How Appealing Extra

How Appealing Extra

Friday, April 25, 2008

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April 25, 2008

Stock Holdings May Force Justices to Sit Out Apartheid Case

By Brent Kendall
Daily Journal Staff Writer

WASHINGTON - When the U.S. Supreme Court meets today in a private conference, it could face the mother of all recusal problems for justices who own stocks.

The court is scheduled to discuss whether to take up an appeal by 34 companies facing lawsuits for doing business in South Africa during that country's apartheid regime from 1948 to 1994. The plaintiffs allege those companies are liable under the Alien Tort Statute for aiding and abetting human rights violations by the South African government. American Isuzu Motors v. Ntsebeza, 07-919.

A trial judge dismissed the lawsuits but the 2nd U.S. Circuit Court of Appeals in New York revived them, giving the plaintiffs a renewed chance to proceed.

The companies, along with the Bush administration, urged the high court to hear the case, saying the 2nd Circuit's decision was profoundly important and would interfere substantially with foreign trade and U.S. foreign policy.

The case could affect other pending lawsuits against companies that do business in nations with troubling human rights records.

But according to their latest financial disclosure forms, three justices - Chief Justice John Roberts and Justices Stephen Breyer and Samuel Alito - own stock in some of the defendants, a fact that would require their recusal.

A fourth justice, Anthony Kennedy, also may have to sit out. Kennedy has a son who works for one of the defendants, the financial firm Credit Suisse, and he has recused himself in past cases involving the company.

If Kennedy recuses himself and the other justices still own their shares, the court would be left with just five active justices, one short of the six needed for a quorum.

Without six members, the court could not hear the case and, by law, the appeals court ruling would be affirmed.

"If the court loses a quorum because of stock ownership, it reinforces the point that justices should not own stock in parties likely to come before the court," said University of Pittsburgh law professor Arthur Hellman, who follows the issue of judicial recusals closely.

"It's much more than a PR problem" for the court, Hellman said. "This is obviously a case of huge significance."

A justice could save a court quorum by selling his stock holdings to "unrecuse" himself. In fact, a new law makes it easier for federal judges to do so by removing certain tax disadvantages.

To date, Roberts is the only justice who appears to have taken advantage of the law.

The chief justice has "unrecused" himself in two cases in which he owned stock, though in another case he did not sell the pharmaceutical shares that forced him to sit out.

In his absence, the court split 4-4 over whether patients could bring a product liability lawsuit involving a diabetes drug that has since been taken off the market. Warner-Lambert v. Kent, 06-1498.

Given his track record and concern about public perceptions of the court, Roberts would seem the most likely candidate to sell stock to "unrecuse" in the apartheid case.

"That would be a quite plausible scenario," Hellman said. "It's also possible he's already done it."

The chief justice owns between $15,000 and $50,000 in defendant Hewlett-Packard, according to his disclosure report.

Breyer owns shares in defendants Bank of America, Colgate-Palmolive, IBM, and Nestle and Alito owns shares in defendants ExxonMobil and Bristol-Myers Squibb, according to their disclosure reports.

Alito did not sell his Exxon shares to take part this year in the closely watched punitive damages case involving the 1989 Exxon Valdez oil spill.

The court could issue an order in the apartheid case as early as Monday, though it's possible they would postpone action if one of the justices requests a delay.

The lead lawyer for the companies, New York attorney Francis Barron of Cravath, Swaine & Moore, declined to comment. Kenneth Geller of Mayer Brown, another member of the legal team, said he had not given thought to the recusal issue. "I'm sure the court will do the right thing," he said.

Paul Hoffman of Schonbrun DeSimone Seplow Harris & Hoffman in Venice, the plaintiffs' lead attorney who urged the court not to take the case, said that, recusals aside, the court should pass on the case because the lower court ruling was narrow and the litigation is still in its early stages.

Stock-based recusals have been a prominent issue on the California Supreme Court.

