Dukes v. Wal-Mart: What the Supreme Court Decision Means for Employers

In Dukes v. Wal-Mart, the United States Supreme Court reversed certification of the largest sex discrimination class action in our nation’s history. The Plaintiffs sought to certify a nation-wide class of approximately 1.5 million former and current female Wal-Mart employees. The Plaintiffs alleged that nation-wide class certification was appropriate because Wal-Mart engaged in a policy or practice of denying its female employees raises or promotions by giving its local managers discretion to determine when to give raises or promotions.

Justice Scalia, writing for a 5-4 majority, gave renewed life to the requirement that plaintiffs establish common questions of law or fact when seeking to certify a class action. In reversing class certification in Dukes, Justice Scalia explained that a proper class must present both a common question and, more importantly, a common answer to the question of “why was I disfavored?” Significantly, plaintiffs must present “convincing proof” to support their contentions, instead of simply relying on allegations in a complaint. The majority of the Supreme Court agreed that the Plaintiffs had failed to establish a “common answer” because they sought to litigate over millions of employment decisions without “some glue holding the alleged reasons for all of those decisions together.” In so holding, the Supreme Court specifically noted that Wal-Mart had an EEO policy that it enforced, including providing penalties to those who violated the policy.

The Supreme Court’s reversal of class certification in Dukes is a significant victory for employers everywhere. Plaintiffs will have to narrow their class definitions. Employers may delegate authority to local managers without concern that the delegation, in and of itself, will form the basis for a class action complaint. However, to take advantage of the Dukes decision, employers should make sure to enforce their EEO policies and be aware that senior executives’ memos or emails setting forth corporate policy may well be the evidence that decides whether a company-wide or region-wide class action is appropriate.

Additionally, employers should be aware of their workplace demographics. Wal-Mart was accused of having a statistically significant bias against women in both promotions and pay. While Wal-Mart may have had a non-discriminatory explanation for these statistics, the cost of providing such an explanation may prove to be prohibitively high. Employers should consider periodically monitoring their workplace demographics to determine if any evidence of possible discrimination exists. Because it is unlawful (in most cases) to intentionally favor groups of workers, even if the goal is to avoid a perceived statistical bias, dealing with problematic demographics/statistics may be complicated and may require counsel. In almost all cases, however, employers will be better served knowing about adverse statistical evidence they find on their own, rather than learning of the evidence through the filing of a class discrimination complaint.

Dealings with Vendors Shouldn’t Expose Trade Secrets

Companies that spend significant amounts implementing computer systems to thwart hackers and creating policies to prevent employees from stealing trade secrets are all too willing to disclose such secrets to vendors.

Here’s the problem. Just as every human being possesses a unique genetic code, every company has its own methods and processes. These trade secrets are the result of years of research and trial and error, and they are constantly evolving and improving. They are what distinguishes one company from another.

When a well-meaning vendor enters a business to discuss its product, perform a demonstration or propose a joint-development agreement, the host company often grants the vendor access to areas where the general public can’t go. It too readily shares details about products and systems. This could include customer information, manufacturing processes, or plans for future products. Compounding the problem, the host frequently signs a nondisclosure agreement, in which it agrees to keep confidential the vendor’s product information. However, no agreement is reached concerning the host’s sensitive information — a vendor can walk out the door with trade secrets.

What starts as a harmless product demonstration can quickly become a legal battle over trade-secret theft that can cost both sides hundreds of thousands of dollars in legal fees. In one local case, the host company, after an extensive trial of the vendor’s product, determined it was of little value and that its own plans for a similar product would achieve a much better result. When the host proceeded, the vendor sued. During two years of litigation, the parties fought over what was said during the demonstration and whether the host ripped off the vendor’s idea or the vendor made improvements to its own product based on what it learned from the host.

