UNLV Law Blog

Professor Trimble Publishes Global Patents: Limits of Transnational Enforcement

2012-02-14T09:47:00.000-08:00

In today’s globalized economy, many inventors, investors and businesses want their inventions to be protected in many, if not most, countries. However, there currently exists no single patent that will protect an invention globally, and despite the attempts in international treaties to simplify patenting, the process remains complicated, lengthy, and expensive. Furthermore, the necessity of enforcing patents in multiple countries exists without any possibility of concentrating in one location any parallel proceedings that concern the same invention and the same parties, thus making the maintenance of parallel patents infeasible.

Professor Marketa Trimble’s recent book, Global Patents: Limits of Transnational Enforcement, explains why the absence of a "global patent" persists, and discusses the events in the 140-year history of patent law internationalization that have shaped the solutions. Professor Trimble analyzes the ways in which patent holders attempt to mitigate the problems that arise from the lack of global patent protection. One way is to concentrate enforcement in one court of patents granted in multiple countries, which makes the enforcement of the patents less costly and more consistent. Another way is to attempt to use the litigation of a single country patent to reach acts that occur outside the country, which can mitigate the lack of patent protection outside the country. However, both the concentration of proceedings and extraterritorial enforcement suffer from significant limitations. Global Patents explains these limitations and presents the solutions that have been proposed to address them. Professor Trimble’s book includes a thorough comparative analysis of the extraterritorial features of U.S. and German patent laws, and original statistics on U.S. patent litigation. Based on a comprehensive treatment of the various facets of transnational enforcement challenges, Professor Trimble proposes the next stage of patent law internationalization.

Full Citation: Marketa Trimble, Global Patents: Limits of Transnational Enforcement (Oxford University Press 2012). ISBN13: 9780199840687.

Professor Traum Publishes in Cardozo Law Review

2012-02-07T16:12:00.000-08:00

Congratulations to Professor Anne Traum on the publication of her recent article in Volume 33 of the Cardozo Law Review. The abstract for "Constitutionalizing Immigration Law on its Own Path" provides: "Courts should insist on heightened procedural protections in immigration adjudication. They should do so under the Fifth Amendment’s Due Process Clause rather than by importing Sixth Amendment protections from the criminal context. Traditional judicial oversight and the Due Process Clause provide a better basis than the Sixth Amendment to interpose heightened procedural protections in immigration proceedings, especially those involving removal for a serious criminal conviction. The Supreme Court’s immigration jurisprudence in recent years lends support for this approach. The Court has guarded the availability of judicial review of immigration decisions. It has affirmed that courts are the arbiters of constitutional issues (including due process) and criminal statutory interpretation. The Court has accorded agency deference on matters of agency expertise, which does not include interpretation of criminal law and convictions. And the Court has created generally applicable procedural protections in order to minimize court interference with substantive immigration policy. Guided by these core concepts, courts are poised to develop procedural protections for immigrants in removal proceedings that are tailored to the institutional interests at stake and protective of immigrants. By constitutionalizing immigration on its own path, courts may also avoid some of the pitfalls of a Sixth Amendment–based criminal-rights model."

The article's full text (Anne Traum, Constitutionalizing Immigration Law on Its Own Path, 33 CARDOZO L. REV. 491 (2011)) is available for download at UNLV's Scholarly Commons as well as SSRN.

Professor Trimble Guest Blogs at JINÉ PRÁVO

2011-11-15T20:42:00.000-08:00

The Boyd School of Law is very pleased that Professor Marketa Trimble has been invited to guest blog at JINÉ PRÁVO during the month of November. Her posts, all in Czech, include a post on "gaming law" and teaching "gaming law" in law schools, a post on possible reforms of U.S. legal education, and a post on cross-border problems in patent law, including a link to Professor Trimble's upcoming book on the topic. We look forward to Marketa's informative blogging on a wide range of topics!

UNLV to Host 8th Annual Colloquium on Labor and Employment Law

2011-10-31T13:01:00.000-07:00

The Boyd School of Law is very pleased to anounce that it has been selected to host the 8th Annual Colloquium on Labor and Employment Law. Professors Ann McGinley (right) and Ruben Garcia will be organizing the conference, scheduled for fall 2013, and other Boyd faculty members will be attending and participating in the conference as well. Additional conference details are forthcoming. Please put the 8th Annual Colloquium on Labor and Employment Law on your fall 2013 calendars!

Circuit Split on Corporate Liability under the ATCA Now at the U.S. Supreme Court

2011-10-27T17:17:00.000-07:00

By Professor Rachel Anderson

The U.S. Supreme Court granted cert in Kiobel v. Royal Dutch Petroleum on October 17, 2011. 621 F.3d 111 (2d Cir. 2010), cert. granted, 80 U.S.L.W. 3237 (U.S. Oct. 17, 2011)(No. 10-1491). This means that, among other things, the Supreme Court will be deciding a split between the Second, on one side, and the Fifth, Seventh, Eleventh, and District of Columbia Circuits, and now also the Ninth Circuit, on the other side, on whether corporations can be held liable for torts committed in violation of the law of nations or a treaty of the United States under the Alien Tort Statute, 28 U.S.C. § 1350. In Kiobel, which was decided by the Second Circuit on September 17, 2010, the majority of a three-person panel held that “the customary international law of human rights has not to date recognized liability for corporations that violate its norms.” 621 F.3d 111, 125 (2010). In Sarei v. Rio Tinto, decided by the Ninth Circuit on Oct. 25, 2011, the majority of the Ninth Circuit sitting en banc held that "a violation of a sufficiently established international norm" could give rise to a cause of action for corporate liability under the Alien Tort Statute. Rio Tinto, slip op. at 19341, __ F.3d at *7. As is noted in the opinion itself, "this holding puts [the Ninth Circuit majority] at odds with the Second Circuit majority in Kiobel." Rio Tinto, slip op. at 19363, __ F.3d at *20 (citing 621 F.3d at 120). For more information about the Ninth Circuit’s holding in Rio Tinto go to Corporate Liability Under the ATCA: Rio Tinto Revisited, Oct. 26, 2011. Kiobel will be argued in tandem with Mohamad v. Rajoub, 634 F.3d 604 (D.C. Cir. 2011), cert. granted, 80 U.S.L.W. 3059 (U.S. Oct. 17, 2011)(No. 11-88). For more information about the questions presented by these two cases go to U.S. Supreme Court Takes Up Issue of Corporate Liability For Human Rights Violations, Oct. 19, 2011.

