Litigation Updates

By: Jim Wagstaffe and The Wagstaffe Group

FOURTH CIRCUIT HOLDS THAT IN DENYING A PRELIMINARY INJUNCTION, ALL FOUR TRADITIONAL FACTORS REQUIRED FOR SUCH RELIEF NEED NOT BE CONSIDERED WHEN ONE FACTOR IS CLEARLY NOT SATISFIED

THE NATIONAL LABOR RELATIONS BOARD (NLRB) SOUGHT a preliminary injunction that allegedly sought to preserve its ability to award relief upon the completion of a pending agency process that was adjudicating alleged unfair labor practices. The four-part traditional test applied; to obtain a preliminary injunction, the NLRB was required to establish (1) a likelihood of success on the merits, (2) the likelihood of irreparable injury in the absence of preliminary relief, (3) a balance of equities tipping in favor of the movant, and (4) that the preliminary injunction was in the public interest. The district court denied the injunction solely on the basis that the NLRB had not established a likelihood of irreparable injury.

The NLRB appealed, arguing that before a trial court can deny a preliminary injunction, it must first consider all four equitable factors and their interrelatedness.

The U.S. Court of Appeals for the Fourth Circuit disagreed, finding that in Winter v. NRDC, Inc., 555 U.S. 7 (2008), the U.S. Supreme Court made it clear that it was unnecessary to address all four factors when one or more had not been satisfied. Henderson v. Bluefield Hosp. Co., LLC, 2018 U.S. App. LEXIS 24334 (4th Cir. Aug. 28, 2018).

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PERSONAL JURISDICTION DOESN’T GO WHERE THE PLAINTIFF GOES

By: Jim Wagstaffe and The Wagstaffe Group

THE PLAINTIFF ALLEGED THAT, WHILE HE WAS LIVING IN Massachusetts, he suffered exposure to asbestos that was mined and sold by defendant Union Carbide. Upon moving to Florida 25 years later and after being diagnosed with mesothelioma, the plaintiff and his wife sued the company, asserting that Union Carbide had substantial contacts with the forum state (e.g., a plant in Brevard County, sales in Florida, and presented a seminar there). After removal, the court granted Union Carbide’s motion to dismiss for lack of personal jurisdiction, and the U.S. Court of Appeals for the Eleventh Circuit affirmed.

Union Carbide, while a large company, was not subject to general jurisdiction in Florida because it was not at home there; it did not have its principal place of business or place of incorporation in Florida. Additionally, the company was not subject to personal jurisdiction because its Florida contacts were not related to the cause of action—meaning the contacts were not the but-for cause of the tort alleged.

The bottom line is that even big corporations are not subject to general jurisdiction except in their home states, and specific jurisdiction is not available in states simply because injured plaintiffs later move there. Waite v. All Acquisition Corp., 2018 U.S. App. LEXIS 23772 (11th Cir. Aug. 23, 2018).

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IN RESOLVING RULE 12(B)(6) MOTION TO DISMISS ACTION ALLEGING COPYRIGHT INFRINGEMENT, COURT MAY REVIEW WORKS OF ART AT ISSUE TO DETERMINE IF THEY ARE SUBSTANTIALLY SIMILAR

By: Jim Wagstaffe and The Wagstaffe Group

THE CREATOR OF THE TELEVISION PILOT “CREAM” alleged that the creators of the television series “Empire” violated his copyright. The district court held four days of hearings in which each party presented excerpts from the shows to demonstrate similarity or dissimilarity. The court found no substantial similarity and dismissed the complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. The U.S. Court of Appeals for the Third Circuit affirmed.

The court of appeals noted that in addressing a motion to dismiss based on lack of similarity, courts are not limited to the “four corners” of the complaint but may consider evidence “integral to or explicitly relied upon” therein. Here, the two shows were necessarily integral to the infringement claim and therefore were properly considered by the court in dismissing the claim. In addition, courts are entitled to consider substantial similarity at the pleading stage because no fact-finding or discovery is necessary and what is required is only a visual inspection of the two works.

The court of appeals agreed that a jury can play an important role in cases where substantial similarity might reasonably be found. But, if no reasonable juror could find substantial similarity, “justice is best served by putting ‘a swift end to meritless litigation.’” Tanksley v. Daniels, 2018 U.S. App. LEXIS 24317 (3d Cir. Aug. 28, 2018).

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THIRD CIRCUIT HOLDS LOCAL DEFENDANT HAS RIGHT TO REMOVE DIVERSITY ACTION UNTIL PROPER SERVICE IS COMPLETE

By: Jim Wagstaffe and The Wagstaffe Group

DIVERSITY JURISDICTION CASES MAY NOT BE REMOVED under 28 U.S.C.S. § 1441 if a local defendant has been “properly joined and served.” District courts have been split as to whether a defendant, in particular a local defendant, may remove prior to service. The first appellate court to consider the issue has come down in favor of permitting removal.

An out-of-state insurance company filed suit in state court against a local defendant, a restaurant. Counsel for the restaurant agreed to accept service of process, but before returning the acceptance of service form, counsel removed the case. When the insurer moved to remand, the restaurant argued that service was not complete at the time of removal. Both the district court and U.S. Court of Appeals for the Third Circuit agreed, applying the plain language of the statute. The appellate court noted that the local defendant rule was designed to prevent a plaintiff from blocking removal by fraudulent joinder, and the plain language interpretation was not contrary to this purpose. Encompass Ins. Co. v. Stone Mansion Rest. Inc., 2018 U.S. App. LEXIS 23576, at *10-12 (3d Cir. Aug. 22, 2018).

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