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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 2011 - June 26, 2012

June 26, 2012

Yesterday the Supreme Court granted certiorari in nine cases of interest to the business community:


Class Actions—Class-Certification Standards

A critical and recurring issue in class-action litigation is the degree to which a district court must consider merits issues when deciding whether to certify a class under Rule 23 of the Federal Rules of Civil Procedure. Although in the past some courts had viewed merits questions as wholly separate from the question of class certification, the Supreme Court recently explained in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011),that the certification inquiry “[f]requently . . . will entail some overlap with the merits of the plaintiff’s underlying claim.” 

Today the Supreme Court granted certiorari in Comcast Corp. v. Behrend, No. 11-864, to decide “[w]hether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.” Depending on how the Court answers that question, its decision may have a substantial impact on a wide variety of class-action lawsuits.

The plaintiffs in Comcast alleged that the cable company violated the Sherman Act by engaging in “clustering”—a strategy of concentrating its operations in specific geographic areas while giving up other, more scattered operations. According to the plaintiffs, Comcast’s clustering strategy deterred potential competitors who could have built new cable networks in areas already served by Comcast. The district court certified a class of over two million Comcast customers in the Philadelphia area. The court concluded that antitrust impact—an essential element of plaintiffs’ claims—could be proved at trial through evidence common to the class. In addition, the court ruled that a damages model proposed by the plaintiffs’ expert constituted sufficient evidence to calculate damages on a class-wide basis.  

A divided panel of the Third Circuit affirmed. After concluding that proof of liability could take place on a class-wide basis, the majority held that the plaintiffs—through their expert’s damages model—had done enough to show that damages could be calculated on a class-wide basis. In the majority’s view, it was unnecessary to determine at the class-certification stage “whether the methodology is a just and reasonable inference or speculative.” 655 F.3d 182, 206. Instead, the majority stated, “[a]t the class certification stage we do not require that Plaintiffs tie each theory of antitrust impact to an exact calculation of damages, but instead that they assure us that if they can prove antitrust impact, the resulting damages are capable of measurement and will not require labyrinthine individual calculations.” Id. Because, according to the majority, “attacks on the merits of the methodology . . .  have no place in the class certification inquiry,” it was proper for plaintiffs to proceed on behalf of a class. Id. at 207.

Judge Jordan dissented. While agreeing that the district court had not abused its discretion in deciding that questions of antitrust impact could be proved on a class-wide basis, he would have held that “damages cannot be proven using evidence common to th[e] entire class.” 655 F.3d at 209. First, Judge Jordan explained that—applying the admissibility principles of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)—the methodology proposed by the plaintiffs’ expert failed to fit with “[p]laintiffs’ sole theory of antitrust impact” and therefore would result in an unreliable damages calculation. 655 F.3d at 217. Second, Judge Jordan believed that, even if the damages model could be revised to account for the plaintiffs’ theory, there “remains an intractable problem with any model purporting to calculate damages for all class members collectively,” which is that “no model can calculate class-wide damages because any damages—such as they may be—are not distributed on anything like a similar basis” throughout the Philadelphia market area encompassing the class. Id. at 222, 224. As Judge Jordan colorfully put it, “to say that Comcast’s ‘but for’ share of the market throughout the Philadelphia [region] would be, on average, 40% is about as meaningful as saying that ‘with one foot on fire and the other on ice, I am, on average, comfortable.’” Id. at 223.

In its petition for certiorari, Comcast had sought review of the broader question whether—both as to liability and as to damages—the district court was obligated to resolve merits issues in connection with the certification decision. In granting certiorari, the Supreme Court recast the question presented to address the issue of damages alone. Although narrower than the original question presented, the issue is of extraordinary importance to businesses defending themselves against class actions of all stripes. Especially at the class-certification stage, plaintiffs often make use of expert testimony in an effort to assure courts that damages calculations can readily be done on a class-wide basis. At least some courts have accepted those assurances, deferring the resolution of whether such damages models are in fact viable to the date of trial—a date that may never come, given the settlement pressures created by the class-certification decision itself.

