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.
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.
On April 9, 2014, Bancroft attorney D. Zachary Hudson argued before the United States Court of Appeals for the First Circuit in Rogelio Blackman Hinds v. Eric H. Holder, Jr., No. 13-2129. Hudson argued that the statutory provision tasking immigration judges with deciding whether an alien is removable from the United States (8 U.S.C. § 1229a(c)(1)(A)) must be read to prohibit the entry of removal orders that would otherwise raise serious constitutional questions. Hudson told the Court that removal orders that amounted to unduly harsh penalties and had tragic consequences would raise serious constitutional questions under the Due Process Clause and the Eighth Amendment, and that in order to avoid those problems the statutory provision at issue should be construed so as to bar removal orders in certain exceptional cases. Hudson explained that the plight of Bancroft pro bono client Rogelio Blackman Hinds proved the point. Mr. Blackman is 59, has lawfully resided in the U.S. for nearly 40 years, is married to a U.S. citizen and has five U.S. citizen children (one is severely mentally and physically handicapped), served this country honorably as a U.S. Marine, and suffers from several health issues that are likely the result of his military service. Hudson’s arguments received substantial amicus support, including from the Center for Constitutional Rights, the American Immigration Council, the Post-Deportation Human Rights Project at Boston College, the American Civil Liberties Union, and several law professors.
Brief Amicus Curiae of the American Civil Liberties Union
Brief Amicus Curiae of the American Immigration Council and the Post-Deportation Human Rights Project
Brief Amicus Curiae of the Center for Constitutional Rights
Brief Amicus Curiae of International and Human Rights Law Professors and Clinicians
On April 3, 2014, the United States Court of Appeals for the Fourth Circuit unanimously ruled in favor of Bancroft client Kolon Industries in E.I. DuPont de Nemours & Co. v. Kolon Industries, Inc., No. 12-1260. Kolon is a South Korean corporation with decades of experience producing synthetic fibers. One of Kolon’s products, known as “Heracron,” is a high-strength fiber that competes against DuPont’s “Kevlar” fiber. In this case, DuPont alleged that Kolon misappropriated trade secrets regarding the Kevlar manufacturing process and used those trade secrets to improve its Heracron manufacturing and marketing operations. At trial, DuPont obtained a $919 million jury verdict, as well as a permanent injunction shutting down Kolon’s Heracron business for the next 20 years. But the Fourth Circuit vacated that verdict and ordered a new trial because the district court had improperly excluded critical evidence showing that the claimed “trade secrets” actually involved publicly available information. Bancroft attorneys Paul Clement, Jeffrey Harris, and Candice Chiu prepared the briefing.
On April 2, 2014, Bancroft partner Erin E. Murphy secured victory in the Supreme Court of the United States on behalf of Appellants Shaun McCutcheon and the Republican National Committee in McCutcheon v. Federal Election Commission, No. 12-536. The Court determined that the aggregate contribution limits imposed by the Bipartisan Campaign Reform Act (“BCRA”) violate the First Amendment. While the government argued that BRCA’s aggregate contribution limits prevent corruption or circumvention, the Court concluded “that the aggregate limits do little, if anything, to address that concern, while seriously restricting participation in the democratic process.”
On April 2, 2014, Bancroft attorneys Paul D. Clement and George W. Hicks secured a unanimous victory in the United States Supreme Court on behalf of the petitioners in Northwest, Inc. v. Ginsberg, No. 12-462. The case concerned the Airline Deregulation Act of 1978, which provides that states may not “enact or enforce a law, regulation or other provision having the force and effect of law related to a price, route, or service of an air carrier.” The Court held that the Act preempts a state-law claim alleging violation of the implied covenant of good faith and fair dealing if the claim seeks to enlarge the obligations voluntary adopted by parties to a contract. The Court further observed that preemption under the Act is appropriate when the implied covenant cannot be waived or is read into contracts as a matter of state policy. Finally, the Court rejected the proposition that the Act only preempts legislation or regulations, holding that because common-law rules have the force and effect of law, the Act preempts common-law rules in addition to positive law. Bancroft attorney Paul D. Clement argued the case, which reversed a judgment of the Court of Appeals for the Ninth Circuit.
On March 25, 2014, Bancroft partner Paul D. Clement argued before the Supreme Court of the United States on behalf of Hobby Lobby Stores, Mardel, Conestoga Wood Specialties, and the companies’ respective owners, in Sebelius v. Hobby Lobby Stores, Inc., No. 13-354, and Conestoga Wood Specialties Corp. v. Sebelius, No. 13-356. The question presented in the consolidated cases is whether the Department of Health and Human Services’ contraception mandate violates the companies’ rights under the Religious Freedom Restoration Act of 1993 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. On February 10, 2014, Bancroft attorneys Paul D. Clement and Michael H. McGinley filed a brief on behalf of Hobby Lobby Stores, Mardel, and their owners. The Court is expected to rule on the case by late June, 2014.
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.
Petition for Writ of Certiorari
Brief Amicus Curiae of the Federative Republic of Brazil
Brief Amicus Curiae of Caja de Valores
Brief Amicus Curiae of Euroclear Bank SA
Brief Amici Curiae of Jubilee USA Network et al.
Brief Amicus Curiae of the Republic of France
Brief Amicus Curiae of United Mexican States
Brief Amici Curiae of Puente Hnos. & Argentine-American Chamber of Commerce
Brief Amicus Curiae of Joseph Stiglitz
Response Brief of Euro Bondholders in Support of the Petition
Response Brief of Fintech Advisory in Support of the Petition
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.