The US Supreme Court held that a valid forum selection clause should be enforced through a motion to transfer under 28 U.S.C. § 1404(a), rather than a motion to dismiss for wrong venue under 28 U.S.C. § 1406(a) or for improper venue under Federal Rule of Civil Procedure (FRCP) 12(b)(3). The decision overturns a majority rule followed by at least nine federal circuits and places a heavy burden on plaintiffs who breach valid forum selection clauses.

In Atlantic Marine Construction Co. v. US District Court for the Western District of Texas, the parties entered into a contract that specified Virginia as the forum for all disputes. However, when a conflict arose, one party filed suit in the Western District of Texas. The defendant, Atlantic, moved to dismiss the case for improper venue and, alternatively, to transfer the case to the Eastern District of Virginia. On appeal, the Supreme Court unanimously held that:

This decision strongly favors enforcing valid forum selection clauses and prevents parties from engaging in post-contractual forum shopping. If a valid forum selection clause exists:

(134 S. Ct. 568 (2013).)

See Legal Updates, Supreme Court Explains How to Enforce Forum Selection Clauses and How a Recent US Supreme Court Ruling Will Affect Forum Selection Clauses in Commercial Contracts for more on this decision.

See Standard Clauses, General Contract Clauses: Choice of Forum and Practice Note, Choice of Law and Choice of Forum: Key Issues for more on forum selection clauses.

Counsel attempting to prevent disclosure of expert materials in the Tenth Circuit should be cautious of the limited protections afforded this information.

In Republic of Ecuador v. For Issuance of a Subpoena Under 28 U.S.C. § 1782(a), the Tenth Circuit rejected a broad reading of the 2010 amendments to FRCP 26, and held that work product protection for expert materials extends only to the narrow categories specifically delineated in FRCP 26(b)(4)(B) and (C). The Republic of Ecuador sought discovery of certain documents withheld by Chevron despite an earlier district court order compelling discovery from one of Chevron's experts under 28 U.S.C. § 1782 (which allows a district court to compel discovery for use in a foreign or international proceeding). Chevron argued that the withheld documents fell under FRCP 26's work product protection.

The Tenth Circuit affirmed the district court's order compelling discovery of the expert materials and concluded that:

(735 F.3d 1179 (10th Cir. 2013).)

See Legal Update, Tenth Circuit Takes a Narrow View of Work Product Protection Over Expert Material for more on this decision.

See Articles, Expert Discovery: An Update on the Rule 26 Amendments and Expert Q&A on the Rule 26 Amendments: Developing Case Law for more on expert discovery under FRCP 26.

Retaining attorneys in a firm's Washington, DC office, without more, is likely insufficient to establish the substantial connection to the forum needed to support personal jurisdiction in the District of Columbia (District).

In Thompson Hine, LLP v. Taeib, the DC Circuit affirmed the district court's dismissal of an action filed in the District by an Ohio-based law firm against a non-resident client for unpaid legal bills. Although the retainer agreement had been written on the firm's Washington, DC letterhead, there was little other deliberate contact with the forum demonstrated either by the terms of the contract itself or by the non-resident's actual dealings with the District. The DC Circuit held that a non-resident's mere retention of a Washington, DC-based service provider was insufficient to establish the requisite minimum contacts necessary for exercising personal jurisdiction over the non-resident.

The DC Circuit found that, under the US Supreme Court's decision in Burger King Corp. v. Rudzewicz, it must look beyond the mere existence of a contract to the question of whether the parties' activities and actual course of dealings demonstrated purposeful availment of the forum. The quality and nature of activities directed to the District must be examined.

The DC Circuit also distinguished certain decisions holding that personal jurisdiction existed over non-residents who knowingly retained Washington, DC counsel to perform legal services in the District, because those cases reflected far more extensive contacts than those between the non-resident and the law firm in Thompson Hine. (734 F.3d 1187 (D.C. Cir. 2013).)

See Legal Update, DC Circuit Looks Beyond Mere Retention of DC Attorneys to Establish Personal Jurisdiction for more on this decision.

See Practice Note, Commencing a Federal Lawsuit: Initial Considerations for more on personal jurisdiction and other key issues to consider before commencing a lawsuit in federal district court.

