KANSAS CITY, Kan. - A plaintiff's police practices expert can opine regarding standards and training at a jail in a civil rights action stemming from the beating of a mentally ill prison inmate by a jailer, a federal judge in Kansas held Dec. 16 (Ronell Richard v. Robert Hinshaw, et al., No. 09-1278-MLB, D. Kan.; 2013 U.S. Dist. LEXIS 176391).
ERIE, Pa. - A federal judge in Pennsylvania presiding over a civil rights lawsuit on Dec. 9 ordered the solicitor of a defendant school board to submit written responses to three categories of questions that were objected to during his deposition, finding that the requested information was not privileged (Matthew Tighe v. Mona Bushcak, et al., No. 11-cv-224, W.D. Pa.; 2013 U.S. Dist. LEXIS 172527).
SAN FRANCISCO - A split Ninth Circuit U.S. Court of Appeals on Oct. 24 ruled that $125,000 is the maximum punitive damages award in a Title VII of the Civil Rights Act of 1964 sexual harassment suit where no compensatory damages were awarded and only $1 in nominal damages was awarded (State of Arizona, et al. v. ASARCO LLC, No. 11-17484, 9th Cir.; 2013 U.S. App. LEXIS 21613).
SCRANTON, Pa. - A Pennsylvania physician who alleges that statutory restrictions on his ability to discover the chemicals in proprietary hydraulic fracturing fluids used in natural gas extraction violates his civil rights under the First and 14th amendments to the U.S. Constitution and exposes him to professional disciplinary action by the American Medical Association lacks standing to challenge the statute, a U.S. District Court for the Middle District of Pennsylvania judge ruled Oct. 23 (Dr. Alfonso Rodriguez, M.D., v. Michael L. Krancer, et al., No. 12-1458, M.D. PA.; 2013 U.S. Dist. LEXIS 152207).
DENVER - A split 10th Circuit U.S. Court of Appeals panel on Oct. 1 reversed a trial court's decision finding that a clothing retailer violated Title VII of the Civil Rights Act of 1964 when it refused to hire a female due to her head scarf (Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc., et al., No. 11-5110, 10th Cir.; 2013 U.S. App. LEXIS 20028).
SANTA ANA, Calif. - A subrogated insurer can proceed with its negligence and breach of contract claims against a developer because the Right to Repair Act, Civil Code Section 895, et seq., does not eliminate a property owner's common-law rights and remedies, a California appeals panel held Aug. 28, reversing a trial judge's ruling (Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC, No. G046731, Calif. App., 4th Dist., Div. 3; 2013 Cal. App. LEXIS 687).
SAN JOSE, Calif. - A federal judge in California on July 24 stayed for six months a civil suit against individuals also facing criminal charges for their alleged perpetration of a Ponzi scheme, stating that forcing the defendants to make a choice between preserving their privilege against self-incrimination, thereby exposing themselves to a "one-sided discovery process," would impinge on their Fifth Amendment rights (Lynn Bridges, et al. v. John A. Geringer, et al., No. 13-1290, N.D. Calif.; 2013 U.S. Dist. LEXIS 103852).
SAN ANTONIO - A federal judge on July 12 limited plaintiff and defense police practices experts to discussing nationally recognized excessive force standards in a negligence and civil rights action against a school district police officer who fatally shot a 14-year-old student after a chase (Denys Lopez Moreno v. Northside Independent School District, et al., No. SA-11-CV-746-XR, W.D. Texas; 2013 U.S. Dist. LEXIS 97401).
WASHINGTON, D.C. - Retaliation claims filed under Title VII of the Civil Rights Act of 1964 must prove but-for causation, a split U.S. Supreme Court ruled June 24, rejecting the lessened causation test outlined in 42 U.S. Code Section 2000e-2(m) (University of Texas Southwestern Medical Center v. Naiel Nassar, No. 12-484, U.S. Sup.).
NEW ORLEANS - Discharging a female employee because she is lactating or expressing breast milk constitutes gender discrimination in violation of Title VII of the Civil Rights Act of 1964, a Fifth Circuit U.S. Court of Appeals panel ruled May 30 (Equal Employment Opportunity Commission v. Houston Funding II, Limited, et al., No. 12-20220, 5th Cir.; 2013 U.S. App. LEXIS 10933).
