On October 8, the Supreme Court heard oral argument in Warger v. Shauers, No. 13-517, a case that the Products Liability Monitor has been watching.  The case involves the ability of a party to introduce juror testimony about statements made during jury deliberations that tend to show the alleged dishonesty of a juror during voir dire.

The admissibility of juror testimony is governed by Federal Rule of Evidence 606(b), which prohibits testimony from jurors about “any statement made or incident that occurred during the jury’s deliberations; the effect of anything on that juror’s or another juror’s vote; or any juror’s mental processes concerning the verdict or indictment.”  Few exceptions to this rule are granted, including testimony about extraneous prejudicial information that was improperly brought to a juror’s attention; an outside influence improperly brought to bear on any juror; or a mistake made in entering the verdict.  Thus, as an established matter, juror testimony that purports to impeach the verdict is not allowed.  Indeed, the Supreme Court previously spoke on the permissibility of juror testimony in a decision issued over a quarter of a century ago; in that case, the Court barred an evidentiary hearing in which jurors would be able to testify on juror alcohol and drug use during trial, finding that the Sixth Amendment right to trial by a competent jury did not require permitting such testimony.  See Tanner v. United States, 483 U.S. 107 (1987).

The Warger case involves a jury foreperson who, after a defense verdict in an automobile accident case and after answering in the negative in response to a standard voir dire question addressing potential biases, revealed that her own daughter had been at fault in an auto accident.  In support of his position that testimony from that juror should be admitted, Warger argued in the briefing that because he was making a motion for a new trial, the juror testimony is not proscribed under Rule 606(b) because it is not being offered as an inquiry into the validity of a verdict or settlement.  In response, Shauers posited that a motion for a new trial is, in actuality, an attack upon the validity of the verdict and that the juror testimony is thereby forbidden.

At oral argument, counsel for Warger started by noting that the Supreme Court had previously held in McDonough v. Greenwood, 464 U.S. 548 (1984), “that a party is entitled to a new trial where it can show that a juror was materially dishonest at voir dire, regardless of whether the juror’s dishonesty actually infected the verdict.”  Counsel proceeded by arguing that a McDonough claim—that is, an inquiry into the composition of the jury—is thus permitted under Rule 606(b). In response, counsel for Shauers asserted that the fact that this case involves juror dishonesty does not change the Court’s holding in Tanner, and that McDonough does not change the nature of Rule 606(b).

The Justices focused their questioning largely on the Petitioner’s position, with Justice Ginsburg indicating her skepticism at the very outset of oral argument when commenting that “the whole rationale behind this is we don’t want to invade the jury province with information about what went on in the jury room.  And that’s a pretty old rule. . . . So this, what’s involved here is a juror reporting what she heard during the deliberations.  And it seems to me that’s exactly the kind of thing that is not permitted.”  Other Justices, including Justice Alito and Chief Justice Roberts, expressed a concern that permitting such testimony would create an untoward incentive for lawyers to approach jurors after trial, in a presumed effort to use the evidence to get a new trial.  This concern is reflective of the values promoted by Rule 606(b) in the first place:  freedom of deliberation, stability and finality of verdicts, and protection of jurors against annoyance and embarrassment.  Given the Court’s previous decision against allowing juror testimony in Tanner, it is possible that the Court in this case will exhibit a similar reluctance to invade the respected boundaries of the jury.  The Products Liability Monitor will continue to follow this case and provide updates.

Over the past year, the fight to authorize fracking has taken different forms in various states across the country, including lawsuits challenging the legality of local fracking bans in both New York and Colorado, and a lawsuit in New York seeking to compel the state government to complete its nearly six-year-long review of fracking.  This past week, landowners in Illinois took a novel approach to the issue, alleging that Illinois’ delay in issuing rules to regulate fracking amounts to a regulatory taking, and seeking monetary damages to compensate them for this injury.

Unlike New York, where a moratorium on fracking is in place and a state review of fracking’s costs and benefits has been underway for over half a decade, the Illinois state legislature actually passed a law in May 2013 that authorizes fracking within the state.  The alleged delay in the implementation of fracking has resulted because the state has not yet adopted rules to regulate the authorized fracking.  Although the rules, which were drafted by the Illinois Department of Natural Resources, are currently awaiting approval by the state legislature’s Joint Committee on Administrative Rules, if the committee does not approve them by November 15 of this year, the rule-making process must start again from the beginning.  The Department of Natural Resources stated that it will not issue fracking permits until the rules are passed, absent a court-order.

