The Second Circuit today sent the Ashcroft v. Iqbal decision (latest post here) back to the Southern District of New York, instructing Judge Gleeson to rule on whether to allow plaintiff Javaid Iqbal leave to amend his complaint.  The opinion says:

PER CURIAM:

On May 18, 2008, the Supreme Court of the United States reversed and remanded a June 14, 2007 judgment of this Court, in which we affirmed in part and reversed in part a September 27, 2005 Order of the District Court for the Eastern District of New York (John Gleeson, Judge). See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1954 (2009); Iqbal v. Hasty, 490 F.3d 143, 177 (2d Cir. 2007); Elmaghraby v. Ashcroft, No. 04 CV 1409, 2005 U.S. Dist. LEXIS 21434, 2005 WL 2375202 (E.D.N.Y. Sept. 27, 2005).  The Supreme Court held that, under Rule 8 of the Federal Rules of Civil Procedure, plaintiff Javaid Iqbal’s complaint “has not ‘nudged his claims’ of invidious discrimination ‘across the line from conceivable to plausible.’” Ashcroft v. Iqbal, 129 S. Ct. at 1951 (brackets omitted) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Supreme Court further instructed that, on remand, “[t]he Court of Appeals should decide in the first instance whether to remand to the District Court so that respondent can seek leave to amend his deficient complaint.” Ashcroft v. Iqbal, 129 S. Ct. at 1954.  We now consider that question.

Rule 15 of the Federal Rules of Appellate Procedure provides that, soon after filing an initial pleading, “a party may amend its pleading only with the opposing party’s written consent or the court’s leave,” but that “[t]he court should freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2).  In the ordinary course, we are accustomed to reviewing a district court’s decision whether to grant or deny leave to amend, rather than making that decision for ourselves in the first instance, and we apply a deferential, “abuse-of-discretion” standard of review to the district court’s informed discretion. See, e.g., McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007) (“[I]t is within the sound discretion of the district court to grant or deny leave to amend. A district court has discretion to deny leave for good reason, including futility, bad faith, undue delay, or undue prejudice to the opposing party.”  (citations omitted)); cf. Sims v. Blot, 534 F.3d 117, 132 (2d Cir. 2008) (“A district court has abused its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence, or rendered a decision that cannot be located within the range of permissible decisions.” (citation, alteration, and internal quotation marks omitted)). We see no need to depart from the ordinary course in the instant case. Accordingly, we remand the cause to the District Court for further proceedings in light of the Supreme Court’s decision in Ashcroft v. Iqbal.

CONCLUSION

We REMAND the cause for further proceedings consistent with this opinion.

Iqbal v. Ashcroft, No. 05-6352 (2d Cir. July 28, 2009).

Per The Washington Post this morning, the Senate Judiciary Committee voted 13-6 to send the nomination of Judge Sonia Sotomayor to the floor of that august chamber for advice and consent by all 100 members.  Majority Leader Harry Reid said he'll set a full Senate vote for next week.

In case this sort of thing interests you:

All 12 Democratic solons cast yeas. 

One Republican, Lindsey Graham, joined them.  The other GOP senators all said ix-nay:  Charles Grassley (Iowa), Orrin Hatch (Utah), Jeff Sessions (Alabama), John Kyl (Arizona), John Cornyn (Texas), and Tom Coburn (Oklahoma).  Senators Grassley and Hatch never opposed a Supreme Court nomination before.

People who write patents walk a fine line.  A broad claim increases the stuff that infringes, but it also raises the risk that the patent fails some test for validity.  A Federal Circuit ruling today pointed up one of those invalidity rules.

A common way to claim broadly involves using "means-plus-function" language.  The claim says something like "means for producing eternal movement".  Or it speaks of a "means capable of turning lead to gold".

The careful reader will note that in neither case does the claim tell you how, respectively, to build a perpetual motion machine or to practice alchemy.

The patentistas will tell you that, before you get to the claims, you must disclose a "structure", usually in the specification of the patent.  And you must do it in terms that someone who knows the field fairly well can figure out.

The Federal Circuit re-affirmed the means-plus-function rule today in Blackboard, Inc. v. Desire2Learn Inc., No. 08-1368 (Fed. Cir. July 27, 2009).  It held that the district court erred by not deeming claims 1-35 in a patent invalid as not definite enough.