MEMPHIS, Tenn. - A federal judge in Tennessee on May 14 refused to dismiss a plaintiff's civil rights and Fair Housing Act (FHA) lawsuit after finding that his failure to comply with an April 12 order was an honest mistake that did not prejudice the defendants (Cecil Johnson v. Belvedere Gardens Condominium Association Inc., et al., No. 12-2118-SHM, W.D. Tenn.; 2013 U.S. Dist. LEXIS 68314).
NEW ORLEANS - An FBI contract employee's claim of discrimination fails under Title VII of the Civil Rights Act of 1964's national security exception, the Fifth Circuit U.S. Court of Appeals ruled April 29, affirming a trial court (Bobbi-Anne Toy v. Eric H. Holder, Jr., Attorney General, United States Department of Justice, No. 12-20471, 5th Cir.; 2013 U.S. App. LEXIS 8673).
WASHINGTON, D.C. - A Title VII of the Civil Rights Act of 1964 retaliation claim must prove but-for causation, the attorney representing the University of Texas Southwestern Medical Center (UTSW) argued before the U.S. Supreme Court on April 24 (University of Texas Southwestern Medical Center v. Naiel Nassar, No. 12-484, U.S. Sup.).
DES MOINES, Iowa - The American Civil Liberties Union of Iowa filed a class complaint on April 18 in the U.S. District Court for the Southern District of Iowa on behalf of members of the Westboro Baptist Church of Topeka, Kan., alleging that their constitutional rights have been violated by law enforcement officials seeking to enforce an old law barring the desecration of the U.S. flag (Margie J. Phelps, et al. v. Red Oak Police Chief Drew Powers, et al., No. 13-11, S.D. Iowa).
VENTURA, Calif. - A California appellate panel on April 17 ruled that denying a woman surgery based on her HIV-positive status and was a violation of the Unruh Civil Rights Act (Maureen K. v. Theodore Tuschka, M.D., No. B236150, Calif. App., 2nd Dist.; 2013 Cal. App. LEXIS 294).
SACRAMENTO, Calif. - A California federal judge on March 21 denied certification of a class of children on the Autism spectrum and their parents suing various California school districts for allegedly being denied access to intensive applied behavior analysis services in violation of Section 504 of the Rehabilitation Act, Title II of the Americans with Disabilities Act and California's Unruh Civil Rights Act (Z.F., a minor by and through his parents M.A.F. and J.F., et al. v. Ripon Unified School District (RUSD), et al., No. 10-523, E.D. Calif.; 2013 U.S. Dist. LEXIS 39655).
NEW YORK - A Second Circuit U.S. Court of Appeals panel on March 15 upheld a federal judge in New York's decision to impose dismissal sanctions against a pro se plaintiff in a suit brought under Title VII of the Civil Rights Act of 1964 after agreeing that lesser sanctions would not have been effective in remedying the plaintiff's willful noncompliance with the court's discovery orders (Ariel Antonmarchi v. Consolidated Edison Company of New York Inc., No. 12-1849, 2nd Cir.; 2013 U.S. App. LEXIS 5164).
BROOKLYN, N.Y. - A woman can settle her unpaid wages complaint against her former employer brought as a collective action under the Fair Labor Standards Act (FLSA) because the FLSA does not apply to the woman's right under Federal Rule of Civil Procedure 41(a) to dismiss the action without the oversight or approval of the court, a New York federal judge held Feb. 22 (Donna Picerni v. Bilingual SEIT & Preschool Inc., No. 12-4938, E.D. N.Y.; 2013 U.S. Dist. LEXIS 24622).
SAN FRANCISCO - The personal injury lawsuit of a California plaintiff who alleges that the City of Richmond, Calif., and Chevron Oil Inc. violated her constitutional and civil rights by allowing petroleum fumes to leak from oil refinery pipes was dismissed with leave to amend on Jan. 14 for lack of federal jurisdiction (Sylvia Marie Williams v. Chevron Oil Inc., et al., No. 12-5488, N.D. Calif.; 2013 U.S. Dist. LEXIS 6106).
