Justice Kavanaugh being seated prior to the second week of oral arguments in October means that most of the cases on the docket in the October Term will be heard by a complete Court of 9 Justices; thus avoiding the dreaded 4-4 split. On September 24 I previewed the cases scheduled for argument in October and November. This week the Court released the calendar for arguments at the end of November and into December these cases are:
Apple, Inc. v. Pepper (No. 17-204): The issue in this case is whether consumers can sue for antitrust damages anyone who delivers goods to them, even when the damages sought are based on prices set by third parties even though the third parties are the immediate victims rather than the consumer.
The case relates to the Apple App Store. Back in March 2008, Apple released a software development kit for third party developers in order to create approved apps for use on the iPhone. In July 2008, Apple opened the App Store, which was used for developers to distribute their apps for use on the iPhone. The App Store was organized as a two-sided marketplace in which the developers were sold the distribution services of Apple and Apple then sold the apps to consumers at prices set by the developer. Developers pay a $99 annual fee as well as 30% of all the sales of apps and in-app purchases to Apple. The respondents claim that the 30% commission is excessive and that Apple violated The Sherman Antitrust Act by adopting a closed distribution system. The case has a complicated history at the district court level. This case was the second of three putative class action lawsuits alleging various violations of antitrust law by Apple. Apple initially moved to dismiss under Illinois Brick for failure to state a claim other than a pass through injury. This initial motion was granted August 15, 2013. After a new petition, Apple’s motion to dismiss was again granted. The Ninth Circuit reversed and stated that Apple acts as a distributor because it sells and delivers the apps to the consumers and thus consumers, as direct purchasers, must be able to sue Apple for damages. The Ninth Circuit did not see the distinction between a markup and a commission as material and instead focused on the function Apple served (846 F.3d 313).
Nieves v. Bartlett (No. 17-1174): The question presented in the case is whether probable cause defeats a retaliatory arrest claim under § 1983 in the same way that the court ruled that probable cause defeats a retaliatory prosecution claim under § 1983 in Hartman v. Moore, 547 U.S. 250 (2006).
Russell Bartlett was arrested for disorderly conduct and harassment. He sued the arresting officers, Luis Nieves and Bryce Weight, for damages under 42 U.S.C. § 1983 and alleged false arrest and imprisonment, retaliatory arrest, and due process and equal protection violations. The district court granted summary judgment for the officers on all claims. The circuit court affirmed on all claims except the retaliatory arrest claim, reasoning that although there was probable cause for the arrest, probable cause is not a bar to a retaliatory arrest claim (712 Fed. Appx. 613).
Nutraceutical Corp. v. Lambert (No. 17-1094): This case involves a Circuit split. The Ninth Circuit held that equitable exceptions apply to mandatory claim-processing rules and excused a party’s failure to file a petition for permission to appeal within the Rule 23(f) deadline.
Lambert filed a class action lawsuit against the petitioner alleging violation of California’s false advertising and unfair competition laws stemming from the sale of a dietary supplement. The district court initially certified the class on June 19, 2014, but after discovery, granted the motion to decertify on February 20, 2015 on the basis that Lambert failed to demonstrate damages on a class-wide basis using common methodology as required by Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1430 (2013). Lambert did not file a petition for permission to appeal the decertification by the March 6, 2015 deadline. On March 2, he filed a motion for renewed class certification. The district court denied the March 2 motion, but informed Lambert that he could file a motion for reconsideration and set a March 12 deadline for this. The motion for reconsideration was filed on March 12 and denied by the district court on June 24. Lambert filed a Rule 23(f) permission to appeal with the Ninth Circuit on July 8, 2015. This was conditionally granted September 16 and assigned to a merits panel. The panel ruled on September 15, 2017 that the petition was timely and reversed and remanded the case to the district court. The panel stated that although the petition would normally be untimely, equitable exceptions applied (870 F.3d 1170).
Carpenter v. Murphy (No. 17-1107): The issue in this capital case is whether the 1866 territorial boundaries of the Creek Nation within the former Indian Territory of eastern Oklahoma constitute an Indian Reservation under 18 U.S.C. § 1151(a) .
