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Sixth Circuit Dismisses Challenge To Mining Regulations

Posted in News and Analysis, Recent Cases

In National Mining Association v. Secretary of Labor , the Sixth Circuit evaluated consolidated challenges to the promulgation of a new pattern of violations regulation by the Mine Safety and Health Administration and the Secretary of Labor.  However, the Court never reached the merits of the challenge because it concluded that it lacked subject matter jurisdiction.  The Mine Act sets forth a somewhat complicated scheme for judicial review of various regulations.  This confusion prompted different results between DC federal courts and the Sixth Circuit on the question of jurisdiction.

According to the Sixth Circuit, the Mine Act vests jurisdiction in the federal appellate courts in only two situations: (1) a party cited for violation of the Mine Act may challenge the citation before the agency and then seek judicial review in the appropriate United States Court of Appeals; and (2) any person adversely affected by a mandatory health or safety standard may likewise challenge the standard in the appropriate federal appellate court.  The petitioners, relying on authority from a DC district court (as amplified by subsequent cases following it) argued that the federal appellate courts may review all substantive rule making pursuant to the Mine Act.  In reviewing this authority, the Sixth Circuit essentially concluded that those courts did not fairly address the question of broader appellate jurisdiction or did so in relatively loose dicta.  Because the regulation at issue was not a mandatory health or safety standard, the Sixth Circuit accordingly concluded that it lacked jurisdiction.

In light of that finding, it begs the question of whether a federal district court would have jurisdiction.  The Secretary took the position that the federal district court may not have jurisdiction, but the petitioners requested, in the alternative, transfer of the case to an appropriate federal district court under 28 U.S.C. § 1631.  However, because there was no clarity as to which district court the matter should be transferred to (in addition to the lack of clarity as to whether the federal district court would have jurisdiction at all) the Sixth Circuit declined an invitation to transfer.

This opinion certainly is a cautionary tale about challenges to agency regulations where the path for judicial review is not a portrait of clarity.  The Sixth Circuit compared this regime to that under the Occupational Safe and Health Act, and parties seeking judicial review under either act should certainly carefully review both the statutory structure as well as this opinion.

 

Caffeine Crash: Sixth Circuit Upholds Contempt Ruling in Energy Drink Spat

Posted in News and Analysis, Recent Cases

In Innovation Ventures, LLC v. N2G Distributing, Inc., the Sixth Circuit affirmed a trademark infringement judgment in favor of the producer of the Five Hour Energy product, as well as the subsequent order by the district court holding the defendant in contempt for violating the permanent injunction entered after the trial.  The dispute involves an effort to protect the trademark of the Five Hour Energy drink, which is a key player in the burgeoning energy drink market.  The defendants had produced a similar product with a label that arguably looked similar to that of the Five Hour Energy drink, prompting the lawsuit.  The Sixth Circuit began by considering whether the Court should order a new trial on the Lanham Act claims to overturn the jury verdict.  Applying a deferential standard of review, the Sixth Circuit found no basis to disturb the jury’s verdict.  The jury heard ample evidence to support the plaintiff’s claim that a likelihood of confusion exists between the products, which the Court surveyed.

After upholding the jury’s verdict, the Court turned to the contempt order issued post-verdict when the district court concluded that the defendant had violated the injunction to prevent further trademark infringement.  The Court first considered the applicability of the so-called “Safe Distance Rule,” which is an equitable principle developed in the context of permanent injunctions to protect intellectual property.  It essentially operates to prevent known infringers from using trademarks whose use by non-infringers would not necessarily be actionable, providing “a useful tool in crafting and enforcing permanent injunctions.”  This obviates the need for the district court to retry the entire range of issues that may relevant in an infringement action for each small variation the defendant might make to the enjoined mark.  The Court held: “the Safe Distance Rule is thus a well-accepted part of the court’s remedial toolkit.”  The defendants pointed to an earlier Sixth Circuit case, Taubman Co. v. Webfeats, 319 F.3d 770 (6th Cir. 2003) to argue that the Sixth Circuit looked with disfavor on using the Safe Distance Rule in Lanham Act cases.  But the Court described the relevant portion of Taubman as dicta and emphasized that the Court had not held that the Safe Distance Rule could not be applied in this context.  It also pointed out that “no other circuit has questioned the continuing viability of the Safe Distance Rule.”  In effect, the Sixth Circuit limited Taubman to its facts.  It then found that the district court properly invoked the Safe Distance Rule as it determined that the modified products were similar to the protected mark.

