Commercial Litigation Update

On June 1, 2023, the U.S. Supreme Court unanimously settled a long-standing dispute over a subjective versus objective standard for scienter under the False Claims Act (FCA), holding that a defendant’s own subjective belief is relevant to scienter, rather than what an “objectively reasonable” person may have known or believed.

The case in question, U.S. ex rel. Schutte v. SuperValu Inc., consolidated from two lower court decisions, involved allegations that the defendants, two retail pharmacy chains, overcharged the government for prescription drugs in violation of ...

A 6-3 Court, sharply divided along conservative and liberal jurisprudential lines, has decided the two headlining cases involving affirmative action in university admissions: Students for Fair Admissions, Inc. v. President and Fellows of Harvard College gets top billing, perhaps relating to the alumni status of several Justices, but the decision also resolves the case of Students for Fair Admissions, Inc. v. University of North Carolina. 

Of the four cases decided today, the one that likely pertains to the largest number of this blog’s readers is Coinbase, Inc. v. Bielski, a 5-4 opinion delivered by Justice Kavanaugh, who wrote for himself, the Chief Justice, and Justices Alito, Gorsuch, and Barrett. Interestingly, Justice Thomas largely joined Justice Jackson’s dissenting opinion.

With four decisions today, the Court has now cut its backlog down to the mid-teens. And with decisions likely tomorrow as well, the Court is well on its way to clearing the docket as the term ends.

It should come as no surprise to constitutionalists, practitioners under the Federal False Claims Act (31 U.S.C. §§3729–3733) (FCA), and auditors of the oral argument in the case that the Supreme Court has held that the federal government may move to dismiss an FCA action under §3730(c)(2)(A) whenever it has intervened—whether during the seal period or later on. United States ex rel. Polansky v. Executive Health Resources, Inc. To assert this right, the government must actually intervene (which is not difficult since the statute allows it at any time before final judgment, even on appeal), and the propriety of dismissal is to be adjudicated pursuant to Fed. R. Civ. P. 41(a), the rule generally governing voluntary dismissal of suits in ordinary civil litigation, and dismissal should be granted in all but the most extraordinary cases. 

Indian tribal rights led the Supreme Court’s docket today. In one case, the Court held that the federal Bankruptcy Code abrogated the sovereign immunity of tribal governments. And in another, this time upholding tribal rights, the Court held upheld the constitutionality of the Indian Child Welfare Act (ICWA), with its arguably discriminatory provision requiring the placement of foster or adoptive Indian children with Indian caretakers. Justice Gorsuch, perhaps the Court’s most interested and knowledgeable member concerning tribal rights and interests, was the lone dissenter in the bankruptcy case and provided a unique historical perspective in a scholarly concurrence in the ICWA case. Finally, a unanimous Court held that the Constitution allows the retrial of a defendant who had been tried in an improper venue before jurors drawn from the wrong district. Three interesting and detailed opinions, none reflecting any major division in the Court, though perhaps Justices Thomas and Alito might seem to live on an island of their own.

Continuing the issuance of opinions as to which the Justices are largely of one mind, the Court today handed down three decisions. Each gives important guidance to litigators on both sides of the ball. The first of these is a unanimous opinion settling the hotly debated question of whether intent under the federal False Claims Act (FCA) is a subjective or objective matter. It is the former. The second decision, also unanimous, clarified what a plaintiff must plead and prove to establish securities fraud regarding a stock offering through a direct listing. The third case offers a lone dissent over a majority and concurring opinions rejecting a labor union’s argument that the National Labor Relations Act (NLRA) preempts a state court tort action concerning workers sabotaging a company’s concrete trucks.

The Supreme Court issued no fewer than six opinions on Thursday, May 18, addressing questions including whether an internet platform might be held liable as an aider and abettor of terrorist activity, and whether Andy Warhol’s famous alterations of photos of the artist known as Prince violated the copyright of an almost-as-famous photographer.

On Wednesday, April 19, the Court decided three cases that are interesting and instructive in following how the Justices, both nominal liberals and conservatives, attempt to apply textual methodology in assessing jurisdictional prerequisites, though not always reaching unanimous results.

While the substantial backlog of decisions has many observers waiting for a flood of rulings, the Supreme Court is moving at its own pace. Thus, the Court has issued a single opinion today, but especially for readers who are involved in administrative law challenges to administrative agency determinations, it is an important one. And it might become even more significant to the extent that it augurs future limitations on agency autonomy.

The Supreme Court issued a single opinion today. Wilkins v. United States concerns a property rights dispute between the federal government and two owners of land near the Bitterroot National Forest in rural Montana to which the government claims an easement that, it argues, includes public access, which the petitioners dispute. They, therefore, sued the government under the Quiet Title Act (the “Act”), which allows challenges to the United States’ rights in real property. The government moved to dismiss on the ground that the petitioners’ claim is barred by the Act’s 12-year statute of limitations. See 28 U. S. C. §2409a(g). The issue before the Court was whether the time bar is jurisdictional or, as the Court held in a 6-3 decision, a nonjurisdictional claims-processing rule.

