The Federal Trade Commission sued Intel Inc. yesterday for using "its dominant market position for a decade to stifle competition and strengthen its monopoly."  Something about the brainy chips — the central processing units — that drive computers.

Press release here.  Complaint here.

The administrative suit shows a trial date of September 15, 2010.  It invokes section 5 of the Federal Trade Commission Act.  Section 5 bars unfair methods of competition but has lain dormant for many years.  The FTC Chairman explained why the Commission took the unusual approach of basing its complaint solely on section 5 — with no count under the Sherman Act, which sets a tougher standard for liability:

[C]oncern over class actions, treble damages awards, and costly jury trials have caused many courts in recent decades to limit the reach of antitrust.  The result has been that some conduct harmful to consumers may be given a "free pass" under antitrust jurisprudence, not because the conduct is benign but out of a fear that the harm might be outweighed by the collateral consequences created by private enforcement.

Intel called the case "misguided."

Remember when the Fifth Circuit ruled not long ago that a camel may pass through the eye of a needle more easily than a defendant may waive its rights to arbitrate?  And then sort of redeemed itself by holding that a defendant had in fact committed an Act of Waiver?  

The Eighth Circuit joined its penitent sister circuit today in ruling that a defendant waived arbitration by moving to dismiss the complaint (which alleges that Advance America charged 250+ percent interest for short-term loans) on the merits.  Hooper v. Advance Am., No. 08-3252 (8th Cir. Dec. 16, 2009).

The Seventh Circuit today upheld a forum non conveniens ruling.  The order under review sent a Bulgarian company's case against a Bulgarian bank and its American parent to Bulgaria.  Anecdotes about corruption in the Balkan state's courts didn't impress the panel, nor did Bulgaria's hefty filing fee, among other things that Their Honors found not enough to keep the case in Chicago.  Stroitelsvo Bulgaria Ltd. v. Bulgarian-Am. Enterprise Fund, No. 09-1753 (7th Cir. Dec. 14, 2009).

Texas law gives a price break on title insurance to people who refinance their home equity loans in less than seven years.  Many don't know about their right to a discount.  Title insurers don't always tell them.

In Sims v. Stewart Title Guaranty Co., No. 09-10127 (5th Cir. Dec. 9, 2009), John and Lucy Mims and Helen Cotton Ragland alleged that Stewart Title shorted them — and bunch of other Texans — on the mandatory discount.  They sued Stewart under the Real Estate Settlement Procedure Act and Texas law.  The district court in Dallas certified both the federal and state law claims under Rule 23(b)(3) as a class action.  Stewart appealed.

The Fifth Circuit reversed as to RESPA.  It viewed the claim as asserting that Stewart violated the law not by splitting the excess charges with its agents but by charging home owners an unreasonable amount for the agents' services.  That standard, the court held, "requires an inquiry into the reasonableness of the payments for goods and services."  Sims, slip op. at 11. "[T]hat inquiry must be performed on a transaction-by-transaction basis."  Id.   And that meant "class issues do not predominate and class certification on the RESPA claim was improper."  Id. 

But the court affirmed certification of the state law claim.  Although some class members may not have qualified for the Texas "R-8" discount, "[c]lass certification is not precluded simply because a class may include persons who have not been injured by the defendant’s conduct."  Id. at 13 (citing Kohen v. Pacific Investment Management Co., LLC, 571 F.3d 672, 677 (7th Cir. 2009)).  Nor did "the equitable nature of plaintiffs' state law claims" require "an individualized factual inquiry". Id.  The court concluded:

Granting the R-8 to eligible borrower[s] is mandatory.  Under Texas law, disclosure of the discount and waiver are irrelevant because the rate rule sets the maximum amount, net of the applicable discount, that Stewart and other title insurers may charge for reissue title insurance.  Accordingly, the district court did not abuse its discretion by certifying the class as to the state law claims.

Id. at 13-14.  The panel remanded the case so the district court could decide whether or not to exercise "discretionary supplemental jurisdiction" over the class state law claim under 28 U.S.C. 1367(c).  But it hinted at the outcome it thought proper, citing a "strong argument" for ruling that the BIG class claim under state law dwarfed the little individual federal claims.

Blawgletter hopes people who see the outcome will remember it next time they hear somebody say class actions are a low-risk way to make easy money.

Feed-icon-14x14 Our feed runs on high test.

Even in a strong economy, clients – you – should look at ways to get the most value from your lawyer's services. That starts with picking the right lawyer, of course, but aligning your interests with him or her matters a lot, too.