Professor Rapoport's Blogspot Named to Top 25 Business Law Blogs of 2011

2011-10-27T12:48:00.000-07:00

The Boyd School of Law is very pleased to announce that Professor Nancy Rapoport's Blogspot has been selected as one of the LexisNexis Top 25 Business Law Blogs of 2011. Each of the Top 25 Business Law Blogs creates an invaluable content space for corporate- and securities-related matters. Nancy Rapoport's Blogspot also contains content about governance in higher education, bankruptcy ethics, popular culture and the law, professional responsibility, movies, and ballroom and Latin dancing. Congratulations, Nancy!

Is it Time for an International Convention on Online Gambling?

2011-10-03T17:37:00.001-07:00

By Professor Marketa Trimble

At the 2011 International Gaming Conference organized by the International Association of Gaming Advisors (IAGA) on September 30 – October 2, 2011, I suggested to André Wilsenach, the CEO of the Alderney Gambling Control Commission, that the time is right for an international convention on online gambling. Our conversation concerned online gambling not only because of Mr. Wilsenach’s pioneering role in online gambling regulation but also because of the Conference’s focus on online gambling. Although not all Conference panels were organized to address online gambling specifically, the discussions always gravitated to the inescapable issues of online gambling regulation.

It might seem counterintuitive to suggest an international convention on online gambling at a time when even the various jurisdictions of individual countries (such as states in the U.S. or Länder in Germany) cannot agree on whether online gambling should be permitted at all, or if permitted, how it should be regulated. And yet discussions at the 2011 IAGA Conference evidenced a desire among gambling operators and regulators to see online gambling regulated at a federal, and not state or provincial, level (federal level in the U.S. and European Union level in Europe). There seemed to be a consensus among the participants that high-level legislation (a federal law in the U.S. or a directive in the European Union) would be beneficial for regulating gambling in the online environment. At the same time, the participants expressed concerns about the effective enforcement of regulation in a medium that lacks physical borders. Regulation has been successful when online gambling operators locate their servers in a regulator’s jurisdiction, but once the servers are outside the jurisdiction, the regulator’s enforcement power is severely reduced or nonexistent. From an operator’s perspective, a requirement to locate servers in every jurisdiction where the operator has an online gambling license is burdensome and technically difficult, particularly if the operator plans to take advantage of cloud computing solutions for multi-jurisdictional operations.

An international convention would greatly assist in the regulation of online gambling because the convention could address issues of enforcement on the internet while maintaining the ability of individual jurisdictions to regulate gambling in their jurisdictions in any manner they see fit, including the ability to disallow all forms of gambling entirely. And the convention would not even need to attempt to align countries’ approaches to regulation – the licensing and technological standards could be left upon each jurisdiction to define and implement individually (with the hope, perhaps, that these areas would ultimately undergo some degree of alignment). Instead of targeting issues on which jurisdictions disagree, the convention could focus on the one point on which all jurisdictions should agree – the need for effective enforcement of gambling activity in the online environment.

Effective enforcement on the internet of territorially fragmented regulation cannot occur without international cooperation among jurisdictions. Individual jurisdictions, as a practical matter, cannot raise borders on the internet to prevent unregulated websites from operating in their territory; although some jurisdictions attempt to do this by building firewalls or imposing filtering by internet service providers, public outcry and legal issues of constitutional and human rights have put these methods into question. The least controversial method of territorial partitioning that currently exists relies on geolocation tools that website operators can use to identify the location of each individual internet user and tailor content according to the user’s location. Although this method has its flaws – about which I have written (forthcoming in the Fordham Intellectual Property, Media & Entertainment Law Journal; http://ssrn.com/abstract=1937960) – it continues to be improved and is increasingly relied upon by website operators, regulators and courts.

An international convention could support regulators in imposing geolocation obligations on online gambling operators located outside their own jurisdictions. Consider an example: Regulators in country A do not allow certain types of online games to be offered in A; however, website W offers such games on the internet worldwide, including in A. Website W operates from country B, where such games are permitted. Under the convention, upon request by the regulators of A, the regulators of B would assist the regulators of A by requiring W to employ geolocation tools to prevent users in A from accessing the games that are prohibited in A. An international convention would set the parameters and procedures for cooperation among countries and provide important protections for jurisdictions that do not allow gambling in their territories.

Not only is the time right for an international convention on online gambling, the subject matter is suitable for a solution at the international level. This is not to say that drafting a convention would be easy; even agreeing on key definitions is likely to be challenging. Many general, non-gambling-specific legal questions that have prevented countries from cooperating in enforcement on the internet would impact the negotiations. However, the great public interest in effective regulation of online gambling, whether based on moral grounds, a desire for tax revenue, or some other motivation, could push forward the negotiations. If the negotiations succeed in answering questions of enforcement in the area of online gambling, the answers could contribute to the general debate about effective enforcement of territorially defined laws on the internet.

Boyd Unveils Public Interest Law Film Festival

2011-09-29T20:18:00.000-07:00

By Professor Jeanne Price

The Boyd School of Law's first Public Interest Law Film Festival takes place on Friday, September 30. The Festival celebrates the Law School's commitment to public service and the relationships among student organizations, public interest groups, community members and the Law School. Films shown at the Festival highlight the contributions of four individuals representative of important social movements - Shirley Chisholm, Thelton Henderson, Cruz Reynoso, and Sargent Shriver. Facilitators of the discussion that follow each film include State Assemblywoman Lucy Flores (Boyd '10), filmmaker Abby Ginzberg, Professor David Tanenhaus, and Professor and former Congresswoman Dina Titus.

Barbara Buckley, Executive Director of Legal Aid Center of Southern Nevada, will open the Festival, and Dean John White will introduce Judge Johnnie Rawlinson of the U.S. Court of Appeals for the Ninth Circuit who will make closing remarks. A reception will follow in the Wiener-Rogers Law Library. Professor Ann Cammett, who started the Festival project, hopes that the Festival will become an annual event: "I think the concept naturally lends itself to repeating. There are many ways to envision public interest law and many themes to coalesce around. Besides, it is always a good idea when Boyd has an opportunity to engage with members of the larger community."

More information about the Festival is available here.

Professor Rapoport Introduces New Blog

2011-09-27T11:43:00.000-07:00

You may be familiar with Nancy Rapoport's Blogspot, where Professor Nancy Rapoport blogs about a range of issues, including corporate governance, bankruptcy ethics, popular culture and the law, Enron and other corporate fiascos, professional responsibility, movies, ballroom and Latin dancing, as well as other issues that grab her attention.

Professor Rapoport also has a second blog, Law School Survival Manual: From LSAT to Bar Exam, which is a companion to her co-authored book of the same name and is designed to help law students survive every part of the law school and bar examination process.

