Will Petrella Apply Beyond Copyright?

For those who concern themselves with remedies, the case law concerning the equitable defense of laches was, until recently, rather somnolent. Two wake-up calls, one loud, the other muted to near silence, have changed largely settled expectations and produced questions about the relationship between laches and federal statutes of limitation. In particular, it is now clear from that laches does not, except in “extraordinary circumstances,” bar actions for damages that are instituted within the three-year statute of limitations set forth in the Copyright Act. Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014). Yet a recent decision of the Second Circuit Court of Appeals may cast doubt on the extent to which courts will extend Petrella. Before the Second Circuit’s ruling in Stockbridge-Munsee Community v. State of New York, it seemed to be only a matter of time before the Federal Circuit overturned A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1029-31 (Fed. Cir. 1992) (en banc) by holding that, per Petrella, laches does not bar damages claims brought within the Patent Act’s six-year statute of limitations. Not so fast.

Laches Prior to Petrella
It used to be generally accepted that laches, an equitable defense based on the notion that equity does not protect those who sleep on their rights, could apply even though the applicable statute of limitations had not run. There was no requisite length of time in which a laches defense could be raised and affirmed; rather, it “depend[ed] on the circumstances” of each case. Aukerman, 960 F.2d at 1023, id. at 1032 (citing Galliher v. Cadwell, 145 U.S. 368, 373 (1992)).[1] Indeed, the Supreme Court had held that a delay of less than a year could be sufficient to preclude recovery.[2]

Petrella’s Change
Laches seemed particularly appropriate in cases in which a court was concerned that “a plaintiff [might] sandbag[] a defendant by bringing a late suit.” Portland Audubon Soc’y v. Lujan, 884 F.2d 1233, 1241 (9th Cir. 1989). Since “several months of correspondence” was not sufficient to preclude laches, City of Rochester v. U.S. Postal Serv., 541 F.2d 967, 977 (2d Cir. 1976), and inexcusable delay could occur despite a “few oral complaints” made to the defendant, it seemed unlikely that the Petrella Court would rule otherwise. After all, Paula Petrella, like the City of Rochester, had indeed complained, but had waited fully 30 years after the death of her father and almost 18 years after renewing copyright in the allegedly infringed-upon screenplay. The fact that she sought damages merely for the preceding three years of infringement, and thus was technically within the statute of limitation, hardly seemed to justify a factual determination that laches was absent, much less a dramatic change in the law of remedies. Yet the majority, in what has been described as a “major shock,” had no difficulty concluding that laches is “essentially gap-filling, not legislation overriding…Inviting individual judges to set a time limit other than the one Congress prescribed…would tug against the uniformity Congress sought to achieve” in establishing a limitations period. 134 S. Ct. at 1974-75. While the majority noted that in “extraordinary circumstances” laches might still be available, id. at 1977, and that the related doctrine of estoppel could preclude any remedy if applicable, id., the decision effectively removes laches as an affirmative defense in such cases.[3]

Laches and the Second Circuit Pre-Petrella
In order to appreciate the potential significance of the Second Circuit’s Stockbridge-Munsee ruling, it is necessary to take a brief detour to federal Indian law. For some time, Indian tribes in New York State, often accompanied by the United States,[4] have pursued litigation against the State and others claiming that the State purchased, condemned, or otherwise acquired vast portions of treaty-protected lands in violation of the Trade and Intercourse Act, 25 U.S.C. § 177, which requires that all transfers of Indian lands be ratified by Congress.[5] The lawsuits typically have sought the remedy of ejectment as well as monetary remedies based on fair market or rental value. In light of the remedies sought—in one case, a purportedly possessory claim encompassed the entire City of Syracuse and more—the lawsuits were fiercely opposed.

In City of Sherrill v. Oneida Indian Nation, 544 U.S. 197 (2005), the Court “dramatically alter[ed] the legal landscape,” Cayuga Indian Nation v. Pataki, 413 F.3d 266 (2d Cir. 2005), cert. denied, 547 U.S. 1128 (2006), to “hold that equitable doctrines, such as laches, acquiescence, and impossibility, can, in appropriate circumstances, be applied to Indian land claims, even when such a claim is legally viable and within the statute of limitations.” 413 F.3d at 273.[6] The Second Circuit seized upon Sherrill to create an entirely new de facto quasi-laches standard in order to avoid three troublesome aspects of traditional laches. Laches typically focuses on the reasons for the delay, which Cayuga seemed to assert were irrelevant, does not apply to the United States when it acts in its sovereign capacity,[7] and ought not be applied based on the pleadings alone. While there is an excellent argument that Cayuga was wrongly decided, its “not truly laches, but has the same effect” concept has plagued the remaining claims cases,[8] particularly given the court’s explicit statement that “possessory land claims…are subject to the equitable considerations discussed in Sherrill.” Id. at 275.

The Second Circuit Distinguishes Petrella
The tribal plaintiff in Stockbridge-Munsee[9] faced the judicial headwind, but seemed to get a shove from Petrella. The tribe’s argument was that Petrella was applicable, and in particular that the Court’s “extraordinary circumstances” language meant that while certain equitable relief might be foreclosed, its entire claim should not be.

The panel had three responses. First, it oddly declared that “Congress has not fixed a statute of limitations for Indian land claims.” 756 F.3d at 166. Second, it emphasized that “the equitable defense recognized in Sherrill…does not focus on the elements of traditional laches.” Id. Finally, but perhaps most importantly, it suggested that Petrella was confined to laches in the context of the Copyright Act. Id.

