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Executive Session

The Senate Committee on Commerce, Science, and Transportation will hold an executive session on Wednesday, January 27, 2021, at 10:00 a.m. in Dirksen Senate Office Building G50 to consider the following measures:

Agenda:

  • Rules Governing the Senate Committee on Commerce, Science, and Transportation 
  • Budget Resolution for the Senate Committee on Commerce, Science, and Transportation

*Agenda subject to change

Executive Session Details:

January 27, 2021
10:00 a.m.
Full Committee
Dirksen Senate Office Building G50

A live video of the markup and additional information will be available at www.commerce.senate.gov.

*In order to maintain physical distancing as advised by the Office of the Attending Physician, seating for credentialed press will be limited throughout the course of the executive session. Due to current limited access to the Capitol complex, the general public is encouraged to view this executive session via the live stream. 

Nomination Hearing

The Senate Committee on Commerce, Science, and Transportation will hold a hearing on Tuesday, January 26, 2021 to consider the presidential nomination of Gina Raimondo to be Secretary of the United States Department of Commerce.

Witness:

  • The Honorable Gina Raimondo, of Rhode Island, to be Secretary of Department of Commerce

*Witness list subject to change

Hearing Details:

Tuesday, January 26, 2021
10:00 a.m.
Full Committee (Hybrid)

This hearing will take place in the Russell Senate Office Building 253. Witness testimony, opening statements, and a live video of the hearing will be available on www.commerce.senate.gov.

*In order to maintain physical distancing as advised by the Office of the Attending Physician, seating for credentialed press will be limited throughout the course of the hearing. Due to current limited access to the Capitol complex, the general public is encouraged to view this hearing via the live stream.

Dr. Seuss Enterprises v. ComixMix: Insufficient Facts About Mashups Invite Danger

WLF Legal Pulse - Thu, 01/21/2021 - 12:32pm

Elizabeth Brannen is the Managing Partner of Stirs & Maher LLP and leads its intellectual property litigation practice. Hanna Chandoo is an Associate in the firm’s Los Angeles, CA office.

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In the immortal words of Mr. Spock, “insufficient facts always invite danger.” Star Trek, Season 1, Episode 24 (“Space Seed,” 1968). A recent Ninth Circuit decision, Dr. Seuss Enterprises, L.P. v. ComixMix LLC, 983 F.3d 443 (9th Cir. 2020), illustrates that this is true of mashups—artistic works created by combining elements from two or more sources. The case involves an unpublished mashup book called Oh, the Places You’ll Boldly Go! (“Boldly”). In Boldly, Captain Kirk and the Enterprise crew journey through a bright and colorful landscape of candy-striped halls, quilted meadows, and “Boom Bands” concert venues borrowed from classic Dr. Seuss books, including Oh, the Places You’ll Go! (“Go!”), which is especially popular during graduation season.

Boldly’s Trekkie creators at ComicMix did not obtain a license from Dr. Seuss Enterprises (“Seuss”), which owns the intellectual property in Dr. Seuss’s works and extensively licenses and oversees the creation of new works under the Dr. Seuss brand. Nor did they consult counsel. Instead, ComicMix proceeded on the assumption that Boldly “would be ‘pretty well protected by parody,’” despite acknowledging “that ‘people in black robes’ may disagree.” Id. at 448. And disagree they did.

ComicMix had prevailed before the Southern District of California, which rejected Seuss’s trademark claims and held that although Boldly was not a parody it was nevertheless a fair use of Go!, Dr. Seuss Enters., L.P. v. ComicMix LLC, 372 F. Supp. 3d 1101, 1115, 1126-27 (S.D. Cal. 2019). But Boldly’s life was neither long nor prosperous. On appeal, despite clearing Boldly of trademark infringement, a unanimous Ninth Circuit panel held that the mashup could not avoid copyright infringement as a fair use of Go!. Dr. Seuss Enters., L.P. v. ComicMix LLC, 983 F.3d 443, 461 (9th Cir. 2020).  

The decision is interesting for more than just its many iconic cultural references. In essence, the Ninth Circuit deemed Boldly expressive enough to dodge Seuss’s trademark infringement claims but not expressive enough in the right ways to avoid liability for copyright infringement. Does the decision address the needs of the many mashup creators looking to avoid liability? Or is it highly illogical? While some may find it the beginning of wisdom, not the end, this post will summarize the decision’s logic and let readers decide for themselves.

Copyright

Copyright law in the United States exists to motivate creative activity. The Copyright Clause of the Constitution grants Congress the power to give authors exclusive rights to their works, for limited times, “to promote the Progress of Science.” See U.S. Const. Art. I, § 8, cl. 8. To help further this end, Congress has both provided for a special reward in the form of copyright protection and placed important limits on the scope of such protection. One important limit is fair use.

Section 107 of the Copyright Act codifies the doctrine of fair use. “Fair use was traditionally defined as ‘a privilege in others than the owner of the copyright to use the copyrighted material in a reasonable manner without his consent.’” Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 549 (1985) (quoting H. Ball, Law of Copyright and Literary Property 260 (1944)). The current statute “requires a case-by-case determination whether a particular use is fair, and the statute notes four nonexclusive factors to be considered.” Id.; see also Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994). Section 107 recites the following four factors:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

Disagreeing with the lower court and prominent copyright scholars, the Ninth Circuit held that all four statutory fair use factors weighed against ComicMix: (1) the use was commercial and not transformative; (2) Go! is an expressive work at the “core” of copyright protection; (3) the amount taken was quantitatively and qualitatively substantial; and (4) Boldly interfered not only with the market for Go! but also with the potential market for derivative works. The court found that each factor favored Seuss, and ruled that no countervailing copyright principles counseled in favor of fair use.