The Boyd School of Law proudly announces the introduction of Professor Rapoport's third blog, Corporate Scandal Watch. Corporate Scandal Watch will include commentary on corporate scandals, including why businesses run by smart people can still manage to find themselves in hot water. Enjoy one, two, or all three blogs!

Boyd Welcomes Five New Faculty Members

2011-09-25T18:58:00.000-07:00

The Boyd School of Law is pleased to welcome five new faculty members.

Professor Linda Berger, one of the nation's leading figures in Legal Writing and Law and Rhetoric, comes to Boyd after serving on the faculties at Mercer University School of Law, Thomas Jefferson School of Law, and the University of San Diego School of Law.

Professor Michael Kagan, an expert in immigration law, asylum law, international human rights, and evidence law, served on the faculties of Tel Aviv University and the American University in Cairo and brings with him a decade of experience building legal aid programs for refugees throughout the Middle East and Asia.

Professor Addie Rolnick, whose ground-breaking scholarship bridges gaps between civil rights, Critical Race Theory, federal Indian law, and Indigenous rights, comes from UCLA School of Law, where she served as the inaugural Critical Race Studies Fellow.

Professor Ruben Garcia, one of the nation's leading experts in labor law, employment law, and employment discrimination, joins the faculty from California Western School of Law, where he taught and wrote about workplace law for eight years and directed the school's concentration in labor and employment law.

Professor Ian Bartrum joins UNLV from Drake Law School, where he taught Constitutional Law, Constitutional Theory, and Law and Religion. Professor Bartrum's research interests lie in the areas of constitutional history and theory, the Establishment Clause, and constitutional education.

Welcome to Boyd!

Nevada Supreme Court Addresses Family Court Jurisdiction

2011-09-21T10:52:00.000-07:00

By Professor Thomas McAffee

In Landreth v. Malik, 251 P.3d 163 (Nev. 2011), the Nevada Supreme Court held that a district court judge serving in a family court division may decide a case involving subject matter outside the scope of the statute setting forth the family division's jurisdiction. The family court judge had entered a default judgment in a conflict over competing property ownership claims of an unmarried couple — "a subject matter outside NRS 3.223’s scope." The court reasoned that the "Legislature does not have the constitutional authority to limit the constitutional powers of a district court judge in the family court division." But it did not conclude that the jurisdictional statute was unconstitutional. It was ambiguous and needed to be harmonized with other statutes. Since the family court division "was constitutionally established as a ‘division of any district court,’ Nev. Const. art. 6, § 6(2), and the judges sitting in family court are district court judges whose power and authority are derived from the Constitution and not statutorily," judges should be reluctant to read generally worded statutes, such as NRS 3.223, as conferring only specified jurisdiction.

Dissenting, Chief Justice Douglas, joined by Justice Pickering, contended that the Court’s decision implied "that a district judge enlarges the family court’s jurisdiction simply by showing up for work." Without disputing that family court judges are district judges who hold the same authority as others, Douglas argued that "[a] judge’s power is not personal, as the majority’s holding seems to suggest," but is "institutional" in the sense that "[j]urisdiction belongs to the court." Given that jurisdiction "is not a personal attribute of the judge," the better reading of the Nevada jurisdictional statute is to limit the court's jurisdiction to the power set forth in the statute’s text. Justice Cherry joined the dissenting opinion, adding the view that the Nevada Constitution is best read as granting the Legislature power to prescribe the jurisdiction of the district courts; and that is what the legislature did. The Court's decision presents an assertion of power that moves away from judicial restraint.

Nevada Supreme Court Refuses to Apply Nondelegable Duty to Reno Hospital

2011-09-20T17:45:00.000-07:00

By Professor Stacey Tovino

Whether a hospital is liable for the negligence of a physician on the hospital's medical staff depends on the application of several tort, agency, and health law doctrines including vicarious liability, actual agency, ostensible agency, corporate responsibility, corporate negligence, the law of nondelegable duties, and the corporate practice of medicine prohibition. In Renown Health, Inc. v. Vanderford, 235 P.3d 614 (Nev. 2010), the Nevada Supreme Court held that Renown Regional Medical Center did not have an absolute nondelegable duty to provide nonnegligent medical care to an emergency room patient through its independent contractor physicians. The Court also held, however, that the Medical Center could be liable for the acts of its independent contractor emergency room physicians under the doctrine of ostensible agency. The Court’s decision makes it slightly more difficult, but not impossible, for an injured patient to recover from a defendant hospital that hosts a negligent emergency room physician.

As a general rule, hospitals are not vicariously liable for the negligent acts of their independent contractor physicians. Some jurisdictions have carved out exceptions to this general rule by identifying certain nondelegable hospital duties, including the duty to provide nonnegligent health care to hospital inpatients, outpatients, and emergency room patients.

In Renown, the Court refused to impose a nondelegable duty on the Medical Center with respect to emergency room patients for four different reasons. First, the Court found that NRS § 439B.410 contemplates a hospital’s delegation of medical care to qualified health care professionals, including independent contractor physicians. Second, the Court referenced Joint Commission Hospital Accreditation Emergency Services Standards I-V, which emphasize the hospital's role as a health care policy setter and administrator, not direct care provider. Third, the Court believed that the imposition of a nondelegable duty on hospitals was a policy decision that was better left to the Nevada Legislature. According to the Court, "The Legislature has heavily regulated hospitals and would have codified a nondelegable duty to emergency room patients if the Legislature had intended such a duty to be imposed on hospitals."

Finally, the Court concluded that the case law cited by the plaintiff in support of a nondelegable duty involved issues that should have been classified as ostensible agency issues, not nondelegable duty issues. In the typical ostensible agency case involving a defendant hospital, a patient presents to the hospital without an attending physician, the hospital selects a physician for the patient, and the Court holds that it is reasonable for the patient to assume that the physician is an agent of the hospital. Because the plaintiff in the instant case did not choose his own physician but instead was subject to the physician selected for him by the Medical Center, the Court held that the Medical Center could be liable under the doctrine of ostensible agency if the plaintiff reasonably believed that the physician was an agent of the Medical Center.

An Online Gaming Ruling of the Court of Justice of the European Union

2011-09-20T15:55:00.000-07:00

By Professor Marketa Trimble

On September 15, 2011, the Court of Justice of the European Union ("CJEU") issued a preliminary ruling that concerns online gaming (Jochen Dickinger and Franz Ömer, C-347/09). CJEU preliminary rulings do not decide the merits of cases, but provide binding interpretations of European Union ("EU") law based on questions submitted to the CJEU by national courts of the EU member states. Although it will be necessary to wait for a national (in this case Austrian) court to render a decision on the merits in the case, the preliminary ruling sheds light on the conditions for online gaming regulation that may be permissible under EU law.