This case provides a good overview of the remedial structure of the Lanham Act and steps that parties can take in the face of willful, and repeated, infringement.  The Sixth Circuit’s embracing of the Safe Distance Rule can be viewed as a sign that the rule will remain a significant enforcement tool available to district courts in these circumstances.

 

 

Noting Sixth Circuit Trend, District Court Admits “Human Factors” Expert Testimony In Products Liability Class Action

Posted in News and Analysis, Recent Cases

We have posted in the past about how, since 2010, the Sixth Circuit has been far more likely to reverse an exclusion of Daubert testimony than a district court’s decision to admit such testimony (although admittedly the sample size is small).  And about two weeks ago, we posted on an additional reversal of a district court’s decision to exclude Daubert testimony, where the Court did not allow contradictory testimony by the injured plaintiff to sway its determination as to the expert’s reliability.  This is consistent with our earlier observation that “a district court’s discretion is broader when allowing testimony than when excluding it,” and that “the Sixth Circuit believes that fact-finders, with the assistance of thoughtful cross-examination, are more than capable of weighing the substance and credibility of an expert and his or her opinion.”  (Of course, the district court must still ensure that the expert satisfies the basic Daubert criteria – just throwing up your hands and saying “it’s all coming in” is as sure a ticket to reversal as improper exclusion.).

It is apparent that district courts are paying attention to the Daubert climate at the appellate level.  Noting the Circuit’s overall trend in a footnote citing our February blog post, the Northern District of Ohio recently admitted testimony from all three challenged experts in a products liability class action (one plaintiff’s expert and two defense experts).  Among the three was a “human factors expert” whose testimony had previously been excluded in at least one other case and who had been retained “to address psychological issues in human attention and information processing” and to opine on how disclosure of the alleged concealed product defect would have affected customers’ decisions about purchasing or leasing the vehicles in question. As the Sixth Circuit’s Daubert jurisprudence continues to evolve, it will be interesting to see how these decisions are interpreted (assuming, of course, that they ultimately get tested at the appellate level).

Sixth Circuit In National Media Spotlight Following Last Week’s Marathon Oral Arguments In Same-Sex Marriage Appeals

Posted in News and Analysis, Recent Cases, Supreme Court

During the last five days, a media spotlight has been cast on the Sixth Circuit as legal pundits and observers try to dissect last Wednesday’s oral arguments in the same-sex marriage appeals before the Court.  The three-judge panel which heard the appeals included Judges Martha Craig Daughtrey of Tennessee, Jeffrey Sutton of Columbus, and Deborah Cook of Akron.  They devoted three straight hours of oral argument to the appeals.

Judge Sutton was the most active judge on the panel, and his questions were thoughtful and balanced.  He asked critical questions of both sides.  On the one hand, Judge Sutton repeatedly questioned why same-sex marriages supporters are focused on the judiciary rather than the legislature.  “I would have thought the best way to get respect and dignity is through the democratic process,”  Sutton said.  “Nothing happens as quickly as we’d like it. . . . I’m not 100% sure it’s the better route for the gay rights community,” he added.  On the other hand, Judge Sutton suggested that the arguments offered by the state in support of same-sex marriage bans were weak, and that they would be hard to defend if they were reviewed under a heightened standard of review. 

Judge Daughtrey also engaged in some spirited exchanges during oral arguments.  When Michigan’s lawyer argued that the judiciary should not tamper with deeply rooted notions of traditional marriage, Judge Daughtrey shot back that bans on interracial marriage also were deeply enshrined in American law before the U.S. Supreme Court struck them down as unconstitutional.  “That was the law across a huge swath of the Southern states,’ Daughtery said.  In contrast, Judge Cook was relatively quiet during oral argument.

