Significant Matters

Ralls Corporation v. Committee on Foreign Investment in the United States

On July 15, 2014, Bancroft attorneys Paul D. Clement, Viet D. Dinh, H. Christopher Bartolomucci, and George W. Hicks, Jr. secured a unanimous victory for Bancroft client Ralls Corporation in the United States Court of Appeals for the District of Columbia Circuit in Ralls Corp. v. Committee on Foreign Investment in the United States, No. 13-5315.  In September 2012, the President, acting on a report from the Committee on Foreign Investment in the United States (CFIUS) and citing only unspecified “national security” concerns, issued an order under Section 721 of the Defense Production Act that prohibited Ralls’s acquisition of four small windfarms in Oregon, barred Ralls from accessing its own property, and required Ralls to destroy all items on the property.  On behalf of Ralls, Bancroft brought suit claiming that the President and CFIUS had violated Ralls’s rights under the Constitution and Administrative Procedure Act.  The district court dismissed the suit, but the D.C. Circuit unanimously reversed, concluding that the President’s order deprived Ralls of property without due process of law.  The court held that the property interests that Ralls held at the time of the President’s order were constitutionally protected, and it held that before the issuance of such an order, a party must be informed of the official action, be given access to the unclassified evidence relied upon for the action, and be afforded an opportunity to rebut that evidence—none of which procedural protections Ralls received.  The court also held that Ralls was entitled to challenge orders by CFIUS preceding the President’s order as violating the Constitution and the Administrative Procedure Act even though they had been superseded by the President’s order, because those orders were capable of repetition but evaded review.

Opinion

 

Burwell v. Hobby Lobby

On June 30, 2014, Bancroft attorneys Paul D. Clement and Michael H. McGinley secured a victory in the Supreme Court of the United States for the companies in Burwell v. Hobby Lobby Stores, Inc., No. 13-354, and Conestoga Wood Specialties Corp. v. Burwell, No. 13-356.  The question presented in the consolidated cases was whether the Department of Health and Human Services’ contraception mandate violates the companies’ rights under the Religious Freedom Restoration Act of 1993 (RFRA) or the First Amendment.  The companies’ owners operate their businesses according to deeply held religious beliefs that prohibit them from providing health care coverage for abortion-causing drugs and devices, including four out of the twenty mandated contraceptives.  The Supreme Court held that RFRA protects the companies’ religious free exercise rights and that the contraceptive mandate violates RFRA.

Supreme Court Opinion
Merits Brief for Respondents
Certiorari Brief for Respondents

ACE Securities Corp., Home Equity Loan Trust, Series 2006-SL2 v. DB Structured Products Inc.

On June 26, 2014, the New York Court of Appeals granted the motion by Bancroft client HSBC Bank USA, N.A., as Trustee for a residential mortgage backed securities (RMBS) trust, for leave to appeal from the decision of the New York State Appellate Division, First Department, dismissing the Trustee’s claim.  Bancroft attorneys Paul D. Clement, Erin E. Murphy, and Stephen V. Potenza prepared the brief in support of the motion.  In the lawsuit, the Trustee seeks to enforce defendant DB Structured Products’ obligation to cure or repurchase defective loans pursuant to a RMBS contract.  On motion to dismiss, the trial court rejected the defendant’s arguments that the Trust’s claim is time barred under the applicable statute of limitations, but the First Department reversed.  The questions accepted for review by the Court of Appeals are: (1) Whether an RMBS contract obligates the sponsor to cure or repurchase loans upon notice or discovery that the loans do not comply with the sponsor’s repurchase accrue when the sponsor fails to cure or repurchase within the time period specified by the contract, or when the contract was made; and (2) Whether this action was timely filed even if the claim for breach of the RMBS contract accrued when the contract was made.  The Court of Appeals will likely hear the case in late 2014 or early 2015.