KNOXVILLE, Tenn. - A jail administration expert can testify that a county jail violated standard correctional procedures, a federal judge in Tennessee held Dec. 11 in a civil rights action by an inmate who alleges that he was raped by a kitchen supervisor (Anthony Rose v. Sevier County, Tennessee, et al,, No. 3:08-cv-25, E.D. Tenn.; 2012 U.S. Dist. LEXIS 174926)
WASHINGTON, D.C. - The U.S. Supreme Court unanimously ruled this morning that a federal employee claiming that an agency action appealable to the Merit Systems Protection Board (MSPB) violates an antidiscrimination statute in 5 U.S. Code Section 7702(a)(1) should file the appeal in a district court, not the Federal Circuit U.S. Court of Appeals (Carolyn M. Kloeckner v. Hilda L. Solis, Secretary of Labor, No. 11-184, U.S. Sup.)
"[T]he intersection of federal civil rights statutes and civil service law has produced a complicated, at times confusing, process for resolving claims of discrimination in the federal workplace. But even within the most intricate and complex systems, some things are plain. So it is in this case, where two sections of the CSRA [Civil Service Reform Act], read naturally, direct employees like [Carolyn] Kloeckner to district court," Justice Elena Kagan wrote for the court.
Kloeckner was a senior investigator for the Employment Benefits Security Administration of the U.S. Department of Labor (DOL). In June 2005, Kloeckner filed a timely administrative complaint asserting that she had been subjected to a hostile work environment based on her age and gender. She amended her complaint two months later to allege that in retaliation for her June complaint, agency officials charged her with being absent without leave, rather than on medical leave without pay, for a six-week period beginning the day she filed her original complaint.
In late spring 2006, the DOL completed its investigation. On June 20, 2006, Kloeckner requested a hearing before an EEOC administrative judge. On July 18, 2006, while her complaint was pending, the DOL terminated Kloeckner. One reason given for the termination was Kloeckner's six-week absence without leave.
On Aug. 18, 2006, Kloeckner appealed her termination to the MSPB. Because she alleged that her termination was the result of discrimination, that appeal presented a mixed case. The result of the appeal was that two related administrative proceedings, both alleging discrimination, were pending at the same time. The mixed case was before the MSPB, and the nonmixed case was before the EEOC administrative judge.
In September 2006, the parties filed a joint motion with the EEOC administrative judge to amend the complaint and for extension of discovery deadlines. In that motion, Kloeckner asked that her pending complaint be amended to include a challenge to her July 2006 termination. Although counsel for the parties agreed that discovery should take place in connection with the EEOC proceeding, they were unable to agree about what should be done regarding the pending MSPB appeal. Kloeckner's counsel decided to file a motion asking the MSPB administrative judge to dismiss the appeal without prejudice for four months, a period that would have lasted past the end of the discovery deadline the parties were proposing to the EEOC administrative judge. The MSPB judge granted the motion.
The EEOC discovery was delayed. As the deadline for refiling the appeal with the MSPB approached, Kloeckner was left with few options. If she refiled with the MSPB before the EEOC discovery was complete, her complaint at the EEOC may have been dismissed. In addition, the DOL had already taken the position that by going to the EEOC in September, Kloeckner had forfeited her rights to pursue any appeal to the MSPB.
However, under Sections 1614.302(d)(1)(ii) and 1614.302(d)(3) of the EEOC regulations, and under Section 1201.154(a) of the MSPB regulations, Kloeckner believed that if she continued to pursue her agency-level complaint until there was a final agency decision by the DOL regarding her discrimination complaint, she would at that point have an express right to file an appeal to the MSPB. So Kloeckner chose not to refile her appeal and instead opted to pursue her EEOC complaint.
In April 2007, the EEOC judge concluded that Kloeckner had engaged in misconduct in connection with the discovery process and as a sanction terminated the EEOC proceedings and returned the case to the DOL for a final agency decision. The decision, rejecting Kloeckner's claims, was issued in October 2007. It included a notice advising Kloeckner that she could appeal the decision to the MSPB or that she could file a civil action in the appropriate U.S. district court.
Kloeckner appealed to the MSPB. But the DOL moved to dismiss the appeal, arguing that it was precluded by the September 2006 decision of the MSPB judge. The motion to dismiss was granted.
