On March 3, 2014, the United States Supreme Court granted certiorari in Integrity Staffing Solutions v. Busk, No. 13-433. In the fall of 2013, Bancroft attorneys Paul D. Clement and Jeffrey M. Harris filed a petition for writ of certiorari on behalf of Integrity Staffing Solutions, Inc., a company that provides staffing for warehouses owned by Amazon.com. The respondents are a nationwide class of former Integrity employees who seek back pay, overtime, and double damages under the federal Fair Labor Standards Act (“FLSA”) for time spent passing through security screenings at the end of their shifts. Every previous court to consider this issue had held that time spent in security screenings is not compensable under the FLSA. But in this case, the Ninth Circuit departed from that unbroken line of authority and held that the respondents could state a claim under the FLSA. Plaintiffs lawyers have already seized on the Ninth Circuit’s decision to sue a number of major corporations for billions of dollars of back pay for time spent in security screenings. The Supreme Court is expected to hear arguments in the fall of 2014.
On February 18, 2014, Bancroft attorneys Paul D. Clement, Zachary D. Tripp, and Barbara A. Smith, along with co-counsel at Cleary Gottlieb Steen & Hamilton LLP, filed a petition for writ of certiorari in the United States Supreme Court in Republic of Argentina v. NML Capital, Ltd. The case arises out of Argentina’s 2001 financial crisis and sovereign debt restructuring, in which 92% of Argentina’s creditors exchanged defaulted Argentine debt for new bonds. NML Capital, a “vulture fund” designed to exploit the absence of a sovereign bankruptcy regime, bought some of the outstanding distressed debt, held out, and sued to enforce its original terms. In so doing, NML put forth a novel interpretation of a boilerplate pari passu clause to support their request for injunctive relief. The courts below then entered and affirmed injunctions that mandate that Argentina must pay the holdouts in full (more than $1.33 billion) when it next services its performing debt—or else Argentina must go into a court-ordered default, imposing grave losses on third-party bondholders, credit markets, and Argentine citizens. The questions presented are: (1) whether the Court should certify to the New York Court of this question: whether a foreign sovereign is in breach of a pari passu clause when it makes periodic interest payments on performing debt without also paying on its defaulted debt, and (2) whether a district court can enter an injunction coercing a foreign sovereign into paying money damages, without regard to whether payment would be made with assets that the FSIA makes immune from “attachment arrest and execution,” 28 U.S.C. §§ 1609–1611. The Court is expected to consider the petition by summer 2014.
On February 18, 2014, Bancroft attorneys Paul D. Clement, Erin E. Murphy, and Barbara A. Smith joined with Akin Gump Strauss Hauer & Feld LLP to file a petition for writ of certiorari in the United States Supreme Court in Raj Rajaratnam v. United States, No. 13-1001. Mr. Rajaratnam was the founder and manager of Galleon Management, formerly one of the world’s largest hedge funds. In 2011, he was convicted of securities fraud based on the government’s allegation that he traded on the basis of inside information. The petition argues that Mr. Rajaratnam’s conviction is the product of two legal errors. First, the Second Circuit stands alone in permitting the government to obtain insider trading convictions without proving that the defendant actually used the inside information. Instead, under Second Circuit precedent, it is enough that a defendant engage in trading activities while in “knowing possession” of inside information. Relying on that novel standard, the district court here allowed the jury to convict so long as the inside information was a “factor, however small,” in trading decision. That minimalist causation instruction cannot be reconciled with the plain language of the statute or decisions from other courts, including the Supreme Court. Second, once again in violation of clear statutory text and the Supreme Court precedent, the Second Circuit refused to suppress wiretap evidence that was collected based on a warrant in which the government made (to use the district court’s words) “nearly a full and complete omission” of the information under Title II, making meaningful judicial evaluation of the application “impossible.” The questions presented are: (1) Whether, in order for in a criminal securities fraud prosecution for trading on the basis of inside information to be consistent with section 10(b) and our basic constitutional traditions, the government must prove, at a minimum, that the defendant actually used the inside information in his trading activities; and (2) Whether wiretap evidence must be suppressed when the government omits and misstates information clearly critical to assessing the legality of a wiretap, instead of providing the “full and complete statement” required by Title III. The Supreme Court is expected to consider the petition by Summer 2014.
On February 14, 2014, Bancroft attorneys Paul D. Clement, Zachary D. Tripp, Candice Chiu, and William R. Levi filed a response brief in the United States Court of Appeals for the Tenth Circuit on behalf of class plaintiffs in In re: Urethane Antitrust Litigation, No. 13-3215. The brief argues that the court should affirm a judgment against defendant Dow Chemical Co., which was entered after a jury found that Dow engaged in a price-fixing conspiracy that allowed the cartel to reap hundreds of millions of dollars of overcharges from its customers. A vast evidentiary showing supports the verdict and common questions overwhelmingly predominated at trial.
On February 7, 2014, Bancroft partner Paul D. Clement argued before the United States Court of Appeals for the Second Circuit on behalf of law firm Mel Harris in Monique Sykes, et al. v. Mel Harris and Associates, et al. In September 2013, Bancroft lawyers Paul D. Clement and Candice Chiu filed their opening brief arguing that inherently individualized issues surrounding whether class members were served and whether they owed underlying debts predominated and require reversal of class certification. The district court had certified sweeping damages and equitable-relief classes united by nothing more than the fact that Mel Harris had, on LR Credit’s behalf, obtained default judgments against class members in New York City Civil Court debt-collection actions. Bancroft had in April 2013 filed a Rule 23(f) petition seeking interlocutory review of the class certification decision, which the Second Circuit granted in its discretion.
