From: "Legal Information Institute [LII]" <Legal_Information_Institute_LII@mail.vresp.com>
Date: May 26, 2015 12:21 PM
Subject: Supreme Court Bulletin for Tuesday, May 26, 2015
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The following information has just arrived via the LII's direct Project HERMES feed from the Supreme Court. A list of links for today's material is followed by the syllabus for any case which had one.
Contents
- (052615 Orders)
- KELLOGG BROWN & ROOT SERVICES, INC. v. UNITED (12-1497 Syllabus)
- COMMIL USA, LLC v. CISCO SYSTEMS, INC. (13-896 Syllabus)
- WELLNESS INT'L NETWORK, LTD. v. SHARIF (13-935 Syllabus)
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| Syllabus | Opinion [Alito] |
|---|---|
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .
SUPREME COURT OF THE UNITED STATES
Syllabus
KELLOGG BROWN & ROOT SERVICES, INC., et al. v. UNITED STATES ex rel. CARTER
certiorari to the united states court of appeals for the fourth circuit
No. 12–1497. Argued January 13, 2015—Decided May 26, 2015
Private parties may file civil qui tam actions to enforce the False Claims Act (FCA), which prohibits making "a false or fraudulent claim for payment or approval," 31 U. S. C. §3729(a)(1), "to . . . the United States," 3729(b)(2)(A)(i). A qui tam action must generally be brought within six years of a violation, §3731(b), but the Wartime Suspension of Limitations Act (WSLA) suspends "the running of any statute of limitations applicable to any offense" involving fraud against the Federal Government. 18 U. S. C. §3287. Separately, the FCA's "first-to-file bar" precludes a qui tam suit "based on the facts underlying [a] pending action," §3730(b)(5).
In 2005, respondent worked for one of the petitioners, providing logistical services to the United States military in Iraq. He subsequently filed a qui tam complaint (Carter I), alleging that petitioners, who are defense contractors and related entities, had fraudulently billed the Government for water purification services that were not performed or not performed properly. In 2010, shortly before trial, the Government informed the parties that an earlier-filed qui tam suit (Thorpe) had similar claims, leading the District Court to dismiss Carter I without prejudice under the first-to-file bar. While respondent's appeal was pending, Thorpe was dismissed for failure to prosecute. Respondent quickly filed a new complaint (Carter II), but the court dismissed it under the first-to-file rule because Carter I's appeal was pending. Respondent then dismissed that appeal, and in June 2011, more than six years after the alleged fraud, filed the instant complaint (Carter III). The District Court dismissed this complaint with prejudice under the first-to-file rule because of a pending Maryland suit. Further, because the WSLA applies only to criminal charges, the court reasoned, all but one of respondent's civil actions were untimely. Reversing, the Fourth Circuit concluded that the WSLA applied to civil claims and that the first-to-file bar ceases to apply once a related action is dismissed. Since any pending suits had by then been dismissed, the court held, respondent had the right to refile his case. It thus remanded Carter III with instructions to dismiss without prejudice.
Held:
1. As shown by the WSLA's text, structure, and history, the Act applies only to criminal offenses, not to civil claims like those in this case. Pp. 5–11.
(a) The 1921 and 1942 versions of the WSLA were enacted to address war-related fraud during, respectively, the First and Second World Wars. Both extended the statute of limitations for fraud offenses "now indictable under any existing statutes." Since only crimes are "indictable," these provisions quite clearly were limited to criminal charges. In 1944, Congress made the WSLA prospectively applicable to future wartime frauds rather than merely applicable to past frauds as earlier versions had been. In doing so, it deleted the phrase "now indictable under any statute," so that the WSLA now applied to "any offense against the laws of the United States." Congress made additional changes in 1948 and codified the WSLA in Title 18 U. S. C. Pp. 5–6.
