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SUPREME COURT DOCKET REPORT

Mayer Brown's Supreme Court and Appellate Practice Group distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community. We also email the Docket Report to our subscribed members and if you don't already subscribe to the Docket Report and would like to, please click here.

October Term 2007 - No. 8 - January 21, 2008

The Supreme Court granted certiorari on Friday in six cases of interest to the business community:

 


Federal Cigarette Labeling and Advertising Act--Express and Implied Preemption of State Law Claims. The Federal Cigarette Labeling and Advertising Act (Labeling Act) expressly bars States from imposing any "requirement or prohibition based on smoking and health * * * with respect to the advertising or promotion of any cigarettes." 15 U.S.C. 1334(b). In addition, the Federal Trade Commission (FTC) has consistently permitted cigarette manufacturers to use descriptors such as "light" to market cigarettes that have comparatively low yields of tar and nicotine according to an FTC-mandated test. In Altria Group, Inc. v. Good, No. 07-562, the Supreme Court granted certiorari to resolve a circuit split concerning whether state-law challenges to the use of such descriptors are preempted, expressly or impliedly, by federal law.

Good is a highly significant preemption case, both for tobacco litigation specifically and for products liability law more generally. For over 15 years, lower courts have struggled to apply the Court's fractured decision in Cipollone v. Liggett Group, 505 U.S. 504 (1992), in which no opinion commanded a majority. Good offers the Court a much-needed opportunity to clarify exactly how the Labeling Act's preemption provision (and similar preemption provisions in other statutes) should be interpreted and applied. The decision in Good will directly affect at least 30 pending cigarette cases, involving billons of dollars, in which plaintiffs are pursuing claims based on the use of tar and nicotine descriptors. Moreover, the question of when state-law claims challenging product labels as deceptive must yield to decisions made by federal regulators to allow manufacturers to make certain claims about their products is of central importance for cases involving a wide variety of products, including automobiles, pharmaceuticals, and electronics. This issue, which has a profound effect on the national economy, has been the subject of inconsistent lower court decisions that have left preemption law dangerously muddled.

Good involves a putative class action filed under Maine's Unfair Trade Practices Act. Plaintiffs contend that Philip Morris deceived consumers by using the terms "light" and "lowered tar and nicotine" in marketing Marlboro Lights. They assert that these descriptors are deceptive because smokers of such cigarettes may "compensate" for the lower tar and nicotine levels, for example by taking deeper puffs or smoking more, and thus may in fact receive as much tar and nicotine as smokers of regular cigarettes. Defendants counter that allowing such state-law claims would effectively impose a prohibition "based on smoking and health" of the sort expressly preempted by the Labeling Act. Defendants also argue that plaintiffs' state-law claims conflict with the regulatory approach taken by the FTC with respect to "light" and "low tar" cigarettes and are thus impliedly preempted as well.

The district court held that these claims were preempted, but the First Circuit, in a decision reported at 501 F.3d 29, reversed. As to express preemption, the court of appeals, relying on the Supreme Court's decision in Cipollone, held that plaintiffs' claims did not fall within the scope of the Labeling Act because they were based not on "smoking and health," but instead on a more general duty not to deceive. In reaching that conclusion, the First Circuit expressly disagreed with a recent Fifth Circuit decision, Brown v. Brown & Williamson Tobacco Corp., 479 F.3d 383 (5th Cir. 2007), which held that the Labeling Act preempts all state-law fraud claims arising out of the marketing of "light" cigarettes. In rejecting defendants' implied preemption argument, the First Circuit focused on the fact that there had been no formal FTC rulemaking regulating the use of the "light" and "low tar" descriptors.

Mayer Brown is co-counsel to petitioner Philip Morris USA. Amicus briefs in support of the petitioners will be due on March 3, 2008; amicus briefs in support of the respondents will be due on March 31, 2008. Any questions about this case should be directed to appellate@mayerbrown.com.