As to the first factor, “the purpose and character of the use,” the Ninth Circuit identified the use as indisputably commercial. The court then addressed the closer question: whether Boldly was transformative. The court noted that “[t]ransformative use of the original work can tip the first factor in favor of fair use.” Dr. Seuss Enters., 372 F. Supp. 3d at 452. But after discussing at length, the similarities between the illustrations in Boldly and in Go!, the court held that Boldly did not transform Go! with any new expression, meaning, or message. Boldly merely “repackaged” Go! “into a new format, carrying the story of the Enterprise crew’s journey through a strange star in a story shell already intricately illustrated by Dr. Seuss.” Id. at 454-55. Thus, this factor did not weigh in favor of fair use.

What does it mean for use to be transformative? After all, something was new and different about Captain Kirk and his crew boldly going where no Star Trek character had gone before. Why was that not transformative? The Ninth Circuit’s framing of the question and discussion of parody are both instructive.

The Ninth Circuit framed the transformative use question as follows: whether Boldly altered Go!, not merely by adding something new, but by “add[ing] something new, with a further purpose or different character, altering [Go!] with new expression, meaning or message.” Id. at 453 (emphasis added). The question is not “is the resulting work new and different; does it contain new expression.” Rather, to qualify as transformative, this case teaches, use must change the nature of the expressive content of the original work.

The court’s discussion of parody helps illustrate the difference. ComicMix mistakenly thought Boldly would be protected as a parody. Parody, meaning “a spoof, send-up, caricature, or comment on” an original work, id. at 452, is quintessential fair use not because the resulting work or message is funny, but because it transforms the original expression by criticizing or commenting on that expression. Neither the district court nor the Ninth Circuit found that Boldly was a parody. And it bears noting that even parodies may not qualify as fair use. See, e.g., Dr. Seuss Enters. L.P. v. Penguin Books USA, Inc., 109 F.3d 1394, 1400 (9th Cir. 1997) (“[T]he parodist is permitted a fair use of a copyrighted work if it takes no more than is necessary to ‘recall’ or ‘conjure up’ the object of his parody.”)

The second factor—“nature of the copyrighted work”—followed suit. The court easily recognized Go! as the kind of creative work that merits protection. Id. at 455.

The court found that the third factor, “amount and substantiality of use,” also weighed against fair use. The court reasoned that the amount of content taken from Go! was significant; Boldly copied over half of Go!’s pages and the illustrations replicated Go! as much as possible, including “the exact composition, the particular arrangements of visual components, and the swatches of well-known illustrations.” Id. at 456. These illustrations captured the “heart” and “highly expressive core” of Dr. Seuss’s works and were “identifiable as Seussian.” Id. at 457. The court squarely rejected ComicMix’s argument that substantiality should be evaluated by comparing the portion used against all of the copyrighted author’s works; the comparison is between the portion used and the specific copyrighted work at issue. Id. at 458.

The final factor, the effect of Boldly on the “potential market” or “value” of Go!, likewise weighed against fair use. Boldly was set to issue during graduation season, a plan that “intentionally targeted and aimed to capitalize on the same graduation market as Go!.” Id. at 460. Because Seuss engages consistently in the derivative market, Boldly’s release would have impacted Go!’s potential market for derivative works. 

Trademark

In stark contrast, the Ninth Circuit agreed with the district court that Seuss’s trademark infringement claim failed as a matter of law. The court declined to reach whether the Seussian style of illustration and font are valid common law trademarks because the claim failed at an earlier stage: it held the Lanham Act, the primary federal trademark statute in the United States, inapplicable to Boldly.

To assess the threshold question of whether the Lanham Act applied, the Ninth Circuit employed the test for expressive works first articulated by the Second Circuit in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). Under the Rogers test, a trademark owner does not have an actionable Lanham Act claim based upon the use of a trademark in an expressive work unless the use either (1) has no artistic relevance to the underlying work or (2) explicitly misleads consumers as to the source or content of the work.” Dr. Seuss Enters., 983 F.3d at 462.

The court stated that if the artistic relevance is “above zero,” the Lanham Act does not apply based upon the first prong. Boldly easily met this low standard. Id.

Analyzing the second prong, whether use of the claimed marks was explicitly misleading, the court evaluated (1) the degree to which Seuss’s claimed mark was used and (2) the extent to which Boldly added expressive content to Go!. Id. at 462-63. Boldly’s use of “the Seussian font” and style, and even the similarities in titles, was not explicitly misleading. Id. at 462. Rather, the court found that ComicMix had added enough of its own expressive content and noted that Boldly explicitly stated that “it is ‘not associated with or endorsed by’ Seuss.” Id. at 462-63.

Conclusion

Fear not, creators, there are a few key take-aways: mashups are not automatically fair use. And mashups that simply combine sources to make a new work, no matter how interesting or funny, are unlikely to qualify. If in doubt about whether an intended use criticizes, comments on, or otherwise transforms the purpose or character of original expression, consider consulting counsel. There is a solution to every puzzle; the best one may entail seeking permission, negotiating a license, or changing course.   

The post <em>Dr. Seuss Enterprises v. ComixMix</em>: Insufficient Facts About Mashups Invite Danger appeared first on Washington Legal Foundation.

Categories: Latest News

Nomination Hearing

U.S. Sen. Roger Wicker, R-Miss., chairman of the Senate Committee on Commerce, Science, and Transportation, will convene a nomination hearing on Thursday, January 21, 2021 to consider the presidential nomination of Peter Buttigieg to be Secretary of the United States Department of Transportation.

Witness:

  • Mr. Peter Buttigieg, of Indiana, to be Secretary of Department of Transportation 

*Witness list subject to change 

Hearing Details:

Thursday, January 21, 2021
10:00 a.m.
Full Committee 

This hearing will take place in the Russell Senate Office Building 253. Witness testimony, opening statements, and a live video of the hearing will be available on www.commerce.senate.gov.

