Today was a day of unanimity at the U.S. Supreme Court, and what the Justices were unanimous about was a textually literal approach to applying dictionary definitions to resolve statutory disputes.
Several years ago, in a lecture series named after the late Justice Antonin Scalia at Harvard, Justice Elena Kagan pronounced, “We’re all textualists now.” And at least on some days, that declaration proves true. Today is one of those days.
We start with Dewberry Group, Inc. v. Dewberry Engineers Inc. Dewberry Engineers successfully sued the similarly named Dewberry Group, a competing real estate developer, for trademark infringement under the Lanham Act. The Lanham Act provides for a prevailing plaintiff to recover the “defendant’s profits” derived from the improper use of a mark.15 U. S. C. §1117(a). Dewberry Group provides services that facilitate the generation of rental income from properties owned by separately incorporated affiliates, and that goes on the affiliates’ books. Dewberry Group is only paid fees, and because those fees are set below market rate, it has operated at a loss for many years, surviving only because the owner of both Dewberry Group and its affiliates has made infusions of cash. Given what it saw as an “economic reality,” the U.S. District Court for the Eastern District of Virginia treated Dewberry Group and its affiliates “as a single corporate entity” for purposes of calculating the profit-based award, totaling the affiliates’ profits from the years in which the infringement took place. This produced an award of almost $43 million. Writing for a unanimous Court, the avowed textualist Justice Kagan opined that “[i]n awarding the ‘defendant’s profits’ to the prevailing plaintiff in a trademark infringement suit under the Lanham Act, §1117(a), a court can award only profits ascribable to the ‘defendant’ itself. And the term ‘defendant’ bears its usual legal meaning: the party against whom relief or recovery is sought—here, Dewberry Group.” Because Dewberry Engineers did not include Dewberry Group’s affiliates as defendants, the affiliates’ profits are not disgorgeable “defendant’s profits” as the term is ordinarily understood. In other words, only the profits attributable to the actual defendant were subject to award.
Separately concurring, Justice Sotomayor cautioned that there might be other cases in which “principles of corporate separateness do not bind courts to economic realities.” She goes on to describe two ways in which a defendant’s profits might be calculated despite certain “accounting arrangements” that might obscure actual profits. But that is for future cases. Here, Dewberry Engineers lost 9-0.
The dictionary played an even more pronounced role in another unanimous opinion in the case of Waetzig v. Halliburton Energy Services, Inc. Mr. Waetzig was terminated from employment by Halliburton and brought suit claiming a violation of the Age Discrimination in Employment Act, 29 U. S. C. §§ 621 et seq. (ADEA). Waetzig agreed with Halliburton to submit his claim for arbitration, but he did not ask the District of Colorado to stay his ADEA lawsuit. Instead, he dismissed the case under Fed. R. Civ. P. 41(a), under which a plaintiff may dismiss his case “without a court order” if he serves “a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment.” Rule 41(a)(1)(A)(i). Halliburton had not yet served an answer or otherwise filed motions, so the dismissal was effective without any court action. Moreover, since this was the first time Waetzig had dismissed his claims, his dismissal was presumptively “without prejudice.” Rule 41(a)(1)(B). Thus, he had preserved his right to refile the same claims in the future. When he lost the arbitration, he returned to court, not to file a new case but to reopen and argue in the old, dismissed one that the arbitrator’s decision should be vacated because of certain alleged rules violations. The problem that the lower court faced was the fact that the Rule 41(a) dismissal without prejudice terminated his case. So, how could he file a motion in a case that no longer existed? Fed. R. Civ. P. 60(b) provides the answer, and that answer saved the day for Mr. Waetzig. To quote Justice Alito, writing for the whole Court, Rule 60(b) permits a court, “[o]n motion and just terms,” to “relieve a party . . . from a final judgment, order, or proceeding.” A court may do so for six enumerated “reasons,” including “mistake, inadvertence, surprise, or excusable neglect.” See Rule 60(b)(1). The general “purpose” of the Rule, we have said, is “to make an exception to finality.” Gonzalez v. Crosby, 545 U. S. 524, 529 (2005). The Rule “attempts to strike a proper balance between the conflicting principles that litigation must be brought to an end and that justice should be done.” 11 C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure §2851, p. 286 (3d ed. 2012).
The essence of the holding is that text, context, history, and the dictionary mandate that a case that is voluntarily dismissed without prejudice under Rule 41(a) counts as a “final proceeding” under Rule 60(b). Thus, the Court reversed the U.S. Court of Appeals for the Tenth Circuit and remanded the case to the District Court, which could then address certain jurisdictional arguments made by Halliburton.
One parting note: Following the release of today’s opinions, the Court heard arguments in Ames v. Ohio Department of Youth Services, in which the issue presented is “[w]hether, in addition to pleading the other elements of an employment discrimination claim under Title VII of the Civil Rights Act of 1964, a majority-group plaintiff must show ‘background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.’” I mention this case not just because it will be of interest to the many lawyers who read this blog who counsel and litigate with respect to Title VII but also because recent executive orders issued by President Trump concerning diversity, equity, and inclusion, as well as other affirmative action efforts, are likely to foment reverse discrimination cases brought by individual plaintiffs and government agencies pursuant to the employment discrimination laws and even as false certification claims under the federal False Claims Act. Indeed, we are already seeing such cases. So, watch the Ames case carefully to see whether heightened standards of proof might be required in similar cases.