The questions submitted by the Austrian court to the CJEU for a preliminary ruling concerned an Austrian law that creates a monopoly on online gaming in Austria. According to the law, online gaming may be offered in Austria only under a government-issued concession, and only one such concession may exist at any given time. Organizing online games of chance for commercial purposes without the concession may lead to criminal prosecution, which is what happened in the case at issue. In their defense, the defendants argued that the creation of a monopoly was inconsistent with EU law.

The CJEU faced a difficult decision in the case, as the EU takes pride in its grant of four paramount freedoms, one of which is the freedom of movement of services. In this case the online gaming website at issue was operated under a valid license from another EU member state – Malta, and placing limitations on providing services licensed in one EU member state in another member state curtails this freedom. Furthermore, the EU’s competition (antitrust) law evidences the seriousness with which the EU views monopolies. In this case the preliminary ruling had to be rendered at a time when national regulators are searching for adequate regulatory approaches to online gaming; so far unity in these approaches has not been reached at either the EU or national levels.

The CJEU decided that the Austrian law creating the monopoly "constitute[d] a restriction on the freedom to provide services guaranteed" by EU law; however, the court noted that derogations from the principle of the freedom to provide services may be made in the public interest. The CJEU recognized a number of possible grounds to justify the application of the derogation in the case of online gaming, such as the protection of consumers and society. Because moral, religious, cultural, and economic factors that impact states' decisions on gaming regulation differ from state to state in the EU, the CJEU is of the opinion that these factors justify states’ discretion in their individual policies on online gaming. As long as the objectives of an EU member state in the area of online gaming require the creation of a monopoly, a monopoly may be in the public interest, and therefore compatible with EU law.

The case now returns to the Austrian court (Linz District Court), which with the guidance of the CJEU's preliminary ruling will determine whether the Austrian law on concessions to online gaming operators follows the kind of objectives that would warrant a derogation from the principle of the freedom to provide services. If the Austrian court finds that the Austrian law is contrary to EU law, criminal prosecution of the two defendants will be precluded.

Professor Edwards Contributes to "Law as a Discourse Community: Critical Perspectives on Legal Discourse"

2011-09-19T17:24:00.000-07:00

Congratulations to Professor Linda Edwards who is writing a chapter in a book entitled "Law as a Discourse Community: Critical Perspectives on Legal Discourse," which will be published by Carolina Academic Press. Please see below for a description of the book.

Proponents of critical legal studies, critical race theory, feminist legal theory, lat crit, and postmodern legal theory all have critiqued traditional foundationalist legal discourse and have attempted to construct alternative discursive accounts of law and its relationship to society. Peter Goodrich has argued that these critical perspectives are all located within legal discourse. Many critical and postmodern theorists, however, have maintained that these critiques are external to legal discourse, i.e., that they are essentially meta-critiques of the domain itself. If Goodrich is correct, then how can critical perspectives really fundamentally change the discourse community? Alternatively, if the latter position is correct can legal discourse evolve in order to accommodate the perspectives of these “outsider” narratives? The essays in this volume will engage these questions directly.

This book will bring together some of the foremost experts in legal discourse theory in a wide-ranging discussion concerning the relationship between traditional discursive practices in law and various critical stances concerning those discursive practices. The critical schools will include critical theory, critical race theory, feminist theory, lat crit theory, linguistics, postmodern legal theory, rhetoric, and semiotics, and will situate their critical perspectives within the larger debates about law as a discourse community. It will include articles flowing from the Law and Interpretation section program at the 2012 AALS Annual meeting, with presentations by Richard Delgado (Seattle University School of Law), Stanley Fish (Florida International University School of Law), Peter Goodrich (Cardozo University School of Law), Theresa Godwin Phelps (American University Washington College of Law), and Jean Stefancic (Seattle University School of Law).

In addition to articles flowing from these presentations, an introductory essay will situate the topic within the context of contemporary debates on discourse, jurisprudence, rhetoric, and semiotics in the legal domain. Essays by other authors will be included in order to round out the substantive coverage of the interdiscursive aspects of the law and society debates in the early twenty-first century.

These essays on the interrelationship between these critical discourses and law as a social institution will open the study of legal discourse for students and scholars who proceed from any of these standpoints, and will show how law in modern societies—especially in the United States—contains overlapping narratives and discursive practices. The high visibility of the authors who have agreed to contribute to both the AALS panel and the book sets this project apart from any other book on legal discourse. The authors’ contributions will make this a central work that anyone interested in legal discourse and critical theory will consult.

The authors are: Richard Delgado—Seattle University School of Law, Linda Edwards—William S. Boyd School of Law, UNLV, Peter Goodrich—Cardozo University School of Law, Theresa Godwin Phelps—American University Washington College of Law, Tayyab Mahmud—Seattle University School of Law, David Ritchie—Mercer University School of Law, Jack Sammons—Mercer University School of Law, Jean Stefancic—Seattle University School of Law, James Boyd White—University of Notre Dame School of Law, and Steven Winter—Wayne State University School of Law.

Eliminating Class Actions – A Tsunami in the Wake of AT&T Mobility v. Concepcion Threatens Access to Justice

2011-09-19T13:41:00.000-07:00

By Professor Jean Sternlight

When the Supreme Court handed down its decision in AT&T Mobility v. Concepcion, commentators expressed concern that the decision might effectively bring an end to many consumer and employment class actions. The five-four decision held that courts' use of California's Discover Bank test for whether an arbitral class action waiver is unconscionable was preempted by the Federal Arbitration Act. The Court explained that the Discover Bank rule, which would classify as unconscionable those class action waivers contained in consumer contracts of adhesion that would insulate companies from claims that they cheated large numbers of consumers out of individually small sums of money, effectively requires "the availability of classwide arbitration" and thereby "interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA."

Although it has been just a few months since the Court issued its decision in Concepcion, results are coming in, and they do not look promising for the future of consumer and employment class actions. Some lawyers and commentators have suggested ways lower courts might distinguish Concepcion, and continue to void unfair class action waivers. Courts might, for example, find that Concepcion only preempted the essentially per se rule in Discover Bank, and allow consumers or employees to challenge class action prohibitions using evidence and a more traditional unconscionability analysis. Or, courts might limit Concepcion to the preemption of the particular unconscionability attack and allow other attacks on class action waiver based on public policy or inability to enforce the relevant federal or state statutes. However, it turns out that most courts are rejecting these and other proposed distinctions and applying Concepcion broadly as a "get out of class actions free" card.