*In order to maintain physical distancing as advised by the Office of the Attending Physician, seating for credentialed press will be limited throughout the course of the hearing. Due to current limited access to the Capitol complex, the general public is encouraged to view this hearing via the live stream.

Cantwell Secures Key Commitments from Buttigieg to Invest in Transportation Infrastructure, Improve Safety Culture at the Department

Opening Statement Video | Q&A Video | Transcripts

Cantwell: “To say we need infrastructure investment is an understatement" 

Buttigieg to Cantwell: “We need to make sure that engineers and the FAA are in the driver's seat when it comes to safety”

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell, the incoming Chair of the Senate Committee on Commerce, Science, and Transportation, secured a commitment from Pete Buttigieg, President Biden’s nominee to be Secretary of the U.S. Department of Transportation, to pursue a major investment in infrastructure and ensure safety at the FAA. Cantwell also highlighted and praised Buttigieg’s past work in this sector that qualifies him for this role within DOT.

“I am very excited that the President has nominated Mayor Pete Buttigieg,” said Senator Cantwell. “And I look forward to his vision in leading that Department of Transportation. As a mayor, I know you're no stranger to the challenges that a region faces on transportation infrastructure issues. I know that you earned national recognition for your “smart streets” project that created a safe environment for all road users, the project resulted in over $100 million in private sector investment. You used your experience as Mayor to help forge that, and I hope that you will do that for communities across the United States of America.”

In her Q&A with Buttigieg, Cantwell talked about the importance of infrastructure investment: “For us, in the state of Washington, we’re a big export state. Not only do we export our own products, so everything from cherries and wheat and apples and airplanes, but we also are a big pass through for many of the Midwest agricultural products reaching Asian destinations. So, to say that we need infrastructure investment is an understatement.”

“Would you say we need a significant increase in those programs, INFRA and Build?”

“Absolutely. There needs to be a major investment in order to deliver,” Buttigieg said.

Highlighting her bipartisan aviation safety legislation signed into law at the end of 2020, Cantwell asked Buttigieg about his commitment to implementing safety reforms at the FAA and ensuring the United States takes a leadership role in global aviation safety. Buttigieg responded: “I'm committed to doing so. We need to make sure that engineers and the FAA are in the driver's seat when it comes to safety, and we'll be working right away to implement the legislation that you've advanced with regard to ensuring that we have every confidence in safety at the FAA.”

To achieve those goals at the FAA, Cantwell asked: “Are you willing to make changes in personnel if necessary?”

“Yes,” Buttigieg responded.

Cantwell also noted the severe impact COVID-19 has had on the transportation industry around the country. Referring to the State of Washington’s Sound Transit agency as an example of budget shortfalls that have impacted transit agencies around the country, she said: “We need to make infrastructure investment all around the United States of America, including in public transportation. Projects like Sound Transit are facing a $1 billion shortfall as a result of COVID-19, which jeopardizes the much needed investment throughout Puget Sound… One of the most impacted sectors in the United States, not the only sector, but one of the most impacted sectors in the United States has been transportation.”

In closing her Q&A with Buttigieg, Cantwell noted her support for the Jones Act and the American maritime industry: “I am a big Jones Act supporter, and the State of Washington and the trade that we have related to the Jones Act to make sure that we have U.S. flagged vessels, sometimes it gets under attack but I just want to hear that you support the Jones Act.”

“Yes, I share your support for the Jones Act, it is so important to a maritime industry that creates hundreds of thousands of jobs, as well as the shipbuilding industry here in the U.S.,” Buttigieg responded.

Video of Senator Cantwell’s opening statement can be found HERE and audio is HERE.

Video of Senator Cantwell’s Q&A with Buttigieg can be found HERE and audio is HERE.

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Biden Administration Enlists GSA Team with a Mix of Obama Veterans and Public/Private Sector Expertise

GSA news releases - Tue, 01/19/2021 - 11:00pm
WASHINGTON, D.C. — The U.S. General Services Administration (GSA) is set to begin work on the four key priorities of the Biden Administration to include COVID relief, economic recovery, racial equity, and climate. The appointees selected are a combination of seasoned Obama-Biden administration...

WLF Urges Second Circuit to Reject Manufactured Article III Standing for States

WLF Legal Pulse - Tue, 01/19/2021 - 10:26am

If adopted, the States’ ‘theory of injury would pervert Article III’s standing requirement for States. A State could always manufacturer standing.’
—John Masslon, WLF Senior Litigation Counsel

Click here for WLF’s brief.

WASHINGTON, DC—Washington Legal Foundation (WLF) today filed an amicus curiae brief urging the U.S. Court of Appeals for the Second Circuit to prohibit States from manufacturing Article III standing. Adopting the States’ position, the U.S. District Court for the Southern District of New York held that a State’s voluntary choice to update its rules in response to a federal regulatory change is a direct Article III injury. It also held that a State’s decision to increase its wage-and-hour enforcement because of federal regulatory action is a direct Article III injury. WLF’s brief urges vacating that decision.

The appeal arises from a lawsuit by a group of States against the Department of Labor. Last year, the Department of Labor revised the joint-employer rule for the first time in 60 years. The States sued alleging that the joint-employer rule would harm their residents and ultimately decrease the States’ tax revenues. The District Court correctly rejected both of these arguments.  WLF’s brief explains why the States lack parens patriae standing and why the revised joint-employer rule will lead to increased State tax revenue. 

