6/9/08 Opinions - US Supreme Ct.

The following opinions were released by the U.S. Supreme Court on June 9, 2008:

  • Allison Engine Co. v. U.S.. Unanimous opinion for the Court by Alito, J.. This qui tam action was brought under the False Claims Act, alleging that subcontractors submitted invoices with false certificates of conformance for work performed on a government contract for construction of guided missile destroyers. The district court granted a judgment as a matter of law at the close of trial on the basis that the plaintiffs had never introduced the invoices into evidence to show that a false claim had been made; the Sixth Circuit reversed the district court in relevant part, holding that claims under § 3729(a)(2) and (3) of the False Claims Act did not require proof of an intent to cause a false claim to be paid by the government, but just the intent to cause a false claim to be paid by a private entity with government funds (here, the payment to the subcontractors by the general contractor from funds from a government contract). The U.S. Supreme Court held that the Sixth Circuit’s interpretation impermissibly deviates from the plain language of the statute, which is triggered by the making of a false or fraudulent claim to be “paid or approved by the Government.” Slip op. at 5. The Court explained the critical distinction: “What §3729(a)(2) demands is not proof that the defendant caused a false record or statement to be presented or submitted to the Government but that the defendant made a false record or statement for the purpose of getting ‘a false or fraudulent claim paid or approved by the Government.’ Therefore, a subcontractor violates §3729(a)(2) if the subcontractor submits a false statement to the prime contractor intending for the statement to be used by the prime contractor to get the Government to pay its claim. If a subcontractor or another defendant makes a false statement to a private entity and does not intend the Government to rely on that false statement as a condition of payment, the statement is not made with the purpose of inducing payment of a false claim ‘by the Government.’ In such a situation, the direct link between the false statement and the Government’s decision to pay or approve a false claim is too attenuated to establish liability.” Slip op. at 8.
  • Quanta Computer Inc. v. LG Electronics, Inc.. Unanimous opinion for the Court by Thomas, J.. The Court reversed the Court of Appeals for the Federal Circuit, holding that method patents are subject to the patent exhaustion doctrine. The Court began its analysis with a compilation of historical decisions regarding the patent exhaustion doctrine before finding, “Nothing in this Court’s approach to patent exhaustion supports LGE’s argument that method patents cannot be exhausted. It is true that a patented method may not be sold in the same way as an article or device, but methods nonetheless may be ‘embodied’ in a product, the sale of which exhausts patent rights. Our precedents do not differentiate transactions involving embodiments of patented methods or processes from those involving patented apparatuses or materials. To the contrary, this Court has repeatedly held that method patents were exhausted by the sale of an item that embodied the method.” Slip op. at 9. The Court then found that the Intel products sold to Quanta and the other computer manufacturers embodied the LGE patents that had been licensed to Intel, and held that the doctrine of patent exhaustion applied.
  • Bridge v. Poenix Bond & Indemnity Co.. Unanimous opinion for the Court by Thomas, J.. Plaintiffs brought suit under the RICO Act’s mail fraud provisions, seeking treble damages from the defendant, alleging that the defendants conspired to fraudulently obtain a disproportionate share of tax lien sales from Cook County; the mail fraud component of the claim involved mailing by the defendants to general taxpayers to further the scheme. The district court dismissed the plaintiffs’ claims, in part because it found that the RICO Act’s mail fraud provisions required that the misrepresentations be mailed to the party that was injured by those misrepresentations; the Seventh Circuit reversed, holding that “A scheme that injures D by making false statements through the mail to E is mail fraud, and actionable by D through RICO if the injury is not derivative of someone else’s.” 477 F.3d 928, 932 (7th Cir. 2007). The U.S. Supreme Court affirmed, holding that the defendants’ argument that RICO requires first-party reliance on the alleged misrepresentations has no basis in the statute; that the term “fraud” had no accepted common-law meaning at the time that RICO was passed, such that any first-person reliance element in common-law fraud is inapplicable to the statute; and that there is no basis for the argument that a proximate-causation requirement would mandate a first-person reliance requirement.
  • Enquist v. Oregon Department of Agriculture. Opinion for the Court by Roberts, C.J., joined by Scalia, Kennedy, Thomas, Breyer, Alito, JJ.; dissenting opinion by Stevens, J., joined by Souter, Ginsburg, JJ.. Plaintiff brought a discrimination lawsuit against her government employer, raising claims based on, among others, the Equal Protection Clause, alleging discrimination based on race, sex, and national origin, as well as a “class of one” claim that she had been discriminated against for arbitrary, vindictive, and malicious reasons. The jury rejected the race-, sex-, and origin-based claims, but found that the plaintiff was discriminated against in her “class of one” capacity. The Court of Appeals reversed in relevant part, finding that “class of one” status was unavailable for Equal Protection Clause claims against a government employer. The U.S. Supreme Court held that government is provided much greater leeway in the Equal Protection context when acting as an employer than when it is bringing its sovereign power to bear over the general citizenry; and that, because “employment decisions are quite often subjective and individualized, resting on a wide athat are difficult to articulate and quantify,” then “the class-of-one theory of equal protection—which presupposes that like individuals should be treated alike, and that to treat them differently is to classify them in a way that must survive at least rationality review—is simply a poor fit in the public employment context.” Slip op. at 12. The Court then cautioned that its holding should be read very narrowly, not to apply to all Equal Protection claims against the government as an employer, but just to class-of-one claims, and that its decision did not reach claims against government employers independently based on other sections of the Constitution. Dissenting, Justice Stevens opined that, “[i]nstead of using a scalpel to confine so-called ‘class of one’ claims to cases involving a complete absence of any conceivable rational basis for the adverse action and the differential treatment of the plaintiff, the Court adopts an unnecessarily broad rule that tolerates arbitrary and irrational decisions in the employment context.” Dissent slip op. at 6.

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