(b) Section 3287's text supports limiting the WSLA to criminal charges. The term "offense" is most commonly used to refer to crimes, especially given the WSLA's location in Title 18, titled "Crimes and Criminal Procedure," where no provision appears to employ "offense" to denote a civil violation rather than a civil penalty attached to a criminal offense. And when Title 18 was enacted in 1948, its very first provision classified all offenses as crimes. In similar circumstances, this Court has regarded a provision's placement as relevant in determining whether its content is civil or criminal. Kansas v. Hendricks, 521 U. S. 346 . The WSLA's history provides further support for this reading. The term "offenses" in the 1921 and 1942 statutes, the parties agree, applied only to crimes. And it is improbable that the 1944 Act's removal of the phrase "now indictable under any statute" had the effect of sweeping in civil claims, a fundamental change in scope not typically accomplished with so subtle a move. The more plausible explanation is that Congress removed that phrase in order to change the WSLA from a retroactive measure designed to deal exclusively with past fraud into a permanent measure applicable to future fraud as well. If there were any ambiguity in the WSLA's use of the term "offense," that ambiguity should be resolved in favor of a narrower definition. See Bridges v. United States, 346 U. S. 209, 216. Pp. 7–11.
2. The FCA's first-to-file bar keeps new claims out of court only while related claims are still alive, not in perpetuity. Thus, dismissal with prejudice was not called for in this case. This reading of §3730(b)(5) is in accordance with the ordinary dictionary meaning of the term "pending." Contrary to petitioners' reading, the term "pending" cannot be seen as a sort of "short-hand" for first-filed, which is neither a lengthy nor a complex term. Petitioners' reading would also bar even a suit dismissed for a reason having nothing to do with the merits, such as Thorpe, which was dismissed for failure to prosecute. Pp. 11–13.
710 F. 3d 171, reversed in part, affirmed in part, and remanded.
Alito, J., delivered the opinion for a unanimous Court.
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| Syllabus | Opinion [Kennedy] | Dissent [Scalia] |
|---|---|---|
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .
SUPREME COURT OF THE UNITED STATES
Syllabus
COMMIL USA, LLC v. CISCO SYSTEMS, INC.
certiorari to the united states court of appeals for the federal circuit
No. 13–896. Argued March 31, 2015—Decided May 26, 2015
Petitioner Commil USA, LLC, holder of a patent for a method of implementing short-range wireless networks, filed suit, claiming that respondent Cisco Systems, Inc., a maker and seller of wireless networking equipment, had directly infringed Commil's patent in its networking equipment and had induced others to infringe the patent by selling the infringing equipment for them to use. After two trials, Cisco was found liable for both direct and induced infringement. With regard to inducement, Cisco had raised the defense that it had a good-faith belief that Commil's patent was invalid, but the District Court found Cisco's supporting evidence inadmissible. The Federal Circuit affirmed the District Court's judgment in part, vacated in part, and remanded, holding, as relevant here, that the trial court erred in excluding Cisco's evidence of its good-faith belief that Commil's patent was invalid.
Held: A defendant's belief regarding patent validity is not a defense to an induced infringement claim. Pp. 5–14.
(a) While this case centers on inducement liability, 35 U. S. C. §271(b), which attaches only if the defendant knew of the patent and that "the induced acts constitute patent infringement," Global-Tech Appliances, Inc. v. SEB S. A., 563 U. S. ___, ___, the discussion here also refers to direct infringement, §271(a), a strict-liability offense in which a defendant's mental state is irrelevant, and contributory infringement, §271(c), which, like inducement liability, requires knowledge of the patent in suit and knowledge of patent infringement, Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U. S. 476 (Aro II). Pp. 5–6.
(b) In Global-Tech, this Court held that "induced infringement . . . requires knowledge that the induced acts constitute patent infringement," 563 U. S., at ___, relying on the reasoning of Aro II, a contributory infringement case, because the mental state imposed in each instance is similar. Contrary to the claim of Commil and the Government as amicus, it was not only knowledge of the existence of respondent's patent that led the Court to affirm the liability finding in Global-Tech, but also the fact that petitioner's actions demonstrated that it knew it would be causing customers to infringe respondent's patent. 563 U. S., at ___. Qualifying or limiting that holding could make a person, or entity, liable for induced or contributory infringement even though he did not know the acts were infringing. Global-Tech requires more, namely proof the defendant knew the acts were infringing. And that opinion was clear in rejecting any lesser mental state as the standard. Id., at ___. Pp. 6–9.
