Court Competition for Patent Cases
There are ninety-four federal district courts in the United States, but nearly half of the six thousand patent cases filed in 2013 were filed in just two of those courts: the District of Delaware and the Eastern District of Texas. In the Eastern District of Texas and the District of Delaware—neither of which is home to a major technology industry —patent litigation comprises an astounding proportion of each court’s docket: twenty-eight percent of 2013 filings in the Eastern District of Texas were patent cases while fifty-six percent of 2013 filings in the District of Delaware were patent cases. In fact, the two judges with the busiest patent dockets—Judge Rodney Gilstrap in the Eastern District of Texas and Judge Leonard Stark in the District of Delaware—have larger patent dockets than does the entire Central District of California, the district that receives the third most patent cases in the country.
While the popularity of the Eastern District of Texas and the District of Delaware with patent plaintiffs is a relatively recent phenomenon, the litigation tactic of selecting the court that offers the greatest odds of success—otherwise known as forum shopping—is not. Forum shopping has been a significant concern in the patent system for over forty years. Forum shopping is generally understood to be driven by the search for favorable substantive law, favorable procedural rules, or “home court advantage.” However, the persistence of forum shopping in patent law cannot be fully explained by substantive legal differences or home court advantage. Patent litigants cannot obtain substantive legal differences by forum shopping because all federal district courts are bound by the same legal rules that come from the U.S. Court of Appeals for the Federal Circuit. Furthermore, the fact that the majority of patent cases are filed in district courts that do not have sizeable technology industries indicates that most forum shopping is not the result of major technology companies seeking the advantages of litigating at the nearest courthouse.
That leaves procedural differences. This Article theorizes that forum shopping in patent law is driven, at least in part, by federal district courts competing for litigants. This competition occurs primarily through procedural and administrative differentiation among courts. All patent infringement cases are heard in federal court and are therefore governed by the Federal Rules of Civil Procedure. Despite the existence of the Federal Rules, district courts across the United States have adopted local rules specifically for patent cases. Intriguingly, some districts have adopted local patent rules despite almost never hearing patent cases in their courtrooms, suggesting that local patent rules serve a signaling function for courts looking to attract potential patent litigants.
An Inconvenient Truth: How Forum Non Conveniens Doctrine Allows Defendants To Escape State Court Jurisdiction
Imagine you are a foreign citizen. You have been injured in a foreign country due to the negligence of a U.S. company and have a legitimate tort claim for millions of dollars against the company. You file suit in the state court in Missoula, Montana—located at 200 W. Broadway, Missoula, Montana 59802. The defendant company removes the case, on the basis of diversity of citizenship, to the United States District Court of Montana—located at 201 E. Broadway, Missoula, Montana 59802 —and argues that the case should be dismissed under the doctrine of forum non conveniens. The state court probably would not have granted the motion, but rather would have allowed the case to proceed to the merits. But now that the case has been moved just two blocks away to a federal district court, that court can exercise its discretion under federal forum non conveniens doctrine and dismiss the case. This sequence of events does not occur infrequently.
Because almost every federal court applies federal forum non conveniens law in diversity cases, defendants can remove cases to federal court solely for the purpose of getting them dismissed on forum non conveniens grounds. In cases where a state would not dismiss under its own forum non conveniens doctrine, it is unfair for defendants to exploit removal to obtain dismissal. Allowing defendants to engage in this practice undercuts the rights of the parties and undermines the purpose of the forum non conveniens doctrine.
The appropriate remedy is for courts to find that defendants who remove from state court waive their right to argue forum non conveniens in federal court when the state would not have dismissed the case under its forum non conveniens law. This would prevent the injustice of defendants using removal as a mechanism for dismissal. However, courts may be unwilling to adopt waiver. Ultimately, I propose that Congress remedy this injustice by amending the removal statute to permit remand to the state court when the federal court dismisses on forum non conveniens grounds.
