Supreme Court Update: T-Mobile v. City of Roswell (13-975), Hana Financial, Inc. v. Hana Bank (13-1211), Gelboim v. Bank of America (13-1174) and Christeson v. Roper (14-6873)

January 22, 2015 Supreme Court Update

Greetings, Court Fans!

What began as a trickle of decisions from the Court's October sitting has swiftly burgeoned into a flood. Yesterday, the Court announced decisions in three more cases, on top of the three decisions handed down Tuesday, and we still owe you one from last week! While it's fair to say we're underwater, we'll bail ourselves out a bit today with summaries of last week's decision in T-Mobile v. City of Roswell (13-975), yesterday's decisions in Hana Financial, Inc. v. Hana Bank (13-1211) and Gelboim v. Bank of America (13-1174), and Tuesday's per curiam in Christeson v. Roper (14-6873).

In T-Mobile South v. City of Roswell (13-975), the Court addressed the type of notice a locality must give to an applicant when it denies an application to build a cell-phone tower. The Telecommunications Act of 1996 requires a locality's denial to be "in writing and supported by substantial evidence contained in a written record." A spurned applicant may seek judicial review of a locality's decision within thirty days of date the denial is received. T-Mobile applied to build a cell tower in a residential neighborhood of Roswell, GA. While the city's zoning board approved the tower, the city council denied the application after a hearing in which there was opposition to the tower as unnecessary and aesthetically displeasing. Two days later, the City sent T-Mobile a letter stating that the application had been denied and that the minutes of the council meeting could be obtained from the City Clerk. However, those minutes were only approved and published twenty-six days later. That left T-Mobile only four days to seek judicial review within the thirty-day period provided by the Telecommunications Act. T-Mobile immediately brought suit in federal district court challenging the denial. The District Court concluded that the City's actions violated the Act because the written notice did not state the reasons for the denial, but the Eleventh Circuit reversed based on circuit precedent allowing state and local governments to state the reasons for the denial of an application in a written record separate from the notice of denial.

The Supreme Court reversed. Writing for a majority of six, Justice Sotomayor resolved two questions. First: Does the statue require localities to provide reasons for the denial of an application to build a cell-phone tower at all? The Court concluded that it does, based on the statutory scheme, which prevents localities from denying applications on certain grounds (such as discriminating against a particular wireless carrier) and allows for prompt judicial review of whether the locality's decision was supported by substantial evidence in a written record. Such review is only possible if courts can identify the reason or reasons why the locality denied the application. Second: Do the reasons for a denial have to be in the written notice of denial or can they be in a separate document? Here, the majority hedged, holding that there is no requirement in the Act that a statement of reasons be included in the same document as the written notice of denial, but that the reasons for denial must be stated "clearly enough to enable judicial review." According to the majority, this means that a "locality must provide or make available its written reasons at essentially the same time as it communicates its denial." This timing requirement follows from the Act's judicial-review provisions, which require review to be sought within thirty days of the denial of an application. An applicant can only make an informed decision whether or not to seek judicial review if it can ascertain the locality's reasons for denial at roughly the same time as the denial.

This is where the dissent split off. The Chief, joined by Justices Ginsburg and Thomas, agreed that the Act requires a written statement of reasons, which need not be contained within the written notice of denial, but found no reason to reach the timing question, which had not been considered below or raised by T-Mobile on appeal. Both the lower courts and the petitioner had considered the limited question of whether the written notice of denial must also contain the reasons for denial, which the Justices unanimously concluded was not required by the Telecommunications Act. The Chief further thought that the majority's timing requirement had no support in the text of the statute, which only required that a written record be available in time for judicial review. Although the Chief Justice disagreed with the majority's outcome, he noted that this was hardly a "sky is falling" dissent, since smart localities could easily comply with the court's timing rule by (among other things) delaying the written notice of a denial of an application until a written statement of reasons was available.

Justice Sotomayor also took the pen in Hana Financial, Inc. v. Hana Bank (13-1211), addressing whether the "tacking" of trademarks is a question of law to be resolved by judges or a factual question for juries. Trademark rights are generally determined by the date of the marks' first use in commerce, giving the first user of a mark priority over later users. But trademark law recognizes that trademark users should be allowed to make minor modifications to their marks without losing priority. Hence the "tacking" doctrine, which gives a new mark the priority position of an older mark when the two marks are "legal equivalents," meaning that they "create the same, continuing commercial impression" so that consumers "consider both as the same mark." So, for example, if "Wiggin and Dana" of New Haven changed its name (back) to "Wiggin & Dana," we'd want to use the tacking doctrine to defend against a lawsuit brought by Wiggum & Dana of Springfield over the use of their precious ampersand. But who would we have to persuade, judge or jury?

In this case, it was a jury that concluded that Hana Bank's original mark (a variation on its name, including the words "Hana Bank" in Korean) gave the same commercial impression as its new mark ("Hana Bank," in English) and therefore that it had priority over Hana Financial, who had sued it for infringing its intervening mark ("Hana Financial," in English). The Ninth Circuit affirmed on appeal, and the Supreme Court granted cert to resolve a circuit split with the Federal and Sixth Circuits, which have treated tacking as a question of law for the judge to decide.