(c) Because induced infringement and validity are separate issues and have separate defenses under the Act, belief regarding validity cannot negate §271(b)'s scienter requirement of "actively induce[d] infringement," i.e., the intent to "bring about the desired result" of infringement, 563 U. S., at ___. When infringement is the issue, the patent's validity is not the question to be confronted. See Cardinal Chemical Co. v. Morton Int'l, Inc., 508 U. S. 83 . Otherwise, the long held presumption that a patent is valid, §282(a), would be undermined, permitting circumvention of the high bar—the clear and convincing standard—that defendants must surmount to rebut the presumption. See Microsoft Corp. v. i4i Ltd. Partnership, 564 U. S. ___, ___–___. To be sure, if a patent is shown to be invalid, there is no patent to be infringed. But the orderly administration of the patent system requires courts to interpret and implement the statutory framework to determine the procedures and sequences that the parties must follow to prove the act of wrongful inducement and any related issues of patent validity.
There are practical reasons not to create a defense of belief in invalidity for induced infringement. Accused inducers who believe a patent is invalid have other, proper ways to obtain a ruling to that effect, including, e.g., seeking ex parte reexamination of the patent by the Patent and Trademark Office, something Cisco did here. Creating such a defense could also have negative consequences, including, e.g., rendering litigation more burdensome for all involved. Pp. 9–13.
(d) District courts have the authority and responsibility to ensure that frivolous cases—brought by companies using patents as a sword to go after defendants for money—are dissuaded, though no issue of frivolity has been raised here. Safeguards—including, e.g., sanctioning attorneys for bringing such suits, see Fed. Rule Civ. Proc. 11—combined with the avenues that accused inducers have to obtain rulings on the validity of patents, militate in favor of maintaining the separation between infringement and validity expressed in the Patent Act. Pp. 13–14.
720 F. 3d 1361, vacated and remanded.
Kennedy, J., delivered the opinion of the Court, in which Ginsburg, Alito, Sotomayor, and Kagan, JJ., joined, and in which Thomas, J., joined as to Parts II–B and III. Scalia, J., filed a dissenting opinion, in which Roberts, C. J., joined. Breyer, J., took no part in the consideration or decision of the case.
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| Syllabus | Opinion [Sotomayor] | Concurrence [Alito] | Dissent [Roberts] | Dissent [Thomas] |
|---|---|---|---|---|
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .
SUPREME COURT OF THE UNITED STATES
Syllabus
WELLNESS INTERNATIONAL NETWORK, LTD., et al. v. SHARIF
certiorari to the united states court of appeals for the seventh circuit
No. 13–935. Argued January 14, 2015—Decided May 26, 2015
Respondent Richard Sharif tried to discharge a debt he owed petitioners, Wellness International Network, Ltd., and its owners (collectively Wellness), in his Chapter 7 bankruptcy. Wellness sought, inter alia, a declaratory judgment from the Bankruptcy Court, contending that a trust Sharif claimed to administer was in fact Sharif's alter-ego, and that its assets were his personal property and part of his bankruptcy estate. The Bankruptcy Court eventually entered a default judgment against Sharif. While Sharif's appeal was pending in District Court, but before briefing concluded, this Court held that Article III forbids bankruptcy courts to enter a final judgment on claims that seek only to "augment" the bankruptcy estate and would otherwise "exis[t] without regard to any bankruptcy proceeding." Stern v. Marshall, 564 U. S. ___, ___. After briefing closed, Sharif sought permission to file a supplemental brief raising a Stern objection. The District Court denied the motion, finding it untimely, and affirmed the Bankruptcy Court's judgment. As relevant here, the Seventh Circuit determined that Sharif's Stern objection could not be waived because it implicated structural interests and reversed on the alter-ego claim, holding that the Bankruptcy Court lacked constitutional authority to enter final judgment on that claim.
Held:
1. Article III permits bankruptcy judges to adjudicate Stern claims with the parties' knowing and voluntary consent. Pp. 8–17.
