Opinion analysis: Scalia treatise on standing law gives Sixth Circuit first affirmance of the year
on Mar 28, 2014 at 1:37 pm
The Court’s consideration of LexMark International, Inc. v. Static Control Components, Inc. puts the Court at the epicenter of a “sprawling litigation” (to use the Court’s words), involving a variety of claims under state and federal law, to say nothing of LexMark’s persistent efforts against all who attempt to interfere with its efforts to erect a practical monopoly over refilling cartridges for its printers. The specific question here is whether Static Control can sue LexMark for unfair competition (under the Lanham Act) based on advertisements LexMark sent to Static Control’s customers (companies that manufacture print cartridges using Static-made chips), claiming that it is unlawful for those manufacturers to use the Static-made chips.
With only a glancing reference to the hoopla of the litigation campaign as a whole, Justice Scalia’s opinion for a unanimous Court upholding Static Control’s right to sue provides a tour de force treatment of statutory standing; the opinion is certain to earn reprinting in casebooks and citations in briefs for decades to come. The simplest way to summarize the Court’s opinion is that it pretty much rejected out of hand everything that either the parties or the courts of appeals have said with regard to the topic at hand, and most of what the Court itself previously has said.
Thus, the Court started by laying to rest the “misleading” perception of the parties (following the Court’s own earlier formulations) that the case was about “prudential” standing. Noting that the parties agreed that Static had suffered an “injury in fact” that satisfies Article III’s constitutional constraints, the opinion emphasized the “tension” between any additional untethered doctrine of “prudential standing” and the federal courts’ oft-noted “virtually unflagging” obligation to “hear and decide cases within its jurisdiction.”
Thus, the Court explained, once Article III concerns are satisfied, the only remaining “standing” question in a statutory case is a question of statutory interpretation: whether the plaintiff’s claims fall within the statutory cause of action, a question to be resolved by “traditional tools of statutory interpretation,” as opposed to any general doctrine of standing limitations: “Just as a court cannot apply its independent judgment to recognize a cause of action that Congress has denied, it cannot limit a cause of action that Congress has created merely because ‘prudence’ dictates.”
Proceeding in some tension with the vigorous claim that “standing” is purely a matter of contextual congressional intent, the Court assessed the scope of the Lanham Act’s false advertising cause of action through the application of “two relevant background principles” – presuming that all statutory causes of action are limited to plaintiffs that fall within the statute’s “zone of interest” and to plaintiffs whose injuries are proximately caused by the unlawful conduct.
Because the Lanham Act’s statement of its purposes is “unusual and extraordinarily helpful,” the Court could determine the zone of its interest with “no guesswork”: injury to a commercial interest in reputation or sales. This would exclude a consumer that purchased a falsely advertised product, but plainly would extend to Static Control’s claims of injured reputation.
Recognizing the inherent imprecision of any “proximate cause” analysis, the Court concluded (not very helpfully) that the Lanham Act reaches injuries “flowing directly” from the deception but not injuries that occur indirectly. Because Static Control alleged that Lexmark explicitly disparaged Static Control’s own products, the harm to the reputation plainly “flows directly from the audience’s belief in the disparaging statements.” The Court offered little guidance as to why anybody might think “direct” causation was any clearer, predictable, or useful than “proximate” causation.
As the Justices’ comments at the argument (analyzed here) indicated, there was little likelihood that the Justices would adopt the narrow standing test that Lexmark advocated. Perhaps the most remarkable thing about the opinion is the ability of Justice Scalia to garner a unanimous Court despite his characteristically uncompromising tone. I will leave it to Federal Courts scholars in the years to come to decide exactly how revisionist Justice Scalia’s presentation of standing doctrine is, but the opinion itself makes it clear that the Court has rejected a notable body of existing doctrine. The opinion suggests at one point that “upon closer inspection, we have found [earlier reasoning] inapt,” and at another point that the Court’s earlier discussion of statutory standing was at best “misleading.” Only the years to come will tell us whether this Court’s formulation brings more clarity and predictability to the area than the so-easily-rejected efforts of Courts of the past.
PLAIN-LANGUAGE SUMMARY: If one company disparages the products of another, the second company can sue the first company for unfair competition, even if the companies are not direct competitors.