Significant Matters

Douglas County School District v. Taxpayers for Public Education

On October 28, 2015, Bancroft attorneys Paul D. Clement, George W. Hicks Jr., and Andrew N. Ferguson filed a petition for a writ of certiorari in the United States Supreme Court on behalf of the Douglas County School District in Douglas County School District v. Taxpayers for Public Education.  Douglas County created a scholarship program that gave funds to students to attend private schools.  The program was neutral toward religion:  Students could choose to attend religious or nonreligious private schools.  A group of taxpayers challenged the program as violating article IX, §7 of the Colorado Constitution, which prohibits any governmental entity from “mak[ing] any appropriation, or pay[ing] from any public fund or moneys whatever, anything … to help support or sustain any school … controlled by any church or sectarian denomination whatsoever.”  Section 7 is one of a series of anti-Catholic measures, commonly called Blaine Amendments, enacted over 100 years ago to prohibit funding for “sectarian” schools—which at the time was widely understood to mean “Catholic”—while maintaining funding for public schools that maintained Protestant observances.  The Colorado Supreme Court struck down the scholarship program under §7 and held that using §7 to require the District to exclude religious schools from the program did not violate the federal Constitution.  The question presented is: Whether Colorado’s Blaine Amendment, which the unrebutted record plainly demonstrates was born of religious bigotry, can be used to force state and local governments to discriminate against religious institutions without violating the Religion Clauses of the First Amendment and the Equal Protection Clause of the Fourteenth Amendment.  The Supreme Court is expected to consider the petition in spring 2016.

United States v. Sterling

On October 28, 2015, the United States Court of Appeals for the Armed Forces granted Bancroft client Lance Corporal Monifa Sterling’s petition for review in United States v. Sterling.  A military court-martial found LCpl Sterling guilty and sentenced her to a bad-conduct discharge after she declined to remove three small pieces of paper from her workstation containing a quotation drawn from the Bible (“No weapon formed against me shall prosper.”).  A military appeals court upheld the conviction and sentence.  On behalf of LCpl Sterling, Bancroft filed a petition for review, and the Court of Appeals for the Armed Forces granted review on the following questions:  (1) Did LCpl Sterling establish that her conduct in displaying signs referencing Biblical passage in her shared workplace constituted an exercise of religion within the meaning of the Religious Freedom Restoration Act?  If so, did the actions of her superior noncommissioned officer in ordering her to take the signs down, and in removing them when she did not, constitute a substantial burden on LCpl’s exercise of religion within the meaning of the Act?  If so, were these actions in furtherance of a compelling government interest and the least restrictive means of furthering that interest?  (2) Did LCpl Sterling’s superior noncommissioned officer have a valid military purpose in ordering LCpl Sterling to remove signs referencing Biblical passages from her shared workplace?  Bancroft attorneys Paul D. Clement and George W. Hicks, Jr. prepared and filed the petition for review.  The court of appeals is expected to hear oral argument in early 2016.

Mylan Pharmaceuticals v. Apotex Inc.

On September 8, 2015, Bancroft attorneys Paul D. Clement, D. Zachary Hudson, and Edmund G. LaCour Jr. filed a petition for certiorari in the United States Supreme Court on behalf of petitioner Mylan Pharmaceuticals.  Apotex filed suit against Daiichi Sankyo, Inc. seeking a declaratory judgment that its generic version of a Daiichi Sankyo drug would not infringe one of the patents associated with the drug.  Daiichi Sankyo—and Mylan as intervenor—argued that Apotex lacked standing to bring suit:  Daiichi Sankyo had disclaimed the patent at issue years earlier and thus there could be no case or controversy regarding infringement of that patent.  In Apotex Inc. v. Daiichi Sankyo, Inc., the Federal Circuit held that Apotex had standing to bring suit notwithstanding Daiicho Sankyo’s disclaimer because a judgment of non-infringement could trigger certain statutory consequences under the Hatch-Waxman Act.  The questions presented are: (1) whether Article III’s case or controversy requirement can be satisfied when the suit seeks a judgment of non-infringement of a disclaimed patent, and (2) whether Congress can create Article III jurisdiction by imposing statutory consequences that turn on obtaining a judgment of non-infringement of a disclaimed patent.