Absent extensions, which are likely, amicus briefs in support of the petitioners will be due on August 16, 2012, and amicus briefs in support of the respondents will be due on September 17, 2012. Any questions about the case should be directed to Andrew Pincus (+1 202 263 3220), Evan Tager (+1 202 263 3240), or Archis Parasharami (+1 202 263 3328) in our Washington, DC office.


Clean Water Act—Forest Road Runoff

The Environmental Protection Agency, pursuant to the Clean Water Act, regulates “point source” discharges of pollutants through a system of permitting requirements under the National Pollutant Discharge Elimination System (“NPDES”). Under a rule first promulgated in 1976, the EPA has defined as nonpoint source activities forest road construction and maintenance from which natural runoff results. In subsequent regulations, EPA also specified that, because forest road runoff is not industrial in nature, it does not require a permit under the Clean Water Act’s scheme for regulating stormwater discharges.

Today the Supreme Court granted certiorari in and consolidated two cases arising from a Ninth Circuit decision involving forest roads—one brought by private parties and Tillamook County, Georgia-Pacific West, Inc. v. Northwest Environmental Defense Center, No. 11-347, the other brought by the State of Oregon, Decker v. Northwest Environmental Defense Center, No. 11-338—to determine whether precipitation runoff from forest roads is a point source discharge “associated with industrial activity” that requires a permit under the EPA’s regulations. In granting certiorari, the Court rejected the recommendation of the Solicitor General, whose views the Court had solicited, that certiorari be denied in both cases.

The Court’s decision will have a substantial impact on forested states and companies in the forest products industry. The decision may also have consequences for deference to administrative agencies, which will affect all regulated industries.

Respondent Northwest Environmental Defense Center (“NEDC”), the plaintiff below, alleged that the petitioners, defendants below, failed to obtain permits for stormwater runoff that flows from logging roads into systems of ditches, culverts, and channels and is then discharged into forest streams and rivers. NEDC contended that these discharges are “point sources” within the meaning of the Clean Water Act. The district court rejected this argument, concluding that the discharges are exempted from the NPDES permitting process by the “Silvicultural Rule,” 40 C.F.R. § 122.27, which in the Ninth Circuit’s words, “categorically exempts all discharges from silvicultural activities resulting from natural runoff,” 617 F.3d 1176, 1189.

The Ninth Circuit reversed, declining to defer to the EPA’s Silvicultural Rule or to apply the statutory agricultural exemption, 33 U.S.C. § 1362(14).. The Ninth Circuit acknowledged that its own interpretation of the Silvicultural Rule “does not reflect the intent of EPA,” but stated that it “would allow [the court] to construe the Rule to be consistent with the statute.” 617 F.3d at 1191. The court then held that the discharges at issue are “associated with industrial activity” and thus require NPDES permits under EPA’s stormwater regulations. The Ninth Circuit also addressed a jurisdictional issue, holding that the plaintiff’s challenge to the almost 35-year-old Silvicultural Rule is timely because the rule is ambiguous.

Absent extensions, which are likely, amicus briefs in support of the petitioners will be due on August 16, 2012, and amicus briefs in support of the respondents will be due on September 17, 2012. Any questions about this case should be directed to Tim Bishop (+1 312 701 7829) or Richard Bulger (+1 312 701 7318) in our Chicago office.

Mayer Brown LLP represents the petitioners in Georgia-Pacific West, Inc. v. Northwest Environmental Defense Center, No. 11-347.


Clean Water Act—Discharge of Pollutants

The Clean Water Act (“CWA”) regulates “discharge[s]” of pollutants from, among other things, municipal separate storm sewer systems. 33 U.S.C. § 1342(p). In 2004 the Supreme Court held that there is no “discharge” within the meaning of the CWA when water flows between two bodies of water that are not “meaningfully distinct.” S. Fla. Water Mgmt. Dist. v. Miccosukee Tribe, 541 U.S. 95, 112 (2004). Today the Court granted certiorari in Los Angeles County Flood Control District v. Natural Resources Defense Council, No. 11-460, to decide whether a discharge occurs when water flows from a manmade concrete channel through which a river has been diverted back into the river’s natural waterway. In granting certiorari, the Court rejected the recommendation of the Solicitor General, whose views the Court had solicited, that certiorari be denied. 