Kloeckner then sued the secretary of Labor in the U.S. District Court for the Eastern District of Missouri, alleging age, gender and disability discrimination and retaliation. The District Court dismissed Kloeckner's complaint for lack of jurisdiction. The Eighth Circuit U.S. Court of Appeals affirmed the trial court ruling, opining that only the Federal Circuit has jurisdiction over mixed cases in which there have been no merits decision by the MSPB.
Kloeckner petitioned the U.S. Supreme Court.
The U.S. high court rejected the government's arguments and reversed the Eighth Circuit's ruling.
"The first step of the Government's argument derives from §7703(b)(2)'s [of the CSRA] second sentence. Right after stating that 'cases of discrimination subject to [§7702]' shall be filed under specified antidiscrimination statutes (i.e., shall be filed in district court), §7703(b)(2) provides: 'Notwithstanding any other provision of law, any such case filed under such [statute] must be filed within 30 days after the date the individual filing the case received notice of the judicially reviewable action under section 7702.' The Government reads that sentence to establish an additional prerequisite for taking a case to district court, instead of to the Federal Circuit. . . . The Government's second step-that the Board's procedural rulings are not 'judicially reviewable actions'-begins with the language of §7702(a)(3). That provision, the Government states, 'defines for the most part which MSPB decisions qualify as "judicially reviewable actions"' by 'providing that "ny decision of the Board under paragraph (1) of this subsection shall be a judicially reviewable action as of the date of the decision.' . . . From there, the Government moves on to the cross-referenced paragraph-§7702(a)(1)-which states, among other things, that the Board 'shall, within 120 days of [the employee's filing], decide both the issue of discrimination and the appealable action in accordance with the Board's appellate procedures.' According to the Government, the Board only 'decide . . . the issue of discrimination' when it rules on the merits, rather than on procedural grounds. On that view, a procedural decision is not in fact 'a decision of the Board under paragraph (1),' which means that is also not a 'judicially reviewable action' under §7702(a)(3)," the court held.
"If you need to take a deep breath after all that, you're not alone. It would be hard to dream up a more roundabout way of bifurcating judicial review of the MSPB's rulings in mixed cases. If Congress had wanted to send merits decisions to district court and procedural dismissals to the Federal Circuit, it could just have said so. The Government has offered no reason for Congress to have constructed such an obscure path to such a simple result," the high court said.
Eric Schnapper of the University of Washington School of Law in Seattle represents Kloeckner.
Solicitor General Donald B. Verrilli Jr. in Washington represents the secretary of Labor.
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WASHINGTON, D.C. - The "supervisor" liability rule established in Faragher v. City of Boca Raton, (524 U.S. 775 ) and Burlington Industries, Inc. v. Ellerth, (524 U.S. 742 ) should apply to harassment by supervisors even if they have no power to "hire, fire, demote, promote, transfer, or discipline" their victim as long as they fall within the Second Circuit U.S. Court of Appeals' "materially augments rule" as established in Mack v. Otis Elevator Co. (326 F.3d 116, 125 [2d Cir. 2003]), a petitioner argued before the U.S. Supreme Court this morning (Maetta Vance v. Ball State University, et al., No. 11-556, U.S. Sup.).
"[The supervisor's authority] has to be sufficient to enable the harasser to instill either fear in the victim that the victim should not turn the harasser in, or that it may have to do with the harasser's ability to control the physical location of the victim. That can augment harassment. If a harasser can steer a victim to a location where the harasser has an opportunity to harass, and, indeed, may have an opportunity to harass without other employees or other people in the company seeing in, that would materially augment," Daniel R. Ortiz of University of Virginia School of Law Supreme Court Litigation Clinic in Charlottesville, Va., who represents employee Maetta Vance, argued.
Vance was hired by Ball State University in 1989 as a substitute server in the Banquet and Catering Department of University Dining Services. In 1991, Ball State promoted Vance to a part-time catering assistant position. In January 2007, Vance applied and was selected for a position as full-time catering assistant.
In 2001, Saundra Davis, a co-worker, hit Vance on the back of the head without provocation. The two were discussing a work-related duty when Davis became aggressive, shouted at Vance and slapped Vance as she turned away. Vance orally complained to her supervisors but ended up not pursuing the matter because Davis was soon transferred to another department.
