Riegel v. Medtronic, Inc. (06-179), Rowe v. New Hampshire Motor Transport Ass'n (06-457), Preston v. Ferrer (06-1463), LaRue v. DeWolff, Boberg & Associates (06-856), Danforth v. Minnesota (06-8273) and order list.

February 25, 2008 Supreme Court Update

Greetings, Court fans!
The Court returned this from an extended recess and left us with five decisions Wednesday and an order list on Tuesday.
Perhaps the most significant decision of the week came in Riegel v. Medtronic, Inc. (06-179), where Justice Scalia led an 8-1 majority holding that FDA pre-market approval for a medical device precludes state common-law claims challenging its safety or effectiveness. The Riegels sued Medtronic after one of its catheters ruptured during his angioplasty, but the district court and Second Circuit held that his claims were precluded by the Medical Device Amendments ("MDA") of 1976, which barred states from imposing "requirements" on medical devices beyond those applied under federal law. The Court agreed, finding that the FDA's extensive pre-market approval process imposed MDA-eligible "requirements" on medical devices because it involved a rigorous review of their safety and effectiveness. It further held, consistent with prior decisions in this area of the law, that common-law causes of action for negligence or strict liability also impose "requirements" that must be consistent with federal law. Otherwise, state tort laws that require safer, but less effective devices than the FDA would disrupt the federal regulatory scheme no less than a state regulation to the same effect. In short, the MDA was not meant to give a state jury greater power to regulate than a state lawmaker; state tort remedies that "parallel" FDA requirements are fine, but those that go beyond the FDA are preempted.
Justice Ginsburg wrote a solo dissent, in which she noted that preemption was disfavored and that the purpose of the MDA was to preempt state regulatory activity rather than proscribe all state-law causes of action – especially since it created no federal compensatory remedy of its own. Justice Stevens concurred in part and in the judgment. In essence, he agreed with Ginsburg's description of the MDA's history and purpose but nevertheless believed that the language of the statute regarding "requirements" reached beyond regulations to common-law rules, and he felt compelled to go with the text in this case.
In a second preemption case, Rowe v. New Hampshire Motor Transport Ass'n (06-457), the Court unanimously held that federal laws deregulating trucking preempted Maine laws regulating the delivery of tobacco within the state. In 1980, Congress deregulated trucking, in the process providing that no state could enforce a law "related to a price, route, or service of any motor carrier . . . with respect to the transportation of property." Nevertheless, in 2003 Maine passed two laws aimed at keeping tobacco away from minors, requiring that only Maine-licensed tobacco dealers could accept shipments, that they had to use carriers that utilized special recipient-verification procedures, and that no one could transport a tobacco product to anyone in Maine unless either the sender or recipient had a Maine license. Numerous transport associations challenged the laws, and the lower courts found they were preempted. Led by Justice Breyer, the Court agreed, based on prior case law in the aviation and trucking context that state laws "having a connection with, or reference to" carrier services are preempted. While the Maine laws have an indirect effect on trucking – they tell shippers what they must choose rather than tell truckers what they have to do – they nevertheless clearly affect what services carriers have to offer in a way that distorts the market. The Court rejected Maine's argument that there was an implied public health exception in the federal law, finding no support in the text or legislative history for such an exception. Justice Scalia concurred in all but those portions of the opinion that relied on congressional committee reports. Justice Ginsburg concurred, but wrote separately to note that, while she agreed that federal law clearly preempted the Maine laws at issue, she doubted that Congress intended to facilitate minors' access to tobacco. She urged Congress to act quickly to address that issue in the context of tobacco shipments.