Cert Petition
John Kennedy, Mylan Takes Benicar Patent Dispute to the Supreme CourtLaw360 (Sept. 21, 2015)

Sovereign Military Hospitaller Order v. Florida Priory of the Knights Hospitallers

On October 15, 2015, Bancroft secured a unanimous victory for the Order of Malta in Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v. Florida Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of Malta, The Ecumenical Order, — F.3d —, 2015 WL 6000633 (11th Cir. Oct. 15, 2015).  The Order of Malta is a religious order of the Roman Catholic Church that performs charitable works around the world and a sovereign entity that has diplomatic relations with 105 countries and permanent observer status at the United Nations.  The Order holds several federally-registered marks—including Knights of Malta® and Order of St. John of Jerusalem®—that it uses in connection with its provision of charitable services.   In 2009, in an effort to prevent consumer confusion, the Order brought a trademark infringement suit against a Florida group that uses several of the Order’s federally-registered marks verbatim.  The district court initially cancelled the Order’s marks and Bancroft secured reversal of that ruling on appeal in Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v. Florida Priory of Knights Hospitallers of Sovereign Order of Saint John of Jerusalem, Knights of Malta, Ecumenical Order, 702 F.3d 1279 (11th Cir. 2012).  On remand, the district court purported to apply the Eleventh Circuit’s seven factor test regarding likely confusion and held that the Order failed to establish that confusion was likely to result from the Florida group’s use of the Order’s marks.  The Eleventh Circuit reversed, holding that the district court erred with respect to every factor challenged by the Order.  On remand, the district court misapplied several factors in its analysis of likely confusion, incorrectly assessed the Florida group’s defense of prior use, relied on historical testimony that the appellate court had previously deemed inadmissible, and misinterpreted the Eleventh Circuit’s instructions about consulting facts outside the record.  The case was briefed and argued by D. Zachary Hudson with assistance from Paul D. Clement and Viet D. Dinh.


Barbara Grzincic, ‘Knights of Malta’ to Battle for Third Time Before Same JudgeReuters (Oct. 16, 2015)

Kat Greene, 11th Circ. Concerned by Judge Remarks in Charity TM FightLaw360 (Oct. 15, 2015)

FERC v. Electric Power Supply Association, et al.

On August 31, 2015, Bancroft filed a brief for the respondents in the United States Supreme Court in FERC v. Electric Power Supply Association, et al., No. 14-840, and EnerNOC, Inc., et al., v. Electric Power Supply Association, et al., No. 14-841. The Federal Power Act grants FERC jurisdiction to regulate wholesale sales of electricity in interstate commerce while reserving for the States the exclusive power to regulate retail sales of electricity to consumers. Although States can and do regulate retail demand as part of their exclusive jurisdiction over the retail markets, FERC claims that it, too, may regulate retail demand, by requiring wholesale-market operators to pay retail customers to forego retail electricity purchases at certain times of day.  FERC has asserted this power as part of an avowed effort to countermand the policy choices of many state and local regulators to keep retail rates fixed and stable even though FERC-regulated wholesale rates fluctuate throughout the day to reflect changes in supply and demand.

A group of electric utilities, competitive power suppliers, and not-for-profit electric cooperatives challenged FERC’s regulatory scheme in the U.S. Court of Appeals for the District of Columbia Circuit, and the court agreed with the challengers that FERC’s rule exceeds its jurisdiction.  The court further concluded that even if the rule were within FERC’s jurisdiction, it would still have to be vacated because FERC acted arbitrarily and capriciously in adopting it.  The Supreme Court granted petitions for certiorari to review the Circuit Court’s opinion. Representing the respondents defending the D.C. Circuit’s decision, Bancroft attorneys Paul D. Clement, Erin E. Murphy, and Edmund G. LaCour Jr. argued that FERC exceeded its jurisdiction by claiming the power to regulate retail demand. Bancroft also argued that FERC’s compensation formula for reduced retail demand is irrational and fails to further FERC’s professed goal of better aligning retail and wholesale rates. Oral argument is set for October 14, 2015.

Ameritox v. Millennium Labs

On September 3, 2015, Bancroft secured vacatur of an $11 million jury verdict in Ameritox, Ltd. v. Millennium Laboratories, Inc., — F.3d —-, 2015 WL 5155240 (11th Cir 2015). Ameritox brought suit against Millennium alleging violations of the Lanham Act and several state unfair competition statutes.  Before trial, Ameritox’s lone federal claim dropped out of the case, yet despite the fact that there was no diversity jurisdiction, the district court proceeded to hold a trial involving only state law claims.  At the end of that trial, which involved the application of the unfair competition laws of nine different states, the jury returned a verdict in favor of Ameritox.  On appeal, the Eleventh Circuit held that the district court’s decision to retain jurisdiction over novel and complex state law claims involving the law of nine different states constituted an abuse of discretion.  Paul Clement argued the case before the Eleventh Circuit and H. Christopher Bartolomucci and D. Zachary Hudson assisted with the briefing.


