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Intellectual Ventures I LLC v. Capital One Financial Corp.

United States Court of Appeals, Federal Circuit

December 11, 2019


          Appeal from the United States District Court for the District of Maryland in No. 8:14-cv-00111-PWG, Judge Paul W. Grimm.


          Matthew J. Moore, Latham & Watkins LLP, Washington, DC, filed a combined petition for panel rehearing and rehearing en banc for defendants/third party plaintiffs-appellants. Also represented by Gabriel Bell, Alan J. Devlin, Adam Michael Greenfield, Blake Stafford; Christopher S. Yates, San Francisco, CA; Robert a. Angle, Troutman Sanders LLP, Richmond, VA.

          Robert E. Freitas, Freitas & Weinberg LLP, Redwood Shores, CA, filed a response to the petition for plaintiffs-appellees and third party defendants-appellees. Also represented by Jessica N. Leal, Daniel J. Weinberg.

          Before Prost, Chief Judge, Bryson and Reyna, Circuit Judges.


          PER CURIAM.

         In its petition for rehearing, Capital One focuses largely on the Fourth Circuit's decision in Tuttle v. Arlington County School Board, 195 F.3d 698 (4th Cir. 1999). Capital One argues that Tuttle is inconsistent with the rationale underlying this court's decision on the issue of collateral estoppel. In fact, however, Tuttle has little in common with this case and does not affect the court's analysis of the collateral estoppel issue.

         In the litigation that led to the Fourth Circuit's decision in Tuttle, the plaintiff first challenged a policy of the Arlington County School Board that limited admission to a particular program based in part on race, in order to obtain diversity among the students. The district court struck down that policy on two grounds: (1) that the objective of a diverse student body was not a compelling interest that would justify decision-making on racial grounds, and (2) that in any event the school board's policy was not narrowly tailored to achieve that objective. Rather than enter a broad injunction, the district court allowed the school board to revise its policy in an effort to satisfy the constitutional objections. After the school board revised its policy, a new group of plaintiffs challenged the policy once more, again arguing that it was unconstitutional. The district court held the policy unconstitutional, and the school board appealed.

         One of the arguments made by the plaintiffs on appeal was that the school board was collaterally estopped from arguing that diversity could be a compelling governmental interest, as that argument had been rejected by the district court in response to the first round of litigation in that court. The court of appeals rejected the plaintiffs' argument on that issue in a single paragraph, citing three grounds for its ruling. First, the court held that because the admissions policy in the earlier proceeding in the district court was "markedly different than the current Policy," the issues decided in the previous proceeding "were hardly 'identical' to the issues currently before this Court." 195 F.3d at 704. Second, in the sentence on which Capital One focuses, the court ruled that "[s]ince the district court [in the first proceeding] also concluded that the [policy at issue in that proceeding] was not narrowly tailored, the district court's conclusion of law that diversity could never be a compelling interest was not 'necessary' [in that proceeding]." Id. Third, the court noted that because the district court's previous ruling had allowed the school board to continue to attempt "the goals expressed in its admissions policy" by other means, the decision in the earlier case was not "final and valid." 195 F.3d at 701, 704.

         Capital One argues that the second ground on which the Tuttle court found collateral estoppel inapplicable is contrary to this court's analysis of the collateral estoppel issue in this case. We disagree, for several reasons.

         First, unlike in this case, the two proceedings at issue in Tuttle were quite different. As the court of appeals pointed out, the school board altered its policy following the first proceeding, so the constitutional analysis of the board's action was necessarily different. By contrast, as we explained in the initial opinion in this case, the two antitrust claims in the proceedings before Judge Trenga and Judge Grimm were essentially the same.

         Second, unlike in this case, the two issues on which the district court ruled against the school board in Tuttle were not integrally related. In this case, as we pointed out in the initial opinion, the two issues were intertwined, inasmuch as the presence of an antitrust market is relevant not only to whether an antitrust market has been identified but also to whether the defendant possesses monopoly power in that market. The issues are not separate and distinct issues, each of which could stand alone in defeating the asserted cause of action. In Tuttle, by contrast, the questions of whether diversity could ever be a compelling interest, and even if it could, whether the school board's policy was narrowly tailored to further diversity were separate issues; deciding one of those issues did not necessarily decide the other.

         Third, in our initial opinion, we held that collateral estoppel was applicable in part because either of the alternative grounds on which Judge Trenga based his decision would have been sufficient to decide the case before Judge Grimm. In Tuttle, however, that was not true. Because the school board altered its policy between the first proceeding and the second, the question whether the policy was "narrowly tailored" to achieve the objective of diversity was different between the two cases. Therefore, Tuttle was not a case in which, as we said of this case, "all of the alternative determinations in the first case would be independently sufficient to dispose of the second case." Op. 28.[1]

         Fourth, unlike in this case, the proceedings in Tuttle were not co-pending. Following the initial decision of the district court, the school board in Tuttle adopted a different policy in an effort to satisfy the court's analysis in the first case. In this case, by contrast, Capital One simply sought to litigate the same claims in Judge Grimm's court after having lost on those claims before Judge Trenga. For the reasons set forth in the Second Circuit's decision in Williams v. Ward, 556 F.2d 1143 (2d Cir. 1977), that distinction also ...

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