April 29, 2014 United States Supreme Court opinions

Octane Fitness, LLC v Icon Health & Fitness, Inc.

Octane sought attorney fees under 35 USC 285 arguing its case against Icon was extraordinary. The district court denied the motion ruling that the case was neither objectively baseless nor subjectively motivated by bad faith. The Federal Circuit affirmed. The Court, with Justice Scalia not joining footnotes 1, 2 and3, reversed. It held that the objective baseless or subjective bad faith rule was contrary to the plain language of 285 which only requires that a case be extraordinary which means unusual or not normal under the totality of the circumstances including the strength of the case and any unreasonable litigation tactics. The Court noted that the rule used below was rigid, underinclusive and would render 285 superfluous all of which reinforced the plain language conclusion. It finally held that extraordinariness is a factual question committed to the sound discretion of the district court and that the burden of proof is on the movant to prove extraordinariness by the preponderance of the evidence.

Highmark, Inc. v Allcare Health Management System, Inc.

Highmark obtained a 285 award of attorney fees. The federal circuit applied de novo review and reversed some of that award. The Court reversed and remanded holding that because the 285 determination is committed to the sound discretion of the district court, appellate review is for abuse of discretion not de novo.

Environmental Protection Agency v EME Homer City Generation, L.P.

Agency promulgated rules implanting a clean Air Act mandate to require upwind states to reduce pollution carried by the wind to downwind states. EME and others and challenged the rules and a split panel of the DC Circuit struck down the rules for not allowing sates a post rule opportunity to create their own plans, not requiring strict proportional reductions and taking into account the costs of reducing pollution. The court, 6-2 (with justice Alito recused), reversed. The majority held that Agency was not required to offer states an opportunity to develop their own plans after announcing the levels of pollution to be met as there is nothing in the relevant text which exempts the downwind requirements form Agency’s mandate to create plans and to impose new requirements if necessary to remedy a state’s inadequate clean air plan. The majority held that the Act is silent as to how the upwind state reductions are to be calculated and under Chevron deference the rule adopted by Agency was reasonable as proportionality is practically impossible to calculate and would impose substantially different costs on states depending on their costs per unit of pollution removed and population. The majority acknowledged the rules may overregulate in some instances, but, noted the overregulated state can bring as applied challenges thus leaving the rules to operate in the meantime. The dissent argued that the operative statutory text requires focus on the amount of pollution not the cost benefit analysis used by Agency and thus proportional reaction is the sole method of complying with the statutory requirement. The dissent also argued that allowing the imposition of federal plans where the targets are not announced beforehand undermines the federalist cooperative nature of the Act’s operations and amounts to a power grab by the Agency abetted by the majority.

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