Nothing in the FLSA requires the States to update their own rules or enforce their own wage-and-hour laws. As WLF’s brief explains, a self-inflicted injury is insufficient for Article III standing. If adopted, the States’ “theory of injury would pervert Article III’s standing requirement for States. A State could always manufacturer standing.” WLF therefore urges the Second Circuit to follow Supreme Court precedent—by not permitting manufactured standing—and to vacate the District Court’s order.

Celebrating its 44th year, WLF is America’s premier public-interest law firm and policy center advocating for free-market principles, limited government, individual liberty, and the rule of law.

The post WLF Urges Second Circuit to Reject Manufactured Article III Standing for States appeared first on Washington Legal Foundation.

Categories: Latest News

Committee Announces Nomination Hearing for Secretary of Department of Commerce

WASHINGTON – The Senate Committee on Commerce, Science, and Transportation will hold a hearing on Tuesday, January 26, 2021 to consider the presidential nomination of Gina Raimondo to be Secretary of the United States Department of Commerce.

Witness: 

  • The Honorable Gina Raimondo, of Rhode Island, to be Secretary of Department of Commerce

*Witness list subject to change

Hearing Details:

Tuesday, January 26, 2021
10:00 a.m.
Full Committee (Hybrid)

This hearing will take place in the Russell Senate Office Building 253. Witness testimony, opening statements, and a live video of the hearing will be available on www.commerce.senate.gov.

*In order to maintain physical distancing as advised by the Office of the Attending Physician, seating for credentialed press will be limited throughout the course of the hearing. Due to current limited access to the Capitol complex, the general public is encouraged to view this hearing via the live stream.

Wicker Calls Out Big Tech After Silencing Conservative Users

WASHINGTON – U.S. Sen. Roger Wicker, R-Miss., chairman of the Senate Committee on Commerce, Science, and Transportation, today sent letters to Big Tech CEOs Sundar Pichai, Mark Zuckerberg, Jack Dorsey, Jeff Bezos, and Tim Cook seeking detailed information regarding decisions to restrict or permanently ban accounts of conservative users, content, or public figures on social media platforms.

Excerpt from the letters to Big Tech CEOs:

In the wake of the fatal attack on the U.S. Capitol last week, social media companies made a series of decisions to restrict the use of their platforms and access to content. Although these decisions were initially targeted at preventing further violence, the restrictions expanded in the following days. The result was thousands of conservative users’ accounts and content being restricted or permanently removed from platforms and an entire platform being denied hosting services, causing it to shut down operations temporarily.

In October, you appeared before the Senate Commerce Committee to discuss Section 230 of the Communications Decency Act, concerns around politically motivated censorship, and legislative proposals that would increase transparency and accountability. I am concerned that recent actions taken by your company only highlight the need for an update to the special liability protections afforded by Section 230. The current framework of Section 230 has shielded massive technology companies from any consequences for failing to protect the American tradition of free speech.

The opaque decision-making and denial of access to numerous users by companies like YouTube, Facebook, and Twitter, primarily targeted at conservative accounts and content, merit additional scrutiny. Americans deserve transparency and accountability for what appears to be politically biased censorship—silencing the voices of users and public figures alike. Accordingly, I request that you please provide detailed information in response to the questions below.

  1. YouTube, Facebook, and Twitter recently took actions in what appeared to be a series of closely timed decisions.  Did your company or employees coordinate or otherwise consult with the other platforms regarding restrictions or permanent bans on the accounts of any conservative users, content, or public figures? If so, how?
  2. What was the decision-making process around the removal or restriction of such accounts on your platform? Was this process consistent with your existing terms of service, community standards, or guidelines for the removal or restriction of accounts?
  3. What was the timeline for deciding to remove or restrict such accounts? Did you approve of those decisions at the time actions were taken?

Click here for the full letters.

Committee Announces Nomination Hearing for Secretary of Department of Transportation

WASHINGTON – U.S. Sen. Roger Wicker, R-Miss., chairman of the Senate Committee on Commerce, Science, and Transportation, will convene a nomination hearing on Thursday, January 21, 2021 to consider the presidential nomination of Peter Buttigieg to be Secretary of the United States Department of Transportation.

Witness:

  • Mr. Peter Buttigieg, of Indiana, to be Secretary of Department of Transportation 

*Witness list subject to change 

Hearing Details:

Thursday, January 21, 2021
10:00 a.m.
Full Committee 

This hearing will take place in the Russell Senate Office Building 253. Witness testimony, opening statements, and a live video of the hearing will be available on www.commerce.senate.gov.

*In order to maintain physical distancing as advised by the Office of the Attending Physician, seating for credentialed press will be limited throughout the course of the hearing. Due to current limited access to the Capitol complex, the general public is encouraged to view this hearing via the live stream. 

 

Wicker Statement on Big Tech’s Censorship of Conservatives

WASHINGTON – U.S. Sen. Roger Wicker, R-Miss., chairman of the Senate Committee on Commerce, Science, and Transportation, today released the following statement in response to Big Tech companies that have restricted or terminated conservative users’ accounts and content on social media platforms:

"Big Tech’s denial of access to users and selective decision making about online content is further dividing our country during a time when we should be fostering unity,” said Wicker. “Social media giants are using their market dominance and exercising politically biased censorship over what content users can access. These companies are adversely affecting the lives of real people, but they need to know they are playing with fire. I will fight to hold them accountable.”

A Q&A with ATRA President Tiger Joyce on 2020 Judicial Hellholes Report

WLF Legal Pulse - Mon, 01/11/2021 - 9:33am

Editor’s Note: In 2002, the American Tort Reform Foundation (ATRF) first unleashed hell on the legal and judicial communities. Its audacious “Judicial Hellholes®” report branded specific courts, municipalities, and entire states as Judicial Hellholes® for they how they treated civil-litigation defendants. It offered meticulously researched examples, identified data-supported trends, and, where necessary, named names of responsible jurists, politicians, activist groups, and lawyers. The report opened a lot of eyes (and mouths, no doubt).

