The Supreme Court: Cases to Watch in the October 2013 Term

10 October 2013 Dashboard Insights Blog

This week marks the first Monday in October, which for Supreme Court watchers is a holiday: the start of a new term. While not everyone gets that excited about the new term, there are several cases that the Court intends to hear this term that merit attention from businesses in the automotive sector.  Below is a quick look at five cases that inside counsel in the industry should keep an eye on:

  •  NLRB v. Noel Canning, No. 12-1281. While the issues presented seem to raise esoteric issues of constitutional law—can the President make recess appointments to a government agency while Congress is in session but on recess; and can the President make a recess appointment to fill a vacancy when the vacancy first arose while Congress was in session—the implications are far-reaching.  As covered by this blog when the Third Circuit ruled upon the issue, and elsewhere when the Noel Canning case was decided by the D.C. Circuit, the Supreme Court’s answer could determine whether any quasi-judicial actions taken by the Board of the NLRB (which requires a quorum of three out of five to hear administrative cases) between March 2010 and July 2013 are valid.  Beyond determining whether Board actions taken over the period of over three years are valid, Noel Canning will shed light on whether the Senate can, by denying its consent to the President’s appointments, effectively shut down the quasi-judicial activities of agencies like the NLRB.  A hearing date has not been set.
  •  DaimerChrysler AG v. Bauman, No. 11-965.  Covered in more detail here, this case asks whether a court can exercise jurisdiction over a foreign corporation on the basis that one of its subsidiaries operated in the same state as the court. The case arises from allegations of human rights abuses by Mercedes-Benz Argentina, a subsidiary of DaimlerChrysler AG’s predecessor (DaimlerChrysler AG is itself now simply Daimler AG), and plaintiffs asserted jurisdiction over DaimlerChrysler AG based on the presence of another subsidiary (Mercedes-Benz USA, LLC) in California. The Ninth Circuit agreed with plaintiffs. The Supreme Court’s decision will clarify the degree to which multinational corporations can compartmentalize risks arising in one country through the use of parent-subsidiary structures.  The case is scheduled to be heard on October 15.
  • Medtronic, Inc. v. Boston Scientific Corp., No. 12-1128. In 2007, the Supreme Court held in MedImmune, Inc. v. Genentech, Inc. that a patent licensee being asked to pay royalties on a product could file a declaratory judgment action to clarify whether the licensee’s product was covered by the licensor’s patent, rather than being required to refuse to pay and wait to be sued for breach of the license agreement.  A question that has arisen is who has the burden of proof with regard to proving or disproving infringement in such a suit. Where the licensor files suit for patent infringement, it is generally the licensor’s burden to prove infringement; nonetheless, in Medtronic, the Federal Circuit held that it was the licensee’s burden to disprove infringement when a declaratory judgment suit was filed under MedImmune, making the declaratory judgment mechanism much less attractive to a licensee accused of infringement.  The Supreme Court has granted review, and will likely decide whether the Federal Circuit is right, or whether the licensor has the burden to prove infringement when sued by a licensee seeking a declaratory judgment.  The case is scheduled to be heard on November 5, 2013.
  • Lexmark Int’l, Inc. v. Static Control Components, Inc., No. 12-873. The Lanham Act provides, among other things, an action for false advertising. However, it is unclear who may sue for false advertising under the Lanham Act: some courts only permit a direct competitor to sue for false advertising; other courts weigh a series of factors based mostly on how directly the plaintiff is injured by the false advertising; and some courts simply ask if there is a reasonable interest to be protected and a reasonable basis for believing that interest would be harmed by the claimed false advertisement. The Supreme Court’s decision should clarify which of these tests—or if another test entirely—applies to who may sue for false advertising under the Lanham Act. The answer will determine both the availability of a false advertisement claim for businesses looking to protect their interests, and, conversely, the potential exposure of businesses to false advertising actions brought by plaintiffs that are not direct competitors.  The case is scheduled for argument on December 3, 2013.
  • Unite Here Local 355 v. Mulhall, No. 12-99. The Labor-Management Relations Act makes it a crime for an employer “to pay, lend, or deliver, or agree to pay, lend, or deliver any money or other thing of value” to, among other things, a “labor organization . . . which represents, or seeks to represent,” any of that employer’s employees. Unite Here and Mardi Gras Gaming entered into a Memorandum of Understanding that provided that Mardi Gras Gaming—the employer—would: provide Unite Here with information about employees; provide Unite Here with use of the employer’s property for organizing; and refrain from making any statements opposing unionization. The question presented is whether such an agreement to assist organization, in return for guarantees of labor peace, violated the Labor-Management Relations Act. Two federal appellate courts considering similar agreements have said no, this case comes to the Supreme Court from a court that said yes. The answer may determine the flexibility of unions and employers to contract with one another in a manner that promises assistance in unionization in return for a more harmonious relationship between the union and the employer, which could become more important as unions reassert their presence in the auto industry. The case is scheduled for argument on November 13, 2013.
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