Litigation Archives - Page 8 of 51 - The National Law Forum

Ninth Circuit Reverses Class Certification Order Because Liability Issues, Not Merely Damages, Were Individualized

The Ninth Circuit recently addressed an issue that tends to arise frequently in class certification motion practice: how trial courts should apply the predominance requirement where appellate decisions have said that the need to calculate individualized damages generally is not sufficient on its own to defeat class certification, but some putative class members likely have no damages. On these types of issues, plaintiffs often try to characterize defendants’ arguments in opposition to class certification as raising mere “damages issues” that can be addressed individually at the end of a class case, and defendants often respond that the issues they raise go to liability, not merely damages, and in any event the damages trials would be too complicated and impractical. The Ninth Circuit recently clarified that if determining liability requires highly individualized inquiries, a class should not be certified, and any individualized damages trials would have to be feasible.

In Bowerman v. Field Asset Services, Inc., Nos. 18-16303, 18-17275, — F.4th –, 2022 WL 2433971 (9th Cir. July 5, 2022), the plaintiffs contracted with the defendant to perform preservation services on properties being foreclosed on. They claimed that they should have been classified as employees rather than independent contractors under California law, and therefore should have been paid overtime and reimbursed for business expenses. The district court certified a class, decided certain issues on partial summary judgment in favor of the class, and left for a later damages trial whether a class member worked overtime (and to what extent) and whether the class member was entitled to reimbursement for business expenses (and the amount thereof).

The Ninth Circuit reversed the class certification order. It explained that “We need not decide whether common evidence can prove that [defendant] has a uniform policy of misclassifying its vendors” because “[defendant’s] liability to any class member for failing to pay them overtime wages or to reimburse their business expenses would require highly individualized inquiries on whether that particular class member ever worked overtime or ever incurred any ‘necessary’ business expenses.” (Emphasis in original.) The plaintiffs had “mischaracterize[d] an issue of individualized liability as an issue of individualized damages.” (Emphasis in original.) The Ninth Circuit explained that if the question involves the existence of damages, that is a liability issue, not a damages issue.

The Ninth Circuit also concluded that, under its interpretation of the Supreme Court’s decision in Comcast Corp. v. Behrend, 569 U.S. 27 (2013), the plaintiffs had failed to demonstrate that damages were “capable of measurement on a classwide basis” because they could not “show that the whole class suffered damages traceable to their alleged misclassification as independent contractors,” even if the amounts of those damages would need to be proven individually. In addition, determining damages would require “excessive difficulty” because there was little documentary evidence, and “using the individual testimony of self-interested class members to calculate the overtime hours they worked and the business expenses they incurred isn’t easy.” In a bellwether trial conducted by the district court, eight trial days had been required to determine damages for a sample of only eleven class members.

This decision helpfully clarifies the perennial debate between what constitutes a “damages” issue versus a “liability” issue. As I’ve often written on this blog, it can be helpful to think about the class certification analysis by analyzing how the named plaintiffs’ or putative class members’ claims would be tried in an ordinary individual case, and what evidence the defendant would be entitled to introduce. Here, the bellwether trial helped the Ninth Circuit determine that this case could not be litigated on a class basis.

Article By Wystan M. Ackerman of Robinson & Cole LLP

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District Court Rules Most Plaintiffs in Case Do Not Have Standing to Block Florida Stop W.O.K.E. Act

There are two key cases pending before the U.S. District Court for the Northern District of Florida on Florida’s “Stop W.O.K.E. Act”: the Falls, et al. v. DeSantis, et al., matter (No. 4:22-cv-00166) and the Honeyfund.com, et al. v. DeSantis, et al., matter (No. 4:22-cv-00227). The Northern District of Florida has issued its first order on the Act, which went into effect on July 1, 2022.

In an Order Denying Preliminary Injunction, in Part, in the Falls matter, the court concluded that the K-12 teachers, the soon-to-be kindergartner, and the diversity and inclusion consultant who sued Governor Ron DeSantis and other officials to block the Stop W.O.K.E. Act did not have standing to pursue preliminary injunctive relief. The court reserved ruling pending additional briefing on the question of whether the college professor, who also sued, has standing.

Stop W.O.K.E. Act

The Stop W.O.K.E. Act expands an employer’s civil liability for discriminatory employment practices under the Florida Civil Rights Act if the employer endorses certain concepts in a “nonobjective manner” during training or other required activity that is a condition of employment.

Court Order

In the Falls case, a diverse group of plaintiffs claiming they were regulated by the Stop W.O.K.E. Act filed a lawsuit challenging the Act on the grounds that it violates their First and Fourteenth Amendment Rights to free expression, academic freedom, and to access information.

The court, however, did not reach the question of constitutionality. It also did not determine whether the case can move forward, an issue that will be decided when the court rules on the defendants’ pending motion to dismiss.

