Ninth Circuit Nursery

Based on statistical and textual analysis of the 148 patent cases heard by the Ninth Circuit Court of Appeals from its creation through 1925, this chapter suggests that the appeals judges created a legal environment highly favorable to innovative West Coast enterprises. Their rulings consistently sided with local patent holders and alleged infringers over litigants from outside the circuit. Cases involving only local parties produced more mixed results, as judges sought to mediate disputes among competing regional suppliers, while insulating small proprietors from risks of infringement. Through these means, the appeals court actively shaped competition and influenced the course of innovation in such emergent fields as oil drilling and refining, hydraulic machinery, and food processing. The distinctiveness of Pacific Coast patent law diminished after 1915 under influence of a federal judiciary stacked with protégés of ex-President William Howard Taft, who became Chief Justice in 1921.

Legal Expertise and the Role of Litigation Risk in Firms' Conservatism Choices

Firms face a greater risk of lawsuits for overstated rather than understated earnings or net assets, suggesting conservatism can reduce firms' expected legal costs. Because managers with legal expertise are more likely than other managers to recognize the legal benefits of conservatism, this study examines whether legal expertise among members of senior management promotes greater conservatism. Consistent with this prediction, we find that firms with a general counsel (GC) in senior management (our proxy for legal expertise) report more conservatively. We also find that GC firms recalibrate their conservatism levels in response to changes in the legal environment-their conservatism choices are more responsive to litigation against peer firms and to two judicial rulings that affected the litigation risk for firms located in the Ninth Circuit. Overall, our findings suggest that populating senior management with legal experts affects the extent to which a firm's level of conservatism incorporates legal risks.

The Impact of Shareholder Litigation Risk on Equity Incentives: Evidence from a Quasi-Natural Experiment

While prior studies generally support that equity-based compensation induces CEOs to manipulate financial reporting, there is limited direct empirical evidence on whether financial misreporting concerns affect compensation design. A key challenge for establishing a causal relationship is that misreporting incentives and compensation policies are often endogenously determined. Exploiting the exogenous reduction in litigation threat following a 1999 ruling of the U.S. Ninth Circuit Court of Appeals, we examine how heightened misreporting concerns in a less litigious environment affect CEOs' compensation design. Consistent with the theoretical prediction that misreporting concerns prevent companies from providing more powerful incentive pay that is otherwise optimal, we find that firms headquartered in Ninth Circuit states decreased CEOs' equity portfolio vega relative to the control firms after the ruling. We further document that this reduction was concentrated among firms facing greater misreporting concerns post-ruling.

Justice at the Border

In two recent cases, children were shot by Border Patrol agents across the United States and Mexico border. In one case, the Ninth Circuit found the Border Patrol agent was not entitled to qualified immunity and should pay damages to the teen’s family. However, the Fifth Circuit refused to allow damages in the other case because of concerns over national security. The circuit split raises questions over separation of powers and how far the power of the courts should go when deciding damages in cases involving transnational issues. This Article discusses officials’ qualified immunity and its limits when constitutional violations occur; judicially created Bivens damages; and the circuit split over separation of powers concerns and fairness to plaintiffs.

Briefly Noted

On August 23, 2020, the U.S. Court of Appeals for the Ninth Circuit issued its decision in Mitchell v. U.S., denying a certificate of appealability to the petitioner who sought a motion to vacate his conviction and sentence of death. The petitioner, Lezmond Mitchell, argued that his conviction and sentence must be vacated in light of an August 12, 2020, report by the Inter-American Commission on Human Rights that concluded that Mr. Mitchell's trial and sentence were a violation of his rights under the American Declaration on the Rights and Duties of Man. Mr. Mitchell, the only Native American on federal death row, argued that the IACHR report created rights binding on the U.S. “‘(1) because they are derived directly from the OAS Charter, a treaty within the meaning of the U.S. Constitution; and (2) because they are derived, through the OAS Charter, from the American Declaration, a statement of human rights norms the United States has not only adopted, but helped to draft.’” The Ninth Circuit concluded that Mr. Mitchell's motion to vacate “did not make ‘a substantial showing of the denial of a constitutional right’” under 28 U.S.C. § 2253(c)(2) and denied his motion. In its reasoning, the Court explained that “reasonable jurists would not find debatable the district court's conclusion that the IACHR's decision is not binding in federal court.” It agreed with the District Court's conclusion that IACHR rulings are not binding on the U.S. because the OAS Charter is “not self-executing” and there is no U.S. statute which implements it. Moreover, the District Court correctly determined that because the American Declaration is not a treaty, it creates no binding legal obligations, nor does the “IACHR's governing statute, the Statute of Inter-American Commission on Human Rights . . . give the IACHR power to make binding rulings with respect to nations, like the United States, that have not ratified the American Convention.” The Ninth Circuit thus joins the other federal courts of appeals that have addressed this issue by concluding that neither the American Declaration, nor the IACHR's recommendations related thereto, is a source of binding obligations for the United States under international law. Cf. Cardenas v. Stephens, 820 F.3d 197, 203 (5th Cir. 2016); Tamayo v. Stephens, 740 F.3d 991, 997–98 (5th Cir. 2014); Flores-Nova v. Attorney Gen. of U.S., 652 F.3d 488, 493 (3d Cir. 2011); Igartua v. United States, 626 F.3d 592, 603 n. 11 (1st Cir. 2010); In re Hicks, 375 F.3d 1237, 1241 n. 2 (11th Cir. 2004); Garza v. Lappin, 253 F.3d 918, 925 (7th Cir. 2001); Roach v. Aiken, 781 F.2d 379, 381 (4th Cir. 1986).

United States v. Lozoya

The U.S. Constitution protects one’s right to a fair trial in a proper venue. Typically, venue is proper in whatever territorial jurisdiction a defendant commits an offense. But this rule is not as clear-cut when the offense takes place in a special jurisdiction, such as American airspace. A court must then determine whether the offense continued into the venue of arrival, making it proper under the Constitution. This issue was reexamined when Monique Lozoya assaulted another passenger on an airplane during a domestic flight. In United States v. Lozoya, the Ninth Circuit Court of Appeals failed to correctly identify the assault as a “continuing offense” and in doing so risked harming the criminal procedure process for prosecutors and offenders alike.

Michael Skidmore v Led Zeppelin: Copyright infringement in music under US law

Michael Skidmore v Led Zeppelin No 16-56057, DC No 2:15-cv-03462-RGK-AGR, 9 March 2020 The US Ninth Circuit Court of Appeal upheld that Led Zeppelin's song Stairway to Heaven did not infringe the copyright of the instrumental song ‘Taurus’ and overruled circuit precedent to reject the inverse ratio rule.

Briefly Noted

On August 8, 2019, the United States Court of Appeals for the Ninth Circuit issued an opinion in Bakalian v. Central Bank of Republic of Turkey, Case No. 13-55664. In this case, the Ninth Circuit affirmed the district court's dismissal of plaintiffs’ claims seeking compensation from the Republic of Turkey and two Turkish national banks for lands that they claim were unlawfully confiscated from their ancestors during what the Court refers to as the Armenian Genocide of 1915–1923. In 2006, California adopted a statute extending the statute of limitations for claims arising out of the Armenian Genocide to December 31, 2016. Thus, the claims filed by the plaintiffs in 2010 were not time-barred under the statute; however, the panel found that since the Court had previously found the statute to be unconstitutional, no statute existed to extend the statute of limitations and therefore the claims were time-barred. The panel held that since the claims were plainly time-barred, the Court need not address legal questions posed regarding Foreign Sovereign Immunities Act jurisdiction.