In what will not come as a shock to anyone who has followed the Court's recent arbitration jurisprudence, the Court held in Preston v. Ferrer (06-1463) that the Federal Arbitration Act ("FAA") supersedes state laws that lodge primary jurisdiction in a state regulatory entity. California's Talent Agencies Act ("TAA"), which requires talent agents to be licensed and invalidates any contract entered into by an unlicensed agent, vests exclusive jurisdiction in the California Labor Commission to resolve disputes under the Act. Preston, a lawyer that provided services to Alex Ferrer (better known as "Judge Alex") brought an arbitration against the good Judge for monies allegedly owned under their contract, which contained a broad arbitration clause. Preston claimed the contract was for personal management services (not covered by the TAA), while Ferrer claimed it was a talent contract and unenforceable since Preston was not licensed under the TAA. Ferrer convinced a California court to stay arbitration in favor of a proceeding before the California Labor Commission, but the high Court disagreed in an 8-1 decision led by Justice Ginsburg. The FAA, it held, created a national policy favoring arbitration. While it does not preempt substantive state law (including the requirements of the TAA), it dictates "who decides" those controversies. Where a contract contains a broad arbitration clause, challenges to the validity of the contract as a whole (as opposed to the arbitration clause itself) are for the arbitrator to decide regardless of state laws to the contrary. And there is no basis to differentiate between state laws that attempt to vest exclusive jurisdiction in a state court and those that attempt to vest jurisdiction in a state agency – the FAA supersedes both. So, Judge Alex can still argue that his contract with Preston is void and unenforceable under the TAA . . . but he'll have to do so before an essentially unreviewable arbitrator (irony anyone?).
Justice Thomas penned a lone dissent espousing his long-standing view that the FAA is merely a procedural device to allow for arbitration in federal courts and does not apply at all to state courts.
Continuing its trend of near-unanimity, in LaRue v. DeWolff, Boberg & Associates (06-856) the court sort-of-unanimously held that section 502(a)(2) of ERISA authorizes suits to recover for breaches of fiduciary duty that diminish the value of a retirement plan participant's individual account. That section provides for suits for fiduciary breaches that harm "plans." In Massachusetts Mutual Life Insurance Co. v. Russell (1985), the Court had held that a defined-benefit plan member could not sue under the section for damages due to the plan fiduciary's delay in processing her claim, because the section identified the "plan," not the member, as the victim and recipient of any relief. An individual member, therefore, would be harmed only by fiduciary misconduct that threatened the solvency of the "entire plan." LaRue, however, concerned a defined contribution plan, in which a member's benefits are pegged to her contributions and their management. The Court, led by Justice Stevens, held that the "landscape has changed" with the rise of such plans, in that fiduciary breaches now could affect individual plan members' accounts, and that as a result a plan member could sue for breaches that diminished the value of her account because her harm was the kind of harm that concerned ERISA's drafters. Justice Thomas concurred only in the judgment, along with Justice Scalia; they would dispense with the Court's homage to the "concerns" of ERISA's drafters and simply hold that assets in a member's account are by definition "plan assets," that a breach hurting their value therefore injures "the plan," and that a member can sue to recover on behalf of the plan (with her account reaping a corresponding benefit from the plan's overall recovery). The Chief concurred in part and in the judgment, along with Justice Kennedy; while he agreed that the lower court (here the Fourth Circuit) got it wrong, he thought that other sections of ERISA might more properly provide for the relief sought by LaRue, and he wrote that future courts might well consider whether the existence of these provisions precluded recovery by a plan member under section 502(a)(2).