The state court abandoned a multimillion dollar toxic-tort case last November because four of the court's seven members owned stock in the oil-company defendants.

Tuesday, April 22, 2008

© 2008 The Daily Journal Corporation.
All rights reserved.

Posted with permission. This file cannot be downloaded from this page. The Daily Journal's definition of reprint and posting permission does not include the downloading, copying by third parties or any other type of transmission of any posted articles.

April 22, 2008

Supreme Court - The Hottest Docket in Town
Firms Clamor to Be Among the Few To Go Before the Nation's Final Arbiter

By Brent Kendall
Daily Journal Staff Writer

WASHINGTON - Against very long odds and without a lawyer, Texas prisoner Carlos Jimenez hit the jackpot last month, successfully petitioning the U.S. Supreme Court to hear his little-noticed case, a procedural dispute about his habeas challenge to a 1991 burglary conviction.

The inmate's surprising accomplishment, however, did not go unnoticed in the Supreme Court bar: Jimenez suddenly had a coveted spot on the court's calendar, and he did not have an attorney to argue for him.

Thomas Goldstein of Akin Gump Strauss Hauer & Feld in Washington, D.C., working with Stanford University's Supreme Court Litigation Clinic, sent Jimenez a letter immediately, offering to represent him for free. But anticipating that Jimenez would receive many other overtures, the group decided its letter wasn't enough.

Goldstein, who has argued 18 Supreme Court cases, called Akin's Dallas office, which sent a partner and an associate on a 2½-hour drive across East Texas to visit Jimenez in prison. The house call worked: Akin and Stanford got the case. Goldstein himself made a trip to the prison shortly thereafter.

"There are so few cases and such competition for them that you have to go the extra mile," Goldstein said. "The number of opportunities is vanishingly small."

Call it the perfect storm. The Supreme Court has been accepting fewer cases for review each year, while the number of lawyers seeking a piece of the action has multiplied rapidly. Seven Supreme Court litigation clinics have sprung up on law school campuses, and they want work too. The result: A heated competition for Supreme Court cases like no one has ever seen.

"It's obvious - you've got more and more of these firms out there, and they're hungry for cases," said Georgetown University law professor Richard Lazarus, who closely follows trends in the Supreme Court bar.

The justices are hearing just 70 cases this term, a new low in the modern era, and many litigants have retained experienced Supreme Court counsel by the time they're planning a high court appeal.

So, when a lawyer with little or no Supreme Court experience gets a case accepted, his or her telephone starts ringing with people offering to help - or to take over the case entirely, Lazarus said. Sometimes the offers start even earlier, he said, if the case is a particularly good prospect for Supreme Court review.

One out-of-town lawyer with a case headed to the Supreme Court saw the phenomenon firsthand in recent months and called the experience an eye-opener.

"There were a lot of offers and they came very quickly - lightning speed," said the lawyer, who asked not to be named, in order to speak frankly. "There must be an entire industry that searches and waits [for cases] and then they pounce. I was amazed by it, without a doubt."

By his count, Goldstein said there are roughly 25 firms looking for Supreme Court work these days, a trend he attributes to "national law firms deciding that, in order to have highly credible litigation practices, they need to be able to say that they operate at the court."

There are also the law school clinics, designed to give students hands-on experience with Supreme Court cases - a trend that Goldstein and Stanford law professor Pamela Karlan started when they launched Stanford's Supreme Court Litigation Clinic in 2004.

In all, Goldstein said there are five times as many players now as when he began searching for clients to build his Supreme Court practice in the late 1990s, "and they're five times as aggressive."

Why the intense battle for high court cases, even ones that don't pay a dime?

Building your Supreme Court resume with a huge volume of cases, even pro bono cases, Goldstein said, is a huge help when trying to compete against the nation's most prominent lawyers for paying clients: "It's hard to position yourself."

Other Supreme Court regulars say the increasingly competitive climate hasn't much altered the way they do business.