Reports in several major media outlets suggest that the Sixth Circuit’s decisions remain a toss-up, with the overall panel leaning toward a rejection of the constitutional arguments for same-sex marriage.  But don’t take the media’s word for it.  An audio link to the Sixth Circuit’s oral arguments can be found here.

A couple of observations:  First, if the Sixth Circuit rules in favor of the states, its decision will create a circuit split with the Fourth and Tenth Circuits, both of which have overturned same-sex marriage bans.  Second, as Judge Sutton recognized at the close of oral arguments, the Sixth Circuit will not be the last word in the same-sex marriage battles.  The U.S. Supreme Court almost certainly will hear the legal challenge, regardless of whether the Sixth Circuit creates a circuit split.  Third, given the high-profile nature of these appeals, expect prompt decisions from the Sixth Circuit, with opinions in as little as two months.  We’ll, of course, be right there to cover the latest developments at the Sixth Circuit. 

 

Does Your ERISA Benefit Denial Letter Limit Time To File Suit? Maybe Not!

Posted in News and Analysis, Recent Cases

A divided panel of the Sixth Circuit held yesterday in Moyer v. Met. Life Ins. Co. that an employee was entitled to bring suit against after the contractual limitations period in his ERISA-governed long term disability plan had expired, because the claim administrator failed to include the time limit for judicial review in the benefit revocation letter itself.  The majority held that, without the limitations period, the letter was “not in substantial compliance with  29 U.S.C. § 1133,” even though it included notice of the employee’s right to judicial review and the limitations period was stated in other plan documents which were available to participants upon request.

The Court said that the “purpose” of § 1133 was “that the claimant be notified of the reasons for the denial of the claim and have a fair opportunity for review,” and interpreted this to apply to judicial review (quoting Kent v. United of Omaha Life Ins. Co., 96 F.3d 803, 806 (6th Cir. 1996)).  The majority rejected the narrower reading of § 1133 as protecting only the right to review by a plan fiduciary, citing authority from the First Circuit and dicta from the Fourth and Fifth (unpublished) Circuits in support of its interpretation.  Although a layperson reading the bare statute would likely favor the narrower reading, the majority pointed out that the statute demands that its mandate be carried out “[i]n accordance with regulations of the Secretary,” and that 29 C.F.R. § 2560.503-1 requires benefit denial letters to provide a “description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action . . . following an adverse benefit determination.”

Judge Cook dissented, primarily on the ground that the employee “rested his argument” on another statute in the district court and on appeal, and “neither mention[ed] the legal requirements for claim-denial letters not cite[d] § 1133 or its implementing regulation, 29 C.F.R. § 2560.503-1.”  Judge Cook did not take a position on the proper reading of the statute, but noted that the statute’s interpretation “presents a more difficult issue than the majority acknowledges,” and deplored that the decision was being made without briefing, “short-circuiting the adversarial process.”

ERISA administrators should take note and make sure to include the applicable contractual limitations period in benefit denial letters.  For those who have missed the boat and are already facing this issue outside the Sixth Circuit, Judge Cook’s dissent—which distinguished some of the authority cited in the majority opinion and cited persuasive authority favoring the narrower reading—might be a good starting point for further research.

Sixth Circuit Same-Sex Marriage Appeals Generating National Interest; Media Turning to Sixth Circuit Appellate Blog For Insight And Analysis

Posted in News and Analysis, Recent Cases

As we reported two weeks ago, the Sixth Circuit is gearing up to hear no less than five appeals tomorrow in the battle over same-sex marriage.  The Court is expecting such a large crowd that it has issued a notice to the public and the media concerning the oral arguments and has designated two overflow courtrooms where live audio from the oral arguments will be streamed.  The three-judge panel hearing the appeals consists of Judges Martha Craig Daughtrey of Tennessee, Jeffrey Sutton of Columbus, and Deborah Cook of Akron. 