Federal Food, Drug and Cosmetic Act--Preemption of State-Law Tort Claims. The Federal Food, Drug and Cosmetic Act (FDCA), 21 U.S.C. 301 et seq., charges the Food and Drug Administration (FDA) with ensuring that prescription drugs are safe and effective. Before marketing a new drug, a manufacturer must satisfy the FDA that the drug is safe and effective as labeled. See 21 U.S.C. 355(b). The FDA exercises continuing regulatory authority over approved drugs, and normally must preapprove any labeling change. See 21 C.F.R. 314.70. Because the lower courts have been deeply divided over the issue, the Supreme Court granted certiorari in Wyeth v. Levine, No. 06-1249, to determine whether FDA approval of a prescription drug label preempts a state-law product liability claim premised on the theory that a different label was necessary to make the drug reasonably safe for use.

Although of greatest significance to pharmaceutical manufacturers, Wyeth is important to all participants in federally regulated industries. In addition to determining the extent to which FDA approval of a prescription drug preempts state-law failure-to-warn claims (and the extent to which courts should defer to the agency's interpretation of its regulations' preemptive effect), Wyeth will also likely define the contours of conflict preemption more generally. Vital to all participants in federally regulated industries, the doctrine of conflict preemption protects federally regulated entities from being subjected to multiple, potentially inconsistent legal requirements.

In this case, the plaintiff asserted state-law tort claims against the defendant drug manufacturer alleging injury as a result of the manufacturer's purported failure to provide adequate warning of the drug's dangers. Under established principles of conflict preemption, state law "actually conflicts" with--and is therefore preempted by--federal law whenever it would be impossible to comply simultaneously with federal and state law or state law would stand as an obstacle to the objectives of federal law. See Geier v. Am. Honda Motor Co., 529 U.S. 861, 873 (2000). In the decision below, the Vermont Supreme Court held that there was no actual conflict between the plaintiff's state-law claims and the FDA's labeling requirements because the defendant supposedly could have changed the relevant label without prior FDA approval. The court also held that claims of "obstacle" preemption are foreclosed by language in the FDCA. In reaching these conclusions, the Court declined to give any weight to the FDA's contrary view, which the agency has expressed in both a regulatory preamble and numerous amicus briefs.

Mayer Brown submitted an amicus brief, on behalf of the Product Liability Advisory Council and the United States Chamber of Commerce, in support of the petitioner at the cert stage. At the merits stage, amicus briefs in support of the petitioners will be due on March 3, 2008, and amicus briefs in support of the respondents will be due on March 31, 2008. Any questions about this case should be directed to Andrew Tauber (202-263-3324) in our D.C. office.

ERISA--Plan Administrators and "Structural" Conflicts of Interest. Employee Retirement Income Security Act (ERISA) plan administrators sometimes have two roles: deciding whether to pay benefits to an employee, and paying any benefits owed. The federal courts of appeals have divided over (1) whether an ERISA plan administrator with both roles has a conflict of interest (sometimes called a "structural conflict of interest"); and (2) how such a conflict affects judicial review of a discretionary benefit determination. The Supreme Court granted certiorari in MetLife v. Glenn, No. 06-923, to decide these questions.

The case is of great importance to ERISA plan administrators, both employers that administer their own ERISA plans and insurance companies that administer plans for employers. It is likely to resolve fundamental questions about judicial review in an exceedingly common scenario: a plan administrator makes a discretionary decision to deny benefits, and the ERISA beneficiary challenges that decision in court.

In MetLife, the plaintiff received short-term disability benefits under the ERISA plan sponsored by her employer, Sears, but she was denied long-term disability benefits under the same plan, which was administered and insured by MetLife. The district court affirmed MetLife's denial of long-term disability benefits, but the Sixth Circuit reversed, holding that MetLife's dual role--funding and administering the plan--created an "apparent conflict of interest." The Sixth Circuit's holding is in line with those of six other circuits. It conflicts, however, with the holdings of two other circuits, which have held that there is no "structural" or "apparent" conflict of interest merely because an ERISA plan administrator also funds the plan. The Sixth Circuit's holding is also in tension with holdings from two more circuits, where a plan administrator's dual role creates no conflict of interest without a further evidentiary showing. MetLife filed a petition for certiorari on two questions: whether a plan administrator's dual role creates a conflict of interest, and whether the Sixth Circuit wrongly required the plan administrator to consider the decision of a Social Security Administration administrative law judge.

At the Court's invitation, the Solicitor General filed a brief urging that the Court grant certiorari on the first question, and on the related question of how such a conflict affects the standard of review, but not on the second question. The Court did exactly that, and in answering the two questions it chose to take--whether the dual role creates a conflict of interest and how such a conflict affects the standard of review--the Court may fundamentally determine how aggressively the federal courts review the denial of benefits under an ERISA plan.