Instead, the court denied the plaintiffs’ request for a preliminary injunction on the threshold question of standing. It found the plaintiffs (other than the college professor) did not show they have suffered an injury-in-fact that is traceable to DeSantis or another defendant that can likely be redressed by a favorable ruling.

The court found the consultant is not an employer as defined by the Florida Civil Rights Act. Therefore, she could not assert standing on that basis. Instead, she argued she has third-party standing to assert the rights of the employers who would otherwise hire her, and she is harmed by the Act because employers will no longer hire her. The court rejected both theories, finding the consultant-employer relationship is not sufficiently “close” to create standing; employers are not hindered in raising their First Amendment rights on their own; and, based on the evidence presented, the court could not reasonably infer that the consultant has lost or will lose business because of the Act.

Importantly, the court specifically held that it was not ruling on the legality of the Act, whether it was moral, or whether it constituted good policy.

Private Employer

The court highlighted that the sister case pending in the Northern District of Florida (Honeyfund.com) involves a private employer under the Florida Civil Rights Act. In that case, the plaintiffs allege the Stop W.O.K.E. Act violates their right to free speech by restricting training topics and their due process rights by being unconstitutionally vague. Honeyfund.com, Inc. and its co-plaintiffs request that the court enjoin enforcement of the law. The case has been transferred to District Court Judge Mark Walker. The Honeyfund.com case will likely have the largest effect on Florida employers and questions surrounding the enforceability of the Act as to diversity and inclusion training.

***

Since the Stop W.O.K.E. Act took effect, employers are understandably unclear how to proceed with training. Employers should continue to train their employees, but review their training programs on diversity, inclusion, bias, equal employment opportunity, and harassment prevention through the lens of the new law. Employers should also ensure they train the trainers who are conducting these important programs. Finally, employers should understand potential risks associated with disciplining or discharging employees who refuse to participate in mandatory training programs, even if employers do not consider the programs to violate the new law.

Article By Stephanie L. Adler-Paindiris, Samia M. Kirmani, Amanda Simpson, and Lindsay Dennis Swiger of Jackson Lewis P.C.

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Five Administrative Law Takeaways From Recent Supreme Court Decisions

The US Supreme Court’s decisions of late have been consequential. While headline-grabbing decisions deal with religious liberties, privacy, and gun control, the Court’s impact on administrative law will have major consequences as well. Administrative law decisions stemmed from cases involving how the executive shaped policy related to climate change, health care, immigration, and public health. Administrative actions are tied together by procedural rules derived from the constitutional separation of powers and the federal Administrative Procedure Act (APA).

Below, we discuss five major trends derived from this term’s decisions related to administrative law and the separation of powers:

The “major questions doctrine,” and how it can limit executive-branch authority;
How spending can be used to shape behavior in situations where executive-branch authority might otherwise be limited;
The fate of “Chevron deference” – i.e., the judiciary’s willingness to defer to the executive branch’s interpretations of statutes agencies are tasked to administer;
What discretion executive agencies have to change policies, and what steps they need to defend such changes; and
When the Supreme Court will intervene in cases that are moot or which otherwise lower court decision-making might simplify the Court’s resolution of involved issues.

Major Questions Doctrine

The facts that would support a “major questions” analysis of executive actions became clearer with this term’s decisions. The doctrine drove decisions in major cases related to climate change and public health – NFIB v. OSHA, dealing with the federal vaccine mandate, and West Virginia v. EPA, which addressed greenhouse gas regulations. In sum, the Court says that administrative actions with significant economic and political impact require a close look at authorizing legislation to determine if Congress has authorized the action taken.

Some background on these cases. NFIB v. OSHA – decided first – grappled with whether OSHA exceeded its authority when it sought to require certain employers and their employees to receive a COVID-19 vaccine or be subject to frequent testing requirements. (We discussed this case individually in-depth here.) OSHA based its mandate on its authority to relate workplace hazards. Because the vaccine mandate for businesses with over 100 employees would impact roughly 84 million Americans, the Supreme Court accepted that it was a “major question” that involved “great economic and political significance” and therefore was subject to the major questions doctrine. Accordingly, the executive branch was required to point to specific authority supporting the mandate. Because the executive branch could not point to where Congress gave them the power to enforce a vaccine mandate, the Court overturned it.

This decision either reaffirmed the importance of checks and balances or demonstrated that the “major questions doctrine” could be used to prevent the executive branch from flexibly using “old” public health law to address novel issues associated with an airborne pandemic.

The “major questions doctrine” appeared next in West Virginia v. EPA, which we discussed here. To address the issue of climate change, US Environmental Protection Agency (EPA) developed the Clean Power Plan to address carbon dioxide emissions from power plants that relied on owners shifting from fossil fuels to zero-emitting fuels in 2015. This required closures of fossil fuel generating stations and significant investments from the electric generation sector. After the Supreme Court stayed the Clean Power Plan, the Trump Administration proposed a different rule that mandated actions solely at the fossil fuel-fired units and, simultaneously, declared that the Clean Air Act did not authorize the far-reaching legal rationale of the Clean Power Plan.

