Supreme Court Update-Part II: Mayo Collaborative Services v. Prometheus Laboratories, Inc. (10-1150), Coleman v. Court of Appeals of Maryland (10-1016), Sackett v. Environmental Protection Agency (10-1062) and Order List

March 22, 2012 Supreme Court Update

Greetings, Court fans!

We're back with Mayo Collaborative Services v. Prometheus Laboratories, Inc. (10-1150), a major patent decision addressing when inventions involving "laws of nature" can be patented; Coleman v. Court of Appeals of Maryland (10-1016), on State employers' immunity from suit under the "self-care" provision of the Family and Medical Leave Act; Sackett v. Environmental Protection Agency (10-1062), on whether review is available under the Administrative Procedure Act for compliance orders issued by the EPA under the Clean Water Act; and the Court's recent orders.

We know the patent lawyers out there have been waiting for Mayo Collaborative Services v. Prometheus Laboratories, Inc. (10-1150), so we'll start there. Prometheus is the exclusive licensee of two patents on a method to determine the proper dose of thiopurine drugs for patients with autoimmune diseases. Thiopurine is metabolized by the body, resulting in thiopurine metabolites in the blood. Because patients metabolize thiopurine differently, it was difficult for doctors to determine the proper dosage for a particular patient. Even before the patent applications at issue were filed, scientists knew that thiopurine metabolite levels could be used to predict clinical efficacy and tolerance. However, the precise correlation between metabolite levels and harm or ineffectiveness was not known. The two patents at issue embody findings that metabolite concentrations above 400 picomoles per a specified amount of red blood cells are likely to be too high (i.e. toxic), while concentrations below 230 picomoles are likely to be too low to be effective. The patent claims frame this research in terms of processes: (1) give the patient a drug containing 6-thioguanine; (2) determine the metabolite levels in the patient; and (3) if less than 230 picomoles, increase the dosage; if more than 400 picomoles, decrease the dosage.

Prometheus sold diagnostic test kits which implemented the patents' steps. Mayo bought these kits for a number of years, but after collecting data based on its own patient population, decided to create, use, and sell its own diagnostic kits, which were similar to the Prometheus kits, but used slightly different metabolite levels (e.g., 450 rather than 400 picomoles at the upper end). Prometheus sued Mayo for patent infringement. The district court found that Mayo's kits infringed Prometheus's patents, but that the patents were invalid because they effectively claimed laws of nature or natural phenomena. The Federal Circuit reversed, finding that the steps of the patent (e.g., giving a drug and determining the metabolite level) involved the transformation of the human body/blood sufficiently that the patents met the Federal Circuit's "machine or transformation test," which the court found sufficient to confine the reach of the patents such that they would not constitute a patent on a natural law.

Justice Breyer authored the Court's unanimous decision, reversing the Federal Circuit. The Court explained that the patents at issue really amounted to little more than a statement that physicians should "apply" a law of nature (i.e., the correlation between thiopurine metabolite levels in the blood and the likelihood that the drug will be effective or toxic to the patient). While the Court cited plenty of cases and performed a detailed analysis, we can't help but feel that the opinion comes close to the "I know it when I see it" test for obscenity. Nevertheless, we endeavor to sum up the Court's analysis. Section 101 of the Patent Act defines patentable subject matter broadly, but has long been held to have an implicit exception for "laws of nature, natural phenomena, and abstract ideas." However, a specific "application" of a law of nature may be patentable if it contains sufficient elements so as to form an "inventive concept" that "amounts to significantly more than a patent upon the natural law itself." The patents here failed that test because, apart from the law of nature, the steps at issue (giving patients a drug and measuring metabolite levels) were "well-understood, routine, conventional activity previously engaged in by researchers in the field" prior to the issuance of the patents. In sum, the steps simply told a specific audience (doctors treating patients with autoimmune diseases) to "apply" the law of nature (the correlation between metabolite levels and effectiveness/toxicity). The Court rejected the Federal Circuit's conclusion that the patents meet the "machine or transformation test," (which under the Court's prior holding in Bilski is just a "clue" to patentability under Section 101 in any event), but even if they had, that test does not trump the law of nature exception. The Court also rejected the Government's arguments that virtually any step should be sufficient to transform a law of nature into potentially patentable material and that other patent sections (such as Section 102's "novelty" requirement) can weed out improper patents. The Court refused to make the law of nature exception to Section 101 – which had stood the test of time – "a dead letter." So, doctors across the country are now free to use the thiopurine correlation without fear of patent liability.