Amicus briefs in support of the petitioners will be due on March 3, 2008; amicus briefs in support of the respondents will be due on March 31, 2008. Any questions about this case should be directed to appellate@mayerbrown.com.

Employment Law--Age Discrimination In Employment Act--Burden of Persuasion. The Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C 621 et seq., prohibits discrimination by covered employers against employees 40 years of age or older. But it is not "unlawful for an employer * * * to take any action otherwise prohibited [by the Act] where the differentiation is based on reasonable factors other than age." 29 U.S.C. 623(f)(1). The Supreme Court granted certiorari in Meacham v. Knolls Atomic Power Laboratory, No. 06-1505, to address whether the employer or employee bears the burden of persuasion under the ADEA in establishing that the employer acted in reliance on "reasonable factors other than age." This case involves a recurring issue that is of great importance to all employers that are subject to the mandates of the ADEA.

The petitioners are a number of former employees of respondent Knolls Atomic Power Laboratory (Knolls) who were terminated as part of an involuntary reduction in force. Of the 31 employees laid off, 30 were over the age of 40, including the petitioners. Subsequently, the petitioners sued Knolls, alleging that the reduction in force had a disparate impact on older workers in violation of the ADEA. A jury rendered a verdict for the former employees on their disparate impact claim. The district court denied Knolls' motion for judgment as a matter of law, and the Second Circuit affirmed. The Supreme Court--after holding in Smith v. City of Jackson, 544 U.S. 228 (2005), that a cause of action for disparate impact exists under the ADEA but that an employer is not liable for a disparate impact that results from a "reasonable factor other than age"--granted certiorari and vacated and remanded the case to the Second Circuit to reconsider its decision in light of Smith.

On remand, the Second Circuit reversed the district court's ruling. 461 F.3d 134 (2006). The court of appeals reaffirmed its earlier conclusion that the petitioners had established the existence of a disparate impact. Id. at 139-41. On the question whether Knolls' justification was "reasonable"--i.e., "relied on reasonable factors other than age"--the court joined the Tenth Circuit in holding that it is the employee's burden to prove that the justification was unreasonable. Id. at 141-44. Because petitioners had failed to do so, the Second Circuit held that Knolls was entitled to judgment as a matter of law. Id. at 144-46. Judge Pooler dissented, arguing in part that the "reasonable factors other than age" provision should be treated as an affirmative defense. Id. at 147-52.

At the Court's invitation, the Solicitor General filed an amicus brief in support of certiorari, taking the position--in agreement with Judge Pooler's dissent and the views of the Ninth Circuit--that the "reasonable factors other than age" provision should be considered an affirmative defense and accordingly that an employer should bear the burden of proof.

Amicus briefs in support of the petitioners will be due on March 3, 2008; amicus briefs in support of the respondents will be due on March 31, 2008. Any questions about this case should be directed to Archis Parasharami (202-263-3328) in our Washington, D.C. office.

Employment Law--Title VII--Scope Of Anti-Retaliation Provision. Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. 2000e et seq., prohibits discrimination by covered employers, with limited exceptions, based on race, color, religion, sex, and national origin. Title VII also forbids retaliation against an employee either because that employee has opposed any practice made unlawful by Title VII (the "opposition clause") or because the employee has participated in an investigation, proceeding, or hearing "under this subchapter" (the "participation clause"). 42 U.S.C. 2000e-3(a). The Supreme Court granted certiorari in Crawford v. Metropolitan Government of Nashville, No. 06-1595, to decide whether an employee's participation in an employer's internal investigation before an EEOC charge has been filed constitutes an activity protected under Title VII's anti-retaliation provision.

Because the Court's decision will likely define the scope of Title VII's anti-retaliation provision, the resolution of this case is crucial to all employers subject to Title VII that initiate internal investigations to resolve allegations of discrimination.

Petitioner Vicky Crawford was a long-time employee of the Metropolitan Government of Nashville and Davidson County, Tennessee. In 2002, the local government, pursuant to its anti-harassment policy, began an internal investigation of allegations that the school district's employee relations director, Gene Hughes, had engaged in inappropriate behavior and sexual harassment. Crawford reported during the investigation that she had been witness to and the victim of sexual harassment by Hughes. Six months after her interview, Crawford's employment was terminated. Crawford filed a charge of discrimination with the EEOC, alleging that the local government had retaliated against her. She eventually sued in federal court. The district court granted summary judgment for the local government.