After addressing some unique procedural issues, which we will discuss below, the Court characterized the Clean Power Plan as effectively remaking the national energy markets. Applying the major questions doctrine, the Court held that such a broad change to the energy sector required a clear congressional mandate, which was not present in the Clean Air Act. In a concurrence, Justice Gorsuch argued that deferring to agencies on matters of great economic or political significance would amount to “Permitting Congress to divest its legislative power to the Executive Branch. . .”

How Spending Can Be Used to Shape Behavior

Whereas the two decisions above illustrate limits on executive power, in Biden v. Missouri, the Supreme Court allowed the executive branch to use spending to compel COVID vaccinations of employees in certain medical establishments. A vaccine mandate in this context was consistent with past policies because Medicare and Medicaid facilities are routinely forced to follow protocols to receive funding.

Clearly, one takeaway from Biden v. Missouri is that the executive is not without power to influence private behavior, so long as spending is involved. The Court found that in the healthcare space, it would be counterintuitive for effective administration of a “facility that is supposed to make people well to make them sick with COVID-19.”

**The Fate of the Chevron Doctrine**

A third issue worth discussing is the fate of the “Chevron doctrine.” Our takeaway is that the “Chevron” doctrine may have little force at the Supreme Court level, even if parts of its analysis live on. We base this conclusion on the fact that both American Hospital Association v. Becerra and West Virginia v. EPA feature limited deference to the executive vis-à-vis the courts. But, neither case discusses Chevron at all. Why?

The “Chevron doctrine” has been fundamental to modern administrative law while existing in a policy-wonk backwater. The Chevron doctrine was born in the 1984 Supreme Court decision Chevron v. National Resources Defense Council. It provides federal agencies with the ability to interpret the statutes they are tasked to administer without heavy-handed court intervention. Under the traditional Chevron analysis, courts will defer to the federal agency when the relevant statute is ambiguous, and the agency’s interpretation is reasonable.

Two major cases seemed to ignore the doctrine, however:

In Becerra, the Court signaled some unwillingness to find statutes “ambiguous.” Becerra involved the US Department of Health and Human Services’ interpretation of the Medicare statute governing hospital reimbursement rates. While the DC Circuit Court of Appeals below found significant ambiguity in the highly technical statute, a unanimous Supreme Court disagreed and held that the plain language of the statute clearly precluded the agency’s interpretation. The fact that the Supreme Court found clarity where the DC Circuit saw ambiguity suggests that the Court has significantly raised the bar for the level of ambiguity necessary for it to adopt an agency’s interpretation.
Where Becerra limited the impact of Chevron based on the text of the statute, West Virginia v. EPA established an entire class of cases where Chevron will not apply based on the practical impact of the regulation. By embracing the “major questions doctrine” discussed above, the Court signaled that it will not defer to federal agencies on novel issues unless Congress clearly stated an intent to delegate to the agency. The Court focused on the sweeping impact of EPA’s proposed emissions regulations, in stark contrast to the DC Circuit’s textual analysis of the statutes at issue (and also to the Court’s own textual analysis in Becerra).

While it appears that the Chevron doctrine may currently be gathering cobwebs at the Supreme Court level, it remains to be seen what will happen at the district and appellate levels. Maybe the Chevron doctrine will continue to exist as a sorting mechanism below — scholars have noted that Chevron was far more likely to determine outcomes in the lower courts. But at the very least, the Supreme Court has given federal judges powerful tools to avoid deferring to agency interpretations where they are so inclined.

How and When Agencies Can Change Preexisting Policies

A fourth issue worth highlighting may be found in Biden v. Texas, which involves the Biden Administration’s rescission of the Trump Administration’s Remain in Mexico policy.

First, some policy background: Government agencies have broad discretion in setting and changing policies so long as they follow the appropriate procedures. Generally, these procedures are set forth in the APA, a statute that we discuss with great regularity. Under the APA, the executive’s decisions can only be justified or challenged based on the agency’s administrative record. The regulated community can sometimes request that the Court look beyond the administrative record by showing that the agency acted in bad faith or in a procedurally improper manner. The Court’s last significant decision in this area – Department of Commerce v. New York, which we summarized here – evaluated the Commerce Secretary’s attempts to add a citizenship question to the 2020 census. In Department of Commerce, extra-record discovery revealed that the Secretary planned to add the question all along and had, in fact, solicited the request for the question from the US Department of Justice (DOJ). The Supreme Court determined that the Voting Rights Act rationale was “contrived” and affirmed the lower court’s decision to bar the US Department of Commerce from asking the question.

