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Supreme Court Clarifies Jurisdictional Requirements; Revives Copyright Class Action Settlement

By Cliff Sloan, Judith Kaye, Mary E. Rasenberger & David W. Foster

On March 2, 2010, in Reed Elsevier, Inc. v. Muchnick, the Supreme Court reinstated a class action settlement, approved by the district court, of copyright claims entered into by freelance authors, publishers and electronic database companies. In doing so, the Supreme Court provided important guidance on whether mandatory pre-conditions for suit, such as the requirement for copyright registration in the copyright statute, are jurisdictional.

The Reed Elsevier case involves a longstanding dispute between freelancers and publishers and databases. Nearly a decade ago, in New York Times Co. v. Tasini, 533 U.S. 482 (2001), the Supreme Court held that “owners of online databases and print publishers had infringed the copyrights of six freelance authors by reproducing those authors’ works” in electronic databases “without first securing their permission.”

After Tasini, attention turned to a class action lawsuit by freelance authors against publishers and databases in the Southern District of New York. After years of negotiation and mediation, the freelancers, publishers and electronic database companies agreed on a global settlement. Although the copyright statute requires registration of a creative work before a copyright infringement suit can be brought, the class action settlement resolved potential claims regarding both registered and unregistered works. The district court certified the class and approved the $18 million settlement.

Ten freelancers objected to certain provisions of the settlement on procedural and substantive grounds, and they appealed. The Second Circuit sua sponte asked the parties to address whether the district court lacked jurisdiction to approve the settlement because it included unregistered works. All parties maintained that there was no jurisdictional problem with the settlement, but the Second Circuit disagreed. Ruling that the district court lacked jurisdiction, it threw out the settlement.

The publishers and databases then sought certiorari from the Supreme Court, which was granted. Because none of the parties agreed with the Second Circuit’s holding on jurisdiction, the Supreme Court appointed a law professor as amicus to defend the Second Circuit’s opinion. Skadden filed an amicus brief in the Supreme Court supporting reversal on behalf of ten leading media and publishing companies and organizations.

In an 8-0 ruling (with Justice Sotomayor recused), the Supreme Court reversed. It held that the copyright registration requirement — Section 411(a) of the copyright statute — is mandatory, but not jurisdictional and thus the Second Circuit should not have thrown out the settlement on jurisdictional grounds. Writing for the court, Justice Thomas applied the rule from Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), for distinguishing between jurisdictional statutes, which govern a court’s power to hear a case, and mandatory claim processing rules. The court held that Congress had not clearly stated that the limitations in Section 411(a) are jurisdictional. As a result, the court would not conclude that the mandatory registration requirement is jurisdictional.

Justice Ginsburg, joined by Justices Stevens and Breyer, concurred in part and concurred in the judgment. They stated that there appears to be some tension between the rule announced in Arbaugh and the result in Bowles v. Russell, 551 U.S. 205 (2007), which found that a time limit for an appeal was jurisdictional. The concurring justices resolved that tension by reading Bowles to apply only when a long line of Supreme Court cases has held a statute to be jurisdictional, and that interpretation has been left unchallenged by Congress.

The Supreme Court emphasized the limits of its Reed Elsevier decision. In sending the case back to the Second Circuit, the court expressed no opinion on the merits of the settlement. It also observed that the registration requirement remains a “precondition to suit,” and left open the possibility that “district courts may or should enforce sua sponte” the registration requirement by “dismissing copyright claims involving unregistered works.” The court also noted that it did not reach the question whether, even if the registration requirement were jurisdictional, the court would have authority to approve the settlement.

Beyond the impact in the Reed Elsevier case itself, the most important effect of the decision is the court’s emphasis that it will not lightly presume that statutory requirements are jurisdictional. A conclusion that a requirement is jurisdictional is warranted only if it is clearly stated or mandated by Congress. The court stressed, as it has in other recent opinions, that it will look skeptically at “drive-by jurisdictional rulings” ­— casual statements about “jurisdiction” in past opinions that are unsupported by clear authority in statutory language or intent.

The decision leaves open the question of whether and how compliance with section 411(a) may be waived by a defendant, whether expressly or by default. Until there is a fully developed body of law on the issue, copyright litigators would be wise to raise failure to comply with section 411(a) at the earliest practical moment in the litigation.

Cliff Sloan, Judith Kaye, Mary E. Rasenberger, David W. Foster are attorneys with Skadden, Arps, Slate, Meagher & Flom. This blog entry does not represent the views of Skadden, any other law firm or any client. This blog is not sponsored by Skadden or any other law firm, or any client. The blog is provided for educational and informational purposes only and is not intended and should not be construed as legal advice.

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