ATRF has built on the success of that first report, making the release of Judicial Hellholes® an event to look forward to each December. On December 8, the organization released the 2020 edition through a dedicated Judicial Hellholes® website. The WLF Legal Pulse caught up with American Tort Reform Association (ATRA) president Sherman “Tiger” Joyce to talk about the report’s evolution and what readers will learn from the 2020 report.

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WLF: Tiger, congratulations on the 19th edition of the Judicial Hellholes® report. Let’s start by going back to the beginning. What was the genesis of putting together this report?

Joyce:  Our objective is to identify the worst litigation jurisdictions in the country for civil litigation and put a bright spotlight on our designation of a Hellhole.  We do this by writing about the specific problems that lead to the designation and explaining why that puts the jurisdiction outside the mainstream of the civil justice system.

WLF: It’s certainly had the impact that you and your colleagues had hoped for. How has the report remained consistent over the years, and how has it changed?

Joyce: The main constant in the report is the overarching objective since it was first published: putting a spotlight on the worst abuses of the civil justice system and serving as a catalyst for reform and improvement.  In terms of changes, we now highlight improvements as “points of light,” which is great to be able to do, particularly when the designation of a Hellhole serves as a catalyst for change.  Also, we have developed “Closer Look” sections to discuss important developments, such as this year’s report which outlines concerns about the activism of the American Law Institute’s Restatements—a topic I know the WLF has also written very effectively on.

WLF: Looking back over the years, how do you feel Judicial Hellholes® has moved the needle toward greater fairness and balance in jurisdictions that have earned the ignominious Judicial Hellholes® label?

Joyce:  The report has increased in reach every year.  It was mentioned in the media over 350 times and had over 550,000 digital impressions since it was released on December 8, which is the basic objective.  That includes highlighting the economic impact that lawsuit abuse has on a state, including lost jobs, economic output, and tax revenue. We are confident that, with the outreach of the report and the considerable effort of our ATRA team and civil justice allies around the country, the issues we raise have resonance in the Hellhole jurisdictions.  While it is expected that the organized trial bar will attempt to discredit the report, public officials have acknowledged the problems we have highlighted.  A few years back when West Virginia was taken off the list after many years, the President of the State Senate and the Speaker of the House held a press conference announcing that the reforms they enacted led to the state’s removal from the list.  That’s a pretty strong testimonial to the effectiveness of the report!

WLF: The 2020 report spotlights an interesting mixture of jurisdictions as Judicial Hellholes.® Why is it that some municipalities or counties, or even specific courts within a state, are named but not the state itself?

Joyce: Ideally, we would highlight only specific communities in a given state—such as a city or county.  The impetus for the report all those years ago was our conclusion that the negative reputation a state might enjoy could be attributed to one or two counties.  For example, Mississippi became a national center for pharmaceutical litigation nearly twenty years ago, but we determined that the problem was really taking place in one small jurisdiction: Jefferson County.  One of the points we highlighted that year was that there were more lawsuits filed in that county than there were citizens!  Hampton County, South Carolina was a similar example.  But, in places like California, the issues we highlight are all over the state, so it’s impossible to target a single place like Jefferson County, Mississippi in California.

WLF: Both this year and in years past, have you seen a correlation between the presence of the most entrepreneurial lawyers and law firms in a state or locality and that jurisdiction earning a Judicial Hellholes® label? For instance, the #2 Judicial Hellhole®, New York City, has an enormous number of suits focused on websites’ alleged violation of the Americans with Disabilities Act, and the report notes the presence of several firms located there that are very active in that space.

Joyce: I think that’s a good observation but would add an important distinction.  Litigation brought in Hellhole jurisdictions often are brought by lawyers from other areas.  For example, we highlighted South Carolina’s asbestos court as the number four Hellhole due to significant problems in these cases.  As our report highlights, however, a key figure from the trial bar in these cases is a firm from Dallas, Texas.  In addition, among the major areas that we focus on in the report is the failure of the judiciary to police its dockets and permit “litigation tourism.”  These jurisdictions are, as you observed, quite hospitable to entrepreneurial lawyers, but it’s important to recognize that they welcome lawyers from all over the country—not just those from their own state.  As we observed in this year’s report, one of the key issues in the Hellholes is the failure to follow the important precedent of the Supreme Court of the United States in Bristol Myers Squibb v. Superior Court of California which establishes important limitations on personal jurisdiction of state courts on out-of-state defendants.

WLF: One common characteristic of several of the Judicial Hellholes® is the frequency of so-called nuclear verdicts. Why are such verdicts hazardous to other business defendants in those jurisdictions?

Joyce: If there is one constant over the years it is that the trial bar looks to capitalize on success in one area by using it against different defendants—in different jurisdictions.  This year’s report highlights commercial trucking cases—and premises cases as among the most egregious examples of “nuclear” verdicts.  But anyone who thinks that the factors that went into those cases—particularly in Georgia—will not be replicated against other defendants is mistaken.  In addition, these outsized verdicts have a significant impact on similar cases that settle before a jury verdict.

WLF: As an organization that advocates for a limited role for the judiciary, we share your group’s disdain for “regulation by litigation,” which is another common characteristic this year’s report identifies. What are some of the worst examples of this practice that ATRF identified for the report?