In Coleman v. Court of Appeals of Maryland (10-1016), a divided Court held that States are immune from suits for money damages under the so-called "self-care" provision of the Family and Medical Leave Act (FMLA). The FMLA entitles eligible employees to take up to 12 weeks of unpaid leave each year to care for a newborn or newly adopted child or to care for a seriously ill family member (the "family-care" provisions) or to attend to "the employee's own serious health condition when the condition interferes with the employee's ability to perform at work" (the "self-care" provision). Petitioner Daniel Coleman was employed by the Maryland Court of Appeals, the state's highest court. Coleman brought suit after he was threatened with termination upon requesting sick leave. The FMLA creates a private right of action for equitable relief and money damages "against any employer (including a public agency)." The District Court dismissed Coleman's suit, however, finding that the FMLA's self-care provision did not validly abrogate the State's immunity from suit. The Fourth Circuit affirmed, as did the Court.

Justice Kennedy wrote the plurality opinion, which the Chief, Thomas, and Alito joined. (Justice Scalia added a fifth vote for the judgment only.) Under the Court's precedents, Congress may abrogate the States' sovereign immunity from suit pursuant to its powers under Section 5 of the Fourteenth Amendment only when its legislation is targeted at conduct transgressing the Fourteenth Amendment's substantive provisions and there is a "congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end." In Nevada Dept. of Human Resources v. Hibbs (2003), the Court held that Congress could subject the States to suits for violations of the FMLA's family-care provisions, because Congress enacted those provisions in response to the States' record of sex-based discrimination in the administration of family leave benefits. The plurality found that no such record existed with regard to self-care leave. When the FMLA was enacted, the vast majority of state and local government employees were covered by paid sick leave plans, and the evidence did not suggest that States administered these policies in a discriminatory way. The plurality also rejected Coleman's – and the dissent's – argument that the FMLA's self-leave provision is a "necessary adjunct" to its family-care provisions. Even if employers are reluctant to hire women because they assume that women will take more family-care leave, there is no evidence that the availability of self-care leave equalizes the amount of total care men and women take, or that employers expect them to take. The plurality concluded with a don't-blame-us: If any State believed that damages for violations of the self-care provision are necessary to combat discrimination against women, that State could waive its immunity or create a parallel state law cause of action.

Justice Thomas wrote a separate concurrence to say that Hibbs was wrongly decided because, in his view, not even the family-care provisions of the FLMA are sufficiently linked to a demonstrated pattern of unconstitutional discrimination by the States. Justice Scalia concurred in the judgment only. Scalia criticized the "congruence and proportionality" test used by both the plurality and the dissent as a "flabby" test that invited "judicial arbitrariness and policy-driven decisionmaking." He would limit Congress's power to abrogate States' sovereign immunity to conduct that itself violates the Fourteenth Amendment, which, in his view, failure to grant leave for self-care (or any purpose) does not.

Justice Ginsburg wrote an impassioned dissent for the liberal wing of the Court. (Justice Breyer joined the entire opinion, while Justices Sotomayor and Kagan opted out of footnote 1, which argued that Congress could also abrogate state sovereign immunity under its Commerce Clause powers, or under Section 5 of the Fourteenth Amendment so long as Congress could reasonably conclude that the legislation was an "appropriate way" to enforce a "basic equal protection requirement.") Tracing the history of the FMLA, Ginsburg explained that the Act was envisioned as "a way to guarantee – without singling out women or pregnancy – that pregnant women would not lose their jobs when they gave birth." "Equal treatment" feminists believed that treating pregnancy differently from other disabilities perpetuated discrimination against women. Among other things, laws that specifically and only required pregnancy leave for female employees gave employers an incentive to discriminate against women in hiring. This, of course, is illegal, but may be hard to prove. As the Senate Report accompanying the FMLA explained, a "significant benefit" of the legislation was "the form of protection it offers women workers who bear children. Because the bill treats all employees who are temporarily unable to work due to serious health conditions in the same fashion, it does not create the risk of discrimination against pregnant women posed by legislation which provides job protection only for pregnancy related disability." In the dissenters' view, Congress's decision to provide for self-care leave as well as family-care leave was a congruent and proportional response to pervasive discriminatory treatment of pregnant women and all women. Although the dissenters' view ultimately did not carry the day, Justice Ginsburg emphasized that the plurality opinion did not authorize state employers to violate the FMLA. Although State employees may not sue for money damages, they may sue for injunctive relief, and the Department of Labor may bring an action for monetary relief on the employee's behalf.