Stephen Labaton lands on the front page of the Sunday NYT today with "Antitrust Chief Hits Resistance in Crackdown".  He says tougher antitrust enforcement by the Department of Justice has ruffled feathers at "expert" agencies, regulate specific industries:

In some cases, though, the new approach is being opposed by administration officials. Some fear that the crackdown is coming at a bad time, as corporate America reels from the recession. Other officials embrace the Bush administration’s view that larger companies and industry alliances can provide consumer benefits by making their businesses more efficient.

*  *  *  *

“The struggles between the expert agencies and the Justice Department get to the heart and soul of exactly what the competition policy of the Obama administration will be,” said Mark Cooper, an antitrust expert and director of research at the Consumer Federation of America, an advocacy group.

He added: “Now you have an antitrust division that cares about competition, and it is running up against the expert agencies that haven’t changed their attitudes yet.”

Blawgletter notes that your expert agencies have ever and always taken a more friendly tack with the outfits they oversee.  Expert regulators often as not come from, or go to, the very businesses they regulate.  We expect some coziness.

Not so with folks in the Antitrust Division.  Antitrusters find and fix anticompetitive conduct regardless of industry.  They watch, and answer to, no particular group.  So you figure they'll see bad behavior where the expert folks say okie dokie.

Note that, most of the time, the expert agencies can't trump the AD.  The Department of Transportation might grant immunity for airlines to form an "alliance", but the Division still may prosecute the members for fixing prices.  And the Federal Communications Commission may give a pass to a cable merger, but that won't preclude charges of monopolization.

So the dispute within the federales' camp looks fun to watch.  Its outcome matters less than you'd think.

The Third Circuit held yesterday that a district court ought not to have agreed to handle claims under the Americans with Disabilities Act on a Rule 23(b)(2) class basis.  The court said each ADA plaintiff must show himself or herself "qualified" to do work that bias prevented the plaintiff from getting.  That put ADA cases on a different footing from sex and race discrimination cases, which don't make qualification an element of the claim, the court concluded.  Hohider v. United Parcel Service, Inc., No. 07-4588 (3d Cir. July 23, 2009).

Blawgletter notes a few fun facts — Chief Judge Scirica, who wrote the big Rule 23 decision, In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305 (3d Cir. 2008), also authored Hohider; former Associate Justice Sandra Day O'Connor sat on the panel; and the opinion spends about as much of its 87 pages down in footnotes as it does up in text.

Feed-icon-14x14 Ontogeny does not recapitulate philogeny!

TransAtlantic Cable 
Flag Telecom's stock price sank when its undersea cable business took a dive.  The price dropped to the bottom.  Verily, it slept with the fishes.

One group of stock buyers — let's call it Group A — overpays for a company's stock because the company – Flag Telecom – told a lie — which we'll name Lie A — that misled the market into overvaluing the Flag stock.

Group B — another set of purchasers – also pays too much for the same stock but does so months later and after Flag utters Lie B.

Later still, the stock price tanks, the company goes belly up, and both Group A and Group B hire lawyers.

Except that Groups A & B retain the SAME lawyers, who proceed to file a class action under federal securities laws to recoup the investors' losses.

The district court grants a motion to certify a single class.  The class includes both groups.  The Flag defendants ask for and win review by the court of appeals (under Rule 23(f) of the Federal Rules of Civil Procedure, which rule allows midstream testing of orders on class certification).  The Flagistas then argue error on the ground that a terrible conflict hived the class in twain. 

The grievous gap, the colossal chasm, the heinous hostility?  That members of Group A might maximize their damages by proving that Lie B didn't cause the drop in the company's stock price — Lie A and Lie A alone made that happen.  Likewise, Group B members might get the biggest payback if they minimize Lie A and insist that Lie B did all the damage.

The Second Circuit held the conflict less than "fundamental" and therefore not enough to mandate reversal of the district court's ruling.  The trial judge, the court said, could use tools like subclasses to deal with the potential conflict.  The court thus largely upheld the decision to certify a single class.  Loftin v. Bande (In re Flag Telecom Holdings, Ltd. Securities Litig.), No. 07-4017 (2d Cir. July 22, 2009).

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The Congressional Record reports that Senator Arlen Specter yesterday offered a bill. S. 1504, to wipe out the Twombly pleading standard (latest post here) and revert to the hoary test of Conley v. Gibson.

