An Excerpt From:
K&L Gates Global Government Solutions SM 2011: Annual Outlook
January 2011
Government Enforcement and Litigation
Supreme Court
The current Supreme Court term promises a number of decisions of interest to
the business community. The court has yet to issue most of this term’s opinions,
and so we preview here the cases that raise the most significant issues.
In perhaps the most notable addition to its
docket, the Supreme Court will review a
decision certifying the largest plaintiff class
in history: 1.5 million women alleging
gender bias by Wal-Mart in pay and
promotions. (Wal-Mart v. Dukes, No.
10-244). The decision is noteworthy
not only because both the class and the
potential monetary liability are large, but
because the appeals court allowed the
class action to proceed under the federal
rule governing class actions seeking
injunctive relief, even though the plaintiffs
are also seeking billions of dollars in
monetary relief. The Ninth Circuit rejected
the “incidental damages” test that other
courts have adopted to prevent such a
result. Under that test, an injunctive class
action that also seeks damages can be
certified only if the monetary relief would
be automatic, or computable by objective
standards without additional hearings, if
liability for injunctive relief were found.
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If the Supreme Court agrees with the Ninth
Circuit, the decision could dramatically
increase the exposure of businesses in
the United States to large class actions
based on a broad variety of legal claims,
under a legal rule with fewer procedural
protections than are provided by the rule
that generally applies to large class actions
seeking money damages. Argument is
scheduled for March 29, 2011, with a
decision likely in June 2011.
As we noted in our last report, the
interplay between arbitration and classaction litigation has been an important
recent issue on the court’s docket. In
November, the court heard argument as
to whether the Federal Arbitration Act
(“FAA”) preempts a state law rule that
conditions the enforceability of arbitration
provisions on the availability of certain
procedural mechanisms such as classwide arbitration. (AT&T Mobility, LLC v.
Concepcion, No. 09-893). The Ninth
K&L Gates Global Government Solutions SM 2011 Annual Outlook
Circuit held that California law as to
“unconscionability” prohibited a wireless
provider from relying on a provision in
its service agreement that disputes must
be resolved in individual arbitrations. At
oral argument, the justices struggled with
weighing the right of states to determine
which contracts are “unconscionable”
against the strong federal endorsement
of arbitration manifested in the FAA.
Thus, while the court last year protected
companies from class-wide arbitrations
imposed on them without their consent, the
ability of companies to protect themselves
contractually from judicial class actions is
in doubt.
The court also agreed in December to
decide whether states and private parties
can bring litigation seeking judicially
created caps on greenhouse gas
emissions. (American Electric Power Co.
v. Connecticut, No. 10-174). The court
will consider whether such parties have
legal standing to seek emissions caps
on utilities in an effort to address global
warming, and whether such an action
can be implied under federal common
Government Enforcement and Litigation
As we noted in our last report, the interplay
between arbitration and class-action litigation
has been an important recent
issue on the court’s docket.
law and is the proper province of the
courts. The court will review a ruling by the
Second Circuit that allowed eight states,
a city and three nonprofit land trusts to
seek to hold utilities liable for creating a
“public nuisance” in the form of climate
change. Similar suits are pending against
automobile manufacturers, chemical
producers and oil-and-gas producers. A
decision in favor of the plaintiffs could be
of particular significance in encouraging
plaintiffs to seek judicial regulation in areas
that the more conservative new Congress,
or an EPA cautious about regulating absent
express statutory authority, may choose
not to regulate. The argument will likely be
set for the April session, and the decision
would then issue towards the end of June.
foreseeable that they will wind up in
the state, for example, by selling them
to an appointed exclusive distributor
that resells them in the state. (J. McIntyre
Machinery v. Nicastro, No. 09-1343;
Goodyear Luxembourg Tires, S.A. v.
Brown, No. 10-76). The Supreme Court
has never squarely decided whether
the “stream of commerce” theory can
support personal jurisdiction, though a
prior decision suggests that the plaintiff
must identify additional conduct showing
that the defendant purposefully directed
its activities at the forum state. Non-U.S.
companies have a significant interest in
this question because product-liability suits
can be much more expensive in the United
States than overseas.
The court heard two cases in January
determining whether U.S. state courts
have jurisdiction over non-U.S. companies
that simply place products in the
“stream of commerce” if it is reasonably
Finally, while it is widely expected that
constitutional challenges to the 2010
federal health care legislation will
ultimately make their way to the Supreme
Court, that will likely be in the October
2011 – June 2012 term. The court will
likely want the challenges to percolate
through the courts of appeals rather than to
step in to hear them sooner, and appellate
decisions on the issue will not begin to
issue until late spring or summer.
Dick Thornburgh (Washington, D.C.)
dick.thornburgh@klgates.com
David R. Fine (Harrisburg)
david.fine@klgates.com
John Longstreth (Washington, D.C.)
john.longstreth@klgates.com
K&L Gates Global Government Solutions SM 2011 Annual Outlook
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