Murphy, a member of the Creek Nation, was convicted of murdering another member of the Creek Nation within the reservation and sentences to death. Murphy sought post-conviction relief, arguing that Oklahoma did not have jurisdiction under the Major Crimes Act, which provides for federal jurisdiction to prosecute murders by Indians in “Indian country” including reservations and certain allotments. The Oklahoma Court of Criminal Appeals (OCCA) ordered an evidentiary hearing and the trial court held that state jurisdiction was proper because it occurred on state land and rejected that the land was an allotment, but did not address the other claim that the land was a reservation. The OCCA affirmed and stated that “Indian Country” reserved the disestablishment question and in the absence of a decision by federal courts, would it would not make a finding. Murphy filed a petition for habeas relief, which was denied by the district court. The Tenth Circuit found that the refusal of the OCCA to make a finding was an adjudication on the merits and thus triggered a deferential review under the Antiterrorism and Effective Death Penalty Act (AEDPA) and also assumed that there should be deferential review of jurisdictional questions. Applying the standard that Murphy needed to show that the OCCA decision was contrary to or an unreasonable application of clearly established federal law, the Tenth Circuit reversed the decision. It found that the OCCA decision ignored the required presumption that the Indian reservation continues to exist until Congress acts to disestablish it and did not consider the 3 factors from Solem (statutory language, contemporary historical evidence, and Congress’ own treatment of the area). The Tenth Circuit found that Congress had not disestablished the Creek reservation and since Oklahoma never argued that the conviction might stand even if the reservation remained, Oklahoma lacked jurisdiction (875 F.3d 896). Interestingly, there is no claim that the crime was not committed by Murphy. The issue is one of jurisdiction and the contention is that the crime needs to be tried by the federal government and not Oklahoma.
Timbs v. Indiana (No. 17-1091): This case seeks to determine if the Eighth Amendment’s Excessive Fines Clause is incorporated against the States under the Fourteenth Amendment.
Timbs was the life insurance beneficiary of his father and received $75,000 after his father’s death. Timbs used $41,558.30 to purchase a Land Rover LR2. The Land Rover was seized by police after Timbs was stopped in the vehicle and arrested on suspicion of selling narcotics. He was charged with two counts of dealing a Schedule I controlled substance and one count of felony conspiracy to commit theft. Timbs plead guilty to one count of dealing and the count of conspiracy to commit theft and received a sentence of six years, with the first year to be served in home detention and the remaining five years on probation. Timbs also agreed to attend a court-supervised drug addiction program as well as police costs of $385, an interdiction fee of $200, court costs of $168, a bond fee of $50, and a drug and alcohol assessment fee from the probation department of $400. Several months after the arrest, a private law firm filed a case on behalf of the State seeking forfeit of his Land Rover. After an evidentiary hearing, the trial court determined that the vehicle was paid for legally, but used to transport heroin back to his home in Merion, Indiana. However, the court determined that forfeit of the vehicle would be unconstitutional under the Eighth Amendment’s Excessive Fines Clause since it would be grossly disproportionate to the gravity of the crime. The Indiana Court of Appeals affirmed. The Indiana Supreme Court reversed the decision and determined that the Supreme Court has never held that States are subject to the Excessive Fines Clause and absent clear direction from the Supreme Court that the Clause applies, would not extend the obligations imposed to the State (84 N.E.3d 1179).
Dawson v. Steager (No. 17-419): The question in this case is whether the doctrine of intergovernmental tax immunity found in 4 U.S.C. § 111 prohibits West Virginia from exempting from state taxation retirement benefits of certain former state law enforcement officers if it does not provide the same exemption to former U.S. Marshals Service employees.
Dawson used to be a Deputy Sheriff in Nicholas County, West Virginia, as well as a former U.S. Marshal. He retired from the Marshal Service on March 31, 2008. He received retirement benefits from the Federal Employee Retirement System (FERS). Under West Virginia law, Dawson is allowed to exempt at least $2000 of FERS incomes from his state taxable income. West Virginia law allows state law enforcement recipients of four West Virginia retirement plans to exempt all of their income from those retirement plans from state taxable income. The four plans are for the Municipal Police Officer and Firefighter Retirement System, Deputy Sheriff Retirement System, State Police Death, Disability, and Retirement Fund, and the West Virginia State Police Retirement System. Around October 24, 2013, Dawson and his wife filed amended tax returns and claimed a full adjustment exempting his FERS income from State income tax for 2010 and 2011. On November 19, 2013, the West Virginia State Tax Department sent a letter denying the exemption. Around January 10, 2014, the Dawson’s appealed the determination of the Tax Department and filed a petition for refund to the West Virginia Office of Tax Appeals (OTA). On August 7, 2015, the OTA confirmed the denial of exemption. The Dawson’s appealed to the Circuit Court of Mercer County, which reversed the decision of the OTA on March 31, 2016. The Tax Commissioner appealed to the Supreme Court of Appeals of West Virginia and that court reversed the decision of the Circuit Court and held that the statute did not violate the doctrine of intergovernmental tax immunity (2017 WL 2172006).