Different fee arrangements create different incentives. An hourly engagement tends to give you more control in the day to day conduct of your case. But it also puts the risk of inefficiency – especially by the other side – on you.

A contingent fee, on the other hand, shares risk between you and the lawyer and gives the lawyer an incentive to maximize your recovery because he or she will earn a percentage of it. The percentage varies from case to case, depending in part on the probability, timing, and size of the recovery. Don't feel shy about negotiating.

Flat fees work best in cases that involve more or less predictable levels of activity. A docket of employment litigation comes to mind. But flat fees can also function well in complex litigation, including patent and antitrust suits.

You can also combine hourly, contingent, and flat fee components.

Just remember to ask about the fee options each lawyer offers.  You deserve to get what you want, but you won't get if you don't ask!

Did you know that "charter party" means a contract to rent a boat or space in or on it?  Lots of weird rules govern such maritime agreements.  But does a charter party that by its terms mandates arbitration of "any disputes" — like any other contract — allow arbitration on behalf of a class?

The arbitrators in a case involving claims that owners of ocean-going freighters conspired to fix prices – Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., No. 08-1198 (U.S.) – said it does.  The Second Circuit held the neutrals acted within their broad powers.  

But today the U.S. Supreme Court thought hard about casting the panel's ruling aside.  Their Honors wanted to know if "imposing class arbitration on parties whose arbitration clauses are silent on that issue is consistent with the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq."

What did Blawgletter learn from reading the transcript?  Just this:

Chief Justice Roberts:  I hates class actions!  Hates 'em, I tells ya!

Justice Scalia:  "I used to teach contracts."

Justice Alito:  The arbitrators didn't have power to do what they did.  Plus class actions are hated by me, too — but only in the passive voice.  Totally different from the Chief.  Completely, I tells ya!

Justice Breyer:  I regret not having the "pleasure" of learning contracts from my excellent colleague.  Although he never taught at Harvard.  As I did.  Although I didn't teach myself.  Despite the fact I could have.

Justice Ginsburg:  AnimalFeeds — do they really use that name?  I mean really? – won with the arbitrators.  Game over, right?

Justice Stevens:  I love the smell of class arbitrations in the morning.  Also evenings.  And afternoons.

Justice Kennedy:  Arbitrators, like judges, can do things we don't like.  Tough.

Justice Thomas:  I will dissent no matter what.

Justice Sotomayor:  I can't believe I didn't ask a single question.

Our ruling?  The Court would frighten us if it holds that the arbitral panel lacked authority to construe the charter party as permitting the plaintiffs to arbitrate on behalf of a class of freight-shippers.  The Court has made clear, in the last decade or so, that the decisions of arbitrators deserve tons of deference.  That view, we believe, reflects a doubtful if not hostile attitude towards lawsuits.  But logical consistency, if nothing else, should compel the Final Nine to respect the output of the system they have wrought.

FeedIcon Our feed pleads ignorance. 

The Charge Of The Light Brigade

by Alfred, Lord Tennyson

Memorializing Events in the Battle of Balaclava, October 25, 1854
Written 1854

Half a league half a league,
Half a league onward,
All in the valley of Death
Rode the six hundred:
'Forward, the Light Brigade!
Charge for the guns' he said:
Into the valley of Death
Rode the six hundred.

'Forward, the Light Brigade!'
Was there a man dismay'd ?
Not tho' the soldier knew
Some one had blunder'd:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do & die,
Into the valley of Death
Rode the six hundred.

Cannon to right of them,
Cannon to left of them,
Cannon in front of them
Volley'd & thunder'd;
Storm'd at with shot and shell,
Boldly they rode and well,
Into the jaws of Death,
Into the mouth of Hell
Rode the six hundred.

Flash'd all their sabres bare,
Flash'd as they turn'd in air
Sabring the gunners there,
Charging an army while
All the world wonder'd:
Plunged in the battery-smoke
Right thro' the line they broke;
Cossack & Russian
Reel'd from the sabre-stroke,
Shatter'd & sunder'd.
Then they rode back, but not
Not the six hundred.

Cannon to right of them,
Cannon to left of them,
Cannon behind them
Volley'd and thunder'd;
Storm'd at with shot and shell,
While horse & hero fell,
They that had fought so well
Came thro' the jaws of Death,
Back from the mouth of Hell,
All that was left of them,
Left of six hundred.