The Court’s resolution of this case could substantially narrow the CWA’s scope and therefore may prove significant for businesses that are currently or potentially subject to National Pollutant Discharge Elimination System (“NPDES”) permits.

Petitioner Los Angeles County Flood Control District (“District”) operates a municipal separate storm sewer system (“ms4”) that is subject to an NPDES permit specifying the maximum permissible levels of various pollutants. The ms4 includes not only various drains and pipes but also concrete channels through which portions of the Los Angeles River and San Gabriel River flow. Monitoring stations in the portions of both rivers included in the ms4 detected pollutant levels that exceeded the levels allowed by the District’s permit. Both rivers flow back into their natural waterways downstream from the monitoring stations.

Respondent environmental groups sued the District, alleging that the District was in violation of the permit. The district court granted summary judgment to the District, but the Ninth Circuit reversed. The court of appeals concluded that the District had violated the CWA because an unlawful discharge occurred at the point where the rivers “flowed out of the[ir] concrete channels . . ., through an outfall, and into the navigable waterways.” 673 F.3d 880, 900. The Ninth Circuit held that a discharge occurred at that point because the ms4 is “an intrastate manmade construction” that is “distinct from the . . . navigable rivers” into which it flows. Id.

Absent extensions, which are likely, amicus briefs in support of the petitioner will be due on August 16, 2012, and amicus briefs in support of the respondents will be due on September 17, 2012. Any questions about this case should be directed to Tim Bishop (+1 312 701 7829) in our Chicago office.


Fair Labor Standards Act—Effect of Offer of Judgment Before Conditional Certification

Under Section 216(b) of the Fair Labor Standards Act of 1938 (“FLSA”), an employee may file a “collective action” against an employer “on behalf of himself * * * and other employees similarly situated.” 29 U.S.C. § 216(b). But the FLSA specifies that the other “similarly situated” employees must choose to join the litigation: “No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.” Id. Today the Supreme Court granted certiorari in Genesis Healthcare Corp. v. Symczyk, No. 11-1059, to decide whether an FLSA collective action becomes moot when the defendant makes an offer of judgment under Federal Rule of Civil Procedure 68 that would fully satisfy the named plaintiff’s claims before any additional employees have opted into the action.

Respondent, the plaintiff below, filed a collective action under the FLSA, alleging that the petitioners, her employers, automatically deducted her pay for meal breaks regardless of whether she took them. The employers answered the complaint and served the plaintiff with a Rule 68 offer of judgment for the full amount of her claims, including costs and attorneys’ fees. Arguing that the offer to pay her claims in full deprived her of the ongoing personal stake in the litigation required by Article III of the U.S. Constitution, the employers moved to dismiss the complaint. The district court granted the motion, noting that an offer of full satisfaction ordinarily moots a plaintiff’s claims and that no other employees had opted into the suit because the plaintiff had not yet sought conditional certification of the collective action.

The Third Circuit reversed, explaining that “conventional mootness principles do not fit neatly within the representative action paradigm.” 656 F.3d 189, 195. The court analogized FLSA collective actions to class actions, in which it is settled that a defendant cannot “frustrate” the objectives of class adjudication by “pick[ing] off” a plaintiff’s suit with a tender of judgment before the class can be certified. Id. at 197-201. The Third Circuit therefore reversed the dismissal and remanded for the plaintiff to file a motion for conditional certification, which would be deemed to “relate back” to the filing of the original complaint and thus preserve the district court’s subject matter jurisdiction. Id. at 201. In so holding, the Third Circuit agreed with the Fifth, Tenth, and Eleventh Circuits and parted company with the Fourth, Seventh, and Eighth Circuits.