Around the same time, Bill Kimes became Vance's supervisor. She claimed that Kimes gave her the cold shoulder, made her feel unwelcome at work and treated other employees to lunch when she was not around.
Vance claimed that things at her job took a turn for the worse in 2005 when Davis returned to the Banquet and Catering Department and the two had an altercation on Sept. 23, 2005. A few days later, Vance was told by another employee that another co-worker, Connie McVicker, used a racial epithet to refer to Vance and other black students on campus and boasted that her family had ties to the Ku Klux Klan.
On Sept. 26, 2005, Vance complained orally to her supervisor about McVicker's alleged statements, and on Oct. 17, 2005, Vance called University Compliance to request a complaint form. While requesting the form, Vance complained about McVicker's racially offensive comments and Davis' slap four years earlier. In November 2005, Vance submitted a written complaint detailing McVicker's comments and the Sept. 23, 2005, altercation with Vance.
Ball State began investigating Vance's complaint about McVicker immediately. In the end, Kimes gave McVicker a written warning and advised McVicker that additional violations would lead to further disciplinary action.
A few days later, Vance complained to another supervisor, Lisa Courtright, that McVicker referred to her as a "porch monkey." Courtright advised Vance to tell Kimes, which Vance did. Kimes investigated by speaking to another co-worker who Vance said witnessed the incident. But that co-worker did not corroborate Vance's allegation. In the end, Kimes did not discipline McVicker for the alleged comment.
As for Vance's complaint about Davis, Kimes and his supervisor decided that counseling both employees about respect in the workplace was the best way to proceed because Davis had also filed a complaint alleging that Vance cursed at her. No one was disciplined for the incident. Around the same time, Vance claimed that Davis made references to "Sambo" and "Buckwheat" while having a conversation with another co-worker in Vance's presence. Vance was offended but did not complain to the university at that time.
In December 2005, Vance told Kimes that she felt threatened and intimidated by her co-workers. A week later, Vance filed a charge with the Equal Employment Opportunity Commission, alleging race, gender and age discrimination.
On May 10, 2006, Vance filed a complaint with Ball State, alleging that Kimes forced her to work through breaks. Ball State investigated but found no factual basis for Vance's allegation. In August 2006, Vance filed a second complaint with the EEOC, alleging that Ball State retaliated against her by assigning her diminished work duties, forcing her to work through breaks, denying her the chance to work overtime hours and unequally disciplining her.
She filed a federal complaint against Ball State in the U.S. District Court for the Southern District of Indiana in October 2006. While her case was pending, Ball State promoted Vance to the position of full-time catering assistant. But her problems continued. In April 2007, Vance filed a grievance against McVicker. Three supervisors investigated. No one was disciplined.
The District Court ruled in favor of Ball State, and Vance appealed. After the Seventh Circuit U.S. Court of Appeals affirmed the District Court ruling on June 3, 2011, Vance petitioned the U.S. Supreme Court.
Representing the United States, as amicus curiae, in support of neither party, Deputy Solicitor General Sri Srinivasan told the justices during oral arguments that "hen a person controls a subordinate's daily work activities and subjects her to harassment, that person qualifies as a supervisor for purposes of the Faragher-Ellerth vicarious liability affirmative defense framework. When it controls daily work activities and, therefore, for example, can compel the cleaning of toilets for a year, the principle that the agency relationship augments the ability to carry out the harassment is implicated in that the victim will lack the same ability to resist the harassment or to report it as would be the case if the harassment were conducted by a coworker."
Representing the university, Gregory G. Garre of Latham & Watkins in Washington argued that the Seventh Circuit's ruling should be affirmed "because the record establishes that the only employee whose status is at issue lacked the supervisory authority necessary to trigger vicarious liability under Title VII [of the Civil Rights Act of 1964]."
He further argued that when applying "the 'materially enables the harassment' standard, it's clear that Ms. Davis, the person who is at issue, does not qualify as a supervisor. And the reason why it's clear is the record is uncontradicted that either the chef or Mr. Kimes made the daily assignments through the prep sheets. . . . It's also absolutely clear that Mr. Kimes was the one who controlled the schedule in the kitchen. He is the one that told the employees what times of days that they could work. He controlled the schedule."