In case after case, courts are now refusing to void arbitral class action waivers, and sending consumers' and employees' claims for fraud, unfair business practices, wage and hour violations, discrimination, and other matters to individual arbitration. Courts are even permitting company defendants to raise the arbitration defense in cases that have been pending for several years, reasoning that Concepcion's dramatic change in the law voids plaintiffs' claim that defendants waived the arbitral defense. The Eleventh Circuit's August decision in Cruz v. Cingular Wireless exemplifies many courts' broad interpretation of Concepcion. In Cruz, the plaintiffs – who were AT&T customers and covered by the same arbitration clause discussed in Concepcion – brought a class action consumer fraud claim regarding small hidden charges. The plaintiffs sought to distinguish Concepcion, arguing that unlike the Concepcion plaintiffs, they had specific evidence showing they would be unable to vindicate their rights absent a class action. The Eleventh Circuit rejected the argument, finding that even assuming it were true that the class action waiver would result in small-value claims going undetected and unprosecuted, the Supreme Court had already considered and rejected the significance of this argument.

A few decisions have bucked the general trend, for example refusing to apply Concepcion to prevent plaintiffs from bringing a Title VII pattern and practice claim collectively or holding that claims brought under California's Private Attorney General Act are not enforceable, notwithstanding Concepcion. However, even these cases have not permitted unconscionability attacks on class action waivers in the consumer context.

Right now, all companies that had the foresight to impose arbitral class action waivers on their consumers and employees are raising the defense to defeat current class actions. In the future we can expect that far more companies will impose arbitral class action waivers as a means to insulate themselves from class actions. Companies that fear being sued in class actions can easily enough insert class action waivers into small print documents or on-line provisions that they send to their customers or employees. Under the Federal Arbitration Act, an arbitration clause need not even be signed to be valid, so long as it is written. Thus, we may soon see the possibility of class actions only in the rare contexts in which the company and potential plaintiffs do not have a prior relationship.

Concepcion and its progeny will not only require named plaintiffs to pursue their claim in arbitration, rather than litigation, but far more critically they will altogether eliminate the claims of absent class members unless they can somehow suddenly and timely bring their own individual claims. Everyone knows this is not going to happen. Thus, whereas a report by the Federal Judicial Center showed that in 2007 more than 1500 labor class actions (mostly Fair Labor Standards Act) and consumer fraud class actions were filed in or removed to federal court, making up 67.7% of the federal class action docket, unless something changes we can expect to see few such claims in the future.

Some are not troubled by this new class action-free world. Indeed, some are thrilled at their success in using arbitration to shield companies from the threat of class actions. Through the private tool of arbitration, corporate defenders are achieving what they have not been able to achieve through Congress or the federal and state rules committees. They defend this coup by claiming that class actions are not beneficial for class members, or that arbitration can be structured to ensure perhaps greater access to justice than is provided by class actions. Yet, both arguments fail.

It is true that class actions are sometimes flawed, and that some class actions serve the interests of plaintiffs' counsel or defendants more than they serve the interests of plaintiffs. On the other hand it is also true that many class actions serve the interests of both plaintiffs and members of the public, protecting them against illegal and unfair business practices. Congress and federal and state rules committees have been working hard to revise class action procedures to ensure that class actions function as fairly and effectively as possible. These groups, rather than companies themselves, are best positioned to weigh the positives and negatives of class actions and refine the rules as needed. We should not allow companies to shortcut the legislative process by using arbitration to abolish class actions.

As for access to justice, this issue lies at the core of this debate. Many people assert, and a few may actually believe, that arbitration will afford greater access to justice than litigation, even including class actions. Asserting that arbitration is quicker and cheaper than litigation, some say that victims of discrimination or consumer fraud will be able to present their claims more effectively in arbitration than they would in litigation. In Concepcion, the Supreme Court examined an ingenious arbitration clause that had been created to provide the impression that consumers who sought to bring claims against AT&T would be assured access to justice. The clause provided that AT&T must pay all costs for non-frivolous claims and pay a minimum of $7500 plus double attorneys fees to any claimant who received an arbitration award greater than AT&T’s last written settlement offer. Yet, even as to the individual claimants, the clause sounds better than it is. What lawyer can afford to take a thirty-dollar claim on the gamble that the defendant would be stupid enough not to settle and risk having to pay $7500 and double attorney fees? Further, the idea that arbitration is quicker and cheaper than litigation neglects the fact that you get what you pay for. Litigation is often time consuming and expensive because claimants need representation by attorneys and discovery to prevail on their claims of discrimination or consumer fraud.

Even more significantly, the idea that individual arbitration might adequately replace class actions neglects one of the major but too little discussed virtues of class actions: they allow people to be represented as to claims they may not have known they had. Clauses like AT&T’s, which eliminate class actions, cannot help consumers or employees who do not know they have been wronged. Class actions, in contrast, allow a single knowledgeable victim to bring a lawsuit on behalf of those similarly situated. In this busy complex world, most of us lack the time or ability to figure out that we are being victimized by fraud, discrimination, negligence, or other misdeeds. The harm may be very real, but especially when victims are harmed only in small or imperceptible ways – inappropriate fees, defective computer software, exposure to toxic substances, denial of overtime pay – many victims will simply not realize they have been harmed, much less harmed in violation of a law. Indeed, even victims of larger or clearer wrongs may lack the knowledge or wherewithal to file claims, whether in litigation or arbitration.

Thus, if we allow lower courts' interpretation of Concepcion to result in the effective elimination of most consumer and employment class actions, we are providing companies with a license to cheat and harm almost at will. If courts do not suddenly change their approach, and begin to construe Concepcion more narrowly, we will need to look to Congress and the executive branch for alternative solutions to this problem. These solutions could include new federal legislation restricting uses of mandatory arbitration, or new legislation empowering federal or state agencies to take on a much greater regulatory role to make up for the loss of class actions. Perhaps, as well, existing regulatory bodies such as the Federal Trade Commission, the Federal Reserve Bank, or the Bureau of Consumer Financial Protection will be able to take some steps, within their respective spheres of influence, to help ensure that all persons have access to justice, even in the wake of AT&T Mobility v. Concepcion.

Nevada Supreme Court Analyzes Statutory Definition of Mental Retardation in Death Penalty Case

2011-09-18T16:04:00.000-07:00

By Professor Mary Berkheiser

In the death penalty case of Ybarra v. State, 247 P.3d 269 (Nev. 2011), Ybarra challenged the district court’s finding that he was not mentally retarded and therefore was not categorically excluded from imposition of the death penalty. This was a case of first impression concerning the proper analysis to be performed under the statutory definition of mental retardation in NRS 174.098, which contains three components: (1) significant limitations in intellectual functioning, (2) significant limitations in adaptive functioning, and (3) age of onset.

