Supporting the Lower Court’s Decision that, in a Constructive Discharge Case Brought Under Title VII, the Administrative Filing Period Begins to Run With the Last Allegedly Wrongful Act By the Employer, Not When the Employee Chooses to Resign.

​The question presented in this case was, in a claim of constructive discharge under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., does the administrative limitations period begin with the last discriminatory or retaliatory act of the employer before the employee resigns, or does it begin instead with the employee’s resignation? A constructive discharge claim can be understood as “an aggravated case” of discrimination or retaliation, in which the employee resigns and then alleges that the employer committed acts of discrimination or retaliation that were so severe that the employee reasonably felt compelled to quit. For employers, and thus of great importance to many of NELF’s supporters, the crucial difference between a constructive discharge claim and the underlying claim of discrimination or retaliation is remedial. The prevailing employee can recover not only for the employer’s discrimination or retaliation but also for his own act of resigning, as if it were a termination for damages purposes. Thus, the prevailing constructive-discharge plaintiff can recover back pay, and possibly front pay, along with any other (economic and non-economic) damages attributable to the employer’s discriminatory or retaliatory conduct, and punitive damages.  

An employee suing under Title VII for any claim must first exhaust his administrative remedies by filing or initiating contact with the Equal Employment Opportunity Commission (“EEOC”) within a specified period of time. Failure to do so will most likely bar the employee from suing in court. In particular, a private-sector employee must file his charge of discrimination or retaliation with the EEOC within 180 or 300 days “after the alleged unlawful employment practice occurred.” 42 U.S.C. § 2000e-5(e)(1). A federal employee, such as the employee in this case, must initiate contact with an EEOC counselor for potential settlement “within 45 days of the date of the matter alleged to be discriminatory or, in the case of personnel action, within 45 days of the effective date of the action.” 29 C.F.R. § 1614.105(a)(1) (emphasis added). The parties in this case have focused on the italicized language as the applicable regulatory provision. As with a statute of limitations, the purpose of this filing deadline is to require employees to act promptly in enforcing their rights, to protect employers from having to defend old claims, and to provide employers with certainty and repose that, after a date certain, they will not have to defend their actions in litigation.    

NELF argued, in its amicus brief on the merits, that in a claim for constructive discharge, as with most any other claim of discrimination or retaliation under Title VII, the administrative limitations period begins with the employer’s last discriminatory or retaliatory act, not with the employee’s resignation in response to that conduct. This is required by the plain language of the limitations provision applicable to federal-sector employees under the EEOC regulation, and by Title VII’s general provision applicable to both private-sector and state employees. And the Court has already interpreted Title VII’s limitations provision as focusing on the employer’s challenged conduct, not on the injurious consequences to the employee. Delaware State College v. Ricks, 449 U.S. 250 (1980). Ricks should apply here because the relevant language in the EEOC regulation is synonymous with Title VII’s limitations provision, and because neither provision treats constructive discharge claims differently from the “traditional” discrimination claim discussed in Ricks.

Moreover, NELF pointed out that the Court has observed that Congress would have been well aware of constructive discharge claims when it enacted Title VII. Pennsylvania State Police v. Suders, 542 U.S. 129, 141-42 (2004). And yet Congress made no special allowance concerning the timeliness of constructive discharge claims. Therefore, Congress should be deemed to have rejected any differential treatment for the filing of constructive discharge claims by private-sector and state employees under Title VII. And the EEOC, in turn, should be deemed to have followed suit with its similarly worded provision for federal employees.

Suders also held that, in a constructive discharge claim under Title VII, the employee’s decision to resign is not an action imputed to the employer. Instead, the resignation remains a separate act of the employee. Therefore, the resignation is not an “alleged unlawful employment practice” under Title VII or a “matter alleged to be discriminatory” under the EEOC regulation. While the employer may indeed be liable in damages for the employee’s resignation as if it were a termination, Suders carefully distinguished the employer’s monetary liability from any vicarious liability for the employee’s resignation. The employer is liable in damages for the employee’s reasonable resignation simply because the resignation is a foreseeable consequence of the employer’s proven wrongful conduct.

After all, Suders explained that a constructive discharge claim is merely “an aggravated case” of discrimination or retaliation. A constructive discharge claim is a dependent claim that rides “piggyback” on the underlying claim of discrimination or retaliation. The only difference between a constructive discharge claim and the underlying claim of discrimination or retaliation is the severity of the employer’s wrongful conduct, and hence the applicable measure of damages. There is no reason, therefore, why the limitations period should be any different for the constructive discharge claim merely because the employee is seeking additional remedies that would not apply in the underlying claim of discrimination or retaliation.