King v. Burwell and the Validity of Federal Tax Subsidies Under the Affordable Care Act
Set for oral argument on March 4, 2015, King v. Burwell brings to the Supreme Court yet another challenge to the Affordable Care Act (ACA). The King plaintiffs cite 26 U.S.C. § 36B to attack the validity of certain federal health insurance subsidies provided by the Internal Revenue Service (IRS) through the ACA. Specifically, because § 36B authorizes subsidies for low-income taxpayers who purchase health insurance from an “Exchange established by the State,” the plaintiffs allege that such subsidies are not valid on exchanges operated by the federal government where the states refused to operate a state-sponsored exchange. Given that the federal government operates exchanges in thirty-four states, the Supreme Court’s ruling will potentially affect nearly ten million taxpayers nationwide.
Professors Eric Segall and Jonathan Adler debate the merits of King v. Burwell, and each suggests how the Court should rule. Professor Segall argues that the Court should follow the IRS’s interpretation of § 36B—namely, that federal tax subsidies are available in a state with a federally operated exchange, because the law allows the federal government to operate the “Exchange established by the State.” Professor Segall emphasizes that Chevron deference requires the Court to defer to the IRS interpretation. In response, Professor Adler contends that Chevron deference is unnecessary because the statutory language is clear: an “Exchange established by the State” cannot be an exchange established by the Department of Health and Human Services. Professor Adler argues that, given the unambiguous language in the statute, the Court need not defer to the IRS interpretation and should rule for the plaintiffs.
The Future of Government-Mandated Health Warnings After R.J. Reynolds and American Meat Institute
Government-mandated disclosures and warnings aimed at promoting public health are ubiquitous. Alcoholic beverage labels bear government warnings against alcohol consumption during pregnancy. Both prescription and over-the-counter drugs must comply with extensive Food and Drug Administration (FDA) labeling requirements. Automobiles carry mandatory safety rating labels. Cigarette packages have included warnings about the dangers of smoking since 1965. Even chain restaurants must now follow the federal nutrition labeling requirements that have applied to food packaging for two decades. Warnings and disclosure requirements are likely to become even more widespread given President Obama’s 2011 executive order encouraging administrative agencies to use these “[f]lexible [a]pproaches” wherever “relevant, feasible, . . . consistent with regulatory objectives, and . . . permitted by law.”
Despite their widespread use as a regulatory tool, government-mandated warnings and disclosures are not immune from legal challenge. In the 2012 case of R.J. Reynolds Tobacco Co. v. FDA, the U.S. Court of Appeals for the D.C. Circuit invalidated FDA’s graphic cigarette warnings on First Amendment grounds. The tobacco manufacturers’ challenge forced the D.C. Circuit to wade into unchartered waters. Although there is a long line of Supreme Court cases addressing First Amendment challenges to commercial speech restrictions (e.g., advertising bans), the Court has heard only two challenges to commercial speech disclosure requirements, neither involving government-mandated warnings. Further, while the Court has been clear that it reviews commercial speech restrictions under the Central Hudson intermediate scrutiny test, it has applied a standard akin to rational basis review when examining purely factual disclosure requirements targeting consumer deception, without explaining in what other circumstances rational basis review would apply. Thus, faced with a novel question of law, the R.J. Reynolds court concluded that the graphic cigarette warning requirements did not merit rational basis review protection, because (1) they did not seek to cure consumer deception and (2) they were not purely factual and uncontroversial warnings, but rather “admonitions: ‘[D]on’t buy or use this product.’” After deciding that Central Hudson intermediate scrutiny was the correct standard of review, the court held the warnings unconstitutional because FDA failed to produce sufficient evidence—indeed, “failed to present any data”—that the warnings would directly and materially advance its goal of reducing smoking rates. Although most commentators expected the case to go to the Supreme Court, FDA instead withdrew the proposed images and said it would issue revised graphic warnings.
To the extent that R.J. Reynolds could be read as holding that only commercial speech mandates that are both purely factual and designed to correct consumer deception receive rational basis review, it was overruled by the 2014 en banc decision of the D.C. Circuit, American Meat Institute v. USDA. Aligning the court’s position with that of other circuits, the D.C. Circuit held in American Meat Institute that Zauderer v. Office of Disciplinary Counsel, the first Supreme Court case to apply rational basis review to a government-mandated disclosure requirement, extended “beyond problems of deception”—and thus applied to the U.S. Department of Agriculture (USDA) country-of-origin disclosures at issue in the case.
