Until now, there has been a split of appellate authority in New York concerning what a prospective purchaser must show in seeking damages for a seller’s repudiation of a contract for the sale of real property. It is the general rule that a prospective purchaser seeking specific performance of a real estate contract must demonstrate that it is “ready, willing and able to close.” However, there has been a split of authority concerning whether the purchaser must demonstrate that it is “ready, willing and able” to close in seeking damages for seller’s anticipatory breach of contract.

The U.S. Supreme Court heard oral argument Monday on the hotly questioned issue of whether pharmaceutical sales representatives are subject to the outside sales exemption under the Fair Labor Standards Act.  

The Supreme Court heard oral argument on February 28, 2012 in Kiobel v. Royal Dutch Petroleum Co., a case raising the controversial issue of corporate liability for alleged violations of international law.

Kiobel is a putative class action in which the plaintiffs, current and former residents of Nigeria, allege that three oil companies aided and abetted the Nigerian government in committing human rights violations in connection with oil exploration activities in Nigeria.  Plaintiffs invoked the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350, as the jurisdictional basis for their U.S. lawsuit against foreign companies for alleged human rights abuses occurring in Africa.  The ATS, although passed by the first Congress in 1789, was first utilized in 1980 by an alien plaintiff seeking a civil remedy for alleged human rights abuses.  The ATS provides as follows: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”    

The Second Circuit dismissed the plaintiffs’ suit, holding that the district court lacked jurisdiction over plaintiffs’ claims against corporations.  The court started with the uncontroversial proposition that the ATS is a jurisdictional statute and does not create any cause of action.  Citing an earlier Supreme Court ATS case, Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), the Second Circuit stated that it must look to “customary international law to determine both whether certain conduct leads to ATS liability and whether the scope of liability under the ATS extends to the defendant being sued.”  After an extensive review of international law, the court could not identify a single instance in which a corporation had ever been subject to any form of liability under the customary international law of human rights.  Thus, the court concluded that imposing liability on corporations for violations of customary international law had not attained a “discernible”, much less the required “universal”, level of acceptance among the nations of the world in their relations with each other.  Therefore, the court held that it lacked subject matter jurisdiction over the plaintiffs’ claims against the oil companies and dismissed the complaint.       

The Supreme Court docket has been extremely active since plaintiffs’ petition was granted in October 2011.  In addition to denying defendant Shell’s conditional cross-petition for writ of certiorari, the Court has seen over 35 amici briefs filed in Kiobel, including a brief by the United States government in support of petitioners-plaintiffs and briefs by the governments of Germany, Great Britain, and the Netherlands in support of respondents. 

The outside interest generated by Kiobel underscores the important ramifications of the Court’s decision on corporate liability, both for U.S. companies with foreign operations, as well as foreign and multinational firms.  But the outcome of the case pivots on a relatively narrow slate of legal issues.  In their merits brief, the petitioners first take the position that the Second Circuit incorrectly characterized the issue of corporate civil liability as an issue of subject matter jurisdiction.  Petitioners go on to argue that under the ATS, analysis of customary international law is necessary to determine whether a particular act constitutes a violation of a substantive international law norm, but that domestic law (which undoubtedly recognizes corporate civil liability) supplies the remedy.  The respondents of course disagree, pointing to the above-quoted excerpt from Sosa as clearly establishing that international law must recognize corporate liability before ATS liability can be imposed. 

From the outset of petitioners’ oral argument, it was apparent that the Court was concerned about the notion of U.S. courts imposing civil liability on foreign companies for foreign conduct.   Counsel for petitioners, Paul Hoffman, uttered two sentences before Justice Kennedy interjected with two statements he challenged Mr. Hoffman to rebut: (1) “International law does not recognize corporate responsibility for the alleged offenses here,” and (2) “No other nation in the world permits its court to exercise universal civil jurisdiction over alleged extraterritorial human rights abuses to which the nation has no connection”.  Justice Alito followed in the same vein shortly thereafter with the observation that “there’s no particular connection between the events here and the United States,” which fed into his later questioning “what business” a case like this one has in the courts of the United States.   Justice Roberts appeared equally concerned about U.S. courts adjudicating the instant dispute, and he questioned whether the Kiobel suit itself contravened international law insofar as it could not have been brought in any other nation.