The Court's final decision, in Danforth v. Minnesota (06-8273), will be a big one for all the criminal practitioners (the rest of you, however, may glaze over). A seven-Justice majority, led by Justice Stevens, held that states can provide broader retroactive effect to a newly announced rule of constitutional criminal procedure than required by the Court. In Crawford v. Washington, the Court held that the Sixth Amendment requires that testimonial statements be subject to cross-examination. Prior to that, courts had admitted such statements (such as a victim's taped statement) even if the witness was unavailable to be "confronted" if there were other indicia of reliability. It is clear that Crawford announced a "new rule" since it was not dictated by precedent (though it reflected the Court's belief as to what the Constitution has always required). "New rules" are applied to all future cases and all cases on direct appeal. However, under Teague v. Lane, new rules of criminal procedure are not applied retroactively in federal habeas corpus proceedings (after a conviction is final on direct appeal) unless the rule is a "watershed rule of criminal procedure" or it places certain conduct beyond the bounds of proscription. The Court had already found that Crawford was not a watershed rule – thus it would not apply to those seeking federal habeas corpus review of sentences that had become final on direct review prior to the Crawford decision. But the question here was whether state courts could nonetheless apply Crawford more broadly to individuals seeking state habeas relief. Minnesota believed that it was bound by the Court's retroactivity analysis and thus could not, but the majority disagreed. The majority explained that Teague was a decision construing the federal habeas statute (a statute with no application in state courts) and that a driving force behind Teague's presumption against retroactivity on federal habeas review of state court convictions was comity (i.e., the desire not to interfere with state convictions that are already final). These rationales were inapplicable to state courts and Teague never set out to constrain state courts' ability to provide greater retroactive effect to new rules announced by the Court.
The Chief, joined by Justice Kennedy, dissented, arguing that retroactivity analysis is inherently bound up with the nature of the constitutional right at issue and thus is a question of federal law. Allowing state courts to apply 50 different retroactivity analyses is inappropriate, particularly since the result may well be that two individuals who committed the same crime and whose convictions became final on the same date with be treated differently – one set free and one put to death – merely because of the disparate retroactivity rules adopted by their states. (For the majority, this type of nonuniformity is the price of a federal system, where crimes are defined under state law and punishments for the same conduct may vary greatly.)
The Court's order list this week included a number of cert grants and one original jurisdiction case. The new cases include:
Herring v. United States (07-513): Whether the Fourth Amendment requires evidence found during a search incident to an arrest to be suppressed when the arresting officer conducted the arrest and search in sole reliance upon facially credible but erroneous information negligently provided by another law enforcement agent.
14 Penn Plaza LLC v. Pyett (07-581): Is an arbitration clause contained in a collective bargaining agreement, freely negotiated by a union and an employer, which clearly and unmistakably waives the union members' right to a judicial forum for their statutory discrimination claims, enforceable?
Locke v. Karass (07-610): May a State . . . consistent with the First and Fourteenth Amendments, condition continued public employment on the payment of agency fees for purposes of financing a monopoly bargaining agent's affiliates' litigation outside of a nonunion employee's bargaining unit?
Kennedy v. Plan Administrator for Dupont Savings (07-636): Was the Fifth Circuit correct in concluding that ERISA's Qualified Domestic Relations Order provision, 29 U.S.C. § 1056(d)(3)(B)(i), is the only valid way a divorcing spouse can waive her right to receive her ex-husband's pension benefits under
Montana v. Wyoming (137 Orig.): This case concerns a dispute over the use of two tributaries of the Yellowstone River (so, assuming the case survives a 12(b)(6) motion from Wyoming, the Court will appoint yet another River Master!).
Finally, the Court asked for the SG's input on the cert. petition in PT Petamina v. Karaha Bodas Co. (07-619), which asks: (1) whether a federal district court has "ancillary" subject matter jurisdiction, after a judgment for money damages has been fully satisfied, to issue an anti-suit injunction barring foreign litigation; (2) whether a federal district court exercising its limited authority under the treaty governing enforcement of international arbitration awards may issue an anti-suit injunction barring foreign litigation on the ground that the district court views the foreign lawsuit as seeking to relitigate matters decided in the underlying arbitration that were never considered or decided in the federal court; and (3) whether an injunction barring foreign litigation presents a grave intrusion upon principles of international comity that is justified only when necessary to protect the jurisdiction of the U.S. federal court or to further an important public policy.
That's it for now -- thanks for reading!
Ken & Kim
From the Appellate Practice Group at Wiggin and Dana
For more information, contact Kim, Ken, or any other member of the Group at 203-498-4400