On February 3, 2014, Bancroft attorneys Paul D. Clement, Jeffrey M. Harris, and Barbara A. Smith filed a brief in the United States Supreme Court in Fifth Third Bancorp, et al. v. John Dudenhoeffer, et al., No. 12-751 on behalf of amicus curiae Delta Air Lines. The brief argues that class-action claims against the fiduciaries of a benefit plan that invests in employer stock should be subject to a deferential standard of review at the motion-to-dismiss stage. The brief argues that a deferential standard is needed in order to preclude meritless claims, such as those alleging liability based only on a stock-price decline. Oral argument will be held on April 2, 2014, and the Court will likely decide the case by June.
On February 3, 2014, Bancroft attorneys Paul D. Clement and Jeffrey M. Harris filed a brief in the United States Court of Appeals for the Eleventh Circuit on behalf of Delta Air Lines in Dennis Smith v. Delta Air Lines, Inc. et al., No. 13-15155. A former employee brought a class-action suit against Delta under ERISA after he participated in Delta’s Employee Stock Ownership Plan and lost money when the price of Delta stock declined between 2000 and 2004. The District Court dismissed the claim twice, both before and after a previous appeal. Bancroft argues in its brief that dismissal of the claim was proper because a mere decline in stock price does not trigger an obligation to divest a benefit plan of all investments in employer securities. The Eleventh Circuit will likely hold oral argument in spring or summer 2014.
On January 17, 2014, Bancroft attorneys Viet D. Dinh, Paul D. Clement, and Michael H. McGinley filed a petition for a writ of certiorari in the United States Supreme Court in Acebo-Leyva v. Holder, No. 13-877. Bancroft’s client Juan Raicedo Acebo-Leyva is a Cuban immigrant who assisted anti-Castro forces in the Bay of Pigs operation. Mr. Acebo-Leyva spent his entire adult life in the United States as a lawful permanent resident, but he now faces removal to Cuba based on convictions from 1981. Contrary to the Supreme Court’s precedents and decisions in other federal courts of appeals, the U.S. Court of Appeals for the Eleventh Circuit held that Congress’ 1996 repeal of discretionary relief under former Section 212(c) of the Immigration and Nationality Act applies to Mr. Acebo-Leyva’s earlier convictions and thus retroactively renders him ineligible for relief. The Eleventh Circuit also held that it lacked jurisdiction over Mr. Acebo-Leyva’s claim for relief under the Convention Against Torture, again in conflict with decisions from other federal courts of appeals. The questions presented are (1) whether discretionary relief under Section 212(c) remains available to individuals who were eligible when convicted and exercised their right to trial; and (2) whether the courts of appeals have jurisdiction over claims for deferred removal under the Convention Against Torture. The Supreme Court is expected to consider the petition by Summer 2014.
On January 13, 2014, Bancroft attorneys Paul D. Clement, Zachary D. Tripp, and Stephen V. Potenza filed a petition for writ of certiorari in the United States Supreme Court in Exxon Mobil Corporation v. The City of New York. The Clean Air Act Amendments of 1990 required manufacturers to add an “oxygenate” to gasoline to reduce air pollution, and Exxon used methyl tertiary butyl ether (MTBE) to comply, as there was no safer, feasible alternative at the time. New York City sued Exxon and won a $104 million state-law tort judgment for the future costs of treating predicted MTBE contamination of unused groundwater wells in Jamaica, Queens. Before any MTBE concerns arose, however, the wells were already so heavily polluted from other sources that the City could not use them without building a treatment plant. The City has only a “good faith intent” to build a plant within the next 15 to 20 years, and even then, the occurrence of harmful MTBE contamination will depend on a host of unpredictable factors. The questions presented are (1) whether a claim is ripe when it is based on a plaintiff’s mere good faith intent to take steps in 15 to 20 years that could, depending on a chain of uncertain events, cause the plaintiff to suffer an injury some day in the future; and (2) whether the federal oxygenate mandate preempts a state-law tort award that applies retroactive liability on a company for complying by using the safest means available at the time. The Supreme Court is expected to consider the petition by spring 2014.
On January 10, 2014, the United States Supreme Court granted the petition for writ of certiorari filed by Bancroft attorneys Paul D. Clement and Erin E. Murphy in American Broadcasting Companies, Inc., et al. v. Aereo, Inc., No. 13-461. Respondent Aereo is in the business of capturing over-the-air television broadcasts and, without obtaining authorization from or compensating anyone, retransmitting that programming to tens of thousands of members of the public over the Internet for a profit. Petitioners brought suit against Aereo, alleging that this conduct infringes upon their exclusive right under the Copyright Act to perform their copyrighted works “publicly.” 17 U.S.C. §106(4). A divided panel of the Second Circuit rejected their claims, concluding that because Aereo uses thousands of miniature antennas to send each of its subscribers an individualized transmission of a performance from a unique copy of each copyrighted program, it is not transmitting performances “to the public,” but rather is engaged in tens of thousands of “private” performances to paying strangers. The question presented by the petition is whether a company “publicly performs” a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet. The Supreme Court is expected to hear arguments this term and rule on the case by late June.