December 1, 2021

Volume XI, Number 335

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Supreme Court Update: Rotkiske v. Klemm (no. 18-328), Peter v. NantKwest (no. 18-801), Thompson v. Hebdon (no. 19-122)

Greetings, Court Fans!

The Court was back this week with its first two signed opinions of the term. As in past terms, The Nine led off with a relatively straightforward statutory interpretation case. But somewhat unusually, the Court’s first opinion was not unanimous, and not authored by Justice Ginsburg. To be fair, at 8-1 (or maybe, more accurately 8.5-.5), it was pretty close, and RBG wrote for the 1/.5. Read on for coverage of the first two signed opinions of the term, as well as the fist per curiam decision, which we forgot to tell you about a few weeks back, and the last few weeks’ cert grants and other notable orders.

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Rotkiske v. Klemm (No. 18-328) asked whether the one-year statute of limitations for actions brought under the Fair Debt Collection Practices Act (“FDCPA”) begins to run when the alleged violation occurs or when it is discovered. In the mid-2000s, Kevin Rotkiske failed to pay approximately $1,200 in credit card debt. His credit card company referred the debt to Klemm & Associates, a debt collector. In 2008, Klemm sued Rotkiske to collect the unpaid debt. But it did so using so-called “sewer service”—that is, by “intentionally serving process in a manner designed to prevent Rotkiske from learning of the collection suit” so that it might obtain a default judgment. That’s exactly what happened in Rotkiske’s case. Rotkiske only learned about the default judgment against him in 2014, after he was denied a mortgage. He then filed suit against Klemm under the FDCPA. Klemm promptly moved to dismiss the suit as barred by the FDCPA’s one-year statute of limitations, 15 U.S.C. § 1692k(d). Rotkiske might have argued that Klemm’s shady conduct equitably tolls the statute of limitations; but instead he argued (primarily, at least) that the “discovery rule” should apply. Under that rule, which had been endorsed by the Ninth Circuit, the FDCPA’s limitations period begins to run only when a plaintiff knew or should have known of their statutory injury. But the District Court and then the unanimous en banc Third Circuit rejected this interpretation of the FDCPA, creating a circuit split.

The Supreme Court resolved the split in the Third Circuit’s (and Klemm’s) favor. Writing for a mostly unanimous court, Justice Thomas observed that the plain text of the FDCPA says that actions must be “brought . . . within one year from the date on which the violation occurs.” “Occurs,” in this and most other contexts, means something akin to “happens,” not something like “is learned of.” Rotkiske didn’t really dispute this; he just argued that, like the Ninth Circuit, the Court should judicially incorporate a discovery-rule into the statute. But that sort of “atextual judicial supplementation” is inappropriate, the Court concluded, not least because Congress has enacted other statutes whose limitations periods run from the discovery of the alleged wrong.

This takes us to the only area of disagreement. At the Supreme Court, Rotkiske argued that, even if Section 1692k(d) is not amenable to a discovery rule, his claim was nonetheless timely under traditional equitable tolling doctrines due to Klemm’s fraudulent conduct. Justice Thomas, joined here by 7 of his colleagues, concluded that Klemm had waived this alternative argument, because he had not raised it before the Third Circuit or in his petition for certiorari. In a brief concurrence, Justice Sotomayor agreed that Rotkiske had waived his equitable tolling argument, but stressed that—should it come up again—it is doctrinally sound.

Justice Ginsburg, however, dissented. Though she agreed with the Court’s interpretation of Section 1692k(d), she believed that “generously read,” Rotkiske had preserved this argument before the Third Circuit and in his cert petition. And on the merits of the argument, Justice Ginsburg concluded that Klemm’s alleged use of fraudulent service to obtain and conceal the default judgment was enough (if proved) to warrant application of the equitable discovery rule.

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The Nine were back in sync in Peter v. NantKwest (No. 18-801), holding that the Patent and Trademark Office (PTO) cannotrecover the pro-rated salaries of its own lawyers and paralegals in cases brought by parties challenging adverse PTO decisions in federal court under § 145 of the Patent Act. The Patent Act offers two tracks that a dissatisfied applicant can take to challenge an adverse PTO decision. Section 141 is the express lane, allowing a direct appeal to the Federal Circuit. But there’s a catch: Review under Section 141 is limited to the record before the PTO; a scorned applicant is not permitted to offer new evidence. If you want to offer new evidence, you’ve got to take the local: Section 145 allows an applicant to file a new civil action against the director of the PTO in the Eastern District of Virginia. That proceeding is not restricted to the record before the PTO; rather, the district court can make new factual findings and render a de novo determination. Because Section 145 proceedings can result in protracted litigation, however, the Patent Act also requires applicants who bring Section 145 proceedings to pay “[a]ll the expenses of the proceedings” instead of the taxpayers, regardless of the ultimate outcome of the case.