Finally, Suders teaches that a constructive discharge claim is an objective inquiry, asking whether the employee’s resignation was a reasonable response to the employer’s challenged conduct. The facts necessary to determine such reasonableness are generally established once the employer has taken official action against the employee, or when a supervisor or co-worker has committed the last in a series of related acts of harassment against the employee before he resigns. At that moment in time, the employee is most likely on notice that resignation may be the only reasonable response to the employer’s allegedly severe conduct. Therefore, this inquiry focuses on the severity of the employer’s disputed conduct. It  does not concern the particular timing of each employee’s resignation.  Accordingly, the employer’s conduct should begin the limitations period, not the employee’s subsequent resignation in response to that conduct.  

On May 23, 2016, the Supreme Court issued its decision. Disagreeing with NELF’s conclusion, the Court held that because “the matter alleged to be discriminatory” in a constructive discharge claim is an employee’s resignation, the limitations period for such actions begins running only after an employee resigns. Justice Alito filed a concurring opinion in which, while he agreed with the Court’s conclusion, he pointed out the problems with the majority’s conclusion and suggested a slightly different framework of analysis. Justice Thomas was the sole dissenter.

Arguing that, in an Arbitration Agreement Falling Under the Federal Arbitration Act, a Reference to State Law with Respect to the Enforceability of a Class Arbitration Waiver Does Not Displace the Federal Arbitration Act’s Mandate to Enforce Such a Waiver. 
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At issue in this Supreme Court case was whether, in an arbitration agreement falling under the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (“FAA”), a reference to state law with respect to the enforceability of a class arbitration waiver displaced the FAA’s mandate to enforce such a waiver.The arbitration provision at issue was in satellite television provider DIRECTV’s customer agreement in 2007 with Amy Imburgia. The agreement required binding arbitration of any future disputes and also prohibited class-wide procedures. However, while the arbitration provision recited that it “shall be governed by the Federal Arbitration Act,” it also stated that enforcement of the class action waiver, and indeed of the entire arbitration provision, would depend on the law of each customer’s state: “If, however, the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire [arbitration agreement] is unenforceable.” Id. (emphasis added).

The California Court of Appeals interpreted “the law of your state” as referring to the law of California without regard to the preemptive force of federal law and read the 2007 contractual language as intending to oust the FAA’s mandate to enforce the class arbitration waiver, as announced four years later in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). On that basis, the California court invalidated the class arbitration waiver under the California law that bars class action waivers in consumer actions and, giving effect to the arbitration agreement’s so-called “jettison” clause, voided the entire arbitration agreement, in essence forcing the parties to litigate in court.

From NELF’s point of view, the case raised one central issue: Did the parties to the disputed agreement intend to elevate state law over the FAA on the subject of class arbitration waivers? NELF argued that reference to “the law of your state” in the 2008 agreement was never intended to oust the FAA in favor of state law. Rather, it reflected the understanding, current in 2007, that, under the FAA, the enforceability of class action waivers in arbitration agreements was governed by state law. That is, the 2007 agreement was intended to comply with the FAA as then understood. This understanding, however, was dispelled by the Supreme Court in 2011 in Concepcion, which held that state law cannot impede the enforcement of class arbitration waivers under the FAA. NELF argued that, since “the law of your state” was not intended to oust the FAA, and since “the law of your state” cannot, after Concepcion, impede enforcement of the class arbitration waiver, DIRECTV’s motion to compel arbitration of Imburgia’s individual claims should have been allowed.

In its decision of December 14, 2015, a six-member majority of the Court agreed with NELF and enforced the class arbitration waiver, although for slightly different but nonetheless compelling reasons. In a skillful opinion written by Justice Breyer, the Court held that the FAA preempts the lower court’s opinion, which singles out arbitration agreements for unfavorable treatment and interprets “the law of your state” as referring presumptively to invalid state law. The Court explained that, since the FAA limits the states to applying general contract law principles to arbitration agreements, “the law of your state” must be interpreted under California general contract law. The Court observed that, as an empirical matter, California cases interpreting such contract language (along with cases from every other state) read “the law of your state” as referring presumptively to the valid law of a state. This means that “the law of your state” in this pre-Concepcion agreement evolves with the times and reflects any intervening changes made by a state Legislature, a state supreme court, or, as in this case, any pronouncements of controlling federal law by the Supreme Court under the Supremacy Clause, as announced in Concepcion.
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Therefore, once the Court in Concepcion held that the FAA preempted California’s Discover Bank rule (which had effectively invalidated all class arbitration waivers in California consumer form agreements and had required the availability of class arbitration), “the law of your state” no longer included the invalidated Discover Bank rule. Thus, the class arbitration waiver in the pre-Concepcion agreement at issue must be enforced under the FAA, and the jettison clause is never reached.

