Supreme Court Update: Sandifer v. United States Steel Corp. (12-417) and Medtronic v. Mirowski Family Ventures, LLC (12-1128)

February 3, 2014 Supreme Court Update

Greetings, Court fans!

As promised, we're back to wrap things up with two more decisions: Sandifer v. United States Steel Corp. (12-417), on what constitutes "changing clothes" under the Fair Labor Standards Act; and Medtronic v. Mirowski Family Ventures, LLC (12-1128), holding that a patentee has the burden of proving infringement even in a declaratory relief action brought by a licensee.

Under the Fair Labor Standards Act ("FLSA"), workers in hazardous jobs must be compensated for the time required to don and doff protective gear. However, under Section 203(o) of the FLSA, parties to a collective bargaining agreement can agree that "time spent in changing clothes . . . at the beginning or end of each workday" is noncompensable. In Sandifer v. United States Steel Corp. (12-417), the Court held that "changing clothes" can include protective gear, thus making compensation for time spent donning and doffing this gear at the start and end of the workday "a subject appropriately committed to collective bargaining." The decision will have significant impact on unionized workers who must change in and out of protective gear as part of their regular workdays.

Clifton Sandifer and a group of current and former employees of United States Steel Corporation ("US Steel") brought suit against US Steel under the FLSA seeking to recover back pay for time spent donning and doffing flame-retardant jackets, pants, hoods, hardhats, snoods, wristlets, work gloves, leggings, metatarsal boots, safety glasses, and earplugs. US Steel, however, contended that this donning and doffing time was noncompensable under parties' collective bargaining agreement. The employees argued that donning and doffing protective gear did not qualify as "changing clothes" under Section 203(o) of the FLSA because ordinarily "clothes" do not perform a "protective" function. The district court sided with US Steel, holding that donning and doffing the protective gear constituted "changing clothes" within the meaning of Section 203(o) and that any time donning and doffing items that were not clothes—such as the glasses and earplugs—was "de minimus," and therefore noncompensable. The Seventh Circuit affirmed.

In an opinion by Justice Scalia, the Court unanimously agreed. Relying on dictionary definitions from 1950, around the time Congress added Section 203(o) to the FLSA, the Court concluded that "clothes" referred to "items that are both designed and used to cover the body and are commonly regarded as articles of dress." Given this definition, the Court rejected the employees' argument that clothes did not refer to gear that protects against hazards. Such a narrow interpretation, the Court found, would reduce Section 203(o) "to near nothingness" because it would eliminate the applicability of Section 203(o) for "factory workers, butchers, longshoremen, and a host of other occupations" for which protective gear "is the only clothing that is integral and indispensable" to those jobs. The ordinary meaning of the word "clothes," according to the Court, includes the protective items worn by the employees, even if they had an additional function of providing protection from hazards. The Court made clear that its definition of "clothes" left "room for distinguishing between clothes and wearable items that are not clothes, such as some equipment and devices."

Having settled on a definition of "clothes," the Court also rejected the employees' argument that the term "changing" clothes was limited to substituting one outfit for another. The employees argued they did not "change" their clothes because they put their protective gear on over their street clothes. The Court, however, found that the word "changing" also includes "altering" what one is wearing, regardless of what one must remove (or not remove) first. Any other meaning, according to the Court, would leave the applicability of Section 203(o) on unacceptably unpredictable ground. Such a limited meaning of the word "changing" would leave Section 203(o) subject to the whim of "purely personal choice" influenced by such "happenstances and vagaries as what month it is, what styles are in vogue, what time the employee wakes up, [and] what mode of transportation he uses . . . ."

After addressing the definition of "changing clothes," the Court concluded that the majority of the items donned and doffed by the employees—in fact every item except safety glasses and ear plugs—counted as "clothes" and that taking them on and off was "changing." The Court found that the time it took to put on and take off ear plugs and safety glasses was insignificant and that "[t]he question for courts is whether the period at issue can, on the whole, be fairly characterized as ‘time spent changing clothes.'"

The Court continued its unanimous streak in Medtronic, Inc. v. Mirowski Family Ventures LLC (12-1128). Here are the quick facts: Mirowski Family Ventures owns patents relating to implantable heart stimulators. More than two decades ago, Medtronic and Mirowski entered into a licensing agreement allowing Medtronic to practice certain of the Mirowski patents in exchange for a royalty. The agreement (as amended) provided that if Mirowski told Medtronic that a new Medtronic product infringed a Mirowski patent, Medtronic could either (a) cure the nonpayment of royalties; or (b) accumulate the disputed royalties in an escrow account while at the same time challenging the assertion of infringement through a declaratory judgment action. If Medtronic just ignored the agreement, Mirowski could, of course, terminate the license and bring an infringement action itself. In 2007, the parties found themselves in the predicted dilemma: Mirowski claimed seven new Medtronic products infringed, but Medtronics took the position that its products did not infringe because they were either outside the scope of the patent claims or because the patents were invalid. Medtronic accumulated the royalties as provided in the agreement and brought a declaratory judgment action to resolve the dispute. The district court held that even though Mirowski was the defendant in the action, as the patentee, Mirowski still bore the burden of proving infringement. The Federal Circuit reversed, holding that the declaratory judgment plaintiff bears the burden of proof where the patentee is not only a defendant but is also foreclosed from asserting an infringement counterclaim by virtue of the existing license agreement.

The Court reversed right back, in a (typically pragmatic) opinion by Justice Breyer. First, the Court quickly dispensed with a jurisdictional argument asserted by an amicus, who claimed that the Federal Circuit did not have jurisdiction because that court had exclusive jurisdiction only over appeals from "any civil action arising under any Act of Congress relating to patents." According the to the amicus, this action didn't qualify because, to determine the nature of this action, the court should look at the nature of the suit Mirowski could have brought against Medtronic – and that suit would have been in the nature of a breach of contract suit, not a patent law suit. The Court disagreed, explaining that the true essence of this action was that Medtronic believed it was not infringing. If Medtronic had acted on that belief and continued to infringe without accumulating the royalties, Mirowski could have sued for infringement. Thus, this case was a civil action relating to patents.

The Court turned next to the burden of proof. It is well-established that a patentee normally has the burden of establishing infringement, even where the patentee asserts infringement as a counterclaim in a declaratory relief action brought by a licensee. Indeed, the burden of proof is a "substantive aspect of a claim." The Declaratory Judgment Act is procedural only and cannot alter the substantive law. Thus, while the Act permits a licensee to bring suit where it otherwise would not be able to do so, it cannot alter the fact that the burden of proof remains where it always has been: on the patentee.

We'll be back soon with whatever the Court issues next.

Kim, Jenny & Julie

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