Supreme Court Update: Impression Products, Inc. v. Lexmark International, Inc. (15-1189), County of Los Angeles v. Mendez (16-369), Esquivel-Quintana v. Sessions (16-54) and BNSF Railway Co. v. Tyrrell (16-405)

June 2, 2017 Supreme Court Update

Greetings, Court Fans!

The Court packed four new opinions into this holiday-shortened week, including the first case to be decided by nine justices in sixteen months. In that case, BNSF Railway Co. v. Tyrrell (No. 16-405), The Nine held that the Federal Employers' Liability Act does not create a special rule authorizing jurisdiction over railroads in any state in which they happen to do business. Scroll down for that summary, as well as our look at Los Angeles v. Mendez (No. 16-369), where The (still) Eight rejected the Ninth Circuit's "provocation rule" in excessive-force cases, and Esquivel-Quintana v. Sessions (No. 16-54), holding, in the context of statutory rape offenses based solely on the age of the victim, that the generic federal definition of "sexual abuse of a minor" requires the victim to be less than 16.

But we'll lead off with the second major patent decision in as many weeks. Impression Products, Inc. v. Lexmark International, Inc. (No. 15-1189) is the latest in a long string of unanimous (or nearly so) decisions overruling some rule of patent law announced by the Federal Circuit. The case concerns the scope of the "patent exhaustion doctrine." Lexmark manufactures toner cartridges for laser printers, which are protected by several patents. Companies known as remanufacturers, including Impression Products, buy old Lexmark toner cartridges, refill them with toner, and resell them for less than the cost of a new Lexmark cartridge. To cut down on this practice, Lexmark began offering a "Return Program" for cartridges, which allows customers to purchase a new Lexmark cartridge at a substantial discount. But in exchange, the customer must sign a contract agreeing not to transfer the empty cartridge to anyone but Lexmark.

This didn't stop remanufacturers like Impression Products from buying old Lexmark cartridges, including cartridges sold as part of the Return Program. While Lexmark could have sued its customers for breaching their Return Program contracts, it chose instead to sue the remanufacturers. But because Lexmark had no contract with the remanufacturers, it couldn't sue them for breach of contract, so it sued them for patent infringement, arguing that by purchasing, refilling, and reselling old cartridges in breach of the Return Program contracts—contracts the remanufacturers knew about—the remanufacturers were infringing Lexmark's patents on the toner cartridges. Lexmark also argued that the remanufacturers were infringing its patent by purchasing toner cartridges Lexmark had originally sold abroad, importing them into the United States, and reselling them here. The District Court dismissed Lexmark's claims regarding the Return Program cartridges based on the doctrine of patent exhaustion but permitted the claims based on foreign-sold cartridges to proceed. But the Federal Circuit reversed as to the Return Program, allowing Lexmark to go forward with infringement suits regarding both categories of cartridges.

The Supreme Court unanimously reversed (with Justice Gorsuch still on the sidelines). Writing for the Court, Chief Justice Roberts first addressed the scope of the patent-exhaustion doctrine. Under that doctrine, when a patentee sells a patented item, the patentee "exhausts" all the rights protected by the patent monopoly. The sold product thus becomes the individual property of the purchaser, to use according to the ordinary rights of ownership. This rule derives from longstanding common-law principles prohibiting restraints on the alienation of property. Thus under the patent-exhaustion doctrine, the sale of a patented item is where the rights protected by patent law yield to the common law's property rules.

In the Chief's view, simply describing the patent-exhaustion doctrine resolves the case. In reaching a contrary result, the Federal Circuit (unsurprisingly) interpreted the doctrine differently. It believed that patent exhaustion derived from an interpretation of the patent infringement statute, which prohibits anyone from using or selling a patented article "without authority" from the patentee. According to the Federal Circuit, the sale of a patented item was a presumptive grant of authority to use the patented item however the purchaser wished, but that presumption could be rebutted when the patentee expressly conditioned the sale on some restriction, like Lexmark's prohibition on selling Return Program cartridges to third parties. The Supreme Court rejected this understanding of the doctrine: Patent exhaustion is not a gloss on the Patent Act but a long-recognized limitation on the scope of rights granted to patentees in the first place. Thus, there is nothing "presumptive" about exhaustion; when a patentee sells a patented good, it relinquishes all patent rights to the item, regardless of what its contract may purport to do. By selling Return Program cartridges, Lexmark therefore lost any right under the patent laws to control the future flow of commerce in those cartridges. It could, of course, seek to limit the sale of its cartridges through contract law, but the scope of that remedy is very different than the infringement suit against Impression Products.