Notably, the Court explained that, while indeed the FAA allows parties to apply any body of law, even preempted state law, to their arbitration agreements, this is not what “the law of your state” means on its face. To override the presumptive meaning of “the law of your state,” then, parties would have to refer expressly to preempted state law in their arbitration agreements (an unlikely but nonetheless enforceable contract clause).

Arguing the Wartime Suspension of Limitations Act does not apply to civil qui tam claims brought under the False Claims Act

Note: In what we believe is a NELF first, during the hearing of this case on January 13, 2015, Supreme Court Associate Justice Sotomayor specifically referred to NELF’s amicus brief, when she asked the attorney for the Petitioner whether he was “adopting the argument of the New England [Legal] Foundation, the amic[us] brief?”  Counsel indicated that this was the case.
 
In this case the Supreme Court considered whether the Wartime Suspension of Limitations Act, 18 U.S.C. § 3287 (“Suspension Act”), a criminal code provision of the federal False Claims Act (“FCA”), that suspends, during and for five years after times of armed conflict, the statute of limitations for “offenses involving [contractor] fraud . . . against the United States,” also applied to civil qui tam actions brought under the FCA. The FCA, first enacted during the Civil War, provides both criminal and civil remedies against federal government contractor fraud. On the civil side, the FCA encourages private whistleblowers (“relators”) to bring suit on behalf of the Government (“qui tam” actions); if successful, a civil qui tam plaintiff is awarded a share of the government’s damage award (between 15% and 30%). Such civil qui tam claims under the FCA are subject to a six-year limitations period. 31 U.S.C. § 3731(b)(1). The Fourth Circuit in this case concluded that the Suspension Act applies to both criminal and civil claims of contractor fraud against the Government. Consequently, the lower court allowed the plaintiff-relator’s otherwise untimely qui tam FCA claim to proceed on the merits against defendants Halliburton Company, KBR, Inc., Kellogg Brown & Root Services, Inc., and Service Employees International, Inc. (collectively “KBR”).
 
Since the vast majority of claims under the FCA are brought as civil claims initiated by qui tam plaintiffs, the Fourth Circuit’s extension of the Suspension Act to civil as well as criminal cases under the FCA would likely have had enormous consequences for companies doing business with the federal government if it had been upheld by the Supreme Court.
 
NELF submitted an amicus brief in support of KBR, arguing that the Fourth Circuit had erred and showing, based on an extensive analysis of the Suspension Act’s legislative history, the source of its mistake. The lower court had misunderstood a crucial part of the Suspension Act’s statutory history. Prior versions of the Suspension Act, enacted in 1921 and 1942, had applied to offenses that were “now indictable under existing statutes.” I.e.,i.e, their coverage was retrospective only, applying to crimes, still timely, that had already occurred when those 1921 and 1942 statutes took effect. In 1944, however, Congress, made the Suspension Act prospective as well, by deleting the phrase “now indictable under existing statutes.” However, the Fourth Circuit, along with virtually every other court and commentator, misinterpreted this 1944 amendment. In particular, the lower court concluded that Congress’ removal of the phrase “now indictable” in 1944 expanded the meaning of the word “offenses” to include non-indictable, civil claims. NELF demonstrated compellingly that, to the contrary, when Congress removed the phrase “now indictable” in 1944, it simply extended the Suspension Act to future offenses of contractor fraud. (Congress also preserved other language in the 1944 Suspension Act to make it clear that the 1944 statute applied to past timely offenses as well.) By no means did the 1944 amendment affect in any way the exclusively criminal meaning of the word “offense.”
 
In its unanimous decision issued on May 26, 2015, the Supreme Court agreed with NELF’s arguments in the case. In an opinion that largely parallels NELF’s brief, the Court held that the Act only applies to criminal offenses under the FCA.

Arguing that the Federal Statutory Ban on Paid Commercial Advertising on Public Television Stations Violates the First Amendment

At issue in this case, before the United States Supreme Court on a petition for certiorari, was whether the First Amendment to the United States Constitution allows Congress to ban the broadcasting of paid commercial advertisements on public television, at 47 U.S.C. § 399b(a)(1) (“section 399b(a)(1)”). Federal law defines a commercial advertisement as a paid message that promotes the sale of goods or services by a for-profit entity. The petitioner, Minority Television Project, owns a small, independent public television station whose unique programming serves the multi-cultural, educational needs of underrepresented members of the community in the San Francisco Bay Area, such as African-Americans, individuals living with HIV/AIDS, and various neighborhoods in which English is a second language. The station has been unable to obtain any federal funding through the Corporation for Public Broadcasting.