Roy Englert of Robbins, Russell, Englert, Orseck, Untereiner & Sauber said more people may be searching for cases, but veteran Supreme Court advocates are getting an increasingly bigger piece of the pie as clients seek out lawyers with significant high court experience.

"I've been a beneficiary of this increasing sense among clients that they need a repeat player," said Englert, who last week successfully defended Kentucky's lethal injection procedures from a constitutional challenge. "I tend to be more responsive to incoming phone calls than making the phone calls trying to get cases."

The tooth-and-nail competition to work for free at the Supreme Court is "an almost comical situation," he said.

While the competition for pro bono work is more aggressive than ever, the playing field for paying work hasn't necessarily been altered by the influx of aspiring lawyers, said Carter Phillips of Sidley Austin, one of the nation's leading Supreme Court advocates.

"There are a few more people, I suppose, who compete in that [paying] market, but the numbers on that score haven't changed much," Phillips said.

Charles Rothfeld of Mayer Brown agreed, saying the leading law firms still dominate the high-stakes cases with big-money clients.

"If you're general counsel of a big corporation and you've got a securities case at the Supreme Court, that's an entirely different plane of activity," Rothfeld said. "When the dollar amounts involved are substantial, I don't think anybody is going to say, 'Gee I'm going with this unknown person to handle my case at the Supreme Court.'"

On the pro bono front, it's true that the big appellate firms are trying to get high court experience for their younger lawyers and are willing to take on free work to do it, Rothfeld said. "But I'm not sure that's a change from the way things were."

Georgetown's Lazarus, however, said even the big-name Supreme Court firms are finding new ways to score more cases, namely through their work with the law school litigation clinics.

"The clinics provide a benign and attractive filter" for the law firms, Lazarus said. "Almost everybody has a proxy now."

Each of the seven law school clinics is affiliated with a law firm that has an active presence at the court. For example, Northwestern University works with Phillips and Sidley Austin, Yale Law School with Mayer Brown, and Stanford Law School with Goldstein and Akin Gump. The lawyers come to campus and help guide the students' work. The other clinics are on the campuses of Harvard University, New York University, the University of Texas and the University of Virginia.

The Stanford clinic is counsel or co-counsel in seven cases this term, including a high-profile death penalty case examining whether Louisiana can execute an inmate for the crime of child rape. In all, law school clinics are involved in 15 Supreme Court cases this term.

Lazarus said when established Supreme Court law firms call out-of-town attorneys with offers of assistance, those offers are more warmly received when they're made on behalf of a law school.

"It's a much easier call to make," he said. "It's not a law firm calling, it's a fabulous law school. At that point you've added prestige to it."

"I don't say this in a negative way," Lazarus added. "I think it's a positive. Whatever helps make the advocacy before this court better is a positive."

Phillips of Sidley Austin said he expects the Supreme Court's docket to increase in the coming years by at least a few cases, which would mean more opportunities for work.

He also expects the real aggressive chase for cases, particularly pro bono ones, to continue.

"Both the law firms and the law schools will have to decide if this effort is worth what they're trying to get out of it," he said.

Friday, April 11, 2008

© 2008 The Daily Journal Corporation.
All rights reserved.

Posted with permission. This file cannot be downloaded from this page. The Daily Journal's definition of reprint and posting permission does not include the downloading, copying by third parties or any other type of transmission of any posted articles.

April 11, 2008


By Lawrence Hurley
Daily Journal Staff Writer

WASHINGTON - The chief judge of the U.S. Court of Appeals for the Federal Circuit added his voice to those criticizing patent reform legislation that looks increasingly unlikely to pass the Senate.

Judge Paul Michel's comments came just a day after a key Republican, Sen. Arlen Specter, R-Pa., the ranking member of the Senate Judiciary Committee, withdrew his support for the bill.

Struggling to Compromise
The prospects of sweeping patent reform legislation passing Congress this year appear to be receding by the day as the leading sponsor, Sen. Patrick Leahy, D-Vt., the chairman of the judiciary committee, struggles to cobble together a compromise.

