You've heard of the term, "lawsuit within a lawsuit" or "case within a case", right? It refers to a dispute that requires you to prove Claim A in order to prevail on Claim B.
Examples abound. Think of a tortious interference with contract claim. You have to show not only that the Bad Guy did something to interfere with your contract but also that the something in itself amounted to a separate actionable tort (such as libel, trespass, conversion, or fraud). Some antitrust claims also may subsume torts, as where Party A alleges that Monopolist coerced its dealers into ceasing to do business with Party A. And litigants who renege on settlements assert damages equal to what they would have gotten had they won the lawsuit they didn't actually win because they settled it.
But the classic lawsuit-within-a-lawsuit arises when an erstwhile client charges her former counsel with malpractice in his handling of the ex-client's case. The unhappy litigant can win only if she proves both that the lawyer made a mistake and that she would have won the earlier case but-for the lawyer's error.
The complexity that comes with having two lawsuits in one makes them harder to win than regular ones. A ruling by the U.S. Supreme Court yesterday provides an off-beat illustration of why.
The case arose from a patent infringement lawsuit. The plaintiff in the patent action, Vernon Minton, lost in the trial court because the defendant established a defense — the "on-sale bar" defense, which kills patents that inventors apply for more than a year after they sold or offered to sell a product embodying the invention. Minton's lawyers came up with a new argument in an effort to overcome the summary judgment against him, urging that the evidence showed that he'd offered his invention only for "experimental" purposes rather than commercial ones. But the district court rejected the 12th-hour rescue attempt, and the Federal Circuit held that Minton had waived the defense to the defense.
Minton then sued his lawyers in state court for malpractice. He lost again, this time because the court saw no evidence that supported Minton's "experimental" argument and therefore ruled that Minton would have lost the patent case even if his lawyers had more timely raised the argument.
On appeal, Minton came up with a new tack. He discovered that the court he'd chosen to litigate his malpractice case in didn't have jurisdiction to decide his claims because only federal courts have authority to decide cases "arising under" federal patent law.
The Texas Supreme Court agreed with Minton, but the U.S. Supreme Court went unanimously the other way. Sure, the latter Court held, we'd like to have all patent law issues go through the federal system to help assure consistency and predictability, but Congress didn't require that. It instead provided for "arising under" jurisdiction, and that means "state legal malpractice claims will rarely, if ever, arise under federal patent law for purposes of 28 U.S.C. §1338(a)." Gunn v. Minton, No. 11-1118, slip op. at 6-7 (U.S. Feb. 20, 2013).
The reason? Mainly that the posing of a patent-law issue in a malpractice setting prevents the issue from qualifying as "substantial in the relevant sense." Id. at 8. As the Court observed:
Because of the backward-looking nature of a legal malpractice claim, the question is posed in a merely hypothetical sense: If Minton's lawyers had raised a timely experimental-use argument, would the result in the patent infringement proceeding have been different? No matter how the state courts resolve that hypothetical "case within a case," it will not change the real-world result of the prior federal patent litigation. Minton'a patent will remain invalid.
Id. at 9-10.