The Sixth Circuit affirmed. 211 F. App'x 373 (per curiam). The court of appeals rejected the argument that Crawford's participation in the internal investigation constituted "opposition" to conduct made unlawful by Title VII, because under Sixth Circuit precedent, the opposition clause "demands active, consistent 'opposing' activities to warrant * * * protection against retaliation." Id. at 376 (citations and quotation marks omitted; ellipsis in original). The court further held that "participation in an internal investigation initiated by" the employer, "in the absence of any pending EEOC charge," "is not a protected activity under the participation clause." Id. The Sixth Circuit reasoned that, "[b]y protecting only participation in investigations that occurs relative to EEOC proceedings, the participation clause prevents the burden of Title VII from falling on an employer who proactively chooses to launch an internal investigation." Id. at 377.

At the Court's invitation, the Solicitor General filed an amicus brief in support of certiorari. Although the Solicitor General stated that there was no square conflict among the circuits, it nevertheless urged review, contending that Crawford's activity was protected under both the opposition clause and the participation clause of Title VII's anti-retaliation provision, and that the Sixth Circuit's holding to the contrary created an "anomalous gap in Title VII's enforcement scheme."

Amicus briefs in support of the petitioner will be due on March 3, 2008; amicus briefs in support of the respondents will be due on March 31, 2008. Any questions about this case should be directed to Archis Parasharami (202-263-3328) in our Washington, D.C. office.

Standing and Ripeness--Direct challenge to agency regulations. In Lujan v. National Wildlife Federation, 497 U.S. 871, 891 (1990), the U.S. Supreme Court held that under the Administrative Procedure Act (APA), a plaintiff "must direct its attack against some particular 'agency action' that causes it harm." The Court granted certiorari in Summers v. Earth Island Institute, No. 07-463, to determine (1) whether an abstract challenge to the legality of Forest Service regulations, as opposed to a suit stemming from a specific application of those regulations, was ripe for review under the APA, and (2) whether plaintiffs had standing to bring such a challenge after they settled their only claim involving a particular agency action.

This case is important to any entity that is involved in a regulated industry or that might seek to challenge government regulation. By permitting plaintiffs to question the validity of recently issued Forest Service regulations apart from any live controversy over their application, the Court of Appeals opened the door to attacks on agency rules without regard to how or even whether the rules have been applied in practice. If this approach were upheld by the Supreme Court, it would represent a significant departure from traditionally narrow rules of justiciability, and would allow plaintiffs more frequent and broader review of agency regulations.

The dispute in Summers centers around Forest Service regulations that excluded certain timber sale and fire rehabilitation activities from review under both the National Environmental Policy Act (NEPA) and the agency's internal administrative appeal process. Shortly after the regulations were issued, the Forest Service approved the sale of timber located on 238 acres of post-fire national forest land known as Burnt Ridge. Consistent with its new regulations, the agency did not conduct a NEPA environmental review before making its decision, and did not allow any administrative appeals of the action.

Several environmental plaintiffs brought suit under the APA. Their complaint argued that the Forest Service's new regulations were facially invalid, and that the Burnt Ridge decision in particular was arbitrary and capricious. Before the district court ruled on cross motions for summary judgment, however, the parties settled all claims relating to the Burnt Ridge project. Consequently, the only claims remaining before the lower courts were direct challenges to the legality of the regulations themselves. The Court of Appeals concluded that the settlement of the Burnt Ridge claim neither deprived plaintiffs of standing to sue nor left their challenge to the regulations unripe. 490 F.3d 687 (9th Cir. 2007). On the merits, the Court of Appeals held that the agency's new regulations were unenforceable, and enjoined the Forest Service from applying them in the future.

Amicus briefs in support of the petitioners will be due on March 3, 2008; amicus briefs in support of the respondents will be due on March 31, 2008. Any questions about the case should be directed to appellate@mayerbrown.com.

 

 


Mayer Brown Supreme Court Docket Reports provide information and comments on legal issues and developments of interest to our clients and friends. They are not a comprehensive treatment of the subject matter covered and are not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed.

 
 
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