When can their glory fade?
O the wild charge they made!
All the world wonder'd.
Honour the charge they made!
Honour the Light Brigade,
Noble six hundred!

Alfred, Lord Tennyson, The Charge of the Light Brigade, in The Examiner, Dec. 9, 1854.

Feed-icon-14x14 The phrase cannon fodder springs to mind. 

Congress allows appeals from "final" judgments but seldom other kinds.  28 U.S.C. 1291.  An order that rejects most but not all claims on a motion to dismiss, for instance, doesn't count as final.  (One to stand while speaking in court or to wear a yellow tie doesn't either.)  But what if the ruling requires you to give the other side your deepest secrets?

The Supreme Court held today that almost always you must wait until the case ends before asking an appeals court for help.  The Court's almost unanimous thinking?*  That the system's need to let trial judges run their cases as they see fit outweighs a party's desire to keep confidences (including notes between lawyer and client) from prying eyes.

Justice Sotomayor wrote that a party may ask for, and sometimes get, midcourse review.  A statute (28 U.S.C. 1292(b)), she pointed out, permits district courts to request a court of appeals to rule on a key question of law.  Really bad orders may draw mandamus relief, she added.  And the party that doesn't want to comply may refuse to, in which case he may receive a lesser sanction (and avoid the thing he hates more) or incur a contempt citation (which he may then appeal right away). 

But the "collateral order doctrine", which started with Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 546 (1949), doesn't provide an easier route to interim relief, the Court concluded:

In sum, . . . the collateral order doctrine does not extend to disclosure orders adverse to the attorney-client privilege.  Effective appellate review can be had by other means.

Mohawk Industries, Inc. v. Carpenter, No. 08-678, slip op. at 13 (U.S. Dec. 8, 2009).

The decision brings the Court's tally to nine since the Term started.  It's also Justice Sotomayor's first opinion as a Justice.

Blawgletter agrees that appeals courts should let trial judges handle their cases and wait until final judgment to fix mistakes.  Our gripe?  Failing to make rulings at all.  Don't judges know that's their number one job?

FeedIcon Our feed concurs with the judgment.

________________________________
*  Justice Thomas joined the Court's opinion only in part.

Patent holders that make stuff tend to dislike holders that don't.  They call them patent trolls.

Blawgletter has heard that juries don't share the anger.  They view patents as property and see misuse of it as bad, even if the owners bought patents solely to extract licensing fees and, if necessary, to sue for infringement.

But the Federal Circuit showed us last week that judges may give non-practicing patent holders less of a break.  In one case, the court upheld subject matter jurisdiction over a declaratory judgment action that contested potential infringement claims by a "patent holding company".  Hewlett-Packard Co. v. Acceleron LLC, No. 09-1283, slip op. at 1 (Fed. Cir. Dec. 4, 2009).  Hewlett-Packard sued Acceleron — a California company with Tyler, Texas, headquarters – in Delaware.  The district court dismissed on the ground that Acceleron hadn't made enough of a threat to HP to justify a declaratory judgment suit.  

In reversing, the Federal Circuit noted that a troll letter asking for a parlay about a patent "'may invoke a different reaction'" from a missive by a competitor:

[W]e observe that Acceleron is solely a licensing entity, and without enforcement it receives no benefits from its patents.  This adds significance to the fact that Acceleron refused HP’s request for a mutual standstill . . . .

Id., slip op. at 7 (quoting district court opinion) & 8.  The competitor, you see, might want to do a cross-license of patents.  Or might have a fair gripe about losing business to the infringer.  But not a patent troll.

The court also last week issued a writ of mandamus compelling the district court in East Texas to transfer a patent infringement case to North Carolina.  In re Hoffman-LaRoche Inc., Misc. No. 911 (Fed. Cir. Dec. 2, 2009).  In doing so, the panel applied the pro-mandamus decisions in In re Volkswagen of Am. Inc., 545 F.3d 304 (5th Cir. 2008) (en banc) and In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008) (post here).  The plaintiff didn't manufacture any relevant products in the Eastern District of Texas and, by sending 75,000 pages of documents to local counsel in East Texas, raised concern that it aimed "to manipulate the propriety of venue."  Id., slip op. at 6.  Naughty.

Some might infer that the Federal Circuit wants to cut the allure of the Eastern District of Texas as a place to file infringement cases.  We wouldn't blame them for thinking that.

Feed-icon-14x14 Our feed wonders whether we need Congress to reform patent law any more, if we ever did.