The risk of such litigation can be greatly reduced by following these steps:

  • Conduct a trade-secret audit. All companies should know what their most-valued business information is, information their competitors would love to obtain. Take time to document specifically this information. In the event there is ever litigation over the disclosure of trade secrets, this will serve a company well. Many a lawsuit has been thrown out because the plaintiff couldn’t adequately identify its trade secrets.
  • Improve the vendor-invitation process. Employees are often awed by new technology that promises to make their jobs easier, and they are quick to ask vendors to visit. Unfortunately, these employees fail to involve senior management, research and development departments, and the information technology staff to ensure a product fits in the company’s big picture. Companies should designate one employee to coordinate vendor visits and product demonstrations, and this person should ensure appropriate departments are involved to help decide whether to have the demonstration and whether the product is a good fit.
  • Do not maintain a public visitor’s log. Otherwise, a vendor can see a list of all recent visitors. The list generally includes reasons for visits, allowing vendors to see what other products a company is evaluating and what the company is working on. The vendor can share this information when visiting your competitors.
  • Be careful what you sign. Vendors often ask companies to sign nondisclosure agreements, which should always be reviewed by senior management and, if possible, in-house or outside counsel. Problems arise because the agreements tend to be too general. Some agreements say everything disclosed by the vendor is confidential, even if the rest of the world may already know it. By signing an overly broad agreement, companies take on far more obligations than they should and can accidentally restrict their own abilities to develop similar products. Senior management and attorneys can help make these agreements more specific and make sure appropriate exceptions are included for matters of general knowledge, information already known to the company, and plans that are already on the company’s drawing board.
  • Have your own nondisclosure agreement. Vendors often need to know some degree of a company’s sensitive information to ensure their product is a good match. Why agree to keep a vendor’s information secret if they are not willing to do the same for yours? Any nondisclosure agreement should be mutual, and it should describe the types of sensitive information to which the vendor is being granted access. Requiring the vendor to sign a nondisclosure agreement also imparts the message that trade secrets are a serious matter, further reducing the risk the vendor will disclose the information to others.
  • Keep detailed records. Companies should keep track of each vendor visit, identifying employees the vendor met, and describe all communications.

These steps will reduce greatly the risk of further litigation. If such litigation does occur, these steps will greatly increase a company’s chance of prevailing.

Supreme Court Grants Cert. In Mayo v. Prometheus

June 20th, in what may be an ominous turn for biotech IP law, the Supreme Court granted cert. for the second time in Mayo Collaborative Services v. Prometheus Labs., Inc, Supreme Court No. 10-1150. Post-Bilski, the Supreme Court granted cert., vacated and remanded the Fed.  Cir.’s decision, rendered December 17, 2010, (related posts are archived under “patentable subject matter”) that reaffirmed that claims involving methods of medical treatment coupled with determining the levels of metabolites of the administered drugs were directed to patentable subject matter, and were not directed to abstract ideas or phenomena of nature. 628 F.3d 1347 (Fed. Cir. 2010).

Is it pay-back time? In the decision below, the Fed. Cir. pointedly in fn. 2, declined to give weight to the “Metabolite Labs. dissent,” 548 U.S. 124) in which Justices Breyer, Souter and Stevens would have found claims to an assay for cobalamin deficiency patent-ineligible as involving “natural correlations and data-gathering steps.” The Prometheus claims are not without vulnerable points. The Fed. Cir. agreed that the steps recited comparing the determined level of the metabolite to a benchmark level and concluding that a need exists to increase or decrease the amount of the drug administered were mental steps and not per se patentable. The Fed. Cir. also held that the first steps of the claims – the administering and determining steps – were not merely data gathering steps, but were central to the claimed method of optimizing therapeutic efficacy of the treatment.