The Court began by spelling out the standard of review. The determination whether a capital defendant is mentally retarded is based on factual conclusions but requires distinctively legal analysis to determine whether the elements of mental retardation have been proven; therefore, an appellate court reviews such a determination as a mixed question of fact and law. Applying that analysis, the appellate court gives deference to the district court’s factual findings, so long as those findings are supported by substantial evidence and are not clearly erroneous, but the appellate court reviews the legal consequences of those factual findings de novo.

Examining the district court’s factual findings, the Nevada Supreme Court concluded that Ybarra failed to show the onset of his mental retardation before age 18, the established age for such a determination. Further, the court found that Ybarra’s evidence of limited intellectual and adaptive functioning was not credible; instead, it stood in contradiction to other credible evidence. Based on these findings, the Court ruled that the district court had properly rejected Ybarra’s claim of mental retardation.

Nevada Supreme Court Holds that Transfer of Clean Water Coalition Monies to General Revenue Budget Violates Nevada Constitution

2011-09-13T13:23:00.000-07:00

By Professor Sylvia Lazos

In Clean Water Coalition v. The M Resort, 255 P.3d 247 (Nev. 2011), the Clean Water Coalition (CWC), an intergovernmental group made up of four political subdivisions based in Clark County, as well as private parties, challenged a 2010 legislative bill that transferred to general revenues $62 million that the CWC had raised from assessments and sewer connection fees to home owners and businesses based in Clark County. The Nevada Supreme Court held that the 2010 transfer of CWC monies for general budgetary purposes violated Art. 4, Sections 20 and 21 of the Nevada Constitution.

First, Section 20 prohibits the Legislature from passing local or special laws "[f]or the assessment and collection of taxes for state, county, and township purposes." In general, the Court noted that a special law or special legislation "imposes peculiar disabilities, or burdensome conditions in the exercise of a common right; upon a class of persons arbitrarily selected, from the general body of those who stand in precisely the same relation to the subject of the law." The policy behind this provision is to ensure that matters that affects all residents and geographical sectors of the state be equally affected by legislative actions that attempt to solve a problem of general concern. The Court found that the 2010 legislative transfer budgetary bill was a special law because it selected a particular group of Nevadans – CWC customers who had been assessed sewer connection assessment and other fees in order for CWC to fund capital improvement projects and waste water treatment projects – and a particular geographic class – governmental units located in Clark County. Moreover, this special law was a tax. The 2010 legislative act transferred CWC fees designated for a specific purpose – capital improvements to Clark County waste water treatment facilities – to the State's general fund. This conversion of fee-based monies for general revenue purposes re-characterized the monies as a tax. By definition, "[r]venue-raising acts are ... taxes." Thus, the 2010 budget bill that mandated that CWC fees be used for general revenue was a special law enacted for the purposes of collecting taxes, and violated Section 20 of the Nevada Constitution.

Second, the 2010 legislative transfer bill also failed under Section 21 of the Nevada Constitution, which requires that the Legislature not pass special laws when it is possible to pass a law of general applicability. The Court noted that it was within the power of the Legislature to solve the budgetary crisis by passing a law of general applicability (that is burdening all Nevadans equally) instead of passing a provision that was a special law, which disproportionately burdened home owners and businesses in Clark County. The state argued that budgetary exigencies justified the Legislature's enactment of special laws to balance the state budget; however, the Nevada Supreme Court rejected this argument. While a budgetary crisis is an exigency, it is not a reason for electing to solve a crisis through special laws rather than laws that generally apply to all Nevadans equally. The Court explained that the "State's budget crisis is, by its very nature, a subject of interest to all people of the state... [f]or that reason, it cannot be addressed by a local or special law that applies to burden only one entity of the state that operates in one locality of the state."

CWC v. The M Resort is a good government decision that impacted the 2011 legislative session and will continue to shape how the Executive and Legislature deal with shortfalls in state budgets. This decision was issued during the last two weeks of the 2011 session, as the Legislature and Executive struggled to balance the large budget shortfall faced by the state in 2011-12. Governor Sandoval acknowledged that CWC impacted his initial budgetary plan that would have transferred monies raised by local jurisdictions through assessment, fees and bonds to general revenues. Although this decision was issued very late in the 2011 legislative session, its clear statement of Nevada constitutional proscriptions forced the Legislature and the Executive to renegotiate the state budget so that revenue-raising measures would affect all Nevadans equally. Thus CWC v. The M Resort is a good governance decision that mandates that the Executive and Legislature to address budget shortfalls through policies that do not select any particular group for disparate treatment. It will also encourage good planning by local jurisdictions. In the future, political local subdivisions will have the confidence that if they raise monies, either through local taxes, fees or bonds, for long term governmental uses, they can dispose of these monies for that purpose, without fear that the State will subsequently sweep such funds into general revenue pool. Thus good planning will be properly rewarded. CWC v. The M Resort has made clear that the Executive and Legislature must deal with budget shortfalls without recourse to accounting line transfers that disproportionately impact one group of Nevadans.

Nevada Supreme Court Applies Full Faith and Credit Clause in Sex Offender Registration Case

2011-09-08T13:43:00.001-07:00

By Professor Thomas B. McAffee

In Donlan v. State, 249 P.3d 1231 (Nev. 2011), Eugene W. Donlan filed a petition in district court to terminate his requirement to register as a sex offender. The Nevada Supreme Court upheld the district court's denial of Donlan's petition, rejecting his argument that the Full Faith and Credit Clause (U.S. Const. Art. IV, § 1) requires Nevada to recognize California's termination of his sex offender registration requirement.

In 1985, Donlan plead guilty to a sex offense, which required him to register as a sex offender in California. The conviction was eventually set aside. Since 1986 Donlan registered as a sex offender in California and Nevada, in Nevada since moving here in 2005. In July of 2009, the California Department of Justice terminated his registration requirement. But in September of 2009 the district court denied his petition to terminate his Nevada registration duty.

The Nevada Supreme Court held that an executive branch administrative decision was not a final court judgment, and public acts or records do not "require a State to apply another State's law in violation of its own legitimate state policy" (quoting, Nevada v. Hall, 40 U.S. 410, 421-22 (1979)). Consequently "[California] has no authority to dictate to [Nevada] the manner in which it can best protect its citizenry from those convicted of sex offenses" (quoting, Rosin v. Monken, 599 F.3d 474, 577 (7th Cir. 2010)). And "Nevada is free to protect its populace from individuals convicted of sex offense by enforcing its own registration requirements." One might question whether it is good public policy in Nevada to require registration for a sex offense conviction under the circumstances presented here, but that is a policy decision for the legislature; the Court's holding on the scope of the Full Faith and Credit Clause is clearly the right decision.