Joyce: We have been highlighting extensively the opioid litigation brought by state and local governments.  To date there have been more than 2,000 suits in this area, which involves activities that are completely subject to regulation by federal and state agencies.  It begins with FDA approval of the product, includes DEA regulation of distribution, and the product can only be provided to a consumer if a physician writes that person a prescription.  In the case brought by Oklahoma, that state alleged a violation of the state’s public nuisance statute.  We believe other important areas include efforts to address climate change through litigation as well as lawsuits against the manufacturers of PFAS.  With regard to climate change, as we have reported previously, Bloomberg Philanthropies is actually paying lawyers to work in the offices of state attorneys general so that they can file these climate change cases.  Ask yourself this question: what would the response be if the WLF or ATRA paid lawyers to work for state attorneys general to oppose opioids or climate change cases?  Can you imagine the outrage that would ensue?

WLF: How does the 2020 report factor in the impact of COVID-19? And do the group’s findings provide any kind of window into how the pandemic will affect civil litigation in 2021

Joyce: I think we are watching the courts just as are other organizations and individuals to determine when we might be able to see the system operate as normal. No doubt, the pandemic has significantly limited the courts in countless ways.  To date, there have been well over 6,000 cases filed in matters arising out of the pandemic, but, in our view, we are in the very early stages of this litigation.  As we outlined in our white paper on the topic, reasonable and balanced legislative reform is needed to protect healthcare providers and businesses of all kinds due to the uncertainty the pandemic creates for all.  We remain hopeful that Congress still may step up to enact needed reform, but states are stepping into the breach.  21 states plus the District of Columbia have enacted some level of liability protections, and several more states plan to address the issue in 2021.  ATRA is working extensively with our in-state allies to coordinate and support these efforts.  This year’s report included a “Closer Look” at the COVID-19 litigation surge and the response around the country.  It also discusses what we expect to see if 2021.

WLF: To close, how can decision makers in the judiciary, and policy makers in legislatures, in Judicial Hellholes® jurisdictions douse the flames, and bring more balance to their respective civil-justice systems?

Joyce:  We believe that too many elected officials fail to understand the impact that lawsuit abuse has on fundamental priorities such as access to health care and its cost, and a state’s economy.  Too often profound problems in the civil justice system are dismissed as matters only for lawyers and judges.  The reality is that the worst abuses in litigation are a problem for all.  Our Judicial Hellholes ® report endeavors to be a catalyst for leaders in government—legislators, judges, and members of the executive branch—to address these important issues.

WLF: Thank you, Tiger, and thanks to ATRA and its dedicated team for its years of fighting for a fair and balanced civil-justice system.

The post A Q&A with ATRA President Tiger Joyce on 2020 Judicial Hellholes Report appeared first on Washington Legal Foundation.

Categories: Latest News

GSA unveils design for new federal courthouse in Huntsville

GSA news releases - Sun, 01/10/2021 - 11:00pm
ATLANTA—The U.S. General Services Administration today unveiled design renderings for the new federal courthouse in Huntsville, Alabama, in partnership with the U.S. District Court for the Northern District of Alabama. Soon to be a prominent feature in Huntsville’s historic downtown, the...

Moved by a SCOTUS Dissent, PA High Court Invites More Lawsuits with Specific-Jurisdiction Ruling

WLF Legal Pulse - Fri, 01/08/2021 - 8:59am

Nicholas P. Vari is a Partner in the Pittsburgh, PA office of K&L Gates LLP.

In a decision issued late last fall with sweeping implications for civil litigation in Pennsylvania, Hammons v. Ethicon, Inc., the Supreme Court of Pennsylvania analyzed the contours of specific personal jurisdiction under a fact pattern resembling those of recent U.S. Supreme Court precedents.  The court considered whether a New Jersey-resident corporation could be sued in a Pennsylvania state court by an Indiana resident who was allegedly injured in Indiana by the defendant’s medical device, because the defendant contracted with a Pennsylvania company to assemble a component of that product.  In holding that personal jurisdiction was present under those circumstances, the court appeared to move away from recent U.S. Supreme Court decisions that required a specific nexus between the defendant, the jurisdiction, and the complained-of conduct.  Instead, the Hammons court advanced a policy of broadening the scope of specific personal jurisdiction to protect the prospect of state-court nationwide mass actions, in accordance with the lone dissent in the U.S. Supreme Court’s 2017 Bristol-Myers Squibb Company v. Superior Court decision.

In Hammons, an Indiana resident filed a lawsuit in the Court of Common Pleas of Philadelphia County, Pennsylvania, alleging that she was injured by a medical device sold by defendant, a New Jersey corporation headquartered in New Jersey.  Plaintiff received the medical device in Indiana, and she was treated for her injuries in Indiana and Kentucky.  Plaintiff limited her strict liability claims to failure to warn and design defect.  Defendant filed preliminary objections seeking to dismiss this case on personal jurisdiction grounds.  At that time, the lone association between the action and Pennsylvania that plaintiff presented was that the defendant had contracted with a Pennsylvania entity to weave a mesh product from a proprietary filament that the defendant provided to the Pennsylvania assembler.  The trial court ultimately denied defendant’s preliminary objections based on a lack of personal jurisdiction, and the matter proceeded to a jury trial, at which the jury awarded plaintiff $5.5M.

On appeal, the Pennsylvania Superior Court, an intermediate-level court of appeal, analyzed the facts of Hammons against the backdrop of Bristol-Myers Squibb.  The Superior Court found that even though the defendant made the design and warning decisions that formed the bases of plaintiff’s strict liability claims in New Jersey and/or France, the defendant’s act of contracting with a Pennsylvania entity to manufacture a component, combined with evidence presented at trial of defendant’s retention of a Pennsylvania-based physician in connection with the marketing of the medical device, met Bristol-Myers’s requirement of “suit-related conduct” in the forum state.