While two of the three Justices who wrote the Metabolite dissent have retired, the Court clearly feels that there are issues here that need resolution. However, it is difficult to see how “methods of medical treatment” could remain patentable subject matter if these claims are held not to be. While processes are s. 101 patentable subject matter, John L. White’s Chemical Patent Practice (1993) felt it necessary to include a section “Process of Treating Humans.” Paragraph three begins:

“Claims to the treatment of humans medicinally are now allowed. Ex parte Timmis (POBA 1959) 123 USPQ 581 (treatment of chronic myeloid leukemia). The fact the claimed process for modifying a function of the human body (combating the clotting of blood) involves a mental determination of the amount administered is not a bar to patentability where that portion is an incidental feature of the process. Ex parte Campbell et al., (POBA 1952) 99 USPA 51.”

These decisions are from the nineteen fifties not the eighteen fifties! In Prometheus, the Fed. Cir. explicitly noted that claims to methods of medical treatment are patentable subject matter. Are modern medicine and IP law about to part ways?

Supreme Court Establishes Bright-Line Rule for 10b-5 Liability, But Questions Remain: Janus Capital Group, Inc. v. First Derivative Traders

On June 13, in an important victory for the investment management industry, the U.S. Supreme Court held that mutual fund adviser Janus Capital Management LLC (JCM) and its parent, Janus Capital Group, Inc. (JCG), could not be held liable in a private suit under Rule 10b-5 under the Securities Exchange Act of 1934 (the 1934 Act)[1] for allegedly false statements contained in a mutual fund prospectus because the Janus Investment Fund itself, rather than the adviser, “made” the statements in the prospectus. In a 5-4 majority opinion written by Justice Thomas, the Court held that the “maker” of a statement for purposes of Rule 10b-5 liability is the person or entity “with ultimate authority over the statement, including its content and whether and how to communicate it.”[2] Applying this rule to the facts underlying the case, the Court held that neither JCM nor JCG was the “maker” of the statements in any of the fund prospectuses, notwithstanding that JCM assisted with their preparation, because the Janus Investment Fund itself had ultimate authority over the statements as they were filed with the Securities and Exchange Commission (SEC).[3] Analogizing JCM’s role to that of a speechwriter, the Court held that no liability and no private right of action existed against JCM or JCG for securities fraud where none of the statements in the prospectuses were made by or attributed to JCM.[4]

The Janus decision continues the Court’s recent trend of strictly construing the judicially-created implied private right of action under Rule 10b-5, and provides some bright-line rules for determining primary liability under those claims. Although the Court identified some open questions that are likely to be the subject of further litigation in the wake of Janus, the Court’s interpretation of Rule 10b-5 provides more certainty for participants in the financial markets to know when they have and have not “made” a statement that will potentially subject them to Rule 10b-5 liability. However, while it is now apparent what constitutes the “making” of a statement for Rule 10b-5 purposes, the decision addresses the issue only in the very specific context of a fund prospectus with no attribution. As a result, the Janus decision leaves investment advisers and funds with further issues to consider:

  • Funds and advisers will want to consider whether their own offering documents are clear that statements are attributed or not attributed to a third party. In addition to review, this may trigger further consideration of attribution among the various parties that contribute to the prospectus drafting process.
  • Mere posting of a prospectus on a website will not result in the website owner being deemed to have “made” the statements in the prospectus. However, the prospectus is a discrete “stand-alone” document. Consideration will have to be given to who “makes” statements about funds that appear elsewhere on a website, in fund “fact sheets,” and in other marketing materials. Consideration should also be given to more express attribution and nonattribution for statements in these materials.


The plaintiff, First Derivative, sought to represent a class of shareholders of the adviser’s parent, JCG, a publicly traded company. JCG created the Janus Investment Fund and, in typical industry fashion, organized it as a Massachusetts business trust that would house various “series” or funds. The Janus Investment Fund functioned as the legal entity in the Janus fund complex and maintained a board of directors that included only one member associated with JCM. Statements in the fund prospectuses represented that the funds did not permit, and took active measures to prevent, market timing. First Derivative contended that investors bought shares of JCG at inflated prices and then lost money when market timing practices authorized by JCM and JCG became known to the public. First Derivative sought to hold both JCM and JCG liable for fraud under Section 10(b) of the 1934 Act and Rule 10b-5 thereunder and attempted to hold JCG liable as a control person of JCM under Section 20(a) of the 1934 Act. First Derivative alleged that JCM and JCG were responsible for the allegedly misleading statements appearing in Janus fund prospectuses.