In this case, the FCC had determined that the petitioner had violated the statutory ban on commercial advertising by airing corporate acknowledgements that the FCC found to be commercial advertisements. (Federal law permits the broadcasting of “enhanced” corporate acknowledgements.) Minority TV does not now dispute that these corporate acknowledgements were commercial advertisements under Congress’s and the FCC’s criteria. (It should be noted, however, that Minority TV, in compliance with the Public Broadcasting Act, did not interrupt regular programming when it aired these advertisements.) As a result, the FCC fined Minority TV $10,000. Minority paid the fine but also filed suit in federal district court for the Northern District of California, alleging that § 399b(a)(1) violates the First Amendment because it is not narrowly tailored to further the government’s interest in preserving the educational content of programming on public broadcast stations.

In its brief supporting Minority Television’s petition for certiorari, NELF argued that the Court should grant certiorari and decide that public television stations have a First Amendment right to broadcast paid commercial advertisements, subject to reasonable, content-neutral limits, to supplement the funding of their educational speech. The educational mission of an independent public station such as the petitioner could be endangered if that station is denied the right to seek additional revenue from the limited broadcasting of commercial advertisements.

NELF argued that § 399b(a)(1)) is a content-based and speaker-based restriction on protected speech that cannot survive scrutiny under the First Amendment. The FCC argues that the ban is necessary to preserve the educational content of programming on public television. But the Government’s fears are both implausible and impermissibly paternalistic. Indeed, this Court has held that the First Amendment rejects the rationale, offered here by the FCC, that the fundraising-related speech of a nonprofit corporation must be regulated for its own benefit. Moreover, the FCC has ignored the many obvious and fundamental differences between a for-profit, commercial station and a nonprofit, public station. These key differences would prevent public stations from abandoning their educational mission if they were allowed to supplement their revenues with commercial advertisements. The FCC has confused the commercial source of the funding with the non-commercial purpose and use of that funding --i.e., to assist in the broadcasting of educational programs that serve the needs of the community.

The FCC has also disregarded the fact that viewers contribute substantially to public television and, therefore, exert a strong influence over programming decisions. The FCC has further disregarded the uniquely charitable, non-commercial role assumed by public television’s corporate supporters. Corporations have long contributed to public television, even though they have never been allowed to promote their products or services as they would on commercial television. Clearly, corporations support public television because of its unique programs, and not because of the audience ratings or marketing opportunities that those programs may offer. Allowing commercial advertisements on public television would simply encourage current corporate supporters to contribute more money, and it could also attract new corporate support to public television. Finally, available empirical evidence, including the factual record in this case, shows that the limited use of commercial advertisements on public television has not influenced programming decisions.

Section 399b(a)(1) fails First Amendment scrutiny for the additional reason that the Government has drawn an arbitrary, content-based line between permissible, “enhanced” corporate underwriting statements and impermissible commercial advertisements. The FCC has allowed enhanced corporate underwriting statements for over thirty years. These statements closely resemble commercial advertisements because they are an implied promotion of a company’s products or services. And yet there is no indication whatsoever that resulting corporate contributions have exerted any commercializing influence on the programming content of public television.

It strains credulity to conclude that the mere addition of some expressly promotional language to these enhanced corporate underwriting statements would somehow transform public television into commercial television. To the contrary, permitting promotional language to enter these corporate statements could attract much-needed additional support for underfunded public stations, such as the petitioner, and allow them to fulfill their charitable mission.

The long use of enhanced corporate underwriting statements also defeats the FCC’s argument that commercial advertisements would cause viewers to abandon their support of public television. The available evidence indicates that viewer support has not diminished, and has actually increased, during the past 30 years of these corporate statements. Viewers would therefore be likely to tolerate the limited appearance of commercial advertisements as a necessary inconvenience for the funding of the programs that they value so highly on public television.

And, even if viewers reacted negatively to commercial advertisements, the First Amendment should permit public station managers to respond intelligently to the situation, such as by withdrawing the advertisements, reducing their frequency, or toning down their promotional content. Conversely, the First Amendment should prohibit the Government from substituting its judgment about the wisdom of commercial advertisements for that of public stations and their viewers. Free and robust debate on this public issue cannot take place with such governmental interference.

