The Sixth Circuit today affirmed dismissal of securities fraud claims arising from Morgan Stanley’s encouraging brokers to push investors into Class B mutual fund shares instead of Class A shares.  Morgan Stanley paid higher compensation for sales of Class B shares.  The court noted a dilemma that the putative class representatives faced:  in order to satisfy class certification requirements, they had to allege a fraudulent scheme that affected all class members; but a scheme that gave class members a choice between investments (Class A and Class B) couldn’t satisfy the requirement of "recklessness" towards all class members.  They dodged Scylla (class cert. requirements), but Charybdis (pleading requirements) nabbed them anyway.  The Robert N. Clemens Trust v. Morgan Stanley DW, Inc., No. 06-5525 (6th Cir. May 2, 2007).

Barry Barnett

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On the very same day that the Supreme Court broadened patent law’s "obviousness" doctrine (post), Vonage asked the Federal Circuit to toss a patent infringement judgment in favor of Verizon.  Stories here and here.  The Federal Circuit docket sheet shows:

5/1/2007

MOTION: Entry 26 :by Appellant – Motion to vacate district court’s finding of validity, to vacate the district court’s order and to remand for a new trial. SERVICE : by Mail on 4/30/2007.

The prospects for the motion — which the Federal Circuit will likely decide with the rest of the appeal — will turn on the wording of the instructions that told the jury how to consider the question of patent validity.  Vonage argues that the instructions tracked the old test that the Supreme Court discarded in KSR Int’l Co. v. Teleflex Inc.  Blawgletter hasn’t located the instructions just yet, and so we will keep our mouth shut about Vonage’s chances for success.

Barry Barnett 

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Blawgletter could wax gloomy about the challenges confronting the rule of law these days — tort reform, the corrosive effect of politics on the justice system, long hours, waning prestige, and tort reform.  But we choose a happier theme on this the 49th annual Law Day.

Sure, the NYT today grumped about how, in its view, the administration "continues to trample on civil liberties in the war on terror and stands by an attorney general who has politicized the Justice Department to a shocking degree."  And, over at The Washington Post, Ruth Marcus fussed about what she sees as "the hollowness of the president’s Law Day rhetoric".  The WSJ meanwhile spilled no ink at all on Law Day — except to poke some fun at it on Law Blog.

None of the negativity can dampen Blawgletter’s cheer today.  For already we see, hurrying towards us, better days for the rule of law.  We just wish they’d hurry a little faster. 

Barry Barnett

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(c) Barry Barnett, who reserves every dadgum right he can.

Not to sound like a vinyl platter sporting multiple scratches across its groovy surface, Blawgletter continues to wonder why the Antitrust Division of the Department of Justice still hasn’t brought a major new price-fixing case this year — and only one in more than a year.  We reported on the phenomenon last month

What has happened since?  The Division charged a Canadian with conspiring to defraud purchasers of window blind slats.  The conspiracy involved efforts to raise slat prices by eight percent during a four-month period in 2002.  But, for reasons Blawgletter cannot decipher, the Division chose wire fraud and conspiracy to defraud rather than price-fixing with which to prosecute the price fixer.

Don’t get Blawgletter wrong.  We prefer some prosecution of price fixers — even unsuccessful small-time ones from Canada — to none at all.  But come on, guys; you really can do better.

Barry Barnett

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An obvious combination of two inventions into a third invention doesn’t deserve patent protection, the Supreme Court held today.  The combination at issue — as far as Blawgletter can tell — involved putting a computer sensor at the bottom of a gas pedal that the driver could move back or forward to accommodate his height.  The "prior art" taught both the wisdom of putting the sensor at the pedal’s "pivot" point and the utility of making the pedal’s position adjustable.  The combo added nothing new, the Court concluded as it affirmed summary judgment for the defendant.  KSR Int’l Co. v. Teleflex, Inc., No. 04-1350 (U.S. Apr. 30, 2007).

