Northwest Business Litigation

Judge Mosman offers a new perspective on oral argument

Judge Michael W. Mosman, one of Oregon's federal district court judges, has written an article titled "Five Oral Argument Tips - For Judges." Here, courtesy of the blog How Appealing, is Judge Mosman's article, originally published in the October 2008 issue of The Federal Lawyer.

Oregon Supreme Court finds no right to jury trial for enforcement of settlement agreement

In McDowell Welding & Pipefitting, Inc. v. U.S. Gypsum Co. et al., the Oregon Supreme Court recently held that specific enforcement of a settlement agreement taking the form of an executory accord is an equitable claim, as opposed to a legal claim, and is not subject to a jury trial.

The case involved a dispute over the defendants’ alleged failure to pay for work that plaintiff had done on a construction project. In answer to the plaintiff’s allegations, the defendants claimed as an affirmative defense that plaintiff had agreed to release its claims in return for an agreed-upon sum. The defendants also counterclaimed for specific performance of the settlement agreement. On the defendants’ motion, the trial court agreed to try defendants’ counterclaim for specific performance of the settlement agreement before trying plaintiff’s claims for breach of the construction contract.

In holding that the plaintiff did not have a constitutional right to a jury trial on the issue of specific performance of the settlement agreement, the Court noted that the right to a jury trial does not extend to cases that would have been tried to an equity court at the time the Oregon Constitution was adopted. After considering the three forms a settlement agreement may take – executory accord, accord and satisfaction, or a substituted contract – the Court found that the settlement agreement at issue was an executory accord since the defendants alleged that the plaintiff agreed to release its claims only after the defendants made the promised payment. The Court observed that executory accords were historically not cognizable at law. In response to the plaintiff’s alternative argument that the defendants’ affirmative defense required a jury trial, the Court noted that because the affirmative defense involved an executory accord, it too was an equitable claim not subject to a jury trial.

The Supreme Court affirmed the trial court’s finding that the parties had agreed to a settlement and remanded the case to the trial court for a determination of prejudgment interest.

Ninth Circuit extends tribal sovereign immunity to casino employees

The Ninth Circuit issued a fascinating Indian law ruling on Friday, November 15, in  a case named Cook v. AVI Casino Enterprises.  In Cook, plaintiff sued a Tribal casino enterprise organized as a Tribal corporation under Tribal law, and two casino employees in their official capacities, for personal injuries from a drunk driving incident involving another casino employee.  The Ninth Circuit panel held 2-1 that the court could exercise jurisdiction over the case under principles of Federal diversity jurisdiction, but held 3-0 that the court lacked subject matter jurisdiction because of Tribal sovereign immunity.

The case is interesting for three reasons.  First, this appears to be the first court of appeals decision to squarely hold that a Tribal corporation, incorporated under Tribal law, can be considered a citizen of the state where its principal place of business is located -- even though all business is conducted within Tribal lands in that state.  Second, the case is the first to hold that Tribal sovereign immunity extends to Tribal employees sued in their official capacity.  Previously, the rule of Tribal sovereign immunity extended only to Tribal officials acting in their official capacities.  Third, Judge Ronald M. Gould, who authored the panel opinion, filed a concurrence requesting that either the U.S. Supreme Court take the case or that Congress take some action to limit Tribal sovereign immunity in the "wholly commercial" Indian gaming context to avoid what Judge Gould saw as the unjust result in this case.

This decision is one of many recent opinions to express frustration with the use of tribal sovereign immunity to bar certain claims.  This might be the type of case that gets the U.S Supreme Court's or Congress's attention.  In the short term, however, this is a major victory for proponents of Tribal sovereign immunity, as the Ninth Circuit has now insulated official actions of Tribal employees under the doctrine.

Oregon Court of Appeals finds landlord not liable for assault by tenant

Last week in Miller v. Tabor West Investment Co., LLC et al., the Oregon Court of Appeals held that a landlord is not liable under a theory of negligence for an off-premises assault committed by one tenant upon another tenant because the assault was not reasonably foreseeable.

The case involved an assault committed by a tenant who the defendant apartment complex owners and property managers knew had past history of violence.  The Court of Appeals analyzed the standards for a negligence claim within the context of a landlord-tenant relationship.  Although noting that a landlord can owe a special duty of care to a tenant, the Court of Appeals stated that "the scope of that particular duty in that particular relationship turns out to be limited to harms to plaintiff that were reasonably foreseeable."  Because the landlord did not know of a risk of the particular type of harm that befell plaintiff, the landlord was not liable.

Apparent authority supports warranty liability, Oregon Supreme Court holds

The Oregon Supreme Court today addressed the scope of an agent's apparent authority in a case involving failed stucco siding.  In Taylor v. Ramsay-Gerding Construction Co., a building owner expressed concerns during construction about the performance of the stucco exterior.  In response, the territory manager for the stucco system's manufacturer stated orally and in a letter that the manufacturer gave a five-year warranty.  Soon after construction was complete the stucco became discolored due to rust, and the owner sued on the manufacturer's warranty.  The manufacturer contended that its manager had neither express nor apparent authority to issue the warranty.

The Supreme Court held that, while the agent lacked express authority, there was sufficient evidence to find apparent authority.  First, the manufacturer created apparent authority by assigning the agent to visit building sites and work with customers to solve problems.  Further, the agent's letter agreeing to the warranty reasonably led the owner to believe that the agent had authority.  For these reasons, the Supreme Court held that the jury properly found in favor of the owner.

Business method patents redux: The Federal Circuit speaks

Messers. Bilski and Warsaw and their patent attorneys are scratching their heads now that the Court of Appeals for the Federal Circuit (CAFC) has tossed out their business method patent applications.  Bilski and Warsaw are inventors of a commodities trading risk hedging process requiring three distinct steps including "initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions."  Last week the CAFC, sitting en banc, affirmed the decision of the Board of Patent Appeals and Interferences (BPAI) to reject the patent applications as failing to be directed to patent-eligible subject matter under 35 USC 101.  (See our earlier post about case, In re Bilski, here.)

The 12-judge panel was split:  Nine judges affirmed the BPAI decision, two of them filing concurring opinions, and three judges filed strongly-worded dissents.  The end result of the 130-plus page ruling seems to be that business method patents are not per se invalid (although dissenting judge Mayer would so hold), but the majority opinion certainly changes the decisional framework for allowing business method patents - and thus throws into doubt the validity of many existing patents.

The upshot in this blogger's view is that the CAFC judges are trying to find a way to reduce the number, and increase the strength, of patents in this area.  But they are uncertain whether the so-called "problem patents" are better rooted out by ruling certain things unpatentable or by applying the tried-and-tested novelty, non-obviousness, and definiteness rules of 35 USC 102, 103 and 112.

Cautious patent practitioners in this area already have been minimizing their risk by drafting business method and software patents to ensure that the differently articulated tests for patentability most likely will be met.  For now, Bilsky and Warsaw, your claims must first meet the statutory subject matter test by tying a method step to an apparatus or by reciting an article-transformative or -reductive step.  In short, do not define your invention so abstractly.

There is nothing wrong with business method or software patents that, in accordance with statute, fall within the intentionally broad statutory subject matter category and meet other patentability requirements of novelty, non-obviousness, and definiteness.

The U.S. Supreme Court should now weigh in on the CAFC's unjustified and unprecedented narrowing of the statutory process patent subject matter, not to mention the court's tortuous logic, re-interpretation of precedent, and donning of industrial age blinders in the information age.