Sackett v. Environmental Protection Agency (10-1062), involved residential property owners (the Sacketts) who filled in a portion of their 2/3 acre lot in order to build a house and got slapped with an EPA compliance order informing them that their lot (which was near a lake, but removed from it by several permanent structures) contained wetlands subject to the Clean Water Act and that the Sacketts had violated the Act by placing fill material on the property. The EPA's compliance order directed them to immediately restore the property pursuant to an approved work plan. The Sacketts asked the EPA for a hearing to contest the EPA's finding that their property was subject to the Act, but the EPA refused. The Sacketts then brought suit under the Administrative Procedure Act (APA) in the District Court for the District of Idaho, arguing that the compliance order was "arbitrary and capricious" and seeking declaratory and injunctive relief. The district court dismissed the suit for lack of jurisdiction and the Ninth Circuit affirmed, finding that the Clean Water Act precluded judicial review of compliance orders issued by the EPA (which are not self-executing) and that this prohibition did not violated the Sacketts' due process rights under the Fifth Amendment.

The Court unanimously reversed, in an opinion by Justice Scalia. When the EPA concludes that a violation of the Clean Water Act has taken place, it can either issue a compliance order or initiate a civil enforcement action under 33 U.S.C. § 1319(a)(3). If the EPA pursues the latter approach, the Act provides for a civil penalty of up to $37,000 per day for each violation. The EPA contends that the potential penalty doubles where a person has been issued a compliance order and has failed to comply (i.e., $75,000 per day). The Act provides for judicial review of civil enforcement proceedings, but does not expressly provide for review of compliance orders. The Court found that such orders are nonetheless subject to review under Chapter 7 of the APA, which provides for review of "final agency action for which there is no other adequate remedy in court." The compliance order constituted a "final agency action" because the issuance of the order "determined" the Sacketts' "rights and obligations" and marked the "‘consummation' of the agency's decisionmaking process." There was no other adequate remedy in court because only the EPA can institute a civil enforcement action under the Act, and the Sacketts would be forced to wait until the EPA chose to do so, all while civil penalties piled up at $75,000 a day! Moreover, the APA creates a presumption favoring judicial review of administrative action. Accordingly, the Sacketts will have their day in court.

Justice Ginsburg penned a separate concurrence to note her view that the Court's opinion is limited to the issue of whether an individual can bring suit under the APA to challenge the EPA's jurisdictional determination that their property is covered by the Clean Water Act and that the Court has not addressed whether the APA also provides a way to challenge the "terms and conditions of the compliance order." Justice Alito also wrote separately to urge Congress to provide a more precise definition of what waters are covered by the Act.

The Court also granted cert in two cases this week:

Ryan v. Gonzales (10-930) asks whether 18 U.S.C. § 3599(a)(2) – which provides that an indigent capital state inmate pursuing federal habeas relief "shall be entitled to the appointment of one or more attorneys" – impliedly entitles a death row inmate to stay the federal habeas proceedings he initiated if he is not competent to assist counsel.

Tibbals v. Carter (11-218) similarly asks, (1) Do capital prisoners possess a "right to competence" in federal habeas proceedings under Rees v. Peyton (1966), and (2) can a federal district court order an indefinite stay of a federal habeas proceeding under Rees?

Finally, for all you hardcore Court fans: the Court announced that audio recordings and transcripts of next week's oral arguments in the Patient Protection and Affordable Care Act cases will be made available after argument each day, likely by 2 p.m. after the March 26-28 morning sessions and by 4 p.m. after the March 28 afternoon session.

There's one more decision – a real doozy on the Longshore and Harbor Workers' Compensation Act – which we'll save for next time. Until then, as always, thanks for reading!

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