Today the Supreme Court granted certiorari in four cases of interest to the business community:
Federal Arbitration Act—Enforceability of Agreements to Arbitrate
Under the Federal Arbitration Act (“FAA”), written arbitration agreements are “valid, irrevocable, and enforceable,” unless a generally applicable contract defense applies. 9 U.S.C. § 2. A party’s effort to invoke such a defense to resist arbitration presents a “gateway” question that, as a default rule, is for the court to resolve. First Options of Chicago, Inc., v. Kaplan, 514 U.S. 938, 944 (1995). If, however, there is “clear and unmistakable evidence” in the arbitration agreement that the parties intended that an arbitrator decide “gateway” questions of arbitrability, then First Options suggests that courts should compel arbitration of the dispute, including the disagreement over whether the underlying dispute is arbitrable. Id. Today, the Supreme Court granted certiorari in Rent-A-Center West, Inc. v. Jackson, No. 09-497, to resolve a circuit split on whether a court rather than an arbitrator must decide whether an arbitration agreement is unconscionable, even when the agreement expressly states that questions of the agreement’s enforceability are for the arbitrator to decide.
This case is of great interest to any business that uses arbitration agreements, particularly ones that call for the arbitrator to resolve any disputes about the interpretation or enforcement of the arbitration agreement. In deciding this case, the Supreme Court likely will clarify the scope of its prior decisions indicating that these questions can be committed to arbitration.
In Rent-A-Center, Jackson entered into a standard-form arbitration agreement with Rent-A-Center as a condition of his employment. The agreement specified that “[t]he Arbitrator . . . shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including . . . any claim that all or any part of this Agreement is void or voidable.” Jackson later filed a lawsuit against Rent-A-Center, alleging employment discrimination in violation of Title VII. When the company moved to compel arbitration of Jackson’s claim, Jackson argued that the arbitration agreement was unconscionable and therefore unenforceable. The district court compelled arbitration, concluding that the arbitration agreement clearly and unmistakably assigned the question of unconscionability to the arbitrator. On appeal, a divided panel of the Ninth Circuit reversed, concluding that Jackson’s claim of unconscionability—based in part on the contention that he lacked meaningful choice in entering into the agreement—raised the question whether Jackson had meaningfully assented to arbitrate any disputes in the first place, including a dispute over the validity of the arbitration agreement. Thus, although Jackson did “not dispute” that the arbitration agreement “clearly assigns the arbitrability determination to the arbitrator,” the court implicitly suggested that considerations external to the agreement’s language were relevant to Jackson’s unconscionability challenge. Under such circumstances, the Ninth Circuit held, “the threshold question of unconscionability is for the court.”
Absent extensions, amicus briefs in support of the petitioner will be due on March 4, 2010, and amicus briefs in support of the respondent will be due on April 1, 2010. Any questions about this case should be directed to Evan Tager (+1 202 263 3240) or Archis Parasharami (+1 202 263 3328) in our Washington, DC office.
Section 502(g)(1) of the Employee Retirement Income Security Act of 1974 (ERISA) provides that “[i]n any action under this subchapter . . . by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney’s fee and costs of the action to either party.” 29 U.S.C. § 1132(g)(1). Although the statute does not expressly require that the party seeking a fee award be a “prevailing party,” as is required by several other fee-shifting statutes, the courts of appeals have divided over whether ERISA incorporates a prevailing party requirement. Today the Supreme Court granted certiorari in Hardt v. Reliance Standard Life Insurance Co., No. 09-448, to determine (1) whether eligibility for attorney’s fees under ERISA is limited to those who qualify as prevailing parties, and (2) whether an ERISA plaintiff is entitled to prevailing party status following a court-ordered redetermination of benefits that results in the requested benefits being granted.
Given the direct costs incurred when attorney’s fees are awarded, and the potential incentive to litigate created by the availability of such awards, this case is important to all businesses that maintain ERISA plans and face litigation over disability or retirement benefits.
In the decision below, the Fourth Circuit vacated an award of attorney’s fees to plaintiff Hardt because she did not meet the requirements for prevailing party status. To qualify as a prevailing party, “a plaintiff [must] receive at least some relief on the merits of his claim.” Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 603 (2001). After Hardt was diagnosed with carpal-tunnel syndrome and small-fiber neuropathy, she filed a claim for long-term disability benefits from respondent Reliance Standard Life Insurance Company (“Reliance”), the underwriter for her disability insurance plan. After Reliance denied her claim, Hardt filed a complaint in the district court alleging an ERISA violation from the wrongful denial of her claim. The district court concluded that the denial of Hardt’s claim was not based on substantial evidence and remanded the claim to Reliance for reconsideration, and Reliance eventually agreed to pay the benefits Hardt had requested. Hardt then moved for attorney’s fees, but the Fourth Circuit ruled that she was not a prevailing party under the Buckhannon standard because the district court’s remand order did not itself award any benefits and did not constitute “an enforceable judgment on the merits.”
Absent extensions, amicus briefs in support of the petitioner will be due on March 4, 2010, and amicus briefs in support of the respondent will be due on April 1, 2010. Any questions about this case should be directed to firstname.lastname@example.org.