This left only the question of whether patent-exhaustion barred Lexmark's claims based on cartridges originally sold abroad. Both the District Court and the Federal Circuit permitted those claims to proceed based on Federal Circuit caselaw holding that the patent-exhaustion doctrine does not apply to goods sold abroad. The Chief, now writing only for seven, reversed that rule as well. The Court relied heavily on its recent decision in Kirtsaeng v. John Wiley & Sons (2013), holding that the "first sale" doctrine of copyright law applies both to sales in the United States and abroad. That rule provides that when a copyright owner sells a lawfully made copy of its work, the copyright owner loses the power to restrict future sales of the work under the copyright laws. The Court found no reason why the very similar doctrine of patent exhaustion, which like the first-sale doctrine is based on the common law's antipathy toward restraints on alienation, should not also apply to sales of patented goods abroad. On this point only, Justice Ginsburg briefly dissented, based largely on her dissent in Kirtsaeng. Moreover, given fundamental differences between patent and copyright law, Justice Ginsburg doubted whether Kirtsaeng's reasoning applies in this separate context.

The result in this case—a unanimous (or nearly so) reversal of the Federal Circuit on a patent-law question—is hardly unusual in recent years, which have seen the Federal Circuit displace the Ninth and Sixth Circuits as the most reversed court of appeals. (Don't feel bad CA9 and CA6: you also got reversed this week!) But many of the Court's reversals of previous Federal Circuit decisions have been narrow, rejecting some categorical rule established by that court in favor of a more context-specific approach. This decision is likely to have much more substantial consequences for at least some patentees' business models, since it prevents them from controlling (at least via patent law) the downstream uses of patented goods they sell. Once again, we'll throw it to the patent nerds to tell you more about the potential impact of this decision.

From one favorite whipping circuit to another, we turn to County of Los Angeles v. Mendez (No. 16-369), where the Court unanimously shot down the Ninth Circuit's "provocation" rule, which (until now) permitted a Fourth Amendment plaintiff to recover for an otherwise reasonable use of force if the force was provoked by a separate Fourth Amendment violation.

LA County sheriff's deputies acting on a tip went to the property of Paula Hughes to search for an armed parolee-at-large named O'Dell. As part of the plan, Deputies Conley and Pederson were to search the backyard of the property, where there were several beat up cars and sheds, along with a shack that the deputies were told was inhabited by a man named Mendez and his pregnant girlfriend. When Pederson and Conley arrived at the residence, they searched three metal storage sheds for O'Dell but had no luck. Then they approached the one-room shack, apparently forgetting (or having not heard) that it was occupied by Mendez and his girlfriend, Garcia. Though they had no warrant, Deputy Conley opened the wooden door to the shack, without knocking or announcing their presence. Inside, Mendez and Garcia were napping on a futon. When Conley opened the door, Mendez jumped up, holding a BB gun that he used to kill pests. Seeing the BB gun, Conley yelled "gun!" and both deputies opened fire, shooting Mendez and Garcia multiple times and causing them severe injuries.

Mendez and Garcia sued under 42 U.S.C. § 1983, pressing three Fourth Amendment claims: a warrantless entry claim; a "knock and announce" claim; and an excessive force claim. After a bench trial, the District Court awarded Mendez and Garcia nominal damages on the first two claims, finding that the act of pointing the BB gun was a superseding cause of their actual damages. On the excessive-force claim, the District Court held that the use of force was reasonable under the circumstances since Mendez was holding a BB gun that appeared to be real, but that the deputies were nevertheless liable under the Ninth Circuit's "provocation rule," which holds that "an officer's otherwise reasonable (and lawful) defensive use of force is unreasonable as a matter of law, if (1) the officer intentionally or recklessly provoked a violent response, and (2) that provocation is an independent constitutional violation." The District Court awarded $4 million in damages. The Ninth Circuit affirmed in part and reversed in part. Unlike the District Court, it held that the deputies were entitled to qualified immunity on the knock-and-announce claim, but it affirmed the lower court's holding that the officers were not entitled to qualified immunity on the warrantless entry claim and it affirmed the application of the provocation rule to the excessive force claim, holding that the deputies had intentionally and recklessly brought about the shooting by entering the shack without a warrant in violation of clearly established law. The Ninth Circuit also adopted an alternative rationale for affirming: that "basic notions of proximate cause" would support liability even without the provocation rule because it was reasonably foreseeable that the officers would meet an armed homeowner when they "barged into the shack unannounced."