Companies with large market shares may face exclusive dealing claims under the Sherman Act even when their contracts are both short in duration and easily terminated. A plaintiff may succeed on a motion to dismiss, making it to the discovery stage, if it alleges other facts that make a de facto exclusive dealing arrangement plausible. A recent district court opinion sustained a de facto exclusive dealing claim based on allegations that the defendant's monopoly power made it economically necessary for market participants to deal with the defendant and that the costs of switching to the plaintiff were prohibitive.

In Pro Search Plus, LLC v. VFM Leonardo, Inc., the US District Court for the Central District of California granted in part and denied in part a motion to dismiss the plaintiff's second amended complaint. The plaintiff's allegations included that the defendant, its competitor, held between 70% and 90% of the market share and maintained exclusive dealing agreements in violation of Sections 1 and 2 of the Sherman Act. The court had previously dismissed the plaintiff's Sherman Act claims because the relevant contracts were of short duration and easily terminated, and the plaintiff failed to allege other facts to support its exclusive dealing theory.

However, the court concluded that there were enough additional facts in the second amended complaint to support the existence of de facto exclusive dealing arrangements despite the terms on the face of the contracts. Citing the Third Circuit's decision in ZF Meritor, LLC v. Eaton Corp., the court noted that an express exclusivity agreement is not necessary for an exclusive dealing claim because courts look beyond the terms of the contract to determine its effects on competition. (No. 12-2102, (C.D. Cal. Dec. 2, 2013).)

See Legal Update, District Court Allows Exclusive Dealing Claims to Proceed under De Facto Theory for more on this decision.

See Practice Note, Exclusive Dealing Arrangements for more on the antitrust implications of exclusive dealing arrangements.

Counsel seeking to restrict the review of arbitration awards cannot contractually eliminate all judicial review of awards under the Federal Arbitration Act (FAA). Instead, they should build other mechanisms into their contracts to discourage appeals of arbitration awards.

In In re Wal-Mart Wage & Hour Employment Practices Litigation, the Ninth Circuit, in a case of first impression, held that parties could not eliminate the judicial review of arbitration awards provided by Section 10 of the FAA in an arbitration clause. After the settlement of the Wal-Mart wage and hour multidistrict litigation, the plaintiffs' co-lead counsel submitted a dispute over the allocation of the district court's fee award to an arbitrator for "binding, non-appealable arbitration." After the arbitrator handed down his opinion allocating fees, one attorney moved to confirm the arbitration award while another filed a motion to vacate it.

The US District Court for the District of Nevada granted the motion to confirm the award, and found no basis to vacate it. On appeal, the appellee argued that the court lacked jurisdiction to hear the appeal because the parties had agreed to binding, non-appealable arbitration. The Ninth Circuit found that it had jurisdiction over the appeal and affirmed the lower court's decision. Arbitration awards are reviewable only on the limited grounds set out in FAA Section 10. The Ninth Circuit held that just as parties are prohibited from supplementing these grounds, parties also could not eliminate them. (737 F.3d 1262 (9th Cir. 2013).)

While the Ninth Circuit found that contractual clauses eliminating judicial review of arbitration awards are unenforceable, there are still provisions counsel may wish to include to discourage appeals of arbitration awards, such as cost and attorney fee shifting provisions.

See Legal Update, Ninth Circuit Finds Non-appealability Clause in Arbitration Agreement Unenforceable for more on this decision.

See US Arbitration Toolkit for a collection of resources designed to assist counsel with US commercial arbitration and drafting arbitration clauses and agreements.

The Eleventh Judicial Circuit of Florida, which encompasses Miami-Dade County, issued an administrative order on December 3, 2013 that established an international commercial arbitration subsection to hear all international commercial arbitration cases, effective immediately. This decision comes soon after the New York State Supreme Court for New York County issued a similar administrative order, designating one judge to handle all international commercial arbitration matters brought before the court.

Together, these administrative decisions reflect the growing importance of international commercial arbitration and the recognition in some courts that specially-trained judges may be best suited to hear these matters.