The Underlying Action

The district court dismissed First Derivative’s complaint for failure to state a claim,[5] concluding that there were no statements in the complaint or the prospectuses that were directly attributable to JCG, and there could be no claim for aiding and abetting liability under Rule 10b-5 pursuant to the decision in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A.[6] The district court also dismissed the complaint against JCM, finding that First Derivative failed to demonstrate that the alleged fraud occurred “in connection with” the purchase or sale of a security because a mutual fund investment adviser owes no duty to its parent’s shareholders and, thus, no nexus existed between the class, as shareholders of the parent entity JCG, and JCM. The U.S. Court of Appeals for the Fourth Circuit reversed the district court’s decision,[7] holding that First Derivative sufficiently demonstrated that the misleading statements were attributable to JCM. The court stated that interested investors would infer that the adviser played a role in preparing or approving the content of the funds’ prospectuses, and that, in light of publicly available information, interested investors would have inferred that if the adviser had not itself written the policies in the prospectuses regarding market timing, it must at least have approved these statements. The Fourth Circuit found that the complaint did not plead an adequate claim of primary liability against JCG, but held that the complaint adequately pled that JCG was liable as a control person of JCM under the 1934 Act.

The Supreme Court Decision

On appeal to the Supreme Court, First Derivative argued that an investment adviser is the “maker” of statements by its client mutual funds for purposes of Rule 10b-5 in the manner of “a playwright whose lines are delivered by an actor.”[8] The Supreme Court disagreed, ultimately likening the adviser-mutual fund relationship to that of an unsung speechwriter and the public speaker who ultimately bears responsibility for what is said and how it is communicated.[9] The Court concluded that in order to be a “maker” of the statement, a person must have “ultimate authority over the statement, including its content and whether and how to communicate it,” and explained that “[w]ithout control, a person or entity can merely suggest what to say, not ‘make’ a statement in its own right. One who prepares or publishes a statement on behalf of another is not its maker.” Finding the definition of “make” to be unambiguous, the Court stated that, “[a]lthough the existence of the private right is now settled, we will not expand liability beyond the person or entity that ultimately has authority over a false statement.”[10]

While Janus was decided in the context of advisers to mutual funds, it has broader implications in its narrow interpretation of Rule 10b-5. The Court went to great lengths to place the Janus opinion in the context of two other decisions addressing the narrow scope of the private right of action implied under Rule 10b-5. First, the Court was careful to note that the Janus interpretation of Rule 10b-5 is consistent with the decision in Central Bank, in which the Court held that the Rule 10b-5 private right of action does not include suits against aiders and abettors.[11] The Court in Janus expressed concern that finding JCM liable for the statements would be tantamount to reintroducing liability for aiding and abetting the making of the statement by the funds. Second, the Court stated that the Janus decision is consistent with its decision in Stoneridge Investment Partners, LLC v. Scientific Atlanta Inc.,[12] in which the Court found no liability for persons whose deceptive acts were unknown to the public and on which the public, therefore, could not have relied. The Court pointed out that in Stoneridge it found that nothing done by the defendants made it “necessary or inevitable” that the primary offender would itself make use of the deceptive information provided by the secondary participants.[13] Similarly, the definition of “make” adopted by the Court in Janus keys on the notion that nothing made it “necessary or inevitable” that the funds, which had ultimate authority over the content of the prospectuses, would have “made” the statements regarding JCM and market timing, even with JCM involved in the drafting process.