NCAA v. Governor of New Jersey II

On August 25, 2015, Bancroft secured victory on behalf of the NCAA, NBA, NFL, NHL, and Office of the Commissioner of Baseball in NCAA v. Governor of New Jersey, 799 F.3d 259 (3d Cir. 2015), a case challenging New Jersey’s latest effort to authorize sports gambling in its casinos and racetracks in violation of the Professional and Amateur Sports Protection Act of 1992 (PASPA). In 2012, New Jersey passed a law licensing sports gambling even though PASPA prohibits it from doing so.  The leagues, represented by Bancroft, successfully challenged that action as a violation of PASPA, securing victory before the District Court and the Third Circuit and then defeating the state’s petition for certiorari in June 2014.  See NCAA v. Governor of New Jersey, 730 F.3d 208 (3d Cir. 2013).  Shortly thereafter, New Jersey passed another law attempting to authorize sports gambling in its casinos and racetracks, this time by purporting to “repeal” existing state law prohibitions on sports gambling, but only at licensed casinos and racetracks.  The District Court agreed with the leagues that New Jersey had again violated PASPA, and the Third Circuit affirmed.  Paul Clement argued the case for the leagues and Erin Murphy assisted with the briefing.  Bancroft continues to represent the leagues in en banc proceedings before the Third Circuit.


American Council of Life Insurers v. District of Columbia Health Benefit Exchange Authority, et al.

On June 23, 2015, Bancroft filed a reply brief on appeal before the United States Court of Appeals for the District of Columbia Circuit in American Council of Life Insurers v. District of Columbia Health Benefit Exchange Authority, et al., No. 14-7206. The District of Columbia has funded the operation of its healthcare exchange by imposing user fees on insurance products that cannot be sold on the exchange. In 2014, the American Council of Life Insurers, which represents approximately 300 insurance companies—many of which are subject to the assessment—filed suit to prevent the District from collecting these fees. That motion was dismissed by the District Court. On appeal, Bancroft attorneys Paul D. Clement, Erin E. Murphy, and Barbara S. Grieco argued that the District’s funding mechanism violates and is preempted by the Affordable Care Act’s mandate that state health care exchanges be “self-sustaining.” Bancroft also argued that by imposing what amount to user fees on non-users, the District has violated the Takings, Due Process, and Equal Protection clauses of the Constitution, all of which prohibit singling out groups and requiring them to pay special fees without receiving special benefits. Finally, the firm argued that the District violated non-delegation principles by allowing the Health Care Exchange Authority to impose these fees without any limiting factor on entities it does not even regulate.

Opening Brief for Plaintiff-Appellant
Reply Brief for Plaintiff-Appellant

Franchise Tax Board of the State of California v. Hyatt

On June 30, 2015, the Supreme Court granted certiorari in Franchise Tax Board of the State of California v. Hyatt, No. 14-1175.  Bancroft attorneys Paul D. Clement, George W. Hicks, Jr., and Stephen V. Potenza represent petitioner Franchise Tax Board, the sovereign taxing authority of the State of California.  The Board conducted an audit of respondent Gilbert Hyatt and concluded that he had falsely claimed residency in Nevada to avoid substantial California income taxes.  Hyatt sued the Board in Nevada state court, alleging various intentional torts arising out of the Board’s audit, and was awarded $490 million.  On appeal, the Nevada Supreme Court refused to apply a $50,000 cap on compensatory damages that Nevada law applies to its own agencies sued in Nevada courts.  The Supreme Court of the United States agreed to review the following questions:  (1) Whether Nevada may refuse to extend to sister States haled into Nevada courts the same immunities Nevada enjoys in those courts; and (2) whether Nevada v. Hall, 440 U.S. 410 (1979), which permits a sovereign State to be haled into the courts of another State without its consent, should be overruled.

Merits Brief

You can find links to the petition for certiorari and reply here:

Baker Botts v. ASARCO

On June 15, 2015, the Supreme Court issued a 6-3 decision in favor of Bancroft’s client ASARCO in Baker Botts v. ASARCO, 135 S. Ct. 2158 (2015). The question presented was whether bankruptcy attorneys and other professionals can bill the bankruptcy estate for fees incurred in defending their fee requests.  The United States and nearly the entire bankruptcy bar supported petitioner Baker Botts and argued that such fees should be allowed.  But the Supreme Court agreed with ASARCO that this case was governed by the longstanding “American Rule,” which provides that parties should generally bear their own fees and costs absent a clear fee-shifting provision.  The Court found no such clear statement in the Bankruptcy Code, which authorizes fees only for actual, necessary services rendered to the bankruptcy estate.  The Court concluded that fees incurred while litigating against the bankruptcy estate cannot possibly be deemed a “service rendered” to the estate.  Paul Clement and Jeffrey Harris helped prepare ASARCO’s merits brief and assisted with argument preparation.