See Legal Update, Florida Court Establishes an International Arbitration Section for more on this administrative order.

See Practice Note, Choosing an Arbitral Seat in the US for information on selecting a US arbitral seat for an international arbitration.

A Delaware Court of Chancery decision serves as a useful reminder to sellers and their counsel to consider privilege issues when negotiating a merger agreement. If the seller wishes to keep its communications with counsel privileged post-closing (particularly if there is a risk of litigation being brought by the buyer), it should contractually exclude from the transferred assets the premerger attorney-client communications that it wants to retain as its own.

In Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, the Court of Chancery held that under the unambiguous language of Delaware General Corporation Law (DGCL) Section 259 (8 Del. C. § 259), the attorney-client privilege, like all other privileges, passes from the acquired corporation to the surviving corporation in a merger, unless the parties expressly agree to carve out these communications from the transaction. Therefore, in this post-closing lawsuit brought by the buyer against the seller, the Court of Chancery barred the seller from asserting privilege over its communications with counsel regarding the merger negotiations. Significantly, the merger agreement lacked any express carve-out for these communications and the seller had never previously taken any steps to preserve the privilege.

The Court of Chancery declined to follow the New York Court of Appeals' decision in Tekni-Plex, Inc. v. Meyner & Landis, which dissected into two categories the privileges belonging to a Delaware corporation sold in a merger and held that premerger attorney-client communications regarding merger negotiations do not necessarily pass to the surviving corporation. The Delaware court noted that Tekni-Plex, Inc. applied New York law and did not cite, let alone apply, DGCL Section 259. (80 A.3d 155 (Del. Ch. 2013).)

See Legal Update, Who "Owns" the Attorney-Client Privilege After a Corporate Merger? for more on this decision.

See Practice Note, Attorney-Client Privilege: Clients and Client-Agents (Federal) for more on passing the attorney-client privilege to a corporate successor.

Until the Delaware Supreme Court provides further guidance, a Delaware Court of Chancery decision advises that companies with valid forum selection clauses in their corporate charters specifying Delaware as the selected forum, who are sued outside Delaware in contravention of those clauses, should seek their enforcement by moving to dismiss in the non-contractually selected forum. The more aggressive step of filing an anti-suit injunction in Delaware, as of now, will be met with reticence.

In Edgen Group Inc. v. Genoud, the Delaware Court of Chancery denied a motion for a temporary restraining order (TRO) to enjoin a stockholder from pursuing a claim in Louisiana against a Delaware corporation. The corporation had a forum selection clause in its corporate charter requiring stockholders to litigate claims for breach of fiduciary duties in Delaware. The Court of Chancery recognized the validity of the forum selection clause, but stated that the proper procedure for the corporation was to move to dismiss the Louisiana action in Louisiana.

In its reasoning, the Court of Chancery relied on its recent decision in Boilermakers Local 154 Retirement Fund v. Chevron Corp., which upheld the validity of forum selection clauses in corporate charters while also advising that these provisions should be enforced in the first instance by the non-contractually selected forum. The Court of Chancery also raised a concern that granting the motion for a TRO would implicate issues of inter-forum comity and concluded that it should wait to issue such an order until the Delaware Supreme Court has had an opportunity to opine on the enforcement of forum selection clauses in corporate by-laws and charters. (No. 9055-VCL (Del. Ch. Nov. 5, 2013) (Hrg. Tr.).)

See Legal Update, Delaware Court of Chancery Declines to Enjoin Claim Brought Outside Delaware Despite Forum Selection Clause for more on this decision.

See Standard Clause, By-laws or Certificate of Incorporation: Delaware Forum Selection for a model clause selecting the Delaware Court of Chancery as the exclusive forum for intra-entity disputes, with explanatory notes and drafting tips.

Employers that sponsor employee benefit plans governed by ERISA should consider adding a reasonable limitations period for disputed claims to their plan documents and summary plan descriptions, or should review existing provisions to ensure the period is reasonable, given a recent US Supreme Court decision.

