6 more Supreme Court cases that matter to businesses

A roundup of important cases on the high court's docket

In addition to other cases on the Supreme Court's business docket, here are ones that could impact companies: 

Government contractors

Minneci v. Pollard

Argument: 11/1

The setup: In the 1971 case Bivens v. Six Unknown Named Agents, the Supreme Court established the right to bring federal constitutional claims directly against federal officers.

The question: Can plaintiffs sue private employees of potential government contractors? The 9th Circuit in Minneci said yes, treating them as federal employees.

The impact: As various government functions are contracted out—a practice that probably will only increase—the questions raised in Minneci could have greater significance as to what kind of litigation exposure federal contractors face.

“Prison is an obvious setting, but this could be broader, as seen in some of the other efforts to bring private companies into the federal constitutional or statutory rights area,” Falk says. “Depending on how this one goes, the rationale in Minneci could encourage more litigation against federal government contractors and those providing government-like services, like prison services and security.”

Standing

First American Financial Corp. v. Edwards

Argument: 11/28

The setup: The case deals with a very confined area of extensive federal regulation—the Real Estate Settlement Protection Act (RESPA). But experts call it a sleeper because it could have a major practical impact on standing and class certification. Here, the plaintiff wasn’t injured by a RESPA violation. She purchased title insurance in Ohio, where the state sets the price, and she doesn’t allege that the product she got was somehow inferior, just that the transaction violated RESPA’s anti-kickbacks provision. She also filed a related class action. A district court denied certification of the class, but the 9th Circuit reversed.

The question: Can a plaintiff sue under RESPA without showing actual injury? More broadly, the court is considering the constitutional question of whether, for standing in federal court, a plaintiff needs to show an actual injury apart from the abstract violation of a statute.

The impact: If the court upholds the 9th Circuit’s decision, it could have an impact in a lot of different contexts involving statutory penalties that don’t require people to prove injury, Smith says.

“One statute that comes to mind as a potential candidate is the Copyright Act, which [provides for statutory damages],” he says.

The case also has implications for class actions. A huge and growing issue in lower courts looking at class certification are situations where a named plaintiff is hurt but wants to certify a class that includes people who are not, Falk says. Almost all circuits apart from the 9th say a class needs common standing to be certified. First American Financial could provide structure to the standing analysis in such situations.

“It could be the world’s easiest class action—it could take Dukes v. Wal-Mart out of the picture for a whole range of cases—if all you need to do is show the abstract legal violation and not show there’s a common issue of standing,” Falk says. “It has potentially very broad significance because if you take injury out of the equation then causation goes out of the equation—and those are two of the areas that most often are individualized and limit class certification.”

Medical Methods/Patent

Mayo Collaborative Services v. Prometheus Laboratories, Inc.

Argument: 12/7

The setup: Mayo v. Prometheus Labs is the big patent case of the term so far, coming on the heels of Bilski v. Kappos, which the high court decided in 2010, and dealing with the same issues. Bilski applied the machine-or-transformation test to business method patents, and in his opinion for the majority, Justice Anthony Kennedy noted the machine-or-transformation test could create uncertainty regarding the patentability of things such as diagnostic medicine techniques. That’s the question Mayo v. Prometheus Labs takes on. 

The question: Is the correlation between blood test results and patient heath patentable?

“It’s one thing to develop the drug and patent the drug,” Charnes says. “It’s another to say, we’ve discovered some sort of correlation that has always existed in nature.”

The impact: If the Supreme Court concludes that the claimed inventions are not patent-eligible, it could have a major impact. Furthermore, as this is the court’s first application of its Bilski test, coming so soon after the court issued that opinion, experts wonder if additional guidance may be forthcoming.

Bilski left open-ended the test for patent eligibility,” McBride says. “The first clue is found by applying the machine-or-transformation test. If application of that test does not result in a favorable result for the patent owner or applicant, then what happens? What test might apply, or what factors might you consider?”

FMLA

Coleman v. Maryland Court of Appeals

Argument: unscheduled at press time

The setup: Businesses have a general interest in 11th Amendment sovereign immunity cases that restrict their ability to sue the government, states and officials for damages. In the business context, courts have, for example, taken up the issue of whether the 11th Amendment restricts businesses’ ability to sue for copyright and patent infringement. Here, a court employee alleges he was fired for requesting a Family and Medical Leave Act leave for health reasons.

The question: Can plaintiffs state a claim against a state for violations of the FMLA?

The impact: Although it’s not directly relevant to businesses, Coleman has an impact with respect to companies that ultimately want to sue a state for any given reason.

Regulatory jurisdiction

Sackett v. Environmental Protection Agency

Argument: unscheduled at press time

The setup: The EPA issued a compliance order determining that a piece of Idaho property was considered a wetland and ordering its owners to clean it up or face a sizable per diem fine. Many businesses face similar situations, receiving unilateral orders from the EPA to clean up a wetland. Most courts have said parties can’t go to court to challenge them until after they do the cleanup.

“That gives the EPA a lot more leverage,” Goldstein says. “The EPA says the right to go to court will throw a monkey wrench into environmental enforcement.”

The question: How early in the process can a party get judicial review of an EPA determination that its property is a wetland?

The impact: The case could be big for the development community, farmers and beyond.

“On its own it’s pretty important, and depending on how the opinion was written, this sort of pre-enforcement review of an assertion of federal regulatory jurisdiction could have broader significance,” Falk says. “There are a couple other regulatory settings that have situations where an agency asserts jurisdiction and basically your only way to get review is to defy the order or challenge it internally, and in the meantime run up fines.”

PTO

Kappos v. Hyatt

Argument: unscheduled at press time

The setup: If the Patent and Trademark Office (PTO) rejects a patent application, patent applicants can appeal the decision to the board. Patent laws also provide another option: the ability to sue in federal district court. Applicants have historically used this option only sparingly.

“The bar feels like there’s certainly been a greater interest in IP cases by the Supreme Court (in recent years),” says McBride. “The fact that they’re now taking on some of these peripheral issues seems to indicate they’re now saying, ‘We’ve tackled a lot of the fundamental issues, let’s take on some issues with narrower applications.’”

The question: Can a plaintiff appealing a patent application denial in federal court introduce new evidence it didn’t present to the PTO in the first place? If so, can the court decide the case de novo—that is, without deference to the PTO’s original decision?

“If I had to be a cynic, I would say they are saying: Someone should be required to present evidence to the PTO and did not,” McBride says. “Whether a party sandbagged or just discovered it later, should they be able to gain from their lack of presentation of that evidence to the Patent Office?” McBride says. “Some would say that this might encourage gaming the system.”

The impact: If such a second bite is allowed, it would be a benefit for patent-seekers that have been rejected by the PTO, and as such it might encourage civil procedures over board appeals.

“The PTO would have to defend itself,” McBride says. “It would probably add cost to the patent office, and more parties might try to strong-arm the patent office as well by filing a civil action rather than just taking a straightforward appeal.”

Contributing Author

Melissa Maleske

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