On May 22, 2017, the Supreme Court handed down its unanimous opinion in the closely-watched TC Heartland LLC v. Kraft Foods Group Brands LLC case. The patent venue statute provides that a domestic corporation may be sued for patent infringement anywhere the defendant “resides,” and the question before the Court was whether that rule incorporates the broader definition of corporate residence found in the general venue statute. The district court and the Court of Appeals for the Federal Circuit both held that it did, thus giving patent owners more choices of where they could sue for infringement. However, the Supreme Court reversed, holding that a corporate defendant only “resides” in its state of incorporation.
While the Supreme Court rested its opinion solely on the statutory language and its own precedent interpreting it, many of the arguments raised in the amicus brief supporting both sides focused on the policy implications. In particular, the briefs argued that the Court should consider the effect its decision would have on certain patent assertion entities (PAEs) or “patent trolls”—non-practicing patent owners who litigate their patents, oftentimes in the Eastern District of Texas. Whether such arguments persuaded the Court is unclear, though it is clear that the Court’s narrow rule for where patent owners may sue will change the litigation landscape for practicing and non-practicing entities alike.
On April 4, 2017, the Seventh Circuit handed down a divided en banc opinion in Hively v. Ivy Tech Community College, opening a circuit split on how to interpret Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on "race, color, religion, sex, or national origin[.]" In Hively, the Seventh Circuit became the first Court of Appeals to hold that sex discrimination encompasses discrimination based on sexual orientation. It held that plaintiff Kimberly Hively could pursue a claim against her former employer, Ivy Tech Community College, for her firing, which she claimed was motivated by her sexual orientation. In doing so, the court opened a split with the Eleventh Circuit, which had held just a few months earlier that employer decisions based on sexual orientation were not discrimination prohibited by Title VII. In addition to paving the way for a potential Supreme Court case to resolve the issue, the Seventh Circuit's decision includes an array of opinions demonstrating different methods of statutory interpretation.
The D.C. Circuit heard a rare doubleheader of en banc arguments on major structural separation of powers questions on May 24.
First up was Raymond J. Lucia Companies, Inc. v. SEC, which presented the question whether Administrative Law Judges at the SEC are “Officers of the United States” who must be selected in compliance with the Appointments Clause. The SEC contends that its ALJs are employees, not officers, because the ALJs do not exercise “significant authority pursuant to the laws of the United States,” which the Supreme Court has described as the hallmark of officer status. Last August, a three-judge panel of the D.C. Circuit agreed with the SEC, relying almost exclusively on an earlier (divided) D.C. Circuit precedent, Landry v. FDIC, 204 F.3d 1125 (D.C. Cir. 2000), which held the ALJs at the FDIC are not officers because they do not issue final agency decisions. Three months later, the Tenth Circuit issued a 2-1 decision finding that SEC ALJs are officers who must be selected pursuant to the Appointments Clause. The Tenth Circuit panel expressly disagreed with Lucia and Landry that authority to issue final agency decisions is a prerequisite for officer status.The D.C. Circuit subsequently vacated its panel decision and granted en banc review.The status of ALJs under the Appointments Clause has important implications not only for the SEC’s enforcement of the securities laws but also for the system of administrative agency adjudication as a whole.
The second case, PHH Corp. v. CFPB, presented the question whether an “independent” administrative agency may be led by a single person. In a 100-page opinion by Judge Kavanaugh (joined by Judge Randolph) drawing on historical practice and first principles of separation of powers, the panel concluded that the statutory provision vesting the CFPB’s broad enforcement authority in a single director removable by the President only “for cause” violated Article II of the Constitution. The panel emphasized the absence of any historical precedent for an independent agency with a single director—a structure that created, in the panel’s description, an administrative official with more power than anyone in the federal government other than the President. The panel explained that this concentration of authority in a single person unaccountable to the President except for cause posed a “threat to individual liberty.” The panel remedied the constitutional defect by severing the statute’s “for cause” removal provision, thus making the CFPB director removable by the President at will. Judge Henderson dissented in part, arguing that the panel could have resolved the case on the basis of PHH’s statutory rather than constitutional challenges. The D.C. Circuit granted en banc review on both the constitutional and statutory questions. The Justice Department (under the Trump Administration) filed an amicus brief in support of the challengers, while the CFPB continues to defend the constitutionality of its structure through its independent litigation authority.
On May 1, the D.C. Circuit denied petitions for en banc review of United States Telecom Association v. Federal Communications Commission. The petitioners challenge the FCC’s Open Internet Order, in which the FCC established Internet access as a telecommunications service subject to Title II of the Communications Act and adopted net neutrality rules. At the same time, the new Chairman of the FCC, Ajit Pai, has announced that he plans to reclassify Internet access as a Title I information service and roll back some of the net neutrality rules.
Daniel Berninger, one of the petitioners in the case, and Adam White, who has been counsel for the intervenors, will join us to discuss the status of the case. In particular, they will discuss the D.C. Circuit’s order denying rehearing, the concurring opinion by Judges Srinivasan and Tatel, the dissenting opinions from Judges Brown and Kavanaugh, the pending FCC rulemaking, and the potential for Supreme Court review of the D.C. Circuit’s decision affirming the FCC’s Open Internet Order. Brett Shumate, counsel to petitioners Alamo Broadband and Daniel Berninger, will moderate the discussion.
In a recent decision, the Third Circuit held that hundreds of state-law claims alleging that bone fractures were caused by an osteoporosis medication were not preempted by federal law. While defendants argued, and the district court agreed, that the record showed that the FDA would not have approved stronger warnings in the product labeling, the Third Circuit concluded that the record raised factual issues that should go to a jury. In doing so, the court rejected defendants’ contention that preemption was a purely legal issue for the court to decide and suggested that the evidence must show that there was a “high probability” that the FDA would have rejected stronger labeling in order to invoke preemption. Was the appellate court correct? How does its decision fit with other recent preemption cases? Jay Lefkowitz and Doug Smith joined us to discuss these and other issues relating to the court’s decision.