Not surprisingly, the same-sex marriage appeals before the Sixth Circuit have attracted significant national media attention.  Court observers and political pundits are all trying to predict how the three-judge panel will rule, and they have turned to our own Pierre Bergeron, who has argued before all three judges on the panel, for his unique insight on the Court.

Bergeron rightly cautions that it is difficult to predict the outcome of the same-sex marriage appeals prior to oral argument.   “It would be hazardous to predict what they’re going to do,” Pierre explained in Sunday’s Cleveland Plain Dealer.  “All three are generally very well prepared, and not prone to hide the ball as to their perspectives on cases.  So I would think we’ll get a sense of their leanings during the oral arguments,” Pierre said.

And even after oral argument, it likely will remain difficult to predict how the panel will rule.  The judge’s backgrounds alone will not carry the day.  As Pierre explained Sunday in the Cincinnati Enquirer, “That’s too simplistic of an analysis.  What you see is courts across the country, regardless of ideological perspective, striking down the gay marriage ban.  Certainly there’s an element of liberal-conservative to it, but I don’t think that’s going to be the driver at the end of the day.”  As Pierre further explained in the Louisville Courier-Journal recently, “They are not going to do something because it is either the liberal or conservative result.”

As someone who also has argued cases before two of the three judges, and has followed the Court for years, I can echo Pierre’s analysis regarding the uncertainty over how the panel will rule.  One thing is clear, though:  The national media is shining a bright spotlight on the same-sex marriage appeals before the Sixth Circuit.  We’ll continue to monitor all developments with these landmark cases.

Sixth Circuit: District Court Failed To Justify One Day Sentence For White Collar Criminal Facing 57-71 Months

Posted in News and Analysis, Recent Cases

Last week, in United States v. Musgrave, the Sixth Circuit held that a one-day sentence was unreasonable for a CPA convicted of fraud and conspiracy facing a 57-71 month Guidelines range.  The panel explained why the district court was wrong to consider the defendant’s financial losses, the loss of his CPA license, and any harm stemming from the four years of litigation, noting that these things were not “his sentence” or “consequences of his sentence” and emphasized the importance of general deterrence in sentencing, especially for white collar crimes, “[b]ecause economic and fraud-based crimes are more rational, cool, and calculated than sudden crimes of passion or opportunity.” (internal quotation marks and citation omitted).

This case is one of a long line of Sixth Circuit cases reversing and remanding for resentencing after a district courts grants an overly generous downward variance under Section 3553(a) in cases involving white collar crime or child pornography.  The opinion cites several such cases, including United States v. Bistline, 720 F.3d 631 (6th Cir. 2013), a child pornography case in which the Court had to vacate the sentence twice.  See also United States v. Robinson, 669 F.3d 767 (6th Cir. 2012) (reversing 1-day sentence where Guidelines range was 78-97 months); United States v. Christman,  607 F.3d 1110 (6th Cir. 2010) (reversing 5-day sentence where Guidelines range was 57-71 months).  Although ostensibly unrelated, both of these offense categories have traditionally been a major source of sentencing disparities.

In 2005, then-Judge-now-Justice Alito expressed his skepticism that requiring district judges to explain their sentences would substantially alter sentencing behavior in these areas:

Back when I was an assistant U.S. Attorney before the Sentencing Reform Act and the guidelines took effect, the two areas where we saw the greatest sentencing disparity were child pornography . . . and white-collar cases. There were particular judges who thought that child pornography was not a crime that ever merited incarceration, that these people should be treated in other ways. And, likewise, there were judges who did not think that it was necessary–in most cases some of them probably in all cases–to send white-collar criminals to jail . . . . If you told them you have to justify your sentence by reference to the goals of sentencing that are set out in 3553(a) to (d), they could have done that and they would have done that. The judges sentencing the whitecollar cases, I think, would have said, you don’t need a lengthy term of incarceration, like you would now get under the sentencing guidelines to deter white-collar crime; even in cases with huge losses, I think that sending a defendant of this sort to jail for even five years is a huge deterrent for anybody else contemplating such a crime . . . . And similar arguments would be made with reference to child pornography. So, I am skeptical that enough sentencing disparity can be wrung out of the system simply by requiring judges to justify what they did by reference to the goals of sentencing in the Sentencing Reform Act . . . .

