Supreme Court Update
Republished with the permission of the Mayer Brown Supreme Court Docket Report.

On January 12, 2018, the Supreme Court granted certiorari in four cases of interest to the business community, described below.

Patent Law—Damages for Profits Lost Abroad
WesternGeco LLC v. ION Geophysical Corp., No. 16-1011

A party commits patent infringement if it supplies “components of a patented invention” “from the United States,” knowing or intending that the components will be combined “outside of the United States” in a manner that “would infringe the patent if such combination occurred within the United States.” 35 U.S.C. § 271(f). The Federal Circuit has held that a plaintiff that successfully proves a claim under this provision is not entitled to the lost profits normally available to patent owners who prevail on infringement claims. That court’s view is that even when Congress has overridden the presumption against extraterritorial application of a statute in creating liability (as it did with § 271(f)), the presumption must be applied a second time to restrict damages. The Supreme Court has granted certiorari to resolve the question of “[w]hether the court of appeals erred in holding that lost profits arising from prohibited combinations occurring outside of the United States are categorically unavailable in cases where patent infringement is proven under 35 U.S. § 271(f).”

Appointments Clause—Classification of Administrative Law Judges
Lucia v. SEC, No. 17-130

Under the Constitution’s Appointments Clause, the president “shall nominate and, by and with the Advice and Consent of the Senate, shall appoint . . . Officers of the United States.” Securities and Exchange Commission administrative law judges are generally selected by Commission staff, even though these judges preside over trial-like adversarial hearings. The Supreme Court has granted certiorari to decide “[w]hether administrative law judges of the Securities and Exchange Commission are officers of the United States within the meaning of the appointments clause.” The circuit courts have split 5–5 on this question.

Dormant Commerce Clause—Taxation of Internet Sales
South Dakota v. Wayfair, Inc., No. 17-494

In 1967, the Supreme Court held that the Constitution’s dormant Commerce Clause prohibits a state from requiring catalog retailers to collect sales taxes on sales into the state unless the retailer is “physically present” there. But in 1977, the Court held that only a “substantial nexus” was necessary for other state taxes affecting interstate commerce. The petitioners in Wayfair ask the Supreme Court to reconsider the “physical presence” rule for sales taxes, arguing that its impact has “exploded with the rapid growth of online commerce.” The Supreme Court granted certiorari on the question of whether it should “abrogate” the “sales-tax-only, physical-presence requirement.”

Bankruptcy Law—Fraud Exception to Discharge
Lamar, Archer & Cofrin, LLP v. Appling, No. 16-1215

The Bankruptcy Code prohibits the discharge of “any debt . . . to the extent obtained by . . . actual fraud, other than a statement respecting the debtor’s . . . financial condition.” 11 U.S.C. § 523(a)(2). Circuit courts have split 3–3 as to whether a statement about a particular asset can qualify as a “statement respecting the debtor’s . . . financial condition.” The Supreme Court has agreed to resolve that split. Mayer Brown LLP represents the respondent.

DRI Submits Amicus Brief Urging Supreme Court to Review Decision on Admissibility of Expert Testimony

On December 20, 2017, DRI filed an amicus brief in the U.S. Supreme Court supporting the petition for a writ of certiorari in Teva Pharmaceuticals USA, Inc. v. Wendell, No. 17-747. The brief was filed through DRI’s Center for Law and Public Policy.

The case raises two questions concerning the admissibility of expert testimony, a subject with enormous practical significance for litigation in federal and state courts nationwide. Almost 25 years ago, in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), the Supreme Court articulated standards for federal trial courts to apply in determining whether an expert should be permitted to offer opinion testimony. In keeping with the trial court’s “gatekeeper” role in determining whether expert testimony should be admitted or excluded, the Court held a few years later that decisions on expert-admissibility would be reviewed on appeal under the abuse-of-discretion standard.

At issue in Teva v. Wendell, is the proposed testimony of two doctors on the issue of causation in a case alleging that prescription pharmaceutical drugs manufactured and distributed by defendants caused a patient to develop an exceedingly rare and aggressive form of cancer. The district court granted defendant Teva’s motion for summary judgment because the testimony of plaintiffs’ causation experts was not reliable and therefore not admissible under Federal Rule of Evidence 702. The U.S. Court of Appeals for the Ninth Circuit reversed and remanded. In the Ninth Circuit’s view, “Daubert poses no bar” and the contested testimony “should have been admitted as expert testimony.” The appellate court reached that conclusion by applying de novo review to the question “whether particular evidence falls within the scope of [Rule 702].”

DRI’s amicus brief urges the Court to grant review to resolve circuit court conflicts on both questions presented in the petition: (1) the standard for appellate review of expert-admissibility rulings, and (2) the standards for determining when proposed expert testimony is sufficiently reliable to be presented to a jury. DRI explains that these issues have broad application to litigation across the country; that the issues have enormous practical significance given the pivotal—often dispositive—role that expert testimony plays in complex litigation; and that nationwide uniformity is essential to “the fair, orderly administration of justice.” The brief explains that Supreme Court review is also warranted because the issues “affect counsel for plaintiffs and defendants (whether they support or oppose an expert in a particular case).”

DRI’s brief was authored by Jerrold J. Ganzfried, founder of GANZFRIED LAW in Washington, D.C. Mr. Ganzfried is a fellow of the American Academy of Appellate Lawyers, and is a former chair and current member of the DRI Amicus Committee.