Rather than seeking such a court order, or moving to compel the government to release the rules, owners of mineral rights on the New Albany Shale in southern Illinois have styled their claim as a Constitutional violation, and filed a class-action seeking monetary damages. In their complaint against the Illinois governor and the director of the Department of Natural Resources, the plaintiffs allege the state’s delay amounts to a taking of their mineral rights without just compensation, in violation of the Fifth Amendment, as well as Illinois’ constitution and state laws. They allege that the class will exceed 1,000 landowners, and that they are each entitled to more than $50,000 in damages.  By pursuing an action for regulatory taking rather than seeking a court order to compel the government to take action, the Illinois plaintiffs may avoid the fate of the New York landowners’ suit to force the state to complete its review of fracking, which was dismissed for lack of standing in July. The Illinois government has not yet responded to the complaint, and the Product Liability Monitor will continue to report on developments in the case as it moves forward.

My colleague Lisa Sokolowski recently discussed some of the cases we are watching during this year’s Supreme Court term. Let’s add another to the list: Perez v. Mortgage Bankers Association, 2014 U.S. LEXIS 4275 (U.S. June 16, 2014).  Although the dispute technically concerns a reinterpretation by the Department of Labor of an existing regulation, in practical terms SCOTUS’s ruling could impact the regulatory interpretative power of federal agencies in general, and EPA in particular.  Not surprisingly, Perez is of great interest to regulated industries.

In the underlying case, the Court of Appeals for the D.C. Circuit relied on its previous decisions, Alaska Prof ’l Hunters Ass’n v. FAA, 177 F.3d 1030 (D.C. Cir. 1999) and Paralyzed Veterans of Am. v. D.C. Arena L.P., 117 F.3d 579 (D.C. Cir. 1997), to hold that the Department of Labor violated the Administrative Procedure Act when it reversed its interpretation of an existing rule without Notice and Comment.  See Mortg. Bankers Ass’n v. Harris, 720 F.3d 966 (D.C. Cir. 2013).  The D.C. Circuit’s ruling highlighted a split with the First, Second, Fourth, Sixth, Seventh, and Ninth Circuits, which agree that changes in interpretations do not require notice and comment because both the original and current position constitute interpretive rules.  See id. Slip Op. at 5, n. 3; Warshauer v. Solis, 577 F.3d 1330, 1338 (11th Cir. 2009).

The question presented by the petitioners on certiorari is “Whether a federal agency must engage in notice-and-comment rulemaking before it can significantly alter an interpretive rule that articulates an interpretation of an agency regulation.” 2014 U.S. LEXIS 4275 (U.S. June 16, 2014).  In its moving brief, the United States asserts that “Congress has expressly and unqualifiedly exempted the amendment and repeal of ‘interpretative rules’ from the rulemaking requirements of the Administrative Procedure Act (APA).” Although the opposition brief of the Mortgage Bankers Association is not yet publicly available, MBA is all but certain to rely on the argument it made below that the D.C. Circuit’s decisions in Paralyzed Veterans and Alaska Professional Hunters stand for the proposition that where “an agency has given its regulations a definitive interpretation, and later significantly revises that interpretation, the agency has in effect amended its rule, something it may not accomplish without notice and comment.”  Alaska Professional Hunters, 177 F.3d at 1034.

As mentioned above, although Perez facially concerns a regulation promulgated by the Department of Labor, its import extends far beyond the Department of Labor.  In particular, Perez could dramatically impact EPA, which is in the process of developing and/or revisiting regulations on climate change and carbon regulation under the Clean Air Act, and permitting under the Clean Water Act.   But regardless of the federal agency, if SCOTUS affirms the D.C. Circuit’s interpretation of the APA then it will dramatically curtail the ability of regulators to unilaterally change their interpretation of existing rules.  This change, should it come to pass, would likely be welcomed by regulated industries because it would go a long way towards establishing regulatory certainty.

Stay tuned for updates.

Ninth Circuit Affirms Local Ordinance Regarding Pharmaceutical Disposal

October 13, 2014

Late last month, the Ninth Circuit affirmed the constitutionality of a California county ordinance requiring all manufacturers of both brand name and generic prescription drugs sold in the county to take equal responsibility for all of the county’s unwanted prescription drugs, including their collection, transportation, and disposal, regardless of whether the manufacturer is based within the county. […]

Read the full article →

Plaintiff’s Major Malfunction: Failure to Plead the “Malfunction Theory”

October 10, 2014

No direct evidence of a specific product defect? No problem. The “malfunction theory” allows a plaintiff to establish the existence of a product defect with circumstantial evidence supporting an inference that an unspecified defect must have caused the accident because all other possible causes are absent. Solves the problem, right? Roland White thought so. Unfortunately […]

Read the full article →