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Case Law for In-House Counsel

U.S. Supreme Court

Civil Procedure

Jurisdiction Okay as Long as One Plaintiff Meets Diversity Minimum

A U.S. District Court can exercise supplemental jurisdiction in a diversity class action over unnamed plaintiffs whose claims do not meet the minimum amount-in-controversy requirement as long as at least one named plaintiff in the action satisfies the requirement.

Exxon Corp. v. Allapattah Services, Inc. Docket No. 04-70. Decided June 23, 2005.


Beef Producers Subsidizing Promotion Can’t Sue Under First Amendment

Beef producers forced to pay a subsidy that funds a promotion campaign they disagree with can’t bring a First Amendment challenge.

Johanns v. Livestock Marketing Association. Docket No. 03-1164. Decided May 23, 2005.

‘Substantially Advances’ Test Inappropriate for Takings Analysis Related to Statute

A state statute limiting commercial rent collection by oil companies may constitute a taking in violation of the Fifth Amendment – but whether the statute “substantially advances” government interests is not the appropriate test.

Lingle v. Chevron USA, Inc. Docket No. 04-163. Decided May 23, 2005.

‘Public Use’ Takings Okayed

Local governments may seize private property for public use even where the sole purpose is economic development.

Kelo v. City of New London. Docket No. 04-108. Decided June 23, 2005.


File Sharing Companies Potentially Liable for Customer Sharing of Copyrighted Material

Peer-to-peer file sharing companies may be liable for the distribution of copyrighted material by their consumers.

MGM Studios Inc. v. Grokster, Ltd. Docket No. 04-480. Decided June 27, 2005.


Use of Patented Compounds in Preclinical Studies Protected Under ‘Safe Haven’ Provision

The use of patented compounds in preclinical studies is protected under the 1984 Patent Act’s “safe haven” provision, as long as there is a reasonable basis to believe that the compound tested could be the subject of an FDA submission and the experiments will produce information relevant to a new drug application.

Merck KGaA v. Integra Lifesciences I Ltd. Docket No. 03-1237. Decided June 13, 2005.

Pesticide Suits

Products Liability Claims Not Preempted by Federal Law

The manufacturer of an herbicide that allegedly damaged farmers’ peanut crops can be sued under state law – claims for defective design, negligent testing and breach of express warranty are not preempted by federal law.

Bates v. Dow Agrosciences, LLC. Docket No. 03-388. Decided April 27, 2005.


Inflated Purchase Price Alone Insufficient to Show ‘Loss Causation’ In Securities Fraud Case

An inflated purchase price by itself is not sufficient to show “loss causation” for plaintiffs alleging securities fraud.

Dura Pharmaceuticals, Inc. v. Broudo. Docket No. 03-932. Decided April 19, 2005.

Jury Instructions Failed to Convey Elements of ‘Corrupt Persuasion’

In a Securities and Exchange Commission prosecution for witness tampering and obstruction of justice, the defendant’s conviction must be overturned because the jury instructions failed to properly convey the elements of “corrupt persuasion.”

Arthur Andersen LLP v. U.S. Docket No. 04-368. Decided May 31, 2005.

1st Circuit


Arbitration Clause Sent to Employees Via E-Mail not Enforceable

A defendant employer’s motion to compel arbitration of a plaintiff employee’s handicap discrimination claim was properly denied, as the employer’s e-mail announcement of a dispute resolution policy containing an arbitration clause would not have apprised a reasonable employee that the policy was a contract that extinguished his or her right to access a judicial forum for resolution of federal employment discrimination claims.

Campbell v. General Dynamics Government Systems Corp., et al. Docket No. 04-1828. Decided May 23, 2005.

Commercial Law

Only Organizations Operating as Nonprofits and Tax-Exempt Entitled to CROA Exclusion From Suit

For an organization to be protected from suit under the Credit Repair Organizations Act, it must actually operate as a nonprofit organization and be exempt from taxation under ��(c)(3) of the Internal Revenue Code.

Zimmerman, et al. v. Cambridge Credit Counseling Corporation, et al. Docket No. 04-2039. Decided May 31, 2005.


False Claims Act Barred Unless Employer on Notice of Protected Conduct

Where an employee oversees government billings or payments as a part of his regular job responsibilities, he must make it clear that his actions go beyond his regular duties to establish that his employer was on notice that he was engaged in protected conduct for purposes of the False Claims Act.