Regarding this case: Biden v. Texas, which involved the Biden Administration’s rescission of the Trump Administration’s “Remain in Mexico” immigration program – also called the Migrant Protection Protocols (MPP) – evaluated whether the Biden Administration acted appropriately when it rescinded the program. Some background on Biden v. Texas:

In January 2019, the US Department of Homeland Security (DHS) began to implement MPP. Under MPP, certain non-Mexican persons arriving by land from Mexico were returned to Mexico to await the results of their immigration cases. After it took office, the Biden Administration first suspended the program and later terminated it.
Texas and Missouri challenged the rescission on the grounds that it violated federal immigration law as well as the APA. A Texas federal court accepted the states’ arguments on the grounds that immigration law required DHS to either detain arrivals in the US or in contiguous territory – as MPP did – and that DHS lacked the resources necessary to house arrivals in the US, so a program like MPP was required by statute. The district court entered an injunction requiring the government to “enforce and implement MPP in good faith until such a time as it has been lawfully rescinded in compliance with the APA and until such a time as the federal government has sufficient detention capacity to detain all aliens subject to mandatory detention under [immigration law] without releasing any aliens because of a lack of detention resources.”
On appeal, the Secretary of DHS released a second explanation for terminating MPP and sought to vacate the injunction. The appellate court affirmed the lower court’s analysis that the injunction was required and rejected DHS’s second explanation for why the program should be terminated on the grounds that it did not constitute a new or separately reviewable “final agency action,” which triggers APA review.

The Court upheld the rescission of MPP on two grounds: first, because federal immigration law used the word “may” in defining what DHS may do regarding confining persons arriving over land from Mexico. “May” gives the government discretion and establishes contiguous-territory return such as was required by MPP as a tool that the agency “has the authority, but not the duty” to use. Congress could have – but did not – construct the immigration provisions to require MPP.

Additionally, upholding the program required the Court’s consideration of DHS’s during-litigation explanation for why the program should be terminated. The Court accepted the during-litigation explanation because it constituted a wholly new explanation of why the MPP should be terminated. The during-litigation explanation explained that it “superseded” and “rescinded” the earlier termination and then offered “new reasons” that had not been included in the prior rescission. Both the pre-litigation and during-litigation memoranda were separate “final agency actions.”

Finally, because DHS did not rest on its pre-litigation MPP termination, it was permitted to provide additional justifications for its actions, so long as the agency complied with APA-imposed requirements for taking “new” actions. The Court rejected the states’ charge that there was a “significant mismatch between” the rescission and DHS’s explanation for it. DHS’s “ex-ante preference for terminating MPP – like any other feature of an administration’s policy agenda – should not be held against” its actions. Accordingly, DHS’s rescission of MPP was upheld.

An Increase in Procedurally Irregular Case Resolutions?

A final trend we wanted to highlight is that the Supreme Court appears increasingly willing to wade into disputes at earlier procedural phases than would be typical. Historically, nearly every Supreme Court case has made it to the Court having been fully and finally resolved in lower federal courts. (To be sure, there are some exceptions – most notably the limited class of cases for which the Supreme Court has original jurisdiction, which involve mainly disputes between the states or disputes between ambassadors.) This term, the Court was increasingly willing to wade into disputes which were either arguably moot or have not yet completed their run through lower courts. Three examples:

Mootness. In West Virginia v. EPA, during the pendency of litigation, the Biden Administration indicated it would not enforce the regulations at issue and instead would pursue a new rulemaking. The Court found that EPA’s representation that “voluntary cessation does not moot a case” unless it is “absolutely clear that the allegedly wrongful behavior could not be expected to recur.” For the government to moot the case, it would have to suggest that it would not re-impose limitations based on generation shifting – something that it did not do.
No lower court finding regarding jurisdiction. In Biden v. Texas, four of the nine justices signed a dissent indicating that lower courts should review whether federal courts had “jurisdiction or authority to enjoin or restrain the operation of” certain immigration laws in light of the Court’s recent decision in Garland v. Aleman Gonzalez, which addressed similar issues. While a majority of the court favored reaching a merits decision, four members of the Court favored remanding the case to lower courts for an evaluation of how Aleman Gonzalez might alter jurisdictional issues in the case.
The Court’s Use of its “Shadow Docket.” In Ardoin v. Robinson, the Supreme Court, in an unsigned order with no explanation, reinstated a district voting map in Louisiana that has previously been deemed discriminatory and harmful to minority voting rights. This case was decided under what has been coined the Supreme Court’s “shadow docket” because it refers to cases decided outside normal procedural regularity: off the regular docket, without oral arguments or written briefs, and before lower courts have fully and finally decided the issue. The Court’s use of its “shadow docket” appears to be occurring with increasing frequency. As the Court is likely to remain polarized next term, we may see additional consequential decisions at the “shadow docket” phase then.