Lorenzo v. SEC (No. 17-1077): This case presents a Circuit Split. The DC Circuit and Eleventh Circuit have held that a misstatement alone can serve as the basis of a fraudulent scheme claim, while the Second, Eighth, and Ninth Circuits have all held that a misstatement alone cannot serve as the basis of a fraudulent scheme claim. The real issue is whether a misstatement claim that does not meet the elements of Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011) can be pursued as a fraudulent scheme claim.
As an aside, Justice Kavanaugh should recuse himself from this case as he heard this case while a member of the D.C. Circuit. Lorenzo became the director of investment banking at Charles Vista, LLC, a broker-dealer registered with the SEC, in February 2009. W2E was a client of Charles Vista and claimed that it had gasification technology that could generate electricity by converting solid waste into gas. In September 2009, W2E, which was a public company, conducted a private offering of $15 million in convertible debentures. In June, the company had filed an 8-K reporting that its intangible assets, which included the gasification technology, was worth over $10 million at the end of 2008. The gasification technology never materialized and on October 1, 2009, the company filed an amended 8-K valuing the gasification at $0 and its total assets as $370,552 as of March 31, 2009. W2E also filed a 10-Q claiming assets of $660,408 as of June 30, 2009. Lorenzo was notified by his secretary via email of the filings on October 1. The following day, Lorenzo sent links to the two filings to all of the brokers at Charles Vista. On October 14, Lorenzo emailed two investors with some key points about the debentures offering, but did not mention the devaluation of intangible assets; in fact, his email referred to the company as having over $10 million in assets. In February 2013, the SEC commenced enforcement proceedings against Lorenzo, the owner of Charles Vista (Gregg Lorenzo of no relation to petitioner), and Charles Vista for securities fraud. Gregg Lorenzo and Charles Vista settled, but the petitioner went to an administrative hearing.
On December 31, 2013, the SEC ALJ issued an Initial Decision concluding that Gregg Lorenzo had drafted the email and the petitioner sent it at his request without reading it or thinking about its contents. Nevertheless, the ALJ concluded that petitioner willfully violated securities law and acted with intent to deceive, manipulate, or defraud. The ALJ imposed a lifetime ban from the securities industry and a civil penalty of $15,000. Petitioner asked the SEC for a review of the Initial Decision. The SEC concluded that petitioner was responsible. Petitioner then appealed to the court of appeal, which found that he violated some of the SEC rules, but Rule 10b-5(b), and remanded the case to the SEC for reconsideration of the penalties in light of the decision that he did not violate Rule 10b-5(b). The reasoning of the majority of the panel was that petitioner did not “make” the statements in the email because he did not have ultimate authority over the statement and how to communicate it; Gregg Lorenzo had such ultimate authority. The other provisions he was found to violate did not require making a false statement; those provisions just require using a fraudulent device, practice, or scheme, which is satisfied by sending the messages (872 F.3d 578).
Biestek v. Berryhill (No. 17-1184): The issue is whether a vocational expert’s testimony can serve as evidence of “other work” as defined by 20 C.F.R. § 404.1520(a)(4)(v), which is available for social security disability benefits, when the expert does not provide the data underlying the premise of the testimony.