The Supreme Court of Pennsylvania accepted allocatur to resolve the personal jurisdiction issue.  In accordance with Bristol-Myers, defendant argued that the assembly process that took place in Pennsylvania was not sufficiently connected to plaintiff’s design-defect or failure-to-warn claims to support the imposition of personal jurisdiction by a Pennsylvania court.  Rather, the design and other decisions on which plaintiff’s claims were based occurred in New Jersey and France, not in Pennsylvania, so the requisite nexus between the forum, the defendant, and the claim as required by Bristol-Myers was lacking.  In response, plaintiff argued that the factual link between her claims and the defendant’s conduct in Pennsylvania met the Bristol-Myers standard.

The Hammons court’s analysis began with an overview of the U.S. Supreme Court’s personal jurisdiction jurisprudence dating back to the seminal case of International Shoe Co. v State of Washington, Office of Unemployment Compensation and Placement.  After quickly concluding that there was no basis for imposing general personal jurisdiction over the New Jersey defendant in Pennsylvania, the Court moved on to assess the more nuanced issue of specific personal jurisdiction, limiting its review to the defendant’s contracts with the Pennsylvania-based mesh assembler.[1]

After noting International Shoe’s “traditional notions of fair play and substantial justice” standard that has framed the Supreme Court’s personal jurisdiction jurisprudence for decades, the Hammons court moved on to a detailed analysis of Bristol-Myers.  It dismissed defendant’s interpretation of Bristol-Myers specific nexus language as being something that could be “excerpted from” that decision, but which, in the Hammons Court’s view, represented an unduly narrow interpretation of the High Court’s personal jurisdiction jurisprudence.  To support its conclusion, the court quoted Justice Sonia Sotomayor’s dissent from the 8-1 majority opinion in Bristol-Myers, in which Justice Sotomayor expressed concern that, if interpreted strictly, the specific-nexus test of Bristol-Myers threatened the ongoing viability of “a nationwide mass action in state court against defendants who are ‘at home’ in different states”  Based largely on that lone dissent in Bristol-Myers, a 6-1 majority of the Pennsylvania justices accepted a “broader view of the contact required for specific personal jurisdiction,” and affirmed the lower court ruling imposing personal jurisdiction.

In the lone dissent in Hammons, Chief Justice Thomas Saylor stated succinctly that a single-justice dissent to an 8-1 Supreme Court decision does not support a departure from the clear import of the majority decision.  Accordingly, Chief Justice Saylor noted that Hammons should have applied Bristol-Myers’s requirement of “a connection between the forum and the specific claims at issue” (emphasis supplied), which would have led to a ruling against imposing personal jurisdiction.

At its core, the Hammons decision represents a policy in favor of loosening Bristol-Myers’s nexus requirement to advance the prospect of state-court mass actions involving claimants from across the United States.  Nevertheless, because a viable alternative exists for mass-tort plaintiffs within the federal court rules for multidistrict litigation, there does not appear to be a pressing need to loosen due-process standards grounded in “fundamental fairness” to advance certain litigants’ possible preferences for state court forums.  Instead, the better answer here appears to be to preserve the existing tests for personal jurisdiction, and to encourage plaintiffs to use established federal court mechanisms to conduct mass litigation.

Note

[1]  In a concurring opinion, Justice Christine Donahue stated that the majority correctly did not consider evidence first asserted at trial when resolving the personal jurisdiction issue.

The post Moved by a SCOTUS Dissent, PA High Court Invites More Lawsuits with Specific-Jurisdiction Ruling appeared first on Washington Legal Foundation.

Categories: Latest News

High Court Takes Up No-Injury Class Action Standing in TransUnion Case

WLF Legal Pulse - Thu, 01/07/2021 - 2:00pm

Frank Cruz-Alvarez is a Partner with Shook, Hardy & Bacon L.L.P. in the firm’s Miami, FL office, and Britta Stamps is an Associate in the firm’s Kansas City, Mo office. Mr. Cruz-Alvarez is the WLF Legal Pulse’s Featured Expert Contributor on Civil Justice/Class Actions.

***

The Supreme Court will soon decide whether unnamed class members who suffered no actual injury have standing to recover for claims of statutory violations of the Fair Credit Reporting Act (“FCRA”). Following the Ninth Circuit’s decision to affirm Trans Union LLC v. Ramirez, TransUnion asked the high court to weigh in on class action standing and punitive damages issues.  While focused on violations of FCRA, this case could have far-reaching implications for class action practitioners.

In the underlying case, plaintiff Sergio Ramirez went to a car dealership with his wife and father-in-law to purchase a vehicle.  But when the dealership ran a credit report on Ramirez, the credit report indicated that Ramirez’s name matched a name on the Treasury Department’s Office of Foreign Assets Control (“OFAC”) list of people with whom U.S. companies cannot do business. As a result, Ramirez’s wife purchased the vehicle instead of Ramirez, Ramirez was embarrassed in front of his family, and he canceled an upcoming trip to Mexico. Ramirez soon contacted TransUnion about the OFAC list “match” on his credit report. He then received two separate mailings from TransUnion, one of which indicated that his name was a “potential match” to a name on the OFAC list and advised him to contact TransUnion with any questions. After Ramirez again contacted TransUnion about the potential match, the OFAC alert was excluded from all future TransUnion credit reports for Ramirez.

Ramirez sued TransUnion, alleging violations of FCRA because TransUnion failed to ensure the maximum possible accuracy of the information in its credit reports, failed to provide consumers with all information in their files upon request, and provided the OFAC list information in a letter sent separately from his credit file.  Ramirez sought statutory and punitive damages on behalf of himself and a class that included everyone who received a letter during the class period from TransUnion indicating their name was a potential match to one on the OFAC list.