The first response was, quite simply, incorrect. The second, while purportedly consistent with Cayuga, ignored the fact that Stockbridge’s claim sought both legal (money damages) and equitable remedies. The panel arguably improperly treated the tribe’s money damages remedy as inherently (or indistinguishable from) a possessory remedy. As the tribe noted in its unsuccessful petition for en banc review, “[t]his failure to distinguish between rights and remedies, legal claims and equitable relief and coercive relief and damages cannot be reconciled with Petrella.”

Absent from the Second Circuit’s rationale is any discussion in support of its underlying premise that Petrella “establishes that…laches cannot be used to defeat a claim filed with the Copyright Act’s three-year statute of limitations” but merely “commented on the applicability of laches to actions in law generally.” Id. The Petrella Court’s ruling was not expressly limited to the Copyright Act, and the Court in support of its conclusion referenced decisions concerning several other statutes, such as the Federal Farm Loan Act, the Securities and Exchange Act, the Prohibition Act, the Civil Rights Act, and, ironically, the Indian Claims Limitations Act of 1982, which the Second Circuit itself had previously acknowledged as creating a statute of limitations for Indian land claims. 134 S. Ct. at 1973; Cayuga, 413 F.3d at 279.

Turning to the Patent Act
Since Petrella, litigants have debated, among other things, whether its ruling extends to appeals under Federal Rule of Appellate Procedure 4 and challenges to Corps of Engineers determinations. The Second Circuit’s summary rejection of the tribe’s arguments, in particular its contention that Petrella announced “a general rule that applies any time Congress has provided a statute of limitations” may provide fodder to those who argue that the Federal Circuit should decline to apply the ruling to the Patent Act. In addition to a potential claim that Congress implicitly blessed laches when it enacted the AIA,[10] litigants could point to the Second Circuit’s (albeit unsupported) conclusion that the decision’s scope is limited to the Copyright Act. The Petrella Court mentioned the Patent Act (and A.C. Aukerman) in a footnote, 134 S. Ct. at 1974 n.15, but gave no indication of how it might address the issue. Arguably, nothing in the Court’s reasoning is inconsistent with extending the ruling to claims brought within the Patent Act’s limitation period. But Stockbridge-Munsee suggests that lower courts may be sympathetic to arguments that laches is not always incompatible with a statute of limitation.

 

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[1] Federal courts routinely emphasized that cases could be dismissed on laches grounds even when complaints were filed within the applicable statute of limitations. For example, in Deering v. United States, 620 F.2d 242, 246 (1980) (en banc), the plaintiff filed on the “last day allowed by…statute of limitations” but because the plaintiff could not “demonstrate…lack of prejudice” or provide an “excuse[] for delay in filing” the case was barred by laches. Similarly, in Mariner v. United States, 1 Cl. Ct. 430, 433-34, aff’d mem., 727 F.2d 1118 (Fed. Cir. 1983), filing “three days shy of…period of limitations” was sufficient to bar the claim due to laches. The Mariner court cited numerous cases involving even shorter durations. For example, filing three years and eight months from the date of accrual of the claim did not preclude dismissal for laches.

[2] In Norris v. United States, 257 U.S. 77, 80-81 (1921), the Court noted that “no fact is found explaining [plaintiff’s] failure to assert his [claim] for the period of 11 months and a little over; [p]ublic policy requires reasonable diligence upon the plaintiff’s part, which we think the findings in this record do not disclose.” And in Alpert v. United States, 161 Ct. Cl. 810, 820-21 (1963), the Court of Claims listed numerous cases in which delays by plaintiffs within the statute of limitations period were held to be sufficient to bar claims under the doctrine of laches.

[3] Daniel Sheerin, “You Never Got Me Down, Delay”:  Petrella v. Metro-Goldwyn-Mayer, Inc. and the Availability of Laches in Copyright Infringement Claims Brought Within the Statute of Limitations,

[4] The United States intervened in several cases in light of Eleventh Amendment decisions that tribes could not sue states regarding state lands unless the state consents to suit. In addition, the United States sought by its participation to aid in settlement negotiations. It had helped craft significant legislative settlements of other eastern land claims, including the Rhode Island Settlement Act, 25 U.S.C. § 1701, the Maine Settlement Act, 25 U.S.C. § 1721, the Connecticut Settlement Act, 25 U.S.C. § 1751, and the Massachusetts Settlement Act, 25 U.S.C. § 1771. These acts affirmed the transfers, thus extinguishing Indian title, in exchange for compensation and acquisition of certain tribal lands by Secretary of the Interior in trust or restricted fee status.  Such a compromise was unsuccessfully sought in several of the New York cases.

[5] It was not until the Court’s decision in Oneida Indian Nation v. County of Oneida, 414 U.S. 661 (1974), that federal courts had unquestioned jurisdiction over tribal assertions of violations of the Act.

[6] Congress established a statute of limitations for Indian land claims in 28 U.S.C. § 2415. Stockbridge-Munsee’s lawsuit was filed with the applicable period.

[7] See, e.g., Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U.S. 172 (1999); Heckman v. United States, 224 U.S. 413 (1912); United States v. Minnesota, 270 U.S. 181 (1926).

[8] See, e.g., Onondaga Nation v. New York, 500 F. App’x 87 (2d Cir. 2012), cert. denied, 134 S. Ct. 419 (2013); Oneida Indian Nation of New York v. County of Oneida, 617 F.3d 114 (2d Cir. 2010), cert. denied, 132 S. Ct. 452 (2011).

[9] The United States did not intervene in the lawsuit.

[10] See Lee Davis and Gregory L. Porter, Author’s Heir Delivers Own Knockout Punch in “Raging Bull” Copyright Suit, 26 No. 8 Intell. Prop. & Tech. L.J. 3 (2014).

 

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