Greetings Court fans!
The Court issued four opinions today, including one summary reversal, thus leaving 19 opinions to be issued before the end of the month. If you’re waiting for one of the Term’s blockbusters, it wasn’t issued today. For those curious about what is left to be decided (beyond the affirmative action cases), I have included a short list at the end of this email.
I’ll begin with the only opinion issued today that was not unanimous: Beneficial National Bank v. Anderson (02-306). In this case, the Court expanded the class of disputes subject to removal under the “complete pre-emption” doctrine. Under basic principles of removal jurisdiction, a claim is removable to federal court if it “arises under” federal law, and a claim arises under federal law only when a federal question is present on the face of the well-pleaded complaint. In other words, the complaint is removable only if it invokes federal law as the basis for relief. Thus, even if the case turns entirely on a federal defense (such as federal preemption), the case is not removable if the plaintiff’s claim arises under state law. Over the years, the Court has carved out a small exception to this “well-pleaded complaint” rule: the complete preemption doctrine. Under the complete preemption doctrine, some federal statutes wholly displace state law causes of action such that any claim touching on the topic, even if pleaded as a state law claim, in reality “arises under” federal law and is removable. In the past, the Court had found complete preemption under only two statutes (the Labor Management Relations Act and ERISA), but today, in any opinion by Stevens (for himself, Rehnquist, O’Connor, Kennedy, Souter, Ginsburg and Breyer), the Court added claims for usury against national banks to this category. Respondents sued a national bank claiming that its interest rates violated the common law usury doctrine and an Alabama usury statute. The Court found that these claims were completely preempted by the National Bank Act and thus arose under federal law for purposes of removal jurisdiction. According to the Court, the National Bank Act completely preempted usury claims because it provided the exclusive cause of action for such claims. Scalia (joined by Thomas) dissented. Scalia finds the “complete preemption” doctrine completely lacking in analytical foundations and thus would not expand it any further.
Turning next to the unanimous opinions, I’ll begin with Dastar Corp. v. Twentieth Century Fox Film Corp. (02-428), in which the Court held that Section 43(a) of the Lanham Act does not prevent the unaccredited copying of an uncopyrighted work. Shortly after WWII, General Eisenhower wrote a book about the allied campaign in Europe, and Twentieth Century Fox eventually turned it into a television series, “Crusade in Europe.” Although Fox originally had a copyright in the series, it did not renew the copyright, so the series entered the public domain in 1977. In 1995, Dastar purchased a copy of the original series, edited it slightly, and released it as a new video set entitled “World War II Campaigns in Europe.” The Campaigns series made no reference to the earlier Crusade series (or Eisenhower’s book), but rather identified Dastar (and its employees) as the producers. Fox (and related entities) sued Dastar claiming that Dastar’s failure to credit Fox violated Section 43(a) of the Lanham Act because Dastar made a “false designation of origin, [a] false or misleading description of fact, or misleading representation of fact, which . . . is likely to cause confusion . . . as to the origin . . . of . . . goods.” The central question presented by this case was whether the term “origin” refers only to the manufacturer or producer of the physical goods made available to the public (the Campaigns videotapes), or whether it also includes the creator of the underlying work (arguably Fox).
In an opinion for everyone but Breyer (who was recused), Scalia adopted the former interpretation. According to Scalia, Section 43(a) was designed to prohibit actions that would deceive consumers and impair a producer’s goodwill. Thus, for example, it would prohibit Coke from passing off its product as Pepsi because brand-loyal customers would care about such distinctions, but it would not cover matters that customers do not care about, such as whether Coke was itself the first to derive the magic formula for that drink. Although purchasers of “communicative” products (books, videos, etc.) might be more concerned with the ultimate creative origins of the product, any extension of the Lanham Act to cover those concerns would conflict with copyright laws, which protect creative works for a period of time, and then allow unlimited copying once the works enter the public domain. When Congress wants to extend this protection, it has done so explicitly. Moreover, if Section 43(a) required attribution of the original creators of an uncopyrighted work, it would create enormous practical problems. In this case, for example, it is unclear whether Fox would be an originator, or whether Dastar would have had to name the entities that supplied the WWII footage in the original film. In addition, if Dastar had credited Fox with the series, this would open Dastar to potential liability under Section 1125 of the Lanham Act for implying that Fox sponsored or approved the copy. Finally, Scalia closed by noting that the Court’s resolution was consistent with past precedent, and that there were other legal avenues open to Fox to protect its creative efforts.