(a) The foundational case supporting the adjudication of legal disputes by non-Article III judges with the consent of the parties is Commodity Futures Trading Comm'n v. Schor, 478 U. S. 833 . There, the Court held that the right to adjudication before an Article III court is "personal" and therefore "subject to waiver." Id., at 848. The Court also recognized that if Article III's structural interests as " 'an inseparable element of the constitutional system of checks and balances' " are implicated, "the parties cannot by consent cure the constitutional difficulty." Id., at 850–851. The importance of consent was reiterated in two later cases involving the Federal Magistrates Act's assignment of non-Article III magistrate judges to supervise voir dire in felony trials. In Gomez v. United States, 490 U. S. 858 , the Court held that a magistrate judge was not permitted to select a jury without the defendant's consent, id., at 864. But in Peretz v. United States, 501 U. S. 923 , the Court stated that "the defendant's consent significantly changes the constitutional analysis," id., at 932. Because an Article III court retained supervisory authority over the process, the Court found "no structural protections . . . implicated" and upheld the Magistrate Judge's action. Id., at 937. Pp. 8–12.
(b) The question whether allowing bankruptcy courts to decide Stern claims by consent would "impermissibly threate[n] the institutional integrity of the Judicial Branch," Schor, 478 U. S., at 851, must be decided "with an eye to the practical effect that the" practice "will have on the constitutionally assigned role of the federal judiciary," ibid. For several reasons, this practice does not usurp the constitutional prerogatives of Article III courts. Bankruptcy judges are appointed and may be removed by Article III judges, see 28 U. S. C. §§152(a)(1), (e); "serve as judicial officers of the United States district court," §151; and collectively "constitute a unit of the district court" for the district in which they serve, §152(a)(1). Bankruptcy courts hear matters solely on a district court's reference, §157(a), and possess no free-floating authority to decide claims traditionally heard by Article III courts, see Schor, 478 U. S., at 854, 856. "[T]he decision to invoke" the bankruptcy court's authority "is left entirely to the parties," id., at 855, and "the power of the federal judiciary to take jurisdiction" remains in place, ibid. Finally, there is no indication that Congress gave bankruptcy courts the ability to decide Stern claims in an effort to aggrandize itself or humble the Judiciary. See, e.g., Peretz, 501 U. S., at 937. Pp. 12–15.
(c) Stern does not compel a different result. It turned on the fact that the litigant "did not truly consent to" resolution of the claim against it in a non-Article III forum, 564 U. S., at ___, and thus, does not govern the question whether litigants may validly consent to adjudication by a bankruptcy court. Moreover, expanding Stern to hold that a litigant may not waive the right to an Article III court through consent would be inconsistent with that opinion's own description of its holding as "a 'narrow' one" that did "not change all that much" about the division of labor between district and bankruptcy courts. Id., at ___. Pp. 15–17.
2. Consent to adjudication by a bankruptcy court need not be express, but must be knowing and voluntary. Neither the Constitution nor the relevant statute—which requires "the consent of all parties to the proceeding" to hear a Stern claim, §157(c)(2)—mandates express consent. Such a requirement would be in great tension with this Court's holding that substantially similar language in §636(c)—which authorizes magistrate judges to conduct proceedings "[u]pon consent of the parties"—permits waiver based on "actions rather than words," Roell v. Withrow, 538 U. S. 580 . Roell's implied consent standard supplies the appropriate rule for bankruptcy court adjudications and makes clear that a litigant's consent—whether express or implied—must be knowing and voluntary. Pp. 18–19.
3. The Seventh Circuit should decide on remand whether Sharif's actions evinced the requisite knowing and voluntary consent and whether Sharif forfeited his Stern argument below. P. 20.
727 F. 3d 751, reversed and remanded.
Sotomayor, J., delivered the opinion of the Court, in which Kennedy, Ginsburg, Breyer, and Kagan, JJ., joined, and in which Alito, J., joined in part. Alito, J., filed an opinion concurring in part and concurring in the judgment. Roberts, C. J., filed a dissenting opinion, in which Scalia, J., joined, and in which Thomas, J., joined as to Part I. Thomas, J., filed a dissenting opinion.
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