The House passed its version of the bill last September.

In remarks made at an American Bar Association event and in an interview with the Daily Journal, Judge Michel, who oversees the court that handles patent appeals, said Thursday that the judiciary itself could resolve most of the controversial issues that are holding up the bill.

Noting that congressional staffers drafting the legislation are inexperienced in patent law, he said it was possible that attempts to improve the system could create unintended new problems.

The key issue, cited by Specter as his reason for changing course, is the way in which damages are calculated.

Baffled by Congress
The current bill, supported by the tech sector, would reduce the damages defendants have to pay if they infringe someone's patent. It would allow judges to calculate damages based on the value of the individual patent being litigated and not the overall market value of the product.

The pharmaceutical and biotechnology industries, which spend years developing products that rely on a single patent, would prefer to keep the current system, in which judges can impose damages based on the market value of the product.

Michel expressed his bafflement Thursday as to why Congress would want to change the way damages are calculated, saying in an interview that the issue "has been greatly misunderstood." The reality is that judges routinely take into account the value of individual patents when instructing juries and in overturning excessive jury verdicts, he said.

He pointed to the dispute between Microsoft Corp. and Alcatel-Lucent SA over several alleged infringements as an example.

Last year, a jury ordered Microsoft to pay a record $1.5 billion in damages, the biggest ever in a patent infringement case, which supporters of patent reform said shows the need for legislative action.

But U.S. District Judge Rudi Brewster for the Southern District of California later threw out the verdict for insufficient evidence, Michel noted. Lucent Technologies Inc. v. Gateway Inc., 02cv2060 (S.D. Cal).

In pointed remarks made at a session for patent lawyers at the ABA's annual Intellectual Property Law Conference, Michel suggested that the federal circuit could weigh in on the damages issue, but lawyers first have to raise the issue on appeal. If defense lawyers have a problem with the jury instructions, they should object at the time, Michel said. He noted that in his 20 years on the appellate court, the issue has never come before him.

As for the rest of the patent reform bill, Michel made it clear that he would prefer that Congress stay altogether out of any reform that affects the judicial process, including to damage calculations, until the judiciary has had a chance to make its own changes.

"Congress ought to wait and see if ultimately the adjustments are good enough," he said. "I would not say that Congress should never act on courthouse problems, but it could wait."

In recent years the courts have addressed patent law in a number of high profile cases, including a major Supreme Court decision last year in which the court ruled that the federal circuit used too narrow of an approach in deciding whether a patent is obvious, and therefore invalid. KSR International v. Teleflex, 127 S. Ct. 1727 (2007).

Congress should instead focus on reforms to the U.S. Patent & Trademark Office, which is clearly under its jurisdiction, Michel suggested.

Lawmakers, patent attorneys, inventors, and businesses have all been critical of the office for perceived problems with the quality of patents approved in recent years.

Michel and Specter appear to be on the same page on the damages provision, perhaps not surprisingly, as the two men are close.

Michel was an assistant district attorney in Philadelphia when Specter was the district attorney in the late 1960s.

He later served as Specter's chief of staff in the Senate before being nominated to the bench in 1988.

Specter said Thursday that he hopes to reach an agreement with Leahy about the damages provision.

"We thought we had reached an agreement on this matter, but the language continued to shift, so we do not yet have a deal on the package. I am hopeful that we can reach an agreement, but more work has to be done to get it right."

Without Specter's support, Leahy's ability to win passage of the bill is in doubt, Senate sources say.

The bill was scheduled to go to the Senate floor within days, but Specter's move puts that in doubt.

The process has been further complicated by Senate Republicans threatening to hold up the bill in retaliation for Democrats failing to move more quickly on President Bush's judicial nominations.

Leahy said Thursday that "just a handful of words" are preventing the bill from proceeding to a full debate.

"I have said repeatedly that the time for patent reform is now," he added. "Unfortunately, some have yet to fully grasp this fact, and have stalled meaningful reform."