In reaching its holding, the Court rejected the argument that the U.S. Government asserted in its amicus brief that “to make” should be interpreted as “to create,” which would have allowed a private right of action against a person who provides false or misleading information to another when that information is incorporated by another into a statement.[14] Citing Stoneridge, the Court disagreed with this interpretation, stating that it saw “no reason to treat participating in the drafting of a false statement differently from engaging in deceptive transactions, when each is merely an undisclosed act preceding the decision of an independent entity to make a public statement.”[15]

The Court also rejected First Derivative’s argument that the uniquely close relationship between a mutual fund and its investment adviser invites a finding that the adviser had control over the making of the prospectus statements.[16] The Court observed that (1) despite significant influence by the adviser over the fund, both entities observed all corporate formalities in keeping themselves completely separate, in Janus’s case even beyond the requirements of the law; (2) it is Congress’s responsibility to address any reapportionment of liability that might be needed based on the closeness of the relationship between advisers and funds; and (3) to do otherwise would be inconsistent with Stoneridge‘s narrow interpretation of the private right of action.[17]

In applying its interpretation of “to make” to the Janus facts, the Court recognized that Janus Investment Fund, as registrant, rather than JCM, was required by statute to file prospectuses with the SEC. Moreover, the Court noted that Janus Investment Fund (again as registrant) had actually filed the prospectuses at issue, and there was no allegation or indication on the face of the prospectuses that the adviser made the allegedly false statements in the prospectuses.[18] Although First Derivative argued that JCM was “significantly involved in preparing” the prospectuses, the Court found that this assistance, which was “subject to the ultimate control of Janus Investment Fund, does not mean that JCM ‘made’ any statements in the prospectuses.”[19] In holding that JCM had not “made” the allegedly misleading statements, the Court also noted that merely providing access to the prospectuses on JCM’s website did not support liability, explaining that “[m]erely hosting a document on a Web site does not indicate that the hosting entity adopts the document as its own statement or exercises control over its content.”[20] The Court did not address, however, statements that are made on the Web or in print that are less self-contained than the fund’s registration statement.

Open Questions and Practical Implications of the Decision

Although it significantly narrowed the scope of potential liability under Rule 10b-5, the Court also left open a few questions that are likely to be the subject of future litigation.

  • Indirect statements: Rule 10b-5 provides that it is unlawful for a person “directly or indirectly” to make any untrue statement. The Court explained that “indirectly” in Rule 10b-5 “merely clarifies that as long as a statement is made, it does not matter whether the statement was communicated directly or indirectly to the recipient.”[21] Thus, the first step in determining liability under the Court’s analysis in Janus is identifying whether a statement was “made” by a person with ultimate authority over the statement.[22] The Court, however, did not define when “indirect” communications of “made” statements might lead to Rule 10b-5 liability, other than to say that attribution, at a minimum, is required for liability to attach.[23] The Court left unanswered whether attribution alone could be enough for an “indirect” statement to lead to liability.[24]
  • Attribution: On the subject of attribution itself, the Court noted that “in the ordinary case, attribution within a statement or implicit from surrounding circumstances is strong evidence that a statement was made by-and only by-the party to whom it is attributed.”[25] The Court did not further explain what it meant by attribution “implicit from surrounding circumstances,” although we know that in Janus the Court rejected the close relationship of investment adviser and mutual fund and the participation of the adviser in the drafting of the prospectus as establishing that the statements could implicitly be attributed to JCM. Investment advisers and similarly situated parties that routinely interact with entities that themselves will be “making” statements under the rule set forth in Janus should carefully monitor communications to ensure that those entities are not attributing statements to their advisers in public statements.
  • Public statements: In addition, the Court in Janus noted that the plaintiff had not alleged that any of the statements that JCM made to the fund were themselves “public” statements that could lead to liability under the fraud-on-the-market theory as described in Basic Inc. v. Levenson.[26] Investment advisers should attempt to manage their communications so that statements that are not intended for wide dissemination or for attribution to the adviser do not become publicly available.