This was clearly a major term with significant decisions in many areas, including administrative law. The Court’s next arguments begin in October. We will keep an eye out for new cases relevant to administrative law.

Article By J. Michael Showalter, Samuel A. Rasche, and Rachael A. Bryan of ArentFox Schiff LLP

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Even in the 9th Circuit, merely conveying contaminated groundwater isn’t “transportation” of a “solid waste”

Just before the July 4th holiday, two Judges on a Ninth Circuit panel reversed their earlier conclusion that conveying contaminated groundwater can give rise to RCRA liability for the “transportation” of a “solid waste”. The panel now agrees that the City of Vacaville’s mere conveyance of drinking water contaminated by someone else is not something Congress intended to criminalize (or make subject to civil penalties) in RCRA.

The two Judges reiterated their view that the contaminated groundwater does fall within RCRA’s definition of “solid waste”.

This case first caught my attention in January after the panel’s first bite at this apple. (See https://insights.mintz.com/post/102hg8l/overturning-the-9th-circuit-vaca…).

I guess it is progress that the panel has corrected one of its two mistakes. But to suggest that conveying groundwater containing parts per billion of anything is the transportation of a solid waste is completely unfaithful to the language of RCRA as the panel has now recognized with respect to the definition of “transportation” but not the definition of “solid waste”.

It bears repeating that the water the City is providing to the residents of Vacaville reportedly meets all applicable federal and state standards, including those established under the Federal Safe Drinking Water Act, and the State of California has stringent standards of its own. It is those laws, and not the federal law having to do with the transportation and disposal of solid waste, that should apply.

As I wrote in January, if we think those laws, or any of our other federal and state environmental laws, need improving, we should lobby our elected officials to improve them. But stoking the fears of an already cynical citizenry that our federal, state and local governments aren’t doing their job isn’t worth whatever citizen suit plaintiffs might stand to gain from misusing the laws that we do have.

“RCRA’s context makes clear that mere conveyance of hazardous waste cannot constitute ‘transportation’ under the endangerment provision,” writes Judge Patrick J. Bumatay in the new ruling, joined by District Judge Douglas L. Rayes, sitting on the 9th Circuit by designation.

Article By Jeffrey R. Porter of Mintz

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US Supreme Court Holds That Airline Cargo Loaders Are Exempt From Arbitration

The US Supreme Court has held that airline cargo loaders who load and unload cargo from planes that travel across state lines are exempt from the Federal Arbitration Act (FAA) because they belong to a “class of workers engaged in foreign or interstate commerce” under § 1 of the FAA. Southwest Airlines Co. v. Saxon (June 6, 2020).

Background

Latrice Saxon worked for Southwest Airlines and was responsible for training and supervising teams of ramp agents who load and unload airplane cargo on Southwest planes that travel across state lines. Saxon brought a collective action alleging failure to pay proper overtime wages FLSA in the Northern District of Illinois. However, Saxon had signed an arbitration agreement requiring her to arbitrate her wage disputes, and Southwest moved to dismiss the lawsuit and to compel arbitration under the FAA.

Saxon opposed the motion, invoking § 1 of the FAA, which exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” She argued that ramp supervisors, like seamen and railroad employees, were an exempt “class of workers engaged in foreign or interstate commerce,” but the district court agreed with Southwest and found that only employees involved in “actual transportation,” not those who merely handle goods, fell within § 1 of the FAA. On appeal, the Seventh Circuit Court of Appeals disagreed with the District Court’s decision, holding that “[t]he act of loading cargo onto a vehicle to be transported interstate is itself commerce.” The Seventh Circuit’s decision conflicted with an earlier decision of the Fifth Circuit, Eastus v. ISS Facility Services, Inc., 960 F. 3d 207 (2020), and the Supreme Court granted certiorari to resolve the conflict between the two circuits.

The Supreme Court’s Decision

In a unanimous decision, the Supreme Court held that loaders who load and unload airplane cargo that travels intrastate play a direct role in the interstate transportation of goods and therefore belong to a “class of workers engaged in foreign or interstate commerce” under § 1 of the FAA. The Court engaged in a two-step analysis. First, it considered how to define the relevant “class of workers.” The Court rejected Saxon’s argument that the “class of workers” should be defined as virtually all airline employees, which would include shift schedulers or those who design Southwest’s website. Rather, the Court held that the inquiry must focus on the job duties of the employees themselves, rather than the employer’s business and that Saxon “belongs to a class of workers who physically load and unload cargo on and off airplanes on a frequent basis.”

Next, the Court considered whether that class of airplane cargo loaders “engaged in foreign or interstate commerce.” It determined that “one who loads cargo on a plane bound for interstate transit is intimately involved with the commerce of that cargo” and that workers like Saxon who load and unload airplane cargo that travels in interstate commerce are exempt from the FAA.