Patent Ethics at Its Best

2011-09-06T18:40:00.000-07:00

By Professor Marketa Trimble

Ethics in patent law – or rather, instances in which it is absent – have propelled a number of reform initiatives that should adjust patent law to the realities of today’s practice. Reactions to the practices of so-called “non-practicing entities” or “patent trolls” – entities that do not manufacture or engage in research and development but only aggressively enforce patent rights obtained from others – can be observed in a number of current developments in patent law; some examples are limitations on the availability of injunctive relief, clarification of venue transfer rules, scrutiny of the calculation of damage awards, and interpretations of the work-product doctrine (in the context of non-practicing entities) and the definition of “domestic industry” for purposes of Section 337 proceedings before the ITC. Although these developments will mitigate some of the more questionable practices in patent law, they certainly do not reflect all of the ethical issues that arise in patent practice. To contribute to the discussion of these issues, the Boyd School of Law on Friday, September 23, 2011, will host two distinguished experts in patent ethics, Professor William Gallagher and Professor David Hricik.

Professors Gallagher and Hricik will discuss issues of patent ethics, particularly as they arise in patent licensing, at an intellectual property seminar that has been prepared by the Boyd School of Law together with IGT, a prominent gaming technology company. The seminar, entitled Intellectual Property Seminar: Assets, Licensing and Pooling, will bring together practitioners and academics; in addition to offering interesting panels on a variety of topics, it will also feature the General Counsel of the United States Patent and Trademark Office.

Professors Gallagher and Hricik bring unique perspectives from their substantial practical experience and extensive research in the area of patent law ethics. After a number of years practicing intellectual property law, both embarked on academic careers and have continued pursuing their passion for ethical problems associated with patent law. In addition to publishing numerous articles and blog posts on the topic, Professor Hricik authored two books on patent ethics – Patent Ethics: Prosecution (together with Mercedes Meyer) and Patent Ethics: Litigation, which were published by Oxford University Press in 2009 and 2010 respectively. Professor Gallagher recently completed an empirical research project of unparalleled scale that focused on ethics and patent lawyers; he will publish his findings in a series of works, which will include the article IP Legal Ethics in the Everyday Practice of Law: An Empirical Perspective on Patent Litigators. Gallagher’s and Hricik’s discussion of ethics issues in patent licensing during the Intellectual Property Seminar promises to be both informative and spirited; don’t miss the opportunity to learn about “patent ethics at its best” on September 23, 2011.

Nevada Supreme Court Embraces "Notice-Prejudice" Rule

2011-09-04T17:10:00.000-07:00

By Professor Jeffrey Stempel

In Las Vegas Metropolitan Police Department v. Coregis Insurance Co., 256 P.3d 958 (Nev. 2011), the Nevada Supreme Court formally joined the vast majority of states in embracing a "notice-prejudice" rule regarding whether an insurer may deny coverage due to late notice of a loss or claim by the policyholder. Under a notice-prejudice approach, late notice to the insurer is not necessarily fatal to the policyholder’s claim and the tardy policyholder may nonetheless obtain coverage unless the insurer demonstrates that it was prejudiced by the late notice. The Court made clear that the burden of proving prejudice was on the insurer because “it is more practical and equitable” to do so. In addition to stating that the result was required by longstanding administrative regulations (NAC 686A.660(4) states that late notice does not relieve the insurer of its obligations unless failure to comply with a policy’s notice provision “prejudices the insurer’s rights), the Metro-Coregis Court overruled State Farm Mut. Auto Insurance Co. v. Cassinelli, 216 P.2d 606 (1950), which had adopted a strict requirement that late notice was the failure of a condition that excused the insurer from providing coverage.

The Court also distinguished Las Vegas Star Taxi, Inc. v. St. Paul Insurance Co., 714 P.2d 562 (1986), which had been read by many lawyers as maintaining the “no prejudice required” strict view of an insurer’s late notice defense.

Further, the Metro-Coregis Court rejected the notion that the normal rules of insurance policy construction were subject to alteration if the policyholder was "sophisticated."

On the merits of the case, the Metro-Coregis court reversed summary judgment granted the insurer by the trial court due to genuine disputes of material fact and remanded for further proceedings pursuant to notice-prejudice rule.

The Court also strongly suggested that the complexity and ambiguity of the 75-page policy coupled with the police department’s reasonable expectations regarding when notice was required made notice in the case timely even though notice came years after the underlying event giving rise to tort liability.

Nevada Supreme Court Interprets Statute Implementing Foreclosure Mediation Program

2011-09-01T14:50:00.000-07:00

By Professor Jean Sternlight

In Pasillas v. HSBC Bank USA, 255 P.3d 1281 (Nev. 2011), and Leyva v. National Default Serving Corp., 255 P.3d 1275 (Nev. 2011), the Nevada Supreme Court made several important interpretations of the statute implementing Nevada's Foreclosure Mediation Program, NRS 107.086 (“NFMP”). Adopted in 2009 in an attempt to deal with the large number of foreclosures in Nevada, the NFMP requires that in order to foreclose on an owner-occupied residence a trustee must provide an election-of-mediation form to the owner together with a notice of default and election to sell. NRS 107.086(2)(a)(3). If the owner elects mediation the deed of trust beneficiary must attend the mediation, mediate in good faith, provide certain documents, and, if attending through a representative, send one with authority to modify the loan.

While other jurisdictions throughout the country are also using mediation to deal with foreclosures, the Nevada program is unique in its reliance on sanctions and the good faith requirement. As the precise requirements of the statute have been disputed, users of the program have long been awaiting guidance from the Nevada Supreme Court regarding interpretation of these provisions.

In essence, Pasillas and Leyva both stand for the proposition that the statute means what it says. Pasillas involved a mediation in which the trustees did not provide all the required documents and also did not send a representative with authority to modify the loan. The Court held that the district court abused its discretion in allowing respondents to continue with the foreclosure process, in that once statutory infractions have been committed the trustee is proscribed from proceeding with foreclosure and may also be subject to sanctions. In Leyva, similarly, the Nevada Supreme Court found that "strict compliance" with the statute is compelled, and that the district court is prohibited from authorizing foreclosure where the trustee produced those documents deemed "essential," but not all documents required by the statute. Specifically, the lender must produce those documents showing the original note was properly endorsed or validly transferred. As for sanctions, the Court held they are not mandatory, but that issuance should depend on "whether the violations were intentional, the amount of prejudice to the nonviolating party, and the violating party’s willingness to mitigate any harm by continuing meaningful negotiation."

