Lawyer malpractice cases, usually handled in state courts, rarely find their way onto the docket of the U.S. Supreme Court.
But the high court on Jan. 16 took up a Texas legal malpractice case — not to decide if the lawyers involved really messed up, but rather to determine whether it should have been litigated before state court or federal court. The reason for the uncertainty is that the alleged malpractice occurred during a patent infringement case, and patent issues are the province of federal courts.
By the end of the hourlong argument, it appeared that federal courts might win out, with justices worrying that state court decisions could bring inconsistency to areas of federal law including not only patents but also immigration and antitrust.
Justice Sonia Sotomayor voiced concern that a state court ruling on how Texas lawyers should or should not handle patent infringement cases could “change lawyers’ behaviors in federal court.” That, she said, “gives me pause, a lot of pause.” Chief Justice John Roberts Jr. echoed her concern, fretting that a state court malpractice ruling in this area “would be disruptive of the uniformity of federal patent law.”
The case of Gunn v. Minton was filed in state court by Vernon Minton, a software developer who claimed that his lawyers, including Jerry Gunn of Waco, mishandled a patent infringement suit they filed on his behalf against Nasdaq. Minton claimed that Nasdaq had infringed on his 2000 patent for stock-trading software. [See "Another Bite at the Apple: Inventor Sues His Former Lawyers for a Second Time," Texas Lawyer, Jan. 30, 2012, page 1.]
The defendant lawyers denied wrongdoing, and while the case was pending, the U.S. Court of Appeals for the Federal Circuit ruled in a separate case that federal courts had exclusive jurisdiction over state legal malpractice claims when proving patent infringement is an element of the claim. The case was Air Measurement Technologies v. Akin Gump Strauss Hauer & Feld. [See "Jurisdiction Friction: Legal-Mal Suits With Patent Infringement Elements Belong in Federal Court," Texas Lawyer, Oct. 22, 2007, page 1.]
Based on that ruling and on a 2005 Supreme Court precedent, Grable & Sons Metal Products v. Darue Engineering and Manufacturing, the Texas Supreme Court ruled that federal courts had exclusive jurisdiction over Minton’s malpractice case. It invoked 28 U.S.C. 1338, which says no state court shall have jurisdiction over “any claim for relief arising under any Act of Congress relating to patents.” Gunn and the other defendants appealed to the Supreme Court.
The case is the latest in which the justices have struggled to decide just how broadly federal courts should predominate in cases “arising under” federal laws. The Grable test includes several factors, including how substantial the federal law issue is and the balance between state and federal interests.
Under that test, Jane Webre, representing Gunn, told the court the case should be handled in state court. Webre, appellate litigator at Scott, Douglass & McConnico in Austin, said the malpractice case did not raise significant federal issues and any decision “would not be binding on either the PTO [U.S. Patent and Trademark Office] in a patent application, or on any subsequent federal court deciding a real patent case.”
She said that, in the wake of the Federal Circuit ruling establishing federal predominance in patent-related malpractice cases, “scores and scores” of federal and state courts have been “grappling with this issue.”
Picking up on her point, Justice Anthony Kennedy said he worried that, even if the Supreme Court resolves the legal malpractice issue, the question of federal vs. state court jurisdiction will be litigated on issues ranging from products liability to food and agriculture. “It goes on and on,” he said.
Thomas Michel of Griffith, Jay & Michel in Fort Worth, rose to argue on behalf of Minton that federal courts should handle cases like his. A state court ruling, he said, would have a “profound effect on patent law” beyond his case. Patent lawyers are “going to have their backs watched by the state courts.”
Justices Elena Kagan and Antonin Scalia questioned whether in fact state court rulings in patent-related cases really would have such damaging impact or even would diverge much from federal court decisions, including by the Federal Circuit.
Scalia joked, “My experience is that . . . judges, including this federal judge, are not interested in getting into the weeds of patent law, and if they could rely on a decision of the Federal Circuit, they would do that just as fast as they can.”
State or Federal?
“Both Thomas Michel and Jane Webre did a spectacular job,” says David Keltner, a partner in Fort Worth’s Kelly Hart & Hallman who represents Gunn in both the trial and appellate courts and who attended the high court argument. “I think it [the U.S. Supreme Court] is probably leaning towards overruling the Texas Supreme court, but I could be wrong about that.”
Rod Phelan, a partner in the Dallas office of Baker Botts who defends lawyers in legal malpractice cases and is not involved in the case, hopes that the defendant lawyers in the underlying case prevail.
That’s despite the fact that, “I have taken the position that federal courts have exclusive jurisdiction over cases asserting malpractice in connection with patent matters,” Phelan says. “But there’s a fair amount of hostility to expanding federal jurisdiction. There’s also a widespread belief that a good many state-court judges can actually spell patent — and other big words. If the Supremes agree, then, in this case, the good guys win.”
Randy Johnston, a partner Dallas Johnston ♦ Tobey who represents Minton in the trial court, says it’s odd having to defend a Texas Supreme Court decision at the U.S. Supreme Court.
“I’m struck somewhat with the irony that it’s my job to protect the integrity of the decision of the Texas Supreme Court, because they are generally not known as a plaintiff’s friendly court. But we’re going to do it,” Johnston says.
Johnston also adds that it’s a great honor to have a case heard by the U.S. Supreme Court, “but it’s an honor that comes with a price tag when you’re on a contingent fee,” as he is in this case.