The working text of the bill — which goes under The Notice Pleading Restoration Act of 2009 — says:

Except as otherwise expressly provided by an act of Congress or by an amendment to the Federal Rules of Civil Procedure which takes effect after the date of enactment of this Act, a Federal court shall not dismiss a complaint under rule 12(b)(6) of the Federal Rules of Civil Procedure, except under the standards set forth by the Supreme Court of the United States in Conley v. Gibson, 355 U.S. 41 (1957).

Yay?

Hotels.com logo 
"TM", yes; "®", no.

Blawgletter's heart swells each time a court rules in line with what we think of as common sense.  Today we almost popped a ventricle.

The Federal Circuit provided the cause.  It held that the Trademark Trial and Appeal Board — a branch of the U.S. Patent and Trademark Office — did not err in blocking registration of a trademark in "HOTELS.COM".  The panel said:

The applicant argues that the sixty-four declarations and the extensive survey evidence [saying people see hotels.com as a "brand name" instead of a "common" or "generic" one] showed that HOTELS.COM is perceived by the relevant public "not as referring to a class or category of services recited in the Appellant's application, but, rather, as referring to a brand of such services originating from one and only one source — Appellant."  Appellant Br. 16.  However, on the entirety of the evidence before the TTAB, and with cognizance of the standard and burden of proof borne by the PTO, the TTAB could reasonably have given controlling weight to the large number of similar usages of "hotels" with a dot-com suffix, as well as the common meaning and dictionary definition of "hotels" and the standard usage of ".com" to show a commercial internet domain.

In re Hotels.com, L.P., No. 08-1429, slip op. at 10-11 (Fed. Cir. July 23, 2009).

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The WSJ reports today that the American Arbitration Association has joined the National Arbitration Forum in saying it no longer shall tinker with the machinery of debt . . . collection.

At least until "some standards or safeguards are established", says the article, quoting an AAA spokesperson.  Right.

The item says nothing about the common practice of banks and cellphone companies — among many others — of forcing consumers to agree to arbitrate on an individual basis.  They can neither bring nor join in a class arbitration — a fact that has led a growing number of courts to strike down entire arbitration clauses. 

But the U.S. Supreme Court will hear a case that deals with that issue in the coming Term.

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Blawgletter likes to read Adam Liptak's law-and-journalism Sidebar column.  A lot.  It offers insights you seldom find.  Anywhere.

But yesterday's didn't take us anywhere near our happy place.

The item, "9/11 Case Could Bring Broad Shift on Civil Suits", refers to Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (posts here and here), in which a 5-4 majority held that the "plausibility" pleading standard of Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), applies in all civil cases. 

Mr. Liptak deems Iqbal the "most consequential decision of the Supreme Court's last term".  He also cites dissenting Justice Ruth Bader Ginsburg for calling Iqbal dangerous and two defense lawyers for opining that Iqbal will change the sea on which the barks of civil plaintiffs seek to glide.

Seriously, though.  Didn't we already know that Twombly, two years later, applies across the board?  The Second Circuit in Iqbal itself grappled at length with Twombly.  See "Second Circuit Ponders Twombly Aftermath in 9/11 Aftermath Case".  We knew.

So what new did Iqbal do?  The column comes closest to the truth when it quotes a law professor.  That guy said that Iqbal "obviously licenses highly subjective judgments" and "is a blank check for federal judges to get rid of cases they disfavor."

Let us pause to note that Iqbal didn't unveil any new standard.  Test-wise, Iqbal simply parroted Twombly.  Twombly – not Iqbal – created the standard.

No, the vice lay in something else — the twists, turns, leaps, contortions, flips, switchbacks, corkscrews, and whirlies the majority (per Justice Anthony Kennedy) performed while clenching Twombly in its teeth. The judicial acrobatics allowed Their Honors to conclude that Mr. Iqbal's complaint didn't plausibly allege that high federal officials condoned abuse of innocent Arabs in the searing wake of the 9/11 attacks by Arabs.  

Not plausible, eh?

Indeed, the author of Twombly – retiring Justice David Souter — said the majority "misapplies" Twombly in Iqbal.  Uh-huh.  A tad late to see that creating a subjective test could lead to . . . highly debatable subjectivity.

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