for greater reimbursements from its Medicaid programs; and (2) whether the lower court erred in holding that the claims of providers in the Home Based Support Services Program are not ripe for judicial review.
My colleagues at the Cato Institute filed an amicus brief seeking cert in the case. More: Will Baude.
Why Sen. Elizabeth Warren (D-Mass.) isn’t to be relied on [Ramesh Ponnuru, followup]
Under the “disparate impact” theory of housing discrimination, private business decisions or local government policies not motivated by race are deemed unlawful anyway because they have a differential statistical impact on housing transactions by members of a given racial group. A mortgage lender’s policy of lending only to borrowers with high down payments or sterling credit ratings, for example, might be subject to attack on the grounds that it tended to screen out minority borrowers, even if such was not its intention, and was not justified by business necessity. The U.S. Supreme Court has never ruled on this theory; two years ago, in a case called Magner v. Gallagher, it was widely speculated that the Court would disapprove disparate-impact claims, a prospect the Obama administration (which is deeply invested in the theory) managed to dodge only by arranging to moot the case through settlement.
In the new Supreme Court case of Township of Mount Holly v. Mount Holly Gardens Citizens in Action, Inc., plaintiffs claim that it is illegal for a New Jersey township to slate a tract of development land for detached single-family housing because poorer persons are less likely to be able to afford such housing and minority persons are more likely to be poorer. The Obama administration is backing the claim. [earlier] The Cato Institute, along with the Pacific Legal Foundation and several other groups, has filed an amicus brief defending the township. Writes Ilya Shapiro at Cato at Liberty:
The Gardens’ residents can’t afford the new housing not because of their race but because of their poverty. While it’s a harsh truth that a disproportionate number of minorities live in poverty, claiming that making expensive products is racist and that these “racists” have an obligation to compensate the victims of poverty is absurd. The FHA was intended, in the words of Senator Walter Mondale, “to permit people who have the ability to do so to buy any house offered to the public if they can afford to buy it. It would not overcome the economic problem of those who could not afford to purchase the house of their choice.”
For following the law as it was written and attempting to improve a blighted neighborhood without resorting to eminent domain abuse, Mount Holly was rewarded with a decade’s worth of vexatious litigation — which the Supreme Court should now end once and for all.
More: Hans Bader, Examiner.
We have often reported on controversies over cy pres class action settlements, in which part or all of a settlement fund goes to charities, universities, advocacy groups, or other unrelated institutions as opposed to actual victims of the sued-over conduct. Most appeals courts have agreed that cy pres raises distinctive issues that call for judicial oversight, yet the various federal circuits have marched off in different directions as to the appropriate nature and extent of such oversight, leading to inconsistency at least, and perhaps also to forum-shopping by lawyers seeking lenient standards.
Now figures well known to many of our readers — Ted Frank of the Center for Class Action Fairness, and David Rifkin and Andrew Grossman of Baker & Hostetler — have petitioned the Supreme Court for certiorari in a case arising from a privacy suit against Facebook over its Beacon program that eventuated in a cy pres settlement. “More than $6 million of [the] money was directed to the establishment of a new Internet privacy foundation with an advisory board that includes a Facebook representative and a plaintiffs’ lawyer from the case.” [Alison Frankel; Ted Frank/PoL; CCAF] Related: the “real problem with cy pres has never been that it is too costly. The real problem is that it creates an incentive for class counsel to act against the interests of the class.” [Andrew Trask]