Biestek spent most of his working life as a laborer and carpenter. He became unemployed in June 2005 and has remained unemployed since that time due to chronic lower back pain caused by degenerative disc disease, depression, and Hepatitis C. He applied for social security benefits in March 2010 and reported his disability as beginning October 28, 2009. His application was denied by the Social Security Administration (SSA) and an ALJ who reviewed the application. The appeals council denied review. The district court vacated and remanded the denial of benefits, finding that the ALJ failed to get necessary medical opinions and made an improper assumption about a vocational expert’s testimony. On remand, the ALJ denied the benefits from October 28, 2009 to May 2013 and found that petitioner had the residual capacity to perform sedentary work, albeit with some limitations, which was readily available. The ALJ did find that he was eligible for benefits from May 2013 because his advanced age would make adjusting to new work seriously difficult. The decision was based on the testimony of a vocational expert. Petitioner requested the job analyses and labor market surveys the vocational expert used as the basis for her opinion, but she refused to provide these citing to the confidentiality of her files. The expert claimed that her opinion could be trusted on the basis of her professional experience and the Department of Labor Dictionary of Occupational Titles. The district court affirmed the ALJ decision finding that the ALJ could rely solely on the expert testimony even if she would not provide the basis for her findings. The Sixth Circuit affirmed, but noted that there is a split on the issue (880 F.3d 778).
Healsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. (No. 17-1229): The question is whether under the Leahy-Smith America Invents Act, an inventor’s sale of an invention to a third party who must keep the invention confidential qualifies as prior art to determine the patentability of said invention.
The case involves petitioner’s drug, Aloxi®, which is a treatment for cancer patients suffering from nausea and vomiting resulting from chemotherapy. The active ingredient in Aloxi is palonosetron, which petitioner acquired the rights to in 1998. In 2000, petitioner submitted protocols for Phase III clinical trials to the FDA, proposing to study two doses of palonosetron. However, petitioner underestimated the costs of this and needed to find a business partner to continue the project. In 2001, petitioner entered into a license agreement and a supply and purchase agreement with MGI Pharma. MGI would purchase whichever palonosetron product approved by the FDA, if any, while keeping confidential proprietary knowledge of petitioner related to the product. As a public company, MGI filed an 8-K with the SEC disclosing the agreements, but redacted information on palonosteron. After the end of the trials in 2002, petitioner submitted a drug application to the FDA for the lower dose of palonosteron, which was approved in July 2003. In 2003, petitioners filed a provisional patent application for the lower dose of palonosteron. This was followed by further applications and culminated in the 2013 issuance of Patent No. 8,598,219 to expire in 2024.
In 2011, respondents filed an abbreviated new drug application for approval to market a generic version of the product. This application included a certification that the petitioner’s patents were invalid or would not be infringed by the generic version. Petitioner brought an infringement action under the Hatch-Waxman Act in the District of New Jersey. The court held that the patent was valid and would be infringed by the generic version and rejected the argument that the MGI agreements invalidated the patent under the AIA on-sale bar. Respondents appealed to the Federal Circuit. The Federal Circuit reversed but did not resolve the competing statutory interpretations, consult the AIA statutory definitions, or use ordinary tools of statutory construction; the court instead looked at a selection of floor statements of the AIA sponsors. Petitioner requested a rehearing, which was denied (855 F.3d 1356).
Gamble v. U.S. (No. 17-646): This case asks whether the separate sovereigns exception to the Double Jeopardy Clause should be overruled.
Gamble was convicted of second-degree robbery in 2008 in Mobile County, Alabama. Since this is a felony, both federal and state law forbid him to possess a firearm. On November 29, 2015, Gamble was pulled over for a faulty tail light. The officer smelled marijuana and searched the vehicle, finding two bags of marijuana, a digital scale, and a 9mm handgun. Alabama prosecuted Gamble for possessing marijuana and being a felon in possession of a firearm. Alabama prohibits possession of a pistol. He was sentenced to one year in prison. At the same time as the state prosecution, the federal government charged him for the same offense under 18 U.S.C. § 922(g)(1). The federal law prohibits possession of any firearm. Gamble objected to the federal charge on the grounds that it violated his Fifth Amendment right to be free from double jeopardy for the same crime. The district court denied his motion to dismiss on the basis of the separate sovereigns exception. Gamble entered a conditional guilty plea, specifically preserving his right to appeal the district court denial of his double jeopardy claim. He was sentenced to 46 months imprisonment and three years supervised release. The Eleventh Circuit affirmed the district court decision and stated that his claim will fail unless and until the Supreme Court overturns the separate sovereigns exception (694 Fed. Appx. 750).