In what must rank among the least interesting cases of the Term, the Court in Entergy Louisiana, Inc. v. Louisiana Public Service Comm’n (02-299), considered whether a FERC tariff preempts a decision by the Louisiana Public Service Commission under the filed rate doctrine. Let me just stop right there. If you don’t understand that first sentence, or if you’ve never heard of the filed rate doctrine, skip to the next case. For those few still reading, here’s the executive summary: In prior cases, the Court has held that under the filed rate doctrine, FERC-approved cost allocations between affiliated energy companies may not be re-evaluated in state ratemaking proceedings. Today, Thomas for a unanimous Court, held that those cases apply even where, as here, the approved cost-allocation scheme allows the regulated entity a measure of discretion in allocating those costs. On to the next case.
In a per curiam opinion, the Court in Citizens Bank v. Alafabco, Inc. (02-1295) opined on the scope of the Commerce Clause in the course of an opinion on the Federal Arbitration Act. The FAA governs arbitration agreements in contracts “evidencing a transaction involving commerce,” and today the Court unanimously held that the Alabama Supreme Court had given an overly narrow interpretation to this phrase. According to the Court, the FAA’s language provides for “the enforcement of arbitration agreements within the full reach of the Commerce Clause,” and thus the question is whether the debt-restructuring agreements at issue would fall within Congress’ power under that clause. Here, there was no doubt that they would. Even if individual transactions would not have a substantial effect on interstate commerce, Congress may exercise its power if in the aggregate, the economic activity would “represent a general practice . . . subject to federal control.” Here, the debt restructuring agreements met this standard for three reasons: (1) The loans that were restructured covered business transactions throughout the southeastern U.S.; (2) The restructured debt was secured by business assets, including an inventory of goods assembled from out-of-state parts and materials; and (3) Commercial lending in general has a broad impact on the national economy.
Finally, as promised, here’s a quick list of the cases that are still pending:
1. Dow Chemical v. Stephenson: Whether absent class members may attack adequacy of representation through a collateral attack on a class settlement.
2. U.S. v. American Library Ass’n: First Amendment challenge to the Children’s Internet Protection Act.
3. Nguyen v. United States: Whether a non-Article III judge on a panel invalidates a decision.
4. Wiggins v. Smith: Whether failure to investigate available mitigation evidence in a capital case constitutes ineffective assistance of counsel.
5. FEC v. Beaumont: Constitutionality of federal campaign finance law as applied to nonprofit corporation.
6. Overton v. Bazzetta: Various questions surrounding legality of “non-contact” visitation in prisons.
7. Lawrence v. Texas: The Texas sodomy case.
8. Stogner v. California: Whether retroactive abolition of statute of limitations violates ex post facto clause.
9. & 10. Grutter v. Bollinger; Gratz v. Bollinger: The U. Michigan affirmative action cases.
11. Desert Palace, Inc. v. Costa: Evidence required to trigger mixed motive analysis in Title VII cases.
12. Green Tree Financial v. Bazzle: Whether class action procedures can be imposed on an arbitration agreement.
13. Hillside Dairy v. Lyons: Constitutional challenge to California’s milk pricing and pooling regulations.
14. American Insurance Assn v. Low: Challenge to California’s Holocaust Victim Insurance Relief Act.
15. Nike v. Kasky: First Amendment/commercial speech case.
16. Georgia v. Ashcroft: Georgia re-districting challenge.
17. Fitzgerald v. Racing Assn’ of Central Iowa: Equal Protection challenge to Iowa gambling tax scheme.
18. Virginia v. Hicks: First Amendment challenge to public housing complex restrictions on access to streets and sidewalks for speech.
19. Sell v. United States: Challenge to administration of antipsychotic medication used to render defendant competent to stand trial.
That’s all for now. The Court will issue more opinions next Monday. Until then, thanks for reading, and as always, I welcome any comments, questions, corrections, or suggestions.
Sandy
From the Appellate Practice Group at Wiggin & Dana.
For more information, contact Mark Kravitz, Jeff Babbin, or Sandy Glover
at 203-498-4400, or visit our website at www.wiggin.com.