NantKwest brought a Section 145 proceeding, which was ill-advised. It lost on summary judgment in the E.D. Va., and the Federal Circuit affirmed. The PTO sought reimbursement of its expenses—with a new wrinkle. For the first time in the 170-year history of Section 145, the PTO sought reimbursement for the salaries of its lawyers and paralegals who worked on the case, in addition to its other expenses. The District Court denied the PTO’s request, holding that the statutory language authorizing expenses did not clearly rebut the “American Rule” that parties must pay their own attorney’s fees. A divided Federal Circuit panel initially reversed, but the en banc Federal Circuit reversed the panel over a dissent and affirmed the District Court, holding that the PTO’s expenses provision was not sufficiently “specific and explicit” to rebut the general presumption against awarding attorney’s fees.

The Supreme Court unanimously affirmed. In an opinion by Justice Sotomayor, the Court began by reiterating the “bedrock principle known as the ‘American Rule’: Each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise.” The Government argued that, because the American Rule presumption is overcome when a statute awards fees to a “prevailing party,” the presumption itself must only apply to prevailing-party statutes. Because the Patent Act provides for reimbursement of the PTO’s expenses in all cases and not just when it prevails, the Government argued that the American Rule does not apply to Section 145 proceedings at all. The Court was not impressed by this argument, particularly because Congress has in fact enacted fee-shifting statutes that apply to non-prevailing parties, and the Court has previously held that the American Rule applies to such statutes. 

Having thus held that the presumption against fee-shifting applies to Section 145, the Court examined the statutory language to determine whether it evinced a “specific and explicit” intent to overcome the default American Rule. The Court concluded it did not, noting both that the term “expenses” has long been interpreted not to include attorney’s fees, and that the terms “expenses” and “attorney’s fees” often appear together in statutory text––clearly showing that Congress understands the terms to mean different things. Finally, the Court highlighted the fact that the PTO itself had in seventeen decades never before suggested that it was entitled to attorney’s fees under Section 145 as further support for its interpretation of the statute. “Nice try, PTO,” the Court concluded (in so many words).

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If you’ve read this far, we’ve got a small confession. While Rotkiske and NantKwest were the first two signed opinions of the term, they weren’t actually the first decisions of OT2019. That honor goes to the per curiam GVR (or “grant, vacate, and remand”) in Thompson v. Hebdon (No. 19-122), a campaign-finance case that was decided shortly before Thanksgiving and has taken us literally weeks to fully digest. Here goes:

Two Alaskans sued members of the Alaska Public Offices Commission, arguing that an Alaskan law limiting individual contributions to political candidates to $500 a year violates the First Amendment. The District Court upheld the statute, and the Ninth Circuit affirmed, holding that the exceedingly low contribution limit furthered a “sufficiently important state interest” and was “closely drawn” to that end. In doing so, the Ninth Circuit declined to apply the Supreme Court’s 2006 precedent in Randall v. Sorrell, a fractured decision striking down Vermont’s individual contribution limits of $200, 300, or $400 per year (with the amount varying based on the office sought). Randall identified several “danger signs” in Vermont’s campaign contribution limits that warranted closer-than-usual review, such as the fact that the contribution limits were lower than the limits upheld by the Court in any prior case, that they were lower than the limits generally found in other states, and that the limits did not automatically adjust for inflation. Under that closer-than-usual review, the Randall Court found that Vermont had failed to provide any “special justification” to uphold the law.

The Ninth Circuit found this precedent unhelpful, because Randall had no majority opinion, something that admittedly makes it difficult to apply. Instead, the Ninth Circuit relied primarily on its own pre-Randall precedent. In a brief per curiam opinion, the Supreme Court told the Ninth Circuit to try harder. It granted cert, vacated, and remanded the case with instructions for the Ninth Circuit to reconsider how Randall (and other, more-recent cases, like McCutcheon v. Federal Election Commissionand Citizens United v. Federal Elections Commission) might apply. In a separate one-paragraph “statement,” Justice Ginsburg did not “oppose” the remand, but stressed that several features of Alaska’s law and political situation make it different from Vermont, suggesting that the “special justification” lacking in Randall may well be present here.

***

That covers all of the opinions of the term thus far, but not nearly all the early term action at One First Street. Though it would be foolhardy to attempt a full rehearsal of every notable order of OT19 since our opening missive, here are some highlights:

The Court has granted certiorari in eleven new cases since last we jawed, including one or two that would count as “biggies” in a less stacked term:

Carney v. Adams (No. 19-309) asks whether a Delaware constitutional provision that limits judges affiliated with any one political party to no more than a “bare majority” on the state’s three highest courts violates the First Amendment, and also whether an attorney challenging the provision has demonstrated Article III standing.

Tanzin v. Tanvir (No. 19-71) asks whether the Religious Freedom Restoration Act of 1993 permits suits seeking money damages against individual federal employees.

Google v. Oracle (No. 18-956) asks whether copyright protection extends to a software interface and whether Google’s use of a software interface in the context of creating a new computer program constitutes a fair use.

United States v. Briggs (No. 19-108) and United States v. Collins (No. 19-184) each concern the statute of limitations for rape under the Uniform Code of Military Justice.

Walker v. United States (No. 19-373) asks whether a criminal offense that can be committed with a mens rea of recklessness can qualify as a “violent felony” under the Armed Career Criminal Act.