Notwithstanding these open issues, in establishing a “clean line” for Rule 10b-5 liability drawn at the point of “ultimate authority over a statement,”[27] the Janus Court’s interpretation provides more certainty in allowing participants in the financial markets to know when they have and have not “made” a statement that will potentially subject them to Rule 10b-5 liability.

  • For pooled investment vehicles (including not only mutual funds but also exchange-traded funds and commodity- and currency-based exchange-traded vehicles), this means that it is the registrant that will be deemed to be “making” statements in prospectuses, absent some indication of attribution to another.
  • It is unclear how Janus will impact commodity- and currency-based exchange-traded vehicles that do not typically have boards of trustees/directors but whose sponsors are deemed to be “issuers” under Section 1(a)(4) of the Securities Act of 1933. With respect to these entities, industry practice has been that either the trust (through its appointed officers) or the sponsor (on behalf of the registrant) would sign the registration statement. In light of Janus, however, the question remains as to whether sponsors or managers of such products would be able to absolve themselves of being deemed to have made a statement for Rule 10b-5 purposes (unless such statement is otherwise attributed to them) if the trust rather than the sponsors signs the registration statement, notwithstanding the fact that such sponsors are statutorily deemed to be issuers of the shares.

After the Janus decision, as long as parties observe corporate formalities and make clear who has ultimate authority for a statement and who does not, exposure to Rule 10b-5 claims will be manageable. The more difficult question may be how various parties will agree to allocate responsibility for “making” statements in light of the Court’s bright-line test.


[1]. Rule 10b-5 provides that it is unlawful for “any person, directly or indirectly, . . . (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person in connection with the purchase or sale of any security.” 17 C.F.R. § 240.10b-5.

[2]. Janus, No. 09-525, slip op. at 6.

[3]. Janus, No. 09-525, slip op. at 6. Justices Roberts, Scalia, Kennedy, and Alito joined Justice Thomas’s majority opinion. Justices Ginsburg, Sotomayor, and Kagan joined Justice Breyer’s dissenting opinion.

[4]. Id. at 6-7, 10-11.

[5]. In re Mut. Funds Inv. Litig., 487 F. Supp. 2d 618 (D. Md. 2007).

[6]. 511 U.S. 164 (1994).

[7]. In re Mut. Funds Inv. Litig., 566 F.3d 111 (4th Cir. 2009).

[8]. Janus, No. 09-525, slip op. at 9.

[9]. Id. at 12.

[10]. Id. at 8, 9 n.8.

[11]. 511 U.S. at 180. The SEC retains the ability to proceed directly against aiders and abettors under Rule 10b-5.

[12]. 552 U.S. 148, 166-67 (2008).

[13]. Id. at 161.

[14]. Janus, No. 09-525, slip op. at 8. In addition, the Court in a footnote “expressed skepticism over the degree to which the SEC should receive deference regarding the private right of action” under Rule 10b-5.

[15]. Id. at 9.

[16]. Id.

[17]. Id. at 9-10

[18]. Id. at 11. The Court observed that, under Rule 10b-5, “as long as a statement is made it does not matter whether the statement was communicated directly or indirectly to the recipient,” but, regardless of how the communication is made, “attribution is necessary.” Id. at *11 n.11.

[19]. Id. at 12.

[20]. Id. at 12 n.12.

[21]. Id.

[22]. Id. at 11 n.11.

[23]. Id.

[24]. Id.

[25]. Id. at 6.

[26]. Id. at 10 n.9 (citing 485 U.S. 224, 227-28 (1988)).

[27]. Id. at 7 n.6.

Sen. Menendez Introduces Comprehensive Immigration Reform Act of 2011

Sen. Menendez Introduces “Comprehensive Immigration Reform Act of 2011”

Today, Senators Robert Menendez (D-NJ), Harry Reid (D-NV), Patrick Leahy (D-VT), Richard Durbin (D-IL), Charles Schumer (D-NY), Kristen Gillibrand (D-NY) and John Kerry (D-MA) introduced the “Comprehensive Immigration Reform Act of 2011,” a bill that seeks to fix a system that has been broken for far too long. The legislation proposes a balance of solutions, such as enhanced enforcement measures and a mandatory E-verify program which is paired with strategies to address the current population of undocumented workers, improvements to regulating future flows of legal immigration, a commission to study and regulate temporary worker programs, as well as efforts to support the integration of immigrants into America.