Maturi v. MacLaughlin Research Group. Docket No. 04-2070. Decided July 1, 2005.


‘Toxic Pollutant’ Determination Not Appealable

An electric company’s petition – seeking review of the Environmental Protection Agency’s final administrative determination hat ferric ferrocyanide is a toxic pollutant under the Clean Water Act – should be referred to the U.S. District Court because the 1st Circuit lacks subject matter jurisdiction under 33 U.S.C. ?(b).

Narragansett Electric Co. v. United States Environmental Protection Agency. Docket No. 04-1127. Decided May 6, 2005.


Limits Set on Review of Disability Benefit Denial

Where a plaintiff employee (1) was denied long-term disability benefits under an ERISA plan which does not preserve discretion in the plan administrator, and (2) claimed in an appeal in federal court that he did in fact establish his eligibility to benefits before the ERISA decision maker, he was not entitled to trial or to admit desired new evidence outside the administrative record or to discovery.

Orndorf v. Paul Revere Life Insurance Company. Docket No. 04-1520. April 15, 2005.


Judge’s Order Concerning Work Stoppage Exceeded Authority

A judge (1) acted permissibly by enjoining a work stoppage and ordering the union and employer to submit their dispute to arbitration, but (2) exceeded his discretion in subsequently going on to require that the parties submit to an arbitration regime different than was contractually bargained for and in restraining the employer from taking action against employees engaged in strike activity in violation of a no-strike clause.

Otis Elevator Company v. International Union of Elevator Constructors, Local 4, et al. Docket Nos. 04-1933 and 04-2047. May 11, 2005.


Unjust Enrichment Claim Not Preempted by Federal Law

A plaintiff hospital’s unjust enrichment claim – based on an allegation that the defendant pursued a patent application which drastically reduced the potential profits to be earned by the plaintiff as co-inventor – is not preempted by federal law, as the plaintiff was not using its unjust enrichment claim to circumvent federal patent law.

Massachusetts Eye and Ear Infirmary v. QLT Phototherapeutics, Inc. Docket No. 03-1682. Decided June 16, 2005.

Products Liability

Claims Based on Water Heater Accident Rejected

Where a plaintiff, who was injured while attempting to light a propane water heater, filed claims against a defendant gas company and the codefendants who manufactured the heater and an allegedly faulty control valve, a trial court award of summary judgment for the defendants should be affirmed, as the gas company owed no legal duty to the plaintiff and the other defendants were prejudiced by the unreasonably late filing of the claims against them.

Smith v. Robertshaw Control Company, et al. Docket No. 04-1262. Decided May 27, 2005.

2nd Circuit


Foreign Arbitration Award Unenforceable Absent Corporate Parent’s Agreement to Arbitrate

An arbitration award, obtained in Egypt by a plaintiff against a defendant corporation, must be vacated because (1) the arbitration clause was contained in an agreement between the plaintiff and one of the defendant’s corporate subsidiaries and (2) the defendant was not a signatory to that agreement.

Sarhank Group v. Oracle Corp. Docket No. 02-9383. Decided April 14, 2005.

Civil Procedure

Rejection Of Cigarette Importers’ Preliminary Injunction Request Upheld

Denial of plaintiff cigarette importers’ motion for a preliminary injunction, seeking to prevent enforcement of New York legislation that imposes burdens on firms not joining the Master Settlement Agreement, will be affirmed where plaintiffs have failed to satisfy the irreparable harm requirement.

Freedom Holdings, Inc. v. Spitzer. Docket No. 04-4996. Decided May 18, 2005.

Civil Rights

Case Remanded for Application of ‘Public Purpose’ Standard to Counsel Fee Award

Where plaintiffs, who prevailed in a civil rights action alleging discrimination in a place of public accommodation, were awarded only $1 in nominal damages but $193,551 in attorneys’ fees, a remand should be ordered to determine if the action sufficiently served a “public purpose” as to fit within an exception to the general rule that attorneys’ fees should not be awarded plaintiffs recovering only nominal damages.

McGrath, et al. v. Toys ‘R’ Us, Inc. Docket No. 02-9308. Decided June 2, 2005.