Memorandum of Law In Support of Plaintiff-Appellant’s Motion for Leave to Appeal to the Court of Appeals

American Broadcasting Companies v. Aereo

On June 25, 2014, Bancroft attorneys Paul D. Clement, Erin E. Murphy, and Barbara A. Smith secured a victory in the Supreme Court of the United States on behalf of petitioners (television producers, marketers, distributors, and broadcasters) in American Broadcasting Companies, Inc., et. al. v. Aereo, Inc., No. 13-461.  By a vote of 6-3, the Court ruled against Respondent Aereo, which is in the business of capturing over-the-air television broadcasts and retransmitting them over the internet for profit to tens of thousands of public members without permission from underlying copyright holders.  The Court held that Aereo “performs” petitioners’ works “publicly” within the meaning of the Transmit Clause, in violation of the Copyright Act.”

Supreme Court Opinion
Petition for Writ of Certiorari

 

Western Conference of Teamsters Pension Trust Fund and Countrywide Financial Corp. v. FDIC

On June 24, 2014, Bancroft attorneys Paul D. Clement, Jeffrey M. Harris, and Candice Chiu filed an opening brief in the United States Court of Appeals for the Ninth Circuit on behalf of Objectors-Appellants challenging the $500 million class-action settlement of investor lawsuits against Countrywide and its affiliates over their mass-production and sale of mortgage-backed securities backed by improperly underwritten Countrywide mortgages.  The district court below certified the settlement class and approved the settlement, despite having previously ruled that named plaintiffs lacked standing to represent the vast majority of the class and that still other class members’ claims were barred on tolling grounds.  Bancroft, representing Objectors-Appellants Broderick CDO 2 Ltd., Cimarron CDO, Ltd., Crystal Cove CDO, Ltd., Duke Funding IX, Ltd., G Square Finance 2006-1 Ltd., Hout Bay 2006-1 Ltd., Kleros Preferred Funding, Ltd., Millstone II CDO Ltd., Millstone III CDO, Ltd., and Millstone IV CDO, Ltd., argues that if named plaintiffs and their counsel lacked standing to represent the lion’s share of the class, they could not possibly be “adequate” and “typical” class representatives in settling their claims.  Bancroft further argues that the district court should not have approved the settlement as “fair, reasonable, and adequate,” particularly when the class members orphaned by the standing and tolling rulings saw their claims sacrificed for fractions of a cent on the dollar.  The case is Western Conference of Teamsters Pension Trust Fund and Countrywide Financial Corporation v. Federal Deposit Insurance Corp., Nos. 14-55120, 14-55121, 14-55122, 14-55125, 14-55128, & 14-55140.

Opening Brief 

NCAA v. Governor of New Jersey

On September 17, 2013, Bancroft lawyers Paul Clement, Erin Murphy, Candice Chiu, and Will Levi secured victory in the United States Court of Appeals for the Third Circuit on behalf of the NCAA, NBA, NFL, NHL, and Office of the Commissioner of Baseball.  The Sports Organizations had sued to halt New Jersey’s efforts to license gambling on certain sporting events as an unambiguous violation of the Professional and Amateur Sports Protection Act of 1992 (PASPA), a federal law that prohibits the spread of state-sponsored sports gambling.  New Jersey, meanwhile, had contended that the Sports Organizations lacked standing and that PASPA itself violates the U.S. Constitution.  In a 2-1 opinion by Judge Fuentes, the Third Circuit affirmed the district court’s grant of summary judgment to the Sports Organizations.  The Third Circuit first reached the “straightforward conclusion” that the Sports Organizations have standing to enforce a prohibition on state-licensed gambling on their own athletic contests.  The Third Circuit then proceeded to reject each of New Jersey’s constitutional attacks on PASPA, agreeing with the Sports Organizations that the law “neither exceeds Congress’ enumerated powers [under the Commerce Clause] nor violates any principle of federalism implicit in the Tenth Amendment or anywhere else in our Constitutional Structure.” On June 23, 2014, the Supreme Court denied petitions for certiorari filed by New Jersey and the other appellants-defendants.

Opinion
Response Brief

Lighting Ballast Control LLC v. Universal Lighting Technologies, Inc.