The Constitution Project’s Sentencing Initiative Panel Discussion, 18 Fed. Sent. R. 120 (Dec. 2005).

The Sixth Circuit has been skeptical of large downward variances in such cases, closely scrutinizing district courts’ Section 3553(a) analyses.  See Douglas A. Berman, Sixth Circuit panel finds one-day prison sentence unreasonable for white-collar defendant, Sentencing Law & Policy Blog (July 31, 2014) (describing the Sixth Circuit in this case as reinforcing its “reputation as one of the circuits most likely to declare a below-guideline sentence unreasonable with a unanimous panel ruling”).  However, it has occasionally affirmed them.  See, e.g. United States v. Stall, 581 F.3d 276 (6th Cir. 2009).  And in this opinion also, the Court did not draw any bright lines, saying that it would not “second guess the individualized sentencing discretion of the district court when it appropriately relies on the § 3553(a) factors.”  However, it seems that, contrary to Justice Alito’s prediction, it will take more than a token nod to Section 3553(a) to justify such a significant departure from the Guidelines in this Circuit.

Sixth Circuit Finds Collective Action Waiver Is Unenforceable

Posted in News and Analysis, Recent Cases

Our colleagues at the Employment Law Worldview Blog have an interesting post today on Killion v. KeHE Distributors, Inc., where the Sixth Circuit overturned a collection action waiver of employee’s rights under the Fair Labor Standards Act that was offered as part of a separation package.

Check Your Arbitration Clause: Sixth Circuit Draws Distinction Between “Arising Under” and “Related to”

Posted in News and Analysis, Recent Cases

Siding with the Fifth, Ninth and Second (unpublished) Circuits in a longstanding circuit split, the Sixth Circuit in United States ex rel. Paige v. BAE Sys. Tech. recently distinguished between disputes “arising under” and “related to” a contract for arbitration purposes.  The Sixth Circuit held that an arbitration clause mandating arbitration of “any dispute arising from this Agreement” did not cover an employee’s statutory retaliation claim (under the False Claims Act), which the court described as “completely separate from the contract.”  In its analysis, the Court distinguished  cases involving arbitration clauses with broader language such as “related to” or “bearing on.”

The Eleventh Circuit has rejected such a distinction, interpreting phrases like “arising under” broadly to include merely “related” disputes.  And the Seventh Circuit appears to have the most finely nuanced position, drawing a distinction in dictum between “arising under” and “arising out of” (with the latter deemed to be broader).

Although Paige was an unpublished decision, and therefore technically not binding, employers and others ought to err on the side of caution and use the broadest language in arbitration clauses for maximum protection from statutory, tort and other non-contract claims.    As we have previously discussed, the Sixth Circuit frequently relies on unpublished cases for substantive propositions of law.

Oral Argument Postponed in Detroit Bankruptcy Appeal

Posted in News and Analysis, Recent Cases

As we expected might happen in light of the Court’s previous order, the parties in the Detroit bankruptcy appeal agreed to postpone oral argument.  In a letter to the parties, however, Judge Gibbons wrote that the appeals should be resolved before near the beginning of the hearing on the confirmation of the plan of adjustment.  Warning that oral argument might be rescheduled for August 7 or that the panel might decide the case, she gave the parties 48 hours—until close of business on July 31—to decide whether the appeal should be dismissed.  In light of the upcoming confirmation hearings, Judge Gibbons wrote that “the panel does not consider further delay in rendering a decision an option at this time.”  The Detroit News has an article on the postponement that refers to this blog.

As pointed out in the Detroit News, oral argument in the related appeal by Syncora Guarantee, Inc. regarding Detroit’s casino income will go forward this afternoon.