Absent extensions, which are likely, amicus briefs in support of the petitioners will be due on August 16, 2012, and amicus briefs in support of the respondent will be due on September 17, 2012. Any questions about the case should be directed to Evan Tager (+1 202 263 3240) or Kevin Ranlett (+1 202 263 3217) in our Washington, DC office.


Antitrust—State Action Doctrine

Under the “state action doctrine,” the federal antitrust laws do not apply to anticompetitive conduct of certain subordinate public entities created by a state if the conduct is authorized as part of a “state policy to displace competition” that is “clearly articulated and affirmatively expressed” in state law. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 38-39 (1985). The doctrine extends to private entities if the state policy is so articulated and the private conduct is “‘actively supervised’ by the State itself.” California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980). “[T]he State may not validate . . . anticompetitive conduct,” however, “simply by declaring it to be lawful.” Hallie, 471 U.S. at 39.

Today the Supreme Court granted certiorari in FTC v. Phoebe Putney Health System, Inc., No. 11-1160, to determine whether (1) a state’s grant to a state hospital authority of general corporate power to acquire and lease out private hospitals constitutes a clear statement of state policy to displace competition in the market for hospitals and (2) the state action doctrine validates an anticompetitive acquisition when the state entity neither participated in negotiating the transaction nor oversees the hospital’s operations. Because the Court’s decision will determine both the clarity necessary for the state action doctrine to apply and the scope of the doctrine’s applicability, it will be of interest to businesses (including hospitals) that are actively supervised by state authorities.

At issue in the case is a transaction undertaken by the Hospital Authority of Albany-Dougherty County, Georgia (“Authority”). In 1941 the Authority formed two private corporations, respondent Phoebe Putney Health System, Inc. (“PPHS”) and its subsidiary, respondent Phoebe Putney Memorial Hospital, Inc. (“Memorial”). The Authority retained reversionary interests in Memorial’s assets but ceded control of the hospital by leasing it to PPHS in a 40-year, dollar-a-year lease that, as extended, is set to expire in 2042. The Authority now has no budget, no staff, and no employees; as a practical matter, it neither controls nor supervises PPHS or Memorial.

Palmyra Medical Center (“Palmyra”) is located two miles from Memorial and, before the transaction at issue, was owned by respondent HCA, Inc. (“HCA”). Respondents negotiated a transaction in which PPHS was to acquire control of Palmyra from HCA, giving PPHS a monopoly in the market for inpatient general acute care hospital services in Dougherty County. Under the terms of the transaction, the Authority acted as a nominal purchaser of Palmyra’s assets, using PPHS-controlled funds, and then gave PPHS a lease to Palmyra for a dollar a year for 40 years, much like PPHS’s existing lease for Memorial. As a result, PPHS gained full economic and operational control over both Memorial and Palmyra.

The Federal Trade Commission challenged the transaction as a violation of the Clayton Act, but the Eleventh Circuit affirmed the district court’s conclusion that the state action doctrine exempted the transaction from antitrust scrutiny. According to the court of appeals, “[t]he requirement of a clearly articulated state policy” is satisfied so long as the “anticompetitive conduct is a ‘foreseeable result’ of [state] legislation.” 663 F.3d 1369, 1375. In the Eleventh Circuit’s view, moreover, the fact that there may be “private influence” or “private benefit” associated with a transaction does not render the state action doctrine inapplicable. Id. at 1378 n.13.

Absent extensions, which are likely, amicus briefs in support of the petitioner will be due on August 16, 2012, and amicus briefs in support of respondents will be due on September 17, 2012. Any questions about the case should be directed to John Roberti (+1 202 263 3428) in our Washington, DC office or Richard Steuer (+1 212 506 2530) in our New York office.