Given that the D.C. Circuit is responsible for reviewing many federal agency regulations, American Meat Institute marks a significant victory for regulators. A contrary holding—one limiting the protection of Zauderer rational basis review to compelled speech aimed at curing deception—would have threatened to unsettle the current regulatory regime, and would have particularly threatened mandates aimed at promoting public health. These disclosure requirements often do not target potentially deceptive commercial speech, and they rarely are supported by the level of evidence R.J. Reynolds deemed necessary to satisfy Central Hudson intermediate scrutiny. (These evidentiary difficulties arise in part because many public health problems are complex and cannot be eradicated by a disclosure requirement alone.) While R.J. Reynolds raised important questions about the effectiveness of disclosure requirements, the First Amendment should not be an insurmountable obstacle when the commercial speaker’s constitutionally protected interest is, as the Court has said, “minimal” and the government interest is substantial.
Although American Meat Institute lessened the blow R.J. Reynolds dealt to regulators, both decisions left open important questions about the First Amendment treatment of government-mandated warnings that are neither “purely factual and uncontroversial” disclosures nor overt government-sanctioned opinions, and about whether graphic cigarette warnings belong in this middle ground. R.J. Reynolds only addressed the constitutionality of the nine warnings before it, and left unanswered whether another graphic warning depicting the negative health consequences of smoking could be constitutional. But, in characterizing FDA’s graphic warnings as “a much different animal” than the mandated statements to which the Supreme Court has previously applied rational basis review, and in viewing them as “intended to evoke an emotional response, or, at most, shock the viewer into retaining the information in the text warning,” R.J. Reynolds strongly implied that no graphic cigarette warning could ever receive rational basis review protection. Not only did the court seem to demand Central Hudson intermediate scrutiny review for all government-mandated graphic warnings, it created an overly burdensome intermediate scrutiny test by misapplying the Administrative Procedure Act’s (APA) “substantial evidence” standard to its First Amendment analysis, and by failing to look beyond the Court’s abstract statements about Central Hudson to its application of the test.
Part I of this Note outlines the Supreme Court’s commercial speech jurisprudence. It explains the Court’s differential treatment of commercial speech restrictions and compelled commercial speech, and it outlines the open question of whether Zauderer, and its accompanying rational basis review protection, is limited to mandates aimed at correcting deception. Part II discusses the various interpretations of Zauderer advanced by circuit courts. It defends the broader interpretation of Zauderer adopted by the First Circuit, Second Circuit, and, most recently, the D.C. Circuit in American Meat Institute, and it criticizes the narrow interpretation articulated in R.J. Reynolds. Part II likewise outlines the doctrinal support and policy justifications for a broader interpretation of Zauderer, with particular focus on the importance of recognizing the government’s interest in promoting public health as worthy of rational basis review. Part III then looks at how FDA could issue revised graphic cigarette warnings that would pass constitutional muster. It examines the type of graphic cigarette warnings that could potentially merit review under the Zauderer standard, argues that R.J. Reynolds misapplied the Central Hudson intermediate scrutiny standard, suggests a better view of Central Hudson as applied to graphic cigarette warnings, and describes post-Reynolds scientific research supporting the effectiveness of graphic warnings.
New Regulations and Pending Cases
Do new regulations apply to pending cases? The question is simple, but the short answer is a lawyer’s favorite: “It depends.” It depends on the organic statute, it depends on the regulation, and, unfortunately, it may even depend on the federal court of appeals that happens to decide the case. This Essay looks at this issue by examining the effect of the Department of Labor’s 2013 amendments to regulations governing claims under the Black Lung Benefits Act. This Essay explains why the new regulations are applicable to pending cases, even if the Department of Labor already issued its final decision on a claim and a party already petitioned a court to review that decision.
The analytical route to this result varies by circuit. This Essay explains why the factor-based retroactivity test used by most circuits better addresses fundamental due process concerns and is more administrable than the D.C. Circuit’s approach, which turns on whether a circuit split predates the new regulations. This Essay both provides a clear answer about whether the 2013 amendments to the black lung regulations apply to pending cases and suggests how courts should handle retroactivity questions for regulations more broadly.