In Heimeshoff v. Hartford Life & Accident Insurance Co., the participant filed a benefits claim under her employer's long-term disability plan with the plan's insurer and administrator in August 2005. Following a lengthy internal administrative appeals process, the plan administrator issued a final claim denial in November 2007. The participant did not file suit under ERISA Section 502(a)(1)(B) (29 U.S.C. § 1132(a)(1)(B)) challenging the claim denial until November 2010. At issue was whether the plan's three-year contractual limitations period, which ran from the due date for proof of loss, was enforceable (rendering the participant's lawsuit untimely).

The Supreme Court unanimously held that absent a controlling statute to the contrary, an ERISA plan participant and the plan may agree in the plan document to a particular limitations period, even one that starts to run before the cause of action accrues or the plan's administrative process is exhausted, if the period is reasonable. (134 S. Ct. 604 (2013).)

This decision should provide comfort to employers with ERISA plans (and insurers) that include limitations periods for disputed claims that run from the date proof of loss is due that the plan's limitations period is enforceable, if the period's length is reasonable.

See Legal Update, Supreme Court Upholds Limitations Period in ERISA Disability Plan for more on this decision.

See Claims Procedure Requirements for Disability Claims Checklist for more on disability claims under ERISA.

A recent Sixth Circuit decision serves as a reminder that UCC-1 financing statements used to perfect a lender's security interest in certain collateral must identify the collateral with specificity.

In 1st Source Bank v. Wilson Bank & Trust, the Sixth Circuit applied Tennessee law in settling a priority dispute, holding that the lender did not have a perfected security interest in collateral consisting of accounts receivable because the collateral description in the UCC-1 financing statement did not include accounts receivable and the term "proceeds" did not expressly refer to accounts receivable. The Sixth Circuit concluded that the UCC-1 financing statement was insufficient to put the other secured creditors on notice of the security interest in the accounts receivable, and that the lender had only an unperfected subordinate security interest in this collateral.

The Sixth Circuit disagreed with the lender's argument that the definition of "proceeds" under Chapter 9 of the Tennessee Uniform Commercial Code includes accounts receivable arising from the use of the collateral, finding that:

(735 F.3d 500 (6th Cir. 2013).)

See Legal Update, 1st Source Bank v. Wilson Bank: UCC-1 Collateral Description Insufficient for Perfection for more on this decision.

See Practice Note, UCC Creation, Perfection and Priority of Security Interests for more on perfecting a security interest.

The Lehman Bankruptcy Court recently extended the safe harbor for swap agreements under section 560 of the Bankruptcy Code to settlement calculation provisions specified under an ISDA Master Agreement, even where the settlement calculation provisions themselves would otherwise operate as prohibited ipso facto clauses under Bankruptcy Code section 365(e)(1).

Section 560 states that no provision of the Bankruptcy Code may limit the contractual right to cause the liquidation of a swap agreement, but does not indicate whether the contractual method of liquidation is protected along with the right to cause the liquidation. However, after examining the plain language of section 560, the US Bankruptcy Court for the Southern District of New York held, in In re Lehman Brothers Holdings Inc., that the contractual method of liquidation was included in the safe harbor because it is inextricably linked to the safe harbor provision that provides for the right to cause the liquidation. The court found that the settlement methodology provided in the ISDA Master Agreement was therefore exempted from the section 365 prohibition on ipso facto clauses. (502 B.R. 383 (Bankr. S.D.N.Y. 2013).)

Practitioners should be aware that the settlement calculation provisions of their ISDA Master Agreements will be protected if their counterparty enters into bankruptcy, even if these provisions have been modified by subsequent amendment to deprive the counterparty of rights or payments based on its bankruptcy filing.

See Legal Update, In re Lehman: ISDA Swaps Liquidation Methodology Protected by Section 560 Safe Harbor for more on this decision.

See Practice Note, The ISDA Master Agreement: Early Termination for more on early termination under ISDA Master Agreements, including settlement and close-out methodology and calculation of the early termination payment under Section 6(e).

A recent Federal Circuit decision clarifies the exceptionality standard for awarding attorneys' fees under 35 U.S.C. § 285. The decision may curb litigation excesses and misconduct in patent cases by making it easier for district courts to award attorneys' fees to prevailing accused infringers.