Blawgletter adores patent law, especially its constant pushing at the limits of language and dependence on abstractions to describe concrete stuff.  The decision in KSR diminishes our ardor not a whit. 

But, just as importantly, KSR appears not to change the obviousness doctrine in any sweeping way.  We get the notion that an obvious combination of separate insights in the same field — gas pedals — ought not produce a monopoly in the combination.  And we doubt that the decision will significantly hinder the granting of patents that put together inventive combinations, not least because the opinion shuns any bright line rule.  Indeed, the Court seems mainly to want to discard a Federal Circuit rule that tried to simplify the obviousness test.  Good.

Barry Barnett

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Today, the U.S. Supreme Court issued two opinions that cut back on protection of patent rights.  One dealt with restricting the overseas reach of U.S. patent law, Microsoft Corp. v. AT&T Corp., No. 05-1056 (U.S. Apr. 30, 2007), and the other concerned the "obviousness" doctrine as a limit on patent validity, KSR Int’l Co. v. Teleflex, Inc., No. 04-1350 (U.S. Apr. 30, 2007).

Barry Barnett

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Southwestflight1248
Oops!

Last week, Blawgletter just learned, the Seventh Circuit published an opinion that included the color photograph, similar to the one above, of a Southwest Airlines jet after it slid off a runway at Chicago’s Midway airport on December 8, 2005.  The picture seems unnecessary to the decision — which ordered remand of the case to state court because the passengers’ claims didn’t conflict with federal law — but adds interest anyway.  Bennett v. Southwest Airlines Co., No. 06-3486 (7th Cir. Apr. 26, 2007) (Easterbrook, J.).

Blawgletter likes it.

Barry Barnett

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Blawgletter loves to read The Wall Street Journal, both for its superb factual reporting and for its zany opinions.  Kimberley Strassel‘s latest Potomac Watch column — "Tort Tribute" — nicely illustrates the latter.

Ms. Strassel, a 1994 Princeton graduate and former writer on technology and real estate, may seem an unlikely guru for matters legal.  But she doesn’t need lawyer chops to whack "the tort bar", by which she means fat cat plaintiffs’ lawyers who zip around in Gulfstreams chasing corporate malefactors riding in bigger Gulfstreams.  You can probably see where she aims to go with her Tort Tribute column.

But the details prove interesting.  Ms. Strassel argues that the new majority in Congress has already commenced to "bestowing a big, wet smooch on the trial bar."  How?  By holding oversight hearings and tweaking legislation.  The hearings ferret out otherwise unavailable information, which "can then be used in lawsuits."  They also "publicly vilify" an industry and soften it up "for a later legal collapse."  The legislative play, Ms. Strassel says, involves inserting "small, seemingly innocuous additions or subtractions to legislation".  She cites a recent attempt by the American Association for Justice to "make it easier for citizens to file lawsuits against chemical manufacturers."

Hmmm.  Finding and warning the public about private wrongdoing have always struck Blawgletter as important, if not essential, functions of government.  And Ms. Strassel’s legislative example in fact concerned an effort to counteract a Bush administration initiative, at the urging of the American Chemistry Council, to make lawsuits for violating state safety standards all but impossible. 

So what Ms. Strassel sees as a Democratic pay-off to plaintiffs’ lawyers looks to Blawgletter like a bee-gotta-buzz, bird-gotta-sing thing — doing what comes natural to guardians of the public weal.  Plus, consider the alternative:  horrific wrongs stay secret and pass without remedy to the victims or consequences to the wrongdoer.  Which do you prefer?

Barry Barnett

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Blue Cross agreed to pay $128 million, plus up to $49 million in attorneys’ fees, to settle doctors’ class action allegations of underpayment on insurance claims.  The settlement benefits more than 900,000 physicians and requires court approval.  See NYT story here

Earlier, Cigna paid the docs $85 million, and Aetna shelled out $170 million.

Other settlement terms may help doctors more than the money.  Blue Cross also committed to streamline its processing of claims and establish independent review boards to decide billing disputes.

Barry Barnett

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