The district court certified the class over objections that the absent class members lacked standing and that Ramirez was not typical of the class.  Following the Supreme Court’s decision in Spokeo Inc. v. Robins (also an FCRA case), TransUnion unsuccessfully moved to decertify the class. In a rare example of a class action going to trial, the case proceeded to a jury trial and ended with a verdict overwhelmingly in favor of Ramirez and the class.  The jury not only found for the class on all claims, but awarded each class member $984.22 in statutory damages and an additional $6,353.09 in punitive damages. To put those figures in perspective, the statutory damages were barely $15.00 shy of the $1,000 maximum statutory damages allowed under FCRA, and the punitive damages totaled approximately 6.5 times the statutory damages. In sum, the total verdict amounted to over $60 million.

On appeal, the Ninth Circuit affirmed almost all aspects of the case. Finding the punitive damages amount to be unconstitutionally excessive, the Ninth Circuit reduced the award from the 6.5:1 ratio of punitive damages to statutory damages down to a 4:1 ratio. But the majority held that every class member had standing, and affirmed the remainder of the damages awarded to the class. Judge McKeown’s dissent points out the inconsistencies between the majority’s conclusion on standing and Supreme Court precedent, which TransUnion leveraged in its cert petition to convince the Supreme Court to clarify the issue.  

TransUnion asked the Supreme Court to consider two questions: (1) “[w]hether either Article III or Rule 23 permits a damages class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered”; and (2) [w]hether a punitive damages award that is multiple times greater than an already-substantial classwide award of statutory damages, and is orders of magnitude larger than any actual proven injury, violates due process.” While the Supreme Court chose to consider the first question presented, it declined to take up the punitive damages issue. Class action defendants will have to wait for another opportunity to convince the Supreme Court to cap punitive damages in class actions.

Since the 2016 Spokeo decision, class action defendants across the country have urged courts to apply Spokeo’s requirement that a class member’s injury be both “concrete and particularized” in order for Article III standing to exist.  As TransUnion pointed out, other appellate courts have held that individuals who never had their credit report information disseminated to third parties cannot establish standing under Article III based on the bare fact that a credit reporting agency’s database contained inaccurate information.  See, e.g., Owner-Operator Indep. Drivers Ass’n, Inc. v. U.S. Dep’t of Transp. 879 F.3d 339 (D.C. Cir. 2018); Gubala v. Time Warner Cable, Inc., 846 F.3d 909 (7th Cir. 2017); Braitberg v. Charter Commc’ns, Inc., 836 F.3d 925 (8th Cir. 2016). And where consumers received a report containing inaccurate information but suffered no other impact, other circuits have rejected attempts to certify a similar class. See, e.g., Flecha v. Medicredit, Inc., 946 F.3d 762 (5th Cir. 2020); Huff v. TeleCheck Servs., Inc., 923 F.3d 458 (6th Cir. 2019); Dreher v. Experian Info. Sols., Inc., 856 F.3d 337, 347 (4th Cir. 2017). This circuit split created the perfect storm for the Supreme Court to grant cert and settle the issue.  

Specific to the FCRA, TransUnion emphasized in its cert petition that Ramirez stipulated that less than 25% of the 8,814 class members had their credit report disseminated to a third party during the class period, and offered no evidence that any other class member was impacted by the OFAC alert. Those class members may not have even opened the letter from TransUnion, much less suffered any further injury beyond the bare statutory violation. But this case could reach other statutory violations beyond the FCRA. It is easy to imagine a number of statutes under which many – or all – absent class members suffer no actual injury from a violation. One such recent example is the Eleventh Circuit’s decision in Muransky v. Godiva Chocolatier, Inc. (we wrote about that decision for WLF here), which held that a Fair and Accurate Credit Transaction Act violation, without more, did not confer standing to certify a class alleging statutory violations. Whether the high court chooses to extend any ruling beyond the FCRA remains to be seen, but TransUnion’s cert petition subtly invites a decision applicable to statutory violations beyond strictly the FCRA.

The U.S. Chamber of Commerce supported TransUnion’s cert petition as an amicus, describing the case as an opportunity for the Supreme Court to put an end to the popular strategy of seeking big settlements from defendants on behalf of large classes who experienced a statutory violation but no cognizable injury. On the other side, Ramirez’s counsel James Francis hopes the high court takes this chance to highlight the serious and widespread injuries consumers face when credit reporting agencies violate the FCRA. But the addition of Justices Brett Kavanaugh and Amy Coney Barrett since Spokeo’s more narrow ruling may signal good news for class action defendants. Longtime Supreme Court advocate Paul Clement is set to argue this case on behalf of TransUnion, teeing up what is sure to be one of the more exciting class action cases the Supreme Court has considered in several years. 

The post High Court Takes Up No-Injury Class Action Standing in <em>TransUnion</em> Case appeared first on Washington Legal Foundation.

Categories: Latest News

December 2020 Month in Review

WLF Legal Pulse - Tue, 01/05/2021 - 9:34am

This WLF Litigation Division feature highlights WLF court and agency filings, as well as decisions issued in response to WLF’s filings. In this edition, we list December 2020 filings and decisions. We also note the passing of a former Chairman of our honorary Legal Policy Advisory Board and longtime friend, The Honorable Dick Thornburgh.

WLF mourns the passing of The Honorable Dick Thornburgh (click here to read our statement).

“Dick provided WLF with invaluable support, counsel, and encouragement for nearly 20 years. Although he is gone, his legacy lives long after him.”
—Connie Larcher, WLF President and CEO

NEW FILINGS
  • Settlements of pharmaceutical-patent litigation that involve no cash payment bolster innovation and spur competition; they should not be condemned under the antitrust laws. (UFCW Local 1500 Welfare Fund v. Abbvie)
  • Although some transportation workers are exempt from the Federal Arbitration Act’s mandate that arbitration agreements must be enforced, the Supreme Court should narrowly construe this exemption. (Amazon.com v. Rittmann)
NEW DECISIONS

The post December 2020 Month in Review appeared first on Washington Legal Foundation.

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