Ortiz and David T. Goldberg of Donahue & Goldberg in New York represent Vance. Garre and Scott E. Shockley of DeFur Voran in Muncie, Ind., represent Ball State.
Lisa S. Blatt of Arnold & Porter in Washington filed an amicus brief on behalf of the Chamber of Commerce of the United States of America. Ian P. Cooper of St. Louis filed an amicus brief on behalf of the American Council on Education and other higher education organizations. Sarah C. Crawford of National Partnership for Women & Families in Washington filed an amicus brief on behalf of the National Partnership for Women & Families, et al. Michael L. Foreman of Pennsylvania State University in University Park, Pa., filed an amicus brief on behalf of the National Employment Lawyers Association and AARP. Benjamin G. Robbins of New England Legal Foundation in Boston filed an amicus brief on behalf of New England Legal Foundation. Leslie E. Silverman of Proskauer Rose in Washington filed an amicus brief on behalf of Society for Human Resource Management and the College and University Professional Association for Human Resources. James B. Spears Jr. of Charlotte, N.C., filed an amicus brief on behalf of National Retail Federation. Rae T. Van of Norris, Tysse, Lampley & Lakis in Washington filed an amicus brief on behalf of the Equal Employment Advisory Council. Solicitor General Donald B. Verrilli Jr. in Washington filed an amicus brief on behalf of the United States.
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CHICAGO - The Seventh Circuit U.S. Court of Appeals on Nov. 21 affirmed a lower federal court's ruling that two law enforcement liability insurers have no duty to defend the City of Waukegan, Ill., and its current and former employees in an underlying civil rights lawsuit stemming from an alleged wrongful conviction (Northfield Insurance Company, et al. v. City of Waukegan, et al., Nos. 11-1215 and 11-3729, 7th Cir.; 2012 U.S. App. LEXIS 24014).
WASHINGTON, D.C. - The Little Tucker Act doesn't waive the U.S. government's sovereign immunity when it comes to damages actions filed under the Fair Credit Reporting Act, 15 U.S.C.S. § 1681, (FCRA), a unanimous U.S. Supreme Court ruled this morning (United States of America v. James X. Bormes, No. 11-192, U.S. Sup.).
However, the high court, in vacating and remanding a ruling by the Federal Circuit U.S. Court of Appeals, left the matter of any immunity contained in the FCRA up to the lower court. "Since FCRA is a detailed remedial scheme, only its own text can determine whether the damages liability Congress crafted extends to the Federal Government. To hold otherwise-to permit plaintiffs to remedy the absence of a waiver of sovereign immunity in specific, detailed statutes by pleading general Tucker Act jurisdiction - would transform the sovereign-immunity landscape," Justice Antonin Scalia wrote for the court.
Attorney James Bormes filed a complaint on behalf of one of his clients in the U.S. District Court for the Northern District of Illinois in August 2008. He paid the $350 filing fee using his American Express credit card. The transaction was processed through the federal government's pay.gov system, which dozens of federal agencies use to process online credit card and debit card payment transactions. Bormes claims that both the confirmation on his computer screen and the email confirmation contained the expiration date of his credit card in violation of the FCRA.
Bormes then filed a putative class complaint against the United States in the U.S. District Court for the Northern District of Illinois. The District Court dismissed the suit, explaining that the doctrine of sovereign immunity protects the United States from suit except when Congress has "unequivocally expressed" a waiver of immunity. Bormes appealed to the Federal Circuit U.S. Court of Appeals. His asserted justification for appealing to the Federal Circuit, rather than the regional Seventh Circuit U.S. Court of Appeals, was 28 U.S. Code Section 1295(a)(2).
The Federal Circuit denied the government's motion to transfer. A merits panel of the Federal Circuit subsequently vacated the District Court's decision and reinstated Bormes' FCRA claim. It opined that even if the FCRA did not itself expressly waive the United States' sovereign immunity, the Little Tucker Act and the general Tucker Act could independently supply such a waiver. The United States filed a petition for writ of certiorari on Aug. 12, 2011. The petition was granted Jan. 13.