Finally, to the extent that the FCC has identified a substantial interest in regulating commercial advertisements on public television, the Government could implement less restrictive, content-neutral limits, rather than banning commercial advertisements altogether. Such reasonable restrictions would allow public stations to benefit from additional funding, while maintaining the educational purpose and character of public television. Such restrictions would also remove the Government from the undesirable role of evaluating the content of public broadcasters’ speech. For example, the Government could limit the percentage of a public station’s revenue that is derived from commercial advertisements, to preserve the current diversity of funding sources for public television.

Unfortunately, the Court denied certiorari on June 30, 2014.

Opposing the Imposition of Personal Jurisdiction in an Intentional Tort Case Where the Defendant Did Not Intend to Harm the Plaintiffs in the Forum State

At issue in this case, before the Supreme Court on the merits, was whether the Due Process Clause of the Fourteenth Amendment permits a court of the forum state (i.e., where the plaintiff has sued) to exercise long-arm personal jurisdiction over a nonresident defendant who has allegedly injured the plaintiff in another jurisdiction, simply because the defendant knew that the plaintiff had connections to the forum state, and the plaintiff allegedly experienced harm in the forum state. This case will also decide the related issue whether the judicial district where the plaintiff allegedly suffered injury is a district “in which a substantial part of the events or omissions giving rise to the claim occurred” for purposes of establishing venue under the general venue statute, 28 U.S.C. § 1391(b)(2), even if the defendant’s alleged misconduct occurred in another district altogether.

In the decision below, a sharply divided panel of the Ninth Circuit held that the federal court for the District of Nevada had personal jurisdiction over the defendant, a federal DEA agent acting in Atlanta, Georgia, who confiscated the $97,000 gambling earnings of plaintiffs, professional gamblers who were passing through the Atlanta airport, en route from Puerto Rico to Nevada. The agent (wrongfully) suspected that the money was connected to illicit drug activity. The agent then initiated forfeiture proceedings by preparing an allegedly false affidavit against the plaintiffs. The plaintiffs sued the DEA agent in the District of Nevada in a Bivens action (an implied right of action under the Fourth Amendment against a federal official, akin to a § 1983 claim against a state actor). The money was eventually restored in full to the plaintiffs (but without interest) approximately seven months after the DEA agent seized it. The plaintiffs allege that long-arm personal jurisdiction over the DEA agent exists in Nevada because, although the agent’s actions took place in Atlanta, the damages that resulted from those actions affected the plaintiffs in Nevada.

NELF filed an amicus brief in this case in support of petitioner, arguing that, under well-settled Supreme Court precedent, no personal jurisdiction) can lie against an out-of-state defendant accused of an intentional tort unless he has “expressly aimed” the injury at the forum state by intending to harm the plaintiff in the forum state when he committed the alleged tort. See Calder v. Jones, Calder v. Jones, 465 U.S. 783 (1984) (Hollywood entertainer Shirley Jones had personal jurisdiction to sue Florida-based National Enquirer journalist and editor in California for defamation: defendants intended to harm plaintiff in California by “expressly aiming” content of false and harmful article at that state). NELF argued that, under Calder v. Jones, it is insufficient simply to show that the defendant knew that the plaintiff had connections to the forum state at the time of the alleged misconduct (although petitioner apparently did not even know about plaintiffs’ Nevada connections when he seized their money), and that the harm may be foreseeable in the forum state. Foreseeability is not enough to create personal jurisdiction. Instead, the defendant must “expressly aim” the harm at the forum state by intending to harm the plaintiff there. The facts here fall far short of this standard of proof and, therefore, NELF argued the Ninth’s Circuit’s jurisdictional ruling is incorrect and must be reversed. (Such reversal, of course, would not, of course, preclude the plaintiffs from suing the petitioner in Georgia, the state in which the alleged tort took place.)

On February 25, 2014, in a unanimous opinion very similar to NELF and AIM’s brief, the U.S. Supreme Court in Walden v. Fiore reversed the Ninth Circuit and held that due process bars the exercise of specific personal jurisdiction in Nevada over the petitioner, a DEA agent at the Atlanta airport who had seized the respondents’ gambling-related money there and had drafted an affidavit in support of forfeiture there, based on his belief at the time that the large sums of money were drug-related. The Court’s unanimous decision is an important victory for businesses, who would otherwise have been exposed to the risk of personal jurisdiction in unanticipated and remote fora whenever they were sued for such common intentional torts as fraud, breach of fiduciary duty, misappropriation of trade secrets, unfair competition, or tortious interference with business relations. In reversing the Ninth Circuit’s decision, the Court has preserved the notice and fairness protections guaranteed under the Due Process Clause to a defendant sued for intentional torts. Due process continues to ensure that the defendant cannot be sued in a forum where s/he has established no meaningful contacts.