National Environmental Policy Act—Injunctive Relief—Evidence of Irreparable Harm
In Winter v. Natural Resources Defense Council, 129 S. Ct. 365 (2008), the Supreme Court affirmed that plaintiffs seeking injunctive relief must demonstrate, among other things, that they are likely to suffer irreparable harm in the absence of the requested injunction. Today the Court granted certiorari in Monsanto Co. v. Geertson Seed Farms, No. 09-475, to address three questions concerning the evidence of irreparable harm necessary before an injunction may issue under the National Environmental Policy Act (NEPA): (1) Whether plaintiffs asserting a claim under NEPA are exempt from the general rule that a likelihood of irreparable harm must be shown to obtain an injunction; (2) whether a district court may enter an injunction to remedy a NEPA violation without conducting an evidentiary hearing to resolve disputed facts relevant to the appropriate scope of the requested injunction; and (3) whether the lower court erred in this case when it affirmed an injunction based on an arguably remote possibility of harm.
This case is important to any business or industry that could face lawsuits from environmental plaintiffs, and is particularly significant to the agricultural biotechnology industry and the countless farmers who are growing genetically engineered crops. The lower court’s approach suggests that plaintiffs in environmental cases can obtain comprehensive injunctive relief even when there is an unresolved factual dispute over whether they will actually be injured absent an injunction.
Genetically-engineered crops are subject to a complex regulatory review and authorization process before they are approved for commercial use. In this case, the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) prepared an Environmental Assessment of a genetically engineered alfalfa seed created by Monsanto, and concluded that the alfalfa would have no significant impact on the environment. The genetically engineered alfalfa was accordingly made available for commercial planting, and quickly came into widespread use among alfalfa farmers.
Plaintiffs successfully challenged APHIS’s environmental review in federal district court, and sought a permanent injunction against the use of the genetically engineered alfalfa while the agency prepared a more extensive Environmental Impact Statement under NEPA. Monsanto and APHIS argued that a far less restrictive injunction would be sufficient to prevent any conceivable injury to plaintiffs, and asked the district court to hold an evidentiary hearing on that issue. The district court refused to hold a hearing, and granted plaintiffs’ request for broad injunctive relief. The Court of Appeals, with one judge dissenting, affirmed the district court’s injunction.
Absent extensions, amicus briefs in support of the petitioners will be due March 4, 2010, and amicus briefs in support of the respondents will be due on April 1, 2010. Any questions about the case should be directed to Jay Johnson (+1 202 263 3305) in our Washington, DC office.
Mayer Brown filed an amicus brief on behalf of various organizations in support of the petition for a writ of certiorari.
Fed. R. Civ. P. 15—“Mistake” in Naming Proper Corporate Defendant—Limitations Period
Federal Rule of Civil Procedure 15(c)(1)(C) permits the amendment of a pleading to “relate back” to the original pleading date for limitations-period purposes when, among other things, the amendment corrects a “mistake concerning the proper party’s identity.” Today, the Supreme Court granted certiorari in Krupski v. Costa Crociere, No. 09-337, to determine whether a “mistake” exists within the meaning of this rule when the amending party had imputed knowledge of the identity of the correct defendant at the time she filed suit.
Although quite narrow, the issue is one of significance to the business community because its resolution will likely define a plaintiff’s responsibility for identifying the proper corporate defendant to a suit, and will in turn likely affect the circumstances under which corporations can assert a limitations defense.
The plaintiff in Krupski was injured on a cruise ship and sued Costa Cruise, a company that serves as the sales agent for the proper defendant, Costa Crociere. Costa Cruise was ultimately dismissed from the case, and Krupski filed an amended complaint correctly naming Costa Crociere as the defendant. However, the district court held that the amendment did not “relate back” to the original filing of her action and that therefore the applicable one-year limitations period barred her claim. The Eleventh Circuit affirmed, holding that knowledge of Costa Crociere as a potential party must be imputed to Krupski as of the time she filed suit because the company was identified as the “carrier” on her passenger ticket. The court concluded that the naming of Costa Cruise, rather than Costa Crociere, was not a “mistake” for purposes of Rule 15(c)(1)(C), but rather a “deliberate decision.” While other Circuits do not appear to have directly addressed the same situation, several have taken a somewhat broader and more lenient view of what constitutes a “mistake.”
Absent extensions, amicus briefs in support of the petitioner will be due March 4, 2010, and amicus briefs in support of the respondent will be due on April 1, 2010. Any questions about the case should be directed to Andrew Tauber (+1 202 263 3324) in our Washington, DC office.
Recently the Supreme Court invited the Solicitor General to file briefs expressing the views of the United States in three other cases of interest to the business community:
Triple-S Management v. Municipal Revenue Collection, No. 09-233: The question presented is whether the Due Process Clause limits the executive branch’s ability to retroactively revise its authoritative interpretation of tax law.
Janus Capital Group v. First Derivative Traders, No. 09-525: The questions presented concern the circumstances under which a service provider that allegedly helped draft statements by a securities issuer can be held liable for securities fraud when those statements are not attributed to the service provider.
Thompson v. North American Stainless, LP, No. 09-291: The questions presented concern whether—and if so, to what extent—the anti-retaliation provision of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-3(a), protects a third party against retaliation based upon the third party’s association with an employee who has engaged in protected activity.
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