A Look Back at the Supreme
Court’s 2009-2010 Term
Weil, Gotshal & Manges LLP
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Hertz Corp. v. Friend
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Plaintiffs, on behalf of a potential class of California citizens, filed suit
against Hertz Corp. in California state court for state law violations.
Hertz Corp. removed the case and argued the federal court had
diversity jurisdiction. Plaintiffs challenged removal and argued that,
like them, Hertz Corp. is a California citizen, and thus, there is no
diversity jurisdiction.
Section 1332(c)(1) provides that “a corporation shall be deemed to
be a citizen of any State by which it has been incorporated and the
State where it has its principal place of business.” 28 U.S.C.
§ 1332(c)(1).
The Court held that, for purposes of federal diversity jurisdiction, a
corporation’s principal place of business is its “nerve center,” that is,
where its high-level officers direct, control, and coordinate the
corporation’s activities.
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Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp.
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AnimalFeeds, on behalf of a class of purchasers of parcel
tanker transportation services, sought to arbitrate an
antitrust dispute on price fixing.
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While the parties agreed to arbitrate the antitrust dispute, they
disagreed on whether the arbitration agreement allowed for class
arbitration.
The Court held that imposing class arbitration on parties
who have not agreed to authorize it is inconsistent with
the Federal Arbitration Act.
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There must exist a contractual basis to compel class-wide arbitration.
Consent does not need to be express, but it must be actual.
It is improper to ask whether the agreement reflects an intent to
preclude class arbitration.
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A Look Ahead at the Supreme
Court’s 2010-2011 Term
Weil, Gotshal & Manges LLP
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Wal-Mart Stores, Inc. v. Dukes
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In the biggest employment discrimination case in U.S. history,
female employees filed suit against Wal-Mart alleging sex
discrimination and seeking injunctive and declaratory relief, back
pay, and punitive damages.
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This class includes over 500,000 women employed at Wal-Mart in
3,400 store locations around the country in 170 different job
classifications.
The 9th Circuit affirmed the class, but the Supreme Court has
agreed to hear the appeal. The issue on appeal is whether the
Plaintiffs’ claims may be combined as a class action, not whether
there was actual sex discrimination.
A ruling on the merits of the case will be put on hold until the class
issue is resolved. Oral arguments on the class issue will be heard
in Spring 2011, with a decision expected by late June 2011.
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Am. Elec. Power Co. v. Connecticut
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Eight states, the City of New York, and three land trusts alleged that five
electric utility companies have created a “public nuisance” by emitting
CO2 and contributing to global warming.
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The utility companies owned and operated fossil-fuel-fired power plants in
twenty different states.
The federal district court dismissed the lawsuit holding that whether CO2
emissions should be reduced was a political, not a judicial, question.
The 2d Circuit disagreed and held that the plaintiffs may maintain their
actions under federal common law and seek injunctive relief capping the
utility companies’ CO2 emissions at judicially determined levels.
The Supreme Court has agreed to hear the appeal, with oral argument in
March 2011 and a decision expected by the end of June 2011.
￭ This will be the most important environmental case of the term, and
the biggest once since the Supreme Court’s 2007 ruling that federal
environmental officials can regulate greenhouse gas emissions.
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Litigation Trends
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Litigation Trends in 2010: In General
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In general, the most litigation was seen in:
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Contract disputes.
Labor & employment litigation.
￭ Wage & hour disputes, labor union related matters, discrimination.
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Personal injury.
The number of regulatory actions increased in the energy sector and
remained constant at 2009 levels in the financial services industry.
The number of bankruptcies and reorganizations rose slightly in the
financial services industry.
The health care sector experienced a significant increase in the area of
product liability litigation.
There was a slight increase in the number of patent infringement suits.
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Litigation Trends in 2010: SEC Actions
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Overall, SEC settlements increased in 2010.
￭ There was an increase in the number of settlements with
individuals.
￭ There was a decrease in the number of settlements with
companies, which fell to the second-lowest level since the
passage of Sarbanes-Oxley.
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But, the SEC’s settlement with Goldman Sachs for $550 million
illustrates that business entities will be held accountable and are
at risk of costly settlements.
Additionally, the SEC created a Foreign Corrupt Practices
Act Unit, which achieved four high value settlements in
the second half of 2010.
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Litigation on the Horizon: What to Expect in 2011
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The recovering, but still lagging, economy and heightened
regulations will affect the amount of litigation in the coming year.
The effects of a more active regulatory environment will be felt
across the board, but most significantly in the financial services,
health care, and energy industries.
￭ Reform and increased regulation in these sectors will prompt
investigations, both internally and by the regulatory agencies
themselves.
Corruption, bribery, and whistleblower actions have been and will
continue to be a concern.
￭ Foreign Corrupt Practices Act.
￭ Dodd-Frank Financial Reform Act.
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