The Supreme Court unanimously reversed, in an opinion authored by Justice Alito. "The provocation rule, which has been sharply questioned outside the Ninth Circuit, is incompatible with our excessive force jurisprudence," the Court held, because "it uses another constitutional violation to manufacture an excessive force claim where one would not otherwise exist." Under the Court's Fourth Amendment jurisprudence, the operative question in an excessive-force case is "whether the totality of the circumstances justifies a particular sort of search or seizure." "That inquiry is dispositive: When an officer carries out a seizure that is reasonable, taking into account all relevant circumstances, there is no valid excessive force claim." The problem with the provocation rule is that it "fails to stop there." It provides a separate path to liability for excessive force even where the force is found to be reasonable by instructing courts to "look back in time to see if there was a different Fourth Amendment violation that is somehow tied to the eventual use of force." This approach conflates distinct Fourth Amendment claims, effectively permitting excessive-force claims that cannot succeed on their own terms. Though the provocation rule "may be motivated by the notion that it is important to hold law enforcement officers liable for the foreseeable consequence of all of their constitutional torts," there is no need to distort the excessive force inquiry in order to accomplish that objective. Plaintiffs can generally recover damages that are proximately caused by any Fourth Amendment violation, subject to qualified immunity. "For example," Alito noted, "if the plaintiffs in this case cannot recover on their excessive force claim, that will not foreclose recovery for injuries proximately cause by the warrantless entry." The problem with the Ninth Circuit's alternative holding on proximate cause, however, was that it focused almost entirely on the deputies' failure to knock and announce their presence, which that was the claim that the Ninth Circuit reversed on, holding that the deputies were entitled to qualified immunity. The Supreme Court remanded to permit the Ninth Circuit to consider whether Mendez and Garcia's injuries were proximately caused by the deputies' failure to secure a warrant at the outset, which is the claim that the Ninth Circuit affirmed on.

Next up, the Court played it close to the vest in Esquivel-Quintana v. Sessions (No. 16-54), hewing strictly to rules of statutory interpretation to determine what counts as "sexual abuse of a minor" under the Immigration and Nationality Act ("INA"). As in other recent cases interpreting immigration law, Justice Thomas's clinical deconstruction of the relevant provision bypassed the weightier question—debated in the briefs and at oral argument—of just how much deference to award immigration authorities' interpretation of the statute under Chevron.

Petitioner Esquivel-Quintana found himself fending off deportation after being convicted of statutory rape in California for consensual sex with his 16-year-old girlfriend. (California's definition of statutory rape includes situations where one party is under 18 and the other is more than three years older.) His removal order was based on Section 1101(a)(43) of the INA, which mandates deportation for federal and state convictions that qualify as "aggravated felonies," including "sexual abuse of a minor." Quintana argued that his conviction did not qualify given that his girlfriend was 16. The Board of Immigration Appeals ("BIA") denied his appeal, concluding that "sexual abuse of a minor" could include situations involving a 16 or 17 year old so long as there was a meaningful age difference between the victim and perpetrator. The Sixth Circuit deferred to the BIA's interpretation. This generated questions about deference that some Court watchers (and both parties) anticipated would lead to a major Chevron versus rule-of-lenity face-off.

Not this time. In a 12-page opinion for a unanimous Court (with Gorsuch again on the sidelines), Justice Thomas first noted that the removability provision of the INA requires a categorical approach, looking only to the offense of conviction and not the underlying facts of the crime. Therefore, a court must "presume that the state conviction ‘rested upon . . . th[e] least of the acts' criminalized by the statute, and then [] determine whether that conduct would fall within the federal definition of the crime." Applying this formulation, the Court considered whether sex between a 21-year-old and a just-under-18-year-old, as proscribed by California, would fall under the "generic" federal definition of the crime of "sexual abuse of a minor." The short answer: no. Age—and in particular, age of consent, rather than age of minority—was key. "By providing that the abuse must be ‘of a minor,' the statute of conviction must prohibit certain sexual acts based in part on the age of the victim," Thomas wrote. He then turned to dictionary definitions of age of consent today and in 1996, when "sexual abuse of a minor" was added to the INA's list of aggravated felonies; a related federal statute; and finally, state criminal codes, whose statutory rape provisions he appended to the Opinion.

Spurning California, the Court found that the consensus age of consent is 16: "Where sexual intercourse is abusive solely because of the ages of the participants, the victim must be younger than 16." For Esquivel-Quintana, this means California's statutory rape offense is not an aggravated felony per the INA, and thus can't get him deported. For everyone else, this means that questions about other kinds of sex crimes that might qualify as aggravated felonies, as well as when, if ever, the BIA's interpretation is entitled to deference under Chevron, must be left to another day.