As NELF had argued in its brief, the Court held today that, to serve the essential notice function under the Due Process Clause, the minimum contacts requirement must focus on the defendant’s purposeful contacts with the forum State, and not on the defendant’s contacts with the plaintiff who happens to reside in the forum state. That is, the minimum contacts inquiry determines whether the defendant has established direct and meaningful contacts with the forum state. Due process does not permit the exercise of personal jurisdiction where, as here, the defendant has established contacts with the plaintiffs who happen to reside in the forum state. The Court agreed with us that the Ninth Circuit had lost sight of this key constitutional focus in effectively attributing all of the plaintiffs’ Nevada contacts to the defendant, thereby defeating the defendant’s reasonable expectations on where he might be sued for his conduct in Atlanta.

As NELF’s brief also discussed, the Court distinguished this case from its key precedent in Calder v. Jones, 465 U.S. 783 (1984) (personal jurisdiction in California over Florida-based National Enquirer journalists because defendants had “expressly aimed” their defamatory article about Hollywood star at California itself and had made it the focal point by harming actress’s reputation there). Unlike in Calder v. Jones, where the defendants deliberately targeted and harmed the plaintiff Shirley Jone’s reputation in California, the defendant’s conduct in this case occurred entirely in Atlanta—i.e., seizing the plaintiffs’ money there and drafting an allegedly false and misleading affidavit there. The defendant here did not target his alleged tortious conduct at Nevada in any way.

 

Fighting a State’s Unconstitutional Taking of Privately Owned Funds In Order To Use Them to Reduce the State’s Deficit

The plaintiff beverage distributors in this case sought declaratory and monetary relief because of the state’s seizure of discrete funds of money owned by them. The money represents so-called “unclaimed” bottle-return “deposits.” “Deposits” is actually a misnomer. In 1980, when the state first required the distributors to pay five cents for each bottle returned to them by retailers, they chose to cover the additional expense by adding five cents to the selling price. The “deposits” that come into their hands, therefore, are simply an undifferentiated part of the sales revenues they receive from retailers, not from consumers; the funds were not segregated in any way, were taxable to the distributors, and were acknowledged by the state environmental agency to belong to them if they remain “unclaimed” because some bottles sold to retailers are not later returned for redemption.

In late 2008, in response to a severe budget deficit, the legislature passed a law mandating the use of separate accounts to hold all incoming and outgoing “deposits.” The legislative history is unequivocal that the purpose of the law was solely to assist that body in determining the volume of money in question so that it could decide whether it might be worthwhile to pass a law escheating the sum for the purpose of reducing the state’s alarming deficit. After only three months of segregated accounts being used, and before the first report on account balances was due, in early 2009 an escheat law was hastily passed redefining property rights in the “unclaimed deposits” and requiring the plaintiffs to surrender money from the segregated accounts to the state. The 2009 law required the plaintiffs to pay over not only the quarterly balances in these accounts from the effective date of the statute, but also balances held there by the plaintiffs in the three preceding months. The bottlers objected to the latter demand, claiming it effected a taking of funds that had always been regarded, even by the state, as their property, right up to the effective date of the 2009 law.

The trial judge found for the distributors, but in an appeal in which NELF filed a brief supporting the distributors, the Connecticut Supreme Court adopted the state’s theory that the bottlers simply had no property interest in the first quarter’s funds. Declining to inquire into the background history of “deposit” funds before the 2008 law, the Court held that the segregation of funds mandated by that law was proof enough that the bottlers did not own the money and that there could be no taking.

In late 2013, the distributors filed a Petition for Certiorari in the U.S. Supreme Court renewing the takings arguments they had made to the state high court. NELF, together with three co-amici, filed a brief in support. NELF argued that the seizure of the money, motivated, as the Attorney General freely admitted, by a severe budgetary crisis, was a classic instance of government unjustly imposing on a few persons an economic burden that should be borne by the public at large. Review, NELF argued, is all the more warranted because all three branches of state government were involved in the taking of the distributors’ established property rights, and distributors have been left without a state remedy for violation of their federal constitutional rights.

NELF pointed out that the state court reached its decision without proper examination of the history of the Bottle Bill and its implementation, despite the fact that distributors had based their defense of their rights on these sources. The analysis the court performed demonstrate that the distributors indeed lacked “incidents of ownership” under the 2008 law is perfunctory and fatally flawed, NELF contends. The 2008 law did not even purport to divest them of any established rights. It was enacted to facilitate legislative fact-finding about the economics of the Bottle Bill, i.e., as an aid to deciding later whether to escheat some or all of the “unclaimed deposits.” NELF pointed out that the distributors’ established property rights had been acknowledged by the state agency charged with administering the Bottle Bill and that the state court, in denying these rights, had to adopt a forced and unnatural reading of the agency’s admission.