Nevada Supreme Court Adopts Public Trust Doctrine

2011-09-01T12:12:00.001-07:00

By Professor Bret Birdsong

The re-emergence of the public trust doctrine has been among the most significant episodes in the coming of age of American environmental and natural resources law over recent decades. Nevada joined this important trend in Lawrence v. Clark County, 254 P.3d 606 (Nev. 2011). The public trust doctrine holds that the public holds inviolable rights in certain natural resources that a sovereign state owning such resources is constrained to act as a trustee for those public rights. In this case, involving the state's attempted sale of lands in the Colorado River valley to Clark County, the Court explicitly adopted the public trust doctrine as the law of Nevada and described how it constrains the state’s disposal of trust resources. The decision, though particular in its factual scope, is a careful, sweeping, and singing recognition of the public's interest in natural resources owned and managed by the state.

A persistent theoretical problem for the public trust doctrine is its source as a principle of law capable of binding state legislatures. If, as is sometimes stated, it is a common law doctrine traceable through the common law courts of England to Roman law, then how can it constrain the power of the legislature, which generally has the authority to amend the common law? The Court explained that Nevada's public trust doctrine finds its source in the Nevada Constitution's gift clause, various Nevada statutes addressing state lands and water resources, and "inherent limitations on the state’s sovereign power."

The precise manner in which the public trust doctrine limits legislative authority has also been problematic for states recognizing the doctrine. Does it prohibit the transfer of public trust resources altogether, or does it protect the public's interest through substantive and procedural limitations on legislative action? Addressing this question directly, the Court explained that Nevada courts must assess the transfer of public trust resources with attention not only to whether the dispensation serves a public purpose and the state receives fair consideration, but also the state's special obligation to maintain trust resources for present and future generations.

Nevada Supreme Court Applies Quarles's Public Safety Exception

2011-08-31T20:51:00.000-07:00

By Professor Katherine Kruse

In Lamb v. State, 251 P.3d 700 (Nev. 2011), the Nevada Supreme Court applied the public safety exception of New York v. Quarles, 467 U.S. 649 (1984), which permits officers to ask a suspect questions without first giving Miranda warnings if they reasonably believe it is necessary to secure their own safety or the safety of the public. In Quarles, the police apprehended the suspect in an armed rape in the supermarket into which he had fled. He had an empty shoulder holster but no gun. After handcuffing him but before giving him Miranda warnings, the police questioned him about the location of the gun.

In Lamb, the police apprehended Lamb in the fatal shooting murder of his sister, and were holding him in handcuffs outside his own apartment while they awaited a search warrant. Without first giving him Miranda warnings, police asked him about the presence of people, dogs or weapons in the apartment. Lamb answered "no" to the first two questions. In response to the third question, he said, "I have a revolver but I found it." At trial, Lamb sought to suppress that statement. The Court applied the public safety exception in Quarles. Although noting that this case differs from Quarles in that here, the source of concern was officer safety within a private apartment, rather than the public safety concern of an unattended weapon in a public place, the Court ruled that this distinction does not make a difference. The scope of the exception derives from the exigency which justifies it, and here the exigency was based on officer safety. "While the question is close," the Court held, "we agree with the district court that Lamb being handcuffed did not neutralize the emergent risk to the police of the protective sweep and/or search they were about to conduct, or convert their quick questions about people, dogs, or weapons from self-protective to investigatory."

Nevada Supreme Court Adopts Modern Flexible Approach to Promissory Estoppel Damages

2011-08-29T22:00:00.000-07:00

By Professor Jay Mootz

The creation of the doctrine of promissory estoppel is one of the most significant developments in modern contract law. In Dynalectic Co. of Nevada, Inc. v. Clark & Sullivan Constructors, Inc., 255 P.3d 286 (Nev. 2011), the Supreme Court of Nevada unanimously embraced the flexible approach to damages in promissory estoppel cases that is articulated in the Restatement (Second) of Contracts. With its succinct and clear opinion, the Court ensures that Nevada courts will follow the modern trend to determine the appropriate measure of damages by looking to "considerations of what justice requires and the foreseeability and certainty of the particular damages award sought."

One of the roots of promissory estoppel is the common scenario when a subcontractor reneges on a bid on which the general contractor has already relied to secure a construction contract with the owner. Under classical contract principles, because the general contractor has not yet entered a formal agreement with the subcontractor, there can be no cause of action for breach of contract. However, beginning with Justice Traynor’s famous opinion in Drennan v. Star Paving, courts began to find that the general contractor reasonably relies on bids to place its own bid, and that there is an "implied" and "subsidiary promise" by the subcontractor that it will not withdraw its bid before the general contractor has a fair opportunity to secure a contract. This is the situation that was presented by the Dynalectric litigation. Clark & Sullivan sued Dynalectric after it repudiated its bid, alleging that it relied on Dynalectric's bid to formulate its own bid. The trial court refused to find a breach of contract, but it did award more than $2 million in damages on a theory of promissory estoppel, based on the increased payments that Clark & Sullivan made to finish the work on which Dynalectric had bid.

Dynalectric appealed, arguing that the trial court was wrong to award expectation, or "benefit of the bargain," damages since the suit was grounded in promissory estoppel rather than breach of contract. The Court rejected this argument, finding that the modern trend is to tailor the damages to the requirements of justice, and to ensure that the resulting damages are foreseeable and reasonably certain. The Court further held that the presumptive measure of damages in a subcontractor bidding case is the expectation measure, citing Drennan and its progeny.

The Court established the correct rule. Although promissory estoppel is a doctrine that might permit recovery when the requirements of a contract are not satisfied, it is not a wholly distinct cause of action with a separate measure of damages. In fact, there is irony in the Court’s decision. Under the Restatement (First) of Contracts, promissory estoppel could be used as a substitute for consideration to establish a breach of contract, and ordinary contract damages (the expectation measure) were awarded. More recently, courts have been more aggressive in using promissory estoppel in situations in which a contract is contemplated but not completed, and in these cases the courts have developed a flexible approach to the measure of damages in light of the expanded liability. As a consequence, the Restatement (Second) of Contracts sec. 90(1) now provides that the "remedy granted for breach may be limited as justice requires." In other words, the general measure of damages in a case utilizing promissory estoppel should be the expectation measure, unless it is not subject to reasonably certain measure or the requirements of justice suggest that a more limited remedy is appropriate. Courts generally have limited the remedy to the "reliance expenditures" of the plaintiff, awarding out-of-pocket costs but not anticipated profits. The modern flexible approach, however, was never meant to unseat the expectation measure as the presumptive measure of damages.