Takeaway for Employers

Though the Court did find a class of workers exempt from the Federal Arbitration Act, it expressly rejected the assertion that this exemption should apply to all employees of an employer engaged in foreign or interstate transportation. It went on to provide examples of positions that would not satisfy the exemption, such as workers engaged in the sale of interstate asphalt or workers who supply janitorial services to a corporation engaged in interstate commerce.

Employers engaged in interstate or foreign transportation commercial should consult legal counsel if they plan to utilize arbitration agreements as part of their dispute resolution process.

Article By John P. Zaimes and Natalie C. Kreeger of ArentFox Schiff LLP

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Update: In Opioid Liability Ruling for Doctors, SCOTUS Deals Blow to DOJ

On June 27, 2022, the United States Supreme Court ruled that doctors who act in subjective good faith in prescribing controlled substances to their patients cannot be convicted under the Controlled Substance Act (“CSA”). The Court’s decision will have broad implications for physicians and patients alike. Practitioners who sincerely and honestly believe – even if mistakenly – that their prescriptions are within the usual course of professional practice will be shielded from criminal liability.

The ruling stemmed from the convictions of Dr. Xiulu Ruan and Dr. Shakeel Kahn for unlawfully prescribing opioid painkillers. At their trials, the district courts rejected any consideration of good faith and instructed the members of the jury that the doctors could be convicted if they prescribed opioids outside the recognized standards of medical practice. The Tenth and Eleventh Circuits affirmed the instructions. Drs. Ruan and Kahn were sentenced to 21 and 25 years in prison, respectively.

The Court vacated the decisions of the courts of appeals and sent the cases back for further review.

The question before the court concerned the state of mind that the Government must prove to convict a doctor of violating the CSA. Justice Breyer framed the issue: “To prove that a doctor’s dispensation of drugs via prescription falls within the statute’s prohibition and outside the authorization exception, is it sufficient for the Government to prove that a prescription was in fact not authorized, or must the Government prove that the doctor knew or intended that the prescription was unauthorized?”

The doctors urged the Court to adopt a subjective good-faith standard that would protect practitioners from criminal prosecution if they sincerely and honestly believed their prescriptions were within the usual course of professional practice. The Government argued for an objective, good-faith standard based on the hypothetical “reasonable” doctor. The Court took it one step further.

Justice Breyer delivered the opinion of the Court. He said that for purposes of a criminal conviction under the CSA, “the Government must prove beyond a reasonable doubt that the defendant knowingly or intentionally acted in an unauthorized manner.” To hold otherwise “would turn a defendant’s criminal liability on the mental state of a hypothetical ‘reasonable’ doctor” and “reduce culpability on the all-important element of the crime to negligence,” he explained. The Court has “long been reluctant to infer that a negligence standard was intended in criminal statutes,” wrote Justice Breyer.

Justice Samuel Alito wrote a concurring opinion, which Justice Clarence Thomas joined and Justice Amy Coney Barrett joined in part. Although Justice Alito would vacate the judgments below and remand for further proceedings, he would hold that the “except as authorized” clause of the CSA creates an affirmative defense that defendant doctors must prove by a preponderance of the evidence.

The Court’s decision will protect patient access to prescriptions written in good faith. However, for the government, the Court’s decision means prosecutors face an uphill battle in charging, much less convicting, physicians under the CSA. Indeed, the Court’s decision may have a chilling effect on the recent surge in DOJ prosecutions of medical practitioners and pain clinics.

Article By Lindsay K. Gerdes and Madeline R. Pinto of Dinsmore & Shohl LLP

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U.S. Supreme Court Sides with Public High School Coach in Free Speech/Freedom of Religion Case

The U.S. Supreme Court issued a ruling which will have wide-ranging effects on the ability of governmental entities to react to religious and other speech of public employees. In Kennedy v. Bremerton Schools, the Court ruled that a public high school could not discipline or disfavor a football coach for his practice of kneeling on the 50-yard line and praying at the conclusion of each game, eventually growing to include most of the football team and opposing players as well. The school district had attempted to accommodate the coach’s desire for prayer, but concerns mounted when one parent complained that her son felt compelled to participate despite being an atheist. The coach was eventually placed on administrative leave and not extended an offer to return to coaching the next school year. Both the district court and the U.S. Court of Appeals for the Ninth Circuit rejected the coach’s First Amendment challenges.

With a 6-3 majority, the Supreme Court reversed. In doing so, the Court first found a violation of the Free Exercise Clause. The Court discounted the school district’s stated concerns that the coach’s practice could violate the Establishment Clause or interfere with students’ right of free exercise. The Court held that absent evidence of “direct” coercion the Establishment Clause was not implicated and then concluded that the coach’s position of authority over the players was insufficient to constitute direct coercion. The Court distinguished earlier cases involving prayers at football games and civic meetings, by emphasizing that the speech for which the coach was disciplined was not publicly broadcast or recited to a captive audience. Additionally, students were not required or formally expected to participate.

