Supreme Court Update: Filarsky v. Delia (10-1018) and Kappos v. Hyatt (10-1219)

April 20, 2012 Supreme Court Update

Greetings, Court fans!

In the spirit of jurisprudential unity, today we bring you two unanimous decisions: Filarsky v. Delia (10-1018), holding that a private individual retained by the government to carry out its work may seek qualified immunity under § 1983, and Kappos v. Hyatt (10-1219), in which the Court determined that unsuccessful patent applicants may introduce new evidence in support of their claims in district court proceedings and that the district court accords such new evidence de novo review.

Filarsky v. Delia (10-1018) took up a § 1983 action by Nicholas Delia, a Rialto, California firefighter who was out of work on a doctor's orders after becoming ill on the job. During his leave, the city suspected him of malingering and hired private investigators to conduct surveillance. The investigators saw Delia purchasing building supplies and the city concluded that Delia was likely spending his sick time working on his home. The city hired Steve Filarsky, an employment lawyer that had represented the city below, to conduct an administrative investigation interview. During the interview, Delia acknowledged that he had purchased the supplies, but denied that he had done work on his home. Filarsky asked permission to enter Delia's home to view the materials and verify that they had not been used, but Delia refused. When Delia also refused to bring the supplies onto his lawn voluntarily, Filarsky ordered him to produce the materials for inspection. Delia's attorney objected on Fourth Amendment grounds and threatened to sue both the city and Filarsky himself. Undeterred, Filarsky prepared a written order to produce the materials, which the fire chief signed. Delia ultimately brought the unused materials to his lawn for inspection, in compliance with the order.

Delia brought a § 1983 action alleging Fourth and Fourteenth Amendment violations by the city, the fire department, the fire chief, and others, including Filarsky. The district court concluded that all the individuals were entitled to qualified immunity. The Ninth Circuit affirmed with respect to everyone but Filarsky, concluding that because Filarsky was a private attorney rather than a city employee, he was not entitled to seek qualified immunity.

The Supreme Court reversed. Writing for a unanimous court, Chief Justice Roberts looked first to the state of the common law in 1871, when § 1983 was passed, to see what it revealed about immunity for private individuals employed to act on the government's behalf. In those days, there were few professional bureaucrats, and local governments relied heavily on private individuals who devoted some of their time to the public's work. Private individuals serving the government on temporary bases fulfilled even such core government responsibilities as criminal prosecutions. As late as 1853, even the Attorney General of the United States maintained an active private law practice. In this light, it is no surprise that, at common law, private actors filling public roles were entitled to the same immunities as their counterparts among the full-time government work force. The Court saw no reason not to carry forward the common law rule, and noted the government's interest in avoiding "unwarranted timidity" and ensuring that those who do the government's work do so "with the decisiveness and the judgment required by the public good." In the Court's view, extending immunities to private individuals acting on the government's behalf will help the government enlist the help of people with specialized knowledge and experience – people like Filarsky, who, in his 29-year career, had developed particular expertise in conducting internal affairs investigations.

Justices Ginsburg and Sotomayor each penned a concurrence. Justice Ginsburg wrote separately to note that, although a private attorney retained by the government to conduct an investigation may seek qualified immunity, on remand the court must still determine whether Filarsky knew or should have known that his conducted violated a clearly established right. If so, he would not be entitled to qualified immunity. Justice Sotomayor observed that, while the public versus private employee distinction was not a sound basis, on its own, to deny immunity, "it does not follow that every private individual who works for the government in some capacity necessarily may claim qualified immunity[.]" She cited Richardson v. McKnight (1977), in which the Court denied qualified immunity to privately employed prison guards, and cautioned that cases "should be decided as they arise, as is our longstanding practice in the field of immunity law."