Trademark Law – Effect of Covenant Not to Sue and Dismissal of Trademark Infringement Claim on Jurisdiction over Counterclaim Challenging Trademark’s Validity

In a trademark infringement action, a district court has jurisdiction over a defendant’s counterclaim challenging the validity of the underlying trademark. See 15 U.S.C. § 1119.Today the Supreme Court granted certiorari in Already, LLC d/b/a YUMS v. Nike, Inc., No. 11-982, to decide whether a district court is divested of jurisdiction over the counterclaim if the plaintiff trademark registrant enters into an agreement to refrain from asserting its trademark against the defendant’s then-existing commercial activities and the plaintiff’s suit is dismissed with prejudice. The case is important to businesses involved in potential trademark disputes because the Court’s decision will determine whether filing a trademark infringement action opens the door to litigation of the validity of the trademark regardless of the outcome of the infringement action.

The case arose from a trademark infringement action filed by respondent Nike against petitioner Already, LLC (“Already”), doing business as the YUMS brand, in the Southern District of New York. Nike claimed that two YUMS brand shoes infringed upon Nike’s trademarked design of its Air Force I shoes. In response, Already filed a counterclaim seeking a declaratory judgment that Nike’s trademark was invalid and should be cancelled, and that Already has not violated any such trademark. During discovery, Nike entered into a covenant not to sue, in which Nike stated that Already no longer infringed Nike’s trademark at a level sufficient to warrant continued litigation, and in which Nike agreed to refrain from bringing any action to enforce its trademark against any of Already’s current or previous athletic-shoe designs. 

On Nike’s motion, the district court dismissed both the infringement action and, over Already’s objection, the counterclaim. The Second Circuit affirmed, agreeing with the district court that, in light of Nike’s broad covenant not to sue and the dismissal of its infringement action, there was no longer any “actual case or controversy” and the district court did not have subject matter jurisdiction over the remaining counterclaim. 663 F.3d 89, 96. The Second Circuit’s decision conflicts with a Ninth Circuit decision holding that a covenant not to sue was insufficient to divest the district court of jurisdiction to hear a challenge to the validity of a trademark.

Absent extensions, which are likely, amicus briefs in support of the petitioner will be due on August 16, 2012, and amicus briefs in support of the respondent will be due on September 17, 2012. Any questions about this case should be directed to John Mancini (+1 212 506 2295) in our New York office.


Employee Retirement Income Security Act—Reimbursement of Benefits Paid out of Funds Recovered from Third Parties

Section 502(a)(3) of the Employee Retirement Income Security Act (“ERISA”) authorizes a plan fiduciary to enforce the plan against beneficiaries by seeking an injunction or “other appropriate equitable relief.” 29 U.S.C. § 1132(a)(3). Under this provision, when a beneficiary obtains a benefits payment for injuries caused by the negligent or willful acts of a third party, the fiduciary may enforce a right to subrogation established in the plan by imposing an equitable lien or constructive trust on any funds the beneficiary subsequently recovers from the responsible party. Today the Supreme Court granted certiorari in U.S. Airways, Inc. v. McCutchen, No. 11-1285, to decide whether Section 502(a)(3)’s reference to “appropriate” equitable relief prevents plan fiduciaries from enforcing reimbursement provisions according to their express terms when an equitable defense (such as unjust enrichment) would otherwise apply.

Because the Court’s decision will determine whether ERISA plan beneficiaries can assert equitable defenses to avoid their contractual obligation to reimburse the plan for benefits paid, it should be of interest to all businesses that offer such plans to their employees or administer them on behalf of other entities.   

Respondent James McCutchen, a defendant below, was injured in a car accident. Petitioner, the plaintiff below, paid approximately $67,000 for McCutchen’s medical expenses while acting in its capacity as the administrator of McCutchen’s ERISA benefits plan (“the Plan”). McCutchen then engaged the services of a law firm—respondent Rosen, Louik & Perry, P.C., also a defendant below—to recover a total of $110,000 from the other driver involved in the accident and under McCutchen’s automotive insurance policy. This recovery, however, was subject to a 40% contingency fee imposed by McCutchen’s attorneys, leaving him with a net benefit of less than $66,000. Petitioner nevertheless sued McCutchen and the law firm—which held a portion of McCutchen’s third-party recovery in trust—for reimbursement of the full $67,000 in benefits, seeking to enforce a provision in the Plan obligating McCutchen “to reimburse the Plan for amounts paid for claims out of any monies recovered from a third party.” The district court granted summary judgment to petitioner and ordered respondents to reimburse the Plan according to its terms.