With respect to the Free Speech issue, the Court concluded that the coach’s prayers were not unprotected “government speech,” and in doing so applied a restrictive view of what could be considered “government speech.” The Court held that because the coach’s job duties did not include leading prayers, the fact that the speech occurred on the field immediately after the game was insufficient to transform it from private speech to government speech. “To hold differently,” the Court stated, “would be to treat religious expression as second-class speech and eviscerate this Court’s repeated promise that teachers do not ‘shed their constitutional rights to freedom of speech or expression at the schoolhouse gate.’”

The decision, together with Shurtleff v. Boston decided earlier this Term, suggests a sharp break with past Court jurisprudence on the balance between the dictates of the Establishment and Free Exercise Clauses. Government entities should review their policies on religious activity on government property or by employees in connection with their positions in light of these two decisions.

Article By Ahmad Chehab, Scott R. Eldridge, and Robert T. Zielinski of Miller Canfield

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You Have Mail (Better Read It): District Court Finds EEOC 90-Day Deadline Starts When Email Received

If a letter from the EEOC is in your virtual mailbox but you never open it, have you received it? Most of us are familiar with the requirement that a claimant who files an EEOC charge has 90 days to file a lawsuit after receiving what is usually required a “right-to-sue” letter from the agency. This is one of the deadlines that both plaintiff and defense counsel track on their calendars. But when is that notice officially “received” by the claimant — especially in these days of electronic correspondence? In Paniconi v. Abington Hospital-Jefferson Health, one Pennsylvania federal court decided to draw a hard line on when that date actually occurs.

A Cautionary Tale

Denise Paniconi worked for a hospital in Pennsylvania and filed a charge of discrimination with the EEOC alleging race and religious discrimination. The EEOC investigated and issued a right-to-sue letter dated September 8, 2021, which gave her 90 days to file her complaint. She filed her complaint 91 days after the EEOC issued the letter. The employer moved to dismiss the complaint for failing to comply with the 90-day deadline.

What ordinarily would just be a day counting exercise took a twist because of how the EEOC issued the notice. The EEOC sent both the plaintiff and her lawyer an email stating that there was an “important document” now available on the EEOC portal. Neither the plaintiff nor her lawyer opened the email or accessed the portal until sometime later. They argued that the 90-day filing deadline should run from the date that the claimant actually accesses the document, not from the date the EEOC notified them it was available.

The court dismissed the complaint for failing to meet the deadline. The opinion noted that although the 90-day period is not a “jurisdictional predicate,” it cannot be extended, even by one day, without some sort of recognized equitable consideration. Paniconi’s lawyer argued that the court should apply the old rule for snail mail ̶ without proof otherwise, it should be assumed that the notice is received within three days after the issuance date. The court disagreed and pointed out that no one disputed the date that the email was sent ̶ it was simply not opened and read by either Paniconi or her lawyer. The court said that there was no reason that those individuals did not open the email and meet the 90-day deadline.

Deadlines Are Important

This is another example of how electronic communication can complicate the legal world. The EEOC has leaned into its use of the portal, and the rest of the world needs to get used to it. The minute you receive an email or notice from the portal, you need to calendar that deadline. Some courts (at least this one) believe that electronic communication is immediate, and you may not get grace for not logging on and finding out what is happening with your charge. Yet another reason to stay on top of your emails.

Article By J. William Manuel and Anne R. Yuengert of Bradley Arant Boult Cummings LLP

For more labor and employment legal news, click here to visit the National Law Review.

Beyond Meat Sued Over Protein Content Claims

A proposed consumer class action lawsuit was filed against Beyond Meat, Inc. on June 10, alleging that the plant-based meat manufacturer embellished the amount of protein contained in its line of plant-based sausages, breakfast patties, meatballs, ground beef, and chicken products.
In the complaint, plaintiff Mary Yoon alleges that Beyond Meat falsely labels and advertises its products as providing “equal or superior protein” to animal-derived meat. Her claim is based on the fact that “two different U.S. laboratories have independently and separately conducted testing on a wide range of Beyond Meat products. The test results were consistent with each other: the results of both tests show that Beyond Meat products contain significantly less protein than what is stated on the product packaging.”
Plaintiff Yoon alleges that Beyond Meat’s quantitative declaration of protein and percent Daily Value (%DV) are false and misleading because the quantitative amount was calculated using the nitrogen method. According to the complaint, “the nitrogen method is not the most accurate way to describe protein content” and that “[b]y law, Beyond Meat is required to use the PDCAAS calculation for the products rather than some other less-sophisticated method.”
In opposition to plaintiff Yoon’s claims, 21 CFR 101.9(c)(7) specifically provides for two different methods to determine protein values, including the nitrogen method. The FDA recently issued a clarifying Q&A supporting the use of either method to calculate protein content (i.e., nitrogen or PDCAAS), but noted that manufacturers are still obligated to include a %DV when protein claims are made and that %DV should be adjusted for protein quality.