Finally, aware of the split among the U.S. Supreme Court justices over the applicability to a case like this of the doctrine of “judicial taking” versus substantive due process, NELF asked them not be dissuaded from granting the petition by this lack of consensus. The state high court’s decision, NELF noted, cannot survive review under either doctrine.

Unfortunately, on March 24, 2014 the Supreme Court denied the petition.

Arguing that the Doctrine of Laches Should Be Applicable to Bar Stale Claims Brought Against a Business Under the Copyright Act’s “Rolling” Statute of Limitations.

The question before the Supreme Court in this case was whether a laches defense can bar a claim of continuing copyright infringement that began several years before the three-year limitations period provided in the Copyright Act’s statute of limitations (in this case, 18 years), where the plaintiff knew about her claim from the outset, and her unreasonable delay caused the defendant to suffer economic and evidentiary prejudice. The issue of laches arises because many lower federal courts, including the Ninth Circuit in this case, have interpreted the statute of limitations as restarting with each new act of infringement, even though it is the same defendant repeatedly exploiting the same allegedly infringing work for many years. Thus, the Ninth Circuit, along with many other circuit courts, has recognized the availability of the laches defense to bar an ostensibly timely claim of copyright infringement that, in fact, first accrued several years before the three-year limitations period and has recurred repeatedly ever since.

The case is an unusually colorful one for us because the petitioner, Paula Petrella, alleges that MGM’s 1980 film Raging Bull has infringed her inherited copyright in her late father’s 1963 screenplay about former boxer Jake LaMotta, the subject of the film. In 1976, Ms. Petrella’s father had actually assigned all of his rights in the 1963 screenplay, including renewal rights, to a film production company that, in turn, assigned the motion picture rights to United Artists (an MGM subsidiary). Therefore, when Raging Bull was produced and released in 1980, United Artists had the undisputed right to borrow as much as it wanted from the 1963 screenplay. (MGM has argued compellingly below, on summary judgment, that the film in fact borrows no protectable elements from the 1963 screenplay. The lower courts did not reach this issue, instead dismissing Ms. Petrella’s stale claim on laches grounds.)

However, by operation of a quirk of copyright law, due to Mr. Petrella’s death in 1981, ten years before the start of the 1963 screenplay’s renewal period, his 1976 assignment of renewal rights was voided. As a result, the renewal rights reverted to his statutory heirs, including his daughter, the petitioner. Thus, in 1991, Raging Bull “became” a potentially infringing work. It is undisputed that Ms. Petrella knew about her claim in 1991. Indeed, she hired an attorney at that point to perfect her renewal rights in her father's screenplay. It is also undisputed that she delayed so long in filing suit because Raging Bull had not yielded a profit for many years. Thus, instead of suing MGM at the time when she first knew about her claim (1991), she waited until 2009, when the film generated profits, to sue for infringement.

The Ninth Circuit in this case held that that respondent MGM had proven its laches defense. The lower court reasoned that Ms. Petrella’s unreasonable, 18-year delay before filing suit in 2009 resulted in economic harm to MGM. During those 18 years, MGM invested substantial capital to exploit the movie. The long passage of time also has resulted in the death or incapacity of witnesses who are essential to MGM’s case.

Seeking reversal of the Ninth Circuits decision, Ms. Petrella argued that laches should not be available to bar a timely claim of copyright infringement under the three-year statute of limitations. She, and the amici who support her, argue that where, as here, Congress has enacted a statute of limitations, the courts do not have the equitable power to truncate that congressional time period with a laches defense.

In its amicus brief, filed in support of MGM, NELF argued that the laches defense is a crucial equitable safeguard in a case of continuous copyright infringement, such as this one, where the plaintiff has an indefinite right to sue on the same recurring claim of copyright infringement. In such a case, the plaintiff has been on notice of her claim from the outset but has delayed filing suit for many years, thereby allowing the defendant to continue exploiting the same allegedly infringing work. But the statute of limitations cannot bar the plaintiff’s stale claim, because many lower federal courts have held that a new claim accrues with each new act of infringement. Thus, the plaintiff has a “rolling,” three-year right to sue on the same recurring claim of copyright infringement.

Laches is a necessary defense in such a case to prevent the plaintiff from abusing this rolling limitations period, to the evidentiary and economic detriment of the defendant. Without the laches defense, the plaintiff can stand by and allow the same claim of copyright infringement to reaccrue repeatedly over a long period of time. And with each foreseeable recurrence of the same claim, the plaintiff’s potential share of the defendant’s profits accumulates. She is thus free to delay filing suit indefinitely and strategically on a claim that first accrued many years before the limitations period, which is generally when the defendant created and first exploited the work.