The Third Circuit vacated the district court’s judgment, agreeing with respondents that enforcement of the Plan’s subrogation provision would “effectively be reaching into its beneficiary’s pocket, putting him in a worse position than if he had not pursued a third-party recovery at all.” 663 F.3d 671, 674. The court reasoned that, by authorizing plan fiduciaries to bring suits for “appropriate” equitable relief, “Congress intended to limit the equitable relief available [to plan fiduciaries] through the application of equitable defenses and principles that were typically available in equity.” Id. at 676. Because the court determined that requiring McCutchen to reimburse the plan for the full value of his benefits claim violated principles of unjust enrichment, it remanded the case to the district court with instructions to fashion an equitable remedy that fairly apportioned McCutchen’s third-party recovery between him and the Plan. The Third Circuit’s decision conflicts with decisions of the Fifth, Seventh, Eighth, Eleventh, and D.C. Circuits holding that courts should not apply common-law theories to alter the express terms of a written ERISA plan, but it is consistent with a recent decision of the Ninth Circuit.

Absent extensions, which are likely, amicus briefs in support of the petitioner will be due on August 16, 2012, and amicus briefs in support of the respondents will be due on September 17, 2012. Any questions about the case should be directed to Andrew Tauber (+1 202 263 3324) in our Washington, DC office.


Title VII—Employer’s Vicarious Liability for Acts of Supervisor

Under Title VII of the Civil Rights Act of 1964, an employer may be held vicariously liable for a supervisor’s acts of workplace discrimination. The Supreme Court established the supervisor liability rule in a pair of 1998 cases, Faragher v. City of Boca Raton, 524 U.S. 775 (1998), and Burlington Industries, Inc. v. Ellerth., 524 U.S. 742 (1998). In a case of co-employee harassment, by contrast, employer liability requires a Title VII plaintiff to show more, such as that the employer was negligent in responding to the plaintiff’s complaints. 

Today the Supreme Court granted certiorari in Vance v. Ball State University, No. 11-556, to decide whether the supervisor liability rule applies to harassment by those whom the employer vests with authority to direct and oversee the employee’s daily work or, instead, is limited to harassers who have the power to “hire, fire, demote, promote, transfer, or discipline” their victim. In granting certiorari, the Court rejected the recommendation of the Solicitor General, whose views the Court had solicited, that certiorari be denied. 

The Court’s decision in this case will be important—particularly to businesses with numerous employees—because it has the potential to expand dramatically the types of workplace harassment claims that can survive summary judgment.

Petitioner Maetta Vance, the plaintiff below, was an African-American employee in respondent Ball State University’s catering department. A co-worker who had been given the authority to direct the work of several employees, including Vance, allegedly subjected Vance to severe and pervasive racial harassment. Vance sued the university under Title VII, asserting hostile environment and retaliation claims. The district court granted Ball State’s motion for summary judgment. It relied on Seventh Circuit precedent holding that, for purposes of an employer’s vicarious liability, “supervisor” status turned on “the power to hire, fire, demote, promote, transfer, or discipline an employee,” which was absent here. The Seventh Circuit affirmed. 

The scope of the supervisor liability rule has divided the courts of appeals. Like the Seventh Circuit, the First and Eighth Circuits have taken the position that only a supervisor’s power over formal employment status implicates the supervisor liability rule. The Second, Fourth, and Ninth Circuits, by contrast, have held that harassment by personnel overseeing the victim’s daily work assignments and performance warrants vicarious employer liability. The EEOC has also argued for the broader rule.