U.S. Patent and Trademark Office v. Booking.com (No. 19-46), asks whether a generic term (like “booking”) can be registered as a trademark if a generic top-level domain (like “.com”) is added to it.

Nasrallah v. Barr (No. 18-1432) asks whether federal courts of appeal have jurisdiction to review factual findings underlying denials of withholding of removal.

Lomax v. Ortiz-Marquez (No. 18-8369) asks whether a dismissal without prejudice for failure to state a claim counts as a “strike” under the Prison Litigation Reform Act.

Seila Law LLC v. Consumer Protection Bureau (No. 19-7) asks whether the vesting of substantial executive authority in the Consumer Financial Protection Bureau, an independent agency led by a single director, violates the separation of powers,  and whether, if the CFPB is found unconstitutional, its implementing legislation can be severed from the remainder of the Dodd-Frank Act. (Of note, the Court has appointed former Solicitor General Paul Clement to defend the constitutionality of the CFPB, after the Government refused.)

Dep’t of Homeland Security v. Thuraissigiam (No. 19-161) asks whether a federal statute limiting judicial review of expedited deportation orders in habeas proceedings violates the Suspension Clause.

***

At the same time, there have been a few notable denials of cert:

The Court denied rehearing in Gundy v. United States (No. 17-6086). As regular readers may recall, Gundy was one of our sleeper cases last term, a seemingly mundane question about the applicability of the federal Sex Offender Registration and Notification Act (SORNA) that had profound implications for the administrative state, insofar as it sought to resurrect the “nondelegation doctrine.” Last term, the Court split 4-1-3 on the nondelegation question, with the liberals concluding that SORNA does not create nondelegation programs because it provides adequate instruction to the Attorney General, three of the conservatives concluding that SORNA does violate the (resurrected) nondelegation doctrine, and Justice Alito writing separately (and mysteriously) to state that he was sympathetic to the view of the other conservatives, but that it would be “freakish” to apply the nondelegation doctrine in this particular case. The fifth conservative, you might have noticed, is Justice Kavanaugh, who did not participate in the case because he was not yet on the bench when it was argued in October 2018. Understandably, after the split decision last term, Gundy filed a petition for reconsideration, arguing that a 9-member Court might reach a different result. The Justices considered this request at seven consecutive conferences, along with a few other petitions raising the same question, before finally denying it. Notably, in Paul v. United States (No. 17-8830), one of the other cases raising the nondelegation question, Justice Kavanaugh issued a separate statement indicating that “Justice Gorsuch’s scholarly analysis of the Constitution’s nondelegation doctrine in his Gundy dissent may warrant further consideration in future cases.” With five Justices now on record as at least admiring a revived nondelegation doctrine, you should expect the issue will make its way back up to The Nine toute de suite.

One other notable cert denial has a local connection. In Remington Arms Co. v. Soto (No. 19-168), the Court declined to review the Connecticut Supreme Court’s decision that the federal Protection of Lawful Commerce in Arms Act does not provide immunity to the manufacturer of the assault rifle that Adam Lanza used to kill 26 school children and teachers in the 2012 Sandy Hook shootings. The surviving families’ lawsuit will therefore proceed to trial. While the case is likely to garner national attention due to its underlying subject matter, our colleagues have observed that it also has important implications for Connecticut law on product liability and unfair trade practices.  

***

And, of course, the Court has been busy addressing the various and sundry petitions and applications that proliferate in the Trump era. It has, for example, been hit with three separate petitions seeking review of lower court orders enforcing subpoenas for President Trump’s tax returns and other financial records. While the Court ordered a provisional stay in one of these cases, Trump v. Mazars USA, LLP (No. 19-715), it remains to be seen whether it will ultimately intervene.

***

In short, the Court has an awful lot on its plate already this term—and that’s not accounting for a likely impeachment trial in the Senate (over which the Chief Justice must preside). We’ll do our best to keep you apprised of all the OT19 action. Stay tuned…

© 1998-2021 Wiggin and Dana LLPNational Law Review, Volume IX, Number 363
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Tadhg Dooley Appelate Attorney Wiggin Dana New Haven, CT
Partner

Tadhg is a Partner in the firm’s Litigation Department, where his practice focuses on appellate and complex civil litigation. He has extensive experience handling appeals in state and federal courts throughout the country and has obtained favorable results for a diverse range of clients, from federal prisoners to foreign presidents, big companies to small towns. Among other recent successes, Tadhg helped a municipality overturn a $6.8 million verdict in the Connecticut Appellate Court, and helped a dental practice overturn a $3.7 million verdict in the Georgia Supreme Court. Tadhg has also...

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David Roth Litigation lawyer Wiggin Dana
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David is Counsel in Wiggin and Dana’s Litigation Department and a member of the firm’s Appellate, Art and Museum Law, and Intellectual Property Litigation practice groups. He has assisted insurers, universities, large companies, cultural institutions, and sovereign nations in a variety of complex civil litigation and appeals. Representative matters include trademark, copyright, and patent cases; insurance class-actions; art-ownership disputes; and high-stakes business litigation. David has also represented private individuals and companies in several criminal matters and...

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