High Court Briefs
In its April 13 petitioner brief, the United States argued that the Little Tucker Act plays no role in determining whether the United States is liable for damages under the FCRA's general civil remedies provisions.
Bormes argued in his brief that the FCRA falls within the scope of the Little Tucker Act's sovereign immunity waiver.
Vacating the Federal Circuit's decision, the court opined that "[t]he Federal Circuit was . . . wrong to conclude that the Tucker Act justified applying a 'less stringent' sovereign-immunity analysis to FCR than our cases require. . . . It distorted our case law in applying to FCRA the immunity-waiver standard we expressed in [United States v.] White Mountain Apache Tribe, [537 U.S. 465, 472 (2003)] 537 U.S. at 472; whether the statute '"can fairly be interpreted as mandating compensation by the Federal Government for the damage sustained."' 626 F.3d at 578. That is the test for determining whether a statute that imposes an obligation but does not provide the elements of a cause of action qualifies for suit under the Tucker Act - more specifically, whether the failure to perform an obligation undoubtedly imposed on the Federal Government creates a right to monetary relief. See White Mountain Apache Tribe, supra; Mitchell II [United States v. Mitchell (463 U.S. 206, 216 )], 463 U.S. 206. That test is not relevant when a 'mandate of compensation' is contained in a statute that provides a detailed judicial remedy against those who are subject to its requirements. FCRA is such a statute. By using the 'fair interpretation' test to determine whether FCRA's civil liability provisions apply to the United States, the Federal Circuit directed the test to a purpose for which it was not designed and leapfrogged the threshold concern that the Tucker Act cannot be superimposed on an existing remedial scheme."
Solicitor General Donald B. Verrilli Jr. in Washington represents the United States. Gregory A. Beck of Public Citizen Litigation Group in Washington and John G. Jacobs of Chicago represent Bormes.
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WASHINGTON, D.C. - A shareholder plaintiff and a pharmaceutical company debated in front of the U.S. Supreme Court whether a securities lawsuit may proceed as a class action even if the plaintiff is unable to plead materiality (Amgen Inc., Kevin W. Sharer, Richard D. Nanula, Roger M. Perlmutter and George J. Morrow v. Connecticut Retirement Plans and Trust Funds, No. 11-1085, U.S. Sup.).
Arguing for petitioners Amgen Inc., Kevin W. Sharer, Richard D. Nanula, Roger M. Perlmutter and George J. Morrow, attorney Seth P. Waxman of Wilmer Cutler Pickering Hale and Dorr said that "ur case is about whether the claim of liability is in a fundamental sense class wide or individual."
Waxman argued that an inability to prove to a judge at the class certification stage "that class-wide reliance can be - that class-wide reliance exists because the statement was material doesn't preclude a plaintiff like [shareholder] Connecticut Retirement [Plans and Trust Funds (CRPTF)], which has said it's going to proceed whether there's a class or not, or any other member of the class, from coming to court and saying either, 'I directly relied on this statement and here's my proof that it's material to the trier-of-fact,' because the decision that the judge makes at certification is not binding on the trier-of-fact; or even to say, 'I relied on the integrity of the market price, and I have proof that the market price was affected because here are three investors, they're all reasonable people, and they say that it was relevant, important to them in the total mix of information involved.'"
But Justice Elena Kagan questioned whether, if at the class certification stage, the court "holds that a statement is immaterial, it's immaterial for all members of the class, and the suit has to be dismissed? Isn't that right?"
Justice Kagan also questioned whether, under Amgen's theory, the class certification stage becomes a sort of "super merits inquiry."
Arguing for CRPTF, attorney David C. Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel said, "In a fraud-on-the-market case, the idea of reliance, the only theory of reliance that is being advanced, is indirect reliance on the integrity of the market."
"There is no other theory of reliance," Frederick said.
CRPTF sued the defendants in the U.S. District Court for the Central District of California under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5.
CRPTF alleged that Amgen made misrepresentations regarding the safety of two of its products, Aranesp and Epogen, causing artificial inflation of the market price for Amgen stock. CRPTF moved to certify a class of people who bought Amgen stock from April 22, 2004, through May 10, 2007. The start of the period corresponds to a public statement by Amgen regarding a May 2004 Food and Drug Administration advisory committee meeting. CRPTF alleges that Amgen misrepresented that the meeting would not focus on the safety of Aranesp. The end of the class period corresponds with a later meeting of the same FDA committee. CRPTF alleged that the meeting constituted a corrective disclosure.