In Kilopass Technology, Inc. v. Sidense Corp., the Federal Circuit vacated and remanded the district court's denial of the accused infringer's request for attorneys' fees under 35 U.S.C. § 285. Attorneys' fees may be awarded under this provision if the litigation was brought in subjective bad faith and is objectively baseless. The district court denied the motion because the accused infringer failed to prove by clear and convincing evidence that the patent owner brought or maintained its patent suit in bad faith. On appeal, the Federal Circuit held that:

(738 F.3d 1302 (Fed. Cir. 2013).)

Notably, the US Supreme Court has granted certiorari in two cases this term that address the exceptionality standard under 35 U.S.C. § 285.

See Legal Update, Federal Circuit Clarifies Standard for Awarding Attorneys' Fees in Exceptional Cases for more on this decision.

See Practice Note, Patent Infringement Claims and Defenses for more on exceptionality and patent infringement claims generally.

A recent Ninth Circuit decision demonstrates for trademark litigants the further erosion of the classic presumption that trademark infringement results in irreparable harm to the trademark owner.

In Herb Reed Enterprises, LLC v. Florida Entertainment Management, Inc., Herb Reed sued for trademark infringement and sought a preliminary injunction against Florida Entertainment's use of the name THE PLATTERS as a vocal group's trademark. The Ninth Circuit, relying on the US Supreme Court's decisions in eBay Inc. v. MercExchange, L.L.C. and Winter v. Natural Resources Defense Council, Inc., held that, as in patent infringement cases, irreparable harm could not be presumed in a trademark infringement action based on a showing of likely or actual success on the merits of the infringement claim.

The Ninth Circuit found:

The Ninth Circuit ruled that to prevail on a motion for a preliminary injunction, the trademark plaintiff, like patent and copyright plaintiffs:

(736 F.3d 1239 (9th Cir. 2013).)

Practitioners should be ready for other circuit courts to find that eBay has eliminated the presumption of irreparable harm in trademark infringement actions. In particular, plaintiffs seeking injunctive relief should be prepared to show likely or actual irreparable harm, while defendants should be prepared to argue that eBay applies.

See Legal Update, eBay's Long Shadow Falls Over Presumption of Irreparable Harm in Trademark Infringement Cases: Ninth Circuit for more on this decision.

See Practice Note, Trademark Infringement and Dilution Claims, Remedies and Defenses for more on trademark infringement claims.

A recent Federal Circuit decision held that any request for continued examination (RCE) limits the patent term adjustment (PTA) under 35 U.S.C. § 154(b)(1)(B)(i) for a period of time extending until the application's notice of allowance.

In Novartis AG v. Lee, the Federal Circuit resolved a split among district courts as to whether the filing of an RCE three years after the original application's filing date limits the patent term adjustment. Under Subsection 154(b)(1)(B)(i), the length of a patent term adjustment excludes "any time consumed by continued examination of the application requested by the applicant." The Federal Circuit upheld in part the US Patent and Trademark Office's (USPTO's) interpretation of this provision, finding that:

(No. 13-1179, (Fed. Cir. Jan. 15, 2014).)

See Legal Update, Any Request for Continued Examination Limits Patent Term Adjustment: Federal Circuit for more on this decision.

See US Patent Application Prosecution Flowcharts for an overview of the basic utility patent application process in the USPTO.

A recent decision from the US International Trade Commission (ITC) will require complainants who rely on licensing-based domestic industry to show that articles protected by the licensed patent exist or are in the process of being created. Before this opinion, the ITC had not required patent owners to show the existence of protected articles practicing the asserted patent to establish a licensing-based domestic industry.

In In re Certain Computers and Computer Peripheral Devices, and Components Thereof, and Products Containing Same, the ITC held for the first time that a complainant must show that licensing pertains to articles protected by the asserted patent to establish a licensing-based domestic industry under 19 U.S.C. § 1337(a)(3)(C). In finding that the complainant had failed to prove the existence of protected articles, the ITC noted that:

(Inv. No. 337-TA-841, Comm'n Op. (Intl Trade Commn Jan. 9, 2014).)

See Legal Update, Licensing-based Domestic Industry Requires Articles that Practice the Asserted Patent: ITC for more on this decision.