Kappos v. Hyatt (10-1219) took up the case of Gilbert Hyatt, who submitted a patent application with 117 claims, only to have nearly all of them denied for lack of an adequate written description. Under the Patent Act of 1952, a disappointed patent aspirant like Hyatt may challenge the PTO's decision by filing a civil action in federal district court in which they may present evidence that they did not previously present to the PTO. The Court addressed two questions: (1) whether there were any limits on an applicant's ability to introduce new evidence in court, and (2) what standard of review the district court should apply when considering any new evidence.

Applicants have two alternate routes for judicial review of PTO denials. Title 35 U.S.C. § 141 permits an appeal directly to the Federal Circuit, which reviews the PTO's decision solely on the administrative record that was before the PTO – no additional evidence is allowed. The Administrative Procedure Act applies to § 141 proceedings, and the Federal Circuit upholds the PTO's factual findings unless they are "unsupported by substantial evidence." In contrast, 35 U.S.C. § 145 is a frustrated applicant's route to district court, where new evidence – including oral testimony, which not permitted before the PTO – is allowed.

Hyatt opted for the § 145 path. In support of his action, he submitted a written declaration identifying portions of the patent specification that supported his claims. The district court determined that it could not consider Hyatt's declaration because applicants were "precluded from presenting new issues" not put to the PTO. The only evidence that remained was the PTO's administrative record; applying the substantial evidence standard, the district court granted summary judgment in favor of the PTO. A divided panel of the Federal Circuit affirmed, but an en banc court vacated the district court's decision, concluding that Congress intended that applicants should be permitted to introduce new evidence in § 145 proceedings, and that, when new, conflicting evidence is introduced in a § 145 action, the district court must make de novo findings.

A unanimous Court joined in an opinion authored by Justice Thomas. The Court rejected the PTO Director's arguments, grounded in administrative law and practice under § 145's predecessor, that (1) new evidence should be admitted only if the applicant had no reasonable opportunity to present it to the PTO; (2) where new evidence is introduced, the district court should overturn the PTO's factual findings only in the face of clear agency error. Starting with the text of § 145, the Court found no unique evidentiary limits or any heightened standard of review that would differentiate § 145 cases from other civil actions in which the introduction of evidence is governed by the Federal Rules of Evidence and the Federal Rules of Civil Procedure. Nor should the district court be limited in its review by administrative law principles; because § 145 permits new evidence, the district court must act as a factfinder, and a deferential standard of review makes no sense because "[t]he PTO, no matter how great its authority or expertise, cannot account for evidence that it has never seen." So the district court must make its own de novo findings. The Court also held that administrative exhaustion rules do not apply in § 145 proceedings, meaning that applicants need not present all available evidence to the PTO in order to have that evidence considered in the district court. Although it rejected the PTO's appeal for a stricter evidentiary rule and an elevated standard of review, the Court did agree with the Federal Circuit that the district court may "consider the proceedings before and findings of the Patent Office in deciding what weight to afford an applicant's newly-admitted evidence."

Justice Sotomayor filed a separate concurrence, which Justice Breyer joined, expressing the view that equitable principles might limit the introduction of evidence in § 145 actions under certain circumstances. The concurrence noted that § 145 is grounded in equity, and that, consistent with equity practice and procedure, "there may be situations in which a litigant's conduct before the PTO calls into question the propriety of admitting evidence presented for the first time in a § 145 proceeding before the district court." A court's equitable authority to exclude evidence "is limited, and must be exercised with caution. . . . Thus, when a patent applicant fails to present evidence to the PTO due to ordinary negligence, a lack of foresight, or simple attorney error, the applicant should not be estopped from presenting evidence for the first time in a § 145 proceeding." Because Hyatt's failure to present evidence to the PTO appeared to result from negligence or lack of foresight, Justice Sotomayor agreed that he was entitled to present his additional evidence in the district court, but noted that courts generally retain their authority to exclude evidence consistent with equity practice.

We'll be back soon with two more opinions. Stay tuned to see if the unanimity streak continues...

Kim & Jenny

From the Appellate and Complex Legal Issues Practice Group at Wiggin and Dana. For more information, contact Kim Rinehart or any other member of the Practice Group at 203-498-4400