The Supreme Court decided two cases today, and though neither of them presents the sort of widely consequential matter that, say, the President's student loan forgiveness plan that was argued this morning does, each has interesting aspects. Both are decided on the now-vogueish doctrine of textualism, though each shows divisions among the Justices that prove again that not only can Justices who have differing jurisprudential philosophies agree with one another as to statutory meaning, but that Justices with the same jurisprudential philosophy can disagree with one another on text as well. Thus, while there are cases, like Dobbs, where one might accurately predict the outcome on the basis of philosophy or alignment with the preferences of the President who nominated various Justices, there is a host of cases where labels don't hold up at all.

The Court has broken the logjam of pending opinions, rendering three decisions today, one of which, dealing with the issue of when overtime pay is mandated under the Fair Labor Standards Act (FLSA), might have a broader effect. So, let's start with that one: Helix Energy Solutions Group, Inc. v. Hewitt.

In a brush-back pitch to DOJ opioid initiatives, the U.S. Supreme Court this past June issued an important decision clarifying the mental state the government must establish to convict a licensed medical professional of illegal drug distribution under the federal Controlled Substances Act (“CSA”). No longer can a doctor be convicted of such a crime based on objectively unreasonable prescribing practices alone. The government now must show that the medical professional subjectively, knowingly, and intentionally prescribed a controlled substance with no legitimate medical purpose. While unlikely to materially impact the number of DOJ opioid prosecutions, the case will no doubt inform charging decisions in marginal cases and will support important defense arguments at trial.

With his retirement to begin on June 30 at noon, Justice Breyer leads a 5-4 split in Torres v. Texas Department of Public Safety, with the Chief Justice and Justice Kavanaugh, along with Justices Sotomayor and Kagan, joining him in holding that, by virtue of the states having ratified the Constitution, they agreed that their sovereignty would yield to the national power to raise and support the Armed Forces. Accordingly, Congress may exercise this national power to authorize private damages suits against nonconsenting states. Congress did just that when it passed the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), which gives returning servicemembers the right to reclaim their prior jobs with state employers, and authorizes suit if those employers refuse to accommodate veterans’ service-related disabilities. See 38 U. S. C. § §4301 et seq.

The day after the Gallup organization reported that public confidence in the Supreme Court has reached new lows, the Court has added what, to many, will be more fuel to that fire. The long-awaited, hotly contested, and divisive opinion in Dobbs v. Jackson Women's Health Organization has officially come down and, given reactions to the premature release of a draft of Justice Alito's majority opinion, the public's expectations on both sides of the abortion debate have been realized.

New York State Rifle & Pistol Association, Inc. v. Bruen is the long-awaited New York gun licensing decision that has been hotly debated since its filing. Especially in light of recent school shootings, that debate is likely to intensify now that the case has been decided. As many predicted, the decision, overturning the state’s statute, provides a stark split between the Court’s predominant conservatives and its liberals.

I'm currently in the wilds of Alaska, learning about the training of sled dogs. Nevertheless, word of the Supreme Court's five most recent decisions has traveled northward. While none of these decisions is earthshaking, they are not uninteresting or unimportant, especially to those like health care and employee benefits lawyers.

On June 15, the Court decided five cases and dismissed a sixth. A case of great importance to health care lawyers, regarding the availability of judicial review of Medicare rates for pharmaceuticals, and another of great importance to labor and employment lawyers, holding that a significant portion of the California Private Attorneys General Act's (PAGA’s) delegation of state enforcement power is preempted by federal law, lead the pack.

The Court has had a busy day, having decided cases of significance to litigators and interest groups, but none is the blockbuster decision in societally divisive matters that the general public has been awaiting. In short, this is a business-as-usual day, with opinions sometimes showing broad consensus on the Court, but with some not-unexpected dissents.

Notwithstanding the fact that, as we approach the end of the term, the Court still had 30 cases to decide as of Wednesday morning, June 8, the day’s count has only been reduced by one. So, expect a flurry of cases with the most controversial of them (think firearms and reproductive rights) perhaps coming down at the end.

The Court has started the week with three decisions emphasizing textual readings, two of them unanimous and a third drawing Justice Kagan into the majority with the Court’s six nominal jurisprudential conservatives.

Despite a large list of argued cases pending decision, the Court decides just two of them today—neither of them Dobbs.

I write this from London on the eve of the announcement that the nomination of Judge Ketanji Brown Jackson to succeed Justice Breyer is about to go to the full Senate for confirmation. Those who follow my writings will know that I am among a group of right-of-center former public officials in Republican administrations who are on record as supporting this nomination of an experienced and well-qualified federal judge.

The Court has decided the latest in a series of important cases interpreting the reach of the Federal Arbitration Act (FAA), 9 U. S. C. §§ 1 et seq.

On March 31, in Badgerow v. Walters, by an 8-1 majority (opinion written by Justice Kagan, and a lone dissent by Justice Breyer), the Court reversed an order of the Fifth Circuit and held that the federal courts do not have authority to “look through” an arbitration dispute for a federal question that would establish jurisdiction to confirm or deny an arbitral award.

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: "The Justices Show Again That They Are Not Politicians in Robes."

The following is an excerpt:

A short note about the Supreme Court’s decision today in Borden v. United States, in which it considered whether a felon-in-possession gun charge qualified as a “violent felony” under the Armed Career Criminal Act (“Act”), 18 U. S. C. §924, which provides enhanced penalties for criminals convicted of certain firearms offenses who have at least ...