Absent extensions, which are likely, amicus briefs in support of the petitioner will be due on August 16, 2012, and amicus briefs in support of the respondents will be due on September 17, 2012. Any questions about this case should be directed to Dan Himmelfarb (+1 202 263 3035) in our Washington, DC office.


Medicare—Equitable Tolling of Provider Reimbursement Claims

Under Part A of Medicare, a provider of services submits a cost report at the end of each fiscal year to an intermediary that determines the amount of the provider’s reimbursement payment for that fiscal year. Pursuant to 42 U.S.C. § 1395oo, a provider may appeal the intermediary’s decision to the Provider Reimbursement Review Board (“PRRB”). Today the Supreme Court granted certiorari in Sebelius v. Auburn Regional Medical Center, No. 11-1231, to decide whether the 180-day limitations period for a provider to file such an appeal is subject to equitable tolling.

The Court’s decision in this case will be important to providers that are eligible for Medicare reimbursements. Depending on the analysis employed by the Court, the decision may also affect the availability of equitable tolling under other statutes.

Respondents, a group of hospitals that receive Medicare reimbursements, discovered that the Center for Medicare & Medicaid Services (“CMS”) had previously miscalculated the percentage of Medicare beneficiaries entitled to Supplementary Security Income, a percentage used in calculating the providers’ reimbursements. The hospitals filed claims with the PRRB in 2006 seeking full payments for the fiscal years 1987-1994. The hospitals argued that the limitations period should be tolled because CMS knowingly and unlawfully failed to disclose its understated calculations. The PRRB held that it lacked authority to toll the limitations period, and the district court affirmed that holding.

The D.C. Circuit reversed. The court cited its decision in Menominee Indian Tribe of Wisconsin v. United States, 614 F.3d 519 (D.C. Cir. 2010), for the proposition that equitable tolling is presumptively available under federal statutes, and distinguished the “straightforward” language in 42 U.S.C. § 1395oo’s limitations period from the “complex” statute limiting the time to file tax-refund claims, IRC § 6511, that the Supreme Court had previously held not to be subject to equitable tolling in United Stated v. Brockamp, 519 U.S. 347 (1997). The D.C. Circuit also found that a regulation exempting a provider’s PRRB claim from the statute of limitations for “good cause” if brought within three years did not bear on whether Congress had rebutted the presumption in favor of equitable tolling.

Absent extensions, which are likely, amicus briefs in support of the petitioner will be due on August 16, 2012, and amicus briefs in support of the respondents will be due on September 17, 2012. Any questions about the case should be directed to Dan Himmelfarb (+1 202 263 3035) in our Washington, DC office.


In the last two weeks the Supreme Court has invited the Solicitor General to file briefs expressing the views of the United States in the following cases of interest to the business community:

Blue Cross and Blue Shield of Montana, Inc. v. Fossen, No. 11-1155: The question presented is whether a substantive state-law insurance standard saved from preemption under the insurance saving clause of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1144(b)(2)(A), can be enforced through state-law remedies or instead is enforceable exclusively through ERISA’s enforcement scheme, 29 U.S.C. § 1132.

GlaxoSmithKline v. Classen Immunotherapies, Inc., No. 11-1078: The question presented is whether the Federal Circuit erred in holding that the statutory safe harbor from patent-infringement liability for otherwise-infringing conduct that is “reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs,” 35 U.S.C. § 271(e)(1), is limited to activities conducted to obtain pre-marketing approval of generic counterparts


Mayer Brown's Supreme Court & Appellate practice ordinarily distributes a Docket Report when the Supreme Court grants certiorari in a case of interest to the business community and a Docket Report-Decision Alert when the Court decides such a case. We hope that you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at atauber@mayerbrown.com or +1 202 263 3324).

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Mayer Brown's Supreme Court & Appellate practice distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community and distributes a Docket Report-Decision Alert whenever the Court decides such a case. We hope you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at atauber@mayerbrown.com or +1 202 263 3324).

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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