The following is a statement from the American Immigration Council’s Executive Director, Ben Johnson:

We welcome the introduction of the ‘Comprehensive Immigration Reform Act of 2011’ the first immigration reform bill of the 112th Congress that proposes a framework for lasting reform. Senator Menendez and co-sponsors should be commended for offering the country an alternative to the enforcement-only bills proposed by immigration restrictionists. While some politicians propose mandatory E-verify without any counter-balancing attempt to help needed workers retain their jobs, the Menendez bill proposes a strategy for the current population of unauthorized immigrants to get right with the law, implementing mandatory E-verify only in the context of broader system reforms.

The Comprehensive Immigration Reform Act’ presents Congress with a clear choice between enforcement-only bills that squander the country’s resources and human capital, and thoughtful, long-range legislation that puts in place the tools for a 21st century immigration system. Members of Congress have, thus far, provided only simplistic enforcement-only solutions and sound bites. The Menendez bill, however, gives Congress the chance to prove that it is willing to put good policy over political expediency, engage in a serious and constructive debate over immigration reform, and focus on realistic solutions rather than passing this year’s political Band-aid.

American Electric Power v. Connecticut: The Dog That Did Not Bark

So, it’s that time of year again, campers. It’s the time when all the law nerds gather ’round expectantly and philosophize over the Supreme Court’s final opinions of the term.

And it’s no different here at the Appellate Record. We yield to no one in our lack of a rich inner life.

Lately, the talking heads were all agog about the American Electric Power opinion, how these global warming lawsuits were dead without an “activist court.”

It is astounding how much is written and how little is decided in some opinions. It’s as if the court gasps an audible “whoops,” and side steps the big issue, only to leave a muddy footprint there on the carpet to nevertheless show where it has been.

The recent case of American Electric Power v. Connecticut is just such a case. Like the famous dog from the Sherlock Holmes mystery, The Silver Blaze, the opinion is notable for what the Court did not say. Indeed, what the Court could not say.

American Electric Power v. Connecticut was one of a number of disputes from around the country where plaintiffs sued select emitters of greenhouse gasses for despoiling the planet with their CO2. (Query if long winded counsel could be joined as potentially responsible parties.)

Recall the prior Appellate Record post about how the Fifth Circuit got itself tied in knots and could not even review the issue of whether such a case presented a justiciable question–that is, plaintiffs picking a few corporations from among the billions of CO2 emitters on the planet and suing them for the nuisance of a warming earth to be caused in the future by omitting more CO2.

(Did you like the way I masked my own personal slant on that subject? Journalistic standards.)

So bow-tie-wearing lawyers like me everywhere were all a-quiver wondering what the Supreme Court would do with the first case that came along. Whack it on the noggin? Or stretch justiciability and allow it to proceed?

Answer: none of the above. Because eight is an even number and eight is all the judges they had.

The Second Circuit had found the case to be justiciable, and the Supreme Court deadlocked at four to four because Sonja Sotomayor, late of the Second Circuit, was recused.

Lacking a majority either way, the justiciability ruling contained in the Second Circuit’s terse little 139 page opinion was affirmed by default. And the court moved onto the question of whether there was a federal common law nuisance action given the EPA‘s move to fill the gap and regulate greenhouse gasses.

Answer: No.

But what about a state common law nuisance action?

Would it be preempted?

Who knows? That question was remanded.


Maybe. Depending upon which circuit (or state court) you ask.

Maybe not if you bring an odd number of judges next time.

So is there such a thing as a global warming nuisance claim? Ask the dog that did not bark.

Many years and many dollars from now.