While the Court kept Mr. Hoffman occupied with the issue of the extraterritorial scope of the ATS, Deputy Solicitor General Edwin S. Kneedler, arguing for the United States, was permitted to address several other arguments in support of petitioners’ position.  Nevertheless, the argument turned back toward broader policy issues, as Justice Kennedy posed a hypothetical to illustrate what he perceived to be the United States’ position:

Suppose an American corporation commits human trafficking with U.S. citizens in the United States. Under your view, the U.S. corporation could be sued in any country in the world, and it would -- and that would have no international consequences. We don't look to the international consequences at all. That's -- that's the view of the Government of the United States, as I understand.

Kathleen M. Sullivan, although peppered with wide-ranging questions from an active bench, was able to consistently return focus to respondents’ position that corporate liability was simply not recognized by customary international law.   Respondents’ argument was summarized succinctly by Ms. Sullivan toward the end of her oral argument:

[T]he ATS has language that says the tort must be committed in violation of the law of nations. So although, Justice Ginsburg, it doesn't specify who may be the defendants, it does point us to the law of nations to figure out what the law of nations thinks about who may be the defendants, and the law of nations is uniform. It rejects corporate liability. It rejects corporate liability.

Counsel for respondents finished her argument by clarifying that respondents did not seek a rule of “corporate impunity”, noting that corporate officers could be liable for human rights violations and that there were other avenues for suits redressing human rights violations, such as under state law or the domestic laws of nations.   

In rebuttal, Mr. Hoffman argued that “international law places no restriction on the way domestic jurisdictions enforce international law”.  However, despite his effort to focus the Court’s attention on domestic law as supplying the remedy for a violation of international law, he found himself answering the same line of questioning that began the argument – why should the courts of the United States entertain a “suit by an . . . alien against another alien for conduct that takes place overseas”?  This fundamental question emerged as perhaps the primary theme of the oral argument.  Whether the justices received a satisfactory answer will likely determine the outcome of the case. Keep an eye on the DRI Court Reporter for a summary of the Court’s decision when it is released.

The entire oral argument transcript can be downloaded from the Supreme Court website here.

Joshua D. Shaw practices law at Turner Padget Graham & Laney P.A. in Columbia, South Carolina.  

On March 31^st of last year, San Francisco Giants fan Brian Stow allegedly was attacked and  sucker-punched by two L.A. Dodgers fans after an opening-day game between the two clubs at Dodgers Stadium.  His head hit the pavement, leaving Stow with a fractured skull and brain trauma.  Doctors placed him in a medically-induced coma for several months.  According to Stow’s attorneys, the attack has left Stow with permanent brain injury and severely limited  movement.  Today, he is wheelchair-bound and reportedly will require 24-hour nursing care for the rest of his life.  Only recently has he begun to write and try to speak.  A former paramedic, he is unable to support himself or his family.

In May, Stow filed suit in Los Angeles Superior Court seeking $50M in damages against the Dodgers, Dodgers owner Frank McCourt, and several others.  Stow asserts that the Dodgers were negligent, among other reasons, for failing to provide adequate security, failing to provide adequate lighting, and promoting a half-off beer sale that promoted violence.  He also claims that the Dodgers fired 300 security staff shortly before the assault, and he submitted sworn declarations from eight other Giants fans alleging that they had difficulty in finding security personnel to respond to threats against them during the game.  He also argues that one of Stow’s assailants was involved in two prior incidents that day and that the Dodgers should have ejected him from the ballpark hours before he attacked Stow.  Many people online report a long-term tolerance by the Dodgers of a significant “thuggish” element at the ballpark. 

 In opposition, the Dodgers have argued that stadium security was at record levels on opening day and that they had no way to anticipate the attack.  Further, they deny any half-off beer promotion.

 In June, the Dodgers filed for bankruptcy in Delaware, resulting in a stay of the L.A. case.  Under a reorganization plan filed by the Dodgers, et al., McCourt and other Dodgers officials would be released from legal liability for any actions they took in their official capacity as team representatives that may have contributed to Stow’s injuries.

On February 3^rd of this year, the Dodgers moved in the Bankruptcy Court for a motion disallowing all of Stow’s claims, arguing that Stow cannot win the L.A. case as a matter of law because Stow cannot prove a link between security issues and the beating.  In response, Stow’s counsel has asked the Bankruptcy Court to yield to Los Angeles Superior Court. 