NELF also argued that the Court has, in effect, already decided the issue in this case in the respondents’ favor: laches is available to prevent a plaintiff from abusing a rolling limitations period by delaying unreasonably in filing her otherwise timely claim, and thereby causing the defendant evidentiary harm. See Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101 (2002).  In Morgan, as in this case, the federal statutory claim continues to accrue under the applicable statute of limitations with each repeated and related act of the defendant. Thus, the plaintiff in each case has a virtually indefinite right of action in the same ongoing claim, allowing the plaintiff to delay filing suit. When such a plaintiff does eventually decide to sue, it is therefore likely that the claim will have arisen from facts occurring long before the applicable limitations period, and that the plaintiff will have long been aware of those ancient operative facts. As a result, the plaintiff’s unreasonable delay will have caused the loss of evidence that is essential to the defendant’s case. Therefore, laches becomes necessary to prevent irreparable evidentiary harm to the defendant in claims that are subject to a rolling limitations period.

In fact, the evidentiary prejudice identified in Morgan is even more pronounced in cases of ongoing copyright infringement, because the statutory term of the plaintiff’s copyright is often quite long. As in this case, the evidence necessary to defend the infringement claim would have arisen from facts and events that occurred long ago, when the defendant created the allegedly infringing work. And, as in this case, the defendant’s key evidence could be irretrievably lost, due to the plaintiff’s permissible delay under a rolling limitations period. Witnesses who are necessary for defending the claim may die or otherwise become unavailable, and memories may fade. The longer the plaintiff delays filing suit after her claim first accrues, the more likely the defendant will suffer irreparable evidentiary harm, as this case pointedly illustrates.

A long-delayed claim of copyright infringement is also likely to inflict economic harm on the defendant. Without the laches defense, the plaintiff is free to lie in wait for several years while the defendant invests substantial capital to exploit what it believes in good faith to be its own original work to exploit. And then, when the defendant’s money and efforts have borne fruit and have thus made a lawsuit worth the plaintiff’s while, she can choose to sue and seek recovery of her share of three years’ worth of the defendant’s highest profits.

Without the laches defense, then, the plaintiff in a case of continuous copyright infringement could abuse the rolling limitations period without any judicial oversight. Recognition of the laches defense in such cases is therefore necessary to fulfill the gatekeeping function of a statute of limitations: to protect the defendant from having to defend a stale claim.

On May 19, 2014, in a disappointing 6-3 decision, the Court reversed the Ninth Circuit and held that laches is not available to bar a timely claim for monetary relief under the Copyright Act. The Court stated that Congress had already decided how much delay a plaintiff can exercise in bringing suit and that the judiciary has no place to cut short that statutory limitations period. The majority did not deem applicable its decision in Morgan, which recognized the availability of laches to bar a timely federal statutory claim for damages (hostile work environment claims under Title VII). Unlike in this case, the majority stated that the laches recognized in Morgan applied only to a single timely claim (of workplace harassment) that continued to accumulate over time with each new offending act, where some of the constituent acts that comprise the single claim may have occurred long before the limitations period. According to the majority, this case aligns instead with the discrete, separately accruing harms discussed in Morgan in non-harassment claims of employment discrimination, where each separate act of the defendant is actionable and warrants its own limitations period. The majority also minimized the evidentiary and economic prejudice that the defendant argued here. However, the Court did recognize that laches could apply under extraordinary circumstances to bar equitable relief, such as a plaintiff’s request to destroy the allegedly infringing work (such as a building) or copies of the allegedly infringing work (such as copies of a book that have already been printed and distributed)). The Court also held that the equitable defense of estoppel could apply to bar a claim for copyright infringement altogether, if the defendant could show that the plaintiff intentionally misrepresented that it would abstain from suit, to the defendant’s detrimental reliance.

In a strongly worded dissent, Justice Breyer, joined by Chief Justice Roberts and Justice Kennedy, embraced the availability of laches in a case of continuous copyright infringement such as this one, to prevent a plaintiff from sitting on her rights strategically for 18 years and allow the defendant to reproduce and otherwise exploit the same allegedly infringing work, and then jump in to sue to collect three years’ of MGM’s highest profits. The dissent also recognized that, as NELF had argued, MGM raised several fact- and witness-dependent affirmative defenses that are now impossible to prove, due to the death or unavailability of witnesses. Finally, the dissent agreed with NELF that Morgan should apply here because that case did in fact hold that laches can bar a timely federal statutory claim for monetary relief.