Consumer Protection

Disclaimers Prevent Fair Debt Collection Recovery

A federal judge rightly dismissed a plaintiff’s complaint alleging violations of the Fair Debt Collection Practices Act by a defendant firm where the defendant’s debt collection letter contained sufficient disclaimers to bar any recovery under FDCPA as a matter of law.

Greco v. Trauner, Cohen & Thomas. Docket No. 04-4605. Decided June 21, 2005.


Fraudulent Concealment Claim Against Record Company Rejected

A record company’s failure to disclose an intention to breach a contract was not actionable under New York law as a fraudulent concealment.

TVT Records, et al. v. The Island Def Jam Music Group, et al. Docket No. 03-9026(L). Decided June 14, 2005.

Award of Damages Under ‘Third-Party Beneficiary’ Theory Ruled Improper

In a breach of contract action, a federal judge erred in awarding damages to a defendant on a theory that the defendant was a third-party beneficiary of a stock purchase agreement between two companies.

India.com, Inc. v. Dalal. Docket No. 03-9019. Decided June 20, 2005.


Infringement Suit Reinstated Following Failure of Judge to Conduct ‘Separability’ Analysis

A judge’s dismissal of a plaintiff’s copyright infringement complaint for failure to state a viable claim must be reversed where the judge failed to conduct a separability analysis prior to ordering dismissal.

Chosun International, Inc. v. Chrisha Creations, Ltd. Docket No. 04-1975. Decided June 30, 2005.


Limitations Standards for Salary Discrimination Cases Clarified

In a salary discrimination case, any paycheck given within the statute of limitations period is actionable, even if based on a discriminatory pay scale set up outside of the statutory period.

Forsyth v. Federation Guidance and Employment Service. Docket No. 03-7348. Decided June 6, 2005.


Widow Not Entitled to ERISA Life Insurance Benefits

In a suit for life insurance benefits under ERISA, a plaintiff decedent’s widow had no valid claim for benefits where the required enrollment form under the defendant employer’s plan had not been submitted.

Weinreb v. Hospital for Joint Diseases Orthopaedic Instititute. Docket No. 03-9347. April 8, 2005.


Federal Court May Drop Non-Diverse Party in Insurance Case

In a diversity action where an insurer and the insured are plaintiffs and the insurer has paid only part of the loss incurred by the insured, if the presence of either party destroys diversity, the district court has the authority to drop the non-diverse party.

St. Paul Fire and Marine Insurance Company v. Universal Builders Supply. Docket No. 04-2076. Decided May 24, 2005.

Products Liability

Class Action Certification in Tobacco Suit Vacated

An order certifying as a “limited fund” class action brought by cigarette smokers seeking punitive damages for defendant tobacco companies’ allegedly fraudulent conduct must be vacated because (1) there is no evidence by which the district court could ascertain the limits of either the fund or the aggregate value of punitive claims against it, such that the postulated fund could be deemed inadequate to pay all legitimate claims, and (2) the plaintiffs have therefore failed to satisfy one of the presumptively necessary conditions for limited fund treatment under Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999).

In Re Simon II Litigation. Docket Nos. 03-7140 and 03-71541. Decided May 6, 2005.


SRO Immune Form Fraud Liability

A complaint charging Nasdaq with fraud must be dismissed because Nasdaq, as a self-regulatory organization (SRO), is entitled to absolute immunity.

DL Capital Group, LLC v. Nasdaq Stock Market, Inc., et al. Docket No. 04-3027. Decided May 26, 2005.


Relief Unavailable to Taxpayers Alleging Retaliatory Audit

A taxpayer may not recover damages against employees of the IRS for undertaking an audit in retaliation for the taxpayer’s exercise of First Amendment rights.

Hudson Valley Black Press v. Internal Revenue Service, et al. Docket No. 04-1949. Decided May 27, 2005.


Standard of Proof Established for New York Libel Suits

To prevail in a libel case controlled by New York law, a plaintiff must prove his falsity claim by “clear and convincing proof,” not by “a preponderance of the evidence.”

DiBella, et al. v. Hopkins. Docket Nos. 03-7012 and 03-9095. Decided April 4, 2005.

Delaware Chancery Court

Corporate Governance

Abstentions Count as ‘No’ Votes on Shareholder Proposal

In the absence of an applicable corporate bylaw, abstentions could be treated as “no” ballots on a shareholder vote to implement cumulative voting.

Licht v. Storage Technology Corp. Docket No. 524-N. Decided May 6, 2005.

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