For several  reasons, the Bankruptcy Court is likely to allow the L.A. suit to run its course:  First, the case has obtained nationwide attention, and federal judges are not immune from media-generated pressure.  If the court stops the L.A. action, some will claim that the court hijacked the jury-trial process.  Second, the Dodgers recently disclosed documents establishing the existence of insurance of over $300M, which is more than enough for a verdict in favor of Stow.  Third, the Dodger bankruptcy is unusual in that the owners will be flush with money after reorganization.  Reports cite many interested buyers, with a predicted sale price as high as $2 billion for the franchise.  Finally, the Dodgers reportedly have admitted that, in all likelihood, all creditors will be paid in full from sale proceeds from the sale.   Bankruptcy judge Kevin Gross already has hinted at the likely outcome, noting that the Dodgers will have a considerable task in convincing him "that there are absolutely, positively no facts that could result in liability under California law."  Hearings on the matter are scheduled for March 7^th and March 21^st.   A hearing regarding the proposed reorganization plan is set for April 13^th, and sale of the franchise is scheduled for April 30^th. 

Bill Staar is a partner in the Boston office of Morrison Mahoney LLP, Chair of DRI's Sports Law & Entertainment Group, and a member of the Sporting Goods Manufacturers Association’s Legal Task Force.  He concentrates in the areas of product liability, construction disputes, toxic torts, and general business litigation. He also is a member of DRI's Product Liability, Commercial Litigation, and Construction Law Committees.

Recently the Federal Communications Commission (FCC) took measures that may possibly eliminate all sports television blackouts — a move that would delight many fans but is up against the strong defense of leagues like the National Football League (NFL). 

The NFL is the most notable league to experience a significant number of blackouts per year, with 2011 seeing 16 of them. The NFL’s blackout policy states that in order for a team’s home game to be televised in that team’s market, the game must be sold out 72 hours prior to kickoff. 

The FCC is seeking public inquiry on eliminating its own blackout rules, which support league blackout policies. Specifically, the FCC’s blackout rule, which has been in place since 1970, is being targeted. In November, the Sports Fans Coalition, supported by other interest groups, filed a petition to end the FCC’s blackout rule, its executive director Brian Fredrick stating, “We’re asking the government to get out of the business of propping up sports blackouts.” The NFL, however, strongly supports the FCC’s blackout rule, as it is said to ensure a team’s “ability to sell all of its game tickets” and to “make televised games more attractive to viewers through the presence of sellout crowds.” 

Fredrick believes that the NFL, along with other leagues, will argue that blackouts are financially necessary and should not be dispelled. In the petition filed in November, interest groups argued that the FCC’s blackout rule “supports anti-fan, anti-consumer behavior by professional sports leagues.” In addition, they believe that the leagues are the main reason this issue exists because, they argue, the leagues overcharge fans for tickets — the whole reason there are so many empty seats come game day in the first place. 

The vanishing jury trial is perhaps one of the most important issues facing the civil justice system today.  Civil trials have declined in federal courts from 12% in 1984 to less than 1% in 2010.  Statistics from state courts, though more difficult to obtain, generally show the same trends.  The issue has been widely studied, and while the fact of the vanishing trial is clear, the reasons for the decline are less obvious.  Several theories have been advanced, ranging from a dramatic rise in case filings and underfunded court systems to the ever increasing cost of litigation and the success of alternative dispute resolution.  

We often see cross-complaints filed amongst defendants in product liability cases asserting causes of action for contribution, equitable indemnity and declarative relief. They are rarely litigated and are almost never adjudicated.

On Monday, January 9, 2012, the Supreme Court heard argument in a case challenging the Environmental Protection Agency’s issuance of administrative compliance orders under the Clean Water Act, 33 U.S.C. §§ 1251 et seq. (the “CWA”).  Sackett v. United States Environmental Protection Agency, No. 10-1062. 

Chantell and Mike Sackett bought a vacant lot near Priest Lake, Idaho, intending to build their home there.  The lot is zoned residential and is located in a platted subdivision, with sewer and water hookups.  Surrounding lots already have homes built on them.  The Sacketts applied for and obtained the necessary building permits from the local authorities.  Once they began laying gravel, however, they were hit with a compliance order from the EPA.  The order declared the Sacketts’ property to be “wetlands,” and charged the Sacketts with discharging pollutants into the waters of the United States, absent a permit, in violation of 33 U.S.C. § 1311(a).  In the order, the EPA required the Sacketts to return the property to its prior condition and to seek a wetlands permit – costs that, according to the Sacketts, would add up to tens of thousands of dollars, many times the $23,000 they paid for the property.  Failure to comply with the order could result in fines of up to $37,500 per day. 