On June 20, 2014, Bancroft attorneys Paul D. Clement and George W. Hicks, Jr., filed a petition for writ of certiorari in the United States Supreme Court on behalf of the petitioner in Lighting Ballast Control LLC v. Universal Lighting Technologies, Inc., No. 13-1536.  The petition presents two questions.  The first is whether factual findings underlying a district court’s construction of patent claims must be reviewed for clear error.  The Federal Circuit, which reviews patent claim constructions, has long held that claim construction is a purely legal issue that it reviews entirely de novo.  In this case, it reaffirmed that rule—the so-called “Cybor rule”—in a closely divided en banc decision, even though the rule is inconsistent with Supreme Court precedent, is in tension with the Federal Rules of Civil Procedure, and promotes inefficiency and unpredictability in patent proceedings.  The second question presented is whether there is an exception for “purely legal” issues to the general rule that an issue raised only in a failed summary judgment motion and not raised in a motion for judgment as a matter of law is forfeited on appeal.  That question has divided the circuits and is squarely presented in this case should the Court affirm the Cybor rule. The Supreme Court is expected to consider the petition in fall 2014.

Petition for Writ of Certiorari

Bresnan v. Montana

On June 6, 2014, Bancroft attorneys Paul D. Clement, Erin E. Murphy, and Barbara A. Smith filed a petition for writ of certiorari in the United States Supreme Court on behalf of the petitioner in Bresnan Communications, LLC v. State of Montana, Department of Revenue, No. 13-1471. The case concerns Montana’s attempt to impose a massive tax hike on Bresnan Communications solely because it responded to federal policies incentivizing cable companies to offer telephone services in addition to cable, in order to increase competition in the telephony market. Although more than 90% of Bresnan’s property is used to provide cable service alone, Montana has concluded that all of Bresnan’s property—even property that is not used to provide telephone service—should be taxed at the higher tax rate applicable to telecommunications property. As a result, Bresnan’s tax liability increased by more than 300%. Although the trial court rejected Montana’s attempt to impose this massive and retroactive tax on Bresnan solely because it offers telephony, the Montana Supreme  Court reversed and, in doing so, sanctioned a tax scheme that directly frustrates Congress’ efforts to encourage competition in the telecommunications market. The question presented is whether Montana’s attempt to impose a massive tax increase is preempted by federal law. The Supreme Court is expected to consider the petition in fall 2014.

Petition for Writ of Certiorari

United States Postal Service v. Postal Regulatory Commission

On April 15, 2014, Bancroft attorneys Paul D. Clement, Jeffrey M. Harris, and Barbara A. Smith filed a petition for review in the United States Court of Appeals for the District of Columbia Circuit on behalf of the United States Postal Service in United States Postal Service v. Postal Regulatory Commission, No. 14-1010.  This case concerns whether the Postal Service is entitled to an “exigent” rate increase to recoup losses incurred as a result of the Great Recession that began in 2007.  The opening brief seeks review of an order by the Postal Regulatory Commission that allowed the Postal Service to recover only a small fraction of its actual losses.  Bancroft argues that the Commission fundamentally misapplied the statute governing rate increases and that its decision not to grant the requested increase in full was arbitrary and capricious.  The D.C. Circuit will likely hear the case in the fall of 2014.

Opening Brief
Intervenor Brief

COMMISA v. PEP

On April 11, 2014, Paul D. Clement, Zachary D. Tripp, and William R. Levi filed a response brief in the United States Court of Appeals for the Second Circuit on behalf of a KBR, Inc.’s subsidiary Corporacion Mexicana de Mantenimiento Integral (“COMMISA”). Using a promise to arbitrate any disputes Pemex Exploraction y Produccion (“PEP”), a Mexican state-owned company, induced COMMISA to build offshore oil platforms in Mexico. After PEP breached repeatedly, COMMISA invoked arbitration and won a $300 million award. Years later, after a U.S. district court confirmed the award, PEP persuaded a Mexican court to rely on a newly-exacted law to retroactively declare that PEP’s own arbitration promise was invalid, setting aside the award and leaving COMMISA with no alternative opportunity to be heard in any forum. The district court subsequently confirmed the award again, and PEP appealed. The Court of Appeals will likely hear argument in the fall of 2014.

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