Writing for a unanimous court, Justice Sotomayor had little problem concluding that tacking is a mixed question of law and fact reserved for the jury. The tacking standard developed in the lower courts, which, though never having been addressed by the Supreme Court was not challenged by either party, looks to the "commercial impression that a mark conveys . . . through the eyes of a consumer." Supreme Court precedent from a variety of doctrinal contexts recognizes that "when the relevant question is how an ordinary person or community would make an assessment, the jury is generally the decision-maker that ought to provide the fact-intensive answer." That's not to say that judges could never resolve a tacking question—motions for summary judgment or for judgment as a matter of law are available here as in other factual contexts. But where there is a real factual dispute on tacking, this dispute must be resolved by the jury.

The Court was unanimous once again in Gelboim v. Bank of America (13-1174), holding that, where the sole claim of a class action is dismissed, that is a final and appealable order, even if the class action has been consolidated with other actions for pretrial proceedings, and there remain other live claims in the other actions.

Plaintiffs Ellen Gelboim and Linda Zacher filed a class action complaint alleging that the defendant banks violated the Sherman Antitrust Act by manipulating the London InterBank Offered Rate ("LIBOR"). The suit was one of dozens alleging that banks had deliberately kept LIBOR low in order to pay lower interest rates. In 2011, the Judicial Panel on Multidistrict Litigation consolidated more than sixty LIBOR cases—including the Gelboim/Zacher class action—for pretrial purposes in the Southern District of New York. The District Court granted the defendant banks' motion to dismiss the antitrust claims against them. While the Gelboim/Zacher suit turned on an antitrust claim alone, other consolidated cases included additional claims that remained pending after the dismissal. When Gelboim and Zacher appealed, the Second Circuit (acting sua sponte) seized on this factor and dismissed the appeal for want of a final judgment, given that the District Court's order did not dispose of all claims in the MDL.

The Supreme Court reversed. Justice Ginsburg began by observing that Gelboim and Zacher could no longer participate in the MDL as the District Court had ruled against them on the merits of the sole claim in their case. The District Court's order therefore had "all the hallmarks of a final decision." To find it was not appealable would create a procedural nightmare where plaintiffs would have to guess when the order dismissing their claim became "final" for purposes of appeal: Once the pretrial consolidation has been concluded? Once all the cases in the MDL have been resolved? The "sensible solution" was to allow a plaintiff in an action consolidated for pretrial purposes whose claims have been dismissed in their entirety to appeal immediately. (The Court "express[ed] no opinion" on whether this rule applies to cases consolidated for all purposes, rather than just pretrial purposes.) The Court rejected the banks' argument that this rule might allow plaintiffs with weaker claims to appeal first, while plaintiffs with stronger claims could not appeal as of right if they had other claims pending before the District Court. As the Court explained, however, the solution to that issue already existed in Rule 54(b), which "is designed to permit acceleration of appeals in multiple-claim cases, not to retard appeals in single-claim cases."

Finally, in Christeson v. Roper (14-683), the Court GVR'd an Eighth Circuit decision summarily affirming a district court's refusal to appoint new counsel for a death row inmate who missed the deadline for filing a habeas petition due to the alleged malfeasance of his original lawyers. Under the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA), a prisoner has just one year after the date on which his conviction becomes final to file a federal habeas petition. Christeson's was due on April 10, 2005, and a federal judge in Missouri appointed him counsel (as required under 18 U.S.C. § 3599(a)(2)), nine months before that deadline. His appointed counsel, however failed even to get in touch with Christeson until more than six weeks after the deadline and they didn't file the petition until August 2005, more than 100 days too late. The District Court dismissed the petition as untimely and the Eighth Circuit affirmed. Almost seven years later, Christeson's attorneys contacted two new lawyers, to discuss how to proceed. The new lawyers recognized that Christeson's only hope was to argue that AEDPA's statute of limitations should be tolled in light of his original counsels' malfeasance in effectively abandoning his petition, and the original lawyers could not ethically raise such a claim due to an inherent conflict of interest. The new lawyers therefore filed a motion to substitute themselves as counsel, but the District Court denied it, finding that it was not in the interests of justice. The Eight Circuit summarily affirmed.

In a per curiam opinion, the Court granted Christeson's cert petition, vacated the decision and remanded for further proceedings. While the District Court had articulated the proper standard for appointing substitute counsel—"that a motion for substitution should be granted when it is in the ‘interests of justice'"—it badly erred in the application of that standard. The principal error was the lower court's failure to acknowledge the original counsels' inherent conflict of interest, given that equitable tolling based on attorney malfeasance is only available for "serious instances of attorney misconduct," something the original attorneys would be understandably loathe to ascribe to themselves. This factor alone warrants substitution, the Court held, irrespective of the other factors at play (e.g. the seven-year delay in filing the motion to substitute, the fact that it was filed shortly before Christeson's scheduled execution date, and the fact that the original counsel had continued to represent him in other matters). The Court therefore (having already stayed Christeson's execution), remanded for consideration of Christeson's equitable-tolling argument, with the assistance of new counsel.

That's all for now. We'll be back soon with summaries of the remaining decisions from this week: Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. (13-854), which addressed the appellate review standard for claim construction in patent cases; Holt v. Hobbs (13-6827), which struck down an Arkansas prison's grooming policy as applied against a Muslim inmate who wished to grow a ½-inch beard; Department of Homeland Security v. MacLean (13-894), which granted whistle-blower protection to a federal air marshal who leaked a TSA plan to cut costs by removing air marshals from certain long-distance flights.

Kim & Tadhg