The Sacketts tried to challenge the wetlands finding – both before the EPA and in federal court under the Administrative Procedure Act, but their challenges were rejected.  The district court in Idaho concluded that the CWA precludes judicial review of compliance orders before the EPA has started an enforcement action in federal court, and granted the EPA’s motion to dismiss.  Sackett v. EPA, No. 08-CV-185-N-EJL, 2008 WL 3286801 (D. Idaho Aug. 7, 2008).  The Ninth Circuit affirmed.  Sackett v. EPA, 622 F.3d 1139 (9th Cir. 2010).  In other words, the only way in which the Sacketts could obtain judicial review of the order would be to violate the order and then raise their arguments in any enforcement action brought by the EPA. 

Arguing on behalf of the Sacketts, Damien Schiff of the Pacific Legal Foundation stated that his clients’ inability to seek relief from the courts when the EPA issues a compliance order under the CWA amounts to a denial of due process.  The majority of the justices seemed sympathetic with his argument.  Justice Stephen Breyer, for example, later commented that not allowing judicial review of administrative actions would represent a “huge upheaval” of federal practice, because “for 75 years the courts have interpreted statutes with an eye towards permitting judicial review, not the opposite.”  Justice Elena Kagan, however, suggested that the Sacketts had not exhausted all of their administrative remedies and could have obtained a wetlands permit from the Army Corps of Engineers.  Mr. Schiff disagreed, stating that having to go through the wetlands permit process before a second agency was not an adequate remedy. 

Deputy Solicitor General Malcolm Stewart argued for the EPA, and stuck to the EPA’s position that the Sacketts’ property is a wetland and that the CWA precludes any judicial review of compliance orders.  The Court did not appear to be persuaded.  In particular, Justice Anthony Scalia and Justice Samuel Alito sharply criticized the EPA’s argument.  Justice Alito remarked at one point that “most ordinary homeowners would say this kind of thing can’t happen in the United States,” adding later that the EPA’s conduct is even more “outrageous” because it can change its mind at any time after issuing the compliance order.

The case is being closely watched by industry and public interest groups alike.  Fifteen different amicus briefs have been filed, fourteen of them in favor of the Sacketts – including briefs filed by the Chamber of Commerce, the State of Alaska and various trade and industry groups.  The media is describing the case as a fight between the “little guy” and big government.  We’ll find out if David or Goliath wins this fight when a decision is issued this spring.  The Court’s decision could impact not only CWA enforcement authority, but possibly also review of compliance orders issued under other federal environmental statutes. 

Carmen R. Toledo is a partner at King & Spalding in Atlanta, Georgia.  

In a unanimous ruling, the U.S. Supreme Court adopted the “ministerial exception” developed in the lower courts and held that the First Amendment flatly prohibits the application of discrimination laws to the employment of “ministers” by religious institutions.  The Court’s decision in Hosanna-Tabor Evangelical Lutheran Church and School v. E.E.O.C., though fact-specific, affords broad discretion to churches and other religious entities to hire and fire employees engaged in preaching or teaching their faith, without fear of a discrimination suit.  

The Supreme Court heard oral argument on two consolidated cases, Florence v. The Board of Chosen Freeholders of the County of Burlington.  Two well-known and experienced members of the United States Supreme Court appellate bar, Thomas C. Goldstein and Carter Phillips, squared off as the Court considered whether the Fourth Amendment permits a jail to conduct a suspicion-less search whenever an individual is arrested, including for minor offenses.  DRI, which has an active committee for lawyers engaged in representing local governments, filed an amicus brief in support of the county jails.  Written by Mary Massaron Ross, the brief focused on the difficult problems of administration that would arise with a “reasonable suspicion” rule as urged by the class action plaintiffs and reminded the Court of past precedent adopting a bright line rule for Fourth Amendment searches in some categories of cases.  DRI argued that a bright line rule was necessary to give guidance to jailers, to facilitate their efforts to ensure that contraband is not introduced into jail, to help with prison security by identifying those with gang tattoos, and to ensure that lice and other health issues are identified and addressed.