Article By Food and Drug Law Practice Group at Keller and Heckman LLP

For more biotech, food, and drug legal news, click here to visit the National Law Review.

SCOTUS Significantly Narrows Scope of 28 U.S.C. § 1782 for International Arbitrations

The United States Supreme Court’s recent decision in ZF Automotive US, Inc., et al., v. Luxshare, Ltd., No. 21-401, holds that U.S. federal courts cannot order discovery in aid of international commercial arbitrations or investor-state arbitrations. In a unanimous decision, the Court reasoned that a “foreign tribunal,” under 28 U.S.C. § 1782, “is best understood as an adjudicative body that exercises governmental authority” rather than a private body that is merely located in another country. Because the private arbitral tribunal in the ZF Automotive case did not exercise governmental authority, the Supreme Court denied discovery in aid of the proceeding under Section 1782.

The decision resolves a circuit split over whether private commercial arbitration panels should be considered “foreign or international tribunals” under 28 U.S.C. § 1782, and thus whether U.S. discovery should be allowed in such private commercial arbitrations. Section 1782 authorizes a district court to order the production of evidence “for use in a proceeding in a foreign or international tribunal.” The Fourth and Sixth Circuits have previously held that international commercial arbitrations are foreign tribunals under the statute, while the Second, Fifth, and Seventh Circuits have held that they are not. The availability of discovery under Section 1782 is a key issue for the international arbitration community because the scope of discovery allowed under Section 1782 is generally broader than any discovery allowed under institutional arbitral rules or under foreign arbitration laws.

In reaching its decision, the Court found that the word “tribunal” carries a distinctively governmental flavor. A prior version of Section 1782 covered only “judicial proceeding[s]” in any court in a foreign country, however, Congress later expanded the legislation’s scope to cover proceedings in a “foreign or international tribunal.” The Court found that while this change broadens the understanding of “tribunal” to include tribunals that are not formal courts, the term is still best understood to refer to an adjudicative body that exercises governmental authority. Under the decision, a “foreign tribunal” is a tribunal belonging to a foreign nation while an “international tribunal” is best understood as one that involves two or more nations imbued with governmental authority. Location of the tribunal or the nature of the parties to the dispute are not determinative in this interpretation.

The Court also noted that extending Section 1782 discovery to cover international arbitrations would conflict with the Federal Arbitration Act, which governs domestic arbitrations. Thus, interpreting Section 1782 as applying to international arbitration would create a “notable mismatch between foreign and domestic arbitration.”

The Court’s decision came in a consolidated case arising out of appeals in the Sixth and Second Circuits. The first case involves a dispute between Luxshare, a Hong Kong company and ZF Automotive US Inc., a Michigan-based company, over an allegedly fraudulent sales transaction. The agreement between the parties provided that all disputes would be resolved by an arbitral panel under the Arbitration Rules of the German Arbitration Institute (DIS). In preparation for bringing an arbitration, Luxshare filed an ex parte petition under Section 1782 in the U.S. District Court for the Eastern District of Michigan seeking information from ZF Automotive and its officers. The district court granted the petition and ZF Automotive moved to quash, arguing that a panel formed under the auspices of the DIS was not a “foreign or international tribunal” under Section 1782. The district court denied the motion and the Sixth Circuit denied a stay.

The second case involves AB bankas SNORAS, a Lithuanian bank which was nationalized by Lithuanian authorities. The Fund for Protection of Investors’ Rights in Foreign States, a Russian corporation, commenced an ad hoc arbitration proceeding against Lithuania under a bilateral investment treaty that the country entered with Russia. The Fund filed a petition under Section 1782 in the district court seeking information from AlixPartners, LLP, a New York-based consulting firm, and one of its officers. AlixPartners challenged the petition, arguing that the ad hoc panel was also not a “foreign or international tribunal” under Section 1782. The district court rejected that argument in a decision that was affirmed by the Second Circuit.

The Court’s decision is likely to spark much discussion in the international arbitration community. There will likely be a significant impact on current and future international arbitrations, with parties having to consider their strategies for discovery in light of the unavailability of a critical information-gathering tool. On the other hand, for better and for worse, this decision will further streamline the international arbitration process, as many arbitral proceedings will not be delayed by related litigation over discovery in U.S. courts.

Article By Travis A. Gonyou of Binder & Schwartz

For more arbitration legal news, click here to visit the National Law Review.

Tag: Litigation

Ninth Circuit Reverses Class Certification Order Because Liability Issues, Not Merely Damages, Were Individualized

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