Finally, then: Our first summary of a nine-vote decision since Musacchio v. United States (2016), back before the Iowa caucuses. Was it worth the wait? Absolutely, if you're a railroad fighting personal jurisdiction in a Big Sky state court. In BNSF Railway Co. v. Tyrrell (No. 16-405), the Court made it much more difficult for plaintiffs suing railroad companies to forum shop (just a week after making it difficult for patent holders to do the same), by holding that the Federal Employer's Liability Act ("FELA") does not create personal jurisdiction over railroads in any state where they've laid tracks.

The case involved two personal injury claims brought against BNSF under the Federal Employer's Liability Act ("FELA"), which makes railroads like BSNF liable to their employees for on-the-job injuries. Section 56 of the Act provides that such an action "may be brought in a district court of the United States, in the district of residence of the defendant, or in which the cause of action arose, or in which the defendant shall be doing business ...." It also provides that the "jurisdiction of the courts of the United States under this chapter shall be concurrent with that of courts of the several States." Relying on these provisions, two plaintiffs filed suit against BNSF for employment-related injuries in Montana state court. Plaintiffs did not reside in Montana, were not injured there, and never even worked for BNSF in Montana. BNSF, for its part, was not incorporated in Montana and did not maintain its principle place of business there. (Apparently, Billings is to personal injury claims against railroads as Marshall, TX, is to patent claims against infringers.) The plaintiffs argued that, notwithstanding Montana's lack of connection with the injuries at issue, BNSF—which did have over 2,000 miles of track and over 2,000 employees in Montana—was subject to personal jurisdiction based on FELA's "doing business" provision and, alternatively, under Montana law, which permits personal jurisdiction over any person "found within ... Montana." The Montana Supreme Court found personal jurisdiction over BNSF on both grounds.

The Supreme Court, all nine justices, reversed. With Justice Ginsburg at the helm, the Court explained that the portion of Section 56 identifying the district courts in which a FELA suit may be brought is a federal venue provision. It does not create personal jurisdiction over a defendant. And the second portion of Section 56 simply makes clear that FELA claims also can be pursued in state courts, abrogating a Connecticut Supreme Court decision concluding that such claims could only be filed in federal courts.

Having made short work of plaintiffs' FELA arguments, the Court ten turned to plaintiffs' arguments that BNSF was subject to personal jurisdiction under Montana state law. While BNSF conceded that it was "found within ... Montana" within the meaning of the Montana personal jurisdiction law, the Court held that this standard did not comport with the Fourteenth Amendment's Due Process Clause. The Court long ago held in International Shoe Co. v. Washington (1945) that a state court could exercise personal jurisdiction over an out-of-state defendant only where the defendant had sufficient minimum contacts with the forum state. And the Court has distinguished specific jurisdiction (where the case itself is linked to the jurisdiction) with general jurisdiction (where jurisdiction is sought over a defendant for all purposes). In the latter circumstance, the Court has emphasized that the defendant's contacts must be "so continuous and systemic as to render them essentially at home in the forum state." This will typically include the defendant's place of incorporation and principal place of business. While the Court noted that in an "exceptional case," a defendant might be subject to general jurisdiction in another forum beyond these two, this case was not exceptional. While BNSF certainly had some significant contacts with Montana, in comparison to its overall business, those contacts were small.

Justice Sotomayor concurred in part and dissented in part. She agreed with the majority that Section 56 of FELA was merely a federal venue provision, but she did not agree with the majority's due process analysis. In her view, International Shoe properly used a contextual approach that examined whether "the benefits a defendant attained from the forum State warranted the burden associated with general personal jurisdiction." This inquiry correctly focused on the amount of contact defendant had with the forum State, not the comparative level of contact a defendant had with the forum state versus other states. She lamented: "What was once a holistic, nuanced contacts analysis backed by considerations of fairness and reasonableness has now effectively been replaced by the rote identification of a corporation's principle place of business or place of incorporation." While the Court plays lip-service to the notion of an exceptional case, the fact that it did not even remand this case for the Montana Supreme Court to consider whether the BNSF's contacts with Montana rose to that level suggests that the Court reads the exception so narrowly "as to read the exception out of existence entirely."

And with that, we send you off to enjoy the weekend. We'll be hitting your inboxes again soon as the annual June deluge begins in earnest.