See Practice Note, ITC Section 337 Patent Investigations: Overview for more on Section 337 investigations and the domestic industry requirement.

Employers should be aware of a recent decision that permits employers in the Fifth Circuit to use class and collective action waivers in arbitration agreements with employees to minimize exposure to broad class or collective action lawsuits.

In D.R. Horton, Inc. v. NLRB, the Fifth Circuit held that employees do not have a substantive right under the National Labor Relations Act (NLRA) to pursue class or collective actions. The court found that there was no conflict between the NLRA, which protects employees' concerted activity, and the FAA, which strongly favors enforcing arbitration agreements by their terms. Because Congress did not exempt the NLRA from the FAA, arbitration agreements must be enforced according to their terms, including class action waivers. The court also found that the National Labor Relations Board (NLRB) could not interpret the NLRA in a way that ignores other statutes. (737 F.3d 344 (5th Cir. 2013).)

The NLRB will likely continue to find class action waivers unlawful as to NLRA-covered employees. However, in light of this decision, employers in at least the Fifth Circuit should consider entering into arbitration agreements with some or all of their employees that waive class or collective action procedures for employment-related disputes. Employers that have, or will create, employee arbitration agreements or alternative dispute resolution programs requiring arbitration should ensure that their agreements or program documents make it clear that employees may still file claims with an administrative agency, such as the NLRB.

See Legal Update, FAA Trumps NLRA in D.R. Horton Class Action Waiver Challenge: Fifth Circuit and Article, Class Action Waivers in Employment Agreements: Expert Q&A for more on this decision, including insights by D.R. Horton's counsel on the Fifth Circuit's ruling and the enforceability of class action waivers.

See NLRB Jurisdictional Limits and Standards Chart for information about who is covered by the NLRA and subject to the NLRB's jurisdiction.

Employers should revisit their strategy when defending charges before the Equal Employment Opportunity Commission (EEOC) following the Seventh Circuit's decision in EEOC v. Mach Mining, LLC. Deviating from the approach taken by other circuit courts, the Seventh Circuit expressly rejected an implied affirmative defense based on the EEOC's failure to conciliate. (738 F.3d 171 (7th Cir. 2013).)

Given this decision, employers in the Seventh Circuit should:

Employers in the Second, Fourth, Fifth, Sixth, Tenth and Eleventh Circuits may still seek judicial review of the EEOC's conciliation efforts, but may find the above strategies helpful if they want to resolve the issue before the EEOC commences a court action.

See Legal Update, Failure-to-conciliate Affirmative Defense Not Available in EEOC Title VII Cases: Seventh Circuit for more on this decision.

See Practice Note, Systemic Discrimination: Responding to EEOC Investigations and Litigation for more on EEOC investigations and litigation.

In a case of first impression, the US District Court for the Northern District of Georgia held that whistleblowers bringing retaliation claims under the Dodd-Frank Act are not entitled to a jury trial. Employers will likely welcome this decision because it removes the risk and uncertainty of a jury trial for Dodd-Frank whistleblower claims, which are becoming more prevalent.

Noting that the Dodd-Frank whistleblower provisions are silent as to the right to a jury trial, the court in Pruett v. BlueLinx Holdings, Inc. used a two-part inquiry to analyze whether Dodd-Frank whistleblowers are entitled to a jury trial under the Seventh Amendment. The court concluded that even though the first factor, which considers the nature of the claim, weighed in favor of a jury trial, the second factor, which considers the nature of the remedy, is more important in determining a plaintiff's right to a jury trial. The court determined that the principal whistleblower remedies available under the Dodd-Frank Act are equitable and therefore outside the scope of damages awarded by a jury. For that reason, the court concluded that the plaintiff did not have a right to a jury trial. (No. 13-02607 (N.D. Ga. Nov. 12, 2013).)

See Legal Update, Dodd-Frank Whistleblowers Not Entitled to Jury Trial: N.D. Ga. for more on this decision.

See Practice Note, Whistleblower Protections under Sarbanes-Oxley and the Dodd-Frank Act for more on the whistleblower provisions of the Dodd-Frank Act.