Amgen opposed class certification principally on the ground that CRPTF did not, and could not, establish that the alleged misrepresentations were material. The District Court rejected Amgen's arguments and granted CRPTF's motion for class certification, holding that CRPTF could invoke the presumption of reliance arising from the fraud-on-the-market theory because to trigger the presumption, CRPTF "need only establish that an efficient market exists." Amgen appealed to the Ninth Circuit U.S. Court of Appeals, which affirmed. The Ninth Circuit rejected Amgen's contention that CRPTF must provide proof of materiality at the class certification stage.
On March 1, Amgen and the individual defendants filed a petition for writ of certiorari with the U.S. Supreme Court.
The petition presented two questions: "Whether, in a misrepresentation case under SEC Rule 10b-5, the district court must require proof of materiality before certifying a plaintiff class based on the fraud-on-the-market theory" and "Whether, in such a case, the district court must allow the defendant to present evidence rebutting the applicability of the fraud-on-the-market theory before certifying a plaintiff class based on that theory."
The Supreme Court granted the petition on June 11. On Aug. 18, the petitioners filed a petitioners' brief, and on Sept. 20, CRPTF filed a respondent's brief.
Former SEC commissioners and officials and law and finance professors filed an amicus curiae brief in support of the petitioners on Aug. 14.
On Sept. 27, the following entities each filed amicus curiae briefs in support of CRPTF: the United States; the National Association of Shareholder and Consumer Attorneys; Public Justice P.C., civil procedure and securities law professors; AARP, New York City pension funds and the Colorado Public Employees' Retirement Association of the City of New York; Public Citizen Inc.; and financial economists.
The petitioners are represented by Noah A. Levine of Wilmer Cutler in New York, Waxman, Louis R. Cohen, Andrew N. Vollmer, Daniel S. Volchok and Weili J. Shaw of Wilmer Cutler in Washington, and Steven O. Kramer, John P. Stigi III, John M. Landry and Jonathan D. Moss of Shephard, Mullin, Richter & Hampton in Los Angeles. CRPTF is represented by Frederick, Derek T. Ho and Emily T.P. Rosen of Kellogg, Huber, Hansen, Todd, Evans & Figel in Washington and Edward Labaton, Jonathan M. Plasse and Christopher J. McDonald of Labaton Sucharow in New York.
The former SEC commissioners and officials and law and finance professors are represented by Timothy S. Bishop, Joshua D. Yount and Frank M. Dickerson of Mayer Brown in Chicago. The United States is represented by Mark D. Cahn, Michael A. Conley, Jacob H. Stillman, John W. Wavery, Benjamin L. Schiffrin and Jeffrey A. Berger of the Securities and Exchange Commission in Washington and Donald B. Verrilli Jr., Malcolm L. Stewart and Nicole A. Saharsky of the Department of Justice in Washington. The National Association of Shareholder and Consumer Attorneys is represented by William C. Fredericks and Ann M. Lipton of Bernstein Litowitz Berger & Grossman in New York.
Public Justice P.C. is represented by Arthur Bryant of Public Justice P.C. in Oakland, Calif., and Earl Landers Vickery of Austin, Texas. The civil procedure and securities law professors are represented by David Marcus of the University of Arizona Rogers College of Law in Tucson, Ariz., and Darren J. Robbins and Eric Alan Isaacson of Robbins Geller Rudman & Dowd in San Diego. AARP is represented by Jay Sushelsky of AARP Foundation Litigation and Michael Shuster of AARP, both in Washington. The New York City pension funds are represented by Michael A. Cardozo of the City of New York.
The Colorado Public Employees' Retirement Association of the City of New York is represented by Gregory W. Smith of the Colorado Public Employees' Retirement Association in Denver. Public Citizen Inc. is represented by Scott L. Nelson and Allison M. Zieve of the Public Citizen Litigation Group in Washington. The financial economists are represented by Ernest A. Young in Durham, N.C., and William C. Fredericks and Ann M. Lipton of Bernstein Litowitz Berger & Grossman in New York.